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Jeff Bailey : 12/3/2008 9:17:33 PM

MBA's Weekly Application Survey Link

Again, these are applicatioins. Not all will be approved, but good grrrrravy!

Jeff Bailey : 12/3/2008 8:49:10 PM

SPY (per tonight's Wrap) Link ... at $99 strike, $2.67 billion in Put OI. $1.3 billion in Call OI.

Jeff Bailey : 12/3/2008 5:01:02 PM

DDX.X 50.74 +6.84% ... sector winner today. Closes above its 21-day SMA (48.33) for first time since falling back below on 09/22/08.

60-minute interval would have neckline of reverse head/shoulder broken to upside at ~49.21.

Jeff Bailey : 12/3/2008 4:58:29 PM

NDX and RUT.X still below.

Jeff Bailey : 12/3/2008 4:57:53 PM

OEX 423.00 +2.62% ... closes a smidge above its 21-day SMA (421.85). And I do mean a smidge.

Jeff Bailey : 12/3/2008 4:56:45 PM

SPX 870.74 +2.58% ... closes just under its 21-day SMA after "prarie dog'n" above on Friday.

Jeff Bailey : 12/3/2008 4:55:50 PM

INDU 8,591.69 +2.05% ... closes back above its 21-day SMA after two (2) days below.

Jeff Bailey : 12/3/2008 4:21:01 PM

Freeport McMoran (FCX) $18.05 -17.27% ... copper giant finishes off the lows of $17.01 after this morning's news of dividend suspended. (see PHF and "junk bond" dividend suspension from Monday)

Jeff Bailey : 12/3/2008 4:01:14 PM

VIX.X 60.84

Keene Little : 12/3/2008 4:00:49 PM

The bulls are going to do it--they're going to push this right up to a high for the close. Buy some puts for tomorrow since that's the setup. If we don't immediately drop tomorrow just get rid of the puts for a small loss.

I've got to run off to a meeting so I'll update charts tonight. Enjoy the rest of your day.

Jeff Bailey : 12/3/2008 3:57:53 PM

DIA $86.10 ... X gets another square Link

Keene Little : 12/3/2008 3:53:03 PM

If this afternoon's bounce is going to be another 3-wave move (another a-b-c bounce within what would now be a triple zigzag bounce off Monday's low), equality between the two legs up is at SPX 873.94 so that's a level to watch for resistance.

Jeff Bailey : 12/3/2008 3:52:56 PM

BIX.X 135.08 +4.82% ... morning low came close to WKLY S1/MONTHLY S1 overlap.

Jeff Bailey : 12/3/2008 3:51:35 PM

VIX.X 61.28

Jeff Bailey : 12/3/2008 3:51:25 PM

SPX "prarie dog'n" its WKLY Pivot.

Keene Little : 12/3/2008 3:45:41 PM

The way this market has been behaving lately, the bulls really don't want the market to close at its high today, especially if it's up near 878. It would be a good setup for yet another reversal and gap down tomorrow.

Jeff Bailey : 12/3/2008 3:45:16 PM

SPX 863.52 +1.73% ... presses WKLY Pivot. Can be telling on a Wednesday.

Jeff Bailey : 12/3/2008 3:40:42 PM

NASDAQ Telecom (IXTCX) 136.16 +2.18% ... pressing session highs.

Keene Little : 12/3/2008 3:36:15 PM

In general I agree with you about the PPT action , BUT, what bothers me is the NASDAQ is too strong. Wouldn?t the PPT action be confined to SP futures and bluechips?

Good point Jamil. Sometimes I wonder if the PPT has closed up shop and stepped away in frustration that the market won't do what they want it to (to which I say "join the club"). The techs have been relatively bullish all day so with that bullish undertone it certainly requires greater care on the short side of the market.

NDX is currently doing battle with its downtrend line from November 4th (so it's ahead of SPX in that regard), having just bumped into it again this afternoon. But it has the same bear flag pattern, the top of which is near 1175 at the moment. So while I would not be comfortable long the market (and I'm not), that's the additional upside potential for now. It too needs to break below this afternoon's low to usher in stronger selling.

Jeff Bailey : 12/3/2008 3:21:49 PM

DIA (unch)

RUT.X +0.72% ... opposites in every aspect.

Narrow and BIG

Broad and small.

Jeff Bailey : 12/3/2008 3:20:53 PM

XLF $11.59 +1.57% ... that's 0.15% in my mind's eye.

Jeff Bailey : 12/3/2008 3:19:27 PM

Volumes way too anemic.

Jeff Bailey : 12/3/2008 3:18:47 PM

SPX would be up +30 if PPT were here.

Jeff Bailey : 12/3/2008 3:17:35 PM

Could become a "read" at an open. Treasuries open for trade at 08:20 AM ET

Jeff Bailey : 12/3/2008 3:16:40 PM

Can tie that action with SPY/SPX WEEKLY Pivot.

Keene Little : 12/3/2008 3:16:32 PM

Regardless of the wave count for the bounce off Monday's low, one look at the choppiness of it on a 30 or 60-min chart should have you thinking bear flag. While we could still get another run up to the top of the flag (878 by the close), it does not look like a bullish pattern. I've been fooled enough by these to know it's not a sure thing (so use your stops) but right now it has me thinking bearishly, not bullishly, about the bounce off Monday's low.

Jeff Bailey : 12/3/2008 3:16:08 PM

10-year finished 2.676% .... juuuuust above its WKLY S2 (tested Monday, Tuesday and again today)

Jeff Bailey : 12/3/2008 3:12:07 PM

Watch the "dip and rip" ... NYSE a/d 1,655:1,312

Jeff Bailey : 12/3/2008 3:10:48 PM

SPX and SPY 5-minute intervals. SPY with volume turned on for trend observation. Link

Jeff Bailey : 12/3/2008 3:08:16 PM

TRIN 0.85

Jeff Bailey : 12/3/2008 3:08:05 PM

NYSE a/d 1,421:1,558

Jeff Bailey : 12/3/2008 3:07:39 PM

SPX 849.02 +0.02% ... slips back under downward trend.

Jeff Bailey : 12/3/2008 2:55:50 PM

NASDAQ a/d 1,581:1,212

Jeff Bailey : 12/3/2008 2:55:39 PM

NYSE a/d 1,758:1,210

Jeff Bailey : 12/3/2008 2:54:55 PM

SPY $86.39 +1.36% ... pounding DAILY R1 from below. You know where the WKLY Pivot is at. Daily R2 $87.61 a trigger to the close.

Jeff Bailey : 12/3/2008 2:47:26 PM

SPX.X 854.60 +0.68% ... sitting on that downward trend now for about 15-minutes.

Jeff Bailey : 12/3/2008 2:46:37 PM

These are the minutes that trend traders revel in.

Keene Little : 12/3/2008 2:44:39 PM

Why is it I sense the action of the PPT here? Perhaps they were at the ready, knowing the Fed Beige report was not going to sound good for the economy. Let the bears drive the market down and then smoke 'em. Now we'll see if there will be any follow through. If yes then a drive up to 878 should happen. If we get a drop to a new low below this afternoon's I suspect it will be strong selling.

Jeff Bailey : 12/3/2008 2:40:28 PM

VIX.X 62.12 -1.36% ... human intervention with no re-test of QRTRLY R2.

Jeff Bailey : 12/3/2008 2:39:56 PM

SPX 856.25 +0.87% ... edges back of trend.

Jeff Bailey : 12/3/2008 2:34:41 PM

NASDAQ NH/NL running 6:90 ...

Jeff Bailey : 12/3/2008 2:33:56 PM

NYSE NH/NL looking a little more positive of late.

30:154 at the 02:00 tick.

Keene Little : 12/3/2008 2:32:24 PM

Now getting a stronger bounce back up but not sure it has any more meaning than just more chop and whipsaw.

Jeff Bailey : 12/3/2008 2:13:16 PM

Fed Beige Book (from 11/28/07) Link

Jeff Bailey : 12/3/2008 2:12:17 PM

Fed Beige Book (before 11/24/08) Link

Jeff Bailey : 12/3/2008 2:10:38 PM

SPX and VIX.X 30-minute intervals at 02:04 PM ET Link

Jeff Bailey : 12/3/2008 1:55:50 PM

VIX.X 63.68 +1.11% ... after testing correlative WKLY and MONTHLY Pivot, now set for a test of QRTRLY R2.

Jeff Bailey : 12/3/2008 1:55:10 PM

SPX 838.27 -1.24% ... after test of WKLY Pivot, now testing the very, very, very short-term upward trend.

Keene Little : 12/3/2008 1:53:17 PM

This pattern has not been easy to figure out in real time so understand that each of the wave count ideas I throw out here is just me thinking out loud as I try to anticipate what's happening. The updated 10-min chart removes the possibility for a rally above 900. Until SPX breaks below 828 (this morning's low) there remains the potential for the market to bounce back up and finish a corrective wave count off Monday's low (dark red). But I think the higher probability now is for a selloff below Monday's low. Link

Jeff Bailey : 12/3/2008 1:51:45 PM

OGZPY $15.66 -4.16% ...
CHL $46.69 +0.60%
PBR $17.83 -3.25% ...

Jeff Bailey : 12/3/2008 1:51:00 PM

EEV $79.24 +4.19% ...

Jeff Bailey : 12/3/2008 1:50:25 PM

Exiting long DIG $26.35 in personal account

Keene Little : 12/3/2008 1:31:33 PM

The decline has now turned the pattern bearish. While this choppy and whippy market can always surprise with another upside push, the bounce is now too corrective to think of it as bullish. Shorting the bounces is the recommendation from here (staying aware of the possibility that we could yet see a push up to 878).

The possibility for this to push above 880 is now pretty much removed from the table. I expect to see a drop below Monday's low (near 816) before any renewed attempt at a stronger rally.

Jeff Bailey : 12/3/2008 1:29:09 PM

USO $38.00

Jeff Bailey : 12/3/2008 1:28:25 PM

DIG $26.98 -3.33% ... slipping out of the volume study zone $27.32-$28.55

Keene Little : 12/3/2008 12:55:41 PM

The bulls need to keep this going or else the pattern will turn more bearish. Zooming in on the 30-min chart I posted earlier (11:12 AM), this 10-min chart shows what I'm watching to see if the rally can make it a little higher: Link . The first Fib projection of interest is 871.70 where the 2nd leg up for the bounce off Monday's low would achieve 162% of the 1st leg up (for the potential completion of an A-B-C bounce as labeled in pink).

Slightly higher is the downtrend line from November 4th and the 78.6% retracement of the decline from last Friday to Monday's low, both near 878-879. Any higher than that would be a break of resistance and lead me to believe that we'll see a rally above 900. We could start a corrective pullback from the 878 area (depicted in dark red) but if it looks corrective then it will be time to think about the long side. A stronger failure from either 871 or 878 (pink) would have me looking to short any bounces from there.

Keene Little : 12/3/2008 12:15:43 PM

The kind of corrective pullback, if that's what we're getting, has a downside Fib projection of 850. This makes 850 doubly important for the bulls to hold if there's to be more upside.

Jeff Bailey : 12/3/2008 12:15:10 PM

30-year Yield ($TYX.X) ... session yield high of 3.271 stopped dead in tracks at WKLY S2.

Make some ties here with majors at WKLY Pivots. Need more cash from Treasury selling.

Jeff Bailey : 12/3/2008 12:09:20 PM

FXE $126.56 -0.46% ...

Jeff Bailey : 12/3/2008 12:09:02 PM

FXY 106.94 (unch) ... off highs of $107.82

Jeff Bailey : 12/3/2008 12:04:05 PM

SMH $16.43 +2.94% ...

Keene Little : 12/3/2008 12:04:02 PM

After today's move up say to 870 or 875 do you still see that we may put in a new low as depicted by your alternate path? When will we see that path negated.

Yes, if SPX fails to get through 880 I still see the possibility for a continuation lower, either as another leg down for an a-b-c pullback from November 28th before continuing higher again (dashed line on my 30-min chart), or as part of the whippy move to a new low by mid month (pink count on 30-min chart). It takes a rally above 900 to significantly reduce the probability for the new low.

Jeff Bailey : 12/3/2008 12:03:51 PM

BIX.X 132.76 +3.02% ...

Jeff Bailey : 12/3/2008 12:03:36 PM

DIG 27.96 +0.17% ... inches green.

Jeff Bailey : 12/3/2008 12:03:13 PM

USO $38.62 +0.31% ... reversing losses.

Jeff Bailey : 12/3/2008 12:02:41 PM

SPX 864.24 +1.81% ...

Jeff Bailey : 12/3/2008 12:02:27 PM

VIX.X alert! 60.34

Jeff Bailey : 12/3/2008 11:59:51 AM

VIX.X 60.73 -3.57% ... BIIIIG test here on 60-minute interval at MONTHLY Pivot/WKLY Pivot overlap. Can call buyers/put sellers turn and make a more meaningful difference over call sellers/put buyers? VIX will make the call. Link

Note POTENTIAL h/s top pattern. Last month's PIVOT a decent neckline.

Jeff Bailey : 12/3/2008 11:45:39 AM

SPX 60-minute interval chart Link

SPX has probed its downward trend from 09/19/08 relative high to 11/04/08 relative high, but the WKLY Pivot holds sellers. MACD on this time interval tries to "hook up" just below the zero level, and that has traders making the tie with the WKLY Pivot.

Keene Little : 12/3/2008 11:26:57 AM

In order for the upside potential to the 875 area (878 is a good Fib target) to remain in effect SPX now needs to hold above 850 on any pullback.

Keene Little : 12/3/2008 11:20:44 AM

The bulls haven't fumbled the ball yest and got through the first level of resistance. This open up the probability that we'll see the 875 area achieved.

Keene Little : 12/3/2008 11:12:10 AM

The updated SPX 30-min chart shows the possibility for the bounce off Monday's low to now be finishing (light dashed line) while a continuation higher should have 871-880 in its sights. For now be careful if you're long the market. A shorting opportunity is here and then higher, hopefully up near 875. Link

Keene Little : 12/3/2008 11:04:54 AM

One other thought occurred to me about the bounce pattern off Monday afternoon's low. It could be considered a double zigzag bounce (an a-b-c bounce into yesterday's mid-day high, an x-wave pullback to yesterday afternoon's low, followed by another a-b-c bounce to this morning's high here). The upside projection for the 2nd a-b-c (for equality) is at SPX 858.73 which closely matches the downtrend line from September. So stay aware of the possibility that the rally will fail just shy of 859.

Keene Little : 12/3/2008 10:54:24 AM

So far so good for the bulls. If they don't fumble the ball here (approaching resistance in the 852-856 area) then we should see the rally continue up to the next resistance area of 871-880.

Jeff Bailey : 12/3/2008 10:53:24 AM

ProShares Ultra Oil & Gas (DIG) $27.40 -1.82% ... look attractive for a long here.

Keene Little : 12/3/2008 10:36:17 AM

Techs are leading the way back into the green so that's the first bullish heads up that we've got here.

Keene Little : 12/3/2008 10:24:39 AM

If SPX rallies above 856 I would say that's enough evidence that we're going to see a rally at least up to the 870 area. It's a wide range but between 819 and 856 it's anything goes for this market and we could be stuck in a very choppy and whippy market. I'm essentially neutral the market with my current trade positions while waiting for the market to tell me what it wants to do. I have no interest in trading chop.

Keene Little : 12/3/2008 10:12:24 AM

This SPX 10-min chart shows the little flag pattern I'm referring to when I say it's possible we'll get one more leg up to complete an a-b-c-d-e correction to Monday's decline (to work off the excessive short-term oversold conditions from that selloff). But a break below 819 would suggest the correction is already finished and we'll get another leg down to at least equal Monday's decline. Link

Keene Little : 12/3/2008 10:00:47 AM

If we have a little flag pattern playing out from Monday's low we could see one more leg up inside the pattern before breaking down harder. Yesterday afternoon's low near 819 would have to hold in order to maintain that possibility.

Keene Little : 12/3/2008 9:48:22 AM

The quick dip to the uptrend line for SPX has held so far and we're getting a bounce off it. Obviously the quick low this morning now needs to hold otherwise we'll probably get a breakdown in the market.

Jane Fox : 12/3/2008 9:38:24 AM

AD line is now -1739

Jane Fox : 12/3/2008 9:38:09 AM

Today we have FOMC Member Kroszner speaking at 10:15

10:35am Crude Oil Inventories

2:00pm Beige Book

7:30pm Treasury Sec Paulson Speaks

Jane Fox : 12/3/2008 9:36:36 AM

WASHINGTON (MarketWatch) -- The productivity of U.S. workers was slightly stronger in the third quarter than previously reported, the Labor Department said Wednesday. Productivity in nonfarm businesses increased at an annual rate of 1.3% in the quarter, not 1.1%. Unit labor costs, a key gauge of wage-price pressures, rose 2.8%, not 3.6%. In the past year, productivity has risen 2.1%, while unit labor costs are up 1.4%. Real hourly compensation fell 1.6%. In the nonfinancial corporate sector, productivity is up 3.5% in the past year, with unit labor costs up 0.2%, real hourly compensation down 1.2%, and unit profits down 6.7%.

Jane Fox : 12/3/2008 9:34:57 AM

WASHINGTON (MarketWatch) -- The U.S. private sector shed 250,000 jobs in November, the biggest job loss in seven years, according to the ADP national employment index released Wednesday. The loss was in line with estimates of analysts surveyed by MarketWatch. Job losses rose to 158,000 in the goods-producing sector and to 92,000 in the services. The report comes two days before the government releases its report on the labor market for November, with analysts expecting the worst losses in more than 25 years.

Jane Fox : 12/3/2008 9:34:12 AM

AD line opens at a bearish -744 so not as bearish as I predicted however, it is heading downward and should get to -1000 in short order.

Jane Fox : 12/3/2008 9:31:04 AM

My daughter and I will be taking a trek to the sunny (NOT!) Seattle today for a doctor's appointment for my grandbaby. So once I post the AD line I will be gone for the rest of the day.

Jane Fox : 12/3/2008 9:29:46 AM

Here are the overnight charts and they are bearish. Lower highs and lows should be telling you the bears have control and I suspect the AD line (the market's pulse) will open below -1000. Link

Keene Little : 12/3/2008 9:26:29 AM

This morning shows once again why holding any trade overnight that was in the direction of the day's trend (up for Tuesday) is very risky. This makes the 3rd day in a row where the market is going to do a hard reversal of the previous day's move. Last night I mentioned a drop below SPX 832 would be a bearish heads up and ES has dropped to a pre-market low of 826 so far. While SPX briefly broke below an uptrend line from November 21st yesterday it held. That line is currently near 831 this morning so keep an eye on it at the open.

Keene Little : 12/2/2008 10:40:17 PM

Wednesday's pivot table: Link

There is the possibility that the climb into the close on Tuesday set up an immediate reversal for Wednesday (the same way we got the reversals from Friday's rally and Monday's decline). The bounce off Monday's low came very close to achieving two equal legs up at 851.73 just before the close (the high was 850.54). I think it will head higher but a reversal in the morning and drop back below 832 would indicate the bounce could be over. Back below 815 should see a move back down to the 775 area. The 30-min chart shows the possible moves from here: Link

There are several possibilities for where this market is headed and as mentioned above I think the lower-probability move is immediately back down (light dashed line). I see a higher likelihood for a continuation higher to the 871-880 area where I'd like to try a short play and watch to see if it starts back down, as shown in pink. If it only pulls back in a choppy decline, as shown in dark red then I'll know to keep my stop very close and start thinking about the long side with a break above the downtrend line from November 4th.

The 120-min chart shows the pink and dark red scenarios and how they could play out this month: Link . If we see the market work its way down to a new low (downside target is 661 around December 12-15) it should set up an outstanding long play into February. If we instead get the rally leg shown in dark red (upside target of 970 this week) it will present a good shorting opportunity. In the meantime we need to see what the market has up its sleeve and where it's headed before we can make any longer-term bets than a day trade.

OI Technical Staff : 12/2/2008 9:59:59 PM

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