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Keene Little : 7/1/2008 10:04:27 PM

Wednesday's pivot tables: Link and Link

The bounce off Tuesday's low looks bullish--it looks like a 5-wave move up if it can move marginally higher Wednesday morning, perhaps to about 1288. That should set up a pullback (a 50%-62% retracement would be 1271-1274) and then we should see another rally leg after that, with an upside target near 1300 which would take it to the top of its parallel down-channel for price action since June 5th (shown in red on the 60-min chart): Link

The bearish (dark red) wave count calls for the bounce up to 1300 by Thursday to be followed by a continuation of the selling next week as it stair-steps lower into August (dark red), as shown on the daily chart: Link . I've changed the daily chart a little bit from the one posted Monday night and it's less bearish into August (looking for a low around 1190 instead of 1075).

The primary difference between the pink and dark red counts is where the larger degree 1st wave down from May 19th will finish. Tuesday's low might have been it which would mean we'll start a multi-week rally back up to correct the decline from May (with an upside target around 1340 by the latter part of July). A rally above 1305 would increase that probability.

But right now I'm leaning towards just a bounce into Thursday that will be followed by more selling into early August before getting the bigger bounce to correct the decline from May. First we'll see if we get the setup for a quick short play after a new high on Wednesday morning, ride it down to 1273 and then reverse long for a ride up to 1300 on Thursday. Then we'll reverse short on Thursday for a ride down to 1230. Think the market will cooperate with that plan? If only it were that easy.

OI Technical Staff : 7/1/2008 9:59:59 PM

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Jeff Bailey : 7/1/2008 8:52:25 PM

HSBC (HBC) finished $75.69 -1.31% ... (up from exit)

TWM finished $78.72 (down from exit)

RIO finished $34.50 (up from partial exit).

CDE finished $2.81 (down from entry)

Jeff Bailey : 7/1/2008 8:48:54 PM

General Motors (GM) $11.75 +2.17% ...

Jeff Bailey : 7/1/2008 8:48:24 PM

Closing Internals found at this Link

Tab Gilles : 7/1/2008 5:42:26 PM

Nasdaq New Lows ($NALOW) Using a weekly chart and a 10-ema.It is now at the level seen back during the March bottom. WATCH for a reversal, I'd like to see the $VXN hit the 33 level. Link Link

Linda Piazza : 7/1/2008 4:24:40 PM

I bet that trend in Japan toward "demotorization," as detailed in another article, too, will mean that U.S. markets will be even more important for Japanese car makers. Car ownership is currently down 0.2% from the year-ago level, another Nikkei Net article noted. The Japan Automobile Dealers Association's staff forecast that by 2020, the number of cars in Japan with engines of over 660 cc's will have dropped from last year's 3.43 million to less than 3 million.

Linda Piazza : 7/1/2008 4:18:19 PM

Will we soon see the Schwepps milk truck driving through our subdivisions again? Today's Nikkei Net included an article titled "Home Delivery Services Thrive as More People Give up on Driving." My first thought was that the article detailed the changes wrought due to the rising gasoline costs, but instead it was due to something else that's rising in Japan: the average age of its citizens. Elderly citizens are giving up their automobiles. However, some believe the trend will rise in areas even where the elderly are not concentrated. The author includes research that notes that "[w]ords conjuring up images of driving have diminished in the lyrics of hit songs." Stores are gearing up to deliver.

That business model didn't work too well in the U.S. previously. I and one of my daughters were devotees of the grocery store chains that let you order online and then deliver the next day, figuring that the $9.95 extra cost would have been eaten up by some impulse buy we'd made if we'd gone to the store, but the stores dropped those services. I wonder, as our population ages and as gasoline costs rise, if there will be a revival of interest here, too?

Linda Piazza : 7/1/2008 4:08:17 PM

Unlike the SPX, however, the OEX moved to a lower low than that March 17 low. In fact, it was only the last-minute push that pushed it a few cents above that March intraday low of 583.64, with the OEX close today at 583.95.

Linda Piazza : 7/1/2008 3:57:07 PM

The headlines are all going to read tonight that the SPX retested its March low, which it did. Closely enough, at least. On that March day, the SPX closed the day at 1276.60. While I have no confidence yet that this is "the" bottom and not just part of a big consolidation band, some will certainly decide that it's the bottom and move accordingly. I just don't know if any bounce attempts will hold.

James Brown : 7/1/2008 3:56:02 PM

Given the strength in oil... I certainly wouldn't buy any airlines but I am seeing Southwest Airlines (LUV) bouncing from its three-month trendline of support in a bullish channel.

Keene Little : 7/1/2008 3:55:07 PM

If SPX can push to a new high from here it will produce a bullish looking impulsive wave up from today's low. That would set up a pullback tomorrow but it's one that I'd be looking to buy.

James Brown : 7/1/2008 3:49:04 PM

Might want to keep an eye on CNOOC Ltd (CEO)... the Chinese oil and gas company. I have not found what caused the midday sell-off but traders bought the dip at its 200-dma and CEO came close to filling the gap from yesterday. CEO looks like it's setting up for a potential rally.

James Brown : 7/1/2008 3:46:36 PM

Apple Inc. (AAPL) is producing a big bullish engulfing (reversal) candlestick pattern. Today marked the second day in the last three days that traders bought the dip near $164.00. Volume is a little bit above average on the bounce.

Linda Piazza : 7/1/2008 3:46:21 PM

TED spread is 0.93. When the TED spread started dropping below 1.00 again without any implosion from some financial somewhere, I started having hope that the markets could steady. That proved to be premature hope, didn't it? The TED spread isn't low enough to warrant any relaxation, certainly, but it's nice to see it trending down. I don't know if that will continue as some financials begin reporting. I have a double calendar on WFC that I mistakenly entered, not seeing (although I had checked) that its reporting date was before JUL's opex, so I know that it, at least, is reporting next week. Some comments I was reading last week said that the TED spread can act oddly while financials are reporting.

James Brown : 7/1/2008 3:43:54 PM

Trading Idea: NFG ..., a natural gas stock, broke out from a consolidation pattern yesterday. Traders bought the dip this morning and the MACD is near a new buy signal.

James Brown : 7/1/2008 3:42:39 PM

Trading Idea: The afternoon rebound in Diamond Offshore (DO) looks like a possible entry point to buy calls. A move over $142 would produce a new triple-top breakout buy signal on the P&F chart. link: Link

James Brown : 7/1/2008 3:39:21 PM

Exit Alert! Nucor Corp. (NUE) strangle play -- Shares of NUE plunged to $69.34 midday. The stock is bouncing from its lows but still down 3.1%.

The July $70 puts hit $3.80 today. It was our plan to exit if either side of our strangle traded north of $3.50. The options we listed were the July $85 calls (NUE-GQ) and the July $70 puts (NUE-SN). Our estimated cost was $2.50.

James Brown : 7/1/2008 3:35:14 PM

Exit Alert! Murphy Oil (MUR) MUR continues to rally. The stock is up another 2.4% and breaking out over the $100.00 mark. We had two targets. Our first target was the $99.95 mark.

James Brown : 7/1/2008 3:33:36 PM

Keene has already commented on the weakness in CME. The stock is down almost $29 near $354. I'm noticing that the afternoon bounce is fading away....

Linda Piazza : 7/1/2008 3:33:26 PM

I wouldn't be surprised to see the OEX parked somewhere between 580 and 586 into the close and I think it's possible it could even be toward the higher end of that range. That's not a given, because it looks to me as if the OEX needs a pullback. I'm just not sure it will happen this afternoon.

So, if the OEX ends the day somewhere in that range, the OEX ends the day with a small-bodied daily candle with a relatively long lower shadow. If the OEX had gapped lower today and this candle had been produced below the consolidation from Friday and Monday, it would actually be a fairly convincing reversal signal. However, the spring back inside that consolidation zone from the last few days questions whether it was really a reversal signal or just part of a sideways/down consolidation pattern, one of the 2-5 days that the OEX often consolidates before deciding next direction. I personally think it's about time for the OEX to rise up toward the daily 9-ema again and test it, but I don't know that will happen. That often happens as the ending pattern of a consolidation pattern, but it doesn't always end that way. Sometimes in a trending move, the OEX just breaks in the direction of the trend without the test. I also don't know how the OEX would react if that test occurred tomorrow or Thursday. That moving average is now 591.18 but it's still descending steeply.

The OEX may be ending the day above the potential support on weekly closes, with the weekly candle so far being a more convincing potential reversal signal. However, it's possible that the week will result in a doji-type candle sitting at or above that potential support near 577-578.

Taken all together, my take on this is that the OEX has steadied enough that it's at least possible that we'll see a daily 9-ema (or 10-sma, if you prefer) test over the next few days. However, I don't think the signal is strong enough to yet suggest a reversal but maybe just enough strength to perform that test. And, that's not a given. This market is shaky, to say the least.

James Brown : 7/1/2008 3:31:54 PM

Exit Alert! AMGN strangle -- Shares of AMGN are up another 2.1% today and testing technical resistance at the 200-dma. The July $45 calls are trading around $3.30bid/$3.45 ask. We had a target to exit if the option rose to $3.00 or higher.

The options in our strangle were the July $45 calls (AMQ-GI) and the July $40 puts (AMQ-SH). Our estimated cost for the July strangle was $1.65. We want to sell if either option hits $3.00.

Keene Little : 7/1/2008 3:29:58 PM

As I draw in parallel down-channels for the decline in SPX from its May high you can see that they're getting steeper on this 60-min chart: Link . It gets a bit confusing to look at but right now the bottom of the first down-channel from May 19th, which it broke below on June 26th, is currently near 1289 and could act as resistance if it gets there.

There's a down-channel from the June 5th high and SPX bounced off the bottom of it today (after a slight throw-under). And now there's potentially a steeper down-channel based off the line along the lows since June 18th. These steepening down-channels of course means the selling has been accelerating and if that continues we'll see SPX break well below 1250 for the next big move.

If the bulls can drive SPX up through 1280 then the top of the steeper down-channel is currently near 1298 and then the top of the middle channel is near 1305. It won't be an easy climb and based on the whippy pattern I've seen today I don't think it will make it past 1300, if that high. A retest of yesterday's high near 1290 may be all we'll get. Just keep in mind that we're clearly in a downtrend and trying to figure out the bottom of it is as difficult as finding the tops of rallies.

Jane Fox : 7/1/2008 3:28:12 PM

Tomorrow's economic reports include:

8:15a.m. Jun ADP Employment Report: Expected: -35K. Previous: +40K.

10:00a.m. May Factory Orders: Expected: +0.6%. Previous: +1.1%.

Jane Fox : 7/1/2008 3:27:37 PM

Dateline WSJ - Chrysler reports 36% decline in U.S. auto sales for June.

Jane Fox : 7/1/2008 3:27:08 PM

The Vix has been very helpful today and has confirmed each and every new high or low the S&P futures (ES) has made so far, well every one except the one made at 11:50 and you can see what happened from there. Link

Jeff Bailey : 7/1/2008 3:21:24 PM

Daimler (DAI) $60.96 -1.15% ... reporting June auto sales.

Linda Piazza : 7/1/2008 3:14:24 PM

It's time to begin thinking about end-of-day decisions. I thought first I'd do the usual "What could happen tonight that might change your trade?" post. Australia has a number of important releases tonight, but our markets don't usually react too strongly to Australia's releases unless Australia is doing some saber rattling about raising rates and we don't know want to know about any central banks raising rates.

Someone else sometimes does some saber rattling that rattles our markets: ECB President Jean-Claude Trichet. He's due to speak at 3:15 am ET in Paris. The Eurzone's PPI will be released at about 5:00.

More importantly, the U.S.'s ADP Nonfarm Employment Index will be released at 8:15 tomorrow morning. Although the ADP has been infamously wrong a number of times, it still gives us some way to begin firming up expectations for non-farm payrolls, to be released the next day. Markets could definitely react to the ADP. After the markets open, we have a number of developments, including factory orders (10:00 am ET), crude inventories (10:35) and talks by Treasury Secretary Paulson (11:00) and FOMC member Frederic Mishkin (noon).

Linda Piazza : 7/1/2008 2:48:25 PM

If you're in a bullish OEX trade, it's time to start cinching up stops as the OEX approaches resistance concentrated just under and over 584, but now in a range broadly from 582 to 585.23, yesterday's swing high. This could be another zone that stalls the OEX or knocks it back. If it's stalled, bulls want to see shallow pullbacks. Because of the size of the big runup on the current candles, a shallow pullback will be all the way back to 580.15 or maybe even 578.64, where the OEX would hopefully find support on 15-minute closes.

However, if bears start getting surprised and decide to help fuel the rise by buying to cover, there might not be much of a pullback. Do manage your positions carefully, though, just in case.

Unfortunately, potential resistance is layered thickly and is next at 585.53-586.47 on 15-minute closes if this zone is surpassed.

Keene Little : 7/1/2008 2:46:46 PM

Both the bulls and the bears will look at today's nearly 200-point reversal in the DOW off today's low as bullish and that could spark a lot more buying for the rest of the week. It will then be the form of the pullbacks that will determine how much more upside to look for. But so far it's looking good for the bulls.

Jeff Bailey : 7/1/2008 2:45:21 PM

Bearish swing trade stopped alert! ... for the ProShares UltraShort Russell 2000 (TWM) $79.00

Keene Little : 7/1/2008 2:39:08 PM

By rallying above its downtrend line from June 25th, SPX is now looking a little more bullish. It now needs to hold the line on a pullback to maintain the bullishness. But today has been little more than a whipsaw kind of day without giving much information as to where it will head next.

Linda Piazza : 7/1/2008 2:34:19 PM

The OEX is now, at least temporarily, back above the potential Keltner support on weekly closes. See my 9:25:37 post for further comments, but those comments included the assessment that we needed to factor in the possibility of a small-bodied candle that sat on that potential support, closing above it, for this week's weekly candle.

Jeff Bailey : 7/1/2008 2:33:55 PM

Most Active ... QQQQ $45.48 +0.68%, MSFT $26.90 -2.21%, BAC $23.47 -1.67%, IWM $68.57 -0.69%, SPY $127.50 -0.37%, QID $44.54 -0.66%, WB $15.42 -0.70%, C $17.00 +1.43%, INTC $21.46 -0.09%, CSCO $23.18 -0.42%

Jeff Bailey : 7/1/2008 2:29:51 PM

GM $12.35 +7.39% ... did backfill 06/25 to 06/26 gap lower.

Jeff Bailey : 7/1/2008 2:25:09 PM

Potential h/s top. "head" about $91.00, "neckline" about $75.00.

Jeff Bailey : 7/1/2008 2:24:03 PM

Sohu.com (SOHU) $71.48 +1.47% ...

Linda Piazza : 7/1/2008 2:22:42 PM

The OEX is testing that potential resistance on 15-minute close that held it back this morning. That resistance is now at 579.95 with the OEX at 580.12 as I type. The OEX paused at this 15-minute 45-ema this morning and was then knocked back quickly. Nothing stops that from being a possibility again, except that this climb does look a little stronger than the previous one. However, those in bullish positions should be judging what they want to do as this resistance is tested. Once again, if there's a pullback, they'd like to see it be a shallow one. One measurement of shallow would be for 15-minute closes to remain above the rising 15-minute 9-ema, with that now at 577.50. Bears need to adjust their profit-protecting plans, too, especially if the OEX should pop to a new day's high and maintain levels above that. I think the 582-584 and then 585.60-587 levels could be difficult ones, too, but if bears start fueling a rise, it's possible they won't stop the OEX. There's no evidence one way or another yet, though.

Jeff Bailey : 7/1/2008 2:21:28 PM

02:00 Internals at this Link

Jeff Bailey : 7/1/2008 2:17:13 PM

VIX.X 24.37 +1.75% ...

Jeff Bailey : 7/1/2008 2:16:47 PM

Swing trade put exit alert! ... for the HSBC Holdings HBC Sep $80 Put (HBC-UP) at the bid of $7.40.

HBC $75.25 -1.89% ...

Jeff Bailey : 7/1/2008 2:11:08 PM

AMR $4.87 -4.88% ... kissed WKLY S2.

Linda Piazza : 7/1/2008 2:10:30 PM

The VIX is now 24.61. Those hoping for a steadying in the equity markets (or at least the SPX since it's geared to the SPX options) want to see a 30-minute close below 24.75, and as far below it as possible.

Jeff Bailey : 7/1/2008 2:10:28 PM

USO $113.47 -0.16% ... slips red.

Linda Piazza : 7/1/2008 2:05:01 PM

So far, so good, but you've heard that from these lips--or rather, these typing fingers--earlier today. As big as this bounce was, it needs to continue. My charts show potential resistance on 15-minute closes at 579.93, if the OEX should rise that far, so begin watching for rollover potential again as that level is approached, if it is. The OEX needs to climb to a new high above the mid-morning swing high to improve the tenor, with that mid-morning high at 583.19 and inside the next Keltner resistance zone at 582.10-583.44.

Keene Little : 7/1/2008 2:01:20 PM

SPX 1273 may turn into resistance now. Slightly higher is the downtrend line from June 25th (top of the descending wedge?) just above 1276.

Linda Piazza : 7/1/2008 2:00:25 PM

TED spread 0.92.

Linda Piazza : 7/1/2008 2:00:12 PM

VIX 24.96.

Jeff Bailey : 7/1/2008 1:59:48 PM

30-year ($TYX.X) ... now unch at 4.531% ...

Jeff Bailey : 7/1/2008 1:58:48 PM

Getting some green on the screen.

Linda Piazza : 7/1/2008 1:57:06 PM

The VIX is 24.99, dropping heavily (at least as seen on the 30-minute chart) from the resistance just tested. Today, the VIX has been finding support on 30-minute closes at the 30-minute 9-ema, now at 24.79, so those hoping that something will come of this bounce would like to see the VIX dropping below and sustaining values below that moving average.

Jeff Bailey : 7/1/2008 1:56:09 PM

Bearish swing trade long raise stop alert! ... for the TWM $80.50 +2.15% ... to $79.00 ... from $78.00.

Jeff Bailey : 7/1/2008 1:53:28 PM

General Motors (GM) $11.65 +1.39% ... reporting June sales.

Jeff Bailey : 7/1/2008 1:51:39 PM

iShares Silver (SLV) $180.02 +4.28% ... ~$18.00 spot.

Jeff Bailey : 7/1/2008 1:50:44 PM

Swing trade long alert! ... for 1/4 position in shares of Coeur D' Alene Mines (CDE) at the offer of $2.83.

Stop goes $2.70, target $3.67.

CDE $2.83 -2.41% ...

Linda Piazza : 7/1/2008 1:50:41 PM

The OEX keeps finding resistance on 15-minute closes at the 15-minute 9-ema now at about 575.90. It's punching above it as I type, but it needs to maintain 15-minute closes above it and then move high enough to keep it turning higher. OEX at 576.50 as I type.

Keene Little : 7/1/2008 1:38:58 PM

One caution, if you're looking for a low and thinking about trying a trade on the long side, I have a Fib projection for today's decline (if it continues) at SPX 1252. Also, draw a trend line along the lows since June 24th and the highs since June 25th and you can see a descending wedge forming. That's the bullish potential here with one more new low down to perhaps 1250 (with a throw-under). So it's a rather wide zone but I see potential support in the 1250-1257 area.

Linda Piazza : 7/1/2008 1:35:14 PM

We're about to enter a typical stop-running (or testing) time of day that sometimes occurs from about 1:35-1:55 pm ET. With the market conditions today, this one could be a doozie. Remember that you're watching for a test, but that the test itself might not be the final direction. It's the result of the test that will give the information. Perhaps that last dip was even the test, although it generally occurs about the time big money is returning from lunch, not about the time big money leaves for lunch. Anyway, I don't know whether a test will occur or which direction will be tested. I certainly don't know the results of that test, but I do know to watch out for it, to reserve judgment about what I'm seeing and to watch the result of the test.

Keene Little : 7/1/2008 1:33:11 PM

The bounce off this afternoon's low is another corrective looking one. A test of the March low for SPX (1257) continues to look like a good possibility. If bullish divergences exist with a test of that low I could be tempted to nibble on a long. But talk about trying to catch falling knives! In this environment you need to be very careful about the long side.

Linda Piazza : 7/1/2008 1:29:41 PM

The VIX is dropping back from its test of daily (and 30-minute) potential Keltner resistance. That resistance is between 25.40-25.60 on the two charts, and the VIX is currently 25.25. This isn't much of a pullback yet, of course, but there's the hint that it might hold. Keep it on your radar screen as the pullback so far is looking a bit bull-flaggish, not the ideal shape for a pullback if you hope for markets to steady.

Linda Piazza : 7/1/2008 1:17:33 PM

The OEX produced a convincing reversal signal on its 15-minute chart, but it got stalled at the Keltner resistance that I mentioned as being so strong. It hasn't been able to build on that reversal signal and it needs to do so or it risks just falling through the floor of this little consolidation pattern, too. The OEX is 574.86 as I type, with the 15-minute 9-ema now at 576.08.

Linda Piazza : 7/1/2008 1:15:13 PM

I trade credit spreads like many of you. How do I handle times like these? I start stepping out of partial positions when the delta of my sold strike hits 0.22-0.24 (or 22 to 24, depending on the nomenclature you use). As prices stair-step closer to my sold strike and the deltas stair-step high, I step out of more positions. It's a kind of roadmap for me that lets me manage my risk without always asking, "Is now the time?" Then, I might wait a day or so and, if there's enough time in the month to swing a trade far enough away, I'll roll into another trade for the same number of contracts, making up some of the loss. So, I've been stepping out of some JUL OEX bull put spreads I had and now I'm left with only 4 of them, still watching closely. I've lost a hefty proportion of the credit I took in for JUL, and I'll soon get close to a loss for the month if markets don't bounce, but I've gained trust in myself as a trader and my ability to avoid some of those mega losses that can occur if you're not careful with condors and credit spreads that are going wrong. If you're interested in what I do, you can go to the CBOE site and listen to some Dan Sheridan webinars on adjustments for condors. This method is not right for everyone and it's not right for all times, either. Two of the most successful credit spread traders I know, one of them being Mike Parnos and both of them making far more money than I do, don't use this system at all. They manage their trades differently, making judgment calls seasoned by their experience and beliefs about what's happening in the markets. This is the right tactic for me, though. Barring a huge gap open some day that results in fast market conditions the rest of the day, I know how to keep my losses in line with the average gains I make each month, and I need the confidence that I can do that. Since these are high-probability plays, that's all you need to make it work for you.

I want to reassure you if you've been hit with big losses this month on your spreads. I discovered this method after I'd experienced a loss bigger than the hit my confidence could take a couple of years ago. Or maybe three. The account took the loss just fine, but my confidence didn't. So, if you're finding yourself in that spot this month, perhaps a year or two from now, you'll find that this loss, this particular one, was the springboard for you into a way that proves workable for you to manage these trades.

Jeff Bailey : 7/1/2008 1:10:32 PM

M, m, mmmmmm

Keene Little : 7/1/2008 1:07:27 PM

The Trannies are getting hit hard to the downside today, currently -4% for the day. By breaking below its 200-dma today it sets a bearish tone. It has now also broken below the high on February 4th which negates the potential for a 5th wave rally in the bounce off the January low (the January-May rally is now a confirmed 3-wave correction to the July-January decline).

I see potential support around the 4660-4700 area (currently trading 4750) but the price pattern is now bearish for the longer term. It also confirms the bearish non-confirmation when it made a new high in May but not the DOW, thus creating another DOW Theory sell signal. Daily chart: Link

Linda Piazza : 7/1/2008 12:55:56 PM

Lots of potential Keltner resistance gathers for the OEX near this morning's first 15-minute close. That potential resistance on 15-minute closes layers up to 575.50 with the 15-minute 9-ema then at 576.69. The resistance looks firm, but the OEX's potential three-candle pattern over the last almost 45 minutes is a potential reversal signal (red candle, doji with an upper shadow, green candle matching or nearly matching the red candle in range). A potential reversal pattern on a 15-minute chart that's forming beneath what looks like strong resistance is again nothing to hang bullish trades on, but it again is most definitely something for bears to keep on their radar screens.

Jeff Bailey : 7/1/2008 12:55:08 PM

13-week Treasury Yield ($IRX.X) ... up 11.5 bp at 1.820%.

Linda Piazza : 7/1/2008 12:49:01 PM

TED spread 0.93 as of 12:30 pm ET.

Jeff Bailey : 7/1/2008 12:48:55 PM

VIX.X 25.52 +6.55% ...

Jeff Bailey : 7/1/2008 12:48:38 PM

Yen CurrencyShares (FXY) $94.45 +0.58% ... threaten a close above 150-day SMA ($94.24) and have probed falling 50-day SMA ($94.69).

FXY-HO $2.35 x $2.60.

Linda Piazza : 7/1/2008 12:46:34 PM

The BIX dropped to a new low of the day. Unlike the OEX and SPX, that drop did not result in potential price/RSI bullish divergences.

Jeff Bailey : 7/1/2008 12:46:09 PM

Euro CurrencyShares (FXE) $158.08 +0.16% ...

Jeff Bailey : 7/1/2008 12:45:35 PM

Paulson: Discussed global currencies, oil, food prices, US/European economic issues, market regulation (Trichet, Weber), CPI. "No comment" on monetary policy.

Jane Fox : 7/1/2008 12:44:30 PM

Ya! Gold is breaking its resistance and on its way to the next resistance at 960. Link

Linda Piazza : 7/1/2008 12:43:35 PM

Be careful in fast market conditions if we should get a faster move started. For the first time ever since I changed subscribers for my feed, I think there's a lag on my feed for prices. What you're seeing might not be the actual price.

Jeff Bailey : 7/1/2008 12:42:24 PM

Treasury's Paulson making comments on meeting with Trichet.

Linda Piazza : 7/1/2008 12:36:55 PM

The SPX's 3/17 intraday low was 1256.98. The OEX's low so far today has been 1260.68. Bears, be careful. We're approaching a have-to-try-it dip-buying place on the SPX, if there are any bulls out there who are still willing to attempt such a thing in this environment. I don't know if there are and if they'd be successful if they tried, but be aware of the possibility. My weekly Keltner chart shows a potential downside target of 1245.79 on the SPX, but the OEX has already reached (and today, slightly exceeded) its analogous target. If the OEX were to pull up soon, the generals could pull the other stocks higher, too. Just be watchful with the VIX hitting potentially strong resistance on a daily close and the SPX approaching that March low.

Linda Piazza : 7/1/2008 12:32:11 PM

Updated VIX daily Keltner chart, showing the resistance currently being tested: Link

Jeff Bailey : 7/1/2008 12:27:09 PM

Bearish swing trade long raise stop alert! ... for the ProShares UltraShort Russell 2000 (TWM) $81.81 +3.81% .... to $78.00 (from $76.00).

Linda Piazza : 7/1/2008 12:24:58 PM

I wouldn't hang any trades on this, but there's potential bullish price/RSI divergence showing up on the 15-minute OEX chart. While I wouldn't hang any bullish entries on that, I would keep it in mind if in bearish trades. Again, for two weeks, I've warned of needs to update your profit-protecting plans without there needing to be much need, but that's just good account and trade management anyway. Don't ignore it because you haven't needed it.

Keene Little : 7/1/2008 12:20:25 PM

SPX is back down to the bottom of its down-channel from the June 5th high, currently near 1264. But only 7 points lower (relatively speaking) is the March low.

Jeff Bailey : 7/1/2008 12:19:27 PM

September Copper (hg08u) up $0.02 at $3.90

Jeff Bailey : 7/1/2008 12:18:09 PM

VIX.X 25.13 +4.92% ...

Jeff Bailey : 7/1/2008 12:17:53 PM

Swing trade call exit partial alert! ... Sell 1/2 of the Companhia Vale do Rio Doce RIO Aug $37 Call (RIO-HK) position at the bid of $1.06.

RIO $33.81 -5.61% ...

Linda Piazza : 7/1/2008 12:16:19 PM

The OEX tests potential support on 15- and 30-minute closes, with both at about 576. For reference, the previous low of the day was 575.58, so that is also potential support. All day, moves have been "very tentative," in my words, although as a writer I know better than to append the word "very" in that way. Either it's tentative or it's not, but the "very" just seemed needed today . . . as I typed, the OEX dropped to a new low of 575.48.

Linda Piazza : 7/1/2008 12:13:57 PM

The VIX has climbed again, of course, although not yet to a new high of the day or above the potential resistance on daily closes at about 25.37. It is currently testing lower potential resistance on a 15-minute close, with that at about 24.70 and with the VIX currently at 24.85. Obviously, those hoping for a steadying in the markets would like to see this resistance hold on 15-minute closes and for the VIX to turn lower again. Do note that the VIX tends to overrun these intraday levels by a bit at times, so use that resistance zone as an approximate and not exact one.

Tab Gilles : 7/1/2008 12:10:37 PM

Celgene (CELG) $61.36 +2.50 (3.95%)

Anticancer company SuperGen SUPG said Tuesday that its Dacogen failed a late-stage trial in patients with myelodysplastic syndromes (MDS) -- news that may lend advantage to competitor Celgene's CELG Vidaza, which will be relaunched this fall. Link Link

Keene Little : 7/1/2008 12:06:40 PM

Well, so much for the bullish potential. SPX has now dropped below its 10:15 AM low and that leaves a 3-wave bounce off this morning's low which is just a corrective move. But all it means at this point is that this could go anywhere, including back up to a new daily high. Considering the holiday-shortened week and the choppy price action I'd be reluctant to do much here. Trading today should be quick day trades off your favorite signals but frankly I don't see anything to entice me into the market today.

Linda Piazza : 7/1/2008 12:05:57 PM

TRIN is 1.20, still well above the level that those who hope for some gains today would like to see. They'd like to see it drop below 1.05 and then 0.98, and maintain levels below those potential support zones.

Linda Piazza : 7/1/2008 11:57:51 AM

The A/D line is testing potential support on 15-minute closes now at about -1150. The A/D line is currently -1136.

Linda Piazza : 7/1/2008 11:53:49 AM

Potential support for the OEX on 30-minute closes is 576.49-578.21.

Jeff Bailey : 7/1/2008 11:51:18 AM

Venezuela urging countries to move reserves away from U.S.

Jeff Bailey : 7/1/2008 11:49:20 AM

VIX.X 24.34 +1.62% ...

Jeff Bailey : 7/1/2008 11:49:07 AM

HSBC Holdings (HBC) $74.97 -2.25% ... trading WKLY S1 here. HBC-UP $7.60 x $7.90.

Keene Little : 7/1/2008 11:41:37 AM

By rallying above 1281, even though it hasn't held it so far, SPX has now turned the price pattern potentially bullish. Now as long as the 10:15 AM low at 1271 is not violated we should see it work its way higher. Or we could be stuck in the middle of a sideways choppy consolidation that will last for the rest of the week (which wouldn't surprise me). It would be a bearish consolidation pattern but we might not see any more downside this week. It's normally a bullish week and I guess if the bulls can hold the bears off for the week that would be bullish.

Jeff Bailey : 7/1/2008 11:41:28 AM

European Markets ... Link ... SPX may have a way to go.

Near-term resistance 1,291, with several MONTHLY/QUARTERLY at 1,240.

Jeff Bailey : 7/1/2008 11:39:36 AM

Asian Markets Link

Shanghai got hit -3.09% to finish 2,651.60.

Keene Little : 7/1/2008 11:42:40 AM

Not surprisingly the euro has a very similar pattern to gold's. The Fib projection at 1.5772 was tagged yesterday (high was 1.5776) which is also at the top of its parallel up-channel for price action since the May low. If it continues higher so will gold. If it starts to drop back down I suspect gold will follow. A divergence exists today with a new high for gold unmatched by the euro.

The EU interest rate decision this week could answer the question as to which way it will head next. I believe it will react to the downside, but will turn bullish if it rallies instead. Daily chart of September contract of the euro: Link

Linda Piazza : 7/1/2008 11:32:20 AM

The BIX is dropping much further than OEX, SPX and Dow bulls would prefer. Next potential support is 168.70-169.62, with that zone potential support on 15-minute closes. The BIX is 169.94 as I type.

Jeff Bailey : 7/1/2008 11:31:56 AM

TWM $79.74 +1.19% ...

Jeff Bailey : 7/1/2008 11:30:26 AM

Most Active ... IWM $68.68 -0.56%, C $16.72 -0.23%, MSFT $27.09 -1.52%, BAC $23.49 -1.59%, SPY $127.64 -0.26%, QQQQ $45.42 +0.55%, INTC $21.74 +1.21%, PFE $17.72 +1.43%, AAPL $172.57 +3.07%, CSCO $23.28 +0.08%

Linda Piazza : 7/1/2008 11:30:10 AM

TED spread is 0.93, or was at 11:17 am ET. It's been chopping between 0.91-0.94 this morning.

Linda Piazza : 7/1/2008 11:29:24 AM

TRIN 1.23, climbing more than those hoping for markets to steady want to see. There's potential resistance at 1.04 on 15-minute closes, likely to be breached without a quick collapse in these last few minutes and then at 1.43.

Linda Piazza : 7/1/2008 11:28:21 AM

We have a few minutes to go in this current 15- and 30-minute period, and those hoping for the markets to steady would certainly like to see the OEX bounce back above 580 and hopefully, 581.26, by the close of those periods. Those are the 15- and 30-minute 9-ema levels, respectively. OEX at 580.48 as I type.

Linda Piazza : 7/1/2008 11:14:26 AM

I wanted to mention, in case you hadn't realized, that the information that I have says that equity markets will close at 1:00 pm ET on Thursday. I wanted to let you know so that you could plan trades accordingly.

Keene Little : 7/1/2008 11:12:50 AM

CME has been in a down-channel since its December high and the June rally stopped at the top of the channel (it kept testing it from June 17th to the 25th). Today it has broken below the June 4th low so that's bearish. It is now down to the mid line of the channel and would leave a healthy bullish divergence if it turned back up here. But if the bears still rule then a drop to the bottom of the channel around 280 would likely be next. Link

Linda Piazza : 7/1/2008 11:11:57 AM

So far, everything is going well for those who hope markets will steady, but it's not a given that what we see now is what we will see into the close, so keep on your toes. Indices have risen into first resistance zones. The A/D line faces resistance. TRIN is 0.96, not as low as bulls would like to see it, although it's far off its early high. A stalling is natural and normal now, but you just don't want to see pullbacks get too big. You want to see some critical level breached soon to the upside, forcing bears to cover. Bears among our subscribers: you, of course, want the opposite.

Linda Piazza : 7/1/2008 11:09:25 AM

The idea that the bounce could stall is partially supported by the glimpse of the A/D line on a 15-minute Keltner chart. It's facing potentially strong resistance from -620 up to -550, with the A/D line now at -643. It's also testing gap resistance, being just a little above yesterday's closing level.

Linda Piazza : 7/1/2008 11:07:14 AM

The OEX is now entering a first potential resistance zone. Without a strong surge, I would expect that there will likely be some stalling and perhaps a pullback. The sideways stall is preferable to those who want markets to steady, if they can't get the surge, that is. However, if the OEX should pull back, they would like to see support on 15- and 30-minute closes in the 184.17-184.44 zone.

Keene Little : 7/1/2008 10:55:45 AM

Gold is nearing an interesting level that will bear watching. The pattern since the March high has looked very corrective (3-wave moves) and suggests we will see another leg down, which is a reason I've been looking to short the shiny metal. But after rallying above 921, the top of a sideways triangle pattern, I've been watching to see what could set up next. I don't trust the upside because of the corrective wave structure and the short term bearish divergences. It doesn't mean it can't continue to rally but I'd be worried about a downside surprise if in a long position.

Two equal legs up from its May low is at 949.3 and that matches the top of a parallel up-channel for price action since the May low. There is a 15 to 18-week cycle that has been running consistenly for gold and the next cycle ends in the early part of July. It was pointing to a low but sometimes these cycles invert which means it could be pointing to a high this time. A rally much above 950 would look bullish but I'm thinking we could soon see the start of a new decline in gold. It's a bit early to act on that but I'll be watching for evidence of the start of a decline to then position short. Gold contract (Aug) daily chart: Link and then one that's a little less "scrunched": Link

Linda Piazza : 7/1/2008 10:53:08 AM

The OEX had two little swing highs yesterday afternoon, at 585.23 and then later at 584.28. Both are within the 584-586 potential resistance level showing up on Keltner charts, so those in bullish positions today should evaluate what they want to do about tests of that zone, if such tests occur today. Next resistance above that is showing up from about 587-588, so it's right above that one. Without a surge higher, always a possibility if bears decide to start covering, it may be that the OEX's climb could stall for a while at one of those zones and do some chopping around before we know next direction. Or, of course, it could just get knocked back.

Jeff Bailey : 7/1/2008 10:50:42 AM

Murphy Oil (MUR) $99.78 +1.76% ... edges to a new 52-week high.

Linda Piazza : 7/1/2008 10:46:08 AM

The next step in any improvement is that the OEX needs sustained 30-minute closes above the 30-minute 9-ema now at 581.25. The OEX is 580.97 as I type, and this moving average has been resistance all morning. As long as it is, a trip back down to next support at 577.32-578.60 must be factored in as a possibility.

Jeff Bailey : 7/1/2008 10:45:10 AM

10:00 Internals found at this Link

Jane Fox : 7/1/2008 10:34:12 AM

WASHINGTON (MarketWatch) - The U.S. factory sector rebounded in June and showed a pickup in activity for the first time since January. At the same time, the inflation outlook worsened.

The Institute for Supply Management reported Tuesday that its factory index rose to 50.2% in June from 49.6% in May.

Readings above 50% indicate expansion in the manufacturing sector.

Norbert Ore, who oversees the ISM survey and also serves as Georgia-Pacific Corp.'s procurement director, said manufacturing seems to be holding up "amazingly well."

"There is a huge amount of inflation" in raw materials and intermediate goods, Ore said. "It is a very inflationary environment."

The increase was unexpected. Economists had forecast a decrease to 48.5% in June

Linda Piazza : 7/1/2008 10:27:28 AM

Although the BIX dipped to another new low below yesterday's this morning, it has not yet closed even a single 15-minute period below yesterday's lows for 15-minute closes. It bounced above yesterday afternoon's (not the day's) swing high of 174.11, but hasn't been able to maintain levels above that. Those who hope to see markets steady want to see that happen. Over the last 10 days, the BIX has not been able to maintain values above a previous swing high on the 15-minute chart, so this would be an important first step in any improvement in tenor for the BIX. It's at 172.64 as I type.

Keene Little : 7/1/2008 10:26:13 AM

Until SPX can rally above yesterday's mid-day low at 1280.74 the price pattern remains bearish and is looking for another leg down, in which case the 1257 area becomes the downside target. But if it can rally above 1281 then it will look like we're in a larger upward correction and the rally leg off this morning's low would have an upside target of 1297. So basically the bulls (with the help of the bears covering) need to drive this back to a new daily high now and that would be a bullish move that should carry for the rest of the day.

Jane Fox : 7/1/2008 10:24:31 AM

WASHINGTON (MarketWatch) -- Spending on U.S. construction projects fell 0.4% in May as outlays on private residential construction took yet another tumble, the Commerce Department reported Tuesday.

Economists surveyed by MarketWatch had been looking for a decline of 0.6%.

On a year-over-year basis, construction spending was down 6%.

Spending on private residential construction declined 1.6% in May, after falling 1.7% in the prior month. On a year-over-year basis for May, private residential construction spending was down 27.3%.

For May, there was a 0.2% gain in nonresidential private construction spending.

Spending on overall private construction projects fell 0.7% in May, and this spending was down 9.7% from the prior year's period.

Meanwhile, public construction spending gained 0.4% in May, with year-over-year outlays up 5.2%.

Linda Piazza : 7/1/2008 10:21:02 AM

That last OEX 15-minute close held support above 577.62, where those who hope for a steadying most want to see it hold. Further potential support is at 576.12, but those hoping for a steadying would prefer that not be tested again. OEX at 578.92 as I type, with the post-ISM action encouraging, as far as it goes, but still tentative. Maintain some skepticism.

Linda Piazza : 7/1/2008 10:13:12 AM

SPX bulls or just those who want the markets to steady want to see the SPX hold 15-minute closes above 1270.33-1271.83. The SPX is at 1273.38 as I type.

Linda Piazza : 7/1/2008 10:11:47 AM

It's still not certain if the OEX can continue climbing without a drop back to test the post-ISM gap. That's the type of gap that doesn't always have to be filled, but the possibility of a dip to test it exists. If that happens, of course those who want markets to steady do want to see it hold gap support that also corresponds to potential Keltner support on 15-minute closes from 577.89-578.49. If the OEX is going to keep climbing, it's likely going to face resistance today in the 584-586 zone and then, stronger, near 587-588.25. There's still some uncertainty in the markets and anything can still happen, but bears need to be aware of the potential for a bigger bounce today.

Linda Piazza : 7/1/2008 10:06:44 AM

Here's what OEX bulls want to see. The OEX is being knocked back from its initial post-ISM number, as could be expected in this environment. Bulls would like to see 15-minute closes above 577.90-578.54. In fact, they'd like to see them higher, but that's the support they'd like to hold if the OEX is to drop further.

Keene Little : 7/1/2008 10:06:21 AM

There was a quick bear fry there as shorts covered on the ISM report. Now we'll see if there's any follow through to the upside otherwise the bears will feel emboldened to pile back on.

Linda Piazza : 7/1/2008 10:05:13 AM

I mentioned the "weak ray of sunshine" this morning offered from the TED spread. It's still 0.92, but that's a delayed number.

Linda Piazza : 7/1/2008 10:04:32 AM

TRIN 0.78.

Linda Piazza : 7/1/2008 10:02:58 AM

Upside surprise on the ISM, above the 50 contraction/expansion number.

Linda Piazza : 7/1/2008 10:01:15 AM

Big bounce in the OEX before the ISM, but I'd have felt better if it had close the first 30-minute period above about 579.20. It's holding at what was support and now might be resistance into the ISM.

Linda Piazza : 7/1/2008 9:54:11 AM

Here's a VIX chart I showed yesterday (and also in early June), with yesterday's annotations. Obviously the questioned recent test of Keltner resistance wasn't the final test, but that resistance is also being closely tested this morning. Bears should keep in mind the possibility that it will hold. Bulls should keep in mind the possibility that even if the VIX breaks above well above it but then closes below it, damage will be done during the day to their positions: Link

Keene Little : 7/1/2008 9:52:42 AM

I was hoping some leadership stocks like GOOG could provide some clues as to whether we should be looking for support soon or expecting more selling. Unfortunately GOOG does not have a clean pattern at the moment--I could argue equally strongly for a bounce or a flush.

Right now it's finding support at its 100-dma but if that breaks there's nothing but air below before it closes its April 18th gap (449.54). If it can hold yesterday's low at 512.20 (this morning's pre-market low was 516.50 and it's currently trading near 521) I see the possibility for a rally back up but it needs to get back above 590 to confirm anything bullish. Daily chart: Link

Linda Piazza : 7/1/2008 9:50:13 AM

The OEX's potential support on 15-minute closes was violated by a little on that first 15-minute close, but only by a little and the OEX is already bouncing above the current 576.46 level of that potential support. It essentially held, but the OEX needs to maintain 15-minute closes above 578.18 to even begin to improve the tenor.

Please be aware that we must watch any early bounce attempt carefully and with some skepticism. It's typical to see a reversal attempt after any strong early move, whether up or down. I think bears definitely need to remain vigilant, particularly with the ISM due in a few minutes but bulls shouldn't be sure that they've seen the worst yet, either. You've got less than 15 minutes to decide how many positions you'll hold open into the ISM.

Linda Piazza : 7/1/2008 9:43:14 AM

TRIN rose up and hit resistance this morning and has dropped down to 1.29, but it needs to drop much further, of course, if it's going to suggest any steadying in the markets. My charts suggest it has to maintain levels beneath 1.06 at least, but do watch the trend of the TRIN. A steady drop will suggest markets are trying to stabilize.

Linda Piazza : 7/1/2008 9:41:36 AM

Keltner outlook on the A/D line: The A/D line is obviously very negative, at about -1550 as I type. Nearest Keltner support and resistance are both fairly far away, at about -1900 and -1050, respectively. The A/D has been falling sharply until a couple of minutes ago, so it might fall straight to support. If it does hit that support, watch for potential attempts to steady the markets. Sometimes instead when it's between support and resistance, it establishes a wide range between the two in the first 30 minutes of trading and then chops around in it for a while before heading the next direction. If it dives straight to support instead, I'll be watching for a bounce and then a retest with bullish divergences, and then a stronger bounce, as that's the kind of pattern that sometimes comes before a real steadying.

Linda Piazza : 7/1/2008 9:34:49 AM

The SPX is testing potential support on 15-minute clsoes at 1271.20; the OEX, 576.55. Both are obviously below these levels, but it won't be until the close of these 15-minute periods that we know if they bounce back above them. It's a possibility although I'm not suggesting it's a done deal.

Linda Piazza : 7/1/2008 9:33:05 AM

As a reminder, Friday's OEX low was 577.27, with the OEX just dropping a few cents below that as I type.

Linda Piazza : 7/1/2008 9:32:04 AM

Here we go. Deep breaths, everyone.

Linda Piazza : 7/1/2008 9:31:13 AM

Futures dropped after I started preparing my 9:26 post. If we extrapolate where the OEX might go now, we have to consider a drop down to about 573 a possibility.

Linda Piazza : 7/1/2008 9:26:10 AM

Equity traders around the globe are in a gloomy mood this morning with our futures reacting negatively, too, of course. If our cash markets act in accordance to what's going on in futures and we extrapolate where the OEX might go from the S&P futures' distance from fair values, we might expect the OEX to drop about 7 points from yesterday's close. That brings it to just above 574 and to a new recent low. There's the possibility that the OEX will instead attempt to steady at Friday's 577.27 low, but I don't think we can count on that.

If the OEX drops this morning, as seems almost certain to happen at this juncture, keep in mind the important ISM to be released about 30 minutes after the open. That number can and often does move markets, either exaggerating an earlier movement or else reversing it. Start making decisions right now about whether you want to hold all your positions open--particularly if you're holding a lot of bearish profits or if you're on the cusp of needing to close out some bullish ones--over the release of that number.

We don't know that number and don't know which way markets might react, even if we knew them. Will weakness that knocks out the possibility of the FED raising rates again do more damage because that weakens the dollar? Will unexpected strength in the manufacturing sector worry investors about the prospect of a rate hike?

On the OEX's weekly chart, there's potential for support on weekly closes at about 577-578, depending on how deeply prices are driven this morning, so a dip intra-week and climb that ends the week above that would be one possibility. So would broken support, but I think we at least need to factor in the possibility of a small-bodied candle this week that sits on that support.

On a short-term basis, although I would not count on any support catching the OEX if this is going to be a cascading-lower day, the OEX has potential support on 15-minute closes at 576.88, so watch for a drop that pops back above that by the end of the first 15-minute period. The 30-minute chart shows potential support on 30-minute closes at 578.77-579.53. That looks likely to be broken, too, in the first prints this morning, but watch what happens by the close of the first 30-minute period.

If you're in bearish trades, just manage your stops. Consider stepping out of partial positions before the ISM if you've got too much on the table. If you're in bullish positions with stops being hit, you have to manage those, too. You can't be prescient and know what's going to happen in the future, so you must act according to the plan you set out when you entered the trades. If your stops aren't getting hit, you can perhaps watch to see where the first rebound takes markets--whether it's sharp and holds or is tiny and gets sold--but please don't let losses get too big. Your first goal as a trader is to protect your trading capital so you can trade again and protect your confidence in yourself so you can lick the "send" button on your trading platform again.

Jane Fox : 7/1/2008 9:11:06 AM

Economic Reports today include:

10:00a.m. May Construction Spending: Expected: -0.5%. Previous: -0.4%.

10:00a.m. Jun ISM Manufacturing Business Index: Expected: 48.3. Previous: 49.6.

Linda Piazza : 7/1/2008 9:10:50 AM

I'm looking at equity charts, but before I spend too much time with them, I wanted to mention at least one ray of weak sunshine. Last night, the TED spread, a measure of default risk, continued the decline that had begun off Friday's 1.13 high. When I went to bed last night, it was 0.93, and this morning (delayed print), it's 0.92. This is obviously still well above the once-traditional range of 0.10-0.50. About two weeks ago, I began to worry when the TED spread began climbing relentlessly toward 1.00 again because my admittedly anecdotal and incomplete study had shown me when it hit support and then rose through 1.00, that could mark the beginning of a selloff in U.S. equities. So, although it's still high, I'm glad to see that it's trending down now and not continuing its upward trend. We have to see if this continues today, though, and into the next few days. While I can't say that this is a good market-timing tool, I would much rather it be trending down than up.

Jane Fox : 7/1/2008 9:02:25 AM

Before you look to see which market I have shown here try to guess which one it is. Pretty amazing heh? Link

Jane Fox : 7/1/2008 8:59:57 AM

I am also long Gold (using the ETF, GLD) so I am hoping it will break through its resistance at 940. The reverse Head an shoulders suggest that it will. Link

Jane Fox : 7/1/2008 8:55:59 AM

Crude has broken out of its trading range and seems to be using the upper trendline as support now. I am long Crude (I have call options on the Crude ETF, USO) with a target of $155.00. Link

Keene Little : 7/1/2008 8:55:58 AM

I am quite surprised by the reaction to slower growth in the UK in the US futures. Seems this will start interest rate cuts in Europe, put a bid in the dollar, and knock the wind out of commodities.

Normally we wouldn?t see this much of a reaction out of UK news. The EU may be on its own path but I too would think thoughts of an EU interest rate cut (or not an increase anyway) would boost the US dollar but it pulled back last night as well while the euro rallied. The dollar is still holding above yesterday's low whereas equity futures have easily broken their lows. All in all I'd say we have a strange reaction and not full intermarket agreement.

The bottom line for equities is not good and it's looking like SPX will head for its March 17th intraday low near 1257. Whether it finds meaningful support there is another question. As shown on my daily chart, I think it will not provide much support if the bearish wave count is correct. Notice there are no bullish divergences at the new lows. The pink count shows the possibility for a multi-week rally to start basically at any time but for now the trend is clearly down. Link

Jane Fox : 7/1/2008 8:46:40 AM

Here is the weekly chart of the SPX. Its all time high was 1576 and on March 21st it hit a low of 1256, a 20% drop as well but as you can see this market did not exceed those March lows yesterday. It may today but it didn't yesterday.

You don't usually see the DOW and the SPX trading so differently. Link

Jane Fox : 7/1/2008 8:43:22 AM

Here is the Weekly chart of the DOW. The all time high was 14198 and yesterday it hit a low of 11287, a 21% drop. That, my friends, is the definition of a bear market. Now, of course, there are some that consider a close to close (the all time high close to yesterday's close) but that is all semantics. Anyway you want to look at it this market has transitioned to a cyclical bear market. Link

Jane Fox : 7/1/2008 8:35:33 AM

There was a huge selloff overnight but it looks like it has been contained. There is no indication this selloff will continue once the cash markets open but I also do not see anything that tells me it won't. I will review the daily charts later for I think they are quite interesting. Link

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