Option Investor
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  Jeff Bailey   5/23/200,  7:39:09 PM
Annika Sorenstam fails to make cut at the Colonial.

S&P futures settled 932.20

  Jonathan Levinson   5/23/200,  6:26:57 PM
Wasn't me, Jim!

  Jim Brown   5/23/200,  5:11:10 PM
New SARS travel alert for Toronto just announced. Five new cases today.

  Linda Piazza   5/23/200,  4:44:38 PM
Concerning my 15:56 post, several readers wrote suggesting the Dow Jones Food and Beverage Index, FOB on BigCharts and $DJUSFB on Stockcharts.com. Thanks, readers!

  Jim Brown   5/23/200,  4:26:36 PM
Another interesting tidbit. The new 52-week highs were 660 and new lows only 47. That could be the highest ratio for the year. I will have to research that later. This is very bullish.

  Jim Brown   5/23/200,  4:19:35 PM
Jeff, sounds like a great idea for the Index Trader Section.

  Linda Piazza   5/23/200,  4:17:47 PM
Have a great holiday, everyone. Get away from the markets and try not to even think about them, except when you read this weekend's newsletter, of course!

  Jeff Bailey   5/23/200,  4:17:09 PM
YWL You're Welcome Linda. I knew that iShare pamphlet I keep getting would be worth saving some day.

I'm going to see if Jim would be interesting in a market monitor sector for day-trading iShares.

  Linda Piazza   5/23/200,  4:12:42 PM
Thanks, Jeff.

  Jeff Bailey   5/23/200,  4:12:13 PM
Linda Oh yes! I'm always tracking such things (GRIN). Actually, you might be able to use the iShares Dow Jones Non-Cyclical Sector Index Fund $42.42 +0.04%. Here's a link to the iShare site. Link

I did get on their e-mail list when I put the "Beetle's Balanced" fund together.

  Jonathan Levinson   5/23/200,  4:04:44 PM
Happy holiday, all!

  Linda Piazza   5/23/200,  3:56:20 PM
Jeff, here's a question for you. Do you know of a sector that includes beverages companies such a KO and PEP, and companies such as YUM, MCD, and JBX? Something other than the broad consumer cyclical sector? I'd like to check sector strength, but I haven't been able to find a sector that's specific to those types of stocks.

  Jeff Bailey   5/23/200,  3:54:26 PM
SPX 932.82 +0.1% ... "right shoulder" of 933.70 saw bid to 934, but encountered the 21 and 50-pd SMA. Then failed right back to WEEKLY R1. From here, intra-day bull would look to sell the rally back to break-even and have a good weekend. No rally back, then sell the close and still have a good weekend.

  Jim Brown   5/23/200,  3:50:40 PM
Thank you SG Cowen. QCOM puts were the editors play last Sunday. Fortunately the gap up on Monday gave us a good entry. Now ready for the bloom to fade.

  Linda Piazza   5/23/200,  3:48:33 PM
QCOM, 30.84, down $.51 gapped down today after being cut to a market performer by SG Cowen, with SG Cowen citing excess chip inventories, increased competition, and slower subscriber additions, according to a Marketwatch.com article. Earlier in the week, QCOM reaffirmed its guidance, but that hasn't made a difference today, with the stock slipping. OBV has been trending down on the daily chart, and there's now a bearish kiss on the daily 5(3)3 stochastics. Jim mentioned earlier in the week that he thought that QCOM's early-week bounce was a gift to traders who wanted to get in on his editor's play from last weekend, and it looks as if he was right with QCOM bumping up to 32 at one point this week.

  Jonathan Levinson   5/23/200,  3:42:41 PM
If index prices hold steady through the close Tuesday will open after an inside day, a hanging man doji, a vix bouncing at its lows and a neutral Put Call. Could be the start of something bearish.

Yes, Dan. I agree.

  Jeff Bailey   5/23/200,  3:28:43 PM
SPX 933.82 +0.2% ... now back near potential "right shoulder". Worth a bid here for short-term calper in the SPY. VIX.X headed lower tends to bring a bullish near-term bias. Play to 936 at close. 5-minute Stochs nearing "oversold"

  Jeff Bailey   5/23/200,  3:25:30 PM
VIX.X Alert! ... getting VIX.X alert at 21.22 level.


Tuesday may be interesting trade action...

  Linda Piazza   5/23/200,  3:23:19 PM
The last four OEX hourly candles march along in a line, with those candles spanning a tight one-point range.

  Jeff Bailey   5/23/200,  3:16:58 PM
Another potential reverse head/shoulder setup on 5-minute chart of SPX.

See the "left" shoulder at 933.34, then head at WEEKLY R1? Might look for decline back to 933.34 to firm, then begin to "kick" higher. Neckline would be yesterday, and today's highs. Objective gets SPX to about 936, which might tie in with the 61.8% retracement of WEEKLY retracement.

Could look to play the "right shoulder" back near 933.34, but would really like to see 5-minute Stochs back at "oversold," Then stop goes just below the head of the potential pattern, which is WEEKLY S1.

  Linda Piazza   5/23/200,  3:15:01 PM
SONY (SNE 26.02, up $.75): Sony has been a big gainer today, gaining almost 3%, but I note that volume is about half its average daily volume of 2.6 million shares traded. Although I don't want to make too much of volume issues today when volume will probably be light across the board, this is something for bullish and bearish traders alike to note. Gains like this should be made on strong volume, not lighter-than-normal volume, so here's one divergence that should be tucked away somewhere in the backs of traders' minds.

  Jeff Bailey   5/23/200,  3:04:28 PM
SPX 934.29 +0.25% .... traders trading levels and cognizant of them, might look to press the SPX higher here on move above the 5-minute interval 21 and 50-pd SMA. "Thinking" that other intra-day traders not cognizant of levels may have been playing the SPX bearish on break below this short-term trade. Short-term bull looks to benefit from short-covering is only thought.Link

Ooops! Just noticed that time interval was set at 3-minutes. This happens to me sometimes when I'm typing elsewhere and forget to click out of q-charts.

  Linda Piazza   5/23/200,  3:04:05 PM
All week, GE has been clinging to its 200-ema and an ascending trendline formed off the February and March lows. GE has printed three doji's (including today's, if it remains a doji) during the week. Daily oscillators turn up, but OBV has been trending down since the end of April. ADX has also been trending down since late April as the rally momentum died and GE broke through another, steeper ascending trendline. Selling pressure had been rising, but has abated this week as those doji's have been printed. CCI is on the point of moving up through the oversold line, but hasn't yet done so. Either GE is basing here, getting ready to move up from that 200-ema and the lower of its two recent trendlines or else it's getting ready to break through that support. I don't know which it is yet, and apparently neither do GE investors as their indecision is depicted by those doji's.

  Jeff Bailey   5/23/200,  3:00:45 PM
SPX 934.00 ... encounters 5-minute resistance at both 21 and 50-pd SMA. If SPX can get above, look for a test of session high 935.20 on day-trader short-covering. If not, and break back below WEEKLY R1, then risk to 930 assessed.

  Jonathan Levinson   5/23/200,  2:55:22 PM
QQQ is up 2 cents on the day. TRINQ .68, TICK.NQ +52, QQV -.22 to 25.15, VXN -.15 and back below 30 at 29.97.


  Linda Piazza   5/23/200,  2:55:09 PM
The DAX closed down 42.38 points or 1.48%, at 2822.83.

  Jeff Bailey   5/23/200,  2:51:33 PM
SPX 933.20 +0.14% ... right at WEEKLY R1, looking for a bounce higher.

  Jonathan Levinson   5/23/200,  2:43:51 PM
Bears are breaking out the champagne over a 5 cent dip in the Qubes. Whattaday.

  Ray Cummins   5/23/200,  2:41:10 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

Earlier, I highlighted Marvell Electronics Group (NASDAQ:MRVL) as today's "stand-out" performer, however there are a number of other issues enjoying upside momentum in the portfolio. Altria Group (NYSE:MO), Avid Technologies (NASDAQ:AVID), Adtran (NYSE:ADTN), Beazer Homes (NYSE:BZH), Broadcom (NASDAQ:BRCM), Genetech (NYSE:DNA), and Omnivision Technologies (NASDAQ:OVTI) are among the session's best performers. On the downside, small declines have emerged in Unitedhealth Group (NYSE:UNH), Career Education (NASDAQ:CECO) and Serena Software (NASDAQ:SRNA). The speculative calendar spread in SRNA is the only position of immediate concern as the issue fell almost 7% after the company said its current quarter's profit could fall shy of consensus estimates. Our "time-selling" position expires in August, but a continued retreat in the issue's share value will make it difficult to achieve a profit in the play. With that outlook in mind, conservative traders are reminded to use sound money-management techniques to limit potential losses in the position.

  Jeff Bailey   5/23/200,  2:34:23 PM
Funny.... PHF $8.55 +0.82% ... making move today. Remember the late 1990's and "split runs?" I'm thinking about strategies for "dividend runs!" PHF pays a dividend each month. You don't think....

But a short-term equity trader might want to keep this in mind!

  Linda Piazza   5/23/200,  2:34:01 PM
The OEX again moves above that diamond formation highlighted in my 11:32 post, but it's more of a sideways trade than a move up. I've always questioned the trustworthiness of the predicted target in today's kind of trading and this sideways move out of the pattern while hourly oscillators flatten makes me even more distrustful. Nevertheless, the prediction is for a minimum four-point move. As I mentioned, I don't know that I'd consider an OEX directional play on a low-volume Friday afternoon ahead of a three-day holiday with a possible four-point move, barely covering your bid/ask spread if you tend to buy OTM options. That doesn't sound like a good risk/reward parameter.

  Jonathan Levinson   5/23/200,  2:26:20 PM
USD Index breaks to 92.91.

  Jeff Bailey   5/23/200,  2:25:16 PM
Wondering too.... If the stellar performance among many of the "junk bond" funds wasn't partially attributed to the "tax cut" issue. Oooooeeee! That Pachholder High Yield (NYSE:PHF) $8.55 +0.82% has been on fire hasn't it? Link

  Ray Cummins   5/23/200,  2:22:15 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

With regard to Jeff Bailey's recent presentation on "bear-call" credit spreads: I hope things went well! Our portfolio has a number of candidates in that strategy and thankfully, the majority of plays are profitable. Positions in Alliant Techsystems (NYSE:ATK), Federal National Mortgage (NYSE:FNM), International Paper (NYSE:IP), General Motors (NYSE:GM), Abercrombie & Fitch (NYSE:ANF), Johnson Controls (NYSE:JCI), 3M Corp. (NYSE:MMM), Goldman Sachs (NYSE:GS), Forest Labs (NYSE:FRX), Krispy-Kreme Donuts (NYSE:KKD) and Proctor & Gamble (NYSE:PG) are trading below their respective sold (call) strikes and most are trending lower in today's session. The group that has given us the most trouble in recent weeks is Oil & Gas Service shares and spreads in Devon Energy (NYSE:DVN) and Nabors Industries (NYSE:NBR) have previously been closed to limit losses.

  Jim Brown   5/23/200,  2:15:54 PM
Jonathan, got that river too: Link Don't have the nice trees in southern Colorado as you do in Canada.

  Jeff Bailey   5/23/200,  2:15:46 PM
Dow Dogs for 2003 ... At the end of 2002, I benchmarked the "Dow Dog" strategy, which had me taking the top 10 yielding Dow stocks (based on 12/31/02 close) and placing them in a portfolio. I then hypothetically invested an equal $1,000.00 in each. Link

I also separated them using the "little dog" theory that of the 10 highest YIELDing, take the 5 lowest-priced (T, GE, HON, SBC, JPM). The thinking for the "little dogs" is that an income oriented investor that likes a dividend, will "psychologically" buy the lower priced stock, as it appears "cheap" relative to the same dividend yielding, but higher priced stock.

  Jonathan Levinson   5/23/200,  2:15:37 PM
ust got out of gold, want to get back in. What opioun on support and resistance in regard to this latest move?

From the chart below, it looks like a bullish cup and handle formation printing. I've highlighted the horizontal support areas. An upside breakout without a pullback will be a strong trending move, but there's plenty of supply at the 390 level, and so waiting for that level to get cleared would be the conservative move if we don't get a pullback first.


  Linda Piazza   5/23/200,  2:09:33 PM
Volume now is 785 million on the NYSE and 987 million on the Nasdaq. On the NYSE, advancers lead decliners by almost 2:1, while the ratio is smaller on the Nasdaq. Up volume leads down volume by about 2:1 on both the NYSE and Nasdaq. New highs continue to outnumber new lows, but we're seeing another day of double-digit new lows,this time on both the NYSE and Nasdaq.

  Jonathan Levinson   5/23/200,  2:07:53 PM
Jim: And a river runs through it...

All kidding aside, I've always been an avid camper, canoeist, mountain biker and freestyle footbag player. My dream is to clear enough coin from my trades to buy nice big piece of Canada's woods and retire from the madness. You've gotta see roadrage to believe it.

  Ray Cummins   5/23/200,  2:05:41 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

Today's modest advance has boosted a number of bullish issues in our portfolio, however one stock is enjoying outstanding upside momentum. Marvel Electronics (NASDAQ:MRVL), a recent synthetic position candidate, is up over 15% after the company announced favorable first-quarter sales and projected strong growth for the second quarter amid increased demand for its gigabit Ethernet and storage chips. Think Equity analyst Charlie Glavin boosted his target price on the issue to $35 in the wake of the better-than-expected performance, saying that "This growth comes despite macroeconomic weakness, as Marvell is benefiting both from new technologies that buck seasonality and market-share gains." Investors appear to agree with the optimistic assessment and the "short-covering" among bearish traders has simply added to this morning's sharp rally. Our speculative position in the issue offered up to a $2.50 gain in less than two weeks.

  Jeff Bailey   5/23/200,  2:04:20 PM
Just thinking ... Last night I gave a talk at the Denver Trading Group regarding Bear Credit Spreads as a way to try and generate income from an option strategy.

I wonder if today's tax cut on capital gains/dividends will see any type of pick up in option strategies that lend themselves to income? What impact might it have on the VIX.X or VXN.X?

  Jim Brown   5/23/200,  1:59:59 PM
Bond market is closed

  Jim Brown   5/23/200,  1:57:34 PM
Jonathan, traffic is heavy here in Colorado as well: Link Link Link

  Linda Piazza   5/23/200,  1:53:26 PM
The Dow Jones Transportation Index's behavior continues to be interesting in relationship to the retracement values associated with its March-to-March decline. Note that it's not as easy to get an exact retracement on stockcharts.com as it is on Q-charts, but Q-charts left out Monday's $TRAN candle, giving an entirely different looking candle for this week. Link Weekly RSI and stochastics (not shown) depict continued weakness in the $TRAN, but daily oscillators hint that the $TRAN could try one more (perhaps doomed to fail?) run at that 50% retracement value.

  Jonathan Levinson   5/23/200,  1:40:29 PM
MSFT has already exceeeded its average daily vol. with 62M shares traded so far.

  Jonathan Levinson   5/23/200,  1:35:42 PM
Traffic is still light on the Long Is. Expressway: Link

  Jonathan Levinson   5/23/200,  1:13:44 PM
FVX has gone positive, yet QQQ has backed off its highs.

While we wait for something to happen, we might take a moment to pontificate on the significance of liquidity in the markets. For the past few years, bonds have traded against equities- buying in one has implied selling in the other. For the past severall months, this relationship has changed, with Al Green's and Ben Bernanke's tidal wave of "anti-disinflation" liquidity buoying all asset classes, stocks, bonds and commodities. Cash has been the only position that has lost in this scenario relative to other asset classes. In a deflation or "disinflation", as the politically-correct fed now terms it, the reverse would be true. Taking it a step further, one sees how the average broker or portfolio manager will have a problem if (when) this sea of liquidity wanes. The brokers I've known have always relied on a "prudent" asset mix. Unfortunately, that kind of finessing has been rendered obsolete by the fed's aggressive inflation of the money supply. When it ends, my guess will be that cash and commodities (and shorts, both on bonds and stocks) will be king.

  Jonathan Levinson   5/23/200,  1:05:17 PM
Hey, I got mine, Jim :) Also loaded up on silver last weekend with part of next month's rent money to take advantage of the ludicrous runup in the Canadian dollar. On a bright sunny Saturday, I was sifting through bags of junk silver at the pawn shop for an hour before going for a hike up north.

  Jim Brown   5/23/200,  1:03:08 PM
Jonathan, too bad they intercepted your gold shipment.

  Linda Piazza   5/23/200,  1:02:34 PM
That threatened OEX upside breakout of the diamond seen on the hourly chart (see my 11:32 post) was a threatened breakout only. So far. As Alan mentioned earlier today, it's easier to run stops on a low-volume day, and I expect to see more of the same kind of market behavior as the afternoon progresses. With that said, I'm noting that while this morning's early gains turned the hourly oscillators back up again, they're moving back into territory depicting overbought conditions while the OEX treads water. The hourly RSI actually has a downward cast. Daily oscillators still look good, however, while the daily candle still depicts indecision.

  Jim Brown   5/23/200,  1:02:27 PM
Well if you get the urge to buy, the house next to me is for sale 6 MM DKK. Check out the picture from my front porch. Denmark in the summer isn't too bad as long as you stay from the socialists and the tax man. Rick. Link

Rick is a refugee from the Iraq area. He left there just before the war when the hostility was heating up against foreigners. Glad to see he found someplace nice to settle. Trading hours are much better than Maui.

  Jeff Bailey   5/23/200,  12:57:15 PM
Day after Memorial Day Jeff: Just for your information, last year the day after Memorial Day Holiday was...

Dow down -122.68 on Tuesday after Memorial Day

Dow down -179.01 for the week ending 05/31/02

NASD down -45.76 for the week ending 05/31/02

Thanks! Then maybe these Q's will do something! Odds are against it, but good info and lesson that history doesn't alway repeat and to NEVER overleverage in a trade.

  Linda Piazza   5/23/200,  12:55:23 PM
Seconding Jeff's 12:51 post, the OEX either hit or nearly hit (depending on how the neckline was drawn) its target predicted by the confirmed reverse H&S formation as seen on the one- and five-minute charts and referenced in an earlier linked chart.

  Jim Brown   5/23/200,  12:52:45 PM
Linda, I escape to the country several weekends a month but that kind of solitude could be detrimental to my work ethic. I actually like the snow. Other than digging out several cars for local residents in that last blizzard I loved it.

  Jonathan Levinson   5/23/200,  12:52:36 PM
The US Dollar Index is back to 93.02 and the bear wedge could be breaking down. Look out below if it does. It's difficult to take Al Green's "dollar-neutral" comments to heart while watching the fed pump in $5B today, the "morning-after" a massive selloff in the USD index taking that index to new multi-year lows. A few billion here and there, and even in the massive forex markets, it begins to add up.

  Jeff Bailey   5/23/200,  12:51:38 PM
SPX 934.39 +0.27% ... session high has been 935.05. Pretty close to the 935.0 intra-day reverse head/shoulder objective, and matches yesterday's high of 935.30. Look for cycle lower back to WEEKLY S1 of 933. Will note 50-pd SMA on 5-minute chart at 932.40 right now, and did serve support after break above neckline of reverse h/s pattern.

  Jeff Bailey   5/23/200,  12:47:09 PM
Genentech (DNA) $59.72 +1.7% ... having a tough day today. I don't see any new X's on the PnF chart. Link

  Linda Piazza   5/23/200,  12:45:22 PM
Developed by a winning publisher and writer as a creative sanctuary. . . . I could finish my latest novel. I think you should go for it, Jim, as a corporate office. Remember digging out from those snowstorms your wife photographed for the site?

  Jeff Bailey   5/23/200,  12:44:15 PM
Hmmmm.... Ben Stein on CNBC talking about how "overvalued" the NDX/QQQ is and that he thinks advance way overdone.

Per Jim's 12:34:18, maybe now's the time for me to go on "Star Search" and discuss the NASDAQ-100 Bullish % Link in front of Ben. Maybe I'd get his vote?

  Linda Piazza   5/23/200,  12:39:49 PM
After first turning back from the top of the diamond shape seen on the OEX hourly chart, the OEX now threatens to break out of the top. On a breakout either direction, the minimum move should be four points (471.27 top - 467.22 bottom = 4.05), with Meyers explaining that the move is usually bigger than the minimum. A caveat, however, is that this is going to be a low-volume afternoon and we could see lots of false moves. While I'm noting what I'm seeing on the charts for the benefit of readers, I'm not personally entering any directional OEX trades today because I don't trust technical analysis on a day like today, and I don't want to be stuck in a directional option trade over the long weekend. This week, I have entered some of the credit spreads from Ray's articles and one of my own, and I look forward to seeing what the premium decay does to them when trading resumes on Tuesday. I'm letting the long weekend work in my favor.

  Jeff Bailey   5/23/200,  12:39:00 PM
Maui? .... Oooooe! I see those pheasants on that picture. I had a client that owned a large ranch in those parts. He was always trying to tempt me with turkey hunting and goats at the ranch. Nice looking weekend getaway. Need GERN to hit about $200 to get me there though.

  Jim Brown   5/23/200,  12:34:18 PM
Staff? You obviously did not get the email about your change in employment status? (grin)

  Jonathan Levinson   5/23/200,  12:32:30 PM
Bear wedge on the US Dollar Index chart: Link

  Jonathan Levinson   5/23/200,  12:31:55 PM
Should limit it to the staff, then, Jim. Imagine how prolific we'd be with all that oxygen and volcanic soil to support us!

  Linda Piazza   5/23/200,  12:27:56 PM
The FTSE 100 closed down 10.60 points or .27%, at 3979.80, not able to make it back over 3980 resistance by the close. The CAC 40 closed down 6.11 points or .21%, at 2897.16, not able to maintain the 2900 level, although it did trade over that level several times during the day. The CAC closed near the middle of its range for the day. Currently, the DAX trades at 2836.75, down 28.46 points or .99%.

  Jonathan Levinson   5/23/200,  12:23:47 PM
The NQ3M contract is printing 1136, with a HOD at 1137. It's now testing resistance as profiled last night.

  Jonathan Levinson   5/23/200,  12:22:06 PM
You're right, Jim- wish I hadn't clicked.

FVX has crept up to a 1.6 bp loss, QQQ up to 28.22. TRINQ still neutrally bullish at .62, ditto TICK.NQ +1.68. QQV is up .08, VXN -.39. The put to call ratio is .73 for its last reading.

  Jeff Bailey   5/23/200,  12:15:23 PM
12:00 Internals

NYSE: VOL: 527M A/D 19:11 NH/NL 240:6

NSDQ: VOL: 707M A/D 16:12 NH/NL 115:7

  Jonathan Levinson   5/23/200,  12:13:16 PM
Thanks, Torsten!

  Jonathan Levinson   5/23/200,  12:09:08 PM
That webcam shot of the Long Island Expressway is live- refresh it for a current view. There's still no pickup in traffic.

  Linda Piazza   5/23/200,  12:08:44 PM
I'm watching the OEX turn down from the top of that potential diamond formation depicted in the chart linked to my 11:32 post, with hourly oscillators somewhat inconclusive, but daily oscillators looking more bullish. So far, the daily candle is a doji, however, so without a big move one direction or the other by the end of the day, that bullishness on the daily oscillators will be belied by the indecision seen in the daily candle.

  Jonathan Levinson   5/23/200,  12:00:35 PM
MSFT, which is now short term overbought on today's action, has already traded 52M shares against an average daily volume of 57M. QQQ, on the other hand, has traded 21M shares against a 68M ADV. 24.50 MSFT is upper resistance, and QQQ has yet to challenge 28.30. I fear that we could be seeing the setup for a sideways afternoon.

  Linda Piazza   5/23/200,  11:57:59 AM
As we head into the noon hour, current total volume is 472 million shares on the NYSE and 656 million on the Nasdaq, with all volume patterns currently showing buying. Adv/dec ratios are a bullish 1.8 on the NYSE and a more neutral 1.2 on the Nasdaq. Up volume is 1.7 times down volume on the NYSE and a stronger 1.9 on the Nasdaq.

  Jeff Bailey   5/23/200,  11:40:46 AM
Do you own some month-out puts that you bought when they were either in or at the money and now either out the money or further out the money as a stock/index has traded against you?

Use your knowledge of buying time, to perhaps work for you ahead of the 3-day weekend, and perhaps sell a near-month out the money put and look to garnish current month premium deterioration ahead of a 3-day weekend.

For an example: I've profiled 2 separate 1/4 position QQQ Sept. $27 puts. (some have selected the $28). I'm looking at selling the QQQ June $27 puts for $0.35. I'm still covered with the long position in the QQQ Sept. $27 puts, but can attempt to garnish some premium of $0.35. I would have to make some type of decision if the QQQ went back below $27.

Right now, I'm just at "break-even" considering action points on the 2-trades, so most likely would only look to sell against the first 1/4 position, which is the "loser" at this point.

  Linda Piazza   5/23/200,  11:32:23 AM
Yesterday afternoon, I thought it was going to be a battle between the sentiments depicted by the declining hourly oscillators and that by the hinging-up daily oscillators. This morning, the buy-the-dip sentiment appears to be winning, as the hourly RSI gets tugged back into an upswing after hitting its trendline. However, there may be an interesting formation setting up on the OEX hourly chart: Link Although diamond formations can break out in either direction, they're most commonly found at market tops. On a breakout, minimum price targets are equal to the distance from the top to the bottom of the diamond.

  Jeff Bailey   5/23/200,  11:32:04 AM
SPX 933.91 +0.21% ... session high here, and just below the little "reverse head/shoulder" intra-day objective of 935.

  Jeff Bailey   5/23/200,  11:29:14 AM
11:00 Update at this Link

  Jonathan Levinson   5/23/200,  11:27:59 AM
Traffic appears light so far on the Long Island Expressway: Link

  Jonathan Levinson   5/23/200,  11:19:39 AM
QQQ is rising slowly on strength in the BTK, +4.16 to 426.43 and the SOX, +3.66 to 346.44. It remains below yesterday's resistance at 28.30 and still within the potential right shoulder h&s pattern discussed in the Futures Wrap last night. NQ is at 1133.50, below the 1136-40 resistance zone. FVX has recovered during this rise in equities, now down 1.4 bps as buying treasuries takes a breather. Gold is off its highs, currently trading 368.60 on the June contract.

  Jonathan Levinson   5/23/200,  11:01:24 AM
More sideways action on a 5 billion dollar injection of repos from the Fed. The QQV is down at 25, at or near an alltime low. As the markets continue to move sideways, it's little wonder that the options market is deflating. Why hold contracts when their value is deflating in a pegged market?

  Jeff Bailey   5/23/200,  10:59:24 AM
SPX 931.76 -0.01% .... just off session high. Intra-day chart shows rally to WEEKLY R1 and DAILY 61.8% retracmenet of 932.91, but that's been it so far.

  Linda Piazza   5/23/200,  10:59:09 AM
We saw another test of OEX 470. Five-minute charts show a lower price high while oscillators made equal highs: bearish divergence if the OEX continues down.

  Linda Piazza   5/23/200,  10:54:51 AM
We saw an OEX upside breakout above the formation shown in my 10:35 post. The VIX is up, bonds and gold are up, which should predict lower prices, but volume patterns are somewhat mixed.

  Jonathan Levinson   5/23/200,  10:47:26 AM
P/C ratio rises to .81, FVX -3.6 bps, TRINQ .60, QQV +.05 at 25.42, TICK.NQ +291.

  Jeff Bailey   5/23/200,  10:37:56 AM
Geron (GERN) $5.33 +3.23% ... SPECULATIVE biotech profiled bullish here week's ago. I still hold bullish and have been monitoring. Somewhat nice to see GERN back above it's WEEKLY pivot of $5.19. Would like to see it stretch a bit in today's session, keep the WEEKLY pivots moving higher.Link

If this thing pulls a DNA type move, I'm going to have to call it the GERN'z bull move. Get it? GERN-z cow?

  Linda Piazza   5/23/200,  10:35:52 AM
Here's what I'm watching on the OEX five-minute chart: Link

  Mark Phillips   5/23/200,  10:32:43 AM
GM $32.94 (-0.67) While definitely taking its time getting here, GM is once again displaying its relative weakness, cracking under the $33 price level for the first time since March 17th. Look for next support to be found near $32.24 (bottom of the 3/04 gap) and then $31 before a test of the March lows near $30. With the broad market trading near the flatline so far this morning, the 2% loss is a clear exhibition of that relative weakness we've been expecting, and it should only continue next week.

  Jeff Bailey   5/23/200,  10:31:31 AM
Posted another SPX intra-day chart at 10:26:40. Link

  Linda Piazza   5/23/200,  10:28:49 AM
One more comment about the long weekend: Remember that this long weekend sees the U.S. on alert for a possible terrorist event. Lately, the markets have ignored that kind of news, but will they today? I'm not sure at this point, as that depends on whether those already long are anxious to book some profits ahead of a possible event or those who haven't yet gotten long, and saw yesterday's action, are anxious to jump on the train. There are a lot of market-sentiment issues to consider as well as technicals.

  Jeff Bailey   5/23/200,  10:26:40 AM
SPX 928.64 -0.34% .... SPX did try and bid back on Tax-bill news, but came back to the 25-minute trade and was reversed. If SPX is going to close at today's lows, it should NOT trade back above that level. Watch for little "reverse head/shoulder" patter here on 5-minute chart. See it? Neckline at 931, head at 927.50?Link

  Jonathan Levinson   5/23/200,  10:24:55 AM
Further to Linda's, Jeff's and Alan's comments, I'm noting that despite forecasts for a rainy Friday, the weather in Montreal is spectacular and sunny, which could contribute to an earlier elevator-escape for trading personnel in Noo Yawk today.

  Jeff Bailey   5/23/200,  10:22:00 AM
Chiming in Per Alan and Lina's comments regarding trade ahead of 3-day weekend.

One thing I've noted in the past, is that at about the 11:00-hour, head trader's will often take off early for 3.5 day weekend, try and beat the traffic to their vacation home. Can create "bullish bias" to things, especially some NSADAQ stocks, where the "younger" trader takes over with instruction... "just don't screw anything up." Big customer orders have been taken care of by head trader, and markets can get a bullish tone in latter part of session.

  Jonathan Levinson   5/23/200,  10:19:21 AM
Other than MSFT's bounce, QQQ is flatlined. Support is at 28, the 27.89, and the head and shoulders neckline around 27.30. Resistance is at 28.30.

  Linda Piazza   5/23/200,  10:18:28 AM
Alan on the Futures Monitor mentioned that he hated trading ahead of a long weekend because technicals often mattered less than they usually did. I give a hearty second to that opinion.

To those traders who are new to options trading, give strong consideration to this possibility before entering trades ahead of a long weekend when option premium will undergo three days of decay. If a technical setup appears ideal but then doesn't quite work out but you haven't hit your stop, either, what do you do? Do you hold over the long weekend and risk having your stop hit on Monday, when your option will be worth much less than it would have been today? Do you get out of a potentially good trade at a loss because of that premium decay you're facing? I've been there and done that (both choices) and neither is fun.

  Jeff Bailey   5/23/200,  10:16:00 AM
Utility Index (UTY.X) 283.40 +2.2% ... session highs. May be on the move in regards to Senate pass of tax cut. Not sure, but strong sector early.

  Jeff Bailey   5/23/200,  10:14:35 AM
Senate approve's $350 billion tax cut

  Jeff Bailey   5/23/200,  10:11:29 AM
SPX 929.67 -0.23% ... comes back to DAILY pivot of 929.90, but so far, not able to hold a 5-minute close. Still has DAILY S1 in play for test. Link

  Jonathan Levinson   5/23/200,  10:08:28 AM
MSFT has hit the 24.50 mark, up 1.37%, while QQQ remains flat, 28.09. FVX is lower, -3.4 bps. Opening put to call ratio .60, good news for bears. The fed has announced a weekend repo of 5B, with no expiries, which it makes it a net addition.

  Linda Piazza   5/23/200,  10:03:28 AM
So far, the OEX dipped below that 467.80 level, rose to 469.18, touching the bottom of the regression channel I mentioned, and then fell again. We're still within that 9:50-10:10 period when reversals from the first morning's direction are attempted, so it's not surprising to see the OEX make another attempt to rise. This time I would expect 467.80 to be first minor resistance. (Note: It looks as if that happened while I was typing.)

  Jeff Bailey   5/23/200,  9:59:24 AM
SPX 927.82 -0.42% ... today's trade almost the mirror image/inverse of yesterday's. Action hints SPX will close at/near lows of the day.

  Mark Phillips   5/23/200,  9:59:16 AM
QLGC $45.91 (+0.78) Off to a positive start, our new call play on QLGC is off to a positive start this morning following positive comments from Morgan Keegan. The firm says its' channel checks indicate a strong up-tick in Fibre Channel HBAs in the distribution channel. The firm cited that akll the distributors with which it talked, said that they have seen a willingness by customers to close large sized deals during the current quarter. Wow, that actually sounds kind of encouraging! Other traders seem to have gotten the same impression, with prices rebounding from the $45 level this morning. As noted in the writeup last night, we're in no hurry to enter chanse mode with this play. Odds favor a pullback into the $44.00-44.50 level, where new entries seem to be favorable.

  Linda Piazza   5/23/200,  9:58:45 AM
Sony (SNE, 25.82, up $.56): After threatening to break down out of its potential bear-flag channel earlier in the week, Sony trades up today after reclaiming the 25.00 level yesterday. Overnight, Nintendo fell in Japanese trading after reporting slower sales of game consoles. Sony may be benefiting from Nintendo's poor results, with the expectation that Sony will gain market share, as well as from the measures undertaken this week by the Bank of Japan to stabilize banks and pension funds, slowing the selling of big-cap stocks. ADX shows a lessening of selling pressure. This still isn't my kind of trade, either bullish or bearish. SNE remains safely within its potential bear-flag pattern for now as well as remaining on a P&F sell signal. Daily oscillators suggest that Sony may now test the top of that potential bear-flag pattern, now near 27.

  Jonathan Levinson   5/23/200,  9:52:00 AM
MSFT setting new highs, currently 24.35.

  Jonathan Levinson   5/23/200,  9:46:59 AM
re: My "who would buy MSFT" question earlier:

Someone short looking for Holiday spendin cash.

  Jeff Bailey   5/23/200,  9:46:45 AM
Day after Memorial Day .... tends to be bullish session (Tuesday). According to the Stock Trader's Alamanac, Dow up 14 of last 19.

As such.... any dip in SPX (see 9:38:21) chart in today's trade back near the WEEKLY S2 of 921.42 and DAILY 19.1% retracement of 922.02, I'd look to be a buyer (if not already long and short-term trader).

As noted in last night's Index Trader Wrap ... I'm suggesting traders that did take my short-term bullish trade from Wednesday raise stops to break even, and that would be right at/near the WEEKLY S1 of 921.42 where trade was profiled.

We can see how that WEEKLY S1 came into play for bulk of yesterday's trade, and a short-term bull would get the "feel" based on observation that a close above this WEEK's S1 might just lend to some bullishness for Tuesday.

  Jonathan Levinson   5/23/200,  9:46:12 AM
MSFT, which, in fairness, looks pretty short term oversold, is off its lows and above the 24.09 fib resistance level I was watching. QQQ is just above 28. It feels bouncy, yet FVX continues to sink as money continues to flow into bonds. QQV is up .43, TRINQ .65, TICK.NQ -44.

  Jonathan Levinson   5/23/200,  9:38:36 AM
Ballmer and his 470 million shares: Who would pay $24 for one share, when one person owns a quantity like 470 million?

  Jeff Bailey   5/23/200,  9:38:21 AM
SPX 929.23 -0.28% ... I'm looking for a rather quiet session today. Here's my SPX chart with DAILY retracement (gold/brown) and I've tried to highlight in yellow, some intra-day levels.Link

Watch that DAILY S1 level for first support. It also looks like that was the "level" the SPX did a little "juke" yesterday on its move higher.

  Linda Piazza   5/23/200,  9:37:30 AM
It is possible to draw an ascending regression channel encasing yesterday's OEX prices from midmorning until the end of trading. This morning, the OEX appears to be breaking down out of that channel, but I'm still watching the OEX 467.80 level, as I was yesterday. That was the trough between the first attempt at 470 and the second. I would expect the ascending channel to be retested today, perhaps during that first 9:50-10:10 reversal period.

  Jonathan Levinson   5/23/200,  9:34:18 AM
Next support should come at 27.89.

  Jonathan Levinson   5/23/200,  9:32:41 AM
QQQ 28 is critical support here.

  Jonathan Levinson   5/23/200,  9:30:41 AM
QQQ down .04 at 28.05, futures red, TRINQ .63, TICK.NQ +270.

  Jonathan Levinson   5/23/200,  9:23:13 AM
June gold is up 2.50 to 370.60 on the dollar weakness. YG3M is currently bidding 370.70.

  Jeff Bailey   5/23/200,  9:20:56 AM
09:00 Update posted at this Link

  Jonathan Levinson   5/23/200,  9:08:41 AM
The US Dollar Index is back above 93, but below resistance at 93.2. FVX is now down 2.1 bps, while QQQ and the futures hold near unchanged. MSFT is trading up 12 cents at 24.29.

  Jonathan Levinson   5/23/200,  8:36:32 AM
Bonds are being bought, FVX -1.9 bps, TNX -2.8 bps and TYX -4.1 bps. QQQ is now trading 28.05. NQ -1, ES -1.25.

  Jonathan Levinson   5/23/200,  8:03:40 AM
Futures are flat, with ES -1 to 929.75 and NQ 1130, YM -8 at 8569.

  Jonathan Levinson   5/23/200,  7:42:10 AM
The US Dollar Index got croaked on a textbook bearish ascending wedge breakout to below 93: Link

Futures are lower with QQQ currently trading 28.01 on Island ECN.

  Linda Piazza   5/23/200,  7:16:15 AM
Good morning. The dollar has been stronger against the yen this week, the U.S. National Association for Business Economics forecast that the U.S. economy would expand 3.6% in the second half of this year, and U.S. markets rallied. Those were reasons enough for the Nikkei to open up almost 70 points in Friday's trading and climb into the midday break. The Nikkei even managed to climb above 8200 at one point in the afternoon, but fell more than 30 points on selling into the close. The index still closed up 133.10 points, or 1.65%, at 8184.76. Tech stocks led the gains, with exporters such as the carmakers also gaining. Bank performance was mixed. Nintendo fell after reporting earnings down 37% from the previous year, blaming the rising yen and slower sales of game consoles.

Tech stocks also gained in other Asian markets, with Samsung, Taiwan Semiconductor, and China Mobile gaining. South Korea's Kospi rose 2.71%, Hong Kong's Hang Seng rose 1.89%, and Taiwan's Taiwan Weighted rose 1.83%. China's Shanghai Composite rose 0.96%. U.S./Chinese political relations were in the news after the U.S. imposed sanctions on a Chinese state-owned conglomerate, charging that the Chinese government had not enforced a weapons proliferation agreement.

The Nikkei was trading up due to the weakening of its currency against the dollar, but European markets currently trade down at least partly due to the strengthening of the euro against the dollar in today's trade. Now that the dollar dipped at one point to $1.18 per euro, talk on CNBC Europe and in Bloomberg.com this morning was that everyone expects to see the dollar weaken further now, to $1.20 per euro. European markets might also have been impacted by numbers showing retail sales falling in Italy and French consumer spending showing no growth from March's number, although that consumer-spending number was actually better than the expected drop in consumer spending.

As of this writing, the FTSE 100 trades down 12.80 points or 0.32%, at 3977.60. The FTSE had traded over the key 4000 level early in trading, but then plummeted 50 points. It recovered to its current level and has been attempting to move over 3980 for the last 90 minutes. The CAC 40 trades down 27.68 points or 0.95%, at 2875.59. The CAC traded as high as 2930.99 at one point, but then fell to 2866.46 before recovering to its current level. The DAX followed a similar pattern. The index currently trades down 37.95 points or 1.32%, at 2827.26, having traded as high as 2886.07 and as low as 2819.59.

  Jim Brown   5/23/200,  6:16:43 AM
Reloading Market Monitor App, please reconnect

  Jeff Bailey   5/22/200,  11:47:50 PM
The Index Trader Wrap has been posted: Link

  Jonathan Levinson   5/22/200,  11:47:42 PM
The Futures Trader Wrap has been posted: Link

  James Brown   5/22/200,  11:47:08 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

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