Option Investor
Printer friendly version
  Jeff Bailey   8/29/200,  5:00:32 PM
Pivot Matrix with new WEEKLY and MONTHLY levels at this Link

Something that stick out for Monday and might relate to Thursday evening's Index Trader Wrap when we looked at the S&P Futures (sp03u) and discussion on those levels.

For Monday, I see SPX (cash) DAILY R1 at 1,011.41, which isn't too far from the 1,010.51 level in my S&P futures (sp03u) chart we've been following. This has been a level that sellers have been able to turn back buyers.

Now, I could envision a trade scenario where that level gets tested early on Monday, that's about a 1% gain (Jim Brown is hoping for a gap higher then failure / see today's 15:42:02), then.... I also see an SPX WEEKLY S1 at 991.45. This is the level that BULLS defended by the close in the futures contract all this week.

Then... see the correlative support at WEEKLY S2 and MONTHLY S1 of 975? This isn't too far off from where an institutional futures trader, that has seen a break above 991.40 after a close below 960.50, would most likely be a stronger bidder in the futures (marked support in Thursday evening's wrap).

Anyway.... this might give the feel for next week's SPX range of 1,011 to 975.

  Linda Piazza   8/29/200,  4:47:38 PM
Swing Trade Recap- OEX/SPX/DJX/DIA/SPY
Tuesday, August 26, 2003:
Entered a bearish position when the OEX traded 495.35.
Exited when the OEX traded 495.50.
Total for the Day: Sustained a 0.15 OEX move against our position.
Total for the Week: Sustained a 0.15 OEX move against our position

  Jeff Bailey   8/29/200,  4:08:02 PM
Thanks Jane and Linda I'm somewhat excited for next week.

The last 5-years that I've taken a week off to go to the mountains, the markets have traded lower and at least one day when I was gone, the Dow fell at least 200 points, or so it seemed, my memory isn't as good as it used to be. While history is no guarantee of the future, its something I've noted.

I think next week is going to be volatile. Lots of vacationing traders are probably looking at the economic data delivered this week and you can almost bet there are going to be some different opinions on things. Too strong, not strong enough, and those that think things are going just as planned.

  Jeff Bailey   8/29/200,  4:04:07 PM
Linda .... you've been off lately. Yesterday, at 10:19:30 AM EST, you were looking for an OEX bounce from 496.94, but missed it as the session low was 495.90. Now today you're off by 0.13? Try using this weekend to study the charts a little closer OK?

Awesome job!

  Jane Fox   8/29/200,  4:03:56 PM
See you after your vacation Jeff. Have a good one.

  Linda Piazza   8/29/200,  4:01:24 PM
Have a good vacation, Jeff. We'll sure miss your analysis.

  Linda Piazza   8/29/200,  3:59:58 PM
Unless the OEX zooms up pretty quickly, it looks as if I was about $0.13 off what I anticipated seeing on the OEX this afternoon. If that 504 had been hit, I wouldn't have been surprised to see 505 or 506.

  Jeff Bailey   8/29/200,  3:54:19 PM
QQQ $33.26 +0.48% ... last 5-minutes has seen the QQQ fall rather quickly from $33.40 to current trade. Are bears just now looking to defend? Almost worth cancelling vacation plans to see what Monday holds!

  Jeff Bailey   8/29/200,  3:51:54 PM
Matched pair has the OEX 503.22 +0.39% and S&P Banks Index (BIX.X) 304.02 just trading their WEEKLY R1's here.

QQQ $33.36 off session high of $33.46, which is this week's WEEKLY R1 (to the penny) at $33.46.

  Linda Piazza   8/29/200,  3:48:50 PM
So close. 503.83 has been the OEX high so far.

  Linda Piazza   8/29/200,  3:43:46 PM
Yesterday, I mentioned that 30-minute OEX CCI and MACD were forming a pattern of higher lows, and that pattern continues today. Both nearly touched their respective trendlines at about 12:45 today, about the same time the OEX fell out of a possible bear flag, but both turned up again as they approached those lines. Watching trendlines in the indicators continues to be a helpful tool, as long as you don't anticipate the signal.

  Linda Piazza   8/29/200,  3:37:01 PM
The OEX isn't all that far from 504 now. Will it make it?

  Linda Piazza   8/29/200,  3:20:00 PM
I wouldn't be surprised to see the OEX hit 504 this afternoon. I wouldn't even be surprised to see 505 or 506, depending on how intense the short-covering becomes.

  Linda Piazza   8/29/200,  3:11:45 PM
New high of the day for the OEX.

  Jeff Bailey   8/29/200,  2:59:31 PM
QQQ $33.32 +0.66% ...... IF it can hold a 5-minute close, THEN it should target the $33.50 zone of resistance, ELSE stop is firm under $33.20.

  Linda Piazza   8/29/200,  2:58:37 PM
The OEX is now just below the day's high at 502.53.

  Jeff Bailey   8/29/200,  2:38:02 PM
QQQ here's updated 5-minute bar chart with DAILY and WEEKLY R1 shown. Link

  Jeff Bailey   8/29/200,  2:26:39 PM
QQQ $33.26 +0.51% ... no sooner did bond market close at 01:00 PM EST, than QQQ reversed an afternoon low of $33.05 to turn higher. Challenging this morning's highs here.

Day Trade Bull may look for rally to $33.40 on a quick spurt of short-covering into the close, but need that break of correlative MONTHLY R1 and DAILY R1 at $33.30. Can play long here with that 5-minute support at $33.20.

  Linda Piazza   8/29/200,  2:26:27 PM
If I were a big institutional player, I sure would want to see the markets end the week with the SPX above 1000, the Dow above 9400, the OEX above 500, the COMPX above 1800, the Russell above 500, the SOX above 450. I'm not sure that's what's going to happen, of course, but it sure would be what I'd want.

  Jeff Bailey   8/29/200,  2:05:41 PM
Tough day for a content poster using Comcast high speed internet here in Denver. While tough to time a trade, even tougher to find spurts of connectivity to post content.

In this afternoon's 01:00 update, take some time with NXTL $19.16 +6.09% and wireless association with Qualcomm (QCOM) $41.20 +0.56%.

NXTL certianly hints that there has been some bulls in this one, and action in March-June, when NXTL was mirroring its bullish support trend, hints to me there was some "conviction" from bulls to hold the stock as the major indices were getting crushed into March. Link

Trader's e-mail regarding QCOM may get some attention. She saw the triple-top buy signal at $40.00 (I didn't, wasn't looking) Link and the "low pole warning" from $31.00 to $39.00 from early May (red 5) to early July (red 7) is a supply/demand signal for a longer-term shift from bearish sentiment to more bullish. The break at $40 clears a major level of past resistance and there isn't much overhead supply dating back to December.

  Linda Piazza   8/29/200,  1:58:04 PM
There wasn't a big push during the usual 1:35-1:55 time period today, but maybe that's because we got it a little earlier when the markets moved up after appearing to break down out of those potential bear flags. On these low-volume days, we haven't been getting that usual push as regularly as we usually do. Perhaps this is another pattern that's going to fail now? We'll see next week, perhaps.

  Linda Piazza   8/29/200,  1:28:36 PM
In all seriousness, I've been trying to figure out the psychology behind that particular pattern, though. (See my 13:17 post) Is it dip-buyers thinking it's their chance to get in? If so, why buy the moment the bear flag breaks down? If it's broken down, then prices would normally be expected to go lower, and give them an even better price. To me, in my unsophisticated analysis of market psychology, it appears to be someone afraid of letting the markets take their course or determined not to let them dive too far. It's as if someone is waiting for that breakdown and then stepping in then. Immediately. With a buy program that creates that V-shaped recovery. I'm really not a conspiracy theorist, but I do think that the reason these chart formations help us with technical analysis is because they're a visual representation of market psychology, but I can't figure this one out.

  Linda Piazza   8/29/200,  1:17:46 PM
We need Jonathan's attention on something: I've been scanning a lot of stock charts lately, and noticing a certain pattern repeating over and over, on daily charts and on intraday ones. It's happened on the intraday OEX charts a few times, too. It's not quite the bear repellent rectangle that Jonathan mentioned yesterday, although it begins the same and maybe it's just a variation. There's a potential bear flag setting up--tight range of higher highs and higher lows after a plunge. Then there's the expected break out of the bear flag. Then there's a V-shaped recovery that either goes right to the top of the original bear flag or else begins a real ramping up and doesn't bother to pause at the former resistance. What do you think, Jonathan? Is it just a variation of the bear repellent rectangle?

  Linda Piazza   8/29/200,  12:55:35 PM
The OEX tests 500 now, having dropped beneath its 10-dma at 500.48 and beneath psychological support at 500, too, at least temporarily. If it can't find support here, next watch the 498.50-499 support zone, the 50-dma at 498.01, or the 21-dma at 497.19.

  Linda Piazza   8/29/200,  12:49:09 PM
As of a few minutes ago, total volume was 440 million on the NYSE and 622 million on the Nasdaq. Adv:dec ratios were 18:13 on the NYSE and 16:13 on the Nasdaq. Up volume was 1.3 times down volume on the NYSE and 1.4 times down volume on the Nasdaq. New highs measured 382 on the NYSE and Nasdaq combined, while only 6 new lows were attained.

  Jeff Bailey   8/29/200,  12:37:58 PM
Russell-2000 Index (RUT.X) 487.09 +0.25% ..... inching up and nearing last week's 52-week intra-day high of 497.79. Juuuust under that first broken upward trend, which I like to leave on a stock's chart to see if it comes into play as resistance. That trend is right at the 500.00 level.

But... just as we was the QQQ get back into its bullish regression channel after breaking below it a couple of weeks ago, there's no saying that the RUT.X can't bust the move above 500.

My gut feel is that next week is going to provide some good volatility and trade action.

  Linda Piazza   8/29/200,  12:34:28 PM
I've had alarms set bracketing the current OEX position, at a trade below 500 and a trade above 501. No alarms are sounding, though, as the OEX holds support in this 500.30-501 zone. I'm still watching for the five-minute 21(3)3 stochastic to cycle up and turn down, thinking that's when we'll see if the support continues to hold, but so far, that stoch is having trouble picking itself up out of the zone indicating oversold conditions.

  Jeff Bailey   8/29/200,  12:31:28 PM
Jeff: I hope you enjoy your vaction. I'm going to enjoy the three-day weekend and I wanted to take a moment to tell you how much I like/learn from some of the rather obscure things you will see. Last week I entered a bullish trade in the QQQ with a target to $33.00, but held on a little longer on some of your short-covering thoughts. Today I blew that position out at $33.25, mostly due to your dollar observation and that chart you showed this morning with the overlapping resistance at $33.30. So... I think I'm going to sit the rest of the day out, and get an early start on the three-day weekend. I've got some money burning a hole in my pocket and might go to Vegas with my wife for the weekend. As they say... "easy come, easy go," but we enjoy trips to Vegas over the weekend.

Have a great 3-day weekend. While the weaker dollar doesn't seem to be overly negative for equities, maybe it is going to limit some of the gains today. Never sure, but maybe... just maybe.

  Linda Piazza   8/29/200,  12:08:36 PM
That OEX 500.30 level appears to be providing at least momentary support for the OEX as the five-minute stochastics hit levels indicating oversold conditions and try to make a bullish kiss again. I'm not sure whether that support is going to last past another cycle up on the five-minute stochs, however. The 30-minute 5(3)3 and 21(3)3 stochs now turn down, as does RSI. Thirty-minute +DI slopes strongly down, although the ADX level itself hasn't risen enough to show us a trending market, even on an intraday basis. The 60-minute RSI and 5(3)3 stochastics are also turning down, lending their pressure to the 30-minute ones. If the OEX does drop, it's going to find at least temporary support soon, in the 498.50-499 zone, so while I'm not sure 500.30 will hold, I'm not sure the OEX will dive all that far, either. I don't think it's possible to be sure on the Friday before a three-day weekend what will happen.

  Linda Piazza   8/29/200,  11:46:57 AM
Reader Question: Comments on IBM?

Response: Starting with the P&F chart, I note that IBM is on a P&F sell signal and below the bearish resistance line, but currently in an "X" column. That means that there's some short-term strength, but there's strong P&F resistance at that bearish resistance line at $85.00.

When I study the bar chart, I notice that I placed a downward-slanting regression channel on the chart some time ago, and that IBM currently trades near the midline of that channel, and also near the middle of the Bollinger bands. ADX remains low, hinting that the range-bound trading will continue. There are three factors, then, pointing to a continuing range for IBM. The quandary is this, though: that range could continue by IBM moving up toward the top of that regression channel, currently near the $84.72 level that marked the August 22 high, or down to the bottom of the channel, just below the $78.00 level that marked several lows during the late March/early April period.

As so often happens when a stock is mired in a congestion zone, as IBM currently is, the oscillators aren't giving a clue. The 5(3)3 stochs have flattened in territory indicating oversold conditions, but they haven't yet turned up. The 21(3)3's slant down, working against the shorter-interval stochs (which often produces chop that isn't tradable), but they slant down at the kind of shallow angle that means that they could just as easily turn right back up again. The RSI down turn down, but it's also doing so at a rather shallow angle and it shows the slightest tendency to curl up again, if you squint just right. Just as I suspected before ever looking at it, MACD flattens, just below the zero level. One worrisome feature turns up in an examination of OBV, however. It's in the cellar, and not showing any signs of climbing again, a fact that tends to confirm that sell signal.

A study of the weekly chart shows IBM currently being pressured by a descending trendline all the way from early 2002. It's sometimes difficult to get those weekly trendlines just right, but it appears that a move above the top of the more recent regression channel, near $85 or maybe $86, would break that trendline to the upside. As soon as it's broken, however, IBM is going to face that gap from last spring, with a move over $90 perhaps difficult to expect without a pickup in OBV. A study of the weekly chart also shows that IBM has already violated an ascending trendline, then came up to test it in mid-July, falling back again. If I study those weekly candles and trendlines alone, it appears to me more likely that IBM will move toward the bottom of its regression channel than that it will break through the top of that channel. Link The impression is perhaps enhanced by the fact that IBM is slipping beneath a whole host of grouped daily MA's just above the current level, with only the 21-dma at $81.73 below it as I type. However, there's a danger in drawing too many conclusions, because that MA is continuing to provide support so far today. IBM has found support many days at the $81.25 level, so there's some historical horizontal support at this level, too. The Bollinger bands slant more up than down, too. That bottom BB is now at $79.65, and we would expect $80.00 to provide support for psychological reasons, too, so it may be that this level could stop any decline. Below that, $78 appears to be next support. Above the current level, $82.50 is going to be tough resistance, with all those grouped MA's lurking there. $83.60 appears to be next resistance on the way to the $85-86 resistance zone.

  Linda Piazza   8/29/200,  11:36:22 AM
That OEX 500.30-501 former support turned resistance has reformulated itself as support again this morning, but it appears that the support is currently being tested. To me, 500.80 is an important level, as it's been a number we've seen come into play over and over.

  Jeff Bailey   8/29/200,  11:06:21 AM
QQQ 5-minute interval chart with DAILY pivot retracement/levels. Note overlapping MONTHLY R1 and DAILY R1 came into play early. Link

  Linda Piazza   8/29/200,  11:04:14 AM
Reader Question: I was wondering if you could provide me with a link to find out what makes up the OFIN.X?

Response: Don't you hate it when different charting services list an index by different names? I believe the OFIN.X, also known as the OFINX, the Nasdaq Other Financial Index, is also known as the IXFN. If so, you can find the components at this link: Link

  Jeff Bailey   8/29/200,  10:29:55 AM
Dollar/bond U.S. Dollar Index (dx00y) 98.08 -0.75% shows dollar weakness, while Treasuries find selling on positive economic data.

INDU 9,392 +0.2%, SPX 1,004 +0.19%, OEX 502.11 +0.17%, NDX 1,337.85 +0.41% and QQQ $33.26 +0.48%.

Dollar weakness obviously not impacting stocks negatively, but will monitor SPX closely as it now approached WEEKLY R1 of 1,005.65.

  Linda Piazza   8/29/200,  10:05:20 AM
The OEX closed this morning's gap, a bullish development, but now has fallen back into the gap, a not-so-bullish development at all. Still, we haven't had a five-minute close below the level of the gap, so it's too early to draw too many conclusions.

  Linda Piazza   8/29/200,  9:47:22 AM
The OEX now tests the 50% retracement of the first five-minute range, with that number at 500.34. If the OEX is successful in sustaining this level, at least with a five-minute close, a test of the day's high and then the gap should be next. A failure should predict a test of the day's low.

  Jeff Bailey   8/29/200,  9:43:14 AM
Amex Gold Bugs ($HUI.X) 199.17% +2.33% .... 200 may be round-number resistance, but looking strong here with near-term upside to 206-211. Link

  Jeff Bailey   8/29/200,  9:37:00 AM
S&P 100 Index (OEX.X) 500.00 -0.27% .... here is daily interval chart of OEX at last night's close. Link

Slight difference compared to broader SPX and I'm thinking a slightly less amount of technology stock exposure had OEX not quite closing outside its regression channel.

  Linda Piazza   8/29/200,  9:36:21 AM
The first OEX five-minute candle did span a relatively large distance, and so retracement levels can be useful as a benchmark in early trading. The 50% retracement of the first five-minute range lies at 500.34. Bears want to keep the OEX under that level, while bulls want to drive it back above that level in early trading.

  Linda Piazza   8/29/200,  9:23:54 AM
Swing Trade Signals
The Swing Trade System is flat this morning. The Friday before a long holiday weekend is not the ideal time to initiate a Swing Trade, either. I'm going to be taking the opportunity to spend the day testing some parameters for entering and exiting trades, and so might be posting infrequently after I monitor the opening of the markets.

  Linda Piazza   8/29/200,  9:15:36 AM
Many European indices have dipped into the red now, with the FTSE 100 now down 26.40 points, the CAC 40 down a narrower 5.07 points, and the DAX down 9.18 points.

  Linda Piazza   8/29/200,  7:13:01 AM
Good morning. Japan's July industrial production rose 0.5% month-over-month, surprising to the upside. Economists had expected a 0.2% rise, but some attributed the better-than-expected numbers to rising orders, especially from overseas. Production was flat from the year-ago period. Another economic number showed that July's household spending decreased by a seasonally adjusted 6.9%, with that decline attributed to unseasonably cold weather. The article quoting the 6.9% figure did not mention whether that drop compared it to the month-ago level or the year-ago level, but another publication mentioned a 6% drop from the year-ago level. Job losses amounted to 200,000, and unemployment remained at 5.3%. The Nikkei opened up 90 points in overnight trading and traded in a narrower range than we've seen the last few days, closing up 118.33 points or 1.16%, at 10,343.55. Although a positive close for the week was in question many times, the index did manage to close up 62.38 points for the week.

Most other Asian bourses moved up Friday. The Taiwan Weighted added 2.31%, and South Korea's Kospi gained 0.88%. Singapore's Straits Times gained 0.36%. Hong Kong's Hang Seng climbed 1.38%, and China's Shanghai Composite gained 0.44%.

Trading is mixed among European bourses, however. August consumer prices jumped 2.1% from the year-ago period in the Eurozone, a number released today showed. That puts inflation above the ECB's 2% limit. Because European economies hover on the edge of recession or have fallen into an actual recession in some cases, economists predict that inflation will stay under control as companies will lack pricing power. Food prices may continue to rise, however, after the recent unusually hot weather. Energy prices drove consumer prices higher. Turning to company-specific news, Munich Re was shown up by rival Swiss Re. Swiss Re reported an increase in net profit. Yesterday, Munich Re reported yet-another loss and received a credit downgrade from S&P.

As of this writing, the FTSE 100 is down 4 points or 0.10%, at 4194.00. The FTSE has been tumbling most of the trading day and is almost 35 points below its high of the day, but has just moved about five points off its low of the day. The CAC 40 is up 14.56 points or 0.44%, at 3337.51; and the DAX is up 14.82 points or 0.42%, at 3507.49. Each of those indices has fallen below the day's high, but bounced from the low achieved a few minutes ago, with these indices perhaps bouncing a bit stronger than did the FTSE.

  Jeff Bailey   8/29/200,  4:19:52 AM
S&P futures (sp03u) 1,003.10 +0.18%.

  Jeff Bailey   8/29/200,  4:18:47 AM
U.S. Dollar Index (dx00y) 98.48 -0.35% .... Downside alert here and break of neckline on 60-minute interval head/shoulder top.

  Jeff Bailey   8/28/200,  1:53:20 AM
Pivot matrix for tomorrow posted at this Link

  OI Technical Staff   8/28/200,  1:53:12 AM
The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.


Market Monitor Archives