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Jeff Bailey : 6/20/2008 3:16:25 AM

Two former Bear Stearns hedge fund managers charged ... AP Story Link

April 2007: "The subprime market looks pretty damn ugly," Tannin wrote to Cioffi in April 2007.

Financial Select SPDR (XLF) Link ($1 box).

$0.50 box Link

iShares DJ U.S. Home Construction (ITB) Link

And ... Bear Stearns ? Shoot! No charts on StockCharts.com, or Dorsey/Wright.

FOMC Minutes 5/09/2007 Link The incoming data on new home sales and inventories suggested that the ongoing adjustment in the housing market would probably persist for longer than previously anticipated. In particular, the demand for new homes appeared to have weakened further in recent months, and the stock of unsold homes relative to sales had increased sharply. That said, participants also noted that sales of existing homes appeared to have held up somewhat better since the beginning of the year. Moreover, the turmoil in the subprime market evidently had not spread to the rest of the mortgage market; indeed, mortgage rates available to prime borrowers remained well below their levels of last summer. Nevertheless, most participants agreed that, although the level of inventories of unsold homes that homebuilders desired was uncertain, the correction of the housing sector was likely to continue to weigh heavily on economic activity through most of this year--somewhat longer than previously expected.

Remember when "housing price inflation" was such a worry? Alway, and I do mean ALWAYS something to worry about.

Jeff Bailey : 6/20/2008 2:15:20 AM

Shanghai Comp. ($SSEC) Link (50-point box) ... has been pummeled pretty much from the opening bell in early January (1) and the earthquake had negative impact.

Up 129, or +4.70% at 2,878. Low/high was 2,696/2,917

Components and "reaction" Link

Jeff Bailey : 6/20/2008 1:13:26 AM

Hang Seng ($HSI) Link (100-point box) ... recovers some of yesterday's 528-point decline. Currently up 292, or 1.28% at 23,090. Session low/high has been 19,387/23,411.

Jeff Bailey : 6/20/2008 12:51:20 AM

As noted in past commentary/analysis, PetroChina (PTR) $140.49 Link , once a high flyer, suddenly started trading weak despite oil's surge. As noted, the "price caps" implemented by the Chinese government worked against the company when oil prices began their surge earlier this year.

It would appear that a reverse/head shoulder pattern presents itself, with neckline at approximately $158.

Jeff Bailey : 6/20/2008 12:42:13 AM

Today's, if not this year's top stories/developments ... China raising unleaded prices 17%, diesel 18%, jet fuel 25%, and electricity by 5% in an attempt to bring down oil prices. Several industry analysts see China's move as further trend of communist and socialist nations transformation on economic issues when trying to regulate prices, the regulations tend to have the opposite impact intended. Those not impacted directly are farmers, fertilizer producers, earthquake impacted areas, or individual/home users.

Keene Little : 6/19/2008 10:18:58 PM

Friday's pivot tables: Link and Link

The DOW shows a little more upside potential to its downtrend line from May 19th (near 12170) while SPX has a little higher to go before hitting its downtrend line from June 5th (near 1350). If we can a little more rally Friday morning that's where I'd be watching those two for resistance since the bearish play from there is for a breakdown to much lower levels.
DOW 60-min: Link
SPX 60-min: Link

NDX is looking the strongest at the moment so if it can rally a little further and achieve two equal legs up from June 12th that would have it potentially finding resistance at 2015.57. Higher upside potential exists up to the 2050 area and its broken uptrend line from March: Link

The RUT is between SPX and NDX in strength but if it too can achieve two equal legs up from its June 11th low it will get up to 751.53 and potentially run into its broken uptrend line from March in the same area: Link

With all these, if the current bounce fails and prices head back below yesterday's/today's lows, and especially if below last week's lows (which the DOW has already done) then the price patterns turn very bearish and I would only be interested in the short side of the market.

OI Technical Staff : 6/19/2008 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.

Linda Piazza : 6/19/2008 4:12:27 PM

That OEX next rise up to the 611-612 level never happened. The OEX did end the day with a small-bodied candle with upper and lower shadows, at the bottom of a decline. This is normally a potential reversal signal. It's complicated this time, however, by the fact that it was produced just under what had looked like support rather than at it or above it. This is Keltner and other support. If I look at the 608-635-ish range that I'm watching as a potential summer-time range, then I guess it closed at it, but Keltners and the weekly 200-sma say otherwise. Other indices give a mixed picture, too. The VIX is coiling but did not get anywhere near its 6/11 high when the indices punched down to test, and in some cases exceed, their 6/11-6/13 lows. That's potential bullish divergence, but it could be opex related, so it's somewhat discountable. The USDJPY continues to consolidate sideways at its 200-sma and -ema's instead of pulling back strongly after hitting them. I do expect it to pull back at some point to its 10-sma, now streaming higher and at 107.31, but its action so far is not indicative of a strong further decline unless this inter-market (USDJPY to U.S. equities) has changed or unraveled.

So, we're in an iffy time and iffy times sometimes produce choppy trading conditions.

James Brown : 6/19/2008 3:56:34 PM

more coal stocks..
CNX is close to producing a bearish engulfing candlestick pattern... These stocks: FDG, JRCC, MEE... are also suffering some profit taking.

James Brown : 6/19/2008 3:54:42 PM

A lot of the high-flying coal stocks appear to have produced some very bearish candlesticks today.

Alpha Natural Resources (ANR) has produced a bearish engulfing candlestick (reversal) pattern...

Linda Piazza : 6/19/2008 3:50:38 PM

You're doing better than I am, Keene. I often forget to put which index I'm discussing! My husband learned many years ago to read my mind rather well, and I guess I expect subscribers to do the same.

Keene Little : 6/19/2008 3:49:29 PM

I just went back and read my last post and realized I never put what upside level I like for SPX. Doh! 1350.

Linda Piazza : 6/19/2008 3:46:41 PM

The OEX looks as if it could make another attempt at 611.53-612.29 resistance in the last few minutes of trading. The scramble to get positions in order before the close may trump anything seen on the OEX's short-term chart, though, but be aware of this possibility.

Linda Piazza : 6/19/2008 3:44:31 PM

Please check your brokers pages and make sure that you don't have any expiring JUN options that you didn't remember having, particularly in those indices such as the SPX, RUT, and MNX, in which those options stop trading today. If you haven't been trading long, you might not know that the settlement figures for those indices tomorrow morning could be wildly off the values of the close today. We've seen unbelievable differences, so make sure you're safe. If you've sold some options that are within 20-30 points of the SPX, for example, and can close those for nickel this afternoon, I'd certainly consider doing it.

Linda Piazza : 6/19/2008 3:41:18 PM

What happens tomorrow that can impact your trade? First, there are the sometimes crazy Friday morning settlement actions. Tomorrow at 2:00 am ET, Germany's PPI is released, and Germany's inflation has been driving all the hawkish talk among ECB members, so that's definitely important for those concerned about the USD against the euro. We could get to see how ECB President Trichet feels about it, too, because tomorrow afternoon at 12:45, he speaks in Belgium before the Forum of the Financing of Enterprises. I don't see anything else. Winnebago reports tomorrow, but that's about the only recognizable name and I'm not sure, other than the take it gives us on how disposable income is being spent, whether it will impact markets.

Keene Little : 6/19/2008 3:37:34 PM

I still like an upside target for SPX, whether it happens into the close or with a quick rally tomorrow morning (maybe a quick pop higher to get the higher option settlement price). Between a Fib projection there and the downtrend line from May 19th there tomorrow morning, it would make the first place I'd be interested in trying to short it.

Linda Piazza : 6/19/2008 3:35:14 PM

What if the OEX ends the day near its current level? We'll have a small-bodied candle with a spring off the low, a potential reversal signal when it comes at the bottom of a decline. Unfortunately, this one will be somewhat inconclusive because it won't have cleared the daily Keltner resistance showing up near 611, so it will leave us in some uncertainty as to whether it can do so. A resistance band from 609-612 is showing up across many chart periods.

Remember that all such small-bodied candles indicate is that the downward momentum waned today. There was indecision, with bulls and bears fairly evenly matched. But, if the OEX ends up under that 611-612 zone, then we've still got some questions about what happens next and you need to make your end-of-day decisions knowing that there's a potential but not yet confirmed reversal signal.

Linda Piazza : 6/19/2008 3:28:45 PM

I wanted to mention something that I'd meant to mention yesterday. I have a little different take on a downturn with strong volume than some people do. I don't think it's necessarily confirmation of the downturn, depending on what happens as a result of that volume. For example, I mentioned this morning in my 9:30:21 post that "the higher volume [yesterday] coupled with that spring [off the low] shows that at least some buyers were stepping in." That's contrary to what a lot of people believe, I know, and I meant to explain.

First, these ideas aren't mine but rather are expressed in a book I've mentioned before, MASTER THE MARKETS, by Tom Williams. In it, he expresses that we have to look at volume and also at the spread that the volume created. If there's stronger than normal volume in a vehicle such as a major index or a well-traded stock, then big money was stepping in, because we retail traders can't create that kind of volume. So, then the question must be asked of what happened as a result of that volume before a decision can be made as to whether big money was distributing or accumulating. So, if there's a punch off the low, big money had to be doing at least some accumulating. If they weren't, if they were the ones doing all the dumping, we retail traders absolutely could not absorb all the volume they were dumping on the markets.

Yesterday's bounce wasn't big enough to be conclusive, but it was one of the reasons that I was warning about the potential for a bounce with a lot of caveats due to the numbers due today. There are some important caveats to that whole theory, too. For one, big money has enough money to start accumulating on the way down. So, the fact that they're beginning to nimble, if they were, doesn't mean that lower lows won't be hit. In addition, sometimes big money is just as wrong as the rest of us. And, sometimes they're accmulating just for a short ride up, too, so this isn't a sign of "the" intermediate-term bottom. Still, it was enough to have me watchful for bounce potential today. But then, based on what I was seeing with the USDJPY, in that there was no strong pullback from its 200-sma and -ema test yet, I've been watchful for that potential about two days prematurely.

James Brown : 6/19/2008 3:23:45 PM

Not much of a bounce (yet) in Coventry Health (CVH) . This health insurer is down 21% to $31.50 after issuing an earnings warning last night. The intraday low was $30.13. ... actually what little bounce there was is fading into the closing bell.

James Brown : 6/19/2008 3:21:19 PM

Shares of AAPL are bouncing from a test of its rising 50-dma this morning.

James Brown : 6/19/2008 3:20:42 PM

... Apple Inc. (AAPL) claiming that they just sold their 5 billionth song on their iTunes store.

Linda Piazza : 6/19/2008 3:20:24 PM

The OEX's 15-minute 9-ema is now at about 608.60, and bulls would like to see that hold up on 15-minute closes.

James Brown : 6/19/2008 3:18:45 PM

Semiconductor stock Silicon Labs (SLAB) has been able to hold on to its gains today. The stock is soaring +10.3% to $36.95 following an upgrade this morning. I certainly wouldn't chase this move.

James Brown : 6/19/2008 3:09:02 PM

The UNG natural as ETF is down 3.6% but it did bounce on its initial test of the $60.00 level.

Linda Piazza : 6/19/2008 3:06:53 PM

The OEX is headed right up to the potentially strong resistance on 15-minute closes at 611.60-612.21. Bulls now need to have their profit-protecting plans in place just in case. The OEX is also approaching potentially strong resistance on a daily close.

James Brown : 6/19/2008 3:06:31 PM

It looks like the news that China is raising prices on fuel is really lifting some of the Chinese energy stocks.

China Petro & Chemical (SNP) is up 8% to $112.70 and breaking out over its exponential 200-dma on strong volume more than 3x the normal volume.

PetroChina (PTR) is up 5.9% to $142.51 and breaking out over its 50 and 100-dma.

Keene Little : 6/19/2008 3:05:00 PM

I'm back. Not a whole lot has happened (a real shocker on an opex Thursday) but the blue chips are at least working their way a little higher. Another pullback and then push higher could finish their bounce. NDX is now challenging Tuesday's high (1992.50) and could be on its way up to a price projection near 2015 (trading 1989 at the moment) for two equal legs up from the low on June 12th. First it needs to break Tuesday's high though.

James Brown : 6/19/2008 2:49:35 PM

Some interesting comments on CNBC...

... could have 30% (or more) of the publicly traded banks no-longer existing as independent banks by the time this credit crisis is over...

... claiming that Home Equity Loans (HELOCs) are defaulting at 50% (in this country)...

James Brown : 6/19/2008 2:39:21 PM

Trading Idea: TCK ... Mining stock Teck Cominco (TCK) is bouncing from the bottom of its bullish channel. The May highs near $53.70 could be a target or if you think the channel continues you could aim higher. chart: Link

Linda Piazza : 6/19/2008 2:37:49 PM

The OEX is breaking up through the highest version of the trendline off Wednesday's swing highs. Watch out for potentially strong resistance near 610-612 if it keeps climbing.

James Brown : 6/19/2008 2:34:08 PM

The Semiconductor Index (SOX) is up more than 2% but the rally has stalled near its 50-dma. chart: Link

James Brown : 6/19/2008 2:31:23 PM

Ryder Systems (R) is contributing a lot to the strength in the transports. THe stock is up 4.5% and breaking out over its overhead trendline. chart: Link

James Brown : 6/19/2008 2:10:10 PM

The combination of the airlines and the railroads are fueling a 2% gain in the Dow Transportation (TRAN) index.

The DJUSRR railroad index is up 2.2%. This sector was breaking down two days ago and now it looks like a bear trap with the sudden reversal higher. chart: Link

James Brown : 6/19/2008 2:05:02 PM

The drop in crude oil today is fueling some big gains in the airlines.

The XAL index is up 5.5%.

DAL ... +8.9%
AMR ... +6.2%
UAUA... +5.9%
CAL ..... +6.1%
LUV .... +2.5%
JBLU ... +3.0%
RYAAY ... +3.6%
CPA ... +3.3%
RJET... +5.2%

Linda Piazza : 6/19/2008 2:00:10 PM

Isn't this fun? The OEX's 15-minute 9-ema is now about 606.60, and the OEX is of course below that as we are ending this 15-minute period. The OEX is at 606.06 as I type, and perhaps needing a trip down to next support near 604-604.90, but you really just can't tell on an opex week Thursday afternoon.

James Brown : 6/19/2008 1:54:30 PM

Our put play in Capital One (COF) is nearing our first target at $40.25. The stock is down another 3.9% around $40.73. The intraday low was $40.52. The $40.00 level is near the bottom of COF's bearish channel, which is where I would expect an oversold bounce.

James Brown : 6/19/2008 1:52:17 PM

Research In Motion (RIMM) continues to show relative strength. The stock is up another 1.5% and inching higher along the center line of its bullish regression channel.

James Brown : 6/19/2008 1:50:33 PM

Exit Alert - BTU - Peabody Energy surged to $86.20 this morning. Our secondary target was the $84.00-85.00 zone.

Linda Piazza : 6/19/2008 1:46:18 PM

We haven't seen much movement in the OEX since the completion of the 12:15 candle. Either all the coverage on CNBC or just regular pin-them-to-the-numbers stuff has kicked in. So far, the OEX is finding support on 15-minute closes at its 15-minute 9-ema now at 606.82 but it's also found resistance at the Keltner level now at 608.25. One or the other has to break, but RSI is currently a rather neutral 57.61 and other scrambled indications just don't give us many clues about which direction it will be. I wouldn't be surprised if it were up, because even though I've got some concerns (such as the TED spread and my overall view of what will eventually happen), my shorter-term view is that there's been an attempt to steady and bounce markets and it could work.

Keene Little : 6/19/2008 1:44:19 PM

We should ask Jeff if there are a lot of cows in his neighborhood.

I have to leave for about an hour--should be back no later than 3:00 PM. If the market can press higher (not sure if we'll get another pullback first) then watch SPX 1350 for an upside target.

Linda Piazza : 6/19/2008 1:32:34 PM

The OEX has so far been finding support on 15-minute closes on its rounding-up 15-minute 9-ema and now it's back to challenge that trednline that's been giving it so much trouble. That's at about 607.35, right now, right where the OEX is as I type. Potential Keltner resistance on 15-minute closes is a bit higher, however, with that at 608.45 on 15-minute closes. Bulls need a confirming 15-minute close above that before they even begin to believe the OEX is breaking to the upside.

Linda Piazza : 6/19/2008 1:30:32 PM

Jeff, wherever you are, I hope the leak is found and you're soon able to return home!

Keene Little : 6/19/2008 1:11:01 PM

We've got very different short term wave patterns in price action from yesterday. The NDX looks the most bullish with the potential to create an impulsive 5-wave move up today if the current small pullback leads to another push higher. That would normally mean another rally leg following a pullback. But the others, including the RUT, look much more corrective in their bounces and it gives me the impression we're going to see a move lower again as soon as the bounce finishes.

Jeff Bailey : 6/19/2008 1:01:19 PM

I have to vacate my house as city officials just informed me they are investigating a gas leak.

Jeff Bailey : 6/19/2008 12:48:25 PM

Sector Losers ... HMOs -7.57%, Money Center Banks -2.70%, Regional Banks -2.08%, CBOE Oil -1.80%, AMEX Nat Gas -1.57%, Broker/Dealers -1.45%

Linda Piazza : 6/19/2008 12:47:34 PM

The OEX's 15-minute 9-ema is now 606.48.

Jeff Bailey : 6/19/2008 12:46:35 PM

Sector Winners ... Airlines +6.40%, Dow Transports +3.03%, Home Construction +2.14%, Health Service Providers +2.04%, Semiconductors +1.67%

Linda Piazza : 6/19/2008 12:46:31 PM

I've been writing about what the OEX's 15-minute chart says today and even the possibility that the OEX could chop back and forth this summer before it does what it's going to do. What I think it may eventually do is head back down to retest the year's low. If the TED spread keeps rising, I'm going to start leaning a little more toward the retest sooner rather than later side, but so far, it's worrisome but not screaming-worrisome yet. So far, the possibility that the OEX could chop back and forth is preserved, but if it doesn't start maintaining 608-ish support a bit more firmly, then it could soon--within a week--topple over and start a steep slide toward the year's low and a weekly Keltner level now at 582-583. So, because I'd rather--for the benefit of people such as my elderly mother-in-law and subscribers who are too heavily long and others--that I'm wrong about the need to retest, I certainly would like to see the OEX scramble back above about 611 by the day's close.

Jeff Bailey : 6/19/2008 12:44:03 PM

YM Long cancel order alert! ... with YM 12,048, please cancel order from 12:20:32 at this time.

Jeff Bailey : 6/19/2008 12:39:04 PM

12:00 Internals found at this Link

Linda Piazza : 6/19/2008 12:36:56 PM

The TED spread is now 0.93.

Linda Piazza : 6/19/2008 12:31:31 PM

It looks as if the OEX may close this 15-minute period below the resistance mentioned, creating a potential reversal signal as it does so. It may drift back to test the 15-minute 9-ema, now at 606.20. If it does, bulls want that to hold as support on 15-minute closes. They would prefer sideways consolidation until the 10-sma rises some more and then a punch higher.

Linda Piazza : 6/19/2008 12:21:29 PM

The OEX is now challenging the best-fit redrawn descending trendline that began to form yesterday. Taht's now at about 607.80, with the OEX as 607.27 as I type. Bulls need to see the OEX maintain 15-minute closes above the 15-minute 9-ema, now at 606.17 if it should pull back. They want sustained 15-minute closes above 608.72.

Jeff Bailey : 6/19/2008 12:20:32 PM

YM Long setup alert! ... with YM 12,055 ... Look to trade LONG the YM on a trade back at 12,005. Stop 11,995. Target 12,130.

Linda Piazza : 6/19/2008 12:14:41 PM

The Nasdaq at least has broken above the descending trendline that began forming yesterday morning, whether that's a best-fit version or one that encompasses all the candle shadows, too. It is, however, testing potential resistance on 15-minute closes at 2445.

Keene Little : 6/19/2008 12:13:29 PM

Techs have been holding up better today and NDX is leading the way to the upside with new daily highs here and now challenging yesterday's mid-day high.

Jeff Bailey : 6/19/2008 12:11:30 PM

Don't see it in the VXO.X ... not yet anyway.

VXO 24.16 +2.37% ... just the 100 S&P

Jeff Bailey : 6/19/2008 12:10:17 PM

Could be a "bad tick" in the VIX.X, but quick decline to 20.91.

VIX 22.27

Be alert!

Jeff Bailey : 6/19/2008 12:04:23 PM

Fuel protests spead, China to increase prices! ... Reuters Story Link

Linda Piazza : 6/19/2008 11:58:54 AM

This time, if the OEX should rise through its redrawn channel, a channel I've once again redrawn to incorporate today's action, be wary of potentially strong resistance near 608-608.90.

Jeff Bailey : 6/19/2008 11:48:58 AM

AMR $5.75 +5.31% ...

Jeff Bailey : 6/19/2008 11:47:24 AM

USO $108.78 -1.90% ...

Jeff Bailey : 6/19/2008 11:47:03 AM

Now, how might we look to BENEFIT from that news? Two (2) price increases due to high oil prices? Place DD on your watch list. Should DD get above $47.79 (check out DD on 60-minute interval) it should go at least $50.

Linda Piazza : 6/19/2008 11:43:03 AM

The TED spread is now 0.92.

Linda Piazza : 6/19/2008 11:41:30 AM

The OEX sorta held the support now at about 604.60 on 15-minute closes. It closed a little below it but right at a trendline that describes bottom support for its descending price channel. As I said earlier, maintain a little skepticism about the OEX dropping right toward next support.

Jeff Bailey : 6/19/2008 11:39:48 AM

DuPont Titanium Technologies raising titanium dioxide prices by approximately $150/ton due to rising cost increases. Richard Olson, vice president and general manager said, "We believed the increases announced earlier in June would be adequate to offset rising costs, but with oil now approaching $140/bbl, there is simply no alternative to this action."

Linda Piazza : 6/19/2008 11:31:27 AM

The TRAN zoomed up this morning, so the transports are doing their part to try to support the OEX, Dow and SPX. With the financials and some of the crude-related (OIX, OIH and XOI are all dropping) stocks so weak, though, the transports can't do it alone.

Linda Piazza : 6/19/2008 11:28:46 AM

The OEX didn't even get all the way to that next resistance, which was up near 609-610, but only approached it. It dropped all the way through the new descending channel and is now testing support. Those hoping it climbs through that channel again and doesn't drop through the support and down toward the next target at 602.24 want to see it hold support on this 15-minute close at or near 604.75. It's of course below that now with only a few minutes left in the 15-minute period. Note, however, that the VXO is NOT hitting a new high as the OEX hits a new low, so maintain that slight skepticism.

Keene Little : 6/19/2008 11:27:42 AM

The little rally that couldn't is back down to the day's lows. Banks look like they could use a new low and that might continue to be a drag on the broader market. Energy stocks are down this morning and that could be a drag on SPX.

Linda Piazza : 6/19/2008 11:07:17 AM

The USDJPY is now 108.00, testing resistance on 15-minute closes. The more important tests are the ongoing tests of the daily 200-sma and -ema's, with those at 108.12 and 107.84, respectively.

Jeff Bailey : 6/19/2008 11:04:42 AM

Swing trade put exit alert! ... the Panera Bread PNRA Aug $45 Put (UPA-TI) at the bid of $2.35.

PNRA $48.44 +0.68% ...

VIX.X 22.02 -0.98%

VXN.X 25.65 -0.58% ...

Jeff Bailey : 6/19/2008 11:01:23 AM

Swing trade COVERED put exit alert! ... the Panera Bread PNRA Jul $40 Put (UPA-SH) at the offer of $0.35.

PNRA $48.38 +0.58% ...

VIX.X 22.08 -0.71%

VXN.X 25.80 (unch).

Linda Piazza : 6/19/2008 11:01:18 AM

It looks as if the OEX might be able to totter up to the next step on the staircase by closing this 15-minute period above the 15-minute 9-ema, now at 606.76. Now it needs to stay above that 9-ema and keep rising enough to keep the 9-ema rising, too. If in bullish positions, know ahead of time how you'll treat the test of the 609.33-610 zone as that could push the OEX right back through a descending channel that I've redrawn on my charts. There's potential Keltner resistance there, too.

Linda Piazza : 6/19/2008 10:50:19 AM

The OEX ended that last 15-minute period above support now at 605.61, but now it needs to scramble above and stay above the 15-minute 9-ema at about 606.60. This is just one more stair on the way to the next level and is no assurance in this climate that the OEX won't still tumble down the staircase.

Keene Little : 6/19/2008 10:43:44 AM

The bottom should be in now if we're to get a rally leg now. Any drop to a new low would turn the price pattern more bearish and I would not be interested in bottom picking. Long against this morning's low should be the right play but it's only for a trade. DOW 12120, maybe a little higher, and SPX 1350 are some initial Fib upside targets.

Jeff Bailey : 6/19/2008 10:40:45 AM

US Nat. Gas Fund (UNG) $62.13 -1.20% ...

Jeff Bailey : 6/19/2008 10:40:00 AM

EIA Nat. Gas Storage Link ... Build of 57 Bcf

Linda Piazza : 6/19/2008 10:39:40 AM

OEX bulls want to see the OEX close this 15-minute period above 605.75 and would prefer a close above 606.63. If in bullish positions, I would evaluate closely what I wanted to do if 609.65-610 were tested, as that could be significant resistance.

Jeff Bailey : 6/19/2008 10:37:50 AM

Swing trade sell NAKED put alert! ... for one (1) of the PetroChina PTR July $120 Puts (PTR-SD) at the bid of $1.00.

PTR $142.15 +5.66% ...

Linda Piazza : 6/19/2008 10:33:48 AM

Due to the often-seen pin-them-to-the-numbers action that begins about mid-morning on opex Thursday, it could be that we'll soon see some setups that produce no follow through. That doesn't always happen, particularly in this environment, but do incorporate a little skepticism today into your outlook when you're scanning charts.

Jeff Bailey : 6/19/2008 10:30:35 AM

10:00 Internals at this Link

Linda Piazza : 6/19/2008 10:30:10 AM

Here's the OEX's 15-minute Keltner chart: Link With that setup, would you put too much faith in the 602.70-ish target being hit or would you maintain still a little skepticism? I obviously have a lot of faith in Keltner channels, and, when I didn't believe what I was seeing two days ago, the action delivered a lesson that I need to believe them. So, there's definitely vulnerability to the 602.70-ish level, but, me, I'm going to maintain a little skepticism still.

Linda Piazza : 6/19/2008 10:26:45 AM

Despite my doom-and-gloom reports on the TED spread and outstanding commercial paper, I seem to be falling in line with Keene, expecting a possible rally today, although I'm not sure how far it will get. However, I've honestly been thinking one could take hold for two days now, and it hasn't, so take that information for what it's worth.

Linda Piazza : 6/19/2008 10:25:18 AM

The Federal Reserve has released its weekly figures on outstanding corporate paper and the news is not good. This is a measure of how difficult or easy it is for corporations to fund their short-term needs. After two weeks of increases, the outstanding paper fell $20.3 billion on a seasonally adjusted basis. Both financials and non-financials were hit. Asset-backed paper dropped $7.6 billion.

Coupled with a rising TED spread, I don't like this news.

Keene Little : 6/19/2008 10:19:28 AM

The DOW undercut yesterday's low a tad more than I expected and it might not be quite finished. Assuming we're going to get a rally leg this morning (instead of dropping like a stone from here), watch for one more minor push lower before the reversal.

Linda Piazza : 6/19/2008 10:19:04 AM

The OEX's potential support on 15-minute closes at about 604.90 held into the close of the last 15-minute period. However, on a Keltner basis, a potential downside target of 602.75 has been set. As long as the OEX is clinging to the 604-ish level, however, maintain just a little skepticism about whether it will be hit.

Linda Piazza : 6/19/2008 10:13:30 AM

Last night in his Wrap, Robert Ogilvie reminded subscribers of a change in the threshold for automatic exercise of stock-settled in-the-money options, and I thought the warning ought to be repeated. Here's how BrokersXprses worded the change: "The OCC has lowered the automatic exercise threshold for equity options from 0.05 to 0.01 beginning with June expiration." If someone is long an equity option that ends up in the money by $0.01 or more, that option will be automatically exercised. Robert went on to remind readers of SPY and DIA dividends tomorrow, too. Having once having SPY options exercised so the proud new owner could collect those dividends, I say that you need to make decisions today about those SPY and DIA options if they're in or close to the money.

Linda Piazza : 6/19/2008 10:05:38 AM

At 604.77 as I type, the OEX tests trendline (wedge support) and Keltner support on 15-minute closes at 604.80. Those hoping for a steadying want this to hold and indeed would prefer for the OEX to bounce back to and above 606.24-606.98 by the close of this 15-minute period. Those hoping that the OEX will set and then see a potential downside target now near 602.79 of course want a close beneath that support.

Linda Piazza : 6/19/2008 10:02:11 AM

My quote for the TED spread is delayed, but the early read this morning was 0.90. A rising TED spread indicates rising default risk or at least a perception of rising default risk. Although my evidence is anecdotal and derived from a study of charts during a time when the action was already a departure from usual action, I consider it a danger if the TED spread rises back over about 0.98-1.00 after having touched support over the last month. That support is from a broad declining channel that began forming as values retreated from last August's highs. So far, values aren't that far out of the 0.77-0.88-ish range in which they'd moved over the last two weeks, but I don't like the trajectory of this. Here's a Bloomberg chart of the last week, leading up to today but not including today's values: Link Not because of my own portfolio because that's relatively safe, but for the sake of the globe's financial health, I'd really like to see this turn down again.

Linda Piazza : 6/19/2008 9:56:45 AM

Other events to keep on your radar screen for today, other than the Philly Fed (and Leading Indicators, which usually aren't all that "leading"). At 12:45 pm ET, Treasury Secretary Paulson ("talk up the dollar" Paulson) will be speaking in Washington, D.C. about the economy and financial markets. At 2:30 pm ET this afternoon, Federal Reserve Governor Donald Kohn will be testifying before the Senate Subcommittee on Securities, Insurance, and Investment, and the Committee on Banking, Housing and Urban Affairs. Each of these could impact markets.

Keene Little : 6/19/2008 9:56:31 AM

The banks are now approaching potential support at a Fib projection area of 178-180, and the bottom of a parallel down-channel for price action since January (near 176). This should form at least a short term bottom for banks from which we'll see a sideways/up correction that lasts into August before heading lower again. BIX daily chart: Link

Linda Piazza : 6/19/2008 9:53:17 AM

You've got a few minutes to decide if you want to hold your positions open over the release of the Philly Fed. Decide now.

Linda Piazza : 6/19/2008 9:52:18 AM

The A/D line has dropped straight to the support I mentioned. Remember that this could be just part of establishing an early range, as I mentioned earlier sometimes happens when the A/D line opens in the middle of a channel. However, bears should take this as a warning that the A/D line is now testing potentially strong support. Link Unfortunately for those with bullish hopes, though, RSI is high and ready for a rollover rather than low and ready for a climb, as bulls would hope, so there's some mixed evidence.

Tab Gilles : 6/19/2008 9:51:50 AM

Found this interesting---

Former House Speaker Newt Gingrich called on Congress to help ease our energy woes by allowing more drilling in the U.S., as President Bush released Wednesday a four-point plan to increase domestic fuel production.

Gingrich ? who founded the bipartisan group called "American Solutions for Winning the Future" ? has said people are ready for action. He has collected some 750,000 signatures of people who want to increase oil production in the U.S. Link

Jeff Bailey : 6/19/2008 9:51:46 AM

PetroChina (PTR) $140.54 +4.45% ...

Jeff Bailey : 6/19/2008 9:50:42 AM

Reports hitting the wires that China will raise its country's gasoline and diesel prices by 1,000 yuan/ton.

Keene Little : 6/19/2008 9:49:16 AM

I still think the market is due for a bounce this morning so watch for a slight undercut of yesterday's low for the DOW before reversing back up again. DOW 11994 is potential Fib support.

Linda Piazza : 6/19/2008 9:48:52 AM

The BIX is back to test yesterday's low. That low was 183.97, and the BIX . . . well, it just dropped below it as I typed. It's at 183.78 as I type. Without a strong bounce soon that leaves only a small tail piercing that previous support level, this is a violation of yesterday's low and a confirmation of the breakdown out of yesterday's triangle.

Keene Little : 6/19/2008 9:46:52 AM

The quick pop back up in the equity futures following the cash market open has been completely reversed so we're just whipping around right now. The banks continue to be a drag on the market, especially the DOW.

Linda Piazza : 6/19/2008 9:39:05 AM

Keltner outlook on the A/D line: The A/D line opened in the upper or bullish half of the 15-minute Keltner charts but it's squarely between support and resistance, as likely to tumble toward support at -475 to -500 as to climb to resistance (historical) at about +1000 or (Keltner) at about +1400. It's at 95 as I type. It's not giving us a clear view, but when this happens, what sometimes happens is that the A/D line establishes a broad range in the first 15-30 minutes and then chops around inside that range before next direction is determined. That means the early action may not be that trustworthy as it may just be establishing a range.

Keene Little : 6/19/2008 9:39:45 AM

A 38% retracement of the DOW's decline from Tuesday is at 12120. Two equal legs up in its bounce off yesterday's low is at 12114 so that's the area I hope it rallies to and we'll see what the setup looks like for a short play.

Jane Fox : 6/19/2008 9:33:59 AM

Crude is falling and is now back to 134.40.

Linda Piazza : 6/19/2008 9:32:57 AM

Whatever trading decisions you'll be making early this morning, remember that we have the Philly Fed at 10:00 am ET. That number can and definitely has moved markets. It's a strong predictor of where the ISM's take on manufacturing strength might go.

A little background: the USDJPY dropped some overnight, but still is basically chopping sideways this week as it challenges its daily 200-sma and -ema's. It was a given that these averages would stall the climb. What wasn't a given was how this currency pair, often a predictor or corroborator of U.S. equity movements, would behave afterwards. Sideways consolidation is the most bullish of the possible scenarios, if it continues.

So far, then, the USDJPY is not really predicting the idea of a steep decline right now, so I keep wondering if support being tested is going to hold. So, keep the USDJPY on your radar screen.

Yesterday's OEX candle produced only a little spring off the low so wasn't a bullish candle, although the higher volume coupled with that spring shows that at least some buyers were stepping in. Late yesterday, the OEX broke above a bullish falling wedge on the 15-minute chart but came back to test that support. It was sliding down the support, holding it but not bouncing up from it yet. SPX futures were slightly below fair value, so we can imagine that the OEX might continue sliding down along that wedge's top trendline.

Bulls want that support to hold and, this time, to prompt a bounce. The trendline is now at about 606.40 but still descending. There's also potential Keltner support on 15-minute closes at 606.88, and bulls would like for that to hold. As of yesterday, the OEX was holding that Keltner level's support on 15-minute closes, too, that so was also an improvement from the earlier behavior.

These are small changes, of course, and not trustworthy with the Philly Fed looming. If that support doesn't hold, the 15-minute chart suggests next support at 605.28 but with a potential downside target of 603.14. If that fails, 599-600 is a possibility, but not yet a probability.

If the OEX pops upward, next potential resistance on 15-minute closes is 610.25-610.50 and then 613.64 and 615.44. If the 615.44-617 zone is tested, I would watch carefully for rollover potential.

I don't have a strong opinion or scenario for this opex Thursday. I'd be wary of leaning too heavily on it anyway if I did because of the Philly Fed and the tendency for technical analysis to be less useful than is normal at the end of an opex week. So, so many times in the past, I've seen a certain setup fall into place the Wednesday or Thursday of opex week and then just not seen it happen, only to follow through the next week. Based on Kelnter and other evidence, though, I'd say that the OEX needs to pull itself up by its bootstraps and scramble back above about 611-612 and, hopefully, 616-617, by the end of this week to best preserve this possibility that it's going to turn up inside the 608-635-ish range. I'm not disturbed by a single day with a small violation of that range because it was an approximate range, a guesstimate, but the Keltner setup says that the small violation could get more serious if the OEX doesn't scramble up, hopefully to 611-612 today and stay there through the end of the week.

Keene Little : 6/19/2008 9:18:38 AM

Equity futures have given up this morning's pre-market gains and are back at the flat line. I'm hoping to see a little rally this morning to see if we get a nice setup for a short play. Two equal legs up in an a-b-c bounce off yesterday afternoon's low for SPX is just under 1348 so that would be about 10 points up off its close.

I'm not sure what caused it but I see the euro spiking up this morning and consequently so are the metals. Gold has rallied about $15 in just the last 30 minutes and is still climbing. The top of a sideways triangle pattern (downtrend line from April) is near 926, just above its 100-dma near 924 (currently trading 910) so that makes for a good upside target. The sideways triangle pattern should be a continuation pattern before the next leg down but I'll reevaluate it if and when gold gets up to the 925 area.

Jane Fox : 6/19/2008 8:59:44 AM

All overnight markets tested their previous day lows except the Russell 2000 (ER2).

I see Crude is now up to 137.55 from an overnight low of 135.96. Link

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