Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Keene Little : 8/26/2008 10:29:16 PM

Wednesday's pivot table: Link

There's still enough of a difference between the blue chips (DOW and SPX) and the techs and small caps (NDX and RUT) to have me wondering if we're going to get much more of a bounce on Wednesday or instead get an immediate reversal and head lower. Continue to exercise caution about the long side as I see enough vulnerability to suggest we're going to continue selling off sooner rather than later.

But sticking with the SPX charts I see the possibility for either a quick move up on Wednesday to about 1280 and then continued selling from there (pink on the 60-min chart). A slightly different pattern would have a 3-wave bounce that continues into Thursday, maybe up to 1280-1285, before heading lower (dark red): Link

On the daily chart I'm showing the possibility for another rally leg into September although I think the chances of that happening are very slim. A rally over 1293 would tell me to rethink that possibility. Otherwise a continued selloff should see SPX below 1200 before mid September. Link

OI Technical Staff : 8/26/2008 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The Market Monitor has been archived.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 : 8/26/2008 7:14:51 PM

Average Retail Gasoline Prices Heatmap

08/21/08 capture Link

08/26/08 capture Link

A lot of oil sitting off the coast of California.

West Coast Refineries Link
Wash. St. = 4
Oregon = 0
Calif = 21

Jeff Bailey : 8/26/2008 6:41:19 PM

Regional Map: U.S. Refineries Link

Jeff Bailey : 8/26/2008 6:31:58 PM

Hurrican Gustav 5-day cone Link

Jeff Bailey : 8/26/2008 6:18:14 PM

Headed into tomorrow's Nymex Sep Nat. Gas (ng08u) expiration, Oct. Nat. Gas. (ng08v) jumped $0.449, or +5.66% to settle at $8.39.

Today was the LARGEST percentage gain since back-to-back 6.75% and 6.68% gains on 10/15/07 and 10/16/07.

Jeff Bailey : 8/26/2008 6:04:02 PM

Clean Energy Fuels (CLNE) $15.65 +10.13% Link

Was spotlighted again yesterday (Monday) on James Cramer's "Mad Money." Some background here is the geopolitical twist to CLNE.

Speaker of the House Nancy Pelosi D Calif., and her husband have a small stake of between $50k-$100k in the shares.

Turns out that the California Proposition 10, also known as the California Alternative Fuels Initiative, seeks to use roughly $5 billion in government funds ($3 billion of which could go to the purchasers of alternative fuel vehicles) to promote alternative fuel vehicles and renewable energy.

Yahoo! Finance lists competitors as Exterran Holdings (EXH) $48.34 +2.91% Link

Jeff Bailey : 8/26/2008 5:35:54 PM

Closing Internals found at this Link

Jeff Bailey : 8/26/2008 5:35:30 PM

DXY's 04:00 tick was 77.267

Jeff Bailey : 8/26/2008 5:34:33 PM

I spent the better part of the day today starting my "DNC Overview" as an update to a clients 2008 Economic/Market Forecast from earlier this year.

For the most part, with 1/4 of the convention already passed, there has been little substance.

Perhaps a strategy of the Dems to introduce themselves, but if American is looking for "change" then I would think we need to hear the hows.

We know the problems. There's always some problem(s) and a "plan to fix" needs to be laid out.

Senator Kennedy gave an inspirational speech last night, and that was perhaps the highlight of the evening.

Either that or some of James Carville's comments about the lack of substance.

Michelle Obama's speech gave insight as to how she met Sen. Barack Obama. Like many Americans, Mrs. Obama wants the best for her children, and their children. Healthcare was a topic and she would like to see every child have healthcare from kindergarten through college.

I would share that ideal, but many Americans should want an idea on what type of "change" needs to be made in order for it to actually happen.

If my car's broken, tell me how you plan on fixing it, and how much it will cost.

Tab Gilles : 8/26/2008 4:46:41 PM

Clean Energy Fuels Corp (CLNE) $15.65 +$1.44 (10.13%)

In reference to my earlier post on natural gas....

Clean Energy Fuels (CLNE) had a nice move up today. Link Link Link Link Link

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

Excerpts from this week's High Relative Strength Newsletter from my good friends at Dorsey/Wright. S&P 500 GICS sector and market cap breakdowns as well as "Wall of Worry" from Jeremy Siegel Link

Keene Little : 8/26/2008 4:07:38 PM

I think this afternoon's decline fits as a retest of yesterday's low for SPX and the late-day bounce should be the start of a larger bounce into Wednesday/Thursday. At least that's what I'll be testing for as the bounce progresses (or not). A turn back down right away tomorrow to a new low will set off a lot of sell alarms from an EW perspective. But at this point the bulls should get a little relief tomorrow.

Jeff Bailey : 8/26/2008 4:13:34 PM

Exxon/Mobil (XOM) $79.95 +1.57% ... Daily interval bar chart with two (2) conventional retracement Link

Has been dilly-dallying around its PINK 19.1%.

BLUE is from SPX-like 10/11/07 to 01/23/08 range.

XOM is the most heavily weighted SPX component.

XOM's MNTHLY Pivot Levels are $72.52, $76.48, Piv= $83.05, $87.01, $93.58

Jeff Bailey : 8/26/2008 3:55:00 PM

S&P 500 Index (SPX.X) Daily interval charts with two (2) conventional retracement. PINK is "drag it down" after 01/23/08 violated on closing basis 07/02/08. Link

Linda Piazza : 8/26/2008 3:53:33 PM

Tomorrow morning, Germany's Import Prices will be released at 2:00 am ET, and the preliminary CPI will be released, but I don't have the time for that. Those appear to be the only releases that are typically market moving for our markets before our own durable goods at 8:30, with that certainly being capable of moving the markets. Jane usually covers our releases in more depth.

Linda Piazza : 8/26/2008 3:51:08 PM

Time to start making end-of-day decisions, if you haven't already. It's a little dangerous to be writing this now, as anything can happen in the last few minutes of the day, but it looks as if the OEX will indeed be producing that small-bodied candle that's often produced after a big-range day. It's going to be tough to predict next direction because of conflicting evidence. Just based on the production of the doji or small-bodied candle, the most likely next day's event would be another consolidation-type candle or a bounce attempt. However, this one is being produced beneath the daily 30-sma, barring a big bounce into the close, which could happen, which would be the second close in a row beneath that moving average that was support last week.

The daily chart, then, doesn't preclude a drop down toward 575-577 support, but that potential target was set and then erased on the 30-minute chart and never fully set on the 15-minute version.

Jeff Bailey : 8/26/2008 3:45:51 PM

Would note that current SPX trade below conventional 19.1% (1,272) if taken from 07/15/08 low to 10/11/08 all-time high.

Would note 01/23/08 low also right here (1,270).

Linda Piazza : 8/26/2008 3:43:21 PM

There's that bounce I thought could happen, as expressed in my 3:13 post. When the OEX is dropping but dragging support along with it rather than violating that support, there's always danger of a bounce. Next potential resistance on 15-minute closes for the OEX is at 586.37; on 30-minute closes, 587.52. I wouldn't be surprised to see some attempt to close the OEX back above its daily 30-sma, but I wouldn't be surprised to see the OEX close the day at or below that moving average, either. That's at 587.65.

Jeff Bailey : 8/26/2008 3:41:00 PM

SPX 1,269.30 +0.19% ... Either side of its WKLY S1 (1,268.94)

Jeff Bailey : 8/26/2008 3:39:39 PM

SPX Heavyweights (Sorted 08/25/08 Open) at this Link

Jeff Bailey : 8/26/2008 3:36:46 PM

SSO $59.94 +0.03% ...

SUJ-IJ $1.35 x $1.50

SSO-IN $0.30 x $0.40.

Jeff Bailey : 8/26/2008 3:35:20 PM

Wachovia Bank (WB) $13.94 +0.14% ... Came close to a kiss of QCharts' WKLY S1 ($13.57).

WB-UC $2.10 x $2.15

VIX.X 20.77 -0.95% ...

Linda Piazza : 8/26/2008 3:35:29 PM

On page 4 of the Minutes, the FOMC discusses the widening spreads of "yields on both investment- and speculative-grad corporate bonds" when compared to "comparable-maturity Treasury yields." However, the notations about that spread and others emphasize the importance of the spreads in pinpointing deterioration or strengthening in the credit markets. That's one reason I watch the TED spread, although I can't say specifically that's among the spreads that the FED watches.

Jeff Bailey : 8/26/2008 3:33:40 PM

BIX.X 170.84 -0.28% ... "no man's land" still this week. Still rather bearish with MNTHLY Pivot 171.73 and WKLY Pivot 176.01.

Jeff Bailey : 8/26/2008 3:29:11 PM

03:00 Internals found at this Link

Linda Piazza : 8/26/2008 3:26:44 PM

A subscriber asked how the BIX was looking after the release of the FOMC Minutes. The BIX dropped immediately afterward, but that drop just took it down low enough to test potentially strong support on 30-minute closes now at about 169. If that support were to be broken on 30-minute closes, the 30-minute chart setup suggests a potential downside target near 162.65, but for now the support is holding, the BIX has bounced, and no such potential target has been set. A look at the daily chart suggests that if the BIX should continue bouncing, the daily 10-sma at 176.16 might prove to be resistance on daily closes, if the BIX should get that far.

Because of the BIX's pattern over the last week, it's difficult to ascertain if the BIX could rise into another 10-sma test. The BIX has been consolidating for about a week below the 30- and 10-sma's. Its consolidation beneath those averages after tumbling from the early August high creates the specter that this could be consolidation before another tumble lower. Sustained daily closes above the 10-sma and especially the 30-sma at 181.26 would suggest a potential climb back toward 192.47. For now, the BIX just chops, especially as long as it's between about 169 and 177.50. Here's the 30-minute chart: Link

Linda Piazza : 8/26/2008 3:13:58 PM

The OEX's 15-minute 9-ema is now 583.97; the 30-minute version is 584.47. The OEX has still not broken potential support on 15-minute closes, instead just nudging it lower and lower, so the chances are that it will go on testing that resistance. The support is 582.58. As long as it's below the OEX and perhaps at least stalling the decline, the chance remains that the OEX will stall long enough for that support to flatten and strengthen underneath it. For now, though, it's weak support, getting pushed lower with each new low on the OEX. Just be aware that the OEX hasn't set a new downside target on this chart, although it has on the 30-minute version. When the OEX is climbing and dragging resistance along with it this way, I'm always on the lookout for a rollover. When the OEX is dropping but dragging support along with it, I'm always on the lookout for a bounce. It's not a promise of a bounce, but rates in accordance with a bullish divergence, for example. It's a sign to be careful and adjust stops, but not a proof of anything.

Linda Piazza : 8/26/2008 3:07:25 PM

I'm seeing some headlines saying that the Minutes suggested that the FOMC's likely next move (not at SEP meeting, according to Cleveland Fed predictions and 30-Day Fed Funds futures) would be to raise rates. I'm not sure I took the same thing away from the Minutes, but here's the passage likely being referenced: "The Committee stated that the substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help promose moderate growth over time. Although downside risks to growth remained, they appeared to have diminished somewhat, and the upside risks to inflation and inflation expectations increased."

Linda Piazza : 8/26/2008 2:56:50 PM

After bouncing to a new high of the day a few minutes ago, the TRIN has dropped back to test support, with that support at 1.15 on 15-minute closes. The TRIN is 1.21 as I type.

Keene Little : 8/26/2008 2:56:23 PM

Assuming for the moment that SPX 1261 is going to hold as support this afternoon, a 50% retracement of the decline from Friday, in 62% of the time of that decline, would take SPX back up to 1277 by mid day Thursday. If the decline continues below 1261 then I think the probabilities increase considerably that we'll see a hard decline from here (after the small 38% retracement this morning), with a quick drop below 1200 in the next day or two. 60-min chart update: Link

Linda Piazza : 8/26/2008 2:46:41 PM

Sep 08 Fed Funds futures are at the same 97.99 rate benchmarked in my 12:06:28 post. No change after the release of the Minutes.

Linda Piazza : 8/26/2008 2:42:39 PM

The OEX now verges on setting potential downside targets from 575.50-578.30. In fact, it has tentatively done so on the 30-minute chart, but hasn't confirmed on the 15-minute one because it continues to cling to potential support on 15-minute closes at 583.01. I believe that OEX traders should begin to factor in stronger vulnerability to that lower level without yet counting on it happening. For example, those who are bullish and thinking about buying support should be considering whether they want to do so if the OEX might be vulnerable to those lower levels and where they would want to set stops to make sure they didn't follow it there if they enter anyway, but bears shouldn't hold out for those targets if the OEX bounces hard and changes tenor.

Linda Piazza : 8/26/2008 2:18:00 PM

The OEX's 30-minute 9-ema, more reliable than the 15-minute version today, is currently at 585.51. The OEX is at 584.80, rising to test it.

Linda Piazza : 8/26/2008 2:16:37 PM

The A/D line has been tumbling since approaching Keltner resistance during the 10:30 and 11:00 candles. As long as it's forming 15-minute closes beneath its curling over 9-ema, now at +446 but likely to be at about +460 if tested, the A/D line risks dropping back toward -70 to -240 before it finds support. A/D line currently at +352.

Linda Piazza : 8/26/2008 2:11:50 PM

The OEX is holding onto potential Keltner support on 15- and 30-minute closes, but barely. If you want to read the minutes for yourself, they're here: Link

Keene Little : 8/26/2008 1:57:44 PM

NDX is looking weaker than the others and has droped below yesterday's low and last Wednesday's. But the low today is showing bullish divergence against yesterday's and last Wednesday's. It's what has me thinking we could see the completion of the leg down from Friday and set up a bigger bounce into tomorrow. From a shorter-term perspective, today's decline looks like it could use a minor consolidation and then a new low before it is set up for the larger bounce.

Linda Piazza : 8/26/2008 1:53:24 PM

Although the OEX had vulnerability to the level it's now testing and although that level is potentially strong support, it's not a particularly great thing that it had to drop here to test that support. Doing so means that it fell out of a more bullish formation and invalidated that as it reapproaches the morning low. Potential support for the OEX is at about 583.80 on 30-minute closes. Of course, take these interpretations with a grain of salt because the release in a few minutes can change everything seen here.

The OEX has not yet set a potential downside target of 575.60-578.30, but if it spends a whole lot of time below 583.60 and closes 15-minute and 30-minute periods below it, the Keltner channels suggest that we need to begin factoring in vulnerability to that level. RSI is currently below 30 on both charts as support is tested, so bulls hope that there's a bounce instead of a sharp decline. We just have to wait and see as my crystal ball is broken.

Keene Little : 8/26/2008 1:38:39 PM

Still dropping and we could see a retest of yesterday's low. I've been feeling that we'll see SPX 1261 hold as support for a bounce and I see the possibility that a move down from this morning's bounce will complete a 5-wave move down from Friday (instead of yesterday's low). Either way I still expect to see a bounce this afternoon and into tomorrow. However, a solid break below 1261 would not have me looking for even a bounce.

Linda Piazza : 8/26/2008 1:31:45 PM

Next Keltner OEX potential support on 30-minute closes is at 583.75.

Keene Little : 8/26/2008 1:29:09 PM

I'm back. I see that SPX bounced this morning up to the 38% retracement level (1275.19) of the decline from Friday and has since pulled back. While that could be it for the correction it would look better with another leg up to perhaps the 50% retracement level (1278.58) and finish by early tomorrow morning. That would fit the typical corrective wave pattern and set up the next big leg down. Maybe after the FOMC minutes are released we'll see another rally leg. But the risk remains to the downside so be careful if trying to trade the long side.

Linda Piazza : 8/26/2008 1:14:20 PM

The topic of the day has been whether the credit crunch has extended beyond the mortgage industry. This was prompted by Credit Suisse Group saying that American International Group (AIG) may have to take mortgage-related writedowns. In a Bloomberg article, the manager of Tribeca Investment Partners was quoted as saying "the process of credit destruction . . . has been set off all around the world."

Jane Fox : 8/26/2008 1:04:06 PM

I just read an article about Crude futures soar 2% as Gustav attains hurricane status. Well they did soar but then fell the same amount. Crude traders are very jittery traders of late. Link

Jane Fox : 8/26/2008 12:58:11 PM

The internals were certainly bullish earlier but are not now but it could just be consolidating going on. Link

Linda Piazza : 8/26/2008 12:44:38 PM

Just sideways stuff on the OEX and SPX. See my 11:33:03 and 11:49:51 posts. Vulnerability to 583.71 on the OEX and 1265.33 on the SPX must now be factored in, however. If the indices do drop to those levels, watch for potential support on 30-minute closes there. If that doesn't hold, then the indices could drop into tests of last week's lows. If those don't hold, the OEX could drop to a test of 575.67-578 and the SPX, 1249.21-1254, but that's a whole lot of "if's" to consider right now. So far, we're just getting chop and who knows whether that support or resistance near 589-590.05 for the OEX and 1276-1278.15 for the SPX will be tested after markets get moving again.

Linda Piazza : 8/26/2008 12:14:26 PM

So far today, neither the OEX nor the SPX has been able to maintain values above their daily 30-sma's. Can that change by the end of the day? Certainly, but as I said in my 10:55:49 post, the only thing that I was picking up was the possibility, not yet a prediction, that these indices could end the day at or below those moving averages. That possibility still has to be factored into your trading plan.

Tab Gilles : 8/26/2008 12:07:54 PM

Chesapeake Energy (CHK) $48.92 +$0.92 (1.92%)

The unexpected upgrade to hurricane status on Gustav, surprised the energy sector today. Plus, many are now beginning to factor energy needs going into winter. Daily: Link PnF: Link

Update on Jan '09 calls: CHK-AJ $6.20; CHK-AK $4.20; CHK-AL $2.85; CHK-AM $1.85

United States Natural Gas Fund (UNG)$38.63 Link

Natural Gas -Continous Contract ($NATGAS) $8.26

Daily: Link PnF: Link

Linda Piazza : 8/26/2008 12:06:55 PM

I wanted to benchmark the level of the 30-day Federal Funds futures for September expiration. According to CME Group's quote, those were last at 97.99. Subtracting from 100 provides an estimate of 2.01 or a 2.01% target rate for the FOMC at expiration. That means that, as of right now, futures traders are guesstimating that the FOMC will keep rates at their current 2.00% level at the September meeting. As of yesterday, the Federal Reserve Bank of Cleveland's calculation was for an approximate 80% chance that the FOMC will keep rates the same. Here's their chart, updated as of yesterday: Link

Linda Piazza : 8/26/2008 11:59:33 AM

Although it's not a given, we could now see indices mostly chop sideways until closer to the release of the FOMC minutes. You may have some quiet time now in which to consider what you want to do about your positions before the release of those minutes. If the OEX were to be within a point or two of its current level as those minues were released, would you want to exit part or all of a position? Would you want to reset stops? If indices do mostly chop sideways for at least a period during the lunchtime lull, and you're given that quiet time to consider, use it wisely.

Linda Piazza : 8/26/2008 11:49:51 AM

Although the OEX ended that 15-minute period just a little below the sinking-lower potential support on 15-minute closes now at about 585.38, it ended only a few cents below it, and the SPX clearly closed that 15-minute period above its analogous support. As I mentioned in my 11:33:03 post, I now wouldn't be surprised to see the OEX and SPX chop around sideways now that they've dropped into this lower support zone. Too much lower, though, and OEX vulnerability to 583.35 and SPX to 1264.68 must be factored in.

Linda Piazza : 8/26/2008 11:40:23 AM

Next potential support on 15-minute closes for the OEX is now 585.60; for the SPX, 1268.22. The OEX remains weaker than the SPX on a Keltner basis, already testing that potential support. If that support fails on 15-minute closes, next support is 584.63 for the OEX; 1267.29 for the SPX. If that fails, then I think we're looking at tests of potential support on 30-minute closes at 583.34 for the OEX and 1264.75 for the SPX, but don't assume just yet that these current levels have failed.

Linda Piazza : 8/26/2008 11:33:03 AM

Now that the OEX and SPX have pulled back into the ranges that I said I wouldn't be surprised to see them test (10:49:24 post), what next? Next, I wouldn't be surprised to see them dip a little deeper into those ranges, but mostly, I wouldn't be surprised to see these indices begin moving sideways from here or else from those lower levels, chopping around into the release of the minutes this afternoon.

Jeff Bailey : 8/26/2008 11:23:45 AM

SSO $60.34 +0.70% ... sits at its DAILY Pivot.

SUC-IJ $1.50 x $1.70

SSO-IN $0.35 x $0.50

VIX.X 20.56 -1.95% ...

Linda Piazza : 8/26/2008 11:16:56 AM

I just noticed that in my 10:49:24 post, when I meant to say that I wouldn't be surprised to see the OEX "pull back toward 586.50-587; the SPX, toward 1269.50-1271.30" that I actually listed the OEX's range as "586.50-567." I hope that the context made it clear that I'd meant 587 instead of 567. The OEX and SPX have indeed begun pulling back toward those ranges and now we see if there's support here. I would deepen the potential range to 586 for the OEX and 1269 for the SPX. Bulls would prefer that they find support in the upper end of that range.

Linda Piazza : 8/26/2008 10:55:49 AM

In all honesty, I'm just not getting a good read on the markets today. Sometimes when that happens, it's my fault because some unseen bias is preventing me from seeing what's right before me; sometimes, it's my strength, however, as I'm picking up on signs that the market action just isn't particularly amenable to technical analysis. The only thing I'm picking up strongly is that it's still possible, but not yet predictable, that the OEX and SPX will end this day at or below their daily 30-sma's. Support looks slightly firmer, but so does resistance, just slightly.

Linda Piazza : 8/26/2008 10:49:24 AM

I wouldn't be surprised to see the OEX pull back toward 586.50-567; the SPX, toward 1269.50-1271.30. It's not a given that will happen, but it wouldn't surprise me. Fifteen-minute closes above 589.35 and 1276.80 lessen the chances of that happening.

Linda Piazza : 8/26/2008 10:41:39 AM

The SPX closed that last 30-minute period above the potential resistance zone and now zooms up to the next, bringing the OEX along, too. By Keltner measures, the OEX has been a little weaker today. Next OEX potential Keltner resistance converges from 588.43-590.34; for the SPX, from 1274.50-1278.73. Strongest resistance on 15-minute closes appears to be at 589.37 and 1276.84, so that's the resistance focus that I'd watch over the next few minutes. Remember that with the daily 30-sma's providing support on daily closes for three days, it could now provide resistance by the close, so remain cognizant of that possibility. Intraday chart setups just don't give me a good feel for how strong or weak resistance might be at any one point.

Jane Fox : 8/26/2008 10:25:14 AM

One thing I did not mention this morning is at 2:00ET the FED will be releasing its FOMC meeting minutes. This is a market mover.

Jane Fox : 8/26/2008 10:22:24 AM

Manufacturing activity in the central Atlantic region continued to drift lower in August, according to the Richmond Fed?s latest survey. The pace of decline in factory shipments moderated, while declines in new orders, employment and capital utilization were more pronounced. Backlogs contracted on par with July, and delivery times turned positive. Moreover, manufacturers reported slightly quicker growth in inventories.

Jeff Bailey : 8/26/2008 10:19:11 AM

10:00 Internals found at this Link

Jane Fox : 8/26/2008 10:17:50 AM

WASHINGTON (MarketWatch) - U.S. home prices fell a seasonally adjusted 1.4% in the second quarter, the Office of Federal Housing Enterprise Oversight reported Tuesday. In the prior quarter, prices declined 1.7%. For June, prices were flat. The OFHEO index is based on repeat sales of homes mortgaged through Fannie Mae and Freddie Mac. Prices fell a record 4.8% in the past year, according to OFHEO. This is much lower than the Case-Shiller index, which showed a 15.4% drop in the second quarter.

Linda Piazza : 8/26/2008 10:16:49 AM

Running through some under-the-market charts, I see the A/D line climbing strongly, but about to face resistance between at Friday afternoon's swing low of 692 up to potential Keltner resistance on 15-minute closes now at 1077. The A/D line is 560 as I type. TRIN dropped to support now at 0.79 on 15-minute closes, but is trying to rise from that support test, with TRIN at 0.94 as I type. VXO is dropping from the morning's high, down toward potentially strong support now at 21.89.

For now, these actions are somewhat mixed, with TRIN at least casting some doubt on its more bullish (for equities) actions of its counterparts. I don't get a strong sense of anything here but that it's supporting the equity tests of resistance, but not predicting the outcome of the test.

Jane Fox : 8/26/2008 10:14:29 AM

Q2 OFHEO home prices down 1.4%

June new-home sales revised to new cycle-low

July new-home sales weaker than 521,000 pace expected

July new-home sales up 2.4% to 515,000 pace

Linda Piazza : 8/26/2008 10:12:16 AM

The SPX and OEX both popped up above their 30-minute 9-ema's after the 10:00 am ET releases, but both are so far just testing that resistance, without either bouncing strongly above it or dropping back strongly after piercing them. Nothing has been determined yet. Those averages are currently about 1270.26 and 586.40, with the SPX slightly above and the OEX slightly below.

Jane Fox : 8/26/2008 10:07:02 AM

WASHINGTON (MarketWatch) -- U.S. consumer confidence rose in August - the second consecutive month of gains - but the level remained relatively low and job concerns persisted, the Conference Board reported Tuesday. The August consumer confidence index rose to 56.9 from a July reading of 51.9. Economists surveyed by MarketWatch had expected an August reading of 53. The percentage of consumers saying jobs are "hard to get" rose to 32% in August from 30.2% in July. Meanwhile, the percentage of consumers expecting business conditions to worsen over the next six months fell to 25.8% from 32.4%.

Jeff Bailey : 8/26/2008 10:04:46 AM

US Oil Fund (USO) $94.44 +1.43% ...

Jeff Bailey : 8/26/2008 10:04:25 AM

Euro CurrencyShares (FXE) $146.74 -0.79% ... retraces 80.9% of its 12/20/07 low to 04/22/08 high.

Linda Piazza : 8/26/2008 9:56:41 AM

You have a few minutes left to make decisions about whether you'll hold all positions open through the release of the 10:00 am ET numbers. Nothing has yet been predicted by the intraday charts.

Linda Piazza : 8/26/2008 9:55:26 AM

Germany's economy has been the engine driving the Eurozone, with Spain's and Italy's economies long since showing weakness. This morning, Germany's Ifo Business Climate Index and Business Expectations Index both came in well below expectations. Consumer confidence did, too.

Linda Piazza : 8/26/2008 9:50:13 AM

The OEX and SPX both test their 30-minute 9-ema's, potential resistance on 30-minute closes, the SPX more closely than the OEX. Those are at 586.56 and 1270.20, respectively.

Linda Piazza : 8/26/2008 9:48:37 AM

The A/D line dropped to support mentioned earlier, down to a low below -400 but has since leaped up. It's +357 as I type, still between next support and next resistance. Bulls like it that it's climbing at least, but the next direction is still not predictable.

Jane Fox : 8/26/2008 9:46:15 AM

I never go long if the VIX is climbing. It has to get on board before I start thinking bullish.

Jane Fox : 8/26/2008 9:44:51 AM

Ah gee. AD volume and AD ratio are both climbing. TRIN is 0.76. These are bullish but the VIX is making new daily highs, bearish. Geesh!

Jane Fox : 8/26/2008 9:41:23 AM

Crude is now trading above $117

Linda Piazza : 8/26/2008 9:35:33 AM

Keltner outlook on the A/D line: the A/D line jumped into the upper or bullish half of the Keltner bands on the 15-minute chart, but it's again between support and resistance, so could as easily drop toward -160 or even -550 as it could climb toward +800 to +970. A/D line at +10 as I type.

Jane Fox : 8/26/2008 9:34:35 AM

AD line opens up at a whopping +27.

Jane Fox : 8/26/2008 9:19:05 AM

Just a reminder for those of you who did not read earlier, Keene will be out until about 2:00ET today.

Jane Fox : 8/26/2008 9:18:30 AM

Linda, I missed the Case/Shiller report on my list of reports to be released today. I have a tendency to use the WSJ for the reports but I see that Forexfactory.com did have it listed.

Jane Fox : 8/26/2008 9:16:05 AM

WASHINGTON (MarketWatch) - The decline in U.S. home prices picked up speed in June, with prices down a record 15.9% in the past year for 20 key cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor's.

Linda Piazza : 8/26/2008 9:17:17 AM

I forgot to mention earlier that when we have a big-range day like yesterday's, it was common in the past for that to be followed by a small-range day the next day. Notice that I used the past tense when typing "was." There's no pattern any longer. Sometimes, such as 7/23 and 8/06, small-bodied candles followed large-range days. Other times, such as 7/29, 8/08, and even yesterday, big-range days have been followed by another big-range day reversing the previous day's move. There's no pattern in this violent thrashing one direction and then the next since 7/15. It would be somewhat typical for the markets to settle into a tight range before the FOMC minutes are released this afternoon, but little happens as is typically does lately.

Jane Fox : 8/26/2008 9:15:31 AM

Isn't it interesting how support (blue arrow) can become resistance (red arrows) months later? Link

Linda Piazza : 8/26/2008 9:13:28 AM

Jane has already mentioned the important reports coming in at 10:00 am this morning. Please factor that into your trading decisions today, as some of those could change the tenor of the trading: reversing that first move, accelerating it or even just stalling it. Decide ahead of time if you want to lock in profits ahead of the releases or maybe refrain from entering new trades ahead of them.

Jane Fox : 8/26/2008 9:11:29 AM

June Case-Shiller 20-city index has record decline

June Case-Shiller home prices down 15.9% in past year

Linda Piazza : 8/26/2008 9:11:09 AM

The SPX support that equates to the OEX's 583-ish potential support on 30-minute closes was, as of yesterday's close, at 1264.45. According to intraday Keltner charts, the loss of that support on sustained 30-minute closes sets up a potential downside target of 1249.40-1253.73, but of course last week's 1261.16 low might provide support, too.

What about resistance, if the SPX climbs? The daily 30-sma at 1271.14 might now serve as resistance, with that idea backed up by intraday charts that show potential resistance on 15-minute closes at 1271.33 as of yesterday's close and 1269.68 on 30-minute closes. That should therefore be the first place we watch for possible resistance, but as I mentioned in my 9:06:01 post, intraday charts have been scrambled by the violent price action, and it's impossible to judge whether support or resistance looks stronger and, if so, which support or resistance level is most important among the stepped levels.

Jane Fox : 8/26/2008 9:10:12 AM

Crude was all over the map during the overnight session. It made a low of 112.36 and a high of 116.39. It is now trading at 115.98. Link

Jane Fox : 8/26/2008 9:06:44 AM

Overnight charts are showing mostly sideways to bearish price action. I guess the only bullish thing we can say is that no market broke its previous day lows. Link

Linda Piazza : 8/26/2008 9:06:01 AM

After having risen Friday to a near-test of the former trendline support in which the OEX had risen off the July low, the OEX dropped sharply yesterday. Although an attempt was made to close the OEX back above the daily 30-sma again, that attempt was not successful. However, there's a hint that the OEX may be forming a triangle on its daily chart, forming since late July, and the OEX did maintain support above the triangle's lower trendline, now crossing at about 582.75. Any sustained break below that level would suggest that the OEX could drop next to 575-577.

That's an impression backed up by intraday charts, too. The OEX's 30-minute chart shows potentially strong support on 30-minute closes at 583.17, but with vulnerability to 575.84-577.83 if that support is lost on 30-minute closes.

Futures have been all over the place this morning, a little above and a little below fair values, so it's impossible to predict where the OEX might go first based on what the ES contract is doing with respect to SPX fair values. What if the OEX bounces instead? First resistance on 30-minute closes was settling in around 587.76 as of yesterday's close, with further potential reisstance showing up on 15-minute closes at 587.41. As happened yesterday, there's no converging of support and resistance levels on the charts as there usually is, with these charts being scrambled by the violent movements one direction or the other across several trading days. For that reason, resistance is layered step-wise all the way up to 591.46 and then sets in again at 594.66-595.25. It's more difficult than usual to pinpoint which resistance level might hold or to make judgments about whether support is stronger than resistance or vice versa. These Keltner charts are not failing to give guidance; instead, they're reiterating what we're seeing develop, saying that prices can be easily pushed one direction or another. What we're seeing is at least partly due to the lighter volume we see in the summertime, but I believe it's also partly driven by emotion-based trading, and I don't take it as a good sign for the markets. Trade with care.

Jane Fox : 8/26/2008 8:55:04 AM

Here are the economic reports for today:

10:00a.m. Jul New Home Sales: Expected: -1.5%. Previous: -0.6%.

10:00a.m. Aug Conference Board Consumer Confidence: Expected: 53.5. Previous: 51.9.

10:00a.m. Aug Richmond Fed Manufacturing Index: Previous: -16.

Market Monitor Archives