Option Investor
Printer friendly version
Jeff Bailey : 9/15/2008 11:36:07 PM

Retail Gasoline Heatmap @ 10:00 PM EDT Link

Jeff Bailey : 9/15/2008 11:29:20 PM

Closing U.S. Market Watch found at this Link

Oct. Crude Oil settled down $5.47, or -5.41% at $95.71.
Oct Unleaded settled down $0.2082, or -7.52% at $2.561.
Oct. Heating Oil settled down $0.1479, or -5.03% at $2.7912.
Oct. Nat. Gas settled up $0.0080, or +0.11% at $7.374.

Tab Gilles : 9/15/2008 10:53:49 PM

Crude has been declining more rapidly then NatGas...look for major support at $88 for $WTIC. Link

$NATGAS Link Still holding above $7 support.


Got as high as 16xs has now dropped around the 13 level. Historically it has averaged 9.2 times. Crude at $88 would equate to NatGas at $9.56, if it were to spike back upto 16xs $5.50.

$NATGAS PnF chart has a Price Objective of $16.50. Link

Keene Little : 9/15/2008 10:30:56 PM

Tuesday's pivot table: Link

Equity futures have dropped further tonight as the Asian markets trade down. We'll see how they're doing after the European markets trade for a bit. The following 120-min charts from tonight's newsletter show the trend lines, Fibs and key levels I'm watching. I'm expecting lower prices before any significant bounce. The one to watch is NDX since I see some possibilities for a bounce in that one (and the semis).
SPX: Link
DOW: Link
NDX: Link

Tab Gilles : 9/15/2008 10:16:55 PM

Nymex Light Sweet Crude $92.26

Spot Gold $776.55

EURO 1.4245

OI Technical Staff : 9/15/2008 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The Market Monitor has been archived.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 : 9/15/2008 6:24:02 PM

Closing Internals at this Link

Jeff Bailey : 9/15/2008 6:10:23 PM

DXY's 04:00 tick was 78.288

Jeff Bailey : 9/15/2008 5:47:48 PM

INDU PRICE Weighted Components at this morning's open (Friday's close) Link

INDU Components September "Max Pain Theory" tabulations at this morning's open (Friday's close) Link

Tab Gilles : 9/15/2008 4:46:34 PM

$SPX; 1175 next support Link

$COMPQ; watch the 2160 level Link

$RUT; performing better than most, broke below its 200-ma. Link

$NYA; broke below its Jun 2006 low of 7,700...next support October 2005 7,250. Link

Jeff Bailey : 9/15/2008 4:21:22 PM

Coca-Cola (KO) $54.75 +0.45% ... only one (1) of the thirty (30) Dow components to finish in the green today.

Tab Gilles : 9/15/2008 4:18:21 PM

Lows [closes] $INDU 11078 [10,917.51]; $SPX 1212.7 [1193.53]; $NYA 7798.55 [7,683.72]; $COMPQ 2200.79 [2,179.91]; $NDX 1721.12 [1,705.46]; $RUT 699.60 [689.76]; $VIX 31.80 +6.14 (23.93%)

Key support levels were broken. As I stated earlier today on my 1:08:43 post, if the markets selloff...expect a rate cut tomorrow from the Fed.

Keene Little : 9/15/2008 4:13:00 PM

Robert and I will be switching market wraps this week so I will be doing tonight's (where do I start?) and he will take Thursday. Here's the SPX 60-min chart I'll be using: Link

The EW pattern is bearish, very bearish. It calls for a waterfall decline that picks up speed this week and we could see SPX 1100 by the end of the week. Opex could exacerbate any selloff this week. That's the bearish picture.

The bullish potential is a descending wedge pattern that I show with the red trend lines. The bullish divergence, if it holds, supports this. It needs an immediate rally tomorrow morning so save this potential and then a rally above 1231 (today's high) would confirm it. It's a very wide stop from here if you're short (up to 1231) but tomorrow could tolerate a bounce to correct this afternoon's decline and not be bullish.

Jane Fox : 9/15/2008 4:08:20 PM

WSJ is also reporting the FED as asked these 2 companies to prevent a downgrade of AIG's credit rating that would prove fatal for the company. It is not immediately clear if the Goldman and JPM will agree.

Jane Fox : 9/15/2008 4:06:35 PM

The WSJ is reporting the FED is asking Goldman Sachs and JP Morgan to make $70-$75 billion in loans available to prop up AIG.

Jane Fox : 9/15/2008 4:04:25 PM

DOW futures (YM) continue to fall and make new daily lows. THe Cash Index, (INDU) is falling and may be saved by the bell when trading is over at 4:00ET. DOW is at 10953.

Linda Piazza : 9/15/2008 4:01:26 PM

Even if the OEX does produce some kind of small-bodied candle tomorrow, indicative of indecision, I'm still not feeling all comfy-cozy about these market conditions. I think that drop to 530 is a distinct possibility if not yet a predicted target.

Jane Fox : 9/15/2008 3:59:29 PM

Intraday, Crude was able to support its overnight low at 94.13 but barely. Link

Linda Piazza : 9/15/2008 3:59:16 PM

Although it's dangerous to draw too many conclusions too soon, it looks as if the OEX might end the day somewhere near that downside target that I've been talking about for so long, warning subscribers to factor in OEX vulnerability to 553. That target and potential support on daily closes has now dropped to 551.67, however, where potential support on daily closes must be considered now. If that support is lost, further potential targets are near 538-540 and 530.

Today was a big-range day, so the potential for a small-bodied (NOT necessarily small-range) day tomorrow exists. That doesn't preclude either a drop to test that deeper potential support or a bounce, even if the OEX were to end the day rather near its beginning and produce that small-bodied candle that's one possibility. With so much uncertainty in the markets, as evidenced by the sky-high TED spread and with the FOMC decision due tomorrow, it would be foolhardy to predict what markets will do. Anything and everything is possible, including an Fed announcement pre-market tomorrow morning if things look too bad overnight.

Jane Fox : 9/15/2008 3:56:18 PM

Federal government asks Goldman, J.P. Morgan Chase to lead $70 billion-$75 billion lending facility for AIG. Full update to follow.

Jeff Bailey : 9/15/2008 3:55:46 PM

YM alert! 10,951

Jeff Bailey : 9/15/2008 3:54:54 PM

SPX alert! 1,200 -4.13% ... new 52-week low.

Linda Piazza : 9/15/2008 3:52:15 PM

What are some of the scheduled market events on foreign bourses tonight? I believe that Japan's markets at least will be open after the one-day holiday and will be reacting to the weekend's developments. Japan's September Bank of Japan meeting will begin. Although one source says that the BOJ's decision will be announced at 12:00 am ET tonight, two others say that decision won't come until tomorrow night. Japan's household confidence number will be released at 1:00 am ET. Germany's final CPI at 2:00, the U.K.'s CPI at 4:30, the eurozone's CPI at 5:00 am, and Germany's and the Eurozone's ZEW Economic Sentiment at 5:00 am are some of the important developments. The Bank of England's Inflation letter will be tentatively released, but no time is provided.

Keene Little : 9/15/2008 3:38:58 PM

Nice little buy program attempt to get some short covering going. If there's no follow through, or selling into it, look out below. If we see the high near 2:15 PM exceeded then I think we could see a bigger rally leg.

Jeff Bailey : 9/15/2008 3:38:46 PM

YM 11,079 ... On Treasury request from MS and JPM for AIG.

Jeff Bailey : 9/15/2008 3:29:33 PM

All equity-based indices in US Market Watch now red ... XAL.X 25.12 -0.35% ...

Jeff Bailey : 9/15/2008 3:28:12 PM

DJ US Home Construction (DJUSHB) 324.64 -4.87% ... back to test its 12/31/07 close. 150-day and 200-day SMA's.

Jeff Bailey : 9/15/2008 3:24:26 PM

NDX 1,718 -2.79% ...

Jeff Bailey : 9/15/2008 3:24:01 PM

RUT.X 694.25 -3.61% ...

Jeff Bailey : 9/15/2008 3:23:36 PM

OEX 555.17 -3.90% ...

Jeff Bailey : 9/15/2008 3:23:20 PM

SPX 1,205.62 -3.68% ...

Jeff Bailey : 9/15/2008 3:22:49 PM

VIX.X 30.18 ... comes to QRTRLY R2 (again)

Jane Fox : 9/15/2008 3:22:37 PM

THe DOW hit a high of 11416 and so far a low of 11011 that is a 404 point range.

Jeff Bailey : 9/15/2008 3:18:40 PM

YM 11,030 ... session low so far 11,009

Jeff Bailey : 9/15/2008 3:17:47 PM

VXO.X 32.58 +11.08% ...

Jeff Bailey : 9/15/2008 3:17:29 PM

NYSE a/d 100/2,831

Jeff Bailey : 9/15/2008 3:17:07 PM

YM short stop alert! ... 11,041

Jeff Bailey : 9/15/2008 3:10:44 PM

YM short lower stop alert! ... to 11,041

YM 11,015.

Jeff Bailey : 9/15/2008 3:07:23 PM

YM short lower stop alert! ... to 11,082.

YM 11,042

Jeff Bailey : 9/15/2008 3:04:18 PM

Majors should go out near, or at their lows of the session.

Jeff Bailey : 9/15/2008 3:03:55 PM

NYSE a/d 149:2,779

Jeff Bailey : 9/15/2008 3:03:13 PM

19.1% "dynamic" at 11,086.

Jeff Bailey : 9/15/2008 3:02:48 PM

YM short lower stop alert! ... to break even ...

YM 11,076

Jeff Bailey : 9/15/2008 2:58:37 PM

YM short alert! ... here at 11,091. Stop 11,128. Target 10,950

Linda Piazza : 9/15/2008 2:53:34 PM

Potential support for the OEX on 30-minute closes is now at about 557.85, with the OEX having just pierced that by a few cents. This is the same support setup--just at a lower price level--as the support setup that bounced the OEX this morning, so it could be strong interim support again. The OEX is 559.05 as I type. If this support fails on 30-minute closes, then 550-552.77 might be the next target, down finally into that range that the daily chart has been predicting as a possible target for some time now.

Keene Little : 9/15/2008 2:50:11 PM

One other potential support level will be the pre-market lows in the futures. For ES that was at 1203.25. But in the current wave pattern I have my doubts we're going to see much in the way of support. Think of a waterfall decline as you look at the 60-min chart--the selling could accelerate and be accompanied by smaller and smaller bounces until we get a washout low somewhere (1100?) before the next larger bounce. A 50% retracement of the 2002-2007 rally is at 1172 and the 62% retracement is at 1077. I think the lower level will be hit sooner rather than later.

Jeff Bailey : 9/15/2008 2:48:33 PM

DJ- Worries turn to Goldman's, Morgan Stanley's Q3 ...

GS $31.30 -15.98% ...

MS $31.18 -16.25% ... gets hit further ...

Keene Little : 9/15/2008 2:44:35 PM

For an upside target, if we do get another rally leg, two equal legs up from this morning would be at SPX 1238, right at the 62% retracement of today's decline. But the bulls can't lose it here--a new daily low would be bearish.

Jeff Bailey : 9/15/2008 2:46:40 PM

DJ- Exelon: Lehman Ch 11 filing won't hurt company

EXC $67.48 -1.33% ... Was #52 weighted SPX component at 0.41% of total at today's open.

Linda Piazza : 9/15/2008 2:43:39 PM

TED spread is 1.97 on my delayed feed.

Jeff Bailey : 9/15/2008 2:42:58 PM

DJ- Bank of Italy: Sees limited risk for Italy banks in Lehman

Linda Piazza : 9/15/2008 2:40:02 PM

The OEX's 30-minute 9-ema is now 563.94. The OEX is 561.95 as I type.

Jeff Bailey : 9/15/2008 2:40:44 PM

DJ- Enbridge: Force majeure still on 6 gas lines post-hurricane(s)

Six of Enbridge Inc.'s (ENB) natural gas pipelines in the U.S. Gulf remain shut in and under force majeure after Hurricanes Gustav and Ike barreled through the region, the company said Monday. Late last week, the Calgary-based firm declared force majeure on the UTOS, Stingray, Garden Banks, Manta Ray, Nautilus and Mississippi Canyon pipelines on the Louisiana coast as Ike approached. Force majeure allows companies to depart from contract terms in the event of a natural disaster. "We're currently in assessment like everybody else...and we don't really have any projections (for resuming pipeline operations) that we can share at this point," said Bill Stephens, a spokesman for the firm's Houston-based U.S. operations. "Just getting into some of the areas is a challenge." Several of the pipelines were only just returning to normal after Hurricane Gustav struck at the end of August, he added. Enbridge has part interests in the six lines, as well as the Destin pipeline on the Mississippi coast. All seven systems move about 3 billion cubic feet a day on average, or 40% of all deepwater Gulf of Mexico natural gas output, according to Enbridge's Web site.

Jeff Bailey : 9/15/2008 2:38:55 PM

Wausau Paper (WPP) $9.40 -2.28% ... if they don't like the paper, they don't like the common.

Jeff Bailey : 9/15/2008 2:38:07 PM

DJ- Sidoti cuts Wausau Paper to "neutral" from "buy"

Keene Little : 9/15/2008 2:33:41 PM

But watch these lower lows this afternoon--if we get a rally back above any of the lower highs it could signal that the pullback is finished and that we'll get another leg up to match this morning's.

Keene Little : 9/15/2008 2:32:50 PM

Earlier I had mentioned to watch for a break of the uptrend line from this morning through the mid-day low. SPX broke that line and then came up for a retest of it at 1223.45. A kiss goodbye here and a new daily low could usher in some strong selling. A quick move down to the 1160 area could be next in that case.

Jeff Bailey : 9/15/2008 2:30:49 PM

Wells Fargo (WFC) $34.31 +0.05% ... edges green.

Jeff Bailey : 9/15/2008 2:28:41 PM

ProShares UltraShort Financials (SKF) $125.44 +10.9% ... still "well off" its 07/15/08 high of $211.74. #10 most active.

Jeff Bailey : 9/15/2008 2:22:14 PM

02:00 Internals found at this Link

Jeff Bailey : 9/15/2008 2:17:10 PM

If throwing all issues into a basket (NYSE, AMEX, NASDAQ and BB) ...

TOTAL NH/NL currently 183:1,351

Tab Gilles : 9/15/2008 2:16:13 PM

$VIX Intraday highs: 9:35AM 30.96, as Sect. Treasury Paulson ended his report @ 1:51 it hit 29.46...currently 29.11

Jeff Bailey : 9/15/2008 2:15:13 PM

Analysis (without 09/04/08 observation) ... either MASSIVE bullish divergence, or a lot further downside could still be had if buyers step away from WEAKEST issues.

Jeff Bailey : 9/15/2008 2:13:37 PM

Still "well off" the 07/15/08 NYSE NH/NL end of day 26:1,161

Jeff Bailey : 9/15/2008 2:12:49 PM

As NYSE has probed 09/11/08 PRICE Lows ... Current NH/NL 18:540

Jeff Bailey : 9/15/2008 2:10:17 PM

NYSE Comp 7,821.85 -3.33% ...

Jeff Bailey : 9/15/2008 2:09:25 PM

On track for record volume at the big board ...

Linda Piazza : 9/15/2008 2:07:25 PM

The OEX's 30-minute 9-ema is now 564.39. This has served as resistance on 30-minute closes all day long, through many tests. The potential downside target is now about 558.10, with that potential support on 30-minute closes. The OEX is 561.46 as I type.

Linda Piazza : 9/15/2008 2:01:38 PM

I wouldn't presume to argue with Merrill Lynch's economists, but the Fed Funds futures traders sure aren't betting on that rate cut mentioned in the article Jane referenced in her 1:42 post. According to the delayed quote on the 30-day Fed Funds futures, the SEP 08 futures were last quoted (delayed) at 98.0175. Subtracting that from 100 provides a guesstimate of 1.9825 or 1.9825% for the target rate. While lower than the just-above-2.00% rate it was running last week, it's far from the 1.50% or 1.75% that would indicate a cut. This is of course just a rough-and-ready guesstimate, but some believe that the Fed is led by these futures traders rather than the other way around. So, if the FOMC does lower rates by a half point, it looks as if it would be a surprise to these traders. For some reason, the Cleveland Fed hasn't updated its predictions, usually updated daily, since September 11, last Thursday. As of that time, the chance of a September outcome of 1.75% was less than 20% and a 1.5% rate didn't even appear to be a consideration, but last Thursday was another world, wasn't it? Here's the Cleveland Fed's prediction as of September 11: Link I wonder if it means something that the Cleveland Fed hasn't updated its site to include Friday's suppositions. I don't think I've seen that happen before.

Tab Gilles : 9/15/2008 1:59:22 PM

Again as mentioned earlier...watch the intraday lows. $INDU 11078; $SPX 1212.7; $NYA 7798.55; $COMPQ 2200.79; $NDX 1721.12; $RUT 699.60

Jeff Bailey : 9/15/2008 1:57:26 PM

VIX.X 29.46 +14.80% ...

Jeff Bailey : 9/15/2008 1:57:01 PM

SPX alert! 1,214.45 -2.97% ... undercuts MONTHLY S2 (testing Thursday morning's low)

Jeff Bailey : 9/15/2008 1:49:38 PM

01:45 US Market Watch (Paulson Press Conference) at this Link

Jeff Bailey : 9/15/2008 1:44:53 PM

EIA: Nat Gas Storage Table that I track at this Link

Jane Fox : 9/15/2008 1:42:00 PM

NEW YORK (MarketWatch) -- The Federal Reserve will cut its target overnight borrowing rate by a half percentage point to 1.50% at its meeting tomorrow, said Merrill Lynch economists David Rosenberg and Drew Matus in a note Monday. "In the current environment, the Fed may feel the need to get in front of the situation with a more aggressive move" instead of the standard quarter-point reduction, they said. Merrill , one of the 19 primary security dealers that trade directly with the New York Fed, was bought by another dealer, Bank of America overnight. "Recent events suggest a large deleveraging of the banking system is picking up steam and suggests the risks to the economy are entirely concentrated in the growth outlook," Rosenberg and Matus said. Merrill analysts had previously expected the Fed to reduce rates in the first quarter as inflation subsided. "Inflation concerns will take a backseat, or move to the trunk," they said. The Fed may also remind markets that the discount window and other liquidity facilities are available.

Keene Little : 9/15/2008 1:41:21 PM

However, before getting too bearish on this afternoon's drop, I see the possibility even for NDX for another rally leg to equal the first one off this morning's low. The pullback from this morning's high would have two equal legs down at 1732.65 and then two equal legs up from this morning would have it bouncing back up to close this morning's gap near 1768. That's the potential anyway so keep your stops in mind if this turns right back around and starts heading back up.

Jane Fox : 9/15/2008 1:40:32 PM

WASHINGTON (MarketWatch) -- Led by a big drop in auto production, U.S. industrial output plunged 1.1% in August, the biggest drop since Hurricane Katrina three years ago, the Federal Reserve reported Monday.

The decline was much worse than the 0.3% decline expected by economists surveyed by MarketWatch. Output in the previous four months was also revised down by a total of half a percentage point.

Industrial production has now fallen 1.5% in the past year and 2% since its peak in January. Industrial production is one of four major indicators used to judge whether the economy is in a recession.

"Manufacturing is in recession, despite the export boom," said Ian Shepherdson, chief U.S. economist for High Frequency Economics.

Keene Little : 9/15/2008 1:38:36 PM

NDX is giving up the fight early by dropping below its mid-day low.

Jeff Bailey : 9/15/2008 1:35:19 PM

EIA: Nat Gas Inventory Winter'04, then period up to Katrina-Rita Link

Current to follow.

Jane Fox : 9/15/2008 1:32:50 PM

Here are your overnight charts. The S&P futures (ES) were even able to break the ON highs briefly, very briefly. Link

Keene Little : 9/15/2008 1:32:22 PM

While we could see price consolidate sideways for the rest of the day keep an eye on the uptrend line from this morning's initial low to the mid-day low. A break of it (currently near SPX 1221.50 and climbing) could signal the start of the next leg down.

Linda Piazza : 9/15/2008 1:20:49 PM

So far, the OEX continues to find resistance on 30-minute closes at the 30-minute 9-ema, now at 566.41. This preserves the possibility that the OEX could drop to the next target and potential support on 30-minute closes, now at 558.63, but there's no guarantee, of course, as the OEX chops and then settles into a tightening triangle pattern. There's interim support near 561-562.40, but any continuation of this triangle shape today will flatten the oscillators and render benchmarks on 15- and 30-minute charts even less trustworthy than I've counted on them being all day.

Jeff Bailey : 9/15/2008 1:18:58 PM

Atlantic Tropical Story Activity (Low and quiet) at 07:32 AM EDT Link

Tab Gilles : 9/15/2008 1:08:43 PM

FOMC meets tomorrow Link

The debate has been, will they cut rates?

In a Fed statement released Sunday...

The Fed ?feels reasonably confident the various credit facilities it has put in place are up to the task of meeting the liquidity needs of the system.? Link

Remarkably, the markets have been very orderly today, currently the Dow is down 230 points. If this market does sell off today or in the coming days...THEN, in my opinion, you'll see the Fed cut rates.

Jeff Bailey : 9/15/2008 1:08:54 PM

Retail Gasoline Price Heat Map at 10:00 AM EDT Link

Friday's 10:00 AM Link

Low end up $0.05/gallon
High end (much of east) up $0.29/gallon

Jeff Bailey : 9/15/2008 12:54:52 PM

-5 platforms evacuated (+5 occupied)
-9 rigs evacuation (+9 occupied)
+28,036 BPD Oil shut in.
+184 MMCF/D Nat. Gas online.

Since Friday's update

Jeff Bailey : 9/15/2008 12:47:57 PM

MMS: Hurricane Ike (updates 09/14/08) Link

Friday's capture Link

Jeff Bailey : 9/15/2008 12:41:34 PM

Most Actives ... QQQQ $42.85 -1.33%, XLF $20.01 -5.39%, BAC $28.25 -16.27%, AIG $5.95 -50.98%, MER $19.98 +17.18%, LEH $0.24 -93.42%, SPY $122.89 -2.54%, UYG $19.28 -9.14%, F $4.89 -0.40%, IWM $70.70 -2.15%

Jeff Bailey : 9/15/2008 12:32:38 PM

12:00 Internals at this Link

Linda Piazza : 9/15/2008 12:25:54 PM

The OEX's 30-minute 9-ema, potential resistance on 30-mintue closes, is now 567.71. Again, I mention these typical benchmarks with some trepidation because I don't think benchmarks on short-interval charts are likely to hold back either a relief bounce or a strong downdraft.

Jeff Bailey : 9/15/2008 12:25:00 PM

American Intl. Group (AIG) $5.73 -53.45% ...

Jeff Bailey : 9/15/2008 12:24:30 PM

Berkshire Hathaway (BRK.A) $121,000.01 +1.25% ...

Jeff Bailey : 9/15/2008 12:23:49 PM

DJ- Berkshire may be in talks to buy AIG

Keene Little : 9/15/2008 12:18:03 PM

While letting the dust settle today we now have a daily high and low to watch for where the market will head next. It's possible we'll consolidate for a bit before the next wave of selling hits.

Jeff Bailey : 9/15/2008 12:16:28 PM

May have seen some "spike in volatility" put selling at the open. Inability to get back under QRTRLY 80.9% still bearish.

Keene Little : 9/15/2008 12:16:17 PM

While letting the dust settle today we now have a daily high and low to watch for where the market will head next. It's possible we'll consolidate for a bit before the next wave of selling hits.

Jeff Bailey : 9/15/2008 12:15:31 PM

VIX 10-minute interval chart Link

Tab Gilles : 9/15/2008 12:09:58 PM

Watch today's intraday lows.

$INDU 11078; $SPX 1212.7; $NYA 7798.55; $COMPQ 2200.79; $NDX 1721.12; $RUT 699.60

Jeff Bailey : 9/15/2008 12:01:26 PM

Wachovia Banks (WB) $10.63 -25.50% ... plunging ... sheeeeooot! "Didn't buy enough time."

Jeff Bailey : 9/15/2008 11:59:45 AM

US Natural Gas Fund (UNG) $34.70 +1.64% ... reversing losses.

Linda Piazza : 9/15/2008 11:49:41 AM

It's possible that the OEX is widening its bear flag formation so don't count too strong on the OEX rolling down to and below the low of the day just yet. It's possible that OEX could just roll right down to the next target and potential support, now at 559.11, but remember that other possibility, too.

Jeff Bailey : 9/15/2008 11:40:47 AM

NYSE a/d 217:2,601

Jeff Bailey : 9/15/2008 11:40:18 AM

11:33 AM US Market Watch at this Link

I have to "question" this morning's TRIN measure.

Last Monday also had very questionable measure.

Linda Piazza : 9/15/2008 11:37:46 AM

Potential support for the OEX on 15-minute closes at 563.82. Potential resistance on 30-minute closes is at 568.74.

Jeff Bailey : 9/15/2008 11:26:38 AM

GLD +1.25%, SLV +0.18%

Jeff Bailey : 9/15/2008 11:26:18 AM

Sector Winners ... XAL.X +4.00%, TRAN +0.35%, RLX.X +0.19%, SMH +0.07% and Treasuries (big winners)

Jeff Bailey : 9/15/2008 11:23:39 AM

DIA, SPY, QQQQ, IWM, SMH, XLF, USO and GLD Sep "Max Pain Theory" tabulations at this Link

Tab Gilles : 9/15/2008 11:16:37 AM

Followup on OIH:

Oil Services (OIH) $157.57 -$6.65 (4.05%) Link

Suggest selling remaining 1/2 position on call option - OIHAK Jan $155- currently trading Bid $15.60/ Ask $16.00

Tab Gilles : 9/12/2008 2:49:50 PM

Oil Services (OIH) $162.87 +$3.56 (2.25%) Going into the weekend with Ike barrelling down on Texas... the suggested call option - OIHAK Jan $155- has had a nice pop from the $13.30 level. Currently trading Bid $19.40/Ask $19.65. Consider taking 1/2 off the table for a nice $6 gain 45% and re-evaluate come Monday.

Keene Little : 9/15/2008 11:11:47 AM

It's getting harder and harder to justify any kind of bullish wave pattern out of this but if SPX were able to get above 1240 I'd have to at least respect the bullish potential for a push up to 1260 if not higher. In the meantime I think we clearly have a market where you want to sell rallies and not buy dips. 60-min chart update: Link

Linda Piazza : 9/15/2008 11:09:34 AM

The OEX bounce is bigger than I anticipated, although either support or resistance had to break. The OEX's 30-minute 9-ema is now 570.59, and I would watch for potential resistance there on 30-minute closes. To be frank, however, I wouldn't look for technical analysis of short-term charts to give you reliable guidance today, although the support that was first pointed out in my 9:40:11 post did hold, as I thought it might. I thought it would be just interim support however. This day is dangerous for bears and bulls alike, as bears might be stopped out of profitable positions only to have the OEX roll down again, as I think it might do. That's why I thought taking partial profits at key levels might have been a good idea, as it gave bears more leeway about stops on the rest of the position. I think it's more than possible that the OEX will see lower lows than it has so far this morning and maybe far lower lows, but whether that will happen today or another day, I don't know. The thought that the OEX might still go lower doesn't give bears permission to ignore good account and trade management. It might not go lower despite my feeling that it could.

Keene Little : 9/15/2008 11:11:38 AM

I must admit I'm wondering if, after watching the bounce off the gap down opening, whether we're going to have a repeat of last Monday--big gap down and then the recovery into positive territory. That was followed by a gap up on Tuesday and then selling for the rest of the week. Rinse and repeat?

Jeff Bailey : 9/15/2008 11:07:01 AM

SPX Heavyweights at today's open Link

Post Ike, Lehman Bankrupt, BAC buys Mer, AIG seeking capital.

Jane Fox : 9/15/2008 11:04:22 AM

The VIX continues its trek downwards supporting the bullishness you are seeing in the markets but keep in mind the AD line and volume are still quite bearish. Link

Tab Gilles : 9/15/2008 11:00:07 AM

Watch the Drop & Bounce and how long it lasts....if the market makes a lower low, then we have a problem.

Tab Gilles : 9/15/2008 10:58:21 AM

Google (GOOG) $441.65 +4.00 (.98%)

Linda Piazza : 9/15/2008 10:53:42 AM

I agree with Keene's 10:36 post.

Tab Gilles : 9/15/2008 10:51:25 AM

Looking at a weekly 52 week - New Highs chart [ using a 10-ema] of both the NYSE & NASDAQ over the 1994; 2002/03 & current periods, along with the volatility indexes:

$NYHGH Link Link Link

$NAHGH Link Link Link

Jane Fox : 9/15/2008 10:48:00 AM

LONDON (MarketWatch) -- U.K. staff at Lehman Brothers may not get paid on Friday, administrators at PricewaterhouseCoopers said, because they are not sure whether they can afford the $75 million wage bill. That's because Lehman's overseas cash was swept daily into the New York-headquartered global Treasury function. Pricewaterhouse didn't say whether Lehman employees would get accrued bonuses and added the company's defined benefit plans were unsecured claims. Only a few dozen employees were immediately terminated, and some staff may remain for months.

Jeff Bailey : 9/15/2008 10:47:45 AM

For any "change" to that observation, VIX.X WEEKLY PIvot would be a first alert.

Jeff Bailey : 9/15/2008 10:47:10 AM

As we can see from the CBOE option montage screen capture (10:44:47 post) there is not a notable amount of CALL activity this morning.

Jeff Bailey : 9/15/2008 10:45:50 AM

SPY $123.25 -2.26% ...

VIX.X 27.91 +8.76% ...

Jeff Bailey : 9/15/2008 10:44:47 AM

SPY $120 puts (spy-up) look to be most active this morning ... from Friday's observation/notes, a LOT of PUT now IN-THE-MONEY.


RISING VIX.X last couple of weeks has this analyst thinking, based on observation, that a LOT OF PUT BUYING was taking place.

So, BULK of market participants LONG PUT and on the RIGHT SIDE of the CURRENT TRADE.

VIX.X goes UP when more call sellers/put buyers than call buyers/ put sellers.

HIGHER VIX.X still this morning would suggest SPY $120 Puts being BOUGHT still. Link

Jeff Bailey : 9/15/2008 10:37:01 AM

Friday's intra-day SPY Option Montage Link

Keene Little : 9/15/2008 10:36:23 AM

After the 1st hour of trading it's looking like a gallant effort to save the market but so far the bounce up is only a 3-wave move and not looking strong enough to be thinking of a v-bottom recovery. Sell rallies for now. The danger is what could happen if "someone" enters a massive buy program to get the shorts to cover and hope it continues with some real buying. While I don't believe the real buying will follow it nevertheless can wreak havoc on a new short entry today.

Tab Gilles : 9/15/2008 10:36:15 AM

$NYE- Energy Index (NYSE) Link Link $IXE- Energy Index (AMEX) Link Link

Jeff Bailey : 9/15/2008 10:28:35 AM

10:00 Internals found at this Link

Linda Piazza : 9/15/2008 10:27:37 AM

So far, the OEX finds support on 30-minute closes at the Keltner line now at 560.19, but that line is sliding lower and its support might be weakening. So far, the OEX also finds resistance on 15-minute closes at the Keltner line now at 564.63. If that continues, it suggests a potential intraday target of about 556.35.

Jane Fox : 9/15/2008 10:22:01 AM

WASHINGTON (MarketWatch) -- With Wall Street scrambling to contain a financial crisis, the Federal Reserve on Monday assembled a series of emergency tools to head off panic, expanding its loan programs and accepting a broader range of collateral for its loans.

The initiatives, with commitments from the private sector as well, are designed "to mitigate the potential risks and disruptions to markets," Chairman Ben Bernanke said in a statement.

The focus was quickly turning to what the Fed would do at formal meeting on Tuesday, its regularly scheduled session. Prior to the weekend's dramatic events, Fed watchers were widely expecting the central bank to hold rates steady at 2%. But the extraordinary events have raised the possibility of a rate cut in many minds.

Linda Piazza : 9/15/2008 10:13:10 AM

Wow. According to my delayed quote, the TED spread is 1.98, and has been as high as 2.17. That's broken it above the descending channel in which it had been moving down from December's 2.2-ish level. (Bloomberg's site is slow today so I can't get the exact level and am going from memory.)

There's mixed performance in the markets after the TED spread bumps so high. Sometimes, the markets are already beginning to recover as the TED spread spikes to its last night--and we don't know if the TED spread has yet done that--and sometimes the decline is just beginning. So we don't know how the SPX and OEX are going to perform now, but we knew last week when I kept noting that despite the Fannie/Freddie solutions, the TED spread was rising rapidly, that something was afoot. We know now that default risk is still considered high. We know to be careful.

Jeff Bailey : 9/15/2008 10:11:22 AM

VERY Defensive ...

Jeff Bailey : 9/15/2008 10:11:05 AM

13-week Treasury Yield ($IRX.X) plunging to 0.82% ... down 64 bp

Jane Fox : 9/15/2008 10:10:31 AM

Of course the AD line at -2495 and AD volume falling off the planet is not bullish.

Jane Fox : 9/15/2008 10:10:49 AM

By the way, the VIX is falling today telling me the bulls have at least some hope .

Jane Fox : 9/15/2008 10:06:35 AM

Remember Friday I was predicting the market was going to fall because the VIX was climbing yet the S&P futures continued to make new daily highs? I stated that I had never seen the VIX so wrong before. Well maybe it wasn't wrong, maybe it was giving us a sense of what was yet to come.

I don't know for sure but it does seem pretty convenient the day before we are faced with a possible financial meltdown the VIX is totally out of sync with the market and was the only time I had ever seen it so out of sync.

Linda Piazza : 9/15/2008 9:59:35 AM

As I suspected might happen, there are problems with fills and cancels this morning, with my broker sending out an announcement that CBOE is having trouble with those. Be very careful today.

Tab Gilles : 9/15/2008 9:51:51 AM

JP MOrgan/Chase (JPM) $41.34 +$0.17 (0.5%) "Best of Breed"

Linda Piazza : 9/15/2008 9:48:33 AM

The OEX hit that 560-561.50 zone that I thought might be potential support on 30-minute closes, in fact piercing it by a little. At 562.70 now, however, the OEX is bouncing from that potential support. Don't be fooled: I thought this might be interim support and a place at which bears ought to fine-tune their profit-protecting plans because a bounce could get out of hand, but I'd be surprised if the selling were over yet. So, bears, update those plans, but bulls, be careful about attempting to buy this market today.

Jane Fox : 9/15/2008 9:46:11 AM

Obviously there is something askew with the AD line and volume ratio which is how the TRIN is calculated.

Jane Fox : 9/15/2008 9:44:22 AM

OK now tell me why the TRIN is a very very bullish 0.51.

Jane Fox : 9/15/2008 9:42:58 AM

Vix made a huge 4 point jump right at the open which should not be a surprise.

Linda Piazza : 9/15/2008 9:42:01 AM

I'm frankly surprised that the OEX has not dropped faster and harder this morning. Oh . . . there it went.

What is the A/D line doing? The A/D line just dropped through potential support near -1500, and, unless it bounces quickly, will set a downside target near -2600. The A/D line is -2063 as I type.

Jane Fox : 9/15/2008 9:41:36 AM

Needless to say the AD line is a very bearish -2011 and falling.

Linda Piazza : 9/15/2008 9:40:11 AM

First potential support on 15-minute closes for the OEX on the way down is near 566, but this is light and short-term potential support and may not matter much. Unless the OEX barrels through the 560-561.50 level, however, it may provide some interim support as some attempt to buy last week's low. I myself would not be going long at any of these levels, but if I were in bearish positions, I'd certainly use them as places to readjust my profit-protecting positions. For whatever it's worth, I'm completely flat in my trading account.

Jane Fox : 9/15/2008 9:37:38 AM

Here is the chart of Lehman Brothers. Link

Tab Gilles : 9/15/2008 9:37:19 AM

$VIX 30.89 +5.23 (20.38%)

Tab Gilles : 9/15/2008 9:34:33 AM

Here's a chart of the DJIA posted on Sept 5th. Link

Tab Gilles : 9/5/2008 12:38:38 PM Taking a look at some of the indexes at or below their respective July 15th lows and the March 17th lows. Plus PnF charts.

DJIA Link Link

SPX Link Link

OEX Link Link

COMPQ Link Link

NDX Link Link

RUT Link Link

NYA Link Link

WLSH Link Link

Linda Piazza : 9/15/2008 9:31:05 AM

If you're looking at Asian market charts this morning to gauge how they reacted to this situation, be aware that many were closed for a holiday today. That included Japan's.

Linda Piazza : 9/15/2008 9:29:42 AM

I will be in and out of the MM today as we deal with relatives impacted by Ike. I wanted to let subscribers who are used to see my first OEX-related post about this time of day know that I posted it early today. That update can be found in my 7:39:43 am post this morning.

Linda Piazza : 9/15/2008 9:27:59 AM

Last week, after the so-called solution to the Fannie/Freddie situation, the TED spread did not narrow but instead widened sharply. It was clear that more was afoot in the markets.

Linda Piazza : 9/15/2008 9:26:54 AM

Jim, I've already roughed out a Trader's Corner article for this weekend, updating a previous article on the TED spread. It includes a historical TED spread chart, originally published in an article by Michael Panzer for Seeking Alpha, in which Panzer says that those who are comparing the current situation to the LTCM are underestimating it, as you are warning. He says the TED spread rise is comparable to the 1987 levels, not those during the LTCM crisis. Here's the chart: Link

Jim Brown : 9/15/2008 9:24:14 AM

Fed Funds Futures - are now showing a 93% chance of a 25-point rate cut tomorrow.

Jim Brown : 9/15/2008 9:15:28 AM

People thought the Long Term Capital meltdown was earth shaking. However, the Fed made the group of banks put up the whopping sum of $3.65 billion to allow LTCM to close positions in an orderly manner.

$3.65 billion is chump change in today's market events.

Tab Gilles : 9/15/2008 9:13:52 AM

$WTIC $95.33 Crude hits PnF Price Objective.

Previously posted chart - 9/3/2008 10:58:47 PM Link

Jane Fox : 9/15/2008 9:13:11 AM

The events currently underway in the financial markets are been compared to the meltdown of the hedge fund Long Term Capital 10 years ago. And just like 10 years ago if Lehman Brothers does fail, it could lead to turmoil in the credit markets as traders redo their credit swaps and other trades they have outstanding with Lehman. This was why the FED bailed out Bear Sterns. However, the FED said they were not going to bail out Lehman because they had time to fix their problems.

Bank of America in merger talks with Merrill Lynch is a new on all of us though

Keene Little : 9/15/2008 9:10:35 AM

The only thing I'll add this morning is that the EW pattern is set up for multiple degrees of trend to the downside with several 3rd waves to unwind. These are usually marked with a few gaps in the direction of the trend and no gap closures. Be very careful today.

Tab Gilles : 9/15/2008 9:05:56 AM

Let's Watch Those Volatility Levels Spike Today!

$VIX Link

$VXD Link

$VXO Link

$VXN Link

$RVX Link

Jane Fox : 9/15/2008 8:52:08 AM

With the all bad news coming out of the financial sector this morning you would think the US$ would be in a freefall but you would be wrong, it is in rally mode. Link

Jane Fox : 9/15/2008 8:48:48 AM

The selling was not restricted to equities, Crude hit a low of 94.13 over the weekend. Link

Jane Fox : 9/15/2008 8:44:13 AM

LONDON (MarketWatch) -- U.S. stock futures pointed toward a bruising open Monday after a tumultuous weekend in which Lehman Brothers Holdings was forced into bankruptcy after failing to secure a buyout, Merrill Lynch reached a deal to sell itself to Bank of America for $50 billion and American International Group reportedly asked the Federal Reserve for $40 billion.

Needless to say the markets were bearish overnight but not as bad as I suspected they would be with the history making news out this morning. Link

Jim Brown : 9/15/2008 7:43:30 AM

Hurricane Hangover, Shortages Ahead
Ike's sudden left turn just before it made landfall meant that the 13 refineries in Houston escaped the brunt of the hurricane's force. All are reporting they sustained no material damage and will begin the restart process as soon as power is restored. That could be a week to ten days before power is stable and another 2-3 days to restart. This suggests there could be a serious problem for refined products like gasoline and diesel.

As a result of hurricane Gustav and the refinery shutdowns in the Louisiana area the availability of refined products is already limited. Most of the refineries in Louisiana are back up and running but several are at reduced capacity because of a shortage of oil. The Louisiana Offshore Oil Port (LOOP) was down over a week for Gustav and most of last week due to Ike. Tankers were avoiding the gulf not knowing where Ike was headed. They should be unloading their cargo into the LOOP again this week.

Most of the 1.4 mbpd of gulf production has been offline for the last two weeks. That is roughly 14 million barrels that were not available for Louisiana refineries to use. Most of that production will be back online by the end of next week but there will still be a shortage of crude in that area for weeks to come.

The surge from Ike is threatening three refineries in the Lake Charles area on the Texas border. They were not initially seen as a hurricane risk but the size of Ike caused a surge peak farther west than expected. As of Sunday 16 refineries representing 25% of U.S. capacity were offline. Texas officials are saying it could take weeks to restore power.

Gasoline shortages ahead! - Drivers across the southwest were already facing long lines and prices higher by as much as 25 cents a gallon in some states. Federal officials are preparing for a prolonged disruption in fuel supplies. According to EIA data gasoline inventories the week Gustav hit were at the lowest level since 2000 at 187.9 million barrels or 21 days of supply. Much of that inventory is required just to keep the pipeline full and cannot be used. Pipelines only run when they are full. There are thousands of pumps along the way that require product in order to run. If allowed to run dry the pipeline would cease to function and require a lengthy restart period. Basically product only flows out when new product is pushed in thousands of miles away.

Gasoline traveling by pipeline from Texas to New Jersey takes an average of 18.5 days to make the trip. The shortages from Gustav took 11 days to appear. Since before Gustav hit there has been a drop in refinery output of around 3 million barrels per day. If it takes another two weeks to get the refineries back online that is another 42 million barrels of refined product shortages.

Pipelines Closed - One of the biggest refined products pipelines is the 5519-mile Colonial with a capacity of 2.4 mbpd. It is currently shutdown because of lack of product. The colonial stretches from Texas to New York and feeds all the states along the way. If the Colonial is not restarted soon the entire eastern seaboard will begin experiencing fuel shortages. The 700,000 bpd Explorer pipeline from Texas to Indiana is completely shutdown from lack of product. The 600,000 bpd Plantation pipeline from Louisiana to Virginia is operating at greatly reduced rates. All of these pipelines could be offline for another two weeks suggesting a serious shortage of fuel will develop on the east coast.

Fuel shortages will involve gasoline, diesel and jet fuel. Expect rationing.
Prices for fuel are likely to rise substantially along the east coast as drivers compete for the available fuel. This is the equivalent of rationing by price. Only those desperate enough to pay the price will be able to buy gas. Consumers may have to cut back on unnecessary trips until supplies return. It is possible Airlines may have to cancel flights from the east coast until jet fuel is again in available. This suggests they will cancel flights to the east coast rather than have their planes grounded there for lack of fuel.

If fuel shortages do develop it could cause a feedback loop in the economy. A two-three week period where travel is seriously curtailed means fewer trips to the mall, going out to eat, taking weekend trips, visiting relatives, etc. Restaurants could see a significant drop in revenue. This could be a preview of what peak oil will look like.

Natural gas shortages - Henry Hub, the delivery point for natural gas futures was also shutdown for Ike and is in the region that was heavily flooded. The NYMEX was forced to declare force majeure on deliveries for August and September contracts.

So far only one major rig has been reported as broken free of its moorings. The Transocean Marianas rig apparently broke free and satellite tracking is showing it floating two miles away from its drill site. Transocean personnel flew over the rig on Sunday to confirm its location and visually inspect it for damage. Transocean plans to send workers to board the rig on Monday and further inspect for damage. This is the same rig that broke free of its moorings and was found 140 miles away after Hurricane Rita. All other Transocean rigs are reported safe and secure.

The MMS is reporting that 10 of the 3800 platforms/rigs sustained moderate damage. I would say that was pretty good odds. The result of no material indications of other platform damage in the gulf and the anticipated loss of 20% of our refining capacity for the next 7-10 days or longer pushed the price of oil down to $98.46 in early trading Sunday night. The $97-98 range is strong support and hopefully a level that holds. There have been several unsourced reports this weekend that Saudi Arabia is NOT going to cut its 700,000 bpd of over quota production despite being instructed to do so by OPEC. If that is the case the price of oil is going much lower but it would require authentication of the story by a credible source.

Jim Brown : 9/15/2008 7:40:18 AM

Linda mentioned an email I sent to the LEAPS subscribers last night. Since she mentioned it I am going to post it here in a minute. I trimmed it down some but it is still long. Just skip over it if you are not interested.

Linda Piazza : 9/15/2008 7:39:43 AM

But although we're still dealing with Ike, and I still have evacuees in my house, Ike isn't the big news. Another storm is, as you've been hearing and reading about what's been happening in financials over the weekend.

Where might the OEX go this morning? Where will the decline stop? The easy answer is that it doesn't stop until sellers quit selling. The true answer is that no potential support I mention is going to matter a whit if selling is still going on when it's hit. Technical analysis goes out the window when markets are in free fall. However, none of that is helpful to subscribers, so let's look at charts. I'm going to post a Keltner chart because it's different than the one you typically see and can chart for yourselves, and it may provide a different perspective: Link I want to warn bears today that capitulation days sometimes end with a big bounce as buy-the-dippers come in. Keep updating your profit-protecting plans as indices drop. Perhaps you might want to think ahead of time about places at which you would take automatic partial profit. Although the OEX tends to trade a bit more smoothly, days like this one could be sometimes swamp trading desks and trading platforms. As recently as last August, SPX desks were swamped, for example, and it was difficult to get a trade through, either to exit or to enter. You don't want to get stuck in a bearish trade while the OEX bounces 17 points off its low into its close, as we all saw happen in January's two strong down days. I want to warn bulls that you absolutely should not try to find that bottom and be one of the buy-the-dippers with anything except some lottery money you might have lying around. If we get a tradeable bottom, you'll have plenty of time to trade it without entering a trade only to see the OEX roll over and the elevator drop again, wiping out all hope of even exiting.

Linda Piazza : 9/15/2008 7:26:18 AM

I'm not sure how much I'll be able to post today, and I wanted to get my first post up as early as possible. We didn't even get a decent rain out of Ike in our part of Texas, but my daughter and my in-law and dozens of friends and other relatives got more. All either still are or have been without electricity or running water, and all have experienced some damage to their homes or property, albeit it small. They report devastation that is relatively minor albeit very widespread in scope. We don't know about the damage to my in-laws homes as they live in the Port Arthur area and haven't gone home. When I say "relatively minor," I mean neighbors with trees on their roof or across their driveways, a neighborhood with windows out or fences pushed over, ten utility poles in a row sheered off at 4-foot heights, metal buildings such as storage or shop buildings caved in, that sort of thing. Even in far northwest Houston, grocery stores have little or no milk or other supplies that families need. As far away as Austin, home supply stores are swamped with lines of people buying fencing supplies and plywood. The few gas stations open in Houston have hours-long waits, perhaps a predictor of what it will be like if Jim's warnings about possible rationing in his LEAPS email come true. Those of us who were adults in the early 1970's don't have to imagine. We remember.

Jim Brown : 9/15/2008 7:10:49 AM

Crude Prices - With the financial stocks imploding and fears about insolvency reaching new highs the odds are very good that any liquid asset, be it oil futures, stocks, options, etc, is going to be sold today.

Institutions seeing values cut by 25% on some stocks and being hit with margin calls on those positions are going to be forced to sell whatever they have of value.

Crude contracts are extremely liquid and odds are good we are going to see a flush on commodities with the emphasis on crude.

Today is going to be a cash day. Everybody will be going to cash at the open either as a protection against further losses or to have available cash to snap up bargains.

Jim Brown : 9/15/2008 6:52:28 AM

Best quote of the day:

"Bank America had to decide between getting Lehman for free or paying $44 billion for Merrill and took Merrill."

What does that say about the real health of Lehman? Lehman has/had a $600 billion balance sheet. There are rumors on the street this morning that they could have over a TRILLION in derivatives. Anybody with a position where Lehman is the other side is going to be playing serious hardball and Lehman is going to find every position being shorted against them. Turn out the lights, the party is over.

Market Monitor Archives