Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
  Jeff Bailey   8/22/200,  7:27:21 PM
Pivot Matrix for next week at this Link

 
 
  Linda Piazza   8/22/200,  3:58:45 PM
Swing Trade Recap- OEX/SPX/DJX/DIA/SPY
I spent the week anticipating the move we got today, only we were stopped out of play at the open and did not participate. After being stopped out of the same play with the same setup several times in a row, I could not see entering again and risking more of the readers' money. It's better to miss a good trade than to get pulled into yet another bad one. All week, the OEX had been producing candles just underneath the descending trendline off its June high, appearing to roll over, but then the strength of the other indices would protect it. I hope we see a climb Monday morning into the resistance, so that we'll have an opportunity to participate in any further downside, if that looks likely, and then prepare for the next long signal to form.

Here is a summary of the two trades this week:
8/18: Entered short/put when the OEX traded 502.38, when the OEX moved below 502.50-503 S/R.
8/19: Stopped out at the close with a trade of 593.75.
Total: The OEX moved 1.43 points against us.
8/21: Entered short/put when the OEX traded 500.75, when the OEX moved below the important 500.80-501 S/R.
8/22: Stopped at the open with a trade of 503.50.
Total: The OEX moved 2.75 points against us.
Total for the week: A 4.18 move against us.

 
 
  Jeff Bailey   8/22/200,  3:48:56 PM
S&P Banks Index (BIX.X) 298.77 -1.82% .... session low has been 298.10 and pretty close to this WEEK's WEEKLY S2 of 298.09.

I'm going to profile a bearish "sell the close" if BIX.X begins making a dart below the 298 level, with thinking that there may be something quite negative presented over the weekend. Perhaps in Barron's or some type of rat revealed on Monday. Would prefer bearish trade to SPX/OEX where we have larger bank/financial weightings.

 
 
  Linda Piazza   8/22/200,  3:41:39 PM
We'll soon be getting end-of-day orders and that may change the complexion of the day's trading, but let's look at what's happening so far on the OEX. The OEX this week has printed Monday's big white candle and then a succession of more and more bearish candles: first a small-bodied candle springing up from support, then a doji or near doji, then a doji with a longer upper shadow, and then today's big red candle. The 5(3)3 stochastics are in full bearish mode and the more reliable 21(3)3's have turned down, but not yet fully committed. RSI has angled down. ADX looks to be curving up, but it's still so low that it's telling us we're not getting a trending market yet. That's actually okay for the bearish argument because most people just expect a move down to the bottom of the recent range and not a total rout: a continuation of the summer's trend. Balanced against this evidence is support near 496-497 from one version of the descending trendline off the June high, the 21-dma at 497.31, and historical S/R between 496-497. I vote for more downside, down to 491-492 or 487-488, if not to 484-485, but then I've been voting that way for a week now!

 
 
  Jeff Bailey   8/22/200,  3:40:55 PM
03:15 update posted at this Link

 
 
  Linda Piazza   8/22/200,  3:17:49 PM
That long white candle on the 30-minute OEX chart is quickly changing into something else, so we should never count our morning stars before they appear. However, we should be watchful, especially those of us in a bearish play.

 
 
  Linda Piazza   8/22/200,  3:15:11 PM
The OEX possibly builds a reversal signal on the 30-minute chart: long red candle, gravestone doji, long white candle. If the current candle remains a long white one, that completes the three candles of a morning-star formation.

 
 
  Linda Piazza   8/22/200,  3:11:11 PM
There's another possible double bottom forming on the OEX five-minute chart. Rather, it's a near double bottom, but if you eliminate the shadows, it's close enough. A move over 499.10 or so, a number fast approaching, then predicts a test of 500.

 
 
  Linda Piazza   8/22/200,  3:05:56 PM
Careful, those of you still in short positions. If all our computers survive, there may be a relief bounce to add to the typical end-of-day bounce.

 
 
  Linda Piazza   8/22/200,  3:03:22 PM
Once again, the OEX threatens to fall through the current day's low, just now edging below the 50-dma.

 
 
  Jeff Bailey   8/22/200,  2:53:31 PM
Hewlett Packard (HPQ) $19.45 -1.81% Link ... losing two-day lows after Tuesday evening's earnings. Trade at $19.00 has this Dow component back on sell signal, but looking for firm support at $17.50.

 
 
  Linda Piazza   8/22/200,  2:51:44 PM
Surprisingly, up volume still trumps down volume on the Nasdaq. Decliners are ahead by a hefty margin on both exchanges, however.

 
 
  Linda Piazza   8/22/200,  2:42:18 PM
Has everyone heard about the massive computer virus attack expected at 3:00 ET? Apparently some machines infected with the virus have instructions to do something or other at 3:00, but it's unknown what they've been instructed to do.

 
 
  Jeff Bailey   8/22/200,  2:39:09 PM
Kohls (KSS) $61.13 -2.89% Link ... Jeff: Have you heard any news that would support this large drop in the stock?

No I haven't. Stock consolidated last several days after Bernstein downgraded on Monday to "market perform" based on valuation.

 
 
  Linda Piazza   8/22/200,  2:36:33 PM
The OEX now pauses just at its 50-dma at 498.68. We can expect a bounce here, and I wouldn't be surprised to see 500-500.80 tested. If that holds as resistance or is never tested before a new low is made, I then wouldn't be surprised to see the 496.50-497 level that was strong S/R a couple of weeks ago. (Kick, kick.)

 
 
  Linda Piazza   8/22/200,  2:31:02 PM
Reader Question: I have really enjoyed the discussions today regarding technical indicators, etc. I was wondering, would you explain the "b" distribution pattern you refer to on the OEX charts. I have seen you mention several times before.

Response: Sure. This was a term that a former future writer introduced, along with the more bullish "p" accumulation pattern. The "b" forms when there's a steep plummet forming the stem and then a controlled period of distribution when the price moves between near-term support and resistance. Here's a picture: Link

 
 
  Jeff Bailey   8/22/200,  2:25:03 PM
Mellon (MEL) $31.84 -2.92% ... noted MEL in 01:00 PM EST update on broker downgrade. Might tie in with stock approaching longer-term bearish trend. Short/put market, stop $35.10. Link

 
 
  Jeff Bailey   8/22/200,  2:20:54 PM
BancTrust (BTFG) $15.69 +0.83% .... short/put on break at $14.50. Link

Note: Any smaller 4-lettered banks. I'm not checking to see if they trade options, but on smaller banks, I would cautioun on shorting as I have been seeing quite a few smaller banks being bought up by mid-to-larger banks.

Actually, I'm going to select the "Optionable only" button on Dorsey's stock screening generator, so will only get banking stocks with options.

 
 
  Linda Piazza   8/22/200,  2:19:37 PM
The OEX now breaks below the consolidation that has supported it since the 18th. We should anticipate a possible retest of the 500-500.80 broken support. Those readers still in the trade from yesterday, who did not take the official stop, should be celebrating now, but now we have the dma's just below to watch. The OEX has now moved inside the 120-minute regression channel I've posted several times this week, predicting a greater fall. We could see a cascade here, but there's also the possibility of a bounce from here or from the 50-dma at 498.70 or the 21-dma at 497.38.

 
 
  Jeff Bailey   8/22/200,  2:14:51 PM
Going through a list of bank stocks BB&T (BBT) $35.17 -2% ... short/put market, stop $39 with longer-term bearish count of $23 giving near-term downside back to $31. Link

Using PnF stock screen of Relative Strength trend in O's, Daily momentum (1-5 days) negative.

Will follow with more as I get them.

 
 
  Linda Piazza   8/22/200,  2:13:04 PM
I'm kicking chair legs here. (Just figuratively.) This is the move I've been trying to catch and which the indicators have been predicting all week, and I don't have readers in it for the Swing Trade.

 
 
  Linda Piazza   8/22/200,  2:10:57 PM
I just turned to the OEX 30-minute chart and noted that the OEX had moved below the 100-pma at 500.47 and came within a point of the 130-pma at 499.08. If this were the ES contract, a move back above the 100-pma would be considered bullish after a close touch of the 130-pma, while a fall below the 130-pma would be considered bearish. Jim's comments alerted me to this system with the ES, and I know at least one reader follows it on the OEX.

 
 
  Jeff Bailey   8/22/200,  2:09:16 PM
S&P Banks Index (BIX.X) 298.94 -1.77% ... further negative on technical basis as BIX.X breaks a third bullish trend. A lower low would be equated with 288-290 area.Link

 
 
  Linda Piazza   8/22/200,  2:03:50 PM
At about 499.50, the OEX hits a trendline that I drew across the tops of the 8/10 12:30 candle, the 8/04 14:30 candle, and the 8/11 10:30 candle. That trendline has come into play a couple of times since, so might bear watching.

 
 
  Linda Piazza   8/22/200,  2:01:01 PM
We didn't see our usual 1:45 push, unless the five-minute decline from 501.20 to 500.62 was the push. Perhaps it's coming now, a bit late?

 
 
  Linda Piazza   8/22/200,  1:55:58 PM
The OEX 60-minute MACD looks more and more bearish. Despite the decline we've already seen, that MACD hints that the declines aren't done. I would be careful this afternoon, however, as Friday afternoons can be treacherous to trade under the best of circumstances.

 
 
  Linda Piazza   8/22/200,  1:44:34 PM
Remember that we're in that time period when we usually see a strong push either up or down, to test resistance or support.

 
 
  Linda Piazza   8/22/200,  1:43:22 PM
It looks as if the OEX is now forming a "b" distribution pattern, with that bear flag first evolving into a possible double bottom and now evolving into a possible "b" distribution pattern. If the OEX breaks through the top on the current climb, however, we'll nix the latest theory along with the others.

 
 
  Jeff Bailey   8/22/200,  1:42:30 PM
01:00 Update posted at this Link

 
 
  Linda Piazza   8/22/200,  1:30:24 PM
The OEX did break out of the bear flag and did test the low of the day, but that low appears to have held. A move over the peak between the two lows, at about 501.50, would then predict a move up to 502.60 or so.

 
 
  Linda Piazza   8/22/200,  1:14:55 PM
Swing Trade Signals
The OEX tests the bottom of its possible bear flag. A breakdown here, if it should occur, hints first at a new day's low and second at a breakdown back into the big 120-minute regression channel I posted earlier today. This would also be a great place for a short signal--if the OEX had not yet fallen so steeply, if it weren't a summer Friday afternoon, if . . . There are too many if's for me to risk pulling readers into the trade this afternoon. I'm going to abstain. Those who elected to stay in the trade, expecting a pop-and-drop, are still doing well, but should still watch that 21-dma.

 
 
  Jeff Bailey   8/22/200,  1:00:09 PM
RUT.X weekly interval chart at this Link . Showing BEARISH fan from the highs. While there are 5 trends shows on downside, the three primary are identified after seeing a lower low on the declines.

After recent break of downward #3, Primary bullish trend identified.

 
 
  Linda Piazza   8/22/200,  12:59:02 PM
The OEX five-minute chart appears to show a bear flag forming after the latest drop. If so, it should break to the downside somewhere before reaching 501.80 or so (the 50% retracement of the drop). The problem lies in deciding where the most recent drop began, however, but I set the fib tool near the 503 level highs set just after 11:00.

 
 
  Jeff Bailey   8/22/200,  12:56:56 PM
RUT.X chart posted for 12:42:10 in those comments. Here it is too. Link

 
 
  Linda Piazza   8/22/200,  12:56:06 PM
I think I agree, Jonathan. Besides, drawing the lines myself helps to develop a kind of tactile impression that helps me remember what's happening. Once upon a time, I printed up loads of charts every night and spent the evening drawing trendlines by hand. Hours. But I knew where support and resistance were! That was back when I mostly traded Enron stock, if that gives you a hint how long ago it was.

 
 
  Linda Piazza   8/22/200,  12:47:20 PM
I can't take the credit for the fanning term, Jeff. Martin Pring's appearance on CNBC reminded me this morning to check those trendlines again, as I had noticed that the OEX had broken through its first two trendlines from the August 6 low. As I expected, it had broken through the third, too, always supposing that these trendlines are valid. The corrective-fan principle is one explained in Pring's book. I'm always trying to use that Q-chart pitchfan thing to check for the corrective fan principle, but it doesn't appear to be the same thing. Sure looks cool, but I don't know what the heck to do with it.

 
 
  Jeff Bailey   8/22/200,  12:42:10 PM
Per Linda's 12:21:34 and last night's chart of the Russell-2000 Index (RUT.X) drawing of trend. Here's the RUT.X chart with today's daily bar. Just as RUT.X found nice bounce 370 on first test of green trend, would look for nice bullish bounce on first test of second "pink" trend, where a small to mid-cap bull would then look for a new high if economy is strengthening as some economic data would suggest.Link

Linda calls this "fanning," and I can't help but add, "it is when the third trend is broken that something actually hits the fan."

The three trend method also works well for the upside.

 
 
  Linda Piazza   8/22/200,  12:38:55 PM
The OEX now tests that important 500.80 level that's been S/R in the past. A move below 500 would feel very bearish and would break the OEX down out of its recent consolidation pattern, but then there are a host of daily MA's grouped just underneath 500.

 
 
  Linda Piazza   8/22/200,  12:34:33 PM
Also in answer to Tom's question to Jim about the OEX, I've been backtesting (unofficially, as I don't have Tradestation) a system that's similar to Jim's for our Swing Trades, but I've been using a 60-minute chart rather than the shorter-term charts Jim uses. I use RSI, MACD, and CCI as confirmation, while watching stochastics, too. I like stochastics as an "early warning system," but don't always trust them. In backtesting, these tools work well, but unless you wait for a 60-minute candle to close for confirmation, it's subject to that CCI dance that Jim mentioned yesterday. When I'm scrolling through past Q-charts testing it, those candles have closed, but in real-life trading CCI can move back and forth across the flatline several times during a single 60-minute candle's formation, and so the results don't translate well into real-life trading as yet. By the time the candle has closed and the signal has been confirmed, the move may have been too big to risk an entry. That happened to us this morning. I've been using a four-point stop in my tests, but it requires more subjectivity with setting stops, and is just more difficult to implement as a "system." It needs to be combined with the standard tools--trendlines, etc.

 
 
  Jeff Bailey   8/22/200,  12:23:33 PM
Excellent comment Linda .... In last night's Index Wrap, we looked at the Russell 2000 Index, and placed first aggressive trend on chart, then followed with a second trend on chart. At some point, will most likely get the third.

 
 
  Linda Piazza   8/22/200,  12:21:34 PM
There's a theory called the corrective fan principle. It says that a new rally is often steep, too steep to be maintained, and that the first trendline established is then broken, with a new and more gently sloping trendline established. Then that one is often broken. A third trendline is established, with the three trendlines fanning out. The break of the third trendline confirms the end of the rally--in this case, an OEX short-term rally off the August 6 low. Of course, I'd say we had to have a violation of 500 before that weakness was confirmed. Here's a chart: Link

 
 
  Jeff Bailey   8/22/200,  12:14:27 PM
12:00 Internals for NYSE and NASDAQ. Still using the July 14th date as relative benchmark, where a NYSE/NASDAQ near-term top was seen. Link

5-day average is colored green for positive cross above 10-day average, while 5-day average is colored red for negative cross below the 10-day average.

10-day averages are colored red when PnF chart of this 10-day average ratio is in a column of O, and not showing a more meaningful shift toward bullish leadership. NASDAQ has tougher time turning back to X, only because it is more "overbought" and perhaps more bullish at higher levels. Again, scale is 0 to 100.

 
 
  Linda Piazza   8/22/200,  12:01:07 PM
Swing Trade Signals
Jim often talks about the thirty-minute 100-pma on the ES, an average that an experienced reader also watches. That average lies at 498.88 for the OEX. Those who elected not to take the official exit and stayed in the trade should pay special attention as the OEX approaches this level, if it does. The current bounce appears to have come as the OEX hit the top of the regression channel picture in my 11:52 chart.

 
 
  Linda Piazza   8/22/200,  11:52:37 AM
Here's a chart you've seen before: Link We've based some successful trades on this chart and some unsuccessful ones this week as the OEX appeared to fall back into the pattern. Which will it do now? Fall in and continue down? Hit the support and bounce? Therein lies both the danger and the opportunity, to both bulls and bears.

 
 
  Jeff Bailey   8/22/200,  11:44:14 AM
Deutsche Bank (DB) $57.71 -2.59% Link .... bears like today's continue breakdown from $60.00 level. No real news I can find to explain today's weakness.

With Germany seeing 2-quarter of negative GDP, DB's bearish vertical count continues to grow at $47. DB nearing $57.00 support, which I would think might find some bidders and short-covering where the stock gave a triple-top buy signal back in May. Shorter-term bear may look to lock in some gains at $57-$56 area, then look for new rally entry back near $61.00 area.

Disclosure: I currently hold bearish position in DB, but looking to lock in gains on further weakness to $56-$57 area.

While not a component of the more money center KBW Bank Index (BKX.X) 870.62 -1.41%, it too is weak today. Link

 
 
  Jeff Bailey   8/22/200,  11:34:22 AM
11:00 Update posted at this Link

 
 
  Linda Piazza   8/22/200,  11:24:24 AM
Decliners now far outnumber advancers, with adv:dec ratios at 11:19 for the NYSE and 11:18 for the Nasdaq. Down volume is now bigger than up volume on the NYSE, but up volume remains more than double down volume on the Nasdaq. Guess that concentrated buying is in the techs, right? Intel has already exceeded its average daily volume. As of a few minutes ago, the total volume on the indices was 439 million on the NYSE and a stronger 724 million on the Nasdaq.

 
 
  Linda Piazza   8/22/200,  11:21:09 AM
To pinpoint the danger to both bears and bulls, here's another possible symmetrical triangle forming on the OEX five-minute chart: Link

 
 
  Linda Piazza   8/22/200,  11:15:04 AM
Swing Trade Signals
The same treacherous indicators that were signaling a short/put trade yesterday are close to giving a signal again today and from the same level. The OEX currently tests its 10- and 21-dma's, at 502.62 and 502.45, respectively. Sixty-minute RSI hooks down slightly. CCI turns down through 100 and heads toward zero again. Sixty-minute MACD turns down again, with the histogram value below zero. Thirty-minute indicators are even more bearish. Here we are at the same trade again. Those who stayed in the trade can breathe a bit easier here, although yesterday's trading experience tells you the risks you face.

 
 
  Linda Piazza   8/22/200,  11:08:20 AM
The OEX climbs again, having found support just above 502. This climb is a straight and steep one, not looking like a measured zig-and-zag that characterizes the typical bear flag. It's too early to be sure what's happening, but we could have gotten a spurt of impulsive buying now that the OEX reached that congestion zone and the other indices reached theirs, too. The pattern could settle down into a bear flag, too.

 
 
  Linda Piazza   8/22/200,  10:59:08 AM
Swing Trade Signals
Of course. Today's the day that the same trade we've tried four times straight is going to work. We've had no bounce, and I'm not going to issue a short-put signal on a Friday morning in the summer after an already-steep drop, especially since we're right back in the middle of that congestion zone. The "b" distribution pattern at the bottom of the first drop this morning hints at a minimal downside target near 500-500.30, since those patterns typically occur about halfway down a drop. For those of you who held on, as I did, you're doing fine, but should be planning exit strategies. We've seen the strong support between 500.80 and 501 and the way that level stop descents several times this week, so there could be a bounce attempt from there, too, if the OEX should drop that far.

 
 
  Jeff Bailey   8/22/200,  10:45:02 AM
Top market cap in S&P 100 quick glance at this Link

 
 
  Linda Piazza   8/22/200,  10:38:52 AM
Volume patterns that were strongly bullish are now mixed. Decliners now outnumber advancers, with adv:dec ratios at 12:16 for the NYSE and 12:15 for the Nasdaq. Up volume is still bigger than down volume on both, however, perhaps indicating some concentrated buying of certain issues. As of a few minutes ago, total volume was 251 million on the NYSE and 486 million on the Nasdaq. New highs vastly outrank new lows.

 
 
  Jeff Bailey   8/22/200,  10:37:46 AM
Dow Industrials (INDU) 9,445 +0.23% Link ... session high of 9,499.97 came pretty close to psychological 9,500 resistance. Most likely witnessing some round number selling there. Support should be VERY firm from 9,000-9,100.

 
 
  Linda Piazza   8/22/200,  10:35:36 AM
Swing Trade Signals
Only a weak bounce so far. The OEX is currently back to the 502.50-502.80 level at which it should find support, with that level also being the locus of the 60-minute 10- and 21-pma's. Those averages are at 502.64 and 502.46 respectively.

 
 
  Jeff Bailey   8/22/200,  10:34:40 AM
Micron Tech (MU) $14.31 +3.92% Link .... off its morning highs of $14.80, but today's trade at $14.50 now has 4 boxes of X building. My thinking is stock may be looking to build a triangle formation where we might look for a 3-box reversal back to $13.00, then look for the move back higher, a trade at $15 to give a "bullish triangle" pattern. This type of trade would be quite bullish after recent triple-top buy signal at $14.00.

Continue to like this DRAM maker at what might well be early stage of chip recovery. It has been a long time since Intel (INTC) reported quarterly earnings, gave guidance, the upped guidance so soon after. Intel is perhaps the best chip stock when it comes to accurate guidance and seeing trend. My thinking is upward revision to just given guidance has seen a little more robust trend that Intel had perceived.

Disclosure: I continue to hold bullish position in MU from $14.50 profile.

 
 
  Linda Piazza   8/22/200,  10:30:09 AM
Markets look good here, Pring says. Jonathan will be glad to know--although he didn't need Pring's advice--that Pring also predicts a worthwhile increase in the gold bugs index, although his KST momentum indicator is at levels indicating overbought conditions. The KST is turning up again, he says.

 
 
  Jeff Bailey   8/22/200,  10:23:22 AM
NYSE Composite (NYA.X) 5,639.35 -0.3% .... lower by 17-points. At 12:00 hour, will take a NH/NL breadth reading.

 
 
  Linda Piazza   8/22/200,  10:23:22 AM
The OEX is back to the 50% retracement of yesterday's range now--and our stop. It should find support at this area, at least enough for a bounce attempt, but it may retreat all the way to 502.50-502.80 before attempting a real bounce.

 
 
  Linda Piazza   8/22/200,  10:21:39 AM
That is one ugly looking 60-minute candle building on the OEX. Of course, the first hour is not yet completed and the candle could change by the time it is.

 
 
  Jeff Bailey   8/22/200,  10:19:04 AM
Russell-2000 Inex (RUT.X) 494.08 +0.94% ... Per Index Trader Wrap notes, session high 497.79

 
 
  Linda Piazza   8/22/200,  10:17:29 AM
Swing Trade Signals
I've been waiting for a bounce back up to broken support or toward the 50% retracement of the first five-minute range before we consider an entry, but we may not get that bounce. If not, there's probably not going to be an entry for us, but I don't want to enter on a quick plunge with inflated option values and then endure a bounce against us as we did yesterday. Of course, this will be the movement that's been predicted for a week now that we may not be in it. It sure was tempting to enter short at the day's high, but absolutely no indicators confirmed such an entry and the OEX was pulling back in that measured pattern. Some indicators, such as 60-minute ones, showed more upside possible. We've seen what happened even with indicators signaling an entry over the last week, so I wasn't going to leap into the trade just on faith. I'd rather miss a trade than pull readers into another losing one. For those of you who stayed in the trade, expecting a pop-and-drop, as I did, so far, so good, but we know what usually happens in this 500.80-503.50 range. Nothing.

 
 
  Jeff Bailey   8/22/200,  10:15:07 AM
S&P Bank Index (BIX.X) 302.30 -0.69% .... finds S&P 100 Index (OEX.X) 503.45 +0.31% gaining 1.4%.

It's "all tech, all the time" right now.

 
 
  Jeff Bailey   8/22/200,  10:11:48 AM
Analog Devices (ADI) $42.65 +5.28% Link ... Semiconductor name where I missed this stock's "bullish triangle" yesterday at $40. Stock achieves its bullish vertical count of $42 today. According to Dorsey/Wright and Associates, semiconductor sector bullish % (BPSEMI) is "bull confirmed" at 78% and could use Prof. Davis study of probability and pattern recognition for ADI to build further upside target to $51.05 on ADI.

 
 
  Linda Piazza   8/22/200,  10:10:08 AM
Here's an update of the OEX daily chart I showed earlier. However, it's also possible to place the upper trendline a little differently, so that it includes all shadows, predicting that the OEX could move up to 508 before hitting the top line. Link

 
 
  Jeff Bailey   8/22/200,  10:05:54 AM
Intel (INTC) $28.97 +9.7% ..... today's trade at $27.50 has the stock achieving its bullish vertical count of $27.50. May look for round-number resistance at $30, but today's updated guidance with addition revision upward in gross margin impressive and should have larger portion of upward revenue guidance flowing to bottom line.

 
 
  Linda Piazza   8/22/200,  10:05:29 AM
The OEX now tests the 50% retracement of the first five-minute range, and is falling beneath that. I'm considering biting the bullet again and issuing another Swing Trade signal.

 
 
  Linda Piazza   8/22/200,  10:04:44 AM
An OEX move below the 38.2% retracement of the first five-minute range, at about 505.43, would also be a breakdown out of the possible "p" accumulation pattern, so that even that minimal retracement would have a more negative impact than it otherwise might have had. As I type, the OEX drops below that level.

 
 
  Jeff Bailey   8/22/200,  9:57:53 AM
QQQ $33.32 +2.11% .... trades MONTHLY R1 here. Session low of $33.16 holds DAILY R2 of $33.13 as support in early trade and would be a nice spot for a stop to be placed under for traders holding long.

 
 
  Linda Piazza   8/22/200,  9:57:43 AM
I often quote from one of Martin Pring's technical analysis texts. He'll be on CNBC in a few minutes.

 
 
  Linda Piazza   8/22/200,  9:56:31 AM
The five-minute OEX chart may show the OEX settling into a "p" accumulation pattern, which has a bullish interpretation. It's challenging the top of that pattern as I type.

 
 
  Linda Piazza   8/22/200,  9:51:18 AM
I agree with Jonathan's comment that the retreat looks corrective so far. That could change and change quickly, but the OEX still has not yet retraced even 38.2% of the first five-minute range.

 
 
  Linda Piazza   8/22/200,  9:46:17 AM
So far, the OEX holds its gains well, and has not yet retraced even 38.2% of the day's range, with that number being near OEX 505.43.

 
 
  Linda Piazza   8/22/200,  9:39:04 AM
No pop-and-drop yet.

 
 
  Linda Piazza   8/22/200,  9:36:08 AM
Today's first five-minute OEX range will most certainly be larger than normal, and so will give us good retracement levels to watch. The 50% retracement of the first five-minute range lies at 505.06 and will be an important level to watch in early trading, especially as there's a very real risk that this could be a pop-and-drop day.

 
 
  Linda Piazza   8/22/200,  9:33:10 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out of our OEX trade at the open, or a second after the open, with a trade at 503.50. The opening trade was 503.49. We entered at 500.75, so endured a 2.75 move against us.

 
 
  Jeff Bailey   8/22/200,  9:28:07 AM
NVIDIA (NVDA) $18.13 Link ... higher at $19.20 in pre-market after company announced dismissal of class action suit.

 
 
  Jeff Bailey   8/22/200,  9:14:25 AM
09:00 Update posted at this Link

 
 
  Linda Piazza   8/22/200,  9:12:47 AM
Swing Trade Signals
Good news for the economy; bad news for our trade. We have an open short/put OEX position established yesterday when the OEX traded 500.75 and with a current stop at 503.50, but INTC's announcement this morning is probably going to pop the OEX above our stop on the open. Way above. If markets open where futures predict they will, I expect the OEX to open between 504-506, setting up the possibility of either a pop-and-drop or another leg up today.

Here's a chart explaining the basis of the entry, an entry that still seems reasonable based on the information at hand then, including a statement by INTC's CEO in Taiwan that he couldn't yet characterize what he was seeing as a recovery: Link For the last four hours yesterday, the hourly candles closed beneath the 60-minute 21-pma, currently at 502.39, and the 10-pma at 502.42 lent resistance to that level, but today they may be providing support. From 12:30 on yesterday, prices stayed beneath the 50% retracement of the day's range. That was all on our side, and those reasons, coupled with the bearish look of yesterday's OEX candle, were my reasons for staying in the trade overnight, but if INTC had only let me know what they had planned, I wouldn't have stayed! We had no economic reports of note this morning, so there didn't appear to be anything to blow the trade out of the water. As I mentioned yesterday, I also expected the Nikkei to fall prey to profit-taking, which it did.

There was always a bullish case to be made, however. The most bullish argument was the performance of the other indices. The OEX appears weaker than the others, and if they should fall, the OEX looks ready to fall the hardest, but they're not falling and they're especially not falling in the futures this morning. Also, the chart linked above shows a confluence of moving averages just beneath the OEX's position and they might have provided enough support to keep the OEX from falling toward the bottom of the channel. Also, since that entry, the hourly 5(3)3 and 21(3)3 stochastics had cycled down toward levels indicating oversold conditions and had made bullish kisses, although they had not yet turned up in full bullish mode.

Short of a miracle, we'll be stopped out on the open. For my personal trade, I'll watch a few minutes to see if we'll get a pop-and-drop scenario, but that's a risky choice and not one I would advise for anyone with anything other than risk capital invested in the trade.

 
 
  Linda Piazza   8/22/200,  7:13:00 AM
Good morning. Although pre-market indications had been that the Nikkei would see a strong open, the index opened up only slightly and couldn't long maintain positive numbers. Within its first hour of trading, it had dropped nearly 100 points into the red. It managed to regain some of those losses by the close of the midday session and climbed back to the flatline in the middle of the afternoon, but then turned down again. The Nikkei closed about 20 points off its low, but far below its high, down 81.52 points or 0.79%, at 10,281.17. The Nikkei still managed a fairly spectacular week, closing 417.70 points above last Friday's 9863.47 close.

Market participants sold exporters as a profit-taking mood hit. The yen strengthened, too, also impacting the exporters. Many banks, retailers, and cyclical stocks gained, however, ameliorating the losses on the Nikkei. Foreign money is apparently moving into Japan as some speculate that their recovery is moving faster than ours. In stock specific news, Standard & Poors cut the credit rating on Japanese chip-related stock Fujitsu due to their weak earnings base.

Elsewhere in Asian, most markets closed in the green. The Taiwan Weighted gained 0.62%, and South Korea's Kospi gained 0.05%. Singapore's Straits Times rose 0.30% and Hong Kong's Hang Seng gained 1.10%. China's Shanghai Composite lost 0.15%, however.

As the dollar makes gains against the euro, European trading is mixed, with both the FTSE and the CAC 40 moving off day's lows hit earlier this morning and now in positive territory. Germany's DAX remains negative, however. Duetsche Telekom was declining in early trading due to parent company Royal KPN's statement that the Q2 earnings declined 16% in the German unit. Unlike in Japan, exporters gained, due to the difference in the euro's and yen's performance against the dollar, but also to optimism about U.S. economic growth.

As of this writing, the FTSE 100 trades up 16.60 points or 0.39%, at 4240.10. The CAC 40 has gained 12.88 points or 0.39%, trading at 3319.30. The DAX has lost 16.10 points or 0.45%, and trades at 3549.37.

 
 

Market Monitor Archives