Financials, Consumers, and the SPY...

As Wall Street and Europe finsh off there end of summer vacations the market is meandering around range bound.

Check out the lack of volume on the S&P....
Volume up on the way down....
Volume down on the way up...... Either way could be played here with fairly tight stops.....I guess this is why they call it a "Trader's market".

Existing home sales Data

Total existing home sales increase to 5 million homes. However inventory also increased to an 11.2 month supply.

Existing home sales

With existing home sales numbers coming out Monday I decided to take a look at the recent data to see if there was anything interesting. So from July 07 to July 08 existing housing monthly supply has risen from 9.1 months to 11.1 months.

Check out the "Months Supply Divided by two" in relation to the actual/consensus numbers. What you see is by dividing the month supply number we can visually see the affect the sales numbers is having on supply. This may be fun to watch as the collapse continues....

Long term look at $INDU

From the Great Depressinon to the 1998-2002 technology nose dive the $INDU or DOW 30 has kept on truckin...
It's just amazing how Fibonacci lines match up on these charts.
How does a 10 year cup with a handle sound? How else are you going to get to DOW 19,000 by 2015? Of course we may see DOW 10,000 again before heading there because 11,750-7,200 = 4,550 and 14,200+4,550 = 18,750. What's a measley 250 points mean to Bull-headed numbers?
What does all this mean for the short term? I have no clue. But the bottom-line is I'll definitely be shopping long leaps when the "Liquidity Crisis" finally finds a bottom.

XLE

Oil is up...big surprise.....Question is for how long? The XLE is tracing out an impressive H&S pattern back to the 50 day EMA. Will it round off or continue higher? Ask the Russians....

GW & XLF

The financials and or the XLF is all the hubabaloo with rumours looming of a "huge" bank failure and continued liquidity issues down on the governmental farm of Freddy and Fannie. The chart is shaping up pretty bearish. Look out below when the resistance line of $19.75 is finally confirmed broken by the passing of the $19.61 fib line.

Check out GW...... getting long with a stop at $7.95....

The Jan 09 $10 strike is trading for a mere $0.35

Jobless claims estimate for pre-open tomorrow is 448,000. A higher surprise or revision of last weeks number could be the catalyst for the market to fall apart. But natural gas may have bottomed.

Oil inventories = Bad for Stocks

• 10:36 a.m. U.S. gasoline supply down 6.2 mln brls
• 10:36 a.m. U.S. distillate supply up 500,000 brls
• 10:36 a.m. U.S. crude supply up 9.4 mln brls last week

Well talk about an outlier on the high side......

Where do we go from here analysis:

HUGE draw can only mean:

1. NO demand or activity thus no growth = BAD for stocks
2. Huge glut will mean OPEC production cut and thus HIGHER prices = BAD for stocks
3. Gasoline supplies actually down meaning HIGHER gas prices screwing the consumer =

Bad for stocks

MO and CALM update

MO is shaping up nicely for some call leaps.
CALM the egg producer is being rumoured on a buyout, but here again is a lesson in fibonacci levels....... Check out the nice cup with a handle at the 100% line down to the 78.6% retracement for the handle and then BOOM explosion up to the 161.8% line. WOW.

The story tomorrow is oil inventories @ 10:35 EST.....

As gleaned from MarketWatch:

"The U.S. Energy Department's Energy Information Administration will report its data Wednesday morning on petroleum supplies for the week ended Aug. 15.
The report will likely show that crude supplies fell by 1.1 million barrels, motor gasoline inventories fell by 3.6 million barrels and distillate supplies were down 900,000 barrels, according to estimates provided by John Kilduff, an analyst at MF Global.

On average, industry analysts surveyed by Platts expect to see crude supplies up by 1.7 million barrels, motor gasoline supplies down by 3 million barrels and distillate inventories up by 1.2 million barrels."

Ok one dude says down 1.1 million and the rest of the analysts AVERAGE UP 1.7 million....

Hmmmmmm....it would appear the analysts as a whole have no freakin clue. Let's assume the article writer picked the outlier on the bottom-side as stated above, 1.1 million down. If the average of all is 1.7 million up... Can one reasonably estimate the outlier on the top-side would be an inventory build of 4.5 million? Talk about slow growth....

Either way the market is going to chew on this oil inventory number pretty hard as technical levels are ripe for reversals. Will definitely be telling by days end.....

LOW earnings beats expectations????

I guess expectations of being unemployed and homeless are easy to beat. The literally cool thing is the majority of their sales came from seasonal and freezers. Is the consumer spending money to save money by dining at home? Time to sell restaurant stocks...

Lowe's earnings:

• EPS declined 4.5% to $0.64 vs $0.67 in 2nd quarter
• Earnings vs. same period last year down 7.9%
• Same store sales 2nd quarter down 5.3% versus same quarter 2007
• Same store sales first half 2008 declined 6.7%
• 6 months ended 8/1/08 net earnings declined 12.1% to $1.54 billion
• Third quarter sales growth at 1% to 2%
• Third quarter EPS of 27 cent to 31 cents
• Full year of 2008 Lowe's expects earnings per share of $1.48 to $1.55
  
  
  
  "The challenging sales environment we have been experiencing for the pastsix quarters continued into the first quarter of 2008, and increasingfinancial pressures on consumers resulted in top-line sales that fell belowour plan," commented Robert A. Niblock, Lowe's chairman and CEO. "Thegenerally poor economic outlook, including well-known housing pressures,rising food and fuel prices and a more negative employment picture erodedconsumer confidence and impacted discretionary purchases for the home. "With our offering of great products and exceptional service, Lowe'scontinued to gain market share in the quarter, and diligent expense controlhelped us achieve respectable earnings in spite of the headwinds facing theindustry," Niblock continued. "Fiscal 2008 will be a challenging year on manyfronts, but we remain focused on what we can control and will continuemanaging for long-term success and pursuing opportunities as they arise in thecurrent environment." During the quarter, Lowe's opened 20 new stores. As of May 2, 2008,Lowe's operated 1,554 stores in the United States and Canada representing176.4 million square feet of retail selling space, an 11.1 percent increaseover last year.

"Our sales results for the quarter, while better than our forecast, reflect the realities of the continuing macro economic pressures on our industry," commented Robert A. Niblock, Lowe's chairman and CEO. "We saw relative strength in our seasonal sales as homeowners welcomed back spring and restored lawns and outdoor landscaping following the effects of last year's drought in much of the country. In addition, we believe our second quarter sales benefited from the economic impact of the fiscal stimulus tax rebates. Unfortunately, weakness in bigger ticket projects continues, particularly in markets most impacted by the housing downturn.

"Through disciplined expense controls we delivered solid earnings for the quarter," Niblock added. "We are encouraged by our results and our continued market share gains, but the macro economic factors pressuring consumers and the ongoing challenges and uncertainty of the financial markets suggest a cautious sales forecast for the balance of fiscal 2008 is prudent. We remain focused on positioning the company for long-term success while managing through the near-term challenges of the current environment."

During the quarter, Lowe's opened 23 new stores. As of August 1, 2008, Lowe's operated 1,577 stores in the United States and Canada representing 178.6 million square feet of retail selling space, a 10.5 percent increase over last year.

Lowe's Business Outlook Third Quarter 2008 (comparisons to third quarter 2007) -- The company expects to open approximately 38 new stores reflecting square footage growth of approximately 10 percent

-- Total sales are expected to increase 1 to 2 percent

-- The company expects comparable store sales to decline 5 to 7 percent

-- Earnings before interest and taxes as a percentage of sales (operating margin) is expected to decline approximately 290 basis points driven by the cycling of last year's $112 million reduction in self-insurance reserves for workers compensation and general liability claims in addition to payroll, fixed cost and depreciation deleverage

-- Store opening costs are expected to be approximately $34 million -- Diluted earnings per share of $0.27 to $0.31 are expected

-- Lowe's third quarter ends on October 31, 2008 with operating results to be publicly released on Monday, November 17, 2008 Fiscal Year 2008 (comparisons to fiscal year 2007)

-- The company expects to open approximately 120 stores in 2008 reflecting total square footage growth of 7 to 8 percent -- Total sales are expected to increase approximately 1 percent

-- The company expects comparable store sales to decline 6 to 7 percent -- Earnings before interest and taxes as a percentage of sales (operating margin) is expected to decline approximately 180 basis points -- Store opening costs are expected to be approximately $97 million -- Diluted earnings per share of $1.48 to $1.56 are expected for the fiscal year ending January 30, 2009

BAC

Zion Bancorp

Someone once correctly answered the age old question, "How low can it go?" by rythmically stating $0.00. In the case of Zion looking at the longterm chart $0.97 may apply. What does come to light are the stops marked in dotted blue one can use if bottom fishing calls.

Looking at a 2 year chart the 50% retracement $58.67 and the 38.2% retracement $42.87 acted as major support areas on the way down and will act as resistance on the way up.

The 30 day shows a great setup for a call trade with the stop being slighty beneath the blue dotted price line $24.98.

This price line could actually be used as a pivot point to get short for the fall back to $17.28 with the only support being the fib line $24.04.

Either way very tight stops should be implored.

Level 3

Thought you might want to take a look at Level 3 communications.....
Pay close attention to the volume tinted in green. This is indicative of the entire communications group and it's difficult to see much more upside....

Bull trap...Don't be a sucker

The huge run up is setting up for disappointment into earnings for both LOW and HD.......
At least the LOW move is backed up with decent volume. Better to take profits here and hedge to the downside for some consolodation......

AZO, PG, and semi-conductors

AZO appears to be forming the right side of a cup. Question is will it retrace off of $140.29 or continue higher? A handle can retrace as much as 50% of the cup which would put a possible target of $121.68. Bottom line is AZO is an "on the move" volitile stock. Perhaps a play here could be a Long Call leaps and 4-6 month out $120 Puts.
PG is nudging up against the underside of a long-term support line setting up for a great short opportunity with a very tight stop. If PG pulls back away from this line it will take out the previous lows at $59.68. So $60 Puts 4-6 months out should be in order with a tight stop at $70.36. Everyone is raging about the semis being the leadership of old that fortells the tech market and therefore the overall market. Some are postulating this move is the catalyst for things to move higher. Well the last two weeks has been a move off of lower levels and appears to be a reversal of trend. HOWEVER, is it coincidence the SMH perfectly touched the 50% retracement line? Can you say BULLTRAP............

The overall trend is still down........

Long term crude and the dollar....

Crude oil may be in for a resbit, however the long term trend is still higher. If you are not a believer in Fib lines perhaps this chart will sway your opinion........
Yes that is correct.....In 1997 one could have reasonably predicted Crude would reach $145. Now let's take a look how this impacted the EUR/DOL....
Very interesting indeed......

Long the dollar short crude fr the time being?

AMGN blast rolling over

The 5 year weekly chart shows the fall and retracement. This marks some fairly close entry and stop marks for a PUT trade.
The daily chart magnifies things a bit in relation to the fib levels.

QQQQ's update and KO on Coke

The inverse Head & Shoulders pattern is intact and setting up for shorts soon:

But for those who are impatient Coca-Cola puts may be in order tomorrow. Be prudent and place a tight stop:

Decision making time for the market.....

Big decision day for the markets as economic data abounds prior to open Thursday:

-ECB announcnement
-Chain store sales
-Unemployment Claims

and at 10:00 am:
-Pending Home Sales
-Natural Gas report
-Consumer Credit

Crude is setting up for interim bounce off of Fib level and will resume downtrend after test of $121.50....Lookout $110 and top of 200 day EMA coming soon:
The VIX will tell the tale if the bottom is in or not:
The major indices are all brushing under their 50 day EMA's with the exception of the stronger IWM which has broken barely above:

Great clip on Cramer's bottom call

Smokers Split, Nibbling Nat Gas & OMG Amgen....

For the smokers in the crowd let's take a look at Altria and Phillip Morris:

Altria, MO, appears to be consolodating nicely under the short term resistance at $21.28 here for a call setup with a somewhat close stop at $20.20.
On the other hand PM is looking toppy and can be shorted with confidence above $53.25 setting a stop above the 78.6% fib level or $53.60 or so.
And for those energy suckers one could reasonably start nibbling at UNG as the falling knife could have hit the floor at the 38.2% fib level at $41.42. Don't forget the TIGHT stop here at $41.29!!! Because if it breaks here lookout for the next fib level at $38.29.
And then there's Amgen: This one was brought to us back in May by our deep in the money calls mentor Mr. Dykstra. On May 14, 2008 one could have purchased the Octber $40 calls for $5 per contract. Yes folks those same calls tomorrow will be worth approximately $22 per contract for a four bagger. Yes there is hope and it can be done..............................

QQQQ

Pharmas: They can go lower.........

Long term charts of Pfizer, Merck, and Amgen show the probability of continued lower trends. Basically there is just no bullish momemtum in the pharmaceuticals whick could be attributed to the coming election and the possible coming onslught of Democratic attacks on healthcare costs. Perhaps the more accurate reasons are the lack of Pipeline drugs in Phizer and Merck. Amgen is probably the most healthy of the three in the pipeline category and thus indicates the stronger of the three charts at this point.

AMGN may test $57 before consolodating back into the $40's where a good buy point for calls may be the bottom of this stil falling trend.

Bounce?

Looking at the VIX and especially the Green trendline which is acting as reisisitance one could reasonably ascertain a VIX fall and the corresponding index bounce. Conversely a break of this line higher means more bull pain.