Option Investor
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  James Brown   6/19/200,  5:31:57 PM
A few stocks we've been looking at as bearish play candidates today are:

MGA, a move under $67 might herald a deeper move lower to previous support near $63-64 and its rising 50-dma.

TCB, a serious under performer with heavy resistance at its descending 200-dma. While there is a lot of congestion between $40 and $38, the easy target is the quadruple bottom at $37.00.

BLL, another major under performer here, BLL is approaching support at $46.50.

CAI, this one looks similar to TCB but it's a computer services company. The easy target here is $30.00. Watch out for possible support at $32.

RKY, concerns over the cool, wet weather across the country and how it may affect beer sales has shares of RKY going flat. The breakdown under the 50-dma is bad news but there is possible support at $50.

For the truly aggressive put trader, these looked rather tempting...

ATH, you'd be calling a top but with the market slipping backwards profit taking could bring ATH back to the $75 level pretty quickly.

AET, another insurance stock, the easiest target is the $55-57 range but shares could bounce at $60.

BCR, again, this stock has been pretty strong so a trigger under $70 may be the best bet to capture any profit taking.

Take note, this was just a cursory glance at the charts and short-term traders would be encouraged to look at the news, earning dates, and point-and-figure charts for any possible plays.

  Linda Piazza   6/19/200,  4:27:59 PM
Reader question concerning SPX settlement: Here's a link to the CBOE site showing how and when SPX settlement values are calculated. Link The options are European-style and expire on Saturday, but the settlement value is calculated tomorrow morning at the open. It's my understanding that all stocks in the SPX must be open before that value is calculated, however, but that might be wrong.

OEX options, with the OEX ticker, are American-style options and have a different settlement time. The settlement time for them is calculated using tomorrow's closing value. They do trade tomorrow. Link The XEO, the European-style OEX options, also use Friday's close to calculate the settlement price. Link

  Jonathan Levinson   6/19/200,  4:27:03 PM
Thanks for the MM comments Monday on toppy GE. I closed my 3-day old 32.50 puts for a sweeeet profit today.

Congrats, Jeff!

  Jonathan Levinson   6/19/200,  4:00:18 PM
Could be that all those cortisone shots and blood doping have poor Casey weary at the bat.

  Linda Piazza   6/19/200,  3:39:31 PM
Correction: I bought the OEX put position on Tuesday, not Wednesday. Today feels like Friday to me.

  Linda Piazza   6/19/200,  3:36:01 PM
I'll probably exit my OEX put position with my profit this afternoon. With the way opex week works, this position isn't nearly as profitable as it should be with the deep drop in the OEX (premiums were obviously pumped up on Tuesday when I bought it, even though I got between the bid and the ask), and I see the OEX approaching that possible midline support on the ascending channel. I'll exit and watch tomorrow.

  Jonathan Levinson   6/19/200,  3:35:40 PM
Put to call ratio .52 for the past half hour.

  Linda Piazza   6/19/200,  3:26:23 PM
Volume patterns are all negative, of course, except for new highs and new lows. The bottom isn't falling out in those new lows numbers, with only 7 between the NYSE and the Nasdaq combined.

  Jonathan Levinson   6/19/200,  3:24:31 PM
This looks like a bear flag breakout on the Qubes, which have nosedived on large volume spike on the trendline failure.

  Jonathan Levinson   6/19/200,  3:22:22 PM
Finally! The range has been broken, with ES, NQ and QQQ on sell signal, taking out the previous lows. TRINQ is up to 1.31, TICK.NQ -539 and QQV up to a .82 loss. Unfortunately, the selling in the indices is hitting the precious metals indices down too, with XAU now up .64 and HUI +.88

  Linda Piazza   6/19/200,  3:19:33 PM
The OEX is below its 30-minute 100-pma and now headed toward its 130-pma at 501.35.

  Linda Piazza   6/19/200,  3:08:32 PM
Here's an OEX chart I used in the weekend wrap. You can see that I was wrong about the level from which OEX might pull back, but the idea is still the same. Notice that the OEX has not yet violated the midline support of its ascending channel, and could find first support there, just above 500. Link

  Linda Piazza   6/19/200,  2:52:42 PM
You might notice on the OEX five-minute chart in my 14:50 post that it's also possible to draw a neutral wedge instead of a reverse H&S. Since the wedge was entered as the OEX was moving down, the most likely break is to the downside, but as I've said all day, that's not a given.

  Linda Piazza   6/19/200,  2:50:15 PM
I mentioned a possible reverse H&S on the OEX five-minute chart and mentioned a horizontal neckline. I took another look at the chart and redrew the neckline. Here it is, showing the way the OEX has traded in relationship with that potential reverse H&S. It appears to be rejecting the neckline level, but could just be forming another right shoulder. If a neckline is rejected, market participants often react with disappointment, driving prices down (or up, in the case of a regular H&S) sharply. Link

  Jonathan Levinson   6/19/200,  2:47:55 PM
Treasury yields are picking themselves up off their lows, FVX -5.7 bps, TNX -1.9 and TYX +2.9 bps. August gold is up 4.30 at 362.10, and XAU and HUI are holding most of their gains as well. It feels like the bias has changed since the rejection of that sell signal earlier, though prices have barely budged. The TRIN.NQ has dopped to .68 and the TICK.NQ -112, QQV down 1.57. The put to call ratio is low at .53, and so it looks like dumping of at least QQQ calls to me, which would hint that the current levels are being deliberately maintained as part of opex antics. We should find out soon enough. Meanwhile, the short cycle oscillators are back toward a bearish kisses. Until the lows of the day fail, it just looks like more chop to me.

  Jeff Bailey   6/19/200,  2:37:06 PM
Good comment from CNBC's Ron Insana regarding money supply. I thought about this last night when I was going to sleep, forgot about it until Ron just mentioned it.

I didn't catch the numbers, but there were some sharp gains in M2. This would really tie in with last night's Index Trader wrap and dollar/bond comments. It would make perfect sense that M2 would rise as liquidity gets pumped into the system.

  Jonathan Levinson   6/19/200,  2:24:22 PM
That bearish cross is reversing, looks like a fakeout.

  Linda Piazza   6/19/200,  2:24:11 PM
The OEX 30-minute 100-pma is now at 502.88, and could provide a bounce zone. I've noticed that the OEX did penetrate this average last Friday and traded down toward the 130-pma but did not touch it. A trade on a move up through the 100-pma again after failing to breach the 130 would have netted a trader about 16 OEX points. Perhaps Jim's method will work well with the OEX, too. I'm watching closely now as the OEX approaches a test of the 30-minute 100-pma again. A bounce from that will certainly have me exiting the put position if not going long.

  Jonathan Levinson   6/19/200,  2:20:58 PM
We have a bearish cross on the 26-3-18 stochastic for ES, still waiting on the strong QQQ.

  Linda Piazza   6/19/200,  2:15:52 PM
The retest of the violated support at 503.80-504 has failed and the OEX has headed down again. Now I'll be lowering my stop on my OEX put position again, to 504.85. With the exception of a couple of spikes, 504.80 has been the top of the congestion zone in which the OEX traded most of the day.

  Jonathan Levinson   6/19/200,  2:13:28 PM
Bearish kisses on ES and QQQ so far, but no crosses yet.

  Jonathan Levinson   6/19/200,  2:12:34 PM
The latest put to call ratio is .53, with the equity pcr .44 and index pcr .81.

  James Brown   6/19/200,  2:11:22 PM
Another potential bearish play candidate - Infosys - INFY - Shares of this India-based software company have rallied back from its April & May lows only to fail at its descending trendline of highs. While shares are heavily influenced by the moves in the U.S. dollar, the stock looks like it could easily retrace to the $45 level. See chart: Link

  Jeff Bailey   6/19/200,  2:10:19 PM
Bema Gold (BGO) $1.28 +9.4% ... Jeff: I played BGO from your comments on Tuesday. Stock gave an upside move today from an inside day and have gotten a nice move. How would you suggest a trader trade this one now with a pretty good gain at risk. I'm not sure I want to risk a stop back below yesterday's low. I know you can't give individual advice, but I'd be interested to know your thoughts in general.

One thing a trader can do is this. It is a "derivation" of the daily bar chart "inside day" trading technique, and may be useful, especially for these type of smaller cap stocks that will run on the speculation mentioned. Try turning your bar chart session time interval to 60-minute, then 30-minutes and so on. Then... simply "pretend" these are daily bars. If I do this with BGO on 60-minute time interval, I see bars where the prior bar has not been violated to the downside in today's session. One could look to capture bulk of gain, but still allow for further upside, simply by placing a stop just below last hour's low of $1.24.

The "tighter" or smaller the time interval you go, the tighter your stop will become, thus your trying to squeeze as much risk from the trade as possible.

  Jonathan Levinson   6/19/200,  2:05:27 PM
The failure just above ES 1000 topped out the 26-3-18 stochastics just before the 80 level, giving us a lower high on the price and the oscillator. A sell signal appears imminent, but support at the low of the day is just 3.25 points away at 995.25. No movement in treasuries so far, so it remains a sideways drift for the moment.

  Linda Piazza   6/19/200,  2:00:54 PM
The OEX 30-minute chart has that same "b" distribution look as did a shorter-term chart his morning, but so far the 503.90 support is holding. I'm lowering my stop through the day on my OEX play to take me out of a profit in case that support is not broken and the OEX heads up instead. I'm below my first target already. That 503.90 area is currently being tested again.

  Jeff Bailey   6/19/200,  1:59:57 PM
Corning (GLW) $8.13 +2.26% ... session highs on some volume spike in last 5 minutes.

  Jonathan Levinson   6/19/200,  1:53:58 PM
The US Dollar Index is sitting at 93, with no bounce or further downside, just like the indices near their lows of the day. August gold is off its highs, 362.10 currently, same for HUI and XAU, but they're holding the lion's share of their gains. Treasury yields sit near their lows since the 12 o'clock data.

  Linda Piazza   6/19/200,  1:51:23 PM
No, the 1:45 ET test has been a test of support rather than resistance as I had guessed, but it's been a rather tepid test so far. It's too soon to be sure, but I'd guess that if support holds this time around, there would be a stronger push upward. Bears therefore want to see the OEX pushed down through its current congestion band and want to see it rather quickly.

  Jeff Bailey   6/19/200,  1:45:56 PM
Microsoft (MSFT) $26.25 +0.72% .... stock day trader may want to keep an close eye on MSFT for some volatility into Friday. Seeing 8,625 contracts traded in the June 25 calls. Suspicious to see this kind of volume.

  Jonathan Levinson   6/19/200,  1:42:08 PM
.52 again for the latest put to call reading. 1002 ES was never touched on this last push above 1000.

  Linda Piazza   6/19/200,  1:39:44 PM
We're moving into the tricky time of day as we approach 1:45 ET. As of this moment, it looks as if the test today will be a test of overhead resistance rather than support, but that's not a given yet. We'll know within the next few minutes. Occasionally, there's no test around this time, but that's rare.

  James Brown   6/19/200,  1:26:43 PM
Just an observation -- two stocks I've been watching are ZMH and SYK. They're both medical device makers in the orthopaedic implants industry. Shares of ZMH are down on what could be concerns that it will be in a bidding war with a British firm over its efforts to buy its Swiss rival, Centerpulse. Meanwhile, SYK is also down on profit taking and just slipped under the $70 level, which should have been support. Both look like they have farther to fall but both have some of "noise" on their charts for the next $2-$3.

  Linda Piazza   6/19/200,  1:14:35 PM
The OEX five-minute chart is certainly beginning to take on the look of a lopsided reverse H&S with shoulders at 504, head at the day's low, and neckline at 505.75. If so, I'll add about $.25 to the neckline value to use as an exit cue on my OEX put play now that it's profitable.

  Jonathan Levinson   6/19/200,  1:12:31 PM
The ES and QQQ have been on a buy signal since noon, with very little progress on ES and a slightly upward drift from QQQ. QQQ 31 will be the key resistance to watch, and 1000 ES for the moment, with better resistance at ES 1002 and 1005.

  James Brown   6/19/200,  1:10:48 PM
I like to keep an eye on shares of MMM as this one stock has the biggest influence on the DJIA. Today's session looks like a failed rally at the $134 level, which coincides with overhead resistance on MMM's point-and-figure chart. I would not be surprised to see it slip back to the $127.50 level or lower.
Chart: Link

  Linda Piazza   6/19/200,  1:03:05 PM
As of a few moments ago, all volume patterns with the exception of new highs vs. new lows were negative (or less than 1.0, in the ratio method I use). Adv/dec ratios are a bearish .57 on NYSE-traded issues and .58 on Nasdaq-traded issues. Down volume is 2.4 times up volume on the NYSE and 1.63 times up volume on the Nasdaq. Total volume is 788 million on the NYSE and 1.1 million on the Nasdaq.

  Jonathan Levinson   6/19/200,  1:02:08 PM
Another put to call reading at .52.

  Linda Piazza   6/19/200,  12:57:33 PM
That potential OEX bull flag pattern broke to the upside and so does appear to have been a bull flag, but the OEX now pauses at the top of the previous consolidation band, near 504.75.

  Jonathan Levinson   6/19/200,  12:55:32 PM
The US Dollar Index is lower still, testing 93 support now. XAU is up 1.15, HUI at 157.54 +1.87, printing some new highs and lofting my spirits atop a cloud of cotton candy and good cheer.

  Jeff Bailey   6/19/200,  12:52:46 PM
Covenant Transport (CVTI) $17.10 -1.4% ... "transportation" stock that gave double-bottom sell signal yesterday and breaks bullish support trend. Link

Sector (BPTRAN) still "bull confirmed" at 76%, but this matches the April 2002 high reading of 76%, which by August of 2002 had fallen to 26%.

  Jonathan Levinson   6/19/200,  12:51:06 PM
Flatline on the price and the indicators.

  Linda Piazza   6/19/200,  12:49:54 PM
The OEX's movements on the five-minute chart are beginning to take on the appearance of a bull flag. After the OEX rose off its low, it paused and now trades in a tight pattern of lower highs and lower lows. We have to keep the possibility of a bull flag in mind when we see patterns like that. We won't know for sure until the OEX either breaks through to the upside or the downside. I'm considering lowering my stop again to take me out of a profit.

  Jeff Bailey   6/19/200,  12:38:50 PM
10-year YIELD ($TNX.X) the benchmark bond has now fully reversed morning losses to show gain with YIELD now lower by 1.5 basis point at 3.343%.

Now begin to think how important financials/housing sectors become as a broader observation of market's perception of economy. In coming weeks/months, what if YIELDS continue to fall, but financials, housing is weak?

Looking further forward, I have been so impressed by the bullish % reading on this move higher, I'm almost looking forward (potentially) to a couple of months from now, when we begin hearing "the sky is falling, the sky is falling" when/if the bullish % fall back below/near the 30% level and bullish risk has been reduced.

  Jonathan Levinson   6/19/200,  12:36:54 PM
GE has traded 21M shares so far, nearly double yesterday's closing volume and 3M shares above its average daily volume.

  Jeff Bailey   6/19/200,  12:36:01 PM
13-week Treasury Bill YIELD ($IRX.X) ... I'm noticing that q-charts had to change its scale on this very short-term bond's YIELD chart to 7.77 from 0.777 as YIELDS have moved so low. This is what is really showing a market expecting 50-basis cut in my opinion. Yield at 0.77% here is down an impressive 8.5 basis points today and new YIELD lows.

  Jonathan Levinson   6/19/200,  12:32:40 PM
Not much to this buy signal so far, just sideways chop near the lows of the day. The TRIN.NQ is at .91, neutral, TICK.NQ -60, QQV -.41.

  Jeff Bailey   6/19/200,  12:28:49 PM
Kerr McGee (KMG) $45.87 +0.7% ... I still carry bullish thoughts toward this "natural gas/energy" play. Stock did find selling at the bearish resistance. While it sounds somewhat contrary to bullish though, I'd just as soon see the stock trade $45.00 at this point, then look for the reversal back higher, break trend and $49-$50 to get a "catapult" type of move. Link

Still like 1/4 or 1/2 bullish here.

Can't be sure with futures expiration at hand, but July (ng03n) 5.785 +3.65%, August (ng03q) $5.87 +3.6% and September (ng03u) $5.88 +3.13% natural gas futures on the move today.

q-charts users may need to add an NYMEX: in front of these futures symbols.

  Linda Piazza   6/19/200,  12:26:26 PM
Now that my OEX put position is profitable, I'm lowering my stop to 507.55, just above the 61.8% retracement of the day's range so far. Most evidence says that if a market retraces more than 61.8% of a previous move, it's likely to retrace the whole move and I have no desire to follow the OEX back up that far. Getting out at 507.55 will take me out of the put play below my entry, but sadly, at that level, it will take me out for a small loss rather than a gain. Opex week does crazy things to options premiums.

  Jonathan Levinson   6/19/200,  12:24:43 PM
Please forward to Alan H.

Re: Diff betw NY & Phil Fed index- If tax shelters are included in production in NY, the activity has been phenomenal, and may account for the difference.

  Jonathan Levinson   6/19/200,  12:24:12 PM
A fresh buy signal on ES and QQQ on this latest uptick.

  Jeff Bailey   6/19/200,  12:20:15 PM
S&P Banks Index (BIX.X) 307.33 -1.42% ... using same technique of adjusting box size as we used in last Thursday's Index Wrap, the 1.5-box size shows the BIX.X not giving a sell signal all the way up the scale since the March lows. On this scale, first sign of real weakness would be 304.50 Link

  Linda Piazza   6/19/200,  12:15:47 PM
Here's what I'm watching on the OEX hourly chart: Link

  Jonathan Levinson   6/19/200,  12:14:57 PM
As a bear, this is what I like to see: The put to call ratio is just .52, with the equity pcr .41 and the index pcr .87, and this on a selling day. Persistent low put to call ratios have been missing on the declines all year, but not so far on this one.

  Jonathan Levinson   6/19/200,  12:11:42 PM
August gold is up 5.60, with XAU +.95 and HUI +1.47. Even the goldbugs were expecting a deeper pullback on yesterday's selling. FVX is lower, -6.6 bps, TNX -2.8 and TYX +1.4. The steepening yield curve is bearish for equities.

  Jeff Bailey   6/19/200,  12:11:30 PM
Correction made to my 12:08:32 post chart link, as I still had the relative strength vs. SPX turned on. I've corrected that link now.

  Linda Piazza   6/19/200,  12:10:42 PM
On the Futures side, Jim has been speaking about the 30-minute 100 and 130-pma's. Those averages are at 502.35 and 500.91 for the OEX. I'm watching how the OEX behaves in response to those pma's, looking for a possible bounce attempt again.

  Jeff Bailey   6/19/200,  12:08:32 PM
Biotech ishares (IBB) $67.50 -4.9% .... Dorsey/Wright plots this iShare on $0.50 box. Link

  Jonathan Levinson   6/19/200,  12:06:44 PM
Getting a fresh sell signal on the 26-3-18 stochastic on ES, QQQ rejected at the buy signal and turning back down. New lows on ES printed at 996.50.

  Jeff Bailey   6/19/200,  12:06:29 PM
June Philadelphia Fed report comes in at 4.0, which was inline with forecast of 4.1.

This may still be an undershoot at 4.0 as I had seen some economists going as high as 11.0.

  Linda Piazza   6/19/200,  12:05:00 PM
New low on the OEX. Watch 503.25 next.

  Jonathan Levinson   6/19/200,  12:03:36 PM
No followthrough to the downside with the lows of the day holding so far.

  Linda Piazza   6/19/200,  12:03:32 PM
Remember that the first reaction to an economic number is not always the final reaction. I'm still watching that OEX 504.25-504.70 level to see if support holds again.

  Jonathan Levinson   6/19/200,  12:02:50 PM
The markets were hoping for an upside surpise, apparently. ES is back below 1000, sellers are piling onto GE which never made it back to the 29.80 failure zone, and FVX is deeper red, down 4.6 bps. The cycle up-phase is is in the process of truncating with the 12 o'clock selloff.

  Jeff Bailey   6/19/200,  11:53:17 AM
Centex (CTX) $80.84 -1.6% ... homebuilder, which yesterday gave a double-bottom sell signal at $82. Might be a good "early entry" bearish play. Link

Current bearish vertical count (column of O from $86 to $81) is bearish to $74.

May go just partial positions here, then monitor relative strength chart versus SPX Link for RS "sell signal" to then add.

  Linda Piazza   6/19/200,  11:52:17 AM
GE: You're right, Jonathan. Apparently everyone is weighing in on GE. I just fund another note that J.P. Morgan today had cut estimates for GE to $1.58 from $1.60. Morgan mentioned the sluggish global economies and SARS and said the plastics unit would likely miss H2 projections. It kept its estimates for 2004. It also reiterated its underweight rating. Perhaps the first note I read was incorrect, or perhaps both Merrill and Morgan weighed in on GE. To balance that, Banc of America Securities raised the price target to $35 from $31, reiterating its buy recommendation. However, it also cut FY03 and FY04 estimates.

  Jonathan Levinson   6/19/200,  11:45:26 AM
Thanks, Linda. Apparently some other bucket shop had upgraded it yesterday or the day before.

  Linda Piazza   6/19/200,  11:44:40 AM
Jonathan, I found a note that Merrill Lynch had cut estimates on GE.

  Jonathan Levinson   6/19/200,  11:44:35 AM
Approaching a buy signal on ES on the intraday short cycle stochastic. I'd look for a break above 1000, but so far, the sell volume has been vastly outdistancing the buy volume.

  Jonathan Levinson   6/19/200,  11:41:28 AM
Harami indeed, eh Jeff? ;-)

  Jeff Bailey   6/19/200,  11:40:55 AM
Gold/Silver Index (XAU.X) 82.24 +1% .... Anglogold (AU) $33.50 +2.25%

  Jim Brown   6/19/200,  11:40:11 AM
RGC Trade - If you entered this trade yesterday please email me for an update. Jim@OptionInvestor.com

  Jonathan Levinson   6/19/200,  11:36:05 AM
Any thoughts on why GE's getting trashed? Options expiration? I don't see any news. rb

Me neither. There news on the wire of an acquisition, but other than the toppy charts to which we've grown accustomed, I have no idea. Anyone?

  Jeff Bailey   6/19/200,  11:35:24 AM
S&P 500 (SPX.X) 1,000 -1% .... boy does this one "smell" like an expiration-related level?

Decent strategy right here I think is for a straddle/strangle type trade for July. Could see good volatility either directiion next week after expiration.

  Linda Piazza   6/19/200,  11:33:32 AM
The OEX still pauses at the levels of the June 12 and 13 highs, still finding support there. If that support is not firmly broken soon, I expect a try at a bounce instead.

  Jonathan Levinson   6/19/200,  11:29:47 AM
Gold is doing well, the August contract above 362 +4.30, XAU +.62 and HUI +1.04. The US Dollar Index is down to 93.41.

  Jonathan Levinson   6/19/200,  11:25:36 AM
GE is getting beaten like a red-headed stepson, down 1.04 on 17M shares, vs. yesterday's total volume of 11.8M shares.

  Jonathan Levinson   6/19/200,  11:20:49 AM
Got a great question for a subscriber. I reported yesterday that the Brazillian central bank has LOWERED rates to 26% yesterday. Our attentive reader wanted to know if I liked the concept of a 26% return on a t-bill. Yes, of course! But in bond-land, yields like 26% reflect the enormous risk of default on those bonds. As ever, no reward without risk, and a reward that big equates to what the market considers to be a very substantial risk.

  Jonathan Levinson   6/19/200,  11:12:28 AM
Put to call ratio to .49, showing no fear whatsoever on the part of the bulls.

  Linda Piazza   6/19/200,  11:09:40 AM
The OEX currently pauses at the levels of the June 12 and 13 highs.

  Linda Piazza   6/19/200,  11:07:28 AM
The early volume patterns have shifted, of course, and now show more decliners than advancers, although the proportions are not yet large. Up volume is still bigger than down volume on the Nasdaq, however, although down volume is bigger on the NYSE.

  Linda Piazza   6/19/200,  11:01:19 AM
The OEX one-minute chart shows the OEX settling into a classic "b" distribution pattern. This type of pattern usually results in a resumption of the decline, but doesn't always do so, of course. (Note: Since this is a one-minute chart, the OEX will have moved a little in the couple of minutes it took to upload the chart. Actually, the OEX has now resumed the decline.) Link

  Jonathan Levinson   6/19/200,  11:00:41 AM
ES prints below 1000.

  Jonathan Levinson   6/19/200,  10:57:13 AM
I'm glad to report that it appears that Al Green is draining this week. I've never, ever seen two back to back reverse repos. Note how well the repo drains coincide with the dollar bouncing. Forex traders should take note of this in establishing broader trend bias.

  Jonathan Levinson   6/19/200,  10:51:51 AM
GE is finding support right at its low. A break below 28.80 should be good for some fireworks.

  Linda Piazza   6/19/200,  10:43:20 AM
My original target on my OEX put play was just above 505, but I'll watch carefully to see how the OEX behaves as it approaches that level. A quick plummet below 505 will keep me in the play, but a bounce back up to the recently violated neutral wedge will have me lowering my stops.

  Jonathan Levinson   6/19/200,  10:42:14 AM
Put to call ratio .50, still too many calls being traded.

  Jonathan Levinson   6/19/200,  10:41:33 AM
And there goes QQQ 31.

  Linda Piazza   6/19/200,  10:40:03 AM
The OEX breaks down below the neutral wedge and yesterday afternoon's support, but there has not yet been a five-minute close below the wedge.

  Jonathan Levinson   6/19/200,  10:38:57 AM
There goes ES 1005.

  Linda Piazza   6/19/200,  10:36:49 AM
As of a few minutes ago, volume patterns showed more advancers than decliners and bigger up than down volume. Total volume was 253 million shares on the NYSE and 447 million on the Nasdaq.

  Jonathan Levinson   6/19/200,  10:35:55 AM
The Qubes are very strong, but the intraday 26-3-18 stochastic put in a lower high just now, reversing before reaching the overbought level. Watch 31 as key support on this potential downphase trying to get underway.

  Jonathan Levinson   6/19/200,  10:34:25 AM
If 1005 ES falls, I expect to see a quick move to round number support at 1000, but if it holds, then next descending trendline resistance would be in the 1011 area.

  Jeff Bailey   6/19/200,  10:30:26 AM
Diane Swonk Bank One Chief Economist just on CNBC. I think she just make good comment as it relates to last night's Index Trader Wrap and Fed doing some "jaw boning" regarding Treasury bonds.

She too thought things might be a little "overdone" on the buy side in the bond market and concern was given that a sudden surge in selling (YIELD higher) could squash economic recovery, but she thought Fed was doing its job in "jaw boning" with talk that it may buy back some Treasuries.

In a way.... Greenspan is trying to tell the bond market what he might do, and influencing the trade in the bond market to his liking.

10 and 30-year YIELD higher, Dow Jones Home Construction (DJUSHB) 464.40 -0.72%

  Linda Piazza   6/19/200,  10:29:23 AM
The OEX just touched the bottom of that wedge I showed in my 10:27 post and bounced up, giving validity to that lower support line, at least. Now we'll know that a break of that line could be significant, if that should occur.

  Linda Piazza   6/19/200,  10:27:35 AM
Is this a wedge I see setting up on the OEX five-minute chart? If so, it will give us some guidance, at least. Link

  Jonathan Levinson   6/19/200,  10:24:22 AM
1005 ES has been solid today. I have a fib level at 1005.50. No loft to the bounces, but no downside followthrough either. Just chop.

  Jeff Bailey   6/19/200,  10:22:43 AM
Anglogold (AU) $32.99 +0.7% .... one little pattern I didn't see in AU that lends to some bullish thoughts to $34.50 type of target for short-term trader is a little reverse head/shoulder pattern. See it with the neckline at $31.45? Current move underway is off the right shoulder of $30.00. Link

Gold/Silver Index (XAU.X) 81.24 -0.28% trying to bed back off the low.

Disclosure (I currently hold bullish position in AU)

  Linda Piazza   6/19/200,  10:22:09 AM
We now have a lower five-minute high on the OEX. That's about all I can say about today's trading with certainty. Watch that 507.50-508 support level again.

  Jonathan Levinson   6/19/200,  10:20:42 AM
The CBOE put to call ratio opened at .42, still more exuberant bullishness. QQV down .54, VXM up .38 and VIX -.23.

  Jonathan Levinson   6/19/200,  10:19:57 AM
Agreed, Linda. It's a very strange session. For all the data released, today is so far continuing right where it left off, with no direction I can discern. NQ up, ES down, August gold up 1.20, HUI and XAU down.

  Linda Piazza   6/19/200,  10:19:16 AM
The OEX just touched the five-minute 21-pma at 508.58 and bounced up from that touch. I'm not sure if that average is playing a major role today, however, as the OEX has already moved through it a couple of times and it's coming back down now as I type and moving through it.

  Linda Piazza   6/19/200,  10:17:04 AM
The tape is behaving weirdly today. I urge caution against drawing too many conclusions about direction too soon. The markets are evidently having problems digesting the various bits of information and their implications.

  Jeff Bailey   6/19/200,  10:16:57 AM
Banks both the more regional S&P Banks Index (BIX.X) and more conglomerate/multinational KBW Bank Index (BKX.X) 883.83 -0.51% just fractionally lower.

Finds S&P 500 (SPX.X) 1,008 -0.18% and S&P 100 Index (OEX.X) 508.59 -0.2% fractionally lower too. Discussed this possibility in last night's Index Trader Wrap.

  Jeff Bailey   6/19/200,  10:11:38 AM
August Fed Funds Futures (ff03q) 99.185 .... BIG and I mean BIG change in thought from MARKET as to what Fed may do on interest rates next week. Yesteray was 50% chance of 50 basis point by August meeting, but jumps to 70% chance at the open and 75% chance of 50 basis point here.

Note: I'm using August contract as it covers both June and August meeting.

  Jonathan Levinson   6/19/200,  10:04:28 AM
A big surge in buying drilled the ES and NQ futures higher at 10AM, but it was fleeting, and the stochastic downphase continues to govern as the futures return to their previous levels.

  Jeff Bailey   6/19/200,  10:01:10 AM
Leading Indicator for May comes in at up 1%, which was better than 0.7% forecast.

  Linda Piazza   6/19/200,  10:00:56 AM
It's still difficult to peg a direction for the OEX. It's down, of course, but not yet below the area that was providing support through much of yesterday afternoon. It could find support there once again (and appears to have done that as I typed). Disclosure: Although I've come close to being stopped out twice (once within 5 cents), I still have a put position on the OEX. I'd considered closing the play yesterday, but decided to stay in the play unless stopped out.

  Jonathan Levinson   6/19/200,  10:00:19 AM
1.25B reverse repo announced, which is a net 1B add against the expiring 2.25B reverse repo expiring today.

  Jonathan Levinson   6/19/200,  9:58:08 AM
NQ continues to lead ES, ith ES down 2 and NQ up 5.5 curently. FVX -.7 bps, TNX +2.8 bps and TYX +5.9 bps as we head into the 10AM data.

  Jeff Bailey   6/19/200,  9:52:25 AM
Anglo Gold (AU) $32.91 +0.45% ... breaks to the upside of inside day, but also see Gold/Silver Index (XAU.X) 80.98 -0.54% and Gold Bug Index ($HUI.X) 154.37 -0.83% broke to the downside of their inside days.

If trader traded bullish in AU, then must view sector action running against the "inside day" trade setup at this point.

  Linda Piazza   6/19/200,  9:52:19 AM
The FTSE 100 and DAX are now down over 1%, with the CAC 40 currently down 0.80%.

  Jeff Bailey   6/19/200,  9:48:34 AM
Treasuries longer-dated 30-year Treasury sees selling with YIELD ($TYX.X) rising 5.3 basis points to 4.41%, while shorter-dated 5-year sees buying with YIELD ($FVX.X) down 1.2 basis to 2.291%.

This presents some disagreement among traders what the FOMC is going to do next week with interest rates, and also has the YIELD curve steepening a bit (slight negative for stocks).

Benchmark 10-year YIELD ($TNX.X) up 2.4 basis points at 3.384%.

US Dollar Index (dx00y) 93.67 +0.53% sees dollar strength today.

  Linda Piazza   6/19/200,  9:48:21 AM
The OEX has now made a new day's low. If it should continue to fall, watch how it behaves at yesterday's consolidation band from 507.50 to 508.

  Linda Piazza   6/19/200,  9:39:17 AM
Early trading on the OEX hasn't given us much of a sense of direction. The first five-minute OEX candle touched 509 support and sprang up, but the move hasn't been big so far.

  Linda Piazza   6/19/200,  9:36:18 AM
Jeff, did you notice that GS upgraded AU to inline?

  Jonathan Levinson   6/19/200,  9:34:28 AM
GE is down 1.89% so far, getting sold aggressively.

  Jonathan Levinson   6/19/200,  9:34:03 AM
The Naz is still stronger, with the TRIN.NQ somehow as low as .43 here, TICK.NQ +97, QQV -.88.

  Jeff Bailey   6/19/200,  9:25:34 AM
Forest Labs (FRX) $60.61 ... trading lower at $55.85 here after Alzheimers study failed to show statistical significance. I (Jeff Bailey) view this as a rather LARGE NEGATIVE for shares of FRX and would look to move to the sidelines near-term. I think much of the recent run from $50 may have been in anticipation of this study as this memantine-based drug for treatment of Alzheimers is viewed by some as a potential "blockbuster" type of drug.

  Jonathan Levinson   6/19/200,  9:22:07 AM
A 28 day repo of 3B so far from the fed. There are 2.25B in reverse repos entering the market today, for 5.25B added so far. The 28 day repos are standard for Thursday and tend to be inconsequential. We await the 10AM announcement.

  Jeff Bailey   6/19/200,  9:20:25 AM
09:00 Update posted at this Link

  Jonathan Levinson   6/19/200,  8:43:11 AM
The US Current account deficit rose to a new record, 136.1B for Q1 2003, 5.8% higher than the previous record set in Q4 2002.

I won't harp on this, but suffice it to say that the data released this morning is a perfect illustration of the utter failure to date of Al Green's policies.

  Jonathan Levinson   6/19/200,  8:35:06 AM
Initial claims -13,000 to 421,000.

Futures are rallying on the news, ES +4.00 and NQ +7.50. FVX is down 5 bps, TNX is down 1.7 bps and TYX is up 1.1 bps. Can you say "moral hazard"?

  Jonathan Levinson   6/19/200,  8:31:49 AM

  Jonathan Levinson   6/19/200,  8:31:33 AM

  Jonathan Levinson   6/19/200,  8:10:45 AM
The US Dollar Index has moved up to the 93.50 level. Futures are up, ES +1.50, NQ +3.50, YM +13, QQQ 31.01, but the real action will commence at 8:30 with that pile of economic data listed at the end of the Market Wrap.

  Linda Piazza   6/19/200,  7:24:04 AM
Good morning. The Nikkei had a volatile day, trading in a 140-point range. During the day, it dipped 90 points into the red but recovered steadily all afternoon to close up 17.54 points or 0.19%, at 9110.51 and above the 9100 mark. That recovery did not retake its morning high of 9140.76, however. Many financials were down, but tech stocks gained.

Most other Asian markets closed up, too, with the Taiwan Weighted closing up 1%, South Korea's Kospi closing up 2.18%, Singapore's Straits Times closing up 2.32%, and Hong Kong's Hang Seng closing up 0.10%. Semiconductor-related companies tended to trade up, while airliners were mixed. Korean Air gained but Hong Kong's Cathay declined. Korean Air has been placing orders for new aircraft while attending the Paris Air Show.

Many European markets trade slightly in the red as I type, with financials leading the slight declines. Deutsche Bank issued a note advising investors to avoid insurers exposed to life businesses and downgraded Swiss Life, so insurers joined the other classes of financials trading down. Despite recent gains in stock markets, Swiss Re's CEO said that his company's 2003 earnings would still be affected by investment writedowns. Duetsche Lufthansa's CEO also had negative things to say about 2003. Speaking at the annual shareholders' meeting, he said that even if economies improved in the second half of the year, this would "not turn out to be one of its better years," according to a Marketwatch.com article.

As of this writing, the FTSE 100 trades down 20.20 points or 0.48%, to 4186.80. The CAC 40 trades down 9.20 points or 0.29%, to 3204.73. The DAX trades down 12.38 points or 0.37%, to 3291.77. The FTSE trades near its day's low while the CAC and DAX tread water again, most probably awaiting the release of U.S. economic numbers later this morning.

  Jeff Bailey   6/18/200,  10:51:14 PM
Randgold (GOLD) $18.11 +0.05% ... go figure. The one stock that actually had Dorsey/Wright's precious metals sector bullish % (BPPREC) turning "bear confirmed" last week with a sell singal at $16.50, actually traded fractions higher today. Check out the bar chart on this one and the moving averages. What the heck do you do here? Link

  Jeff Bailey   6/18/200,  9:59:55 PM
Thanks Linda and Jonathan for the discussion on the "harami" candle pattern on Anglo Gold (AU). I can't disagree with your thoughts of caution toward the bullish side at all. What interested me about this stock as a trade is that it just looks like a good "short squeeze" candidate based on what I had witnessed from the XAU.X a couple of weeks ago and "old" upward trend. Still, I can see some downside (easy) back to $31.50.Link

I forgot to change my moving average setting back to 21, 50 and 200 after this evening Index Trader Wrap. (50 and 200-day SMA are both trending higher at $29.82 and $29.79 respective. 21-day curling high at $30.43).

As of May 15 data, AU short interest had been coming down and May 15th data would have been "last kiss" at $31.45 before last little dip back below $29.22. Not certain what short interest might be now one month later. Link

If not familliar with "inside day" trading technique, here's a link to an article I wrote on this trader neutral technique. Link

  Jim Brown   6/18/200,  8:12:16 PM
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