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Keene Little : 2/27/2008 12:58:23 AM

The last two times the VIX tagged its 200-dma proved to be tops in the market. It came close to tagging it on Tuesday--21.64 low vs. 21.25 for the 200-dma. But it could drop a little lower to its uptrend line from December 2006, currently near 20.30.

But we have a heads up here for a potential reversal in both--notice the divergence in December when SPX made a lower high but VIX made a lower low. This was an indication of too much complacency and an expectation for the market to continue higher, which of course it didn't: Link

Now we have a similar situation with VIX making a new low for the year but price has not made a higher high. This could of course change with a continuation of the rally but if it sells off Wednesday instead we could have a bearish confirmation here.

Keene Little : 2/27/2008 12:05:52 AM

Wednesday's pivot tables: Link and Link

After looking at the 4 major indices we track, and multiple time frames, I have the impression that the market must continue rallying on Wednesday otherwise there is a very bearish wave pattern that could kick off if we see an immediate decline start in the morning. The 60-min charts, with some notes on the charts, show the important levels to watch on Wednesday:
DOW: Link
SPX: Link
NDX: Link
RUT: Link

The setup on NDX, and even the RUT, is interesting because of the sideways triangle pattern. NDX did a brief throw-over in the afternoon, dropped back inside and then closed right on the line. The key level to the upside is at 1824, which would negate the bearish triangle, but in reality, any rally for all of them back above Tuesday's highs would likely mean a continuation of the rally.

Just to follow through with NDX tonight, the daily chart shows how the sideways triangle fits as a 4th wave correction with a 5th wave down yet to go (dark red) with a downside Fib projection to 1548 to equal the 1st wave down from the October high, or a little lower to the bottom of its down-channel near 1500: Link

The weekly chart shows only the bearish price pattern calling for a 5th wave down to just below 1560 which is the January 2004 high: Link

OI Technical Staff : 2/26/2008 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The Market Monitor has been archived.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 : 2/26/2008 9:44:11 PM

Crude oil continued to march higher with the NYMEX April hitting $101.35 intraday and settling up $1.65, or +1.66% at $100.88. The "big squeeze" on the break of the right shoulder continues and picks up some steam today. Bullish vertical count to $109.50 still in play until a sell signal is generated. Link

Jeff Bailey : 2/26/2008 8:33:22 PM

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

CLOSED out the long VLO-FK at $9.70 and covered VLO-CZ call at $2.05 as VLO was trading $62.17.

Jeff Bailey : 2/26/2008 8:22:21 PM

Closing Internals found at this Link

Jane Fox : 2/26/2008 4:43:29 PM

Economic Reports tomorrow include:

8:30a.m. Jan Durable Goods Orders. Expected: -4.0%. Previous: +5.2%.

10:00a.m. Jan New Home Sales. Expected: -1.1%. Previous: -4.7%.

Keene Little : 2/26/2008 4:32:28 PM

Looking at the monthly charts of MBIA and AMBAC I'd say Moody's and S&P have more confidence in those two companies' ability to pay on insurance than how the market feels about them. Each is down more than 90% from their highs:
ABK: Link
MBI: Link

Keene Little : 2/26/2008 4:04:01 PM

I wonder how much pressure Moody's and S&P are under to maintain that AAA rating on the insurers. Maybe even a paid-for legal defense team to protect them when the law suits start flying, as they will, when it's shown (again) how poorly the ratings agencies are doing their job. It's all a sham and the public is going to be the one who pays.

Linda Piazza : 2/26/2008 4:03:46 PM

Not such a long upper shadow on the SPX's daily candle now, so we now have some uncertainty about how much indecision is indicated, if that makes any sense. The last-minute climb reached up only to a retest of the former ascending trendline off Monday's afternoon swing low and remained below the one off Friday's low, so it constitutes just a retest of the broken trendline. We'll have to wait until tomorrow to see if it gets any higher. There's still an upper shadow on the day's candle, so there was some selling into the gains but not enough to completely swamp the buyers and reverse the gains. As I said, we'll have to wait until tomorrow to see what happens next, but you need to be prepared for absolutely anything with Bernanke speaking. Everyone is going to be weighing every word, listening for how the FOMC is weighing inflation risks against economic ones.

Keene Little : 2/26/2008 4:00:57 PM

When intraday price action is a mess (and it is) I of course like to keep an eye on the larger price pattern for some clues. Unfortunately the daily pattern since the January low is not exactly helpful yet either. SPX maintains several possibilities from here, including slightly higher to the 1411-1417 area (or right on up to 1460 from here), another pullback to stay within a sideways triangle pattern, or drop straight from here that will produce a fast decline as 3rd waves start to unfold. Link

The chart remains messy until price tells us which scenario is playing out and for now the key levels at 1396 and 1317 continue to hold. For a longer term view, the weekly chart shows the possibility for a 4th wave triangle to play out into March (dark red) or another leg up for the correction off the January low before heading lower again (pink): Link

Jeff Bailey : 2/26/2008 3:51:14 PM

MBIA Inc. (MBIA) $15.12 +3.70% ...

Jeff Bailey : 2/26/2008 3:50:33 PM

S&P and Moody's Reaffirm MBIA's "AAA" Ratings

Jeff Bailey : 2/26/2008 3:47:46 PM

Petroleo Brasileiro (PBR) $121.01 +0.92% ...

Keene Little : 2/26/2008 3:43:59 PM

So far SPX has found support at the top of its parallel up-channel from Feb 7th. This is typical in bullish price action and as long as that level holds (about 1377) it remains bullish. But if the rising wedge, shown on this updated 30-min chart, is the correct pattern then it points to a fast retracement of the entire thing (so back below 1327 in the next day or so). The bulls need to hold the line here. Link

Jeff Bailey : 2/26/2008 3:46:57 PM

Brazil's Petroleo Brasileiro 4Q Profit Expected Up On Oil Prices, Real Questioned

DJ- Rising oil prices and increased sales volumes likely have helped to boost fourth quarter profits at Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras.

A strengthening of Brazil's currency, the real, however, may have dented sales revenues.

Petrobras' net profit in the fourth quarter likely rose to 5.699 billion reals ($3.384 billion) from BRL5.2 billion in the year-earlier quarter, according to the median estimate of three analysts polled by Dow Jones Newswires. Estimates ranged from BRL5.6 billion to BRL5.721 billion.

The company is scheduled to announce its fourth-quarter results Thursday, after markets close in Brazil.

The median estimate for net operating revenue was BRL47.493 billion, compared to BRL41.041 billion in the fourth quarter of 2006. Estimates ranged from BRL46.3 billion to BRL47.659 billion.

Analysts put their median estimate for Petrobras earnings before interest, tax, depreciation and amortization, or Ebitda, at BRL13.298 billion, from BRL10.225 billion a year earlier. Estimates ranged from BRL12.9 billion to BRL13.692 billion.

Petrobras' production didn't rise as much as the company had hoped in the fourth quarter as new offshore platforms didn't come on stream as fast as planned.

The company's overall domestic and overseas oil and gas output in December reached an average of 2.367 million barrels of oil equivalent, or BOE, a day, little changed from the 2.336 million BOE a day a year earlier.

Petrobras in November and December took three large new oil platforms on stream, which will only reach their production peak some time during the middle of this year. That may result in a temporary rise in lifting costs - the cost of pumping oil from the ground.

But a surge in international oil prices and in sales volumes during the period more than compensated for the weak production results, analysts said.

The price of WTI light oil rose 51% from the fourth quarter 2006 to the fourth quarter 2007, said Nelson Rodrigues de Matos, an oil analyst with Banco do Brasil in Rio de Janeiro.

Petrobras didn't pass the oil price increase on to its domestic customers of diesel and gasoline. The company in fact hasn't raised those fuel prices since Sept. 2005, although they make up for more than half of its sales.

Petrobras is officially free to set gasoline and diesel fuel prices in Brazil, but the country's inflation-wary government is believed to be exerting a subtle pressure on the company to keep prices low.

The company's pricing power is also limited as an increasing number of cars in Brazil are equipped with flex-fuel motors that can run on any mixture of gasoline with ethanol made from sugar cane. Ethanol in most of Brazil is cheaper than gasoline.

Petrobras did, however, raise prices for other oil products, such as jet fuel, naphtha or fuel oil, in synch with international oil prices.

Fuel sale volumes likely rose by about 6.1% in the fourth quarter from the year-earlier period, de Matos said.

Meanwhile, the company's net sales revenue is likely to be affected negatively by the strengthening of the real. The currency strengthened by 20% against the U.S. dollar in 2007 and ended the year at BRL1.777 per dollar.

Petrobras' financial results possibly were also harmed by the strong real due to investments made in dollars, Felipe Cunha, oil analyst at the Brascan brokerage in Rio de Janeiro, said. Cunha added salary increases granted in the fourth quarter also will have affected results.

Jane Fox : 2/26/2008 3:40:40 PM

Interesting NQ has traded back into its overnight range. Link

Linda Piazza : 2/26/2008 3:40:00 PM

If the SPX ends the day anywhere near its current 1378.78 level or below it, it will leave behind a small-bodied candle with a relatively long upper shadow. In normal times that would suggest either further consolidation tomorrow or an actual pullback. As I've repeated ad nauseum lately, these are not normal times. If the SPX gains considerably into the close and reduces that upper shadow or eliminates it altogether, then the candle is not so indicative of hesitation.

Jeff Bailey : 2/26/2008 3:38:16 PM

Brazil Jan Crude Steel Output Rises 9.9% On Year

Keene Little : 2/26/2008 3:36:14 PM

And that buy program shows why you take some money off the table when downside targets are achieved. I don't know if this buying will spark a new rally or if instead we'll just consolidate sideways for a bit longer. We're still inside the trading range between the Feb 1st high and Feb 7th low so expect chop and whipsaw and take money off the table when offered. And just like, as I type, a sell program is taking away the results of the buy program (which may have been engineered by someone wanting some liquidity to sell into).

Linda Piazza : 2/26/2008 3:30:07 PM

Don't let potential support areas convince you to stay in a bullish trade that you should be closing. If you're in bearish trades, let it warn you of areas where you might be vulnerable to a bounce. If people decide to bail ahead of tomorrow's developments, a little thing like potential support on a 30-minute chart isn't going to stop them. Conversely, if they want to buy ahead of tomorrow's developments, neither will overheated RSI levels or anything else. Let price be your arbiter.

Linda Piazza : 2/26/2008 3:28:20 PM

Potential support for the SPX at 1374-1374.60 on 30-minute closes. For the OEX, it's 632.50.

Jeff Bailey : 2/26/2008 3:27:37 PM

VIX.X 22.06 -4.21% ...

Jeff Bailey : 2/26/2008 3:27:09 PM

Swing trade covered call buy back alert! ... Let's buy back the one (1) Valero Energy VLO Mar $62.50 Call (VLO-CZ) at the offer of $2.05.

When done ...

Swing trade sell long call alert! ... and the one (1) Valero Energy VLO June $55 Call (VLO-FK) at the bid of $9.70.

VLO $62.17 +1.78% ...

Keene Little : 2/26/2008 3:24:36 PM

For the RUT, the 2nd leg down achieves 162% of the 1st at 715.68.

Keene Little : 2/26/2008 3:22:46 PM

Two equal legs down for the pullback from today's high is at ES 1378.75 (SPX 1378.26) and YM 12660 (DOW 12659). Both just got tagged so if the decline continues then the next targets are ES 1373.50 (SPX 1373.46) and YM 12618 (DOW 12619) where the 2nd leg down will equal 162% of the 1st leg down (NQ is nearly at its target at 1788). Considering trimming some profits off the table if short from the high and those levels look like they'll hold.

Linda Piazza : 2/26/2008 3:21:09 PM

The MID is testing the level of the trough between its two peaks today. Sustained values below about 823.75 would confirm the double-top formation. I know that the MID's second peak was actually slightly lower than the first, but the 15-minute closes were roughly equal at the peaks

Linda Piazza : 2/26/2008 3:15:41 PM

If you know that you're not going to be holding overnight with the durable goods number and with Bernanke's testimony beginning tomorrow, then you might consider cinching up your stops so that you're taken out near the high in case everyone starts to bail ahead of the close. That might mean that you're taken out on a support test just before the SPX and OEX head higher again into the close, and you miss the last part of the climb. As I said earlier, oh, well. If you don't remember how quickly prices can sometimes drop, then I'll remind you. Sometimes you have seconds to react, so know ahead of time where your get out points are and act on them and congratulate yourself for your sound trade-management practices even if you don't capitalize on all the gains. If you plan in staying over, then you've got a harder decision, but still set account-appropriate stops and adhere to them. I sure wouldn't let a profitable trade turn into a losing one.

Keene Little : 2/26/2008 3:15:30 PM

GOOG touched the 450 you predicted and a bit more then strarted bouncing a bit. Given that it was so weak in a rallying market, do you see it holding 450 or breaking further if the market heads south? Thanks.

I've also been watching it since its low to see if the bounce provides any clues. The pattern of the move down would actually look better with another new low and so far the bounce has failed at the bottom of its gap (which is bearish). Stay short GOOG for now (or at least don't buy it yet) and let's see if it makes it down to the Fib projection at 424. The bottom of its steeper down-channel that I showed on its daily chart ( Link ) is near 400 so that's even a possibility.

If GOOG drops back below 455 from here that would leave today's bounce looking more like a 3-wave correction and indicate more downside ahead. But if it manages to bounce up into its gap then it turns more bullish. Then I'll be watching to see if it can get above the 50% retracement of its gap (473).

Jeff Bailey : 2/26/2008 3:12:08 PM

03:00 Internals found at this Link

Linda Piazza : 2/26/2008 3:12:07 PM

The OEX's 30-minute 9-ema is now at 634.28, just below the rising trendline off Friday's low.

Linda Piazza : 2/26/2008 3:11:02 PM

The rising trendline off the SPX lows since about 1:30 yesterday afternoon is now at about 1379.50, near the 1379.53 trough between the two peaks today. Bulls obviously want this support to hold and bears obviously want to drive prices lower and to hold them lower. The 30-minute 9-ema is in about the same level.

Linda Piazza : 2/26/2008 3:02:45 PM

Now that the bond market has closed, we need to watch for a possible change in tenor.

Keene Little : 2/26/2008 3:02:44 PM

After what appears to be a corrective pullback from today's high (not accurate on the very short term charts), the bounce back up is now also looking corrective. We could get a minor new high as part of a larger pullback. Assuming we get another leg down I'll be looking for where to take some profits off the table since the whole thing since today's high is looking more like consolidation before heading higher rather than the start of something bigger to the downside.

Jeff Bailey : 2/26/2008 2:58:50 PM

FPL Spokesman: Outages began when company shut down reactor

Keene Little : 2/26/2008 2:58:19 PM

CME continues to motor along sideways since its initial bounce off its February low. The pattern still supports another leg down but it's difficult to tell whether or not it will get another leg up in its bounce first. Any rally above 580, the low on Jan 31st, would negate the bearish wave pattern: Link

Jeff Bailey : 2/26/2008 2:57:22 PM

US Grid Monitor: Power Returning In Parts Of Florida

Linda Piazza : 2/26/2008 2:56:56 PM

No new high of the day yet for the MID, but it's still testing and it hasn't fallen beneath the trough between the two highs. The SPX is finding resistance a Keltner line near 1385.30, with potential resistance there on 15-minute closes and with further resistance at 1387.13 on 15-minute closes.

Linda Piazza : 2/26/2008 2:50:02 PM

When I compare the SPX, OEX and MID on a short-term Keltner basis, I see the MID outperforming the other two, the OEX underperforming the other two, and the SPX in the middle. So, one conclusion is that this rally isn't being led by the generals but instead is being led by buying that's a bit more speculative in nature. What I don't know, however, is whether the midcaps are a favorite trading vehicle of the institutions, so are we to put faith in the risk-takers who are sending the midcaps so much higher comparatively or do we worry about the relative nonparticipation by the big caps? When I look at the Nasdaq and the NDX, I see the same underperformance by the NDX, on a short-term Keltner basis.

Linda Piazza : 2/26/2008 2:42:15 PM

I'm watching the MID to see if it breaks out to another new high of the day and, if so, if it can maintain it. The MID's previous high of the day was 829.92, with the MID at 828.76 as I type. If the MID breaks out and can sustain values above the previous high of the day--a key point--then perhaps other indices will do so, too, but if it turns down from an equal-high test, especially if it drops below 824.55, then it might not longer be adding its upward momentum.

Linda Piazza : 2/26/2008 2:32:51 PM

Potential SPX resistance at 1386.50 on 15-minute closes. For the OEX, that's at about 634.28 on 15-minute closes.

Linda Piazza : 2/26/2008 2:32:07 PM

I'm tempted to shake my monitors to see if prices move. Isn't strange how used we become to prices moving big all the time.

Linda Piazza : 2/26/2008 2:19:58 PM

Support has so far held a bit higher than I thought it might on the SPX. It dipped only to 1379.53 before climbing again. Potential resistance on 15-minute closes exists at 1384.75 and then again at 1387.35. For the OEX, potential resistance is near 637.20-637.40 on 15-minute closes.

Keene Little : 2/26/2008 2:17:47 PM

Back. Not sure about the pullback yet (whether it's impulsive or corrective). I'm keeping my stop at a new daily high in case there's going to be a test of it. If it makes a new high then there's a good chance we'll see SPX test the Feb 1st high near 1396. And there's still the higher Fibs in the 1411-1417 area. So, short until proven otherwise here.

Jeff Bailey : 2/26/2008 2:15:10 PM

FPL Group (FPL) $64.70 -0.09% ...

Jeff Bailey : 2/26/2008 2:14:22 PM

Florida Power Outage (update)

DJ- Widespread power outages are being reported around southern Florida, including parts of Miami.

Reports say areas of Miami, Doral, Westchester and Pembroke Pines are without power as well as the Port of Miami. Police officers on live television are seen directing traffic at intersections in downtown Miami. Many stop lights are out and some stores have closed because they are without power.

A Miami-Dade Police Department spokesman told WSVN-TV that they are working with Florida Power & Light, a unit of FPL Group Inc. (FPL), to access the situation. It is unclear how many customers are affected.

An FPL spokeswoman told The Miami Herald the company is investigating the problem.

The North American Electric Reliability Council said that as of 1:09 p.m. EST, eight power plants were down - a mix of fossil and nuclear power plants, according to CNN.

Turkey Point nuclear plant is among the eight powr plants reported down, according to MSNBC.

Jeff Bailey : 2/26/2008 2:06:51 PM

BIX.X 266.93 -0.16% ... slips red.

Linda Piazza : 2/26/2008 2:04:52 PM

The SPX looks vulnerable to a test of 1375-1378 as I type and bulls would like it to find support in that zone and bounce. Otherwise, it's broken through the rising trendline it began establishing at yesterday afternoon's 1:30-ish low. Being vulnerable to a test of a level doesn't promise that it will reach it, but I think bulls need to know what they'll do if that test occurs.

Jeff Bailey : 2/26/2008 2:05:43 PM

Fed Discount Rate Minutes: Banks Cite Weakening Economy

DJ- Federal Reserve regional banks voting to slash the discount rate in January judged that risks to the economy were larger than those to inflation.

The Fed released minutes Tuesday of meetings held on the discount rate during Jan. 21 through Jan. 30.

In that period, the Fed cut the rate twice: a 75-basis-point decrease to 4% announced a week before a scheduled meeting Jan. 29-30, when another, 50-point cut to 3.5% was made.

"Although directors considered inflation, which recently had been somewhat elevated, to be a concern, they judged that the risks to prospects for the real economy were larger," according to minutes of the decision-making on the first rate cut, announced Jan. 22.

The Fed also announced that day its policymaking Federal Open Market Committee decided to lower the target for the federal funds rate 75 basis points to 3.5%.

The discount rate minutes released Tuesday show Chicago and Minneapolis sought a cut of 75 basis points in that rate. Boston, Cleveland, New York and Philadelphia voted for a cut of 50 points. Richmond and Dallas voted for 25 points. The other banks voted to maintain the existing rate of 4.75%.

On Jan. 30, the Fed approved a reduction in the discount rate of 50 points to 3.5%. New York, Boston, Philadelphia, Cleveland, Atlanta, St. Louis, Kansas City, San Francisco and Chicago voted for 3.5%. Richmond and Dallas wanted to keep the rate at 4%.

"Federal Reserve Bank directors in favor of a 50-basis-point reduction in the primary credit rate generally agreed that continued deterioration in financial markets and weakened economic conditions in housing and labor markets had considerably worsened the economic outlook," the minutes said.

"They viewed these circumstances as raising downside risks for economic growth," the minutes said. "Directors concluded that a more accommodative stance for monetary policy in the near term would provide additional insurance against a protracted slowdown in economic activity.

"Some directors noted, however, that the duration of such an accommodative stance should be considered carefully in view of continuing upside risks to inflation," the minutes said.

Jeff Bailey : 2/26/2008 2:02:50 PM

US Gasoline Demand +0.2% On Week - MasterCard SpendingPulse

Jeff Bailey : 2/26/2008 2:01:17 PM

NERC Reports 8 Power Plants Down In S. Florida

Linda Piazza : 2/26/2008 1:53:45 PM

I had thought that the MID might have an upside target near 825 this morning but thought that bulls should be prepared for a potential rollover anywhere from 820-825. Instead, the MID charged right up to outer Keltner channel resistance. So far, it's still holding above the 30-minute 9-ema, but as I've been warning, the MID should be on your radar screen now. It helped lead the charge higher and could lead it lower if traders decide to bail ahead of tomorrow's developments. Here's the chart: Link

Linda Piazza : 2/26/2008 1:48:48 PM

The more reliable (lately) benchmark for the SPX and OEX at the 30-minute 9-ema can now be found at 1377.26 for the SPX on 30-minute closes and 633.04 for the OEX. What does it mean, that it's a benchmark? Lately, on bounces or declines, the SPX has been bouncing from or back from tests of that moving average, with it providing either support or resistance on 30-minute closes. When it flattens, it loses that benchmark status and the SPX and OEX chop around it. Since late Friday afternoon, it's served as support on 30-minute closes on multiple tests. So, a failure to find support there on a 30-minute close, even if pierced during the 30-minute period, would serve as a sign that something had possibly changed. Traders would know to have their profit-protecting plans in place, if they didn't already and if stops hadn't already been triggered.

Keene Little : 2/26/2008 1:40:40 PM

Stepping away for about 30 minutes. The stop on my short play is 3 ticks to a new high. Hopefully we'll get a bounce to a lower high and then drop lower again. Then I'll lower my stop to just above the bounce high and let it ride in a free trade for a bit.

Keene Little : 2/26/2008 1:37:19 PM

The RUT looks to be struggling with its 50-dma today, currently at 721.19.

Linda Piazza : 2/26/2008 1:33:02 PM

The SPX's 15-minute 9-ema is now at 1380.13 with other support at 1379.09. For the OEX, those numbers are near 634.21. Remember that the 15-minute 9-ema hasn't been as reliable a benchmark as it once was. Just honor your stops, wherever you set them.

Linda Piazza : 2/26/2008 1:30:51 PM

I was just looking at the SPX's chart, realizing that since Friday's low, it's gained 60.3 points. Those of you who trade credit spreads will remember months when we were lucky to get 70 points above the then-current SPX level for our sold calls on bear call spreads.

Jeff Bailey : 2/26/2008 1:24:13 PM

01:00 Internals found at this Link

Jane Fox : 2/26/2008 1:19:03 PM

Crude has made a high of 101.11 so far today.

Jane Fox : 2/26/2008 1:16:59 PM

Here is a chart of the Dow on a daily. Link

Jane Fox : 2/26/2008 1:15:37 PM

The break of the wedge yesterday told us the bulls were getting stronger and today they proved it. Link

Keene Little : 2/26/2008 1:13:47 PM

So far SPX stopped just a tad above its 38% retracement of the Oct-Jan decline (1386.96) with a high of 1387.30. This is also a reason I don't trust further upside today. But a choppy sideways/down pullback will look like a consolidation in preparation for further upside so the next pullback will be important.

In the meantime I'm trying one more short play against the latest high. Keep stops tight while probing for a top.

Linda Piazza : 2/26/2008 1:12:48 PM

At some time or another, not necessarily today, the SPX likely needs to come back and retest the 1364-1367 zone to see if it holds as support after serving as resistance for so long. That's why I keep cautioning that you know where your profit-protecting stop should be if you're in bullish trades.

Keene Little : 2/26/2008 1:09:45 PM

A break below the last dip just before 1:00 PM would tell us a high is in for now.

Keene Little : 2/26/2008 1:06:37 PM

Nope, the bulls aren't going to give this one up. Unfortunately the new highs are now being met with bearish divergences so the upside could be risky from here. Better to wait to see if this last thrust higher fails and then short a bounce after the breakdown, if it comes today.

Linda Piazza : 2/26/2008 1:06:06 PM

Subscriber J.: My current Keltner readings for the advdec line on my charting service at the 15-minute 9-ema at 1270, with the channel lines at 869 and 1567. The advdec line value is 1646. These numbers change quickly, so they might be hundreds of points away by the time you check it, but this should give you an approximation as a benchmark.

Jeff Bailey : 2/26/2008 1:05:32 PM

DIA $127.30 +1.37% ...
SPY $138.87 +1.12% ...
QQQQ $44.44 +1.23% ...

Jeff Bailey : 2/26/2008 1:04:08 PM

iShares Russell 2000 (IWM) $72.13 +1.92% ... trades 38.2% conventional.

Jeff Bailey : 2/26/2008 1:00:37 PM

iShares Silver (SLV) $185.28 +2.99% ... surging. WKLY R2 here at $185.20.

Jeff Bailey : 2/26/2008 12:59:31 PM

US Oil Fund (USO) $79.99 +1.58% ... (see earlier post)

Jeff Bailey : 2/26/2008 12:59:01 PM

US Dollar Index (DXY) Alert! 75.04 -0.64% (30-minute delayed) ... WKLY S1 traded.

Jeff Bailey : 2/26/2008 12:54:26 PM

Utility HOLDRs (UTH) $128.01 +0.56% ...

Linda Piazza : 2/26/2008 12:54:17 PM

The USDJPY continues its downward trajectory. That's usually not good for U.S. equities. I don't always expect intermarket relationships to remain the same, but this is a bit puzzling. The dollar is lower against the euro, too. Do currency traders believe that our FOMC will still be on an easing track despite the higher-than-expected numbers this morning?

Jeff Bailey : 2/26/2008 12:53:45 PM

Moody's: Utility Companies Could Be Hurt By Climate, Change In Laws

DJ - A growing consensus from the scientific community on the causes and effects of global climate change could lead to costly regulatory and legislative action, causing "profound effects" on the U.S. electric utility industry, according to a report from Moody's released Tuesday.

"The Cost of Climate Change" report said federal legislation and regulation aimed at reducing emission of greenhouse gases such as carbon dioxide appear "inevitable" in the U.S. and constitute a "meaningful" business risk factor for the industry.

Moody's said the cost to electric utilities of required environmental mitigation can't be estimated now, but climate-change policies eventually could carry "significant" credit implications.

Moody's hasn't lowered any utility's ratings due solely to the large capital spending needed to cut emission levels, but that could change, the rating agency said. The firm said timely recovery of climate-related spending from rate-payers could be "daunting," and that any rate increases related to pollution efforts could make getting rate hikes for general expenses "more challenging. Such a scenario could cause negative rating actions within the sector."

Companies like American Electric Power Co. (AEP), Duke Energy Corp. (DUK) and Southern Co. (SO) could be most susceptible to current and pending federal environmental legislation due to their large, coal-fired generating capacity, Moody's said.

Utilities also face steep costs in reducing emissions of the pollutants nitrogen oxide and sulfur dioxide. The Environmental Protection Agency has forecast annual costs directly attributable to the pair's reduction at $2.4 billion (in 1999 dollars) in 2010 and $3.6 billion in 2015. Moody's anticipates those costs to exceed the EPA's estimates.

For example AEP has agreed to spend an estimated $4.6 billion to cut its nitrogen-oxide and sulfur-dioxide emissions, while Duke forecasts it will cost $3.5 billion to $4 billion to meet various state and federal emission-reduction standards.

Concern over climate change has come to the forefront as world leaders have started to weigh in on the issue. On Monday, Bush administration officials told the U.N.'s climate chief that the U.S. would accept a binding international commitment to reduce global-warming gases. The Bush administration insisted, however, that China and other growing nations do the same.

Growing countries China and India may struggle to pay for cleaner energy technologies as they compete in the race to produce goods and expand their economies.

The U.S. is the only major industrial nation to reject the U.N. climate treaty's Kyoto Protocol, which requires 37 nations to reduce greenhouse-gas emissions by an average 5% by 2012.

Jeff Bailey : 2/26/2008 12:49:21 PM

Royal Dutch Shell Buys Back 435,000 "A" Shares @ EUR24.36

(RDS.A) $73.02 +0.16% ...

Linda Piazza : 2/26/2008 12:48:37 PM

I got a day ahead of myself in my previous post. Tomorrow is not the GDP update: that's Thursday. Tomorrow we get Durable Goods and the Bernanke testimony. Still, the advice is the same. You will need to make hold-overnight decisions by the end of the day, as either of those could be market moving.

Jane Fox : 2/26/2008 12:44:36 PM

Crude's move today has ramifications for us Goldbugs. The Gold/Crude/US $ relationship has changed lately but I think crude is the driver now and may be the reason Gold is not taking the retracement I think it should. Link

Linda Piazza : 2/26/2008 12:47:06 PM

Bulls, you now have the easier task. You just determine account-appropriate stops and adhere to them, no matter what you believe might happen next. Just follow the SPX and OEX higher with those account-appropriate stops, making sure at this point that the stops are set so that you maintain profit. By the close, you're going to have a more difficult decision--whether to hold overnight with tomorrow's Durable Goods and Bernanke testimony.

Jane Fox : 2/26/2008 12:42:05 PM

Crude is busting through the $100/bl level. Will it stick this time? The charts are telling me it will. Link

Linda Piazza : 2/26/2008 12:40:59 PM

The OEX also hit its target and potential resistance on its 15-minute chart, with that now at 636.72 but when hit, slightly lower. OEX traders would prefer that the OEX find support on 15-minute closes at the rising 15-minute 9-ema now near 632.60 or at slightly lower but potentially stronger support at 632.51. As is true of the SPX, the 15-minute 9-ema hasn't been as reliable a benchmark for the OEX the last week as it sometimes is, with the 30-minute version more reliable. That's at about the same level, though, down to about 631.24. That makes the 631-631.50 level look fairly important for the OEX on 15- and 30-minute closes.

Jane Fox : 2/26/2008 12:40:51 PM

The internals gave me no hint of this rally, which tells me it is not a rally that came from "normal" market forces but one that was staged through buy programs and once those programs were triggered everyone just jumped on board. Link

Jeff Bailey : 2/26/2008 12:39:13 PM

Valero Energy (VLO) Alert! $62.74 +2.71% ... trades above $62.50 strike.

Linda Piazza : 2/26/2008 12:37:36 PM

The SPX has hit the potential upside target mentioned in my 12:01:07 post, but the upward movement of the SPX had pushed that upside target a little higher by the time it was hit. It's now at 1383.39 on 15-minute closes, and it's holding so far as resistance, but it's of course very early in this 15-minute period. If you're bullish, you'd prefer that the SPX maintain support on any pullbacks above the rising 15-minute 9-ema at 1376.91 or at slightly lower support at 1375.13. As I've been mentioning, the 15-minute 9-ema hasn't been as good a benchmark lately as it was in the past, at least for the SPX. A better one has been the 30-minute version, now at 1374.06 with slightly lower but perhaps stronger support at 1371.81 on 30-minute closes.

Keene Little : 2/26/2008 12:35:11 PM

SPX has pushed above the top of its rising wedge pattern, following a throw-under beow it this morning (typical throw-over following the throw-under). I show a Fib projection at 1386.35 for the pattern which happens to be very close to the 38% retracement of the Oct-Jan decline at 1386.96. This is still a bearish setup for an ending pattern here and short against today's high is now a recommendation. Link

Linda Piazza : 2/26/2008 12:27:51 PM

The MID has now hit its target and potential resistance on the 30-minute chart. The target and potential resistance is at about 828.50 on 30-minute closes, with the MID at 828.56 as I type. Have your just-in-case profit-protecting plans in place now for your bullish trades as this front-runner index has now hit this potential resistance.

Do I think resistance on a 30-minute chart will stop a massive relief rally cold? Not a chance if this is what's beginning, but is it? We just don't know that yet.

Jeff Bailey : 2/26/2008 12:26:06 PM

Fed's Kohn:
Fed "will do what is needed" to restore growth
Weighing if Fed has done enough to limit economic risks
Economy very sluggish, downside risks abount
Financial market recovery likely a "prolonged process"
Housing correction has further to go
Rate cuts should support asset prices
Rate cuts a factor in dollar's drop, helping exports
Jobless claims suggest more labor softness in February
Inflation disappointing but should moderate
Economy should pick up around midyear, but many risks

Linda Piazza : 2/26/2008 12:23:42 PM

Markets have been long overdue for a relief rally. Is this the rally beginning? Perhaps, but I don't believe for a moment that we've resolved all issues and that all volatility will magically be erased, so any relief rally might be sharp but punctuated by downdrafts that manage to take away the gains that many brave bulls thought they had accumulated. Be careful with your assumptions, particularly with some important numbers due out in the remaining days of this week. Do not let a profit turn into a loss.

Keene Little : 2/26/2008 12:23:31 PM

The longer this pushes higher now the more bullish it becomes so don't jump in early here--if it doesn't fail at the setup here then it's not going to.

Linda Piazza : 2/26/2008 12:21:49 PM

Unlike some other indices, the RUT has held fairly well to the support of the 15-minute 9-ema. That's currently at 716.10. If the RUT loses the support it's testing now, near 719, then equity bulls want to see this other leading index maintain that 15-minute Keltner support. I had thought the RUT actually might begin topping out at about 716, lower than its current high of the day, at 720.40, but I'd still start watching for signs that its short-term upward momentum has stalled.

Keene Little : 2/26/2008 12:21:47 PM

The DOW and SPX quickly broke their short term uptrend lines but recovered so it could be a sign of topping as it's struggling to hold on now. But there's been no break down yet so watching closely here.

Jeff Bailey : 2/26/2008 12:16:28 PM

Today's Global Economic Calendar Link

Jeff Bailey : 2/26/2008 12:14:44 PM

DJ- Euro Hits Intraday High Above $1.4900

Linda Piazza : 2/26/2008 12:11:37 PM

The MID is now at 826.23, topping my estimate of an upside target by a bit but still a little below the potential Keltner target that's now at 828.42.

Jeff Bailey : 2/26/2008 12:09:11 PM

US Oil Fund (USO) Alert! $80.08 +1.70% ... 52-weeker here. Challenges WKLY R1 ($80.03).

Keene Little : 2/26/2008 12:06:49 PM

Use an uptrend line along the lows of the rally from about 11:15 AM since a break of that should be the signal that the top is in. NDX is now testing its downtrend line from Feb 1st at 1792 (the top of its triangle pattern).

Linda Piazza : 2/26/2008 12:04:12 PM

The OEX has potential support on 15-minute closes at 631.30. It has a potential upside target of 636.47 as long as that support is maintained, but that support hasn't been as reliable a benchmark lately as it sometimes is. The 30-minute 9-ema has proven much more reliable over the last week, but it's potential support is now down at 630.14. That means that you'd have to wait to see whether a pullback held that support on a 30-minute close before you knew whether or not the tenor had changed. You might prefer to set a stop an account-appropriate level below the current value. Sometimes you do what you have to do, and if you're stopped for a smaller profit than you might have eventually made, oh, well. What you don't want to do in this environment is let a profit turn into a loss.

Linda Piazza : 2/26/2008 12:01:07 PM

The SPX has now established a pattern of finding support on 30-minute closes at the 30-minute 9-ema, with that average at 1368.66 currently. Unfortunately, that's a distance away from the SPX's current value and so not so good as a benchmark for setting stops for scalping or day trades. However, the SPX hasn't been so good at maintaining support/resistance at the 15-minute 9-ema over the last week or two, sometimes violating it without the violation meaning too much. However, that moving average has been a good benchmark in the past and it currently coincides with other important support, so I'll mention that it's at about 1371.50. That's still far aware from the current SPX level, so bulls might want to set trailing stops an account-appropriate distance below the current level or set it in accordance with the last swing high, whatever is appropriate. The SPX has set a potential upside target of 1382.79 on the 15-minute chart, but with the current rising wedge shape and with the MID approaching its target, I'd be prepared with just-in-case profit-protecting plans now. They may not be needed, but we've seen how quickly they're needed when they are.

Linda Piazza : 2/26/2008 11:51:03 AM

The MID, at 823.52, is approaching what was my speculation about potential upside, about 825, with later developments leading me to conclude it might be closer to 825-826. Now the 30-minute Keltner channels are returning an even higher potential target, at 828.15. As I've been suggesting, it's still time to watch for a stalling or rollover as this potential target zone and/or resistance is approached. If the MID has been an indicator index of sorts as indices broke out, it might also serve a first warning of when the upward momentum is waning.

Keene Little : 2/26/2008 11:50:24 AM

I just noticed I posted the charts in reverse order on my last post on silver and the dollar but you get the picture.

Keene Little : 2/26/2008 11:44:29 AM

SPX has now pushed up to the top of its parallel up-channel for price action since the Feb 7th low, now at 1376. A little higher is the Fib projection at 1379 so watch for potential topping at any time now.

Keene Little : 2/26/2008 11:42:17 AM

Silver has now broken convincingly above the top of a rising wedge pattern for the rally from mid January. It is now approaching the top of a little parallel up-channel for that rally. It's very overbought on the 60-min chart and the daily is overbought so it should be due at least a pullback. Link

At the same time the US dollar is approaching potential support at the bottom of its triangle pattern: Link and therefore we could be close to a reversal in the dollar and the metals.

Linda Piazza : 2/26/2008 11:38:14 AM

Like today's leader, the MID, the SPX and OEX are testing highs above yesterday's. I'm rolling up to the more reliable 30-minute charts to give you next potential resistance levels if these indices can hold above yesterday's highs and not get shot down quickly. (Potential bearish price/RSI divergences warn bulls to keep a lookout for that possibility.) Potential next resistance above the current levels are 1380.05 for the SPX on 30-minute closes and 634.58 for the OEX.

Jeff Bailey : 2/26/2008 11:35:14 AM

IBM (update) ... DJ- International Business Machines Corp. (IBM) announced another $15 billion stock buyback, less than one year after undertaking a similar-sized effort.

The company, which has a market capitalization of about $150 billion, plans to repurchase up to $12 billion in stock this year, on top of the $18.8 billion bought in 2007. That total included $12.5 billion executed through accelerated share repurchase agreements in May. Those purchases will be completed Thursday, and IBM said the repurchases could boost 2008 earnings by up to 5 cents a share.

As such, the company now sees 2008 profits of at least $8.25 a share, compared with forecast it gave last month of $8.20 to $8.30 a share. The latest mean per-share earnings estimate of analysts polled by Thomson Financial was $8.22.

IBM's shares recently traded up $3, or 2.7% to $113.08.

"IBM's profitable growth and consistently strong cash flow enable the company to continue to return value to our shareholders. Stock repurchase is not only one of the ways we deliver this value, it is also one of the key elements of IBM's 2010 roadmap for earnings per share growth," said Chairman and Chief Executive Samuel Palmisano.

The technology bellwether last month posted a 12% rise in fourth-quarter net income and projected 2008 earnings above analysts' then-expectations. The company has been benefitting from overseas strength.

Linda Piazza : 2/26/2008 11:27:56 AM

As a reminder, I noted earlier today that I could envision an upside target of about 825 for the MID (actually about 825-826), but that doesn't mean that it will be reached. As I was noting earlier, it's time to start watching for rollover potential in the MID as it reaches toward that potential target. There's no sign of a rollover yet as it reaches above yesterday's and this morning's highs, but keep a watch. RSI has been at extreme levels more for than a day now, showing strong upward momentum, but sometime or another, it's going to be time for a breather.

Linda Piazza : 2/26/2008 11:23:43 AM

Potential resistance exists for the SPX at yesterday's high, at 1374.36. For the OEX, that number was 631.75. The MID, the indicator index du jour, has already hit a new high.

Jeff Bailey : 2/26/2008 11:18:23 AM

11:00 Internals found at this Link

Linda Piazza : 2/26/2008 11:10:56 AM

The VIX hit that Keltner resistance I had mentioned earlier and dropped like a stone to a new low of the day, but that new low is just above potential Keltner support from 22.38-22.50. Now it's attempting to steady, being at 22.72 as I type. If it bounces, the action twice today as it hit that Keltner resistance and dropped straight down emphasizes the importance of that resistance. The resistance is now at 23.07 on 15-minute closes. Equity bears want the VIX to first maintain 15-minute closes above 22.38 and then to bounce and sustain values above that Keltner resistance at 23.07 as a first sign of a change in tenor. Bulls want the VIX to keep dropping or, if it rises, to find resistance again at the Keltner line now at 23.07.

Linda Piazza : 2/26/2008 11:04:56 AM

Advdec line Keltner support (now at about -46) held and the advdec line now is testing potential resistance near +450 that held earlier this morning. The advdec line is currently above that potential resistance, testing the previous high of the day. If it can sustain these values (currently +538), it might have a chance of moving toward +1200, but so far, it's still just testing resistance early in this 15-minute period.

Jane Fox : 2/26/2008 11:00:39 AM

There was no indication from the internals that we would rally but I guess the internals never know when buy programs will kick in.

Keene Little : 2/26/2008 10:58:30 AM

Nice little buy program saved the market (for now). Hopefully the rally can continue now and drive SPX up to 1379.

Jeff Bailey : 2/26/2008 10:57:07 AM

International Business Machines (IBM) $113.22 +2.83% ...

Jeff Bailey : 2/26/2008 10:56:31 AM

IBM's Board Authorizes $15 Billion For Stock Repurchase
To Spend Up To $12B on Buybacks In '08
Raises Full-Year Guidance.

Jane Fox : 2/26/2008 10:49:58 AM

AD line is making new daily lows and that used to be enough for me to say the bears are in control. Now watch the AD ratio as well (thanks to Linda) and it is not making new daily lows so the jury is still in deliberations about who has control although we know for sure the bulls don't.

Then you have the VIX which is climbing but not really making new daily highs and not telling me much either. Link

Linda Piazza : 2/26/2008 10:34:08 AM

I see the advdec line testing possible support (near -60) and the VIX testing possible resistance, as noted in my 10:32:24 post. No outcome is yet predicted. TRIN is bearish. The USDJPY is dropping again. So far, it's neutral with a slightly bearish cast, but nothing yet to hang a lot of predictions on.

Linda Piazza : 2/26/2008 10:32:24 AM

The VIX is rising off the day's low, but not soaring higher. There's potential resistance for the VIX at about 23.18 on 15-minute closes and then again at 29. Equity bears want to see it maingain values above 23.29 and bulls want to see it pushed back and drop to a new low. It's at 23.11 as I type.

Keene Little : 2/26/2008 10:30:56 AM

GOOG and AAPL are not looking good this morning and NDX is heading lower again. This sets a bearish tone for the market. But GOOG is now at potential support near 450. If it doesn't find support here then a Fib projection at 424 could be next. Link

Linda Piazza : 2/26/2008 10:25:31 AM

Continuation of my 10:23:23 post about my use of the Keltner channels with the advdec line: I'd already planned, before receiving the subscriber's email, to write an article about this topic, to appear in the March 8 edition, as a Trader's Corner article.

Linda Piazza : 2/26/2008 10:23:23 AM

A subscriber asked about some questions about my use of Keltner channels on the advdec line, questions that I thought some of the rest of you might want answered, too. This subscriber's charting service wasn't showing the Keltner channels even though it said they were showing up. I don't know much about specific charting services but a common problem is that the advdec line's numbers are so big and change so much that the Keltner channels might be there but out of range of the chart. My charting service allows me to adjust the spike filter (perhaps of some help) and also to adjust the whole chart so that the channels show up even if they normally would have been out of range. That has the effect of scrunching up the whole chart (technical term--"scrunching"). Sometimes, it's something as simple as the charting service setting a default color for the channels that's the same as the background color you chose. Check with your charting service for specific information.

Also, the settings for the nested channels are as follows: smallest channel, 9-ema basis line with a 1.4 multiple; next a 45-ema basis line with a 3.0 multiple; and next, a 120-ema with a 7.2 multiple.

Here's a chart with some annotations that might help show you what I'm seeing: Link Right now, a sustained drop below about -55 would question the bounce today.

Jane Fox : 2/26/2008 10:22:48 AM

The internals are telling me this is a good time to be on the sidelines.

Jane Fox : 2/26/2008 10:22:26 AM

AD line was able to climb above 0 to a high of +406 but is now retreating back to +178.

Jane Fox : 2/26/2008 10:21:07 AM

TRIN is a bearish 1.28 down from a high today of 1.48. There are some systems out there that will take a long as soon as the TRIN hits 1.50 so I am not sure 1.48 qualifies or not. In any case the VIX is not giving me any clues because it is midrange.

Keene Little : 2/26/2008 10:17:25 AM

Futures tested their lows (NQ undercut it) and SPX tested its uptrend line from Friday's low. Now let's see if it can rally up to 1379. A break back below the dip just past 10:30 would be more bearish since it will be a break of the uptrend line and suggest that the leg up is finished (and would leave another corrective move behind).

Linda Piazza : 2/26/2008 10:05:01 AM

Potential support here at 1364.16 on the SPX, on 15-minute closes. For the OEX, it's at about 628, with the OEX below that and having to reclaim it if that support is going to hold into the next 15-minute period and not become resistance instead. On the more reliable 30-minute charts, the SPX has potential support at about 1363.06 on 30-minute closes and the OEX, at about 626.70.

Linda Piazza : 2/26/2008 10:01:31 AM

Some of you may remember that yesterday I was noting that former leading-indicator index the MID (S&P Midcaps) was showing more strength than other indices. I had been watching it yesterday break out while those other indices were still consolidating. Now I'm watching as it tests potentially significant resistance: Link In the old days, the MID did sometimes overrun resistance, but be aware that it might be topping out here. That consolidating flag pattern yesterday is the type that sometimes occurs about midway through a move, suggesting that the MID could still move up to 825 or so, but I'd keep this on my radar screen in case it rolls over at any time between now and 825. It was a good leading indicator yesterday and you want to know if it starts losing steam.

Linda Piazza : 2/26/2008 9:55:51 AM

Keltner outlook on the advdec line: The advdec line pierced potential resistance at +260 but then fell back, with that resistance so far holding. At -22 as I type, it's still in the potential resistance (now support?) zone that now spans down to about -60. Consolidation above -60 would suggest that it's still gathering strength for another push higher while a sustained drop beneath it would suggest that the resistance held.

Keene Little : 2/26/2008 9:54:29 AM

We could get a pullback to test the pre-market low in the futures which would gives us a minor new low in the cash indices. From there we will hopefully see another push higher to finish the rising wedge pattern on SPX (DOW also). A push higher for the RUT to 714.73 would make for two equal legs up from Friday's low.

Jane Fox : 2/26/2008 9:53:22 AM

VIX was making new daily lows but is now heading up.

Jane Fox : 2/26/2008 9:51:33 AM

Remember the Consumer confidence number out at 10:00.

Linda Piazza : 2/26/2008 9:48:32 AM

I'm a little surprised to see that the USDJPY dropped this morning, continuing a drop that began at about 4:15 am ET this morning. It's now bouncing off the just-hit low at the time our equities opened. I would have thought that the higher-than-expected wholesale prices this morning might have brought about the specter of higher rates or at least no more easing of rates, perhaps acting to strengthen the dollar. Anyway, the intermarket relationship of currencies to equities doesn't always hold, but the USDJPY now has potential resistance from the current 107.80 up to about 108.10. Equity bulls want to be careful of rollover potential from somewhere in that zone.

Linda Piazza : 2/26/2008 9:45:16 AM

Mixed signals out there, aren't there? The VIX is headed down, the advdec line bouncing (but into possible resistance) and the TRIN above 1.00.

Linda Piazza : 2/26/2008 9:43:48 AM

Keltner outlook on the advdec line: The advdec line has now climbed to -87, butting up against the potential resistance that I mentioned earlier. From here to about +260 is the do-or-die zone for this early bounce attempt off the low. The advdec line needs to hold here and even climb and maintain levels above that +260 level. Bulls should be prepared for rollover potential here. I'm not saying it's going to happen: I'm saying it could if the advdec line doesn't show continued momentum.

Jane Fox : 2/26/2008 9:37:08 AM

AD line is a bearish -753

Linda Piazza : 2/26/2008 9:36:54 AM

So far, the SPX traveled down to the 15-minute 9-ema and has bounced strongly from it. I'm not sure the story is over there yet, though.

Linda Piazza : 2/26/2008 9:35:20 AM

More on the Keltner outlook on the advdec line: If the advdec line immediately steadies and starts bouncing without dropping toward -1100, potential resistance lies in the -80 zone and bulls should be watchful for rollover potential from there up to about +250.

Linda Piazza : 2/26/2008 9:33:51 AM

Keltner view of the advdec line: The advdec line on my feed source is now at -687 and heading lower. It's got potential support near -1100 and bulls would like to see that hold. Bears should have profit-protecting plans in place as the advdec line approaches that zone, in case there's a bounce. Then we'll see what sets up.

Linda Piazza : 2/26/2008 9:31:25 AM

S&P futures were about 4.55 below fair value this morning. If the cash market trades in accordance with that action, which it doesn't always do, what will that mean? On the daily chart, that would mean that the SPX would be likely to drop back toward the triangle's upper boundary, retesting it. Since I'm not sure that the triangle has much relevance any longer, a worry I discussed due to the RUT's action in last Thursday's Wrap and at other times, I'm not sure how strong we should consider the possible support there.

On intraday charts, potential Keltner support exists in the 1366.50-1369 zone, depending on the time interval being studied. Bulls would like to see the first 15-minute period close above about 1366.40 and would like to see the SPX back at or above about 1369.80 by the close of the first 30-minute period.

OEX traders want to see the OEX close the first 15-minute period at or above 628.35 or so and back at 630.60 or so by the close of the first 30-minute period.

Jane Fox : 2/26/2008 9:31:22 AM

Here is the daily chart of Gold. The MACD divergence I see on this chart is telling me Gold is ready for a retracement but I do not expect that retracement to break support at 885. Ah gee here I am out on a limb again.

I would like to put a fib bracket on this chart to see if 885 holds up as a fib level as well but I truly do not know where to put the bottom of the bracket so I don't think I would be very helpful right now. Link

Keene Little : 2/26/2008 9:23:17 AM

It looks like we'll get at least a pullback this morning so we'll see if it can hold above the last pullback low near 1:30 PM yesterday. A pullback followed by another choppy run higher as shown in last night's SPX 30-min chart could set up a potential top. But if price declines below yesterday's mid-day pullback then it will leave a 3-wave rally off Friday's low and that would strongly suggest we're going to stay stuck in a trading range (more chop and whipsaw, oh joy).

Jane Fox : 2/26/2008 9:07:43 AM

Case-Shiller 20-city index falls 9.1% annualized

Case-Shiller 10-city index falls 9.8% annualized

Jane Fox : 2/26/2008 9:03:44 AM

All the markets made new overnight lows after the PPI data came out but they now seem to have found a bottom. A bottom I might add that will be an obvious spot for support intraday. Link

Jane Fox : 2/26/2008 8:54:00 AM

LONDON (MarketWatch) -- U.S. foreclosures rose 8% in January compared to December and nearly 57% from January 2007, RealtyTrac said on Tuesday. Nevada, California, Florida posted the top state foreclosure rates, it added. "January's foreclosure numbers demonstrate that foreclosure activity is continuing on its upward trend, substantially increasing from a year ago in many states," said James J. Saccacio, chief executive officer of RealtyTrac. "However, the 8% monthly increase in January is not as precipitous as the 19% spike we saw in January of 2007, and several key states actually experienced decreasing foreclosure activity from the previous month. It could be that some of the efforts on the part of lenders and the government -- both at the state and federal level -- are beginning to take effect," he said.

Jane Fox : 2/26/2008 8:53:26 AM

WASHINGTON (MarketWatch) - Producer prices soared in January, pushed higher by energy prices and the biggest increase in food prices in more than three years.

The January producer price index climbed by 1%, the Labor Department reported Tuesday. The PPI had fallen 0.3% in December after a jump of 2.6% in November.

The core PPI, which excludes food and energy prices, rose 0.4%, driven by higher drug and car prices.

Year over year, the PPI is up 7.4%. This is the fastest pace since 1981. Over the same time period, the core PPI is up 2.3%.

Economists surveyed by MarketWatch were expecting the PPI to rise by 0.4%, although some expected much larger gains. They also forecast a 0.3% rise in the core PP

Jeff Bailey : 2/26/2008 3:25:50 AM

S&P 500 (SPX.X) ... 60-minute interval chart with Quarterly (green), Monthly (pink) and Weekly (blue) pivot retracement Link

BIG test underway at MONTHLY Pivot and overlapping WEEKLY 80.9% retracement.

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