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Jeff Bailey : 7/8/2008 1:16:25 AM

Nikkei-225 ($NIKK) Link ... Down 333 points, or -2.49% at 13,027.

Session high/low has been 13,294/13,005.

Unless $NIKK were to trade 13,450, would have to chart O's from 13,350 down to 13,050 at this point in session.

Jeff Bailey : 7/8/2008 12:32:25 AM

$RUT's NH/NL for Monday were 5:268

Keene Little : 7/7/2008 11:26:27 PM

Tuesday's pivot tables: Link and Link

The DOW and SPX charts look similar and I've redrawn their parallel down-channels to use just the one that incorporates price action since the early June highs. The price pattern would look best right now with a rally on Tuesday, perhaps up to DOW 11500/SPX 1280 but then a continuation lower from there. I see a good possibility for the market to stair-step lower into the end of the month before setting up a decent rally into September. SPX 120-min chart: Link

There certainly is not the requirement for a rally first before continuing lower as it could continue lower right out of the gate. If we do get a rally on Tuesday it would not necessarily be bullish, at least not until it can get above 1292 in which case we could be at the start of a bigger bounce to correct the decline from May (shown in pink). That possibility is shown a little more clearly on the daily chart: Link

NDX barely missed closing its April 16th gap at 1794.95 on Monday (the low was 1799.49) and I think there's a good chance we'll see that before any bigger bounce. Between that gap closure and the uptrend line from October 2002 near 1788 it could be decent support for a bounce back up to the top of its down-channel, currently near 1875 (which matches its 100-dma). Any push above 1875 would be a bullish move. NDX daily chart: Link

OI Technical Staff : 7/7/2008 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The Market Monitor has been archived.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 : 7/7/2008 6:22:35 PM

Major Global Indexes, Currencies, Oil and Gold at this Link

Jeff Bailey : 7/7/2008 5:25:08 PM

Closing Internals found at this Link

Jeff Bailey : 7/7/2008 5:17:48 PM

Closing U.S. Market Watch at this Link

Nymex August Crude Oil (cl08q) settled down $3.92, or -2.70% at $141.37.

Nymex August Unleaded (rb08q) settled down $0.0883, or -2.47% at $3.4827.

Nymex August Heating Oil (ho08q) settled down $0.1364, or -3.32% at $3.9696.

Nymex August Nat. Gas (ng08q) settled down $0.6000, or -4.42% at $12.9770.

Jeff Bailey : 7/7/2008 4:36:00 PM

DXY's 04:00 tick was 72.724

Jeff Bailey : 7/7/2008 4:04:11 PM

Belgian Finance Minister saying Euro group did not pressure ECB's Trichet to raise rates.

Jeff Bailey : 7/7/2008 4:03:35 PM

Dutch Finance Minister saying "no fear" of stagflation in Euro group meeting last week.

Jane Fox : 7/7/2008 4:01:44 PM

Here are economic reports for tomorrow.

10:00a.m. May Wholesale Trade: Previous: +1.3%.

10:00a.m. May Pending Home Sales Index: Expected: -2.8%. Previous: +6.3%.

3:00p.m. May Consumer Credit: Expected: +$7B. Previous: +$8.9B.

Jeff Bailey : 7/7/2008 4:01:24 PM

SPX 1,253.04 -0.78% ...

Keene Little : 7/7/2008 3:58:16 PM

It looks like a nice save by the bulls in the last hour. The DOW made it nearly back up to the top of its steeper down-channel shown on its 60-min chart (2:38 PM) and SPX made it back above its March 17th low. They're pulling back again into the close so it might have been just a bout of short covering. We'll see if there's any follow through to the upside tomorrow. The price pattern remains bearish until at least this morning's highs are exceeded.

Linda Piazza : 7/7/2008 3:57:53 PM

Bulls are still afraid to go home with too much risk overnight. I don't know that I blame them, but bears should assess the same thing: how much risk they're willing to carry overnight.

Jeff Bailey : 7/7/2008 3:57:41 PM

Pfizer (PFE) $17.43 -0.32% .... right around its July "Max Pain Theory" tabulation of $17.50.

Jeff Bailey : 7/7/2008 3:56:52 PM

Bank of America (BAC) $21.67 -3.25% ... heavy, and I do mean HEAVY call OI at much lower levels has BAC well above its July "Max Pain Theory" tabulation of $7.50.

Jeff Bailey : 7/7/2008 3:55:48 PM

Home Depot (HD) $22.44 -0.44% ... right around its July "Max Pain Theory" tabulation of $22.50.

Jeff Bailey : 7/7/2008 3:54:55 PM

General Electric (GE) $27.20 +1.04% ... right around its July "Max Pain Theory" tabulation of $27.00.

Jeff Bailey : 7/7/2008 3:54:13 PM

Disney (DIS) $30.20 -2.26% ... right around its July "Max Pain Theory" tabulation of $30.00.

Linda Piazza : 7/7/2008 3:53:27 PM

TED spread 0.98.

Jeff Bailey : 7/7/2008 3:53:23 PM

JP Morgan (JPM) $34.24 -3.03% ... still well above its July "Max Pain Theory" tabulation of $30.00.

Linda Piazza : 7/7/2008 3:52:08 PM

OEX bulls would like to see it maintain 15-minute closes above 576.40. If not, then they'd like to see the 15-minute 9-ema, now at 573.99, hold as support on 15-minute closes.

Jeff Bailey : 7/7/2008 3:52:01 PM

McDonald's (MCD) $57.43 +0.41% ... at its July "Max Pain Theory" tabulation of $57.50.

Jeff Bailey : 7/7/2008 3:51:08 PM

Johnson & Johnson (JNJ) $65.48 +0.55% ... hanging around its July "Max Pain Theory" tabulation of $65.00.

Jeff Bailey : 7/7/2008 3:49:57 PM

Exxon/Mobil (XOM) $87.76 -0.57% ... Holding above its July "Max Pain Theory" tabulation of $85.00.

Jeff Bailey : 7/7/2008 3:48:54 PM

IBM $122.00 +2.05% ... holding above its July "Max Pain Theory" tabulation of $120.00

Jeff Bailey : 7/7/2008 3:47:46 PM

DIA $112.84 -0.18% ... "prarie dog'n" WKLY Pivot.

Linda Piazza : 7/7/2008 3:43:28 PM

If the day were to end here, the OEX would have produced a doji for the day's candle, a doji at the bottom of a decline. You know the drill about such doji and you also know the risks about believing too strongly that a reversal will occur just because there's a potential reversal signal. However, as I always do, I suggest that bears evaluate their profit-protecting plans.

With the OEX still under the daily 9-ema (now at 584.61), 547.15 remains a potential downside target, doji or no doji, so bulls also need to evaluate their risks. If you bought near the bottom today when all those little small-bodied candles were clinging to support (on the SPX, especially) then you need to evaluate how much risk you're taking home and whether you're comfortable with that risk.

Jeff Bailey : 7/7/2008 3:43:05 PM

Ford Motor (F)

Jeff Bailey : 7/7/2008 3:42:45 PM

Daimler (DAI) $60.70 +0.59% ...

Jeff Bailey : 7/7/2008 3:42:23 PM

General Motors (GM) $10.32 +1.97% ...

Jeff Bailey : 7/7/2008 3:41:50 PM

Toyota Motor (TM) $93.64 +1.78% ...

Linda Piazza : 7/7/2008 3:40:11 PM

FWIW, the Nikkei Net reports that Toyota is going to add solar panels to the Prius when it retools the car as early as next spring.

Linda Piazza : 7/7/2008 3:38:57 PM

Of course, when I said "there's not a lot that should impact our markets until tomorrow morning" other than the G-8 meetings, an exception was any dour news from some globally important financials, a la Northern Rock or UBS type announcements.

Linda Piazza : 7/7/2008 3:37:47 PM

Jane often covers what's happening on the economic front in the U.S. the next morning, so I thought I'd start with the Asian and European markets. One market mover could be the ongoing G-8 meeting in Tokyo.

Other than that, there's not a lot that should impact our markets until tomorrow morning, with the possible exceptions of earnings from Aeon and a press conference with Masamitsu Sakurai, chairman of the Japan Association of Corporate Executives. Japan has the money supply numbers coming out at 7:50 pm ET, and that could cause some wrinkles in the currency action, as could its Economy Watchers' Current Index at 1:00 am ET. In case Jane doesn't mention it, though, Fed Chairman Ben Bernanke is scheduled to speak in Arlington before the Federal Deposit Insurance Corporation's Forum on Mortgage Lending. I know I want to hear whatever he's going to say about the FDIC or mortgage lending and I imagine others do, too. I don't know whether there's to be a Q&A session.

Jeff Bailey : 7/7/2008 3:35:50 PM

SPX 1,258.72 -0.33% ... back to test YRLY S2 from underneath.

Jeff Bailey : 7/7/2008 3:34:55 PM

QQQQ $45.16 +1.18% ... first to reclaim WKLY Pivot.

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

The Nasdaq has gone into the green, although by only a few cents.

Jane Fox : 7/7/2008 3:21:20 PM

IT was about 12:30ET when you could see the sellers getting stronger and the internals took a bearish turn. Link

Linda Piazza : 7/7/2008 3:20:42 PM

If the SPX can steady now, the next big test is the 15-minute 45-ema, with that average at 1260.27 currently. For the OEX, that's at 576.45.

Linda Piazza : 7/7/2008 3:14:47 PM

Bears need to watch their profits carefully. As I said last week, I've been crying wolf for more than two weeks now, but that's about the time that the possibility for a relief rally began being apparent. No such rally has put in an appearance and we could see another three weeks before one does, but the possibility of one remains. Don't listen to the news: you can be assured that big money has been aware of that developing news and has been reacting, with a lot of that news priced in before we even knew it. The widening TED spread over the last few weeks has told us that default risk was rising.

Jeff Bailey : 7/7/2008 3:13:45 PM

IWM $65.76 -0.84% ...

Jeff Bailey : 7/7/2008 3:12:54 PM

NASDAQ a/d 949/1,960

Jeff Bailey : 7/7/2008 3:12:42 PM

NYSE a/d 761/2,397

Jeff Bailey : 7/7/2008 3:12:19 PM

VIX.X 26.37 +6.33% ...

Linda Piazza : 7/7/2008 3:12:01 PM

Those hoping for a steadying would like to see the VIX close this 15-minute period below the breakout benchmark at 26.52 and as far below it as possible. There's further potential support on 15-minute closes at 26.36 and equity bulls would like to see that broken, too. Right now, the VIX is 26.37.

Jeff Bailey : 7/7/2008 3:11:43 PM

Swing trade call option alert! ... for one (1) of the ProShares Ultra Russell 2000 UWM Aug $45 Calls (UWM-HS) at the offer of $2.30 ($1.90 x $2.35).

UWM $42.71 -2.42% ...

Linda Piazza : 7/7/2008 3:08:11 PM

The SPX tests potential resistance on 15-minute closes from 1246.99-1250.48. The SPX is 1248.31 as I type, and those hoping for a steadying would at least like to see that 1246.99 level hold as support on 15-minute closes.

Jeff Bailey : 7/7/2008 3:07:30 PM

RUT.X 655.90 -1.48% ...

Linda Piazza : 7/7/2008 3:05:55 PM

TED spread still 0.99.

Jeff Bailey : 7/7/2008 3:05:47 PM

UWM $42.73 -2.37% ... was $42.18 at the 03:00 tick.

Jeff Bailey : 7/7/2008 3:04:57 PM

Bond market close ...

13-week yield finished down 3.5 bp at 1.775% and holds an important near-term yield support of 1.75%.

5-year finished lower by 5.1 bp at 3.219%, while the benchmark 10-year yield finished down 4.3 bp at 3.930% after a look under its WKLY S1.

The longer-dated 30-year yield was lower by 2.7 bp at 4.504%.

Linda Piazza : 7/7/2008 3:04:31 PM

That short-term (15-minute chart) breakdown benchmark for the BIX is now 160.02, with the BIX at 160.64 as I type. Further potential resistance is 161.53. Watch for rollover potential here, but if the BIX can sustain values back above that benchmark and continue climbing, it has a change to hold the daily support at 166-167, mentioned first in my 10:49:08 post this morning.

Linda Piazza : 7/7/2008 2:59:27 PM

Vivian, welcome to the Market Monitor and thanks for all the information--and the moment away from our Texas heat, imagining that tidal boat slip and people wearing Wellingtons. Around here, when a trip to the garden in 100+ weather is likely one in which I'll encounter snakes (4 so far, three of the 5+ feet rat-snake variety and one a Western diamondback rattlesnake), I'm beginning to rethink the whole cowboy boot thing. Seriously, thanks for the heads up about tomorrow.

Jeff Bailey : 7/7/2008 2:56:53 PM

3-month Treasury auction had Treasury awarding $24 billion at a high rate of 1.865%. Bids received totaled $60.83 billion. Bid-to-cover ratio was 2.53. Tenders submitted at the high yield were allotted 67.82%. Median rate was 1.820%. Of the competitive bids accepted, 5% were tendered at or below the rate of 1.75%.

Vivian Lewis : 7/7/2008 2:51:39 PM

This blog comes from our London flat, Mudlark Manor, bought in 2000 when I decided to spread some risks away from stocks and bonds. We bought in the East End near where my husband was born. From our windows we look out on a tidal boat slip into the Thames. At low tide the mudlarks come out to look for treasures. Some are birds and some are people wearing Wellington boots. I did not realize then that having a bolthole would protect me from suicide bombers, not, alas the 9/ll variety who operate here too, but the corporate variety. But is London also a ?loophole? as charged by members of the U.S. Congress, which needs to be closed to stop the tide of speculation. Probably not. While the British regulatory system is less rule-based than the U.S. variety, it also has mechanisms to stop speculative excess. The seemingly inexorable rise in commodity prices, in my view, is demand-driven rather than the result of speculation, a combination of new consumers from Asian emerging markets and the need for an alternative to the declining dollar from other players. You can prove it by looking at the prices of untraded commodities, like iron ore and uranium, which I referred to in my last blog July 3. While my Rightside colleague Richard Suttmeier thinks he is in favor of regulation commodities trading, he also has some solution ideas which do not involve the heavy hand of Congress and the law. One idea I am attracted to is simply revising the Goldman Sachs commodities index, as Goldman can do for good statistical reasons all by itself. Even Richard admits this. The current index is a self-fulfilling prophesy. As the price of oil rises, it becomes and increasing part of the capitalization-weighted commodities index. It is hovering at over 80% of the total, which, if nothing else, has made the GS into an oil rather than a commodities index. So the Wall Street firm just might decide to rebalance its index to push oil back down where it belongs. Another lightweight regulatory fix suggested by Richard would be to raise the commodities trading margin requirement from its present 5%. That means you only put up a nickel to buy a dollar?s worth of CFTC tradeed commodities. Again, the market itself can change the rules without having to bring congressional heavy guns to bear. Richard?s suggested changes would also have the effect of restricting some of the wilder hedge and pesnion fund trading that has moved into commodities, probably for the same reason as I moved money into Mudlark Manor. But while he calls this regulation, I call it free market adjustment. I?m not the believer in untrammelled markets that Jim Rogers jr. is. He calls me a ?Luddite? (after the Lancashire stocking knitters who broke machines that made tube socks more cheaply than they could.) But I shudder at the prospect of heavy-handed market intervention for political ends. Commodity prices in the end are a messenger, and you do not shoot the messenger. *Tomorrow the British gold ETF plans a huge bash of conference calls and papers. This may spill over into the prices of our two gold ETFs, GLD and IAU. Free market adjustment in the gold market is done by IMF sale of the precious metal in its vaults. The purpose officially is to raise cash, not to deter speculators. But the real purpose is to disguise the inflationary bias of central banks who have been tolerating inflation. Gold is the canary in the coal mine, the obvious hedge against the excess liquidity in paper money.

Linda Piazza : 7/7/2008 2:50:24 PM

Previous low of the day for the SPX was 1240.68; for the OEX, 568.11. Both are being approached, the SPX's, more closely. The SPX is 1241.57 as I type. Obviously, those who want the markets to steady do not want a new low of the day or at least want a biiig, quick bounce if there is one.

Linda Piazza : 7/7/2008 2:45:25 PM

TED spread now 0.99.

Jane Fox : 7/7/2008 2:44:20 PM

Here is a weekly chart of the SPX. MACD is telling me we should get a bounce here real soon. It will probably be a dead cat bounce but could be tradable. Link

Linda Piazza : 7/7/2008 2:43:44 PM

The SPX has potential support on 15-minute closes at 1243.09, support at a Keltner line that's essentially held all day. There was one 15-minute close slightly below it. I can't give you analogous Keltner support for the OEX that's held all day because the OEX has outperformed by this standard and hasn't yet dropped to this particular Keltner level. That's at 565.97 for the OEX.

Keene Little : 7/7/2008 2:38:12 PM

If the market continues to work its way lower into Wednesday I see the possibility for the DOW to drop towards 10700-10800 (the lower level being the June-September 2005 highs and the 2006 lows). After today's price action I'm not seeing enough to get me more bullish yet. On the 60-min chart notice how MACD came up, twice, to kiss the zero line from below and has since rolled back over. That's bearish. Link

Linda Piazza : 7/7/2008 2:37:05 PM

The BIX is approaching its breakdown benchmark on the 15-minute chart with its breakdown below that benchmark marking the point at which other indices started diving today, too. That benchmark is now at 160.15 for the BIX, so those hoping for a better market tenor want to see the BIX sustain 15-minute closes above that level. For now, though, market participants should be aware of this potentially strong resistance being tested. BIX is 159.07.

Jeff Bailey : 7/7/2008 2:31:53 PM

IRX.X down 4.0 bp at 1.770% ... Reminder that current fed funds target is 2.00%.

Jeff Bailey : 7/7/2008 2:30:57 PM

3-month Treasury Bill acution results posted.

Linda Piazza : 7/7/2008 2:30:36 PM

Also for any change in tenor, even a tentative one, the VIX needs to sustain 15-minute closes below 26.40. The VIX is 26.67 as I type.

Linda Piazza : 7/7/2008 2:29:11 PM

The SPX peak between the last two little swing lows was 1247.51. The next tentative step in any improvement in tenor would be sustained values above that. The SPX is 1246.45 as I type.

The OEX peak between the last two swing lows was 571.49. For further signs of improvement in tenor, no matter how tentative, the OEX would need to sustain values above that. OEX at 570.58 as I type.

Linda Piazza : 7/7/2008 2:23:25 PM

The OEX's five-minute 9-ema is now at 570.10 with the OEX at 569.96 as I type . . . no, bounced to 570.51. Those who want a change in tenor want sustained values above 570.10 as just the first sign of an improvement.

Linda Piazza : 7/7/2008 2:21:53 PM

As another 15-minute period ends, the SPX has again held onto the 15-minute Keltner support depicted in the charts linked to my 2:05:40 and 1:08:41 posts. As long as that support is holding on 15-minute charts, it presents the possibility of a climb up toward 1248-1250.70 where next potential resistance exists on that chart.

On a shorter-term basis, though, the SPX is testing potentially strong resistance at 1244.65 on five-minute closes. Those who want any change in tenor, even a short-term one, want to see five-minute closes above that, with the levels above it then sustained. The OEX is 1244.49 as I type.

Jeff Bailey : 7/7/2008 2:18:40 PM

SPX 1,243.50 -1.53% ...

Jeff Bailey : 7/7/2008 2:18:24 PM

ProShares UltraShort S&P500 (SDS) $70.91 +3.36% .... #9 most active.

Jeff Bailey : 7/7/2008 2:16:55 PM

02:00 Internals found at this Link

Linda Piazza : 7/7/2008 2:14:12 PM

My 2:10:40 post wasn't entirely accurate. The SPX did close a five-minute period above the five-minute 9-ema, but it didn't sustain five-minute closes above it and it was knocked back to a new low, despite that one five-minute close above that moving average. To see even the slightest change in tenor, the SPX needs sustained five-minute closes above 1245.05.

Linda Piazza : 7/7/2008 2:10:40 PM

No change in tenor yet, as measured by the SPX's reaction to its five-minute 9-ema, which continues to knock it back to new lows for the day each time tested.

Linda Piazza : 7/7/2008 2:05:40 PM

My 1:08:41 post linked an SPX chart, showing the potential Keltner support on 15-minute closes that it was testing. Here's an updated chart showing that support is still tentatively holding on 15-minute closes: Link

Linda Piazza : 7/7/2008 2:02:05 PM

The OEX's five-minute chart shows potentially strong resistance up to the five-minute 9-ema now at 570.33. Sustained five-minute closes are needed above that before there's even the slightest change in tenor, but such a change would be slight and tentative. The OEX is now 569.65.

Linda Piazza : 7/7/2008 2:00:54 PM

The SPX's five-minute 9-ema and further potentially strong resistance on five-minute closes now extend up to 1246.40. Sustained five-minute closes above it signals a slight change in tenor, but only a slight and tentative one. The SPX is currently 1244.79.

Jeff Bailey : 7/7/2008 2:00:49 PM

NDX/QQQQ and RUT.X only major equity indexes I track in Pivot Matrix to NOT see trade at WKLY S1's so far.

RUT.X did NOT see trade at WKLY Pivot though.

Jeff Bailey : 7/7/2008 1:58:14 PM

SPX 1,244.74 -1.43% ...

Jeff Bailey : 7/7/2008 1:57:52 PM

US Oil Fund (USO) $115.73 -0.93% ... comes back UP to WKLY Pivot.

Linda Piazza : 7/7/2008 1:53:39 PM

Remember the potential support for the BIX on daily closes now at about 165.68. The BIX would have to bounce big to close the day at or above it, but that's still a possibility. If it should bounce big, that will likely bring indices such as the SPX and OEX up with it. The BIX is 156.89 as I type.

Keene Little : 7/7/2008 1:51:04 PM

The financials and energy are the big drag today and that is of course hurting SPX. Big cap techs are not doing so badly today--NDX is down only -0.6% vs. SPX down -1.5%. BIX is down -6.7%, brokers -3.7%, home builders -6.8%, oil stocks -2.3%. In the meantime we've got AAPL, BIDU, GOOG and IBM in the green.

Linda Piazza : 7/7/2008 1:48:59 PM

TED spread is 0.98, but I'm wondering today if that's in response to the financials diving or if the financials are diving in response to widening default risk.

Linda Piazza : 7/7/2008 1:47:57 PM

We're in a typical stop-running time of day from about 1:35-1:55 pm ET, so the possibility exists that big money is plumbing for support, seeing if it exists or if dips are met with renewed selling. Whatever trade you're in, keep updating your trade plan, preparing for either a stronger bounce or a stronger dip. I see some slight possibilities that it could be a bounce, but over and over through the last two weeks, we've had these "shoulda" bounce possibilities that just don't materialize.

Linda Piazza : 7/7/2008 1:44:55 PM

The OEX has been outperforming the SPX by one Keltner measure. It hasn't been dropping all the way to Keltner targets. The target analogous to the SPX's 1244 target is 566.33 for the OEX. The OEX is at 569.73 as I type, attempting to steady.

Linda Piazza : 7/7/2008 1:43:23 PM

Turning back to the 15-minute chart, I see that the SPX is so far still clinging to potential support on 15-minute closes at about 1244 . . . just barely.

Linda Piazza : 7/7/2008 1:41:09 PM

The OEX has also not yet produced a five-minute close above the five-minute 9-ema, with that at 571.11 as I type. This, of course, would be only a short-term change in tenor and not proof of a low being in, even if there is such a close.

Linda Piazza : 7/7/2008 1:40:06 PM

No five-minute close above the five-minute 9-ema for the SPX. The SPX now has potential resistance on that chart up to 1247.76. SPX at 1245.53 as I type. This, as I warned before, would be only a short-term change in tenor and not proof that the low was in.

Linda Piazza : 7/7/2008 1:29:03 PM

I've rolled down to five-minute charts after that quick action. What we've seen since about 11:30 is that each test of the five-minute 9-ema has resulted in a downturn that produced a new low, so bears want that pattern to repeat and those hoping for a steadying want the SPX and OEX to begin closing five-minute periods above that moving average again. That's at 1248.40 for the SPX and 571.74 for the OEX. This would, of course, be only a first and tentative sign of any change in tenor, not proof that the bottom for today is in.

Linda Piazza : 7/7/2008 1:19:57 PM

Small comfort: the SPX held potential support on 15-minute closes now at 1244.51. The OEX didn't dip to its analogous support, which is down at 566.39. Both indices printed potential reversal signals on their 15-minute charts, so sideways or a bounce attempt appears to be next, but whether either will be successful in bouncing or even going sideways isn't yet clear. With the SPX hitting that potential target and balancing there, bears need to cinch up their profit-protecting plans, however. SPX at 1246.73; OEX at 571.15 as I type.

Keene Little : 7/7/2008 1:19:36 PM

If SPX can't hold the bottom of its steeper down-channel (red) then the price pattern becomes much more bearish and points to a move down to the 1200 area by mid week, a bounce into next week and then lower again into opex. The bulls need to step up to the plate now and get this thing turned around. It's an edge-of-the-cliff play here if you want to try a long play. Updated 60-min chart: Link

Jane Fox : 7/7/2008 1:14:42 PM

Here is Crude's test of support at (cough cough spit spit) $140.00 and it seems to be holding. Link

Jane Fox : 7/7/2008 1:13:16 PM

ES and the VIX are trading hand in hand now. Earlier ES was leading the VIX which does not happen too often. Link

Linda Piazza : 7/7/2008 1:08:41 PM

Here's where the SPX is, the support it's testing and the precipice it threatens to fall beneath, as seen on the 15-minute chart: Link

Keene Little : 7/7/2008 1:08:19 PM

The June/July 2006 lows, in the 1220-1225 area, would be the likely downside target (for at least a bigger bounce) if 1240 can't hold.

Keene Little : 7/7/2008 1:05:15 PM

If SPX drops below 1240, which will be a clear break below the bottom of its steeper down-channel (red, shown on the 60-min chart earlier: Link ), it will be an indication of continued acceleration of the selling (after breaking below the bottom of its first parallel down-channel from May). Not good for the bulls if this happens.

Linda Piazza : 7/7/2008 1:03:20 PM

Strangely enough in this climate, it's time for bears to protect their profits, too, as some potential downside targets and descending trendlines are being tested or even exceeded by a bit.

Keene Little : 7/7/2008 1:02:35 PM

I had mentioned after this morning's high in SPX that the decline looked choppy (easily seen on a 5-min chart). We'll probably see something similar from here where it stair-steps lower for the better part of today. It just tagged the bottom of its parallel down-channel from June 5th (1246) so we might see some support.

Jeff Bailey : 7/7/2008 1:02:03 PM

SPX 1,246.82 -1.27% ...

Jeff Bailey : 7/7/2008 1:01:47 PM

Wilshire 5000 (DWC) 12,646.45 -1.31% ... undercuts its 03/14/08 relative low.

Linda Piazza : 7/7/2008 12:59:43 PM

Hanging on the precipice again, aren't we? It's become a familiar feeling. I'm watching the BIX, an index that appears to be trying to steady with a potential reversal signal in the making on its 30-minute chart. I'm watching the SPX, too, though, and it's just now diving below the Thursday morning low of 1252.01, with a potential downside target (and support on 15-minute closes) at 1245.27. SPX at 1251.25.

Linda Piazza : 7/7/2008 12:54:28 PM

The OEX needs to hold onto the potential support near 573.87 on 15-minute closes. Otherwise, it risks setting a downside target near 566.69.

Jeff Bailey : 7/7/2008 12:52:22 PM

July'08 Max Pain Theory tabulation at Thursday's close Link

Linda Piazza : 7/7/2008 12:47:14 PM

Without a renewed bounce in the last couple of minutes of this 15-minute period, the BIX's current candle will no longer have retraced more than half the previous 15-minute candle's decline. The BIX is now at 158.30.

Linda Piazza : 7/7/2008 12:45:30 PM

The BIX is bouncing strongly. The current 15-minute candle has retraced more than 50% of the previous 15-minute candle's decline. If the BIX should continue climbing, however, it will now likely face potential resistance on 15-minute closes at 161.36-161.84. If it should pop above that and maintain 15-minute closes above it, that will be the first time since about midday Wednesday that it would have produced a 15-minute close above that. That's still a while away, though. The BIX is now 159.37, having pulled back a bit while I typed.

Keene Little : 7/7/2008 12:41:47 PM

Bears need to keep in mind that it's possible we're getting a post-holiday flush which will be followed by stronger buying. There is a way to interpret the decline from Wednesday as a setup for a stronger rally this week. In other words, don't get complacent here.

Linda Piazza : 7/7/2008 12:40:09 PM

This time, there's tentative bullish price/RSI divergence on the OEX's 15-minute chart. That's tentative only and predicated on the OEX's continuing to climb.

Keene Little : 7/7/2008 12:39:10 PM

SPX has made a minor new low below Thursday's but nothing especially bearish here (yet). In other words a minor new low could simply be part of the larger consolidation pattern I showed on the 60-min chart. But if the move down from this morning's high develops an impulsive look to it and is followed by a bounce and then new lows again, that's when the pattern turns more bearish again.

Jeff Bailey : 7/7/2008 12:37:13 PM

Most Actives ... XLF $19.31 -3.15%, QQQQ $44.69 +0.17%, YHOO $23.68 +10.86%, MSFT $25.72 -1.11%, NVDA $11.85 -5.12%, CSCO $22.74 -1.64%, SPY $125.07 -0.98%, INTC $20.68 +0.09%, TEVA $42.57 -9.80%, XLE $83.28 -1.89%

Linda Piazza : 7/7/2008 12:36:39 PM

The TED spread is 0.94. I'm glad to see it's not increasing with this downturn.

Jeff Bailey : 7/7/2008 12:34:25 PM

SPX 1,253.28 -0.76% ...

Jeff Bailey : 7/7/2008 12:34:06 PM

BIX.X 157.45 -6.58% ... gets the trade at WKLY S2.

Linda Piazza : 7/7/2008 12:28:36 PM

The A/D line dropped through support, too.

Linda Piazza : 7/7/2008 12:27:51 PM

And, the OEX succumbs to the weakness in financials, too. The OEX has dropped toward potentially strong support on 15-minute closes at 574.37. In my 11:57:57 post, I mentioned this possibility, that the OEX would drop to deeper support if it couldn't bounce soon. Unfortunately, I mistyped the support level as 578.95 instead of the 574.95 it measured at the time.

Keene Little : 7/7/2008 12:26:02 PM

There's no question that today's action in the banks is bearish and is clearly dragging the market down from its early bounce. But the BIX is now back down at the bottom of its down-channel for price action since early May so they could find support here (near 160). If the BIX drops out the bottom of the channel (which it's threatening to do here), I don't need to say how bearish that would look. BIX 240-min chart: Link

Jeff Bailey : 7/7/2008 12:25:25 PM

SPX 1,256.95 -0.47% ... undercuts YRLY S2.

Linda Piazza : 7/7/2008 12:25:08 PM

The BIX needs to bounce back above about 161.70 by the close of this 15-minute period to avoid creating a breakdown status on its 15-minute chart. It's at 158.92 as I type.

Jeff Bailey : 7/7/2008 12:24:51 PM

12:00 Internals at this Link

Linda Piazza : 7/7/2008 12:23:55 PM

The BIX just hit another new low. Barring a strong bounce over the next few minutes, it's going to create a breakdown status on the 15-minute chart. It's at 159.47 but accelerating its decline.

Linda Piazza : 7/7/2008 12:15:20 PM

Jane is right about the A/D line. It's just hit a new low for the day. However, on a Keltner basis, it's approaching what could be particularly strong support on 15-minute closes, with that at about -570. It's also approaching an ascending trendline off Wednesday's low, with that trendline at about -520. So, with the A/D line now at -444, it's near what could be strong support and what equity bulls in the OEX, Dow and SPX certainly hope is support.

Keene Little : 7/7/2008 12:08:25 PM

There's not much to add here. SPX has been pulling back in a choppy fashion and that continues to be either bullish (buy a break out to a new daily high) or else we're only in the beginning of what's going to be a terribly boring week of a choppy consolidation. As hard as it is not to trade sometimes that really is the best trade.

Jane Fox : 7/7/2008 12:03:53 PM

Fed, SEC pact covers bank holding companies

Fed, SEC pact covers Consolidated Supervised Entities

Fed, SEC to share info on market regulation

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

Okay, now it's time for the OEX to steady at or above potential support on 15-minute closes at 578.65, and then bounce up toward 582.80-583 again. If it can't do so within the next 45 minutes or so, chances increase that it will instead drop toward next support at 578.95.

Jane Fox : 7/7/2008 11:55:30 AM

Internals have taken a turn for the worse. AD line and VIX have both turned bearish and the AD ratio is supporting the move. Link

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

US Dollar Index (DXY) 72.94 +0.28% (30-minute delayed) ... Probes MNTHLY Pivot.

Jeff Bailey : 7/7/2008 11:35:14 AM

Weekly, Monthly, Quarterly Index Pivot Matrix at this Link

Linda Piazza : 7/7/2008 11:32:10 AM

The BIX dropped all the way to a close approach to the potentially strong support on 15-minute closes, now at 162.31. I'm not seeing bullish price/RSI divergence yet on that chart, but traders should still watch for a potential bounce attempt. If that happens, note that the BIX has not had a 15-minute close above its 15-minute 9-ema, now at 165.06, since midday on Wednesday, so I'd watch for potential resistance there. It's about time, though, for another punch up to a higher level, with that higher level now at 167.64. If you're in bullish trades that depend on the BIX stocks performing well, you want to see that punch to the higher level, but I'd be watchful for rollover potential there. The BIX is 163.18 as I type, with a day's low of 162.64.

Linda Piazza : 7/7/2008 11:28:09 AM

Sideways for a few more 15-minute bars: in my 10:38:43 post, I mentioned that we could see the OEX "essentially just moving sideways for a few more 15-minute periods." That sideways movement could go on for another few 15-minute bars, but I wouldn't be surprised to see an attempt to break the stalemate happen any time now, whether that will result in a break or not. Next potential support is now 578.28 on 15-minute closes: next potential resistance is now 582.88-587.27.

Keene Little : 7/7/2008 11:21:29 AM

SPX has made a larger pullback than I expected to see before making a new high at 1280 before pulling back again (at least that was the setup). The pattern for the move up from Thursday morning is now either very bullish (a strong rally leg is about to follow and would likely make it above 1290 before consolidating again) or else we're into the choppy consolidation that would fit the larger declining pattern. We could stay stuck between Thursday's low and this morning's high. But if it pushes higher from here I'll be looking for a stronger rally.

Jeff Bailey : 7/7/2008 11:09:19 AM

Most Actives ... QQQQ $45.31 +1.52%, YHOO $23.23 +8.85%, NVDA $12.43 -0.48%, SPY $126.95 +0.50%, CSCO $23.05 -0.30%, UYG $19.06 -2.45%, MSFT $26.17 +0.73%, TEVA $43.56 -7.71%, XLF $19.70 -1.20%, AAPL $176.00 +3.45%

Jeff Bailey : 7/7/2008 11:00:28 AM

BIX.X 162.93 -3.33% ... slips below WKLY S1 (163.54)

Linda Piazza : 7/7/2008 10:58:44 AM

Equity bulls on the Dow, OEX and SPX first need to see the VIX sustaining values below 24.67 and preferably below 24.35, but the chopping the VIX has done has created potential support layered in fairly regular invervals until about 23, so the ultimate goal would be to see it sustaining values below that.

Linda Piazza : 7/7/2008 10:49:08 AM

The BIX isn't doing so well this morning. It's at a new low for the morning, at 164.06 as I type. It looks to be headed down toward potential OEX support on 15-minute close at 162.60. It's hit its potential Keltner target, at 166.35 on daily closes, so there's the potential for a steadying here, either a doji-type candle or an attempted bounce. It would not be a good thing, of course, to see a continued steep decline.

Jane Fox : 7/7/2008 10:43:44 AM

WASHINGTON (MarketWatch) -- The price of petroleum will continue to rise because of ethanol, the weak dollar and political tensions, the oil cartel's president was quoted as saying Sunday.

"The price of oil will rise again in the coming weeks," Chakib Khelil -- the Algerian energy minister and currently president of the Organization of Petroleum Exporting Countries -- said in an interview with an Algerian newspaper. "We have to follow the evolution of the dollar, because a 1% fall in the dollar means $4 more on the price of oil."

Khelil said the weak dollar and geopolitical worries are responsible for 60% of the rise in crude prices, but also said that "the intrusion of bioethanol on the market" was alone responsible for the other 40%.

He didn't explain why more ethanol would drive crude prices higher, but said the dollar's decline was because the Federal Reserve had kept interest rates low.

Khelil repeated his view that a lack of supply is not the problem.

"As producer countries, we think that the current supply is sufficient, that this balance in supply is in everybody's interests and that it shouldn't be disturbed, because the current rise in oil prices is in nobody's interest," he said, according to media accounts.

Khelil said petroleum production had been limited by Western investment embargoes on Libya and Iran, and by the war in Iraq.

Everyone has their opinion as to why the price of Crude is so high.

Linda Piazza : 7/7/2008 10:39:48 AM

The OEX is so far finding support on 15-minute closes at the potential Keltner support now at 580.54. It's also finding resistance on 15-minute closes at the resistance now at 582.80, so it's still just chopping around between support and resistance. I wouldn't be surprised to see the OEX dip a little lower than it has, although essentially just moving sideways for a few more 15-minute periods. However, if it declines lower than about 577.40, especially on 15-minute closes, it's doing more than just chopping around. It would then have a further potential downside target of 575.64. If it breaks above the resistance instead and maintains 15-minute closes above it, has a potential upside target of 587.29. Bulls should certainly have a profit-protecting plan in place if that should be approached.

Jane Fox : 7/7/2008 10:34:23 AM

S&P futures (ES) made a new daily low but the VIX did not make a new daily high so I suspect those lows will not hold. Link

Jeff Bailey : 7/7/2008 10:33:24 AM

10:00 Internals found at this Link

Linda Piazza : 7/7/2008 10:24:40 AM

The A/D line rolled all the way over to support instead of trending sideways until support caught up. This is not the optimum outcome for bulls, but as long as this support now at about +220 mostly holds up on 15-minute closes (the A/D line can overrun it by a bit), this action warns bulls to be careful but doesn't yet predict anything other than a deeper support test than was optimum. The 15-minute 9-ema has not rise to about -10, so that's the next potential support. A/D line at 198.

Linda Piazza : 7/7/2008 10:25:22 AM

Potential support for the OEX on 15-minute closes now cycles down to 580.21. Potential resistance is now 587.90. Between the two, it's just chop.

Linda Piazza : 7/7/2008 10:11:08 AM

The dollar just rose to a new daily high against the yen, but there was divergence when the euro/dollar pairing was seen. The euro did not drop below its 1.5611 value against the dollar seen in the wee hours of the morning. Generally, though, the dollar is stronger against both currencies, and that's the way U.S. equity bulls would like to see it for now.

Linda Piazza : 7/7/2008 10:07:56 AM

TED spread now 0.94. For those who might be new to the site, the TED spread is a measure of default risk or at least perceived default risk. Equity markets typically don't like rising default risk. It's dropping from a high of 1.13 week before last.

Keene Little : 7/7/2008 10:07:09 AM

If we can get a small consolidation now after this morning's rally it should be followed by another push higher (for a small 5-wave move up from Thursday afternoon's low). That would give us a larger 3-wave move up from Thursday morning and two equal legs up would be at SPX 1280 where I'd watch for a reversal. The sideways triangle idea, shown on last night's 60-min chart) is still a very good possibility.

Jane Fox : 7/7/2008 10:07:03 AM

SAN FRANCISCO (MarketWatch) - Facing complaints from price-pinched consumers, U.S. lawmakers are targeting lax futures trading rules that some critics say have given rise to a speculative bubble in oil and other commodities.

Several bills have been introduced recently aimed at tightening the rules and expanding the regulations governing futures trading.

Gaps in these rules have given financial speculators too much freedom to bid up prices, some lawmakers say.

"Speculation is not illegal," said Sen. Joseph Lieberman, an independent from Connecticut, at a hearing in late June. "But that does not mean it isn't hurtful."

Yet proposals that make it too difficult to buy and sell commodities, particularly in the largely unregulated over-the-counter market, could backfire, some economists and analysts warn.

"These are global commodities markets. If we put on too much red tape, trading will go overseas," said James Angel, a corporate finance professor at Georgetown University's McDonough School of Business, who testified on energy prices before the late June hearing.

Dubbed the "Enron loophole," the "London loophole," and the "swaps loophole," the exemptions targeted by lawmakers largely pertain to the vast and opaque market for commodities trading that happens outside the major futures exchanges such as Nymex Holdings' New York Mercantile Exchange.

Jane Fox : 7/7/2008 10:03:45 AM

Here are the internals I watch. The top chart is the AD ratio, I like to see it making new daily highs when the AD line is making new daily highs but it doesn't need to. The middle chart is the AD line and I do need to see this chart moving opposite to the VIX, the bottom chart. The relationship between the AD line and VIX are the most important part of the internals. Link

Jane Fox : 7/7/2008 9:55:18 AM

Ah gee too late on that last post, ES made new daily highs as I was typing.

Jane Fox : 7/7/2008 9:54:53 AM

Since the VIX is making new daily lows the S&P futures have a very good chance of making new daily highs as well.

Keene Little : 7/7/2008 9:53:33 AM

The gold short from Thursday at 940 is looking good this morning but there is still the potential for gold to make another push to a new high. It needs to break below the June 19th high at 910.70 to signal a more bearish move in progress, at least back down to the bottom of a potential flag pattern (864). Daily chart of YG, August contract: Link

Notice that gold has dropped down to the trend line along the highs from April (near 917). If we're to get another leg up back above 950 this is where gold should find support. At a minimum we might see a retracement of the decline from last week's high.

Linda Piazza : 7/7/2008 9:53:05 AM

OEX potential resistance on 15-minute closes is now 582.99 and it's been holding so far this morning. A sideways consolidation or pullback looks as if it's begun. Equity bulls would like to see support hold on 15-minute closes at 579.87-580.45.

Jane Fox : 7/7/2008 9:49:21 AM

The TRIN is a bullish 0.70 and the AD line is now making new daily highs. VIX is also making new daily lows so the all the ducks are in a row for the bulls.

Jane Fox : 7/7/2008 9:46:52 AM

AD line is a bullish +847 down from a high of +933.

Linda Piazza : 7/7/2008 9:45:32 AM

Keltner outlook on the A/D line. The A/D line has charged above the +600 level that tended to be resistance late last week. It's charging toward potential historical resistance near 950 and a potential Keltner target and resistance at about 1200-1225. It's left support far behind and RSI is well above 70, so it may soon be time for the A/D line to stall or even pull back. Equity bulls would prefer a sideways/sideways-up stall but even as I typed, a pullback has begun. If there is a stronger pullback, equity bulls would prefer it stop at about 600 or, barring that, at 132, but the higher stall would be far preferable to a deeper decline. The A/D line is currently 805.

Linda Piazza : 7/7/2008 9:41:38 AM

The OEX has potentially strong resistance on 15-minute closes now at 583.10. Bulls need to see sustained 15-minute closes above that before they believe that a breakout has occurred. Otherwise, the OEX may need to trend sideways or else pull back, hopefully where it will find support on 15-minute closes at 579.58-580.43.

Linda Piazza : 7/7/2008 9:35:45 AM

The OEX is charging right up to challenge the descending trendline off Wednesday's high. That trendline is a bit lower than I thought a few minutes ago, probably at about 581.60.

Linda Piazza : 7/7/2008 9:30:54 AM

Good morning. I hope you had a good long weekend away from the markets.

As I type, futures are higher, but they've been below and above and at fair values over the last hours, so it's hard to give their spot values too much credence. Let's get a little background first. For the OEX, last week produced a weekly candle that was a doji at potential weekly Keltner support. That doji--a potential reversal signal--was the 7th of what candlestick theorists call "record sessions" on the weekly chart. These are sessions in which a lower low than the previous one (weekly candle) produced. Six to eight record sessions usually signal that it's time for a trend to end, although I've seen them go 10 or 11 sessions. So, there's the potential for but not the promise of either a pause in the downtrend or a reversal from that downtrend. The action after the doji of the week of 6/09 proves that such doji at the bottom of a descent don't prove that the next week will be an up one.

Dropping crude and climbing USDJPY values support the idea that a climb could be attempted, although don't prove that it will be successful. A slightly declining TED spread is helpful, although it declined only from 0.96 to 0.95, so that's not a big change.

Intraday charts are a bit more problematic. Both the 15-minute and 30-minute charts showed at the end of the day on Thursday a slightly greater likelihood that the OEX would drop than that it would climb. On the 15-minute chart, for example, the OEX had set a potential downside target of 576.83 or perhaps even 575.75, where support might be found on 15-minute closes. Such a drop would have retested potential trendline support.

The end-of-week scrambling may have been responsible. Those who hope for a rally week instead want today to start off with a climb that breaks up through 582 and then confirms by producing sustained 15-minute closes above 583.08. For now, though, bulls need to be wary from 582-583.08 and then again at next potential resistance at 587.40.

Jane Fox : 7/7/2008 8:52:44 AM

Governor Janet Yellen will give her economic outlook in a speech at 11 a.m. Eastern. Fed Chairman Ben Bernanke and Richmond Fed Governor Jeffrey Lacker have speeches planned for Tuesday

Keene Little : 7/7/2008 8:52:08 AM

Equity futures managed a somewhat choppy climb during the overnight session and have been able to reverse Friday's decline. At this point it's looking like we'll open relatively flat to slightly positive from Thursday's closing prices (assuming they don't drop between now and 9:30).

This will leave us in a bit of a quandary about what to expect after the open. Friday's lows could get retested (ES 1256.50, YM 11235, NQ 1813.75 and ER 660.60) in which case I'd look for a successful test as a buying opportunity. But Friday might have been just a throw-away day and we could start rallying from here. Flip a coin. Stay aware of the potential for a very choppy and difficut-to-trade market this week.

Jane Fox : 7/7/2008 8:50:20 AM

Today's reports include 10:00a.m. Jun Conference Board Employment Trends Index Jul 7: Previous: -0.5%.

Jane Fox : 7/7/2008 8:48:34 AM

Crude looks like it is heading down to retest support at $140.00. Cough cough spit spit did I just say SUPPORT at $140.00 ? geesh! Link

Jane Fox : 7/7/2008 8:45:23 AM

Here are the overnight charts showing how the American futures markets traded on Friday (you did know the futures markets are open on our holidays?) and yesterday. The entire overnight/over-weekend move was contained within Thursday's range. Link

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