Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jeff Bailey : 6/20/2008 11:59:08 PM

Various Energy Futures at this Link

OI Technical Staff : 6/20/2008 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The Market Monitor has been archived.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 : 6/20/2008 9:42:43 PM

Currencies had FXE $156.59 +0.81%, FXY $93.05 +0.69% and FXB $198.25 +0.25%.

Jeff Bailey : 6/20/2008 9:41:20 PM

Closing U.S. Market Watch at this Link

July crude expired today. I'll "roll" to August (cl08q) for others. rb08q, ho08q, ng08q.

July crude's settlement was $0.37 more than Brent's 06/13/08 settlement of $134.25.

Jeff Bailey : 6/20/2008 9:15:35 PM

There was a "bad tick" to $21.00 in the XLF $21.95 -2.59% (session low $21.90). The XLF churned a hefty #3 most active 180.7 million shares today. Just before 12:00 PM EDT, the BIX and the BKX.X were actually green. Some "relief" news from a couple of regionals today, but so tough on the op-ex to draw too many conclusions.

Two levels for me near term are resistance.

OEX 610 and DIA $121.

Jeff Bailey : 6/20/2008 9:00:54 PM

NYSE reporting 5.325 billion shares traded today.

It might be worth noting that today's close for the NYSE Comp. 8,829.25 is almost an EXACT match to 01/17/08 close, in a near-term downward distribution.

On 1/17/08 the NYSE reported an a/d of 475/2694 (pretty close with today's) with a NH/NL of 27/480 (much weaker than today's).

Analysis here would be that market participants are planning on some type of "shoe to drop" in the next couple of days, as the amount of distribution, escpecially LARGE cap and narrow (INDU/DIA and OEX) suggest it is a "big name" that is about to lose the shoe.

The NH/Nl do not suggest "capitulation" numbers where we'll usually see close between 700 and 1,000 new lows at each of the major exchanges.

We do have the Russell reconstitution at the end of the month, but not a large number of additions/deletions this year.

Jeff Bailey : 6/20/2008 8:26:22 PM

Closing Internals found at this Link

Linda Piazza : 6/20/2008 4:27:27 PM

I ended the day worried about the TED spread and wondering if there's news brewing in the financial sector that we haven't learned yet. However, I'm still not so sure about the steep decline to retest March's lows occurring right now, and not so sure why I'm not sure! My overall view is that the indices will retest, so I don't know why I'm finding it so difficult to feel all that right-now-bearish. For three days, I've been fighting the feeling that the OEX is due for a bounce without much of one occurring, of course.

Here's my daily OEX chart with the lower trendline now lowered to encompass all candle shadows (2 now) instead of cutting them off. I used standard technical analysis tools by drawing the upper one when the first two touchpoints were reached and then drawing a parallel one that fit best on the bottom. The line is copied, no fudging with its slant. Link My daily and weekly Keltner channels suggest that a further drop is possible, too, and the close today was about 11 points below the place where I'd thought the OEX might set up a summertime consolidation-range bottom, so clearly my first idea was wrong. I don't know if I'm operating under some sort of bias, although since I pulled my money out of funds, etc., and am one of those sitting in cash (other than my trading account) until I think a bottom has been reached, because I don't think it has been, I don't know how I can be termed too bullish. I just keep seeing warnings that this particular decline is overdone and keep putting more faith in those signs, I guess, than they deserve.

Anyway, stubborn to the last, I see the signs that the OEX could just topple over now and test the March lows, with a potential target on my weekly Keltner charts now at 582.02. Something is just keeping me warning people that it might not happen right now, warnings that have been in vain so far.

Jeff Bailey : 6/20/2008 4:25:51 PM

I hope to post all major energy futures including Brent and Russian oil once settlements established. Get a benchmark to China's new price fixes.

Jeff Bailey : 6/20/2008 4:21:56 PM

US Oil Fund (USO) $109.14 +2.08% ... looks official.

Up $4.84 from the 05/20/08 June Nymex futures benchmark.

Keene Little : 6/20/2008 4:12:20 PM

SPX finished right at the bottom of its parallel down-channel that I showed earlier. It leaves an interesting setup for Monday. I hope everyone has a great weekend.

Keene Little : 6/20/2008 3:50:12 PM

It looks like we're now into the bounce to correct the leg down from this morning's bounce. This should hold up into the close but the setup for Monday is another leg down. It takes a rally back above this morning's bounce high (SPX 1330.48) to negate the immediately bearish pattern that is set up here. In the meantime watch for this morning's first low (SPX 1322.79) to act as resistance.

Jeff Bailey : 6/20/2008 3:43:43 PM

I'd be getting flat equity futures here for day traders.

Linda Piazza : 6/20/2008 3:41:51 PM

Still no 15-minute close above the 9-ema for the OEX. Nearby resistance layers up to 598.75 on 15-minute closes.

Linda Piazza : 6/20/2008 3:27:12 PM

The BIX is rising again off the swing low from about 30 minutes ago. It's got light potential resistance on 15-minute closes near 186.75 but the stronger potential resistance is near 189-189.37.

Linda Piazza : 6/20/2008 3:18:24 PM

The OEX's 15-minute 9-ema is now 598.10 with further potential resistance at 598.97. Just so you know, the OEX has not produced a 15-minute close above the 9-ema all day, so that would be small change in tenor. I don't know that it would matter if that's all that happens, but a big spring off the low into the close might matter a lot.

Linda Piazza : 6/20/2008 3:07:43 PM

TED spread is 0.96.

Linda Piazza : 6/20/2008 3:06:08 PM

Oh, one thought. If any of you have JUN bull put spreads on the OEX or XEO and if the OEX is anywhere close to your sold strikes, you need to consider whether you need to take action this afternoon. Remember how settlement works. It's not the last print of the OEX that determines that settlement value: it's a computation determined from the closing values of each component stock of the OEX. So, for example, if the OEX was diving into the close and each component stock closed at lower and lower values, the settlement value could be far lower than the final print. Or, if the OEX is diving into the close but CSCO makes some major announcement minutes before the close and stocks start popping higher just as the market is closing, the settlement value could be far higher. Anyway, give that some consideration. If you're new to trading credit spreads you might never have been caught in a weird settlement value, but I think if I mentioned November 2006 or August 2007, most of you who had been trading a while could immediately tell me you war stories.

Linda Piazza : 6/20/2008 3:02:04 PM

That potential downside target for the OEX (based on the 30-minute chart) is now 595.19, but the OEX is again testing the descending trendline under the swing lows since Wednesday morning, so, just in case, again watch for the potential for a bounce to kick in at any time.

Linda Piazza : 6/20/2008 2:54:38 PM

Soon it will be time to make end-of-day and end-of-week decisions. We have no idea where the OEX and other indices are going to go by the end of the day, so it's hard to predict what those decisions should be, but you should be setting up some what-if scenarios. For example, I imagine that a lot of you have a lot of profit if you're holding any JUL puts in your portfolios. Are you going to hold those over the weekend? What if the OEX bounces up by the close to somewhere north of 600, leaving a 3-point or more lower shadow? What if it bounces up to 603 or even 606-608? That seems impossible but it's not.

What if your options have doubled in volume and you have multiple options? Have you considered selling half and locking in profit? That way, you can't lose any money and your end-of-day and end-of-week decisions will be made easier. Maybe, if you believe there's still some downside to go on Monday, you'll decide to step out of half now and half of the rest (1/4) near the end of the day, so that you've not only made sure you won't lose any money but have made sure that you'll bring home at least some profit, too.

What if you have no intention of going home with any open put positions this weekend? It may be time soon to start tightening the stops, so that you're taken out near the low. It may be that you'll be taken out and then the markets will reverse lower again almost immediately and you'll do the woulda-shoulda-coulda dance instead of patting yourselves on the back, but I think those pats would still be deserved.

Whatever you decide, decide something now, while markets are relatively calm, before the bond market close and before the end-of-the-day stuff gets wild, if it's going to get wild. Make clear-eyed and wise decisions.

Jeff Bailey : 6/20/2008 2:53:31 PM

Companhia Vale do Rio Doce (RIO) $34.98 -3.04% ... even the rio having a time holding above its June "Max Pain"

Keene Little : 6/20/2008 2:40:43 PM

The one bullish possibility is for SPX to bounce off the bottom of its parallel down-channel from the May high, currently near 1317. I'm having difficulty figuring out a bullish wave count to accomodate that but it's possible we'll at least get a bigger bounce. Obviously if it breaks down below the channel it would be confirming the EW count that calls for a strong selloff from here. Link

Keene Little : 6/20/2008 2:34:40 PM

It had looked like this morning's low might hold with bullish divergence but then the new low. I had mentioned that the wave pattern is bearish with a break below last week's low and that selling could accelerate. With yesterday's relatively weak bounce (from a Fib retracement perspective) and then today's weak bounce, these are more bearish signs. Look for another small bounce now to correct the leg down from this morning's high and then continued selling (perhaps into the close for an ugly finish to the day). This is all setting up for a very bearish Monday.

Linda Piazza : 6/20/2008 2:32:48 PM

The SPX has potentially strong resistance on 15-minute closes converging up to 1322.10. The SPX is 1318.85 as I type. Bulls want the SPX back above that converging resistance; bears want it to hold on 15-minute closes.

Linda Piazza : 6/20/2008 2:31:42 PM

The OEX's 15-minute 9-ema and the breakdown benchmark are converging near 599.58, so that is presumed potential resistance on 15-minute closes. The configuration looks to be as firm as it did when it was supposedly support a bit earlier! If the OEX should rise, we'll see if it does any better at holding it back than it did at holding it up. OEX at 597.83 as I type. Bears, people could start squaring up positions ahead of the weekend at any time now, so keep that in mind and don't let your profits turn into losses.

Jeff Bailey : 6/20/2008 2:24:26 PM

02:00 Internals found at this Link

Linda Piazza : 6/20/2008 2:23:28 PM

The OEX is now testing the descending trendline touching the 6/18 10:45 low and today's 10:00 low. It bounced from both. It feels silly to keep warning you of things that don't occur, but there it is: a descending trendline from which the OEX has bounced a couple of other times, so I need to let you know to be watchful for a bounce.

Linda Piazza : 6/20/2008 2:20:46 PM

This time, it's the VIX that's confirming the equity lows with a new high while for about a week, it's been the VXO that confirms while the VIX plays a follower's role rather than a leading one. Go figure.

Linda Piazza : 6/20/2008 2:19:48 PM

VXO is testing but not breaking through potential resistance now at 24.90 on 15-minute closes. It's previous high of the day was 24.91, and it's currently 24.89, so testing that previous high, too. Bears want an upside break; bulls, a rollover.

Linda Piazza : 6/20/2008 2:18:16 PM

No new low in the TRAN, either, although I wouldn't be surprised to see the TRAN drop to 5164.10, near but not below the previous low. The TRAN is now 5185.67, well above the 5151.70 low of the day. These divergences haven't made a bit of difference so far, but I still want to let you know about them.

Linda Piazza : 6/20/2008 2:17:05 PM

No new low of the day for the BIX yet. At 184.41, it's still well above its low of 181.39.

Linda Piazza : 6/20/2008 2:16:11 PM

Potential OEX target and potential support on 30-minute closes has now dropped to 595.23. A Fib bracket anchored from the 6/17 high to the 595.50-ish level fits quite nicely with the consolidation bands, so I'd be thinking in advance of how I wanted to treat a test of that level if I were in bearish trades, just in case that's all for now.

Jeff Bailey : 6/20/2008 2:15:10 PM

All equity-based sectors now in the red.

Linda Piazza : 6/20/2008 2:11:14 PM

The testing period should be ending soon and the results period kicking in. Bears have it easy as you just have to decide when you start stepping out of partial positions and locking in some profits and how tight you keep those stops on the rest. Remember that if you're in JUN options in equities or indices such as the OEX that still trade today, the extrinsic value (the part not in the money) is going to start seeping away fairly rapidly this afternoon. That effect will mean that you need actual price movement in your direction or else the options you hold will start losing money rather than staying steady in price.

Jeff Bailey : 6/20/2008 2:01:14 PM

USO $108.70 ... IYS-RG $2.30 x $2.40 ... high has been $2.35.

Jeff Bailey : 6/20/2008 2:00:42 PM

$0.40 and $0.90 just seem to be tough option numbers.

Jeff Bailey : 6/20/2008 2:00:15 PM

I'd stick them out there at $2.35. Hate, just hate $0.40 number.

Linda Piazza : 6/20/2008 1:59:14 PM

I don't see anything that's predictive of next action today in the underpinnings of the market, but just underpinnings that corroborate what we're seeing on price charts. If the OEX is testing or violating by a little the downside support, then VXO is testing the upside resistance, as is TRIN.

I see some divergences but none have meant anything yet this week and so we just keep being warned to pay attention without there being much need to do so, so far. Higher lows so far in USDJPY, TRAN, BIX, etc.

So, right now, TRIN is testing but neither besting nor rolling down below the resistance now at 1.862 on 15-minute closes (with TRIN at 1.76). VXO is testing but not besting nor rolling down beneath potential resistance at 24.82 (with the VXO now at 24.70).

Jeff Bailey : 6/20/2008 1:57:55 PM

Brazil announcing it sold BRL750.8M bonds at range of 14.48-14.75%.

Jeff Bailey : 6/20/2008 1:56:23 PM

Mexico's Pemex saying oil output rose in June to over 2.8M B/D.

Jeff Bailey : 6/20/2008 1:51:14 PM

Day trade put cancel order alert! ... for the IYS-RG at this time.

USO $109.39 +2.30% ... IYS-RG $1.65 x $1.80

Linda Piazza : 6/20/2008 1:50:11 PM

Another 15-minute close in breakdown territory for the OEX, like those we saw earlier this morning. Bulls want to see the OEX scramble back above 599.94 and then 600.50 and stay there. Bears want any tests of that zone to result in another rollover. Remember that we're watching a test and it's the outcome of the test that's going to give us some information about the next few hours. It's not the fact that there's a test going on but the result of that test that gives us that insight.

Jeff Bailey : 6/20/2008 1:48:44 PM

If you're trading USO PUTS today, from the bearish side, wouldn't let it get much back above $109.50 now.

Linda Piazza : 6/20/2008 1:44:30 PM

The TRAN did not hit a new low of the day when the OEX, SPX and Dow did. The BIX remains far from its low of the day, although it did violate its 15-minute 9-ema. The VIX has not hit a new high of the day, although it tends to trail this week rather than lead. Even the VXO, however, that has been more reliable this week as a predictor or corroborator, has not hit a new high. It is however rising toward that previous high and next resistance, with that resistance (that stopped it earlier today) now at 24.82 on 15-minute closes. It's at 24.63 now.

So, we saw the dip and it may be followed by more selling, but some signs suggest that it was indeed a test and we have to wait until the test's outcome before we know what happens next.

Jeff Bailey : 6/20/2008 1:40:44 PM

Son of a gun ... $109.25 ... $1.70 x $1.80

Jeff Bailey : 6/20/2008 1:39:14 PM

It was there within that last 10-minutes as USO came back up to $110.25.

Linda Piazza : 6/20/2008 1:39:12 PM

TRIN again at potential resistance, this time at 1.85 on 15-minute closes. The TRIN hit it and is now at 1.78. Not much of a pullback, but do watch for rollover potential in the TRIN and then bounce potential in the equities. Bears want TRIN to keep climbing; bulls, that rollover.

Jeff Bailey : 6/20/2008 1:37:54 PM

Day trade put alert! ... for one (1) of the US Oil Fund June $111 Puts (IYS-RG) for a LIMIT price of $0.90.

No stop and target $108.

USO $109.63

$1.35 x $1.50

Linda Piazza : 6/20/2008 1:37:36 PM

Nope. No magnets repelling each other. The OEX has driven the potential Keltner support on 15-minute closes lower, to about 599.95. The OEX closed the last 15-minute period right on it but has now dropped through it and to a new low of the day. The next potential target that I mentioned earlier, then above 596, is now at 595.49, but, again, I'm not sure it will be reached. This last move came as we're moving into a typical stop-running time of day, so I consider it a test. If that test results in increased selling then we have one answer. If dip buyers step in soon, we have another, so be particularly vigilant with your stops right now. Those who have a big cushion and think this is the start of something big to the downside--could be, but we'll have to wait to see where this day ends, for one thing--might widen stops so they're not whipsawed out, while those who have too much risk to the bearish side and not much cushion and whose intention it is to get out this afternoon might want to narrow theirs so they don't let a gain turn into a loss.

Jeff Bailey : 6/20/2008 1:29:13 PM

Interesting comments/note on Ace Ltd. (ACE) $57.64 -1.41% ... Will have "record" number of crop insurance claims this season after floods.

I'll have to check with some clients/farmers to see if they've heard anything about premiums next year. I do know that with the cost of seed, diesel fuel, fertilizer, weed killer, that they aren't planting ANY field, even in the drylands of Kansas without crop insurance!

Linda Piazza : 6/20/2008 1:22:27 PM

The OEX pierced the 15-minute 9-ema but again couldn't close above it. It's still testing that resistance, now at about 601.90. If it can't maintain values above it soon, it may need to retreat toward (but maybe not all the way to) potential support now at 600.14. That support is looking strong enough that it may act like two magnets presenting with the same poles, repelling each other. Looks can be deceiving in this market environment, but that's how the setup looks now.

Jeff Bailey : 6/20/2008 1:21:20 PM

DineEquity (DIN) $42.02 -4.52% ... updating Tuesday's announcement of its property "sale-leaseback" of 181 locations. Link

Company saying it will pay $2.6 million a month in initial base rent to lease back the properties. SEC filing just released said the expected $337 million is sale-leaseback gross proceeds may cause it to incure and impairment charge for Q2. Details of that charge will be discussed in a July 29th conference call.

Linda Piazza : 6/20/2008 1:17:03 PM

TED spread is still 0.95, and I'm still not liking that at all. This is a measure of default risk. It's ranged over the last two weeks or so from 0.77 up to this 0.95 level. Keep in mind that before all this default risk started troubling the markets, the norm was 0.10-0.50.

James Brown : 6/20/2008 1:15:18 PM

I heard something earlier today...the NYSE was reporting that short-interest had reached a new all-time high at 7.4% or 17.65 billion shares (versus the recent high of 16.4 billion shares on May 30th).

Here is the article: Link

Linda Piazza : 6/20/2008 1:08:43 PM

The OEX has what looks like firm support on 15-minute closes near 600.20. It has obvious resistance on 15-minute closes at its 9-ema, now at 601.94. One or the other will break sooner or later. The Keltner setup currently suggests that the OEX will break up through the 9-ema, but doesn't preclude another test of support instead.

Jeff Bailey : 6/20/2008 1:07:05 PM

Oh, that's how. Short higher-grade bonds and short-term maturity.

James Brown : 6/20/2008 1:04:09 PM

Gambling and casino stocks are sinking to new year-and-a-half lows. The DJUSCA index is down 3.7% to 518.

Wynn Resorts (WYNN) is down 4% near $88.85 but it did bounce from its June lows this morning.

Las Vegas Sands (LVS) is down 4.7% around $54.75 and it also bounced from its June lows today.

MGM Mirage (MGM) is down more than 5% to a new yearly low under the $40.00 mark.

If WYNN and LVS break under their June lows it may be another entry point to buy puts.

Jeff Bailey : 6/20/2008 1:01:47 PM

Now wondering how an Ultra Short fund EUBAX loses 1/2 of its value. Must be one of the "contrarian" fund managers.

James Brown : 6/20/2008 1:00:25 PM

We might as well call the coal stocks the terminator because nothing keeps them down and nothing seems to stop their advance. There has been almost no follow through on yesterday's bearish reversal/failed rallies that we saw across the board yesterday.

Jeff Bailey : 6/20/2008 12:59:12 PM

That was that 1/18/08 "large block" benchmark I mentioned a couple of days ago. Monday was a dinger to the downside.

Jeff Bailey : 6/20/2008 12:57:41 PM

Humph ... just thinking that this DIA expiration has been very similar to the January expiration. Remember the contest to win a StockTrader's Almanac? DIA just kept falling and falling and falling. Even the low guess was way high.

James Brown : 6/20/2008 12:55:51 PM

Exit Alert! - ADRE This Emerging markets ETF is down 2.8% to $50.97. Our target was the $51.00-50.00 zone.

Linda Piazza : 6/20/2008 12:47:18 PM

TRIN 1.28. Bullish/bearish benchmark on the Keltner channels is currently 1.11 on 15-minute closes, so bulls want it to dive there and stay below there and bears want bounces from any tests of that zone.

Linda Piazza : 6/20/2008 12:44:57 PM

OEX, Dow and SPX bears need to be aware that if the BIX can sustain values above the current high of the day, at 190.23, it will have confirmed a bottoming inverse H&S, complete with bullish price/RSI divergence as the head was formed. Bulls need to be aware that the BIX needs to rise up through that neckline and then stay above it before they count on it being confirmed. BIX at 187.09.

Jeff Bailey : 6/20/2008 12:44:06 PM

Good gravy! ... Wachovia's Evergreen Investments investment unit said it will liquidate the mortgage-centered Ultra Short Opportunities Fund (EUBAX) to the tune of $403 million, which is less than half the funds value six months ago.

EUBAX is an open-end fund.

Linda Piazza : 6/20/2008 12:41:22 PM

The OEX's 15-minute 9-ema is now at about 602.07. The OEX really has to maintain 15-minute closes above that before the tenor had improved another jot. OEX at 601.76 as I type.

Linda Piazza : 6/20/2008 12:37:38 PM

Last week, the OEX's weekly candle was a doji between the weekly 200-sma and -ema's. The form of the doji made it a particularly strong potential reversal signal. Since the trend into that doji was a several-week decline, it looked particularly nice that the shape of the doji itself (long lower tail) was also a pretty classic potential reversal signal. However, I'm glad I always append that "potential" to anything when I talk about a reversal signal because there's been no reversal of the trend this week. It would take a sharp rally up to or above the weekly 200-sma at 612.46 to make this candle look like sideways consolidation on that weekly chart. However, do be aware of the possibility. The OEX is currently testing the support of a long-term price channel with parallel support and resistance. I'm showing it on the daily rather than the weekly chart so its parameters are more visible: Link As I said yesterday, however, I've thought the OEX could begin steadying for three days now, however, and thought losses might be stopped in the 608-ish area, so take my ideas with a grain of salt. I of course recognize the shape of this as a possible bear flag which fits with my overall view of what will eventually happen--a break below it--but I'm just not sure that now is the time. I tell you what, though, if that TED spread keeps climbing, I'm going to be a whole lot more worried.

Jeff Bailey : 6/20/2008 12:37:18 PM

Region bank Huntington Bancshares (HBAN) $6.58 +28.01% said late yesterday that it expects charge-offs to come in at the top end of its 2008 guidance.

Jeff Bailey : 6/20/2008 12:33:55 PM

Venezuela's Oil Ministry saying Saudi Arabia has asked for its presence at meeting. Venezuela saying it will attend.

Jeff Bailey : 6/20/2008 12:31:43 PM

Most Actives ... SPY $132.38 -1.51%, QQQQ $47.63 -2.33%, BAC $27.41 -2.59%, MSFT $28.35 -2.00%, C $19.50 -3.32%, CSCO $24.84 -2.66%, SIRI $2.00 -6.10%, FITB $10.39 +6.56%, INTC $22.48 -1.61%, HBAN $6.49 +26.26%

Keene Little : 6/20/2008 12:25:06 PM

The pullback from this morning's high is looking corrective and should be the b-wave of an a-b-c bounce off this morning's low. Once it completes then we can calculate where two equal legs up off this morning's low will be. As an example, if the pullback in SPX is finished then two equal legs up would be at 1333.48 which is between the 38% and 50% retracement of the decline from yesterday. If the pullback drops a little lower then so too does the projection for the 2nd leg up.

Jeff Bailey : 6/20/2008 12:15:08 PM

12:00 Internals found at this Link

Linda Piazza : 6/20/2008 12:12:47 PM

We're seeing the expected pullback in the OEX since it couldn't push above the 15-minute 9-ema on 15-minute closes. We're also seeing the expected pullback in the BIX to its 15-minute 9-ema after it broke above it. Bulls would like these natural and expected pullbacks to be minimal, with the OEX finding support on 15-minute closes at or above about 600.50. They can stand the level being pierced but want that close at or above it. Bears want prices to crash through and stay below that potential support.

Jeff Bailey : 6/20/2008 12:01:24 PM

IMF upping its U.S. growth forecast to around 1% in 2008, +0.8% in 2009. IMF said the revision comes after a strong-than-forecasted 0.9% growth rate in Q1. The IMF said the U.S. must continue to focus attention on supporting the economy without stoking inflation, reforming the financial system, and dealing with both fiscal and current account imbalances.

Commenting on Fed activity the IMF thought policy has been conducive to an economic recovery, and "a risk-management approach would suggest that policy should be on hold."

John Lipsky, first deputy director at the IMF also said that it is difficult to reverse a rise in inflation expectations, which are already edging higher, and that the Fed may need a "vigorous response" in reversing the recent easing once the economic recovery in firmly in place.

Linda Piazza : 6/20/2008 11:56:09 AM

Potential support on 15-minute closes for the OEX is at 600.57; for the SPX, 1323.20-1324.66.

Linda Piazza : 6/20/2008 11:51:37 AM

I mentioned the TRIN's potential Keltner support on 15-minute closes that was then at 1.09. The TRIN has been testing it, but so far closing 15-minute periods above it, so maintaining the possibility of a bounce attempt.

Here's the evidence so far shown on the TRIN's chart. The TRIN, at 1.25 as I type, is still in bearish (for equities) territory, above both the static benchmark that some people use and the dynamic Keltner one that I use. It's usually somewhere near 1.00, too, but varies a little as it's doing today. So, the number is bearish. However, the trend of the TRIN signals some potential problems for bears. It was extreme this morning, piercing a channel level that signals that it's extreme. I warned then that bears didn't want to see a sharp reversal after that was pierced, and that's so far what's happening. Now they want a sharp bounce.

Linda Piazza : 6/20/2008 11:46:52 AM

Keene reminded me to remind readers that I see potential resistance on 15-minute close for the BIX at 189.92. It's been testing it and the resistance has stalled it but not even knocked it back yet. However, if it is knocked back, those with bullish hopes in indices impacted by this want to see it maintain 15-minute closes above the 9-ema, now at 186.67.

Linda Piazza : 6/20/2008 11:44:46 AM

The OEX's potential support on 15-minute closes continues to look firmer. That's near 600.71. As I said with the SPX a few minutes ago, it's not firm enough to stop a strong plunge, but it is firmer than it was earlier and so could be support on a minor pullback. The OEX needs to push through this 15-minute 9-ema now at 602.65 and stay there, though, before there's another step in its improvement plan.

Keene Little : 6/20/2008 11:37:57 AM

Linda has been noting the strength in the banks and this fits my expectation for a bounce in that sector. Whether it translates into a broader market rally or just a rally in the banks is the big question. Between yesterday's candle and today's (so far) it's looking like some bullish bottoming signals at Fib support: Link

For SPX a 38% retracement of the leg down from yesterday is at 1333.29. It could find resistance at 1331, previous price level support. The pattern is bearish but we might have seen the bottom for today and the rest of the day will be spend consolidating in a sideways/up correction.

Linda Piazza : 6/20/2008 11:33:47 AM

The SPX also tested its 15-minute 9-ema now at about 1329.30 but didn't close that 15-minute period above it, so it remains resistance for now. A pullback toward support now at 1323.50-1325 remains possible. New bulls would like to see that hold on 15-minute closes if the SPX does pull back. Bears want new lows, but that support appears to be firming up a bit. It won't stop a blast lower, of course.

Linda Piazza : 6/20/2008 11:31:50 AM

The OEX is currently testing its 15-minute 9-ema, now at 602.75. The BIX blazed right through this moving average earlier today so that the possibility exists that the OEX will, too. So far, though, that's not happening and a pullback to about 600.72-601 remains a possibility.

Linda Piazza : 6/20/2008 11:12:27 AM

The TED spread has risen to 0.95 today and I don't like seeing that.

Linda Piazza : 6/20/2008 11:09:13 AM

BIX at 187.54 with the high of the day 188.83. I show potentially strong Keltner resistance on 15-minute closes at 189.63-189.99, so if the BIX is going to rollover again, it could happen soon. Would-be bulls want to see a sideways stall or even a strong whoosh through that resistance. Bears want that rollover.

Linda Piazza : 6/20/2008 11:03:41 AM

TRIN is dropping more strongly now, down to test its 15-minute 9-ema at 1.39. With TRIN now at 1.40, it's obviously still above that 1.00 benchmark some use as denoting a bearish (for equities) level, but its trend today has been strongly down from an extreme level, as I've been noting. Bears don't want this to continue, and particularly, don't want consistent 15-minute closes beneath 1.09, which is the bullish/bearish benchmark on my Keltner charts.

Linda Piazza : 6/20/2008 10:59:55 AM

The BIX has pushed well above its 15-minute 9-ema on this 15-minute chandle and looks stronger. It's reversed slightly more than half the day's drop, so OEX and SPX bears need to keep on their toes in case this continues.

Linda Piazza : 6/20/2008 10:58:59 AM

The OEX keeps testing that breakdown benchmark on its 15-minute chart and is currently just a few cents above it. Would be bulls would like a 15-minute close above 601.35 and a climb from there.

Linda Piazza : 6/20/2008 10:53:19 AM

The OEX now has a potential downside target on the 30-minute chart of 596.44. However, there is potential bullish price/RSI divergence already showing up on that chart. We've seen the same thing on shorter-term charts over the last few days with those obviously not meaning much, so I begin to sound like the boy crying wolf. However, I've always warned that they don't guarantee a reversal but they certainly mean that you need to keep updating your what-if plans in case one occurs. That's still what I'm warning. So, vulnerability to 596.44, which means that want-to-be bulls should keep that in mind but not that current bears should count on it.

Linda Piazza : 6/20/2008 10:38:55 AM

BIX is bouncing. Its bounce is in small-bodied candles that look, still, a bit indicative of a relief bounce and not strong growth, but I'm mentioned earlier that it looked healthier (or less sick) on a Keltner basis than it had when it was testing lows yesterday. It continues to do so. It's about to face the 15-minute 9-ema now at 184.48, though, and I wouldn't be surprised to see it pull back to about 181.80-182.80. If it holds somewhere near or above there, then perhaps a stronger bounce could get started. This is important because the declining financials have pressured other markets, and a stronger bounce in financials could prompt one in other indices.

Linda Piazza : 6/20/2008 10:35:31 AM

TRIN still having trouble with that resistance at about 1.75 on 15-minute closes. It's still hanging around near that level--currently 1.59--and may rise to test it again, but a drop to 1.34 or so looks possible, too. That's still bearish for equities, of course, but bears need to remain watchful for a sharp drop in the TRIN that continues, as happened on 1/23.

Keene Little : 6/20/2008 10:32:00 AM

It looks like a quick 5-wave move down this morning so we're due a bounce to correct this leg down from yesterday's high (look for a 38%-62% retracement). But that should set up another shorting opportunity.

Linda Piazza : 6/20/2008 10:31:17 AM

The OEX remains in breakdown territory on the 15-minute chart until and unless it maintains 15-minute closes above 601.16 and preferably above 601.69. That can be a first guideline.

Keltner channels were created to identify times when momentum was strong with the intention of trading the breakdowns or upside breakouts. These trades can be very profitable, but the opposite side of that is that there are so many whipsaws. Breakdowns can appear but the extreme momentum doesn't carry on . . . except in extreme cases. So anyone trading a vehicle in breakdown mode should be aware that they're in a trade that can be profitable but that traders tend to get whipsawed out them quite frequently, too. So, enjoy those profits you're accumulating but keep on your toes about account and trade management. You absolutely should not let a winning trade turn into a losing one.

Linda Piazza : 6/20/2008 10:28:11 AM

VIX hit potential resistance at 23.14 on 15-minute close and has pulled back. It's at 22.83 as I type. The pullback isn't severe, but bears should still watch. VXO hasn't pulled back but now is having a bit of trouble with potential resistance on 15-minute closes now at 24.70. Again, nothing terrible going on here for bearish hopes yet, but it should be watched.

Linda Piazza : 6/20/2008 10:14:32 AM

I'm rolling back up to the 15-minute chart again. Despite a potential reversal signal in the previous 15-minute period, bears still own the day and the OEX has dropped into the breakdown zone on the 15-minute chart. However, that can be erased by a 15-minute close above 601.26 this 15-minute period, creating another potential reversal signal.

TRIN has finally bounced again but is now facing another potential resistance level, at 1.75. So far, though, it has not followed through on the early sharp reversal from highs that reached extreme levels. It seems silly to do, but I continue to warn bears that while TRIN at these extreme levels supports their case, a reversal from these extreme levels sometimes occurs and sometimes prompts a sharp equity bounce. Just remain on your toes, carefully adjusting your profit-protecting plan as markets go down. I always suggest that if you're in any option trade and have doubled the original cost of your option that you consider taking profit on half the position. That makes further decisions so much easier because you know that there's no possibility of a loss from that point on.

Linda Piazza : 6/20/2008 10:05:14 AM

Bears still have the day, but keep TRIN on your radar screen, too. TRIN is staying steady although it hasn't bounced from the support it's testing yet and so, if it can't soon bounce, might soon instead begin dropping toward 1.25 next support. It's 1.55 as I type.

Linda Piazza : 6/20/2008 10:02:03 AM

The VXO has jumped up and hit potential resistance on 15-minute closes at 22.43 and is pushing a little above it as I type. At 24.64, it's approaching yesterday's 24.63 high. RSI has jumped up, too, to 81.55. While it's possible that the VXO could be pushing toward a higher target at 25.09, I'd begin watching for rollover potential right now, and a rollover would tend to suggest a steadying in equities.

Linda Piazza : 6/20/2008 9:59:29 AM

VIX maintained support above that descending trendline off Wednesday's high into the first few minutes of trading. It's still testing that support, dropping toward the trendline now at 22.05 and then bouncing from it. The candles don't look too healthy, but it is maintaining that support so it's not giving bulls what they want even if it also isn't quite giving bears what they want either in a bounce up from this. There's a current potential short-term target of 22.79 for the VIX and bears should be wary of rollover potential in the VIX if it should reach that level, but I'm not so sure yet it will reach it. VIX at 22.27 as I type. I'm going to look at the VXO, which has actually been a bit more predictive lately.

Linda Piazza : 6/20/2008 9:53:50 AM

TRIN is testing potential support at about 1.53 on 15-minute closes. Bears want this to hold and the TRIN to bounce again; bulls, a drop through 1.45 at least, as a first sign of improvement in market tenor. TRIN at 1.53 as I type.

Linda Piazza : 6/20/2008 9:52:38 AM

The RUT has already begun a bounch attempt. It hasn't gotten far yet, but traders should note that today's downturn did not send the RUT to a low below yesterday's.

Linda Piazza : 6/20/2008 9:49:37 AM

This move has been quick this morning, so for a time I'm going to roll down to the OEX's 10-minute chart. The first slightest sign of any improvement at all would be OEX 10-minute closes above 602.83. Consistent 10-minute closes above it.

Linda Piazza : 6/20/2008 9:47:41 AM

The OEX is now dropping to 501.60-602.20 potential support on 15-minute closes. Of course you must factor in the psychological target and potential support at 600, too. The BIX has slightly violated yesterday's 181.88 low with today's now at 181.56 but with the BIX currently just a little above that. On a Keltner basis, the BIX looks slightly healthier (or should I say, slightly less sick?) than it did when this level was tested yesterday, but another chart shows a potential downside target near 172-173, so more downside is possible, although not yet a given. I'd certainly keep this on your radar screen as bounce potential starts any time now.

Linda Piazza : 6/20/2008 9:44:26 AM

Equity bears don't want to see the VIX close this 15-minute period below about 21.88 because that would show that the resistance there held. They actually would prefer it not close beneath about 22.05 because that would show a descending trendline off Wednesday's high had held as resistance. VIX at 22.25 as I type.

Linda Piazza : 6/20/2008 9:43:12 AM

We have to wait for TRIN to settle down a bit before we know what's up, but it hit an extreme level, piercing a certain Keltner channel line that shows that the value was extreme. Bears need to watch out now that that's happened, as they don't want to see the current sharp drop continue. For example, on 1/23, TRIN also pierced this channel line and then dropped sharply while equity bounces as sharply. It doesn't always happen that way, as TRIN pierced the same channel line on 1/05 and 1/15 and still ended the day near that channel line while equities dropped sharply. It's a signal, just as divergences are a signal, to pay attention, but not proof of anything. Price action will be the proof, but this certainly warns bears to keep on their toes. Bulls, too, for that matter.

Keene Little : 6/20/2008 9:39:59 AM

The DOW is down to the bottom of its shallow up-channel from January (near 11950) so this is the last line of defense for the bulls. They could tolerate a brief break but then it needs to recover quickly. Otherwise it's another 200 points lower to the March low with nothing but air between here and there.

Linda Piazza : 6/20/2008 9:37:51 AM

Keltner outlook on the A/D line: The A/D line is bearish, of course, opening in the bearish half of its Keltner channels and heading straight down. It's got potential support on 15-minute closes at about -1475 and then at about -1720. It's at -1305 as I type, so it's possible that in the next 15-30 minutes and maybe sooner, it will attempt to steady and we'll see what happens then.

Linda Piazza : 6/20/2008 9:36:23 AM

SPX potential support on 30-minute closes at 1332.30; on 15-minute close, at 1336.41 (because the first 15-minute period hasn't closed) and then 1325.34-1327.82. It's actually holding up a little better than the OEX, Keltner wise.

Linda Piazza : 6/20/2008 9:34:28 AM

Here goes the drop, and that's pushing that potential OEX support on 30-minute closes lower. It's at 604-604.71. The OEX is already below it, approaching potential support on 15-minute closes at 602.46-601.72. It's also hit the trendline from on which it was finding support on 15-minute closes yesterday. So, bears, it looks bad, but there's potential support right here and you need to make sure you know how you're going to handle a possible bounce.

Linda Piazza : 6/20/2008 9:27:00 AM

Futures are well below fair values this morning, as anyone knows who has glanced at CNBC or Bloomberg TV coverage. I want to offer one caution. We sometimes see strange action on settlement Friday mornings that's soon reversed, so be a little wary of the possibility of a down move that is soon reversed.

Also, I mentioned yesterday that the USDJPY had been holding up fairly well since testing its 200-sma and -ema's and that wasn't supporting the idea of steep declines as long as it held up so well, unless the previous intermarket USDJPY/equities relationship no longer was relevant. I said that I did expect a pullback at least to test the 10-sma at some point. That pullback is happening this morning. As I type, the USDJPY has bounced from that test, but equity bulls would like to see it continue to bounce and push back above those moving averages, now at 108.08 and 107.84, respectively. The possibility exists that it could instead drop back to retest a former resistance line, now at about 106.80. A climb back toward those averages would tend to be supportive of equities and a drop toward the former trendline would not, of course.

However, let's just take this at face value and decide where the OEX might go depending on how far the SPX is below fair value. The OEX ended yesterday at 608.81 and I can extrapolate that if the futures' action predicts where the indices might go this morning, the OEX would be likely to drop back to the 604-605 region. It has potential support on 30-minute closes at 605.09, so those hoping that markets steady want that to hold on 30-minute closes. Below that is potential support near 602-603.

Keene Little : 6/20/2008 9:16:12 AM

Equity futures are down and broke yesterday's lows. This is not a good sign. They've bounced off their lows made near 7:30 AM so if we get an immediate rally then all's well. But we've got a bearish start to the day and it could get worse so be careful if in long positions.

I'll be traveling today (heading for my northern "office" on the St. Lawrence River) but I should be able to keep an eye on the market as long as I've got a signal. So I'll make some comments when able but it will be sporadic.

Market Monitor Archives