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Keene Little : 12/28/2007 12:06:42 AM

Friday's pivot tables: Link and Link

As I had mentioned at the end of the day, using the DOW chart to show a few different possibilities for what could play out into January/February, we have similar possibilities for the SPX as shown on its daily chart: Link

The bearish possibility (dark red and which is a little different from what I showed on the DOW) is that we'll see price contract into early January before letting go to the downside. But the light green scenario calls for a leg down that finds support at or above the November low and then starts a rally leg to new all-time highs.

Until price breaks below the 1435 December low there is the possibility, shown in dark green, for price to chop its way higher into February to finish its final 5th wave, perhaps with a retest of the October high.

There is not a clear EW pattern that stands out above the rest right now and that's because of all the corrective 3-wave moves the market is making up and down. That kind of price action is indicative of either a topping process or a market that has already topped out and is being held up before collapsing. It's simply too early to tell so keep trading short term until this clears up.

If the RUT and COMP patterns are an indication of where we go next then the bears might be back in control. Their patterns look like an A-B-C bounce off the November low finished at Wednesday's highs and now we'll see a decline kick into gear as we enter the new year. Their patterns suggest you want to be short against Wednesday's highs and therefore that should be true for the DOW and SPX as well.

This is an update to the COMP 60-min chart I had posted earlier in the day on Thursday that shows a potential path down: Link . If we get a bounce on Friday it should set up a short (again, against Wednesday's high) for another leg down. Once the 2nd leg down completes (assuming we'll get it) then we'll find out if another rally leg gets started (dark green) or just another correction (the 4th wave shown in dark red). For now the short term pattern looks bearish though for at least another leg down after a bounce.

OI Technical Staff : 12/27/2007 9:59:59 PM

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Jeff Bailey : 12/27/2007 5:08:09 PM

Closing Internals at this Link

Today's action does have the NASDAQ's A/D 5-day ratio reversing back lower at 54%.

NYSE's NH/NL 10-day ratio still edging lower.

Keene Little : 12/27/2007 4:55:02 PM

I had mentioned last night that because of the multitude of 3-wave corrective moves since the July high there are several possibilities from an EW perspective as to where this market could be headed. On the DOW daily chart I'm showing three of them (and that's confusing enough): Link

The light green wave count calls for a decline down to the bottom of a potential sideways triangle, so near 12800 in early January, before setting up the next rally leg to new all-time highs. The key level for this one is a break below the 13092 December low.

The more bearish (dark red) wave count does not look complete to the upside and requires another rally leg (to at least retest the December high near 13800) before turning back down in a strong decline.

The bullish (dark green) wave count calls for a rising wedge pattern (based on the corrective wave structure I'm seeing so far) as the market chops its way higher in its final 5th wave off the November low. Much higher than 13800 would have me thinking more seriously about this possibility and the ultimate high will likely be near 14500 in February.

The bottom line is that short term trading is a must right now. The choppy whipsaw price action is taking profits from both sides if they don't regularly harvest winning trades. I suggest traders continue that until we get a clearer picture as to what this market is up (or down) to.

Jeff Bailey : 12/27/2007 4:37:47 PM

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

Out of Office: ... I will be out of the office all day on Monday (12/31/07) and should return Wednesday morning (01/02/08).

Jeff Bailey : 12/27/2007 4:22:23 PM

TRIN 2.34 ... waited until the end of the day to get WEEKLY R2. Ya knew it was going there eventually.

Jane Fox : 12/27/2007 4:08:47 PM

Tomorrow will bring us:

9:45a.m. Chicago PMI. Expected: 52. Previous: 52.9.

10:00a.m. Nov New Home Sales. Previous: +1.7%.

10:00a.m. Nov Help-Wanted Index. Previous: 23.

Jeff Bailey : 12/27/2007 4:01:11 PM

Semiconductor HOLDRs (SMH) $32.76 -1.73% ... smack on WEEKLY Pivot.

Linda Piazza : 12/27/2007 3:49:10 PM

The Dow looks as if it may be breaking through the neckline of its head-and-shoulder formation, forming since last Friday. The 30-minute chart says its needs a 30-minute close beneath about 13387 and maybe even 13365 to confirm that, but there's been a tentative confirmation at least. Be careful of a quick bounce.

Keene Little : 12/27/2007 3:45:36 PM

AAPL update: The pullback today looks good for completing the 4th wave correction but it needs to find support soon, preferably above 198. Assuming its pullback correction is finishing (could get a small bounce and minor new low) then the next rally leg should finish off its rally. If it continues to break much below 198, and especially below 195, I'm going to start thinking AAPL may have seen its high already (in which case I'll look for a bounce to get short). Link

Linda Piazza : 12/27/2007 3:40:06 PM

There's a potential H&S visible on the SPX's 30-minute chart. The shoulders are small, but fairly symmetrical. The neckline is at about 1478, but since this is on a 30-minute chart, I'd want to see a 30-minute close beneath potential support at 1476.10 before I believed the H&S to be confirmed.

Linda Piazza : 12/27/2007 3:37:22 PM

I'm back, just in time to find the SPX dipping down to test the previous low of the day as well as potential Keltner support layered down to 1480 on a 15-minute close. If the SPX closes the current 15-minute period below 1481.27, it will be the first time in a week that the SPX has closed a 15-minute period below the mid-channel Keltner level. So far, however, there's been neither a breakdown below support nor a breakout above resistance.

Keene Little : 12/27/2007 3:36:57 PM

I know some of you are playing CFC (Countrywide Financial) on the short side. I had recommended a short play out of its triangle consolidation pattern near $20 in the beginning of October. After it achieved its downside objective out of the triangle at its November low of 8.21 I felt the short play was essentially finished even though it looked like it needed a bounce and then one more new low.

The downside Fib projection for the 5th wave (wave (5) down) is at 7.51 and it might yet be achieved since the short term pattern for the move down from the December high looks like it needs one more minor low to finish the final 5th of the 5th wave down: Link

The continuing bullish divergences, and the EW count, suggest the short side is now the risky side. Perhaps think of a small long play soon although there are probably better candidates. A bounce back up to $20 would not be at all surprising over the next couple of months.

Jeff Bailey : 12/27/2007 3:26:57 PM

Luminent Mortgage (LUM) $1.05 +8.24% ... jumps higher on headline numbers.

Jane Fox : 12/27/2007 3:24:03 PM

I am taking the YM long at 13511 off the table now. Way too late to be trying a trade.

Keene Little : 12/27/2007 3:20:01 PM

Fibs line up for potential resistance for the DOW at 13441-13447 and SPX 1487 so keep an eye on those levels for a short entry. The 200-dma for SPX is close to 1490 so it's possible it will be driven up to there for the close. The DOW is dancing around its 50-dma at 13411 (SPX 1483). You can see why we're probably consolidating where we are--there's a little battle going on here as the bulls buy support while the bears are hoping it acts as resistance.

Keene Little : 12/27/2007 3:11:22 PM

The market is continuing to consolidate this morning's decline. It's possible we're going to see another leg up in the bounce off today's lows in which case watch for two equal legs up for a possible high for the bounce and an opportunity to short it.

Jeff Bailey : 12/27/2007 3:09:28 PM

NASDAQ NH/NL 81:141

Jeff Bailey : 12/27/2007 3:09:13 PM

NYSE NH/NL ... 57:181

Linda Piazza : 12/27/2007 2:58:16 PM

I need to step away for about 30-40 minutes, but I hope to return by the close. If not, know that an SPX close beneath about 1485 would constitute the completion of an evening-star pattern on the daily chart. That's a bearish reversal signal that takes three days to complete. A bounce to 1487 gives a sort of iffy confirmation of the signal, but a bounce and close back above about 1489 invalidates it and questions where the SPX goes next. I've seen times when the only reversal seen after a validated reversal signal was the bearish candle that completed the signal itself, but just know what you want or don't want to see at the end of the day, and make decisions accordingly.

Jeff Bailey : 12/27/2007 2:55:23 PM

Not seeing too much "tax loss sell" bounces going on. Not yet.

CFC $9.13 +0.99% ... maybe a touch.

Jane Fox : 12/27/2007 2:54:57 PM

US$ has broken its upward channel and is now testing the 38.20% fib level. Link

Linda Piazza : 12/27/2007 2:53:59 PM

The SPX's mid-channel Keltner support held on that last 15-minute close, but barely. That support is at 1481.25 on 15-minute closes, with further potential support layered down to 1480.23. Resistance has been at the top of the SPX's smallest channel, now at 1486.13, with further nearby resistance layered up to 1487.06 on 15-minute closes. Until one of those breaks, we're just seeing chop while bulls and bears sort it out. Typically, consolidation at the bottom of a decline would be considered bearish, just as consolidation at the top of a rally would be considered bullish, but this light-volume holiday week is not the time to be hanging too many plans on what's typical.

Jeff Bailey : 12/27/2007 2:53:24 PM

TRMP $4.37 ... should be closed out.

Jane Fox : 12/27/2007 2:53:09 PM

It is late in the day and the markets are very quiet but I do see a long YM trade at 13511 with a stop at 13463. Target will be a 1:1 to the risk.

Jeff Bailey : 12/27/2007 2:51:58 PM

Day trade long stopped alert! ... for the 1/2 position in shares of Trump Entertainment (TRMP) $4.36 -3.00% ...

Jeff Bailey : 12/27/2007 2:42:20 PM

Nielsen Online: Yahoo Nov. Share Of Searches 17.9%

Jeff Bailey : 12/27/2007 2:41:46 PM

Nielsen Online: Google Nov. Share Of Searches 57.7%

Jeff Bailey : 12/27/2007 2:35:08 PM

Day trade long alert! ... for 1/2 position in shares of Trump Entertainment (TRMP) at the offer of $4.41, LIMIT $4.43.

Stop goes $4.36. Target $4.60.

Keene Little : 12/27/2007 2:34:49 PM

The bounce off today's low continues to look corrective (bear flag) so unless it gets a spark of buying to blast it higher out of this I'd say we'll see new lows either before the end of today or sometime tomorrow.

Linda Piazza : 12/27/2007 2:17:34 PM

So far, the SPX is still closing at or below the flattening 9-ema. RSI has risen from its sub-30 levels to about 45. Bulls need to do better than this, but the outcome isn't determined yet, not until bears are driving the SPX below about 1480 and sustaining values below that or until bulls are driving it above about 1487 and sustaining values above that.

Jeff Bailey : 12/27/2007 2:04:05 PM

Base Metals: Comex Copper Hurt By Data, Equities, Technicals

DJ- Copper futures finished lower Thursday largely on technically oriented selling but also due to a soft U.S. durable-goods orders report and the weaker tone in equities, analysts said.

Trading remained thin between the Christmas and New Year's Day holidays, they reported.

The most-active March copper contract fell 3.80 cents to settle at $3.1320 per pound on the Comex division of the New York Mercantile Exchange.

"Durable-goods orders looked weak," said Eric Wittenauer, analyst with A.G. Edwards. "In addition, you ran into resistance at the $3.21 area and worked lower after hitting that early on. And we're also down with equities."

The government reported that durable-goods orders - big-ticket items such as appliances that often require copper - rose 0.1% in November. However, this was short of the 3% consensus forecast rise. As copper closed, the Dow industrials were around 160 points lower for the day.

Copper came into the session with a softer tone even ahead of the data, then the March futures remained in a fairly narrow $3.11-$3.15 pit range. The early pullback was profit-taking after the market ran into chart resistance, said Scott Meyers, senior trading analyst with Pioneer Futures.

"It hit a technical point at $3.2085-$3.21 and then they started hitting it," he said.

The $3.21 peak was only marginally above the Dec. 3 low of $3.2085.

March copper also turned back after not developing much momentum above a key Fibonacci level, said J.B. Slear, CEO of Fort Wealth Trading. The market sold off from an Oct. 3 high of $3.7500 to the Dec. 17 low of $2.8530, hurt by weak housing and auto sales, Slear said. Then the market bounced, but found limited momentum above the 38.2% Fibonacci retracement, which comes in a little above $3.19 a pound.

"We broke just above it but now are down below it now," he said. "So this is a fight zone here. This is all technical, really."

Ralph Preston, senior market analyst with Heritage West Financial, said copper's bounce from the $2.8530 low was a "massive reversal," yet it isn't clear which direction this and other markets may travel next.

"Hedge and pension funds are distorting prices across the board as they pull out and dump money into the markets," Preston said.

One of the focal points for copper on Friday will be new-home sales, said Wittenauer. The housing market is eyed closely by traders since copper goes into construction for uses such as electrical wiring and pipes. The report is due out at 10 a.m. EST (1500 GMT), with sales expected to fall 1.8% to an annual rate of 715,000 during November.

"That could prove to be a number that the market will move off of," Wittenauer said.

The other main report Friday will be the Chicago Purchasing Managers Index at 9:45 a.m. EST (1445 GMT), forecast to slip to 52 in December from 52.9 last month.

Inventories of copper stored in London Metal Exchange warehouses dipped 100 metric tons Thursday, leaving them at 198,225. The most recent Comex inventory data, released late Wednesday afternoon, were up 268 short tons at 15,383 short tons.

Linda Piazza : 12/27/2007 1:59:11 PM

Weren't natural gas inventories to be released today? Has anyone seen it?

Keene Little : 12/27/2007 1:58:06 PM

Wave counts on short term charts (especially shorter than 60-min charts) are not as reliable but I still use them as a guide. Right now the wave count for today's decline does not look complete so that has me watching for the possibility that we haven't seen the lows for the day yet. Stay aware of that possibility if you're playing the long side on the current bounce.

The COMP gave a clear signal for a top to the rally leg from Dec 18th by breaking down from its sharp up-channel. I show it dropping a little lower today before setting up a larger bounce which should be followed by another move lower (shown in dark red): Link

Assuming it drops into the new year as depicted, once it has a 3-wave move down (shown with wave (iii) on Jan 2nd) I will then watch to see what kind of bounce we get in helping to determine what's playing out here (the bullish or bearish wave count).

Right now there's no way to tell with confidence what the larger wave pattern is so we'll play this one small leg at a time until the bigger picture clears up some more.

Linda Piazza : 12/27/2007 1:57:40 PM

So here's the lunchtime lull typical action (see my 1:07:24 post), with the SPX's 9-ema flattening and with the SPX values attempting to move across it toward the top of the smallest channel. The 9-ema is now at 1484, with further potential resistance at 1484.70 and with the top of that channel now at 1486.45. Bulls want to see the SPX maintain 15-minute closes above the 9-ema; bears want to see it drop beneath midchannel support now at about 1480.60 and then sustain 15-minute closes below a turning-lower 9-ema. I don't pretend to know what's going to happen. Big money is testing, see whether support or resistance is going to hold and making decisions accordingly. We just have to wait for the outcome. Keep your stops set to protect your profits if in bearish positions.

Jeff Bailey : 12/27/2007 1:42:57 PM

Applied Materials (AMAT) $17.82 -1.98% ... American Technology Research analyst Bill Ong said Thursday that Applied Materials will likely face weak orders for semiconductor equipment through the early spring of next year. In a research note, Ong said that channel checks suggest Applied Materials' orders in the first quarter of 2008 will likely be down 10% from the fourth quarter, and could fall as much as 15% in the company's spring quarter.

Jeff Bailey : 12/27/2007 1:41:38 PM

EMC Corp. (EMC) $18.58 -2.00% ...

Jeff Bailey : 12/27/2007 1:41:14 PM

Document Sciences Corp. (DOCX) $14.41 +74.87% ... EMC Corp. (EMC) will acquire the provider of document output management software for $14.75 a share, or $85 million.

Jeff Bailey : 12/27/2007 1:39:59 PM

Warner Music Group (WMG) $6.07 +1.67% ...

Jeff Bailey : 12/27/2007 1:39:33 PM

Amazon.com (AMZN) , $94.28 +1.54% .. MP3 customers can now purchase songs from Warner Music Group Corp.'s (WMG) digital audio catalog music, the two companies said in a joint release Thursday. Amazon and Warnet Music said they will also offer digital music products such as album bundles featuring exclusive tracks. Amazon MP3, available from the Seattle Internet retailer, offers a wide selection of a la carte DRM-free MP3 music downloads with more than 2.9 million songs from over 33,000 record labels.

Keene Little : 12/27/2007 1:39:22 PM

I haven't ruled out in my own mind the potential for another rally leg (up to SPX 1507.57 for equality between the 1st and 5th waves in the move up from Dec 18th)--updated 60-min chart: Link . But if this drops lower again then I'll start to have serious doubts about the short term bullish potential (shown in green).

Keene Little : 12/27/2007 1:35:23 PM

The downtrend lines along the today's highs have now been broken after the last low left a bullish divergence so that should mean we have a tradeable bottom in place. We could get a pullback that tests today's lows but look at it as a buying opportunity for a larger bounce to at least correct today's decline. Just don't let a decline get away from you if you're long since another drop lower could accelerate.

Jane Fox : 12/27/2007 1:29:54 PM

Well this is certainly not looking all that bullish but what it is, is a very clear chart and for that we must all be quite thankful. A close below the swing low at 1435 not only confirms the lower high but the head and shoulders. Link

Linda Piazza : 12/27/2007 1:23:14 PM

The USDJPY has still been dropping, although it's trying to steady over the last 45 minutes or so. It's at 113.61 as I type. I think we can conclude that it has definitely now broken down out of its bearish broadening formation. A retest of the formation's former support, now at about 113.85, and rollover from that former support might be needed for confirmation.

Keene Little : 12/27/2007 1:11:59 PM

Got another poke lower but now the short term charts are starting to hint of bullish divergences so tighten up your stops if you're short. Give it a little breathing room and follow it lower in case it turns into a trend down day--use a downtrend line along the highs of the bounces and stick with it as long as the downtrend holds (which is not far above current price action here).

Linda Piazza : 12/27/2007 1:07:24 PM

It's about time for the lunchtime lull to set in soon. During that time, the SPX's 15-minute 9-ema sometimes flattens. On a day when there's been a strong decline, like today, the SPX sometimes rises during the lunchtime lull through that flattening 9-ema to the other side of the smallest channel. It's a dangerous time for bulls and bears because they don't know whether that's a true sign of improvement in the tenor or just a lunchtime-lull effect. Right now, the 9-ema is at 1484.49 and still descending, while the other side of the smallest channel is now at 1487.12 but still descending.

Keene Little : 12/27/2007 12:59:43 PM

Getting a little bounce now. If price drops again to a new low then the pattern will look like it could stair-step lower for the rest of the day. I'm watching to see how the current bounce develops.

Linda Piazza : 12/27/2007 12:50:36 PM

If the SPX were to close today beneath about 1485, it will have completed a fairly classic version of a candlestick reversal signal known as an evening star pattern. If it closes beneath about 1487, the version wouldn't be as clean, but would still be rather bearish. A close above the 200-sma, though, would now involve a fairly pronounced bounce and would question what's next.

Keene Little : 12/27/2007 12:45:19 PM

The market is still heading lower and the indices have dropped below where I thought they might find support. I don't see evidence yet of a bottom being put in either (no bullish divergences to speak of). Therefore don't try to catch any falling knives here. This is starting to smell more bearish (meaning a move back down to SPX 1420 that I showed on last night's charts (light green).

Jeff Bailey : 12/27/2007 12:44:01 PM

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

Linda Piazza : 12/27/2007 12:41:49 PM

The SPX approaches its target and potential support on 15-minute closes, with the SPX at 1481.10 as I type. This is typically strong enough support to at least steady the SPX for a few candles, if not bounce it, but we'll have to see how things progress today. If it bounces, bears want to see sustained 15-minute closes beneath the 9-ema, now just below 1486 but still descending.

Linda Piazza : 12/27/2007 12:39:24 PM

The USDJPY is now at 113.76, having broken beneath the descending supporting trend line that had been in place since last Friday. This morning's overnight pop in the USDJPY had broadened its formation since Friday, so that it looked like a bearish broadening formation. There's a problem with these. Support and resistance is broadening, so how do you know if support has truly been broken, as it appears it has been, or if the formation is just broadening further? I'm going to be watching how the USDJPY reacts on tests of its 15-minute 9-ema, now at 113.94 but still descending. Bears want 15-minute closes beneath that average.

Potential next short-term support and target exists at 113.66.

Linda Piazza : 12/27/2007 12:31:54 PM

The SPX is now testing that potential Fib support I mentioned earlier, near 1483.22, with the next Keltner target and potential support on 15-minute closes now at 1480.95.

Jeff Bailey : 12/27/2007 12:28:30 PM

SPY Alert! $148.13 -0.94% ... probes its "Santa Claus Rally" benchmark, or Friday's close.

Keene Little : 12/27/2007 12:24:26 PM

SPX 50-dma is at 1483.

Keene Little : 12/27/2007 12:23:42 PM

The DOW has pulled back to its 50-dma at 13411 and its 20-dma is just below at 13401.

Jeff Bailey : 12/27/2007 12:18:30 PM

ETF Top 10 Percentage Winners Link

Keene Little : 12/27/2007 12:17:53 PM

One other SPX level that I'll watch for support, if 1483 doesn't hold, is near 1481.50 at the bottom of a parallel up-channel for price action since the Dec 18th low. And then a projection from there for equality between the 1st and 5th waves would be near 1509 and the downtrend line from October: Link

Jeff Bailey : 12/27/2007 12:15:54 PM

ETF Top 10 Percentage Losers Link

Jeff Bailey : 12/27/2007 12:10:16 PM

S&P Sees Risk Of Cut To Pakistan Ratings If Violence Grows

Keene Little : 12/27/2007 12:09:57 PM

The RUT is approaching its broken downtrend line from October, currently near 782.25.

Keene Little : 12/27/2007 12:08:11 PM

I'm back and I see no bottom yet (the current little bounce looks like a little bear flag). I think we could be close to a tradeable bottom though. Watch SPX 1483.60 area.

Jane Fox : 12/27/2007 12:00:16 PM

SAN FRANCISCO (MarketWatch) -- Crude-oil futures rose for a fourth day on Thursday to above $97 a barrel after government reports showed U.S. crude inventories fell for a sixth week and as geopolitical tensions escalated after former Pakistani Prime Minister Benazir Bhutto was assassinated.

Jeff Bailey : 12/27/2007 11:55:37 AM

S&P Raising Indicated Dividend Rate On S&P 500 To $28.75

DJ- McGraw-Hill Cos.'s (MHP) Standard & Poor division said it raised the indicated dividend rate on the S&P 500 to $28.75 from $26.55.

The New York index provider said cash dividends set another record, paying out to $27.73 from $24.88 a year earlier.

The company said the 11.5% increase in dividend payments translates into $246.6 billion in aggregate payment, up from $224.8 million in 2006.

Standard & Poor said its data also shows that corporate buybacks are continuing to outpace dividends in both aggregate dollars and growth.

Linda Piazza : 12/27/2007 11:50:15 AM

The SPX has been closing 15-minute periods beneath the former support, now at about 1487.38, but it hasn't been dropping lower. Next potential Keltner support is now at 1480.80, with potential Fib support at about 1483.22. The potential downside target remains at that next Keltner support, but there's always even more doubt about further declines when candles don't fall away from broken support but instead cluster near it.

Linda Piazza : 12/27/2007 11:14:00 AM

Potential Fib support on the SPX exists at about 1482.22. Next Keltner support (and potential downside target) is now at 1480.49. This supposes a 15-minute closes beneath 1487.57, which isn't a given yet. A 15-minute close above that erases the potential downside target.

Linda Piazza : 12/27/2007 11:07:44 AM

Short-term look at the VIX: for the first time since 12/17, the VIX is sustaining 15-minute closes above a particular channel line, a sign of increasing short-term strength. As I type, it's above yesterday's high and is right at the daily 200-ema, at 19.55, a moving average that has thwarted VIX advances the last few days. See my 10:01:04 post for background on the significance of this moving average, as well as a chart.

Linda Piazza : 12/27/2007 10:51:21 AM

That potential SPX Keltner support mentioned in my 10:40:12 post is now being tested. It might be strong enough to prompt a bounce back up toward Keltner nearby resistance, now at 1490.40 and 1491.40 on 15-minute closes, but resistance is beginning to look a little stronger than support. The bulls are going to have to call out some of their buddies to break through that resistance on 15-minute closes. If the SPX falls through the support instead on a 15-minute close, the next Keltner support is now at 1480.40 but is still rising. Be careful on a holiday week in believing in anything technical analysis says too strongly, though. Your object, if already in a trade, is to protect your money and do all you can not to suffer a loss, or keep it as small as possible if your trade goes wrong.

Linda Piazza : 12/27/2007 10:40:12 AM

The SPX has next potential Keltner support at 1487.59 on 15-minute closes, so just below the previously reached low of the day.

Jeff Bailey : 12/27/2007 10:32:46 AM

PetroChina (PTR) $181.77 -1.22% ...

Jeff Bailey : 12/27/2007 10:32:26 AM

US Oil Fund (USO) $76.44 +0.69% ...

Jeff Bailey : 12/27/2007 10:32:05 AM

DOE: US Crude Oil Stockpiles -3.3 Million Barrels

Linda Piazza : 12/27/2007 10:31:20 AM

The SPX's 15-minute 9-ema is now at 1492.88; the breakout benchmark, at 1493.50. Bears want to see these hold as resistance on 15-minute closes.

Jeff Bailey : 12/27/2007 10:28:57 AM

30-year Yield ($TYX.X) ... currently down 5.1 bp at 4.635%.

Jeff Bailey : 12/27/2007 10:28:21 AM

10-year Yield ($TNX.X) ... currently down 6.1 bp at 4.220% ...

Keene Little : 12/27/2007 10:28:10 AM

It's hard to tell whether we've put in a bottom for now or if instead we're just getting a small bounce before heading lower. I've got to run out to the Dr.'s office to have my knee checked out and hopefully it won't take long. I'll be back as quick as I can.

Jeff Bailey : 12/27/2007 10:27:34 AM

Freddia Mac: 30-year Fixed-Rate Mortgage Averages 6.17% Dec 27 Week

Jeff Bailey : 12/27/2007 10:26:12 AM

Iran Condemns "Terrorist" Bhutto Killing In Pakistan

DJ- Iran Thursday condemned the assassination of Benazir Bhutto and urged the authorities to track down the "terrorists" responsible for killing the former Pakistani prime minister.

"The criminal action today in Rawalpindi is strongly condemned," said Foreign Ministry Spokesman Mohammad Ali Hosseini after the suicide attack in Iran's southeastern neighbor, the Web site of state television reported.

"The Pakistan government should use all efforts to identify the terrorist group which caused this incident and punish them to prevent terrorist groups from finding opportunities to undertake such actions again," he added.

Jeff Bailey : 12/27/2007 10:16:18 AM

APPLE TO OFFER FOX MOVIE RENTALS DIGITALLY

DJ- In an effort to jump-start the market for online movies, News Corp.'s Twentieth Century Fox and Apple are preparing to announce a deal in which Fox movies would be available for rent digitally through Apple's iTunes Store.

AAPL $202.22 +1.64% ...

Jeff Bailey : 12/27/2007 10:15:11 AM

ETHANOL CASH MARGINS LIKELY TO RISE

DJ- Ethanol prices are now trading in line with gasoline prices for the first time since late August and, fueled by the new U.S. energy bill, are likely to rise further, Citigroup says in a recent report.

Jeff Bailey : 12/27/2007 10:14:35 AM

IRAQ OIL EXPORTS HIT NEW POST-WAR HIGH

DJ- Iraq exported 1.96 million barrels of oil a day in November, the highest level since the March 2003 U.S.-led war in Iraq and up on the 1.8 million barrels a day exported in October, ministry figures obtained by Dow Jones Newswires show.

Jeff Bailey : 12/27/2007 10:13:27 AM

ECB DRAINS LIQUIDITY, MORE TENDERS EXPECTED

DJ- European Central Bank continues to drain liquidity in an effort to normalize euro-zone money markets, but analysts say there is still a long way to go before this is achieved. Around euro 145.640 billion has been pulled at a fixed rate of 4.00%.

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

MBA's Weekly Application Survey at this Link

Jeff Bailey : 12/27/2007 10:10:52 AM

JP Morgan (JPM) $44.47 -1.04% ...

Jeff Bailey : 12/27/2007 10:10:29 AM

Merrill Lynch (MER) $53.81 -1.33% ...

Jeff Bailey : 12/27/2007 10:10:03 AM

Citigroup (C) $29.96 -1.60% ...

Jeff Bailey : 12/27/2007 10:09:30 AM

CITI SEEN WRITING DOWN $18.7B, CHOPPING DIVIDEND

DJ- Goldman Sachs analyst predicts Citi would cut its dividend by 40% to preserve capital as it writes down $18.7 billion in the 4Q on losses related to CDOs, sending Citi shares down 3%. Goldman also hikes its predictions for Merrill Lynch and JPMorgan.

Jeff Bailey : 12/27/2007 10:05:50 AM

Conference Board's Consumer Confidence Index Improves Moderately In December

DJ- The Conference Board Consumer Confidence Index, which had been declining since the summer, posted a slight increase in December. The Index now stands at 88.6 (1985=100), up from 87.8 in November. The Present Situation Index, however, decreased to 108.3 from 115.7 in November. The Expectations Index rose to 75.5 from 69.1.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world's largest custom research company. The cutoff date for December's preliminary results was December 18th.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "This month's slight gain in Confidence was due solely to an increase in the Expectations Index. Consumers' short-term outlook regarding business conditions, employment, inflation and stock prices improved marginally. However, while consumers are less negative about the near-term future, they remain far from optimistic. Furthermore, persistent declines in the Present Situation Index indicate the economy is still losing momentum. In fact, in assessing the current job market, pessimists now outnumber optimists. Regarding business conditions, the gap between the two is almost nonexistent."

Consumers' appraisal of present-day conditions continues to paint a dismal picture. Those claiming conditions are "good" decreased to 20.3 percent from 22.5 percent. Those saying conditions are "bad" increased to 20.0 percent from 18.9 percent. Consumers' assessment of the job market was also less positive. Those saying jobs are "hard to get" rose to 23.5 percent from 21.4 percent, while those claiming jobs are "plentiful" declined to 22.7 percent from 23.3 percent in November.

Consumers' short-term expectations, while reversing a four-month slide, remain at levels that bear watching. Those expecting business conditions to worsen in the next six months decreased to 14.1 percent from 16.6 percent. Those anticipating business conditions to improve increased to 13.8 percent from 12.4 percent.

The outlook for the labor market was also less pessimistic. The percent of consumers expecting more jobs in the months ahead inched up to 11.2 percent from 10.6 percent, while those anticipating fewer jobs edged down to 19.9 percent from 22.8 percent. The proportion of consumers expecting their incomes to increase in the months ahead decreased to 19.0 percent from 19.4 percent.

Jane Fox : 12/27/2007 10:04:58 AM

It certainly looks the SPX 1490 "zone" still has some influence over this market and that the right shoulder of the head and shoulders is still in play. This right shoulder building has the potential until the swing high (the head) at 1523 is broken. Link

Jane Fox : 12/27/2007 10:02:58 AM

WASHINGTON (MarketWatch) -- U.S. consumer confidence rose in December due to an increase in short-term expectations, though consumers "remain far from optimistic," the Conference Board reported Thursday. The consumer confidence index rose to 88.6 from a revised reading of 87.8 in November. The initial estimate for November was 87.3. December's level is also above the 86.4 expected by economists surveyed by MarketWatch. Consumer outlook on business conditions, employment, inflation and stock prices "improved marginally," according to Lynn Franco, director of consumer research at the private Conference Board. However, December's reading is below last year's level of 110.0, as consumers have been concerned about higher energy prices and falling home prices.

Jane Fox : 12/27/2007 10:02:34 AM

U.S. Dec. consumer confidence above 86.4 expected

U.S. Dec. consumer confidence 88.6 vs. 87.8 in Nov

Keene Little : 12/27/2007 10:03:41 AM

In case the leg down this morning is wave-c of an a-b-c correction from yesterday morning's high, watch for potential support on the DOW at 13450 (Fib projection for SPX is lower at 1483.59).

Linda Piazza : 12/27/2007 10:01:04 AM

Yesterday in my 3:18:27 post, I noted that the VIX was testing the same moving average, the 200-sma, that it was last testing October 9-11. That time, the VIX bounced from that moving average and began climbing while indices began dropping. I noted that bears wanted the same thing to happen this time while bulls wanted the opposite. From September 06 - March 07, the VIX had dropped below the 200-sma and equity markets zoomed. That's what bulls want to see happen again. So far, this morning, the VIX is bouncing, although it's again finding resistance at its 200-ema, as it has the last three days. That's currently at 19.55. So, bears, you want the VIX to sustain values above 19.55 into the close; bulls, you want the VIX to sustain values beneath 18.80 and preferably beneath the 12/21 low of 18.28 into the close. It's at 19.43 as I type, slightly above its level on this chart: Link

Jane Fox : 12/27/2007 9:55:42 AM

Here is a chart of the US$. It has broken out of the upward channel and I am now more defensive because I thought it would stay within that channel. However, markets rarely do what I think they should and this retracement so far is not even to the 38.20% fib. Link

Jane Fox : 12/27/2007 9:48:31 AM

TRIN is also on the side of the bears at 1.59.

Jane Fox : 12/27/2007 9:47:18 AM

The VIX is making new daily highs supporting the bearish AD line today. This is different from yesterday morning when the VIX was bullish and did not support the bearish AD line.

Keene Little : 12/27/2007 9:47:23 AM

It's possible that this morning's sharp drop is completing a larger a-b-c correction from yesterday morning's high (an expanded flat correction, on the DOW and SPX) in which case the drop will get completely retraced as the market heads higher again. Stay cautious and short term oriented in your trades right now.

Linda Piazza : 12/27/2007 9:46:37 AM

Here's what SPX bears want to see and what bulls don't want to see: If there's a bounce from the level now being tested, bears now want to see the SPX finding resistance on 15-minute closes at the breakout benchmark, now at 1493.09. They want to see the 9-ema continue its descent and for it, too, to drop below 1493.09. It's now at 1495.07 but dropping. They then want sustained 15-minute closes beneath that 9-ema and they want the 9-ema to continue moving lower and not flatten. If you don't have Keltner channels and don't know or care how to use them, you can still put a moving average such as the 9-ema up and watch the action compared to that moving average.

Linda Piazza : 12/27/2007 9:43:04 AM

The USDJPY dropped like a stone from 6:30, about when the then-news that Pakistan's opposition leader had been critically injured, until a few minutes ago, when it reached down to 113.90, nearly touching the descending supporting trendline on which it's been bouncing since Friday. It's now at 114.13, having bounced a little from that trendline. My Keltner charts tell me that the USDJPY is still in breakout mode and that it will take sustained 15-minute closes beneath 113.72 to undo that breakout mode. The support of the descending trendline will be violated if the USDJPY does that, too.

Linda Piazza : 12/27/2007 9:37:53 AM

The SPX has been in breakout mode on its 15-minute chart for slightly more than two trading days now, having broken out late Friday. That's a long time for such exuberance. Now the SPX is breaking through the breakout benchmark, currently at about 1493 on 15-minute closes. It's about time for the SPX to break back inside the Keltner channels, but bears shouldn't make too many assumptions just yet. The goal for big money this week is probably just for the juniors in charge to keep things relatively steady. Plus, RSI has already dipped to 30 this morning as the 1490 historical and 1490.50 Keltner potential support is tested. This first 15-minute period hasn't ended, and it's still possible for a bounce now to take the SPX back above that breakout benchmark by the close of the first 15-minute period.

Jane Fox : 12/27/2007 9:36:08 AM

AD line is a bearish -814 about the same it was this time yesterday.

Jane Fox : 12/27/2007 9:33:58 AM

One thing I have learned over the last few years is do not short Gold. I thought this market had found resistance because the US$ had found support but Gold does not play totally by technical analysis rules. It is influenced a great deal by politics because the US$ is influenced by politics. Link

Keene Little : 12/27/2007 9:15:49 AM

Equity futures started to drop before the durable goods number came out (leaked?) and dropped further after the news so we've got a negative open facing us. I mentioned last night that we should get a pullback today and then potentially another leg up (maybe tomorrow) to finish the move up from December 18th. It will be the form of the pullback (assuming we get it) that will provide some clues as to what's next.

Jane Fox : 12/27/2007 9:09:36 AM

Markets did not like the durable goods report out at 8:30 but only the DOW futures (YM) have broken their previous day lows. Link

Jane Fox : 12/27/2007 9:04:30 AM

WASHINGTON (MarketWatch) -- Seasonally adjusted first-time jobless claims nudged up in the most recent weekly data, while continuing claims reached the highest level in more than two years, the government reported Thursday.

Initial claims rose 1,000, reaching 349,000 for the week ended Dec. 22, according to the Labor Department. The previous week's initial jobless claims level was revised to 348,000 from an earlier estimate of 346,000.

Initial claims were at 322,000 during the same period in the prior year. Economists watch claims closely because an increase could be a leading indicator of a slowdown.

Continuing jobless claims gained 75,000, hitting 2.71 million for the week ended Dec. 15 and the highest level seen since Nov. 12, 2005.

Jane Fox : 12/27/2007 9:03:26 AM

WASHINGTON (MarketWatch) -- A big jump in demand for civilian aircraft pushed durable goods orders up for the first time in four months in November, the Commerce Department reported Thursday. Excluding transportation orders, however, durable goods orders fell by 0.7% in November. New orders for non-defense aircraft and parts shot up by 20.9% in November, the data show. However, new orders for defense aircraft and parts dropped by 20.1% in the same month. Economists surveyed by MarketWatch were expecting orders for durable goods to climb by 2.9% in November after falling by 0.2% in October.

Jane Fox : 12/27/2007 9:01:08 AM

Dateline WSj - Former Pakistani Prime Minister Benazir Bhutto was killed in an apparent suicide bombing in the military garrison town of Rawalpindi, according to her aides, throwing Pakistan's political system into a new round of turmoil.

Ms. Bhutto was emerging from a political rally in Rawalpindi when an attacker fired shots and detonated himself, according to news reports from Pakistan. At least a dozen people are believed dead from the blast.

"At 6:16 p.m. she expired," Wasif Ali Khan, a member of Ms. Bhutto's Pakistan People's Party, told the Associated Press. He spoke from the Rawalpindi General Hospital where the former prime minister was taken after the attack.

A senior military official, who spoke on condition of anonymity because he was not authorized to comment, confirmed that Ms. Bhutto had died.

Linda Piazza : 12/27/2007 8:55:42 AM

The USDJPY is still dropping after the news from Pakistan about the death of opposition leader Benazir Bhutto in a suicide bombing attack and after our economic releases at 8:30. It's at 114.09 as I type, having tumbled from a high of 114.62 just two hours ago. I hesitate to be reporting on currencies, money, in the same sentence in which I mention a person's death, but our subscribers need to know the impact on their positions. That's not an indication of personal insensitivity.

Linda Piazza : 12/27/2007 8:35:33 AM

The USDJPY broke higher again last night. I can't find figures on the November Housing Starts number released in Japan last night, but with the weakness in the yen compared to the dollar and the euro overnight, I would guess that it wasn't a strong number. Rather it must be one that currency traders believe will keep the Bank of Japan's Fukui from raising rates. As the USDJPY rose overnight, so did our futures from their slightly negative levels late last night, but the just-released economic numbers here in the U.S. pulled them down again. The USDJPY has begun dropping off its early morning high of 114.62 to its current 114.36.

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