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  Jeff Bailey   8/20/200,  4:14:03 PM
Hot Topic (HOTT) $32.92 -0.99% Link ... reports Q2 (July) earnings of $0.18 per share, which was a penny better than consensus estimates. HOTT said revenues rose 25.1% year-over-year to $115.7 million, slightly below consensus estimates of $115.9 million.

$32.85 in light after-hours trade.

  Linda Piazza   8/20/200,  3:54:56 PM
It looks as if the OEX might end the day sitting right on the top line of the regression channel I've been posting all day. Is this bullish or bearish? The trading pattern looks as if the OEX may end the day with a red spinning top that follows yesterday's doji or near doji. Does this complete the reversal signal (evening star) or not? I tend to think that today's candle is further signs of uncertainty and a second possible reversal signal, but perhaps not a confirming of the reversal. Does that make sense? I look forward to a big red candle tomorrow that may do that. I've noticed that the OEX tends to print two doji or two spinning tops or two of some other reversal signals before it actually reverses. It's possible that we could get a gap down opening tomorrow that doesn't allow us entry, but I don't like entries in the last few minutes of trading and we didn't get the entry signal I needed anyway.

  Linda Piazza   8/20/200,  3:46:20 PM
The OEX now drops beneath the 501.50 support, but there's support from the recent trading range layered in .50 intervals all the way down to 500.

  Jeff Bailey   8/20/200,  3:44:57 PM
03:15 Update posted at this Link

  Linda Piazza   8/20/200,  3:27:52 PM
Swing Trade Signals
I won't be issuing a signal based on the last thirty minutes' trading pattern. Besides, I grow more and more gun-shy as the day goes on.

  Linda Piazza   8/20/200,  3:23:56 PM
Reader Request: IBM (83:02 -.19, -023%) Stock broke to the upside 82.51 on Monday, removed from OI put list, now stock back to 82.00 low today, we are still holding puts, could you advise where you see resistance and support at this point, appreciate your comments.

Response: This stock has moved up since the reader first wrote, and now trades at 83.25, but I've just received the email a few minutes ago. The point and figure chart first: IBM is on a sell signal, below the bearish resistance line, but currently in an "X" column. However, there was a low-pole reversal, sounding a warning to those in bearish trades.

The daily bar chart: Yesterday, IBM rose right to the level of the big gap from January 16, at 83.75, and currently eases back from that level. Not much, though, as it's rising this afternoon. Stochastics--both 5(3)3 and 21(3)3--approach levels indicating overbought conditions, but ADX is high enough that we may not be able to trust that stochastic evidence. The Bollinger bands slant up, so it's possible that price could rise and follow those bands up while those stochastics stay pinned at those high levels. It's possible to draw a descending trendline from the May 14 high through the July 16 high, with that descending trendline crossing somewhere between 84.90 and 85.30, depending on how quickly IBM should rise. It's also possible to draw an ascending trendline off the March 12 low, with IBM having violated that trendline back in early June and now rising to test it again at about that same 84.90-85.30 range. Looking at the way IBM sprang up from its 10-dma today and with the other averages grouped just underneath that level, I wouldn't be surprised to see it test that 84.90-85.30 range. I also see resistance at 86, the top of that January gap, and of course near 88.80.

Support? That's difficult to decide as there's so much congestion which means that there's lots of support. However, 80.00 must be considered of course. The midline of the regression channel crosses at about 81.60, also an area of some horizontal support and also the locus of several crossed moving averages, including the important 200-dma at 82.19. Below 82 and 80 lies some support at 78, so it appears that IBM has support layered underneath in 2-point intervals, but that 81.60-82.20 looks to be the most important right now since that's the location of the 200-dma.

As I studied the chart, there's so much congestion that it's difficult to conjecture what might happen next. My strongest vote goes for either a sideways trading until the top of the regression channel descends enough to meet price and price turns down, but maybe only minimally, or else a rise toward the top of the regression channel and then a decline, but again maybe only a minimal one. Weekly ADX says its range-bound, but ready to move up in its range, so it could even test that 88-89 level again, although the daily chart suggests that it will retrace a bit first. In that case, IBM will have broken out of the regression channel, a possibility that exists since we've seen the same thing happen with the Dow and the Nasdaq. I'm finding it difficult to make predictions.

  Linda Piazza   8/20/200,  3:16:32 PM
Haven't we been here before? The OEX rises now toward the descending trendline that defines the top of the diamond shape, with that trendline being just under 504.

  Jeff Bailey   8/20/200,  3:04:46 PM
Autozone (AZO) $88.73 +1.2% .... Link Jeff: What do you suggest we do with AZO as it gets close to the $90 bullish count? I'm tempted to take profits. What do you think?

OK... here's the "kicker" that I didn't reveal upon first bullish profile, and my current contemplation.

Now... a trader holding September expiration, I would agree it is time to take profits off the table, or simply begin using the trailing stop technique just below previous day's low.

The "kicker" is $90, with the old trader/investor saying that 90% of stocks that trade $90 trade $100 as the psychological target on AZO. Now, when bulls played this 90%/$90 trade in IGT, IGT did indeed trade the $100 level (pre-split), but it had a higher bullish vertical count objective.

When/if AZO trades $90, a bull with October or longer-dated expiration may simply give about $2.00 downside room and look for the $100 level. A trader holding 2 calls or more, perhaps sell half of them here, and let other half ride with $2 stop and target $100.00.

I continue to hold bullish position in AZO and look to play the 90%/$90 type of scenario.

  Linda Piazza   8/20/200,  3:04:31 PM
Instead of breaking down out of that "b" distribution pattern, the OEX rose to test the underside of the diamond again.

  Linda Piazza   8/20/200,  2:51:12 PM
Swing Trade Signals
After breaking under the diamond pattern, the OEX has been consolidating in a "b" distribution pattern and now threatens a breakdown out of that pattern. That breakdown, if it occurs, confirms the failure of the OEX in its retest of the diamond. Whew. Diamond patterns are usually reversal patterns, although not always. This one formed at the top of the OEX daily regression channel where we could expect to see resistance. This still spells range-bound index to me, with the OEX most likely to move down and test the midline support or the bottom support of its regression channel. I'm waiting until the OEX breaks back into the big regression channel that I've been posting all day before I issue a signal, but am considering issuing a short/put again. If so, the same risks exist that have existed all the last week as I issued those signals, with the failed follow through each time.

  Linda Piazza   8/20/200,  2:28:06 PM
Here's the regression channel again, this time on the 60-minute chart so that you can see more detail: Link Notice the way the OEX keeps finding support at the upper trendline? Until that tendency is broken, and maybe not even then after the previous failed entries, I won't feel comfortable issuing a signal for a bearish trade.

  Andy Aronson   8/20/200,  2:24:31 PM
The VIX is up .50 today to 19.73. In the past, a low VIX level has led to a sell-off. So, it is very possible that we may reverse direction and head lower. However, it really looks as if the market is trying to make a new high for the year, before moving lower. Some insurance put options may be considered in the very near future. The P/E levels on some stocks are equal or above the levels seen in 2000.

  Linda Piazza   8/20/200,  2:20:26 PM
As should be expected, the OEX now rises to test the broken support.

  Linda Piazza   8/20/200,  2:14:13 PM
I agree with Jim about CNBC Europe. I like to watch as it's a good counterpoint to the bullish talk we normally hear. By listening to both versions, I get a more balanced view.

  Jeff Bailey   8/20/200,  2:14:08 PM
Dow Industrials (INDU) 9,393 -0.384% ... moving to an afternoon low here. Did this exact same trade yesterday at about this time and fell into the 03:00 PM EST bond market close.

Will note, that Treasury YIELDS finished lower yesterday, but higher here, so thinking is that Dow may not rebound into close today?

  Linda Piazza   8/20/200,  2:13:05 PM
The OEX just dropped below that trendline from the diamond shape, but there's been no confirming five-minute close below it as of yet. Those who might be in long plays should continue to monitor stops, however. I'm also watching that 120-minute regression channel, too. It appears that the OEX will have to drop below 501 until it's moved back into the channel and as low as 500 before I'd feel comfortable saying that move was confirmed.

  Linda Piazza   8/20/200,  2:07:34 PM
Tiny bubbles . . . oh, I mean tiny candles climb the lower trendline of that diamond shape from my 13:59 post. There's no great conviction yet in those small candles.

  Linda Piazza   8/20/200,  1:59:08 PM
Here's where we are on the OEX diamond shape, as shown on the five-minute chart: Link

  Linda Piazza   8/20/200,  1:54:06 PM
So far, we haven't seen much of a push either direction during this period when we usually see a strong push either up or down. That's typical of today's trading, right? We've still got a couple of minutes left in the typical 1:35-1:55 push time zone, though.

  Ray Cummins   8/20/200,  1:51:57 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

One of the stocks on the move today is Intuit (NASDAQ:INTU), up $1.36 at $46.60 following an early "gap down" in the issue. Last night, Intuit reported a narrower quarterly loss on higher sales and lower acquisition-related charges, beating analysts' expectations. But, the company also said results in the current quarter could fall short of consensus numbers, and growth in sales for TurboTax software might slow next year. The announcement caused INTU's share value to fall more than 2% in Tuesday's after-hours trading, however the stock has rebounded in today's session and appears headed for higher prices in the near-term. That doesn't bode well for our bearish (call) credit spread in the issue, which is short at $47.50. Traders should continue to closely monitor the technical strength of the stock in the coming sessions.

  Linda Piazza   8/20/200,  1:43:17 PM
I love technical analysis. What I don't like about technical analysis, though, is the way I can watch an oscillator and see it clearly turn down or up as price turns down or up from some trendline or formation, only to have the whole thing redraw itself as if I'd imagined what I'd seen. What technical analysis is telling us today, though, is depicted by that diamond shape I mentioned on the 30-minute chart: we're still in consolidation mode. That consolidation range is narrowing, and I wouldn't be surprised to see an attempt to break out during this current period, a period when stops are often run during a push to test support or resistance.

  Jeff Bailey   8/20/200,  1:41:04 PM
01:00 Update posted at this Link

  Linda Piazza   8/20/200,  1:29:26 PM
As could be guessed from the day's narrow range, the OEX currently prints a small doji on its daily chart, with that doji inside yesterday's range. Although it's far too early to be deciding what the day's candle is going to be, I do note that the OEX sometimes prints two candles in a row that signal a potential reversal before it finally reverses. I wouldn't be surprised to see anything happen today, however, including a push to the upside out of those diamond patterns.

  Linda Piazza   8/20/200,  1:08:47 PM
That orthodox broadening formation or bullhorn we were seeing on the OEX 30-minute chart has now narrowed down with today's narrowing range of trading, perhaps into a diamond pattern. According to Meyers, "Although the diamond formation can turn out to be a continuation pattern, it usually is a reversal pattern." That potential is about the only thing keeping me from changing my stripes and going long as I see support hold time and again.

  Linda Piazza   8/20/200,  12:57:24 PM
So far, OEX 502.50 is holding as support.

  Jeff Bailey   8/20/200,  12:57:23 PM
S&P Banks Index (BIX.X) 304.73 +0.02% .... just sitting here. 21-day SMA certianly seems to be resistance. BIX.X has closed right on/at this 21-day SMA last two sessions and trades right on/at it here again today.Link

Here's the BIX.X PnF chart Link

  Linda Piazza   8/20/200,  12:48:54 PM
Advancers currently pull ahead of decliners on the NYSE, with up and down volume roughly equal on the exchange. On the Nasdaq, decliners still lead, but by a 14:15 ratio. Up and down volume were each 399 million on the Nasdaq as of a few minutes ago, as closely matched as I've ever seen it. Total volume was 582 million on the NYSE and 312 million on the Nasdaq.

  Jeff Bailey   8/20/200,  12:46:47 PM
12:00 PM EST NH/NL readings ... just plugging in the 12:00 PM NH/NL readings for both the NYSE and NASDAQ, which we discussed in last night's Index Trader Wrap. Still looks bullish leadership holding today. Link

Shorter-term bull in NASDAQ maybe not all that impressed with its DAILY ratio at this point, slightly below yesterday's rate. Thinking might be a nice snug stop under today's or yesterday's low does the job.

  Linda Piazza   8/20/200,  12:38:44 PM
Here's an update of the regression channel on the 120-minute (and 60-minute, not shown here) OEX chart. Link Since I remain in a bearish play myself, I'd like to think the current downturn in some oscillators and in prices means that I'm home safe, but the top of the channel may now provide support on any pullbacks. I don't yet feel safe.

  Linda Piazza   8/20/200,  12:32:23 PM
Bearish divergence has been confirmed on the OEX five-minute chart. On the 30-minute, some indicators now turn down, as does the RSI on the 60-minute. These are tentative signs that can be undone again, but a failure to sustain levels above 502.50, if that should occur, would signal longs to be extremely careful about their stops. Today saw the OEX move close to that 504 level I mentioned in my 10:16 and other posts, but it has not yet been able to push above that resistance. It next faces stronger 506 resistance if it should push above 504.

  Jeff Bailey   8/20/200,  12:26:27 PM
PLAB and NTAP questions... have some traders wondering if bulls should wait for pullbacks?

This is always a tough question when stocks make rather BIG single-day moves. Both of these stocks look LONGER-TERM "super bullish" and have that catapult look to them. My advice is to play a 3 to 4-month call option, but perhaps just get 1 call option right now, then sit and wait a couple of weeks. Should the current bullish vertical count columns, currently under construction continue to build bullish and lengthen themselves, then so be it, you've claimed a partial position at least. Once the stock builds the bullish vertical count column, THEN look for pullback levels of support to perhaps round into position.

While Monster Worldwide (MNST) $25.63 +0.58% Link is different than PLAB or NTAP, I still hold a September $25 call option. I bought the September only because I wasn't aware there were longer-dated expirations from prior TMPW. I've been seeing quite a few PnF charts where the stocks are giving these double-bottom sell signals, only to then "catapult" back higher to a new high. I'm struggeling with my MNST position because time is running out on my September expiration and stock is back within $0.50 of bullish entry.

  Linda Piazza   8/20/200,  12:20:55 PM
The OEX 21(3)3 five-minute stochastics dipped below 80, but immediately began an effort to curl up again. Let's see what happens.

  Jeff Bailey   8/20/200,  12:18:38 PM
Internet Initiative (IIJI) $5.12 -32% Link .... Jeff: I'm short a rather small amount of IIJI at around $7. I had been following it since one of your ask the analyst columns. I was getting a little nervouse yesterday, but the stock is getting crushed today. I have a couple of questions. Is there any news to explain today decline. Also, I've calculated the bearish count as $2.00, is this correct?

First... you've got the bearish vertical count correct. Good job! Now a bear needs to break that bullish support trend and this $5.50 area needs monitoring as it is also right where the stock generated that triple-top buy signal in July which seemed to have the stock exploding to the upside.

Second .... I do see news that Crosswave Communications and its Japanese units filed voluntary petitions for reorganization with Tokyo District Courts. This news is negative for IIJI as it owns approximately 38% of Crosswave.

  James Brown   8/20/200,  12:16:38 PM
Du Pont - DD - Shares of Dow component DD are also in breakout mode today. The stock has struggled with resistance at $45 for months. The $45 level also happens to coincide with its 200-week moving average. A convincing move higher from here could lead to a test of its next major resistance level of $50.

  Linda Piazza   8/20/200,  12:09:16 PM
The OEX five-minute chart shows the possible bearish divergence (lower price high and equal stochastics highs) I noted in my 11:45 post as being a continuing possibility, with the stochastics now rolling further. It's still tentative, however, and I would not consider it confirmed until both stochastics lines roll fully beneath 80.

  James Brown   8/20/200,  12:08:18 PM
Whole Foods Market - WFMI - Breakout in progress for WFMI. The stock has completed what looks like a reverse head-and-shoulders pattern. The neckline and overhead resistance at $55 has been broken in today's session. The H&S pattern suggest that bulls could target a move closer to $65 but there is plenty of congestion near $57.50. WFMI's P&F chart is also interesting as today's move has produced a double-top breakout but it is trading right at descending bearish resistance.

  Linda Piazza   8/20/200,  11:58:02 AM
Swing Trade Signals
The OEX approaches that 504 resistance from the series of lower highs since yesterday morning. A push above that level would be considered bullish, but the OEX would find next and possibly stronger resistance near 506. Those who elected to enter long at 502.50 are feeling pretty good now, but not yet out of the woods. Watch your stops.

  Jeff Bailey   8/20/200,  11:50:40 AM
Photronics (PLAB) $22.33 +17.6% Link ... higher after last night's earnings and bolts to a new 52-week high. Today's trade at $19.50 gets stock back on a buy signal, with bullish vertical count to $33.50.

  Linda Piazza   8/20/200,  11:45:42 AM
We have hints of bearish divergence on the OEX five-minute chart, but confirmation requires that both the price and stochastics continue rolling down. As yet, the 21(3)3 stochastics have made a bearish kiss, but haven't yet rolled down below 80. However, if both price and stochastics continue to roll, a big if, stochastics made equal highs while price made a lower high. I'm not sure whether I believe that will happen, however.

  Linda Piazza   8/20/200,  11:36:46 AM
A descending trendline can be drawn on the Dow five-minute chart from yesterday's 10:55 Dow high, connecting to the 15:55 high, with that trendline crossing currently at about 9425.50. A similar trendline can be drawn on the OEX, beginning at the 9:30 candle high, with that descending trendline now crossing at about 504.

  Linda Piazza   8/20/200,  11:32:18 AM
Volume patterns continue to show more decliners than advancers and bigger down than up volume, but at much lower proportions than earlier. There's been a shift toward a more bullish (less bearish?) stance in these patterns. As of a few minutes ago, total volume was 382 million shares on the NYSE and 557 million on the Nasdaq.

  Linda Piazza   8/20/200,  11:11:23 AM
Add LSI to that list of places the Fed invested money today.

  Jeff Bailey   8/20/200,  11:03:05 AM
Disk Drive Index (DDX.X) 122.55 +2.1% ... breaking to new 52-week highs here.

NTAP +13%, FLSH +3.45%, ADIC +2.98%, MXO +1.37%, DSS +0.99%, STK +0.95%, IOM +0.26%, SNDK +0.08%, ADPT (unch) and HTCH -0.59%.

  Linda Piazza   8/20/200,  10:59:08 AM
Are we seeing a breakout? Link Note: As I was uploading this image, the OEX moved higher, confirming the breakout.

  Linda Piazza   8/20/200,  10:49:34 AM
The interpretation is in the bias of the beholder. Here's another interpretation of what might be happening on the 30-minute OEX chart, a more bullish one: Link

  Jeff Bailey   8/20/200,  10:42:30 AM
Department of Energy (DOE) ... reporting that crude oil inventories fell 1.6 million barrels (ABN AMRO had estimated a rise of 500K), gasoline inventories fell 1.2 million barrels (ABN estimated decline of 2 million), and distillates rose by 1.2 million barrels (ABN estimated rise of 500k).

Oil Service Index (OSX.X) 90.12 (unch), while September Light,Sweet Crude futures (cl03u) $30.68 -0.06% (I'm 30-minute delayed quotes on futures)

American Petrileum Institute (API) out with their numbers. Crude inventories fell 2.0 milliion barrels, gasoline inventories fell 2.1 million barrels, distillates rose 1.6 million barrels.

  Jane Fox   8/20/200,  10:28:09 AM
Linda looks like neutral is breaking out all over.

  Linda Piazza   8/20/200,  10:27:12 AM
The OEX five-minute chart shows the OEX coiling up into a neutral triangle formation.

  Jeff Bailey   8/20/200,  10:18:19 AM
Treasuries reversing course here and early morning buying turns to selling. 10-year YIELD ($TNX.X) now higher by 3.7 basis points to 4.418% after test of rising 21-day SMA.Link

30-year YIELD ($TYX.X) higher by 2.4 basis points to 5.278%. Yesterday, 30-year YIELD closed just under its rising 21-day SMA, and trades right back on that 21-day SMA here. Link

Still weak mortgage applications comes after Dow Jones Home Construction (DJUSHB) 438.41 -1.3% found pretty good bid yesterday, in what looked to me like some bulls and bears doing some buying in the group with belief that Treasury YIELDS are going to be edging back lower in coming weeks.

One thing I'm doing as it relates to this weekend's "Ask the Analyst" column is adding the 10-year YIELD to the Mortgage Applications spreadsheet, but taking the 5-day SMA reading for this bond's YIELD as of each Friday, to try and correlate with each MBA's weekly survey. Here's a quick look at the 10-year YIELD with this 5-day SMA rolling lower a bit Link and what makes me think there are some buyers in the homebuilder, stops just below the recent low, looking for this 5-day average to ease back lower, bringing mortgage rates with it, and having mortgage applications rebounding.

Remember, yesterday's new housing starts and building permits were for JULY, and while Mortgage Applications were starting to trend lower on weekly basis and holding around 1,350 level, those numbers have been cut in half with today's report that Mortgage Applications falling to a 737.7 reading.

I need to also get over the Money Supply and see if there's been any negative impact as the Refinance Index has also dropped off significantly. The Money Supply and Refinancing is what may have broader economic implicatioins as it relates to consumer spending on a forward basis and rather important until we get some type of job GROWTH and hiring back of workers.

  Linda Piazza   8/20/200,  10:16:04 AM
Swing Trade Signals
I've just learned that I may be called away during the day, so I'm not going to be making an official Swing Trade call. I'm gun-shy anyway and might not have done so under any circumstances. I see two possibilities, neither of which is ideal Those who are so inclined and know the risks they're taking could go short/put the OEX on a trade below 500, as this represents a confirming move back inside the 120-minute regression channel depicted in my 9:27 post (the third chart). Both the 21- and 50-dma's lie just beneath, at 496.88 and 498.75, respectively, so this will be tough going. Perhaps more important is the Dow 9323 support. Traders could also consider a long on a move above 502.50, remaining aware of that 504-506 resistance looming overhead, the recent low values in the VIX, and the bullhorn's sometimes-role as a reversal pattern.

  Jeff Bailey   8/20/200,  10:09:10 AM
Aeropostale (ARO) $27.13 -7.4% Link .... cut to "market perform" from "outperform" at Wachovia this morning. Downgrade comes ahead of this afternoon's quarterly earnings report with Wachovia saying it sees ARO's shares vulnerable near term to a significant comparables deceleration from July, but still believes in the company's growth prospects. Consensus estimates are for company to earning $0.06 per share.

I would share in Wachovia's "vulnerable near-term" comments, but only because stock recently exceeded its bullish vertical count of $28.50 that was generated back in March (column of X from $10.50 to $16.00).

  Linda Piazza   8/20/200,  10:04:04 AM
The OEX obviously could not maintain that 50% retracement of the first five-minute range. This gives a bearish tenor to the early trading, coupled with that given by volume patterns. However, we must balance the information Jonathan has given us about the 5.5B overnight repo and the buy-the-support mood that has prevailed of late.

  Linda Piazza   8/20/200,  9:58:40 AM
Early volume patterns show more decliners than advancers and bigger down than up volume, but these early patterns can be distorted. Still, that's a warning to those in bullish positions to watch their stops.

  Jeff Bailey   8/20/200,  9:58:20 AM
Patterson Dental (PDCO) $52.28 -6% Link ... NASDAQ-100 component lower after reporting Q1 (July) earnings of $0.43 per share, which was a penny below consensus. Company said revenues rose 11.7% year-over-year to $433.3 million, which was above consensus of $431.4 million. Guidance given for Q2 was for EPS between $0.46 and $0.48 share, below to in line with consensus of $0.48 per share.

  Linda Piazza   8/20/200,  9:54:10 AM
As the Dow challenges 9400, the OEX pushes above the 50% retracement of the first five-minute move. That's showing some strength, and theory now predicts a test of the day's opening high and gap-down level.

  Jeff Bailey   8/20/200,  9:46:33 AM
Network Appliance (NTAP) $20.43 +13% Link .... early winner in NASDAQ-100 and Disk Drive Index (DDX.X) after handily beating earnings estimates last night.

Rating raised to "outperform" at RBC from "sector perform" based on company's guidance of 3% to 7% sequential revenue growth in Q2 reflecting improved visibility. RBC raised its FY04 estimates to $0.38 from $0.33 per share and FY05 to $0.51 from $0.41, which compares to current consensus estimates of $0.34 and $0.44 respectively. TBC ups price target to $25 from $13.

  Linda Piazza   8/20/200,  9:46:30 AM
The OEX sits on the upper trendline of the 120-minute regression channel (the third chart linked to my 9:27 post), but it's too early to decide it's going to drop back inside it.

  Linda Piazza   8/20/200,  9:43:27 AM
OEX 501.60 is the approximate 38.2% retracement of the first five-minute move. The OEX approaches that level now. If it's turned back here without even approaching the 50% retracement level, that's a first sign of weakness.

  Linda Piazza   8/20/200,  9:38:08 AM
The 50% retracement of the first five-minute OEX range lies at 501.88. We can use this as a benchmark through early trading, as well as watching the gap level. We usually see a first retracement attempt begin a few minutes from now. If the bulls can't bring the OEX back above that 501.88 level and sustain numbers above that level, that gives a bearish tenor to the early trading. As we saw yesterday, however, some volatility can be expected.

  Linda Piazza   8/20/200,  9:35:13 AM
The OEX now approaches that important 500.80 S/R zone.

  Linda Piazza   8/20/200,  9:33:16 AM
The OEX is now right back where it was before that last 30 minutes of trading yesterday.

  Linda Piazza   8/20/200,  9:27:24 AM
Swing Trade Signals
I apologize in advance for the length of this post. The Swing Trade is flat this morning after having been stopped out of our short/put play by less than $0.50 on a spike into the close. The premise behind the Swing Trade was a premise that may still have validity: a move from the top of the regression channel on the daily chart to the bottom of the channel: Link The OEX reached the top of this channel at the same time that stochastics approached levels indicating overbought conditions. The trade was risky since there was always the possibility that the channel was a bull flag and that the OEX would pop out of it rather than turn down from the upper resistance. My intention was to switch to a long play if that happened.

Stops are necessary and it was necessary for me to keep lowering the already-wide stops as the OEX pulled back yesterday, but my overall view won't change until the OEX vaults above 506. Now this morning, of course, futures are down. Several problems exist, however. One is that the Nasdaq and Dow both broke out of similar patterns, perhaps predicting that the OEX will, too. Another is the bullhorn formation seen here: Link Perhaps we could use this regression channel to help us determine when the OEX has broken down: Link As you can see, the OEX broke above the channel yesterday. Perhaps a move back inside the channel would tell us that something has changed.

When I'm trading my own account and suffer several losses in a row, I tend to step back and paper trade a few trades. I'm going to miss some opportunities that way, but several losing trades in a row may be saying that I'm missing something. Perhaps I was just early. I'm going to be particularly careful with trades now, and we'll perhaps miss the move that I've been anticipating because of that care.

Disclosure: Because my overall view wasn't changed without a move over OEX 506, and because I feel more comfortable with wide stops than many of the readers writing to me feel, I did not close my personal OEX put trade yesterday. I tend to seek position trades rather than Swing Trades, sometimes staying in a trade up to two weeks.

  Jeff Bailey   8/20/200,  9:10:10 AM
09:00 Update posted at this Link

  Linda Piazza   8/20/200,  8:26:01 AM
The declines in the European markets have steepened. Currently, the FTSE 100 is down 42.40 points or 1.00%, to 4208.40. The CAC 40 is down 28.04 points or 0.85%, to 3282.66. The DAX trades down 22.11 points or 0.63%, to 3482.42.

  Linda Piazza   8/20/200,  6:13:19 AM
Good morning. The Nikkei opened just above 10,200 and zoomed above 10,300 before the close. Retreating off its high in the late afternoon, the Nikkei closed up 117.96 points or 1.16%, at 10,292.06. The biggest gainer in early trading was Fanuc Ltd., the world's largest manufacturer of industrial robots. The shares increased after the company announced plans to increase production, citing growing demand. Hewlett-Packard's warning weighed on some computer-related stocks, however. Retailers gained after having been trammeled in recent sessions. Cyclical stocks also gained.

Other Asian markets were less positive. The Taiwan Weighted gained 0.57%, but most other Asian bourses traded down. South Korea's Kospi lost 0.40%, and Singapore's Straits Times lost 0.20%. Hong Kong's Hang Seng declined 0.32%, and China's Shanghai Composite lost 0.56%.

Many European bourses currently trade down, too. This morning, economic numbers showed that France's economy contracted for the second quarter of 2003, by 0.3%. France now joins Italy, Germany, and the Netherlands in reporting shrinking economies in that quarter, but since France's economy had grown in the previous quarter, it avoided joining the others in an official recession. However, the decline was unexpected, as economists had predicted a flat quarter rather than a decline. Other than the GDP surprise, individual stock stories dominated the news in early European trading. The DAX 30 removed financial planning firm Mlp and replaced it with tire maker Continental. Goldman Sachs downgraded insurer Allianz to underperform due to valuation concerns, sending the shares lower. The U.S. Food and Drug Administration approved Bayer's competition to Viagra, and Bayer gained in early trading.

As of this writing, the FTSE 100 trades down 29.60 points or 0.70%, to 4221.20. The FTSE has been tumbling all day, but has moved off its lows as I write this. The CAC trades near its opening level, down 18.37 points or 0.55%, to 3292.33. It traded 15 points lower earlier in the morning. The DAX trades down 4.83 point or 0.14%, at 3499.70, off its 3481.46 low.

  Jeff Bailey   8/20/200,  4:47:31 AM
Pivot Matrix posted at this Link

  OI Technical Staff   8/20/200,  4:47:23 AM
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