Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jeff Bailey : 8/5/2008 2:11:41 AM

$/Yen at 108.10 -0.15%

Jeff Bailey : 8/5/2008 2:11:33 AM

Japan's Aso thinks Japan in recession ... U.S. stock futures getting squirrelly this morning with YM slipping from 11,287 to 11,265 in the matter of 5-minutes after the secretary-general of Japan's ruling Liberal Democratic Party said that he thought the nation's economy had entered a recession.

Jeff Bailey : 8/5/2008 1:30:17 AM

Australia Central Bank: ... Leaves rates unchanged at 7.25%.

Statement Link

Jeff Bailey : 8/5/2008 12:47:39 AM

US Dollar Index (DXY) 73.645 +0.30% ... edges above its 150-day SMA. First time since falling below on 2/13/07.

Jeff Bailey : 8/4/2008 11:54:50 PM

BPOEX saw a net loss of four (4) stocks to reversing lower PnF sell signals on Monday.

XOM Link @ $79 was a triple bottom sell signal and it is the most heavily weighted SPX stock (3.71% , or #1 at Tuesday's open).
WMB Link @ $30 (0.16% weight, #159)
SLB Link @ $95 (1.03%, or #18).
BHI Link @ $80 (0.22%, or #115).

Note: Weighting and Rank is SPX.

Jeff Bailey : 8/4/2008 11:09:57 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 8/4/2008 11:07:44 PM

Closing Internals at this Link

Keene Little : 8/4/2008 10:21:43 PM

Tuesday's pivot table: Link

Monday's late-day selloff left the price pattern looking bearish for a continuation lower on Tuesday. I had been thinking we might see a bounce into FOMC followed by disappointment and a selloff. Now I'm not sure how it will set up but I do see the possibility for exactly the opposite.

Two equal legs down in the pullback from the July 23rd high would be at SPX 1228.52 (which now becomes the key level to the downside) and that could set up a nice rally up the 1320 area (for two equal legs up from the July 15th low), shown in pink on the daily chart: Link

However a drop below 1228 would mean we'll likely see at least a retest of the July low (1200). But before that level is the 18-year uptrend line from 1990 that's currently near 1213 and a break of it could be serious. For the short term I'll have to wait for more price action into FOMC to help get a sense of where the market might head after the announcement.

OI Technical Staff : 8/4/2008 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The Market Monitor has been archived.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 : 8/4/2008 4:32:50 PM

DXY's 04:00 tick is 73.467

Jeff Bailey : 8/4/2008 4:17:06 PM

SPY $125.04 -0.88% ... still about $0.30 weaker than a bull wants to see.

Jeff Bailey : 8/4/2008 4:07:38 PM

SPY $125.14 -0.80% ... 10-minutes to close.

Linda Piazza : 8/4/2008 4:18:13 PM

Here's where the OEX is ending the day, slightly below the converging 10- and 30-sma's, at rising trendline support: Link This formation is a rising wedge, generally considered bearish, but the day's candle speaks of indecision.

Linda Piazza : 8/4/2008 3:58:21 PM

I was having so much fun with this market (smile) that I didn't realize it was so near the close. Overnight economic developments include Australia's central bank's rate decision, the Eurozone's and the U.K.'s Services PMI at 4:00 and 4:30 am ET, respectively, and the Eurozone's Retail sales at 5:00 am ET.

Jeff Bailey : 8/4/2008 3:45:36 PM

Wachovia (WB) $17.17 -9.53% ... set to test morning lows.

Jeff Bailey : 8/4/2008 3:44:39 PM

OEX and BIX.X only equity-based currently holding above MONTHLY Pivots.

Linda Piazza : 8/4/2008 3:44:23 PM

Both the 15-minute and 30-minute charts for the OEX give similar potential downside targets: 576.44 and 576.61, respectively. As I noted before, though, be a little skeptical of any targets in this environment.

Jeff Bailey : 8/4/2008 3:43:42 PM

OEX 579.53

Jeff Bailey : 8/4/2008 3:42:24 PM

DIA $113.10

SPY $125.34

QQQQ $44.57

SMH $28.14

BIX.X 190.22

RUT.X 706.91

TNX.X finished at 39.72, or 3.972%

Jeff Bailey : 8/4/2008 3:35:53 PM

SPY either side of MONTHLY Pivot.

Jeff Bailey : 8/4/2008 3:34:50 PM

SPY $125.27 -0.70% ... at near-term upward trend. 07/15 low to 07/28 pullback low.

Keene Little : 8/4/2008 3:32:53 PM

Not looking good for the bulls all of a sudden. The big drop has now left today's bounce a clear 3-wave move and that's a correction. It could develop into a larger bounce but this is bearish price action.

Linda Piazza : 8/4/2008 3:30:36 PM

And just as I suspected it would do (2:13:29 post), the OEX has perhaps begun that chopping back and forth process that renders formerly important S/R levels as useless in predicting next action. A break above resistance did not mean that the OEX was going to go far and now, this break back below what should be newly minted support might or might not mean much, either. The OEX is, however, less than a point above the daily 30-sma, which might or might not serve as support on a daily close.

Jeff Bailey : 8/4/2008 3:30:25 PM

Euro CurrencyShares (FXE) $156.00 +0.34% ... "well above" its 06/13/08 relative low close of $153.86.

How, I haven't a clue. Other than more buyers than sellers.

Jeff Bailey : 8/4/2008 3:26:54 PM

Petroleo Brasileiro (PBR) $51.27 -5.85% ... PMJ-TI $0.20 x $0.30

Jeff Bailey : 8/4/2008 3:25:17 PM

US Oil Fund (USO) $97.58 -3.43% ... threatens lows close since May 5th.

Jeff Bailey : 8/4/2008 3:21:35 PM

Nicaragua Jan-Jun Bean Exports: down 11% to 34,875 tons.

Linda Piazza : 8/4/2008 3:21:10 PM

Six trading days ago, on 7/24, the OEX closed the day at 579.09. Eleven trading days ago, on 7/17, the OEX ended the day at 580.01. Now look where we are: 582.13 as I type. In between, we've had some big swings, enough to reward the adept (and lucky) scalper but to whipsaw most traders out of multiple positions and decimate a trading account.

Jeff Bailey : 8/4/2008 3:18:45 PM

SPX Heavyweights (08/01/08 Sort Order) at this Link

Keene Little : 8/4/2008 3:18:01 PM

As can be seen on the DOW's 120-min chart, price is holding in its up-channel from the July 15th low but it will soon do battle again with its downtrend line from May 19th, currently near 11415. The DOW needs to get above the July 30th high at 11583 to turn more bullish and below the July 28th low at 11127 to turn more bearish. It's a wide range but in between there's just no telling which way this is going next. Link

Jeff Bailey : 8/4/2008 3:16:00 PM

VIX.X 23.15 +2.56% ...

Jeff Bailey : 8/4/2008 3:15:44 PM

SSO $58.99 -0.75% ...

SPY $125.75 -0.32% ...

Jeff Bailey : 8/4/2008 3:07:49 PM

DIA and OEX ... juuuuust above WKLY Pivots.

Jeff Bailey : 8/4/2008 3:07:17 PM

NYSE a/d 1,255:1,838

NASDAQ 1,194:1,649

Linda Piazza : 8/4/2008 3:07:16 PM

The OEX has approached but not quite touched Friday's last swing high, at 584.46, with today's high so far at 584.30. The OEX's next potential target and resistance on 15-minute closes continues to descend and is now at 585.48. I mention these developments with some trepidation because of the typical action this time of day before an FOMC decision makes such short-term chart setups less reliable than usual. If the OEX should sustain values below 581.87, the chart suggests that the upside targets will be erased. OEX at 583.34.

Jane Fox : 8/4/2008 2:56:35 PM

ES and The VIX are still not in sync but the VIX did warn us that the bulls were lurking. Link

Linda Piazza : 8/4/2008 2:43:55 PM

The OEX has popped just above potential resistance on 15-minute and 30-minute closes, although it has not yet closed either period above that resistance. In my 2:13 post, I noted that this might happen becuase of the flattening of the price action and the moving averages upon which Keltner channels are built. Those normally important benchmarks start losing their importance, so that a break above them might not get too far and a break below them might not, either. So, I now note the potential for the OEX to set an upside target near 585.61, although it first has to get past the Friday afternoon high of 584.46, and although these potential targets might have less validity than they normally would. OEX at 583.54.

Jeff Bailey : 8/4/2008 2:28:36 PM

Disclosure: I currently hold bullish position in SSO.

Jeff Bailey : 8/4/2008 2:27:59 PM

Swing trade long round up to 1/4 alert! ... with an additional 1/8 position in the ProShares Ultra S&P 500 (SSO) at the offer of $58.99.

Keene Little : 8/4/2008 2:24:02 PM

SPX pulled back for a 62% retracement of the rally off this morning's low and is trying to bounce back up. So far this afternoon's bounce looks a little corrective so if it turns back over and makes a new afternoon low it will probably head down faster for a new daily low. Otherwise give the bulls the benefit of the doubt and expect a further rally this afternoon.

Jeff Bailey : 8/4/2008 2:19:44 PM

02:00 Internals at this Link

Linda Piazza : 8/4/2008 2:14:03 PM

The OEX's price action has flattened, which has flattened many moving averages, including the ones upon which the Keltner channels are based. This is typical pin-them-to-the-numbers type of action, but it has the impact of rendering what is typically important S/R less important, so that the OEX might chop back and forth across such S/R without the movements meaning much. So far, resistance at the 15-minute and 30-minute central basis lines, now at 582.50 and 581.93, respectively, has held on 15-minute and 30-minute closes, showing that they still retain some importance as benchmarks. However, I'm not sure they'll continue to do so. That means that if the OEX should break above that 15-minute benchmark on 15-minute closes, for example, I'm not sure that it would get all that far because I'm not sure the movement would have that much meaning in this environment. However, if that should happen, the next place I would look for resistance is at Friday's afternoon hig of 584.46 and at potential resistance on 15-minute closes that's now at 585.78 but is still descending. Support beyond the 15-minute 9-ema now at 580.75, is down at 577 or perhaps this morning's low of 576.86.

Jeff Bailey : 8/4/2008 2:13:02 PM

IPOs hit 5-year low world-wide ... July was the slowest month of initial public offerings (IPOs) on global basis in five years. Just 47 IPOs raising $5.6 billion, compared with 190 that raised $31.7 billion last year at end of July benchmark. August IPO calendar doesn't show much of a turnaround.

Jeff Bailey : 8/4/2008 1:50:19 PM

13-week Yield ($IRX.X) up 3.0 bp at 1.660% ... would not be long.

Jeff Bailey : 8/4/2008 1:49:05 PM

3 and 6-month auction results released.

Jeff Bailey : 8/4/2008 1:48:07 PM

A bit "surprised" that DOW $32.25 -1.46% and DD $42.41 -2.07% are as weak as they are today.

Jeff Bailey : 8/4/2008 1:45:34 PM

US Dollar Index (DXY) 73.474 +0.06% (30-minute delayed) ... "weak dollar" vs. euro needs to be addressed. DXY probing its 150-day SMA from underneath.

Jeff Bailey : 8/4/2008 1:42:41 PM

Euro CurrencyShares (FXE) 155.88 +0.26% ...

Jeff Bailey : 8/4/2008 1:38:53 PM

Some chatter that Senator Obama suggesting U.S. release portion of SPR to bring down diesel and gasoline prices.

Supply of these two "not a problem" in my opinion. Based on observation.

Jeff Bailey : 8/4/2008 1:36:35 PM

EIA's latest report would show ULS Diesel (<15 PPM Sulfer) stockpiles up 16.63% versus year ago.

Linda Piazza : 8/4/2008 1:33:31 PM

The 30-day Federal Funds rate for August expiration, after tomorrow's FOMC decision, of course, is currently quoted on CME Group at 97.9825. That gives a guestimate of an outcome tomorrow of 2.02%. Since that's far closer to the current 2.00% than to the 2.25% that would represent a quarter-point rate hike, it looks like Fed Funds traders are betting on no hike. As of Friday, the Federal Reserve Bank of Cleveland's prediction was leaning the same way. Using options on federal funds futures, the Cleveland Fed estimates probabilities, and as of Friday, after the GDP release, that probability was near 0.9 or 90% that after the FOMC meeting, rates would be at 2.00% rather than any other rate calculated, from 1.75-2.75%. I haven't followed these predictions through other FOMC meetings, so I don't know how accurate these various calculations are.

Jeff Bailey : 8/4/2008 1:32:27 PM

Fed fund futures currently forecasting no change in Fed monetary policy.

Jeff Bailey : 8/4/2008 1:30:26 PM

CRB Index (CEC:CRY) 402.18 -3.32% ... probes its 02/25/08 close. See 07/23/08 Market Wrap Chart Link

Linda Piazza : 8/4/2008 1:27:55 PM

I don't see any firm predictions to be made from short-term OEX charts, which doesn't surprise me, given that we're moving into the pre-FOMC period that sometimes begins about midday the day before the decision. Right now, resistance still looks slightly stronger than support, but the OEX clings to its 15-minute and 30-minute 9-ema's, so that's at least suggestive of further resistance tests as long as the OEX can continue to cling there. With this conflicting information--strong-looking resistance but suggestions of on-going resistance tests--down would still look slightly easier than up except that the OEX isn't going down.

Keene Little : 8/4/2008 1:26:06 PM

SPX is pulling back for what should be just a test of this morning's low but so far the bounce looks like just a correction and therefore the risk is for a continued selloff this afternoon. As mentioned earlier, the bulls must hold this morning's low otherwise we'll probably see the selling accelerate a bit (1325 would be a good initial downside target).

Jane Fox : 8/4/2008 1:13:09 PM

TRIN is bouncing from 0.84 to 1.06 so it is not telling us much other than it does not agree with the bearish AD volume which is making new daily lows.

Jane Fox : 8/4/2008 1:10:58 PM

S&P futures and the VIX are really out of sync today. Link

Jeff Bailey : 8/4/2008 1:02:42 PM

NYSE a/d 961:2,070

NASDAQ a/d 884:1,901

Jeff Bailey : 8/4/2008 12:59:24 PM

Allstate (ALL) $46.04 +0.17% ...

Linda Piazza : 8/4/2008 12:58:21 PM

On intraday charts, the OEX has since Friday morning begun setting up a parallel descending price channel with a top not at about 583.20 and a bottom now at about 576. With the OEX at 580.75 as I type, it's inside that channel. Bears and bulls should watch for potential support and resistance at the channel's top and bottom levels, levels that currently correlate fairly well with the OEX's potential resistance on 15-minute closes at about 582.64 and potential support on 15-minute closes at about 576.37. Breakouts from the channel need to be confirmed, I would think, by sustained 15-minute closes outside those Keltner channel lines, too.

Jeff Bailey : 8/4/2008 12:57:42 PM

USO $97.91 -3.09% ...

Jane Fox : 8/4/2008 12:51:39 PM

Dateline CNN - Oscar-winning actor Morgan Freeman is in serious condition after a car accident in Mississippi, according to hospital officials.

Jeff Bailey : 8/4/2008 12:51:12 PM

World powers seek new sanctions on Iran ... Representatives of U.S., U.K., France, Germany, Russia and China agree to pursue new actions against Iran if it doesn't respond positively to their offer of incentives to freeze uranium enrichment operations.

Jeff Bailey : 8/4/2008 12:48:23 PM

Valero Energy (VLO) $31.31 -4.54% ... Refiner said this morning that it was cutting production rates at some of its Houston, TX refinery following an incident at a sulfur loading tank. Residents nearby advised to stay inside their homes.

Linda Piazza : 8/4/2008 12:47:09 PM

So far, but with several minutes left in this 30-minute period, the OEX's potential resistance on 30-minute closes from 582-582.63 is holding. With the latest 15-minute period about to close, the potential resistance on 15-minute closes up to 582.67 is holding, too. That's about all we can say until the 15-minute 9-ema, now at 580.49 is retested. If it holds, then we might expect the OEX to go on testing that resistance. If not, this particular resistance test has failed.

Jeff Bailey : 8/4/2008 12:45:42 PM

WCI Communities (WCI) $0.63 -50.00% ... Builder hit hard by Florida condominium bust files for Chapter 11 bankruptcy protection after efforts to raise new money failed. Approximately $1.8 billion worth of debt could be in danger of default.

Jeff Bailey : 8/4/2008 12:39:51 PM

Nov/Dec Soybeans ... Limit Down

Jeff Bailey : 8/4/2008 12:38:43 PM

Corn ... Limit Down

Jeff Bailey : 8/4/2008 12:27:33 PM

S&P 100 (OEX.X) 581.49 -0.10% ... juuuuuust barely above WKLY Pivot. Only major to do so.

Jeff Bailey : 8/4/2008 12:22:41 PM

12:00 Internals found at this Link

Jeff Bailey : 8/4/2008 12:07:50 PM

December mini Corn (yc08z) 555 1/2 -5.04% ... undercutting its 200-day SMA.

Jeff Bailey : 8/4/2008 12:07:12 PM

Commodities under pressure.

Jeff Bailey : 8/4/2008 12:06:44 PM

December mini Wheat (yw08z) 779 3/4 -4.79% ... threatens 5/29/08 relative low settlement.

Linda Piazza : 8/4/2008 12:04:19 PM

It looks as if this first OEX test of potential resistance on 15-minute and 30-minute closes that's grouped from 581.85-582.73 is holding on this 15-minute and 30-minute close, but whether it will continue to do so is yet unknown. This is why I urged bears to update their profit-protecting plans and know what they would do if the A/D line was approaching -1500 as the OEX was hitting 577. There was bounce potential if that happened, but it's not clear yet what happens next.

I would urge some slight skepticism about chart setups from this point on, too. There is sometimes a pin-them-to-the-numbers action that begins about mid-morning the day before an FOMC decision. That's not a to-be-depended-upon action, but it is sometimes seen.

Jeff Bailey : 8/4/2008 12:02:12 PM

Motorola (MOT) $9.68 +9.87% ... Strong again today and gives lift to chips. Company announced it has hired Qualcomm's (QCOM) $53.82 -2.97% COO Sanjay Jha to head its handset division as it prepares to become an independent company.

Jeff Bailey : 8/4/2008 11:59:29 AM

Humana (HUM) $46.87 +4.99% ... Earnings Press Release Link

Keene Little : 8/4/2008 11:56:56 AM

Updating last night's SPX 10-min chart with this 15-min chart, and removing the pink wave count, I'm showing the probability for a 3-wave bounce into tomorrow before selling off again. I'm showing a 62% retracement of the decline from last Thursday (to 1270) but that's just a guess at this time as it might not make it up that high. Bulls need to hold it now--no new daily lows allowed otherwise the pattern turns more immediately bearish. Link

Jeff Bailey : 8/4/2008 11:55:42 AM

Williams Coal (WTU) $9.68 +2.00% ... Boosting quarterly cash dividend to $0.35/share from $0.187.

Jeff Bailey : 8/4/2008 11:51:14 AM

SPX "Heavyweight" % Losers ... DVN $90.27 -5.08%, SLB $96.38 -3.81%, OXY $76.49 -3.49%, C $18.34 -2.80%, QCOM 53.97 -2.70%, JPM $39.74 -2.52%, MON $111.98 -2.48%, GS $117.86 -2.27%, BAC $32.57 -2.25%

Keene Little : 8/4/2008 11:51:13 AM

The little descending wedge pattern (easily seen on the 5-min chart) turns out to have been the correct interpretation. It remains possible now that the move down from last Thursday's high completed the 5-wave move down at this morning's low. If true we should now get a bounce to correct that leg down, probably into tomorrow, before continuing lower. That of course would mean the market will be disappointed with the FOMC announcement. Could be an interesting setup.

Jeff Bailey : 8/4/2008 11:48:56 AM

SPX "Heavyweight" % Gainers ... DELL $25.44 +4.21%, PM $53.47 +2.66%, WYE $41.25 +2.48%, ABT $57.25 +2.10%

Jeff Bailey : 8/4/2008 11:44:30 AM

Petroleo Brasileiro (PBR) $51.48 -5.47% ... under pressure. PMJ-TI $0.15 x $0.25

Jeff Bailey : 8/4/2008 11:42:52 AM

USO $96.86 -4.15% ... darts lower

Jeff Bailey : 8/4/2008 11:42:13 AM

Sector Losers OIH -4.16%, XNG.X -3.69%, OIX.X -2.65%, BIX.X -2.33%, BKX.X -2.30%, XBD.X -1.95%, HUI.X -1.59%, BTK.X -1.48%, IXTCX -1.37%

Linda Piazza : 8/4/2008 11:40:08 AM

The OEX is through its 15-minute 9-ema, although not on a 15-minute close, of course. That average is now at 578.86. The 30-minute version is at about 579.80 now. The next resistance band has softened a bit, too, but ranges from 582-583.50, being strongest near the lower end of the band, but the OEX has to sustain closes above those others before we start worrying too much about the next resistance band. OEX at 579.95 as I type.

Jeff Bailey : 8/4/2008 11:39:57 AM

Sector Winners ... XAL.X =2.46%, HMO +1.82%, RXH +1.39%, DRG.X +1.39%, SMH +1.00%

Linda Piazza : 8/4/2008 11:37:34 AM

As soon as I uploaded that 11:32:38 post, the A/D line began jumping. It's now at -1327, testing potential resistance on 15-minute closes at about -1310.

Jeff Bailey : 8/4/2008 11:37:21 AM

Semiconductor HOLDRs (SMH) $28.15 +1.07% ... MNTHLY Pivot ($28.35) just ahead.

Jeff Bailey : 8/4/2008 11:35:41 AM

Asian Markets Link ... Broadly lower Monday.

Toyota Motor (TM) $82.29 -3.27% Link ... notably weak and nearing its bearish vertical count of $82.00.

Linda Piazza : 8/4/2008 11:32:38 AM

The A/D line isn't mustering much of a climb, so far. It's -1553, barely off the low of the day.

Linda Piazza : 8/4/2008 11:32:01 AM

The OEX's 15-minute 9-ema is now at 578.75; the 30-minute version, 579.92. Both serve as potential resistance, on 15-minute and 30-minute closes, respectively.

Linda Piazza : 8/4/2008 11:30:38 AM

On my delayed feed, the TED spread is currently 1.13, 0.006 below Friday's last level, a 0.564% decline. The high today has been 1.14, at the open.

Linda Piazza : 8/4/2008 11:29:19 AM

Last Thursday, the Federal Reserve released information about outstanding corporate paper, a measure of how tight the credit crunch remains. Declining outstanding corporate paper may indicate that companies are finding it difficult to place that paper and having to go to banks for more expensive short-term loans to finance operations and other such short-term needs.

Outstanding corporate paper fell for the fourth week in a row, certainly no sign that credit problems are easing! It fell by $16 billion but this time it was the nonfinancials mostly responsible for the decline. Asset-backed paper did decline by $6.1 billion.

Linda Piazza : 8/4/2008 11:18:14 AM

I just heard from my brother-in-law who is on vacation but is rushing back to Port Arthur, heading into work at a chemical plant where he has been called back. He is not sure whether they will shut down some units, but doesn't think so at this time. Evacuations have been called for Galveston, but Galveston is an island with access shut off far in advance of a storm coming to shore and is evacuated early in any tropical storm or hurricane, an evacuation order which many long-time residents ignore.

Jeff Bailey : 8/4/2008 11:15:49 AM

Yen CurrencyShares (FXY) $92.36 -0.21% ...

Jeff Bailey : 8/4/2008 11:14:39 AM

Sunday's and Today's Global Economic Data Link

Linda Piazza : 8/4/2008 11:14:35 AM

The OEX is currently testing that potential support on 30-minute closes that's now at 577.23, with the OEX at 577.63 as I type. Bears should update their profit-protecting plans here, especially as the A/D line did indeed test the -1500 area as the OEX was testing the 577 zone. See my 10:43:02 post for explanations. However, until and unless the OEX can maintain 15-minute closes above 578.92, it hasn't even begun to change its tenor. If this 577-ish support is lost on 30-minute closes, there's the potential for a slide down to 575 or perhaps even the next target currently at 570.28. Bears should not be holding on and letting profits turn to losses if the OEX should begin a strong bounce, all the while counting on a turnaround that's going to take the OEX down to 575 or especially 570. Think in terms of vulnerability but not promised targets. Don't ever let profits turns to losses in this market environment.

Jeff Bailey : 8/4/2008 11:12:46 AM

iShares Japan (EWJ) alert! $11.54 -2.45% ... set to test its 03/14/08 relative low ($11.53).

Keene Little : 8/4/2008 11:09:00 AM

Even though SPX has dropped below 1250, which has me thinking bearish, the pattern of today's drop is potentially bullish since it looks like a small descending wedge with some bullish divergences showing up. One more minor new low could see a reversal so stay a little cautious about the short side. But until the bulls can show us something I don't like the upside yet.

Jeff Bailey : 8/4/2008 11:02:41 AM

SPY $125.07 -0.86% ...

SSO $58.35 -1.83% ...

Jeff Bailey : 8/4/2008 11:01:29 AM

XLF $21.11 -2.40% ...

Jeff Bailey : 8/4/2008 11:01:08 AM

BKX.X 64.96 -3.36% ...

Jeff Bailey : 8/4/2008 11:00:51 AM

BIX.X 185.39 -3.20% ...

Jeff Bailey : 8/4/2008 10:59:53 AM

VIX.X 23.74 +5.18% ...

Jeff Bailey : 8/4/2008 10:59:36 AM

Swing trade put alert! ... for one (1) of the Wachovia Corp. WB Sep. $20 puts (WB-UD) at the offer of $4.40.

WB $17.24 -9.22% ...

Jeff Bailey : 8/4/2008 10:50:05 AM

Verizon (VZ) $33.66 -1.00% ... Unions extend contract negotiations past Sunday's deadline.

Jeff Bailey : 8/4/2008 10:50:01 AM

Shell: ... Conducting limited evacuations in Gulf of Mexico on Tropical Storm Edouard.

Edouard 5-Day track forecast cone Link

Linda Piazza : 8/4/2008 10:43:02 AM

No change in tenor yet. Akso, unless the A/D line can maintain values above about -1215, it looks vulnerable to declines toward about -1500. The A/D line is currently -1296. If the A/D line closely approaches -1500 while the OEX is also hitting 577.20, I would watch for potential support to kick in. That support is not a given to hold, but it's a place when bears need to have updated profit-protecting plans.

Linda Piazza : 8/4/2008 10:34:48 AM

The OEX has next resistance near 579.80, and the tenor won't even begun to have changed, even over the shortest term, until it can produce 15-minute closes above that number. Further potential resistance is now near 580.50 but the resistance now from 582.12-583.06 on 15- and 30-minute closes looks particularly firm. If the OEX should bounce that far, bulls should have profit-protecting plans already made. For now, watch for resistance to kick in between 579.80-580.50.

Jane Fox : 8/4/2008 10:26:21 AM

Linda, the AD volume with a trajectory like this Link tells me the markets are certainly bearish so the VIX at daily lows was quite surprising to me. The VXO is supporting the bearishness much more than the VIX today. If this were OPEX week I would understand it but it is not.

By the way when the VIX tested its daily lows the TRIN was 0.86. Not making a lot of sense today.

Keene Little : 8/4/2008 10:25:00 AM

SPX hit the line in the sand at 1250 so the bulls need to hold it here. Otherwise it will be time to short the rallies.

Linda Piazza : 8/4/2008 10:21:48 AM

RVX, the RUT's volatility index, also just punched to a new high of the day, with the RVX now at 27.85 and with a potential target and potentially strong resistance at 28.11.

Linda Piazza : 8/4/2008 10:21:00 AM

Jane, VXO is acting completely differently than what you've noted on the VIX. The VXO has just popped up to a new daily high. However, observers should note that it's approaching the Friday high of 25.38, which may serve as resistance. VXO at 25.26. Strange divergence, isn't it?

Linda Piazza : 8/4/2008 10:18:46 AM

If the OEX should lose the support on 30-minute closes just above 577 and sustain 30-minue closes below that, it now has vulnerability to 575 (historical, trendline) or perhaps even 570.20 (Keltner, 15-minute chart).

Jeff Bailey : 8/4/2008 10:18:19 AM

10:00 Internals found at this Link

Linda Piazza : 8/4/2008 10:17:40 AM

The OEX had looked vulnerable to lower prices and it was vulnerable, it appears. Potential support on 30-minute closes has now been pushed down to 577.13-577.70. OEX at 577.82 as I type.

Jane Fox : 8/4/2008 10:14:36 AM

But with an AD line at -1156 I would not be expecting the markets to be make new daily highs but the lows may hold for now.

Jane Fox : 8/4/2008 10:13:39 AM

VIX has just taken a spike down and is now testing daily lows. This is bullish.

Linda Piazza : 8/4/2008 10:09:28 AM

The OEX's 15-minute 9-ema is now descending and is at 580.67 as I type. That may be first resistance on 15-minute closes. Support on 15-minute closes is now at about 578.60 but that support is now sliding lower. The 30-minute chart still shows vulnerability to 577.20-577.73.

Linda Piazza : 8/4/2008 10:07:49 AM

Factory orders were up 1.7%, with one source listing expectations at 0.7%.

Linda Piazza : 8/4/2008 10:00:06 AM

Keltner outlook on the A/D line: The A/D line has been dropping strongly all morning, but is now approaching potential support on 15-minute closes now at about -1225. RSI is below 30, not proof that the support will hold, but certainly a warning to bears to watch out for that possibility. The A/D line is now -1041, and bears would like to see it drop through that support toward the next support, now at about -1500.

Linda Piazza : 8/4/2008 9:58:29 AM

TRIN has bounced up twice this morning to test potential resistance now at 1.09-1.19 on 15-minute closes and has been pushed back both times. It's 0.90 now with vulnerability to 0.85 and to 0.57 if that support fails on a 15-minute close. This descending TRIN goes against what's seen on equity action, but watch out for the possibility support might kick in.

Linda Piazza : 8/4/2008 9:55:14 AM

The OEX's potential support on 15-minute closes has been pushed down to about 579.08 with the OEX cents above that as I type, but the 30-minute chart shows vulnerability down to 577.22 on 30-minute closes. OEX at 579.11 as I type. Remember the 10:00 am numbers, which could change market action by producing a bounce or an acceleration of the downtrend.

Keene Little : 8/4/2008 9:52:13 AM

We got the quick move down and SPX is tagging 1252 so it's at potential support. If support holds above 1250 watch for a reversal now. If it keeps dropping lower then the pattern becomes more bearish, like the pink wave count on last night's 10-min chart but without the bounce first.

Jane Fox : 8/4/2008 9:47:29 AM

AD line opens a bearish -822 and the VIX is climbing so the bears have the ball this morning.

Linda Piazza : 8/4/2008 9:39:37 AM

The OEX is hitting a short-term rising trendline off Friday's early morning low, testing that support near 580. Keltner channels suggest that the support may be a bit lower, now at about 579.30-579.50 on 15-minute closes, but all traders can draw that rising trendline and bulls can buy it. As I typed, the OEX bounced a bit from that trendline but until and unless it produces 15-minute closes above 581.89, it may remain vulnerable to the 579.30-579.50 test. OEX at 580.77 as I type.

Jane Fox : 8/4/2008 9:34:08 AM

SPX tagged its 38.20 retracement on Jul 23rd and has not been able to break above it ever since. If it makes a confirmed higher low that will mean the trend then turns up. Link

Linda Piazza : 8/4/2008 9:37:16 AM

Tropical storm Edouard is now moving toward the Gulf Coast shoreline. I'm hearing from my relatives on the Texas coast that speculation is being made that it's headed toward Sabine Pass and that, since it's slow moving, it's expected to bring floods with it. This will bring it along the Port Arthur/Beaumont/Orange triangle that's filled with refineries and of course offshore rigs, too. For me, it has personal implications in that my house may be filled the middle of this week with evacuating relatives. Electrical service, even for our part of Texas, may be so spotty that I may be taking some time off in the middle of the week. For oil traders, it may have more implications, although I haven't heard anything yet about shut downs on the refineries which would probably have to begin today, if they're going to happen. I don't remember shut downs for tropical storms, but the Houston area, at least, is being told they'll get the "dirty" side of this storm and to expect floods like those last seen several years ago when hospitals and other buildings were flooded. Sometimes these things, even low Category hurricanes, don't amount to much in an area that's used to wildly dramatic thunderstorms that hit with some frequency.

Linda Piazza : 8/4/2008 9:29:03 AM

The OEX ended the day Friday enmeshed in the converging daily 10- and 30-sma's. The 30-sma is at 580.72 with the 10-sma closer to 583 and the 582.09 closing value between the two. It's possible that the descending 30-sma will continue to be support on daily closes. The rising trendline off the 7/15 low is now at about 575, and that could also provide support. I must warn, however, that trendline has only two touchpoints so far, so may not be valid. It describes the bottom trendline of a rising wedge, with such formations having bearish implications, but it's possible that the OEX will break through that trendline only to widen the formation a bit into a regular old rising price channel or regression channel. Therefore, bears should be watchful of potentially strong support near 575, if tested, and should be careful of their assumptions if the trendline is broken. It may be possible that the decline won't get too far, perhaps near 558-562, before the OEX attempts to bounce.

Futures are below fair value this morning. If I extrapolate where the OEX might go, with an emphasis on "might," based on the SPX futures' distance from fair value, then the OEX might head down toward 580. My Keltner charts, 15-minute version, show potential support at about 579.43-579.91 on 15-minute closes. So, if the OEX moves lower in accordance with the futures' action, then we might expect a test of that support. The 30-minute chart suggests that lower levels--perhaps even to 577.50-578.80--might even be tested.

If the OEX should bounce instead, or bounce after a support test, the 583.25-584.50 zone looks like fairly firm resistance for now. We'll look at it after a bounce begins and see how firm it looks then. The daily chart presents the possibility for either more mostly sideways consolidation or perhaps even a bounce attempt, but cast that in the context of a potentially bearish formation in which the OEX is climbing, one that may fail at any time.

Take a look at the way that the OEX has been moving for a long while before you make or expect any firm predictions about next action. Action tends to be of one or two types: either the previous day's action is being completely reversed in a big-range candle or else there's consolidation. We have emotion-based trading mixed with indecision, and it's dangerous to form a set-in-stone prediction of what might happen next.

Whatever trading decisions you're making this morning, remember that we have factory orders at 10:00 am ET this morning, and that's at least possibly market moving. Remember, too that tomorrow is an FOMC day, and that positioning ahead of that will certainly take precedence over anything seen on short-term charts.

Jane Fox : 8/4/2008 9:24:04 AM

Gold is building an ominous head and shoulders here. A break of the July 30th low at 893 will confirm this bearish formation. Link

Keene Little : 8/4/2008 9:21:58 AM

Equity futures chopped lower during the overnight session and look to open slightly negative but nothing that can't be turned around quickly. We don't have a good sense for where the market might head this morning so I'll be watching the first 30 minutes for a sense of direction.

Jane Fox : 8/4/2008 9:19:41 AM

Here is your chart of Crude. Notice the congestion I have "boxed" on the chart that took place in early to mid June. It was just above support at $130 with resistance at $140. Now we have another area of consolidation with support at $120 and is looking a lot alike the earlier congestion. Of course the MACD was still above 0 during the earlier consolidation and it is well below 0 now so these two areas do have differences. Link

Jane Fox : 8/4/2008 9:12:16 AM

NEW YORK (MarketWatch) -- The dollar rose slightly early Monday, after data showed consumer spending and inflation increased in June, while the market positioned itself ahead of Tuesday's decision on interest rates by the Federal Reserve. The dollar index , which tracks the U.S unit against a basket of major counterparts, stood at 73.45, compared with 73.39 ahead of the data. Personal incomes unexpectedly grew 0.1% in June after a huge 1.8% increase in May attributed to the federal tax rebates, the Commerce Department said. Consumer spending increased 0.6%, compared to a 0.5% rise that was the median forecast in a MarketWatch survey of economists. Inflation figures surged the most in 27 years because of food and gas prices. Core prices, excluding those categories, increased 0.3% in June as expected.

Jane Fox : 8/4/2008 9:11:28 AM

WASHINGTON (MarketWatch) -- The windfall of cash from Washington got eaten up in June by the worst inflation in 27 years, Commerce Department data showed Monday.

Nominal spending grew 0.6% on the month, but the increase was all due to higher prices, which spiked 0.8% -- the most for a month since 1981.

Adjusted for inflation, June's so-called real spending fell 0.2%, the first decline since February. Real consumer spending is up just 1.2% from a year ago.

The impact of the tax rebates on personal incomes was reduced in June: After getting $48.1 billion from the government in May, individuals received $27.9 billion.

Personal incomes rose 0.1% after a 1.8% surge in May.

Economists surveyed by MarketWatch had been looking for nominal spending to rise 0.5% and incomes to fall 0.1%

Jane Fox : 8/4/2008 9:09:52 AM

WASHINGTON (MarketWatch) -- With the economy still suffering from a mild case of recession and the trauma of high energy prices, it's time for the periodic checkup with Dr. Ben. The Federal Open Market Committee meets Tuesday to talk about what to do about this sick economy.

The patient is demanding instant relief, but the doctor knows the only cure for what ails the U.S. economy is time. Chairman Ben Bernanke and the rest of the FOMC have done all they can do by slashing overnight lending rates down to 2.0% and by providing unprecedented doses of cheap money to the comatose financial system.

The FOMC is expected to keep its target rate unchanged but to alter its statement to indicate that the weak economy is the chief worry in the short run, while the risks of higher inflation remain elevated.

"The majority of FOMC members is now a bit more concerned about growth and a bit less concerned about inflation," said Jan Hatzius, chief economist for Goldman Sachs.

Jane Fox : 8/4/2008 9:08:13 AM

Here are the overnight charts for the major American Index futures. The series of lower lows and highs tells you the bears were in the driver's seat and I suspect that bearishness will carry over into the intraday session that starts at 9:30ET when the cash markets open. It remains to be seen if the bulls show up today or not. Link

Market Monitor Archives