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  Jeff Bailey   9/18/200,  5:38:50 PM
Pivot Matrix for tomorrow posted at this Link

Additional note: According to Stock Trader's Almanace, September Triple Witching day (tomorrow) has Dow Industrials (INDU) down 8 of last 12 years. Maybe look for some morning follow through to 9,700, then fade. Get new WEEKLY levels next week, where better correlative support levels can then be identified. Thinking maybe something in the INDU 9,500's

 
 
  Jeff Bailey   9/18/200,  3:54:14 PM
New highs/New Lows not nearly as bullish as I would have tried to guess.

NYSE showing 254:8 and see that 09/03/03 NH/NL was 507:6

NASDAQ showing 33:5 and same 09/03/03 NH/NL was 331:5.

Still bullish leadership.

 
 
  Linda Piazza   9/18/200,  3:51:06 PM
Swing Trade Signals
OEX traders in the unofficial long Swing Trade should be making exit decisions if the position hasn't already been exited for a profit. I suggested earlier today that traders might set a profit exit just ahead of 423, and that looks to have been a wise choice, if taken. The OEX hit a 522.83 high before this latest small downturn. I wouldn't be surprised to see a small drop into the close. I don't know that I'd hold this position overnight, either. Evaluate your risks carefully if you're thinking of doing so.

 
 
  Jeff Bailey   9/18/200,  3:50:04 PM
eBay (EBAY) $55.60 +1.25% Link .... I thought I has set an upside alert on EBAY for $55.00. Stock traded that yesterday and with INX.X breaking to new highs today, EBAY should be ready to roll. Like this one long for at the money calls, especially with that unreasonable bullish vertical count of $123.00.

 
 
  Jonathan Levinson   9/18/200,  3:35:51 PM
The put to call ratio continues to read... you guessed it, .60 total, equity pcr .48 and index pcr 1.01. The index pcr has been falling all day, which is generally a bullish sign, as it was today.

 
 
  Linda Piazza   9/18/200,  3:30:02 PM
Here's one of the charts I've posted several times over the last couple of weeks. Along with the weekly OEX chart, it was the basis for my slightly bullish outlook heading into this week. Here's what it's done since: Link

 
 
  Linda Piazza   9/18/200,  3:21:13 PM
Last night when I read Jeff's article, I had already written my 9:19 post from this morning. Although Jeff and I use different methods of looking at charts, I was interested last night to read his proposed upside target for today and see how closely it aligned with the target I had happened upon, using different techniques. That gave further confirmation to the possible upside target as well as to the possible resistance near 523.

 
 
  Jeff Bailey   9/18/200,  3:17:10 PM
Correction needed for my 13:53:01 post. I will go back and make change, but December 900 put mentioning was Dec. 04 900 puts (splxt).

When I quickly glanced, I did NOT see the 900, so this far out, while it might put a floor at SPX 900, my "floor" comments were based as if I was seeing heavy put volume at Dec. 03 900 strike/expiration. (I thought at the time... boy, $39 is a good naked put premium for just 3-months).

 
 
  Jeff Bailey   9/18/200,  3:11:24 PM
U.S. Dollar Index (dx00y) 95.92 +0.18% ... I'm 30-minute delayed on my quotes, but with bond market close, this may also be an "indicator" away from equities to give an observation into close.

Similar thought here to YIELD, is that a strong dollar move (session high has been 96.01) and further dollar gains, could help bolster equites to close as foreign cash looks for some action.

Will note that both 10-year YIELD ($TNX.X) 4.184% and Dollar Index (dx00y) both traded DAILY R1's in today's session after morning dip to DAILY S2's.

 
 
  Jeff Bailey   9/18/200,  3:04:09 PM
It's all up to the bears now in my opinion on how we close. Bond market now closed and 5-year YIELD ($FVX.X) finished at an afternoon low YIELD of 3.085%, but traders can see from the SPX chart that it looks almost identical, except SPX diverging a bit and nearing session highs again. Could still get a major short-cover push higher, but I think it depends on how jittery bears are. Only catalyst to the close is the break to a session high in my opinion.

 
 
  Linda Piazza   9/18/200,  3:03:33 PM
Swing Trade Signals
Those still in the unofficial OEX Swing Trade now want to see the OEX break to the upside of this possible bull flag, achieving a new high of the day. (Done as I typed.) Keep your exit plan in mind as you head into the final hour of trading. What will you do as the time for MOC orders approaches? I would suggested tightening stops more and more as the close approaches if not setting a profit exit and exiting ahead of the volatility that might come with MOC orders.

 
 
  Jeff Bailey   9/18/200,  2:55:57 PM
7-minutes to bond market close 5-year YIELD ($FVX.X) higher by 2.9 bp, but right at afternoon low.

 
 
  Jeff Bailey   9/18/200,  2:51:50 PM
Consolidated Freight (CNF) Link $32.40 +10.84% .... was having strong session to begin with, but jumps from $31.20 to current levels in last 5-minutes after guiding Q3 above consensus. CNF sees Q3 EPS of $0.45-$0.50, which may exclude a one-time charge of up to $0.10 per share for the resolution of a prior year claim. Consensus estiamtes were at $0.29. So rather BIG upward guidance here.

PnF notes have today's trade at $32 getting stock back on a buy signal. This has bullish vertical count now longer-term bullish to $46.

 
 
  Linda Piazza   9/18/200,  2:50:28 PM
As of a few moments ago, total volume was just over 1 billion for the NYSE and about 1.5 billion for the Nasdaq. Adv:dec ratios were 21:11 for the NYSE and 19:12 for the Nasdaq. Up volume was more than double down volume, and new highs numbered 570 versus 12 new lows.

 
 
  Jonathan Levinson   9/18/200,  2:42:01 PM
The put to call ratio is currently .60, equity pcr .47 and index pcr 1.11. VIX is down .16 at 19.46, QQV -.05. It hasn't budged for hours, and unless it's a new arb program keeping it pegged, I believe that Quote.com is dropping the ball on that symbol, currently -.05 at 27.04.

 
 
  Jeff Bailey   9/18/200,  2:39:30 PM
5-year YIELD ($FVX.X) chart to add to 01:00 PM EST thoughts and Link 14:19 post. (what to look for into the close)

 
 
  Linda Piazza   9/18/200,  2:33:50 PM
The OEX 30-minute MACD again flattens and the two lines draw near a bearish cross. They can separate and move up again with a strong push, but be alerted that at least temporarily some of the momentum is easing. The OEX now comes back up to test that 521.54 level that confirmed the lower high. This could still be some form of a measured accumulation pattern, such as a bull flag on top of the five-minute rise, and that would account for the lower highs and lower lows. Just be careful, as it's difficult to assess how the last 90 minutes of trading could proceed on the last trading day for SPX options.

 
 
  Linda Piazza   9/18/200,  2:20:34 PM
An OEX sustained move below 521.54 will confirm a lower high on the OEX five-minute chart.

 
 
  Jeff Bailey   9/18/200,  2:19:53 PM
QQQ $34.72 +1.34% .... Index Trader Wrap chart shown last night has QQQ at some crisscrossing resitance right here at $34.73. I would have to strongly expect the broken downward trend to offer any pullback support.

Today's last hour of trade, after bond market closes could get VERY WILD into the close.

The tip to a strong close or fade could come from the bond market in its final 45-minutes of trade, and will monitor that here.

My thinking is....

1) If YIELDS rise into their close, then equities could erupt into the close.

2) If YIELDS slip further below afternoon lows, then might see some giveback of gains to the close.

One test I have today is the December S&P futures (sp03z) 1,037.00 +1.12% to hold a close above 1,029.10. While this looks like a "sure thing," we should no better by now, that there's just no such thing as a sure thing.

 
 
  Linda Piazza   9/18/200,  2:12:18 PM
The OEX may be consolidating in the form of a rough symmetrical triangle, although it's too soon to be sure. The formation is best seen on a one-minute chart, if that tells you anything about how "too soon" it is to make decisions about its shape. If the triangle has any validity, it should break one direction or another soon, however, as it will quickly narrow to its apex. The presumption with this neutral formation is that it will break in the direction price was moving before its formation--so up--but that's not a given and I would still be ratcheting up my stops if still in the unofficial OEX Swing Trade.

 
 
  Jeff Bailey   9/18/200,  1:53:01 PM
SPX 1,038.56 +1.22% .... today's September expiration. Most active calls are 1,050 strike and 1,025 strike. I doubt SPX trades 1,050, but MONTHLY R2 not out of question. Action is 1,025 might hint that this was a covered call trade that simply exploded from this morning as contract were closed out to save broader portfolio positions.

In last night's Index Wrap, I thought we might have seen a little more of a dip lower at the open, and potential for this type of bullish session on the mentioned option expiration.

I'm also going to take note of 3rd largest volume contract in the December 900 puts (splxt). In my mind, this roll to next quarter puts a floor at SPX 900.

 
 
  Jeff Bailey   9/18/200,  1:45:59 PM
01:00 Update posted at this Link

Some observations inside the Philly Fed should be noted.

 
 
  Jonathan Levinson   9/18/200,  1:45:45 PM
The put to call ratio is steady at .62, with the VIX -.05 and the QQV -.05. The THX is up .8 bps, gold up .90 at 378.20. Readers have been inquiring about the projected maximum pain opex levels for the indices, and have noted that these levels will be missed unless there's a vertiginous drop within the coming minutes and hours. Obviously, option writers are either hedged or will get blown out at current levels. I note also that maximum pain analysis has so far caused maximum pain to bears all year, for the most part, and is no longer working as faithfully as it once did.

 
 
  Linda Piazza   9/18/200,  1:45:36 PM
Swing Trade Signals
I forgot to add this. If still in the unofficial OEX trade, consider how you'll handle the 523-524 level and make a decision ahead of time. Some conservative traders might want to take profit near 522.50, if hit, getting out ahead of potential resistance. That resistance may be minor, consisting of a weekly close, a weekly open, and one intraday weekly low during May 2002. Some of you may prefer to take your chances and see what happens, but consider ratcheting up your stops if you intend to do that.

 
 
  Linda Piazza   9/18/200,  1:40:12 PM
Swing Trade Signals
If still in the unofficial bullish OEX trade, consider raising stops now to 520 or even 520.75, just below the 520.80 previous resistance.

 
 
  Linda Piazza   9/18/200,  1:32:24 PM
The thirty-minute OEX CCI and RSI continue to flatten, with CCI actually sliding slightly down, but MACD appears to be "de-flattening" as the OEX rises. Remember that we're approaching the stop-running time of day when resistance or support is tested, so decide how you'll handle your stops. Will you ratchet them up tighter to take you out on a profit (if in the unofficial OEX bullish play) if the OEX should dip or will you widen them to account for that usual volatility? If there's a new move over the previous day's high, as appears to be occurring now, then 523 comes into play again. I would definitely ratchet up my stops should that level be approached, however.

 
 
  Linda Piazza   9/18/200,  1:26:21 PM
Reader Question: Just to confirm, OEX expires tomorrow and SPX today. Correct? Thanks.

Response: That's a great question to address today. Expiration day is different than the last trading day. The SPX options expire Saturday, as do the OEX and XEO (European-style for the OEX) options, but the last trading day for the SPX options is usually the Thursday before the opex, and the last trading day for the OEX and XEO options are usually that Friday. Settlement (the determination of the value) for the SPX options is based on the opening price Friday morning in its primary market for each component of the SPX, so you have to wait until all components are open, and not just the first SPX value on Friday morning to know what the settlement value is. OEX and XEO settlement values are based on the last (closing) reported sales price in the primary market of each component stock on the last business day before the expiration date.

Here's a link for each of the index options, explaining last trading date, settlement value, whether European or American-style options, and lots of other great information: Link

 
 
  Jonathan Levinson   9/18/200,  1:02:45 PM
Volume already exceeds 1.1B on the COMPX, with the TRIN.NQ .56 and the TICK.NQ currently +42. Volume is a bull's best weapon, and there's plenty of it today. The p/c ratio is .61 currently, volatility near unchanged. The lack of extreme readings and the presence of strong volume also look bullish, but doji reversals occur precisely when advance looks like a "sure thing". Bulls and bears need to be careful at this critical juncture.

 
 
  Linda Piazza   9/18/200,  1:00:31 PM
There was no higher high on the OEX, at least so far. We can't confirm the lower high, however, unless the OEX moves below 520.15, the trough between the two five-minute peaks, before it achieves a new high.

 
 
  Jeff Bailey   9/18/200,  12:55:43 PM
S&P Banks Index (BIX.X) 309.90 +1.67% .... continues to gain. Should find SPX 1,036.61 enough lift to make a new session high soon. If so, another wave of short-covering expected.

U.S. Dollar Index (dx00y) 95.84 +0.11% and TNX.X rising 2.7 bp to 4.218%.

 
 
  Linda Piazza   9/18/200,  12:53:34 PM
The next task OEX bullish traders want to see accomplished is an OEX trade over the previous day's high.

 
 
  Linda Piazza   9/18/200,  12:46:07 PM
Swing Trade Signals
Both the Dow and the OEX have traded sideways out of their potential bear flags, as has been the tendency of late with these bearish formations. If not out of the unofficial OEX play already, I would keep ratcheting up those stops. Volume patterns are still bullish, but the 30-minute indicators show the slightest tendency to flatten. They're not bearish yet, but a quick draft down could make them look so. It's possible that they're going to flatten while the OEX establishes a new congestion/consolidation zone between 519.80 and 520.80, which will be death to option premium. Remember that I warned yesterday that there's sometimes a tendency to pin stocks and indices at specific levels beginning about midday on Thursday before opex Friday. I can't be certain that's happening, but it's a scenario we have to keep in mind.

 
 
  Jeff Bailey   9/18/200,  12:35:58 PM
Barr Labs (BRL) $73.50 +0.47% .... stock spiked to $74.50 in last 15-minutes and little pullback here after getting FDA approval for generic Loestrin Fe.

 
 
  Jeff Bailey   9/18/200,  12:31:07 PM
Monster Worldwide (MNST) Link $28.86 +1.47% ... didn't get that pullback to $25 I was looking for when gone on vacation. Stock make new 52-week high today despite some anemic jobs data. Action here along with broader market certain hints that a market feels jobs will come along. I'm still monitoring stocks/tracker for updated Sept. 15 short interest data, but none yet.

Trade at $29 would get stock's PnF chart back on a buy signal, where that would have an initial bullish vertical count of $46 being built. Session high has been $28.91.

MNST is a NDX/QQQ component and relative strenght is bullish Link

 
 
  Linda Piazza   9/18/200,  12:27:50 PM
The Dow and the OEX have each retraced more than 50% of the flagpole plunge that preceded the current formation. That makes it more questionable whether this could be a bear-flag rise, because they typically retrace less than 50%. The OEX hit that 50% retracement sooner than the Dow did, showing its relative strength once again. However, the Dow is now turning back at the 61.8% retracement. I'm still watching.

 
 
  Jonathan Levinson   9/18/200,  12:24:48 PM
The put to call ratio is currently .60, VIX -.01 at 19.61, QQV -.05 at 27.04. Bonds remain weak, and gold has bounced back from lightly negative to lightly positive.

 
 
  Jeff Bailey   9/18/200,  12:22:58 PM
S&P Banks Index (BIX.X) 309.15 +1.42% .... All I had to do is outline the potential head/shoulder top in last night's wrap to get this sector moving higher. Go figure.

 
 
  Linda Piazza   9/18/200,  12:15:37 PM
Actually, I snapped the regression channel wrong when writing the 12:10 post. The 50% retracement of the Dow plunge crosses at about 9621, not 9620, and the Dow did turn down, at least temporarily, at that number. It's steadying now near 9615 as I type this, however, so I'm still watching closely, ready to exit my own play if the Dow fails out of this flag.

 
 
  Jeff Bailey   9/18/200,  12:15:13 PM
Sybernaut (XYBR) $2.56 +33.3% ... Hi Jeff

Great call on this one, go find some more of these!!!

SL

I saw this action early this morning, but didn't have time to mention. Yes, stock doing well again today after mentioning on 09/15 at 12:00 regarding discussion of warrants.Link

While not a warrant play, keep eye on BOOM $3.63 +0.55%. Somebody's working the stock and I think using Cincinnati to try and influence some selling with an offer. Bid suspiciously builds on the NASDAQ at $3.63 on intra-day basis, thus my thinking somebody's working the stock before another leg higher. This kind of action rather common in some of the thinner traded small to micro caps. Support should be firming at $3.00 and I wouldn't mind seeing a little dip to that level (influence some long selling, get some liquidity going), then bull working the stock drive for higher price above $4.00 and start building a chart.

Disclosure: I currently hold bullish position in BOOM

 
 
  Linda Piazza   9/18/200,  12:10:49 PM
The predictable bounce attempt comes as the Dow approaches 9600 again. We can expect a measured distribution pattern to form now. Those who have not exited the OEX play might watch this Dow pattern, too, to see how it plays out. There appears to be a lot of volatility just now. Sometimes the initial reaction is not the final reaction, but there's risk right now to both bullish and bearish plays as the markets sort out their reactions. If the Dow cannot mount another move over 9620, the 50% retracement of the plunge, then I would consider exiting the unofficial OEX bullish play, too, on any strength. If the Dow does move back above 9260, then consider raising stops tightly under the OEX then-current level.

 
 
  Jeff Bailey   9/18/200,  12:03:59 PM
Philly Fed benchmarking....

INDU = 9,616 , SPX = 1,035, OEX = 520, NDX = 1,390, QQQ = $34.55, DX00Y = 95.82, $TNX.X = 4.244% (UP 5.3 BP), BIX.X = 308.85.

 
 
  Jeff Bailey   9/18/200,  12:01:34 PM
SPX updated 5-minute chart and reason for thinking it might be wise for those traders long from post-FOMC and just above WEEKLY pivots to lock in some gains. Link

 
 
  Linda Piazza   9/18/200,  11:55:57 AM
Is this a bull flag on the OEX five-minute chart? That's possible, but the Dow's similar chart shows a fall out of a similar pattern. I'd be careful here if in a bullish play. The OEX 30-minute 21-pma has now risen to 517.28, so I'd certainly exit on a drop below that level, if not before.

 
 
  Jeff Bailey   9/18/200,  11:54:22 AM
Agree with Jim's 11:50:40 I would suggest bulls from Wednesday's post-FOMC and WEEKLY Pivots look to take some gains here. Will follow with intra-day SPX chart, but SPX high of 1,036.96 comes at our "fitted" 61.8% retracement of 1,036.61. Pretty good gains at risk and why not pay yourself a little.

Can always get back on board if 1,037 is traded, but intra-day risk assessed to SPX 1,032 here.

 
 
  Jeff Bailey   9/18/200,  11:51:01 AM
S&P Banks (BIX.X) 309.00 +1.36% ... set upside alert here, which is just above MONTHLY R1. Looks to pave the way to WEEKLY R2 313.14 and more likely MONTHLY R2 of 312.34.

 
 
  Linda Piazza   9/18/200,  11:44:55 AM
The OEX is now falling back toward that 520-520.50 level. If it doesn't find support here, there may be reason for concern and a reversal could come quickly. Plan accordingly if you're in a long play.

Know your own account-management and trading style when you plan exits. I often tend to exit just ahead of my original target. Usually that target is set at a level at which I expect some resistance, and so I take profit just ahead of it, and then watch the battle for a while at that level. If there's going to be major resistance, then I don't want to sit at that level while I lose time premium. If there's going to be a reversal, I want to be out ahead of it, because those often happen quicker than the original move. The only time I lose out is when the OEX zooms right through that target level, giving me no chance to jump back in. I have seller's remorse when that happens, of course, but I'd rather have seller's remorse while sitting on a smaller profit than lose that profit. Different traders have different styles, however.

 
 
  Jeff Bailey   9/18/200,  11:44:36 AM
AMEX Gold Bugs Index ($HUI.X) 201.86 +0.54% ... rather rapid giveback of morning gains here (last 20-min) after session high of 205.10.

 
 
  Jeff Bailey   9/18/200,  11:40:10 AM
Dow Industrials (INDU) 9,635 +0.93% ... strong move taking place above MONTHLY R1. Next stop??? "Psychological resistance at 9,700" and WEEKLY R2 of 9,702.11.

 
 
  Jonathan Levinson   9/18/200,  11:38:31 AM
The US Dollar Index has bounced to 95.80 now, pulling Dec gold down to 377.90, up .60 cents on the day. HUI is up 1.75 at 202.52, while TNX is up 5.7 bps, bonds continuing to sell.

 
 
  Linda Piazza   9/18/200,  11:36:21 AM
The OEX appears to have surpassed that 520-520.50 level with only minimal struggles. Even if these weren't pivot analysis R2 levels, we would suspect that the round-number resistance would come into play at 520. consider raising your stop now closer to your entry level if you're in a bullish OEX play. If you entered on the first pop over the 30-minute 21-dma, consider raising it to 518.25, just below the 518.50 support. Some traders might even consider a higher stop, according to their account-management rules.

I made a mistake in my entry this morning. Realizing that the Dow was weaker than the OEX, but figuring it would play catch-up, I entered with DJX calls. I'd sure be up a whole lot more if I'd used the OEX options instead. It was the stronger index this morning and I should have traded a call play on the stronger index. I often do try to judge which index is stronger or weaker, and then buy calls or puts accordingly, and I should have done that today, too, but I figured wrong.

 
 
  Jeff Bailey   9/18/200,  11:29:37 AM
11:00 Update posted at this Link

 
 
  Linda Piazza   9/18/200,  11:21:55 AM
The OEX now draws near that 520-520.50 level that may prove problematic. It's currently just above the daily R2 of 519.92 as I type. So far, those who took the unofficial OEX trade are doing fine, however.

 
 
  Linda Piazza   9/18/200,  11:19:42 AM
As of a few minutes ago, total volume was 428 million shares on the NYSE and 673 million on the Nasdaq. Adv:dec ratios were 19:11 on the NYSE and 17:11 on the Nasdaq. Up volume was more than double down volume on both exchanges.

 
 
  Jonathan Levinson   9/18/200,  11:10:08 AM
The put to call ratio is .62, equity pcr .47 and index pcr 1.23. The VIX is up .06 at 19.68, QQV -.05 at 27.04.

 
 
  Linda Piazza   9/18/200,  11:08:28 AM
The OEX 30-minute 21-pma has now risen to 516.88. That average should provide some support if the OEX should decline. I'm keeping a close watch on the 30-minute indicators and note some flattening. That's normal during consolidation, but we don't want to see the MACD roll down and punch through its trendline of higher lows.

The Dow is close to confirming a double top on its two-minute chart, with the confirmation level at 9597.60 and the downside target at about 9588. The last double-top we saw on a short-term intraday Dow chart did confirm, but did not meet its downside target. The 9588 level has been a support level for the Dow, so if nothing more than that happens, the Dow would have been just coming back to test support.

 
 
  Jeff Bailey   9/18/200,  10:59:44 AM
10-year YIELD ($TNX.X) ... now has YIELD higher by 1.9 bp to 4.213%, U.S. Dollar Index (dx00y) 95.80 +0.06% and BIX.X +0.96%

Shorter-term equity bull couldn't have gotten bettern dynamics in this morning's trade could they?

 
 
  Jeff Bailey   9/18/200,  10:54:41 AM
SPX updated 5-minute bar chart. Link

 
 
  Linda Piazza   9/18/200,  10:52:13 AM
Swing Trade Signals
With the OEX maintaining 518.50 support, hardy souls who feel like gambling on a light-volume day might consider a long trade at the current level, stop at 517, target 423. I'm not a pivot analysis follower in particular, but those entering such a trade should be aware that the OEX has a daily R2 overhead at 519.92 and a monthly R2 at 520.53. While I don't follow pivot analysis regularly, there are certainly those who do, nearly guaranteeing that there will be a pause at this 520-520.50 zone if not a halt in the rally. The current OEX five-minute pattern appears to be a bull flag, but if it is, it should break to the upside before declining further than 518.40 or so.

 
 
  Linda Piazza   9/18/200,  10:38:10 AM
The Dow hits 9600. Volume patterns now confirm the bullish tenor in the markets, but volume remains low at 234 million on the NYSE and 431 million on the Nasdaq.

I should have stuck with the plan I outlined this morning, going long the OEX on a move above the 30-minute 21-pma. All signs pointed to that being a viable move, with a possible upside target of 523, but the low volume scared me during the Thursday before opex week. I didn't want to trap readers in a play and then see the indices sit while the rest of their time premium leaked away. All signs on the 30-minute chart, as posted in my 10:12 post, pointed to that being a viable trade, however.

 
 
  Linda Piazza   9/18/200,  10:25:41 AM
New highs for the OEX, but there hasn't been a confirming Dow move above 9600. I'm not sure that it's not going to happen, however.

 
 
  Jonathan Levinson   9/18/200,  10:25:21 AM
TRIN.NQ .67 here, TICK.NQ +413, and live p/c ratio .58. Breadth and sentiment are not in extreme territory yet.

 
 
  Jeff Bailey   9/18/200,  10:24:52 AM
SPX 1,032.80 +0.66% .... new 52-week high here. Daily R2 of 1,034.09 only level I see that stands between correlative WEEKLY/MONTHLY 1,044.28 and 1,043.46.

 
 
  Jeff Bailey   9/18/200,  10:22:10 AM
SPX 1,030.97 +0.48% .... session high of 1,031.46 pegged WEEKLY R1 of 1,031.46.

Jonathan's "critical spot here," would be correct in my opinion.

BIX.X +0.57%, 10-year YIELD ($TNX.X) unchanged, and U.S. Dollar Index (dx00y) 95.40 -0.34%, while edging up from lows, may need to improve to get major indices through this resistance, but bulls have the advantage in my opinion.

 
 
  Linda Piazza   9/18/200,  10:19:42 AM
If the OEX 30-minute MACD turns down and punches through that rising trendline depicted in my 10:12 post, that could be a confirmation of further weakness. If it continues to turn up, however, with the OEX having moved back above that central 21-dma, that could be a long signal, as odd as that seems with what we know about book-to-bill results and tech weakness. I'm not going to give a signal with such low volume, opex week almost over, and the overhead resistance nearby, because that weights too many factors against us. The technical signals we're seeing could be false, produced by a few program trades pushing the indices one way or another, but that's what's showing up so far. The current OEX five-minute pattern looks as if it could be a bull flag forming after the steep rise.

 
 
  Jeff Bailey   9/18/200,  10:17:50 AM
10-year YIELD ($TNX.X) just edging green, up 0.2 bp at 4.193%, BIX.X +0.62%.

 
 
  Jeff Bailey   9/18/200,  10:15:42 AM
AMEX Gold Bugs ($HUI.X) 204.63 +1.92% ... sector winner early. Here's an updated chart with previously shown used of two retracement, where both anchored at the bullish vertical count from the PnF chart. Link

Bullish bias to 211.32 after bounce at 194.64. Both retracement seem to be in play don't they?

 
 
  Jonathan Levinson   9/18/200,  10:14:20 AM
New low for the US Dollar Index printed at 95.30. Gold is up 2.50 at 379.80, HUI +3.63 at 204.40. Ten year notes are back in negative territory, +.5 bps.

 
 
  Linda Piazza   9/18/200,  10:12:40 AM
Here's something that could be important to note on the OEX 30-minute chart: Link

 
 
  Jonathan Levinson   9/18/200,  10:10:58 AM
We have the Philly Fed at noon and FOMC minutes due at 2PM.

 
 
  Linda Piazza   9/18/200,  10:07:37 AM
The OEX now falls back below that descending trendline formed off the previous two five-minute highs.

Earliest volume patterns were weighted slightly to the negative side, although earliest up volume was slightly ahead of down volume on the Nasdaq. As of a few minutes ago, volume was only 86 million on the NYSE and 219 million on the Nasdaq.

 
 
  Jonathan Levinson   9/18/200,  10:06:12 AM
The put to call ratio is .72, equity pcr .57 and index pcr 1.81 , with the VIX up .23 at 19.85 and QQV -.47 at 26.62.

 
 
  Jeff Bailey   9/18/200,  10:06:03 AM
10-year YIELD ($TNX.X) lower by 1 bp at 4.181% after morning low YIELD of 4.125%. On intra-day technical basis, just about to fill its morning YIELD gap lower from yesterday's close of 4.191%.

 
 
  Jeff Bailey   9/18/200,  10:03:48 AM
SPX now testing DAILY R1 of 1,030.03 .... BIX.X +0.75%, 5-year YIELD ($FVX.X) now higher by 1.7 bp, Dollar Index (dx00y) 95.30 -0.45%. (2 positive, one a bit negative for bulls) if not counting the SPX itself (GRIN)

 
 
  Linda Piazza   9/18/200,  10:03:29 AM
The OEX now tests a descending trendline formed off the previous two five-minute highs. It appears to be pushing above that trendline, however

 
 
  Linda Piazza   9/18/200,  10:01:49 AM
Well, maybe I shouldn't have reconsidered that long play?

 
 
  Jeff Bailey   9/18/200,  10:01:33 AM
SPX 1,029.22 when leading indicators released. (see 09:54:38 intra-day chart) Link

 
 
  Jeff Bailey   9/18/200,  9:59:23 AM
S&P Banks Index (BIX.X) 306.16 +0.47% along with 5-year YIELD ($FVX.X) now higher by 0.6 bp, which is reversing morning gains, could bode well for bulls in today's session, especially OEX which may dodge some of the SOX.X -1.22% weakness.

 
 
  Linda Piazza   9/18/200,  9:54:39 AM
Jim just mentioned the light volume today on the futures side of the Monitor. I won't be issuing any signals during light volume trading on the last two days before opex. We need to see volume pick up first. I'm also reconsidering any possibility of issuing a long signal on a bump up through the 30-minute 21-pma, as is occurring now. When trading envelopes or Bollinger bands, this is ordinarily a signal to go long, with the intention of trading out to the upper BB or envelope band. However, with the 50% retracement of the move immediately preceding the possible bear flag formation being at 516.62, we couldn't enter until that level was surpassed, with that level being tested now. That would mean that we'd face that 518.50 resistance soon after entering. While I think there's a possibility of testing 523 if that 50% retracement is surpassed and that level sustained, that 518.50 appears too dangerous to face on a light-volume day. The light volume may be responsible for the brief bump up, as a single moderate buy program could have sent the index up.

 
 
  Jeff Bailey   9/18/200,  9:54:38 AM
S&P 500 Index (SPX.X) intra-day chart on 5-minute intervals. Same thing we did yesterday witht he futures contract, but using cash today. Also note this is chart shown in last night's Index Wrap, where we showed a "fitted" retracement from DAILY. I've also placed today's DAILY pivot levels on chart.Link

 
 
  Linda Piazza   9/18/200,  9:46:55 AM
The OEX obviously retraced more than 50% of the first five-minute move, but it's just moving back and forth within the congestion zone right now, and so that first five-minute range retracements might not be the best benchmarks of early weakness or strength today. As a reminder, if the current pattern is a bear flag pattern, it should break to the downside before retracing more than 50% of the move that immediately preceded it, with that 50% level being at 516.62.

 
 
  Jonathan Levinson   9/18/200,  9:43:59 AM
Gold is very firm today, with the Dec contract up 2.40 at 379.70, HUI up 3.87 at 204.64, and XAU +1.08 at 94.27.

 
 
  Linda Piazza   9/18/200,  9:40:28 AM
The OEX and SPX still hold within their supposed bear flag formations on their five-minute charts, but the NDX and Dow have already broken down out of theirs.

 
 
  Linda Piazza   9/18/200,  9:37:26 AM
The 50% retracement of the first five-minute OEX range lies at 515.62, just below the 30-minute 21-pma at 516 and in the middle of the consolidation zone.

 
 
  Linda Piazza   9/18/200,  9:31:52 AM
The OEX opens in the midst of the consolidation zone from yesterday afternoon.

 
 
  Linda Piazza   9/18/200,  9:19:10 AM
Swing Trade Signals
The OEX 30-minute 100-pma and 130-pma cross at 512.85 and 512.07 respectively. In an options Swing Trade model that's similar to Jim's Momentum Model on the futures, we'll be watching for a test of those key averages. We'll want to be long on a move down to them and a bounce back above the 100-pma. We'll want to be short/put on a move down through the 130-pma, but I'm not issuing an automatic signal. Let's see what volume looks like before we make a decision. I know the warnings about low-volume moves must be growing boring, but they're especially important to heed during opex week, when there's a tendency to nail stocks and indices to specific levels and keep them there. If those averages are hit during another low-volume period, all but aggressive traders should pass up the opportunity.

That's the easy part. What if those averages aren't tested? Since climbing above its 30-minute 21-pma on September 12, the OEX has been climbing and then retreating back to that average, sometimes overshooting it a bit, and then climbing again. It's been climbing within an ascending regression channel and it ended the day yesterday just below the midline of that channel. If the OEX should push above that midline and concurrently above the 30-minute 21-pma, we may be considering a long from that level, targeting the top of the channel, currently near the 523.50 level that is next light resistance (above the 518.50 resistance) on the weekly chart. Again, we'll need volume however. We'll also want to let early volatility shake out, which may mean we'll miss the move entirely. Preserving our trading accounts should be our first priority, however.

 
 
  Jeff Bailey   9/18/200,  9:19:03 AM
09:00 Update posted at this Link

 
 
  Jonathan Levinson   9/18/200,  8:53:38 AM
The US Dollar is sinking against the yen and the euro, bond yields lower, TNX -5.7 bps. Perhaps the unemployment issue is beginning to get some attention from the markets.

 
 
  Jonathan Levinson   9/18/200,  8:18:47 AM
Reading Jeff Bailey's excellent Index Wrap and comments from yesterday's Market Monitor, I wish to clarify the context of some of the comments I make from time to time in the Futures Monitor regarding order depth and support/resistance levels. My technique involves determining likely support and resistance levels outside of regular market hours, as well as during the day on a realtime basis using trendlines and fibonacci tools. I also watch order depth at or near such levels, and occasionally report these latter observations when they appear noteworthy. An observation of heavy or thin order depth is intended to illustrate just that, and nothing more. I often qualify such statements, because order depth is a fleeting indicator, and large orders have a way of disappearing or "phantomizing" while we blink. I have yet to find a way to integrate such observations reliably into my trading, and advise caution in reading too much into those moments when a sudden >1000 contract set of orders stacks up. If a large set of orders coincides with a support or resistance level, that's added evidence, but I wouldn't rely on it too heavily and prefer, as always, to follow price first, secondary indicators second.

 
 
  Jonathan Levinson   9/18/200,  8:07:53 AM
Semiconductor August book-to-bill came in at 0.91, 0.08 below Wall Street expectations.

 
 
  Linda Piazza   9/18/200,  7:14:57 AM
Good morning. With the yen firming recently, exporters led the Nikkei lower at the open Thursday morning. Car manufacturers and computer-related stocks saw the biggest declines. A Bloomberg article offered this interesting statistic: Canon's annual sales adjust by 11.4 billion yen for each one-yen change in the dollar's value. The Nikkei traded as low as 10,869.69, but when the afternoon session opened, the index climbed steadily into the close. It closed up 43.21 points or 0.39%, at 11,033.32. This marked its highest close in more than a year. Some exporters and car manufacturers still closed the day in the red, but tech stock Fujitsu was credited with turning the stock market around when it was reported that the company had won a 173-billion yen contract with the U.K. government. Banks gained, too. According to one report, GE has decided to bid for the leasing business of Resona, a Japanese bank.

Other Asian bourses were mixed as techs and telecoms struggled. The Taiwan Weighted closed flat, up 0.06%. South Korea's Kospi fell 1.10%, and Singapore's Straits Times lost a minimal 0.09%. Hong Kong's Hang Seng fell 0.64%, but China's Shanghai Composite closed flat, up 0.05%.

European bourses currently are mixed, too. Trading was suspended in the shares of the troubled French engineering group Alstom late Wednesday, after the European Commission blocked the planned bailout by the French government. Bayer soared higher after a Minnesota court refused class action status to claimants in a suit involving the company's anti-cholesterol drug Baycol. French ad group Havas plummeted after it reported that negative exchange rates and weakness in Europe and marketing services resulted in a steep decline in revenues.

As of this writing, the FTSE 100 trades essentially flat, up 1.80 points or 0.04%, at 4294.80. The CAC 40 has lost 4.27 points or 0.13%, to trade at 3389.66; and the DAX has gained 23.07 points or 0.65%, to trade at 3584.10.

 
 
  Jim Brown   9/17/200,  10:49:54 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

 
 
  Jeff Bailey   9/17/200,  10:49:14 PM
Pivot Matrix for tomorrow at this Link

 
 
  OI Technical Staff   9/17/200,  10:49:05 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

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