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  Linda Piazza   9/8/2003,  3:49:26 PM
The highest OEX close last week was 516.18, and the highest SPX close last week 1027.97. These were all last Thursday's closing highs.

  Linda Piazza   9/8/2003,  3:46:31 PM
Currently, the Dow is testing last week's closing high of 9588.

  Linda Piazza   9/8/2003,  3:34:03 PM
If the OEX ends anywhere near its current level, today's trading will have erased the bearish implications of the reversal pattern that was completed with Friday's bearish red candle. As we've seen so often since March, sometimes the only declines are the ones that produce the reversal signal. So far, the daily MACD appears to be turning up from just above zero and RSI cups up again after beginning to head down. The last 30 minutes could undo all of that, but today's trading pattern has proven surprising in light of that reversal signal produced just under resistance. Now the OEX appears to be consolidating at that resistance, perhaps massing strength for another assault on higher levels. However, we've seen today that expectations can be undone in a single day, and today's bullish candle can be followed by a bearish day.

  Linda Piazza   9/8/2003,  3:24:42 PM
OEX 516.80-517 continues to hold as support. So far.

  Linda Piazza   9/8/2003,  3:23:00 PM
The DAX closed at 3641.53, up 33.82 points or 0.94%. The index had oscillated around 3640 for most of the day, sometimes trading above it and sometimes below.

  Linda Piazza   9/8/2003,  3:16:19 PM
The OEX wasn't able to hold onto 518, and now is deciding whether 516.80-517 is going to be support. So far, it's holding, but there are still more than 40 minutes to go.

  Linda Piazza   9/8/2003,  3:04:43 PM
I've been watching OEX 30-minute (RSI, MACD, CCI) indicators closely all day today. Without the OEX changing materially during the middle of the day, those indicators have given slightly different pictures of likely action at various times. Such is range-bound trading.

As I was typing, the OEX moved to the bottom of the channel depicted in my 13:12 post, and also to the 516.80-517 zone we've been watching. It's bouncing as I type, but let's see if that bounce holds. It's not much of a bounce as yet.

  Mark Phillips   9/8/2003,  2:54:59 PM
RYL $71.99 (+1.34) As suspected, last Friday's dip in the Housing sector was a gift of an entry point, with the $DJUSHB rebounding roughly 1% today and our RYL play coming right back to the $72 resistance level. Traders looking to enter on strength will want to watch for a breakout over $72.25 (just above last Thursday's $72.23 intraday high) as a trigger for new long positions. Clearly our preference for bullish entries is to take advantage of the brief and rare intraday dips, but we've got to take what the market offers.

  Linda Piazza   9/8/2003,  2:52:06 PM
The bull flag scenario has probably been refuted on the OEX, because the OEX retraced more than 50% of the rise that preceded the flag. That doesn't mean that the OEX can't rise into the close, but only that it didn't quite fit the parameters for a bull flag. Lately, though, we've seen a lot of breakdowns or breakouts that quickly get reversed, so it's difficult to know whether we should even trust a breakdown or breakout when we see one.

It's also time for the Dow to turn around and head back up if it's going to keep that possible inverse H&S (five-minute chart) as a viable option.

  Mark Phillips   9/8/2003,  2:51:03 PM
PGR $73.80 (+1.04) Steadily advancing higher again today, PGR seems to have neutralized another resistance level ($73.50) on its march back to the June/July highs. With price now nearing $74 and the 10-dma now rising to $71.39, we need to manage open positions to hopefully maximize gains without risking too much on the downside. With roughly $2 of upside to the top end of our $75-76 profit target zone, we shouldn't be willing to risk much more than that to our stop from current level. Teh 10-dma seems to be a good support point to use, so our stop now rises to $71.25.

  James Brown   9/8/2003,  2:41:34 PM
The afternoon intraday update is posted. Link

  Linda Piazza   9/8/2003,  2:32:51 PM
The Dow five-minute chart features a possible miniature inverse H&S formation, but the Dow would have to find support near 9575-9580 for this formation to remain valid. The neckline slopes upward, and bet you can't guess where it currently crosses: 9600. Inverse H&S formations are usually bottoming formations, but they can occur as consolidation formations according to some technicians.

  Linda Piazza   9/8/2003,  2:16:31 PM
Except for the bad tick we just saw on the OEX, the current OEX five-minute pattern looks a bit like a bull flag formed after the rise that began around 1:00 ET. If so, it should not retrace more than 50% of that rise. The 50% level lies at about 517.50. That level is currently being tested. However, a drop as far as 516.80 would still keep the OEX within the regression channel in my 13:12 post.

  Jim Brown   9/8/2003,  2:13:23 PM
IBM - CSFB raised estimates on IBM this morning and it is up +2.58 for the day. Evidently the analyst did not understand the impact of the stronger dollar on last quarters earnings. 64% of their $4 billion in revenue gains were from currency translation. (Stronger dollar) The weaker dollar this quarter could easily impact the Q3 earnings. Just a different view on the tech giant which has been a favorite earnings warning target for the bears for the last three years.

  Linda Piazza   9/8/2003,  2:06:25 PM
As a conversation with a fellow trader reminds me to mention, it's important for those of us watching the OEX to be aware of how trading on the other indices proceeds, too. The OEX probably cannot break significantly higher until and unless the Dow breaks above 9600.

  Linda Piazza   9/8/2003,  2:00:36 PM
The OEX has now spent most of the day challenging that 516.80-517 S/R level that was so important through 1998, and has at times shown up in other trading. I wouldn't consider the break through this resistance confirmed as yet (for me, that takes more than a single afternoon trading through a level), but if the bullish tenor continues through the afternoon, I wouldn't be surprised to see 521-522 tested, either. In the past, there have been a number of periods when daily opens, closes, highs, or lows hit this zone.

  James Brown   9/8/2003,  1:57:33 PM
Royal Dutch - RD - Shares of RD are seeing a nice push higher, up +1.6% today. The move is a breakout above both the $46.25 resistance level as well as what appears to be the neckline of a reverse head-and-shoulders pattern. Interested bulls might want to target the June highs near $50.00. Be careful, RD is an ADR, so it constantly gaps up and down at the open of the U.S. markets to better reflect changes in overseas trading.

  Linda Piazza   9/8/2003,  1:51:02 PM
The OEX maintained 517 and now has pushed above 518. It's now at the top of the formation shown in my 13:12 post, with the shadow actually touching the top band and then retreating slightly to the current level. Do you ever wonder if those computers used by institutions are snapping Q-charts regression channels, too?

  Linda Piazza   9/8/2003,  1:38:23 PM
A new daily OEX high--by $0.02. What happens next? We'll have to wait to see. That's what this time period is all about, but so far, there's been a retreat from the daily high.

  James Brown   9/8/2003,  1:37:08 PM
The next Intraday udpate is posted. Link

  Linda Piazza   9/8/2003,  1:35:53 PM
Is this the 1:35-1:55 ET push coming a few minutes early? If so, remember that it's the outcome of the test of resistance (or support) that helps us determine likely afternoon direction. For the OEX, for example, bullish traders would want to see the OEX move above the previous day's high and sustain that level on a retest. A brief pop above that level and then a zoom down wouldn't be a bullish development. Neither would a failure to achieve a new day's high on this upward cycle of the five-minute 21(3)3 stochastics. So far, the OEX came within a penny of previous 517.97 high before retreating slightly to the current level.

  James Brown   9/8/2003,  1:33:01 PM
Kohls Corp - KSS - It looks like the daily chart on KSS is suffering from a back tick with a suspect bounce just above its simple 50-dma near $59.00. Looking at the intraday chart I don't see it trading below $60. The volume for KSS has been falling off as shares pull back from its recent high. Very aggressive bulls could target entries on a bounce from $60 but it would be nice to see some confirmation.

  Linda Piazza   9/8/2003,  1:12:54 PM
Here's a formation I've been watching on the OEX five-minute chart. Link On a play of Jonathan's "funniest statement" last week, the OEX has to get above 517 and stay there before it can move above 518.

  James Brown   9/8/2003,  1:09:23 PM
Weyerhauser - WY - Shares of this paper/lumber company have continued their uphill climb and today's +1.64% gain is a nice follow through from Friday's intraday bounce off the 10-dma. Shares do look very overbought but given this market's momentum I wouldn't be surprised to see it reach its next major resistance level between $64-65.

  Linda Piazza   9/8/2003,  1:07:55 PM
Although they had been easing off their highs prior to the open of the U.S. markets, the FTSE 100 and CAC 40 turned around and climbed higher, closing near their new day's highs. The FTSE 100 closed up 34.90 points or 0.82%, at 4292.10; and the CAC 40 closed up 16.97 point or 0.50%, at 3409.72. The DAX currently trades up 32.28 points or 0.90%, at 3640.09.

  James Brown   9/8/2003,  12:50:09 PM
Market Internals
NYSE: advancers beating decliners 19 to 8.
NASDAQ: advancers beating decliners almost 20 to 10.

Up volume 619M to 161M down volume on the NYSE.
Up volume 847M to 160M down volume on the NASDAQ.

  James Brown   9/8/2003,  12:40:54 PM
Jim, sounds like meat on a stick.

  Linda Piazza   9/8/2003,  12:32:18 PM
As has happened so many times lately, the OEX 30-minute pattern is now beginning to look a little extended to be a measured accumulation pattern. Still, the OEX oscillates around the 516.80-517 level that was so important in 1998, so it's uncertain whether the OEX is just establishing a new base as it challenges this level, or whether this is a stall just at important resistance. Volume patterns remain bullish. The OEX remains above its 30-minute and 60-minute 21-pma's. However, that 60-minute RSI continues to roll down beneath its trendline of lower highs, and some of those 30-minute oscillators now look more bearish than they did earlier.

  James Brown   9/8/2003,  12:22:33 PM
Biotech Booming the BTK.X is extending its gains, up 2.9% today. The largest component in the index, AMGN, is up 1.7% and is dangerously close to breaking out above the descending trend of lower highs. Bullish traders may want to keep it on their watch list for a potential trade. AMGN's MACD has produced a new buy signal this morning.

  James Brown   9/8/2003,  12:19:33 PM
Brokerage stocks - Merrill Lynch offered some positive comments for Goldman Sachs and Lehman Brothers this morning but both equities are under performing the markets today and the XBD broker dealer index is up less than 1%.

  James Brown   9/8/2003,  12:14:39 PM
Russell 2000 - Money is still flowing into small caps. The RUT is up five weeks in a row and quickly approaching its old highs near 520-523 from April 2002. The entire index is up nearly 50% from its March 2003 lows.

  Mark Phillips   9/8/2003,  12:11:19 PM
Is it live or is it Memorex? That's the question I keep asking myself about this rally, as it continues to feel like late 1999 to me. My perceptions aside though, the bulls are clearly in charge.

SPW $50.79 (+1.45) Blasting out of the starting gate this morning, shares of SPW have taken out their recent resistance near $50 and are currently trading a new 10-month high. From the looks of the price action, it looks like a serious run at our initial $53 target is underway. The big "BUT" is the volume picture though, as volume is pretty disappointing on this breakout. 2.5 hours into the trading day, SPW has only traded about 260K shares vs. the ADV of 840K. Either volume will pick up towards the end of the day or we'll have to be skeptical of the longevity of this move. Remember, volume is a weapon of the bulls -- they need it to sustain the upward momentum. With today's breakout, is should be safe to raise stops to just below the 20-dma ($48.65), so we'll adjust our coverage stop up to $48.50 tonight

  James Brown   9/8/2003,  12:03:30 PM
Wilshire 5000 Total Market index - TMW.X +78 The broadest of market indices, the TMW is just 14 points away from crossing the 10,000 mark. The last few sessions have seen the index trade sideways between 9900 and 10K.

  James Brown   9/8/2003,  11:59:58 AM
Diamond Fields (DFI.TO) is reporting that they've discovered a 23-carat gemstone in Madagascar (not market moving but pretty amazing nonetheless)

  Linda Piazza   9/8/2003,  11:59:27 AM
Depending on the time frame being used and the indicator studied, you can get a different view of the OEX. Earlier, I showed some bullish characteristics on the OEX 30-minute chart. However, the 60-minute RSI (14) has been showing bearish divergence with the price, with that divergence continuing today as the RSI turns down under that trendline as OEX makes new highs. Sometimes I find that when market participants are confused, buyers battling sellers, some market indicators are confused, too, not moving in synchronization. That sometimes indicates choppy trading conditions. So far today, this doesn't feel like chop setting up: it feels like a prelude, either to another push high or to a decline.

  Linda Piazza   9/8/2003,  11:44:52 AM
Here are some things I noticed this morning on the OEX thirty-minute chart: Link

  Linda Piazza   9/8/2003,  11:30:06 AM
The OEX also broke to a new high, barely, but that new high certainly keeps the accumulation-pattern thesis alive. It also keeps alive the possibility that the OEX is recharging its batteries before making an assault at 521. Of course, because the OEX's new high was only slightly higher than the previous high, the sets up the possibility for a double-top on the five-minute chart, too. So far, that doesn't appear to be what's happening and volume patterns continue to support the bullish scenario. The OEX needs to build on its gains, however.

  James Brown   9/8/2003,  11:21:18 AM
Advancing stocks are beating declining stocks 18 to 7 on the NYSE and 20 to 8 on the NASDAQ.

  James Brown   9/8/2003,  11:20:00 AM
Up volume is coming in 6-to-1 over down volume on the NASDQ and 3.5-to-1 on the NYSE.

  James Brown   9/8/2003,  11:17:38 AM
The 11:00 AM ET update is posted. Link

  Linda Piazza   9/8/2003,  11:09:33 AM
So far, the accumulation-pattern thesis is winning over the potential-reversal-signal one on the OEX. The previous 30-minute candle did not retrace more than 50% of the day's first thirty-minute candle. Now we need to see a move over the previous day's high to confirm the accumulation pattern. We've seen a few of these potential accumulation patterns set up lately, and then those candles just get strung out in a long horizontal row over days without much movement occurring after the first big push.

  Linda Piazza   9/8/2003,  10:56:38 AM
A 50% retracement of the first 30-minute OEX candle lies just above 515. A sustained move below 515 during the last portion of the current 30-minute period would result in the day's trading having shown first a larger-than-normal white candle, then a doji printed at the high of the day, and then a bearish red candle that retraced more than 50% of the white candle. That wouldn't be good for those of us with bullish positions in our portfolios today. However, just below 515 lies the 30-minute 21-pma, at 514.87, so I wouldn't draw too many conclusions without a plunge below that level, too. Unless all those conditions are met, the current pattern could be nothing more than a measured accumulation pattern at the top of the day's range before the OEX shoots up again.

  James Brown   9/8/2003,  10:48:18 AM
Krispy Kreme Doughnut - KKD - As much as a doughnut sounds good this morning, Investors are selling shares of KKD despite the market strength. KKD's current loss of 1.6% for the session has broken support and traded through our trigger point of $41.69.

  James Brown   9/8/2003,  10:46:00 AM
Angiotech Pharma - ANPI - new OI put play, ANPI, has traded through our trigger point of $37.69 as the weakness continues.

  James Brown   9/8/2003,  10:43:48 AM
SPX Corp - SPW - Current OI play, SPW, is one of our best performers this morning up +2.65%. The move back over the $50 level looks like a good spot to evaluate new entries.

  James Brown   9/8/2003,  10:41:16 AM
UTX Current OI call play, UTX, is bouncing more than 2% this morning. We previously outlined that a rebound from the $78 level might be a decent entry point. We're seeing that bounce now. Some traders may want to wait and see UTX make a new high above $80.75.

  James Brown   9/8/2003,  10:37:56 AM
ERTS - We're also seeing a bounce in shares of ERTS, another current OI call play. The move back above $90 looks like a potential entry point.

  James Brown   9/8/2003,  10:36:50 AM
CCMP - Current OI call play, Cabot MicroElectronics, is bouncing again. The trend of higher lows is encouraging and a breakout above $68 might give some momentum bulls more confidence to initiate new positions.

  Mark Phillips   9/8/2003,  10:36:27 AM
New Lows on the VIX at 19.07. Of course with the pending changes described in Jim's editors plays over the weekend, I'm not sure how much longer the VIX readings will be meaningful, at least on a historical comparison basis. Time will tell, but for now, it's clear that complacency still reigns!

  Linda Piazza   9/8/2003,  10:31:06 AM
The current OEX 30-minute candle looks as if it's going to be a doji printed at resistance. This can be a potential reversal signal, although lately we've seen a lot of these kinds of candles being followed by either another candle or two indicative of indecision before the index moves up again or else a bullish candle. We need to see a red candle that drops from this level before we see that potential reversal signal confirmed. With volume patterns this strong, it seems difficult to believe that a reversal will come right now, but we still should be aware of the dangers.

  Linda Piazza   9/8/2003,  10:27:00 AM
As of a few minutes ago, the volume patterns continued to be bullish, with total volume at 170 million for the NYSE and 357 million for the Nasdaq. Adv:dec ratios stood at 21:7 for the NYSE and 19:8 for the Nasdaq. Up volume was about 5 times down volume on the NYSE and almost 7 times down volume on the Nasdaq. There were only 5 new lows on the two exchanges combined.

  Linda Piazza   9/8/2003,  10:23:14 AM
This current OEX five-minute pattern looks a lot like a "p" accumulation pattern at the top of a quick rise. The most likely outcome is an upside breakout, but we have to wait for that breakout (above the current day's high) to be sure. Even then, in this strange market of late, I'm wary of playing breakouts, especially with the 521 resistance so close overhead. OEX 521 is the location of the 1.35% outer envelope we've been watching on the OEX 30-minute chart, and represents historical resistance, too. (The OEX may be breaking out of the "p" pattern as I type.)

  James Brown   9/8/2003,  10:15:15 AM
More chip upgrades - First Albany following in the footsteps of major analysts last week with a few chip stock upgrades of its own today. Upping Altera (ALTR) and Xilinx (XLNX) to "buy".

  Linda Piazza   9/8/2003,  10:09:14 AM
The OEX popped over last week's resistance but is now below it again. Was that a fake, a stop-running move of the kind we've seen far too often these days? It may be too soon to tell. Earliest volume patterns were bullish this morning. The 30-minute and 60-minute oscillators appeared bullish, too, although 30-minute RSI now has a small downward hinge. The five-minute chart shows a big white candle matched by a big red candle--a potential reversal signal--but there's been no follow-through on that potential reversal.

  Linda Piazza   9/8/2003,  9:59:09 AM
The OEX again challenges the resistance from late last week, near 516.80-517. This S/R zone dates all the way back to 1998, when it was either support or resistance for most of a year. A firm upside break of this level might send the OEX toward 521, where several levels of resistance meet, perhaps not a big enough distance for us to comfortably squeeze in a long OEX play. A break over OEX 421 might see next strong resistance between 545-550.

  James Brown   9/8/2003,  9:47:36 AM
Halliburton - HAL - A federal court in Dallas, TX threw out a lawsuit against the oil services company where the plaintiffs had alleged HAL's revenues on certain projects were "overstated and misleading" (Reuters).

HAL has received a lot of press the last few years since VP Cheney used to run the company. Shares are up +1.32% and near 52-week highs. A breakout above $25 would look good for the bulls.

  James Brown   9/8/2003,  9:42:08 AM
Crossing the wires this morning: an ING survey "reveals" that Baby-Boomers are not prepared for retirement.

  Linda Piazza   9/8/2003,  9:40:51 AM
So far, here's what's happened on the OEX: It climbed to the 30-minute 21-pma and retraced from there. It retraced a nearly exact 38.2% of the first five-minute range and then began bouncing from there. It has not yet been able to get over the high of the day, so it's still in question whether that minimal retracement was all the retracement we're going to get, although it's climbing again as I type.

  James Brown   9/8/2003,  9:40:37 AM
Barr Labs - BRL - Adding more strength to the DRUG sector this morning is a First Albany upgrade for BRL. They are raising their rating from "buy" to "strong buy" and upping their price target to $88 from $73.

  James Brown   9/8/2003,  9:38:13 AM
DJ winners - Following IBM's lead and pushing the Industrials higher is Merck (MRK), United Technologies (UTX) and Johnson and Johnson (JNJ). Only 7 Dow components are trading in the red. Leading the losers is Wal-Mart, down 50 cents.

  James Brown   9/8/2003,  9:35:38 AM
Big Blue Bounces - Shares of IBM are currently up 2% on the CSFB upgrade but they remain under resistance at $89-90. A bullish breakout could have it filling the April gap back towards $97.00.

  Linda Piazza   9/8/2003,  9:35:36 AM
The 50% retracement of the first five-minute OEX candle lies at 513.85. This candle did span a larger-than-normal distance, and so it might be useful to watch this retracement level as a benchmark of early strength or weakness.

  James Brown   9/8/2003,  9:33:18 AM
Teva Pharmaceutical - TEVA - Drug company TEVA, currently trading near all-time highs, just announced its plans to submit an FDA application for its Rasagiline drug as a treatment for Parkinson's disease.

  Linda Piazza   9/8/2003,  9:33:11 AM
The OEX ended last Friday's trading in a presumed bear flag pattern on the OEX. That presumed pattern was broken to the upside this morning, with the OEX trading all the way up to (and a little beyond) the 30-minute 21-pma at 514.61.

  James Brown   9/8/2003,  9:30:10 AM
Bank of America - BAC - BAC says it will compensate any mutual fund shareholders to be found harmed by the recent fraud uncovered by Spitzer.

  James Brown   9/8/2003,  9:26:49 AM
Retail Downgrades - Potentially putting pressure on the Retail sector this morning is a downgrade for TGT & WMT. Sanford Bernstein is cutting Target and Wal-Mart to "market perform".

  James Brown   9/8/2003,  9:21:15 AM
The 09:00 AM ET update is posted Link

  Linda Piazza   9/8/2003,  6:53:46 AM
Good morning. Late Friday, the International Monetary Fund (IMF) revised its growth estimates for the Japanese economy from 0.8% to 2%, but this morning investors had to balance that information with Friday's trading pattern on Wall Street. Proving to be as volatile in early trading as it has been for the last couple of weeks, the Nikkei traded in a 160-point range within two hours of its opening, hitting first the low of the day and then climbing to the high of the day. The Nikkei closed up 32.99 points or 0.31%, at 10,683.76, with this level being well off its low but also about 40 points beneath the high of the day. The weakening yen helped produce that rise off the low as it sent exporters higher, but some auto companies did not gain with other exporters. An explosion last week at Nippon Steel's Nagoya Ironworks prompted questions about possible production slowdowns. Some also believe that optimism ahead of tomorrow's July machinery orders number might be balanced by caution ahead of the September 20 Liberal Democratic Party presidential election. A consumer confidence number was also due today, but news services were not reporting that number this morning.

In Taiwan, Taiwan Semiconductors predicted that Q3 shipments will rise 10% over the previous quarter's shipments, and the company doesn't expect to see Q4 shipments fall below Q3's. The Taiwan Weighted rose 1.56%. Other markets were mixed, however. Singapore's Straits Times rose 0.27%, but South Korea's Kospi lost 0.17%. Both Hong Kong's Hang Seng and China's Shanghai Composite declined, by 0.05% and 0.41%, respectively.

Most European bourses currently trade up, just off their highs of the day as they react to good news from several sectors. Today, U.K. government figures showed July factory output rising 0.5%, much higher than the expected 0.2%. UBS upgraded Deutsche Bank, sending other financials higher, too. STMicroelectronic's (STM) CEO also said that although he is not expecting growth to be explosive, he does expect technology and telecom companies to begin investment spending again in 2004.

As of this writing, the FTSE 100 trades up 22.60 points or 0.53%, at 4279.80. The CAC 40 trades up 11.49 points or 0.34%, at 3404.24. The DAX has gained 27.67 points or 0.77%, to trade at 3635.38.

  OI Technical Staff   9/5/2003,  9:26:45 PM
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