Option Investor
Printer friendly version
Jeff Bailey : 5/23/2008 10:40:04 PM

Dow 30 Components ... PRICE weighted index, so sorted by price. Link

Note the 5-dayNet% of the index, then the various components. Dow quite weak this week. Then 20-dayNet% of the index, then the various components.

KO Link is a stock that "stands out" as a stock that hasn't been targeted by sellers this week. Think "beverage." Up 2.73% in a down week, and while -0.23% last 20-days, showing some relative strength.

UTX Link a stocks that stands out as weak. Think "aerospace/defense." Makes some sense with higher fuel prices, some carriers going bankrupt, cutting routes on the commercial airlines.

AA Link made a big move for a more methodical mover. This one hints of good'ol profit taking this week.

DIS Link reported upside earnings. Discussed "theme park" and Rand McNally survey (MM 5/13/08).

Did some "bottom fishing" in SIX at $2.07 Link and the very day I profiled as bullish (5/14/08), they restructured some debt, we sold partial at $2.40, but hold the rest, stop $1.80.

OI Technical Staff : 5/23/2008 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The Market Monitor has been archived.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 : 5/23/2008 9:05:45 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 5/23/2008 5:04:42 PM

Closing Internals found at this Link

Jeff Bailey : 5/23/2008 4:58:24 PM

July Nat. Gas (ng08n) settled at new contract high. Getting back near those "Amaranth $14" levels. Citadel Investment Group and JPMorgan picked up the pieces of that mess (trader forgot about RISK management and took the fund down) at about $7.00!

Jeff Bailey : 5/23/2008 4:53:32 PM

July Heating Oil (ho08n) was the only energy futures I show trading below yesterday's low. Could be a "tweezer top"

Keene Little : 5/23/2008 4:09:16 PM

The one bearish thing I see is the inability to bounce much this afternoon. SPX has not been able to bounce back above its downtrend line from October and the choppy bounce makes it look like it will continue immediately lower. A bearish interpretation of the wave pattern for the decline this week calls for some very hard selling to kick in (as if this week wasn't hard enough). A downside surprise on Tuesday is a possibility in that regard. I wouldn't want to bet that way but I'd be a nervous long over the weekend.

Jeff Bailey : 5/23/2008 4:02:33 PM

Goldman's "BUD call" is probably best described as how I felt Monday evening.

Do I tell them I'm changing my my 2008 economic forecast to "modest growth" up here, or wait for the pullback?

Goldy needed to make the call today. Monday might be too late should "Merger Monday" find BUD at $65.

Keene Little : 5/23/2008 4:01:05 PM

Notice too on the NDX chart that a downside objective near 1840 would also close the gap up on April 18th.

Keene Little : 5/23/2008 3:59:03 PM

NDX has broken its downtrend line from Monday so by that measure it's stronger than the blue chips. It also used its previous low on May 7th as support (minor break lower). As depicted on the daily chart, a bounce into next week (similar to what I showed on the SPX 30-min chart, 3:10 PM) would build a right shoulder for a H&S top. The downside objective out of this pattern would be to about 1840 so obviously that would be a nice short play setup. But first it needs to bounce. Link

Linda Piazza : 5/23/2008 3:57:25 PM

I'll still be here into the close, but I wanted to take a moment to say that I hope you get some time away from the markets to refresh and renew yourselves. We need to be balanced people, and that includes spending time with those we love without having the markets occupying our every thought. If you have some planning or worrying to do, schedule a time for it this weekend and then don't allow yourself to think about it at other times.

Linda Piazza : 5/23/2008 3:57:56 PM

A little bounce here, a little drop there. The OEX hasn't varied much from the 629.37 level it hit at the low of the 10:00 15-minute this morning. It's created lots of frustration for traders and perhaps some premium decay, too, for those who were in options at the close of that 10:00 candle, but it certainly hasn't shown us much about next direction. Several charts pointed to potential support, but when a big move gets going, you can't count on any support holding, so you're never sure if those charts or Fib levels or trendlines mean anything. Bears had the easier job today, determining how to best protect and collect their profits, and I hope some of you are going home with nice ones.

Jeff Bailey : 5/23/2008 3:49:13 PM

Goldman Sachs raising BUD to "neutral" from "sell"

Jeff Bailey : 5/23/2008 3:43:02 PM


Just the "opposite" of a security at a MULTI-YEAR high.

Jeff Bailey : 5/23/2008 3:41:34 PM

Here's an interesting "contrarian" tidbit.

See if there's as many takers on this!

Moody's lowers the senior unsecured debt rating of American Intl. Group (AIG) $36.93 -2.30% due to exposure to the U.S. residential-mortgage market. Moody's is the last to take such action.

Jeff Bailey : 5/23/2008 3:37:48 PM

Seeing news that it is the Farm Bill that looks to close the "Enron Loophole" and pull all energy trades on electronic platforms under Commodity Futures Trading Commission oversight, imposing limits on the size of traders' positions in an attempt to prevent excessive speculation.

Linda Piazza : 5/23/2008 3:31:54 PM

It's time to begin making your end-of-day decisions, if you haven't already. While it's always possible that the indices could do something strange in the last few minutes of trading, big money people have probably already left for the long weekend, with the expectations that markets will be held at current levels. The OEX has hit a descending trendline across the tops of the early February, late February and early April swing highs, so it's possible although not promised that some support will be found there. A possibility is that it could slide lower along it, of course, even that if essentially holds as support. The SPX, however, has not tested its analogous trendline, now at about 1360 and I think you have to factor in vulnerability to that level, if not a promise that it will be tested. You have three days for those options prices to decay, although as I mentioned yesterday, you can bet that the options prices have already been decaying into Tuesday's values. Do you want to risk more decay and an adverse move or lock in some or all of your profits today? How convinced are you that prices will continue to drop? No options decision is without risks, and if you close out positions today, your risk is of course that you'll wake up Tuesday morning to cratering prices that would have nicely plumped up your puts' values.

Jeff Bailey : 5/23/2008 3:31:19 PM

Anheuser-Busch (BUD) $56.52 +7.49% ... Looks to be trading higher not because of that tasty "lime beer" I mentioned just after Mother's Day, but on reports that Belgian brewer InBev is considering a takeover offer that could have the stock fetching $65/share. Some see any such action as hostile.

Jeff Bailey : 5/23/2008 3:24:10 PM

I should clarify ...

The FXY 96.65 +0.84% ... is Yen STRENGTH vs. the dollar.

The USD/JPY 103.28 -0.75 is $ WEAKNESS vs. the yen.

For those that have been following my commentary the last several months, for broader US Equity STRENGTH, we're looking for $ STRENGTH against the yen.

Jeff Bailey : 5/23/2008 3:11:27 PM

YM 12,500 ...

Linda Piazza : 5/23/2008 3:10:20 PM

The OEX's 15-minute 9-ema is now 629.78; the SPX's, 1377.90.

Keene Little : 5/23/2008 3:10:05 PM

The wave count fits well for a low for the move down this week, even if the intial bounce is sloppy. Long against this afternoon's low would be the right play but obviously bulls will want to see the downtrend line from Monday, currently near 1382, get broken. Assuming it will, we should see a 3-wave bounce (or something similar) into next Wednesday that will set up the next shorting opportunity. 30-min chart update: Link

Jeff Bailey : 5/23/2008 3:09:54 PM

I didn't get the 02:00 volumes, but you will note just how light volumes are today.

Jeff Bailey : 5/23/2008 3:06:42 PM

For those of you new to the MM, or day trading, what I was so insistent on here this afternoon with a YM long is the trade where into a three-day weekend, a day trader will look for concerted selling in the first 1/2 of the session as the pros look to get flat, or squared up into the weekend.

Then, about 01:00 PM EDT, or so, they turn it over to assistant traders, and the "sell bias" gets lifted and the majors trend back higher to the close.

Still have to trader your levels, and indicators as your still up against computers.

$/yen was juuuuust stable enough to have me interested.

Jeff Bailey : 5/23/2008 2:59:14 PM

YM long stop alert! ... 12,504

Jeff Bailey : 5/23/2008 2:55:47 PM

YM long raise stop alert! ... to 12,504.

YM 12,511

Jeff Bailey : 5/23/2008 2:51:42 PM

NYSE a/d 860:2226

Jeff Bailey : 5/23/2008 2:50:55 PM

YM Long raise stop alert! ... to 12,498.

YM 12,507

Jeff Bailey : 5/23/2008 2:48:25 PM

YM long raise stop alert! ... to 12,492.

YM 12,509

Linda Piazza : 5/23/2008 2:47:14 PM

The OEX's 15-minute chart shows that traders are dealing with potentially significant resistance on 15-minute closes at 630.35-630.73. That's the next hurdle the OEX needs to cross--15-minute closes above it--as we see these tentative signs of improvement.

Jeff Bailey : 5/23/2008 2:46:56 PM

YM Long raise stop alert! ... to 12,484.

YM 12,494

Jeff Bailey : 5/23/2008 2:38:11 PM

TRIN 1.92 ... WKLY R1 now.

Keene Little : 5/23/2008 2:37:44 PM

The bounce in the last 30-mins is very choppy and looks like it's going to head lower again. But the alternative interpretation is that it's getting ready to blast higher (think short-covering rally). Be careful either way.

Linda Piazza : 5/23/2008 2:37:17 PM

We've just seen a first 15-minute OEX close above its 15-minute 9-ema, now at 629.50. Again, these are just very tentative signs of any improvement, but I'm watching because of the potential OEX support shown on the chart linked to my 2:21:08 post.

Jeff Bailey : 5/23/2008 2:34:33 PM

NYSE a/d 830:2,250

Jeff Bailey : 5/23/2008 2:33:01 PM

YM Long raise stop alert! ... to 12,480.

YM 12,496

Jeff Bailey : 5/23/2008 2:31:26 PM

YM long stop goes 12,465. Target 12,530.

Jeff Bailey : 5/23/2008 2:30:34 PM

YM long alert! here at 12,477.

Jeff Bailey : 5/23/2008 2:25:52 PM

YM Long stopped alert! 12,473

Linda Piazza : 5/23/2008 2:21:08 PM

Not much movement at the end of this pre-holiday Friday, at least not yet. I see the OEX perched a potential support, retesting the top trendline of the formation in which it moved for several months. This is one reason I've been warning so much about updating your profit-protecting plans if in bearish trades and watching for small first signs of improvement: Link This doesn't guarantee that the OEX will bounce now, but it's certainly something to keep in mind.

Keene Little : 5/23/2008 2:20:51 PM

I meant to say in my last post that each succeeding high is an important one, not each succeeding low.

Jeff Bailey : 5/23/2008 2:19:28 PM

$/yen 103.32 ... best of the afternoon.

Keene Little : 5/23/2008 2:19:16 PM

Each succeeding low in the decline now is an important one so if the bounce can exceed the last bounce high near 1:30 PM that will mean the bottom is probably in.

Jeff Bailey : 5/23/2008 2:18:43 PM

YM long raise stop alert! ... to even at 12,473.

YM 12,489.

Keene Little : 5/23/2008 2:17:19 PM

Not to stomp all over Jeff's effort to get long (since I think it's the right idea) but the wave pattern suggests it will work its way lower still before finding a low. Like Jeff is doing, keep your stops tight if probing for a bottom here.

Linda Piazza : 5/23/2008 2:12:32 PM

Just one of those stop-running tests? After a single incursion back below the Keltner support now at 628.59 on 7-minute closes, the OEX is back above it again. Now we see what happens next after the retest of the previous low of the day. Anything goes at this point.

Jeff Bailey : 5/23/2008 2:06:31 PM

YM stop will be 12,459. Target 12,530. Last try.

Jeff Bailey : 5/23/2008 2:05:51 PM

YM long alert! here at 12,473.

Jeff Bailey : 5/23/2008 2:03:00 PM

TRIN nearing WKLY R2.

Jeff Bailey : 5/23/2008 1:59:02 PM

$/yen 103.21 slipping back to 5-minute interval 21-pd SMA.

Jeff Bailey : 5/23/2008 1:58:36 PM

NYSE a/d still very weak 769:2293. About best I was was smidge over 810 advance on post YM profile.

Linda Piazza : 5/23/2008 1:56:52 PM

The OEX has come back down to test that 7-minute Keltner support now at 628.93. So far, it's still holding, but this is just still such tentative evidence of improvement. I want to be sure others understand . . . and, as I typed, the OEX darted beneath that support again, although it ended the previous 7-minute period above it.

Jeff Bailey : 5/23/2008 1:56:14 PM

"Shouldn't have come back under 19.1% dynamic, or 12,487.

Jeff Bailey : 5/23/2008 1:55:42 PM

YM long stopped alert! 12,475 ... also.

Jeff Bailey : 5/23/2008 1:54:37 PM

Jeff Bailey : 5/23/2008 1:54:36 PM

Jeff Bailey : 5/23/2008 1:54:34 PM

YM Long exit alert! 12,485

Keene Little : 5/23/2008 1:52:43 PM

I solved my screen capture problem (but still a small problem with QCharts in order to get the two to work together). Certainly workable for now.

It's anyone's guess as to where oil is going and we've certainly had many guessing. I'll throw my guess into the ring and say it will hit $140 before it tops out. The wave count for the move up from January would look best with one more new high to finish the wave count and the Fib projection would take it to about $140. Link

Linda Piazza : 5/23/2008 1:48:44 PM

The same very tentative signs of improvement can be found on the SPX's chart, with the SPX now finding support on 7-minute closes at a line now at 1376.85. If that support can be maintained, an iffy proposition, then next potential Keltner resistance is at 1381.25.

Linda Piazza : 5/23/2008 1:47:28 PM

When I switch to the 7-minute chart for the OEX, I see some slight signs of improvement, but they're certainly only tentative ones that can be quickly undone. Those signs include the fact that the OEX is now finding support on 7-minute closes at the Keltner line now at 629.11. That line had been resistance on tests at about 11:00 and again about noon. Next resistance on that chart is at 631.56, but first we have to see if this support can be maintained before we start looking at next resistance.

Jeff Bailey : 5/23/2008 1:47:05 PM

There DUG is again ... #7 most active. Two (2) days in a row.

Linda Piazza : 5/23/2008 1:35:38 PM

We're entering a typical stop-running time of day from 1:35-1:55 pm ET. This is a time when big money might try sending prices lower to see if that test will be met with buying or selling or send prices higher to test the same. Be aware of the test, and don't imagine just yet that a test guarantees next direction. Rather it shows big money where the next direction should go. Bears should be particularly careful here, though. Just let your plan play out.

Linda Piazza : 5/23/2008 1:25:56 PM

Another way to refit that Fib bracket from my 1:05:48 post, however, is to imagine that yesterday's consolidation was occurring about midway through the eventual drop. If that is imagined and the 50% level is fitted to Wednesday's low, then the SPX might have an eventual downside target near 1338 and the OEX, near 611, so that's why I said that the bracket shouldn't be considered as a sign for bulls to pile into new entries but rather for bears to keep updating their what-if plans.

Jeff Bailey : 5/23/2008 1:23:12 PM

FXY 96.74 +0.93% ...

Jeff Bailey : 5/23/2008 1:22:38 PM

$/yen 103.23

Jeff Bailey : 5/23/2008 1:22:24 PM

YM Long alert! ... here at 12,490. Stop goes 12,475. Target 12,590.

Keene Little : 5/23/2008 1:21:40 PM

Update on my gold short--I've lowered my stop to 930, just above today's 929.30 high. If today's high is exceeded I see the potential for at least a run up to 955-960 so I'd rather watch and see how it progresses. I don't have a desire to get long at a new high since I'm thinking we could be very close to a nasty surprise from gold and see it get dumped. But nor do I want to stand in the way of a new rally leg. Flat is a position and if stopped out that's where you'll find me.

Jeff Bailey : 5/23/2008 1:17:10 PM

NYSE EuroNext $63.12 -3.11% ... (check email)

Keene Little : 5/23/2008 1:14:11 PM

At this point any rally back above the high near 12:00 PM would indicate that a bottom is in and I'd look for a trade to the upside. We should get a retracement of this week's decline before setting up the next leg down later next week.

Jane Fox : 5/23/2008 1:11:59 PM

Here is McMillan's weekly commentary. - The rally that started two weeks ago culminated with $SPX reaching 1440 on Monday morning. Since then, selling has been in vogue. The market basically declined for two and half days into Wednesday's close. That broke the 20-day moving average and violated the 1400 support level, but it did not break the rising trend line from the March bottoms. That trend line is at 1390 currently, and there is previous support at that level as well, so that is the area we must watch (there is more than one trend line which can be drawn, but this is the own we think is the significant one

The equity-only put-call ratios have been on buy signals since the March bottom, but they are now wavering. Both ratios, have curled upward. If they truly roll over and begin to rise, that is a sell signal. Our computer analyses declare that the weighted ratio (Figure 3) is already a confirmed sell signal, but the computer is not issuing a sell signal for the standard ratio yet (Figure 2). When and if the standard ratio's sell signal arrives, that should signal the next leg of the bear market.

Market breadth has been rather poor all along, and breadth gave sell signals early this week. By itself, breadth has not been a particularly reliable leading indicator, so we have generally considered it be merely a confirming indicator.

The volatility indices have -- like $SPX and the put-call ratios been in a clear bullish (down) trend since mid-March. That trend continues in $VIX. Its moderate rise early this week did not violate that trend line; it merely rose to the 20-day moving average. By our reckoning, $VIX would have to close above 19, at least, and preferably above 20, in order for this indicator to be declared as bearish meaning that its down trend was broken.

In summary, the bulls are still in position to keep this rally going, but they are running out of time. A decisive close below 1390 by $SPX, coupled with a rise in $VIX, and a confirmed sell signal in the standard equity-only put-call ratio would likely launch a new bear market leg.

Jeff Bailey : 5/23/2008 1:07:15 PM

Tuesday's oil futures expiration benchmark untested

Jeff Bailey : 5/23/2008 1:06:12 PM

USO $106.62 +0.93% ... sticks its head back above correlative DAILY Pivot and WKLY R2

Linda Piazza : 5/23/2008 1:05:48 PM

Is the SPX nearing the end of its decline? Here's a fitted Fib bracket that fits quite nicely. Link I don't use these to make trading decision but I certainly use them to update what-if trading plans, and this one says just what I've been saying all day: bears should keep their profit-protecting plans updated. That doesn't mean that I think bulls should just jump in, though.

Jeff Bailey : 5/23/2008 1:02:11 PM

CurrencyShares Euro (FXE) $158.29 +0.49% ... juuuuust above Wednesday's high.

Linda Piazza : 5/23/2008 1:01:50 PM

For those who would like to use the 15-minute 9-ema's as benchmarks for when the short-term tenor might have changed, that's now at 630.11 for the OEX and 1377.76 for the SPX. So far, both are holding as resistance on 15-minute closes.

Linda Piazza : 5/23/2008 1:00:28 PM

The VIX broke out again on its 15-minute chart and will remain in breakout mode until and unless it sustains 15-minute closes beneath 19.52.

Jeff Bailey : 5/23/2008 1:00:17 PM

June Gold (gc08m) ... session high has been $929.30, which was a violation of yesterday's regular session high. Wednesday evening's extended session high of $935.40 not violated.

Keene Little : 5/23/2008 12:50:24 PM

It looks like we might get another leg down (it might only make a minor new low or a test of the low) and this is the one I expect to see some bullish divergences. Pull your stops down tighter now to at least protect profits on a short.

Keene Little : 5/23/2008 12:47:38 PM

I've had the pleasure of setting up a new laptop computer this morning (I'm away from my home office) and I'm trying to get all my programs working together under the new operating system (Vista). QCharts wasn't showing me all-hours charts so I did some trouble shooting and found you need to run it in Windows XP compatibility mode. While my screen capture program (to show you my charts) was working with QCharts before, now it's not so I'm trouble-shooting that. For the time being I can't post charts. Ugh, this is worse than rebuilding after a hard disk crash.

Linda Piazza : 5/23/2008 12:36:28 PM

I'm caught on the phone.

Keene Little : 5/23/2008 12:20:35 PM

The little bounce we've seen off the low looks like another correction and the decline from yesterday afternoon would look best with one more new low to finish off the wave count. If we get the new low that's when we might see SPX 1371 at which time I would look to take profits on a short play and look to reverse long (obviously look for evidence that we're seeing a bottom--bullish divergences, etc.).

Jeff Bailey : 5/23/2008 12:20:12 PM

12:00 Internals found at this Link

Linda Piazza : 5/23/2008 12:19:19 PM

The OEX now has potentially strong resistance on the 15-minute closes, extending up to 631.36 or maybe even 632.36. For the SPX, that's up to 1381.50. The VIX is threatening to decline again toward 19.16-19.25, but threatening and doing it are two different things.

Jeff Bailey : 5/23/2008 12:03:04 PM

OIX.X chart Link ... With old "bearish" bailey wave, and current "bullish" bailey wave.

Jeff Bailey : 5/23/2008 12:01:07 PM

Used to have all this stuff in my browser "favorites" list. Computer crash and rebuild and didn't re-mark. So important for times like these to have at fingertips.

Jeff Bailey : 5/23/2008 11:57:32 AM

CVX and XOM are #2 and #3 in INDU.

Jeff Bailey : 5/23/2008 11:56:52 AM

Thanks Linda! ... I'm working on OIX.X components. I know there is Oil and Nat. Gas components. Want to make sure that Coal, or others haven't become heavier weights in OIX.X

I do know this! IF, and I do mean IF energy stocks crater, INDEX traders better know what's inside!

QQQQ only one (1) energy name last check. PTEN $31.22 -2.25%

Linda Piazza : 5/23/2008 11:51:57 AM

Jeff, I haven't confirmed that, either, and yesterday, another source said that techs had moved ahead of financials to become the largest weighting in the SPX. Unfortunately, in addition to posting to the Market Monitor, I'm also working on a Trader's Corner article, so I don't have time to research that right away.

Linda Piazza : 5/23/2008 11:48:41 AM

The VIX has of course long since climbed to a new high, but it's now dealing with potential resistance, just another sign that it's time to be watchful if in bearish trades. It's not a sign that it's a great time to try a bullish one as the VIX has at least temporarily broken out to the upside. It may turn out to have been, but for right now, all we're being told is to make sure bearish profits are protected: Link

Jeff Bailey : 5/23/2008 11:34:44 AM

I haven't yet confirmed, maybe Linda can, but a couple of days ago, CNBC mentioned that "energy" had become largest weighting in S&P, moving ahead of financials (due to energy strength and financial's weakness most likely).

Jeff Bailey : 5/23/2008 11:31:58 AM

OK, now take a retracement on the OIX.X from the 01/23/08 low to recent 05/21/08 all-time high.

Keene Little : 5/23/2008 11:31:09 AM

The DOW is now down to the uptrend line from March 2003 and its 100-dma so I'm watching to see what kind of bounce develops. So far not much and in fact it continues to look corrective which indicates lower still. The lower uptrend line from October 2002 is closer to 12400. Link

Jeff Bailey : 5/23/2008 11:30:22 AM

IYS-RR is $1.10 x $1.25

Jeff Bailey : 5/23/2008 11:29:13 AM

Swing trade stop alert! ... for the remaining 1/4 position in the US Oil Fund (USO) $106.80 ...

Jeff Bailey : 5/23/2008 11:23:27 AM

Most Actives ... SPY $137.91 -1.14%, MSFT $28.09 -1.33%, INTC $23.23 -2.72%, QID $40.56 +1.19% (inverse QQQQ, don't see here that often), CSCO $25.16 -1.64%, AAPL $180.92 +2.18%, WM $9.14 -3.28%, QQQQ $48.06 -0.59%, NUE $71.86 -3.53%, DELL $21.37 +2.29%

Jeff Bailey : 5/23/2008 11:20:14 AM

USO $106.97 +1.26% ...

Jane Fox : 5/23/2008 11:19:44 AM

SPX has broken below support from the May 9th lows at 1384 and is making a lower low so the uptrend has been reversed. The bearish MACD divergence is now playing out and all bullish bets are off the table. Link

Jeff Bailey : 5/23/2008 11:18:22 AM

The decline in energy-related equities is something we've seen several times this year, when market participants develop a near-term distaste for equity. Then they've been the leader on rebounds.

Jeff Bailey : 5/23/2008 11:11:03 AM

Anheuser Busch (BUD) $57.24 +8.86% ... "big hit" this summer, big hit.

Linda Piazza : 5/23/2008 11:10:00 AM

The OEX now has potential resistance on 30-minute closes at 633.19; the SPX, 1382.24. These are the current breakdown benchmarks. Remember that these indices don't tend to stay below these levels long in regular markets (although in runaway ones, they do), so if you're in a bearish trade, now is a time to be extremely careful about account and trade management. For example, do you have more than one put contract, and have those puts doubled in value? Why not sell half, then, and lock yourself in at breakeven, at least? Your risk is that you give up more profit if the indices just cascade lower. The benefit is two-fold, though. You can't lose on the trade any longer, so that's one benefit. The other relates to the emotional side of trading. If you know you can't lose, you'd be surprised how much easier it becomes to make reasoned decisions throughout the duration of the trade.

Jeff Bailey : 5/23/2008 11:08:43 AM

Sector Losers ... Airlines -4.88%, Home Construction -3.58%, AMEX Nat. Gas -2.01%, Broker/Dealers -1.98%, MS Cyclicals -1.86%, CBOE Oil -1.76%, Dow Transports -1.66%

Jeff Bailey : 5/23/2008 11:05:43 AM

Sector Winners ... Treasuries and Gold Bugs +0.26%

Keene Little : 5/23/2008 10:59:29 AM

I see oil bouncing today but oil stocks are getting sold off again. They're showing a strong reversal off the Wednesday high (and shooting star on the daily chart). This should be a good indication that we'll see a top in oil soon as well. The question right now is what kind of top. As shown on the OIX chart we may only see a pullback before pressing higher again. A break below 950 would be a heads up that something more bearish could be in play. Link

Jeff Bailey : 5/23/2008 10:54:21 AM

Some of the data "inside the numbers" from the existing home sales for April ... Month's supply rose from 10.0 months to 11.2 months. Actual sales (not seasonally adjusted) rose to 0.434% with the median price rising to $202,300 from March's $200,100. The average price of an existing home rose to $248,300 from March's $247,100.

Keene Little : 5/23/2008 10:45:58 AM

Here's the updated SPX 30-min chart that shows the parallel down-channel from Monday. In another hour the bottom of it would coincide with the 50-dma near 1371 and could make for a good place to watch for a long play. Link

Linda Piazza : 5/23/2008 10:43:48 AM

No bounce yet. Bears, you have the easier job today as you just keep inching down your stops and deciding the points at which you want to start locking in profits. Because you have the easier job doesn't mean you can skip doing your job, however. The USDJPY is still kind of hanging in there. It has not broken through its 5/09 and 5/12 lows, so it's not yet confirming what we're seeing on indices such as the SPX, which has done so.

Jeff Bailey : 5/23/2008 10:42:23 AM

10:00 Internals found at this Link

Keene Little : 5/23/2008 10:41:22 AM

I'm back and I see the market is dropping a little further than I had expected (SPX below 1380). Support at the bottom of its parallel down-channel from Monday's high is currently near 1374 and then as I mentioned earlier, it's 50-dma is near 1371. But this leg down should be the 5th wave of the decline from Monday's high and that's why it's a bit risky chasing it lower. Once the 5th wave completes we should get a reversal back up.

Jeff Bailey : 5/23/2008 10:29:06 AM

Trying to talk on phone, update internals ....

Jeff Bailey : 5/23/2008 10:28:47 AM

Ignore alert .... stop is 106.80

Linda Piazza : 5/23/2008 10:26:44 AM

Equity bears: be aware that the USDJPY has bounced strongly off its morning low of 103.16. It's at 103.40 as I type. It's just faced potential significant resistance at 103.45 and has obviously pulled back a bit, to the 15-minute 9-ema, as it happens. If it continues climbing and especially if it can scrabble back above 103.45 and stay there, that may be offering a warning to you that equities will attempt their own analogous gains. The USDJPY sometimes leads the indices, although it's of course not a simple and always good market-timing tool for equity traders to use.

Linda Piazza : 5/23/2008 10:18:24 AM

The VIX has dropped back inside that Keltner channel, erasing the one 15-minute breakout attempt. While we can't be sure it won't keep trying, it still has not erased its potential divergence with the Wednesday afternoon and early yesterday highs. It's at 18.69 right now, below 18.80 potential resistance on 15-minute closes, so what I'd say is that it's still testing that resistance. Watch this to see if it keeps diving (bullish for equities) or testing resistance (uncertain for equities but tending slightly toward the bearish side) or breaking higher (bearish).

Linda Piazza : 5/23/2008 10:10:03 AM

Here's the SPX's 30-minute Keltner chart as it existed last night. The 30-minute outer boundary level has not updated yet this morning, and it likely will have been shoved lower. However, this shows the target I've been talking about, with that target also sometimes potential support. As can be seen from the Monday action, the SPX can break outside this and sometimes does so even more dramatically when it's trending, but it often doesn't or doesn't stay outside it long, if it does, so bears need to keep their profit-protecting plans updated just in case: Link

Linda Piazza : 5/23/2008 10:05:06 AM

The A/D line has now erased the bullish divergence when compared to the Wednesday afternoon level. Not the VIX, though, not quite yet. It's still trying, however, and has now completed a first 15-minute close above the resistance that has now been shoved up to 18.77. Bears don't want to see it quickly reverse back below that now. It's 18.83 as I type.

Jeff Bailey : 5/23/2008 10:02:45 AM

April existing home sales Down 1.0% to 4.89M rate.

Jane Fox : 5/23/2008 9:56:29 AM

Crude is back above $133/bl and looks like it wants to challenge the all time highs made yesterday at $135.09

Linda Piazza : 5/23/2008 9:55:46 AM

The SPX is now hitting potentially strong support on 30-minute closes as is the OEX. The OEX is actually a little through it. While these indices sometimes break through this outer 30-minute Keltner boundary, they sometimes don't stay outside it long. So, if in bearish trades, your only job now is to keep altering your profit-protecting plans and make sure that the profit you have doesn't evaporate.

Jane Fox : 5/23/2008 9:55:29 AM

AD line -1430 so the bears certainly have control of the ball and field position today.

Jane Fox : 5/23/2008 9:54:44 AM

VIX is climbing to new daily highs and the S&P futures are in sync making new daily lows.

Linda Piazza : 5/23/2008 9:53:54 AM

In case you've missed my several references to it and probably those of other writers, the existing home sales number arrives in a few minutes. Plan your trades and your profit-protecting plans accordingly.

Linda Piazza : 5/23/2008 9:53:15 AM

SPX 1382, here we come? As I've been warning for a couple of days, if the SPX hits that downside target, bears need to know ahead of time how they'll deal with the potential support there. In fact, they need to kick in their profit-protecting plans now as that level is approached. While it's possible that we'll have a cascading lower day, we have the existing home sales number in a few minutes and that could change the tenor of trading. I don't expect it to do so, but it certainly could if it shows something unexpected.

Linda Piazza : 5/23/2008 9:51:35 AM

Keltner outlook on the VIX: Wednesday afternoon, the VIX broke above a Keltner level that's now at 18.73 but was then a bit lower and headed toward the next Keltner channel boundary. This morning, the VIX has not even attempted to break through the first boundary yet. It may yet do so as it's bouncing as I type. Bears want to see resistance at 18.73 broken on 15-minute closes; bulls want to see it hold and the VIX turned back. The VIX is 18.60 as I type.

Linda Piazza : 5/23/2008 9:47:33 AM

The TRAN reached a new low (below yesterday morning's) this morning, too, so it's not diverging from the SPX and OEX in that manner, at least. It has not approached its potential downside target on its 30-minute chart as closely, with that now at about 5150, but that's not much of a divergence at this point.

Jeff Bailey : 5/23/2008 9:46:36 AM

Swing trade long establish stop alert! ... for the 1/4 position in the US Oil Fund (USO) $107.80 +2.05% ... to $106.80

Linda Piazza : 5/23/2008 9:45:31 AM

A/D line now -1082. It's still showing tentative bullish divergence when today's level is compared to the Wednesday afternoon level. It's higher while prices are lower. However, if it keeps diving that tentative bullish divergence will be erased. Just be aware it's there now.

Linda Piazza : 5/23/2008 9:43:06 AM

I would expect to see some automatic dip-buying kick in here, but we have to see first, if it does, and then, if it has any staying power. The OEX has a downside potential target near 633 (in the snafu with my charts this morning, a Keltner line was erased), and the SPX, near 1382. Factor in vulnerability to those levels, as I've been suggesting for a couple of days. For the OEX, I'd want to see 30-minute closes above a Keltner line now at 636.87 before I even began to believe there was any staying power.

Linda Piazza : 5/23/2008 9:40:01 AM

Potential OEX support (although sliding lower) is at 634.34 on 15-minute closes; for the SPX, 1388.82.

Linda Piazza : 5/23/2008 9:38:19 AM

Keltner outlook on the A/D line: As might be anticipated, the A/D line dove. It's currently testing potential support on 15-minute closes at about -550. It's below that now, at -886 as I type, but the first 15-minute period is far from over, of course, and there's still a chance that this will hold on the first 15-minute close, although that doesn't seem likely right now. If it doesn't, a test of the -1200 or even next Keltner support at about -1650 are possible, but bears should be aware that, so far, at least, it's above the Wednesday afternoon level when the indices were producing those lows now being tested, so there's tentative divergence. That may be changed rather quickly, however.

Linda Piazza : 5/23/2008 9:32:46 AM

Considering where SPX futures were in relationship to their fair values, I'm extrapolating where the OEX might be if it moves in accordance. Futures action doesn't always predict cash market action, of course. However, if the OEX moves down in accordance, we could see a test of yesterday's low or even the 633 level. There's potential Keltner support near yesterday's low.

Linda Piazza : 5/23/2008 9:27:45 AM

Whatever trading decisions you're making this morning, remember that we'll be seeing Existing Home Sales at 10:00. I don't think anyone expects anything good out of that, so unless the number declines to a brutal level or unexpectedly climbs, that might not be a market mover. Still, keep it on your radar screen.

Keene Little : 5/23/2008 9:20:26 AM

With the equity futures down this morning it's looking like we'll get the next leg down sooner rather than later this morning. It's not a move I'd be comfortable chasing lower if you're not already short since there's a good chance it will drop to an early-morning low and then reverse back up so be a little careful in that regard.

I'll be away from the market for about the first hour so keep an eye on SPX 1384 for support. I have a Fib projection pointing to 1379.84 so maybe a quick jab under 1384 for a bear trap and then reverse back up. If the sellers are stronger this morning, the 50-dma is down near 1371.

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

Futures are lower this morning, and I'd love to give you my take on the markets, but I'm having some difficulties with my charting service this morning, for the first time ever in two years of using this service. I'm shutting down and rebooting and will be back as soon as possible.

Jane Fox : 5/23/2008 9:18:45 AM

Gold has been on a tear since its May 14th higher low so it needed to take a break. I expected yesterday was the beginning of that retracement and that it would look like this. Selloff about 50% of the rally to around 890-900, make a higher low and then make another attempt at the 940-960 resistance. Gold obviously has a different plan in mind. Link

Jane Fox : 5/23/2008 8:55:41 AM

Here are your overnight charts. Obviously the Russell 2000 futures (ER2) was the strongest market, it didn't break it previous day lows. Then the next strongest was the NDX futures (NQ) and the weakest was the DOW and S&P. Link

Jane Fox : 5/23/2008 8:49:45 AM

Crude didn't make new all time highs overnight but it certainly did not retrace either. Link

Market Monitor Archives