4:00pm
This market sure is interesting. The S&P rallied up to the 1291 level and then consolidated just under just under it. Financials did not participate in the rally today, perhaps taking a rest after yesterday’s push. FNM and FRE were both down big, but the overall market did not pay much attention. AIG about to report. Stay tuned for today’s video.
3:44pm
FRE trading as session lows, down 19%. I am not sure how much longer the stock market can ignore what is going on with the GSEs.
3:20pm
Market pulling back some. 20 moving average sits at 1285.60 on the ES 10-minute.
3:10pm
Market consolidating just under 1291 resistance level. Financials not participating outside of Lehman.
2:43pm
The ES has just made another new session high. Can’t fight the tape. ES may test resistance at 1291.
2:30pm
Oil will settle down about 60 cents to 118.57.
2:25pm
Day traders may try a short here at this double top level.
2:18pm
Market breaking out to session highs. Volume not impressive.
1:30pm
LEH threatening to break out of inverse head and shoulders pattern.
1:19pm
Nat gas double top (UNG).
1:14pm
Should we see weakness this afternoon, the 200MA is trading near today’s intraday low at 1275.
1:12pm
The volume is light today and the range is small. It is not surprising to see the S&P and XLF not breakout the day following a massive rally. Today looks like consolidation, and perhaps this will continue tomorrow. Unless the markets really start to roll over, a push above 1291 and towards the 50MA is likely Friday or early next week.
12:51pm
Nat gas spiking higher. Oil down only 25 cents. The ES could not break above the 1285.50 resistance level. MER, LEH, XLF not able to break resistance. QQQQ above resistance on light volume. An S&P short might be worth a shot here with a stop slightly above today’s high.
12:07pm
QQQQ breakout above $46.15 resistance level. Volume light.
11:30am
I am a buyer of USO at 93.85, which is gap fill support.
11:27am
Crude under 118 and below yesterday’s low.
11:20am
If the the rally breaks above 1291, the next upside target is the 50MA around 1302. But the upward momentum is likely to continue to the bear market trendline, near 1360. This trendline is descending, so the longer the rally, the lower the target price. (click image to enlarge)
10:37am
Oil slips into negative territory near 119. Refiners working well today. TSO up 8%.
10:35am
Crude supplies rise 1.6M barrels. Gas down 4.3M barrels. Distillates up 2.8M barrels.
9:55am
Oil inventories comes out at 40 minutes. Market may be on hold until then.
9:52am
Notice the resistance level at 1285.50. (click image to enlarge)
9:16am
FRE trading lower this morning (from 8.0 to 6.5) and the conference call is about to begin. The market is not showing any confidence in FRE’s future to this point.
9:09am
Freddie Mac (FRE) reported Q2 earnings of -$1.63 v -$0.53 estimate. Revenue also light. Cuts dividend from $0.25 to $0.05.
9:08am
Good morning. Thr ES is trading lower by 4 points in the pre-market. It looks like there will be some weakness this morning with the ES trading sideways/up on light volume. The 200MA is below us near 1272.
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August 6th, 2008 at 10:10 am
TSO on a break out… also on a daily chart it broke it’s 20 sma…
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August 6th, 2008 at 10:13 am
we also have an inverse head and shoulders on the 10 minute to take us to new highs
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August 6th, 2008 at 10:16 am
Be patient with TSO. Might have resistance at 16.50. Oil inventory numbers will be a catalyst for a push above 16.50 or a pullback. Volume has been solid on this buying.
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August 6th, 2008 at 10:24 am
I also own TSO at 16.40 as a long term core hold. I’m in no rush to sell it. Prices at the pump have only retreated a fraction of the recent drop in crude. If a trader believes that the price of crude will fall dramatically from current levels then this is only the first inning of the refiners’ run. The refiners will benefit from the improvement in crack spreads from early Q2, and margins returning to the historical mean. Their best gross profit point may actually occur by them cutting production to meet falling real demand and maintaining tight supplies with a healthier margin .
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August 6th, 2008 at 10:30 am
did you close out your SPY double short position yesterday? looks like that divergence lead to a gap down
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August 6th, 2008 at 10:34 am
Pat, I’m out of SDS.
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August 6th, 2008 at 10:50 am
i think the wise thing here is either to wait for a break of 1291 or a break of the ascending line at like 1256. But if the $SPX. breaks through it’s 20 SMA and 50 SMA at around 1264, you should expect a break of the ascending channel downard.
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August 6th, 2008 at 11:00 am
I agree, but would add that I favor the upside. This rally will likely hit the 50MA before any potential reversal.
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August 6th, 2008 at 11:01 am
‘i think the wise thing here is either to wait for a break of 1291 or a break of the ascending line at like 1256.’
- I’m in agreement as to not intitiating any new postions in this narrowing range. We have seen a decline in relative trading volumes in forming this penant on the chart. The decline is in comparisson to the recent volumes of the week on or around July 15th. This is to be expected. If you look at trading volumes, however, compared to long periods in the spring time, they are up substantialy, and this is during the summer months which historically has less activity. Volume should be less in this narrowing consolidation area, because traders will be less likely to take substantial positions as an inflection point approaches. When the break out/breakdown happens, the volume should increase measurably if the move is for real. I wouldn’t interpret the relative decline from recent highs volume peaks in the SP500 while in this defined trading range as bearish.
Craig- where does 1365 on the SP500 you mentioned once or twice come from?
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August 6th, 2008 at 11:07 am
Yeah.. I don’t necessarily believe that this move higher is done, I really like the consolidation we got, but a little worried on yesterday’s volume.
TSO looking really strong, and I guess the next level is 17.23 for the 200 SMA of the 60 minute candle.
I bought it at the double bottom formation on the 10 minute at 14.80$
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August 6th, 2008 at 11:14 am
TSO will see some resistance at 16.8~17 and pause one day or two.
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August 6th, 2008 at 11:17 am
I don’t really see any resistance on TSO until 17.23
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August 6th, 2008 at 11:19 am
In fact.. I would sell my TSO position at 17.20 and hope to catch it again at 16.50
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August 6th, 2008 at 11:27 am
Yes, precisely it is about 17.2 which is MA50. Good luck with your trading, Idan.
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August 6th, 2008 at 11:35 am
Craig.. you going in on an SSO if we break above yesterday’s high?
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August 6th, 2008 at 11:40 am
No, it’s probably a good trade but the market is too extended for me to get long up here. I would be more likely to get long after a day or two of consolidation.
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August 6th, 2008 at 11:42 am
tso seems to want to break 17.23 too, so now hte next level support on the daily is 18$, I sold 80% of my position at 17.23, and will sell the rest at 18.
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August 6th, 2008 at 12:05 pm
QLD starting to look a good trade on a QQQQ break out…
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August 6th, 2008 at 12:09 pm
Looks like markets may want to rally to the 1291 area today…What does everyone think?
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August 6th, 2008 at 12:13 pm
I would rather they rally barely past 1285-1286 or completely past 1291, if they end right at 1291 it could be disaterous..
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August 6th, 2008 at 12:18 pm
Ok Idan, then I will hope for right past 1291 this afternoon and really squeeze the shorts…
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August 6th, 2008 at 12:24 pm
I sold my TSO, it looks like it wants to consolidate, and pigs get slashed… so lets step back .. a move like this only comes once in a while… 16.50 is a good place to be a buyer again…
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August 6th, 2008 at 12:24 pm
MER is trying to break thru 28.25-28.30 for 2 days now. Everytime it hits it is rejected. Once it convincingly breaks thru I could see it run to 30 quickly. Any thoughts?
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August 6th, 2008 at 12:27 pm
Thai, looks like a good trade. LEH is also on the neckline. Wait for the breakout. This is the lunch hour.
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August 6th, 2008 at 12:27 pm
Craig,
I really enjoy your analysis and highly count on that.
XLF may break above the descending trendline around 22.45-22.5 this afternoon. As you kept saying, this is a strong resistence. That will easily take it to 23.8-23.9. I put some of my money in financials into this morning’s weakness. I’ll put more money upon breakout.
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August 6th, 2008 at 12:39 pm
Isn’t it more likely we bounce off resistance and head back down? That’s been the story for the past two weeks. And clearly fundamentals don’t support an upside breakout either.
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August 6th, 2008 at 12:39 pm
Craig, while we are at this lunch hour pause sort of speak, I just want to second John’s comments. I too have found your analysis and videos very entertaining and thoughtful. I really appreciate your efforts and hard work. Thank you from a fan.
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August 6th, 2008 at 12:42 pm
Thanks John and Thai. Appreciate it.
Pat, I agree. Resistance must be respected until broken. For traders that have a long bias in the short-term, go long on a breakout. For traders with a short bias int the short-term, short at resistance.
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August 6th, 2008 at 12:47 pm
I have a feeling today is like 7/23 and yesterday was the equivalent to 7/22, people get all bullish and tomorrow we gap down and tank.
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August 6th, 2008 at 12:50 pm
Pat, this is possible. The volume continues to be on the light side. Looks like more of a short squeeze than any real accumulation. SDS might be worth a short with a stop above today’s high.
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August 6th, 2008 at 1:03 pm
Craig,
I am not sure if I read it on your blog. Didn’t you say (in the last 10 days) you took a position or thinking of taking a position in IMAX?
A bull flag?
http://finance.yahoo.com/q/ta?s=IMAX&t=6m&l=on&z=m&q=l&p=&a=&c=
(Disclosure: I just took a big position, based on fundamentals and this bull-flag. Also, they report before the open tomorrow. Risky)
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August 6th, 2008 at 1:07 pm
skf?
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August 6th, 2008 at 1:08 pm
Mohan, I have a small long position in IMAX. Every now and then, I like to play a stock based on anecdotal observations. The Dark Knight continues to sellout at my local IMAX theater every day. I cannot believe it continues so sell out so far after the release. This will have a positive effect on future earnings, but maybe not the last quarter. I think this type of performance is repeatable for other big releases. People are willing to pay a little more for the IMAX experience. And if you are a believer that 3D movies re the next big thing, IMAX is a good long-term play. Someone will probably buy this company down the road.
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August 6th, 2008 at 1:10 pm
Craig, I looked at the volatility skew (optionistics subscription) and volume for IMAX and I saw increased volatility skew in calls and high call volume.
Pretty much no put volume and no put skew in the last bit.
which means there are a lot of people long on calls not for hedging but speculation, and in general people are highly bullish on IMAX.
I’d jump in if I had cash right now.
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August 6th, 2008 at 1:17 pm
This push downards on the XLF is on light volume, and i think a push higher is in the works,
I put in a 5% UYG double XLF position, as soon as we hit that 20 SMA 10 minute on the XLF which was sitting at 22.23
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August 6th, 2008 at 1:24 pm
Craig,
Excellent. I am not good at trading frequently. I take position trades. In the past I was fairly successful with turnaround stories (Example: European cell phone service provide TIWI - now part of Vodaphone) and story stocks (Example: Warner Lambert during the early days of Lipitor in the market, Apple during early days of iPod, NutriSystem in 05.)
IMAX caught my attention becasue my kids wanted to watch Dark Knight in IMAX, even though they have seen it once in regular theater.
I agree with you on June 30 Q being a loss for IMAX. They should be profitable in the quarter ending Sept 30 with revenues nearly doubling. Just as they will close the quarter, on Sept 26th another flick (Eagle Eye, starring a favorite of generation X - Shia Labeouf) will be released on Sept 26. That should bode well for Q ending Dec 31.
I think MAX will become a story stock pretty soon. The success of Dark Knight is going to be trendsetter. Soon more studios will jump on this band wagon and most big budget films will have an IMAX version soon.
To top this, in partnership with AMC they are expanding their theaters by over 100.
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August 6th, 2008 at 1:25 pm
TSO back down to it’s 20 SMA 10 minute or the 200 SMA 60 minute, I think there is more room downside to go for consolidation. The 50% retracement sits exactly at 16.50, that’s where i’m putting my long, you can put some long here if you have a high risk tolerance.
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August 6th, 2008 at 1:27 pm
I wish I was in LEH instead of MER…That is the definition of a short squeeze.
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August 6th, 2008 at 1:39 pm
Actually.. you shouldn’t have bought finanicals yet.. the fact that lehman broke out right now, makes me think it’s a good buy now.. not before hand.
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August 6th, 2008 at 1:49 pm
I know most people here are Traders I personally think the Refiners have bottomed out at these levels and can only go higher from here TSO has a book value of around 24. Im holding it till it catches a double. Most Hedge funds Money Managers in august are going to be pouring money into Refiners.
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August 6th, 2008 at 1:55 pm
‘I know most people here are Traders I personally think the Refiners have bottomed out at these levels and can only go higher from here TSO has a book value of around 24. Im holding it till it catches a double.’
- Roop -I am as well. I posted on TSO above this morning.
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August 6th, 2008 at 1:56 pm
Why not just make this into a chat room?
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August 6th, 2008 at 1:56 pm
(LOL!) - Did I just hear someone say Warner Lambert? Quick! Name that Ticker! … WLA
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August 6th, 2008 at 2:11 pm
wow.. that was the lousiest 2 pm volume bar
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August 6th, 2008 at 2:50 pm
We need WAY more volume to break the 1291 .. if not this is a double top..
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August 6th, 2008 at 2:50 pm
1291 - we just touched it…
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August 6th, 2008 at 3:03 pm
Lehman on a break out.. this could provide financial strength and then break the 1291 on stonger volume
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August 6th, 2008 at 3:06 pm
how many think we are going to break out and stay up? OR are we ging back down? BAC has tripled topped with incrementally lighter volume each time.
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August 6th, 2008 at 3:09 pm
I am scaling out of my long financials are lightly starting a SKF position. AIG after the bell so it’s a crap shoot.
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August 6th, 2008 at 3:11 pm
Yea, I don’t know how this market can keep rallying on no good news. I say we start reversing tomorrow.
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August 6th, 2008 at 3:12 pm
SO far the bulls are really doing well, as the last 30 minutes have been consolidation on very very light volume, but FNM and FRE could be the ones that get the financials into trouble.
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August 6th, 2008 at 3:16 pm
they are just holding it up as long as possible to get the little guy in huh. The volume is earie this could go to break the lows eventually. DOW yearly chart….Fib retracement @ 10500, check it out!!!
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August 6th, 2008 at 3:18 pm
SP500 - Even if we don’t break today, the trading range is still intact ~1260-1291. The floor and the ceiling have each been tested equally (see the chart that Craig posted above earlier this morning.) This range for the SP500 is under 3% top to bottom, and narrowing by the day.
I’m a believer that we eventually climb the wall of worry…
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