Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jeff Bailey : 8/23/2008 2:23:36 AM

The VP offer I'd like to see a response to is on the Republican side.

I would think more notably bullish response if Romney were on the ticket.

Jeff Bailey : 8/23/2008 2:11:17 AM

Futures, currencies closed, so unable to measure any response.

Jeff Bailey : 8/23/2008 2:10:50 AM

DJ- Obama Offers VP Spot To Biden, Who Accepts

Jeff Bailey : 8/23/2008 2:08:08 AM

Max Pain on a post-expiration week table at this Link

Some "gravitational pull" lower after last week's option expiration.

SMH actually slipped below $30.00 after starting out $0.40 above.

XOM actually comes ABOVE its 8/18/08 tabulation as one single stock observation.

I'll get any updated Max Pain values for the start of next week. I'll also update the SPX and INDU weightings (they change each day, but I'm trying to post at least once a week).

Jeff Bailey : 8/23/2008 1:39:45 AM

How the SPX Heavyweights performed this week at this Link

I placed +/-2.5% collars from SPX 5 and 20DyNet% . +/-8.0% collars on YrNet%.

Notice VIX.X ... Not a very good indicator for PRICE direction is it? Great for determining amount of put buyers/call sellers vs. call buyers/put sellers and option premiums though.

Jeff Bailey : 8/22/2008 11:22:25 PM

Closing U.S. Market Watch at this Link

NYSE volume was very light today at 3.74 billion changing hands. Advancers outpaced decliners by a hefty 2,224:861. 17 issues traded a new 52-week high, while 61 issues traded a new 52-week low.

Nasdaq volume was just 1.40 billion. Traders probably not making too many bets doing into the DNC and RNC as well as a long Labor Day weekend and last chance for the summer to get up to the beach house. Advancers outpaced decliners by 2007:823. 42 issues traded a 52-week high, while 92 issues traded a 52-week low.

Four (4) stocks traded a new 52-week high among the S&P 500 components compared to 3 new lows.

The Russell 2000 reported 13 new highs and 12 new lows.

OI Technical Staff : 8/22/2008 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The Market Monitor has been archived.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 : 8/22/2008 5:38:25 PM

Dorsey's DXY chart Link

Some "change from the past" showing up here too. Sell signal, after sell signal, after sell signal.

Then a double top "buy signal" at 73.50 in May (5), which reversed 3-boxes back lower. Gave a rather "small" bullish vertical count. (to 78.00)

Then a 3-box reversal back up to 73.50 in June (6) and a 2nd consecutive "buy signal" at 74.00.

Then the DXY acts as it had and reverses back lower and gives a reversing lower sell signal.

But then "boom!" It whips back higher, as if traders/investors caught off guard. Give a reversing higher "buy signal" at 74.50, where current column of X build the bullish vertical count to 88.50.

DXY at what should be a formidable resistance level near-term.

One change the PnF chartist will pick up on is this ...

Sell, sell, sell, sell, sell, sell, sell, sell, sell.

Then, buy, buy, sell, buy.

Jeff Bailey : 8/22/2008 5:24:50 PM

RUT.X 737.60 +1.70% ... not able to see two (2) weekly closes ABOVE its 150-week SMA. Link (test from last Friday close observation)

I'll make a note here.

Last night, as I was reviewing various PnF charts from Dorsey/Wright, I noticed an "Alert!" from Dorsey that the RUT.X was "1 box away from RS Sell Signal."

Today's gain has that "Alert!" removed.

However, this would suggest to me that this week's low for the SMALL CAP RUT.X could be important support.

Probably some DISCIPLINED bears this week on pullback to the recent "bullish triangle" and the "spread triple top" breakout Link

Jeff Bailey : 8/22/2008 5:09:15 PM

One reason I do think oil saw its biggest percentage daily decline in years today, is the DIVERGENCE of what we've seen in the DXY in recent quarters.

Yesterday's sharp percentage decline usually found currency traders dumping the dollar further the following day.

Today, DXY gains just about all of yesterday's decline back.

Oil action today, combined with DXY action today suggests at a MINIMUM that there's still some $/oil traders out there.

Jeff Bailey : 8/22/2008 5:05:02 PM

USO $92.54 -5.77% ... YTD, USO up 22.15%.

Jeff Bailey : 8/22/2008 5:03:55 PM

Venezuela Finance Minister ... Expects 6.7% GDP growth for 2008.

Jeff Bailey : 8/22/2008 4:41:32 PM

DXY's 04:00 tick 76.81 +0.93% from yesterday's 04:00 tick.

USO $92.54 -5.77% ...

Jeff Bailey : 8/22/2008 4:38:23 PM

SPX 1,292.20 +1.13% ... Link and Link . Off 6.00 points, or -0.46% for the entire week. A little suspense Tuesday/Wednesday, but back "in the zone".

Should get some suspense Monday and Tuesday at MONTHLY Pivot and "old" downward trend.

Jeff Bailey : 8/22/2008 4:07:58 PM

SSO $62.20 +2.53% ...

LONG SUC-IJ (see 08/08/08 MM) $2.45 x $2.75

SOLD COVERED (see today's MM) SSO-IN $0.75 x $0.90.

VIX.X 18.78 -5.24% ...

Linda Piazza : 8/22/2008 4:04:12 PM

I don't know about the rest of you, but I think I need to go see my doctor for a prescription for Dramamine before next week's trading opens. I'm kidding, of course, but the confusion caused by this market's violent thrashing is no joke. Take it easy this weekend. Do something that renews your energy and your confidence in yourself. You may need both next week.

Linda Piazza : 8/22/2008 4:02:13 PM

Hmm. I was just reviewing the requirements for an evening star pattern on Candlestickchart's site. They don't require that the third candle close at least 50% into the body of the first candle, as I was requiring. Their requirements, quoting them: "In an uptrend, the market builds on strength on a long white [green, for most of us] day and gaps open on the second day. However, the second day trades within a small range and closes at or near its open. This scenario generally shows an erosion of confidence in the current rend. Confirmation of the trend reversal is the third black [red, for most of us] day." Here's what we have on the OEX's weekly chart, for the last three candles (the "days" referenced in that quotation: Link To me, it's so far a weak confirmation with that spring off the low for the week. If next week sees a decline but a decline within week before last's range, then I would be on the lookout for another reversal, this one higher. If next week sees a stronger decline than that, then I of course wouldn't be. And if next week produces a strong climb with no decline, we start all over again.

Jeff Bailey : 8/22/2008 4:01:05 PM

Wachovia Bank (WB) $14.35 -2.04% ... and the WB-UC (see recent 08/19/08 MM profile). This is our "protection" for the SUC-IJ while I'm away.

Jeff Bailey : 8/22/2008 3:54:17 PM

FXE $148.13 -0.74% ... Link

For now, just a "back fill" of yesterday's rebound, but if it was just some BEARISH profit taking, and the euro takes out the recent lows, then the hedges that were put on (buy euro/buy oil) earlier this year, could unravel further.

Jeff Bailey : 8/22/2008 3:48:47 PM

I tend to side with Goldman's view that GLOBAL demand destruction isn't going to be seen anytime soon.

I'm not so sure I agree with the $/euro not having a still meaningful roll to play.

Jeff Bailey : 8/22/2008 3:46:18 PM

I'm going to be in and out of the office next week, and out of the office from 09/01 to 09/05.

Yesterday I commented on a trade strategy of selling a covered call on the USO (not an official MM profile/trade) for a couple of traders that had been exercised on some USO Aug $93 Puts (IYS-TO) (see 07/16/08 sell entry $1.40, then 08/01/08 buy back of that put for $0.75) exit.

If I were going to be here to monitoring things on a more frequent basis, I'd certainly consider profiling the selling of another out-the-money NAKED USO PUT, if you felt comfortable being able to HEDGE the trade should oil continue to decline.

One RISK for further decline is if a HURRICANE shows up in the Gulf of Mexico.

That would have a greater possibility for FURTHER WEAKNESS in oil.

Today's close BACK BELOW Wednesday's Sep Crude Oil futures termination benchmark viewed as somewhat BEARISH.

As such, I'm NOT going to profile the trade, but if you're comfortable in SELLING SOME PREMIUM with USO $92.62 -5.69%, and ABLE to assess and manage the trade, this is a decent time to do it.

VIX.X -4.69% here.

Thinking is, "even if" crude reteats further, then broader equity either steady to higher next week or two.

VIX.X falls further, and premiums fall further.

DNC and RNC next two weeks, and I would think dollar/euro starts to find consolidation range.

Oil has made a pretty sharp decline, and barring a HURRICANE smack into the gulf and REFINERY operations along the gulf, then oil prices chop sideways.

Again, NAKED (call or put) oil with geopolitical (Russia and Middle East) as well as HURRICANE season growing further near, I'm just not comfortable profiling such a trade, if I'm not able to follow it with you.

Keene Little : 8/22/2008 3:38:59 PM

Into the last 30 minutes of the day and it's looking like we'll have to wait until Monday for the answer to the bull-bear battle here. As shown on the daily chart and 60-min chart, SPX is tucked up tight under its downtrend line from May and its broken uptrend line from July 15th. A gap up over resistance and run higher on Monday would clearly be bullish. A kiss goodbye against resistance would be bearish. I know which way I'm leaning but each needs to make their own decision here, especially if you're going to risk holding a position over the weekend.
Daily: Link
60-min: Link

Linda Piazza : 8/22/2008 3:35:28 PM

Once again, the OEX's potential support on 15-minute closes now at 595.49 has held into a 15-minute period and the OEX rises. Potential resistance at 596.80 (trendline) and 597.17 and 598.83 (Keltner, on 15-minute closes). The OEX is at 596.36 as I type.

Linda Piazza : 8/22/2008 3:34:01 PM

What else should you consider when making hold-over-the-weekend decisions? I would include the TED spread and other spreads. (Keene covered some in his Wrap last night, including a useful link, if you haven't yet read the Wrap.) The TED spread is currently at 1.12, having bounced up from the test of the 0.92-0.94 potential support level that was being tested about ten days ago. Generally, equities don't react well to rising risk of default, although the rising TED spread has been largely ignored the last few days. Here, courtesy of Bloomberg, is what's been happening this week, minus today's figures: Link I mentioned either late yesterday or early this morning that the TED spread was moving into a zone from about 1.07-1.16 that produced a week or two of choppy consolidation the last time the TED spread moved through it, before next direction was determined, and that could happen again.

However, the rising spread while equities are still climbing seems to me to be akin to prices rising while volume is declining, not a definitive sign of underlying weakness but not one of strength, either. The TED spread may be rising because of all the rumors aswirl in the markets or it may be rising because there are some underlying problems that are not yet apparent to us, although feared by all.

I don't want to be fear mongering, but we've had two Friday afternoons over the last couple of months when banks were taken over or otherwise reorganized immediately after the close, so I'm a little worried when I see the TED spread rising into the end of the week. Don't use this as a trading signal, but do use it to decide how much risk you want to take home.

Linda Piazza : 8/22/2008 3:24:28 PM

What economic releases/events are scheduled on foreign bourses before the market opens Monday? Not much happens Sunday night. At 2:00 am ET, Germany's import prices are released. Also at 2:00 am ET, The Bank of Japan's Governor Shirakawa is scheduled to speak before a group of business leaders in Osaka. I don't know if there will be a Q&A session or not. Although our markets don't always trade in concert with the FTSE, there is a summer bank holiday in the U.K. on Monday.

That's about it until our Existing Home Sales is released at 10:00 am ET Monday morning.

Linda Piazza : 8/22/2008 3:21:09 PM

Potential resistance on 15-minute closes for the OEX is at 597.10 and then 598.82.

Linda Piazza : 8/22/2008 3:19:55 PM

The OEX's potential support on 15-minute closes now at 595.25 held into the last 15-minute close, but the OEX isn't far above it now, still testing. OEX at 595.53 as I type. Bulls want this support that's held all day continue to hold on 15-minute closes. It's time to begin deciding, if you haven't already, if you intend to hold your positions open over the weekend, and start adjusting your stops accordingly. If it's your intention to exit before the weekend, start tightening the stops so that you're taken out near the then-high of the day, whatever that might be.

Linda Piazza : 8/22/2008 3:07:57 PM

After pulling back a little off its noonish high of 19.31, the VIX is attempting to steady at a higher low than this morning's 18.64 low. It's 19.02 as I type, but as I said this morning, the VIX has to sustain 15-minute closes above a Keltner level that's now at 19.23, then slightly different, before it's changed its tenor. Sustained values above 19.31 will confirm the lower high.

Linda Piazza : 8/22/2008 2:58:03 PM

Potentially strong support on 15-minute closes for the OEX at 594.98. That's been holding all day so far on 15-minute closes, so bulls want to see it continue to hold. OEX at 595.42 as I type.

Linda Piazza : 8/22/2008 2:51:00 PM

Continuing with the discussion about weekly candles, I noted Tuesday that, while the OEX had nearly completed a three-candle potential reversal signal known as an evening star pattern, the week was still young and much could happen. It did. The OEX sprang higher, and without a strong drop into the close, that evening star pattern will not be completed. I calculate that the OEX would have to close the day below about 591.40 to confirm that signal.

What the OEX is instead producing--so far, with that "so far" being a strong caveat--on the weekly chart is a small-bodied candle with a long lower shadow. That in itself can be a potential reversal signal, and I take it particularly seriously since this week's action has broken the OEX through its rising wedge support and now driven it up toward a retest of that former support, a possible failure point for the OEX. It's still got a bit to go to touch that previous support trendline and it could still try to do it early next week, but I would begin to look at the possibility that 599-603 are the levels that various charts now show could stall the OEX, if it can even get through the 597 zone and stay above that.

As I said this morning, if you've traded long enough, you've seen rising support lines broken, but then seen prices climb the underside of that former support, finding resistance there but eventually exceeding the previous high inside the formation while it's doing so and before it breaks down again, if it does. That can happen. I'm not being lazy or unwilling to make a decision when I say that absolutely anything can happen in this market. Moreover, I began cautioning last week that if the OEX were to break out of that channel, that bears should temper their expectations because it could then find support on daily closes on its 30-sma, which it in fact did do. So, it's more than possible that the OEX is just broadening that wedge into a more sustainable rising channel and the OEX will break through the support and charge right up to the top of the channel again, with that now near 612. However, this week's action as well as the shape of the daily candle suggest that it's time for bulls to temper their excitement a bit. Yes, the OEX is climbing and, yes, it could climb straight into the close. However, the higher it climbs now, unless it should get significantly above 602-603, the smaller the week's real body grows, and the more significant its potential for serving as a reversal signal.

Like the RUT, the OEX has lately been producing a lot of potential reversal signals that haven't produced reversals themself. However, also as in the case of the RUT, I wouldn't go into the weekend with a full plate of bullish positions, especially if I didn't know how to handle them if the OEX should turn down hard next week.

Jeff Bailey : 8/22/2008 2:49:07 PM

Swing trade covered call filled alert! ... for the SSO-IN at $0.85.

SSO $62.10 +2.35% ...

Linda Piazza : 8/22/2008 2:37:43 PM

I've been looking at a few weekly charts. The body of the RUT's weekly chart almost completely reverses the body of the previous week's. That week, the RUT opened at 734.18, and the RUT is currently 735.50. Both weeks' candles have shadows: this week's was a lower shadow springing from the RUT's near test of its weekly 200-sma but the previous week's candle had an upper shadow pulling back from the test of the May high, with that shadow slightly exceeding it.

Barring a strong climb into the close, it won't be a good thing to have this week's losses mostly reverse last week's gains, but the spring off support complicates the conclusion a bit. Without that spring, this candle would have strongly hinted at more reversal to come, but the spring tells us that bulls aren't giving up yet. Three times in the climb off the March low into the May high, we saw bearish weekly candles that reversed the previous week's gains but then were followed by strong gains the next week. So, we can say conclusively that it's not a good thing to have this week reverse last week's gains, but at this point, we unfortunately can't conclude much beyond that. I personally would not go into the weekend fully loaded up with bullish trades on the RUT but that's me.

Keene Little : 8/22/2008 2:34:29 PM

After bouncing off its short-term broken downtrend line from August 11th SPX tried again to get back above its broken uptrend line from July (it had pushed above it this morning but couldn't hold on). It's currently near 1290.50 and the downtrend line from May is now just under 1293. Watching to see if the bulls can do it or not.

Linda Piazza : 8/22/2008 2:20:41 PM

The OEX held the support now at 594.56 on the just-completed 15-minute close, but it's testing it again. This support held when tested through four 15-minute candles near noon today, and equity bulls want to see it continue to hold. OEX at 594.85.

Jeff Bailey : 8/22/2008 2:18:26 PM

Chesapeake Energy (CHK) $47.08 -4.67% ... slips back below its 200-day SMA $47.50.

Jeff Bailey : 8/22/2008 2:17:33 PM

US Nat. Gas Fund (UNG) $36.61 -5.76% ... Nat. Gas helping pace energy's decline after yesterday's rather large build.

Jeff Bailey : 8/22/2008 2:15:34 PM

FXE 148.21 -0.69% ...

Jeff Bailey : 8/22/2008 2:14:58 PM

US Oil Fund (USO) $93.63 -4.66% ... has fallen back under the MNTHLY 38.2% and now testing its rising 150-day SMA.

Jeff Bailey : 8/22/2008 2:09:36 PM

SPX 1,287.73 +0.78%

SPY $129.07 +0.99% ...

Jeff Bailey : 8/22/2008 2:06:51 PM

Swing trade sell covered call setup alert! ... For those currently long the one (1) SSO Sep $62 Call (SUC-IJ)

Let's place an order to sell COVERED, one (1) of the SSO Sep $66 Calls (SSO-IN) for $0.80. $0.65 x $0.85.

SSO $61.94 +2.11% ...

VIX.X 18.97 -4.28% ...

Linda Piazza : 8/22/2008 2:06:20 PM

Potential support for the OEX on 15-minute closes at 594.46. Bulls want to see that hold on 15-minute closes or there's been at least a slight change in tenor. OEX at 595.24.

Linda Piazza : 8/22/2008 2:00:25 PM

The TRIN finally dropped off its high. It has now dipped to test potentially strong support near 0.96. The TRIN is 1.03 as I type, bouncing a little from that support, but not much yet. Equity bulls of course want that support to be lost while bears want another bounce in the TRIN and another pullback in equities while that happens.

Keene Little : 8/22/2008 1:51:43 PM

They're sure trying to shoo away the bears before the weekend. Makes me think the market is going to open down on Monday which will have all the bears chasing it lower. Seems to be the way of this market--the biggest moves come from getting one side or the other chasing it.

Linda Piazza : 8/22/2008 1:13:31 PM

The OEX's potential support on 30-minute closes that's now from 592.30-593.73 held on two 30-minute closes and now the OEX punches higher, again approaching the descending trendline that stopped it earlier today, as well as the former high of the day at 596.97. Bulls not stopped out by the pullback should of course update their profit-protecting plans. We have a clear parameter now to measure first changes in tenor, with a Keltner line now at 593.94 providing support through four 15-minute candles that tested it. It would then require sustained 15-minute closes beneath that trendline to see any marked change in tenor, and that would be only a first and tentative one.

If the OEX should continue climbing and get past the former high of the day, bulls should know that potentially strong resistance on 15-minute closes is now at about 599.07, and should be aware that a minor new high could be followed by another pullback. So far, though, unless my charts have stalled, there's been no new high. OEX at 595.6 as I type.

Linda Piazza : 8/22/2008 12:57:00 PM

Have a great weekend, Jane!

Jane Fox : 8/22/2008 12:55:58 PM

So I am outta here. I have booked an REI wilderness adventure and going camping and hiking with a bunch of total strangers this weekend. I cannot get anyone to do these things with me so I took matters into my own hands and decided if I wanted to go I needed to seek out those who love it as much as I do. I wish I were going with family but this is going to have to do.

What we do to satisfy our passions heh?

Linda Piazza : 8/22/2008 12:35:33 PM

The A/D line popped up this morning to make its first prints above what had been potential resistance on 15-minute closes, then at about 400. That line has since risen to 659, and the A/D line is now 770, coming down to test it to see if it will serve as support now. Equity bulls don't want that support lost and certainly don't want the A/D line below 400.

Keene Little : 8/22/2008 12:34:48 PM

SPX has pulled back from its downtrend line from May and is now testing its shorter-term broken downtrend line from August 11th. A bounce back up to a new high would be bullish whereas a break below 1275 would confirm a 3-wave bounce off the August 20th low has finished and some strong selling will follow. Now we let price tell us which scenario is playing out. 60-min chart: Link

Linda Piazza : 8/22/2008 12:24:58 PM

The OEX is now dropping deeper into the potential support zone on 30-minute closes now from 592.21-593.52. As I mentioned earlier, bulls don't want to see this lost on 30-minute closes. The OEX has already pulled back below the daily 10-sma, and bulls don't want to see the day end there, either, after the spike through it this morning.

Linda Piazza : 8/22/2008 12:09:00 PM

TRIN 1.30. From the earliest moments of the trading day today, the TRIN wasn't acting as expected. So far, it hasn't made a huge dent in the bullish enthusiasm, but equity bulls would still prefer that it roll down through potential support on 15-minute closes now at 1.19-1.24. TRIN has been offering a warning that all was not right with the bullish world, so it's been important to keep updating your profit-protecting plans. As I type, I see the OEX pulling back to the daily 10-sma, and bulls certainly don't want the OEX to end the day there or below it after piercing it. That wouldn't guarantee that the bounce was over but it would certainly confirm that the bounce this week has been of a bear-flag type.

Jane Fox : 8/22/2008 11:52:17 AM

I turned the FIB retracement around and updated my last post.

Linda Piazza : 8/22/2008 11:52:10 AM

The OEX tests its 15-minute 9-ema, now at about 594.45, with the OEX at 594.49 as I type. As long as that 15-minute 9-ema is preserved as support, the possibility of another bounce up toward the day's high exists. If the OEX pulls back further, the 592.20-593.48 zone is the next level of potentially strong support, with this on 30-minute closes. Bulls don't want to see that support lost on 30-minute closes.

Jane Fox : 8/22/2008 11:51:44 AM

It looks like the 38.2% retracement of the selloff from the May highs is going to be resistance. I don't think the SPX will break it today but there is a good chance next week. Link

Keene Little : 8/22/2008 11:19:05 AM

SPX got about as close to 1293 as possible. The price pattern supports another push to a minor new high or test of the high but as long as the high essentially holds the bulls haven't won anything yet (other than to scare the bejeebers out of the bears and get some short covering going). After the pullback from the high if we see a strong push above SPX 1294 then abandon all thoughts of the short side and look to join the bulls.

The one warning I have for the bulls, or those who are thinking of holding long over the weekend, is that the longer term price pattern is now set up for a "dislocation" event. As long as the August 15th high holds (near SPX 1302), the wave pattern is still set up as a 1-2, 1-2 wave count to the downside and that could set up a big gap down and strong decline come Monday. Will something bad happen over the weekend to be the catalyst for such a move? Who knows but the pattern is set up for it as we head into the weekend. I'd be very reluctant to hold long positions over the weekend unless you're hedged (put options for example).

Linda Piazza : 8/22/2008 11:18:08 AM

TRIN 1.25, just off its 1.29 high of the day.

Linda Piazza : 8/22/2008 11:17:35 AM

VIX 18.97 as I type. If it keeps rising, it's likely to find resistance near 19.25-19.50 and would need to sustain values above that to truly change its tenor. However, keep this on your radar screen.

Jane Fox : 8/22/2008 11:08:21 AM

The TRIN is up to 1.23 and making new daily highs. AD ratio is falling but the AD volume and VIX are still bullish. I think the move is over and the rest of the day will be choppy.

Linda Piazza : 8/22/2008 11:07:59 AM

TRIN is 1.20, again facing what could be particularly strong resistance, but this is absolutely, 100% not what we usually see with rising equity prices. Maybe it's going to turn over again at this resistance, but use this as a reason to be watchful today if you're trading the bullish side.

VIX bouncing, but only minimally so far. It's at 18.80. Keep this on your radar screen, however.

Linda Piazza : 8/22/2008 11:05:29 AM

Below you'll find a chart showing where the OEX is with respect to Fib levels and a couple of trendlines. Note that today the RSI on this 30-minute chart has popped above 70 for the first time since 8/11, its level now rivaling that day's high with clear bearish price/RSI divergence unless prices can keep rallying while RSI holds above 70: Link The OEX has already driven up past multiple possible resistance levels this morning, including the ones I thought likely to stall it, so it can certainly continue to do so. Look at the daily chart and no one could argue: the OEX can do anything! However, this chart's setup, coupled with the strange TRIN behavior, is why I said a few minutes ago that this is another point at which bulls should be updating their just-in-case profit-protecting plans.

Linda Piazza : 8/22/2008 10:52:07 AM

TRIN 1.07.

Linda Piazza : 8/22/2008 10:51:37 AM

If a new trendline is drawn from the top of the 8/12 consolidation zone, though the top of the 8/14-8/15 consolidation zone, the OEX closely approached it a few minutes ago. The OEX has already plowed through potential resistance level after potential resistance level, but it continues to be important to recognize levels at which profit-protecting plans should be updated. This is one, as it could be capable of sending the OEX back to test some of those levels it plowed through earlier, to see if they now hold as support. And that's not a given that they will. If the OEX should pull back, bulls want the 591.70-592.00 zone to hold as support. They would prefer support at 593.25-593.50 or even 594-595, but I don't think a retest of 592 can be precluded yet.

Would be bears: sorry, but although it's necessary to suggest that bulls update their plans, and although the TRIN has bounced again and the VIX is testing what could be support, it would be too risky to suggest a bearish trade right now as equity prices are not confirming the doubt produced by the TRIN.

Jane Fox : 8/22/2008 10:47:24 AM

SPX is now at 1292 and I am not seeing the kind of power in the internals that is needed to blast it through 1300 let alone all the way to 1320 (which was quite unlikely anyway).

My next prediction is 1320 next week.

Linda Piazza : 8/22/2008 10:45:11 AM

I imagine most of you are like me, riveted to the market action. However, if you'd like to read Federal Chairman Ben Bernanke's prepared remarks for his speech today, it can be found at Link .

Linda Piazza : 8/22/2008 10:40:36 AM

TRIN tumbling hard now, but it's tumbled back to potential support on 15-minute closes, now at 0.90. Equity bulls want that support to fail, while bears want it to hold up and bounce the TRIN again. TRIN bounces haven't done them much good yet, of course! TRIN at 0.89 as I type.

Linda Piazza : 8/22/2008 10:39:07 AM

Another note: The last time the VIX was at this level was in early June. What was happening then? In mid-May, the markets had tumbled off their May high but then had spent some time consolidating from about May 23-June 6. Then the real tumble lower began. I'm not guaranteeing that the markets will tumble again. The VIX has not reached the low it was reaching in early May and it hasn't touched a potential target in the 17.30 zone, set up by a daily Keltner chart. It has, however, approached light potential support at 18.30-18.40 on daily closes. That's a level that also marks the support band for a descending wedge on the VIX, forming since equities bounced off the mid-July high.

Linda Piazza : 8/22/2008 10:33:09 AM

Yesterday afternoon, when mentioning potentially strong support for the VIX on the 15-minute chart, I added the caveat that the 30-minute chart suggested it could go much lower. Now the VIX is closely approaching that chart's potential support level, now pushed down to about 18.48. The VIX is 18.71 as I type, with a low of 18.64 for the day.

Linda Piazza : 8/22/2008 10:28:59 AM

Bulls have the easy task now, just updating their profit-protecting and perhaps profit-gathering plans, too. Have you thought about the place at which you might choose to lock in at least partial profits? Given this market environment, doing so might be a good thing to consider. It has an added benefit in that you can think clearer about the remaining portion of your position if you've already locked in some profits. It builds confidence in your abilities and takes some of the emotion out of trading decisions.

The OEX's 15-minute 9-ema is now at 592.38 with further potential support on 15-minute closes at 591.50. The 30-minute version is way down at 590.35, so equity bulls don't really want to see that tested. Higher potential support on 30-minute closes can be found from 592.04-593.24, however, and bulls definitely want that to hold on 30-minute closes.

A sustained pullback below 591.50 suggests that something more than just a pullback is occurring.

Keene Little : 8/22/2008 10:27:07 AM

The bulls are still going strong this morning. SPX is now nearing its downtrend line from May through the August 11th high (so it's an untested downtrend line) which is just above 1294. Obviously above that downtrend line is a clear signal that we're going to see another rally leg into September (1320 minimum). You don't want to try shorting a rally above 1294 but instead join the bulls on pullbacks.

Linda Piazza : 8/22/2008 10:21:04 AM

TRIN is 1.05, having zoomed up close to the next potentially strong resistance level, now at 1.16. This climb in the TRIN is not what you typically see when equities are climbing, so just keep it on your radar screen that something odd is going on. The TRIN has started a pullback from its 1.13 high, and equity bulls want that pullback to send it back below 0.90, while equity bears want it to stay near its current level or above.

Keene Little : 8/22/2008 10:12:21 AM

The DOW has a little higher before it would test its broken uptrend line from July 15th, currently near 11605. After breaking back below its downtrend line from October the RUT is back up to it at 735.

Jane Fox : 8/22/2008 10:04:20 AM

The SPX is now trading at 1287. Let's see my prediction this week was 1320 so that is only another 33 points to go. I may have to wait until next week.

Keene Little : 8/22/2008 9:59:09 AM

At 1289 SPX just tested its broken uptrend line from July 15th, which it broke below on Tuesday. It's a good place to try a short with a stop at 1293.

Linda Piazza : 8/22/2008 9:56:23 AM

In one respect, equity bulls have not yet gotten their wishes with the TRIN. It's at 0.92 as I type. Although they haven't gotten their wishes and the TRIN hasn't been pushed back sharply from the potential resistance on 15-minute closes that it tests, with that now at 0.89, it is struggling with that resistance a bit. TRIN values pierced it and pulled back to it repeatedly and may do it again by the time this is uploaded. Equity bulls should remain aware that, for now, at least, TRIN is rather nearer its high of the day than its low of the day while bears should be aware that it tests potentially strong resistance and may not deliver them a save, as they might wish. I would guard carefully for a pop-and-drop kind of day, however, with TRIN behaving this way. It never hurts to have your just-in-case profit-protecting plans.

Linda Piazza : 8/22/2008 9:52:17 AM

Just under 595, at about 594.98 if I snapped the Fib bracket correctly, is the 50% retracement of the slide from the 8/11 high to this week's low. That 50% mark is another place to watch for potential resistance, although 50 isn't a true Fib number. Many will be noting that the OEX prices have been pushed above the descending trendline off that 8/11 high, but please still keep on your toes with Federal Reserve Chairman Ben Bernanke's speech coming up in a few minutes. OEX at 594.56 as I type.

Linda Piazza : 8/22/2008 9:45:22 AM

Now we see. OEX's potentially strong resistance on 30-minute closes is now at 591.96 and 592.93, with Fib and other resistance surrounding these Keltner levels. The 15-minute and 30-minute 9-ema's are currently 589.65 and 588.73, respectively, but are climbing fast. Until and unless the OEX sustains 15- and 30-minute closes beneath them, it hasn't changed its tenor, but I would be wary about the bullish side if the OEX pulled back to those Keltner levels by the close of the first 30-minute period. OEX at 593.46 as I type.

Jane Fox : 8/22/2008 9:44:44 AM

Both the DOW and the Russell 2000 have broken their respective overnight highs.

Linda Piazza : 8/22/2008 9:40:52 AM

TRIN is 0.89, climbing and not dropping, as bulls would wish. However, it's approaching potentially strong resistance on 15-minute closes now at 0.91. Equity bulls want to see that resistance roll it over, while bears want the TRIN to punch through.

Jane Fox : 8/22/2008 9:38:40 AM

AD line is now above +1000, TRIN is 0.80 and the VIX is falling. The bulls have the ball this morning.

Linda Piazza : 8/22/2008 9:38:27 AM

Keltner outlook on the A/D line: As might be expected, the A/D line zoomed this morning. The possible trouble for bulls, however, is that it zoomed right up to potentially strong resistance on 15-minute closes that's now just under 1000 but which could be shoved just above it by early action. The A/D line doesn't have to make strong further gains to stay bullish now, as it would be enough for it to just keep moving sideways while support caught up, but bulls don't want this resistance to knock the A/D line all the way back to support now. The A/D line is at 1009 as I type but next support is all the way down at about 400.

Jane Fox : 8/22/2008 9:35:09 AM

AD line opens at +740, strong but not overly bullish.

Keene Little : 8/22/2008 9:20:57 AM

Are futures being driven higher pre-market so as to have a little more cushion for Uncle Ben's speech? Just wondering.

Keene Little : 8/22/2008 9:14:31 AM

We've got a big gap up opening facing us after equity futures ramped up from the retest of the overnight lows just after 3:00 AM. It looks like it could press a little higher but the one caution is that this will have SPX testing potential resistance that I mentioned last night--1285-1288. The raises the possibility we'll see a gap n crap morning.

One reason I think it's possible we'll see only a brief rally this morning is the potential A-B-C bounce with a rising wedge pattern for the c-wave from Wednesday afternoon's low, shown on this 10-min chart: Link . The Fibs and trend lines coincide in the 1285-1288 area so any rally above 1288 would be bullish. As mentioned yesterday, a move above 1292 would indicate we'll probably see a move up to at least 1320 (if not much higher) into September.

Jane Fox : 8/22/2008 9:13:55 AM

Dateline Marketwatch - The theme of the Fed's Jackson Hole seminar this year, 'Maintaining stability in a changing financial system,' seems more like a prayer to the mountain gods than anything else.

Behind the scenes and on the sidelines, conference participants are going to be debating the Fed's dramatic actions over the past year to stem the crisis and protect the economy. And they'll be pondering what more could or should be done.

Linda Piazza : 8/22/2008 9:13:23 AM

The TED spread is 1.11 this morning, no change from yesterday's last level.

Jane Fox : 8/22/2008 9:12:25 AM

Federal Reserve Chairman Ben Bernanke is due to deliver the keynote speech from the Fed's annual retreat at Jackson Hole this morning.

Jane Fox : 8/22/2008 9:10:55 AM

Crude traded back to $119 so broke the $120 level overnight but Crude will always find support or resistance at the century marks so it was no surprise it rallied from there. Now we need to see if it can get back above $120.00 Link

Linda Piazza : 8/22/2008 9:09:39 AM

If futures are to be believed this morning, The OEX will leap up to test the 592-593 range. The trouble is that futures can't always be believed, and yesterday proved to be one example of that. The OEX never dropped as deeply as futures suggested it might at this time yesterday. Determining where the OEX might go requires a bit of extrapolation based on the ES contract's distance above fair value for the SPX, but it's been a fair guide lately. It had been, at least, until yesterday, when we were again reminded that futures' action isn't always an exact barometer of what will happen on cash markets.

If the OEX should rise, various charts and various types of support/resistance suggest potentially strong resistance from 590.48-593.23. Those potential resistance levels start again near the daily 10-sma at 594.15 up to 594.98, the approximate 50 percent retracement of the decline from the 8/11 high to the 8/20 low. And then there's the location of the former supporting trendline from the OEX's rising wedge shape that it violated earlier this week. That's currently located at about 599.40, if I'm guesstimating where it crosses correctly, with one Keltner chart currently showing potentially strong resistance near 598.78, but with that number likely to be pushed higher, toward the trendline's resistance, if the OEX climbs steadily.

Is one of those levels likely to kick in as resistance? I believe that's the most likely scenario although it's of course not the only one that can be envisioned. Anyone who has traded for any length of time has seen prices break out of a formation and then spend some time climbing the underside of a former support line, with that line serving as resistance the whole time that prices climb to a new high above the previous one within the formation. So, we can't rule out the possibility that the OEX is headed to a new high above the 8/11 one. However, for now a failure before that seems most likely.

But where? This morning, I would watch carefully for the possibility that the OEX could stall near a potential resistance band on 30-minute closes now from 590.48-592.53. Because there's also potential resistance from the Fib retracement based on the decline from the 8/14 high into this week's low that has seemed to have some relevance this week, I would extend that first resistance band up to 593.23. Therefore, I wouldn't be surprised to see a first punch extend up through 590.48 and maybe to 592.52 or even 593.23, but neither would I be surprised to see the first 30-minute period close with the OEX at or below 592.52 or the slightly higher level to which the early action could push this resistance line. That could be much closer to the 593.23 level than it is now.

It's important to put these resistance levels together with what will be happening today. Federal Reserve Chairman Ben Bernanke will be speaking in Jackson Hole today, talking about financial stability when he speaks before the Federal Reserve Bank of Kansas City's Economic Symposium. Even if markets are gung-ho this morning, it would be natural to see a stall ahead of or during that address. That's not a given but it's certainly a possibility that dovetails with what we're seeing on futures and on the charts.

We have to see what happens after that first push to decide where the OEX might go next. If the first bounce, presuming it occurs, is pushed back below 592.52 or especially back below about 590.48 by the close of the first 30-minute period, then I think we have to consider the possibility of a move back toward 587-588 and possibly 585-586. If, however, the OEX manages to stay above 592.50, perhaps consolidating there while it gathers strength to challenge 593.23, then it's possible that a daily 10-sma test is in the works.

I wouldn't count too many points either direction before they're realized, though. Keep expectations tempered and remember the environment in which you're trading. Whether you believe that the rise off the July low was a bear-market rally (as I do) or not, take one look at recent action and remember how easy it is to get whipsawed out of your trade and punished badly if you didn't have careful stops set. Be prepared always for an adverse move, sometimes particularly sharp ones. And I believe that you have to always guard against a sharp downturn. You don't have to believe that one is coming, and maybe one isn't coming for a long time, but you have to be aware that with all kinds of spreads showing widening risks in the markets, it's just prudent to form what-if plans. Don't take on more risk than you can handle. Don't enter a trade unless you know where your stops should be or how you will adjust it if it goes wrong.

Jane Fox : 8/22/2008 8:57:00 AM

SPX closed at 1277 yesterday so there is little hope it will reach the level I predicted earlier this week, 1320.

Jane Fox : 8/22/2008 8:56:06 AM

The markets were in full rally mode overnight. HMMMM Link

Jeff Bailey : 8/22/2008 3:51:22 AM

Oh ... on "reason" Dorsey has OIL as "UnFavored" is because a lot of the stocks are BELOW trend. Work-em from the long side, but those ABOVE trend better candidates.

Use your gained knowledge of dollar/euro and oil relationship.

OK, Goldman thinks oil still so strong of fundamentals that euro weakness/dollar strength not the biggest factor. That's fine, keep it in the back/front of our minds.

Watch what the MARKET thinks/does though.

If the dollar surges higher still, and oil plunges, don't keep buying.

Do what the MARKET does.

Jeff Bailey : 8/22/2008 3:51:08 AM

Hmmm ... check this out.

Just know that its there, and be cognizant of the BEARISH resistance trend.

Dorsey's PnF of CVX, which I've doctored up a bit. See the "bearish triangle?" See the double top buy signal at $86? Then the spread triple at $88. Link

See the POTENTIAL head/shoulder top?

Here's StockCharts.com's version Link

Note: Any PRICE chart from StockCharts.com will show as "price adjusted" (bar, candle, PnF, etc.) Link tie in 200-day, 150-day and 50-day SMA resistance too!

See? On 05/21/08, CVX did trade as high as $104.63.

See how StockCharts.com "changes" the true supply/demand picture when it subtracts the recent quarterly dividends? Link

SOMEBODY paid $104 for the STOCK, so CHART it! Did CVX trade $81 TWICE? No, but if you subtract $1.30 of dividend from $82.00 it looks like it did.

The way I figured this "error" out, was I profiled either a PUT/short, or a CALL/long based on a StockChart.com PnF pattern years ago. StockCharts.com's chart was "incorrect" and the trade got shoved down my/our throat.

Fool me once, shame on you.

Fool me twice, then shame on me.

So, this is also why StockCharts.com's and Dorsey's BULLISH% charts don't always match. (There's probably a couple higher dividend paying stocks that show "buy signals" that haven't really generated a "buy signal.")

Market Monitor Archives