Option Investor
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Jeff Bailey : 10/30/2008 5:13:24 PM

Hartford (HIG) $9.62 -51.56% ... good grrrravy. 5-minute looked like AVP did today until about noon. Different sector, but you just never know. Traded a RED#4. RED #6 was $3.57.

Jeff Bailey : 10/30/2008 5:00:38 PM

Apollo Group (APOL) $69.64 +7.12% ... closes above bar chart downward trend. Not many stocks look like this right now.

Jeff Bailey : 10/30/2008 4:51:33 PM

Good grrrravy! ... ICE $87.00 +40.79% ... did a GREEN #7

Jeff Bailey : 10/30/2008 4:50:03 PM

IVN $2.96 +43.86% ... not much of a 5-minute interval.

Jeff Bailey : 10/30/2008 4:49:12 PM

ODP +48.6% and OMX +46.1% ...

Jeff Bailey : 10/30/2008 4:47:48 PM

Hey! Put a UPPER 5-mrt on CPTS $14.00 +52.67% today.

What was "the news" that triggered that?

Jeff Bailey : 10/30/2008 4:35:18 PM

AVP session recap Link

OK, so we never were able to day/scalp trade AVP today.

But do this with ANY security.

What IF you shorted this type of setup this morning at $21.00? BEFORE you eventually had the eventual DYNAMIC low of $19.85?

ONE "problem" perhaps today with an AVP-type of 5-mrt is how STRONG the markets were today. (AVP is a NYSE-listed stock) and you had a BIG 5-minute bar.

I would think a "scalp" day trader either stopped at $20.75 or so on the move back above 19.1% dynamic. MAYBE break-even if given more room.

Go ahead! ANY stock you want. Use the LEVELS, go back to ANY stock you want. TEST and observe.

You can "paper trade" 6,000 stocks if you'd like. Eventually, you'll begin to recognize the WINNERS fomr the "this isn't looking right," to the "no way can I control my RISK because the LEVELS are too far apart."

We'll never know today, but I'd have bet you (with a short at $21.84-ish this afteroon), that if the a/d line wasn't as strong as it was for the NYSE, and the major averages were flat to red, AVP probably goes out at/near the lows of the session.

Again ... go back and look at some stocks, you can also look at what the market did that given day.

Jeff Bailey : 10/30/2008 4:16:32 PM

SPY $96.40 ...

Jeff Bailey : 10/30/2008 4:11:13 PM

Get'n a craving for carmel apple Link

Jeff Bailey : 10/30/2008 4:09:58 PM

QQQQ $32.83 +3.30% Link ...


Jeff Bailey : 10/30/2008 4:07:10 PM

SPY $96.00 +3.13% ... the plot thickens ... make it ... BREW thickens ... Link

would place GREEN "?" on your witching chart.

Keene Little : 10/30/2008 4:04:01 PM

This spike up into the close looks like another test of the broken uptrend lines from this morning. Nice setup for another shorting opportunity (options only).

Jeff Bailey : 10/30/2008 4:02:59 PM

Almost feels like an option expiration!

Jeff Bailey : 10/30/2008 4:02:46 PM

PHM $10.24 ... high/low has been $11.01/$9.97

Keene Little : 10/30/2008 4:01:45 PM

Nice little spike at the end to get the market to close at its highs. I'd feel bullish about it if it didn't look so manipulated and choppy. There's a real false sense about today's rally and I don't trust it at all. But price is the final arbiter so don't argue with it if it's running you over.

Jeff Bailey : 10/30/2008 4:00:56 PM


Jeff Bailey : 10/30/2008 3:59:42 PM

From 9,005 15 minutes ago.

Jeff Bailey : 10/30/2008 3:59:17 PM

YM 9,166 ...

Jeff Bailey : 10/30/2008 3:48:06 PM

AVP's Earnings Press Release Link from earlier this morning.

Keene Little : 10/30/2008 3:44:43 PM

The market is being held up (the manipulators are busy dumping money into the market) but will it be enough? The last 10 minutes will tell us.

Jeff Bailey : 10/30/2008 3:41:45 PM

Premiums still "jacked" so stay AT/near the money.

Jeff Bailey : 10/30/2008 3:41:22 PM

VIX.X 66.54 -4.88% ...

Jeff Bailey : 10/30/2008 3:40:49 PM

Swing trade put alert! ... for one (1) of the Avon Products AVP Dec. $22.50 Puts (AVP-XX) at the offer of $2.60.

AVP $22.51 -15.59% ...

Jeff Bailey : 10/30/2008 3:31:43 PM

AVP $22.76 -14.81% ...

Jeff Bailey : 10/30/2008 3:30:09 PM

YM 9,114 ... after kiss of DAILY Pivot (9,019) and WKLY R1 (9,034)

Jeff Bailey : 10/30/2008 3:28:32 PM

General Electric (GE) $19.15 -0.26% ... comfortable at DAILY Pivot.

Keene Little : 10/30/2008 3:27:22 PM

The uptrend lines for the bounce from this morning's lows have broken. Watch for a retest. That break should be the signal that we're now going to get the next leg down. Think of the bounce as a bear flag pattern and now two equal legs down from this morning would target SPX 916.45 and NDX 1299.63. It doesn't mean it will get there, or stop there, but that's a downside target if you're day trading this short.

Based on the stronger bounce in NDX back up to the morning high it increases the chances that we'll see a stronger 2nd leg down--162% of this morning's leg down. That would be at SPX 890.82 and NDX 1272.93. That would also be near a 38% retracement of the rally from Tuesday for NDX and a 62% retracement for SPX. Again, no guarantees for those levels, just some potnetial downside targets if the decline keeps going into the close.

Jeff Bailey : 10/30/2008 3:24:31 PM

NYSE a/d 2,134/657

Jeff Bailey : 10/30/2008 3:21:41 PM

Day trade short setup CANCEL order alert! ... for the AVP (from 03:03:35).

AVP $22.32 -16.31% ...

Jeff Bailey : 10/30/2008 3:19:49 PM

03:14 Market Watch Link

Jeff Bailey : 10/30/2008 3:15:19 PM

Gots to be thinking that a YM/ES/MR/NQ day trader has some heart beat in the final 45.

Jeff Bailey : 10/30/2008 3:12:25 PM

NYSE 2,287/499

Jeff Bailey : 10/30/2008 3:10:19 PM

EIA: US Revised August Oil Demand -1.758M B/D Vs. Yr Ago

Jeff Bailey : 10/30/2008 3:09:31 PM

EIA: US Revised August Oil Demand -8.4% vs. Yr Ago

Jeff Bailey : 10/30/2008 3:05:21 PM

NYSE 2,233/552

Jeff Bailey : 10/30/2008 3:03:35 PM

Day trade short setup alert! ... for 1/2 position in shares of Avon products (AVP) $22.39 -16.16% ... SHOULD IT TRADE LOWER at $21.80.

Jeff Bailey : 10/30/2008 3:02:33 PM

Just in case ...

Jeff Bailey : 10/30/2008 3:01:35 PM

Just above GREEN #2.

Jeff Bailey : 10/30/2008 3:00:55 PM

Somebody chunked 1.2 million from 02:20-02:25.

Jeff Bailey : 10/30/2008 2:59:56 PM

INTC $16.08 +7.63% ... "best of breed!" DAILY R2 $16.05.

Jeff Bailey : 10/30/2008 2:59:13 PM

SMH $20.28 +5.13% ... trades DAILY R2 again, did this morning too.

Jeff Bailey : 10/30/2008 2:57:51 PM

Interesting thoughts ... Possible 2nd-job income potential.

Tab Gilles : 10/30/2008 2:57:16 PM

Chips Ahoy!

INTEL (INTC) $16.01 +$1.07 (7.16%)

ProShares Ultra Semi- ETF (USD) $19.19 +$2.01 (11.7%)

Jeff Bailey : 10/30/2008 2:56:58 PM

Jimmy C talking about AVP

Jeff Bailey : 10/30/2008 2:50:08 PM

NYSE a/d 2,192/589

Jeff Bailey : 10/30/2008 2:49:52 PM

AVP sitting on 50% dynamic.

Jeff Bailey : 10/30/2008 2:46:57 PM

XNG.X +6.11% ...

UNG -7.22% ...

Keene Little : 10/30/2008 2:46:22 PM

FWIW, the climb off this morning's low looks corrective--lots of overlapping between the highs and lows of the bounces and pullbacks. That suggests it could be wave-b of what will be a larger a-b-c pullback from yesterday's or this morning's highs. It calls for a another leg down at least equal to this morning's decline. But with the higher-than-usual manipulation this week (my guess on that), the intraday patterns may not be as reliable as usual. Have I mentioned that flat is a position? But if forced to pick a direction I'd say we're going to head back down before the close.

Jeff Bailey : 10/30/2008 2:42:44 PM

SPY $95.22 +2.29% ...

Jeff Bailey : 10/30/2008 2:42:26 PM

FXY $100.88 -1.18% ... almost "par" again.

Jeff Bailey : 10/30/2008 2:37:50 PM

Good gravy! BARE has achieved its bearish vertical count.

Jeff Bailey : 10/30/2008 2:37:00 PM

See the "5" on BARE? That's early May=5 in the PnF chart.

Jeff Bailey : 10/30/2008 2:36:01 PM

AVP Link

Jeff Bailey : 10/30/2008 2:34:08 PM

URY-QX from 04/30/08 entry at $22.94, exited 05/05/08 at $20.51.

Jeff Bailey : 10/30/2008 2:31:29 PM

Bare Escentuals (BARE) $6.69 +6.19% Link ...

Jeff Bailey : 10/30/2008 2:29:36 PM

what was that other cosmetic stock we put for profits? ... check the blotter.

Jeff Bailey : 10/30/2008 2:29:00 PM

NYSE a/d 2,185/567

Jeff Bailey : 10/30/2008 2:28:34 PM

AVP at WKLY S1 ... bears need some weakness late if they're to have any fun.

Jeff Bailey : 10/30/2008 2:27:08 PM

AAPL $111.90 +7.03% ... at GREEN #4.75.

Jeff Bailey : 10/30/2008 2:24:37 PM

02:00 Internals at this Link

Jane Fox : 10/30/2008 2:23:15 PM

Internals remain bullish although meandering. Link

Tab Gilles : 10/30/2008 2:21:18 PM

Apple (AAPL) $111.70 +$7.20 Link Link Link

Apple is picking up momentum here. With Holiday sales approaching I believe that Apple will be a leader in consumer electronics. Valuations are CHEAP, trading at 14xs, it has traded historically between 30 & 40 times.

Support/Resistance of $120 over the last 18 months.

Suggesting a Call Spread:

Buy December $115 Call QAA-LC Bid $9.00/ Ask $9.10

Sell December $120 Call QAA-LD Bid $6.90/ Ask $7.05

Net cost $2.20

Jane Fox : 10/30/2008 2:18:00 PM

NEW YORK (MarketWatch) -- Major bond dealers say the United States may have to issue more than $1 trillion in debt during its current fiscal year, by far the most ever, to fund massive programs designed to bail out the banking system.

Jeff Bailey : 10/30/2008 2:17:46 PM

13-week at 0.39% and WKLY S2. Be alert out there.

Jeff Bailey : 10/30/2008 2:15:12 PM

Really should get something more than conventional on the SLV.

Jeff Bailey : 10/30/2008 2:14:46 PM

GLD $72.64 -1.83% ... comes back to Qs1.

Jeff Bailey : 10/30/2008 2:11:55 PM

This morning's OPEN, CDE was "crazy" at $0.71, up roughly 16% ...

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

How about CDE ??? what did it do yesterday? (green #2). What's it done today? (red#3).

Jeff Bailey : 10/30/2008 2:08:29 PM

Just more than a RED#7.

Jeff Bailey : 10/30/2008 2:07:43 PM

SPY got a RED#6.

Jeff Bailey : 10/30/2008 2:06:38 PM

SPY $94.52 +1.52% ... this morning's low was $92.90

Jeff Bailey : 10/30/2008 2:03:39 PM

Almost a RED#12 eh?

Jeff Bailey : 10/30/2008 2:02:48 PM

Mmmm ... check out SYMC too.

Jeff Bailey : 10/30/2008 2:01:36 PM

AVP 30-minute chart Link

Jeff Bailey : 10/30/2008 1:58:44 PM

MUCH different picture on a 60-minute isn't it?

Jeff Bailey : 10/30/2008 1:57:29 PM

Once you get a chart set up, then click 10-minute, 15-minute, 30-minute, 60-minute intervals. LOOK FOR TROUBLE.

Like buying a house, 125% loan-to-value with a 3-year ARM and introductory rate of 1.00%.

Keene Little : 10/30/2008 1:56:13 PM

Keene, when they call you to ask who will you vote for, turn it around and Ask the guy: "So do you think the next 1000 points on the DOW are up or down?"

That's a great idea. They probably won't call me anymore. I think my tone of voice on this morning's call scared the poor young lady just trying to do her part in volunteering for our great democracy in action.

Jeff Bailey : 10/30/2008 1:53:50 PM

You kind'a have to wonder WHY AVP stopped this afternoon at $19.85 don't you?

Let's at LEAST consider the $20-strike.

Keene Little : 10/30/2008 1:53:01 PM

Thanks to Scott for pointing out the potentially bearish diamond formation that you can see on a 10 or 30-min chart for price action since yesterday morning (SPX 30-min chart): Link . How much (if any) it will break down is the question. I'm showing both possibilities on the chart with possible support at the broken downtrend line from October 14th, currently just below 900.

Jane Fox : 10/30/2008 1:52:38 PM

NEW YORK (MarketWatch) -- Russian stocks surged on Thursday, with the RTS index jumping nearly 18% and the MICEX index rising by more than 19%, with investors cheering international measures to provide funds to emerging markets and expecting more measures to be announced by Moscow. Russia's dollar-denominated RTS index jumped 17.8% to close at 758.71, while the MICEX surged 19.5% end at 727.39 points. "There's slightly improved [emerging-market] sentiment that there's enough money out there for bailouts," said Paul Biszko, senior emerging-market strategist at RBC Capital. "There's also expectations that the [Russian] government has come up with money for a bigger, more detailed bail-out package."

Jeff Bailey : 10/30/2008 1:52:04 PM

Avon Products ... and now with the "Dynamic" (pink) and color up some zones. Link

Jane Fox : 10/30/2008 1:40:55 PM

Ah gee I hope I don't get in trouble for that statement either.

Jane Fox : 10/30/2008 1:40:26 PM

.. and expect others should live the same way.

Jane Fox : 10/30/2008 1:39:23 PM

No Jeff, neither can I. Gee am I just hard hearted person or one who has been very very careful to make sure I was not overburdened with debt?

Keene Little : 10/30/2008 1:39:10 PM

I can tell the Obama campaign has too much money and no idea how to spend it. I've received at least 6 calls within the past week from someone working on the Obama campaign wondering if I'm going to vote for the guy. First of all, it's for me to know and them to find out. Second, is anyone in their campaign coordinating anything? I'll be so glad to get this election over with. To say I'm tired of it is a gross understatement.

Jeff Bailey : 10/30/2008 1:37:52 PM

UNE-AJ $0.95 x $1.15 ... with UNG $27.47 -7.63% .... would NOT look to buy this call, at these $27.50-ish prices. Any NEW enty would be AT, or just OUT the money.

Don't expect a "bail out" or "rescue" package.

Jeff Bailey : 10/30/2008 1:34:54 PM

I can't feel too sorry for either ...

Jeff Bailey : 10/30/2008 1:32:55 PM

Shocking isn't it? Can't feel bad for a guy that's down $20B, but tears hit the floor for the ARM homeowners that never thought rates would rise from 1.00%, that housing rices would increase 20% a year, and leveraging 125% loan-to-value.

Keene Little : 10/30/2008 1:32:11 PM

Some thoughts about November options (for those of you holding them)--one of the kinds of consolidation patterns I've mentioned several times previously, for a 4th wave correction playing out since the October 10th low, is a big sideways triangle. That possibility is still on the books and with this week's price action I'm elevating it to a likely scenario. On the SPX daily chart it's shown as the pink wave count: Link

It remains possible we'll get a quick thrust up to about 1050 to finish the 4th wave (light dashed line) so keep that in mind if you're short the market. It's also possible the price action since the October 14th high is a 1-2, 1-2 wave count to the downside and that says we're very close to getting another flush (dark red). So keep that in mind if you're long the market.

The triangle idea says we should get a little more pullback today, perhaps to the 880-900 area and then another leg up to about 1000-1005 sometime next week. Then a big down-up sequence through the month of November finishing around Thanksgiving before the market drops in the 5th wave to a new low in December.

If you're long November options this triangle idea will kill them--they'll dry up like little raisins (except not as tasty after they've shriveled). If we do get the pullback today/tomorrow to the 880-900 area I'm thinking of bailing on my November puts. I've still got a bunch of December puts in case the market takes a spill but I may roll those out to January.

If there's one thing I've learned over the years, it's that I'm often right on the direction of the market but wrong on the timing (it often takes much longer than I thought it would). And time kills long options. My credit spreads would do just fine with the triangle idea but obviously they have their own risks at the moment in this very volatile market. Those need to be watched like a hawk as well.

Just some more thinking out loud in my attempt to figure out this price action since October 10th. I've at least got 11 possible corrective wave count possibilities narrowed down to only 3 (wink).

Jeff Bailey : 10/30/2008 1:30:00 PM

Avon Products (AVP) ... 5-minute. Left the LOWER 5-Mrt. Now turn on QCharts' DAILY and WEEKLY Pivot Levels. I add a RETRACEMENT bracket on the WEEKLY R2 ($33.37) and S2 ($19.29) Link

Jane Fox : 10/30/2008 1:26:23 PM

CNBC is reporting one of the world's richest men, Carl Slim just lost 20Billion last month. Misery may love company but I just can't feel bad about it.

Keene Little : 10/30/2008 1:24:28 PM

Two equal legs up for the bounce off this morning's low is at NDX 1331.80 (just got tagged to the penny) and SPX 952.14 (not reached yet). If we're in the middle of a larger 3-wave pullback then the market will turn back down from here and make a new daily low.

Jeff Bailey : 10/30/2008 1:22:46 PM

SPY $95.03 +2.09% ... consider the MARKET

Jeff Bailey : 10/30/2008 1:21:58 PM

Where would have been a good looking AVP short entry point this morning?

Jeff Bailey : 10/30/2008 1:15:04 PM

Avon Products (AVP) ... 5-minute interval chart with LOWER "5-Mrt" Link

Still some questions on "what" a 5-mrt is. Simply MEASUREING a response at an open. Getting the FIRST 5-minute market reaction.

Jane Fox : 10/30/2008 12:45:35 PM

GAUHATI, India -- A series of coordinated blasts tore through northeast India on Thursday, killing at least 61 people and sending police scrambling to find any unexploded bombs in a province troubled by years of separatist violence and ethnic tensions.

Jeff Bailey : 10/30/2008 12:37:11 PM

FXE $129.03 -0.48% ...

Jeff Bailey : 10/30/2008 12:36:38 PM

Excellent, excellent oil/euro comments on CNBC. See my 03:45:39 post this morning and far right of table.

Jeff Bailey : 10/30/2008 12:32:02 PM

AVP ... probably not a RED#6 target, but RED #2 and WKLY S2 potential.

Jane Fox : 10/30/2008 12:27:47 PM

I just want to be sure that everyone knows I did NOT make a political statement in my 12:25 post. So please no emails.

Keene Little : 10/30/2008 12:26:22 PM

The reason I'm still longer-term short is because all of the price action since the October 10th low has 4th wave correction written all over it. It's not a guarantee that we'll get new lows but the larger wave count for the move down from October 2007 and May 2008 both point to the need for new lows to complete the wave count. Whether it happens from here or not until further consolidation through next week, we should get another leg down. Once I have a good idea that the 5th wave down is in progress I'll then be able to make some downside projections for it.

Jane Fox : 10/30/2008 12:25:48 PM

This plan is still in the works and has not been decided on as the plan of action for easing the foreclosure issue facing the government. The final draft of any proposal may have to wait for the next administration. One has to wonder why anyone in their right mind would want to run our government for the next 4 years.

Keene Little : 10/30/2008 12:21:31 PM

Continuing with the NDX pattern here, the current bounce, at 1314.64, got slightly above the 1313.05 low near 10:30 AM. This is overlap. It means we can't have a 5-wave move down in progress because the current bounce (which would be the 4th wave) overlapped with the 1st wave down. That's an EW no-no. So we're either left with a 3-wave pullback and we'll head higher or we've got the start of a more bearish 1-2, 1-2 wave count to the downside. The latter means a strong decline is about to unfold (3rd of a 3rd wave down for this little move down so far).

Therefore one way to play this is to be short against the bounce high at 1329.84 (to catch a bigger selloff) or long against this morning's low at 1301 (to catch the next rally leg to new daily highs). Or flat remains a good position--one I particularly like at the moment. I'm still longer-term short but I don't like the setup yet for a high-odds short-term play.

Jane Fox : 10/30/2008 12:19:51 PM

Looks like 3 million homeowners struggling to pay their mortgages may get to stay in their homes. There is plan in the works where the government (Treasury and FDIC) would take on half of the looses on home loans if the mortgage companies agreed to lower borrower's monthly payments for at least 5 years.

The plan would cost upwards to $50 Billion but is part of the $700 Billion already approved by Congress so will not have to go through the lengthy approval process.

The program intends to entice mortgage companies to reduce payments by lowering interest rates, writing down balances or a combination of both. The problem is mortgage companies don't want to lower payments because they are afraid the homeowners will still not be able to keep up and then what are they going to do. The governments offer to shoulder 1/2 the losses should mitigate this fear though.

Jeff Bailey : 10/30/2008 12:13:35 PM

Ding, dong ... AVP $20.18 -24.40% falling.

Jeff Bailey : 10/30/2008 12:04:13 PM

UNG $27.51 -7.49% ... backfills yesterday's gap. WAAAAY overdone in my opinion, but let it settle out. Yesterday was termination of November

Jeff Bailey : 10/30/2008 12:02:00 PM

Quite a few "ramp and cramps" in the miners this morning considering gold/silver action earlier.

Keene Little : 10/30/2008 12:08:15 PM

If we are getting just an a-b-c pullback then the bounce high at 11:00 AM is a key level (NDX 1329.84). Back above that would likely mean we'll head for new highs since above that level would leave the pullback as a corrective 3-wave move. If the move down instead turns into a 5-wave move (impulsive) then we'll know we've got at least a short-term trend change to the downside. A 5-wave move will be followed by a 3-wave correction but will then be followed by another 5-wave move (down in this case). This is what I'm watching for to help get some clues as to what might happen today.

Jeff Bailey : 10/30/2008 11:58:54 AM

VIX.X 69.11 -1.21% ...

Jeff Bailey : 10/30/2008 11:58:37 AM

PNC $63.98 +1.78% ...

Jeff Bailey : 10/30/2008 11:58:21 AM

Swing trade call exit alert! for the one (1) National City NCC Jan $2.5 Call (NCC-AZ) at the bid of $0.35.

NCC $2.35 +1.73% ...

Keene Little : 10/30/2008 11:56:19 AM

The NDX 10-min chart shows a brief break of the uptrend line from Tuesday at yesterday's spike-down close. Then it gapped back up this morning, dropped back below the uptrend line and then retested at the bounce high this morning near 11:00 AM. Nice little kiss goodbye there: Link

Here's an example of watching for two equal legs down, shown with the Fib projection tool that QCharts has. From this morning's 1344.21 high to the 1313.05 low just after 10:30 AM gives us 31.16. Subtract that from the 1329.84 bounce high at 11:00 AM and we get 1298.68 (which is what the Fib projection tool is showing for a 100% (equality) move for the 2nd leg down). Hence two equal legs down.

I also use the 62% projection and 162% projection as those are common (especially the 162%). It's just one of many tools available to help identify potential support and resistance levels. If NDX finds support near that 1298.68 level then I will consider the possibility that it's completing an a-b-c pullback (corrective move) and we could see the resumption of the rally from there.

Jane Fox : 10/30/2008 11:42:30 AM

The VIX is in sync with the S&P futures today helping the bears but the AD line is still in the Bulls corner. Link

Jeff Bailey : 10/30/2008 11:33:16 AM

Humana (HUM) $29.05 -4.47% ... softening up. See today's economic reports.

Jane Fox : 10/30/2008 11:11:26 AM

Crude is struggling again today. Link

Keene Little : 10/30/2008 11:05:13 AM

This morning's pullback is not very clear at the moment as far as determining whether it's just a pullback or if it's something that will lead to stronger selling. No trade setups this morning. Flat is a position.

Jane Fox : 10/30/2008 11:03:31 AM

CHICAGO (MarketWatch) -- Mortgage applications filed last week rose a seasonally adjusted 16.8%, due mainly to an increase in refinancing activity, the Mortgage Bankers Association said Wednesday.

Application volume was still down 30% on an unadjusted basis for the week ended Oct. 24, compared with the same week in 2007, data compiled by the Washington-based MBA showed. The MBA's weekly survey covers about one half of all U.S. retail residential mortgage applications.

The volume of applications for mortgages to purchase homes increased a seasonally adjusted 8.5% on a week-to-week basis, while refinancing applications rose 28.5%.

The MBA's four-week moving average for all loans was up 1.2% on a seasonally adjusted basis.

Applications to refinance existing home loans made up 46.9% of total filings last week, up from 42.6% the previous week. Applications for adjustable-rate mortgages accounted for 1.9%, down from 2.7%.

Jane Fox : 10/30/2008 10:54:10 AM

Now that is one video game I would be interested in.

Jane Fox : 10/30/2008 10:53:47 AM

SAN FRANCISCO (MarketWatch) -- MTV Networks Inc. and video game publisher Harmonix said Thursday they will publish a new video game based on the music of The Beatles. The announcement was made in conjunction with Apple Corps Ltd., the company that oversees the business interests of The Beatles. The new game is meant to be "a new way to experience The Beatles," said Alex Rigopulos, CEO and co-founder of Harmonix. However, the game won't carry the Rock Band title, which is produced by MTV and Harmonix, and no exact release date was set, other than it will be out by the end of 2009.

Jeff Bailey : 10/30/2008 10:47:05 AM

US Nat. Gas Fund (UNG) $28.48 -4.23% ... trades back to M S2.

Jeff Bailey : 10/30/2008 10:39:38 AM

EIA: Weekly Nat. Gas Storage Link ... Build of 46 Bcf.

Jeff Bailey : 10/30/2008 10:38:41 AM

Today's Global Econ. Calendar Link

Jane Fox : 10/30/2008 10:27:59 AM

SAN FRANCISCO (MarketWatch) -- American Express Co. said Thursday it will cut 10% of its global workforce, or about 7,000 jobs, in 2009 as part of a $1.8 billion cost-savings plan. The cuts will occur across business units, the company said. Also, American Express will suspend management salary increases in 2009, and institute a hiring freeze on open positions. The company expects to take a pre-tax charge of $370 million to $440 million in the fourth quarter.

Jeff Bailey : 10/30/2008 10:22:40 AM

10:00 Internals found at this Link

Jane Fox : 10/30/2008 10:17:43 AM

The VIX is giving no clues as to direction but the AD line and ratio are still quite bullish sooooo. I think the best trade right now is no trade. Link

Jeff Bailey : 10/30/2008 10:17:39 AM

Pulte Home (PHM) $11.00 +11.33% ... gets the trade at GREEN #2. WKLY R1 ($10.97) right here.

Keene Little : 10/30/2008 10:15:26 AM

Flip a coin as to which way this market is going to go short term. Lots of bearish divergences to say the buyers are running out of steam but there is clearly an effort to hold it up. I think the government is involved at this point because they're not going to want to see a market selloff following the .5% rate cut. The Fed is running out of bullets and what a waste of one if the market simply sells off on the rate cut.

We could stay stuck in a large-range sideways holding pattern (since October 10th) through the election. And if there's a tight race and more questionable ballot results that ends up in a bunch of recounts, court decisions, etc., one can only imagine what that would do to the markets. I heard one election official simply ask for a landslide victory for one of them so that there's no need for recounting. Pretty sorry state of affairs in our election process when you hear that. Supposedly the most technologically advanced country and we can't figure out how to count ballots reliably.

Jane Fox : 10/30/2008 10:07:07 AM

LONDON (MarketWatch) -- Credit-market conditions showed further signs of improvement Thursday, responding to the Federal Reserve's decision to slash a key U.S. interest rate to 1% along with central banks' moves to further flood money markets with dollars.

Jane Fox : 10/30/2008 10:04:41 AM

Overnight highs so far have held the markets back so that is the level the bulls will need to break before you become bullish. Link

Jeff Bailey : 10/30/2008 10:03:38 AM

Asian Markets Link ... finished green across the board. Nikkei-225 finished +9.96% at 9,029; Hang Seng +12.82% at 14,329; Shanghai +2.55% at 1,763.

Keene Little : 10/30/2008 9:53:03 AM

Actually the RUT is leading the way higher this morning as it has made a bigger run above yesterday's highs than the others. But it too is showing bearish divergence at this morning's high.

Keene Little : 10/30/2008 9:50:28 AM

It looks like NDX will be the first to challenge yesterday's high. The good news for bulls is that it's the NDX leading the way. The bad news for bulls is that the bearish divergences continue at these highs. Shorts may be getting whacked by this market but I don't think the long side is any safer right here.

Jane Fox : 10/30/2008 9:46:35 AM

AIG has already received $85 billion emergency fund from the FED which was later supplemented by a $38 billion lending facility but that may not be enough. An insurance executive brought in by the government to restructure AIG is saying it may need more because he fears the losses are bigger and more surprises are in store for us. This is one of the factors that have a grip on the credit markets, everyone is waiting for next shoe to fall.

Jane Fox : 10/30/2008 9:37:53 AM

AD line is a bullish +1695 and the VIX gapped from a close of 70 yesterday to open at 65. THis is good news for the bulls.

Jane Fox : 10/30/2008 9:47:50 AM

I just ran across an interesting article. Did you all know the Reserve Fund is still frozen? The Reserve Fund is the nation's oldest money market fund and has frozen hundreds of thousands of customer's accounts for over six weeks and there is no end in sight. This was due to the failure of Lehman and the subsequent "breaking the buck."

Estimates are from 400,000 to over a million people cannot get at their money markets, which is like saying they cannot get to their savings accounts. I wonder how many mortgages are going into default because people cannot get to their money?

Jane Fox : 10/30/2008 9:29:53 AM

The one biggest issue facing congress now is to get the banks to start lending again unfortunately you can bring a horse to water but you can?t make him drink. Interest rates at 1% or even 0% will not do it but what will? Many say we need to become a nation of savers instead of spenders and I agree but consumer spending is 70% of the GDP and if want that 'ld GDP to start growing again then we need to start spending again. Just a little bit of a paradox heh?

Keene Little : 10/30/2008 9:29:19 AM

Equity futures were pushed all the way back up to yesterday's highs by the master manipulators. So those who shorted the market near yesterday's close could get spiked out at the open. I have no idea if this after-hours futures action will stick so we'll have to see what the cash market looks like after the open. This is a particularly dangerous week to trade because of the end of month/quarter/year for so many funds. We don't know who will be facing liquidation problems vs. who will be trying to paint the tape for a stronger finish. And then we've got the government who has made no secret about manipulating the market higher as best they can.

Jane Fox : 10/30/2008 9:25:52 AM

Bernanke's move yesterday to lower rates to 1% will probably not have a lot of affect on our economy but it sure made us all feel good, heh? Unfortunately though Bernanke doesn?t have a lot of options up his sleeve. He could lower rates to 0% like Japan did from 2001 to 2006 before it raised them to 1/2 a point but it didn?t help Japan and will probably not help the US either.

Lowering rates to 0% is called quantitative monetary easing and allows the FED's monetary policy to focus on money supply and not the cost of money (ie interest rates). If anyone out there is living on a fixed income or knows of anyone who lives on a fixed income this type of monetary policy is not good news.

And gee whiz wasn't it the 1% FED rate Greenspan kept interest at for over a year that was partially responsible for the pickle we are in now? However, this time we needn't worry about a housing bubble again because there just ain't no one out there lending which is probably Ok because there are just as few people borrowing. I just read a comment that there are as many people buying new cars as there are people attending a Ted Stevens rally.

Jane Fox : 10/30/2008 9:10:45 AM

Exxon's quarterly profit was the biggest ever reported by a private corporation.

Jane Fox : 10/30/2008 9:08:45 AM

Next quarter's profits for these Oil giants will not be anywhere near these levels.

Jane Fox : 10/30/2008 9:06:56 AM

NEW YORK (MarketWatch) -- Exxon Mobil Corp.'s third-quarter net income rose 58% to a new record of nearly $15 billion, the energy giant said Thursday, in a likely swan song for groundbreaking profits tied to this past summer's triple-digit prices for crude oil.

Jane Fox : 10/30/2008 9:06:27 AM

LONDON (MarketWatch) -- Royal Dutch Shell on Thursday reported a 22% rise in third-quarter profit, as rising prices and improving profits from refining and marketing overcame a drop in production.

Jane Fox : 10/30/2008 9:04:53 AM

Here are your overnight charts, I guess the GDP data was already built in because it hardly caused a blip in overnight trading. Link

Jane Fox : 10/30/2008 8:58:04 AM

WASHINGTON (MarketWatch) -- Jobless claims held steady in the latest week after a jump in the previous period, the government reported Thursday.

New applications for state unemployment benefits were unchanged at 479,000 in the week ended Oct. 25.

About 7,500 new claims stemmed from Hurricane Ike, but the effect on the data is starting to diminish, a Labor Department official said.

Economists had expected claims to fall to 473,000 after a jump in the previous period.

Claims rose a revised 16,000 in the week ended Oct. 18, up from the initial estimate of a rise of 15,000

Jane Fox : 10/30/2008 8:54:58 AM

WASHINGTON (MarketWatch) - The U.S. economy contracted at a 0.3% annualized rate in the third quarter, as consumer spending declined at the fastest rate in 28 years, the Commerce Department estimated Thursday.

The 0.3% decline in real gross domestic product was the largest since the end of the last recession in late 2001. The economy grew at a 2.8% pace in the second quarter.

The drop was close to economists' expectations that the economy would shrink at a 0.5% annual rate.

Final sales to domestic purchasers fell 1.8%, the largest decline in 17 years. Consumer spending dropped 3.1%, the first decline in 17 years and the biggest drop in 28 years, while business investment fell 1%. Investments in homes fell for the 11th straight quarter

Jeff Bailey : 10/30/2008 3:45:39 AM

EIA Refinery table I keep. Seeing some DEMAND returning Link

Jeff Bailey : 10/30/2008 3:21:37 AM

Sector Bell Curve Link

Jeff Bailey : 10/30/2008 3:06:27 AM

World Bullish % Link

Jeff Bailey : 10/30/2008 2:48:29 AM

BPNDX achieves "bull confirmed" status.

StockCharts.com's $BPNDX Link

Jeff Bailey : 10/30/2008 2:41:47 AM

BPSPX achieves "bull confirmed" status.

StockCharts.com's $BPSPX Link

Jeff Bailey : 10/30/2008 2:37:28 AM

BPNYSE also reverses back up to "bull alert" status at 20.80%.

StockCharts.com's $BPNYA Link

Jeff Bailey : 10/30/2008 2:35:37 AM

BPALL reverses back up to "bull alert" status at 16.63% (roughly 5,000 issues) Link

Keene Little : 10/30/2008 2:06:01 AM

I am new to the site but over the course of last few months have been using your commentary in the MM and the newsletter very successfully. I had a couple of questions about the terminology that you use. Would you please point me to resources on the web or forward any material that you have that explains the following terms:

Impulsive move
Corrective move
Two equal legs (up or down)

Thank you and keep up the great work.

I get in the habit of using Elliott Wave (EW) terminology and forget that we are constantly getting new readers and don't have a clue what I'm talking about. For that I apologize. So this is a good time to review the terminology.

An impulsive and corrective move are EW terms to describe moves with and against the primary trend. A move in the direction of the trend is typically impulsive which will be a 5-wave move (also called the motive wave). A corrective move is as its name implies--it's a correction to the primary trend and is usually a 3-wave move (or some variation of that). You can use the following diagram to help visualize the explanation below: Link

The impulsive move tends to be a sharp move with the 3rd wave the strongest which is why the 4th wave pullback does not overlap with the 1st wave high. The corrective 3-wave move will often have equal legs in the direction of the correction (against the direction of the trend) and if it gets more complex it will tend to have overlapping highs and lows within the move (a pullback will overlap the previous bounce high). If you look at a bear flag pattern (a small parallel up-channel) or a sideways triangle you'll see an overlapping choppy move, hence corrective.

These EW terms can be found at most EW sites (just google Elliott Wave Theory) where you can find some pictures and definitions. If you become more interested in learning the tool, a good book is by Robert Prechter, "Elliott Wave Principle". I also put together a special report at the end of last year that introduces EW Theory and uses AAPL's rally in 2007 to show how I used EW analysis to trade it. Email me if you'd like a copy of it.

As for "two equal legs up (or down)", I'm referring to the 3-wave move (such as a leg up, pull back and then another leg up). So for a 3-wave move up you will often see equality between the two up legs and then the correction finishes. That's why I often call that out to watch for a reversal. If after a rally we get the start of a correction and the 1st leg down is 100 DOW points which is then followed by a bounce of 50 points, measure from the top of that bounce 100 points lower and you'll often see the market reverse at that downside projection. The 3-wave move in this case is the corrective move.

It's all a bit confusing at first but the more you're exposed to it the simpler it becomes.

Jeff Bailey : 10/30/2008 1:10:01 AM

YM +234 @ 9,088

Jeff Bailey : 10/30/2008 1:08:50 AM

Asian Markets Link ... $NIKK Up 8.31% at 8,894. $HSI +10.11% at 13,986.

Keene Little : 10/30/2008 12:26:44 AM

Thursday's pivot table: Link

It's official--we're in a recession. The Phillies won the World Series and the only few times they've done that have been during a recession or depression. If they win again next year our economy will be in the toilet. So the economists can pack up their books and go home. We have our answer now. That's of course all said tongue-in-cheek but it's an amazing statistic about the Phillies.

The market sold off hard in the last 10 minutes of trading and a GE story out of Dow Jones Newswire got the blame (saying GE would try to maintain the same profits on a 10%-15% reduction in revenue for 2009). After working so hard to get the market to rally up into FOMC, and wanting to keep the market up after the FOMC announcement, I'm sure the PPT was not a happy group after that story came out. I can just imagine the phone call with the editor of DJ Newsire, "Yes sir, we'd still like our line of credit maintained. Yes sir, we'll retract that story immediately and say we need to "clarify" it. Yes sir, we'll get your approval on all future stories before we publish them." OK, I made that all up but it does make one wonder.

Following the retraction comment from DJ Newswire equity futures rallied hard in after hours. ES retraced 62% (951) of the afternoon plunge as I write this. The setup into the close was a very good one for a short play. After the completion of the 5-wave move up all it needed was a catalyst for the selloff. We'll see what happens tomorrow morning but I think it's still a good setup for more selling on Thursday. The bigger question in my mind is how much selling we'll get.

The SPX daily chart shows it tagged its 20-dma which was last touched on the spike up on September 19th: Link . There is of course the possibility that the rally will continue on Thursday (light dashed line) and head on up to at least 1050. But right now I think the greater likelihood is for at least a pullback (perhaps to the 900 area) to correct the rally off Monday's low or the more bearish possibility for a continuation to new lows (dark red), both shown on the 60-min chart: Link

The NDX daily chart shows the possibility for a continuation of the rally to the top of a parallel down-channel, currently just above the 1471 high on October 14th. The more bearish wave count calls for a strong decline into November. Link

Jeff Bailey : 10/29/2008 11:55:05 PM

NCC Question: ... Or NCC-AZ ... Today ncc shows on most active top 10 options, in several strike price in all 3 next months, your opinion on that please.if something is on horizon, in what time frame? will help me select month, am considering january 09/ 2.50 strike price @ .25/.3

Jeff's Reply: NCC is currently being pruchased by PNC Financial in a stock deal. (See 10/24/08).


For each share of NCC an investor owns, they are to get 0.0392 share of PNC.

Deal when announced valued NCC at $2.23 (see charts of NCC and PNC to understand what has taken place).

So, 100 shares of NCC would be 3.92 shares of PNC.

This is a "take under" at this point as the $2.23 offer (at time of announcement as structured) was BELOW the $2.75 NCC close on 10/23/08.

I think the REASON NCC options are so active is the squaring up of the NCC and PNC.

Now, there could be a chance, that something happens SIMILAR to what we saw with JPM buying BSC, but I'm not counting on it.

JPM stepped in to "save" BSC for something like $2.00/share, but ended up paying $10.00.

I've currently profiled one (1) of the NCC Jan $2.50 Calls (NCC-AZ) back on 10/14/08.

I'm not looking to BUY any more, but trying to get out of the trade if we can.

If you were to see a HEAVY amount of CALL buying at an OFFER of say a $5, $6, or $7 strike, then MAYBE something might be up.

However, I'm treating as SPECULATIVE HOLD at this point.

Jeff Bailey : 10/29/2008 11:30:56 PM

YG did settle $754.00. Trading 759.50 here.

Jeff Bailey : 10/29/2008 11:27:12 PM

Trade blotter of CLOSED and OPEN/active mm profiles that I've made at this Link

The GVD-XU was stopped this morning as the GLD traded $75.00. GLD then closed back below MS1. Yep, I don't stop and it closed $79.00. That's what we're up against right now (market environment).

I'm going to likely CANCEL the earlier session's "buy, run, write" on the 100 shares of Pulte Home (PHM) and simply target $12.50. Might be "crazy" to get a move, right a call, then have any stock shoot higher/lower and be sitting there with the proverbial "pumpkin in the hand" and fit to be tied.

Those GG-KW finished $3.10 x $3.20.

Not dwelling on it, but I think that's the kind of stuff/trade we need to be looking for. Get it, then blow it out on direction side of things.

Jeff Bailey : 10/29/2008 11:00:11 PM

YM +204 at 9,058

Jeff Bailey : 10/29/2008 10:58:20 PM

Closing Internals at this Link

OI Technical Staff : 10/29/2008 9:59:59 PM

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