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  Jeff Bailey   6/9/2003,  5:21:20 PM
Pivot Analysis Matrix for tomorrow at this Link

  Linda Piazza   6/9/2003,  4:24:02 PM
Reader Question: Linda, Do you see a H&S on the Weekly XAU? It has a target of 41.27. Does that seem possible?

Response: The SEC does not allow me to give individual advice that might be construed as helping with investment decisions, but we can discuss chart formations in this venue. I think one of the other writers may have addressed the potential H&S formation in one of the newsletters last week, but I wasn't able to find the mention after a quick search.

I've had a potential neckline marked on my chart for some time, showing a huge potential H&S, with a right shoulder forming from late 2001 to the fall months of 2002, etc. As sometimes happens, the left shoulder itself was formed from a sort of rough H&S formation, as the right shoulder might be. (That right-shoulder H&S might actually be the H&S to which this reader refers rather than the larger one I've had marked on my charts for some time.) However, as that formation is also setting up, something else interesting is occurring. A glance at the monthly chart shows an even larger and rougher potential reverse H&S setting up.

Obviously, the $XAU must be one of those markets that tends to set up these types of formations quite frequently. Just as DD tends to trade in a ten or fifteen-point range, and other markets tend to set up other types of formations, the $XAU seems prone to this kind. That might be logical when you think about it, because of the psychology behind the formation of a H&S pattern--people in the know buying first, slightly less experienced people hopping on next, and the last-in-the-know bidding up (or selling down) that right shoulder--and the $XAU's relationship to overall investor psychology.

The right shoulder of the H&S formation on the weekly chart (either the larger one or the smaller one to which the reader probably refers) have not fully rounded over, though, so while we should be watchful, we shouldn't draw too many conclusions. Weekly MACD is just turning up through the zero level, looking strong, and RSI generally moves up, although it tends to hinge down a day or two here or there as it advances. Those oscillators predict more upside. If that upside carries the XAU past the level of the head, the potential H&S will be negated. The ADX is a little difficult for me to interpret. It registers only 14.5, showing a range-bound market, but there might have been the slightest upturn over the last few weeks. It's certainly not enough of an upturn to signal a trending market as yet, though. That low ADX number confirms the importance of watching as those oscillators top out and roll over, though, if the XAU has not yet exceeded the head level when they do so.

  Linda Piazza   6/9/2003,  3:53:56 PM
As of a few moments ago, volume stood at 1.1 billion for the NYSE and 1.6 billion for the Nasdaq--lower volume than we saw at the end of last week. While volume confirmation is important in rising markets, it's not as important in sinking ones. Too high a volume on a fall could actually mean some accumulation was occurring. Volume patterns still show about twice as many decliners as advancers, with down volume almost 5 times up volume on the NYSE and 5.8 times up volume on the Nasdaq. New highs still vastly outnumber new lows, but there are fewer new highs than we've become accustomed to seeing of late.

  Jonathan Levinson   6/9/2003,  3:39:49 PM
The indices are bouncing off the low end of the range, yet another fakeout.

  Linda Piazza   6/9/2003,  3:27:46 PM
I'm still studying the hourly OEX chart and still noting that the 487-488 level did not set up as much congestion as did the 492.50-494 that it took the OEX so long to break through this morning. There was more congestion at 485 than at 487-488, too. I'm wondering then, if the next lengthy pause will come closer to 485 than to 487-488, even though logic would say that 487-488 would be important psychologically. If the OEX does pause and maybe even bounce from 485, I'm noticing that would set up a potential H&S . . . . wait, I'm getting ahead of myself.

Still, successful trading does require recognizing patterns as/before they set up. It also requires not trading on those patterns until they're confirmed. How would I use this information? I'd use it to manage risk. If I'm in a put position, for example, and didn't want to risk my profits on a bounce back up to 492 after the OEX hit 485-487, then I'd start following the OEX down with profit-protecting stops. I'd let the market take me out if it wanted to rise back toward 492. If I didn't mind being carried back to 492-494, I'd then set wider stops above the supposed right-shoulder area. If I then saw a right shoulder rounding over, and chart signals, volume patterns and other intermarket relationships seemed appropriate, I'd perhaps enter a new put position, but again be prepared to follow with profit-protecting stops as it approached the neckline. That's all supposition, of course. The OEX has not traded 487, much less 485, and we have no idea if it would bounce from one of those levels if it did fall that far.

  Jonathan Levinson   6/9/2003,  3:25:27 PM
As Jane notes, the lower trendline on this range is getting challenged here, QQQ at 29.53, NQ 1189, ES 973.

  Jonathan Levinson   6/9/2003,  3:13:52 PM
Indeed- I get a TRINQ reading of 3.02 and a TRIN.NQ reading of 3.00.

  Jonathan Levinson   6/9/2003,  3:11:30 PM
No breakdown of the interminable range, despite price sticking to the lower support line. FVX went out near its low of the day. TRINQ is getting high at 3.12, TICK.NQ -160, QQV +1.49.

  Linda Piazza   6/9/2003,  3:10:16 PM
Reader A.I. noticed this morning that his Q-charts quotes for TRINQ were different than those being quoted on the Market Monitor. He writes the following: I called Qcharts and they told me that the correct symbol is TRIN:NQ. The new symbol works well (INDEX: TRIN.NQ).

I tried TRINQ myself. You will get a value quoted for TRINQ on Q-charts. It just won't be the correct one. Thanks for the information, A.I.

  Linda Piazza   6/9/2003,  3:03:03 PM
The OEX broke through its low of the day, fulfilling the bearishness implied by the classic b-shaped distribution. (See my 14:19 post.) Normally, this type of distribution occurs about halfway through a move, predicting a minimum downside target near 475-478. Cautions: there has not yet been an hourly close below the just-broken support, OEX 487-488 may be strong support, and downside targets haven't been met as readily as upside targets for several months.

  Jonathan Levinson   6/9/2003,  3:01:39 PM
The file is registered to "Indigo Rose Corporation" and appears to be legit.

  Jonathan Levinson   6/9/2003,  2:54:41 PM
MSFT has gone negative for the first time all day and is setting new lows. NQ and QQQ are above their lows, but this bodes ill for the Nasdaq indices.

  Jeff Bailey   6/9/2003,  2:53:45 PM
S&P 500 Index (SPX.X) 974.57 -1.3% ... getting downside alert here at 975, which is level shorter-term bears wanted to see violated for way to WEEKLY S1 of 965.00.

Oil Service (OSX.X) 96.59 +0.4% only sector I see in the green here.

  Andy Aronson   6/9/2003,  2:53:22 PM
A close below the 979 level on the SPX should lead to a move to the 954 major support. With less than two weeks til expiration, SPX puts are not showing enough premium to sell close to the money options. On an increase in Volatility, it may be worth selling the 920 puts.

  Jonathan Levinson   6/9/2003,  2:52:28 PM

  Jonathan Levinson   6/9/2003,  2:51:12 PM
Alan, my compuker has that file, but is virus-checked and clean.

  Jeff Bailey   6/9/2003,  2:45:30 PM
Cyberonics (CYBX) $22.65 +17.90% .... Dow Jones reports that Boston Scientific (BSX) $56.55 +0.87% confirming to have pruchased 2.7 million shares of Cyberonics for around $50 million (approx. $18.51 per share), making BSX largest shareholder of CYBX.

  Jonathan Levinson   6/9/2003,  2:37:12 PM
No downside followthrough on that last brush with oblivion. FVX is at new lows, -8.6 bps. The put to call ratio printed .81 for the past half hour.

  Linda Piazza   6/9/2003,  2:36:26 PM
The OEX retested its LOD, but I'm not sure that test has yet concluded.

  Jonathan Levinson   6/9/2003,  2:31:36 PM
New lows on the indices just printed, but awaiting followthrough to make sure it's not a headfake.

  Jonathan Levinson   6/9/2003,  2:29:46 PM
MSFT LOD just printed.

  Jonathan Levinson   6/9/2003,  2:21:49 PM
Heading back toward the lows of the day, with NQ 1192 (lod = 1189), QQQ 29.63 (lod = 29.57), ES 976.25 (lod = 975).

  Linda Piazza   6/9/2003,  2:19:09 PM
This hourly chart shows the OEX dropping and then consolidating in a rectangular band. This formation looks a lot like the classic "b" distribution shape that a former writer once taught us to watch, but we have to remember that some of those classic patterns have not worked out as expected lately. Link

  Linda Piazza   6/9/2003,  2:15:51 PM
The FTSE 100 closed down 21.70 points at 4129.10. A glance at the daily chart shows that the FTSE printed an inside day today. MACD flattens and RSI action has been showing bearish divergence with the price, as RSI shows a continued band of equal highs while price rises. The CAC 40 also printed an inside day that was almost but not quite a classic harami. It closed down 37.98 points, at 3055.23. MACD still slants up but RSI has hooked down down. There's an inside day and an almost-but-not-quite-classic harami on the DAX, too. The DAX closed down 32.70 points, at 3094.76. MACD slants up, but RSI turns down. The DAX has not yet fulfilled its upside target from the confirmed reverse H&S formation, with that H&S target somewhere near 3250, but it currently pauses under the 3150 resistance from early 2003.

  Jonathan Levinson   6/9/2003,  2:10:03 PM
The put to call ratio has printed .82 for the 2nd consecutive hour. The other indicators have flatlined as well, with FVX -7.8 bps, QQV +1.35 at 32.06, TRINQ high at 2.1, TICK.NQ -78, VXN +.97. HUI -.40, XAU -.37.

  Linda Piazza   6/9/2003,  1:59:46 PM
Contrary to what usually happens, we had no real test of either support or resistance around 1:45 ET. That time of day usually sees at least one probe of next support or next resistance. Not today. Since the OEX was the closest to support, does that mean that bears couldn't drive it down far enough to test the day's low again? Or does that just mean that the probe of next support or resistance is delayed today, and we'll get it a bit later? I'm not sure, but any divergence from the usual pattern alerts me to be watchful.

  Jonathan Levinson   6/9/2003,  1:53:48 PM
While we await the break, here are some fascinating comments from Stephen Roach for my fellow fans of macroeconomics:

"There are few things that shock me these days -- with age comes an unfortunate cynicism. But I was truly shocked to read over this weekend that none other than the same Milton Freidman has just recanted the central premise of monetarism. In an astonishing interview published in the Financial Times, the now 91-year-old retired professor concedes that “The use of quantity of money as a target has not been a success. I’m not sure I would push it as hard as I once did” (see “The Long View,” an interview with Simon London contained in the Weekend Section of the Financial Times, June 7-8, 2003). This is an extraordinary mea culpa for a man who single-handedly turned the macro policy debate inside out over the past 30 years. The founding father of modern-day monetarism is now telling us that the quantity of money doesn’t matter after all. Ironically, the admission comes at just that same point in time when the Fed is telling us that it’s all that matters." [...]

  Jonathan Levinson   6/9/2003,  1:45:54 PM
NQ didn't come close to challenging 1200 on that last go-round, and QQQ never got to 29.80, confirming my oscillator now within its shallow downphase. However, until the lows of the day get taken out, we'll continue to be within a range, subject to a breakout in any direction. The short term trend is clearly down, but it's easier to watch the range high of NQ 1202 and QQQ 29.90, and the day lows for a momentum trade on a break of either level.

  Linda Piazza   6/9/2003,  1:44:02 PM
1:45 ET and its likely test of next support or next resistance (or both) approaches. For the OEX, next support would have to be the day's low of 490.93. Closest resistance might be 493.40, the bottom of the latest violated bear flag and one version of the rising trendline off the May 20 low, as well as some slight S/R this morning.

  Jonathan Levinson   6/9/2003,  1:30:58 PM
Stop the presses!!! This tidbit just crossed the wire. She actually has a website?

Monica Lewinsky's TheRealMonica.com Selects KeywordRanking.Com to Increase Online Sales of Exclusive Fashion Accessories

  Jonathan Levinson   6/9/2003,  1:14:18 PM
The US Dollar Index is up to 93.33, while the CRB is down .46 at 236.97, with strength in wheat, crude oil, heating oil, cocoa, lean hogs, soybeans, live cattle and platinum. June gold is down to 361.50, while HUI is -.45 and XAU -.26.

  Jonathan Levinson   6/9/2003,  1:07:38 PM
Instead of a bounce on my negatively divergent intraday stochastic, I've got a solid sell signal on this decline. If price fails to take out the lows at 29.57, I expect another bounce up to the 29.85 area. However, given the negative divergence, I expect to see those lows pretty shortly.

  Linda Piazza   6/9/2003,  12:57:41 PM
The OEX fell out of its latest bear flag on the five-minute charts, but this time it didn't fall. Instead it stays just below the ascending line, retesting the pattern. This is a divergence from action seen earlier this morning, but may be partly attributed to the lunchtime lull trading. Things should heat up again within the next hour. We hope.

  Linda Piazza   6/9/2003,  12:55:22 PM
Decliners continue to run about 2:1 ahead of advancers on both the NYSE and Nasdaq. Down volume remains about 4 times up volume on the NYSE and about 3.75 times up volume on the Nasdaq. Total volume is 643 million shares on the NYSE and 1 billion on the Nasdaq. New highs number around 300, far less than the exorbitant number of new highs we've seen lately, but new lows remain low, at 8.

  Jeff Bailey   6/9/2003,  12:54:21 PM
OxiGene (OXGN) $16.30 +91% Link ... small-cap biotech is biggest gainer today after company said its Combretastatin A4 Prodrug, will receive an accelerated review by U.S. regulators as a treatment for thyroid cancer.

While larger biotechs as depcited by Biotechnology Index (BTK.X) 462.60 -4.18% under pressure today, smaller cap names like OXGN, GERN +12% Link , ENMD +27% Link , PPHM +23% Link seeing some slight bid.

  Jonathan Levinson   6/9/2003,  12:38:09 PM
Still couldn't touch 29.90 or break 1200 NQ or 980 ES. I have a divergence on my intraday oscillators, still in an upphase on lower prices. I expect the lowof the day to get taken out once that oscillator turns back down.

  Linda Piazza   6/9/2003,  12:31:54 PM
I'm looking at a number of weekly charts of stocks in different sectors that nevertheless show similar chart characteristics: a previous steep fall with some also displaying a sharp gap down, and a recent climb in an ascending channel up to next serious resistance. Charts showing that characteristic are the weekly chart of Jack-in-the-Box (JBX), Texas Industries (TXI), Sony (SNE), and Baxter International (BAX). Conventional wisdom suggests that those rising regression channels are bear-flag channels, but it's still possible that markets will instead produce upside breakouts in some or all of these issues. I'm not suggesting plays in these issues, although experienced traders might of course take a look at the charts and make their own decisions. Instead I wanted to point out that these similar chart characteristics, across various industries, show how important current market action is, and how that's demonstrated by individual stocks and sectors as well as by those key numbers we've all memorized for the major indices.

  Jeff Bailey   6/9/2003,  12:27:32 PM
Market Volatility Index (VIX.X) 24.05 +2.64% .... session lows here. Has tended to backfill its morning gaps higher in June. Might look for backfill to 23.62 today. Action may hint of early morning hedges put on, then abating after early going. Still... VIX.X slowly working its way to the 25.66 level last couple of days.

  Mark Phillips   6/9/2003,  12:16:12 PM
GENZ $45.03 (-1.58) In what has been a rather listless session so far, new OI Call play, GENZ is presenting us with what looks like the ideal entry point as detailed in the weekend newsletter. Broad weakness in the Biotechnology sector has pressured the stock right back to the $45 level, where those those two channel lines intersect. If that intersection is to provide the support as expected, then this is the level from which that bounce should commence.

  Jeff Bailey   6/9/2003,  12:11:33 PM
12:00 Internals ...

NYSE 5,544 -0.68% = Vol. : 535m A/D 1116:2027 NH/NL 167:5

NASDAQ 1,610 -1.03% = Vol. : 878m A/D 947:1974 NH/NL 92:1

  Jonathan Levinson   6/9/2003,  12:11:02 PM
June gold is trading 362, down 1.70, while HUI and XAU are treading water, +.17 and -.03 respectively.

  Jonathan Levinson   6/9/2003,  12:07:27 PM
QQQ is back to the mid 29.80's, NQ back to 1200 and ES to 980. QQQ is struggling with descending trendline resistance, but the shallow pullback in the past few minutes has me thinking more bullishly than I was half an hour ago. A break above 29.90 will target the day high or just below it, max 30.20 resistance.

  Jeff Bailey   6/9/2003,  12:02:48 PM
Newmont Mining (NEM) $32.51 +0.68% ... session high has been a matching 52-week high of $32.75 set on 06/04/02. Heavy volume on Friday of 7.9 million shares shows some interest from market particpants and I would think sector and NEM bulls would want to see move above the $32.75 level in the next couple of sessions for further sign of short-squeeze. Not only in NEM, but broader sector.

  Jonathan Levinson   6/9/2003,  12:01:28 PM
Very quiet session. I'm told that much of Europe is on holiday today, which coild could explain the low volume and relatively muted response to the FRE news.

  Ray Cummins   6/9/2003,  11:54:17 AM
Spreads/Combos & Premium-Selling -- New Positions

Today's broad retreat in the major equity averages has improved the entry opportunities in a number of new bullish positions. The question now is, "When will the buying resume?" Positions in Allergan (NYSE:AGN), Electronic Arts (NASDAQ:ERTS), Medimmune (NASDAQ:MEDI) and Unitedhealth (NYSE:UNH) all offered acceptable opening credits -- although the latter is the only stock trading higher at this time. On the bearish side, Anadarko Petroleum (NYSE:APC) and International Business Machines (NYSE:IBM) both rebounded after recent sell-offs and the bearish spreads in those issues were available at the target credits.

One issue that deserves attention is Neurocrine Biosciences (NASDAQ:NBIX) as it is trading down over $3 on active volume. After the closing bell on Friday, the biotechnology firm filed with the SEC to periodically sell up to $200 million in preferred and common stock and it looks as if investors are immediately factoring in the (dilutive) effects of that offering. The company said it plans to use the proceeds from the stock sale for general corporate purposes, including clinical trials and research and development, however some traders have speculated that a product purchase or company acquisition may be in the works. Regardless of the reason, the issue is enduring a brisk adjustment and it may be prudent to wait for it to stabilize before entering a bullish position. One last note concerns the speculative debit strangle in R.J. Reynolds (NYSE:RJR). This morning, the company's CFO, Richard H. Bogan, announced his resignation in order to pursue other business opportunities. While not a cataclysmic event, the news may be contributing to the stock's volatile activity.

  Linda Piazza   6/9/2003,  11:48:22 AM
So far, this still hasn't been much of a test of that 60-minute OEX rising channel that I linked to my 10:53 post. The 21-pma on that 60-minute chart, currently above at 495.44, has flattened and may even have a slight downward slant. As I scan the hourly chart, I see that before this morning's drop, the last previous close below that 21-pma was May 29, but that day saw only two hourly closes below that average before May 30th's first candle closed above it again. Before that, the last consistent hourly closes below the average occurred from May 19 to May 20.

  Jonathan Levinson   6/9/2003,  11:44:47 AM
Nice trade, Alan.

  Linda Piazza   6/9/2003,  11:41:00 AM
Reader Question: Linda, since you like the OEX and you're a conservative trader, I want to point out, though you probably already know this, that in 2002 each counter-trend ranged from 25-27%. From March 2003 low to Friday's close the OEX has rallied 26%. So is this a fledgling bull or a grisly standing on his hind legs?

Response: Thanks for the information, as I'd intended to mention this morning that oft-quoted 25% figure, too. Jim's been mentioning in some of his wraps a likelihood of a 25%-38.2% correction.

If I knew the answer to your last question, I'd be loading up the truck--well, the Acura--with the appropriate options. This answer isn't going to satisfy much of anyone, but that has to depend on how the OEX acts on the next correction, possibly beginning now, and possibly even on the next rally attempt after that.

Although my original plan had been to load up on calls when the OEX hit 450 and stay in them until just ahead of 487, personal considerations and the problems technical traders experienced around the time of the Iraq conflict kept me from participating in my plan. When I originally conceived that plan, I had wanted to get out and watch the markets ahead of 487 out of a sense of caution, as I hadn't expected the push above 490, much less above 500. That forces a revision of the original scenario, a scenario that consisted of a continuation of the trading range that's persisted over most of the last year, and maybe even an eventual downside break of the range.

Precedent shows us that the next correction should be shallow, perhaps in that 25% range you mentioned or perhaps nearer 38.2%. If it's deeper, and especially if it's deeper than 50%, I'll be going back to my earlier scenario. If the correction is shallow, but if the next rally is, too, I'll be revisiting that scenario again, too. For now, I have to assume a shallow correction, but I'll have to delay drawing conclusions further than that.

  Jonathan Levinson   6/9/2003,  11:31:26 AM
My shorter cycle oscillators are moving sideways from low levels, which is bearish. NQ below 1200 and ES below 980, with QQQ unable to break 29.85, looks like a short to me.

  Jeff Bailey   6/9/2003,  11:27:29 AM
11:00 Update posted at this Link

  Linda Piazza   6/9/2003,  11:25:43 AM
So far, this has been an "all my ducks in a row" kind of trading day, when it's felt safe to be in a directional play. The rise in the volatility indices and the bonds, the decline in the dollar, and the volume patterns all appear to match the current direction of the markets. I remind those in OEX bearish trades, however, that the 487-488 level might serve as powerful support on any approach to that zone. That represented a top for the OEX since last July and bullish traders might be expected to defend that level. I'm surprised, however, to study the OEX hourly chart and see that the OEX hourly chart actually shows more congestion near 492-492.50 to 494 than it does near 487-488, so perhaps the current level is the more powerful S/R zone.

  Jonathan Levinson   6/9/2003,  11:24:15 AM
We have a weak failure at resistance, but it's worth noting that we've barely seen either failures or resistance for several months now. Yields are holding their losses, while the TRINQ has edged down to neutral at 1.14. QQV +1.65, showing that fear persists even on the bounces. The bias appears to be down.

  Jonathan Levinson   6/9/2003,  11:15:58 AM
This needs to be read carefully. Is he telegraphing a bias toward higher US rates? I doubt that it's possible without popping the credit bubble- so it must indicate some kind of new understanding with the ECB. Or, it's just hot air:

WASHINGTON, June 9 (Reuters) - U.S. President George W. Bush said on Monday he was committed to a strong dollar policy and that interest rate differentials between Europe and the United States have added to pressure on the dollar.

"The policy of this government is a strong dollar policy," Bush told reporters after a meeting with his Cabinet. "You'll see different behavior as the interest rate spread begins to narrow between Europe and the United States."

Bush said he reminded his G8 partners last week that "the interest rate differential had caused people to sell dollars to buy euros to get a higher return on investment and that's why you're seeing pressure on the dollar."

  Linda Piazza   6/9/2003,  11:11:22 AM
Volume patterns show decliners leading advancers by about 2:1 on both the NYSE and the Nasdaq. Down volume is 5 times up volume on the NYSE and 4 times up volume on the Nasdaq. Total volume is 376 million on the NYSE and 656 million on the Nasdaq, with the volume appearing lighter at this time of day than we've seen on the last few days, at least on the Nasdaq. New lows still number less than ten--5, to be exact--so we're not seeing the weaker stocks fall out of the bottom, so to speak, as yet, but the number of new highs is "only" 219 so far.

  Jonathan Levinson   6/9/2003,  11:10:20 AM
QQQ continues to reach for its bounce target in the mid 29.80's. Note that the highs of the day were at a failure of descending intraday trendline resistance, and I expect those levels to hold on a retest. NQ is now finding resistance at 1200, ES at 980. TRINQ is up to 1.87, near its highs of the day, TICK.NQ +169, QQV +1.95 at 32.66.

  Jonathan Levinson   6/9/2003,  10:54:23 AM
A bounce from the lows here targets 29.83 QQQ.

  Linda Piazza   6/9/2003,  10:53:56 AM
As this OEX 60-minute chart shows, the OEX has not yet retested the violated ascending regression channel. Unless a steep drop appears first, damaging sentiment, I would expect a retest of that of channel some time or another. At this point, I wouldn't expect the retest to be successful, but that's a guess as yet. Link

  Jonathan Levinson   6/9/2003,  10:48:38 AM
The put to cal ratio for the second half hour of this session rose slightly to .75, with the equity pcr .61 and index pcr 1.32.

  Jonathan Levinson   6/9/2003,  10:36:47 AM
The yield curve is "flattish", yet stocks are sinking. Why? Perhaps its general fear to hold bonds in light of the terrible news coming out of FRE. Currently, FVX -6.8 bps.

  Linda Piazza   6/9/2003,  10:32:26 AM
This weekend, I calculated Fibonacci retracement levels for the OEX if Friday's key-reversal pattern did mark the beginning of a minor reversal. So far, today's open below Friday's close preserves the possibility of a reversal beginning, but the day is far from concluded. I find the calculated Fibonacci levels more exact than those snapped on a chart. Here they are: 38.2% retracement of March 12 low of 400.24 to June 6 high of 505.17 is 465.09, 50% retracement is 452.71, and 61.8% retracement is 440.32. Since the OEX rally was strong, conventional wisdom and historical precedent suggest a small pullback, but nothing is proven in this market until it happens, as we've all seen recently.

  Jonathan Levinson   6/9/2003,  10:29:36 AM
ES, NQ, YM lows of the day.

  Linda Piazza   6/9/2003,  10:22:54 AM
The OEX appears to have fallen through the latest of its bear-flag patterns. It's also currently testing the support line off its May 20 low. Here's a five-minute chart showing the latest bear-flag pattern and the ascending line. Note: uploading the image required about three minutes, so the image has changed somewhat since this image was snapped. Link

  Jonathan Levinson   6/9/2003,  10:20:22 AM
Back to the lows, with QQQ 29/83, ES 979, NQ 1200.50.

  Jeff Bailey   6/9/2003,  10:19:11 AM
SPX 979.58 -0.82% .... just below DAILY R1 here, 5-minute close below this level leaves SPX vulnerable intra-day to DAILY R2 of 972.14 then WEEKLY S1 of 965.

BEARS will pressure today with S&P Banks Index (BIX.X) 304.55 -2.2% weakness.

  Jonathan Levinson   6/9/2003,  10:18:58 AM
It was worth enduring the sight and sound of Suzie A. to hear Doug Cliggott, who continues to recommend euro bonds, golds, and a strategy of "singles and doubles" instead of home runs. He sees further weakening in the USD and noted the fed's money supply expansion.

  Jeff Bailey   6/9/2003,  10:14:25 AM
SPX 980.412 --0.73% ... trades my downside alert at 982.00.

  Linda Piazza   6/9/2003,  10:13:27 AM
The earliest volume patterns show more decliners than advancers and larger down volume than up volume. The ratios appear worse on the NYSE, with down volume more than three times up volume and decliners almost twice advancers. However, I'm somewhat doubtful of my quote source's reliability on Nasdaq volume information this morning as Nasdaq volume was quoted at 2.9 billion until a few moments ago.

  Jeff Bailey   6/9/2003,  10:13:03 AM
Sector action broadly negative.

Gainers have Health Provider (RXH.X) +0.44%, North Amer. Telecom (XTC.X) +0.27% and Gold/Silver (XAU.X) +0.29%.

Weakness has Disk Drive (DDX.X) -2.27%, S&P Banks (BIX.X) 305.47 -1.9% , Semiconductor (SOX.X) -1.88%,

  Jonathan Levinson   6/9/2003,  10:12:56 AM
Looking forward to hearing Doug Cliggott, coming up on Bloomberg TV on the internet. I always enjoy his analysis.

  Jonathan Levinson   6/9/2003,  10:08:09 AM
CBOE put to call ratio .71 for the first half hour, a neutral reading.

  Linda Piazza   6/9/2003,  10:06:30 AM
So far this morning, the OEX's five-minute chart shows what appears to be a continuation of Friday afternoon's pattern of declines followed by bear-flag patterns. This morning's potential bear-flag pattern has yet to break to the downside, however, so it's still only a potential bear-flag pattern as yet. It's currently testing the downside of the newest bear-flag pattern, however.

  Jeff Bailey   6/9/2003,  10:05:57 AM
SPX Intra-day chart on 5-minute bars with DAILY pivot analysis retracement (gold/brown) Link

  Jonathan Levinson   6/9/2003,  10:04:02 AM
FRE is restating its financials for the last 3 years?! Did I just hear that correctly?

  Jonathan Levinson   6/9/2003,  10:01:59 AM


  Jonathan Levinson   6/9/2003,  10:01:29 AM

  Jeff Bailey   6/9/2003,  9:59:14 AM
SBC Communications (SBC) $27.12 +2.64% higher after Lehman Bros. upgrades to "overweight" from "equal-weight" based on signs of an improving fundamental environment and improvements. Raises target to $30 from $26. Link

Lehman also raising price targets on Verizon (VZ) $39.32 +0.43% Link to $48 from $45 and BellSouth (BLS) $27.35 +1.67% Link to $30 from $26.

Dow component AT&T (T) $19.96 +3.04% Link also lifting on the SBC upgrade.

  Jonathan Levinson   6/9/2003,  9:56:22 AM
The fed has announced a 5.75B 3 day repo, which is a net addition with no expiries today.

  Jonathan Levinson   6/9/2003,  9:52:17 AM
A bounce has taken QQQ to 30.10, NQ to 1211 (-2.0) and ES to 983.50 (-4.25). FVX is down 5.5 bps, the TRINQ .83 and TICK.NQ +139.

  Jeff Bailey   6/9/2003,  9:52:03 AM
Freddie Mac (FRE) $50.60 -15.8% .... down sharply after company terminated its President and COO and announced resignation of its CFO. President/COO David Glenn terminated because of serious questions as to the timeliness and completeness of his cooperation, or lack thereof, with the Board's Audit Committee. Link

  Linda Piazza   6/9/2003,  9:49:41 AM
This weekend, I received some questions about my key reversal comments. Apparently, some definitions of key reversal days mention the market moving below the preceding day's low, but here's what Martin Pring has to say:

The term key reversal refers to the fact that at the beginning of the day in question the price continues to move sharply in the direction of the previous trend. Since this usually occurs following a long exponential-type move, it appears as if the price will never reverse its trend. However, by the end of the day the price has key-reversed, so that it closes in the direction opposite to that indicated at the opening. In an up market the price closes down on the day; in a down market the price closes up on the day. Key reversal days are associated with an explosion of volume well above levels of the recent past and represent an exhaustion of buying power at peaks and selling power or liquidation at troughs.

What's important in Pring's eye is that an important new high (after a rally) or an important new low (after a decline) occurs before the reversal, along with the other qualifications. He doesn't mention anything about a close below the previous day's close or low. I did also check another reference, Thomas A. Meyers. In his book, he states that [k]ey reversals occur during one period (usually one day) of market activity. A key reversal top is the result of prices quickly moving higher (to a new high in an uptrend) than the previous period's high, but closing near the lows of the day (and, at times, even lower than the previous period's low.).

It doesn't appear, then, that either of these others considers it necessary that the market close below the previous day's low, although Meyers comments that it sometimes does. Perhaps other technicians apply different definitions to the term. I did want to emphasize, though, that both label key-reversal days a sign of a minor reversal, although that can trigger a larger one. I especially wanted to emphasize this point as I've come to realize that my cautions might be coming across as overly bearish lately. I'm all about controlling risks, so I of course mention any cautions that might be necessary, but I've had bullish and bearish plays in my portfolio. I closed out some of those bullish positions on Friday in the interest of taking any profit offered, but not all.

  Linda Piazza   6/9/2003,  9:48:10 AM
The VIX has moved above 24.

  Jonathan Levinson   6/9/2003,  9:44:13 AM
FVX is down 5.8 bps now, recovering off its lows, as the US Dollar Index finds support in the 93 area. The equities selloff is continuing, albeit slowly, but the TRINQ remains in neutral territory at 1.35, TICK.NQ -297. QQV +1.98 continues to reflect a sharp escalation in QQQ option premium / "fear".

  Jeff Bailey   6/9/2003,  9:40:32 AM
S&P500 Index (SPX.X) 982.67 -0.52% ... getting downside alert here at MONTHLY 19.1% retracement (see 09:31:23 chart). Would look short/put on break at 982.00.

  Linda Piazza   6/9/2003,  9:36:21 AM
Q-charts is not being particularly cooperative this morning, but I note that the OEX trades within reach of an ascending trendline that has been supporting prices since May 20. That ascending trendline crosses near 492.50, if the May 27 shadow is not included. This is also an area of some horizontal historical support.

  Jonathan Levinson   6/9/2003,  9:33:44 AM
TICK.NQ -115, TRINQ 1.35, QQV +1.91 to 32.62, QQQ 30.05, NQ -2.

  Jeff Bailey   6/9/2003,  9:31:23 AM
SPX chart with new WEEKLY retracement. Link

  Jonathan Levinson   6/9/2003,  9:30:06 AM
North Korea has just announced for the first time that it is ready to develop nuclear weapons.

  Jonathan Levinson   6/9/2003,  9:22:08 AM
To get a feel for how big the FRE story could be, here's a fresh story from the Financial Times: US commercial banks' derivatives holdings climbed by 9 per cent to a record $61,400bn in the first quarter as banks hedged against changes in interest rates.


  Linda Piazza   6/9/2003,  9:16:02 AM
European markets continue to fall, with the 4100 level currently being tested by the FTSE and the 3100 levels already having fallen in the CAC 40 (last week) and the DAX (today). The FTSE 100 trades down 45 points or 1.08%, to 4105.80; the CAC 40 trades down 42.66 points or 1.38%, to 3050.55; and the DAX trades down 44.03 points or 1.41%, to 3083.43.

  Jonathan Levinson   6/9/2003,  9:15:54 AM
FRE is down 16% in premarket trading and there's talk of accounting impropriety. This should be a very big story shaping up.

  Jonathan Levinson   6/9/2003,  9:09:39 AM
The US Dollar Index is headed back south, 93.16 (delayed) last, QQQ 29.94, FVX -7.9 bps, NQ -8, ES -5.75, YM -38.

  Jeff Bailey   6/9/2003,  9:08:29 AM
09:00 Update posted at this Link

  Jonathan Levinson   6/9/2003,  9:01:16 AM
08:13 ET FRE Freddie Mac terminates Pres/COO, announces CFO resignation

  Jonathan Levinson   6/9/2003,  8:32:52 AM
Treasuries have opened very strong, with FVX -8.3 bps, TNX -6.8 and TYX -4.7 bps.

  Jonathan Levinson   6/9/2003,  8:04:05 AM
Equities are now red, ES -1.75, NQ -1.5 and YM -10.

  Jonathan Levinson   6/9/2003,  7:49:32 AM
The US Dollar Index is up .06 to 93.53, and the Qubes are up .10 to 30.21. June Gold is up 30 cents to 364. Equity futures were up at 6:30 but pulled back to flat as of this writing, with NQ 1213 unchanged, ES 988.25 >50, YM up 6 to 9061.

  Linda Piazza   6/9/2003,  7:28:05 AM
Good morning. Although the Nikkei dropped about 40 points below Friday's close in early trading on Monday, it closed the day on a six-month high. That six-month high appeared in danger the last thirty minutes of trading, however, as the Nikkei fell nearly 60 points from its day's high of 8882.51 to its closing value of 8822.73. At the close, the Nikkei had gained 36.86 points or 0.42%. Techs and banks led the gains, although the BOJ announced that May lending by Japanese banks fell 4.7% from the year-ago level. April's level fell 4.6%. According to Marketwatch.com, May marked the 65th straight month of decline. Mizuho Financial Group might have been the biggest gainer among the banks, adding 13.3%. Monday was the sixth straight day of increasing spot prices of the most widely used computer-memory chip, helping support tech prices.

Many other Asian markets gained, too. South Korea's Kospi gained 1.2%, Hong Kong's Hang Seng Index gained 0.4%, and Taiwan's Weighed added 1.8%. Singapore's Strait Times rose 0.3%. Tech stocks gained in these bourses, too. Taiwan Semiconductor (TSM) gained after a media report that it had begun implementing an investment plan first announced last year. After the bell, TSM said May sales increased 10.6% from the same month last year, and 10.1% above April's sales.

European trading is mixed today, with most bourses trading down or flat, with several closed for a holiday. Today, Chancellor of the Exchequer Gordon Brown will reveal before the British Parliament his opinion of adopting the euro. He's expected to say that the time is not yet right. Today, the Treasury published a study saying the pound should drop at least 5% against the euro before the U.K. could join the other euro nations and adopt the euro. Most hadn't expected that such an extensive weakening of the pound would be necessary, but others stress that the study was not authored by Brown but by Exeter University's Professor Simon Wren-Lewis, and that Brown might have other ideas. Currently, the FTSE 100 trades down 26.50 points or 0.64%, to 4124.30. The CAC 40 is down 28.24 points or 0.91%, to 3064.97; and the DAX is down 21.82 points or 0.70%, to 3105.64.

Goldman Sachs upgraded its rating of European banks to neutral from attractive. The rising stock markets contributed to the better outlook, as did expected 2004 economic growth. In other stock-specific news, several brokers said SAP might gain from Oracle's attempted takeover of PeopleSoft, but SAP eased in early trading after Friday's 4.49% gains. Merrill Lynch did not feel those gains were justified and restated its neutral outlook.

  Jim Brown   6/9/2003,  4:06:28 AM
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  Leigh Stevens   6/8/2003,  12:37:13 AM
The Index Trader Wrap has been posted: Link

  Jonathan Levinson   6/8/2003,  12:37:02 AM
The Futures Trader Wrap has been posted: Link

  Jim Brown   6/8/2003,  12:36:29 AM
The Market Monitor has been archived. You may view it and any previous days here: Link

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