Schaeffer's Trading Floor Blog

Good Morning

by 6/8/2005 7:46 AM
Stocks quoted in this article:

If at first you don't succeed, try, try again...

That would appear to be the motto of the bulls as they rebound from yesterday afternoon's reversal to rally pre-open stock futures. With just under two hours until the open, the S&Ps sit nearly five points above fair value.

Oil is down 53 cents to 53.23 ahead of today's inventory report. Gold is up 60 cents to 427.30.

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Final Figures

by 6/7/2005 4:58 PM
Stocks quoted in this article:

As the figures below show...

Index Index Value Point Change Percent Change
S&P 500 (SPX) 1197.3 -0.3 points -0.02 percent
Dow Jones Industrial Average (DJIA) 10483.1 16 points 0.2 percent
Nasdaq Composite (COMP) 2067.2 -8.6 points -0.41 percent
Russell 2000 (RUT) 623.8 0.8 points 0.13 percent
CBOE Market Volatility Index (VXO) 11.70 0.22 points 1.9 percent

...today was more or less a round trip as the major indices shrugged off earlier gains and finished the session flat.

While the broad market indices were flat, a number of sectors showed losses on the day. Semis took a hit which is worth noting as the group continues to struggle with resistance. After trying to bounce from their lows in the late-morning, gold stocks resumed the sell-off that started yesterday afternoon. Oil related stocks were also weak. Bonds were strong as the TLT pushes back toward Friday's high. Housing stocks were also gainers on the day as the HGX hit a new intraday high today.

Earlier I noted the curious behavior of today's market action and I am not sure of its significance. In quickly glancing through some charts I did notice a number of bearish outside days. (A bearish outside day is chart pattern where you have both a higher high and a lower low versus the previous day and a lower close.) While far from being a "perfect" indicator, many traders regard this as a sign of weakness.

Last night I said I would update my index charts but I didn't do that. However, I have this on my "must do" list for the morning...

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Into the Close

by 6/7/2005 4:21 PM
Stocks quoted in this article:

And here is how the SPX finished the session...


Chart Courtesy of Thomson/ILX

What the open giveth...the close taketh away...

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Stocks quoted in this article:

In response to my request for questions regarding the Advanced Home Study Program endeavor Terry says - "Hi Nick ... might be interested in your project -- how would you see the weekly topics being handled, e.g. in a separate forum area? And for example on ratio back spreads -- using current stocks /option pricing to determine if there is good risk/reward opportunity?"

My response - I hope to integrate the content directly into the blog as best I can. At the beginning of the week I would give my thoughts on the chapter and then ask for your input and questions. While there might be some back-and-forth in the blog, most likely, I will compile the questions and then post those, along with my responses, in a downloadable PDF file at the end of the week.

I am glad you brought up the ratio back spreads questions because I want to make it clear that I am not going to be able to give specific option recommendations. I want the focus to be on learning. If readers are interested, I think it might be interesting to pick a few examples of strategies to track so that we discuss the nuances involved.

If you read my post last night but have not yet looked into the details on the Advanced Home Study Program (and special price) make sure you check it out by clicking here.


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No News?

by 6/7/2005 3:51 PM
Stocks quoted in this article:

I have been scanning the headlines to see if any news might account for the selling I just noted...however, I have yet to see much. There are some spotty rumors but I don't see anything concrete.

This makes for a somewhat curious session. In the first half hour of trading, we saw broad based buying but there wasn't much in the way of leadership. The market then crept sideways for most of the morning and early afternoon. Now we see selling pressure that threatens to leave the broad market indices unchanged on the day...

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