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OI Technical Staff : 12/21/2007 9:59:59 PM

The Market Monitor has been archived.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

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Jeff Bailey : 12/21/2007 9:33:59 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 12/21/2007 7:36:25 PM

New Math For FICO Credit Scores ... WSJ article Link

Jeff Bailey : 12/21/2007 7:19:48 PM

Alcoa To Sell Packaging, Consumer Ops To Rank Group

Jeff Bailey : 12/21/2007 7:12:36 PM

Could see some changes for the "Dow Dog" theory for 2008.

A surging stock price in shares of MRK (+35.67%) has its yield falling to 2.57%.

HD should be the replacement with a yield of 3.40%.

Jeff Bailey : 12/21/2007 6:39:20 PM

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

XLF-LG expired worthless.

CHA-LT expired worthless.

Can really see the negative impact the plunging VIX.X has had on the SPG-MQ even as stock is -1.42 from entry.

Jeff Bailey : 12/21/2007 6:39:15 PM

AAPL ... I sensed some bearish complacency on Tuesday in one of the STRONGEST Nasdaq stocks we follow. At such "oversold" levels in the NASDAQ NH/NL at that!

Jeff Bailey : 12/21/2007 5:59:49 PM

Thinking risk/reward from the NASDAQ 5-day NH/NL ratio, last couple of days was RISKING 4 to a sell signal at 14.

Daily ratio (see 05:33:43 table) has whipped higher to 42.

Jeff Bailey : 12/21/2007 5:55:57 PM

NASDAQ Comp. NH/NL Ratio chart at this Link

Jeff Bailey : 12/21/2007 5:38:16 PM

NYSE NH/NL ratio chart at this Link

"f"= is five day ratio.

X and O are 10-day.

Jeff Bailey : 12/21/2007 5:33:43 PM

NYSE and NASDAQ Internals since 10/25/07 at this Link

Jeff Bailey : 12/21/2007 5:26:15 PM

Santa Claus Rally ... Dates are last 5-days of the year, and first two in January. Santa's failure to show tends to precede bear markets, or times stocks could be purchased later in the year at much lower prices.

Jeff Bailey : 12/21/2007 5:22:29 PM

Excellent, excellent realization ... CNBC ... brokers and banks will "have to come to Jesus" with realization that they have to do something regarding subprime.

Some have, some have not.

Keene Little : 12/21/2007 5:15:17 PM

Speaking of new highs, even after today's strong rally the number of new lows beat out new highs 462 to 273. Even on the Nasdaq they were 185 new lows to 135 new highs. The NYSE, up +1.7% today, had 207 new lows to 100 new highs. What's wrong with this picture? It's certainly not the picture of health.

Jeff Bailey : 12/21/2007 5:06:56 PM

NASDAQ's 135 new highs; most since more recent 195 found on 10/29/07.

Jeff Bailey : 12/21/2007 4:36:59 PM

NYSE adjusted volume 2.3 billion shares.

Jeff Bailey : 12/21/2007 4:29:34 PM

SPY weekly interval chart from last year's expiration Link

Jeff Bailey : 12/21/2007 4:15:25 PM

SPY Alert! $148.35

Keene Little : 12/21/2007 4:15:19 PM

Oops, sorry, just noticed I left a green label 'C' at the top of the rally into next week and didn't want to confuse anyone. It should be just '1' and changed on this chart: Link

Keene Little : 12/21/2007 4:10:20 PM

Small change to that SPX 60-min chart to reflect the fact that I believe Monday will see at least a small pullback (maybe to 1480) before potentially heading a little higher (pink). Link

Jeff Bailey : 12/21/2007 4:09:32 PM

Wow! What a week for the small caps.

Jeff Bailey : 12/21/2007 4:04:00 PM

YM 13,537 ... 58-minutes. 58-minutes until close.

Keene Little : 12/21/2007 4:03:20 PM

SPX has Fib resistance at 1490 (and the fact that it's been tough support/resistance this year) to deal with if it makes it a little higher on Monday. Just above that is its downtrend line from October if I ignore the December high, currently just above 1493. Link

The bearish wave pattern says we're close to topping out and get ready for another decline. The bullish pattern says we'll only get a choppy pullback before breaking above resistance. It'll be the pullback/decline that provides the clues as to what to expect next. Until then it's just a guess.

Jeff Bailey : 12/21/2007 4:02:18 PM

DIA $134.32 +1.21% ... 14-minutes. 14-minutes until close.

Jeff Bailey : 12/21/2007 4:00:59 PM

SPY $148.25 +0.97% ... 15.5 minutes. 15.5 minutes until close.

Jeff Bailey : 12/21/2007 4:00:28 PM

QQQQ $51.85 +1.86% ... 1 minute, 1 minute until close.

Jeff Bailey : 12/21/2007 3:57:00 PM

Coeur D' Alene Completes Acquisitions ... Company Press Release (this morning) Link

Linda Piazza : 12/21/2007 3:53:53 PM

Some of you may be traveling this weekend and may be away from the markets next week. Safe traveling and happy holidays!

Jeff Bailey : 12/21/2007 3:48:59 PM

iShares Silver (SLV) $142.29 +0.98% ... (~$14.23 spot)

Jeff Bailey : 12/21/2007 3:47:58 PM

StreetTracks Gold (GLD) $80.00 +1.69% ... (~$800.00 spot)

Keene Little : 12/21/2007 3:42:36 PM

Mabye not. NQ just made a lower low in this leg up.

Keene Little : 12/21/2007 3:41:27 PM

Should get another squeeze higher.

Jane Fox : 12/21/2007 3:40:48 PM

Very good chance the SPX will close above 1470. Link

Jeff Bailey : 12/21/2007 3:40:05 PM

Into the final 30-minutes of trade ...

XLF-LG offered $0.01.

CHA-LT offered $0.05.

Jane Fox : 12/21/2007 3:39:41 PM

McMillan's weekly update - The market has managed to struggle its way to the traditionally bullish holiday season without a major collapse. However, it certainly hasn't had much strong bullish action. $SPX broke down below the 1465-1470 support level early this week and has not been able to climb back about there since. So that now represents resistance. There is minor support at this week's lows (1435), but the real support is at the 1410 level -- near the closing lows of both the August and November declines. As we have stated before, form a broader perspective, $SPX seems to be in a wide and volatile trading range between roughly 1410 and 1560.

Equity-only put-call ratios are clinging to recent buy signals. There were buy signals issued about two weeks ago, but now the ratios have started moving higher again. The standard ratio (Figure 2) is right on the verge of moving to new highs, which would negate that buy signal. The weighted ratio feinted higher, but then yesterday confirmed the buy signal by moving to a new December low. So, these important ratios are still on buy signals, but not decisively so.

Market breadth reached very oversold levels early this week one of the factors in Tuesday afternoon's strong reflex rally. If in the next couple of days advancing issues lead declining issues by a decent margin, breadth buy signals will be generated.

Volatility indices ($VIX and $VXO) have drifted lower this week, as option sellers have gotten aggressive. In one sense, $VIX is still in a downtrend that began in November, and that is bullish. However, the uptrend in $VIX that began in June (or October) is still intact as well, and that is bearish. So, depending on one's time horizon, he could interpret the trend of $VIX accordingly. For now, we'd have to rate $VIX as neutral.

From these indicators, we are assuming a cautious attitude about the market unless $SPX can close above 1470. If that happens, the $SPX chart will have a more positive slant to it, and it is likely that the breadth oscillators will have generated buy signals, joining the equity- only put-call ratios. However, lacking that close above 1470, we are still cautious.

Jeff Bailey : 12/21/2007 3:34:43 PM

Never know Keene! Will find out AAPL's new offerings in January. As noted here in MM, much buzz and anticipation!

Keene Little : 12/21/2007 3:32:27 PM

Not much of a pullback yet. That leaves open the possibility for another small pullback and then another push higher so it appears to be setting up for squeeze higher right into the close. That would set up a pullback on Monday morning but it might not be much.

Jeff Bailey : 12/21/2007 3:31:35 PM

SPY $148.19

Jeff Bailey : 12/21/2007 3:31:07 PM

BIX.X 274.70 +1.10% ... after being red.

Linda Piazza : 12/21/2007 3:29:13 PM

Butting the SPX up against a resistance level at the Friday close before a holiday presents bulls with a problem. I addressed this early this morning. See my 10:33:31 post. What are you going to do? What plan did you make? Factor in the possibility of consolidation Monday at this resistance or even a pullback from it. There's no guarantee that will happen, but choppy consolidation days often follow such gains.

Jeff Bailey : 12/21/2007 3:28:13 PM

10-year ($TNX.X) finished up 14.2 bp at 4.168% ...

Linda Piazza : 12/21/2007 3:26:21 PM

Some shorts are getting squeezed into the close. SPX is butting up against the daily 72-ema, an average that is often important for the SPX. Just recently, the average, then at a different level, was the intraday high on 10/22, the opening value on 11/02, the intraday high on 11/30 and the closing level on 12/13, for example.

The more closely watched 200-sma is at 1488.33.

Jeff Bailey : 12/21/2007 3:22:40 PM

PetroChina (PTR) ... here's how I would have my bar chart for those that use Fibonacci and "Wave" analysis. Link

I would have to believe based on observation and news from early November that much of PTR's trade above $190, while demand related, was largely due to anticipation of mainland China retail investors being able to invest Hong Kong listed shares.

Jane Fox : 12/21/2007 3:17:16 PM

Dateline WSJ - The banks orchestrating a bailout of troubled investment vehicles that were hit by the subprime mortgage crisis are throwing in the towel after struggling to raise money for the planned fund, according to people familiar with the matter.

At the behest of the Treasury Department, Bank of America Corp., Citigroup Inc. and J.P. Morgan Chase & Co. have been working since September to set up the fund, which would buy assets from so-called structured investment vehicles. SIVs have been battered by the credit crunch, with investors refusing to buy the short-term commercial paper that the funds' issue to buy higher-yielding assets, in particular securities backed by subprime mortgages.

Lack of interest has led the banks to drop the plan -- known as the Master-Enhanced Liquidity Conduit, or M-LEC. In many cases the banks, in particular Citigroup, that were supposed to sell assets to the fund have instead bitten the bullet and moved the assets onto their own balance sheets, alleviating a key rationale for the rescue fund.

Keene Little : 12/21/2007 3:12:55 PM

Actually Jeff, they're Macintosh. AAPL, Macs, right? Maybe they'll come up with an iApp(le) for some new application.

Keene Little : 12/21/2007 3:09:31 PM

It's holding up at the highs but this should now be ready for a pullback to at least correct the leg up from the low near 1:00 PM. If at any time price drops back below that low then the rally is finished and either a larger pullback will be in progress or it'll be the start of the next selloff.

Jeff Bailey : 12/21/2007 3:04:50 PM

I call "those apples" ... "Granny Smiths!" ;P

Jeff Bailey : 12/21/2007 3:03:48 PM

What's dat? SPY $148.10 ... new high of day.

Linda Piazza : 12/21/2007 3:02:54 PM

My daily charts show an SPX resistance zone that begins at about 1484, as I mentioned earlier today.

Jane Fox : 12/21/2007 3:00:27 PM

Internals are bullish!! Link

Jeff Bailey : 12/21/2007 3:00:22 PM

PTR-LP's $0.50 offer. Somebody's hit the bid in the PTR-XP's from earlier, now $0.55.

Jeff Bailey : 12/21/2007 2:58:02 PM

QQQQ Alert! $51.81 .. new high of the day.

Jeff Bailey : 12/21/2007 2:49:55 PM

Headline prediction #1 for 2008 at this Link

Jeff Bailey : 12/21/2007 2:42:51 PM

USO starting to look like August on bar chart.

Jeff Bailey : 12/21/2007 2:41:37 PM

US Oil Fund (USO) $73.62 +2.10% Link ... $0.50-box to match futures.

Keene Little : 12/21/2007 2:41:36 PM

This is how I see the rally from Tuesday--the bullish count says we should stair-step higher, probably moving above 1490 next week. The bearish count says the rally to 1490 will be rejected and we'll see another selloff start from there. I'll monitor it as we go along and provide some key levels for us to watch. Link

Jeff Bailey : 12/21/2007 2:40:10 PM

Evergreen Solar (ESLR) $15.85 +1.40% Link ...

Jeff Bailey : 12/21/2007 2:37:29 PM

Solarfun (SOLF) $28.02 +10.10% Link ... today's trade at $28.00 negates the potential "bearish triangle" pattern.

Trade at $29.00 would be "bullish triangle."

Linda Piazza : 12/21/2007 2:37:15 PM

Advdec line at 1440 as I type. Those first early divergences from the action seen on the mornings of 12/12 and 12/18 let us know that something was different this morning and that the early action wasn't as bearish. So far, the advdec line hasn't even violated the early opening low this morning. Divergences continue. The character of trading sometimes changes after the bond market closes, so watch the advdec line carefully for clues.

Keene Little : 12/21/2007 2:34:44 PM

Ideally (from an EW perspective) we'll see another minor push higher now and that will set up a little larger pullback, retracing perhaps 50% of the leg up from the low just after 1:00 (which is where I have the sideways 4th wave finishing). The pullback should then set up another rally leg as this works its way higher to the upside targets.

Depending on how long it takes to play out we could see an up day, or at least an up morning, on Monday to get us up to the SPX 1490 area. If it happens today then Monday will have the potential to be a down day.

Jeff Bailey : 12/21/2007 2:34:17 PM

It's probably a perfect time to mention tax loss and tax gain dynamics as we approach year-end.

If looking for some "bargains" at 52-week lows, probably best to wait a couple more weeks.

Stocks that have had major runs this year with no near-term catalyst for upside can be vulnerable.

Jeff Bailey : 12/21/2007 2:28:03 PM

Ah ... but if you do see it, you get the idea the big guns are.

Jeff Bailey : 12/21/2007 2:27:19 PM

You just aren't going to see the retail traders hitting PTR-XP bid of $1.05 though.

Jeff Bailey : 12/21/2007 2:25:54 PM

Wasn't a bad spec perhaps ... somebody got filled at $0.20 in the PTR-LP. the PTR-XP's are quiet.

Hey, they take out $180, there's plenty of pain to be had at $185-$190.

Jeff Bailey : 12/21/2007 2:22:56 PM

Not why I profiled a bullish trade for PTR today, but last couple of days, I've been monitoring stock closely. Wasn't sure if it could break away from $175.00 strike.

Linda Piazza : 12/21/2007 2:20:11 PM

The SPX has approached that Keltner target mentioned earlier, the one I wasn't sure would be reached. It's also potential resistance and that resistance near 1483.70, resistance that sometimes holds on 15-minute closes. It didn't this morning on the RUT or the USDJPY, so the possibility exists that it won't for the SPX, either, but further resistance exists on the daily chart at 1484.81 and then 1488.31. The SPX is at 1481.23 as I type.

Jeff Bailey : 12/21/2007 2:15:40 PM

PetroChina (PTR) Alert! $179.21 +2.99% ... may take a look at the $180 call/put OI.

Keene Little : 12/21/2007 2:07:36 PM

If it's not the 2:00 head fake move this should be the start of the 5th wave up. SPX 1490/DOW 13500 are the upside targets. If if it drops right back down into the consolidation range then be careful if you got long here. Let's go Santa, get those reindeers to pull.

Linda Piazza : 12/21/2007 1:55:40 PM

The SPX just moves sideways, Keltner channels flattening out, resistance and support about evenly weighted. No prediction of next direction is possible from this setup.

Jeff Bailey : 12/21/2007 1:59:42 PM

Forecasted Closes update (11:45:41 PM)

DIA currently $133.94. Session high has been $134.18. My forecast $134.50 may still be in play, but notable decline in $134 from yesterday's action may have capped any further pain.

SPY $147.54. Session high has been $148.00. Heavy call/put OI remains at both $148 strike and evenly matched. $149 not in play. Maybe $0.20 either side of $148.00 more likely.

QQQQ $51.64 +1.45% ... have been more focused here. Dead on so far.

IWM $77.91 ... pretty close. Session high $78.16. Heavy $78 Call and $77 put.

Keene Little : 12/21/2007 1:43:20 PM

I was even thinking of a lottery play with an ATM Dec call option but I don't like the risk--if price stays flat this afternoon (this is opex Friday before a holiday after all) it would have the option dying off to nothing.

Jeff Bailey : 12/21/2007 1:42:26 PM

US Market's Schedule For Christmas Holiday

Monday 12/24/2007: The Securities Industry and Financial Markets Association has recommended a 2 p.m. EST (1900 GMT) close for the U.S. government securities market. The recommendation also includes trading in mortgage securities, municipal bonds, over-the-counter investment grade corporate bonds and all secondary money market trading, including trading in Bankers Acceptances, Commercial Paper and Yankee and Euro certificates of deposit.

U.S. stock markets will close at 1 p.m. EST (1800 GMT).

Chicago Board of Trade: In pit trading, financial and full-sized agricultural products close at 1 p.m. EST (1800 GMT), equities close at 1:15 p.m. EST (1815 GMT), and mini-sized agricultural contracts close at 1:30 p.m. EST (1830 GMT). In electronic trade, full-sized agricultural contracts close at 1 p.m. EST (1800 GMT), mini-sized agricultural contracts and equities close at 1:30 p.m. (1830 GMT), and financial contracts close at 2 p.m. (1900 GMT). Metals and Dow-AIG contracts will trade normal hours. Overnight trading sessions will be closed.

Chicago Mercantile Exchange: Pit-traded commodity, foreign exchange and interest rate products will close at 1 p.m. EST (1800 GMT), commodity options close at 1:02 p.m. EST (1802 GMT) and equity indexes close at 1:15 p.m. EST (1815 GMT). On the electronic platform, commodity products close at 1 p.m. EST (1800 GMT), while foreign exchange, interest rate and equity index products all close at 1:15 p.m. EST (1815 GMT).

ICE Futures U.S.: Financial products will close early, with the New York pit closing at 1 p.m. EST (1800 GMT) and screen trade ending at 1:15 p.m. (1815 GMT). Stock index contracts, both pit and electronic, will end at 1:15 p.m. EST (1815 GMT). Both pit and electronic agricultural and commodity index contracts will not trade.

Kansas City Board of Trade: Both pit and electronic wheat futures trading will close at 1 p.m. EST (1800 GMT), while options trade will close at 1:10 p.m. EST (1810 GMT).

Minneapolis Grain Exchange: Both pit and electronic wheat futures trading will close at 1 p.m. EST (1800 GMT), while options trade will close at 1:10 p.m. EST (1810 GMT).

New York Mercantile Exchange: Floor-traded products will close early. Palladium and copper will close at noon EST (1700 GMT), platinum at 12:05 p.m. (1705 GMT), silver at 12:25 p.m. EST (1725 GMT), gold at 12:30 p.m. EST (1730 GMT), and energy contracts - such as crude oil - at 1:30 p.m. EST (1830 GMT). Electronically traded Nymex contracts will trade until 5:15 p.m. EST (2215 GMT).

Tuesday, Dec. 25:

All U.S. financial markets, exchanges and electronic trading will be closed during the day.

Keene Little : 12/21/2007 1:35:11 PM

If you do try a long just remember that we could get one more minor new low for this sideways consolidation before turning back up. More conservatively you can wait for a break above the consolidation. Then all you have to worry about is a head fake break and a quick reversal back down. It's never easy.

Jeff Bailey : 12/21/2007 1:34:46 PM

Ivanhoe Mines Cut to "Hold" from "Buy" at Salman ... IVN $11.17 +8.55% ...

Keene Little : 12/21/2007 1:33:16 PM

I'm very tempted to buy it here with a tight stop just under the lows of the consolidation.

Keene Little : 12/21/2007 1:30:41 PM

Assuming the high-level consolidation leads to another leg up, it looks like it would be the 5th wave of the move up from yesterday's low. If the 5th wave equals the 1st wave (yesterday afternoon's rally) then I get upside projections to near DOW 13500 (just under 62% retracement at 13515) and just under SPX 1490 (62% retracement). Amazing how that 1490 level just keeps popping up as support/resistance.

Keene Little : 12/21/2007 1:24:36 PM

Bonds have sold off quite a bit today (yields up) with the 30-year down more than a handle (-1'11). The money coming out of bonds may have swung over to stocks for the hoped-for Santa Claus rally. It's not a bad bet considering the odds of a rally happening. Of course those odds haven't helped the bulls too much this month yet.

For those who don't get the nightly Market Wraps, here's a chart that I posted showing historical returns on SPX for the month of December vs. this month's returns. The bulls have a little catching up to do. Link

Linda Piazza : 12/21/2007 1:24:23 PM

We sometimes see a stop-running move get started about 1:35-1:55, as big money people return from lunch. Could that be when the break occurs through the reader's BB's (see my 1:23:58 post) or through Keltner support and/or resistance? Trouble is, I'm not sure big money will return from lunch today, the Friday before a holiday week.

Linda Piazza : 12/21/2007 1:23:58 PM

After my 12:50:45 post, an experienced trader wrote to say that the "Bollinger Bands [are] also getting pinched extremely tight . . . [with] lots of energy . . . being stored up for the next move." He's watching the 5-minute charts, so says that the move could take place this afternoon, perhaps rather soon if the BB's are telling the truth.

Jane Fox : 12/21/2007 1:20:20 PM

Here are your overnight charts and as you can see the NDX futures (NQ) are trading below its overnight highs. Link

Jeff Bailey : 12/21/2007 1:11:35 PM

Disclosure: I currently hold bullish position in PTR.

Jeff Bailey : 12/21/2007 1:10:12 PM

Last report was that Mr. Buffett had sold position.

Jeff Bailey : 12/21/2007 1:09:30 PM

VIX.X 19.03 -7.53% ...

Jeff Bailey : 12/21/2007 1:09:09 PM

Swing trade call alert! ... for one (1) of the PetroChina PTR Jan $195 Calls (PTR-AV) at the offer of $3.20 ($2.80 x $3.20).

No stop for now, target $210 in the underlying.

PTR $178.21 +2.41% ...

Keene Little : 12/21/2007 1:08:18 PM

How 'bout them apples? I managed to make a whopping 10 cents on my AAPL April 150 puts when I exited this morning. Let's see what we have now that the key level for the upside has been broken which gives us a more bullish price pattern. As always, there are at least two possibilities here but it's for the bulls to lose now. The move up from Tuesday's low is currently a 3-wave move and that's why I have the key level for the downside now at 185.66, Tuesday's high: Link

If price drops back below 185.66 before we see a 5-wave move up then the price pattern will turn back to bearish and we'd likely see a leg down at least equal to the December decline. But until that happens the bullish price path (green) calls for a 4th wave correction and then a final 5th wave up next week. The Fibs for the move suggest AAPL will top out just under $200. If it plays out this way it'll make for a good short play but not yet.

Jeff Bailey : 12/21/2007 1:03:11 PM

M, m, m ....

Jeff Bailey : 12/21/2007 12:59:32 PM

MS Option Montage Link

$55 puts were heaviest going into today.

Jeff Bailey : 12/21/2007 12:57:41 PM

Might be Op-Ex ... inflicting some pain on the $55's

Jeff Bailey : 12/21/2007 12:53:50 PM

Morgan Stanley (MS) $54.16 +5.43% ... "Op-ex?" or something more?

Linda Piazza : 12/21/2007 12:52:53 PM

Good idea, Jane, in your 12:47:06 post. Volume will be light next week, the equity movements unpredictable.

Linda Piazza : 12/21/2007 12:50:45 PM

The SPX is ringed pretty thickly with near-term Keltner support lines and near-term Keltner resistance lines. No prediction of near-term direction can be made from this.

Linda Piazza : 12/21/2007 12:49:24 PM

The USDJPY still climbs. It's at 114.06 as I type.

Jane Fox : 12/21/2007 12:47:06 PM

Next week would be an excellent time to stop trading and use your trading days to read the book. I would like to mention that there are many good books out there that address the emotions in trading but I have found Douglas' book one of the best and he tells you how to put the "rubber on the road."

Jane Fox : 12/21/2007 12:44:33 PM

If you decide to undertake this exercise, I really want to know how you progress. Please keep me up to date.

Jane Fox : 12/21/2007 12:43:07 PM

I just had a question as to the name of Mark Douglas' book. It is called, "Trading in the Zone."

Jane Fox : 12/21/2007 12:42:04 PM

I have done this task myself and know of what I speak.

Keene Little : 12/21/2007 12:41:54 PM

MER is been in a fairly steady decline since this morning's gap-up open. This is another piece to today's puzzle that is keeping me from recommnending a long play even though the high-level consolidation in the indices looks bullish. <> The consolidation could be good for just a quick pop higher this afternoon that then fails to hold. It's a time for caution. Throw in opex Friday afternoon and it's probably reason enough to be flat. Don't let any trades get away from you.

Jane Fox : 12/21/2007 12:40:58 PM

Pick a day to start and commit to 20 trades. You need to be honest and if you enter a trade or exit it not according to your strategy rules you have to go back to number 1.

This will be the hardest trading task you will every undertake. The upside is if you get through 20 successful trades you are ahead of about 95% of the traders out there and you have what it takes to become the kind of trader you want to be. I guarantee it!

Jane Fox : 12/21/2007 12:35:55 PM

Now open up a spreadsheet and here are the columns you will need.

Number - starting at one down to 20

You may want to add a comment column so you can record your thoughts while in the trade. I think this is an extremely good idea but I for one have to admit I cannot keep it up. So like my personal trainer says, "If I cannot do it I cannot ask you to do it."

Jeff Bailey : 12/21/2007 12:32:29 PM

Correction Alert! ... Stop on the QQQ-AX is $49.45 in the underlying per yesterday's 03:28:16 PM post (not $49.95 shown in MM Profiles).

Linda Piazza : 12/21/2007 12:27:38 PM

In response to the question that Keene answered in his 11:51:52 post, I was recently listening to a webinar on CBOE (Yes, I try to do my "continuing education" work religiously, and that means listening to webinars and reading.) presented by a former market maker and long-time trader. He said that this market was like a Category 5 hurricane, that these were not normal trading conditions but were rather like something you only see rarely.

Jane Fox : 12/21/2007 12:25:12 PM

The risk you take on each and every trade has to be within your account size. It is very possible you will have 4, 5, 6 losing trades in a row. No let me rephrase that - it is very LIKELY you will have 4, 5, 6 losers in a row and you need to make sure you have an account that will weather the drawdown.

We often say there are no guarantees in this business but there are a few. One of them is that your account will have a drawdown. I guarantee it and you need to have an account size to keep you trading.

Linda Piazza : 12/21/2007 12:21:22 PM

The advdec line has now dropped through its breakout benchmark, dropping all the way to the 9-ema. What are the similarities with the mornings of 12/12 and 12/18? It's been dropping all day since the first few minutes after the market opened, it's erased its breakout status, and RSI has dropped back below 70. The major divergence, however, is in the shape of the decline from the day's high. This decline today has been a choppier one composed of small 15-minute candles rather than the tall ones that began about 30 minutes after the market opened on those other two days. So, the shape of the decline is different, not as bearish, and that's being reflected by equity prices that are kind of hanging in there around the day's high. Another difference is in timing: it took longer today for the advdec line to fall to its 9-ema. It hasn't yet violated the opening low, as it has done by this time those other days.

So, we see some similarities in the first setup and in the steady pullback, but not in the timing and the shape of the pullback. That makes this 9-ema (at about 1300 currently) more important, perhaps. Generally, equity bears want to see the advdec line suddenly crater, while bulls want to see it bounce from the current ongoing test or else just hang around near its current 1300-1400 support zone.

Jane Fox : 12/21/2007 12:19:48 PM

The strategy has to have very precise rules for entry and exit, no subjectivity here. You need to get your emotions in line first and the next step will be to allow subjectivity to become part of your trading but we are not there yet.

Jane Fox : 12/21/2007 12:16:24 PM

OK finally on to the exercise - for you who already have Douglas's book the exercise is on page 189.

Pick a market - one that is liquid and has movement. DUH! Who would trade anything but a liquid market.

Pick a strategy and timeframe - (reread Linda's 12:07 post) here is where you will need to find a strategy/timeframe that fits your trading style. If you like the fast daytrading kind of trading a strategy that uses 60 minute bars is not for you. I use the 377 (a fib number) tick charts on the DOW that allows me time to post to the monitor and do other things throughout the trading day.

This strategy should have a proven track record and one that you believe will make you money if you could just stick to it. if you do not have a strategy you believe in then this is an exercise in futility.

Jeff Bailey : 12/21/2007 12:15:06 PM

Don't think Mr. Santelli is talking about "buy long" investors. "Buy to cover" just as smart.

Keene Little : 12/21/2007 12:13:00 PM

Prices appear to be consolidating near the highs which is bullish for another leg up. Assuming we do get another leg up the question is whether we'll see it this afternoon or on Monday. The challenge, and the reason I'm not recommending a long play, at least not yet, is because I've seen so many of these kinds of consolidations suddenly drop lower (think of a waterfall decline).

So I continue to watch this pullback. If you shorted this morning's high at 10:20 AM you might have been popped out on the DOW's minor new high but the others are still below their highs which is where your stop should still be. For now I'm going to let the market prove to me that there's another leg up coming.

Jeff Bailey : 12/21/2007 12:11:00 PM

Rick Santelli ... Quote of the day ... "Idiots don't buy equities. Smart investors do!

Jeff Bailey : 12/21/2007 12:09:14 PM

VIX.X 18.91 -8.11% ... once again sitting on its 200-day SMA.

Linda Piazza : 12/21/2007 12:07:31 PM

Adding to Jane's excellent response in her 11:30:08 post and to those of other writers, I'd like to add the following thought: Controlling emotions requires first and foremost deciding on the type of trading that fits your personality and your style, as well as your situation in your work and personal life. As many of you know, deciding those questions for myself determined me to trade combination options trades that need to be monitored daily but not every minute. However, I recently attended a trader's meeting, and two of the traders there said that such types of trades kept them awake at night. Because of the nature of a credit spread, for example, your P&L (profit and loss) statement may show a loss from the moment you enter a trade until either a big move in your favor or enough time has eroded to narrow the spread. That was driving these traders batty. So, the trading style that best fits my needs and helps me control emotions related with trading was heightening their emotional responses.

There's no right or wrong style. Options afford you many types of trades due to their versatility. So, I personally think the first requirement in controlling emotions is determining the type of trading style that fits your needs.

My second suggestion? When you've made great trades, the natural tendency is to think you're a great trader. When you've lost money or lost the opportunity to make money, the natural tendency is to berate yourself. Go to CBOE's or the CBOT's education section and find a webinar on controlling emotions in those times when you're berating yourself. There are many, and they do help. At least you know that your reaction is common enough to prompt many webinars presented by the CBOE, so you don't feel alone!

Here's a link to a Trader's Corner I wrote last summer about some of the information gleaned from those seminars on controlling or managing emotions: Link

Jeff Bailey : 12/21/2007 12:05:20 PM

Emotions aren't just "fear" either. "Greed" also an emotion.

AAPL $191.73 +2.41% ... up $11 from 12/18/07 gap backfill.

Jane Fox : 12/21/2007 12:04:34 PM

Before we begin the exercise I want to go over the definition of a successful trade. This is very very important. A successful trade is one where you planned the trade and then you traded the plan. Any decisions made while in the trade invalidates this definition. It does not matter if the trade lost money or not, it all hinges on having a plan BEFORE you entered the trade and sticking to that plan.

Jane Fox : 12/21/2007 12:01:02 PM

Keene suggested Elder's book and I certainly think it is a good one as well. It is just that Douglas'book has the exercise.

Jane Fox : 12/21/2007 11:59:57 AM

First of all I need to say this exercise was not devised by me it is in Mark Douglas's book "Trading in the Zone." So that is the first thing you need to do is get this book and read it. I mean READ it. Get an underliner and underline all the stuff that is important. Like me you will probably have the whole dang book underlined.

I was listening to a Mark Douglas interview once and he said in his seminars he will ask how many have read his book and almost 100% will raise their hand. Then he will ask how many tried the exercise in the back and about 30% will raise their hand. Then he said how many actually finished the exercise to completion. He said he is lucky if anyone will raise their hand. Does that tell you how hard this exercise is? It should

Jeff Bailey : 12/21/2007 11:59:40 AM

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

CLOSED out the remaining QQQ-LY at $0.70.

The BEST/REWARD that could happen to target (+$0.10). The WORST/RISK that could happen by the close (-$0.70).

Keene Little : 12/21/2007 11:56:39 AM

I have one more suggestion for anyone struggling with the emotional issues surrounding trading (and anyone saying they don't struggle with this is not trading real money). Read Dr. Alexander Elder's book "Trading for a Living". It's excellent and gets into the psychology, trading tactics and money management. Highly recommended.

Jane Fox : 12/21/2007 11:54:12 AM

The emails are coming in so maybe I will put the exercise here in the monitor. But before I begin I want to warn you that I am going to sound like a hard a%##*# OK. If you are going to take offense then do not read any further.

I have been trading for almost 8 years now and although I certainly do not know it all I have done my share of ... what you would call "learning." Each "learning" experience has been expensive and every one of them were what you call SEE (significant emotional events). I have taken these SEEs and have become a relatively good trader. The reason I was able to weather the SEEs was that I really wanted to become a good trader and was willing to do what was needed. This exercise will tell you if you are willing to put in the work.

Keene Little : 12/21/2007 11:51:52 AM

Keene, has there ever been a time when the market has gapped up or down as often as this year? I think not.

William, I have the same impression as you. It seems especially true in the last couple of months that we've seen these very large overnight moves in the futures that then causes the cash players to have to scramble to catch up when the market opens. Is it manipulation? Or is it because there's a real bull vs. bear battle going on (as part of the topping process)? I suspect a little of both, especially when I see big moves in the early morning hours. It's just another factor we need to deal with when considering holding overnight trades.

Linda Piazza : 12/21/2007 11:51:01 AM

The SPX's 15-minute 9-ema has now risen just underneath the current SPX price, with further support layered down to 1474.56. This setup is typically about the time there's a dip down to test and/or pierce the 9-ema, preparatory to a bounce from it. So, if there's a dip, that's what equity bulls want to see happen. Equity bears want to see price crater suddenly.

If there's a bounce, Keltners say that near-term resistance will be found at 1480.74 and then again at 1483.44 on 15-minute closes. Time for those profit-protecting plans to be fine tuned.

Jeff Bailey : 12/21/2007 11:48:28 AM

I'd also STRONGLY suggest that subscribers build some type of "portfolio" or position tracker.

MANAGE the ACCOUNT, MANAGE the TRADE. Always, always focusing on the bottom line.

What's your GOAL for the year?

Then divide by 12, gives you a GOAL for the MONTH.

Then divide by 4 gives a trader a GOAL for the week.

No different than a business plan.

Great New Year resolution.


Jane Fox : 12/21/2007 11:44:50 AM

Keene, my response was going to start with, "Never ever Never ever think you will get all of a move. Gee did I repeat myself? Sorry, let me put it another way. Never ever never ever think you will get all of a move. "

Keene Little : 12/21/2007 11:36:37 AM

I'll add one more comment to Jane's excellent response (11:30)--always be happy with taking chunks out of the middle. It's hard to leave money on the table but always remind yourself that you took some money out of the trade. Very rarely will you be able to buy it at the low and sell it at the high. If you do manage the exact high and low, consider yourself lucky. It's usually when you get greedy and look for the "one more high" or "one more low" that you end up losing what you had.

Jeff Bailey : 12/21/2007 11:45:58 AM

Per Jane's 11:30:08 AM (received same e-mail) ... See Tuesday's, Wednesday's, Thursday's MM. Traded the QQQ-LY LIVE here in the MM.

Made decision on Wednesday to leg out of 80% of a speculative 3-day op-ex trade (4 of 5 options is 80%) if they traded $0.25 (what if RIMM went south?). Leg out remaining 20% today (1 of 5 is 20%)

Make the decision ahead, helps remove the emotion.

By legging out of partial position, that will often leave a "free trade" on the remaining.

When you then have "nothing but profit left" on the table, there is no emotion.

EMOTIONS usually come when overleveraged and really can't afford to lose.

Linda Piazza : 12/21/2007 11:31:36 AM

The USDJPY is still rising, with 15-minute RSI trending now above 70. Upward momentum is strong anytime there's a breakout situation, but this is also a setup (breakouts) that sees frequent whipsaws. So far, though, the action of the USDJPY remains supportive of rally conditions in the U.S. equities. Keep a watch, though. The USDJPY is now at 113.91.

Jeff Bailey : 12/21/2007 11:31:17 AM

QQQQ $51.57 +1.30% ... snug at WEEKLY Pivot.

Jeff Bailey : 12/21/2007 11:30:51 AM

RUT.X 780.79 +1.72% ... only major to trade WEEKLY R1.

Jane Fox : 12/21/2007 11:30:08 AM

I have a question relating to emotions and taking profits. Yesterday I went into the day holding 200 qqq-ly, 250 qqq-lx, 200 qqq-lw, and 200 iow-lw and got out just before the QQQQ and IWM popped higher in the last hour and big gap this am. My thought was that time was ticking away and I had a profit that could be erased very quickly. Needless to say, I left a lot of profit (over $70,000) on the table. While I have had a good month so far, it is frustrating to leave so much on the table. How do you guys deal with this very powerful emotional issue? Thanks

You must have had a plan entering these trades so what was your plan for exiting? Did you stick to your plan? If so then it was a successful trade. You did know the definition of a successful trade is a trade you planned and a trade where you stuck to your plan? Did you notice that definition said nothing about profit or losses?

Ok I am getting a little flippant here and for that I am sorry because this is an issue we all deal with and will always have to deal with. 80% of trading is emotion; it is not strategies, it is not having the right broker or charting platform, it is not knowing a lot about technical analysis but how you handle your emotions.

I have a little exercise you could all do that will reveal just how much your emotions are involved in trading and anyone who is interested can email me at jbfox@charter.net

Linda Piazza : 12/21/2007 11:29:35 AM

The SPX's 15-minute 9-ema is at 1474.56 and still rising. The action sometimes sets up this way: a sideways consolidation until this moving average rises just underneath the consolidation zone, at which time prices dip down to test it, sometimes piercing it, and then another bounce. At least that's the way it sets up when the day's price action remains positive. So, SPX bulls want to see a bounce from that average, if tested.

Linda Piazza : 12/21/2007 11:27:20 AM

There's a small divergence already in the action of the advdec line when compared to both 12/12 and 12/18. The early setups were the same on all three days, but today, the advdec line is clinging to the breakout benchmark rather than falling through it. There's just a little more strength this morning than there was either of those two previous mornings when the setup was the same. Of course, we're seeing this reflected in price action on indices such as the SPX, where prices are consolidating near the highs. I'm still watching, though, as the USDJPY has not been able to bounce again: the divergence is only in its clinging to the support.

Jeff Bailey : 12/21/2007 11:26:29 AM

Goldcorp (GG) $31.96 +2.96% ... $35 calls heaviest OI. $27.50 puts and $30 puts respective #1 and #2 on put side.

Might have some room to $32.50 put strike (OI=4,347)

Keene Little : 12/21/2007 11:22:49 AM

The DOW is just shy of its 50% retracement at 13435.

Jeff Bailey : 12/21/2007 11:21:55 AM

Newmont Mining (NEM) $48.77 +2.91% ... $50 call is heaviest. $45 put and $47.50 put OI dded together would equal $45.

Trades smack in middle of $47.50 to $50 strikes.

Keene Little : 12/21/2007 11:19:52 AM

We've got a bit of a fractured market this morning now with the DOW pushing marginally higher again (with bearish divergences) while the techs hang back.

Jeff Bailey : 12/21/2007 11:18:38 AM

Barrick Gold (ABX) $38.71 +3.17% ... almost smack in the middle of $37.50 to $40 strike.

Jeff Bailey : 12/21/2007 11:17:02 AM

Coure D' Alene Mines (CDE) $4.49 (unch) ... Stock acted yesterday like it was an "op-ex" stock.

Jeff Bailey : 12/21/2007 11:11:39 AM

Apple Computer (AAPL) Link ... some bears have gone from :P to :( the last couple of days.

QQQQ bulls will stay focused. Need a trade at $194 to get this stock back on a buy signal and give some indication that bullishness will linger into January.

Jeff Bailey : 12/21/2007 11:06:09 AM


RIMM Link ... nearing its bullish vertical count $128.

Jeff Bailey : 12/21/2007 11:01:08 AM

Research in Motion (RIMM) Link ... a perma-bear favorite ahead of earnings.

In late June, lack of overhead supply had stock gapping up 18.27% at open, finished near high of day and above gap open.

Early October, lack of overhead supply had stock gapping up 7.08% and finishing well above gap open and high of day.

Today, RIMM gaps up 14.08%, some overhead supply, but currently $4 below gap open.

Keene Little : 12/21/2007 10:59:24 AM

The last time the VIX dropped to its 200-dma was at the October high. Bulls need to stay cautious here. Link

Linda Piazza : 12/21/2007 10:59:14 AM

The advdec line is again set up the way it was on 12/12 and 12/18. It's so far following the pattern seen both days: Keltner breakout in the morning, complete with RSI above 70, and then a pullback from that early morning high. On 12/18, I followed the action, comparing it to what had happened on 12/12, and was able to note an early divergence from the 12/12 pattern, when the bounce in the advdec line got above a crucial Keltner level. So, let's follow it today and see what it shows us. The advdec line is now testing the breakout level at about 1510 or so on 15-minute closes. Equity bulls would most prefer the breakout status to be maintained, but if it's not, they want to see support maintained on 15-minute closes at the rising 9-ema, now at 1133.72. Because we're working with such large numbers with the advdec line and because Keltner lines are dynamic, those levels can change quickly, but I'll update now and then during the day. If the advdec line is following the 12/12 pattern, a day on which equities fell heavily from their early high, it will drop through that 9-ema and below the open at 983. It did the same on 12/18, but then bounced during the midday lull from the mid-channel basis line. Today that mid-channel basis line is way down at -198.

Keene Little : 12/21/2007 10:53:35 AM

If you shorted the market at the highs (per my 10:21 post) then it's time to lower your stop to just above the high. If we consolidate here for a little bit then new highs are likely on the way. If we drop harder I'll wait for the first larger bounce to then lower the stop some.

Jeff Bailey : 12/21/2007 10:50:28 AM

Interesting action so far today in Research in Motion (RIMM) $118.00 +10.28% ... after a gap open to $122.06.

Linda Piazza : 12/21/2007 10:49:41 AM

If you've ever talked to people about trading currencies, you'll hear that they're cleaner or purer to trade from a technical analysis standpoint. I'm not sure I always agree. Just let Governor Fukui (Bank of Japan) make some statement overnight and all the technical analysis setups in the world are not going to protect you from being blown out of your position.

However, now that I've given that caveat, it is true that most times, the technical setups are more reliable than they are on an index such as the Dow, where those 30 component stocks can get pushed around fairly easily. So, I'm looking at the 15-minute chart of the USDJPY, noting that RSI, now at 73.44 but down from the day's high, has reached levels that usually indicate that a pullback should be expected. Sometimes a bearish divergence is produced before such a pullback actually begins, with those bearish divergences typically in the form of a higher USDJPY move but a lower or equal RSI move. If the 3:45 swing high is compared to the current one, we're beginning to see bearish divergences form.

What is all this saying? Be very watchful now for a pullback in the USDJPY. It isn't guaranteed to happen, but if it does, U.S. equity bulls want the pullback to be small, probably no lower than about 113.40-113.50, a retest of former resistance. Anything deeper than that will question this supposed upside breakout this morning. The USDJPY is at 113.77 as I type.

Jane Fox : 12/21/2007 10:41:54 AM

Same scenario for the 13450 area on the DOW. Link

Jane Fox : 12/21/2007 10:40:49 AM

SPX is quickly approaching 1490 again and although I think 1490 has lost most of its importance it may still have enough to hold back this index temporarily. Link

Jeff Bailey : 12/21/2007 10:38:54 AM

I didn't like the FACT that the BPNYSE, BPSPX and BPNDX were still in column of O's and exercising the QQQQ Dec. $51 Calls with a 1/2 position in the QQQ-AX would put us full position.

This could make for some type of backfill into the QQQQ's gap early next week.

So, cut and run on the $51 Calls.

Linda Piazza : 12/21/2007 10:33:31 AM

Another post relating to the RUT: In November, the RUT began climbing off its november low. It established a rising channel that held until 12/13, when the RUT closed beneath that channel for the first time. It then dropped into a retest of the November low and began bouncing from just above that low. All's well and good, right? Well, we're not sure. The 72-ema that I mentioned in my 10:17:51 post has been resistance in the past, but the correspondence of support and resistance at that level fell apart somewhat in November, as I mentioned in that past. Therefore, it may not be as important, although I would still sure counsel that profit-protecting plans be in place and ready to go now that it's been approached. The 200-sma now converges with the former supporting trendline from which the SPX bounced as it was climbing off that November low. That moving average and former supporting trendline are now at about 792.70, and they should be even stronger resistance than the 72-ema, especially as they're just below the 12/11 peak high of 796.34.

So, there's some significant resistance coming up and a big gap left behind. Absolutely do not let an adverse move, if one should begin, wipe out your bullish profits, not in this climate.

That may necessitate making some difficult decisions by the close today. If the RUT manages to consolidate here the rest of the day or even gain, closing just at or under that 72-ema at 783.84, what are you going to do? Ask yourself if the RUT can gap up the way it did this morning, can it gap down that much Monday morning? Sure it can. What will happen to your positions if it does? If it closes at the 72-ema or near it, can it gap above it Monday morning and charge up to the 200-ema on Monday? Sure it can, but how will your options positions perform? Would it be better to sell and take your profits this afternoon, locking them in, and reassess Monday? If you've been in an options position since the December low, and it's a March option and you believe in an overall bullish intermediate term move, then you'll likely have an entirely different plan than the person who bought a January option early this morning, with no real plan but to ride the rally higher, and who will be facing some slight deterioration in that now-front-month option over the weekend.

Keene Little : 12/21/2007 10:32:59 AM

While the DOW has managed to rally quite a bit more since the open, the techs stalled at their opening high. SPX is in between the two.

Jeff Bailey : 12/21/2007 10:28:44 AM

Perhaps the QQQQ stock of the week for bulls ... Oracle (ORCL) $22.54 +1.99% ...

Jeff Bailey : 12/21/2007 10:27:56 AM

and yes... Research in Motion (RIMM) $117.00 +9.36% ...

Jeff Bailey : 12/21/2007 10:27:24 AM

Cisco (CSCO) $28.59 +1.09% ...

Jeff Bailey : 12/21/2007 10:27:02 AM

Qualcomm (QCOM) $39.85 +1.86% ...

Jeff Bailey : 12/21/2007 10:26:38 AM

Google (GOOG) $696.79 +1.02% ...

Jeff Bailey : 12/21/2007 10:26:19 AM

Microsoft (MSFT) $35.99 +1.32% ...

Jeff Bailey : 12/21/2007 10:26:00 AM

Apple Computer (AAPL) $192.04 +2.57% ...

Jane Fox : 12/21/2007 10:24:14 AM

VIX is supporting all the bullishness. Link

Keene Little : 12/21/2007 10:21:37 AM

Short term bearish divergence at the new high for the DOW. That could do it for the leg up from yesterday afternoon. If it pulls back now I'll be watching to see if it looks corrective or something more bearish. But regardless, think about nibbling on a short up here. Just watch those rising knives. SPX is hitting its 50% retracement now and the DOW's a little higher at 13435.

Linda Piazza : 12/21/2007 10:17:51 AM

For most of last year, the daily 72-ema was a bullish/bearish benchmark for the RUT. This year, it hasn't been such a strong benchmark, as the RUT has traded back and forth across it for prolonged periods, such as in November. However, for whatever it's worth or not worth, that moving average is now at 783.80 on the RUT's chart. Here's a chart (not showing current prices, but historical performance relative to this moving average): Link

Jeff Bailey : 12/21/2007 10:17:23 AM

Swing trade call close out alert! ... for the remaining QQQQ Dec. $51 Call (QQQ-LY) at the bid of $0.70.

QQQQ $51.68 +1.53%

Jane Fox : 12/21/2007 10:06:27 AM

WASHINGTON (MarketWatch) - The Federal Reserve said Friday it would conduct biweekly auctions of short-term funds for "as long as necessary" to alleviate a credit squeeze.

Demand was slightly weaker for the Fed's second special auction this week of short-term credits, the Fed reported Friday.

The Fed auctioned $20 billion in 35-day credits at a stop-out interest rate of 4.67% in the auction held Thursday. A total of 73 banks submitted bids for $57.7 billion in the dutch-auction. The bid-to-cover ratio was 2.88. On Monday, the Fed auctioned $20 billion at 4.65%, with 93 banks submitting bids for $61.6 billion.

The Fed has joined with other central banks to provide extraordinary amounts of short-term funds to banks to alleviate a credit crunch.

Jane Fox : 12/21/2007 10:05:38 AM

WASHINGTON (MarketWatch) -- Consumer sentiment strengthened in late December, according to a monthly survey released Friday by Reuters and the University of Michigan. The UMich consumer sentiment index rose to 75.5 in late December from 74.5 earlier in the month. Economists were expecting the index to hold steady. The index stood at 76.1 in November.

Jane Fox : 12/21/2007 10:04:17 AM

UMich Dec. sentiment above 74.5 forecast

UMich Dec. sentiment revised up to 75.5 vs 74.5

Jane Fox : 12/21/2007 10:03:48 AM

Bid-to-cover ratio 2.88 in Fed auction

73 banks submit bids of $57.7 billion in auction

Fed auctions $20 billion at 4.67% in special auction

Fed to conduct special auctions 'as long as necessary'

Linda Piazza : 12/21/2007 9:56:30 AM

The SPX 15-minute Keltner chart shows a potential resistance at 1483.68 on 15-minute closes. These Keltner lines can also be targets, but I wouldn't necessarily count on this one being hit. If it is, I would absolutely have profit-protecting plans in place for protecting bullish profits. In fact, I'd be sure I had them in place now. How many opex Fridays over the last five months have we seen strange early action that is then reversed? Just be careful.

Keene Little : 12/21/2007 9:49:27 AM

The 50% retracement for the DOW is at 13435 (SPX 1480).

Keene Little : 12/21/2007 9:48:42 AM

The upside Fib projection for this leg up for the DOW is at 13405 so watch that level for potential resistance.

Jane Fox : 12/21/2007 9:48:27 AM

Needless to say the AD line is bullish at +1841.

Linda Piazza : 12/21/2007 9:47:53 AM

Overnight, the USDJPY pushed above last Friday's swing high and is above it now, at 113.74. It's in breakout status, and so far, corroborates equity strength. You don't want to see a sharp pullback, though.

Linda Piazza : 12/21/2007 9:45:40 AM

So far, the SPX has pushed above the converging 10-sma and 200-ema on the daily chart, with both those averages sometimes providing support or resistance. This means we're seeing an ongoing test of this resistance, a test with results that won't be available until the close today, when we see whether the SPX closes above or below those averages, converging now near 1472.60-1472.70. A close above them would suggest that a test of the 72-ema, now at 1484.65, would be likely. A pullback below those averages by the close, especially a sharp pullback, would not look so positive.

Keene Little : 12/21/2007 9:45:01 AM

The big question here is whether the market is doing a little consolidation before heading higher or if like so many gap-ups that we've seen recently we've already topped out for the day.

Jane Fox : 12/21/2007 9:35:16 AM

And of course Crude is rallying as well but not as much as Gold. Link

Jane Fox : 12/21/2007 9:34:23 AM

Here is the daily chart of Gold and as you can see it is in rally mode, still within its triangle but it looks like it may break upward and I have been thinking downward. But if I was thinking the $ was going to retrace back to its lower trendline then of course Gold would break upwards if that happened. Link

Jane Fox : 12/21/2007 9:29:52 AM

Since both Crude and Gold have a very close interaction with the US$ I decided to show the Dollar chart first. All this week I have been predicting it will retrace to at least its lower trendline. As you can see it has started that retracement. How what so you think Gold is doing in response to this little retracement? Link

Keene Little : 12/21/2007 9:27:36 AM

Last night I showed on the SPX chart the potential for it to rally up to the 1479 area (shown in pink). Not shown on the chart are the retracement levels for the December decline and 1480 would be a 50% retracement so there are some Fibs there that could be tough resistance.

Jane Fox : 12/21/2007 9:26:43 AM

All I can say is; "Let the Santa Rally begin."

By the way for all the new Monitor Subscribers, these are the overnight charts of the four major indexes we watch here on the monitor, the futures charts that trade almost 24 hours Monday to Friday. Link

Keene Little : 12/21/2007 9:22:48 AM

Equity futures rallied steadily higher all night and now we've got a big gap up to start the day. Will it stick this time? We'll only know in hindsight but you know the risk.

The AAPL short play was stopped out yesterday when it hit 188.50 after hours. If you had left your stop at 190 that will be exceeded at this morning's open. There's a good chance that stock will make another attempt at 200.

Jane Fox : 12/21/2007 9:17:42 AM

Merrill Lynch & Co ( is in advanced talks to receive a $5 billion cash infusion from Singapore's state investment company Temasek Holdings Ltd., becoming the latest among a number of blue-chip Wall Street and European financial institutions to receive funding from Asian or Middle Eastern government funds in the wake of the ongoing turmoil in structured credit markets, according to a media report Friday

Jane Fox : 12/21/2007 9:16:52 AM

WASHINGTON (MarketWatch) -- U.S. consumers spent more than they earned in November, driving the personal savings rate negative for the first time in 15 months but giving a boost to a sagging economy, the Commerce Department reported Friday.

Core inflation increased 0.2% for the month, less than the 0.3% growth that had been expected, but the year-over-year gain accelerated to 2.2%, the highest such comparison since March and well above the Federal Reserve's target rate of 1% to 2%.

Nominal incomes rose 0.4% after increasing by 0.2% in October. Economists expected a 0.5% gain.

After taking out taxes and adjusting for the highest inflation since September 2005, real disposable incomes fell 0.3%, the second decline in a row and the fourth decline this year -- a troubling sign for an economy that's depending on a healthy consumer.

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