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  Jeff Bailey   10/7/200,  9:51:26 PM
Nikkei 225 10,694 -1.16% Link .... trying to recover from early morning low of 10,651.98, with weakness coming from the dollar's slide to 3-year low against the yen.

S&P futures (sp03z) settled Tuesday's trade at 1,037.30 and trading down 1.60 at 1,035.70 here.

  Jeff Bailey   10/7/200,  9:35:46 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   10/7/200,  4:28:39 PM
Alcoa (AA) $28.19 -0.28% headline EPS is $0.33 vs. consensus of $0.33. Stock higher at $29.24.

  Jeff Bailey   10/7/200,  4:16:27 PM
YUM! Brands (YUM) $31.57 +1.08% .... higher at $32.08 after reporting Q3 (September) EPS of $0.54, which was 2 cents better than forecast. YUM said revenues rose 3.9% year-over-year to $1.99 billion, which was below consensus of $2.06 billion. Guidance for Q4 and full year 2003 was EPS of $0.62 (consensus $0.62) and $2.03 (consensus $2.01).

  Linda Piazza   10/7/200,  3:57:45 PM
Why am I investigating other methods of trading the OEX? It's always a good idea to study new information or tools, but also currently I'm staring in dismay at the 60-minute indicators, seeing MACD hooked up from above signal, CCI appearing to flatten just below 100, RSI having bumped up above the descending trendline, but now perhaps turning down again. I could have looked at them during almost any other 30-minute period and given you a slightly different but no less confusing or mixed-up configuration.

  Jeff Bailey   10/7/200,  3:54:34 PM
Correction to the 03:15 PM EDT update and bullish vertical count calculation of $31.25. Correct calculation is $21.25. Link

((14*3)*0.25) = 10.5

((6*3)*0.5) = 9.0

$1.75 + 10.5 + 9.0 = $21.25

  Linda Piazza   10/7/200,  3:51:45 PM
I'm going to be especially interested in Jim's write-up tonight to see if his methods (for Swing Trading the ES) might be applicable to trading the OEX, too, perhaps on a different time frame.

  Linda Piazza   10/7/200,  3:47:59 PM
I've been watching a setup similar to the one Jim mentioned in his 15:10 futures post. One of the reasons for my hesitation today in entering a long position on a breakout of the possible bull flag on the OEX daily chart is what's shown on this chart: Link These are Keltner channels. Yesterday when there was so little volume, I experimented with Donchian channels and Keltner channels in addition to envelopes and other methods I've been using. (See archived Market Monitor posts from yesterday.) When I posted information on the Donchian channels and noted that I couldn't find many signals, a reader suggested that I try superimposing different intervals on the same chart, but by then I'd moved on to Keltner charts, and tried it there, too, as I'd heard about that method, too. Anyway, I'm still figuring out how to interpret the information and how to set up the different intervals, and the optimum time frame to use, but it looked to me as if the OEX would soon be butting up against some resistance that's turned it around before. Besides, I had personal experience late last week with the OEX getting turned around in just this area!

  Mark Phillips   10/7/200,  3:47:16 PM
AMZN $55.26 (+1.11) As I mentioned this morning, AMZN reached our $55 profit target and we should have used today's strength as a gift of an exit point. AMZN could continue higher, but with the stock actually reaching $56.25 this afternoon (+17.5% from our picked price), does it really make sense to be greedy and hold out for more upside? I really don't think so, and especially not in light of the fact that fellow Internet stock YHOO is set to release its earnings tomorrow after the closing bell.

we're going to stick with our discipline and close this play tonight, happy with a very nice gain. For those risk-takers out there, we'd recommend a tight stop at $53.90, just below this morning's intraday low. In any event, prudent traders should close any open positions ahead of YHOO's earnings report due to the potential for a sell-the-news event, regardless of how good the report actually is.

  Jeff Bailey   10/7/200,  3:39:50 PM
03:15 Update at this Link

small cap stock worthy of note.

  Linda Piazza   10/7/200,  3:26:23 PM
I will not personally be entering any long positions this afternoon, although I might have done so if I'd wanted to scalp a few points when the OEX moved above the previous high of the day. There's just too much resistance overhead (learned that lesson last week). The daily RSI has not really participated strongly in today's move off the lows. The 5(3)3 stochastics are producing a bearish kiss in overbought territory, and the ADX level is not yet strong enough for me to discount that action.

  Linda Piazza   10/7/200,  3:21:21 PM
The 60-minute OEX chart now shows RSI breaking back above its descending trendline, and the 30-minute chart shows RSI trying to do the same thing. This is occurring as the OEX breaks above the apparent bull flag. While I tend to distrust late-day developments, if it quacks like a duck . . .

  Linda Piazza   10/7/200,  3:15:37 PM
The five-minute OEX MACD tries to turn back up, so perhaps we won't see bearish divergence there. The OEX pattern looked like a "p" accumulation pattern at the top of a steep rise, but so did the mid-morning pattern. The OEX has spent the day switching from bullish to bearish signs and back and forth as it churns around, but a testing of Friday's gap, a filling of today's gap, and then a close near the high of the day--should that happen--would not be bearish.

  Linda Piazza   10/7/200,  3:09:10 PM
The OEX five-minute chart shows possible bearish divergence setting up on the MACD, but that's far from confirmed. The MACD appears to be rounding down at a lower high after price reached a higher high, but there's been no bearish cross on the MACD as yet.

  James Brown   10/7/200,  3:03:56 PM
Also breaking out to a new yearly high is WebEx Communications (WEBX). The stock is trading above resistance in the 22.50-23.00 range on decent volume. The stock's bullish trend from May doesn't appear to show any investor concerns over Microsoft's new launch for a rival application. The 10% gain today in WEBX could also be due to a short squeeze, of which it is rumored that short interest measured about 20% of the float.

  Jeff Bailey   10/7/200,  3:02:57 PM
Treasury bond market closes here. Treasuries found sellers today with benchmark 10-year YIELD ($TNX.X) rising 9.3 basis points to 4.244%. Traders are reminded that the bond market is closed on Monday in observance of Columbus day. Stocks will trade on Monday.

Benchmarking .... INDU = 9,619, SPX = 1,035, OEX = 518, NDX = 1,385, QQQ = $34.40, BIX.X = 316.5

  Jeff Bailey   10/7/200,  3:00:01 PM
Cyclical Index (CYX.X) 578.42 +0.44% Link .... while tentative move higher, new 52-week high today.

Yesterday, Motorola (MOT) $13.97 +3.48% Link was biggest gainer in this index, and battles Goodyear Tire (GT) $7.16 +3.6% Link for today's index gainer.

  Linda Piazza   10/7/200,  2:56:46 PM
Actually, knowledgeable subscriber T.G. today sent me a daily chart that shows the SOX also in a possible bull flag, with daily MACD also cupping up in a similar manner (as in my 14:48 post) as the SOX tests the top of a similar, possible bull flag. I would have noticed the 30-minute pattern on the OEX anyway, and its congruence with the MACD action, since I've been watching MACD lately, but that only prodded me to watch more closely.

  James Brown   10/7/200,  2:55:05 PM
Ouch! sympathy pains for any bears blindsided by the legal news yesterday in shares of Rambus (RMBS). The stock is tacking on another 10% this session on very strong volume of 27 million shares. Another analyst came out and reiterated their "buy" rating and a $37.50 price target. The stock is trading at levels not seen since March 2001. The latest data showed that RMBS had short interest numbering around 5% of its float or 4 million shares. Looks like they're all trying to cover at once.

  Jeff Bailey   10/7/200,  2:52:57 PM
Dynamic Materials (BOOM) $3.65 +9.29% Link .... since initial bullish profile near $3.00, this micro-cap metal cladder has been range-trading from $3.00 to $4.00. With some of today's observation of copper breaking out, would think business might be picking up for BOOM.

Technicals look poised for the break higher at $4.25, which would be a spread-triple-top buy signal.

Disclosure ... I currently hold small bullish position in BOOM as more of a longer-term type of trade at this point. Targeting $8.00 based on historical trade and current bullish vertical count of $8.25.

  Linda Piazza   10/7/200,  2:52:02 PM
Thanks, Jonathan. Now, just tell me whether the OEX is going to punch up through that bull flag, with the MACD continuing to roll up, or whether there's going to be that strong whoosh down with the MACD rolling below signal. It seems that all day, the OEX and other markets have been right on the cusp . . . of something or other.

  Linda Piazza   10/7/200,  2:48:40 PM
Here's something I'm watching on the 30-minute chart: Link

  Linda Piazza   10/7/200,  2:41:46 PM
A new day's high on the OEX.

  Linda Piazza   10/7/200,  2:40:37 PM
I glance at my charts and begin writing a note about the indicators and they switch while I'm writing the note. I'm typing quickly now so I can get this written before they change again. As I type, the 60-minute CCI cups up again, and the MACD has flattened, appearing to be trying to stop its downward momentum. Sixty-minute RSI has flattened. Thirty minute indicators show CCI turning green again and RSI turning up, just now meeting its trendline of lower highs. The thirty-minute MACD histogram again shows a positive number, if only barely so. The OEX approaches its day's high.

  Jeff Bailey   10/7/200,  2:32:16 PM
S&P Banks Index (BIX.X) 316.05 +0.25% ... just making a session high here.

  Jeff Bailey   10/7/200,  2:26:23 PM
Semiconductor Index (SOX.X 453.72 +1.05% .... just noting on its 60-minute chart, which we could compare to SPX (see 14:19:35) is SOX just tested a rising 21-pd SMA and flat 200-pd SMA at 449, where the 200-pd SMA has provided intra-day support since the opening move higher.

Take your trend from the Sept. 8 high, and you've almost got the same "cloned" trend in the SPX.

  Linda Piazza   10/7/200,  2:25:20 PM
The OEX continues to test the 30-minute and 60-minute 21-pma's. Since I don't have an overall bearish outlook, but rather a neutral one, it won't be hard to convince me that I need to exit my risk-capital-only bearish position if the OEX breaks out of its possible bull flag, as it may soon do.

  Linda Piazza   10/7/200,  2:20:58 PM
The OEX zoomed all the way up to the descending trendline off Friday's highs (well, almost) as well as the 30-minute and 60-minute 21-pma's. We're back to the could-go-either-way zone.

  Jeff Bailey   10/7/200,  2:19:35 PM
S&P 500 (SPX.X) 60-minute chart of SPX, which is same chart as last night's Index Wrap, with WEEKLY/MONTHLY retracement overlaid. Can see how "cloned" trend in play as resistance, as well as MONTHLY 19.1% retracement right now. Just kind of a "do nothing" type of range from MONTHLY R1 and 1,040 except for scalpers. Link

  Linda Piazza   10/7/200,  2:13:34 PM
Retracements everywhere. The OEX has now retraced more than 50% of the flagpole decline from 13:34 short-term high to the 13:53 low, as well as being back above a 50% retracement of the day's range. It remains, however, below the 30- and 60-minute 21-pma's, with those averages at 516.37 and 516.46 respectively. The 60-minute RSI still turns down along its descending trendline, although the 30-minute RSI has hooked up, moving up to test its own descending trendline. There are grab-bags of bullish and bearish chart characteristics. Take your pick and be surprised by what you get--either a bullish reaction or a bearish one. While I was willing to put a little risk capital to work today, I definitely remember that possible bull flag on the 30-minute chart, and I will be exiting this bearish position on signs of an upside breakout of that bull flag. (Note: While I typed, the OEX moved slightly below a 50% retracement of the flagpole, with that number at 515.55.)

  Linda Piazza   10/7/200,  2:04:54 PM
The OEX did dip below the 50% retracement of the day's range. The 30-minute MACD now snakes just below the signal line with 30-minute CCI now measuring -108.23. The 60-minute RSI turns down along a line of descending highs. The OEX rises, however, to test the 515.35 level. It's here we'll see whether that broken support will hold as resistance now.

  Jeff Bailey   10/7/200,  2:01:31 PM
01:00-02:00 Internals ...

NYSE A/D 15:15 and 15:16 ... NH/NL 254:5 and 268:5

NASDAQ A/D 15:14 and 15:15 ... NH/NL 215:5 and 229:5

  Linda Piazza   10/7/200,  1:39:49 PM
Currently, the OEX tests the 50% retracement of the decline from the day's high to the 13:05 low of 515.47, with that 50% retracement level being at about 516.57. If the current movement is some type of distribution pattern after the fall from the day's high, it should break below that pattern before retracing more than 50% of the decline, so bears are on shaky footing here. Above this level lie the 30-minute and 60-minute 21-pma's, and the descending trendline off the Friday high, as well as today's high, which might also serve as resistance.

  Linda Piazza   10/7/200,  1:20:47 PM
The OEX keeps trying to break back into and then above this morning's gap. It's so far having difficulty doing so, but the five-minute indicators just now turn up, perhaps showing that it still has some upside before those five-minutes roll down again. The OEX will then face that descending trendline from Friday's highs, at about 516.80 now, and then next will face the day's high. A move above them all would be another bullish signal and would have me out of this bearish play, even if it is only risk capital because there are certainly enough bullish signs to keep me honoring my stops today.

  James Brown   10/7/200,  1:14:40 PM
Afternoon Sector Winners:
XAU gold & silver: +1.75%
SOX semiconductors: +0.44%
RLX retail index: +0.27%
XAL airlines index: +0.28%

Afternoon Sector Losers:
DDX disk drive index: -1.98%
DRG drug index: -0.8%
UTY utilities index: -0.8%
OSX oil services: -0.48%
GSO software index: -0.41%

  Linda Piazza   10/7/200,  1:07:28 PM
Today's trading has certainly been choppy, with charts presenting both bearish and bullish signals and formations. For that reason, I'm not going to offer even an unofficial signal today, but do offer the observation that those who don't mind jumping in and jumping back out right away if a trade doesn't work out might find that a move below the 50% retracement of the day's range at 515.35 might offer a decent bearish entry with a stop placed just above today's high. The 30-minute CCI is negative now, and RSI turns down beneath its pattern of lower highs, perhaps predicting that the OEX will follow through with its own pattern of lower highs. The OEX is below the 30-minute and 60-minute 21-pma's. There's great danger, though, due to multiple support levels and the possibility that the formation we're seeing on the 30-minute chart is a bull flag. Disclosure: I have just entered an OEX put play, using risk capital only.

  Linda Piazza   10/7/200,  12:54:23 PM
I was about to post this chart when the OEX dipped. Note what happened to the RSI: Link

  Linda Piazza   10/7/200,  12:51:50 PM
That last drop stopped at the bottom of this morning's gap. That's bullish on the surface, but now price has to climb back above the top of the gap, which is has not yet been able to do.

  James Brown   10/7/200,  12:48:23 PM
Dow component and current OI call play, United Technologies (UTX) is showing some decent relative strength so far today. The stock's bounce off the $81.00 level this morning looks like a potential entry point for new bullish positions but the weakness in the broader indices makes me cautious. The company is set to announce its Q3 earnings results on Oct. 16th.

  Jeff Bailey   10/7/200,  12:47:18 PM
Phelps Dodge (PD) $52.49 +1.23% Link .... copper producer continues to chug higher for 5th consecutive session.

December copper futures (hg03z) $0.8445 +0.83% made a contract high this morning at $0.848 and triggered a triple-top buy signal at 84.0 on 0.5 box size (84.0 on PnF is equal to 0.84 on futures chart) and still bullish with vertical count of 89.50 / $0.8950.

  Jane Fox   10/7/200,  12:46:04 PM
Talk about defying gravity, take a look at the PnF chart for JBLU. Amazing!

  James Brown   10/7/200,  12:41:11 PM
Jane, I don't think that was an unwise decision. Stocks like this can only defy gravity for so long. Eventually, there will be a more reasonable entry point.

  Jane Fox   10/7/200,  12:37:28 PM
James, I am having a hard time sitting today (kicking myself) for I exited my JBLU position on Friday.

  Jeff Bailey   10/7/200,  12:37:01 PM
YUM Brands (YUM) $31.25 +0.06% Link .... scheduled to report quarterly earnings after the bell. Current estimates are for EPS of $0.52 versus year-ago $0.49.

Had profiled this one as bullish back in May on triple-top buy signal and break of bearish resistance trend. PnF chart remains bullish and hasn't quite yet achieved Professor Davis' study for 87.9% probability of 28.7% gain from the $26 level over 6.8 months on average.

Still using fitted retracement from $20.35 to $33.16, which has 80.9% now support at $30.72.

  James Brown   10/7/200,  12:31:04 PM
It's about time! We've been saying that JetBlue (JBLU) is overdue for another stock split for weeks. The company finally announced another 3-for-2 stock split to be paid on November 20th, 2003 for shareholders of record on Nov. 10th. JBLU almost hit the $70 mark on the news.

  James Brown   10/7/200,  12:27:04 PM
PeopleSoft (PSFT)...was all the rage yesterday raising its Q3 earnings guidance for the second time in two months. The news propelled shares up and over the $20 mark. This morning the stock retested the $20 level but this time as support. Bulls stepped in to buy the dip and a little upgrade from Wells Fargo didn't hurt. WFC raised their outlook on PSFT from "hold" to "buy" with a price target of $27.00.

  James Brown   10/7/200,  12:18:27 PM
Breaking out to a new one-year high are shares of CVS Corp (CVS), the retail drug store chain. The company reported very strong September same-store sales numbers this morning, up 6.6%. CVS then went on to raise their Q3 earnings guidance. Consensus estimates had been for 43 cents a share. Now CVS sees earnings near 46 cents. The company reports near the end of October.

  Linda Piazza   10/7/200,  12:17:47 PM
I keep thinking about the possible bull flag on the OEX 30-minute chart, and the way the MACD made a bullish cross as the OEX tests the top of that possible bull flag, a hint that the OEX might push above the resistance offered at the top. In fact, the OEX keeps finding support on that descending trendline off Friday's highs, currently at 517, and has been testing the bullish #2 on Jeff's 5MRT system. That 517.63 level must have some relevance because the OEX keeps pausing there. The 30-minute CCI is now positive, with the OEX above the 30-minute 21-pma. Adv:dec ratios are now positive for the NYSE and the Nasdaq, although down volume still leads on the NYSE. This is either rollover territory or bounce territory. Most indicators I'm studying say it's bounce territory, but I see that flat 30-minute RSI and hesitate to believe what I'm seeing. I see overhead resistance and hesitate to pull the trigger, too. I see the small candles poised just above the 30-minute 21-pma, one a gravestone doji, and don't believe what I'm seeing. So, I've had difficulty believing either the bullish or the bearish case up until now today, which has been a good thing, because it's kept us out of the chop.

  Jeff Bailey   10/7/200,  12:17:13 PM
Market Internals 11:00 to 12:00 ....

NYSE A/D 11:17 and 15:15 with NH/NL 147:5 and 221:5

NASDAQ A/D 11:15 and 15:13 with NH/NL 132:3 and 190:4

  James Brown   10/7/200,  12:13:40 PM
Shares of Sears Roebuck Co (S) continue their recent rally, making today its fifth gain in a row after bouncing from the simple 50-dma. The stock has broken out above price resistance in the $46-47 range and the move has produced a fresh triple-top buy signal on its point-and-figure chart. Wall Street expects Sears to report earnings in the next two weeks (currently unconfirmed).

  James Brown   10/7/200,  12:04:19 PM
Hitting another new all-time high is Countrywide Financial Corp (CFC). The stock was started with an "out perform" by Goldman Sachs this morning. The stock broke through the $80 level last week on strong volume. Even though shares look very overbought a dip to $80 might work for an aggressive bullish play with a tight stop. CFC is a very large and growing mortgage lender across the U.S. and into the U.K.

  James Brown   10/7/200,  11:54:34 AM
J.P.Morgan (JPM) started coverage on several regional banks this morning. Those getting the "under weight" (a.k.a. sell) are Synovus (SNV) and Amsouth Bancorp (ASO). SunTrust Banks (STI) and SouthTrust (SOTR) were given the "neutral" ratings. National Commerce (NCF) and Marshall & Ilsley (MI) were both started with an "over weight".

None of the banks above really seem to be reacting to the news.

  Jeff Bailey   10/7/200,  11:47:15 AM
Semiconductor Index (SOX.X) 455.67 +1.49% ... session high and just a smidge above Friday's intra-day high. Currently encountering a downward trend from its 52-week high from 09/08/03 (472.91), but trade above 457.50 would be break of this trend and leads to bullishness for broader tech.

QQQ $34.44 (unch) here and session highs of $34.57 also edged above Friday's intra-day highs.

  Linda Piazza   10/7/200,  11:45:03 AM
Here's one seemingly incredible possibility I'm watching on the OEX 30-minute chart that goes counter to everything we believe about October: Link

  James Brown   10/7/200,  11:40:31 AM
One of our favorite stocks to watch and play, Electronic Arts (ERTS), gets downgraded to a "hold" by American Technology Research. Yet the downgrade is not stopping the stock from breaking out above the $100 mark, which is typically a tough psychological support/resistance level. Shares do look very overbought, both short-term and long-term. If we get a chance to by the dip at $95 or the 30-dma, then we'd probably be players but at this rate that may not occur.

  Linda Piazza   10/7/200,  11:37:59 AM
Just to clarify my 11:34 post, I'm not seeing anything yet that would lead me to call a play one direction or the other. I'm not suggesting traders jump in to the long side with NYSE volume patterns still negative, nor am I suggesting that a long signal will confirm.

  Linda Piazza   10/7/200,  11:34:46 AM
Just thinking through the action today: What's happened so far? Today the OEX came down and tested Friday's gap. The midpoint of that gap lies at 512.78, and the OEX fell to a low of 513.05, just above that midpoint, before climbing again. That's bullish action. It's closed this morning's gap completely. That's bullish action. It's moved above the 30-minute and 60-minute 21-pma's. That's bullish action. It's now challenging a descending trendline from Friday. A sustained move above that trendline would be bullish, too. NYSE volume patterns remain bearish, however, arguing against this premise, and we've got seasonal patterns to consider. Tough call, but the move above those 30-minute and 60-minute central averages argues that we'll see a test of the 520-523 level, and we're seeing 30-minute CCI move to postive levels, and the 30-minute MACD cupping up into a bullish cross just above signal. First, though, the OEX has to make it above that descending trendline before we could consider any kind of bullish play, or else we're still watching for a rollover. I'm watching the five-minute candles line up just underneath that trendline, with their shadows piercing it.

  Jeff Bailey   10/7/200,  11:27:22 AM
11:00 Update posted at this Link

  Linda Piazza   10/7/200,  11:21:19 AM
The OEX is now above the 60-minute 21-pma at 515.56 and is testing the 30-pma 21-pma at 516.61. If it's able to break above that MA, as it's doing as I type, it would then soon approach the descending trendline formed from lower highs since Friday at about noon. It will cross that trendline at about 517.40. I mentioned this morning that a bounce from the gap support could mean that we'd see a long signal develop, and a break above that descending trendline would be an opportune place to consider an entry, but the volume levels and volume patterns are not supporting that entry yet. It's also possible that this could give us our rollover entry, but after issuing several signals that resulted in stopped-out plays last week, I'm gun-shy this week of issuing signals that could result in us getting caught in the chop again. We don't need volume to be as strong in a bearish entry as in a bullish one, however.

  Linda Piazza   10/7/200,  11:07:32 AM
Volume remains lighter than I would like today, but we've been getting that test of the 60-minute 21-pma that I'd wanted to see. The OEX climbed off its low and retested the day's high, but has so far not been able to close the gap. It climbed in a bear flag, and appears now to be breaking down from that flag. We've been off line, so I wasn't able to issue a signal, either fortunately or unfortunately, but perhaps would have done so on a breakdown of that bear flag, but it looks as if the flag will be tested again anyway. Let me look quickly at things now that we're online again, but I'd like to see stronger volume before we commit to a play.

  Mark Phillips   10/7/200,  11:02:19 AM
AMZN $55.02 (+0.87) There's our target! Remember that when we initiated coverage of AMZN, we were looking for a rally up to the $55 level as a profit exit. Well, don't look now, but the stock just tagged that level and this looks like a great point for harvesting some gains. Sure there may be some more upside ahead of the company's earnings report, but remember the risk entialed in holding positions over YHOO's earnings, which are set to be released tomorrow after the closing bell. Nobody every went broke taking a profit!

  Jeff Bailey   10/7/200,  10:42:10 AM
Semiconductor Index (SOX.X) 453.70 +1.05% .... edges up to best levels of morning session. CBOE Internet Index (INX.X) 164.22 +0.10% now edging green as has HMO Index (HMO.X) 729.82 +0.10%.

SPX 1,030.75 -0.36% at morning highs, while QQQ $34.21 -0.69% just off session high of $34.25 after morning test of MONTHLY R1.

  Jeff Bailey   10/7/200,  10:09:39 AM
S&P 500 Index (SPX.X) 1,026.47 -0.76% .... alert here on move below MONTHLY R1 of 1,027.39 (per Index Trader Wrap).

  Linda Piazza   10/7/200,  9:59:28 AM
Swing Trade Signals
There we go. The OEX bounces from the top of Friday's gap. We're now going to be watching the 50% retracement of the first five-minute range, at 515.24, also near the 60-minute 21-pma at 515.29. Although I wouldn't be surprised to see the OEX overshoot that level by a bit, if there's a truly bearish bias on the day, it shouldn't overshoot it by far. OEX 514.94 is the 50% retracement of the day's range. I'm considering a bearish entry near that level if the OEX will only pause there long enough for us to see a rollover as it begins.

  Jeff Bailey   10/7/200,  9:58:40 AM
S&P 500 Index (SPX.X) 1,029.24 -0.49% .... edging off session low of 1,027.85. Didn't quite get a test of MONTHLY R1 of 1,027.39, but came close.

While the buds may have fallen from the rose, there may be some bears looking to hibernate until a level of support is violated.

  Jeff Bailey   10/7/200,  9:54:44 AM
Semiconductor Index (SOX.X) 450.44 +0.32% .... first sector outside of gold to get green. Altera (ALTR) $18.41 +4.01% higher on this morning's upgrade.

  Linda Piazza   10/7/200,  9:52:27 AM
I feel as if I'm trying to manually lift the markets, so that the OEX retests resistance and rolls over, giving us a bearish entry. Doesn't look as if it's going to happen.

  Jeff Bailey   10/7/200,  9:51:27 AM
Short squeeze alert ... Netflix (NFLX) $43.00 +4% ...

  Jeff Bailey   10/7/200,  9:50:25 AM
AMEX Gold Bugs Index ($HUI.X) 195.66 +2.62% .... sector winner in early going. After getting hit lower on Friday from its starting to round lower 21-day SMA of 199, begins to bounce from rising 50-day SMA, now at 187.

  Linda Piazza   10/7/200,  9:45:33 AM
The OEX now pauses at the 514 level that marks the top of Friday's gap, a spot where I expected to see the first bounce attempt. We'll watch here to see if there's going to be a bounce and rollover that offers us a bearish entry, or if the OEX instead surprises many and climbs back above that 30-minute 21-pma near 517. That seems a less likely possibility, but one we shouldn't rule out if we want to see all possibilities clearly.

  Linda Piazza   10/7/200,  9:40:00 AM
Based on the 30-minute chart, we should probably be in a bearish trade from 517, with a downside target of 511.50-512. However, yesterday's volume was too low for me to confidently call a bearish entry, especially with a trade that would be held overnight. This morning, we're not getting a bounce to enter, so now we'll watch for a test of those important 100- and 130-pma's. If they're going to be violated to the downside, there's still plenty of downside to go!

  Jeff Bailey   10/7/200,  9:37:49 AM
Gemstar-TV Guide (GMST) $5.35 +11.4% Link ... GMST announces a long-term licensing and distribution agreement for Time Warner Cable to utilize GMST's intellectual property and technology as well as TV Guide brand and content on interactive program guides.

  Linda Piazza   10/7/200,  9:35:08 AM
The first five-minute OEX range was from a high of 516.03 and a low of 514.44. The 50% retracement of that first five-minute range lies at 515.24, and we can watch this figure for signs of early strength or weakness. This may become particularly important to us today as we consider whether to enter a bearish trade, with a downside target of 512.

  Linda Piazza   10/7/200,  9:33:04 AM
I would expect the morning reversal--in this case a bounce attempt--to begin by OEX 514, if not before. That's the top of the gap from Friday morning. Let's see, though, as the drop is precipitous so far.

  Jeff Bailey   10/7/200,  9:30:37 AM
Regeneron Pharmaceuticals (REGN) $15.37 -16.5% Link .... lower after the company said its experimental treatment for rheumatod arthritis missed its primary goal in a midstage clinical trial.

  Jeff Bailey   10/7/200,  9:29:06 AM
LookSmart (LOOK) $3.02 Link ... falling to $1.22 in pre-market after the Internet search company said Microsoft's (MSFT) MSN Internet division would end its licensing agreement with LOOK in January.

  Jeff Bailey   10/7/200,  9:18:34 AM
09:00 Update posted at this Link

  Linda Piazza   10/7/200,  9:18:18 AM
Swing Trade Signals
The Swing Trade Model is flat today. For those of you who might have been away from the markets yesterday and might have missed my summary, I'm going to be calling unofficial trades only until the performance of these trades improves. I want anyone following me into a trade to be making a conscious decision to do so since we had several losing trades in a row last week.

Yesterday, the 30- and 60-minute 21-pma's began flattening. OEX candles followed the 30-minute 21-pma as it rounded over into a possible lower high. With futures currently down, it appears that rounding-over process may continue, perhaps with a test of the 514-515.25 support. We have to be careful here, because there's the 60-minute 21-pma at 515.10, historical support near 515, and top-of-the-gap support at 514. Below that lies bottom-of-the-gap support near 511.50, historical support near that same level, and the 30-minute 100- and 130-pma's, one now just above 511 and one just below. OEX 511.20 is also a 38.2% retracement of the move from the 9/30 low to Friday's high, and 511.61 is the 21-dma. If the usual October seasonal patterns assert themselves, the OEX could slice through those levels with little difficulty, but will the usual October patterns assert themselves? On the daily chart, I'm seeing the MACD bearish divergence, but also seeing a MACD that's just rounded up in a bullish cross from above signal. RSI appears to be rounding down, following its recent pattern of lower highs, but it hasn't quite rounded over yet, and neither have the 21(3)3 stochastics, still moving up and still with plenty of room to move. The candle pattern is one I've watched develop on many equities over the last months--bull flag, breakout, test of the bull-flag support, move up--with the usual outcome in those cases being a move to new highs. I'm torn, then, between the possible outcome I've watched happen over and over with equity after equity over the last weeks, and the knowledge of usual seasonal patterns. Our guide is going to be those 60-minute 100- and 130-pma's. As long as the OEX remains above those averages, we're likely going to remain in a buy-the-dip mode rather than a sell-the-rally mode, however cautiously or reluctantly we might be. Therefore we'll watch for a test of the 514-515 support, with a bounce from that level signaling a careful long play. I'm going to have to see some supporting intermarket relationships, though, if we enter a long play. If the OEX declines below that support zone, we'll likely still stand aside, although I'm not yet sure of that, for a test of 511.50 support. If intermarket relationships appear to support the downside, such as strongly negative volume patterns, we may consider a cautious entry, aware that the middle of a gap can provide support, too. I'd love to see a retest of those 60-minute 100- and 130-pma's, as a bounce from that level would be a stronger signal to go long again while a drop through gap support and those important pma's would be a clear signal to enter a bearish trade, as the mode had changed to selling-the-rally mode again.

  Linda Piazza   10/7/200,  6:54:20 AM
Good morning. The Nikkei opened slightly higher in Tuesday's trading, but then careened back and forth between the flatline and 10,800 several times. Monday, bank Mizuho Financial Group had raised its first half earnings forecast, and banks performed strongly. In the afternoon session, the banks began dropping on profit-taking. The swings grew even wider, with the Nikkei dipping briefly below 10,700, but closing at 10,820.33, up 80.19 points or 0.75%.

Other Asian bourses were mixed. The Taiwan Weighted was essentially flat, closing up 0.09%. South Korea's Kospi gained 0.55%, and Singapore's Straits Times rose 0.25%. Hong Kong's Hang Seng also closed essentially flat, down 0.09%. China's Shanghai Composite appears to still remain closed due to the holiday.

Most European bourses trade down this morning, however, despite an August German factory orders number that rose a higher-than-expected 0.6% from July's number. Factory orders were expected to decline by 0.1%. Perhaps since this was an August number and the September German manufacturing activity number has already been released, this was viewed as old news, even if good news. More likely, the euro's rise against the dollar builds nervousness about the fragile European recovery, with several articles worrying over the impact of that rise. Soon-to-be-ex ECB President Wim Duisenberg reportedly commented that the U.S. account deficit made the U.S. dollar's weakening inevitable. As might be expected in that climate, European auto makers were the biggest decliners in Europe. Chemicals and some banks also declined. Deutsche Bank received a downgrade to a neutral rating by CSFB. CSFB spoke about the European banks in general, saying that their fixed-income revenue would likely "eventually return to earth," according to a Marketwatch.com article, and that equities trading revenues weren't going to be able to take up the slack once that occurred. Philips Electronics was one stock gaining in early trading, reacting to a JPMorgan reiteration of its overweight rating. The statement spoke about Dell's decision to enter the LCD market, but said that decision would impact retailers more than consumer electronics makers.

As of this writing, the FTSE 100 has lost 18.60 points or 0.44%, to trade at 4251.50. The CAC 40 has declined 31.31 points or 0.95%, to trade at 3250.05. The DAX has lost 43.19 points or 1.27%, to trade at 3361.72. All are just off the morning lows reached a few minutes ago.

  Jeff Bailey   10/6/200,  10:44:49 PM
Pivot Matrix for tomorrow posted at this Link

  OI Technical Staff   10/6/200,  10:44:39 PM
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