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Keene Little : 2/28/2008 12:48:20 AM

Thursday's pivot tables: Link and Link

The updated 60-min charts show the setup for tomorrow. If the market rallies above Wednesday's highs I would look for a break to the upside through the key levels. But if the market sells off we'll either be stuck inside this months trading range or be starting a breakdown (which won't be known until the key downside levels are taken out):
SPX: Link
DOW: Link
NDX: Link
RUT: Link

OI Technical Staff : 2/27/2008 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The Market Monitor has been archived.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 : 2/27/2008 9:50:05 PM

Closing Internals found at this Link

Jeff Bailey : 2/27/2008 5:40:11 PM

Apple reiterated 10 million iPhone sales forecast at Goldman Sachs' Technology Investment Symposium.

Jeff Bailey : 2/27/2008 5:10:29 PM

QQQQ $44.27 +0.45% ... $44.45 extended. (see Monday's Wrap)

Jeff Bailey : 2/27/2008 5:09:37 PM

Apple (AAPL) Alert! $122.88 +3.13% ... ticks $127.10 extended. This would be just back above 0% conventional, or 1/23/08 low. QQQQ heavyweight here.

Jeff Bailey : 2/27/2008 4:53:59 PM

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

Jane Fox : 2/27/2008 4:22:58 PM

Economic Reports on the docket for tomorrow include:

8:30a.m. Initial Jobless Claims For Feb 23 Week. Expected: +6K. Previous: -9K.

8:30a.m. 4Q Prelim GDP. Expected: +0.7%. Previous: +0.6%.

10:00a.m. Jan Help-Wanted Index. Previous: 22.

11:00a.m. Feb Kansas City Fed Mfg Index . Previous: 7.

Jeff Bailey : 2/27/2008 4:18:07 PM

RIMM $111.50 +3.48% ... closes above its 50% conventional.

Linda Piazza : 2/27/2008 4:03:35 PM

Just another 16-point range day for the SPX, with the SPX ending the day near the middle of that range and close to where it opened. We need neck braces to trade these days.

Jeff Bailey : 2/27/2008 3:59:32 PM

PTEN $24.31 -0.65% ...

Jeff Bailey : 2/27/2008 3:58:29 PM

Remember what is, and what isn't inside.

Jeff Bailey : 2/27/2008 3:58:19 PM

SPY $138.03 -0.23% ...

Jeff Bailey : 2/27/2008 3:58:05 PM

QQQQ $44.25 +0.40% ...

Jeff Bailey : 2/27/2008 3:57:40 PM

Cisco Systems (CSCO) $24.93 +3.61% ... threatens to close back above 19.1% conventional. Still keep that 0% at the 1/23/08 low.

Jeff Bailey : 2/27/2008 3:52:46 PM

Citigroup $2.5B 30-yr Global Launched At Treasurys +2.30

DJ- Citigroup Inc. (C) launched its $2.5 billion global bond offering Wednesday, according to people familiar with the deal.

The 30-year issue was launched at a spread of 230 basis points over Treasurys, directly in line with preliminary price guidance.

The offering is expected to price later Wednesday and has been rated Aa3 by Moody's Investors Service and double-A-minus by Standard & Poor's.

Linda Piazza : 2/27/2008 3:47:48 PM

Yesterday about this time, I said that if the SPX ended the day anywhere near its then-current level, I would expect either another day's candle that indicated consolidation or else an actual pullback. If the SPX ends the day near its now current 1379.61, we'll have had that day of consolidation. What next? If the SPX were establishing its old pattern, two to five days of consolidation would be followed by a quick dip to the rising daily 10-sma. That's now at 1360.43 but is still rising, of course. It would be only after we saw how the SPX reacted to that 10-sma test that we would get an idea of what would happen next. We don't know that the old pattern will repeat, but this is one possible scenario to consider.

Keene Little : 2/27/2008 3:46:43 PM

It seemed like a lot of work today (by the market) to be at the flat line by the end of the day. Today's candle is a doji and all it means here is indecision. I don't think I needed to tell you that.

Jeff Bailey : 2/27/2008 3:26:38 PM

USD 74.22 ... on 12/31/07, the dollar index closed 76.69. So down about 3.22%.

Linda Piazza : 2/27/2008 3:22:17 PM

The SPX's 15-minute candles look like little birds perched on the 15-minute 9-ema's, hunkering down in the little space allotted them by the overhead 9-ema. Those averages are at 1378.02 and about 1380.50, respectively. Which way does the SPX go next? I would be surprised to see a 1385 test but neither would I be that surprised to see a 1370 one.

Jeff Bailey : 2/27/2008 3:19:19 PM

SLV $190.88 ... on 12/31/07, SLV closed $146.97. So up about 29.8%.

Keene Little : 2/27/2008 3:15:04 PM

As the updated daily chart for SPX shows, the key levels remain 1317 to the downside and 1396 to the upside: Link . In between we could see continued chop sideways into next month. Unless you like and are good at scalping, this is a horrible time to trade.

Even the Citigroup trading team has not had a good go of it--I've read they've lost $100M or more on each of 15 separate days so far this year. And these guys supposedly know what they're doing and have every possible tool and inside news one could ask for. Or maybe they're a bunch of rogue traders (wink).

Jeff Bailey : 2/27/2008 3:13:32 PM

03:00 Internals found at this Link

Linda Piazza : 2/27/2008 3:08:41 PM

Soon it will be time to begin making your hold-overnight-or-not decisions. As you're making those decisions, remember that tomorrow morning at 8:30 am ET, we get the GDP update for the fourth quarter of last year. Fed Chairman Bernanke continues his testimony. My guess would be that there would be fewer opportunities for surprises in tomorrow's testimony, but the great unknown that has to be factored in is the overnight reaction to today's testimony.

Jeff Bailey : 2/27/2008 3:01:38 PM

GLD $94.69 ... on 12/31/07, GLD closed $82.46. So up about 14.83%

Jeff Bailey : 2/27/2008 3:01:46 PM

USO $79.12 ... on 12/31/07, USO closed $75.76. So up about 4.43%

Jeff Bailey : 2/27/2008 2:57:06 PM

Interbank Foreign Exchange Rates at 02:50 PM EST Link

Linda Piazza : 2/27/2008 2:56:12 PM

Remember that this can all switch back the other direction as quickly as prices dropped. I'm watching the VIX, at 22.75 as I type, pulling back from its test of the 22.88-22.92 resistance on 15-minute closes that it tested. It's not pulling back far yet, but it may soon need to drop back to test its rising 15-minute 9-ema, now at about 22.60. As long as it maintains support there on 15-minute closes and keeps hammering away at that overhead resistance, then I think equity bears will have some corroboration of their positions. If it drops much further than 22.50, then something else may be going on. I warned earlier that equity bears needed to have profit-protecting plans for a test of the zone that was tested a few minutes ago, and now you just need to watch to see if those plans will need to be enacted or if the VIX continues gaining and equity prices continue dropping.

Jeff Bailey : 2/27/2008 2:45:58 PM

Exxon/Mobil (XOM) $89.45 -0.48% ... how much money has been spent fighting that?

Jeff Bailey : 2/27/2008 2:45:00 PM

HIGH COURT MAY LOWER $2.5B EXXON VALDEZ OIL SPILL AWARD

DJ- Supreme Court is skeptical of Exxon's bid to overturn a $2.5 billion punitive damages award over the 1989 Valdez oil spill, but the justices indicated they may order the award be reduced.

Jeff Bailey : 2/27/2008 2:37:41 PM

Got to think MBI's option action is probably PREMIUM seller.

$15 +/- $3.00 = $12 to $18 collar.

Linda Piazza : 2/27/2008 2:37:06 PM

The OEX has not set a new downside target. It's still maintaining Keltner support at about 633.40 on 15-minute closes. The 9-ema, potential resistance on 15-minute closes, is now at 635.33.

Linda Piazza : 2/27/2008 2:36:15 PM

Potential resistance for the SPX is now at 1378.03 on 15-minute closes with the 15-minute 9-ema now at 1380.21. The SPX has a tentative downside target now at 1369, but we know not to trust targets too much in this environment. That target will be erased with a 15-minute close above the 9-ema.

Jeff Bailey : 2/27/2008 2:36:02 PM

My QCharts MBI option montage shows 1,500 CBOE calls traded. All DnTick. Nothing for May $15's.

Terrible, terrible option service from QCharts. Just terrible. They keep talking about how great the merger has been. They've done nothing for us option traders.

Linda Piazza : 2/27/2008 2:33:15 PM

That next potential Keltner support didn't even stall the decline on the SPX but it has on the OEX. The MID dropped right through it and is already well below this morning's low, the trough between yesterday's and today's peaks. We have the opposite situation of that we've seen over recent days, when the MID was stronger, the SPX in the middle and the OEX weaker. That action had suggested a bit more speculative buying creeping in on those previous days, and I'd wondered aloud yesterday if maybe that wasn't such a good thing when considering the sustainability of the rally. Now we're seeing that the speculative buyers were perhaps the weaker hands and the holders of the big caps are holding on a bit better, which is a defensive-type action in my view. Let's see how it develops, remembering that if the SPX and OEX are in a broadening formation, it's difficult to tell when they've broken down. This could be more zigging and zagging within that formation.

Jeff Bailey : 2/27/2008 2:31:15 PM

Don't "assume" buying of puts/calls ... check up/dnticks.

Jeff Bailey : 2/27/2008 2:30:35 PM

CBOE Most Actives @ 02:17 PM EST Link ... LEN, DHI and PHM are home builders.

Jeff Bailey : 2/27/2008 2:28:09 PM

iShares Japan (EWJ) $12.79 -0.77% ... taps back at conventional 38.2%. (see $/yen)

Jeff Bailey : 2/27/2008 2:25:50 PM

CBOE Most active have MBI May 15 Call and May 15 Puts .

Jeff Bailey : 2/27/2008 2:21:15 PM

Companhia Vale Do Rio Doce (RIO) $36.23 +0.05% ...

Jeff Bailey : 2/27/2008 2:20:25 PM

Petroleo Brasileiro (PBR) $123.57 +1.49% ... edges back from another record high of $125.41.

Linda Piazza : 2/27/2008 2:20:01 PM

At 22.76 as I type, the VIX is approaching that potential Keltner resistance 22.90 as well as the previous high of the day at 22.88. Oops, hit that previous high as I typed. This is time for equity bears to be particularly cautious and protective of profits as you don't want to see a strong pullback in the VIX.

Linda Piazza : 2/27/2008 2:12:14 PM

On a Keltner basis, the MID is looking worse than the SPX--already dropping through the Keltner support that the SPX is just now testing. The MID is leading to the downside just as it led to the upside the other day. The MID approaches the trough between yesterday's high and today's, with that at 818.39 and with the MID at 818.49. Potential Keltner support exists at 818. The MID may give us some insight into whether yesterday's and today's double tops are confirmed . . . MID began dropping more sharply as I typed, down to test that 818-ish support. Unless it bounces strongly, it's now confirmed that double-top formation. If it does bounce strongly? Then we have to consider a different interpretation.

Jeff Bailey : 2/27/2008 2:11:58 PM

DJ- Brazil Real Closes Stronger @ Nine-Year High of BRL1.671.

Jeff Bailey : 2/27/2008 2:09:53 PM

Take a conventional on USO from the Feb low to this morning's high. 38.2% sure would mark the 2/15 to 2/19 gap.

Jeff Bailey : 2/27/2008 2:07:58 PM

US Oil Fund (USO) $79.54 -0.69% ...

Jeff Bailey : 2/27/2008 2:07:35 PM

Nigeria Official: OPEC Output Steady If Prices Stay High

Linda Piazza : 2/27/2008 2:07:31 PM

The VIX is so far maintaining support above the 15-minute 45-ema, the moving average from which it was knocked back yesterday and twice Monday. This is the first time since last Friday that it's been able to maintain levels above that average. However, the VIX is now about to face the day's high, at 22.88, with the VIX at 22.62 as I type. Further Keltner resistance is at 22.92 on 15-minute closes.

What does this mean? This means that if you're in bearish equity trades, you want to be particularly careful to protect your profits if the VIX should rise into the 22.88-22.92 range, as that might be another area from which it might get turned back. If it is turned back, you don't want the pullback to be drastic.

Keene Little : 2/27/2008 2:06:55 PM

The pullback has now gone deeper than it should have in order to maintain the possibility for another rally leg. If we now get a small consolidation (maybe for about an hour) followed by another move down then we'll have an impulsive decline off the high and it would indicate a trend change. Right now the move down is still just a 3-wave move and therefore potentially just a correction to the larger degree rally.

Jeff Bailey : 2/27/2008 2:05:24 PM

Key Interest Rates at 02:00 Link

Linda Piazza : 2/27/2008 2:04:38 PM

Next SPX potential Keltner support on 15-minute closes, below that being tested now, is now at 1377.99. For the OEX, it's at 633.67.

Jeff Bailey : 2/27/2008 1:59:59 PM

FRE $25.30 +0.35% ...

Jeff Bailey : 2/27/2008 1:56:53 PM

A wild one for FNM so far today ... FNM $27.65 +2.48% ... #1 most active at 87.11 million shares.

Jane Fox : 2/27/2008 1:55:03 PM

February 1st the DOW made a high of 12767 and today's high so far has been 12756. Will we blast higher or will this be a double top and retrace the rest of the week - or longer.

I think we will probably see consolidation and a little selloff this week and then blast higher next week.

Jeff Bailey : 2/27/2008 1:50:52 PM

EUR/USD 1.511 +0.92% ... today's trade at 1.510 has the euro achieving its bullish vertical count.

Keene Little : 2/27/2008 1:50:05 PM

The 2nd leg down for the DOW from today's high would achieve 162% of the 1st leg down at 12688 so like the SPX, the pullback should be finding support here if there's more rally ahead.

Jane Fox : 2/27/2008 1:49:16 PM

The TRIn and the VIX are mostly in sync but the TRIN is now above 1.50 and the VIX is hovering at daily lows. This should be a huge buy signal. I'm not buying it because this is something I have never watched before. In any case it will be interesting to see what happens. Link

Linda Piazza : 2/27/2008 1:49:08 PM

Potential next Keltner support for the OEX--below that currently being tested--is at 633.58 on 15-minute closes. The OEX is at 635.82 as I type.

Linda Piazza : 2/27/2008 1:48:18 PM

Potential next support--below that being currently tested--for the SPX is at 1377.86 on 15-minute closes. The SPX is at 1381.46 as I type.

Keene Little : 2/27/2008 1:47:25 PM

Breaking down instead of rallying could be bearish but so far it could be just a 3-wave pullback before heading higher again. If the latter then SPX should find support at or above 1380.

Linda Piazza : 2/27/2008 1:45:58 PM

Careful here. The VIX is piercing that level mentioned in my 1:35:34 post, building on the strengthening it was showing at the time of my 1:19:47 post, but the VIX pierced this particular resistance yesterday and Monday and was subsequently pushed back sharply. Equity bulls want that to happen, with the potential resistance now at 22.46 on 15-minute closes and the VIX at 22.52. Equity bears want the VIX to maintain levels above 22.46 on 15-minute closes and then to gain from there.

Jeff Bailey : 2/27/2008 1:45:27 PM

DIA just can't find enough buyers at this point to get itself above 02/01/08 high. Even with yesterday's "3 Amigos" trading strong. (IBM, XOM, CVX)

Jane Fox : 2/27/2008 1:41:41 PM

Well we survived quite a while but when you hover underwater you pretty well know you will probably end up drowning.

Tab Gilles : 2/27/2008 1:41:40 PM

WEEKLY CHARTS:

$INDU Link

DJIA PnF is 13900

$SPX Link

$SPX PnF 1490

$COMPQ Link

Nasdaq PnF is 2550

$RUT Link

Russell 2000 Small Cap PnF 795.

Linda Piazza : 2/27/2008 1:35:34 PM

The VIX is climbing now after producing 15-minute closes above the 9-ema for about an hour and a half. (See my 1:19:47 post.) At 22.45, it will face Keltner resistance that knocked it back sharply lower this morning and twice on Monday. Bulls and bears both should keep this on the radar screen. If it's not knocked back today and instead manages to being producing 15-minute closes above it, then there's been notice of a slight change in tenor. The VIX is at 22.30 as I type.

Keene Little : 2/27/2008 1:30:12 PM

Still consolidating and the pullback has gone about as far as it should if we're to get another rally leg, which start soon.

Jeff Bailey : 2/27/2008 1:28:40 PM

Recent short-term Treasury acutions showed some decent participation from foreign investors though.

Jeff Bailey : 2/27/2008 1:27:53 PM

30-year YIELD ($TYX.X) ... its WKLY R1 4.696% holds yield resistance.

With dollar weakness, the one thing equity bulls do NOT want to see, which could trigger panic, is SHARP moves higher in yields, as dollar falls.

That could depict selling of government securities and cash being taken out of U.S. assets.

Jeff Bailey : 2/27/2008 1:25:25 PM

01:00 Internals at this Link

Linda Piazza : 2/27/2008 1:19:47 PM

Another way of looking at today's developments is a climb up to test the former rising trendline off Friday's lows. Too steep a drop from those tests of the trendlines and some would start thinking kiss-goodbye test. So far, though, there's of course been no such steep pullback.

However, for the last hour and a half, the VIX has been maintaining 15-minute closes at or above its 15-minute 9-ema. That's slightly bullish for the VIX and bearish for equities but the closes are so tentative that we can't give this development too much weight now. It's easily reversed with that moving average then serving as resistance.

Linda Piazza : 2/27/2008 1:15:48 PM

SPX 15-minute 9-ema is at about 1385.15; potential Keltner resistance on 15-minute closes at 1389.63-1390.80. For the OEX, those numbers are 637.11 and 639.07-639.30.

Jeff Bailey : 2/27/2008 1:15:16 PM

Each chance bears get to cover at an old high they do. This morning's low was Monday's high.

Jeff Bailey : 2/27/2008 1:14:02 PM

Oil sure look overly short doesn't it?

Jane Fox : 2/27/2008 1:12:50 PM

The DOW has had a very nice rally off the lows at 12155 (right shoulder) and there is a very good chance tomorrow, and maybe the rest of the week, this market will retrace. If it does not and blasts through resistance, the next spot it could hit would be the 127.20% fib retracement at ~ 13062 Link

Jeff Bailey : 2/27/2008 1:07:41 PM

Equity bulls want to see money flow out of the "safety" of Treasuries.

Jeff Bailey : 2/27/2008 1:07:14 PM

Still not sure .... intra-day feed very limited.

Jeff Bailey : 2/27/2008 1:05:53 PM

5-year Yield ($FVX.X) up 2.7 bp at 2.915% ... looks more like it should be.

Keene Little : 2/27/2008 1:04:45 PM

Price continues to consolidate which looks bullish. But if the market chops its way higher (instead of spiking its way higher out of this morning's consolidation) then it will begin to look like an ending pattern to the upside. A pullback to a higher low (above the one near 12:30 PM) and then another minor high could finish today's rally.

Jeff Bailey : 2/27/2008 1:03:01 PM

True Story: As you review your weekly MBA updates, you'll want to remember that "refinance applications" are just that. They are applications and by no means should be thought to be "successful refinanced mortgages."

One of my clients' friends owns a mortgage service company. He himself tried to refinance his mortgage a couple of weeks ago. He was denied due to his chosen line of employment.

Jeff Bailey : 2/27/2008 12:58:09 PM

The only real fundamental "positive" I gleaned from TOL's earnings was their net debt-to-capital ratio falling to 26.8%. As reviewed in their earnings press release.

Linda Piazza : 2/27/2008 12:57:22 PM

Nothing really new is happening, no predictions being made by what I see on the charts. If you're bullish, you see the pattern as an inverse H&S; if you're trying to be neutral, as I am, you can as easily see it as a broadening formation. Either way, the SPX's 15-minute 9-ema has so far been holding as support on 15-minute closes over the last couple of hours, with that support now at 1384.98 for the SPX and 636.89 for the OEX. Potential resistance on 15-minute closes is at 1389.50-1390.50 for the SPX and just over 639 for the OEX.

Jane Fox : 2/27/2008 12:54:07 PM

YM long from 12756 with a stop at 12718 retraced to a low of 12722 so we are still solvent.

Jane Fox : 2/27/2008 12:53:19 PM

Certainly does look like the SPX is trying it's darnest to test resistance at 1400. I am looking for a close above resistance before I venture back into any long positions. Well I am long Crude and Gold but those don't count. Link

Jeff Bailey : 2/27/2008 12:43:39 PM

Pacholder High Yield (PHF) 8.44 +1.19% ... Most recent NAV benchmark given was 2/21/08 Link when PHF closed $8.43. Actually a PREMIUM to NAV of $8.31.

Bond market analysis here would be "firming" of higher risk credit markets.

Fed action starting to see response.

Jeff Bailey : 2/27/2008 12:40:17 PM

For those of you new to the MM, today's news from OFHEO regarding the lifting of caps on FNM and FRE will allow them to purchase mortgages from banks. Once banks sell those mortgages to FNM and FRE, that will free up capital in order to then generate some new refinances, or originate new mortgage loans.

A way to create some liquidity.

Linda Piazza : 2/27/2008 12:28:13 PM

Again, while the SPX is thrashing around within what I consider to be a possible broadening formation, don't count on standard technical analysis being too predictive. However, I'll note that the SPX's 15-minute 9-ema is now at about 1383.75 and the OEX's at about 636.30, and bulls would like to see that support maintained on 15-minute closes while bears would like to see it fail to hold.

Jeff Bailey : 2/27/2008 12:26:39 PM

US Dollar Index (DXY) ... daily interval chart with bull and bear "Bailey Wave" as well as your MONTHLY Pivot retracement Link

Yesterday's action was a rather clear "failure" of bull wave channel. Old Wave channel once again the current. DXY tends to trade increments of 0.50, but technicals strongly suggest 73.45-ish.

Keene Little : 2/27/2008 12:23:35 PM

The US dollar continues to decline and commodities continue to rally. While the commodity index (CRX.X) can certainly push higher, the weekly chart shows a weakening since last July: Link . The top of its parallel up-channel from 2006 is currently near 915 which is about 2% higher than its current price.

The US dollar has broken below the November low and looks like it could be headed for the bottom of its parallel down-channel from 2006 (nice inverse correlation with the commodities channel), currently near 73. Daily chart update: Link

Jane Fox : 2/27/2008 12:13:00 PM

Target on the YM long from 12756 is 12756 + 38 = 12794.

Linda Piazza : 2/27/2008 12:07:50 PM

As the SPX was testing levels higher than yesterday's high, the VIX was NOT testing levels below yesterday's low, a divergence that Jane has taught us to watch. From a Keltner viewpoint, the VIX is showing potential Keltner-style bullish divergence (bullish for the VIX; bearish for equities). At yesterday's low, it was breaking down below Keltner support that it's holding today, at least so far. That potential support is now at 21.61-21.75 on 15-minute closes. This could all change in a moment and potential divergence does not mean that price action will follow through, but this warns those of you who are exuberantly bullish to be a little careful about your assumptions here.

Jeff Bailey : 2/27/2008 12:06:16 PM

The dollar is getting squashed and will like fall to month's end. 73.45 in play.

Jane Fox : 2/27/2008 12:04:32 PM

If I am triggered into the YM long I will put my stop at 12718 so the risk is 38 points.

Linda Piazza : 2/27/2008 12:03:55 PM

Potential Keltner resistance is bunched up to about 1390.10 on the SPX, on 15-minute closes. It looks fairly firm, but it still rises slightly, so it's possible that even if it's "fairly firm," the SPX could rise while testing it. I know some of you are seeing inverse H&S's, continuation form, but I'm seeing a broadening formation that tells me to be very careful about drawing any conclusion.

Jane Fox : 2/27/2008 12:02:58 PM

It is into the lunch hour now but the 377T timeframe is long enough that I usually trade through this lull.

Jeff Bailey : 2/27/2008 12:02:46 PM

Swing trade long alert! ... for 1/4 position in shares of Coeur D' Alene Mines (CDE) at the offer of $4.96. Stop goes $4.70 to begin. Target is $5.30.

Jane Fox : 2/27/2008 12:02:21 PM

Internals are still very strong so I will try a YM long at 12756. alert

Keene Little : 2/27/2008 11:49:44 AM

The small consolidation near the high looks like a small 4th wave for the rally off this morning's low. That means we should get another push higher but it will be the 5th wave and it will set up a deeper pullback at a minimum. So be careful with a new high--it might not stick (for day traders). So far, looking for where the 5th wave would equal the 1st wave, I get an upside target for SPX just under 1392.

Jeff Bailey : 2/27/2008 11:47:36 AM

11:00 Internals found at this Link

Note(s): It would take a closing measure of 28.00% for the NASDAQ's 5-day NH/NL measure to reverse back up.

I may be having data feed issues with the 5-year Yield, so quote at 11:00 mark may not be correct.

Linda Piazza : 2/27/2008 11:47:16 AM

You may have noticed that I'm not saying much, not posting as much as usual. That's deliberate. I don't think there's much to be said while the SPX and OEX are set up inside those possible broadening formations as I don't think technical analysis of short-term charts will trump emotional reactions to every little news bullet. So, if I mention potential support or resistance and it appears to hold for a short time, someone out there might be encouraged to believe I'm speaking to them, encouraging them to just hang on to a losing trade or enter a new trade or something similar.

It's in that context that I mention that SPX potential resistance on 15-minute closes is now at 1387.38-1388.95 and potential support is now at 1382.08 and then at 1374. For the OEX, those levels are 637.63-638.79 potential resistance and 635.59 and 632 potential support on 15-minute closes.

Keene Little : 2/27/2008 11:39:36 AM

From Denise: The lenders created this mess..and they have just given them a larger credit line imo.. when you screw it up..why give them more..I have not seen the effects of the Fed rate cuts in the housing loan rates available here..just as was just mentioned in Congress on TV now..the rates are not trickling down to the consumer!

Good observation. Fear is also strong in the banking industry which is why bank rates are not coming down (much anyway) as they're afraid to lend it out and want a higher return for it. I've read that the Fed is actually encouraging the banks to keep their rates high as a way to help them recover from their colosal mistakes and huge writedowns. Keep in mind that the Fed is more interested in saving the banks (the financial system) than the public (including homeowners).

Jane Fox : 2/27/2008 11:36:32 AM

A quick look at the overnight charts shows you the Russell 2000 market is the stronger market today. Link

Keene Little : 2/27/2008 11:31:28 AM

The raising of the caps on mortgage loans for FNM and FRE sounds good in theory but I have two concerns (countering the market's excitement about the news). First, as people become fearful (which is what starts recessions and bear markets, Not the other way around) they take fewer financial risks. Therefore the demand for new loans, mortgages included, will not be affected that much by lower rates or larger caps. It's why I keep saying the Fed is pushing on a string--they can't stimulate demand with lower rates when those people don't want to take on more debt.

Second, raising the caps sets a potential problem with larger loan failures. The excess money creation, lowering rates, raising caps--it's like giving a drunk a drink to make him feel better. But eventually the detox period will only be worse. Unfortunately our country needs to be detoxed and the fixes by the government will likely make things worse rather than better. Certainly they'll drag out the process of cleansing.

But that's longer term. The bulls are enjoying the thought that Uncle Ben and Uncle Sam are here to save everyone. When reality hits, it will bite. So trade it to the upside but don't get complacent (like the VIX is telling us everyone is).

Linda Piazza : 2/27/2008 11:18:28 AM

We have signs now of emotion-based trading on the SPX with a bullhorn shape setting up: Link If you're inclined to enter trades right now, I'd enter with fewer positions than normal.

Jeff Bailey : 2/27/2008 11:13:16 AM

SPX 1,383.70 +0.17% ... still battles conventional 38.2% and mid-point of "Bailey Wave" channel. (see Monday evenings MM)

Jeff Bailey : 2/27/2008 11:11:21 AM

TOL $24.46 +5.79% ... sticks its head above mid-point of "Bailey Wave" channel.

Tab Gilles : 2/27/2008 11:09:01 AM

Dow Industrial ($DJIA) Is the Dow ready to rally? Link

Jeff Bailey : 2/27/2008 11:05:00 AM

Toll Brothers (TOL) $24.00 +3.8% ... today's trade at $24.00 triggers a triple top buy signal.

Jeff Bailey : 2/27/2008 11:02:19 AM

My calculation have # Days of supply for crude oil inching up to 21.2 from last week's 21.0.

Linda Piazza : 2/27/2008 11:02:22 AM

It is, of course, not bullish to see prices knocked back so quickly but we have emotion-based trading going on right now with a widening bullhorn shape perhaps setting up, so it's going to be really difficult to judge when there's either a breakout or a breakdown and murder to trade in between. When I said anything could happen, I mean absolutely anything.

Jeff Bailey : 2/27/2008 10:57:40 AM

FNM $28.50 +13.01% ...

FRE $28.75 +14% ...

Jeff Bailey : 2/27/2008 10:57:01 AM

Alert! OFHEO To Remove Portfolio Caps On Fannie, Freddie March 1, 2008

Jane Fox : 2/27/2008 10:52:56 AM

Internals are on board for this rally. Link

Jane Fox : 2/27/2008 10:52:07 AM

AT least today the VIX was "warning" us about the possibility of a rally. It sure didn't yesterday.

Linda Piazza : 2/27/2008 10:51:56 AM

Time to look at the front-runner, the MID, again. With a just-reached high of the day of 829.41, the MID is challenging yesterday's 829.92 high. I'm watching closely to see if it's slapped back again or if it breaks out, as it's been a fair early indicator for the SPX and OEX. It's at 828 as I type, pulling back but certainly not "slapped back" yet.

Keene Little : 2/27/2008 10:51:07 AM

The top of the parallel up-channel I showed on the ES chart is currently near 1400 (for SPX also).

Jane Fox : 2/27/2008 10:51:04 AM

WASHINGTON (MarketWatch) - After years of speculation and guessing, at last we know what the Federal Reserve's inflation target is: 1.5% to 2% core inflation over a three-year time horizon and just a little lower over the longer term.

Pressured by criticism that it's getting soft on inflation as it slashes interest rates to boost growth, the Federal Open Market Committee set the informal inflation target to bolster its inflation-fighting credibility and to help anchor inflationary expectations.

Based on earlier comments from Chairman Ben Bernanke and others, Fed watchers have been assuming that the Fed had adopted an informal target of about 1% to 2% for core inflation. The new target wasn't announced with any fanfare. It was slipped into a passage in the FOMC's semiannual report to lawmakers on Wednesday

Keene Little : 2/27/2008 10:49:07 AM

Here come the buy programs. The pattern on the ES chart I showed earlier continues. A break below this morning's low now would break it. In the meantime the bulls control the ball.

Linda Piazza : 2/27/2008 10:49:01 AM

The SPX and OEX have obviously closed the last 15-minute period above their 15-minute 9-ema's, and they're charging higher. Next potential Keltner resistance is at 1386.67-1388.31 and 637.29-638.54, respectively, on 15-minute closes.

Jeff Bailey : 2/27/2008 10:48:57 AM

EIA: SPR Stockpiles +228K Bbls

Jeff Bailey : 2/27/2008 10:45:58 AM

Zions Bancorp. (ZION) $52.55 +1.52% ... finds a bid.

Linda Piazza : 2/27/2008 10:41:39 AM

SPX and OEX 15-minute 9-ema's are now at 1378.10 and 633.45, respectively, with these having served as resistance on 15-minute closes all morning. So far.

Jane Fox : 2/27/2008 10:39:33 AM

Dateline WSJ - WASHINGTON -- Federal Reserve Chairman Ben Bernanke Wednesday delivered an economic forecast fraught with risks from housing, labor and credit markets, suggesting policymakers remain on track to lower interest rates further next month.

Meanwhile, Mr. Bernanke indicated that inflation risks are more two-sided, though skewed slightly to the high side -- a nod to the stagflationary mix of weak growth and rising price data of late.

But Mr. Bernanke made it clear where the Fed's main worries lie. "It is important to recognize that downside risks to growth remain," Mr. Bernanke told members of the House Financial Services Committee in prepared semiannual testimony on the state of the economy and monetary policy. (

Fed officials "will need to judge whether the policy actions taken thus far are having their intended effects," Mr. Bernanke said, adding the central bank "will act in a timely manner as needed" to keep the economy on track.

Mr. Bernanke's remarks, which echo those he made earlier this month as well as comments Tuesday by Fed Vice Chairman Donald Kohn, suggest officials will most likely lower the federal-funds target rate at their March 18 meeting, as most economists expect. The Federal Open Market Committee has already cut the fed-funds rate at which banks lend to each other by 2.25 percentage points since September to 3%, including 1.25 percentage points over an eight-day period last month

Linda Piazza : 2/27/2008 10:39:10 AM

I was just reading Keene's 10:27:00 post, and I also have been studying what's going on to try to determine the nature of the bounce we had and, now, the decline. Sometimes you have a pretty good idea what's going to happen. I did when I made my 9:22 post, for example, as was borne out by the action the first 30 minutes, but I already knew when I made that 9:22 post to expect some confusion about what would happen next. That's how the charts were set up, and Keene was noting some of the diverging signs. If you're seeing confusing signs, please don't attempt to force a trade. There will be plenty of times when you think you have a good idea of what might happen next, but there are periods of disorganization in the markets when you just have to wait it out.

Jeff Bailey : 2/27/2008 10:34:12 AM

EIA: US Refineries Ran At 84.7%

Linda Piazza : 2/27/2008 10:33:56 AM

If the support levels mentioned in my 10:30:04 post do not hold on 15-minute closes, the SPX has vulnerability to about 1361.60-1364.90, and the OEX, to about 626.50-627.75. "Vulnerability to" is not a promise that these zones will be hit, but you need to be assessing how a drop into those levels would impact your trades, if it occurs. If you're in bearish trades, you also need to know that if the previously listed (10:30:04 post) support fails on 15-minute closes, then next support, and possibly stronger support, might be found in the zones I'm listing here. You need to have profit-protecting plans in place for such a test, if it occurs.

Jeff Bailey : 2/27/2008 10:33:40 AM

EIA: US Distillate Stockpiles -2.5M Bbls

Jeff Bailey : 2/27/2008 10:33:03 AM

EIA: US Gasoline Stockpiles +2.3M Bbls

Jeff Bailey : 2/27/2008 10:32:31 AM

EIA: Crude Oil Stockpiles +3.2M Bbbls

Linda Piazza : 2/27/2008 10:30:04 AM

SPX and OEX 15-minute 9-ema's continue to hold as resistance on 15-minute closes. Next potential support at 1372 and 630.90 on 15-minute closes. Bulls need this support to hold.

Keene Little : 2/27/2008 10:27:00 AM

I've been watching the bounce off this morning's pre-market lows for evidence of whether it's going to be just a correction before heading lower again or the start of another spike up. So far it's a mixed picture. The same could be said about the pullback from yesterday's highs as it continues to look like a correction to the rally rather than the start of something more serious to the downside. The choppy pattern continues.

Jane Fox : 2/27/2008 10:24:46 AM

AD volume is climbing as is the AD ratio against a falling VIX. This is bullish, but keep in mind the AD volume is still under 0 and the ratio is still under 1.00 so this is not a runaway bull rally. Link

Jane Fox : 2/27/2008 10:22:53 AM

Here are the charts of the S&P futures and the VIX and as you can see they are in sync and bullish. Link

Linda Piazza : 2/27/2008 10:18:03 AM

So far, the SPX's 15-minute 9-ema is holding as resistance on 15-minute closes. That's just under 1379 as I type, with the SPX looking as if it's about to test it again. Remember that what goes on with Chairman Bernanke's testimony today will trump anything on our charts, so be prepared for almost anything.

Linda Piazza : 2/27/2008 10:11:55 AM

As Jane has probably already mentioned, we've seen a strong bounce in the VIX. It ran up and hit Keltner resistance at 22.78 on 15-minute closes and is pulling back now from that. Those of you who are bears would like to see it find support on 15-minute closes at the 9-ema, now at 22.17 and support below that near 22, down to 22.70 if it pulls back further. They'd really like to see it sustain values above 22.78. Equity bulls want a sharp downturn that violates support or keeps sliding lower along it. The VIX doesn't always adhere well to Keltner S/R, but it gives you some sort of guidelines at least.

Linda Piazza : 2/27/2008 10:06:42 AM

The SPX and OEX both ended their first 30-minute periods at or above their 30-minute support levels, with those now at about 1374.50-1376.50 and 631.50-633.13. I had expected them to be pierced during the first 30-minute period and then for there to be a bounce back up to those support levels and that then we'd see what was really going to happen. I thought they might close at those support levels and not clearly above them, as they did, so that there would be some question as to whether they were now support or resistance. Despite the close somewhat above the support, the since-then action has shown that we don't have that answer yet, as to whether these levels are now support or resistance. Watch now for potential resistance on 15-minute closes at 1379.20 and 633.84 as a guide.

Jeff Bailey : 2/27/2008 10:04:39 AM

MBA's Weekly Application Survey at this Link

Linda Piazza : 2/27/2008 9:59:49 AM

The advdec line is climbing swiftly toward potential resistance at about -170 and then again, stronger, at about +300 to +750. It's at -391 as I type. Meanwhile the USDJPY keeps dropping. Opposite evidence.

Linda Piazza : 2/27/2008 9:56:04 AM

The SPX and OEX bounces have occurred sooner than I anticipated, so let's start watching the 15-minute 9-ema's to see if they're holding as resistance, too. They're are 1379.50 on 15-minute closes and 634.01, respectively. I still wouldn't be surprised to see the SPX and OEX end their first 30-minute periods near their 30-minute support (support turned resistance?) levels at 1376.06 and 633, respectively, but the quickness of the bounce lets us know we should watch higher potential resistance, too.

Linda Piazza : 2/27/2008 9:52:27 AM

The USDJPY is still dropping. That's not normally good for U.S. equities, but it should be watched now for bounce potential as its current 106.10 level is near possible support on the daily chart.

Linda Piazza : 2/27/2008 9:50:11 AM

My original thought was that the SPX and OEX might end the first 30-minute period somewhere near their now-current 1375.87 and 632.69 levels. They've both gotten here a little sooner than I expected, so I'm not sure whether they'll both hold near here into the end of this first 30-minute period. I wouldn't be surprised but would have felt more confident if they'd taken a bit longer to bounce back up here.

Jane Fox : 2/27/2008 9:47:57 AM

VIX is making new daily lows, not supporting the bearish AD line so this means we will are witnessing a battle between the bulls and bears. Don't get caught in the shrapnel.

Linda Piazza : 2/27/2008 9:47:09 AM

OEX: The OEX is below potential support on 30-minute closes at 632.94. Like the SPX, it pierced that potential support and dropped toward potential support on 15-minute closes at 630.47. Like my scenario with the SPX, mine for the OEX would have been a piercing of that 30-minute support early in the morning, a dip toward the 15-minute support, a possible bounce and close of the first 30-minute period somewhere near that 30-minute "support." Then we see whether that support is truly support now or whether it's resistance. This is just a rough scenario against which to test early action. I didn't propose the SPX's version at 9:22 so that you could necessarily trade that scenario but rather so that if you're in bearish positions from overnight, you could assess whether you wanted to take early profits before a possible bounce or wait out the Fed head's testimony, or if you were in bullish positions overnight, if you wanted to use any bounce, if it came, to lighten up ahead of that testimony.

Linda Piazza : 2/27/2008 9:42:50 AM

Keltner outlook on the advdec line: The advdec line hovers at the top of a historical support zone from about -950 down to -1600, so there could be historical support anywhere through here. On a Keltner basis, it's in the middle of nowhere on the 15-minute chart. Support exists down at -2300 and resistance up at -146. The Keltner line is now at -1128. Not much help there.

Linda Piazza : 2/27/2008 9:38:57 AM

So far, the SPX scenario laid out in my 9:22:45 post is playing out, but it's still very early in the first 30-minute period. The SPX has pierced the support on 30-minute closes, as I thought it might do, heading down toward the potential support on 15-minute closes, now at 1371.19. I'm not sure that the testing of that 15-minute support is over yet, but if it holds, I wouldn't then be surprised to see the rest of the scenario play out--a bounce back toward the support on 30-minute closes by the end of the first 30-minute period, with that support from 1375.70-1376. Then I think we see what happens next.

Jane Fox : 2/27/2008 9:38:28 AM

AD line as you could guess is bearish at -1293.

Keene Little : 2/27/2008 9:28:01 AM

I see a familiar pattern in the all-hours price action for ES with spikes to the upside followed by choppy pullbacks. If the pattern continues we'll get another spike up this morning (which makes it look like it's being manipulated and I could hazard a guess that there's a lot of Fed money being poured into the market in hopes they can hold it up by causing the shorts to scurry for cover. Here's the ES 60-min all-hours chart showing the pattern: Link

A break below yesterday morning's low (1363.75)would violate the pattern. One reason I think the Fed could be behind a lot of the money that's coming into the market is a look at the spike in M3 money supply this year. The blue line on this chart shows the rate of increase and it's clear the money supply is accelerating higher. It's no wonder the dollar is shrinking and inflation is increasing. The piper will eventually have to be paid here. Link

Jeff Bailey : 2/27/2008 9:26:13 AM

Toll Brothers (TOL) ... Earnings Press Release Link

Consensus was $-0.44/share on Revenue of $818.22M

Stock went out at $23.12 yesterday. Ticking $22.24 pre-market.

Linda Piazza : 2/27/2008 9:22:45 AM

Yesterday, I kept noting that the action of the USDJPY didn't correspond to the action in the U.S. equities. Typically those are moving in the same direction. Overnight, the USDJPY dropped further, with some reporters saying that the weakness in U.S. equities began last night when the dollar weakened further. The weakness was only exacerbated when this morning's numbers proved unfavorable, not begun by this morning's report, those reporters say. If the USDJPY was showing some doubt all day yesterday about the equity rally that was going on, then we should definitely watch it today.

Late yesterday, the action looked as if it would produce a daily candle with a long upper shadow, a sign of selling into the rally. I had commented about 15 minutes before the close that if the SPX ended at the then-current level, then more consolidation or even a pullback would be the most expected outcome in normal times, which these are not. The late-day push erased some of that upper shadow, so that the prediction wouldn't have been as clear-cut, even in normal times, but chart action still showed some doubt about the sustainability of the rally. Fed Chairman Bernanke's testimony will likely trump anything seen on short-term charts. However, if U.S. equities trade in accordance with current futures action, which they don't always do, the SPX will drop toward a retest of Monday's high. The SPX has potential support on 30-minute closes at about 1375.70 and on 15-minute closes at 1377.10 and then again at 1371.52. My conclusion? It's possible that the SPX could pierce that 1375.70-ish 30-minute support in the first 15 minutes of trading, but still possible that it could then bounce and hold tentatively onto that support, which should by then have been driven a bit lower, into the close of the first 30 minutes. Then we see what happens, because if the SPX can't then sustain levels above that, it threatens to fall deeper, perhaps even into that 1364-1367 support level.

These are all just rough scenarios, though, against which to test the early action.

Jane Fox : 2/27/2008 9:18:22 AM

LONDON (MarketWatch) -- Gold futures hit a new record high in electronic trading on Wednesday, up as high as $961.30 an ounce, and recently up $11.50 to $960.40 an ounce. The gains for gold comes after a slew of mostly disappointing U.S. economic data, as well as surprisingly firm European figures, helped the euro cross the $1.50 level for the first time.

Jane Fox : 2/27/2008 9:13:35 AM

Mike sent me an email yesterday asking if the bullish reverse head and shoulders on the DOW chart had indeed confirmed. I had removed the pattern but when I got the email I thought I better take another look at it and sure enough it has confirmed. Link

Jane Fox : 2/27/2008 9:09:47 AM

The US$ does not like Crude above $100 or the fact that the US economy is not just flirting with a recession but a possible stagflation, a combination of slowing growth and rising inflation.

I wouldn't want to be in Bernanke's shoes right now. Link

Jane Fox : 2/27/2008 9:05:54 AM

I still think Gold needs to make a retracement, at least to the bottom of this upward channel, but as long as Crude is rallying I don't see a retracement that goes much further than that. Link

Jane Fox : 2/27/2008 9:03:13 AM

This is the market that is talk of the town, Crude Oil. It actually closed above $100 yesterday at $100.88 and hit a high of 102.08 overnight. I have not looked at Gold yet but I will bet it is in rally mode as well.

I also bet the US$ is down. Link

Jane Fox : 2/27/2008 9:00:11 AM

You can't blame the durable goods report for this drop because the markets were heading down well before the report was released. Link

Jane Fox : 2/27/2008 8:55:28 AM

NEW YORK (MarketWatch) -- Crude futures hit a fresh record of $102.08 a barrel before falling back to $101.01 in electronic trading on Wednesday. Oil continues to gain as the Euro tops $1.50 in currency trading. In the previous session, oil broke through the $101 level for the first time before closing at $100.88 on the New York Mercantile Exchange.

Jane Fox : 2/27/2008 8:54:08 AM

WASHINGTON (MarketWatch) - Demand for durable goods fell back in January after a burst of orders in December, the Commerce Department reported Wednesday, another sign that the economy is slowing.

New orders for durable goods fell 5.3% in January, close to the 5.1% drop anticipated by economists surveyed by MarketWatch. December's gains were revised lower to 4.4% from 5% previously reported. The data are extremely volatile month-to-month.

Much of the decline in January was due to the unwinding of the flood of orders for aircraft in December. Declining demand was seen in almost every industry in January, however, despite reports of higher exports.

Excluding the 13.4% drop in transportation orders, orders for new durable goods fell 1.6%.

Jane Fox : 2/27/2008 8:53:17 AM

Eyes will be trained on Washington D.C. today as Bernanke begins his two days of testimony, starting at 10 a.m. Eastern.

Vice Chairman Donald Kohn on Tuesday said that, despite signs that inflation actually strengthened in January, the nation's weak economy and fragile financial markets remain a bigger threat than higher prices. Kohn's views are generally thought to be closely aligned with Bernanke's.

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