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Jeff Bailey : 12/8/2008 4:15:37 PM

10-year Yield ($TNX.X) ... rose 7.7 bp to finish 2.734% ... After gapping above WKLY Pivot, really didn't come much below at session low yield of 2.674. Session high yield of 2.760 in its first hour (08:20-09:20 AM ET).

Jeff Bailey : 12/8/2008 4:11:40 PM

DXY's intra-day range 85.50-86.75.

Can color your WKLY S1 and WKLY Pivot.

Note 04:00 as to MONTHLY and Quarterly Levels.

Jeff Bailey : 12/8/2008 4:06:47 PM

DXY's 04:00 tick 85.67

Jeff Bailey : 12/8/2008 4:05:24 PM

EEV $61.70 -13.64% ... see 09:42:28 AM ... a little "weaker" for 200-x INVERSE

Jeff Bailey : 12/8/2008 4:04:09 PM

GG $24.08 +9.80% ... see 09:37:30 AM

Keene Little : 12/8/2008 4:01:04 PM

The sharp drop and then sharp bounce back up into the close is a bearish setup for an immediate drop tomorrow morning.

Keene Little : 12/8/2008 3:47:01 PM

That sudden little breakdown looks like a top was just made.

Jeff Bailey : 12/8/2008 3:45:35 PM

$95.00 strike more of the "naked call squeeze" with $4.17 million.

Jeff Bailey : 12/8/2008 3:44:48 PM

Should note that there isn't a lot of call/put OI in the RKH down here.

@ $85.00 strike, only $955,000 call OI.

Jeff Bailey : 12/8/2008 3:42:28 PM

Pretty close match for BIX.X and RKH as it relates to WKLY Pivots. Probably a little different weighting of components though.

Jeff Bailey : 12/8/2008 3:41:22 PM

BIX.X 154.22 +5.89% ...

Jeff Bailey : 12/8/2008 3:41:01 PM

RKH's WKLY R1 ... 86.42

Jeff Bailey : 12/8/2008 3:40:21 PM

Regional Bank HOLDRs (RKH) $86.00 +6.48% ... Dec "Max Pain" theory $75.00. "bear gulp"

Jeff Bailey : 12/8/2008 3:38:55 PM

XLF $13.82 +7.88% ... Dec Max Pain Theory $15.00

Jeff Bailey : 12/8/2008 3:21:46 PM

Can't remember the last time some of the major indexes, or sub-sectors were at/above their Max Pain theory tabulations.

Jeff Bailey : 12/8/2008 3:20:39 PM

MSFT $21.14 +6.39% ... December "max pain" currently $21.00

Keene Little : 12/8/2008 3:20:20 PM

Follow the money--the BIX may soon give us a heads up for what's next. On the daily chart I've been pointing out the 3-wave moves to the downside since September and why I think it's hammering out a descending wedge pattern (ending diagonal 5th wave). The move down from November 4th to November 21st was a 3-wave move with the 2nd leg down going just past equality with the 1st leg down. Now in the bounce off the November 21st low it's a 3-wave move which would achieve equality at 156.98. Today's high so far is 154.07. This rally could be topping very soon. BIX 120-min chart: Link

Jeff Bailey : 12/8/2008 3:19:37 PM

SMH's December "Max Pain" theory tabulation currently $15.00

Jeff Bailey : 12/8/2008 3:17:13 PM

VXN.X 56.21 -4.66% ... benchmark

Jeff Bailey : 12/8/2008 3:16:52 PM

QQQQ $30.38 +4.97% ... just about $0.40 above its December "Max Pain" theory tabulation of $30.00.

Jeff Bailey : 12/8/2008 3:08:56 PM

NASDAQ a/d 2,108/771

Jeff Bailey : 12/8/2008 3:08:43 PM

NYSE a/d 2,335/570

Jeff Bailey : 12/8/2008 3:07:40 PM

DJUSHB 237.34 +0.09% ... All equity-based U.S. Market Watch now green.

Jeff Bailey : 12/8/2008 3:06:52 PM

XBD.X components Link

Jeff Bailey : 12/8/2008 3:05:38 PM

e*Trade Financial (ETFC) -66.34% YrNet% ... "no soup for you"

Jeff Bailey : 12/8/2008 3:04:14 PM

Charles Schwab (SCHW) -22.05% ... BIGGER CEO bonus candidate in my opinion.

Jeff Bailey : 12/8/2008 3:03:08 PM

Ameritrade (AMTD) -36.99% YrNet% ... BIG CEO bonus candidate in my opinion.

Jeff Bailey : 12/8/2008 3:00:59 PM

Hadn't thought of that ... CNBC intra-day report ... U.S. auto troubles could impact NASCAR various other auto racing circuits.

Keene Little : 12/8/2008 2:58:09 PM

The leg up from the low near 1:30 PM almost looks finished and it could be the last leg up for the rally from Friday, just as SPX is tagging the 914-915 Fib target. So the potential is for price to roll over in the last hour. Certainly a drop below this afternoon's low (SPX 893.93) would now be bearish for at least a larger pullback (a Fib retracement of the rally from Friday).

Jeff Bailey : 12/8/2008 2:57:17 PM

Ah yes ... MSFT $21.01 +5.73% ... this is SOFT in your bullish %.

Jeff Bailey : 12/8/2008 2:56:48 PM

SMH $16.51 +1.85% ... "well off" morning high.


Jeff Bailey : 12/8/2008 2:56:09 PM

QQQQ $30.28 +4.63% ... just of new intra-day high.

Jeff Bailey : 12/8/2008 2:54:40 PM

Morgan Stanley (MS) -69.41% YrNet% ... "so soup for you!"

Jeff Bailey : 12/8/2008 2:52:56 PM

GS -64.05% YrNet%

Jeff Bailey : 12/8/2008 2:52:04 PM

What are the Board of Directors thinking?

Jeff Bailey : 12/8/2008 2:51:33 PM

XBD.X -63.8% YrNet%

MER -76.00% YrNet%

Jeff Bailey : 12/8/2008 2:48:46 PM

Where is DDX.X "within pattern" retracement?

Where is CYC.X "within pattern" retracement?

Jeff Bailey : 12/8/2008 2:48:10 PM

SNDK $9.56 +3.57% ... how far to its "pattern objective" ... see sector bullish % and think ... "field position" within the pattern.

Jeff Bailey : 12/8/2008 2:47:22 PM

DDX.X 54.64 +8.30% ... testing MONTHLY 61.8% again.

Jeff Bailey : 12/8/2008 2:33:34 PM

GG would be PREC sector bullish %.

Jeff Bailey : 12/8/2008 2:32:01 PM

GG "had to be long" after overlap of MNTHLY S1/Qrtrly S1 was traded and held buyers. Maybe some double "right shoulder" SPY/SPX action too.

Keene Little : 12/8/2008 2:28:49 PM

The leg back up now leaves the pullback as a corrective 3-wave move and therefore new highs should be coming (even if there will first be another pullback).

Jeff Bailey : 12/8/2008 2:29:56 PM

Simply couldn't resist SNDK from work we did last week. Link Sold / Partial on Friday, raise cash from very nice profit. Was "top holding" into Friday's close.

Jeff Bailey : 12/8/2008 2:27:22 PM

DDM and DIG have a tie.

XOM and CVX.

Jeff Bailey : 12/8/2008 2:22:38 PM

UYG ... This is now SMALLEST position I hold, but I sold 1/2 of 11/21/08 long at $3.62 on 11/25/08 at $5.24.

Jeff Bailey : 12/8/2008 2:19:56 PM

It is TEMPTING to AVERAGE DOWN INTO A NOW LOSING EEV at $63.22 seeing it -11.52% on the day and -22.31% avg. cost.

FRIDAY was just as TEMPTING.

Jeff Bailey : 12/8/2008 2:18:29 PM

Personal Holding of one account Link

As we gather important information that impacts our personal holdings, managing the account is of top importance. KEEPING it weighted properly based on analysis.

I suggest keeping account SORTED with LARGEST HOLDINGS (based on total cost) at TOP of account.

As you AVERAGE UP INTO PROFITABILITY (I do not teach the AVERAGE DOWN INTO LOSING TRADES) or LEG OUT and realize gain/loss, POSITION sizes may change.

Jeff Bailey : 12/8/2008 2:07:02 PM

OEX actually a bit higher than 12:55, but RUT.X a bit lower.

Jeff Bailey : 12/8/2008 2:06:12 PM

02:00 Market Watch at this Link

12:55 Link

Jeff Bailey : 12/8/2008 2:02:26 PM

Head, tail and everything in between.

Jeff Bailey : 12/8/2008 2:02:13 PM

Just like the CYC.X and its reverse h/s pattern.

PIVOT analysis gives tests with the levels of trade.

Jane Fox : 12/8/2008 2:01:53 PM

Google GM's Job Banks and find out about it for yourself. I will not make anymore comment about it in case I get some out there mad at me.

Jeff Bailey : 12/8/2008 2:00:13 PM

SMH $16.26 +0.30% ... paring gains.

Jeff Bailey : 12/8/2008 1:59:55 PM

QQQQ $29.70 +2.62% ... slips below my WKLY R1.

Jane Fox : 12/8/2008 1:59:14 PM

The Jobs Bank was set up by mutual agreement between U.S. automakers and the United Auto Workers union to protect workers from layoffs. Begun in the mid-1980s, the program is being tapped by thousands of workers. Many of those receiving checks do community service work or take courses. Others sit around, watching movies or doing crossword puzzles -- all while making $26 an hour or more. In an interview with The Detroit News, General Motors CEO Rick Wagoner says his company can't sustain the price of the program, which he says runs to $400 million annually.

Keene Little : 12/8/2008 1:59:06 PM

Either today's pullback is slowly tipping over into what will be a waterfall decline this afternoon or else it's very corrective and we're going to get another leg up in the rally. If we get another push higher we should certainly see SPX tag its 915 level. If it instead tips over we should quickly see gap closure and the potential to see SPX 860 before the next opportunity for a bounce.

Jeff Bailey : 12/8/2008 1:57:19 PM

I'm not sure Jane.

What percentage of the UAW's concession in job bank to payroll/benefits total?

Thain's $10M bonus in percentage of Salary?

Jane Fox : 12/8/2008 1:55:16 PM

One of the UAW's concession is to let the job bank go. Now that is quite a concession isn?t it? This almost equals Thains ridiculous $10M bonus.

Jeff Bailey : 12/8/2008 1:55:09 PM

XBD.X 75.75 -0.11% .... This would be WALL in your sector bell curve.

Jeff Bailey : 12/8/2008 1:54:20 PM

DJUSHB -3.27% ... some retailers like HD $24.47 +0.28% and LOW $22.85 +2.19% comprise the DJUSHB. But note field position of BUIL

Jane Fox : 12/8/2008 1:53:37 PM

Do you all know what the Job Bank is? Let me give you a few details. Members of the United Auto Workers continue receiving their $31-an-hour pay and full benefits -- even after their work has left the building.

Created in the mid-1980s as a safety net for temporarily idled auto workers, GM's jobs bank has swollen to more than 8,000 workers, according to company sources.

Analysts estimate that each worker in the jobs bank costs GM about $130,000 a year in wages and benefits, a crippling financial burden for an automaker that lost $8.6 billion last year.

Jeff Bailey : 12/8/2008 1:53:03 PM

BPINSU ... certainly the "strongest" bullish % at 48%-52% bullish, and while not quantitatively "overbought" (>=70%), may be finding some profit taking.

SOFT, CHEM, BANK, INET, PROT, GUTI, GAME, BUSI better field position. Then EUTI, BUIL

Jeff Bailey : 12/8/2008 1:51:07 PM

IUX.X 138.26 -1.33% ... (see 12/05/08 sector bullish %)

Jane Fox : 12/8/2008 1:49:32 PM

SAN FRANCISCO (MarketWatch) -- The United Auto Workers union is looking for a seat on General Motors Corp.'s board of directors and an equity stake in the automaker in exchange for concessions that would help the industry fetch billions of dollars in federal aid, according to a posting Monday on a North Carolina union local's Web site. The UAW concessions include allowing the domestic automakers to postpone their required health-care contributions from 2010 to 2012 and to eliminate the controversial jobs bank. GM shares jumped more than 16% in midday trades to $4.75.

Jeff Bailey : 12/8/2008 1:49:12 PM

Please Note: Executive compensation, especially bonuses for CEO's, is set by the Board of Directors. The CEO then accepts, or refuses employment contract.

Jeff Bailey : 12/8/2008 1:47:43 PM

Sector Bell Curve 12/03/08 to 12/05/08 (see 01:23:00 and 01:40:54) to get feel for strength/weakness sectors and action of SECTORS to MARKET. Link

Keene Little : 12/8/2008 1:47:32 PM

The arrogance and selfishness of these bank executives (traits that are present in many other industries as well) is simply mind boggling. They just don't get it.

Jeff Bailey : 12/8/2008 1:40:54 PM

Sector Bell Curve 11/19/08 to 11/26/08 (see 01:23:00) to get feel for strength/weakness sectors and action of SECTORS to MARKET. Link

Jeff Bailey : 12/8/2008 1:35:18 PM

Merrill's Corporate Governance Link

Jane Fox : 12/8/2008 1:23:43 PM

$10M bonus for Thain is just a tad too much? Ya think?

Jeff Bailey : 12/8/2008 1:23:00 PM

Major Global Equity Indexes, Currencies, USO, GLD, HUI, OIX, XLF and DJUSHB benchmark table I track Link

2008 YTD would be longer-term. 2008 Q4 more intermediate-term. 12/3 to 12/8 would be very short-term.

Jane Fox : 12/8/2008 1:22:27 PM

SAN FRANCISCO (MarketWatch) -- New York Attorney General Andrew Cuomo told the board of Merrill Lynch & Co. on Monday that a reported bonus of $10 million for Chief Executive John Thain "appears unjustified." Cuomo said in a letter to the board that Merrill Lynch has lost more than $11 billion over the year and that "the performance of Merrill's top executives throughout Merrill's abysmal year in no way justifies significant bonuses for its top executives, including the CEO." On Friday, Merrill Lynch and Bank of America Corp. shareholders voted to approve Bank of America's acquisition of Merrill Lynch.

Keene Little : 12/8/2008 1:21:13 PM

The pullback today is not clear yet. It looks impulsive (meaning trend change to the downside) for SPX but corrective (3-wave pullback) for NDX. We may be doing a 4th wave correction within the rally from Friday (with the expectation for another push higher) but it's starting to get a little large and that has me wondering what it's doing here. We could get at least another leg down that might find support near SPX 890 but could drop all the way to close this morning's gap.

Jane Fox : 12/8/2008 1:18:32 PM

The AD volume continues to be bullish but the VIX is not supporting it. I have a hard time trading against the VIX but then again I have a hard time trading against the AD volume as well - especially when it is this bullish. Link

Jeff Bailey : 12/8/2008 1:18:31 PM

Monday's action, now finds Hong Kong's $HSI up 4.6% since U.S. Elections.

Jeff Bailey : 12/8/2008 1:07:47 PM

12:55 Market Watch as RUT.X and OEX.X trade back to WKLY R1s. SMH and BIX.X unable at this point to trade WKLY R1s. Link

Please Note: All 5-day Net%, 20-Day Net% may not be entirely accurate, or benchmarked to same day.

Jeff Bailey : 12/8/2008 1:03:25 PM

IF a trader held LONG two(2) or more calls from Friday, might sell PARTIAL positions.

Jeff Bailey : 12/8/2008 12:57:24 PM

OEX.X 435.81 +2.66% ... trading my calculated WKLY R1.

Jeff Bailey : 12/8/2008 12:56:08 PM

RUT.X 476.24 +3.28% ... slips below WKLY R1.

Jeff Bailey : 12/8/2008 12:53:13 PM

dj- via CNBC US Rep. Frank: Deal on short-term auto bailout likely by end of day Monday

Jeff Bailey : 12/8/2008 12:51:24 PM

dj- Treasury Report: Treasury has committed $335B of TARP funding

Jeff Bailey : 12/8/2008 12:49:16 PM

Either didn't see the pattern, or simply didn't believe they might hold.

Jeff Bailey : 12/8/2008 12:48:45 PM

A bit "surprising" ... also a "bit surprising" is VIX.X 59.09 -1.40% ...

Considering SPX/SPY +3.00%.

Bears taking some heat, still getting things under control. We know at least ONE bear was shorting Friday morning at the re-testing of right shoulders.

Jeff Bailey : 12/8/2008 12:47:05 PM

Yen CurrencyShares (FXY) $107.14 -0.24% ... off fractions. WKLY Pivot $107.37.

Jeff Bailey : 12/8/2008 12:45:44 PM

XAL.X +2.71% ...

Jeff Bailey : 12/8/2008 12:45:29 PM

DJUSHB -0.76% ... paring losses.

Jeff Bailey : 12/8/2008 12:42:18 PM

BIX.X 149.83 +2.88% .... Was last week's only gainer in your Index Pivot Matrix. That's a "key" observation.

NO trade yet at this week's WKLY R1.

Keene Little : 12/8/2008 12:33:28 PM

I've used a chart from Elliott Wave International in the past to show when a stock market rally should not be trusted. Their chart plots the credit spread (between Moody's BAA bonds and the 30-year Treasury) inversely to show correlation to the S&P and each time the credit spread has widened (dropped lower on their chart) the stock market has followed.

SPX has rallied +23% off the November low to today's high while credit spreads continue to widen. My bet is to follow the credit spreads "lower" (wider). This chart was last updated last Monday and says stock market bulls need to be very careful here: Link

Keene Little : 12/8/2008 12:28:46 PM

I'll continue to show on the daily SPX chart the possibility for another leg down to a new low later this month. While the pattern gets a bit stretched, even a rally up to 950 (to hit a downtrend line from October 14th, not shown) could still fit within the idea that we're only completing a 4th wave correction from the October 10th low). There are simply too many possibilities to include on the chart at this juncture. But for now I'm keeping the new low idea (dark red) and the sideways triangle idea (pink): Link

If SPX can push up through 917 then the next resistance level is the 50-dma near 930. Then the downtrend line from October 14th near 950. Then the Fib projection for two equal legs up from November 21st at 973. Then the broken uptrend line from 1990 near 1005 (also an important Gann number). And then finally the inverse H&S price objective near 1050. So there's definitely upside potential--I just don't trust it and I'll post soon why I still feel bearish here.

Jeff Bailey : 12/8/2008 12:22:05 PM

Sector Bullish % Descriptions at this Link

Jeff Bailey : 12/8/2008 12:18:55 PM

Sector Bell Curve Bullish % 12/01/08 close to Friday's close Link

Jane Fox : 12/8/2008 12:09:14 PM

The VIX gave me a sell signal at 11:38ET so, although I will take long positions, I will not take reentry type long positions.

Jeff Bailey : 12/8/2008 11:59:00 AM

The "tail" of the proverbial "inchorm"

Jeff Bailey : 12/8/2008 11:58:39 AM

Pivot analysis and trend would confirm such thought/observation.

Jeff Bailey : 12/8/2008 11:58:05 AM

SMH likely a "Guinea Pig" weakness sector for technology still. How I would "rank" it anyway.

Jeff Bailey : 12/8/2008 11:55:01 AM

QQQQ $29.91 +3.35% ... THAT SAME BENCHMARK trend from the SMH for QQQQ now at $27.16.

Jeff Bailey : 12/8/2008 11:53:45 AM

OK ... SMH $16.48 +1.66% ... also noting SMH has tested its near-term downward trend from 09/19/08 relative high to the 11/04/08 relative high.

Jeff Bailey : 12/8/2008 11:44:46 AM

VIX.X 58.72 -2.01% ... session low so far 57.82. NO trade at WKLY S1.

Jane Fox : 12/8/2008 11:38:12 AM

I use some proprietary indicators for my trading and apply them to the market I trade and the VIX. The VIX has to be on a buy or a sell before I will take reentry type trades and so far today I have not been able to take any short reentries because the VIX has not given me a sell signal yet.

Jeff Bailey : 12/8/2008 11:36:27 AM

Airline Index (XAL.X) 22.37 -0.40% ... slips red.

DJUSHB -4.00%

Jeff Bailey : 12/8/2008 11:35:18 AM

DiskDrive Index (DDX.X) 53.43 +5.90% ...

Jeff Bailey : 12/8/2008 11:33:31 AM

OK ... SMH's DAILY R1 $16.68.

Daily Pivot $15.87.

Jeff Bailey : 12/8/2008 11:32:25 AM

SMH $16.50 +1.78% ... session high of $16.75 still unable to see trade at MONTHLY Pivot.

Jeff Bailey : 12/8/2008 11:31:37 AM

QQQQ $29.96 +3.52% ... ABOVE its MONTHLY Pivot.

Jeff Bailey : 12/8/2008 11:30:43 AM

SMH has not yet been able to trade its WKLY R1.

Keene Little : 12/8/2008 11:29:20 AM

Also as shown last night on the NDX daily chart, if it manages to push higher I see Fib resistance near 1250 which is also near the top of its parallel down-channel from August. Slightly higher is its 50-dma at 1268. The pattern for NDX continues to support the possibility for another new low later this month and therefore I'm not taking that possibility off the table, even if that possibilty has been reduced for SPX (but SPX would very likely follow lower).

The pink wave count on the daily chart calls the current rally off Friday's low as the conclusion of a 4th wave correction since the October 10th low (running triangle in EW terminology since it slopes in the direction of the trend, down in this case) which will be followed by a drop to a new low before the end of the year (to finish the larger degree 3rd wave down from June). Link

I've changed the dark red wave count to call the November 21st low as the low for the year and that we'll see a larger degree sideways 4th wave correction play out into January before we start the 5th wave down to new lows next year. The sideways correction is just a guess at this point and I'll have to wait for the next pullback for some clues as to whether or not it's a likely path.

Jeff Bailey : 12/8/2008 11:28:57 AM

QQQQ 29.95 +3.48% ...

SMH $16.50 +1.78% ...

Jeff Bailey : 12/8/2008 11:15:59 AM

Dow Jones Home Construction (DJUSHB) 230.74 -2.69% ... Only equity-based index in U.S. Market Watch currently red.

Keene Little : 12/8/2008 11:01:00 AM

The risk for tech bulls right here is that NDX is now topping out. As I had shown on last night's 60-min chart, there is a Fib projection near 1222 to complete an a-b-c bounce off last Monday's low so be careful about expectations for higher. We could see just a pullback or the start of bigger decline to the 1060 area before another leg back up.

Keene Little : 12/8/2008 10:53:43 AM

The top of a parallel up-channel for the bounce in NDX off the November 21st low is currently near 1250. A little higher near 1270 is where the bounce would have two equal legs up. 30-min chart: Link

Jeff Bailey : 12/8/2008 10:41:22 AM

SPX/SPY 30-minute intervals Link

Keene Little : 12/8/2008 10:31:25 AM

So far the little sideways consolidation near the high looks bullish so another leg up towards SPX 915 looks doable.

Jeff Bailey : 12/8/2008 10:26:05 AM

CYC.X 60-minute intervals Link

Jane Fox : 12/8/2008 10:22:12 AM

I have taken a few short trades but I certainly will not be taking a short reentry type trade, internals are too bullish. Link

Jeff Bailey : 12/8/2008 10:05:30 AM

CYC.X's WKLY Pivot Levels are ... 410, 433, Pivot= 448, 471, 486.

Jeff Bailey : 12/8/2008 10:04:20 AM

Morgan Stanley Cyclical (CYC.X) 475.15 +4.15% ... has probed neckline of the 60-minute interval h/s pattern. (477.25). See Friday's MM.

Jeff Bailey : 12/8/2008 10:01:22 AM

I'd suggest placing a stop/limit of $23.25/$23.20 for those still long GoldCorp. (GG) $23.88 +8.89% ...

Jeff Bailey : 12/8/2008 9:58:06 AM

GoldCorp. (GG) $23.63 +7.84% ... couple notes this morning. Company providing a positive outlook for its Penasquito Project.

Credit Suisse lowering its target to $35 from $46.

Natl. Bank lower target to $33 from $41.

Keene Little : 12/8/2008 9:53:35 AM

With this morning's rally I am now assuming that the November 21st low was in fact the low for the year. While there's an EW pattern possibility for another decline into the end of the year it has become a lower probability so I'll only resurrect that possibility if SPX were now to drop back below 770. In the meantime there are a few possibilities to be considered and the bottom line is noone should expect the bulls to have free reign from here. The volatility, chop and whipsaw moves are very likely to continue.

I've updated the 60-min chart to take off the bearish scenario calling for a new low this month and instead I'm now looking at a couple of possibilities for the next move. Assuming for now we're going to see SPX make it up to the 914-917 area and stall there (several Fib projections from this month's price action point to that level and therefore I believe it's an important one) I think we'll then get a pullback. How deep is the question. 60-min chart: Link

If we've started a bigger move up to 973 Fib target we should only get a pullback to correct the leg up from Friday, perhaps down to about 865-867 (shown in dark red) and then continue on up. If the price action since the November 28th high is one big correction then a sharp decline to 785 could be the next move (light dashed line). Or instead of the sharp correction we could chop sideways/down to around the 840 area before chopping our way back up into the end of the month (chop being the operative word).

This is a very messy pattern we're in and I don't expect it to clean up much. I'll continue to warn about not expecting much follow through in either direction. It's just not the nature of a 4th wave correction which I believe we'll be in until January/February.

Jeff Bailey : 12/8/2008 9:48:19 AM

ProShares Products Link

Jeff Bailey : 12/8/2008 9:47:24 AM

ProShares New Additions

UltraShort DJ-AIG Commodity Index (CMD)
UltraShort DJ-AIG Crude Oil (SCO)
UltraShort Gold (GLL)
UltraShort Silver (ZSL)

Jane Fox : 12/8/2008 9:45:22 AM

Egads the TRIN is 0.31 - now that is really really low.

Jeff Bailey : 12/8/2008 9:42:28 AM

EEV $64.17 -10.21% ... sold long partial in personal account $64.65.

Jane Fox : 12/8/2008 9:42:09 AM

VIX is falling supporting the bullishness.

Jane Fox : 12/8/2008 9:41:50 AM

AD line is a bullish +2018

Jane Fox : 12/8/2008 9:42:49 AM

Crude is up a little today but is still trading under $45.00/bl. Jim Brown talks about Crude in his Leaps Trader column (a must for everyone) and is probably one of the most informed Crude analysts around - seriously. He mentioned how we may all love the price of Gas nowadays but the price we are also paying is in future oil projects, projects that are been put on hold because they are now profitable at the prices for Crude. I know the Canada Oil Sands cannot extract Crude from the tar sands profitably with Crude less than around $60.00 barrel and that is one very very big project. Link

Jeff Bailey : 12/8/2008 9:37:30 AM

GoldCorp. (GG) $24.07 +9.48% ... selling long a partial from Friday in personal account.

Jane Fox : 12/8/2008 9:20:41 AM

It is quite obvious the bulls have control of the overnight market but it remains to be seen if they can retain that control. Friday was a phenomenal day. All the bad news out about job losses the bears were having a feast then the bulls just said, "Enough is Enough" then put their heads down, started pawing the ground and snorting and proceeded to rip victory right out from under the bears nose. Link

Keene Little : 12/8/2008 9:20:07 AM

I must not have received the memo about the economy recovering, banks getting back to profitability and earnings expected to improve next quarter. Why equity futures are up so big in front of today's open is beyond me but never argue with price. I just don't trust the spike up we're going to have at the open. Having said that, I do see the possibility for SPX to make a run for it up to the 914-917 area before turning back down for at least a larger correction. The pre-market high for ES is 905.75 and has pulled back to 898 here. NQ has pulled back a little more sharply as we head for the open.

Jane Fox : 12/8/2008 9:11:20 AM

NEW YORK (MarketWatch) -- Dow Chemical Co. said Monday it will cut about 5,000 full-time jobs as it accelerates a strategy to cut costs to address "current economic realities." Further, the Midland, Mich., chemical giant will dismiss 6,000 contractors, idle 180 plants and shutter 20 facilities in "high-cost locations." The job reductions represent about 11% of Dow Chemical's global workforce, the company said, and should result in $700 million in annual cost savings by 2010. Shares of Dow rose 4.4% in premarket trading to $19.84.

Jane Fox : 12/8/2008 9:08:54 AM

CHICAGO (MarketWatch) --Newspaper publisher and broadcaster Tribune Co., weighed down by massive debt, could file for Chapter 11 bankruptcy protection as soon as this week, according to a published report Sunday.

Tribune has hired investment firm Lazard Ltd. to help it prepare for the possible filing, The Wall Street Journal reported in its online edition, citing unnamed sources with knowledge of the situation.

The company remains in discussions with its creditors to find some way to restructure its debt, the Journal said.

The company's cash flow may be insufficient to allow it to handle more than $1 billion in interest payments due in 2008, the Journal said. Tribune must also make a payment of more than $500 million by June.

Keene Little : 12/8/2008 12:27:42 AM

Monday's pivot table: Link

I read a lot of bullish market sentiment over the weekend and we should know early whether or not the bulls are going to get some follow through to Friday's rally. If there's a pullback on Monday it will then need to break Friday's high in order to confirm the bullish scenario for a decent rally from here. Otherwise there is a bearish setup that calls Friday's rally the end of a 3-wave correction off Monday's low. We should know very quickly whether the bears will get the ball back or not.

This market has had a nasty habit of not following through when the market has closed the previous trading day at either the high or the low and Friday's close at the high may have set us up for another immediate reversal. That and the potential EW count for an a-b-c correction to Monday's decline says we'll get another leg down at least equal to Monday's (nearly 700-point drop for the DOW and -80 points for SPX). The bearish scenario also requires an immediate decline Monday morning.

If it does drop right away then I'll be watching for the potential that it will be only a pullback before heading higher again or signs that the decline is impulsive and giving us clues the next leg down is underway. A continuation higher right away on Monday will difficult to get on board because I see the possibility for a pullback soon after a bounce. Stay cautious about the upside first thing Monday morning--we should get a better long entry after pulling back some.

The SPX and NDX 60-min charts show the 3-wave bounce off Monday's low achieved equality (NDX slightly higher than equality) in the two rally legs (Tuesday to Thursday's high and then Friday's rally) and that's why we have a setup for an immediate decline Monday morning, shown in dark red:
SPX 60-min: Link
NDX 60-min: Link
Not shown on the NDX 60-min chart, and only barely on the SPX 60-min chart (light dashed line), is the possibility we'll get a pullback and then continuation higher. But beware that any immediate decline on Monday could lead to strong selling (so don't hold onto a long position hoping it will turn back up--it might not). The daily charts give a wider view of what these two scenarios might look like this week and into the end of the month:
SPX daily: Link
NDX daily: Link

A continuation of the decline in SPX should target at least a move down to about 710 and as low as the Gann target of 661. A continuation of the rally (either immediately or after a pullback on Monday) should target the 973 area (two equal legs up from November 21st) as part of a potential sideways triangle consolidation pattern into the new year (shown in pink).

I'm continuing to show a different expectation for NDX where a larger bounce (two equal legs up from November 21st is at 1270) will then lead to another leg down to a new low by the end of the month. A break above its 50-dma at 1276 (and coming down) would be a bullish heads up that something more bullish is happening. If we do get the new low as depicted, either from here or after another rally leg, it would be a very good setup for a long play.

OI Technical Staff : 12/7/2008 9:59:59 PM

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