Option Investor
Printer friendly version
Jeff Bailey : 1/16/2008 2:40:02 AM

Bearish Triangle Patterns: that were generated today ... RIMM, FSLR, EEB, CHL, CERN, AIRM.

01/14/08: LDK, CISG

01/11/08: ESMK, ARA

01/10/08: VRNM, SORC, ORCT

01/09/08: RGR, LFT, IOTN, ARUN, ARM

Jeff Bailey : 1/16/2008 2:19:56 AM

StockCharts' S&P 500 Bullish % ($BPSPX) Link

Pretty close to Dorsey's ... their BPSPX gave a "sell signal" on 1/08/08 at 34% too. Dorsey's measure tonight is 28.72%.

Jeff Bailey : 1/16/2008 2:10:23 AM

NYSE Bullish % (BPNYSE) at this Link

This does look to confirm my thought of a "moderate recession" in 2008.

NYSE Composite ($NYA.X) 9,172.17 vulnerable to August lows of 8,812 at a minimum.

StockCharts.com's equivalent $BPNYA Link

Keene Little : 1/15/2008 10:10:25 PM

Wednesday's pivot tables: Link and Link

INTC caused a sharp drop in after-hours futures but we've seen time and again a lack of follow through in the cash markets the next day so it remains to be seen what happens on Wednesday. I think we'll see the market chop its way lower into the end of the week so watch for lack of follow through in both directions and some volatile price action. 60-min charts:
DOW: Link
SPX: Link
COMP: Link
RUT: Link

Jeff Bailey : 1/15/2008 10:03:48 PM

Polls Closed! ... Of those respondents to Monday's Market Wrap, the AVERAGE predicted close for the Dow Diamonds (DIA) at Friday's 04:15 PM EST close is $127.95.

DIA Options Montage at tonight's close (OI as of Monday's Close) Link

OI Technical Staff : 1/15/2008 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The Market Monitor has been archived.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 : 1/15/2008 9:29:41 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 1/15/2008 5:49:57 PM

GLD went out $88.21 -1.48% ... did hold above $87.50. BIIIIG volume today 23.8 million.

"Prarie Dogged" $90.00, or ~$900.00/oz spot.

Jeff Bailey : 1/15/2008 5:47:19 PM

C went out at $26.65 -8.29% ...

Jeff Bailey : 1/15/2008 5:43:03 PM

IBM went out at $108.80 -1.09% ... $99.49 extended.

Jeff Bailey : 1/15/2008 5:40:04 PM

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

Jeff Bailey : 1/15/2008 5:10:30 PM

Closing Internals found at this Link

Keene Little : 1/15/2008 4:30:59 PM

I had mentioned earlier that all the choppy 3-wave price action was giving me that sideways triangle feeling and I thought we could see a choppy consolidation this week followed by a new low. Now it's looking like the triangle idea is morphing into a descending wedge and this calls for another up-down sequence to finish the decline, potentially by the end of the week. It would set up a very nice long play if it plays out something like depicted on this DOW 60-min chart: Link

The downside projection for this pattern would have the DOW finding support at the bottom of its parallel down-channel for price action since the October high, currently near 12375 (tad lower by Friday).

Jeff Bailey : 1/15/2008 4:22:25 PM

Intel's Q4 Earnings Press Release Link

Jeff Bailey : 1/15/2008 4:18:50 PM

Intel (INTC) $22.69 -1.68% ... plunges to $20.29 on headline numbers.

Jeff Bailey : 1/15/2008 4:14:24 PM

CPKI Prelim Q4 Press Release Link

Jeff Bailey : 1/15/2008 4:12:14 PM

CPKI had forecasted Q4 EPS around $0.22-$0.23.

Jeff Bailey : 1/15/2008 4:11:00 PM

Casey's General Stores: ... December Gasoline Sales Down 5.6%.

CASY $28.09 +0.17% ...

Jeff Bailey : 1/15/2008 4:09:54 PM

Schlumberger (SLB) $88.93 -6.90% ... cutting jobs in N. America as business slows.

Jeff Bailey : 1/15/2008 4:09:12 PM

CPKI Cutting 4Q Guidance to EPS $0.16 to $0.18.

Keene Little : 1/15/2008 4:08:55 PM

Today's close certainly makes it official on the DOW's break of the August low. The closing low confirms the bear market signal by that break. We could see a continuation lower towards potential support near 12375 (the bottom of a parallel down-channel for price action since the October high). I'm getting the sense that while it looks lower from here, it will be a choppy move down that forms a descending wedge (might even start off with a rally tomorrow). It's a little risky for both sides at the moment as I could easily argue a move in either direction tomorrow morning.

Jeff Bailey : 1/15/2008 4:08:24 PM

California Pizza Kitchen (CPKI) $12.27 -4.06% ... Halted for trade on headline numbers.

Jeff Bailey : 1/15/2008 4:06:43 PM

Venezuela's Chaves: No Plans To Cut Oil Exports To U.S.

Jane Fox : 1/15/2008 4:06:13 PM

Economic Reports tomorrow include:

8:30a.m. Dec Consumer Price Index. Expected: +0.2%. Previous: +0.8%.

8:30a.m. Dec CPI, Ex-Food & Energy. Expected: +0.2%. Previous: +0.3%.

9:00a.m. Nov Treasury International Capital Flows. Previous: -$101.5B.

9:15a.m. Dec Industrial Production. Expected: -0.2%. Previous: +0.3%.

9:15a.m. Dec Capacity Utilization. Expected: 81.2%. Previous: 81.5%.

1:00p.m. Jan NAHB Housing Market Index. Previous: 19.

2:00p.m. Federal Reserve Beige Book.

Jane Fox : 1/15/2008 4:04:37 PM

DOW tested it January 9th lows. Link

Jane Fox : 1/15/2008 4:01:55 PM

The entire intraday session has traded under the overnight range. This is not good and I think we are headed for lower lows. I do believe the lows the SPX made on January 9th will not hold as support. Link

Keene Little : 1/15/2008 3:57:31 PM

Mother MER is dropping to new lows as we head into the close, down just shy of -4.9% on the day.

Jeff Bailey : 1/15/2008 3:54:07 PM

Dow 30 Link

Keene Little : 1/15/2008 3:53:43 PM

Hold it Boyz. Need a close above DOW 12518 (the August low).

Jeff Bailey : 1/15/2008 3:53:26 PM

Dow 30 Components breadth negative at 29:1. C dividend cut to $1.28 has its SEC yield at about 4.75%.

Linda Piazza : 1/15/2008 3:52:59 PM

We're not the only ones viewing CPI tomorrow morning. Germany's will be released at 2:00 am EST, and I believe the EU's version will be released at 5:00 am EST. Tonight, Japan sees a number of releases from 6:00 pm EST-6:50 pm EST, including the Corporate Goods Price Index for December, November's Machinery Orders and Current Account Balance. The president of Japan's Regional Banks Association holds a news conference tonight, and there's a Democratic Party convention in Japan.

Why am I listing all this? There are sooooo many opportunities for something to occur to change the trading tenor tonight. Make sure you're not taking home more risk than you can take.

Jeff Bailey : 1/15/2008 3:46:19 PM

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

Linda Piazza : 1/15/2008 3:45:26 PM

The bounce attempt came near last Wednesday's low, so is it real? I'm going to drive you mad because I've been saying all day that I didn't trust that downside target, and now I'm going to tell you that we just don't know yet what happens next. Since last Wednesday, the SPX had been building a big triangle (formerly a potential inverse H&S) that broke to the downside this morning. We should expect at some time that the SPX will come back up and retest the former support to see if it now holds as resistance. That former rising support is now near 1409.70, so even if the SPX maintains this current rally attempt, not a given, and approaches 1409.70, also not a given, we have to see how it behaves near that level before we know much of anything. If you're trading this on the bullish side and you're really, really brave and plan on holding overnight, then you better know how you'd treat a test of 1409-1410. Tomorrow morning, we have CPI and tomorrow two more financials (at least) report, so there's a lot of risk to both bulls and bears in holding overnight.

Jeff Bailey : 1/15/2008 3:40:07 PM

03:36 Market Watch at this Link

Linda Piazza : 1/15/2008 3:39:48 PM

We've had a 15-minute close above the SPX's 9-ema and now a push up toward--and above, as I type--the midday highs. The SPX now heads toward 1395.60 resistance.

Keene Little : 1/15/2008 3:37:56 PM

I'm sure those in control of the levers (the man behind the curtain, the PPT) are getting a tad nervous watching the DOW break its August low (2nd time it's happened now). And that's two saves now. Must be nice to have all the money you need to do that (they just print what they need for their operations).

Jeff Bailey : 1/15/2008 3:36:34 PM

iShares Silver Trust (SLV) $159.52 -2.01% ...

email question Could you give an update on SLV in the market monitor? It has fallen very quickly the last little bit.

Response: ... email looks to have come in just as SLV fell from $161 level.

My US Market Watch has dollar index (DXY) relatively unchanged. Oil down more than 2%, may weigh on precious metals today. Not much "inflation" in many of today's global economic reports Link

Not much of a "buy mood" for anything other than Airlines (XAL.X) 33.27 +3.38% and Treasuries today.

Keene Little : 1/15/2008 3:30:50 PM

Nice little short covering spike back up. Either that or the PPT finally stepped in with "that's enough of that!"

Linda Piazza : 1/15/2008 3:27:55 PM

The TRAN is just not breaking down, not setting a downside target analogous to the one the SPX has set, for example. That keeps me uncertain about whether that SPX downside target is viable. So, all I can do is keep saying to factor in potential vulnerability to that 1367 level, but don't count on it necessarily being hit.

What does that mean? It means that if you're in a bearish trade, you be careful about setting stops that trail the SPX lower and don't hold on for that last little half point just because there's a so-called target there. It means that if you're testing out or considering a bullish trade, that you absolutely know whether you want to risk a possible dip down to 1367. If not, then do you want to enter a trade at all if your particular setups line up or do you want to enter it only with a tight stop?

Jeff Bailey : 1/15/2008 3:16:21 PM

03:00 Internals found at this Link

Keene Little : 1/15/2008 3:07:30 PM

Banks are holding up better and that's probably holding up SPX just a little better than the DOW at the moment. Which is odd since C and JPM are the biggest losers on the DOW. Maybe they should get their own TV show.

Keene Little : 1/15/2008 3:05:28 PM

There's certainly the potential to see a flush in the final hour as opex "covering" takes place (to protect short put positions).

Keene Little : 1/15/2008 3:04:52 PM

That's ugly little drop in the DOW. A little less so for SPX, barely a new low for NDX and the RUT still sits above this morning's low. It's a bit of a fractured market at the moment and I'm not sure if that's more bearish or if it's non-confirmation of the lows and therefore bullish.

Keene Little : 1/15/2008 2:56:57 PM

The RUT is hanging tough this afternoon and is showing some relative strength by holding above this morning's lows while the others pound on them.

Keene Little : 1/15/2008 2:51:48 PM

The choppy price action as the market keeps making minor new lows is either bullish (we're seeing an ending pattern with some bullish divergences) or else it's very bearish where we'll see prices waterfall lower into the close. Be wary of the latter if trying to find a tradeable bottom. That's why I'd prefer to wait for a break of the downtrend lines now.

Linda Piazza : 1/15/2008 2:39:41 PM

Nearest support for the SPX has drifted down to 1382.20 on 15-minute closes. After doing the lunchtime-lull thing and popping across the channel, the SPX stalled at the upper-channel resistance. That showed that the weakness continues so far and keeps the downside target and potential support in play. Vulnerability to that target, now at 1367.32, must be considered until and unless the SPX begins forming 15-minute closes above 1391-1392 and sustains those levels.

Jeff Bailey : 1/15/2008 2:38:50 PM

DIA $125.45 -1.61% ...

Jeff Bailey : 1/15/2008 2:38:15 PM

YM 12,567 ... undercuts morning, session lows.

Keene Little : 1/15/2008 2:38:13 PM

More lows. They could be minor (bullish divergences are still present on the charts) but support is breaking so I'd just step out of the way for now. Now I'd rather wait to see today's downtrend lines start to break before thinking long.

Jeff Bailey : 1/15/2008 2:18:59 PM

DJ- EXTRA CREDIT Cheap Prices, Low Default Rates, But Few Buyers ... Amid all the post-holiday sales, some of the best bargains around right now can be found in the junk bond market, where risk premiums on speculative-grade bonds have ballooned to 666 basis points over Treasurys, writes Michael Aneiro.

Keene Little : 1/15/2008 2:18:16 PM

Not a bad looking bounce. Raise your stop to a new daily low now--the long play has to work from here otherwise step out of the way. I don't trust any further downside to recommend any further short trades today.

Jeff Bailey : 1/15/2008 2:17:06 PM


DJ- U.S. Bancorp earnings slide to $942 million, or 53c a share, in 4Q hurt by charges while trying to navigate the credit crisis. Total net revenue rise 3.4% to $3.54 billion.

USB $30.26 -0.19% ...

Jeff Bailey : 1/15/2008 2:15:51 PM


DJ- Firm posts net income of $223 million, or 57c a share, as it builds up a legal reserve to move past its subprime woes. Excluding items, earnings are $1.38 a share, 3c better than expected. Shares fall 5% on disappointing 2008 view.

STT $80.20 -5.49% ...

Keene Little : 1/15/2008 2:10:40 PM

But it's like trying to catching falling knives on this decline (opposite of gold). The bounces still look very corrective and it's risky stepping in front of the train here.

Keene Little : 1/15/2008 2:09:16 PM

Not a bad spot to try a long on NDX (NQ) with a tight stop just below last week's low.

Keene Little : 1/15/2008 2:03:31 PM

Looking at the daily chart of the gold contract (February contract), yesterday and today it overran its Fib projection at 909.50 where its 5th wave = its 1st wave but so far that level is acting as resistance. The daily up-channel shows a little more room to run if today's pullback leads to another push higher. Link

It's trying to catch rising knives by shorting this rally (which is especially difficult with commodities which can extend much further than you think they should) so if you short gold today and it makes another high, keep an eye on the top of the parallel channel, currently near 925, for the next resistance level.

Keene Little : 1/15/2008 1:45:07 PM

Interesting spot for GLD. Today's high at 90.35 is pennies shy of a Fib projection for the 5th wave at 90.59 where it would equal the 1st wave in the move up from the end of September 2006. It has reached the top of a parallel up-channel for price action since its August 2007 low and also the top of a parallel up-channel for price action since the July 2005 low: Link

The wave count can be satisfactorily counted as complete at the Fib projection for it and the channels suggest the rally could be complete. The negative divergence on the weekly RSI says gold bulls need to be careful. Will the Andrews Pitchfork (modified Schiff), which suggests higher, work or will bulls get the shiv instead? I like the setup for a short on gold here, stop at a new daily high.

Jeff Bailey : 1/15/2008 1:43:44 PM

VIX.X 23.73

Jeff Bailey : 1/15/2008 1:42:51 PM

Swing trade sell NAKED Put Alert! ... for one (1) of the Valero Energy VLO Mar $50 Puts (VLO-OJ) at the bid of $1.30.

This is an OBLIGATION to buy 100 shares of VLO at $50 - $1.30 = $48.70.

VLO $56.30 -5.96% ...

Linda Piazza : 1/15/2008 1:42:40 PM

SPX nearest support (15-minute Keltner and longer-term, too) is in the 1383.40-1384-ish zone. The 9-ema is at 1389, but the strongest nearby resistance right now should be that at about 1391.84 and a little above on 15-minute closes.

This kind of sideways movement at the bottom of a decline is usually followed by more downside, and the Keltner setup certainly presents that possibility. Due to what I'm picking up on other charts, just little signs, I've been uncertain all day about the likelihood that we'd see that 1367-ish level approached. We'll see. Keep vulnerability to that level in mind today.

Keene Little : 1/15/2008 1:32:17 PM

The kind of sideways consolidation that I'm envisioning for this week would also work off the short term oversold market conditions. It will also be very ugly choppy price action (trading inside 4th wave corrections is one of the more difficult times to trade) so take only crisp trade setups and remember, flat is a position.

Keene Little : 1/15/2008 1:26:45 PM

All of the choppy 3-wave price action since last week's low is starting to make some sense to me now. Ideally, if NDX can hold above last Wednesday's low (1892.68) then we could see a larger sideways triangle (descending triangle--declining highs, flat bottom) play out this week before heading for a new low, perhaps next week (it may have already found its low for now): Link . It could mean a positive response tomorrow to INTC's earnings report.

This idea fits the other indices as well and as shown on the DOW it would also be a 4th wave correction (dark red count) before a 5th wave lower: Link and how it might look on the daily chart: Link

Jane Fox : 1/15/2008 1:24:56 PM

Here is the VIX making new daily lows yet the S&P futures continue to make new daily lows as well. These two should be mirror images of each other. Link

Jane Fox : 1/15/2008 1:23:46 PM

This is one of those days where you have to take head of the AD volume. It is so strong today it is even overpowering the VIX. Link

Jeff Bailey : 1/15/2008 1:21:20 PM

CNBC ... guests discussing refining, upcoming fundamentals.

see today's 12:43:20, 12:51:02, 01:03:17

Linda Piazza : 1/15/2008 1:16:32 PM

I guess it wasn't too early, after all to see the SPX push up toward 1392. (See my 1:05:28 post.) Bulls want to see, first of all, the SPX maintain 15-minute closes above the 9-ema, now at 1389.84. Then they want the SPX to push above and maintain 15-minute closes above about 1392. As I said in my 1:05:28 post, until then, this is just normal lunchtime lull, move-across-the-channel action. If the SPX begins maintaining 15-minute closes above 1592, it looks tentatively better than it did earlier, erasing that downside target.

Jeff Bailey : 1/15/2008 1:16:26 PM

01:00 Internals found at this Link

Linda Piazza : 1/15/2008 1:05:28 PM

As is typical of this time of day, the SPX's 9-ema is beginning to flatten. When that happens, the SPX sometimes is driven freely across it, to the other side of its smallest Keltner channel. That's now at just above 1392 while the 9-ema is now at 1388.94. From the looks of the channels, it's still a bit early to expect that to happen, if it even does today, but I wanted to present it as a possibility if the 1384-ish support continues holding. If the SPX does bounce up to test that 1392-ish area and begins maintaining 15-minute closes above it, then perhaps something more bullish than the typical lunchtime lull action is going on. Maintain some skepticism for now, though, if there's a bounce that is turned back sharply short of or at 1392.

Jeff Bailey : 1/15/2008 1:03:17 PM

Valero Energy (VLO) $56.01 -6.44% ... Link

Jeff Bailey : 1/15/2008 12:51:02 PM

$GASO:$WTIC 1-point box Link

0.50-point box Link

0.40-point box Link (update to 01/03/08 Market Wrap) Link

0.25 box Link

Linda Piazza : 1/15/2008 12:46:25 PM

Both the TRAN and the SPX have continued finding resistance on 15-minute closes on their 15-minute 9-ema's. Neither has yet fallen to a new low of the day. If the SPX continues dropping, the next support is now near 1383.39. Nearest resistance is 1390.19, at the 9-ema. Above that is stronger resistance beginning at about 1392.36 currently. The downside target remains in effect. It's now at 1366.29. I continue to remain a bit skeptical about that downside target being reached, but so far, the SPX is behaving as expected if it was working its way toward that target. Channels are flattening again, but that's typical of this time of day. Do assess your willingness to endure a drop that low if you're dipping your toe into bullish waters, and also know exactly what you'll do to protect profits if you're in bearish plays and that level is approached.

Jeff Bailey : 1/15/2008 12:43:20 PM

Nymex Crude Oil (Mar-Dec) and Unleaded (Mar-Dec) futures at this Link

Keene Little : 1/15/2008 12:41:21 PM

NDX just broke the bottom of its triangle and about to test Friday's low. Not looking good for the bulls here.

Jeff Bailey : 1/15/2008 12:33:16 PM

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

Keene Little : 1/15/2008 12:16:36 PM

So far the little bounce off the last low is a small 3-wave move so nothing bullish yet. I'm watching to see how the bounce develops in order to provide some clues as to how big the bounce might get (or maybe even start a new rally).

Linda Piazza : 1/15/2008 12:13:18 PM

The TRAN is already testing its 9-ema on the 15-minute chart, with that average at about 4239.40, and the TRAN at 4240.27 as I type. That moving average has held as resistance on 15-minute closes all day, but the TRAN still isn't dropping far when you compare Keltner support and resistance levels with what we're seeing on indices such as the SPX. In my opinion, it's still diverging from the SPX in the degree of weakness that it's showing. I guess I could be saying that as the SPX slips all the way down to its Keltner target, perhaps, because the divergence certainly hasn't stopped the SPX from slipping lower yet, but I've learned to remain watchful when I see the TRAN not corroborating what's going on in the SPX, OEX or Dow.

Linda Piazza : 1/15/2008 12:09:02 PM

Nearby SPX Keltner support is now at 1383.44 on 15-minute closes. Resistance at the 9-ema, now at 1390.96, joined by further resistance that extends up toward 1394.50. The SPX is at 1387.63 as I type.

Jane Fox : 1/15/2008 12:02:33 PM

Here is the daily chart of the SPX. This is quite bearish and is telling me it will go lower still. Link

Keene Little : 1/15/2008 11:58:02 AM

SPX is showing some bullish divergences at the current low on the 5 and 10-min charts now as it drops to potential support near 1384. At least pull your stop down if you're still short.

Linda Piazza : 1/15/2008 11:37:19 AM

Light Keltner support is now showing up at 1384.83 on the SPX's 15-minute chart. This is where we know historical and other support to be, so this new Keltner support is corroborating what we already know. It would take a bounce back above and sustained values back above 1393.67 to erase that downside target that was set earlier, but if you've been reading my posts, you know I haven't been too sure at all of the likelihood that would be reached.

Linda Piazza : 1/15/2008 11:35:15 AM

The TRAN is now drifting just below the rising trendline off Wednesday's low, but it's moving sideways so far. A potential downside target near 4215 or perhaps even 4198 has been set, but the TRAN hasn't been falling toward those targets. The TRAN is at 4235.48 as I type.

Linda Piazza : 1/15/2008 11:33:12 AM

Denise wrote to tell me of an explosionin Beirut. My research turned up information that a U.S. embassy car was apparently targeted and hit. There have been casualties but no further information was available and no confirmation has been given that it was a U.S. embassy car.

Keene Little : 1/15/2008 11:31:54 AM

It looks like we should see at least a minor press lower. If the short term charts show some bullish divergences as SPX nears 1384 I'd protect profits on shorts and maybe even think about testing the long side.

Jeff Bailey : 1/15/2008 11:29:11 AM

VIX.X 24.27 +5.98% ...

Jeff Bailey : 1/15/2008 11:28:57 AM

Swing trade put lower target alert! ... for the one (1) Wachovia Bank WB April $35 Put (WB-PG) to $29.00 (from $30) in the underlying shares.

WB $34.99 -3.58% ...

WB-PG $3.40 x $3.50.

Jeff Bailey : 1/15/2008 11:17:35 AM

11:00 Internals found at this Link

Linda Piazza : 1/15/2008 11:05:20 AM

Nearest resistance for the SPX is 1391.06 on 15-minute closes, but strongest nearby resistance appears to be near 1394.25-1395.50. Bears want resistance to hold there on 15-minute closes, maintaining the downside target. As long as the TRAN is mostly maintaining that rising trendline off Wednesday's low, I'm still a little leery of believing too strongly yet in that SPX downside target near 1367, so be particularly watchful if that SPX resistance zone is tested.

Jeff Bailey : 1/15/2008 11:01:17 AM

Dow Diamonds (DIA) $125.81 -1.33% ... checks back at QTLY S1 from underneath. Did this on 01/09/08 and then again on Friday late and got back above. Failure here suggest lower low coming.

Jeff Bailey : 1/15/2008 10:44:36 AM

DUG $40.02 +5.53% ...

Jeff Bailey : 1/15/2008 10:43:21 AM

Exxon/Mobil (XOM) $88.76 -2.27% ... probes its trending higher 150-day SMA.

Linda Piazza : 1/15/2008 10:43:58 AM

Whether or not I yet give that SPX downside target much credence (10:35:11 post), the purpose of posting it is to encourage you to evaluate your risks and assess whether you can or want to stay in a trade through such a test, if the Keltner charts happen to be right and if that target is not erased. I believe the 1384-ish zone and certainly the 1370-1375 zone to be potential support, too, but the Keltners have been right and my impressions of where support ought to lie have been wrong at other times. I just don't like the TRAN's relative strength (by Keltner standards, at least) when thinking about whether the SPX is going to hit a downside target or not.

Keene Little : 1/15/2008 10:41:45 AM

The DOW will have potential support at its uptrend line from last Wednesday the 9th, currently near 12570. That trend line could be the bottom of a similar sideways triangle as shown for NDX.

SPX is in a more bearish pattern since it has already dropped below last Friday's low and could be signalling that we're going to see a larger drop sooner rather than later to new lows. Two equal legs down from the Jan 10th high is just below 1384 so that's potential support that could launch another rally (pink wave count): Link

Next support below that is 1370 and then down to the bottom of a parallel down-channel for price action since the October high is near 1363 (dark red wave count).

Jeff Bailey : 1/15/2008 10:40:00 AM

Palladium and copper down, but holding rather tough considering more industrial metals.

Jeff Bailey : 1/15/2008 10:38:47 AM

Silver and Gold commodity also higher, but fractions.

Jeff Bailey : 1/15/2008 10:37:23 AM

Sector Winner(s) ... XAL.X 32.92 +2.29%, "Junk Bond" PHF $8.12 +0.61% and Treasuries with 5-year down 5.1 bp at 3.016%, 10-year down 7.1 bp at 3.722%, 30-year down 6.7 bp at 4.304%.

Jane Fox : 1/15/2008 10:35:29 AM

Overnight lows have been breached by all markets. This is very bearish folks. Link

Linda Piazza : 1/15/2008 10:35:11 AM

The SPX has a current tentative Keltner target of 1367.55, with potential support there on 15-minute closes. I've hesitated to mention it or to give it much credence yet because of that TRAN divergence. The TRAN is still maintaining the support of the rising trendline off Wednesday's low. Neither the SPX, OEX or Dow tend to go too far one direction if the TRAN isn't leading them or going there with them, so I'm cautious about either mentioning or believing that the SPX downside target will be hit. Something is wrong here in this picture, and I don't yet know which is wrong: the TRAN or the SPX.

Jane Fox : 1/15/2008 10:33:07 AM

WASHINGTON (MarketWatch) -- U.S. businesses turned in their best sales growth in eight months during November, boosted by higher prices and strong sales at the retail level.

Sales at all U.S. businesses increased 1.6% in November, the strongest growth since the 1.8% gain in March, the Commerce Department reported Tuesday.

Sales are up 8.7% in the past year. The figures are not adjusted for inflation. Read the full report.

Real, inflation-adjusted sales are one of four monthly indicators used to judge whether the economy is in a recession; the other three -- job growth, income growth and industrial output -- have softened significantly.

However, just-released data for December show that sales, at least at the retail level, are weakening.

Jeff Bailey : 1/15/2008 10:33:18 AM

Citigroup (C) $27.41 -5.67% ... volume rather light in my opinion at 30.5 million shares.

Bearish vertical count no help for assessing further downside at $36.00.

Jane Fox : 1/15/2008 10:31:31 AM

Internals are all in sync. Link

Jane Fox : 1/15/2008 10:30:37 AM

AD volume has the tajectory that tells you, "Don't even think long."

Jane Fox : 1/15/2008 10:29:36 AM

VIX to new daily highs so supporting the bearish AD line.

Jane Fox : 1/15/2008 10:29:18 AM

AD line is a very bearish -1883

Jeff Bailey : 1/15/2008 10:27:40 AM

S&P Banks (BIX.X) 249.21 -3.42% ... slips below WEEKLY Pivot.

Linda Piazza : 1/15/2008 10:21:09 AM

As noted in my 9:59:12 post and in some of Keene's, the shape of the early bounce on many indices just looked like a typical short-term relief bounce and wasn't particularly convincing.

The TRAN's relative strength and the divergence shown there has certainly not made any difference yet as the SPX dipped to and below its Keltner target. I'm still watching, though, warned by the TRAN's relative outperformance to be watchful for a stronger bounce attempt. Haven't seen it yet. The TRAN is now testing its rising trendline off Wednesday's low. If it violates it and drops to and through a Keltner support line now at 4193, it will have undone its divergence, just playing a following rather than a leading role.

Keene Little : 1/15/2008 10:18:46 AM

The bottom of the potential sideways triangle for NDX is just below 1906 but I would expect a bounce that creates a 3-wave decline to that level. A break above yesterday's high would be a heads up that something more bullish is happening but until then I'd look to short any bounces for now. If price drop s below 1900 directly from here then the selling would very likely accelerate. Link

Linda Piazza : 1/15/2008 10:12:34 AM

The OEX has potential support just above 654 on 15-minute closes. That's also a potential target.

Linda Piazza : 1/15/2008 10:10:58 AM

The SPX's downside target is now about 1396.30, with potential support there on 15-minute closes.

Linda Piazza : 1/15/2008 10:08:53 AM

Hmm. I just took a look at the TRAN, and it's much stronger on a Keltner basis than is the SPX. Many of you may know that I often watch the TRAN as a sort of indicator index. I don't trade it or its component stocks, but I want to see the TRAN going the same direction as the SPX, OEX or Dow, or I'm going to be asking what's up. Don't get me wrong: the TRAN is lower this morning. But it hasn't violated the central basis line (120-ema) for the nested Keltner channels I watch, much less dropped toward lower support, and it's still above the rising trendline off Wednesday's low. This is a divergence, a bullish one for the SPX, OEX and Dow. I treat this the same way I would any other divergence. It's a heads-up that something underneath isn't supporting the degree of weakness in the SPX, but it's not proof that the SPX will bounce. It just signals that we should watch for that possibility. The other possibility, of course, is that the TRAN gets pulled down to a greater degree and the divergence is erased that way.

Keene Little : 1/15/2008 10:06:37 AM

The small bounce off this morning's low was left as a corrective bounce so whether it drops lower from here or after another bounce first, it looks lower from here.

Linda Piazza : 1/15/2008 10:03:07 AM

If you didn't read Jim's Wrap this weekend, you might not know that he proposed a scenario in which, if the inflation figures were tame enough, the Fed might want to lower rates before Fed Chairman Bernanke's testimony on Thursday. I don't know how much credence Jim put in his "just a theory" scenario, but it's an idea that's being tossed around this morning, too, at least in some of the reports I'm hearing and reading. I don't know how likely it is but I do know that any traders in the market right now need to know how much risk they can tolerate if such a thing should happen and we should get the wild swings in prices that sometimes come immediately after such a surprise announcement.

Jane Fox : 1/15/2008 10:02:09 AM

*NOV BUSINESS INVENTORIES: 0.4 % V 0.4%E - no revision to prior 0.1%

Linda Piazza : 1/15/2008 9:59:12 AM

I see some attempts at recovery beginning, but none are as yet convincing of a turn-around in progress. The USDJPY bounced up to 106.93, just below that 106.96-107.05 resistance zone I mentioned earlier. The SPX bounced up to the underside of the trendline off Wednesday's low, but it hasn't done anything to erase its downside target of 1396.90, much less broken above the trendline again. So, we're getting the kind of retest that we expect to see at some time or another, but no strong evidence yet that the retest is anything other than a retest. I'm still watching.

Jeff Bailey : 1/15/2008 9:57:09 AM

Citigroup's Earnings Press Release Link

Jeff Bailey : 1/15/2008 9:54:12 AM

Citigroup Loses $9.83 Billion, Slashes Dividend ... AP Story Link

Jane Fox : 1/15/2008 9:50:14 AM

And once again the US$ is not doing what I suspected it would. I thought this support would hold but now we have a head and shoulders break and this chart has turned bearish. Link

Jane Fox : 1/15/2008 9:48:31 AM

I suspect the support Crude found at $93.00bl will break. This consolidation pattern usually results in lower prices. Link

Linda Piazza : 1/15/2008 9:48:17 AM

The USDJPY is rising off its 9:00 low of 106.60, currently at 106.83. It looks as if 106.96-107.05 could be significant resistance, though, so it needs to sustain values above that before we consider that its bounce is anything but the shortest-term of short-term relief bounces.

Jane Fox : 1/15/2008 9:46:09 AM

Doesn't look like Gold is ready to take a break does it? The higher it gets and the longer it takes to retrace the more violent and unforgiving the retracement will be. I would not be thinking about getting long Gold here but back at 850 I will be looking for support and for a entry. Link

Linda Piazza : 1/15/2008 9:43:32 AM

Shorter-term look at the SPX: The SPX is edging just beneath a rising trendline off last Wednesday's low, but a quick bounce back above about 1402.50 would have that line pierced but perhaps not truly violated. Will that happen? Keltners say that next potential support and a current target is 1397.01, which could be hit before this uploads if I don't do it quickly. Don't count on that Keltner target being hit. What it's showing us is that there are several forms of potential support now being tested, so be watchful for the possibility that one of them could catch and steady the SPX.

Linda Piazza : 1/15/2008 9:39:43 AM

We all can imagine round-number support for the SPX near 1400. I also wanted to reiterate this morning that both tradition and Keltner daily and weekly charts point to potential support in the 1384 zone, at 1378, and then again at the 1370-1375 zone. Watch for potential support in those areas.

This action this morning was the reason that I and several others kept cautioning yesterday to plan ahead of time how they would react to a test of resistance late yesterday, if it came, and how much risk they felt comfortable taking home with them overnight. If you made the wrong decision and your stops have now been hit, lick your wounds, don't castigate yourself too much, and evaluate whether you would make the same or a different choice next time.

Jane Fox : 1/15/2008 9:29:24 AM

Looks like I could have stayed up all night and traded and stayed short I would have had a very profitable night.

Both the S&P (ES) and DOW (YM) futures have tagged their respective previous day lows overnight. The Russell 2000 (ER2) futures broke their overnight lows and the NDX (NQ) futures were not quite able to reach its ON lows. Link

Keene Little : 1/15/2008 9:25:26 AM

The steep drop in equity futures overnight (strong rally in bonds) is not what the bulls needed today. It looks like yesterday morning's gap up could get closed today and as I mentioned last night, this drop back down sets a bearish tone for the rest of the week (but it could consolidate in a big choppy sideways move for another day or two before dropping to a new low).

Jane Fox : 1/15/2008 9:16:24 AM

WASHINGTON (MarketWatch) -- Producer prices fell 0.1% in December, as energy prices declined and food prices gained, the Labor Department reported Tuesday.

Excluding volatile food and energy, core producer prices grew 0.2%. Economists had expected a gain of 0.2% in December for both the producer price index and the core.

But for the full year, producer prices were up 6.3% -- the largest calendar year rise since 7.1% in 1981. Core prices were up 2.0% in the past year.

Wholesale energy prices fell 1.9% in December, after hitting record growth in the prior month. Food prices in December grew 1.3%, compared with no gain in the prior month.

In November, PPI growth hit 3.2% -- the largest monthly gain since August 1973 -- raising concern among some observers about surging energy prices and inflation.

In December, wholesale gasoline prices fell 4.8%. In the prior month, gas prices had hit record growth of 34.8%.

Jane Fox : 1/15/2008 9:14:17 AM

Dateline WSJ - WASHINGTON -- U.S. retail sales were surprisingly weak in December, taking a holiday season tumble that suggested the housing slump and gasoline prices might have caught up with consumers.

Meanwhile, a slight decline in December U.S. producer prices wasn't enough to prevent them from posting the highest calendar-year increase in over a quarter century in 2007 on the back of sharply higher energy, commodity and food prices. Yet underlying price pressures remained under control, suggesting the multiple inflationary shocks haven't yet gained a foothold in the broader economy, which should give Federal Reserve officials room to cut interest rates further in response to the weak economy.

Retail sales decreased by 0.4%, the Commerce Department said Tuesday. Sales went up a revised 1.0% in November; originally, the government estimated November sales 1.2% higher.

For all of 2007, sales rose 4.2%, the softest annual gain since 2.4% in 2002. Sales in 2006 went up 5.9%.

The median estimate of 21 economists surveyed by Dow Jones Newswires was a 0.1% dip in December retail sales.

Linda Piazza : 1/15/2008 8:50:29 AM

I must be away from my office for a little while this morning, and I'm not sure I'll be back at the open.

If there's still any unwinding of the yen carry trade to be done, we may be seeing evidence of its effect this morning. Immediately after the PPI, the USDJPY dropped to 106.68, which is below the November 107.27 low, which was below the August low. Futures had already been weak, but they dropped further after the PPI. As I type, they're questioning on CNBC why futures went the "wrong" way after inflation figures appeared tame. That may be because tame inflation figures are perceived by currency traders to give the Fed license to lower rates, which weakens the dollar, which impacts whether U.S. equities will benefit from the yen carry trade.

Anyway, keep an eye on the USDJPY again today, to see if it bounces sharply or continues falling, and keep an ear open for any "surprise" Fed announcements, as either could impact your trades.

Market Monitor Archives