Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Jane Fox : 11/25/2008 4:06:30 PM

Tomorrow we have the very important Core PCE Price Index, the Durable goods Orders and Personnel Spending all out at 8:30.

Then at 9:45 we have the Chicago PMI and at 9:55 the revised U of M Consumer Sentiment. Should be fun.

James Brown : 11/25/2008 4:05:38 PM

Wal-Mart (WMT) has broken out past its three-week trendline of lower highs but today's rally stopped dead at the 50-dma and exponential 200-dma.

James Brown : 11/25/2008 4:01:06 PM

On CNBC they were talking about Staples (SPLS).... looking at SPLS you can see that shares have rallied right back to resistance at its 40-dma, where the stock has failed several times in the last month. The stock is either at or near an entry point depending on your bias to short it at resistance or buy the breakout when it occurs.

James Brown : 11/25/2008 3:56:21 PM

As the U.S. dollar falls commodity stocks like metal stocks, coal stocks, and some fertilizer stocks are all rising sharply. I'm not seeing the same sector strength in oil or gold stocks today.

James Brown : 11/25/2008 3:51:40 PM

It looks like Freeport McMoran (FCX) might be breaking out from its bearish channel. It is up to interpretation. On a more short-term basis the stock's bounce is nearing its 38.2% Fib retracement level of its previous three-week decline. Traders should also note that today's 6.6% gain is being fueled by very low volume of 2.7 million shares versus the average of 24.6 million, which makes me cautious on the stock.

James Brown : 11/25/2008 3:46:58 PM

The late-day sell-off in RIMM continued this morning and shares plunged to round-number support near $40.00 before bouncing back this afternoon. This may be a bullish entry point for a short-term aggressive trade. I would aim for the $47.00-47.50 zone.

James Brown : 11/25/2008 3:45:12 PM

Sears (SHLD) is bouncing from its intraday lows. The stock rocketed higher yesterday to over $35.00 a share. Today that rally faded and SHLD retested round-number support near $30.00 only to bounce back. The stock is currently at $33.69. This might be an entry point for an aggressive short-term trade with a stop under $30.00.

James Brown : 11/25/2008 3:42:12 PM

Citigroup isn't doing much (+2%) after yesterday's massive short-covering gain. Volume is incredibly low at 78.8 million versus the average of 221 million and compared to yesterday's 800 million share day.

James Brown : 11/25/2008 3:39:53 PM

Goldman Sachs (GS) is on the uptick again after pulling back from its early morning gains. GS is currently +5.4% at $71.00. Volume is incredibly low today at 6.1 million shares versus an average of 28.8 million.

James Brown : 11/25/2008 3:31:51 PM

Homebuilders are also out performing today. The DJUSHB home construction index is up 14.6% following yesterday's big gain.

Some of the stocks moving... PHM +9.8%, RYL +8.1%, BZH +11.5%, TOL +5.8%, CTX +11.1%, MHO +3.7% ...these have pulled back from their highs this morning.

James Brown : 11/25/2008 3:30:07 PM

Yay! the Monitor is back online!

James Brown : 11/25/2008 1:45:49 PM

E*Trade Financial (ETFC) is on fire today. The stock is up 40% to $1.24. Investors are reacting to news about ETFC's application to receiving TARP money. If you're looking for a high-risk, high-reward bet buying some ETFC stock would be like buying a call option that never expires.

Jeff Bailey : 11/25/2008 1:39:15 PM

iShares DJ US Real Estate (IYR) $30.80 -1.81% ... #11 most active. Very rare to see this among most actives.

Keene Little : 11/25/2008 1:38:01 PM

SPX bounced off its broken downtrend line from November 4th (broken above it yesterday) so that's bullish so far. The correction to the rally from Friday looks too small to be all of the correction so we might see a larger pullback "walk" down that broken downtrend line. But I've also seen enough of these strong rallies get only minor pullbacks before proceeding higher again so I respect that possibility.

This is not the time to hang around short the market. I'm looking for an opportunity to add to my long position and I'm hoping for a deeper pullback to do that. I'd rather not chase it higher and don't like the risk of adding a new long position here. I'll wait to see how this pullback develops.

Jane Fox : 11/25/2008 1:19:25 PM

I'm having trouble keeping all these programs straight. TARP Trouble Asset Recovery Program. TLGP - Temporary Liquidity Guarantee Program.

Jane Fox : 11/25/2008 1:17:55 PM

NEW YORK (MarketWatch) -- Goldman Sachs Group became the first bank to take advantage of another way to raise much-needed money without costing the government anything up front.

The Federal Deposit Insurance Corp. last week finalized its Temporary Liquidity Guarantee Program, or TLGP, creating a window of opportunity for banks to issue government-guaranteed debt -- easing strains that kept them from even the normal process of refinancing maturing debt for months, and that were crimping their ability to lend to consumers and businesses.

Jane Fox : 11/25/2008 1:12:55 PM

Internals are a mess today and not telling me anything. Nada. Link

Keene Little : 11/25/2008 1:07:23 PM

Two equal legs down from this morning's high would be at SPX 829.91 and yesterday's mid-day low was at 826.11 so we have a potential support zone of 826-830. The next support level below that is near 820--38% retracement is at 819.29, the November 13th low is at 818.69 and the November 20th high is at 820.52.

Keene Little : 11/25/2008 1:05:02 PM

A bounce back up to SPX 844-845 would now be a retest of its broken uptrend line from yesterday's mid-day low.

Jeff Bailey : 11/25/2008 1:01:17 PM

RUT.X 428.97 -1.79% ... its WKLY Pivot at 413.93. WKLY R1 not nearly close to being tested at 456.57 yesterday.

Jeff Bailey : 11/25/2008 1:00:16 PM

SMH $15.71 -4.49% ...

Jeff Bailey : 11/25/2008 12:50:02 PM

DJUSHB 191.54 +14.19% ... WKLY R1 176.36. WKLY R2 209.76

Jeff Bailey : 11/25/2008 12:42:25 PM

FXY $104.71 +1.66% ... has reclaimed its WKLY Pivot ($104.31).

Jeff Bailey : 11/25/2008 12:40:36 PM

NWX.X 133.33 -1.34% ... has tapped WKLY R1 135.68. WKLY Pivot at 126.33.

Jeff Bailey : 11/25/2008 12:39:41 PM

CSCO's weekly pivot at $15.40

Jeff Bailey : 11/25/2008 12:39:00 PM

Cisco shares fall after report of 4-day shutdown ... Reuters Story Link

CSCO $15.61 -4.77% ...

Jeff Bailey : 11/25/2008 12:37:23 PM

RUSSIA MAY CUT OIL OUTPUT WITH OPEC

DJ- Russia indicates it may cut oil production in tandem with OPEC to support prices, though analysts note the country's output is likely to continue to fall in any case, as producers cut capital spending.

Keene Little : 11/25/2008 12:31:46 PM

While NDX tested its broken uptrend line from yesterday's mid-day low (and failed there), SPX has yet to break its uptrend line, currently near 843. A break of it and this morning's low should usher in some stronger selling this afternoon. But with volume running below yesterday's lower-volume day, stronger selling could be a relative term.

Jeff Bailey : 11/25/2008 12:30:42 PM

Having observed SMH at its WKLY Pivot, even an INDU trader has to assess 8,025 having seen 8,607 hold sellers.

USO $41.47 -6.02% ...

Jeff Bailey : 11/25/2008 12:29:16 PM

INDU 60-minute interval with my MONTHLY/QRTRLY Pivot retracement and QCharts' WKLY Pivot levels turned on Link

Jane Fox : 11/25/2008 12:09:30 PM

Obama chooses Peter Orszag as White House budget chief.

Jeff Bailey : 11/25/2008 12:03:39 PM

INDU and SPY only equity-based indices in my pivot matrix to see trade at their WKLY R1.

Jeff Bailey : 11/25/2008 12:03:01 PM

INDU's uptrend line (10/10/08 low to 10/27/08 pullback low) and extension of that trend, overlaps WKLY R1 at 8,595. Was tested in opening ticks.

Jeff Bailey : 11/25/2008 11:59:20 AM

SMH $15.99 -2.79% ... that was a "pivotal" test and hold from the weakest in the index pivot matrix.

Keene Little : 11/25/2008 11:59:00 AM

The broken uptrend line along the lows of NDX from yesterday's mid-day pullback is currently near 1145-1146. Watch that level for possible resistance if it's to be a kiss goodbye.

Jane Fox : 11/25/2008 11:55:27 AM

Paulson's new plan will come from the TARP yet there is a discrepancy here. The new plan is $800 Billion and the TARP already has some of its allocated elsewhere unless they are going to divert the already allocated funds to these new programs.

Jeff Bailey : 11/25/2008 11:54:58 AM

BHP Billiton abandons bid for Rio Tinto ... AP Story Link

BHP $38.49 +15.17% ...

RTP $99.01 -32.18% ...

Jane Fox : 11/25/2008 11:37:02 AM

SAN FRANCISCO (MarketWatch) -- Bank loan losses surged during the third quarter but the reserves set aside for future problems didn't keep up, the Federal Deposit Insurance Corp. said on Tuesday. Net charge-offs totaled $27.9 billion in the quarter, up 156% from a year earlier, according to the FDIC's Quarterly Banking Profile. The net charge-off rate in the third quarter was 1.42%, up from 0.57% in the third quarter of 2007. The FDIC said this is the highest quarterly net charge-off rate for the industry since 1991. The failure of Washington Mutual on Sept. 25 meant that a significant amount of charge-off activity wasn't reflected in the latest quarter. Loan-loss reserves didn't keep pace with the growth in noncurrent loans, and the "coverage ratio" of reserves to noncurrent loans fell from 89 cents in reserves for every $1 of noncurrent loans to 85 cents, the FDIC said. "This is the tenth consecutive quarter that the industry's coverage ratio has fallen; it is now at its lowest level since the first quarter of 1993," the FDIC warned.

Jane Fox : 11/25/2008 11:35:03 AM

It is not clear if some of Paulson's new $800 Billion plan announced today to buy back some of the toxic securitized debt from Fannie Mae, Freddie Mac and other Federal Home Loan banks will come from the $800 billion already approved bailout plan or not. A good portion of the original $800 billion has already been allocated to bailout banks like Citigroup, etc.

The plan is use $600 billion to by mortgage backed securities and $200 billion for securitized consumer debt.

Keene Little : 11/25/2008 11:28:18 AM

NDX is bouncing off the 1120 area which is where it pulled back to yesterday before continuing higher. A bounce could create the right shoulder of a H&S topping pattern with the neckline near 1120. Assuming the neckline then breaks we'd have a H&S downside projection to 1075 which is where the 62% retracement is located. Possible support just above that is closure of yesterday's gap up at 1082.75. NDX 10-min chart shows the setup for a short play and then reverse long (might take longer than just today as depicted): Link

Jeff Bailey : 11/25/2008 11:21:02 AM

SMH $15.77 -4.13% ... session low of $15.73 tests the WKLY Pivot.

Jane Fox : 11/25/2008 11:17:19 AM

Will someone PLEASE explain to me why bonuses are even being discussed????

Jane Fox : 11/25/2008 11:16:40 AM

SAN FRANCISCO (MarketWatch) -- American International Group Inc. said Tuesday Chairman and Chief Executive Edward Liddy will receive a salary of $1 for 2008 and 2009. The insurance giant also said there will be no 2008 annual bonuses nor salary increases through 2009 for its top seven officers as a part of its voluntary restrictions on executive compensation. In addition, 50 of its next-highest executives will not be receiving salary increases or bonues through 2009. The company is also developing a funding structure to ensure that no taxpayer funds are being used for bonuses or cash performance awards for AIG's senior partners. AIG has received billions in government funds as its capital position continued to deteriorate amid the financial market turbulence.

Keene Little : 11/25/2008 11:15:51 AM

SPX will probably get a bounce/consolidate off the 840 level but it should break. Assuming we've seen the high for the leg up off Friday's low we can now start thinking about some downside targets for a pullback (and an opportunity to get long for another leg up). The 38%, 50% and 62% Fib retracement levels are at SPX 820, 805 and 790. NDX, which is weaker, could drive a little deeper but its Fib levels are at 1109, 1091.73 and 1074.53. Once the pullback develops further I'll hopefully be able to zero in on some good support levels to watch for a buying opportunity.

Jane Fox : 11/25/2008 11:13:30 AM

AD line is now under 0 at -240 this is a drop from a high of +1301

Jane Fox : 11/25/2008 11:08:17 AM

WASHINGTON (MarketWatch) -- Falling gas prices perked up consumers in November, according to the monthly Conference Board index, which reported Tuesday that confidence rose from a record low in October.

The November consumer confidence index rose to 44.9 - still a relatively low result -- from an upwardly revised October reading of 38.8. Economists surveyed by MarketWatch had expected a November reading of 39.

One-year inflation expectations among consumers declined to 5.9% in November from 6.8% in the prior month.

"Inflation expectations, which have been at historically high levels in recent months, subsided considerably as a result of falling gas prices," said Lynn Franco, director of the Conference Board's Consumer Research Center.

Overall consumers' expectations were less pessimistic, with that index rising to 46.7 from 35.7. Those expecting business conditions to worsen over the next six months declined to 28.1% from 36.5%, and those expecting fewer jobs declined to 33.3% from 41.5%.

Jeff Bailey : 11/25/2008 11:04:28 AM

VIX.X 64.19 -0.78% ...

Jane Fox : 11/25/2008 11:03:45 AM

NDX futures (NQ) are breaking their overnight lows. The Russell 2000 (TF) may be as well but they are on a 20 minute delay so not sure. Link

Jane Fox : 11/25/2008 10:58:55 AM

I just started to get my VIX quote and sure enough it is making new daily highs.

Jane Fox : 11/25/2008 10:57:10 AM

I am not getting a VIX quote but I would wager a bet it is making new daily highs. Internals are not overly bearish but much more bearish than they were earlier. Link

Jeff Bailey : 11/25/2008 10:53:35 AM

Selling long some UYG $5.21 +2.96% ... in personal account.

Keene Little : 11/25/2008 10:50:22 AM

The 30-year yield is near an area of support so it may be setting up for a reversal soon. It is down to the bottom of a parallel down-channel from June 2007 and close to a Fib projection at 3.46%. It should be ready soon for a bounce back up to the shelf of support at 3.9% (Sept-Oct lows) to test support-turned-resistance before heading lower again. That bounce in yields (selling in bonds) should provide some money for stocks over the next month or more. Weeky 30-year yield chart: Link

Keene Little : 11/25/2008 10:38:34 AM

Speaking of flight to safety, bonds are up big today. The 30-year bond is up 2 handles and looks ready to tackle the spike high at the end of the day last Thursday. The 10-year yield is down to 3.14% and the 30-year is down to 3.64%. The buying in bonds normally puts some pressure on the stocks (rotating out of stocks into bonds) so that might also put some downward pressure on stocks today.

Keene Little : 11/25/2008 10:33:37 AM

Short sellers have clearly wanted to take profits since Friday's low and the strong spike up since then is indicative of short covering. There are also many traders betting on a bullish Thanksgiving week. But as the week progresses we will likely see reduced volume and I wouldn't be surprised to see the market drift lower due more to lack of interest than actual hard selling. That's obviously just a guess but it would be somewhat typical.

The bears know the market is oversold and they're pressing their luck to hang on short. Bulls know we've got massive credit problems and an economy that seems to be getting weaker every day. They know they're pressing their luck on the long side. The volatility we're seeing of course reflects this push/pull between the two sides and I strongly suspect it will be a volatile and choppy period into the new year.

Keene Little : 11/25/2008 10:29:50 AM

NDX has now broken below 1138 so we've got a sell signal on that one. I suspect SPX and DOW will eventually follow with a break below 840/8331 but so far they're a lot stronger and holding up better (could be flight to safety in big caps as we head for December).

Keene Little : 11/25/2008 10:25:24 AM

If NDX breaks below 1138 it will have broken not only the late-day low but also the uptrend line along the lows from mid day. This would add to the confirmation that the leg up from Friday is finished. But both are still holding so it's bullish until it breaks.

Keene Little : 11/25/2008 9:59:39 AM

While gap closure for SPX would look bearish (as the exhaustion gap for this leg up) the key level is yesterday's late-day pullback low (SPX 840.25). The price pattern remains potentially bullish as long as that low holds. If SPX breaks below 840 then the leg up from Friday is finished and we'll be into at least a pullback to correct it. Since NDX is leading the way this morning, it should give us a heads up that the break is coming--its equivalent low is at 1138.23, only a few points lower now.

Keene Little : 11/25/2008 9:50:24 AM

Techs and small caps are leading us back down this morning, the first to get back into the red.

Jane Fox : 11/25/2008 9:34:59 AM

AD line opens up bullishly but certainly not overly so at +800

Jane Fox : 11/25/2008 9:28:27 AM

WASHINGTON (MarketWatch)-- Home prices in 20 major U.S. cities dropped 1.8% in September from the prior month, and had fallen a record 17.4% from the previous year, according to the Case-Shiller home price index published Tuesday by Standard & Poor's. Prices have fallen in all 20 cities compared with last month and a year ago. The largest decline in September was found in the San Francisco metro area, where prices fell 3.9%. In the past year, Phoenix has had the largest decline, down 31.9%. For the original 10-city index, prices fell a record 18.6% in the previous 12 months.

Jane Fox : 11/25/2008 9:27:04 AM

One way to determine if this current rally will stick or not is how the markets react to bad news. The news released in the GDP report was about as bad as it gets yet the market mostly blew if off and said, "ENOUGH!" and have continued to rally. Link

Keene Little : 11/25/2008 9:24:48 AM

With equity futures up big this morning it looks like the 5th wave of the move up from Friday is going to extend. Now bulls have the risk of a gap n crap setup so be careful of that possibility. If the bulls manage to hold onto the gap up and keep pushing this higher the next trend line resistance is the downtrend line from September 19th through the November 4th high, currently near 894. That would be one heck of a move up off Friday's low near 741 (too much too fast).

Jane Fox : 11/25/2008 9:23:30 AM

GDP measures the value of all goods and services produced within the U.S. and is considered the best barometer of the country's economic fitness. Since consumer spending is 70% of GDP it is very dependent upon the consumer so when consumers sit on their wallets the GDP will shrink. Consumer spending fell 3.7% in the 3rd quarter, the first drop in 17 years and the largest in 28 years. Consumers are hunkering down amid job losses, tanking investment portfolios and sinking home values, which are making them nervous about spending.

The GDP report also showed that Americans' disposable income fell at an annual rate of 9.2 % in the 3rd quarter, the largest quarterly drop on records dating back to 1947. The government's initial estimate had showed a record 8.7 percent decline in disposable income for the quarter more proof the economy is in worse shape than originally thought.

Jane Fox : 11/25/2008 9:11:11 AM

WASHINGTON (MarketWatch) -- In a sign of trouble ahead, the U.S. economy contracted at a slightly faster pace in the third quarter than initially estimated, government data showed Tuesday.

The economy contracted at a real annual rate of 0.5% in the third quarter, not at the 0.3% rate reported last month, the Commerce Department said Tuesday.

According to the median forecast compiled by MarketWatch, economists had expected a revision in GDP down to negative 0.6%.

Real gross domestic product has grown 2% over the past four quarters.

Economists have said they believe the weakness in the July-through-September quarter is a harbinger of further weakness ahead. Growth in the current quarter is on track to fall at a 4% annual rate.

Jane Fox : 11/25/2008 9:08:42 AM

NEW YORK (MarketWatch) -- The Federal Reserve unveiled Tuesday what it called a term asset-backed securities loan facility, a plan under which it will lend up to $200 billion to support the issuance of debt backed by consumer and small-business debt, such as credit-card loans, student debt, auto loans and loans backed by the Small Business Administration.

The Fed hopes the plan will create liquidity in the market for securities backed by the receivables from such loans, which in turn would encourage originators of consumer loans to restart lending to individuals.

The markets for asset-backed securities "historically have funded a substantial share of consumer credit and SBA-guaranteed small-business loans," the Fed said in a press release detailing the new loan facility.

Jeff Bailey : 11/25/2008 12:54:20 AM

BPPREC Link

Jeff Bailey : 11/25/2008 12:43:35 AM

11/24/08 Sector Bell Curve Link

Jeff Bailey : 11/25/2008 12:27:13 AM

Major Market Bullish % I track at this Link

Jeff Bailey : 11/25/2008 12:13:40 AM

DDM finished $29.26 +6.28% ...

Jeff Bailey : 11/25/2008 12:12:04 AM

Dorsey/Wright's very narrow BPDJIA ... reverses back up to "bull confirmed" status at 16.66 (16% chart).

StockCharts.com's ($BPINDU) Link

Note: Due to adjustments for dividens paid, would be "bull alert!"

Remember DIA did see trade at its BEARISH vertical count of $77.

60/40 we've seen the lows here. Could push me 65/35.

Jeff Bailey : 11/24/2008 11:58:09 PM

Dorsey/Wright's BPOEX ... reverses back up to "bull confirmed" status at 17.00% today (16.00% chart).

StockCharts.com's ($BPOEX) Link

Jeff Bailey : 11/24/2008 11:47:52 PM

BPALL Link

Jeff Bailey : 11/24/2008 11:43:30 PM

SPX NH/NL was 0:4

Jeff Bailey : 11/24/2008 11:43:03 PM

RUT.X NH/NL finished 2:67. 50/50 at best that we've seen "the low."

Keene Little : 11/24/2008 11:40:43 PM

Tuesday's pivot table: Link

With Monday's rally it significantly increases the probability that we've seen the low for the year. As shown on the 60-min chart I can't remove the possibility for one more move down to a new low (pink) but if the indices can rally above the November 14th high (SPX 917) then the possibility for a new low will be negated. The dark red wave count calls for a pullback on Tuesday to be followed by another rally leg higher into the end of the month. 60-min chart: Link

Assuming for the moment that we've seen the low for the year, it would be the completion of the 3rd wave for the decline from October 2007. Now we'll enter a large 4th wave correction (a larger degree 4th wave than the one we were in following the October 10th low). There's no way to tell what kind of correction pattern will play out so the caution is be wary of reversals at any time. Taking trades home overnight will be risky. The daily chart shows just two (of 11) possibilities: Link

We could get a big A-B-C bounce (pink) that takes SPX up to the broken uptrend line from 1990 (where the previous 4th wave failed), so up to about 1000 by late December/early January (maybe quicker). Or we could get a big sideways triangle consolidation (dark red) that doesn't get much above 900 and takes us into February before finishing. Only after the correction gets underway will I get some ideas for what type of 4th wave we might be able to expect. For a longer-term perspective, these two possibilities are shown on the updated weekly chart: Link

Once the larger 4th wave correction finishes we'll be due another leg down to complete a 5-wave move down from October 2007. That would then set up a large year-long rally to correct the decline (possibly longer and higher, depending on one's interpretation of the longer-term EW count). So it's too early to be thinking anything long term, either short or long, and it's certainly too early to be thinking we're ready to start a new bull market leg. The wave pattern is quite clear--the leg down from October 2007 is not finished yet but the market needs to relieve the severely oversold conditions and it will need time to do that.

Jeff Bailey : 11/24/2008 11:05:18 PM

Brown Pledges U.K.'s Biggest Stimulus in Two Decades ... Bloomberg Story Link

Jeff Bailey : 11/24/2008 11:02:35 PM

IMF Approves $7.6 Billion Bailout Loan to Pakistan Bloomberg Story Link

Jeff Bailey : 11/24/2008 10:57:39 PM

Obama asks urgent action on 'historic' econ crisis' ... AP Story Link

OI Technical Staff : 11/24/2008 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.

Market Monitor Archives