Week of Nov 5th, S&P 500 & Crude Oil

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Stock Index Corner: S&P 500

The daily of S&P500 has declined for six sessions in a row after hitting the Fib Op target of 1381. If last friday low is taken out, then we will have a lower high formed on the daily, a downtrend definition. The next possible support will be 1336.

S&P500:
Big Picture: (monthly): Bullish
Medium term (weekly): Sideways to Bearish
Short term (daily): Sideways to Bearish

Fundamental:

More recently, stock prices were bolstered by very strong Q3 earnings. However, the earnings season is now winding down and the market appears to be suffering from some fatigue, particularly in light of the recent weak US economic data. While Q3 earnings were very strong at +17.4%, the market is looking for a downshift in earnings growth to mediocre single-digit levels in the first half of 2007. In that environment, the stock market will need some fresh bullish factors such as even lower interest rates or crude oil prices in order to prevent a correction from developing.

Major World Indexes
Weekly MACD Histogram (Medium term): FTSE, Nikkei - DOWN (Bearish), ASX - still UP (very likely to top and decline like other major indexes)

Commodity Corner: Crude Oil

Technical:
The Crude Oil (CL Dec) has found a nice bottom at 57.5. The market may go sideways for the 1-2 weeks re attempting to move higher. First resistance at 62.3. Support at 56.3.


Fundamental:

US inventory levels have fluctuated in volatile ranges over the past month due to refinery shut-downs for the switch-over to winter products. The latest weekly DOE report was mixed with an increase of 1.9 mln bbl in crude oil inventories offset by a sharp -2.8 bbl decline in gasoline inventories and a -2.7 mln bbl decline in distillate inventories. The refinery operating rate rose sharply by 2.7 points to 88.9% as refineries get past their seasonal shut-downs. US inventories are still plentiful vs their seasonal 5-yr averages at 9.6% for crude, 3.0% for gasoline, and 13.3% for distillates.

Trading ideas : (please do your own research and apply your profit/ risk management rules in all trades, please note except options writing, all the other trades may last just several days)

Writing Options: Gold OTM Puts
Futures: Long Rough Rice
Stock Options: Oracle (long puts), SLB (long calls)