Tuesday, July 31, 2007
VIX monthly chart since 1998.
AheadoftheNews.com
Market analysis and futures trades.
SPX managed to avoid closing the month below 1443, its 10 month moving average. As you can see on the chart, it's an important marker. Will August ring the bell? Stay tuned.
I noted yesterday not to get greedy and take money in the middle. I didn't think they would sell it this hard, but that is why you don't take chance on a counter-trend swing and book your profits quickly. NQ 2010 was upper resistance and they sold that non-stop all day. It found support at monthly pivot (1943). ES double bottomed at its 200 dma, but it looks ugly. No follow-through, gap and crap and new lows for NDX/QQQQ. YM 13K is not that far away.
Bears should note, however, that ADVDEC lines were not that bad, only -496. It was a strange day, as if sellers reluctantly took over and no one stood in their way.
Bears should note, however, that ADVDEC lines were not that bad, only -496. It was a strange day, as if sellers reluctantly took over and no one stood in their way.
Noon update:
Oil is a problem, holding techs back. Watch QM and the approaching 78 level. YM would be 100 points higher without this problem. Note that VIX bottomed at 19.68.
Oil is a problem, holding techs back. Watch QM and the approaching 78 level. YM would be 100 points higher without this problem. Note that VIX bottomed at 19.68.
Good news from GM is sending futures up. YM tagged its 5 DMA at 13516. NQ moved up to R1. We have a slew of economic data coming out this morning: link.
Oil is at 77.40 and approaching record territory. This might be why NQ is slightly lagging. I would get defensive if we stay at these levels or go higher.
Oil is at 77.40 and approaching record territory. This might be why NQ is slightly lagging. I would get defensive if we stay at these levels or go higher.
Monday, July 30, 2007
I put out a buy signal on Friday, and suggested you buy the dip on Monday. Now that we got that out of the way, please understand that the mood has changed, so don't get greedy and take profits. This is a swing trade, not a buy and hold. Upside risk is NQ 2002, followed by 2010. Support is important at 1987.75 and 1979. Again, don't play the extremes, take the money in the middle and beat the bank.
Closing hour:
Shorts are getting slaughtered as the VIX drops even further. Rising yields gave the all clear sign, as money left bonds and went back into equities. Bulls managed to hold key levels, SPX 200 dma and DOW 38.2% retrace off March lows (13226).
Resistance will now be 5 DMA's accross the board, quite a come back if it holds. Watch weekly pivots as well, ES 1490.50 and NQ 1995.75.
Shorts are getting slaughtered as the VIX drops even further. Rising yields gave the all clear sign, as money left bonds and went back into equities. Bulls managed to hold key levels, SPX 200 dma and DOW 38.2% retrace off March lows (13226).
Resistance will now be 5 DMA's accross the board, quite a come back if it holds. Watch weekly pivots as well, ES 1490.50 and NQ 1995.75.
PM update (2):
They run it up some more, with VIX tagging weekly pivot at 21.56. That could top things out for now (ES 1479.50).
They run it up some more, with VIX tagging weekly pivot at 21.56. That could top things out for now (ES 1479.50).
PM update:
QQQQ held its 50 DMA (47.95) and ES continuous contract did an almost perfect bounce off its 200 DMA (1456). The VIX pretty much said buy the dips, but there is lots of chop. Yields rising is actually bullish today.
QQQQ held its 50 DMA (47.95) and ES continuous contract did an almost perfect bounce off its 200 DMA (1456). The VIX pretty much said buy the dips, but there is lots of chop. Yields rising is actually bullish today.
Pre-open:
VZ earnings reassure and we have a strong gap open. Watch YM 13358 resistance and 13315 support. DOW ley support is 13226, 38.2% should we have a gap fill attempt on NQ and ES. NQ reistance is 1974, 50 dma. Trendline held.
VZ earnings reassure and we have a strong gap open. Watch YM 13358 resistance and 13315 support. DOW ley support is 13226, 38.2% should we have a gap fill attempt on NQ and ES. NQ reistance is 1974, 50 dma. Trendline held.
Sunday, July 29, 2007
Overnight:
IB traders be careful, if you buy ECBOT futures (YM, YG, ZN etc...), you can't get out at this time (9:11 PM). Sell orders are not getting through. This is really bad news, so stay away form IB, unless you are trading Globex.
Update: issue with ECBOT is resolved per IB (9:40 PM). That was an IB problem, not ECBOT since TradeStation was working.
IB traders be careful, if you buy ECBOT futures (YM, YG, ZN etc...), you can't get out at this time (9:11 PM). Sell orders are not getting through. This is really bad news, so stay away form IB, unless you are trading Globex.
Update: issue with ECBOT is resolved per IB (9:40 PM). That was an IB problem, not ECBOT since TradeStation was working.
July 29 (Bloomberg) -- Investors are preparing to snap up shares of telephone, health-care and computer companies after last week's $2.1 trillion global stock market rout left U.S. equities the cheapest in 16 years.
``The window for buying is starting to open,'' said D.A. Davidson & Co. chief market strategist Frederic Dickson, who oversees $23 billion. His Great Falls, Montana-based firm plans to buy drug and technology stocks as long as bond market losses don't worsen.
Watch YM 13315, June low.
``The window for buying is starting to open,'' said D.A. Davidson & Co. chief market strategist Frederic Dickson, who oversees $23 billion. His Great Falls, Montana-based firm plans to buy drug and technology stocks as long as bond market losses don't worsen.
Watch YM 13315, June low.
SPY 145 strike put to call ratio: 13.5
QQQQ 48 strike put to call ratio: 2.04
DIA 132 strike put to call ratio: 1.75
The SPY number is massively tilted to the bear side. That would lend credence to the nearby 200 DMA holding, at least for now. If you think these ETF's mostly represent smaller traders, take a look at the full price index:
SPX 1450 strike: 24 (120K puts to 5K calls).
Of course, most of these extravagant numbers are a result of massive hedging, but it seems everyone is betting on more downside.
QQQQ 48 strike put to call ratio: 2.04
DIA 132 strike put to call ratio: 1.75
The SPY number is massively tilted to the bear side. That would lend credence to the nearby 200 DMA holding, at least for now. If you think these ETF's mostly represent smaller traders, take a look at the full price index:
SPX 1450 strike: 24 (120K puts to 5K calls).
Of course, most of these extravagant numbers are a result of massive hedging, but it seems everyone is betting on more downside.
Saturday, July 28, 2007
Marc Faber makes the point that SPX actually topped out in February if you input dollar weakness versus the Euro. He feels emerging markets will get hit hard and the dollar could strenghten further: video.
We have been doing pretty much the opposite of last year on a monthly calendar basis. In 2006, May was down, this year up. In 2006 June was down, this year it was up. Even February and March are flipped. It gets even spookier: In 2006, July 18th was the low. This year, July 20th was the high. Extrapolating on a weekly basis, early August 2006 saw a pullback, followed by a non-stop rally on August 10th which could mean an early August bounce this year, followed by continued selling mid-month. In other words, should the pattern keep repeating itself, I doubt August overall will be bullish but there should be a swing long trade coming any day. Just don't hold on to it.
Friday, July 27, 2007
SPX is approaching its 200 day moving average (1447.72) and the October 2000 high of 1454.82. The latter was a breakout area in April. That zone should be supportive next week. If it isn't, then they are going for the whole 10%. Odds favor a rally and a good swing trade, that doesn't mean the bull will be back on track. August will be a trader's month, not a buy and hold like last year.
Flush down at the close, looks very capitulative (YM monthyl s1 at 13279). Maybe one lower low Monday. New year lows (chart) have reached a level not seen since 2002! If anything, it's time to cover shorts. QQQQ 50 dma is very close, at 47.94.
Just like I put out a swing sell alert a few weeks ago, I am putting out a swing buy alert. Take the dip Monday. ISEE closed a little high given the circumstances, which would be my only caveat, but it was much lower yesterday. If we get an extremely bearish read Monday, it would add fuel to a short squeeze.
As we head into the 2 PM turn, NQ held trendline once again at 1972. Shorts could be on the defensive, or at least booking profits. Opening lows at 1986.50 need to hold after we bounce. It's a scalp day, sell resistance, buy support with a bearish bias at this point, although the closing hour and a half will be more telling. Once shorts have covered, they might re-attack if NQ loses 1986.50.
PM update:
Sellers are still in full control. Watch that trendline for NQ at 1972. ES has extreme support at 1464.
Sellers are still in full control. Watch that trendline for NQ at 1972. ES has extreme support at 1464.
July 27 (Bloomberg) -- The U.S. economy grew more than forecast last quarter, propelled by rising exports, commercial construction and government spending.
The 3.4 percent annual pace of expansion, the most in more than a year, followed a revised gain of 0.6 percent in the prior quarter, the Commerce Department reported today in Washington. Economists surveyed by Bloomberg News had forecast a 3.2 percent increase. The Federal Reserve's preferred inflation gauge rose at the slowest pace in four years.
The 3.4 percent annual pace of expansion, the most in more than a year, followed a revised gain of 0.6 percent in the prior quarter, the Commerce Department reported today in Washington. Economists surveyed by Bloomberg News had forecast a 3.2 percent increase. The Federal Reserve's preferred inflation gauge rose at the slowest pace in four years.
Morning update:
Bears sell the overnight highs and we are down. Support for NQ will be around 1993, followed by 1987. Below that, we could have another day of hard selling. The Yen is still on a bid, though. All in all, a scalper's day. Stay out unless you have the tools.
Bears sell the overnight highs and we are down. Support for NQ will be around 1993, followed by 1987. Below that, we could have another day of hard selling. The Yen is still on a bid, though. All in all, a scalper's day. Stay out unless you have the tools.
Open:
Yen drop and traders are buying the lows. VIX and VXN have a long way to go down and are red, so there is a bullish bias to the day. Just keep in mind that days after the kind we had yesterday, and a Friday to boot, can be very treacherous once you past the first 45 mns. NQ key resistance is at 2014.50. NQ needs to hold 2002 as the day goes along.
Yen drop and traders are buying the lows. VIX and VXN have a long way to go down and are red, so there is a bullish bias to the day. Just keep in mind that days after the kind we had yesterday, and a Friday to boot, can be very treacherous once you past the first 45 mns. NQ key resistance is at 2014.50. NQ needs to hold 2002 as the day goes along.
Overnight session:
Pivots were sold. They are still unwinding the carry trade and we could see some more selling at the open. Watch the VIX for any sign of an intraday reversal. Watch ES 1485.25, a key level.
Pivots were sold. They are still unwinding the carry trade and we could see some more selling at the open. Watch the VIX for any sign of an intraday reversal. Watch ES 1485.25, a key level.
BPNDX update. As you know, I raised the alarm bells a few times when we went above 76 and especially 79 last week. We are currently at the June lows.
NQ found clear support at its 50 dma and trendline off March lows. That puts the tech sector in better shape than others. Note how the 5 dma is sold, which confirms downside momentum. Until bulls get a close above, longs should be day trades only, as it was today from 1972. With the VIX in the stratosphere and ISEE now below 100, shorts are also hazardous. In other words, stick to day trading. It is the perfect environment to do so.
Closing hour:
Big bounce for NQ off the 1972 level mentioned earlier. That should hold today. If it doesn't and we retest the 1969.25 low, we could have more downside tomorrow. Note that NDX 50 dma is at 1948 if we do break lows for NQ.
I warned shorts to book profits on what was a 9 to 1 down volume day on NYSE and actually even went as far as 10 to 1. That is often a swing buy signal. This does NOT mean we have a long lasting bottom, far from it. But we will get rallies.
Big bounce for NQ off the 1972 level mentioned earlier. That should hold today. If it doesn't and we retest the 1969.25 low, we could have more downside tomorrow. Note that NDX 50 dma is at 1948 if we do break lows for NQ.
I warned shorts to book profits on what was a 9 to 1 down volume day on NYSE and actually even went as far as 10 to 1. That is often a swing buy signal. This does NOT mean we have a long lasting bottom, far from it. But we will get rallies.
PM update:
New lows. We now have a 9 to 1 NYSE down volume day. This is an extreme, so mind your step if short. The VIX is now at the 200 monthly ema, a level that was rarely reached the past four years. This is not an invitation to gamble, but an understanding that we usually get powerful rallies after days like this.
Watch NQ 1972, 50 dma and trendline support.
New lows. We now have a 9 to 1 NYSE down volume day. This is an extreme, so mind your step if short. The VIX is now at the 200 monthly ema, a level that was rarely reached the past four years. This is not an invitation to gamble, but an understanding that we usually get powerful rallies after days like this.
Watch NQ 1972, 50 dma and trendline support.
Morning update:
Volatile session, but QQQQ just closed the July 12th gap at 48.81 and it looks like they are buying it (NQ 1998.75, NDX 1984). NQ 2002 needs to hold after we bounce.
Volatile session, but QQQQ just closed the July 12th gap at 48.81 and it looks like they are buying it (NQ 1998.75, NDX 1984). NQ 2002 needs to hold after we bounce.
July 26 (Bloomberg) -- Orders for U.S. durable goods excluding transportation equipment unexpectedly dropped in June for a second month, casting doubt on forecasts that gains in business investment will help sustain the expansion.
Pre-open bloodbath with YM -100, after testing 13700. NQ hit a low of 2002. Oil at these levels is finally getting noticed. Durable Goods coming up at 8:30.
Overnight:
Oil tops 77, hurting an overnight rally in equities. NQ still up, but a long way from its 2039.50 high. YM is retesting 13810.
July 26 (Bloomberg) -- German business confidence fell for a second month in July as the euro's gains and rising oil prices threaten to curb growth in Europe's largest economy.
Oil tops 77, hurting an overnight rally in equities. NQ still up, but a long way from its 2039.50 high. YM is retesting 13810.
July 26 (Bloomberg) -- German business confidence fell for a second month in July as the euro's gains and rising oil prices threaten to curb growth in Europe's largest economy.
July 26 (Bloomberg) -- The ``golden era'' for leveraged buyouts proclaimed by Henry Kravis two months ago is losing its luster.
Yesterday, Chrysler and Alliance Boots Plc failed to find buyers for $20 billion of loans to pay for their buyouts. Ten banks, including Deutsche Bank AG and JPMorgan Chase & Co., were stuck holding the debt.
If true, it could mark the end of this bull.
Yesterday, Chrysler and Alliance Boots Plc failed to find buyers for $20 billion of loans to pay for their buyouts. Ten banks, including Deutsche Bank AG and JPMorgan Chase & Co., were stuck holding the debt.
If true, it could mark the end of this bull.
Wednesday, July 25, 2007
Did small caps find a bottom? RUT chart shows a pretty strong bounce today off the 200 dma and a close above 50% 2007 (808). Stochastics are turning up. How long this bounce lasts will depend on the ability to close above 819.71 tomorrow, 38.2% 2007 and previous double bottom support in June. A break below today's lows would be extremely bearish for the markets in general.
VIX jumped above weekly R2 , but reversed back down to R1 by the close. Watch these levels tomorrow: 19.11 and 18.03. It's never a good idea to stay short when the VIX hits weekly R2, which is why we saw a closing rally.
SPX still needs to reconquer 1522 at the close before bulls can feel a little safe.
AAPL seems to have delivered enough of the goods to get NQ back above 2025. We could get a nice short squeeze tomorrow if that holds. The COMP closed above 2645. The only problem is oil above 76. At some point, someone will take notice. For now, we have an extended VIX calling for a reversal.
ISEE closed at a low 113, a pessimistic read. This market goes from one extreme to the other.
ISEE closed at a low 113, a pessimistic read. This market goes from one extreme to the other.
Noon update:
They sold YM 13870 at the open and never looked back. After a lower low from yesterday, we have mounted a small comeback, but 13826 is still a problem. NQ also did a lower low and as long as it can hold 2015 the rest of the day, we coud see a bid forming. GOOG is dragging NDX down.
VIX hit an extreme at 19.46 and that could be supportive. Oil is back at 75, gold is being hurt by a stronger dollar. YG support is 774, 770 and 668.
Remember to keep an eye on COMP 2646. I mentioned yesterday that if SPX can't get above 1521/1522 (50 dma), sellers could still be a problem. That is still the case.
Yields are not going up on the higher dollar, which is a divergence.
All in all, a rough day to trade unless you are just scalping. This is often the case after big days.
They sold YM 13870 at the open and never looked back. After a lower low from yesterday, we have mounted a small comeback, but 13826 is still a problem. NQ also did a lower low and as long as it can hold 2015 the rest of the day, we coud see a bid forming. GOOG is dragging NDX down.
VIX hit an extreme at 19.46 and that could be supportive. Oil is back at 75, gold is being hurt by a stronger dollar. YG support is 774, 770 and 668.
Remember to keep an eye on COMP 2646. I mentioned yesterday that if SPX can't get above 1521/1522 (50 dma), sellers could still be a problem. That is still the case.
Yields are not going up on the higher dollar, which is a divergence.
All in all, a rough day to trade unless you are just scalping. This is often the case after big days.
Tuesday, July 24, 2007
The real victory for the bears is the breakdown of the financials. XLF lost the 2006 trendline on increasing volume. The only immediate support is the March lows of 34.18. You cannot have a sustainable rally without this group. Always make sure they are riding shotgun when you are long.
AMZN delivers and that could pave the way for a modest tech rebound. VXN is at the top of the envelope and NDX still above its 20 dma (1991.50). I still consider long trades to be day trades only as the mood might have changed to sell the rallies. Nevertheless, I would favor NQ if scalping long tomorrow. The COMP must regain 2645 soon, or all bets are off. Be careful, the wolves are out.The biggest task for bulls is to get SPX to close back above its 50 dma (1521.55). If they short that level, you know the party is over.
July 24 (Bloomberg) -- The cheap financing that fueled the leveraged buyout boom is over, according to Bill Gross, manager of the world's largest bond fund.
``The tide appears to be going out for levered equity financiers and in for the passive owl money managers of the debt market,'' Gross, chief investment officer at Pacific Investment Management Co. in Newport Beach, California, wrote today in his monthly commentary on Pimco's Web site. The shift ``promises to have severe ramifications for those caught in its wake.''
``The tide appears to be going out for levered equity financiers and in for the passive owl money managers of the debt market,'' Gross, chief investment officer at Pacific Investment Management Co. in Newport Beach, California, wrote today in his monthly commentary on Pimco's Web site. The shift ``promises to have severe ramifications for those caught in its wake.''
They took it lower, YM hitting its 20 dma at 13769. The DOW is right near trendline support and bulls are shaken. Big earnings tomorrow, BA and AAPL. VIX tagged 19.09, and we are definitely at a reversal point.
BPNDX once again did not fail as did multiple ISEE +200 readings. I hope many of you bought some puts and made some serious money. Don't forget to cash in. You can always re-enter. Maybe one lower low tomorrow, but a bounce is coming.
BPNDX once again did not fail as did multiple ISEE +200 readings. I hope many of you bought some puts and made some serious money. Don't forget to cash in. You can always re-enter. Maybe one lower low tomorrow, but a bounce is coming.
ES loses 1529 and YM tags 13826, my max target for this drop (at least for now). I would cover shorts here, especially since the VIX is very close to 19 (YM 13826 is the previous high from June and the breakout test). If bulls lose 13826, next support is 13798 and 13772.
Closing hour:
ES finds support at 1529, 50% june/July. Bulls need to hold that. Note that COMP has a gap close at 2552.
ES finds support at 1529, 50% june/July. Bulls need to hold that. Note that COMP has a gap close at 2552.
PM update (2):
Bulls drop the ball and we retest the lows. ADVDEC line is a very negative -2200. YM breaks below 13900 and ES loses its 50 dma. It's a rough day for bulls. Noting that NQ is not making new lows, unlike ES and NQ. Should YM lose 13886, we could see 13840, weekly S1. The VIX is back at 18.
Bulls drop the ball and we retest the lows. ADVDEC line is a very negative -2200. YM breaks below 13900 and ES loses its 50 dma. It's a rough day for bulls. Noting that NQ is not making new lows, unlike ES and NQ. Should YM lose 13886, we could see 13840, weekly S1. The VIX is back at 18.
PM udpate:
We have a bigger bounce as VIX weekly R1 (18.03) brings on the buyers. Volatility is extended to the upside, this is not suprising. Watch NQ gap close at 2053.50. COMP found support at its 20 dma, 2662.
We have a bigger bounce as VIX weekly R1 (18.03) brings on the buyers. Volatility is extended to the upside, this is not suprising. Watch NQ gap close at 2053.50. COMP found support at its 20 dma, 2662.
SAN FRANCISCO (MarketWatch) -- Shares of Apple Inc. took a hit Tuesday morning after wireless carrier AT&T issued disappointing activation numbers for the iPhone for the last two days of the second quarter, when the device first went on sale.
Note that the 140 strike has five calls for every put, a whopping 0.22 ratio. I would not hold the stock above 140 prior to earnings.
Note that the 140 strike has five calls for every put, a whopping 0.22 ratio. I would not hold the stock above 140 prior to earnings.
Noon update:
ES is finding support at 50 dma, 1535.75. That needs to hold.
The VIX is at 18.03, weekly R1. Bulls should try and reverse it here. If they fail, we could see 18.5 and maybe 19, weekly R2 at some point.
ES is finding support at 50 dma, 1535.75. That needs to hold.
The VIX is at 18.03, weekly R1. Bulls should try and reverse it here. If they fail, we could see 18.5 and maybe 19, weekly R2 at some point.
Morning update:
July 24 (Bloomberg) -- Lockheed Martin Corp., the world's largest defense contractor, said second-quarter profit rose 34 percent on higher-than-expected sales of jet fighters.
The war machine is doing well, but that was expected (although that could be winding down next year). It's giving YM a floor for now above 13900. Resistance is 13961, 10 day moving average. Another break belwo 13930 puts bears in full control again.
July 24 (Bloomberg) -- Lockheed Martin Corp., the world's largest defense contractor, said second-quarter profit rose 34 percent on higher-than-expected sales of jet fighters.
The war machine is doing well, but that was expected (although that could be winding down next year). It's giving YM a floor for now above 13900. Resistance is 13961, 10 day moving average. Another break belwo 13930 puts bears in full control again.
Open:
NQ finds support at 2035, weekly S1. Resistance is yesterday's YM low at 13930. Not single gap close so far. ADVDEC lines hit -2000.
Should bulls hold on to 13900 (YM), they could shoot for 13950/13970 on a bounce. Many traders are waiting there to re-short. NQ would have resistance at 2044 and 2046.
NQ finds support at 2035, weekly S1. Resistance is yesterday's YM low at 13930. Not single gap close so far. ADVDEC lines hit -2000.
Should bulls hold on to 13900 (YM), they could shoot for 13950/13970 on a bounce. Many traders are waiting there to re-short. NQ would have resistance at 2044 and 2046.
Pre-open:
We have a heavy down day shaping up, NQ attacking the lows of last week even before the market open, now down to weekly S1 (2035). Target for YM is 13826/13850. It does not look good for bulls.
July 24 (Bloomberg) -- DuPont Co., the third-biggest U.S. chemical maker, said second-quarter profit fell 0.3 percent after declines in U.S. auto and housing markets weakened demand for car paints and kitchen countertops.
We have a heavy down day shaping up, NQ attacking the lows of last week even before the market open, now down to weekly S1 (2035). Target for YM is 13826/13850. It does not look good for bulls.
July 24 (Bloomberg) -- DuPont Co., the third-biggest U.S. chemical maker, said second-quarter profit fell 0.3 percent after declines in U.S. auto and housing markets weakened demand for car paints and kitchen countertops.
Overnight:
July 24 (Bloomberg) -- BP Plc, Europe's second-largest oil company, said net income rose 1.5 percent as the sale of its last remaining U.K. oil refinery added to revenue from high oil and gas prices.
This is helping ES futures as overnight traders get excited over upcoming energy earnings. Financials and techs could be in trouble tomorrow, but for now we get the usual 3 AM push. We could also be witnessing a nasty short squeeze on the lower overnight volume.
YM pulls up to 14028 and retreats back below 14012.
July 24 (Bloomberg) -- BP Plc, Europe's second-largest oil company, said net income rose 1.5 percent as the sale of its last remaining U.K. oil refinery added to revenue from high oil and gas prices.
This is helping ES futures as overnight traders get excited over upcoming energy earnings. Financials and techs could be in trouble tomorrow, but for now we get the usual 3 AM push. We could also be witnessing a nasty short squeeze on the lower overnight volume.
YM pulls up to 14028 and retreats back below 14012.
Monday, July 23, 2007
ES (SPX futures) might be making new year highs this month, but the strongest volume bars in July were on down days. 
This would confirm the inability of NYSE to produce high tick readings that would match the past three months. This could be due to the abolition of the uptick rule on July 5th, but the ES volume chart is ominous. It's still up for grabs until we fall out of the ascending wedge. Key support will be 1540.
ISEE is still overly optimistic, except for the Indices/ETF side, often used for hedging. Equity came in at 191, in the upper historical range. I prefer to measure sentiment using equity long (call or put) options.
Update: no fireworks from either (TXN and AXP down), YM is stuck below 14012, July 13th high. I am quoting YM since I know many of you trade it. I think it is a swing short from last week's highs (14097) with a possible target of 13826, followed by 13756 and 13706 if 13826 does not hold. Resistance is 14012, 14038 and 14059. As for NQ, it is looking weak every since NDX hit 61.8% projection 2006 at 2057.50 and fell from there (see last week's chart). They are holding QQQQ 50, probably in anticipation of great AAPL numbers on Wednesday. Right now, NQ is down after hours.
Closing hour:YM fails to hold on to 14038, Friday's open and techs are weak. Small caps are also struggling. Internals are getting worse. This rally is still a bear flag as fas as I'm concerned.
Note the lower highs/lower lows on NYSE ADVDEC lines on every push up since late July (chart).
Semis and financials are down as we head into the close.
There is a widespread argument out there that retail investors are not fully participating and that could signal more gains as they jump on board. This is not a bad analysis, but it does not take into account post-crash historical facts. It took retail investor more than 20 years to get fully "interested" in the markets after the crash of 1929. After 1987, eight years, ten if you skip the first two. The losses incurred by many in 2000 far exceed 1987, so we might have to wait a little longer for full on retail investor participation. Furthermore, to go back and compare the current environment to the bull market of the 90s is utterly absurd. The mid to late 90's showed strong growth coupled with low inflation. We currently have slower growth, slower earnings and stubborn core at 2 or above. M&A's from cheap money is not something to hang your hat on for too much longer, but we will give bulls the benefit of the doubt until proven otherwise. Just stand near the exit doors as it could get crowded when someone yells fire.
Noon update:
NQ and techs (NDX/QQQQ) find support and we get a pre-lunch push higher. However, NQ is still finding resistance at its 5 DMA (2060) as is ES (1554.50). YM went up to tag 14038, Friday's open, and so far that is holding things back. It still looks bear flaggish for NQ and ES. YM is a wild card, gap close from Friday is a little higher at 14059 if we get past 14038. ES and NQ closed those gaps Friday (YM was much weaker due to CAT). Internals are weakening on this bounce, which is something we saw on the rallies last week. The one thing bulls have going for them is the VIX, which could conceivably move much lower. Note, however, that ISEE equity options indicator is printing +200 again, and that is frothy. We saw the same thing last year in May. This is one heck of a bull market and not to be underestimated, but all good things do come to an end at some point. Shorts hope it is not much higher.
QM (September oil) did lose 75 and came very close to my support target of 74.35 (74.425). That needs to hold.
NQ and techs (NDX/QQQQ) find support and we get a pre-lunch push higher. However, NQ is still finding resistance at its 5 DMA (2060) as is ES (1554.50). YM went up to tag 14038, Friday's open, and so far that is holding things back. It still looks bear flaggish for NQ and ES. YM is a wild card, gap close from Friday is a little higher at 14059 if we get past 14038. ES and NQ closed those gaps Friday (YM was much weaker due to CAT). Internals are weakening on this bounce, which is something we saw on the rallies last week. The one thing bulls have going for them is the VIX, which could conceivably move much lower. Note, however, that ISEE equity options indicator is printing +200 again, and that is frothy. We saw the same thing last year in May. This is one heck of a bull market and not to be underestimated, but all good things do come to an end at some point. Shorts hope it is not much higher.
QM (September oil) did lose 75 and came very close to my support target of 74.35 (74.425). That needs to hold.
Morning update:
Right on cue, bulls fail at ES and YM 5 dma's and we have a bear flag on the daily (for now). It is still very early in the day, but the fact that techs are down is not going to help bulls. ES does have support at 1547 and YM at 13062. Watch overnight resistance for YM at 13097.
Right on cue, bulls fail at ES and YM 5 dma's and we have a bear flag on the daily (for now). It is still very early in the day, but the fact that techs are down is not going to help bulls. ES does have support at 1547 and YM at 13062. Watch overnight resistance for YM at 13097.
Open:
Gap up, but we have a 5 DMA stall for YM and ES. NQ is weaker. This a bear flag on the daily until proven otherwise. A break above ES 1557 negates it (for YM it would be 14038). Bottom line: bears don't want to see a close above 5 dma's, ES 14010.
Gap up, but we have a 5 DMA stall for YM and ES. NQ is weaker. This a bear flag on the daily until proven otherwise. A break above ES 1557 negates it (for YM it would be 14038). Bottom line: bears don't want to see a close above 5 dma's, ES 14010.
July 23 (Bloomberg) -- Barclays Plc, vying to buy ABN Amro Holding NV in the biggest banking takeover, raised its offer to 67.5 billion euros ($93.4 billion) after securing investments from the governments of China and Singapore.
Another Monday merger and the bulls take the reins back in the overnight session. Watch ES 1549 resistance.
Another Monday merger and the bulls take the reins back in the overnight session. Watch ES 1549 resistance.
Sunday, July 22, 2007
QM (September contract) has key support this week at 75. It's interesting to note that the premium during contract rotation was not as elevated as prior months. Expectations for higher oil are narrowing in the futures market. With a slowing economy, it's going to take some weather disruption to get up to 80. If we break below 75, next support is 74.35.
July 23 (Bloomberg) -- The yen dropped against the euro after the Nikkei newspaper reported yesterday Japan's coalition may lose its majority in upper house elections on July 29, citing a poll it conducted.
The yen fell against 14 of the 16 most-active currencies after the newspaper said the Liberal Democratic Party and coalition partner New Komeito may win fewer than the 64 seats necessary to retain their majority. The yen rose the most in six weeks on July 20 as losses in stocks prompted investors to pare holding of riskier assets funded by loans in Japan.
The yen fell against 14 of the 16 most-active currencies after the newspaper said the Liberal Democratic Party and coalition partner New Komeito may win fewer than the 64 seats necessary to retain their majority. The yen rose the most in six weeks on July 20 as losses in stocks prompted investors to pare holding of riskier assets funded by loans in Japan.
Overnight session:
There is a chance we will get a test of Friday's lows if no mergers are announced. Target for YM would be between 13826 and 13850 on a break of 13871. A sustained move above 13969 this week puts the bulls back in the saddle.
There is a chance we will get a test of Friday's lows if no mergers are announced. Target for YM would be between 13826 and 13850 on a break of 13871. A sustained move above 13969 this week puts the bulls back in the saddle.
BPNDX hit 79, a number not seen since the highs of 2005. We invariably get strong correction at these levels (as you can see on the chart) and lingering this long above 76 is not something bulls should take solace in. Furthermore, we have not had a drop below 55 this year, a very unusual event. I know I have put up this chart several times since we moved above 72, but in my view it just makes the coil even more dangerous. We could go on like this a little longer (AAPL is due on 7/25 and hopes are high), but the fall should be severe when it happens.
Friday, July 20, 2007
Closing hour:
More selling after a brief bounce. They want to pin QQQQ 50, or close. ES found solid resistance at its 10 dma (1549) and that could be setting up more lows on Monday if we can't get back above that level.
NYSE new year lows 134.
AAPL stayed up most of the day after an analyst raised his target to 205 based on 2009 projections. Who cares about 2009, we are dealing with a possible liquidity crunch in the coming months. It's getting more ludicrous every day, but that is what makes a market.
More selling after a brief bounce. They want to pin QQQQ 50, or close. ES found solid resistance at its 10 dma (1549) and that could be setting up more lows on Monday if we can't get back above that level.
NYSE new year lows 134.
AAPL stayed up most of the day after an analyst raised his target to 205 based on 2009 projections. Who cares about 2009, we are dealing with a possible liquidity crunch in the coming months. It's getting more ludicrous every day, but that is what makes a market.