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Jeff Bailey : 11/16/2007 10:42:25 PM

Sector Bell Curve since 11/02/07 which gives us a 2-week look at which way things have moved Link

One thing traders will do (if they don't they should) is look at/review their trade blotters. What worked, what DID NOT work as it relates to MARKET and SECTOR action.

Here's my MM month-to-day CLOSED trades blotter Link

To the far right, Exit "B" is the benchmarked price of the underlying equity when the option was closed. Entry "B" is the benchmarked price of the underlying equity when the trade was profiled. I like to benchmark the options due to impact of time decay, and volatility fluctuations.

PTR-WL is a foreign-based oil producer. Entered the bearish biased trade at $181.42, close out at $192.44, which was HIGHER (green) than entry.

GG-XG is a precious metals. Entered the bearish trade at $33.93 and exited at $31.80, which was LOWER (red) than entry.

FCX-XC is both a precious and non ferrous metals miner. Entered the bearish trade at $114.50 and exited at $110.22, which was LOWER (red) than entry.

Once a trader reviews their blotter (am I making the right/wrong decisions/analysis), they'll also type up the underlying security's ticker symbol, check its price at tonight's close.

Even on CLOSED trades it can be helpful to see where the underlying stock is trading at.

For example. I continue to monitor FCX. And that's what had me looking at RIO as a potential put candidate.

Jeff Bailey : 11/16/2007 10:09:30 PM

Ooops! They archived me. (see 11/16/07 09:54:30)

MM profiles and their sector classifications

MO is a "Foods Beverages/Soap" stock.

MFE is an Internet stock. I'd think software too.

XLF is insurance, bank, finance, savings&loan, wallstreet

CHA a foreign-based telecom.

DUG would be oil and oil service

CFC is a finance.

RIO is a non ferrous metals

OI Technical Staff : 11/16/2007 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 11/16/2007 9:54:30 PM

Sector Bell Curve comparison at October's option expiration and today's expiration. Link

Jeff Bailey : 11/16/2007 9:45:32 PM

Current OPEN MM Profiles that I've made and Watch List found at this Link

Jeff Bailey : 11/16/2007 9:45:27 PM

Closing U.S. Market Watch at November Option Expiration Link

Jeff Bailey : 11/16/2007 9:45:21 PM

I should probably note that this week's WEEKLY Pivot for the XLF was $30.43. "Gott'a love them/hate them pivots."

WEEKLY's for next week are ... $28.66, $29.58, Piv= $31.04, $31.96, $33.42.

Jeff Bailey : 11/16/2007 9:45:11 PM

XLF Nov/Dec/Jan options montage found at this Link

I'm thinking the 49,025 volume on the XLF was a one day risk trade and a "sell to open" saying ... "I'll take the risk that it doesn't close below $30.00 and M S2" and sell the premium.

I think the $0.90 in options I've seen so many years is just the inverse of a $0.10 above or below a round number that I tend to use with some stops on highly liquid securities.

Now, November is over and done with for many option traders. But you can still play the "what side of the trade won." Don't just think CALL BUYERS lost, or PUT BUYERS lost. Also think CALL SELLER and PUT SELLER. For the most part (roughly 90%) it is the INSTITUTIONAL trade this is SELLING CALL and PUT premium. They've got a LOT more capital, some very efficient computers they can program, to keep things squared up.

Do look at VOLUME on the day(s) just prior to an expiration.

For example, I could think that the "reason" we see 3,277 contract traded on the CBOE exchange in the $32.00 puts is perhaps a retail trader like you and I may not really have wanted to "put" X-number of contracts, or actually be ready, willing, and ABLE to short X-numer of shares of XLF at $32.00 - the option they bought to open. So they close it out (sell to close) the contract.

You can test this type of analysis on Monday. If OI declines from Thursday's OI, then you get a feeling that analysis is correct. However, if OI were to RISE, then we must analyze that the bias was "sell to open," which at today's close becomes "I want to BUY XLF at $32.00 - premium received."

Now, let's look at December.

I've highlighted the XLF-LG. I know where the strike is at, I know what I paid. $1.75. So, $33.00 + $1.75 = $34.75.

Do I still think, or more important, SHOULD I STILL be thinking XLF $35.50 target? (Right? Remember the trader than shorts 3-times at each high, continues to lose, and still can't resist the 4th-time.)

My Answer: No. I can't be thinking $35.50 with what I see facing us at $34.00 Call right now (110,832), which isn't that far off of the 110,552 that faced the $34 strike in November.

Now, I was monitoring the XLF-LG on Wednesday, when we saw that big move UP at the open. But I still "hate" it when I see $0.90 stand so firm on a gap. What's $33.00 + 0.90?

Now I start to understand the $34.00 Nov OI.

Question: Ahead of today's November expiration, did the XLF ever trade above $34.00 after October's experiation?

Now, I want to make sure you didn't think I said ... "No, XLF will NEVER be able to trade $35.50 by December expiration. That's what NAKED call squeezes are all about. It's the NEVER that becomes the IS, that makes for the squeeze. Right? Let's say that 110,832 is ALL NAKED.

Jeff Bailey : 11/16/2007 4:57:58 PM

Ask yourself "why" did the XLF Nov. $30 puts (XLF-WD) trade 49,025 contracts on the CBOE today?

Jeff Bailey : 11/16/2007 4:56:07 PM

See where the XLF goes out? $30.51 -0.78% ... that's right between $30 and $31 if my math is correct (checking my math since $/yuan)

Jeff Bailey : 11/16/2007 4:54:21 PM

If you're tying to develop a "bias" based on where a security you are interested in closed RELATIVE to where the OI was at, I suggest you do it today, BEFORE the OI is updated for today's action. What a trader wants is to get some type of observation BEFORE you get all the volume right around the nearest OI strikes.

Jeff Bailey : 11/16/2007 4:51:24 PM

Hmmpfh ... Did anyone other than I notice that on Tuesday, as the XLF surged higher at the open, that our XLF-LG's could only muster a $0.90 trade?

I'm working on a Nov / Dec / Jan option montage for XLF. See some very "computer-like" figures at where the XLF closed today. And some Dec XLF open interest.

Keene Little : 11/16/2007 4:42:20 PM

Sticking with the same possibilities for the RUT, two equal legs up from this morning's low gives us 774.67 for an upside target on Monday. This is a little above the broken uptrend line from August 2004 (which acted as resistance for this morning's bounce) and could set up the next steep selloff (pink). If it manages to keep rallying then upside targets for the others could be a better guide for where to next. Link

Jeff Bailey : 11/16/2007 4:34:38 PM

PTR-WL's go out at $0.00.

Remember that observation of a BIG SELLER of $0.40 on the CBOE that one day, when other market makers had stepped off to $60?

We cut and and ran when we got a bid of $0.60 on 11/08.

Jeff Bailey : 11/16/2007 4:32:40 PM

I'm starting to "dislike" the $0.40 as much as I've always disliked the $0.90 increment of options and stocks.

Jeff Bailey : 11/16/2007 4:31:26 PM

Financial Select SPRDs (XLF) $30.51 -0.78% ... looking way too early on the 1/3 position with the Dec. $33 Call (XLF-LG).

Jeff Bailey : 11/16/2007 4:30:01 PM

Remember the saying ... when the bad news really hits, and a stock doesn't go down further, then that's the bottom!

Keene Little : 11/16/2007 4:29:43 PM

Two equal legs up from this morning's low for NDX gives us an upside projection to 2063 on Monday for a potential high before rolling back over (pink). If it can continue rallying from there then the next upside target is 2120: Link

Jeff Bailey : 11/16/2007 4:29:20 PM

Here... now THINK about the headline to this BSC article from Tuesday Link

I've got BSC at $99.07.

Certainly is wasn't "as bad" as some had thought, but if that's the case, why is BSC below a $100 strike, and why is it below its 11/14/07 close of $103.27.

I HAVE to believe, based on observation of BSC's chart, that the MARKET knows there is MORE coming from BSC.

Why it still hangs out at those last three (3) bearish vertical counts? Well... that's yet to be revealed.

Jeff Bailey : 11/16/2007 4:23:49 PM

BSC $99.07 -0.87% ... a stock where its PRICE action has suggested a MUCH LARGER write-down than the 0.7B tabulation Jim gave us in Saturday's wrap.

Keene Little : 11/16/2007 4:22:15 PM

The same setup for the DOW shows the possibility for a quick pop up to the 13200-13220 area before rolling back over (pink). If it can push further then I like the 13450 area for the next upside target. Link

Jeff Bailey : 11/16/2007 4:21:45 PM

Nope ... Morgan Stanley (MS) $52.90 -0.69% ... closes BELOW that 11/08/07 close.

Jeff Bailey : 11/16/2007 4:20:51 PM

Can MS sway me from a bearish view?

Jeff Bailey : 11/16/2007 4:20:36 PM

KBW Bank Index (BKX.X) 93.42 -0.84% ... simply noting some percentage difference than BIX.X. Not a new low close, but not that far from 11/07/07 close of 91.93.

Jeff Bailey : 11/16/2007 4:18:48 PM

BIX.X 291.94 -2.18% ... CLOSES at new 52-week low CLOSE.

Jeff Bailey : 11/16/2007 4:16:32 PM

From the LONG side ... who got the "pain." Was there any pain? (check the OI)

From the NAKED side ... who got the pain. Was there any pain? (check the OI)

Jeff Bailey : 11/16/2007 4:15:18 PM

In Monday's MM at 03:23:16 PM EST, my "eyeball" for a November "max pain" theory for the SPY was $147.00.

SPY $145.79 still a few minutes to go, but looks $146-ish.

Keene Little : 11/16/2007 4:12:44 PM

The finish with SPX shows (in pink) the possibility for a move up to the top of its flag pattern and downtrend line from October 31st near 1468 although two equal legs up from yesterday's low would be at 1463.55 and will be the first level I'll be watching for resistance. Then if the pink wave count is correct we'll see some selling really kick into gear. Link

If it pulls back in another choppy decline then the correction off yesterday's low could chop its way higher. Unless something changes here I do not see the likelihood for a higher bounce (as per the dark red wave count) and this could be very significant for the market here.

Jeff Bailey : 11/16/2007 4:10:35 PM

Let's check a couple of things ... what was my analysis Monday as to an option-related SPX/SPY close today? Is my read "on," or is it "off." I care more about the OFF than I do the on, as that is where I'd have to make the adjustment.

Jeff Bailey : 11/16/2007 4:08:16 PM

Altria (MO) $73.18 +1.25% ... nice that it closed above $72.50 (mid-point of $70-$75). An "upper quarter" of $73.75 would have been even better. May dump the DEC $70 Call (MO-LN) Monday, but would sure like to see about a 6, or 7-day run higher out of the gate like we saw for the major averages after October's trade into SPX 1,500 expiration.

Jeff Bailey : 11/16/2007 4:03:36 PM

CHA $66.80 -3.96% ... not much OI, but inability to hold any of the $70-$85 puts suggests any NAKED put will have some stock RISK below each strike, depending of course on when and what premium was sold.

Keene Little : 11/16/2007 4:03:18 PM

Big bounce into the close and it looks like they let the Qs get away from them with new highs now. Traders hedging themselves against the move probably adding some buying power. For today's pattern, which looks like wave-a up, wave-b down and now wave-c up, we should see a small consolidation followed by antoher push higher but not much. SPX 1465 could be the limit on Monday morning before at least another pullback if not the start of a hard selloff.

Jeff Bailey : 11/16/2007 4:01:12 PM

CFC $12.09 -1.06% ... inability to hold a $12.50 suggest bulls still "don't want it."

Jeff Bailey : 11/16/2007 3:59:54 PM

RIO $35.45 +2.75% ... into the close. ABILITY to hold $35.00 looks bullish.

Jeff Bailey : 11/16/2007 3:59:06 PM

Monday's is a NEW game entirely, and the "manipulation" trades will be off.

Jeff Bailey : 11/16/2007 3:58:22 PM

For the QQQQ $50.45 +1.26% ... What's you BIG heavyweight?

AAPL $166.85 +1.55% , MSFT $34.09 +0.97%, QCOM $41.30 +1.22%, GOOG $634.48 +0.76% and CSCO $29.97 +2.28% ... Any big OI strikes nearby?

Linda Piazza : 11/16/2007 3:57:15 PM

This bounce has not, so far, changed the shape of the SPX's weekly candle. It's just changed the small body from a red one to a green one.

Jeff Bailey : 11/16/2007 3:55:22 PM

That was a LOT of information, but may shed some light as it relates to some of my commentary today regarding USO and DUG.

Jeff Bailey : 11/16/2007 3:54:48 PM

Nymex Crude Settles Up On Contract Expiry, Dollar

DJ- Crude oil futures rebounded Friday as traders closed out December contracts and worried about tensions in the Middle East. The dollar's deterioration also gave oil a lift. On its last day of trading, the December contract for light, sweet crude on the New York Mercantile Exchange settled up $1.67, or 1.8%, at $95.10 a barrel. The more actively traded January contract settled at $93.84, up $1.77. January Brent crude on the ICE futures exchange rose $1.39 to settle at $91.62 a barrel. The price gain forced traders who had expected prices to fall to buy long positions, further fueling the rise. An Iranian ambassador's vow that his country would "never" give up uranium enrichment amid pressure from the West kept alive concerns about future oil supply disruptions. The possibility of demand softening amid a slowing U.S. economy did little to drag on prices. Federal Reserve Governor Randall Kroszner signaled in remarks that the Fed isn't inclined to cut interest rates further even if the economy hits a "rough patch" as he expects. Separately, the Fed reported slowing industrial production in October. But the production data helped weaken the dollar against the euro, which was at $1.4662 from $1.4616 Thursday. The dollar's weakness has been a major factor in oil's rise this year. The industrial production figures "should have been bearish," said John Kilduff, a senior vice president at MF Global in New York. "But that translates into a weakening dollar. So it once again pushes up crude prices." The closing price was 3.8% off an intraday high of $98.62 reached Nov. 7. Analysts said they expect fairly calm trading next week ahead of the Thanksgiving holiday, with a wild card in weekly U.S. oil inventory numbers due Wednesday. "I think we could see a fairly subdued Monday, a quiet Tuesday, and Wednesday all hell breaks loose," said Jim Ritterbusch, president of Galena, Ill., oil trading advisory firm Ritterbusch and Associates. U.S. crude stocks increased by a surprise 2.8 million barrels in the Department of Energy's latest inventory report, a significant number but one centered on the West Coast, a market largely separate from the rest of the country. Stocks at Cushing, Okla., the delivery point for Nymex crude contracts, remain near a three-year low. "Next week if we don't see another build, there is not a whole lot to help the bears out," said Brad Samples, a commodity analyst at Summit Energy in Louisville, Ky. Traders will also focus on the dollar and the performance of U.S. equities markets, said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn. "If crude is going to drop significantly, it's going to be on a slowing U.S. economy and weaker demand for oil," he said. Front-month December reformulated gasoline blendstock, or RBOB, rose 3.92 cents, or 1.7% to settle at $2.3754 a gallon. December heating oil rose 2.84 cents, or 1.1%, to $2.5871 a gallon.

Linda Piazza : 11/16/2007 3:55:07 PM

Barring a big move in the last few minutes of the trading day, it does look as if the SPX will produce that potential reversal signal on the weekly chart, with a small-bodied candle with a long upper shadows. Now's the time to ask yourself some what-if questions about your December positions, before the close. What if a bounce does begin? Can your bearish positions survive a bounce attempt, perhaps up to 1490-1501, before you even know if the bounce will be sustained or prices will roll over again? If your bearish positions were long-term ones and you want to stay in, do you have a plan for when you'll exit or how you might hedge against a short-term move against your position, if that should occur?

I'm still not sure that any bounce, if it did get started, will be anything more than a relief bounce, so I'm still in the stand aside while the bounce occurs camp. By that, I mean that I'm still not thinking that anyone other than experienced traders should jump in on bounces, and they don't need my advice. I'm not saying that bears should stand there, being complacent, though. Don't let gains turn to losses. Have a plan.

Jeff Bailey : 11/16/2007 3:44:56 PM

Good comment Keene ... but is it "pinning" or is it "propping?"

Jeff Bailey : 11/16/2007 3:42:52 PM

If you are managing money for an elderly person, and their "short-term bond fund" is down 16% since June, better check under the hood.

Jeff Bailey : 11/16/2007 3:41:03 PM

After reviewing PHF's recent holdings, the recent "softness" from $9.00 ... is what I'd have to analyze as simply being MORE softness in broader credit market, NOT a fund chuck-full of CDO to enhance a yield.

Jeff Bailey : 11/16/2007 3:38:50 PM

Just got off the phone with JPMorgan ... the "link" to PHF's fund experienced problems today. They hope to have it fixed by Monday.

Jeff Bailey : 11/16/2007 3:34:16 PM

Pacholder High Yield (PHF) $8.72 +1.04% ... at least you KNOW what a "junk bond" fund will invest in. HIGHer yielding, but RISKIER debt instruments. Was looking at their recent holding disclosures the other day to see just what, and how MUCH "junk" was inside.

Jeff Bailey : 11/16/2007 3:27:50 PM

I could see that one coming a MILE away ... Grandma buys a "limited duration" mutual fund, thinking 8% is grrrreat, when the bank CD is yielding just 4%. Plows $100K into it.

Keene Little : 11/16/2007 3:25:22 PM

They certainly are pinning those Qs today. At this rate I'd be surprised if it goes out more than 5 cents away.

Jeff Bailey : 11/16/2007 3:25:49 PM

Remember some of my "warnings" more than a year ago regarding some "short-term" funds that were paying a questionable 8% yield when short-term Treasuries were yielding just 4.8%.

Saw Tab comment a couple of times yesterday. Looked at EVV $14.97 -0.59% ...

If something looks "too good to be true," it's probably worth looking under the hood first.

Jeff Bailey : 11/16/2007 3:22:09 PM

Fitch Downgrade of Legg Mason (update)

DJ- Fitch Ratings Inc. downgraded Legg Mason Inc.'s (LM) outlook to negative from stable on the company's decision to prop up its troubled market funds with a $178 million cash injection.

The Baltimore asset-management firm, which owns just over 10% of the country's largest mortgage issuer Countrywide Financial Corp. (CFC), has the financial flexibility for the current levels of support, Fitch said, but "additional funds may be necessary if the market deteriorates further."

The problems are arising in the company's $5 billion in structured investment vehicles, or SIVs, according to Fitch. Earlier in the week, Chief Executive Chip Mason said 6% of the company's $167 billion in liquid assets are in SIVs, roughly half of which has been loaned to riskier non-bank issuers.

The funds have come under pressure because of exposure to the debt of troubled bank-affiliated SIVs that invested in mortgage-backed securities.

Fitch said it believes Legg Mason will support the funds if necessary, support that could put pressure on the company's balance sheet liquidity. As of Sept. 30, Legg Mason had $1.38 billion in cash or cash equivalents on its ledger.

In October, Legg Mason described its business as "demanding" with turbulence "in the fixed-income markets, and, to a lesser extent in the equity markets," saying equity flows "continued to be difficult."

At the time, Legg Mason Value Trust, which is run by legendary fund manager Bill Miller, was trailing the S&P 500 Index by more than 5 percentage points.

Jeff Bailey : 11/16/2007 3:19:12 PM

Legg Mason (LM) $71.17 -0.84% ...

Jeff Bailey : 11/16/2007 3:18:39 PM

Fitch Downgrades Legg Mason Outlook On Fund Support

Jeff Bailey : 11/16/2007 3:17:53 PM

CFC $11.94 -2.21% ... slips a bit more under $12.00.

Jeff Bailey : 11/16/2007 3:16:59 PM

See, I have GREAT problems with that type of thinking (CNBC guest) ... Every place I go, they're short the dollar. As a contrarian, I want to be on the other side of that trade.

Sometimes, I see that as saying ... "I see the 500 tanks coming at me, but while everyone else is running for cover, I want to stand here and see if they'll really run over me."

Linda Piazza : 11/16/2007 3:18:27 PM

If, instead of ending the day somewhere near its current level, the SPX should drop considerably into the close, the weekly candle will no longer be a small-bodied one like the one produced the week of 7/17/06. Despite that long upper shadow, the candle might look a bit more like that produced the week of 7/30/07. Although the week after that candle also saw gains, the next week produced that summer low.

Jeff Bailey : 11/16/2007 3:06:31 PM

Now, with Oil where it is at, and with DUG where its at ... Are you FULL position? Or are you 1/2, 1/4?

The BIG profit for a "energy bear" in my opinion is partial bearish equity position. BUT NEED ENERGY PRICES at the commodity level to FALL.

IF THEY DON'T, and EQUITY MARKET gets bullish ...

Jeff Bailey : 11/16/2007 3:03:26 PM

In my 1) question, this would be my hardened belief, based on observations, that when a MARKET is hungry for equity, it tends to buy BULK of equity and you get the rising tide lifts many boats (strongest going into the rise will lead). When market dislikes EQUITY, it tends to SELL BULK of equity and you get the "lower tide grounds most ships).

Jeff Bailey : 11/16/2007 3:00:16 PM

DUG ... now your 30-minute interval chart with WEEKLY and MONTHLY Pivot retracement Link

Three questions I ask myself.

On this time frame, what do you think it takes to have MACD curling higher and staying above 0 (zero). What's "the level" where MACD would probably fall belo 0 (zero)?

Linda Piazza : 11/16/2007 2:58:50 PM

I've been looking at the weekly candle for some indices, including for the SPX. If the SPX were to close the day somewhere near the current 1446.44, the weekly candle will actually comprise a potential reversal signal (small body, tall upper candle at the bottom of the decline). This candle is something like the candle produced the week of 7/17/06.

Remember that "potential" is a key word when considering a potential reversal signal. In addition, although the similar candle the week of 7/17/06 produced a strong bounce, a similar but smaller one in March, 2005, resulted in only a one-week bounce before another week of big losses.

We don't yet know where the SPX will end the day and how the candle will be shaped, and we certainly don't know if the candle's potential bullishness nature will be confirmed by action next week, but perhaps those in bearish positions need to consider whether their positions can weather a bounce attempt next week, if one should occur.

Keene Little : 11/16/2007 2:44:38 PM

Techs are holding up better this afternoon. This looks like it's just getting whacked around from opex. What's hurting the DOW today is GM (-4%), HON (-2.6%) and the banks (-2.6%). The financials are of course a drag on SPX as well.

Linda Piazza : 11/16/2007 2:42:06 PM

Now that the bears have invalidated the potential inverse H&S, they drove the SPX all the way back to the rising trendline off the 11/12 low, yesterday's low and this morning's low. That trendline is at about 1445.10. Which will it be this time, a bounce or a decline through that rising trendline? Today, we just have to follow price and, even then, be ready for a reversal. That's a product of both the market environment and the fact that this is opex Friday.

Jeff Bailey : 11/16/2007 2:42:03 PM

Firing up the news wire ... want to make sure there isn't some type of market moving news as to why oil is up.

I KNOW the dollar is weak, and that has been one "tie" of late.

Right?

GG $31.93 +1.75% ... was a consideration yesterday.

Jeff Bailey : 11/16/2007 2:40:40 PM

Russian Finance Ministry Says Deputy Finance Minister Arrested

Keene Little : 11/16/2007 2:36:51 PM

Based on today's price action I'm starting to lean more towards the wave count that's looking for a minor bounce and then sell off hard next week (in pink): Link

Normally the week before Thanksgiving is bullish but if the flag pattern that I've added to the chart holds, which is looking for another leg up to about SPX 1467 on Monday, then the bulls could get some indigestion around the holiday. First we need to see if this flag pattern will hold or if instead we see another low today (which could set up a renewed effort at a stronger bounce).

Jeff Bailey : 11/16/2007 2:35:08 PM

You KNOW where DUG is at ... its MONTHLY R1/WEEKLY R2 correlation.

Jeff Bailey : 11/16/2007 2:34:01 PM

Just think of USO as both a "psychological" and "fundamental" influence.

I've got some decent models for oil, but NOTHING like the big guns do.

When oil gapped higher, did you ask yourself .... WHY is DUG unchanged?

Did you look at the stock market at that time? It was down. NEGATIVE bias toward equity.

Then SPX bounces (see today's option montage) and DUG advances as if oil and equity psychology improved.

Now SPX 1,451.50 +0.02% ...

DUG $43.53 -2.57% ... see its little "spike" from $43.00 to $43.90 in last 30-minutes?

Why?

Jeff Bailey : 11/16/2007 2:29:34 PM

Yes! What about DUG, or DIG, or the equity side?

Jeff Bailey : 11/16/2007 2:28:07 PM

See the VOLUME spikes? What does volume tell us?

VOLUME equates to MAJOR DISAGREEMENT.

It HAS to. For EVERY BUYER, there's a SELLER. Each with a different opinion on where things are headed.

Jeff Bailey : 11/16/2007 2:26:39 PM

Do you see where two (2) ENTIRELY DIFFERENT "systems" are saying the same thing right in here?

What's it saying? This is a CRITICAL LEVEL.

Jeff Bailey : 11/16/2007 2:24:55 PM

USO $73.66 +1.88% ....

Jeff Bailey : 11/16/2007 2:24:30 PM

USO 2-chart montage. LEFT is a conventional use of retracement. RIGHT is my WEEKLY and MONTHLY Pivot retracement, with that October close (useful for futures into a contract roll) Link

Keene Little : 11/16/2007 2:17:39 PM

Time to drive this back up and the Qs back to 50.

Jeff Bailey : 11/16/2007 2:16:52 PM

Oh boy ... this is when things get interesting for a trader. 2-chart montage of USO on its way so you can see what I'm seeing.

Linda Piazza : 11/16/2007 2:16:01 PM

The SPX has barely avoided invalidating that little inverse or reverse H&S, and it may yet do that. The potential Keltner support just below is now at 1450.40 on 15-minute closes, but that support is rather light. The inverse H&S's right shoulder is extending a bit too much anyway, so the formation is probably defunct anyway. Bulls couldn't make it happen, but who knows what happens now.

AS I typed, the SPX dropped further, so I'd consider the potential inverse H&S pretty much undone.

Jeff Bailey : 11/16/2007 2:12:33 PM

Ah, but wait a second. Remember that "benchmark" I had from the 10/31/07 close? And "short squeeze alert" from 11/02/07? What's today's low?

Jeff Bailey : 11/16/2007 2:10:54 PM

I "know" from my last four "short squeeze alerts" what the eventual outcome was as "short, stop the high" paid dearly. I'm not seeing that at this point. Will continue to monitor.

Jeff Bailey : 11/16/2007 2:09:34 PM

Aha! ... just looking at my USO chart with its MONTHLY and WEEKLY Pivot retracement. Note its 61.8% WEEKLY also right here at $73.92.

"Will sellers be strong enough, or will buyers prevail?"

Jeff Bailey : 11/16/2007 2:07:00 PM

CEO +89.61% for 52-weeks. Down 18.09% last 20-days.

PTR +64.5% last 52-weeks. Down 23.7% last 20-days.

I think we "know" from 11/05/07 as to "why" these two China-based oil producers have differed so greatly from some of their US-based counterparts.

Jeff Bailey : 11/16/2007 2:02:04 PM

Short squeeze alert! ... USO $74.03 +2.36% ...

Keene Little : 11/16/2007 1:59:16 PM

I'm not seeing enough evidence in today's bounce to keep me bullish for another rally leg. We could get one but at this point I'm beginning to think we're going to see at least another low before a rally or bigger bounce. Today is looking like it's just going to chop sideways.

Linda Piazza : 11/16/2007 1:41:45 PM

Four little birdies, sitting in a tree . . . I'm looking at four small-bodied 15-minute candles sitting along a flattening 15-minute 9-ema that looks for all the world like four songbirds sitting along a tree branch. Nothing much has happened during the lunchtime lull period. Now begins a time that's often a stop-running time of day, so I'll certainly be watching to see whether the SPX rushes up to the rising neckline of its potential inverse H&S or whether it drops back below about 1450, invalidating the potential formation. With a 15-minute RSI in the neutral zone (54.60 as I type), neither one nor the other movement is predicted, and opex could instead just flatten prices sideways.

Jeff Bailey : 11/16/2007 1:29:04 PM

USO $73.67 +1.89% ... were you watching it was it fell back toward 50% $73.18? Level II showed a bunch of bids lined up like land-men at a lease sale.

Linda Piazza : 11/16/2007 1:24:02 PM

So far, the SPX's 15-minute 9-ema has held as support on this little pullback, something that bulls want to see. That's at 1455.18.

There's a little inverse or reverse H&S on that 15-minute chart, with the rising neckline now at about 1462.50. That could be potential resistance, and my Keltner charts show layers of resistance above that, too. So, if you're in a short-term bullish play today, be careful about stops as we're in a choppy market period perhaps made worse by option expiration. I thought there could be a bounce today within that possible triangle that's forming on the daily chart, but I'm still not suggesting bullish trades for any but those experienced enough to pick their own entries and exits. I still consider them countertrend. I'm just providing updates about what I see that bulls need to have happen.

Jeff Bailey : 11/16/2007 1:22:10 PM

Right? If CFC ends up like Enron, I'm sure a defense would be ... "we did warn of the RISK."

I have NO information that a credit rating service is about to, or will ever lower their debt rating on CFC to "junk."

Yesterday's reversing lower "sell signal" certainly suggests to me that the MARKET thinks there's a chance.

In a continuous motion, or column of O, where would CFC have to trade in order for its bearish vertical count column to build to $0.00?

Remember! count the column of O, multiply by 2 for BEARISH vertical counts, then multiply that by the scale, which is $0.50 increments.

Jeff Bailey : 11/16/2007 1:18:04 PM

CFC's PnF chart with supply/demand more accurately measured Link

I'm observing the "return to profit" announcement on 10/26/07, and what I'm calling the "covery your fanny" announcement on Monday.

Jeff Bailey : 11/16/2007 1:15:32 PM

Correction to my 12:57:48 ... today's trade at $12.00 in CFC has bearish vertical count building to $9.00.

So, RISK to a buy signal is to $15, with potential reward assessed to $9.00 for a bear.

Jeff Bailey : 11/16/2007 12:57:48 PM

Please not that StochCharts' CFC Link PnF chart is not accurate. Stock NEVER traded $12.00 before today. CFC pays a dividend of $0.15/quarter, and when Stockchart's adjusts their charts to reflect dividend payments (actually penalizes a stock's supply/demand) it looks like CFC traded 12.00, when in actuallity, it traded a low of $12.07 on 10/25/07.

Linda Piazza : 11/16/2007 12:52:18 PM

USDJPY now at 110.78. (I realize that I have a typo--"hig" for "high" in my 12:44:58 post about the USDJPY, but if I edit it, the time stamp will change.)

Jeff Bailey : 11/16/2007 12:51:47 PM

Dorsey/Wright's BPFINAnce sector bullish % still "bull correction" at a rather "oversold" 26%.

The August low measure was 22%, then reversed up to "bull alert" at 28%. Achieved "bull confirmed" status at 42% and rose as high as 50% before reversing back down to "bull correction" at 44%.

Dorsey/Wright classifies CFC as belonging to "finance" sector.

They also break out Bank, SAVIngs&Loan and WALLstreet as different sectors.

Jeff Bailey : 11/16/2007 12:44:58 PM

Still need to catch up on what NFI $1.97 -5.28% said the other day. Thinking it wasn't all the bullish.

Linda Piazza : 11/16/2007 12:44:58 PM

Caution, equity bulls. Since hitting the Keltner and historical resistance I mentioned earlier, the USDJPY has dropped heavily. It's at 110.85 as I type, down from the 111.30 hig of about 20-30 minutes ago. You don't want it to drop much below about 110.70-110.80.

Jeff Bailey : 11/16/2007 12:44:02 PM

Swing trade put establish stop alert! ... for the Countrywide CFC Dec. $15 Put (CFC-XC) at $15.20 in the underlying.

CFC $12.18 -0.24% ... As you know, yesterday's trade at $12.50 generated a reversing lower PnF sell signal. Today's trade at $12.00 has bearish vertical count building to $10.00.

Keene Little : 11/16/2007 12:32:55 PM

Because techs didn't keep up with that last spurt higher I'm still wondering if we're going to see choppy price action around this level as the Qs get pinned to 50 for expiration.

Jeff Bailey : 11/16/2007 12:24:50 PM

Remember! OI increases as "buy to open" or "sell to open" induced trades are initiated.

OI declines as "buy to close" or "sell to close" trades are initiated.

Right? I can either "buy to open" a 1,450 put, or I can "sell to open" a 1,450 put. What took place since Monday's screen capture at the then heaviest OI's?

Jeff Bailey : 11/16/2007 12:28:01 PM

Here's the SPX option montage screen capture from Monday ... here we can see how OI changed, what market participants did Link

Again ... here's the montage from last night's close and where OI ended up at Nov expire. Link (see 12:11:50 post)

Keene Little : 11/16/2007 12:21:13 PM

Now it's the techs holding back with NQ holding at its pre-market high (ES also) but YM has climbed above its pre-market high.

Linda Piazza : 11/16/2007 12:17:08 PM

At 111.10 as I type, approaching yesterday's 11:00 high of 111.22, the USDJPY has been climbing steadily since the first dip shortly after equities opened this morning. I've noticed in the past that it's often useful to watch the USDJPY on a 10-minute Keltner chart, and that shows the USDJPY pressed against potential Keltner resistance. It may be important to watch here, with equity bulls preferring that pullbacks, if any, stop at about 110.90.

Jeff Bailey : 11/16/2007 12:14:39 PM

Morgan Stanley (MS) $53.15 -0.22% ... trading BELOW my deemed IMPORTANT 11/08/07 benchmark close of $53.68.

Jeff Bailey : 11/16/2007 12:13:15 PM

Excellent, excellent observation from Bob ... "The street is way ahead of analysts regarding write-downs."

Some do believe the MARKET is a forward-looking vehicle.

Jeff Bailey : 11/16/2007 12:11:50 PM

SPX Option Montage where yesterday's close was 1,451.15 Link

SPX closed well above the 1,400 PUT oi, so NAKED seller of those ended up a winner.

A fractional "bullish bias" as SPX manages to close above the 1,500 PUT OI, which was #2 most heavy OI. Right? The NAKED SELLER of that PUT would be OBLIGATED to buy 5.1 million SPX "shares" on a CLOSE BELOW 1,450.00.

What about #3? What might the SELLER of NAKED PUT done the last couple of weeks?

Remember, nobody is able to trade the SPX Nov options today. They "expired" at yesterday's close.

Today its the SPY's turn.

Linda Piazza : 11/16/2007 11:59:53 AM

The SPX might not yet have built a consistent record today of closing 15-minute periods above the 15-minute 9-ema, but the NYSE advdec line has. That line is still at a tepid -403 issues, however.

At the same time, the VIX has been finding resistance at the close of 15-minute periods at its 9-ema, which is currently at 27.10. So far, these internals support the idea that the SPX might be able to consistently form 15-minute closes above its 9-ema on that interval, with that average now at 1551.69. The internals support this idea, but don't prove anything yet. Watch price for your guidance, especially on an opex Friday.

Keene Little : 11/16/2007 11:55:51 AM

That would be DOW 13166 and SPX 1457.83.

Keene Little : 11/16/2007 11:55:01 AM

I'm trying to get a feel for whether this bounce is going to amount to more than just a small correction. Two equal legs up rom the low is at ES 1462 (coming up) and YM 13199 so watch for potential resistance there.

Jeff Bailey : 11/16/2007 11:52:24 AM

USO $73.61 +1.81% ... still acts/trades VERY short doesn't it?

One retracement I just recently added to "mark a range" regarding yesterday's build in crude inventor is a simply retracement from the recent high of $76.31 to Tuesday's low of $70.03.

To me, a move muuuuch above the 61.8% retracement of $73.92 could bring in another short squeeze.

Keene Little : 11/16/2007 11:46:41 AM

The techs (NDX) have recaptured all of this morning's selloff but the others are lagging. I'm beginning to wonder if we're just going to see the Qs pinned at 50 for the day.

Linda Piazza : 11/16/2007 11:44:29 AM

Next SPX potential resistance (beyond 1453.80-ish resistance) is 1457.70 and 1460.09 on 15-minute closes.Potentially strong resistance is at 1466.47 if the SPX should get past lower layers of resistance.

Jeff Bailey : 11/16/2007 11:44:49 AM

RIO's Nov/Dec option montage at this Link

"It doesn't make sense" today that an industrial metal miner's shares rise today. But to a NAKED Nov. $35 Call position, that trader(s) may have to do what they need to do.

One thing I'll do (like we did with SPX/SPY last month) is see if there is a "bias" as to where RIO closes relative to that $35 Call OI at today's close.

Think about it from the SELLER of the call's position though, as that is by far the HEAVIEST open interest going into today's expiration. Remember, SELLERs of NAKED CALLS and PUTS have potentially MUCH GREATER RISK profiles than the BUYERS of calls and puts.

The DnTickVol and UpTickVol on QCharts is ONLY CBOE related, as is the Volume. I would MUCH rather be able to see ALL exchanges measured at volume to tell you the truth.

For December, I mark the 1-4 OI's. At this point, a "Max Pain" theory value would look to be $25.63.

I (Jeff Bailey) do NOT make "major direction" decisions based on "Max Pain" theory, but understand its implications and will look for ANY hints in a securities chart, or MARKET, SECTOR and STOCK to ascertain a potential bias.

Linda Piazza : 11/16/2007 11:31:39 AM

Keltner support and rising trendline (off the 11/12, yesterday's low and this morning's 10:30 15-minute candle) support are now converging at 1443.33.

Linda Piazza : 11/16/2007 11:29:06 AM

It would certainly be more fun to be with Jane at the Trader's Expo in Las Vegas, wouldn't it? Trading an opex Friday tends to be either wildly exciting or infuriatingly boring, and we've been getting the boring version today. Don't rule out the exciting version just yet, however.

Linda Piazza : 11/16/2007 11:23:40 AM

SPX bulls want support at the 9-ema at 1451.04 to hold on 15-minute closes. For the OEX, it's 676.95.

Keene Little : 11/16/2007 11:22:27 AM

Volume has dropped off some but that could be a result of slower trading as opex comes to a close for most positions. The move up off this morning's low will look impulsive if it can push a little higher right here. Then we should get a pullback that would make for a good buying opportunity, using this morning's low for your stop.

Jeff Bailey : 11/16/2007 11:14:29 AM

RIO $35.26 +2.20% ... Nov. $35 Call OI is 22,860 at last night's close. Nov. $35 Put OI is about 1/2 at 12,429.

What MIGHT be taking place today as it relates to NAKED $35 Call?

Where's FCX at?

Jeff Bailey : 11/16/2007 11:11:51 AM

Now, you might think my 10:55:45 is a bit "long winded." That's OK, but it also serves an additional purpose.

Now think of ALL the stocks/securities that do trade with options.

Pretend you're the market maker of options, and YOU are always selling NAKED to a market participant.

You're BIG and have MILLLIONS of dollars of capital at your disposal.

Say you do SELL NAKED an at, or even out-the-money call, or put option, and the underlying security starts to move against YOUR position, but in favor of the BUYER of that option.

See, market makers are simply SELLING premium, and they will most often TRADE THE UNDERLYING as the hedge to the trade, always trying to keep things "squared up" with the PREMIUM as their eventual profit.

Now look at Altria (MO) $73.29 +1.41% as it has been trading around $72.50 the past 16 sessions. We KNOW the strikes are $70 and $75. We KNOW MO is somewhat of a "defensive" stock that could be a hide out for capital in tough times. Pays a decent dividend yield of 4.1%.

Gut feel is options market maker isn't really dealing with the November 70-75 call open interest today. Not that much. It's the December $70.00.

Keene Little : 11/16/2007 10:54:56 AM

Volume is dropping off on this bounce so I'm thinking we haven't seen the lows yet.

Jeff Bailey : 11/16/2007 10:55:45 AM

Boy, when I look at that, I don't think the DUG-LR is half-bad.

See, my stop on 1/4 position, or 57 shares for $10K=full is currently $40.00 on the DUG with our re-entry at $43.84.

So what I "said" was I was willing to RISK $3.84/share to a defined stop (could gap us like we got gapped Wednesday morning on the remaining 1/8 position.

But on a 100 share basis, the OPTION really defines that risk too.

Right? If I were to buy long the DUG-LR, that's $4.00/share risk too, and even if DUG were to trade $40.00, the OPTION still would have some premium (depending on time remaining to expiration), but even better is that if DUG were to trade $40.00, the OPTION would still allow a trader the opportunity to look for a REBOUND in DUG, say $1.00 in the option to cut out. With the realization of course that the DISCIPLINED equity traders would have honored their $40.00 stop in the underying.

Now the REWARD side of things ... that's where the DUG-LR may have a "problem." Paying $4.00 + $44.00 = $48.00 has $48.00 as break even.

My TARGET is $49.50.

Heck, what COULD a 100-share LONG in DUG do with the DUG-LT? They could SELL that premium, and already come close to LOCKING IN their target $2.70 + $46 = $48.70.

Linda Piazza : 11/16/2007 10:42:42 AM

I show the SPX just having touched the rising trendline off the 11/12 and 11/15 lows, with that trendline now crossing somewhere between 1443.80-1444.10. Bulls need a bounce now (although Keltner support is actually lower, at 1441.94 on 15-minute closes) and then start forming 15-minute closes above the 9-ema now at 1450.57. Otherwise, it's maintaining the same tenor that's been in force since about 2:30 on Wednesday.

Jeff Bailey : 11/16/2007 10:38:07 AM

Quick benchmarking for some DUG call options.

DUG-LR Dec $44 Calls are $3.60 x $4.00

DUG-LT Dec $46 Calls are $2.70 x $3.20

DUG $44.30 -0.85% ...

VIX.X 28.11 +0.17% ...

Keene Little : 11/16/2007 10:34:57 AM

The RUT bounced off support near 760 and is holding even as the other indices drop a little lower. Meanwhile the bullish divergences on the DOW and SPX are still holding so I think this morning's decline will hold the lows. Is this setting the bear trap I warned about? Too early to tell but I'm not trusting this decline.

Jeff Bailey : 11/16/2007 10:31:57 AM

The reason I even "looked" today regarding option on DUG and DIG was the $100.00 level of trade I saw in DIG. Could it be "option-related" I asked myself. But there was NO WAY there would be options equating to a a "leverage on leverage."

DUG and DIG's 200% reflection is leverage. Option would be additional leverage.

Leverage is "great" as long as you don't OVERleverage.

Those are the one's that send trader's to the shower when just ONE trade moves against you.

Jeff Bailey : 11/16/2007 10:27:23 AM

I've been trading DUG and DIG in one of my accounts that doesn't have "option" capability, so I've been trading the underlying of each.

However, here at OptionInvestor.com, if the premiums aren't "out of this world," it might be a better RISK management and use of capital (don't tie up as much cash in a trading account) by utilizing options.

Of course, for a $10,000.00 = full position, one (1) contract will be equivalent of 100 shares of either DUG, or DIG.

Jeff Bailey : 11/16/2007 10:23:06 AM

Alert! ... You learn something every day. Up until 2-minutes ago, I did NOT know that DUG and DIG traded with options!

They do! Link

Jeff Bailey : 11/16/2007 10:21:48 AM

UltraLong Oil & Gas (AMEX:DIG) $100.02 +2.77% ...

Keene Little : 11/16/2007 10:20:26 AM

Banks (BIX) still under pressure and about to test Monday's low near 290.

Jeff Bailey : 11/16/2007 10:19:11 AM

UltraShort Oil & Gas (AMEX:DUG) $44.02 -1.47% ...

Jeff Bailey : 11/16/2007 10:18:19 AM

CBOE Oil Index (OIX.X) 793.54 +1.28%

Oil Service HOLDRs (OIH) $179.35 +0.78% ...

Jeff Bailey : 11/16/2007 10:17:22 AM

My current MM PROFILE of 1/4 Position in DUG is equivalent to 1/2 position in an enegery sector tracker. DUG moves 200% up/down in INVERSE to say the OIX.X, or OIH.

Jeff Bailey : 11/16/2007 10:15:00 AM

DUG $44.22 -1.02% ... just filled its "gap lower." Probably some negative market psychology toward equities action.

Session low/high has been $43.11 / $44.65.

Linda Piazza : 11/16/2007 10:14:40 AM

So far, the SPX has done nothing more than rise up to a more-than-overdue test of the upper boundary of its channel. It hasn't maintained 15-minute closes above the 9-ema on that chart interval. There hasn't been a major change in the short-term trend. Those hoping for a continued bounce today need better performance than this.

Similarly, the USDJPY dropped back below that 110.47-ish zone that I had mentioned earlier. Euity bulls need to see another push above 110.68 that is sustained on 15-minute closes to feel that the USDJPY is corroborating equity gains. It was at 110.39 as I began this post.

Jeff Bailey : 11/16/2007 10:13:14 AM

XOM $85.16 +0.79%, CVX $85.09 +1.10% and COP $78.44 +0.51% still holding morning gains.

Strong move at the open in the energy pits.

USO $73.56 +1.74% ... don't see the "sell now, ask question later" type of action in it.

Jeff Bailey : 11/16/2007 10:11:35 AM

Looking at CHA $66.12 -4.94%, CEO $157.77 -5.21% and PTR $187.00 -2.96% ... still has to suggest "China Premier" unravel.

Keene Little : 11/16/2007 10:08:40 AM

The RUT is the leader to the downside in breaking Monday's low. It's about to tag the bottom of its parallel down-channel at 760.

Linda Piazza : 11/16/2007 10:07:29 AM

An SPX drop below yesterday's low would undo the whole "forming a triangle" theory from my 9:45:58 post. Either that, or the triangle would be established with a lower trendline. I wouldn't consider it a breakdown out of the triangle, because it's too new to be considered a reliable formation on the daily chart.

Keene Little : 11/16/2007 10:03:58 AM

By gettng the gap open it also helped get a higher settling price on SPX components.

Keene Little : 11/16/2007 10:03:09 AM

That post-6:00 AM ramp up in the futures has now been retraced. Definitely a manipulated rally so that someone could sell into it after the cash market opened.

Jeff Bailey : 11/16/2007 10:03:28 AM

Brazilian Bovespa ($BVSP) Link ... currently off 450 points, or -0.70% at 64,181.

Jeff Bailey : 11/16/2007 10:03:24 AM

Companhia Vale Do Rio Doce (RIO) $34.86 +1.04% Link ... gapped higher to open $35.94. "Real bearish" action would be a push lower with distribution to flat, negative.

Keene Little : 11/16/2007 9:57:02 AM

So far we've only seen selling into this morning's gap up which is exactly what I thought might happen after seeing that ramp up in futures pre-market. The techs are getting hit the hardest but the others are starting to follow. The DOW is back below its downtrend line from Wednesday but SPX is holding up a little better in that regard. NDX and RUT could be the first to retest yesterday's lows if the selling keeps up here.

Jeff Bailey : 11/16/2007 9:55:15 AM

Gramin Ltd. (GRMN) $95.75 +13.92% ... Withdrew it $3.3 billion takeover bid for Tele Atlas and TomTom's offer looks to be the winner.

Seeing GRMN action looking like some recent gap highers at this point; getting sold as if to say ... "sell now, ask questions later."

Linda Piazza : 11/16/2007 9:47:15 AM

The Fed has announced a repo in the amount of $5.250 billion. Repos in the amount of $19.250 matured today, so that leaves a net drain of $14.000 billion so far.

Linda Piazza : 11/16/2007 9:45:58 AM

What's my overall view? I've been studying the daily chart, noticing that some indices, such as the SPX and OEX may be forming a narrowing triangle since the 7th. That tells me that the whole story isn't known yet, that the consolidation could (but isn't promised to) continue a few more days, and that the direction of the breakout should be watched for few-day direction. I don't know if even a triangle breakout or breakdown on the daily chart will yet give us a long-term direction, however.

Jeff Bailey : 11/16/2007 9:45:00 AM

Economic: ... October Industrial Production: Came in at -0.5%, which is below consensus for a 0.1% rise. Previous reading was revised up to 0.2% from 0.1%.

October Capacity Utilization: Inched lower to 81.7% from September's 82.2% utilization. Forecast among economists was 82.0%.

Linda Piazza : 11/16/2007 9:41:33 AM

The OEX is so far finding resistance on a Keltner bounary now at about 679.60. Bulls want it to find support on 15-minute closes at the 9-ema, now at 678.13.

Keene Little : 11/16/2007 9:41:17 AM

The DOW and SPX have broken their downtrend lines from Wednesday afternoon which suggests this leg down has completed. NDX popped above it but sold off hard so is now back below it. A retest of the broken trend line for SPX would be near 1453.

Linda Piazza : 11/16/2007 9:40:10 AM

The SPX reached up toward the upper boundary of its smallest Keltner channel, but has pulled back, apparently finding resistance, at least temporarily on a lower Keltner boundary at about 1457.60. Those hoping for a continued bounce at least want it to maintain support on 15-minute closes at the 9-ema, now at 1454.26. That would be a slight change in tenor anyway, if not yet a whole lot of reassurance.

Linda Piazza : 11/16/2007 9:33:02 AM

The top of the smallest Keltner channel for the OEX is currently at 681.81, with further resistance layered up to the potentially significant 684.89 on 15-minute closes.

Linda Piazza : 11/16/2007 9:31:13 AM

Here's what I notice on the SPX: Since about 2:30 Wednesday afternoon, the SPX has found resistance at its 9-ema on 15-minute closes. It's definitely overdue for a test of the top of the smallest channel, with that upper channel boundary ow at 1461.44, but likely to get pushed a little higher at the open. Other resistance is layered up to 1469.28, with that a potentially significant resistance layer.

Keene Little : 11/16/2007 9:25:12 AM

Equity futures rallied strong off the lows just before 6:00 AM so we've got a bullish start to the day. I'm always a little suspicious of a big ramp up like that since it makes it look like it's being manipulated higher for a reason. Another opportunity to sell into it after the open? There's the risk of the overnight lows being tested, if not immediately then sometime later. So it makes it a bit more difficult trusting the upside here even though that's what I'm expecting for the day.

Linda Piazza : 11/16/2007 9:08:33 AM

I'll be working with limited capability today, working from my laptop. I may not post as often. While everything is loaded on my laptop, having the laptop's single monitor makes it difficult to post timely numbers. I might be making a point about Keltner levels, for example, but the extra seconds it takes to switch back and forth between pages and verify support or resistance levels means prices can have changed a lot by the time I then edit and upload the post, especially in this market. Most of us writers work with multiple monitors and there's a reason why. It's already difficult to keep our posts timely and having multiple monitors makes it a little easier.

With that said, I wanted to note a few things that I was noticing about the USDJPY. During the night and into the premarket session, the USDJPY dropped to a 109.76 low, producing bullish price/RSI divergences on the 15-minute chart while it dropped. Since then, it's been climbing. It's now broken above the 110.63 swing high that was reached last night about 8:30, while the Nikkei 225 was open, so during a legitimate time period to consider. It's at 110.68 as I type. My Keltner charts show me that equity bulls want to see the USDJPY maintain support on 15-minute closes at about 110.47-110.58. That number will change a bit by the open of our cash equity market, moving a little up or down as the USDJPY does, but that gives you a range to watch. This should no longer be considered the be-all and end-all indicator but instead one to watch among many.

Linda Piazza : 11/16/2007 7:26:11 AM

Today, $19.250 billion in repos mature. I'll let you know later today if the Fed announces new repos.

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