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  Jeff Bailey   7/29/200,  6:43:43 PM
Cree, Inc. (CREE) $16.61 +3.23% ... further lower in extended hours at $14.54. Not seeing anything in print on the newswires to explain the decline at this time.

Seems "stock specific" as most other semiconductor stocks calm in after-hours.

  Jeff Bailey   7/29/200,  5:21:36 PM
Pivot Matrix for tomorrow posted at this Link

"Dashed red" would only be considered tentative and early resistance and index traded either side in today's trade.

  Jeff Bailey   7/29/200,  4:29:34 PM
Cree Inc. (CREE) $16.61 +3.23% (see 15:48:08) .... lower at $16.00 after reporting Q4 (June) earning's of $0.15 per share, which was a penny below consensus. CREE said revenues jumped 69.5% year-over-year to $64.1 million, better than consensus of $63.6 million.

  Linda Piazza   7/29/200,  4:02:01 PM
The OEX touched but closed above the midpoint of Friday's range. Why is that important? Yesterday's candle was a small-bodied candle at the top of Friday's range, a possible reversal signal. To complete that possible three-candle reversal signal, we wanted to see a red candle today, which we did get, and preferably one that retraced and closed beneath at least half of Friday's range. As a reversal signal, then, this was is so-so. Of course, as I mentioned in the Wrap last night, this reversal signal comes during consolidation and not after an extended ramping up, and so might not be as important. Today's downdraft could be the only "reversal" we see. Still, it's not a bullish development.

  Jonathan Levinson   7/29/200,  3:55:42 PM
A great quote: "The word "genius" isn't applicable in football. A genius is a guy like Norman Einstein." --Joe Theisman, NFL football quarterback & sports analyst.

  Jeff Bailey   7/29/200,  3:54:12 PM
Monster Worldwide (MNST) $24.85 -3.7% ... looks to close at low of the session and right at my "stacked" regression channel of support. I continue to hold SPECULATIVE bullish trade in MNST and "look forward" to seeing what type of reaction is seen after Thursday's weekly jobless claims. I'm looking for bears to be buyer above $24.25.

  Mark Phillips   7/29/200,  3:53:43 PM
LEN $66.33 (-0.25)

Following my earlier post (13:06:59), I got an insightful email on our LEN play that I think is insightful as to the difference between the short-term trades we feature here and in the newsletter in contrast to long-term investments.

I do not understand the LEN play. I see no mention of the acquisition of 50,000 acres in Los Angeles last week. This is VERY bullish for LEN as it gives them 100,000 new home sites in the high priced LA area. They estimate it will take them 15 years to build out the site and add huge amounts of profit to their bottom line. It also shuts out competitors in the area. This was all over CNBC and the various commentaries last week. That is what bounced them on the 22nd I think. I agree the interest rate thing will hurt all builders but these guys got a lock on profits for the next 15 years.

I agree the acquisition referenced above is probably a major long-term benefit to the company and it will likely be very beneficial to the bottom line -- in the future. But I also think that benefit will be felt long after the current bearish play we're profiling has run to its conclusion. The dominant fundamental factor right now (in my opinion) is what impact rising rates are going to have on the next 2 quarters' earnings reports from the home builders. I see it as a negative, although only time will tell. What primarily drives our short-term trades are either near-term fundamental catalysts or developments on the price charts. So long as LEN continues to work lower in its pattern of lower highs, then it remains a solid bearish play. The acquisition mentioned above is not likely to have a near-term benefit to the company and if it was the reason for the pop on the 22nd, we can see the swiftness of the reversal back lower from the $70 area as the market telling us that it sees the benefits of that move as more long-term as well.

  Jim Brown   7/29/200,  3:51:23 PM
For the first day on the new monitor I think things went pretty smooth. I think all the readers with installation problems have been resolved and we are in good shape. Our main developer on this project rewrote it completely after the last one left in frustration over the complexities of the project.

If you are happy with the product you can send Ben a thank you email. I would appreciate it.

  Jeff Bailey   7/29/200,  3:48:08 PM
Earnings preview Cree Inc. (CREE) $16.60 +3.54% Link ... manufacturer of compound semiconductor materials and electronic devices reports after the bell. Consensus is for quarterly EPS of $0.16 per share.

Recent July 10 disclosure in company's 8-K regarding informal SEC inquiry and yesterday's call out of Friedman Billings Ramsey in which firm reiterated "underpeform" rating has CREE's PnF chart looking bearish, with bearish vertical count of $11.50.

  Linda Piazza   7/29/200,  3:44:23 PM
The OEX five-minute pattern looks like a bear flag, but so did this morning's pattern when prices stabilized after the quick drop.

  Mark Phillips   7/29/200,  3:43:04 PM
EBAY $108.62 (-2.27)

Hello Mark, I've done very well with ebay (credit spreads)over the last few months and expect a run up on split news. Please give me your take.

Wow, EBAY has certainly fallen back following its earnings report last Thursday, but I'm viewing this pullback as simple profit taking after an incredible rally off the October lows, more than doubling in that period of time and leaving many bruised and battered bears behind. I've gotten to the point where I'm more comfortable leaving the Internets alone, simply because I see the valuations as being so ridiculously stretched AGAIN. But if there was one stock in the sector that I think has some predictability, EBAY would be it due to the fact that the company has real income and real earnings. I like the approach of playing using spreads, as I think the risk is more managable than straight long call positions. It's all about picking the right entries, and I agree, the stock will likely move up into its highly anticipated split.

Today's drop under the $109 level does cause some concern for the bulls though, and my feel is that they'll be focusing now on the 50-dma (currently $105), which is just above what should be strong support in the $102-103 area. If looking to put on a new bullish position ahead of the split, that would seem to be the place to do it. If managing risk via the PnF chart, that would have a stop placed at $96, as a trade at that level would create a Sell signal, only the second one since last October.

  Linda Piazza   7/29/200,  3:41:32 PM
Volume patterns continue to show weakness on the NYSE and a slightly bearish cast on the Nasdaq, with adv:dec ratios now at 12:21 for the NYSE and 15:16 for the Nasdaq. New lows now have reached 53 on the NYSE. Total volume as of a few moments ago was 1.2 billion on the NYSE and 1.4 billion on the Nasdaq.

  Linda Piazza   7/29/200,  3:39:39 PM
For reference tomorrow morning, the European markets closed as follows: The FTSE 100 closed down 11.80 points or 0.28%, at 4137.00. The FTSE opened down and chugged up to 4160, finally achieving that S/R target during midday trading, only to be knocked down again when U.S. numbers were released and U.S. markets cratered. The CAC traded in a similar pattern, except that it opened down only a few points and had little trouble maintaining its 3180 S/R zone until U.S. numbers were released. The CAC closed down 22.54 points or 0.71%, at 3142.39. The DAX trades longer than the other two indices so had time to recover as our markets began to do so, but it followed a similar pattern with that exception. It closed up 10.35 points or 0.30%, at 3428.12.

  Linda Piazza   7/29/200,  3:20:04 PM
Swing Trade Signals
An OEX move below the current day's low will violate the green trendline depicted in my 11:31 post, but then the OEX faces 493-494 (historical support and the 50-dma) and 491 possible support levels. All day, I've tried to find a reasonable short/put official entry that would safely get us out of the chop, but I've yet to find any convincing evidence to enter ahead of a break of 491 support. Even then, we face possible support at 488 and 485, but at least we're out of the major congestion zone. I might suspect that support will be challenged sooner than June highs will be, but the evidence is not overwhelming that I'm right. That's why I suggested an unofficial entry for aggressive traders, those who must trade more often than the official Swing Trade model is likely to trade. Those traders probably endured many breath-holding episodes today and that's not something I want to be responsible for causing for any but the hardiest of traders. Trading a break of 498 with a hope for a test of 493 was a risky trade, as today has proven.

  Jonathan Levinson   7/29/200,  3:06:37 PM
The put to call ratio is up to .78 here, VIX +.66 at 20.59, with the QQV and VXN still negative.

  Linda Piazza   7/29/200,  3:00:30 PM
I've been studying the OEX daily chart, trying to glean something definitive. What my gaze keeps seeking out, though, is that descending trendline off the June highs, and the way the OEX has tested it four days in a row now, counting today, without being able to push above it. Last week strengthened 491-493 as support, too. The OEX is being squeezed into a tighter and tighter range, so perhaps we will get an explosive move one direction or the other after all. I still don't know that it's possible to be sure which direction it will be, however. RSI still squiggles near the 50 mark, ADX continues down, MACD flattens, and both versions of stochastics I watch approach overbought territory but aren't there yet.

I turned to a chart of the VIX, too, and scanned a descending regression channel that I've had marked on my charts for some time. The OEX touched the channel's bottom supporting line back in the middle of May before reversing back up toward 25. The bottom of the channel now lies at about 18.50. A VIX slipping down toward 18.50 would probably occur only if the indices were testing the June highs, so that's one possible scenario. However, it would be a divergence from the last year's history for the VIX to touch the bottom of the channel again without first heading up toward the top of the channel. Since that channel began forming, a touch and move off the bottom has resulted in a touch of the top of the channel before the bottom is touched again. Divergences do occur, however.

  Jeff Bailey   7/29/200,  2:54:32 PM
NYSE New High/New Lows continues to show some sign that bullish leadership fades. 02:00 PM EST internals on the NH/NL was 121:46, with 46 new lows the highest I've seen sinch March 31st (56 new lows that day). DAILY ratio is 72.5%, while 10-day average is 79.6%.

NASDAQ NH/NL still rather strong at 207:11, which has DAILY of 95.0% and 10-day would still hold at 94.4%.

  Jonathan Levinson   7/29/200,  2:38:11 PM
The put to call ratio is down to .79, VIX +.13 at 20.06, no fear. TNX +9.9 bps at 4.383%, August gold -3.40 at 361.50.

  Linda Piazza   7/29/200,  2:30:22 PM
Here's one problem occasioned by all this chop. There's now a trendline to explain any hesitation, so that any contemplated entry faces multiple layers of support or resistance that could swamp the trade with little clue as to which could be the most important. Here's the latest trendline, as seen on a 30-minute chart: Link

  Jeff Bailey   7/29/200,  2:20:35 PM
Boston Scientific (BSX) $64.30 +4.45% Link ... declares 2 for 1 stock split.

Here would be a PnF view of BSX post-split. Just take the scale numbers at the left and divide by 2. Link i.e ($56 becomes $28, $58 is $29, $60 is $30 and so on)

  Linda Piazza   7/29/200,  2:18:55 PM
Today the OEX 500.40 level has seemed as important as the 500.80 level, so perhaps we should tag that a 500.40-500.80 support zone instead of watching 500.80 so closely.

We're still in chop zone and that's what we've had: chop. CNBC just featured a segment talking about the bullish undertone to the markets, but today and yesterday have felt a little different to me. Obviously, since I haven't called any official Swing Trade signals and equally obvious from my commentary in the Market Wrap last night, I can see the potential for both an upside or downside breakout, but this feels a bit less bullish to me than it apparently does to the people contributing to that CNBC report. I still think it entirely possible that we'll chop around most of the summer, trying to establish some kind of equilibrium or base, but it feels to me as if a bit of the helium has leaked out of the bullish balloon for now. We've been testing breakout zones since Friday, and there's been little carry-through.

  Jeff Bailey   7/29/200,  2:13:10 PM
Forest Labs (FRX) $49.17 +5.4% .... stock higher on rumor that Johnson & Johnson (JNJ) $51.27 -0.36% will make a cash bid offer.

  Jeff Bailey   7/29/200,  2:09:37 PM
5-year YIELD ($FVX.X) shorter dated bond continues to unravel with selling and has YIELD higher by 12 basis points to 3.236%. My only remaining surprise from here is if August Fed Funds futures (ff03q) 99.005 were to fall to 89.75, which would have this futures contract looking for a Fed funds rate of 1.25%!

  Jeff Bailey   7/29/200,  2:04:45 PM
NVIDIA (NVDA) $18.89 -7.3% ... Stock lower after last night's updated guidance for Q2 of revenues of $455-$460 million, which company said was "within guidance provided by the company on its last quarterly conference call" of $460 million. NVDA said gross margins are expected to be slightly lower than the company's guidance as a result of higher than anticipated product costs.

Only PnF notes is that NVDA did exceed its bullish vertical count of $25.00. Might look for bounce from $15.00, where spread-triple top buy signal was given. Link

  Linda Piazza   7/29/200,  1:51:13 PM
The OEX appears to be turning back from that trendline formed off the series of lower highs since yesterday morning, as seen on the five-minute chart, but the move is tentative so far.

  Linda Piazza   7/29/200,  1:42:28 PM
The weakness seen in the volume patterns hints that the S&P's might have difficulty climbing above too much resistance, but those volume patterns are not as weak for the Nasdaq. Decliners still outnumber advancers and down volume is still larger than up volume, but the proportions are not as out of balance on the Nasdaq. One note of interest is the growing number of new lows on the NYSE. Today sees 117 new highs to 45 new lows. That's a significantly lower proportion of new highs to new lows than we've been accustomed to seeing.

  Linda Piazza   7/29/200,  1:34:36 PM
I would suspect that the 1:35-1:55 push today will be a push toward resistance, but I've been surprised at other times. Right now, the OEX tests the descending trendline formed off the lower highs since yesterday morning. This could be an important test, but remember that it's not the initial push but the reaction to that push that tells us the most. Do markets temporarily push above a key level, running stops, but then immediately fall back? Do they push above, spurt even higher, and then barely pull back before spurting up again?

  Jim Brown   7/29/200,  1:33:04 PM
BSX splitting 2:1

  Linda Piazza   7/29/200,  1:30:30 PM
Volume patterns still show more decliners than advancers, with adv:dec ratios at 13:19 on the NYSE and 14:16 on the Nasdaq. Down volume is still ahead of up volume.

  Jeff Bailey   7/29/200,  1:29:24 PM
01:00 Update posted at this Link

  Mark Phillips   7/29/200,  1:06:59 PM
Has the interest rate play run its course in the Housing sector? I've been noticing the interplay between housing stocks and bond yields over the past few weeks and it has actually been fairly consistent -- rising yields has produced falling prices for most of the Housing stocks.

But things appear to be shifting somewhat in the past few days and it is becoming more clear today. Note that the 10-Year Note yield is once again pushing to new highs at 4.350% (very close to a 52-week high), but the Dow Jones Home Construction index ($DJUSHB) is actually in the green by 0.40%.

This hint of strength is also seen in our bearish OI play on LEN, which is once again rebounding from just above $66. There's no need for the bears to panic just yet, as the stock continues to find intraday resistance at its declining 10-dma ($68.16) and could be preparing for that next leg down that we've been expecting. But just in case it doesn't materialize, tightening our stop seems to be the prudent course of action. Ou official stop is now set at $70.00 (exactly the intraday high from last Wednesday). More conservative traders who entered the play at higher levels may want to set a tight stop just over the 10-dma or just over $69, which has been an effective barrier for the past week. We'll need a break and close under $65, with the $DJUSHB closing under $414 to allay my concerns.

  Linda Piazza   7/29/200,  12:50:54 PM
One possible benefit to all this chop is that it may be aligning the 30 and 60-minute and daily oscillators so that they might all turn down at the same time. When we see hourly oscillators doing figurative battle with daily oscillators, we sometimes get this kind of chop.

  Mark Phillips   7/29/200,  12:50:34 PM
AZO $83.80 (+0.83) I'm still looking for any news that could be used to explain AZO's strong rise over the past couple days, and since I'm not finding anything, I'm forced to conclude that this is simoply a strong technical breakout after Friday's close over $80 resistance, as well as the 50-dma. Recall our first target to the upside was for a run at $85, and today's intraday high was #84.70, a mere 30-cents shy of that mark. Hopefully aggressive traders that jumped into the play on the continued strength yesterday morning had the presence of mind to take some gains on that early strength today. Now we're on the lookout for a fresh entry setup, and with the stock pulling back a bit this afternoon, we just may get our wish. For a solid entry, we'll need to see price retrace to the $82 level, and we'd actually prefer a test of the $80-81 area -- although at this point, a pullback to the $80 level seems rather unlikely.

  Mark Phillips   7/29/200,  12:40:55 PM
HD and LOW Our home improvement duo has been getting lazy this week, with the strong (LOW) backing off from last week's breakout over $48 and then catching a rebound from the $47.50 level back above $48. In contrast, HD has been pushed down into the $31.25-32.35 area, consolidating now below both the falling 10-dma ($32.28) and the rising 50-dma ($32.50). HD seems to be consolidating its recent drop, while LOW is consolidating its recent rise. That gives us some pretty clear setups for new entries. For those looking to enter the LOW play, intraday rebounds from above the $47 level look like solid entries ahead of our expected move towards $50. On the bearish side of the coin, we want to take advantage of failed rebound attempts in HD to enter new positions in the $32.25-32.50 area, looking for the next leg of the decline to extend down to round-number support at $30.

  Jonathan Levinson   7/29/200,  12:39:40 PM
Put to call ratio .81, VIX +.63 to 20.56.

  Linda Piazza   7/29/200,  12:32:54 PM
Reader Question: the tight consolidation yesterday (1726-1740 on COMP, 9234-9330 on DOW and 993-1000 on SPX) left us w/ down side targets of 1712 on COMP, 9165 on DOW and 986 on SPX. Those were reached. As long as we stay below the bottom of yesterday's range, we should stay weak. I am short QQQs and also SPYs....would like you thoughts on my consolidation targets and any lower targets you may have.

Response: Good eye. This reader refers to using rectangular trading ranges to establish downside or upside targets once that trading range is broken. The downside or upside target can be found by determining the width of the trading range (such as 1740-1726 on the COMP equaling a 14-point difference or trading range). On a downside break, the target could be set at a distance equal to the trading range (1712 on the COMP). This would be a minimal expected target. On an upside break, the range would be added to the breakout point.

The SEC does not allow me to offer advice to individuals concerning their positions, so I'm not allowed to comment on your short positions on the QQQ's and SPYs, but you might refer to my Market Wrap last night for my opinions on current market direction. Rather, on current market lack of direction: that Market Wrap pinpointed my uncertainty of further downside targets or even uncertainty as to whether there is further downside while markets are mired in the recent congestion zones. Those recent consolidation patterns could break either to the upside or downside, although yesterday's candles hinted at a test of support before an upside breakout.

  Mark Phillips   7/29/200,  12:24:53 PM
FRE $49.91 (-0.70) Is this the break that is going to stick? FRE has been doing battle with its $50 support level on each of the past 3 sessions, and each dip below that level has found eager buyers...but somehow the intraday price action looks a bit different today, with the rebound off the intraday low ($39.65) unable to even reclaim $50 just yet. Each of the past 2 rebounds met stiff rejection near $51, so it appears we also have resistance building as well as weakening support. My preference for new entries would be the next rollover in the $50-51 area (preferably at $50.50 on a successful fill of today's gap). Traders looking to enter on weakness will want to wait for a break below yesterday's intraday low of $49.00. At this point, it should be safe to lower stops to $52.50, as FRE has been unable to touch that level in over a week and if it did would clearly signal a change in trend.

  Jonathan Levinson   7/29/200,  12:12:47 PM
Put to call ratio .80, VIX +.50 to 20.43, QQV -.09 to 26.06.

  Linda Piazza   7/29/200,  12:07:39 PM
Here comes OEX 500.80 again.

  Linda Piazza   7/29/200,  11:59:45 AM
This choppy market remains choppy. At about 502.60-502.80, the OEX faces a descending line formed off yesterday's and this morning's series of lower five-minute highs.

  Jonathan Levinson   7/29/200,  11:54:18 AM
Bonds rose on the Con-con news, for what I believe to be a few reasons. Flight to quality perhaps, but also a speculative bid that Moneybags Bernanke would step in and buy treasuries to stimulate the sagging consumer. As well, bonds needed some kind of buying after the huge ...not crash, but strong selloff for the past weeks. As well, the Fed ponied up 9B this morning to its dealers, available for buying stocks, bonds, futures, anything. The selling returned shortly thereafter, returning to the overriding trend of weeks past. The US Dollar dropped in the same timeframe, so perhaps foreigners are bailing on what today's data shows to be a weakening US economy. As well, the bid into bonds on the data was based on a very secondary, "soft" indicator- consumer confidence is a very variable and "trend-following" datum. Sorry for the stream of consciousness reply, but those are my thoughts with one eye on the charts.

  Linda Piazza   7/29/200,  11:50:41 AM
If that was a bear flag on the OEX five-minute chart, it nevertheless broke to the upside, which has bullish implications. The OEX currently faces 500.80 S/R.

  Jeff Bailey   7/29/200,  11:49:03 AM
Trader question ... Why are bonds fading off the confidence #s? Is it the supply by the treasury that is concerning them? Thnx in advance

Some thoughts on my part is that the confidence survey was completed on July 22nd, and bulk of the negativity in the survey surrounded jobs. It wasn't until July 24th that the weekly jobless claims data gave a weekly upside surprise, and today's choppy bond trade (lower, then up, now lower) may have some bond traders discounting the confidence data, with thought jobs data will trend toward improvement.

Jonathan Levinson may be better able to address the supply part of your question as he follows the Fed a lot closer than I do.

We'll get another look at weekly jobless claims on Thursday at 08:30 AM EST.

  Linda Piazza   7/29/200,  11:43:25 AM
OEX RSI has hinged up on both the 30- and 60-minute charts. The 5(3)3 and 21(3)3 stochastics have made bullish kisses on the 30-minute chart, too. These indicators can just as easily reverse to the downside, but currently point to at least a retest of resistance. Resistance levels to watch are the 21-dma at 499.38 and the 500.80 level.

  Linda Piazza   7/29/200,  11:40:29 AM
With the current move up, the bear-flag formation gains favor over the "b" distribution pattern on the OEX five-minute chart. If this is a potential bear-flag rising off the day's low, it should break to the downside before or at about the time it retraces half the flagpole, which would occur at about 499.21. That's just below the 21-dma, so we could also use the 21-dma as our marker. A rise above that moving average would predict that this likely isn't a bear flag, erasing the bearish implications.

  Jeff Bailey   7/29/200,  11:39:33 AM
Treasuries reverse course again. Now has selling with 10-year YIELD ($TNX.X) higher by 1.4 basis points at 4.298%.

May have the day's lows in equities in place.

  Alan Knuckman   7/29/200,  11:39:01 AM
IMO the Dollar weakness was intentional and designed to provide support for the market. Politics??? And no we do not accept Child Tax Credit checks to open new brokerage accounts..Ha Ha

  Linda Piazza   7/29/200,  11:35:17 AM
The OEX currently is below its 21-dma at 499.38, but the 50-dma has now risen to 493.90, just above the 493 level that has provided support on some pullbacks.

  Alan Knuckman   7/29/200,  11:34:53 AM
Jane, How many of the positive earnings surprises can be attributed to the weakness in the US Dollar? Without the beneficial exchange rate maybe the earnings wouldn’t have been so positive?

  Jeff Bailey   7/29/200,  11:33:11 AM
Terror futures (per Jonathan's 11:26 post) what a crazy idea those were to begin with. Can just imagine the various "scandals" and accusations of insider trading from CIA and/or FBI heads if they were to have profited from any trades based on terror or lack of terror events prior to a futures contract expiration.

  Linda Piazza   7/29/200,  11:31:44 AM
Swing Trade Signals
When I glance again at charts like this one, and note where the OEX found support today, I feel better about not calling an official Swing Trade short/put play. Link Sometimes not calling an official play feels like indecision or a lack of courage, but there were solid reasons for feeling that there's too much risk for an official play. Those who entered on a break of 498 want to see today's low broken next.

  Jonathan Levinson   7/29/200,  11:24:34 AM
August gold is now lower by 3.80 to 361.10. HUI is down 3.27, XAU -1.65. The uptrend on the daily gold chart is still intact, with trendline support in the 360 area.

  Jeff Bailey   7/29/200,  11:19:13 AM
11:00 Update posted at this Link

  Linda Piazza   7/29/200,  10:58:01 AM
The pattern on the OEX five-minute chart still looks a bit like a "b" distribution pattern to me, which signals good news to those of you who entered an unofficial short/put play on a break of OEX 498. One problem, however, is that you may have paid high premiums entering on a quick downdraft, and may be underwater even though the OEX continued dropping. You need to see the OEX fail from this probable "b" distribution pattern.

  Linda Piazza   7/29/200,  10:52:36 AM
Volume patterns now show decided weakness, with adv:dec ratios as 10:19 on the NYSE and 10:18 on the Nasdaq. Down volume is now about three times up volume on both the NYSE and the Nasdaq. Today sees 36 new lows so far, too. As of a few moments ago, total volume was 311 million on the NYSE and 495 million on the Nasdaq.

  Jonathan Levinson   7/29/200,  10:40:44 AM
The put to call ratio is up to .68, VIX +.94 to 20.87, QQV +1.02 to 27.17.

  Linda Piazza   7/29/200,  10:39:22 AM
We may not be getting a retest that allows us to enter an official Swing Trade with decent risk/reward parameters, so of course this means that the OEX will go down to those levels I imagined last week. To pinpoint only one of the dangers, the OEX had been consolidating just under the extended neckline of a reverse H&S that formed late Thursday and early Friday. The right-shoulder dip was truncated, but the OEX climb exceeded the target predicted by that reverse H&S, so it would have been important to see whether the neckline was violated before entering during that last thirty minutes of consolidation. A failure there, which may be happening, then faces possible support at 493 and even stronger possible support at 491.

  Linda Piazza   7/29/200,  10:27:16 AM
Swing Trade Signals
As Jonathan mentioned earlier with respect to another underlying, the pattern showing up on the OEX five-minute chart looks like a bear flag pattern. It could also be setting up as a "b" distribution pattern. On 30- and 60-minute charts, oscillators now all look bearish. The danger lies in the fact that RSI and the shorter term 5(3)3 stochastics already begin to look oversold on these charts, with the OEX now approaching support. My personal belief is that we're going to see a test of 491-493 support, if not a further dip, but I'm still examining whether the risk/reward parameters warrant an official play. It may be that we miss that official play and the move down to 491-493.

  Jim Brown   7/29/200,  10:22:57 AM
The Conference Board's Consumer Confidence Index, which was virtually unchanged in June, declined in July. The Index now stands at 76.6 (1985=100), down from 83.5 in June. The Expectations Index fell to 86.4 from 96.4. The Present Situation Index declined to 61.9 from 64.2.

The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by NFO WorldGroup. The cutoff date for July's preliminary results was July 22nd.

"The rising level of unemployment and sentiment that a turnaround in labor market conditions is not around the corner have contributed to deflating consumers' spirits this month," says Lynn Franco, Director of The Conference Board's Consumer Research Center. "Expectations are likely to remain weak until the job market becomes more favorable."

Consumers' assessment of current conditions was less favorable than last month. Those rating present business conditions as "bad" increased to 30.4 percent from 28.1 percent. However, those holding the opposite view increased to 16.3 percent from 14.9 percent. Consumers claiming jobs are "hard to get" rose to 33.1 percent from 31.9 percent, while those claiming jobs are "plentiful" declined to 10.5 percent from 11.2 percent.

Consumers' expectations for the next six months were less optimistic than last month. Those anticipating an improvement in business conditions fell to 20.2 percent from 23.5 percent. Consumers anticipating conditions to worsen rose to 11.5 percent from 9.2 percent.

The employment outlook was also less favorable. Consumers anticipating more jobs to become available over the next six months declined to 16.8 percent from 18.9 percent, while those expecting fewer jobs increased to 19.8 percent from 16.9 percent. The proportion of consumers anticipating an increase in their incomes declined to 15.7 percent from 17.1 percent.

Source: July 2003 Consumer Confidence Index, The Conference Board

  Jeff Bailey   7/29/200,  10:22:25 AM
Clayton Homes (CMH) $12.55 -6.3% ... loser in Dow Jones Home Construction Index (DJUSHB) 422.40 -0.21% after Cerberus Capital declines to make bid for CMH. Previously, Berkshire Hathaway had made bid for CMH at $12.50 per share.

  Jonathan Levinson   7/29/200,  10:19:23 AM
The put to call ratio was .58 for the past half hour. A moment of silence for all of those call buyers.

  Linda Piazza   7/29/200,  10:16:35 AM
Volume patterns now show more decliners than advancers and higher down than up volume, but the numbers were not yet persuasive as of a few moments ago. If the downward trend continues, however, that may give us one more needed piece of evidence to support a downside play. For those of you who jumped in on the break of 498, you want to see this downward trajectory continue.

  Linda Piazza   7/29/200,  10:13:20 AM
Swing Trade Signals
I'm watching for a bounce back up to 497.50-498.60, but we may not get that bounce. If it doesn't come, I'm reluctant to enter an official signal while the OEX soon faces 493 and 491 support, plus the 495-496 pivot analysis support Jeff has mentioned. Even if we do get a failed bounce at 497.50-498.50, I'll want further corroborating evidence that it's the right trade to make before issuing an official signal.

  Jim Brown   7/29/200,  10:12:12 AM
Monitor Instructions

We are getting tons of questions about features in the monitor. Instead of answering them one question at a time I am going to cover them here.

Changing the font

Click "tools", then "Edit Preferences" (sample) Link

Then you will get this screen: Link

Once you set the font you have to close the Monitor and reopen it.

Audible Alerts

Select "Alerts" then Enable/Disable Link

When the alerts are enabled you will hear a "chirp" when a "trading alert" is posted. There will not be any sound for normal posts.

  Jeff Bailey   7/29/200,  10:11:50 AM
Sector action is lower with only the Health Providers (RXH.X) 312.19 +1.87% and HMO Index (HMO.X) 792.14 +1% in the green.

early weakness is Oil Service (OSX.X) 83.52 -2.17%, Airline (XAL.X) 53.61 -2.2%, N. American Telecom (XTC.X) -1.85%

  Linda Piazza   7/29/200,  10:06:12 AM
Swing Trade Signals
The initial reaction has not been positive, as you might imagine. The OEX has now dropped through the 498 level that I suggested yesterday might make a good entry for aggressive options traders who wanted to try the 498-493 or 491 range again. It's dropped through several levels of so-called support. This quick drop is sure to have kicked up option premiums, however, so be careful. I'm going to be watching for a possible bounce and failure for an official entry, but will be aware of those higher option prices, too.

  Jeff Bailey   7/29/200,  10:06:01 AM
10-year YIELD ($TNX.X) now seeing buying with YIELD down 5.4 basis points to 4.228%.

  Jeff Bailey   7/29/200,  10:04:54 AM
OEX 497.34 -0.82% .... sell program sees quick decline to current levels, OEX breaks below WEEKLY pivot of 499.10 and looks to trade "zone of support" from WEEKLY S1 of 495 to MONTHLY pivot of 495.4.

  Jeff Bailey   7/29/200,  10:02:16 AM
Sell Program Premium Alert INDU = 9,217, SPX = 989.72, OEX = 499, NDX = 1,266, QQQ= $31.53, $TNX.X = 4.202%

  Jeff Bailey   7/29/200,  10:00:49 AM
July Consumer Confidence 76.6 (forecast was 85.0)

  Jeff Bailey   7/29/200,  9:59:00 AM
DuPont (DD) $43.70 -1.53% ... after morning high of $45.05.

  Linda Piazza   7/29/200,  9:55:39 AM
While it's too early to draw many conclusions based on volume patterns, especially ahead of the 10:00 numbers, early volume patterns show more advancers than decliners and higher up than down volume.

  Jeff Bailey   7/29/200,  9:54:16 AM
10-year YIELD ($TNX.X) up 1.5 basis points now at 4.299% and has almost back filled it gap lower. Treasuries now set up for June consumer confidence. The Major Indexes did give back earlier gains to trade just fractional, but similar to bond action, I think just a little defensive action from traders ahead of the June confidence data.

From here, if 10-year YIELD were to jump above WEEKLY R2 of 4.364% and equity indexes take out the highs on a strong confidence number, then cork could "pop" into close.

Downside, I have alert set at OEX 498 to signal weakness, with 10-year YIELD downside alert just below its WEEKLY R1.

  Jonathan Levinson   7/29/200,  9:53:07 AM
The VIX is up .32 to 20.25, while treasury yields are lower, FVX now +2.1 bps, TNX +1.2. Futures are bouncing off their lows set a few moments ago, still well within yesterday's trading range. The Con-con data due shortly should get things moving.

  Linda Piazza   7/29/200,  9:47:52 AM
Here comes the test of OEX 500.80.

  Linda Piazza   7/29/200,  9:42:11 AM
It looks as if the OEX may not be able to sustain that 502.21 level that represent the 50% retracement of the first five-minute range. That points to some early weakness, but it's too early to draw too many conclusions since we've had only one five-minute close below that level and the OEX could still attempt a bounce. If the OEX continues declining, we have to see how it performs near the 500.80 level that's provided support so many times in the past.

  Jeff Bailey   7/29/200,  9:40:09 AM
Coventry Health (CVH) $56.00 +5.4% Link ... component of HMO Index (HMO.X) 787.39 +0.44% Link is higher after reporting Q2 earnings of $1.05, which was $0.18 better than forecast. Raised Q3 guidance and 2003 EPS.

Oxford Health (OHP $46.45 +1.41% ... Link PnF chart looks similar to CVH at $42

  Linda Piazza   7/29/200,  9:36:26 AM
Today's first five-minute OEX candle was a larger-than-normal candle, so that it's probably valid to watch how the OEX behaves around the 50% retracement of that candle. That 50% retracement lies at 502.21. Bulls want to see the OEX sustain numbers above that level in early trading.

  Linda Piazza   7/29/200,  9:30:50 AM
Swing Trade Signals
The Swing Trade Model opens another day flat, but being flat yesterday was less painful that being mired in the chop again. S&P futures this morning are positioned so that the OEX will probably open somewhere in that congestion/consolidation zone again. As I was yesterday, I'm reluctant to trade an upside breakout above the OEX daily descending trendline because the OEX then soon faces recent highs and the resistance they might provide, but instead would prefer waiting for a break above June highs with cooperating volume patterns and intermarket relationships. I'm equally reluctant to play the a rollover within the narrowing congestion zone range, but will do so if most chart signals and intermarket relationships support the play. Going short/put on a breakdown below OEX 491 support might make the safest play, but that doesn't mean we'll be offered that opportunity, today or any day.

  Jeff Bailey   7/29/200,  9:29:40 AM
10-year YIELD ($TNX.X) opening tick was 4.332% and after a morning YIELD high of 4.356%, we've seen some buying come back in from the first 20-minutes of trade with YIELD here at 4.325%. Might see a little "gap fill" back lower in YIELD into the consumer confidence numbers, which might have equities holding between their opening ticks and yesterday's close.

  Jeff Bailey   7/29/200,  9:18:09 AM
09:00 Update posted at this Link

  Linda Piazza   7/29/200,  7:05:07 AM
Good morning. Before trading opened Tuesday, the Japanese government released economic figures showing a drop in the country's unemployment rate. June's figure was a better-than-expected 5.3%, down from May's 5.4%. Economists had predicted an unchanged number. Government figures also showed that among households headed by a salaried worker, spending increased 4.8% in June. Another report was not quite so optimistic, however, revealing June retail sales that dropped 0.5% from May's figures and 2.3% from the year-ago level. This was a worse-than-expected number.

The Nikkei opened up almost fifty points but had trimmed its gains by three fourths by the close of the morning session, and erased the rest in the afternoon session. The Nikkei closed down 5.60 points or 0.06%, at 9834.31. The Nikkei had pushed over 9900 at one point, and according to some commentators, it's going to be difficult for investors to justify a Nikkei over 10,000 without significant improvement in the outlook of domestic companies. That news proved to be mixed during and after the Nikkei's Tuesday session, with Sharp showing a 13.5% increase in net profit for its Q1, Fujitsu showing an expected loss, and Honda Motor warning that weak domestic sales and the stronger yen drove down profit in the first quarter.

Other Asian trading was mixed. The Taiwan Weighted closed down 2.01%, but South Korea's Kospi gained 0.63%. Singapore's Straits Times lost 0.40%, but Hong Kong's Hang Seng gained 0.63%. China's Shanghai Composite also gained, 0.47%. South Korea's gains were made even after the EU decided to impose hefty tariffs on Hynix Semiconductor, following the lead of the U.S.

French and German bourses trade up this morning, but the UK's FTSE has struggled to stay in the green. Insurer Prudential (PUK) announced a decision to trim its interim divided 40%. Although a cut had been expected, analysts had not expected it to be so deep. The announcement and attendant statement about the difficulties faced by U.K. insurers pressured the U.K. market. Earnings announcements have revved up throughout Europe, too, with Alcatel (ALA) rebounding after an earnings announcement that showed operating income gaining after a previous loss. Sales decreased year over year, but were up from the first quarter. Several telecoms reported, including France Telecom (FTE) and its subsidiary Orange, with both gaining in early European trading. As of this writing, the FTSE 100 is up a minimal 1.80 points or 0.04%, to 4150.60. The CAC 40 trades up 20.78 points or 0.66%, to 3185.71; and the DAX trades up 32.04 points or 0.94%, to 3449.81.

  Jim Brown   7/28/200,  12:36:35 AM
Monitor Instructions

We are getting tons of questions about features in the monitor. Instead of answering them one question at a time I am going to cover them here.

Changing the font

Click "tools", then "Edit Preferences" (sample) Link

Then you will get this screen: Link

Once you set the font you have to close the Monitor and reopen it.

Audible Alerts

Select "Alerts" then Enable/Disable Link

When the alerts are enabled you will hear a "chirp" when a "trading alert" is posted. There will not be any sound for normal posts.

  Jim Brown   7/28/200,  12:36:23 AM
The Market Monitor has been upgraded. You will not be able to access it properly without downloading the new software.

If you switched to the Proxy version earlier do to the disconnect problem I strongly urge you to switch back to the standard version. It is much more robust and reliable than the previous one.

Download link: Link

The new monitor is about four times faster than the old one and requires about 1/4th of the computer power to operate it. We have spent a long time getting to this point and it will be well worth your effort to download the new version.

To enable/disable the audible alerts select the "Alert" tab on the menu bar.

If you have problems with the install please email it@OptionInvestor.com tonight instead of in the morning if at all possible.

  Jeff Bailey   7/28/200,  12:36:09 AM
Pivot Analysis Matrix posted at this Link

  Jim Brown   7/28/200,  12:35:50 AM
The Market Monitor has been archived. You may view it and any previous days here: Link

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