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Keene Little : 6/10/2008 11:38:57 PM

One more chart on SPX to show why the bulls will want to see an immediate bounce on Wednesday. The pullback into the close stopped at the bottom of the bear flag so there is the potential for at least for another leg up (1371 target) before continuing lower. It would obviously be bullish to see SPX rally out the top of the parallel up-channel, especially if a pullback finds the top of the channel to be support. Link

Jeff Bailey : 6/10/2008 10:23:27 PM

Trade Deficit Jumps To Highest Level In 13 Months ... AP Story Link

Notable was $4.3 billion increase in crude oil imports ($29.3 billion), as the average price per barrel was $96.81.

If, and we should stress "if" the price of crude had been at $60/barrel, about where it was this time last year, deficit would have been $11 billion lower ($18.3 billion).

I show that on 05/30/08, the 21-day SMA for July Crude (cl08n) was at $125.26, so deficit could widen further.

Keene Little : 6/10/2008 10:22:18 PM

Wednesday's pivot tables: Link and Link

Tuesday's price action was very corrective with lots of chop and overlap between the highs and lows. This points to further downside after the bounce is finished. The question as of the end of the day was whether we can expect another leg down right away or after a little larger bounce first. The two scenarios are shown on the SPX 60-min chart: Link

Two equal legs up in the bounce off Monday's low is near 1371 as is the 38% retracement of the decline from last last Thursday's high. Either bearish case means potentially much lower lows, especially if it gets below 1337 (two equal legs down from May 19th). Below 1337 would likely mean a drop down to the March lows by the end of the month/early July.

But if the bulls can get this turned around and back above 1380, and especially if above 1393, we could see another rally leg into July, shown in pink on the daily chart. First order of business for the bulls is to get it above 1371. Until that happens I prefer the short side of this market. Link

OI Technical Staff : 6/10/2008 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The Market Monitor has been archived.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 : 6/10/2008 9:46:41 PM

All Canada NH/NL was 53:139 today, and it is full of miners.

Jeff Bailey : 6/10/2008 9:46:00 PM

Not entirely accurate ... I see Apex Silver (AMEX:SIL) $6/26 -4.28% ... still not through disappointing.

Jeff Bailey : 6/10/2008 9:41:54 PM

"Bank" 52-week lows (AIB, AMFI, BAC, BANR, BFR, BMRC, BPFH, CACB, CBC, CBON, CNB, CORS, CPF, CRBC, CTBK, CTZN, DB, FMBI, FFKT, FHN, FITB, FTBK, GGAL, GRAN, HBAN, HTBK, IBCA, IBCP, IBN, IRE)

Jeff Bailey : 6/10/2008 9:29:43 PM

Sector Break Down of the number of New Highs (8) and New Lows (64) from Dorsey/Wright Link

Note: Does not include ETFs, or Bulletin Board/Pink Sheet

Jeff Bailey : 6/10/2008 9:05:40 PM

Nikkei-225 ($NIKK) Link ... currently up 110, or 0.79% at 14,131.

Session low has been 14,098, high has been 14,140. No chart action at this point.

Jeff Bailey : 6/10/2008 8:54:30 PM

Closing Internals found at this Link

Jeff Bailey : 6/10/2008 6:56:32 PM

NVIDIA, Inc. (NVDA) $22.27 -5.99% ... sharply lower after FTN Midwest downgraded to "sell" from "neutral."

Jeff Bailey : 6/10/2008 5:47:40 PM

DXY's 05:00 tick was 73.637 ...

Jeff Bailey : 6/10/2008 5:47:04 PM

DXY's 04:00 tick was 73.659. Best since 03/04/08

Jeff Bailey : 6/10/2008 4:48:59 PM

LQD finished $102.47 -0.54% ... Link ... Approx. yield 5.55% ... pretty close match.

Jeff Bailey : 6/10/2008 4:46:11 PM

DJ Corp. Bond Index 206.09 ... yield 5.89%

Jeff Bailey : 6/10/2008 4:37:54 PM

Good gravy! ... corn +2.50 ... wheat +2.50%

Jeff Bailey : 6/10/2008 4:35:48 PM

VLO closing just below its 05/09/08 52-week low of $44.55. "Crack Spread" tabulation that day was 25.414.

Jeff Bailey : 6/10/2008 4:34:20 PM

Has my "crack spread" at 25.278. Up a fraction from yesterday's 25.262 tabulation.

VLO $44.60 -1.65% ... About $4 discounted?

Jeff Bailey : 6/10/2008 4:31:16 PM

July Unleaded (rb08n) settled down $0.0747, or -2.20% at $3.3193.

Jeff Bailey : 6/10/2008 4:30:14 PM

July Crude Oil (cl08n) settled down $3.04, or -2.26% at $131.31. Crude hasn't seen 3 consecutive down days since 04/29-05/01.

Jeff Bailey : 6/10/2008 4:23:58 PM

Seeing 3.0 million INTC blocked at $22.68 in extended. INTC $22.68 -0.35% ...

Jeff Bailey : 6/10/2008 4:18:26 PM

Seeing 1.5 million shares blocked iin RIO at $35.25 in tonight's extended.

RIO $35.25 -4.26% ... session low was $34.88, not $34.18.

Jeff Bailey : 6/10/2008 4:15:35 PM

Chesapeak Energy (CHK) $58.86 -2.03% ... declares quarterly dividend of $0.075/share. Payable 07/15/08 with record date 07/01/08.

Keene Little : 6/10/2008 4:10:11 PM

Looking at USO for some downside targets, the decline from last Friday achieved two equal legs down at 160.98 (dropped slightly lower) and the bounce into the end of the day looks like a bear flag so I suspect it will head at least a little lower. The 2nd leg down (today's decline) will achieve 162% of the 1st leg down at 103.71 which is near the 62% retracement of last week's rally. That's also where Friday's gap would be closed at 103.73. 60-min chart: Link

But if it stops around 105-106 (50% of the gap) and heads back up then it could be a bullish sign. Assuming USO gets down to the 104 area it will then be important to watch what kind of bounce we get. Since it could be the completion of just a correction to the rally it would be a good time to take some profits off the table. And then if we get just a choppy sideways/up correction then a 5th wave down could be expected. Right now it's by no means certain that Friday's high was THE high although that's the way I'm currently leaning.

Jeff Bailey : 6/10/2008 4:08:29 PM

Pfizer (PFE) $17.94 -0.44% ... prints a "doji" ... Obamanation?

Jeff Bailey : 6/10/2008 4:06:40 PM

Will want to check this evening's sector NH/NL review from Dorsey/Wright.

Jeff Bailey : 6/10/2008 4:02:21 PM

"Bad tick" on RIO $35.20 -4.39% ... at $34.18. Monitor that one closely tomorrow morning.

Linda Piazza : 6/10/2008 4:02:09 PM

As I suspected it would, the VIX is bouncing from that Keltner support now at 22.08-22.45. It's going to take either a strong thrust through it or else a bit more chopping around before that breaks down, it appears.

Linda Piazza : 6/10/2008 3:58:27 PM

See you all tomorrow morning. I'll be in and out tomorrow but will post as often as I can. Who knows: the way I spit out posts, maybe it will be a relief for you to have a few less to read.

Jeff Bailey : 6/10/2008 3:47:16 PM

I was really looking for some fireworks into the close.

Jeff Bailey : 6/10/2008 3:45:48 PM

YM 12,292 ... smack in the middle of day's range.

Jeff Bailey : 6/10/2008 3:42:45 PM

IBM +0.22%

CVX -1.94%

XOM -1.02%

CAT -0.76%

Jeff Bailey : 6/10/2008 3:41:23 PM

TRIN still flat at 0.69

NYSE a/d still running 1,128/2,032.

YM might get WKLY Pivot, but pressing things with less than 1/2 hour.

Linda Piazza : 6/10/2008 3:40:21 PM

Time to make end-of-day decisions if you haven't already. This week, the OEX has punched down toward its weekly 200-ema now at 612.14. It's punched down toward but not to a potential downside target at 612.27 with support presumed to be there on daily closes as well as a bit higher, at 615.22. For the second day in a row, it's created a consolidation-type candle, maybe another doji depending on what happens into the close. It's so far following the pattern after the 2/05 candle that was a long red candle that traveled almost the same range as Friday's, then produced chop for a few days before heading up and chopping around some more a bit higher for about a month. The eventual outcome wasn't pretty, but we're not looking at eventual outcomes here. We're thinking about what happens tomorrow.

Tomorrow sees two Fed speakers in the middle of the day and then the release of the Beige Book in the afternoon. Decide soon whether you want to hold overnight with that risk coming up tomorrow. It could be that tomorrow will be the day that breaks the consolidation pattern, and it could be that the break will be to the upside, maybe toward 625-627, but the point of consolidation is that we don't really know which way it will break until it breaks. Bears and bulls are battling it out.

May I say that when you're making your end-of-day decisions and if you're in JUN credit spreads, you might take a look at them and see if you can exit any for a pittance and eliminate some of the risk in your portfolio. It's not hard for me and many of you to remember last August's option expiration week and how awful that was--it was the last time I had a monthly loss in any of my accounts and I'm sure some of you have some tales to tell, too. Anyway, in my mind, there's not very much sense in keeping so much at risk for that last nickel or dime of premium, but that's just me, and I'm also the person who has a problem with keeping a profitable trade open, so take it for what it's worth.

Jeff Bailey : 6/10/2008 3:37:23 PM

YM long stopped alert! ... 12,306

Jeff Bailey : 6/10/2008 3:35:15 PM

TRIN 0.69 ... still sitting juuuuust above DAILY S2.

Jeff Bailey : 6/10/2008 3:33:41 PM

YM long raise stop alert! ... to 12,306.

YM 12,317 ...

Keene Little : 6/10/2008 3:25:21 PM

We've so far got a corrective bounce against the drop from today's high and being short against that high could work nicely if the bear flag pattern breaks down now. The risk is further chop and whipsaw but the longer it does that the more bearish it will become.

Linda Piazza : 6/10/2008 3:24:14 PM

We have a potential inverse or reverse H&S on the OEX and some other indices. Matching that is a potential regular H&S on the VIX, with all these showing up on the 15-minute and 30-minute charts. The OEX is just hanging out in the middle of nowhere, so that it's hard to guess whether that formation will be confirmed or rejected. The VIX, though, has what looks like strong support in the neckline region, so it's going to take something big to punch it through that support. I'm not sure it's going to happen, which questions whether the OEX and SPX inverse (and bullish) version will, either. Watch the VIX. That's all I can suggest.

Linda Piazza : 6/10/2008 3:12:18 PM

Just chopping around. Down looks as easy as up; up as easy as down. My original thought was that the OEX might pull back to 617-618 (originally 619-620 when Keltner support was higher) and chop around there for up to a couple of hours before we knew next direction. It's now been about an hour since the pullback, so more chop is possible, but so is a stronger move. The question is, which direction? The VIX is currently headed down again, but it's got strong support near 22.55-22.75 and then at 22.03, so it may take some doing to break it through that. It could instead bounce again. It's at 22.94 as I type, not giving any particular clues. Watch for either a stronger swoon on the VIX as a sign that equities might pop or else a chopping around above support as a sign that equities might do some chopping, too.

Jeff Bailey : 6/10/2008 3:05:50 PM

YM Long alert! ... here at 12,315. Stop 12,285. Target 12,400.

Jeff Bailey : 6/10/2008 2:54:50 PM

GE and MSFT become MUCH more important to OEX traders.

Jeff Bailey : 6/10/2008 2:54:11 PM

Dow Components ... but sorted by MARKET cap Link

Jeff Bailey : 6/10/2008 2:49:09 PM

OEX traders ... you might also want to take my INDU components list, add "Market Cap" and then sort by it. Get a feel/observation of cap-weighting.

Keene Little : 6/10/2008 2:46:33 PM

The bounce off yesterday's low remains very corrective with lots of overlap between the highs and lows within the bounce. This is what continues to have me leaning towards a bearish resolution out of it. But it could still get another rally leg back up before finishing a larger 3-wave bounce. A continuation higher from here with SPX achieving two equal legs up from yesterday's low would have it tagging 1371 which is also the 38% retracement of the recent decline.

On the updated 60-min chart I'm now showing the more immediately bearish scenario in dark red for a continuation of the decline from here (or after a bounce that stays below today's high). The pink scenario is looking for a leg up to 1371 first and then back down. Any higher than 1371 would have me backing away and waiting for additional price action to see what is setting up. Link

Linda Piazza : 6/10/2008 2:42:35 PM

The VIX is finding resistance on 15-minute closes at a line now at about 23.50 and at potential Keltner resistance now at 23.30, but it hasn't given up testing that level, so a pop up toward 23.90 remains possible, although not yet probable. A sideways chop perhaps seems the most likely result.

Linda Piazza : 6/10/2008 2:41:11 PM

So, let's assume just for the sake of argument that the OEX is going to just chop around into the close, in accordance with my theory earlier that the OEX might find resistance and retreat, but that the retreat might be rather shallow and that the OEX might then chop around a couple of hours, long enough to drive us batty. What underlying reason, beyond what we see on the charts could be causing that kind of hesitation into the close? My theory is that it might be some kind of potentially market-moving information on tap. So, I decided to check it out.

Here's what I see. Japan has its final GDP tonight at 7:50 pm ET. That could definitely impact currency moves, and we know that we're closely watching the USDJPY. Perhaps, though, it wouldn't move markets much unless it was a surprise change from the former number, since this one is a final. The U.K. has some important numbers tomorrow, but unless the BoE's King is on tap or a financial institution is in trouble in the U.K., we don't usually react too strongly to developments in the U.K.

But we do have the Beige Book tomorrow afternoon, as well as a couple of FOMC members or Fed Governors on tap tomorrow before the release of the Beige Book. Jane may provide more detail later, but remember when I kept pointing out today and yesterday the similarities in Friday's candle and that on 2/05? After that 2/05 candle, the OEX chopped around for four days above about 609-610 before deciding next direction, and I've been postulating that the OEX could do something similar this time, too. However, I think it possible that the Beige Book could send markets one place or another, so begin thinking about whether you want to hold positions open overnight.

Jeff Bailey : 6/10/2008 2:33:11 PM

Won't hurt a bull to see some strength at the tail ... (Bottom 10).

This market is your inchworm.

Jeff Bailey : 6/10/2008 2:32:19 PM

And IBM, MMM, PG, JNJ and MCD.

Jeff Bailey : 6/10/2008 2:31:52 PM

See the "drag" that CVX and XOM put on things today? Easy DIA traders ... easy. The rotation should come. Watch the thorax (Mid-10)

Jeff Bailey : 6/10/2008 2:30:44 PM

Dow Components at this Link

Jeff Bailey : 6/10/2008 2:27:32 PM

DXY $73.67 +1.12% ... so far, the cash is staying here.

Jeff Bailey : 6/10/2008 2:27:07 PM

These are the hours that we look for rotation.

Jeff Bailey : 6/10/2008 2:23:29 PM

Sector Losers ... Gold Bugs -5.97%, CBOE Oil -3.78%, Oil Service -2.66%, AMEX Nat. Gas -2.98%, Semiconductors -1.87%, Disk Drives -1.15% and Treasuries

Linda Piazza : 6/10/2008 2:23:37 PM

The VIX finally bounced. I'd expected it to do so sooner, but it's going to be facing short-term resistance now on 15-minute closes at either 23.50 or perhaps 23.88. The VIX is currently 23.27.

Linda Piazza : 6/10/2008 2:22:13 PM

The OEX held above 617-618 potential (historical and Keltner) support into that last 15-minute close, but it's still testing that zone. There's potential support on 30-minute closes at 617.10 and on 15-minute closes at 618.35. The OEX is 618.24 as I type. Remember my theory from earlier today (1:34:57 post) that the OEX could now chop around for several hours before we know next direction. That might put that into tomorrow morning. At the time I wrote that post, the potential support I'm listing now was higher, at 619-620, but now it's in the 617-618 range.

Jeff Bailey : 6/10/2008 2:21:17 PM

02:00 Internals found at this Link

Linda Piazza : 6/10/2008 2:08:58 PM

So, the OEX is turning down from the level that it seemed would cap gains, at least on first test. Earlier today, I said that it was possible that the pullback would be rather shallow and that the OEX might then chop around a couple of hours, long enough to drive us all batty. Bulls would like to see any pullback stop in the 618-619 zone, and that's a possibility, but we have to see what happens. If the OEX drops further, to retest today's low, then the "chop around a couple of hours" theory has to be revised.

Keene Little : 6/10/2008 2:08:24 PM

SPX is now dropping down towards the bottom of the bear flag at near 1356.50. Will it support it for another bounce back up?

Linda Piazza : 6/10/2008 2:06:10 PM

John Hussman of Hussman Funds as well as a guest speaker on Bloomberg this morning (didn't catch his name) agree with your assessment that the FOMC follows interest rate levels the market determines rather than leads them, Keene.

Linda Piazza : 6/10/2008 1:57:45 PM

The OEX is still finding support on 15-minute closes at its rising 9-ema, now at 621.10, but it's testing that as I type. Bulls would like to see this support hold and for the OEX to push up toward 623.50 or maybe even its current target on the 15-minute chart, 625.03. From this point on, though, bulls need to be careful to protect profits as the high today reached into the zone identified early this morning as having the potential to cap gains. It's not a given, but a possibility. So keep the vulnerability up to 625 in mind, but bulls shouldn't hang on if conditions change just because of that potential target.

Linda Piazza : 6/10/2008 1:55:26 PM

The TED spread is all the way down to 0.77 now. I actually think there may be support in the 0.70-0.72 level (supporting trendline from a descending channel in place since everything broke loose last August), but, for now, it's slightly bullish for equities. For those who didn't read my Trader's Corner article this weekend or my comments lately in the Market Monitor, equity bulls don't want support near 0.70-0.72 and then a bounce. They want the TED spread to return to its historical norms in the 0.10-0.50 range.

Jane Fox : 6/10/2008 1:54:44 PM

These internals are downright bullish now. I guess the bullish TRIN earlier on was a good indication of things to come. Link

Jeff Bailey : 6/10/2008 1:52:52 PM

Bulls will most likely want to see something north of 361.8 from the purchases index.

Jeff Bailey : 6/10/2008 1:51:40 PM

DJUSHB 301.70 +3.15% ... vies for sector winner. BIG number tomorrow morning from the MBA. Will purchases index mirror existing home sales?

Jeff Bailey : 6/10/2008 1:49:21 PM

USO $107.32 -1.58% ... edges into its 06/05 to 06/06 gap.

Jeff Bailey : 6/10/2008 1:48:33 PM

FXE $154.76 -1.08% ... attempt to backfill that 06/04 to 06/05 gap.

Jeff Bailey : 6/10/2008 1:47:11 PM

What technicians will be monitoring (as we did several years ago as it looked as though the Fed was done cutting rates) is to monitor dollar and gold action with our Treasury yields.

Primary difference today is dollar "weaker" not "stronger" than major currencies.

Jeff Bailey : 6/10/2008 1:44:26 PM

StreetTracks Gold (GLD) $85.85 -2.43% ... ~858.50 spot.

Jeff Bailey : 6/10/2008 1:43:17 PM

On the alert with the 13-week approaching 2.0%

Keene Little : 6/10/2008 1:40:46 PM

The rate hike question will be answered by the bond market, which the Fed follows (it does not lead). TNX bears watching here since it has bounced back up to the top of its parallel up-channel from March and very near its previous high of 41.39 on May 29th, with bearish divergence. Daily TNX chart: Link

If it continues to a new high then I see the potential to work its way up to a Fib projection near 44. A rally in yields has been a good omen for stocks (selling in bonds frees up money that rotates into stocks). But after the bounce in TNX, whether from here or a little higher later this month, the price pattern points south and for now I think the Fed will remain on hold until later in the year when they could lower rates further.

The big question is whether they'll raise a quarter point later this month at the next meeting to keep up with the 10-year and then have to reverse it later this year.

Linda Piazza : 6/10/2008 1:35:48 PM

The OEX is still gaining, still approaching next resistance at 623.71 on 30-minute closes. The 15-minute chart has set a tentative upside target of 625, but keep some skepticism in the forefront when contemplating that potential upside target. A 38.2% retracement of the OEX's slide over the last few days is just under 624 and there's that potential Keltner and historical resistance at about 623.40, too. Although we haven't had a pullback yet of any consequence and might not, I feel duty-bound to warn, as I did early today, that this level being tested and approached could cap gains. I think it's possible, although not a given, that any pullback could be somewhat shallow, perhaps in the 619-620 zone, but it could endure through several hours and drive us all batty while we're trying to guess next direction. That's just a potential scenario and not a given, as I said.

Jeff Bailey : 6/10/2008 1:30:18 PM

General Electric (GE) $30.74 +2.26% ... on some volume. #8 most active.

Linda Piazza : 6/10/2008 1:30:08 PM

Yes, I was watching that neckline and then the long-term trendline break on the USDJPY, too, Keene. I was viewing the equity gains with a somewhat jaundiced eye because the USDJPY had not broken through its trendline off last year's high when so many indices did. However, I want to see how the USDJPY behaves on a retest of that trendline, too, before I believe too strongly in this break. One reason is that I'm hearing--and I don't know if you might be hearing it, too, or have a different take--a lot of distrust of the rate-hike theory out there, as some believe that continued weakness in the U.S. economy will stay the hands of the FOMC. If that happens, this USDJPY climb may quickly lose steam as it's been partly predicated on the belief that the U.S. will raise rates.

Keene Little : 6/10/2008 1:28:15 PM

SPX has cycled around the downtrend line from October since the beginning of May. At this point we don't know whether the bulls will regain control or if the bears will continue to press this lower. Daily chart: Link

Linda Piazza : 6/10/2008 1:21:48 PM

The OEX's 15-minute 9-ema is now 620.85; the SPX's, 1362.04. Both indices have been finding support on those on 15-minute closes over the last two hours, so bulls would like to see that continue. Keep your stops at account- and trade-appropriate levels from here on out, though, as both indices are approaching what might be resistance.

Keene Little : 6/10/2008 1:20:44 PM

And then right above SPX 1370 is the 38% retracement of the decline from last Thursday at 1371. So the bulls have their work cut out for them between 1367 and 1371.

Keene Little : 6/10/2008 1:19:25 PM

SPX has now run into the top of its bear flag pattern. Slightly higher is the downtrend line from October (near 1368.50) and then the 1370 low on June 3rd, which stopped the bounce on Monday.

Keene Little : 6/10/2008 1:15:51 PM

In fact I see you mention the H&S neckline right on the chart.

Jeff Bailey : 6/10/2008 1:15:32 PM

Most Actives ... SPY $136.85 +0.16%, XLF $23.32 +1.39%, QQQQ $48.79 +0.04%, MSFT $28.11 +1.47%, IWM $73.55 -0.17%, C $20.49 +4.54%, INTC $22.86 +0.43%, AAPL $186.24 +2.54%, JPM $39.07 +4.18%, QID $39.08 +0.05%

Linda Piazza : 6/10/2008 1:15:21 PM

VIX 22.82, still dropping.

Keene Little : 6/10/2008 1:15:20 PM

Linda, your chart of the USDJPY looks like an inverse H&S. That could be bullish for a move up to 116-117 (just eyeballing it). Could be interesting if equities stay in synch with that.

Keene Little : 6/10/2008 1:13:31 PM

The SPX 10-min chart shows the bear flag that's been forming since yesterday's low. The top of it is currently approaching 1367 and the bottom of it is near 1356. Sell the top of it and buy the bottom of it until it breaks down (assuming it's a bear flag and will break down). Obviously a rally out the top of the pattern would be bullish and I'd switch to the long side. Link

Linda Piazza : 6/10/2008 1:09:51 PM

The USDJPY is climbing strongly, now up to 107.24. However, the daily 200-sma and -ema's are at 108.35 and 107.84, respectively, so it's possible that gains will be capped soon. Equity bulls would rather not see a pullback, but if there is one, they would rather it stopped at the red trendline just broken through: Link

Jeff Bailey : 6/10/2008 1:05:51 PM

September Copper (hg08u) $3.57 -1.38% ... still steady.

Jeff Bailey : 6/10/2008 1:04:13 PM

Gold and silver getting whacked.

Linda Piazza : 6/10/2008 1:02:00 PM

Still no bounce in the VIX nor in the VXO, the old VIX determined by OEX options. That's good news for for equity bulls, but remain watchful. I'm looking at an OEX 30-minute chart as I type and those 30-minute candles aren't the healthiest. This just-formed one is a doji at the top of the climb, so either sideways consolidation or a pullback might be in store. If there's a pullback, bulls want it to be shallow, perhaps finding support on 30-minute closes at 619.43 or at least at 618.10.

Jeff Bailey : 6/10/2008 12:54:39 PM

EIA saying OPEC's May oil output up 510,000 B/D on month at 32.47M B/D

Jeff Bailey : 6/10/2008 12:50:37 PM

EIA saying it sees natural gas consumption in the U.S. increasing by 2.2% in 2008 and by 0.9% in 2009 with demand propelled by weather and growth in the industrial sector.

Linda Piazza : 6/10/2008 12:49:46 PM

The OEX's 15-minute 9-ema is now 619.80, and bulls would like to see it hold as support on 15-minute closes. This will promote the idea that it's likely to keep on hammering at resistance now at about 620.55-622.04 on 15-minute closes, with the hope that it might break through and head toward 622.93-623.55 or maybe even up near 625. However, if the VIX should bounce, it might be that the OEX will pull back more deeply, perhaps toward 619.30 or maybe even 618.10.

Linda Piazza : 6/10/2008 12:46:53 PM

No bounce in the VIX yet, and it looks as if it might close this 15-minute period at or slightly below the support that was near 23.10 and is now just a little lower. A bounce is still not impossible, so keep a watch on it, but so far, bulls are pleased to see none begin. The VIX is 23.03 as I type.

Jeff Bailey : 6/10/2008 12:46:37 PM

EIA saying it sees US '08 oil use at 20.41M B/D, -1.4% Vs. Yr Ago

Jeff Bailey : 6/10/2008 12:44:25 PM

Meeting of oil producers/consumers set for June 22 in Jeddah

Jeff Bailey : 6/10/2008 12:38:43 PM

BIX.X 205.39 +3.24% ... tries to reclaim QRTRLY S1.

Keene Little : 6/10/2008 12:33:20 PM

Good point Jeff. That's why I had recommended buying puts on USO on Friday. I called it a bit of a lottery play but I liked the setup. However, oil has been wild and trying to pick a top in it is clearly a risky play. Hence put options--at least you know exactly what you're risking.

Linda Piazza : 6/10/2008 12:31:44 PM

I would not be terribly surprised now to see the VIX bounce back up toward 23.43 or maybe even 23.70 or so. I'm not guaranteeing that will happen but instead am just saying that it wouldn't surprise me. I think it likely, but not promised, that the resistance would hold if it did bounce up to that level. The VIX is now 23.15.

Linda Piazza : 6/10/2008 12:28:11 PM

The TED spread is now 0.81, well off its 0.88 high of the day.

Jeff Bailey : 6/10/2008 12:26:43 PM

For those new to the MM, the USO does trade options (put and call). If you want to incorporate RISK management to your account.

Linda Piazza : 6/10/2008 12:25:57 PM

The VIX is more closely approaching the next potential support level on 15-minute closes, now at about 23.10. Equity bulls want to see it continue to find resistance on 15-minute closes at the descending 9-ema, now at 23.44, as it has been doing since the first 45-minute period today. They then want to see it break through that support. Bears want the support to hold and the VIX to then bounce up through the 9-ema again. The VIX dropped to 23.08 as I typed, testing that support.

Jeff Bailey : 6/10/2008 12:20:38 PM

Swing trade call alert! ... for one (1) of the Dow Diamonds DIA Aug $123 Calls (DAW-HS) at the offer of $4.50.

DIA $123.36 +0.32% ...

VXO.X 23.78 -2.05% ...

Keene Little : 6/10/2008 12:19:57 PM

After bouncing up this morning and now turning back down below yesterday's low, the recommended short play on USO from Friday afternoon is at least looking a little better now than it did this morning. I am lowering my stop from 113 to 112, just above this morning's high. It's not much but I like to get my stop to breakeven as soon as I can and any rally back above this morning's high would mean new all-time highs are coming.

Jeff Bailey : 6/10/2008 12:18:29 PM

12:00 Internals found at this Link

Linda Piazza : 6/10/2008 12:15:27 PM

Hmm. Just noticing that the RUT is back to test potential support on 15-minute closes that layers down to 729.24. This one can't pick itself up off the floor yet today. I took a look at the RVX, the RUT's volatility index, however, and it's still trending down, very near its low of the day. That RVX, then, doesn't support the idea that the RUT is going to break through support, at least not yet. If the RVX were to suddenly zoom higher, then there would be some cause for concern. The RVX is 26.86 as I type, with a 26.84 low of the day . . . and, as I typed, it hit a new low of 26.81.

Linda Piazza : 6/10/2008 12:05:57 PM

My quote for the TED spread is delayed, but my current quote is 0.85, up 0.043 or 5.356% from yesterday's close. The high today has been 0.88 and the low, 0.76, so it's done some chopping around. That 0.88 high is the highest in a week. Equity bulls really don't want to see it go too close to 1.00, I don't think, although my evidence for that conclusion is anecdotal and not time proven. The TED spread measures default risk or maybe it would be better to say it measures perceived default risk.

Linda Piazza : 6/10/2008 12:01:22 PM

The A/D line did not break out of its chop zone from this morning when the OEX did, and it didn't test analogous resistance, which would be at about -814 for the A/D line. The A/D line is currently -1157. This isn't an end-all and be-all sign of anything, but bulls certainly would have preferred that the A/D line attempt to break above that congestion zone, too.

Jeff Bailey : 6/10/2008 11:59:49 AM

IEA Cuts Oil Demand Forecast ... AP Story Link (earlier this morning) Link

Linda Piazza : 6/10/2008 11:59:40 AM

TRIN 0.67.

Keene Little : 6/10/2008 11:58:43 AM

Gold had a big $45 run up from Thursday to a high of 912.30 in the pre-market hours on Monday. It has since given it all back and is currently back below 870, near last Thursday's low. The 200-dma is just below 865 and could provide some support but I continue to see gold with a downside target near 800 before a bigger correction back up.

Linda Piazza : 6/10/2008 11:59:18 AM

The OEX is testing that resistance that I noted and is in fact pulling back from it a little. The resistance appears to be holding on this 15-minute period. The OEX has been churning either side of the 15-minute 9-ema, so it's not the best benchmark to use, but it's beginning to turn higher now, so it should serve as a little better support than it did earlier. So, those who want to see the OEX keep battering away at resistance want to see 15-minute closes above that 9-ema, now at 618.76.

In truth, almost anything can happen now. I thought it likely or at least possible that support would hold this morning, but I also think it's possible or maybe even likely that the OEX could churn around for a day or two more. So I'm going to turn to the 30-minute chart for guidance. If the OEX can maintain 30-minute closes above a potential support line now at 618.29, then it seems possible that it will climb toward 622.21 and maybe even 623.84, but I'd certainly be particularly protective of any bullish gains if it got to 622.21-623.84, and I wouldn't count on it getting there. It's just a possibility.

Jeff Bailey : 6/10/2008 11:49:56 AM

National City (NCC) $4.84 +8.27% ... Higher after bank notes that it has the highest Tier 1 capital ratio among large banks in the U.S. as it confirms it has entered into an agreement with regulators to address problems.

Keene Little : 6/10/2008 11:45:53 AM

At a minimum I thing we're due another leg up in the correction off yesterday's low. It still looks like a bear flag pattern so watch for resistance at the top of the patterns if the market pushes a little higher from here.

Linda Piazza : 6/10/2008 11:45:12 AM

If the OEX should continue gaining, it has potential resistance on 15-minute closes from 620.12-621.16.

Linda Piazza : 6/10/2008 11:44:34 AM

Earlier today I had mentioned that the TRIN was hitting support and might bounce, and then mentioned in a later post it could find resistance on 15-minute closes at 0.80. It did hit a high of 0.82 but that 15-minute close was 0.73 and the TRIN is now 0.67, and the TRIN never did close above that resistance that's now even lower, at 0.76. This downturn is short-term bullish.

Linda Piazza : 6/10/2008 11:42:42 AM

The VIX continues to form 15-minute closes beneath the breakout benchmark, now at 23.67. However, it is also finding support at the next potential support level, now at 23.04, so it hasn't given up testing that resistance and may nudge it higher again. VIX at 23.52 as I type.

Linda Piazza : 6/10/2008 11:41:38 AM

No change since the last post. The OEX continues to string along the flattened 15-minute 9-ema, now at about 618, chopping a little this side and a little that side of it. This inaction today has had the effect of firming up potential support on 15-minute closes now at 614.36-615.23, however. Although firmed-up support on a 15-minute chart would do nothing to stop a cascading lower movement, bulls would still prefer to see than not see it.

Jeff Bailey : 6/10/2008 11:40:07 AM

Loonie 1.024 +0.08% ... modestly higher.

Jeff Bailey : 6/10/2008 11:38:29 AM

Global Interest Rates: In a surprise move, the Bank of Canada defied market expectations for a 25 bp rate cut and instead held rates unchanged at 3.00%. The bank cited economic stability and shifting risks of inflation (to upside) for no policy change.

Jeff Bailey : 6/10/2008 11:36:02 AM

Home builders holding steady despite more debt downgrades today out of Fitch. Fitch Ratings cuts DHI $11.75 +0.17%, RYL $24.55 -0.12% and MTH $16.53 -0.54% into "junk" territory amid concerns about continued difficulties in the housing market.

Jeff Bailey : 6/10/2008 11:31:05 AM

Economic data released showed the U.S. trade deficit of goods and services jumped 7.8% in April to $60.90 billion amid a widening trade gap with China. The trade deficit was slightly more than the $60.0 billion forecasted by economists. Exports increased 3.3% to $155 billion, while imports climbed 4.5%.

Jeff Bailey : 6/10/2008 11:27:59 AM

XTO Energy (XTO) $68.05 +0.48% ... Natural gas producer said today that it was buying privately held Hunt Petroleum in a deal valued at $4.19 billion ($2.6 billion cash and 23.5 million shares of XTO).

Jeff Bailey : 6/10/2008 11:16:15 AM

SPX probed QRTR Pivot yesterday. Again this morning.

Jeff Bailey : 6/10/2008 11:15:09 AM

See if the DAILY Pivots find any "stick" for buyers.

Jeff Bailey : 6/10/2008 11:14:38 AM

BKX.X 68.31 +1.39%

BIX.X 200.91 +0.99% ... "fading" a bit. Most likely some short covering at the open.

Linda Piazza : 6/10/2008 11:14:12 AM

It's still iffy out there, but I'm not surprised. I thought it might be all day and might even be for another day or two. So far, the OEX is chopping either side of its flattened 15-minute 9-ema, with that now at 618.13. That means that the OEX is as likely to drop to 614.35-616 as it is to climb to 620.09-621.42 and vice versa.

Jeff Bailey : 6/10/2008 11:13:38 AM

Most Actives ... QQQQ $48.36 -0.84%, C $19.96 +1.83%, MSFT $27.83 +0.43%, SPY $135.90 -0.51%, INTC $22.47 -1.27%, AAPL $184.58 +1.63%, XLF $22.98 -0.13%, F $6.13 -3.61%, CSCO $26.27 -0.60%, DELL $23.74 -1.69%

Linda Piazza : 6/10/2008 11:01:57 AM

There have now been two VIX 15-minute closes below the breakout benchmark now at 23.63. This is not proof of anything, but is a slight change in tenor. Now watch for potential support at 23.

Jeff Bailey : 6/10/2008 11:01:32 AM

Apple Computer (AAPL) $184.95 +1.83% ... probes yesterday's high.

Jeff Bailey : 6/10/2008 10:54:23 AM

Petroleu Brasileiro (PBR) $67.57 -2.07% ... Brazilian state-run oil company saying they will go ahead with plans to update and expand their fleet of oil rigs, tankers and support vessels, but wants the equipment to be manufactured in Brazil.

PBR's president Jose Sergio Gabrielli saying the company is planning to lease 28 new oil rigs capable of operating offshore in waters more than 200 meters deep (3.2808 feet in a meter). PBR plans to add 175 vessels to fleet, including 122 supply ships and 44 very large crude-oil tankers.

Mr. Gabrielli also saying the company will be "more active in raising money than before."

Linda Piazza : 6/10/2008 10:49:49 AM

The OEX maintained the 15-minute close above the 9-ema now at 618.45. Bulls want continued 15-minute closes above that.

Keene Little : 6/10/2008 10:48:21 AM

So far the bounce off yesterday's low looks more like a bear flag than anything else. The overlapping highs and lows, even in the stronger DOW, makes the bounce corrective and therefore nothing for bulls to feel good about here. It doesn't mean it can't chop higher but as long as it's a choppy bounce I'll be leaning towards a downside resolution once the correction is finished (too early to tell when).

Jeff Bailey : 6/10/2008 10:47:23 AM

Petrobras' CEO saying he believes pre-salt exploration risk "practically zero"

Linda Piazza : 6/10/2008 10:37:48 AM

VIX 23.53, now below the breakout benchmark that had risen to 23.58. There has of course not been a 15-minute close below that benchmark, much less sustained 15-minute closes beneath it, so the bounce potential remains. Bears should be aware of that looming resistance on the daily chart, though, resistance that the VIX ran up and tested yesterday, as per the chart I posted yesterday when it was hitting that resistance. Here's the chart again with yesterday's annotations still there (VIX bounced to 23.67 while I typed): Link

Linda Piazza : 6/10/2008 10:34:20 AM

TRIN now 0.74, rising from that support I warned about earlier, but there's potential resistance on 15-minute closes at 0.80. Bears want it to be broken; bulls want it to hold on 15-minute closes.

Linda Piazza : 6/10/2008 10:31:28 AM

Remember, my possible scenario for the next few days is that the OEX could be following the pattern seen after the 2/05 candle, a pattern in which it chopped around for four days before deciding on next direction--up in that case, but with the next direction this time still up for grabs. I'm not basing that on a similarity to a single candle, though. One of my possible scenarios for the summer--one I'm watching closely to see if it occurs--is that the OEX could be setting up the parameters for a chop zone that will gradually chop through whatever patience we traders have until there's a later breakout, maybe not until the fall months. Also, I see the OEX approaching, if not quite there, what could be substantial support in the 612-612.60 zone. So, for many reasons, it fits a scenario that all this support could prompt at least a stalling for several days.

Just because a scenario fits current evidence doesn't mean it will continue to do so, however. We must of course be on the lookout for evidence that the scenario is not fitting. So far, I'm not seeing any contradictory evidence, but traders should keep in mind that we might have another chop day today.

Jeff Bailey : 6/10/2008 10:24:40 AM

C $20.35 +3.82%, KO $57.76 +3.38%, JPM $38.79 +3.38%, BK $30.43 +2.76%, AIG $34.22 +2.17%

VZ $37.24 -1.84%, DD $45.41 -1.73%, INTC $22.43 -1.44%

Keene Little : 6/10/2008 10:23:44 AM

The broader market doesn't always trade in synch with the banks so the bounce this morning in BIX does not necessarily mean the broader market will follow (although I keep saying follow the money). We were all watching the banks yesterday and the trend line along the lows since January. My daily chart is one I regularly show in each week's newsletter and I've been suggesting we'll see a choppy decline into the summer inside a descending wedge for price action since the January low: Link

With the throw-under yesterday it has me wondering if we've seen the low for the banks for a while. The wave count is set up for another choppy rally back up to the top of the wedge, perhaps 220-230 depending on how long it takes to get there. More bullish of course would be a break out the top but there's lots of time between here and there before we need to speculate on that. And of course it would be very bearish if price turns back down and falls out the bottom.

Linda Piazza : 6/10/2008 10:23:24 AM

Careful here. The VIX is currently 23.56, testing that Keltner breakout benchmark, at 23.51 on 15-minute closes. It wouldn't be surprising to see a bounce attempt in the VIX and, therefore, a pullback in equities. If the OEX were to pull back in accordance with a VIX bounce, bulls would like to see it still maintain about 618.60 in 30-minute closes . . . VIX bounced to 23.62 as I typed.

Jeff Bailey : 6/10/2008 10:22:26 AM

DIA $123.13 +0.13% ... Breadth 14 up and 16 down.

Jeff Bailey : 6/10/2008 10:21:16 AM

10:00 Internals at this Link

Note(s): It would currently take a closing measure of <38.00% for the NYSE 5-day NH/NL ratio to see a 3-box reversal back lower.

It would currently take a closing measure of <34.00% for the NASDAQ 5-day NH/NL ratio to see a 3-box reversal back lower.

Linda Piazza : 6/10/2008 10:16:37 AM

The OEX has potentially strong resistance on 30-minute closes from 618.25-618.76. Other than the push near the close yesterday, the OEX has not been able to close any 30-minute periods above that moving average since Friday morning, and it obviously didn't maintain yesterday's last-minute close above it, either. So, for now, expect some resistance to kick in soon. Bulls want to see the OEX surge through that, of course, or at least stall sideways until it can get through, while bears want the OEX to be knocked way back.

Jeff Bailey : 6/10/2008 10:14:56 AM

US Oil Fund (USO) $111.23 +1.99% ... probes its MONTHLY R1 (again).

Linda Piazza : 6/10/2008 10:13:13 AM

That VIX breakout benchmark I've been talking about over the last two days is now at 23.51, with the VIX currently at 24.08. Potential resistance on daily closes is now about 24.40, as mentioned earlier. The VIX obviously has not yet stopped testing that resistance and it sometimes overruns it, so a zone around it should be considered potential resistance, not that exact number. Still, bears should be aware that although the VIX is higher this morning, it's testing that resistance, and that resistance might hold. Bulls should be aware that on the short-term period, it's still in breakout mode and will remain there until it maintains consistent 15-minute closes beneath 23.51. If it should dip to that level, be watchful for a bounce attempt (and therefore, a pullback in equities).

Linda Piazza : 6/10/2008 10:08:08 AM

Potential support for the OEX on 15-minute closes is now from 614.42-615.78, but bulls would prefer all closes be above 614.99 if not above 615.78.

Jeff Bailey : 6/10/2008 10:06:58 AM

DIA/INDU find sellers on the bounce at DAILY Pivot.

Jane Fox : 6/10/2008 10:06:15 AM

Interestingly the VIX and AD volume are bearish but the TRIN is 0.68 which is quite bullish.

Jane Fox : 6/10/2008 10:03:40 AM

AD line is a bearish -1447 but an "improvement" from the lows of -1599.

Jeff Bailey : 6/10/2008 10:03:29 AM

Tyson Foods (TSN) $15.37 -1.91% ... has retraced 61.8% of Jan-Apr advance. Will check corn.

Saw last night on evening news flooding in mid-west. May have lost some corn crop. Various corn futures contracts have met/exceeded bullish vertical counts.

Linda Piazza : 6/10/2008 10:02:35 AM

It's still really iffy out there, so try to keep an open mind about what happens next. TRIN is in the bullish zone, but might still rise from the support being tested (which would be bearish for equities). The USDJPY remains strong so far. The A/D line is indeed attempting to steady in the potential support zone that now extends down to about -1725, but that support is turning down a little and it's so far just an attempt to steady and not a confirmed steadying. The OEX is so far still maintaining 15-minute closes above the potential support from 615.11-615.99 (with lighter support at 614.16), but that support still slants lower, still looking weak. So, the attempts to steady are visible, the possibility of further steadying and at least chopping around near the lows if not gaining strongly are there, but nothing is a given yet.

Keene Little : 6/10/2008 10:00:17 AM

With the techs leading the way to the downside it will be important to watch them to see if they find support and turn around. Yesterday's decline and this morning's drop found support at the uptrend line from October 2002 (log price scale). This has been an important trend line affecting price behavior since January. A rally back up to its broken uptrend line from March, currently near 2006, for a retest would make for a good setup for another short play. In the meantime bears beware a bounce. Daily chart: Link

Jeff Bailey : 6/10/2008 9:59:48 AM

VXO.X 24.85 +2.34% ...

Jeff Bailey : 6/10/2008 9:59:00 AM

FXE $155.28 -0.75% ... Euro "weak" vs. dollar. Juuuust below our NAKED call entry point of $155.54 on 5/29/08. This was closed out, but helpful to know "where we are" in relation to "where we were," and action since.

Linda Piazza : 6/10/2008 9:58:11 AM

TRIN 0.69.

Jeff Bailey : 6/10/2008 9:57:27 AM

FXY $93.32 -0.57% ... Yen "weak" vs. dollar

Jeff Bailey : 6/10/2008 9:57:02 AM

EWJ $13.10 -1.94% ...

Jeff Bailey : 6/10/2008 9:56:02 AM

BIX.X 202.35 +1.71% ...

BKX.X 68.64 +1.88% ... only equity-based sectors up >1%

Jeff Bailey : 6/10/2008 9:54:40 AM

Still ... gold above $400.00 rather inflationary.

Jeff Bailey : 6/10/2008 9:53:41 AM

Gold -1.54%

Silver -0.99% ... not a "inflation" or "deflation" look with selling in treasuries. Strengthening dollar.

Linda Piazza : 6/10/2008 9:51:30 AM

The SPX has potential support on 15-minute closes that ranges from 1349.22-1354.07, but bulls or even those who just want markets to steady would prefer closings at least above 1351.46 if not the higher number.

Jeff Bailey : 6/10/2008 9:50:31 AM

Companhia Vale do Rio Doce (RIO) $35.01 -4.91% ... nearing its H/S top pattern objective of $34.00. RIO-UG are $3.25 x $3.35

Linda Piazza : 6/10/2008 9:50:12 AM

TRIN is 0.68, offering a warning to bears. However, it is at potential support, so we must watch the "trend of the TRIN," too, as Jane often warned us in the past.

Linda Piazza : 6/10/2008 9:49:13 AM

Now those hoping for a steadying want to see the OEX form continued 15-minute closes above about 616.25 or at least 615.20, so that begins to firm up that support. It's still iffy out there, folks, so don't let your guard down, whatever type of trade you have.

Linda Piazza : 6/10/2008 9:47:34 AM

USDJPY now 106.92.

Linda Piazza : 6/10/2008 9:46:17 AM

It looks as if the OEX potential Keltner support on 15-minute closes now at 615.30 may hold on this first 15-minute close. Those hoping for a steadying would prefer that the OEX close this 15-minute period above 616.25, too, which is a possibility.

Linda Piazza : 6/10/2008 9:44:30 AM

Keltner outlook on the A/D line: At -1632 as I type, the A/D line drops deeper into its potential support zone that extends down to about -1710 now. Again, watch for the possibility (but not the certainty) that the A/D line could try to steady soon.

Linda Piazza : 6/10/2008 9:42:54 AM

Those who want the equity markets to show signs of steadying want to see the VIX sustaining 15-minute closes beneath a Keltner line now at 23.41. The VIX broke out above that line at about 2:00 pm on Friday and has maintained 15-minute closes above it since then. Those who want a steadying should consider the possibility that, if the VIX should drop down to test it again, it could bounce again, perhaps even into an equal-ish high, sending equities lower temporarily, but we'll just have to wait and see. VIX at 24.10 as I type.

Linda Piazza : 6/10/2008 9:39:56 AM

The VIX is again pressing up toward what could be resistance on daily closes at about 24.40. The VIX is currently at 24.25. The VIX can sometimes overrun this resistance or support so think of a zone around 24.40 as being potential resistance, not 24.40 itself. Of course, there could be a sustained breakout and the markets could be in deep trouble, but for now, consider the possibility that the VIX could be topping out soon. The VIX is 24.09 as I type, down only slightly from its 24.42 high of the day.

Linda Piazza : 6/10/2008 9:36:02 AM

Keltner outlook on the A/D line. The A/D line of course opened in the lower or bearish half of its 15-minute Keltner channels, but it also opened and is moving, so far, within the chop zone that began to be established about 2:00 yesterday afternoon. I think it may well drop below that zone, perhaps toward -1400 to -1700, but there's potentially strong support there, so be watchful for bounce potential if it does. . . . and, as I typed, it dropped to -1374, so be watchful for a steadying that might begin over the next ten minutes or so.

Linda Piazza : 6/10/2008 9:33:41 AM

Keene and I use entirely different methods to arrive at our conclusions and both of us are seeing the possibility of a punch lower this morning followed by a reversal. (Keene's 9:18:12 and my 9:30:15 posts.) "Possibility" doesn't equate to probability, but that should show you that the possibility exists and warn you to plan appropriately to protect your bearish profits.

Jeff Bailey : 6/10/2008 9:33:20 AM

iShares Japan (EWJ) $13.04 -2.39% .... gives some "idea" of percentage loss for U.S. majors today.

Linda Piazza : 6/10/2008 9:30:15 AM

Late yesterday, I posted information about the overnight developments that might impact trading, including Fed Chairman Ben Bernanke's speech, and they certainly did impact trading, didn't they? Now, here we go, trying to estimate where the OEX might go if markets go down in accordance with futures action. That of course does not always happen, the first of several caveats you're going to get in this post.

ES futures are currently about 11 points below fair value, so let's say the OEX dips 5.5 points below the close. That would bring the OEX down to 613.86, which is of course rather near yesterday's 614.49 low. So, we first should imagine what might happen if the OEX heads down to test yesterday's low. I show a potential downside target on the daily Keltner chart now at 612.65 with that also representing potential support on a daily close, but there's also potential support a bit higher, at 617.18. The traditional chart shows the weekly 200-sma, an important average, of course, at 612.14. So that's part of the background: a tentative target near 612.65 and tentative long-term support near there, too.

On the daily chart, I noticed something interesting that I mentioned yesterday. Friday's candle had retraced nearly exactly the candle from 2/05. The lows were two cents from each other. What happened after that 2/05 candle? The OEX dipped a little lower, into the 609.50-610 zone but basically spent the next four days consolidating just a little lower before springing higher again and chopping around for several weeks. Eventually it headed lower, but not right away. Patterns don't always repeat, but some other signs tell us that the OEX could spend a number of days chopping around before deciding next direction, too, so keep that possibiity on your radar screen.

Short-term, the OEX has potential support on 15- and 30-minute closes near 618.30 and then near 614.80-616.50, so it's possible that, even if there's a punch to an equal or slightly lower low, the OEX will find support on the first 15- and 30-minute closes at those levels and then spend the day trying to stabilize. Bears should be aware of this possibility while bulls shouldn't count on it happening. We won't know until the markets open.

Here's another caveat. Markets could crater. Of course they could. Here's the last caveat. As a result of all the "strong dollar" and inflation talk overnight, the USDJPY has finally broken above the descending trendline off last June's high. It's also broken above the descending neckline of a bottoming H&S formation that began forming in January. It's at 106.89 as I type. I've long been saying that we can't count on the same inter-market relationship always persisting, but for the last several years, the USDJPY has tended to lead U.S. equities. If the USDJPY maintains this strength, that warns bears to be careful about their assumptions in this environment.

So, if you didn't lock in some profits yesterday afternoon when equities were at their lows, you might decide right now how you want to handle an equal or slightly lower low test this morning. Be a little cautious in case there's a drop and then a quick pop. There's no proof yet that will happen, but keep it in mind as a possibility.

Jeff Bailey : 6/10/2008 9:29:29 AM

Oil is up $3, or +2%

Jeff Bailey : 6/10/2008 9:28:54 AM

I'm going to suggest "holding off" on buying DIA calls here at the open (see last night's Market Wrap) as overseas markets took a pretty good hit to the downside last night.

DIA ticking $122.14 pre-market.

Keene Little : 6/10/2008 9:18:12 AM

Equity futures are down hard this morning after dropping steadily all night. Techs led on the way up and they're leading on the way down and NQ has made new lows below yesterday's. If the market continues lower today we could see SPX head for its Fib projection near 1337 (and DOW 12K). But I'm seeing some evidence of waning momentum and it's possible we'll see an early low this morning followed by another reversal back up so bears can't get complacent here.

Jane Fox : 6/10/2008 8:50:07 AM

HONG KONG (MarketWatch) -- Asian markets suffered major losses Tuesday, led down by Shanghai and Hong Kong, where banking and property shares fronted declines.

Investors fretted about the impact of the latest round of anti-inflation measures announced over the weekend.

Shanghai's Composite Index plunged 7.7% to 3,072.33, its lowest closing level since March 22. Tuesday's trading was the first since the People's Bank of China announced it would lift the ratio of reserves banks must set aside as deposits by 1 percentage point. The adjustment comes ahead of consumer-price index data for May due out Thursday.

The benchmark index for the Shenzhen stock market was down 8% at 928.20.

Hong Kong's Hang Seng Index slipped 4.2% at 23,375.52 and the Hang Seng China Enterprises Index gave up 5.4% to 12,789.87.

Jane Fox : 6/10/2008 8:47:09 AM

NEW YORK (MarketWatch) -- XTO Energy Inc. (on Tuesday said it'll buy closely held Hunt Petroleum Corp. for $4.19 billion in cash and stock, as the Fort Worth, Texas, natural gas and oil producer moved to boost its reserves and production. XTO Energy said Hunt Petroleum's proved reserves total about 1.052 trillion cubic feet of natural gas equivalent in East Texas, Louisiana and in the Gulf of Mexico. About 62% of the reserves are proved and developed. Daily production of 197 million cubic feet, 8,500 barrels of oil and 2,300 barrels of natural gas liquids will be added to XTO's production base upon closing of the transaction. "Simply put, the majority of these properties equate to a super-charged bolt-on for XTO," the company said.

Jane Fox : 6/10/2008 8:46:29 AM

WASHINGTON (MarketWatch) -- The U.S. trade deficit widened to $60.9 billion in April behind higher prices for crude oil and other commodities, the Commerce Department reported Tuesday. Imports rose 4.5% to $216.4 billion, while exports increased 3.3% to $155.5 billion. Excluding the impact of inflation, the real trade deficit slipped by 0.1% to the lowest level in nearly five years.

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