Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jeff Bailey : 12/17/2007 11:15:33 PM

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

CLOSED out the 1/4 short position in CDE at the offer of $4.13.

Monitoring the RIO-XZ closely.

Noting RIO Jan $27.50 Puts (RIO-MY) $0.75 x $0.85.
RIO Jan $28.75 (RIO-MT) $1.10 x $1.20.

Keene Little : 12/17/2007 10:22:53 PM

Tuesday's pivot tables: Link and Link

SPX comment posted at the end of the day on Monday:
This market has had a tendency to make a big move in the overnight futures that forces cash traders to do some catching up after the open. Will we get a big gap up tomorrow [futures are up this evening]? This is opex week and anything goes. SPX is now approaching a trend line along the previous two lows but is an untested trend line and therefore I have no idea if it will offer support (at 1443). Two equal legs down for a potential a-b-c pullback from last week's high is at 1435. And then there is the uptrend line from March 2003 (that supported the August and November declines) at 1419. Link

The DOW shows a similar down-channel. Downside potential to the bottom of the channel is near 12950 but there are a couple of potential Fib support levels before that--the 62% retracement of the Nov-Dec rally is at 13127 and then two equal legs down is at 13072. Link

The bullish price depiction shows a bounce off the 13072 level and starting a new rally from there. If we get a bounce first thing in the morning up to the downtrend line near 13290 it will be a good test for the bulls. A break of the downtrend line would be potentially very bullish. Otherwise, as shown in pink, we could see renewed selling from there.

The COMP also shows the same parallel down-channel and interestingly price stopped very close to the level where it had two equal legs down from Dec 12th (at 2576). As shown with the bullish wave count and depiction, a break of the downtrend line from here would be bullish. But we're obviously in a down trend at the moment so stick with the trend until it breaks and look for resistance at the downtrend line if it bounces to there on Tuesday. Link

OI Technical Staff : 12/17/2007 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The Market Monitor has been archived.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 : 12/17/2007 8:22:15 PM

Bull Correction! ... Today's action has Dorsey/Wright's S&P 500 Bullish % ($BPSPX) reversing back lower to "bull correction" from "bull confirmed" at 48% (47.39% actual).

Jeff Bailey : 12/17/2007 5:31:39 PM

Venezuela: Ponders Relaxing Some Price Controls
Sees Deep Shortages In Some Food Products

Jeff Bailey : 12/17/2007 5:05:26 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 12/17/2007 4:54:14 PM

Closing Internals found at this Link

Keene Little : 12/17/2007 4:12:21 PM

This market has had a tendency to make a big move in the overnight futures that forces cash traders to do some catching up after the open. Will we get a big gap up tomorrow? This is opex week and anything goes. SPX is now approaching a trend line along the previous two lows but is an untested trend line and therefore I have no idea if it will offer support (at 1443). Two equal legs down for a potential a-b-c pullback from last week's high is at 1435. And then there is the uptrend line from March 2003 (that supported the August and November declines) at 1419. Link

These are the potential support levels that I currently see. The chart looks bearish but stay on your toes here and don't assume it's going to continue lower. We'll let the market tell us what's next.

Jane Fox : 12/17/2007 4:00:52 PM

It is the bottom of the seventh so the bulls better step up to the plate or the bears are going to win this one. Link

Jane Fox : 12/17/2007 3:59:29 PM

Ok I guess 50% retracement didn't hold up now we are wondering if 61.80% retracement at 1450 will hold up as support. Link

Keene Little : 12/17/2007 3:53:04 PM

Each bounce is getting sold hard and obviously that pattern will need to change if the bulls hope to avoid another big down day tomorrow.

Jeff Bailey : 12/17/2007 3:37:43 PM

Swing trade call option alert! for one (1) of the QQQQ Jan $50 Calls (QQQ-AX) at the offer of $1.69. No stop for now, target $55.00 in the underlying.

QQQQ $49.95 -2.00% ...

VXN.X 28.28 +9.14%

Keene Little : 12/17/2007 3:37:35 PM

There are lots of bullish divergences on the charts. It doesn't guarantee a bounce but it sure makes me wonder what surprise attack the bulls have up their sleeves. A lottery play with a couple of cheap December call options might work nicely. Just remember it's an all-or-nothing play.

Linda Piazza : 12/17/2007 3:34:47 PM

Decide soon if you want to stay in your option position overnight. MOC (Market-on-close) orders will be coming in soon. We don't know whether some of that $9.500 billion was put to work today on a bond auction, as was suggested as one possibility, or whether there's still some left to be used buying equities today, or if it's for another purpose altogether. If you don't intend to stay in your positions overnight, however, begin cinching up your stops so that a bounce that gets a little too big will take you out, still near the bottom and with a lot of your profit left intact.

Linda Piazza : 12/17/2007 3:22:28 PM

The SPX's 15-minute 9-ema is now at 1451.46; the OEX's, at 679.61. Except for one 15-minute period today, those 9-ema's have held as resistance on 15-minute closes all day.

Keene Little : 12/17/2007 3:16:04 PM

This market will always have us second guessing what it's up to (at least that's what we need to constantly be trying to figure out) and I remain a little suspicious of today's move down because of opex week. I can't help but feel "they" are setting a bear trap in order to provide the fuel needed for a big rally into the end of opex week. Keep pulling your stops down to previous bounce highs and follow this lower if that's where it's headed. Shorts need to be in protective mode now.

Jane Fox : 12/17/2007 2:57:32 PM

Of course you have to consider the US$ but Crude does not trade in unison to the $ as much as Gold does.

Keene Little : 12/17/2007 2:57:25 PM

The important level for the bulls remains the Thursday/Friday highs since any rally back above that high would leave the move down from Nov 11th (the FOMC high) as a corrective 3-wave pullback. For SPX that's back up at 1489. In the meantime I continue to like the downside and the lack of a bounce here, if it doesn't get turned around quickly, could mean a selloff into the close today and through tomorrow: Link

Linda Piazza : 12/17/2007 2:57:09 PM

The SPX's 15-minute 9-ema did hold as resistance on a 15-minute close on that last little bump up, so I guess it is still serving as a decent benchmark for whether the downtrend continues.

Jane Fox : 12/17/2007 2:56:03 PM

This may be a very good spot to try a long position in Crude. I use the ETF USO which is an ETF of Crude futures and not stocks so is as close to a pure Crude play as you can get without trading the futures. Link

Keene Little : 12/17/2007 2:47:03 PM

The bounce still looks corrective so keep your stop tight if long off the low (new daily low would have me out).

Linda Piazza : 12/17/2007 2:44:33 PM

Mark wrote, bringing up something that hadn't occurred to me. He asked if "this morning's $9.5 billion liquidity injection could in any way be related to today's $20 bilion special auction." Good point, Mark. I don't know the answer. Does anyone else have any input?

Jeff Bailey : 12/17/2007 2:38:39 PM

iShares Silver Trust (SLV) $138.00 +0.44% ...

Jeff Bailey : 12/17/2007 2:36:50 PM

Swing trade short cover alert! ... for the 1/4 position in shares of Coeur D' Alene Mines (CDE) at the offer of $4.13.

Keene Little : 12/17/2007 2:35:31 PM

How about them (bad) apples? UBS's upgrade this morning hasn't been too helpful to AAPL's stock price yet. Today's break below 185.77 has confirmed the bearish wave count that calls for lower. The key level for the bulls is at 193.20, Friday's high. Back above that level would leave the pullback from the high as just an A-B-C pullback and would portend higher highs for the stock. So that's where the stop belongs on a short play and it will stay there until I see an impulsive decline in the stock. Link

Linda Piazza : 12/17/2007 2:32:11 PM

Except for one 15-minute period, all SPX 15-minute closes have been beneath the 15-minute 9-ema, with that at 1545.79 currently. Despite that, it doesn't look like as good a benchmark as it usually is, as there just haven't been as many opens, closes, highs or low along that 9-ema as there sometimes are.

Keene Little : 12/17/2007 2:19:49 PM

This could be setting up a scalp opportunity on the long side. Just be careful about trying to catch falling knives here.

Keene Little : 12/17/2007 2:16:58 PM

The pattern for the techs looks like it needs a minor new low to finish the leg down from 1:00 PM and that should then finish the leg down from Friday morning and set up a larger upside correction (a 38%-62% kind of retracement of the 2-day decline).

Jeff Bailey : 12/17/2007 2:05:46 PM

Treasury's Paulson: Applauds Citigroup's SIV Decision
Still Optimistic About Super SIV
Supports Temporary Increase Of GSE Loan Limit
Loan-Limit Rise Must Accompany Broad GSE Reform
Mtge Plan's Goal Not To Freeze All Interest Rates
No 'Silver Bullet' For Credit Market Problems

Keene Little : 12/17/2007 2:02:07 PM

This could of course continue selling off but the bullish divergences warn not to get complacent if you're short. Watch out for a potential 2:00 turn here.

Jeff Bailey : 12/17/2007 2:00:23 PM

US NAHB Dec. Housing Index 19 Vs. 19 In Nov.

Linda Piazza : 12/17/2007 1:55:41 PM

There's nothing for bears to do now but just follow the SPX lower with their stops an account-appropriate level above the SPX's level. What's account-appropriate will depend on whether you've been following the SPX lower since the afternoon of the Fed meeting or since about 10:00 this morning, and whether you've got 1 put contract or 50. To some degree, it would matter whether you had deep-in-the-money contracts or OTM ones, and it most certainly matters whether you're in December contracts or longer-term ones. If you have OTM December contracts, for example, and you entered a trade at about 10:00, when the SPX was around 1461 or so, you just don't have as much wiggle room, as you don't want to let a bounce turn your profitable trade into a losing one, especially if the SPX were to start a bigger bounce that carried through the close of opex week.

Keene Little : 12/17/2007 1:51:47 PM

In the potential 5-wave move down for SPX from the Thursday high, the 5th wave would equal the 1st wave at 1450.78, close to the 1451 62% retracement so tighten up your stops again if still short.

Keene Little : 12/17/2007 1:49:46 PM

A 62% retracement of the rally off the November low for SPX is at 1451 so watch for potential support there.

Jeff Bailey : 12/17/2007 1:35:33 PM

01:00 Internals found at this Link

Keene Little : 12/17/2007 1:34:34 PM

The last drop had the DOW breaking its Dec 4th low so the 4 indices I watch have now broken and confirmed it for each other. It doesn't preclude a bigger bounce coming (especially if this afternoon's leg down is finishing a 5-wave move from Friday in which case a bigger bounce will be next) but the pattern is clearly bearish now.

Linda Piazza : 12/17/2007 1:24:14 PM

The SPX did reach toward the top of the channel after my 12:26:58 post, but failed in its efforts,with that top channel line dropping anyway. Now there's a new low for the day. The downtrend has continued. There's tentative bullish price/RSI divergence as the SPX thrusts lower. That's not proof of anything other than that bears need to keep their profit-protecting plans updated, just in case. There's also potential Keltner-style bullish divergence (so far, no breakdown status this time on this thrust lower, as there was this morning) on the 15-minute chart. Again, that's no proof of anything. Taken alone, it's not a signal that a bounce will immediately emerge: it's just a signal to prepare just-in-case plans if in bearish positions.

Keene Little : 12/17/2007 1:21:06 PM

The small consolidation and break lower now is bearish. Just no other way to view it.

Keene Little : 12/17/2007 1:15:35 PM

The bounce fell short of two equal legs up and now is dropping back to the lows. It'll either continue heading south from here or stay trapped in a sideways consolidation for the rest of the day. Either way it's not bullish.

Keene Little : 12/17/2007 1:02:56 PM

Watch for possible resistance where the bounce off this morning's low would have two equal legs up (DOW 13286 and SPX 1462.27).

Jane Fox : 12/17/2007 12:53:10 PM

SPX has traded past 1460 but markets never to do just as you expect so we are still OK and the bulls still have the ball. Link

Keene Little : 12/17/2007 12:46:49 PM

I'm beginning to wonder if we're going to get a sideways consolidation today. That would be a bearish continuation pattern but perhaps not until tomorrow. There's nothing particularly bullish about the current bounce off the lows but there are enough bullish divergences to suggest we could at least see the short term oversold conditions get worked if in time if not price.

Jane Fox : 12/17/2007 12:44:00 PM

Based on this chart I have closed my GLD position. :( Link

Jeff Bailey : 12/17/2007 12:32:22 PM

Juniper Networks (JNPR) $32.19 -2.77% ...

Jeff Bailey : 12/17/2007 12:31:54 PM

Corning (GLW) $23.70 -2.02% ...

Jeff Bailey : 12/17/2007 12:31:35 PM

Cisco Systems (CSCO) $28.29 -1.25% ...

Jeff Bailey : 12/17/2007 12:31:13 PM

Networking Index (NWX.X) 261.07 -1.30% ...

Jeff Bailey : 12/17/2007 12:30:42 PM

QWEST CEO SEES '08 CAPEX $1.8B ON NETWORK UPGRADE

DJ- Qwest Communications International expects $1.8 billion in capital spending next year, according to its CEO Muller. He says one priority for the firm is to upgrade its network, with a penetration rate for fiber-optic lines of 40% by 2011.

Q $6.87 -1.99% ...

Jeff Bailey : 12/17/2007 12:29:31 PM

US GOVERNMENT REVENUE UP 7.6% IN 2007

DJ- Government says revenues increased 7.6% in 2007 to $2.6 trillion, with net operating costs down about $175 billion from last year, but entitlement spending growth remains a looming problem.

Jeff Bailey : 12/17/2007 12:28:20 PM

AMBAC BOOSTED BY MOODY'S REPORT; MBIA TAKES HIT

DJ- Investors pay heed to Moody's Investors Service's affirmations and warnings on several bond insurers, with Ambac Financial Group's credit default swaps getting a small boost, while its rival MBIA's CDS worsen.

ABK $26.18 +14.77% ...

MBI $28.50 +3.26% ...

Linda Piazza : 12/17/2007 12:26:58 PM

The SPX has so far been finding resistance on 15-minute closes at its descending 9-ema. That average is at 1460.37 currently. However, it's normal that during the lunchtime lull, that average might flatten and the SPX might cross it to the other side of the smallest Keltner channel. The other side is now located at about 1464.20.

Jeff Bailey : 12/17/2007 12:26:35 PM

FED TO PROPOSE NEW SUBPRIME MORTGAGE CURBS

DJ- Federal Reserve is slated tomorrow to propose broad new curbs on subprime loans, potentially limiting the kinds of mortgages that can be issued and the types of items borrowers will need in order to obtain a loan.

Jeff Bailey : 12/17/2007 12:25:23 PM

Oil Service HOLDRs (OIH) $177.89 -1.96% ...

Jeff Bailey : 12/17/2007 12:24:51 PM

NATIONAL OILWELL TO BUY GRANT PRIDECO FOR $7.5B

DJ- National Oilwell Varco agrees to purchase oil-equipment company Grant Prideco in a cash-and-stock deal worth about $7.5 billion, the latest deal in the consolidating oil sector. Deal values Grant Prideco's shares at $58, a 22% premium to Friday's closing price.

NOV $70.45 -8.94% ...

GRP $53.75 +13.25% ...

Jeff Bailey : 12/17/2007 12:22:34 PM

US To Sell $20.0 Billion 4-week Bills Tuesday (Vs. $23.0 Billion)

Jeff Bailey : 12/17/2007 12:21:32 PM

Wachovia (WB) $39.96 +2.35% ...

Jeff Bailey : 12/17/2007 12:21:06 PM

National City Sees $700M 4Q Loan-Loss Provision

NCC $17.18 +3.36% ...

Jeff Bailey : 12/17/2007 12:20:16 PM

Bank of Canada Injects C$250M Into Financial System

Keene Little : 12/17/2007 12:09:55 PM

With both the Trannies and banks staying in the green today we have to wonder how bearish things could get today. This is another reason I think pulling stops down tight is a good idea. Take at least some money off the table and we'll watch to see what kind of bounce sets up.

Linda Piazza : 12/17/2007 12:06:47 PM

The USDJPY is now at 113.19. It has not violated the overnight low of 112.81.

Keene Little : 12/17/2007 11:56:00 AM

We've got some bullish divergences starting to appear at the new daily lows (or a test of the lows) and with the potential completion of the leg down from Friday it's becoming a higher probablity that we're going to get a bigger bounce back up. Shorter term traders should cinch their stops down tighter now.

Jeff Bailey : 12/17/2007 11:51:56 AM

Swing trade put lower target alert! ... for the Simon Property Group SPG Jan $85 Put (SPG-MQ) to $86.20 in the underlying.

SPG $89.64 -2.75% ...

SPG-MQ currently $2.65 x $2.90.

Linda Piazza : 12/17/2007 11:41:04 AM

I don't need to tell anyone that a drop through the previous low of the day, at 1456.06 on the SPX, would be a bearish thing to have happen. Short-term Keltner support, however, is at 1457.39 on 15-minute closes, with daily Keltner support in the 1456-1457 zone on daily closes. We're still seeing an iffy condition in the SPX, one in which it could either cascade lower or something could convince bulls that the support is holding and they could commence buying.

Keene Little : 12/17/2007 11:39:19 AM

The techs are looking weaker than the others this morning but the pattern of its decline from Friday morning also supports the possibility that it's close to putting in a short term bottom (could be completing a 5th wave down for the decline from Friday morning). If true then it could be close to the point where it will bounce back up and retrace some Fib portion of that decline. So pull your stops down a little closer now if you're short from Friday and don't want to let a bigger bounce move against you (but let the market tell you when the decline is done for now).

Keene Little : 12/17/2007 11:25:54 AM

The techs are leading to the downside now with new daily lows for NQ (QCharts is not printing NDX prices for some reason).

Jane Fox : 12/17/2007 11:10:44 AM

The VIX is continuing to fall telling me the bulls have ball but they don't have field position because the AD line is still bearish at -963. when the VIX and the AD line are not in sync then the markets are choppy. So even though we have a bullish bias it will be hard to stay long unless you have wider stops than normal. If you are not willing to widen your stops then you may want to just step aside for now.

Keene Little : 12/17/2007 11:10:17 AM

The pattern of this morning's bounce looks corrective, especially on the techs. The 2-min charts are showing bearish divergences against the marginal new highs being made by the DOW and SPX. I'd look to short it.

Linda Piazza : 12/17/2007 11:03:05 AM

The SPX's 9-ema is now at 1463.45 on 15-minute closes.

This point in time and this SPX level constitute an iffy condition for the SPX. It reached down into that 1456-1457 Keltner target on the daily chart, the one I mentioned several times last week. Each time I mentioned it, I also mentioned that it's potential support on a daily close, and that long-term bears needed their profit-protecting plans in place if that zone should be tested.

So, there's potential for a bounce here but certainly no guarantee of one if the SPX is in a cascading lower mode. Whatever profit-protecting plan you put in place, it's time to follow it.

Would I advise jumping into a bullish play, then? Nope, not unless you're an experienced scalper whose own studies suggest it's time to do so. According to several studies I follow, including the corrective fan principle discussed in this weekend's Trader's Corner, we're likely still in a sell-the-rallies environment on an intermediate and perhaps long-term basis, with a built-in expectation that we'll perhaps see some sharp relief rallies come along now and then. Perhaps we're going to see one of those now-and-then relief rallies start now that the daily Keltner target/support has been tested. Perhaps not. One thing is clear: you don't want to be caught and hang on too long on the wrong side of any trade in this environment. If you don't trust yourself to get out when you should, don't trade.

Jeff Bailey : 12/17/2007 10:57:19 AM

UBS Raises Price Target, Estimates on Apple ... MarketWatch Story Link

AAPL $188.91 -0.77% ...

Keene Little : 12/17/2007 10:50:27 AM

The buying spikes we're seeing show somebody's trying to jam the shorts but so far they're not getting follow through. It's an example of how difficult it is to stay short if you don't keep your stop far enough away from price action to avoid the spikes. The consequence of course is that a real buying surge that finally hits your stop will mean you'll give back a lot of profit. Get used to it as this is likely how the market will behave in a bear market.

If you're short from Friday and wondering where a good place is for your stop there are two choices that I like. The first is the low just before 3:20 PM on Friday but the better one is the high near 3:35 PM. A break of that upper level would be confirmation of a break of the downtrend line from Friday's high.

For a new bearish entry, if we get gap closure then that would be potentially a good level to short and then have your stop above the levels mentioned.

Jeff Bailey : 12/17/2007 10:46:32 AM

Ingersoll-Rand Buys Trane for $10.1 Billion ... AP Story Link

IR $46.56 -5.34% ...

TT $46.15 +24% ...

Jeff Bailey : 12/17/2007 10:43:25 AM

Altria (MO) $76.52 -0.39% ...

Jeff Bailey : 12/17/2007 10:42:48 AM

Loews To Spinn Off Tobacco Unit ... AP Story Link

LTR $48.27 +3.14% ...

Jeff Bailey : 12/17/2007 10:37:50 AM

First Ship Loaded At Vale Port After Incident ... Reuters Story Link

Companhia Vale Do Rio Doce (RIO) $31.68 -3.70% ...

Jane Fox : 12/17/2007 10:37:26 AM

Ok this is interesting. Look at how the VIX and the AD volume are moving in the same direction. Now you all know if the AD volume and VIX are in sync they should be moving in opposite directions so one of them is wrong (although I never think the VIX is wrong). So now you want to find something that will confirm which one is wrong and you need look no further than the AD ratio. Notice how the AD ratio was climbing and in sync with the VIX and not the AD volume. How cool is that??? Link

Jane Fox : 12/17/2007 10:29:01 AM

Looks like the VIX has served us well today. S&P futures are now testing daily highs.

Jeff Bailey : 12/17/2007 10:27:30 AM

Fitch Says Banks' SIV Moves "Positive" For Some

DJ- Fitch Ratings in a report Monday said recent actions banks have taken to support their structured investments vehicles, or SIVs, have "in several cases" been positive for investors with senior SIV exposure.

The ratings agency said actions taken to "deleverage" SIV portfolios are positive for senior investors despite shrinking SIV portfolio sizes and values.

Fitch is referring to moves like Citigroup Inc.'s (C) announcement last week that it would provide emergency support to its seven SIVs, moving $49 billion of the troubled investment vehicles' assets onto its balance sheet. The SIVs held assets worth $87 billion in August.

Many SIVs have come into trouble amid the liquidity crunch, in which debt investors have balked at buying short-term notes known as commercial paper that fund the vehicles.

Fitch noted the credit quality and composition of SIV portfolios has remained largely unchanged in the past month. It added, "Commercial paper issuance continues to be severely limited and SIVs have been deleveraging their portfolios and relying on alternative sources of funding."

Citigroup's action last week ignited controversy among analysts. Bear Stearns said the move was positive and should have little impact, while CIBC said the exposure would be a "toxic cocktail" for Citigroup's capital ratios.

Credit rating agency Moody's Investor Service said there would be "no negative rating impact," adding that it assumes Citigroup "will not take any losses due to the quality of its assets."

Fitch continues to rate its the three Citigroup SIVs it follows as AAA/F1+.

Keene Little : 12/17/2007 10:24:28 AM

The bulls are fighting hard here. The first resistance level is the bottom of this morning's gap (the post-9:30 high) and if that's breached then it's really not that much higher to close the gaps. ES is pushing marginally higher as I type. After that would be the downtrend lines from Friday's highs. Each level has the potential to push it back down.

Linda Piazza : 12/17/2007 10:19:46 AM

On the SPX's 15-minute chart, the breakdown level now at 1460.19, and the 9-ema is now at 1464.49, with bears hoping one of these holds on 15-minute closes.

For OEX traders, the OEX has so far mostly held onto the lower Keltner channel's support, now at 682.35, on 15-minute closes. It's not in breakdown mode on that chart. The 9-ema is just under 686, so bears would like to see 686 hold on 15-minute closes. If you're in a scalping play, that's probably more of a bounce than you want to endure before you know whether all's good or not, but that's unfortunately how the charts are set up.

Jane Fox : 12/17/2007 10:16:56 AM

VIX made a new daily lows but the S&P futures (ES) did not. That divergence is telling me we have made a bottom and there will be no further downside so bears should be taking their profits. Link

Keene Little : 12/17/2007 10:13:35 AM

AAPL update: with the drop below Friday's mid-day low its pattern is now also turning more bearish. I'm lowering my stop on the put play to 193.25, just above Friday's high. If AAPL rallies back above that level from here then the pullback from its high will look too much like a correction and I'd rather just step aside and reassess.

Linda Piazza : 12/17/2007 10:03:43 AM

A repo in the amount of $9.500 billion has been announced. Since none matured today, that's a total add, and a big one. It's the biggest one since Nov 13. November 13 was a day that saw a big SPX gain, a huge one (a warning to bears today to be careful), but was ultimately just an interruption in the downtrend that had begun in October. That downtrend resumed the next day.

That's just anecdotal evidence, so is not proof of anything, so just take it for what it's worth.

Linda Piazza : 12/17/2007 9:59:02 AM

The SPX is now in breakdown mode on the 15-minute chart. With a daily Keltner target and potential support being approached, bears want to see continued signs of weakness. At this point, bears would prefer for any bounces to get stopped at the breakdown point, currently at 1461.35 on 15-minute closes. Barring that, they'd like to see bounces stopped at 1466.19-1468.09 on 15-minute closes.

As I suggested earlier, unless there's going to be a cascading-lower type day, which is certainly possible, then the SPX is well into overdone levels on that 15-minute chart and approaches its target on the daily one. This signals both that bearish momentum is strong and, conversely, that you need to have a plan in effect now to keep those profits protected. That plan might be as simple as taking a partial profit and locking it in or even just following the SPX lower with your stops.

Keene Little : 12/17/2007 9:50:33 AM

The RUT has joined SPX in breaking its Dec 4th low near 749.

Linda Piazza : 12/17/2007 9:49:44 AM

As I suggested most of last week, long-term bears need to have their profit-protecting plan in mind if the SPX should drop into that 1456-1457 region. Keltner charts suggest that this could be potential support on a daily close. No form of support or resistance--trendline, moving average, Bollinger band, etc.--ever works all the time, so I'm just suggesting that you formulate a plan but then let price guide your actions.

Keene Little : 12/17/2007 9:48:34 AM

The bulls are trying to hold SPX 1460 but if it fails here I would expect some stops to start getting hit.

Linda Piazza : 12/17/2007 9:47:17 AM

The USDJPY is now at 113.18. The trough between the two peaks on the values (Friday's and last night's) is at 112.81, so a drop through that level would be bearish. However, potential support exists near 112.60, too, with that being the 50% retracement of the decline off October's high.

For now, what you need to know is that the very short-term movement (down) is corroborative of this morning's downturn in U.S. equities, but that the longer-term outlook is cloudier.

Jane Fox : 12/17/2007 9:45:07 AM

My SPX scenario was a revisit to 1460 where it would find support and bounce to make a higher high. A close below 1460 would certainly have me worried that November lows may get a revisit. Link

Linda Piazza : 12/17/2007 9:42:36 AM

The SPX's 15-minute 9-ema is now at 1470.63 but is dropping swiftly. Bears would like to see a lower resistance line, now at 1466.50, hold on 15-minute closes, but if that doesn't, they'd like to see 1470.63 hold on 15-minute closes. The SPX dropped almost to its daily Keltner target, one that I mentioned several times last week as both a potential target and potential support on a daily close. That's in the 1456-1457 zone.

Jane Fox : 12/17/2007 9:41:49 AM

AD line is a bearish -1337.

Jane Fox : 12/17/2007 9:41:20 AM

US$ is quite bullish so I am looking for support at 76.00 to hold. This of course, as I have stated many times, has huge ramifications on my long Gold position. Link

Keene Little : 12/17/2007 9:38:35 AM

SPX has broken below 1460 which is its key level on the chart (the Dec 4th low). This negates the bullish wave count on its chart. The wave pattern could morph into something else if the move down takes on a corrective look to it but so far the pattern is bearish.

Linda Piazza : 12/17/2007 9:36:11 AM

Short-term Keltner setup for the SPX: The SPX has dropped all the way to the lower Keltner channel line, with that currently right at 1462 on a 15-minute closing basis. That support slants down, however, so it's weak. RSI is now way below 30. It this is going to be a cascading-lower type day, that's all well and fine, but if it's not, bears need to be aware that potential support has been reached at the open. My daily Keltner charts, as you might remember from my discussions last week, have an ultimate potential target in the 1456-1457 region, but not all such targets are reached. So, for now, I'd say there's vulnerability to the 1456-1457 region, where I'd certainly have profit-protecting plans in mind if I were in bearish positions, as I warned last week, but no promise yet that it will be reached, although if I keep typing, it might be while I'm typing.

Jane Fox : 12/17/2007 9:33:56 AM

Crude looks to be making a lower high. If $90.00 breaks there is a good chance the swing low made on December 6th will be tested again. Link

Keene Little : 12/17/2007 9:30:28 AM

Futures recovered some off their overnight lows but we're going to have a bearish open. One thing to keep in mind about today's gap down is the possibility that it won't get filled. If the bearish wave count is correct, which is calling for a continuation of a 3rd of a 3rd wave down from Thursday's high, then a gap down and continued selloff is a good possibility.

However, if the gap does get closed right away with an immediate rally this morning then the short term bullish possibility remains (a rally back up to Thursday's highs, shown in pink on last night's charts below). So both sides need to stay on their toes this morning.

Jane Fox : 12/17/2007 9:28:57 AM

Gold has not yet broken its support at $780.00. Link

Jane Fox : 12/17/2007 9:26:16 AM

All markets are trading below their respective overnight lows but seem to building reverse H&S so may be making a bottom. Link

Jane Fox : 12/17/2007 9:06:52 AM

WASHINGTON (MarketWatch) -- Growth in the factory sector in the New York region slowed in December, the New York Federal Reserve Bank reported Monday. The Empire State index fell to 10.3 in December from 27.4 in November. It's the lowest since May. Readings over zero indicate growth. The new orders index fell 10 points to 14.3, and the shipments index fell 11 points to 21.1.

Linda Piazza : 12/17/2007 9:06:35 AM

As you might remember, on Friday the action of the USDJPY was somewhat counter the action of the U.S. equities. This was a divergence from the typical pattern. I don't expect any normal congruence to be firmly in place each and every day, and I remain watchful for any shift in the inter-market relationship between the direction of the USDJPY and U.S. equities, but for now, this was showing divergence.

So, what's happened since? Last night, while the Nikkei 225 was plunging, the USDJPY was dropping. It dropped down to 112.81 at about 1:45-2:00 am EST this morning, which was still above a 50% retracement of the decline off the October high. It has since bounced, hitting 113.45 about 5:45 am, but this was while neither the primary markets in Japan nor in the U.S. were trading, so the bounce is a little suspect. The USDJPY is now at 113.35 as I type.

Conclusion? Japan's bourse and the USDJPY appeared to be more sensitive overnight to each others' movements than did our markets on Friday. That still gives us some idea that the normal USDJPY congruence to U.S. and Japanese markets might be in place. The current USDJPY rise off the overnight low could constitute a retest of Friday's high, so the direction of the currency pair this morning could be important. We could be setting up for either a breakout to a new high or a rollover from a near-term double-top level. I would still give this currency pair some weight in your planning of trades, about the same weight I'd give the direction of the advance/decline line or TRIN.

Giving it weight in your planning isn't the same as letting it guide your trades. Here's an example. Say you wake up one day and believe equities are approaching a turning point. Perhaps they're approaching either strong support or strong resistance, so you're watchful for that turn. You take a look at the advance/decline line. It's not going the same direction as equities. So, you decide your presumption that markets are at a turning point might be correct. You decide that if your preferred trading vehicle hits this price or that price, your presumption of a turn is correct. You plan a trade accordingly, and when the price is hit, you act.

You don't act solely on the information given by that advance/decline line, and neither should you due to the direction of the USDJPY. You do use it as one tool to inform your trading plan for the day.

Jane Fox : 12/17/2007 9:04:58 AM

WASHINGTON (MarketWatch) -- The U.S. current account deficit narrowed in the third quarter to $178.5 billion, or 5.1% of gross domestic product, the Commerce Department said Monday.

It's the smallest current account deficit as a share of the economy since the first quarter of 2004.

The decline in the deficit was accounted for by a decrease in the deficit in trade of goods and an increase in the surplus on income.

By comparison, the current account deficit totaled a revised $188.9 billion in the second quarter, or 5.5% of GDP

Linda Piazza : 12/17/2007 8:51:13 AM

No repos mature today, so if any are made, they will result in a net add to liquidity by the Federal Reserve. $53.000 billion are already sloshing through the system. These are repos made but not yet matured. This is above the current average of $47.825.

Market Monitor Archives