Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Keene Little : 1/9/2008 10:46:56 PM

Thursday's pivot tables: Link and Link

The bounce off Wednesday's lows looked very bullish and that could have marked the low for now. But we'll need to see some follow through on Thursday in order to convincingly call a bottom for now. Otherwise the EW count would look ideal with another new low to complete the decline from Dec 26th and set up a larger rally into next week and beyond. 60-min charts:
DOW: Link
SPX: Link
COMP: Link
RUT: Link

OI Technical Staff : 1/9/2008 9:59:59 PM

The Market Monitor has been archived.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

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

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

Jeff Bailey : 1/9/2008 5:47:46 PM

Dow Industrials Post Biggest Gain Of Year ... +146 to finish 12,735.

Jeff Bailey : 1/9/2008 5:15:06 PM

Current OPEN MM Profiles that I've made at this Link

CLOSED out the RIO-MG at $3.70 as RIO traded $31.40.
Will monitor again long put and SELL COVERED put strategy (see 11/27-12/4 RIO-XT and 12/13-12/20 RIO-XZ).

Jeff Bailey : 1/9/2008 4:53:44 PM

WD-40 (WDFC) $36.29 +0.13% ... plunges to $34.50 on headline numbers.

Jeff Bailey : 1/9/2008 4:51:31 PM

Men's Wearhouse (MW) $25.44 +3.83% ... plunges to $21.90 extended on headline numbers.

Jeff Bailey : 1/9/2008 4:49:40 PM

American Eagle Outfitters (AEO) $17.72 -0.33% ... trades higher on December Same-store sales at $18.55.

Reuters Story Link

Jeff Bailey : 1/9/2008 4:46:44 PM

Ruby Tuesday (RT) $7.24 -6.09% ... falls to $6.71 extended on headline numbers.

Jeff Bailey : 1/9/2008 4:45:57 PM

US Energy Systems (USEY) $0.11 -54.16% ... Files For Chapter 11

Jeff Bailey : 1/9/2008 4:43:20 PM

Alcoa (AA) $31.25 +0.80% ... released for trade ... $32.50 extended.

Jeff Bailey : 1/9/2008 4:29:39 PM

INDU Components (Price Weighted Index) at this Link

Linda Piazza : 1/9/2008 4:23:26 PM

The RUT faces an important test tomorrow morning at about 718-718.50. This is the location of the descending trendline off the 3/05/07 and 8/16/07 lows, as well as potential Keltner support. Those hoping for gains would prefer to see the RUT gap up above that level tomorrow morning and continue gaining from there, isolating today's candle below the line. Bears hoping for more downside want to see an open below that level and a rollover from beneath it.

Jeff Bailey : 1/9/2008 4:22:18 PM

AA also traded its 08/16/07 relative low today.

See today's 02:23:48

Keene Little : 1/9/2008 4:20:19 PM

If the bulls can keep the buying going tomorrow then they'll have a good chance of breaking the downtrend lines from Dec 26th. SPX got parked just beneath its downtrend line so a break above it followed by a pullback to it for support would be bullish. If it consolidates underneath the trend line then another, and should be final, leg down is likely. Link

Jeff Bailey : 1/9/2008 4:17:07 PM

First Dow Indu component to report as earnings season kicks off.

Jeff Bailey : 1/9/2008 4:16:33 PM

Alcoa (AA) ... Earnings Press Release Link

Consensus was for EPS of $0.33 on Rev of $6.92B

Jeff Bailey : 1/9/2008 4:14:35 PM

Alcoa (AA) $31.25 +0.80% ... Halted on headline numbers.

Jane Fox : 1/9/2008 4:10:49 PM

Reports for tomorrow

8:30a.m. Initial Jobless Claims. Expected: +4K. Previous: -21K.

10:00a.m. Nov Wholesale Trade. Previous: Unch.

10:00a.m. DJ-BTMU Business Barometer. Previous: +1.2%.

Jeff Bailey : 1/9/2008 3:58:22 PM

While VIX.X traded WEEKLY R2 this afternoon, VXO juuuuust barely missed its WEEKLY R1.

Jeff Bailey : 1/9/2008 3:57:10 PM

On 12/26/07, VXO traded as low as 19.20. Traded as high as 28.16 today.

So ... since that time we've seen much more call selling/put buying than we have call buying/put selling.

Jeff Bailey : 1/9/2008 3:55:33 PM

Would look for a dart lower in VXO.X (biggest of the big volatility measures for DIA) to get observation that call buying/put selling starting to outnumber call selling/put buying.

Linda Piazza : 1/9/2008 3:55:12 PM

It's time to make end-of-day decisions, if you haven't already. We've seen quite a recovery off the low with that recovery coming at key Keltner and horizontal support on a weekly close. We haven't seen that weekly close. Those in bullish positions must still factor in vulnerability at least to 1384-1388 if not all the way to 1370-1375. Bears must note today's strong spring off presumed support, with the possibility of more follow-through tomorrow. That sets up the possibility for a pullback from that first thing tomorrow morning.

In normal situations, I'd come down on the side of more follow-through tomorrow. This is not a normal situation. The daily chart suggests it as a possibility, but be aware of the 11/26/07 low of 1406.10 just ahead and the potential for strong resistance to be found beginning there.

Jeff Bailey : 1/9/2008 3:54:12 PM

No DIA option traders flinching at this point.

Jeff Bailey : 1/9/2008 3:53:47 PM

VXO.X 26.40 ... DAILY Pivot 25.89.

Jeff Bailey : 1/9/2008 3:53:00 PM

DIA $126.94 +0.86% ... doing battle with MONTHLY S2.

Jeff Bailey : 1/9/2008 3:50:28 PM

KB Home (KBH) $16.49 -1.72% ...

Jeff Bailey : 1/9/2008 3:50:00 PM

S&P: KB Home Ratings, Outlook Unaffected By 4Q07 Results. Already Factored In

Linda Piazza : 1/9/2008 3:49:05 PM

After a punch down to the 15-minute 9-ema, the SPX gained again. That 9-ema has now risen to 1396.11, so short-term (and maybe intermediate-term, too, but that remains to be seen) bulls want to see that 9-ema's support maintained on 15-minute closes. The SPX is at 1404.90 as I type.

Jeff Bailey : 1/9/2008 3:47:37 PM

Wachovia (WB) $34.96 +2.64% ... pressed against Jan $35 strike.

Jane Fox : 1/9/2008 3:46:54 PM

Nice recovery but the bulls have a very very hard uphill battle ahead of them. Levels of resistance everywhere. Link

Jeff Bailey : 1/9/2008 3:42:37 PM

DJ- Chile Stocks End Down 2.3% On Expectations Of Thu Rate Hike

Jeff Bailey : 1/9/2008 3:41:43 PM

DJ- Red Hat: Patent Infringement Suit Filed Against Company

RHT $19.83 -0.30% ...

Linda Piazza : 1/9/2008 3:35:57 PM

The SPX's 15-minute 9-ema is now at 1392.29, and those hoping for continued gains would like to see that hold as support on 15-minute closes.

Keene Little : 1/9/2008 3:27:24 PM

The DOW is up almost 200 points off the this afternoon's low. Gotta love them short covering rallies. The question is whether it's just another bear market rally or the start of something more significant to the upside. We won't know until we see what kind of pullback/decline we get next and whether or not the downtrend lines from Dec 26th can be broken. Take nothing for granted and don't be afraid to peel some money off the table if you got long for this bounce.

Jeff Bailey : 1/9/2008 3:26:51 PM

DAW-MZ has 15,084 OI. High/Low has been $5.15/$3.55. 1,291 traded all exchanges.

Jeff Bailey : 1/9/2008 3:25:01 PM

DAW-AB was heaviest OI (32,131) on call side. They're quiet with just 122 traded.

Jeff Bailey : 1/9/2008 3:23:00 PM

Sign of some pre Op-Ex action.

Jeff Bailey : 1/9/2008 3:22:32 PM

VIX.X 24.26 ... after an afternoon kiss of WEEKLY R2.

Jeff Bailey : 1/9/2008 3:17:03 PM

03:00 Internals found at this Link

Keene Little : 1/9/2008 3:06:54 PM

We've got a nice 5-wave move up off today's low. We will either acclerate higher from here (in a strong 3rd of a 3rd wave) or pullback now. A pullback would set up another rally leg.

Linda Piazza : 1/9/2008 3:05:41 PM

Short-term SPX bulls want to see the SPX maintain 15-minute closes above the 9-ema, now at about 1389.30 but rising now. The SPX is at 1396.33 as I type.

Keene Little : 1/9/2008 3:04:56 PM

Got a nice bounce off the low. Now the question is whether that was it for the decline from Dec 26th or will we get a bounce and one more new low as I've been showing on the charts. The updated SPX 60-min chart shows a bounce into tomorrow followed by one more new low into the end of the day tomorrow or Friday. A break above the downtrend line, currently up near 1412 and then 1400 by the end of the day tomorrow, is needed to confirm a bottom is in. Then it will be time to buy pullbacks again. Link

Linda Piazza : 1/9/2008 2:56:03 PM

A price update of the weekly SPX chart that was linked to my 1:48:14 post, with the original annotations: Link This weekly chart had also been the basis of the vulnerabilities that I had mentioned in my 9:33:59 post. This week's close will be important on a Keltner basis, but I've been watchful all day for signs that there will be an attempt to steady the SPX at converging Keltner and horizontal support, as there's the possibility of a countertrend bounce beginning at any time. I have no idea if it will hold or not as the week is far from concluded.

Jeff Bailey : 1/9/2008 2:54:07 PM

VIX.X 25.12

Jeff Bailey : 1/9/2008 2:53:58 PM

Swing trade put exit alert! ... for the one (1) Companhia Vale Do Rio Doce RIO Jan $35 Put (RIO-MG) at the bid of $3.70.

RIO $31.40 +0.54% ...

Jeff Bailey : 1/9/2008 2:46:00 PM

US Treasury Freezes Assets Of Iran Gen, Syria TV Station, 3 Others

DJ- President George W. Bush's administration moved Wednesday to financially clamp down on a general in Iran's powerful military wing, a Syrian TV station and three other individuals accused of helping insurgents in Iraq.

The Treasury Department's action means that any bank accounts or other financial assets found in the U.S. belonging to those named on Wednesday must be frozen. Americans also are prohibited from doing business with them.

Ahmed Foruzandeh, a brigadier general in Iran's Revolutionary Guard Corps' Quds Force was covered by the department's order. The Quds Force, Iran's special operations unit, is part of the Guard Corps, the country's military wing. The U.S. said Foruzandeh and his associates provided financial and material support for violent acts against U.S.-led coalition forces in Iraq, as well as Iraqi security forces.

"Iran and Syria are fueling violence and destruction in Iraq," said Stuart Levey, Treasury's undersecretary for terrorism and financial intelligence. "Iran trains, funds and provides weapons to violent Shia extremist groups, while Syria provides safe haven to Sunni insurgents and financiers."

Abu Mustafa al-Sheibani, who the U.S. says leads a network of Shia extremists that provide logistical and material support for acts of violence in Iraq, also was covered by the department's order. Ismail Hafiz al Lami, accused of directing acts of violence against Iraqi civilians, and Mishan Rakin Thamin al-Jaburi also were covered by the order.

Al-Zawra TV station in Syria, which the U.S. says is owned and controlled by al-Jaburi, also was named in the department's order. The U.S. alleges the station has received money from al-Qaida. The U.S. government says the station has aired coded messages through patriotic songs to the Sunni terrorist group, the Islamic Army of Iraq.

The department has the authority to act under an executive order Bush signed in July 2007. The order allows the U.S. government to impose financial sanctions against those that threaten stability in Iraq.

Jane Fox : 1/9/2008 2:40:57 PM

A 20% correction on the DOW would be a trade down at 11358 - Gulp!!!http://www.optioninvestor.com/premium/mm/chartlink.aspx?mm=&Path=/oin/mm/chartlink/600_01092008114032

Tab Gilles : 1/9/2008 2:36:41 PM

Weekly EIA Report Link

Keene Little : 1/9/2008 2:23:48 PM

We're officially in a bear market now. With the DOW dropping below its August low it has now negated the last possible bullish wave count that I've been carrying on the charts (large sideways 4th wave triangle from the July high). The DOW has now confirmed the break of that support level by the transports and gives us a DOW Theory confirmation that we've entered a bear market. This is a big deal. It doesn't preclude a monster bounce over the next month or more, but the bears now control this market. Or I should say fear controls this market.

Jeff Bailey : 1/9/2008 2:19:45 PM

Base Metals: Liquidation Knocks Comex Copper From 2-Month High

Keene Little : 1/9/2008 2:19:02 PM

I'm looking over the COMP daily chart and seeing the possibility for support at a Fib projection at 2405.85. That's where the move down from the Oct 31st high would have two equal legs down. It's almost there now.

Linda Piazza : 1/9/2008 2:01:53 PM

The USDJPY is now at 109.33, still going sideways. This is a divergence from the U.S. equity action, so it's still got me watchful.

Keene Little : 1/9/2008 2:01:46 PM

The DOW came within 9 points of its August low. The COMP got to within 20 points and SPX within 11 points. The RUT said goodbye to that level back on Jan 4th.

Linda Piazza : 1/9/2008 2:00:00 PM

As is also obvious from the chart linked to my 1:48:14 post, an SPX drop much below that 1370-1375 support zone and particularly a weekly close much below it would confirm a double-top formation on the SPX. According to standard technical analysis, that would set up a downside target somewhere in the 1183 area, depending on where exactly you put the confirmation level.

Although the weekly closes were close enough at the July 2006 and October 2006 highs that the formation can be seen as a potential double-top formation, the October 2006 high was in fact a higher high if you're looking at daily charts and daily closes and not thinking about weekly closes. That brings up the possibility of a head-and-shoulders formation in the making, and that brings up the possibility of a bounce from the neckline area into another shoulder. Keep an open mind. Although we may be about the only people looking at potential Keltner support on weekly closes, we are certainly not the only ones who see the 1370-1375 potential support. Powers that be don't want that support to fail, and want-to-be-bulls are leaning forward over their keyboards this instant, asking themselves, "Is this close enough? Are we here yet?" Just be prepared for anything. What we don't in all honesty want to see--if we care about pension plans and 401K's and all of that--is a violation of that support on a weekly close, especially if weekly Keltner support now at 1345.50 doesn't hold on a weekly close.

Keene Little : 1/9/2008 1:57:18 PM

The SPX 10-min chart shows the descending wedge pattern, along with confirming bullish divergences, that says we should be putting in a bottom here. The risk is another bounce inside the pattern and then another low (or that the pattern is not really there and we'll tank from here). That's why a break above today's downtrend line should be the bullish signal and then the question will be how high, and choppy, will the bounce be. Link

Jeff Bailey : 1/9/2008 1:52:01 PM

Dow Jones US Steel Index (DSUSST) 351.70 -2.52% ... retraces 61.8% of its 8/16/07 low to recent 10/29/07 high.

Jeff Bailey : 1/9/2008 1:48:53 PM

DIA's QUARTERLY 80.9% pivot retracement at $124.85.

WEEKLY S2 $124.35.

Linda Piazza : 1/9/2008 1:48:14 PM

For a longer-term look, here's what's being tested on a weekly Keltner chart: Link

Jeff Bailey : 1/9/2008 1:46:31 PM

DAW-AY $0.47 x $0.50

Jeff Bailey : 1/9/2008 1:45:43 PM

DIA $125.37 -0.38% ...

SPY $138.28 -0.45% ...

Jeff Bailey : 1/9/2008 1:44:48 PM

PetroChina (PTR) $177.00 ... PTR-AV $0.85 x $0.95

VIX.X 25.60 +0.66% ...

Jane Fox : 1/9/2008 1:42:35 PM

SPX head and shoulders' projection is down to 1350 but for a full blown bear market to emerge you will need a 20% correction and that is the SPX hitting a low of (1576 (all time highs) * 20% = 315. 1576 - 315 =) 1261. Lots of people will be really hurting by then. Link

Keene Little : 1/9/2008 1:40:28 PM

The wave pattern is looking good now for an end to today's decline. Start looking for a place to nibble on a long play (or at least pull your stop on a short play down tight now). Or wait for the bounce to break today's downtrend line (good place for a stop on a short). The risk in looking to buy this is that we'll see a waterfalling decline from here but so far that doesn't fit the pattern.

Jane Fox : 1/9/2008 1:40:11 PM

No doubt that the bears have the ball today. Link

Jeff Bailey : 1/9/2008 1:30:59 PM

PTR-AV $0.95 x $1.15

Jeff Bailey : 1/9/2008 1:30:06 PM

PetroChina (PTR) $178.00 +1.54% ...

Linda Piazza : 1/9/2008 1:27:02 PM

The SPX just keeps sliding down along the Keltner benchmark that marks breakdown status, but it's not really looking worse on a Keltner basis. That and the sideways action of the USDJPY have me cautious about calling for more weakness. I just don't know. I think markets are vulnerable to more downside, maybe a lot more downside, and I've already detailed, beginning early this morning, where I think nearest vulnerability exists. However, I am also keenly aware of that potential support zone from 1384-1388 on the weekly charts, and so I think the danger exists that an oversold rally could begin at any time. Even if the markets are going to keep cratering, we should get some oversold rallies along the way. It looks to me as if there's some sorting out going on this morning, and I am seeing some evidence of some effort to steady markets at least for now. I just don't know if those efforts will be successful. So, no guess for me right now.

Keene Little : 1/9/2008 1:22:29 PM

Looks like we're headed for another daily low and this is the one that could set up a larger bounce into tomorrow. Whether we're putting in the final low for now or have one more to go after another sideways/up choppy consolidation is the big question. I'm leaning towards the need for one more consolidation before the final low on Thursday/Friday but we should be nearing a point where we'll get a tradeable bounce. Conservatively, use the break of the downtrend line along today's highs as your signal to go long.

Jeff Bailey : 1/9/2008 1:13:03 PM

01:00 Internals found at this Link

Keene Little : 1/9/2008 12:45:20 PM

CME managed to drop down to its 200-dma and looks ready for a bounce. Of course the whole market looks ready for a bounce. My best guess on its wave pattern is that it's due a 2-week consolidation in a 4th wave correction before heading for one more new low later this month. That would then set up a bigger bounce in February. Link

Linda Piazza : 1/9/2008 12:39:00 PM

The SPX just produced its first 15-minute close above the 9-ema since the 2:30 pm ET candle yesterday afternoon. This is just a first tentative sign of improvement, and we saw how quickly this morning's first sign was reversed. The Keltner setup suggests that there may at least be a retest of the day's high to see if it holds as resistance. Beyond that, it doesn't suggest much yet.

Jeff Bailey : 1/9/2008 12:31:18 PM

Current OPEN MM Profiles that I've made at this Link

CLOSED out the PTR-AV at bid of $1.20 as PTR traded $178.90.

Keene Little : 1/9/2008 12:11:55 PM

It's possible we'll get a small descending wedge for the decline from this morning's bounce--it needs one more minor new low to finish it. That could then set up a slightly larger sideways/up correction before the final low tomorrow or Friday. But the risk for bears now is that the wave pattern is very close to completing the count for the move down from Dec 26th and a much larger rally leg could start.

Ideally we'll get one more consolidation (after this morning's decline finishes) and then a final low but be very careful now if you've been holding short for the past week.

Linda Piazza : 1/9/2008 12:03:03 PM

The new slight SPX Keltner support has held on the 15-minute close on its first test. The SPX absolutely has to begin closing 15-minute periods back above its 15-minute 9-ema, though, before we put even any slight credence in such actions. That moving average is now at about 1392.35.

Jeff Bailey : 1/9/2008 11:57:05 AM

Friday evening was looking for a good short setup in DIA on bounce back to $134. That 11/27/07 2 million share benchmark certainly stood in the way yesterday.

Jeff Bailey : 1/9/2008 11:55:20 AM

DIA further vulerable to at least $124 here before possible oversold Op-Ex bounce.

DIA $125.69 -0.12% ...

Jane Fox : 1/9/2008 11:55:01 AM

Since the Nasdaq Compsite has closed down 8 days in row, Mark Hulbert did a study on the probability of Nasdaq Compsite closing down 8 days in row. Since 1972 it has happened 37 times so an average of once a year. 58% of the time the COMP is higher in 3 months, 79% the COMP is higher in 6 months. So he is saying although the 3 month time frame is not all that good the 6 month timeframe is worth noting and the 8 straight losses should not be a reason to sell all your stock holdings and retreat to cash, or get short.

Jane Fox : 1/9/2008 11:50:06 AM

Just as well we didn't get a fill on that long heh?

Linda Piazza : 1/9/2008 11:48:59 AM

The SPX now tests that new potential support that I mentioned earlier. It's at about 1387.20 on 15-minute closes.

Linda Piazza : 1/9/2008 11:47:56 AM

A new low of the day for the RUT is accompanied by potential bullish price/RSI divergence. It's potential because RSI could still move lower. This isn't proof of anything except that we should remain watchful for a bounce. If there is a bounce, it looks to me as if there might be significant resistance 708-710, with lighter resistance at 704.

Jeff Bailey : 1/9/2008 11:42:00 AM

It was elapsed time more than premium on the PTR-AV.

Jeff Bailey : 1/9/2008 11:40:52 AM

VIX.X 25.08

Jeff Bailey : 1/9/2008 11:37:06 AM

Swing trade call exit alert! ... for the one (1) PetroChina PTR Jan $195 Call (PTR-AV) at the bid of $1.20.

PTR $178.90 +2.03%

Keene Little : 1/9/2008 11:36:23 AM

The RUT is not hanging around waiting for the others and is heading for new lows now. I'm thinking the others could consolidate a little more before also heading lower. But the RUT just might be leading the way from here.

Linda Piazza : 1/9/2008 11:35:55 AM

The USDJPY is now at 109.42, about as neutral as it can be.

Linda Piazza : 1/9/2008 11:34:56 AM

I haven't been giving any predictions about next direction because I don't really see anything developing that tells me that. I see SPX vulnerability down to 1385 and maybe even 1370-1375 if that fails, but I also see potential support in the 1384-1388 zone, a zone already touched. I'm watching the RUT now as it inches back toward a retest of the day's low to see if its action gives us any clues.

Linda Piazza : 1/9/2008 11:22:34 AM

Consolidation near the lows: that's not what those hoping to see a bounce or at least a steadying want to see. However, the SPX is now improving slightly on a short-term Keltner outlook. It's maintaining 15-minute closes above or at the Keltner breakdown benchmark, now at about 1393.50 on 15-minute closes, rather than beneath them. As I said early this morning, this doesn't mean that the SPX can't move lower. It can slide down that still descending benchmark channel line. But it's just a slight and first sign of steadying. The SPX desperately needs 15-minute closes above the 9-ema, now at about 1397.20, though, before even this slight improvement can be believed. The SPX is at 1394.88 as I type.

Jeff Bailey : 1/9/2008 11:16:36 AM

11:00 Internals found at this Link

Linda Piazza : 1/9/2008 11:08:40 AM

Follow-up to my 10:18:56 post: Does the chart linked there, showing that CFC's Keltner-based downtrend remained intact a week ago, as it does today, prove that someone can't make money on a bullish trade on CFC? No. Even in downtrends, there are countertrend bounces. Also, it's possible that my post might have marked the point in time that will be the very bottom in CFC's price.

That wasn't the point to say that a bounce couldn't be traded, if one appears and if one is experienced enough to make the decision. (I don't trade individual stocks much, as I said earlier, and am not recommending a trade in this for subscribers, either.) The point was that even a quick look at a chart shows that a downtrend was and is still intact. Anyone attempting a long trade must be aware of that fact and ready to jump out immediately if prices prove them wrong. I think that's an important point for us to keep in mind in the coming period because we're going to be hearing a lot of "bottom is in" statements. That's the reason I used CFC as an example.

Jeff Bailey : 1/9/2008 11:04:20 AM

DIA $126.69 +0.66% ... DAILY Pivot at $126.86. Session high has been $126.84.

Jeff Bailey : 1/9/2008 11:03:11 AM

VIX.X 24.51 -3.61% ... WEEKLY Pivot 23.34. DAILY Pivot here 24.55. Neutral to bearish.

Jeff Bailey : 1/9/2008 11:01:56 AM

Countrywide (CFC): Update

DJ- Shares of Countrywide Financial Corp. (CFC) fell after the mortgage lender said its delinquency rate continued to climb in December, showing homeowners are increasingly falling behind on their mortgage payments.

The stock, which lost 28% of its value Tuesday on bankruptcy rumors that the company denied, were recently down another 46 cents, or 8.4%, to $5.01. Fellow big mortgage lender Washington Mutual Inc. (WM) dropped $1.49, or 12%, to $11.25.

Countrywide's loan delinquency rate surged to 7.2% of unpaid principal balances from 4.6% a year earlier and 6.52% in November.

The nation's largest mortgage firm said it funded $23.55 billion in loans last month, versus $23.25 billion in November and $42.83 billion a year earlier. December's funding was above the company's expectations.

Average daily applications dropped 44% to $1.54 billion. November's activity averaged $1.85 billion. The company's mortgage loan pipeline was $35.06 billion, compared with $57.22 billion a year earlier and $42.58 billion in November.

Banking operations assets were $113 billion, with total deposits reaching $61 billion at the end of December. Retail deposits increased $2.3 billion during the month and $7.7 billion for the quarter to $33 billion.

Financial institutions that have run into difficulties and need consumer deposits to fund loans and build up their capital levels. Countrywide and E*Trade Financial Corp. (ETFC), both of which have been hit hard by the credit crunch are offering some of the industry's highest rates on products like certificates of deposit.

Egan Jones, a ratings company, wrote in a report on Tuesday that Countrywide is "severely challenged and might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks." It said funding is needed because of a 40% decline in mortgage originations at the savings-bank company and a shift away from formerly profitable subprime-mortgage loans.

Reacting to the bankruptcy rumors, Countrywide spokesman Rick Simon said, "There is no substance" to them "and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company."

Jane Fox : 1/9/2008 10:58:45 AM

I will be taking YM long at 12726 with a stop at 12678. This will be a long trade so if you decide to jump on board be prepared to monitor it possibly for the rest of the day.

Jane Fox : 1/9/2008 10:53:22 AM

VIX is bullish
AD volume is bearish
AD ratio is neutral
USDJPY is bullish
DAX is neutral Link

Jane Fox : 1/9/2008 10:48:58 AM

CHICAGO (MarketWatch) -- Applications for mortgages jumped a seasonally adjusted 32.2% in the week ended Jan. 4 compared with the week before, due largely to a sharp increase in refinancing filings, the Mortgage Bankers Association reported Wednesday.

Interest rates on fixed-rate mortgages dropped last week, according to the MBA's weekly survey.

Total mortgage application volumes were up an unadjusted 8.7% compared with the same week a year ago, the MBA said.

The latest week, the mortgage group noted, was shortened by the New Year's holiday.

Applications to refinance an existing loans increased 53.9% on a week-to-week basis, while purchase applications rose a seasonally adjusted 14.7%.

Jeff Bailey : 1/9/2008 10:47:43 AM

US Oil Inventories

DJ- U.S. crude-oil inventories in the week ended Jan. 4 fell far more than analysts' expectations, according to data released Wednesday by the U.S. Department of Energy.

Crude stockpiles dropped 6.8 million barrels to 282.8 million barrels, the department's Energy Information Administration said in its weekly report. That compared with an average forecast of an 800,000-barrel draw in a Dow Jones Newswires survey of 18 analysts.

Gasoline stockpiles rose 5.3 million barrels to 213.1 million barrels, compared with an average survey estimate of a 1.6 million-barrel gain.

Distillate stockpiles rose 1.5 million barrels to 128.7 million barrels, compared with analysts' forecasts of a 300,000-barrel draw.

Refinery use rose 1.9 percentage points to 91.3% of capacity. Analysts had expected a 0.1 percentage point gain.

Jane Fox : 1/9/2008 10:47:15 AM

SAN FRANCISCO (MarketWatch) -- U.S. crude inventories dropped by 6.8 million barrels in the latest week, much more than expected by analysts, U.S. Energy Information Administration reported on Wednesday. U.S. crude inventories dropped to 282.8 million barrels in the week ending Jan. 4, EIA reported. Analysts surveyed by Platts were expecting a drop of 2.1 million barrels. After the data, crude-oil futures for February delivery slid 48 cents, or 0.5%, to $95.85 a barrel on the New York Mercantile Exchange. Gasoline supplies rose by 5.3 million barrels in the latest week, and distillate stocks grew by 1.5 million barrels, EIA reported. On Nymex, February reformulated gasoline fell 3.13 cents a gallon and February heating oil lost 1.71 cents a gallon.

Jeff Bailey : 1/9/2008 10:44:53 AM

ICE Futures U.S. Posts Record Electronic Volume

DJ- IntercontinentalExchange (ICE), a leading operator of global exchanges and over-the-counter (OTC) markets, announced that its ICE Futures U.S.(TM) subsidiary yesterday posted a new high in exchange-wide electronic trading volume for a single day. The exchange reported record electronic volume of 234,120 contracts on Tuesday, January 8.

The new record surpasses the previous electronic volume record set on June 13, 2007.

Electronic trading at ICE Futures U.S. yesterday represented 89% of total futures trading volume. ICE announced last month that all futures trading at ICE Futures U.S. would transition to the electronic platform in March 2008.

ICE $165.00 -0.06% ...

Linda Piazza : 1/9/2008 10:39:19 AM

On a short-term Keltner basis, the 24.50 level looks important for the VIX. Bears want continued 15-minute closes above it, suggesting a potential second test of the 25.30-25.50 zone. Bulls want 15-minute closes beneath it, suggesting a drop toward 24.15 or perhaps even 23.87. The VIX doesn't follow the 15-minute chart as well as some other entities, so the numbers should be considered zones and not exact numbers.

Keene Little : 1/9/2008 10:36:08 AM

The other possibility is that we'll just chop sideways between yesterday's low and this morning's high.

Keene Little : 1/9/2008 10:35:21 AM

We should be due another leg up in the bounce off yesterday's low. If we get a nice 3-wave bounce with equality it will set up the next short play.

Linda Piazza : 1/9/2008 10:35:04 AM

The SPX closed the last 15-minute period slightly below its breakdown benchmark. It very obviously found resistance at its 9-ema, now at about 1398. The rise of yesterday's last 15-minute period looks bear flag like. So, I think we must question that rise. However, some slight hopeful (if you want a steadying at least) signs appear. There's new potential slight support appearing at 1387.28 on 15-minute closes, for example. It wasn't there earlier. So, I think it's possible, although not a given, that there will be another test of the 9-ema, although perhaps not until after a 1387 test.

Jeff Bailey : 1/9/2008 10:33:34 AM

US Oil Fund (USO) $75.43 -0.82% ... backfills yesterday's gap.

Jeff Bailey : 1/9/2008 10:32:26 AM

PetroChina (PTR) $179.10 +2.16% ...

Jeff Bailey : 1/9/2008 10:32:08 AM

DOE: US Crude Oil Stockpiles Down 6.8M Barrels At 282.8M Barrels

Linda Piazza : 1/9/2008 10:31:00 AM

Here's the thing about today: the USDJPY is at 109.36. It's below the original rising trendline off Friday's low (bearish) and it found resistance at that trendline when it rose to retest it overnight (bearish), but it's still holding above 108.75-109.00 support (semi bullish). Instead of falling steeply from its kiss-goodbye test of that former trendline, it's essentially moving sideways out of that rising channel it had formed. If this were an equity, I'd be beginning to suspect that bears didn't have enough strength to produce follow through, and I'm beginning to wonder if that's true on this currency pair, too. Why isn't it dropping along with U.S. equities? Is it just that it reached a new recent lower ahead of equities or is it predicting an attempt at steadying? I don't know yet, but I'm watching.

Jeff Bailey : 1/9/2008 10:30:58 AM

Mexico's 2007 CPI Up 3.76%; Core Up 4.0%

Jane Fox : 1/9/2008 10:30:54 AM

VIX and S&P futures are tracking each other nicely this morning. Link

Linda Piazza : 1/9/2008 10:25:35 AM

The SPX erased its breakdown status on the 15-minute chart, the first step to steadying. Now it needs to maintain closes above 1396.10 or so or this bounce is suspect. That's the benchmark to the breakdown status. As I type, the SPX is at 1392.72, but several minutes remain in this 15-minute period. The SPX next needs to close 15-minute periods above the 9-ema, now at 1400.12, and to keep forming 15-minute closes above that 9-ema, turning it up again. If you're in a bullish trade from late yesterday or early today, absolutely, 100% be aware of the vulnerability to a sudden collapse at any time. (I haven't suggested such a trade.) Make decisions that protect your profits. Be quick on the draw to protect them. Once you're in a trade, you have to fight to keep from losing money or to keep loses small if there's no way to prevent a loss.

Jeff Bailey : 1/9/2008 10:24:48 AM

Mexico's December CPI Up 0.41% ... Consensus was =0.35%.
Core CPI Up 0.46%; Inline With Consensus

Jeff Bailey : 1/9/2008 10:23:06 AM

Mexico's 2007 Auto Sales Down 3.5% To 1.1M Units

Jeff Bailey : 1/9/2008 10:20:13 AM

BP DENIES GUIDING ANALYSTS ON 4Q EARNINGS

DJ- BP denies the company provided guidance to analysts pointing to lower-than-expected 4Q earnings. The rumor led to a drop of more than 3% in the U.K. oil giant's share price.

BP $71.20 -3.50% ...

Linda Piazza : 1/9/2008 10:18:56 AM

Falling knives: I don't follow individual stocks much, but all the talk about CFC swirling through the airwaves today reminded me of a conversation with someone a week ago who had thought that CFC had to be reaching a bottom. At this rate, it soon will be, won't it? I wasn't asked to look at a chart at that time, and the stock had already been purchased and stop losses set, but if I had been asked, here's what I would have pointed out: Link Here's the thing to remember in this market: nothing "has" to be reaching a bottom unless it's at zero. Falling knives can still cut you even when they're just inches from the ground. Be careful when you're making your decisions. Set stop losses as this trader did in case he was wrong. Determine the amount of risk you're willing to take that you're wrong, as he did. And be really careful about jumping into stock or options on individual companies just before earnings.

Jeff Bailey : 1/9/2008 10:18:05 AM

Swing trade call option raise stop alert! ... for the PTR-AV to $178 (from $177) in the underlying.

PTR $180.27 +2.83% ...

Jeff Bailey : 1/9/2008 10:14:42 AM

Securities Broker/Dealer (XBD.X) 181.69 (unch) ...

Jeff Bailey : 1/9/2008 10:14:05 AM

LBOS REACH RECORD IN '07, BUT DEAL PIPELINE DROPS OFF

DJ- Leveraged buyout volume surges to a record of $521.8 billion in 2007, helped by some very large transactions. But the credit pinch takes a toll on the deal flow in the second half of the year, with announced deals down precipitously.

Jeff Bailey : 1/9/2008 10:13:30 AM

APPLE AGREES TO CHANGE EU PRICING

DJ- Apple agrees to equalize download prices across Europe, allowing the European Commission to close its case against the consumer-products giant and major record companies over allegations of unfair pricing of online music.

AAPL $173.01 +0.99% ...

Keene Little : 1/9/2008 10:13:28 AM

Even with the DOW and SPX up about +0.6% today the banks can't get off the mat, down a little more than -1% this morning.

Jeff Bailey : 1/9/2008 10:12:36 AM

MBA's Weekly Application Survey at this Link

Linda Piazza : 1/9/2008 10:06:26 AM

The SPX needs to close this 15-minute period above 1396.14 to erase its breakdown status but more potential resistance is just above, at about 1398.50 and then 1394.40.

Jeff Bailey : 1/9/2008 10:06:23 AM

Dow Diamonds (DIA) $126.80 +0.75% ... DAW-AY $0.80 x $0.82

Jeff Bailey : 1/9/2008 10:05:49 AM

DUPONT BOOSTS '08 VIEW DESPITE US WOES

DJ- Chemical giant now expects to earn $3.35 to $3.55 a share, saying it has so far been able to overcome the U.S. slowdown. Analysts expected $3.42 a share. It also sees 2007 EPS in the high range of its $3.15 to $3.20 guidance.

DD $45.87 +7.29% ...

Jeff Bailey : 1/9/2008 10:05:00 AM

COUNTRYWIDE DOWN AS LOAN DELIQUENCIES SURGE

DJ- Mortgage lender's loan delinquency rate surges to 7.2% of unpaid principal balance from 4.6% a year earlier and 6.52% in November. Its December loan fundings drop 45% from a year earlier, but beat its guidance.

CFC $5.08 -7.12% ...

Linda Piazza : 1/9/2008 10:04:22 AM

I'm watching the RUT closely today, too, to see if it's going to give us any clues. While at first glance, there doesn't seem much of a link between the small-cap RUT and the big-cap OEX or even the SPX, the RUT does sometimes act as a sort of indicator of general market mood. It's in breakdown mode, too, on its 15-minute chart, with presumed Keltner resistance lining up from 710-173, in a zone where we already see historical resistance. The RUT is at 706.93 as I type, and those hoping for a slowing of the bleeding in the markets want to see it closing 15-minute periods back above 713 at a minimum. That's no warranty that markets will rally, but it's a first sign that some steadying may be being attempted.

Jeff Bailey : 1/9/2008 10:03:52 AM

E*TRADE CUTS INSTITUTIONAL TRADING, SELLS $3B IN ASSETS

DJ- Electronic brokerage will close its institutional trading business and sold $3 billion in securities, including a combination of mortgage-backed securities and municipal bonds, as part of its turnaround plan.

ETF $2.47 +9.77% ...

Jeff Bailey : 1/9/2008 10:02:42 AM

MBIA TO RAISE $1B IN NEW CAPITAL, CUTS DIVIDEND

DJ- Bond insurer will raise another chunk of money as it takes steps to contend with the threat of growing losses caused by the crumbling mortgage market. Moves also include cutting its annual dividend by 62%, to 52c a share. Fitch Ratings says it will affirm insurer's critical AAA ratings and change its outlook to stable if the $1 billion offering is successful.

MBI $13.48 -3.57% ...

Linda Piazza : 1/9/2008 9:57:34 AM

The OEX needs to begin closing 15-minute periods above Kelner resistance now at 655.03 to begin to change its short-term pattern. That's just a first step, a first benchmark, and not a promise of a bullish day, though. So far, it hasn't happened, so action remains bearish.

Linda Piazza : 1/9/2008 9:55:11 AM

The breakdown status still exists on the SPX's 15-minute chart. A 15-minute close above 1396.77 is now required to erase that status. Erasing it doesn't mean that the SPX will go up, but it does at least give us a benchmark to watch to say there's some lessening of downside momentum, at least over the short-term. Right now, that benchmark says that it hasn't lessened yet. We do want to see 1384-1388 support hold.

Jeff Bailey : 1/9/2008 9:51:26 AM

Swing trade call establish stop alert! ... for the one (1) PetroChina PTR Jan $195 Call (PTR-AV) at $177 in the underlying.

PTR $179.74 +2.53% ...

PTR-AV $1.30 x $1.50.

Keene Little : 1/9/2008 9:50:57 AM

If we're going to get a small consolidation before heading lower again, it could be a choppy morning but so far it's a nice bounce off this morning's open. YM is about to test its overnight high.

Linda Piazza : 1/9/2008 9:43:22 AM

The SPX is on breakdown status on the 15-minute chart. Watch for 15-minute closes above 1397.52 to erase breakdown status. As you may remember from yesterday's close, the breakdown status was established on the last 15-minute period, and I don't completely trust breakdowns that occur in the first or last 15-minute periods of the day. That doesn't mean I count on them being wrong, but I just don't trust them completely. But, you need that higher close to feel better about the breakdown.

Jeff Bailey : 1/9/2008 9:42:41 AM

Goldman Sachs Sees Recession In 2008 ... Reuters Story Link

Jane Fox : 1/9/2008 9:41:28 AM

VIX to new daily lows.

Jane Fox : 1/9/2008 9:40:59 AM

AD line is a neutral -159.

Linda Piazza : 1/9/2008 9:39:36 AM

The USDJPY is at 109.31 as I type. No clues from this.

Linda Piazza : 1/9/2008 9:37:54 AM

I'm trying to keep posts shorter so that they can be read before the site refreshes, so this is a continuation of my 9:33:59 post. That post weighed in on what happens if the SPX continues dropping. Yesterday the SPX did dip low enough to essentially test that 1385-ish potential weekly Keltner support, so bears should be aware now that support kick in at any moment. Be protective of your profits. If support does kick in, the intermediate-term picture doesn't improve too much until and unless the SPX produces weekly closes above about 1453 and possibly even 1465. Until then, vulnerability to further support tests must be factored in. A relief rally could be sharp, but that won't mean we can assume the bottom is in, so trade it with care, if at all. It could be reversed at any moment.

Jane Fox : 1/9/2008 9:36:20 AM

These charts are now bearish and there is nothing I can say in defensive of the bulls. Yesterday changed the tenor of the markets a great deal and the fact that the jtHMA monthly charts have turned red, the first time since May 2003, supports that perspective. Link

Linda Piazza : 1/9/2008 9:33:59 AM

Intermediate term view of the SPX: I was looking at daily and weekly charts of the SPX last night. I see some potential support on weekly closes near 1385 but also some vulnerability on daily charts to 1370-1375. Our hope--that of all who want to avoid a steeper decline in the markets, and that includes most of us--is that the SPX would steady at that 1370-1375 level. If it's touched intraweek, the hope would be that the week's close would see the SPX back above about 1385 as only a first step in any steadying. If not and if the 1370-1375 level fails, then we have to consider vulnerability to 1365 and then about 1345-1356. My weekly Keltner chart actually suggests 1346 as a target if there's a weekly close beneath 1385, but I'm still going to weigh in that 1370-1375 historical support zone.

Jane Fox : 1/9/2008 9:29:32 AM

Here is the chart of the US$ telling you support is holding and more evidence Gold will head lower. Link

Keene Little : 1/9/2008 9:28:15 AM

The overnight highs in equity futures could get retested as part of today's price consolidation before heading lower again. Gold did what I thought it would--it found resistance at 894 and has since dropped fairly hard. Its uptrend line from Dec 20th is near 872 and I'll then be watching the bounce for another shorting opportunity.

Jane Fox : 1/9/2008 9:24:25 AM

Gold is telling me it should start to head lower soon. Link

Jane Fox : 1/9/2008 9:13:08 AM

Consolidating at daily lows suggests lower lows so if today starts like the Monday and Tuesday the AD line will start out bullish and then head lower bringing the markets with it. Link

Market Monitor Archives