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Keene Little : 2/7/2008 1:22:18 AM

Thursday's pivot tables: Link and Link

While CSCO disappointed and futures sold off after hours, we've seen this story before--shorts get caught in the morning with a few well placed buy programs and the short squeeze flips the market around. Will it happen again? Let's just say I wouldn't be surprised.

But keep in mind that Thursday prior to opex tends to be the head fake day so an early morning washout could set up a rally into next week. The pattern of this week's decline supports the idea that we should be looking for a bounce soon. 60-min charts:
DOW: Link
SPX: Link
NDX: Link
RUT daily: Link

Jeff Bailey : 2/6/2008 10:32:16 PM

Closing Internals found at this Link

Jeff Bailey : 2/6/2008 10:23:12 PM

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

At bottom of my Watch List are the six (6) largest weighted QQQQ components.

OI Technical Staff : 2/6/2008 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The Market Monitor has been archived.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 : 2/6/2008 7:33:00 PM

Pacholder High Yield (PHF) goes out at $8.41 +0.96%. Should PHF continue to pay $0.075 per share/month over the next 12-months, its SEC Yield would be 10.71%.

Is there ANY THING OUT THERE (another asset class, anything?) that offers GROWTH retunr of 10.71% over the next 12-months?

The MARKET will give the answer.

Each second, each minute, each hour, each day, each week, each month, each quarter the MARKET is always asking these types of question.

30-year YIELD 4.37%. Is there ANY THING OUT THERE that offers the potential GROWTH return of 4.374% per year for the next 30-years?

Jeff Bailey : 2/6/2008 7:16:54 PM

Email Question: ... Hi Jeff, What did you mean by your 13:20 comment? And " 0% conventional"?

Jeff's Reply: ... My alert! on AAPL and then INTC go back to recent suggestions that traders/investors take a "conventional" retracement on the QQQQ, then do the same for its HEAVIEST weighted components. Then as time passed we could measure STRENGTH or WEAKNESS in an unbiased way. Just like a doctor will do with tools at his/her disposal. Monitor the brain, heart, lungs, kidney(s), liver ...

Here's a QQQQ, AAPL, MSFT and INTC chart montage as I had shown previously. Link

Again, just three (3) QQQQ components, but #1, #2 and #8. Do you see where it is my belief (based on years of observation) the relationships and dynamics of how stocks can have impact on an index? Do you think it was "random walk" that had MSFT jumping to 61.8% on earnings, but finding notable selling? Then days later they annouced intentions to buy YHOO?

You and I both have a pretty good idea that MSFT has been working with an investment bank before 1/25/08 and even 2/01/08.

Jeff Bailey : 2/6/2008 5:12:01 PM

Cisco Systems (CSCO) $23.08 -0.77% ... marked lower at $21.10. This would be a 0% conventional alert were this regular session trade. #5 heavy weight in NDX/QQQQ

Jeff Bailey : 2/6/2008 5:10:30 PM

Cisco Systems (CSCO) $23.08 -0.77% ... marked lower at $21.10. This would be a 0% conventional alert were this regular session trade.

Jim Brown : 2/6/2008 5:07:01 PM

Important Reader Survey - As we head into 2008, we wanted to take a moment and invite you to participate in a short subscriber survey to help us better meet your needs.

As I'm sure you can appreciate, we have a wide range of traders and investors that trade a variety of stocks, options and futures across various time horizons. What's more, the market has introduced and expanded the use of ETFs and emini futures contracts. We felt it was time to take a quick snap shot of your investment and trading styles and get your thoughts and ideas in order to help us better tailor the content and focus of the Market Monitor.

Please click here: Link

Thank you in advance for your quick response to the attached survey. Your feedback is important to us

Jeff Bailey : 2/6/2008 4:50:51 PM

That will increase their amount of cash, but it is also dillutive to shares. Still, with losses on the bottom line, dilluting shareholders better than "belly up" at this point in the game.

Jeff Bailey : 2/6/2008 4:48:44 PM

MBIA To Raise $750 Million For Insurance Unit ... Reuters Story Link

Jeff Bailey : 2/6/2008 4:45:58 PM

MBIA Inc. (MBI) alert! $14.28 -4.16% .... stockjumps in extended. $15.69 here.

Jane Fox : 2/6/2008 4:17:25 PM

Cisco's quarterly profit rose 7.2% as revenue reached $9.83 billion.

Jane Fox : 2/6/2008 4:14:11 PM

Dateline WJ - Economists in the latest Wall Street Journal forecasting survey gave Federal Reserve Chairman Ben Bernanke the lowest grade of his two-year tenure-75 out of 100 points-and said it was increasingly likely the nation's economy would tumble into a recession.

On average, the survey's 52 respondents put the odds of a recession at 49%, up from 40% in the January survey and 23% last June. Moreover, if a downturn does materialize, they gave 39% odds that it would be worse than the past two recessions.

To try to stave off a contraction, the Fed has been pursuing an aggressive interest-rate-cutting campaign, lowering the target for its benchmark federal-funds rate, at which banks lend to each other overnight, by 1.25 percentage points since mid-January. The economists expect the central bank to continue to cut the federal-funds rate, now 3%, by another half point by the end of June.

Despite his efforts to rescue the economy, Mr. Bernanke drew increasing criticism, with economists faulting him for what they said was his poor management of Fed communications and being overly attentive to fluctuations in the stock market. The overall grade they gave Mr. Bernanke dropped below 80 for the first time since he took office.

Keene Little : 2/6/2008 4:14:00 PM

The update to the DOW 60-min chart shows a break below the bottom of a parallel up-channel from the January low but that's not critical (just a guide or where support might be found). I think the more critical downside level is 12073, the 62% retracement of the bounce of the January low. There is still the potential for another rally leg into next week (pink) with an upside target near 12300 now (two equal legs up from the January low). Link

But any bounce to correct the decline from Feb 1st that then turns back down would be very bearish (dark red). Bullish divergences at today's low, hitting the 50% retracement at 12206 and having a potentially complete wave count for the leg down from Feb 1st says shorts need to be careful here--we should be set up for at least a larger bounce now. Then we'll have to see what develops from that.

Jeff Bailey : 2/6/2008 4:10:51 PM

QLD alert! $68.00 ... know where it is versus where we were, versus where we could be.

See 1/28/2008 MM bull entry $73.00, 01/31/2008 bull exit $74.70. And all the trade management between.

Linda Piazza : 2/6/2008 4:03:12 PM

The SPX closed very near the weekly 200-ema at 1322.26. Support? It was on weekly closes for the previous three weeks, but we're just going to have to see what comes next. I wondered after the recent lows if the SPX might not set up a huge triangle or other consolidation pattern, mentioning it the day after the FOMC meeting, so I'm watching for that possibility.

Jeff Bailey : 2/6/2008 3:59:03 PM

SPY $132.43 ... WKLY 19.1% retracement.

Linda Piazza : 2/6/2008 3:57:13 PM

I don't know about the rest of you, but ever since the markets became more volatile, I've found it more difficult to get SPX orders through. Time to get your orders in if you've decided to exit positions before the close and haven't done so already. The SPX options trade for a few minutes after the close, of course, but the tenor of trading can change rapidly with after-the-close announcements.

Jeff Bailey : 2/6/2008 3:57:07 PM

CME daily interval chart with "Bailey Wave" and conventional retracement Link

Missed that one. Are there other patterns setting up?

Jeff Bailey : 2/6/2008 3:48:25 PM

Intel (INTC) Alert! $19.92 -0.94% ... checking 19.1% conventional.

Linda Piazza : 2/6/2008 3:48:09 PM

The SPX is now in breakdown mode on its 15-minute chart. The 9-ema has now descended to about 1334.86.

Because of the breakdown mode, I'm rolling to the 30-minute chart for the next potential downside target. Time to take a breath: the potential downside target on that chart is 1307.18 currently. That will be maintained as a potential target until and unless the SPX begins sustaining 30-minute closes above the 30-minute 9-ema now at 1336.78.

I have a couple of caveats here: breakdowns on the Keltner charts that occur the last few minutes of trading or the first few minutes of trading are the least reliable and the most often reversed. That doesn't mean they always are, but keep just a bit of skepticism about that downside target. Then, while you're keeping a bit of skepticism, remain aware that these downside Keltner targets are being met lately. I was a bit skeptical of yesterday's on the 15-minute chart, and it's definitely been met.

Jane Fox : 2/6/2008 3:46:47 PM

I suspected the SPX would find support at January 28th lows at 1322 but I see the 50% retracement from January lows at 1270 to February highs at 1396 is at 1331 so this is the "zone" I think will be support.

I am probably fine tuning this too much and, like I have said before, the bulls just need this market to stay above yearly lows. Link

Keene Little : 2/6/2008 3:41:27 PM

Lower your stop on a short play to the last bounce just before 3:30 PM. We could be getting close to the point where we're going to see a larger correction (at a minimum) of today's decline. Take nothing for granted and take money out of your trades early and often. This market is too frenetic to trade it any other way.

Jane Fox : 2/6/2008 3:40:41 PM

I am back on line now. It has been a challenging day.

Here are your internals and they are not looking good. These are the days when it becomes very clear the bears have the ball. Link

Jeff Bailey : 2/6/2008 3:37:12 PM

CME at lower end of a "Bailey Wave"

Linda Piazza : 2/6/2008 3:35:23 PM

Have you ever been caught by a Cisco-enduced rally or a Cisco-enduced decline after CSCO reported earnings the night before? Many have, when Cisco's results have supposedly rallied the markets to sent them spinning lower. While what CSCO does or doesn't do probably doesn't rate the caliber of attention that the potential downgrades of bond insurers does, you should still add in the risk that CSCO's results could impact the markets as you're making your end-of-day decisions.

Jeff Bailey : 2/6/2008 3:35:04 PM

CME 505.20 -14.22% Link ... ouch. Never could hold conventional 61.8%.

Jeff Bailey : 2/6/2008 3:29:28 PM

03:00 Internals found at this Link

Keene Little : 2/6/2008 3:27:52 PM

Yesterday's update on CME ( Link ) pointed to the potential for another leg up in its bounce off the January low. The key level to the downside, to negate that expectation, was at 581, the Jan 31st low. That got taken out in a hurry with today's gap down and strong selloff: Link

CME has now broken below the January low and convincingly below its uptrend line from April 2005. This puts it into a bearish wave count which says the drop is part of what will become a larger 3rd wave down. Short is the place to be on this one for a while.

The key level to the upside remains 581 for now--any bounce back above that level would potentially negate the impulsive move down today so stay short below that level.

Linda Piazza : 2/6/2008 3:22:33 PM

The SPX still can't hold a 15-minute close above the 15-minute 9-ema (now at 1336.11), so by using our short-term benchmark, we see that the downtrend is maintained. I'm again seeing some tentative bullish price/RSI divergences set up (but not Keltner ones this time), but it should be remembered from yesterday's multiple warnings that such divergences are only reminders to set up a "what if" plan in case there's a bounce; they're not proof there will be a bounce.

It's not too soon to begin thinking about end-of-day decisions. I should point out that if there should be any kind of bounce on the SPX, particularly one that takes the SPX back near the opening value of 1339.48, the day's candle could end up being the type that is a potential reversal signal. That doesn't promise a reversal tomorrow, but it should be factored into your decisions about how much bearish risk you take home with you overnight tonight.

Keene Little : 2/6/2008 3:20:01 PM

So much for breaking the downtrend line. Bears still rule and the last bounce is a good place for your stop on a short play for now. But watch for some bullish divergences to warn you to pull your stop a little closer.

Jeff Bailey : 2/6/2008 3:12:10 PM

PBR same bar chart we've been following. Tie USO's "Bailey Wave" and be ready. Link

Keene Little : 2/6/2008 3:11:34 PM

Those downtrend lines are holding but if price consolidates just beneath them we could see a break to the upside in the last hour.

Linda Piazza : 2/6/2008 2:53:54 PM

The SPX bounces--or, rather, attempts a bounce--from significant Keltner support, with RSI at a level that can sometimes indicate that the short-term move is approaching an end. However, 15-minute "significant" support is not always so significant and an overdone RSI level is not always indicative of a bounce that will continue. It wasn't indicative of that yesterday. So, this upcoming potential test of the descending 15-minute 9-ema will be a first test, with that moving average now at 1338.04. (Note: the SPX tested and fell back slightly from that test while I typed.)

Is your head spinning? Mine is, too, and don't think we're alone. We wouldn't be having this kind of volatility if people and institutions with more money than you and I have weren't trying to figure it out, too. So far, since last Friday, we've seen a series of lower swing highs and lower swing lows, so obviously, in swing trade terms, the trend is still down as well as on the very short-term intraday period we've been watching today. So, first, there needs to be sustained 15-minute closes above that 9-ema, but that's not enough, as we saw earlier. Watching that benchmark allowed those who were in short-term bullish trades to find a spot at which they could see those trades weren't working any longer, but they still might have gotten out for only breakeven or even a small loss. After seeing those 15-minute closes above the 9-ema, you need to begin seeing some moves above short-term swing highs, too, such as this morning's swing high of 1351.96.

Jeff Bailey : 2/6/2008 2:53:54 PM

One could say USO still in a "standing 8 count." Of course, some bears got "knocked out." (frown)

Jeff Bailey : 2/6/2008 2:51:49 PM

Petroleo Brasileiro (PBR) $107.25 +0.73% ...

Keene Little : 2/6/2008 2:50:50 PM

The current bounce off the low is nearing the downtrend lines (for the DOW and SPX) from this morning's highs. The bulls would obviously like to see those lines get broken (about DOW 12280 and SPX 1338.60, YM 12290 and ES 1339.50).

Jeff Bailey : 2/6/2008 2:46:58 PM

USO daily inteval chart with a current "Bailey Wave" 8 count Link

Jeff Bailey : 2/6/2008 2:37:18 PM

US Oil Fund $69.065 -1.56% ... $1 box Link and $0.50 to match futures Link

For those that haven't been with us since October, it was noted at that time that there was "no USO to short," yet some tried very hard to short this commodity.

Today you've seen some mention of how fast traders have had to react to near-term price action.

I'd have to agree based on my MM Profiles. We've had to think fast at time.

Now, in a minute I'll follow with a USO and "Bailey Wave" counts. We're going to have to be on our toes!

Tab Gilles : 2/6/2008 2:30:36 PM

Weekly EIA Report Link

Keene Little : 2/6/2008 2:23:59 PM

The drop from this morning's high has now taken on the appearance of a waterfall decline so it could drop significantly from here. Don't be hanging on if you're long.

Linda Piazza : 2/6/2008 2:23:19 PM

What happens next? As long as the SPX is maintaining 15-minute closes beneath its 9-ema, it's still in a downturn. Some will consider a H&S confirmed on the 15- and 30-minute charts, but I'm not so sure about any target predicted by any H&S these days or even whether that one is a valid one or one still lacking a true right shoulder. Just pick out your favorite benchmark and watch the SPX according to that. I want to note again that the SPX is essentially testing (although just a little below) historical and Keltner potential support, so remain watchful for bounce potential although we're not seeing it yet.

Jeff Bailey : 2/6/2008 2:19:09 PM

Monster Worldwide (MNST) $27.50 -0.29% ... speaking of W-S's. Has slipped back under 19.1% conventional.

Keene Little : 2/6/2008 2:16:10 PM

SPX now breaking to a new daily low, following NDX lower. It's once again time to simply trail your stop down, giving it a little room to breathe but so far I'm not seeing a reason to challenge the decline.

Linda Piazza : 2/6/2008 2:15:04 PM

The SPX is hitting potential Keltner support as I type, with further light support now at 1332.70. The 1/28 low was 1322.26, near the weekly 200-ema, to give another perspective.

Jeff Bailey : 2/6/2008 2:14:30 PM

Liberty Tax Service Releases Results through Jan 31st

DJ- Liberty Tax Service today released its early season results through January 31st. The Company is up 12% in number of returns filed. Revenue has increased 31% from the same period last year. This increase is in spite of the fact that there have been widespread reports of the Internal Revenue Service's numbers being down significantly from last year.

"We're very pleased with our successful start to the tax season," states Liberty's CEO John Hewitt. "W-2's were issued later than usual this year, and several million taxpayers have to wait until after February 11th to file their tax returns due to late Congressional tax changes."

About Liberty Tax Service Liberty Tax Service operates over 2700 offices in the United States and Canada. Recently the Company launched an online income tax preparation product, . Liberty Tax Service is the fastest growing retail tax preparation company in the industry's history. Founded in 1997 by CEO John T. Hewitt, a pioneer in the tax industry, Liberty Tax Service has prepared over 5,000,000 individual income tax returns With 39 years of tax industry experience, Hewitt stands as the most experienced CEO in the tax preparation business, having also founded Jackson Hewitt Tax Service (JTX). Liberty Tax Service provides computerized income tax preparation, electronic filing, and refund loans. With an emphasis on customer service including audit assistance, a money back guarantee, and free tax return checking, Liberty Tax Service is well known for its strong commitment to community service and charitable activities, most recently partnering with the March of Dimes.

Linda Piazza : 2/6/2008 2:12:28 PM

Jane has just called to let me know that her Internet service has been interrupted (Aren't moves fun?) and she's completely offline. She will probably be offline the rest of the afternoon.

Linda Piazza : 2/6/2008 2:06:52 PM

The SPX's next Keltner support is at 1334.33 on 15-minute closes. This is also near a trendline from the 1/30 9:30 candle low and this morning's 9:45 low, with the 1/31 9:30 candle low just above that trendline. Some will be drawing a lopsided H&S neckline along these points and speculating on the possibility of a H&S confirmation here, but I'd also urge watching for a possible bounce, too. If you're not looking at weekly charts, you might not be aware that weekly 200-sma and 200-ema are at 1322.30 and 1294.78, respectively.

Jeff Bailey : 2/6/2008 2:02:20 PM

Some observation of how important one (1) stock can be and how its technical influence can impact market psychology

Keene Little : 2/6/2008 1:50:52 PM

We're getting a continuation of the pullback. SPX would now test its broken down-channel (the one from yesterday that I showed on its 10-min chart) right at today's low near 1335. So far I'm not seeing much in the way of bullish divergences to suggest looking for a place to try the long side.

But the DOW and SPX are now back down to the bottoms of their up-channels, shown on their 60-min charts (e.g., DOW-- Link ), where price found support this morning so pull your stops down if you shorted this morning's bounce.

Jeff Bailey : 2/6/2008 1:46:44 PM

Toll Bros. (TOL) $21.57 -1.37% ...

Jeff Bailey : 2/6/2008 1:45:56 PM

Toll Bros. earnings press release Link

Current quarter consensus was for EPS of $-0.13 on Reveneue of $680.5

Next quarter was for EPS of $0.02 on Revenue of $716.25M

Linda Piazza : 2/6/2008 1:44:03 PM

In reponse to my comments about the crazy markets and the comments I'd heard from those who had been in the pits, syndicate traders and in other such categories for decades, subscriber H.D. sent the following quotation from Jeffrey Cooper: "The worst January in 18 years followed by the best week in 5 years followed by the worse two day loss since January 2003 underscores just how frantic the playing field has become."

Linda Piazza : 2/6/2008 1:42:26 PM

This is not the action that short-term SPX bulls hoped to see. For the last hour and a half, the SPX has been finding resistance at its 15-minute 9-ema rather than support there. It was okay and expected to see the SPX come back at some point to test that 9-ema and even to test the other side of its smallest Keltner channel, but not to turn both lower. The SPX needs to scramble back above that 9-ema, now at 1343.97 and maintain levels above it to change the tenor back again. Next support, below that currently being tested near 1341, is now at 1335.06 and then 1333.80.

Jeff Bailey : 2/6/2008 1:25:23 PM

01:00 Internals found at this Link

Jeff Bailey : 2/6/2008 1:18:19 PM

For the QCB-OJ ... no stop for now. Target is $42.00 in the underlying.

Jeff Bailey : 2/6/2008 1:17:26 PM

Discosure: I currently hold bearish position in BOOM.

Jeff Bailey : 2/6/2008 1:16:54 PM

Swing trade put alert! ... for one (1) of the Dynamic Materials BOOM Mar $50 Puts (QCB-OJ) at the offer of $3.20 ($2.85 x $3.20)

BOOM $53.32 +0.79% ...

Jeff Bailey : 2/6/2008 1:13:20 PM

Apple Computer (AAPL) Alert! $125.76 -2.77% ... 0% conventional

Keene Little : 2/6/2008 1:09:49 PM

If we don't get a bigger bounce here but instead get a drop to another low then the wave count for the pullback turns corrective (7-wave move which makes it a double zigzag a-b-c-x-a-b-c). That would suggest we'll see another rally leg to a new daily high. No resolution yet. In the meantime I'm wondering if we'll see a pullback to test the broken down-channel, such as the one for SPX--currently near 1337 which would be close to a retest of this morning's low. Link

Jeff Bailey : 2/6/2008 12:59:52 PM

USO -1.76%

GLD +1.74%

Jeff Bailey : 2/6/2008 12:54:47 PM

Note: For the previously sold covered VLO-CZ you and I are also monitoring the crack spread of April.

Jeff Bailey : 2/6/2008 12:52:39 PM

Various NYMEX Energy Futures @ 12:15 PM EST at this Link ... Heating Oil also used by most as an observation of distillate.

Keene Little : 2/6/2008 12:52:35 PM

And now the pullback is looking impulsive (5-wave move). This suggests we're due a bounce but that it will be followed by another leg down. This analysis is on small timeframe charts and subject to error but the combination of the corrective bounce and now an impulsive decline has me feeling more bearish for the rest of the day. Be careful if you're long this morning's bounce.

Linda Piazza : 2/6/2008 12:51:43 PM

Here's where short-term SPX bulls want the pullback to stop. RSI is now at 36.44 on the 15-minute chart, so it's still possible to get more downside even in the regular ebb and flow of things, but short-term bulls would prefer that SPX prices hang around near 1343 while RSI does its thing and turns back up. They'd actually prefer that prices bounce back right away, but you know what I mean.

Keene Little : 2/6/2008 12:41:36 PM

Unfortunately, for the bulls, the bounce off this morning's low looks more like a 3-wave bounce than anything else, especially for NDX. This doesn't mean we can't get another leg up after the current pullback but a bounce starting out as a corrective move (3-wave move) typically means the whole bounce will be a correction.

I think we'll still get another leg up after this little pullback finishes but then it might be time to look for a short entry. But in the meantime any push back above the high just past 12:00 should be a sign the next leg up is underway (pushing above that bounce high would leave this pullback as just a 3-wave correction of this morning's rally).

Jeff Bailey : 2/6/2008 12:38:18 PM

EIA Wkly Gross Inputs, Crude Oil Inputs, Refinery Op. Capacity, % Utilization, USO Price at Friday Close, # Days of Supply table that I keep Link

Linda Piazza : 2/6/2008 12:35:56 PM

While the SPX didn't hold the support of its 9-ema on that last 15-minute close, the advdec line did. That's at about +900, with the advdec line now at 982 and still testing.

Linda Piazza : 2/6/2008 12:26:28 PM

As I type, the SPX is below the 15-minute 9-ema. Next potential support at the bottom of its smallest channel is now at 1342.14. Short-term bulls would prefer that the SPX pull it together by the end of this 15-minute period and get the SPX back above that 9-ema now near 1346.80.

Jeff Bailey : 2/6/2008 12:26:10 PM

Euro Spot PnF chart at 0.01 box Link

"Bailey Wave" also utilizes outside observations and draws heavily on supply/demand and the charting of this important relationship and its impact on PRICE.

In April of 2006, the euro gave a reversinig higher PnF buy signal at 1.24 and resulting column of X suggested longer-term strength to 1.50. As you can observe, the euro is nearning 1.50.

Keene Little : 2/6/2008 12:21:30 PM

I had mentioned last night that any bounce today that is followed by another drop lower would be bearish so the bulls don't want to see today's bounce fail. As shown on this updated DOW 60-min chart (SPX looks the same), the DOW found support at the bottom of a parallel up-channel from the January low (the intraday candles still have not been painted in by QCharts, thank you eSignal): Link

If new lows are made then the wave pattern turns potentially very bearish (dark red). But if the current bounce can develop some legs I see the possibility for another push higher into opex (pink) with an upside target at 13369 (two equal legs up from January and the downtrend line from October).

The bulls need to break the key upside level at 12766 and the bears need a new low but a stronger sell signal would be a break below the 62% retracement at 12074. Stay cautious in between as the potential for chop and whipsaw remains high.

Jane Fox : 2/6/2008 12:14:14 PM

The only market that did not reach resistance from November 2007 lows was the NAZ. Notice also that the retracement off the January 2008 lows never made it to the 50% fib level like the SPX, DOW and Russell have. Link

Jane Fox : 2/6/2008 12:07:04 PM

And the Dow reached its resistance and turned around as well. Link

Jane Fox : 2/6/2008 12:06:20 PM

Here is the daily chart of the Russell 2000 cash index (cash as opposed to the futures), RUT.x. Notice how it reached resistance at 735 and turned on a dime, just like the SPX. Link

Jeff Bailey : 2/6/2008 12:05:33 PM

DXY daily interval chart with my "Bailey Wave" count and MONTHLY Pivot retracement Link

"4 d4" is nothing more than a 4-th wave that stays outside the channel for day 4.

Wave traders might want to go back and check their trade blotters and note action of securities/commodities using "Bailey Wave" counts.

To avoid any confusion, "Bailey Wave" counts are NOT to be confused with other wave model counts.

Linda Piazza : 2/6/2008 12:01:20 PM

The OEX's 15-minute 9-ema is now at 623.07, with next resistance at 625.33 and then 626.65. If the SPX retreats all the way through its smallest channel, something short-term bulls would prefer it not do just yet, that support is now just over 620. Instead, short-term bulls would prefer the OEX hold the 9-ema's support on 15-minute closes and then bounce from it.

Linda Piazza : 2/6/2008 11:59:20 AM

It's normal and natural for the SPX to retreat to its 9-ema during climbs, as long as it holds that support on 15-minute closes and bounces from it. That 9-ema has now risen to about 1346.80. If the overhead resistance is strong enough, the SPX would need to retreat further, all the way to the bottom of its smallest channel, but short-term bulls trying out the bullish side would prefer that not happen yet. It probably will happen during the lunchtime lull, but short-term bulls will hope that the bottom support will have risen higher than its current 1339.83 by then.

Jane Fox : 2/6/2008 11:39:28 AM

Well that long YM got to full target but without me. Do you see the dance you do with the market? Sometimes you are in step and sometimes you are not. It was a good idea moving that stop but I moved it too close so I tripped and fell.

Linda Piazza : 2/6/2008 11:35:03 AM

The SPX's 9-ema still rises and is now at 1346.70. It should be retested at some point--maybe soon or maybe not until after a test of the 1354.80-ish resistance.

Jeff Bailey : 2/6/2008 11:31:59 AM

Dynamic Materials (BOOM) $53.94 +1.96% Link ... sticks its head back above 50% dynamic.

Keene Little : 2/6/2008 11:29:46 AM

This morning's bounce looks a little choppy so it's either getting ready to blast higher or pull back first to correct the initial bounce. The long side continues to look like the right side to be but be careful about the possibility for a coming pullback (to shake out the weaker longs).

Jeff Bailey : 2/6/2008 11:24:08 AM

11:00 Internals found at this Link

Linda Piazza : 2/6/2008 11:16:25 AM

The OEX's 15-minute 9-ema has risen to 622.13. Next potential Keltner resistance beyond that currently being tested is near 627, so be on guard if the OEX should approach that level.

Linda Piazza : 2/6/2008 11:15:16 AM

The SPX's 15-minute 9-ema has risen to just under 1344.50. Next support is at 1343.42. On intraday charts, some light historical and Keltner resistance converge near 1355, so be on guard if the SPX should approach that level.

Jane Fox : 2/6/2008 11:06:09 AM

Too funny but you know the old saying sometimes you are the bug and sometimes the windshield. It hurts been the windsheild heh?

Linda Piazza : 2/6/2008 11:02:33 AM

The SPX is sustaining 15-minute closes above the 9-ema, so that's one tentative sign of improvement. It's gaining enough to turn the 9-ema higher, so that's another. Now it just needs to maintain those signs. The 9-ema is now at about 1343.70.

For the OEX, it's at just under 622.

Jane Fox : 2/6/2008 11:02:30 AM

Stopped at 12339. Now the market better not rally from here :)

Jane Fox : 2/6/2008 10:59:39 AM

I only have 2 ticks as risk now.

Jeff Bailey : 2/6/2008 10:59:10 AM

Should be a pretty good test for "Bailey Wave" followers in the USO over the next 4-days. See yesterday's action in the dollar, not some SIMILARITY in the USO.

Jane Fox : 2/6/2008 10:58:19 AM

Raise the stop to to 12339 now. I do not like the way YM is moving so want to reduce as much risk as possible. alert.

Linda Piazza : 2/6/2008 10:52:44 AM

There goes the SPX above the next level of resistance. On pullbacks, those testing the bullish side want to see the SPX hold support at or above 1343.70 although they'd prefer that support currently at 1344.58 hold on 15-minute closes. The SPX is at 1347.91 as I type.

Crazy markets! I'm not the only one saying that. I've heard all kinds of people with decades of experience as floor traders, syndicate leaders and other market-related occupations expressing their amazement at these markets.

Jane Fox : 2/6/2008 10:51:25 AM

Lets raise the stop to 12319. alert

Keene Little : 2/6/2008 10:49:27 AM

Dollar update: as I analyze the metals I continue to watch the US dollar for clues and right now I'm getting a sideways triangle feeling for the dollar. If it plays out sideways through March, as depicted in pink, then we haven't seen the final low for the dollar yet (and would mean we haven't seen the final high for gold and silver). Link

The two key levels are 77.85 to the upside and 74.48 to the downside. In between could see a lot of chop but a break of either of those levels should set the direction. If it continues chopping lower (dark red) then we could see the dollar make a bottom around 73 at the bottom of its parallel down-channel but it's still too early to make that call.

Linda Piazza : 2/6/2008 10:48:29 AM

If the SPX continues gaining today, we should keep in mind that the daily 10-sma is at 1359.27 as I type, and that might provide resistance on a daily close. The SPX traded across it yesterday as if it didn't exist. We may well be in a period of disorganization, one of those in which key benchmarks no longer serve as benchmarks, but that doesn't mean that we shouldn't keep this particular benchmark on our radar screens. So, if you're testing the bullish side today, be sure to keep it on your radar screen.

Jeff Bailey : 2/6/2008 10:46:03 AM

Weekly crude oil inputs fell by 126K barrels per day to 14.49 million bpd.

# Days of Supply jumps to 20.3 from last week's 19.4.

Jane Fox : 2/6/2008 10:44:55 AM

I am now long YM from 12341 with a stop at 12294 and target at 12388. alert

Jane Fox : 2/6/2008 10:43:47 AM

AD line has improved to +793 and AD volume making new daily highs. I will not be putting as much emphasis on the AD volume as I did yesterday because its tajectory is choppy today.

Jane Fox : 2/6/2008 10:41:00 AM

This will get us long from this consolidation which I think will resolve upwards.

Jane Fox : 2/6/2008 10:40:31 AM

Let's try another YM long at 12341 with a stop at 12294.

Linda Piazza : 2/6/2008 10:38:59 AM

That resistance that I thought might prove troublesome for the SPX did in fact prove troublesome. The SPX is back to test its 9-ema after closing right on it the last 15-minute period. It's currently below the 9-ema now at about 1341.40, but there are many minutes yet in the 15-minute period. Because that resistance (now at 1345.40 and 1347.80) looked so firm, I'm not surprised to see the SPX knocked back to the 9-ema tests. Even if the tenor is going to improve, I think it may require a period of candles forming along a flattening 9-ema before that resistance could be bested. So, the outcome is as yet unpredictable, but there's at least a slight improvement in tenor.

Jeff Bailey : 2/6/2008 10:37:14 AM

Productivity Slowed in Q4 ... AP Story Link

Jeff Bailey : 2/6/2008 10:35:20 AM

US Oil Fund (USO) $69.12 -1.46% ...

Jeff Bailey : 2/6/2008 10:34:52 AM

Tesoro (TSO) $36.18 -0.49% ...

Jeff Bailey : 2/6/2008 10:34:27 AM

Valero (VLO) $56.45 -1.34% ...

Jeff Bailey : 2/6/2008 10:33:46 AM

Petro Brasileiro (PBR) $107.80 +1.27% ...

Jeff Bailey : 2/6/2008 10:33:11 AM

Refineries ran at 84.3%

Jeff Bailey : 2/6/2008 10:32:54 AM

Gasoline +3.6M Barrels

Jane Fox : 2/6/2008 10:32:24 AM

FED'S LACKER REITERATES FED MAY OR MAY NOT CUT INTEREST RATES AGAIN, SEES ECONOMIC GROWTH AT ABOUT 0.5% FOR 1H08

- reminder: Lacker said yesterday that further cuts 'may be warranted'

- says subprime loans problems concentrated among loans made in cycle

- says intermeeting cut warranted by news that housing woes spreading

- Concerned about growth, seeing signs consumer is pulling back

Jeff Bailey : 2/6/2008 10:32:24 AM

Biiiig build in crude oil inventory ... +7M

Keene Little : 2/6/2008 10:33:10 AM

Techs gave up a bunch of its bounce off the low and NDX has dropped back into its down-channel. This is not what bulls want to see. But as long as the low holds, the long side is still the preferred side.

Linda Piazza : 2/6/2008 10:23:51 AM

For OEX traders, the OEX's 15-minute 9-ema is now at 621.09, with a first 15-minute close above that since Monday, and Monday's one close above it was questionable. This is just a first and tentative sign of improvement. Next resistance is at 622.82 and 623.95, and it looks relatively firm.

Keene Little : 2/6/2008 10:16:31 AM

NDX has already broken its little down-channel. A pullback to retest the top of it would be near 1782 (NQ 1786).

Linda Piazza : 2/6/2008 10:12:28 AM

Another test of the 15-minute 9-ema for the SPX, and I kind of think there's a possibility this one might hold. That's at 1342.27, but next resistance is at 1347.59-1349.42, and I'm not at all sure the SPX can bulldoze through that.

Jane Fox : 2/6/2008 10:11:57 AM

jtHMA on the Gold chart is giving us a buy - both monthly and weekly are green, daily has turned red so we are into a retracement then the 120/60 minute charts are back to green telling me the retracement has turned around. Link

Keene Little : 2/6/2008 10:09:14 AM

Next step is to see the DOW and SPX break above the tops of their down-channels, 12330 and 1346. If they break higher watch for a pullback to retest the lines as another opportunity to test the long side.

Jeff Bailey : 2/6/2008 10:07:36 AM

MBA's Weekly Application Survey at this Link

Keene Little : 2/6/2008 10:05:51 AM

Techs have blasted higher off that last low. Looks good for the long side.

Jane Fox : 2/6/2008 10:04:01 AM

Stopped at 12302

Keene Little : 2/6/2008 10:03:10 AM

SPX did a brief poke below the bottom of its little parallel down-channel and immediately bounced back up inside. This is usually the sign of the end of the move (down). I recommend trying the long side, stop at a new low now. Keep it tight until it works.

Linda Piazza : 2/6/2008 10:02:07 AM

As a reminder, the SPX's 1/31 early morning low was 1334.08. This morning's low has been 1334.73.

Linda Piazza : 2/6/2008 10:00:25 AM

The advdec line is headed down again. If you're in bearish trades, watch the line's action as it approaches about -350 to -650, if it drops that far. Those could be levels at which it steadies, although there are no promises in this climate. You just don't want to be caught unaware if the volume patterns start leading price action higher again.

Keene Little : 2/6/2008 10:00:15 AM

The DOW has the same small parallel down-channel following yesterday morning's sharp drop. The bottom was briefly broken at this morning's open. The current range, bottom to top, is 12248-12330: Link

The low was just tagged again. Note the bullish divergences. This and the overlapping highs and lows during the decline in this channel tell me we should be finding a bottom.

Jane Fox : 2/6/2008 9:58:32 AM

I am short the YM (DOW futures) from 12269 and have a stop at 12302 and target at 12302 - 12269 = 33. 12269 - 33 = 12236.

Linda Piazza : 2/6/2008 9:57:33 AM

The TRAN is stronger than the SPX this morning, at least on a Keltner basis. It still tests its 15-minute 9-ema. We saw all these kinds of tentative divergences set up yesterday, with none of them meaning anything, but in this climate, it would be remiss not to be aware of them.

The SPX tests light, descending Keltner support as I type, with that near 1335. Next support and the current downside potential target is 1332.87. The 15-minute 9-ema is just under 1341.

Jane Fox : 2/6/2008 9:56:45 AM

TRIN is above 1.00 although not much but it is making new daily highs here. Link

Jane Fox : 2/6/2008 9:53:27 AM

Stop will be 12302 so the risk on this trade is a little less than most. alert

Linda Piazza : 2/6/2008 9:52:49 AM

Bounce in the advdec line from above -350. The advdec line is still hanging out in the middle of nowhere on my Keltner charts, so is not giving me any sense of where it might go next. Watch Jane's posts, too, as she has insight into these kinds of breadth indicators.

Jane Fox : 2/6/2008 9:52:48 AM

I will be taking YM short at 12269, below the daily lows and below the 00 number. alert

Jane Fox : 2/6/2008 9:48:47 AM

However, the VIX is talking loud and clear and making new daily highs.

Jane Fox : 2/6/2008 9:48:18 AM

AD line is in the non-committal range, +104.

Linda Piazza : 2/6/2008 9:46:42 AM

No change in tenor for the SPX yet. TRIN is only 0.98, so near the benchmark level some use to measure bullishness vs. bearishness. Lots of signs exist that the day's ultimate tenor is as yet undecided.

Keene Little : 2/6/2008 9:46:33 AM

Futures had jumped up right after yesterday's close so they're back in the red while the cash indices are still showing some green (except the relatively weaker RUT this morning). Watch for a successful retest of yesterday's lows (or not).

Linda Piazza : 2/6/2008 9:44:08 AM

The advdec line is headed down within its Keltner channels and is now at +245. Those who want equity price action to steady want to see the advdec line find support at about -350 if not before.

Linda Piazza : 2/6/2008 9:40:06 AM

If the SPX can't produce a 15-minute close above the 9-ema, then that 9-ema is still resistance even though it was pierced during the 15-minute period. Where is support? Light support exists at just over 1337 and then stronger potential support is near 1333.30. That lower support is also a potential target if the SPX can't maintain 15-minute closes above that 9-ema.

Jane Fox : 2/6/2008 9:39:59 AM

Using mainstream technical analysis, the SPX retraced 50% of the decline from the December 12th highs to the January 23rd lows, which happens to be the 1400 resistance area I have been talking about. I expected a retracement from here and thought it would take most of this week to complete but yesterday the bears had a bee in their bonnet and decided to get the retracement out of the way quickly.

SPX has now retraced almost 50% of the retracement off the January lows and should now start to find support. Markets never do what I expect them to do so more or less is probably in order but the important part of this retracement is that it does not close below yearly lows. Link

Linda Piazza : 2/6/2008 9:37:39 AM

Keltner outlook for the advdec (advance/decline) line: At +1024 as I type, the advdec line is between Keltner support and resistance, hanging out in the middle of nowhere. A potential upside target is near +1900; a potential downside one, near -350. No real clues from this yet, other than the fact that it's a positive number, and so that is on the side of the bulls.

Linda Piazza : 2/6/2008 9:34:40 AM

The SPX is testing and a little over the 15-minute 9-ema, with the price action now pushing that 9-ema up to about 1343.75. To begin to see even the most minor of improvements in tenor, the SPX needs to produce a 15-minute close above that 9-ema and then to maintain those closes above it. Next resistance on that chart is now at just over 1350. The SPX is at 1345.04 as I type.

Linda Piazza : 2/6/2008 9:31:29 AM

Jane, Keene and I don't consult before we post, as should be obvious from the times when we disagree, but our 9:17:49, 9:29:40 and 9:30:09 posts all point to concerns about choppy price action.

Linda Piazza : 2/6/2008 9:30:09 AM

Yesterday before the close, I mentioned that those with bearish profits needed to consider whether they wanted to hold overnight, saying that markets that dropped this quickly could gain just as quickly. We don't know if that's going to be true today, but futures ended up well over fair value. In a normal climate, a strong down day that ended on its lows would be indicative that there were more sellers waiting to get out, but these times are just not normal. The volatility has been going both ways.

Cash markets don't always behave in accordance with futures' action, but let's take a look at where the SPX might be if the cash market does go where futures have gone. Futures were about 8 points above fair value. That would bring the SPX above the 9-ema currently at 1342.09. As I said near the close, the SPX needs to begin producing sustained 15-minute closes above that 9-ema to change even the shortest-term of short-term tenors, so that will be the first thing to watch today. I wouldn't be surprised if some margin calls weren't hit yesterday, so I expect some degree of selling into any gains, but that will be met by some shorts exiting if the gains get too big. We may see a battle at first, and we can't be sure who will win. Be cautious.

Keene Little : 2/6/2008 9:29:40 AM

Equity futures worked higher during the overnight session and look to open in the green. It was a relatively calm overnight session and price action was a bit choppy so I'm not sure it's going to hold. We could see prices push marginally lower at least but keep an eye on the small parallel down-channels since yesterday's sharp drop, such as the one shown on this SPX 10-min chart: Link

SPX needs to break above 1347 (10 points above yesterday's close) to break its downtrend. Until that happens be careful about the long side.

Jane Fox : 2/6/2008 9:17:49 AM

The overnight session was bullish because of the higher highs and lows but I think the open will be mixed and we may get another choppy day. Link

Jane Fox : 2/6/2008 9:13:40 AM

Dateline WSJ - WASHINGTON -- U.S. productivity decelerated at the end of 2007 along with the economy, yet its climb was much higher than expected, while unit labor costs went up far less than projected.

Nonfarm business productivity increased at a 1.8% annualized rate between October through December, the Labor Department said Wednesday. It had gone up 6.0% in the third quarter, a number revised down from a previously estimated 6.3% surge.

Productivity is defined as output per unit of labor.

The 1.8% increase was far above Wall Street expectations of a 0.5% rise. Economists had expected a slowdown because the economy braked sharply during the fourth quarter, rising just 0.6% after soaring 4.9% during the third quarter.

Unit labor costs -- a key gauge of inflationary pressures -- rose 2.1% in the fourth quarter. Economists had expected a 3.8% advance. Third-quarter unit costs fell 1.9%; previously, the drop was estimated at 2.0%.

For all of 2007, productivity climbed 1.6%; it went up 1.0% in 2006. Unit labor costs last year climbed 3.1%, slightly higher than 2006's 2.9% rise.

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