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Jeff Bailey : 10/29/2008 6:47:28 PM

DowJones to issue "clarification" on GE story ... Reuters Story Link

Tab Gilles : 10/29/2008 5:54:06 PM

EIA Weekly Report Link

Tab Gilles : 10/29/2008 4:52:17 PM

If GE is aiming for same '09 profit even if revenues fall 10%-15%, I would tend to say that so will '09 S&P earnings? Given that GE is a proxy for the market.

GE CEO Jeffrey Immelt, will have to cut cost and maybe lay off some employees to offset earnings?

Got to do some research on GE to when they had that type of revenue percentage decline in the past.

Keene Little : 10/29/2008 4:38:21 PM

SPX tagged its 20-dma today at 962.91 which was another reason I thought the 960-965 area would be tough resistance. As this market is want to do, it threw itself over that resistance zone but it was like touching a live wire--it got slammed down into the close. The last time SPX touched its 20-dma was its big spike up on September 19th (at 1248 at the time), which was followed by the strong selloff into the October 10th low. Whether it will repeat that kind of move we can only guess. I should add that instead of a doji today for SPX, it looks more like a shooting star at that 20-dma resistance.

Keene Little : 10/29/2008 4:24:56 PM

We have little spinning top dojis on today's daily charts. We'll find out tomorrow if they're signals of consolidation before pressing higher or instead the middle candle of a 3-candle reversal pattern. A red candle tomorrow, especially if it closes at or below the half way point of the preceding white candle (SPX 900, NDX 1254), would confirm the reversal signal (evening star pattern). NDX daily chart: Link

Keene Little : 10/29/2008 4:16:47 PM

DOW dropped 270 from its high before FOMC to its post-FOMC low, rallied 420 to the afternoon high and then dropped 455 to the close. And that was just in the last 90 minutes of trading. The DOW actually put in a nice 5-wave move up from the afternoon low, easily seen on the 5-min chart. It was a nice setup there for a short entry. The only thing that would have made it slightly better is a run up to 9400 where the 1st and 5th waves would have been equal in size. Tomorrow we'll look at the Fib retracements of the rally from Monday to see how price behaves around them.

Jeff Bailey : 10/29/2008 4:13:19 PM

GLD goes out at $74.00 +0.28% ... felt more like an op-ex, or end of quarter than anything today.

Jeff Bailey : 10/29/2008 4:10:22 PM

DIA $89.40 -1.90% ... back at trend 10/10 low to 10/16 low.

Jeff Bailey : 10/29/2008 4:08:17 PM

at 03:52 PM EDT, GE was $19.80-ish.

GE goes out $19.20.

Jeff Bailey : 10/29/2008 4:07:00 PM

That headline was released at 03:52 PM EDT. I saw it, didn't think much of it. Evidently, the MARKET did.

Jeff Bailey : 10/29/2008 4:06:31 PM

dj- GE CEO: Aiming for same '09 profit even if revenues fall 10%-15%

Jeff Bailey : 10/29/2008 4:02:33 PM

Goood grrrravy!

Jeff Bailey : 10/29/2008 4:02:11 PM

GE $18.86 -3.23% ... CNBC mentions late decline.

Jeff Bailey : 10/29/2008 4:00:36 PM

dj- Brazil's Central Bank: US Fed swap lines to increase liquidity

Keene Little : 10/29/2008 3:59:28 PM

That was a quick test of the high instead of a new high (truncated 5th wave which is fairly common). Down we go now--should get a nice pullback at a minumum tomorrow.

Jeff Bailey : 10/29/2008 3:58:19 PM

HUI.X 198.06 +14.69% ... sector winner. Faces round-number 200.00.

Jeff Bailey : 10/29/2008 3:55:11 PM

GLD $74.76 +1.31% ...

Jeff Bailey : 10/29/2008 3:54:52 PM

GG $19.14 +15.78% ... gets the trade at MONTHLY S2.

Jeff Bailey : 10/29/2008 3:53:01 PM

McDonald's (MCD) $59.45 +5.00% ... joins WMT for 52-week Net% among your Dow-30.

Keene Little : 10/29/2008 3:46:46 PM

You can see the bearish divergences continuing at new price highs on the 10-min chart. Another leg up to a new high now or a break below this afternoon's post-FOMC low are the two shorting opportunities I see. SPX is above 965 but I don't like the bearish divergences agreeing with the EW pattern calling for a top here (for at least a larger pullback).

Keene Little : 10/29/2008 3:38:36 PM

DOW dropped 300 points from its high and rallied 400 points from the afternoon low. Just another day in the market. Have I mentioned this is a whippy market to try to trade? We should see the market push higher still in the final 30 minutes and a small consolidation here followed by another push higher would create a 5-wave move up from the post-FOMC pullback.

As I just mentioned earlier, the pattern for the move up from Monday afternoon for NDX would then have a cleaner completion of a 5-wave move (looks the same for the DOW). SPX made a minor new low on Tuesday and therefore looks slightly different. The NDX pattern suggests the completion of the 5-wave move up, especially with another push higher into the close (better hurry up and turn back up) would set up the next shorting opportunity for at least a pullback tomorrow.

Jeff Bailey : 10/29/2008 3:34:37 PM

iShares Emerging Markets (EEM) $23.54 -2.88% ...

Jeff Bailey : 10/29/2008 3:34:05 PM

dj- Fed's swap lines are with Singapore, Mexico, S. Korea, Brazil

Jeff Bailey : 10/29/2008 3:33:35 PM

dj- US Fed establishes swap lines with four central banks

Jeff Bailey : 10/29/2008 3:31:01 PM

RUT.X 505.57 +4.77% ... play'n some catch up.

Jeff Bailey : 10/29/2008 3:28:26 PM

Apple (AAPL) $109.34 +9.30% ... session highs. Breaks free of WKLY R2.

Jeff Bailey : 10/29/2008 3:26:53 PM

FXY $102.24 +0.27% ...

Jeff Bailey : 10/29/2008 3:26:36 PM

iShares Japan (EWJ) $8.84 +1.02% ... edges to session high.

Jeff Bailey : 10/29/2008 3:23:45 PM

VXN.X 65.51 -1.04% ... WKLY S1 just below 62.57.

Jeff Bailey : 10/29/2008 3:22:51 PM

SPY $96.10 ... gets the trade at WKLY R1

Jeff Bailey : 10/29/2008 3:22:31 PM

QQQQ $32.77 +2.85% ... takes a look at new session high.

Jeff Bailey : 10/29/2008 3:21:29 PM

Here come the small caps ... RUT.X 498.79 +3.36% ... round-number 500.00

Keene Little : 10/29/2008 3:20:13 PM

It looks like we're going to get the rally higher. Let's see what the bulls can put together in the final hour. Another big short squeeze? That's always possible and above 965 would say look out above.

Jeff Bailey : 10/29/2008 3:19:52 PM

SPY $$95.62 +1.91% ... set to test WKLY R1 for first time this week.

Jeff Bailey : 10/29/2008 3:12:50 PM

RUT.X 492.43 +2.04% ... continues to pound WKLY Pivot.

Keene Little : 10/29/2008 3:09:39 PM

Thinking out loud here and looking at a slightly different picture of the rally from yesterday I can see the possibility that we haven't yet put in the 5th wave to the upside. So another new high could accomplish that. All it means is that we could find ourselves getting whipped a little by stopping out of our short play from this afternoon and then reentering it slightly higher (or hold on through the next high in you're in a small enough put option position and don't mind letting the market go against your position).

The SPX 960-965 area may still be a siren call for the bulls and that would be the next level I'll be watching for another setup for a short play. So if we get a rally into the final hour that stalls in that area it could be a good time to try a short and see if tomorrow brings a reversal.

If the market drops in the final hour then I'll continue to look for evidence of what kind of pullback we're getting. I'm looking for signals that point to a reversal tomorrow and continuation of the rally or instead a decline that points lower still.

Jeff Bailey : 10/29/2008 2:57:01 PM

QQQQ $32.31 +1.41% ... continues to pound WKLY R1

Jeff Bailey : 10/29/2008 2:55:38 PM

NASDAQ a/d 1,831/1,005

Jeff Bailey : 10/29/2008 2:55:25 PM

NYSE a/d 1,942/1,027

Keene Little : 10/29/2008 2:52:58 PM

Bonds are selling off (yields rising) so they're not exactly with the Fed program of dropping interest rates. The money being freed up there might head for stocks, especially this week as fund managers pump up their portfolio for month end. That continues to be the risk for short players.

Keene Little : 10/29/2008 2:50:09 PM

If the market manages to rally higher into the close I would be very careful about the long side. Until SPX can get above 965 I think there's a lot of reasons for it to fail at or below that level. I'll let the market prove to me that it will be capable of running up to 1050 by first getting above 965. In the meantime it's still a good setup for the short side. Now we wait to see if the market agrees or not.

Tab Gilles : 10/29/2008 2:50:05 PM

Interesting discussion on CNBC ---

Ken Heebner sees "panic" buying coming, we've seen perfect storm as there's been tax loss selling, capital gains selling on expected '09 higher taxes, hedge fund selling and individuals panicking. Sees opportunity in financials as rates comedown.

Frank Holmes believes Dollar will correct over the next 3 months, see gold ($1000) and oil($100) rising. Believes higher dollar is hurting exports, as noted in FOMC statement.

Jeff Bailey : 10/29/2008 2:47:30 PM

PHM $10.36 +12.12% ... gets the trade at GREEN #4

Jeff Bailey : 10/29/2008 2:36:47 PM

DIA $89.43 -1.87% ... testing extension of trend from 10/10 low to 10/16 low

Keene Little : 10/29/2008 2:35:40 PM

The DOW gave up 200 points in a hurry and has already retraced its ascending wedge from 11:00 AM and then some. SPX is close to doing the same. I think we'll see a little lower and then a bounce to correct the decline from today's high before proceeding lower again. Placing stops at new daily highs now would be a smart move since a continuation higher from here could develop some legs and I wouldn't want to be holding short in that case.

Jeff Bailey : 10/29/2008 2:25:28 PM

02:20 PM Market Watch Link

Tab Gilles : 10/29/2008 2:24:53 PM

Federal Open Market Committee

FOMC statement:

Release Date: October 29, 2008

For immediate release The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 1 percent.

The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

Recent policy actions, including today?s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, and San Francisco.

Jeff Bailey : 10/29/2008 2:23:10 PM

DXY 84.76 -2.61% ...

Keene Little : 10/29/2008 2:21:51 PM

Selling the news on the .5% rate cut. I'm shocked (wink). But let's see how the cha-cha-cha goes.

Jeff Bailey : 10/29/2008 2:21:40 PM

FOMC cuts discount rate 50 bp

Jeff Bailey : 10/29/2008 2:21:12 PM

FOMC cuts target 50 bp to 1.00.

Jeff Bailey : 10/29/2008 2:18:57 PM

WEN ... Link ... My QCharts bar chart may be wrong. It shows gap from 09/29 $19.21 to 09/30 $5.85.

Jeff Bailey : 10/29/2008 2:16:04 PM

dj- Moody's cuts credit ratings on Wendy's, Arby's

WEN $3.37 +1.50% ... good gravy!

Keene Little : 10/29/2008 2:15:36 PM

Watch for any bounce back up to the broken uptrend lines for failure (kiss goodbye).

Jeff Bailey : 10/29/2008 2:11:49 PM

02:00 Internals found at this Link

Keene Little : 10/29/2008 2:10:52 PM

Any projections how far the breakdown might go out of wedge?

Normally just to the beginning of the wedge (the 11:00 AM lows). And that might be all we get so be careful if short. But in this case since we could get at least a larger pullback to correct the rally off yesterday's low, I'm thinking we'll see at least at 38%-50% correction. More bearishly we're starting the next leg down to new lows.

Keene Little : 10/29/2008 2:08:55 PM

Both NDX and SPX have confirmed breaks of their uptrend lines now.

Keene Little : 10/29/2008 2:04:50 PM

SPX is trying to hold onto its uptrend line--no break yet.

Keene Little : 10/29/2008 2:03:50 PM

Looks like NDX is breaking its uptrend line first, as expected. But we've got another 15 minutes before FOMC.

Jeff Bailey : 10/29/2008 2:02:03 PM

Major Global Indexes, Currencies, Oil, Gold, HUI.X, OIX.X and XLF ... from DowIndu on down still trading for Wednesday Link

Keene Little : 10/29/2008 1:58:07 PM

Basically a break below the uptrend lines from the low near 11:00 AM would now be a sell signal and your stop would be just above the last high. But with the cha-cha-cha dance that's done around FOMC we could see a strong spike in both directions so my suggestion is to use a small enough put option position where you can afford no stop (plan for total loss even though you will likely get most of it back if/when you stop out later). I'm using December, slightly OTM such as QQQQ December 31 puts, QAVXE.

Jeff Bailey : 10/29/2008 1:52:39 PM

Also ... BPPREC was still 0.00% at last night's close.

Jeff Bailey : 10/29/2008 1:51:49 PM

Dorsey's BPBANK was 12.78% at last night's close. (see prior question regarding ZION and banks).

Jeff Bailey : 10/29/2008 1:50:47 PM

ZION $37.61 +1.21% ...

Keene Little : 10/29/2008 1:46:24 PM

If we get a little throw-over above the ascending wedge and then collapse back down it would be a sell signal. Same with a break below the bottom of the wedge.

Keene Little : 10/29/2008 1:45:23 PM

Looks like a small ascending wedge with bearish divergence. Nice setup for a short play right here (might get one more little push higher to get closer to 960). SPX 10-min chart: Link

Jeff Bailey : 10/29/2008 1:43:49 PM

NCC $2.46 +3.36% ... $2.50 would be 1/2 backfill of 10/23-10/24 take under gap lower.

Jeff Bailey : 10/29/2008 1:42:58 PM

PNC alert! ... $66.00 Link

Keene Little : 10/29/2008 1:42:02 PM

There are still a number of possibilities as to what kind of pattern is playing out since the October 10th low. I discussed earlier the one possibility that the pattern is set up for a strong decline once the current bounce completes. Two equal legs in the bounce pattern from the October 15th low is at SPX 964.69 which is near the top of a parallel down-channel similar to the one that NDX has already broken above (60-min chart): Link

A short-term bullish possibility is for the rally to continue above that level and head for a Fib projection at 1050 where there would be two equal legs up from the October 10th low (shown in pink). Above 1060 would mean something more bullish is underway.

Jeff Bailey : 10/29/2008 1:40:55 PM


China's central bank cuts interest rates for the third time in six weeks, moving to shore up investor and consumer confidence as its economy's once-stellar growth prospects come under an increasingly dark cloud. The Chinese move comes ahead of a widely-anticipated rate cut by the U.S. Federal Reserve, which is finishing a two-day meeting today.

Jeff Bailey : 10/29/2008 1:39:16 PM


Iceland condemns the U.K.'s use of anti-terror laws to freeze the assets of Iceland's crisis-hit banks and protests that the language used by U.K. ministers had caused "devastation" in her country, a U.K. paper reports, citing a letter it has seen. Meanwhile the U.K. calls the measures effective.

Jeff Bailey : 10/29/2008 1:37:48 PM

Pulte Home (PHM) $10.04 +8.65% ... "prarie dogs" the $10.00 strike.

Jeff Bailey : 10/29/2008 1:33:32 PM

Bancolombia (update) ... The Colombian stock exchange temporarily halted trading of Bancolombia's preferred shares Wednesday after they surged more than 10% on a better-than-expected earnings report released earlier in the day. The shares of Bancolombia were halted when they traded at 10,680 Colombian pesos, the stock exchange said. Bancolombia SA (CIB), Colombia's largest bank, said Wednesday its net profit in the third quarter rose 16% from the same period a year ago to 367 billion Colombian pesos ($154 million), boosted by revenue from its lending business. The net profit was substantially higher than the COP306 billion expected by local brokerage Interbolsa.

Jeff Bailey : 10/29/2008 1:32:29 PM

dj- Colombia stock exchange halts trading of Bancolombia shares

CIB $9.58 +9.58% ... still trading here.

Jeff Bailey : 10/29/2008 1:28:19 PM

GLD $74.24 +0.60% ... backfills just more than 1/2 of this morning's gap higher

Jeff Bailey : 10/29/2008 1:23:44 PM

GLD $74.17 +0.51% ...

Jeff Bailey : 10/29/2008 1:23:23 PM

GG $18.67 +12.94% ... would protect day trade

Jeff Bailey : 10/29/2008 1:22:46 PM

GLD $74.03 ... giving up gains.

Keene Little : 10/29/2008 1:15:12 PM

It's mind boggling to me that the market should rally into an expected .5% rate cut by the Fed. What exactly is the market expecting from this .5% cut that the previous 3.75% cuts and massive liquidity injections haven't been able to do? I know, I know, market logic is an oxymoron.

Keene Little : 10/29/2008 1:08:11 PM

Hoping to see one more minor push higher to create a 5-wave move up from the low near 11:00 AM. That should then complete the larger 5-wave move up from Monday and be the setup for a short play. Buy the rumor, sell the news sure seems like it's setting up here. Always dangerous around FOMC though--use options.

Jeff Bailey : 10/29/2008 1:06:31 PM

GM ... short interest as of 10/15/08 Link

Jane Fox : 10/29/2008 1:04:52 PM

Very true Keene. Thanks for the input.

Keene Little : 10/29/2008 1:03:42 PM

One other point about those point gains that Jane showed (12:54 PM)--they're all during bear markets. Bear market rallies are incredibly strong thanks to short covering. But they don't stick. A review of past huge gains in the stock market showed that more than 90% of them occurred during a bear market. It's one of the things that makes trading a bear market so difficult--large spikes against your short position if you try to hold through them and sucker rallies if you try to buy them (and hold). And you're never sure which one will finally stick.

Jane Fox : 10/29/2008 1:01:26 PM

Once again here you see 63% of the percentage winners and losers clustered in Sept and Oct.

Jeff Bailey : 10/29/2008 1:00:57 PM

PHM $9.82 +6.27% ... 21-day SMA above at $10.98.

Jeff Bailey : 10/29/2008 1:00:33 PM

TOL $20.16 +6.55% ... trades its 21-day SMA.

Jeff Bailey : 10/29/2008 1:00:13 PM

DJUSHB 207.91 +4.92% ...

Jane Fox : 10/29/2008 1:01:50 PM

Here are the percentages winners and losers.

Mar 15/33 +15.34%
Oct 6/31 +14.87
Oct 30/29 +12.34
Sept 21/32 +11.36
Oct 13/08 +11.08
Oct 28/08 +10.88
Oct 19/87 -22.61%
Oct 28/29 -12.82
Oct 29/29 -11.73
Nov 6/29 -9.92
Dec 18/1899 -8.72
Aug 12/32 -8.40

Jeff Bailey : 10/29/2008 12:59:08 PM

General Motors (GM) $6.81 +8.96% ... on news the company may ask Toyota Motor (TM) $73.06 +2.93% for help in turning around its business.

Jeff Bailey : 10/29/2008 12:57:09 PM

Buy run write alert! ... ahead of the FOMC, let's dip our toe in the water with 100 shaes ($10K account) in Pulte Homes (PHM) at the offer of $9.81.

Stop goes $7.50. Will look for a nice run, then sell a covered call.

Jeff Bailey : 10/29/2008 12:54:08 PM

European Markets Link ... finished sharply higher Wednesday, with Germany's DAX taking a rest after a 2-day surge on the heels of Volkswagen. UK's FTSE-100 gained 7.14% to 4,206 Link , Germany's DAX was off 0.82% at 4,784 Link while France's CAC-40 rose 8.17% to 3,369 Link

Jane Fox : 10/29/2008 12:54:53 PM

Here is a list of the DOW's largest point changes, of course they are all clustered in recent times because the DOW is a lot higher than it was in 1929.

Oct 13/08 +936 11.0%
Oct 23/08 +889 10.88%
Mar 16/00 +499 4.93%
July 24/02 +488 6.35%
Sept 30/08 +485 4.68%

Sept 29/08 -777 6.98%
Oct 15/08 -733 7.87%
Sept 17/01 -684 7.13%
Oct 9/08 -678 7.33%
April 14/00 -617 5.66% Oct 27/97 -554 7.18%

Notice how many of these moves are in Sept and Oct? 73%

Jeff Bailey : 10/29/2008 12:50:04 PM

Asian Markets Link ... Finished mostly higher. Japan's Nikkei-225 rose 7.74% to 8,212 Link . Hong Kong's Hang Seng edged up 0.84% to 12,702 Link , while mainland China's Shanghai fell 2.94% to 1,720 Link

Keene Little : 10/29/2008 12:42:48 PM

Watch gap closure for SPX at 954.54 or for ES a little higher at 960.

Jeff Bailey : 10/29/2008 12:42:34 PM

DXY 84.63 -2.79% ...

Jeff Bailey : 10/29/2008 12:42:01 PM

FXE $129.69 +1.95% ...
FXB $164.61 +3.14% ...

Jane Fox : 10/29/2008 12:41:36 PM

AD line has improved to +1063 and the VIX is falling to new daily lows so the bulls have a grip on the ball. Heaven forbid if the FED does not come through.

Jeff Bailey : 10/29/2008 12:41:26 PM

FXY $101.70 -0.25% ...

Keene Little : 10/29/2008 12:38:45 PM

NDX is breaking above 1311, the top of the potential parallel down-channel and is looking bullish here. It's leading the market to the upside and that's also bullish. But it's still very possible that this leg up is completing the 5th wave of the move up from Monday and that makes me unwilling to buy into it. It's still a long way up to the key level of 1368, its October 17th high, but not as far (in points) as it used to be. Above that level would negate the more bearish wave pattern setup and point to the likelihood that we'll see at least a test of the October 14th high (1471).

Keene Little : 10/29/2008 12:31:05 PM

While I may be feeling bearish about the setup in front of us I am acutely aware this week of the dangers of being short the market and I think all of us need to be extra cautious about trading in general. We have end of month/quarter on Friday and we're heading into an election. That's potentially bullish for the market.

The fund managers will want to show the best possible positions for their end-of-quarter statements and a lot of their buying has been in large caps (easier to dump quickly next week if they have to). And who knows what the government might try to do this week between the FOMC announcement and the upcoming elections. There are all kinds of opportunities for hanky panky interference this week.

Trade lightly or not at all. If the market starts heading back down this afternoon we'll have plenty of opportunities to catch some bounces to get short. If the market rallies stronger I think we could see SPX 1050 fairly quickly but the quicker it gets there the less likely it is it will hold.

Jane Fox : 10/29/2008 12:20:49 PM

Crude has rallied over $5.00 today. Link

Jeff Bailey : 10/29/2008 12:19:32 PM

MBA's Weekly Application Survey at this Link

Jeff Bailey : 10/29/2008 12:18:06 PM


GMAC Financial Serves was recently granted access to new short-term funding facility created by the Federal Reserve to help alleviate the ongoing credit crisis in order to access the locked-down commercial credit markets.

Jeff Bailey : 10/29/2008 12:17:24 PM


Auto parts supplier, facing weaker demand from auto makers, will eliminate 500 salaried and 600 hourly jobs worldwide as part of a broader restructuring. Along with 5 plant closings, cuts expected to save $64 million annually.

TEN $2.81 -9.06% ...

Jeff Bailey : 10/29/2008 12:15:28 PM

12:00 Internals at this Link

Keene Little : 10/29/2008 12:09:29 PM

I'm hoping we'll see the market continue to slowly elevate into the FOMC announcement as it would be a bearish setup.

Jane Fox : 10/29/2008 12:03:39 PM

The market is basically in a holding pattern and this is bullish. AFter the gains we had yesterday this is about a bullish as we could have expected. Gee I think I have said this before.

Jeff Bailey : 10/29/2008 12:02:48 PM

Humana (HUM) $31.05 -2.72% ... (see MM profiles)

Jeff Bailey : 10/29/2008 12:02:19 PM


Aetna's 3Q net falls 44% to $277.3 million, or 58c, despite gains in revenue and membership. The health insurer lowers its full-year outlook as CEO Ronald Williams cites "protracted" economic weakness.

AET $25.44 -8.48% ...

Jeff Bailey : 10/29/2008 12:01:18 PM


Kellogg's partially offsets high commodity costs with a cost-cutting effort. The U.S.'s largest cereal maker reports net income of $342 million, or 89c a share, beating expectations for EPS of 80c. Sales in North America increase 10%.

K $50.88 +0.39% ....

Jeff Bailey : 10/29/2008 12:00:13 PM

dj (earlier)- FANNIE EYES $20.6B WRITE OFF

Fannie Mae says it will write down the amount of deferred tax assets on its books as part of the mortgage company's 3Q report, potentially erasing all $20.6 billion the company had available to offset taxes on future profit.

FNM $0.92 +16.45% ...

Jeff Bailey : 10/29/2008 11:58:49 AM


Morgan Stanley launches a series of moves to increase bank deposits. The company's effort comes amid a flight to quality in the deposit market, with customers moving money out of banks they perceive to be weaker into those they believe are stronger.

MS $14.99 -1.38% ...

Jeff Bailey : 10/29/2008 11:57:18 AM


Food company's net 3Q net rises to $1.4 billion, or 93c a share, helped by a gain from the sale of its Post cereals business, combined with product-price hikes.

KFT $28.99 +0.38% ...

Jeff Bailey : 10/29/2008 11:55:12 AM


GM, marking its third straight quarterly drop, sold 2.11 million vehicles in the quarter, the latest indication that its growing overseas operations have stopped offsetting declining sales in its troubled North American unit.

GM $6.40 +2.40% ...

Jeff Bailey : 10/29/2008 11:54:13 AM


Company's 1Q net rises to $3.35 billion, or $1.03 a share, as net sales rise to $22.03 billion, driven by growth in developing regions. Beauty segment sales gain 10% on double digit sales of brands including Gillette Fusion and Covergirl.

PG $61.09 -3.38% ...

Jeff Bailey : 10/29/2008 11:53:18 AM


Demand for expensive goods rises by 0.8% in September to a seasonally adjusted $207.81 billion on higher car and airplane orders amid a weakening economy and a credit crunch. Economists expected a decline of 1.1% in durable orders.

Jeff Bailey : 10/29/2008 11:48:31 AM

Yesterday (11:26:45) I noted VLO scrapping plans for new coker project at Port Arthur.

Jeff Bailey : 10/29/2008 11:46:51 AM

dj- Hess: No plans to build refinery in St. Lucia amid lower capex

Jeff Bailey : 10/29/2008 11:23:49 AM

That's it isn't it? ... "bad behavior."

LOW interest rates aren't the overriding "problem." History simply shows it is the "bad behavior" that has been the problem.

Keene Little : 10/29/2008 11:19:27 AM

Ideally, from an EW perspective, the rally for NDX from Monday afternoon (what could be the c-wave of an a-b-c bounce off last Friday's low) would look best with a pullback this morning, as it has started, followed by one more push higher (maybe tag the top of its parallel down-channel near 1310). If that happens into the FOMC announcement I would guess the market is going to sell off post-FOMC. We'll just have to wait to see how it's setting up early this afternoon.

Jeff Bailey : 10/29/2008 11:05:40 AM

FXE $129.70 +1.96% ... backfills roughly 1/2 of its 10/21 to 10/22 gap lower.

Jeff Bailey : 10/29/2008 11:00:07 AM

EIA US Weekly Inventory Data

Crude Oil stockpiles up 493,000 bbls @ 311.87M bbls
Total Gasoline down 1.51M bbls @ 194.99M bbls
Conventional Gasoline down 972,000 bbls @ 93.18M bbls
Total Distillates up 2.32M bbls @ 126.63M bbls
ULS Diesel up 1.46M bbls @ 68.59M bbls
Kerosene-Type Jet Fuel down 588,000 bbls @ 35.99M bbls
Heating Oil up 464,000 bbls @ 38.75M bbls
SPR saw a draw of 54,000 bbls to 701.83M bbls

US Refiner Capacity/Utilization

Gross Inputs up 104,000 bbls/day to 15.03M bbls/day
Crude Oil Inputs up 289,000 bbls/day to 14.85M bbls/day
Refinery Op. Capacity unch at 17.61M bbls/day
Percent Utilization rose to 85.34% from prior 84.75%
My # Days Supply of Crude fell to 21.7 days supply from 22.6.

Keene Little : 10/29/2008 10:47:51 AM

On the NDX 60-min chart I showed last night there is a Fib projection at 1297.76 for an a-b-c bounce off last Friday's low where the c-wave is 162% of the a-wave (very common). Just above that is the top of a potential parallel down-channel for price action since the October 15th low, currently near 1311. Today's high is right in between those two levels at 1304.13. I consider that zone to be tough resistance. Updated 60-min chart: Link

The significance of the setup here is that we could be perched on the edge of the cliff again. The dark red wave count is a 1-2, 1-2 to the downside (for the larger degree 5th wave in the move down from May). This says we're about to unleash another 3rd of a 3rd wave down, similar to the setup we had at the September 19th high (which was followed by the 574-point drop to the October 10th low). I don't think the downside potential is that high but it does suggest the market may be vulnerable to another "dislocation".

I like the setup for another longer-term short play and then I'll be watching to see what kind of decline develops (assuming of course we get one).

Jane Fox : 10/29/2008 10:44:26 AM

SAN FRANCISCO (MarketWatch) - Motor gasoline supplies fell for the first time in five weeks, down 1.5 million barrels for the week ended Oct. 24, according to the Energy Department Wednesday. Crude supplies climbed 500,000 barrels. Distillate stocks rose 2.3 million barrels. Refinery utilization was at 85.3% compared with 84.8% of capacity a week earlier. Following the news, December crude was up 6.1% at $66.53 a barrel on Globex.

Jeff Bailey : 10/29/2008 10:39:31 AM

10:00 Internals found at this Link

Jeff Bailey : 10/29/2008 10:24:36 AM

Apex Silver Mines (SIL) $1.38 +16.94% ...

Keene Little : 10/29/2008 10:23:03 AM

Looking at all this I'd say SPX should have firm resistance in the 955-960 area and I'd watch it for a short play to set up if price makes it up there and stalls.

Jeff Bailey : 10/29/2008 10:22:21 AM

CDE long ... Stop goes $0.39. Target $0.90.

Jeff Bailey : 10/29/2008 10:21:10 AM

SLV $9.82 +8.50% ...

Keene Little : 10/29/2008 10:21:02 AM

If I place the same wave count on the bounce for SPX (which is obviously not all-hours trading), the 5th wave projects up to 960 for equality with the 1st wave in the bounce off yesterday's low. That matches another Fib projection for a possible a-b-c bounce off Friday's low (with an extended c-wave). Just below that, at 954.54, it would close its October 22nd gap.

Jeff Bailey : 10/29/2008 10:20:56 AM

Swing trade SPECULATIVE long alert! ... for 500 shares ($10k accounts) in Coeur D Alene Mines (CDE) at the offer of $0.59.

Jane Fox : 10/29/2008 10:15:49 AM

The VIX and S&P futures are not in sync today. The VIX is quite bearish but the S&P futures are not bearish. Link

Jane Fox : 10/29/2008 10:06:03 AM

I certainly would not want to be long if the FED doesn't give the market what it wants today - 1/2 point cut.

Jeff Bailey : 10/29/2008 10:03:45 AM

YG 761.50 +2.69% ...

Jeff Bailey : 10/29/2008 10:02:54 AM

VIX.X 69.28 +3.46% ...

Jeff Bailey : 10/29/2008 10:02:09 AM

HUI.X $181.79 +5.26% ...

Jeff Bailey : 10/29/2008 10:01:40 AM

FXE $128.06 +0.67% ...

Jeff Bailey : 10/29/2008 10:01:26 AM

GG $17.55 +6.17% ...

Jeff Bailey : 10/29/2008 10:01:03 AM

Swing trade put stop alert! for the one (1) StreetTracks Gold GLD Dec $73 Put (GVD-XU) at the bid of $5.00

GLD $75.00 +1.63% ...

Jane Fox : 10/29/2008 9:59:58 AM

LONDON (MarketWatch) -- Short-term dollar borrowing costs fell again Wednesday. The London interbank offered rate, or Libor, declined to 3.42% from 3.465% Tuesday. Economists look to easing Libor rates as a signal that tensions in money markets have started to ease. Libor rates had soared as banks grew increasingly reluctant to lend to each other, threatening to freeze the global financial system. Prior to the credit crunch, three-month dollar Libor usually traded slightly above the Federal Reserve's benchmark fed funds rate, which currently stands at 1.5%. The Fed is widely expected to cut the rate later Wednesday.

Jane Fox : 10/29/2008 9:52:54 AM

Like I said earlier, the bulls should just be happy with chop today and if they can hold on to the gains from yesterday that would be quite bullish.

Jane Fox : 10/29/2008 9:51:43 AM

VIX is climbing telling me the bears have the ball but this is a FED day and things could be choppy.

Keene Little : 10/29/2008 9:48:18 AM

Being as close as we are to closing the gap at ES 960.00 ("only" 20 points or 200 DOW points) it seems like that could be a strong magnetic pull on the market today. And of course a rally to get there would be a rally into FOMC and not something I'd want to hold long through.

Keene Little : 10/29/2008 9:43:30 AM

A drop below the overnight lows (ES 914.25) would say the 5th wave already completed at this morning's high and that would have me watching what kind of pullback we're getting (for some clues about whether it's going to be just a pullback or the start of the next leg down).

Jane Fox : 10/29/2008 9:35:34 AM

Well so much for the AD line opening bullishly, it is -93 so not bullish at all.

Keene Little : 10/29/2008 9:31:54 AM

Equity futures were down until just before 6:00 AM and then ramped higher above yesterday's highs. How many times have we seen that kind of pre-market price action not hold after the open? Looking at all-hours trading for ES it's looking like a clean 5-wave move up from Monday evening.

The 5th wave, which is the move up from 6:00 AM, has achieved the minimum projection at 946.00 (62% of the 1st wave). It would achieve equality with the 1st wave at 965.50 so that's the upside potential currently. Gap fill from October 22nd would be at 960.00. This should then be followed by at least a pullback to correct that move up. More bearishly it will complete a larger a-b-c pattern and start heading down again. ES 60-min all-hours chart: Link

Jane Fox : 10/29/2008 9:30:09 AM

I see more talk about the mark to market rule. For those of you who are unfamiliar with this rule it is an accounting rule that came into effect last November and requires companies to value any given asset according to what they believe someone else would pay for it. They then record, or "market," this "market value" on their financial statements. The problem is that some of the assets on companies books no longer have a market value (or very little); assets like Mortgage backed securities, CDO and credit default swaps (insurance policies on bonds). This turns some balance sheets into nightmares and companies with assets worth $1 trillion are now reporting tens of billions of dollars less. The Troubled Assets Relief Program (TARP) gives the SEC the authority to suspend this rule but so far has not.

Many think if the rule were suspended we would just be putting the inevitable into the future and that mark to market accounting gives investors a way to trust a company's balance sheet. Allowing a company to value their own assets is only asking for manipulation and has been called mark to myth. One of the governments biggest hurdles in this environment is building trust and suspending this rule is not the best way to build that trust.

There certainly can be an argument that mark to market rules can overvalue assets in good times and under value them in bad so it is certainly not a black and white issue.

Jane Fox : 10/29/2008 9:05:32 AM

Here are your overnight charts. The futures markets we watch here in the monitor all broke their previous day highs during the overnight session. How long has it been since that happened last? I expect the AD line to open bullishly but don't expect a huge movement day. I think all the bulls should be hoping for today is to hold on to the gains from yesterday, anything more than that would be gravy. Link

Jane Fox : 10/29/2008 8:55:57 AM

WASHINGTON (MarketWatch) - Strong demand for airplanes lifted orders for U.S.-made durable goods to a 0.8% gain in September, the Commerce Department estimated Wednesday.

A 6.3% increase in orders for transportation goods offset weak demand in other sectors in September, the government reported. Excluding transportation, orders fell 1.1%. Excluding civilian aircraft, orders fell 0.3%.

The 0.8% increase was much stronger than the 1% decline expected by economists surveyed by MarketWatch. However, orders in August were revised down sharply to a 5.5% decline from a 4.5% decline earlier.

Orders for durable goods are down 1.8% from the previous September. Shipments are off 0.6%. The figures are not adjusted for price changes.

Durable-goods orders have risen in four of the past five months, but are still down 2.7% from April's level.

Keene Little : 10/28/2008 11:40:46 PM

We've been watching the credit spreads as a way of gauging fear in the financial markets. The TED spread dropped nicely after the massive bailout attempt by the Fed and Treasury, dropping from a high of 4.64-point spread on October 10th to the current 2.71 points. As shown on the chart, it has retraced about 50% of the rise from June: Link

But the bigger concern is what's happening in the commercial market and the updated chart of the spread between Moody's Corp. BAA bonds (charted inversely on the chart) and the 30-year T-note shows no improvement at all: Link

The decline in the credit spread curve (widening in the credit spread) has been a good indicator for us to keep an eye on and it continues to predict lower prices for the stock market. Trade it long but don't fall in love with your position.

Keene Little : 10/28/2008 10:45:24 PM

Wednesday's pivot table: Link

The huge price swings continue inside the trading range we've been in since the October 10th low. The question tonight is whether we've got something bigger to the upside starting or just another bear market rally that will fail like the rest of them. The SPX daily chart shows a continuation lower from the current bounce: Link

If we do see the market head back down again I'm not sure yet whether we'll see a hard decline kick into gear (dark red) or instead a choppy move lower that hammers out a bottom this week at a marginal new low (around 825). If the rally continues on Wednesday, especially after the strong rally on Tuesday, it improves the chances that we'll see a larger rally leg (dashed line) to finish an a-b-c bounce from the October 10th low although I still consider that possibility as the lesser of the two others (at the moment but that would obviously change on Wednesday with a continuation higher). The upside projection for the short-term bullish move would be near 1050.

On the NDX daily chart I'm only showing the two possibilities for either a larger leg up before turning back down again or a strong selloff from here: Link . The 60-min chart shows the two different selloff ideas--the hard decline (dark red) vs. the choppy decline to a marginal new low this week: Link

The highs on October 17th, near NDX 1368 and SPX 985, are key levels for the short term--above those would say we're getting the bigger leg up shown in pink on the daily charts. As Maria Bartiromo so eloquently stated the other day, this market is whacked. Trade carefully in this mess.

OI Technical Staff : 10/28/2008 9:59:59 PM

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