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  Jeff Bailey   5/19/200,  4:00:08 PM
Cepheid (CPHD) 4.60 +42% ... stock surges in final 10-minutes of trade after Northrop says it will use CPHD technology in its Postal Service contract.

  Jonathan Levinson   5/19/200,  3:54:25 PM
Jon, Do you think the 30 yr has topped out or with another posible rate cut do you think there is more upside? Thanks, Bill

I think that there's more potential upside, but risk/reward-wise, I think that it has far more room to fall than to rise. I recall listening to Bill Gross, whose opinion I regard most highly, saying months ago that he felt that bonds were topping. Well, this has been a difficult market for all of us. If the fed is serious about pursuing inflation at all costs, then perhaps there is more than token upside left. I have difficulty imagining that Bernanke won't be tarred and feathered first, but you never know. Japan went very far down this road, and perhaps the fed intends to try and follow. Nevertheless, there appears far greater downside potential than upside potential in bonds.

  Linda Piazza   5/19/200,  3:49:57 PM
The OEX did make an attempt to move higher just after my post about the last 5(3)3 five-minute stochastics rollover not feeling the same. The move up never reached the 466 level I suggested, however, stopping short at 465.18 before rolling over again. It's tough to tell what might happen in the last few moments here, but a glance at today's daily candle clearly shows the overall bearishness. Bears will want to see the OEX open below the middle of that big red daily candle (469.17 unless the OEX makes a new LOD in the next few moments) and stay below that level all day. Bears should remember that hourly oscillators are all indicating short-term oversold conditions, so it's possible though not predicted that those overhead levels could be tested.

  Jim Brown   5/19/200,  3:46:06 PM
Looks like QCOM is about to shake off the earnings affirmation from this morning. Thanks QCOM for the great entry point on my editors play! Of course EBAY, my previous thought from Thursday, would not have been bad either.

  Linda Piazza   5/19/200,  3:43:34 PM
Great chart in your 15:34 post, Jonathan. What's especially interesting to me is that for the last several months, we've had normally bearish chart formations breaking out to the upside. Your chart depicted depicts a normally bullish right triangle being violated to the downside instead. Maybe we're having one of those upside-down times that were featured in children's books a while ago?

  Jonathan Levinson   5/19/200,  3:38:43 PM
Any comment on the last hour of bond trading - reversal?

Not really- bonds closed 37 minutes ago and had stayed around this level through much of the session. I think that foreign dumping will take down stocks and bonds together, but we'll have to see.

  Jonathan Levinson   5/19/200,  3:34:33 PM
Here's a preview of the 20-day view of today's action. Note the oscillator setup for a bounce, but the strengthening trend depicted by the ADX: Link

  Linda Piazza   5/19/200,  3:33:18 PM
Although the Russell 2000 remained positive longer than the other indices today, it, too, finally succumbed and traded in the red. How far will the Russell 2000 fall? One chart formation suggests the 395-400 level as a possibility. Here's an old Russell 2000 chart of mine, showing a rough reverse or inverse H&S formation. The neckline sloped so steeply that I wasn't sure the formation was valid. Although I did mention it a time or two on the Monitor, especially in the connotation of there being more strength in the markets than fundamentals predicted there should be at the time, I didn't emphasize the formation or follow it closely. Today I was looking at the upside target predicted by that rough H&S formation and noted that the Russell came close enough that perhaps that H&S had some validity after all. If so, perhaps the extended neckline, already successfully tested once, will provide support for the Russell on a pullback. Link Interestingly enough, the 38.2% retracement of the recent Russell rally would occur at 392, providing a possible correlation. According to Martin Pring, when a movement has been big in relationship to the previous movement, as this rally was, the retracement might be small. I've been wondering if the retracement in the indices could be expected to stop or at least pause in the 38.2% to 50% range, rather than the 50% to 61.8% range. I've been testing various scenarios and this is one. However, we'll just have to see how the oscillators behave during these retracements (or even consolidations) to get a better idea.

  Jonathan Levinson   5/19/200,  3:29:05 PM
Geez, everybody had to come up with a Rube Goldberg in engineering school, but I never thought anyone would actually get paid to do that! I'm jealous! I'm a biomedical engineer... we used cat parts from the comparative lab for parts of ours.. guess I know why I didn't get that job....

Thanks for the link - I needed a joke!

  Jonathan Levinson   5/19/200,  3:16:03 PM
Just received, off topic but amazing: This is a European commercial for the Honda Accord, made by a British Agency in a studio in Paris. There are NO camera tricks - it's all real. It took 606 takes over a 4 day period to get the entire sequence to work, after 7 months of planning.


  Jonathan Levinson   5/19/200,  3:12:19 PM
Trendline resistance is down to approximately 27.93 QQQ now. The TRINQ is increasing, 2.34 currently, TICK.NQ -19. QQV is up just .25 and VXN is down .04. These volatility indicators say that this is just a pullback as far as the option market is concerned. Bears have no problem with complacency on a decline. The put to call ratio has stabilized in the mid-.90's.

  Linda Piazza   5/19/200,  3:05:46 PM
The OEX five-minute 5(3)3 stochastics rolled over again, but this time isn't feeling quite the same as the previous times. So far, the stochastics are zooming down a little faster in relationship to the move in the OEX, alerting me that there might be another try for OEX 466 in the making.

  Ray Cummins   5/19/200,  2:54:55 PM
Spreads/Combos -- Suggested Reading For New Traders

(Condensed) Hello Ray...I really am interested in learning anything and everything I can about credit spreads so I can become proficient at trading them. My main goal is to learn how to create monthly income using cash as collateral with income averaging from 4 to 10 percent a month. [Regarding the "bibles" of option trading] I have both of the books you mentioned. Are there particular sections which I should concentrate on? I assume the volatility and its effect on pricing is a major factor in determining which spreads to write and when to get in/out. I really appreciate your assistance and am looking forward to Sunday's columns.

You commented that you already have both of the "bibles" of option trading: "Option Volatility & Pricing: Advanced Trading Strategies and Techniques" by Sheldon Natenberg, and "Options As A Strategic Investment" by Lawrence G. McMillan. Probably the most important topics in Sheldon's book are "normal distribution" and how it relates to volatility, and the explanations concerning the "fair value" of an option. In Larry's book, I would also suggest reading the sections regarding volatility, but focus as well on the chapters that discuss the criteria for selection of a position and the various adjustment strategies such as "rolling-out," etc. Without a fundamental knowledge of option pricing and position mechanics, you can't possibly hope to be successful trading options in the long-term. Finally, one last book I highly recommend (it's fairly new, but you might find it in the library) is, "The Option Trader's Guide to Probability, Volatility and Timing," by Jay Kaeppel. It's a great resource for beginning option traders.

  Linda Piazza   5/19/200,  2:49:39 PM
As Alan mentioned earlier, the DAX closed at 2850, 2850.68 to be exact, down 138.40 points or a whopping 4.63%. A trade below 2800 would create a new P&F sell signal on the DAX, but the index remains above its P&F bullish support line and it hasn't traded that below-2800 level yet. The CAC 40 also closed down over 4%, down 127.58 points or 4.256%, to 2867.29. The FTSE managed to slow its decline with only a 2.66% slide, to 2941.30, down 107.70 points.

  Jonathan Levinson   5/19/200,  2:47:39 PM
The US Dollar Index has bounced all the way up to 93.74.

  Jonathan Levinson   5/19/200,  2:45:37 PM
27.95 QQQ should intraday trendline resistance here.

  Jonathan Levinson   5/19/200,  2:44:56 PM
What's most noteworthy to me is that the intraday resistance levels keep moving down. The bulls keep getting shortchanged on the up-phases on the intraday oscillators. Having just lived this experience in reverse, where there was no resistance, but plenty of support on the way up, we can see the trend having reversed. This occurs when the oscillators are trending. Whether this "trend" lasts beyond today or tomorrow, nobody knows. But, there were some very extreme levels reached on the breadth and sentiment charts. If these get undone all the way, we will see much, much lower lows across the indices. If they merely correct enough to blow off the extreme readings, one of these bounces is going to take us to higher highs. I vote for the former, but the tape will have to decide. Currently, QQV +.88 at 26.77, TICK.NQ -106, VXN -.07, FVX -3.7 bps.

  Linda Piazza   5/19/200,  2:30:57 PM
So far today on the OEX, it's been one of those days when each bearish kiss of the five-minute 5(3)3 stochastics has signaled the next downturn. The hourly stochastics have been fully in oversold territory all day, but there's still been no appreciable bounce effort. That could come, however, with the OEX now falling toward minor support near 462-463, and stronger support near 460 (200-ema at 460.48, for example), but it's possible that these levels could fall, too. During the early part of the rally off the March 12 low, the hourly 21(3)3 stochastics once stayed fully in overbought territory for more than 40 hourly candles, so stochastics can stay oversold or overbought longer than seems possible.

  Linda Piazza   5/19/200,  2:17:58 PM
The SOX is now about 3 points away from its 200-ema, a logical first bounce point. The daily oscillators predict lots of room to fall while the deep-in-oversold-territory hourly stochastics attempted a weak bearish kiss that looks to be turning down again. A straight fall through the 200-ema would probably damage investor sentiment although the 325-330 area also look to be at least minor support.

  Jonathan Levinson   5/19/200,  2:12:48 PM
The TRINQ is up to 2.27, a very tame reading. Note that the bulls got months on end of sub .40 readings, and recall all those countless off-the-charts breadth indicators? Bulls should be strapping on their helmets, particularly those who arrived late to the rally. Stop losses are key- better a small loss than a large one, and we've all been there. QQV is up .93, VXN up .26, QQQ down 2.93% and SMH down 3.78%. June gold is up 9.60 at 364.50. QQQ has just taken out 27.85 for a few ticks, which is almost 1$ below the ascending trendline on the bear wedge.

  Linda Piazza   5/19/200,  2:03:16 PM
For the last couple of weeks, I've periodically posted a chart of the Dow Jones Transportation Index, showing that it was recently turned back near 2490, the 50% retracement of the March to March move in the index. Today's continued fall, with the $TRAN currently at 2367.68, brings the $TRAN back closer to the 38.2% retracement of the move at 2358. The 200-ema is just above 2300, too, so these might be points to watch for a bounce in the $TRAN. A fall through 2300 would be bearish, particularly as the $TRAN often leads its sister index, the DJI. My $TRAN daily and weekly charts aren't updating, so it wouldn't be helpful to link the chart to this posting.

  Jonathan Levinson   5/19/200,  1:39:32 PM
The COMEX crush brought gold and the miner indices down, but they're now up again, with June gold up 9.30 per oz., HUI +5.3 and XAU +2.52. QQQ topped on a bounce and is now back in a downphase on the 3 minute candles. On the 30 minute candles, we see a clear break of the ascending lower trendline, at 28.70. In theory, a "Return to the scene of the crime" rally would have that level retested, but given the strength of the selling today, it appears to me unlikely.

  Linda Piazza   5/19/200,  1:18:44 PM
In reference to Jonathan's last post (13:14), the hourly ADX indicator shows that buying pressure has fallen off in the QQQ's and SMH, while selling pressure is picking up. ADX hourly levels shows the downtrend gaining strength at the same time that hourly oscillators reach oversold levels and the fast lines try to hinge up.

  Jonathan Levinson   5/19/200,  1:14:41 PM
Looking over today's action on the oscillators, we've had zero loft on any of the intraday up-phases. The Qubes are trading at lower levels despite a number of expected bounces. It's been a wall of sellers, yet the TRINQ is very tame at 2.07. Remember when it printed above 5 and even 6 earlier this year on a couple of selling spikes? In any event, although I find it hard to believe, today's action, which is still in pullback territory, has me expecting the pullback to go much deeper. If they can't put together any kind of bounce today, then the bulls must have already all been fully committed. If that's the case, then there's no one left to do any buying. We'll see.

  Jonathan Levinson   5/19/200,  12:59:34 PM
Gold is up over 9$ per ounce to 364/oz. HUI is now up 5.22, XAU +2.54, CRB above 241. Treasuries are not participating in any meaningful way, with FVX up just 4 bps.

  Jonathan Levinson   5/19/200,  12:56:41 PM
Gold is up over 9$ per ounce to 364/oz. HUI is now up 5.22, XAU +2.54, CRB above 241. Treasuries are not participating in any meaningful way, with FVX up just 4 bps.

  Linda Piazza   5/19/200,  12:56:14 PM
Several times lately, I've noticed that I have the uncanny ability to move the VIX. All I have to do is make a post about the VIX's level, and it switches direction before the post makes it onto the screen, even though I'm a fast typist. The VIX is back below 23 again, repeatedly testing its 21-dma at 23.08. As I mentioned earlier today, the VIX has not closed above this MA in a couple of months.

  Linda Piazza   5/19/200,  12:53:44 PM
The VIX is back above 23, and at the high of the day, at 23.19.

  Linda Piazza   5/19/200,  12:50:58 PM
The SOX now drops toward 340 and toward a former ascending trendline formed off the February low for the SOX. If the SOX does drop below 340 (currently 341.06), a retest of the 200-ema at 334.96 becomes a possibility. Thinking through the various tests of 200-ema's that are within reach, such as the OEX's, I'm wondering if these might be likely points for bounces or consolidations in which the hourly oscillators relieve some of the oversold pressure before an attempt at more downside. I'm not necessarily thinking all this would happen today, but just thinking through various possibilities.

  Jeff Bailey   5/19/200,  12:50:14 PM
WEEKLY Pivot Matrix notes it is notable in today's trade, that for the first time since the week of 03/14-04/04, the equity indexes have traded their WEEKLY S1 levels of support. The S&P 100 Index (OEX.X) 465.59 -2.4% has traded its WEEKLY S2 of 466.70 and this too is notable weekness as it relates to recent WEEKLY pivot analysis.

This action within the WEEKLY pivot matrix "makes sense" perhaps as it relates to the higher levels of bullish %, which would have some institutions taking some caution in their stock inventories at the higher bullish risk levels. As such, I would begin to look for rally resistance this week at R1 levels of resistance in the WEEKLY matrix.

In Friday evening's market monitor, I showed an OEX chart with new WEEKLY and existing monthly pivot analysis retracement, which showed several levels of resistance coming in at this WEEK's R1.

  Jonathan Levinson   5/19/200,  12:43:00 PM
The TRINQ is holding steady above 2.0, TICK.NQ -189, QQV +.85. This is more than just a shake, but still well within pullback territory. If this bounce remains in the current area, it will begin to look like much more, but it's still early to guess at it. I agree with Matt (last quoted post), because if this is something more, and the bear wedges are getting taken out (ie, weekly chart of AMGN, QQQ, SPX, etc.), then there will be plenty of time to jump on for the ride.

  Jeff Bailey   5/19/200,  12:30:39 PM
Protein Design Labs (PDLI) $13.86 +18.9% ... after triggering a triple-top buy signal at $10.50 and breaking above bearish resistance trend, today's trade at $14.50 triggeres "spread-triple top" buy signal. Link

Notable here that PDLI is set to receive a 3% royalty on worldwide sales of DNA's Avastin drug sales.

  Linda Piazza   5/19/200,  12:28:20 PM
Reader Question: DO you believe the wedge is still alive? If so, then they have all been violated on the downside.

Response: Interesting question. As many of you know, I began questioning the relevance of the rising wedge on the OEX, at least, when prices broke below the level of the original wedge (in green on the linked chart) off the March 12 low and didn't fall precipitously, as should happen with a bearish rising wedge. Then, prices moved back up and into the apex, prompting me to further question its relevance. Bearish rising wedges usually break down before prices reach the apex. Two factors kept those rising wedges on my chart, however. One was a proposal by a reader that perhaps the more reliable lower line was the one that's currently drawn in mauve. Link Although I don't like to redraw lines after I've first drawn them as it's too tempting to draw them to fit the scenario that best fits my bias, the reader's line seemed to have some validity so I included it on my charts as a test line. Several other writers for OIN seemed to have trendlines drawn more broadly than I'd drawn this one, too. The second factor was one that I've mentioned several times in wraps when I was substituting for Jeff: RSI and some of the other oscillators had broken below their trendlines of higher lows at about the same time that prices began turning down from the upper mauve line (which was an alternate line that I'd added myself to the chart, encompassing some of the upper candle shadows). RSI, and particularly trendline breaks in the RSI, can be a leading indicator. Today's break of the new (mauve) rising wedge does seem to have led to a more precipitous fall, so, yes, I'd have to say I believe the wedge is still viable. However, as with all violated formations, we'll only know for sure when it's retested and the retest fails, or if the fall is so precipitous that no retest is possible.

  Jonathan Levinson   5/19/200,  12:27:26 PM
Hi Jonathan,

re: your bearish feeling on this bounce: Agree. My short term (for me that's the next few days) indicators are all down, intermediate's still up, but weak. Only long term's still strong up, and that includes a very significant 52-week high/low ratio which is still way to high.

More important than my personal indicators, McClellan Oscillator's still positive (so the rally isn't officially over as the long term players measure things), but it's below where it was March 13th (the 2nd day of the rally), and if it's still below at the close, a lot of the more volatile long term players will jump ship and pull the market down another rung.

If we don't rally this afternoon, I'll probably enter a partial short. What major index looks weakest to you for a few days short?

The COMPX has come the farthest on this rally, and is in my view the most egregiously overpriced, overhyped index of the bunch. However, the dilemma is that the Naz has been the biggest winner in the rally. Does that mean that it will correct the least, or the most? Taking my cue from the current morning's action, SMH is leading the way lower. If our bearish feeling is correct, we can expect this trend to continue. One the other hand, the Dow has lagged all the indices, participating the least in this rally. I believe that the Dow has been the closest to the foreign selling of US assets depicted by the declining USD Index. If you believe that this will continue, then Dow shorts will be the place to be, with OEX/SPX a close second. My own short positions are in QQQ and MSFT to keep the bases covered.

  Jonathan Levinson   5/19/200,  12:19:04 PM
June gold has now broken 362. If not for the Japanese propjob being executed on the US, I believe that gold would be significantly higher still. HUI is up 4.39 and XAU is up 2.31. The CRB is above 241.

  Jonathan Levinson   5/19/200,  12:09:10 PM
Interesting that I alerted the New York Fed to their "omission" in failing to update their website, and today's 4.75B overnight repo still hasn't been posted.

The FVX is down 5.4 bps, while QQQ is now struggling to hold the 28 level. HUI and XAU are at fresh highs of the day, HUI +4.33 and XAU +2.3.

  Linda Piazza   5/19/200,  12:08:26 PM
OEX 465 is an interesting level for bulls and bears alike. It's a likely bounce point. However, a fall through this level might predict a downside test of the 200-ema at 460.49, with historical S/R there, as well as a former descending trendline on the linear chart. The OEX might first pause near 463-462, with some historical S/R in that area.

  Jonathan Levinson   5/19/200,  12:05:35 PM
Put to call ratio rises to .97.

  Jonathan Levinson   5/19/200,  11:59:52 AM
A new rush of lows of the day. Are european closing market orders landing now?

  Jonathan Levinson   5/19/200,  11:51:14 AM
The US Dollar Index is down to 93.42. USD:JPY and USD:EUR, and so it looks like there's an attempt to support the dollar for the moment at these low levels. QQQ s down 2.24%, while SMH is down 2.95%. The semis usually lead the Qubes, which usually lead the markets. The weakness of this bounce is making me feel increasingly bearish.

  Linda Piazza   5/19/200,  11:50:27 AM
Total volume shows 517 million shares traded on the NYSE and 712 million on the Nasdaq. Decliners continue to outnumber advancers by about 2:1. Down volume is currently just under 6 times up volume on the NYSE and just under 4 times up volume on the Nasdaq.

  Ray Cummins   5/19/200,  11:41:48 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity

Today's abrupt sell-off is the first significant test of the recent optimistic outlook among investors and it will be interesting to see when (and at what level) the buying pressure resumes. The brisk retreat conveniently coincides with the first day of the June expiration period (little consolation for those with bearish plays that expired in May), thus providing some excellent entry opportunities for option traders. Our new group of candidates includes both bullish and bearish positions and the majority of plays have been available at acceptable opening prices.

Among the current portfolio positions, technology stocks appear to be bearing the brunt of the selling pressure with sharp declines seen in KLA-Tencor (NASDAQ:KLAC), Mercury Interactive (NASDAQ:MERQ), Linear Technology (NASDAQ:LLTC), Safenet (NASDAQ:SFNT) and National Semiconductor (NYSE:NSM). Large losses are also apparent in the broader-market groups with Best Buy (NYSE:BBY), Capital One (NYSE:COF), Career Education (NASDAQ:CECO), and First Data (NYSE:FDC) among the worst performers. Of course, the downward trend is benefiting a number of the bearish plays in our portfolio including Goldman Sachs (NYSE:GS), 3M Corp. (NYSE:MMM), Forest Labs (NYSE:FRX), Krispy-Kreme Donuts (NYSE:KKD), Pharmaceutical Product Development (NASDAQ:PPDI), Dupont Photomasks (NASDAQ:DPMI), and Proctor & Gamble (NYSE:PG).

  Linda Piazza   5/19/200,  11:39:27 AM
For a minute or two, the VIX just bumped back above 23, to a high of 23.01, but was perhaps repelled by the 21-dma just overhead at 23.09. The VIX has not closed above its 21-dma since the middle of March, but traders might watch the VIX in relationship to its 21-dma today as one clue among many to the market's direction.

  Jeff Bailey   5/19/200,  11:38:55 AM
Curbs in ... program trading curbs are now in place with the Dow Industrials (INDU) 8,521 -1.81% lower by 157 points. Trading curbs are put in place this quarter when the Dow gains/loses 150 points. For curbs to be lifted, the Dow must return to within 70-points of it previous session's close. For this to take place today, the Dow must rebound back to 8,608.97. Link

  Jonathan Levinson   5/19/200,  11:36:04 AM
The most recent put to call ratio is .87.

  Jeff Bailey   5/19/200,  11:35:16 AM
Drug stocks ... The DRG.X -4.16% lower after Washington Post reports that the Supreme Court gave go ahead to Maine's program to force drug makers to lower prices on prescription drugs, but did warn that the program may not survive further court challenges. The program is called Maine RX and is a setback to drugmakers, which claim the program violates federal law.

  Jonathan Levinson   5/19/200,  11:34:47 AM
HUI is now up 4.13 and XAU is up 2.03.

I've received questions about how the divergence in bonds and stocks strikes me. Actually, it makes sense if you're a foreigner. Take a look at a chart of the COMPX in Cdn dollars (on stockcharts, it's $COMPQ:$CDW). Not much of a rally at all over the past months. If you're a foreigner, you're converting US to other currencies, and you're dumping bonds and stocks alike in order to do it. On this view, we expect to see rising yields and falling equities. So far, today, that's happening, as the yield recovers off its gap down lows even as the equity indices keep printing lower lows.

  Jonathan Levinson   5/19/200,  11:30:47 AM
Was this most recent low of the day the bounce "bottom"? I see no volume spike at the low of the day, which I would expect if it were a significant level.

  Mark Wnetrzak   5/19/200,  11:27:23 AM
Covered-Call Updates

NorthWestern (NYSE:NOR) and Identix (NASDAQ:IDNX), two In-The-Money covered-call candidates for this week, are defying the general trend and rallying higher this morning. Abgenix (NASDAQ:ABGX) and Celgene (NASDAQ:CELG) both jumped higher too but they have reversed fairly quickly and are now in negative territory.

  Jonathan Levinson   5/19/200,  11:24:53 AM
The fed informs me by phone that a 4.75B overnight repo was made, but no press release was sent and the website was not updated. Well done, Al! Now resorting to stealth open market ops.

This is only partially facetious. So far, the GLOBEX has been unplugged and now the fed is "forgetting" to announce its ops. Keep live stops on all your trades, and remember that system "outages" and other "extraordinary measures" can be employed while you have open positions on.

  Jeff Bailey   5/19/200,  11:23:15 AM
11:00 Update posted at this Link

  Jonathan Levinson   5/19/200,  11:22:07 AM
The put to call ratio edged down to .96 on this pause in the pullback. Note that the TYX has actually gone positive, up .3 bps but now back to flat as I typ,e with TNX -1.1 and FVX -2.4 bps. The fed has not updated its website today and I'm trying to reach them by telephone.

  Linda Piazza   5/19/200,  11:08:02 AM
The SOX fell below 350, and currently is just below the 21-dma at 344.38, with a SOX value of 342.88. The daily charts shows the RSI threatening to punch below an ascending trendline formed from its pattern of higher lows, a pattern that began in February. The important 200-ema lies below at 335.44.

  Jonathan Levinson   5/19/200,  11:01:48 AM
June gold is now above 361/oz. FVX -3.4 bps. HUI +3.83, XAU +2.0. QQQ -.66 at 28.04. NQ -28.

  Linda Piazza   5/19/200,  11:01:39 AM
Well, here we are, with an OEX low of 466.52 so far and a bounce attempt underway on the five-minute charts. If you're already in a bearish play, what next? That depends on your account-management style and your intention when entering the trade. If you were in it for a short daytrade only, you might elect to follow with close stops now. If you were in it for a longer trade as dictated by the daily or weekly charts, you'll expect a retest of broken resistance and will have set appropriate stops, perhaps a little higher than a daytrader would. Perhaps you'd at least be expecting a retest of 470-472 if not 474.50. Hourly oscillators have all zoomed down toward oversold levels but have not yet turned up. OEX 465 should provide another possible bounce point if 466.50 fails.

  Linda Piazza   5/19/200,  10:53:45 AM
Total NYSE volume appears light this morning, with 296 million shares traded, while the Nasdaq shows 470 million shares traded. Volume patterns show the selling, with adv/dec ratios of .47 on NYSE-traded issues and .51 on Nasdaq-traded issues. This demonstrates 2:1 ratios of decliners to advancers. Down volume exceeds up volume by 6.5 times on the NYSE and by 3.2 times on the Nasdaq. New highs continue to outnumber new lows.

  Jonathan Levinson   5/19/200,  10:53:37 AM
re Snow: I feel better now knowing platitudes are now central economic policy.

The sarcasm is as obvious as the market's disdain for his incredible trite, almost silly comment. Gold broke above 360/oz almost instantly. The message clearly is to sell dollars. I thought that Bernanke had made it plain enough, but they're going to make this issue into a dead horse before long.

  Jonathan Levinson   5/19/200,  10:49:56 AM
The CBOE put to call data was delayed by better than 10 minutes, but has just come out at 1.09. I wonder if they'll unplug the GLOBEX again too... In any event, the p/c data, which has been discussed many times during the past several months, is only a secondary indicator, and I don't trade on it alone. It is very high at 1.09, but we've seen it spike much higher in the past. It's an "orange alert" indicator, while most of the other breadth indicators I follow are still very mellow, such as the TRINQ at 1.84, the VXN at +.02, QQV +.98, and TICK.NQ -415. So far, this continues to be "just a pullback".

  Linda Piazza   5/19/200,  10:45:30 AM
Only a point away from the 466.50 downside target predicted by the confirmed double-top formation on the hourly chart, the OEX steadied temporarily and appears to be retesting the (daily) 21-dma at 468.30. If the OEX closes beneath this MA today (a big leap in conclusion to make this early in the day), this will be the first close beneath it since April 11. The hourly oscillators reach toward levels indicating oversold conditions, so the OEX could be primed for a bounce attempt at any time. That 466.50 level, if reached, could be an important level to watch for a bounce attempt, as could the 465 level.

  Jonathan Levinson   5/19/200,  10:40:24 AM
In comments to reporters Saturday at an economic summit in France, Mr. Snow said the U.S. government no longer measures the dollar's strength by its market value against the other major currencies -- the long-accepted premise of that policy. Instead, Mr. Snow said "strong" refers to such aspects of the dollar as the confidence it inspires in the public and its resistance to counterfeiting.


  Jonathan Levinson   5/19/200,  10:38:48 AM
June gold breaks 360/oz.

  Jonathan Levinson   5/19/200,  10:35:53 AM
Still no update from the fed one way or the other regarding the 2.75B in expiring repos.

  Linda Piazza   5/19/200,  10:33:26 AM
Currently near the high of the day at 22.19, the VIX is up 1.18, but a glance at the daily chart shows an inside day printing so far so that it's not yet possible to draw too many conclusions about whether we're seeing any kind of reversal pattern developing. Friday, the VIX did touch the bottom of a downward trending reversal channel that began developing last July. So far, it's always reversed after touching the boundaries of this channel, but there's always a first time . . .

  Linda Piazza   5/19/200,  10:27:39 AM
The FTSE 100, CAC 40, and DAX continue their slides, with the CAC 40 and DAX each down more than 3%, 3.48% and 3.82%, respectively.

  Jonathan Levinson   5/19/200,  10:26:07 AM
Last week's equity gains have now been reversed after less than 1 hour of trading. June gold is pushing for 360, currently 359.60.

  Jonathan Levinson   5/19/200,  10:22:11 AM
I am so far unimpressed with the selling. The TRINQ is at 1.49, QQV up 1.52, TICK.NQ -425. This is a decent pullback, but no way could it be called a selloff. FVX is still down 3.7 bps, while HUI and XAU add to their gains. VXN is up just .44 to 31.46.

  Linda Piazza   5/19/200,  10:12:27 AM
The OEX retest of 472.50 made it only to 472.10 before the OEX dropped again and headed to the next possible bounce point near current 469.74 levels. Hourly, daily, and weekly charts still indicate that at least the 466.50 minimum downside target projected by the double-top formation is possible, but this is another danger point for bearish players, with 469.69 being an important retracement level from the past year.

  Jonathan Levinson   5/19/200,  10:11:32 AM
The opening put to call ratio was .85. No announcement from the fed regarding the expiring weekend repos. ES, NQ, QQQ GE and SMH LODs printing.

  Jonathan Levinson   5/19/200,  10:08:15 AM
From CBS Marketwatch:

The U.S. economy continues to grow slowly, the Conference Board said Monday in releasing its April index of leading economic indicators. The forward-looking gauge rose 0.1 percent, as expected, after falling 0.2 percent in March. "GDP growth in the second quarter may not be much better" than the 1.6 percent reported in the first quarter, said Ken Goldstein, economist at the board. "Growth is very slow." Five of the 10 leading indicators rose in April. The coincident indicators fell 0.1 percent while the lagging index fell 0.5 percent.

  Linda Piazza   5/19/200,  10:07:18 AM
Both the CAC 40 and the DAX have slipped beneath 2900 now, although they may be trying to recover that level.

  Jeff Bailey   5/19/200,  10:03:55 AM
Leading Indicator for April rose 0.1%. This was in line with consensus as economist's forecasted a 0.1% rise.

Economic calendar is light this week. Treasury Budget is scheduled for tomorrow at 02:00 PM EST (April estimate is for $50.0 billion), and then WEEKLY jobless claims is for Thursday at 08:30 AM EST (consensus is 420,000).

  Jonathan Levinson   5/19/200,  10:01:23 AM

  Jonathan Levinson   5/19/200,  10:01:02 AM
Note that FVX is now up just 3.7 bps, yet stocks pulled back on the pullback in treasuries. If that's more than just a slightly anomaly, then the anticipated rally in stocks on a pullback in bond prices will be a massive correction. Let's watch that.

  Jeff Bailey   5/19/200,  10:00:56 AM
Geron (GERN) $5.50 +3.57% .... not nearly the "quality" of stock that DNA is, but same sector and doing some early phase cancer drug trials.

Late Friday, I showed "new" bar chart of GERN with MONTHLY and "new" WEEKLY pivot analysis retracement. Link (see 06:01:08 PM). Also made some notes at 04:09:29 in after-hours.

  Jonathan Levinson   5/19/200,  9:59:09 AM
June gold continues to hold above 358/oz, and the silver that I was buying with some of my lunch money at the pawn shop over the weekend is also more valuable , with Dec silver contracts going for 4.85/oz. HUI is up 2.61, XAU 1.50.

  Linda Piazza   5/19/200,  9:57:27 AM
Although most other indices trade in the red this morning, the Russell 2000 is in the green, up $.41 to 415.10 as I type. Most daily oscillators indicate more downside to come, although RSI has flattened and may be trying to cup up. RSI is often seen as a leading indicator, so this bears watching. If the Russell continues to move up, I would expect a retest first of Friday's closing level at 416.59 and then of the 420 level, but today's opening in the bottom half of Friday's candle doesn't bode well for that second test, at least so far. Hourly oscillators are deep in territory indicating oversold conditions, so there's a possibility of a bounce attempt showing up there, too, although those oscillators have not yet turned up.

  Jeff Bailey   5/19/200,  9:57:13 AM
Biotechnology Index (BTK.X) 427.93 +6.17% .... big move and mostly attributed to Genentech (DNA) $51.40 +35.62%.

Oooooooeeee! I'd raise a profit stop under $48.00. Hey! That was our 7-month bullish price target, so why not try and "let her/him rip," give the stock a chance to see just how bullish the market wants to get on it.

  Jonathan Levinson   5/19/200,  9:56:23 AM
Today is Victoria Day here in Canuckistan, and it's easily one of the loveliest days of the year thus far. We'll see how it impacts volume throughout the session.

  Jeff Bailey   5/19/200,  9:47:52 AM
Cisco Systems (CSCO) $16.47 -1.13% .... Jeff: why is stockcharts labelling its warning on CSCO as a bear trap rather than an triple top breakout? because of the double bottom breakout at 12?

Aha! Great question. First, there is NO triple-top breakout "intact" with CSCO's chart. I think you're looking at the trade in January (just after red 1) at $15.50 (spread-triple top), but that "buy signal" was NEGATED by the "sell signal" and triple-bottom at $12.50. Link

Remember when I profiled 1/2 bearish position (I still hold this trade in my account) in the CSCO $12.50 puts, when CSCO traded $12.50 and the triple-bottom sell signal?" This was labeled a "bear trap" when CSCO traded $15.00 (that was my underlying stock trader's bearish stop). You see, the "bear trap" pattern is depicted by a chart pattern where a triple-bottom sell signal is generated ($12.50), but then the stock's chart reverses back up and triggeres a "buy signal," which "traps" a bear that shorted the breakdown.

I "knew" there was potential for this pattern, and explained it when profiled. The "reason" I "knew" this was a potential trap was 2 things. 1) The NASDAQ-100 Bullish % ($BPNDX) Link was at/near "oversold" levels. 2) CSCO was just getting ready to test its bullish support trend (Old Pnf chartist saying... "the first test of bullish support can be painful for a bear).

So... why did I profile CSCO bearish? There had just been news a couple of days before the European networker Dimensional Data had warned on earnings, Black Box (BBOX) Link had aslo gotten "whacked" lower in early March (benchmark the red 3).

So... I thought it "worth" a PARTIAL bearish in CSCO for June expiration. I profiled PARTIAL to try and mitigate risk in the trade to account for bullish % and bullish support trend, but also used the Dimensional Data and BBOX warning along with CSCO triple-bottom sell signal to view bearish.

  Linda Piazza   5/19/200,  9:46:58 AM
OEX 472.50 has long been a level of S/R. For example, the November left-shoulder high for the OEX was a 472.47 high on November 6. In addition, last week's trading created a rough double-top formation on the OEX with a confirmation level near 472.50, and with a minimum downside target of 466.50. Watch first for an attempt to bounce from current levels, however, before drawing too many conclusions. Hourly, daily, and weekly charts hint that there's plenty of downside possible, but they don't promise downside instead of consolidation.

  Jonathan Levinson   5/19/200,  9:45:41 AM
New lows erupting on my screen, but so far we're in "light pullback territory". For patient bears, the pullback is crucial. Bulls and bears alike agree on the need for a pullback from current levels, and the bearish case won't gain any strength unless the pullback is very deep. This is what we're waiting to see. Meanwhile, QQV is now up 1.14, at 27.03. Remember when it was rangebound between 40 and 42? TRINQ 1.69, TICK.NQ -252.

  Linda Piazza   5/19/200,  9:40:55 AM
Sony (SNE) 25.13, up 0.01 dipped briefly below 25 this morning, falling out of a potential bear-flag pattern on the daily chart, but quickly bounced. Let's see if it holds. As I mentioned last week, the chart patterns here look ideal for a bearish play on a breakdown out of the bear-flag pattern, or alternately, a break below the 4/28 low of 23.16, but there's other support layered beneath these levels and much of Sony's fate lies in the hand of Japanese government policies that dictate whether funds buy or dump Sony's stock. That doesn't add up to an ideal play for me, so I'm not recommending a play in Sony. I'll continue to mention developments from time to time for the benefit of those who might own Sony stock or who might have entered a bearish or bullish play on their own.

  Jonathan Levinson   5/19/200,  9:35:43 AM
QQV in .98 to 26.87, TRINQ 1.08, TICK.NQ -68. Other than the initial gap down, there's no real selling going on, though buying in bonds is still very strong, FVX -6.5 bps.

  Jonathan Levinson   5/19/200,  9:29:30 AM
The stick save in the USD is reversing, with DX00Y now 93.52. Link

  Jonathan Levinson   5/19/200,  9:25:36 AM
News that Ari Fleischer is going to resign in July.

Reports due this AM:

10:00 am: Leading Indicators for April, prior -0.2%, consensus 0.0%

  Jim Brown   5/19/200,  9:20:17 AM
Editors Play
It looks like we got a gift from QCOM this morning. The editors play for this week was puts on QCOM based on TXN, NOK, STM announcing they were going to make CDMA chips and try to crack into the 90% market share QCOM has. The stock is up +1.00 in the premarket based on a affirmation of earnings prospects. They may not see any hit to earnings soon because current production has been presold. This will not hold in my opinion. Their trend has been down and this bounce puts them tight back to resistance. In my opinion the play is still a go.

  Jeff Bailey   5/19/200,  9:07:06 AM
09:00 Update posted at this Link

  Linda Piazza   5/19/200,  9:06:53 AM
The FTSE 100, CAC 40, and DAX hold relatively steady from an-hour-ago levels, probably awaiting the opening of the U.S. markets for further direction. Currently, the FTSE 100 is at 3989.10, the CAC 40 at 2915.50, and the DAX at 2904.67.

  Jonathan Levinson   5/19/200,  8:52:29 AM
The US Dollar Index touched a low of 93 last night, and gold hit 360. The dollar has been inching up since 3AM, and is now above 93.60, while gold is hovering just above 358. Futures are in the red, with NQ3M down 9.50 at 1147, ES3M down 6.25 at 938, QQQ is down 22 at 28.48, while bonds are being bought again, FVX -5.7 bps, TNX -5.1 bps, and TYX -4.6 bps.

  Jim Brown   5/19/200,  7:56:46 AM
Reloading App (Market Monitor will be down for 5 minutes)

  Linda Piazza   5/19/200,  7:16:26 AM
Good morning. Last weekend, Treasury Secretary John Snow torpedoed the U.S. dollar when he spoke on weekend talk shows ahead of the Senate debates on the administration's tax plan. It appears he's done it again this weekend, speaking to reporters after a meeting of major industrial nations in France. He called the dollar's decline "modest," according to a Bloomberg report, sending the dollar to four-year lows against the euro. Rumors still surface that the Bank of Japan continues intervention to stabilize the dollar against the yen, but still the Nikkei opened down 33.82 points. The Nikkei slid into the midday break, dropping below 8000 and into the gap from the May 2 close of 7907.19 to the May 6 open and low of 7995.49. As often happens, however, the Nikkei changed gears after the midday break and retraced some of its earlier losses, regaining the 8000 level. The Nikkei still closed down 78.16 points or 0.96%, however, at 8039.13. Other Asian bourses fell, too, many perhaps impacted by SARS-related news.

A separate and important factor in the Nikkei's early slide was news that the government would bail out Japan's fifth largest lender, Resona Holdings, possibly to the tune of $17.2 billion (U.S.). Several news sources featured the Resona story, revealing that the bank's loss cut its capital adequacy ratio well below the required 4%. Other banks slid, too, although by more modest amounts than the 17% plunge in Resona.

Nintendo and Sega fell, impacted by the weakening dollar and, in Sega's case, in anticipation of their earnings release after the bell. Sega's earnings were characterized as in line with expectations, with a net profit of 3.1 billion yen, but profits dropped 34.5% as sales declined 4.4%.

Most European markets currently trade down, also impacted by the weakening dollar. Today, the German Federal Statistics Office announced that producer prices fell 0.2%. In the Eurozone, too, banks impacted market sentiment, with French bank Credit Agricole reporting lower-than-expected profits for the first quarter and with Goldman Sachs mentioning the remaining uncertainty in the banking sector while raising estimates for German insurer Alianz. However, some feel that the current problems will force the ECB to lower rates, ultimately benefiting banks. British Airways warned that it might not meet expectations for the current quarter, dragging down Deutsche Lufthansa, too. Merrill Lynch announced a reduction in its growth forecast for the Eurozone from 0.8% to 0.6%.

As of this writing, the FTSE 100 is down 60.10 points or 1.48%, to 3988.90; the CAC 40 is down 74.85 points or 2.50%, to 2920.02; and the DAX lost 79 points or 2.64%, to 2910.08. All now trade below the key psychological levels (4000 for the FTSE, 3000 for the others) they achieved last week.


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