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  Jeff Bailey   9/17/200,  4:00:51 PM
IntraBiotics (IBPI) $10.98 -0.45% .... What level would you buy IBPI since it has had a big run lately??

Here's a technique I've discussed before for trying to find a level for entry/exit points.Link

Would look 1/2 bullish on pullback to $8.95 (maybe some stops lined up under $9.00 that hungry market maker wants to trigger in order to get some stock), then average up to full or additional 1/2 on move above $10.66. If no pull back to first entry, take 1/2 on break above $12.55.

  Linda Piazza   9/17/200,  3:51:32 PM
I was thinking about my 15:39 comment that we may get a viable entry tomorrow morning on a move away from the OEX 30-minute 21-pma and then thinking about that in the context of this being opex week. One of the problems with trading the OEX based on a 30-minute chart is that it sometimes tends to hug that central average for a while, building a congestion zone as it consolidates. One problem with trading opex week is that the indices and specific stocks sometimes get nailed to certain levels about midday on Thursday (SPX options stop trading after Thursday afternoon, although settlement isn't until the open the next day) and move very little after that. We may not get a viable entry after all. Trading during opex week used to be a lot more fun.

  Linda Piazza   9/17/200,  3:39:36 PM
What's happened with the OEX so far today? It tested recent highs, moving slightly above them. It then fell back, slightly below a 50% retracement of the previous rally (from about 2:30 yesterday afternoon until reaching today's high) and it then rose to retest the 38.2% retracement of that rally. It rose to test that level in a formation that may be bear flag, and now falls back toward the bear flag support. In any other time, that's exactly what I would presume that it is, but these haven't been normal times. If this is a bear flag, however, it should break to the downside before retracing more than 50% of the move that immediately preceded its formation. That would be at about 516.62.

With the OEX poised at the 30-minute 21-pma, we may have a valid Swing Trade entry tomorrow morning, either on a failure at that level or a bounce from it. We'll have to see what happens the rest of the trading day today and whether we get a gap move on the opening, which would probably nix our ability to enter.

  Jonathan Levinson   9/17/200,  3:19:14 PM
The put to call ratio is .73, with the equity pcr .44 and the index pcr 1.92. VIX is up .54 at 19.85, QQV -.51 at 26.52. Yesterday, put buyers were blown out by the sudden rally. This being opex week, is it reasonable to expect the call buyers to be next? So far, not really, but there are up to two days to go, depending on the contracts.

  Jeff Bailey   9/17/200,  2:59:37 PM
Jonathan's 14:23:42 comments as it relates to some of the things we've looked on in the futures chart and use of retracement.

It may be more useful to some intra-day traders to be able to tie comments like those in with a level, whether it be a pivot matrix level or one of these retracement techniques.

If I were staring at a blank chart with moving averages only, Jonathan's observation may not may much sense as to why bids were lined up near that level, at least from a technical sense.

Jonathan's observation perhaps more useful to an aggressive bear that was willing to short the 1,029, stop above 1,030, and when the bear got the inta-day break of 1,027.00, which should have found a bid, and then the break at 1,025.70, a good reason to close a bearish trade with an observation that there were some strong bids lined up.

Even for bull that had been buying 1,025.70, and just didn't get his/her upside break above 1,030, there may have been a sense of calm, and look for rally back to break-even, with eye on 1,025.70 resistance for an exit, as the day's low was lost.

  Linda Piazza   9/17/200,  2:50:35 PM
Swing Trade Signals
That bounce is looking more and more likely. Consider exiting now to protect any profits you might have.

  Jonathan Levinson   9/17/200,  2:47:16 PM
Bonds are easing off their highs as equities ease off their lows, with FVX currently -5.9 bps, TNX -8.6 and TYX -9 bps.

  Jonathan Levinson   9/17/200,  2:43:34 PM
The US budget deficit reported at 2PM was less than expected but represents an alltime high.

  Linda Piazza   9/17/200,  2:41:27 PM
The OEX sits right in that zone I warned about in my 13:37 post. This has strong bounce potential. The 50% retracement level of the ramp up from yesterday afternoon is at about 515.46, near the current OEX level and the 30-minute 21-pma is at 515.64. A sustained move above these levels could see a retest of the day's high. Right now, the five-minute pattern looks like a standard bear flag rise after a steep drop, but be careful. Those 30-minute oscillators are showing signs of flattening from their downward slides, and the five-minutes are cupping up, too. If you entered on that rollover under 517, you consider setting a stop somewhere near your entry.

  Linda Piazza   9/17/200,  2:31:53 PM
Swing Trade Signals
Careful. The 30-minute CCI is flattening and MACD shows a hint of doing so, too, although it's just the merest hint now. Consider tightening your stop to your entry level.

  Jonathan Levinson   9/17/200,  2:29:19 PM
The put to call ratio is up to .74, still neutral, with the VIX up .48 at a mere 19.79, QQV still -.11 at 26.92. The TRIN.NQ is up to 1.02, TICK>NQ -250. Selling has begun, but complacency in the options market continues to reign.

  Linda Piazza   9/17/200,  2:25:38 PM
Swing Trade Signals
Those in an unofficial bearish OEX trade can now breathe a bit easier as the OEX is safely below the 50% retracement of the ramping up from about 2:30 yesterday and below the 30-minute 21-pma. This should actually be a point at which we're entering an official bearish OEX play with a stop at today's high and a target of 512.75, just above the 30-minute 100-pma. The 30-minute MACD says it would be a good trade, too, but I'm still too suspicious of the buy-the-dip mentality to pull the trigger. Just yet.

  Jeff Bailey   9/17/200,  2:24:49 PM
Fascinating observation from Jonathan as it relates to the 14:18:39 chart?

  Jeff Bailey   9/17/200,  2:18:39 PM
S&P futures (sp03z) updated intra-day chart. Link

Took about 10-minutes to prepare, but 1,023.50 now gains importance as it relates to holding buld of yesterday's gains. Just as 1,027.00 should have held support on the levels, this now becomes level to look for resistance, on rebound from selling after another test of 1,029.10.

The pennant outlined on the 5-minute chart simply shows a 30-minute period yesterday where bulls and bears battled it out, where bulls eventually won. This is now a point where you get the sense intra-day that traders compile data, then vote with their convictions.

  Jim Brown   9/17/200,  2:10:01 PM
End of Year Special We are getting ready to produce the end of year special. We have had various success with the various offerings over the last six years and each year it becomes a little harder to top the prior year. I would like to open it up to the monitor readers.

What would you like to see as a special this year?

Email me at eoy@OptionInvestor.com

  Linda Piazza   9/17/200,  2:07:33 PM
The OEX now challenges its 30-minute 21-pma and the 50% retracement of the ramping-up movement that began about 2:30 yesterday afternoon. Until now, nothing terribly bearish has happened, as it's natural to retrace about half of the previous movement, but that could change if this level falls, too. This is a potential bounce point, so be careful if you're in bearish position, perhaps ratcheting down stops.

  James Brown   9/17/200,  1:51:33 PM
Looks like a Washington Post article is confirming that AOL Time Warner will drop "AOL" from its name.

  James Brown   9/17/200,  1:49:59 PM
Jane, It's not me. I remember reading about James Brown (at Merrill Lynch) earlier this year.

  Linda Piazza   9/17/200,  1:47:30 PM
Remember that we're in the middle of that time when we often get a strong push to test resistance or support. Now we'll have to see if the downside continues. It's the outcome of this test that's important.

  Linda Piazza   9/17/200,  1:37:05 PM
Swing Trade Signals
I would anticipate a possible bounce back up to OEX 517 to test broken support there. Those who are interested in a short play and have not yet entered might enter on a rollover anywhere beneath 517.50, but should be prepared to exit quickly near 513.50-514 if the OEX bounces from that level. Just as Jim is not going to issue a Momentum Trade short on the futures, I'm not going to issue an official short/put trade here, either, because of the uncertainties.

There's a bigger danger in entering a short/put position here. The 30-minute 21-pma is rising strongly and is now at 515.84, just below a possible 517.50-516 entry. That's also near the 50% retracement of the move that started yesterday at about 2:30. These levels have strong bounce potential and are the reasons I'm not entering an official trade.

  Jonathan Levinson   9/17/200,  1:35:08 PM
The put to call ratio is currently .69, equity pcr .45 and index pcr 1.60. The TRIN.NQ is up to neutral bullish from previous extreme bullish territory, currently .68, TICK.NQ -168 as the Nasdaq futures print their session low.

  Mark Phillips   9/17/200,  1:30:17 PM
GS $90.99 (+0.06) Turned back again, shares of GS have once again failed to break out over the $92 resistance level. While this resistance seemed like it should be only a mild speed bump for the bulls when we initiated bullish coverage more than 2 weeks ago, the ensuing price action demonstrates that this is a much more significant level than we initially assumed. Today's intraday high of $91.99 and subsequent failure shows that the bears are really trying to defend that level. A breakout over $92.25 is still the line that needs to be crossed before initiating new momentum entries. At this point, stops should be raised to $88.75, just below last Thursday's intraday low, and now below both the 20-dma ($89.25) and the 5-week ascending trendline ($88.85).

  James Brown   9/17/200,  1:26:31 PM
More upgrades for Retailers... UBS also started shares of Wal-Mart (WMT), Costco (COST), Target (TGT), and Sears (S) with "buy" ratings.

  Linda Piazza   9/17/200,  1:23:09 PM
There's now a bearish cross on the OEX 30-minute MACD, although MACD remains above signal and also above a rising trendline formed from a series of higher lows. RSI has turned down. The 30-minute chart shows a series of candles stacking up next to each other in a consolidation zone. It's possible that they're going to continue to stack in a tight range today. Although few official Swing Trades opportunities have presented themselves (unacceptable risks ahead of the weekend and then the FOMC meeting, tight downside or upside target, etc.) over the last week, I've been trading both bullish and bearish positions with a neutral to slightly bullish outlook. I thought we'd get that retest of 518.00. Today, it's hard to get a feel for the markets, though, at least for me. The price charts say we should be long over OEX 518.50 and short under 516, but that doesn't account for close support or extended markets, or opex week machinations.

  James Brown   9/17/200,  1:16:22 PM
Harmonic (HLIT) Soars It was only a week ago that FBR was downgrading HLIT and slashing its price target from $6 to $5. Today we see Soundview upgrading HLIT to outperform from neutral and raising its price target from $4.40 to $6.00. Giving the go-go momentum feel of the markets these days, investors preferred the upbeat comments. The stock is up over 18 percent to $5.56 on the news.

  Linda Piazza   9/17/200,  1:11:21 PM
Swing Trade Signals
It's now possible that we're seeing a lower high build on the OEX five-minute and 30-minute charts. Confirmation is going to require a trade below the 516.41 trough between the two lows, however, close to the 516 level that would have been confirmation for the OEX H&S. That may mean that we'll see another bounce attempt at that level, since two potential formations have set up with confirmation levels near there. A break of that level should see the OEX test the 514 level, but now the 30-minute 21-pma has risen to 515.37, and might provide support, at least temporarily. Traders should be cautious about initiating bearish positions as long as the buy-the-dip sentiment presides. As I mentioned this morning, I'm not going to give an official short entry with that potentially strong support so close underneath.

  James Brown   9/17/200,  1:09:29 PM
Merrill Raising some Retailers... Merrill Lynch has upgraded both Ann Taylor (ANN) and Talbots (TLB) this morning from "neutral" to "buy". Both stocks are up about 4.7 percent on the upgrade on decent volume.

Meanwhile the Retail index (RLX) is just barely in the green.

  Jeff Bailey   9/17/200,  1:03:46 PM
S&P Banks Index (BIX.X) 305.17 -0.09% .... Haven't shown BIX.X with new MONTHLY/WEEKLY retracement, but MONTHLY retracement of 304.58 and WEEKLY retracement at 305.38 has defined bulk of today's range after morning high of 305.99 was found.

Trying to envision BIX.X impact on SPX/OEX and not seeing enough "confirmation" to really get an OEX/SPX bull to get a push in the SPX/OEX here.

  Jeff Bailey   9/17/200,  1:02:55 PM
Updated S&P futures (sp03z) chart on intra-day 5-minute bars. Link

  James Brown   9/17/200,  1:00:37 PM
Rising Bread... Shares of Panera Bread Co (PNRA) are down 2.6% today after Raymond James downgraded the stock to "out perform" based on valuation concerns. The stock remains above short-term support at $45. Bulls might actually be using the weakness as an entry point given the afternoon bounce.

  James Brown   9/17/200,  12:57:15 PM
Big Loser Shares of Jack In The Box (JBX) are getting hit hard today, down 13.7 percent, after serving up an earnings warning for 2004. Many investors may not know that JBX also operates the Qdoba Mexican Grill chain but company profits are still dropping from lower franchise fees, rising pensions and insurance expenses (Reuters).

  James Brown   9/17/200,  12:53:45 PM
Keeping the DJIA positive? Shares of Altria Group (MO) have been able to maintain this morning's gains of nearly 11%. I haven't seen it in the monitor yet so here's the summary. The Illinois Supreme Court reduced the bond amount needed for the "Lights" lawsuit from $12 billion to just $6.8 billion. This is a major sigh of relief for MO, as the $12 billion bond could have bankrupted the company. This sparked a new MO price target from Smith Barney from $50 to $56.

In related news for the tobacco industry, R.J.Reynolds (RJR) is also up more than 11 percent after telling Wall Street it would reduce $1 billion in costs by slashing its workforce by 40 percent by the end of 2005. Smith Barney also raised their price target on RJR from $31 to $38.

  Jeff Bailey   9/17/200,  12:53:20 PM
Russell 2000 Index (RUT.X) 516.52 +0.16% .... couldn't quite get a new 52-weeker yesterday, but attempting again today with September 8 high being 517.21.

  Linda Piazza   9/17/200,  12:51:43 PM
Reader Question: Is LUV breaking below the neckline on a H & S on the 30 minute chart?

Response: Great observation. In this case, I thought an annotated chart might be the easiest way to answer the email: Link

  Jeff Bailey   9/17/200,  12:46:09 PM
Dow Industials (INDU) 9,590 +0.25% ... back to test morning highs. MO +11.14%, IBM +1.7%, T +1.3%, HPQ +1.2% and INTC +1.2%, with DD -2.9%, XOM -1.45%.

Breadth now fractionally negative at 16 to 14, but breadth and gains in individual names starting to broaden out. Trader psychology should be getting lift.

With weak dollar and buying in Treasuries, I'm left to think shorts are doing bulk of buying at this point. SPX trading 1,030.29 here, with squeeze-like trade potential above 1,032.

  James Brown   9/17/200,  12:42:28 PM
E-Trade Group - ET - Yesterday we mentioned that Schwab had seen August trades decline from July's but noted September trade volumes were coming in very well. This morning ETtrade reiterated the same theme. August trades were slow but September's volume is surging. The company reaffirmed its Q3 estimates.

The Brokerage sector (XBD.X) is still green but only fractionally.

  Jonathan Levinson   9/17/200,  12:40:32 PM
The put to call ratio is hovering at .68, pretty much neutral for its recent range. VIX is barely moving at 19.63, QQV lower by .36 at 26.67. This remains a puzzling opex week, with the options markets relatively quiet.

  Linda Piazza   9/17/200,  12:35:29 PM
Volume patterns appeared slightly more bullish as of a few minute ago, but remain cautious. Adv:decline ratios were 16:15 for the NYSE and 16:14 for the Nasdaq. Up volume led on both exchanges. Total volume was 618 million for the NYSE and 990 million for the Nasdaq.

  Jeff Bailey   9/17/200,  12:31:45 PM
Angiotech (ANPI) $51.70 +2.03% Link ... Jeff: I may have shot myself in the foot -- sold 10 SEP45 calls, now out $5K. Hard to read the financials on this company -- loses $10-20 million a year, lousy cash flow, high stockholders equity, lots of missing numbers. Hard to chart now that the event has occurred. Time is running out. What would a savvy options trader look for: let it drift down and get excercised, set a stop and move it down (volitile now), look at puts/calls, cover and forget it (which is what I think the pros would do)

I would have to agree with the last option, cover it, but don't necessarily forget it. While the fundamentals obviously look poor, for whatever reason (I think we know now) the chart was longer-term bullish. PnF stop for bear would have had to have been $48, which stock gapped above on Monday's news, and short the calls with a bullish vertical count hinting at $79 not good.

I can't say there were "obvious" signs that this was going to happen as relative strength versus SPX was near-term weak. Just some bad fortune and would look to limit exposure to the trade.

  Linda Piazza   9/17/200,  12:08:48 PM
I'm beginning to give my tight-range thesis today more credence. As has been true of late, the five-minute OEX chart shows the index resisting rounding over into that right shoulder.

  Jim Brown   9/17/200,  11:59:02 AM
Internet stocks are soaring after the ban on Internet taxes was made permanent a few minutes ago. Link

  Jeff Bailey   9/17/200,  11:47:38 AM
11:00 Update posted at this Link

  Linda Piazza   9/17/200,  11:42:09 AM
Reader Question: when do the sept options expire

Response:Great question and a timely one, but that depends on which options you're considering/holding. Here's a page that links you to the specifications on all the index options: Link Click on the appropriate option series--the European-style XEO or American-style OEX for OEX options, for example--and you'll find the information under that section.

  Jonathan Levinson   9/17/200,  11:40:01 AM
The put to call ratio is down to .66, with the equity pcr low at .47, index pcr neutral at 1.53. VIX still 19.77, QQV -.04 at 26.99.

  Linda Piazza   9/17/200,  11:36:41 AM
The OEX five-minute chart shows the OEX rounding over right on schedule into a possible right shoulder, but the rounding-over is hesitant. The H&S formation used to be so reliable that traders could go short/buy puts as soon as the rounding-over process began, but it's been less reliable lately. There's been a propensity for the index to begin rounding over and then bounce at the neckline. Although it's not unusual for H&S formation to form a second right shoulder, lately that second right shoulder hasn't been a shoulder at all, but has exceeded the head level. Still, the 30-minute indicators are now looking more bearish, with the MACD lines curving down and touching, although still above signal, and with CCI turning down, although still green. Direction remains iffy.

  Linda Piazza   9/17/200,  11:14:58 AM
Swing Trade Signals
The OEX H&S on the five-minute chart is looking like a possibility. A move above 518 again would negate that potential formation, however. A fall through 516 would confirm the neckline. The downside target should be about 513.80, which lines up well with known next light support. This might make a possible aggressive bearish trade, although a trader would have to monitor such a trade closely and employ an option strategy that would benefit from a small movement in the OEX. I would note, however, that downside targets are not being met, even this morning. The Dow did not meet its 9552 downside target after confirming its double-top formation on the five-minute chart, and has now moved back above the confirmation level at 9573. I'm cautious about today's action, with volume patterns not strong, but with the markets still not meeting bearish targets, even on a five-minute basis. The best action may be no action, which might be the decision I make.

  Jonathan Levinson   9/17/200,  11:04:21 AM
Bonds are strengthening, FVX -2.7, TNX -5.1 bps and TYX -6.3, as is December gold, now up 2.30. Equities are the weakest link so far today.

  Linda Piazza   9/17/200,  11:03:08 AM
I'm still concerned about volume patterns. Although a burst through overhead strong resistance or a breakdown through support would likely change those patterns, they're fairly evenly mixed between buyers and sellers. Breadth is not strong. Decliners are ahead by 81 issues on the NYSE and advancers are ahead by 73 issues on the Nasdaq. Up volume is more than double down volume on the Nasdaq, however. These volume patterns continue to urge caution, especially caution for those in or contemplating bullish positions.

  Jeff Bailey   9/17/200,  11:01:46 AM
sp03z 5-minute bar chart posted at this link, per discussion at 10:46:38. Link

  Linda Piazza   9/17/200,  10:58:42 AM
The OEX is behind the NQ, Jane, not yet having completely formed its head, but I was just noticing the potential for a H&S on the OEX five-minute chart, too. If so, then the OEX should probably bounce again somewhere near 516 (as it began doing while I was typing), up to the 517.50 level and then head down again. As Jane mentioned, however, these have not been reliable formations lately.

  Linda Piazza   9/17/200,  10:53:46 AM
The 30-minute OEX MACD now begins to flatten but is far from giving a sell signal yet. I've been wondering since yesterday's close about the markets' tendency to follow a big-range day with a tight-range day. I wouldn't be surprised to see a tight range today, but opex may change that tendency.

  Linda Piazza   9/17/200,  10:47:35 AM
The Dow is confirming the double top, a first bearish sign. Now we'll need to see if the downside target is confirmed.

  Jeff Bailey   9/17/200,  10:46:38 AM
S&P futures (sp03z) 1,028.70 +0.09% .... been watching this contract this morning based on my fitted retracement. Two tests of 1,029.10 have been turned back.

But watch this the 1,030 level. Simply take your retracement from the 5-minute bar low of 09:30 to - 09:35, anchor base at bottom of that 1,025.70 low, then begin sliding it up, with your 80.9% retracement at the top of that bar at 1,027.00. See how the 50% reracement hits the 1,029.10. This is a very short-term "fit" again to the 1,029.10 area and where sellers will sit until demand too strong. Trigger for bullishness then comes higher at your 38.2% retracement of 1,029.90, where we might look for a buy program premium alert on bigger demand.

  Linda Piazza   9/17/200,  10:39:45 AM
The Dow is setting up for a possible double-top formation on the five-minute chart. A dip below 9573 would confirm the double top with a target then at about 9552. This would be a more than 61.8% retracement of the day's range.

  Jonathan Levinson   9/17/200,  10:36:34 AM
The put to call ratio has edged up to .60, VIX back down to 19.68, QQV +.30 at 27.33. Breadth continues to reflect strong buying pressure, but the rising p/c ratio indicates heightened caution as well. Bonds are positive but not rallying- the market feels uncertain here, waiting for a cue.

  Linda Piazza   9/17/200,  10:35:51 AM
Early volume patterns were not supporting the bullishness in the markets. Decliners actually led on the NYSE, while advancers led slightly on the Nasdaq. Up volume was ahead on both exchanges. There were zero new lows on the Nasdaq, however. Total volume was light, at 226 million on the NYSE and 438 million on the Nasdaq.

  Jeff Bailey   9/17/200,  10:34:57 AM
Agree with Jim's 10:28:27 as it relates to new bull entries below INDU 9,621 (10-points above MONTHLY R1 of 9,611).

U.S. Dollar Index (dx00y) 96.24 -0.44% shows some give back of dollar's gains yesterday, and this may be ahead of today's 02:00 PM EST release of the Treasury budget for August, which is expected to show increase deficit of $78.0 billion compared to year-ago $54.7 billion.

  Linda Piazza   9/17/200,  10:31:26 AM
Swing Trade Signals
I won't be issuing a Swing Trade short signal even if the OEX appears to be rolling over beneath support. There are two reasons: the bullish underpinning apparently still exists, and we have support rather close at 514. I'm not sure whether the OEX would decline to that next support before dip-buying began again. For that reason, we would need to follow the trade closely, and that might not be possible if the Monitor has intermittent outages, which is the second reason.

There could be an upside breakout instead, as difficult as that may be to believe. Although I would like to have done so, I'm not going to issue an official signal here, either, until the hardware issues are fully resolved, but hardy souls who can follow their own trades might consider a long play (with close stops) on a breakout above OEX 518.50 (which has already occurred) with a simultaneous break out of Dow 9600 (which has not yet occurred). I would watch closely for a reversal and be prepared to switch sides quickly. Only the most aggressive traders should consider this trade.

  Jeff Bailey   9/17/200,  10:24:21 AM
Sirius Satellite (SIRI) $1.90 +13% ... most actively traded and higher after SG Cowen increases its estimates for net additional subscribers for 2004 to 700,000 from 500,000 and for 2005 to 1 million from 700,000 on belief that exclusive OEMs Ford and Daimler Chrysler will launch factory installs in 2005 model year and that decision on factory installs should come in November.

  Linda Piazza   9/17/200,  10:23:44 AM
While the indices are at levels where the oxygen thins out, both the OEX and the Dow retraced roughly 38.2% of their day's range and then headed up again. So far, that looks bullish, but they need to move above those previous day's highs before we consider the retracement completed.

  Jonathan Levinson   9/17/200,  10:16:16 AM
VIX has broken back above 20, currently 20.06. The put to call ratio remains too low but is rising slowly. The TRIN.NQ is up to .52 from a low of .24 this morning, TICK.NQ +181. This is either the end of the morning's bullish short covering and/or buying frenzy, or the beginning of more meaningful selling, but the uptrend from yesterday is still intact. Patience for bears, close stops for bulls remains the order of the day.

  Linda Piazza   9/17/200,  10:12:33 AM
The Dow has not yet retraced 38.2% of the day's range, with that level at about 9572 and with a 50% retracement at about 9565.50.

  Jeff Bailey   9/17/200,  10:08:08 AM
Dow Industrials (INDU) 9,580 +0.13% ... just off session high of 9,594 which saw test of WEEKLY R1. Breadth weak at 22 to 8, with MO $44.95 +10.87% and CAT $70.48 +1.11% doing a bull's work.

DD $42.84 -2.56% lower after updating guidance at the lower end, saying 2003 EPS expected to be about $1.60 per share compared to consensus of $1.80. DD saying it does not see evidence of a broad turnaround in industrial demand in their July and August results, but leading indicators suggest a meaningful recovery which should begin to gain momentum in the fourth quarter of 2003 and carry into 2004... "Considering our business experience to date and a close watch on industrial production, we believe that the slower scenario is playing out."

  Linda Piazza   9/17/200,  10:08:02 AM
The OEX currently moves down to a 38.2% retracement of the day's range, with that retracement at about 517.37. A 50% retracement lies at about 517.08, and a 61.8% retracement lies at about 516.80. If the OEX steadies here and then moves back above the previous day's high, that would be a bullish signal, but we've got Dow 9600 still to be tested. If the OEX instead retraces more than 50%, that would show early weakness.

  Jonathan Levinson   9/17/200,  10:04:36 AM
The current put to call ratio is .52. VIX is up .65 to 19.96, VXN +.34 at 32 and QQV +.46 at 27.49.

  Linda Piazza   9/17/200,  10:01:25 AM
Swing Trade Signals
Here's the post I intended for earlier today: The OEX ended the day yesterday at a key level, as indicated by the horizontal blue line in the linked chart: Link This blue line represents long-term resistance dating back years. The OEX tested this level just after climbing out of its bull flag, but then retreated and retested the former resistance. Now it's challenging that level again. A fall from here would almost surely send the OEX back to test support, but a strong move through that level might initiate a new leg up. Where is next support? Nearest support lies between 513.50-514. Below that lies a rather wide congestion zone between 511-512.60, with the strongest support near 511.

Where is the next resistance above 518? We have to look at the weekly chart for that information. On the weekly chart, slight resistance shows up at 523, but strong resistance doesn't show up next until near 550. Link

That's a weekly chart, though, and we need to know what's going to happen now, today. As I scan intraday charts, I see many indicators showing overbought levels. Yesterday's low $TRIN level was showing the same thing from a contrarian viewpoint. Yet I also notice MACD moving above signal on 30-minute and 60-minute charts, and MACD lines separating and turning up again on the daily. The 5(3)3 stochs look bullish on the daily. Lately, I've trusted MACD more than other oscillators, although they're slow to move and a reversal may have begun before they signal that reversal. What we're going to have to do today is rely on price. We're going to look for a rollover below 518 or a breakout above that level. We need to wait for initial volatility to subside, if possible, and it's possible that the first breakdown or breakout will not be the final direction. We may have to switch sides and do so quickly. Be prepared. If we do enter short, we're also going to have to be prepared to jump out quickly if the OEX looks to bounce at next support.

  Linda Piazza   9/17/200,  9:59:57 AM
Swing Trade Signals
The OEX is back above 518, a potential long signal, but the Dow has not yet cleared 9600, so I'm waiting to see what happens there, as a failure of the Dow to breach that level could be the signal for a reversal. I'm also reluctant to issue an official signal if there might be outages, but we may look at an unofficial trade.

  Jim Brown   9/17/200,  9:53:44 AM
A critical server at OptionInvestor and one that serves the Market Monitor crashed and was down for over 2 hours. Tech support has worked around the problem at least temporarily. I am unsure how stable the temporary workaround will be. We are working to correct it completely but there could be some more temporary outages this morning.

  Jeff Bailey   9/16/200,  12:35:28 AM
Pivot Matrix for tomorrow at this Link

  OI Technical Staff   9/16/200,  12:35:18 AM
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