Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jeff Bailey : 5/8/2008 1:10:22 AM

Today's EIA data had Reformulated Gasoline stockpiles falling by 413,000 barrels to 1,585,000 barrels. Current stockpiles are -30.63%, or 700,000 barrels below year-ago levels.

Jeff Bailey : 5/8/2008 12:55:35 AM

EIA's This Week In Petroleum Link

Keene Little : 5/7/2008 11:45:15 PM

Thursday's pivot tables: Link and Link

Have we seen the high for the bounce off the March low? There are certainly enough signals on the charts to warn us of that possibility. I'll be looking for a bounce on Thursday to short since the setup looks good for at least another leg down. But because the sharp pullback on Wednesday may have been the completion of an a-b-c pullback from the May 2nd high, there is the possibility we're going to get a sharp reversal back to the upside.

If SPX bounces back up to its broken uptrend line from April 15, near 1409, it would be a good setup to try a short. Much higher than 1410 and I'd start thinking more about another rally leg to new highs. 120-min chart: Link

Same for the DOW--a bounce up into the 12915-12950 area would be a good setup for a short play. Back above 12950 would look more bullish. Link

NDX found support again at the mid line of its parallel up-channel from March and therefore remains more bullish looking than the others, although the breakdown from its uptrend line from April 15th is potentially bearish. Link

Jeff Bailey : 5/7/2008 11:37:59 PM

DXY 73.77 (30-minute delayed) ...

Jeff Bailey : 5/7/2008 11:37:01 PM

5-year Yield ($FVX.X) (see 04/06/08 Market Wrap) ... MONTHLY Intervals Link

Remember 09/11/2001 ... Shall we never forget.

Certainly Dr. Hussman wouldn't.

Since 04/06/08 Wrap, 5-year Yield has risen to, to, to 32.26, or 3.226%.

I feel, based on observation, great pressure building in these markets.

Jeff Bailey : 5/7/2008 11:07:15 PM

US Money Supply (as of 04/21/08) Source: Federal Reserve Board Link

Jeff Bailey : 5/7/2008 10:54:51 PM

Closing Internals at this Link

OI Technical Staff : 5/7/2008 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The Market Monitor has been archived.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 : 5/7/2008 8:44:49 PM

At the time of this writing, I've yet to find the draft of this bill. Link

Jeff Bailey : 5/7/2008 8:39:37 PM

A different school of economic theory than most can figure out.

How does "taxing" oil production (supply) at a higher degree hope to bring down oil prices?

You tax CONSUMPTION (demand) in an attempt to bring down prices. PENALIZE what you feel is wrong in order to bring about a change in behavior.

Some quit smoking because the cancer-sticks became too expensive. Not because the consumer might get cancer.

Ah, but you think any Senator is going to tell their constituents they want to raise taxes on gasoline? Not if they want to keep their job.

Mr. Schumer ... If it is true (and I Jeff Bailey believe it is) that Americans are great entrepreneurs, you don't need to tax big oil. When there's a buck to be maid, the entreprenuer will sniff it out if it makes ECONOMIC SENSE.

Jeff Bailey : 5/7/2008 8:19:32 PM

In 10-years, and how many studies later, we might figure out what "reasonable" is.

Jeff Bailey : 5/7/2008 8:17:54 PM

After reading the first two sentences, I was thinking the same thing Mr. McConnell.

Jeff Bailey : 5/7/2008 8:16:25 PM

Senate Democrats seek to tax oil companies ... AP Story Link

See today's 02:41:58

Jeff Bailey : 5/7/2008 8:09:09 PM

Colombia granting the rights for construction of three (3) power plants to be built by 12/1/2012. State owned Isagen and Gecelca win two (2) contracts while US-based investment group Helm Investment gets the other.

Companies will receive a subsidy of $13.998 per megawatt hour of electricity they are able to produce over the next twenty (20) years.

Generator contractors that won previous auctions were paid $13/MWh.

Government officials said that should electricity demand rise faster than expected (see above) between now and 2012, new auctions may be held.

Jeff Bailey : 5/7/2008 7:41:14 PM

Carphone Warehouse and Best Buy teaming up to form European JV.

Jeff Bailey : 5/7/2008 7:39:10 PM

EXPD's Q1 earnigns up 12%; revenue up 17%.

Jeff Bailey : 5/7/2008 7:28:28 PM

US Oil Fund (USO) $99.80 +1.44% ... do see some $100.00 in extended. Maybe tomorrow.

Jeff Bailey : 5/7/2008 7:24:04 PM

Expeditors Intl. (EXPD) $46.94 -4.16% ... quiet on headline numbers. Worth reviewing for us TRANS bulls.

Jeff Bailey : 5/7/2008 5:04:39 PM

CME's Nikkei-225 stock futures settle down 225 points.

Jeff Bailey : 5/7/2008 5:00:43 PM

Liberty Global (LBTYA) $36.42 +0.83% ... ticks higher on headline numbers. NDX/QQQQ component here.

Jeff Bailey : 5/7/2008 4:58:42 PM

S&P Changes MGM Mirage outlook to "stable, "BB" rating affirmed.

Jeff Bailey : 5/7/2008 4:53:12 PM

DXY's 04:00 tick was 73.482

Jeff Bailey : 5/7/2008 4:51:54 PM

UHAL's been sideways now for more than a month.

Jeff Bailey : 5/7/2008 4:50:53 PM

Amerco (UHAL) $57.60 -2.04% ... Files suit against city of Berkeley with violating environmental quality act.

Jeff Bailey : 5/7/2008 4:48:28 PM

Might need that one if we return to horse & buggy.

Jeff Bailey : 5/7/2008 4:48:07 PM

Dover Saddlery (DOVR) $4.76 (unch) ... thin with no tick extended on headline numbers.

Jeff Bailey : 5/7/2008 4:47:19 PM

Tandy Leather (TLF) $2.95 -1.99% ... thin with no trade on headline numbers.

Jeff Bailey : 5/7/2008 4:46:09 PM

Good day for beans. May soybeans settled up 32.75 cents higher at $12.97 1/4 a bushel, July finished up at $13.09 while our November up 28 cents at $12.45 1/2.

Corn higher as farmers still find muddy fields. May ticked up 6.75 higher at 6.01 1/2 a bushel. July was up 6 and 3/4 at $6.13, while December up 7 at $6.30 1/2.

Jeff Bailey : 5/7/2008 4:39:36 PM

KKD $3.05 -6.15% ...

Jeff Bailey : 5/7/2008 4:39:20 PM

SBUX $15.92 -2.68% ...

Jeff Bailey : 5/7/2008 4:38:59 PM

Caribou Coffee (CBOU) $2.66 +2.70% ... quiet at $2.64 extended on headline numbers.

Jeff Bailey : 5/7/2008 4:37:24 PM

CROX ... still thrashing $11.30 now.

Jeff Bailey : 5/7/2008 4:35:40 PM

Yamana boosts dividend. Moves to MONTHLY dividend from quarterly.

Jeff Bailey : 5/7/2008 4:35:03 PM

Still trying to catch an updated state of earnings so far for Q1.

Jeff Bailey : 5/7/2008 4:34:33 PM

S&P 500 P/E ratio at 16.36 (based on 2007 full-year).

Jeff Bailey : 5/7/2008 4:33:46 PM

Yamana Gold (AUY) $13.75 -1.36% ... ticks $13.81 on headline numbers.

Jeff Bailey : 5/7/2008 4:31:27 PM


Jeff Bailey : 5/7/2008 4:31:25 PM

Einstein Noah (BAGL) $11.06 -3.74% ... quiet extended on headline numbers.

Jeff Bailey : 5/7/2008 4:28:41 PM

Zumiez, Inc. (ZUMZ) $20.43 -2.34% ... don't know the name, but April sales +4.1%.

Jeff Bailey : 5/7/2008 4:27:45 PM

Hot Topic (HOTT) $4.93 +1.85% ... seeing April sales -2.5%.

Jeff Bailey : 5/7/2008 4:24:43 PM

Aldila (ALDA) $9.99 +2.46% ... long-time subscriber will remember this one!. Naming new management.

Jeff Bailey : 5/7/2008 4:21:49 PM

Interactive Brokers (IBKR) $32.73 +1.51% ... halted for news pending. No trade resumption time given at this time.

Jeff Bailey : 5/7/2008 4:15:04 PM

Hansen Natural (HANS) $35.64 +0.87% ... "crushed" to $33.38 extended on headline numbers.

Jeff Bailey : 5/7/2008 4:14:00 PM

TurboChef (OVEN) $7.87 +0.63% ... quiet on headline numbers.

Jeff Bailey : 5/7/2008 4:11:10 PM

Crocs (CROX) $9.97 -0.49% ... thrashes higher at $10.80 on headline numbers.

Jane Fox : 5/7/2008 4:10:21 PM

Economic Reports on the docket tomorrow are:

8:30a.m. Initial Jobless Claims. Expected: +0K. Previous: +35K.

10:00a.m. Mar Wholesale Trade. Expected: +0.6%. Previous: +1.1%.

Keene Little : 5/7/2008 4:09:23 PM

The market closed near its lows. That of course sets up a rally tomorrow (wink). But seriously, that's the pattern we've seen with this market--shorts threw in the towel yesterday and there was no one left to buy today. Now longs threw in the towel into the close and there may be no more selling tomorrow. Trend lines, Fib retracement and the EW pattern have me thinking we could get a bounce back up to around SPX 1409-1410 tomorrow before tipping back over and heading lower again.

Jeff Bailey : 5/7/2008 4:08:17 PM

Here come the earnings ...

Jeff Bailey : 5/7/2008 4:03:41 PM

That may be all ... would cover a YM short here 12,820. Just missed DAILY S2.

Linda Piazza : 5/7/2008 4:02:18 PM

Last October 11, Jane was declaring that a top might have been put in due to the way the VIX was acting compared to equities. Jane has always emphasized to all of us the importance of watching the underpinnings of the market, and I was certainly watching that VIX today.

Linda Piazza : 5/7/2008 4:01:01 PM

The SPX's 30-minute chart suggests that we could get a move down toward 1372 eventually but the 15-minute chart suggests that there may be support near 1388-1389 and that could bounce the SPX first before it rolls over into a by-then-reset downside target.

James Brown : 5/7/2008 4:01:00 PM

The gambling stocks and casino operators also look poised to move lower. chart: Link

Jeff Bailey : 5/7/2008 3:57:24 PM

Brazil's CB was a buyer again before 02:00 at 1.6846

James Brown : 5/7/2008 3:56:42 PM

The Biotech index (BTK) also looks vulnerable here... Link

Linda Piazza : 5/7/2008 3:56:41 PM

Here's the VIX's daily Keltner chart again, so that you can see what has happened during the day: Link It's not an exact replica of what happened October 11 after the VIX had been testing this same Keltner support level, but it's certainly close enough to prompt you to spend a bit of what-if planning tonight.

Jeff Bailey : 5/7/2008 3:56:34 PM

Dollar soaring against the real 1.69 +2.15%

Jeff Bailey : 5/7/2008 3:54:11 PM

$ flat against the yen

James Brown : 5/7/2008 3:53:58 PM

The XBD broker-dealer index looking weak here: Link

Jeff Bailey : 5/7/2008 3:53:48 PM

Dollar holding gains vs. the euro, the pound.

Jeff Bailey : 5/7/2008 3:51:45 PM

DIA's May "Max Pain" Theory tabulation was $127.00 ... $1 inc. at last night's close.

Jeff Bailey : 5/7/2008 3:50:49 PM

I'm checking ...

Jeff Bailey : 5/7/2008 3:49:40 PM

YM finds a bid from, from, from its 05/01/08 cash open lows.

Jeff Bailey : 5/7/2008 3:48:42 PM

VIX.X 19.47

Jeff Bailey : 5/7/2008 3:48:26 PM

BIX X 246.98

Jeff Bailey : 5/7/2008 3:48:05 PM

Buy program premium ...

Linda Piazza : 5/7/2008 3:47:22 PM

I believe that there could be an effort to close the SPX at or above its 10-sma today, with that now at 1400.33. Whether that will be successful or not, we'll soon see. If the SPX should end up near 1400-1402, the outlook is a bit clouded as that parks it just beneath important resistance on the 15-minute and 30-minute charts. Will it be ready to pop above it or drop below it?

If the SPX ends the day near 1388-1389 instead, bears need to be aware of the possibility that the SPX could bounce back toward next resistance (probably about 1397-1399 by the time the day ends) as easily as it could dive to next support, way down near the 30-sma if you're looking only at Keltner levels and ignoring that rising trendline off the March low. That trendline is now near 1383, I believe. So, the setup is a bit iffy for tomorrow, and there's the possibility for an up date (Oct 12 was, for example), but I do believe that bulls have been handed a warning to prepare their what-if plans just in case.

Jeff Bailey : 5/7/2008 3:46:59 PM

Dow Diamonds look to be first to test their recently broken to the upside downward trend.

Linda Piazza : 5/7/2008 3:42:51 PM

Time to make end-of-day decisions, if you haven't already made them. You should be aware that the Bank of England and the ECB make rate decisions tomorrow morning. We get weekly initial jobless claims before the open, but nothing else here before the open. ECB President Jean-Claude Trichet's press conference does begin about an hour before our open, though.

Jane Fox : 5/7/2008 3:41:11 PM

I have a few strategies that will fade a TRIN at 2.00 but I do not.

Jeff Bailey : 5/7/2008 3:41:06 PM

Dow 30 breadth negative at 25:5

IBM +1.34%, WMT +0.69%, MRK +0.48%, AA +0.15% and DIS +2.84%

AIG -6.50%, AXP -4.59%, C -4.44%, GM -4.11%.

Jane Fox : 5/7/2008 3:40:43 PM

Internals are bearish but the TRIN at 2.00 is telling me we may be getting a bounce soon. Link

Jeff Bailey : 5/7/2008 3:38:46 PM

Sector Winners ... HMO's 1,465 +0.81%, and 5-30 Treasuries.

Jeff Bailey : 5/7/2008 3:37:27 PM

Nymex crude oil settles at record $123.53/bbl

Jeff Bailey : 5/7/2008 3:37:02 PM

Nymex gasoline settles at record 3.1182/gallon

Jane Fox : 5/7/2008 3:36:49 PM

BTW CRude is at $123.80/bl. not $123.08

Jeff Bailey : 5/7/2008 3:36:38 PM

Nymex heating oil settles at record 3.4473/gallon.

James Brown : 5/7/2008 3:35:30 PM

REIT stock SLG is down 4.4% and reversing under resistance near $100 and its 200-dma. SLG appears to have short-term support near $95.00 but a breakdown there would portend a test of the next level of support at $90.00. chart: Link

Keene Little : 5/7/2008 3:32:14 PM

SPX is overshooting its downside Fib target but the DOW has just tagged its target at 12808. It doesn't mean I'd step in front of this and do any buying but it does say shorts should be pulling their stops down tighter now.

Linda Piazza : 5/7/2008 3:31:58 PM

I mentioned it to Jane yesterday, Jeff, but I'm not sure you caught it: the CBOE has introduced a new volatility measure, the VXV, a three-month VIX, if you will.

Jeff Bailey : 5/7/2008 3:31:53 PM

BIX.X 246.03 -4.22% ... undercuts WKLY S1.

James Brown : 5/7/2008 3:31:51 PM

The KOL coal sector ETF is producing a bearish engulfing candlestick, which would suggest a potential short-term top in this high-flying group.

Jeff Bailey : 5/7/2008 3:31:13 PM

VIX.X 19.76 ... nearing WKLY R1.

SPY $139.23 ... nearing WKLY S1.

Jeff Bailey : 5/7/2008 3:29:37 PM

SPY $139.35 ... nearings its May "Max Pain" theory of $139.00 ... $1 inc.

Linda Piazza : 5/7/2008 3:28:56 PM

Current SPX target is 1389.16. I don't know if it will have time to get there, especially as I wouldn't be surprised by an effort to hike the SPX back above its 10-sma by the close.

Linda Piazza : 5/7/2008 3:28:14 PM

Even if there's a repeat into the close of the Oct 5-11 pattern, please be aware that nothing is ever guaranteed and that, even if predicted moves come to fruition, they're never straight-line moves. On October 12, for example, the SPX gained and it wasn't until the next day that the long slide began.

Tab Gilles : 5/7/2008 3:27:57 PM

Weekly EIA Report Link

Jeff Bailey : 5/7/2008 3:27:02 PM

The VIX.X Linda. The VIX.X! Perhaps the most misunderstood indicators you'll ever find. So simple, but made so complex by some.

Linda Piazza : 5/7/2008 3:19:26 PM

Thanks, Jeff, but I've been sending missives out so quickly that I'm not sure which post you're referencing! For subscribers, I just noticed my 3:15:50 post has a typo: "clseo" for "close." If I change it, the time stamp on the post changes.

Jeff Bailey : 5/7/2008 3:19:02 PM

In early April, bears were really counting on the obscurity of the VIX.X 200-day SMA to hold.

Linda Piazza : 5/7/2008 3:17:37 PM

The SPX has set a potential downside target of 1389.33; the OEX, 641.65. The last three 15-minute candles have all sprung up, leaving long lower shadows, however, so I'm not all that sure about the viability of those downside targets. The SPX could attempt to bounce instead. If so, I'd watch for potential resistance near 1402.

Jeff Bailey : 5/7/2008 3:16:36 PM

Good eye Linda! ... BIX.X holding 248

Linda Piazza : 5/7/2008 3:15:50 PM

VIX now at a new high of the day and well on its way to repeating that OCT 11 pattern. I'd like to see it higher than this in the clsoe before I believed too strongly in a repeat of that pattern and not just in a test of near-term resistance.

Linda Piazza : 5/7/2008 3:14:46 PM

A word to the wise for you condor traders out there: if you have some May bull put credit spreads and if, today, you can close them out for a nickel or a dime, you might consider doing so. I'm long out of my May positions and don't have any June ones (June bps: I do have bear call spreads for June) yet since I've been waiting for a downturn toward the 30-sma to establish them, but I'd certainly be looking for that opportunity today if I had them. In fact, I've been such a chicken about bps these last six or seven months that all mine are closed out for 60% of my original credit as soon as I can get out of them.

Jeff Bailey : 5/7/2008 3:13:29 PM

March consumer credit increased to $15.3B. February's figures revised to up $6.5B from up $5.2B.

Jeff Bailey : 5/7/2008 3:10:40 PM

Another "dinger" of a sell program on the CC headline

Keene Little : 5/7/2008 3:10:07 PM

The 5th wave down for the decline from yesterday's high, which I was expecting to find support around SPX 1405-1406, looks like it's doing an extension and ideally needs one more drop lower. Some Fib projections for that kind of move are down to SPX 1393.44 and DOW 12808.

Jeff Bailey : 5/7/2008 3:09:44 PM

Mastercard (MA) $292.91 -1.05% ...

Jeff Bailey : 5/7/2008 3:09:15 PM

American Express (AXP) $48.86 -4.12% ... also insurance, but worth a note.

Jeff Bailey : 5/7/2008 3:07:41 PM

Visa (V) $88.40 +1.01% ...

Jeff Bailey : 5/7/2008 3:07:19 PM

DJ reporting the surge in March consumer credit the most in 4-months.

Jeff Bailey : 5/7/2008 3:06:43 PM

At the 03:00 benchmark, decliners outnumber advancing issues 2,099:988 at the big board. NASDAQ a similar 1,962:907.

Linda Piazza : 5/7/2008 3:06:30 PM

While I'm giving all the short-term target information on the SPX, I must give the other side of the argument, too, because we really don't know the outcome of all this. The SPX is only barely below the daily 10-sma. It punched through the former resistance trendline off the OCT 11 high on either 5/1 or 5/2, depending on how you draw the trendline and it's since been consolidating. This decline is causing the SPX to slide lower along the top of that trendline, although it's in danger of piercing that trendline again. So, this is not bullish behavior, of course, but it's not yet all that damaging and the whole October 5-11 pattern similarities don't guarantee that the outcome will be the same. I always, always thought and have voiced my opinion that the 50% retracement of that long slide down from October 11 would be a difficult level to pierce and then maintain values above, and it's only natural to see the SPX have trouble with it and perhaps have to move back further (to the 30-sma, perhaps?) to regroup. So, consider the possibilities. However, just as bulls should take steps to control their risk just in case, bears shouldn't make too many assumptions, either and not take on more bearish risk than they can afford. Nothing terrible has happened yet except to those of you who lost money today, and I wish there were a way when no one ever lost money. Whether something terrible will or won't happen in subsequent days is still to be proven.

Jeff Bailey : 5/7/2008 3:04:50 PM

Bond market's closed ... the 13-week yield finished up 3.5 bp to close at 1.630%. After today's 10-year acution, 5's, 10's and 30's reversed losses. The shorter-dated 5-year yield fell 4.4 bp to 3.101%, the 10-year was down 2.6 bp at 3.867% and the 30-year edged back 2.0 bp at 4.622%.

Jane Fox : 5/7/2008 3:01:21 PM

Good Gravy (as Jeff would say) crude is up to $123.080/bl.

Linda Piazza : 5/7/2008 2:59:52 PM

The SPX approached a rising trendline off the 4/24 low. That trendline is currently about 1395.50. It's bounced strongly from that trendline, but if it should roll over again and fall through it, maintaining values below it, then the next target is 1389.31, and a trip down toward 1372 can't be ruled out, either.

Jeff Bailey : 5/7/2008 2:57:32 PM

As close at it's been, BIX.X 247.74 low not quite my WKLY S1 derived 243.76.

Tense moments for bears here I would think.

Linda Piazza : 5/7/2008 2:56:09 PM

Oh, and there's one other potential drawback to the collar procedure. If you sell calls and the stock is a dividend producing one, and the dividend payout period occurs, you'll owe those dividends to someone.

Linda Piazza : 5/7/2008 2:54:37 PM

Vix now 19.52, challenging potential resistance on 30-minute closes at 19.50. If it can break free of this, there's really nothing else until about 20.03, as far as I can see. If the VIX were to end the day there, it would have recreated its Keltner performance from October 11. That doesn't mean that the rest of the performance that occurred then would be recreated, too, but it certainly means that you need to know where your risks lie and how to protect yourself.

For example, if your buy-and-hold portfolio is at risk, you might discuss the pros and cons of collars with your broker. This is a procedure in which you sell a call against long holdings and use the credit you receive to buy an OTM put, thereby giving yourself some insurance against declines. The drawback is that it requires the clearance to trade covered calls and, if markets turn around and zoom higher and toward those sold calls, you'll be faced with the choice of having your stock called away or buying back those sold calls.

Jeff Bailey : 5/7/2008 2:54:24 PM

DJ "hot" headline at that time would be Democrats energy bill.

Might be worth a look-see.

Might be some housing-related handouts in it? (wink)

Jeff Bailey : 5/7/2008 2:52:43 PM

A dinger of a sell program 02:25. Had your S&P futures premium plunging to -3.29.

James Brown : 5/7/2008 2:43:44 PM

Potential bearish reversal in progress for the transports.

The iShares Dow Jones Transport (IYT) has produced a short-term double-top over the last few days and is producing a bearish engulfing candlestick pattern today.

Linda Piazza : 5/7/2008 2:42:45 PM

The VIX is 19.37, pausing beneath potential resistance on 30-minute closes at 19.49, as well as below yesterday's swing high of 19.57. It is above its daily 9-ema, but it certainly hasn't closed the day above it yet, and it needs to swing higher than this before we can say it's doing anything more than testing that average. This is still bearish for equities so far, of course.

Jeff Bailey : 5/7/2008 2:41:58 PM

Senate Democrats are unveiling their energy package. One part of the plan calls for the suspension of SPR adds while prices are high.

You may have noted that the SPR saw its first weekly decline after five weeks of build. An "evaporative" 8,000 barrels.

James Brown : 5/7/2008 2:41:01 PM

Just for kicks I looked to see how Pepsico Inc. (PEP) was doing. The stock looks bearish. There is a failure under resistance and a potential bear flag. The P&F chart is bearish with a $52 target. I could see a put play on a drop under yesterday's low (67.87) but bear in mind PEP doesn't move very fast. chart: Link

Keene Little : 5/7/2008 2:39:20 PM

SPX 1396 is an important level--the February 1st high and its broken downtrend line from October.

Linda Piazza : 5/7/2008 2:39:10 PM

I've been noting since yesterday afternoon on the MM the similarities on a Keltner basis in what was happening with the VIX October 5-11 of last year and currently. My 9:31:14 post includes a chart. What about with the SPX? Are there are any similarities there? Link I don't want you to think I'm making too much of this. I love technical analysis for its own sake and sometimes think I trade so I can be involved in technical analysis (oh, and so I can support my husband and I now that he's retired) more than I do technical analysis so that I can trade. Patterns intrigue me, so I'm intrigued. While I recognize these similarities, I'm not suggesting anything yet other than what I've been suggesting since January: I personally don't believe that the testing of the bottom is over yet, so I'm always staying prepared and remaining watchful for signs of a rollover. You should be managing your risk, too, either by protecting bullish profits or just not taking on more risk than you can afford to lose. Those similarities are there, but they don't promise anything yet other than that you need to pay attention.

Jeff Bailey : 5/7/2008 2:35:55 PM

Volume looks anemic for the QQQQ $48.21 -1.47% as it eases back to test its 200-day SMA. 27.1 million at this time.

James Brown : 5/7/2008 2:34:52 PM

Cadbury-Schweppes (new symbol: CBY) has spun off its Dr. Pepper brands and Snapple into their own entity. The new company, Dr.Pepper Snapple Group (symbol: DPS) began trading today. Shares are up a mild 0.8% to $25.26. DPS already has options available.

This makes DPS the third largest soft drink producer in the U.S. behind KO and PEP.

DPS produces and markets more than 50 brands including... Dr Pepper, Snapple, 7UP, Mott's, A&W, Sunkist Soda, Hawaiian Punch, Canada Dry, Schweppes, Squirt, RC Cola, Diet Rite, Penafiel, Rose's, Yoo-hoo, Clamato, Mr & Mrs T

Keene Little : 5/7/2008 2:31:57 PM

Today is certainly a reversal of yesterday. Now we have the opposite of what we had yesterday afternoon--if the decline is not reversed by the 2:00 PM window it probably won't be. At this rate it's looking like we'll see a complete retracement of yesterday's rally. The pundits are probably saying the market is spooked by the high oil prices (as if all of a sudden the light switch went on and massive recognition has occured that oil prices are high).

Linda Piazza : 5/7/2008 2:29:24 PM

Here comes the VIX, rising through a first level of resistance and now closely approaching a stronger one on the 15-minute and daily charts. The VIX is 19.17 as I type, with resistance now layered up to 19.46 on the 30-minute chart. The important daily 9-ema is just a few tenths away.

James Brown : 5/7/2008 2:27:42 PM

The march of the iPhone continues...

I think it was yesterday or the day before that Vodaphone (VOD) announced it would launch Apple's (AAPL) iPhone in ten countries around the world this year.

Today America Movil (AMX) said it would launch the iPhone across its Latin America coverage areas this year.

AAPL -1.4% to $184
AMX -0.37% to $58.65

Linda Piazza : 5/7/2008 2:27:32 PM

"Whoosh" and "strong whoosh" are technical terms, but you have to be highly educated in technical analysis to fully comprehend them. LOL.

Linda Piazza : 5/7/2008 2:26:36 PM

The SPX's next target has risen to 1404.04 on 15-minute closes. Resistance is firming up a bit, from 1407.90-1408.20, making that target look a bit more likely but still not a given. The 30-minute chart suggests an even lower potential target near 1399.57-1402, and it's certainly not an impossibility although not yet a given, either. Barring a strong whoosh through that level, I would have profit-protecting plans in place for my bearish trades as it's the same Keltner level tested earlier yesterday morning (when it was a bit lower). While I can't promise it, the potential has been set up for today to be a reversal day, so a strong whoosh is a possibility, too.

As I typed (as fast as I could), the SPX headed down toward the first target.

James Brown : 5/7/2008 2:24:58 PM

Oil services giant Transocean (RIG) is up 1% and pulling back a bit after hitting new all-time highs above resistance at $160.00 following its earnings report.

The company beat analysts' estimates by 47 cents a share. I would be somewhat concerned that RIG could be in the process of marking a bearish double-top pattern if it fails here.

Jeff Bailey : 5/7/2008 2:21:43 PM

02:00 Internals found at this Link

Keene Little : 5/7/2008 2:20:03 PM

No bounce yet but the choppy decline now looks like it's trying to put in a bottom. Bullsihs divergences on the 5-min chart show a loss in selling momentum. SPX is now very close to its uptrend line from April 15th, now just above 1405. Whether it will hold or not is the question.

James Brown : 5/7/2008 2:18:48 PM

While there have been several headlines this morning that Microsoft (MSFT) would go it alone after the failed Yahoo bid.... that doesn't mean MSFT has stopped looking for acquisitions.

A Forbes article today is reporting that Microsoft had its bankers contact Facebook about buying the rest of the company. Last year MSFT purchased a 1.6% stake in Facebook for $240 million.

Linda Piazza : 5/7/2008 2:06:24 PM

The TRAN has now hit the Keltner level that corresponds to the SPX 1403.61 level. That's not a guarantee that the SPX will drop there, but since it's got a downside target there now, it's certainly corroboration of that potential target. The corresponding target is 647.06 for the OEX and 12892 for the Dow.

Linda Piazza : 5/7/2008 2:03:15 PM

VIX coming up again. It's still below its high of the day and below potential short-term resistance (on 15-minute closes) from 18.99 to 19.18, but its pattern is looking potentially short-term bullish (cup and handle on the 15-minute chart) today, so further challenges of that support might be possible. As per the VIX Keltner chart I posted late yesterday afternoon and again at 9:46:15 this morning, equity bulls do not want a repeat of the pattern seen on October 5-11, when the VIX tested the same Keltner level it's currently been testing and then, on October 11, zoomed up through and past the daily 9-ema. That's why I've been watching the VIX so closely the last couple of days, joining Jane who always watches it closely. That daily 9-ema is now 19.23. Equity bulls want the VIX repulsed from any approaches to that moving average while equity bears want to see the VIX scramble well above it by the close, mimicking that October 5-11 pattern.

Jeff Bailey : 5/7/2008 2:02:33 PM

That's not a component I track, but the numbers didn't add up when looking at conventional and reformulated.

Jeff Bailey : 5/7/2008 2:00:37 PM

As Jane may have noted, it looks like the EIA's total gasoline build of 800K bbls was all due to blending components.

Linda Piazza : 5/7/2008 1:51:10 PM

The SPX now looks vulnerable to 1403.72 and possibly even 1399.68-1401.94. Sustained 15-minute closes above 1409.53 would change that outlook . . . a little.

Keene Little : 5/7/2008 1:41:46 PM

The TRAN might have topped. Linda and I have both mentioned the Trannies today and I said today's test of the May 2nd high has left a bearish divergence. The daily candle could easily change but so far it's a bearish engulfing candle (outside down day): Link

Linda Piazza : 5/7/2008 1:36:42 PM

We're approaching a typical stop-running time of day, from 1:35-1:55 pm ET. Big money may come in and test, either to the upside or downside, to determine whether sellers or buyers are waiting. I'd be testing, too, if I had a lot of money at stake and could manage that test, the same way one might tentatively put weight on a spongy-looking board on an old house's porch to see if it's going to hold one's weight. Don't think they're out to get you, running your stops for sport, but rather that they're doing some cautious testing of their own. If we understand what's happening, we can watch and figure out what big money figures out, too, and that gives us some sense of what to expect over the next hours. So, it's not necessarily the direction of the test that gives us the information but how buyers and/or sellers react to that test.

James Brown : 5/7/2008 1:33:48 PM

Exit alert! First target achieved on OI call play in Nucor (NUE). Our fist target was the $79.50-80.00 range. The stock hit an intraday high of $80.36 about 30 minutes ago. Our secondary, more aggressive target is the $84.00-85.00 zone.

James Brown : 5/7/2008 1:31:36 PM

Target achieved. OI call play IBM is doing well. The stock is up 1.7% and challenging the top of its recent trading range near $125. Our short-term target was the $124.90-125.00 range. Our more aggressive target is the $128.00-130.00 zone.

Keene Little : 5/7/2008 1:30:13 PM

If the low is in then a bounce to retrace a Fib portion of today's decline could start. A 38%-62%retracement of the decline from yesterday's high gives us a resistance zone of SPX 1412.55-1416.00 and DOW 12974-13002. Hopefully it will set up with a clean 3-wave bounce into this zone to set up the next shorting opportunity (assuming it's going to bounce now).

James Brown : 5/7/2008 1:28:13 PM

OI call play on CF, one of the fertilizer stocks, is up 1.3% and cracking above potential round-number resistance at the $140 level.

MOS, another OI call play, isn't doing quite as well. MOS failed to break through the $130.00 mark this morning. MOS +0.4% to $128.01.

Other stocks in the group...
POT +2.2% to $203.04
AGU +2% to $88.10
MON +0.69% to $120.53
TNH +0.05% to $149.27
TRA +1.6% to $42.24 (above 50-dma today)
IPI +3.6% to 51.54 (recent IPO)

Linda Piazza : 5/7/2008 1:15:53 PM

The OEX is well below the potential support level at 650.03, looking vulnerable to 646-647.24, where support might be found on 15-minute closes.

Linda Piazza : 5/7/2008 1:14:39 PM

It took a while, but the SPX is hitting that 1407.90 area and even moving a bit below it as I type. Vulnerability to 1403.69 can't be ruled out yet. If that's broken, 1399.63-1401.83 is next potential support, but let's see what happens with the currently being tested 1407.90-ish level.

Keene Little : 5/7/2008 1:11:48 PM

We got the little sideways/up consolidation near the low and now another drop lower. This is the move that's giving us a 5-wave decline from yesterday's high and tells us we have a trend change (at least for another leg down following a bounce to correct today's decline). I continue to see potential support for SPX in the 1405-1406 area.

Linda Piazza : 5/7/2008 12:57:41 PM

Watch for potential SPX resistance on 15-minute and 30-minute closes near 1412.50-1413.10

Jeff Bailey : 5/7/2008 12:53:58 PM

10-year Auction Preliminary Results (.pdf) Link

Jeff Bailey : 5/7/2008 12:48:23 PM

Treasury's 10-year auction completed.

Linda Piazza : 5/7/2008 12:45:33 PM

The VIX has been testing its 30-minute 9-ema, now at 18.62 on 30-minute closes. The VIX is currently 18.68, tentatively holding onto that support.

Jeff Bailey : 5/7/2008 12:34:55 PM

iShares Japan (EWJ) $13.40 -0.37% ...

Jeff Bailey : 5/7/2008 12:34:33 PM

Seeing DJ headline of 6.3 magnitude earthquake rocking Tokyo.

Jane Fox : 5/7/2008 12:31:55 PM

LONDON (MarketWatch) -- Bill Gates, Microsoft's chairman, said the company isn't pursuing other deals after pulling its takeover bid for Yahoo Inc. , according to press reports from Tokyo. "Now at this point, Microsoft is focused on its independent strategy," the Associated Press quoted Gates as saying.

Linda Piazza : 5/7/2008 12:30:03 PM

The SPX still looks vulnerable to 1407.90 or so but that would change if it can move above and maintain values above about 1413.

Keene Little : 5/7/2008 12:25:23 PM

If the little bounce we're getting now stays below this morning's first low (near 9:40 AM) and then drops to a new low for the day it will give us a 5-wave move down from yesterday's high. That would signify a trend change for at least the short term to the downside. A 5-wave move down would then set up a larger bounce (perhaps from the SPX 1405-1406 area) to correct today's drop and then set up an opportunity to short it.

But so far the move down from yesterday is only a 3-wave move and as such is just a correction to the rally. Any rally back up from here that overlaps this morning's low would warn bears that new highs could be coming (or that we'll continue to chop sideways/down before heading higher again).

Jeff Bailey : 5/7/2008 12:15:39 PM

12:00 Internals found at this Link

Linda Piazza : 5/7/2008 12:14:08 PM

Currently, the SPX looks vulnerable to 1407.90 but that would change if it gets above and maintains values above about 1413.35-1413.60.

Linda Piazza : 5/7/2008 12:12:35 PM

The SPX's 30-minute 9-ema is now 1413.58. Look for potential resistance there on 30-minute closes. The 9-ema for the OEX is 651.63.

Linda Piazza : 5/7/2008 12:03:02 PM

One difference in today and October 11 is that the TRAN was showing marked and early differences in behavior than that seen in indices such as the SPX on October 11. While they were still headed higher, the TRAN was rolling down. The TRAN has of course been headed down today ever since the first early high during the first 15-minute climb, but more in a corroborative than in a leading (and diverging) role. SPX, OEX and Dow bears do of course want the TRAN to corroborate weakness in those other indices, but some prior warning yesterday certainly would have been nice.

Linda Piazza : 5/7/2008 11:58:26 AM

I'm absolutely fascinated by the similarities in the current Keltner setup for the VIX and that seen on October 5-11, so I've mentioned it a lot today, but I don't want to scare subscribers unduly. Since yesterday, I've warned of the similarities, suggesting that you need to have your profit-protecting plans in place and not take on too much bullish risk, but that's something we all need to be doing all the time. I'm of the "still needs to retest the bottom" ilk, so I'm of course always wary of rollover potential, but that doesn't mean I'm promising that markets are rolling down. Bears shouldn't be stepping in front of any freight trains, either.

Jeff Bailey : 5/7/2008 11:57:28 AM

Good Gravy #2 --- Link ... first test of bearish resistance usually painful for a bull.

Jeff Bailey : 5/7/2008 11:55:43 AM

Good gravy! ... YRC Worldwide (YRCW) $18.62 -1.53% ... gapped higher to open $20.36 with a kiss at trending lower 200-day SMA ($20.86).

Linda Piazza : 5/7/2008 11:52:37 AM

Well, let's give me a little further out from last summer's debacle when I tried that failed hedging procedure for condors-gone-wrong before we count me good at trading condors!

Keene Little : 5/7/2008 11:52:31 AM

The DOW has been cycling around the top of its shallow parallel up-channel from January, finding it to be support and resistance ove the past 2-1/2 weeks. It's currently back down on it here at 12950 (120-min chart update): Link

Linda Piazza : 5/7/2008 11:51:16 AM

The A/D line is now -392, just off its low of the day, finally breaking below that coil that it had been forming. It has now reset the downside target that's now at -751, but whether it will hit it this time or not, I don't know. I just know that we seem to be at or nearing both a time frame and a chart setup that's pivotal (in the old sense of the word "pivotal," not in the trader's term reference calculated pivots).

Jane Fox : 5/7/2008 11:46:45 AM

Linda is really good at trading Condors.

Jane Fox : 5/7/2008 11:46:29 AM

Only 1/2 kidding Linda.

Jane Fox : 5/7/2008 11:45:58 AM

Linda you are absolutely right. The strategy has to fit your personality and should have been one of my points when talking about the strategy. Thank for that.

Speaking of Condors. I can't trade condors for the reasons Linda noted and is why I have Mike Parnos trade them for me. If Mike can no longer trade for me I will get Linda to do it.

Jeff Bailey : 5/7/2008 11:45:07 AM

S&P Depository Receipts (SPY) $141.16 -0.62% ... #8 most active. Either side of its 50% conventional last three sessions (not including today). 200-day SMA at $143.14. 12/31/07 close was $146.20.

Linda Piazza : 5/7/2008 11:43:40 AM

VIX now 18.83.

Jeff Bailey : 5/7/2008 11:42:49 AM

iShares Japan (EWJ) $13.40 -0.37% ... notably active at #6. Did kiss its conventional 61.8% of $13.51 at the open. 200-day SMA at $13.33. 12/31/07 close was $13.29.

Linda Piazza : 5/7/2008 11:43:18 AM

The SPX's 30-minute chart suggests that next potential support on 30-minute closes is now at 1409.62-1410.27. Monday, the SPX steadied at that support for hours before finally dropping below it early the next morning, so it can certainly stall a decline. Watch for the possibility without counting on it happening.

Linda Piazza : 5/7/2008 11:39:40 AM

You know, Jane, I think I'd add a fourth leg to that three-legged stool you mentioned in your 11:10:57 post: I think a method not only has to be profitable, tradeable and inspire your faith, but also has to fit your personality and lifestyle. I know people who absolutely can't trade the slow-to-unfold condors and other similar types of trades. They need to be doing something, and sometimes what they're doing is tinkering with the trades too much, adding this leg and that leg, making their trading portfolios so complex that they don't know where their delta and vega risks lie. Others get nervous in the rush of scalping or daytrades and jump in or out at the wrong time because they can't take the emotions.

Keene Little : 5/7/2008 11:38:02 AM

Techs are now joining in the selling so that's a bearish development.

Keene Little : 5/7/2008 11:36:20 AM

SPX is now approaching the level I mentioned earlier--1411.63 (two equal legs down from yesterday's high). If it doesn't hold then I see a potential drop of another 6 points to the 1405 area.

Jane Fox : 5/7/2008 11:36:10 AM

The reason I am testing a new strategy is because I have all the other parts in place so I feel that I have the foundation to allow me this leeway. I have been successful trading the DOW and Russell and think there are other opportunities in other markets. This is not a greener pastures move but a move upward. I would never even think of trading Crude on a 144 TICK without this foundation in place.

Linda Piazza : 5/7/2008 11:35:24 AM

The VIX keeps climbing, although it has not as yet approached nor breached the 19.22 level I'm watching (daily 9-ema) as a benchmark. Oops, and it fell back from its just-reached high of 18.84 to its current 18.70 as I typed. I show potential resistance on 15-minute closes at 19.00-19.18, so the VIX will have both short-term and daily potential resistance to plow through if it should climb again. Potential short-term support is down to 18.63 on 15-minute closes.

Jane Fox : 5/7/2008 11:32:25 AM

The emphasis I put on each leg is:

10% method - although 98% of all traders put this as the most important and are constantly looking for different strategies when any strategy that is profitable and fits your style of trading will work.

20% Money management - I cannot tell you how many traders have never thought of using a daily, let alone a weekly circuit breaker and is why many traders have blown through more than one account.

70% psychology which of course is the hardest part. Funny though once you have a business plan, a trading plan and a strategy that has been back tested and tested in real time the psychology really does fall into place.

Jane Fox : 5/7/2008 11:21:56 AM

Once the method and money management are in place the psychology will usually just fall into place.

Jane Fox : 5/7/2008 11:22:50 AM

Money Management is:

- Trade management ( stops on each trade)
- Daily circuit breaker for each account
- Weekly circuit breaker for each account
- Stop trading breaker to reassess.

Jeff Bailey : 5/7/2008 11:20:08 AM

MBA's Weekly Application Survey Link

Jane Fox : 5/7/2008 11:19:57 AM

I look at trading as 3-legged stool (I think I have stated this before but I will again).

The method (strategy),
Money management
and psychology.

You need a method that is
Profitable
Tradeable
You have undying faith in

Jeff Bailey : 5/7/2008 11:18:14 AM

Will check the MBA site again.

Jeff Bailey : 5/7/2008 11:18:01 AM

I do see a Dow Jones headline that US Mortgage applications jumped 15.6% the week ended May 2nd. Refinancing applications rebounded 19.3%, while those looking to buy a home increased 12.1%.

Linda Piazza : 5/7/2008 11:16:43 AM

As I suspected, the A/D line is just chopping out a bigger chop zone that's surrounding the 15-minute 120-ema. The A/D line is now -81, back below that 120-ema.

Jane Fox : 5/7/2008 11:15:52 AM

Thank you Linda. I have a group of people I mentor and since I teach this stuff I need to walk the walk. This is of course the keys to kingdom if you are a daytrader.

Jeff Bailey : 5/7/2008 11:15:09 AM

One of the more important inflation guages the Fed monitors had nonfarm productivity jumping 2.2% in the first quarter, much stronger than the 1.7% forecast of economists. Fourth-quarter was revised lower to a 1.8% gain. Unit labor costs rose 2.2% versus forecast for a more worrisome 2.8% increase.

Jane Fox : 5/7/2008 11:13:48 AM

Because I need a larger daily circuit breaker I need to go back and redo my Business Plan as well. Sigh! But of course I will do that tonight.

Linda Piazza : 5/7/2008 11:14:22 AM

Jane, it's interesting and so instructive to see the measured way you go about determining trading parameters for any vehicle you're trading. While I consider any woman trading crude to be a real cowgirl trader (that's supposed to be a compliment), you're the most careful cowgirl I know other than another female subscriber I know whose knowledge of the energy complex and trading acumen is also great!

Keene Little : 5/7/2008 11:12:21 AM

The drop in SPX from Friday's high would have two equal legs down at 1411.63 and essentially at the pullback lows yesterday afternoon. If we're just going to chop around before heading higher keep an eye on that level for support. If SPX breaks below 1410 then we could see a drop to its uptrend line from April 15th, currently near 1405. With the techs and small caps holding up while the blue chips drag behind we might only get a choppy day today.

Linda Piazza : 5/7/2008 11:12:10 AM

The SPX has now dropped into that zone I noted it might drop into in my 10:57:40 post. This is again potential support. If the SPX should steady here and bounce, as it already appears to be attempting to do, watch for potential resistance on 15-minute closes at either 1416.21 or 1418.66.

Jane Fox : 5/7/2008 11:11:26 AM

Crude was choppy this morning and I was down almost $1000 on one contract (I trade CL and not QM) but have gotten it all back because Crude is now trending very nicely. My simulator trading as shown me I need a larger circuit breaker with crude than I have with the Russell or the DOW. But now I need to configure what that will be and what my weekly circuit breaker will be as well.

I have also noticed I need to pay a lot more attention to my charts for I have a tendency to miss trades. I am gleaning all this invaluable information without putting a dime on the table.

Linda Piazza : 5/7/2008 11:09:45 AM

Because of my concern about the similarities in the VIX's daily Keltner chart now and in the October 5-11 period, I went back and read my Wrap that day and the MM comments we were making that day. I was focusing on the fact that the TRAN was not confirming strength in other indices while the SPX and other indices were attempting to break above rising trendlines on their daily charts. Jane was focusing on the fact that as the SPX and other indices started making new highs that morning, the VIX was not producing corresponding new lows. Keene was noting that the SPX was tagging a projected Fib level and that he was thinking about a short trade. Keene and I were dubbing ourselves Chicken Little and Chicken Littlette (since he claimed prior title to the term "Chicken Little").

So, we were watching the same signs we're all watching today. The climb that day continued with a first sign I noticed occurring about midday, when I first noted that the SPX had closed a first five-minute (because the rise had been so sharp, I was following a five-minute chart) period below its 9-ema, and the TRAN dropped to retest its 200-sma. Indices began to form little H&S's on their short-term charts (the SPX has one currently), but those were to be invalidated as indices zoomed up to Keene's "one more high" (his term) about 1:15 pm ET. Within minutes, however, indices were dropping. By 1:31:27, Keene was noting the shooting-star candle at resistance on the SPX's 60-minute chart. Jane noted that the VIX had not dropped to a new low when the SPX futures climbed in the way that had produced the shooting star candle.

Will all that repeat? No way of knowing, and I'm certainly not promising that it will. What I am doing is pointing out some similarities, saying that you shouldn't be gung-ho bullish, ignoring those signs, and ignore the need, always, in any market, to have stops and exit plans ready.

Jane Fox : 5/7/2008 11:04:42 AM

As I have stated before I am testing a strategy to trade Crude on a 144 Tick chart. I have simulator with Tradestation now so I can test how easy it is to get orders placed and then adjust my OSO orders. I have just found out this morning that Crude is the wild wild west around the inventory report, at least today it was.

I needed to trade this report so I can flesh out the rules for my trading plan but I think I will need to trade around a few more reports before I can put my official seal on them .

Jane Fox : 5/7/2008 10:59:36 AM

Crude back to new all time highs at 122.80. So much for the drop in Crude prices.

Linda Piazza : 5/7/2008 10:57:40 AM

And the SPX, after stalling at resistance that was nudged up to 1418.46 on 15-minute closes drops again. One Keltner chart suggests tht it might drop back toward 1412.69-1413.65, where it might attempt to steady, barring a strong whoosh through that level.

Jeff Bailey : 5/7/2008 10:54:17 AM

ON Semiconductor (ONNN) $9.22 +17.92% Link ... decent pop this morning. Gap comes juuuust above 200-day SMA.

Jeff Bailey : 5/7/2008 10:51:24 AM

Overstock.com (OSTK) $20.59 +2.18% Link ... continues to press 38.2% conventional. Decent "cup and handle" pattern developing at 200-day SMA support.

PnF chart Link ... careful of trend.

Linda Piazza : 5/7/2008 10:49:23 AM

The A/D line gained strongly, climbing above and closing a 15-minute period above the presumed resistance that had ranged up to +150 or perhaps +230, depending on the level being studied. It has now erased its downside target and set a new upside one of +505. I warned this morning that we shouldn't count on the downside one being met, and I'm not certain we can count on the upside one being met, either, although I think there's a bit more of a tendency to run to the upside lately. To me, as of yet, it just looks like a lot of chopping around near the key 120-ema that's now at about +150.

Keene Little : 5/7/2008 10:49:21 AM

There are a few stocks that can be used as a measure of the "animal spirits" in the market. AAPL, GOOG, RIMM and BIDU are examples of these stocks. GOOG continues to struggle at its broken uptrend line from March 2005, currently near 590. If it can push higher then the 62% retracement of the Nov-Mar decline is at 619.58 (GOOG is currently trading 596).

I showed a chart of BIDU on April 24th ( Link ) and thought it had the potential to make it up to the 380-385 area where it could run into Fib resistance (78.6% retracement at 380.38 and two equal legs up from March at 385.31). It has now made it into this zone so it's time to watch for a short play to set up. Link

Jane Fox : 5/7/2008 10:45:09 AM

SAN FRANCISCO (MarketWatch) -- Crude supplies rose 5.7 million barrels to 325.6 million for the week ended May 2, according to the Energy Department Wednesday. Motor gasoline supplies climbed 800,000 barrels to 211.9 million barrels. Distillate stocks were down 100,000 barrels at 105.7 million barrels. Refinery utilization fell to 85.0% of capacity from 85.4% a week ago. Following the news, June crude was last down 74 cents at $121.10 a barrel. June reformulated gasoline fell 2 cents to $3.08 a gallon and June heating oil traded at $3.36 a gallon, up 1 cent.

Linda Piazza : 5/7/2008 10:40:24 AM

The potential SPX resistance that I mentioned in my 10:13:26 post has now risen to 1418.08 on 15-minute closes. The SPX has had its climb stalled there, as I suspected it would, but now we have to see what happens next. The Keltner setup suggests that the SPX is likely to turn back toward 1412.47-1414.22 again, but that's far from a given and it's the outcome of this very test that will tell us something about short-term strength or weakness.

Jeff Bailey : 5/7/2008 10:39:55 AM

At 10:00 AM EDT, the iShares GSCI Cmdy (GSG) was $65.65.

Currently ticks $65.22.

Jeff Bailey : 5/7/2008 10:38:42 AM

At 10:00 AM EDT, the CRY was at 417.33

Jeff Bailey : 5/7/2008 10:38:03 AM

At 10:00 AM EDT, the DXY was 73.51.

Jeff Bailey : 5/7/2008 10:36:08 AM

EIA reporting that crude oil stockpiles rose by 5.7M barrels in the latest week, while gasoline stockpiles also rose by 800K barrels. Distillate stocpiles were down 100K. Refiners ran at 85.0% operable capacity.

Jane Fox : 5/7/2008 10:34:00 AM

I trade Crude on a 144Tick and this is way too fast for me so I guess my rules will be to step aside.

Jeff Bailey : 5/7/2008 10:33:32 AM

Mexico's peso opened at 10.5330/$ Vs. yesterday's close of 10.5050. Peso continues to give back some ground on diminished expectations of further yield spread advantages.

Jane Fox : 5/7/2008 10:32:27 AM

Huge drop in crude so I guess the report is out.

Jane Fox : 5/7/2008 10:31:42 AM

I need to watch the market and how it reacts to the inventory release in order to formulate my trading plan rules for how I trade around it.

Jeff Bailey : 5/7/2008 10:31:17 AM

Not seeing this week's MBA update.

Linda Piazza : 5/7/2008 10:29:46 AM

Bulls haven't given up yet, at least not if you're using the A/D line as a measure. The A/D line coils and coils beneath potential resistance, but bulls obviously haven't given up the test of that potential resistance. That's now from +80 to +180 with the A/D line currently -24. According to the Keltner channels, it's still maintaining that potential target now near -763, but I don't think we can count on it being hit. We should count in that possibility when making trading plans, however.

Jane Fox : 5/7/2008 10:29:43 AM

I have never traded Crude before so never watched it during a Crude Inventory release. This release is not due for another 3 minutes but the Crude market is getting quite jittery.

Jeff Bailey : 5/7/2008 10:24:20 AM

10:00 Internals found at this Link

Keene Little : 5/7/2008 10:17:57 AM

Linda mentioned the TRAN earlier and the potential double top against the May 2nd high. Right now, if price rolls back over as it appears to be doing, there's a significant bearish divergence on the 30 and 60-min charts at the retest of the high.

Linda Piazza : 5/7/2008 10:16:08 AM

The VIX is still climbing, but it hasn't yet approached that potentially strong resistance on daily closes that's now at about 19.20. Equity bulls want to see the VIX turned back from any tests of that resistance, if it should rise that high, while equity bears want the VIX to repeat its October 11 performance and zoom through that resistance and well above it, closing well above it. The VIX is 18.67 as I type, testing shorter-term potential resistance on 15-minute closes.

Linda Piazza : 5/7/2008 10:13:26 AM

Barring a strong whoosh lower, I would expect the SPX to attempt to steady soon as it now approaches that potential support I mentioned in my 10:10:08 post. That potential support on 15-minute closes is now from 1412-1413.35. If the SPX does steady and attempt to bounce, however, I would certainly watch for the possibility that any bounce might stall near 1416.40-1417.60.

Linda Piazza : 5/7/2008 10:11:40 AM

The A/D line is now -220, rolling down again after testing resistance for the last 40 minutes. It's now set a potential downside target of -772, so factor in vulnerability to that level and the accompanying weakness in equities in your trading plans without absolutely counting on it happening.

Linda Piazza : 5/7/2008 10:10:08 AM

It looks possible that the SPX could drop toward 1412-1413.50.

Jane Fox : 5/7/2008 10:09:54 AM

WASHINGTON (MarketWatch) -- An index of sales contracts on previously owned U.S. homes fell 1.0% in March from the prior month, the National Association of Realtors reported Wednesday. The index, which is considered a leading indicator of existing home sales, was down 20.1% from the March 2007 level. By region, March's pending home sales index rose only in the Northeast, with a 12.5% gain. The index declined 10.4% in the Midwest, 1.4% in the West and 0.1% in the South. February's level was revised to a decline of 2.8% from a prior estimate of a 1.9% drop.

Jane Fox : 5/7/2008 10:08:13 AM

U.S. March pending home sales index fell 1%: NAR

Jeff Bailey : 5/7/2008 10:03:48 AM

US pending home sales just released and were down 20% year-over-year.

Linda Piazza : 5/7/2008 10:02:42 AM

The SPX maintained potential Keltner support on 30-minute closes that's now at 1415.60. The 15-minute chart suggests that unless the SPX can push above and maintain values above about 1417.50, it's likely to retest that potential support again, if not break it . . . and it's doing it now, before I could finish the post.

Jane Fox : 5/7/2008 10:01:02 AM

CRude is trading above $122/bl again today but so far has not tested its all time high at 122.73.

Linda Piazza : 5/7/2008 9:57:04 AM

The TRAN's Friday intraday high was 5383.90. Currently, the TRAN is 5360.30 after pushing to an early 5380.02 high. That's pretty close to an equal-high test, but of course it's not concluded yet. It would be foolish to suggest that we know the outcome of this test (push to a new high that's maintained, push to a new high that's soundly rebuffed, or rollover that begins soon) just yet. It might also be foolish, however, not to keep the TRAN on your radar screen as it could give early signals that help those trying to gauge what happens next in the SPX, OEX and Dow. Remember that the TRAN is sensitive to both the economy and crude costs (Although you wouldn't know it now, would you?), and it's pattern can sometimes change after the release of the inventories number on Wednesday mornings.

Jane Fox : 5/7/2008 9:59:28 AM

A very good place to get your economic reports is www.forexfactory.com. They place an "impact" on each release so you know how much of an impact it will have on the market.

Jane Fox : 5/7/2008 9:54:45 AM

Remember the Pending home sales report out at 10:00 and then the Crude Inventories out at 10:30.

Linda Piazza : 5/7/2008 9:51:28 AM

The A/D line is currently +51. Unless it can jump above and maintain values above about +170, it's now set a potential downside target of -740. We've seen some jumping around lately so shouldn't trust any potential targets too much. Traders should factor in the possibility of future drops in the A/D line (and, so, further weakness in equities) in their trading plans if the A/D line turns lower again after the current test of resistance.

Linda Piazza : 5/7/2008 9:49:02 AM

Currently, the SPX is attempting to stabilize above potential Keltner support on 30-minute closes, now at 1415.46. The SPX did test that level, even piercing by a bit earlier, but it will be the 30-minute close that tells us whether the support held. The SPX is currently 1416.52, testing the 50% retracement of its long slide from October 11, 2007 to March's low.

Jane Fox : 5/7/2008 9:47:48 AM

VIX is making new daily highs and this give the bears a much larger edge.

Jane Fox : 5/7/2008 9:47:17 AM

AD line is a neutral -140 but of course under 0 it means he bears have a little edge.

Linda Piazza : 5/7/2008 9:46:15 AM

This is the VIX chart I mentioned in my 9:31:14 post, a chart I posted yesterday afternoon, too. Link While there are some differences in the Keltner setup when comparing that October level and the current one, the similarities are troublesome. Note how on October 11, the VIX reversed higher after testing that black-channel support for several days, climbing up through and closing well above the thin red daily 9-ema. Equity bulls don't want to see that happen this week. They'd rather see the VIX break down through that potential support and head down lower levels.

Keene Little : 5/7/2008 9:42:19 AM

The first levels to watch for support, if prices drop a little lower from here, are the overnight lows near 4:30 AM (ES 1413.75, YM 12972).

Keene Little : 5/7/2008 9:41:02 AM

This morning's pullback is merely a small correction of yesterday's rally (so far) and we could see a run up to test the overnight highs (ES 1424, YM 13049) but that's not a given. If we instead get a larger pullback today I will be looking for evidence of it being just a correction or something more bearish. Obviously it's too early to tell right now.

Linda Piazza : 5/7/2008 9:36:30 AM

Keltner outlook on the A/D line: the A/D line gapped below potential support on its 15-minute chart, gapping into the bottom or bearish half of its Keltner channels and perhaps converting that potential support into potential resistance. We'll see soon because the A/D line is immediately rising to test that potential resistance, now up to about +200 on 15-minute closes. The A/D line is currently +163. If it can't maintain closes at or above that resistance, it risks setting a downside target near -725. Let's reserve judgment as much as possible for now, but do factor in the possibility that the A/D line could turn lower.

Linda Piazza : 5/7/2008 9:31:14 AM

SPX futures are near the flat-line level this morning, so let's look a near-term potential support and resistance on a 30-minute chart. Potential resistance is from 1421.46-1422.60 on 30-minute closes. Potential support is 1415.79 on 30-minute closes.

For the OEX, those numbers are 655.15 and 657.13 for potential resistance on 30-minute closes and 652.63 for potential support on 30-minute closes.

I don't really have a scenario for today, but I do know one scenario that equity bulls don't want to see: they don't want to see the VIX reverse and climb strongly (perhaps after a morning test of the 17.80-ish level?), closing above potential resistance on daily closes at 19.32. The VIX is currently testing a Keltner level that it last tested October 5-11, 2007. On October 11, the VIX hit the line that's now at about 17.80 and reversed higher, beginning a process that was to result in the long slide lower into March's low.

Jane Fox : 5/7/2008 9:30:47 AM

Crude's chart is getting weaker and weaker and it needs to take a very nice breather but I'm not sure the political area in which it trades will allow that to happen and the most we may get is a sideways move to let the MACD catch up. In any case this is not a place to be putting on new long positions. Link

Jane Fox : 5/7/2008 9:28:21 AM

Gold is not doing well today because the US$ is rallying on the productivity news out at 8:30. I am long Gold and have a stop just under yearly lows. Link

Jane Fox : 5/7/2008 9:22:33 AM

This chart leaves little doubt the bulls are leading the pack albeit not a huge lead and the MACD is telling me the bulls will need to take a breather sooner or later. This may embolden the bears but the trend will remain up until the SPX closes below the April 15th low down at 1330. If the bulls are so asleep at the wheel that they allow the bears to bring price down that low they deserve to lose control. Link

Jane Fox : 5/7/2008 9:00:03 AM

WASHINGTON (MarketWatch) - Sen. Barack Obama has won the Democratic presidential nomination with his convincing win in the North Carolina primary. The primary election that Sen. Hillary Clinton said would be a "game changer" has become a "game ender."

While Obama hasn't completely put to rest the concerns raised by Clinton about his ability to woo white working-class voters, his strong showing on Tuesday in North Carolina and, to a lesser extent in Indiana, will likely push even more Democratic super delegates into his camp.

Soon, in a few weeks or early next month, Obama will have the endorsements of a majority of Democrats to the Denver convention. And then it will be time for Clinton to step aside and step behind the man who has beat her under every conceivable standard: most delegates, most votes and most states.

Jane Fox : 5/7/2008 8:58:07 AM

The overnight markets really liked the fact US productivity rose 2.2% annualized. The Russell 2000 futures (ER2) liked it more so than the other three because it was able to make new overnight highs. We still have about 40 minutes until the open of the cash markets so I will post these charts a little later to see how they are all doing. Link

Jane Fox : 5/7/2008 8:51:19 AM

NEW YORK (MarketWatch) -- Retailers' sales in April are expected to rebound from a downbeat March, boosted by warmer weather in the first half of the month and a calendar shift in Easter that resulted in an extra selling day.

Chain store sales are forecast to rise 1.5% to 2% in April, about 2.5 percentage points of which were bolstered by the extra selling day in April as Easter fell in March this year, according to International Council of Shopping Centers. While warmer weather helped boost some pent up demand for spring merchandise in the first half of the month, analysts said that lift likely trailed off as weather got unseasonably cold in the back half.

"The underlying pace of the demand remains very stagnant if adjusted for the Easter shift," said Michael Niemira, ICSC's chief economist.

Record high oil prices and declining housing and credit markets have curtailed consumer spending and sentiment, making discretionary items such as apparel not a priority. Retailers such as J.C. Penney Co. have lowered their profit forecast as a result, analysts said.

Jane Fox : 5/7/2008 8:50:05 AM

NEW YORK (MarketWatch) -- The dollar strengthened its gains against other major currencies Wednesday after data showed that productivity of the U.S. non-farm business sector accelerated to a 2.2% annual rate in the first quarter, exceeding the expectations of economists. The dollar index, which tracks the performance of the greenback against a basket of other currencies, rose 0.6% to 73.47. The dollar rose 0.7% against the euro, 0.9% against the British pound and 0.7% against the Japanese yen.

Jane Fox : 5/7/2008 8:49:15 AM

WASHINGTON (MarketWatch) - Productivity of the U.S. non-farm business sector accelerated to a 2.2% annual rate in the first quarter, as businesses slashed working hours, the Labor Department estimated Wednesday. Economists were expecting productivity to rise 1.8% in the first quarter. Unit labor costs - a key inflationary signal - rose at an annual rate of 2.2% in the first quarter. Economists had expected a 2.6% gain. Real hourly compensation rose 0.1%. Compared with the same quarter a year ago, productivity was up 3.2% while unit labor costs rose 0.2%. This is the smallest gain in labor costs since 2004.

Market Monitor Archives