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  Jeff Bailey   8/7/2003,  6:43:52 PM
Pivot Analysis Matrix posted at this Link

 
 
  Linda Piazza   8/7/2003,  3:57:21 PM
Swing Trade Signals
If the OEX does ever break over that descending trendline, the pent-up energy may send it on another flagpole rally as it did on July 31. The OEX has certainly expended a lot of energy trying to break through, however. I began today showing you 60-minute oscillators that were bearish, and those oscillators have turned and run all the way up toward territory that indicates oversold conditions, with the 5(3)3 stochastics already giving a bearish kiss at 83.56. Those stochastics are fickle, however, and while I value them for their early signal, I don't count on them for all my decisions. None of the other oscillators have turned down yet.

It's time for all participants in this play to make decisions. Unless we're stopped out in the final few minutes, we're going to end up where I thought we might--right underneath that descending trendline. We risk being stopped out tomorrow morning. The official Swing Trade will remain open, but participants should make decisions according to their own account-management parameters. These options are losing money while the OEX tests resistance.

 
 
  Linda Piazza   8/7/2003,  3:41:11 PM
On the OEX thirty-minute chart, I'm seeing the potential for bearish divergence on the 21(3)3 oscillators, with price not yet making a new high while oscillators have. This divergence is potential divergence only, however, as the OEX price could still shoot up before those oscillators roll completely down. RSI shows the same potential. MACD appears to be flattening just underneath the zero level. As yet, all this evidence is inconclusive and I'm still just watching that trendline we've been watching all day. All these oscillators will spike upward if price does.

 
 
  Linda Piazza   8/7/2003,  3:22:48 PM
Swing Trade Signals
Is anyone else tired of this? The OEX again rises to test that trendline from July 28. I suggested that we might get this latest bump up when I noticed a potential left shoulder and head formation on the five-minute chart with a neckline near 489 (489.50, as it turned out), but that pattern has been refuted by a climb over the level of the head. The OEX should turn down soon if the OEX is going to remain below the descending trendline and our stop. My guess is that we're either about to be stopped out or else the OEX will end the day butted up against that trendline. In that case, participants still have a decision to make, as premium is decaying while the OEX decides on a final direction. Determining a stop based on OEX price is one way of closing a play. Determining a stop based on a percentage or dollar decline in your option price is another. Each is valid.

 
 
  James Brown   8/7/2003,  3:22:30 PM
MedImmune Inc - MEDI - Only for the very adventurous technical trader: Shares of MEDI have been trading in a wide ascending channel since October 1st last year. Despite all the bearish oscillators and broken support levels it always seems to bounce from the bottom of the channel. Currently, MEDI is doing just that. The stock is at the bottom edge of its rising channel and while the bounce isn't very big today it could be an entry point. I would consider this pretty high risk but a stop loss under $35.50 or $35.00 might reduce the pain for failure.

 
 
  Jeff Bailey   8/7/2003,  3:22:03 PM
Dow Industrials (INDU) 9,133 +0.79% ... higher by 72 points and now moving challenging yesterday's highs. Might get some attention of short-term bears unable to break yesterday's lows and WEEKLY S2.

 
 
  James Brown   8/7/2003,  3:19:36 PM
Linda, I should have known you would have caught that H&S pattern already.

 
 
  Linda Piazza   8/7/2003,  3:16:31 PM
I agree, James. I noted a day or two ago that the neat (as in fits together neatly) thing about that potential H&S formation on GE's chart is that it appeared that the slightly descending H&S trendline would coincide with the 200-dma. I also noticed that this level coincides just about exactly with the 50% retracement of the March to June rally, and thought there might be a real battle there. The H&S says "down." The 200-dma and 50% retracement say "support."

 
 
  Jeff Bailey   8/7/2003,  3:15:11 PM
Dow Industrials (INDU) 9,119.10 +0.63% ... session highs here and looks to be taking out intra-day 9,120 resistance.

 
 
  Jeff Bailey   8/7/2003,  3:12:33 PM
Consumer Credit response from market looks favorable to decline in consumer credit. Recent retail reports have been strong and may depict a consumer healthier than first thought as consumer pays down debt, but spends with cash.

 
 
  James Brown   8/7/2003,  3:10:15 PM
General Electric - GE - I could be duplicating someone else's earlier observation but it looks like shares of GE are starting to finish the last part of a right shoulder in its Head-and-Shoulder formation. The 200-dma is close to where the (somewhat slanted) neckline would be. A breakdown there could forecast a move to the $21.00 level.

 
 
  Linda Piazza   8/7/2003,  3:05:32 PM
Swing Trade Signals
Here's an update of the chart showing how the OEX trades with respect to the descending trendline Jim pointed out from July 28 to the present. Note that it's also possible to draw an ascending trendline beginning yesterday and that until price breaks through it to the downside, we won't be entirely in the clear. Link

 
 
  Jeff Bailey   8/7/2003,  3:00:01 PM
June Consumer Credit expected any minute. Consensus is for a decline to $6.0 billion.

 
 
  Linda Piazza   8/7/2003,  2:54:08 PM
The OEX finally violated the midline support of the regression channel on the five-minute chart, but now it's pausing at the lower trendline. On the thirty-minute chart, it does appear to be getting turned back at the descending trendline from July 28 to the present, but it's too soon to be sure, as the OEX hasn't yet moved a significant distance below it and hasn't dropped below the last 30-minute (or even five-minute) low. We may be getting a bounce into potential right-shoulder territory (on the five-minute chart) from 489.50 rather than from 489, as I first envisioned might happen, giving us a slanted rather than a straight neckline on the potential H&S, but it's too early to be sure of that, either.

 
 
  Jeff Bailey   8/7/2003,  2:44:28 PM
Semiconductor Index (SOX.X) 378.67 -0.93% ... making session lows below 380 with yesterday's lows of 378.38 now vulnerable. If traders "garage sale" the SOX.X, it isn't going to help the Q's.

 
 
  Jeff Bailey   8/7/2003,  2:42:48 PM
S&P 500 Index (SPX.X) 970.60 +0.36% .... moving back under WEEKLY S1 of 971.14 and looks to follow NASDAQ weakness.

 
 
  Linda Piazza   8/7/2003,  2:41:56 PM
Reader Question Linda, if you were not in the short oex trade would you take it at 89 this time around? thanks

Response:Great question. I'm studying that descending trendline marked on the chart linked to the 12:57 post and thinking that, yes, a move down through 489 would mean that the OEX had been turned away from that trendline and I would take the play. Yet we saw support hold at 485, so I'd know there was likely less reward than I first envisioned, so it would be toss-up. Looking at the five-minute chart, I also think there's a chance of a bounce at 489 into a right-shoulder height of 491, so there's that danger, too. Likely I would, however.

 
 
  Jeff Bailey   8/7/2003,  2:41:25 PM
QQQ $30.18 (unch) .... looking more defensive and starting to follow the broader NASDAQ Composite move lower.

 
 
  Jeff Bailey   8/7/2003,  2:40:00 PM
NASDAQ Composite (COMPX) 1,650.13 -0.15% ... afternoon low here and matching yesterday's morning's session low. This morning's lows of 1,641.74 could be in tested on further weakness.

 
 
  Linda Piazza   8/7/2003,  2:32:16 PM
Oscillators on the OEX 30-minute and 60-minute charts have been climbing most of the day with RSI on both now showing just the slightest hint of flattening. It's preliminary as yet, but stochastics are also approaching or already in territory indicating overbought conditions on both time frames, too. That shows me that a lot of energy has been expended to get the OEX to current levels today, but it doesn't guarantee me that the OEX is about to turn down. It's still testing that descending trendline from July 28, as depicted in the chart linked to my 12:57 post.

 
 
  Jeff Bailey   8/7/2003,  2:31:03 PM
Texas Two-Step, or an Old Kentucky Waltz? S&P 500 Index (SPX.X) 973.90 +0.69% looks like it wants to come back and test WEEKLY R1 again.

 
 
  Linda Piazza   8/7/2003,  2:25:52 PM
The OEX dropped back after its touch of the descending trendline from the chart linked to my 12:57 post, but it's now back to the midline support of the ascending regression channel from my 11:00 post. We need to see a firm break of that support as a first sign of weakness.

 
 
  James Brown   8/7/2003,  2:15:15 PM
Energy Sector - The energy sectors are really making headway today. The OIX (+1.78%) is bouncing strongly from what looks like support above 260. Momentum bulls might want to watch it for a break above the 270-272 level.

The OSX oil service index (+3.65%) has also bounced strongly and is now back above its simple 200-dma. The OSX's MACD has curved back into a bullish signal from deeply oversold.

Plus, the XNG natural gas index (+2.2%) is on a two-day bounce from under the 180 mark. The rally today appears to be piercing the top border of its descending channel.

I looked at several of the larger oil & gas stocks and found many of them in similar bullish patterns (as to be expected) but several almost look good enough for call plays. Unfortunately, some of them move rather slowly so traders might need to consider ITM calls or covered calls as an alternative strategy. Check these out:
XOM - It's back above $36.00 and trying to breakout above its simple 50-dma.
BP - Nice trend of higher lows, about to breakout over resistance at $42 and its simple 50-dma.
TOT - shares jump around a lot as an ADR but it is approaching resistance at $76 and its 50-dma.

Stock players might want to look at shares of WMB, which are about to breakout above $7.00 and the top of its descending channel.

 
 
  Linda Piazza   8/7/2003,  2:12:13 PM
I was just running through a list of upgrades and downgrades, studying the charts of the companies listed. I noticed at least three instances when separate firms have raised stocks that fell precipitously over the last week: DB Alex Brown raised COST to hold, Wachovia raised CKFR to outperform, and S. Bernstein raised FE to outperform. While it can be argued that the downside is overdone in each case, in each case the price has violated the 200-dma and ADX has risen showing a strong trend in place. A violation of the 200-dma is given serious consideration by even those people who don't know much about technical analysis. If they don't know anything else, they know to determine whether a stock is above or below that average. In other words, it doesn't appear from the chart just yet that these stocks are going to outperform although they may recoup some of the recent losses. Makes you wonder, doesn't it?

 
 
  Ray Cummins   8/7/2003,  2:07:53 PM
Spread/Combos & Premium-Selling -- E-mail Replies

Hi Ray, Would you please comment on Sandisk - SNDK in light of its performance Wednesday? I have put credit spreads (50/45 @ $0.65 credit and 47.50/42.50 @ $1.00 credit) and I'm having a mini heart-attack. If it breaks 50, my plan is to bail, but I must admit, I'm having dangerous thoughts of hanging on "it will bounce back". I would appreciate your opinion. Thanks, NYCG

Hello NYCG, The most "dangerous thought you could have" is thinking I know more than you do about the future of SNDK...(LOL!). In life, your first instinct is almost always correct and your plan to "bail if it breaks 50" seems as worthy as any strategy one could have at this point, based on a short (put) position at that strike price. The technical indications would appear to support your assessment as the 30-day EMA (similar to an APR/MAY/JUN trend-line) is almost exactly at $50 and the mid-July "gap-up" on earnings/upgrade occurred near that price as well. As far as the market environment in general, I'd like to say that everything looks "swell" going forward, but we both know that isn't the case. The best we can hope for at this point is an "oversold bounce" that would carry some of the inflated technology shares through the August expiration without further declines. Good Luck!

P.S. If you want some great "real-time" analysis on SNDK, send a note to one of the traders on the OIN Market Monitor (Linda, Jeff, or Jonathan). They will happily give you valuable opinions with specific exit points and swing-trade signals for almost any issue in the world of finance.

 
 
  Jeff Bailey   8/7/2003,  2:05:08 PM
NYSE New High/New Low after four-straight days of new lows outnumbering new highs, slight shift from this breadth indicator with New Highs at 32 and New Lows at 14 at the 02:00 PM EST mark.

As of last night, the NYSE 10-day average of this ratio was at 66%, after a bull cycle high reading of 99%, that first reversed lower at 92% on 07/18/03.

The very broad NYSE Composite ($NYA.X) 5,493 +0.59% might now look to face round number resistance of 5,500.

 
 
  Linda Piazza   8/7/2003,  2:04:47 PM
Swing Trade Signals
It's soon going to be make-it or break-it for our OEX short/put position, as the OEX now approaches the descending trendline linked to my 12:57 post. Our 492.75 stop now gives us a bit of cushion over that trendline that now crosses near 492, so let's see what happens.

 
 
  Jeff Bailey   8/7/2003,  1:58:43 PM
S&P Banks (BIX.X) 300.97 +0.12% ... session highs. Current trade here is yesterday's DAILY R1, and this has/had been the level all day that was serving resistance. Action here hints BIX.X has a shot at WEEKLY Pivot of 304.8.

 
 
  Linda Piazza   8/7/2003,  1:50:23 PM
We got a downside push at 1:35 and support held. Now there appears to be an upside push. Let's see if resistance holds.

 
 
  Jeff Bailey   8/7/2003,  1:50:16 PM
Buy Program Permium Alert ... INDU = 9,107, SPX = 973.41, OEX = 491.13, NDX = 1,221, QQQ = 30.35, $TNX.X = 4.288% (UNCH)

 
 
  Jeff Bailey   8/7/2003,  1:49:06 PM
Dow Industrials (INDU) 9,094 +0.34% ... on intra-day basis, since 11:00 AM EST, Dow has been finding support at its WEEKLY S1 of 9,074.4 and its WEEKLY 80.9% retracement of 9,080.09.

5-minute bar chart shows all three (21, 50 and 200) period SMA's converging here.

If we're going to get some type of move into the close, the may be the major index to monitor here. 5-minute Stochastics (5,3,3) trying to curl up from "oversold" while MACD is flat, just above zero. Ocillator action looks bullish.

 
 
  Linda Piazza   8/7/2003,  1:35:51 PM
We should be getting the 1:35-1:55 push any moment now. It appears like that the push will be to the downside, testing the downside support, but that's not yet a given. If the push moves the OEX below support, but then prices spring back up, market participants know one thing. If prices get pushed down and don't spring back up, market participants know something different.

 
 
  Linda Piazza   8/7/2003,  1:34:25 PM
NYSE volume patterns are positive, with adv:dec at 18:13 and up volume 1.5 times down volume, while Nasdaq patterns are mixed, with adv:dec at 13:17 and up and down volume roughly equal. Today sees fewer new lows on the NYSE than we've seen of late, with only 14 so far. Total volume as of a few minutes ago was 768 million on the NYSE and 995 million on the Nasdaq.

 
 
  Jeff Bailey   8/7/2003,  1:26:04 PM
01:00 Update posted at this Link

 
 
  James Brown   8/7/2003,  1:24:05 PM
RJ Reynolds Tobacco - RJR - The play picking team has been watching RJR for a few days now. We're seeing a rounded top on the stock on its daily chart and its weekly chart looks equally bearish. The move on Tuesday took it below support of $34.50 and today's move confirms a breakdown under $34.

Driving shares lower today is news from Moody's who downgraded RJR's credit rating to "negative". We're a little hesitant to play this as a put on OptionInvestor.com as the stock tends to move somewhat slowly and there is always headline risk from one of the myriad court cases the tobacco industry is still involved in. However, speculative players might consider targeting moves to psychological support near $30.00 or the May lows near $28.00.

 
 
  James Brown   8/7/2003,  1:18:48 PM
Just a little market update...as of 1:15 PM the NYSE has advancing issues just outpacing decliners almost 15 to 12 while the NASDAQ is showing decliners running about 16 for every 12 gainers.

In a similar pattern up volume is running 5 to 3.4 over down volume on the Big Board while down volume is beating up volume 5.4 to 3.7 at the NASDAQ.

Sector winners:
OSX - oil service index: +3.3%
BTK - biotech index: +2.06%
XNG - natural gas index: +1.97%
RLX - retail index: +1.93%

Sector losers:
XAU - gold and silver: -0.73%
DFI - defense index: -0.33%
INX - internet index: -0.13%
DDX - disk drive index: -0.24%

 
 
  Linda Piazza   8/7/2003,  1:07:32 PM
The OEX continues to find support on the midline of the regression channel depicted in my 11:00 post, continuing to show more strength than I would like.

 
 
  Linda Piazza   8/7/2003,  12:57:54 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Here I go again. Jim just sent me this chart, depicting a long-term descending trendline on the OEX. Note that the trendline crosses just above 492, but that some candle shadows have pierced that trendline in the past. Link After studying the chart, I'm going to give the OEX a few cents more to test the trendline, raising the stop to 492.75, a nickel over yesterday's high. That's 3.75 over our entry yesterday. Great chart, Jim. This chart also shows that we definitely want out if the OEX breaches this line, honoring this stop. Just look what happened on July 31-August 1.

 
 
  Jeff Bailey   8/7/2003,  12:51:37 PM
Jim: ... Not sure, but I think you're Internet connection is fine. I don't see a lot happening either, except the reversal in 10-year YIELD, which as Linda points out perhaps, is sentiment, and jitters before the auction.

I've been thinking I had problems too as the NDX.X just sits at 1,220 and if not for the trades I see coming across on time and sale, would think my Internet connection was down too.

 
 
  Jeff Bailey   8/7/2003,  12:49:13 PM
5-year YIELD ($FVX.X) .... I'm not certain that my q-chart is correct today, and I've been hesitant to mention today's YIELD action in the 5-year. Session high posted, which was at the open was 3.581%, which would have been a HUGE rise in this bond's YIELD. It didn't reflect the what was/is taking place in the 5-year futures contract (fv03u) 111'305 -0.05%

 
 
  Linda Piazza   8/7/2003,  12:48:32 PM
Swing Trade Signals
This is sentiment-based trading ahead of the auction, it appears, and as such it may not be amenable to standard technical analysis tools. In sentiment-based trading, we sometimes see broadening patterns form, for example, or consolidation into forms that breakout first one direction and then another. We have a stop in place. There's no use obsessing over minutiae on the charts with this kind of trading.

 
 
  Jeff Bailey   8/7/2003,  12:41:45 PM
Dow Jones Home Construction Index (DJUSHB) 421.17 -0.73% ... did come back near unchanged after morning low of 417.59, but edging back lower.

10-year YIELD ($TNX.X) now higher by 1 basis point at 4.298% most likely getting the attention.

S&P Banks Index (BIX.X) 299.82 -0.27% stalled again.

S&P 500 Index (SPX.X) 970.21 +0.32%, most likely now edging below what many traders call a "bearish wedge," which Jane discussed in her 11:59:04 post.

 
 
  Jeff Bailey   8/7/2003,  12:30:31 PM
Market Volatility Index (VIX.X) 22.39 -3.9% ... mentioned VIX.X in 11:40:10 post. Here is my chart I've used for a couple of years, that I've found useful in trying to split up the VIX.X into levels. Link

Here's the S&P 500 Bullish % ($BPSPX), where I think a trader can begin to tie in VIX.X action with bullish % and market internals. Link

Just as 70% and 30% are deemed "overbought" and HIGH risk levels for bulls, and "oversold" or HIGH risk levels for BEARS, I tend to associate VIX.X below 21.22 and VIX.X above 40 as being somewhat similar.

VIX.X action from yesterday may help a put options holder better understand near-term premium erosion, especially in a near or out-the money option.

 
 
  Linda Piazza   8/7/2003,  12:26:37 PM
After an aborted upside breakout, the OEX is now back to the midpoint of the regression channel (bear flag?) shown in my 11:00 post this morning. Will that midline support hold this time?

 
 
  Jeff Bailey   8/7/2003,  12:12:32 PM
NASDAQ-100 Index (NDX.X) 1,223.10 +0.66% .... I usually show the QQQ in each night's Index Wrap. Here's the NDX with same type of MONTHLY/WEEKLY pivot retracement overlaid. Link

 
 
  Jeff Bailey   8/7/2003,  12:10:34 PM
Jane's bearish rising wedge ... that's a great observation Jane, especially with 10-year YIELD having reversed earlier morning lows. I would certainly think a short-term trader following a scenario that higher YIELD might weigh on investor psychology toward stocks could use that to snug up a real tight stop on any bullish trade.

 
 
  Linda Piazza   8/7/2003,  12:10:25 PM
Yesterday, I came into the trading day believing that we might see a couple of days of consolidation before another fall, perhaps early next week, but even then I didn't have a strong opinion of how deep the fall would be. If the 25% rally retracements were breached, I thought we'd see 38.2% rally retracements, but probably not before the indices bounced from their 200-ema's. That's why I had set a second Swing Trade target at 477 rather than down near the 38.2% retracement near 470. The 200-ema lies at 475.20. Yesterday, twice, the OEX's inability to remain above key levels enticed me into bearish plays. The current one could still work, but it's looking more as if my original thesis was correct, and we'll have a few days of tight-range premium-sapping consolidation. I hope not. At the same time, it just feels as if there's monumental effort behind the current rise with the NYSE stocks and the Nasdaq stocks working against each other.

 
 
  Linda Piazza   8/7/2003,  12:00:38 PM
Jane's bearish rising wedge might have been the most valid setup, as I suspected it might. Even bearish wedges sometimes break to the upside, as this one did on the OEX five-minute chart. That wedge support is now being retested, and it's holding temporarily, which makes me even more convinced that the formation was the valid one to watch.

 
 
  Jeff Bailey   8/7/2003,  11:58:16 AM
Per Jane's 11:50:07 ... Jane... the only resistance I see here is from my MONTHLY pivot analysis retracmenet (1,394 to 1,121), which has 61.8% at 1,225. I'll just note session high of 1,225.29 so far today. From here, WEEKLY S2 at 1,231.

 
 
  Linda Piazza   8/7/2003,  11:52:11 AM
Congratulations, Jim, for a great trade on the Futures side of the Monitor.

 
 
  Jeff Bailey   8/7/2003,  11:50:21 AM
10-year YIELD ($TNX.X) 4.278% and has reversed lower YIELD of 4.219% to now trade down just 1 basis point.

Not overly "crazy bullish" with this morning reversal into the 10-year auction.

S&P Banks Index (BIX.X) 300.79 +0.06%, fractional gain, but hovering at DAILY pivot, and it doesn't seem overly enthused either.

S&P 500 Index (SPX.X) 972.06 +0.51% is smack dab in the middle of our sliver of support area from WEEKLY S1 of 917.14 and WEEKLY 80.9% retracement level of 972.32.

 
 
  Linda Piazza   8/7/2003,  11:49:22 AM
Swing Trade Signals
That strength I was seeing is playing out in the OEX. It sure looks as if we're in for a test of our stop. There's still a chance that we'll get stopped out just before the OEX turns around, but I don't want to keep raising the stop to accommodate that possibility. We need to have stops. Aggressive traders who like wider stops could look at the 493 through 496.50 levels as next resistance, but if the OEX wanders around a bit within consolidation patterns for several days, premium is going to be evaporating quickly. Even if you believe that the direction we've chosen is ultimately the right one, most times it's best to take the stop and get back in at a higher level if the play sets up again.

 
 
  Jeff Bailey   8/7/2003,  11:40:10 AM
Merck (MRK) $55.29 +1.97% .... question regarding previously profiled bearish trade at OI and the August $55 puts.

Trader makes note that premium is evaporating fast, and this may make sense after VIX.X rose to my 25.66 level of retracement yesterday morning, then collapsed back lower, and lower again today at $22.54. With expiration on next Friday and MRK looking near-term oversold and now above $55 strike, would look to too cut out. This is my (Jeff Bailey's) opinion, an not necessarily that of OI play analyst.

Disclosure: I currently hold bullish position in MRK from prior bullish profile in the MRK Oct. $65 calls. Looking for rebound back near $59 to exit

 
 
  Jeff Bailey   8/7/2003,  11:34:54 AM
S&P 500 Index (SPX.X) 971.16 +0.38% .... session high here and right at WEEKLY R1.

S&P Banks Index (BIX.X) 300.24 -0.11% following, but not really showing leadership type move.

S&P Retail Index (RLX.X) 336.58 +1.75% looks to be the leader, as it looks to test morning high of 336.81.

 
 
  Linda Piazza   8/7/2003,  11:33:13 AM
The OEX is showing more strength than I would like. (Well, in the long term, I of course would like to see the economy show strength, but just not today while we've got a bearish Swing Trade open.) Bear flags are indicative of weakness, but the OEX did find support at the midline of the regression channel that perhaps defines the bear flag. (See my 11:00 post.) However, I like Jane's bearish wedge interpretation better and hope it's the more valid one. Here's how it would look on the OEX: Link (Note: the OEX appears to be breaking through the top of this formation as I type.)

 
 
  Jeff Bailey   8/7/2003,  11:31:17 AM
11:00 Update posted at this Link

 
 
  Linda Piazza   8/7/2003,  11:13:47 AM
The OEX is finding support at the midline of the regression channel depicted in my 11:00 post, at least temporarily. If that continues, that's a bullish reaction. Today's action has also arrested the fall of the oscillators on the 60-minute chart. On the daily chart, today's tiny candle hovers at the lower end of the last few day's range. Although "key moment" is an overused phrase, I don't know what else to say but that we're at a key moment today.

 
 
  Mark Phillips   8/7/2003,  11:02:23 AM
KSS $61.24 (+0.60) As Jeff noted earlier this morning, KSS gave the market some good news this morning, with a much better than expected same store sales number. Or did they? Based on the anemic price reaction so far today, I'd hazard a guess that despite what the consensus estimates were, the market was expecting a strong increase in same store sales and so there's no major surprise today, and therefore no strong price increase.

We've been waiting for KSS to clear the $60.60 level (getting it above the April highs and yesterday's close at $60.64 did the trick, providing the trigger for momentum entries. Although the stock surged a bit higher early in the day (hitting an intraday high of $62.41), it is pulling back now for a test of that prior resistance as new support. Traders that didn't take the breakout entry at the close yesterday will want to look for a rebound from the $60 area as their opportunity for new entries.

 
 
  Linda Piazza   8/7/2003,  11:00:48 AM
Could this be another bear flag on the OEX five-minute chart? Link

 
 
  Jeff Bailey   8/7/2003,  10:54:49 AM
QQQ $30.26 +0.23% ... back in the green and not unlike the BIX.X, testing intra-morning resistance of $30.30.

 
 
  Linda Piazza   8/7/2003,  10:51:05 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I really do think we're in danger of being stopped out by a few cents on this double bottom on the OEX five-minute chart. Let's raise the stop to 492.25 again.

 
 
  Jeff Bailey   8/7/2003,  10:50:42 AM
Sensing a move higher here.

 
 
  Jeff Bailey   8/7/2003,  10:48:50 AM
S&P Banks (BIX.X) 299.71 -0.29% ... back for a second intra-morning test of 300.00.

S&P 500 Index (SPX.X) 969.41 +0.24%.

 
 
  Jeff Bailey   8/7/2003,  10:47:01 AM
Altria (MO) $39.95 -0.62% ... stock has been trading sideways at $40 for about 3-weeks. Falling 21-day SMA ($40.55) catching up to stock, with 200-day SMA. Still looking or a move lower. Link

 
 
  Linda Piazza   8/7/2003,  10:36:59 AM
Swing Trade Signals
A move over the OEX high of the day will set up an "almost" double bottom (one bottom was slightly lower than the other) on the five-minute chart. The upside target would project up to around 491.50, so might stop us out, just barely, again. I don't want to keep moving our stop every time the OEX bumps up a bit, but aggressive traders managing their own trades might want to consider edging it up toward 492 again if the OEX surpasses the high of the day.

 
 
  Jeff Bailey   8/7/2003,  10:29:54 AM
QQQ $30.09 -0.33% ... move in early morning below yesterday's lows. High this morning of $30.37 came right near its DAILY pivot of $30.35. Trade here is still edging lower at our lower end of regression from Index Trader Wrap. 60-minute Stochastics now oversold territory, should look for some firming.

 
 
  Linda Piazza   8/7/2003,  10:27:42 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Lower the stop to 491.50.

 
 
  Jeff Bailey   8/7/2003,  10:27:11 AM
IPO .... Capital Source (CSE) $16.85 ... provider of commercial loans to small and medium-sized business opens hot after being priced at $14.50. CSFB is lead underwriter of 21.3 million share offering.

 
 
  Linda Piazza   8/7/2003,  10:25:32 AM
Swing Trade Signals
The OEX again approaches the day's low. While I don't find anything that says our play isn't working, our next goal is to see the OEX below that previous day's low and below yesterday's 484.68 low. I'm going to be watching for a few more minutes and then will consider lowering our stop again.

 
 
  Jeff Bailey   8/7/2003,  10:20:01 AM
10-year YIELD ($TNX.X) lower by 5.2 basis points here at 4.236%. Session YIELD low of 4.219% gets close to 4.214%.

My thinking here is to potentially get the BIX.X to session highs and move the major indexes out of early morning range to upside is YIELD move below 4.214%.

Never sure, but could find a 4.25% handle on YIELD into today's auction.

YIELD support has been just above 4.2% on PnF chart. Link

 
 
  Jeff Bailey   8/7/2003,  10:15:02 AM
S&P Banks Index (BIX.X) 299.59 -0.3% .... session low of 297.29 finds support at our 297 level discussed in Index Trader Wrap, but rebound attempt here finds resistance back at DAILY Pivot of 300.48.

S&P 500 Index (SPX.X) 966.58 -0.05%, just sitting here this morning, can make a move in either direction.

 
 
  Jeff Bailey   8/7/2003,  10:12:52 AM
Kohls (KSS) $62.05 +2.3% ... Link reported 6.7% increase in July same store sales. Well above estimates for a 1.6% rise.

 
 
  Linda Piazza   8/7/2003,  10:12:13 AM
Volume patterns aren't giving us many clues as to market direction today as they're not slanted strongly one direction or the other this morning.

 
 
  Jeff Bailey   8/7/2003,  10:08:11 AM
S&P Retail Index (RLX.X) 336.18 +1.63% ... doing most of the work early for the bulls on many reports of stronger same store sales.

Best Buy (BBY) $44.69 +9.85% Link is standout early (see 09:42:02).

 
 
  Linda Piazza   8/7/2003,  10:04:31 AM
Jonathan's information on the put-to-call ratio should keep us alert this morning.

 
 
  Linda Piazza   8/7/2003,  9:59:21 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I'm remembering yesterday's spike up to 492.70, stopping us out of yesterday's put play before the OEX turned down again. That's making me rethink that 492.25 stop, especially ahead of the volatility around the Wholesale Numbers. Let's raise it to 492.75.

 
 
  Jeff Bailey   8/7/2003,  9:55:09 AM
XM Satellite Radio (XMSR) $11.76 -11.4% .... (per 09:39:54) .... Reuters confirming that loss of $1.38 per share was comparable to consensus estimates.

 
 
  Jeff Bailey   8/7/2003,  9:48:13 AM
AmeriCredit (ACF) $5.91 -24% Link ... sharply lower after company said it will have to delay quarterly results as its independent auditors are reviewing the accounting treatment for derivative instruments and hedging of certain interest rate swaps that were entered into prior to 2001 and used to hedge variable cash flows on credit enhancement assets. The amount of unrealized losses being reviewed totals approximately $50 million on a pre-tax basis. The company said any restatement will not change previously reported cash flows and is not expected to impact shareholders' equity as of March 31.

 
 
  Linda Piazza   8/7/2003,  9:47:46 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's lower the exit to 492.25. I'll edge it down closer to the price once the opening volatility is past us.

 
 
  Jeff Bailey   8/7/2003,  9:42:54 AM
S&P Banks Index (BIX.X) 298.52 -0.7% .... lower in the early going.

 
 
  Mark Phillips   8/7/2003,  9:42:02 AM
BBY $43.75 (+3.07) Ouch! Relatively new to the OI Put list, BBY hadn't really done much yesterday, dipping below $40, bouncing and then dropping back for a fairly neutral close. All that is moot this morning though, after the company's surprise upside guidance before the open. With consensus estimates of $0.30 for Q2, the company issued revised guidance for $0.37-0.42. The market likes the new guidance a lot and the stock gapped up well above our $43.05 stop. Needless to say, we'll be dropping the play tonight, as the entire character of the play has been altered now.

 
 
  Jeff Bailey   8/7/2003,  9:39:54 AM
XM Satellite Radio (XMSR $12.44 -6.3% ... Link reports Q2 ESP loss of $1.38, which was wider than consensus estimates of $1.26. XMSR said revenues rose 382.1% year-over-year to $18.3 million, slightly below consensus estimates of $18.7 milion.

There is some confusion as to the EPS loss of $1.38 being comparable to analysts' estimates.

 
 
  Linda Piazza   8/7/2003,  9:32:01 AM
Swing Trade Signals
Somewhat surprisingly, the OEX opens at 488 and heads down from there. This level is at least slight support for the OEX, however, and I wouldn't be surprised to see a bounce attempt at the usual first reversal in a few minutes.

 
 
  Jeff Bailey   8/7/2003,  9:25:37 AM
09:00 Update posted at this Link

 
 
  Linda Piazza   8/7/2003,  9:23:00 AM
Does technical analysis really work? Sometimes it works remarkably well, even the simplest formation-watching techniques. Here's an un-doctored chart I posted last week at the request of a reader who wanted an analysis of CTMI. Link Notice that I mentioned that a break of the rectangular trading band predicted a drop to 12.70 or so. Guess what yesterday's low was? Those targets are minimal targets, so it's not guaranteed that CTMI will begin rising now that it hit that minimal target. The last two days' declines have been on strong volume. I notice that First Albany started CTMI today with a neutral rating.

 
 
  Alan Knuckman   8/7/2003,  9:21:55 AM
Technically the T-Bond futures have resistance at 107 30 and a rally projection to 108 10. Support is placed at 107 02 and 106 17. The upside target for the 10 Year Notes is 112 20 AND 113 17. Support is at 111 31 and 110 25. The final leg of the $60 Billion Treasury auction is expected to meet with strong foreign demand in the 10 Year note sale. When the auction is over will the buying dry up? Some banks and brokerages were buying in the auction to cover their short position and taking profit on the dramatic futures selloff. The 50% retracement of the recent move in the 10 Year Note targets a move below 3.9%.

 
 
  Linda Piazza   8/7/2003,  9:12:54 AM
Swing Trade Signals
The Swing Trade Model is short/put the OEX from 489 with a stop at 493. As Jim has mentioned on the Futures Monitor, futures are down slightly this morning despite encouraging economic news, but we'll have to wait until the open to see whether the tepid reaction of the futures to encouraging news predicts a tepid reaction in the cash markets, too. We have a first target of 484, although we'll have to watch carefully near 488, 485.75 and 485. Here's a view of the OEX as seen on the 60-minute chart. Link

 
 
  Alan Knuckman   8/7/2003,  9:05:37 AM
T-Bond and T-note futures are still up moderately after the positive weekly jobs numbers. The initial claims fell to the lowest level in six months and the 4 week average is below 400,000 for the first time since February. The positive 2nd leg of the Treasury auction and the oversold conditions contributed to the over 2 basis point rally in the bonds Wednesday. The world’s largest retailer Wal-Mart raised earnings and sales projections and indicate a improving economic outlook.

 
 
  Linda Piazza   8/7/2003,  7:07:03 AM
The Bank of England's Monetary Policy Committee met today, and kept the Bank's repo rate at 3.5%, as had been expected.

 
 
  Linda Piazza   8/7/2003,  6:26:33 AM
Good morning. The Nikkei opened flat and fought to steady itself. That was a fight the Nikkei lost as it dove though the morning session and the early part of the afternoon session. After reaching a low of 9224.05, the Nikkei bounced just before the close, closing down 58.35 points or 0.63%, at 9265.56. The Nikkei closed beneath its 50-dma at 9275.74, the first close beneath this average since May. Many technology stocks struggled, although Sega gained ahead of its after-the-close earnings, with those earnings including better-than-expected Q1 sales of game software titles.

Other Asian bourses fared better, however, with the Taiwan Weighted gaining 0.80% and South Korea's Kospi gaining 0.27%. Singapore's Straits Times also gained, 1.55%, with stellar earnings by Singapore Telecommunications leading the index higher. Hong Kong's Hang Seng dropped 0.30%, however, and China's Shanghai Composite closed flat, up 0.08%.

In Europe today, investors mulled conflicting economic news. The ECB used its monthly bulletin to announce expectations that the eurozone economy might improve gradually in the second half of 2003 and more substantially in 2004. They expected to see improvement in real income growth and pointed to the supportive investment environment created by low interest rates. They also noted an expectation that they would see world economic growth, with that growth compensating for the deleterious effect of the euro's firmness against other currencies. Countering this news was information being announced on CNBC Europe this morning about Germany's machinery output, showing a decline in that number. In addition, German oil, gas, and chemical company BASF gave a dismal outlook on the struggles it would face in matching last year's earnings, citing high unemployment rates. The company said it is not seeing any signs of increasing demand in the short term. Dutch insurer Aegon mentioned uncertain market conditions when reporting its earnings.

As of this writing, the FTSE 100 traded down 8.10 points or 0.20%, to 4062.30.. A key focus in the U.K. was on banking stocks as Barclays reported profit that beat expectations. The CAC 40 was down 13.90 points or 0.44%, to 3112.25. The DAX was down 67.56 points or 2.00%, to 3308.10. Yesterday, the FTSE 100 closed beneath its 50-dma. Today, the CAC trades below that average, although it has not yet closed beneath it. The 50-dma on the DAX is still below current prices, at 3255.59.

 
 
  Jim Brown   8/6/2003,  12:51:49 AM
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