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OI Technical Staff : 11/23/2007 9:59:59 PM

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Jeff Bailey : 11/23/2007 2:19:16 PM

Biiiig volume spike in January Crude (cl08f) into its close.

Settled up $0.89, or +0.93% at $98.18.

Jeff Bailey : 11/23/2007 1:42:41 PM

Closing U.S. Market Watch found at this Link

Keene Little : 11/23/2007 1:28:38 PM

I hope everyone has a great weekend--time to go eat some more turkey.

Keene Little : 11/23/2007 1:18:01 PM

NDX closed on its downtrend line from Nov 7th, leaving us guessing what it will do on Monday. It's in between its two key levels of 2063 to the upside and 1988 to the downside. Keep an eye on the trend lines for RSI since that could provide some clues as to which way this one will head next. Link

Keene Little : 11/23/2007 1:08:32 PM

Actually Jr. got a call from Sr. out at the Hamptons with very explicit instructions for the DOW to finish at the high today if Jr. is to have any hope of getting his $20M bonus at the end of the year. I'd do some serious buying with OPM for that kind of bonus too, but buying puts at the same time. You know--Goldman's tactic of shorting that which they sell to the public.

Keene Little : 11/23/2007 1:03:12 PM

The manipulation at the end of the day on the DOW was not too obvious--they jammed it higher in last few minutes to make it finish at the high of the day. Need to try to fool the masses.

Linda Piazza : 11/23/2007 12:56:53 PM

There's the 9-ema test on the SPX's 15-minute chart. After breaking above the resistance that had held since last Thursday (the 120-ema on the 15-minute chart), the SPX looks as if it will close beneath it. I'd have to conclude that there's no confirmed change in tenor yet.

Keene Little : 11/23/2007 12:50:14 PM

Correction to my previous post on GLD (12:21)--I misplaced the Fib projection tool and the actual level for two equal legs up in its bounce from Monday's low is at 81.66 not 81.51: Link

Linda Piazza : 11/23/2007 12:39:26 PM

The first SPX 15-minute close above its 120-ema since last Thursday. It wasn't far above it, but the SPX has continued to gain, chugging up toward next resistance, now at 1444.42 on 15-minute closes. I mentioned earlier that a surge through 1438-1440 and consolidation there while the 9-ema caught up would be a preference to falling back first to the 9-ema, and that's what's happened. Remember that it's all about positioning before the weekend from this point on, though, and that low volume holiday Fridays can do wicked things to your trades.

Jeff Bailey : 11/23/2007 12:38:17 PM

Sector Winners ... Regional Banks +4.49%, Homebuilders +4.18%, Broker/Dealer +4.01%, Airlines +3.52%

Keene Little : 11/23/2007 12:37:15 PM

With SPX breaking its downtrend line from Nov 14th and above 1436.51 where its bounce off Tuesday's low had two equal legs up it's now looking like there's potential to rally at least up near 1450. In the bounce off Wednesday's low the 2nd leg up would achieve 162% of the 1st leg up at 1449.31 which is close to its broken Aug-Nov uptrend line sitting near 1449. This 30-min chart zooms in a little on the 60-min chart I posted last night (at the beginning of today's posts): Link . The key level for the bulls is a break above 1453 but watch 1449-1450 for resistance if it gets there (maybe on Monday).

Jeff Bailey : 11/23/2007 12:36:37 PM

Sector Loser(s) Utilities -0.10%, Software +0.07%, Disk Drive +0.77%

Jeff Bailey : 11/23/2007 12:35:07 PM

TRIN 0.39 ...

NYSE A/D 2,659/497

NYSE NH/NL 22:147 ... DAILY Ratio 13.0. 5-day 7.9%; 10-day 9.2%.

Linda Piazza : 11/23/2007 12:33:51 PM

It's time soon to decide if you're going to hold your options plays over the weekend and then to take appropriate action, depending on your decision. Remember the early closing today as you're making those decisions. My brokerage page says that the equity markets close at 1:00 pm ET, so you have about thirty minutes if that page is correct. If you're in a bullish daytrade, for example, be cognizant of that perhaps significant resistance being tested on the SPX and OEX. If prices break out, there's the potential for a short-covering rally the last few minutes of trading, so that a trailing stop might be tightened as the close approaches, taking you out at a profit. First, though, if you're in a daytrade and intend to exit, decide where your cutoff point is if this resistance should hold and prices should suddenly reverse.

Jeff Bailey : 11/23/2007 12:29:23 PM

Google (GOOG) alert! 676.40 +2.40% Link ... trade at $676 gets stock's PnF chart back on a buy signal.

Linda Piazza : 11/23/2007 12:26:48 PM

The SPX now tests its 120-ema on the 15-minute chart. A pullback to the 9-ema, now at 1434.20, often occurs after the first test, but if it does this time, bulls want that support to hold on 15-minute closes. They'd rather the SPX just power through the 1438-1440 zone and consolidate there while the 9-ema catches up.

Jeff Bailey : 11/23/2007 12:25:28 PM

Euro (spot) 0.01 box chart Link ... I've plotted today's action. High as been 1.49665. Not 1.50, but getting close.

Linda Piazza : 11/23/2007 12:24:30 PM

The USDJPY has been climbing and it's now back above 108. It's at 108.21 as I type. The daily chart shows presumed resistance at 109.33-109.68, but we may have to wait until next week to see if that is tested, much less exceeded.

Linda Piazza : 11/23/2007 12:22:12 PM

Since about 11/12, the VIX has been forming a neutral triangle at the top of its climb off the 10/11 low. If this were an equity, I'd be suggesting that we have to watch for a triangle breakout, one direction or the other, before we concluded what the next direction was likely to be. I think I'd have to say the same for the VIX, too. Of course, values can just issue sideways out of a triangle and the breakout can have little meaning, but unless that's going to happen, we should see the breakout next week sometime. The triangle is narrowing.

Keene Little : 11/23/2007 12:21:32 PM

Gold's ETF (GLD) came within 2 cents of hitting 81.51 for two equal legs up from Monday's low. It makes for a good short with a tight stop. Link

Keene Little : 11/23/2007 12:07:25 PM

The euro looks like it might have topped out after spiking above the top of its parallel up-channel from August. The throw-over finish, after a clean 5-wave count to the upside, with bearish divergence, says it just made its last high. It dropped sharply after making the high last night: Link

Gold has been trading closely with the euro and its strong bounce today could be a bull trap. Today's high so far is 824.9 and close to 826 where it would achieve two equal legs up in its bounce off the Nov 19 low (for an a-b-c correction to its decline from Nov 8th). I'm liking the setup for a short play on gold.

Linda Piazza : 11/23/2007 11:58:46 AM

Here we go with the TRAN now approaching that resistance I've been mentioning, with that resistance now at 4462.98 and then 4472.96 on 15-minute closes. The TRAN is at 4451.55 as I type.

At the same time, the SPX tests analogous resistance at 1438.33 and then 1444.82 on 15-minute closes. To pinpoint the importance of this resistance, the SPX has not closed a 15-minute period above the line now at 1438.33 (120-ema) since about midmorning last Thursday. It's tested it at least six times since then (with the 120-ema falling across those days), falling back each time. I'm not saying that it's going to do so today--the end of a light-volume Friday would be the perfect time to stage a short-covering rally, for example--but only suggesting that this has been important resistance over the past, and you need to plan your trades and/or exits accordingly.

Jane Fox : 11/23/2007 11:46:32 AM

From a purely technical point of view the double top this market (crude) made Wednesday should mean lower prices but unfortunately this is one market that you have to consider fundamentals. Link

Keene Little : 11/23/2007 11:45:03 AM

SPX has been able to marginally climb above its downtrend line but on light volume we're not exactly getting confirmation of a bullish breakout. The DOW is working its way higher towards its downtrend line, now near 12944, and the RUT is working its way higher towards potential resistance at 753. In the meantime, I was looking over some monthly charts and it's hard to feel anything but bearish when you look at the DOW: . We could be due a bounce (maybe) but this chart tells me we've clearly topped out. Link

Jane Fox : 11/23/2007 11:44:43 AM

I added to my long Gold position and so far it is doing quite well. Link

Jeff Bailey : 11/23/2007 11:41:16 AM


Stalwarts Back In Favor As Credit Strains Deepen

DJ- Rather than issuing fancy structured debt products to raise financing to support their business activities, banks have been issuing plain staid certificates of deposits, short-term debt instruments that are guaranteed by the federal government.

Jeff Bailey : 11/23/2007 11:38:40 AM


DJ- Federal appeals court upholds $1 billion punitive-damage award against members of Turkey's Uzan family in a case in which Motorola alleged massive fraud regarding loans to Telsim Mobil Telekomunikasyon Hizmetleri AS, a Turkish cellphone operator.

MOT $15.64 +2.02% ...

Jeff Bailey : 11/23/2007 11:37:05 AM


DJ- Euro is fundamentally overvalued against the dollar, but market volatility is likely to persist, an Ifo Institute economist says, adding current trends on foreign exchange markets are likely to continue for a while.

Jeff Bailey : 11/23/2007 11:36:11 AM

Not seeing "falling crude oil prices at this point.

Jeff Bailey : 11/23/2007 11:35:21 AM


DJ- AMR and Mesa Air pace an early advance in the airline sector, with falling crude-oil prices and the prospect of further industry consolidation helping to drive the rally.

AMR $20.79 +3.89% ...

MESA $3.59 +7.16% ...

USO $76.93 +0.64% ...

Jeff Bailey : 11/23/2007 11:32:54 AM


DJ- Option One Mortgage amends a financing agreement with lender Greenwich Capital, raising the amount of funding available to $750 million from $400 million.

HRB $19.10 +0.52% ...

Jeff Bailey : 11/23/2007 11:31:34 AM


DJ- Broadcom says a federal judge upheld an earlier decision finding that Qualcomm infringed on three Broadcom patents, but Broadcom also said the judge overturned a decision to double damages in the case.

BRCM $27.57 +1.58% ...

Jeff Bailey : 11/23/2007 11:30:39 AM


DJ- In first sign of relief for troubled bond-insurance industry, financial guarantor CIFG Holding will receive $1.5 billion capital injection from controlling shareholders of its French parent so it can preserve its imperiled triple-A credit rating.

Jeff Bailey : 11/23/2007 11:29:25 AM


DJ- Shoppers, shrug off a spate of lead-tainted toy recalls and higher prices for food and gas, jamming stores before dawn to grab discounted TVs, toys and clothing for the official start of the holiday season, expected to be the weakest retail showing in five years.

RLX.X $412.62 +1.70% Link ...

Jeff Bailey : 11/23/2007 11:17:23 AM

TRIN 0.58

NYSE A/D 2,457:610

NYSE NH/NL 17/122 ... DAILY Ratio 12.2%

Jeff Bailey : 11/23/2007 11:08:15 AM

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

Linda Piazza : 11/23/2007 11:07:47 AM

The TRAN still climbs, having just reached another new high of the day. That's on the side of the bulls. Resistance at 4463.47-4474.34 still looms ahead, with those looking as if they might be significant resistance on 15-minute closes. The candles since the first one of the day have been small-bodied ones that aren't indicative of a lot of strength. There's not as yet a lot of proof that the TRAN will surge through that resistance. So, altogether, the TRAN is at least corroborating SPX, OEX and Dow gains, but not yet showing evidence that it or those other indices are more likely to surge through next resistance than to pull back from it.

Jeff Bailey : 11/23/2007 11:02:39 AM

SPX Option Montage with OI as of 11/21/07 Close at this Link

Keene Little : 11/23/2007 11:02:01 AM

SPX is now tagging its downtrend line from Nov 14th.

Keene Little : 11/23/2007 10:59:04 AM

There are a couple of parallel down-channels for the RUT but after breaking below the one from the October high a retest of it would occur at the same 753 level I cited in my last post. As shown with the dark red wave count, that could set up a strong 3rd wave down. I'm wondering if it'll get parked there for today's close. Link

Keene Little : 11/23/2007 10:52:45 AM

The RUT is looking a little stronger than the others when measured by its rise above Friday's high and breaking its downtrend line from Nov 14th. But its bounce pattern is not exactly bullish yet and instead looks more like just a correction to its decline. It would have two equal legs up from Friday's low at 753 so if you're trading the RUT keep an eye on that level to see if a rally to that level fails and sets up another shorting opportunity.

Jeff Bailey : 11/23/2007 10:52:04 AM

SPY Option Dec. Option Montage with OI as of 11/21/07 Close at this Link

Linda Piazza : 11/23/2007 10:49:06 AM

I'm watching the TRAN, one of the indices I watch as sort of an indicator of underlying strength or weakness, consolidating just beneath next resistance and just above the neckline of a confirmed inverse H&S on its 15-minute chart. However, when I look at the USDJPY, it's not doing anything so potentially bullish. It's at 107.86 as I type, just trending sideways.

Jane Fox : 11/23/2007 10:26:18 AM

Same story for the DOW but this has an added bonus of a MACD bullish divergence building. Link

Jane Fox : 11/23/2007 10:25:02 AM

This would be a very good spot to start the end of year rally. The head and shoulders pattern has mostly played out and it think another revisit to 1490 is possible. Then we will see who is the strongest, the bulls or the bears. Link

Keene Little : 11/23/2007 10:20:19 AM

SPX will hit its downtrend line from Nov 14th at 1434. The DOW's is further up and would essentially be a retest of Friday's high near 12964.

Jane Fox : 11/23/2007 10:19:49 AM

VIX is making new daily lows as the S&P futures are making new daily highs so these are back in sync.

Jane Fox : 11/23/2007 10:19:07 AM

AD line is a bullish +1602

Linda Piazza : 11/23/2007 10:14:14 AM

No repos have been announced today, so that leaves a net drain of $15.000 billion.

Linda Piazza : 11/23/2007 10:13:24 AM

For you OEX traders, the OEX tests resistance near 669 on 15-minute closes, with higher and perhaps more significant resistance at 671.41-672.68 on 15-minute closes and than at 677.21.

Linda Piazza : 11/23/2007 10:09:37 AM

The SPX is currently testing Keltner resistance near 1430 on 15-minute closes, with further and perhaps more important resistance at 1439 and then 1446.62 on 15-minute closes. The SPX hasn't closed a 15-minute period above the line now at 1439 since about midday last Thursday.

Linda Piazza : 11/23/2007 10:08:17 AM

So far, the TRAN is holding up near the day's high, but further resistance is layered up to about 4477 on 15-minute closes. The TRAN is at 4440.30 as I type.

Linda Piazza : 11/23/2007 9:53:49 AM

The TRAN has indeed confirmed its inverse or reverse H&S. Now those hoping for equity gains on the SPX, OEX and Dow can watch, hoping that the TRAN doesn't stall and reverse and instead gains strongly. The Keltner setup doesn't make further gains look easy, to say the least, so bulls would need to gather some strength to push through resistance.

Remember as I'm making these comments that although I think we could be due soon again for another relief bounce, maybe one that will eventually take the SPX up toward 1446-1452, I still haven't seen evidence that conservative traders should be doing anything other than watching for rollover potential after any such relief bounce tamps out. After a relief bounce is underway, maybe we'll see something that leads to a different conclusions, but that's still how I feel now.

Keene Little : 11/23/2007 9:50:34 AM

My wireless internet connection is very spotty for some reason this morning--in and out a lot and mostly out. I have to grab the brief moments it's in and see what the market is doing. My commentary could likewise be spotty. Techs are not holding up as well after the open but so far the DOW and SPX futures are holding onto their overnight gains. I wouldn't be surprised to see the market stay stuck between Friday afternoon's price range.

Jane Fox : 11/23/2007 9:49:50 AM

McMillan's weekly commentary - Stock prices continue to behave bearishly. Rallies can't gain footholds, while declines are deeper and more long-lasting than seem possible. As a result, there is an oversold condition in this market one which can spur sharp, but short-lived rallies at any time -- but a true intermediate term buy signal is not at hand, for none of our indicators have turned bullish.

Let's begin with the chart of $SPX itself. It turned bearish when the index fell through what had been support at 1490. That was the last piece of the bearish puzzle, and the market has been under extreme pressure ever since. Any rallies towards 1490 can be sold, as that level now represents resistance. Meanwhile, where is support? It was at 1430-1440, but that level gave way and it seems likely now that the averages will test 1410 (the August closing lows) and perhaps 1370 which is multiple support from both August and March. Should that give way, then a true bear market would be underway.

The equity-only put-call ratios (Figures 2 and 3) remain strongly on sell signals as they continue to climb on their charts. They are not "oversold" yet, in our opinion.

Market breadth has been abysmal, but breadth can be considered an indicator that is deeply oversold at the current time.

Volatility indices ($VIX and $VXO) have not risen as sharply as you might expect. As a result, at first glance, it appears that there is a spike peak buy signal on the $VIX chart (Figure 4). This is countered, however, by the fact that $VIX continues to be in a rising trend, which is bearish. As long as $VIX remains above its 20-day moving average, we are reluctant to classify it as a bullish.

So none of our major indicators is bullish. In reality, only breadth is deeply oversold. The others have room to run before they reach oversold levels. So, while it may be tempting to try to catch oversold rallies as they occur, don't overstay your welcome, for they are sure to be short-lived until some real buy signals emerge.

Linda Piazza : 11/23/2007 9:40:35 AM

Although it's hard to discover an analogous formation on the SPX, the TRAN has a reasonably well formed potential inverse H&S on its 15-minute chart. The neckline would be at about 4425.60, but then I show potentially strong Keltner resistance just above that. What that tells me is to be watchful of the possibility of a confirmation of the inverse H&S and then to have the TRAN reverse again unless bulls are strong and prices surge through resistance after clearing the neckline. It doesn't promise that a confirmation and then reversal will happen, as any such strong surge could plow through resistance, but since the TRAN sometimes gives us clues about the SPX, OEX, and Dow, it might be helpful to watch whether any such scenario plays out. The TRAN is at 4420.47 as I type, approaching that neckline.

Linda Piazza : 11/23/2007 9:31:01 AM

The USDJPY slipped even lower since U.S. equity markets closed Wednesday. It's at 107.89 as I type, off the 107.62 low reached just after midnight, but well below the 108.51 spike high reached near the time European trading opened.

Jane Fox : 11/23/2007 9:30:14 AM

Thank you for that reminder Linda - that means we can hit the stores in the afternoon. LOL

Jane Fox : 11/23/2007 9:29:26 AM

The overnight picture is not very clear due to the fact that the American Index futures traded yesterday so you can use yesterday's high as the previous day high or Wednesday's. I have used yesterday's.

In any case the pattern I see is higher highs and lows except for the DOW futures (YM). Link

Linda Piazza : 11/23/2007 9:28:59 AM

$15.000 billion in repos mature today. I'll check back later and see if any repos are announced during the regular time period in about 15 minutes.

Linda Piazza : 11/23/2007 9:28:03 AM

I wanted to remind those subscribers who make it to their trading screens today, tottering there after turkey- and carb-induced sleepiness, that equity markets close at 1:00 pm ET today. Extending hours trading extends to 4:00 ET. Various other markets--grains, currencies, interest rates, futures contracts--have different trading hours today, depending on the exchange on which they're traded, so check with the applicable exchange or your broker for information.

Keene Little : 11/23/2007 9:21:48 AM

Equity futures retraced roughly 2/3 of Friday afternoon's steep decline before pulling back slightly this morning. We'll have a bullish start to this morning's trading but it really is anyone's guess as to where this is headed next. Certainly as a start if the bulls can rally this above Friday afternoon's highs they'll be able to break the string of lower highs but any bounce today that then gets sold into and drops to a new low could then turn into strong selling. It'll be a light volume day and therefore subject to some whipsaw movements.

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