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Jeff Bailey : 6/6/2008 1:50:26 AM

YM off 3 at 12,615

Jeff Bailey : 6/6/2008 1:49:36 AM

Euro and Yen both got a "pop" on the BAC news.

Jeff Bailey : 6/6/2008 1:33:28 AM

YM +2 at 12,620

Jeff Bailey : 6/6/2008 1:33:10 AM

Bank of America Wins Approval To Buy Countrywide ... AP Story Link

Jeff Bailey : 6/6/2008 1:27:02 AM

June "Max Pain" Theory Tabulations

TSO = $22.50 ... $2.50 inc.
BOOM = $45 ... $5 inc.
RIO = $35 ... $2.50 inc. below $35. $1.00 ($36) then $1.50 ($37.50) then $1.50 ($39) then $1 ($40) above $35.
NVDA = $22.50 ... $2.50 inc.
SIX = $2.50 ... $2.50 inc.
DUG = $28 ... $1 inc.

Jeff Bailey : 6/6/2008 1:18:27 AM

June "Max Pain" Theory Tabulations as of Thursday's close

DIA = $125 ... $1 inc.
SPY = $134 ... $1 inc
QQQQ $49 ... $1 inc.
IWM = $72 ... $1 inc.
SMH = $33 ... $1 inc.
XLF = $26 ... $1 inc.
XLE = $85 ... $1 inc.
USO = $104 ... $1 inc.

Keene Little : 6/6/2008 12:04:28 AM

Friday's pivot tables: Link and Link

The big question for me tonight is whether Thursday's rally was the start of something bigger to the upside or the finish to a 3-wave bounce off Tuesday's low. It's important to the bulls that the rally continue immediately on Friday morning whereas the bears need to see an immediate decline. The pre-market economic reports could set the tone for the day. But both sides need to watch out for a head-fake move that gets quickly reversed.

One of the reasons I wonder about the possibility for a quick reversal is the potential bearish rising wedge pattern for NDX. Ideally it calls for a quick spike up above the top of the wedge (the throw-over and is usually caused by a news spike) to then be followed by a complete reversal (dark red on the 60-min chart): Link

The bulls will want just the opposite--either an immediate rally or a quick pullback that holds above the uptrend line from Tuesday's low and then continue rallying. By all means they do not want to see Thursday afternoon's low violated. And that holds true for the other indices as well--the bulls need the Thursday afternoon lows to hold. The SPX and DOW 60-min charts show upside targets if the bulls can keep the rally going:
SPX: Link
DOW: Link

The interesting setup on the RUT daily chart is the throw-over above a potential bearish rising wedge for price action since the March low: Link . If this rising wedge is the correct interpretation then bulls definitely do not want to see a reversal in price which would create a sell signal. But if the rally continues on Friday and finds that top trend line to be support on a pullback then stay long the RUT.

Jeff Bailey : 6/5/2008 11:44:06 PM

Wheat due for a bounce ...

Jeff Bailey : 6/5/2008 11:43:48 PM

Corn exploded to the upside today

Jeff Bailey : 6/5/2008 10:53:36 PM

One observation I'll make is that despite the FXE-FA closed out for a $0.10/contract loss, the FXE itself moved against us from entry benchmark on 5/29/08 of $155.54.

Probably saw some "benefit" from the VIX.X decline.

I hate losses. I'd hate it more if the euro were to gap higher tomorrow and a real squeeze take place.

Jeff Bailey : 6/5/2008 10:28:51 PM

The overnight trade to monitor will likely be the July Crude Oil (cl08n) futures as they are nestled juuuuust under the 05/20/08 settlement, which would be the final settlement benchmark of June crude oil.

Not unlike last night's observation of the eur/$, an oil trader would like to see what's there at $128.98.

Understand implications of SIMILARITY, or DIVERGENCE to the 05/05/08 trade when crude lurched above its May contract settlement benchmark from 04/22/08.

We have a pretty good idea where the buyers are holding firm with the USO and Quarterly R2.

Jeff Bailey : 6/5/2008 10:08:59 PM

What an incredible day it was for the Eur/$ . Last night we witnessed a technical test of what any technician would have been monitoring.

Eur buyers stood their ground and the ECB's Trichet provides the commentary to bring in some strong buying for bulls and short-covering bears.

Jeff Bailey : 6/5/2008 10:01:06 PM

The Russell-2000 Index (RUT.X) 763.27 +2.63% ... comes juuuuust shy of its 12/31/07 close of 766.03.

On that day in history, the RUT.X ended with 9 stocks having traded a 52-week high, while 107 stocks had traded a 52-week low. 5-day NH/NL ratio had just reversed from an inflection high of 55.8% to measure 42.0%, while the 10-day NH/NL ratio was still in a column of X at 32.8% after an inflection low of 25.4%.

At tonights close, the RUT.X reports 76 new highs and 23 new lows. The 76 new highs (glass half full) is the most since 10/29/07. The 23 new lows are the fewest since 5/13/08. Tonight's 5-day NH/NL measure climbs to 53.6% after the 5/27/08 inflection low of 35.9%. The RUT.X's 10-day NH/NL ratio still in a column of O at 47.3%, but edges off a yet-to-be determined inflection low of 44.0%.

OI Technical Staff : 6/5/2008 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 : 6/5/2008 9:44:08 PM

Major Global Equity Benchmarks, Currencies, Oil and Gold at this Link

Bolstered by strength in the $/yen, Japan's Nikkei-225 looks to take top spot among the Asian as we near the end of the 2nd quarter.

US markets show some renewed stability and continues to mirror $ strength versus the yen.

Oil prices continue to offer headwinds, as does euro strength versus $, where all commodities are denominated in dollars.

Gold, often utilized as a hedge against inflation, eases in the 2nd quarter, and HUI.X, offers a surprise and actually looks to mirror the underlying commodity.

Jeff Bailey : 6/5/2008 8:52:34 PM

National Semiconductor (NSM) $22.66 +3.56% ... ticked $24.87 extended on headline numbers, bullish forecast.

Earnings press release Link

Jeff Bailey : 6/5/2008 8:48:49 PM

I think some of those late ticks in the USO this evening at $99.99 to $100.15 are agency crosses. Though QCharts has them marked as "Trade."

My Ameritrade Level II shows no bid/ask

Jeff Bailey : 6/5/2008 8:25:46 PM

Closing Internals at this Link

NYSE churns over 4 billion shares for 3rd-straight session.

Jeff Bailey : 6/5/2008 8:06:29 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 6/5/2008 8:03:12 PM

Scratch, scratch, scratch ... "Crude oil posts biggest dollar gain ever. Stocks surge!"

Jeff Bailey : 6/5/2008 4:11:12 PM

I must admit, and perhaps others as well, that at last night's close, and then late in the evening, crude oil and the eur/$ was at one of the "make or break" levels near-term.

The resolution comes to the upside today.

Account and RISK management dictated at the close to remove as much of the unknown RISK as possible.

Jeff Bailey : 6/5/2008 4:03:22 PM

Some may have gotten filled at $0.78 on the FXE-FA. Not sure all subscribers filled.

Jeff Bailey : 6/5/2008 4:01:34 PM

Dow Transports (TRAN) alert! ... 5,491.15 +1.91% ...

Jeff Bailey : 6/5/2008 4:00:16 PM

Swing trade NAKED call buy back alert! ... the two (2) Euro CurrencyShares FXE Jun $157 Calls (FXE-FA) at the offer of $0.90.

FXE $156.06 +1.02% ... while I've long believed their rates are too high, I'm not sure market participants agree.

FXE $156.06 +1.02% ...

VIX.X $18.68 -10.19% ...

Keene Little : 6/5/2008 3:56:19 PM

Looks like we'll get the last of the hold-out shorts throwing in the towel as we head into the close. What tomorrow may bring, after the economic reports, is anyone's guess. I definitely see some bullish possibilities for a run up to the Fib targets at SPX 1424/DOW 12795. The DOW may not makes its target or SPX will over-throw its target and head for 62% retracement of the October-January decline near 1460. That's the bullish potential. But if we get a nasty negative reaction tomorrow morning then all bullish bets are off.

Linda Piazza : 6/5/2008 3:55:16 PM

The OEX's 30-sma is now at 641.99. A punch up to test that tomorrow and a pullback from there could create that doji-type or small-bodied candle tomorrow, so keep that in mind as a possibility.

Linda Piazza : 6/5/2008 3:57:38 PM

Okay, for tomorrow, what do we expect? Big-range day today forecasts a possible small-range doji-type day tomorrow, but doesn't prove it will happen. I honestly think people have to be concerned about a downturn, too, just in the sense of managing how much risk they take home tonight.

Linda Piazza : 6/5/2008 3:49:57 PM

I'm still monitoring the TED spread today. My quote is delayed, but so far, there's not been a big change in the TED spread, a measure of the perceived credit default risks. As I've been saying the last couple of days, I've been concerned because the TED spread dipped close to a trendline that has served as support ever since last year's first credit whammy, when the TED spread jumped out of its typical 0.3-0.5 historical range. So, short-term today, it's perhaps a little reassuring that it didn't expand with the news we've had, but a bit out from the short-term, I'm not sure that the failure to even drop completely down to test that trendline before steadying this week is a great thing. This is just anecdotal and subjective. As I type, the delayed TED spread quote is 0.83 or 83 basis points.

I've been reading about "blowups" in credit default swaps, so that's why I've been watching so closely, but I don't have a method to determine whether credit default swaps are blowing up other than reading what someone else has written.

Jeff Bailey : 6/5/2008 3:44:30 PM

SPX 1,402.45 +1.83% ...

Linda Piazza : 6/5/2008 3:44:23 PM

Oh, I have my lists, too, Jeff. For example, I want to see exactly how the fund performed in the 2000-2003 period.

Jeff Bailey : 6/5/2008 3:42:31 PM

VIX.X Alert! 18.72 -10.00 ... testing WEEKLY Pivot.

Jeff Bailey : 6/5/2008 3:35:56 PM

I don't consider any mutual fund unless it has existed for 10-years, and same fund manager running the fund those 10-years. Must rank in the top 1/4 of peers.

Prefer "group" managers if possible (not many funds run with group).

MUST consider market cap and style. DISCIPLINE of STYLE very important to avoid "style drift" and deviating from discipline.

Keene Little : 6/5/2008 3:32:30 PM

Does it seem odd to anyone other than me that we'd get a strong rally in front of some potentially important economic reports tomorrow morning? I had mentioned yesterday or the day before, showing the contraction in moving averages and the Bollinger Band, that this market is getting ready for a big move. I've been saying it's looking like distribution to me in the price pattern. I believe the big move will be to the downside but I must admit a day like today has me challenging my thinking.

Linda Piazza : 6/5/2008 3:31:13 PM

Jeff, I've been spending the last few months studying all kinds of funds, deciding which fund managers I trust and which I don't and deciding when and where I want to start reinvesting some money. I'm reading a lot of reports from fund managers who are expressing concerns about the market environment. I've been making money all along--not a losing month in 10 opex cycles--so I'm not worried about the money that I don't have invested, but I also know that I'll be putting money to work again sometime. Just not today.

Jeff Bailey : 6/5/2008 3:29:56 PM

iShares Russell 2000 (IWM) alert! $75.90 +2.19% ... trades its 12/31/07 close.

Jeff Bailey : 6/5/2008 3:25:28 PM

Linda may not be alone .... MANY fund managers have not been able to buy this market for months. With quarterly reports due out in less than three weeks, they may have to now.

Linda Piazza : 6/5/2008 3:21:40 PM

I'm just not buying this. Sorry. Again, I know. I'm the one who thought we'd get a steadying or a bounce today. That doesn't mean that I believe it's a sign of strength. Quite the opposite. Absolutely don't try betting against it right now--I know, I was tempted into my once-in-a-blue-moon attempts at daytrading today, and thank goodness I put in stops immediately--but that doesn't mean that you shouldn't carefully assess how much risk you want to take home tonight.

Linda Piazza : 6/5/2008 3:16:20 PM

The OEX has now nailed, within a few cents, the upside target from its double-bottom formation. That was at about 638.41. It's also hit a resistance trendline again (same one hit earlier today) and potential resistance on 30-minute closes at 638.35. It sounds a little useless to warn bulls to protect profits, but I'm going to do it once again. Keep those profits protected.

Keene Little : 6/5/2008 3:13:35 PM

SPX (and ES) rung the bell and closed the gap so now what? It looks like a pretty strong spike up so there's obviously some money being put to work. Either that or manipulation to cover for the bond insurer downgrades. But I won't go there.

Jeff Bailey : 6/5/2008 3:11:43 PM

Not seeing it ... just not seeing it.

Jeff Bailey : 6/5/2008 3:11:31 PM

Swing trade puts exit alert! for the two MBI-TA at the bid of $0.90

MBI $6.05 +7.46% ...

Linda Piazza : 6/5/2008 3:05:47 PM

The funny thing is that the OEX's pattern on its 10-minute chart from 9:10 am ET to right now looks so like the USDJPY's from the 4:00 am ET to 10:40 am ET period. There was a breakout above a 10-minute Keltner resistance line, a formation of what looked like a left shoulder and head of a H&S formation forming along that line and then a sharp drop through the Keltner line without ever forming the right shoulder. Then, there was a strong bounce right back up to that previous Keltner line along which the USDJPY and now OEX was forming a possible H&S. It's like all those "translate this graph" exercises we used to have to do in high school math classes. The USDJPY's action has been translated in time and the OEX is following it. Will it continue to do so? The USDJPY found resistance at that retested Keltner line (the 636.45-636.85 level for the OEX on 10-minute closes) and then dropped through, creating a new low before consolidating again. This is not proof that the same thing will happen with the OEX, just an exercise in showing what could happen.

Jeff Bailey : 6/5/2008 3:03:28 PM

Sector Losers ... Home Construction -2.50%, DXY and Treasuries.

Jeff Bailey : 6/5/2008 3:02:29 PM

Sector Winners ... Airlines +5.66%, Oil Service +4.18%, Broker/Dealer +3.96%, CBOE Oil +3.53% and the list remains long.

Keene Little : 6/5/2008 3:02:07 PM

Maybe SPX is going to head back up and tag home base (gap closure at 1398.97 which it missed by 33 cents on that second attempt before taking a spill).

Linda Piazza : 6/5/2008 2:59:37 PM

The OEX has now shoved next potential resistance on 15-minute closes up to about 636.05. The OEX is at 635.90 as I type.

Keene Little : 6/5/2008 2:59:32 PM

Getting a strong bounce right back up so now I can't figure out if that sudden selloff was a head fake or if the bounce is just a stop run before heading lower again. It's getting a little whippy.

Jeff Bailey : 6/5/2008 2:59:20 PM

ABK $2.45 -1.60% ... session low has been $2.27

Jeff Bailey : 6/5/2008 2:58:48 PM

MBI $5.74 +1.95% ...

James Brown : 6/5/2008 2:57:53 PM

It took them long enough! There has been speculation that they would downgrade ABK and MBI for months!

Jeff Bailey : 6/5/2008 2:57:03 PM

S&P downgrades Ambac, MBIA ... Fortune brief Link

Jeff Bailey : 6/5/2008 2:54:42 PM

S&P Cuts AAA Ratings of MBIA, Ambac Bond-Insurer units.

Linda Piazza : 6/5/2008 2:54:47 PM

The OEX's 15-minute 9-ema is now at 635.15, right where the OEX is as I type. It's possible and maybe even likely now that this or the resistance now at 635.89 will hold as resistance on 15-minute closes. Therefore, if you'd intended to exit your bullish trade and didn't get a chance before the rollover, you might consider whether you want to now. You risk getting out just before another zoom higher, but if you don't, your risk is not getting out before another zoom back to test 632.50-634. We don't know which will happen next.

Jeff Bailey : 6/5/2008 2:54:04 PM

S&P puts 5 Wachovia Bank Commercial Mtg Tr 2005-C17 ratings on WatchNegative.

Linda Piazza : 6/5/2008 2:43:41 PM

Some things I've been mentioning on the OEX's 30-minute chart: Link Barring a strong whoosh lower (fear of the non-farm payrolls, financial news?), this support looks strong enough to bounce the OEX around a while, but now the 637.60-638.50 level has been strengthened as resistance, too.

Jeff Bailey : 6/5/2008 2:40:22 PM

LEH $33.00 +5.19% ...

Jeff Bailey : 6/5/2008 2:40:01 PM

Seeing headline that Fitch affirms 40 and cuts 31 classes from 18 lehman subprime transactions.

Jeff Bailey : 6/5/2008 2:39:03 PM

Radian Group (RDN) $5.27 -0.75% ...

Jeff Bailey : 6/5/2008 2:38:35 PM

Ambac (ABK) $2.36 -5.22% ... might be the one.

Jeff Bailey : 6/5/2008 2:38:08 PM

MBIA Inc. (MBI) $5.72 +1.59% ... ... did slip to $5.22 last 10 minutes

Jeff Bailey : 6/5/2008 2:37:14 PM

Didn't catch the CNBC news ... something about S&P downgrading some mortgage debt.

Keene Little : 6/5/2008 2:32:58 PM

A bullish setup for NDX is where it will retest its broken downtrend line from May 19th through the May 30th high, currently near 2036. If that holds and rallies back up to a new high above today's that would be a bullish move.

Jeff Bailey : 6/5/2008 2:31:07 PM

02:00 Internals found at this Link

Linda Piazza : 6/5/2008 2:29:04 PM

The OEX has dropped, rather quickly, as I was afraid it could do, down to test significant potential support. At least, bulls hope it will significant potential support. That extends down to 632.50 on 15- and 30-minute closes. For now, I would anticipate that we'll get some kind of bounce attempt soon, perhaps after a dip toward 632.50-633, but I would now be very watchful of what happens near the turning lower 30-minute 9-ema, now at 634.41 or the 15-minute version, now at 635.39.

Keene Little : 6/5/2008 2:27:56 PM

DOW just overlapped yesterday's high but only marginally and is now trying to bounce. Play the direction of a break of today's high or yesterday's high.

Linda Piazza : 6/5/2008 2:27:02 PM

The USDJPY is now 105.55, well down from its 106.40 pre-market high.

Jeff Bailey : 6/5/2008 2:25:57 PM

US Oil Fund (USO) $103.20 +4.26% ... set to fully backfill its 06/02 to 06/03 gap.

Linda Piazza : 6/5/2008 2:24:24 PM

The USDJPY's weekly 30-sma is now at 106.20. I would think we'd need to see a weekly close above that before we began thinking that the USDJPY has broken above that descending trendline off its 6/18/07 high, in place since then. Right now, I'd be careful with my equity longs, watching how the USDJPY behaved over the next few days.

Keene Little : 6/5/2008 2:24:00 PM

SPX has now dropped below 1394 and the DOW has dropped below its equivalent level of 12542 (the little bump high at 12:00 PM) and thus has signaled the end of the leg up from the mid-morning low. That means the high of the day should be in. The bearish case here is that today's rally finished the 3-wave bounce from Tuesday's low and as such shorting the next bounce, against this afternoon's high, is a recommended play.

We will not have confirmation that the market is likely headed lower until prices drop below yesterday's highs (SPX 1388, DOW 12496). Until those levels are violated there is still a good possibility that the current pullback will simply lead to another push to new highs (towards the SPX 1424, DOW 12795 targets).

Linda Piazza : 6/5/2008 2:22:10 PM

There is something else that's critical to watch overnight, however: Link

Jeff Bailey : 6/5/2008 2:19:50 PM

DIS $34.40 +0.14% ...

Linda Piazza : 6/5/2008 2:18:16 PM

We know to watch for the non-farm payrolls here tomorrow. What about elsewhere? I don't see anything particularly market-moving in the overnight markets tonight, other than perhaps tomorrow morning's German Industrial Production number. That's at 6:00 am ET. Canada also has an employment number tomorrow, just ahead of ours, with Canada's at 7:00 am ET. That number will certainly impact Canadian markets and maybe our futures will react in concert ahead of our own numbers, although that's just speculation. The U.S.'s number is at 8:30, with Fed Governor Randall Kroszner then speaking at 8:45 am ET in Boston. He will be taking questions, and his speech will address financial market and credit conditions. I would ordinarily say this has the ability to move markets, except we've heard from Fed Governor Kroszner at least twice in the last two weeks and maybe three times, so unless something changes or something is said in the Q&A session, I wouldn't think his speech would trump whatever the markets were doing as a result of the non-farm payrolls number that will just have been released.

Jeff Bailey : 6/5/2008 2:13:15 PM

Swing trade long exit alert! ... the 1/4 position in shares of Six Flags (SIX) at the bid of $2.13. This is the one from 5/14/08.

Linda Piazza : 6/5/2008 2:12:03 PM

As we move into the last two hours of trading, remain aware of tomorrow's non-farm payrolls number, a number with the definitive ability to move markets. Some will soon begin positioning their portfolios according to how much risk they want to take home ahead of that number, and you should be examining that question, too.

Linda Piazza : 6/5/2008 2:09:09 PM

OEX charts suggest the possibility that the OEX could dip to 634.70-634.75 although they don't give that as a probability. We've seen some other "should dip to" levels never touched today.

Linda Piazza : 6/5/2008 2:07:23 PM

I'm going to roll up to the 30-minute chart to pinpoint the shouldn't-be-broken support level since it's the 30-minute chart that gave us the upside target that was so closely approached. The 10-minute one has shown us a minor change in tenor so now we need to take a bit longer of a look. The 30-minute 9-ema is now 634.75, and so bulls don't watn to see 30-minute closes beneath that as that's a bit more significant of a change in tenor. It will, however, require 30-minute closes beneath 633.17 or maybe even 632.36 before we can say more than that, because those are support levels that could bounce the OEX again.

Linda Piazza : 6/5/2008 2:00:43 PM

The OEX is trading along its 10-minute 9-ema, but, until now, not violating it on 10-minute closes. This average is now at about 636.12, however, and there's a chance this could constitute the first 10-minute close of the day when it does violate it. There's further support at 635.53, however, and the OEX would need to violate that on 10-minute closes to confirm even that slight change in tenor. Bulls should, however, remain protective of their profits.

Jeff Bailey : 6/5/2008 1:56:36 PM

The U.S. House gives final approval of a budget blueprint for 2009 that rewards domestic agencies and the Pentagon with increases, but leaves wrenching decisions about curbing Medicare costs and increasing taxes to the next president.

House approves the $3.1 trillion budget plan by a 214-210 vote. Plan goes to Congress.

Keene Little : 6/5/2008 1:50:25 PM

The RUT is the strongest index again today and its rally has brought it up near the trend line along the highs since April 18th, currently just above 761 or about 1.50 points higher. Therefore some caution is warranted for those long the RUT as well.

Keene Little : 6/5/2008 1:45:16 PM

The timing is good for a push to a new high and then reversal around the 2:00 PM window. Either that or the market could accelerate higher. With waning upside momentum for most of the day it's hard to see an acceleration higher but you never know. There's just enough money that keeps coming in to keep the bears at bay.

Keene Little : 6/5/2008 1:38:44 PM

If SPX drops below 1394 it will create overlap in the move up from the mid-morning low which would suggest the high is in. But until it drops below that level I see the potential for another push higher (to close the gap which it missed by 67 cents).

Linda Piazza : 6/5/2008 1:33:20 PM

The A/D line isn't retreating at all yet. The USDJPY has, however, maintained its pattern over the last few hours of finding resistance on 15-minute closes at its 15-minute 9-ema. That 9-ema is now at 105.97, with the USDJPY currently 105.88.

Jeff Bailey : 6/5/2008 1:31:56 PM

US Oil Fund (USO) $101.12 +2.16% ... set to test yesterday's EIA data release high.

Keene Little : 6/5/2008 1:31:47 PM

No gap closure yet for ES/SPX but there's still the possibility for another push to a new high to complete a 5th wave in the move up from the mid-morning low which should complete the 5th wave for the move up from yesterday afternoon. If we do get a new high it should be accompanied by a continuation of the bearish divergences on the 5 and 10-min charts. So if you're long and want to protect profits, now is the time to pull your stop up tight.

Linda Piazza : 6/5/2008 1:24:12 PM

The OEX is now moving sideways into a rising 10-minute 9-ema, and that's generally the most bullish way to burn off short-term overbought conditions. However, a test of that moving average may be imminent, with the moving average now at 636.18 and the OEX now at 636.68. Bulls want to see that hold as support on 10-minute closes and for the OEX to then bounce into a new high of the day to preserve the current tenor.

It was "imminent": as I typed, the OEX dropped to and a little through that moving average.

Linda Piazza : 6/5/2008 1:21:23 PM

Last night, Mitsubishi UFJ Financial Group pulled back. Lehman Brothers has cut its outlook on the Japanese banks to negative, and Moody's has said it may cut the credit ratings of the globe's bond insurers. In a Bloomberg article, a fund manager in Tokyo was quoted as saying "it's too early to be optimistic" about "the shock to global financial markets." Mitsubishi UFJ is Japan's largest bank if market value is the determinant. It retreated 2.9 percent last night and others fell by percentages such as 3.7 and 2.7 percent. For a while, it was postulated that Japan's bankers were a bit stuffier and were unlikely to have engaged heavily in the risky stuff that had hit some of our financials, but since the early days of the credit crunch that viewpoint has been revised somewhat.

Linda Piazza : 6/5/2008 1:11:23 PM

If the OEX can break above the potential resistance on 30-minute closes now at 637.33, the next upside target brings it into the 639.20 range, with resistance on the daily chart ranging up to about 643. I just wouldn't count on it yet, as I remain puzzled by some things I'm seeing.

Remember that I said this morning that the upside target set by the confirmed double-bottom formation was 638.41 (10:16:57 post)? I certainly didn't have much confidence in that upside target, but I sure wished I'd plunged in and traded the OEX to the upside this morning. I wouldn't have done that, however, as the setup was never a particularly stellar one. Too bad, because the double-bottom formation trumped anything otherwise shown. However, I continue to warn that we're seeing a gain within a descending channel on the daily charts with an eventual potential downside target in the 613-616 range, so keep raising those stops.

Linda Piazza : 6/5/2008 1:05:42 PM

The OEX's 10-minute 9-ema is now 635.85; the SPX's, 1395.53. Equity bulls want these indices to keep skipping higher along these often-tested-today moving averages, maintaining the short-term extremely bullish tenor. Ten-minute closes beneath them would be a sign of a short-term change in tenor only, but one that should then be watched for other signs since both the OEX and SPX have now closely approached their next potential resistance on their 30-minute charts as well as their daily ones. So far, so good, but don't get complacent.

Jeff Bailey : 6/5/2008 1:02:47 PM

Representative Stupak: Chairman of the U.S. House energy oversight committee saying oil markets were being manipulated by the biggest trading houses in the the futures markets, naming Goldman Sachs (GS) $176.30 +2.44% and Morgan Stanley (MS) $44.13 +1.77% as two of the trading houses.

Mr. Stupak said initial results of his committee's investigation into skyrocketing oil and product prices has found loopholes in current laws that allow the biggest traders in the futures market to "game the system."

While Mr. Stupak did say that there is no evidence at this point as to any illegal manipulation, current laws allow excessive speculation that may be creating artificial prices in the energy futures markets.

Linda Piazza : 6/5/2008 1:02:13 PM

No bounce in the VIX yet. That's bullish for equities. Countering that is the fact that the USDJPY is now below its 15-minute 9-ema, testing its earlier low of the day, and that's short-term bearish for equities. Which are you going to trust?

Keene Little : 6/5/2008 12:53:16 PM

ES could be going for gap closure from Monday's gap down. Closure would be at 1400.50 and the high so far is 1398.75. SPX gap closure would be at 1398.97, a little more than a point above today's high so far. The same gap closure for YM is at 12619 (high of 12584 so far) and DOW 12621.96 (high of 12572 so far).

Linda Piazza : 6/5/2008 12:52:01 PM

The OEX's 15-minute 9-ema is now at 634.94; the SPX's, 1393.66. Neither has closely tested these averages today, so I want to give you the 10-minute versions, which have several times been closely tested. Those are at 635.40 for the OEX and 1394.01 for the SPX, with further support at 634.71 and 1393.97, respectively, on 10-minute closes. Sustained 10-minute closes beneath those averages would be a first sign of a short-term change in tenor for these averages.

Linda Piazza : 6/5/2008 12:40:56 PM

The volatility indices--VIX, VXO and RVX (RUT's)-- all confirmed the new highs in those indices by dropping to new lows.

Keene Little : 6/5/2008 12:40:27 PM

The DOW has now tagged the downtrend line from October. But the last time it bounced up to it at the end of May it rallied about 100 points above it before dropping back down. Daily chart: Link

Linda Piazza : 6/5/2008 12:39:08 PM

The TRAN is now finally rising to test the resistance analogous to the OEX's 634.50-635-ish area and the SPX's 1393-1394-ish zone. The TRAN is playing the part of a follower today and not a leader, and that's another thing that's been puzzling me today. The MID has kind of taken over from the TRAN as the momentum indicator for the SPX and OEX, and it's now hit its upside target, so we see what happens next with it. The MID is at 889.97 as I type. OEX and SPX bulls want to see it continue to climb or at least not pull back much.

Keene Little : 6/5/2008 12:42:56 PM

I had mentioned earlier this morning that two equal legs up for the bounce off Tuesday's low was at SPX 1389.80 and DOW 12493. Since those have obviously been exceeded the next upside projection is where the 2nd leg of the bounce achieves 162% of the 1st leg up (in case this is still just the completion of a 3-wave bounce off Tuesday's low rather than the start of a larger rally leg up to SPX 1424/DOW 12795). Those projections are at SPX 1401 and DOW 12587.

Linda Piazza : 6/5/2008 12:35:48 PM

The USDJPY is not jumping as equity prices do. It is so far maintaining support on its 15-minute 45-ema.

Jeff Bailey : 6/5/2008 12:32:19 PM

12:00 Internals found at this Link

Linda Piazza : 6/5/2008 12:30:57 PM

Potential target and potentially strong resistance on 30-minute closes for the SPX is now 1399.30. Keep cinching up those stops.

Linda Piazza : 6/5/2008 12:29:42 PM

No new A/D line high of the day yet, although it is challenging its previous high of the day.

Linda Piazza : 6/5/2008 12:28:54 PM

Next OEX potential upside target is 637.56, tentative resistance on 30-minute closes. This whole day is confounding me, as I thought a rise was possible, but the whole day, it's been accomplished after weak-looking candles that have not engendered much confidence in the upside targets.

Keene Little : 6/5/2008 12:27:43 PM

New highs has me out of my short and watching now. I'm just not sure how much higher this is going to go before a larger pullback.

Linda Piazza : 6/5/2008 12:26:53 PM

The USDJPY is back to test its 15-minute 45-ema as support. Although it gained overnight, it's action since just before the U.S. open has not been one of strength as it tests significant resistance on its daily chart. Short-term equity bulls don't want to see it lose that potential support on 15-minute closes now at 105.90 and especially that at 105.85, as that suggests a possible trip down toward 105.58. That hasn't happened yet, however, with the USDJPY now at 105.94, tentatively holding onto that support.

Jeff Bailey : 6/5/2008 12:23:25 PM

Cisco Systems (CSCO) $27.54 +2.91% ... gets a trade at its 200-day SMA.

Keene Little : 6/5/2008 12:16:24 PM

Short term bearish divergences on the charts suggests waning upside momentum so I don't trust the upside but it doesn't mean a short will work here either.

Keene Little : 6/5/2008 12:13:37 PM

SPX 1395 hasn't been tagged yet so my short is still alive but barely. We did get the one more poke higher and it could now roll over. At this point though another push higher would look more bullish than I care to short.

Jane Fox : 6/5/2008 12:12:51 PM

SPX is telling us loud and clear that 1370 is a support zone however it needs to break the swing high at 1400 before the bulls can breath again. Link

Linda Piazza : 6/5/2008 12:10:30 PM

New high of the day for the OEX and SPX. We have potential upside targets of 637.50 for the OEX and 1399.08 for the SPX, but I remain a bit skeptical and continue to urge bulls to keep cinching up their stops. I know, I know: I said we could see consolidation or a gain today, so perhaps my skepticism seems misplaced, but I thought that gain would come in the context of continued vulnerability to a downturn and I'm still seeing some chart developments that make me maintain that skepticism that this is just a rise within a declining price channel, with lower targets on the daily chart still preserved, so I'm antsy about it all.

Jeff Bailey : 6/5/2008 12:07:24 PM

SPX "prarie dogs" its WKLY Pivot.

Linda Piazza : 6/5/2008 12:06:30 PM

The OEX closed that last 15-minute period above its potential resistance now at 634.51. The SPX did not close that last 15-minute period above analogous resistance now at 1393. The SPX is testing it again as I type. The TRAN has not again tested that resistance since the 10:15 candle today, with that at 5454.80 for the TRAN and instead it did dip to the 15-minute 9-ema (as I had thought the OEX might do, too) and it's now attempting to steady there. The fact that it did drop to its 15-minute 9-ema presents the possibility that it was leading other indices there, too, but if it rises strongly, it's more likely to provide support for gains. So, equity bulls who want to see the OEX and SPX keep charging higher want it to gain from its current 5438.57 level.

Jeff Bailey : 6/5/2008 12:05:25 PM

Dow Jones Home Construction (DJUSHB) 315.01 -1.15% ...

Jeff Bailey : 6/5/2008 12:04:33 PM

SPX.X 1,393.55 +1.18% ...

Jeff Bailey : 6/5/2008 12:04:14 PM

US Household Net Worth Down 2.9% To $55.97 Tln In Q1.

Jeff Bailey : 6/5/2008 11:59:29 AM

For the record ... I (Jeff Bailey) don't see anything wrong with speculation. Every market participant should be allowed to speculate and benefit/suffer the consequences of said speculation.

Keene Little : 6/5/2008 11:58:58 AM

At this point I'm thinking we could see one more push up to a minor new daily high and then roll right back over. If stopped out and it rolls right back over I'll jump back in short with a very tight stop at a new daily high again. It would be my 3rd and final attempt at shorting today's rally.

Jeff Bailey : 6/5/2008 11:57:31 AM

US Oil Fund (USO) $99.92 +0.94% ...

Linda Piazza : 6/5/2008 11:56:45 AM

The SPX has potential resistance on 15-minute closes at 1392.99.

Jeff Bailey : 6/5/2008 11:56:03 AM

US Reprasentative Stupak unveils law to cut speculation that may be creating artificial prices. Currently, speculation is allowed by law.

Linda Piazza : 6/5/2008 11:54:34 AM

Bears are warned that upside momentum has not yet been undone as the OEX again pops above the potential resistance on 15-minute closes now at 634.38 instead of dropping toward the 15-minute 9-ema. It's testing the 635.14 previous high of the day as I type, having just reached 635.13.

Jeff Bailey : 6/5/2008 11:47:54 AM

XBD.X 167.79 +2.73% ...

BKX.X 73.30 +1.13% ...

XLF $24.46 +1.24% ...

Jeff Bailey : 6/5/2008 11:47:03 AM

Fed's Kohn making comments ... Thinks investment banks "in better shape than March"

Linda Piazza : 6/5/2008 11:45:04 AM

The VIX is back to test that trendline (from a rising channel in place since 6/2) support and potential Keltner suppor at 19.73 and then at 19.44 on 15-minute closes. The VIX is currently 19.80.

Linda Piazza : 6/5/2008 11:43:49 AM

The OEX is back to test potential resistance on 15-minute closes at 634.35. The OEX is at 634.15 as I type. The 15-minute 9-ema is now 632.33, rising near the potential support on 30-minute closes.

Jeff Bailey : 6/5/2008 11:35:45 AM

Euro strength vs. dollar looks to be coming from remarks made by ECB Bank President Jean-Claude Trichet.

The ECB "is in a state of heightened alert," he told a news conference after the ECB left its key interest rate unchanged at 4.00% for the 12th consecutive month.

"A number of us thought there was the case for raising rates," he said, and added that the council didn't exclude the chance of a rate hike at its July 3 meeting.

Linda Piazza : 6/5/2008 11:31:23 AM

The A/D line is still in breakout mode on the 15-minute chart. Equity bears want to see it sustaining values below 1300 and preferably below 1150, while bulls want 1300 preserved as support on 15-minute closes. It's 1442 as I type, not really pulling back very much yet.

Keene Little : 6/5/2008 11:30:56 AM

Updating the DOW 60-min chart from the one posted last night, I'm showing the same two possibilities as I showed a little earlier on the SPX 60-min chart. Right now this morning's rally could be the completion of an a-b-c bounce off Tuesday's low, and is the reason I tried a short. Link

If it turns around and rallies higher the next potential resistance will be the downtrend line from October, currently near 12565. Any higher than that and it would likely mean it's going to rally up to a Fib projection at 12795, which coincides with the 50% retracement of the May 19-27 decline.

So far the pullback from this morning's high, especially for NDX, hardly looks bearish so I still have no idea if my short will work. Stop is a couple of ticks to a new high now and I'll just let price tell me what it's going to do.

Jeff Bailey : 6/5/2008 11:30:03 AM

US thrift director telling lawmakers that the number of "problem thrifts" stood at 17 at the beginning of June, up from 12 at the end of the first quarter.

Despite the increase, John Reich said the industry is nowhere near the dire straits that existed during the S&L crisis two decades ago. In 1992, Mr. Reich noted there were more than 200 thrifts considered to be "problem thrifts."

Linda Piazza : 6/5/2008 11:29:49 AM

I don't know what's wrong with my fingers lately, but every since I started working on the fourth-finger exercises on violin (I'm taking lessons for the first time ever), I can't type the word "closes" without typing "clsoes" instead!

Linda Piazza : 6/5/2008 11:28:28 AM

The SPX's 15-minute 9-ema is now 1388.29. There's potential support on 30-minute closes at 1387.71, so watch carefully in that 1387.71-1388.29 level for potential support on 15- and 30-minute closes. Sustained 15-minute closes beneath 1386 would question the whole breakout this morning, but for now, watch for that potential support, as it could possibly kick the SPX back up to test resistance. We just don't know yet.

Jeff Bailey : 6/5/2008 11:22:11 AM

Beetle's Balanced Benchmark ... Top is Q2 Asset Class performance.

Lower is YTD Asset Class performance.

Also education on why rebalancing of portfolios important.

Asset Class Comparison Link

Market technicians will ask "why are market participants doing what they're doing?"

Linda Piazza : 6/5/2008 11:19:11 AM

The USDJPY turned down from the Keltner resistance now at 106.16 on 15-minute closes, the benchmark breakout level that I've been mentioning. As I type, it's 106.01, still above the 45-ema that's been providing support on 15-minute closes. That's now at 105.89, and equity bulls don't want to see that broken on 15-minute closes.

Linda Piazza : 6/5/2008 11:16:23 AM

VIX bouncing from that trendline, the OEX indeed dropping although not yet to its 15-minute 9-ema, and the TRIN continuing its trendline of rising from the day's low: nothing is set in stone, but be aware that the OEX could indeed test that 9-ema now at 632.14. The OEX also has potential support on 30-minute closes at 633.04, however, so watch for the possibility that its retreat could hang up there or, even if it punches down toward that 632.14 level, it could bounce right back above 633 before the end of the 30-minute period. If you're leaning toward the bearish side, you first need 30-minute closes beneath 633.04 to even begin to believe that the charts could begin to be leaning your side and then you need 15-minute closes beneath about 631.76. That could all happen, but it's not a given yet. While I believed and stated my belief a few minutes ago that the OEX's behavior didn't look strong over the last 45 minutes and while I've been pretty vocal for days about my concern that the 633-635-ish zone could be strong resistance and could present rollover potential, we haven't seen anything other than a stalling yet. Bulls need to keep their profit-protecting plans updated, but bears who are trying to water need to keep on their toes, too.

Jeff Bailey : 6/5/2008 11:13:33 AM

17-days until end of Q2.

Jeff Bailey : 6/5/2008 11:12:15 AM

iShares Russell 2000 (IWM) $75.30 +1.34% ... shuffled to #3 most active.

Jeff Bailey : 6/5/2008 11:09:35 AM

Sector Losers ... Treasuries on PRICE and Gold Bugs -0.08%

Jeff Bailey : 6/5/2008 11:09:03 AM

Sector Winners ... Airlines +6.59%, Broker/Dealer +2.95%, Disk Drives +2.32%, Biotechnology +2.29%, Retail +1.96%, NASDAQ Telecom +1.59%

Linda Piazza : 6/5/2008 11:07:33 AM

The OEX finsihed the last 15-minute period above the 15-minute potential resistance now at 634.25, setting a tentative upside target now of 636.75, but I gotta tell you, these candles aren't looking too healthy and I'm not trusting that so-called breakout and next target (derived from the rolled-up 30-minute chart): Link Therefore, while I feel duty-bound to mention the next upside target and the OEX could of course move toward it, I'm also duty-bound to warn you that the OEX could indeed instead begin a pullback toward 632.28 or so.

Linda Piazza : 6/5/2008 11:03:24 AM

The Federal Reserve has released its weekly figures on outstanding corporate paper, a measure of how tight credit is for corporations. For the week, outstanding paper rose a modest $1.3 billion, reversing last week's modest $1.1 drop, with both numbers seasonally adjusted. On an unadjusted basis, however, outstanding paper dropped $4.2 billion, adding to last week's whopping $36.7 billion drop. Asset-backed paper dropped $1.1 billion. Financials gained, but I wonder what will be shown next week, with the MBIA and other news?

Jeff Bailey : 6/5/2008 11:02:12 AM

Euro CurrencyShares (FXE) $155.45 +0.62% ... strong versus dollar (see last night's MM)
Yen CurrencyShares (FXY) $93.97 -0.93% ... weak versus dollar. (see yesterday's MM and EWJ, implications for U.S. equities)
Pound CurrencyShares (FXB) $195.64 +0.01% ... flat versus dollar. Follower of "strength" in euro. Leader of "weakness" for euro.

Keene Little : 6/5/2008 11:00:42 AM

My short is still alive but it appears to be on life support at the moment. It may only have a few more minutes to live if the market bounces back up again.

As for gold, here's the chart from last night's newsletter, updated for this morning's price: Link . The uptrend line from August broke this morning and unless it's reversed back above 87 it looks like the bearish scenario will play out (move down to 79-80).

Linda Piazza : 6/5/2008 10:58:40 AM

This VIX Keltner chart is a bit messy, but I wanted you to see both Keltner levels and possible trendline support. Although there's potential for the VIX to drop toward next support at about 19.40 on 15-minute closes, market participants should be aware that both Keltner and trendline support are converging. As should be obvious, the VIX doesn't always adhere exactly to these Keltner lines, but they are at least a guideline for when a short-term move (down in this case, a positive for equities) might be nearing an end and when particular attention needs to be paid: Link

Jeff Bailey : 6/5/2008 10:56:58 AM

Today's Global Economic Calendar Link (updated with overnight reports).

Linda Piazza : 6/5/2008 10:54:55 AM

TRIN is currently 0.70, a bullish number, but it's bouncing off its 0.56 low of the day, so watch the "trend of the TRIN," as Jane used to say, as well as its actual number.

Linda Piazza : 6/5/2008 10:51:47 AM

The USDJPY is approaching potential resistance now at about 106.15 on 15-minute closes. This is the breakout benchmark on this chart. During the overnight hours, the USDJPY had created a breakout status but then had begun falling sharply and erased its breakout status. This will be the first retest today. The USDJPY is 106.11 as I type. Standard Keltner analysis would suggest that it might have some difficulty with strong gains although it might keep battering at the resistance enough to nudge it a bit higher. However, we should test what the USDJPY actually does in comparison with that standard lore. A new sustained breakout shows us that something more is afoot, but remember that long-term resistance on the daily chart.

Jeff Bailey : 6/5/2008 10:46:44 AM

NVIDIA, Inc. (NVDA) $24.97 +3.01% ... Goldman Sachs raised its rating on the stock to "buy" from "neutral" on thoughts the graphics chipmaker will remain the performance leader in desktop graphics processing units for the foreseeable future. Firm raises target to $30.00 from $23.00.

Keene Little : 6/5/2008 10:46:35 AM

Stepping away for a few minutes. Stop is set and the short trade will either work well or I'll get stopped out.

Linda Piazza : 6/5/2008 10:45:20 AM

The A/D line still holds near its high of the day, but the candles are now small-bodied ones with small upper shadows. This is usually, but of course not always indicative of a need to rest. Bulls hope to see the A/D line rest by moving sideways for a while, letting the sharply rising 9-ema, now at 905) rise closer beneath the other potential support now at 1278. Bulls want to see that support at 1278 hold on any pullbacks, if there's a pullback instead of sideways moves, as there may well be.

If this is going to be one of those strong mo-mo days, nothing about this setup will matter, just as this morning's early resistance didn't matter, but I've been saying all this week that you needed to have profit-protecting plans in place if the OEX were to reach toward 633-635 and I still believe this is a zone when you need to be very careful about protecting profits, just in case.

Keene Little : 6/5/2008 10:41:48 AM

I should note that the 3-wave bounce off Tuesday's low has met the requirements for a 2nd wave correction (dark red wave (ii) on the 60-min chart) in both time and price. This morning's bounce hit the 62% retracement of the decline from May 29th in just under 62% of the time for the decline. With price and time having been met I believe this is a setup for the short side so I'm trying it again here, stop at 1395.

Jeff Bailey : 6/5/2008 10:40:48 AM

DUG $29.37 -2.97% ...

Jeff Bailey : 6/5/2008 10:39:47 AM

UNG $58.78 +0.05% ...

Jeff Bailey : 6/5/2008 10:39:27 AM

EIA: Weekly Nat. Gas Storage Table Link ... Build of 105 Bcf

Keene Little : 6/5/2008 10:38:23 AM

The two possibilities as I see them from here are for a continuation of the rally up to a Fib projection near SPX 1424 or a rollover from near current levels to new lows. For the short term bullish case (lasting a few days), shown in pink on the 60-min chart, a larger 3-wave bounce would then be followed by a renewed decline to new lows. The more immediately bearish case (dark red) calls the move up from Tuesday's low just a 3-wave correction of the decline from the May 29th high. It's a tricky spot here and both sides need to be careful. Link

Jeff Bailey : 6/5/2008 10:38:20 AM

IMF making comments today. Some of the headlines ...

"Still challenges ahead" for financial markets.
ECB's steady monetary policy appropriate
Dollar value still somewhat on strong side
Euro has borne brunt of dollar adjustment
China yuan remains substantially undervalued

Jeff Bailey : 6/5/2008 10:34:42 AM

Most Actives ... SPY $139.50 +1.09%, QQQQ $50.32 +1.12%, NTAP $23.97 +1.61%, CSCO $27.38 +2.31%, INTC $23.83 +1.49%, AMR $7.96 +7.85%, NVDA $24.98 +3.05%, CIEN $29.23 -4.10%, ADCT $16.63 +6.32%, XLF +24.47 +1.28%

Jeff Bailey : 6/5/2008 10:30:14 AM

10:00 Internals found at this Link

Linda Piazza : 6/5/2008 10:26:15 AM

If you're in bullish positions today, your choices are easy ones. Decide how to move your stops up to protect profits. If you've doubled what you paid to buy your calls, then you could consider selling half and letting the others run, so you'd be sure to break even, even if the OEX were to suddenly keel over. If you've met your original profit goal, I'd certainly take off at least part of the position in that instance, too, and keep a tight rein on the rest. The OEX could charge higher all day or . . . you could discover that you'd been caught in a trap that quickly reverses.

Linda Piazza : 6/5/2008 10:23:22 AM

The A/D line is still in breakout territory on the 15-minute chart, still zooming higher. While in real mo-mo times it can stay above that breakout level all day, it's usually a sign to be particularly careful when it reaches above that level with RSI also above 70. Also as a note, the value/RSI couplings are producing bearish divergences with each test of A/D line highs over the last three days. Such divergences are obviously not signs that equity prices are going to just keel over immediately (although they pretty much did yesterday), but they are signs to pay attention.

Keene Little : 6/5/2008 10:20:16 AM

Nope, resistance didn't hold and the downtrend line for the DOW is also breaking. The bulls want to see that line hold as support on any pullback. We're still in head-fake breakout territory so be a little careful here if long.

Tab Gilles : 6/5/2008 10:17:17 AM

Cisco Systems (CSCO) $27.35 +$0.59 (+2.10%)

Cisco has broken the $27 resistance level and testing its 200-ma. PnF chart has a Bullish P/O of $38. Link Link Link

Linda Piazza : 6/5/2008 10:16:57 AM

I have to give the most bullish case its due, too, when considering the OEX's behavior. Some will consider yesterday's low an equal-low test when compared to Tuesday's low and the punch this morning above the 631.42 high from yesterday will have confirmed a double-low formation. Technical analysts would then be setting a potential upside target near 638.41 (6.99 difference from yesterday's low to yesterday's high added to yesterday's high), and that's the reason for these quick gains and the runup toward next Keltner resistance and Tuesday's high. However, although my take on today was always that we would likely have steadying or a bounce attempt, I'm keeping that backdrop in mind and not counting on all upside targets being met, particularly with USDJPY not performing particularly strongly this morning. So, enjoy the ride up if you're in bullish trades, but do keep updating your profit-protecting plans and be sure not to let any profits turn to losses.

Keene Little : 6/5/2008 10:14:51 AM

Two equal legs up from Tuesday for the DOW is at 12493 so here's the pitch. Short it here with a relatively tight stop to see if it works.

Linda Piazza : 6/5/2008 10:11:05 AM

The OEX has now set a potential upside target of 634.02, and that's potential rseistance, too, on 15-mintue closes. The 30-minute chart suggests that 633.09 might be significant resistance on 30-minute closes. Keep updating your profit-protecting plan if in bullish trades, keeping the background vulnerability in mind.

Keene Little : 6/5/2008 10:01:52 AM

That 1389.80 upside target for SPX also matches the downtrend line from May 19th if drawn through the afternoon high on May 30th instead of the previous high on May 29th. A small pullback followed by another push higher up to that level would finish a 5-wave move (for wave c) up from yesterday afternoon and that would make for the next shorting opportunity. If it breaks above 1390 and holds above then the price pattern turns more bullish and it will be time to at least short term trade the long side.

Linda Piazza : 6/5/2008 9:59:15 AM

The VIX is currently 20.05, testing its daily 45-ema now at about 20.10 and its daily 9-ema now at about 19.47. This could be a support zone on daily closes for the VIX, so keep it on your radar screen.

Keene Little : 6/5/2008 9:57:37 AM

NDX is close to challenging its May 30 high near 2041 and is looking bullish. The techs and small caps are leading the way higher again. The sharp spike up this morning is either short covering that will flame out soon or the start of another larger rally leg. For SPX, two equal legs up from Tuesday's low (for an a-b-c bounce off that low) is at 1389.80 so watch for resistance there if this morning's rally is only completing a correction rather than starting a stronger rally leg.

Linda Piazza : 6/5/2008 9:55:33 AM

The USDJPY is still slipping down below the turning-lower 15-minute 9-ema. Although the USDJPY is higher and has indeed today attempted a breakout above a long congestion zone from the last couple of months, it bounced up to hit or approach (depending on how it's drawn) a descending trendline off last summer's high. This is a particularly important time to watch the USDJPY. A pullback now is natural and to be expected, but short-term bulls don't want to see it get too steep today, and they don't want that 15-minute 45-ema now at 105.95 to be broken on 15-minute closes. The USDJPY is currently at 105.92.

Linda Piazza : 6/5/2008 9:52:23 AM

Next potentially strong resistance on 15-minute closes for the OEX is at 631.55, with the analogous level for the SPX at 1385.50, already being tested. Essentially, however, both these indices are "triangling up" since Tuesday's high, with the SPX now at its triangle's upper boundary. You would want to see a 15-minute close above that 1385.50 level before you even began to believe that the SPX was breaking out to the upside, though, and even then they should be cautious about the then-approaching test of yesterday's high. For now, equity bulls should be making their profit-protecting just-in-case plans as the A/D line, the OEX and SPX all test potentially strong resistance.

Linda Piazza : 6/5/2008 9:47:21 AM

The A/D line has shot higher, all the way up under the current target and potentially strong resistance at about 1240. It's at 1161 as I type. When I said earlier that the OEX didn't look as if its "test resistance" story was over, I had no idea that the A/D line was acting as it is. It's now, however, at a level of even stronger resistance, so it should be watched closely as it probably will soon top out and need to consolidate sideways (limiting equity gains) for a while or pull back. What bulls want is that sideways consolidation. A strong pullback, particularly back below about 730, would be a bad sign.

Linda Piazza : 6/5/2008 9:44:37 AM

Keltner outlook on the USDJPY: After producing a breakout situation on its 15-minute chart during the overnight session, the USDJPY has not erased that breakout status and has been dropping from its overnight high since the 8:30 candle. It just reached down to test the 15-minute 45-ema at 105.84 and has bounced off that to its current 105.96. However, over the last two 15-minute candles, it has now established a pattern of finding resistance on 15-minute closes at its 15-minute 9-ema, now at 106.07, and so the possibility exists that it will do so again. While finding support at its 45-ema and resistance at its 9-ema, we really don't have a lot of new short-term guidance from this.

Keene Little : 6/5/2008 9:43:33 AM

ES was the most bullish, by a nose, in this morning's pre-market spike up so I'm watching SPX for some clues here. Its downtrend line from May 19th, which stopped yesterday's rally, is near 1385, about 2.5 points higher here.

Linda Piazza : 6/5/2008 9:40:36 AM

The OEX rose to test that trendline resistance although it didn't quite get to the highest part of the Keltner resistance band, now from 629.03-629.50. It's now 628.35 and so being knocked back from its resistance test, but it's not knocked back far enough to give us a feeling that it's going to give up the test of the resistance just yet. I don't think this story is over yet, but let's watch that A/D line and the USDJPY.

Keene Little : 6/5/2008 9:39:14 AM

We've got equity futures ticking down to meet cash and cash ticking up to meet futures this morning. Which direction they head when they get together is the question.

Linda Piazza : 6/5/2008 9:38:13 AM

Keltner (and other) outlook on the A/D line: the A/D line has risen to test potentially strong resistance on 15-minute closes at 675. It's also testing a descending trendline off the 5/29 high, with that trendline currently at about 600. So, equity bears want to see this converging resistance hold on 15-minute closes and bulls want to see it broken strongly, setting an upside target of about 1200. As I type, the A/D line is 523, way down from its 752 day's high, so pulling back below that resistance as I type. The possibility exists that this is a pop-and-drop open, then, and the A/D line will drop all the way to 270 or maybe about -130, carrying equities lower with it, but there's still lots of time left in this 15-minute period.

Linda Piazza : 6/5/2008 9:29:17 AM

First, the background. I believe that the OEX may be vulnerable to the 613-616 zone over the next week or so. Vulnerability does not equate to inevitability, but I believe we must keep that vulnerability on our radar screens because it means that prices could collapse at any time.

With that as the background, though, the OEX produced a doji yesterday on the daily chart after two previous days of springs off the lows. The effort to steady the OEX has been made obvious. Whether it's going to ultimately be successful is another thing, but we have a short-term (day or two) effort to steady against a background of potential weakness.

After the previous two days, the most likely expectation would be either an effort to steady or an actual climb, but always keeping that background weakness on the radar screen. The USDJPY has zoomed up overnight, supporting the climb idea, but with one strong caveat: the USDJPY is currently at Keltner resistance, so you don't want to see it start lower now as the cash market opens. The OEX itself has potential to rise up toward potential resistance on 15-minute closes now at 629.05, but that's joined by trendline (off Tuesday's high) resistance, too, so I would watch carefully for the possibility that the OEX could be turned lower from that trendline as it was twice yesterday. Some signs (higher lower yesterday, not yet confirmed by a higher high) point to the possibility that there's a short-term attempt to strengthen, but particularly if the OEX should move up toward 633-635, I would watch carefully for signs of a stalling. We'll know by 629 and especially by 633-635 if that's approached what the internals look like, so we can check what's going on underneath then.

Keene Little : 6/5/2008 9:17:12 AM

This morning's spike up in equity futures had them testing yesterday's highs (ES made a marginal new high by one tick) so the overnight session was more bullish than I had expected to see. The sharp drop since the 8:30 AM spike up leaves a big question mark for what the cash market will do now. Short against yesterday's highs is still my recommendation but obviously that looks more precarious this morning than it did at yesterday's close.

Linda Piazza : 6/5/2008 9:17:05 AM

I can't find ECB President Jean-Claude Trichet's prepared remarks yet on the ECB's website, but Bloomberg reports that he has said that it's "not out of the realm of possibility" that the ECB could raise rates at its next meeting. Obviously, that would have dashed hopes some had (see my 7:51:00 post) that the ECB was going to moderate its hawkish stance on inflation.

Jane Fox : 6/5/2008 8:57:37 AM

Crude tagged a low of $121.81 overnight and is now trading at 122.90.

Jane Fox : 6/5/2008 8:56:28 AM

Overnight the major American index equity futures tagged their respective previous day highs (well ER2 was a little shy) and they all have a series of higher highs and lows so the bulls have the ball this morning. Link

Jane Fox : 6/5/2008 8:50:43 AM

Interestingly Gold is at the same juncture. If it breaks this swing low it will confirm the lower high from May 22nd and change the trend to down. These two markets do not have a close inter-market relationship so I am not reading anything into this other than it been coincidental. Link

Jane Fox : 6/5/2008 8:46:57 AM

The SPX is testing support but if it breaks this swing low that will first of all confirm the May 29th lower high and secondly confirm the trend has changed to down. Link

Jane Fox : 6/5/2008 8:42:39 AM

NEW YORK (MarketWatch) - Treasurys were little changed early Thursday after a report showed initial claims for U.S. jobless benefits fell last week. Ten-year notes yielded [s:$tnx] 3.99% with the price at 99 1/32. The Labor Department said 357,000 people filed jobless claims in the week ended May 22, compared to revised 375,000 claims in the previous week. Federal Reserve governor Donald Kohn will testify to Congress about the banking industry at 10 a.m. ET. Philadelphia Fed president Charles Plosser will speak about financial stability later in the day.

Linda Piazza : 6/5/2008 8:10:00 AM

The ECB has left rates unchanged, as expected. President Trichet's press conference will begin in 30-40 minutes.

Some interesting (to me, at least) bullet points from CNBC Europe discussions over the last two weeks:

One commentator noted that the ECB is basically keying off the German economy and the other European nations "can go hang." Although Germany has recently had some troubling numbers (ZEW, Ifo, etc.), its economy has remained stronger than Italy's and Spain's, which are showing more need for help.

The ECB's and FOMC's mandates are different. The ECB has no mandate to stimulate the economy, as does the FOMC, one commentator today concluded. The economies operate somewhat differently, with another commentator concluding that the U.S. economy depends on consumer debt.

Also as noted today, the ECB has a history of holding rates steady long after the U.S. has begun to decrease rates. In the 90's, that commentator noted, the ECB once held rates steady for 40 months after the U.S. had begun easing. I wonder if he meant one of the organizations such as the European Community (EC) of governors of national central banks or the European Monetary Institute (EMI) that preceded the ECB, though? The ECB was formed in 1998, I believe. Unless we had a couple of years comprised of 20+ months each, there wasn't time for 40 months of ECB holding steady after the U.S. had begun to ease.

Linda Piazza : 6/5/2008 7:52:01 AM

The Bank of England has kept its benchmark interest rate steady this morning. Most economists predicted the central bank would leave rates unchanged even after the bank had forecast that inflation will likely break through the upper end of the bank's comfort zone. Governor Mervyn King had also said a couple of weeks ago that the British economy may sink into recession, but he signaled that the central bank's hands were tied due to the rising inflation concerns.

In a few minutes, we'll get the ECB's decision. The ECB is also expected to keep its key rate unchanged but many will be closely examining President Jean-Claude Trichet's statement. Some have speculated that the word "vigilance," attached to the bank's concerns about inflation, will be removed while others doubt that will happen.

Jeff Bailey : 6/5/2008 3:08:41 AM

YM +19, or +0.15% at 12,423. Just about smack in the middle of 03/10/08 settlement and 05/02/08 settlement.

Can't believe Q2 is just about over.

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