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Keene Little : 5/23/2008 12:54:35 AM

Friday's pivot tables: Link and Link

NDX consolidated on Thursday and it looks corrective which suggests another leg down before potentially finding strong support. The daily chart shows the uptrend line from March and the uptrend line from October 2002, both in the 1941 area. The short term bullish possibility, especially with the 200-dma holding, is for another rally leg to kick off. Daily chart: Link

The DOW has been weaker and I have more downside potential for the DOW before potentially stronger support at its uptrend lines from 2002/2003 (using arithmetic scale). That support runs from about 12400 to 12475 so a fairly wide range. A rally back above 12715 could turn into something more bullish so that's what the bulls want to see happen. Daily chart: Link

Jeff Bailey : 5/23/2008 12:18:42 AM

CurrencyShares Euro (FXE) daily interval bar chart Link

With a conventional retracement from 12/20/07 relative low, to recent 4/22/08 high. I "like" this retracement as it would give the "squeeze" trigger on 02/26/08, and the support to CLOSE on 05/07/08.

Jeff Bailey : 5/22/2008 11:28:50 PM

And if you're like me and get "confused" with the I'll be a contrarian and short oil, or I've been warning for years, but short oil and get stopped for a loss, then you're not alone.

USO short interest at RECORD on 5/15/08 (17,171,691 shares) has me (Jeff Bailey) wondering if a BULL isn't the contrarian, and with EUR/$ at a critical juncture, the trade unwinds again in oil on Wednesday.

Eur/$ Link

The rise in oil is amazing, but I think we can see the "trade light positions" and expect volatility.

Just as it seems momentum bulls have been speculating the bullish run in oil, there's been a similar run in the euro, which may also be contributing to oil's rise (oil is priced in US$).

There may certainly be a camp of traders, a LARGE camp that is short oil in anticipation of the break of the 5/08/08 low. I too have noted the potentially IMPORTANT support there.

Here's the short interest for the USO, which is up from 6.76 million shares on 12/31/07. Link

Jeff Bailey : 5/22/2008 10:34:08 PM

$/yen tested bullish support trend today Link

This is the one "story" very few are actually covering.

OI Technical Staff : 5/22/2008 9:59:59 PM

The Market Monitor has been archived.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

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Jeff Bailey : 5/22/2008 8:08:52 PM

BOJ Minutes (.pdf) Link

Jeff Bailey : 5/22/2008 8:04:36 PM

$/yen 104.03 -0.03% ... as BOJ releases 04/08-04/09 policy minutes.

Jeff Bailey : 5/22/2008 5:30:40 PM

Excellent info from CNBC. Trader citing the reason PetroChina (PTR) $142.66 +0.45% has so severely lagged during crude oil's surge is price caps from China's government.

Good technical read to exit with +3.80/share on 2/21/08 when we did.

Jeff Bailey : 5/22/2008 5:22:55 PM

Closing Internals found at this Link

Jeff Bailey : 5/22/2008 4:35:28 PM

DXY's 04:00 PM EDT tick was 72.239, up 0.46% from yesterday's 04:00 tick.

Jeff Bailey : 5/22/2008 4:33:07 PM

GLD $90.95 -1.09% ... MONTHLY Pivot $88.49.

Keene Little : 5/22/2008 4:20:34 PM

The question after today's decline in gold is whether or not we've seen the top of the bounce and now it'll start another leg down or if instead it will just pull back some before heading higher again. I'm short against last night's high at 935.40 while I wait to get some more clues as to what the next move will be. Daily chart of gold contract, June: Link

Jeff Bailey : 5/22/2008 4:18:56 PM

I hear ya there! ... DJ Headline- Oil prices ease as supply fears subside.

Keene Little : 5/22/2008 4:10:14 PM

MarketWatch headline popped into my email right after the close: "U.S. stocks rebound after two-session plunge as oil prices pull back". Yea, OK, I guess DOW being up 24 points can be called a rebound. I bet they were anxiously waiting to print that headline as the closing bell approached (before the DOW lost it again).

Jeff Bailey : 5/22/2008 4:06:55 PM

USO looks like it wants to go out juuuuust above yesterday's EIA knee-jerk jump.

Jeff Bailey : 5/22/2008 4:00:11 PM

I think the consensus a little high. I'm at 4.83M

Keene Little : 5/22/2008 3:57:46 PM

No surprise, today turned into just a day of consolidation. This continues to point lower but it's question for me as to whether we get another bounce up first or drop from here. The updated SPX 30-min chart shows my expectations for a drop to around 1380 tomorrow before setting up a bigger bounce off support at that level. If we get an early bounce I would continue to look at 1400 being resistance. Link

Jeff Bailey : 5/22/2008 3:57:20 PM

Economic Calendar for tomorrow has April existing home sales due out at 10:00 AM EDT. Consensus is for 4.85M

Linda Piazza : 5/22/2008 3:55:39 PM

I've been studying charts, trying to decide what to say about end-of-day decisions. We got the expected consolidation or indecision type day, and now see the expected mixed-up chart characteristics as a result. The OEX looks about as likely and perhaps a bit more likely to roll down toward 633.30-634.30 as it does to climb toward 640 or even perhaps 642-644, but I wouldn't count out the climb just yet. I just wouldn't count on it going much further than that and would be watchful of stalling or rollover potential at one of those levels. For now, though, we could wake up tomorrow with the OEX headed down to the next support just as easily as gapping above the next resistance.

Jeff Bailey : 5/22/2008 3:45:02 PM

BIX.X 232.63 +0.84% ... still juuuuust above its 01/22/08 low.

Jeff Bailey : 5/22/2008 3:44:12 PM

Sovereign Bancorp (SOV) $8.76 +8.14% ... back to probe its 01/22/08 low.

Linda Piazza : 5/22/2008 3:38:39 PM

No new low, but the OEX did fall beneath the rising trendline that had been established since yesterday's low. Right now, no trendline support, no Keltner support gained seems to say, yes, breathe easier. The OEX and SPX, too, are just chopping around.

So, this may or may not be a significant break of the triangle formation that has been setting up. It may or may not be signaling that the indices will roll over now toward a retest of yesterday's low or Keltner support, which is next at 634.71 on 15-minute closes for the OEX. The OEX maintains a potential downside target now at 633.32-634.34 on the 30-minute chart.

I would tell you what I saw if I saw anything to report, but so far all I can see is breath-holding possibilities.

Jeff Bailey : 5/22/2008 3:31:32 PM

Children's Place (PLCE) $33.97 +19.92% ... Sterne Agee raising to "buy" from "hold"

Jeff Bailey : 5/22/2008 3:29:58 PM

GreenHunter Turns Houston Waste Oil Storage Site Into Renewable Fuels Campus ... Press Release Link

GRH $20.24 -8.99% ...

Keene Little : 5/22/2008 3:23:11 PM

There's not much different on CME from when I last posted a chart on it (last Friday). It's been in a long sideways/down choppy decline for almost two months now. I don't show the Bollinger Band on the daily chart but it has tightened considerably and each high and low is bouncing off the bands. The move out of this is probably going to be big. The 50-dma keeps holding the bounces down so a close above it (484.19), especially if it can get back above 525, would likely see a fast move up to the 600 area. Link

The bearish wave count calls for a move down to a Fib projection at 338 and there's no change to that expectation. If it keeps chopping its way lower instead of dropping sharply then I'll probably turn more bullish on CME as it nears its last low in March (399). For now I still prefer the short side but I'd be one nervous bear if short this stock.

Jeff Bailey : 5/22/2008 3:20:10 PM

Google co-founder Larry Page saying an ad deal with Yahoo is doable.

Keene Little : 5/22/2008 3:05:04 PM

GOOG dropped hard yesterday and in so doing it gave up its 200-dma that it managed to rally back above on April 30th. Today's low is at the 38% retracement of the Nov-Mar decline (540.79) and then right below that is the top of its big gap up on April 18th, near 524. As I show on its daily chart, it's possible the pullback from the May 2nd high will be completing and set up another raly leg, perhaps up to the 62% retracement near 620 (shown in green). It takes a rally above 589 now to point the way higher: Link

The bearish wave count calls the Mar-May bounce complete and a new leg down has started. If price drops below 524 I think it could get ugly quickly as there's a lot of air there. Notice the break of the uptrend line on RSI. I think this is pointing to the bearish wave count as being the correct one.

Jeff Bailey : 5/22/2008 2:58:28 PM

DXY 72.30 +0.50% ... 30-minute delayed. Back to check MONTHLY Pivot.

Jeff Bailey : 5/22/2008 2:57:42 PM

New York Fed's auction of its holdings under the Term Securities Lending Facility drew $46.13 billion in demand for the $75 billion on offer.

All bids were accepted, and the stop out rate was 0.25%. Bid-to-cover was 0.62.

This was the ninth offering under the TSLF program.

Settlement date for the operation is Friday, and term is for 28 days, maturing on June 20.

Linda Piazza : 5/22/2008 2:54:22 PM

At this point, I would think it's at least halfway likely that the OEX would test 638.97-639.54, but I'm honestly not sure what will happen as a result of that tst, if it occurs. I'm a big help, right? Actually, it's the charts that aren't big helps.

Jeff Bailey : 5/22/2008 2:53:23 PM

New Yord Fed TSLF Results being reported

Jeff Bailey : 5/22/2008 2:50:47 PM

S&P takes GM off watch, Affirms 'B' rating; Sr. secured notes rated 'B'

GM $18.71 -2.14% ...

Linda Piazza : 5/22/2008 2:45:53 PM

The OEX attempts to steady above its noon-ish swing low. It's got to get above and maintain levels above the previous 639.41 high of the day, and I'd say even maintain 15-minute closes above 639.64 before it stops threatening to crater any moment, in my opinion. Even then, I think we have to consider that formation a likely bear flag, but at least then we'd have firmer parameters to watch.

Jeff Bailey : 5/22/2008 2:36:21 PM

02:00 Internals found at this Link

Note: It would take a closing session measure of 38.00% for the NASDAQ's 5-day NH/NL ratio to see a 3-box reversal back lower.

Keene Little : 5/22/2008 2:34:38 PM

Techs are now leading to the downside with new daily lows so follow the leader for now.

Linda Piazza : 5/22/2008 2:33:35 PM

The OEX's 15-minute potential support did not hold on this 15-minute close. That was at 637.50. Next potential support is 635.46. In all honesty, this is just a guessing game with watching these levels today. If this is a bear flag forming, then you want to see each little swing low be higher than the prevous one. Prices could give way any time, but so far, there's been a tentative attempt to hold above the day's previous low. The 633.42-634.61 downside target on the 30-minute chart remains a possibility but it's difficult to give it a 50-50 or 80-20 or 20-80 sort of weighting.

Keene Little : 5/22/2008 2:16:59 PM

The last attempt at making a new high has failed and now right back down into the day's trading range. Definite lack of energy in the market today.

Jeff Bailey : 5/22/2008 2:14:12 PM

Now ... on 05/15/08, I profiled the USO put as the USO darted back under its 80.9% retracement of $99.71. However, USO's QRTRLY R2 ($98.45) held buyers.

Jeff Bailey : 5/22/2008 2:08:52 PM

Eur/$ 1.5705 -0.57% ...

Jeff Bailey : 5/22/2008 2:07:37 PM

USO $105.89 -2.21% ... undercuts MR2.

Linda Piazza : 5/22/2008 2:04:51 PM

It looks as if the OEX is going to now finish a second 15-minute close above the Keltner S/R level now at 637.73. The first 15-minute close was barely above it, so it wasn't certain that the OEX has really cleared that resistance. It has now also completed its first 7-minute close above the resistance at 637.92.

Based on this, we're now working on the possible bear flag theory, although the OEX still has to produce a higher high for today to begin to firm up the formation. As you can imagine, I'm still thinking that trading a possible bear-flag rise with a long call trade is a risky thing, although I grant that it's possible that the OEX could be attempting to rise through the small descending channel it's been forming on the daily chart since May, at the top of its climb. And that channel could well be a bull flag. Still, though, I think it's risky right now as rollover potential still exists, and, for today, the possibility of a small-bodied consolidation-type candle remains strong.

Jeff Bailey : 5/22/2008 1:56:45 PM

$/yen 104.02 +0.95% ...

Jeff Bailey : 5/22/2008 1:54:42 PM

Swing trade NAKED Put Cancel Order Alert! ... With DDM $76.05 +0.60% now, and VXO.X 18.54

CANCEL order to sell NAKED the DDM-RR for $1.00.

DDM-RR $0.75 x $0.85.

Keene Little : 5/22/2008 1:51:48 PM

VIX is hitting new daily lows so watch for new daily highs in stocks.

Jeff Bailey : 5/22/2008 1:46:35 PM

USO $106.76 -1.43% ...

Keene Little : 5/22/2008 1:46:18 PM

Whether SPX continues to consolidate in a sideways triangle or gets a little higher bounce instead, the corrective price action is indicating we should expect another leg down to finish a 5-wave decline from Monday. While I've been mentioning 1384 as potential support I get some Fib projections that are a little lower--perhaps down to abount 1377 (depending on where the 4th wave correction finishes and then I'll be able to get a better projection). It still takes a break above 1400 to say something more bullish is happening. 30-min chart: Link

Jeff Bailey : 5/22/2008 1:45:32 PM

US and UK warning Iran of new sanctions.

Jeff Bailey : 5/22/2008 1:37:26 PM

Ford Motor (F) $7.20 -7.69% ... said today that it no longer expects to return to profitability next year and that it will scale back production for the remainder of this year as consumers shift toward more fuel-efficient vehicles.

Jeff Bailey : 5/22/2008 1:35:02 PM

Most Actives ... QQQQ $48.43 +0.51%, C $21.55 +2.37%, SPY $139.57 +0.05%, IWM $73.23 +0.79%, ESLR +11.03 +21.31%, MSFT $28.55 +1.06%, GE $31.09 +0.32%, PFE $19.66 -1.74%, INTC $23.93 +1.14%, F $7.20 -7.69%

Jane Fox : 5/22/2008 1:32:09 PM

Dateline CNN - Appeals court rules Texas had no right to seize hundreds of children from polygamous sect.

Keene Little : 5/22/2008 1:26:15 PM

I'm back and I see the market doesn't look much different than when I left 1-1/2 hours ago. Unfortunately for the bulls this consolidation means another drop is more likely than a rally. Another down-up sequence with today's trading range would be a good setup for a short play (for just a trade to a new low since it would then be reversed back up into another larger bounce at least).

Linda Piazza : 5/22/2008 1:24:20 PM

So far, the OEX has not been able to break above the resistance on 15-minute closes now ranging up to 638.02. It's forming a triangle rather than a rising flag, with the ultimate direction of the break becoming less certain. Those hoping that the OEX will at least avoid breaking down want it to find support on 15-minute closes at 636.23. For the SPX, that's 1393.31 or perhaps 1391.11 support on 15-minute closes and 1395.33-1396.71 resistance.

Jeff Bailey : 5/22/2008 1:24:08 PM

At 10:05 AM EDT ... US Home Prices showed a 0.4% decline from February to March, after gaining 0.6% in February. Home prices down 3.7% since their peak in 2007.

According to OFHEO, the House Price Index (HPI) fell 1.7% in Q1'08, the largest quarterly decline on record since the index began in 1991.

OFHEO said housing prices fell in 43 states during Q1.

Linda Piazza : 5/22/2008 1:17:13 PM

I don't know what's going on out here on the prairie where I live where the Colorado River (1/2 mile away) runs between two rows of low hills, but there's enough wind today to generate electricity for a big town! Central Texas isn't supposed to be good for wind energy, although other parts of the state are, but nobody told that to whatever determines the microclimate through here. When we first moved out here, a neighbor said in a low voice, like something out of Little House on the Prairie, "I hate the wind." I thought she was a little cracked, but maybe not as much as I thought!

Jeff Bailey : 5/22/2008 1:15:17 PM

US Unemployment Claims were released at 08:30 AM EDT. The 365,000 were better than economists' forecast for 373K.

Linda Piazza : 5/22/2008 1:12:54 PM

Keene may have mentioned it already, but I just noticed that the Dow yesterday approached a best-fit version of the top of the Dow's broad consolidation zone from late January until April 18, when it finally broke up through that trendline. Will it hold now as support? Equity bulls certainly hope so. That trenldine is currently at about 12520, if I've eyeballed it correctly.

Jeff Bailey : 5/22/2008 1:03:38 PM

Dow Diamonds Option Montage with OI as of Wednesday's close. VXO was 19.00 at time of screen capture. Link

As noted, DIA's June Max Pain theory at last night's close (add up all call and put open interest) was $125.00.

Linda Piazza : 5/22/2008 12:56:23 PM

Back to the 15-minute charts now, I see the OEX back at the same potential resistance that it was testing earlier today, only that Keltner resistance has lowered as the day progressed. It now extends from 638.06-638.67 on 15-minute closes. It's not quite as firm as it was earlier today, but still capable of turning back the advances, so remain watchful for that possibility. If so, look now for potential support on 15-minute closes from 635.66-636.44.

Jeff Bailey : 5/22/2008 12:40:05 PM

UTX is currently #7 PRICE-weighted component in Dow Industrials.

Jeff Bailey : 5/22/2008 12:39:07 PM

United Tech (UTX) $71.95 -0.09% ... sits on its 38.2% conventional. Company announcing it received $210M contract from Northrop (as I type)

Linda Piazza : 5/22/2008 12:38:45 PM

So far, we have had a tentative higher low in both the SPX and OEX even though that 7-minute support didn't hold on the SPX on 7-minute closes. As I noted in my 12:13:57 post, they were holding on the OEX, but I thought it possible that the SPX could drag it down. Not true. The OEX is bouncing from that 7-minute support now at 635.49. So far. It's got to get above 638.06 on 7-minute closes and maintain closes above that before it changes the tenor at all. Even a little. And any improvement in tenor would, in my opinion, just mean that the bear flag formation was still a possibility, not that anything a whole lot more bullish was a great likelihood as yet. For the SPX, 7-minute closes above 1396.74 are needed.

Jane Fox : 5/22/2008 12:32:11 PM

WASHINGTON (MarketWatch) -- U.S. home prices fell a seasonally adjusted 1.7% in the first three months of 2008 -- the largest quarterly price decline on record, the Office of Federal Housing Enterprise Oversight reported Thursday.

Prices fell in 43 states, according to the agency. Prices were down 3.1% between the first quarter of 2007 and the first quarter of 2008, OFHEO's data showed. That drop is the largest in the index's 17-year history.

"For homeowners and financial market observers, these declines spell further erosion in home equity levels and potentially more trouble for mortgage markets," said James Lockhart, OFHEO director. "To prospective home buyers who have been shut out of homeownership because of affordability constraints, these declines may be welcome news, as are continued low mortgage rates."

Eight states had quarterly prices declines of more than 3%, while in California and Nevada prices fell more than 8%.

Within data that includes home sales and appraisals for refinancings, the states with the greatest year-over-year price appreciation were Wyoming, with a gain of 6.3%, and Utah, up 5.6%.

Jeff Bailey : 5/22/2008 12:30:07 PM

June "Max Pain" Tabulations ... as of last night's close.

DIA $125.00 ... $1 increments
SPY $134.00 ... $1 inc.
QQQQ $49.00 $1 inc.
IWM $72.00 ... $1 inc.
SMH $33.00 ... $1 inc.
XLF $26.00 ... $1 inc.
USO $102.00 ... $1 inc.

Jane Fox : 5/22/2008 12:20:59 PM

The S&P Futures is testing daily lows but the VIX is not testing daily highs so I think ES's lows will hold. Link

Jeff Bailey : 5/22/2008 12:20:29 PM

12:00 Internals found at this Link

Linda Piazza : 5/22/2008 12:13:57 PM

Those 7-minute potential support levels on the OEX and SPX are tentatively holding on the OEX, but not on the SPX, so we might soon be in for an equal-low test that undoes the bear flag theory.

Jeff Bailey : 5/22/2008 12:12:24 PM

CNBC mentioning something about developing nations "lifting caps" on their gasoline prices. Several sessions ago James mentioned some of the VERY LOW gasoline prices in various countries.

Linda Piazza : 5/22/2008 11:58:08 AM

Here's what the OEX and SPX charts are currently showing me: the rise that began at yesterday's low may be reforming into a bear flag. If so, we should see a higher low produced, probably somewhere through here, at the support that I detailed in my previous two posts. If the indices drop to an equal or lower low, that scenario is undone. However, right now, that bear flag scenario looks like a halfway decent one, and we might anticipate if this short-term support holds that these indices will again rise into those resistance bands and retest them, perhaps or perhaps not getting through them this time. However, do you want to trade long a possible bear flag rise? Not me, not even in my heyday as a daytrader.

It's always possible, too, that the SPX is beginning a rise back through the descending channel that's been forming this month on the daily chart. That's a possibility but barring some strong updraft, it seems likely that even if that is beginning, it would begin by an indecision-type day for today.

Keene Little : 5/22/2008 11:53:34 AM

It looks like we might get that next leg down after all. Either that or just chop sideways for a little longer but that too would point to another low coming. SPX 1384 continues to be a good target for potential support. I've got two downside Fib projections for NDX--1951.85 (minor new low) and 1935.66. The lower target would get it close to its uptrend line from March.

I've got to run off to a meeting that should take no longer than about 90 minutes so I'll be back with you after lunch.

Jeff Bailey : 5/22/2008 11:52:58 AM

Current LONG 1/4 position ($2,500) in USO at $105.22. Took 1/4 off table for PROFIT.

Currently LONG one (1) IYS-RR.

Jeff Bailey : 5/22/2008 11:50:19 AM

IYS-RR are $1.15 x $1.25.

Bought this put when USO was $99.03.

If I had shorted 100 shares of USO, would be at a LOSS of $800.

Paid $3.50 for the IYS-RR.

As demonstrated yesterday, when trade does move against us, can alway trade LONG, use the PUT as some protection.

MUST weight accordingly.

Jeff Bailey : 5/22/2008 11:47:06 AM

You know what I think about shorting anything at a 52-week, or all-time high with no overhead supply to keep things in check should the trade move against you.

That's what PUTS are for. I continue to see "short," when a trader/investor can LIMIT RISK to a known amount with a put.

Linda Piazza : 5/22/2008 11:45:56 AM

The SPX has potential support on 7-minute closes at 1393.13 and again at 1390.67. As I said of the OEX a few minutes earlier, there's a halfway chance this could hold on 7-minute closes, but only about halfway. Temper your expectations for the size of any downdraft, watching for potential support here, but continue to factor in vulnerability to 1382.65 if the SPX should just give way. That doesn't mean that you should count on 1382.65 being hit if you're in bearish trades, but it does mean that if you've been dabbling in long trades this morning or will be tempted to if yesterday's low should be tested, you need to keep that vulnerability in mind when setting your stops. If you don't intend to follow the SPX down that low, if it should go there, then set stops accordingly.

Linda Piazza : 5/22/2008 11:42:59 AM

I'm turning to the 7-minute charts now to see where support might lie. For the OEX, that's at 635.07-636.19. When I noted earlier that you might temper your expectations if the OEX turned down, I was thinking in terms of this kind of support perhaps holding on 7-minute closes. That's not a given, of course, but certainly remains a possibility. Temper your expectations, watching for potential support on 7-minute clsoes at that level, but that doesn't mean that you shouldn't also factor in a potential vulnerability to 633.67 on the OEX. I think there's a halfway chance this support could hold, but I'd say it's just that, about halfway.

Linda Piazza : 5/22/2008 11:39:45 AM

The SPX and OEX are still chopping around that resistance band. I'd noted at 11:01:46 that I thought they might do so for 15-30 minutes before we knew next direction, and that's been true. A break one direction or the other could occur any time now. If so, and if the break is to the downside, temper your expectations for a little while yet as it's possible the pullback could be a shallow one or perhaps be a retest of Keltner support and/or yesterday's low.

Jeff Bailey : 5/22/2008 11:30:16 AM

Sector Winners ... Airlines +3.74%, Money Center Banks +1.69%, Regional Banks +1.51%, Biotechnology +1.22%, Insurance +1.09%, Healthcare +1.03%

Jeff Bailey : 5/22/2008 11:28:10 AM

Sector Losers ... Gold Bugs -1.12%, Oil Service -0.61%, Home Construction -0.59%, North Amer. Telecom -0.51%

Keene Little : 5/22/2008 11:27:03 AM

We've also got some selling in the commodities this morning so there's more freed up money. I would think equities would benefit if some of that money rotates into stocks. If stocks can't get a lift from that (and it might not happen until this afternoon) then the market will be talking to us.

Jane Fox : 5/22/2008 11:26:58 AM

You all know what I think of shorting Crude but if you must maybe you should consider Natural Gas instead. Of course this contract is different from the Crude contract but it has a very clear MACD divergence going on that could mean a SHORTTERM top. If you do short this commodity make sure it is a short term trade and not an investment. Link

Keene Little : 5/22/2008 11:22:21 AM

Lots of selling in the Treasuries this morning (yields spiking higher) and that freed up money often times makes it into equities. So far that's not been the case but stay aware of it in case you're short the equity market.

Keene Little : 5/22/2008 11:18:13 AM

If the market can push a little higher and the DOW gets back above its October downtrend line, watch for a move up to DOW 12715, its May 9th low. So far we've got just a lot of chop and that trend line continues to act as resistance for now.

Linda Piazza : 5/22/2008 11:01:46 AM

So far, Keltner resistance is holding, but it looks as if the 15-minute 9-ema's might hold as support for the OEX and SPX, too, on this 15-minute close. That fits the "chop around some more until resistance loosens" scenario, but still doesn't preclude a rollover. So far, though, it's the most bullish likely outcome of this test of resistance because these indices weren't likely to plow through it when it looked so strong. The resistance band is now 638.02-639.39 for the OEX and 1396.95-1398.79 for the SPX. I wouldn't be surprised to see some more chopping back and forth, for maybe another 15-30 minutes or so before we know anything about next direction.

Jeff Bailey : 5/22/2008 10:54:43 AM

UNG whips back higher ... 56.28 +0.30% ...

Keene Little : 5/22/2008 10:49:18 AM

This morning's bounce in the DOW has brought it back up to its downtrend line from October (that it broke back below yesterday), currently at 12661, and so far it's acting as resistance (kiss goodbye?).

Jeff Bailey : 5/22/2008 10:40:05 AM

UNG $55.40 -1.24% ...

USO $106.64 -1.54% ...

Jeff Bailey : 5/22/2008 10:39:23 AM

EIA Nat. Gas storage showed a build of 85 Bcf Link

Keene Little : 5/22/2008 10:38:19 AM

The bounce in NDX is now bordering on being too large to be part of a small 4th wave (that's subjective) so continuing on up to its downtrend line now looks like the expected move. SPX has hit a Fib projection at 1398.83 for its 4th wave correction so be aware that we could see a quick reversal now of this bounce and head lower again. But a rally above 1400 should have it heading higher as well.

Jeff Bailey : 5/22/2008 10:37:25 AM

DDM Link

And $INDU Link

Jeff Bailey : 5/22/2008 10:34:21 AM

VXO.X 19.14 -0.77% ...

Jeff Bailey : 5/22/2008 10:33:54 AM

Swing trade sell NAKED put alert! ... for one (1) of the ProShares Ultra Dow30 June $70 Puts (DDM-RR) at a LIMIT price of $1.00.

DDM $76.01 +0.56% ...

Linda Piazza : 5/22/2008 10:32:38 AM

Keltner outlook on the A/D line: The A/D line is looking uncomfortably like it did at this time yesterday. Just as it was at this time yesterday, it's chopping around within the first 15-minute range. It's doing that chopping above the same potential Keltner support, with that at 364.16 now but lower yesterday. So, what equity bulls don't want to see happen is a repeat of the rest of yesterday's pattern. About 10:45 yesterday, the A/D line plunged through that support. It then consolidated for a number of hours at the Keltner support now at about -150 to -250 before plunging again. So, for now, equity bulls would like to see the A/D line stay above that 364-ish level and would most like to see new highs.

Keene Little : 5/22/2008 10:29:07 AM

This NDX 30-min chart shows how the wave count shown on the NDX 10-min chart fits in the slightly larger picture: Link . Assuming we get one more leg down tothe 1944 area I'll then be watching for another bounce to see if it's able to break the downtrend line from Monday or instead does another choppy sideways/up correction which would tell us another leg down is coming.

If NDX rallies from here (without the leg down first), then upside potential is to the downtrend line from Monday, currently near 1984 (but obviously dropping).

Jeff Bailey : 5/22/2008 10:25:27 AM

DIA $126.38 +0.25% ... after yesterday's test of its conventional 38.2% (10/11/07 high to 01/22/08 low)

Jeff Bailey : 5/22/2008 10:23:39 AM

5-year yield ($FVX.X) up 11.6 bp at 3.201%. This is a smidge above its conventional (10/15/08 relative high to 01/23/08 relative low)

Linda Piazza : 5/22/2008 10:21:48 AM

Both the OEX and SPX are challenging their 15-minute 9-ema's again, with both seeming to still provide some resistance. However, it's the stronger resistance above that must now be considered. That's at 638.32-639.15 for the OEX and 1397.32-1399.81 for the SPX. That looks strong in both cases, strong enough that it's going to require either a strong punch to stay above those levels even if they are pierced, a pullback to stronger support before another attempt is made, or else some time spent chopping around near them to loosen the resistance.

Jeff Bailey : 5/22/2008 10:21:32 AM

10:00 Internals found at this Link

Keene Little : 5/22/2008 10:10:32 AM

Right now the pattern of NDX has me thinking we're still in a 4th wave correction within the move down from yesterday morning. This calls for another leg down (5th wave) to complete that move. Using a price projection for equality with the 1st wave gives us a downside target near 1944. But if this bounce gets much higher than about 1972 then it will look like the move down from yesterday morning has already completed and we'll see what kind of bounce develops. 10-min chart: Link

Linda Piazza : 5/22/2008 10:06:25 AM

Here's the test of the 15-minute 9-ema for the OEX, at about 637.20. For the SPX's, it's about 1395.10. Remember that closing a 15-minute period above these benchmarks means only that investors/traders are attempting to steady these indices, not that the test of next resistance will be successful. After a day like yesterday, an indecision day would be one of the possibilities, so keep it in mind.

Jeff Bailey : 5/22/2008 9:58:14 AM

US Nat. Gas Fund (UNG) $55.48 -1.08% ... EIA Nat. Gas report due out at 10:30 AM EDT.

Linda Piazza : 5/22/2008 9:56:46 AM

The OEX's 15-minute 9-ema is now 637.08; the SPX's, 1395.09.

Linda Piazza : 5/22/2008 9:55:34 AM

TRIN is doing a lot of jumping around this morning, ranging from 1.03 to 1.54 this morning. currently it's 1.27, its level above the 1.00 benchmark so many use (although I'd use 1.20 this morning), but not giving us much information about its trend since it's in the center of the day's range.

Jeff Bailey : 5/22/2008 9:52:51 AM

Evergreen Solar (ESLR) $11.45 +25.71% ... gets a pop this morning after the company said it received two (2) long-term sales contracts worth nearly $1 billion.

Linda Piazza : 5/22/2008 9:47:21 AM

The A/D line is showing some iffy signs here. At 523 as I type, it's well above the Keltner S/R now at 218 on 15-minute closes, so it's likely to maintain an official, if you will, upside target of 1200-1412, but it's pulled back sharply from its 981 early morning high. It's never good to see a sharp pullback like this, whether in equities or the A/D line. So, support will likely be held this 15-minute period, but I wouldn't rule out a drop to that support, if not through it.

Linda Piazza : 5/22/2008 9:43:56 AM

As it has been lately, the RUT is trying to lead the way, bouncing bigger on a Keltner basis than other indices. It's way above its 15-minute 9-ema, now at 729.93 on 15-minute closes, but it needs to close this 15-minute period above that or else it's still resistance. The RXV, the RUT's volatility index, is also turning back nicely, but it's approaching historical and Keltner support at 22.31-22.45, with the RXV at 22.65 as I type and above its day's low of 22.52. I'm not trading the RUT today (unless I can use any downturns to get out of my last JUN credit spread, 25 RUT 800/810's) but instead am watching it as a sort of leading indicator.

Jeff Bailey : 5/22/2008 9:42:42 AM

BCE Inc. (BCE) $32.91 -13.00% ... sharply lower after Quebec court rules against buyout. Court saying deal unfair to bondholders.

Linda Piazza : 5/22/2008 9:39:16 AM

The OEX's 15-minute 9-ema is now 637.46; the SPX's, 1395.99. The SPX has a tight band of potential resistance just above that, from 1397.99-1401.96.

Linda Piazza : 5/22/2008 9:36:08 AM

Fed Governor Groszner believes that "any assessment at this stage about the recovery and repair of the mortgage markets is preliminary," as stated in his speech in Washington, D.C.

Linda Piazza : 5/22/2008 9:35:15 AM

Kelner outlook on the A/D line: The A/D line jumped up to potential S/R on the Keltner chart, now at about 140 on 15-minute closes. The A/D line is poised then to either tip over through the Keltner channel and fall or else bounce from here toward 1100-1365. It's at 392 as I type. This is in the bullish half of the Keltner charts, but again it's poised to either tip over or climb and we really don't know what it will have done by the end of this 15-minute period.

Keene Little : 5/22/2008 9:33:29 AM

Gold futures made a slightly higher high last night but have pulled back since the early evening high. This little bugger rallied a little higher than I thought it would (I thought 932 would stop it but it made it up to 935) but it should start back down now. Short with a stop at 936 is my recommended play on gold. Whether it will pull back only as a correction of the rally or start something bigger to the downside is the question at the moment.

Linda Piazza : 5/22/2008 9:33:29 AM

The OEX's 15-minute 9-ema is now 637.24; the SPX's, 1395.44. Those who have hopes that the indices will steady want the OEX and SPX to get above those averages and maintain levels above those averages.

Linda Piazza : 5/22/2008 9:29:08 AM

Fed Governor Randall Groszner, a voting member of the FOMC, began speaking on "Prospects for Recovery and Repair of the Mortgage Markets" at 9:00 am ET. When we get past the early morning stuff, I'll look for information on his comments.

Keene Little : 5/22/2008 9:29:00 AM

It was relatively quiet in equity futures last night and we'll start the day flat from yesterday's close. Techs look slightly stronger. I wouldn't be surprised to see a day of consolidation (watch the chop) after two down days but if the market drops a little lower then keep an eye on SPX 1384 for support. Obviously the bulls would like to see a v-bottom kind of reversal back to the upside.

Linda Piazza : 5/22/2008 9:25:03 AM

Yesterday, the SPX never quite made it to its potential downside target near 1382.15 on the 30-minute chart, so traders should keep that potential target in mind as they make trading plans. The target might never be reached, but bulls need to factor in possible vulnerability to that level and bears need to know what they'll to protect profits if that level should be reached.

Futures' levels don't give us a strong prediction for what will happen at the open, so a move down toward that target can't yet be precluded. Neither can an immediate bounce attempt. If the SPX attempts to bounce, watch for potential resistance first at the descending 15-minute 9-ema, at 1395.39 as I type but likely to be a bit higher if the SPX bounces immediately, or at stronger potential resistance at 1398.16-1401.10. That last band looks fairly strong right now, so it would take a strong push to stay above it even if it did pierce it.

Jane Fox : 5/22/2008 9:22:56 AM

Here are the overnight charts. They are not telling you much. Link

Linda Piazza : 5/22/2008 9:20:56 AM

Here's the OEX chart I posted late yesterday afternoon: Link Although the OEX ended the day a little below the pink 45-ema, it just overran that support by a little. Late yesterday in the MM, I mentioned that I didn't consider support yet broken.

That's not to say it can't be. That chart poses a potential downside target deep below the current level if it is broken in a sound way on daily closes. However, I thought in my late-day posts that we had to consider the possibility that the OEX might now attempt to bounce from that support, with that bounce attempt perhaps ultimately resulting in another consolidation-type candle. If a bounce attempt is to be made, that attempt could begin immediately or only after another test of 633.50-ish support on 30-minute closes. Futures action, currently near the flat-line levels, don't give a strong prediction.

As I mentioned yesterday, though, the close beneath the 637-639 level converts that level from support to potential resistance, so if there is a bounce attempt, I'd be careful of rollover potential in that zone.

Jane Fox : 5/22/2008 8:57:57 AM

Dateline WSJ - The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought.

A pessimistic supply outlook from the IEA could further rattle an oil market that already has seen crude prices rocket over $130 a barrel, double what they were a year ago. U.S. benchmark crude broke a record for the fourth day in a row, rising 3.3% Wednesday to close at $133.17 a barrel on the New York Mercantile Exchange.

For several years, the IEA has predicted that supplies of crude and other liquid fuels will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently. Now, the agency is worried that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day over the next two decades.

The decision to rigorously survey supply -- instead of just demand, as in the past -- reflects an increasing fear within the agency and elsewhere that oil-producing regions aren't on track to meet future needs.

"The oil investments required may be much, much higher than what people assume," said Fatih Birol, the IEA's chief economist and the leader of the study, in an interview with The Wall Street Journal. "This is a dangerous situation."

Jane Fox : 5/22/2008 8:55:16 AM

Crude hit $135.09 overnight. Big Yawn!! Link

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