Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jeff Bailey : 3/16/2008 11:46:05 PM

Spot Pound at this Link

Recently gave a reversing higher PnF buy signal at 2.00. Bearish resistance is "young," so bulls could play here. Maybe 1/4, or 1/3 positions with stops 1.98 and 1.93.

Euro stronger, but it exceeded bullish vertical count (1.50) weeks ago.

Jeff Bailey : 3/16/2008 11:37:45 PM

Spot Yen at this Link

Still about 8% upside to its current bullish vertical count of 1.08.

This may be "the currency" break higher that ties best with the major U.S. equity benchmark highs in October. "B" is early November and the powerful "bearish signal reversed" pattern in the Yen.

Jeff Bailey : 3/16/2008 11:24:58 PM

Japan: Tertiary Industry Activity Index M/M up 0.7% (forecast +0.6%) versus prior -0.6%.

Not a "negative" economic number, but I still see yen's strength vs. dollar as negative for Japan's exports.

Keene Little : 3/16/2008 11:23:29 PM

I mentioned the big rally in gold futures tonight and it looks like fear has many running to the perceived safety of gold. While I think gold has higher to go over the next month, look where tonight's rally took it--right to the top of a parallel up-channel for price action since the December low, near $1034: Link

My preferred wave count calls for a pullback and then a new high into April but if it drops below the uptrend line from December and below 922 (the wave (i) high) then the top is in. Until that happens, shorting gold here is for a trade only.

Jeff Bailey : 3/16/2008 11:18:12 PM

Nikkei-225 ($NIKK) Link ... down 514, or -4.20% at 11,727.

100-point box Link

Keene Little : 3/16/2008 11:08:24 PM

While the DOW futures (YM) are hard down, S&P futures (ES) dropped even harder--down -40 points (-3.1%) at its low about 30 minutes ago. This would be a very big move on a regular trading day and it hasn't even started yet. Even if the market recovers by the morning we'll now have this lower level acting as a magnet that could cause the cash market to drop down and retest the overnight low.

As bearish as tonight looks, there is the possibility we'll see a quick reversal Monday morning. On Friday I had shown an idea for a final low within a possible descending wedge pattern (SPX 60-min chart: Link ). I depicted a small bump up and then a new low but that was just a guess. It could drop down to finish it earlier. These descending wedge patterns (or ascending in a rally) tend to see a spike finish (usually news related) that does a throw-under and then quick recovery. That will be a possibility for early Monday morning.

SPX could tolerate a spike down to the 1250 area and a recovery back above 1260 that stays there would make for a potential bottom (for a multi-month trade on the long side). But if SPX drops much below 1260 and stays below it then the descending wedge idea gets thrown out the window. In that case the more bearish wave pattern calls for a move at least down to about 1225 and potentially just below 1200 before finding at least a tradeable bottom. NDX has a downside target near 1550 (but not straight down to there from here).

The DOW daily chart shows the more bearish wave count that calls for some very strong and relentless selling from here as strong 3rd waves start to unfold: Link . DOW below 10K before the week is out (Thursday) is a real possibility by the dark red wave count. That's not my preferred wave count at the moment but that is the potential that we must stay aware of.

Early Monday morning price action will be key. Just keep in mind that we could see a strong sell off that doesn't let up or it could spike down and get a very hard reversal back to the upside, finishing well in the green. As much as it would be nice to ride a big move, unless you can tolerate exremely wide stops (ouch if they're hit) and trade completely unemotionally, Monday morning will be a bad time to trade the market.

SPX 1260 is key and I will be watching that level, and price action around it, like a hawk. We'll have time to position for a trade once we see which direction the market has chosen.

Jeff Bailey : 3/16/2008 10:50:55 PM

May Crude (cl08k) up $0.77, or +0.70% at $109.51.

Jeff Bailey : 3/16/2008 10:50:21 PM

April Crude (cl08j) up $0.79, or +0.71% at $111.00

Jeff Bailey : 3/16/2008 10:49:34 PM

April Gold (yg08j) ... up $26.20, or +2.62% at $1,026.00

Jeff Bailey : 3/16/2008 10:42:08 PM

Swing trade put adjust target alert! ... for the one (1) Petroleo Brasiliero PBR Mar $95 Put (PMJ-OS) to $4.80 in the option.

Not sure what kind of open to look for in Brazil.

PBR went out at $108.22 on Friday.

Linda Piazza : 3/16/2008 10:40:22 PM

Obviously, Jeff, Keene and I were all composing posts at the same time. Good luck, everyone. I'm going off to get some rest before tomorrow morning.

Jeff Bailey : 3/16/2008 10:36:13 PM

YM -268, or -2.23% at 11,714

Linda Piazza : 3/16/2008 10:35:57 PM

If you're wondering what's going on in the markets, JPMorgan (JPM) has purchased Bear Stearns (BSC) for the fire-sale price of $2.00 a share. The Federal Reserve and the U.S. government have already approved the buyout with the Fed guaranteeing up to $30 billion of the assets. The Federal Reserve also approved a cut in its lending rate to banks to 3.25 percent from 3.50 percent, making the move effective immediately. The Federal Reserve will also make another lending facility for big investment banks available tomorrow, planning to keep this "cousin" to the discount window in place for at least six months. Investment-grade mortgage-backed securities will be acceptable as security.

Amid those developments and continued uncertainty about the Bank of Japan's new governor to replace outgoing Governor Fukui, the USDJPY has dropped 4.52 percent tonight and is bid 96.095 x ask 96.127 as I type. The Nikkei 225 is down 514.61 points.

Our futures are obviously negative, too. We have many hours to go before morning, and Wall Street will have time to digest this news and decide whether it's going to be sell-the-rumor/buy-the-fact, deciding to feel confident that our government is going to step in whenever and wherever needed, or just sell. You have time to make some plans, too. As I've said many times lately, there's nothing you can do to control markets. When they're this vulnerable, there's also little you can do, no matter how good your technical analysis skills, to predict when another bit of news will send them one direction or another. What you can control is your reaction to what happens. Make your what-if plans, then get some rest. You may need it tomorrow.

Keene Little : 3/16/2008 10:34:25 PM

The other news that probably has spooked traders is the fact that the Fed has done an emergency cut in their discount rate by 25 basis points, this only 2 days prior to their regular meeting. Traders are either very disappointed it's not more or spooked by the need to do it so close to their regular meeting on Tuesday. Note that this is not a reduction in the Fed funds rate but the two will likely be brought into synch on Tuesday.

SAN FRANCISCO (MarketWatch) -- The Federal Reserve on Sunday cut the rate on direct loans to commercial banks by a quarter-point and said it will allow primary dealers to borrow at the rate in exchange for a broad range of investment-grade collateral. In a statement, the central bank also extended the maximum term of discount-window loans to 90 days from 30 days.

You can sense how desperate the Fed has become--they're willing to take more and more as collateral (in an effort to put a floor underneath those collateralized debt obligations) and lending the money out for a longer period of time. The market is becoming fearful that all of these steps aren't working (because they're not) and the Fed is starting to panic, and worse they're starting to show their panic.

Jeff Bailey : 3/16/2008 10:33:35 PM

JPMorgan To Buy Bear Stearns for $2 a Share; Fed Cuts Discount Rate ... AP Story Link

Jeff Bailey : 3/16/2008 10:32:14 PM

US Dollar Index (DXY) Link ... The dollar is under further pressure this evening and now trades at the lower end of our longer-term "Bailey Wave" (Andrews Pitchfork; Modified Schiff". At historic lows and now under MONTHLY S2, WEEKLY S1 (being traded) then WKLY S2 are support levels. Might look for a four session consolidation close, then a bounce.

Keene Little : 3/16/2008 10:26:25 PM

Monday's pivot tables: Link and Link

To say that we have big moves in the futures tonight would be a gross understatement. Equity futures are down very hard (DOW down -280 points as I type but at its low and could keep dropping). The news about JP Morgan buying Bear Stearns for only $2/share has clearly spooked traders (this after a big spike up just before the news which I'm sure nabbed a few traders going the wrong way):

SAN FRANCISCO (MarketWatch) -- J.P. Morgan Chase (JPM) has agreed to buy Bear Stearns [BSC] for $2 a share in a stock-swap deal, according to a report in the online edition of the Wall Street Journal citing people familiar with the matter. J.P. Morgan will exchange 0.05473 shares of its common stock per one share of Bear Stearns stock. Both boards have approved the transaction. The Journal reported people familiar with the discussions said all sides were pushing hard to complete an agreement before financial markets in Asia open for Monday trading. The Journal report quotes Treasury Deptartment spokeswoman Michele Davis as saying, "None of these things is done until they're done. But I think everyone's expectation is sometime in the early evening hopefully" the deal will be done.

There's a lot of dark before the morning so anything can happen between now and then but this is clearly one of the most negative Sunday evenings I can remember. Traders are certainly flocking to the perceived safety of gold--futures are up $30 (3%) tonight. There's a lot of fear out there right now. I'm sure I don't need to caution all of you to be especially careful right now. This is a ripe opportunity for the PPT to try something by early Monday morning.

OI Technical Staff : 3/16/2008 9:59:59 PM

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

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

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

Jeff Bailey : 3/16/2008 3:13:09 PM

Wednesday could be a big day for the dollar. April Nymex Oil expires and we'll get some more inventory data. With unleaded inventories creeping higher, could see refiners slow their draws, oil ease on the post-roll and dollar rebound. Otherwise, trends continued.

Jeff Bailey : 3/16/2008 3:09:09 PM

Weekly, Monthly, Quarterly Pivot Matrix at this Link

Yellow highlights are some correlations I see.

A test for strength early would be OEX above WKLY Pivot/MNTHLY S1, with some room to WKLY R1/QTR S2. Untested overlapping support at WKLY S1/MNTHLY S2.

Jeff Bailey : 3/16/2008 2:57:03 PM

Jan & Feb Op-Ex Weekly and This Week's weekly pivot matrix Link

I typed in the currently mathematically derived (all call/put March Open Interest) "max pain" values for DIA,SPY,QQQQ and SMH

Market Monitor Archives