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  Linda Piazza   10/9/200,  3:58:20 PM
I think it's unlikely that the OEX will make it back above its 30-minute 21-pma by the close, with that moving average currently at 519.18. However, one reason I began watching the 60-minute charts instead of the 30-minute was that I noticed that the OEX often overshot that average on the 30-minute chart while often it held fairly close to the 60-minute 21-pma. That 60-minute average is currently at 518.09, so that it's likely that the OEX might close near that moving average or even above it. What does that mean? Perhaps nothing, but it would mean that with all the damage to sentiment today, the OEX came down and tested its morning gap and then managed to close at its equilibrium point. I don't want to read too much into that, of course, but I am just making observations. One observation is that today's close will probably confirm my opinion that a strong move away from the 60-minute average would have more meaning than a similar move from the 30-minute.

  Jeff Bailey   10/9/200,  3:35:52 PM
03:15 Update posted at this Link

  Linda Piazza   10/9/200,  3:34:59 PM
This is what I noted as I watched the gap tests: Link The congruences and divergences may mean less than nothing, but it's by recognizing patterns and such congruences and divergences that we can begin to build a scenario of what to expect next.

  Linda Piazza   10/9/200,  3:20:37 PM
The OEX bounce is coming from the lower of the two ascending trendlines depicted in my 15:05 post. In addition, the OEX is back above the top of this morning's gap. Like the last time it tested gap support, with the candle shadow piercing the 60-minute 21-dma but the body closing on that average, the current hour's candle body now moves back toward the 60-minute 21-pma at 518.16. There's still a lot of time left before this hourly candle completes at 3:30, of course, but if the OEX candle body should close back above the 60-minute 21-pma, then there's been congruence with the OEX performance the last time a morning gap was tested. That's why I placed those green lines on the graph, so I could watch for congruence or divergence.

  Linda Piazza   10/9/200,  3:14:52 PM
Checking other markets, I note that the Wilshire 5000 now measures 10,070.34, still above the 10,000 level, but having been turned back from the weekly resistance I noted earlier today and from the top of its Bollinger band on the daily chart. Support for the Wilshire may actually be slightly under 10,000, near 9990, but 10,000 should certain be important psychologically.

  Linda Piazza   10/9/200,  3:05:44 PM
The OEX approaches yesterday's close but so far remains above the lowest of these red ascending trendlines: Link The green horizontal trendlines represent the places where the OEX has plumbed the morning gaps. I placed the lines there so I could compare today's performance to that of a few days ago, when another gap was plumbed and support found. Note also on this graph that the OEX has moved below the 60-minute 21-pma, although it has not yet had an hourly close below this average.

  Jeff Bailey   10/9/200,  2:56:24 PM
QQQ $34.71 +0.9% .... session low here. On 5-minue close below $34.75, becomes intra-day vulnerable to $34.50.

  Jeff Bailey   10/9/200,  2:47:00 PM
Bond market closes in 14-minutes.

  Linda Piazza   10/9/200,  2:46:33 PM
Scanning various systems to see what worked well and what didn't, I notice that according to Jeff's 5MRT, which I altered to a 3MRT this morning, the OEX never triggered a bullish play. It moved up to but did not close above the bullish #2. It's still in the neutral zone, too, as I also notice that the OEX has now come down to test this morning's gap. Could this morning's tiny (relatively speaking) gap possibly hold as support? I wouldn't think that likely, but the 60-minute 21-pma, currently at 518.05, might play a part in steadying the OEX, at least on the short-term.

  Jeff Bailey   10/9/200,  2:43:40 PM
Bearish Profile for short in QQQ on trade at $34.73, stop $35.06, target $34.18.

  Linda Piazza   10/9/200,  2:39:44 PM
I was just looking at the 30-minute offset Donchian channel I've been watching. If we had used a close inside the channel as a stop on a play entered at this morning's breakout of the channel, we would have closed the play at 522.62 after entering at 521.25. That's not much of a breakout, but it would have kept us out of trouble, too. I'm sure there are those who might have entered a bullish play who wish they'd gotten out at 522.62. I've noticed other times when it was not a good idea to close the breakout play on the first close inside the Donchian channel, but I'm watching day-to-day trading to see how useful this tool might be.

  Linda Piazza   10/9/200,  2:33:50 PM
The OEX now heads fast down toward today's open, not a bullish development.

  Mark Phillips   10/9/200,  2:31:19 PM
While perusing charts this morning, I decided to put this little comparison chart together on the VIX and VXO (volatility indices for the SPX and OEX, respectively). Link

Isn't it interesting how the VIX once again broke out of the months-long descending channel, only to fall right back in, as the SPX has continued upwards. This chart shows the comparison between the VIX and VXO, but that isn't what I find interesting. In reality, the true measure of the old VIX would be achieved by replacing the black line with the red line back in late September. Note that if we did that in our collective mind's eye, the composite old VIX has only now fallen to 19.33, which still places it will above the lows posted throughout the month of September. So for those of you looking to initiate bearish position trades based on low VIX readings, I'd have to say that there's still more downside to come before a bottom (in the VIX) will be in place.

  Linda Piazza   10/9/200,  2:31:19 PM
While I was unable to post, I read Jeff's latest intraday update. In that update, he warned about the similarities in today's trading and last Friday's, and warned about how the markets had dived last Friday after the bond market closed. It appears someone else had that performance in mind and decided to front-run the dive. However, as I was reading Jeff's update, I was thinking how glad I was that I hadn't called another top-of-the-day long signal today as I did last Friday. I wouldn't have done that, even without last Friday's experience to guide me, but I'm still glad.

  Jeff Bailey   10/9/200,  2:31:03 PM
S&P Insurance (IUX.X) 277.57 -0.28% .... fractional losses from a financial group.

  Jeff Bailey   10/9/200,  2:30:02 PM
QQQ $34.88 +1.29% ... giving up ground rather quickly and sees 5-minute close back below WEEKLY R1.

  Linda Piazza   10/9/200,  2:25:16 PM
Reader Question: Would you think with 3 gaps [on IBM], based on your earlier comments, that this is an exhaustion gap?

Response: Great observation, S. Here's the thing that concerns me about IBM. Take a look at the weekly chart, and you see that big gap in summer, 2002. The midpoint of that gap is $93.60, and the last IBM advance stopped at $93.47, just below that midpoint. Today's candle is forming just below that midpoint, too. While stochastics, MACD, and RSI look bullish on IBM and while people whose opinion I trust think IBM think it might be a good bullish bet right now, I personally don't trade through such big gaps. I usually wait to see how the issue will be resolved. Will the gap high, low, or midpoint serve as resistance now? How long will it take IBM to get through that resistance? Will it get through? Now that it's above the bottom of the gap, will that level serve as support on any retreats? I just usually feel that there's a better stock for me to make either a bullish or bearish bet unless there is some other overwhelming reason to trade through such a big gap.

  Jeff Bailey   10/9/200,  2:24:29 PM
QQQ $35.00 +1.71% .... off session highs of $35.27 here and back to test WEEKLY R1 of $34.99. Did dip below $34.99 to $34.95. Should we see 5-minute close below $34.99, then day's highs most likely in place.

  Linda Piazza   10/9/200,  2:23:32 PM
I've been unable to post for a few minutes. Obviously, the OEX broke down out of the pattern that at first appeared to be a bull flag. The OEX now heads down to test the 520 support, and then, if that fails, the 30-minute and 60-minute 21-pma's, now at 519.07 and 518.05, respectively.

  Jeff Bailey   10/9/200,  2:20:00 PM
Wash Mutual (WM) $40.76 +1.06% ... I was stopped on trade at $40.87. See here that stock is testing BLUE #2 support and its 5-minute bar chart 50-pd SMA. Tempted to trade a bounce again, but BLUE #3 $40.98 and psychological $41.00 might be enough intra-day resistance to look for something else.

Nice little trade on the gap fill at to RED #3 is my thinking.

  Jeff Bailey   10/9/200,  1:46:20 PM
01:00 Update at this Link

  Linda Piazza   10/9/200,  1:29:55 PM
Here's one thing I'm watching on the OEX five-minute chart: Link

  Linda Piazza   10/9/200,  1:08:15 PM
The upper trendline of the OEX supposed bull flag failed to hold as support, and now the lower level is being tested as I type. I mentioned that I was hesitant to consider these flags confirmed until either new interim highs were reached or until the bull flag support was tested and held. OEX 521.68 is the 50% retracement of the move that immediately preceded the flag's formation (not the entire day's range), and that should hold if the short-term bullish tenor is to continue. As I type, the OEX is moving up from the bottom support of the flag, but . . . well, there are just a lot of "buts" today.

  Linda Piazza   10/9/200,  1:02:36 PM
Dow 10,000? How about Wilshire 10,000? The Wilshire 5000, the broadest of our markets, and the one Pring believes should be the market to which we refer when we speak of "the" market, spent this week establishing the 10,000 level as support. Link There's some medium-strength weekly resistance at the current 10,170 level, consisting of about eight weeks of opens, closes, lows, or highs near this level. Above that, there's even lighter resistance at 10,300, and then it's blue skies until about 10,850.

  Linda Piazza   10/9/200,  12:46:36 PM
The OEX has broken out of its latest bull flag. Now comes the test of the previous day's high at 523.41 or a retest of the broken support. The OEX faces weekly resistance up to 524. I'm being hesitant to consider these flags confirmed until there's either a climb above the previous interim high or else a retest of the flag with the flag then serving as support, but so far, all is performing as you'd expect on a bullish day. As I mentioned this morning and earlier in the week, I've been too gun-shy to call plays after last week's performance, but I'm using the time constructively, evaluating several new charting tools.

  Jeff Bailey   10/9/200,  12:39:30 PM
S&P Banks Index (BIX.X) and KBW Bank Index (BKX.X) both get a little bounce from their 5-minute interval 21-SMA (for second time today). Make this observation if trading WM intraday.

  Linda Piazza   10/9/200,  12:38:04 PM
So far, the idea that the current OEX pullback has been a bull flag pullback has not been disproved, although the OEX has not yet broken out of that flag to the upside. Just ahead of that breakout would be the bullish #2 on Jeff's 5MRT system, except that today I've applied it to the OEX first three-minute range since the 5-minute range was so large. Actually, I believe Jane's idea of using the first one-minute range might have been even better, as that first one-minute range was rather large on the OEX, too. There's some congruence, however, with the three-minute range as we've seen this pullback just ahead of that bullish #2. At 523.55, that bullish #2 is also between several of those weekly figures I listed in my 11:55 post.

  Jane Fox   10/9/200,  12:35:46 PM
Jeff, seems to me the price objective is only on the Graphical PnF charts.

  Jeff Bailey   10/9/200,  12:32:39 PM
Alway try and check for yourself the bullish vertical counts when they are calculated for you. I should note that www.stockcharts.com is not calculating the PLCE bullish count correctly. The bullish count column should be taken from $18 to $21. Do you see the "first buy signal" came at $21? www.stockcharts.com appears to be counting the current column of X, but this is the second column of X showing a buy signal. I will even check Dorsey's sometimes, and hopefull I will then get the count correct. I messed up on Tuesday when I calculated TERN's vertical count wrong.

One trader said he didn't see where www.stockcharts.com was posting the vertical count objective. It is near the top of the chart, just under "Alert" Link

  James Brown   10/9/200,  12:24:40 PM
Claire Stores (CLE) also doing a super hero impression with a big gap higher, up 8.5% to new all-time highs. The company announced same-store sales were up 7% in September and they pre-announced stronger Q3 earnings. Estimates had been for 32 cents, now CLE is guiding higher to 41-42 cents a share.

  Linda Piazza   10/9/200,  12:22:45 PM
If the current movement is a bull flag or some other form of measured accumulation, it should break to the upside again before retracing more than half the movement that immediately preceded it. With the OEX, that movement would be the 10:18 (three-minute chart) bull flag low at 519.95 to the 11:39 high at 523.41. The 50% retracement of that range lies at 521.68, so we should watch for an upside breakout before 521.68 if this is indeed a bull flag or some other bullish accumulation pattern.

  Jeff Bailey   10/9/200,  12:22:10 PM
Washington Mutual (WM) $40.90 +1.43% .... day trade bulls ... will make note here that session high has been $41.00 (psychological) and recent attempt at re-test has been $40.99.

Nice day trade gain at risk here, so lets move stop up to $40.87, give WM a chance to break $41.00, see if there might not be some bear stops above that level.

Disclosure .. I hold day trade long in WM and am raising stop to $40.87.

  James Brown   10/9/200,  12:19:09 PM
Up, Up and Away! Shares of Marvel Enterprises (MVL) are soaring to new highs, up 12 percent, after pre-announcing stronger earnings. Estimates had been for 25 cents a share. MVL now expects Q3 earnings in the 37-to-41 cents range. Revenues should fall between $84-87 million, above estimates of $65 million. The stock is above major resistance at $25.00. MVL will actually report Q3 earnings on Nov. 4th.

  James Brown   10/9/200,  12:15:02 PM
EBAY is hitting new 52-week highs, breaking out above the $60 mark on the YHOO news. The stock is just $2.50 away from passing its all-time high from March of 2000.

  Jeff Bailey   10/9/200,  12:09:15 PM
Fantastic! .... subscriber's note regarding PnF charts at Stockcharts.com... Hi Jeff, I use DWA and stockcharts.com for my P&F and found that the new P&F charts on Stockcharts has price objectives. I thought I should point out that it looks like you must have the old P&F charts programmed into your system.

See the difference in the charts? Link and Link

Now I need to go update all the charts in My Favorites :(

Thanks for your excellent work.

Curtis on Kauai

Thanks Curtis. Yes, the first link is the "text" version that I use, as it is a little less fuzzy. But... I never noticed that the second link you provided now has the bullish count calculated for us! That's good for quick longer-term risk/reward analysis. Thanks for pointing your finger to that!

  James Brown   10/9/200,  12:08:40 PM
Sears (S) continues its recent rally and just tagged the $50 mark after reporting same-store sales up 3.2%. The stock is up 177% from its March lows and reports Q3 earnings next Thursday. What are the odds that we'll see any sort of "sell the news" reaction.

  Jim Brown   10/9/200,  12:04:18 PM
NVR is the Internet stock of home builders. I have been whining about no options on it for years.

  James Brown   10/9/200,  12:00:46 PM
I don't know about a short but I'd love to know when they're finally going to let us trade options on NVR. Check out the weekly chart (from early 2000 to today).

  Jeff Bailey   10/9/200,  11:58:43 AM
Wash Mutual (WM) $40.90 +1.38% .... updated 5-minute chart... thoughts. Link

  Jim Brown   10/9/200,  11:55:48 AM
Hi Jim, I mentioned this to you about 1,000 points ago, but why don't we have some fun again? Given some of the ridiculously high market prices, how about another round of some short ideas from readers? Still love your end-of-day summaries . . . Ken

Any ideas guys?

  Linda Piazza   10/9/200,  11:55:00 AM
The OEX is currently just below the 9/19 high of 522.91, but this is definitely a place where I'd expect either a pullback or consolidation. This level offers light resistance on a weekly chart, with a 5/05/02 weekly close at 523.24, a 5/12/02 weekly open at 523.82, and a 5/26/02 weekly low of 523.31. I would not term this strong resistance, however, and a study of the monthly chart doesn't show this to be an important Fibonacci retracement level, either. We'll just have to watch and see what happens.

  James Brown   10/9/200,  11:53:34 AM
More Same-Store Sales (SSS) data:

Barnes & Noble (BKS) posted September same-store sales +5.8%. The stock is surging above resistance to post a new high at $28.14.

Kohl's Stores (KSS) reported SSS of +5.5%, yet shares are rolling over at the $55 level and its simple 200-dma.

Ross Stores (ROST) had SSS of +5%. The stock is hitting new all-time highs at $52.85, +4.34% today.

Gap Inc (GPS) really turning in a strong September with SSS +13%, beating estimates. The stock is up 5% to $19.10.

Saks Inc. (SKS) reports SSS +4%. Shares are hitting a new relative high above resistance of $13.

Target (TGT) said SSS were +5.4%. The stock is higher today but still stuck in a trading range.

Needless Mark up, I mean Neiman Marcus (NMG.A) is reporting SSS for September +13.6%. Shares appear to be hitting new all-time highs at $46.41, up 3.94%.

Nordstrom (JWM) SSS for September +7.7%. Shares are up 4.36%.

Not a comprehensive list but it certainly paints a positive trend.

  Jeff Bailey   10/9/200,  11:45:33 AM
11:00 Update at this Link

  Linda Piazza   10/9/200,  11:45:03 AM
Here's a look at how today's action looked on a 60-minute chart with the envelopes I watch frequently: Link

  Jim Brown   10/9/200,  11:43:36 AM
AMZN is amazing. It looks like a perfect short setup on such an extended spike but shorting AMZN has cost traders millions, if not billions over the last few years. I would look to see when their earnings were and find a cheap put the night before. Nothing grows to the sky. (famous last words)

  James Brown   10/9/200,  11:39:46 AM
Having fun? Sure. Just wish we'd kept that AMZN call play active.

Seller's remorse can be pretty frustrating.

  James Brown   10/9/200,  11:36:09 AM
Also enjoying strong same store sales numbers is TJX Companies (TJX) better know for its T.J.MAXX, Marshalls, HomeGoods and A.J.Wright stores. TJX said same-store sales jumped 8%, which significantly beat estimates for a 3.6% increase. Sales for the five weeks ending Oct. 4th were up 16%. The stock is up almost 7 percent and the move is fueling bullish signals in its MACD, RSI and Momentum. The key level to watch is overhead resistance in the $22-23 range.

  James Brown   10/9/200,  11:30:35 AM
Family Dollar Stores (FDO) is hitting a new all time high after reporting better than expected same-store sales numbers +5.3%. This stock isn't the fastest moving issue so directional call or put plays could be tough but the steady trend is certainly worth exploring (maybe with covered calls, naked puts or spreads).

  Linda Piazza   10/9/200,  11:29:52 AM
Since October 1, the breakout signals on the Donchian channels gave 1 signal on 10/01 in which the OEX moved up 5.98 points after the signal; one signal on 10/03 that would have been taken on the open above the channel (due to my backtesting first impressions), resulting in a 6.28 point move after the signal; a false signal on 10/7; and then today's signal with the ultimate outcome as yet unknown. That also doesn't mean that we'd yet know when to determine the exit. Perhaps with our trailing stops, we would have lost much of that movement. The interesting point, though, is that if we were using a trailing four-point stop, the first signal this month would not have been stopped, so that we would never have exited that position before the second signal, staying in for the entire movement, which was a 14.51-point move. (It included a gap, which is the reason it's more than the sum of 6.28 and 5.98.) In addition, if we were using a four-point stop, we would not yet have been stopped out of that "false" signal on 10/7. I'd take just a hunk out of the middle of that a couple of times a month. Wouldn't you?

  James Brown   10/9/200,  11:22:45 AM
Shares of NETGEAR (NTGR) are up over 9% with a little bit of help from Lehman Brothers. The month of September was a tough one for NTGR. Shares pegged a high near $21 and proceeded to drop throughout the rest of the month with a very steady trend of lower highs. The stock actually traded as low as $14.27 two weeks ago before quickly bouncing back. Now the stock is gapping higher on an upgrade from LEH from "equal weight" to "over weight". LEH suggests that NTGR actually has an attractive valuation (P/E = 20, forward P/E =29, PEG =2.18) and puts a $20.50 price target on the stock. The move higher has produced a bullish MACD crossover, while RSI and its momentum indicator are shooting higher.

Traders should be careful as this is a rather volatile "internet" stock.

  Linda Piazza   10/9/200,  11:17:59 AM
One curious thing I found when backtesting the Donchian channels was that the breakout tended to perform better when the longer-term stochastics--21(3)3--were already pinned either in overbought or oversold territory.

  Linda Piazza   10/9/200,  11:14:12 AM
My interest in Donchian channels with the parameters I've set up is growing. Here's what I see so far: Link Now we just have to determine how to sort the false breakouts from the true ones, or if that's not possible, decide whether the gains would offset the times we'd be stopped out of plays on those false breakouts. We'd need to determine how to know when to exit. My first thought was to exit on the first close within the channel again, but backtesting proved that not to be a good strategy because it often cut off much of the follow-through movement.

  James Brown   10/9/200,  11:11:20 AM
Two low dollar equities that stock traders might want to keep an eye on are Corning (GLW) and Avaya (AV). Both have surged higher in the last three or four sessions so this probably isn't the best entry point for new bullish positions. Both companies also announce Q3 earnings in about 7 or 8 trading days. This morning J.P.Morgan started GLW with a "neutral" and AV with an "over weight".

  Jeff Bailey   10/9/200,  11:07:00 AM
NDX/QQQ ... now look to lead in the weekly pivots. NDX 1,416 +2.41% and QQQ $35.20 +2.21% working above their WEEKLY R1's.

It's gravy train from here, can now raise bullish stops just under today's lows as WEEKLY R1 targets achieved.

  James Brown   10/9/200,  11:05:50 AM
Shares of Symantec (SYMC) are ignoring a new "hold" rating by an analyst this morning. Instead the stock is enjoying the rally with another new all-time high to $67.15, +3.45%. Shares look extremely overbought with its non-stop rally from the breakout above the $50 mark in mid-August.

  Jeff Bailey   10/9/200,  11:04:07 AM
S&P 500 Index (SPX.X) 1,045.53 +1.13% ... session highs here

  Jeff Bailey   10/9/200,  11:02:12 AM
Monster Worldwide (MNST) $29.18 +4.67% Link .... weekly jobless data and recent nonfarm payroll continue to help the fundamental prospects for MNST.

Bulls would like to see a second consecutive buy signal on the PnF chart at $30 after recent alternating sell and buy signals.

Disclosure: I currently hold bullish position in MNST

  Linda Piazza   10/9/200,  11:01:19 AM
A move above the current OEX high of the day at 521.82 would definitely confirm the bull flag breakout, and might also suggest a test of 522.50-523.50. I would expect some difficulty moving above those levels, requiring at least some time consolidating there if nothing else, but if the OEX could clear them with some confidence, there's little resistance until OEX 550. I see several envelopes and channels that suggest 524-525 as an upper limit for now, however, but those envelopes slant up, the OEX sometimes follow them up.

  James Brown   10/9/200,  11:00:25 AM
Charging higher! The Dow Jones Transportation Index ($TRAN) has rocketed higher almost 60 points to levels not seen since April 2002. The 52 cent rebound in crude oil futures to $30.40 a barrel is not slowing down transport stocks.

The XAL airline index is up another 4.6% to yet another new 52-week high. Airlines stocks are rising on hopes that we could see a rebound in travel better pricing trends. Shares of AMR are up 7.9%, DAL +5.15%, CAL +7.4%

  Jeff Bailey   10/9/200,  10:58:22 AM
Import/Export Prices .... Forgot.... 10:00 AM release of Import/Export prices showed Import Prices (ex-oil) rose 0.2% in September (August -0.3%) while Export Prices (ex-agriculture) fell 0.1% (August +0.1%).

  Linda Piazza   10/9/200,  10:58:18 AM
The OEX has definitely broken above its bull flag, although 521 does still continue to give it difficulty. That may be changing as I type, however.

  Jeff Bailey   10/9/200,  10:50:50 AM
Cendant (CD) $19.45 +1.2% Link .... upside alert at new 52-week high. Still looking bullish and things could get crazy in weeks to come on trade at $21, which would be spread-triple-top. Would reiterate buying shares here and bulls that took partial can round to full on trade at $19.50.

Check out the Airline Index (XAL.X) 69.76 +4.6% breaking to new 52-week highs and should bode well for CD's travel-related business.

CD's PnF chart carries bullish vertical count of $36.50. Decent little 3-month base from which to break out of.

  Linda Piazza   10/9/200,  10:47:24 AM
I keep staring at those running gaps on the QQQ, too. One gap is good, and it usually occurs about halfway up a move, if I'm remembering my gap theory correctly. If so, that gap from the 10/2 close to the 10/3 open predicted a move up to about $35.00. That's where the QQQ is now. Three gaps is trouble, signifying an exhaustion gap, if I'm remembering theory correctly. Two gaps may be somewhere in between.

  Jeff Bailey   10/9/200,  10:44:12 AM
Day trade setup for Washington Mutual (WM) Link (see 09:38:43, 10:20:41)

  Linda Piazza   10/9/200,  10:42:39 AM
If you're watching a three-minute and under OEX chart, you'll notice that the OEX appears to have broken out of the bull flag to the upside, but it keeps getting turned back at 521, so I would not consider that upside breakout confirmed yet.

  Jeff Bailey   10/9/200,  10:30:26 AM
Bullish Profile in Children's Place (PLCE) for the December 22.50 calls (tuylx) $2.85. (see 10:26:13)

  Jeff Bailey   10/9/200,  10:26:13 AM
Children's Place (PLCE) $23.87 +24% Link ... big gainer among retailers after company guides Q3 to $0.43 per share, which smashes Wall Street's estimates of $0.27. Company also reported comp store sales increased 30% in September on year-over-year basis, where consensus was for more modest 5.6% increase.

Nice/bullish looking PnF chart with bullish vertical count of $28.50.

PLCE has also been a stock that bears love to hate and good short squeeze potential. Check out this short-interest! Link

  Linda Piazza   10/9/200,  10:25:54 AM
The earliest volume patterns were strongly bullish--no surprise--and volume was rather light--no surprise, either.

  Linda Piazza   10/9/200,  10:24:33 AM
So far, the OEX bounces from just above the 50% retracement of the day's range. It has not yet broken out of the bear flag, however, so we can't presume that it will or that it won't fall below that 50% retracement.

  Linda Piazza   10/9/200,  10:21:10 AM
The OEX is near a test the 50% retracement of the flagpole rise, which is also the 50% retracement of today's range. A retracement to and bounce from the 50% retracement is a bullish action, while a fall beneath that 50% retracement would be at least short-term bearish.

  Jeff Bailey   10/9/200,  10:20:41 AM
Washington Mutual (WM) $40.30 -0.07% .... Trades RED #3 here and fills morning gap higher. Can enter day trade long here, or look for 5-minute close back above $40.31.

  Jeff Bailey   10/9/200,  10:18:35 AM
QQQ $34.96 +1.51% .... will note that if I use the 5-minute retracement technique on this morning's opening 5-minute bar, RED #2 lines up very nicely with our MONTHLY 19.1% retracement of $34.75.

How about this. Bulls that may have played the QQQ long last week on break above $33.22, place a profit stop under $34.75, say.... $34.70 with WEEKLY R1 still in play as resistance right now.

  Linda Piazza   10/9/200,  10:17:58 AM
Here's what I'm watching on the OEX one-minute chart: Link

  Jeff Bailey   10/9/200,  10:14:19 AM
Cyclical Index (CYC.X) 587.71 +1.34% Link .... continues to impress after recent triple-top at 575.

  Jeff Bailey   10/9/200,  10:12:30 AM
QQQ $34.95 +1.51% ... back to test sessiion high of $35.00 and its WEEKLY R1 of $34.99.

Banks holding gains, now need some more strength from tech to get the inchworm moving higher.

  Jeff Bailey   10/9/200,  10:08:47 AM
Yahoo! Inc. (YHOO) $42.11 +8.5% .... PnF chart Link looks somewhat similar to eBay's (EBAY) $60.47 +3.4% Link doesn't it? I like eBay's supply/demand chart a little better as it recently broke from a larger base of consolidation.

Same little shakeout type pattern on each though.

  Linda Piazza   10/9/200,  10:08:46 AM
The current OEX five-minute pattern takes on the shape of a bull flag pulling back after the flagpole rise. If that's true, it should not retrace more than 50% of the flagpole, with that figure being at 519.78, so we can use this as a first guide. A break to a new day's high before a break below 519.78 would confirm the bull flag.

I'm making all these observations but still gun-shy of acting on them. There's that presumed-to-be-strong resistance overhead to be combated. Anyone who has scrolled back through charts over weeks and months has noted how many 9:30 am breakouts were reversed by the end of the day, too.

  Jeff Bailey   10/9/200,  10:04:46 AM
This morning's trade kind of reminds me of Friday's trade (10/03) where morning gap higher consolidated for a couple of hours, then indices slowly edged high, to then give back some of that session's gains in final hour.

Only difference today is indices are at new highs, and may not be as many bears trying to leverage off the highs.

  Linda Piazza   10/9/200,  10:02:50 AM
The OEX did close above the offset Donchian channel on the first thirty minutes, but something else I noticed when doing backtesting is that these above-channel closes were more reliable when the Donchian channel was slanting up already. They still sometimes predicted strong breakouts when the channel was not yet slanting up, but not as reliably. The top of the Donchian channel is beginning to slant up now, but the entire channel is not yet moving up. Yesterday's flat trading flattened the channel. Again, this is not trading advice, but observations that might help us in the future.

  Jeff Bailey   10/9/200,  9:54:00 AM
AMEX Gold Bugs Index ($HUI.X) 192.50 -2.71% Link .... sector bulls need to be careful here. Yesterday's trade at 200.00 was triple-top buy signal, but rather quick/sharp reversal today may be alert to "bull trap" pattern. Stops firm under 186 if long.

According to Dorsey/Wright and Assoc. sector bullish % (BPPREC) is "bull correction" at 82.9% after having reached 92%. The 92% was highest bullish % reading dating back to 1996.

  Linda Piazza   10/9/200,  9:52:45 AM
Since I'm watching the first three-minute range instead of the first five-minute range on the OEX, I wanted to give the 50% retracement of that first three-minute range. That's at 519.14. That hasn't been tested yet, of course, as the OEX has been finding support so far at the top of the first three-minute range.

  Jeff Bailey   10/9/200,  9:50:46 AM
S&P Banks (BIX.X) 319.48 +0.47% .... session high has been 319.92. Still holding above its DAILY R2 (319.42) here and hints of bid holding for market and should bode well for some pullback bullish entries intra-day.

  Linda Piazza   10/9/200,  9:50:12 AM
The OEX attempts its first bounce right at the top of the first three-minute range, which perhaps gives more confirmation that this is a good range to watch today.

  Linda Piazza   10/9/200,  9:48:49 AM
This morning's move bumped the OEX above the 30-minute Donchian channel (20,2). When I was backtesting last night, I found that when the OEX opened above or below the Donchian channel, it was usually a good idea to buy the open, but that didn't hold true for days when the OEX opened inside the channel and moved above it. On those days, it was important to wait for a 30-minute close above the channel. My original study of Donchian channels showed that it was used as a breakout tool, but when continuing my reading last night, I found that some use it as you would Bollinger bands or envelopes, and not as a breakout tool. Confusing, right? Still, using that offset set at 2, I found that the Donchian did identify some breakouts that went on to be highly profitable. Of course, it also gave some false signals, and it's far too early in my study process to identify when it might be giving a good signal and when it might not. Right now, this is just "isn't this interesting" information rather than suggestions to go long or short.

  Jeff Bailey   10/9/200,  9:45:34 AM
NASDAQ-100 Index (NDX.X) 1,403.42 +1.52% .... just off session high of 1,407.50, which is right in our intra-day DAILY R2 (1,408.57) and WEEKLY R1 (1,406.65) pivot matrix zone.

May try and partially refill this morning's gap higher, but for further gains, should not come back through the DAILY Pivot of 1,385.98.

  Linda Piazza   10/9/200,  9:42:49 AM
All the charts I'm watching today--envelopes, etc.--show the possibility of a move up to OEX 524-525, without promising that's going to happen, of course. Right now, the OEX is in the demilitarized zone, between now-presumed-to-be-support 520 and resistance at 522.50-523.50.

  Linda Piazza   10/9/200,  9:39:36 AM
Since the OEX first five-minute range was so large, I've switched to the first three-minute range to watch the movements today. For those who don't have access to these ranges, the first three-minute high was 520.56 and the low was, of course, 517.71.

  Jeff Bailey   10/9/200,  9:38:43 AM
Day Trade Long on Washington Mutual (WM) $40.55 +0.54% ... look for pullback and filling of this morning's gap higher for bull entry at $40.31, stop $40.20, target $41.20

  Linda Piazza   10/9/200,  9:36:25 AM
The OEX first five-minute range saw a low of 517.71 and a high of 520.84. The 50% retracement of that first five-minute range lies at 519.28. We can watch this 50% retracement for signs of early strength or weakness, perhaps particularly important today when we're watching for a prolonged move higher or else a pop-and-drop move.

  Jeff Bailey   10/9/200,  9:35:32 AM
S&P Banks Index (BIX.X) 319.40 +0.44% .... strong move early and 5-minute close above DAILY R1 of 318.70.

  Jeff Bailey   10/9/200,  9:31:33 AM
Thoughts based on S&P futures .... should have upside to the 1,050 level, possibly by day's end. Link

  Linda Piazza   10/9/200,  9:31:28 AM
I had expected an OEX open over 520. I guess we'll be waiting first for a retest of the 520.33 high from last week.

  Linda Piazza   10/9/200,  9:27:25 AM
Futures are up strongly this morning. Perhaps yesterday's prolonged consolidation along 21-pma's on the OEX 30-minute and 60-minute charts will provide a solid base upon which the OEX can rise, with the OEX likely to open somewhere near the key 423 level. The daily chart I posted yesterday noted how similar that chart appeared to those of many tech stocks lately, with a breakout of a bull flag, a retest of the bull flag support, a move up, and a clustering of candles just underneath the previous highs. I mentioned yesterday morning that this pattern had resolved many times in higher highs on those tech stocks. I also mentioned my reluctance to buy the OEX near 520 because I wanted to wait for a test of 522.50-523.50. Perhaps we'll get that test today. I'm gun-shy after spending the last week going long at the day's high and going short at the day's low, so I'm probably going to refrain from offering signals this morning, but a breakout would not be totally unexpected due to the watched behavior of those tech stocks. Perhaps I should offer signals, and you can take the opposite side, using me as a sort of contrarian indicator?

  Jeff Bailey   10/9/200,  9:24:08 AM
09:00 Update posted at this Link

  Linda Piazza   10/9/200,  7:24:20 AM
Scanning news sources this morning, I noticed that Halliburton (HAL) and Bowater (BOW) have lowered their earnings estimates. BOW now expects a loss excluding gains of 80-90 cents per share, with analysts previously expecting 70 cents. Marvel (MVL) raised its guidance to 37-41 cents per share.

  Linda Piazza   10/9/200,  7:15:13 AM
Good morning. Late in Wednesday's trading session, Japan's August machinery orders number was released, showing that August's machinery orders fell 4.3% from July's number, although they were up from year ago numbers. That disappointment and the dollar's collapse below 110 yen had precipitated Wednesday's steep decline. Thursday, the Nikkei opened near Wednesday's closing level and soon had traded in a 100-point range, moving either side of the flatline. In the afternoon session, the Nikkei also traded in a similar range, but closed the day near the center of its day's range, down 10.76 points or 0.10%, at 10,531.44. The dollar had stabilized against the yen in early trading, and exporters such as automakers recouped some of their recent losses. The Bank of Japan's policy board has begun a two-day meeting, but many conjecture that the central bank will be hesitant to intervene to protect its currency ahead of President Bush's trip to Tokyo next week. In addition to dealing with currency concerns, investors digested the news that Japan's August current account surplus rose 33.6% from the year-ago period. Also, earnings season has begun in Japan, too, and retailer Ito-Yokado beat its own estimated earnings, sending many retailers higher. Many tech stocks retreated, however. Retreating stocks included Yahoo Japan, falling after Yahoo reported earnings that were greeted with enthusiasm here in the U.S.

Wednesday, Standard & Poors raised its credit ratings for Indonesia, Thailand, and Malasia. The firm cited improved economic performances in the three countries as well as improving markets. That surprise action raised hopes that the firm would soon raise credit ratings for other countries in the region, leading to bourses that closed higher throughout much of Asia. The Taiwan Weighted gained 0.83%, and South Korea's Kospi gained 1.85%. Singapore's Straits Times gained a more modest 0.24%, and Hong Kong's Hang Seng climbed 0.68%. China's Shanghai Composite bucked the trend, however, dropping 0.18%.

The Bank of England met today, but left rates unchanged as expected. Previous to the decision, discussions centered on when the central bank might next raise rates. U.K. retail prices show that ideal inflation rates are being exceeded according to one commentator, but the discussion on CNBC World this morning revealed that many did not expect a rate hike until early 2004 at least. In Germany, August industrial production dropped a higher-than-expected 2.5% from July's level. It dropped 1.9% year-over-year. September's adjusted jobless rate in Germany fell to 10.5% from the previous 10.6%. The August current account surplus fell from the year-ago-level. Those digesting this news also had to factor in a newspaper's speculation that Germany would cut its GDP forecasts for 2003 and 2004.

Most European bourses were higher as this report was prepared, with the FTSE 100 climbing 29.60 points or 0.69%, to 4298.20. The CAC 40 climbed 33.04 points or 1.02%, to 3281.65. The DAX rose 39.20 points or 1.15%, to 3434.53.

  Jeff Bailey   10/8/200,  10:16:43 PM
Pivot Matrix for tomorrow at this Link

  OI Technical Staff   10/8/200,  10:16:24 PM
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