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  Linda Piazza   5/20/200,  4:03:48 PM
Here's a weekly chart of the Dow Jones Transportation Index, showing that the index's advance was stopped at the 50% retracement of the March-to-March decline, while this week's move dropped the index back near the 38.2% retracement of that decline. Link Not shown on this chart, because it would be too messy, is the retracement bracket for the recent rally. The 38.2% retracement of that rally would be found at 2275, a level of prior S/R. I would expect an eventual retracement of the rally at least to that level, perhaps after a bounce somewhere along the way. The current level, because it lies at a long-term retracement level, might be one place to look for that bounce, but a fall through here wouldn't look good for the $TRAN.

 
 
  Jonathan Levinson   5/20/200,  3:45:04 PM
Picture perfect resistance here on QQQ- Edwards and Magee would be proud. Link

 
 
  Jeff Bailey   5/20/200,  3:42:32 PM
McDonalds (MCD) $17.17 -5.45% ... lifting from the lows of $16.58. Seeing reports now that the cow that had "mad cow" was reportedly slaughtered 4 months ago.

 
 
  Linda Piazza   5/20/200,  3:38:04 PM
Hourly oscillators on the OEX again show that there's a possibility for another at-least tepid try at resistance. The 463.60-463.75 level is now at least light resistance, as it served as the bottom trendline of the now-violated bear-flag pattern as seen on the intraday fifteen-minute to hourly charts. OEX 466.25 is obvious next resistance above that, as the OEX tested that level from yesterday afternoon through today before succumbing and falling out of the bear-flag pattern. A close at the current level could be called a victory by both bears and bulls. Bulls could point to today's more modest pullback after yesterday's deep slide. They could also point to the successful test of the OEX 200-ema. SOX bulls could say the same thing. For these reasons, I wouldn't be surprised to see a test of those next higher levels of resistance tomorrow if the end-of-day bounce continues.

 
 
  Jonathan Levinson   5/20/200,  3:37:15 PM
So much for shorting a failure at 27.60 QQQ.

 
 
  Jonathan Levinson   5/20/200,  3:34:40 PM
Just watched Pisani who attributed the rise in gold to the Indian wedding season. Is that the real reason you added to your postion?

No, certainly not, although all kidding aside, Millhouse isn't completely wrong. They buy mucho gold during the wedding season in India.In early 2002, when the BOJ did away with deposit insurance, the meteoric rise in demand for physical gold spiked the price in Japan. Extrernal factors such as these always play a large role in the price movement of commodities. I believe that Snow's and Bernanke's comments about the USD had a LOT more to do with it, but it all factors in.

 
 
  Mark Phillips   5/20/200,  3:21:18 PM
Looking across the spectrum of the other LEAPS plays, we've got some significant developments there too.

EMC - Finally bit the dust with its trade below our $9.25 stop yesterday. And if there was any doubt, it looks like the stock will close below that level today. EMC gave us a great ride, but as we've been discussing for a couple weeks now, it's time to take the money and run.

AMZN - Our entry target for AMZN was for it to drop under the $32 level and we got that setup yesterday. So for better or for worse, that Put play is active as well. For those of you that took the entry, our initial stop will be just above the recent highs at $34.50.

 
 
  James Brown   5/20/200,  3:14:44 PM
very funny, Jon.

 
 
  Linda Piazza   5/20/200,  3:14:15 PM
I've dialed down to the one-minute charts just to watch the OEX action near 460. All afternoon, that one-minute chart is showing a series of quick declines followed by bear-flag patterns. The OEX currently trades in one of those bear-flag patterns. The one-minute 21-pma has been capping most movements throughout the afternoon with some brief blips above that average. Currently the average is at 460.22, with the OEX currently moving just above that MA. Will this be the time the bear-flag breaks to the upside?

 
 
  Jonathan Levinson   5/20/200,  3:13:26 PM
Gotta love the Teflon Market. Tanking CPI, PPI, spiking unemployment... no worries. Ronald McDonald gets sick? SELL, Mortimer, SELL!

 
 
  Mark Phillips   5/20/200,  3:13:20 PM
Finally, we're starting to see some meaningful downside price action today. Notables on the OI play list are as follows:

GM - Right at the $33 support level and if the market continues to drift lower, that level should crack by the close. On a close under $33, conservative traders should tighten stops to just above $35, which is just over last Friday's intraday high. GM is also a LEAPS Put play, and we'll be a bit less aggressive with our stop there, but likewise it should now be lowered to $36.50.

GS - Finally that stubborn $74 support level gave way, paving the way for new momentum entries. Note how it coincided with the XBD index losing the $450 level as noted in the Play of the Day writeup yesterday. I neglected to mention it yesterday, but the GS Watch List play on GS transitioned to the Portfolio as of yesterday's close, with details to follow this weekend.

JCI - This OI Put play has been flirting with the $80 support level for the past couple days and with that level starting to give way here this afternoon, it looks like the next test will come at our initial target of $78, which is also very close to the 50-dma ($78.51).

 
 
  James Brown   5/20/200,  3:05:00 PM
Shares of AMZN are finally showing some weakness for the first time since their April 24th earnings announcement. MACD is very overbought while stochastics and momentum are already rolling over.

 
 
  Jonathan Levinson   5/20/200,  3:02:04 PM
27.60 QQQ now looks like a good resistance line. A failed bounce to that level would be a decent short entry.

 
 
  Linda Piazza   5/20/200,  2:59:12 PM
As I scan charts, I notice a host of individual stocks either falling below or currently challenging their 200-ema's, including Dupont (DD), Lowe's (LOW), KLA Tencor (KLAC), Intel (INTC), Dynegy (DYN), and Wal-Mart (WMT). How many times lately have we said that the markets were at a key juncture? Well, I'm saying it again, although I believe that many of these 200-ema's will ultimately fail whatever the outcome of this afternoon's actions and whether or not an intervening bounce occurs. This retracement has come too far not to test at least the 38.2% retracement levels, if not deeper levels. IMHO.

 
 
  James Brown   5/20/200,  2:54:26 PM
Shares of GS, a current OI put play, finally broke the $74.00 level. Meanwhile shares of MER have also broken down through its rising channel but have paused just north of $40. The XBD rose almost 140 points from its March lows and could give a lot back in profit taking.

 
 
  Jonathan Levinson   5/20/200,  2:50:53 PM
FVX is now down 8.7 bps, TNX -8.2 and TYX -9.9 bps, as money flocks into treasuries. The TRINQ is only up to 1.94, with QQQ only down .17 at 27.49. QQV is up .58, TICK.NQ -515. There still appears to be a disconnect on the indices- I'd expect much more downside out of the terror news.

 
 
  Linda Piazza   5/20/200,  2:46:09 PM
The SOX just dropped below its 200-ema, and the OEX seems prepared to do so.

 
 
  Linda Piazza   5/20/200,  2:45:36 PM
Volume is picking up, at 1 billion for the NYSE and 1.2 billion for the Nasdaq. Advancers still lead decliners on the NYSE, but not by as big a ratio and down volume has drawn ahead of up volume. Decliners lead decidedly on the Nasdaq and down volume leads, too.

 
 
  James Brown   5/20/200,  2:42:15 PM
I hope I'm not duplicating an earlier post but Merrill's chief technical analyst believes that the Nasdaq could recover to 2250-2300 by the fall. Encouraging to hear but they followed that with the opinion it will then trade sideways for a "few years".

 
 
  Linda Piazza   5/20/200,  2:40:57 PM
Both the SOX and the OEX sit right on their 200-ema's. This is either a bounce point or bad news for these indices, if it isn't.

 
 
  Linda Piazza   5/20/200,  2:32:55 PM
The SOX is the next index to test its 200-ema, with the SOX currently at 336.48 and that MA at 335.39.

 
 
  Linda Piazza   5/20/200,  2:30:31 PM
Today's action has brought the DJI below its 200-ema, with that average at 8532.29.

 
 
  Linda Piazza   5/20/200,  2:27:49 PM
The VIX is currently above 23 again, although the current doji sitting above yesterday's big white candle is anything but a convincing bullish (for the VIX/bearish for equities) signal.

 
 
  Jonathan Levinson   5/20/200,  2:27:44 PM
The mad cow action has taken a bit of the edge off the drop in USD:CND, now down just .79%. Everytime the CDN dollar rises against the USD, I see another chunk of my paycheck go fluttering away...

 
 
  Jonathan Levinson   5/20/200,  2:24:22 PM
The stochastic on the QQQ 30 min charts is now at resistance. Link A break to the upside will target the day highs, 28 cents away. A failure here will imply lower lows. FVX is edging back down, -6 bps on the day, TRINQ holding at neutral, 1.22, TICK.NQ -276.

 
 
  Linda Piazza   5/20/200,  2:16:58 PM
OEX is testing the low of the day again.

 
 
  Jonathan Levinson   5/20/200,  2:16:23 PM
No doubt the considerable MCD PR machine will begin damage control ops post-haste. Perhaps a short term call play to catch the bounce?

 
 
  Jonathan Levinson   5/20/200,  2:15:28 PM
Rising TRINQ, and, at last, the QQV goes green, up .21 to 27.25.

 
 
  Jonathan Levinson   5/20/200,  2:14:58 PM
Funny that no one wrote about the mad bull disease over the past month...

 
 
  Linda Piazza   5/20/200,  2:11:45 PM
Jim just mentioned on the Futures Monitor that Pisani on CNBC is painting today's lack of follow-through selling as a positive sign. I was just listening to his comments, too. While I'm not sure what will happen in the last two hours of trading today, what I've seen happening so far on the OEX is consolidation while hourly oscillators moved out of oversold levels and relieved some of that very-short-term oversold pressure. In previous weeks, the OEX 5(3)3 hourly stochastics' move out of oversold levels was good for a four-to-fifteen point move to the upside, so that today's pattern is a real divergence. That doesn't appear bullish to me on the surface, although I'm blinking steadily to make sure I'm not peering at charts through a bearish haze.

 
 
  Jonathan Levinson   5/20/200,  2:10:28 PM
Good point, Jim- only online. Virtual friends, one might say ;-)

 
 
  Jim Brown   5/20/200,  2:09:47 PM
You have friends Jonathan?

 
 
  Jonathan Levinson   5/20/200,  2:08:53 PM
Some of my friends refer to Pisani as "Millhouse".

FVX is creeping up off its lows, and the QQV is still negative, down .29. The put to call ratio is down to .82, still high, but not so much given yesterday's action- the low QQV and low p/c ratio looks like calls being sold quickly here, and could portend lower lows, but we'll wait for the tape to confirm it. TICK.NQ -327, TRINQ 1.3.

 
 
  Jonathan Levinson   5/20/200,  1:59:14 PM
LOL Linda! Hey, I'm not making any statement about MCD's either way.

 
 
  Linda Piazza   5/20/200,  1:56:09 PM
Funny, Jonathan! (See Jonathan's 13:47 post.) I'm going to abstain from the whole mad-cow discussion, however, not wanting to be hauled into court a la Oprah by Texas cattlemen!

 
 
  Jonathan Levinson   5/20/200,  1:49:50 PM
Keith, many Ellioticians have been watching the 919 line, specifically 919.71 - 919.72. I'd prefer to see a decisive break below 919 that holds for longer than a few moments, but that said, I agree with your read and feel like those lower lows are on their way.

 
 
  Jonathan Levinson   5/20/200,  1:47:15 PM
The resilience in MCD's could have something to do with suppositions about the amount of meat in their burgers :)

 
 
  Jeff Bailey   5/20/200,  1:46:12 PM
SureBeam (SURE) $3.22 +9.15% ... stock benefiting from "mad cow" reports.

 
 
  Linda Piazza   5/20/200,  1:41:02 PM
For those at work, CNBC is now telecasting a briefing on the Canadian situation with mad cow disease.

 
 
  Linda Piazza   5/20/200,  1:38:43 PM
Here's that possible bearish pattern I'm watching on the OEX, as seen on the fifteen-minute chart. It's visible on the five-minute through hourly charts. Link

 
 
  Jonathan Levinson   5/20/200,  1:33:49 PM
Live cattle futures are down 1.50 today, leading the decliners within the CRB, so not much reaction to the story thus far.

 
 
  Jonathan Levinson   5/20/200,  1:32:34 PM
I don't eat their burgers and don't hold their stock, but MCD could be reacting today to news out of Canuckistan that there's an outbreak of Mad Cow Disease in British Columbia.

 
 
  Jonathan Levinson   5/20/200,  1:29:36 PM
Here we go. QQQ goes negative on the day, QQV still down .50 as option traders continue to snore, TICK.NQ -522, TRINQ 1.50, FVX -5.7.

 
 
  Linda Piazza   5/20/200,  1:28:56 PM
As the OEX approaches yesterday's low and the bottom of the possible bear-flag pattern, the hourly 5(3)3 stochastics make a bearish kiss.

 
 
  Jonathan Levinson   5/20/200,  1:22:27 PM
Nothing for bulls or bears to get excited about here. QQQ is becoming short term oversold, while the up-phase is truncating on the longer intraday timeframes. So, we could either break down from here or rebound back up- a completely useless observation, but at least it's accurate :) The weakness in treasury yields gives me a bearish bias toward equities, so my *guess* is that the longer cycles will bring us down further. Uncertain, but bearish here.

 
 
  Linda Piazza   5/20/200,  1:21:26 PM
The fast line of the hourly 5(3)3 OEX stochastics is trying to hinge down, as is the RSI, giving a warning that weakness may be appearing. I wouldn't trust the 5(3)3's as giving a valid sell signal, much less on a mere hinging of the fast line, but it does alert me to pay attention.

 
 
  Jonathan Levinson   5/20/200,  1:13:06 PM
I'm hearing unconfirmed rumors that Tom Ridge is meeting with the President to discuss possibly raising the terror alert. Unconfirmed trader chatter.

 
 
  Linda Piazza   5/20/200,  1:04:28 PM
I'm having the same difficulty, Jeff (see Jeff's 12:44 post). I've been watching Sony for a week as it trades within a possible bear-flag formation, but the BOJ's almost daily announcements about emergency measures will have too much impact on Sony's future--deciding whether institutions buy or dump Sony's stock--to allow me to gamble on a play on a break of that bear-flag formation. It's got some support layered just beneath current levels, too. I had planned to enter two of Ray's listed credit spreads (UNH and ANF) today, if possible, but UNH ran away from me this morning while I was attending to a telephone call, so that the credit received for the sold put now makes the play less attractive, and ANF's fall today devalued the credit that would be received on its sold call. I'm was also thinking of one of Mike's combo plays (COF), but here, too, the credit received has deteriorated so much that I decided against the play.

 
 
  Jeff Bailey   5/20/200,  1:04:03 PM
McDonalds (MCD) $17.49 -3.9% ... drops suddendly from the $18.20 level after CNBC reports Canadian officials reporting one cow in Canada has been found to test positive for "mad cow disease."

 
 
  Jonathan Levinson   5/20/200,  1:02:17 PM
Note that the ADX has been declining today, signalling that on the 30 minute timeframe, this rise in QQQ is countertrend/corrective.

 
 
  Jonathan Levinson   5/20/200,  12:58:20 PM
Here's how it looks on the 30 minute candles. Resistance is approaching on the oscillators, but stronger resistance (implied by the trendline retest) is considerably higher. Link

 
 
  Jonathan Levinson   5/20/200,  12:47:26 PM
Agree, Jeff, as far as QQQ goes. It seems like a dead heat short term between longs and shorts at current levels.

 
 
  Jeff Bailey   5/20/200,  12:44:00 PM
Been looking hard and long/short for a trade, but having a tough time finding anything right now that jumps out at me.

 
 
  Jonathan Levinson   5/20/200,  12:43:25 PM
Treasury yields continue to decline, with FVX now down 3.8 bps. TRINQ .91, QQV -.51, TICK.NQ -112. So far, today has worked off the extreme short term oversold readings on the oscillators with a 22 cent gain for QQQ.

 
 
  Linda Piazza   5/20/200,  12:39:29 PM
The unwritten addendum to my "if the OEX can maintain this (466.25) level" in my 12:35 post is that if it can't, the hourly 5(3)3 stochastics show the energy already expended to make another attempt, relieving much of the oversold pressure. A turn down in this indicator as well as the others might not bode well for the OEX, particularly as today's trading is beginning to look a lot like a bear-flag formation on the hourly charts.

 
 
  Linda Piazza   5/20/200,  12:35:22 PM
Here's that OEX 466.25 level again. The hourly 5(3)3 stochastics cycle up strongly and have not quite reached the overbought levels again. This last move turned up the 21(3)3's, too, as well as the RSI, and CCI is almost (but not yet) crossing into positive territory. Let's see how this test comes out, but if the OEX can maintain this level, that 469-470 test may happen after all. I don't have strong hopes that the OEX can move above 470 at this time, however.

 
 
  Linda Piazza   5/20/200,  12:31:53 PM
My only contribution to the DJX expiration/settlement question from Jonathan's and Ray's posts is that the Friday-morning settlement on some of these options is not based on opening value of the underlying index, but on opening value after all the stocks in the index are opened. For example, if a stock were halted for an hour on pending news, you might be subject to whatever market maneuvering went on during that hour, too. I'm not sure if that's true of the DJX and NDX options, as I don't trade them, but it is true of some other options with Friday-morning settlements, I believe.

 
 
  Linda Piazza   5/20/200,  12:26:29 PM
Reader Question: How do you read the ADX?

Response: Stockcharts has good basic information on the ADX. Here's the overview: Link Here's the explanation of +DI: Link Here's the explanation of -DI: Link

Note that the color of +DI and -DI can vary on different charting services, so you'll have to check with your service to see which is the + and which is the -DI.

 
 
  Jonathan Levinson   5/20/200,  12:21:27 PM
The USD:CND ratio is down more than 1.30% to 1.3452 today, and I'm still completely unable to comprehend what might have possessed the Bank of Canada to hike its rates twice this year. This appears to be macroeconomic suicide, so I must be missing something. It sure seems like the world would be a better place without central bankers.

 
 
  Jonathan Levinson   5/20/200,  12:14:59 PM
The put to cal ratio is down to .81. TRINQ .97, TICK.NQ -180, QQV -.37. Bond yields all deeper in the red. No breakdown, but also no challenge of MSFT 25 or QQQ 28.

 
 
  Linda Piazza   5/20/200,  12:03:50 PM
On the OEX hourly chart, we're seeing consolidation near yesterday's lows while the 5(3)3 stochastics move out of oversold territory. This is not what bullish traders want to see, but this action cheers the hearts of bears. If bullish traders are caught in trades waiting for a better exit, consider how your accounts will be impacted if the OEX falls toward 458-460. Does that fit your trading plan? If not, consider how you'll react to that possibility. Watch those hourly 5(3)3 stochastics, noting what happens as they move toward overbought levels again. Currently, the fast line measures 49.94, and the slow line only 33.08. A fall toward 460 is not guaranteed if the 5(3)3's turn down again, especially as historical support can be found near 462.50-463, too, but it's a possibility that must be considered. For those of you in bearish trades, watch that 466.25 level, as a move through that much-tested level might propel the OEX back toward 469-470. Does that fit your trading plan?

 
 
  Ray Cummins   5/20/200,  12:00:59 PM
Premium-Selling Question-- E-mail Reply With regard to Jonathan's comments on the question about DJX premiums: I agree completely, but I am also open to correction/clarification as the DJX/NDX options are not my specialty.

I suspect the answer may exist in the difference between the last trading day for DJX options (European - cash settled), which is ordinarily on the business day (usually a Thursday) preceding the day on which the exercise-settlement value is calculated, and the actual expiration date, which is the Saturday following the third Friday of the expiration month. Also, the settlement value is calculated based on the opening prices of the component securities on the business day prior to expiration, which is usually a Friday. Thus, the sequence is:

Thursday -- options stop trading
Friday -- settlement value calculated, based on the opening prices.
Saturday -- actual expiration of options

A similar situation exists with the Nasdaq-100 (NDX) options, which are normally traded through Thursday or the day preceding the day on which the exercise-settlement value is calculated. The exercise-settlement value is calculated on the last business day (usually a Friday) before the expiration date, and that is also the last day that NDX options can be exercised, because they actually expire on the Saturday, following the third Friday of the month.

Hope that helps...and all of the info about a particular issue or index can generally be found at the option exchanges' web-sites: WWW.CBOE.com, WWW.AMEX.COM, WWW.PHLX.COM, etc.

 
 
  Linda Piazza   5/20/200,  11:48:15 AM
Decliners have now pulled 86 issues ahead of advancers on the Nasdaq, with down volume still slightly ahead of down volume. On the NYSE, up volume remains slightly ahead of down volume, but the adv/dec slipped from its earlier 1.65 ratio to the current 1.4 ratio. Total volume is 523 million shares on the NYSE and 674 million on the Nasdaq.

 
 
  Jonathan Levinson   5/20/200,  11:45:30 AM
The put to call ratio has come down to .88.

 
 
  Jonathan Levinson   5/20/200,  11:44:28 AM
With respect to that post regarding DJX options, the closing price is determined by the opening print on Friday, as far as I know. There is therefore "gap" risk for options shorted on Thursday's close, as you cannot trade the contracts but the closing price is set by the DJX's Friday open. Please correct me if anyone has info showing my understanding to be wrong.

 
 
  Ray Cummins   5/20/200,  11:41:53 AM
Premium-Selling Strategies -- An "Expiration" Question

Here's a question from one of our readers for the Market Monitor group. Any comments would be appreciated!

[In May] The DJX option expires on the third Thursday, 5-15-03. By 4 PM, the INDU closed at 8714.80. At 4:07 PM, DJX 87 PUT DJXQI stopped at 87.13 for quite a while and there were 1000 contracts bid at 0.20 and 50 contracts ask at 0.30. I sold one put contract at 0.20 that executed immediately and the bid became 999 contracts. I placed two more orders that went smoothly. They should have expired worthless but I was afraid of selling more in case I was wrong. The last four trades on Times and Sales were at 0.30 from 4:16 - 4:20:22. You can see the record on QCharts. ETrade also showed the final bid/ask as 0.20 X 0.30 with a last price of 0.30. I checked my account the next (Friday) morning. Everything is fine and the margin availability recovered as well. DIA options on 5-16 were normal. The OTM Bid disappeared before 4 PM.

My guess is that some people don't know DJX options expire one day earlier, so it still shows time value. The $87 call bid was 0.25 after 4pm, that also shows 0.10 excess time value. Dow stocks stop trading shortly after 4pm. If there was a disaster (bad new) at 4:10, will the DOW and DJX plunge? If not, then it is no-risk premium selling. The NDX options had a similar situation with the 1150 put bid at 0.60 while the NDX closed at 1160.99. I am not sure if this month was abnormal for the DJX. Your input would be greatly appreciated. MC

 
 
  Linda Piazza   5/20/200,  11:39:59 AM
The OEX now approaches yesterday's low of 463.60. For anyone in a current bearish play, this morning's action has been encouraging, but with strong support just below near 460, I'm not sure that a breakdown below yesterday's low would be a great new bearish entry.

 
 
  Jonathan Levinson   5/20/200,  11:38:28 AM
The QQQ h&s is getting tested right now, and a break below 27.70 will have me looking for QQQ 27.45 as a potential target.

 
 
  Jonathan Levinson   5/20/200,  11:32:10 AM
AMGN is resting on its 42 dma within a massive bear wedge. A breakdown from current levels should kick off big selling in that issue, in biotechs in general, and in QQQ.

 
 
  Jonathan Levinson   5/20/200,  11:29:42 AM
Still very little commitment to either the upside or the downside, but after yesterday's selling, that on its own is quite telling. Where are all those dippers? Yields are all negative across the curve now, with FVX down 1.8 bps. Either it's Al Green's intervention money hitting the tape, or traders are fleeing into bonds- probably both.

 
 
  Linda Piazza   5/20/200,  11:20:00 AM
Several times over the last week, the SOX has approached within four or five points of its 200-ema, including yesterday's approach. Today, the SOX low of 336.08 was only a little more than a point above its 200-ema of 334.96.

 
 
  Jonathan Levinson   5/20/200,  11:19:08 AM
FVX has just gone red, now net buying in the five year treasury, TNX and TYX still green.

 
 
  Jonathan Levinson   5/20/200,  11:18:24 AM
QQQ is testing the neckline of the h&s formation I'm watching, currently 27.75. QQV is down .22, TICK.NQ -565, TRINQ up to 1.16.

 
 
  Linda Piazza   5/20/200,  11:10:24 AM
The FTSE 100, CAC 40 and DAX currently trade relatively near their early-morning levels, with the FTSE 100 up 37.80 points or 0.96%, at 3979.10; the CAC 40 up 13.06 points or 0.46%, at 2880.35; and the DAX up 6.06 points or 0.21%, at 2856.74.

 
 
  Jeff Bailey   5/20/200,  10:55:39 AM
Credit Spreads ... Ray Cummins of OI discusses selected "combinations" in his weekend commentary. Link

Ray doesn't know this yet, but I will be using his plays at the DTG meeting to see how a trader might look at some of Ray's profiled plays to make a selection decision for their own account.

 
 
  Jonathan Levinson   5/20/200,  10:52:14 AM
I'm watching a head and shoulders formation develop on the 3 minute candles. A decline from here should see an assault on the neckline in the QQQ 27.73 area.

 
 
  Linda Piazza   5/20/200,  10:51:01 AM
Volume patterns today show more advancing than declining issues, with a 1.65 adv/dec ratio on NYSE-traded issues and a more neutral 1.2 ratio on Nasdaq-traded issues. Up volume is slightly ahead of down volume on both the NYSE and Nasdaq, but not by much, belying the strength seen in the adv/dec ratios. New highs continue to vastly outnumber new lows. Total volume is 312 million shares on the NYSE and 443 million on the Nasdaq.

 
 
  Jeff Bailey   5/20/200,  10:50:05 AM
Institutional type of market bullish % indicator from Dorsey/Wright and Associates is the Bullish % for Optionable stocks (BPOPTI). Idea behind the creation of this bullish %, is to get a feel for optionable stock, where institutions tend to "buy" options (either close out naked puts that were sold when market risk was low, or buy to open positions when stock prices have rebounded and option premiums are low to hedge portfolios) has this bullish % currently at 66.98%. For those with either FREE trials at www.dorseywright.com or have subscription, will note that this bullish % hasn't seen 70% for years! Latest high reading looks to have been 68% (on 2% box scale) back in mid-May of 2001.

It is thought that when this indicator of only those stocks with listed options turns, is when institutions are often times picking up the pace of their option strategies.

On Thursday, I will be giving a presentation to the Denver Trading Group and will be discussing the options strategy of credit spreads. Will discuss the bullish % data to make a case for looking to implement bear credit spreads where we will most likely look at selling an in/at the money call short, and taking some of proceeds to buy and out the money call for protection.

 
 
  Jonathan Levinson   5/20/200,  10:36:40 AM
The put to call ratio opened at 1.33, then came down to .98 for the past half hour. FVX is still 2.1 bps, TRINQ 1.03, TICK.NQ -248. Looks like rangebound indecision for the moment.

 
 
  Jeff Bailey   5/20/200,  10:35:45 AM
S&P Banks Index (BIX.X) 291.79 -0.15% ... session lows here and fractionally red. Shorter-term 21-day SMA currently being tested here. Slight weakness here has S&P 500 (SPX.X) 921.59 +0.08% relatively unchanged, narrower S&P 100 Index (OEX.X) 464.75 +0.15% holding fractional gain.

Interesting that as BIX.X finds 2-day support at its 21-day SMA Link , SPX broke below its 21-day SMA yesterday Link , and morning high of 925.34 finds the 21-day SMA in SPX (925.79) serving some resistance in early morning trade.

 
 
  Jeff Bailey   5/20/200,  10:24:41 AM
Dow Industrials (INDU) 8,521 +0.34% ... Link currently holds a 30-point gain. Without Home Depot (NYSE:HD) $30.77 +9.5% Link Dow might be in the red at this time.

Drug giant Merck (NYSE:MRK) $55.09 -2.7% Link leading Dow decliners, most likely seeing some follow through negativity from yesterday's Supreme Court ruling regarding Maine RX.

I'm somewhat "uncertain" on this Maine RX ruling. If I were a Supreme Court judge, but not knowing law, I would have ruled against. I would leave it up to the MARKET to establish what I could or could not charge for drugs a company manufactures. If Medicaid thinks it has buying power and can set price, then negotiate that price with your buying power. Shouldn't need the Federal courts to try and establish price ceilings. That would be something "socialists" do.

With economist's worried about deflation, will Supreme Court rule next that consumers should pay higher prices for other goods where price is falling. How about we set a floor on aluminum prices and other goods/services and mandate price increases each quarter.

 
 
  Linda Piazza   5/20/200,  10:22:50 AM
The OEX continues to have trouble with the 466.25 level, but hourly oscillators look stronger, with the 5(3)3 stochastics and RSI cupping up now. It's always possible that the OEX could consolidate in its current just under 466.25 while those oscillators relieve oversold pressure and then drop again as they cycle back down, but that's not yet certain. That development would be even more bearish than an unsuccessful attempt at the midpoint of yesterday's range, of course.

 
 
  Jonathan Levinson   5/20/200,  10:17:20 AM
The fed still can't be bothered to update their website, but I've just caught a press release to the effect that the fed has added 5.5B via overnight repo, which is a .75B net add over yesterday's unreported expiring 4.75B repo.

 
 
  Jeff Bailey   5/20/200,  10:15:26 AM
Nextel (NXTL) $14.24 +4.3% .... mentioned earlier this morning per subscriber question from yesterday's e-mail. Stock at session high here and makes its way back above 21-day SMA of $14.11. Look for continue move higher on move above $14.25 and 5/14/03 rally high of $14.21, which NXTL looks to be moving above here.

 
 
  Jonathan Levinson   5/20/200,  10:13:21 AM
So far MSFT can't even touch 25 and QQQ 28. The TRINQ got down to .66 there, but still no real convinction to the buy side.

 
 
  Linda Piazza   5/20/200,  10:06:24 AM
Before the OEX can make an attempt at the midpoint of yesterday's range, it first has to clear 466.25, a level of resistance yesterday afternoon and in earliest trading this morning. Hourly oscillators currently attempt an upturn, but it's tentative as yet. Let's watch this latest attempt at 466.25.

 
 
  Jeff Bailey   5/20/200,  10:05:49 AM
SIGA Tech (SIGA) $2.17 +19.8% .... Link opened "hot" at $2.34 rose to $2.39 and settles back after it and Plexus Vaccine announced it filed patent in Denmark for SARS vaccine. Patent will look to cover a proprietary method of identifying and validating antigens with results obtained by analyzing the genetic variants of the SARS agent.

 
 
  Jonathan Levinson   5/20/200,  10:03:55 AM
The USDX is down to 93.61, yet June gold is down to 366.90, up 2.50. HUI is -1.42, XAU -.17, and the FVX is up 2.2 bps.

 
 
  Jonathan Levinson   5/20/200,  10:02:26 AM
QQQ is taking another run at the descending trendline. The TRINQ at .83 shows that it's a pretty half-hearted attempt, given the sub-.30 readings that recent jams have generated. QQV is up .23, TICK.NQ -81.

 
 
  Jonathan Levinson   5/20/200,  9:56:08 AM
Well, I'm impressed with that print above 27.90, but apparently the market is not, because it isn't holding. Looking at my chart, QQQ 28 seems to be pretty good resistance from here, and a failure to break above and hold 28 should be a good short entry.

 
 
  Jonathan Levinson   5/20/200,  9:48:29 AM
QQQ is walking down beneath a descending trendline from yesterday afternoon, and a trade above 27.90 will represent a bullish upside violation.

 
 
  Linda Piazza   5/20/200,  9:39:42 AM
The OEX opened below the midpoint of yesterday's range, one plus in the bears' camp. At the end of trading yesterday, hourly stochastics were indicating a possible bump up at the opening. If that bump up should occur, the best-case scenario for bears is for the move to stop short of the midpoint of yesterday's range, which would be 469.15, just below an important retracement value from last year that has provided S/R in the past. Bears would hope to see the hourly oscillators move all the way up toward overbought levels while that move occurred. Bulls surprised by yesterday's quick drop and wanting to exit on strength might watch what happens if the OEX should rise to that level, too. So far, that's not looking like a strong possibility since the first five-minute white candle has been eclipsed by a big red candle, but the day is still young.

 
 
  Jonathan Levinson   5/20/200,  9:39:26 AM
Oof... pretty sad bounce, if that's all they've got.

 
 
  Jonathan Levinson   5/20/200,  9:31:35 AM
Bullish open, with QQQ up .18 to 27.83, TRINQ 1.01, TICK.NQ -7, QQV -.13 to 26.91, FVX +2.1 bps.

 
 
  Jeff Bailey   5/20/200,  9:30:46 AM
Nextel Communications (NXTL) $13.65 ... Hi Jeff: I would appreciate your view of NXTL. It has held strong today against the market.What is your short term price target?

My short-term price objective on NXTL would be $14.50.

NXTL's PnF chart is bullish. Link after recently triggering a triple-top buy signal at $14.50. The resulting column of X ($12.50-$15.50) builds a bullish vertical count column with a longer-term price ojective of $23. First sign of weakness would be a trade at $11.50, which would be a break of trend and generate a double-bottom sell signal.

According to Dorsey/Wright and Associates, NXTL is a "telephone" stock. Dorsey's "Telephone" sectur bullish % (BPTELE) is "bull confirmed" at 50.35%, meaning that for every 100 stocks in the sector, 50.35 of them have a "buy signal" associated with their PnF chart. NXTL is one of them and trades in an upward trend, so my technical view of the stock is bullish.

 
 
  Jeff Bailey   5/20/200,  9:07:35 AM
09:00 Update posted at this Link

 
 
  Jim Brown   5/20/200,  8:52:59 AM
Reloading App (Market Monitor will be down for 5 minutes)

 
 
  Jonathan Levinson   5/20/200,  8:50:25 AM
The New York Fed *still* hasn't updated its website, and so yesterday's 4.75B overnight repo still hasn't been announced. Hopefully they'll get it together today, because long distance phone calls from Canuckistan aren't cheap. The New York fed's address and phone # are 33 Liberty Street New York, NY 10045 (212) 720-6130. If they don't start updating today, I'll try to find someone for whom it's a local call to get in touch with them.

 
 
  Jonathan Levinson   5/20/200,  8:35:39 AM
It's been choppy, but the US Dollar Index has recovered to 93.75. Nevertheless, June gold just printed 370 before my very eyes, currently 369.70 up 5.30. NQ3M is up 4.50 to 1118.50, ES +1.50 to 923.75 and YM +25 to 8515. Yields are up, FVX +2.1 bps, TNX +2.6 and TYX +1.4.

 
 
  Linda Piazza   5/20/200,  7:21:41 AM
Good morning. With the dollar trading above 117 yen, the Nikkei opened down but early trading proved volatile. The Nikkei fell as low as 7962 and climbed as high as 8100 within the first 90 minutes of trading. In the afternoon session, the Nikkei made a series of lower highs with bounces from the breakeven level, managing a positive close, up 20.35 points or 0.25%, at 8059.48. Tech stocks lost ground. Among the financials, Mizuho Holdings and UFJ Holdings declined, although Resona retraced some of Monday's 17% loss after the government agreed to bail out the bank in an emergency meeting this weekend. Two developments probably propelled the Nikkei's bounce. Finance Minister Masajuro Shiokawa affirmed that the government might sell yen, firming the dollar against the yen, at least temporarily. Many had speculated over the last week that BOJ had been actively intervening to keep the yen from further strengthening against the dollar. Also, after announcing increased economic risks due to SARS, the dollar's decline, and a sluggish global economy, the BOJ announced a decision to raise the reserves made available to lenders. By the end of the day, carmakers such as Honda and Toyota had gained. Sony dropped again, but Sega gained after announcing the resignation of its president.

In other Asian news, Taiwan is now the site of the most new SARS infections. The Taiwan Weighted closed flat, however, down 4.21 points or 0.10%. In South Korea, SK Global plummeted with its parent company SK Group planning a bailout plan for the affiliate, the trading arm of SK Group. South Korea's Kospi closed up 5.72 or 0.96%. Hong Kong's Hang Seng closed down 36.97 points or 0.41%.

The FTSE 100, CAC 40, and DAX trade up this morning, although none have recovered key psychological levels. France saw its GDP rise 0.3%, with exports decreasing 0.7% and imports rising 0.7%. In other European news, two groups of airlines banded together, seeking cost savings that might be granted to bigger purchasers, with one group consisting of Air Canada, Austrian Airlines, and Deutsche Lufthansa, and the other group consisting of Air France and Alitalia. The announcement didn't seem to help the airlines, as Lufthansa and SAS still dropped while Air France was unchanged in early trading. ASML Holding gained in early trading after saying that it sold a lithography system to a joint venture between UMC, Infineon Technologies, and Singapore's Economic Development Board Investments. As of this writing, the FTSE 100 was up 31.80 points or 0.81%, to 3973.10; the CAC 40 was up 16.22 points or 0.57%, to 2883.51; and the DAX was up 23.16 points or 0.81%, to 2873.84.

 
 
  James Brown   5/19/200,  9:43:14 PM
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