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Shares of PeopleSoft (NASDAQ:PSFT) is powering above earlier session highs and traders should be alert in the software sector. Share of Microsoft (NASDAQ:MSFT) has been "consolidating" for the past four hours on the 60-minute chart and there appears to be a seller at $65. Should that seller "dry up and go away" watch for a move to $67.50 that powers the GSO.X higher.

Still monitoring General Electric (NYSE:GE) at $39.78. Stock has traded range of $39.31-$39.85. Should we get a move above my bullish action point of $40.10, things could unfold to the upside and we could see a significant rally into the close. Be alert and watch some of the levels we've been talking about in various stocks and sectors.

Gold/Silver Index (XAU.X) on the move and trading up 1.9% at $56.15. I think a break above $57 is quite bullish for stocks in this group. I also believe that bullishness further in sector is due to potential inflation fears longer-term. At this point, this is a good thing as it hints MARKET may believe in economic growth.

Swiss Franc (sf01z) is quite today and lower vs. US$ so I'm thinking gold/silver move is inflation type of move and not "risk averse" to market or "hedge" type of move.

October 4th, a day to remember

It seems like just yesterday I was writing a market update and talking about what looked to have been some type of sell program hitting the S&P Banks Index (BIX.X) when we saw some "suspicious" action taking place in the group at $605. The suspicion arose from an earlier session high that day of $619.99 that smelled rotten and reeked of some type of computerized sell program near our 50% retracement level of $618.68.

Now traders need to be alert once again. The BIX.X has staged a remarkable recovery from 100% retracement of $550 and we're nearing the $619.99 level yet again.

S&P Banks Index Chart -

Call me "retentive" but there are some trading day's I will never forget. October 4th is one of those days as it relates to observations made of suspicious action in the BIX.X. Part of my "retentive" nature is to adjust my retracement bracket ever so slightly. Some institution pulled the plug on things at 619.99 and the impact was felt for the next two days and 66 points later (10.6%). a move of that magnitude needs to be monitored and accurately depicted. If edged my retracement bracket up fractionally and 50% has moved from 618.68 to 619.97. If I could have gotten her to fit at 619.99 I would have, but can't seem to get it.

If you're trading any type of financial related stock, be alert. We're never certain if the seller is still around or not and you never know what they were thinking or playing. Could have been an institution that felt the Fed was only going to cut 25 basis points, or felt some bank was going to announce a major write-off or default of some sort.

While Providian Financial (NYSE:PVN) is not a component of the BIX.X, it's vaguely suspicious that that stock "shocked" the market just eight days later as they slashed their earnings outlook from $0.82 cents a share earnings to $0.19. That set off some rumblings in the financial sector.

Jeff Bailey
Senior Market Technician
Option Investor

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