Option Investor
Printer friendly version
Jeff Bailey : 8/22/2008 2:47:36 AM

Email observation/question ... Jeff! I see SC's BPOEX reversed back up to bull confirmed today. You've posted stocks that have given the buy and sell signals in the past. Could you post them in the market monitor or let us know what they are? Also, did Dorsey/Wrights do the same?

Jeff's Reply: ... Good eye! StockCharts.com's $BPOEX Link did show a net gain of 3 stocks to reversing higher Pnf buy signals today (Thursday). Dorsey's BPOEX also showed a net gain of 3 to 42% having falling to 39% (40% on chart), but would need a measure of 46% to reverse back up to "bull confirmed." As you know, the "difference" we'll see from time to time is that Dorsey/Wright does NOT adjust historical prices LOWER (thus changing the stock's true price history) when a stocks pays a dividend, when if significant enough, would impact price over time.

SLB Link , an OILService stock gave a reversing higher PnF buy signal at $97. It was the powerful "bearish signal reversal" pattern (minimum of 7 columns of lower highs and lower lows, then BOOM! Bearish complacency turns bullish.

EXC Link electric utility (EUTI) gave a reversing higher double top buy signal at $77.

COP Link , an OIL producer and some refining gave a reversing higher and powerful "triple top" pattern at $83.

Here's a list of OEX stocks that have given buy, or sell signals since 8/11/08. My query was ... "Give me all stock's buy and sell signals. Price range $1 to $1,000. Belongs to OEX. I can get a bunch of technical indicators in the printout. Link

This is a QUANTITATIVE approach to internals supply and demand.

The BULLISH % only count the FIRST reversing "buy" or "sell" signal.

StockCharts.com's chart of CVX looks incorrect. Either that, or both QCharts and Dorsey are incorrect. CVX's most recent "buy" signal was indeed the powerful "spread triple top," but it was actually the 2nd buy signal. The first being a double top buy signal on 08/13/08 at $86. So today, we don't want to count CVX +1 again. It already got a +1 back on 08/13/08.

See Wachovia Bank (WB) Link ? That's the powerful "bearish catipult" pattern, but the sector was and is still "bull confirmed," which tells us there's still some type of demand holding the sector in check. First sign of strength now is a trade at $17, which would be a "double top" buy signal. The 08/19/08 "sell signal" was the 2nd consecutive sell signal. The reversing lower was the also-powerful "triple bottom" sell signal. Should the sector turn "bear confirmed" or "bear" phase, then we can utilize Professor Davis' study of patterns and probabilities. For now, we use the BEARISH vertical count as a PRIMARY objective. Yes, the laws of science and ballistics. (length of the barrel, size of the projectile, velocity, air density, etc). Air density relates to SECTOR and MARKET strength. Bearish patterns in "bull" phase markets often-times is like swimming against the current. Bearish patterns in "bear" phase markets tend to flow with the current more easily, move faster. See over to the right of the Dorsey query the RS (MKT) and RS Col (MKT) and RS Mkt Date? WB is "sell" as its Relative Strength to the MARKET was found on 01/03/08. That is, WB started UNDERPERFORMING relative to the SPX in a SIGNIFICANT way that day. RS Col MKT tell us that even on a near-term basis, its Relative Strength is weakening vs. the SPX.

Keene Little : 8/21/2008 10:15:32 PM

Friday's pivot table: Link

The bounce off Wednesday's lows for the DOW and SPX continues to look like a correction to the decline and as such I'm watching for evidence for where the bounce might end (if it wasn't Thursday's high). For SPX I see resistance at the downtrend line from August 11th, near 1285-1288 depending on whether the August 15th or 18th high is used. Just above that is the downtrend line from May near 1293. A break above 1293 would have me turning short term bullish but until then I think the market will turn back down into some hard selling. 120-min chart: Link

For the DOW I would get a little more bullish if it gets above 11550 but until then I think the bounce is very close to finishing if it hasn't done so already. DOW 120-min chart: Link

OI Technical Staff : 8/21/2008 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.

Tab Gilles : 8/21/2008 9:59:17 PM

Metals are on the move....

Yamana Gold (AUY) $11.47 +$0.93 (8.82%) Link

Street Tracks GOLD (GLD) $82.17 +$2.11 (2.64%) Link

IShares Silver (SLV) $13.41 +$0.51 (3.87%) Link

Freeport McMoran (FCX) $93.66 +$2.57 (2.82%) Link

Southern Peru Copper (PCU) $26.30 +$1.75 (7.13%) Link

Jeff Bailey : 8/21/2008 7:39:42 PM

Closing U.S. Market Watch Link

Jeff Bailey : 8/21/2008 7:04:18 PM

Today's closes (Hurricane preparedness kit?) ...

MSFT $27.19
CPST $2.57 (hurricane sensitive?)
TLT $93.12 (defensive? offensive?)
Oct. Nat Gas $8.36 (hurricane sensitive?)
OEX 588.89
INTC $23.05
AMZN $83.26
SPR currently holds 707.2 million barrels. Week ending 08/26/05 was at 700.5 million barrels.
DB ... taken private at $18.03.
TRAN 4,936
BAC $29.04
BIX 172.08
GOOG $486.53 +0.31% ... up slightly after Levees breached
TOL $22.85 ... mentioned today 08/21/08. Check out 08/29/05 @ 12:01:51 PM.
MUR $79.96 (hurricane sensitive?)
DIA $114.05, SPX 1,277, QQQQ $46.86
TNX 3.838% (offensive/defensive)
COP $85.05
PGN $44.22
USEG $3.17
XLB $39.77
WMT $58.50
ETR $103.10
MO $20.91 and PM $54.82
MAN $49.01
RIG $131.71
SMH $28.78
Sep Unleaded $2.95 (remember what unleaded and oil did during Katrina! Ooooe did that surprise some traders.
BGC $52.65 +0.43% ... remember all the cable that needed replacing? Incredible "wave" of buying

Jeff Bailey : 8/21/2008 5:42:44 PM

That was then ... Link

It was the best of times, it was the worst of times.

Jeff Bailey : 8/21/2008 5:33:10 PM

Katrina formed August 23, 2005; landfall August 29, 2005; then abated August 31, 2005.

Jeff Bailey : 8/21/2008 5:22:20 PM

Tropical Storm "Fickle Fay" called ... she's headed to Hattiesburg now. Link

Jeff Bailey : 8/21/2008 5:12:35 PM

I had GLD going out at $82.00 +2.42% on the nose.

Jeff Bailey : 8/21/2008 5:10:58 PM

SPY's daily pivot levels for tomorrow are ... $125.79, $126.80, Piv= $127.61, $128.62, $129.43.

Jeff Bailey : 8/21/2008 4:58:57 PM

NASDAQ's 1.56 billion shares lowest since 1/2-day 07/03/08 of 1.43 billion.

Jeff Bailey : 8/21/2008 4:46:58 PM

GS $156.42 -1.15% ... ticks flat at $156.42

Jeff Bailey : 8/21/2008 4:45:48 PM

MER $24.34 -0.28% ... ticks $24.60.

Jeff Bailey : 8/21/2008 4:45:20 PM

SPY $127.80 +0.17% ... ticking $127.86 on NY AG announcements.

Jeff Bailey : 8/21/2008 4:34:09 PM

USO $98.18 +4.46% ...

FXE $149.24 +1.00%
FXY $91.90 +1.20%
FXB $188.32 +0.87% ...

DXY's 04:00 tick 76.104 -1.08% ...

Watch a gap tomorrow morning and DXY's WKLY, MNTHLY, QRTRLY Pivot correlations.

Jeff Bailey : 8/21/2008 4:27:13 PM

Watch a gap tomorrow morning and VIX.X WKLY, MNTHLY and QRTRLY S1 correlations.

Jeff Bailey : 8/21/2008 4:26:08 PM

VIX.X 19.82 at the close.

Linda Piazza : 8/21/2008 3:57:36 PM

VIX 19.56.

Keene Little : 8/21/2008 3:56:39 PM

It's a tough call but I think we could see marginally higher tomorrow before it turns back down. The downtrend line from August 11th is at 1285 or 1288, depending on which high is used for the lower high, so that's the upside potential that I see at the moment. It would be a good setup since the 1292 stop level is that much closer. But I'll say it again--the risk is to the downside and surprises now will likely be to the downside.

Linda Piazza : 8/21/2008 3:56:34 PM

All this violent thrashing around has allowed watchful credit spread traders to find opportunities to close out some of their SEP spreads, if those spreads were placed far out of the action and if traders are willing to give up some of their profits to lock in the rest and eliminate some risk. I've been using each hard bounce to exit bull put spreads and each hard decline to exit some bear call ones, so that I have only 25 contracts of RUT bear call spreads left out of the 90 contracts of full condors I started with for SEP, on various indices (RUT, SPX, OEX, and OIH). I gave up some of my profits, but with such violent action, I'm more than happy to lock in 60% or more of my original credit with weeks left to go in the SEP cycle. It seems to me that we're gearing up for something big soon, sometime in the next 8-10 weeks or so, and I'd just as soon not be suffering heart palpitations while we do it, whichever direction it might be.

So, I'm not telling you what to do, but just saying that you consider that if these wild swings deliver you a possible credit spread exit for something you consider a pittance, whatever that might be, you take it. If you're watchful each and every day, you'd be surprised how many times you can exit, times you wouldn't have even realized were possible if you hadn't been watching. Just something to consider. I'm not an expert but just someone like you, learning as I go.

Linda Piazza : 8/21/2008 3:49:12 PM

The VIX has bounced a little. It's at 19.47 as I type, having closed the last 15-minute period back above the potential S/R now at 19.45. The VIX exceeded the lower target and the potential support on 15-minute closes that had been at 19.48, but not by much. The violation did raise the specter that it could drop to sub-19 levels, but, for the VIX, it hasn't been a particularly convincing break of that potential support just yet. Now we have to see how it behaves, but I don't think bulls can afford to be complacent here. I still urge caution as the VIX tests this potential support.

Jeff Bailey : 8/21/2008 3:44:40 PM

Right? Long USO at $93 - $1.40 = $91.60.

Now sell the $105 call for $2.25, or OBLIGATION to sell for $107.25.

Jeff Bailey : 8/21/2008 3:41:39 PM

USO $98.13 +4.41% ...

VIX.X 19.48 -4.60% ... would have been "better" if VIX.X at 30.00 today, but that didn't play out.

Linda Piazza : 8/21/2008 3:42:55 PM

For a while, charts warned bears to temper their expectations if the OEX were to break down out of its bearish rising wedge. In some instances, such breakdowns are followed by sideways movements, I warned, rendering the wedge less effective as a prediction and sometimes just morphing a wedge into a regular old rising price channel. So far, that sideways movement is what's happening. What we could see next is the next thing that sometimes happens: the OEX rising toward or climbing along the underside of the rising trendline that used to be the wedge's support. The action so far has been a choppy rise off this week's low, and while I've been saying for at least two days that a rise toward 593-594 is about as likely as a drop toward 575-579 (now 575-578), I would now remain highly suspect of the rise. If the OEX can get past this first layer of resistance that began around 588 and keep punching higher, I would be particularly watchful for rollover potential from 593.33-594.25 and then again near 599.40-600. And, in case you haven't looked at a daily chart lately, I'd look at that chart each day, noting how many times the previous day's move was reversed either the next day or the day after that, and decide if I really, really wanted to carry my position home with me. The OEX has already moved into the lower part of that potential resistance band, and there's no guarantee that it will get up to 593.33-594.25, much less the higher level. It wouldn't be unusual to see a kiss-goodbye test, but it's not a given that it will occur, not with the shape this climb is taking.

Jeff Bailey : 8/21/2008 3:40:27 PM

For those that emailed me regarding being exercised on the IYS-TO into expiration, can now sell the Sep $105 Calls IYS-IZ for $2.25.

See your pivot chart.

Jeff Bailey : 8/21/2008 3:28:36 PM

Really should follow the "mid caps" should we?

Jeff Bailey : 8/21/2008 3:28:01 PM

RUT.X 728.74 -0.39% ... still trending lower 200-day SMA at 721.07. Starting to curl higher 150-day SMA at 709.

Jeff Bailey : 8/21/2008 3:24:09 PM

The "lower high" in the COMPX ... you KNOW what that is don't you?

Yes! Small cap and large cap differential.

Jeff Bailey : 8/21/2008 3:22:30 PM

At last night's close, and this could have been this week's Double Date "Charts of the Week"

30oTC Link

And COMPX with its 150-day SMA Link

Linda Piazza : 8/21/2008 3:21:46 PM

It looks to me as if the descending trendline off the OEX's 8/11 high is now at about 591.30, although that's just a guesstimate. The OEX has potential resistance on 30-minute closes now at 590.54, resistance that held the last 30-minute close. As I said then, though, until and unless the OEX closes 30-minute periods beneath the 9-ema on that chart, now at about 587.45, it hasn't changed the tenor that has brought it off its low of the day. If the OEX should burst through that resistance, next resistance shown here in 592.83 on 30-minute closes, but charts from 15-minute through daily show various types of resistance converging from the 588-594 zone.

Similarly, the OEX's 15-minute chart shows potential resistance at 590.53 on 15-minute closes, with the 15-minute 9-ema at about 588.45.

Keene Little : 8/21/2008 3:17:39 PM

SPX made it up into the potential resistance zone of 1280-1285. Watch for a short entry but understand it takes a rally above 1292 to suggest we're going to see a rally at least up to the 1320 area.

Jeff Bailey : 8/21/2008 3:16:57 PM

COMPX has tested its 150-day SMA in today's action. That's your 30-week bull %.

Jeff Bailey : 8/21/2008 3:16:17 PM

At last night's close, Dorsey/Wright's 10-week for OTC (TWOTC) was "bull alert" at 47.82%.

COMPX 2,382.98 -0.25% ... its 10-week SMA (50-day) below at 2,343.

Linda Piazza : 8/21/2008 3:15:00 PM

When you're making your end-of-day decisions today, you need to factor in the fact that Federal Reserve Chairman Ben Bernanke is scheduled to speak about financial stability in Jackson Hole, at the Federal Reserve Bank of Kansas City's Economic Symposium. I don't know whether there will be a Q&A session, but you can bet everyone will be listening attentively to anything our Fed chief has to say about financial stability. Also keep in mind that, whether in reaction to all these fears about defaults percolating through the markets these days or as some kind of prediction of rising risks, the TED spread has bounced from the 0.92-0.94 low it was testing 8/12 into today's 1.10-1.13 range. Just factor in these things as you decide how much risk, bullish or bearish, you're willing to take home tonight.

Jeff Bailey : 8/21/2008 3:13:11 PM

NYSE Comp. ($NYA.X) 8,320 +0.52% ... 50-day SMA "well above" at 8,527.

Jeff Bailey : 8/21/2008 3:12:17 PM

At last night's close, Dorsey/Wright's 10-week For NYSE (TWNYSE) was "bull correction" at 46.98%. Roughly 46.98% of NYSE-listed above their 10-week (50-day) SMA's.

Linda Piazza : 8/21/2008 3:11:27 PM

What economic releases are scheduled on foreign bourses for the overnight period? The minutes of the Bank of Japan's Monetary Policy Meeting wil be released at 7:50 pm ET. The U.K.'s revised GDP will be released at 4:30 am ET along with another release. At 5:00 am ET, the Eurozone's Industrial New Orders will be released.

Jane Fox : 8/21/2008 3:09:54 PM

The internals are much more bullish compared to earlier. AD Ratio is making new daily highs (top chart). AD volume (2nd chart) is making new daily highs and is now above 0. VIX is making new daily lows and the TRIN is well below 1. The bulls have the ball and there is no indication they plan on fumbling it at any point today. Link

Jeff Bailey : 8/21/2008 3:09:24 PM

DIA $114.52 +0.42% ... 50-day SMA "well above" at $115.28.

Jeff Bailey : 8/21/2008 3:08:31 PM

SPY $128.25 +0.52% ... probes its 50-day SMA (128.17) ... See last night's wrap.

Linda Piazza : 8/21/2008 3:02:29 PM

The OEX has potential resistance on 30-minute closes at 590.55, support that's holding so far. Until and unless the OEX produces 30-minute closes beneath its rising 30-minute 9-ema, the tenor that has brought the OEX off its low of the day has not changed. That 9-ema is now at 586.83. The 15-minute chart shows that the OEX may now have significant support a bit higher, near 587.75, the location of the 15-minute version of the 9-ema. OEX bulls don't want to see sustained values beneath either of those, but particularly below the 30-minute version. OEX at 589.33 as I type.

Linda Piazza : 8/21/2008 2:59:01 PM

The potential support for the VIX that was at 19.48 on 15-minute closes did not hold, of course, but the VIX sometimes overruns potential support by a bit, so I still urge bulls to exercise caution. That potential S/R level on 15-minute closes is now at 19.47. As I mentioned earlier, there was no guarantee that the VIX would find support at that level. There never is a guarantee with anything while trading, but in this case, I had mentioned that the 30-minute chart showed the potential that the VIX would move much lower. In fact, it suggests a possible downside target near 18.63. I think I would be careful about assuming that target would be hit, though, and I would still consider the VIX just testing the potential support on the 15-minute chart, remaining watchful for a bounce in the VIX. VIX at 19.36 as I type.

Jeff Bailey : 8/21/2008 2:58:07 PM

Horton hears a hoo ... DR Horton (DHI) $11.40 +6.24% ... #455 weighting in SPX at 0.03%.

Jeff Bailey : 8/21/2008 2:56:46 PM

Pulte Home (PHM) $13.23 +3.60% ... #462 weighting in SPX at 0.02%.

Jeff Bailey : 8/21/2008 2:55:17 PM

Centex (CTX) $15.03 +6.89% ... #487 weighting in SPX at 0.02% ... a "heavyweight" here.

Jeff Bailey : 8/21/2008 2:54:18 PM

Lennar (LEN) $11.43 +5.44% ... #491 weighting in SPX at 0.01%

Jeff Bailey : 8/21/2008 2:53:26 PM

KB Home (KBH) $18.19 +4.48% ... #496 weighting in SPX at 0.01%.

Jeff Bailey : 8/21/2008 2:51:36 PM

Toll Bros. (TOL) $22.78 +4.68% ... decent pop after backtest yesterday of correlative 150-day and 200-day SMA.

Jeff Bailey : 8/21/2008 2:49:12 PM

VIX.X alert! 19.30 -5.48% ...

Linda Piazza : 8/21/2008 2:46:54 PM

If the OEX can hold onto gains above yesterday's 588.62 high, it's perhaps made a saucer or bowl-shaped bottom (not "the" bottom but a short-term one) over this week's trading pattern. The trouble is, with the descending trendline off the 8/11 high now at about 591.60 and with the whole 588-594 zone awash with potential resistance levels, I'm not sure we can feel any confidence yet that the OEX can hang onto its gains. I'm sure when people were looking back last week's "V" shaped recovery off the 8/13 low, many felt optimistic that the OEX was just going to keep on going. Keep your expectations in check. OEX at 588.93 as I type.

Jeff Bailey : 8/21/2008 2:44:00 PM

INDU +0.21%

SPX +0.31%

NDX -0.10%

RUT -0.35%

Jeff Bailey : 8/21/2008 2:43:23 PM

NYSE +0.48%

COMPX -0.16%

Jeff Bailey : 8/21/2008 2:43:02 PM

Can see some "come together" in your US Market Watch ...

Jeff Bailey : 8/21/2008 2:42:24 PM

XLF $20.10 ... comes to WKLY S1.

SPY $128.11 +0.41% ...

Jeff Bailey : 8/21/2008 2:40:08 PM

5-year up 5.4 bp at 3.066% . Daily R1 at 3.084%. WKLY Pivot higher at 3.131%. Has been "sloppy" at WS1 3.031% this week.

Jeff Bailey : 8/21/2008 2:38:39 PM

Pimco's Rodosky saying "prefers agency MBS vs. Treasuries despite GSC concern.

Jeff Bailey : 8/21/2008 2:36:14 PM

Me think'um lots of "oil" and "gold" long put selling today.

Jeff Bailey : 8/21/2008 2:35:49 PM

VIX.X 19.61 -3.96% ... DAILY S2 here.

Linda Piazza : 8/21/2008 2:34:38 PM

The VIX is now approaching potentially strong support on 15-minute closes now near 19.48. The 30-minute chart suggests that it could still dive further, so this close approach is no guarantee that the VIX will bounce and equities will turn lower, but it is a sign that bulls need to cinch up their just-in-case profit-protecting plans. I've hidden all chart lines on the following chart except the Keltner level I'm referencing and the Fib bracket anchored at that potential target and potential support near 19.48 so you can see what I'm seeing: Link

Jeff Bailey : 8/21/2008 2:32:34 PM

Probably a "spread trader's dream"

Jeff Bailey : 8/21/2008 2:31:44 PM

SPX 1,275.74 +0.09% ...

Jeff Bailey : 8/21/2008 2:31:09 PM

Double date of opposites ... still

Jeff Bailey : 8/21/2008 2:30:42 PM

OIX 836.28 +2.31% ... DAILY R2 834.92 and WKLY R2 830.95.

Jeff Bailey : 8/21/2008 2:29:13 PM

XLF $20.02 -1.62% ... DAILY Pivot $20.08 and WKLY S2 $20.10.

Keene Little : 8/21/2008 2:24:05 PM

Updating the SPX 60-min chart shows the possibility for a bounce up to the 1280-1285 area before heading lower again. A break above 1286 would be a little bullish and above 1292 very bullish (for a potential move up to at least 1320). The choppiness of the bounce over the past two days has me thinking it will fail soon and roll back over. Link

Jeff Bailey : 8/21/2008 2:21:40 PM

XOM $80.35 +1.95% ... DAILY R2 $80.12. WKLY R2 $79.93.

Jeff Bailey : 8/21/2008 2:20:20 PM

CVX $88.58 +2.41% ... WKLY R2 $88.73 marking high. DAILY R2 $88.25. CVX gapped its DAILY R1 $87.33.

Linda Piazza : 8/21/2008 2:19:38 PM

Potential resistance on 15-minute closes for the OEX is now at about 588.30 and then 590.19. For the last several hours, each pullback has seen the OEX find support on 15-minute closes at its 9-ema, now at 586.80, and on 30-minute closes at its 9-ema on that chart, currently at 586.16. I would think then, that for anything to change in the tenor that has brought the OEX up off its low of the day, it would have to form consistent 30-minute closes beneath 586.16. OEX at 587.79 as I type.

Jeff Bailey : 8/21/2008 2:18:59 PM

IBM $122.48 -0.02% ... Session low has been DAILY S1. WKLY S2 right here.

Session high has been DAILY Pivot ($122.84).

WKLY "stronger" than daily, so caution advised.

Jane Fox : 8/21/2008 2:20:41 PM

Crude is now back to $120.00 and you have to wonder if $120 is now support turned resistance turned back to support.

Jeff Bailey : 8/21/2008 2:17:05 PM

YM's DAILY Pivot is 11,381

Session low was DAILY S1 (11,311).

WKLY S1 now in play 11,451

YM 11,412

Jeff Bailey : 8/21/2008 2:13:54 PM

Here's a calculator that also gives you the math (I use in Excel Spreadsheet) Link

Jeff Bailey : 8/21/2008 2:11:22 PM

Would need QRTRLY and MONTHLY to see if there's an arb trade.

Jeff Bailey : 8/21/2008 2:10:33 PM

SLV $13.68 +3.79% ... "well off" its 12/31/07 close (14.70).

Jeff Bailey : 8/21/2008 2:05:51 PM

USO $97.77 +4.03% ...

Jeff Bailey : 8/21/2008 2:05:21 PM

FXE $149.03 +0.85% ...

Jeff Bailey : 8/21/2008 2:04:50 PM

DXY 76.20 -0.97% (30-minute delayed) ...

Jeff Bailey : 8/21/2008 2:03:23 PM

GLD $82.10 +2.54% ... sellers firm at 12/31/07 close and correlative MS2.

Linda Piazza : 8/21/2008 1:39:06 PM

Funny, Keene. (Keene's 1:30 post.) I've been thinking of other tests I learned about long ago in a psychology class, tests in which someone was jolted at random times with enough electricity to be painful. Not every wrong response resulted in a jolt. That person tended to react negatively to every other test setup, whether jolted or not, whether fairly certain that the response being given was the correct one or not. The randomness seemed to cause more fear than consistent shocks with wrong answers. You'd think that after some of the wild swings that we've had that days like the last three would be restful by comparison, but we've all been jolted a few times and it's anything but restful wondering when the next jolt was going to come.

Linda Piazza : 8/21/2008 1:34:22 PM

The OEX has so far turned back a little from the descending trendline off yesterday's morning high, but the pullback isn't big yet. Just be careful to manage your expectations today just as carefully as you manage your trade and account risks. The OEX tests resistance and it tests support, and each time, it looks as if a breakout might be imminent, but so far there have been no breakouts. Furthermore, Keltner bands suggest that the OEX might slam into either resistance or support immediately after breaking out, either direction.

Keene Little : 8/21/2008 1:30:37 PM

Have you ever seen the video clip (on America's Funniest Home Videos maybe) of the dog pushing a rock all around the yard, going nowhere in particular? I'm reminded of that while watching the market today.

Linda Piazza : 8/21/2008 1:24:01 PM

Potential resistance on 15-minute closes for the OEX is 588.34 and then 590, so watch for rollover potential beginning about there. Actually, watch for it now as the OEX tests the descending trendline off yesterday's high, with that trendline at about 587.36, if my guesstimate is correct. OEX at 587.31 as I type. The A/D line is testing potentially strong resistance, too, at about -535 on 15-minute closes, resistance that has so far turned it back each time tested today. A/D line at -539 as I type.

Linda Piazza : 8/21/2008 12:48:38 PM

I wasn't surprised when I looked at the TED spread, however, with that spread considered a measure of actual or at least perceived default risk. ("Perceived" was used because sometimes I've suspected that it's reacting to and not in advance of heightened risk.) Week before last, I began mentioning that the TED spread had dropped into particularly strong support near 0.92-0.94, and that equity bulls wanted the TED spread to drop through that support since equities tend to perform better when default risk is dropping. However, I warned that could be strong support, and it did end up being support. The TED spread has now risen and is last, as of my delayed feed, at 1.11, back through the 0.98-1.00 S/R level again. I wouldn't be surprised to see it chop around for a while in the 1.07-1.16 range before it decides on a final direction, however, as it did so the last time it moved through that zone. For now, we know that the TED spread has been generally rising over the last week to ten trading days.

Linda Piazza : 8/21/2008 12:42:35 PM

Thursday is the day that the Federal Reserve releases figures on outstanding commercial paper, a measure of how tight credit might be right now. For newbies, declining outstanding paper is a sign that corporations and businesses are not able to place commercial paper and so are forced to go to banks to fund their short-term needs such as operational costs. I got a big surprise when I looked at that figure today. Outstanding commercial paper had risen $40.5 billion this week. That rise is coming from non-financials, though, with asset-backed paper continuing to drop.

Jane Fox : 8/21/2008 12:38:05 PM

The VIX and the S&P futures are trading in sync today and supporting the bulls. Link

Linda Piazza : 8/21/2008 12:35:48 PM

Similarly (see my 12:32:03 post), the OEX, too, is just chopping around. One moment, it looks more likely to rise toward next Keltner resistance now in the 588.40-590.75 range on the 15-minute and 30-minute charts. A few minutes later, it looks more likely to fall toward potential support now at 579.20-580.36 on the 15-minute and 30-minute charts. Neither setup is trustworthy and so we have about the same information we've had for two days now: not much. On a broader basis, we still have to factor in the possibility of a larger drop stairstepping down toward support currently at 575-578.50 or perhaps even to the next level, near 568-570, or zipping higher toward resistance currently near 588.40-590.75 or even higher, toward 593-594.

Linda Piazza : 8/21/2008 12:32:03 PM

The A/D line again approached what has been significant resistance today on 15-minute closes, with that now at -545. The previous 15-minute period had a high of -570 but the A/D line is currently -890. Bears, don't get too excited, though, because it's just chopping around within the range established the first 45 minutes of trading. Anything can and may happen.

Jeff Bailey : 8/21/2008 12:29:37 PM

Stepping away for a couple of hours ...

VLO $33.80 -3.06% ... good work yesterday.

Jane Fox : 8/21/2008 12:23:45 PM

WASHINGTON (MarketWatch) -- U.S. leading economic indicators fell 0.7% in July, pointing to "slow growth the rest of the year, and possibly an economy grinding to a halt," the Conference Board reported Thursday.

"If there's a second-half recovery, it'll be the second half of 2009," said Ken Goldstein, labor economist at the private research organization. "The recent decline in gas prices isn't enough to overcome all the negative momentum that's been building up."

Five of the 10 indicators declined in July, led by building permits, stock prices and jobless claims. Three of the indicators rose, led by the interest-rate spread and consumer expectations. The large decline in the index in July overstates the deterioration in the economy, analysts said. The building permits and jobless claims data were distorted by one-time factors. Excluding those factors, the index maintained its modestly negative trend.

Jeff Bailey : 8/21/2008 12:24:43 PM

QQQQ $46.66 -0.91% ... under its conventional 38.2%, but holding WKLY S2.

Jeff Bailey : 8/21/2008 12:22:42 PM

IWM $72.45 -0.75% ... session low has been, been $72.05

Jeff Bailey : 8/21/2008 12:21:34 PM

SPY $127.61 +0.02% ... inches green.

Jeff Bailey : 8/21/2008 12:21:01 PM

Swing trade put setup cancel order alert! ... for the UAL-UV (from 11:43:36)

UAUA $11.71 -5.56% ...

Jeff Bailey : 8/21/2008 12:19:08 PM

NYSE Comp. 8,284.80 +0.09% ... inches green.

RLX +0.08%, HMO +2.10%, OIX +2.18%, OIH +2.15%, XNG +0.86%, UTH +0.75%, HUI.X +6.13%, DJUSHB +2.26%

Jane Fox : 8/21/2008 12:18:22 PM

Crude has hit a high of $122.04 and I think that is it for the day. Link

Jeff Bailey : 8/21/2008 12:11:36 PM

USO / PBR ... now a 60-minute interval (just dumped a partial long in PBR at $53.90) Link

Jeff Bailey : 8/21/2008 12:02:11 PM

USO / PBR daily interval montage (QRTRLY/MNTHLY Pivot Retracement) Link

Linda Piazza : 8/21/2008 11:51:42 AM

The A/D line is again approaching potentially strong resistance on 15-minute closes, at about -530 down to -600. The A/D line is now -762. The A/D line has twice popped above this particular resistance line this morning, only to be pushed back. As that potential resistance is approached again, it's time to spiff up your profit-protecting plans for bullish trades, in case of another rollover. Bulls of course want sustained 15-minute closes above that resistance.

Jeff Bailey : 8/21/2008 11:50:39 AM

DJUSHB 282.84 +1.56% ... pops above its 21-day SMA.

Keene Little : 8/21/2008 11:47:25 AM

No change to the picture from this morning. The sideways consolidation in the DOW and SPX since yesterday continues to look bearish. The choppy decline for the RUT and NDX continues to look bullish (potentially). The fractured market looks bearish but I can't discount the possibility for another rally leg as part of a larger correction in the DOW and SPX while the RUT and NDX bounce to correct their declines. So I sit and I wait for clarity.

Tab Gilles : 8/21/2008 11:46:36 AM

NatGas $8.272 Link

Weekly EIA Report: Link DOE News: Link

Jeff Bailey : 8/21/2008 11:46:35 AM

USO $97.91 +4.18% ...

Jeff Bailey : 8/21/2008 11:46:20 AM

Petroleo Brasileiro (PBR) $53.71 +3.96% ... nearing QS1 $55.00 and overlapping MNTHLY 38.2% $55.15.

Jeff Bailey : 8/21/2008 11:43:36 AM

Swing trade put setup alert! ... to buy two (2) of the UAL Corp. UAUA Sep $12.50 Puts (UAL-UV) currently $2.40 x $2.45 should UAUA trade $12.10 today.

UAUA $11.73 -5.40% ...

Tab Gilles : 8/21/2008 11:34:25 AM

Chesapeake Energy (CHK) $49.43 +$0.80

Well so much for demand destruction in the energy markets...as geopolitical issues are the focus now. We had a surprise build in crude yesterday and today an 88BCF build in Natural Gas and still energy prices rise.

As for CHK...I'm targeting $51/$52 as a price objective. Thus far today the stock saw an intra-day high of $50.13. The suggested Jan '09 calls have been performing nicely, CHK-AJ, CHK-AK, CHK-AL & CHK-AM.

Jeff Bailey : 8/21/2008 11:28:39 AM

SPX Heavyweights Link

Tab Gilles : 8/21/2008 11:25:00 AM

Celgene (CELG) $71.11 -$1.23 (1.7%)

Celgene is rolling over, similar bearish divergent patterns to May & Oct 2007 and May 2008. First support level at 50-ma around $70, PnF has $64 P/O, followed by 200-ma $62. Link Link

Linda Piazza : 8/21/2008 11:23:55 AM

The OEX is testing a rising trendline off yesterday's low, now crossing at about 583. I don't know if that trendline is going to hold, but the OEX has been forming a triangle based on yesterday's earliest low and yesterday's earliest high, with upper and lower boundaries now at about 583 and 587.70. If those boundaries are broken, then watch for next support or resistance at yesterday's low of 581.15 and high of 588.62. The 15-minute chart pinpoints support and resistance just outside those highs and lows, however, so factor in the possibility of a bit bigger move before stronger support or resistance is found.

In other words, I'm not sure this little triangle on the intraday charts says much at all about next direction, as any breakout could just move outside its boundaries 3-4 points and then find support or resistance again.

Linda Piazza : 8/21/2008 11:14:43 AM

The A/D line has been drifting lower again since about 10:00 but hasn't yet broken below the previous -1080 low of the day. If it does, one potential target is about -1400, where support might be found. For now, however, we just have what we've seen on the equities: chop.

Jane Fox : 8/21/2008 10:54:13 AM

Once Crude broke through $120 it was Nelly hold back the horses.

Jane Fox : 8/21/2008 10:53:36 AM

Well I have just got back all the losses I built up earlier today and they were substantial.

Linda Piazza : 8/21/2008 10:52:35 AM

Absolutely no telling details here that are going to show next direction. Some might begin to factor in the possibility that this sideways consolidation along the daily 30-sma and the failure to maintain any bounces above it are beginning to look a bit more bearish than the test of the 30-sma itself looked. For now, however, OEX traders must factor in the possibility of a drop toward the 575-578.30 zone or a climb up toward the 588-593 zone, as either looks possible.

Jane Fox : 8/21/2008 10:52:16 AM

Maybe I should start a blog on trading Crude. It certainly helps to write (talk) about all the trials and tribulations.

Jane Fox : 8/21/2008 10:47:23 AM

You have no idea how hard it is to put another trade on when you are just ticked out of two trades.

Jane Fox : 8/21/2008 10:49:04 AM

This is the ying and yang of trading and in life - everything has a trade off.

Jane Fox : 8/21/2008 10:45:32 AM

I have switched to trading the Crude Emini, QM because it smoothes out a lot of the chop you get with the big contract, CL but today even the mini contract is choppy.

QM may smooth out a lot of the chop but it does add other issues that I did not have to deal with when trading CL. Because the volume is much less you get the feeling that they are able to "come for you." Twice today I was just ticked out of a trade and it turned on me and went to full profit. If this happens once you say Oh well just a coincidence but twice you start to realize that it was more than just a coincidence.

Jane Fox : 8/21/2008 10:44:44 AM

Crude breaks through $120.

Keene Little : 8/21/2008 10:42:58 AM

The techs and small caps are making new daily lows and that's obviously not good for the broader market. But the pattern of the decline since yesterday morning looks more like an ending pattern rather than the start of something more serious to the downside. Bullish divergences are showing up on the 30 and 60-min charts. Bottom line is we've got a mixed up market with lots of choppy price action and I don't see a good trade setup in any of the major indices. There are too many conflicting signals.

However, the one bearish thing I see is the sideways consolidation in the blue chips while the techs and small caps chop their way lower. This chopping lower could in fact lead to a stronger decline (think waterfall appearance to the decline starting from yesterday's high). So while I continue to see greater downside potential I don't like the setup enough here to suggest new short entries. Continue to hold short if you're short from last week or earlier this week.

Keene Little : 8/21/2008 10:26:07 AM

The bounce off this morning's low was expected and it still looks corrective so it remains a market that looks like it will continue to consolidate sideways for a bit more.

Jane Fox : 8/21/2008 10:25:11 AM

Crude's high for the day is $119.99 Too funny!

Jane Fox : 8/21/2008 10:23:49 AM

Yup it did. Crude sellers are not going to let the buyers break $120 easily.

Linda Piazza : 8/21/2008 10:23:44 AM

As of this moment, the OEX's intraday charts provide no more clarity than they did before the market opened. The 30-minute chart shows a slightly higher likelihood that the OEX will rise toward 588 than that it will drop toward 581.80. However, the 15-minute one shows the opposite: a slightly higher likelihood that the OEX will drop toward 580.30 than that it will rise toward 588.60-589.70. And, those change moment by moment.

Jane Fox : 8/21/2008 10:20:09 AM

I would not be surprised to see it sell off again here.

Jane Fox : 8/21/2008 10:19:37 AM

Crude taking another run at $120

Jane Fox : 8/21/2008 10:12:18 AM

Crude traders are real jittery today and Crude is getting pushed and pulled everywhere.

Jane Fox : 8/21/2008 10:08:53 AM

Crude made a high of $119.94 and quickly sold off. No surprise there.

Jane Fox : 8/21/2008 10:05:47 AM

The TRIN at 0.77 is telling me the bulls are lurking and I so see the AD line and volume climbing, albeit still under 0.

Linda Piazza : 8/21/2008 9:58:52 AM

The bounce in the A/D line has strengthened a bit now with the generals indeed leading the way so far. I would watch for potential resistance for the A/D line near -700 up to -550, however. A/D line at -862 as I type.

Linda Piazza : 8/21/2008 9:49:14 AM

The TRAN has touched a lower low than yesterday's and is only slightly off that low. The A/D line begins a little bounce, but it's not much of one yet; certainly nothing like the caliber of the one we're seeing on the OEX as it's not impressive at all just yet. These aren't supporting the strong OEX bounce, but there's always the chance that the generals are going to lead the troops higher. The VIX and TRIN have pulled back off their early morning highs, so evidence is mixed, but I don't yet trust the OEX bounce and would urge some skepticism, at least enough to keep your profit-protecting plans updated if you've been thinking bullish.

Keene Little : 8/21/2008 9:49:36 AM

The metals (and oil) are getting a bounce after being sold off hard from the July 15th high into last week's low. Silver had a cleaner pattern in its decline from July than gold's although both look very similar in their larger move down from March. My last update on silver (YI, September contract) on Friday, August 15th showed an expectation for the 5th wave down to finish the leg down from July and a reversal back up to at least correct the decline ( Link ).

We've seen a bounce this week in the metals and oil and it should have more to it for a couple of weeks. Assuming we'll get a bounce up into the 50% retracement area (15.86) it could take us into early September where I'll then be able to evaluate the potential for a higher rally (green) or a turn back down to new lows into the end of the year. Updated daily chart: Link . Gold's chart (YG, December contract) has the same setup and shows the potential for a bounce at least back up to 880-890: Link

Linda Piazza : 8/21/2008 9:42:54 AM

The OEX is attempting to steady on its 30-sma again. With a low so far of 582.60, it has not yet made a close approach to potential support on 30-minute closes now at 582.10 much less to the lower potential support on the 15-minute chart. Until and unless it can sustain 15- and 30-minute closes above about 585.30, however, that 582.10 level, at least, must be considered a potential target.

Jane Fox : 8/21/2008 9:40:53 AM

However, the VIX is falling which is bullish and I see the S&P futures following with new daily highs.

Jane Fox : 8/21/2008 9:38:42 AM

AS Linda noted the AD line is quite bearish at it current reading of -1177

Linda Piazza : 8/21/2008 9:37:52 AM

Keltner outlook on the A/D line: The A/D line is negative and in the lower or bearish half of its 15-minute Keltner chart, of course. It's got a potential downside target of about -1375, with the A/D line being at -1079 as I type.

Jane Fox : 8/21/2008 9:22:47 AM

Crude has hit a high of $119.75 so far this morning.

Linda Piazza : 8/21/2008 9:11:34 AM

At least yesterday when OEX traders were busy reversing the previous day's range, or mostly so, they didn't have to work so hard. The previous day's range wasn't as big as some of those that were reversed the next day as the OEX has thrashed its way higher off the July low and now begun to thrash its way lower off the August high.

At least since 8/06 and maybe earlier, I've been mentioning that bears should temper their expectations if the OEX should break down out of its rising wedge as it might just be broadening that wedge into a regular old rising channel with parallel boundaries. By last week, I was mentioning the daily 30-sma as a possible spot where a decline might stall. That 30-sma did provide at least temporary support with the daily 30-sma currently at 584.39.

If futures are telling the correct story, we'll see another test of that moving average this morning. Will it continue to hold as support on daily closes? Here's where predictions get tricky. With each test of the 30-sma, it becomes as likely that the OEX will drop toward 575-578.50 (slight change) as that it will climb toward 590-594. So far, OEX bulls and bears have been fairly evenly matched and the OEX has been producing smaller-bodied candles along the 30-sma for the last few days. As long as they're fairly evenly matched, that consolidation could continue, but each time the daily 30-sma is tested, bears must factor in the possibility of a bounce back toward 590-594 and bulls, the possibility of a drop toward 575-578.50.

Do intraday charts help any? Not a lot. The 30-minute chart suggests that if the OEX should drop as hard as futures' action suggests equities could drop, it could retest potential support on 30-minute closes currently at 582.40 but bound to be closer to 582 if the OEX drops hard at the open. The 15-minute chart pins strong support a bit lower, at 580.96, but probably closer to 580.50 if the OEX drops hard at the open. So, if the OEX drops as hard as futures suggest that equities could drop, then traders should watch for potential first support at 580.50-582, on 15-minute and 30-minute closes. If that's pierced and the OEX doesn't bounce right back up, then the 30-minute chart suggests that the OEX could head toward 578.50 or perhaps closer to 578, where next support might be found. What happens then? We have to see. The possibility of stair-stepping lower over the next days or weeks to 575 and 568-570 exists, but most people believe it will not be until September or October that we get a retest of the July lows. Markets sometimes make fools of any of us who try to make predictions, so always remember that vulnerability when you decide how much risk to take on.

Although futures action has been a fair predictor of what might happen with early cash market behavior lately, with a few exceptions, we have to look at the reality that it doesn't always do so. If the OEX should drop, but not drop as hard as futures action is predicting, watch for first potential support in the 585.75-586 zone. If the OEX should climb, watch for strong resistance on 15-minute closes to kick in near 589-595.50.

Keene Little : 8/21/2008 9:06:49 AM

Equity futures dropped steadily during the overnight session, consolidated during the hours the European markets have been trading and then dropped to new lows since 8:30 AM. We've got a negative open facing us and as of right now a complete retracement of yesterday's afternoon bounce. The trouble with the short term price pattern, since Tuesday morning's low, is that it looks like we could continue to see more sideways consolidation before heading lower again. So this morning's drop may not see follow through but bounce back up instead.

Jane Fox : 8/21/2008 8:58:49 AM

If the SPX is going to reach 1320 this week the bulls have a lot of work to do today and tomorrow. Link

Jane Fox : 8/21/2008 8:57:02 AM

I predicted we would see Crude at $120 before it broke $110 and that does seem to be the case. I also predicted the SPX would see 1320 this week so I'm not feeling all that smug. Link

Jane Fox : 8/21/2008 8:53:59 AM

Here are the overnight charts. A steady move down then consolidation at overnight lows which just happen to be previous day lows for ER2 and NQ. Link

Jane Fox : 8/21/2008 8:54:09 AM

Remember we still have the:

10:00a.m. Aug Philadelphia Fed Business Index: Expected: -13.5. Previous: -16.3.

10:00a.m. Jul Conference Board Leading Indicators: Expected: -0.2%. Previous: -0.1%.

Jane Fox : 8/21/2008 8:45:46 AM

WASHINGTON (MarketWatch) - The number of new claims for state unemployment benefits fell by 13,000 to 432,000 last week, and the number of claims under a new extended federal program rose by 714,000 to 1.28 million, the Labor Department reported Thursday.

The new federal program just underway allows unemployed workers who've exhausted the typical 26-weeks of eligibility for state benefits to get an additional 13 weeks of federal relief.

The new federal program has skewed new claims for state benefits higher in recent weeks, as some of those filing for the federal program instead found they still were eligible for state benefits. The government does not know how many of the 432,000 new state claims were due to the publicity about the federal program.

Market Monitor Archives