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Keene Little : 5/28/2008 12:21:09 AM

Wednesday's pivot tables: Link and Link

Looking at NDX, which is one of the stronger indexes, the bounce off Friday's low would achieve two equal legs up at 2002.53 and is labeled in dark red on this 30-min chart as an A-B-C correction of last week's decline and could make for a very good short play setup: Link

A little more bullish possibility, and still a 3-wave bounce, is a move up to the 2027 area where the 2nd leg up would equal 162% of the 1st leg up and it's also the level of the 78.6% retracement (considered about the maximum retracement you'll see--any more than that usually means a complete retracement is coming).

The bullish possibility, labeled in green, shows last week's decline as an A-B-C pullback correction which points to a new high coming. That's one more reason a rally above 2027 would be considered bullish. The daily chart shows the two possibilities with the key levels as the May 19th high and May 23rd low. Link

So far the bounce in the DOW and SPX are much weaker and have me wondering if the NDX is going to pull these up or if the DOW and SPX are going to pull the techs down. For a better looking correction of last week's rally (to get the right look for the pattern) I'd like to see a pullback and then another rally leg, perhaps into Thursday, to finish an A-B-C bounce off Friday's low. That might mean NDX will do the same but in a larger form. The risk remains for a choppy whipsaw environment but hopefully we'll get a good setup to try the short side. SPX 30-min chart: Link

Jeff Bailey : 5/27/2008 11:45:59 PM

According to the Petroleum Association of Japan, gasoline stockpiles held by Japanese refiners fell by 20,470 kiloliters from a week earlier to 2.50 million kiloliters as of May 24. Crude oil stockpiles fell by 40,185 kiloliters to 15.42 million kiloliters, or 97.0 million barrels.

Jeff Bailey : 5/27/2008 11:14:12 PM

Closing Internals at this Link

OI Technical Staff : 5/27/2008 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The Market Monitor has been archived.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 : 5/27/2008 4:19:17 PM

Just over 3.0 million shares blocked in the SPY @ $138.66.

Jeff Bailey : 5/27/2008 4:17:12 PM

Just over 1.1 million shares in GE being blocked at $30.41.

Keene Little : 5/27/2008 4:13:08 PM

We've got NDX retracing almost 50% of last week's decline already and SPX has barely retraced 20% (and the DOW even less). The RUT has retraced a little more than 50% and continues to look the most bullish of all of them. In fact, last week's decline is a good example of the overlapping decline that I typically talk about. When I see something like the pullback on the RUT I think bullish: Link

Compare this to the pattern for the decline in SPX (and the others look the same) where it looks like a much more bearish impulsive 5-wave decline: Link . I look at SPX (and DOW and NDX) and I'm looking for a 3-wave correction of last week's decline to then get short. I look at the RUT's decline and think we're going to get a new high.

I like to go with "majority rules" in the market and therefore think the RUT has formed some kind of leading diagonal 1st wave down (a type of diagonal that allows for overlap between the 1st and 4th waves) and will also tip back over with the others. But with its relative strength right now I wouldn't want to choose the RUT for a short play anyway.

Linda Piazza : 5/27/2008 3:55:51 PM

It looks as if the OEX's 30-minute 9-ema, now at 631.33, will possibly be retested, although perhaps not this afternoon. If so, bulls want to see that support hold.

Jeff Bailey : 5/27/2008 3:50:37 PM

Berkshire Hathaway (BRK.A) $127,680.00 +2.99% ... threatens to close back above its 01/16/08 lows.

Keene Little : 5/27/2008 3:48:32 PM

When talking about "overlap" when applying to an EW pattern does "overlap" mean the corrective pullback "wave a" would need to "overlap" or touch the bottom where "wave 1" began? Or does "overlap" basically means that a pullback or rally of a corrective move, will touch/meet the area where the previous wave began? Does this make sense?

I use this phrase so much that I thought it would be good to answer this email on the MM to see if I can make more sense of this (and hopefully understand your question). Using the following little 3-wave bounces I'll try to answer what I mean by overlap: Link

When I talk about overlap in a bounce I?m referring to the pullbacks that overlap the previous bounce high. The first 3-wave bounce in the linked picture shows the most recent leg down has overlapped the previous bounce high and for an impulsive wave count that would mean that the 4th wave pullback just overlapped the 1st wave high and that violates an EW rule. That's when I refer to the fact that it leaves the bounce as a 3-wave correction.

The 2nd example shows overlap below where the start of the bounce occurred and that means the A-B-C bounce off the initial low is an expanded flat correction. If I saw price action define either one of these patterns I would be leaning bearish but recognize that the pattern can morph into something different, including a continuatin higher.

That's why I continually look for confirmation in many other technical signals such as trend lines, price level support/resistance, moving averages, oscillators, etc. EW is a guide, a roadmap as I call it. But you still need to drive on the road and watch for hazards and detours, no matter what the map says. Hopefully that makes it a little clearer (as mud right?).

Jeff Bailey : 5/27/2008 3:42:28 PM

Hershey Co. (HSY) $39.89 +9.39% ... has jumped markedly in the last couple of hours from $37 level.

Jeff Bailey : 5/27/2008 3:40:38 PM

Sears Holdings (SHLD) $87.43 -0.59% ... Hopes to "get hip" as it sets to launch its LL Cool J line.

Linda Piazza : 5/27/2008 3:42:02 PM

Time to be thinking about end-of-day decisions, if you haven't already. I've already mentioned the speech of the Bank of Japan's new head that's to take place tonight, a speech that could impact currency markets. We have durable goods tomorrow morning, and that could be market moving. A couple of Fed speakers are on tap tomorrow, but the first, Minneapolis Fed President Gary Stern, doesn't speak until 12:50 pm.

What do charts suggest? The OEX's chart suggests that if the OEX can get past the 634-636 resistance zone, it might zoom up to 637-640, but it doesn't tell us much about whether it can get past that zone. So, if the OEX ends the day anywhere near its current level of 633.82, it's ending the day with the potentially significant resistance near 637-639 and then 640-642 and support down near the day's low. That support is from the former resistance trendline in place since late January and broken to the upside in early April. We just really don't know much yet.

Jeff Bailey : 5/27/2008 3:38:52 PM

NYSE April Margin Debt Falls 5.2% to $295.6B

Jane Fox : 5/27/2008 3:32:49 PM

S&P futures (ES) is making new daily highs supported by a bullish VIX.

Jane Fox : 5/27/2008 3:31:14 PM

Crude is also falling but the Crude bulls are not too worried. I am looking for support around the $124-125/bl and if I see that support holding I will be a short term buyer again. Link

Jane Fox : 5/27/2008 3:29:29 PM

Gold is taking a beating today and has retraced 38.20% of the rally off the May 2nd lows. Link

Jane Fox : 5/27/2008 3:28:16 PM

The SPX broke through support at 1385 on Friday and that support has now turned to resistance. Link

Linda Piazza : 5/27/2008 3:23:40 PM

For several 15-minute periods, the OEX has moved sideways beneath that resistance now at 633.69 and then at 635.92 on 15-minute closes without being able to break through. If it soon doesn't do so, it risks falling back toward 631.40-631.85.

Jeff Bailey : 5/27/2008 3:06:43 PM

A strong spat of selling in Treasuries has helped lift the majors to their best levels of the session.

Bonds finished the day with price declines. The 13-week Treasury note finished up 5.0 bp at 1.850%, while the 5-year yield jumped 9.9 bp to close at 3.220%. The benchmark 10-year yield rose 9.0 bp to 3.921%, while the longer-dated 30-year yield finished up 8.8 bp at 4.645%, its highest yield close since 02/27/08.

Keene Little : 5/27/2008 3:00:40 PM

The market suddenly got a little more buying interest as they're all getting some stronger buying this afternoon now. Techs continue to lead the way higher and a projection off Friday's low with two equal legs up is at NDX 2002.53. This would place it between a 50% and 62% retracement of last week's decline.

It would also be part of what I believe will be the creation of the right shoulder of a H&S pattern I showed on its daily chart last night, updated here: Link . Keep an eye on RSI to see if it fails at the horizontal line across the RSI lows over the past month.

Linda Piazza : 5/27/2008 2:56:21 PM

The OEX has finally broken through resistance that was near 631.25 on a 15-minute basis and 630.38 on a 30-minute basis. Next resistance, potentially strong resistance, is from about 633.80-636.00, with this showing up on both 15- and 30-minute charts.

Linda Piazza : 5/27/2008 2:53:25 PM

There we go, with some of those indices that I mentioned (2:12:41 post) as having potential inverse H&S formations on their 15-minute charts rising up toward their necklines. The Nasdaq, for example, has completed a 15-minute close above its neckline, but some of the others haven't, and we have to see if the Nasdaq maintains that breakout by maintaining 15-minute closes above about 2475 and especially above about 2460. Anyway, these mo-mo indices du jour are trying to break out in at least an intraday way, so keep a watch.

Jeff Bailey : 5/27/2008 2:40:26 PM

Swing trade call option alert! please buy one (1) of the Continental Airlines CAL Jun $12.50 Calls (CAL-FV) at the offer of $2.25.

CAL $13.95 +5.84% ...

Not stop for now, target $17.20 in the underlying.

Jeff Bailey : 5/27/2008 2:19:34 PM

FXE $157.55 -0.39% ...

Jeff Bailey : 5/27/2008 2:19:01 PM

Eur/$ 1.5715 -0.35% ...

Jeff Bailey : 5/27/2008 2:16:52 PM

USO June $96 Put (IYS-RR) $1.35 x $1.40

Jeff Bailey : 5/27/2008 2:15:58 PM

US Oil Fund (USO) Alert! $104.30 -2.47% ... trades 05/20/08 June futures expiration close.

Keene Little : 5/27/2008 2:12:57 PM

So far, of the 20 cities tracked by Case-Shiller, only Detroit has dropped into negative territory when using 2000 prices as the starting point. It looks like Cleveland could be next.

Linda Piazza : 5/27/2008 2:12:41 PM

Bears, be forewarned that several indices (TRAN, MID, Nasdaq, etc.) have very roughly formed potential inverse or reverse head-and-shoulder formations on their 15-minute charts, forming over the last four or five days. Many might be confirmed by sustained 15-minute closes above their 15-minute 120-ema's, combined with a move above the early morning highs. For the Nasdaq, for example, that moving average is now at about 2470 and the early morning high 2472.70. This means that this is also potentially strong resistance and it's possible that a brief pop above that resistance will be met with selling. If a bounce is sustained, however, bulls might climb on board, so manage your trades and accounts accordingly.

Jeff Bailey : 5/27/2008 2:11:55 PM

02:00 Internals found at this Link

Keene Little : 5/27/2008 2:09:39 PM

I was looking over the latest report on the Case-Shiller real estate values and downloaded their latest spreadsheet (can get from this link: Link ). I then plotted the chart for the different markets and it sure looks like a bubble-pop. I labeled a few of the high-flyer markets since it gets a little confusing with the multiple colors: Link

Linda Piazza : 5/27/2008 2:08:25 PM

I keep looking at other charts and then turning back to the OEX, expecting it to look better than it does, to be performing better on a Keltner basis. It's underperforming many other indices by Keltner measures. Let's see if they all keep attempting to rise, though. The A/D line is up against potential resistance on 15-minute clsoes at about 490, with the A/D line at 485 as I type.

Linda Piazza : 5/27/2008 2:01:35 PM

The SPX, unlike the OEX, has already popped above its breakdown benchmark on its 30-minute chart once today, but it just couldn't stay there. Now it's attempting again. It's at 1378.33 on 30-minute closes, with the SPX at 1379.52 as I type.

Linda Piazza : 5/27/2008 2:00:31 PM

There may be significant resistance for the OEX on 30-minute closes at 630.70, as this is the breakdown benchmark on that chart. We haven't seen 30-minute closes above that since Thursday afternoon. If there is a close above it now, we need to see such closes sustained.

Linda Piazza : 5/27/2008 1:55:28 PM

The A/D line still mostly chops around the 15-minute 9-ema. That 9-ema is slightly rising, however. That's better than nothing for those with bullish hopes and gives a slight nod toward the "it will climb rather than fall" scenario, but that nod is slight. Next potential resistance is now 476 with the A/D line currently 395. This chart looks as if anything at all can happen next, which would suggest that anything at all can happen next on NYSE equities.

Keene Little : 5/27/2008 1:46:20 PM

Linda mentioned currencies and that reminded me to show the chart of the US dollar which has held support so far at the bottom of its down-channel from 2006 and its uptrend line from March. It's still a coin toss as to whether it break below the April low at 71.19 and resume its bounce off the March low. Link

Linda Piazza : 5/27/2008 1:38:01 PM

I'm substituting for Jim tonight in the newsletter as he's out of town. As you're making decisions about holding overnight this afternoon, I thought you might like to know about this, taken from tonight's Wrap: It's probably important to know about a talk occurring in Tokyo overnight. The Bank of Japan's new governor, Governor Masaaki Shirakawa, will speak at an international conference at 9:15 pm ET, I believe. The talk will occur at the 2008 International Conference that the Bank of Japan's Institute for Monetary and Economic Studies is sponsoring. Since he's relatively new on the job, taking over for Toshihiko Fukui only after a prolonged political wrangling about the identity of the new appointee, currency traders will be studying every word he speaks. His words could impact currency trades, which of course could impact equities.

Jeff Bailey : 5/27/2008 1:15:50 PM

VIX.X 20.39 +4.29% ...

Jeff Bailey : 5/27/2008 1:15:30 PM

RIO Sep $35 Puts (RIO-UG) from 4/29/08 entry currently $1.94 x $1.99.

Linda Piazza : 5/27/2008 1:14:40 PM

Not much definitive action to point to today on the SPX and OEX. The A/D line hasn't shown its hand, either. A drop toward -150 to -300 looks as likely as a climb. The A/D line is currently +246.

Jeff Bailey : 5/27/2008 1:14:22 PM

Most Actives ... SPY $137.90 +0.18%, QQQQ $48.51 +0.64%, F $6.60 -4.07%, C $21.49 +1.75%, MSFT $28.18 +0.46%, INTC $23.39 -0.08%, WM $9.38 +2.40%, CSCO $25.36 +1.03%, AAPL $183.18 +1.10%, RIO $39.26 -4.26%

Keene Little : 5/27/2008 1:09:17 PM

The bounce is holding and that's about as bullish as I can get right now. Use a pullback to try the long side with a stop now at a new daily low.

Jeff Bailey : 5/27/2008 1:05:59 PM

10:00 AM EDT ... The Conference Board's consumer confidence index falls a fifth straight month in May to 57.2, down from April's 62.8.

Jeff Bailey : 5/27/2008 12:51:22 PM

Valero Energy (VLO) $47.06 -3.18% ... trades weak despite some crack spread improvement. The company said a key gasoline-producing unit at its Paulsboro, N.J. refinery has been shut due to a leak discovered late Monday. The unit is the sole gasoline feed-stock producing unit at the plant.

Jeff Bailey : 5/27/2008 12:46:58 PM

UBS AG (UBS) $25.20 -13.99% ... Switzerland-based banker warned today that it may have to record losses on non-U.S. relas estate as it seks nearly $16 billion from shareholders to repair balance sheet. In a prospectus for a secondary offering, UBS said economic and market conditions were volatile and challenging into the second quarter.

Linda Piazza : 5/27/2008 12:39:37 PM

No change in pattern yet for the OEX, as seen on its 30-minute chart: Link

Linda Piazza : 5/27/2008 12:28:30 PM

The OEX is again testing the 15-minute 9-ema, but this time from the underside. That potential resistance on 15-minute closes is at 629.24, with the OEX currently at 629.17. First this held as support today and for about an hour, it's been holding as resistance, so I'm not sure it holds its usual benchmark status.

Linda Piazza : 5/27/2008 12:26:52 PM

The A/D line still looks as capable of dropping to about -145 as it does climbing back toward +750 or retesting the high of the day.

Jeff Bailey : 5/27/2008 12:19:10 PM

12:00 Internals found at this Link

Note: It would currently take a closing session measure of 54.00% or lower for the NYSE's 10-day NH/NL ratio to see a 3-box reversal back lower.

Keene Little : 5/27/2008 12:15:48 PM

SPX is holding at support so far (Friday's low and 50-dma). Long is the right play with a stop no lower than about 1370.

Jeff Bailey : 5/27/2008 12:05:29 PM

TM $98.16 -0.73% ...

Jeff Bailey : 5/27/2008 12:05:14 PM

DAI $76.40 -1.92% ...

Jeff Bailey : 5/27/2008 12:04:57 PM

F $6.59 -3.93% ...

Jeff Bailey : 5/27/2008 12:04:43 PM

GM $16.93 -3.80% ...

Jeff Bailey : 5/27/2008 12:04:11 PM

Chicago Fed April Midwest Mfg Index falls a sharp 1.7% on weak autos to a reading of 105.7 Vs. 107.5 in March.

Auto production down 5.6% in April Vs. 4.6% decline in March.

Jane Fox : 5/27/2008 12:03:24 PM

The NDX is a large cap index yet it trades much more in line with its small cap counterpart, RUT.

The NDX has made the same kind of retracement as the RUT. Link

Jane Fox : 5/27/2008 12:01:34 PM

The Russell 2000 cash index, RUT has retraced even less than the S&P barely piercing the 23.80% fib level. Link

Jeff Bailey : 5/27/2008 12:00:44 PM

JP Morgan (JPM) $42.80 +1.13% saying that first-quarter trading volume of depository receipts jumped 69% to 30.3 billion shares as values surged to $1.21 trillion, up from $585 billion in the prior year.

The bulk of activity came from issuers in Europe, the Middle East and Africa. The firm said it is adding specialists in Argentina, Brazil and Singapore to deepen the firms global reach and meet demand.

Jane Fox : 5/27/2008 11:53:34 AM

Whereas the SPX retracement has not even made it to 38.20% fib level, the DOW's retracement has hit the 50% fib level. Link

Linda Piazza : 5/27/2008 11:50:46 AM

So far, the A/D line is kind of holding support at about 340 on 15-minute closes. Hear that all-out endorsement in my "kind of"? That's because it's not an all-out anything. The support remains tentative for now with the A/D line now at 377. The A/D line looks about as likely to drop to -120 as it does to climb again toward the day's high.

Jeff Bailey : 5/27/2008 11:48:32 AM

Federal Reserve Bank of San Francisco President Janet Yellen making remarks this moring.

While Ms. Yellen says that inflation levels have been "disappointing," she doesn't see stagflation. Ms. Yellen believes the dollar's level has been beneficial to U.S. competitiveness.

Ms. Yellen addressed the financial sector, saying that banks and regulators dropped the ball in current crisis, and while there are signs of "hope" for market conditions, financial markets are "still far from normal."

Jane Fox : 5/27/2008 11:43:52 AM

S&P futures have just made a new daily low that was not confirmed by the VIX so I expect there to be little, if any, followthrough.

Keene Little : 5/27/2008 11:42:48 AM

SPX has not held above its broken downtrend line from last week so that's a bearish sign. But if a retest of Friday's low holds we'll very likely see a fairly significant bullish divergence on MACD. This may all be part of the the shaking out (of longs) that I had expected earlier this morning. Bulls obviously want to see Friday's low of 1373.72 hold or 1 point lower at the 50-dma, now at 1372.76.

Jane Fox : 5/27/2008 11:42:22 AM

Gold is the market I love to swing trade, along with Crude that is. I never short these two yet there are times when that stance may seem foolish. I am very bullish on Gold and Crude and there are more than enough opportunities on the long side so my thoughts are why take the chance.

Gold is taking a breather here and when Gold takes a breather it is usually a hefty breather but the uptrend is still in place and the other good news it has not even retraced to the 38.20% fib level.

I am out of my long Gold positions and waiting for the next opportunity. Link

Jane Fox : 5/27/2008 11:36:04 AM

The S&P Cash index (SPX) made a higher high on May 19th but the MACD did not make a higher high (bearish divergence) and since then the SPX has fallen 3 out of 4 days. Friday it closed below support at 1385 and made a lower low breaking the uptrend but the good news is that this little retracement from the MACD divergence has not even made it to the 38.20% fib level. Link

Jeff Bailey : 5/27/2008 11:35:50 AM

Economists polled in a recent Dow Jones newswire survey aren't expecting much for U.S. April durable goods orders. The most recent survey has economists looking for a 2.0% decline in orders last month, after the revised 0.1% increase in March. Vehicle orders are expected to lead the weakness in orders.

Linda Piazza : 5/27/2008 11:34:39 AM

Let's summarize. All along, what we had today were early signs that the mo-mo traders were sending up some of the high-flying indices (TRAN, RUT, SOX, BIX, RTH) without a corresponding response in the SPX and OEX. The A/D line climbed strongly, but climbed right into resistance shown on in the chart linked to my 10:26:36 post. The early conclusion was that there was likely to be a steadying and an attempt to bounce, but without much certainty yet that the bounce would hold.

What now? While both the OEX and SPX were able to produce 15-minute closes above the benchmark breakdown levels, neither has yet been able to hold above those, currenting retesting them and a little below them as I type. While the SPX did also produce a 30-minute close above the breakdown benchmark on that chart, the OEX hasn't, with the SPX's benchmark at 1379.03 and the OEX's at 631.07. Both are currently below those benchmarks, too.

So, since neither could sustain 30-minute closes above those benchmarks, I don't think we're certain that there's been any change in tenor yet. We do see efforts to steady the markets. I'm watching the A/D line for clues as to whether it will find support now and bounce. But there's still just a lot of uncertainty. Be aware of the very real efforts to steady markets but just don't count too strongly yet on their success.

Jeff Bailey : 5/27/2008 11:32:19 AM

Brazil's Finance Minister saying he sees the country's GDP growth staying at around 5% over next couple of years. 12-month inflation rate through April was 5.04% and slightly above government's target for calendar-year inflation of 4.5%.

Jane Fox : 5/27/2008 11:23:30 AM

Here are the overnight charts. Both the S&P and DOW futures are back into their respective overnight ranges but the NDX and Russell futures are not. Link

Linda Piazza : 5/27/2008 11:23:03 AM

The A/D line is now dipping closer to its 15-minute 9-ema, with that now at 350 and the A/D line now at 508. Bulls want to see that 9-ema hold on 15-minute closes.

Jane Fox : 5/27/2008 11:21:33 AM

Internals are bearish yet the fact that the VIX is not making new daily highs makes me wonder just how strong the bears really are today. Link

Linda Piazza : 5/27/2008 11:13:23 AM

We now have a pattern this morning of 15-minute closes above the 15-minute 9-ema, but that pattern could be broken this 15-minute period. If so, that would be evidence of remaining unsteadiness. The OEX is currently below its 15-minute 9-ema at 630.26, testing lower support at 629.60. Equity bulls want that support to hold on a 15-minute close and would prefer for the OEX to bounce back above the 9-ema by the close of this 15-minute period. Further support is at 628.04 currently, but all these potential support levels still turn lower and so are still more iffy than solid.

Keene Little : 5/27/2008 11:13:18 AM

Gold did a little shakeout last night and popped me out of my short at 930 (June) but I've seen gold do this many times in the early evening price action so I reentered my short, watched it drop a little, set my stop at a new high and went to bed. I'm now using the August contract so I'm short from 935. I don't have the August daily chart updated yet but the June chart is updated to show what I'm watching: Link

The bounce high on May 9th (895 August, 890.8 June) is the key level because any decline from here that overlaps that high would leave the bounce off the May 2nd low as a 3-wave bounce and would be pointing to another strong decline (potentially). But so far the pullback from last week's high is only a 3-wave move and therefore could be just a correction to the rally.

Any move back above last week's high would turn the rally from May 2nd into an impulsive 5-wave advance and that would portend bullish things for gold. The 240-min chart shows the key levels I'm watching: Link

Jeff Bailey : 5/27/2008 11:09:55 AM

Weekly, Monthly, Quarterly Index Pivot Matrix at this Link

SMH, RUT.X, TNX.X, DXY have seen trade at WKLY Pivot.

Jeff Bailey : 5/27/2008 10:54:13 AM

Sector Losers ... Gold Bugs -3.08%, CBOE Oil -1.35%, AMEX Nat. Gas -0.20%.

Treasuries also find selling with 5-year yield up 7.6 bp at 3.197%, 10-year yield up 7.4 bp at 3.905% and longer-dated 30-year yield up 7.6 bp at 4.633%.

Jeff Bailey : 5/27/2008 10:52:11 AM

Sector Winners ... Airlines +1.99%, Retail +1.57%, Semiconductors +1.43%, Dow Transports +1.29%, Networking +1.29%.

Linda Piazza : 5/27/2008 10:50:54 AM

So far, so good. Just a retest so far of OEX and SPX support levels.

Jeff Bailey : 5/27/2008 10:49:41 AM

Standard Pacific (SPF) $3.52 +58.55% ... now #5 most active after the home builder said it has received an equity commitment of more than $530 million from private equity firm MatlinPatterson Global Advisers LLC.

Jeff Bailey : 5/27/2008 10:45:13 AM

Still Halted ... from Friday are shares of China Netcom (CN) $68.50, China Telecom (CHA) $71.16 and China Unicom (CHU) $22.79 amid speculation that Beijing will announce plans to overhaul the nation's telecommunications industry.

Keene Little : 5/27/2008 10:42:42 AM

Try this again. SPX has broken its downtrend line from last Monday (only marginally though) and a pullback to it, currently near 1376, could be a good setup for the long side. The only caution is that the bounce off Friday's mid-day low looks corrective and that could mean we'll see it continue lower. 30-min chart: Link

Linda Piazza : 5/27/2008 10:40:11 AM

What bulls also want is for the A/D line to just chop around near the day's high, consolidating there, while the fast-rising 9-ema rises up just underneath it. The 9-ema is now at +77, with the A/D line now at +804, so that support is still far below and the A/D line still vulnerable to a steeper pullback.

Keene Little : 5/27/2008 10:38:57 AM

For some reason I'm a lot of problems with my computers this morning and am having trouble posting. I've been trying to get updates posted for the past 20 minutes and it keeps freezing on me. Be back with some charts as soon as I get this figured out.

Linda Piazza : 5/27/2008 10:38:53 AM

The SPX levels analogous to those mentioned in my 10:26:36 post about the OEX are 1379.30 and 1374.75. The SPX is drifting close to the first potential support level (on 15-minute closes) as I type. So is the OEX. Bulls want these levels to hold as support.

Jeff Bailey : 5/27/2008 10:35:39 AM

The Office of Thrift Supervision reporting that thrifts lost $617 million during Q1 2008, down from net profit of $3.61 billion in Q1 2007, but much better than the record $8.75 billion loss in Q4 2007.

The agency said that thrifts set aside an industry-record $7.6 billion in loan loss provisions during Q1'08, up from $5.5 billion and $3.5 billion in the prior two quarters.

The agency added that troubled assets as a portion of all assets in the industry increased 2.06% in Q1, from 1.66% in Q4'07.

Jeff Bailey : 5/27/2008 10:30:04 AM

After shock in the Qingchuan County in southwest China causes 420,000 houses to collapse.

Jeff Bailey : 5/27/2008 10:28:24 AM

Favrill Inc. (FVRL) $0.26 -85.05% shares plunging this morning after the biopharmaceutical company said it will stop developing its Specifid cancer drug, citing disappointing Phase III test results.

Linda Piazza : 5/27/2008 10:27:26 AM

Caution here, bulls. The A/D line is hitting that resistance and is stalling there, and there's not much Keltner support below it. That doesn't mean that it will definitely crater, but you just need to pay attention to account and trade management. Here's a chart: Link With the chart looking like this, I wouldn't be surprised to see the OEX pull back at least to 630.30 and maybe even 628.64. That's not a promise, of course, but it wouldn't be surprising given the setup.

Jeff Bailey : 5/27/2008 10:23:20 AM

Most Actives ... LEH $36.17 +0.30%, QQQQ $48.70 +1.03%, SPY $138.41 +0.55%, INTC $23.49 +0.34%, MSFT $28.34 +1.03%, F $6.91 +0.58%, C $21.48 +1.70%, FVRL $0.27 -84.48%, AMAT $19.30 +2.00%, XLF $24.79 +0.56%

Jeff Bailey : 5/27/2008 10:20:40 AM

10:00 Internals found at this Link

Linda Piazza : 5/27/2008 10:14:24 AM

The A/D line is now hitting the upside resistance mentioned earlier. That resistance has been shoved up to 1078.31 on 15-minute closes with a high so far of 1058.00 and a current level of 1018. The A/D line doesn't have to do much else now except sort of chop around near the high of the day to maintain the support of equities, but bulls needs to watch this now for signs of bearish value/RSI divergences or strong pullbacks as a sign that they need to update their profit-protecting plans. I prefer to see divergences before I believe too strongly that anything is going to change, but they're not always given. If such divergences do set up, it's a sign that your profit-protecting plans need to be updated, not specifically a sign that a rollover will occur at any moment. Such divergences can persist through an entire day without prices rolling back significantly.

Linda Piazza : 5/27/2008 10:09:57 AM

For the SPX, we need to see a 15-minute close above 1379.94 to begin to believe anything has changed, and then we'll start watching for the 30-minute close.

Linda Piazza : 5/27/2008 10:09:14 AM

For the OEX, we need to see a 15-minute close above 630.67 as a first sign that things have changed and then we'll start watching the 30-minute close.

Jeff Bailey : 5/27/2008 10:03:43 AM

US April New Home Sales +3.3% to 526,000; Consensus was 533,000.

March revised to 509,000 from 526,000.

Linda Piazza : 5/27/2008 9:56:35 AM

At about +1060, the A/D line will hit what can be significant resistance. I don't see any signs yet of pullback or bearish divergences, but this is just a warning to keep a careful watch. The A/D line is currently +815.

Linda Piazza : 5/27/2008 9:49:56 AM

If the OEX were to be showing a performance analogous to that I'm seeing in some other indices, those momentum indices I've been mentioning, it would be moving up toward 636.49-638.32, which it's obviously not yet doing. For the SPX, the analogous zone would be 1392.53-1396.22, which it's obviously not testing, either. However, if you're in bearish trades, you need to be aware of possible vulnerability up to that level. If you're thinking bullish, you need to be aware, though, that these momentum indices could be attempting to lead, but they have reached potential stall levels already, so if you're thinking bullish, you need to carefully manage any trades. The SPX and OEX haven't even yet established any change in tenor.

Linda Piazza : 5/27/2008 9:47:17 AM

The RTH, representing the retailers, also zoomed up, but zoomed up to significant resistance on 15-minute closes from 94.80-94.96. The RTH is now 94.83. So, we're seeing some money put to work in these momentum type of indices.

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

The RUT is also zooming higher as is the SOX. We have a lot of these indicator-type indices trying for higher prices. The SOX, at least, though, is now facing what may be significant resistance on 15-minute closes in the 405.33-407.15 zone. So, taken together, we have obvious attempts to send these indicator indices, at least higher but we perhaps still don't have confirmation that the attempts will be sustained. Bears do need to be aware of the ongoing efforts, though.

Keene Little : 5/27/2008 9:44:39 AM

The techs are pointing higher and I don't see a downside shakeout happening there. The only caution is that a bounce over the next couple of days is likely to be choppy and could see some whipsaws.

Linda Piazza : 5/27/2008 9:40:27 AM

The TRAN is making a run for it. It's well above the levels analogous to the "tenor has changed" levels I listed for the OEX and SPX in my 9:17 post this morning. Now we see if it stays there. However, with the USDJPY trying to climb and the TRAN also trying, it's clear that there will be that attempt to steady and bounce, although it's not yet clear how successful it will be. The SPX and OEX have not yet responded in kind, although that might be starting as I type.

Linda Piazza : 5/27/2008 9:36:49 AM

Keltner outlook on the A/D line: The A/D line jumped into the upper or more bullish half of the Keltner channels on its 15-minute chart this morning. Now it needs to stay there by finding support on any pullbacks, hopefully at about -260 and at least at -508, if that higher level doesn't hold. The A/D line is currently +160, pulling back from its +237 high of the day.

Linda Piazza : 5/27/2008 9:35:18 AM

My 9:17:45 post listed OEX and SPX levels to watch for a sign that the short-term tenor had changed. However, first resistance for those indices is at 629.26 and 1376.40, respectively, on 15-minute closes.

Keene Little : 5/27/2008 9:26:58 AM

Equity futures had dropped fairly hard after their 3:00 AM high and made a low near 7:00 AM. Since then they've bounced back up and the pre-market push back up always makes me suspicious--someone may want the market to open higher in order to sell into it. The price pattern is set up for a rally today so I don't trust the downside but I'm not sure I trust this pre-market rally either. Watch for an early shake out to the downside and then reversal back up, or at least that's the setup I see currently.

Linda Piazza : 5/27/2008 9:17:45 AM

Futures' values have been chopping around this morning a bit as the price of crude chops around a bit, too.

As I type, SPX futures are still below fair value, but not much below fair value. When I look at the USDJPY, I see it moving higher this morning, but moving higher within a narrowing sideways triangle on its daily chart. Short term, the USDJPY move higher is supportive of U.S. equities, but on anything but a short-term intraday basis, it's so far not telling us much.

Friday, the OEX moved into a breakdown mode on both the 15-minute and 30-minute charts, so next targets are hard to determine. I unfortunately can't get the outer Keltner boundary on my 60-minute charts to determine next potential downside targets. However, those 15-minute and 30-minute charts still allow us to determine when something has changed from Friday's tenor. As of Friday's close that would require sustained 30-minute closes above 631.73 for the OEX. For the SPX, that would require sustained 30-minute closes above 1380.18. For now, be watchful of stalling or rollover potential at those levels, if they should be tested.

It is possible, however, that the OEX could attempt to steady and bounce, although I'm not sure how successful any attempt might be. Here's where the OEX ended up Friday afternoon: Link The SPX, however, remains well above its analogous descending trendline, with that at about 1361.00 and maybe even as low at 1354, depending on how the trendline is drawn. So, will the OEX steady and will these generals pull the SPX up with them or will the SPX descend to its analogous trendline, pulling the OEX lower with it? We just don't know yet, but I'd be on the lookout for an attempt, at least, to steady these markets and send them higher. I just wouldn't be overly optimistic at this point about how high such an attempt would get these indices or how long a bounce would be sustained. If there's a bounce today and you're going along, I'd already be thinking about whether I wanted to stay in overnight or not, if the OEX should end up jammed against next resistance at about 636-638 and especially 639-641; the SPX, at about 1380-1382 or especially 1394-1396.

Jane Fox : 5/27/2008 9:03:24 AM

By the way to we have New home Sales and Consumer Confidence at 10:00. I will try and post these reports as they come available.

Jane Fox : 5/27/2008 9:02:17 AM

I will be in the Monitor at 11:30ET today.

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