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  James Brown   9/2/2003,  3:56:41 PM
One more tidbit on airlines, check out JetBlue (JBLU). Shares have already doubled since their 3-for-2 stock split in December. You can bet there are dip buyers waiting to jump on that bandwagon.

 
 
  James Brown   9/2/2003,  3:54:19 PM
Soaring Higher. - The big winners today appear to be the airline stocks. The XAL index is up more than five percent on the session. AMR +5.7%, DAL +10.48%, NWAC +10.65%, CAL +7.66%.

A Reuters story quoted a J.P. Morgan analyst saying lower oil prices and smaller than anticipated losses are fueling the move.

 
 
  Linda Piazza   9/2/2003,  3:52:05 PM
The OEX did hit the outer 1.35% envelope (based on the 21-pma) on the 30-minute chart today, in addition to punching through that envelope on the 60-minute chart. Here's how it looks on the 30-minute chart: Link If it weren't for those little wrinkles in this method of trading (the possibility that the OEX will continue to climb that envelope, in this case), this might appear to be an ideal bearish entry, with a first target at the 21-pma at 504.67 (but rising) and a second target at the lower envelope border at 497.86 (but rising). Reader J.B. has been testing and perfecting this method of trading the OEX for a while, as has Jim, so the credit goes to them and not to me, but it's similar to trading Bollinger bands, as many of us have done for years. The difference is that Bollinger bands are based on a standard deviation from a moving average, while envelopes are based on a percentage distance from the moving average.

 
 
  James Brown   9/2/2003,  3:46:46 PM
So many stocks are looking so extended these days I wonder when the next round of downgrades based on valuation concerns are going to hit? Especially with the next four weeks being earnings warning season.

Everyone likes to play the trend and currently the trend is up but keep a sharp eye on your stops. This is one bullish breakout I'd love to see some follow through on.

 
 
  Linda Piazza   9/2/2003,  3:38:35 PM
Just a couple of minutes now until market-on-close orders.

 
 
  James Brown   9/2/2003,  3:25:18 PM
Jon, I love the "brickout" reference. There are certainly a lot of breakouts today: $INDU, TMW (Wilshire 5000), S&P 500, $TRAN (transports), DDX (diskdrives), GHA (hardware), XBD (broker-dealer), BTK (biotech, above its descending trendline), OIX (oil), UTY (utilities), XAL (airlines +4.92%). All of these above have broken out of resistance. This doesn't count new higher highs on the NASDAQ, GSO.X and more.

Looks like the historical trend for the day after Labor Day is going to follow through again.

 
 
  Linda Piazza   9/2/2003,  3:19:01 PM
We're about 20 minutes away from MOC orders. That last spike up in the OEX certainly had a short-covering geyser look to it, but short-covering rallies can prime the pump for more stable gains, too.

 
 
  James Brown   9/2/2003,  3:17:36 PM
The 3:15 PM update is posted. Link

 
 
  Linda Piazza   9/2/2003,  3:12:07 PM
Notice that OEX 506.60-506.90 appeared to be the breakout level, with the OEX sprinting up once it had cleared that zone? Those levels marked several intraday highs, or opening or closing levels over the summer months. If the OEX is to continue building on strength, that zone should now provide support on any pullback, with 504 being next support below that.

 
 
  Linda Piazza   9/2/2003,  3:06:20 PM
Right now, it appears that the only technical analysis tactic you need is "buy (go long) early in the day and sell later in the day."

 
 
  Linda Piazza   9/2/2003,  2:54:07 PM
The OEX has now touched the upper 1.35% envelope on the 60-minute chart, although not on the 30-minute. If we were using the 60-minute chart to determine Swing Trade entries, here would be our quandary now: is this going to be one of those times when the OEX climbs that envelope as it sometimes climbs an upper or lower Bollinger band, or is it going to retreat now to the central average or even to the lower envelope? Is this an ideal bearish entry or would we likely be stopped out? Would it be better to wait for a retreat to the central moving average (21-pma, in this case) and then enter a bullish trade or better to enter a bearish trade now? If we were trading futures, we would probably take our chances and enter a bearish trade here, setting a tight stop, then re-enter at a higher level if we were stopped. However, OEX traders must pay those spreads and we'd like to avoid those doomed-to-be-stopped entries as often as possible. These are the matters I'm trying to iron out with my money and not yours.

 
 
  Linda Piazza   9/2/2003,  2:38:37 PM
Reader Request: please say in english what u just posted [my addition: in your 13:51 post].

Response: Sure. I'm glad you asked, because if I wasn't clear, perhaps other readers wanted more clarity, too. How about English and a chart? Obviously, the signs of potential bearish divergence have not resulted in lower prices in the meantime: Link

 
 
  Mark Phillips   9/2/2003,  2:22:16 PM
Reader Question: Your comments and thoughts on BA please.

Response: I've actually looked at BA on several occasions in the past few weeks. In each instance, I've seen what looks like a viable bearish trade, but I'm being forced to rethink that stance. The PnF chart Link is on a Buy signal, with a bullish price target of $62, and if the stock can trade $38, it will generate another Buy signal, giving bullish confirmation. The stock is currently trading right at resistance from the June intraday highs, so it is difficult to make a case for going long here. If feeling bullish, I would definitely wait for a breakout over $38 before doing so. Another point to consider is that the 50% retracement of the March-02 to March-03 decline is $37.81, and we can see how that level is providing resistance. That adds another confirmation that waiting for the $38 print is the prudent course of action.

On the other hand, if looking for a bearish trade, I think we need to take our cue from the PnF chart, and it would take a trade at $30 to create a Sell signal. That is far enough away that I don't see the downside being viable in the near-term, especially with the supportive 200-dma resting just above $31. The Dow Transports ($TRAN) are rallying to new 52-week highs today (probably partially on falling energy prices) and that adds just one more point of confirmation for the bulls.

 
 
  Linda Piazza   9/2/2003,  2:16:08 PM
While I wouldn't exactly say the VIX has been volatile today, it has moved below 20 and then rose almost to 21. As I type, it measures 20.56.

 
 
  Linda Piazza   9/2/2003,  2:13:41 PM
The OEX rises to test the 506 level it broke through at about the same time the 30-minute CCI violated its rising trendline of higher low.

 
 
  Linda Piazza   9/2/2003,  2:06:24 PM
The 30-minute OEX CCI definitely broke through its ascending trendline of higher lows, but RSI looks prepared to turn up again ahead of hitting its similar trendline. MACD is close to making a bearish cross, but from above zero. While the five-minute 21(3)3 stochastics showed bearish divergence (higher price highs with a lower stochastic high), it may be setting up now to form bullish divergence (lower or equal stochastic low with higher price low) unless the OEX drops below 502.39 before testing the day's highs again. Maybe it's going to wind up in another of those dreaded symmetrical triangles again.

 
 
  Linda Piazza   9/2/2003,  1:51:42 PM
I put on my reading glasses to be sure, but the 30-minute CCI does now appear to be either testing or violating its trendline formed from higher lows. That trendline may not be as significant any longer, however, as it has climbed so high that the CCI would soon have to break through it, no matter how strongly the OEX performed. The 30-minute RSI has not yet violated its similar trendline, but it has turned down. The 30-minute MACD now flattens. All these indicators can (and often do) redraw themselves, but that's where they are right now. The CCI in particular continues its pattern of lower highs, not confirming the OEX higher highs on this time frame. The five-minute chart also shows bearish divergence on the 21(3)3 stochastics. Curiously enough, the 60-minute CCI shows no such bearish divergence.

 
 
  James Brown   9/2/2003,  1:39:34 PM
BTK - Biotech index - We could be seeing the beginning of the BTK's next leg higher. The index has been struggling with lower highs every since the intraday peak in early June. Today looks like a breakout above that descending trendline* but it will be a lot more convincing if we can see a strong move over the 460 level.

In a related note, shares of AMGN, the BTK index's largest component, are bouncing from the $65 level of support. Aggressive bulls could see this as an entry point but the stock does have resistance at $70 and probably at its simple 50-dma near $68.00.

*The descending trendline on the BTK is probably best drawn from the June 17th high.

 
 
  Linda Piazza   9/2/2003,  1:39:13 PM
I was thinking about those patterns (see Jonathan's 13:35 post) again this weekend, Jonathan, with respect to the bear-flag variety: a big move down, a sideways or slight move up that appears to be a bear flag, an apparent downside confirming break of the flag, and then a move up again. I'm not an EW person and these are four moves and not five, but could this be explained by EW theory, I wonder?

 
 
  Linda Piazza   9/2/2003,  1:33:59 PM
We're now approaching the 1:35-1:55 ET stop-running move. Although logic would dictate that the push would be to the upside today to test resistance, I always find it difficult to predict which direction the push will send the indices. It's more likely to occur near 1:45 ET, but could occur any time. Some days, we don't see it at all, but those tend to be range-bound days, not days like today.

 
 
  James Brown   9/2/2003,  1:23:29 PM
XBD - Securities/Broker dealer index. - The XBD is about to breakout to new highs not seen since February 2001. The XBD hit 586 in the middle of July but its strong performance today threatens to close above this level.

Leading the way are shares of Legg Mason (LM), which have hit a new all-time high themselves today. Following closely behind is Merrill Lynch (MER), which has been consolidating under resistance at $55 and looks ready for a breakout itself. Goldman Sachs (GS) is also near one-year highs but it needs to conquer resistance between $90-92. Shares of Bear Stearns (BSC) just broke out today above the $70.50-71 level of resistance and is currently trading above the simple 50-dma. This is a stock that could play "catch up" with the rest of the group. We also see shares of Lehman Brothers (LEH) breaking above recent resistance while shares of Morgan Stanley (MWD) are inching closer to its own resistance level near $50.00.

 
 
  Linda Piazza   9/2/2003,  1:12:31 PM
Here we are at the 1013 level Jim had been waiting to see. Too bad he's not around to watch and give his impressions along with those of the other futures traders. As I watch the OEX 30-minute chart, I continue to see bearish divergence between the CCI and price, and between the RSI and price. Both CCI and RSI are printing lower highs while the OEX marches up to higher highs. CCI has been doing so since Friday, while the RSI lower high is just now showing up, as compared to this morning's RSI high. MACD continues moving up, however. MACD is usually slower to move than CCI and RSI, but I tend to trust the early signals given by RSI. I may not pay so much attention to RSI level, but I do to the patterns it's forming. While this may not be enough evidence for me to call a bearish Swing Trade play and while it may be signaling nothing more than a need to consolidate, it would keep me from considering a bullish play from these levels. I also note that the OEX has traded about 7 points above its 30-minute 100-pma, with Jim once commenting to me that the OEX rarely traded more than 8 points above or below that pma.

 
 
  James Brown   9/2/2003,  1:11:04 PM
The 1:00 PM ET update has been posted. Link

 
 
  James Brown   9/2/2003,  1:05:17 PM
Russell 2000 Index. - The RUT has just broken above the 500 level. The small cap index has traded this high since May 2002.

 
 
  Linda Piazza   9/2/2003,  12:32:38 PM
A breakout of the five-minute OEX pattern that was a possible bull flag (see my 12:06 post) resulted in that push toward a new OEX high of the day, so I guess we can consider the bull flag confirmed. While I wish I had my bullish OEX play back (sold before ISM), I'm glad I haven't been tempted to jump back into the market, because I most probably would have done so on the bearish side earlier today. The OEX now punches through the upper Bollinger bands on both the 30-minute and 60-minute charts, but since those BB's slant straight up, it's possible that the OEX will continue to climb them for a while. This is a danger signal but not a prediction of an imminent fall. If the OEX falls, former resistance at 504 should be the first support level on a decline.

 
 
  Linda Piazza   9/2/2003,  12:16:15 PM
The OEX just broke through its pattern of lower highs from today. Earlier today, however, it broke down below the pattern of higher lows it had been forming since the 10:15 five-minute candle. The breakdown didn't last. Will the upside break?

 
 
  James Brown   9/2/2003,  12:06:26 PM
SPW - Current call play, SPW, has broken out to a new multi-month high and crossed the $50 line. Conservative traders who have been waiting for just such a move might want to take notice.

 
 
  Linda Piazza   9/2/2003,  12:06:09 PM
The five-minute OEX pattern could be a bull flag forming after the rise from the 10:15 candle, but the 30-minute oscillators continue to hint at weakness, so I'm seeing conflicting signs. The 60-minute oscillators do not show the same pattern, however.

 
 
  James Brown   9/2/2003,  12:04:17 PM
OMC - Current call play, OMC, is quickly approaching the $80 level (again). This was our initial short-term target and some of our readers may want to consider taking profits now or as OMC gets closer to the $80 mark. We're obviously looking for a breakout above this resistance level but should it stall look for a bounce from the $77.50-78.00 area.

 
 
  James Brown   9/2/2003,  12:00:00 PM
ESRX - Believe it or not but current put play, ESRX, has rolled over under resistance at the $65.00 level. Aggressively bearish traders might see this as an entry point but given the higher low from last week we're still a bit cautious. A move under $64 would be more encouraging.

 
 
  Linda Piazza   9/2/2003,  11:43:11 AM
So far, there has not been an exuberant climb back to the previous OEX high of the day. The 30-minute CCI and RSI appear to be flattening as the OEX hesitates, with the CCI soon to be testing that rising trendline of higher lows again. MACD, slower to move, is only barely flattening. Volume patterns so far support the rise in the markets, however, with adv:dec ratios at 18:13 for the NYSE and 16:13 for the Nasdaq. Up volume is stronger than down volume, but not by an exuberant ratio here, either. New highs vastly outnumber new lows, however, with 489 new highs on the two exchanges and only 5 new lows. Those 30-minute indicators warn me that the markets, or at least the OEX, might not be as strong as those volume patterns or current prices indicate, however. The VIX is at 20.56, up 1.07 from Friday's close, but below its 20.87 high of the day.

 
 
  Linda Piazza   9/2/2003,  11:29:45 AM
The OEX tested and then remained above the 50% retracement of this morning's post-ISM plunge. As my previous post mentioned, that means that the rise was probably not some kind of bearish distribution pattern, as is being demonstrated by the current rise. Theory says that the day's high should now be tested. After testing its trendline of higher lows, the 30-minute CCI has turned back up again above that trendline. It's never a good idea to anticipate those trendline breaks, and I'm glad now that I wasn't tempted to jump into a bearish play based on a possible trendline break. Now we'll have to see how the OEX behaves on a retest of the day's high. Will we get a lower high or an equal high? Or will the OEX achieve a new day's high and try for 508 and then 512-513?

 
 
  James Brown   9/2/2003,  11:20:32 AM
Broadest Index Hitting New Highs. Looking at the Wilshire 5000 Total Market Index traders can see the broadest market barometer hitting new highs this morning before the recent dip. The 9800 level is current resistance and the TMW.X is already bouncing back from the 9750 intraday low hit about an hour ago. The early morning highs were 9821.

 
 
  James Brown   9/2/2003,  11:15:35 AM
Transports A three percent drop in crude futures, pushing the price of oil back under $30 a barrel, could be helping the Transports today. The Dow Jones Transportation average hit another new yearly high this morning before the late morning dip. The index is already bouncing back and is about to break the 2700 mark again.

 
 
  James Brown   9/2/2003,  11:06:51 AM
The 11:00 AM ET Intraday update is up. Link

 
 
  Linda Piazza   9/2/2003,  11:06:24 AM
Here's what I'm watching on the OEX five-minute chart: Link

 
 
  Linda Piazza   9/2/2003,  10:54:18 AM
Last week, I mentioned that 30-minute OEX CCI and MACD had both formed a series of higher lows. CCI appears to be either testing or perhaps even violating a trendline formed from those higher lows, although MACD has not yet done so. CCI also showed bearish divergence with the 30-minute price highs, with price making a higher high while CCI made a lower high. Because RSI trendline breaks can often lead the other indicators, I drew a trendline under recent RSI lows (August 26 to present). The 30-minute RSI has not yet violated that trendline.

 
 
  James Brown   9/2/2003,  10:48:32 AM
Sector Winners & Losers

-Winners-
XAL.X airline index +1.24%
GSO.X software index +0.62%
NWX.X networking index +0.43%
XBD.X broker/dealer index +0.43%

-Losers-
SOX.X semiconductor index -1.40%
OSX.X oil service index -1.39%
XNG.X natural gas index -0.47%

 
 
  Linda Piazza   9/2/2003,  10:48:04 AM
At least President Bush's lunch meeting with Alan Greenspan must be fairly good evidence that last week's rumors of Greenspan's death were premature.

 
 
  Linda Piazza   9/2/2003,  10:38:31 AM
If this is some sort of bearish distribution pattern after the quick plunge this morning, then we should see a downside OEX break before the OEX retraces more than 50% of the plunge. That means the pattern should break to the downside before it retraces higher than 504.30 or so. Right now, it's difficult to classify the five-minute OEX pattern, as it keeps changing shape, looking like a rising wedge one moment and then like a flag the next.

 
 
  Linda Piazza   9/2/2003,  10:34:22 AM
This morning, the Dow Jones Transportation Index reached a new relative high, trading at 2707.41, above the 8/22 intraday high of 2691.26. The TRAN last traded an intraday high above 2700 on 6/30/02. It's now in a congestion zone that spans from 2640 to about 2900, congestion that may make further increases more difficult. If the recovery is real, however, transports should benefit, perhaps by maintaining that 2640 support, so this might be an important index to watch as a measure of economic health.

 
 
  James Brown   9/2/2003,  10:23:37 AM
More need to know information - Toyota debuts the first "self-parking" car. The new hybrid gasoline-electric Prius sedan uses power steering and sensors to guide the car into parking spaces. (source: Reuters)

 
 
  Linda Piazza   9/2/2003,  10:23:24 AM
Swing Trade Signals
I mentioned this morning that I was testing Swing Trade signals based on a touch of envelopes surrounding a central average on the OEX, and was evaluating both the 30-minute and 60-minute charts. This morning, the OEX high did not approach the 30-minute 1.35% envelope with a 21-pma as the central average, and so would not have given a signal. The 60-minute chart did show a close approach, however, with that 60-minute chart showing the upper envelope at 506.87 and with today's high at 506.15.

 
 
  Linda Piazza   9/2/2003,  10:16:39 AM
That potential five-minute OEX bull flag certainly did not fulfill its bullish potential, as I was skeptical that it would. The OEX has now moved into this morning's gap, a bearish development. The bulls need to stop the drop right here, but that doesn't look likely.

 
 
  Mark Phillips   9/2/2003,  10:08:50 AM
Hmmm. James, was the important data you referred to the ISM or the relief about the lack of danger from QQ47? In the perverse sense of logic that seems to dominate our markets, the asteroid news may actually be BAD for the economy. Now we clearly won't have to ramp up research, technology and production to combat this new 'threat' and "POOF" there goes another potential growth catalyst. GRIN

 
 
  Linda Piazza   9/2/2003,  10:03:37 AM
Now we get to see if there's going to be a sell-the-event reaction, regardless of the good ISM number, or whether the markets will continue moving up. Currently, the OEX pullback takes the form of a possible bull flag on the five-minute chart, but that's not a proven bull flag until it breaks to the upside. I'm always wary of the initial reaction after these numbers are released.

 
 
  James Brown   9/2/2003,  10:03:30 AM
Hot Date - CNBC just reporting that President Bush will be having lunch with Alan Greenspan today. Wonder what they'll be talking about? *grin*

 
 
  James Brown   9/2/2003,  9:59:40 AM
You may be right, Mark. It could be dangerous chasing some of the software stocks but looking at stocks like SAP, which just gapped up above resistance, we could still see a good run before they all roll over. If MSFT decides to wake up and join the party it could push the GSO a lot higher.

 
 
  Linda Piazza   9/2/2003,  9:58:45 AM
The first 30-minute OEX candle has been a larger-than-normal 30-minute candle, and so we might now watch retracement levels based on that candle. Unless the OEX achieves a new high or a new day's low in the next couple of minutes, the 50% retracement lies at 505, a level currently being tested. Bulls want to see this level hold as support, while bears do not want the OEX to sustain this level.

 
 
  James Brown   9/2/2003,  9:57:21 AM
Terror from Outer Space. Good news, astronomers are downplaying fears that a recently discovered asteroid (named 2003 QQ47) has a very slim chance of hitting the earth in 2014. The floating space rock is traveling at 20 miles a second. At less than 1 mile across, should an impact with early occur it is estimated that it would detonate with the same energy as 350 Billion tonnes of TNT. (This needless information has been brought to you by the BBC.) Link

 
 
  James Brown   9/2/2003,  9:57:11 AM
One second, Mark. Important news is about to hit.

 
 
  Mark Phillips   9/2/2003,  9:55:58 AM
James, my favorite part about the Goldman upgrade this morning is this little tidbit, "the software sector has lagged most other tech subsectors and may have an opportunity to outperform in the seasonally strong Q4." Oh really??? As of Friday's close, the NASDAQ Comp was up 66% from the October lows, and the Software index (GSO.X) was up 77%.

I guess you can compare the GSO to the Semiconductor index (GSO.X), which is up well over 100% since the October low. I don't know about you, but I have a really hard time chasing the upside after bullish moves of this magnitude. I'll be the first to admit that the bulls may be right and the market is going up from here into the end of the year. But that flies in the face of everything I understand about profitable investing. I'm more than willing to wait for this transitory rise to pass and then jump aboard for the inevitable day of reckoning when investors wake up and realize just how stretched valuations have become.

 
 
  Linda Piazza   9/2/2003,  9:53:43 AM
Being a bit conservative, I typically exit ahead of important economic numbers and then await the reaction, jumping back in if I think a new entry warranted. That's what I've done this morning with my bullish OEX play, and all traders should be evaluating how comfortable they feel holding over the ISM announcement in a few minutes. Markets feel primed to test higher levels, but with the OEX in particular, 508 resistance lies just ahead.

 
 
  James Brown   9/2/2003,  9:46:57 AM
ORCL . Shares of ORCL, +1.94%, are reacting strongly to an upgrade from Thomas Weisel. TW upped their rating to "outperform" from "peer perform". We can't confirm but ORCL may be due to report earnings on September 15th. Estimates are for 8 cents a share.

 
 
  Linda Piazza   9/2/2003,  9:44:01 AM
I wouldn't be surprised to see the OEX jammed right underneath the 506-508 resistance zone as the ISM number is released--primed either to break through that resistance or to fall from that level. As Jim often warns, remember that the first reaction is not always the final reaction. Those holding bullish plays (myself included) must make the decision as to whether to hold over those ISM numbers or not.

 
 
  James Brown   9/2/2003,  9:41:14 AM
Goldman Sachs jumps on the software bandwagon with an upgrade of the software sector to "attractive". The GSO software index has been hitting new one-year highs for a few sessions now. As a matter of fact the GSO index has almost produced a non-stop climb from its early August lows yet its biggest component, MSFT, has barely budged.

 
 
  Linda Piazza   9/2/2003,  9:40:49 AM
So far, there's been no OEX retracement to watch, but we usually see the first real morning retracement between 9:50-10:10 ET, anyway, a pattern that will most likely be strongly affected by the expectations for and then actual reporting of the ISM number.

 
 
  James Brown   9/2/2003,  9:36:40 AM
Chips get a boost from BAC. For those of you who didn't hear, Bank of America (BAC) has started Micron (MU), Intel (INTC) and Advanced Micro Devices (AMD) all with a "buy" rating. Yet the SOX is still the only tech index in the red this morning.

 
 
  Linda Piazza   9/2/2003,  9:36:22 AM
The 50% retracement of the OEX first five-minute range lies at 504.46. Traditionally, we can use this 50% retracement as a benchmark in early trading, with bullish traders wanting the OEX to maintain levels above that 50% retracement, but it may be the gap level that's most important to watch. That gap spans the distance from Friday's close at 503.35 to today's open at 503.84. While market participants expect gaps to be tested, bullish traders will not want to see the OEX fall below that gap.

 
 
  James Brown   9/2/2003,  9:31:21 AM
Prudential giving hair cuts. Prudential (PRU) has cut its view on the Forest and Paper Products sector and the Steel Industry to "Market Perform".

 
 
  James Brown   9/2/2003,  9:27:29 AM
Not so hot for HOTT. JP Morgan (JPM) has cut its rating on shares of HOTT. You probably recognize it as Hot Topic, the clothing store you cringe at when your kids walk into it. Shares of HOTT have almost doubled from their August lows near $18.00 so it may not be a surprise that JPM cut HOTT from "overweight" to "neutral" on valuation issues. Please note that HOTT split 3-for-2 prior to the opening bell today, so it should open near the $23.75 mark.

 
 
  James Brown   9/2/2003,  9:22:20 AM
Upgrade for CBRL - Raymond James has raised their rating on shares of CBRL, the restaurant Cracker Barrel, to a "strong buy". The stock has been slowly consolidating higher under resistance at $35.00-35.65. Currently, shares are up in pre-market trading, jumping above the $35 mark to $35.40. A move above its simple 50-dma might be a profitable trigger point for a run towards the $40 level.

 
 
  Linda Piazza   9/2/2003,  9:11:00 AM
Swing Trade Signals
For several weeks, I've been evaluating a method of entries and exits that's similar to Jim's Momentum Trade model for the futures, but I need to work out a few shortcomings in a real-time trading environment. The low-volume trading over the last couple of weeks hasn't afforded much opportunity.

This anticipated method and its (relatively few) shortcomings will appear familiar to those accustomed to watching Bollinger bands, but I'll probably use envelopes rather than Bollinger bands. The envelopes will be positioned a percentage distance away from a central moving average, probably the 21-pma on either the 30-minute or 60-minute charts. I'm leaning toward the 30-minute. Here's an example of the types of entries we'll seek: Link Here are examples of the shortcomings, familiar to anyone who trades based on Bollinger bands: Link

While it's possible for futures traders to enter repeatedly with tight stops, OEX spreads make that a less favorable choice for OEX options traders. We need to eliminate as many of those doomed-to-be-stopped trades as we can, although no amount of technical analysis is going to eliminate them all. Some tactics I'm experimenting with include factoring in the slope of the MA (not taking bearish entries if the MA slopes strongly upward, for example) and using oscillators such as ADX, CCI, and MACD. The parabolic SAR Jim demonstrated in his weekend article looks appealing, too, but Q-charts doesn't offer this feature. I'm also trying to account for known S/R points, but I want to keep this as simple as possible so that we all understand our entries and exits. If it weren't for those annoying (and account-depleting) shortcomings I've listed above, using the envelopes alone would be my choice, keeping the method really simple. Depending on the way trading unfolds, I may mothball the Swing Trades while I experiment with my money and not yours.

 
 
  James Brown   9/2/2003,  8:55:03 AM
The 09:00 AM ET - Pre-Market Update has been posted. Link

 
 
  Linda Piazza   9/2/2003,  6:42:07 AM
Good morning. While our markets were closed for a holiday yesterday, other markets remained open. Were they ever open! The Nikkei added 326.63 points or 3.16% Monday, closing at 10,670.18. With the exception of Hong Kong's Hang Seng, most other Asian markets closed up, too, although their percentage gains were not as large. Exporters and computer-related shares gained, with exporters gaining despite a firming of the yen against the dollar. Some worried about the impact of a higher yen on those exporters as Snow arrived in Japan to meet with Japanese finance officials, as it's theorized that Snow may ask those officials to stop intervening to keep the yen low.

Tech stocks also gained in Europe on Monday after Goldman Sachs raised its rating on the European software and technology services sector to attractive from neutral. M&A activity also drove the indices higher. France Telecom announced its intention to acquire the portion of mobile operator Orange that it doesn't already own, and other M&A's are reportedly being contemplated in Europe. The FTSE 100 closed up 1.04%, the CAC 40 closed up 1.42%, and the DAX gained a heftier 2.49%.

Tuesday's trading proved much more volatile, both on the Nikkei and in the European markets. The Nikkei's intraday chart looks like a child's scribble, with the Nikkei declining dropping immediately after opening, but then soon zooming up to its day's high near 10,750, then dropping as soon as the afternoon session started, and then climbing again toward 10,750, and then declining into the close. The Nikkei closed up 19.90 points or 0.19%, at 10,690.08. The last time the Nikkei reached an intraday high above 10,700 was July 10, 2002 when the Nikkei closed at 10,791.24, but traded as high as 10, 975.70 intraday.

After talking to Japanese financial officials, Snow commented that he was pleased to see the work done by the banks in eliminating bad loans. The banking and financial sectors climbed. Bonds fell precipitously in early trading as traders expected less demand at the auction of 10-year government debt, but the auction was successful and bonds trimmed their losses afterwards. Many cyclicals gained, but techs were mixed.

Elsewhere in Asia, trading was mixed. The Taiwan Weighted gained 0.42%, and South Korea's Kospi gained 0.31%. Hong Kong's Hang Seng gained 0.34%. However, Singapore's Straits Times lost 0.58%, and China's Shanghai Composite lost 0.23%.

The FTSE 100 has experienced volatile trading today, too, with the CAC 40 and DAX also having traded both sides of the flatline, but not in as volatile a manner as the FTSE. European metals and mining companies rose, with the hope being that a rising economy would boost the need for metals used in manufacturing. Vivendi rose on a Wall Street Journal report that the company might merge its entertainment assets with GE's NBC. As of this writing, the FTSE 100 trades up 4.30 points or 0.10%, at 4208.70. The CAC 40 trades up 6.93 points or 0.21%, at 3365.45; and the DAX trades up 2.03 points or 0.06%, at 3573.25.

 
 
  Jim Brown   9/1/2003,  7:26:42 PM
Market Monitor Upgrade - Several readers have reported strange formats in the Market Monitor such as two date/time entries on each post. If you are seeing two date/time entries then you are not on the current version of the monitor. The current version is 3.07.23.03. Click "help", "about" to determine your version.

Please go here and download the current version.

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  Jeff Bailey   9/1/2003,  7:20:31 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.

 
 
  OI Technical Staff   9/1/2003,  7:20:17 PM
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