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Keene Little : 6/23/2008 10:36:36 PM

Tuesday's pivot tables: Link and Link

I've tried several ways of counting the wave structure of the decline from May (it's not as clean as I'd like) and I come up with two preferred counts. One is extremely bearish but not quite yet. The other is looking for a tradeable bottom on Tuesday and a rally to correct the decline from the May high.

The SPX and DOW 60-min charts show another leg down on Tuesday followed by a bounce into at least Wednesday (which could be timed for a big disappointing reaction from the Fed, shown in dark red): SPX -- Link and DOW -- Link

The pink depiction calls for a much bigger bounce into July, which could result from post-FOMC relief. A rally above last Thursday's highs (SPX 1348, DOW 12115) would negate the more bearish wave pattern. A break below the downside key levels at SPX 1300 and DOW 11700 would be potentially very bearish (as noted on the DOW's chart it could mean we're about to experience at least a mini crash leg down).

DOW 11700 is potential support at the bottom of its down-channel but it's also near the 200-week moving average (and of course just below the 2000 high of 11750). The DOW's weekly chart shows the downside potential to near 10600 by early July (or worse) but the rally leg in pink can't be ruled out yet: Link

The SPX weekly chart shows the same setup (with a slightly different wave count but that doesn't matter a whole lot at this point in the pattern) and points to a downside target of 1134 (could go deeper): Link . But after a minor new low on Tuesday there is still the potential for a rally leg up into early July. Notice that SPX is trying to find support on its 200-week moving average, just under 1319.

OI Technical Staff : 6/23/2008 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The Market Monitor has been archived.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 : 6/23/2008 5:30:01 PM

Closing Internals found at this Link

Jeff Bailey : 6/23/2008 5:09:06 PM

Closing U.S. Market Watch at this Link

Linda Piazza : 6/23/2008 4:10:16 PM

The OEX ended the day with a small-bodied candle at the bottom of a long decline from the 5/19 high. As you know, such candles at the bottom of a long decline should be considered potential reversal signals. As you also should know from reading our commentary, such "potential" signals should function only to warn bears to update their what-if plans and not as a guarantee that any reversal will occur. As should be obvious from the other such potential reversal signals produced on the way down, such as the ones on 6/04, 6/09 and 6/10 and even 6/19, reversals don't always follow potential reversal signals.

On a short-term basis, the OEX looked as likely to climb to 599.60 as it was to decline to 595.50 at the end of the day. So, bears, you've been warned to update your plans. One of these days, a potential reversal signal will become an actual one.

Keene Little : 6/23/2008 3:56:51 PM

Updating the SPX 60-min chart, I'm showing the expectation for a another small bounce and then continuation lower tomorrow morning. Because of the Fib relationships between the waves of the move down from last Thursday we'll either see a quick/short decline and then a bounce back up to the 1330-1335 area (dark red) or else an "extended" 5th wave down to the 1275 area before bouncing back up to the 1320 area (dashed line). Link

If we're putting in a bottom (which I doubt) then the pink shows a stronger rally out of a corrective pattern to the downside (instead of an impulsive one which says the trend is down). A rally from here above 1331 would swing the probabilities over towards the more bullish scenario, at least for the short term.

Linda Piazza : 6/23/2008 3:47:32 PM

The OEX probably needs to rise soon--either the last 15-minute-period today or first thing tomorrow morning--or it will soon invalidate and render useless this potential inverse H&S, too.

Linda Piazza : 6/23/2008 3:45:21 PM

What happens tonight and tomorrow morning around the globe? Tonight, Germany's Consumer Confidence number will be released at 2:00 am ET. Tomorrow morning, we get the S&P/Case-Shiller U.S. National Home Price Index (HPI) at 9:00 am ET, followed an hour later by our Consumer Confidence, the House Price Index and the Richmond Fed Index. The HPI and Consumer Confidence could be particularly important to watch, with Germany's Consumer Confidence also capable of moving the DAX and coloring the tenor of overnight markets.

Of course, there's the "Fear of the FED" factor, too, with the policy decision and statement due at 2:15 pm ET on Wednesday. Probably this morning, market participants sorted through the fallout from opex week last week and that whole fear-of-the-Fed thing, too, and that will only intensify going into Wednesday's decision.

Keene Little : 6/23/2008 3:41:13 PM

In the meantime I see SPX has worked its way back down towards to the lows of the day. One more trip back up towards the highs should be the setup for a short play for another leg down.

Keene Little : 6/23/2008 3:35:47 PM

Are there some smart wireless gurus out there? I've spent practically the entire day today trying to get wireless computers, access points and repeaters working nice together. I've set up internet sharing on my laptop that uses a data card for internet access and have the laptop wired to a Netgear access point. The other computers are wirelessly connected to the Netgear.

One computer is a long distance away so I'm trying a range extender (Belkin) and trying to get it to talk with the Netgear access point (which is connected to the laptop with the internet card). And of course I'm making it more difficult with WPA encryption. The bottom line is Belkin says I can't get the Belkin to talk to the Netgear to talk to my internet-connected laptop.

I'm no closer to getting them all talking to each other than I was when I started this morning. Wireless is a great technology and most of the time works effortlessly but it sure can be finicky when you start messing with IP addresses, security encryption, et. al. I have a lot of admiration for people who do this stuff for a living.

Linda Piazza : 6/23/2008 3:07:40 PM

Once again, the OEX is forming a potential inverse H&S at the bottom of its decline. This isn't the first time, so you know not to count on it confirming or predicting anything much, don't you? At this time, it would require a pop to a new high, corroborated by 15-minute closes above 599.50 that are sustained, to confirm it. If the OEX loses potential support now at 595.14-595.81 on 30-minute closes, I would consider it invalidated. We may not have time before the close to see the formation either confirmed or invalidated, unfortunately.

Linda Piazza : 6/23/2008 3:03:59 PM

Next potential support on the OEX's 30-minute chart is now 595.83.

Linda Piazza : 6/23/2008 3:00:09 PM

The TRIN is currently 0.94.

Linda Piazza : 6/23/2008 2:59:05 PM

A/D line hitting a new low of the day.

Linda Piazza : 6/23/2008 2:51:33 PM

In our last two neighborhoods, a lot of the boys, teen and otherwise, owned Hummers. I noticed on Planet Green a piece on a company that is now doing conversions on Hummers, converting them to not only run on diesels or biodiesels but also raising the fuel mileage to 18-26 MPG from the standard 9-12 while they're at it. Performance upgrades are included. I don't know how much that costs, but if you have an H1 or H2, that extra 9-14 MPG would go a long way toward paying for the conversion, wouldn't it?

James Brown : 6/23/2008 2:35:54 PM

I know what you mean, Keene. I'm surprised it's taken GM this long to start the discounts. Imagine what the discounts will be when gasoline is $6.00 or $7.00 a gallon?

Linda Piazza : 6/23/2008 2:35:43 PM

The OEX barely held to the support of the 30-minute 9-ema into that just-finished 30-minute period. That's okay, but now it needs to bounce above 599.25-599.55 and stay there. As Keene said earlier, a consolidation type day is possible today, so it could be that we've seen nearly all the range we'll see for today. However, I wouldn't be surprised either, if bulls managed to push prices above some crucial level, if a few bears didn't help them out by covering their positions. Bears have so far been rewarded for holding on, so all may not be scared into covering, but some could be.

Keene Little : 6/23/2008 2:33:28 PM

Hey James, that GM deal sounds great. That way each time I'm gassing up one of those beasts I can keep poking a needle in my eye and beating my head against the side of the "truck". They all sound equally as pleasurable (wink).

Jeff Bailey : 6/23/2008 2:22:48 PM

02:00 Internals found at this Link

James Brown : 6/23/2008 2:20:56 PM

If you are in the market to buy a gas-guzzler then GM is willing to deal....

On CNBC today they were talking about the latest GM Incentive Program through the end of June.

0% financing for 72 months
-or-
up to $7,000 off Tahoe or Suburban,

Linda Piazza : 6/23/2008 2:13:32 PM

The OEX's 30-minute 9-ema, more important than the 15-minute version, is now 597.83, about $0.20 above the 15-minute version. Bulls want both to hold as support.

Keene Little : 6/23/2008 2:06:51 PM

My last post should have said if SPX can't get above this morning's high (not low) we'll get a return trip back down. Sorry about that.

Linda Piazza : 6/23/2008 2:01:32 PM

The OEX's potential resistance on 15-minute closes, now at 599.47, is apparently more than "potential" resistance. It appears to be holding as resistance on this 15-minute period, at least, with the OEX's 15-minute candle a small-bodied candle just under that resistance. Either sideways continued testing or a pullback to support at the 15-minute 9-ema, now at 597.57, could be next. Bulls want the sideways move or at least they want that 9-ema to hold as support if there's a pullback.

Keene Little : 6/23/2008 1:57:59 PM

If SPX is not able to get above this morning's low with this current bounce we could see another down-up sequence between today's range before heading lower again, likely tomorrow. It would look like a sideways consolidation for a 4th wave and then a 5th wave down for the decline from last Thursday's high. It still takes a rally above 1331 to negate the bearish wave pattern.

Linda Piazza : 6/23/2008 1:49:37 PM

At about 182.99, potential resistance on 15-minute closes, the BIX will also be facing potential resistance from a descending trendline off Friday's high. The BIX is currently 181.68. Watch for rollover potential or for a sustained burst up through that trendline and Keltner resistance for short-term guidance.

Linda Piazza : 6/23/2008 1:46:23 PM

Now it's time to start watching the OEX's curving higher 15-minute 9-ema as a shorter-term signal. That's now at 597.24, and bulls would like to see the OEX find support there on 15-minute closes and then bounce high enough to keep it curving higher. Potential resistance approaches at 599.52 on 15-minute closes.

Linda Piazza : 6/23/2008 1:32:05 PM

The OEX looks as if it might close another 30-minute period above the 30-minute 9-ema now at 597.41. That's good news for bulls, as far as it goes. The OEX will soon be facing resistance potnetial resitance in the 599.60-599.80 zone.

Linda Piazza : 6/23/2008 1:04:22 PM

The OEX has closed a first 30-minute period above its 30-minute 9-ema since Thursday afternoon. Now bulls want to see the OEX hold above 596.60 on 30-minute closes. Watch for potential resistance near 599.50-601.50.

Linda Piazza : 6/23/2008 12:33:37 PM

The potential downside target for the OEX, as predicted by its 30-minute chart is now 594.21. A 30-minute close above the 30-minute 9-ema, now at about 596.95, would erase that downside target, if those higher levels are sustained. OEX at 595.83 as I type.

Linda Piazza : 6/23/2008 12:27:37 PM

A/D line has continued dropping and is now at the support mentioned earlier, now at -860, with the A/D line currently -830. A drop through this targets -1063. If you go on the A/D line alone, the day has been bearish; look at the TRIN since about 10:15 and its trend has been bullish for equities.

Jeff Bailey : 6/23/2008 12:27:31 PM

Swing trade bearish long raise stop alert! ... Let's raise the stop on the 1/4 position in the ProShares UltraShort Russell 2000 (TWM) $72.41 +0.91% .... to $68.00 (from $67.00).

Jeff Bailey : 6/23/2008 12:23:54 PM

Most Actives ... QQQQ $47.11 -0.65%, MSFT $27.92 -1.09%, SPY $131.43 -0.10%, CSCO $24.56 -0.32%, IWM $72.08 -0.67%, INTC $22.49 +0.53%, QID $41.68 +1.70%, ORCL $21.87 -1.04%, AMD $6.61 -5.29%, HBAN $6.00 -10.04%

Linda Piazza : 6/23/2008 12:22:34 PM

TRIN 1.00.

Linda Piazza : 6/23/2008 12:21:59 PM

I could point to all kinds of things this morning, such as the small-bodied candles being produced as the OEX drops inexorably off its high today, a possible sign that there will be a bounce attempt, but there's one truth that so far just stands out to me, one litmus test. That test is whether or not the OEX is still finding resistance on 30-minute closes at the 30-minute 9-ema, now at 597.29. So far, it is, but I'd certainly pay attention if that pattern changed.

Jeff Bailey : 6/23/2008 12:18:17 PM

12:00 Internals found at this Link

Keene Little : 6/23/2008 12:09:05 PM

Price action up and down today looks corrective. This has me thinking it will be just a day of consolidation so don't force trades today.

Linda Piazza : 6/23/2008 12:05:00 PM

The OEX's 30-minute 9-ema is now 597.47.

Linda Piazza : 6/23/2008 11:51:32 AM

The TRIN has now dropped to 1.05. From the form of its drop, I wouldn't be surprised to see a pop back up to test 1.19-1.20 to see if it continues to hold as resistance on 15-minute closes, but perhaps not until a further drop first, maybe toward 0.97-0.99.

Keene Little : 6/23/2008 11:42:15 AM

Bonds have reversed their early-morning move up and the selling in that market could free up some cash for the equity market.

Keene Little : 6/23/2008 11:40:05 AM

The DOW is showing bullish divergence on its 10-min chart at the new low on Friday afternoon and now with a retest of the low. It might mean we'll see just a sideways consolidation to work off some of the oversold conditions but it is at a minimum warning bears that the market might not have much lower to go here. In fact the choppy decline this morning also looks like an ending pattern so lower your stops if you want to protect profits on a short play. A long play is clearly counter-trend but it could be worth a day trade attempt.

Linda Piazza : 6/23/2008 11:36:47 AM

A/D line now, though: That's been dropping all day since hitting that upside resistance first thing this morning. It has finally now dropped into the potentially strong support level that I mentioned earlier, now down to about -880, although some support also extends to about -1100. The A/D line is now -653.

Linda Piazza : 6/23/2008 11:35:09 AM

TRIN is 1.15, above the 1.00 benchmark most use but it, like some other under-the-market indicators we've been watching today, is also finding resistance on 15-minute closes at its 15-minute 9-ema, with that currently at about 1.21. I don't recall seeing so many under-the-market indicators (TRIN and VXO--and VIX, for all but one 15-minute period) finding resistance at their 15-minute 9-ema's while equity indices are mostly doing so, too. These usually move in opposition to equity prices. Something weird is going on, and I'm not comfortable making predictions with this going on. If I were looking at the TRIN, VXO and VIX alone, I'd expect the OEX to be attempting to rise or maybe actually rising rather than being somewhat weak.

Linda Piazza : 6/23/2008 11:29:43 AM

The OEX's potential downside target on its 30-minute chart is now 594.45. That 30-minute 9-ema has been a good benchmark to watch today, as it has continued its pattern from Friday of being resistance on 30-minute closes, showing us that the tenor hasn't changed yet. Keep an eye on it, though as the deep selling could result in a real snap back if bears should fear that they need to start covering. Hasn't happened yet, but it could.

Keene Little : 6/23/2008 11:27:25 AM

We've got a bit of a mixed bad this morning with NDX breaking Friday's low, the DOW testing it and SPX and the RUT slightly above their lows.

Linda Piazza : 6/23/2008 11:25:10 AM

The BIX's 15- and 30-minute charts still show vulnerability to 177.93-178.23. However, there's that potential support on daily closes at 179.60 to consider, too, as any punch lower could result in a bounce by day's close. In other words, the BIX may be approaching/testing a level that could prompt some support to kick in, so bears should keep it on their radar screen. Of course, I've been suggesting that for some reason or another for days, with little need so far.

Linda Piazza : 6/23/2008 11:22:36 AM

To follow up on Keene's posts about the TRAN, my Keltner charts show that it currently has a downside target of 5086.10, in place until and unless it can maintain 30-minute closes above 5162.30. The 15-minute chart setup is different and shows an even lower potential downside target, at 5035, but that would be erased quicker, with sustained 15-minute closes above 5150.

Keene Little : 6/23/2008 11:14:36 AM

The home builders are back down some more today. The price pattern would look better with another rally leg into the first part of July before heading lower again. It's currently trading near 285 and support might be found around 280, bounce up to 317 and then tip back over for what could be a final low for the home builders later this summer (downside target is 216). Link

Keene Little : 6/23/2008 10:55:20 AM

As Linda mentioned, the Trannies are weak today and the the daily chart shows a good setup for a strong decline from here unless it can get back above Thursday's high near 5299: Link

Linda Piazza : 6/23/2008 10:54:48 AM

Strange, strange but the VIX continues to find resistance on 15-minute closes at its descending 15-minute 9-ema, now at 22.89. The VXO, too, finds resistance at its 15-minute 9-ema so far. The VXO, however, also clings to potential support at about 22.80 on 15-minute closes, so it's being squeezed between the two. However, it's not typical to find these descending beneath resistance at their 15-minute 9-ema's while the SPX and OEX are also finding difficulty with maintaining values above these same averages. Both the OEX and SPX have popped above them for a 15-minute period or two but haven't been able to maintain values above them.

Linda Piazza : 6/23/2008 10:50:35 AM

BIX dropping toward a potential short-term Keltner target of 178.71. That's potential support, too, on 15-minute closes. I also show potential support on daily closes at about 179.60. Bears should be aware of bounce potential, but it's certainly not a given that a bounce will occur. If this level fails as support on a daily close, my daily Keltner chart now shows a potential target at 170.56. However, that target has not yet been set and OEX and SPX bulls don't want to see it set.

Linda Piazza : 6/23/2008 10:44:10 AM

With both the BIX and the TRAN behaving as they are today, it's surprising that indices such as the OEX are holding up as well as they are. The TRAN is currently 5164.69. Although it's clinging to potential Keltner support on 15-minute closes at about 5157.10, it's not far above its 5148.40 low from today, with that low just a few points above Friday's low. It's bouncing from that potential Keltner support and that retest of Friday's low, but bulls need to see a bigger bounce and one that sustains values above the resistance from 5175-5196 on that chart.

Tab Gilles : 6/23/2008 10:38:39 AM

Google (GOOG) looks like it wants to head lower? Link

Linda Piazza : 6/23/2008 10:33:49 AM

Just another painful day watching and trying to read each little signal. The effort to stabilize the OEX and some other indices is evident. The OEX is not able to maintain values above its 15-minute 9-ema now at just under 598, but it's not dropping that far below it or the breakdown benchmark, either. It's testing both, not really turning down below them. So, the effort is literally visible with small bodied candles clinging to those Keltner lines. But, neither can the OEX bounce above those levels. If bulls can't break the impasse soon, they'll be forced to retreat to stronger support. Right now, that stronger support would likely be at the potential support and downside target on the 30-minute chart, at 594.66. The OEX needs a 30-minute close above 598.24 to erase that potential target.

So, we don't know anything at this point since the bulls haven't given up yet and may eventually prevail.

Jeff Bailey : 6/23/2008 10:29:52 AM

Most Actives ... QQQQ $47.42 (unch), MSFT $28.12 -0.38%, SPY $131.86 +0.21%, CSCO $24.53 -0.44%, INTC $22.62 +1.11%, SIRI $1.99 (unch), HBAN $5.81 -12.89%, AAPL $173.80 -0.80%, XLF $21.63 -2.47%, GLD $86.99 -2.20% (~869.90 spot)

Jeff Bailey : 6/23/2008 10:27:15 AM

10:00 Internals found at this Link

Linda Piazza : 6/23/2008 10:21:51 AM

An OEX 15-minute close at the 15-minute 9-ema at 598.08 and above the breakdown benchmark at 597.75, but not a clean break above resistance. As I type, the OEX is 597.87, still testing, chopping on either side of the breakdown benchmark. So far, the A/D line's behavior has been a better predictor than how the OEX itself is behaving with regard to its Keltner lines. Currently, the A/D line is -30, bouncing from its -335 low. It's in the upper or bullish half of its Keltner channels, but still as vulnerable to dropping to -675 to -911 as it is to climbing to +636. Not much to predict from here.

Keene Little : 6/23/2008 10:21:03 AM

Would it make sense that managers will not want to show any financials on their books at the end of the quarter but then buy the beaten down sector in July and begin to unwind their winners (energy)?

Interesting thought and it's quite possible. It would of course be a complete guess on my part to answer that question and I'll stick with the charts for an answer. If the banks (BIX) can hold up for the week (and not get taken out to the trash pile) then a reversal next week would not surprise me. With a new low this morning the BIX is now very close to the 178-180 Fib target level I've been watching for (and the bottom of its down-channel from January). It's a good setup for a bounce, especially if it can work its way slightly lower first. Daily chart: Link

Linda Piazza : 6/23/2008 10:14:02 AM

I know that TRIN is above 1.00, the benchmark most use, but on my Keltner charts, today's bullish/bearish benchmark is now about 1.21 on 15-minute closes. So far, the TRIN has not been able to maintain values above that although it's still testing. Keep it on your radar screen for either sustained 15-minute closes above that or a rollover beneath it. So, for now, its actual value is bearish by the standards most people use, but there's still some hint that it could pull back.

Linda Piazza : 6/23/2008 10:10:20 AM

BIX is 180.43 as I type, almost a point below Friday's low and potentially vulnerable to 179.22. In fact, a daily Keltner chart shows a lower potential target at 172, but the current short-term setup in fact shows a possibility of a steadying on 15-minute closes either slightly above its current level or at that 179.22 level, so I'm not ready to give full credence to that 172 potential target. Keep it on your radar screen, however.

Keene Little : 6/23/2008 10:07:25 AM

The gap up has not held and the risk is a continued drop as I had depicted on last night's SPX 60-min chart. It's still very early and we may only get a retest of Friday's low before bouncing back up but as mentioned before, the bounce off Friday's low looks like a correction so far and not something more bullish. Therefore be careful if you're trying to buy the dip (thinking we're oversold and therefore due a bounce).

Linda Piazza : 6/23/2008 10:06:35 AM

For some reason, my links aren't working this morning.

Linda Piazza : 6/23/2008 10:03:23 AM

As I feared it would do (9:37:17 post) because of no close support as resistance was being tested, the A/D line has fallen sharply. It's currently 32, testing that 0.00 potential support zone, but still vulnerable to a pullback to -695 to -927. In fact, as I kept typing, it dropped to -80.

Equity bears should watch for bounce potential, however, if it reaches that next support zone as it looks strong so far.

Linda Piazza : 6/23/2008 10:00:43 AM

VIX is not doing much this morning. It's been testing its 15-minute 9-ema and finding resistance there so far on 15-minute closes, with that at 23.08 and the VIX currently 22.89. If you look at the VIX on a daily chart, you see that it's lower compared to its last swing high at 6/09-6/10 while equities are lower than their last swing low on 6/12. It was this kind of bullish divergence that kept fooling me last week, thinking that the equities could be trying to steady. Didn't happen, but still keep a watch on it.

Keene Little : 6/23/2008 9:59:28 AM

The NDX 50-week moving average was support back in August 2007 and then again after it pulled back from the highs in May (after climbing back above it at the end of April). But it closed below it on Friday so any bounce back up to it may find it to be resistance. It's currently near 1958. Weekly chart: Link

Linda Piazza : 6/23/2008 9:57:53 AM

TRIN is 1.24, having risen from its bullish low this morning up to test what could be substantial resistance on 15-minute closes from 1.20 and then at 1.37-1.45. Equity bulls would like to see it rollover soon, at least finding resistance on 15-minute closes near 1.20.

Linda Piazza : 6/23/2008 9:56:21 AM

BKX falling, too. Potential support for it on 15-minute closes is at 60.99. It's currently 61.60.

Linda Piazza : 6/23/2008 9:55:20 AM

The BIX is headed down sharply this morning, currently at 182.90 and threatening, if it doesn't pull up quickly, to fall back to potential support on 15-minute closes at 179.52-180.91. In fact, as I typed, it fell further and is currently 182.13. Equity bulls want those support levels to hold.

Linda Piazza : 6/23/2008 9:53:07 AM

The OEX did maintain a first 15-minute close above the S/R now at 598, but it's come right back down to test it. Bulls want a bounce and a first 30-minute close above 599.10 as just a first step in any steadying. That's still not proof that this precarious bounce will hold through the day, but it's certainly better than not seeing these developments.

Linda Piazza : 6/23/2008 9:51:21 AM

My link is not working on the OEX chart I wanted to post, so I'll describe what that chart first posted last Friday now shows. It shows a broad channel in place since February, with the top trendline now crossing at about 665 and the bottom, at about 595-596. The OEX hit it Friday and is now slightly above it. The sharply descending 10-sma is currently 610.03.

Obviously, bounce potential up through the channel again exists, but I've been looking for a non-existent bounce since last Wednesday and thought the OEX might steady near 608, and that scenario obviously did not play out. Therefore, I feel a bit reluctant to make too many guesses about what might happen, especially ahead of this week's FOMC meeting. However, from this chart, I would suggest that bounce possibility exists, but a rollover through that lower trendline does, too. If, however, a bounce should be sustained, bulls should be particularly careful as the OEX approaches the descending 10-sma, now at 610.08 but likely to be lower by the time it's tested . . . unless we have some kind of zoom higher today, in which case, it will actually be higher by the time it's tested.

Linda Piazza : 6/23/2008 9:42:30 AM

The OEX is rising up to challenge that potential resistance again on the 30-minute chart, now at 599.15 on 15-minute closes. For a shorter-term look, the OEX's 15-minute 9-ema converges with potential resistance on 15-minute closes at 598.29, so a first step in bulls' favor would be a 15-minute close above that. That's just a tentative first step, however.

Linda Piazza : 6/23/2008 9:40:09 AM

A/E line now 733, in bulls' favor so far. Keep a watch on it, however.

Linda Piazza : 6/23/2008 9:37:17 AM

Keltner outlook on the A/D line: the A/D line shot right up through to potentially strong resistance on 15-minute closes at about 600. It punched through that resistance but has pulled back to it now and is currently 551. Bulls need to see it break out now and maintain a breakout or at least trend sideways, continuing to challenge this resistance as the support catches up. There's very little support beneath the A/D line, however, until about 0.00 and then -750 to -950, so it's possible that it could pull back strongly, something bears would prefer to see. The best I can do right now is to say it's at a precarious place for bulls.

Linda Piazza : 6/23/2008 9:39:22 AM

My electricity was off, unfortunately also knocking me off the Internet, so I'm just signing back on and playing quick catch up. For some reason, I'm also having difficulty getting a futures quote and having various other difficulties. However, going on where futures stood at the last time I was able to see them, I'll tell you what I can about the OEX.

First, you should know that the USDJPY gained overnight and is again challenging its 200-sma and -ema's after having challenged them, pulled back to the 10-sma and a former resistance trendline and then bounced. That's in favor of bulls, but it's facing particularly strong resistance at 108.04, and in the last few minutes has pulled back from a test of that level and is at 107.90. Equity bulls want it to burst through that 108.04 level and stay there; bears, a strong pullback.

The OEX has potentailly strong resistance on 30-minute closes at 599.21, with this being resistance that held it back all day Friday. So, those hoping for a steadying want to see that broken and for prices to hold above it into the first 30-minute close. Be careful of pop-and-drop possibility.

If I disappear, you'll know it's not willingly but due to whatever is going on in our small rural area.

Keene Little : 6/23/2008 9:21:21 AM

Equity futures are up so we'll have a positive start to the day. Using all-hours trading for ES I see that two equal legs up from Friday's low would be at 1331.50 and I had mentioned last night that SPX 1331 could be resistance if it manages to get up there. Something to watch for anyway. But first we need to see if the gap up will hold.

Currencies made a big move this morning--the dollar rallied sharply while the euro dropped. This caused a spike down in the metals. I haven't seen any news yet that caused the move. But a rallying dollar, if it holds, could provide a little bit of a psychological lift for equities.

Jane Fox : 6/23/2008 8:51:11 AM

Dateline WSJ - JEDDAH, Saudi Arabia -- Saudi Arabia moved to calm anxiety in the oil market by promising the world a little more oil now and potentially a lot more later.

But it is unclear whether the Saudi bid to reassert its oil muscle will be enough to slow a historic surge in crude prices that many fear could go far higher. Oil prices in New York hit a record last week of $139.89 a barrel and have since fallen back, but only marginally.

The world's largest oil producer told ministers and oil executives at an unusual summit of producers and consumers in the Red Sea city of Jeddah that it will boost its output by 200,000 barrels a day for the rest of the year if needed, adding to its current production of around 9.5 million barrels a day. The global market for oil is about 86 million barrels a day.

In addition, seeking to address rising fears that future world supplies may not match rising demand, Saudi Arabia also promised an aggressive campaign to push its overall output capability to as much as 15 million barrels a day by 2018 from around 11.4 million now.

A capacity increase of that magnitude would be extraordinary for a country that has never produced more than 11 million barrels a day. To get there, Saudi Arabia would have to squeeze greater quantities of oil primarily from huge fields that have been in production since as far back as the 1940s -- far from a simple task.

Jim Brown : 6/23/2008 3:07:12 AM

Much Ado About Nothing

The Saudi Arabia Energy Conference in Jeddah was a dud. There was no new announcement of an additional production hike from Saudi Arabia. The +200,000 bpd increase in July was leaked to the press last week was confirmed at the meeting but it was old news. That will take Saudi output to something in the neighborhood of 9.75 mbpd and was definitely not a fix for oil prices. One attendee said it looks like we are going to see $200 oil.

Prices rose in Sunday night trading to $136.60 simply because there was nothing new that came out of the meeting. Saudi confirmed again that their $90 billion program to increase production to 12.5 mbpd was still on track for completion in 2009. That is good because every barrel of that increase will be needed in 2009 just to stay even with increasing demand from China and India and current depletion rates of about 4 mbpd each year.

Saudi must not have been happy with the response from the delegates because they pulled another card out of their deck at the last minute. The Saudi oil minister said engineers had "discovered" potential additional production capability of another 2.5 million barrels per day that could be brought online over the next several years "IF" the market needed it. Nearly everyone I have read tonight thinks this is just a bluff. Those familiar with the current state of the Saudi fields believe they will have a tough time hitting the 12.5 mbpd target in 2009. The easy oil in Saudi Arabia has been produced. Every barrel they pull out of the ground in the future will be more difficult than the last. Deeper wells, slower flows, horizontal drilling, etc. They will need all the tricks at their disposal to keep the oil flowing.

I mentioned that oil prices were up in early overnight trading but they may not remain up. There was some other news on Sunday that was very positive for oil production. The Nigerian rebels declared a unilateral cease-fire starting at midnight on Tuesday. This was in response to a plea from a group of village elders to end the attacks. I would bet that the plea went something like this. "If you don't end the attacks we are going to turn against you and give you names and locations to the authorities." The MEND attacks have been causing harm to the communities as well as to the oil companies.

The MEND attacks have taken about 40% of the total production of Nigeria offline. Currently there are 944,000 bpd of light crude shut in due to militant attacks and sabotage. Just halting hostilities will not bring the oil back online immediately and could take several months to repair the damage and get the system moving again. They could decide to end their cease-fire at any time so nothing is a sure thing. Once the cease-fire begins it will take several days before the oil companies will start moving to recover that shut in production. This has happened a dozen times in the past and never lasted for very long.

Oil prices post Oil Conference and post cease-fire could continue to be volatile simply because nothing changed on the supply front from OPEC and it will be weeks before any increase is seen from Nigeria. However, the additional 500,000 bpd from Saudi (+300,000 announced May 13th, start June 1st, +200,000 announced June 17th, starts July 1st) would make a difference if it was light crude. If they are going to dump low quality heavy crude on the market it may not impact prices at all.

Monday could be a testing day for the futures community. The August contract becomes the front month on Monday since July ceased trading on Friday. Anyone looking to enter new post meeting positions has a clean slate. Traders are going to want to see where resistance appears and I would expect a support test this week as well.

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