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Jeff Bailey : 5/20/2008 10:55:48 PM

Closing Internals found at this Link

Keene Little : 5/20/2008 10:45:55 PM

Wednesday's pivot tables: Link and Link

The setup after Monday's rally rejection (daily shooting stars) was a good one for the short side and now several daily charts look like an evening star reversal candlestick pattern. Therefore it's now for the bears to give back--short the bounces until the market is able to rally back above Monday's highs.

The DOW broke below its uptrend line from March and by that measure is one of the more bearish indexes. This after a double top just above 13130 with bearish divergence as shown on the daily chart. A break below its May 9th low near 12715 would confirm the double-top failure. Link

Watch for a rally first back up for a possible retest of its broken uptrend line, currently near 12920-12950 (depending on whether arithmetic or log scale is used, with log scale shown on the daily chart). A 38%-50% retracement of the decline from Monday's high would be a bounce up to 12918-12960 so good correlation in that zone.

The RUT also broke its uptrend line from March but made a stronger bounce into the close--almost looked like short covering for whatever reason. It came nearly back up to its broken trend line and left a bullish hammer (but not a reliable indicator in this position): Link . This index will be important to watch Wednesday since a bounce right back up to a new high would definitely have me looking for the others to follow.

OI Technical Staff : 5/20/2008 9:59:59 PM

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Jeff Bailey : 5/20/2008 4:55:46 PM

BIX.X 235.20 -2.06% ... did see trade at WKLY S2 (234.30). Session low was, was 234.28.

Jeff Bailey : 5/20/2008 4:49:39 PM

Late buying into the close leaves S&P Depository Receipts (SPY) $141.89 -0.81% back above WKLY Pivot and MONTHLY R1.

Jeff Bailey : 5/20/2008 4:44:09 PM

Nymex June Crude Oil (cl08m) final contract settlement was $129.07. Settled up $2.02, or +1.59%. OI was 35,631.

Rolling to July (cl08n) in U.S. Market Watch. July finished up $2.26 at $128.98. OI 368,266 with estimated volume 304,266.

Keene Little : 5/20/2008 4:07:45 PM

Gold would look best with another minor high before potentially topping out in its rally. It could make an overnight high (perhaps 926-932), which is common for the gold contract, or a new high tomorrow morning.

Keene Little : 5/20/2008 3:59:39 PM

The bulls hold support as measured by the trend lines for SPX and NDX. The bounce clearly has a corretive look to it and therefore I expect to see a little larger bounce tomorrow morning (maybe back up to near DOW 12930 to test its broken uptrend line from March) before heading lower again. We'll see how it sets up tomorrow.

James Brown : 5/20/2008 3:49:42 PM

Chipotle Mexican Grill (CMG) is falling under support near $90.00 and its March 10th low. Traders might be tempted to buy puts here but the stock looks a bit oversold down almost five weeks in a row so I'd be somewhat hesitant.

Keene Little : 5/20/2008 3:47:21 PM

The bulls are fighting hard to hold onto support while the bears want to see it break and set off some sell alarms by the closing prices.

James Brown : 5/20/2008 3:43:59 PM

CPI Corp. (CPY)... which does not have options and has abysmally low volume... still looks like it's building a bottom over the last five months.

Linda Piazza : 5/20/2008 3:43:54 PM

If you haven't started making end-of-day decisions, it's time to begin. If the OEX ends the day anywhere near its current level, it will be completing yet another potential reversal signal with today's follow-through to the downside. I shouldn't even say "potential," because it did complete that signal, but these days, you have to attach the word "potential" to any reversal, it seems. Last week's tall green weekly candle, for example, came after a completed reversal signal from the previous week.

However, my daily Keltner channels show the OEX ending the day near potential support, but with a 637.40-ish downside target if it breaks through. The 5/09 low was 637.37, so that target is also near historical support, as well as just above the 636.40-ish FIB level that marks the 50% retracement of the decline from last October's high.

So a reversal potential is set up but not promised in this overly bullish environment, and, even if there's follow through, there's always the chance that the 636.40-637.40 level could mark the end of that decline. I had anticipated that the OEX might have about a 20-25 point chop region that carried into the summer, but I'd anticipated that region would be mostly from about 613-637. Could it be higher instead, from about 637-640? We'll have to see, but consider that possibility.

Jeff Bailey : 5/20/2008 3:42:23 PM

Swing trade call exit alert! for the PM/MO June $75 Call (MZS-FO) at the bid of $1.54.

PM $52.97/MO $22.50.

James Brown : 5/20/2008 3:37:52 PM

Spartan Stores (SPTN) is out performing today. The stock is up 4.2% as traders buy the dip near its 200-dma. Yesterday SPTN pulled back just low enough to fill the gap from May 15th which was sparked by its better than expected earnings report. SPTN is a grocery store chain. The P&F chart is bullish with a $35 target. P&F chart: Link

James Brown : 5/20/2008 3:18:28 PM

Trading Idea - Garmin (GRMN) is reversing under resistance. This might be an entry point. I will note that the big bounce (short squeeze?) from last week produced a new P&F buy signal. chart: Link

Linda Piazza : 5/20/2008 3:15:31 PM

If the OEX can maintain values above 646.30, especially into a 30-minute close, then it might attempt a test of 647.20-647.50 potential resistance. First, though, it has to get past that first resistance level at 646.30, and that might be tough. I really thought there was a halfway chance that the OEX might steady near 645 and at least a halfway chance that it wouldn't reach that 642 downside target, though, but would rather mostly chop around near that and up to about 651 or perhaps a little higher. I thought that might continue perhaps as much as another day or two. I wouldn't be surprised by a punch higher now, but wouldn't think it was necessarily an extremely bullish sign, either. As I said earlier, I was mostly on the lookout for potential choppy conditions for a day or two now. The OEX kept moving lower after I said that, though, continuing the previous trend. Now, though? I'm still on the lookout for choppy conditions, seeing if it sets up.

Keene Little : 5/20/2008 3:12:25 PM

SPX and NDX are both holding their trendline support so we'll have to see what kind of bounce develops from here. If it becomes an overlapping choppy bounce then we'll have a better sense that the decline will continue. Until then we don't know what's next.

James Brown : 5/20/2008 3:10:42 PM

Sears Holding (SHLD) is down 2.8% but it's bouncing from round-number support at $90.00. The trend is bearish but I don't think this is an entry point yet. Keep an eye on it for a breakdown under $90.00 or a failed rally in the $96-98 region.

Linda Piazza : 5/20/2008 3:04:10 PM

The OEX's 15-minute 9-ema is now 645.29.

Linda Piazza : 5/20/2008 2:56:42 PM

So far, the OEX's 15-minute 9-ema held again as resistance on that 15-minute close. The VXO, however, is headed lower during this current 15-minute period, rather than higher, and they should be moving in opposition to each other, so I'm not sure the OEX is through testing.

Linda Piazza : 5/20/2008 2:44:24 PM

The OEX is back to test resistance at its 15-minute 9-ema, now at about 645.54. There's also potential resistance gathered from 645.50-646.65 on 30-minute closes. If the OEX can't maintain 15-minute closes above the 15-minute 9-ema, at least, we have to consider that potential 642-ish target still possibly viable.

Linda Piazza : 5/20/2008 2:35:29 PM

The OEX's 15-minute 9-ema is now at 645.43; the SPX's, 1412.23. These can be used as first and tentative benchmarks showing when something might have changed. It's not as good a benchmark for the SPX as it has been for the OEX today, though, as there have been a couple of 15-minute closes just above it on the SPX.

Keene Little : 5/20/2008 2:30:41 PM

MER making new lows here, currently down -3.7%. INTC is in hot pursuit, down -3.5%, but off its double-bottom low (with bullish divergence).

Jeff Bailey : 5/20/2008 2:30:38 PM

Target (TGT) $54.35 -1.03% ... Earnings Press Release Link (before the bell).

Consensus was for EPS of $0.71 on Revenue of $14.92B

Jeff Bailey : 5/20/2008 2:25:19 PM

Home Depot (HD) Earnings Press Release Link (before the bell).

Consensus was for EPS of $0.37 on Revenue of $17.61B

Linda Piazza : 5/20/2008 2:24:24 PM

The A/D tested but so far has not broken through its previous low of the day. So far, all it has to do is just keep from bouncing too hard to support the bearish case for today.

Keene Little : 5/20/2008 2:24:04 PM

Where are the dipsters when you need them.

Keene Little : 5/20/2008 2:23:35 PM

NDX is also breaking its mid line of its parallel up-channel from March, first time since getting above it in mid April. A recovery here would only leave a brief poke lower.

Keene Little : 5/20/2008 2:22:28 PM

Bulls need to step in now and save the SPX from breaking its uptrend line. Otherwise it will follow the DOW which broke its uptrend line this morning.

Jeff Bailey : 5/20/2008 2:16:25 PM

02:00 Internals found at this Link

Linda Piazza : 5/20/2008 2:10:44 PM

Still no new low for the A/D line, although the formation in which the A/D line has been climbing off the low of the day looks decidedly like a bear flag formation. If the A/D line can climb above about -850 to -750 and stay there, however, then I'd be careful about protecting any short-term scalping or day trading type bearish gains. As I type, it's far from that, at -1106 but looking better on a Keltner basis than it did earlier today.

Linda Piazza : 5/20/2008 2:07:27 PM

Here's one reason I thought the OEX might at least attempt to steady near its current level: Link Remember that I'm still of the "needs to retest the bottom" ilk, but that doesn't mean that I don't think that bulls, successful so far at buying every test of this trendline, might not try it again.

Keene Little : 5/20/2008 2:05:50 PM

Price is now chopping its way lower and this gives it the appearance of an ending pattern for the leg down from yesterday's high. This as SPX approaches its uptrend line form March, near 1410. I would look for a bounce off that support and into tomorrow morning.

The alternative interpretation of the choppy decline since 12:30 PM is that it's getting ready to drop hard so a break below SPX 1410 that stays there would be very bearish.

Linda Piazza : 5/20/2008 2:00:02 PM

The OEX's 15-minute 9-ema has again held as resistance. With the OEX now breaking through potential support on 30-minute closes, continue to consider the OEX's 642.07 current downside target in your trading plans while not holding out for the very last cent if it doesn't quite get there. I had thought there was a strong possibility that the OEX would find support near the 645 zone, so I'm not sure how trustworthy to believe that downside target might be.

Jeff Bailey : 5/20/2008 1:59:46 PM

US House passing "Anti-OPEC" legislation this afternoon despite a veto threat from White House. The so-called "NOPEC" provision would change certain laws, such as the Sharman Act and Foreign Sovereign Immunities Act, to block OPEC countries like Iran, Kuwait, Saudi Arabia and Venezuela from involing immunity from U.S. court action relating to concernes about oil production.

Jeff Bailey : 5/20/2008 1:54:28 PM

Home Depot (HD) $27.154 -5.99% ... a component of the DJUSHB. Also a Dow Industrials component. #26 weighting as I type.

Jeff Bailey : 5/20/2008 1:52:03 PM

DJ US Home Construction (DJUSHB) 353.57 -4.12% ... testing upward trend from 01/09/08 low to 3/17/08 pullback low. Today is first test of this trend. Would also be 38.2% retracement of 01/09/08 low to recent 04/07/08 high.

James Brown : 5/20/2008 1:51:46 PM

Traditionally the healthcare stocks are seen as more "safe haven" plays when the market turns lower. This group was slaughtered in the first quarter of 2008. Now the HMO index is bouncing (+1.8% today) and nearing resistance. Can it breakout? chart: Link

Linda Piazza : 5/20/2008 1:50:23 PM

The TRAN hasn't yet given up its test of resistance, with the TRAN tangled up in resistance lines that converge from about 5360-5390. The TRAN is 5366.38 as I type. If it bursts higher out of this resistance band, it could tug other indices such as the SPX, OEX and Dow up at least to test their own resistance bands. Of course, it could also roll down, but so far it's outperforming those others by this measure at least.

Jeff Bailey : 5/20/2008 1:45:55 PM

Here's a Live CMD May'09 housing futures Link

You can begin to see why some question the accuracy of just what these futures are "saying" about housing prices on a week-to-week basis. Check out the bid/ask spreads here. Any trading will likely be done between the bid/ask where buyer and seller meet on price.

Hopefully, as time passes, these relatively new derivatives will pick up some trade. I remember when equity futures use to have little volume.

Keene Little : 5/20/2008 1:44:38 PM

Appears to be breaking down instead of completing a sideways triangle.

James Brown : 5/20/2008 1:43:57 PM

The BTK biotech index is not looking very healthy here. It will be interesting to see if this sector will rally or sink on the upcoming ASCO conference, which begins on May 30th and ends June 3rd.
ASCO = American Society of Clinical Oncology

If I remember correctly, I thought the biotechs normally rallied into the ASCO conference and then sold off afterwards but my memory is a little fuzzy here.

Anybody else remember how the biotechs trade around the ASCO conference?

Chart of the BTK: Link

Keene Little : 5/20/2008 1:40:43 PM

SPX appears to be consolidating in a sideways triangle (if it doesn't immediately break lower from here). The pattern calls for one more small bounce up to another lower high and then break down. Watch for that setup to get short for a 5th wave down (so day trade and then cover before a bigger bounce into tomorrow).

Jeff Bailey : 5/20/2008 1:34:30 PM

Here's a Live CME May'08 housing futures at 01:28 PM EDT. Actually, the near-month bid/ask rather tight into expiration. Link

One (1) contract today for Los Angeles. Looks like a sell on an up-tick?

James Brown : 5/20/2008 1:29:07 PM

Dow-component IBM is breaking down under what should have been support near $125.00 today. IBM has also broken under its 10-dma. The trend is still bullish but IBM needs to bounce soon (122-124 region) to keep the trend alive. chart: Link

Jeff Bailey : 5/20/2008 1:26:10 PM

Just another technical I'll be monitoring into the end of the month is the "roll" from May'08 contracts. Feb'08 was rather bearish.

Linda Piazza : 5/20/2008 1:26:08 PM

The OEX's 15-minute 9-ema, now at 646.97, again holds as resistance on a 15-minute close. There's potential support on the 30-minute chart, however, down to about 645.16.

James Brown : 5/20/2008 1:22:41 PM

Trading Idea -- MGM Mirage (MGM) has pulled back and filled the gap from May 14th (see an intraday chart). Traders bought the dip this morning near $50.50. This could be an aggressive entry point for bullish positions but I'd probably use a stop under $50.00. Bear in mind that MGM is bouncing around a couple of significant resistance trendlines. The stock has broken through one of them (blue) but still has resistance in the 53.50-54.00 zone near its 30-dma (red line on the chart). This might be a stock to add to your watch list. chart: Link

Keene Little : 5/20/2008 1:21:53 PM

Silver has a pattern similar to gold's but only weaker. Its bounce off the May 1st low has not even achieved two equal legs up yet. Nor has it reached its 50-dma yet (17.78 and today's high so far is 17.65). The price pattern of the bounce off the May low is a clear indication of a corrective bounce and as depicted with the bear flag pattern on the daily chart, it should proceed lower once the current leg up of the bounce finishes (July contract): Link

Jeff Bailey : 5/20/2008 1:21:39 PM

The various CME housing futures trade VERY thin, and have WIDE bid/ask spreads.

Jeff Bailey : 5/20/2008 1:20:14 PM

CME's May'08, Aug'08, Nov'08 and Feb'09 housing futures benchmarks I track for the major metro areas around the country Link

Linda Piazza : 5/20/2008 1:18:39 PM

The TRAN is driving well up into the resistance band that's analogous to the OEX 649-651 band and the SPX's 1416-1418 band. If the TRAN performs well, it could be leading the way for the other indices, so it should be watched. For now, though, I'm still operating on the premise that I proposed earlier, that the OEX might now chop around between about 645.50 and 651.50 or perhaps a little outside that range for a number of days before next direction is decided, so I'm on the lookout for choppy conditions now.

If the 645.30-ish support is lost on 30-minute closes, however, the OEX could make a quick trip down to 642 or so.

Jane Fox : 5/20/2008 1:16:05 PM

Dateline CNN - Doctors say Sen. Edward Kennedy has brain tumor; condition discovered after he had seizure.

Jeff Bailey : 5/20/2008 1:16:48 PM

Was a slight up-tick in the CME Feb-09 housing futures for the San Fran region from a 4/30/08 to 5/15/08 benchmark.

Jeff Bailey : 5/20/2008 1:13:28 PM

San Francisco Bay area April home sales up 29% on month

James Brown : 5/20/2008 1:10:00 PM

McGraw-Hill (MHP) announced a restructuring plan today but it failed to help the stock price. The stock is showing a very common pattern this week. MHP has failed near its 200-dma. There is potential support in the gap area but the $40 level looks like stronger support. chart: Link

Jane Fox : 5/20/2008 1:07:13 PM

Crude up to $129.29 on the July contract.

Linda Piazza : 5/20/2008 1:05:49 PM

So far, both the OEX and SPX found resistance on 15-minute closes at their 15-minute 9-ema's. Here's a chart showing the OEX's test, with the 9-ema the thin red line: Link A new test can't be ruled out yet as what is not shown is the potential support on the 30-minute chart.

Keene Little : 5/20/2008 1:05:36 PM

For those who follow/trade gold it will be important to see how it behaves around its 50-dma. At the April high it briefly broke above it but wasn't able to hold it for more than one day. If today's break above can hold above then we'll have a change in character. The jury's still out deciding whether we've got a bullish move in gold or just a correction to its new down trend. Link

Right now the gold ETF, GLD, is above its 50-dma at 90.27 (today's high so far is 91.15). It is nearing its Fib projection at 91.42 where the 2nd leg up in its bounce off the May 1st low would achieve 162% of the 1st leg up. It's currently at the top of a potential parallel down-channel for price action since the April 1st low. Therefore, it's a good place to try the short side on gold since the stop can be kept relatively tight.

James Brown : 5/20/2008 1:02:32 PM

Some of the technicals I look at are suggesting that AAPL is poised for a deeper correction. However, at this point, if you were to gamble on a put play in AAPL I'd wait for a breakdown under $180.

Part of the challenge on trying to pick bearish plays in AAPL is this whole 3G iPhone hype. The developer's conference is three weeks away. There are a lot of bulls who believe AAPL will continue to rally up into the conference and then plan to "sell the news" once the announcement is made.

James Brown : 5/20/2008 12:59:32 PM

Tech stock leader Apple Inc (AAPL) is bouncing after testing the $180 level this morning.

Fueling the bounce was a story out this morning that AAPL would probably unveil its 3G iPhone at its June 9th keynote for the Apple Worldwide Developers Conference.

Furthermore the story suggests that the new 3G iPhone will be available immediately, which further supports recent rumors that AAPL has let current inventories of its iPhone run down as it prepares for the launch of its second-generation product.

Jeff Bailey : 5/20/2008 12:57:52 PM

Most Actives ... SPY $141.54 -1.05%, QQQQ $49.10 -1.10%, IWM $73.33 -0.86%, MSFT $28.74 -2.41%, INTC $24.06 -3.29%, AIG $38.06 -2.31%, HD $27.20 -5.78%, CSCO $25.76 -2.27%, F $7.90 -1.49%, AAPL $184.72 +0.61%

Jeff Bailey : 5/20/2008 12:47:37 PM

05/12/08 world bullish % Link

World Bullish % at 05/19/08 close Link

James Brown : 5/20/2008 12:45:46 PM

A Dow Jones article is stating that Alan Greenspan believes there is a speculative bubble in oil and food prices. Here is an excerpt:

"Yes, there are aspects of a bubble in oil and grains, but nonetheless there are fundamental forces that are driving it," Greenspan told conference participants via a video link.

He added that controlling the rapid increase in commodity prices is one of the most difficult challenges facing central banks worldwide, but he stressed that globally, "inflation isn't out of control at this point."

James Brown : 5/20/2008 12:40:54 PM

Keene and Jane have been commenting on the rally in gold. I noticed that the gold ETF the GLD is up 1.7% and breaking out over resistance at $90.00 and at its 50-dma and 100-dma. I'm not suggesting investors chase it here but this is definitely a bullish turn of events. chart: Link

Linda Piazza : 5/20/2008 12:34:45 PM

The A/D line is now back above its 15-minute 9-ema, about to tackle possible resistance near -700. It's at -896 as I type.

Jeff Bailey : 5/20/2008 12:32:05 PM

DXY 72.40 -0.88% ... testing its 50-day SMA today. This weighted basket of currencies nearing its MONTHLY Pivot.

Linda Piazza : 5/20/2008 12:27:56 PM

The OEX is likely to face significant resistance beginning about 649.15 and extending up toward 651.10. However, I wouldn't be surprised to see the OEX chop around that zone quite a while, perhaps between today's low and that zone for a day or two, although that's not a promise, of course. We'll just have to see how that plays out before we make further decisions about what happens next, but I think those with bullish hopes have to be careful. Of course, I thought so last week, too.

Jane Fox : 5/20/2008 12:27:26 PM

I suspected Gold to reach its resistance at 940-960 but I certainly didn?t expect for it to do it this week. Link

Jeff Bailey : 5/20/2008 12:25:32 PM

One heck of a pennant forming in the longer-dated 30-year

Jeff Bailey : 5/20/2008 12:24:37 PM

Most Actives ... SPY $141.65 -0.97%, QQQQ $49.19 -0.92%, MSFT $28.72 -2.51%, INTC $24.10 -3.13%, AIG $38.17 -2.00%, CSCO $25.84 -2.00%, AAPL $185.61 +1.09%, MU $8.25 -5.59%, HD $27.56 -4.53%, DELL $20.62 -2.73%

Linda Piazza : 5/20/2008 12:18:41 PM

The OEX's 15-minute 9-ema is now 647.52; the SPX's, 1415.88.

Jeff Bailey : 5/20/2008 12:17:35 PM

12:00 Internals Link

Keene Little : 5/20/2008 12:15:08 PM

NDX has been finding support at the mid line of its parallel up-channel from March since climbing above it a month ago. It has dropped down to it again today and is again finding it to be support. I believe it will break this time but obviously the bears need to see it happen before getting too bearish. Let price lead the way here and in the meantime stay cautious if you're bearish. 120-min chart: Link

Jeff Bailey : 5/20/2008 12:07:25 PM

Keep an eye on those "junk bonds" ...

Jeff Bailey : 5/20/2008 12:06:28 PM

Pacholder High Yield (PHF) $8.50 (unch) ...

Keene Little : 5/20/2008 12:06:09 PM

Gold is still pushing a little higher and is approaching its monthly R1 at 926. Weekly R2, at 933.90, is just above the 162% Fib projection for the 2nd leg of the bounce at 932.58 (which is a correction to the level I mentioned in my previous post at 11:21 AM). Between these levels and trend lines it should be a tough wall of resistance.

Linda Piazza : 5/20/2008 12:05:56 PM

The VIX finally hit a new high, although not much of one. The A/D line has not hit a new low, however. Neither has the TRAN.

Jeff Bailey : 5/20/2008 12:01:55 PM

Dynamic Materials (BOOM) $39.34 +2.18% Link ... stock takes a look at its gap lower open of 05/02/08 after earnings. Still long the BOOM Jun $45 Call (QCB-FI) from 4/07/08 entry of $46.47.

Linda Piazza : 5/20/2008 11:56:29 AM

If the OEX should drop further without bouncing, it's got a lower potential downside target at 641.89. Consider vulnerability to that level, but don't count on it happening and continue to update your profit-protecting plans for your bearish trades.

Linda Piazza : 5/20/2008 11:50:56 AM

The OEX has now hit the potential downside target, despite my doubting Thomasina worries. That target is now 645.80 and it's also potential downside support on 30-minute closes.

Jeff Bailey : 5/20/2008 11:48:47 AM

MO and PM now slide up MO's BLUE 0% to 04/09/08 relative low. Link

It would have to be my analysis, based on observation, the MO is a bit of a "drag" of the two (2). What I can do is now establish a STOP on the June expiration by using the "weaker" MO stock price, but give the trade a chance to progress further. Technically, there would be some uncertainty as to just how high the PM portion could go if PM takes out $54.35.

Keene Little : 5/20/2008 11:47:12 AM

We've got some short term bullish divergences building at the new price lows so protect your profits if you rode this decline. Take profits early is still the mantra. Day traders should start watching for a buying opportunity. SPX's uptrend line from March is now near 1410 and that could work nicely if it gets there. Then maybe a bounce for the DOW to get back up to its broken uptrend line, perhaps up near 12910 by this afternoon.

Keene Little : 5/20/2008 11:43:07 AM

The semis (SMH) have dropped fairly hard today, down -2.5% currently, and this follows the bearish shooting star yesterday after tagging its 50% retracement of the July-January decline: Link

But the bulls have a chance here to turn things around. Price has dropped down only slightly below its 200-dma and is back to the uptrend line from April 15th. It's also the location of the top of a parallel up-channel from January, which it broke above last week. A drop below 32 would be a confirmed break of these support levels and be further proof we've seen the high, at least for now. But keep an eye on this sector as it gave us an early heads up yesterday about the reversal by not making new highs with the blue chips.

Linda Piazza : 5/20/2008 11:37:32 AM

The OEX's 15-minute 9-ema is now 648.53 and can be used as a short-term benchmark. Bears want to see any bump higher find resistance on 15-minute closes at that 9-ema.

Jeff Bailey : 5/20/2008 11:36:21 AM

Now watch what I do with the MO chart. I'm going to slide up its BLUE 0% to the 04/09/08 low.

Linda Piazza : 5/20/2008 11:36:15 AM

Neither the VIX nor the RVX, the Russell 2000's volatility index, have hit new highs in the last 30 minutes, although the VXO did. The A/D line is still trying to steady and did not hit a new low as the OEX and SPX did. Neither did the USDJPY. As I said in my earlier post, these are divergences, with the exception of the VXO, and should be watched, but they don't prove anything yet. Bears should keep their just-in-case profit-protecting plans updated, however.

Jeff Bailey : 5/20/2008 11:33:54 AM

MO and PM daily interval montage Link

The MAJOR level of near-term resistance looks to me to be MO $23.00 and PM $54.35, or $77.35.

Linda Piazza : 5/20/2008 11:25:09 AM

Current potential downside target for the OEX is 645.69, with potential support on 30-minute closes at that level, too. As I typed, the VXO, the old VIX calculated using OEX options is pushing up toward the day's high again, if not yet achieving a new high of the day. Not quite.

Keene Little : 5/20/2008 11:21:25 AM

Gold pressed higher than 904.40, which I had pointed out two days ago as potential resistance (two equal legs up from the May 2nd low). Now gold is facing the next level of resistance at its broken uptrend line from August 2007 through the April 1st low, the 100-dma and 50-dma, all co-located in the 918-921 area. Gold contract (June) daily chart: Link

Gold's high so far this morning is 920.50. Slightly higher is the Fib projection at 931.84 where the 2nd leg up in the bounce off the May 2nd low would be 162% of the 1st leg up. It's another good setup to try the short side on gold since the next leg down, assuming we get it, should be a sharp drop down to the 800 area.

Jeff Bailey : 5/20/2008 11:21:24 AM

CNBC mentioning our MO/PM bull trade. I'm working on charts. May be time to make a decision.

Linda Piazza : 5/20/2008 11:20:16 AM

The A/D line did not broken to a new low when the OEX and SPX did a few minutes ago. While that's not definitive proof of anything, it does counsel bears to be watchful especially since VIX also did not break to a new high when the OEX and SPX broke to new lows.

Jeff Bailey : 5/20/2008 11:06:33 AM

Swing trade NAKED Call(s) establish stop alert! ... for the two (2) S&P Depository Receipts SPY June $148 Call (SFB-FR) at $144.50 in the underlying.

SPY $141.80 -0.87% ... SFB-FR currently $0.42 x $0.44.

VIX.X 17.96 +5.58% ...

Jeff Bailey : 5/20/2008 11:00:02 AM

SPY daily interval chart Link

Can perhaps envision how market participants systematically initiated short, or long put positions on each rally to SPY $138. Now it should be time to cover.

Note the two (2) upward trends.

Linda Piazza : 5/20/2008 10:50:09 AM

So far, the OEX maintains a downside target that's now at 645.78. That's so potential support. I'm not sure how much credence to give that target, though, since the A/D line looks so far as if it's trying to steady.

Keene Little : 5/20/2008 10:44:39 AM

SPX doesn't hit its uptrend line from March (drawn through the April 15th low) until it drops down to 1408, near last Thursday's low.

Keene Little : 5/20/2008 10:40:11 AM

We didn't get a very large consolidation so it looks like a little lower before we get it. Perhaps then a bounce back up to the DOW's broken uptrend line for a kiss goodbye. Friday's large gains have now been completely reversed (a bull trap).

Jeff Bailey : 5/20/2008 10:39:20 AM

SPX ... same bar chart we looked at in last night's Market Wrap, but bring in the 10-day NH/NL ratio benchmarks Link

Linda Piazza : 5/20/2008 10:33:17 AM

I don't need to tell you that the OEX "climb" so far is taking the shape of a possible bear flag.

Linda Piazza : 5/20/2008 10:32:19 AM

The A/D line is attempting to break back above potential resistance now at -980. It's above it as I type, now at -882. If the A/D line can hold above this level, it might then attempt to push higher, perhaps toward -620 to -540, where I would expect next potential resistance to show up. If the A/D line finds support and climbs into next resistance, then the OEX might, too. If it then finds resistance at the next level, then the OEX might, too.

Jeff Bailey : 5/20/2008 10:29:52 AM

The last time the SPX's 10-day NH/NL ratio was 78.8% was an inflection high of 78.8% on 12/11/07.

Jeff Bailey : 5/20/2008 10:27:54 AM

Yesterday's tally of new high and new lows among the S&P 500 components range in at a very strong, yet very "overbought" 37:0. "Overbought" as the 5-day NH/NL ratio which is really choppy due to narrower data set was 91.1%. The 10-day NH/NL ratio also well above the 70% measure at 78.6%.

Keene Little : 5/20/2008 10:24:28 AM

We're due a consolidation that should last at least an hour or so before proceeding lower. I would not expect it to get above DOW 12950 so a bounce higher than that would have me thinking something a little more bullish.

Linda Piazza : 5/20/2008 10:23:43 AM

Currency traders appear to be trying to stabilize the USDJPY near Friday's 103.62 low. Today's low has been 103.45, with the USDJPY now 103.80. I mentioned several days ago that the USDJPY looked to be heading down toward its 30-sma again after retesting a broken trendline off the March low, and it's hit that moving average, now at 103.56, today. Although there's always the chance that the former intermarket relationship of U.S. equities to the USDJPY will disconnect and some even predict that it will, for now, it's still useful to watch the USDJPY. U.S. equity bulls don't want to see it drop below its 102.56 low from 5/12.

Keene Little : 5/20/2008 10:22:40 AM

If the uptrend line from March for the DOW is drawn off the May 9th low instead of April 15th, the lower uptrend line is at 12875 which is where the DOW is finding some support after breaking below the slightly higher uptrend line at 12895.

Jeff Bailey : 5/20/2008 10:21:41 AM

Texas Instruments (TXN) $31.85 -2.09% ... CEO saying chip sales to Nokia (NOK) $29.50 -0.57% are expanding.

Jeff Bailey : 5/20/2008 10:20:30 AM

10:00 Internals at this Link

Linda Piazza : 5/20/2008 10:18:55 AM

Presumed OEX resistance can now be found from 649.32-650.98 on 15-minute closes in a thick band. The setup looks as if the OEX will need a strong push to get through this. A prolonged battering at it could also loosen the resistance. For now, though, without that strong push, expect it to hold as resistance. You know something else is going on if it doesn't.

Jeff Bailey : 5/20/2008 10:16:49 AM

Japan's government saying that 1/5, or 20% of its population is age 65 or older.

Linda Piazza : 5/20/2008 10:03:05 AM

The OEX has now formed a second 15-minute candle below the S/R zone now from 649.91-650.53. In addition, it's closing its 30-minute period below potential support now at 649.30. There's now a potential downside target of 645.93, but I'd be just a little leery of that target. What that means is that while bulls need to recognize that vulnerability and perhaps not jump into bullish trades unless they see some strong setup I'm not yet seeing, bears shouldn't necessarily hang on for every cent of that so-called target if they see some change in the wind.

Keene Little : 5/20/2008 10:01:20 AM

Updating the daily chart of the BIX shows the index has now broken below the lows of the recent 7-day consolidation. As I mentioned before with this chart--follow the money (down). Link

Linda Piazza : 5/20/2008 9:53:22 AM

The OEX is so far bouncing from potential Keltner support on 30-minute closes, now at 649.32, but it's got something to prove now. It closed the first 15-minute period below potential support that extends from 650.03-650.53, and it needs to bounce right back above that and maintain values above that to show that it just overran it by a bit. The OEX is 650.13 as I type, having a bit of trouble with that new resistance. For now, however, I think the safest bet is to assume that the OEX is clinging to that support rather than that it's cleanly violated it. Watch the A/D line, though, as it's also retesting what should have been support and may now be resistance. That's at about -950 with the A/D line, with the A/D line now -1010 and with a -947 high so far for this 15-minute period.

Keene Little : 5/20/2008 9:46:41 AM

The DOW has now dropped to its uptrend line from March, near 12900 so watch for a bounce. If it only consolidates (choppy sideways/up correction) then we'll have a setup for a break of the trend line. But the bulls could step back in here and drive it back up.

Linda Piazza : 5/20/2008 9:40:39 AM

The OEX's daily 10-sma is now 646.61. The 9-ema, which I prefer to watch, is now about 648.50. Both could lend their support on daily closes.

Linda Piazza : 5/20/2008 9:36:41 AM

Keltner outlook on the A/D line: The A/D line has dropped right to likely support, near -925 on 15-minute closes. The A/D line sometimes overruns support or resistance by a bit, but here's another warning that a bounce attempt could begin, without promising that it will do so. The A/D line is currently -980.

Linda Piazza : 5/20/2008 9:35:11 AM

Here we go. The OEX is dropping to and through the potential support on 15-minute closes that's now been driven down to 650.03, but don't count that support out just yet as the OEX could bounce by the end of this 15-minute period. Now potential support on 30-minute closes shows up at 649.31, too, so bears should carefully manage their profits at this point, being prepared for a possible bounce attempt. If it comes, don't let it get too big. My personal belief is that the OEX might be topping out for a few days, at least, but that doesn't mean that I'm right and it certainly doesn't preclude a test of 656-658 resistance.

Keene Little : 5/20/2008 9:31:41 AM

We'll obviously have a big gap down this morning so that sets a negative tone for the day and looking ahead, if the gap down is followed by a red candle for the day it will be a strong reversal signal off yesterday's shooting star candles. Be careful about trying to be in a dip-buying mode and instead look for opportunities to sell the rallies (until we see if the bulls can close the gaps and hold it).

Jane Fox : 5/20/2008 9:25:31 AM

Sorry I was looking at Crude's June contract and we are now using the July. Teh July contract is "only" $128.94.

Jane Fox : 5/20/2008 9:22:46 AM

Crude hitting 129.24.

Jane Fox : 5/20/2008 9:21:50 AM

The Russell and NDX futures found support overnight at their respective previous day lows. Both the DOW and S&P futures have breached their previous day lows but not by much. Link

Linda Piazza : 5/20/2008 9:23:07 AM

Futures are obviously well below fair values this morning. The cash markets don't always behave in accordance with futures' action, but let's look at what happens if they do. Extrapolating from the difference in the SPX's futures and fair value for the SPX and then trying to determine where the OEX might go is an inexact science, of course. However, I'm guessing that if the cash markets follow suit with what's happening in the futures, the OEX might either drop to or gap below the support that's layered thickly from 650.24-651.62, with that from 15-minute and 30-minute charts. If the OEX drops to and even through that zone at first, we need to watch to see if it bounces back above it by the first 15- and 30-minute close, as that suggests that the support is indeed holding. If it gaps below it on the open, that suggests that the potential support level will in fact become resistance, and it would then need to be watched for resistance on those closes.

So, what I'm saying is that unless the OEX gaps below that zone and stays below it, bears need to be prepared for the possibility that this support could hold. While daily charts present the possibility that the OEX could easily drop to the 648.50 zone and perhaps even toward 644.40-646.25, the intraday charts still set up the possibility that support can hold at least long enough to bounce the OEX back up to another tests of 653-654. So, just manage your profit-protecting plans this morning if in bearish trades as that level is tested. If there's a gap below it and that holds as resistance on 15-minute and 30-minute closes, then I think we start looking at those lower targets as possibilities. The same is true of a strong drive through support that shows no attempts to bounce.

I don't know thatI think it's a great idea to try to buy a 650 test, though, not without seeing how things set up.

Jane Fox : 5/20/2008 9:05:08 AM

WASHINGTON (MarketWatch) -- Federal Reserve Vice Chairman Donald Kohn gave the clearest signal to date Tuesday that U.S. central bankers want to hold short-term interest rates steady in the weeks ahead until the outlook for the economy becomes clearer. "With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation," Kohn said in a speech to a business group in New Orleans. Kohn is considered to be one of the most influential policy-makers on the Fed's board. Fed watchers had already picked up hints that the Fed wanted to hold rates steady for a lengthy period, but the evidence before Kohn's speech was scanty.

Jane Fox : 5/20/2008 9:04:14 AM

The last time I looked at the SPX chart it was in rally mode and building a very nice bullish candle. I commented that I though SPX would rally until at least 1460 but that the rally would be choppy. The candle SPX finished the day with yesterday suggests very strongly the bulls are weaker than I thought. Link

Jane Fox : 5/20/2008 9:01:30 AM

Looks like Gold is starting the day on a positive note. Link

Jane Fox : 5/20/2008 9:04:47 AM

Crude's current consolidation at all time highs occurred back in the middle of March and from April 24th thru the 29th. Each time the pattern resulted in at least a 3 day drop. I am not suggesting this is a place to short Crude, you all know my thoughts on shorting Crude, but is certainly a place to taking long positions off the table and to think about where you will get back on this train. Link

Jane Fox : 5/20/2008 8:47:19 AM

I am taking this week off from the Market Monitor but will be popping in occassionally.

Jane Fox : 5/20/2008 8:46:09 AM

WASHINGTON (MarketWatch) - Wholesale prices rose a smaller-than-expected 0.2% in April after seasonable adjustments, with food prices flat and energy prices falling, the Labor Department reported Tuesday.

The producer price index has risen 6.5% in the past year, the government said.

The core PPI - which excludes food and energy prices - rose 0.4% in April, more than expected. Core prices are up 3% in the past year, the biggest year-over-year rise since late 1991. The PPI had risen 1.1% in March.

Economists surveyed by MarketWatch expected a 0.4% rise in the headline PPI and a 0.2% gain in the core rate.

The PPI figures are likely to have a muted effect on markets, because they came in after the consumer price index was released last week.

And, to be blunt, markets don't seem to trust the government's inflation figures that show falling energy prices in a world of record crude oil prices.

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