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  Jeff Bailey   9/10/200,  4:21:57 PM
Adobe Systems (ADBE) $36.39 -4.31% .... higher at $37.92 after reporting quarterly EPS of $0.28 (ex charges of $0.01 per share) which was 3 cents better than forecast. Revenues rose 12% year-over-year to $319.1 million, well above consensus of $311.7.

For Q4, ADBE said it sees EPS between $0.30-$0.32, which would be above consensus of $0.28. ADBE also sees revenues between $330-$350 million, where consensus currently is at lower end of range at $332 million.

Targets for gross margins in Q4 is approximately 93%

 
 
  Jeff Bailey   9/10/200,  4:13:33 PM
Is SBC pulling out? .... Pacific Growth says it is receiving information that SBC Communications (NYSE:SBC) $23.30 +1.65% may be pulling out of the joint RFP (request for proposal) for fiber to home deployments (FTTH). Earlier this year, SBC, Verizon (NYSE:VZ) $35.76 +1.73% and Bell South (NYSE:BLS) $25.46 +0.39% joined together to issue a RFP to try and reduce overall purchasing costs for the next generation of equipment. Pacific Crest notes that Alcatel (NYSE:ALA) $11.55 -7.82% Link and Advanced Fiber Comm. (NASDAQ:AFCI) $21.97 -7.8% Link rallied strong from their lows due to the possibility of winning all or part of these contracts, which some projected as totaling multi-billions of dollars. Pacific Crest feels there may be significant downside to ALA and AFCI if VZ and BLS were to follow SBC's lead in withdrawal of their RFPs.

 
 
  Linda Piazza   9/10/200,  3:56:55 PM
The OEX has fallen beneath its 10-dma, and looks to close there for the first time since August 27. It also looks to close on or near the low of the day with a bearish candle. So far, I don't view this action as particularly bearish, however, as it is natural and expected that the OEX come down to retest the broken resistance from the former bull flag. That test is needed to establish that former resistance as support now, so that bulls feel comfortable driving the index higher. If that former resistance fails to hold as support, however, the case grows more bearish. That resistance lies between 504-506, depending on how the regression channel was drawn. Now we get to see whether we should continue buying dips or start selling rallies.

 
 
  Jeff Bailey   9/10/200,  3:54:42 PM
Merck (MRK) $53.67 +1.66% Link ... Jeff,

In looking up the options chain for MRK I find two options listing for almost every strike price. Each of them are priced very differently. For example there is MKMIK (Sept 55C @ $2.25) and MRKIK (Sept 55c @ .45)Can you explain?

Yes, I believe the MRKIK Sep 55c for $0.45 are for the Medco (NYSE:MHS) Link $26.01 +1.01% unit that was spun off a couple of weeks ago. MRK stockholders got partial shares in the spinoff and larger lots of MRK option holders (call or put) received additional options.

 
 
  Linda Piazza   9/10/200,  3:34:20 PM
Is this another bear flag on the OEX? If so, it should break down at or before reaching 508.72, the 50% retracement of the plunge that immediately preceded it. Bearish traders should be careful here, as the OEX is just above that 506-508 support zone.

 
 
  Linda Piazza   9/10/200,  3:22:44 PM
I wonder if the Dow could hit that 9320 double-top target today? I doubt it, but anything is possible if enough downside momentum gets going. Instead of re-entering with a bearish OEX trade today, I reentered with a bearish Dow trade since it seemed to be the weaker index today. I'm gaining more confidence in the market's following of the signals this week as I trade with my own money, and will soon be ready to test it with real-life Swing Trade entries, too.

 
 
  Linda Piazza   9/10/200,  3:19:02 PM
Well, I guess the OEX broke down out of that bear flag for sure! Now it needs to hit a new low of the day to keep the momentum going.

 
 
  Linda Piazza   9/10/200,  3:17:08 PM
This looks like a bear flag rise on the OEX, but if so, it should break down near 509.40, the 50% retracement of the plunge that immediately preceded it.

 
 
  Linda Piazza   9/10/200,  3:08:46 PM
With indicators plastered to the oversold levels across many intraday time frames and across many indices, traders need to see the downside momentum accelerate into the close, or else we might be looking at a possible short-covering bounce at the end of the day.

 
 
  Jeff Bailey   9/10/200,  3:04:09 PM
Treasuries close strong with 10-year yield ($TNX.X) falling 10.2 basis points to 4.269%.

Treasury action looks more defensive considering new supply today. Will benchmark the INDU - 9,430, SPX= 1,102.69, OEX = 509.67, NDX = 1,340, QQQ = $33.34 -2.25% and BIX.X = 299.49 at bond market's close.

 
 
  Linda Piazza   9/10/200,  2:35:29 PM
We can probably expect that 9460 confirmation level from the Dow double top to be retested.

 
 
  Jeff Bailey   9/10/200,  2:34:21 PM
Plot thickens a bit as S&P Bank Index (BIX.X) 299.68 -2.09% making way below its WEEKLY S2 of 301.59. This action is viewed negative at this point, especially with Treasury YIELDS falling, seeing a slight rebound in mortgage activity. Today's last hour of trade may be very telling after bond market closes. Home Builders (DJUSHB) 429.22 -4.87% getting drilled.

 
 
  Linda Piazza   9/10/200,  2:32:42 PM
On the 60-minute Dow chart, the Dow has now confirmed a double-top pattern. The confirmation level was about 9460. The minimum downside target should be about 9320. Lately, downside targets have not been met, however.

 
 
  Linda Piazza   9/10/200,  2:29:48 PM
The OEX appears to be trading in a measured distribution pattern, a "b" distribution pattern after the quick fall of a few minutes ago, forming this pattern just above the supposed support of the 30-minute 130-pma. This should break to the downside, but that's not a given. (Note: Broke to the downside as I was typing.)

 
 
  Jeff Bailey   9/10/200,  2:24:50 PM
S&P futures (sp03u) ... here's an updated chart of my futures chart where I've been using a "fitted" retracement for an IF, THEN, ELSE or SHOULD/SHOULD NOT type of level trading. While gone on vacation, futures broke to new high, thus needing to fit a new retracement higher. Link

This is simply an add on to a July 6th Ask the Analyst column at this Link

 
 
  Linda Piazza   9/10/200,  2:20:57 PM
Reader Question: I have been out of pocket the last couple of days, and I was just wondering if you had posted any OEX trade recommendations in the M.M. this week?

Response: No, I've been trying to evaluate a system for trading from one side of an envelope band (similar to Bollinger bands) to the other, or from the central average out to the envelope band. I stated early this week that although I'd been doing a lot of unofficial backtesting (I don't have TradeStation and so can't back test with as much efficiency as Jane does), I wanted to try it with real-life trading and would be testing the method with my money and not that of the subscribers. It's a good thing, too, because this week has unexpectedly continued some of the same conditions we saw last week. Support or resistance appeared to be broken, and then nothing happened while time value leaked out of options.

Yesterday, if I had been officially using this method, I would have called a bearish OEX play at 515.75 (when the OEX fell below its 30-minute 21-pma) and then probably would have closed it this morning at 511.50 (when the OEX hit its 30-minute 100-pma). Because of the strong bounce potential, I probably would have wanted to take profits there (as I did with a personal OEX bearish trade) and then wait to see what happened next. Right now I would be evaluating the possibility of reentering if the OEX fell through its 30-minute 130-pma, but that would be a risky trade because strong support lies just below in the 506-508 zone.

 
 
  Linda Piazza   9/10/200,  2:15:26 PM
The OEX is now significantly below its 30-minute 100-pma, and headed down to test its 130-pma just above 510. Perhaps the failure of the other indices to hold above this MA suggests that the OEX will eventually fall below it, too?

 
 
  Linda Piazza   9/10/200,  1:57:26 PM
As a subscriber and I were just discussing, we didn't get much of a push today. Over the last couple of weeks, we've seen several days when we haven't gotten that usual push to test support and resistance. Perhaps when we're trading in such tight ranges, we don't need that typical afternoon push to test them. We know where they are already. On some of those previous afternoons when that push didn't materialize, trading has continued to be range-bound for the rest of the day, but that evidence is so anecdotal and with so few samples that I don't think we can count on that happening. It might, though, unless the indices either fall away from the averages they're testing or climb above them. Right now, we're back to oscillating around moving averages. I just checked volume, and the patterns appear as bearish as they did earlier.

 
 
  James Brown   9/10/200,  1:44:10 PM
Omnicom Group - OMC - Shares of OMC, a current call play on OI, are finally giving in to some profit taking. We've been suggesting for a week now that short-term traders who took advantage of the dip to $75 take profits now that OMC was at $80. We'll be watching to see if OMC can bounce from the $78 area.

 
 
  James Brown   9/10/200,  1:26:22 PM
Interesting note from a reader:

I recently worked for a DNA genetics company and found while researching the funeral industry that cremated bodies can also been "turned into" the type of synthetic diamond you are referring to. A lasting memory that can be say, worn around the neck rather than the typical urn on a mantle for remains.

TS

I'd say that could bring a whole new meaning to the term "family heirloom".

 
 
  Linda Piazza   9/10/200,  1:25:13 PM
Both the Dow and the NDX again test their 30-minute 130-pma's, with the Dow having risen to a 9494.7 high test of the 9500 level. We'll soon be getting that usual 1:35-1:55 ET push, and that push should tell us a lot about afternoon direction. I hope.

 
 
  James Brown   9/10/200,  1:13:08 PM
Maybe not so useless trivia: Has anyone else seen the latest copy of WIRED magazine? The cover story article is how two companies are now artificially producing gem quality diamonds. These businesses are trying to break into the jewelry business where the margins are absolutely enormous. Evidently, the De Beers cartel is in a panic and they probably should be. If the diamond growers can market their product well what is a woman going to choose? A 1-carat natural diamond or a 2-carat "cultured" diamond for the same price?

What I found really interesting was the potential technology uses. The authors believe that inexpensively grown diamonds could pave the way for a new evolution in semiconductor design. Diamonds can handle heat much better than the metals chipmakers are using now so they won't have to worry about melting the circuits. The implications are pretty big.

 
 
  Linda Piazza   9/10/200,  1:05:45 PM
It looks as if the OEX is going to have another go at testing the 513.53 level that's the 50% retracement of this morning's opening gap. That level has also been historical support over the last couple of weeks, so it's natural to see it retested. Stating the obvious, the OEX has to clear this level before it can rise to the 516.50 level that represents a possible right-shoulder level on the 60-minute chart.

 
 
  Linda Piazza   9/10/200,  1:02:37 PM
With the exception of new highs vs. new lows, volume patterns remain bearish, with declining issues double advancing issues and with down volume much bigger than up volume. That's going to have to change if the indices are going to make much headway, so we'll be watching to see what happens with the volume patterns.

 
 
  Jeff Bailey   9/10/200,  12:57:07 PM
S&P 100 Index (OEX.X) 512.44 -0.28% .... Here's chart of OEX with WEEKLY/MONTHLY retracement Link . OEX holding its weekly pivot today, while we've seen SPX violate its weekly pivot. I'm thinking larger tech exposure in SPX main reason for today's slight difference in WEEKLY pivot. Meanwhile, OEX suffers a bit from banks/BIX.X falling to its WEEKLY S2.

 
 
  Linda Piazza   9/10/200,  12:51:50 PM
The daily charts show the NDX, OEX, SPX, and Dow all trading at, just above, or just below their 10-dma's. Along with the other levels we're watching, we can watch those averages, too. Although there have been some intraday moves below their 10-dma's, most of the indices have been finding support from their 10-dma's since early August. Therefore a plunge beneath them would increase the bearishness, while continued support found here might give more confidence to the bulls.

 
 
  Jane Fox   9/10/200,  12:49:40 PM
AS soon as I posted my comment I remembered it.

 
 
  James Brown   9/10/200,  12:48:40 PM
Jane, if you look at Jim's Editor's plays from the weekend.. you will be able to trade the VIX soon.

You can read that here: Link

 
 
  Jane Fox   9/10/200,  12:45:47 PM
Linda - to bad we can't trade the VIX, we could have system here. (grin)

 
 
  Linda Piazza   9/10/200,  12:43:40 PM
For some months now, I've noticed that I have the uncanny ability to move the VIX. All I need to do is post the VIX's current level and it's going to change considerably as I'm typing. The five-minute chart shows a gap down below 20.40 as I made the last post about the VIX's range for the day.

 
 
  Linda Piazza   9/10/200,  12:39:29 PM
The VIX measures 20.55. It's been oscillating between 20.40 and 21.00 most of the day, but it's currently up 0.87.

 
 
  James Brown   9/10/200,  12:37:31 PM
GSO Software Index - The rollover in the GSO software index (-2.44% today) doesn't look to healthy. It's about to break the 140 level and it's already under its 10-dma. I guess unhealthy isn't the right adjective. I agree that the markets need a decent consolidation to make it healthy for the next leg higher but short-term could be painful for the bulls. The MACD on the GSO is starting to roll over from very overbought while its daily stochastics, momentum and RSI indicators are already pointing downward. The next support level for the GSO should be the 135 level.

The good news here is that current OI call play, ERTS is holding up very well. The stock is only down 14 cents and has not broken its rising trend.

 
 
  Linda Piazza   9/10/200,  12:36:52 PM
As the OEX continues to hug its 30-minute 100-pma, the SPX (cash) rises from its 130-pma, and the NDX and Dow test theirs. It's still uncertain to me whether the OEX's strength is going to pull the other indices up or whether the Dow's weakness (by this measure) is going to pull the others down.

 
 
  James Brown   9/10/200,  12:30:04 PM
Angiotech Pharmaceuticals - ANPI - Good news for ANPI put players, the stock has rolled back over under the $40 level, which might be a reaction to SG Cowen's downgrade of BSX today. The downgrade wasn't directly related to the BSX-JNJ patent dispute but Cowen did lower their estimates on BSX due to JNJ cutting prices on one of their stents in the U.S.

 
 
  Jeff Bailey   9/10/200,  12:24:23 PM
NASDAQ-100 Index (NDX.X) 1,351.39 -1.39% Link ... hey jeff, ndx just printed a 3 box reversal. how imp. is that?? thanks

A 3-box reversal is meaningful, but simply shows some near-term weakness. The NDX has seen multiple 3-box reversals that have sometimes grown an additional 20 to 40 points or so. I'm looking for a nice pullback into the 21-day SMA, which on the PnF chart, I've set my Bollinger bands at 21-day with 2 Std. Deviations (Low, Avg, High). This 21-day SMA also matches pretty close with the WEEKLY S1 of 1,336.71 and might match with last night's Index Trader Wrap and discussion for the QQQ.

 
 
  James Brown   9/10/200,  12:23:55 PM
DRG.X - Drug Index Breakout - The bullish breakout in the Drug sector continues today. As we suggested last week, money appears to be rotating out of recent winners in tech and back into the oversold drug stocks. The Barron's article over the weekend outlining the low P/E's and dividend yields for stocks like Pfizer, Merck and Johnson-and-Johnson didn't hurt.

Currently, PFE has broken out above its 200-dma but appears to be struggling with the $32 level and its simple 50-dma directly overhead. Shares of MRK have made a nice recovery off the lows just two weeks ago. While shares of JNJ, which have been somewhat lagging the rebound, have finally broken out through the top of its descending channel and its simple 50-dma.

 
 
  Linda Piazza   9/10/200,  12:20:26 PM
I'm looking at the OEX 60-minute chart, noticing that there's a left-shoulder-and-head look to the chart. Whenever I see that, I start wondering if there's going to be a bounce up to form the right shoulder. The OEX is currently at the neckline, an area of historical support and also the 30-minute 100-pma. The 60-minute 21(3)3 stochastics have reached levels indicating oversold conditions, although they have not yet attempted to turn up. While I wouldn't necessarily trade the upside on a potential formation that hasn't even completely set up (trading from the neckline to the 516.50 shoulder area), I would be alerted to guard stops on my bearish positions.

 
 
  James Brown   9/10/200,  12:14:27 PM
Internet Index - INX - The INX has produced an interesting formation. From its August lows it ran up from 130 to above the 160 level. What I am noticing today is the last three sessions, counting today, appears to be a three-candle reversal signal. Considering that the reversal pattern is at the top of a big run up bears are sure to take notice.

Shares of YHOO are currently shadowing the same reversal pattern in the INX while shares of AMZN are merely trading sideways the last several sessions.

Shares of Internet darling EBAY have bounced from support at the $50 level and are currently up 2.4%.

 
 
  James Brown   9/10/200,  12:01:39 PM
STMicroelectronics - STM - STM has been upgraded by two analysts in the last two sessions but that has not stopped shares from falling almost 5% this morning to its simple 10-dma. With the SOX index down almost 4%, the profit taking in chips is looking fierce. FYI: Prudential upped STM to "overweight" and stuck a $33 price target on the stock. Smith Barney just upped it to "out perform".

 
 
  Linda Piazza   9/10/200,  11:56:11 AM
The OEX has dropped below its 30-minute 100-pma, but when looking at 30-minute 100 and 130-pma's, the OEX still shows relative strength as compared to the other indices. It remains above its 510.05 130-pma. The Dow long ago dropped beneath that average, and the SPX (cash) and NDX have now done so.

 
 
  Jeff Bailey   9/10/200,  11:39:33 AM
11:00 Update at this Link

 
 
  Linda Piazza   9/10/200,  11:27:58 AM
Reader Request: Walmart looks like it's broken up & out of a pennant, but now testing and bouncing off the breakout line. Looks bullish except that daily stochs may be turning down and macd may be showing divergence. Worth playing with LEAPS?

Response: Mark Phillips might be a better person to address the issue of LEAPS since I seldom play them. I don't know if you read Mark Phillips' article this weekend about his reservations about LEAPS plays in the current market environment, but here's a link: Link

However, I'd be glad to look at WMT. As usual, I started with the P&F chart. That shows me that WMT is currently on a buy signal and above the bullish support line, but that it's also currently in an "O" column, a sign of short-term weakness. Because sector strength or weakness is also important, I checked the P&F for the RLX, and also found it on a buy signal, but currently in an "O" column.

Next I checked the bar chart. I look first at OBV when I study a chart, because I want to know whether the stock's prices are being supported by volume patterns. OBV dipped down on WMT as it began falling last week, although it may look a bit as if the decline is slowing now. The stock has been trading in a fairly well defined ascending regression channel, and today's open put it below the bottom of that channel. It looks as if it's trying to rise back into the channel, but I notice that it's also below the $57.50 resistance level from its weekly chart, so I would suspect that level might give it some problems as it tries to rise. The zone from $57-58 might be considered resistance, although $57.50 looks strongest to me. I'd have felt really comfortable with WMT coming back to test that $57.50 level as it represents the peak between the double bottoms and could reasonably be expected to be tested. Perhaps this is close enough?

Other chart characteristics? Link WMT pierced its 50-dma today at 57.27, but couldn't maintain that level and fell back. ADX showed a bearish cross of the -DI line over the +DI line and those lines haven't turned toward each other again yet. -DI appears to be still climbing and +DI still falling. The 21-dma has turned down. As WMT tests the bottom rising trendline from its channel, MACD turns down, the lines separating, and the histogram moving below zero. That's not what you want to see when support is tested, although MACD does admittedly move slower than the other indicators. On the bullish side, RSI has flattened, and currently appears to be setting up bullish divergence, although that's in question because price could still drop before it turns up again. Also on the bullish side, the 5(3)3 stochastics are in levels indicating oversold conditions and the fast line is trying to flatten, although the slow line still moves down. In addition, WMT is touching the lower Bollinger band, which normally would hint at a rise, although I do note that the Bollinger band has now turned down, and stocks sometimes do follow the BB's when they slant that way.

I've looked at WMT a couple of times over the last week, and I haven't considered it a great bet personally, although I can certainly see the risk/reward possibilities. The problem is that I could probably make a pretty good case for a bearish trade right here, too, although that one would have limited reward. I guess the question relates to your pain threshold and that of your account. The regression channel hints that WMT should turn up now, and the 5(3)3 stochastics and RSI hint that it's possible that it could do so, although their evidence remains tentative as yet. OBV and MACD give opposing evidence. Based on the regression channel and the P&F buy signal, you could enter a long position at the current level and set a tight stop below the current position, at least giving you a tight stop in case bullish suppositions are wrong. If your risk tolerance is great, you could set one all the way down at the 200-dma. Evidence currently suggests that WMT isn't likely to fall below that MA.

 
 
  Linda Piazza   9/10/200,  11:08:47 AM
The current OEX pattern looks like a bear flag printing just above next support, but on the 30-minute chart the OEX has also been printing a series of possible reversal signals just above that support. The Dow is already below its 30-minute 130-pma but the OEX has yet to even test that average, and the NDX and SPX (cash) are between the 30-minute 100-pma's and 130-pma's. So will the strength of the OEX stocks pull the other markets up or will the weakness of the Dow stocks pull the others down?

 
 
  Mark Phillips   9/10/200,  10:52:40 AM
Reader Question: Just wondering why AMTD (Ameritrade) has missed your radar screen. Obviously, brokerages are very interesting right now, and AMTD has done extremely well, with some very interesting uptrending account growth. Up very well today with the brokerage index. Just curious on your opinion vs your GS play.

Response Aaah, great question! In truth, it hasn't missed our radar screen, as we've discussed it on numerous occasions in the past few weeks. There's no question the stock looks strong, and its relative strength chart (compared to both GS and the XBD index) has been in a consistent rising trend since early May. The rationale for not listing AMTD on the OI playlist is two-fold. First, the stock's price is rather low for an option play, as it takes a 20% move in the stock price just to go from one strike to the next. Additionally, the way the stock moves is not conducive to an option play. Note how it will have a sharp upward move and then consolidate for 1-3 weeks before resuing the rally? That type of movement is death to an option play, as father time continually whittles away at the options value, even as price holds steady.

At the point where we added GS to the call list (9/02), AMTD closed at $11.90 and has traded between $11.56-12.63 over the past 6 sessions and is currently trading at $11.99. No real excitement there. On the other hand, GS was $90.45 when we added it and has traded between $90.07-92.22 over the past 6 sessions and currently rests at $90.24. Hmmmm, no excitement there either! GRIN The primary incentive for pursuing GS rather than AMTD is that on a confirmed breakout over resistance ($92.25 for GS and $12.65 for AMTD, we ought to see better appreciation on the underlying options for a comparable 10% move in the price of each stock.

That said, based purely on a stock basis, I do prefer shares of AMTD to GS (even with AMTD's astronomical PE of 850+), but at that dollar level, I think a straight purchase of the stock makes more sense than buying options.

 
 
  Linda Piazza   9/10/200,  10:38:26 AM
The OEX perches right on the 30-minute 100-pma. It hasn't fallen to or below the 130-pma, as have the other indices. The Dow has fallen below that 30-minute average, and the NDX and SPX (cash) now hover just above that average, but below their 100-pma's.

 
 
  Linda Piazza   9/10/200,  10:14:36 AM
The OEX heads back down to test the 30-minute 100-pma again, now at 511.54.

 
 
  Linda Piazza   9/10/200,  10:09:17 AM
A miniature inverse H&S builds on the OEX one-minute chart. The neckline slants and will cross just under the 50% retracement of this morning's gap, at 513.53. That means a move through that 50% retracement will look short-term bullish for two reasons.

 
 
  Jeff Bailey   9/10/200,  10:05:43 AM
Early sector trade finds Airlines (XAL.X) 62.45 +1.67% and Drugs (DRG.X) 321.49 +1.42% early sector winners.

Downside finds Semiconductor (SOX.X) 455.46 -2.3%, Networking (NWX.X) 223.68 -2.39%, Home Construction (DJUSHB) 440.97 -2.26% and Software (GSO.X) 141.77 -1.39%.

 
 
  Linda Piazza   9/10/200,  10:03:14 AM
That first OEX 30-minute candle was a doji springing straight up from the 30-minute 100-pma. That's a possible reversal signal in the making, but it requires a bullish white candle as the third of a three-candle pattern known as a morning star. If we had been in an official bearish OEX trade overnight, we might have closed it out when the OEX bounced from that 100-pma, standing aside and watching what happened next.

 
 
  Linda Piazza   9/10/200,  9:59:47 AM
Early volume patterns were bearish, with decliners at least double the number of advancers on both exchanges and with down volume at least double, too. However, these early volume patterns can be distorted, so we need to wait to be sure they're indicative of the morning's patterns.

 
 
  Linda Piazza   9/10/200,  9:56:25 AM
The OEX now has climbed almost to the 38.2% retracement level of this morning's gap, with that level at 513.41.

 
 
  Andy Aronson   9/10/200,  9:52:08 AM
CHICAGO, Sept. 8, 2003 – On Thursday, Sept. 11, Chicago Mercantile Exchange Inc. (CME) will observe four separate minutes of silence in memory of those who lost their lives on Sept. 11, 2001. In conjunction with planned memorial activities in New York and a similar observance at the New York Stock Exchange, a minute of silence will occur on CME’s trading floors at 7:46 a.m., 8:03 a.m., 8:59 a.m. and 9:29 a.m. Chicago time. Traders on CME’s GLOBEX® electronic trading platform are asked to observe the periods of silence at those times.

 
 
  Linda Piazza   9/10/200,  9:48:54 AM
The OEX did retrace 50% of the first five-minute move. In fact, it retraced all of the first five-minute move, a first sign of strength. However, it did not retrace a significant portion of the gap, or has not done so to this point, erasing that first sign of strength. The OEX fast approaches its 30-minute 100-pma, now at 511.82, and a possible bounce point. If we had initiated a bearish Swing Trade yesterday when the OEX crossed the 30-minute 21-pma, we've have sweated out some uncomfortable moments yesterday, but would not have been stopped, and today would be ratcheting down the stops as the OEX approached that 100-pma.

 
 
  Jeff Bailey   9/10/200,  9:44:26 AM
Forest Labs (FRX) $50.66 +1.34% ... strong start this morning. Testing 200-day SMA here and may look to "fill the gap" from 07/14-07/15 $54-$50.55 into FDA review of memantine. Link

 
 
  Linda Piazza   9/10/200,  9:35:24 AM
The first OEX five-minute candle spanned a large enough distance that the Fib retracement levels might be important benchmarks in early trading, showing us early strength or weakness. The 50% retracement level lies at 512.67. Typically, a sustained move above that 50% retracement level would show strength and an inability to sustain moves above that level would show weakness. However, today's gap down is big enough that I think it's probably more important to watch gap levels, including a 50% move into the gap, at 513.56.

 
 
  Jeff Bailey   9/10/200,  9:30:42 AM
General Motors (GM) $41.61 .... The Wall Street Journal reporting that GM's CEO Rick Wagoner stated a strengthening in the U.S. economy could allow the company to ease off discounts on its U.S. models. Mr. Wagoner noted that past recessions have witnessed auto sales falling 30% from its peak to trough and then would rebound as the economy recovers. Wagoner added "maybe we get some easing off of incentives. Does that happen with 2004 models? I hope so."

 
 
  Linda Piazza   9/10/200,  9:30:06 AM
Two key OEX levels to watch today are derived from MA's on the 30-minute chart. One is the 100-pma, currently at 511.50. Just below that is the 130-pma at 509.91. The 9/05 low of 510.84 lies between these two MA's. Either of those MA's might provide bounce points for the OEX, and a touch of the 130-pma and a bounce back above the 100-pma might be a sign of strength. A fall below the 130-pma would be a sign of weakness, but just below that average lies the 506-508 support zone.

 
 
  Jeff Bailey   9/10/200,  9:23:18 AM
09:00 Update posted at this Link

 
 
  Linda Piazza   9/10/200,  6:56:54 AM
Good morning. In Japan, several economic reports were released today. As expected, the Japanese government revised growth estimates for the quarter encompassing the April-to-June period. The number was revised to 1% growth from the previous estimate of 0.6%, with a large portion of the growth attributed to improved corporate capital spending. The annualized number rose to 3.9% from the previous 2.3%. In another report, Japan's July current account surplus rose 34.6% year-over-year.

Despite the upward revision to the growth estimates, exporters declined as investors feared that U.S. consumer spending would wane. Investors appeared to be in a profit-taking mood, and the Nikkei closed down 65.72 points or 0.60%, at 10,856.32.

China's August factory production rose 17.1% year-over-year, with one article noting that China's economy is the fastest growing in North Asia. China's Shanghai Composite rose 0.22%. Asian bourses were mixed. South Korea's Kospi also rose, by 0.95%, but Singapore's Straits Times dropped 0.85% and Hong Kong's Hang Seng dropped 2.14%.

Most European bourses currently trade down, although many have trimmed earlier losses. After TXN's narrowed guidance last night, many chip stocks dropped in European trading. Automakers struggle as investors focus on their outlooks during the Frankfurt Motor Show.

As of this writing, the FTSE 100 trades down 4.10 points or 0.10%, to 4259.80. The CAC 40 trades down 29.05 points or 0.86%, to 3346.21. The DAX has dropped 34.19 points or 0.95%, to 3560.21.

 
 
  Jeff Bailey   9/9/2003,  1:11:41 AM
Pivot Matrix for tomorrow posted at this Link

 
 
  OI Technical Staff   9/9/2003,  1:11:35 AM
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