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Keene Little : 4/22/2008 12:37:35 AM

Tuesday's pivot tables: Link and Link

The DOW daily chart shows price has rallied up to the downtrend line from October, the price projection at 12864 for two equal legs up from January and nearly up to the top of a parallel up-channel for price action since January. RSI is overbought and MACD is showing bearish divergence. Price did a little throw-over above the rising wedge. We've got several signals here for a classic setup for a short play. Be careful if you're long and look to trade the short side against Friday's high. Link

For those who haven't read tonight's newsletter I showed some charts that used log scales vs. arithmetic price scales and it's interesting to see how the market trades around long term trend lines (including the ones from as far back as 1929). Since the uptrend lines from October 2002 and March 2003 are longer term trend lines, they're in a different place when using the log scale. Notice where price stopped: Link

Instead of price oscillating around those longer term uptrend lines, as shown on the first daily chart, price has been held back at each retest of the broken uptrend lines when viewed using a log scale.

The 120-min chart shows how price might have another down-up sequence, staying within the rising wedge pattern, to finish a final high closer to 13K in early May: Link . But as noted on the daily chart, any rally above 13100 would be bullish and any decline below 12270 would be bearish. In between you need to stay aware of the potential for a continuation of chop and whipsaw.

OI Technical Staff : 4/21/2008 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The Market Monitor has been archived.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.

Jim Brown : 4/21/2008 4:11:51 PM

Crude conintuing to tick higher after the close and currently at $117.79. Shorts are getting crushed.

Linda Piazza : 4/21/2008 3:54:36 PM

If you're making end-of-day decisions, here's what you have: the SPX is likely producing an inside day today, although it would be a more classical one if the entire range for today turns out to be inside Friday's open and 1390.33 close. It's not quite as classic an inside day if the SPX moves above that, as it may do.

This is indicative of indecision. It's indecision coming at the top of a climb. I'm likewise undecided. As I said as the market was opening this morning, some of my daily charts suggest that the SPX may climb into the 1408-1417 before stalling and some suggest it's likely to be stalling right here. You, unfortunately, must make those end-of-day decisions with that uncertainty and with the day's candle being a visual representation that I'm not the only one experiencing that uncertainty. In my mind, the SPX has not broken out yet but bulls certainly haven't yet given up the right to do so.

Linda Piazza : 4/21/2008 3:50:36 PM

Next potential resistance has now moved to 1394.11 from its earlier level, moving a little lower.

Linda Piazza : 4/21/2008 3:26:37 PM

The A/D line is currently -535. It's risen to test the -500 level but isn't above it yet, much less sustaining values above it. Short-term under-the-market setups are improving with the VIX and TRIN both dropping, but none of those movements are any more convincing as yet than is the A/D line's.

Linda Piazza : 4/21/2008 3:21:16 PM

For the SPX, next potential resistance is 1394.20.

Jane Fox : 4/21/2008 3:14:14 PM

The NDX futures are blasting through its overnight highs and it looks like the Russell 2000 is right behind. Link

Linda Piazza : 4/21/2008 3:04:03 PM

Resistance and support are in a tight band for the SPX and OEX. Potential resistance now is 1387.10, on 30-minute closes. For the OEX, it's 639.40, already surpassed by a bit but with many minutes left in this 30-minute period.

Jim Brown : 4/21/2008 3:01:44 PM

Crude appears to be settling around $117.50 with one day left on the contract. I am going to reiterate my suggestion to buy the July $90 USO puts (UNA-SL) or at least buy them before Tuesday's close. We could see a sharp sell off on Wednesday.

James Brown : 4/21/2008 2:55:22 PM

Research In Motion (RIMM) just recently crossed potential resistance at the $125.00 mark. This might be a new bullish entry point to buy calls.

Linda Piazza : 4/21/2008 2:53:21 PM

The A/D line is currently -739, still not above the -500 level that it needs to climb above to even begin to show a change in tenor.

Linda Piazza : 4/21/2008 2:43:33 PM

The SPX needs to close this 15-minute period above about 1384.25 to start breaking free of the resistance that it's slipped beneath over the last hour. Otherwise, odds increase that it will drop back down to test support at 1380.22.

In case anyone hasn't noticed, price action is choppy and we just have to wait it out.

James Brown : 4/21/2008 2:38:23 PM

OI call play on USO is trading at new highs. We're suggesting readers exit at the close today.

Jim Brown : 4/21/2008 2:36:17 PM

Russell futures - Another buy program on low volume spiking the markets again. That knocked me out at 715.50 for a 1 point loss. I am not going to try another one today on this low volume. Every little program can push the indexes around without any conviction.

Linda Piazza : 4/21/2008 2:32:52 PM

I showed this daily SPX chart earlier, but I'll show it again. The SPX is trapped, currently, between presumed strong support (38.2% retrace of the decline from last October) and presumed strong resistance (downtrend line), today's small candle between the two: Link . It's not surprising to see bulls and bears in such a standoff.

Jim Brown : 4/21/2008 2:31:50 PM

The closing spike in crude futures hit $117.76 and another new historic high. Still a couple minutes left to trade. Every dime we gain before tomorrow's expiration is just another dime to give back once the May futures expire.

James Brown : 4/21/2008 2:31:06 PM

Let me modify that statement...It's not reporters but market pundits who are noting the similarities between Britian's new plan to accept mortgage-backed securities for more liquid government-backed bonds and the British government's failed plan to convert war debt into shares of stock that created the South Sea Company bubble back in the 1700s.

Here's a link to a story about what happened in the 18th century that includes a photo of a pamphlet with a warning about what the British government was about to do titled, The Ruine of the Bank of England, and All Publick-Credit Inevitable". The pamphlets actually go on sale at auction on April 30th. Link

James Brown : 4/21/2008 2:14:21 PM

The recent 2008 lows in the DJUSHB home construction index was a bounce from its October 2002 lows. This sector has witnessed a drop from 1120 (in 2005) to 245 (Jan. 2008) in the value of the index. The group looks like it wants to put in a bottom here but the bulls are having hard time with any follow through on the rally attempts over the 400 level.

Jim Brown : 4/21/2008 2:11:02 PM

Volatility did pickup in crude with a new spike to more than $117 with 21 min left in normal trading.

James Brown : 4/21/2008 2:09:52 PM

Ouch! I just read an article suggesting that the housing market won't bottom until we see a 43% correction (in home prices) from the 2006 highs.

Linda Piazza : 4/21/2008 2:07:45 PM

The SPX threatens to slip below that support on its 15-minute chart but hasn't quite done so, with 15-minute closes still at that support rather than below it. They are, however, below the 15-minute 9-ema. If the SPX does lose support, currently down to 1382.20 on 15-minute closes, the next target is currently 1379.16.

Keene Little : 4/21/2008 1:56:21 PM

Linda, yes, 500 is clearly the downside potential for the S&P 500 but as I show at the top right of the chart, I believe we're going to form either a sideways triangle consolidation or a bear flag with another leg down to complete the long term correction by 2011 (with a low below October 2002). The sideways triangle would likely run out into 2016-2018. The good news is that we'll then get another big bull market into the 2020-2030 period.

I completely concur with your Traders Corner article that said now is Not the time to be a buy and holder. Finding sector strength and knowing when to be in stocks and when to be in cash (or bonds) will be very important to longer term investors. Look at the period between 1968 and 1982 on the chart I posted--in real dollars the market was down almost as much as the 1929-1932 decline. Most people have no clue it was that bad during that time.

Jim Brown : 4/21/2008 1:55:10 PM

Russell short - We are not really seeing a strong break under 714.50 but I went ahead and took the entry. Let's hope it continues. I would set at tight stop at 715.50.

Jane Fox : 4/21/2008 1:53:36 PM

Long from 12786 and stopped at 12779.

Linda Piazza : 4/21/2008 1:49:34 PM

That 1386.62 (currently) resistance on the 30-minute chart proved too strong, pushing the SPX down to potentially strong support. That now ranges down to about 1382.20, but bulls would prefer that the SPX maintain support on 15-minute closes at or above 1382.80.

Jim Brown : 4/21/2008 1:48:32 PM

Definitely should have taken that Russell short when it failed at 718. Looking for a cycle bounce now to enter a short position or a break below 714.50.

Jim Brown : 4/21/2008 1:47:19 PM

Nasdaq under 2400, A/D line has rolled over. Ticks went decidely negative. Are we setting up for an afternoon washout?

Linda Piazza : 4/21/2008 1:46:33 PM

So, Keene, if I followed the bottom of that figger (red) channel across to the scale, it appears to be at about 500 now? We don't want to imagine an SPX at 500, do we?

Jim Brown : 4/21/2008 1:45:33 PM

Sell program hitting the tape. With no volume these little programs are able to really push the market around.

Jim Brown : 4/21/2008 1:44:14 PM

With 45 min to go in regular trading on crude we should see volatility pickup substantially. It will be interesting to see which way it settles. With shorts required to close their positions by tomorrow's close you would think it will be higher but you can never tell what forces may be at work.

Keene Little : 4/21/2008 1:43:32 PM

Along with the other comments on the long term trend lines and how long they seem to act as support and resistance, I thought I'd show one chart I'm using in tonight's newsletter. I'm going to review some long term charts, the use of log vs. arithmetic scales and nominal prices vs. inflation-adjusted prices. At any rate, take a look at this chart of the S&P 500 from 1870 (yes, 1870) using inflation-adjusted prices and log scale: Link

Trend lines of interest are the red ones which identify a parallel up-channel since the 1932 low and the top of the channel is where price (inflation adjusted) stopped last October. The blue dotted trend line from the 1929 peak through the 1968 peak is where price found support in 2002. The blue dotted uptrend line from 1982 through the 2002 low is where price found support in March. The market has a rhythm to it and it's identified by trend lines.

James Brown : 4/21/2008 1:42:59 PM

NYMEX Holdings (NMX) looks tempting. The stock is showing relative strength after its recent breakout above the 50-dma. I'm seeing some bullish developments in the shorter-term technicals. The P&F chart is positive with a $120 target. A move over $100 might be an entry point. Earnings are not expected until May 1st.

Jim Brown : 4/21/2008 1:40:17 PM

Text of a speech by Fed Governor Kroszner hitting the wires. Topic is Sustainable Capital for Community Investments. Now you know for sure I am bored and volume is near zero if I would even mention a speech like this. Link

Linda Piazza : 4/21/2008 1:39:16 PM

This is the most labored climb on the SPX, isn't it! Yet, when I look at a 15-minute keltner chart, I see support that keeps firming, now from about 1382.30-1382.80. That firming support suggests that the SPX should be climbing, but its climb should look stronger. Something is wrong somewhere and I haven't figured it out yet.

James Brown : 4/21/2008 1:38:51 PM

This biotech company, Illumnia Inc. (ILMN), might be worth checking out. The stock has a nice bullish trend and traders bought the dip near $70.00 last week. Shares might see some volatility on earnings due out April 22nd after the closing bell. Link

Jim Brown : 4/21/2008 1:37:38 PM

I should have taken that Russell short at 718 when the buy program ended. If the Naz falls below 2400 that would be confirmation of a potental afternoon decline.

Jim Brown : 4/21/2008 1:35:39 PM

Volume is extremely light. There is no conviction from either the bulls or the bears.

Linda Piazza : 4/21/2008 1:35:24 PM

We never mention it here on the Market Monitor, at least not that I remember, but I thought subscribers might like to know that there's a volatility index just for the Russell 2000, the RVX. It's been zigzagging its way up since Friday, a little after noon. Today, it's been pulling back in what looks like a bull flag, back from resistance now at 26.17 on 15-minute closes. The RVX is 25.83 as I type. If that is a bull flag, it would support Jim's thesis about what's going to happen with the RUT.

Jim Brown : 4/21/2008 1:29:21 PM

I am sure tempted to short the Russell futures again here at 718 but the A/D line is still rising. I am a little careful here.

Linda Piazza : 4/21/2008 1:28:14 PM

That is an amazing chart, James (1:24:41 post). I, like Jim, hate to remove any old trendlines. Sometimes when writing the Wraps, I'm forced to do so just because the charts grow so cluttered, but I agree with James and Jim that those old trendlines stay important long after you think they will be.

Jane Fox : 4/21/2008 1:27:38 PM

Target is 12823 so make sure your limit orders are in.

Jim Brown : 4/21/2008 1:26:24 PM

I almost never remove my trendlines from my charts and I am always amazed to come back to a stock months or even years later and see the trendline still in play. Maybe technical analysis really does work. (grin)

James Brown : 4/21/2008 1:24:41 PM

I was investigating the rally in Laboratory Corp. (LH). The stock is up more than 2% and breaking out over its 200-dma. The move is probably being fueled by the positive reaction in DGX, who reported earnings this morning.

Then I noticed the weekly chart and the regression channel I had drawn on LH years ago was still there. Hmmm.... Link

Linda Piazza : 4/21/2008 1:24:11 PM

I wouldn't assume that the SPX can maintain levels above about 1386.50. However, if it can, the next Keltner target is now risen to 1394.82, so a retest of Friday's high. Watch for rollover potential now, though, just in case. The A/D line is climbing, but it needs to maintain levels above about -500 before its climb is really impressing me any. It's -646 now.

Jim Brown : 4/21/2008 1:20:17 PM

GameStop (GME) dropped -1.08 after the president resigned. Goldman Sachs cut their rating to a sell.

James Brown : 4/21/2008 1:18:33 PM

Interesting... both Honda (HMC) and Toyota (TM) have been surging higher the last four days in a row. The longer-term trend for both of them is still down but HMC might have broken through some significant resistance with today's gap higher.

It's probably not a coincidence that the NIKKEI was up four days in a row.

Linda Piazza : 4/21/2008 1:18:02 PM

Watch potential SPX resistance at 1386.47 on 30-minute closes. For the OEX, that's 639.04 and the OEX is currently over that level, but without the 30-minute period being yet concluded.

Jim Brown : 4/21/2008 1:11:10 PM

Russell futures short - stopped at 718.20 on that buy program.

Jim Brown : 4/21/2008 1:10:37 PM

Too bad Petrobras denied that discovery announced by the NPA.

James Brown : 4/21/2008 1:08:14 PM

Shares of Brazilian PBR are still marching higher following last week's announcement of a huge oil find off the coast of Brazil. The stock is trading at new highs and up 37% from its March lows with four straight weeks of gains. A dip or bounce near $120 might be a new entry point for bulls. The P&F chart points to a $199 target.

Jim Brown : 4/21/2008 1:07:53 PM

Small buy program hitting the tape at 1:PM.

Linda Piazza : 4/21/2008 1:02:18 PM

Stalemate. As I mentioned earlier, that firming support on the SPX's 15-minute chart looks so strong that, barring a strong whoosh lower, I wouldn't think the SPX would even dip all the way to that support. Balancing that is resistance up to about 1386.46 on 30-minute closes. Balanced between presumed strong support and presumed strong resistance, with mixed underpinnings of the market, the SPX is stalled. Earlier, I'd expected a bounce from support but didn't know what would happen next and thought we'd have to wait for the chart setups. Apparently, no one else knew or knows what to expect, either, as bulls and bears engage in a staring contest.

Jim Brown : 4/21/2008 1:02:04 PM

Russell futures short - 716.20 was hit. The stop will be 718.20.

James Brown : 4/21/2008 12:56:35 PM

The HMO healthcare index looks like it might be forming a bottom. The index has been bouncing around the 1365-1450 zone for more than four weeks. A breakout over 1450 might be an entry point. It's currently trading at 1433.

Jim Brown : 4/21/2008 12:56:19 PM

Russell futures trade alert
I would short the Russell futures with a trade at 716.20 with a stop at 718.20

James Brown : 4/21/2008 12:52:58 PM

Netflix (NFLX) is up 3.9% ahead of its earnings report out after the closing bell tonight. Shares got a boost this morning following some positive analyst comments.

The stock is up about 74% in just the last three months. Tonight's earnings report could see a sell-the-news reaction no matter what the results. Traders might want to consider a strangle to capture any post-earnings move.

Jim Brown : 4/21/2008 12:52:44 PM

Japanese oil tanker attacked off the coast of Yemen.
As if the oil markets did not have enough to worry about a Japanese tanker, the Takayama, was attacked by a small boat while headed to Saudi Arabia to reload. The tanker was hit by a small rocket and lost several hundred gallons of fuel from hole where a rocket exploded. Nobody was injured and the damage was minimal. I am surprise more tankers have not come under attack. They are relatively unprotected and easily in reach of al-Qaeda's capabilities.

James Brown : 4/21/2008 12:48:06 PM

I mentioned a couple of dry-bulk carriers (shipping companies) earlier this morning. Another one showing strength today is Diana Shipping (DSX), which is up 3.5% and breaking out over its 200-dma. Short-term looks bullish and the stock has broken out from under its trendline of lower highs. However, DSX is quickly approaching potential resistance on its P&F chart near $30.

Jane Fox : 4/21/2008 12:46:47 PM

I am now raising my stop to just below BreakEven at 12779.

James Brown : 4/21/2008 12:37:04 PM

Both Mastercard (MA) and Visa (V) are showing strength today.

Traders bought the dip in MA near $231 this morning.

V is showing more strength with a 3.4% rally and a break above the $70.00 level. This is a new high for Visa, which came to market with an IPO on March 19th. Visa does have options on it.

Linda Piazza : 4/21/2008 12:36:22 PM

The TRIN is still dropping off the day's high. The A/D line is moving sideways, maintaining its breakdown mode on the 15-minute Keltner chart. The VIX coils near the day's high. Mixed evidence.

Jim Brown : 4/21/2008 12:35:43 PM

QM crude futures - Giving a sell signal under $116.45. Currently trying to cling to $116 with the intraday low at $115.67. It looks like a short setup but remember QM's expire today, CL expires tomorrow. Lots of room for volatility before Wednesday's expected decline.

Linda Piazza : 4/21/2008 12:33:55 PM

The SPX is maintaining 15-minute closes above the 15-minute 9-ema, but barely, and it's doing so with small-bodied candles. That moving average is now 1383.77. The SPX needs a big push higher or it risks turning back to support. That support appears to be firming near 1380-1382, so I'm surprised that the SPX isn't doing better than it is. The support looks firm enough that the SPX shouldn't even drop down to test it, so something is going on. When I see too many contrary signs, I stay wary, and you should, too. Of course, the A/D line looks terrible.

Jim Brown : 4/21/2008 12:32:12 PM

Relatively speaking the markets are holding up rather well today given last week's monster rebound and today's earnings disappointments. Unfortunately the morning's rebound appears to be running out of steam. Russell futures are weakening from the noon high. Still no obvious direction and lots of indecision.

James Brown : 4/21/2008 12:29:23 PM

ITRON (ITRI) is showing relative strength today. The stock is up 3.2% and breaking out over resistance at the $100 level.

This could be a bullish entry point to buy calls and target a run toward the $110 region. The Point & Figure chart shows a bullish triangle breakout pattern with a $121 target.

Traders should note that ITRI reports earnings on April 30th.

Keene Little : 4/21/2008 12:28:58 PM

The DOW is at an interesting point here. It achieved two equal legs up in its bounce from January when it tagged 12864 on Friday and it did a perfect tap against its downtrend line from October. As you can see on the daily chart, RSI has reached a level that has marked previous highs. Not shown on the chart, the 50% retracement of the Oct-Jan decline is at 12916 and the DOW came within 23 points of that level on Friday. It might very well have already topped out. Link

If the bulls can press it a little higher there could be resistance at the top of a bear flag pattern for the bounce off the January low, currently near 12950. And then a little higher is its 200-dma at 13087. I've placed the key level for the upside at 12100 because I think that's what the bulls need to break above in order to prove the bounce is anything other than just a bear market correction. A break below 12270 is needed to confirm we'll likely see at least a move back down to the Jan/Mar lows near 11700.

Linda Piazza : 4/21/2008 12:18:56 PM

The A/D line certainly isn't looking bullish this morning, is it? It's still in breakdown mode on the 15-minute chart, still below its descending 15-minute 9-ema, at -654.35. The A/D line is -798.

Linda Piazza : 4/21/2008 12:08:40 PM

The SPX approaches potentially strong resistance on 30-minute closes, at 1386.32. The OEX has already reached analogous resistance at 638.84, reaching it and closing below it during the just-concluded 30-minute period. It's testing it again as I type.

Keene Little : 4/21/2008 12:06:56 PM

The techs are looking a little more bullish right now and the NDX daily chart shows some upside potential to its downtrend line from October, currently near 1933. A little higher is its 200-dma at 1960 and the 50% retracement of the Oct-March decline at 1954. After the two gaps to the upside last week it would be a sign of weakness if NDX drops back into Friday's gap (with a drop below 1880). Link

James Brown : 4/21/2008 12:04:10 PM

Coal producer, Arch Coal (ACI), reported earnings today and beat estimates by 10 cents a share.

The news has lifted the entire group. ACI is up 5.4% to another new high. FDG is hitting new highs, up 4.6% to over $65.

Exit alert - OI call play CNX is up 2.38% at $88.31. Shares hit an intraday high of $89.62 this morning. Our target was the $88.00-90.00 zone so this is an exit for us.

Linda Piazza : 4/21/2008 11:57:22 AM

The SPX's 15-minute 9-ema is now 1383.40; the OEX's, 637.94. If upward momentum is to be preserved, these indices need to maintain 15-minute closes above these levels. Watch the approaching resistance, however, as that may stall the indices. The bounce was anticipated; now what happens subsequently will tell us what to expect next.

James Brown : 4/21/2008 11:55:14 AM

I've mentioned MTL, an iron and steel producer, in my play editor's notes recently. I wish we had bought the dip near $140 and its 10-dma. The stock is now hitting new highs near $155.

This might be one to put on your watch list and wait for another dip. The Point & Figure chart is suggesting a $186 target. chart: Link

James Brown : 4/21/2008 11:49:29 AM

Oil and gas producer Hess Corp. (HES) is breaking out past its December highs and hitting new all-time highs at $109.80 today.

The relative strength looks great but I would hesitate to open bullish positions until after we see if crude oil futures sell-off following futures expiration.

Jane Fox : 4/21/2008 11:46:47 AM

Raising my stop to 12764.

James Brown : 4/21/2008 11:45:41 AM

Shares of PetroChina (PTR) are up sharply today (+3.87%) and breaking out over the $130.00 level.

China Petrol and Chemical Corp (SNP) are up more than 6% to $96.81.

Both stocks are rising on news that the Chinese government will provide a monthly subsidy to offset losses for processing imported oil.

"The shortages have been caused largely by state-set pump prices, which are so low that refiners lose money on processing..." (Reuters)

Linda Piazza : 4/21/2008 11:45:00 AM

The OEX has potential next resistance near 638.95-639.08, with that potential resistance on 15-minute closes. Watch for possible stalling of the bounce there, but the 15-minute chart suggests that, if the OEX can get past that, it could reach 641.40. Be careful about expectations, though, as this next level of resistance looks fairly strong when I roll up to the 30-minute chart.

Linda Piazza : 4/21/2008 11:43:20 AM

If the SPX should be able to reach the 1386.15-1386.40 zone, it may find resistance there on 30-minute closes. The 15-minute chart is in conflict, painting a rosier picture of a possible climb to 1392, but let's see what happens at that other zone first. Watch for a potential stalling or rollover there.

Jane Fox : 4/21/2008 11:38:20 AM

I am now long YM at 12786 and have a stop at 12749. Target is a 1:1 ratio to risk. I will be raising the stop as soon as we move into profit a little more.

Jane Fox : 4/21/2008 11:36:40 AM

This may be a day when you need to take heed of the AD volume trajectory for it is just not letting up. VIX is not supporting the bearish AD volume but it is not bullish either. The AD volume ratio is also making new daily lows and telling me you should be worried if long.

The trade I have profiled may not be your cup of tea with the internals like they are but this is a trade my system has setup and I will be taking it. Of course all the trades I profile here are for training purposes only..

Linda Piazza : 4/21/2008 11:28:10 AM

The SPX's 15-minute 9-ema is now 1383.32; the OEX's, 637.71.

James Brown : 4/21/2008 11:27:49 AM

Biotech stock Gilead Sciences (GILD) is showing relative strength today. The stock is up 1.39% and appears to be breaking out from what almost looks like a bull flag pattern. The stock has been churning sideways to down for the last three weeks and today's move breaks the short-term trend of lower highs.

Today's move or a rally past resistance near $53.00 might be a bullish entry point. chart: Link

Linda Piazza : 4/21/2008 11:23:26 AM

Today, THE LONDON TIMES carried an article about a 50-billion-pound mortgage bailout to help Britain's banking system and ease the morgage market. According to the article, lenders can trade U.K. and European mortgage-backed assets for government-backed bonds. Banks will, however, be charged a fee based on the LIBOR, and bonds offered for the swap will be discounted 10-30% off the value for the banks' assets. The six-month window for these kinds of swaps begins today. Some think the terms stiff enough that not much help will be provided for the ailing financial system. Mortgage rates won't drop, others argue. Perhaps, though, the help will be conceptual, in a boost in confidence. Some hope it will help stop the hoarding of cash among banks that have been reluctant to lend to each other when they can't assess the exposure the other banks have due to mortgage-backed assets. The danger, though, is that banks will now be revealing the true state of their finances. The usual arguments about whether this is a bailout, about whether government should shoulder risks that private entities took on and other arguments long familiar to us are being voiced.

Jim Brown : 4/21/2008 11:23:46 AM

OIL Short - Alert
I would be looking to short/put the USO today. I would be a buyer of the July $90 put UNA-SL currently at $5.30. We could still see an expiration spike but I think we will be much lower by Friday. In the April expiration cycle last month crude priced fell $10 in the 48-hours after expiration. May crude futures expire tomorrow.

Chart of April crude expiration: Link

Jane Fox : 4/21/2008 11:16:01 AM

I do see a long YM trade at 12786 with a stop just under the daily lows so a large profile.

Jim Brown : 4/21/2008 11:10:42 AM

A reader question: On CNBC this morning a guest, Stephen Schork of The Schork Report, argued that crude is so high because of a lack of refinery capacity to produce the distillates not because of a lack of crude. I've heard OPEC say the problem was refinery capacity also. But he later said the cure for high prices for crude is for the government to start doing things to support a strong dollar. Seems to me the cure would be more refinery capacity if the problem is lack of capacity. I don't get his argument.
I believe you have stated the dollar is not the problem and given that refinery capacity is very low what is the real reason in your view?

Answer:
Refineries are only running at 81.4% of capacity as of last week. Currently the price of oil is not related to refinery capacity. However, on a long term basis it is a factor. There is plenty of cheaper heavy crude and sour crude available to the market. There is a shortage of refineries to process that type of crude. Saudi, China and India are building refineries to process that kind of crude but they will not be completed for several years. The combined new capacity will be over 2 mbpd.

There is a shortage of light sweet crude. All the light crude deposits have been heavily produced and the crude being found in remote and hard to produce locations like the new Tupi field off the coast of Brazil is heavy crude.

I do not believe the dollar is a material reason for higher oil prices. The dollar has fallen 12% over the last year and the price of oil has risen 65%. There may be some minor impact but the dollar is not the only reason for the rise in crude.

It is a combination of all the factors but eventually it will still boil down to not enough oil being produced to keep up with demand. That should occur in 2010 according to current estimates.

Linda Piazza : 4/21/2008 11:07:13 AM

Bears, as I warned earlier, this is a zone now of potentially strong support for the SPX and OEX. It's not guaranteed support, but I would certainly have profit-protecting plans in place now. On the daily chart, that Fib level I showed earlier was tested. On the 15-minute chart, the target and potentially strong support on 15-minute closes, now at 1378.57, was closely approached.

However, without a bounce soon and probably unless that bounce sustains levels above about 1383.15 currently, the SPX risks settling at this support for a while, chopping around, and possibly falling more deeply, perhaps to 1373.08.

Keene Little : 4/21/2008 11:04:22 AM

CME is still struggling at its downtrend line from December. The 38% retracement of the Dec-Mar (519.52) has been resistance. We should get some indication as to where it will head over the next few weeks once it either breaks its last high near 527 on April 7th or its last low near 476 on April 15th. If it manages to rally higher it should have no problem making it up to its 100 and 200-dma's (571-581) and probably up to its broken uptrend line from April 2005, currently near 600 and the 62% retracement. Link

A turn back lower could have CME working its way back to the bottom of its parallel down-channel. There's a Fib projection near 340 that makes for an interesting possibility by early May.

James Brown : 4/21/2008 10:59:26 AM

FYI: Both the Chinese Hang Seng index and the Japanese Nikkei index were up strong on Monday with +2.1% and 1.6% gains, respectively. This was probably a reaction to U.S. market strength on Friday. Both markets were up sharply over the last few days and could be due for a correction.

Jane Fox : 4/21/2008 10:56:49 AM

I really hate saying this but I don?t think a short nor a long is viable right now. Unfortunately though that is what the market is giving us and we have to take it. I never force a trade and will continue to watch to see if anything sets up.

Jim Brown : 4/21/2008 10:56:21 AM

The Saudi Arabian oil minister said last month that oil is unlikely to ever fall below $70 again. The Total SA CEO said the rising cost of exploration means $70-$80 is a new floor for prices. He also said the new rules being created about carbon storage would add significantly to costs absorbed by exploration companies. This suggests many marginal fields may not be produced for many years until the price of crude reaches a level where all the new taxes and costs can be offset by higher crude prices

Linda Piazza : 4/21/2008 10:54:50 AM

The SPX's 15-minute 9-ema is now 1384.40; the OEX's, 638.15.

Linda Piazza : 4/21/2008 10:53:40 AM

James mentioned Fib levels. The SPX is approaching an important one, the 38.2% retracement of the steep slide from the October high into the March low. It's at the horizontal green line marked on this daily chart: Link The SPX didn't quite reach the potential next support and target on its 15-minute chart, now risen to 1378.16, but that may be because of that daily chart Fib level's potential support, too.

Jim Brown : 4/21/2008 10:51:43 AM

There are cracks appearing in the Canadian oil sands production targets. The Canadian government is working on rules to require any carbon dioxide produced from the process to be buried rather than vented into the atmosphere. Numerous countries are moving towards this option and it is not going to be cheap.

The cost to bury carbon in Canada is said to be between $2 and $13 per barrel. Current costs to produce crude from the oil sands are running about $60 per barrel. With the addition of the carbon costs, extra expenses to recover the wastewater and higher costs for natural gas to heat the sands the overall cost to produce 3-5 years from now could be $85-$90 per barrel. Since the majority of that oil is exported to the U.S. it suggests there will not be any return to the cheap oil of just a couple years ago.

James Brown : 4/21/2008 10:51:06 AM

Shares of ImClone Systems (IMCL) are up big today after a report came out this morning suggesting that IMCL's Erbitux could challenge Genentech's (DNA) Avastin drug as a treatment for lung cancer. (Source:Reuters)

Shares of IMCL are up 4.8% to $48.24. The $48.00 level has been overhead resistance dating back to 2004. This move might have legs. The Point & Figure chart displays a bullish triangle breakout pattern with a $63 target. However, readers should note that IMCL is due to report earnings on April 24th before the opening bell.

Jane Fox : 4/21/2008 10:49:14 AM

From a purely technical point of view, Crude has a very very good chance of retracing back to at least the $108/bl price but I would not be brave enough to short the ride down. What I plan on doing is getting long at this support and riding it back up again. I know at some point this market needs to come back to earth and this next retracement may be the one but you just never know.

Of course before I get long I will have good evidence the support has held and Crude is heading back up again. Link

James Brown : 4/21/2008 10:44:15 AM

Speaking of currencies, the FXE Euro ETF is bouncing after Friday's dip. The FXY Yen ETF is also rebounding although it doesn't look as strong as the Euro.

Both of these currency ETFs have options.

Jane Fox : 4/21/2008 10:44:10 AM

Here are your overnight charts. Both the Russell 2000 and NDX futures have not broken their respective overnight lows whereas the S&P and DOW futures have. Link

Jane Fox : 4/21/2008 10:40:40 AM

The problem with the FADE is that the AD volume tajectory is very bearish. Geesh trading is never easy heh?

Linda Piazza : 4/21/2008 10:40:27 AM

James, I agree on the Fib retracements, whether it's just a self-fulfilling prophecy or something else at work. They're especially useful on the forex markets, I believe.

Linda Piazza : 4/21/2008 10:39:30 AM

I would not consider any trade setup optimal on the Monday morning after opex week, so guard your profits carefully if you have them and don't let losses get too big if you have those.

James Brown : 4/21/2008 10:39:18 AM

Nice chart on Google (GOOG), Keene. Sometimes it's uncanny how useful the Fibonacci retracements can be.

Linda Piazza : 4/21/2008 10:38:22 AM

There has now been a new low on the A/D line, although the A/D line immediately bounces from that new low. It no longer signals bullish divergence, however.

Jane Fox : 4/21/2008 10:37:52 AM

VIX is NOT making new daily highs as the S&P futures make new daily lows so this is a huge indication to fade this market and try a long. Link

Jim Brown : 4/21/2008 10:36:30 AM

Qatar says China to get gas previously destined for U.S. and Europe.
Qatar is the world's largest producer of LNG and is diverting supplies to China because they are willing to pay a premium for the gas. The Qatar oil minister said, "We are not in the charity business. Whoever will give me the best price, I will follow him."

The U.S. has been having some problems contracting for future LNG supplies to feed the new terminals under construction. Even with our internal gas going for $10 per MCF we can't attract external production. This is completely opposite of what U.S. LNG operators were expecting just a couple years ago. Everyone was talking about all the cheap gas available from overseas. That gas has disappeared.

Linda Piazza : 4/21/2008 10:32:45 AM

The SPX's 15-minute chart now shows increasing likelihood that the SPX will drop toward 1377.66; the OEX, 635.29. That's not a promise, but certainly a stronger possibility now.

Jane Fox : 4/21/2008 10:32:18 AM

DOW daily chart has broken the very odd shaped reverse head and shoulders and is retesting the neckline today. Since I am bullish until around the elections in November I think this trendline will hold. Link

James Brown : 4/21/2008 10:32:08 AM

Another winner today is Quest Diagnostics (DGX $48.45). They are a large medical testing company.

DGX is up 6% today following its earnings report this morning. The company announced a profit of 72 cents a share, which was 2 cents better than estimates. Quarterly profits jumped 32% from a year ago.

Today's move in DGX is a bullish breakout from its recent consolidation and a breakout over its 50-dma. The move is also a breakout over what looks like resistance near $48.00 on the weekly chart.

I wouldn't chase it here but it might be worth another look on a dip. Bear in mind DGX has not yet broken out from its bearish channel dating back to its September 2007 peak. chart... Link

Keene Little : 4/21/2008 10:31:20 AM

After GOOG's big gap up on Friday it is pulling back (to be expected). The top of the gap is near 525 and the bulls want to see that act as support. The bulls remain in control as long as the pullback does not drop below 50% of the gap (near 492). A trend line across the highs of the bounce off the March low is currently near 510 and obviously climbing over time. So those provide some potential support levels if GOOG pulls back further today. Link

The rally off the March low achieved a 38% retracement of the Nov-Mar decline (540.70) so bulls need to be aware that the correction to the decline might have finished. But another push higher could tag the 50% retracement at 580 or its broken uptrend line from March 2005 near 590. A push above 600 would be bullish but so far I view the bounce in GOOG as just a correction to a new downtrend.

Linda Piazza : 4/21/2008 10:28:06 AM

The A/D line has not hit a new low to match the new day's lows on some equity index charts. This is bullish divergence, although tentative. You know how to use divergence. Let it warn you to make what-if plans but don't count on it as proof that there's going to be a turnaround. We can see bullish divergences set up all the way down a steep decline.

Jim Brown : 4/21/2008 10:25:16 AM

The fertilizer stocks are surging higher again. Getting an entry on these stocks is extremely tough.

POT +3
MOS +3
TNH +7

Linda Piazza : 4/21/2008 10:21:37 AM

Here's how the 15-minute SPX chart is now set up: Potential support now near 1381, and, if that fails, near 1377.30. A bounce attempt likely from one of those. If the bounce comes from near the 1381 level, that bounce attempt is likely to stall near 1386.20 or perhaps as high as 1389.70-1390.80, and then we'll have to see what unfolds. If the SPX drops deeper, particularly if it drops down to 1377.30 or so, then I'd expect a possible bounce attempt, too, but it is a little more difficult to gauge where it would stall from this vantage point. In other words, there's still the possibility for chop.

Jim Brown : 4/21/2008 10:19:35 AM

Oil company costs going up
The CEO of Italy's largest oil company, ENI, said this weekend that the rising share of oil profits taken by governments in oil rich countries was approaching 90%. He said in some cases the left over profits for independent oil companies like ENI, XOM, COP, etc was in some cases less than their cost of capital.

Scaroni said, "International oil companies need to profoundly rethink their business model in order to survive and prosper."

You may remember that Venezuela hammered independents again last week with a windfall profits tax of 50-60% when oil is over $70 per barrel. Governments are slowly killing the golden geese and historically it has always resulted in lower production whenever the independents had no incentive to explore.

James Brown : 4/21/2008 10:18:34 AM

I was considering a Lexus RX hybrid, which should come close to doubling the gas mileage of my Chevy Tahoe.

I've always owned American-made cars but I don't see anything comparable that's all-wheel or front-wheel drive and gets close to 30 MPG.

Jim Brown : 4/21/2008 10:16:00 AM

If you have a surburban with a 40-gal tank that costs $125 at today's prices. With most service stations cutting off credit cards at $75 that means you have to go through the process twice to get a full tank.

Linda Piazza : 4/21/2008 10:14:31 AM

Bears, know how you'll treat a test of SPX 1379.85-1381.06, as a potential Keltner support zone is in that area. For the OEX, it's 635.21-636.21.

Linda Piazza : 4/21/2008 10:13:17 AM

The SPX's 15-minute 9-ema is now 1387.54; the OEX's 639.50. So far, today, both have continued the pattern established about 2:00 Friday afternoon of descending below these turning-lower averages. Friday, they were finding resistance on 15-minute closes at these averages, but they haven't been tested yet this morning. Sustained moves above them might show a change in tenor.

Keene Little : 4/21/2008 10:11:44 AM

I'm still watching and waiting to see which way SPX is going to head. Any move lower to a new daily low could set the direction for the day (or at best mean a sideways consolidation kind of day). A rally above 1391 should indicate we're into the next leg up. In the meantime beware the chop.

Linda Piazza : 4/21/2008 10:11:10 AM

Me? I'm thinking about buying a late 80's vintage Mercedes deisel and then converting it to run on straight vegetable oil. (I deleted reference to the specific vendor because I don't want to sound like a commercial.)

James Brown : 4/21/2008 10:07:15 AM

It's not pretty, Linda.

My next car will be some sort of hybrid.

Linda Piazza : 4/21/2008 10:06:45 AM

Jim is reporting on average gasoline costs this weekend in his 10:03:11 post. For the first time ever, I spent more than $40 putting gas in my Acura this weekend. When it costs more than $40 to fill up an Acura's tank, I can't imagine the pain that big SUV drivers are feeling.

Linda Piazza : 4/21/2008 10:04:35 AM

The SPX did not manage a 30-minute close above the breakout benchmark after all, dropping in the last few minutes of the 30-minute period. Rolling back down to the 15-minute chart, next potential support is a little higher than it was the last time mentioned, now at 1381.07. That's now a potential target and will remain so as long as the SPX can't sustain 15-minute closes above the 9-ema, now at 1387.72. For the OEX, the analogous target is now 636.24, in place as long as the OEX can't produce 15-minute closes above 639.55.

James Brown : 4/21/2008 10:04:09 AM

SanDisk (SNDK) is showing strength today.

The company reported earnings last Thursday night and missed estimates by 5 cents. However, guidance and its conference call were strong enough to warrant some positive analyst comments.

The stock was inching higher on Friday. Today is seeing SNDK up 2.2% and breaking out from its sideways consolidation. Shares are challenging technical resistance at its 100-dma near $28.20.

Jim Brown : 4/21/2008 10:03:11 AM

AAA reporting that the national average for a gallon of gasoline hit $3.50 over the weekend.

Linda Piazza : 4/21/2008 10:01:44 AM

It's frustrating not to be told exactly what's going to happen, but it may be more useful than you know to be told that we just don't know yet how the day will unfold. If you're thinking about jumping into the market this morning, it's better to miss a trade than to enter an iffy one. We're blessed with many experienced writers, however, so check out what the others have to say, too, as they may have a firmer outlook.

Jane Fox : 4/21/2008 9:58:31 AM

SPX daily charts are facing some really tough resistance but I think it will break it or if not the retracement will be a higher low so the trend remains up. Link

Linda Piazza : 4/21/2008 9:58:06 AM

As we approach the end of the first 30-minute period, the SPX has currently bounced back above the breakout benchmark on its 30-minute chart. That's at about 1385.90 currently with the SPX at 1386.18 as I type. It's wise to retain some skepticism about what you're seeing in the early trading period, particularly early on a Monday morning and especially on the Monday after opex week. The outcome to the "stall now or climb to 1408-1417 and stall" question is as yet uncertain in my mind.

Jane Fox : 4/21/2008 9:56:23 AM

VIX is making new daily lows supporting the S&P futures new daily highs. AD line is still under -500 so the any upside move will be choppy.

Jim Brown : 4/21/2008 9:55:48 AM

Nigeria crude shut in
Shell reported this morning that 160,000 barrels of daily crude production had been shut in because of attacks by MEND rebels. The force majeure they declared this morning covered remaining May and June deliveries. Normally that would have spiked oil another couple of dollars but with only one day left on the May futures there is indecision showing on the charts. May crude is only up +7 cents for the day.

James Brown : 4/21/2008 9:54:55 AM

Jim mentioned strength in the tankers.

Dry-bulk tankers or carriers are also doing well. Dryships (DRYS) is a current OI call play and the stock is breaking out over its 200-dma this morning. DRYS is currently +2.4% at $77.38. Our target is the $79.00-80.00 range.

I also noticed that Excel Maritime (EXM) is another dry-bulk carrier that is showing strength. EXM is up 5% and challenging resistance at the $40.00 mark.

Linda Piazza : 4/21/2008 9:50:12 AM

The SPX has created a downside target of 1380.99, but I'm deliberately remaining a bit skeptical of that downside target. The VIX bounced hard but has pulled back hard, too. The A/D line fell hard but is bouncing hard, too. Be aware of that potential downside target, but the SPX could rise to retest resistance near 1388.70, and if it gets past that and stays past that, it erases that downside target.

James Brown : 4/21/2008 9:48:29 AM

Retailer Sears Holding (SHLD), operator of the Sears and K-Mart stores, is trading down almost 5% today.

Evidently there was some negative news out on Friday night after the closing bell.

Bank of America (BAC) has declined to renew SHLD's secured credit agreement, which would end in July (Source: Reuters)

SHLD is now trading under the $100.00 mark.

Jim Brown : 4/21/2008 9:46:41 AM

Tanker rates rise
I reported last month that tanker rates for crude tankers had declined about 30% as demand for transport had declined. That month long decline has ended. According to Bloomberg shipping rates climbed to 2.5% over the stated Worldscale points last week. The Worldscale points values 320,000 specific routes around the globe for shipping traffic. It provides a common base rate for any route. Changes in pricing are based off the base points.

For instance the 39 day round trip from Saudi Arabia to South Korea is quoted at 124.94 points. That translates into $88,621 per day for a Very Large Crude Carrier (VLCC) with one million barrels of crude. Frontline (FRO) said it needed $31,400 per day to breakeven on each of its super tankers. Looks like another strong profit ahead for them.

James Brown : 4/21/2008 9:44:19 AM

Southern Copper Corp. (PCU) is rising and just broke through the $120.00 mark. This might be a momentum trade for the bulls. It wouldn't surprise me to see PCU make a run at the $130 level.

The Point & Figure chart has a $158.00 target but the recent oscillation around the $120 level has produced a "bull trap" pattern.

Keene Little : 4/21/2008 9:44:10 AM

SPX has tagged the 1384 level so if it holds and bounces back above Friday's close just under 1391 it should give us a buy signal.

Linda Piazza : 4/21/2008 9:40:45 AM

A/D line bouncing. It's at -774 as I type, but needs to bounce back above about -481 to erase that breakdown mode.

James Brown : 4/21/2008 9:40:29 AM

AAPL spiking to $164.00 -- Shares had just crossed resistance near $160 on Friday

RIMM is also trading higher and looks poised to breakout over minor resistance near $125.00 soon.

GOOG is only down $3.00 following Friday's $89.00 gain.

Linda Piazza : 4/21/2008 9:40:03 AM

The OEX's 15-minute Keltner chart sets up the possibility--in fact, looking more like a probability at this point--that the OEX might drop to 636-636.20. A 15-minute close above the 15-minute 9-ema now at 640.24 would change that outlook.

Jim Brown : 4/21/2008 9:39:15 AM

Earnings There are roughly 973 companies reporting earnings this week. The ones to watch today include TXN, NVLS, ACI, WFT, BSX, HAL, NBR and NFLX. BAC and MRK have already reported today.

Here is the earnings calendar with highlights for the week: Link

Linda Piazza : 4/21/2008 9:37:08 AM

Keltner outlook on the A/D line: The A/D line is in breakdown mode, but may not be in that mode by the end of the 15-minute period. Barring a strong bounce above about -480 by the end of this 15-minute period, however, it will confirm a breakdown mode. It's at -908 as I type. These early moves, especially on the Monday after option expiration, are suspect and should be treated so. Don't assume a reversal from the early tenor, but certainly have a what-if plan in mind in case there is one.

Jane Fox : 4/21/2008 9:37:02 AM

AD line opens at -551 and has fallen to -927.

James Brown : 4/21/2008 9:34:57 AM

Art Cashin on CNBC says he is looking for some "bumps in the road" for the market as we hit the busiest earnings week.

Linda Piazza : 4/21/2008 9:34:05 AM

If potential light historical support near 1383.70 is broken, next SPX potential Keltner support on the 15-minute chart is 1380.65 on 15-minute closes.

Linda Piazza : 4/21/2008 9:31:49 AM

My daily SPX charts show mixed evidence this morning. Some show that the SPX is likely to stall near Friday's high, and some show a possible push up to somewhere in the 1408-1417 range. Futures action, of course, gives more credence to the "stall near Friday's high theory."

Scrolling down to the 15- and 30-minute charts, I see that the SPX is still in breakout mode on both. It would need 30-minute closes below a line currently at 1386.20 (but destined to drop if the SPX does at open) and 15-minute closes below 1376.10 to erase that breakout mode.

If the cash market moves down in accordance with futures' action, which it doesn't always do, the SPX will of course be testing that breakout benchmark on the 30-minute chart. A strong early move down doesn't mean it will be violated by the end of the 30-minute close, however, as early moves are sometimes traps that are reversed. Try, as much as possible to reserve judgment until you see how matters set up.

James Brown : 4/21/2008 9:31:16 AM

Shell Oil (Royal Dutch Shell) is declaring force majeure on its Nigerian oil exports as of tomorrow. Shell is one of Nigeria's largest oil companies and sabotage of its oil pipelines is the problem.

Jim Brown : 4/21/2008 9:31:26 AM

May crude futures expire on Tuesday
The CFTC said last week that open interest in crude futures rose 40% over the last two weeks. It looks like the majority of that rise was in the June contracts. There is a massive imbalance in the June open interest compared to other months.

May 99,364
June 379,801
July 110,451
Aug 46,027
Sept 58,084
Oct 47,202

The June futures would be the likely candidate for speculators wanting to play the May expiration cycle and the change in demand/pricing as we move into the summer fuel blends. That amount of OI is extreme and suggests we could see some downside pressure on prices over the next couple weeks.

Keene Little : 4/21/2008 9:29:38 AM

If SPX drops down to the trend line across the highs since February 1st that would be a drop of about 6 points to 1384. ES is currently down 3 points and its overnight low was 5 points lower so I don't see anything especially bearish yet. If that support line holds then look to buy it for a run up to at least 1400, potentially to 1415.

Jane Fox : 4/21/2008 9:26:08 AM

Gold is taking a nice bounce off the $900.00/oz. support. I download podcasts to my iPod and listen to them as I work in the yard. It is amazing how fast the time goes.

Last weekend I was listening to a podcast by Jim Paplava called Financial Sense. It was very clear Jim and his parade of guest speakers were extremely bullish on Gold and gave some very convincing reasons. Of course I am bullish on Gold as well and found the program quite interesting.

They were all quite bearish on the market though and as you all know I am bullish on the market, at least until the elections. Link

James Brown : 4/21/2008 9:25:30 AM

Apple (AAPL) is getting some positive analyst comments before the bell. Citigroup says they see higher MAC computer sales for AAPL while another analyst firm is raising their price target to $190 on AAPL.

AAPL closed near $161.00 on Friday. Shares are trading near $162 in pre-market.

Jim Brown : 4/21/2008 9:22:22 AM

Saudi Arabia selling the spin
The Saudi oil minister said over the weekend that they were not going to add any more capacity for the next decade after their current $50 billion list of projects were completed in 2009. Those projects will raise their capacity 11% from 11.3 mbpd to 12.5 mbpd.

Saudi's "worry" is that biofuels will weaken demand for crude oil. Biofuels will total 347,000 bpd in 2008 compared to the expected 88 million barrels per day of crude demand. That equates to 0.004% of crude demand that will be replaced by biofuels.

Demand growth in crude is expected to be 1.3 mbpd and depletion losses 4.5 mbpd. There is no way the need for additional capacity is going to be reduced by that 0.004% of biofuels. This is just a blatant attempt by Saudi Arabia to support or justify oil prices.

James Brown : 4/21/2008 9:21:14 AM

Rival drugmaker Merck (MRK) also reported earnings this morning. Estimates were at $0.86 a share. MRK actually beat estimates by 3 cent.

MRK closed at $39.76 on Friday and is now trading up in pre-market trading between $40.65-41.00 a share.

Jane Fox : 4/21/2008 9:19:34 AM

Overnight markets made a new overnight low at around 7:30EDT that was, of course, a lower low so the trend is down. I don't see this as overly bearish and suspect the AD line will open between +1000 and -1000. I should start keeping track of my AD line " premarket predictions" and see what kind of win/loss ratio if have with them.:) Link

James Brown : 4/21/2008 9:18:46 AM

LLY closed at $52.07 on Friday. Shares are trading close to $50.00 this morning.

James Brown : 4/21/2008 9:17:44 AM

Eli Lilly (LLY) reported earnings this morning. Consensus estimates were at $0.96 a share. LLY missed estimates by 4 cents. Guidance was inline with prior estimates.

LLY appears to be trading down in the pre-market.

Jane Fox : 4/21/2008 9:15:11 AM

Dateline WSJ - Bank of America Corp. posted a 77% drop in net income Monday, as provisions for credit losses quintupled to $6 billion and investment banking write-downs cost at least another $1.91 billion.

The big increase in credit costs was driven by weakness in home equity loans and credit extended to small businesses and home builders, Bank of America said. The results from the largest U.S. retail bank underscore the growing pressure on U.S. consumers as the housing slump deepens and economic growth slows -- pressure that is doing increased damage to banks' profit reports.

James Brown : 4/21/2008 9:15:10 AM

Here's the Top Ten for 2008's Fortune 500

......................Revenue in millions
1. Wal-Mart (WMT)    $378,799.0
2. Exxon Mobil (XOM)    $372,824.0
3. Chevron (CVX)    $210,783.0
4. General Motors (GM)   $182,347.0
5. ConocoPhillips (COP)  $178,558.0
6. General Electric(GE)  $176,656.0
7. Ford Motor Co. (F)   $172,468.0
8. Citigroup (C)    $159,299.0
9. Bank of America (BAC)  $119,190.0
10. AT&T (T)    $118,928.0


James Brown : 4/21/2008 9:06:51 AM

Crude oil now at $117.51 a barrel. Yes, that's a new record high.

FYI: In the weekend newsletter we suggested readers close out the USO position some time today. More aggressive traders could choose to hold the position through Tuesday and close the USO call position at Tuesday's close.

We do not want to hold it on Wednesday, since Wednesday could see a significant sell-off in crude. Crude oil futures expire after Tuesday's close bell.

James Brown : 4/21/2008 9:03:51 AM

Fortune magazine released their latest Fortune 500 companies list today. Topping the list was Wal-Mart (WMT) at No. 1.

I believe I heard CNBC say that WMT now employs more people than we have serving in the armed forces.

James Brown : 4/21/2008 8:59:46 AM

Bank of America (NYSE: BAC) reported earnings this morning. Wall Street was looking for a profit of $0.41 a share. BAC turned in a profit of $0.23. That's an 18-cent miss but the key word there is probably "profit".

James Brown : 4/21/2008 8:57:18 AM

Crude oil is poised to open higher this morning. It's currently trading at $117.39 a barrel.

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