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OI Technical Staff : 2/15/2008 9:59:59 PM

The Market Monitor has been archived.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

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Jeff Bailey : 2/15/2008 5:24:02 PM

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

The 1/3 position, or two (2) Apex Silver Mines SIL Feb $15 Calls (SIL-BC) expire "no bid."

Jeff Bailey : 2/15/2008 4:57:20 PM

Closing Internals at this Link

Linda Piazza : 2/15/2008 4:02:27 PM

Have a good long weekend, everyone. I have a feeling we all need it! I haven't checked settlement values since I was out of all my February spreads except for 5 contracts of SPX 1240/1230 bull put spreads that were hedged with 5 contracts of 1245/1235 bear put spreads, but I hope all of you made it safely out of your 1300/1290 spreads!

Jeff Bailey : 2/15/2008 3:54:07 PM

SPX 1,349.14 +0.02% ... inches green.

Jane Fox : 2/15/2008 3:52:14 PM

Well maybe not all that bullish the VIX is not making new daily highs and the AD line is still under 0. Probably all a moot point though this late in the day.

Linda Piazza : 2/15/2008 3:51:04 PM

Nothing showing up on the charts now is likely to trump the end-of-day positioning that will be occurring as far as predicting what will happen over the next few minutes. Both the SPX and the OEX are rising into next Keltner resistance, resistance that should be significant on 15-minute closes, but there's only one 15-minute close left, and its action will be tainted by that end-of-day opex-related action.

Jane Fox : 2/15/2008 3:50:38 PM

Internals have certainly turned bullish. Link

Keene Little : 2/15/2008 3:43:28 PM

There's very little change to the SPX charts I showed last night. The daily chart still looks bearish with a drop back down from the top of its down-channel: Link

The 60-min chart gave us a sell signal with a break below 1339 but did so only marginally. I'd have to say I'm leaning bearishly for a break down on Tuesday (Monday is a holiday) but it needs to break today's 1338 low to confirm that. Right now it's finding resistance at the underside of the broken parallel up-channel from Monday: Link

Jeff Bailey : 2/15/2008 3:41:20 PM

Into the close ... Apex Silver Mines (SIL) $12.99 -2.40% ... looks like the two (2) SIL Feb $15 Calls (SIL-BC) are going to go "poof."

Keene Little : 2/15/2008 3:37:14 PM

Interesting comment by McMillan when comparing Bernanke to Arthur Burns, the Fed head during the 1970s, a period of time to which I've repeatedly compared our current situation and one of the reasons I think we'll see a decline over the next 1-2 years that drops below the 2002 low, just as the market did in 1974.

Bernanke is just an academic and will be blamed for what happens but in fact it was his predecessor who did the most damage. But even he was just hoodwinked with the rest of the financial institutions in thinking their marvelous financial engineering wizadry was the greatest thing since sliced bread.

Jeff Bailey : 2/15/2008 3:35:17 PM

Stillwater Mining (SWC) $15.97 +9.15% ... set to test its April'07 highs.

Jeff Bailey : 2/15/2008 3:34:34 PM

Selling long the small position in N. American Palladium (PAL) $6.47 +7.83% ... see 1/25/07 S. African power news and 01/29/08 01:26:43 "mentioning."

Conventional 61.8% traded $6.66

Linda Piazza : 2/15/2008 3:30:48 PM

The SPX has not managed to sustain a breakout above--or to the sideways out of--the descending trendline off yesterday's high. The stronger OEX has followed the TRAN's example, but only so far. It's been stuck beneath that Keltner resistance that ranges up to about 623.52 now on 15-minute closes. We'll soon see the market-on-close action and see if there's another turn or a continuation of the 3:00 one. Those making end-of-day decisions need to be aware of the approach of that time period just in case there's a change in tenor. Or is there any tenor to change?

Linda Piazza : 2/15/2008 3:27:42 PM

Remember as you're making your end-of-day decisions today that the markets are closed on Monday. If you're in March options, you'll be dealing with an extra day of premium decay.

Linda Piazza : 2/15/2008 3:18:00 PM

Next resistance for the SPX and OEX: For the SPX, it's being tested now, and then ranging up to about 1349.40 on 15-minute closes. For the OEX, it's also being tested now and then ranges to about 623.56 on 15-minute closes. Bulls don't want to see quick reversals; bears do. The TRAN hasn't yet reached a new high and is pulling back slightly as I type, but not significantly yet.

Linda Piazza : 2/15/2008 3:15:09 PM

The TRAN is fast approaching its high of the day. It's at 4707.46 as I type, only about 10 points below that high of the day.

Linda Piazza : 2/15/2008 3:13:31 PM

I misspoke in my previous post. While the OEX has traded to the side of its descending trendline off yesterday's high, the SPX hasn't quite done so.

Linda Piazza : 2/15/2008 3:12:27 PM

The OEX has now followed the TRAN's example and traded above--but so far mostly by sideways movements--its descending trendline off yesterday's highs. It always pays to watch the TRAN. So, what's happening with the TRAN now? It's zooming high as I type, just above 4700 now but testing next Keltner resistance. The TRAN's high of the day was 4717.08.

Jeff Bailey : 2/15/2008 3:09:22 PM

03:00 Internals found at this Link

Jane Fox : 2/15/2008 3:02:21 PM

I love what McMillan has to say because he mostly agrees with my analysis - or is it that I agree with his?

Jane Fox : 2/15/2008 3:00:41 PM

Here is McMillan's weekly commentary. Our various indicators have done a good job of steering us through the markets so far this year. Our speculative broad market recommendations, both in The Option Strategist and in The Daily Strategist (as well as Daily Volume Alerts) have been strong -- the strongest start to any year in our 17-year history. So, we are not going to deviate from them in our current market analysis.

The chart of the S&P 500 Index ($SPX) itself is one of the most negative indicators at the current time. Twice it has tried to poke above its declining 20-day moving average. The first attempt came at the beginning of February and failed, leaving resistance at 1390-1400 in its wake. $SPX did manage to close above that moving average for a couple of days, but the average itself never turned upward, so it retained its overall bearish look and eventually pulled $SPX back down. This week, another such attempt has been made, as $SPX has once again rallied off of a good support area (1315-1325) and closed above its 20-day moving average yesterday. However, that moving average is still declining and is thus still bearish; witness the struggle that $SPX experienced today (as an aside, is Bernanke the biggest market jinx since Arthur Burns or what?!? Burns was Fed Chairman during the Nixon administration and accelerated the 1973-1974 bear market every time he opened his mouth). So, except for the fact that $SPX showed good support at 1315-1325, there isn't much positive about its chart. Looking at the $SPX chart, one could make a case for a trading range between roughly 1320 and 1400. A breakout in either direction would be a significant development.

The equity-only put-call ratios are bullish. The standard ratio (Figure 2) is clearly on a buy signal. The weighted ratio, (Figure 3) however, is much shakier (chart, above center). The computer analysis program keeps saying that the weighted ratio is on a buy signal, but you can see that if it makes new highs, that would be bearish and would throw it back onto a sell signal -- requiring a whole new setup for a buy signal.

Market breadth has been a surprisingly good indicator in the last couple of months, but it hasn't issued a new signal recently. Volatility indices ($VIX and $VXO) can be considered bullish. $VIX was moving bearishly higher when the broad market was testing the $SPX 1320 support level, but once that test was successfully passed, $VIX has dropped below 26, confirming a short-term bullish trend. Also, the intermediate-term spike peak buy signal of late January is still in place.

In summary, the indicators are mixed, but are generally leaning more to the bullish side than the bearish. On the bullish side, we have the equity-only ratios, $VIX, and the "breadth differential" indicator. The only actual bearish "indicator" is the chart of $SPX itself -- a significant indicator to be sure. Hence we expect to see the top of the $SPX range (1390-1400) challenged before the bottom is.

Linda Piazza : 2/15/2008 2:56:46 PM

No big changes anywhere. No guidance as to next direction . . . if there is going to be a direction. The bond market closes in a few minutes and perhaps we'll begin to see then, but we could be clamped into the pin-them-to-the-numbers tight ranges.

Jeff Bailey : 2/15/2008 2:47:40 PM

FOREIGN BUYS OF US SECURITIES DROP

DJ- Foreign interest in U.S. long-term securities eases significantly to $45.2 billion in December from $79.7 billion in November. Despite the dip, analysts say the data paint a picture of relatively healthy foreign demand.

Jane Fox : 2/15/2008 2:41:56 PM

Notice how the MACD has reflected each and every move the SPX has made since the middle of last year. This means, if you see a MACD divergence on this chart you need to pay attention to it.

We may be getting a small divergence with the swing high made on February 13th. That high was a lower high whereas the MACD made a higher high. This is not the kind of divergence I am talking about, I like to see it on a larger scale, but it does tell you that the 1320 support may hold up if it is retested. Link

Linda Piazza : 2/15/2008 2:40:10 PM

The TRAN still moves sideways out of the descending channel in which it had been moving down since yesterday morning. It's not a convincing breakout, but what is convincing these days? What is possibly more important is that the TRAN has begun forming consistent 15-minute closes above the 15-minute 9-ema, now at 4674.74. That's an improvement in its tenor, for whatever it's worth. The OEX and SPX are not above (or outside) their respective rising trendlines yet and they're barely holding onto the support of their 15-minute 9-ema's, but as long as the TRAN is behaving as it is, it presents the possibility that it's leading the OEX and SPX. Just keep the possibility in mind as the SPX and OEX enter do-or-die sort of areas, where they're being squeezed tightly between today's support and those descending trendlines. Keep in mind the third possibility--the sideways trading into the close of the day.

Jeff Bailey : 2/15/2008 2:32:49 PM

BERKSHIRE HATHAWAY REPORTS 8.6% STAKE IN KRAFT FOODS

DJ- Berkshire Hathaway, the closely watched investment vehicle of billionaire Warren Buffett, discloses that it was quietly accumulating shares of Kraft Foods in 2007, amassing an 8.6% stake by the end of the year.

KFT $31.30 +6.75% ...

Jeff Bailey : 2/15/2008 2:29:35 PM

Lean Hogs Continuous Link ... sure enough. Pigs down Q4.

Jeff Bailey : 2/15/2008 2:21:30 PM

HORMEL 1Q NET UP 17% ON LOWER PORK COSTS

DJ- Processed meat maker's fiscal 1Q net income rises to $88.2 million, or 64c a share, while revenue rises 7.8% to $1.62 billion. Analysts expected EPS of 58c on revenue of $1.59 billion.

HRL $40.76 +4.83% ...

Linda Piazza : 2/15/2008 2:20:24 PM

The TRAN has just bumped above (really to the side of) the descending trendline off yesterday's early morning high. The TRAN sometimes overruns targets, as the old tech favorites used to do in the late 1999's and early 2000, so it should be watched carefully for a potential reversal lower again, beneath that trendline again. It's already dropped down to it, with the TRAN at 4676.52 as I type. Too much lower and we will have seen a reversal back below the trendline again. However, if it continues higher, it suggests that the SPX and OEX could also break above (well, to the side of) their respective descending trendlines.

Linda Piazza : 2/15/2008 2:15:01 PM

Turning back to the 15-minute charts, all that's happening is that the SPX did its sometimes seen lunchtime lull thing and traveled across to test the resistance at its smallest channel's upper boundary. A quick drop below the 15-minute 9-ema and a decline toward 1338-1340 on the SPX and 619-619.40 on the OEX is needed, however, to show that this was just a regular old, needed-every-now-and-then test of the other side of the channel. That 30-minute close above the 30-minute 9-ema lets us know that we should be aware that something more short-term bullish might be afoot.

Linda Piazza : 2/15/2008 2:12:29 PM

For the first time since yesterday morning, the SPX and OEX closed a 30-minute period above their 30-minute 9-ema's. The closes were only minimally above those averages and prices remain below descending trendlines off the highs since yesterday morning, but this is a slight change in tenor that should be watched. It suggests the possibility that these indices could travel across their smallest channel on their 30-minute charts, with the top of those channels now converging with descending trendline resistance. That's at about 1348 for the SPX. On the OEX, the smallest channel's resistance is at about 623.45, and that's actually above the descending trendline on that chart, with that now at about 622.30 if I'm eyeballing it correctly. The close above those 30-minute 9-ema's was not convincing, so I'm not certain about that possibility of bumping up to test those descending trendlines or those channel lines, but it should be considered a possibility. Bears, of course, do not want sustained prices above those descending trendlines.

Jeff Bailey : 2/15/2008 2:11:54 PM

Exxon Tops 2007 Output With New Reserves

DJ- Exxon Mobil Corp. (XOM) said new reserves again topped its production for 2007, remaining the one big oil company that has consistently been able to match output with new finds.

The firm said it replaced 101% of last year's oil-and-gas production with additions to its reserves. Excluding property sales and the loss of Venezuelan assets the company walked away from in June as the country nationalized projects in the Orinoco River basin, the replacement rate would have been 132%.

Chairman and Chief Executive Rex Tillerson noted the company's 10-year replacement-ratio average has been 112%.

Exxon put proven reserves as of Dec. 31 at 22.7 billion barrels of oil and gas, split about evenly between liquids and gas. At current production rates, that would last more than 14 years. The portion of proven reserves already developed is 62%.

Between 2004 and 2006, only Exxon Mobil managed a better-than-100% replacement rate on its own among the Western world's five largest oil companies by market capitalization. As a group, the firm managed a 75% rate excluding acquisitions, meaning that for every four barrels they pumped out and sent to market they found only three new barrels in the ground.

Some of the declines have been due to a lack of significant increases in the firms' capital budgets. For example, Exxon's annual capital budget has barely budged, growing at a 1% annual rate since 2003. But other firms have been boosting spending at a double-digit clip.

XOM $84.99 -0.65% ...

Keene Little : 2/15/2008 2:11:29 PM

Oil is either forming its own sideways triangle (descending triangle with a flat bottom and descending top), which could be a continuation pattern here, or else it's an ominous H&S top forming: Link

Considering the global economic slowing, I believe it will turn into a H&S top. It needs to break the neckline just above 85 to confirm and then it would have a downside objective near $71, or its August low.

Keene Little : 2/15/2008 2:03:57 PM

The pattern of gold has been a bit baffling the past few weeks and I'm still waiting for some clarity as to which way it's going. Since the January low I've been thinking it needs another new high to finish a potential rising wedge (silver made a new high on Monday but was not confirmed by gold). Now I'm wondering if we're getting a another sideways triangle 4th wave correction which points to another rally leg out of it. GLD daily chart update: Link

A break below 85.77 would negate the triangle pattern and suggest we've already seen the top. Otherwise I see the potential for a rally up to the $96 area for a final 5th wave (dark red). Any higher than that and we'll very likely see gold make a run above $1000.

The chart of the US dollar supports another run higher in gold if it drops to another new low out of its sideways triangle pattern: Link . The trouble is the chart of the euro, normally in the same price pattern as gold and inverse to the dollar, has been confirming neither. So I wait for clarity to return to this trio.

Jane Fox : 2/15/2008 1:56:18 PM

Here is how the markets are trading in relation to their previous day ranges. Link

Jane Fox : 2/15/2008 1:47:45 PM

Like I said earlier this morning, the overnight highs and lows will be very good spots for support and resistance. Link

Linda Piazza : 2/15/2008 1:45:00 PM

Looks as if it's possible we finally could get the lunchtime lull punch up through the smallest of the Keltner channels on the 15-minute charts for the SPX and OEX. Those are now at about 1344 for the SPX and about 621.60 for the OEX. If this pop does occur, bears want the advances to stop near there and get soundly pushed lower: bulls want the indices to then begin finding support on upturning 15-minute 9-ema's.

Linda Piazza : 2/15/2008 1:17:45 PM

If the SPX and OEX break through and run up to the top of their smallest channels, as they sometimes do during the lunchtime lull, the tops are now at about 1344.30 for the SPX and 621.75 for the OEX.

Jeff Bailey : 2/15/2008 1:15:03 PM

01:00 Internals found at this Link

Linda Piazza : 2/15/2008 1:11:14 PM

My 15-minute Keltner charts already show much lower potential Keltner targets set for the SPX and OEX. I've just been reluctant to believe them until and unless the SPX and OEX drop through support. The 15-minute and 30-minute charts show opposing evidence, with those lower Keltner targets set near 1321 for the SPX and 611 for the OEX, but with the 30-minute charts showing that the support just below is significant. Whenever I see conflicting evidence like that, I take the more conservative route, and that's what I've been doing, not fully believing in or counting on those downside targets. However, as I did earlier today, I continue to warn bulls to factor in vulnerability to those levels while advising bears that they shouldn't count on them being hit. They shouldn't hold onto trades they shouldn't be holding onto on the hope that they'll be hit.

Keene Little : 2/15/2008 12:59:43 PM

Linda's Keltner channels show her support levels and one reason I'm watching for no lower than SPX 1335 is because a drop lower than that would suggest the next leg down is underway rather than it being part of a larger sideways correction.

Looking at the bounce off this morning's low, a 127%-138% projection of that to the downside is 1335-1336 which is about the limit for a corrective pullback. Any deeper than that and I start looking for a new leg down and potential downside targets.

On the other hand, if that level holds then there is the possibility for another leg up to match or exceed the size of this morning's bounce (equality or 162%).

Linda Piazza : 2/15/2008 12:59:25 PM

The SPX and OEX either will or won't break those support zones; they either will or won't bounce up to the tops of their smallest channels. We traders can't predict which will happen and we can't control it, but we can control ourselves. Know how you'll react in either case and in a third--sideways movement through the rest of the day that depletes your option premium.

Jeff Bailey : 2/15/2008 12:52:28 PM

Wilshire 5000 (DWC) ... Daily interval bar chart with conventional and "Bailey Wave" counts (see BPALL) Link

Linda Piazza : 2/15/2008 12:51:01 PM

The SPX's 15-minute 9-ema is now at about 1342, with the upper channel line of its smallest channel now at about 1345; for the OEX, those are at about 620.30 and 622.10.

Linda Piazza : 2/15/2008 12:48:34 PM

Keene's getting his support zone from an EW perspective. Here's where I'm getting mine: Link I like it when totally different disciplines provide similar levels, because that provides corroboration. So, this is potentially significant support, and it will be significant if it's broken unless there's a quick reversal. Broken support to me will require a 30-minute close below those levels.

Linda Piazza : 2/15/2008 12:41:58 PM

Anyone else hearing the soundtrack from JAWS playing in their heads?

Keene Little : 2/15/2008 12:37:48 PM

It's hard to trust a directional move on an opex Friday but the break to new daily lows, from an EW perspective, has the potential to accelerate lower. That's why I'm looking at the same SPX 1335-1338 support zone as Linda but my reason has to do with Fibs and the potential EW count.

Linda Piazza : 2/15/2008 12:34:51 PM

Careful here, bulls and bears. If the SPX and OEX don't break through the support, then we might get those upper-channel line tests and perhaps moves even a little higher. If they do break through, then those potential downside targets gain more validity.

Jeff Bailey : 2/15/2008 12:31:11 PM

US Bullish % All (BPALL) Link ... currently "bull alert" at 31.61%. Use this for internal observations of the Wilshire 5000 (DWC) 13,544 -0.81%

Linda Piazza : 2/15/2008 12:30:24 PM

The 15-minute 9-ema's continue to hold, and there's no upturn through the smallest channel yet. Instead the lows are being tested again. As a reminder, the potential downside target for the SPX, set by the 15-minute channels, is now about 1321, but that potentially significant support in the 1335-1338 zone has been propping up the markets and has had me hesitating to believe too strongly in the downside target. I mentioned this in last night's Wrap and this morning on the MM. For the OEX, that potential downside target is about 610, but the same problem exists, the potentially strong support that's been bouncing the OEX so far.

Jeff Bailey : 2/15/2008 12:23:16 PM

World Bullish % Bell Curve at this Link

Linda Piazza : 2/15/2008 12:22:12 PM

It's been a long while now since the SPX and OEX have risen to the top of their smallest descending Keltner channels, and that's something that often happens during the lunchtime lull anyway. It may soon be time again. Those are at 1347 for the SPX and 623 for the OEX. It's normal and natural to see that happen once in a while, even in a confirmed downtrend, but the problem is that you don't know until after that test if the indices will roll down again. Anyway, for now both indices are still finding resistance at the 9-ema's but watch for the possibility that they'll rise through the channels again.

Linda Piazza : 2/15/2008 12:18:51 PM

The VIX is not yet to a new high of the day, but it is maintaining support on 15-minute closes at its 9-ema, at least so far. It's moving up into a resistance point from yesterday, the 15-minute 45-ema, with that average at 25.23 and the advdec line at 25.13. Bears would rather the advdec line not sustain values below about 25.05.

Jeff Bailey : 2/15/2008 12:13:38 PM

Hang Seng ($HSI.X) Link (100-point box) ... Up 126, or +0.53% at 24,148. Session High/Low 24,208/23,446. X gets the square at 24,200.

Jeff Bailey : 2/15/2008 12:08:45 PM

DAX ($DAX) Link ... Down 129 points, or -1.87% at 6,833. Session high/low 7,012/6,798. No trade at 7,100. Trade(s) from 6,900-6,800 get Os.

Keene Little : 2/15/2008 12:06:10 PM

Nice bounce off the retest of this morning's low. If we get a flat correction with two equal legs up from this morning SPX will top out just shy of 1349. It's also possible we're going to just chop sideways between today's range (typical for an opex Friday). Don't force trades on a day like today just to trade. Opex Friday's are typically good days to catch up on some of your other work/research/reading.

Jeff Bailey : 2/15/2008 12:04:48 PM

CAC-40 ($CAC) Link ... Down 86 points, or -1.79% at 4,772. Session High/Low 4,877/4,744. No trade at 4,950. Trade at 4,750 is 3-box reversal lower.

Jeff Bailey : 2/15/2008 12:02:07 PM

FTSE-100 ($FTSE) Link ... Down 91 points, or -1.56% at 5,788. Session High/Low 5,915/5,764. No chart activity, but threatens 3-box reversal.

Linda Piazza : 2/15/2008 11:57:04 AM

The SPX and OEX are testing the day's low. Neither has broken it yet. So far, the SPX and OEX both still remain below the 9-ema's on both the 15-minute and 30-minute charts. On the 15-minute charts, that's at about 1343.80 for the SPX and about 621.50 for the OEX.

Keene Little : 2/15/2008 11:54:56 AM

It's looking like a slow-motion retest of this morning's low and it's showing some bullish divergences so it may hold here.

Jeff Bailey : 2/15/2008 11:49:53 AM

IEA: US Should Open Closed OCS Areas For Oil, Gas Exploration
US Should Enact Federal Renewable Power Portfolio
US Must Pursue More Aggressive CO2 Reduction Policies

Jeff Bailey : 2/15/2008 11:47:33 AM

Morgan Stanley Cuts Chile, Philippines Equities

Linda Piazza : 2/15/2008 11:40:49 AM

The SPX and OEX are getting pushed down toward the day's or Tuesday's lows, but they're not there yet. Both now have potential light Keltner support near the day's lows, joined by historical support there from Tuesday and today's lows. Be prepared for anything. If you're in bearish trades and that last push higher was unbearable, think about how you'll manage the trade differently now with the indices creeping lower. You've had another chance. If you're in bullish trades, think about how you'll manage the trade if the indices cascade through that support and head down to the Keltner targets that are much lower.

Keene Little : 2/15/2008 11:38:38 AM

The pullback since 10:30 is looking a bit choppy and corrective and suggests another leg up in the bounce could happen. But a break much below 1335 would suggest we're into the 3rd wave down.

Jane Fox : 2/15/2008 11:33:35 AM

Once anyone figures out what that symmetry is will you please email. No on 2nd thought just call me, anytime anyplace. :)

Jane Fox : 2/15/2008 11:32:15 AM

When you think about it the VIX is comprised of SPX options and the TRIN is comprised of AD volume and AD line. So the fact that these two are in sync today tells you there is some symmetry to the market.

Linda Piazza : 2/15/2008 11:31:08 AM

The VIX is moving above its 15-minute 9-ema, although it hasn't closed a 15-minute period above it, while the SPX and OEX turn down. I knew it had to change sooner or later because both the VIX and those indices were consolidating just beneath those averages, testing them, and that's not usual. The push lower on equities appears reluctant to me, however, if I can be allowed a little anthropomorphism. The advdec line probably needs to turn down more sharply than its current -1328 level before we get too much oomph to any push lower. As I type, I'm no more certain whether today's lows will hold as support than I was a few minutes ago.

Jane Fox : 2/15/2008 11:29:44 AM

Here is the TRIN and VIX on the same chart. HMMM maybe there is something to the TRIN. Link

Jane Fox : 2/15/2008 11:27:49 AM

Just got an email, "What do you think if this bullish TRIN"?

I don't follow the TRIN too much and I must admit I do not see the TRIN as bullish. Let me put a TRIN and VIX together and see what is happening there. Link

Jeff Bailey : 2/15/2008 11:23:22 AM

Dynamic Materials (BOOM) $56.72 -4.44% ... slips below 61.8% conventional.

Keene Little : 2/15/2008 11:20:59 AM

If we see another attempt at a bounce I still see resistance in the SPX 1351 area. Otherwise a drop through this morning's low could accelerate lower with not much to stop it before 1320 (minor support at 1334).

Jeff Bailey : 2/15/2008 11:21:10 AM

SPX Option Montage (source: CBOE) at yesterday's close Link ... A bearish bias close as SPX not able to hold a close at 1,350. Market participants didn't seem to want the SPX bad enough and suggests the winning trade was covered/naked call and long put.

Linda Piazza : 2/15/2008 11:20:36 AM

While the SPX and OEX are retesting their 15-minute 9-ema's, so is the VIX. This is not the usual order of things. One of these should shift, because according to the Keltner setups, they're not moving in opposition to each other, but with each other. The VIX has bounced from its low of the day, setting up bullish value/RSI divergence when it hit that low. It's now just below its 15-minute 9-ema at 24.98, with the VIX at 24.90. It's been testing that average's resistance for the last 45 minutes, about the same period that the SPX and OEX have been testing the same average on their respective charts. There's a tug of war, and I don't know whether equities or the VIX are going to win.

Jane Fox : 2/15/2008 11:19:26 AM

Here is a daily chart of Gold (red), Crude (green) and the US$ (Black). Notice how Crude and the US$ seem to be in sync more than Gold and the US$ since the beginning of the year. Link

Linda Piazza : 2/15/2008 11:14:30 AM

Will they or won't they? Will the SPX and OEX drop through their day's lows or are they about to pop higher? We don't know. The indices I watch look to me as if they're being pressured lower by their declining 15- and 30-minute 9-ema's, but if they don't give way soon and drop below this morning's support, then bulls are going to gain courage and buy again. Try not to be convinced, to "know" what's going to happen, because if you do, that leads to poor account management. Been there and done that.

Jeff Bailey : 2/15/2008 11:14:07 AM

11:00 Internals found at this Link

Yesterday's Internals at this Link

Linda Piazza : 2/15/2008 11:00:09 AM

The TRAN is dropping this 15-minute period a little harder than the SPX and OEX. It's not proof of anything yet, but something to watch. As I type, the TRAN is at 4679.30 with the low of the day at 4656.12 and with potential support in the 4635-4645 zone.

Linda Piazza : 2/15/2008 10:58:02 AM

Mixed evidence. The 15-minute and 30-minute 9-ema's are holding as resistance on respective closes, but on the 15-minute chart, the OEX at least is clinging to the support of the channel line that's now at about 621.90. The SPX is below it. If I were bearish, I'd be giving great weight to the continued 15- and 30-minute closes beneath those 9-ema's and I'd call what's happening now consolidation at the bottom of the decline off yesterday's high, with a likely break lower. If I were bullish, I'd be noting the OEX's clinging to that potential support and calling what's happening now consolidation at the top of today's range. So, pick your side and you can find something to support your view. Me? I'm just trying to keep my eyes open. Nothing yet has changed the tenor from yesterday (continued closes beneath the 30-minute 9-ema)--so that falls on the bearish side--and nothing yet has undone the possible scenario that includes choppy consolidation that begins about now, although right now the SPX and OEX are a little lower than I thought they might be before such consolidation set up.

One note: I predicated that scenario on the possibility that a H&S formation might be setting up. If conditions are bearish enough, right shoulders can be truncated, so now that the indices have risen, consolidated for about 45 minute to an hour, any drop below the day's and Tuesday's lows might be enough of a right-shoulder building exercise to let the bottom fall out. It's just a thought and not a promise. The "under the market" indicators have not turned bearish again.

Jane Fox : 2/15/2008 10:56:57 AM

Expanding ranges are very difficult to trade. Stopped at 12319, the low of that swing low.

Jane Fox : 2/15/2008 10:38:36 AM

We are into a very choppy mess and I was hoping to take a long once we broke out but it looks like it is an expanding range and expanding ranges are very dangerous to trade. In any case I have put my money down and will ride this out.

Jane Fox : 2/15/2008 10:36:56 AM

I am long YM from 12361 and have a stop at 12319. alert

Linda Piazza : 2/15/2008 10:35:48 AM

Tests of the more reliable SPX and OEX 30-minute 9-ema's are coming up now, so now bulls have to be watchful. These held as resistance on 30-minute closes all day yesterday. They're at about 1389.40 for the SPX; for the OEX, at about 624.

Keene Little : 2/15/2008 10:35:44 AM

A good test for this morning's bounce would be at SPX 1350-1351. That's where the bounce off this morning's low would have two equal legs up and retrace 62% of the leg down from yesterday afternoon's high. This could be a bounce that tips over into a strong 3rd wave down. The 1350-1351 area is also where the 30-min 100/130 moving averages are located.

Linda Piazza : 2/15/2008 10:32:59 AM

How soon things change. Traders who think they have all their ducks in a row aren't even safe in this market. A look at the "under the market" indicators right now shows most leaning toward or firmly on the bullish side right now. Remember that they can change back as quickly as they've been changing directions all week.

I'm still watching to see how the SPX and OEX behave when testing 15-minute and 30-minute 9-ema's to see if that "climb toward the top of yesterday afternoon's congestion zones and consolidate there" scenario looks possible or whether the indices will be pushed back, but so far everything is fitting with that possible scenario.

Jane Fox : 2/15/2008 10:30:16 AM

I will put "my money where my mouth is" and take a long YM at 12361. ALERT

Jane Fox : 2/15/2008 10:29:25 AM

VIX is now to new daily lows and I will always "listen" to the VIX over anything else. I believe we move higher here.

Keene Little : 2/15/2008 10:28:58 AM

Drawing in a small parallel down-channel for price action since yesterday's high shows a break below the bottom of it this morning (bearish) and then an attempt to get back up inside it. If it drops back down to a new low from here then selling could accelerate a little. If it chops its way higher from here then we'll probably have a choppy day instead of a directional one. Link

Linda Piazza : 2/15/2008 10:27:00 AM

So far, first significant Keltner resistance is holding for the SPX. That's at 1346.41 for the SPX, with the 9-ema now at 1347.30. The OEX has been a bit stronger the last few days, and it did break above that first resistance during the previous 15-minute period, but hasn't been able to maintain it. It's just above 622 now, with the OEX at 622.05 and with the 9-ema at 623.06.

Jeff Bailey : 2/15/2008 10:25:31 AM

Circuit City (CC) $4.81 -4.56% ... in between 38.2% and 19.1% conventional.

Jeff Bailey : 2/15/2008 10:23:48 AM

Best Buy Lower Guidance ... AP Story Link

BBY $43.93 -4.02% ... falls below 19.1% conventional ($44.20)

Linda Piazza : 2/15/2008 10:18:07 AM

The SPX's 15-minute 9-ema is now at 1348.45; the OEX's, 623.23. Bears want those to hold as resistance on 15-minute closes, if tested. Bulls want the opposite. Bulls, though, remember that possible scenario that I laid out last night and then in my 10:12:55 post. Gains might be limited even if they get past those 15-minute 9-ema's.

Jeff Bailey : 2/15/2008 10:16:10 AM

Industrial Production +0.1% In January ... AP Story Link

Linda Piazza : 2/15/2008 10:12:55 AM

Last night in the Wrap, I laid out a possible scenario, with the SPX and OEX dropping down to test Tuesday's lows (if futures were below fair value this morning) but then bouncing back toward the top of yesterday's late-day consolidation zone and consolidating there again for a while. That's why I've been cautioning that bears be careful and protective of profits as Tuesday's lows were approached. Neither the SPX nor the OEX has gotten past even the first layer of potential Keltner resistance on the current bounce attempt, so I have no idea if they will bounce much higher or not, but I do know that you need to know where your get-out point is in case you're in bearish positions and the bounce gets too high . . . and it's getting higher as I type.

Keene Little : 2/15/2008 10:10:04 AM

Even though it was only a marginal break so far, a break is a break and the Feb 12th low of SPX 1339.72 has been broken this morning. That makes for at least a short term bearish wave pattern now.

Linda Piazza : 2/15/2008 10:08:14 AM

If the SPX can maintain a bounce, bears want the SPX to find resistance now on 15-minute closes at a channel line at 1346.92 and the 15-minute 9-ema just above 1347; for the OEX, that's 622.27 and 622.85. Bulls want those indices to scramble back above those benchmarks.

Linda Piazza : 2/15/2008 10:03:59 AM

Again today, the VXO is behaving differently than the VIX. The VXO has been climbing, although it's currently just a little off its 27.83 high, being at 27.54.

Linda Piazza : 2/15/2008 10:02:10 AM

The SPX is now slightly below Tuesday's low; the SPX, approaching it. Bears, be protective of your profits here. Bulls, be aware that if this support is lost and these indices don't quickly bounce, you have to give a little stronger consideration to the potential downside targets set by 15-minute Keltner channels: 1320 for the SPX and 609.42 for the OEX.

Note: The SPX began bouncing slightly while I typed, but not much yet.

Jeff Bailey : 2/15/2008 10:01:38 AM

Dow Transports (TRAN) 4,657 -1.04% ... 61.8% conventional.

Jeff Bailey : 2/15/2008 10:00:51 AM

SPY $134.02 -0.85% ...

Jeff Bailey : 2/15/2008 10:00:35 AM

S&P Banks (BIX.X) 257.13 -1.92% ... 19.1% conventional.

Linda Piazza : 2/15/2008 9:58:53 AM

The TRAN is fast approaching potential support (historical) in the 4635-4645 zone. The TRAN is at 4661.20 as I type. Bears, be watchful of this index's actions near that potential support as a strong bounce from it could give you a heads up on SPX, Dow, or OEX action. No strong bounce is appearing as I type.

Linda Piazza : 2/15/2008 9:56:56 AM

The TRAN is also moving to a new low, also below Tuesday's low, so if we're also using this as a barometer, as I do with the SPX, OEX and Dow, it's leading down if it's leading anywhere at all.

Linda Piazza : 2/15/2008 9:55:54 AM

The RUT is dropping to a new low of the day, now below Tuesday's low, so if we're using this leading index as an indicator for market sentiment, it's not so good.

Keene Little : 2/15/2008 9:55:06 AM

There's still hope here--SPX is holding at the lower parallel line I showed on the 60-min chart (essentially the bottom of a short term up-channel for price action since last week's low. A break of 1339 would be confirmation of a break of that little up-channel which is why it's a key level.

Linda Piazza : 2/15/2008 9:54:06 AM

As Jane has already noted, some of the "beneath the markets" indices or indicators have begun to change. That's true of the advdec line that's now bouncing up to test the Keltner support that it broke through earlier this morning. That Keltner line, now potential resistance, is now at about -1174, with the advdecline now at -1300, off its intra-15-minute period high of -1219. Those in bearish trades today want this test to result in an advdec line rollover down toward -1700 or at least -1530. Those in bullish trades want it close this 15-minute period well above that -1174 level.

Jeff Bailey : 2/15/2008 9:52:41 AM

China January Trade Surplus Up 22.7% Y/Y ... AP Story Link

Linda Piazza : 2/15/2008 9:49:56 AM

The SPX closed that 15-minute period below the Keltner resistance on 15-minute closes at 1347.71, with the 15-minute 9-ema now at 1349.77 and still cycling lower. Bears would like to see 15-minute closes continue below that lower channel line, maintaining a downside target. That potential target is way down at 1320, but I would counsel that you be aware of support in the 1338-1340 range, as it could be significant. I've seen times when those Keltner targets looked impossible due to support I "knew" was there, but were promptly met, so if you're in bullish trades remember that there's vulnerability that low. Just don't count on that as a target if you're in bearish trades. For bearish trades, think in terms of protecting profits you already have, especially if that 1338-1340 zone should be approached.

That 30-minute 9-ema that held as resistance all day yesterday on 15-minute closes (and support all day the day before) is now at 1352.17. That's a long way from the current 1344.16 level, so not a particularly good benchmark for those in day or scalping trades. However, it proved more trustworthy over the last few days than the 15-minute version, which was violated a number of times before the move resumed.

Jane Fox : 2/15/2008 9:44:22 AM

VIX is making new daily lows so certainly not in sync with the AD line and we all too aware of what that means - choppy markets. Like you needed me to tell you that!

Jane Fox : 2/15/2008 9:41:48 AM

AD line is a bearish -1340.

Jane Fox : 2/15/2008 9:40:57 AM

The SPX daily chart is not a bullish chart and there is a very good possibility it will revisit support at 1320. If it does then here are the scenarios;

1. Support holds and we get a double bottom which propels it to resistance at 1400.

2. Support does not hold and we move down to retest yearly lows at 1270 and we get a double bottom which propels it back to the support turned resistance at 1320. This is not a great scenario.

3. Support at 1270 does not hold and the SPX enters a bear market. Link

Linda Piazza : 2/15/2008 9:40:46 AM

The advdec line is blowing through that potential Keltner support. The first 15-minute period is not yet over so the advdec line has time to bounce, but so far, it's not doing so. It's at -1348 as I type.

Linda Piazza : 2/15/2008 9:39:08 AM

For the OEX: There's potential support on 15-minute closes for the OEX at about 622.66. I know the SPX is below that support, but the first 15-minute period hasn't closed yet. Those who want to see lower OEX levels, perhaps with a test of last Tuesday's low, want this first 15-minute close to be lower than about 622.66, and in fact would rather it be much lower than its current 621.57 level because that still leaves a relatively long lower shadow and more doubt about whether the OEX can spring higher or has truly violated that support. Bulls of course want the OEX to close at or above that 622.66 level.

Linda Piazza : 2/15/2008 9:36:09 AM

Keltner outlook on the advdec line: At -916 as I type, the advdec line is headed down toward -1100 potential support. If it blows through that, it's still got plenty of room to head lower, not even yet nearing yesterday's lows. Those who want the SPX and OEX to steady want to see the advdec line steady above about -1100 and then rise sharply. Those who are leaning toward the bearish side want it to blow through that level or at least just consolidate there a little while before rolling down again.

Linda Piazza : 2/15/2008 9:33:42 AM

As SPX components begin opening, the SPX heads down. It's not yet as negative as futures would have led one to expect but is still headed lower. Watch that 1338-1340 zone if it continues lower.

Keene Little : 2/15/2008 9:31:10 AM

It's looking like we'll get the test of the SPX 1339 level that I mentioned last night with the 60-min chart. Yesterday's decline did not count out that well on the short term charts (often the case, especially on 1st waves for some reason) and the 2nd wave correction was smaller than usual but the net result looks like a bearish setup for today. If true then 1339 will not hold.

Jane Fox : 2/15/2008 9:29:19 AM

The link between Gold and Crude has taken precedence over the Gold/US$ link of late. I'm not sure why and when I read about it I was skeptical at first but the charts are supporting this theory. In any case, if it is true, the rally in Crude is only good for us Goldbugs. Link

Jane Fox : 2/15/2008 9:25:00 AM

Gold is making it easier on us Goldbugs now with this higher low, although that that swing low at $900/oz. will not confirm until the swing high at 931 is breached. Link

Linda Piazza : 2/15/2008 9:21:55 AM

The Federal Reserve Bank of New York reported that the Empire State manufacturing index dropped to a -11.7 value, down almost 21 points from its previous reading. While this district's report isn't usually deemed as predictive of the ISM number as are the indices from some other districts, such as the Philly Fed, this still was not good news. The prices paid component also rose, exacerbating the damage done from falling shipments and new orders components.

Linda Piazza : 2/15/2008 9:17:35 AM

Although the NY Empire Manufacturing Survey doesn't usually prove market moving, it was so far below expectations this morning that it appears to have done some damage to futures. Of course, confirmation that the bond insurer downgraded by Moody's yesterday, FGIC, had asked NY regulators to split the company in two was offered just a few minutes later, and I wonder if it wasn't that information, with rumors perhaps already circulating, that delivered the real hit to futures. As I type, SPX futures are off their lows, but still about 7 points below fair value. If the cash markets behave in accordance with futures action, that would gap the SPX lower, beneath the support on which it closed yesterday, and set up a potentially much lower downside target. I would, however, of course watch the Tuesday low of 1339.36 and potential Keltner support on 30-minute closes at 1338.55 for potential support if the SPX should drop that 7 points and then continue lower.

Some cautions. This is opex Friday, of course, with SPX settlement values determined by the opening values of all the SPX components. We've seen some instances in the past months when stocks are driven lower (or higher) on opex Friday and then immediately reversed.

For all those in the FEB SPX 1300/1290 bull put spreads, I'll be wishing you well. You've got a pretty good cushion.

Jane Fox : 2/15/2008 9:10:02 AM

The overnight price pattern was the same for all markets and no one market stands out as more or less bearish, they are all bearish. Obviously the markets did not like the 8:30 Import Price report.

You may want to keep track of the overnight highs and lows because the wide range you are seeing here is telling you those levels will have a very good chance of being support and resistance. Link

Jane Fox : 2/15/2008 9:00:16 AM

WASHINGTON (MarketWatch) -- Prices of goods imported into the U.S. jumped in January as imported petroleum costs climbed and food prices also rose, the Labor Department reported Friday. The U.S. import prices index rose 1.7%, the most since November. The gain was mostly powered by a 5.5% increase in imported petroleum prices in January. In December, those prices fell by a revised 1.9%.

Over the past 12 months, petroleum import prices are up a staggering 66.9%. That's the largest 12-month increase since October 2004.

Excluding petroleum imports, import prices rose just 0.6% in January.

The overall gain was bigger than expected. Economists surveyed by MarketWatch were expecting import prices to rise by 0.4% in January

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