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  Jeff Bailey   5/16/200,  10:18:00 PM
Daily/Weekly/Monthly pivot analysis matrix. Note: WEEKLY matrix levels are updated based on this week's lates trade. Link

All of the WEEKLY S2-R2 levels for EQUITY indexes move higher.

If I had walked in the door on Wednesday evening upon return from my vacation, and you told me the 10-year YIELD ($TNX.X) fell below its MONTHLY S2 and asked me what I thought equities did, I would have said "they got creamed to the downside." This did not happen, and I must now "discount" prior YIELD analysis, and thinking that "buying in Treasuries" is negative for equities. There is "something changing" or appears to be changing, that I simply do not understand at this point. However, the seed is still planted in the back of my mind that I KNOW cash has been moving into Treasuries at an incredible rate, and foreign investors have been selling the dollar (there can't be a lot of cash ready to buy when the pullback comes and bulls pull out). Where is the money coming from that keeps a bid under equities? My only explanation is BEARISH short-covering and CASH from bed mattresses, short-term savings/money market accounts.

Here's a chart of the S&P 100 Index (OEX.X) with WEEKLY and MONTHLY retracement overlaid. Link

 
 
  Jeff Bailey   5/16/200,  8:31:04 PM
That's it! James Cramer (CNBC's Kudlow and Cramer) just hit his fist on the table, said he was no longer bearish on tech, and he's now a bull.Link

As I've said befoe, there have been times I've agreed with James Cramer, and times I've disagreed with him. I have to disagree with tonight's "fist pound" on technology.

Is the bottom on technology in? I truly believe/think so, but I just don't think its "fist pounding bullish time" for tech right now.

 
 
  Jeff Bailey   5/16/200,  6:01:18 PM
Geron (GERN) ... last comments on this one. I don't want to sound like I'm "pumping the stock" for my own good (I currently own bullish position in the Sept. $5 calls). I don't have enough call options to make me "rich" or "poor" anyway. However, I just find some of this stuff interesting. Here's how I've got my chart set up for next week, with only change made for the new WEEKLY pivot analysis. Link

Now.... I also went back to a market monitor archive on 04/24/03 04:04:54 Link as that was a day I had an alert triggered, that I has set the day before. I gave the "alert" at 02:35:26 PM, as the stock suddenly gapped on an intra-day basis for no apparant reason. My end of session thought was that a short might have tipped his/her hand, somebody found out about it, and market makers backed away from the offer. Not sure, but this one's chart just has my juices flowing today.

 
 
  Jonathan Levinson   5/16/200,  4:45:18 PM
US Dollar Index prints new bear market low at 94.06.

 
 
  Jonathan Levinson   5/16/200,  4:43:47 PM
MSFT got whacked after the close as well.

 
 
  Jeff Bailey   5/16/200,  4:38:47 PM
Horse racing and stock trading Amazing... Funny Cide is this weekend's favorite in the Preaknes after recently winning the Kentucky Derby. It's amazing isn't it how "bettors" will jump on a winner, and ride it until it loses.

Here's a really neet picture of Funny Cide, a horse that sold for $75,000 dollars (cheap by horse racing standards). Link

The thing I like most about investing/trading that has me not being much of a horse better/gambler, is that when "my horse" doesn't look to good down the stretch, I can't go back to the window and ask for some of my money back if I'm betting on horses, playing black jack, etc, but with stocks/options I can take a winning bet off the table (or cut a loser) if the dealer starts building a hand close to 21 or a horse stronger than I am looks to be getting the best of me.

It would also be a great horse bet if your horse rounds the final turn to the finish, was leading by several horse lengths, and you could go back to the window and place an additional bet!

 
 
  Jeff Bailey   5/16/200,  4:09:29 PM
Geron (GERN) 5.31 +4.11% ... Humph! Couldn't computers have closed it in our "zone of resistance" of $5.29-$5.30? Maybe my retracement are off a bit.

See that 26,500 share print just after the close at 16:05:47 Link , that's most likely a an order that was put together during the day. Trader, maybe even an inventory management computerized system, gathers stock during the day, then prints the "net" at the close. Might make some sense as it comes suspiciously close to WEEKLY R2. My "gut" feel is that it was a "buy" and most likely an inventory build. Yes... the stock traded higher, but it was also at the upper-stretch of WEEKLY pivots, so perhaps a more "bullish" inventory position was needed? Just thinking aloud, taking some notes, but interesting at these levels.

 
 
  Jeff Bailey   5/16/200,  3:58:55 PM
S&P Banks Index (BIX.X) 298.72 +0.6% ... broke above near-term resistance today as it relates to our "fitted retracement" that we put in place weeks ago to represent the reverse head/shoulder pattern. Trader's can perhaps make some good tie-in with what we've seen in the Market Volatility Index (VIX.X). Here's the BIX.X chart Link and I would currently have to make the tie that this action portends bullishness. Not only in the BIX.X, but also SPX/OEX, which has quite a few regional banks in them.

 
 
  Jonathan Levinson   5/16/200,  3:56:29 PM
Good eye, Dan!

May 2002 expiration day was a turning point. The following week Dow fell 249 points. The Vix was 20.4, P/C 70 Bullish % 66.7. Looks almost the same as today

 
 
  Jonathan Levinson   5/16/200,  3:44:38 PM
Another bearish engulfing for the USD Index, returning to its previous spike bear market low of 94.11: Link

 
 
  Linda Piazza   5/16/200,  3:42:21 PM
Before the day closes, I wanted to wish everyone good luck with their current about-to-be expired plays and say that I look forward to trading during the next opex cycle. We entered this cycle just having come through a protracted period of confusing trading when neither fundamental nor technical analysis helped us protect our trading accounts. Bulls and bears both suffered that previous cycle and everyone entered this one uncertain and confused. I have abstained from trading except for a few risk-only plays for longer than I like doing, but I'm hopeful that this next opex cycle will see some good opportunities for all of us.

 
 
  Jonathan Levinson   5/16/200,  3:41:23 PM
The put to call ratio is now down to .53, equity pcr .39 and index pcr 1.31.

 
 
  Linda Piazza   5/16/200,  3:25:49 PM
That last bump up in the OEX was courtesy of the five-minute 130-pma. The OEX hit it and bounced (well, if you can call this a bounce) immediately, with the shadow extending exactly to the pma. The 130-pma is currently located at 476.20.

 
 
  Jonathan Levinson   5/16/200,  3:21:18 PM
QQQ is pinned in the low to mid 28.70s, blowing out max pain expectations for yet another month. QQV and VX are both down over a point, while the put to call ratio has printed a new intraday low at .57.

 
 
  Linda Piazza   5/16/200,  3:17:20 PM
The current 476.75 level has served alternately as resistance or support at several periods for the last several days. It's temporarily serving as support, but that support may be failing now.

 
 
  Linda Piazza   5/16/200,  3:07:55 PM
After finding support on the ascending trendline on the five-minute chart, the OEX tested those higher levels once again, failed that test, and now has breached the trendline.

 
 
  Mark Wnetrzak   5/16/200,  3:02:46 PM
Covered-Call Updates

It appears all the May covered-call portfolio positions (even TOM which was closed early) will end the day above the sold strike and reach their maximum profit.

 
 
  Jeff Bailey   5/16/200,  3:01:11 PM
VIX.X 21.18 -2.26% ... I personally can't read "too much" into intra-day action on VIX.X, especially on an option expiration date. VIX.X clawin its way back to the 21.22 level here after an afternoon dip to 20.57.

If it's "true" (like I think it is) that a computer-related program would kick in only when a level is traded, then I'm alert to such an event today. Take some notes in your trader's logbook that you keep by your trade terminal as this may be helpful in coming sessions.

Now... last night, I was reading some of Jim's wrap. He said something like ..."I'm still expecting some type of mother of all asset allocation programs" to kick in.

Hey... I am too, but more based on the bullish % charts than anything. Still, could it be the VIX.X and 21.22 level from our retracement that dials up the computers? It is so difficult to answer on an intra-day basis, but if we take notes and check against those notes from time to time, then things may unfold that make sense. Sure... I want to KNOW EXACTLY when it happens, but I will confess to only picking bottoms and tops at their extrement levels only once in my trading career.

My point here is... if you're a BEAR and have been holding on for the past couple of weeks, NOW's not the time to start panicking, unless you're OVERLEVERAGED on the short/put side, then you've MUST do what you've got to do to protect the account.

 
 
  Linda Piazza   5/16/200,  2:58:30 PM
So far, the OEX test of the five-minute 21-pma and ascending trendline has held.

 
 
  Jonathan Levinson   5/16/200,  2:57:15 PM
Regarding that $200M QQQ trade: It wasn't me.

 
 
  Linda Piazza   5/16/200,  2:55:37 PM
From noon on, the OEX has followed an ascending trendline formed off the higher lows, and is currently testing that trendline, also near the location of the five-minute 21-pma at 477.26.

 
 
  Jonathan Levinson   5/16/200,  2:52:42 PM
At 14:50:01, a 6,950,000 share trade on QQQ went through on the bid at 28.75.

 
 
  Jonathan Levinson   5/16/200,  2:49:50 PM
We have a lower high so far within the ever-narrowing wedge. There's now a 40 cent range separating the upper horizontal trendline on the bullish triangle from the lower ascending trendline on QQQ. Yields are back to their lows of the day, with bonds headed for a close on their day highs. QQV is down 1.36 at 26.19, VXN -.89, and the total put to call ratio is down .58. The bulls have pulled out all semblance of restraint here.

 
 
  Ray Cummins   5/16/200,  2:41:17 PM
Spread/Combos & Premium-Selling -- Portfolio Activity

Despite the early volatility, it just doesn't seem like "Expiration Friday." Except for a few adjustment opportunities in bearish positions, our portfolio has experienced little noteworthy activity during the session. The biggest upside move came in J2 Global Communications (NASDAQ:JCOM), which soared almost 10% on heavy volume as shorts covered in the wake of the company's announcement that some of its products would be integrated into Microsoft's Office 2003 software. Our bullish positions (sold puts at $22.50 and $25) were not in danger but the added insurance is never unwanted with volatile stocks. Other active issues include Omnivision Technologies (NASDAQ:OVTI) and eResearchTechnology (NASDAQ:ERES), both of which are trading at multi-year highs, and Getty Images (NYSE:GYI), a recent synthetic position candidate that is testing its peak 12-month price near $36.

Among the more critical bearish issues, Bank of America (NYES:BAC), Cabot Micro (NASDAQ:CCMP), Engineered Support Systems (NASDAQ:EASI), Mercury Interactive (NASDAQ:MERQ), Noble (NYSE:NE), Quest Diagnostics (NYSE:DGX) and Symantec (NASDAQ:SYMC) will likely expire at or near their respective sold strikes (a good thing!), however spreads in the S&P 100 Index (OEX) and the Oil Service Holdrs (OIH) continue to trade well above the break-even points. One stock that may become an "early-exit" candidate is Nabors Industries (NYSE:NBR), which has moved above the sold (call) strike at $42.50 in our recent bearish spread. The next (long-term) resistance area is near $44 but until the rally in Oil Service shares comes to an end, it may be best to close this play, preserving capital for more profitable positions.

 
 
  Linda Piazza   5/16/200,  2:39:28 PM
Advancing issues have pulled slightly ahead of declining issues on the NYSE, as up volume pulls slightly ahead of down volume. On the Nasdaq, declining issues and down volume still lead, but by smaller margins.

 
 
  Linda Piazza   5/16/200,  2:36:45 PM
The Wilshire 5000, currently at 9017.41, has been testing this morning's high of 9029.16, after the Wilshire managed an above-9000 close of 9014.89 yesterday. The Wilshire currently pulls back from that test as the other indices pull back from their tests of recent highs.

 
 
  Jeff Bailey   5/16/200,  2:25:05 PM
NYSE Composite (NYA.X) 5,331.41 +0.34% (+18 points) ... new relative highs here on the broader NYSE and I veiw this as bullish and hints of institutional buying and commitment to stocks still.

While VIX.X alert didn't happen "by itself," that alert at 21.22 sure seemed to coincide at, or just prior to renewed intra-day bullishness in the indexes.

 
 
  Linda Piazza   5/16/200,  2:24:20 PM
European markets closed with the FTSE 100 up 37.90 points or 0.94%, to 4049; the CAC 40 down 1.11 points or 0.04%, to 2994.87, and the DAX down 0.30 points or 0.01%, to 2989.08.

 
 
  Jonathan Levinson   5/16/200,  2:21:36 PM
Here's a chart of the USD Index. It's astounding that ES3M is actually green. Link

 
 
  Jonathan Levinson   5/16/200,  2:15:38 PM
The put to call ratio has hit .60.

 
 
  Jonathan Levinson   5/16/200,  2:10:56 PM
FVX is headed back down, -7 bps, and the US Dollar Index is sporting a new bearish engulfing down to 94.21 so far, and QQQ just spiked up just for fun. It failed at intraday fib resistance and is sinking slowly. QQV is down .68 and VXN -.83, and several more of my diminishing supply of hair just turned grey. TRINQ is bullish at .81, TICK.NQ +103.

 
 
  Linda Piazza   5/16/200,  2:05:42 PM
Support held when the minor after-lunchtime-lull move tested bullish resolve. As I mentioned in my 13:19 post, that initial after-lunchtime-lull test is often not the final direction of the day as that final direction depends on the outcome of the test. This time, bullish resolve held, and the OEX moved up again. We're coming up on another time when bullish resolve is tested, as the OEX moves back toward the week's highs. Be prepared to watch for another potential reversal or else a ramping up into the end of the day.

 
 
  Jeff Bailey   5/16/200,  1:56:17 PM
Geron (GERN) $5.57 +9.21% ... nice volume build on the break at $5.50. Daily volume running 1.4 million shares. According to NASDAQ, short interest as of April 15 was 5.68 million shares, up from March 14 1.7 million. In mid-April, average daily volume was 4.2 million and that put days to cover at 1.33. However, in recent weeks, average daily volume really dropped off to an "eyeball" rate of 500,000. I don't know what current short interest is, but I sure like to to be around 6 million shares, with days to cover of about 10.

Here's a PnF chart of GERN with "volume" turned on. "Turn it on and turn it up!" is what a bull is saying.

 
 
  Linda Piazza   5/16/200,  1:52:13 PM
Reader Question: Based on the manner in which I have drawn the ascending uptrend line on the SMH daily chart, it appears to have broken to the downside today from a bearish ascending wedge. Please give me a confirmation on this? The semi stocks look pretty weak such as KLAC and MXIM. If this is so, perhaps the semis are a leading indicator of NDX weakness with further confirmation of the overbought bullish percent?

Response: If I've drawn the ascending wedge the same as you have, I also see the breakdown. On the chart, I've included OBV because it is applicable on the SMH as a reader pointed out. OBV may show a slight downtrend beginning, while RSI definitely shows bearish divergence, and the ADX may be beginning to flatten as buying pressure eases somewhat. Link However, I've also highlighted in red another pattern that was recently broken to the upside, a bullish right triangle, with that pattern being of longer duration than the bearish wedge. What does that mean? Right now, I'm not sure, but I'd certainly be watching that 26.50 horizontal top of the bullish right triangle on any pullbacks in the SMH, as that might be just the place the SMH would find support. If it does, the bullish fervor might be preserved. If it doesn't, and especially if it falls through the lower supporting line of the right triangle, that bullish fervor is going to evaporate. I of course agree with your thesis that the semis often serve as a leading indicator, and this time we'll be able to see whether they're indicating a minor pullback only or a major downturn back into the bear market behavior. I'll be watching how the oscillators behave in conjunction with the price movements to gauge sentiment. If those oscillators have already cycled back to oversold levels by the time that 26.50 level is reached, I'll know the bullish tenor might be preserved. I'll be watching the bullish percent levels to see what's happening with them, too. It appears that you're doing a great job of gathering lots of information and thinking through various scenarios.

 
 
  Ray Cummins   5/16/200,  1:50:41 PM
Spread/Combos & Premium-Selling -- E-mail Replies

Hi, Last month you suggested buying NVLS May-32.50 calls and selling May-30 calls. This position seems [likely] to expire with a profit. What do you think about [buying] NVLS June-35 calls and [selling] June-32.50 calls? It pays around $0.35 [credit] at this time. Thanks, AA

At a glance, Novellus (NASDAQ:NVLS) looks like a stock that wants to join the recent "rally party" in the technology group but simply can't find the address. In the long-term, the technical indications are somewhat ambiguous as the issue is still forging a Stage I base after a failed rally earlier this year. In the short-term, the stock is at a "key" moment near its 150-dma and the top of a multi-month trading range. The most obvious resistance area is near $35-$36 (the NOV-02 to JAN-03 highs), while the current support area is at $25-$26. As far as the options, the "premium" in the calls is relatively low with implied volatility near the bottom of a historical range. Obviously, the issue is not the best choice for option "selling" strategies, but there are some spread positions that warrant consideration. The play you suggested (with an upside break-even near $33) appears to be a favorable "call-credit" combination for traders who are bearish on the issue. Hope that helps! Ray

 
 
  Jonathan Levinson   5/16/200,  1:48:03 PM
Here's how today looks so far. The retest of the lower ascending trendline on the rising triangle that's been giving bears sweats lately got tested successfully today. The good news is that the bounce has so far been weak, weaker than the others lately. Link

 
 
  Jonathan Levinson   5/16/200,  1:31:06 PM
Interesting article on deflation: Link

 
 
  Linda Piazza   5/16/200,  1:28:27 PM
Volume patterns continue to improve as the day progresses, although there are still more decliners than advancers, and still bigger down volume than up volume. Currently, adv/dec ratios are .88 for NYSE-traded issues and .70 for Nasdaq-traded issues. Down volume is 1.2 times up volume on the NYSE and 1.6 times up volume on the Nasdaq. Total volume is 776 million on the NYSE and 1 billion on the Nasdaq.

 
 
  Jonathan Levinson   5/16/200,  1:23:29 PM
Satellite image zooms down on the western hemisphere, clicks in to the Marriner S. Eccles Building. Under the krytonite lined lead-encased roof, Al Green and Ben "T-1000" Bernanke are sharing a 4-gallon jug of the finest sake while video conferenced in on their floor-to-ceiling plasma screen with Yasuo Fukuda and Toshihiko Fukui. "TGIF, eh Ben?" croaks Al Green, adjusting his silk ascot. "You said it," chimes in Yasuo. Link

 
 
  Jeff Bailey   5/16/200,  1:20:12 PM
Geron (GERN) $5.50 +6.4% ... getting upside alert here at $5.50, which triggers the "bullish triangle" on PnF chart. Look for some volume build to give further bullishness and show interest from market. Link

 
 
  Linda Piazza   5/16/200,  1:19:01 PM
The lunchtime lull should be ending about now, and we see a time when there's often a minor test of bullish or bearish resolve. The immediate direction now might not be the final direction for the markets, then. That depends on the outcome of the test.

 
 
  Jonathan Levinson   5/16/200,  1:17:04 PM
The put to call ratio is down to .65. QQV, VIX and VXN all too low. It still feels like an ideal environment for market makers to be distributing short calls to hopeful bulls.

 
 
  Jeff Bailey   5/16/200,  1:06:26 PM
Downside Alert! Market Volatility Index (VIX.X) 21.17 breaking below our 80.9% retracement bracket. Is the the "last round" of overly bullish bulls buying calls, or another leg higher in the major indexes. With the bullish % as high as they are, I tend to think this is "last of the bulls" coming in.

This VIX.X action and drop here could also be option expiration related on today's option expiration!

 
 
  Jonathan Levinson   5/16/200,  12:59:59 PM
Here's the QQQ chart mentioned in my last post: Link

 
 
  Jonathan Levinson   5/16/200,  12:58:54 PM
Posting a chart in a moment, but QQQ on my 50 tick candle chart is looking ready to roll with a short term MacD divergence and toppy oscillators. 61.8% retracement of 28.67 is the support line to watch.

 
 
  Linda Piazza   5/16/200,  12:48:54 PM
The OEX hourly chart shows stochastics that have made tentative bullish kisses. The RSI hinged up first, showing the first hint that the OEX might turn up. The VIX is now negative, but coming ever closer to its lower BB, which does appear to be significant for the VIX over the last year. The VIX sometimes follows that lower BB down, but right now, the lower BB is moving up again, reflecting the lower volatility in this volatility index! As Jim mentioned, bonds are moving off their highs. Volume patterns are improving, too, but decliners remain ahead of advancers and down volume remains ahead of up volume. I'd be watching the changes in these volume patterns, seeing if breadth measures continue to improve or if this is just a normal minor reversal during the lunchtime lull. On a heavy buying day, I often notice that the markets tend to ease during the lunchtime lull; on a heavy selling day, I often notice the opposite. Be careful, as anything depicted on the charts or shown in volume patterns might be undone by opex maneuvering.

 
 
  Jim Brown   5/16/200,  12:43:31 PM
Editors Play
I am giving second thoughts to the EBAY short for an editors play this weekend. After a brief pause it is charging off again to a new high at 99.47. Don't get in front of this train might be a better plan.

 
 
  Jeff Bailey   5/16/200,  12:25:58 PM
Market Volatility Index (VIX.X) 21.68 +0.04% ... was trying to find an "old article" on the Russell 2000 Index, as I'm "sure" is thought bulls should look to take profits back in mid-January in the smaller caps.

However, I found this intra-day update discussing the VIX.X , with the retracement I like to you. Might be getting to an applicable stage again. Link

On May 1, when the VIX.X "popped" to 25.66 we thought it really needed to get above that level to signal a more "bearish" turn in tone. Kind of interesting to me how this 25.66 level was a topic of discussion in the above "link." VIX.X didn't break below the 25.66 level and the S&P 100 Index (OEX.X) couldn't get much higher from where it was.

Now we will note how the VIX.X is hugging the 21.22 level of retracement and OEX has been finding resistance just below 480.

As Linda would say...."critical level"

 
 
  Jonathan Levinson   5/16/200,  12:16:21 PM
Most recent put to call readings: total .69, index 1.50, equity .49. QQV -.21, VXN -.20. The rising QQV and VXN could be the start of something, but it's easier to wait for the lows of the day on QQQ to get taken out if it's in the cards. FVX is now down 7 bps. The unrenewed expiration of 10.75B in repos today should certainly bring some offers into treasuries, and so I expect to see yields showing some strength throughout the session. The real question for us today is what will happen to equities, and for now, the answer is still "nothing much". QQQ continues to be glued to its 21 period MA on my 3 minute/50 tick/2 day chart. It coincides with the 78.6% retracement off the day highs. If it finally lets go, for example on a print below the day lows, I'd expect a kickoff for some actual selling, but so far, there's little hint of it.

 
 
  Jeff Bailey   5/16/200,  12:09:19 PM
Adding to Linda's 11:51:52 post. I was looking at the RUT.X last night too. It's been my observation that the RUT.X has tended to "be the last" broader index to falter once the markets decide they want to give back gains. I've talked before about the "3 strikes and your out" breaks of trend. Link

 
 
  Linda Piazza   5/16/200,  12:07:18 PM
Here's that weekly Dow Jones Transportation Index chart that I first posted in the Index Wrap this weekend. That potential reversal signal at the 50% retracement of the March-to-March move does appear to have been a valid reversal signal and the 50% retracement level does appear to have been significant resistance. Weekly oscillators still show lots of room to go, and the ADX continues to show the rally losing strength. Link

 
 
  Jonathan Levinson   5/16/200,  12:02:57 PM
Hey Jim, if QQQ dumps to 27 by this afternoon, there's a better than even chance that I'll hop a plane to Denver to buy you a Rolling Rock in person.

 
 
  Linda Piazza   5/16/200,  12:01:13 PM
OEX 474.50 appears to be the line in the sand this morning.

 
 
  Jonathan Levinson   5/16/200,  12:00:01 PM
June gold is now up 1.11% at a fresh day high of 356.70.

 
 
  Linda Piazza   5/16/200,  11:56:18 AM
Dialing down to the 1-minute chart on the OEX--and even on that chart, the candles are small, showing little movement--I see that the OEX touched the 130-pma about 11:45 and was repelled from that average. Jim has been talking about this average in his futures posts, and I've been watching it this week, too, trying out a technical analysis tool.

 
 
  Linda Piazza   5/16/200,  11:51:52 AM
As I've mentioned several times, I tend to keep old trendlines on my chart because they sometimes come into play later. Here's a chart of the Russell 2000, showing that this index appears to be at a key point--of course, which index isn't these days? The top and bottom red lines are lines that depict a massive rising wedge that's actually better seen on a weekly chart than this daily chart. The Russell 2000 yesterday popped above the top red line, but since it was drawn first from the weekly chart, the line may not be exact when translated onto a daily chart, and the Russell may actually be slightly under the line or even slightly higher above it. The diagonal red line was first drawn from a slanting H&S neckline that formed late last year and early this year. I've kept the neckline on my chart, and that's coming into play today, too. Drawing necklines is as much art as science, and here, too, it's possible that the neckline's slope should have been a bit steeper or a bit less steep. As the Russell 2000 either challenges or retests these lines depending on their accuracy, the RSI and other oscillators appear to show weakening strength. The daily ADX (not shown) depicts the rally as strong, however, so the Russell 2000 may do no more than consolidate or slightly pull back. Watching this index's behavior on a pullback may help confirm or predict the behavior of the others. Link

 
 
  Jonathan Levinson   5/16/200,  11:46:52 AM
June gold is up 3.30 now to 356.10.

 
 
  Jeff Bailey   5/16/200,  11:45:33 AM
Geron (GERN) $5.30 +3.92% ... c'mon baby...

here's my chart of GERN with WEEKLY and MONTHLY retracement.Link

I'm gong to go and try and find a past GERN chart I've posted with a prior WEEK's pivot analysis retracement on it. Need to get the computers to quit feeding stock out at $5.30 area. Only way to do it is for some buyers (not us at this point) to drive the stock and deplete inventory or get short inventory to turn into buyer as they assess risk.

Here's a prior chart of GERN Link

OK... so at that time, our "zone of resistance" was $51.15-$5.18 and support zone was $4.04-$4.19.

Good! At least support zone this week along with resistance zone both edging higher.

 
 
  Jonathan Levinson   5/16/200,  11:43:10 AM
QQQ put in a lower high just now, but it certainly isn't putting in lower lows either just yet. VXN and QQV are both negative, with the put to call ratio low, .68. I continue to think (stubbornly, now) that COMPX and NDX component call options are being written and sold aggressively at current levels- that's what the combination of low pcr, low VIX and QQV tell me. Here's the updated intraday QQQ chart. Link

 
 
  Jeff Bailey   5/16/200,  11:27:39 AM
Scratch Day Trade Long in NTII from 09:37:17. Stock pulled back to $4.75, but "rebound" has found some selling late morning at a 50% retracement I have from $1.75 to $8.00. I was looking for more of a little "juke lower" after the early pop higher, and while we've seen some of that action, I don't like this late morning trade with late-morning resistance at $4.87. As such, I don't think it worth a day trade at this point for entry at $4.71.

 
 
  Linda Piazza   5/16/200,  11:24:22 AM
While down volume still remains about twice up volume on both the NYSE and the Nasdaq and decliners still lead advancers, the gap between advancers and decliners narrowed a little. The adv/dec ratios are still bearish, however, with a .70 ratio on NYSE-traded issues and a .59 ratio for Nasdaq-traded issues. Total volume is a rather strong 476 million shares traded on the NYSE, and a 639 million on the Nasdaq.

 
 
  Jeff Bailey   5/16/200,  11:21:24 AM
11:00 Update posted at this Link

 
 
  Jonathan Levinson   5/16/200,  11:19:50 AM
Is this what they mean by "distributional top"? There's so far been decent volume after just under 2 hours, with relatively little movement in price (yesterday's range being maintained).

 
 
  Linda Piazza   5/16/200,  11:19:28 AM
On the other hand, in reference to Jonathan's and Jim's posts, max-pain theories have tended to work quite well for KO in the last four or five options expiration cycles. Today, I note almost 15,000 OI in KO 45 calls, and highest OI in KO puts at the 40, but nearly as high at the 45 and the 37.50. Is there any coincidence that KO bounced up from the below-40 levels earlier in the month, but bounced down from the 45 it tried to achieve yesterday? KO has had a tendency to ramp up into opex week over many options expiration cycles toward what are usually slightly higher max-pain levels than the levels at which it's trading in the weeks previous to opex week. If I were a gambling person, I would almost just buy KO puts at the end of opex week and cash them in at the end of the next week, but I'm not and I wouldn't suggest anyone else try to trade that pattern, either, because the declining dollar may change fundamentals for multinational KO.

 
 
  Jonathan Levinson   5/16/200,  11:11:15 AM
Jim, I've noted (to my chagrin) that max pain options theory has missed for the past several months on QQQ.

 
 
  Jonathan Levinson   5/16/200,  11:09:03 AM
The US Dollar Index is settling in the 94.20 area after a very solid selloff. June gold is up 2.10 to 354.90.

 
 
  Jonathan Levinson   5/16/200,  11:06:13 AM
Put to call ratio back down to .71, Index pcr 1.86, equity pcr .41.

 
 
  Jim Brown   5/16/200,  11:04:18 AM
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Thanks to everyone that participated. This will give us an idea on how to post general comments. 88% are receiving everything posted. Only 12% are selective.

 
 
  Linda Piazza   5/16/200,  10:58:11 AM
Other than the new highs/new lows patterns, other volume patterns show selling, with down volume being about twice up volume on both the NYSE and Nasdaq and with advancers outnumbering decliners, too. Total volume is 393 million on the NYSE and 545 million on the Nasdaq.

 
 
  Linda Piazza   5/16/200,  10:53:18 AM
The OEX is back at the top that gap from Wednesday's close to Thursday's opening, with the top at 464.69. This level has provided support and resistance on other occasions, too. As the OEX tests this level, the 5(3)3 stochastics approach overbought levels, but haven't turned down.

 
 
  Linda Piazza   5/16/200,  10:46:38 AM
The BIX remains within its recent consolidation range, at 296.25 as I type, but the 5(3)3 daily stochastics now show a bearish kiss. ADX has definitely leveled off, but so have both buying and selling pressure. Watching the indicators, it appears that a retracement is imminent, but prices aren't showing it yet. A retracement only to the 290 area would preserve the bullish cast of the chart.

 
 
  Jonathan Levinson   5/16/200,  10:44:30 AM
QQQ is bouncing, now 12 cents off its day low. FVX is down 9.2 bps, NQ3M down 11.50- almost time for them to turn off the Globex again (grin). QQV is down .1 to 27.45, TICK.NQ -105, TRINQ 1.03. Just some very light profit taking, to quote Paul Kangas in advance.

 
 
  Linda Piazza   5/16/200,  10:43:24 AM
Thanks, Jeff, for checking out that CSCO anomaly. I kind of figured that must be what had happened with the CSCO alert that signaled a trade below 16, but then prices right back near the 16.50 area.

 
 
  Jeff Bailey   5/16/200,  10:38:22 AM
Cisco Systems (CSCO) $16.50 -1.49% ... per Linda's 10:21:50 ... that was a bad tick Linda. Session low has been $16.48 at this point. (bad tick to $15.55 most likely keypunch error at trading desk with intention to sell $16.55).

 
 
  Jonathan Levinson   5/16/200,  10:36:55 AM
The put to call ratio has edged up to .81, index pcr 2.38 and equity pcr .43.

 
 
  Jonathan Levinson   5/16/200,  10:33:02 AM
Yesterday's support just cracked on the QQQ, but no real acceleration yet: Link

 
 
  Linda Piazza   5/16/200,  10:31:33 AM
Both the CAC 40 and the DAX have now fallen under 3000, with the CAC currently trading at 2980.75 and the DAX at 2971.29. The FTSE 100 has come off its highs of the day, and currently trades at 4043.60.

 
 
  Linda Piazza   5/16/200,  10:21:50 AM
Wow, that was quick or else a bad tick. I had set an alert for a CSCO trade under 16, and it just sounded, but before I could look at the chart, CSCO showed a 16.56 level with a long lower shadow on the candle that dips below 16.

 
 
  Linda Piazza   5/16/200,  10:19:50 AM
While I was preparing that last post, the OEX 476 support fell, and the bearish kisses on the hourly stochastics appear less tentative than they did earlier. In just the last few minutes, the selling-pressure line on the hourly ADX has spiked up and the buying-pressure line has plummeted, while the ADX line itself begins to roll, demonstrating an increased loss in strength in the rally. Hourly RSI turns down. MACD appears to be turning down, too. We've seen these configurations--hourly, daily, and weekly oscillators overbought and appearing to roll in unison--earlier in the week, too, though, with only minimal profit-taking resulting. As I mentioned yesterday, I'm watching for a fall beneath 472-472.50, which would confirm a double-top formation in the OEX, hinting at a fall toward the 466 area, but I remain cautious of trusting predicted downside targets in this environment, with the recent patterns in mind, and knowing that this is opex Friday.

 
 
  Jonathan Levinson   5/16/200,  10:13:16 AM
QQQ found support in the vicinity of yesterday's higher lows, currently bouncing, so far weakly. FVX is now down 10.9 bps, and the action in equities looks nothing short of crazy to me. Longs are very risky because of the proximity to major support as outlined in the various wraps last night, while shorts are risky because of the complete absence of selling so far. Yet, all the intermarket relationships and longer term breadth and sentiment measures are indicating that strong selling should have already commenced.

 
 
  Linda Piazza   5/16/200,  10:11:18 AM
Expiration FAQ's Late yesterday, a question came in concerning the expiration of the European-style OEX options, the XEO's. As stated on the CBOE site, both the XEO (European style) and OEX options use the closing price of the OEX on the last trading day (usually the third Friday of the month) as the settlement basis. To read information about the XEO option in particular, you can access a two-page information sheet at the following link: Link

For those new to trading index options, the SPX options stop trading the Thursday before the third Friday of the month. The settlement value is determined after all 500 stocks that make up the index open that Friday morning. Here's a general sheet of FAQ's on options that includes the answer to the question What is the last full day of trading in the Equities, OEX and SPX? How do they settle? You can read the information for yourself at this site: Link

 
 
  Jeff Bailey   5/16/200,  10:06:47 AM
QQQ $28.65 -0.93% ... per last night's Index Trader Wrap Link QQQ low has been that $28.60 level again today (MONTHLY R1 of $28.59). As a bear in the QQQ, I certainly would like to see a break of this level today. Especially on some "good news" from the University of Michigan Sentiment.

 
 
  Jonathan Levinson   5/16/200,  10:06:30 AM
The fed has announced a weekend repo of 2.75B, which is a net drain of 10.75B, which should put some selling into bonds.

 
 
  Jonathan Levinson   5/16/200,  10:05:01 AM
Opening put to call ratio .72, at the low end of neutral.

 
 
  Jeff Bailey   5/16/200,  10:02:48 AM
Major Indexes are in the red with Dow -10, SPX -1.6, OEX -0.85, NDX -8.3, QQQ -$0.24 after University of Michigan Sentiment.

This is notable on near-term basis and portends some "selling on good news." I'm making mental note here as to higher levels of bullish %, and bulls may be taking the opportunity to sell into some good news for a change.

 
 
  Jeff Bailey   5/16/200,  10:00:30 AM
Ashanti Goldfields (ASL) $7.59 +6.9% ... stock higher after company confirmed it has been in talks to be acquired by AngloGold (AU) $30.00 -2%. Early talks would have an exchange of 26 AU shares for every 100 shares of ASL. There is word that deal may not lead to a entire deal being made, but major stake in ASL by AU.

 
 
  Linda Piazza   5/16/200,  9:57:10 AM
Bearish kisses are showing up on the OEX hourly charts, on both 5(3)3 and 21(3)3 stochastics. So far, recent support is holding, however, so I'd be watching closely before trusting those bearish kisses.

 
 
  Jonathan Levinson   5/16/200,  9:56:00 AM
Bad news is good, good news is bad. Perhaps it's the idea that consumers are optimistic despite having just lost .3% of their purchasing power. Either way, FVX is down 8.2 bps, off its lows but still deep in the red, QQQ down to 28.69, no real selling but still negative, TRINQ is up to 1.24, QQV -.21, TICK.NQ +52.

 
 
  Jeff Bailey   5/16/200,  9:55:29 AM
Geron (GERN) $5.27 +3.33% .... stock really packed on the gains in final 30-minutes of yesterday's trade. Back at a major level of resistance in my WEEKLY/MONTHLY pivot analysis zone of resistance from $5.29-$5.30 here. Bulls really need a break higher of 5.50.

I think it was the bullish action in biotechs in general yesterday that had a buyer (bull long or bear long) coming into the stock late yesterday.

Disclosure: I continue to hold Sep. $5 calls from previous profile.

 
 
  Linda Piazza   5/16/200,  9:54:08 AM
Now the link in my 9:47 post has been corrected to show the daily SNE chart. Sorry.

 
 
  Jeff Bailey   5/16/200,  9:51:12 AM
Preliminary May Michigan Sentiment come in at 93.2. Wow! This is well above estimates of 87.0!

This is second consecutive gain since the March cycle low of 77.6, which was the lowest sentiment reading since 1992.

 
 
  Linda Piazza   5/16/200,  9:47:57 AM
Sony (SNE, 25.28, down 0.34) continues to fall today, as it did on the Japanese market overnight. As I mentioned yesterday, the chart shows a possible bear-flag setting up, but with a recent April low at 23.16, the 23 level could be next support for the stock. Viewed on this daily chart only, the chart characteristics make this look like a sound short/put play on a breakdown out of that bear-flag pattern and below the April low, but since the 1993 highs and 1995 lows were in the 21-22 range, that area might be expected to be strong support. 1992 lows were near 14. A short/put player might have a bumpy road in this stock. While daily oscillators look overbought and toppy, weekly and monthly oscillators look oversold. Link

 
 
  Jim Brown   5/16/200,  9:46:13 AM
Michigan Sentiment 93.2 vs estimates of 87 and last month of 86

 
 
  Jonathan Levinson   5/16/200,  9:40:15 AM
FVX down 9.4 bps, yet the Teflon Market doesn't care about anything at all, QQQ 28.77. QQV is up .44, TRINQ a merely, paltry 1.19, TICK.NQ +81.

 
 
  Jeff Bailey   5/16/200,  9:37:17 AM
Day Trader Long ... NTII $4.87 +4.63% .... look for bullish day trade entry on pullback to $4.71, stop 4.60 and target 5.34 by session's end.

Stock was hit lower from a 52-week high just days ago. Forest Labs (FRX) followers will know NTII as the manufacturer for Memantine, which is key component for Alzheimers drug that FRX looks to develop. This Memantine was also being tested by FRX for treatment in neuropathic pain in diabetic patients, but in this test, failed to demonstrate statistical significance versus placebo.

However, I (Jeff Bailey) think that memantine's key drive (for NTII) is the Alzheimers drug market, not the additional neuropathic pain treatment.

 
 
  Mark Phillips   5/16/200,  9:31:49 AM
GM $34.88 Late yesterday afternoon, I noted that GM had slipped below the $35 level, citing that as an important technical development but then stating my expectation that we wouldn't see much price movement on Friday with op-ex shenanigans likely to pin the price near $35. That notion is certainly going to be put to the test this morning, with the pre-open dowgrade to SELL from Prudential. Early indications are for some mild weakness into the low to mid $34 range.

 
 
  Jeff Bailey   5/16/200,  9:28:32 AM
Auto parts suppliers were downgraded by Prudential this morning. Pru believes that clouds are forming on the horizon and will likely weigh on any further price gains. Firm expects May sales to disappoint by coming in well below 16.5 million. Pru downgrades JCI Link , GNTX Link , LEA Link , DPH Link to "hold" and downgrades VC Link to "sell"

 
 
  Jonathan Levinson   5/16/200,  9:28:17 AM
Unverified trader talk from a trader I respect very much:

US investment bank putting out huge offers on US Peso. Seems like they have been clued in on something to be putting out shorts at this level.

Meanwhile large and deep bids on the Euro coming from Middle East. Seems the only bids on the USpeso are coming from BOJ lapboy Mizuho bank.

 
 
  Jonathan Levinson   5/16/200,  9:25:31 AM
Jon, when the Fed decides to inflate the money supply, how does the money physically get into the economy?

It's a question that goes to the outer reaches of my limited understanding on this topic. I believe it does so by the creation or extension of credit, which provides fractional reserve capacity to its dealer banks, which they can then use to purchase bonds/extend credit. It also does so by easing the reserve requirements or the price of loans, or with direct intervention through repos, coupon passes and other open market ops. It has done so by leasing gold on the cheap to its dealers, who can sell it on the open market. I believe that there are many, many ways, which is what Bernanke was hinting at.

 
 
  Jeff Bailey   5/16/200,  9:13:45 AM
09:00 Update is posted at this Link

 
 
  Jonathan Levinson   5/16/200,  9:01:39 AM
Here's a chart of money supply. Note where it pumped up, and correlate it to the rallies we've had: Link

 
 
  Linda Piazza   5/16/200,  8:59:54 AM
European markets eased in the wake of our economic numbers, with the DAX falling back underneath 3000, currently trading at 2996.81. The FTSE 100 slipped about ten points and now trades at 4057.60, and the CAC 40 slipped about six points, now trading at 3007.28.

 
 
  Jonathan Levinson   5/16/200,  8:58:38 AM
Bonds being bought, FVX -6.5 bps, TNX -5.6 and TYX -4 bps. June gold is now bidding at 355.10. USD Index now 94.55.

 
 
  Jonathan Levinson   5/16/200,  8:56:38 AM
I just received an EMAIL from a newsletter saying the lunar eclipse marks a market top. They claim there is statistical data behind the statement. This info is probably as reliable as the economic data recently.

Yes. But I'm sticking to my guns. Market timers, including the one from whom I suspect you're quoting, have been getting killed on this rally. The fed's been inflating the money supply at an accelerating rate. I'll post a chart if I can find it. That money is killing the dollar, and floating ALL other boats. I'll only add that I personally feel that it's going to end very badly, but that's not a tradeable datum- just my own gut feeling.

 
 
  Jonathan Levinson   5/16/200,  8:46:22 AM
I just saw your last update about real wages. Wow... Let's see the consumer is 2/3 of the economy. Purchasing power is decreasing..., prices moving down as well... so where are corporate profits going to come from... PPI decrease rate stronger than CPI decrease rate... CPI lagging or slowing or PPI leading and CPI to accelerate decrease rate... Let's oil slowly making its way back to 30.00. Wow... this economy is in trouble... big time.

 
 
  Jonathan Levinson   5/16/200,  8:35:40 AM
U.S. April real earnings fell 0.3 pct

 
 
  Jonathan Levinson   5/16/200,  8:34:12 AM
April CPI and April PPI, both below expectations. I wonder if the fed will upgrade from "dis"-inflation comments to "in"flation comments. Gold is up at 355.20, and QQQ is down to 28.75.

 
 
  Jonathan Levinson   5/16/200,  8:31:57 AM
APRIL BUILDING PERMITS UP 1.2% TO 1.708 MILLION RATE

 
 
  Jonathan Levinson   5/16/200,  8:30:55 AM
MARCH HOME STARTS REVISED DOWN TO 1.748M RATE

 
 
  Jonathan Levinson   5/16/200,  8:30:36 AM
APRIL HOME STARTS DOWN 6.8% AT 1.63M ANNUAL RATE

 
 
  Jonathan Levinson   5/16/200,  8:30:21 AM
APRIL CPI -0.3% VS -0.1% FORECAST; CORE FLAT VS. +01%

 
 
  Jonathan Levinson   5/16/200,  8:25:01 AM
8:30 am: CPI for April, prior 0.3%, consensus -0.1%

8:30 am: Core CPI for April, prior 0.00%, consensus 0.1%

8:30 am: Housing Starts for April, prior 1.780M, consensus 1.743M

8:30 am: Building Permits for May, prior 1.692M, consensus 1.700M

9:45 am: Mich Sentiment-Prel for May, prior 86.0, consensus 87.0

The US Dollar Index is getting clobbered, now at 94.68, the chart showing those C3P0/R2D2 candles, but red for a change. Perhaps someone at the BoJ or the fed plugged in the trading robots but inserted the wallplug upside down- that's got to be why they make one prong wider than the other, no? In any event, gold is up 1.80 to 354.60, while equity futures are not budging.

 
 
  Jonathan Levinson   5/16/200,  8:11:20 AM
QQQ is trading 28.82, up .22 from its close but still within yesterday's range. NQ futures are down 3.50, ES down .50, 1160 and 945.75 respectively. YM is flat, down 4 at 8693. The US Dollar ramp reversed and that index is now slightly below 95, and so June gold is up 30 cents to 353.10.

 
 
  Jim Brown   5/16/200,  7:29:35 AM
Reloading Market Monitor App (Server will be down for 5 Minutes)

 
 
  Linda Piazza   5/16/200,  7:27:12 AM
Good morning. Although expectations had been for a GDP growth of 0.1%, Japan's economy did not grow in the first quarter. A drop of 0.5% in exports was one causative factor. Since Japan also exports to Asian countries, many expect SARS to take further tolls on exports in the coming quarter. One example of this effect was seen in Honda's announcement that it would delay production of subcompact cars in China because of the SARS epidemic. Much as our markets have done of late, the Nikkei showed little reaction to the worse-than-expected news, opening flat, and climbing more than 60 points during the morning. Perhaps market participants focused on another aspect of the GDP report, indicating that corporate capital investment rose 1.9%. The Nikkei could not hold onto those gains, however, and closed flat, too, down 6.11 points or 0.08%, at 8117.29. Losses in exporters such as Honda were balanced by gains in tech stocks on the heels of the Dell report last night. Sony, however, added to recent losses, dropping another 1.2%.

Other Asian markets were mostly flat to down. Hong Kong's Hang Seng closed down 0.36%, Singapore's Strait Times was down 0.46%, South Korea's Kospi was down 1.38%, and Taiwan's Taiwan Weighted was down 1.10%.

Market participants in both Asia and Europe begin to focus on the upcoming G8 economic conference in France this weekend. Treasury Secretary John Snow said that the U.S. has been pulling its weight in managing growth by taking "aggressive and timely monetary and fiscal action," according to a Marketwatch.com report, and he says he'll urge other G8 members to do the same. "[T]he world economy is falling far short of its potential," he also said.

Currently, most European markets trade up, with the FTSE 100, CAC 40, and DAX all reaching key psychological levels today or maintaining those reached yesterday. As of 7:20 ET, the FTSE 100 was up 55.40 points or 1.38%, to 4066.50; the CAC 40 was up 17.91 points or 0.60%, to 3013.89; and the DAX was up 26.55 points or 0.89%, to 3015.93, finally achieving its key 3000 level, too. Europe's largest insurer, Allianz reported a much-worse-than-expected net loss for the current quarter, but forecast that it would achieve profitability again in the next quarter, and rose significantly on the news. Yesterday, Deutsche Telekom gained, with those gains at least partially attributed to similar bullish forecasts for the future when the company said it would break even this year. Unlike Allianz, Deutsche Telekom did report a profit for the current quarter, however. Deutsche Telekom added to its gains today. Even Royal Ahold, a company in the news in recent months because of overstated profits in some of its U.S. units, jumped after it said the U.S.'s Stop & Shop and Giant supermarkets gained a better-than-expected 4.8%. At one point in the morning's trading, the stock had jumped 13%.

With the Nikkei, FTSE 100, CAC 40, and DAX all achieving or maintaining key levels at the end of this week, U.S. market participants must be studying those key levels just ahead in the U.S. markets, too, and wondering if they're achievable today. Some are certainly within reach, and it may be that optimism engendered by the performance of these other bourses can carry through into U.S. trading today, too. However, much will depend on the key economic numbers released this morning. Or perhaps not. Other markets have shrugged off troublesome numbers this week, as the DAX did yesterday and the Nikkei did today. We'll have to see.

 
 
  Jeff Bailey   5/15/200,  10:41:51 PM
The Index Trader Wrap has been posted: Link

 
 
  Jonathan Levinson   5/15/200,  10:41:43 PM
The Futures Trader Wrap has been posted: Link

 
 
  Jim Brown   5/15/200,  10:41:16 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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