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Jeff Bailey : 3/13/2008 2:29:54 AM

April Crude (cl08j) ... down $0.52 at $109.40

Jeff Bailey : 3/13/2008 2:29:11 AM

YM 12,002 (-122)

Jeff Bailey : 3/13/2008 2:28:53 AM

DXY 72.07 -0.46% (down 0.33 points)

Jeff Bailey : 3/13/2008 2:26:17 AM

EIA Crude Oil, Ttl Gasoline, Distillate, ULS Diesel, Jet Fuel, Heating Oil Table at this Link

Crude oil stockpiles look to be ramping, but still down 4.21% from a year ago. OK Crude Oil price should be up 4.21% all things being equal. Dollar isn't what it was a year ago.

Unleaded looks plentiful and the expected draw down on switch over not showing up at all.

Spring is nearing and Heating Oil still way down vs. year-ago. Robbing "Paul"(distillate/heating oil) to pay "Paul" (refine unleaded).

So, unleaded refined here in the U.S. may track oil's price higher, but not at the rate that the highly IMPORTED oil, paid for by a falling US$ has risen.

The law of supply/demand stands true, but the dollar is the variable, and its been dropping notably.

Disclaimer: United States data only.

Jeff Bailey : 3/13/2008 2:26:11 AM

EIA Gross Inputs, Crude Oil Inputs, Ref. Op Capacity, Pct Utilization, USO Price, Day's Supply, DXY Table at this Link

I added a DXY Friday close observation just to make sure that the dollar (up/down) may be having some impact on oil's price. I think it important to also have an understanding/observation of inventories, but on the surface the dollar was down roughly 13% from a year-ago on Friday.

As of last Friday, US Weekly crude oil inputs fell by 2.59%, or 389,000 bbls/day, yet the USO had risen from $72.90 to $83.73. The dollar was down 4.7%.

I do think there is evidence that a weaker dollar is resulting in higher oil price.

Disclaimer: United States data only.

Keene Little : 3/13/2008 12:52:15 AM

Thursday's pivot tables: Link and Link

Equity futures are getting sold off pretty hard tongiht so it'll be interesting to see how they look in the morning. The way it's looking right now, it's not a good sign for the health of our one day wonder rally on Tuesday. The price pattern was set up such that it really needs a another rally leg in order to at least get a trend reversal in place. A continuation lower from Wednesday's high would leave a 3-wave bounce off Monday's low in place and suggest new lows are coming.

The SPX 60-min chart shows in dark red a continuation to new lows, confirmed with a break below 1286 (although another bounce off the 1272 low first would not be out of the question): Link . But watch for possible support at the broken downtrend line from the end of February, currently near 1295. That's where ES has dropped to so far tonight.

NDX did a bearish kiss goodbye Wednesday against its broken uptrend line from early February (the bottom of its sideways triangle) so a continuation lower on Thursday would certainly look bearish. Just stay aware that we're in a choppy environment here and a deep retracement followed by another strong rally leg is just as likely: Link

OI Technical Staff : 3/12/2008 9:59:59 PM

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

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Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 3/12/2008 9:58:19 PM

Now watch ... I'll wake up tomorrow morning, DXY will be 74.00 and stock futures will be indicated for a much higher open. That's how I felt Tuesday morning after writing a more "defensive" wrap Monday evening.

Jeff Bailey : 3/12/2008 9:55:55 PM

US Dollar Index (DXY) ... here the same bar chart with "Bailey Wave" and Quarterly and Monthly pivot retracement. Link

In all actuallity, the ER (Russell mini futures) were the better short today as it is the weaker index, but I simply like to trade the YM for various reasons (mostly NYSE-listed, only 30 stocks and 10 big ones).

What I'm seeing in the dollar is that now we're not seeing a "bounce" where we probably should have gotten one. Yep, it sure looked good yesterday, but as today wore on.

In late January, stocks as depicted by the DIA, SPY, IWM, QQQQ got an "extended rally" as the DXY held above 75-ish support.

My mindset tonight, based on DXY observation, is that market participants are now assessing DOWNSIDE risk in the majors right back at Monday evening's lows.

Jeff Bailey : 3/12/2008 9:39:16 PM

Closing U.S. Market Watch found at this Link

As it relates to the dollar ... today's action was probably NOT what the Fed and other Central Banks wanted to see today. Not that 2-days is a true indication, but I think yesterday's strategy was a way to try and provide liquidity, without further deterioration in the dollar, and even having more cash flow into the SAFETY of treasuries.

Now, Jim Rogers continues to make the point that the "easy Fed" is just creating more problems as they try and solve a problem.

Hey ... I've tried to fix a lot of things during my life, only to make them worse. This weekend I "fixed" the winch on my truck and by the time I'm through fixing it, I'll probably wish I had left well enough alone. So far it looks like I'm going to be buying a new brush guard ($800) as I've stripped some bolts and threads so I can't get it back together.

Today, we may have really seen that.

A 6 million barrel build in US crude oil stockspiles. Oil dips on the knee jerk, then bids higher to the close. Another record close.

With oil a $-denominated commodity (some have wanted oil to be priced in another currency), the decline in the dollar still seems to rule the day.

Hey, I think Bernanke understands this (weak dollar, higher oil and commodity prices in general), thus yesterday's different strategy.

It could be that the higher commodity prices are simple result of buying by market participants as they seek a hedge.

However, the rise in commodity rices, especially oil, simply puts strain on the economy and slows it down. Right? $100 to fill up the land yacht, so I forgo something else I might have bought if a fill up had cost me just $50.

Should a foreign investor buy XOM, or should they put their cash in a foreign-based oil producer where that currency isn't falling 1.28% each day? OK, the dollar isn't falling 1.28% each day, but you get the point of dollar weakness. Sure, the Canadian dollar was "always" worth about $0.75, but even that's changed.

So, how could a Central Bank prop up, or firm up the dollar? The DOWNSIDE of even owning a FOREIGN-domiciled producer is that THEIR CURRENCY becomes too strong relative to where they're EXPORTING to.

Well, one way could be to RAISE rates, but we know that isn't necessarily the case. The dollar's been falling for years now, even during the tightening cycle.

Another great idea is to reduce the deficit! Control government spending perhaps!

I've said before that things simply run in cycles. And perhaps the economy is no different.

I'm still in the pool that says the "housing bubble" was simply created by home buyers being allowed to buy more than they could probably afford due to lending and the easy lending "standards."

As things unwind, Jim Rogers makes the point that it is a normal cycle (he may blame the Fed, but the Fed didn't twist anyone's arm to buy a house they couldn't afford with a 30-year fixed-rate mortgage, but could afford to buy with some crazy adjustable rate product with no money down, or even 120% loan-to-value.)

Now tonight, Larry Kudlow begins to wonder if the Fed isn't trying to fix a problem (that may only be able to be fixed with the passage of time) that's simply creating a bigger problem? A weaker dollar!

In essence, Mr. Kudlow also notices the weakening dollar and flow of capital into treasuries, oil rising and equities giving back some of yesterday's gains.

Today's YM short was certainly setup on dollar weakness and money flowing into treasuries.

The problem the Fed probably has at this time with RAISING rates is that they probably don't want to see the 10-year and 30-year yield RISE, thus putting upward pressure on mortgage rates. Hey, the housing sector has excess supply of new homes as it is, excess supply of existing homes (see forclosure) and RAISING rates would only make things worse on that end of the treasury bond and dollar spectrum that I'm providing some focus towards.

See, the dollar's weakness isn't all that bad. It certainly helps products/services made in the U.S. "cheaper" to our trading partners with a stronger currency. The bad thing is that it makes things like oil, which we import so much of, more EXPENSIVE.

"Inflation adjusted oil price" should really be called "dollar-weakness adjusted oil."

Another indication of "credit crunch" revealed itself in today's MBA's Weekly Application Survey where the 1-year ARM rose to 6.72% from 5.83%. Folks, the 5-year Treasury Yield ($FVX.X) finished 2.509% on 2/29 and FELL to 2.353% at its 3/07 close.

Jeff Bailey : 3/12/2008 7:05:58 PM

Jim Rogers too!

Jeff Bailey : 3/12/2008 7:04:35 PM

Yes! Yes! Yes! ... You might be on to something Larry.

Jeff Bailey : 3/12/2008 5:13:53 PM

Today's oil trade "defies logic" if we consider the build in inventory.

The dollar/oil tie however ...

Jeff Bailey : 3/12/2008 5:07:24 PM

Closing Internals at this Link

For the first time, I'm adding the Dollar Index (DXY) to the intra-day internals.

Now, for those new to the MM, both the DXY and the CRB Index are only quoted 30-minute delayed.

When I report an 11:00 AM in the morning, both the DXY and CRB Index will actually be around 10:30 AM quotes. Only at 01:00 PM do I then go back and look at an intra-day chart to find out what the actual 11:00 AM tick was for both the DXY and CRB Index.

Jane Fox : 3/12/2008 4:27:47 PM

Tomorrow's economic reports include:

8:30a.m. Initial Jobless Claims. Expected: +4K. Previous: -24K.

8:30a.m. Feb Import Prices. Expected: +0.6%. Previous: +1.7%.

8:30a.m. Feb Retail & Food Sales. Expected: +0.1%. Previous: +0.3%.

8:30a.m. Feb Retail & Food Sales, Ex-Autos. Expected: +0.2%. Previous: +0.3%.

10:00a.m. Jan Business Inventories. Expected: +0.7%. Previous: +0.6%.

Jane Fox : 3/12/2008 4:16:44 PM

Crude goes out at 110.16/bl

Jeff Bailey : 3/12/2008 3:55:58 PM

Hmmmm ... listening to CNBC ... has me thinking ... maybe the Fed could borrow some Oil from the SPR, sell it at these price, and buy some mortgage bonds? Or dollars for that matter.

Jeff Bailey : 3/12/2008 3:50:09 PM

See what this dollar does.

Jeff Bailey : 3/12/2008 3:49:54 PM

VXN.X 30.07 +5.28% ...

Keene Little : 3/12/2008 3:49:47 PM

Banks (BIX) down -3.4%. Looking at the daily chart and the swings look like relatively small blips but they're obviously getting a little volatile here after yesterday's short-covering +10% rally yesterday.

Jeff Bailey : 3/12/2008 3:49:31 PM

Swing trade call exit alert! ... for the Dynamic Materials BOOM March $45 Call (QCB-CI) at thee bid of $1.10.

BOOM $43.72 +3.60% ...

QCB-CI $1.10 x $1.25

Jeff Bailey : 3/12/2008 3:42:34 PM

YM short stopped alert! 12,126

Jeff Bailey : 3/12/2008 3:41:49 PM

YM short lower stop alert! ... to 12,126.

YM 12,112

Keene Little : 3/12/2008 3:40:42 PM

No violations of yesterday morning's highs yet, and that would be a bearish heads up that the bounce off Monday's low might be left as a 3-wave correction, but the bulls need to get this turned around now. As a 4th wave pullback it really shouldn't get much bigger than this. Plus the DOW is back below 12220 (only marginally so far) and SPX has dropped back below 1320. Again, the bulls would really be better off if both closed above these levels today.

Jeff Bailey : 3/12/2008 3:39:08 PM

YM short lower stop alert! ... to 12,146.

YM 12,127

Jeff Bailey : 3/12/2008 3:36:10 PM

YM short lower stop alert! ... to 12,156.

YM 12,137

Jeff Bailey : 3/12/2008 3:34:56 PM

Max rest of day target on YM is 12,095. Juuuuust above DAILY Pivot.

Jeff Bailey : 3/12/2008 3:32:33 PM

SPY 131.79

Jeff Bailey : 3/12/2008 3:32:13 PM

YM short lower stop alert! to 12,166.

YM 12,150

Jeff Bailey : 3/12/2008 3:30:05 PM

SPY $132.01 ... YM 12,165

Jeff Bailey : 3/12/2008 3:26:57 PM

USD/JPY 101.76 lower to its close ... or so it looks

Jeff Bailey : 3/12/2008 3:25:50 PM

YM short stop lower stop alert! ... to 12,191.

YM 12,171

Jeff Bailey : 3/12/2008 3:15:24 PM

SPY $132 ...

Jeff Bailey : 3/12/2008 3:13:45 PM

SPY 131.92 ... probes morning lows.

Jeff Bailey : 3/12/2008 3:13:16 PM

If we hit 12,150, will snug down stop, but play for a little more.

Euro best levels

Jeff Bailey : 3/12/2008 3:12:39 PM

Might be able to get daily pivot.

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

YM short cancel target alert! ...

Keene Little : 3/12/2008 3:12:03 PM

It would be good for the bulls to hold it here and rally it back up to a new high for a 5th wave, as depicted on this SPX 30-min chart: Link . That would then set up a longer term bounce after a pullback to correct the 5-wave move up. If price drops back below 1286, the wave-2 low, then it's over for the bulls.

Jeff Bailey : 3/12/2008 3:08:43 PM

BIX.X 242.48 -1.65% ... can't forget about the banks.

Jeff Bailey : 3/12/2008 3:07:14 PM

USO $87.00

Jeff Bailey : 3/12/2008 3:06:56 PM

Euro hoveres near highs vs. dollar

Jeff Bailey : 3/12/2008 3:06:33 PM

Pound hoveres near highs vs. dollar

Jeff Bailey : 3/12/2008 3:06:01 PM

Dollar moves back to low against the yen.

Jeff Bailey : 3/12/2008 3:05:33 PM

SPY $132.15 ... know where we are. What needs to happen.

Jeff Bailey : 3/12/2008 3:05:10 PM

YM short lower stop alert! ... to 12,196.

YM 12,174 here.

Jeff Bailey : 3/12/2008 2:59:37 PM

YM short lower stop alert! ... to even.

YM 12,192 here

Jeff Bailey : 3/12/2008 2:52:24 PM

YM short alert! at 12,216. Stop 12,230. Target 12,150.

Tab Gilles : 3/12/2008 2:38:25 PM

Quidel (QDEL) Flu is widespread after a late start. Quidel Corporation develops, manufactures, and markets point-of-care (POC) diagnostic solutions for infectious diseases and reproductive health primarily in the United States. It provides POC and other diagnostic tests under QuickVue, QuickVue+, QuickVue Advance, RapidVue, and Metra brand names. The company offers POC diagnostics products for infectious diseases, such as Influenza, Group A Strep, and Mononucleosis, as well as for reproductive health. Link Link Link

It is now reported that China has closed elementary schools for 2 weeks after an outbreak of influenza. Link

Linda Piazza : 3/12/2008 2:30:41 PM

I've got to sign off now for the afternoon, as I have a lovely appointment to get a new crown and possibly a root canal. I started to say that I don't know what would be most unpleasant--staying and watching this choppy market action or getting the root canal. I think I would rather stay. Be aware that the possibility for a downturn exists, but within the context of a possibly small-bodied candle day, the choppiness could continue and any decline be met with a bounce attempt. If all that occurs, and there's no guarantee that it will, that will set up a potential reversal signal (tall green candle followed by small-bodied candle). You'll have to make hold-overnight decisions not knowing if the potential reversal signal will result in an actual reversal or perhaps in further consolidation near the high. Good luck.

Tab Gilles : 3/12/2008 2:20:49 PM

Weekly EIA Report Link

Jeff Bailey : 3/12/2008 2:18:42 PM

One might be able to say ... "THE ONLY REASON to have bought "the low" in the SPY Monday/yesterday, was that the TYX.X was above 4.417%.

Linda Piazza : 3/12/2008 2:17:25 PM

If the SPX rises up toward 1324-1326 again and rolls down through the current low of the day or if it just keeps rolling down now, where might it go? One possibility is a trip back toward 1298-1300. However, it currently looks to me as if a decline, unless it's a cascade lower, is likely to find at least temporary support at either 1311.80 or 1308.56 on 15-minute closes. If the SPX should drop, those lines should converge more closely with the higher one dropping a bit faster than the lower one. It's possible that the support near there is strong enough that it could bounce the SPX up again. This is putting the cart before a horse a bit, though, because that 1316-1317 level is at least tentatively holding.

Jeff Bailey : 3/12/2008 2:15:57 PM

Depending on YOUR time horizon, a Day trader doesn't give much room below DAILY Pivot.

Another trader WEEKLY Pivot.

Another trader/investor MONTHLY Pivot.

An investor QUARTERLY ....

Jeff Bailey : 3/12/2008 2:14:08 PM

OK ... 30-year at "conventional" 38.2% and SPY at conventional 19.1%

We KNOW where they both were intra-day on 1/22/08.

Jeff Bailey : 3/12/2008 2:10:05 PM

30-year Yield ($TYX.X) ... a WEEKLY Interval (to go with Saturday's MM comments) Link

Jeff Bailey : 3/12/2008 2:08:02 PM

FVX.X 2.492%

Jeff Bailey : 3/12/2008 2:07:45 PM

IRX.X 1.430%

Jeff Bailey : 3/12/2008 2:07:32 PM

SPY $132.14

Jeff Bailey : 3/12/2008 2:07:10 PM

Alert! TYX.X 4.412% ... chart on its way.

Keene Little : 3/12/2008 2:01:21 PM

If you look at a 30-min chart and price action since Monday's low you will see a clear 3-wave move up. The current pullback from today's high could create a 4th wave correction and if it's followed by another rally leg then we'll get the impulsive 5-wave advance. That's when we'd know we have a trend change to the upside. The 5-wave move up would be followed by a pullback but the pullback would be an opportunity to buy the dip for another rally leg up.

This bullish possibility would be in doubt in price now drops back below yesterday morning's high (the 1st wave up) since the 4th wave can't overlap the 1st wave). For example, that high for SPX is at 1303.26. The bounce would be confirmed a 3-wave bounce if price drops back down through yesterday's mid-day low (SPX 1285.94). So this is what I'm watching for now. I'll simply let price tell me what's playing out here and then make some trading decisions based on that.

Right now it's a toss-up as I watch for some short term clues as to what the market might do here. The form of the pullback so far has me leaning towards a 4th wave correction.

Linda Piazza : 3/12/2008 1:56:53 PM

Jane has probably already mentioned it, but I certainly don't like (on the behalf of our readers who might be bullish) the VIX's steady climb off its low of the day. It may be, however, approaching significant potential resistance in the 26.85-27.10 zone. It's at 26.40 as I type.

Linda Piazza : 3/12/2008 1:55:10 PM

The USDJPY is now at 102.03, drifting ever closer to that Keltner downside target that was set earlier today. That target is now at 101.94, with that perhaps serving as potential support on 15-minute closes.

Linda Piazza : 3/12/2008 1:51:22 PM

The picture is clearer now. The SPX is again dropping into potential support on 30-minute closes now at about 1319, joined by possible Fib support from 1316-1317. Now, if the SPX should rise from this support test, watch for rollover potential in the 1324-1326 zone. That looks like a little stronger resistance now and a little clearer setup, but it's still possible, of course, for the SPX to push back toward the previous high of the day.

Jeff Bailey : 3/12/2008 1:44:03 PM

Good gravy! 1-year ARM jumped to 6.72% ... (see yesterdays Fed/Central Bank move)

Jeff Bailey : 3/12/2008 1:29:16 PM

01:00 Internals found at this Link

Linda Piazza : 3/12/2008 1:28:39 PM

I just see a lot of chopping around over the last hour or so, and it's difficult to decipher what might happen next. I had amended my previous thoughts that rollover potential existed in the 1324-1326 zone to also include the 1329-1331 zone, but, so far, the SPX does struggle with 1324-1326. It looks possible, though, that the SPX could push up toward potential Keltner and Fib resistance from 1329.80-1331, so that zone is now validated by other sources. If it's not quickly knocked back from there now, on any test, then the potential pattern I was seeing would be invalidated. In fact, it may be already. This is what these choppy days are like.

Jeff Bailey : 3/12/2008 1:25:43 PM

PHF $8.00 +0.25% ... "riskiest corporate"

Jeff Bailey : 3/12/2008 1:25:32 PM

Monday saw a kiss of WKLY S1, just saw another today from 12:45-12:50 at 4.428%

"Riskiest" treasury

Jeff Bailey : 3/12/2008 1:23:45 PM

Maybe check out your 30-year Yield with WEEKLY Pivot levels turned on.

Jeff Bailey : 3/12/2008 1:18:40 PM

CL +16.94% last 20DyNet%

RB +6.27%

Jeff Bailey : 3/12/2008 1:11:37 PM

Seeing RIO Jun $27.50 and $32.50 puts on the most active list again today. (see yesterday's Option post)

Linda Piazza : 3/12/2008 1:05:41 PM

Looking at the SPX's chart again, I think I'd likely amend that place where rollover potential might be strongest to add the 1329-1331 zone.

Keene Little : 3/12/2008 1:06:02 PM

The banks (BIX), the beneficiaries of the biggest short covering from Monday's low, stopped right at the top of a parallel down-channel based off the trend line along the lows since the Feb 1st high: Link

The price pattern would look best with another decline to a new low (shown with the dark red line down to a new low near the low in 2000). This would then set up a potentially important low. The bulls have some work to do to get this turned around and need a break above 274 to negate further bearish expectations, at least for now.

Linda Piazza : 3/12/2008 1:03:43 PM

And, of course, if you do look only at a daily chart of the TRAN with a six-month period covered, you see a potential inverse or reverse H&S on that chart. Mixed-up picture.

Linda Piazza : 3/12/2008 1:01:34 PM

Keene spoke of the TRAN a few moments ago, reminding me of something that might be appropriate to show. In some of my Wraps over recent months, I've been mentioning that the daily charts I've been including didn't show the whole picture because the whole picture shows a huge potential H&S forming since the beginning of '06. The red trendline seen on this linked chart is not the neckline for that, but I don't want to erase it as it's a long-term trendline that I don't want to redraw. Anyway, here's the formation I've been mentioning and watching: Link I'm not saying that this will confirm, but I have been saying that the TRAN was in a right-shoulder-building period and those can be particularly choppy times for price action. The TRAN sometimes starts to roll over into a right shoulder and then zooms up and invalidates the whole thing, so I'm not counting on this to confirm, but I sure am watching it. The TRAN also sometimes just abruptly abandons the right-shoulder-building thing prematurely and craters.

Jeff Bailey : 3/12/2008 12:59:47 PM

USO $86.32 -0.02% ... trades very, very, very, very short.

Jeff Bailey : 3/12/2008 12:59:23 PM

GPB/USD 2.0196 ... slips below EIA release.

Jane Fox : 3/12/2008 12:57:38 PM

Here are you overnight charts. All markets are trading back within their overnight ranges. Link

Linda Piazza : 3/12/2008 12:54:21 PM

To be clear: I'm not particularly expecting any rollover or pullback to be huge, if it does occur. It could be, of course, but I'm still operating under the same scenario I've had all day: a possible small-bodied daily candle for the day (now) with upper and lower shadows.

Keene Little : 3/12/2008 12:53:31 PM

Since the Transports showed some bullish non-confirmation of the DOW's test of the January low, it'll be interesting to see if it leads the charge back to the upside. So far it remains in its down-channel Since its July high: Link

If it manages another rally leg, two equal legs up from its January low is at 5145 (shown in pink) which would have it tagging its broken uptrend line from March 2003 by the end of this month or early April. Currently it's fighting its 100-dma which acted as support for each of the pullbacks in February (except for a quick jab down to its 50-dma on Feb 22nd). Right now I'd have to say the Trannies don't look very bullish to me.

Linda Piazza : 3/12/2008 12:52:35 PM

Here's the weakness that the SPX's action was suggesting might be next. Remember that the SPX is now approaching potentially strong support on 30-minute closes. That support is now beginning at about 1319.50, and layers down to the Fib level near 1316-1317. Bulls want this to hold up on 30-minute closes, but if in bullish positions, you now have to be wary of rollover potential in the 1324-1326 zone, even if the SPX does bounce from this tested support. A rollover isn't a given, of course, but it's now more of a possibility.

Jeff Bailey : 3/12/2008 12:52:03 PM

MBA's Weekly Application Survey Link

Jeff Bailey : 3/12/2008 12:43:14 PM

Seeing "hot" headline from 12:28 that White House was evacuated on an air space violation.

Jeff Bailey : 3/12/2008 12:41:41 PM

All clear on what?

Jeff Bailey : 3/12/2008 12:41:32 PM

All Clear Issued At White House

Jeff Bailey : 3/12/2008 12:39:52 PM

Petroleo Brasileiro (PBR) $114.46 -0.10% ...

Jeff Bailey : 3/12/2008 12:39:19 PM

Brazil Officials: Outlook Favorable For Economy, Rates

Jeff Bailey : 3/12/2008 12:38:18 PM

Drag UP 0% to today's new 52-weeker of $86.71.

Linda Piazza : 3/12/2008 12:38:02 PM

Currently at 102.31, the USDJPY continues to have trouble with all that gathered overhead resistance. It's been piercing it but then falling back below it. The low of the day, a pre-market low, was 102.19. Although there's not always a direct or good market-timing correlation in the equities and this currency pair, it's close enough at times that equity bulls would prefer that the USDJPY not drop below that previous low or anywhere near the current 101.01 potential target set up by the 15-minute Keltner charts. Bears, of course, would prefer that the USDJPY do exactly that.

Jeff Bailey : 3/12/2008 12:37:33 PM

Should be LONG two (2) of the USO April $85 Puts (UNA-PG) at $4.20/contract as USO was trading $85.40.

IF we get a decline back near $80 into March expiration, will be looking to SELL covered the March $80's, $79's. Then let expiration pass, see what takes place.

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

Darned it ... UNA-PG are April $85 Puts, which are the ones I think traders should be trading. I typed WRONG the April $81 Puts.

Would NOT trade that far out the money.

Linda Piazza : 3/12/2008 12:34:22 PM

The SPX lost the 15-minute 9-ema's support on the just-completed 15-minute close. The violation was minor, but the 9-ema has flattened and it's possible that the SPX will dip further. If it does, bulls want the support from about 1316.80 up to 1320.40 to hold on 30-minute closes. That's a fairly broad range, but there's potential support all through that zone.

Now for the hard part: if the SPX dips to that level and then bounces from it, I'd be particularly careful of rollover potential in the 1324-1326 zone. That's not guaranteed, but I'd be watchful.

Keene Little : 3/12/2008 12:20:34 PM

As Jim had mentioned in last night's newsletter, SPX 1320 has been a support/resistance level since January so the bulls will want to see that level hold now that SPX has climbed back above it.

Jeff Bailey : 3/12/2008 12:19:22 PM

Now the Fed and Treasury really scratching heads. BIG build in crude oil inventory, yet dollar sinks and oil bids.

Jeff Bailey : 3/12/2008 12:17:08 PM

The "fundamentals" suggest weakness for oil, but the currency action seems to be the overriding factor.

Jeff Bailey : 3/12/2008 12:15:42 PM

Here's what I feel continues to be a good observation of the impact on weaker dollar and oil Link

Jane Fox : 3/12/2008 12:15:15 PM

Here are the charts of the Russell and the NDX both of which made new 2008 lows. Link Link

Jane Fox : 3/12/2008 12:13:32 PM

The transports did not come anywhere near testing its 2008 lows.

Jane Fox : 3/12/2008 12:12:23 PM

Here is a chart of the DOW transports. This shows what Richard Russell is talking about when he said the market was severely oversold but in the face of a flagrant non-confirmation on the part of the Transports.

Also notice the huge bullish MACD divergence. Link

Linda Piazza : 3/12/2008 12:11:08 PM

Although the SPX punched above the 50% retracement of the sharp recent decline, it didn't stay there. If you're studying a 30-minute chart, you see that it didn't stay there even through the first 30-minute close. The SPX is currently clinging to the 15-minute 9-ema's support, but it's looking a bit iffy, so I turned to the 30-minute chart to see where next and stronger support might lie. Much support on that chart groups near 1318.70-1320.02, so you might watch for next potential support in that area if the 1324 zone is lost as support.

Keene Little : 3/12/2008 11:58:20 AM

After breaking above 12220 the bulls want to see the DOW hold that level as support now. A drop back below the broken uptrend line there would leave this morning's rally as just a throw-over.

Jane Fox : 3/12/2008 11:57:14 AM

DAteline CNN - New York Gov. Eliot Spitzer today announced his resignation after allegations of his involvement in a prostitution ring.

Very sad.

Linda Piazza : 3/12/2008 11:56:14 AM

The OEX's 15-minute 9-ema is at about 613.20. Bulls would like to see this hold as support on 15-minute closes. Bulls should have their profit-protecting plans in shape as it's still possible that the OEX (as mentioned in my 11:54:38 post with regard to the SPX) could swing first one way and then the other today, ending up rather near where it started. This is not a prediction: it just wouldn't be unusual after such a big range day.

Linda Piazza : 3/12/2008 11:54:38 AM

The SPX's 15-minute 9-ema is now at 1324.46. Bulls would like to see that hold as support on 15-minute closes. As I've counseled all day, have your plans in order to protect bullish profits, just in case this is one of those days when prices swing one way, then swing the next and end up not too far from where they started.

Jane Fox : 3/12/2008 11:39:05 AM

Internals are very bullish today. Link

Jeff Bailey : 3/12/2008 11:37:11 AM

See that 5-minute bar comparison with USO?

Jeff Bailey : 3/12/2008 11:36:52 AM

GBP/USD alert! 2.0235 ... 52-weeker

Jeff Bailey : 3/12/2008 11:35:32 AM

TSO $33.32 -6.14% ... gives back yesterday's gains.

Jeff Bailey : 3/12/2008 11:34:46 AM

PBR $114.04 -0.47% ...

Jeff Bailey : 3/12/2008 11:34:20 AM

GBP/USD 2.0212

Jeff Bailey : 3/12/2008 11:33:51 AM

USD/JPY 102.59

Jeff Bailey : 3/12/2008 11:33:31 AM

EUR/USD 1.5492

Jeff Bailey : 3/12/2008 11:31:24 AM

Swing trade put alert! ... for two (2) of the US Oil Fund USO April $81 Puts (UNA-PG) at the offer of $4.20.

USO $85.40 -1.08% ...

Jeff Bailey : 3/12/2008 11:25:31 AM

DXY 72.663 -0.83% (30-min delayed) ... at 10:30 AM EDT, DXY was 72.617

Linda Piazza : 3/12/2008 11:22:27 AM

If in bullish trades, I would definitely be deciding how to treat a test of the 1337.50 zone, if it should be tested. The SPX has entered into a resistance zone that should be strong, with that upside target also serving as potential resistance. We don't know that there will be a pullback from this zone but I would certainly be deciding how I would treat it. Was your play a short-term one and you stayed up much of the night last night, worrying about what might happen today? You might consider automatically exiting at least part of your position in this 1330-1337 zone, locking in some profits. Have you doubled what you spent on your calls yesterday? Then consider exiting half of them and setting the stop for the rest no lower than the break-even level.

Jeff Bailey : 3/12/2008 11:21:59 AM

11:00 Internals found at this Link

Keene Little : 3/12/2008 11:19:41 AM

NDX is now back up to the bottom of its previous sideways triangle pattern, here at 1763, and potential resistance: Link

Jeff Bailey : 3/12/2008 11:18:22 AM

iShares Germany (EWG) $31.81 +1.22% ... 38.2% conventional.

Linda Piazza : 3/12/2008 11:16:15 AM

The USDJPY is now climbing toward a test of the potential resistance near 102.75 on 15-minute closes. Historical resistance extends up to 102.80 and is then layered above that. This is an improvement, then, over the early morning setup, but this is the most significant resistance tested so far today on this chart.

I don't know, though. I keep getting the feeling that price action is leading these others, rather than them leading the price action. Maybe I'm reading too much into that, but it's just an impression that I have.

Linda Piazza : 3/12/2008 11:13:41 AM

The A/D line is jumping all over the place, scrambling the Keltner lines on its chart and rendering them fairly useless for the time being. I will just note, FWIW, that the A/D line has not made a new high as prices have.

Linda Piazza : 3/12/2008 11:11:06 AM

I see that Keene and I have slightly different values for the 50% retracement of the recent slide for the SPX. Mine is not a calculated value, which would be more exact, but a click-and-drag one.

Linda Piazza : 3/12/2008 11:10:02 AM

Price action is contrary to the underpinnings. Those underpinnings are choppy, giving somewhat opposing information, but price action is just what bulls want to see. Be aware that not quite all the ducks are in a row yet as you follow the SPX higher with your stops. If your scenario is that we could get a small-bodied candle for the day, now definitely with an upper shadow if we get that kind of day, then you'd be wary of a possible pullback through here. The action has not yet negated that possibility, so just remain watchful and ready to protect your bullish profits, if needed.

The SPX's 50% retracement of the recent slide is at about 1330.31 with a Keltner target (and potential resistance on 15-minute closes) at 1337.26.

Keene Little : 3/12/2008 11:09:08 AM

NDX is stronger--it just tagged the 62% retracement of the decline from the end of February, at 1755.84.

Keene Little : 3/12/2008 11:08:02 AM

The same 50% retracement for SPX is at 1330.73 so about 3 points higher.

Keene Little : 3/12/2008 11:04:13 AM

DOW is now tagging the 50% retracement (12244) of the decline from the end of February.

Linda Piazza : 3/12/2008 10:59:33 AM

At 1.03, the TRIN still chops around near the neutral area. At 102.51, the USDJPY is attempting to chop up through the massed resistance, up to about 102.75, but that resistance currently looks relatively strong, so it will require either a surge higher or else a lot more time to get through it, and a decline remains a possibility. The VIX is dropping again. So, we have mixed signs again.

Keene Little : 3/12/2008 10:58:23 AM

There are some small bearish divergences between this morning's first high and the current test of the high so it's hard to trust the move up. We might see a slightly new high and another pullback. The risk for both sides is getting whipped around.

Jane Fox : 3/12/2008 10:56:39 AM

ALthough I thought the VIX was telling us a short term bottom was in, it looks like it was more than just shorterm.

Linda Piazza : 3/12/2008 10:56:21 AM

The SPX has so far pulled back toward but not quite to support (a sign of strength that it didn't even need to touch it) and has risen now into a retest of the day's high. This is of course a place to watch for a potential rollover, but the underpinnings of the market are so mixed that I don't know whether to suggest that this resistance will hold or to expect the SPX to fall back down to test the 15-minute 9-ema at 1318.11 and further support at 1316-1317 again. The SPX has a potential upside Keltner target now at 1337.51, but that's descending toward the 50% retracement of the SPX's recent slide, now at 1330.31. No predictions from the setup as to whether that potential upside target will ever be hit.

Jeff Bailey : 3/12/2008 10:49:58 AM

USD/CAD 0.9885

Jeff Bailey : 3/12/2008 10:49:35 AM

USD/JPY 102.39

Jeff Bailey : 3/12/2008 10:49:22 AM

GBP/USD 2.0181

Jeff Bailey : 3/12/2008 10:49:03 AM

EUR/USD 1.5466

Keene Little : 3/12/2008 10:44:11 AM

Techs are pushing to new daily highs so that's certainly bullish. But if the renewed push doesn't hold then there's a good chance we'll see choppy consolidation instead.

Jeff Bailey : 3/12/2008 10:41:25 AM

EIA: US Refineries Ran At 85.0% Oper. Capacity

Jeff Bailey : 3/12/2008 10:40:48 AM

EIA: US Distillate Stockpiles -1.225M Bbls

Jeff Bailey : 3/12/2008 10:40:22 AM

EIA: Gasoline Stockpiles +1.691M Bbls

Jeff Bailey : 3/12/2008 10:34:09 AM

EIA: US Crude Oil Stockpiles +6.17M Barrels

Jeff Bailey : 3/12/2008 10:32:39 AM

DIA $122.02 -0.03% ...

Jeff Bailey : 3/12/2008 10:32:28 AM

IBM $116.72 +0.19% ... 80.9% conventional.

Jeff Bailey : 3/12/2008 10:31:10 AM

My mindset here is that for the dollar to rally, EIA needs to show a substantial Crude Oil inventory build, have oil prices retreat. If not...

Jane Fox : 3/12/2008 10:29:01 AM

Here is a comment from Richard Russell, editor of Dow Theory Letters, "The market was severely oversold. But what interested me was that the market was not only oversold -- but it was severely oversold in the face of a flagrant non-confirmation on the part of the Transports. This unusually bullish combination provided the basis for a violent turnaround. In fact, it could turn out to be more than 'just a turnaround.' Ideally, what I'd like to see now is a 90% day on the upside. If that were to occur, we could be seeing a key reversal -- with the stock market perhaps having discounted the worst that can be seen ahead."

By the close on Tuesday, Russell's wish for a 90% up day apparently was granted: Up volume on the NYSE represented almost precisely 90% of the combined up and down volume on the exchange.

Linda Piazza : 3/12/2008 10:27:32 AM

As Jane has probably mentioned, we've just begun seeing a big drop in the VIX. On my Keltner charts, it's now setting a potential downside target of 24.52.

So, we have the VIX bullish, the TRIN neutral, the USDJPY somewhat bearish, and the A/D line near neutral on my Keltner charts. What are you going to make of that? Maybe chop, although the VIX's action is puzzling . . . and I see as I typed this report that it jumped right back up. Yep. Choppy.

Jane Fox : 3/12/2008 10:27:13 AM

Here is a comment from Bob Brinker, editor of THe MarketTimer, one of the most successful newsletters out there. "The process of establishing a stock market correction bottom has unfolded in text-book fashion over the past two months. This process involves the establishment of an initial closing low, followed by a short-term rally, followed by testing of the area of the prior established closing low on reduced trading volume ... The correction bottoming process (over the past few weeks) has seen a significant reduction in selling pressure in the vicinity of the Jan. 22 closing low. This is a very important aspect of any successful test."

Keene Little : 3/12/2008 10:26:13 AM

Watch for a retest of this morning's high and if it holds then the short play looks good. If it continues higher then simply step aside. While the rally could continue straight from here I don't have enough confidence in the upside potential vs. the risk. I'd prefer to see resistance break and then hold on a retest (talking about DOW 12220 area where the broken uptrend line from October 2002 is located).

Jeff Bailey : 3/12/2008 10:25:22 AM

SIL $10.60 +3.01% ... what a dog

Linda Piazza : 3/12/2008 10:25:05 AM

The TRIN isn't telling us much right now, its value chopping around on either side of 1.00. It's currently just below it.

Jeff Bailey : 3/12/2008 10:24:50 AM

CDE $4.56 -6.54% ...

Jeff Bailey : 3/12/2008 10:24:26 AM

Coeur D'Alene Announces Proposed Offering of $150M of Convertible Senior Notes ... Business Wire Link

Linda Piazza : 3/12/2008 10:24:04 AM

The USDJPY is currently at 102.38. So far, it has not been able to punch above all that gathered resistance just above its current level, and it still has a potential downside target of about 101.91, with 102.17 also being potential support on 15-minute closes. The USDJPY is not currently supporting the idea of equity strength.

Linda Piazza : 3/12/2008 10:22:21 AM

The A/D line is not holding onto that Keltner support, which questions whether the SPX will be able to hold onto support, either. Currently, the A/D line is rising, but it needs to climb back above about -70 to -120 and stay there to erase the weakness that the current setup suggests. The A/D line is at -296 as I type.

Jane Fox : 3/12/2008 10:19:44 AM

CHICAGO (MarketWatch) -- Mortgage applications filings last week dropped a seasonally adjusted 1.9% compared with the week before as interest rates rose sharply, the Mortgage Bankers Association said Wednesday.

Applications to refinance an existing mortgage were down 4.7% during the week ended March 7, while applications for loans to purchase homes were up 1.6% on a week-to-week basis, according to the MBA's weekly survey.

The total number of applications was down an unadjusted 3.4% compared with the same week in 2007. The four-week moving average for all application filings fell a seasonally adjusted 12.1%.

Last week, the volume of applications for refinancing and home-purchase loans backed by the Federal Housing Administration were on the rise. The MBA's seasonally adjusted Government Index, which includes mostly FHA loans, was up 6.0% compared with the previous week.

Jeff Bailey : 3/12/2008 10:20:46 AM

BIX.X 244.21 -0.95% ... sitting on WKLY R1. 60-minute interval chart would show little reverse h/s pattern where a pullback to WKLY Pivot/QS1 would be "right shoulder"

Jane Fox : 3/12/2008 10:15:08 AM

Here is a chart of the greenback. Not pretty!!! Link

Jeff Bailey : 3/12/2008 10:14:26 AM

SLV $199.13 +2.01% ...

Jeff Bailey : 3/12/2008 10:14:15 AM

GLD $96.96 +1.00% ...

Jeff Bailey : 3/12/2008 10:13:46 AM

USO $86.12 -0.25% ...

Jeff Bailey : 3/12/2008 10:13:13 AM

DXY 72.68 -0.81% (30-min delayed) ... this will weigh on market psychology in my opinion, based on past observation.

Jeff Bailey : 3/12/2008 10:12:13 AM

EIA at 10:30 AM EDT.

Jeff Bailey : 3/12/2008 10:11:51 AM

First test of WKLY Pivot underway with the IWM. Market's a "buy" if IWM holds, SPY comes back at tests its WKLY Pivot then takes out morning high.

Jeff Bailey : 3/12/2008 10:10:49 AM

Dollar under pressure again this morning.

Snapshot DIA, SPY, IWM, QQQQ 60-minute interval with QCharts' WKLY Pivot Levels Link backtesting conventional 19.1%.

Linda Piazza : 3/12/2008 10:09:01 AM

I've mentioned before the benefits of setting up a potential scenario for the day and doing it when the markets are closed, when you're saner and not caught up in the emotion of the moment. Today, for example, if you're a believer in the "small-range days follow big-range days" theory, then you're on the lookout for a potentially choppy day, one of those that results in a small-bodied daily candle with or without upper and lower shadows as prices move away from the open and return closer to it by the close. If you're on the lookout for that kind of day, you'll temper your expectations for any gains and expectations for any losses, and might even decided not to trade at all (my preference unless something trending sets up after all). Do all such scenarios come to pass? No, of course not, but if you've got a scenario in your head, you're testing the action all the time against those expectations. You can note when something begins to seem wrong, to go against that scenario.

Linda Piazza : 3/12/2008 10:01:34 AM

The SPX's 15-minute 9-ema is now at 1312.68, with other potential support near 1316-1317. The SPX has reached a low of 1317.32 so far. Close enough to consider that a successful test of the support? It's possible. The A/D line is now at 12.00, having pierced that potential Keltner support I had mentioned. We need to see the A/D line continue to maintain that support on 15-minute closes, now at -58 to -138, to give credence to the possibility that the SPX has successfully tested support. For now, it's not a certainty.

Jane Fox : 3/12/2008 9:59:34 AM

S&P futures are making new daily lows and are not in sync with the VIX. This tells me we should see a short term bottom here.

Keene Little : 3/12/2008 9:58:18 AM

The DOW tagged its broken uptrend line from October 2002 with this morning's quick spike up to 12223. I like a short play against that high as mentioned last night. The risk is we'll simply consolidate for a while and then head higher but that should become more obvious as the consolidation continues. For now resistance held.

Jane Fox : 3/12/2008 9:53:59 AM

AD line is falling to new daily lows and is now at -439. VIX is not making new daily highs but is testing daily highs.

Jane Fox : 3/12/2008 9:48:24 AM

AD line opens at +222 climbs to +600 but has not fallen to -156. As Linda said, today could be a choppy day so be careful.

Linda Piazza : 3/12/2008 9:46:54 AM

It appears possible that the SPX could pull back to either the 1316-1317 zone or else potential Keltner support on 15-minute closes, near 1311.30. For the OEX, that potential support is 609.60 and 606.90-607.70. It's not a given that these indices will drop this far, but certainly a possibility . . . and it may be happening as I type.

Linda Piazza : 3/12/2008 9:44:40 AM

Keltner outlook on the A/D line: the A/D line has now moved up into a test of the gathered potential resistance on 15-minute closes, now at about 860-1043. The A/D line pierced that resistance but now is 521, having dropped back a bit. The reason I listed that potential resistance a few minutes ago was that this was one point from which a pullback might occur, and an A/D line pullback can produce one in equities. If the A/D line keeps dropping, it currently looks as if next potential support is at the day's low near 300 and then at potential Keltner support at -55 to -146.

Linda Piazza : 3/12/2008 9:36:24 AM

Keltner outlook on the A/D line: It currently looks equally possible that the A/D line could climb into 850-1025 potential resistance or drop toward +55 to -121 potential support from its current 597 level. No prediction there yet.

Keene Little : 3/12/2008 9:35:31 AM

The equity futures consolidated overnight and that's what the bulls would like to see continue today (or rally of course). A reversal of yesterday's gains would obviously be very disheartening for the bulls. I need to see how the price pattern develops today in order to get a feel for what we can expect over the next several days.

Linda Piazza : 3/12/2008 9:34:57 AM

The OEX's 15-minute 9-ema is now at 607, near other (Fib, etc.) potential support at 607-608. Equity bulls would like that to hold as support on any pullbacks.

Linda Piazza : 3/12/2008 9:33:49 AM

Yesterday, the SPX was climbing quickly enough that it was bouncing off the 15-minute 9-ema. That's at 1311.46 as I type. Other potential support is near 1316-1317.

Linda Piazza : 3/12/2008 9:32:41 AM

Remember the possibility for choppy trading conditions today that result in a small-bodied candle for the day (open and close fairly close together) with or without long upper and lower shadows (prices moving away and coming back by the close). That's one possibility after such a big-range day. A decline to retest support is another.

Futures are lower this morning, but still above fair value, so their values shouldn't prove particularly disturbing to bulls. However, of more concern to me is a steep drop in the USDJPY off yesterday's high. The USDJPY is now at 102.40. It has a potential downside target near 101.90 unless it can move up through layered resistance to about 102.80. If it drops lower, that would not be corroborative of equity gains. Maybe this will prompt the building of a lower candle shadow on the daily chart? Just be aware of this possibility.

Jane Fox : 3/12/2008 9:12:54 AM

Yesterday SPX had a nice bounce off yearly lows at 1270 and as you can see tagged support turned resistance at 1320. The bulls were able to regain almost three days of work by the bears .

I think the SPX could rally to at least 1400 based on the bullish MACD divergence but the basing we are now seeing could last for a very long time. We may get a rolling back and forth from 1400 to 1270 for months before the trend becomes clear again. Link

Jane Fox : 3/12/2008 9:02:41 AM

I figured Gold would retrace back to at least $950.00 before it headed higher again but as you can see $970 has been support. I was long Gold and have booked some profit and want to get back on board again so I need it to retrace a little more.

As you all know I do not take a position in Gold with Gold stocks for 70% of a stock's movement is dependent on the "stock market" and the stock market right now stinks. I use the ETFs that are based on Gold futures so it is as close to holding a futures position as you can get without the risk. It is also better than actually buying Gold because it is much more liquid. Link

Jane Fox : 3/12/2008 8:57:29 AM

Here is the chart du jour. Crude hit at high of 109.72 yesterday. Who would have thunk!!!

Here is what I see happening. Crude will retrace to $100/bl, find support and bounce back to $110/bl again. If the political field is conducive it may take off through $110/bl but if not then that may be it for a while and we will see a weaken for the rest of the year. Link

Jane Fox : 3/12/2008 8:52:46 AM

The overnight session was able to hold on the gains from yesterday and then even add a little more although all that has been given back now. In any case this is a bullish overnight session and I would not be surprised to see the AD line open well above 0. Will it open above +1000? Not sure on that one. Link

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