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Jeff Bailey : 7/26/2008 1:40:50 AM

Closing Internals at this Link

"Light" volume day compared to what we've been seeing.

NYSE average a/d for 5-days has been 1,565:1,616 ; 10-day 1,589:1,583 ; 21-day 1,380:1,789 ; 50-day 1,400:1,745.

NASDAQ average a/d for 5-days has been 1,497:1,396 ; 10-days 1,511:1,399 ; 21-days 1,327:1,570 ; 50-days 1,317:1,571

Jeff Bailey : 7/26/2008 1:18:50 AM

FDIC takes over 2 more banks, closing 28 branches ... AP Story Link

Jeff Bailey : 7/26/2008 1:15:00 AM

Negative comment regarding Taco Bell visit.

Just finished meal. Was very tasty. Satisfied.

However, just noticed that while I used three (3) packets of their hot sauce, I had fifteen (15) packets left over!

Cost of Goods Sold, or "COGS" as accountants call them.

Let's keep an eye on costs guys.

Past visits, employee usually asks how many hot sauce I would like.

Let's watch the bottom line shall we?

Jeff Bailey : 7/26/2008 12:47:50 AM

Just darted over to Taco Bell, division of Yum Brands (YUM) Link

Market research showed 9 cars in drive thru upon my arrival. While sitting in line to order, looked to my right and saw 3 cars in Wendy's Intl. Link

Received order of one (1) spicy been $0.99 (extra cheese $0.25, extra onion $0.00) for $1.24, and one (1) burrito supreme $2.19. Meal ticket $3.43 + tax $0.28 = $3.71.

Upon departure, 11 cars in drive thru.

Time was approximately 10:25 PM EMT.

No jokes about "free gas" with purchase. (see TCF Bank notes this week).

Will note that cashier at Taco Bell window reminded me that tomorrow I shouldn't forget they have 4 tacos for $X.XX (can't remember). In marketing we call that "suggestive sale."

At a fast food joint?

Have a good weekend!

Jeff Bailey : 7/25/2008 11:38:51 PM

For the economy, finally some news not half bad ... AP Story Link

Jeff Bailey : 7/25/2008 11:34:48 PM

07/08 to 07/25 Sector Bell Curve Comparisons with major equity PRICE benchmarks Link

Subscriber question to today's close.

RUT.X closed 710.34, so up 4.10% from 07/08 close.

That's the one investors need to ask some serious questions about.

How, with a credit crunch, and horrific economy, are the most domestic-sensitive small caps doing that?

Has the MARKET lost its mind? Or does the MARKET know something that the popular press doesn't yet know, or simply doesn't want to tell.

Jeff Bailey : 7/25/2008 11:27:48 PM

As you can see ... Index trading, regardless of strategy, is the most comprehensive and time consuming of all.

I've shown you ways to quickly dissect and track.

Know your heavyweights, the sector weighting.

Several days ago (see MM 07/09/08) Link a subscriber wondered how the SPX was going to move if oil was going to fall and banks were suffering from credit crisis.

Only one way to really find out.

SPX weighting at 07/08/08 close Link

Jeff Bailey : 7/25/2008 11:27:38 PM

S&P 500 Heavyweights (from 07/21/08 Open weighting) now sorted by Industry Name Link

Did you know? MRK -13.26% vastly underperformed this week? Do you know why? Stock specific, or potential sector impact? (It was stock specific)

Is BAC's purchase of Countrywide acretive long-term? Shock! Explosion! Some profit taking from bulls, or move to sideline after seeing $19 a share.

Biotech strength noted a couple of weeks ago. Oh my!

AXP's earnings report and outlook was most negative I've read so far. Link

Jeff Bailey : 7/25/2008 10:38:47 PM

Did you know? ... At this morning's open ... the SPX weightings were ...

XOM 3.90%, GE 2.61%, MSFT 1.86%, PG 1.80%, JNJ 1.77%, T 1.72%, IBM 1.63%, CVX 1.55%, AAPL 1.28% and BAC 1.28%. With just these 10 stocks accounting for 19.41% (almost 1/5 entire weighting of SPX).

Jeff Bailey : 7/25/2008 10:32:53 PM

S&P 500 Heavyweights (from 7/21/08 Open weighting) now sorted by 5DyNet% Link

Jeff Bailey : 7/25/2008 10:22:15 PM

S&P 500 Heavyweights ...

7/14/08 Link

7/21/08 Link

And how they finished the week at today's close Link

From last Friday's close the SPX fell 2.92 points, or -0.23%.

Jeff Bailey : 7/25/2008 10:07:21 PM

Linda ... good point about individual stock vs. index trading.

How an index trader like yourself keeps up with all the news and earnings reports that will impact a sector, the sector's weighting in the index, I'll never know. The dedication and time. I guess that's what the MM and OptionInvestor.com is all about.

Just following a few of the SPX heavyweights the last couple of weeks here in the MM has been a more focused observation of how dynamic an index be. All its moving parts.

Would be even more informative as to how the S&P 100 (OEX) components have faired.

OI Technical Staff : 7/25/2008 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 : 7/25/2008 9:50:30 PM

Closing U.S. Market Watch found at this Link

Tab Gilles : 7/25/2008 8:37:42 PM

Linda, very well put. I agree with your views on index option versus individual equity options. Earlier, I expressed my preference on options not taking into consideration the many variables that may hinder one doing individual equity options, I apoligize. As with any type of investment vehicle, an individual should be comfortable in their trades/investments, knowing what their risk tolerances are.

Again, as you wrote; "it's not all about which types of trades are the most exciting or potentially the most lucrative, but also which work best for your skillset, your personality and your lifestyle."

Linda Piazza : 7/25/2008 5:38:13 PM

Tab weighed in about preferences with indices versus individual stocks, and the ability to tailor specific option trades around earnings announcements and other such tactics. I understand, but traders must also factor in their own strengths, abilities, interests and lifestyles. Whether or not you have a full-time job other than trading impacts the decision about the types of trades in which you'll engage and the vehicles you'll employ for those trades. In my case, yes, I realize that trading individual stocks offers a lot of flexibility and opportunities for maximizing gains. Risks are sometimes higher, too, however. Perhaps traders might know exactly when the company in which they've got an options trade reports, but how about all its competitors? How about its suppliers? A supplier down a notch in the food chain can warn some morning and your trade is smoked unless you're right there to make the appropriate adjustment.

My lifestyle just doesn't support such trades as the majority of my trades. Calendars, which are relatively easy to adjust, are okay if an impossible-to-resist one sets up, but most of my trades must be ones that aren't as likely to be swamped by some supplier making some statement at an analysts' meeting or something like that. For the last several months, my life has been fairly stable and I've been able to be at the computer every day, but my granddaughter's fragility means that I never know from one moment to another how long that stability will last. Periods have arisen in which I literally had to jump up from the computer at a moment's notice and rush to a hospital, or take in a sick older granddaughter to keep her from exposing her fragile younger sister. Trading the types of trades I mostly trade on the securities I mostly trade are the types of trades that work best for me. As both Tab and Jeff know but newbies may not, it's not all about which types of trades are the most exciting or potentially the most lucrative, but also which work best for your skillset, your personality and your lifestyle.

Jeff Bailey : 7/25/2008 5:12:56 PM

Amgen: Positive results from osteoporosis drug study ... MarketWatch story Link

Jeff Bailey : 7/25/2008 5:10:05 PM

Biotech HOLDRs (BBH) $197.00 +1.02% Link ... tick $197.50

Jeff Bailey : 7/25/2008 5:09:17 PM

Amgen (AMGN) $53.90 +0.11% Link ... surging to $59.71 on positive drug trial results.

Jeff Bailey : 7/25/2008 4:50:56 PM

SPX July OI at settlement Link

Jeff Bailey : 7/25/2008 4:49:37 PM

ES unchanged from 04:15 tick.

Jeff Bailey : 7/25/2008 4:48:46 PM

SPY $125.44 -0.05% ... 04:00 tick was $125.76.

Keene Little : 7/25/2008 4:40:11 PM

The SPX 60-min chart shows the downside possibilities where another leg down could hit 1220 for a test of the broken downtrend line from May. It could rally back up from there (pink) or sell off to 1170 to finish the leg down from May (dark red). I'm not considering a hard selloff beyond that yet. Link

How those two possibilities would look on the daily chart is shown here: Link . As I had discussed in last night's newsletter, there are several sectors, and even the RUT, that have me thinking we'll start a major selloff (so SPX wouldn't stop at 1170) but I want to see more price evidence from the blue chips before I buy (sell?) into that idea.

Jeff Bailey : 7/25/2008 4:35:17 PM

Or at least know about it.

Jeff Bailey : 7/25/2008 4:34:58 PM

Might be hedges Keene, but don't forget July expiration today.

Jeff Bailey : 7/25/2008 4:31:22 PM

Continuous Cocoa (Thursday's close) ... 20-point box Link

Keene Little : 7/25/2008 4:29:14 PM

Futures are selling off after the cash market closed but I think that's more about hedging and not a directional play for Monday. Could be wrong but I like the potential for a quick rally Monday morning, perhaps up to SPX 1265 and then a selloff. So Monday should be a good setup for a short play. Hope everyone has a great weekend.

Tab Gilles : 7/25/2008 4:28:38 PM

Got to go...appointment.

Enjoy the weekend everyone!

Jeff Bailey : 7/25/2008 4:27:04 PM

Couldn't show you with converntion 10-point box.

Tab Gilles : 7/25/2008 4:27:03 PM

On the individual trades versus index discussion earlier, I have to side with Jeff, Linda.

I prefer using options on individual stocks, for example you can use an earnings report or some other specific catalyst to profit on. Then again, it can work against you too.

Jeff Bailey : 7/25/2008 4:26:21 PM

Good gravy ... look at Continuous Cocoa

Jeff Bailey : 7/25/2008 4:25:17 PM

The Hershey Company (HSY) $36.33 +0.27% Link ... has been doing battle with its 150-day SMA .

Jeff Bailey : 7/25/2008 4:23:51 PM

Colombia's Grupo Chocolates 1H Net Up 147% to COP123B

Tab Gilles : 7/25/2008 4:21:30 PM

Jeff (3:44pm post), you're correct...not being mentioned about the $RUT.

I, however did make this observation the otherday...

Tab Gilles : 7/23/2008 9:06:14 AM

Russell 2000 ($RUT) Small-caps are now doing better than the overall market....a very bullish signal. These stocks typically get sold off during tough economic times as investors look to safer investments, but historically are the first to rise when the economy rebounds. In the year following the end of each of the past 10 recessions, small stocks rose an average of 28% compared to 19% for large stocks, according to T. Rowe Price. As for the Russell 2000 index ($RUT) of smaller companies has performed significantly better than larger-company indexes so far this year. Link

Jeff Bailey : 7/25/2008 4:19:11 PM

US Bank Business Loands Up $4.4B in latest week.

Jumbo CDs Up $25.7B; Home Equity Up $700M

Jeff Bailey : 7/25/2008 4:15:53 PM

Was a nasty "bad tick" earlier this afternoon to $71.00.

Jeff Bailey : 7/25/2008 4:14:37 PM

Look at the volume roll in the SPY ... nearly 6 million in last 10 minutes.

Jeff Bailey : 7/25/2008 4:09:03 PM

At Wednesday's close ... SPX's NH/NL was 10:6.

Yesterday's drubbing ended 11:8. What do you think they should be tonight?

Jeff Bailey : 7/25/2008 4:07:38 PM

At Wednesday's close ... RUT's NH/NL was 40:14.

Yesterday's was 18:32.

What do you think they should be tonight?

Jeff Bailey : 7/25/2008 4:04:10 PM

$RUT vs. $INDU Link

Jeff Bailey : 7/25/2008 4:03:35 PM

YUM vs. SBUX Link

Jeff Bailey : 7/25/2008 4:02:55 PM

SBUX vs. USO Link

Jeff Bailey : 7/25/2008 4:02:14 PM

YUM vs. USO Link

Jeff Bailey : 7/25/2008 4:00:28 PM

and JBLU vs. PBR Link

Jeff Bailey : 7/25/2008 3:59:56 PM

PBR vs. USO Link

Keene Little : 7/25/2008 3:59:27 PM

With the pop up going into the close I like the setup for a quick pop higher on Monday morning (to a high marginally above today's high) to then be followed by another leg down to match the decline from Wednesday to Thursday's low. So a little volatility and then lower.

Jeff Bailey : 7/25/2008 3:58:17 PM

JBLU vs. USO Link

Linda Piazza : 7/25/2008 3:58:01 PM

Barring a big movement in the last few minutes of trading, the OEX will have produced a small-bodied candle at the 10-sma, a possibility explored in my earliest post this morning. What do we know about next direction now? Not a lot. The weekly chart has produced a doji, too, one with a looong upper shadow that reached up toward but not quite to the weekly 10-sma. We see indecision everywhere then. Bulls can point to the OEX's second test of the 10-sma since breaching it on 7/17, with the OEX holding above it on a daily close both times it was tested. Bears can point to those ugly evening-star reversal patterns confirmed by yesterday's bearish candles.

Sorry, but we don't have a prediction from this action. I'd tell you if I thought there was one. My daily Keltner charts give about equal probability to a rise toward this week's high as to a drop back toward 570-571.

Jeff Bailey : 7/25/2008 3:56:14 PM

AA's 10-Q if you missed it .. Link

Jeff Bailey : 7/25/2008 3:52:44 PM

VIX.X 22.74 -2.98% ...

Jeff Bailey : 7/25/2008 3:52:28 PM

VXN.X 26.47 -4.88% ...

Jeff Bailey : 7/25/2008 3:52:04 PM

Swing trade call alert! ... for one (1) of the F5 Networks FFIV Oct. $30 Calls (FLK-JF) at the offer of $4.50.

FFIV $31.81 -0.65% ...

Linda Piazza : 7/25/2008 3:50:59 PM

Companies reporting before the open on Monday include CHG, CALM, CNA, KFT, L, PBNY, PROV, SOHU, TSN, VZ, WWY and probably some important ones I've missed. Those include a number of consumer goods companies such as TYS and KFT and a number of lesser-known financials will be reporting, too.

Jeff Bailey : 7/25/2008 3:49:45 PM

Maybe, but lets buy some time.

Jeff Bailey : 7/25/2008 3:49:24 PM

Do you think they'll be cheaper on Monday?

Jeff Bailey : 7/25/2008 3:44:58 PM

What's so "crazy" about the RUT.X, that really hasn't been mentioned by Wall Street, is its outperformance of othe majors.

Crazy is that financials are largest weighting.

Linda Piazza : 7/25/2008 3:44:17 PM

The OEX is hanging onto that potential Keltner support on 30-minute closes now at about 578.30-579.15, with the OEX slightly below that as I type. It's been here before today, many times, seemingly clinging to this same Keltner support, so we just can't draw too many conclusions from this. If it drops too much past 577 and doesn't quickly bounce again, it will have set a potential downside target of 572.21, but we've seen how strong the effort has been to just hold the line today so I wouldn't suggesting holding your breath!

Yesterday before the close, I suggested that those with open trades consider the possibility of consolidation today and what that would do to their open options trades. If you were long AUG options, they may have leaked some premium today, which is what worried me on behalf of subscribers, and they may leak more over the weekend. In recent years, I've compared trading long options to flipping houses in a declining housing market: you have to be good to make that work because long options are a decaying entity. For those of you who have sold premium, today's action has probably helped your positions.

However, if you're in August credit spreads, take a look at them this afternoon, and see if it's possible to exit any for a pittance, locking in the rest of your profit.

Jeff Bailey : 7/25/2008 3:42:07 PM

CNBC has been reporting that Chrysler no longer leasing vehicle due to credit conditions, cost.

Actually see it in earnings press release.

Crazy, but I believe I mentioned several weeks ago about a refinery fire in Australia. Check out AA's earnings press release?

Linda Piazza : 7/25/2008 3:37:28 PM

What economic releases occur overnight Sunday night? Germany's AUG Consumer Confidence Index is the only important one I see listed, with this released at 2:00 am ET on Monday. Japan's Council on Economic and Fiscal Policy meets Monday to discuss budget request ceilings for fiscal 2009 and Japan Iron and Steel Federation's chairman meets the press, but I don't see specific times for those.

Jeff Bailey : 7/25/2008 3:37:18 PM

I love individual equity trades, opportunity for greater percentage gain with options.

I here you on limits Linda. Only so many you can actually follow!

Jeff Bailey : 7/25/2008 3:30:14 PM

Good gravy ... look at JNPR in last two hours. Breaks higher from little pennant.

Jeff Bailey : 7/25/2008 3:29:40 PM

JNPR $26.78 +18.69% ... reported earnings. Haven't had time to review. Market likes it would appear.

Jeff Bailey : 7/25/2008 3:28:58 PM

FFIV $31.59 -1.34% ... strong earnigns and upbeat guidance.

Jeff Bailey : 7/25/2008 3:28:22 PM

CSCO $22.40 +2.94% ... threatens a close above its WKLY R1.

Jeff Bailey : 7/25/2008 3:26:19 PM

PBR 53.20 -0.26% ...

Jeff Bailey : 7/25/2008 3:26:03 PM

RIO $27.53 -0.43% ...

Jeff Bailey : 7/25/2008 3:25:44 PM

Brazil's real closes at new 9-year high of BRL1.5730/dollar

Jeff Bailey : 7/25/2008 3:22:01 PM

USO side-by-side 60-minute interval charts. Humans on the left, humans and computers on the right. Link

Linda Piazza : 7/25/2008 3:19:08 PM

Jeff, I limit how many individual-equity-based trades I engage in. I just don't like them, and I want specific conditions when I do put one on, so I don't know that I'm the best one to ask about C calendars right now. However, this year has been one in which my trading goal has been to vary my vega and delta risks better than straight condors varies them, and so I've been deliberately seeking some calendars, double diagonals, and even the occasional speculative directional trade such as a debit spread (one recent bearish one on GLD, for example) or just option purchase. So, here's a chart that shows what worries me now about C: Link With the WFC calendar (exited too early on 7/16) I was testing my probably clunky skills at volume/price-spread analysis and also forcing myself to do more calendars to vary those risks as part of this year's trading goal, but I didn't want to stay in any bullish trade too long with any financial at that time. I just wanted my minimal profit, and then to get out of that trade.

Now, of course, I see potential Keltner support being tested on C's chart, but also the potential for C to fall back to 15.80-16.30 as well as to climb toward this week's high again. I don't see anything guiding me any particular direction on the comparison of volume patterns with price spreads, so it's just not speaking to me either direction. It wouldn't fit my parameters for one of those infrequent trades I make on individual equities.

Jeff Bailey : 7/25/2008 3:11:53 PM

Already covered period in time as last time USO closed a Friday below a WKLY S1.

Jeff Bailey : 7/25/2008 3:08:55 PM

USO $99.46 -1.97% ...

Using this week's current HIGH (106.97) and LOW (98.77). And assuming a close here.

Next week's WKLY Pivot levels would be ... $93.51, $96.46, Piv= 101.71, $104.66, $109.91.

Jeff Bailey : 7/25/2008 2:59:07 PM

Mentioning of the NYSE 5-day NH/NL ratio change now at 0.00%.

This is the "inchworm" analogy.

Inchmorm has tried to climb up the tree after tumble.

Now the head and the "tail" come together short-term.

Will tail begin to drag/slip, or dig in and provide foot-hold and leverage for expansion of the "head"

Jeff Bailey : 7/25/2008 2:56:21 PM

You gott'a think "sentiment" traders are feeling it here.

Horrible jobs data, no end to housing.

But oil, gasoline, natural gas on the cusp.

Linda Piazza : 7/25/2008 2:54:42 PM

The OEX again tests potential resistance that begins at about 580.20 and extends up to 582.45 on 15-minute closes. RSI is 52.01, nearly neutral and the action certainly isn't making strong predictions of next direction or even if there will be a next direction. The last punch to a new low was met by potential bullish price/RSI divergence on 15- and 30-minute charts, but we know to watch those and use them to update bearish profit-protecting plans, but not to count on them to suggest that the next direction is up. Anyone who has traded any length of time has seen such divergences produced all the way down a steep decline.

Jeff Bailey : 7/25/2008 2:53:48 PM

Linda ... I saw your 12:35:28 a couple of minutes ago.

Interesting your WFC Jul/Oct calendar.

C calendar in play?

Jeff Bailey : 7/25/2008 2:52:34 PM

C $18.76 -1.57% ... Dec $12.5 puts active. Aug $22.50 call active.

TED spread?

Jeff Bailey : 7/25/2008 2:51:19 PM

WFC $28.83 -1.09% ... Oct $20 Puts $0.80 showing active.

Jeff Bailey : 7/25/2008 2:50:09 PM

TOL $19.53 +1.29% ... Dec$30 calls showing up as most active.

TOL Dec $15 puts also.

Jeff Bailey : 7/25/2008 2:48:02 PM

General Motors (GM) $12.20 -6.15% ... CEO saying July US sales same as June; Volt still on track. (02:38PM EDT)

GM WKLY Pivot at $12.02.

Jeff Bailey : 7/25/2008 2:46:23 PM

02:00 Internals at this Link

Keene Little : 7/25/2008 2:41:13 PM

If the market keeps chopping its way lower into a low today it's possible that it will be an ending pattern for the 5th wave down in the move from Wednesday's high. That in turn would actually set up a rally on Monday instead of a decline (to correct the leg down from Monday). I should have a better feel for Monday depending on how today finishes.

A rally to a new daily high this afternoon would set up a decline on Monday whereas a choppy decline into a low today would set up a rally.

Jeff Bailey : 7/25/2008 2:39:01 PM

That could be the setup Art!

Jeff Bailey : 7/25/2008 2:37:54 PM

USO $99.44 -1.99% ... WKLY S1 here too. (99.25)

Jeff Bailey : 7/25/2008 2:36:34 PM

QQQQ $46.25 +1.23% ... been bumping DAILY R1 all session ($45.32). "Prarie dogged" it just before 11:00

Linda Piazza : 7/25/2008 2:34:27 PM

Jeff, in regard to your 2:24:40 post, I'm not sure if the TED spread is good for OEX spreads or for SPX and Dow ones. Some people question whether TED spreads are the best to measure default risk in the first place, with people more versed in spreads and swaps than I am each debating the merits and problems associated with each type of spread such as the TED spread versus the OAS or some swap. The fact that I'm self taught and just digging into this stuff means that it's difficult for me to side with one camp or another. That's why I typically just use the TED spread as a kind of indicator, one that warns me to be careful about bullish positions, particularly in anything heavily weighted in financials, or bearish ones. Thus, when the TED spread was hitting support near 0.75 and turning up again, I warned that it could be a bearish signal if it moved through 0.98-1.00 and sustained values above it. Then, when it started approaching 1.70, where I thought resistance might lie, I suggested that bears needed to be careful. So, when I'm initiating a spread on an index, I weigh in what the TED spread is doing as part of my decision-making process, but only in the same way I would the VIX or the VXO. If I thought the VXO was approaching strong support and perhaps due to rise, I'd be careful about placing my XEO bull put credit spreads too close, wanting to swing them as low as possible. I was worried when the TED spread started rising through 1.00, for example, about my JUL bull put credit spreads, but I unfortunately was already in them by that point.

I'm hampered both by my just-learning status and by my inability to do anything other than eyeball hand-drawn trendlines since I can't do the studies I would typically do of the TED spread's chart. So, yes, I weighed it as one factor when doing that WFC calendar, but I did that with only 4 contracts, and I had only a little over $1000 at risk. For the rest, I'm just using it as I mentioned, as something that may be offering a potential warning when it is rising or falling, approaching resistance or support.

Jeff Bailey : 7/25/2008 2:33:58 PM

10th oil auction will exclude pre-salt area.

Jeff Bailey : 7/25/2008 2:33:30 PM

Brazil to review 10th oil concession auction rules in August

Jeff Bailey : 7/25/2008 2:32:44 PM

S&P Mulling Cut To Various Freddie, Fannie Ratings.

Jeff Bailey : 7/25/2008 2:32:07 PM

Petroleo Brasileiro (PBR)

Jeff Bailey : 7/25/2008 2:28:35 PM

VIX.X 22.72

VXO 24.71 ... VIX suggests higher premiums than mid-point

Jeff Bailey : 7/25/2008 2:24:40 PM

Linda! Is TED good for OEX spreads?

Jeff Bailey : 7/25/2008 2:23:58 PM

Check out NYSE 5-day NH/NL ratio change from yesterday.

Jeff Bailey : 7/25/2008 2:22:24 PM

INDU/SPX, OEX ... sellers stubborn at Daily Pivots.

Jeff Bailey : 7/25/2008 2:21:33 PM

RUT.X 710.17 +1.10% ... buyers stubborn at DAILY Pivot (707.78).

Jeff Bailey : 7/25/2008 2:19:00 PM

TRIN 1.17 ... did undercut DAILY S1 (1.00) at the 01:00 tick, but then quickly above.

Jeff Bailey : 7/25/2008 2:16:34 PM

That is ... as long as contries they export to have economic growth and consumer spending.

Jeff Bailey : 7/25/2008 2:15:54 PM

Any ProShares Ultra Japan? Weaker yen usually finds "bullish" response for Japanese companies. Help their exports.

Jeff Bailey : 7/25/2008 2:10:31 PM

How did the Nikkei 225 do yesterday? What's EWJ doing today?

Yen CurrencyShares (FXY) 92.43 -0.60% ...

Linda Piazza : 7/25/2008 2:10:46 PM

The OEX did manage a 30-minute close at that potential support after piercing it during the 30-minute period, so it has not set that potential downside target now at 572.32. See what I mean about not buying too strongly into any chart setup today? A test of potential resistance on 30-minute closes looks to be next, however, with that potential resistance now at just over 580.30. It wouldn't take much now to set that potential downside target, but neither would it take much to break up through resistance and move toward descending potential resistance on 15-minute closes, now at about 582.60.

Jeff Bailey : 7/25/2008 2:09:02 PM

FXE $157.33 +0.04% ... juuuuuust above 19.1% conventional.

Jeff Bailey : 7/25/2008 2:07:18 PM

Nat. Gas getting pounded some more.

Jeff Bailey : 7/25/2008 2:06:39 PM

CRB Index (CRY) 411.73 -0.28% (30-minute delayed) ... still holding trend (see Wednesday's Wrap).

Jeff Bailey : 7/25/2008 1:50:28 PM

Can see a lot of "January" tie with oil/unleaded and the restaurants.

Linda Piazza : 7/25/2008 1:48:53 PM

I mentioned earlier today that if the OEX lost the potential support on 30-minute closes (or else dropped too much below it during a 30-minute period) that's now at 578.52-579.14, it was setting a potential downside target that's now at 572.59, but then was slightly different. The OEX hasn't yet closed this 30-minute period below that support and neither has it dropped far enough below it during the 30-minute period as yet that we can definitely say that support has been lost. However, those in OEX trades need to know that, barring a bounce back to or above about 579 by the close of this 30-minute period, the OEX may be vulnerable to that 572.58 area.

Jane Fox : 7/25/2008 1:46:56 PM

The internals just "ain't" talking to me today. Link

Jeff Bailey : 7/25/2008 1:47:46 PM

LUB $7.74 -1.05% Link ... could be a decent short/put. Weaker relative strength, a bit "overbought" in distribution.

Jeff Bailey : 7/25/2008 1:44:42 PM

BAC $29.18 -4.76% ...
JPM $39.30 +0.48% ...

Jeff Bailey : 7/25/2008 1:43:59 PM

FRE 8.19 -7.03% ...

Jeff Bailey : 7/25/2008 1:43:45 PM

FNM $11.35 -5.57% ...

Jeff Bailey : 7/25/2008 1:43:31 PM

ABK $2.12 -3.19% ...

Jeff Bailey : 7/25/2008 1:43:19 PM

RDN $1.88 -7.38% ...

Jeff Bailey : 7/25/2008 1:43:08 PM

MBI $4.97 -8.30%

Jeff Bailey : 7/25/2008 1:41:14 PM

CEC Link had a pretty sharp jump 07/23/08. Earnings? Broker upgrade?

Keene Little : 7/25/2008 1:40:27 PM

The way the market has been settling lower since this morning's high makes it look like we're going to get another leg up to match the bounce off yesterday's low to this morning's high (for an a-b-c bounce where b is the pullback from this morning's high and we need wave-c up). Maybe a rally into this afternoon to finish the correction and a setup for a move down on Monday.

Jeff Bailey : 7/25/2008 1:38:19 PM

THI $27.27 -2.11% ...
SBUX $14.51 -0.20% ... hold put position, after selling 2/3 for profit.
YUM $34.15 -0.64% ... hold call positition.
BKC $26.86 -0.03% ...
PNRA $46.08 ... did trade put in recent weeks.
MCD $59.15 +1.33% ... Dow component, SPX heavyweight.
PZZA $28.63 +0.56%
CEC $36.06 -0.22% ...

Jeff Bailey : 7/25/2008 1:31:37 PM

RESTaurant WEEKLY Distribution Bell Curve Link

Jeff Bailey : 7/25/2008 1:31:32 PM

Bull % RESTaurant ... reversed up to "bull alert" status Wednesday. Yesterday's action saw a net loss of 1.56% to 15.63%. Still "bull alert" and a sector I would think "consumer discretionary."

Linda Piazza : 7/25/2008 1:18:12 PM

The TED spread is currently 1.08.

Jeff Bailey : 7/25/2008 1:12:05 PM

Yum Brands (YUM) $34.38 +0.02% ... spicey-green, been burrito, extra onions and cheese about $1.19/ea I think.

Disappointed so far.

Jeff Bailey : 7/25/2008 1:10:07 PM

USO $99.58 -1.85% ...

JBLU $5.10 +4.93%

PBR $53.78 +0.28% ...

How's the strategy working? Holding up? Or need attention.

What if oil does ...

Jeff Bailey : 7/25/2008 1:05:43 PM

The "economic tie" we might make is consumer/investor confidence as it relates to fuel prices.

Jane Fox : 7/25/2008 1:05:16 PM

Crude made another lower low today but I think we may be in for a rally next week. If that rally fails at 130 resistance then it may tumble all the way to $120.00. Link

Jeff Bailey : 7/25/2008 1:04:19 PM

TCF Financial (TCB) $11.70 -3.22% ... Can't remember if I shared this story with you the last couple of weeks.

One bank I bank at ticked me off not long ago (poor service) and I'd been getting these mailings/pomotions from TCF for months. Always some type of "free gift" if you opened up a checking/saving account with them.

Long story short.

Since I was ticked off with a bank that I had to drive 3-miles to in the land yacht, there was a TCF just around the corner from my primary dwelling. The promotion this month was $50 Free Gas/Diesel at Shell Station.

So, I go in, open up account, get my $50 free card.

Being the inquisitive one, I ask the teller if this promotion saw different response from consumer than other (toasters, protable TVs, coffee makers, clocks, etc.).

She grinned and said the "gas card promotion was about 300% more new accounts than prior promotions."

Jane Fox : 7/25/2008 1:03:15 PM

Here is an interesting chart. Gold's daily high today was right at resistance from the May 22nd swing high, 935. Link

Linda Piazza : 7/25/2008 1:01:42 PM

The TRAN is lining little candles up under 4982.14, the approximate location of the 23.6% retracement of its slide from Wednesday's high into this morning's low. The 15-minute chart shows about equal chances of the TRAN climbing toward 5000-5009 as to fall to 4944.

Jane Fox : 7/25/2008 12:58:58 PM

Here is McMillan's weekly commentary. On July 15th, the market reversed up from its lows and just kept on going for a 90-point $SPX rally, trough to peak. Is this the bottom? We can fairly safely say "No" to that inquiry, but it could be a strong oversold rally -- much as we saw last September, or in February or April of this year. What happens next, after this initial six-day oversold surge, will likely determine the next intermediate-term move in this market.

If this week's highs (1280, closing, or 1290 intraday) are exceeded, then a bullish pattern of higher highs and higher lows will have been established. A further rally attempt on the order of those earlier ones should ensue -- perhaps carrying roughly to 1320 or so. On the other hand, if the decline that started today continues right on down and violates the lows at 1200, then all bullish thoughts must be abandoned, as a new bearish leg will take hold, and a whole new bottoming process would have to begin at a lower level.

The $SPX chart is still negative, in that it is declining and so is its 20-day moving average. This week's oversold rally managed to poke above that 20-day moving average briefly -- a rather common occurrence -- but it couldn't hold there. If the bullish pattern of higher highs and higher lows does develop, we would expect -- as confirmation -- that the 20-day moving average will curl over and begin to rise.

The equity-only put-call ratios are mixed. The standard ratio (Figure 1) officially rolled over to a buy signal recently, as confirmed by our computer analyses. However, the weighted ratio has not rolled over, again according to the same computer software.

Market breadth had gotten extremely oversold and thus was the main harbinger of the recent oversold rally. Now, that oversold condition has been alleviated. However, to really confirm a bullish condition, we would expect to see breadth expand to oversold readings quickly in a newly bullish phase. It didn't do that, so these buy signals have to be considered tepid at best.

The volatility indices ($VIX and $VXO) gave strong buy signals by a) reversing downward from their July 15th peak, and b) violating the uptrend line that had been in place for $VIX since mid-May. As such, $VIX is now technically in a bullish downtrend, and will remain so unless it closes above 25.

From a longer-term perspective, we do not think the bear market is over. At best, a retest of the 1200 level will have to take place perhaps not for another couple of months. At worst, that retest will fail and the bear market will accelerate and continue. For now, though, there is a possibility of a further rally, which would be signaled by $SPX closing above 1280.

Jeff Bailey : 7/25/2008 12:55:36 PM

Various Energy Futures, Unleaded/Oil Crack and VLO table that I keep at this Link

August heating oil and unleaded futures expire Thursday.

August oil expired 07/22. I "roll" all energy futures tabulations that day, so keep apples to apples.

Linda Piazza : 7/25/2008 12:48:15 PM

The OEX is, so far, bouncing from potential support on 30-minute closes now at 578.40-579.17, but that support is beginning to weaken a little. Resistance can be found on the 15-minute chart, now at 582.74-583.54 on 15-minute closes. So far today, that's been holding, too. No prediction is available from these charts.

Jeff Bailey : 7/25/2008 12:40:34 PM

Continuous West Texas ($WTIC) $0.50-box to match futures Link

Jeff Bailey : 7/25/2008 12:39:20 PM

Continuous Unleaded ($GASO) penny box Link

Linda Piazza : 7/25/2008 12:36:59 PM

In my 12:35:28 post, I mistakenly mentioned a JUL/AUG calendar I had done and since closed on WFC, but that was instead a JUL/OCT one. I had done a JUL/AUG MNX double diagonal at about the same time, and got the two dates mixed up. I have since corrected the original post using information, including the date I closed that WFC calendar, from my brokerage page.

Jeff Bailey : 7/25/2008 12:36:26 PM

Guidance from VLO at this Link

Jeff Bailey : 7/25/2008 12:35:05 PM

Dorsey/Wright Internals from yesterday ...

NYSE: Saw 191 issues rising on their charts and 508 falling. 23 new buy signals and 34 new sell signals for a net loss of 11. 46 3-box reversals up and 288 3-box reversals down. NYSE Bull % fell by 0.53%.

NASDAQ: Saw 240 issues rising on their charts and 309 falling. 29 new buy signals and 24 new sell signals for a net gain of 5. 77 3-box reversals up and 166 3-box reversals down. OTC Bull % rose by 0.16%.

Optionable Stocks: Saw 295 issues rising on their charts and 782 falling. 35 new buy signals and 50 new sell signals for a net loss of 15. 88 3-box reversals up and 458 3-box reversals down. Optionable Bull % fell by 0.42%

Tab Gilles : 7/25/2008 12:35:09 PM

Valero (VLO) $32.27 +$0.83

Valero reports earnings Tuesday July 29th at 11 PM. Most likely the earnings will be terrible, however how they guide will be pivotal.

HOUSTON, July 25 (Reuters) - Valero Energy Corp said it planned to restore its 295,000 barrel per day (bpd) Port Arthur, Texas, refinery to planned production on Friday.

The company expects to restore crude throughput at its 130,000 bpd Houston refinery over the weekend.

Production at the two refineries was cut by 10 to 20 percent beginning on Wednesday because shipping interruptions along the Gulf of Mexico during Hurricane Dolly halted crude oil supplies to the plants, Valero said.


Linda Piazza : 7/25/2008 12:35:28 PM

Jeff, I haven't been watching the TED spread long enough to really put on trades based on it, using it only as a Yikes! or a Okay, okay! kind of indicator, if that makes sense. When I thought the TED spread was approaching resistance based on my rough, rough charting abilities with the somewhat clunkier charts Bloomberg provides than I'm used to having, and when I saw other signs that supported the trade (using volume/price-spread analysis), I did do a WFC JUL/OCT calendar. I'm out of it since 7/16, though, taking profit as soon as it was offered. I was merely testing the volume/price-spread analysis I had done and not feeling like it was a healthy thing to do to stay in a financial too long. I had noticed, though, that when the TED spread hit the descending trendline off the August 2007 highs, equities were sometimes already recovering. Not always, however, so the near approach to what I thought might be resistance (about 1.7) was at least a sort of Okay, okay sign for the WFC trade, if not the basis for that trade.

Linda Piazza : 7/25/2008 12:27:52 PM

I mentioned either Tuesday or Wednesday morning that the RVX, the RUT's volatility index, was dipping to test a rising trendline off May's low. I warned RUT bulls to keep that volatility index on their radar screens because one of the two trendlines--the best-fit one or the one running under the June 23 low--might prompt a bounce. The RVX has since bounced, but is today pulling back. It's pulling back into a 10-sma test, however, with that moving average now at 26.25, and perhaps with the potential to serve as support on a daily close. The RVX also has potential historical as well as trendline support in the 25-25.50 zone. MACD turned down but the lines are now approaching the benchmark zero, a time I personally find iffy, as it's a time which sometimes produces an MACD turn up again. For now, all we can conclude is that RVX is consolidating and still above that rising trendline, and that it should be watched. Link

Jeff Bailey : 7/25/2008 12:25:44 PM

Linda ... thanks for 11:52:36.

What kind of trades do you put on, or take off based on TED?

Keene Little : 7/25/2008 12:20:01 PM

Oil is down some more today but oil stocks (OIX) are getting a good bounce today. It might be forecasting a coming rebound in oil as well. The daily chart from last night's newsletter shows an expected bounce to correct the decline from May before continuing lower into the fall: Link

Jeff Bailey : 7/25/2008 12:18:15 PM

PBR $53.75 +0.76%

Jeff Bailey : 7/25/2008 12:17:50 PM

JBLU $5.08 +4.52% ...

Jeff Bailey : 7/25/2008 12:17:32 PM

USO $100.28 -1.16% ...

Jeff Bailey : 7/25/2008 12:16:56 PM

Euro CurrencyShares (FXE) $157.51 +0.15% ... challenges yesterday's "doji" high. Has REFUSED to close back below your 19.1% conventional. (12/20/07 low to 04/22/08 high).

Jeff Bailey : 7/25/2008 12:14:22 PM

12:00 Internals found at this Link

Jane Fox : 7/25/2008 12:10:08 PM

Not a lot of direction today so one may just want to take the rest of the day off.

Jeff Bailey : 7/25/2008 12:07:23 PM

CROX ... PnF with volume turned on Link

Jeff Bailey : 7/25/2008 12:02:02 PM

ACI component of S&P400 Midcap

Linda Piazza : 7/25/2008 12:01:42 PM

Potential support for the OEX on 30-minute closes is now 578.15-579.12. It's softened a little but only a little.

Linda Piazza : 7/25/2008 12:00:58 PM

Now the OEX has narrowed its pattern today into a more neutral triangle rather than the more bullish one (flat top, rising support) from earlier. As I warned earlier, try to remain open to any possibility for today and try not to rely too strongly on the au courant intraday chart setup. That can change in a heartbeat.

Jeff Bailey : 7/25/2008 12:00:20 PM

ACI not a component of SPX

Tab Gilles : 7/25/2008 11:59:45 AM

United States Oil (USO) $99.40 -$2.06 (2%)

Tab Gilles : 7/18/2008 10:53:15 AM

United States Oil (USO) $105.80; which seeks to imitate the price of West Texas Intermediate (WTI) light sweet crude oil had been in an uptrend channel since the early part of the year. It is currently testing its 50-ma and broken below the channel, next test $98. Note, that the 61.8% retracement coincides with it's 200-ma. Link Link

38.2% Fibonacci Retracement/ 100-ma being tested, next support 50% ($92.50), then 61.8% ($86.75) 200-ma. I'm expecting a bounce here then(agreeing w/ Keene's commentary last night)... further selling ahead. Link Link

Jeff Bailey : 7/25/2008 11:58:39 AM

Arch Coal's Q2 earnings triple on soaring prices ... AP story Link

ACI $55.92 +9.85% Link

Linda Piazza : 7/25/2008 11:57:49 AM

Keene, thanks. Fortunately, I use Keltner channels on all my intraday charts, so I was able to get those up and running right away, and my various templates for the daily charts, Keltner and otherwise, were just fine. However, you are right: customer service is outstanding. I tested that with asking several questions before I subscribed and I've found them to be wonderful each time I had a problem. This time, I was able to solve it for myself.

This charting service isn't quite as user friendly as is QCharts, but using the DTNIQ feed, it's been more reliable and you can't beat their customer service, at least so far. DTNIQ's is the same way. Even with paying for my feed (which you don't have to do if you have IB, for example), it's much cheaper than QCharts, too. One difficulty is that DTNIQ doesn't (or didn't as of a few months ago) provide quotes for the Wilshire 5000. Also, I can't make their regression channels work efficiently and so am reduced to drawing my own "price channels."

Jeff Bailey : 7/25/2008 11:56:18 AM

More foreclosure gloom ... CNN story Link

Jeff Bailey : 7/25/2008 11:55:40 AM

New home sales fall but stronger than expected ... Reuters story Link

Jeff Bailey : 7/25/2008 11:54:57 AM

Consumer confidence rebounds from 28-year low ... Reuters story Link

Jane Fox : 7/25/2008 11:53:05 AM

VIX is making new daily lows suggesting the S&P futures will make new daily highs here soon. I'm not holding my breath though.

Linda Piazza : 7/25/2008 11:52:36 AM

Jeff, I don't know that options are available. I had a difficult enough time finding a quote for the spread itself and haven't located any for options. Other measures of credit spreads exist, too, such as the Z-spread and OAS, but I just haven't been able to find enough information about them to do anything other than provide the information that I've been giving. I think it might be possible to go back to the entities from which TED spread calculations are made--U.S. T-bills versus LIBOR--and fashion one's own option trade, but that's too esoteric for me. I just use it as an indicator.

Keene Little : 7/25/2008 11:45:51 AM

Linda, if you're using QuoteTracker I think you can retrieve the previous day's settings. It's been a while since I've had to do that but I do remember outstanding customer service with them. I continue to use them for my backup charts using IB as my feed. I use the free version so I only get two day's worth of charts but it's enough as a backup.

Jeff Bailey : 7/25/2008 11:43:55 AM

Linda ... can one buy/sell puts and calls on TED spead?

Linda Piazza : 7/25/2008 11:40:00 AM

On my delayed quote, the TED spread is now 1.08. There is perhaps some support in the 0.98-1.00 zone, but it's really the 0.90-0.92 level that's a sort of benchmark. That's still well above the 0.10-0.50 range that used to be applicable, of course, but equity bulls would be much relieved to see the TED spread back below 0.90 and staying there. As I noted yesterday, these are just guestimates because my feed doesn't provide a quote for the TED spread, so I'm limited to the clunkier chart setups on the Bloomberg site, which does provide quotes.

Jeff Bailey : 7/25/2008 11:39:02 AM

No fun recently with FLK-TF and UZK-TN.

Jeff Bailey : 7/25/2008 11:37:25 AM

Had some fun this morning with BAC-TG !

Linda Piazza : 7/25/2008 11:36:42 AM

Jane, I was commenting on the frustration that results when markets are setting up as they are today, not on your difficulty with posting. Sorry about that! After feeling a bit smug the last few days that I wasn't having to put up with the usual QCharts stuff, either my charting program or my computer decided to wipe out all my intraday chart settings overnight, including the saved templates. Some days are just like that, aren't they?

Jeff Bailey : 7/25/2008 11:33:46 AM

What were those two (2)? How did they trade to yesterday's close under negative tape. Any follow through today?

Linda Piazza : 7/25/2008 11:32:47 AM

I'm having so much fun that I was trying to fast-forward time when I noted that next week was the August 5 FOMC meeting. That's not true, of course. That's week after next. I hope the fact that I included the actual date prompted subscribers to determine that I was as mixed up as I undoubtedly was. I am editing my Trader's Corner article on calculating what the FOMC might do and I guess I just had FOMC meeting on the brain.

Jeff Bailey : 7/25/2008 11:32:38 AM

StockCharts' $BPOEX Link ... saw a net gain of 2.

Jeff Bailey : 7/25/2008 11:31:46 AM

StockCharts' $BPSPX after yesterday's "drubbing" Link ... saw a net gain of 4 stocks to reversing higher PnF buy signals.

Jane Fox : 7/25/2008 11:30:50 AM

Linda, I am not having fun. :( My posting today is worse than most days.

Linda Piazza : 7/25/2008 11:29:41 AM

Having fun, Jane? I bet many subscribers would share your "Geesh!" comment.

Jeff Bailey : 7/25/2008 11:29:02 AM

SPX daily interval bar chart with your QRTRLY (green) and MNTHLY (dark purple) pivot retracement Link

On Wednesday I noted SPX "in the zone" here in the MM.

See 5-point SPX PnF chart and make the tie.

Jane Fox : 7/25/2008 11:29:31 AM

Geesh! Took 3 trys to get that last post right.

Jane Fox : 7/25/2008 11:28:25 AM

There is no real clear direction yet but after yesterday's monster move that is not surprising. Plus this is a summer Friday. Link

Keene Little : 7/25/2008 11:26:33 AM

Watching the 2nd leg of todya's bounce I was thinking it might be able to head for a new high. Now I'm not so sure and the sideways consolidation idea is starting to look more plausible.

Jeff Bailey : 7/25/2008 11:23:28 AM

SPX conventional box size Link

Then a 5-pointer Link

Tab Gilles : 7/25/2008 11:21:49 AM

Celgene (CELG) $74.67 +$1.41 (1.945)

Nearing its Oct '07 high of $75.50. Having reported Q2 earnings Thursday morning, Celgene stated that 2nd-quarter profit more than doubles on a surge in sales of cancer therapy Revlimid. Celgene raises its 2008 profit and revenue outlook following 2nd-quarter surge in sales. Link

PnF P/O $102- Link

Jeff Bailey : 7/25/2008 11:20:33 AM

SMH below WKLY Pivot. NDX/QQQQ tagged there's as support at yesterday's close.

Jeff Bailey : 7/25/2008 11:18:51 AM

Linda noted RUT.X relative strength with "Keltner" and it has been prevalent in pivots and just about everywhere else some of us have been looking.

Jeff Bailey : 7/25/2008 11:16:41 AM

RUT.X session high just above DAILY R1.

SPX still under DAILY Pivot. Ditto INDU.

Linda Piazza : 7/25/2008 11:14:26 AM

The OEX is once again testing potential resistance now at 583.22 on 15-minute closes. Further potential resistance cycles down toward it, with that from 584.63-585.67 on 30-minute closes.

So far, this resistance has been holding but so has the firm-appearing support on 30-minute closes now from 578.22-579.12. One or the other is going to break. The shape of the OEX's behavior this morning (flat top, rising support) suggests an attempt, at least, to break through resistance, but I don't think you should lean too heavily on any conclusion in times like these.

Jeff Bailey : 7/25/2008 11:11:25 AM

RUT.X 713.67 +1.60% ... less than 2-points off the high.

Linda Piazza : 7/25/2008 11:10:44 AM

My Trader's Corner article this weekend will discuss calculating predictions for what the Fed will decide at its next meeting or meetings into the future. One source I'll be including is the Cleveland Fed's site, where all the calculations are performed for you and updated daily. Currently, the Cleveland Fed calculates an almost 0.90 or 90% chance that the target Fed fund rate will remain at 2.00% as an outcome of that August meeting. Here's the chart from the Cleveland Fed: Link I'll be discussing other methods for calculating those rates for yourself.

Jeff Bailey : 7/25/2008 11:09:56 AM

USO ... with conventional and Nymex crude oil futures settlement date benchmarks Link

See the 61.8%? Back in April as USO broke to another new high, I warned shorts. Showed a "bull fit 38.2%" (anchor a relative low, fit 38.2% at prior 52-week high) to build levels above.

Tab Gilles : 7/25/2008 11:06:44 AM

JP MorganChase (JPM) $39.30 +0.14 (0.36%)

Since its gap up seven days ago, JPM has been in a tight trading range gravitating around the $40 price level.

15 minute chart- Link daily- Link PnF- Link Inverse Asymmetrical Triangle- Link

Jane Fox : 7/25/2008 11:03:33 AM

WASHINGTON (MarketWatch) -- U.S. sales of new homes fell to the lowest level since March, but revisions put total sales for the spring well above previous estimates.

Sales fell 0.6% in June to a seasonally adjusted annual rate of 530,000, the second straight monthly decline, the Commerce Department reported Friday.

But revisions to March, April and May put sales in June well above the 501,000 rate that economists surveyed by MarketWatch had expected.

For instance, new-home sales in May were revised to a 533,000 level compared with the previous estimate of 512,000.

Sales remained above the cycle low of 513,000 that was set in March.

By region, sales gains were strongest on the East Coast. Sales rose 5.3 % in the Northeast and 2.5% in the Midwest. Sales fell 2.0% in the South and fell 0.9% in the West.

Jeff Bailey : 7/25/2008 10:55:43 AM

USO (conventional retracement in play) would be from the 02/06/08 close to recent 07/14/08 close. 38.2% at $98.98. (see the 06/04/08 relative low?) This could be another important close today.

Keene Little : 7/25/2008 10:55:06 AM

If the current bounce can keep going now and head for a new daily high, two equal legs up off yesterday's low is at SPX 1266.52. That's the level I'd watch carefully for a short play to set up. The other possibility is that we'll consolidate sideways, which I didn't think would happen but in a more bearish environment that might be all the bulls are going to get before we see another leg down on Monday.

Jeff Bailey : 7/25/2008 10:53:31 AM

US Oil Fund (USO) ... daily intervals with QRTRLY (green) and MNTHLY (pink) pivot retracement Link

Linda Piazza : 7/25/2008 10:49:17 AM

I wanted to remind everyone that we have an FOMC meeting next Tuesday, August 5. As you're making your end-of-week decisions today, I wanted subscribers to keep that meeting in mind. We used to have fairly reliable pin-them-to-the-numbers action beginning about midday the day before an FOMC decision, but pre-decision days have been all over the place the last year or two.

Jeff Bailey : 7/25/2008 10:48:35 AM

USO $99.54 -1.89% ... OI at the Aug $100 put 16,768 at last night's close. Now largest OI of calls/puts.

Linda Piazza : 7/25/2008 10:40:32 AM

During the last 30-minute period, the TRAN printed a new low for the day. Potential resistance on 30-minute closes from about 4956-4965 appears to be firm. We may soon see as the TRAN is currently attempting to bounce and retest it. The TRAN is 4934.79 as I type.

Linda Piazza : 7/25/2008 10:37:21 AM

TED spread, on a delayed quote, was last 1.10.

Linda Piazza : 7/25/2008 10:34:30 AM

For reference, the OEX's low yesterday was 578.66. The OEX has potential support on 30-minute closes that looks relatively firm, currently extending down to 578.27. If that support is lost on a 30-minute close or exceeded too much during a 30-minute period, the OEX sets a next potential downside target of 572.40. For now, don't discount the possibility that the 578.27-ish support will hold on 30-minute closes. It's a distinct possibility.

Keene Little : 7/25/2008 10:32:46 AM

The little short-covering spurt didn't get much of a follow through and we've got a sharp pullback. But I think it's all part of what should be a choppy bounce higher. As I mentioned earlier, be careful of the whipsaws in what should be a lower than normal volume day.

Jeff Bailey : 7/25/2008 10:30:18 AM

Most Actives ... JNPR $26.02 +15.33%, CSCO $22.19 +1.97%, CROX $5.16 -42.34%, SPY $125.82 +0.24%, MSFT $25.78 +1.33%, FNM $10.64 -11.23%, WM $3.85 -4.46%, XLF $20.97 +0.09%, QQQQ $45.12 +0.96%, SOLR $11.70 -20.21% ...

Jeff Bailey : 7/25/2008 10:26:18 AM

10:00 Internals found at this Link

Checked, then double checked.

Linda Piazza : 7/25/2008 10:23:10 AM

So far, the OEX is still finding resistance on 15-minute closes at a Keltner level now at 583.31. It hasn't dropped far, however, still testing the 50% retracement of Tuesday's range as well as both the 15-minute and 30-minute 9-ema's, all potential support. We don't know final direction yet, but the warnings of potential resistance just where they were found were offered on chart setups as early as yesterday afternoon.

Linda Piazza : 7/25/2008 10:18:42 AM

The A/D line dropped down to potential support and has now bounced hard, to a new day's high. It's approaching the late Tuesday high of 1299, with the A/D line at 1034 as I type. RSI is 87.40, a level from which it usually reverses. We saw it trend all day yesterday in a way it doesn't usually do below 30, so it's entirely possible that it will trend above 70 today, but bulls should be wary of rollover potential here in the A/D line, and, therefore in equities.

Jane Fox : 7/25/2008 10:14:04 AM

Internals are clearly bullish yet the TRIN is still 1.24. HMMMM Link

Linda Piazza : 7/25/2008 10:11:49 AM

Once again, the RUT is outperforming some other indices, at least on a Keltner basis. On a Fib basis, too. While the OEX is struggling with a 23.6% retracement of the slide down from the Wednesday morning high, the RUT is approaching a 50% retracement, at just under 713.80. The RUT is 711.90 as I type. Remember, however, that the 50% retracement, although not a classic Fib number, can prove to be significant S/R.

I took a look at the BIX and TRAN, too, to see if these leaders to the upside earlier in the week (and to the downside yesterday) were outperforming. The BIX is past the Keltner resistance that the OEX is challenging, although not above it on a 15-minute close. It's above a 23.6% retracement, but not quite to the 38.2%. The TRAN, however, is underperforming. It's not near the Keltner resistance setup that the OEX is challenging and not yet closely approaching a 23.6% retracement. The RUT is kind of alone out in front, with mixed performance from the rest.

Keene Little : 7/25/2008 10:08:26 AM

Nice "little" 100-point rally in the DOW off its low. Looks like the shorts are covering again.

Jeff Bailey : 7/25/2008 10:05:14 AM

Banking Traders and Investors ... Last night I was trying to get caught up on some earnings reports, and I'm still way behind.

However, one thing I'm really trying to explore further is Credit Loss Provisions.

One reason I think some of these stocks like JPM, BAC and WFC had such big moves, is lower Q1 to Q2 CLPs.

As a percentage of revenue (not sure that's the right calculation to work off of) JPM's recent quarterly's CLP of $3.455 billion was 18.78% of revenue.

BAC recent quarterly CLP of $5.830 billion was 28.69% of revenue.

Both companies CLP were less than Q1.

More later ...

Jane Fox : 7/25/2008 10:03:51 AM

Here are your overnight charts and as you can see all markets have broken their respective ON highs. Link

Linda Piazza : 7/25/2008 10:03:43 AM

The OEX was parked at the first significant resistance ahead of the sentiment number, as it looked likely would happen, and now it's testing that resistance. That's up to about 583.25 on 15-minute closes and 583.15 on 30-minute ones.

Keene Little : 7/25/2008 10:00:56 AM

The quick pullback has been bought and now spiking up so that's a good sign for a rally holding this morning. It may not be a smooth ride though as it hopefully works its way back up to yesterday's afternoon highs.

Jane Fox : 7/25/2008 10:00:29 AM

Seriously the VIX is making new daily lows and the AD Volume is making new daily highs, which is bullish. Yet the TRIN is 1.35.

Jane Fox : 7/25/2008 9:59:14 AM

THE TRIN at 1.61 is certainly telling us the bears have the ball yet the AD line is above 0 and climbing. And now I see the VIX falling so this is not making sense.

Jeff Bailey : 7/25/2008 9:55:01 AM

WM $3.73 -7.69% ...

Jane Fox : 7/25/2008 9:54:50 AM

THe AD line opened at +611, not overly bullish but bullish. Unfortunately though it has fallen to +235. I think today will be hard to call and we will not have a clear direction one way or the other.

Jeff Bailey : 7/25/2008 9:54:35 AM

JPM $39.71 +1.45% ...

Jeff Bailey : 7/25/2008 9:53:07 AM

VIX.X 21.31 -0.55% ...

Jeff Bailey : 7/25/2008 9:52:35 AM

Swing trade long exit alert! ... for the one (1) Bank of America BAC Aug. $35 Put (BAC-TG) at the bid of $5.80

BAC $29.78 -2.77% ...

Jane Fox : 7/25/2008 9:52:12 AM

Some talk about how much the price of crude affects the stock market but I'm sorry but I just don't see it. I know the price of Crude affects the economy in general but it has no immediate effect on the market.

From March 17th to May 19th the SPX rose from 1256 to 1440 and in that same time frame Crude also climbed from $98 to $135. Then the SPX started to fall and Crude continued it climb to a high of $147. Now Crude is in a selloiff and coincidently so is the SPX but the charts tell me that is only a coincidence. If anything Crude is following the SPX not the other way around and of course we all know that is just silliness. Link

Linda Piazza : 7/25/2008 9:42:51 AM

My delayed print on the TED spread shows a value of 1.11, down 0.043 or 3.678. This is below potential support at 1.13 that it bounced from yesterday. I guestimate that it has to get back below 0.90-0.92 before it looks as if this current bout of heightened default risk appears to lesson.

Linda Piazza : 7/25/2008 9:40:43 AM

Keltner outlook on the A/D line: the A/D line is printing its first values in the upper or bullish half of its Keltner channels, but it's stuck in no-where land, between next strong Keltner support and Keltner resistance, with those at about -120 and +1580, respectively. As I type, it's hitting a descending trendline drawn off Tuesday's late-day high, potential trendline resistance. A/D line at +667 as I type.

Linda Piazza : 7/25/2008 9:38:08 AM

The OEX is trying to rise, but was knocked back in early going by the 15-minute 9-ema, now at 581.66. That's first potential resistance on 15-minute closes, with the resistance now from 582.93-583.40 looking even firmer. Until and unless the OEX can maintain 15-minute closes above these resistance levels, it's maintaining vulnerability to about 572.50. OEX at 579.94 as I type. Remember, though, the potentially strong support on 30-minute closes, now at 578.35-578.97.

Linda Piazza : 7/25/2008 9:13:50 AM

Futures had been moving up since about 3:15 am ET this morning and popped above fair values after the durable goods number was released. As mentioned yesterday, the OEX and some other indices--such as the TRAN--produced various versions of three-candle reversal signals known as evening stars.

In some climates, however, such as the OEX's climb off its 2003 lows, the only reversal that occurred in connection with the reversal signal was that needed to confirm the signal. Also, when a previous day has produced a wide range, the next often produces a candle with a smaller-by-comparison range between the open and the close, with or without upper and lower candle shadows. Sometimes, as often happened in the period from 6/27/08-7/09/08, consolidation is accomplished by wide-ranging daily candles that zigzag up and down, each reversing the previous day's action.

My take on all this? Yesterday's action was bearish. There was no doubt about that. And, a strong rally built on the foundations of gains in shaky financials and airlines, among others, had unstable foundations. Tuesday, I mentioned a Bloomberg report that, as of Tuesday morning's high, financials had gained 32% in six days and now ranked as the second-highest sector component of the SPX. That seemed to be getting a bit dangerous, to me. No doubt about that, either, with a rise of that degree in a troubled sector.

Although I know (having both sets of grandparents be farmers, I really do know from personal experience) it's an ugly image, the "chicken with its head cut off" image comes to mind. That chicken is not going to survive, but its body may run quite a distance, zigzagging back and forth all the while. Do you really want to base your account's performance on each zig and zag that chicken's body makes now? Do you want to draw conclusions about where the chicken will ultimately drop based on this zig or that zag?

So, yesterday's action was undeniably bearish and it was most classically bearish where such bearishness was most significant, such as with the TRAN. However, I urge subscribers to keep an open mind about what might happen next because almost anything can. In the normal course of things, I would expect today to be either a consolidation-type day or else see some follow-through to the downside, perhaps producing another 10-sma test, with that moving average now at 575.66. Some charts show the possibility of a drop toward 570.80 before next support is found on a daily close.

What about intraday charts? As noted yesterday afternoon, the OEX was ending the day at potentially significant support on 30-minute closes that ranged down to 578.44 at the time. That suggested, barring a gap below that level early this morning, the possibility of a bounce attempt right away this morning, something that Keene had also mentioned. However, if the OEX does climb first thing, be particularly careful for rollover potential in the 582.70-583.50 range and then up near 584.50-585.50.

Remember that we have the important sentiment number at 10:00 am ET. Keep that in mind if the OEX should rise up toward that potential resistance and be parked there ahead of the sentiment number, a number that can move markets. We won't know which way until after the report. If you're in a bearish trade from overnight and the OEX is parked at that resistance into the number, you'll have a difficult decision as to whether to hold that position through the release. Ditto if you were caught in a bullish position going wrong yesterday and were hoping for a bounce today to exit, deciding whether that any bounce pre-sentiment-number is the only bounce you'll get or if you should hang on. I can't tell you how markets will react. All I can tell you is that you need to assess how much risk you have and go back to your original plan of when you thought you would exit. That's all you can do. Sometimes, your beliefs about what will surely happen turn out to be right and you would have been better off to ignore your stops, but unless you're particularly prescient about the markets--and I have known a couple of traders who are, but only a couple--and have the nerves of steel to stick out your decisions, that's a path that's going to get you into big, big trouble some day.

Keene Little : 7/25/2008 9:00:06 AM

If the market can't hold the gap up this morning and drops into negative territory, and stays there, we could see SPX work its way down to 1235. I don't anticipate a sideways kind of day.

Jane Fox : 7/25/2008 9:00:27 AM

Durable goods report out at 8:30 gave the overnight markets a boost and they all made new ON highs. I think we will have a bullish open but the rest of the day may be hard to nail down. Because of the huge selloff yesterday, don't expect another big selloff today or a big rally neither of which is likely today. Link

Keene Little : 7/25/2008 8:56:25 AM

No real surprise this morning to see equity futures up. It looks like we'll start with a gap up and I suspect we'll get a decent bounce this morning. Upside potential is back up to SPX 1265-1270 but not in a straight line. It being a summer Friday the only caution is possible whipsaws in lighter than normal volume. That will be more true this afternoon.

Jane Fox : 7/25/2008 8:47:25 AM

WASHINGTON (MarketWatch) -- New orders for U.S.-made capital goods surprise to the upside in June, signaling that some businesses were still spending despite headwinds from the credit crunch and housing recession.

New orders for durable goods rose 0.8% in June, pushed higher by orders for primary metals, machinery, and electrical equipment, the Commerce Department reported Friday.

Orders in May were revised to a 0.1% gain, compared with no change estimate previously. Economists surveyed by MarketWatch were looking for a 0.3% fall in durable goods orders in June.

Durable goods are big-ticket items designed to last three years or more. As such, new orders are very sensitive to economic expectations and serve as useful leading indicators of growth.

Demand in June was held back by a 25.1% drop in orders for civilian airplanes. Excluding the extremely volatile transportation category, orders were up 2.0% in June, after falling 0.5% in May.

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