Option Investor
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  Jeff Bailey   8/21/200,  3:59:44 PM
Washington Mutual (WM) $39.12 -1.31% .... Jeff: Your earlier comment today about not seeing any banks that spelled of danger. I remember playing WMU from your negative comments back in July regarding what looked like a seller implementing a bearish hedge strategy with a target to $40. Just like the BIX.X is stalled out, right at $40 and is falling nicely today. I played some Sept. $40 puts again today. What do you think?

Good memory (symbol for Wash Mutual is WM), and yes, I played for a short-term gain to the downside too. I agree with trader's observation that this one isn't acting right. Most likely the mortgage lending part of business is hurting WM. Link

  Linda Piazza   8/21/200,  3:59:10 PM
Swing Trade Signals
It looks as if the OEX is going to end the day close to yesterday's close, with the OEX printing a doji right under resistance. I'm inclined to leave the trade open unless stopped, but this is an extremely risky decision as the other indices are not yet cooperating with the OEX apparent weakness. Make the decision that best fits your trading style and risk parameters, keeping in mind how highly leveraged your account might be in this trade. The Nikkei has gained day after day, reaching new 13-month highs day after day, and I'm wondering if it's not time for some profit-taking in the overnight. That's just speculation, however.

  Linda Piazza   8/21/200,  3:47:37 PM
Swing Trade Signals
We have no economic reports tomorrow that might impact our trade, unless I've missed something. Let's watch and see what happens for a few more minutes and then make a decision about whether or not to close out the trade and take our licks this afternoon.

  Linda Piazza   8/21/200,  3:39:55 PM
Swing Trade Signals
I was just about to type up something about the end-of-day decision we'll need to make, but it looks as if the OEX may take that decision out of our hands, as it appears close to running our stop. It looks as if there might be some front-running ahead of MOC orders, and as if they're expected to be positive. This trade is not working well (an understatement, to be sure) although I made sure I waited until even the longer-term 60-minute indicators were giving a "go" signal and even though I was just as willing to go long as to go short, depending on those signals. Unless something changes before the end of the day, we should probably consider closing the trade, despite those doji on the daily chart, forming right under resistance. The OEX appears weak and keeps giving sell signals, but the other indices are supporting it.

  Jeff Bailey   8/21/200,  3:39:27 PM
03:15 Update posted at this Link

  Linda Piazza   8/21/200,  3:32:08 PM
The OEX currently challenges the ascending intraday trendline (five-minute) that it broke through at about 2:15 this afternoon.

  Linda Piazza   8/21/200,  3:20:47 PM
That potential OEX bear flag just broke to the upside. Unless we get an answering quick move down, it wasn't a bear flag.

  Linda Piazza   8/21/200,  3:13:03 PM
Time will tell, but this looks like a bear flag on the five-minute OEX chart. Link

  Linda Piazza   8/21/200,  3:03:59 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The last OEX five-minute high was 502.79. Let's lower the stop to 503.50.

  Linda Piazza   8/21/200,  3:02:12 PM
What was that little skip above OEX 501.50? Was someone front-running the closing of the bond market, thinking the equities will go higher? Maybe so, and maybe they will. We'll have to see.

  Jeff Bailey   8/21/200,  3:01:33 PM
S&P 500 Index (SPX.X) 1,001.59 -0.07% .... Index Traders that may have taken a bullish trade today on the break higher at 1,005, I would simply suggest following with a stop below Tuesday's low of 995.30, where I think is level that any bear really needed to see a break lower to think weakness.

Continue to target the MONTHLY R1 of 1,016.45.

While it would always be nice to wait until the close to see if the index you're looking to trade closes above or below what is most likely a key level of trade, an intra-day action point is an intra-day action point.

Yes, for a bull it would have been better to see a trade at 1,010 on the PnF chart Link and today's session high of 1,009.53 is a bit suspicous.

Who... better yet "why?" would somebody be willing to sell at that point instead of something closer to 1,005? Why aren't the banks / financials participating? These are the questions that have me most perplexed.

  Jeff Bailey   8/21/200,  2:46:21 PM
Cendant (CD) $17.75 -0.83% .... wanted to follow up on this name in travel/leisure group.

Was looking at the Airline Index (XAL.X) 55.55 +1.88% last night on both Pnf Link and bar chart Link

and thought CD's PnF chart Link and bar chart Link

along with sector association might go hand in hand.

I'm trying to associate a CD trade at $18.50, with an XAL.X break at that triple-top.

Looking to put some of those FRNT gains from $10.00 Link to work in CD and try to continue playing this type of sector theme.

One thought on CD's weakness today is I saw something about hotel occupation taking a hit this past week on the power outages.

If there's one thing I don't like about CD at this point is it owns Century 21, which would be more sensitive to rising Treasury YIELDS if job market doesn't improve and higher YIELDS continue to choke off home purchases.

  Linda Piazza   8/21/200,  2:43:43 PM
Swing Trade Signals
If for no other reason, I want the OEX to exceed its 500.57 day's low so that we would not have entered so near the low of the day. With all seriousness, however, the hourly oscillators now offer more confirmation of our position. It's far too early to decide what the daily candle will be, but that daily candle does look bearish so far, with a wick or shadow that extends right up to resistance and a body that moves away from it. The 21(3)3 daily stochastics have made a bearish kiss, but they're far from rolling down yet.

  Linda Piazza   8/21/200,  2:29:01 PM
Switching to the one-minute OEX chart, the current rise looks like a bear flag rising after a quick plummet, but I really don't trust anything right now.

  Linda Piazza   8/21/200,  2:22:42 PM
Swing Trade Signals
Hourly CCI is beginning to offer confirmation of our OEX put play, but then I made sure it did before we entered the play, too, and it's switched around several times since.

  Linda Piazza   8/21/200,  2:18:32 PM
The OEX just broke through the summetrical triangle. To confirm that this is a meaningful break, we need to see a new day's low.

  Jeff Bailey   8/21/200,  2:18:30 PM
Network Appliance (NTAP) $22.23 +6.46% ... continues to erupt in today's session. Link

  Jeff Bailey   8/21/200,  2:14:31 PM
OEX Notes per 13:58:50 ... I need to remind myself that the OEX is rebalanced every quarter. The quick glance shown today, sorted by market cap, isn't necessarily representative of how the OEX was rebalanced the end of June.

  Linda Piazza   8/21/200,  2:09:32 PM
The OEX just winds tighter and tighter. The 30- and 60-minute indicators I'm watching might as well be wind socks, turning this way and that with the prevailing wind.

  Ray Cummins   8/21/200,  2:09:06 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

Another great day for market bulls with an early-session spike followed by a measured consolidation and share values eventually stabilizing in positive territory. Some of the best performers include Analog Devices (NYSE:ADI), Amazon.com (NASDAQ:AMZN), Adobe Systems (NASDAQ:ADBE), Maxim Integrated Products (NASDAQ:MXIM), Multimedia Games (NASDAQ:MGAM), National Semiconductor (NYSE:NSM), Netflix (NASDAQ:NFLX), and Research In Motion (NASDAQ:RIMM). Among the issues in that group, NSM has been a very successful diagonal spread candidate and the ADBE debit straddle reached profitability in less than one week.

On the downside, the recent bullish activity has begun to negatively affect some of the call-credit positions in our portfolio. Issues on the "watch" list now include: Centex (NYSE:CTX), Neurocrine Biosciences (NASDAQ:NBIX) and Investors Financial Services (NASDAQ:IFIN), which is basically a bond market hedge.

  Jeff Bailey   8/21/200,  2:07:07 PM
You're welcome Linda, but I think helpful I can't believe I had to put this together. I went to S&P site for index weighting and while not looking at it now, I think their last update was July 2000.

I just added "sector" info from q-charts too, which gives traders/investors a feel for what parts of the economy are represented. Just look at all them "financials" in the most heavily weighted.

I assumed it was Pfizer weighing a bit on today's OEX trade, and that would certainly look to be the case. PFE -3.7% and the 5th largest weighted.

  Linda Piazza   8/21/200,  2:05:13 PM
Great information on the OEX, Jeff. Thanks for all the hard work.

  Jeff Bailey   8/21/200,  1:58:50 PM
Why is OEX lagging? .... here's a quick look at the OEX top market cap components in the OEX. Link

  Linda Piazza   8/21/200,  1:57:15 PM
If the symmetrical triangle on the OEX five-minute chart is to be preserved, the OEX should turn down by or around 503.50. A move much above that would be an upside breakout of the symmetrical triangle. A move below 501.25 would be a downside break, but it looks as it's the upside resistance that will be tested.

  Linda Piazza   8/21/200,  1:42:53 PM
As the OEX moves down, the 60-minute CCI, RSI, and stochastics turn down again. The only trouble is that both the stochastics (21(3)3) and the RSI slant down at a flat angle that sometimes indicates that they're likely to turn right back up again. They're headed down, but uncommitted. That's sort of been the story every time we have a dip lately, right? For most of the day, the OEX has been settling into a symmetrical triangle. I'd be tempted to say that a breakout of that triangle should help us predict afternoon direction, except that we've seen this happen time and again over the last week.

  Jeff Bailey   8/21/200,  1:37:34 PM
01:00 Update posted at this Link

  Linda Piazza   8/21/200,  1:33:50 PM
We're approaching the time when we usually get a push up to next resistance or down to next support. The way the OEX moves now, I would bet on a move up to next resistance, but you can never be sure with this 1:35-1:55 push.

  Ray Cummins   8/21/200,  1:09:02 PM
Spreads/Combos & Premium-Selling -- E-mail Replies

(condensed) Also, I need some direction in picking option plays from your list of candidates. With so many to choose from, where do I start? TJ

Most traders choose positions for their portfolios through personal research and due diligence by evaluating the technical/fundamental character of the issue and its sector/industry group, as well as the overall market. Experienced market players generally begin that process by developing a trading plan that is appropriate for their experience level, risk/reward attitude, and personal style. Then they choose strategies that are favorable with regard to the current market conditions (direction/character/premium levels), and they use these techniques only if they are appropriate for their portfolio, and after becoming completely knowledgeable about the strategy, its potential advantages, drawbacks and associated exit/adjustment procedures.

You can learn more about profitable techniques by reading the bibles of option trading (Options as a Strategic Investment, by Larry McMillan, and Option Volatility and Pricing Techniques, by Sheldon Natenburg) and by talking with other successful traders. You may also benefit from the use of a options principle who can help you choose plays and develop position management strategies that will limit losses and maximize gains. One of the most popular people among OIN readers in that category is Andrew Aronson (aaronson@OptionInvestor.com), and he would be happy to help you with your trading program by determining your objectives and formulating a solid game plan based on those objectives. Good Luck!

  Linda Piazza   8/21/200,  1:08:23 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We've already put in a day's work with this OEX put play, haven't we? While the OEX zoomed up after the release of the Philly Fed number, the same indicators that had convinced me to enter the play (30- and 60-minute stochastics, RSI, CCI, among others) turned up in a bullish fashion. The 30's have turned back down again, and let's hope that the 60's do soon, too. Now that the initial volatility has subsided after the release of the Philly Fed number, let's lower the stop back to 504.25 again. We need to see a lower low soon to feel safe with this play.

  Linda Piazza   8/21/200,  12:59:30 PM
Reader Question: On Monday I bought Sept $30 puts on QQQ. Averaged about $0.45/share. Put no stop loss in place. In the mean time, the QQQ seems to be moving against me. Currently bid is $0.15. Any suggestions on how you'd play this from here? Would you set any stop loss?

Response: The SEC does not allow me to give individual advice, but I thought perhaps this question might be helpful for the general readership, so I've deleted some identifying details so I could discuss it here. We've all been in this spot, hoping, hoping. In fact, I sometimes do enter trades with no stop and with a plan to let the trade run its course during the month. For example, if I had looked at the QQQ chart and decided that I felt fairly certain that the QQQ's would trade below $29.55 before September expiration and that I had enough money in my account to risk a total loss of the $0.45 I was going to be paying for the puts, then I might buy them and forget them.

However, that might mean that I'd risked 5% or 10% of my trading account on the play, a typical amount that might be safely risked on a single play. If this reader is more highly leveraged, that might not be a viable choice. Someone near and dear to me once risked a $250,000 trading account on a single bet he "knew" would work out and lost it all during a single options expiration cycle, so I understand how even a brilliant person can be overleveraged. Let's look at the daily chart, then. As I scan the chart, I see a grouping of dma's between $31 and $31.50, with historical support in that area, too. There's more support at $30 and $29.50. MACD slants up strongly, with stochastics and RSI in full bullish mode, although either at or approaching levels indicating overbought conditions. We all know that the tech stocks seem extended, but that doesn't mean they can't climb higher. ADX is below 20, but slanting up strongly as the QQQ climbs, indicating that perhaps a new uptrend is being established, although it hasn't yet been firmly established. So far, today's move has been stopped only cents above the July 14 high. If the QQQ looks to close above that July 14 high, I would certainly consider whether I wanted to risk holding onto puts that rapidly grew worthless as the QQQ's traded in breakout fashion. Therefore, I would consider setting a stop at or near today's high, especially on a closing basis. As I type, the QQQ's hold up well, not yet succumbing to the current downdraft on the OEX. It's finding support at this morning's gap level, so the day's outcome is unclear as yet. If the QQQ's do fall below that gap and then below $31.80 or so, there's a chance of a double top forming, but that's a hope that may be more fantasy than anything else with those MA's lurking just below. It's just too difficult to tell at this moment, because the QQQ's are either at a breakout point or one in which they turn down and the range continues. Perhaps Jonathan or Jeff has a better feel for this than I do as I don't follow the QQQ's as much as I do the OEX.

In McMillan's Options as a Strategic Investment, the author describes several loss-limiting actions when a put play goes sour. Those include a "rolling-up" strategy that creates a spread. Imagine that the reader held 5 contracts. That strategy would involve selling 10 contracts--twice the number of losing puts--and buying 5 contracts at a higher strike for about the amount taken in by selling the 10 contracts. However, I think it's too late for this reader to employ this strategy as the QQQ 30 put is bid at $0.05 as I type, and selling 10 of them would not allow the reader to buy a higher strike at the same price or close to the same price. The "rolling up" strategy limits any possible gains, but requires no extra money other than commissions. Risk is not increased but the break-even point for the position does change. Although I can't go into great detail here about all the various pros and cons of this strategy, McMillan's book does explore them, and I recommend it for all options traders.

  Jeff Bailey   8/21/200,  12:46:25 PM
U.S. Dollar Index (dx00y) 98.51 +1.15% ... BIG break above July 14-August relative highs and sprinting toward a still falling 200-day SMA of 98.97.

George Soros really getting whacked if still short the dollar below 94 and gives proof that even the best can sometimes be wrong.Link

  Linda Piazza   8/21/200,  12:34:37 PM
Swing Trade Signals
So far, so good. The OEX was stopped at the 504 level, but now we're back to watching retracement levels. The OEX retraced an almost exact 61.8% of the day's range, which lies just below 503.90. It's now hesitating at the 38.2% retracement of the day's range, near 502.60, and we need to see it drop below that level and then toward the day's low.

  Jeff Bailey   8/21/200,  12:26:25 PM
NYSE/NASDAQ NH/NL Table ... current levels of trade in the NYSE Composite (NYA.X) 5,664 +0.33% and NASDAQ Composite Index (COMPX) 1,772.40 +0.67% are almost exact with those found intra-day on July 14th. Link

  Linda Piazza   8/21/200,  12:14:48 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
There's OEX resistance at 404.50. Let's raise the stop to 404.75. This play is in trouble, though, so don't raise the stop if you don't feel comfortable with the extra $.50 loss.

  Jeff Bailey   8/21/200,  12:10:53 PM
Treasury / equity relationship.

In last night's Index Trader Wrap, wanted to monitor 10-year YIELD ($TNX.X) currently higher by 13.4 basis points at some correlative YIELD resistance of 4.502% (DAILY R1) and 4.505% (WEEKLY Pivot) today. I did get upside YIELD alert on this bond's YIELD/level and bond edges higher from this level here.

Can't say with certainty that this YIELD level had the major indices pulling back from their morning highs, but YIELD action may be having some slight negative impact.

10-year YIELD ($TNX.X) looks like it may want to ramp higher here.

  Linda Piazza   8/21/200,  12:07:34 PM
Swing Trade Signals
The reason behind leaving the official stop at 504.25 is that sometimes those supposed fat-finger trades turn out not to be mistakes after all. If you don't agree, or if you've risked money you can't afford to lose on the OEX trade, make your own determination of an appropriate exit.

  Jeff Bailey   8/21/200,  12:05:24 PM
Philly Fed for August at 22.1 is "off the chart" compared to economists' forecast of 10.0 and July's 8.3 reading.

While not "off the chart," the shorter-dated 5-year Treasury bond is being shredded in today's session with its YIELD ($FVX.X) surging higher by 20 basis points at 3.469% and looks to test its recent high YIELD of 3.584%.

  Linda Piazza   8/21/200,  12:03:36 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Looks like a fat-finger trade tricked both me and the indicators, and the Philly Fed number spells further trouble. Conservative traders might want to exit now for a minimal loss, but I'm leaving our official stop at 504.25 for now.

  Jeff Bailey   8/21/200,  12:02:12 PM
Deutsche Bank (DB) $59.13 -2.1% ... this is the only "rat" I've really been able to see in the banking sector. Still, DB not a component of the BIX.X or BKX.X, but the only banking chart I've come across that hints of something being "wrong" in the sector.

  Jeff Bailey   8/21/200,  11:57:17 AM
11:00 Update finally posted at this Link

My apology needed as I uploaded it to PremierInvestor site by accident. (my typing isn't very good today either).

  Linda Piazza   8/21/200,  11:55:12 AM
The OEX bounces up again to test broken support. The 60-minute 21-pma lies at 502.48, right in the middle of the 502-503. We hope to see the OEX stopped at that level, but it wouldn't be a surprise to see it bounce a point or so above that average as it challenges it, either.

  Linda Piazza   8/21/200,  11:40:02 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Lower the stop to 504.25. I may lower it again in a few minutes.

  Linda Piazza   8/21/200,  11:38:28 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We are short/put the OEX at a trade of 500.75. I'm going to lower the stop in a few minutes.

  Linda Piazza   8/21/200,  11:37:25 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Enter short/put now. At least for the next few minutes, the stop will be at 506, just above the day's high, and the target will be 497.

  Linda Piazza   8/21/200,  11:29:37 AM
Swing Trade Signals
Good, we're getting a bounce. My 30-minute and 60-minute (CCI, 21(3)3 stochastics, RSI) have either given or are close to giving a signal for a put play on the OEX, so it looks as if that's the signal we'll get next although that was up for grabs earlier today. It's still not a done deal. That drop was so quick that you can bet options prices were inflated sky high, and I sure didn't want to enter a put play there even if the signal was given. It would have been difficult to make money even if the OEX dropped three or four more points, buying at that level after a plummet that quick and deep.

  Linda Piazza   8/21/200,  11:23:15 AM
What does Jim do when he leaves for five minutes? Does he call somebody? We always seem to get these strong moves when he leaves.

  Linda Piazza   8/21/200,  11:22:01 AM
Swing Trade Signals
The drop was too fast. Let's watch (and hope) for a possible bounce up to 502-502.50.

  Linda Piazza   8/21/200,  11:18:28 AM
Swing Trade Signals
My 30-minute and 60-minute oscillators may be getting close to giving a signal for a put play on the OEX, but I sure want to let it bounce up and test broken support first. We might not get that opportunity, however.

  Linda Piazza   8/21/200,  11:11:07 AM
Oops. There goes the potential bull flag. The OEX now drops below a 50% retracement of the day's range. We've had only a single five-minute close beneath that level, however, and should now wait for a retest of 504-504.50.

  Linda Piazza   8/21/200,  11:04:27 AM
The OEX has been moving within its potential bull flag formation. Actually, this potential bull flag doesn't have a particularly classic bull-flag-y shape, though. It's more of a V-shape.

  Jeff Bailey   8/21/200,  10:55:16 AM
Dow Industrials (INDU) 9,460 +0.67% ... settles back off its high of 9,481 at WEEKLY R2 here. While today's trade builds further optimism for future, bullish Index Trader at this point not overly enthused with these entry points, but should have further optimism for pullback entries.

I kick myself at times like these for selling to soon from bullish entry below and then turning with puts at very same level of bullish exit.

  Linda Piazza   8/21/200,  10:49:03 AM
Swing Trade Signals
The 50% retracement of the day's range has held so far. Now a retest of the day's high should be next. A failure to move above the day's high again would not be so positive, however. I'm watching thirty-minute CCI begin to tip over and 60-minute CCI flatten. Sixty-minute RSI curves over oh-so-slowly, but other indicators aren't giving clear signals. If I were looking at this chart alone, I'd be shorting enthusiastically right now, but I'm aware that the Dow and Nasdaq broke out of their similar regression channels, confusing the issue (or me) somewhat. Link

  Linda Piazza   8/21/200,  10:39:53 AM
Swing Trade Signals
The OEX nearly topped that 504-506 resistance I'd been watching earlier in the week with the intention of entering a put position at that level. Although the OEX now appears to be turning back from that level, not all my 60-minute indicators have yet rolled down. The OEX also just now tests the 50% retracement of the day's range, a normal retracement after a steep climb. Although I'm itching to enter--one direction or another--we're not seeing everything line up for either direction just yet. As I mentioned earlier today, we may miss a good trade if all elements don't line up our direction. We already have once this morning, but that's okay because another good trade will come along that will line up correctly. Perhaps even today. One direction or the other.

  Jeff Bailey   8/21/200,  10:33:09 AM
Longs Drug Store (LDG) $20.93 +15.9% Link .... 3rd biggest gainer in today's market and stock making its way above longer-term bearish trend. Last night, company reported quarterly EPS of $0.25 per share (exluding $0.11 charges), which was 4 cents better than forecast. Company said revenues rose 0.7% year-over-year to $1.11 billion, which was in line with consensus. Company gave Q3 EPS guidance of $0.11 to $0.14, with comparable consensus estimates of $0.12. For Q4, company said it sees EPS of $0.38-$0.41, which was above consensus of $0.35.

Vertical count on LDG is currently bullish to $30.00.

  Linda Piazza   8/21/200,  10:32:32 AM
The 50% retracement of the OEX day's range today lies near 504.27. After a steep climb, we first assume that a pattern of lower highs and lower lows might be a bull flag forming, but if so, it should break to the upside again around or before reaching 504.27. OEX 504 is also the location of a descending trendline off Tuesday's 9:30 30-minute candle high, so I would give the possible bull flag that much leeway.

  Linda Piazza   8/21/200,  10:26:12 AM
That possible "p" accumulation pattern on the OEX five-minute chart has decayed and broken to the downside. Now watch support near 504.

  Linda Piazza   8/21/200,  10:25:11 AM
Up/down volume patterns are so strong that they're almost suspect. Up volume is 4.7 times down volume on the NYSE and 5.5 times down volume on the Nasdaq. Actually, these numbers are sustainable. New highs vastly outrank new lows. As of a few moments ago, adv:dec numbers were 20:7 and 19:7 for the NYSE and Nasdaq, respectively, but total volume was a light 181 million on the NYSE and 318 million on the Nasdaq.

  Linda Piazza   8/21/200,  10:14:06 AM
We have a possible "p" accumulation pattern building on the OEX, but I'm still cautious below that resistance on the daily OEX bull flag.

  Jeff Bailey   8/21/200,  10:12:19 AM
US Dollar Index (dx00y) 98.18 +0.83% ... dollar very strong and would depict further inflow of foreign capital. Selling in Treasuries looks to have cash freeing up further from bond market, and it certianly looks like bulk of cash continuing to find its way into stocks.

Very bullish looking, with best advice I can give is to trade so, but with some moderation.

  Linda Piazza   8/21/200,  10:11:10 AM
So much for diamond patterns almost always occurring at market peaks. We noticed back in March, I believe, that a similar pattern also broke to the upside. I guess someone hasn't read the technical analysis texts.

  Jeff Bailey   8/21/200,  10:08:34 AM
Dow Industrials (INDU) 9,471 +0.78% ... breaks above "overlapping resistance" of WEEKLY R2 and its MONTHLY 19.1% retracement and while looking very near-term overbought, psychological 9,500 is only type of resistance with MONTHLY R2 of 9,645 in play.

  Linda Piazza   8/21/200,  10:08:29 AM
Early volume patterns show strength with more advancers than decliners and bigger up than down volume. Who would have guessed?

  Linda Piazza   8/21/200,  10:07:06 AM
The OEX retraces only minimal amounts before climbing to a new high.

  Jeff Bailey   8/21/200,  10:04:19 AM
New Bullish Profile .... Cendant (CD) $18.00 +0.55% Link

Added this one to my "watch list" yesterday for a bullish trade at $18.50, with current bullish vertical count hinting at $36.50.

A trade at $18.50 gets stock's PnF chart back in a column of X, and $18.50 would have stock moving back above a downward trend on bar chart taken from the recent relative highs of July 9. Link

  Linda Piazza   8/21/200,  10:03:55 AM
The VIX is at 19.69 as I type, up 0.46.

  Linda Piazza   8/21/200,  10:02:26 AM
Swing Trade Signals
Well, we missed a nice move up this morning, waiting for confirmation on a move above the potential bull flag on the daily chart. I've done a lot of backtesting over the last few weeks, and I found repeatedly that plays were stopped out between 9:30 and 10:00, with many times the OEX reversing after that first 30 minutes and heading in the original direction again. I always hesitate to enter during amateur hour, especially when the OEX is just below what has been strong resistance in the past.

  Jeff Bailey   8/21/200,  9:57:37 AM
Autozone (AZO) $89.45 +0.94% Link ... upside alert here at new 52-week high and all-time high. Original price target was bullish vertical count of $90 and near that here. Discussed strategy yesterday in market monitor for $100 target.

  Linda Piazza   8/21/200,  9:55:58 AM
Showing strength, the OEX has exceeded yesterday's high.

  Linda Piazza   8/21/200,  9:53:49 AM
Here's a 30-minute trendline that the OEX currently challenges. Link It appears to be moving over that trendline as I type.

  Jeff Bailey   8/21/200,  9:51:46 AM
Monster Worldwide (MNST) $27.10 +3.74% Link .... challenging its recent highs here. I'm looking to place trailing stop under September calls previously profiled at $25.90 with sell on further strength target of $29.50. Starting next Friday I will be out of the office for a week and simply looking to sell this near-term expiration ahead. Those holding longer-dated continue to look for trade at $29.00 to get PnF chart back on a buy signal. A trade at $29.00 in current column of X from $22 to $29 would be initial bullish count of $46.

While weekly jobless data provides a bullish backdrop for MNST, its the Help Wanted Index for job growth a MNST bull wants to see improve. Next week, (Aug 28th) we'll get Help Wanted Index. Briefing.com forecast is 39, which would be slight improvement from June's reading of 38.00.

  Linda Piazza   8/21/200,  9:49:31 AM
That OEX midline gap support held on its first test, predicting a move up now to test the day's high again.

  Linda Piazza   8/21/200,  9:42:49 AM
The OEX gap is currently being tested. Bulls want to see gap support hold. The 50% retracement of that gap lies near 502.50. Sound familiar? It should, as it's been S/R over the last few days.

  Jeff Bailey   8/21/200,  9:40:46 AM
Treasuries getting pounded lower early with YIELDS higher. 5-year yield($FVX.X) jumping 11.7 basis points to 3.386%, 10-year ($TNX.X) up 9.4 bp to 4.475% and 30-year ($TYX.X) up a more modest 3.5 bp to 5.288%.

S&P Bank Index (BIX.X) 304.55 -0.03% relatively unchange

S&P 500 Index (SPX.X) 1,003.15 +0.07% is higher by 0.85 points, while the S&P 100 Index (OEX.X) 503.40 -0.10% down 0.5 points.

  Linda Piazza   8/21/200,  9:38:24 AM
The 50% retracement of the first five-minute OEX range lies at 503.56. We can use this level as a measure of initial strength or weakness in the OEX, but the gap level is probably more important this morning. That gap spans from yesterday's close at 501.91 to today's open at 503.13. Bulls want to see the OEX retrace no more than half that gap, but certainly not to move below the lower boundary.

  Linda Piazza   8/21/200,  9:35:26 AM
On the five-minute chart, the OEX now bumps up against a descending trendline off the 8/19 9:30 high.

  Linda Piazza   8/21/200,  9:31:23 AM
The OEX gaps up this morning, so we'll be watching to see if gap support holds in early trading.

  Linda Piazza   8/21/200,  9:30:01 AM
As I was watching the futures this morning, I was laughing, thinking of the time when I was a relatively new trader and had finally switched from my traditional broker to my first online broker--Fidelity. When I called them to ask them what symbol to use to get quotes on the futures, the customer service representative didn't know what the futures were and couldn't tell me. I never did find out how to get futures quotes while I stayed with Fidelity. My traditional broker didn't believe in shorting stocks and didn't believe in technical analysis. I bet I would have had a different experience if I'd been using Alan K. in either instance. This just reminds me to remind newer traders to make sure that their brokers meet their needs.

  Jeff Bailey   8/21/200,  9:28:48 AM
Property/Casualty Insurance Prudential initiating coverage of property/casualty insurance group with "market outperform" rating on belief that strong pricing power trends are mostly unrecognized and that investor concerns about slowing pricing gains and dimininishing prospects for asbestos litigation reform are overblown.

Prudential placed "buy" ratings on ACE Link , CB Link , SPC Link , XL Link , MMC Link and ALL Link

"hold" ratings on AJG Link , SAFC Link and PGR Link

"sell" ratings on RNR Link and AOC Link

Top picks by Prudential are ACE and MMC

  Jeff Bailey   8/21/200,  9:19:48 AM
09:00 Update posted at this Link

  Linda Piazza   8/21/200,  8:47:54 AM
Swing Trade Signals
The Swing Trade Model is flat this morning. We've endured a few miserable days composed of long periods of flat trading interspersed with false upside and downside breaks. On the S&P indices, trading has created a diamond pattern, with diamond patterns almost always being reversal signals, and yet the Dow and Nasdaq break out of their own consolidation patterns, perhaps predicting that the S&P's will, too. Historical trading patterns predict that markets will remain rangebound, at best, during summertime trading, but these markets have bucked historical trends all summer, and may continue to do so. As the following chart shows, the OEX has not yet broken out of its range, and won't do so until it trades above 508. Link

Until then, the presumption must remain that the OEX will continue to trade in a range, particularly as the daily ADX (not shown) remains low, currently at 11.83. That ADX line begins to curve up, however, perhaps predicting that the OEX will begin to trend again. Which direction? Daily CCI begins to turn down, while RSI and MACD prove difficult to decipher. Stochastics are within levels indicating overbought conditions, but have not turned down yet, and we all know that if the market begins strongly trending, a downturn might signal nothing more than consolidation, anyway.

Over the last few days, the OEX has been finding support at the descending red trendline marked on the chart, with that line currently crossing about 499.75. It appears clear, then, if anything is clear in this market, that we want to be long if the OEX moves above 508. A move below 499.75-500 appears to signal that we should be in a play that capitalizes on the downside, although that's more problematic with various levels of support layered underneath. I also dislike entering short/put plays at the end of the week because of the tendency of late for shorts to cover on Friday's, sending the indices higher. Even more problematic would be a move up to 508 with an apparent downturn. Do we trade that to the downside? Whatever we see happening on the OEX--upside breakouts or downside breakdowns--must be backed up by similar actions on the other indices. It's possible that we won't see everything line up correctly and so will pass up a play that turns out to be profitable.

  Linda Piazza   8/21/200,  6:58:45 AM
Good morning. The Nikkei opened down, but soon climbed above 10,300 and into positive territory. It closed just off its high of the day, up 70.63 points or 0.69%, at 10,362.69. This was a fresh 13-month high. Some market pundits attributed the lower open to declines in cyclical and export-related stocks, but those stocks gained in later trading, sending the Nikkei higher. Steelmakers rose. Banks climbed. As is true in the U.S., government bond prices have endured a losing streak.

Elsewhere in Asian, many export-related stocks climbed, too. Most Asian bourses rose. The Taiwan Weighted rose 1.23%, and South Korea's Kospi gained 2.33%. Singapore's Straits Times climbed 1.45%, and Hong Kong's Hang Seng gained 1.61%. China closed down 0.04%, however.

Most European bourses currently trade up as the euro falls to its lowest level against the dollar in months. Although the U.K.'s July retail sales dipped, the loss was smaller than expected. The Confederation of British Industry released its monthly trends survey, with the August resultant balance at -24%, an improvement from July's -37%. The output expectations component measured -3% against July's -4%. The CBI also trimmed its growth forecast for the U.K. to 1.8% from the previous 2.1% for 2003.

Throughout Europe, the automakers perform well, even though DaimlerChrysler was the subject of a Wall Street Journal report that said that a hefty portion of its Q2 earnings resulted from foreign exchange trading. Intel's CEO spoke in Taiwan, saying that although he hesitated to label the trend a recovery, his company and others were upgrading PC's. That sent Infineon and ASML higher.

As of this writing, the FTSE 100 trades up 25.30 points or 0.60%, at 4242.70. The CAC 40 trades up 36.06 points or 1.10%, at 3316.40; and the DAX trades up 38.51 points or 1.10%, at 3539.74. These markets also trade up in anticipation of encouraging news from U.S. economic numbers to be released this morning.

  Jeff Bailey   8/20/200,  11:16:33 PM
Pivot Analysis Matrix posted at this Link

  OI Technical Staff   8/20/200,  11:16:26 PM
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