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Index Wrap

Something's cook'n

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Sniff... Sniff.... Do you smell something?

Something's cook'n, at least I think it is, but all be darned if my lifting of cooking lids can uncover just what it is.

The major indices traded in a very tight range today, and those traders that check in at the Market Monitor during the day (or read the archives each night) will see that I was trying to keep track of the numerous buy and sell program premium alerts generated during today's session.

S&P Premium Alerts - For today 04/21/04

In each morning's 09:00 AM EDT update, I'll post HL Camp & Company's buy/sell program premium levels for the S&P. Intra-day traders will use these alert (you can set them up in some trading software services like QCharts) so that each time a program trading premium level is executed, you'll be alert. Sometimes I'll simply make notes, like I'm doing tonight, that there was an unusually high number of programs being set in motion today, but there was little movement. Sometimes this can be the equivalent of trying to hammer a square peg into a round hole. Hit the peg hard enough with the hammer, and the peg either shatters, or the square peg conforms itself to eventually fitting in the hole.

Something's cook'n to generate such buy/sell program activity, with so little movement, but some pretty good volume rates at both the NYSE and NASDAQ, where volume was up from yesterday's trade. The NYSE turned 1.73 billion shares, its heaviest volume since March 11 (1.89 billion), while NASDAQ flipped 2.05 billion, its heaviest volume since 2.15 billion on April 2, and the nonfarm payroll numbers.

Market Snapshot / Internals - 04/21/04

Certainly there were some adjustments being made based on yesterday afternoon's testimony from Fed Chairman Alan Greenspan, and today's tight range of trade gives me the feel that there's some steam building in the pressure cooker.

Mr. Greenspan was rather upbeat in today's testimony before Congress, and similar to me perhaps, Mr. Greenspan has been turning over many of his economic indicator's lids, looking for inflation and doesn't seem to think inflationary pressure are a big item right now.

While Greenspan keeps the door of possibility open for a threat of inflation, it was Spot Gold and the AMEX Gold Bugs Index ($HUI.X) 194.55 -1.42% that found selling, where the Gold Bugs Index was the only equity-based index to fall more than 1% in today's trade.

What happened to "sell the news" with Motorola (NYSE:MOT) $19.30 +18.98% today? After gapping to a new 52-week high (above its March 01, 2004 high of $18.90) today was the opportunity for all bulls that had survived the recent pullback to $16.00 an opportunity to get the heck out while the getting was good.

After all.... the Fed will be raising rates soon!

Hmmmm..... Motorola's (MOT) upbeat earnings mentioned strong handset trends, where market share gains are being found. Maybe Nokia's (NYSE:NOK) $15.01 +0.26% recent bad news wasn't necessarily a sign of negative consumer behavior. Analysts praised Motorola's move "flip phones," and noted that Nokia is behind in this segment.

OK, I ended up sacrificing a penny loss (plus commissions) on a bearish day trade short in the stock, but all be darned if I was going to try and get between the alternating buy/sell programs in and index trade today.

After the opening bell, MOT and the indices really traded in a tight range, and what some trader's call a "paint drying session," where the day's trade is about as exciting as watching paint dry.

Not every day's trade is volatile, and today's action seemed to be that of thought and fine-tuning.

Pivot Matrix -

Today's high for the Dow Industrials (INDU) 10,317.27 +0.02% came just shy of its WEEKLY Pivot, while the broader S&P 500 Index (SPX.X) 1,125.09 +0.53% "sipped the soup" with a test of its MONTHLY Pivot resistance, but the lid on the kettle was quickly replaced as a sell program premium alert at 02:30 PM EDT (see it in the Premium Chart at 14:30?).

The NASDAQ-100 Index (NDX.X) 1,451.01 +0.98% session LOW didn't quite see a test of its MONTHLY Pivot support, and remains the ONLY index in our MONTHLY Pivots to not yet see a test of this continued support level.

Do you kind of get the same feeling I do that something's cook'n, but it just isn't ready to be served up at this point?

Semiconductor Index (SOX.X) - Daily Intervals

The SOX.X was a sector I looked for some type of hint for a market eruption to the upside, with MOT being the upside catalyst. However, at 10:00 AM EDT, the SOX.X stuck its head above 479.37, where the WEEKLY 61.8% retracement would have been a level of potential resistance, but sellers drove the SOX right back down to the MONTHLY 61.8% retracement of 471.13. While these two rather obscure levels are obviously levels that a computer will have calculated as buy/sell points, its a bit suspicious how these two levels have played a role in the QQQ's trade in the past, and continue to do so today.

Look at the news and after-hours trade of semiconductor equipment maker KLA-Tencor (NASDAQ:KLAC), which got smacked back lower in extended hours. While earnings beat estimates by 4 cents per share (reported $0.33 vs. estimate $0.29) upcoming Q4 revenue guidance was $440-$450 million, which was below the $457.8 million consensus. Order guidance was very wide, which can hint of uncertainty, where KLAC gave a range of up 10% to down 15%.

Maybe that's why the SOX was somewhat tentative at 479.37 today, despite robust earnings from MOT.

If you did NOTHING in the SOX.X today (buy/sell new position, or existing position) you may have done OK come tomorrow.

NASDAQ-100 Tracking Stock (AMEX:QQQ) - Daily Intervals

While the QQQ traded between $36.04 and $35.68 for the better part of the entire session, we looked at an intra-day chart of the Qs where other than a couple of dips lower to the MONTHLY pivot of $35.68, the Qs really wanted to hug the upper end of today's range and WEEKLY 61.8%, just like the SOX found resistance at its WEEKLY 61.8%.

The darned QQQ is almost smack dab in the middle of the recent rebound from $34.00 to $37.50. Using Stochastics as a tiebreaker and with MACD just having crossed below its Signal, I'd have to take on a somewhat bearish tone toward the QQQ below $36.43, where only on a price move above that level would MACD turn up from above its zero level, and threaten to cross back above Signal. It would probably take a QQQ break below $35.43 and WEEKLY 80.9% to have MACD falling below zero, which is a more bearish indication from this oscillator.

S&P 500 Index (SPX.X) Chart - 10-minute intervals

I thought we'd take a look at a 10-minute interval chart, and perhaps think about my suspicions as it relates to "something is cook'n." Look just below the WEEKLY Pivot of 1,134.78 where I point to "Yesterday's Greenspan sell program." Now that's a sell program! Now think about all of today's buy/sell program premium alerts.

Note that not all SELL program alerts mean "weakness" as the SPX actually held support at the 1,117.34 level. Why the heck this level is more important than a pivot analysis derived WEEKLY S1 I can't really explain, but one reason I do like to use retracement with the pivot.

Look at our old upward trend (which is shown on the daily interval bar charts we look at) and how it may also be serving up some near-term bullish resistance with the MONTHLY Pivot. If its true that support broken can serve resistance, then 1,126 is the level of resistance. A break much below today's lows has WEEKLY S2 of 1,106.56 in play.

Dow Industrials (INDU) Chart - 10-minute intervals

For the INDU, we see similar trade as to the SPX, but note how its is the WEEKLY S1 for the INDU that has more technical significance right now. Remember that the WEEKLY S1 is usually very close to LAST WEEK's lows, and you can see to the left how that "support...support" when broken yesterday on the Greenspan commentary, served "resistance... resistance" today.

Be alert! All those sell program premium alerts could turn into buy program premium alerts on a move back above the MONTHLY Pivot.

Conversely, there's some air under the SPX to its WEEKLY S2 should today's sell programs gain some traction.

Keep a close eye on those banks. They've been weak, and so far, they haven't been bouncing.

Jeff Bailey

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