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  Jim Brown   5/14/200,  4:15:26 PM
BRCD earnings 0.00 cents vs estimates of breakeven

  Jim Brown   5/14/200,  4:05:58 PM
INTU earnings $1.05 cents vs estimates of $1.02, estimating a loss of -6 to -9 cents with consensus at -9 for next quarter. Stock trading up +2.50

  Jim Brown   5/14/200,  4:05:32 PM
CA earnings 8 cents vs estimates of 6 cents.

  Jim Brown   5/14/200,  4:01:35 PM
BEAS earnings 7 cents vs estimates of 7 cents, revenue inline

  Jim Brown   5/14/200,  4:00:47 PM
ADI 19 cents instead of 18 est

  Jim Brown   5/14/200,  3:58:58 PM
BEAS, BRCD, INTU, CA out shortly

  Linda Piazza   5/14/200,  3:53:46 PM
As of a few moments ago, advancers and decliners were only 1 issue apart on the NYSE, while there were 16 advancers to every 15 decliners on the Nasdaq. Up/down volume was nearly equal on the NYSE, too, while up volume was about 1.4 times down volume on the Nasdaq.

  Jonathan Levinson   5/14/200,  3:47:04 PM
For perspective, today's losses are really slight, with INDU -29, COMPX -4.77, SPX -3 and OEX -1.35. The RUT is actually fractionally positive, and QQV was just flat a moment ago, now up just .33. No real selling has taken place.

  Linda Piazza   5/14/200,  3:42:06 PM
The OEX temporarily broke out of the regression channel to the upside, but it has not yet had an hourly close above that channel and may be falling back inside. The hourly 5(3)3 stochastics have turned up in full bullish run, and the 21(3)3's are trying to hinge upward again. RSI had turned up, but is really just squiggling around in the middle of its range. CCI is still negative. The OEX remains below the 60-minute 21-pma and also below that flat-topped resistance near the last three days' highs. Sigh. On the hourly chart at least, the oscillators show a possibility of the OEX making yet-another (probably doomed to fail) attempt at 480, perhaps tomorrow morning, but I think that's going to depend more on how the global markets perform and how our economic numbers are received than on the behavior of these oscillators and chart formations.

  Mark Wnetrzak   5/14/200,  3:40:29 PM
Covered-Call Updates
With the recent strength in the market, many stocks (except for Cyberonics (NASDAQ:CYBX) in the covered-call portfolio have run a bit far and may be causing some "call-selling" regret. Generally, there are several choices: do nothing, get called out and accept the original profit established; close the position early if the call is near parity (evaluate extra commissions vs. an increased annualized return); or roll the call up/forward. A "net order" could be used in closing a covered write to ensure a proper exit. You would place an order to "sell the stock and buy to close the call for a net credit of $" (a price reasonably close to parity). When you roll up - buy back your current call and sell a higher strike - you increase your profit potential. The catch is that you give up downside protection. Your downside break-even point will be raised by the amount of debit required to roll up (cost of the call closed minus the premium of the new position). When one rolls up, a debit is incurred and this is usually considered negative (putting more money on the table) by many traders. Sometimes it is more advantageous to roll to a more distant expiration as it reduces the debit required. It is generally not advisable to roll up if a 10% correction in the stock price cannot be withstood (though this percentage may not be applicable to more volatile stocks). As expiration nears and the time value premium disappears from a written call, it is time to roll forward. An investor would buy back their calls and sell longer-term calls with the same striking price. Note, with a deep in-the-money call, the time value can disappear well before expiration. As long as there is time premium left in the call, there is little risk of early assignment (and you are earning time premium by staying with the original position). Once the option trades at parity or a discount, there is a significant probability of exercise by arbitrageurs (floor traders who don't pay commissions). As always, each individual needs to evaluate the risk-reward scenarios above and make a decision that fits their trading plan based on their outlook for the underlying issue.

  Jim Brown   5/14/200,  3:39:22 PM
Come on guys, he will get a swelled head and ask for more money. It will be bad enough when he sees I used a PNF chart in the market wrap last night.

  Linda Piazza   5/14/200,  3:32:15 PM
The OEX currently pushes to the top of the downward-slanting regression channel on the 60-minute chart as the 5(3)3 hourly stochastics turn back up once again. I've been watching hourly ADX, and it's been going down for days now, showing that the trend is decreasing. It's 16.43 empirical number says that we should be able to trust oscillator evidence, but as I've been mentioning since early this morning, the two stochastics settings I use have been working against each other all day, predicting this kind of choppiness.

  Jonathan Levinson   5/14/200,  3:29:41 PM
Thanks, Jeff!

  Linda Piazza   5/14/200,  3:28:24 PM
Perhaps we should all be thanking Jeff! It took Jonathan, Mark, James, and I to cover Jeff's intraday updates and evening Index Wraps.

  Jonathan Levinson   5/14/200,  3:19:53 PM
Thanks, Jim :)

  Jim Brown   5/14/200,  3:18:43 PM
Jeff Bailey will be back from vacation tomorrow. I think Linda, Jonathan and Mark did an excellent job filling in for him. If you think so to do not hesitate to send them an email and tell them so. They did a great job and it was no small task.

  Linda Piazza   5/14/200,  3:18:22 PM
This 473 level on the OEX is the daily S1 level as well as a resistance level in early May.

  Jonathan Levinson   5/14/200,  3:18:18 PM
The 13 period sma is trying to cross the 21 period sma to the upside on my 3 minute QQQ candlechart, which is a bullish signal, but given the flat range this afternoon, we may see little followthrough, such as occurred at 1:50PM. The absence of any serious damage to equities today is downright eerie, and it feels like the lower ascending trendline discussed in the index wrap last night in play here.

  James Brown   5/14/200,  3:16:58 PM
The 3:15 PM ET update: Link

  Linda Piazza   5/14/200,  3:07:13 PM
Reader Question: Isn't it interesting that a downgrade of the SFA comes a day before a major breakout? Makes you wonder of the real motives of the analysts? Now that I have that out of the way, what is your opinion on SNE please?

Response: I think we should question motives. That keeps us thinking and making as sound judgments as it's possible for us to make. Now, about Sony (SNE). While the SEC doesn't allow me to give specific trading advice to individuals, I've been thinking about this stock all day today, and specifically, wondering how analysts will see the introduction of the new handheld. I expect upgrades/downgrades tomorrow, perhaps to Nintendo as well as to Sony, based on their analysis of the outlook. Like you, I often do question motives of analysts, but I have three concerns in mind. One is that Sony is rather fragile right now, having dropped something like 30% of its value since its earnings announcement April 24. A downgrade might impact the stock more strongly than it would another. The second concern is that my reading leads me to believe there may be other problems at Sony. Lacking an ability to interview executives or evaluate their product cycle, I'd like a second opinion. My third concern relates to the Japanese market. Sony is a major holding in Japanese funds. Even before the earnings announcement, SNE had been falling as troubled Japanese pension plans and funds dumped the stock. This week, Japanese ministers will be releasing their plans to rescue their markets. One portion of those plans concerns how the pension plans and funds manage their assets. If that decision is considered unfavorable, I'm afraid the dumping could continue.

Those are the fundamentals. I consider myself a technical trader, but I do as much as I can to make sure that nothing in the fundamentals is going to swamp my trade. As I scan the daily chart, I see all oscillators in bullish mode as SNE attempt to recoup some of its losses. I expect SNE to find resistance at 30, and perhaps even between 27-28 as it retraces 50% of the most recent drop. If I were considering a trade, I'd be waiting for a climb toward those levels and then watching how the oscillators behave as I considered a bearish trade, but I'm not certain traders will get that chance. Today's gap up could be a runaway gap, portending another leg up, or it could be setting up the candles for a bearish abandoned baby pattern. No matter what the charts say, however, those Japanese Cabinet ministers may be deciding this stock's short-term fate. Since I'm not privy to their decision, trading this stock right now doesn't fit my pattern. I will, however, be watching if it continues to climb, especially as those upgrades and decisions in Japan should be factored in by then.

  Jonathan Levinson   5/14/200,  3:05:30 PM
QQQ has just cleared the 13 and 21 period sma's on the 3 minute chart, aimning for upper bollinger band resistance 28.51. The action so far has been rangebound and aimless, and that fits well with the action during opex week. However, given the relative worth of calls over puts on the straight runup since last month, I'm surprised not to see more of a decline. Perhaps tomorrow's reports will be the catalyst (or not).

  Jonathan Levinson   5/14/200,  2:51:23 PM
USD Index still holding steady at 94.60.

  Jonathan Levinson   5/14/200,  2:46:35 PM
Yields continue to melt, with FVX now down 9.7 bps, TNX -11.6 and TYX -13.9 as the treasury rally heads into its final minutes of the session.

  Linda Piazza   5/14/200,  2:45:05 PM
This last dip in the OEX brings the OEX toward the midline of that regression channel and turns the 60-minute oscillators firmly back down again. The 5(3)3 stochastics are turned back down from just above oversold levels and now measure oversold levels not seen since May 8. The 21(3)3's cycle down toward oversold levels, but aren't quite there yet, and RSI is similar, cycling down but not quite having reached oversold levels. CCI is negative. One scenario I can see happening is an OEX move down toward 470 at the close as the hourly oscillators complete their moves into oversold territory and so that the OEX ends the day with hourly oscillators indicating oversold conditions. Daily oscillators are beginning to look a little bearish but not quite in full bear roll yet, so their moves are tentative as yet.

  Jim Brown   5/14/200,  2:32:19 PM
Jim - Thanks to you, the staff and the readers for guidance on affordable futures charts. I'll report back with my findings, and my initial ES trading results. OIN is a unique "personal" trading resource, and I am very glad you raised the price. (name deleted)

Don't get many of these. I guess he has not heard about the commission schedule on profits. (grin) Glad to be of service!

  Jonathan Levinson   5/14/200,  2:18:29 PM
I also cant beleive that bond yields are dropping like a rock and equities are treading water. What is your take on a possible massive asset allocation out of bonds and back into stocks with yields so historically low????. Your comment on MM will suffice.

For you market monitor subscribers, I'll front run part of my market wrap for tonight, currently being penned:

My thinking continues to be that the fed's recent proclamations of its intent to do whatever it deems necessary to avoid "dis"inflation has resulted in a flood of US dollars hitting the markets, either from foreign sellers or from the fed itself. Either way, this supply is diminishing the price for dollars while chasing US denominated assets, be they treasury bonds, equities, commodities, and even precious metals, all of which have been rallying simultaneously.

Thinking a step further, one might wonder if the weaker dollar is not an excellent way to mitigate both the ballooning balance of trades deficit, as well as the national deficit. With an estimated 30% of US debt held by foreigners, and domestic savings at or near record lows, the devaluation of the US Dollar is an excellent way to reduce the intrinsic value of that debt while harming only the vast minority of Americans who are actually net savers. In light of Ben "The Terminator" Bernanke's statements about being able to print dollars out of thin air, it's no wonder that massive supplies of US Dollars are hitting the forex markets- if I owned US treasuries in a foreign land, I'd be dumping them too, which is no doubt the desired effect. But I digress.

  Linda Piazza   5/14/200,  2:14:43 PM
The OEX continues to trade within the potential bull-flag pattern on the 60-minute chart. Nothing I know the overbought oscillators on daily and weekly OEX charts, or the various intermarket relationships makes me predisposed to believe that the OEX could/should move higher, but so far the 60-minute chart keeps showing me that potential bull-flag pattern. Sixty-minute oscillators grow more bullish-looking, too, except for the RSI and CCI, and I usually put more trust in the RSI than in other oscillators. If that pattern is a bull-flag pattern, tradition says that there should be a breakout before the pattern retraces more than half of the previous rise. That halfway point comes right about at the afternoon lows, although the channel now extends down to 470. I would wait for a breakdown below 470 before I would consider that channel violated to the downside. I would wait until a breakout above 480 before I would consider an upside breakout confirmed, since there's also horizontal resistance just under that level.

  Jonathan Levinson   5/14/200,  2:13:27 PM
FVX is now down 7 bps, TNX -9.7 bps and TYX -14.2 bps. This breakout represents a massive movement of money. Meanwhile, the US Dollar Index is trading the 94.60 level, signalling that so far the breakout is being bought domestically. June gold is up 2.70 at 352.90, off its lows. I wonder if some are selling gold to chase the treasury breakout.

  Jonathan Levinson   5/14/200,  2:09:17 PM
Put to call ratio .75 there. Given the breakout in bonds, I'm just astounded. Equity bulls must be ingesting a volatile mix of nitrous oxide, vitamin C and Wild Turkey today.

  Jonathan Levinson   5/14/200,  1:53:00 PM
Interesting- FVX has sunk to a 5 bp loss now, TNX -6.8 bps and TYX -11.4 bps. Here's the TYX chart: Link These are fresh, new multidecade lows. Yet QQQ is up off its bottom and trying to push higher. Astounding? Oh yes. It's what happens when a flood of US Dollars are printed and deployed indiscriminately, chasing bonds, gold and, well, equitites for the past few months, just not so much today. Either way, the strong breakout in treasuries today cannot be bullish for equities, and I'm waiting to hear the "timberrr" when equities finally make it to their long awaited appointment with gravity.

  Linda Piazza   5/14/200,  1:43:23 PM
One stock that has been benefiting from the lower dollar is multinational company Coca-Cola (KO), which has been moving up strongly since it gapped up a week ago on an analyst upgrade. Currently at 44.18, KO moved up this week to challenge its simple and exponential 200-dma's, at 44.93 and 44.18 respectively. As KO turns down today, the oscillators begin to look a little toppy, with daily 5(3)3 stochastics and RSI flattening in overbought territory and perhaps curving slowly down now. MACD also is flattening. If KO should manage a close above that simple 200-dma at 44.93 and the historical resistance at 45, that might bring in fresh money, sending the stock even higher. If KO drops instead, as it appears ready to do, there's some support in the 43.50 area, then at 42.60-42.80. A move below 42.20 would bring KO back into that gap and test bullish resolve. I note that volume has been tapering off across the last five trading sessions as KO continued to climb, a somewhat bearish sign as volume is not following the trend. KO has two nasty habits that make it difficult for bearish traders to prosper: one is a habit of popping up just as it did the other day, bumping above what should have been strong resistance and moving far too fast for a stodgy stock. The other nasty habit is a rise into expiration Friday with a drop off the following week. I've watched it happen month after month. Disclosure: I hold KO puts.

  Linda Piazza   5/14/200,  1:32:26 PM
GE trades at 28.64, just about where it was trading at this time yesterday. It's still trading within a down-sloping regression channel that may or may not be a bull-flag pattern, with daily oscillators proving as difficult to decipher today as they were yesterday. I'm of the opinion that those oscillators will probably not sort themselves out and give solid clues until that potential bull-flag pattern is broken, either to the upside or the downside. I don't have a position in GE but am watching because it's possible that the breakout or breakdown in this bellwether stock could predict the direction taken by the broader markets, too. I'm using this as a sort of breadth indicator.

  Jonathan Levinson   5/14/200,  1:20:12 PM
The FVX is back below a 4 bp loss and QQQ is back into the mid 28.40's. Very little action, and the compression in the bollinger bands relfects that. QQV is now up a point to 28.84, VXN lagging at a .59 gain, TRINQ 1.03 and TICK.NQ +36. This is a very sedative market right here, with my eyelids starting to get heavy. Hopefully the Qubes will too.

  James Brown   5/14/200,  1:12:47 PM
The 01:00 PM ET update: Link

  Linda Piazza   5/14/200,  12:56:53 PM
Just as the OEX moves up to test the top of the possible bull-flag pattern pinpointed in my 12:15 post, those troublesome 60-minute OEX stochastics show some possible bullish tendencies. The 5(3)3's definitively curve up now out of oversold territory and that shallow angle on the downsloping 21(3)3's portended just what I thought it might--they're trying to turn up, too. RSI has hinged up. All of these indicators can see their directions reversed, as they already have been once or twice today, but this opposition in the positions of the 5(3)3's and 21(3)3's, with one near oversold levels and the other not, predicted just this kind of choppy trading today.

  Jonathan Levinson   5/14/200,  12:48:23 PM
Looks like bears can relax a bit, as the bull flag portion of the cup and handle I was watching appears to have just failed, with the 3 minute COMPX trading below the 13 and 21 period sma's on that short timeframe. There's bollinger band support at 28.40. FVX is up to a -2.7 bp loss, TRINQ up to .96, TICK.NQ +70, and QQV +.62 at 28.45.

  Linda Piazza   5/14/200,  12:34:23 PM
The VIX is above 23 again, measuring 23.15 and currently near the day's high.

  Ray Cummins   5/14/200,  12:32:46 PM
Spread/Combos & Premium-Selling - Portfolio Activity

A number of bearish positions have benefited from today's retreat, not the least of which is Wal-Mart (NYSE:WMT), which dropped below $55 after reports that U.S. retail sales fell unexpectedly in April and import prices set a record decline. The share value slump was a bit of a surprise for Wal-Mart investors as the company reported Tuesday that its earnings rose 14% in the first quarter, while other major retailers posted weak profits for a period hobbled by the war in Iraq, unfavorable weather and job losses. Our "bear-put" debit spread at $55 is once again profitable and traders who remained in the position based on the solid resistance at $56-$57 were rewarded for their persistence.

  Jonathan Levinson   5/14/200,  12:27:23 PM
Careful, bears- could be a cup and handle forming on the QQQ 3 minute candles.

  Jonathan Levinson   5/14/200,  12:19:52 PM
The US Dollar Index is hovering below 94.70, with gold holding above 354 and the CRB index above 240. So far little loft to this QQQ bounce, but slow and steady wins the race, or so they say. TRINQ is down to .90, TICK.NQ +44, QQV +.77 at 28.53. The QQQ:QQV ratio is down to .9975 at current levels, confirming the trend change we've been watching in the Index wrap this week.

  Linda Piazza   5/14/200,  12:15:50 PM
On the OEX 60-minute chart, here's what I'm watching: Is this a broadening formation or a bull-flag formation? Link Either type could be indicative of measured accumulation. In either case, a breakout over yesterday's highs could signal more upside, while a fall below 469-470 could signal that bulls were giving up their efforts at accumulation and bailing. An upside breakout should be accompanied by strong volume to be considered valid. An upside breakout would probably predict another move up toward OEX 480 and then 487. A downside breakout probably predicts a move down to next support at 465.

  Ray Cummins   5/14/200,  12:14:38 PM
Spread/Combos & Premium-Selling - Portfolio Activity

The equity markets are enduring another day of profit-taking but despite the selling pressure, there is still income to be earned in a number of portfolio positions. Getty Images (NYSE:GYI) continued its recent rise in early trading, up over $0.80 to a peak of $36.20, which is also its 12-month high. The bullish synthetic position in the issue has offered a profit of up to $2.10 in less than one month. Traders were also seen locking-in gains in the International Business Machines (NYSE:IBM) calendar spread (JUL-90C/MAY-90C) and the bullish synthetic position (AUG30C/AUG22P) in the Semiconductor Holdrs (SMH). The best performing portfolio stocks during Wednesday morning's session were American Pharmaceutical Partners (NASDAQ:APPX), Microstrategy (NASDAQ:MSTR), and Celgene (NASDAQ:CELG). One other noteworthy issue is Sony (NYSE:SNE), a recent volatility candidate, which appears to be coming off a base near $25. Traders who believe the stock has upside potential could attempt to profit from that outcome with the relatively inexpensive call options.

  Jonathan Levinson   5/14/200,  11:58:53 AM
The bollinger bands have narrowed considerably around the day lows, and this QQQ bounce is actually pushing the upper band on the 3 minute candle chart. FVX is still down 4.3 bps, QQV up just .46 now, TRINQ 1.08 and TICK.NQ +58. This move is causing a bullish cross of the 21 period sma by the 13 period sma, which is the first such buy signal on this timeframe all day.

  Linda Piazza   5/14/200,  11:48:54 AM
Although it's currently measuring 22.57, the VIX bumped as high as 23.23 today. The 21-dma now slopes down to a level just above that HOD, at 23.69. A close above 23 would bring the VIX back into that consolidation zone that comprised its range throughout the later part of April and the early part of May. Yesteday's VIX candle was a a harami--a doji in this case, printed entirely within the previous day's red candle. If the VIX were a stock, today's move over the previous two day's highs would have been considered a buy signal, although the VIX has since retreated to levels that contain it again within Monday's range.

  Linda Piazza   5/14/200,  11:43:12 AM
After its initial drop this morning, the BIX (294.76 currently) has traded in a range from 294.50 to 295.25. The day's low was 294.32. Daily stochastics and RSI continue to show divergence with the price, with the BIX rising and the oscillators either flattening or showing lower highs. A rolling down of the oscillators appears imminent, but opex week can delay reactions that appear imminent during the middle of opex week. It's probably going to require a move below 290 before those oscillators turn strongly down. Although the BIX currently trades in its own rising wedge and downside breakdowns of those wedges usually predict a quick fall, the BIX has strong support near 280. I watch this index as a gauge of overall market strength or weakness.

  Jim Brown   5/14/200,  11:34:10 AM
Subject: Providian Financial (PVN)
Just a different thought. Many months ago you recommended Providian and then it sunk with the rest of the market. A comment that you made relative to this being a stock that would make it stuck in my mind. I bought it long at 3.60. It looks like it has just moved through upside resistance. JTM

Thanks for rubbing salt in my wounds. (grin) Yes, I had a big position in PVN and bailed with the big drop came around $7.00 in January. Now at $8.81 I kick myself every time I see the ticker. I have had about a dozen readers email me thanks over the last couple weeks. It is not me, it is you. You had faith and stuck with it. Congratulations.

  Jonathan Levinson   5/14/200,  11:33:58 AM
Bonds are near new highs, with FVX -4.8 bps, while QQQ struggles near its day lows, currently down .28 at 28.38, QQV +1.13 at 28.96, TRINQ 1.07 adn TICK.NQ -103. The lack of a significant bounce is allowing the short term oversold extreme to work off, and does not look particularly bullish to me at this point.

  Linda Piazza   5/14/200,  11:33:16 AM
The hourly 5(3)3 OEX stochastics are currently unkissing as prices move down again. The hourly 50-dma lies just beneath current levels, at 472.22. That MA might be a next level of support to watch, as the OEX has not had a close beneath this average since Friday.

  Jonathan Levinson   5/14/200,  11:26:09 AM
The CRB is up .49 to 241, with June gold up 4.00 to 354.20, HUI +1.15 and XAU +.91.

  James Brown   5/14/200,  11:08:36 AM
The 11:00 AM ET update is posted: Link

  Linda Piazza   5/14/200,  11:05:20 AM
The daily OEX 5(3)3 and 21(3)3 stochastics begin to show some weakness, with the fast lines hooking over, although the slow lines still move up. It will take real selling to tug them down, but if they do roll now while prices turn down, they will have set up bearish divergence.

  Jonathan Levinson   5/14/200,  11:03:12 AM
QCOM and MXIM are interesting shorts. QCOM is in a downtrend and has not rallied.MXIM just broke out of a rising wedge the day it printed a hangman doji and broke down today. Let me know what you think. Rusty

QCOM looks like it wants to start trending lower, with a big fat sell on the MacD and that gravestone doji. Link MXIM is much stronger, but on a fresh stochastic sell signal. Link

  Linda Piazza   5/14/200,  11:01:40 AM
Volume stands at 336 million shares on the NYSE and 597 million on the Nasdaq. Volume patterns show a neutral-to-bearish .81 adv/dec ratio on NYSE-traded issues and a neutral .93 ratio on Nasdaq-traded issues. Down volume is about 1.5 times up volume on the NYSE and about 1.2 times up volume on the Nasdaq. Although bears might congratulate themselves that today's decreases have come on numbers that are of course sustainable, weaker internals might be more reassuring to bears.

  Jim Brown   5/14/200,  10:56:48 AM
Yes, S&P and/or NDX. On Sunday, I went through the Investor's Business Daily 100 list from the May 12 issue. I compared them to DorseyWright p&f charts. Admittidly, I'm a novis, but to my eyes, most looked way oversold. Just pick some. Jim.

Way to make stock picking look hard! (grin) Jeff would be proud of your PNF chart research. Yes, I am sure we could get the darts out and have a pretty good chance of hitting an overbought symbol.

  Jim Brown   5/14/200,  10:48:30 AM
I have a watch list of overvalued, extended (historically) PE stocks of highly traded companies, the vast majority of which have increased in price in the last few months despite decreasing sales revenue.

It is called the S&P 500. Thanks, CKM

Have you got Jonathans email address? I think you both have something in common. (grin) I am with you. I keep talking about the +4.3% earnings growth for the 2Q as totally disconnected from the current rally but I am a voice crying in the wilderness. Considering the recent gains I should be quiet it appears.

  Jonathan Levinson   5/14/200,  10:47:14 AM
Caution from a bludgeoned, paranoid bear: A move back up from here will print a very tidy inverse head and shoulders formation on the 15 minute Qube candles, neckline at QQQ 29. If it happened, it could boomerang the Qubes past the 30 mark.

  Linda Piazza   5/14/200,  10:46:52 AM
The OEX 60-minute 5(3)3 stochastics are making a bullish kiss, but a tentative one that can be redrawn, as often happens with stochastics. The 21(3)3's are sloping down, but they're at that shallow angle that always alerts me that they could turn right back up. In addition to the other levels of nearby support I mentioned earlier this morning, the OEX is also finding support at the original line I drew off the March 12 lows, so this is a significant level for the OEX. A bounce attempt would be expected, and that may what we're going to get. The hourly chart now shows a broadening formation with a flat top just under 480 and a series of lower lows, so it's possible that the OEX will try for another retest of the recent highs. I don't think it would get very far, if so, but I'd be surprised if successful-of-late bulls don't make at least a tepid try. Most broadening formations are unstable and would predict an eventual fall, but we'll just have to see.

  Jonathan Levinson   5/14/200,  10:44:05 AM
I have a watchlist of overvalued, extended (historically) PE stocks of highly traded companies, the vast majority of which have increased in price in the last few months despite decreasing sales revenue.

It is called the S&P 500.

Beautiful Chris!

  James Brown   5/14/200,  10:43:48 AM
The $90 level on IBM has been MAJOR resistance since the big gap down in April of 2002. With the markets weak, I'm not surprised to see resistance holding up.

  Jonathan Levinson   5/14/200,  10:42:51 AM
Shorting EBAY is one of those martyr moves that bears have learned to avoid (thereby guaranteeing an even bigger crash when reality finally reasserts itself). Like Yahoo in 1999-2000, bulls are religious about the stock and don't care what it's worth or not.

  James Brown   5/14/200,  10:42:49 AM
Actually, I think there are hundreds of stocks that look so overbought that any significant downturn is going to be painful for a lot of investors. If you have the time, just flip through the S&P 500, NASDAQ-100 or even the S&P Mid-cap components and you'll see more stocks that look like AZO and PGR than you'll know what to do with.

  Jim Brown   5/14/200,  10:42:26 AM
IBM definitely got dumped this morning

  Jim Brown   5/14/200,  10:41:23 AM
Nobody wants to step in front of the EBAY train with a potential stock split any day.

  Jonathan Levinson   5/14/200,  10:41:01 AM
SeeBS Marketwatch is hyping the possibility that IBM will print a bullish engulfing. I think that IBM is a beautiful short candidate just below massive resistance.

  James Brown   5/14/200,  10:39:56 AM
oh, come on you guys.. no one is suggesting EBAY as an overprice stock? (grin)

  Linda Piazza   5/14/200,  10:39:12 AM
I was going to suggest JC Penney (JCP) as an overpriced stock, Jim, but I'm worried about the risk/reward parameters of a play in this stock. It's currently on a P&F buy signal but jammed right underneath its bearish resistance line. As I mentioned in this morning's update, the stock gained big yesterday after reporting a 29% drop in earnings. However, it gained on bullish outlook and its assertion that it would meet full-year goals, as long as the retail outlook improved. This morning's retail numbers didn't seem to predict an improvement, and Goldman Sachs had already downgraded JCP before those retail numbers were released, citing an "uncertain consumer outlook." Going short/put at yesterday's high would have been the best idea, but my daily charts also show the price trading in an upward-slanting regression channel that could be a bear-flag pattern. The bottom of that channel now crosses at 17.30, also the location of the 21-dma at 17.34. A breakdown out of that channel would also mean a fall beneath that MA, then. There's also support at 16.55, so conservative traders might want to wait for a break below that level, but an even better bet would be to hope for a retest and failure of the top of the channel, now located near 18.70, the current location of the 50-dma. Next strong support lies near $14.00, however, so the risk/reward might not be right for most traders.

  Jonathan Levinson   5/14/200,  10:38:14 AM
Samir's Medved Quotetracker is the program I recommended earlier. Jerry Medved is the author of this excellent free download.

  Jonathan Levinson   5/14/200,  10:37:33 AM
hi, i am in qqq may 29 puts since last week, my breakeven is .80 to .85 should i hold or sell on this weakness now, i am still feeling that the qqq will be trading below 28 at least prior to expiration, 2 3/4 days left (grin).

Unfortunately, we are not permitted to give specific advice due to SEC rules. The decision you're trying to make is complicated by the short time to expiry. One trick I use when getting squeezed by premium decay is to "roll out" my contracts, by selling what I'm holding and buying back a month or two. The extra premium for the time can be reduced by dropping strike prices. This is not advice as to what to do here, but that's one way to buy yourself more breathing room.

  Jim Brown   5/14/200,  10:36:30 AM
Low cost charts

Jim...Medved Quotetracker has a free program that's very good. Takes feeds from dozens of different broker sites, including IB. If one doesn't want the ads that come with the free program, possible to pay a few bucks and have them disappear. Cheers...Samir

If U R trading seriously U should NEVER skimp on charts. It is like a carpenter trying to build a house with a cheap hammer. The house will suffer because U just can't build quality without quality tools. Jane (I agree - Jim)

Jim, CME offers a chart service called E-Quotes for $39 which is better then Q-Charts - Derek

Barchart.com starts at $15 per month. - Wes

Jonathans suggestion of www.QuoteTracker.com is also good.

  Jim Brown   5/14/200,  10:30:54 AM
Overpriced stocks that might drop
Comments from readers.

SINA, SOHU and NTES are really over blown. Thanks, Marie

Possible overblownstocks - COF, PHF

  Jonathan Levinson   5/14/200,  10:27:53 AM
Anyone with other free charting solutions, please email your recommendations to me at jlevinson@OptionInvestor.com. I'll try take some of that load off of Jim.

  Jonathan Levinson   5/14/200,  10:26:47 AM
TRINQ now up to a mere neutral reading for a change, 1.17. QQV +.96 at 28.56, TICK.NQ -87.

  Jim Brown   5/14/200,  10:25:19 AM
Terror alert level about to be raised according to news just crossing the wire.

  Jonathan Levinson   5/14/200,  10:22:54 AM
Quotetracker at www.quotetracker.com accepts the Interactive Brokers feed and has excellent, excellent charting... for free.

  Jim Brown   5/14/200,  10:19:01 AM
Jim, For those of us that agree that the overall market is overblown here, how about a potential list of names of the biggest offenders that might be good to look at for shorts/puts? I'm big on planning ahead . . . Thanks much! Ken

How about it guys. Any suggestions for Ken?

  Linda Piazza   5/14/200,  10:18:55 AM
The FTSE 100 could not maintain the 4000 level, currently trading at 3983, down 16.90 points; and the CAC 40 could not sustain the 3000 level, currently trading at 2971.42, up 7.79 points. The FTSE 100 trades near its day's low, but the CAC trades within its day's range. The DAX also trades about in the middle of its day's range, currently at 2921.16, up 11.21 points.

  Jonathan Levinson   5/14/200,  10:18:35 AM
The way the Teflon Market has been trading this week, Jim, that news just sets us up for a "the world hasn't ended" rally.

  Jim Brown   5/14/200,  10:17:32 AM
According to the emails from a Al Queda operative before the attacks this was the beginning of a new round of warfare to avenge the Iraq war. There have been recent electronic intercepts that mention an attack in planning to rival the 9/11 attack. With Saudi Arabia less well protected than the U.S. I am sure the administration is concerned. The guards at the residential compound this week were not even armed.

  James Brown   5/14/200,  10:13:37 AM
whoa... anyone know what's going on? Coming across the wires is this:

U.S. orders nonessential diplomats out of Saudi Arabia.

More terrorist attacks in Saudi on the way?

  Jim Brown   5/14/200,  10:13:37 AM
Editors Play
The closer we get to 8600 the more life we should see in the Mat-$85 DIA put, now 15x20. A break under 8600 should start the ramp in price fairly quickly.

  Linda Piazza   5/14/200,  10:11:33 AM
The OEX appears to be finding support near yesterday afternoon's low of 473.73, also the location of recent resistance, now broken, and today's S1 level at 473.

  Jonathan Levinson   5/14/200,  10:08:54 AM
June gold is rocking, up 4 to 354.20. HUI up 1.04 to 134.67, XAU +.71.

  Jonathan Levinson   5/14/200,  10:07:37 AM
Buying the dip: Put to call ratio .65, Equity pcr 0.55, Index pcr 1.00.

  Linda Piazza   5/14/200,  10:05:46 AM
The bears prevailed in that test of bearish/bullish resolve in the attempt to surmount the opening gap again. Prices were driven down, with the OEX currently making new day's lows. So far, all is going according to a bear's hopeful planning. Be careful, however, as there's been an established pattern lately of buying early dips, so bulls might be desensitized to any dangers and be eager to step in at any moment. Hourly oscillators show that the 21(3)3 and 5(3)3 stochastics are somewhat opposed, with the longer-term stochs showing plenty of room to move down with the shorter-term 5(3)3 soon reaching levels indicating oversold conditions. When they're opposed like this, I sometimes notice choppy trading, so just be alert to any possibility.

  Jonathan Levinson   5/14/200,  10:04:25 AM
Al Green deploys 5.751B in 2 day repos, for a net add of 3.5B on today's expiries.

  James Brown   5/14/200,  10:01:22 AM
FYI: for any other Matrix fans out there...if you're willnig to sit through the credits of Matrix Reloaded, which opens tomorrow (or tonight at midnight) there's a very short preview of Matrix Revolutions, which comes out in November this year.

  Jonathan Levinson   5/14/200,  10:00:03 AM
QQV is up .57 to 28.40, TRINQ up to .87, TICK.NQ down to -187. For what it's worth, Jim, despite the lower bolly band violation, I wouldn't be going long here either. There's too much selling that's been deferred too long, and I would have expected the bounce to be in swing already.

  Jonathan Levinson   5/14/200,  9:58:04 AM
A flood of pent up selling has brought the Qubes through the lower bollinger band on the 3 minute candles, and the bounce is already beginning. FVX is off its lows, confirming what should be a bounde to at least 28.80, the 13 sma on the 3 minute candles.

  Linda Piazza   5/14/200,  9:57:21 AM
The OEX touched the bottom of this morning's gap and now attempts a move up again. The next minor test of bearish/bullish resolve will come at the top of that gap, at 476.08. Bears want to see the OEX driven down again before or at that level. Bulls want to see the opposite.

  James Brown   5/14/200,  9:54:29 AM
I know Wall Street probably feels that SARS is "old news" but the World Health Organization stated this morning that infections have topped 7500.

  Linda Piazza   5/14/200,  9:53:15 AM
The SOX is approaching 350 again, trading at 350.29 as I type.

  Linda Piazza   5/14/200,  9:48:38 AM
The OEX retraced about 61.8% of the first five-minute candle's range. Normally, it's considered a (very) short-term bearish action to retrace more than 50% of that move, predicting at least a retest of the opening value at 476.08. (That appears to be happening as I type.)

  James Brown   5/14/200,  9:48:00 AM
Is it just me or is everyone seeing a lot of downgrades in the last few days? Not that it has slowed the market down any.

  James Brown   5/14/200,  9:44:57 AM
AAPL announced this morning that its iTunes Music store, which opened for business sixteen days ago, has already sold more than 2 million songs.

From their press release:
The iTunes Music Store lets customers quickly find, purchase and download the music they want for just 99 cents per song, without subscription fees...

...The iTunes Music Store features over 200,000 songs from major music companies including BMG, EMI, Sony Music Entertainment, Universal and Warner so music fans can easily find the music they love or discover exclusive tracks and download them directly into their iTunes 4 music library with one-click.

  Linda Piazza   5/14/200,  9:42:47 AM
Reader Question: Fair value for the S&P 500 today is $-.34. That price will not change during the session. HL Camp & Company set their computers for program buying at $0.48 and for program selling at $-1.82. Linda, can you explain how I figure what s-p numbers these goal posts relate to?

Response: Great question. Jeff has answered this question in the past, but it's a good one to address from time to time for the benefit of new readers. Those program buying and selling levels are not keyed specifically to the S&P 500 value, but rather to the PREM ($prem, prem.x, and various other ticker symbols on various quoting services). PREM or premium measures the spread or difference between the S&P futures prices and the cash prices. Today, for example, if PREM reaches $0.48, meaning that the S&P 500 futures trade $0.48 higher than the S&P 500 trades, HL Camp's computers would be triggered to initiate a buy program. HL Camp warns that many quoting services for PREM are not accurate, so it's not always possible for us retail traders to initiate our own mini buy and sell programs, but some find it useful to set alerts to know when an institutional buy or sell program might be triggered. Jeff sometimes provides these alerts for us.

  James Brown   5/14/200,  9:40:28 AM
Anheuser-Busch Cos. Inc, brewers of Budweiser and a host of other libations, just raised its 2003 EPS growth forecast to a range of 12 to 13 percent on a favorable beer pricing environment in the U.S. (Reuters).

The stock is up 1.86% to $51.82

  James Brown   5/14/200,  9:35:01 AM
No kidding, Jon. Check out networking stocks Juniper (JNPR) and Entersys (ETS). Both equities have been upgraded by SSB this morning and shares are up strongly. JNPR +0.86 or +6.87% to 13.37. ETS +0.35 or +13% to $3.06.

  Jonathan Levinson   5/14/200,  9:31:11 AM
Gold is up 2.20 to 352.40, HOD, bonds much be very close to a bullish breakout with yields at their lows of the day, but... QQQ is up 20 cents at 28.86, slightly off its premarket highs, TICK.NQ a whopping +455, TRINQ at .29 showing a buying frenzy at the open. Who *are* these bulls? My guess is that it must be program robots, C3PO and R2D2 gone berzerk.

  James Brown   5/14/200,  9:30:12 AM
Linda mentioned SNE was trading higher in Japan this morning and its ADR-style shares are trading higher in the U.S. pre-market as well. The stock looks like it will gap open above the previous highs from May 7th ($26.00). Add a bounce to the U.S. dollar and one has to speculate if SNE can get an oversold rebound back towards the $30 level (it may take a few days).

  Jim Brown   5/14/200,  9:29:23 AM
Editors Play
We are still holding the May-$85 DIA put at a cost basis of 30 cents. The option is bid/ask 10x20 this morning. The intraday bounce in the Dow yesterday took the premium back to nothing and we will need to see a move under 8600 to reflate it significantly. I am still hoping for a drop to something under 8500 after the economic reports on Thursday. It would be good for the play and good for the markets to take some froth out.

  James Brown   5/14/200,  9:09:49 AM
The 09:00 AM ET Update: Link

  Linda Piazza   5/14/200,  9:02:48 AM
After a brief and shallow dip as our economic numbers were released, European markets steadied. The FTSE 100 now trades up 17 points or 0.43%, at 4016.90; the CAC 40 trades up 38.72 points or 1.31%, at 3002.35; and the DAX trades up 46.75 points or 1.61%, at 2956.69.

  Jonathan Levinson   5/14/200,  8:58:58 AM
This just says it all:

Federated 1Q profit falls 44%

But department store chain tops Wall St. estimates, sees 2Q profit slightly below views.

Yes, you guessed it- FD is higher in premarket trading.

  Jonathan Levinson   5/14/200,  8:41:17 AM
The Teflon Market is once again shrugging off bad news, and I smell intervention again. Only bonds seem to be behaving as one might expect, FVX -3.3 bps now. QQQ is back up to 28.81. So it goes.

  Jonathan Levinson   5/14/200,  8:33:38 AM
The US Dollar Index ticked back down to 94.80 as bonds opened, with yields down across the curve, FVX -2 bps, TNX -3.9 bps and TYX down 3.5 bps. Retail sales were down .1%, ex auto down .9%, and the market's not happy, with June gold suddenly up a buck to 351.20 and the futures coming back to earth, with QQQ down .11 to 28.73.

  Jonathan Levinson   5/14/200,  7:52:14 AM
The US Dollar Index broke out of its wedge, then down, and is now back up to 94.90 and headed to challenge what is now triple top resistance at 95.00. June gold is down 80 cents to 349.40. Futures are in the green, with NQ up 5.50 to 1160, ES up 3.75 to 946.50, and QQQ trading 28.82.

  Linda Piazza   5/14/200,  6:55:35 AM
Good morning. This morning's economic reports began with Japan's Finance Ministry's release of the current account surplus. For the first time in four years, the last fiscal year's surplus rose, with a 12% increase. The trade balance in both goods and services for fiscal 2002 increased 63.9%. Although the Nikkei dipped a little more than 2 points into the red once during the day, it opened up and closed up, at 8244.91, with a closing gain of 54.65 points or 0.67%. Sony (SNE, 25.52 in U.S. trading, up 0.40) added to this week's gains after the company announced that it would produce a handheld game machine. The handheld will be named the PSP (Play Station Portable), feature 3D graphics and sound, and include an USB port. A glance at Sony's P&F chart shows the massive recent losses in SNE, with the stock currently being on a P&F sell signal and still facing multiple levels of overhead resistance before it would again produce a buy signal with a trade at 39. Analysts believe the PSP will benefit Sony and hurt Nintendo. Tech stocks gained, but exporters continued to suffer from the declining dollar.

Two market-moving events will occur soon in Japan. The long-awaited government measures to shore up the Japanese stock market should be released soon, after a meeting of Cabinet ministers held Wednesday evening, Japanese time. Also, the struggling Mizuho Financial Group will report earnings that are expected to set record losses for a Japanese company. Mizuho's losses have been blamed on many of the government measures being addressed in that meeting of Cabinet ministers, among other reasons.

European markets trade flat or up this morning although CNBC World and the print media focused on the unexpectedly large losses reported today by German airliner Lufthansa. A French manufacturing number cheered French investors, surprising to the upside with a March 0.6% gain rather than the expected fall. Excluding construction, overall industrial production fell 0.4%. Much attention also focused this morning on German utility RWE, which reported a 33% growth in operating income. Cold weather and cost-cutting efforts benefited the company. As of this writing, the FTSE 100 was up 13.60 points or 0.34%, to 4013.50; the CAC 40 was up 39.03 points or 1.32%, to 3002.66; and the DAX was up 45.14 points or 1.55%, to 2955.09. Both the FTSE and the CAC traded over psychologically important numbers.

  Jonathan Levinson   5/13/200,  1:18:01 AM
The Index Trader Wrap has been posted: Link

  Jonathan Levinson   5/13/200,  1:17:55 AM
The Futures Trader Wrap has been posted: Link

  James Brown   5/13/200,  1:17:47 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

  Jim Brown   5/13/200,  5:02:51 PM
AMAT conference call highlights.
Orders are weaker than Q1 at $971 million vs $1.1 billion.
Still a lackluster environment. Orders will be flat, revenues flat or below estimates. Company estimates 3-4 cents compared to consensus of 4 cents, guidance to low end of the range. Orders still volatile and unstable.

  Jim Brown   5/13/200,  4:20:47 PM
CSC earnings 93 cents compared to 92 estimate
Sees signs of demand stabilization in North America
Stock trading down in post market at 33.83

  Jim Brown   5/13/200,  4:08:22 PM
NTAP 7 cents vs est 7 cents

  Jim Brown   5/13/200,  4:06:08 PM
AMAT trading down in after hours at 15.27 from 15.55 close. Waiting on conference call.

  Jim Brown   5/13/200,  4:03:52 PM
ANF 26 cents, no estimate

  Jim Brown   5/13/200,  4:02:26 PM
AMAT earnings -4 cents after charges, 3 cents vs estimates of 2 cents.
SCMR -4 vs -5 est

  Linda Piazza   5/13/200,  3:54:00 PM
The frustrating aspect of the inconclusive nature of today's trading is that there's every possibility that there will be a gap opening tomorrow, after tonight's earnings reports and the overnight economic and other developments. Which direction, though? On the OEX, will it be another attempt at 480 to 487 or will it be down? It's impossible to tell and those of us not entering new trades are going to be kicking ourselves if the markets gap in the direction we expected. That's the breaks, though. What if there are bad/good numbers and little reaction? For those who didn't catch Alan 's article this weekend or didn't check out the link in my early-morning update this morning, here's a link to a Futures Trader article in which Alan discusses the ways we can use the reaction or lack of reaction in the overnight futures market to gauge market strength or weakness. Link

  Mark Phillips   5/13/200,  3:46:31 PM
EMC $10.03 (+0.09) One final comment on this LEAPS play before the close. Tonight, NTAP is expected to release its Q4 results tonight after the close. While Lehman believes the company will come in at the high-end of estimates, the stock has already had a heckuva run in the past 2 weeks and may be susceptible to a pullback in "sell the news" fashion. Any severe selling in NTAP tomorrow could spill over into trading for EMC. Take that into account when making a decision on whether to hold long positions in EMC or harvest gains before the close.

  Linda Piazza   5/13/200,  3:42:12 PM
I'm still watching GE today, down further since my 11:36 post, trading at 28.40, down .57. Hourly OBV does appear to be turning down as the day progresses, and the hourly ADX shows the downtrend gaining strength as selling pressure increases and buying pressure decreases. Daily ADX shows that selling pressure has today made a bearish upward cross of the descending buying pressure. Daily CCI dips into the red, and RSI continues to turn down. Daily OBV appears to be turning down, too. Stochastics evidence is mixed, however.

  Mark Phillips   5/13/200,  3:40:18 PM
AIG $55.52 (-0.84) Traders monitoring this AIG Put play have got to be pleased with the price action so far this week. Yesterday's euphoric ramp in the broad market was only good enough for AIG to test the top of Thursday and Friday's range. The stock has been pressured lower with the rest of the market today and is back near the lows of the past four days. One important observation is that the stock seems to have finally lost the support at the 20-dma and looks to close solidly below that measure for the first time since March 14th. AIG is currently a LEAPS Put play as well and traders that entered on one of the last two failed rallies near the 200-dma are looking good here. Relative to that LEAPS play, once AIG loses the $55 level, it should be save to lower stops to $59, just above the recent intraday highs.

  Linda Piazza   5/13/200,  3:27:05 PM
The BIX is one index that's maintaining some gains today, trading up near the 296-297 level most of the day. Unless something changes by the end of the day, which I acknowledge is possible, the BIX will print a doji on the daily chart. Is this a possible reversal signal? (My first caveat to this discussion is that nothing is truly a reversal signal in this market!) I have mixed opinions. First, I can clearly see as could anyone else that the BIX has been moving up since the middle of March, so I could say that it's in an uptrend. This doji is also occurring right at important resistance, which supposedly (in anything but a rampant buy-the-dip market mentality) would lend it special significance. However, since early May, the BIX has been consolidating in a rectangular trading range roughly from the 289 to the 297 level, so it's also possible to say that today's doji occurred during this consolidation, in which case it would not be considered a likely reversal signal. A scan of the chart shows the BIX consolidating in a similar trading band in late April and printed several doji's or near-doji's at the top of that range, too, before moving up again. Is this just a trading pattern for the BIX, then? It's a toss-up, in my opinion.

  Jonathan Levinson   5/13/200,  3:24:02 PM
Nice push from the bears! Link

  Jonathan Levinson   5/13/200,  3:19:57 PM
Sorry, that was Glassman for Dow 36,000, Acampora wrote the forward to "Dow 100,000- Fact or Fiction".

  Jonathan Levinson   5/13/200,  3:18:08 PM
Oh, I almost forgot! Apparently Ralph "36,000" Acampora is suggesting today that the dips will be bought

  Jonathan Levinson   5/13/200,  3:16:57 PM
Bears who want to try some collective meditation might wish for a push below 28.64, which could kick off a head and shoulders breakdown on my 10 minute/ 2 day QQQ chart.

  Jonathan Levinson   5/13/200,  3:13:08 PM
Volume is light on the NYSE but more moderate on the COMPX. I keep hearing Tom O'Brien's New England accent: "It's trina take aht the swing high on lightah volume but it cahn't do it, it's gonnah come right back atchah!" On the other hand, a close at or above current levels will give us a potential bullish triangle set up, which I could do without, personally. Yields closed at their lows of the day, which supports the bearish case here.

  Linda Piazza   5/13/200,  3:10:38 PM
Although there were two closes beneath that OEX 474.50 level, I wouldn't consider that five-minute double-top confirmed as yet. The bounces here might be tepid, but do at least confirm the importance of this level, which would conversely give more credence to downside targets on a break of the level. As I said earlier, though, I don't know that there's enough downside to profit on this move, even if it did meet a five-minute target. With the hourly 5(3)3 stochastic so near oversold levels and the daily oscillators not yet turning down, with the late hour in the current trading day, and with tomorrow seeing April retail sales, import/export prices, and with earnings both tonight and tomorrow, I don't know that I'd yet feel certain that this was "the" big pullback we've all been awaiting.

  James Brown   5/13/200,  3:06:31 PM
The 03:15 PM ET Update: Link

  Jonathan Levinson   5/13/200,  2:44:59 PM
QQQ bounced at the 78.6% fib retracement off the intraday high at 28.64, currently working with the 61.8% level. FVX has slid a tough lower, QQV is actually up to unchanged, TRINQ .77, TICK.NQ +31. If the Qubes manage to close negative today, then the QQQ:QQV ratio discussed in last night's Index Wrap will drop again, adding another candle's confirmation to trend reversal that bears are hoping/wishing for.

  Linda Piazza   5/13/200,  2:41:20 PM
The 60-minute OEX RSI got tugged back beneath its formerly violated descending trendline, showing a likely change in short-term trend, at least. The 21(3)3 stochastics are getting tugged out of overbought territory, showing a satisfyingly steep line of descent. The fly in the ointment, though, is that the 5(3)3's have already cycled down almost to levels indicating oversold conditions and the daily oscillators have not turned down at all, with the exception of the RSI. It's still possible, although not necessarily probable, that there could be one more 60-minute 5(3)3 cycle up before the real downdraft ensues and we see how the OEX will respond.

  Linda Piazza   5/13/200,  2:36:48 PM
I just checked volume patterns and noticed that there's been another shift, with advancers now barely ahead of decliners on the NYSE and decliners slightly ahead on the Nasdaq. Up volume is barely ahead of down on the NYSE, but more strongly ahead on the Nasdaq. To me, that shows that there's still some concentrated buying of a few issues on the Nasdaq, but that buying is slacking off. Total volume is 963 million on the NYSE and almost 1.4 billion on the Nasdaq.

  Jonathan Levinson   5/13/200,  2:25:20 PM
I'm hoping that my own observation of that support/resistance phenomenon mentioned by Linda marked the very top of this move, but we'll have to see. The US Dollar Index broke the neutral pennant to the downside, currently trading 94.65, and this coincides with gold regaining 350, with June gold currently 350.90. So far, QQQ 29 has held, and that level would have made the perfect stop for the entry I discussed yesterday at 28.90. For what it's worth, I believe that if QQQ proves to be a high, it will be on at least a swing basis, in that the top of the trend here is on a daily candle basis, and not some shorter daytrade or swing trade basis.

Yields are now read across the curve, while QQV is still down .27 despite VXN being up .42. TRINQ is at .79, TICK.NQ +23.

  Linda Piazza   5/13/200,  2:20:43 PM
Currently at 474.65, the OEX now approaches that 474.50 confirmation level of the double-top formation on the five-minute charts, but as Jonathan said earlier today, support means more than resistance lately, so I would be certain that support has been violated before forming too strong an opinion about even near-term direction.

  Linda Piazza   5/13/200,  2:08:55 PM
I'm now watching the second test of the day of the violated RSI descending trendline on the OEX hourly chart, as depicted in my 10:55 post. This time, the RSI does not appear to be hinging up ahead of the line, but could still do so at the line.

  Linda Piazza   5/13/200,  2:03:57 PM
An OEX move and close (at least five-minute, if not longer) below 474.50 would confirm a double-top formation on the five-minute charts, with a downside target of 470-470.22. As I've often warned, targets are not reliable on five-minute charts, and downside targets have not been particularly reliable on any charts during the current market trend. Still, this might be a level to watch. This would probably not be a big enough move or reliable enough one to be profitable as a day trade, but might give information into the OEX direction.

  Jonathan Levinson   5/13/200,  1:58:50 PM
Whoops, correction: 28.76 is the 21 period MA on the 15 minute, and not 10 minute candles.

  Jonathan Levinson   5/13/200,  1:57:25 PM
Put to call ratio is down to .59, equity pcr 0.48, index pcr 0.84.

  Jonathan Levinson   5/13/200,  1:55:29 PM
28.76 coincides with the 21 period MA on the 10 minute candles, as well as the 50% retracement off today's high for the Qubes.

  Linda Piazza   5/13/200,  1:50:15 PM
The 60-minute OEX oscillators are absolutely useless just now in predicting market direction, with the 5(3)3 stochs having paused in midrise after pausing in midfall, and now squiggling around in a rather attractive but confusing braided pattern. RSI heads back down to test that violated descending trendline again, however, and the 21(3)3 stochs ease ever nearer to the point when they'll be pulled down out of overbought territory. Over on the daily charts, the 5(3)3 stochs have nearly reached overbought territory again, but the 21(3)3's have not yet so much as hinged down. RSI has, though, giving a first hint of possible weakness to come. A fall below 475 would predict a move back down to test the hourly 21-pma at 473.66 or perhaps to the 469.50-470 support.

  Jonathan Levinson   5/13/200,  1:40:38 PM
That's very light volume for this time of day, Linda. A last drive to the top on light volume should be bearish, though volume analysis is very far from an exact science.

  Linda Piazza   5/13/200,  1:39:26 PM
A glance at volume patterns show that 807 million shares have traded on the NYSE and 1.1 billion have traded on the Nasdaq. Adv/dec, up/down, and new highs/new lows patterns are all positive, with some of those ratios reversing their earlier solidly bearish numbers.

  Jonathan Levinson   5/13/200,  1:36:53 PM
QQQ at 28.81 is 38.2% off the day high on the 10 minute candles, with next fib support at 28.76, then 28.71. 28.88 is the 23.6% line. Dare we hope for it to act as resistance?

FVX is down to flat on the day as bond buying reasserts itself today.

  Jonathan Levinson   5/13/200,  1:21:12 PM
The put to call ratio has fallen to .63, with the equity pcr at a very low .49, and index prc 1.01. It looks like the little guy (equity pcr) is buying the highs with both fists, and even the big guys (index pcr, I'm guessing) are relenting on their put trades. Whether my interpretation of the breakdown of the pcr is correct or not, the numbers make me bearish but nervously so at current levels.

  Linda Piazza   5/13/200,  1:20:54 PM
Nearly there--so far, the OEX daily high is only $.30 below yesterday's HOD, although the OEX currently falls back a little from that high. As I thought might happen earlier, the OEX 60-minute RSI did find support from its violated descending trendline, being the first sign that the OEX might try for higher levels again. This is why I favor the RSI or at least pattern breaks on the RSI as a leading indicator of market direction. As I also thought might happen, the 5(3)3 hourly stochs zoomed down fairly quickly and turned back up, turning the 21(3)3's back up with them, with those longer-term stochs still up in overbought territory. My best guess now is that 480 may be tough resistance for the OEX, but that a move above that should see a try for 487, at which point I do expect a failure or at least a regrouping and consolidation before a further push up.

  Jonathan Levinson   5/13/200,  1:14:33 PM
The US Dollar Index has coiled into a neutral pennant at 94.80 on the 15 minute candles, and should be breaking in either direction soon. On a coin toss, I'd *guess* that it breaks to the upside, which should have short term bearish implications for gold and other commodities. No clue what it will do for or to equities. FVX has climbed up to a 1.7 bp gain here, coinciding with the new highs on QQQ and COMPX. The gains on the day are quite small across the indices, but it sure feels like a big move off the lows, back to critical resistance from yesterday.

  James Brown   5/13/200,  1:12:07 PM
The 01:00 PM Update: Link

  Mark Phillips   5/13/200,  12:58:45 PM
EMC $10.12 (+0.18) While it can't rival the excitement of an EBAY or YHOO today, our EMC LEAPS Call play is pushing convincingly through the $10 level this afternoon and setting a new 52-week high. Those traders who have been following this play since we added it just below the $7 level know that we're looking at an exit from the play in the $10-11 area. I think we'll get a surge towards the upper end of that range before this persistent rally runs out of steam, but conservative traders may want to think about harvesting gains into this strength either later today or tomorrow.

  Linda Piazza   5/13/200,  12:50:46 PM
The U.S. Bancorp Piper Jaffray tech conference is going on today, with SSB's scheduled for tomorrow, I believe. Information about tech stocks could be coming out of that meeting, affecting trading today. For example, Siebel Systems (SEBL) reported at 9:40 this morning, and the stock began moving up about 10:30 ET, reaching a high of 9.35 about 11:20, regrouping and then currently reaching toward that day's high again.

  Jonathan Levinson   5/13/200,  12:48:31 PM
The New Currency: Link

  Jonathan Levinson   5/13/200,  12:46:47 PM
After a shallow downphase, we're watching a runup to yesterday's highs. QQQ 29 still hasn't been challenged, but it's very close. FVX is up just 0.7 bps, so the buying in bonds is continuing. CRB has given up part of yesterday's gains, as has gold, the HUI and XAU, but so far, I see no sign of a trend reversal in any of these asset classes. It's just chop, so far.

  Jim Brown   5/13/200,  12:43:06 PM
I was scanning the EBAY investor relations website for a clue to the bounce today. No clue, but I did find an interesting presentation that was given at a May-2003 tech conference. Very interesting. Link

  Mark Phillips   5/13/200,  12:42:40 PM
There are a couple of notable exceptions to the consolidation theme today though. EBAY, which really lagged during yesterday's rally, is up a strong $3, now flirting with the $98 resistance level. Another strong performer in the Internet arena is YHOO (currently a bullish trade candidate on PremierInvestor), which is vaulting higher by more than 5% today, moving through the $27 level and setting a new 2-year high.

  Mark Phillips   5/13/200,  12:41:25 PM
Now fully 3 hours into the trading day, by any measure I can find, we have a clear consolidation session. By the price action, it certainly looks bullish to me, with very minor losses on the DOW and SPX and the NASDAQ now creeping into the green. Advancing vs. Declining volume on the NYSE is just barely in favor of the bulls by a ratio of 42:38, while the NASDAQ shows bullish leadership by a ratio of 2:1. Bond yields are revealing little as they are vacillating near the flat line and individual stock performance reflects this bifurcation as well. Of the 200+ stocks I monitor on a daily basis, only 6 are down by more than $1, while 5 are up by more than $1.

  Ray Cummins   5/13/200,  12:29:48 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

Despite the recent surge in share values, there are a few positions in the (bullish) portfolio that deserve attention including ImClone (NASDAQ:IMCLE), Silicon Laboratories (NASDAQ:SLAB) and PolyMedica (NASDAQ:PLMD), and since none of these stocks participated in Monday's rally, all of them are suspect with regard to future upside activity. One issue that is enjoying some bullish momentum this morning is Krispy Kreme Doughnuts (NYSE:KKD). Traders are buying the stock in anticipation of a favorable quarterly report, which is due out on 5/28 near the opening bell. Unfortunately, our outlook for the issue is neutral to bearish and our recent call-credit spread is profitable with the stock below $35. The upcoming report will likely determine the near-term character of the issue.

  Jonathan Levinson   5/13/200,  12:29:23 PM
Well put, Jim and Linda. Something's got to give, and with treasuries going from being sold to being bought, commodities holding their gains, and the USD really fighting for its bounce points, the bearish case is intact. But, the charts tell a bearish tale so far, and at this point, nothing could surprise me.

  Jonathan Levinson   5/13/200,  12:24:12 PM
QQQ is coming in for another run at the rally highs, now trading 28.88, while FVX sinks lower, now up just .7 bps. TRINQ .48, QQV -.27, TICK.NQ +383.

  Linda Piazza   5/13/200,  12:22:59 PM
The FTSE 100 closed at 3999.90. How's that for closing just under key resistance (at 4000 for the FTSE)? The CAC 40 closed up 1 point, at 2963.63, about in the middle of its day's range. The DAX currently trades down a minimal 3.60 points at 2933.42, having fallen as low as 2883.31 at one time today.

  Jim Brown   5/13/200,  12:20:33 PM
Every time I have looked at EBAY over the last several months I think "I will buy some when it pulls back". The pullback never comes to more than a buck or two and you just keep thinking "I would be buying the top" here. Well that top grew by almost +$3 this morning as it closes in on $100. With a PE over 100 it is one of the Internet's darlings that never lost investor confidence. The PayPal acquisition is adding torrents of cash flow and there are probably more acquisitions in the future. I will get some on a pull back. (grin)

  Linda Piazza   5/13/200,  12:19:21 PM
Interesting. As the indices rise toward their day's highs again, bond yields drop toward the day's lows, the VIX reaches toward its day's high, and futures for light, sweet crude oil do, too. These are not the usual interactions seen in the markets.

  Linda Piazza   5/13/200,  12:08:10 PM
A reader offers a solution for the SOX/OBV dilemma mentioned in my 10:43 post this morning, one I was considering myself. Daily volumes are tabulated for the SMH. While this HOLDRS is not an exact match for the SOX, it would give some idea of how OBV were behaving on the SOX, were it applicable. On the SMH, OBV has generally been trending upward since early February. Thanks, M.K., for this suggestion.

  Jonathan Levinson   5/13/200,  12:01:24 PM
USD Index back at 94.90, nearing the upper descending trendline on the 15 minute candles. FVX is down to a .8 bp gain, while gold is now below 350/oz at 349.90, while QQQ trades back into yesterday's channel, now at 28.83.

  Ray Cummins   5/13/200,  11:59:30 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity

As we look back on an extremely bullish session, it's important to note the character of the most critical plays on the (bearish) "watch" list. In the technology group, Cabot Micro (NASDAQ:CCMP) is definitely a nominee for early exit and Mercury Interactive (NASDAQ:MERQ), a new call-debit spread candidate, is near the break-even point. Wal-Mart (NYSE:WMT) is the primary concern among the broader-market issues, although it has retreated significantly today, and the S&P 100 Index (OEX) call-credit spread is slightly "in-the-red" with the index above $475. The position in Dreyer's (NASDAQ:DRYR) endured a forced exit early this morning as speculation of a merger announcement became rampant, and Universal Health (NYSE:UHS) ended our hopes of salvaging any profit as the issue jumped over $2 to $43 despite a lack of public news. On a positive note, spreads in Bank of America (NYSE:BAC), Intuit (NASDAQ:INTU), 3M Corp. (NYES:MMM), Engineered Support Systems (NASDAQ:EASI, and Varian Medical Systems (NYSE:VAR) appear safe for now. Not surprisingly, Total Fina (NYSE:TOT) is back below $70 (and the sold call) after a brief run to the top of its recent trading range but the same can not be said for the Oil Service Holdrs (OIH) position, which is teetering on the profit/loss threshold with the underlying near $60.20. Of course, all of the suspect issues should be monitored closely for changes in their respective technical outlooks.

  Jim Brown   5/13/200,  11:56:06 AM
Any idea's on what's driving EBAY today? I am long term short, but am starting to wonder. Thanks, JL

I don't see any news but they should be announcing a stock split very soon. They typically split in the 75-90 range and they are well ove rthat now. It could be some advance news leaked. Anybody else have a clue?

  Linda Piazza   5/13/200,  11:55:44 AM
The OEX 60-minute 5(3)3 stochs now reach down toward oversold levels, although they're not quite there yet, and the RSI does appear to be finding support from that now-violated descending trendline. The 21(3)3 stochs cycle down, but still haven't fully rolled down out of overbought territory and can still be turned back up again. All this is occurring while the OEX holds steady between next minor support and next major resistance. The daily oscillators still show the possibility of more upside. My gut feeling is that the OEX will take another (perhaps doomed to fail) run at yesterday's highs and maybe even higher toward 480 or even 487 before those daily oscillators complete their cycle and turn down again. There's just not enough information to be sure. I'm not trading off my gut instinct, and you shouldn't, either.

  Jonathan Levinson   5/13/200,  11:44:45 AM
Most recent put to call data: total .76, equity .59, index 1.18.

  Jim Brown   5/13/200,  11:38:41 AM
SIRI has traded over 51 million shares on news that their radios will be offered in Ford, Lincoln and Mercury vehicles. The stock was up strong on news back on the 7th and has been trending down since.

  Linda Piazza   5/13/200,  11:36:00 AM
GE, 28.60, down $.37: Today, GE slipped beneath the 28.80 level that supported prices from mid-April through early May, but it has not yet fallen beneath the May 8 and 9 levels. Daily 21(3)3 stochastics and MACD are somewhat inconclusive, sloping generally down but at the rather flat angles that sometimes predict an imminent upturn. RSI definitely turns down, however. ADX appears to be weakening, with a potential bearish cross of the buying pressure and selling pressure lines setting up, but with the ADX empirical number still above 20 and still indicating a trending market. Volume appears to be tapering off as GE's price slips, too. With that tapering of the volume and with the counter-cyclical tight pattern of lower highs and lower lows occurring just after a protracted move up from GE's February low, the possibility of a bull-flag pattern must be considered. Although a breakout above the current trend of lower highs would confirm the bull-flag pattern, I would wait for a move over 30 before I would consider the potential bull-flag pattern fully confirmed. Conversely, a move below support at 28 or the 200-ema at 27.49 might be considered more bearish and would probably lead to more selling.

  Jim Brown   5/13/200,  11:35:18 AM
SUNW is holding yesterday's gains on takeover speculation. The stock has traded 42 million shares today. There is speculation that Dell, HPQ or IBM is about to announce a purchase of SUNW. HOWEVER, two vice presidents, people who should know, sold 218,324 shares on the open market according to form filed at the SEC on Monday.

  Jonathan Levinson   5/13/200,  11:35:01 AM
So far, QQQ has failed to penetrate 28.79, coinciding with my expected resistance zone from yesterday's afternoon trading range. FVX is up 1.6 bps, with the longer maturity yields in the red. The USD Index is back below 94.80 on that ramp. All of these look bearish for equities, but I'll feel more secure if, say, QQQ dumps a buck or two from here. Let's not start holding our breath just yet. QQV -.21 to 28.54, TICK.NQ +134, TRINQ .54.

  James Brown   5/13/200,  11:28:52 AM
The 11:00 AM update is posted: Link

  Linda Piazza   5/13/200,  11:24:03 AM
The OEX cleared the five-minute 21-pma, the first minor test of the weakness or strength. It's now challenging that first ascending trendline drawn off the March 12 low. The 60-minute chart showed that the RSI did hinge up when it hit the violated trendline shown in my 10:55 post, but that the hinge up is far from decisive as yet. The 5(3)3 stochastics have not yet turned up, however, but neither have the 21(3)3's rolled completely out of overbought territory. I expect the OEX to next test yesterday's high at 478.83, but I still don't believe the outcome is yet decided. As much as you or I may want a definitive answer as to final direction today, I don't believe we have it yet.

  Jonathan Levinson   5/13/200,  11:11:46 AM
Here's are some interesting charts on UBS. I heard on CNBC this morning that UBS sees things improving since most of the global uncertainties have been lifted.



Any thoughts on these charts?

As your charts indicate, UBS is right at channel resistance. As a good trader, you'd be naturally thinking of selling near the top instead of buying, but good news and CNBC's cheerleading have you thinking of buying. Knowing nothing about UBS or its fundamentals, I can only look at the chart, and you know what I'm going to say. I'll therefore keep it short and just reinforce it with two points. Joe Granville's maxim that "News is for suckers." And, that CNBC is owned by GE, a very large industrial company with a great big liquid stock. CNBC's job, as the world's longest running infomercial, is to get people to buy and hold stock. Trust what the chart is telling you in planning your trades. CNBC has been calling a bottom for years now. Never once have I heard of them calling a top. Now, UBS may well break out and run to new highs. With a tight stop, you could try a long trade on it. Alternatively, you could wait for UBS to clear resitance and then enter on a successful retest of the channel top.

  Linda Piazza   5/13/200,  11:08:48 AM
Currently, the FTSE 100 is up 6.20 points, but has slipped back below the 4000 level, trading now at 3993.60. The CAC 40 is down 5.74 points to 2956.89, and the DAX is down 32.66 points to 2904.60.

  Linda Piazza   5/13/200,  10:59:55 AM
Currently, volume stands at 333 million shares on the NYSE and 520 million on the Nasdaq. Based on recent days' trading, this is decent volume. Adv/dec ratios are .62 for the NYSE and .63 for the Nasdaq. Down volume is more than double up volume on the NYSE, but is roughly equal to up volume on the Nasdaq.

  Linda Piazza   5/13/200,  10:55:31 AM
On the OEX 60-minute chart, I'm watching the RSI and 5(3)3 stochs in particular. Here's why: Link

  Jonathan Levinson   5/13/200,  10:52:04 AM
The US Dollar Index just spiked above 94.80, yet the five year yield is still up 1.2 bps. The thirty is down 1.7 bps, though. Perhaps Toshihiko Fukui and Yasuo Fukuda are converting yen to buy US thirty year treasuries?

  Jim Brown   5/13/200,  10:47:36 AM
Editors Play
The Dow has dropped -80 from yesterday's highs but this is not yet enough to reflate the put side of the play which is currently trading at 15x25 cents. We will probably not see any significant gain in the price until the Doe moves under 8600 again. There are three days of significant economic reports ahead with Thursday being the heaviest reporting day. Current uptrend support for the Dow is in the 8500 range and I expect to see that by Thursday. I would love to see 8400 after Thursday's reports but there is always the possibility for good news. Keep your fingers crossed.

  Jonathan Levinson   5/13/200,  10:46:20 AM
The CRB is pulling back to unchanged on the day as FVX sinks to day lows, now up 1.1 bps. The Commodities Index is at 240.13, down 9 cents, led by cotton, heating oil, copper, crude oil FCOJ and live cattle futures. HUI is down .24 to 135.96, XAU -.28 to 25.93, and June gold 351.20, down .70.

  Jonathan Levinson   5/13/200,  10:44:02 AM
Here's a repost of that must-see chart: Link

  Linda Piazza   5/13/200,  10:43:49 AM
The SOX is down today but also currently up from the day's low, trading just now at 353.64. As I've mentioned before, MACD has been flat during the recent move up, and the 21(3)3 stochs have been trading mostly flat in territory indicating overbought conditions since mid-April. If the SOX should retreat further, an interesting test will soon occur. The 21-dma and the 200-ema now converge at 335.70 and 334.72, respectively. Those two MA's should support the SOX should it reach those levels on a pullback, especially as there's also horizontal historical support in that area as well as support from a rising trendline. A fall through that area would probably require sustained selling, and might mean a more bearish intermediate outlook for the SOX. Let's watch.

On another note, I mentioned frequently through the last few weeks that the rise in the SOX was not attended by a rise in OBV. Last Friday, an astute reader wrote asking whether the OBV indicator was valid for an index such as the SOX, where volume levels were not tabulated. It was such an obvious question that I don't know why it didn't occur to me as I know to ignore OBV on other charts such as that of the VIX. Since the OBV calculations depend on volume tallies for each day, it appeared apparent that OBV would not be applicable to the SOX, no matter whether the charts were showing values or not. Since then, both this reader and I have queried our various charting and quoting services. Q-charts said the OBV would be "moot" for the SOX, and the reader so far has received similar answers. My research of various texts hasn't enlightened me any further, but at this time, I would say that it is not applicable. This was a case of not being able to see the forest for the trees. I was so attuned to studying the various indicators that I did not pull back and think about the applicability of the OBV to studying the SOX. Thanks, B.G.R. for bringing this to my attention and for following up with research of your own.

  Jonathan Levinson   5/13/200,  10:41:10 AM
Off topic, but KKD has just arrived in Montreal, and one of the guys in my office has taken to bringing a box or two each week, just to prove my weakness on a regular basis. These things are treacherous!

  Jonathan Levinson   5/13/200,  10:37:01 AM
That red volume spike was over 1000 QQQ shares traded within 50 ticks.

  Linda Piazza   5/13/200,  10:30:17 AM
Currently at 295.76 and with a day's high of 297.05, the BIX is challenging the 297 level that has retarded further advances since last September. The upper BB is at 299.89, and the daily oscillators still maintain a bullish outlook although they're approaching or already at levels that indicate overbought conditions. This index might be a good one to monitor today and the next few days, as a push over 300 would be considered bullish, but a fall below recent support near 290 might be considered yet another failure to breach that overhead resistance.

  Jonathan Levinson   5/13/200,  10:29:47 AM
A very large negative volume spike on my chart- a sell program on QQQ.

  Jonathan Levinson   5/13/200,  10:28:57 AM
I mentioned "cold sweats" yesterday and was surprised to receive some emails agreeing with me. Well, here's a chart that puts it in perspective: Link

  Jonathan Levinson   5/13/200,  10:25:28 AM
QQQ is taking another run at the lower band of yesterday afternoon's narrow trading range. I expect to see resistance at 28.78. I'm inclined to say that a failure to retake that level shortly would be bearish, but the past two months have made me far more sceptical of resistance levels than I am of support. FVX has come off its highs, though, and is currently up 2.2 bps. The US Dollar Index has found support at 94.60, and June gold is down 1.30 at 350.60.

  Linda Piazza   5/13/200,  10:23:54 AM
The OEX pulled back from its first test of its now-trending-lower five-minute 21-pma, but remains above the first level of support today at 475 and again appears to be bouncing off that original trendline I drew off the March 12 lows. The outcome of the first minor test of "will it be strength or weakness" has not yet been decided, in my opinion. The hourly RSI looks weaker than it did earlier, but that 21(3)3 stoch has still not fully committed itself to more downside, keeping me from forming too many opinions just yet. That five-minute 21-pma is now just overhead at 477.10, with the OEX currently at 476.78.

  Jonathan Levinson   5/13/200,  10:08:23 AM
The 10AM put to call ratio has just come in at 1.07, comprised of an equity pcr of .79 and index pcr 2.18. It spiked up to these levels on a twenty cent pullback in QQQ with no downside followthrough, which looks unpleasantly bullish to me. My thesis yesterday was that perhaps the put to call ratio should be taken literally, and not in contrarian fashion, as lately we've also seen "put" buying, or the equivalent thereof, in the treasury and commodity rallies. These are much bigger and "smarter" markets than equities. Perhaps those buyers are also throwing in some index puts while they're at it? Time will tell.

  James Brown   5/13/200,  10:07:51 AM
The "Market is overbought" bandwagon is getting crowded. Bear Stearns says that most of the good news for stocks has already been priced in and investors should take profits.

  James Brown   5/13/200,  10:05:37 AM
Volume leaders this morning are SIRI, SUNW, LU, CSCO and AVNX. AVNX is up 157% this moring to $3.05.

  Linda Piazza   5/13/200,  10:03:19 AM
The OEX 60-minute charts shows 5(3)3 stochastics now in full bearish roll and RSI also rolling down. There's a bearish kiss on the 21(3)3's but not yet a full roll out of overbought territory. It's still possible to see the shorter-term and less reliable 5(3)3's kick back up after a brief pullback or a period of consolidation. MACD hints at potential weakness, however, since it looks as if it might be beginning to roll. The slight drop today has done nothing to impact the daily stochs, however, which still move up. Daily RSI has a slight downward hinge, but maintains a pattern of higher lows. So far. I would watch for an attempt to retake the five-minute 21-pma at 477.37, or alternately, a fall through 475 as the first minor signs of strength or weakness.

  Jim Brown   5/13/200,  10:01:34 AM
Editors Play
To recap yesterday's movement in this play we bought the May DIA $87 call for 40 cents and the May DIA put for 40 cents shortly after the open. We sold the Call for 95 cents when the Dow topped at 9720-8740. We doubled up on the DIA put for 20 cents lowering our cost basis in the put side to 30 cents. I anticipate no further changes in this position today.

  Jonathan Levinson   5/13/200,  9:59:13 AM
Al Green has just added a 2.25B overnight repo, which is a net addition with no expirations today.

  James Brown   5/13/200,  9:59:09 AM
The only major sector in the green right now is the XAU Gold & Silver index, currently up 0.24 to 71.97. Although gold itself is down slightly (GC03M) -0.90 to 351.00.

One of the biggest sector loser is the SOX semiconductor index, which should be no surprise after the negative comments coming from the house of Merrill this morning. The SOX is down 1.83%.

We're seeing a bit more profit taking in groups like the INX Internet index (-0.70%) and OIX oil index (-0.79%). Overall the selling appears rather mild.

  Linda Piazza   5/13/200,  9:53:31 AM
I show the OEX price currently in the process of testing the original trendline I drew off the March 12 low. Here's a chart, with a 120-minute interval so you can see the entire trendline: Link As I prepared the post, the OEX was dropping through that trendline, but the battle may not yet be decided.

  James Brown   5/13/200,  9:53:05 AM
Evidently Merrill Lynch's chip sector analyst, Joe Osha, doesn't believe Intel's President when the latter says a second half recovery for chips is coming. This morning Joe downgraded five chip stocks from "buy" to "neutral" and said he expects a 20% drop in the $SOX by the end of summer. Those lucky stocks this morning are: NVDA, the graphics chip maker who recently guided higher, SMTC, MXIM, ISIL and ATYT.

  Jonathan Levinson   5/13/200,  9:53:02 AM
A nice failure at the 21 period MA on the 50 tick bars, but until I see some actual downside happen, this will just look like a shake. As I type, QQQ is challenging support at the 13 period MA.

  Jonathan Levinson   5/13/200,  9:46:59 AM
I was starting to type that the QQQ had gone "quiet" and then it crossed its 21 period MA on my 50 tick short term chart. FVX is down 3.4 bps, and it looks like this bounce aims to challenge yesterday afternoon's range. Expect a test of resistance (if such concept still exists) in the 28.78 area.

  Linda Piazza   5/13/200,  9:43:04 AM
This morning shows the opposite configuration of yesterday morning's. Today, the indices are down while bonds are down and bond yields are up, and the dollar is up. It's too early to look at volume patterns, as they would still be distorted, but the configuration we're seeing in intermarket relationships should be predicting higher markets. Yesterday, these typical relationships weren't reliable in predicting market direction, and perhaps they won't be today, either. One relationship that is holding is higher crude oil prices coupled with lower indices.

  James Brown   5/13/200,  9:36:29 AM
WMT's Earnings Report Disappoints Wall Street Before the bell, the world's largest retailer, Wal-Mart reported Q1 earnings of 42 cents a share. This compares to 37 cents a share the same quarter last year. Despite a 14% rise in quarterly profits and sales growth of 9.7% to $56.7 billion, investors are not going to be excited with WMT's CEO's comments that Q2 will probably be flat. The CEO called the lastest quarter both confusing and disappointing and stated that inventory levels were too high. WMT said it missed its sales targets for same-store sales growth in March and April but management is feeding investors the same story that things will look better in the 2nd half of the year. Analysts had been expected WMT to turn in revenues just over $60 billion.

  Jim Brown   5/13/200,  9:35:47 AM
There was a server problem at the ISP this morning, which delayed the posting on the monitor. We apologize for the delay and everything is now back up and running.

  Jonathan Levinson   5/13/200,  9:35:32 AM
The US Dollar Index took a whack at the same time as the dismal balance of trades data was released, currently trading the 94.60 level.

  Linda Piazza   5/13/200,  9:35:18 AM
I had difficulty posting this morning, but here's my intended first post:. The Nikkei's trading was a tale of two trading patterns today: before the midday break and after the midday break. Building on the Nasdaq's gains yesterday, the Nikkei opened last night up 55.49 points, and rose into the early morning, reaching a high of 8339.07 before the midday break. Short-covering may have played a part in some of the gains, as Sony was the most actively traded issue. Not so long ago, Sony was selling limit-down each day. Japanese banks gained as Japan's economic ministers and a BOJ official began meetings to discuss emergency economic measures. Also, the dollar was weakening against the yen in early trading.

However, Japanese trading held a completely different character after the midday break, with the Nikkei falling straight through the afternoon, ending down 30.86 points or 0.38%, at 8190.26 and 150 points below the day's high. A Marketwatch.com article attributes the afternoon plummet to comments made by U.S. Treasury Secretary John Snow. Snow reportedly said that currency interventions should be kept to a minimum. Many believe the Japanese government may again recently have been selling yen to shore up the weakening dollar, but Japanese officials declined to confirm the rumors. Sony and Japanese banks maintained most of their gains, with exporters such as the automakers leading the declines. In addition to these factors, figures for Japanese March private-sector machinery orders were released today, with those orders rising 3.8% from February's levels and 11.7% from year-ago levels.

The South Korean central bank cut key interest rates by a quarter point. However, the truck drivers' strike continues in South Korea, with the government now making plans to intervene. In addition, North Korea's nullification of the accord intended to keep the Korea peninsula free of nuclear weapons weighed on the market. The Kospi fell 2.7%. Other Asian markets were mixed, with Taiwan's Weighted Index climbing 1.7% and Hong Kong's Hang Seng falling 0.4%.

Europe reacts to a variety of input this morning. That input included terror attacks in Saudi Arabia, attacks in which terrorists used force to enter gated compounds housing Westerners, where they set off car bombs. At least ten Americans died. A blast also targeted the Saudi Maintenance Company's headquarters, with that company partially owned by a U.S. citizen.

In addition, the euro was declining against the dollar in early European trading today, too, and the German May ZEW Indicator of Economic Sentiment showed an increase of 0.3 points to 18.7 points, still remaining below the key 33 level. This rise offset two earnings reports that shook German market participants. A German bank reported worse-than-expected earnings. A German truck and equipment maker reported losses, then said that it was seeing continued reluctance to spend on projects and would not give a forecast for the coming fiscal year. Several European telecoms reported news that was deemed positive, but the euro's rise led Goldman to cut its view of the European automakers to neutral. As of this writing, the FTSE 100 trades down 4.20 points or .11%, at 3983.20; the CAC 40 trades down 18.02 points or 0.61%, to 2944.61; and the DAX trades down 42.11 points or 1.43%, to 2895.15.

  Jonathan Levinson   5/13/200,  9:33:12 AM
The US Dollar Index got jammed to the upside last night as soon as Japan began trading. It sold off around midnight, ramped back up, and is currently trading 94.80. June gold sold off and is trading 350.00 currently, down 1.90. NQ futures are down 6.50 to 1153.50, ES -3.75 to 940.50, QQQ trading 28.65.

  Jonathan Levinson   5/13/200,  9:33:08 AM
Opening levels have the Qubes gapped down 20 cents at 28.65, QQV -.18 at 28.57, TICK.NQ +40, TRINQ .69. FVX +3.4 as bonds find sellers for a change.

  Jonathan Levinson   5/12/200,  11:27:33 PM
The Index Trader Wrap has been posted: Link

  Jim Brown   5/12/200,  11:27:25 PM
The Futures Trader Wrap has been posted: Link

  James Brown   5/12/200,  11:26:36 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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