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Jeff Bailey : 3/5/2008 12:27:33 AM

NDX stocks that gave reversing higher PnF buy signal was LEAP @ $45 (stock closed $44.76) Link .

No reversing lower PnF sell signals, but several names that have given multiple continuation sell signals.

GOOG Link as an example gave a reversing lower PnF sell signal at $652. Broke trend at $592. Gave a continuation sell signal at $540, another at $496 another today at $444. Stock is below its 10-week trading band ($464). Stock has not given a "buy signal" since the sell signal at $652. Currently, first buy signal on $4 box chart would be a trade at $480.

Jeff Bailey : 3/5/2008 12:14:03 AM

OEX stocks that gave reversing lower PnF sell signals today were SLB @ $85 (stock closed $84.55), ROK @ $53 (stock closed $53.68), BHI @ $66 (stock closed $66.80).

Jeff Bailey : 3/5/2008 12:06:49 AM

Dorsey/Wright's Bullish % (Updates) ... NYSE and NASDAQ Comp bullish % remain in X's, though we did see some internal damage with additional sell signals today.

Both the BPSPX and narrower BPOEX reversed back lower to "bull correction" status, and the line has been drawn in the sand for the BPOEX where two (2) columns of X have seen 38% now, but not 40%.

BPNDX actually rises to a relative high, adding 1 more buy signal to 31% and remains in "bull confirmed" status.

Very narrow BPDJIA steady at 36.66%.

Sector status changers had Banks, Chemicals, Savings & Loans, Steel/Iron, Transport/Non Air reversing back lower from "bull confirmed" to "bull correction" status.

Jeff Bailey : 3/4/2008 11:22:06 PM

Chinese Premier Calls for Price Controls ... AP Story Link

Jeff Bailey : 3/4/2008 11:09:30 PM

Closing Internals found at this Link

Keene Little : 3/4/2008 10:38:40 PM

Wednesday's pivot tables: Link and Link

We have a good setup for a decent rally after finding what should be an important low on Tuesday. The SPX 30-min chart shows the bounce stopped at the bottom of the original down-channel off last week's high which is also the location of the previous 4th wave (common resistance level). As noted on the chart, the 1307 level was a good level on Tuesday to watch for support: Link

A pullback in the morning should be followed by a continuation higher and hopefully make it up to the 1350 area by Thursday where it would test the broken uptrend line from January and potentially set up a short play from there. If SPX manages to rally above 1360 it would start to turn more bullish. The 60-min chart shows the Fib retracement levels of the decline from Feb 27th: Link

A 3-wave bounce up to the broken uptrend line would have it between a 50% and 62% retracement and you can see why a rally above 1360 would start to look more bullish. The pink wave count calls Tuesday's low as the end of the consolidation since Feb 1st which means a big rally leg to match the one off the January low. That gives us an upside projection to 1433 and is shown better on the daily chart: Link

The 1433 Fib projection crosses the October downtrend line towards the end of this month. A high into opex makes a lot of sense although "painting the tape" into month/quarter end would also be reasonable to expect. Obviously we have lots of time to decipher the price pattern along the way but that's the upside potential as I see it (but first it has to get up through 1360).

OI Technical Staff : 3/4/2008 9:59:59 PM

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

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Linda Piazza : 3/4/2008 4:01:40 PM

It looks as if we'll get the doji-type day, another day of consolidation. What's next? After a couple of days doji- or near-doji days, it's a big harder to predict, but the most likely event would be either another candle depicting uncertainty or else an attempt to gain. I'd be careful about my expectations for gains though, as it's possible they'll be capped in the 1337-1347 zone. If we get another doji-type day tomorrow, if indices are knocked back soundly from any upside tests, the odds will increase that this is just consolidation before another rollover, rather than potential reversal signals being created.

Jane Fox : 3/4/2008 4:00:28 PM

The bears had their chance but were not able to pull the rabbit out of the hat and close the SPX below 1320. Link

Jane Fox : 3/4/2008 3:59:28 PM

Economic Reports out tomorrow include: 8:15a.m. ADP/Macroeconomic Advisors Employment Estimate. Previous: -17K.

8:30a.m. 4Q Revised Productivity. Expected: +1.8%. Previous: +1.8%.

8:30a.m. 4Q Revised Unit Labor Costs. Expected: +2.1%. Previous: +2.1%.

10:00a.m. Jan Factory Orders. Expected: -2.2%. Previous: +2.3%.

10:00a.m. Feb ISM Non-Manufacturing Business Index. Expected: 47.2. Previous: 41.9.

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

Linda Piazza : 3/4/2008 3:57:22 PM

The SPX is still having difficulty wtih that 23.6% retracement zone at about 1326.77. The 30-minute 9-ema is now at 1318.31, so if the SPX should fall back that far, bulls want it to hold as support on 30-minute closes. There may not be time to decide on whether that will hold or not before the close.

Keene Little : 3/4/2008 3:52:14 PM

That also means no big gap up tomorrow to get traders chasing it to the upside. Instead we could see a quick drop to flush out the weak longs and then start another rally leg. At least that's the setup as I see it here and we'll just have to see how it plays out tomorrow morning.

Keene Little : 3/4/2008 3:49:57 PM

I prefer the idea that this last high is the one that ended a 5-wave move up from today's low. That means we should be looking for a 38%-62% pullback correction tomorrow morning to then get long.

Jeff Bailey : 3/4/2008 3:49:53 PM

Moody's Cuts Rating On County Facing Bankruptcy DJ- Moody's Investor Services cut the sewer-bond rating of an Alabama county that may be forced to file bankruptcy because of cash-flow problems and the woes in the market for auction-rate securities.

Moody's lowered its rating three notches to Baa3 on the Jefferson County bonds, putting the rating into junk status. It had been at Moody's lowest investment-grade level; one week earlier, the agency cut its rating three notches from A3.

The $3.2 billion in bonds are guaranteed by insurers that include XL Capital Assurance and Financial Security Assurance Holdings Ltd.

The county said last week that it couldn't be sure that sewer revenue or other cash would cover obligations such as debt service, and that it couldn't ensure it could comply with terms of credit-default swaps. Those swaps can be terminated as early as Friday, and such a move would result in the county making termination payments, further depleting its cash position.

Moody's also said its downgrade is the result of cash flows being "insufficient to meet significantly increased demands" from paying higher interest rates because of failed sales of its auction-rate securities. That market has been the latest caught up in the credit crunch, as investors have fled the once-safe haven. Failed auctions have resulted in sharply higher interest rates for governmental entities, which rely on the market for cash flow.

Standard & Poor's on Friday slashed its rating on Jefferson County's sewer bonds six notches to junk territory following the county's warning. S&P said the termination requirements could total $184 million, which is more than the $100 million to $150 million in available funds it said the county has to cover rising interest costs and any potential collateral or termination payment.

County officials have been reviewing their options.

Keene Little : 3/4/2008 3:44:00 PM

I'm watching ES here for an entry and I see a quick spike back up to the day's high and it could continue higher from here but it would leave a correction to the bounce that is short in both time and price so I'd prefer to see another leg down for a slightly larger correction.

A slightly larger pullback would call for the 2nd leg down to be 162% of the 1st leg down (expanded flat correction) which is at 1317.25. A 50% retracement of this afternoon's bounce is at 1317.75. So if it drops back down now, watch that zone for support and an entry point for a long play.

One other possibility is for a minor new high to finish a 5-wave move up from today's low (could be getting it as I type) and then we'll get a pulback correction into tomorrow morning for a better opportunity for the next long play.

Jeff Bailey : 3/4/2008 3:43:47 PM

DIA $122.36 -0.11% ... see early post.

VXO.X 28.28 -0.07% ...

Linda Piazza : 3/4/2008 3:43:11 PM

The SPX pushed up through that 1326.77 area while I typed.

Linda Piazza : 3/4/2008 3:42:52 PM

The 23.6 retracement of the decline from the 2/27 high to today's low is at about 1326.77 and it's apparently causing some stalling. That's pretty natural and normal. However, I do note that the 38.2% and 50% retracements, also places where we could anticipate possible stalling, are at about 1338.56 and 1346.67, in the right-shoulder zone I mentioned for the potential H&S. Even more reason to suspect that there could be stalling in that zone. That doesn't mean that there will be--if this is "it" for a couple of weeks and markets are just going to gain, gain, gain, nothing is going to stop gains. Just be aware of the possibilities.

Jeff Bailey : 3/4/2008 3:42:41 PM

VIX.X 25.92 -1.06% ... MONTHLY Pivot.

Jeff Bailey : 3/4/2008 3:40:43 PM

Semiconductor HOLDRs (SMH) $28.62 +0.77% ... set to test MONTHLY Pivot again. Did this yesterday at $28.66 and failed.

Linda Piazza : 3/4/2008 3:34:41 PM

The SPX's 30-minute 9-ema is now at 1317.77. The OEX's, 607.10.

Keene Little : 3/4/2008 3:32:42 PM

A pullback that retraces 38%-62% of the bounce off the lows should be a good setup for the next long play, especially if it's a clear 3-wave pullback (on the 3-min chart) with equality between the two legs down.

Linda Piazza : 3/4/2008 3:31:43 PM

It may seem contradictory that all day I've been suggesting that it's possible that we'll see a doji-type day or even a gain and now, as soon as that gain appears to be a possibility, I'm already warning about the possibility of a head-and-shoulder formation. It's not, though. I've always thought that declines are going to be punctuated by sometimes rapid gains. I'm also not saying that the head-and-shoulders is a given, or that it will confirm if it sets up or reach some predicted target if it does. However, as technical traders, our first goal is to see patterns, think about what they might mean for our trade and make what-if plans. If you're bullish and you bought this afternoon and you're celebrating your bravery, would it change your mind about how to treat a test of the 1337-1347 zone if you thought such a test might possible result in a day or maybe two of consolidation before you even knew which way things would be headed next? As options traders, we have to factor our impressions of the time frame in with other decisions. Maybe if you're in March calls and you intended a trade of a day or two, so that gains in price would outrun the theta loss, you might have a plan that includes what happens if prices run up to some level and hang there for a couple of days, while theta-related losses start eating away at your gains.

Linda Piazza : 3/4/2008 3:25:45 PM

My charting service and the feed I use is great in many respects. It's far cheaper than my previous one and the feed remains reliable, no matter what else is happening. I'm able to get more than enough of the indicators I like to use and some I don't even pretend to know how to us.

It has one drawback, however. In the version I use, I get only 10 days of intraday data. And now, as I'm looking at those 10 days of data, I see what I think might be a potential head-and-shoulder setting up from about 2/20 through now, with the left shoulder forming from 2/20 to about 2/22, the head from about 2/22 through today, and the right-shoulder rise perhaps beginning now. Since I can't see the intraday moves that immediately preceded it, it's possible I'm mistaken. However, if I'm not, symmetry with the left shoulder and the (I think) descending trendline would suggest that the right-shoulder level would be somewhere between 1337-1347. That may mean that we'll see a zoom that carries through to that level, either this afternoon or more likely tomorrow morning and then some choppy consolidation for a day or so and then we see if the thing is invalidated or if the SPX begins rounding over into a right shoulder. Just consider the possibilities and what it would mean for your trade if it developed, making some what-if plans just in case.

Jeff Bailey : 3/4/2008 3:25:14 PM

iShares Russell 2000 (IWM) $68.00 -0.32% ... after backtest of conventional 19.1%.

Keene Little : 3/4/2008 3:21:00 PM

Bonds have sold off sharply this afternoon. Sure looks like classic rotation going on here.

Keene Little : 3/4/2008 3:19:14 PM

If you're long the market and want to carry it into tomorrow, I would use a break below today's low for your stop. It's always riskier holding overnight but the possibility is for a gap up move tomorrow (to try to get traders, long and short, chasing it higher at the open). You can lower your risk a little, and certainly know what your max loss will be, by buying a couple of slightly OTM March call options to take advantage of what should be at least a 1-2 day rally ahead of us.

Jeff Bailey : 3/4/2008 3:15:15 PM

03:00 Internals found at this Link

Linda Piazza : 3/4/2008 3:13:18 PM

And there you go. If the SPX were to end the day anywhere near the current level or above it, it will have created either a doji-type day or an actual gain, depending on where exactly it ended. Remember that a quick advance can be as quickly reversed, but do make sure you protect bearish profits if your stops haven't already been hit. The SPX is at 1322.93 as I type, now challenging that 1316-1322-ish level from below. Bulls don't want to see it pushed back below the 30-minute 9-ema now at about 1316.70.

Keene Little : 3/4/2008 3:09:03 PM

Techs are leading the way--NDX is the first one into the green.

Keene Little : 3/4/2008 3:07:35 PM

The DOW and SPX, as expected, have now climbed above the mid-day highs. Maybe we'll even get a run back into the green before the close today.

Keene Little : 3/4/2008 3:06:24 PM

We've now got a little impulsive climb off the lows so the next pullback will be a buying opportunity.

Linda Piazza : 3/4/2008 3:04:19 PM

The closing of the bond market sometimes sees a change in tenor of trading. Either a bounce begins and gains steam or the selling gets more vicious. So far, there's nothing big happening, but remain watchful.

Linda Piazza : 3/4/2008 3:02:39 PM

Just about all the indices I'm scanning (SPX, OEX, MID, RUT, etc.) are all showing the same Keltner setup. All are finding resistance on 30-minute closes at their 30-minute 9-ema's and further resistance at the Keltner lines that are now near the highs reached during the just completed 30-minute periods. Institutional action, distributing on each pop up to and through those averages? Bears, be wary when it stops being resistance as that may mean the distribution is finished for now. Then a pop gets bigger, surprising shorts who join the bottom-fishers in buying and sending equities higher.

Linda Piazza : 3/4/2008 2:58:28 PM

Heading into the last few minutes of this 30-minute period, the SPX is at the 30-minute 9-ema, now near 1315.65. It pierced the moving average during the period, but it's going to be touch and go as to whether it clears it on the close. If It does, it's got (now confirmed) potential resistance at 1318.40, and that will be the next hurdle. Sometime, someday, we're going to see a big surge that clears all hurdles, but will it be today?

Jeff Bailey : 3/4/2008 2:53:43 PM

Swing trade call alert! ... for one (1) of the Dow Diamonds DIA April $123 Calls (DAW-DS) at the offer of $3.20.

DIA $121.22 -1.04% ...

Linda Piazza : 3/4/2008 2:52:26 PM

Bulls want to see the VIX drop below about 26.50 and maintain values below that. Doing so will erase its breakout status and start turning its 15-minute 9-ema lower. One reason that I wasn't all that worried about the markets before having to shut down my computer was the VIX's outlook on the Keltner charts. It didn't look as strong as it had Friday and Monday, but we have to see if this support will hold. The VIX is at 26.75 as I type.

Jeff Bailey : 3/4/2008 2:50:10 PM

TOL $21.05 +2.23% ...

Jeff Bailey : 3/4/2008 2:49:57 PM

MBIA $13.00 +3.01% ...

Jeff Bailey : 3/4/2008 2:49:42 PM

ABK $10.89 +9.45% ...

Jeff Bailey : 3/4/2008 2:49:05 PM

10-year up 2.4 bp ... not as "defensive" as a bear would like.

Keene Little : 3/4/2008 2:48:46 PM

Note that TNX is rallying off today's mid-day low as well (bonds have sold off some) and spiked up a bit at the same time equities shot a little higher. It's all small stuff but it's a start. Now I'm watching the form of the bounce to see if it becomes impulsive (which would signal a trend change).

Jeff Bailey : 3/4/2008 2:48:22 PM

DIA Option Chain at 02:44:21 PM EST Link ... Sorted by CBOE volume.

Keene Little : 3/4/2008 2:45:43 PM

There's the break of the downtrend lines so it's looking good for a bottom today.

Linda Piazza : 3/4/2008 2:44:40 PM

The OEX's 30-minute 9-ema is now at 605.72, and it's been resistance on 30-minute closes for the OEX today and mostly since last Wednesday, too. So, watch for the possibility that it will hold again on 30-minute closes. Bears, though, keep updating those profit-protecting plans. As I said earlier and as I see Keene has been saying, too, one of these bounces is going to hold one time. I've been thinking all day today that if bears don't drive the indices too deep, bulls are going to decide somewhere along the way that "the" bottom has been reached and start buying. I still wouldn't be shocked to get either a doji-type day or even a gain. I'm not promising it, but I certainly would be guarding against that possibility if I had a lot of unrealized bearish gains.

Linda Piazza : 3/4/2008 2:41:51 PM

The SPX's 30-minute 9-ema has been a better benchmark today than has the 15-minute version. There have been some minor breaks above the 15-minute version, only to be reversed in the next 15-minute period, but there have been no 30-minute closes above the 30-minute version today and precious few since last Wednesday. That moving average is now at 1314.43. So, that's the first place you should look for potential resistance on 30-minute closes if the SPX should continue the present bounce attempt, and, if it's not there and the SPX manages to sustain values above there, it's signaling a first minor change in tenor. It may not last long, as there have been others, but it's signaling an attempt, at least, and bears would be forewarned to guard their profits.

Linda Piazza : 3/4/2008 2:38:44 PM

I'm back online, trying to catch up with what I've missed. I see that the advance/decline line dropped to the -1900 target that had been a possibility at the time of my 9:37:35 post about it. In fact, it's dropped a little lower, below support. It's at -1964 as I type. The advdec line sometimes overruns resistance or support a bit, but it needs to climb above and sustain values above about -1780 before it looks better on a Keltner basis. It is mostly finding resistance on bounces at the 15-minute 9-ema and that needs to change before there's even a minor improvement in the advdec line's tenor and, thus, in the SPX's and other indices.

Keene Little : 3/4/2008 2:36:26 PM

A push back above SPX 1314/DOW 12100 would suggest, from a pattern perspective, that we've seen the bottom. A break of the downtrend line from the mid-day high, and especially a successful retest of it (may not get the retest) would signal that long is the place to be.

A trend line along the lows since mid day would be a good place to watch for support if we get another new low (it could do a brief throw-under) Because of the bearish potential you'll want to keep your stop fairly tight but I like the setup here to be looking for a long play to set up.

Jeff Bailey : 3/4/2008 2:35:07 PM

NYMEX Crude Closes -2.71 at $99.74/Bbl

Keene Little : 3/4/2008 2:19:33 PM

The overlapping highs and lows in the move down since mid-day is a typical ending pattern. I wouldn't be at all surprised to see a rally above the mid-day highs before the end of the day. The opposite interpretation of the price pattern is very bearish and it says we're going to drop like a stone into the close. The bullish divergences have me leaning into the bullish camp right now.

Keene Little : 3/4/2008 2:11:27 PM

The 10-year yield (TNX) looks similar to equities right now--it's looking like a bottom is getting put in today. I've been looking for a larger correction (at a minimum) of the June-January decline and as shown in dark red, another leg up to match the one off the January low would achieve equality at 41.79 (that projection will be lower if we haven't seen the low yet today). Link

I think 4.3% makes for a good upside target because of the previous 4th wave at that level, and 50% retracement. But first things first--we need to see a reversal in bonds (to selling which could support an equity rally as money rotates out of bonds into stocks) to get some clues as to what could be next for yields.

Jeff Bailey : 3/4/2008 2:05:16 PM

PBR $110.53 -5.96% ... slips below 38.2% conventional.

Jeff Bailey : 3/4/2008 2:04:44 PM

Petroleo Brasileiro CFO: Output Capacity To Rise By 500,000 B/D in 2008

Keene Little : 3/4/2008 1:54:04 PM

There hasn't been much of a change to the CME chart since I last posted an update (Feb 26th: Link ), as you can in today's updated chart: Link

Still looking for a little lower to potential support near 465 and then a bounce back up to its downtrend line from December. If it were to drop much below 450 then there's a more bearish way to look at the price pattern that calls for a downside projection near 357.

Keene Little : 3/4/2008 1:43:29 PM

This DOW 60-min chart shows what could play out the next 1-2 weeks. First thing we need to see is a bottom put in and I think we should be close (however, a break below 12K that stays there would clearly be more bearish). We're getting the minor new low I thought we'd see so now we'll find out if it stays as only a minor new low. Link

The dark red count is the more bearish and it calls for a bounce back up to the broken uptrend line from the January low, perhaps up to the 12380 area by Thursday, and then tip back over for a strong decline. The pink count is the one that is looking for another rally leg to match the one off the January low, back up to 13200.

Jane Fox : 3/4/2008 1:29:25 PM

Crude is now taking its needed break and testing the very obvious $100/bl resistance turned support. Link

Keene Little : 3/4/2008 1:26:54 PM

We've got bullish divergences showing up on most time frames now so the downside momentum is certainly dissipating. We might see a final new minor low but it doesn't have to happen. Regardless, I'd have stops on short plays tucked in close now. Any push back above this morning's mid-day bounce would suggest we've seen the lows and I'll be looking for at least a 2-day rally to correct the decline from last week.

Keene Little : 3/4/2008 1:15:52 PM

Doing the same projections on SPX as I did for the DOW shows a downside Fib projection for two equal legs down from Feb 1st at 1309. If it were then to rally back up and achieve two equal legs up from the January low we get an upside projection to 1435 and again at its downtrend line from October. The 1435 level crosses that downtrend line on opex Friday, Mar 21st.

This makes for a very interesting, and bullish, setup from here. At this point I consider this 2-week bullish potential to have an equal chance as a breakdown from the next bounce (to correct the decline from last week's high).

The other interesting thing about a March high for the bounce is that it would maintain the market symmetry that I've discussed a couple of times--the July-October 2002 lows and March 2003 retest of the lows and then the July-October 2007 highs and now a potential retest of the high in March 2008. I like symmetry and would like to see this short term bullish scenario play out.

Jeff Bailey : 3/4/2008 1:15:22 PM

NYSE NL juuuust exceeding yesterday's total.

NASDAQ not there yet.

Jeff Bailey : 3/4/2008 1:14:49 PM

01:00 Internals at this Link

Yesterday's Internals Link

Jeff Bailey : 3/4/2008 1:00:27 PM

A gap fill on the TNX.X might just line up with DIA's 1/22/08 close.

Jeff Bailey : 3/4/2008 12:59:33 PM

DIA and TNX.X both tick below 19.1% conventionals.

Jeff Bailey : 3/4/2008 12:56:46 PM

Monitoring 10-year YIELD closely ... has a gap to fill.

Keene Little : 3/4/2008 12:56:32 PM

There is one more bullish possibility for this market (for the next couple of weeks only) that needs to be considered. Using the DOW, the move since the Feb 1st high could be an a-b-c consolidation in preparation for another rally leg to match the one off the January low. The Fib projection for the end of that a-b-c consolidation is at DOW 12058 (today's low so far is 12078). Link

The dark red wave count calls for a continuation below the January low (although first a bounce to correct the decline from last week's high should be expected soon). The pink count calls for a rally leg up to the 13200 area (two equal legs up from January 22nd which lands it right on top of the 62% retracement of the Oct-Jan decline.

The consolidation around the longer term uptrend line from October 2002 through the July 2006 low could certainly support a rally off it. Conversely, a break below it that holds below it now, could trigger many sell stops. At this point I would say the bears control the market and it takes a break above the last high at 12757 to reverse this (with a break above 12500 a heads up that it could happen).

Jeff Bailey : 3/4/2008 12:56:11 PM

Majors starting to look "squared up" on 5DyNet% ...

DIA -3.90%

SPY -3.77%

QQQQ -4.07%

IWM -4.39%

Jeff Bailey : 3/4/2008 12:35:12 PM

Applied Materials (AMAT) $19.98 +5.82% ... probes the $20 strike again.

Jeff Bailey : 3/4/2008 12:27:08 PM

Russia Threatens Further Cuts In Ukraine Gas Dispute (update) DJ- Russia's state gas monopoly OAO Gazprom (GAZP.RS) Tuesday warned Ukraine it could further reduce gas supplies if talks don't resume in a dispute over unpaid debts, a spokesman for the company said.

"If the Ukrainian side does not return to the negotiating table, I do not exclude a further reduction in supplies," Gazprom spokesman Sergei Kupriyanov said on state television.

Russia reduced gas supplies to Ukraine by an additional quarter on Tuesday after a 25% cut in a debt dispute, a spokesman for Russian gas monopoly OAO Gazprom (GAZP.RS) said on state television.

"Supplies of gas for Ukrainian consumers...have been reduced by an additional 25 percent," the spokesman, Sergei Kupriyanov, told reporters.

Jane Fox : 3/4/2008 12:21:36 PM

What I am looking for now is the daily jtHMA to turn red then once the 120/60 minute charts turn back green it is time to add to your long Gold positions. Link

Jane Fox : 3/4/2008 12:18:54 PM

Finally Gold is starting its needed retracement. This market can move very fast and usually overshoots any kind of projections but I think 930.00 may be a good spot to add to your long positions. Link

Keene Little : 3/4/2008 12:12:45 PM

The pattern to the downside for the broader indices can now be considered complete so stay aware of the potential for a reversal to the upside.

Keene Little : 3/4/2008 12:11:12 PM

GOOG supports the idea that the market could be ready for a bounce as well. Some bullish divergences are showing up at its new lows and the wave count supports a bounce from here that could get it back above 500, or higher: Link

Jeff Bailey : 3/4/2008 12:05:00 PM

Sector Losers ... Gold Bugs -3.76%, Broker/Dealers -3.69%, Regional Banks -2.79%, Money Center Banks -2.53%, Oil Producers -2.18%

Jeff Bailey : 3/4/2008 12:03:23 PM

Sector Winners ... Utilities +1.30%, Healthcare Providers +0.84%, Home Construction +0.57%

Keene Little : 3/4/2008 12:02:10 PM

It's looking like we should get the new low in equities and if SPX is to make it down to its first Fib target of 1307 (doesn't necessarily have to get there) that could drive the DOW closer to 12K for a millenial test.

Keene Little : 3/4/2008 11:56:11 AM

From a short term EW pattern perspective I'm having my doubts about a top in gold but the daily chart says look out below. The break above the rising wedge pattern followed by a collapse back inside the pattern today is a sell signal (YG, April, daily chart): Link

Note the bearish divergences at the new highs against RSI since the November high. This helps confirm the bearish rising wedge pattern is probably the correct interpretation. Bearish confirmation doesn't come until it breaks below its Feb 26th low near 928.

Jeff Bailey : 3/4/2008 11:51:04 AM

With commodity prices as they are, PRODUCTIVITY measures will be CLOSELY monitored by the Fed.

Jeff Bailey : 3/4/2008 11:50:32 AM

DJ Survey: US Final 4Q Productivity Seen +1.8%

Keene Little : 3/4/2008 11:47:41 AM

If the current bounce stops short of this morning's early low and then drops back down to a new low it will create a 5-wave move down from yesterday's close. That's when the move down from Feb 27th could be called complete so watch a new low carefully (assuming we'll get one) as an opportunity to take profits on your short play (or at least cinch your stop a little tighter) and if we're seeing some bullish divergences it could be a good time to nibble on a long play. I'll watch for a potential setup in that regard. For now stay short.

Jeff Bailey : 3/4/2008 11:43:09 AM

SWC $20.94 -5.50% ...

PAL $8.52 -1.38% ...

Jeff Bailey : 3/4/2008 11:42:29 AM

June Palladium (pa08m) $574.00 -1.99% ... backfills yesterday's gap higher.

Keene Little : 3/4/2008 11:34:45 AM

The DOW 30-min chart shows a parallel down-channel for price action since the Feb 27th high and price has been finding support at the mid line of the channel since yesterday's bounce above it. The wave count is a bit funky looking but my best guess is that we're into the 5th wave of the move down from Feb 27th and should therefore be expecting a larger bounce soon: Link

Two Fib projections for the downside that I'll be watching are at 12045 (5th wave equals the 1st wave and at the mid line for today) and then 11910 (5th wave equals 162% of the 1st wave and at the bottom of the channel later today. Obviously the bulls need to break out the top of the channel to let us know this leg down is finished and that we're into the larger correction of it.

Similar projections for SPX give me downside targets of 1307 and then 1292. NDX's pattern is a bit harder to decipher since the bounces have been so small. A downtrend line along the highs since Feb 29th, currently near 1725, would be a good heads up that something more bullish has started. That would mean a new daily high.

Linda Piazza : 3/4/2008 11:32:21 AM

I'm having some computer difficulties that are going to require me to shut down everything for an hour or two. Keep a close watch on your profits if you're in bearish positions. At some point, some day, buyers are going to decide that a test has come close enough to the January lows and will send everything higher again.

Linda Piazza : 3/4/2008 11:27:24 AM

As I suggested in my 11:10:07 post, SPX bears should be careful now that the SPX approached and tested the 1310-1312 historical support. We all know that when prices start cascading lower, trying to determine so-called support can appear downright silly. However, my job is still to tell you when it might exist.

Linda Piazza : 3/4/2008 11:23:07 AM

The MID has hit its potential downside target (30-minute chart), with that target now at 777.03 and the MID reaching 776.91. The MID is at 779.08 as I type.

What's the significance of this? Maybe none, but the MID has tended to lead over the last week both to the upside and the downside. This potential target and potential support on 30-minute closes is analogous to the SPX's 1309.81 level. It might pay, now that the MID has hit its target and potential support, to keep it on the radar screen to see if the current bounce attempt is sustained or soon falters, particularly at about 781.10-781.40. That might give you some slight insight into what the SPX might be more likely to do.

Jeff Bailey : 3/4/2008 11:22:32 AM

USO $79.80 -1.86% ... retraces 19.1% of recent rise from 2/07/08 low.

Jeff Bailey : 3/4/2008 11:19:01 AM

Surprised EWJ wasn't leading the way via USD/JPY

Jeff Bailey : 3/4/2008 11:18:06 AM

SPY $131.66 -1.37% ... 19.1% conventional $132.02 (see Monday's Wrap)

Jeff Bailey : 3/4/2008 11:17:02 AM

iShares Japan (EWJ) $12.19 -2.63% ... testing 19.1% conventional.

Jeff Bailey : 3/4/2008 11:16:06 AM

11:00 Internals found at this Link

Linda Piazza : 3/4/2008 11:10:07 AM

The SPX is below the support zone that has been holding since January 23, and that's obviously not a good thing. It obviously brings up the specter of another drop down to test the 1/22 and 1/23 lows. At this point, I don't know whether that's likely to happen but if you're in bearish positions, your job is now easy. You just follow the SPX lower with your stops an account-appropriate level above the SPX's current position. Because of the potential Keltner support near 1309 and historical support near 1310-1312, I'd be careful through here to make sure I didn't let a bounce, if one got started, get too big and turn my profits into loses, but, other than that, you're good.

Jeff Bailey : 3/4/2008 11:08:55 AM

Swing trade put adjust/lower targe alert! ... for the Dynamic Materials BOOM Mar $50 Put (QCB-OJ) to $50.30 (from raised $51.10).

BOOM $53.40 -4.67% ...

Keene Little : 3/4/2008 11:08:44 AM

At yesterday's close I showed the SPX 5-min chart with the setup for a potential kiss goodbye retest of the broken uptrend line. Unfortunately today started with a big gap down and the setup required holding a short position overnight (a risky venture with this market) but you can see how well it worked: Link

Linda Piazza : 3/4/2008 11:03:46 AM

I'm also noticing that the USDJPY has not yet violated yesterday's overnight 102.59 low, although it looks to be headed down toward a retest of it. It's at 102.70 as I type, so we can watch to see if it finds support just below or breaks through that previous low.

Jeff Bailey : 3/4/2008 11:02:57 AM

YM 12,100 ... WKLY S1.

Linda Piazza : 3/4/2008 11:02:09 AM

The VIX has not yet established a new uptrend. It's still chopping around its 30-minute 9-ema. It's still below the day's high and well below yesterday's high, but let's keep a close watch on it.

Linda Piazza : 3/4/2008 11:00:49 AM

SPX support is obviously not holding. It's at 1317.45 on 15-minute closes, so it may not be violated by much on this 15-minute close. However, that support appears to be weakening, as stated previously. I'm rolling up to a 30-minute chart for another potential support level, and that's at 1309.60. That may be a possibility if the SPX can't bounce.

Jeff Bailey : 3/4/2008 11:00:33 AM

iShares Brazil (EWZ) $84.05 -1.99% ... retraces 19.1% of its recent 1/23/08 to 2/28/08 rise.

Keene Little : 3/4/2008 10:59:02 AM

While it's only a marginal break so far, the break below SPX 1317 negates the sideways triangle pattern which means the bullish potential out of the triangle has been negated. We're now into the more bearish wave pattern and while we could see soon see a bounce to correct the decline from Feb 27th (but not yet), the bearish pattern has been confirmed.

Jane Fox : 3/4/2008 10:56:45 AM

SPX is now breaking support at 1320 but remember we need a close below 1320 to take any bullish scenarios off the table.

Jeff Bailey : 3/4/2008 10:53:26 AM

US Oil Fund (USO) $81.08 -0.29% ...

Jeff Bailey : 3/4/2008 10:52:46 AM

White House Urges OPEC To Keep Oil Markets "Well Supplied"

DJ- The White House urged the Organization of Petroleum Exporting Countries Tuesday to keep world markets "well supplied" ahead of a key OPEC decision on output levels.

Spokeswoman Dana Perino declined to comment specifically until OPEC formally announces a decision, with record oil prices sparking consumer calls for increased production.

But she reiterated past US appeals that "oil producing countries should work to keep the markets well supplied, and right now we have extremely high demand and tight supply, it's worldwide demand."

Senior OPEC representatives began arriving in Vienna, the group's headquarters, on Monday ahead of a ministerial meeting Wednesday and indicated output levels were to remain on hold as supplies were sufficient.

OPEC fears that a hike in output would send oil prices tumbling, thus reducing the income of its 13 members, which include the world's biggest crude producer Saudi Arabia, as well as Iran, Nigeria and Venezuela.

Jane Fox : 3/4/2008 10:50:55 AM

LONDON (MarketWatch) -- The Bank of Canada on Tuesday cut rates by a half-point, as central banks around the world try to insulate themselves from the struggling U.S. economy.

The move by the Bank of Canada comes only hours after the Reserve Bank of Australia hiked rates, but issued a cautious economic outlook, and after a leading European finance minister expressed concerns over the economy.

The rate cut, to 3.5%, was steeper than the quarter-point rate reduction some economists had expected. The Canadian central bank blamed the U.S. economy for the rate fall.

Jeff Bailey : 3/4/2008 10:49:39 AM

PetroBrasiliero Expects To Hit More Oil In Brazil's Presalt Area

PBR $114.27 -2.78% ...

Jane Fox : 3/4/2008 10:49:18 AM

NDX is testing its pervious day lows (PDL).
Russell 2000 is testing its PDLs
DOW has broken through its PDLs
S&P has broken through its PDLS Link

Linda Piazza : 3/4/2008 10:42:14 AM

The SPX has potential Keltner support at 1317-1318.20 on 15-minute closes. As well, it has historical support at 1316-1322.

Linda Piazza : 3/4/2008 10:34:03 AM

Declines like today's are good times to check your bear call credit spreads and see if you can exit them for a pittance, removing that risk, if you're so inclined. I was just able to close out an APR 810/820 bear call spread, for example, capturing 60% of my original credit. If the markets bounce big in time enough, I'll reestablish the spread. I've been out of my March spreads for a while, but those especially, depending on where you have them, might be cheap to exit this morning.

Jane Fox : 3/4/2008 10:30:57 AM

I think Crude is ready for a retracement and if it does then we have the age old question to where will it retrace? With a straight up rally like this it is hard to find your levels of support so I turn to Fib numbers.

Obviously the $100/bl was resistance and should be support on the way down but sometimes those levels are just too obvious and they do not hold up. Therefore if it does not I will be looking for the 38.20% level at $97.00/bl to be support.

At the gym yesterday a fellow pulled me aside because he knows what I do for a living and proceeded to tell me that he bought the double short ETF for Oil and Gas because he thought crude was too high. I asked him what was his "uncle" point , the place where the market tells him he was wrong. He really didn't know what I was talking about. He said he would hold on to the position until he made money on it because at some point he would. Maybe he will. Link

Keene Little : 3/4/2008 10:26:35 AM

The banks (BIX) are getting close to testing their January lows. Needless to say it will be an important test and should support break, follow the money.

Linda Piazza : 3/4/2008 10:24:59 AM

The VIX's 30-minute 9-ema is now at 26.63. Equity bulls want to see the VIX stay below that, but, more than that, they want to see it drop below about 26.00 and stay there. That would erase the VIX's breakout status on one chart, a breakout status it's now maintained since Friday morning. The VIX is at 26.32 as I type.

Jeff Bailey : 3/4/2008 10:17:07 AM


DJ- International Council of Shopping Centers-UBS Retail sales index falls .6% in the week to March 1 from its level a week before, as consumer spending continues to struggle in a tough economic environment.

Jeff Bailey : 3/4/2008 10:15:08 AM


DJ- Information-technology provider's 4Q net rises 39% to $50.2 million, or 92c a share, as strong gains in Europe offset a profit decline in Americas. Revenue increases 5.9% to $6.48 billion.

TECD $34.57 +4.25% ...

Keene Little : 3/4/2008 10:15:04 AM

They're trying to get this market to bounce but so far it continues to struggle. I'm not seeing much evidence of anything bullish in the bounce so be careful if trying to buy the low--right now it's looking like the bounce will fail and new lows could trigger a bunch of sell stops.

Jeff Bailey : 3/4/2008 10:12:48 AM


DJ- The commander of U.S. forces in the Middle East Adm. William Fallon says there has been a dramatic decrease of violence in Iraq, but such gains are not irreversible. Adds multiple strains of violent extremism still threat to the country.

Jeff Bailey : 3/4/2008 10:11:57 AM


DJ- Bank of Canada cut its benchmark overnight rate 50 basis points, the first cut of that size since November 2001, and says further reductions will likely be needed in face of 'intensifying' risks from the U.S. economic slowdown.

Jane Fox : 3/4/2008 10:10:17 AM

More than $21 billion of initial public offerings were cancelled by issuers through the end of February, nearly double the volume of IPOs that made it to the markets, according to Thomson Financial.

Jeff Bailey : 3/4/2008 10:06:07 AM


DJ- Banking giant may lay off up to 10% of its work force this year, CNBC's Charlie Gasparino reports, saying the number of job cuts is going to be much higher than previously stated, in the range of 30,000.

C $22.15 -4.07% ...

Linda Piazza : 3/4/2008 10:04:20 AM

The SPX's 15-minute 9-ema, now potential resistance, is at 1325.87. The OEX's, 610.64.

Jane Fox : 3/4/2008 10:00:28 AM

Markets are now making new daily highs so the VIX seems to be winning. Notice how the VIX and AD ratio (top chart) are in sync. Link

Keene Little : 3/4/2008 9:57:44 AM

All key levels are still holding this morning and now we're getting a decent little bounce. This is a tough spot here--we could see SPX bounce 10 points and not mean anything in particular. But obviously if it bounces that much from here then watch for price behavior at gap closure.

Linda Piazza : 3/4/2008 9:56:30 AM

Jane and I are following each other with posts about the internals. That just emphasizes the importance of watching these internals. Jane has always given us good insights into what's happening. The Keltner outlook just provides another way of looking at these indicators, an little addition to Jane's great work.

Linda Piazza : 3/4/2008 9:54:37 AM

The VIX hit Keltner resistance this morning, with that resistance now at about 27.22, and it dropped sharply away from that resistance. It's at 26.61 as I typed. The VIX doesn't adhere as well to Keltner boundaries as do some of the other entities we watch, but the channels at least give us some sort of guidelines to watch. It's surprising, for example, to see how important the 30-minute 9-ema can be for the VIX. Right now, that average is at 26.74 and the VIX is below it. However, after spending the period from midday on Wednesay, 2/27 to midday yesterday bouncing from that 30-minute 9-ema, the VIX has since been chopping across a flattened version, with each little jit and jot above or below it not meaning much. What does that signal? When it's an equity or equity index behaving that way, it means that the previous trend (up, for the VIX, and so, down for equities) is ended and a period of disorganization (for the VIX, and therefore, perhaps for equities, too) has been entered. Until a new trend is established (perhaps a trend in which the VIX bounces down from tests of the 30-minute 9-ema?), it's going to be difficult to predict next direction. So, those in bearish equity positions want the VIX to bounce back above that average and stay above it long enough to turn the average higher again. Equity bulls want the VIX to stay below it, as it is as I type, and to move down sharply enough that the average is turned down and begins to provide resistance on 30-minute closes.

Jane Fox : 3/4/2008 9:49:56 AM

VIX is falling and making new daily lows so it is bullish and in conflict with the bearish AD line and volume. The result is exactly what all day traders love (tongue in check) , choppy markets,

Linda Piazza : 3/4/2008 9:46:42 AM

So far, the SPX's potential support on 15-minute closes, now at 1318.29 and 1320.50, is holding through this first 15-minute period. This doesn't yet prompt conviction that the second consolidation-type candle or an actual gain will be produced today, but it certainly doesn't erase the possibility, either. Not yet. That potential Keltner support is looking somewhat weakened, but it's backed by a historical support zone from about 1316.25-1322, too, that might help. We'll see.

Jane Fox : 3/4/2008 9:46:12 AM

SPX is giving support a very good test this morning. I still think it will hold up and that we will, at a minimum, get a bounce in reaction to the selloff we saw last week. Unfortunately though the internals are not agreeing with me so far today, the AD line is a bearish -1343. Link

Linda Piazza : 3/4/2008 9:37:35 AM

Keltner outlook on the advdec line: There's potential support for the advdec line on 15-minute closes in the -1300 area. The advdec is currently below that, but the first 15-minute period has not concluded. Potentially stronger support, support that likely could be tested, is at about -1900. The advdec line is at -1544 as I type.

Linda Piazza : 3/4/2008 9:35:20 AM

The OEX is at potential Keltner support on 15-minute closes, at 608.12-609.00.

Linda Piazza : 3/4/2008 9:34:47 AM

SPX potential Keltner support is now at 1320.40-1320.59 on 15-minute closes. This is of course short-term support and it's not going to hold back a concerted push lower, but remember that we've also got the weekly 200-ema just below the SPX's current 1322.25 level.

Keene Little : 3/4/2008 9:27:48 AM

As Jane noted, equity futures tanked after an initial bounce attempt following the open of the European markets. Another bounce attempt from the 6:30 AM low got rejected and futures are near their early morning lows. I had shown charts of ES with all-hours yesterday and referenced the fact that the climb off the overnight low was very choppy and looked corrective. This morning's low is a test of the low so far--the 1320 area is critical support and of course 1317 (cash) is a key level.

NDX 1715 and DOW 12070 are their key levels and it's looking like is going to try again this morning to test that level. The DOW's level, which is its Feb 11th low, is a little safer this morning, so far.

Jane Fox : 3/4/2008 9:41:53 AM

AT this point I usually like post a chart of Gold and CRude but I think taking a look at the S&P cash market is due.

I see support at 1320 held up yesterday. Yesterday I stated that I did not think we would make new daily lows and if we did they would not stick. Shortly after that statement the markets did indeed make new daily lows but they did not stick and immediately went into rally mode. Sometimes I get a few things right. Link

Linda Piazza : 3/4/2008 9:20:06 AM

If the SPX behaves this morning in accordance with futures' action, it will drop back to test or perhaps even exceed slightly yesterday's 1320.04 low. The SPX does not always behave in accordance with futures' action, although it does more often lately than at some other times I've seen. In normal times, the day after a doji like yesterday's is produced, another consolidation-type candle or even a gain is the most likely next event, but as I warned late yesterday and have warned often lately, these are not normal times. We've seen a number of such candles and potential reversal signals followed by strong down days. Take a look at the action following the 1/03 candle, a similar setup, as an example of what can happen. You do not want to hold onto a losing position bullish position longer than you should with such examples apparent in the not-so-distant past.

However, as dire as futures currently look, that consolidation or gain day remains a possibility, which means that there could be a bounce after a dip to retest support. The SPX has been hammering out historical support from about 1316.75-1322 since the end of January. If tested, it's possible that support zone will hold again. So, those in bearish positions need to be aware of the potential support zone in that area. When looking at a 15-minute Keltner chart, tentative support might be found at 1320.25-1321.17 on 15-minute closes. Don't count on it holding but certainly have your profit-protecting plans in mind for another test of that zone, if it comes.

Jane Fox : 3/4/2008 9:18:39 AM

The markets did not like the news out from Intel and did not like what Bernanke had to say either. Mind you though they were doing just fine until around 4:00 and the INTC news had already hit your desktop by then. Also Bernanke didn't start jawboning until 9:00 so what spooked the markets at 4:00? Not sure but all I know is something did and both the Dow (YM) and S&P (ES) futures broke their previous day lows. Link

Jane Fox : 3/4/2008 9:11:05 AM

WASHINGTON (MarketWatch) -- The mortgage and financial-services industry will have to use fresh thinking to reduce preventable foreclosures, said Federal Reserve Board Chairman Ben Bernanke on Tuesday.

A willingness to consider new ideas has been a hallmark of the Bernanke Fed in the months since the financial market turmoil began last summer.

For instance, the central bank has begun novel auctions of liquidity to get around the unwillingness of banks to borrow at the Fed's discount window.

In a speech to community bankers in Orlando, Fla., Bernanke urged the banking industry to consider new approaches.

"Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping but more can, and should, be done," Bernanke said.

Jane Fox : 3/4/2008 9:08:40 AM

Intel (INTC:Intel Corporation News, chart, profile, more Last: 20.01+0.04+0.20% 4:00pm 03/03/2008 Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: INTC fell 3% in pre-open action after it lowered its gross-margin outlook for the current quarter due to lower NAND flash-memory chip prices than expected.

Scott Geels, an analyst at Bernstein Research in London, said the chip industry is headed for the second straight sub-seasonal quarter due to weak pricing, as he expects first-quarter revenue to fall 4% to 5% from fourth-quarter levels.

Jane Fox : 3/4/2008 9:07:44 AM

The Reserve Bank of Australia lifted its benchmark lending rate by a quarter-point to 7.25%, while the Bank of Canada is expected to cut rates by at least a quarter-point.

Jane Fox : 3/4/2008 9:07:17 AM

Federal Reserve Chairman Ben Bernanke is due to deliver a speech at 9 a.m. Eastern on the subject of the subprime crisis and preventing foreclosures. Bernanke will be joined on the speaking circuit by several of his Fed peers.

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