Option Investor
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  Jeff Bailey   7/25/200,  5:17:15 PM
Pivot Analysis Matrix for Monday and next week is posted at this Link

  Linda Piazza   7/25/200,  3:55:08 PM
The upturn in the markets since midmorning have turned the daily 5(3)3 stochastics back up and have produced a bullish kiss and slight cupping upward of the 21(3)3's, too. RSI has barely budged, however, as it still squiggles around the 50 mark, sometimes pointing up and sometimes down. MACD is trying to stage a recovery as it slants down toward the flatline. Right now, the series of lower highs on the OEX appears to be holding, but will it Monday? Is it significant that the SPX moved right up to 1000 but not over it (at least not yet)? Although I've been characterizing the shape I'm seeing on the daily OEX chart as a bearish right triangle, while always saying that even bearish formations can break to the upside, it's possible to squint differently and see a neutral triangle there. Rather than a flat base, it would have a slanting base if the shadow from the July 1 low was included rather than cut off.

  Jeff Bailey   7/25/200,  3:51:13 PM
Oxford Health (OHP) $44.75 +2.68% ... making its move above $44.60.

Will profile full positions from partial on OHP trade at $45.00 Link

Then, if still holding calls from first bullish profile in June, snug a stop just under $40.

  Jeff Bailey   7/25/200,  3:48:04 PM
Jim Brown made comment earlier this morning about the increased volatility.

Tom Dorsey, in his book "Point and Figure charting" likes to use the analogy that it is like a tennis match, where the both players are hitting the ball at each other from the base line, then each begins to approach the net and action back and fort becomes quicker and quicker.

When we look at the PnF chart of the SPX, we perhaps see the Bulls at their service line, while bears may have tried a move to the net yesterday. However, bulls look to have returned the ball back to the bears by today's close and .... as they say... "the ball is back in the bear's court." Link

  Linda Piazza   7/25/200,  3:44:12 PM
The OEX moved to test its descending trendline, but it hasn't moved above that trendline.

  Jeff Bailey   7/25/200,  3:41:44 PM
Human Genome (HGSI) $12.45 -1.42% .... I completely missed a bearish trade back at $14.00 where I had been stopped out from prior bullish trade.

Some earnings calendars showed HGSI due to release late yesterday, but they didn't. Now I'm seeing "unconfirmed" for July 28th. Not sure if this earnings schedule has anything to do with today's action or not. Stock dropped to a morning low of $11.50, and I think part of that may have been attributed to not reporting last night.

  Jeff Bailey   7/25/200,  3:34:38 PM
Oxford Health (OHP) $44.40 +1.85% .... starting to close in on the $44.60 with 30-minutes left in the session.

If institutions want to draw some bullish attention to the stock, often times you'll see them try and paint the stock higher to a 52-week high by a Friday close, so it gets bold print in the Wall Street Journal or Investor's Business Daily.

Not sure of that today, but a trade at as it would take a trade at $44.54 would be 52-week high.

  Jeff Bailey   7/25/200,  3:28:19 PM
3M (MMM) $140.86 +1% .... 52-week high again today. With "fitted" retracement from $120 to $150, stock looks $144. I've anchored this "fitted" retracement from $120, then "fit" the 50% at the $135 level. Yesterday, MMM low came at $138.63, which was 38.2% retracement of $138.54.

  Linda Piazza   7/25/200,  3:23:35 PM
On the daily chart, ADX is in the cellar, at 12.68, indicating range-bound trading is likely, and boy that's what we've had. In retrospect a good plan this week would have been to short/put 498 and get out at 493.50, then go long up to 498, and then do it all over again

  Jeff Bailey   7/25/200,  3:20:56 PM
03:15 Update posted at this Link

  Linda Piazza   7/25/200,  3:07:41 PM
I must have on my "H&S vision" glasses today. Here's another: a big potential reverse H&S on the 60-minute chart with a slanted neckline crossing just under 504. The regular H&S on the 30-minute chart is now kaput, of course, with the OEX zooming up past the right-shoulder area. . If the 60-minute reverse H&S is confirmed, it predicts a move back up toward June highs, but I wouldn't trust too much I saw at the end of the trading day on a Friday afternoon. Shortcovering could push the OEX above that neckline, for example.

  Jonathan Levinson   7/25/200,  3:06:36 PM
Put to call ratio .66 again, VIX -.13 at 20.33.

  Linda Piazza   7/25/200,  3:02:08 PM
We just hit our original target for the OEX short/put play from yesterday. Aren't you glad now that we stopped out this morning? Although our lowered stop this morning took us out $0.90 below our entry, technically a gain on a short/put, the OEX option spreads and commissions meant that the position lost money in real life. Not as much as it would have if those stops hadn't been triggered, however. It's tough to see stops triggered, especially this morning when we'd just seen our positions making money, so congratulations to those who honored the stops.

Special congratulations go to those of you who took the several suggested alternative targets beginning yesterday afternoon. You ought to be feeling pretty smug right now.

What if you didn't take any of the stops or alternative profit targets? Then you have a decision to make. You'll be holding a losing position over the weekend when it will be subject to premium decay. Oscillators on daily charts don't give us much in the way of clues right now, but the OEX will soon--perhaps this afternoon--face the 502.50-504 level that should be next strong resistance. If so, 30-minute and 60-minute oscillators should be pretty toppy by then, just as that strong resistance is faced, but that's no guarantee that prices will turn down from there, of course. It's a tough decision and one that should be made individually. Presumably if you didn't take any of the offered exits, you prefer making your own decisions anyway.

  Jeff Bailey   7/25/200,  2:50:22 PM
Monster Worldwide (MNST) $26.41 +4% .... day trader may want to monitor MNST closely right here. See the pennant forming on 60-minute chart?

Now turn to your QQQ chart (MNST is component of NDX/QQQ), and note QQQ now approaching WEEKLY Pivot of $31.65. Also little "zone of resistance" from $31.58-$31.65.

I would think if QQQ tries to make a move above $31.65, the should see a short or two in MNST make his/her move to cover further, maybe see MNST making a move to $29.52 and our 19.1% retracement from "fitted retracement" we showed yesterday.

  Jeff Bailey   7/25/200,  2:47:27 PM
Buy/Sell program premium alerts have been calm since the early morning. Notable that there was a "buy program" aler at 10:00 AM EST, at/near SPX 994, saw move lower to 978, then "swoop" back higher from there.

  Linda Piazza   7/25/200,  2:45:05 PM
I just checked the OEF again. With the OEX at 500.14, the OEF registered 50.15, with 50.25 x 51.26 bid and ask. At the time, the near-month OEX 500 calls and puts had smaller spreads, although the October's and out had bigger spreads. Unless you prefer to play far-month options, it doesn't appear as if the thinly traded OEF would solve the spread problem. Of course, it would solve one problem: the premium decay problem experienced with options.

  Jeff Bailey   7/25/200,  2:43:41 PM
S&P 500 Index (SPX.X) 993.84 +1.24% .... may have "spoken too soon" about the 3-box reversal this morning at 980. SPX is going to try and test the WEEKLY pivot 995 and trade at 1,000 would actually have SPX plotting an X.

With recent events out of Iraq, and today's news that some of Saddam's top aids potentially being captured, may see some jittery bears looking to get flat into the close ahead of the weekend. U.S. troops may be making some progress in rounding up "evil doers" in Iraq.

  Ray Cummins   7/25/200,  2:41:09 PM
Spreads/Combos & Premium Selling -- E-mail Replies Part II

The key to remember with any type of trading is that it deserves your best analysis and judgment. If the strategy is based on selling naked puts, the issue should be one you want to own and the recent price history must be technically favorable, with minimal downside risk. Correctly timing the entry requires a thorough knowledge of charting techniques and market trends and the entire process is something you must completely understand because a successful exit is by and large the product of a proper entry. Good Luck!

  Jeff Bailey   7/25/200,  2:39:24 PM
ImClone Systems (IMCL) $39.32 +7.7% Link .... stock has been on the move today. Some comments regarding company being taken over by major equity holder Bristol Myers Squibb (BMY) $26.20 -0.90% Link .

Merger Monday? "Waksal does deal from Pen"

  Linda Piazza   7/25/200,  2:38:35 PM
It appears that a confirmed reverse H&S formation on a five-minute chart, no matter how truncated that right shoulder might have been, had more relevance than a perhaps-just-then-rounding-over formation on the 30-minute OEX. The OEX looks determined to test the top of its trading range from this week.

  Ray Cummins   7/25/200,  2:38:27 PM
Spreads/Combos & Premium Selling -- E-mail Replies

Hello Ray, I've been using some of your naked put candidates to sell more aggressive options and for the most part, it's been successful. But, the sell-off this week caused a couple of my plays to go upside down and it was due in part to my lack of money management. I was wondering what kind of loss strategies you recommend for this type of option trading. RV

Regarding position management: Professional market players utilize various mechanical systems and exit strategies to manage their positions. The primary goal of every trader is to limit losses and maximize profits. The basic question is, "How far do you let the play run before allowing it to erode your profits or incur a potential loss?" Answering this question before you enter a position will help to control your emotions and improve consistency with exit decisions. Most methods for taking profits (and preventing losses) fit into one of two categories: 1. A prearranged goal or target gain such as 15-25% of the amount invested; 2. A trailing stop, either on the option or based on the underlying stock, which is moved as the position advances. There are many different methods involving technical analysis to establish the stop-loss level; trend-lines, previous lows, moving averages, etc., and with this type of system, you take profits (or limit losses) after a violation of a pre-established level. Traders may also decide to combine both a profit target (based on a percentage of the initial investment) with a trailing stop as there is no guarantee the initial goal will be met.

  Linda Piazza   7/25/200,  2:20:43 PM
OEX 498-498.15 is being tested, with the OEX failing this afternoon to move much above the 498.65 level. Just as we saw some possible bounce spots hit earlier in the day and eventually a bounce up from one of those, it's possible that the OEX has hit a spot from which it might get knocked back down. Here's one of those days when H&S formations are showing up everywhere, but in contrast to the truncated reverse H&S that was seen earlier on the five-minute OEX, a potentially better-formed regular H&S formation on the 30-minute chart may be just now rounding over its right shoulder. If so, the OEX is not going to fulfill the 501 goal of its reverse H&S formation, but I don't trust formations from five-minute charts as much as I do those that show up on longer-term charts. The 30-minute H&S has not yet rounded over to form its right shoulder much less dropped through the guess-where 491 neckline, so we can't draw too many conclusions. It's too late to risk a Swing Trade entry today even if I thought I were psychic enough to know what's going to happen next.

  Jeff Bailey   7/25/200,  2:17:59 PM
S&P 500 Index (SPX.X) 989.56 +0.81% .... just off the highs of 991.52. My thinking here, when looking at intra-day charts is there may be a little hesitancy among traders as SPX got close to the "tail end" of yesterday's sell program, which some attributed to large institutional seller in the futures.

  Mark Wnetrzak   7/25/200,  2:12:14 PM
Covered-Calls -- E-mail Replies

(abridged)...Also, I read in the covered-call section about a method to enter plays called the buy-write. I know you buy the stock and then sell the calls, but what does that mean? KI

In simple terms, a buy-write order involves buying stock and selling its option simultaneously. When placing an order for a buy-write, you are requesting to purchase the shares and sell the (call) options for a specific "net" price, with both transactions occurring at the same time. The exact phraseology is not important but a specific "net-debit" must be given when the trade instructions are delivered to the agent. The floor broker or clearing-house will fill the order if the specified net-debit can be achieved through any combination of stock and call-option prices.

One of the advantages of this technique is that it prevents the possibility of "slippage" during the position entry process when the premium in the call option declines. This problem happens frequently with the plays we list as many are opened in the first hour of trading on the Monday after the newsletter is published. If too many calls are sold without any buying pressure, the bid premium drops quickly towards intrinsic value and the (ITM) play becomes unfavorable. Traders who attempt to "leg-in" to these positions (buying the stock with plans to sell the call later) are often surprised to see the previously overvalued premiums disappear before they can write the options that complete the play. Using the "buy-write" will eliminate this problem and guarantee that the price you pay (cost basis) for the stock is exactly what you expected.

  Jonathan Levinson   7/25/200,  2:08:20 PM
Put to call ratio .67, VIX -.12 to 20.34.

  Jeff Bailey   7/25/200,  2:01:54 PM
Alcoa (AA) $26.72 +3.4% Link.

Not overly similar to Dow Industrials (INDU) 9,190 +0.87% PnF chart Link , but AA may be one component to monitor for Dow Industrials traders near-term. INDU 9,300 and AA $28 comparison.

  Linda Piazza   7/25/200,  2:01:30 PM
OEX 489.60-498.65 fell, but the OEX is so far holding steady just above 498.

  Ray Cummins   7/25/200,  1:53:35 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

After a week of volatile activity, today's session seems rather docile, however there are few issues making substantial moves in conjunction with the afternoon rally. Cabot Micro (NASDAQ:CCMP), Expedia (NASDAQ:EXPE), InterActiveCorp (NASDAQ:ICAI), j2 Global (NASDAQ:JCOM) and Zoran (NASDAQ:ZRAN) are among the best performers in the technology group while MGI Pharma (NASDAQ:MOGN), Boston Scientific (NYSE:BSX) and Gilead (NASDAQ:GILD) are leading the health sciences segment. In the broader market sectors, American International Group (NYSE:AIG) is making headway after reporting a 26% jump in second-quarter profits amid strength in its life insurance and financial services businesses. AIG also said it plans to increase its quarterly common stock dividend and the news has boosted the stock above $64 for the first time in six months. Our debit straddle in the issue has offered up to $4 profit on $5 invested in less than one month.

On the downside, shares of eBay (NASDAQ:EBAY) sold off this morning after the company reported yet another quarter of surging profits and said it will split its stock to help attract more investors. Our bullish positions in the issue (at $100 & $105) are profitable for now but traders should monitor the stock for signs of continued downward momentum. Another surprise move occurred in Igen Intl. (NASDAQ:IGEN), which soared to a high near $59 after Swiss pharmaceutical company Roche AG agreed to buy the firm in a deal valued at more than $1.4 billion. There was no opportunity to exit or adjust our speculative bearish spread in the issue however traders can take consolation in the fact that we sold premium on the stock numerous times over a period of almost a year while the companies were fighting legal battles concerning the licensing of IGEN's Origen technology.

  Linda Piazza   7/25/200,  1:49:21 PM
The indicators lied. The 1:45 ET push has been to the downside on the OEX, testing support. First support lies at 498.60-498.65, a level that should be familiar to us after the last week or so of trading. Below that, the OEX found support this afternoon just above 498.

  Jeff Bailey   7/25/200,  1:41:01 PM
01:00 Update posted at this Link

  Linda Piazza   7/25/200,  1:40:27 PM
The OEX 30-minute stochastics--5(3)3 and 21(3)3-- and RSI are in full bull mode now, and MACD tries to turn up at the flatline. CCI is pushing up into green territory, too. This morning's push has brought the 5(3)3 stochastics all the way up to territory indicating overbought conditions, however, but the other indicators show that there's more upside possible, as do the indicators on the 60-minute chart. There RSI and 5(3)3 stochastics are already running up, while MACD and 21(3)3 stochastics try to curl up, too. With the 1:35-1:55 push due any minute, I these indicators hint that the push will most likely be to the upside to test next resistance.

  Jonathan Levinson   7/25/200,  1:36:55 PM
Put to call ratio drops to .66, VIX -.08 at 20.38.

  Linda Piazza   7/25/200,  1:18:21 PM
I guess we're glad to have taken the OEX 495.60 Swing Trade exit today, although in retrospect, I wish I'd issued an official exit at 492 instead of suggesting that conservative traders consider exiting there this morning when we started bouncing from just above 491. The truncated reverse H&S on the OEX five-minute chart now suggests an upside target of 501.

  Jonathan Levinson   7/25/200,  1:07:16 PM
Put to call ratio drops to .70, VIX +.37 to 20.83.

  Linda Piazza   7/25/200,  1:05:47 PM
The OEX now tests the neckline of the potential five-minute H&S, although the right shoulder never really formed, or was formed from only a small and truncated dip. In testing that neckline, the OEX is also breaking out of the potential bull flag it had formed after the rise off this morning's low.

  Linda Piazza   7/25/200,  1:03:44 PM
Volume patterns remain mixed, with adv:dec ratios of 16:15 on the NYSE and 13:16 on the Nasdaq. Up and down volume are roughly equal on the NYSE, and down volume is 1.8 times up volume on the Nasdaq. New highs are only 124 as compared with much higher numbers earlier in the week, and new lows are 21. Total volume is 696 million on the NYSE and 876 million on the Nasdaq.

  Linda Piazza   7/25/200,  12:57:48 PM
The OEX seems reluctant to even form that potential right shoulder, with only a truncated dip to 495.75 so far. As the OEX consolidates since noon, it's been doing so in a formation that's reminiscent of a bull flag, so it's possible we'll soon see a break to the upside, as Jonathan speculated. If it's a bull flag, it should break to the upside before retracing more than 50% of the flagpole, which consisted of the rise from today's low up to 496.82. That would mean that it should break to the upside before retracing further than 494 or so.

  Jeff Bailey   7/25/200,  12:53:05 PM
Sudden increase in selling on 30-year 30-year YIELD ($TYX.X) jumping to 5.142%. Moves comes from 5.1% in past 10-minutes.

Same action for 5 and 10, but I had set an alert on 30-year YIELD above recent highs.

  Jonathan Levinson   7/25/200,  12:41:13 PM
Put to call ratio .73, VIX +.40 at 20.86, QQV -1.34 at 25.77.

  Linda Piazza   7/25/200,  12:36:25 PM
The OEX may now be rolling over to form that right shoulder of a potential reverse H&S on the five-minute chart, although that's far from certain. Anyone who hasn't yet exited short/put positions should watch closely if the OEX should approach 493-493.50, as this would be an appropriate place for any decline to slow and might represent the best opportunity to exit ahead of the weekend if that fits your plan. Of course, now that we're stopped out of our Swing Trade play, the OEX will this time plunge right through 491! If so, then we will have been a victim of today's volatility, but 30-minute and 60-minute oscillators hint that it's more likely that we'll see that bounce from above 493.

  Jeff Bailey   7/25/200,  12:23:27 PM
Oxford Health (OHP) $43.70 +0.25% ... stock has been consolidating gains in recent weeks. Looking for a move above $44.60 to "kick" the MACD above signal. Link

  Linda Piazza   7/25/200,  12:05:07 PM
Swing Trade Signals
It's unlikely that I will issue another Swing Trade Signal today, although I might consider doing so if the OEX were to break through 491. Even with that break, however, it might be best to wait until Monday and see if there's a retest of the level.

On the OEX five-minute chart, the OEX may be setting up a potential inverse H&S formation, with a left shoulder at 493 and the head at today's low. If so, and if there are those of you who did not take the official exit, you might use any right-shoulder dip to exit your positions. If a right shoulder is to form, however, the OEX should dip to form it fairly soon, before moving above 497.50, so be careful of holding out hope and holding onto losing positions on a Friday.

  Jeff Bailey   7/25/200,  12:04:04 PM
Monster Worldwide (MNST) $26.27 +3.58% ... volatile little bugger today. Traded $26.50 early, then down to $25.00 after housing data, now back at $26.27.

  Linda Piazza   7/25/200,  11:56:12 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Our stop was triggered when the OEX traded through 495.60, with that stop being $0.90 below our entry of 496.50. Now the OEX is free to turn around and head down again! Congratulations to the traders who took the suggested alternative exits, yesterday afternoon as the OEX traded down to Thursday's 493.36 level and this morning, as the OEX first approached its 50-dma and then approached 491.

  Linda Piazza   7/25/200,  11:52:03 AM
Swing Trade Signals
The OEX has come within $0.02 of our new stop. In retrospect, I perhaps should have set that stop a few cents higher, as I'm afraid that the OEX will hit it and turn around, but I could say that if I'd set it at 496 or kept it at 496.50 or 497.50, too.

  Linda Piazza   7/25/200,  11:48:54 AM
Swing Trade Signals
The OEX broke above 494.80 and now approaches our stop. Let's see what happens next. NYSE volume patterns have switched, now showing slightly more advancers than decliners, with up and down volume roughly equal. The Nasdaq volume patterns still show more decliners than advancers and about twice down volume over up volume levels. Actually, volume patterns haven't been particularly helpful today in predicting direction.

  Linda Piazza   7/25/200,  11:43:44 AM
Swing Trade Signals
I'm beginning to get that we-should-exit feeling here. The OEX may hit our new stop anyway and take us out, but I don't like the way the OEX is hanging above 493 and the 50-dma. We should know soon, as it's rising to test 494.80 again.

  Linda Piazza   7/25/200,  11:40:40 AM
A reader asked yesterday if there was something akin to the SPY or QQQ for trading the OEX. I mentioned the OEF, an exchange traded fund, but said I had little experience with it and so could not offer any recommendation either way. I also mentioned the low average daily volume. As a general rule, I avoid anything with an average daily volume less than 200,000. At Jonathan's suggestion, I've been watching the spreads on the OEF today, too. Currently, with the OEX at 494.18, the bid/ask on the OEF is 49.61 x 49.65, but I've seen the ask blip above 50, too, so I'm not sure what's typical for the spreads.

  Linda Piazza   7/25/200,  11:27:43 AM
As of a few minutes ago, decliners had a slight advantage over advancers on the NYSE, and there were 16 decliners to every 12 advancers on the Nasdaq. Down volume leads slightly on the NYSE and is more than twice as heavy as up volume on the Nasdaq. Total volume was 430 million on the NYSE and 593 million on the Nasdaq. I'd like to see numbers that were slightly more bearish than these.

  Linda Piazza   7/25/200,  11:23:58 AM
This hasn't been a day when you wanted to walk away from the computer, has it? The OEX has so far not been able to break back above 494.80, but it's hanging up there just underneath that level, too, and it's currently making a push up again. The battle is on, with the outcome not decided.

  Jonathan Levinson   7/25/200,  11:20:39 AM
Stranger than fiction: Link

  Linda Piazza   7/25/200,  11:13:15 AM
Swing Trade Signals
That reverse H&S on the one-minute OEX chart predicts now that we'll see a retest of 494.80, with no surety as to the outcome of the test. Those not comfortable weathering the test should set appropriate stops. The most conservative traders have probably already exited whole or partial positions as I've been suggesting at various intervals, so the rest of you know how you like to handle your accounts.

  Linda Piazza   7/25/200,  11:09:49 AM
There's a miniature reverse H&S on the OEX one-minute chart, predicting a rise now toward 494.80.

  Jonathan Levinson   7/25/200,  11:08:35 AM
Put to call ratio rises to .64.

  Linda Piazza   7/25/200,  11:06:51 AM
We're now watching a retest of the OEX's violated 50-dma, now at 492.78. So far, the OEX has not been able to break back above that level. A fall below the current day's low before a move above 493.10 (the last one-minute high) will mean that the test has failed, but we're on dangerous ground here, as the OEX has several times bounced from 491 over the last couple of weeks. This is support for the possible bearish right triangle on the daily chart. A drop through this level will be significant, but this is real bounce territory.

  Linda Piazza   7/25/200,  11:00:53 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Lower the stop to OEX 495.60, above the 50-dma, 493 S/R, and 494.80 S/R. If the OEX kicks back above those levels, the tenor has likely changed.

  Linda Piazza   7/25/200,  10:56:04 AM
Swing Trade Signals
We approached our first profit goal of 491.25. Conservative traders might elect to take partial or whole profits here.

  Linda Piazza   7/25/200,  10:51:12 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Lower the stop to our entry at 496.50. Conservative traders might want to set a 495.60 stop.

  Linda Piazza   7/25/200,  10:47:15 AM
The OEX is currently testing its 50-dma, having briefly dipped below it then bouncing above it. The bounce has not yet been a strong one, but I'm not ruling out anything yet. This would be one appropriate place for a bounce.

  Jeff Bailey   7/25/200,  10:44:10 AM
S&P 500 Index (SPX.X) 9800.25 -0.12% .... session low of 979.34. Trade at 980 enough for 3-box reversal back lower. Link

Per Index Trader Wrap... the "pitcher is in his wind up"

  Jonathan Levinson   7/25/200,  10:43:08 AM
Put to call ratio .47 now, equity pcr .41, VIX +.33, VXN +.57, QQV -.62.

  Linda Piazza   7/25/200,  10:41:43 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Conservative traders might now want to lower their stops to our 496.50 entry, but for a little while our official stop will remain 497.50.

  Linda Piazza   7/25/200,  10:37:13 AM
Here we go. Let's see what happens at the 50-dma at 492.80. If the OEX cuts right through that, I won't be so worried about 491.

  Linda Piazza   7/25/200,  10:35:16 AM
Swing Trade Signals
We're been seeing a test of this morning's broken support, with that support having come in the form of a now-violated bear flag or rising bearish wedge. The point of these tests is that we don't know how they'll turn out as the test is being undergone, but it's perfectly natural to see broken support retested. It now appears that the OEX has failed to move above that broken support and is headed down again. As a result, a move back above today's high will signal that something has changed, and so I decided to lower the stop to 497.50, just above the day's high.

With that said, today's volatility could take us out just before the OEX headed down again. While recognizing that possibility, I don't like way the 30-minute and 60-minute oscillators have cycled all the way back toward oversold levels, nor do I like their tendency to try to kick up this morning and want to minimize any losses in case the OEX turns around and heads up. A strong downdraft will knock those oscillators back down again, however, and I hope we're seeing the beginning of that downdraft appear. Advancers still lead decliners, however, and those nervous about today's volatility might elect to exit with our small profits.

  Linda Piazza   7/25/200,  10:29:43 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Lower stops to OEX 497.50, with discussion to follow.

  Linda Piazza   7/25/200,  10:18:42 AM
Whether that was a bearish rising wedge or a bear flag, the OEX has now dropped below it. It's now once again testing the 484.80 level, a level from which it might rise to retest the broken support. Link

  Jeff Bailey   7/25/200,  10:18:38 AM
Avaya (AV) .... here's my bar chart and thinking for taking rest of Sep. $7.50's off the table. Link

  Jeff Bailey   7/25/200,  10:09:48 AM
Blowing out rest of partial bullish in AV here $9.57 +22.84 in September. Got an e-mail from subscriber regarding longer-dated expirations available. All be darned if I can get on option chain on them, but looking. Want to take these gains. Will follow with chart, but I placed fitted retracement on AV yesterday evening from $6.01 to $10.96 and 19.1% came into play as resistance at $10.02, with session high so far $10.00

  Linda Piazza   7/25/200,  10:08:56 AM
The OEX hit the top of the potential bear flag just before the release of the 10:00 home sales figures and then headed down, but now zooms back toward the top of the channel. The formation now begins to look a bit more like a bearish rising wedge, rising into resistance, but final direction isn't decided yet.

  Jonathan Levinson   7/25/200,  10:04:54 AM
Put to call ratio .43, very low indicating extreme call volume for first half hour.

  Jeff Bailey   7/25/200,  10:03:56 AM
New Home Sales came in at 1,160k which was above consensus of 1,111k

Dow Jones Home Construction (DJUSHB) 427.05 +0.59%. Link

  Linda Piazza   7/25/200,  10:01:24 AM
Swing Trade Signals
Both 30-minute and 60-minute RSI have kicked up, now adding some concern for our bearish play.

  Jeff Bailey   7/25/200,  9:56:16 AM
Monster Worldwide (MNST) $26.43 +4.1% Link ... session high and back above my "fitted" 38.2% retracement, which is juuuuust a little higher than yesterday's bullish profile. Shorts look aggressive here.

  Linda Piazza   7/25/200,  9:54:40 AM
Swing Trade Signals
We're again witnessing a test of the violated ascending trendline formed beginning July 21, with the OEX five-minute chart indeed looking as if a bear flag formation is forming off the low achieved late yesterday afternoon. Although I wish we had more cushion here, the action isn't terribly concerning yet. The VIX is up, as we would wish it to be. The earliest volume patterns, although frequently distorted, were more positive than I would like, however, and Friday's are always dicey.

  Jeff Bailey   7/25/200,  9:50:05 AM
Avaya (AV) $9.12 +17% ... on the move!

  Linda Piazza   7/25/200,  9:48:22 AM
The recalculated 50-dma for the OEX today is 492.83, according to Q-charts. That's going to add even more support to OEX 493, making it even tougher to break and more significant if it is broken.

  Linda Piazza   7/25/200,  9:45:04 AM
Our next goal is a five-minute close below 493, but we may not see those lower levels until after the 10:00 economic numbers, if we see them at all. I wouldn't be surprised to see the OEX settle into a bear flag (tight range of higher highs and higher lows) ahead of the number, with the direction of the breakout to be discovered after 10:00.

  Linda Piazza   7/25/200,  9:41:36 AM
OEX 494.80 is being tested, and there's been one five-minute close below it. Bears hope to see the OEX driven below this level while bulls want to see the OEX maintain numbers above this level.

  Linda Piazza   7/25/200,  9:39:58 AM
The OEX first five-minute candle wasn't larger-than-normal, but instead spanned a run-of-the-mill range. Normally I wouldn't even post the 50% retracement level of such a candle, as I wouldn't expect it to be especially significant. In this case, however, that 50% retracement happens to fall at 494.80, a level we already know to be significant.

  Linda Piazza   7/25/200,  9:37:14 AM
The OEX currently tests the violated supporting trendline that began forming on the 21st. That trendline now crosses at about 495.70. The OEX broke through this trendline to the downside yesterday afternoon.

  Jeff Bailey   7/25/200,  9:34:22 AM
JDS Uniphase (JDSU) $2.78 -11.6% Link ... lower after reporting Q4 loss of $0.02, which was penny better than forecast. However, company guided Q1 lower to a loss of $0.02 to $0.03.

  Linda Piazza   7/25/200,  9:32:48 AM
Swing Trade Signals
At the end of the day yesterday, I mentioned that I expected to see 494.80 retested. We didn't see that happen yesterday, but are seeing it happen today. If the OEX can sustain levels above 494.80, the next resistance we might see tested is 496.50.

  Jeff Bailey   7/25/200,  9:29:06 AM
Avaya (AV) $7.79 Link ... indicated $8.00 after yesterday's after-market Q3 earnings of break even. Ex-items, reported $0.02 per share. Company said revenues fell 12.1% year-over-year to $1.07 billion, which was slightly below consensus of $1.08 billion.

  Linda Piazza   7/25/200,  9:26:08 AM
Swing Trade Signals
The Swing Trade model has an open short/put position this morning with a stop at 500.80. The most conservative participants probably took profits late yesterday afternoon when the OEX traded down to Thursday's 493.36 low. Our first profit target is 491.25, just above 491 support, although we'll also be watching 488 and 485. On a trade below 493, we will be lowering our stop to 498.71. If trades below 493 continue beyond the early volatile period of trading, we'll be lowering stops to our 496.50 entry, but participants are free to and should set any parameters that feel appropriate for their trading styles. Although I would normally carry forward any trade that's working in our favor, our goal today is probably to close this trade out for a profit before the end of the trading day so that we don't deal with the premium decay over the weekend.

How likely are we to hit any of those goals? Both 30 and 60-minute oscillators point to the possibility of more downside. On the OEX, the next big hurdle is the 50-dma just below at 492.42. The OEX has been testing this moving average all week and has so far found support there, so we'll have to see whether it holds today or not. Since this is a Friday, I'm likely to take us out of the trade if that level holds while 30-minute and 60-minute oscillators cycle all the way down and start to turn up again. Be prepared.

  Jeff Bailey   7/25/200,  9:17:40 AM
09:00 Update posted at this Link

  Linda Piazza   7/25/200,  8:44:43 AM
Immediately after our durable goods number was announced, European markets bounced with the DAX cutting its losses in half, but they're beginning to slip back toward their pre-release levels. Currently, the FTSE 100 trades down 15 points at 4134.60, the CAC 40 trades down 31.37 points at 3125.49, and the DAX trades down 16.32 points at 3358.50.

  Linda Piazza   7/25/200,  7:14:46 AM
Good morning. The Nikkei opened down almost twenty points and plunged immediately toward the day's low. It spent the rest of the day recovering, alternately moving into positive territory and then falling back. It closed down 22.99 points or 0.24%, at 9648.01. Sony had reported after the bell Thursday, and had reported earnings as disastrous as people feared they would be, with net income down 98% over the year-ago period. Sony dragged down other computer-related stocks, especially those soon to report earnings. Some exporters rose, however, on hopes that yesterday's improved U.S. unemployment numbers signaled a coming recovery and that the recently weaker yen would help earnings. Mitsubishi Motors did not join those other exporters in gaining, however, with the company seeing an 11.8% decline in the day's trading after cutting its profit forecast for the current fiscal year. Brokers also dipped in Friday's trading, with the declines largely attributed to profit-taking.

Perhaps profit-taking hit Taiwan Semiconductor, too, with the stock declining 2.6 percent after reporting a 26% gain in profits. Across Asia, another semiconductor company, Hynix, plunged an even deeper 7.4%, but its drop was due to a final U.S. ruling to impose import duties on the company's chips. Trading in Asian bourses was mixed. The Taiwan Weighted dropped 0.15%, but South Korea's Kospi gained 0.31% as the Bank of Korea governor reportedly speculated that the country's economy could begin to recover after falling into recession in the latest quarter. Singapore's Straits Times gained 1.14%, and Hong Kong's Hang Seng gained 0.16%. China's Shanghai Composite fell 1.06%.

European markets mostly trade down, but they appear to be attempting moves off lows hit earlier in the trading day. Many automakers reported earnings with the companies receiving mixed receptions afterwards. Although Volkswagen reported declines in operating profit and sales, the result was deemed better than expected, and the stock was rising in early trading. The company expects full-year operating profit to be significantly lower than 2002's results. Renault also rose. Although revenues decreased due to weaker sales volume and a stronger euro, net income did grow. DaimlerChrysler and Peugeot fell. Some chemical companies also fell after DSM and Rhodia warned.

As of this writing, the FTSE 100 trades down 17.20 points or 0.41%, at 4132.40. The CAC 40 trades down 30.92 points or 0.98%, at 3125.94; and the DAX trades down 18.10 points or 0.54%, to 3356.72.

  Jeff Bailey   7/24/200,  12:25:15 AM
Pivot Matrix for tomorrow posted at this Link

  Jim Brown   7/24/200,  12:25:07 AM
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