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Jeff Bailey : 8/1/2008 11:17:29 PM


** are foreign ADRs (American Depository Receipts)

Jeff Bailey : 8/1/2008 11:09:00 PM

NYSE NH: ACL, AVA, CIR, CRY, EBS, HCN, HRB, IKN, LG, LTC, MPR, NHP, NPK, NTT, PMC, REV ... HRB surprised me. Got crushed from mortgage exposure.

Jeff Bailey : 8/1/2008 11:06:09 PM

Market and Sector NH/NL tabulation for Friday at this Link

Jeff Bailey : 8/1/2008 10:54:07 PM

Closing Internals found at this Link

Note(s): Most new lows at the big board and NASDAQ since 07/17/08.

NYSE that day was 32:146, while NASDAQ was 58:126.

Jeff Bailey : 8/1/2008 10:28:32 PM

Closing U.S. Market Watch at this Link

OI Technical Staff : 8/1/2008 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

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Keene Little : 8/1/2008 5:56:20 PM

Sorry about that, I had to dart out before the market closed and just got back. The setup is the same as it's been all day--we should get another leg down on Monday morning to finish the 5th wave down for the decline from Thursday. SPX 1252 is the downside target. That should set up a bounce into Tuesday to correct the decline and the interesting thing is that it could be a setup for a selloff following the FOMC announcement.

Hope everyone has a great weekend.

Jeff Bailey : 8/1/2008 5:08:55 PM

DXY's 04:00 tick was 73.454 Link

Jeff Bailey : 8/1/2008 4:35:16 PM

CME May'08 to May'09 Regional Housing Futures Table that I keep at this Link

Jeff Bailey : 8/1/2008 4:30:20 PM

Should be able to look through some of the homebuilder earnings reports to judge inventories too.

Jeff Bailey : 8/1/2008 4:28:48 PM

I see where Treasury Assistant Secretary for Economic Policy Phillip Swagel thinks there are signs of housing market bottom. Current inventories is "the first piece of the housing correction." Mr. Swagel said he doesn't think there is is need for another stimulus package.

Jeff Bailey : 8/1/2008 4:17:12 PM

AMBAC (ABK) $3.79 +50.39% ... stock was higher today after it said earlier this morning that is cut its expected subprime losses by $789 million by settling one of its largest collateralized-debt obligations. AMBAC paid $850M to get out of insuring $4.1B.

Linda Piazza : 8/1/2008 4:16:23 PM

Those who want to read announcements about upcoming changes to S&P indices, you can find that page at the following link: Link The most current one, however, does not include any announcements about BUD being replaced, and I'm back to page 5 and haven't found one yet. Sorry.

Jeff Bailey : 8/1/2008 4:14:24 PM

SPY's 04:00 tick was $126.09

Jeff Bailey : 8/1/2008 4:13:12 PM

SSO $59.30 -1.28% ...

Jeff Bailey : 8/1/2008 4:12:49 PM

SPY $125.98 -0.67% ... to its close.

Linda Piazza : 8/1/2008 4:12:34 PM

For those who would like to see recent index changes on S&P indices such as the SPX, OEX and MidCap, they can be found at this link: Link

Jeff Bailey : 8/1/2008 4:07:35 PM

I looked quickly, but didn't see anything either.

Linda Piazza : 8/1/2008 4:05:00 PM

No, Jeff, I haven't seen any news about it and I don't see it on Standard & Poor's site, either.

Jeff Bailey : 8/1/2008 3:58:20 PM

Why didn't SPY trade MNTLY Pivot today? No WKLY S1 to stop it. Daily S2 was $125.39 and it wasn't tested.

Answer: Human intervention

Jeff Bailey : 8/1/2008 3:57:01 PM

SPY $126.39 -0.34% ... see how it "prarie dogged" WKLY Pivot. Computer(s) turned on, fed some liquidity.

Linda Piazza : 8/1/2008 3:56:58 PM

This morning in my first post and also in yesterday's late-day post, I noted that the OEX had converging daily 10-sma and 30-sma support beneath it. If it can maintain values above 580.77 into the close, it will have maintained the 30-sma's support at least, and if it can maintain closes near its current 583.32, it will at least be closing near or at the 10-sma, too, after piercing both. The candle is a small-bodied one in a consolidation zone, however, so I'm not sure how much credence to give the spring off support, especially as this action is coming with a late-day push and the OEX may well be closing at rather than cleanly above the potential resistance on both 15-minute and 30-minute charts. Although the setups may change by the close, those charts give about as much likelihood of the OEX dropping as of it rising through those Keltner channels. The candle looks as much indicative of indecision as it does of reversal, although the reversal potential should be factored in.

Jeff Bailey : 8/1/2008 3:54:43 PM

CVX's net oil-equivalent production was 1.84M barrels/day in Q2.

So much here. Oil service trader/investor needs cap-ex updates.

How are proved reserves? Up or down?

Linda Piazza : 8/1/2008 3:51:36 PM

The OEX closed a 15-minute period for the first time today above the bullish/bearish Keltner basis line that's now at about 583.55. However, the OEX has dropped right back to that line and is at 583.76 as I type, questioning the so-called breakout.

Jeff Bailey : 8/1/2008 3:51:23 PM

Chevron (CVX) $84.55 -0.02% ... Earnings Press Release (pre-market) Link

Linda Piazza : 8/1/2008 3:49:30 PM

The TRAN is not leading this rush higher. It's attempting to follow higher but with a pitiful little green candle that's just barely holding above potential resistance on 15-minute closes at 4959.15. This level would be analogous to the OEX's 579.24 level on a Keltner basis. Those with bullish hopes would like to see the TRAN leading, not following. TRAN at 4972.31.

Jeff Bailey : 8/1/2008 3:47:32 PM

Have you seen any news regarding what stock will replace it? BUD has become BIG weight in SPX and probably OEX.

The stock that gets added could surge big time.

Linda Piazza : 8/1/2008 3:45:30 PM

Yes, Jeff, BUD is a component.

Linda Piazza : 8/1/2008 3:43:49 PM

The RUT is pushing back toward that descending trendline off the 7/23 high that I've mentioned several times over the course of the week and once today. That trendline now looks to be at about 719, but that's just a guestimate. It may be a few cents above or below. RUT at 717.48 as I type.

Jeff Bailey : 8/1/2008 3:41:17 PM

Linda! Is BUD a component of your OEX?

Jeff Bailey : 8/1/2008 3:40:28 PM

KO $53.11 +3.12% ... adding some fizz today.

Linda Piazza : 8/1/2008 3:41:59 PM

The OEX is attempting to break through the top of that bear flag formation and above resistance on 15-minute closes up to 583.60 and on 30-minute, up to 583.75. This is why I warned that the OEX wasn't acting the way it should when dealing with what looked like such firm resistance. However, we still don't know the outcome, and you have to also maintain just the slightest skepticism about end-of-week late-day action.

Linda Piazza : 8/1/2008 3:39:00 PM

What happens on the economic release front on foreign markets that could change your trade before Monday morning? Figures on Japan's Monetary Base will be released at 7:50 pm ET Sunday night. The Eurozone's PPI will be released at 5:00 am ET Monday morning. However, I'm not sure that anything seen there will have a stronger impact that the pre-FOMC posturing or our own pre-market economic numbers that begin to be released with the Challenger Job Cuts at 7:30 am ET and continue with the Personal Spending, Core PCE Price Index numbers that begin at 8:30 and the factory orders that round it up at 10:00.

Jeff Bailey : 8/1/2008 3:38:09 PM

SPY $126.35 -0.37% ...

Jeff Bailey : 8/1/2008 3:37:46 PM

C $18.93 +1.28% ...

Linda Piazza : 8/1/2008 3:34:24 PM

Resistance on the OEX's 15-minute chart appears to be firming up, but the OEX isn't giving up testing it, so it's certainly not falling away sharply from these continued tests of that resistance. This warns bears to be careful, because bear flag or not, firm resistance or not, something isn't happening the way it normally would be. Oh, gee, there isn't any normal these days. Forgot.

Jeff Bailey : 8/1/2008 3:22:54 PM

Can't disagree with subscriber email on that.

Jeff Bailey : 8/1/2008 3:22:23 PM

Really should hat nat gas commodity in BBB.

Jeff Bailey : 8/1/2008 3:21:12 PM

Nat gas showing some strength today in otherwise mixed energy trade.

Linda Piazza : 8/1/2008 3:22:17 PM

I had looked at the OEX's weekly chart earlier but not the RUT's. The RUT has a small-bodied, long-lower-shadowed candle on the top of a climb, with the top of the candle's body currently pressing against the weekly 200-sma, now at about 716-717. (On my charting system, the label for the current price on the weekly chart is covering up the label telling me the value for the weekly 200-sma.) That suggests some indecision about pushing the RUT higher, or at least suggests some sellers waiting at that weekly 200-sma and so far, keeping the bulls from advancing.

Jeff Bailey : 8/1/2008 3:17:59 PM

If long/short the underlying shares of KFT, just be aware.

Jeff Bailey : 8/1/2008 3:16:32 PM

Make it six (6) ... Aug $37.5 put

Jeff Bailey : 8/1/2008 3:13:52 PM

KFT ...

Aug 35 C
Aug 40 C
Aug 37.5 C
Aug 35 P
Aug 40 P

Jeff Bailey : 8/1/2008 3:12:28 PM

KFT $31.88 +0.18% ... very unusual to see five (5) of KFT August call and put options at top of CBOE most active.

Jeff Bailey : 8/1/2008 3:10:34 PM

LEH $18.03 +4.03% ... juuuust under your 38.2% no "naked" short emergency rule.

Jeff Bailey : 8/1/2008 3:09:45 PM

BKX.X 67.00 +1.26% ...

Linda Piazza : 8/1/2008 3:09:23 PM

Another push higher that gets rejected. The OEX bounced up toward potential resistance on 15-minute closes now up to 583.79, aligning with 30-minute and trendline potential resistance and now drops back to the point from which it started. It looks about as likely to drop to . . . and has started as I began typing . . . to 579.73 as to rise back to 583.79. A sustained break through that support on 15-minute closes will be a break through the little bear flag formation, but let's don't count eggs before they hatch . . .or bearish action before its born or something like that. OEX at 581.15.

Jeff Bailey : 8/1/2008 3:08:47 PM

BAC $33.07 +0.51% ...

Jeff Bailey : 8/1/2008 3:08:28 PM

SSO $59.17 -1.48% ...

Jeff Bailey : 8/1/2008 3:08:14 PM

SPY $125.92 -0.71% ...

Jeff Bailey : 8/1/2008 3:07:25 PM

NY Attorney General ... Citigroup charges linked to sales of auction rate securities.

Jeff Bailey : 8/1/2008 3:06:09 PM

CNBC reporting NY Attorney General plans to charge Citigroup (C) $18.69 (unch) with fraud.

Jeff Bailey : 8/1/2008 3:04:02 PM

MONTHLY Pivot Test (update) ... INDU/DIA currently 11,335/$113.29 , NDX/QQQQ 1,829/$45.01 and TNX.X 39.48, or 3.948% have seen trade at their MONTHLY Pivots.

SMH $27.98 +0.25% has not.

VIX.X 22.36 -2.52% has not.

Jeff Bailey : 8/1/2008 2:52:15 PM

SQX-VC $1.39 x $1.42 from 07/02/08 entry.

Jeff Bailey : 8/1/2008 2:48:49 PM

Starbucks (SBUX) $14.55 -0.95% ... little "pop" from $14.40 as James Cramer says he things substantially higher in couple of months.

Linda Piazza : 8/1/2008 2:48:47 PM

Potentially strong resistance (Keltner, both 15-minute and 30-minute, and trendline) for the OEX is from 583.28-584 on 15- and 30-minute closes. OEX at 581.86 as I type.

Linda Piazza : 8/1/2008 2:41:42 PM

If you're watching for next direction, it might be a good idea to keep the RUT on your radar screen due to its leading-index status. The RUT is not so far off the descending trendline off the 7/23 high, with that trendline now crossing at about 719.75 and with the RUT currently at 715.87. The high of the day has been 718.45, perhaps close enough to constitute a near test of that rising trendline, but I certainly wouldn't write off the RUT yet. I don't see any prediction from the 30-minute chart as which direction the RUT will go next and RSI there is a neutral 52, giving no predictions, either. Just watch the price action. If the RUT should climb higher and break above that trendline, the potentially strong Keltner resistance on 30-minute closes now at 724.89 and the 7/23 high of 726.27 should be watched for rollover potential.

If the RUT should drop, there's potential support on 30-minute closes at about 710 and then at the day's low of 706.25. That's converging with next potential Keltner support on 30-minute closes at 705.67. However, it's not until 696 that the RUT encounters the lower trendline of its flattened triangle that's been forming since 7/22.

Jeff Bailey : 8/1/2008 2:23:11 PM

02:00 Internals found at this Link

Keene Little : 8/1/2008 2:17:50 PM

At this rate it's looking like the market is simply on hold for the day. But the bottom line is that the bounce off this morning's low is a correction. That means we're still due another leg down (SPX 1250 remains a good downside target for it) to be followed by a correction of the decline from yesterday's high (so not a big bounce) which will then be followed by more selling next week. The more immediately bearish scenario (dark red on the charts posted earlier this morning) moves to the head of the line as far as probabilities go.

Linda Piazza : 8/1/2008 2:09:41 PM

So far, the OEX's potential resistance on 15-minute and 30-minute closes has held. The OEX is turning down through that little flag-looking channel that it's been in most of today. There's potential support on 15-minute closes at about 580.15 and then at about 579, the site of the rising trendline under that little possible bear flag. The 30-minute chart still shows a lower potential downside target, now at 576.83-577.98, continuing to climb as the OEX trades mostly sideways, but if that flag's support continues to hold, it may not get tested this afternoon. The chart setup suggests that the flag may well fail, but we've seen a lot of "suggests" situations that just don't play out.

Jane Fox : 8/1/2008 2:05:51 PM

The 2:00-2:30ET spike in Crude volume is now underway and CRude is spiking all over the map.

Linda Piazza : 8/1/2008 2:06:15 PM

We have two hours of trading left, and we've seen many examples of action the last two hours that completely changes the tenor of the day's trading and the shape of the day's candle. It's far too early to tell what that candle is going to look like and what it might portend, but it's not too early to do some thinking about your end-of-week decisions. If you're in AUG options, the theta-related premium decay is going to begin accelerating. We have an FOMC meeting next Tuesday--a meeting I tried to move up by a week last Friday, when I talked then about it being "next week"--and that can play havoc with your trade early next week, too. We used to see prices clamp down into a pin-them-to-the-numbers effect beginning about a day before the meeting, but that's not always the case any longer. Sometimes there's a lot of zooming around as markets react to every bit of news, repositioning portfolios ahead of the meeting. However, if there should be a pin-them-to-the-numbers effect beginning Monday and extending into the pre-FOMC decision, that's going to mean three and a half days of accelerated premium decay in front-month options. While that's great for the option seller, it could murder premium in both puts and calls unless the implied volatility were also rising fast enough to counter that effect.

I don't know what's going to happen Monday. I'm watching the resistance being tested right now just to get some idea of what will happen this afternoon, but I certainly don't know if this will be another Friday afternoon when the FDIC seizures a bank or two or if some major financial in Europe is going to announce a huge write down or if some great positive development will occur, either. Just weigh all these what-if's in your decisions about whether to take profits or even to take losses this afternoon and reduce risk in some of your trades.

Jane Fox : 8/1/2008 2:03:27 PM

Crude is giving back most of its gains today. Link

Jeff Bailey : 8/1/2008 2:01:59 PM

CSCO $22.01 +0.09% ... August "Max Pain" theory tabulation right here.

Jeff Bailey : 8/1/2008 2:00:45 PM

QLGC $18.63 -1.11% ...

Linda Piazza : 8/1/2008 1:55:09 PM

If that's a bear flag that the OEX is forming as it climbs off today's low, it's now reaching the top of that flag formation at about the same time that it's moving into potentially strong resistance that extends up to 584.22. The OEX is now 582.6. The strongest resistance should be at 583.36-583.81.

Jeff Bailey : 8/1/2008 1:53:23 PM

Swing trade short stopped alert! ... for the 100 share short in F5 Networks (FFIV) $29.10.

Jeff Bailey : 8/1/2008 1:49:04 PM

Could be "pivotal" moment this month for QQQQ $44.93 -1.16%

BIIB $51.38 -26.34% ... doing its best to make sure it doesn't happen for bulls.

Jane Fox : 8/1/2008 1:42:51 PM

Here is McMillan's weekly commentary. - There have been large swings in both directions in the last week. In fact, of the last six trading days, five have seen $SPX net changes -- on a closing basis -- of 17 points or more. Even so, it appeared that the bulls were going to take charge, but they seem to have failed. After the oversold rally which ended last week, the market pulled back early this week, and then rallied. That pullback bottomed out at 1234 on $SPX, there making a "higher low" (the low of the previous week was at 1200). Then, on Wednesday (yesterday), $SPX rallied strongly, closing at a new high for this rally, at 1282. That made a "higher high" on a closing price basis, although not on an intraday basis. A pattern of higher highs and higher lows is bullish for the $SPX chart.

However, that configuration was dealt a blow by today's negative action -- thanks mostly to very negative comments by ex-Fed chief Greenspan (the market had pretty much weathered early selling, caused by worse-than-expected GDP growth). With today's pullback, the $SPX chart looks more like it has even heavier resistance at 1280, as opposed to what looked like a bullish pattern yesterday. But the "higher low" is still in place, and there are some buy signals from the technical indicators, so the bulls may still be able to take control.

The equity-only put-call ratios have both turned bullish. That is certainly important, as these intermediate- term indicators have a strong track record. Moreover, these buy signals arose from fairly lofty levels on their charts -- usually an indication of a signal with a high probability of success.

Market breadth has been volatile, just like the market. Despite today's negative action, breadth is currently on a buy signal -- generated by the strong number of advancing issues on Tuesday and Wednesday of this week. This is usually a confirming indicator, and as such it is confirming the bullishness of the equity- only put-call ratios.

The volatility indices ($VIX and $VXO) have made some sharp moves, but the general tend is lower, and that's bullish. However, recently $VIX has been bouncing around in a range between 21 and 24. A close below 21 would confirm a bullish market, but a close above 25 would change the $VIX chart to bearish. At this point, its last signal was a buy signal, and it hasn't negated that, so technically $VIX is on a buy signal -- merely by the fact that it's in a general down trend. Note that its 20-day moving average is rolling over and beginning to turn downward. That's bullish, too.

In summary, we don't have any sell signals, and the fact that the equity-only put-call ratios have recently turned bullish is significant. Moreover, the other indicators are modestly bullish. As a result, we favor the upside here, but it looks like there won't be complete confirmation from the $SPX chart unless it trades above 1291 -- the July 23rd high. Of course, if the lows at 1200 are violated, then all bullish thoughts are to be abandoned, for that would be extremely bearish.

Jeff Bailey : 8/1/2008 1:39:44 PM

MBI $7.28 +22.76% ...

Jeff Bailey : 8/1/2008 1:39:11 PM

Mortgage insurers ... RDN $2.45 +40.8% and ABK $3.69 +46.42% edging higher

Linda Piazza : 8/1/2008 1:35:38 PM

Potential Keltner support for the OEX on 30-minute closes is now at 576.81-577.85, rising throughout the day. Of course, there's now also potential rising trendline support at about 579.45, the intraday trendline off the morning's low.

Linda Piazza : 8/1/2008 1:31:54 PM

Potential resistance on the OEX's 15-minute and 30-minute charts is lining up in close proximity. The OEX has potentially strong resistance on 15- and 30-minute closes from 582.20 up to 584.40, with potential resistance levels layered thickly all through that 2.2-point range.

Remember the "potential" in potential resistance.

Linda Piazza : 8/1/2008 1:28:12 PM

The TED spread is still 1.14, its high of the day.

Jeff Bailey : 8/1/2008 1:27:37 PM

Yes ... Cap-weighted index of all listed equities of the Irish Stock Exchange, but also includes UK registered companies. Base value of 1000 as of 01/04/1988

Linda Piazza : 8/1/2008 1:26:14 PM

On the OEX's daily chart, this bounce has brought it back up to test the 30-sma now just a hair below the OEX's 581.36 current level.

Jeff Bailey : 8/1/2008 1:24:55 PM

Good gravy ... Ireland I think it is got hit hard.

European Markets Link

Jeff Bailey : 8/1/2008 1:22:14 PM

Asian Markets ... finished mixed. Karachi got hit. Link

Jeff Bailey : 8/1/2008 1:20:37 PM

iShares Emergin Markets (EEM) $42.43 -0.93% ... #11 most active. Don't remember ever having it up here.

Jeff Bailey : 8/1/2008 1:19:32 PM

Most Actives ... QQQQ $44.84 -1.36%, XLF $21.42 -0.97%, WM $5.32 -0.18%, MSFT $25.32 -1.55%, SPY $125.91 -0.72%, ELN $10.99 -45.18%, BIIB $51.70 -25.87%, CSCO $21.94 -0.22%, INTC $22.23 +0.22%, JAVA $9.30 -12.51%

Jeff Bailey : 8/1/2008 1:12:15 PM

Petroleu Brasileiro (PBR) $54.73 -2.11% ... edges back under correlative WKLY Pivot and DAILY S2.

Jeff Bailey : 8/1/2008 1:09:30 PM

NASDAQ a/d 1,242:1,486

Jeff Bailey : 8/1/2008 1:09:18 PM

NYSE a/d 1,328:1,689

Linda Piazza : 8/1/2008 1:06:03 PM

For reference, the OEX's low of the day has been 578.85. The OEX is currently at 579.57. On the 30-minute chart, it maintains a potential downside target that has now moved up to 576.72-577.49. Sustained 30-minute closes above 581.94 would question that downside target and sustained 30-minute closes above 583.34 would erase it. For now, be aware that the OEX is testing potential support and could still be setting up a possible bear flag, just widening it by this dip. A drop to a new low would negate that flag setup.

Keene Little : 8/1/2008 12:54:47 PM

Tap, tap, tap...yep it's still moving a little.

Tab Gilles : 8/1/2008 12:37:41 PM


The banking and housing crisis we are currently undergoing has some similarites to what we went through 26 years ago.

President Carter left office in January 1981, a year in which 3,300 out of 3,800 S&Ls lost money. In 1982, the combined tangible net capital of this industry was $4 billion. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, the lowest rate since World War II. The $SPX in January 1982 was at 110, 18 years later it was at 1,500! One of the greatest bull markets ever....will history repeat? Link

Linda Piazza : 8/1/2008 12:26:25 PM

Potential resistance for the OEX on 30-minute closes is at 583.56-584.43 currently. Watch for rollover potential at that level, if it's reached as the OEX zigzags upward.

Linda Piazza : 8/1/2008 12:14:02 PM

I'm just doing some what-if planning. What if the OEX were to end the week about where it is right now? That would produce a second weekly doji or near-doji in a row. In fact, last week's open was 581.13, very near the OEX's current level, and the close the previous week was at 580.57. All this zooming around has so far produced nothing except a bunch of whipsawed accounts and perhaps some great profits for the few adept scalpers. Indecision, indecision, indecision: that's not giving us much guidance, is it?

The daily chart shows me a possible rising wedge shape with support now at about 575 and resistance now at about 598-599 and with the possibility that the OEX could still widen that to a regular old rising channel by dropping to 561-562 and bouncing from there. The OEX is still inside the wedge, however, so we just have chop within that wedge.

The monthly chart is different. Much different. As of the close yesterday, the end of the month, the OEX had produced a small-bodied candle with a long lower shadow, a potential reversal signal.

Put all this into context. Given the bearish underlying tenor, the bearish tenor of a rising wedge shape, and the monthly candle, I would consider the possibility that the OEX could continue the current reversal off the July low, but if so, I would consider it akin to the recovery that began in March, when a similar monthly candle was produced and the OEX did rise, but with a rise that failed.

As with all potential reversal signals, we have to be aware of that word "potential." We also have to be aware that such potential signals can start forming well before the reversal actually does. For example, in July 2007, the OEX produced a strong potential reversal signal on the monthly chart at the top of a long climb. In fact, it looked a bit like a key reversal signal. In fact, as many of us well remember, August produced a steep decline, but by month's end, prices had jumped and the month's close was above July's as the OEX headed up into its October, 2007 high. It was not until then, after another potential reversal signal, that the decline really started. Keep in mind, then, that even if this monthly candle is signaling a potential reversal, it may be signaling early and it does not preclude lower prices before such a reversal occurs.

Keene Little : 8/1/2008 12:13:16 PM

Updating this morning's SPX 10-min chart, the bounce off this morning's low so far looks like a correction (small bear flag). That suggests we'll see a new low this afternoon and the downside projection for it right now (assuming the bounce is finished) near 1250 (for equality between the 1st and 5th waves in the move down from yesterday morning): Link

If it gets it over with quickly (say within the next hour) that would set up a bounce into the close and early Monday as depicted. But the impulsive move down from yesterday to today would suggest it's the start of a more serious decline that we'll see next week. That's why the current bounce off this morning's low is so important--an impulsive decline would confirm the trend to be down.

Jeff Bailey : 8/1/2008 12:12:08 PM

12:00 Internals found at this Link

Keene Little : 8/1/2008 12:02:20 PM

A summer Friday afternoon awaits us. This is where the market goes dormant and we diehards stare at the screen, giving it a tap now and again to be sure the electrons didn't get stuck.

Jeff Bailey : 8/1/2008 12:01:16 PM

USO $101.06 +1.07% ... QRTRLY Pivot and upper-end of initial "Bailey Wave" held sellers.

Jeff Bailey : 8/1/2008 12:00:03 PM

EuroCurrency Shares (FXE) $155.78 -0.47% ... opening tick gaps below 38.2% conventional. (06/13/08 low to 04/22/08 high)

Notable 1st day of month. 4-day close watch list.

Jeff Bailey : 8/1/2008 11:53:55 AM

S&P 500 Weighting (at 08/01/08 cash open) Link

Linda Piazza : 8/1/2008 11:42:03 AM

As per my delayed quote from Bloomberg, the TED spread is 1.14, its high of the day and perhaps the high of the week.

Keene Little : 8/1/2008 11:38:10 AM

One indication as to whether the current bounce will be more than just a correction will be if the 2nd leg up (the current one) gets above the point where we have two equal legs up from this morning's low. That's at SPX 1265.38. If that acts as resistance and it turns back down and overlaps the pullback low at 1258.35 (near 11:10 AM) then we'll have a corrective bounce. That would add more evidence that we will see selling rather than a rally next week.

Linda Piazza : 8/1/2008 11:37:41 AM

The OEX's five minute Keltner chart is now showing an improvement in tenor, one that suggests that the OEX might be headed up to test potential resistance on 30-minute closes now from 583.50-584.60. For now, the shape of the rise is potentially a bear flag, so be careful of the potential for it to fail at any time.

In these market conditions, just be careful of anything. The A/D line is currently at +38, rising quickly to test potentially strong resistance now near +75.

Keene Little : 8/1/2008 11:28:45 AM

Similar to what I showed earlier this morning for SPX, this DOW 120-min chart shows the two scenarios that I currently see for the market: Link

We either bounce from here (or wherever the final low for the day will be) and start another rally into next week (pink) or else we'll see a consolidation today before dropping a little lower on Monday (dark red), bounce and then drop harder later in the week. The price depiction uses wave relationships in both time and price and trend lines for guidance.

Jeff Bailey : 8/1/2008 11:21:27 AM

Browser version of MM now working.

Jeff Bailey : 8/1/2008 11:20:48 AM

Biogen, Elan weigh on biotech stocks ... MarketWatch Story Link

Jane Fox : 8/1/2008 11:19:49 AM

Keene thinks the low is in for the day and that is enough for me.

Jane Fox : 8/1/2008 11:19:13 AM

The VIX and ES are in sync today but since there are no divergences they are not telling me if the bottom is in or not. Link

Jeff Bailey : 8/1/2008 11:15:44 AM

QQQQ $44.71 -1.64% ...

Jeff Bailey : 8/1/2008 11:15:25 AM

Biogen Idec (BIIB) $52.15 -25.24% ... also under pressure. #3 most active.

Jeff Bailey : 8/1/2008 11:14:37 AM

Elan (ELN) $11.06 -44.83% ... getting hit hard again today.

Jeff Bailey : 8/1/2008 11:05:26 AM

Swing trade short establish stop alert! ... on the 100 share short (equal to call positions) in F5 Networks (FFIV) $28.80 -1.23% ... at $29.10.

Keene Little : 8/1/2008 11:04:05 AM

We might have seen the low for the day and if so then it now becomes important what kind of bounce we get. In order for us to get a rally higher into next week we need to see the market start rallying from here in an impulsive way. If it instead chops sideways/up then we'll have a better indication that we'll see renewed selling next week which would turn the price pattern more immediately bearish.

Jeff Bailey : 8/1/2008 11:01:29 AM

Swing trade put exit alert! ... for the one (1) Dynamic Materials BOOM Aug $30 Put (QCB-TF) at the bid of $1.80.

BOOM $29.24 -11.20% ...

Linda Piazza : 8/1/2008 11:00:17 AM

The OEX is retesting potential resistance on 15-minute closes (support earlier) that's now at about 581.80. While it would be a slight improvement in tenor for the OEX to produce 15-minute closes above this and to sustain them, the 30-minute chart suggests that until and unless it can maintain 30-minute closes above 583.55, it still maintains vulnerability to 575.32. OEX at 581.33 as I type.

Jeff Bailey : 8/1/2008 10:58:16 AM

VIX.X 22.88 -0.26% ...

Jeff Bailey : 8/1/2008 10:58:02 AM

Swing trade NAKED put buy back alert! ... for the US Oil Fund USO Aug $93 Put (IYS-TO) at the offer of $0.75.

USO $102.24 +2.20% ...

Jeff Bailey : 8/1/2008 10:52:11 AM

Dow Indu. Components Link

Linda Piazza : 8/1/2008 10:43:34 AM

The A/D line just tested potential support on 15-minute closes that's now at about -1070 but was then slightly higher. The A/D line has bounced from that potential support, but is bouncing into a 9-ema test. That 9-ema is at about -642 and the A/D line is currently -416, with several minutes to go in this 15-minute period. I would normally conclude that the A/D line maintains vulnerability to -1070 or maybe even -1400 until and unless it can maintain 15-minute closes above that 9-ema and is improving in tenor when it can maintain those closes. However, the A/D line has been all over the place within the lower half of its Keltner channels since yesterday morning, and it's difficult to give too much weight to any potential support or resistance line. So, while it's good to have the A/D line bouncing if you want the OEX and other equities to steady, it's just bouncing within a choppy zone until and unless it maintains 15-minute closes above a Keltner line now at about +88.

Jeff Bailey : 8/1/2008 10:29:37 AM

10:00 Internals at this Link

Jeff Bailey : 8/1/2008 10:26:35 AM

USO $103.17 +3.18% ...

Jeff Bailey : 8/1/2008 10:24:10 AM

Swing trade call exit alert! ... for the JebBlue JBLU Aug. $2.50 Call (JGQ-HZ) at the bid of $2.70

JBLU $5.20 -1.32% ...

Linda Piazza : 8/1/2008 10:24:03 AM

An OEX potential downside target of 569.29 has been set on the OEX's 15-minute chart, but both the 30-minute version and a rising trendline off the July low shows potential strong support kicking in just above 575, so bears should watch for bounce potential to kick in near there, if that level is approached.

Jane Fox : 8/1/2008 10:22:21 AM

CRude now $128.00 and climbing.

Linda Piazza : 8/1/2008 10:14:14 AM

The OEX has rising wedge support (off the July low) now at about 574.50-575.25, depending on how the trendline is drawn. If the OEX continues lower, I would watch for potential support there, ahead of the potential (not yet set) downside target of 569.29 showing up on the 15-minute chart. Remember that a bounce back above the Keltner channel line that's now been pushed down to 582.14 by the close of this 15-minute period will say that support has held and will mean that the downside target has not been set. OEX at 580.24 as I type.

Keene Little : 8/1/2008 10:11:19 AM

New lows is not what the bulls want to see here. This is turning more bearish as the leg down from yesterday afternoon is developing a strong 3rd wave feel to it. That suggests we could be into more than just a pullback that will lead to a push higher into next week.

Jane Fox : 8/1/2008 10:10:38 AM

Crude is well on its way to $130.00 resistance. Link

Linda Piazza : 8/1/2008 10:09:46 AM

Some effort is now being made to hold the OEX at that potential Keltner support on 15-minute closes. Here's the chart: Link However, this chart suggests that if that support is lost and values below it maintained, the OEX is vulnerable to about 569.50 or slightly below. The OEX has dropped to 580.42 as I type.

Jane Fox : 8/1/2008 10:09:28 AM

CRude is flying. Back up over $127.00 again

Linda Piazza : 8/1/2008 10:02:56 AM

The OEX ended that 15-minute period near Keltner support now at 582.48.

Keene Little : 8/1/2008 10:02:07 AM

NDX is back down to its uptrend line from July 15th, currently near 1812. A break below that would be very bearish as it would say the bear flag correction since the 15th has completed. Bulls need to step back into the ring now.

Jane Fox : 8/1/2008 10:01:54 AM

The internals are all in sync and quite bearish. The TRIN is printing a 1.10 which is not overly bearish but then again I will only take the TRIN into consideration when it is overdone. Link

Jane Fox : 8/1/2008 9:57:25 AM

AD line is a bearish -911 and VIX is making new daily highs supporting the S&P futures' new daily lows.

Linda Piazza : 8/1/2008 9:50:22 AM

The OEX is still testing that support rather than bouncing up to resistance. On the 15-minute chart, support cycles down to 582.69 on 15-minute closes. Try not to form too many opinions or preconceptions before the ISM report is released, but do make appropriate account-protecting decisions. The chart setup still presents the possibility of a several-hour bounce up into the 587 region, but that's not a promise, and if your bullish stops are being hit, you're just going to have to make those account-appropriate decisions knowing that markets could either drop or indeed bounce up into the 587 area afterwards. We're just not prescient, but we are in control of our account-preserving decisions.

Keene Little : 8/1/2008 9:48:55 AM

The quick little bounce at this morning's open gave us the little correction needed for the wave pattern so that the new low now is completing the 5th wave for the move down from yesterday afternoon's high (with a downside target near SPX 1260). That will complete the 3-wave move down from yesterday morning. So assuming we'll see support there, we should see a bounce that holds for the rest of the day.

In other words, if you're short, trail your stop down closer now.

Linda Piazza : 8/1/2008 9:41:51 AM

Keltner outlook on the A/D line: At -22.00 as I type, the A/D line is neither very bearish nor bullish. It's position on the Keltner charts echoes that impression, as its values today have been either side of a neutral basis line now at +155. No guidance from this view.

Linda Piazza : 8/1/2008 9:40:34 AM

Potential support for the OEX on 15-minute closes is now 582.80-584.41. OEX at 585.24.

Keene Little : 8/1/2008 9:36:45 AM

That pre-market gain following the 8:30 reports sure didn't last long--futures are back to where they were prior to the reports.

Linda Piazza : 8/1/2008 9:22:22 AM

Is anyone getting dizzy yet? We have a market environment in which one day's gains are totally reversed within a day or two, and one day's losses are, too. This action occurs within a rising wedge pattern on the daily chart, so let's put this into context. The markets are undergoing a correction of the slide down from May into July, and they're doing it so far with a rising wedge pattern. Such patterns are typically bearish, and this is probably a bear-market rally off July's lows, so the pattern and the probable action fit. The OEX zigzags rather violently, but mostly upward, but within a pattern that has a possible bearish outcome unless the OEX widens that channel into a regular rising channel. We should therefore be watchful for a failure out of the wedge, but, if one occurs, watch for potential support at a trendline now at 560-564 which would describe the bottom trendline of a regular rising channel, in case any drop through the wedge's lower trendline is instead just a widening of the channel into a regular parallel channel.

Against that background, as noted near the close yesterday, the OEX was ending the day just above the converging daily 10- and 30-sma's, so near potential support. On the 15-minute chart, too, the OEX was ending the day at the potential support on 15-minute closes that was then at 582.86-584.48. The close was between the two, so certainly testing support. That was support that had been mentioned early yesterday, well before it was tested.

If that support holds and the OEX bounces, as futures suggest might happen, I would now caution bulls to watch for potential resistance to kick in first near 585.25-585.50 and then at 587.00-587.50. These markets are being driven by emotion-based trading, so that they run off above or below support and resistance, so the usual parameters are a bit untrustworthy.

If the OEX should drop instead, watch for potential support on 30-minute closes that extends down to about 582.70 to kick in.

Cast these potential support and resistance levels against the knowledge that the ISM Manufacturing number will be released at 10:00 am ET. That means that, if the OEX were to bounce in early trading, perhaps up near 587, for example, and be sitting there as the ISM is released, there is the potential for a reversal lower or for an acceleration of the climb through that resistance level, and we may not be able to predict which will happen. Ditto if the OEX drops toward 582.70 and is sitting at that potential support. Make early trading decisions accordingly. For example, if you were trapped in a bullish position yesterday by the late-day swoon and there's an early bounce this morning, decide whether you want to use the bounce to exit ahead of the ISM or if you want to weather that release.

Jane Fox : 8/1/2008 8:51:39 AM

Perception is everything in the stock market because although the jobs report was dismal it was not as bad as the Street expected. Link

Jane Fox : 8/1/2008 8:45:20 AM

We still have the ISM at 10:00ET to look forward today.

Jane Fox : 8/1/2008 8:42:39 AM

WASHINGTON (MarketWatch) - Nonfarm payrolls fell for the seventh straight month in July while the unemployment jumped to 5.7%, a four-year high, the Labor Department reported Friday. Nonfarm payrolls fell by 51,000 in July, led by losses in manufacturing, construction, retail and temporary help. Since December, 463,000 jobs have been lost, the strongest signal that the economy is in a recession. Economists surveyed by MarketWatch expected payrolls to shrink by 70,000 and for the unemployment rate to rise to 5.6% from 5.5% in June.

Jane Fox : 8/1/2008 8:41:17 AM

Dateline WSJ - WASHINGTON -- The U.S. unemployment rate jumped to a four-year high in July as companies shed workers for a seventh-straight month, further evidence that the economy remains vulnerable to a recession in the second half of the year. However, the employment decline was less than Wall Street economists had feared, suggesting that any downturn is still likely to be mild.

The data, which included only a small rise in wages, support the view that Federal Reserve officials will hold interest rates steady at next week's meeting and subsequent meetings as well.

Keene Little : 8/1/2008 8:35:04 AM

Equity futures are all over the place this morning--now getting a strong bounce off the 8:30 reports. Be careful about some whipsaw price action after the open (which actually fits the wave pattern--small choppy consolidation before a new low followed by a reversal higher).

Keene Little : 8/1/2008 8:04:07 AM

Friday's pivot table: Link

With the 3-wave pullback yesterday we should be looking for another bounce soon after today's open. I mentioned there were some Fibs near SPX 1260 that made for a good downside target and potential support. With this morning's drop in equity futures (but only into slightly negative territory) we could see another 6 points given up in order to reach 1260.

From there it will be important what kind of bounce we get. After the completion of a 3-wave pullback the market will be set up for a stronger rally into next week (targeting the 1320 area). But if the bounce becomes a choppy sideways/up correction then we'll know there will be lower prices and the price pattern will turn longer-term bearish sooner rather than later. These scenarios are shown on the 10-min chart: Link

The 60-min chart shows how each scenario would likely play out into the middle of August: Link . It should be noted that both are bearish but the pink wave count calls for a continuation of the bounce off the July 15th low into the middle of next week before it turns south and starts heading for new lows. So it's a matter of when the market heads lower not if. This is best shown on the daily chart: Link

While I've been showing the two different wave counts, one for a little higher bounce into next week and the other for a resumption of the decline from here, each "joins up" in the latter part of August so the differences become less important at that point. The dark red wave count will simply be about a week or so ahead of the pink wave count. And the way the longer term wave pattern is set up, it's not a pretty sight for bulls as shown on the weekly chart: Link

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