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  Jeff Bailey   9/16/200,  9:52:10 PM
December S&P futures (sp03z) settled 1,027.70 and that's last trade after MO news here.

December futures with fitted retracement. Link

  Jeff Bailey   9/16/200,  9:48:06 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   9/16/200,  4:41:17 PM
ym03u 9,549 +1.41% (10-minute delayed) after MO news begins to be seen. Contract high has been 9,580

  Jeff Bailey   9/16/200,  4:34:46 PM
Altria (MO) $40.46 -0.34% ... Dow/OEX/SPX component jumps to $43.30 in extended hours as Illinois judge changes mind once again and reinstates lower bond in "Light cigarette" case. This is third change of decision on this bond. ym03z 9,538 +1.29% (10-minute delayed quote)

  Linda Piazza   9/16/200,  3:57:31 PM
I agree with Jim and Jonathan that longs (and shorts, too, for that matter) should be very careful about holding overnight tonight. If the OEX in particular is going to bump above next strong resistance, then we should see a retest after it does, and could enter long then. If the OEX is going to fail, well, we don't want to be long overnight.

  Jeff Bailey   9/16/200,  3:55:40 PM
Dow Jones Home Construction (DJUSHB) 464 +2.4% Link ... challenging relative highs of 465 from earlier this month.

KB Home (KBH) $59.53 +3.3% Link reports earnings after the close. Consensus is $2.14 per share.

Lennar Corp. (LEN) $74.65 +3.3% Link also reports after the bell. Consensus is $2.23 per share.

  Jeff Bailey   9/16/200,  3:51:54 PM
Marvell Technology (MRVL) $40.09 +2.63% Link ... Higher with broader technology, but seeing some talk/rumor that gross margins tracking ahead of plan. 4-day resistance has been at $40.50, but PnF chart has that look that weak holders may have gotten shaken out at $32, and current bullish vertical count of $66 compelling for a bull on near-term move above $40.50.

  Linda Piazza   9/16/200,  3:49:29 PM
Swing Trade Signals
Those in the unofficial Swing Trade should be picking a point for a profit exit now. A glance at the OEX 30-minute chart shows an index that has been charging up the chart since testing and then climbing above its 30-minute 21-pma this afternoon, post FOMC. That was also near the weekly pivot of which Jeff spoke earlier. There should be a pullback some time or another, and it could be first thing tomorrow morning. Of course, the OEX could also gap up tomorrow morning, but evaluate the risks carefully as the OEX ends the day jammed underneath supposedly strong resistance.

  Linda Piazza   9/16/200,  3:38:37 PM
Swing Trade Signals
For those in the unofficial OEX Swing Trade, I'd be ratcheting up my stop here, perhaps to 516 or 515.50. The OEX also approaches the original target at 518, and I would be considering taking my profit as it approached that level or else ratcheting up stops even closer if I didn't.

  Jeff Bailey   9/16/200,  3:37:51 PM
Broker/Dealer Index (XBD.X) Link 612.59 +2.69% ... new 52-week high today above 600 resistance. Bullish vertical count of 645 just 5% away.

  James Brown   9/16/200,  3:34:18 PM
Dell dances higher - Previous high-flyer DELL Inc is struggling to make its best close in more than two years. The bullish trend from February is still intact and the stock is trying to close over resistance near $34.00-34.50 (it did spike higher to 35.00 intraday on 9/5/03).

Glancing at the weekly chart it looks like DELL has completed its bottoming phase or Stage 1 basing pattern as described in Mark Wnetrzak's Covered Calls column two weeks ago and is now in its Stage 2 uptrend. The stock moves rather slowly for short-term option trading (just buying calls) but there are plenty of option strategies still available to capitalize on the trend.

  Jonathan Levinson   9/16/200,  3:31:57 PM
The VIX is now down .50 at 19.75, QQV -1.1 at 27.20, p/c ratio .71. The precious metals indices are pennies in the green, gold still negative. TRIN.NQ is .38, low but not ridiculously so relative to the power of the price moves coming here.

  James Brown   9/16/200,  3:26:06 PM
Bullish defense play - GD - The rising channel in the DFI defense index and in shares of GD is hard to ignore. Interested traders might take note that GD is bouncing from the bottom of its channel (also off its simple 30-dma) and this could be an entry point for longs.

  Jeff Bailey   9/16/200,  3:26:03 PM
03:15 Update posted at this Link

  Linda Piazza   9/16/200,  3:25:08 PM
Swing Trade Signals
For aggressive traders in the unofficial Swing Trade, consider raising stops to 515 or perhaps 0.25 below that to allow for an overrun of that support level. Also give strong consideration to closing out the trade today. When I was backtesting a model for the Swing Trade, many trades were stopped out in the first thirty minutes of a trading day, only to go on and be profitable afterwards. With the OEX very near strong 518 resistance, it may be better to close out this afternoon and see if there's an opportunity to re-enter tomorrow morning.

  James Brown   9/16/200,  3:23:16 PM
Fedex - FDX - Gamblers are probably taking note of FDX today. The stock is bouncing from support near the $65 area. FDX reports earnings tomorrow before the bell. Consensus estimates are for 57 cents a share. Prudential recently said they expect FDX to beat by a couple of cents but remained less enthusiastic on the stock.

  James Brown   9/16/200,  3:18:06 PM
Coca-Cola Fizzles - Shares of KO are showing weakness in this market rally. The stock was slapped with a downgrade this morning based on weaker global volume trends. KO has gapped down below short-term support of $43 and its simple 200-dma on strong volume of 7.4 million shares.

  Linda Piazza   9/16/200,  3:17:04 PM
New high of the day on the OEX.

  Linda Piazza   9/16/200,  3:15:28 PM
Swing Trade Signals
Without any follow-through after the bond close, I would consider raising my stop to the entry on the unofficial OEX Swing Trade. It's natural to see some retracement, and I expected some, but time is running out before MOC orders.

  James Brown   9/16/200,  3:14:33 PM
Amgen Inc - AMGN - Regular readers know that AMGN has been on the OptionInvestor.com watch list for the last seven weeks as we've watched it consolidate from the July highs. We've finally seen a breakout above the trend of lower highs and the move above $69 looks tempting. More conservative traders may want to wait for a move above the $70 level.

  James Brown   9/16/200,  3:11:41 PM
Morgan Stanley - MWD - Despite the news that Jon posted about MWD early today, it's not stopping the upside breakout over long-term resistance at $50.00. The next level of clear resistance is between $57 and $60.

According to the point-and-figure chart this is a bullish triangle breakout, one of the most successful bullish patterns to trade.

  Linda Piazza   9/16/200,  3:07:10 PM
Swing Trade Signals
Those in the unofficial long OEX Swing Trade might consider raising their stops to 512 or perhaps even to 513.

  James Brown   9/16/200,  3:06:57 PM
3M Co. - MMM - The daily chart on MMM is starting to look positive again. Aggressive short-term traders might find the afternoon's move back over the $140 level a tempting signal to go long and target the old highs near $145-146. On the other hand, if you're more skeptical, this could be a right shoulder to a head-and-shoulder pattern with a sloping neckline.

  Linda Piazza   9/16/200,  3:05:24 PM
The double-top thesis for the Dow on the one-minute chart has been negated now.

  Jonathan Levinson   9/16/200,  3:04:47 PM
The VIX dipped briefly below 20 there, currently down .11 at 20.14, with the QQV down .67 at 27.67. No change in the put to call ratio, currently .71. The TRIN.NQ is down to .37, TICK.NQ +164.

  Linda Piazza   9/16/200,  3:01:31 PM
Dialing down to the one-minute chart, I see an OEX pullback into a bull flag, a breakout of that bull flag, and then a test of the current day's high. The OEX appears to be struggling with that level, however, as are the other indices with their current day's highs. The Dow, for example, shows a miniature double top, with a fall under 9524 setting a target of 9515 or so. That would be just above a 50% retracement of the post-Fed climb. The Dow has not confirmed that possible double top, however, and a move substantially above the day's high would negate the possibility of one forming.

  James Brown   9/16/200,  3:00:36 PM
United Technologies - UTX - current OI call play UTX is currently the 5th best performer in the Dow Jones today, up 1.9%. Shares are breaking out of the short-term two-week pattern of lower highs. More conservative traders may want to wait and see the stock clear $80 before considering new positions.

  Jeff Bailey   9/16/200,  2:59:08 PM
SPX quickly punching in DAILY H,L, with estimated close of 1,025 in DAILY matrix. Would give DAILY p of 1,022 (close to WEEKLY Pivot), with DAILY R2 of 1,032.61 (close to WEEKLY R1 of 1,031.46). Looks bullish in the MATRIX for carry over to tomorrow.

  James Brown   9/16/200,  2:57:59 PM
Lear Corp - LEA - following up on LEA, another OI call play, the bounce from its 50-dma continues. This could be a breakout of its potential bull flag pattern. Shares have traded through our trigger of $54.05 so this looks like an entry point for bulls.

  James Brown   9/16/200,  2:55:55 PM
Goldman Sachs - GS - Current call play GS is also bouncing higher following the leadership in the XBD broker-dealer index which is breaking out to new highs above resistance near 600.

  Jeff Bailey   9/16/200,  2:54:33 PM
Dow Transports (TRAN) 2,769.67 +1.34% ... econ-sensitive sector looking to challenge its 52-week high of 09/08/03 which was 2,777.04. Break above and alert set there is upside alert for broader indices to find some gains.

Tie in perhaps SPX at 1,035.

  James Brown   9/16/200,  2:53:58 PM
Electronic Arts - ERTS - Shares of current call play, ERTS, are soaring higher today by +3.9% and breaking out above the old higher in early September at $92.00. Evidently, August video game sales rose 4 percent over August last year, powered by ERTS' Madden NFL football. This comes one day after ERTS launches its online EA SPORTS Nation for Sony's PlayStation2 systems.

  Linda Piazza   9/16/200,  2:51:32 PM
Swing Trade Signals
That bearish cross on the OEX 30-minute MACD has now been erased with a tentative upswing in the MACD above its own trendline of higher lows. So far, those aggressive traders who leapt into an unofficial OEX long position on a trade over 514.25 are doing okay, but be alert. Some time around here, there should be a measured distribution pattern such as a bull flag, and it may likely retrace 50% of the post-FOMC climb, taking the OEX back near 513.90. The OEX has punched through the upper Bollinger bands on both the 30-minute and 60-minute charts, so some retracement would be likely from that perspective, too.

  Jeff Bailey   9/16/200,  2:47:41 PM
S&P 500 Index (SPX.X) 1,024.13 +0.91% ... session highs and closing in on 1,025, which is MONTHLY R1. 5-year YIELD now higher by 3.8 basis points and stronger reversal higher in YIELD could press the SPX through 1,025 with eyes set on WEEKLY R1 of 1,031.50.

  Jeff Bailey   9/16/200,  2:45:01 PM
Dow Indu (INDU) 9,512 +0.67% .... session highs here. Not unlike QQQ, looking at WEEKLY retracement of 9,535 as next resistance after clearing free of psychological 9,500 here.

  Linda Piazza   9/16/200,  2:43:30 PM
Swing Trade Signals
So far, we've had a lot of zooming around in both directions. That initial direction after a move-the-market event can not always be trusted, but we can't trust this direction, either, unless new highs are achieved.

The OEX 30-minute MACD now features a bearish cross so that I can't with good conscious initiate an official Swing Trade, but aggressive traders who have risk money to spend might consider a long entry on an OEX trade above 514.25 with a stop at 511 and a target of 518. The MACD tries to turn up again and it's slow to change.

  Jeff Bailey   9/16/200,  2:43:27 PM
QQQ $33.97 +1.4% .... trying to make a run at morning high of $34.00 here after coming close to post-FOMC test of WEEKLY pivot of $33.79 with trade at $33.82. Bears are pressured here and Q's look to be set to trade $34.15.

  Jeff Bailey   9/16/200,  2:38:16 PM
5-year YIELD ($FVX.X) 3.132% .... higher by 2.6 basis points here. Was trading 3.140% just prior to FOMC announcement when buyers came in. If sellers take over, I've set alert at 3.15%, and per 14:32:54 post, this 3.15% is level I've set intra-day alert, where move above in YIELD might be signal for further equity rally.

Just using the 5-year here as it is shorter-dated than 10 or 30-year.

  Linda Piazza   9/16/200,  2:36:12 PM
The initial slide now halted, bulls still have a task on their hands. That's to move above the day's high.

  Jonathan Levinson   9/16/200,  2:34:05 PM
The US Dollar Index appears to have failed just above 96.70, ticking back down toward 96.60.

  Jeff Bailey   9/16/200,  2:32:54 PM
5-year YIELD ($FVX.X) after slipping to 3.09%, has seen selling with YIELD edging back higher by 1.8 bp.


  Linda Piazza   9/16/200,  2:31:43 PM
Unlike the Swing Trade on the futures side, we index traders have more difficulty benefiting from a small movement. With the supposed support of the 30-minute 100 and 130-pma's between 510.80 and 511.41, a Swing Trade initiated at this level would not have time to benefit before hitting that support. We'll wait and see what happens when that support is tested, if it is.

  Jeff Bailey   9/16/200,  2:24:34 PM
5-Year YIELD ($FVX.X) shorter-dated 5-year reverses price loss to now have YIELD lower by 1.6 basis points to 3.092%.

  Jonathan Levinson   9/16/200,  2:21:40 PM
Agreed, Linda. So far, they're running the stops in both directions.

  Linda Piazza   9/16/200,  2:20:45 PM
Be careful. Remember that the first reaction is not always the final reaction.

  Jeff Bailey   9/16/200,  2:19:22 PM
No change in Interest Rates

INDU = 9,494, SPX = 1,021.37, OEX = 513.27, NDX = 1,364, QQQ = $33.91, BIX.X = 303.36, $TNX.X = 4.266% , $HUI.X = 196.22

  Jeff Bailey   9/16/200,  2:18:59 PM
Altria (MO) $40.54 -0.17% .... Dow Jones reporting that a Federal court upholds dismissal of damage claims in HMO lawsuit.

  Jeff Bailey   9/16/200,  2:08:53 PM
U.S. Dollar Index (dx00y) 96.69 +0.73% ... rather large upward move for the dollar index today (dollar strength) and rally comes right to a MONTHLY pivot analysis retracmenet level of 96.75.

While I'm 30-minute delayed here on dollar quotes, trader with real time might look for dollar strength above the 96.75 level to fuel stock gains.

WEEKLY pivots for the indices should show some formidable intra-day support.

  Jonathan Levinson   9/16/200,  2:06:43 PM
The put to call ratio is .69, comprised of an equity pcr of .53, index pcr 1.46. Neutral readings. VIX -.07 at 20.18, QQV -.30 at 28.04.

  Jeff Bailey   9/16/200,  2:04:41 PM
December fed funds futures (ff03z) 98.995 .... less than 5% chance of a Fed rate hike forecasted by market.

Shorter-dated 5-year YIELD ($FVX.X) 3.137% is now higher by 3.3 bp and middle of today's range.

VERY surprised if the fed does anything.

  Linda Piazza   9/16/200,  1:58:44 PM
Just before we head into the release of information from the FOMC meeting, we can look at new retracement levels, retracing the day's move so far. The 38.2% retracement of the day's move lies near 512.50 and the 50% retracement lies near 512. Bullish players will want to see the OEX hold above that 50% retracement level. The 61.8% retracement lies near 511.60, between the 30-minute 21-pma and the 30-minute 100-pma.

  Jonathan Levinson   9/16/200,  1:57:21 PM
For those following the unfolding "late trading" scandal, here's an excellent discussion in the Boston Globe: Link

  Jonathan Levinson   9/16/200,  1:43:21 PM
Despite December gold being down 1 at 374.60, the HUI is up .29 and the XAU .36- it looks like others are sharing Jeff's thought about taking out some FOMC insurance.

  Linda Piazza   9/16/200,  1:38:09 PM
All traders, whether bullish or bearish, should give some consideration to the risks of holding over the FOMC meeting results, even if nothing material is expected to change as a result of that meeting. Perhaps you've got some lottery-ticket style September options and knew you were willing to risk their entire price on a gamble and don't mind holding, but others should give strong consideration to their account management protocols.

What, specifically, will happen with the OEX after the announcement? On an intraday chart, we can see that the OEX is poised underneath next resistance at 514 but above the 512.50-513 light support and above supposed support between 510.50-511. Right now, the OEX daily candle sits squarely in the middle, between strong resistance near 518 and strong support near 506-507. MACD remains flat. RSI curls up along a rising trendline. Stochastics curl up after having just begun a down phase, but stochastics are notoriously fickle, and can curve right back down again. A case could be made for a test of strong resistance at 518 or a test of strong support, with indicator evidence mixed. While I had a bullish thesis for a move over 511, I did not initiate an OEX play because we'd be stuck in this dilemma about now unless the OEX had moved strongly over 514 by the time of the meeting, and I didn't think that would happen.

  Jeff Bailey   9/16/200,  1:29:17 PM
01:00 Update posted at this Link

  Linda Piazza   9/16/200,  1:26:04 PM
The OEX approaches 514. I sure wish I'd been able to initiate that long play this morning as the OEX moved back through the 30-minute 100-pma, but the risks were too strong to pull readers into the play ahead of the FOMC meeting. We'd be thinking about exiting soon, ahead of the FOMC meeting, so gains would not have been large with a 2.5-point movement in the OEX under our belts so far.

  Jonathan Levinson   9/16/200,  1:22:32 PM
ATLANTA, Sept 16 (Reuters) - The National Association of Securities Dealers said on Tuesday that it has fined Wall Street investment firm Morgan Stanley (NYSE:MWD - News) $2 million for holding contests among its brokers to encourage them to sell Morgan Stanley's own mutual funds.

  Linda Piazza   9/16/200,  1:07:06 PM
We just saw a new high of the day on the OEX and a test of the 9/11 high. Despite the minimal retracement so far and the OEX's climb back above its daily 10-dma, the possibility exists that we could be seeing a distribution top build on the OEX. I've just spent some time scrolling through the OEX 30-minute chart, and most instances when the OEX climbs quickly, then prints a prolonged series of small candles that move sideways out from the high of the day, that patterns results in a fall. Much may depend on the current Dow test of 9500, as a strong move by the Dow could send the OEX up, too, negating the possibility of that distribution-top formation playing out. A move over OEX 514 could set up the possibility of a new leg up, toward 517.50-518.

  Jonathan Levinson   9/16/200,  1:04:21 PM

  Jeff Bailey   9/16/200,  12:50:47 PM
Russell 2000 Index (RUT.X) Link 512.01 +0.86% .... small-to-mid caps continue to impress and little pullback late last week never got a test of the rising 21-day SMA. Not the most favorite group for option traders on stock specific names.

  Jonathan Levinson   9/16/200,  12:50:24 PM
Agreed, Jeff. An alternate play is the XAU, which is also optionable, thin and often overpriced as its contracts may be. The XAU tends to underperform the HUI, being comprised of "hedged" miners, but companies like ABX and NEM have much higher visibility and "brand" than the smaller, unhedged HUI components, which helps to offset the lag.

  Jeff Bailey   9/16/200,  12:45:08 PM
Just in case ... while few, me included, expect a Fed cut at today's meeting, I always like to have a backup plan in place to try and make money on a suprise to the market. A surprise cut by the Fed would, in my opinion, bring a big bid into gold stocks. With AMEX Gold Bugs Index ($HUI.X) 195.82 -0.10% just sitting here at one of my fitted retracement (from 140.68 to 228) level, not a bad sector to pick a stock in the group, should a surprise be given. Newmont (NEM) $39.01 +1.14% is usually a name that attracts bigger money.

  Jeff Bailey   9/16/200,  12:35:28 PM
IntraBiotics (IBPI) Link $11.22 +26% ... takes over today's top % gainer from TTN. After IBPI received fast track status from FDA for its iseganan, which is used in patients receiving mechanical ventilation to reduce the risk of pneumonia, the stock consolidated gains to the $8.00 level and broken out of a nice pennant on the bar chart. Link Bullish vertical count of $19.25 looks achievable. (I like these BIG volume patterns, consolidation, then move above a short-term resistance level that seems to be created by aggressive bulls) rounding up positions.

On September 5, FDA said it was granting fast track because 1) There are currently no products approved (topical or systemic) for the prevention of ventilator-associated pneumonia and 2) Ventilator-associated pneumonia is commonly recognized as highly morbid condition in critically ill patients.

  Linda Piazza   9/16/200,  12:23:39 PM
The OEX falls back inside the presumed bull flag formation--not what bulls want to see, but the retracement remains minimal so far.

  James Brown   9/16/200,  12:23:19 PM
Sector Winners
Leading the charge on this early afternoon are the following:
DFI defense index: +2.26%
SOX semiconductors: +2.18%
NWX networking index: +2.18%
XBD broker/dealers: +1.87%

  Jeff Bailey   9/16/200,  12:21:52 PM
Three-Five Systems (TFS) $7.38 -24% .... stock shows a loss in today's session, but is really just a result of today's spin-off of its Brillian unit, which is now trading under Brillian (NASDAQ:BRLC) $10.02, where TFS distributed 1 share of BRLC for each four shares of TFS common stock.

  Jonathan Levinson   9/16/200,  12:15:33 PM
The US Dollar Index continues higher, now approaching 96.70. Bonds remain weak and equities strong. The TRIN.NQ has dropped to .47, TICK.NQ +137, showing relatively focused buying on the Naz. Price still continues to creep, which should change after the FOMC announcement.

  Linda Piazza   9/16/200,  12:04:01 PM
The OEX has broken the bull flag to the upside and achieved a new day's high as the Dow breaks over 9500. This is an iffy time, however, as the Dow retreats slightly from that test of 9500. Still wish that break over the 30-minute 100-pma had occurred on any day but the day of an FOMC meeting, when volume was light.

  Jonathan Levinson   9/16/200,  11:57:10 AM
The volatility indices continue to hover around both sides of unchanged, the p/c ratio currently .78 on Interquote. The TRIN.NQ at .52 is more overbought than oversold, but clearly the indices are comfortable at current prices for time being.

  Linda Piazza   9/16/200,  11:49:15 AM
Now that five-minute OEX consolidation pattern mentioned in my 11:37 post is beginning to resolve itself into a possible bull flag. It took that dip below the horizontal support and current climb to make it look more like a flag. If it is a bull flag (tight pattern of lower highs and lower lows after a steep climb), then it should break to the upside before retracing more than 50% of the flagpole. In this case, that 50% level lies at the 50% retracement of the day's range, so at 511.89.

  Linda Piazza   9/16/200,  11:37:53 AM
Jane mentioned earlier that the ES had not retraced even 38.2% of its day's move, at least at the point the post was made. As I mentioned earlier, the OEX has retraced only 20%, although it currently hovers just above that level. The retracement isn't taking the form of a regular bull flag or "p" accumulation, but rather a sort of sideways trading that defies categorization. Is it a flag in the making, as it heads down to test the low of the consolidation band again? Is this a bearish right triangle with a horizontal bottom and a series of lower highs? If it's a bearish right triangle, then we could see that 38.2% retracement level after all.

  James Brown   9/16/200,  11:33:04 AM
FDA approval for TEVA Shares of TEVA are not reacting to an FDA approval to market a generic version of Bristol-Meyers Squibb's (BMY) antidepressant drug, Serzone. Last June, generic drug maker Ivax Corp (IVX) was also given FDA approval to market its Serzone. - Reuters

  Jeff Bailey   9/16/200,  11:30:30 AM
11:00 Update posted at this Link

  Jonathan Levinson   9/16/200,  11:29:39 AM
The US Dollar Index has broken higher, now up to 96.60 and bove 96.50 resistance. Gold remains weak, as do treasuries, while stock indices slide sideways just below their highs of the day.

  James Brown   9/16/200,  11:27:40 AM
Chip upgrades - Helping push the $SOX up 2% is an upgrade for Micron (MU) by First Albany to "strong buy" and Wells Fargo starting Jabil Circuit (JBL) at a "buy".

  James Brown   9/16/200,  11:25:09 AM
BSX receives review date - Investors following the BSX story will be interested to note that the FDA has set Nov. 20th as the panel meeting to review the Taxus stent.

  Jonathan Levinson   9/16/200,  11:23:33 AM
Despite the aggressive move higher at the open, the put to call ratio has been hovering around neutral territory, currently .80, as have been the volatility indices, with the VIX up .36 amd the QQV -.30. It's tempting to write the move off to opex manipulation, except that these measures dont' confirm it. So far, all of the major volume spikes have been upticks today.

  James Brown   9/16/200,  11:21:20 AM
Follow up on QCOM - Digging deeper we see the rebound in QCOM is fueled by the company's positive comments this morning. QCOM is guiding to the high end of current estimates for Q4 and the full year.

  James Brown   9/16/200,  11:18:20 AM
Kroger Misses & Warns! - Shares of Kroger (KR) are down more than 6.4% after missing earnings by 1 cent and warning for the rest of the year. The grocer cited higher operating costs, stiff competition from Wal-Mart (WMT) and the recent blackout. KR said their 2003 earnings, currently estimated between $1.55 and $1.64 a share, could be off by as much as a nickel.

Fellow grocers Albertson's (ABS) is down 4.3% and Safeway (SWY) is down 4.9%.

  James Brown   9/16/200,  11:07:53 AM
QUALCOMM - QCOM - Just a quick note, QCOM was on the OI watch list last night. Shares were weak this morning but they have quickly rebounded and are currently making new highs.

  James Brown   9/16/200,  11:04:48 AM
Charles Schwab - SCH - Schwab's CFO says they're comfortable with current estimates of 9-cents a share and may beat that number if September trade volumes hold up. SCH said that August levels of 126,800 trades a day were better than a year ago but down 15% from July. The real positive news was September's average is running about 164,000 trades a day. If this pace keeps up then SCH could be its Q3 estimates.

Shares of SCH have almost doubled from their March lows and are breaking out above the $12.00 level, up 4.87% this morning.

  Linda Piazza   9/16/200,  10:59:53 AM
So far, the OEX has retraced only a modest 20%, but it must exceed the previous day's high before we start considering the current retracement completed. Today's movement has been so strong that the five-minute 21(3)3 stochastics has begun trending in overbought levels, not cycling down.

  James Brown   9/16/200,  10:58:24 AM
Krispy Kreme Doughnut - KKD - One might suspect that with the onset of Fall and the coming Winter seasons the morning commute might seem sweeter with a hot coffee and a warm Krispy Kreme doughnut (Jim & Jeff, stop drooling). Unfortunately for shareholders, this current OI put play is getting hammered for a 5.5% loss on strong volume of 1.7 million shares. The Wall Street Journal reported this morning that sales for some of KKD's newer stores were "unexpectedly weak".

FYI: shares have not yet broken the $40 level but they're close.

  Jeff Bailey   9/16/200,  10:56:57 AM
Intra-day trader note as it relates to the DAILY pivot levels. So far, the DAILY R2's have held some resistance. More notably is the SPX's 1,022.26, with session high of 1,022.04. The INDU 9,490 +0.44% session high has been 9,499.55, where DAILY R2 is 9,513.08.

Only mention this for intra-day traders.

  Linda Piazza   9/16/200,  10:56:03 AM
As of a few moments ago, volume measured a light 286 million for the NYSE and 458 million for the Nasdaq. Adv:dec ratios were a strong 20:9 for the NYSE and 19:9 for the Nasdaq. Up volume was 3.2 times down volume on the NYSE and 4.5 times down volume on the Nasdaq. New highs were 234 versus 8 new lows.

  James Brown   9/16/200,  10:51:48 AM
Gilead Sciences - GILD - Ouch! GILD is down more than 6% on a J.P. Morgan downgrade to "neutral" from "overweight". JPM believes that share price growth "will be difficult" with out significant improvement to its earnings forecast.

  James Brown   9/16/200,  10:48:07 AM
DEFENSE SECTOR MOVES - The DFI.X index is up a big 2.4% and bouncing near the bottom of its rising channel. The big news in the sector this morning is Lockheed Martin's (LMT) announcement to buy defense-contractor Titan (TTN) for $22 a share (about $2.4 billion).

This has sparked a lot of interest in smaller defense company as takeover targets. Meanwhile Goldman Sachs has started Raytheon (RTN) and General Dyamics (GD) with an "in-line".

Not participating in the rally is Alliant Tech Sysytems (ATK) which just announced a $130 million 5-year deal with the U.S. Defense Dept. To be honest, ATK looks like a short-candidate using a potential trigger under $48.25 or $48.00 and targeting $45 or the March lows near $43.

  James Brown   9/16/200,  10:42:03 AM
Jeff, I actually saw "Fall" move into town. It was Saturday night about 9:30 and you could hear it coming. Suddenly, a wall of wind and cold air just washed over town.

  Jeff Bailey   9/16/200,  10:39:51 AM
Follow on to James' 10:33:29 .... Did anyone notice this weekend, at least here in Denver, CO, the "smell" of fall in the air. Many of the breakfast joints I frequent for weekend breakfast were packed. I usually don't have to wait more than 5-minutes, but saw many lines outside of breakfast joints and ended up going to Country Buffet. Something about cooler weather or perhaps end of summer season, but restaurants seemed full of people this weekend.

  Andy Aronson   9/16/200,  10:34:41 AM
Exchange traded equity options (QQQ DIA)are "physical delivery" options. This means that there is a Physical Delivery of the underlying stock to or from your brokerage account if the option is exercised. The owner of an equity option can exercise the contract at any time prior to the exercise deadline set by the investor’s brokerage firm. Generally this deadline occurs on the option’s last day of trading.

  Linda Piazza   9/16/200,  10:34:37 AM
With the Dow just having attempted to climb above 9500, we can assume this is a logical pausing place for the OEX as well and snap some retracement levels on the OEX LOD and HOD, too. A 38.2% retracement of the day's range lies at 512.30, and a 50% retracement lies at 511.86. Bulls want to see the OEX sustain levels above the 50% retracement of the morning's rally, although it's not uncommon to see retracements fall between 1/3 and 2/3 of the previous movement. A 61.8% retracement lies at 511.47. We now have some important levels to watch ahead of the FOMC meeting.

  James Brown   9/16/200,  10:33:29 AM
Darden Restaurants - DRI - Shares of DRI continue to build on their bullish breakout from mid-August. Chart readers can see the big move on its daily, weekly and point-and-figure charts. While the stock looks short-term overbought from its August lows, it is channeling higher and just bounced from the bottom the rising channel. This morning Bear Stearns upgraded DRI from "under perform" to "peer perform".

  Jeff Bailey   9/16/200,  10:33:20 AM
60-minute interval chart of SPX shows nice reverse head/shoulder pattern with neckline right at our WEEKLY pivot of 1,019.58, where left shoulder dipped lower than recent right shoulder formed yesterday. This higher right shoulder and break of neckline looks very bullish on near-term basis and should see support holding on a re-test of the neckline. Pattern objective would be about 1,030.

MACD on this time interval just now trying to get above zero level and past technicals on this time interval saw nice bullish move to upside from 995 congestion to 1,025. (08/28 to 09/03)

  James Brown   9/16/200,  10:29:45 AM
E M C Corp - EMC - EMC's press release this morning said the company's market share in the storage market has reached 25.5%. It's too bad the stock is so cheap, making it tough to swing trade options on. Shares are up about 40% from their late July lows and its technical oscillators are all overbought. A pull back to $11.50 or $12.00 might be a tempting entry point for a longer-term trader.

  Jeff Bailey   9/16/200,  10:29:12 AM
Dow Industrials (INDU) 9,498 +0.52% .... makes it way through correlative DAILY R1 and WEEKLY Pivot of 9,484.

  Jeff Bailey   9/16/200,  10:26:30 AM
SPX 1,021.61 +0.67% new high of the day here. Looking for 1,025 here.

  Linda Piazza   9/16/200,  10:25:44 AM
This has been my reason for my slightly bullish slant this week: Link This daily chart shows the OEX having first broken above three-month resistance, then risen to test next resistance, and then pulled back to find support. I thought it just as possible that the OEX might attempt another assault at the blue horizontal line, long-time resistance dating back years, as that it might test that support another time. The moving averages rise beneath it, to offer support. The stochastics turn back up. This morning, so does RSI, turning up as it approaches a trendline of higher lows. MACD, however, isn't confirming the strength, one danger to the bullish thesis. So, while I began the week working on the possibility that the long-term resistance might be tested again this week, it's not a strong enough possibility to warrant an entry ahead of the FOMC meeting.

  Jeff Bailey   9/16/200,  10:23:47 AM
Major Indices all at their WEEKLY pivots here. If they can now take out highs of session, should see some bullishness build into FOMC announcement on rates at 02:15 PM EST.

Dollar strength and some selling in Treasuries gives the look some cash looking to play equities.

  Jeff Bailey   9/16/200,  10:17:56 AM
Cendant (CD) Link $18.50 +1.42% ... upside alert again here at $18.50. I like this one for bulls still. Also have upside alert set at $19.00, which would have stock breaking out of 2-month congestion.

  Jeff Bailey   9/16/200,  10:14:29 AM
S&P Global 100 ... On Friday, when I was writing this weekend's Ask the Analyst column, stumbled across quarterly rebalancing for the GLOBAL 100.

Sony (SNE) Link $37.49 +1.54% is stock that will need to be bought into quarterly rebalancing.

  Andy Aronson   9/16/200,  10:13:20 AM
SPX (S&P 500) options stop trading at the close on Thursday. The actual settlement price is determined by the OPENING price of all 500 stocks in the Index Friday morning. The settlement price is known as the SET and is available 2-3 hours after the open. All options are settled using this SET price. You may have options in the money on Thursday and by Friday the options expire worthless, and vice versa. This is the reason the out of money options still retain some value at the close Thursday.

  Linda Piazza   9/16/200,  10:12:56 AM
The first 30-minute OEX candle spanned a larger-than-normal range, so we can begin watching its retracement values as benchmarks now. The 50% retracement of that candle lies at 511.37, just above the 30-minute 100-pma at 511.08. A retest of that moving average, then, will also be a retest of the 50% retracement of that first 30-minute candle. While it's natural and normal to see a retest of broken resistance, bulls will want to hold the OEX above that 511.00-511.40 zone.

So far, the OEX hasn't seemed too inclined to perform any retracement, but it's now testing a resistance zone between 512.75-513.00 and may see further resistance up near 513.75. I would expect some retracement after testing one of those levels. A move above 514.00, however, might predict a test of the 518.50 recent high.

  Linda Piazza   9/16/200,  10:02:34 AM
Shucks. I really wanted to issue a long signal when the OEX climbed back above that 30-minute 100-pma this morning, but the light volume scared me, and it should have. It is too light to trust the current behavior, although the OEX may zoom all day. As of a few minutes ago, NYSE total volume was only 59 million and Nasdaq, only 160 million.

  Jeff Bailey   9/16/200,  10:02:31 AM
Qwest Communications (Q) Link $3.91 +3.98% ... Raymond James upgrading to "market perform" from "underperform" with thought that Qwest has declined 25% year-to-date compared to S&P 500 gaining 15% and telecom group +13% and Qwest now attractive. Ray James believes recent closing of the Dex sale and approval of long distance application by the Arizona Corporation Commission is a positive development. Ray James cautions the Q's fundamental position is weaker than other RBOCs, with significant out-of-region long distance and broadband operations that need to be addressed.

Sounds like an "avoid" call to me.

  Linda Piazza   9/16/200,  9:58:14 AM
KKD appears to be getting hit hard by a Wall Street Journal report that says sales may be weaker than expected. The stock fell from yesterday's $42.70 close to a low of $40.05 this morning, but has since rebounded a bit. The chart has a rough, slanting H&S look to it, with a neckline near $40, depending on how the neckline is drawn. For that reason and because of round-number support, I expect it to continue to try to bounce from $40.00. Below $40.00, next support appears to be $37.00, but I still find myself wary of jumping on KKD, with its perennially heavy short interest, during opex week. Max pain appears to be $45.00. I do note, however, that it's now on a P&F sell signal.

  Jeff Bailey   9/16/200,  9:45:19 AM
Sector action broadly positive early, with all gains less than 1%.

Semiconductor (SOX.X) 447.41 +0.92% is early gainer despite comments out of Bank of America saying that TSM's CEO Morris Chang spoke at a conference about how "mega trends" are leading to slower growth for the semiconductor industry. Mr. Chang attributed the slowing growth to saturation of semiconductor content and increasing economic hurles facing Moore's law. Mr. Chang also thinks that China is over-investing in capital equipment and creating a bubble that will cause an industry downturn in 2005-2006.

Bank of America thinks if analysts are taking current prices for semi stocks, extrapolating forward the 1990's growth rates, earnings power and profitablilty to derive targets is a mistake.

  Linda Piazza   9/16/200,  9:39:02 AM
Since I've been working on a slightly bullish scenario, I'm more tempted to issue an official long signal this morning if all lined up correctly than I was to issue an official short signal yesterday, but wise account management says it's better to let a potential play go by if it's just ahead of a potentially market-moving event on a day that's likely to have light volume. Signals can't be trusted in that environment.

  Linda Piazza   9/16/200,  9:36:19 AM
The OEX now challenges the 30-minute 100-pma as well as the top of the Thursday-to-Friday gap. It's still mired within the recent congestion band, however, but a sustained move above the 30-minute 100-pma and out of that congestion band would be bullish.

The midpoint of the first five-minute OEX range lies, unsurprisingly, at 510.80, near that confluence of S/R levels and moving averages that I mentioned earlier.

  Linda Piazza   9/16/200,  9:30:25 AM
Yesterday's last OEX 30-minute candle was a bearish candle that engulfed the previous day's candle body, although not its upper shadow. The midpoint of that candle lies at 510.50, reinforcing the known importance of that level. It's near the 30-minute 130-pma, the 30-minute 21-pma, and the 60-minute 21-pma, as well as also being near the 510.62 midpoint of the gap from Thursday's close to Friday's open. The OEX opened just below that and we could expect a first test to be of that zone.

  Jeff Bailey   9/16/200,  9:20:29 AM
09:00 Update posted at this Link

  Linda Piazza   9/16/200,  9:10:06 AM
Swing Trade Signals
I will not be issuing Swing Trade Signals this morning. Volume is likely to be extremely light ahead of the FOMC meeting this afternoon, and those light-volume days prove unpredictable and hazardous to the pocketbook. A formation can set up and then a single buy or sell program can send the index the other direction. Although it's widely expected that the FOMC will neither change rates nor radically change the wording of its statement, we'll watch the markets as the decision approaches, seeing if a viable trade might exist then.

  Linda Piazza   9/16/200,  7:01:57 AM
Good morning. Investors in the Nikkei returned in a good mood after their three-day holiday, sending the Nikkei more than one hundred points higher in early trading. The Nikkei closed up 174.22 points or 1.63%, at 10,887.03. Banking and auto stocks were also early gainers, with the banking sector leading gains by the end of the day. The Japanese government announced a decision to pay banks about $2 billion in a tax case settlement. Tech stocks were mixed.

Most other Asian markets traded higher. The Taiwan Weighted gained 1.35%, and South Korea's Kospi gained 1.33%. Singapore's Straits Times climbed 0.29%, and Hong Kong's Hang Seng gained 0.72%. China's Shanghai Composite rose 0.61%.

Most European bourses currently trade higher, too. This morning, the German September ZEW Indicator of Economic Sentiment surprised to the upside, measuring 60.9 points instead of the expected 58. August's number was 52.5. The German banking sector benefited from the news, as it's considered a sign that the Germany economy is recovering. In stock-specific news this morning, French mobile phone operator Orange has awarded Nortel Networks a contract to build 3G mobile phone infrastructure with that contract valued at 800 million-1 billion euros. Two other companies are expected to join Nortel in building the infrastructure, with Alcatel and Nokia being mentioned as possibilities.

As of this writing, the FTSE 100 trades up 16.60 points or 0.39%, to 4277.50. The CAC 40 trades up 28.54 points or 0.85%, to 3366.90. The DAX has gained 36.68 points or 1.04%, and trades at 3552.99.

  Jeff Bailey   9/15/200,  12:25:38 AM
Pivot Matrix for tomorrow posted at this Link

  OI Technical Staff   9/15/200,  12:19:14 AM
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