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  Jeff Bailey   10/14/20,  6:49:13 PM
Pivot Matrix for tomorrow posted at this Link

  Jim Brown   10/14/20,  4:59:57 PM
LLTC Earnings 22 cents compared to est of 21 cents, sees sales and profits up for the 4Q

  Jeff Bailey   10/14/20,  4:22:26 PM
Novellus (NVLS) $37.42 +1.27% ... $38.15 after headline number.

  Jeff Bailey   10/14/20,  4:20:59 PM
QQQ $35.33 +0.25% .... edging up at $35.42

  Jeff Bailey   10/14/20,  4:18:30 PM
Intel (INTC) $31.08 +0.9% ... wild swing from $31.45 to $30.36 (may be bad ticks, trade is fast) after headline number. Use your limit orders if trading after-hours. Market orders are going to be disappointed. INTC $31.21 here.

  Jim Brown   10/14/20,  4:17:06 PM
NVLS earnings = $221 million, +04 ex items, compared to estimates of +0.00 (flat)

  Jim Brown   10/14/20,  4:14:26 PM
Intel earnings = 25 cents compared to estimates of +0.23 cents.
Revenue = $ 7.8b compared to estimates of $7.71 billion
Next Qtr est = $8.1-$8.7B compared to prior est $0.27, $8.32 billion.
Reduced capex spending for rest of 2003
4Q gross margins 58-62%

  Jeff Bailey   10/14/20,  4:14:20 PM
Keane (AMEX:KEA) $14.35 +1.19% ... announces it will move its listing to the NYSE under ticker KEA. Anticipates that trading on NYSE will begin Thursday October 30.

  Jeff Bailey   10/14/20,  4:07:11 PM
IDEC Pharmaceutical (IDHP) $34.13 +0.29% Link ... stock edges up to $34.34 in after-hours after reporting Q3 of $0.26 per share, which was in line with consensus. Revenues rose 33.6% year-over-year to $138.5 million, topping consensus of $134.3 million. Bulk of revenues came from company's Rituxan, which registered $134 million in sales.

  Jeff Bailey   10/14/20,  4:03:06 PM
QQQ $35.29 +0.14% .... though I don't expect it, will suggest a long bull stick an offer out at $35.74 ahead of Intel's earnings. Maybe get a knee-jerk type of bullish trade to that level.

  Linda Piazza   10/14/20,  4:02:34 PM
We have an OEX breakout on the 30-minute OEX Donchian channel. Good. Let's see how it works out tomorrow. Remember that the Donchian channel breakout signals I was testing worked miserably for the last 60-day period.

Of course, this doesn't mean that Donchian channels work miserably but only that the methodology I was using to test the last 60-days did. That same methodology worked wonderfully for a different 60-day period, and perhaps a different methodology would work beautifully in many markets.

  Jeff Bailey   10/14/20,  3:57:25 PM
Dow Industrials (INDU) 9,808.31 +0.45% .... moving above our WEEKLY 19.1% pivot retracement and now sets stage for test of MONTHLY R2 of 9,852.

JNJ +2.3% Link , DIS +2% Link and AA +2% Link were drivers to the close.

SBC 21.40 -1.38% Link was only component down more than 1%.

  Linda Piazza   10/14/20,  3:55:54 PM
I'm actually going to be surprised if the OEX closes above 522.54, above the top of the 30-minute Donchian channel. That doesn't happen much. The OEX comes close often, but doesn't often close (on a thirty-minute basis) above it.

  James Brown   10/14/20,  3:54:41 PM
Momentum traders may want to take note of the 4.55% surge in shares of Untied States Steel (X). The stock has broken out above the $20.00 level of resistance. The weekly chart shows next resistance at $22.00. Earnings are expected around Oct. 28th.

  Jim Brown   10/14/20,  3:54:22 PM
BCR has not split their stock in the last ten years and I would suspect a split soon as it approaches the $80 range. Announcing with earnings would not surprise me.

  James Brown   10/14/20,  3:50:41 PM
Another stock to watch tomorrow is C.R.Bard Inc (BCR). Shares have just edged up to a new all-time high above $73. The company is set to announce earnings tomorrow after the closing bell. Estimates are for 95 cents/share.

  Linda Piazza   10/14/20,  3:48:26 PM
A Donchian channel breakout would occur on an OEX close today above 522.54. I'm definitely not suggesting acting on this information by going long the OEX if it closes above this channel, especially ahead of INTC earnings, but only bookmarking how the OEX behaves in accordance with that channel in case that information is useful to us in the future. The OEX looks as if it's going to end the day jammed up underneath that 523 resistance. How ironic that we keep waiting for these tests of key levels and they keep happening when we can't act on the test. Well, perhaps we could, but we would be gambling to enter the market either direction ahead of INTC's earnings, and I'm not going to gamble with your money by suggesting such a trade. I guess I should have gambled by trusting my instincts this morning and going long, but the low volume did make that a gamble and the flat oscillators made it a gamble based on what I "believed" might happen.

  James Brown   10/14/20,  3:43:21 PM
Checking out some new highs, Insurance company Ambac Financial Group (ABK) just broke to a new all-time high at $72 after spending four months consolidating sideways. Look for earnings on Thursday morning before the bell with estimates set at $1.36/share.

  Jeff Bailey   10/14/20,  3:41:00 PM
03:15 Update posted at this Link

Some comments from Goldman Sachs on INTC.

  Linda Piazza   10/14/20,  3:32:38 PM
As I mentioned earlier, it's not a good idea to anticipate a close outside the 30-minute Donchian channel. At the time I was mentioning the upper boundary of the channel, the OEX was trading above that boundary, but it takes a lot to see a breakout on a 30-minute basis.

Our high so far today has been 522.75, not quite to the 523-524 level I anticipated seeing tested today. Of course, perhaps that was the test?

  James Brown   10/14/20,  3:32:25 PM
Bears have probably noticed the recent declines in SLM Corp (SLM), better known as Sallie Mae. The stock looks ready to break its September lows near $37.00 now that it has closed below its simple 200-dma. The weekly chart shows a clear breakdown of its long-term rising channel. However, before you consider bearish positions be aware that SLM is expected to announce earnings on Thursday morning. Estimates are for 47 cents.

  James Brown   10/14/20,  3:28:59 PM
The strong BAC earnings this morning and strength in the banking indices has lifted shares of Bank of New York (BK) through resistance at $32 to hit a new yearly high. BK's next resistance level appears to be $35 on its weekly chart but BK's point-and-figure chart show bearish resistance at $34.00. Earnings for BK are expected on Oct. 22nd. Estimates are 41 cents.

  Linda Piazza   10/14/20,  3:15:44 PM
I read the value incorrectly on the 30-minute Donchian channel as mentioned in my 15:11 post. The current 30-minute close would have to be over 522.54 to represent an upside breakout, rather than the 522.44 level I previously posted.

  James Brown   10/14/20,  3:13:19 PM
Breaking out of its descending channel and surging past its simple 50-dma is Natl City Corp (NCC), a financial holding company for several banks throughout the midwest. The company is expected to announce earnings tomorrow before the opening bell. Estimates are for 57 cents/share. Momentum bulls might want to look for a move past $32.

  Linda Piazza   10/14/20,  3:11:19 PM
New high of the day for the OEX. Can it hold? For the sake of reference, the 30-minute Donchian channel (20,2) now shows a close over 522.54 on this 30-minute candle would be a breakout to the upside. I'm referencing these moves not because I'm suggesting that we begin trading them right now, but rather so we can see how they perform in real-time. As I mentioned earlier, you absolutely cannot anticipate these signals and think you know that the OEX will close outside the channel because it's uncanny how often it closes just inside it.

  James Brown   10/14/20,  3:09:42 PM
Just a note for some of the stock traders, OpenTV Corp (OPTV) is shooting higher by 14.5% to $4.89 on big volume of 4.5 million shares. I can't find any headlines regarding the surge. These are levels not seen since May 2002. There doesn't appear to be any big short interest. The stock is up almost 700% from its March lows.

The company did win an appeal in an patent infringement case but that was last week.

  James Brown   10/14/20,  3:02:13 PM
Lehman Brothers now makes the second brokerage house in two days that has upped their Q3 GDP estimates. LEH bumped GDP expectations from 5% growth to 6% growth. Yesterday Goldman upped their expectations for 6.5% GDP growth.

  Jeff Bailey   10/14/20,  2:58:31 PM
Internet Capital Group (ICGE) $0.47 +11.9% ... its has been a long time since I've seen this one on the most active list, even at these prices. Large intra-day volume spike from $0.43 on just about 9 million shares.

  Linda Piazza   10/14/20,  2:54:32 PM
There was an upside breakout of the apparent bull flag on the OEX five-minute chart, but the OEX could not hold the higher level and failed at the day's previous high, or actually slightly below it. It has now confirmed a double-top on the five-minute chart, with the predicted downside target near 521.30. That's just above the 12:30 high of 521.27.

  Linda Piazza   10/14/20,  2:46:58 PM
The Donchian channel breakout tests I did last night showed that we wouldn't as yet want to begin entering trades based on those breakouts. The performance was spectacular with one 60-day period I tested this weekend, picking the testing period at random, and dismal with another, the August 13-October 13 period. However, for reference, if the OEX closes above 523.01 in this 30-minute period, it will have broken out of the 30-minute Donchian channel (20,2) to the upside. It's uncanny, however, how often the OEX trades right up to the channel without closing above it.

  Jeff Bailey   10/14/20,  2:45:07 PM
United Parcel (UPS) $67.71 +1.86% Link .... also seeing some rather heavy call volume in October $60 and $65 calls as stock jumps to 52-week highs. This looks like cautious bulls looking to close out covered calls that may have been written, and trying to save underlying positions. The reason I say this is UPS reports quarterly earnings Tuesday morning before the opening bell, option expiration is Friday. Current consensus at $0.60 per share. Today's trade at $67 is spread-triple top buy signal. Vertical count is bullish to $90.

  Linda Piazza   10/14/20,  2:41:37 PM
Now that the OEX is above the 521 resistance, I will speculate on the current five-minute pattern. That five-minute pattern does look like a bull flag pullback, but the test is going to be whether it retraces more than 50% of the flagpole rise that preceded its formation. That 50% retracement comes at about 521.66, so I would say that the OEX should not retrace lower than the 12:30 high at 521.27 before that possible bull flag breaks to the upside.

  Jeff Bailey   10/14/20,  2:38:02 PM
Teradyne (TER) $19.33 +2.54% ... unusual call volume in the TER October $20 calls (TERJD) ahead of tonight's earnings.

Yesterday, saw some put volume in Holywood Ent. (NASDAQ:HLYW) $17.00 -5.13% puts.

  Linda Piazza   10/14/20,  2:34:07 PM
Advancers had pulled ahead of decliners on the NYSE as of a few minutes ago, as well as on the Nasdaq. Adv:dec ratios as of a few minutes ago were 17:15 on the NYSE and 19:12 on the Nasdaq. Up volume was bigger on both exchanges, with up volume more than double down volume on the Nasdaq. Total volume was 827 million on the NYSE and 1.2 billion on the Nasdaq.

  Jeff Bailey   10/14/20,  2:27:38 PM
Dow Industrials (INDU) 9,788 +0.24% ... trade here has INDU 5-points above its WEEKLY R1 and looks to follow BIX.X 324.66 +0.38% in the WEEKLY Pivot.

Will not that all the major indices shows their daily interval stochastics (5,3,3) with %K crossing back above %D. Past oscillator setup has seen a near-term "blow off" type move to the upside.

Perhaps Intel (NASDAQ:INTC) $30.90 +0.32% now bidding into positive territory is the catalyst. Earnings come after the close.

  Linda Piazza   10/14/20,  2:19:43 PM
Here's what's stopping the OEX now: Link Since this might legitimately be termed a symmetrical triangle, presumably an upside breakout would be a signal to go long.

  Jeff Bailey   10/14/20,  2:19:09 PM
Geron Corp. (GERN) $16.70 +15.8% .... has broken to 52-week high.

  Linda Piazza   10/14/20,  2:11:48 PM
The OEX has now moved above the bullish #2 on the 5MRT system and heads toward the #3. Of course, it also tested the bearish #2 this morning, with one five-minute close below that level. This move above the bullish #2, however, confirms the bullish bias I've had today, for a test of 523-524, and then 527-528 if the OEX can manage a sustained move above 524. However, that 523-524 has proven itself to be tough resistance, and it shows up on the weekly chart, too. Although I believed this morning that we'd see a test of 523-524, that belief was contrary to October trading patterns and we did not have the strong volume I hoped to see, to support such a move. Without that volume, trading decisions were made even more complicated and much riskier.

  Jeff Bailey   10/14/20,  1:55:04 PM
QQQ $35.25 +0.02% ... should look for intra-day support to firm at $35.14. Look at that volume spike on break of short-term trend. The only bearish trend currently in play. Link

  Linda Piazza   10/14/20,  1:52:21 PM
If looks as if a test of OEX 523-524 may be next, with a test of 527-528 after that. Since the volume is so low and since that next resistance is so close, I'm not calling a trade. As I mentioned this morning, I would have needed something to work out this morning so that we had time for the trade to work because I would not want to hold overnight with INTC earnings due. Should I have had more confidence in my prediction this morning, so that we bought at the move over the 60-minute 21-pma? I don't think so. Just because my I-believe scenario appears to be working now didn't mean that it would have been a sound trading practice to enter a bullish trade based on that scenario alone. We haven't seen 523-524 tested yet, much less a move over those levels.

  Linda Piazza   10/14/20,  1:45:26 PM
Right on time for the usual stop-running push at 1:45 ET, the OEX tests 521 again. The five-minute chart shows a pattern of higher lows.

  Linda Piazza   10/14/20,  1:21:19 PM
Here's an ugly thought: what if the indices get nailed at these levels for the rest of the week? Actually, I think that's unlikely to happen. However, I looked at the Bollinger bands, expecting to see them narrowed in the way they usually narrow when prices get compressed and a breakout is imminent. Although they've narrowed a bit on the 30-minute chart, perhaps they haven't narrowed significantly.

We are approaching the time of day when we often see a stop-running move. I've noticed lots of day over the last month when that move was absent, however, and those days were usually days when indices failed to move much in the afternoon, either.

  Linda Piazza   10/14/20,  12:59:32 PM
Is the latest five-minute OEX formation a bull flag retreating after the rise toward 521? I'm not even going to speculate on that. Until the OEX moves out of this range, this is just oscillations back and forth and it probably does more harm than good to identify all these short-term intraday patterns.

  James Brown   10/14/20,  12:55:00 PM
Wow! Shares of TASER Intl (TASR) have soared even higher from the October 1st news that the company received $1 million in funding from the U.S. Dept of Defense. TASER is known for its "less lethal" and stun-gun style weapons to incapacitate an assailant. The company turned in 2002 revenues around $10 million, so the DoD bill is a nice boost in sales. The stock is no doubt extremely overbought surging from $25 in early October to over $40 today.

Yes, you're probably thinking short squeeze and you'd be right. The latest short interest numbers reported that short interested had reached 47% of the float.

  Jeff Bailey   10/14/20,  12:47:34 PM
Geron (GERN) $15.72 +9% Link ... this once "little" biotech jumping again today. No news... not yet at least. Bullish triangle pattern on PnF chart with trade at $15.00.

  Jeff Bailey   10/14/20,  12:38:24 PM
Forest Labs (FRX) $47.07 -0.44% ... You are more than likely to have seen the release of earnings which were on analyst projection with better revenue but warned that costs of Namenda launch would bring 2004 earnings to 1.82-1.92 vs. prior 1.99. stcok printing double bottom breakdown with inital target of $42 which would correspond to the August low.

Interestingly we are back to the top of the 8/27 gap but so far this morning do not show signs of filling this gap.

I have a long core position on which I regularly sell covered calls which has lowered my cost to hi 30'as well as traded around hi and lows half succesfully. I believe I will hang on at this stage and revisit if we do go to the 42 level.

If you have a minute in this flood of earnings, would appreciate your thoughts.

My feel is that FRX may be a "dead money" trade below $53 the next 3-months (quarter), and yes, I've browsed today's news.

What I'd look for near-term, to perhaps once again have the trader selling covered calls, is we should see the FDA actually make a decision on Namenda (deadline given was October 19). As it relates to FRX's guidance vs. analysts estimates, I'm not sure that analysts had factored into next quarter's earnings the hiring of new sales reps for the Namenda pre-launch (they may have, but I doubt it).

I think the ramp to 25%-35% EPS growth for fiscal 2005 (beginning April 1, 2004) is management's thoughts as to potential for Namenda.

Part of my "dead money" thoughts until end of year is that drug sector as a whole is still out of favor, and with some still high hopes for other more econ. sensitive sectors still holding, drugs and general healthcare may not find bullish rotation until early next year.

  Linda Piazza   10/14/20,  12:32:05 PM
I hesitate to type this, but the OEX breaks above the 521 level that has been capping its moves today and late yesterday afternoon, too. As I mentioned earlier this morning, a sustained move over this level should predict another test of 523-524 with a possible upside test as high as 527-528, but we've already seen some false breakouts today and I hesitate to act on this information.

  James Brown   10/14/20,  12:18:59 PM
Afternoon Sector Winners:
(Winners are pretty light on gains today.)
DFI defense index: +0.39%
GSO software index: +0.20%
DDX disk drive index: +0.36%

Sector Losers:
XNG natural gas index: -1.27%
OSX oil services index: -1.65%
XAL airlines index: -1.71%

  Linda Piazza   10/14/20,  12:18:58 PM
At 10,153.84 as I type, the Wilshire 5000 again approaches that 10,180 level that has some importance on its weekly chart.

  Linda Piazza   10/14/20,  12:17:33 PM
Tice allows that the Dow may reach 10,000 first, however.

  Linda Piazza   10/14/20,  12:16:43 PM
Dow 4000 in next 18 months: That's the prediction of David Tice, Prudent Bear Fund, speaking now on Bloomberg TV.

  Linda Piazza   10/14/20,  12:11:23 PM
If that pattern I was seeing on the five-minute chart was a valid diamond pattern (see my 11:47 post), the OEX broke below that diamond and now rises to test the broken support. The apex of the diamond appears to be at about 519.85, so a sustained rise above that level would tend to negate the bearishness of the breakdown out of the pattern.

  Jeff Bailey   10/14/20,  12:00:58 PM
Pogo Producing (PPP) $47.90 -0.97% Link .... during market hours reports Q3 earnings of $1.06 per share, which was 12-cents better than consensus of $0.94. PPP said revenues rose 33.7% year-over-year to $277.9 million versus $259.5 consensus.

  James Brown   10/14/20,  12:00:23 PM
Don't forget! Earnings for current OI call plays CAT & UTX are expected on Thursday morning. We'll probably close the plays in tonight's newsletter.

  Linda Piazza   10/14/20,  11:56:46 AM
How many times have you been sure you were seeing the imminent breakdown this morning? How many times have you been sure you were seeing the imminent upside breakout? The one we don't take will be the one that would have maxed out the profits in our trading accounts, but so far, a trader could have justified taking numerous signals today and the OEX would still be sitting right where that trader started out. For those who chose to enter on OTM October options, time premium would have been tick-tocking away. I can look at 30-minute MACD and see that series of lower highs and say, bearish divergence. I can look at the way the OEX holds onto its 60-minute 21-pma and stays above the 100- and 130-pma's, and think, "buy the dips." I can look at the OEX 30-minute pattern one way and see a H&S developing with a sell signal imminent. I can look at that same pattern and see a rising regression channel, with the current level being a great time to buy ahead of a possible bounce up to the top of the channel. It's still I-believe trading.

  Jeff Bailey   10/14/20,  11:47:24 AM
11:00 Update posted at this Link

  Linda Piazza   10/14/20,  11:47:09 AM
The pattern I'm seeing on the OEX five-minute chart may be a diamond pattern, which is somewhat confusing. Link These are usually reversal patterns. Although they sometimes occur at market bottoms (the five-minute one is forming at the bottom of a decline), they're usually topping formations. According to Thomas A. Meyers, their formation usually requires high volume during the formation of the expanding part of the pattern, and then decreasing volume during the contracting portion, which is the reason they're usually seen at market tops and not bottoms. Meyers says they can sometimes form as continuation patterns, too, but these relatively rare patterns are usually seen after a climb, not after a decline.

  James Brown   10/14/20,  11:45:42 AM
Looking for a put candidate? One stock we were looking at last week was Express Scripts (ESRX). Shares had been in a bear flag pattern near its simple 200-dma for about a month. In the last two days we've seen it fall through the bottom of that consolidation pattern (as it should have). This morning's weakness breaks support at $57.50. MACD is rolling over and its P&F chart is pointing toward a price objective near $52. It's weekly chart suggests there might be some support near $50. Surprisingly there is no reaction to ESRX being started with an "out perform" this morning. Earnings are expected on Oct. 29th with estimates at 81 cents/share.

  James Brown   10/14/20,  11:37:41 AM
Retailer Urban Outfitters (URBN) continues its gravity-defying performance, up another 2.6% to $33.28. It's been quite the run from the February lows near $8.50. Four days ago UBS upgraded the stock to a "buy" after URBN announced strong same store sales for September and this morning First Albany chimes in with a "buy" rating. Earnings are expected in November.

  Linda Piazza   10/14/20,  11:32:52 AM
The OEX again approaches its ascending trendline, currently at about 518.30.

  Linda Piazza   10/14/20,  11:30:14 AM
Where's that volume we were promised this week? As of a few moments ago, total volume was a slow 380 million on the OEX and 642 million on the Nasdaq. Declining issues were ahead on the NYSE and advancing issues were ahead on the Nasdaq, with adv:dec ratios at 14:16 on the NYSE and 16:13 on the Nasdaq. Down volume was bigger than up volume on the NYSE and the opposite was true on the Nasdaq.

  James Brown   10/14/20,  11:26:22 AM
The rally in Moody's Corp (MCO) has come to a sudden end. The ascent may have been slow but it was non-stop from early September with barely any profit taking on the way up. This morning Merrill Lynch cut the stock to a "sell" on valuation concerns and the stock is down 3.65% to $57.50 on strong volume. The lows this morning at 56.75 coincide with the early July highs.

  Linda Piazza   10/14/20,  11:25:39 AM
If I trusted my judgment more and it wasn't contrary to the observations of the other writers, I'd suggest that a break above the most current OEX congestion would occur on a move above 521, and that a bullish play might be considered with an upside target of 528, but with special care exercised between 523-524. A trader would have to be ready to jump ship quickly at 523-524 if the OEX turned down from there. A break below 517.50-518, a zone that's important on a daily and weekly basis as well as on an intraday basis, might offer a good bearish entry, except for those important 100- and 130-pma's on the 30-minute chart. They're just below the current price. I wouldn't want to enter bearish just ahead of them, although I actually believe their 60-minute counterparts to be more important. Those averages are down around 515. This entire 513-523 zone has become so congested that it's difficult to trade. No wonder the OEX is behaving as it is within this zone.

  James Brown   10/14/20,  11:17:38 AM
CS First Boston really went out on a limb this morning and started several Casino/gambling stocks with a "neutral". Those lucky equities include MGM Mirage (MGM), Park Place (PPE), Mandalay Bay (MBG), Harrah's (HET) and Station Casinos (STN).

  James Brown   10/14/20,  11:12:52 AM
One stock that has been on the OI watch list recently is General Dynamics (GD). Shares just broke through the simple 50-dma yesterday and the rally continues today with an upgrade. Morgan Stanley raised GD from an "equal-weight" to an "over-weight" and put a $100 price target on the stock. If you recall it was just a few weeks ago that several Wall Street analysts came out bearish on the defense group after a survey showed Americans were quickly growing less enthusiastic about defense spending. The sudden drop in shares proved to be a buying opportunity as GD is quickly approaching its early September highs. Earnings should come out tomorrow morning before the bell. Consensus estimates are $1.24/share. Currently share are up 2.88 percent to $85.00.

  James Brown   10/14/20,  11:03:51 AM
Wall Street giant Merrill Lynch (MER) is down more than $1 or 1.9 percent after beating estimates by 17 cents this morning. Analysts had been looking for 86 cents, MER turned in $1.03 with revenues jumping more than 16 percent over last year. As of yesterday the stock had climbed toward the $59 level, which was both the top of its current rising channel and resistance on its weekly chart. The XBD broker/dealer index is down slightly in sympathy pains.

Current OI call play in BSC is down 31 cents on the session.

  Jeff Bailey   10/14/20,  11:00:31 AM
QQQ $35.18 -0.17% ... best level of the morning. Held Red #2 in early morning from 5-mrt, now looks to test Blue #2 at $35.22, which would be just under yesterday's close. Rather neutral here.

Microsoft (MSFT) $28.61 -0.6%

  Linda Piazza   10/14/20,  10:59:04 AM
Jonathan mentioned the flattened indicators. I've been noting lately how many of them have flattened near their equilibrium levels. Lately, the only kind of trading that's been offered is I-believe trading, the kind where you believe you know where the market is going and plunge in, because indicators aren't giving many clues. You'd better be quick to take profit if they're offered, too, because the direction you believe the markets might go might not hold for very long.

  James Brown   10/14/20,  10:57:13 AM
Biotech giant Amgen Inc (AMGN) remains mired in a three-month bull flag consolidation pattern. After an incredible run from its Nov '02 lows near $44 (and its July '02 lows near $31) the stock has been consolidating gains after peaking over $70 this summer. This morning's downgrade to a "hold" from A.G.Edwards doesn't help the stock. The analyst at AGE believes AMGN will find it more and more challenging to meet its revenues and earnings estimates. The weakness today just happens to coincide with its declining 50-dma. Checking out AMGN's point-and-figure chart the stock should have support near $62, which just happens to coincide with its simple 200-dma on the bar chart. Earnings are expected on Oct. 21st, estimates are for 50 cents.

  Linda Piazza   10/14/20,  10:49:00 AM
This morning, the OEX found support just above that ascending trendline I've been depicting, but also near the top of yesterday's morning gap. That gap wasn't particularly large, so I don't expect it to figure greatly in trading but perhaps it does bear watching. Friday's close was 518.28 and Monday's open was 518.78, so some light support might be offered at that area. That support might be strengthened, however, by that rising trendline.

  James Brown   10/14/20,  10:45:35 AM
Shares of Emulex (ELX) are making a go for its third gain in a row today. Shares were recently downgraded on valuation concerns (Oct. 9th) but investors seemed unwilling to sell the stock on the lowered outlook. Today a different analyst has put a "strong buy" on the company. Looking at the weekly chart, shares of ELX have broken through very tough resistance at the $26.50 level. Prior to June 2002 ELX traded on the NASDAQ using the symbol EMLX.

  Jeff Bailey   10/14/20,  10:39:59 AM
Darden Restaurants (DRI) $19.80 +0.25% Link .... after gapping lower on 09/25 to $18.25 due to "crab promotion," stock has clawed its way back above its flat 200-day SMA of $19.73 in early morning trade.

I was looking at its PnF chart yesterday as a pullback entry as PnF chart was quite bullish in September and current bullish vertical count is $31.50.

Perhaps those bulls still holding YUM! Brands (YUM) $32.31 -0.49% Link from $26 level (and break back above 200-day SMA) might look to take some profits near-term and rotate to DRI.

  Linda Piazza   10/14/20,  10:38:05 AM
The 30-minute oscillators begin to flatten or attempt to curve up. Is this just more twitching around the 60-day 21-pma or will support be found and the OEX move up, resolving that daily chart formation the way that the tech stocks have done lately when the same formations were seen on those charts? I wish I knew, but I'm still leery of my own observations here.

  James Brown   10/14/20,  10:37:52 AM
With Intel's earnings after the bell tonight we're going to see a lot of focus on the semiconductors. One chip stock, QLogic Corp (QLGC) was just started at a "buy" this morning. Shares appear to be fighting for a clean breakout from a wide bull flag pattern. There is resistance at $52.50 through $53.25. Earnings are expected tomorrow night after the closing bell and estimates are for 35 cents a share.

  Jeff Bailey   10/14/20,  10:31:21 AM
December Palladium futures (pa03z) $209.00 -0.23% .... day's range has been $207.25-$209.00, so rather tight. Stillwater Mining (NYSE:SWC) $6.74 +0.74% trying to edge above 21-day SMA resistance, while North American Palladium (AMEX:PAL) $5.36 -0.74% steady after yesterday's 52-week high trade of $5.65.

  Linda Piazza   10/14/20,  10:27:58 AM
Mixed signals again: the OEX is consolidating just above those 30-minute and 60-minute 21-pma's. The three-minute chart shows a bounce, consolidation, a move up, and now more consolidation. That's good. However, the three-minute and five-minute stochastics are threatening to roll over with price at a lower high. The OEX needs to climb above 521 before those five-minute stochastics do roll or else we'll be looking at a lower five-minute high. (That won't be divergence, however, as the stochastics are also at a lower high.) Note: The OEX is dropping below those averages as I completed this post.

  Jeff Bailey   10/14/20,  10:27:53 AM
December Copper futures (hg03z) $0.8825 -0.56% .... spiked to a contract high of $0.8985 earlier today. Phelps Dodge (PD) $55.73 +0.45% holding 25-cent gain.

  Linda Piazza   10/14/20,  10:22:23 AM
Too good to be true? The first test of the Donchian channel breakouts turned out to be too good to be true. Last night, I backtested the last 60-day period, from August 14 through yesterday. That period saw 18 breakouts, with a total loss of 0.68. Those results differ widely from the first 60-day period I selected at random this weekend, and those results obviously won't do.

Then I refined the entries based on an observation I'd made while backtesting. I'd noticed that if the OEX opened outside the Donchian channels, it was a good idea to enter at the open. However, if the OEX opened inside the Donchian channels and then closed outside it on the first thirty-minute candle, my impression had been that those trades did not perform as well. To test that theory, I eliminated all entries in which the OEX opened inside the channel but closed outside it on the first 30-minute candle. That resulted in 13 entries for a total gain of 18.49 points. That's a much better performance, but still not good enough. It did still, however, catch several breakouts that ran for a long period.

I'm disappointed, but will continue testing. Perhaps the initial 60-day period I picked at random was the only one in which Donchian channel breakouts proved helpful. Perhaps the last 60-day period was the aberration and all other periods would work well. This is how testing goes, and more is needed. It may be that we won't be able to use the Donchian channel breakouts to initiate trades, but can use them to confirm a breakout we'd already seen setting up.

  Linda Piazza   10/14/20,  10:19:28 AM
The OEX is now back above the 30-minute and 60-minute 21-pma's, again hinting at a possible move up to the top of the respective channels, Bollinger bands, or envelopes you might watch. Those predict moves up to 523-528, depending on the channel or envelope or band being watched, but first the OEX must sustain the rise above those key moving averages. So far, this is still just consolidation, still just twitching around near the central averages. This is what the OEX has been doing lately--oscillating around those averages and then either zooming up or zooming down after it has zoomed up.

  Jeff Bailey   10/14/20,  10:17:03 AM
Corillian (CORI) $5.44 +22.5% Link ... stock getting a boost from Friedman Billings Ramsey on upgrade to "outperform" from "market perform" and raising of price target to $10 from $3 on firm's belief that significant leverage in the company's business model will accelerate earnings over the coming years and any additional license deals or increased seat licenses will be magnified to the bottom line.

  Linda Piazza   10/14/20,  10:15:08 AM
The OEX rises to test its 30-minute and 60-minute 21-pma's again, with those averages at 520.10 and 519.95, respectively. If the OEX manages to sustain levels above those averages, is this the time for us to consider buying the dip, too? The indicators on the 30-minute and 60-minute charts still look bearish, however. I don't have the stellar setup I need to consider that action.

  Jeff Bailey   10/14/20,  10:12:31 AM
Defense Index (DFX.X) 175.63 +0.74% ... takes over sector winner in early trade. L-3 Comm. (LLL) $45.33 +1.52% (see 09:46:34 post) and SG Cowen's comments.

  Jeff Bailey   10/14/20,  10:10:57 AM
NetFlix (NFLX) $47.62 +1.68% .... bucking trend of fractional losses for broader market.

  Jeff Bailey   10/14/20,  10:10:02 AM
Children's Place (PLCE) $27.46 +1.10% .... bucking trend of fractional losses for broader market.

  Linda Piazza   10/14/20,  10:09:15 AM
The 30-minute 100 and 130-pma's lie at 517.14 and 516.16. I'm torn between seeing a break of 518 as a break of the H&S neckline and studying that possible strong support just beneath the neckline break, and so would be reluctant to initiate a bearish signal on that neckline break. The same moving averages are at 514.88 and 513.88 on the 60-minute chart.

  Jeff Bailey   10/14/20,  10:08:23 AM
Treasuries find selling in early going after being closed for trade yesterday. 5-year YIELD ($FVX.X) rising 7.3 bp to 3.206%, 10-year YIELD ($TNX.X) higher by 7.7 bp at 4.331%, and 30-year YIELD ($TYX.X) edging up 5.2 bp to 5.234%.

  Jeff Bailey   10/14/20,  10:06:24 AM
Disk Drive Index (DDX.X) 140.55 +0.52% Link ... sector winner early and trying to clear October 2000 relative highs of 140. Quantum (DSS) $3.42 +3.63% Link is index gainer, with Advanced Digital (ADIC) $16.75 +1.08% Link

  Jeff Bailey   10/14/20,  10:00:57 AM
Sector weakness in the early going has the Airline Index (XAL.X) 69.30 -1.7% Link the only sector down more than 1%, though sectors are broadly lower. Delta Airlines (DAL) $14.02 -4.62% Link after reporting Q3 loss of $1.43, which was 2 cents better than consensus. DAL said revenues rose 0.7% year-over-year to $3.44 billion, which was in line with consensus of $3.46 billion.

  Linda Piazza   10/14/20,  10:00:06 AM
Here's a view of the OEX 30-minute chart picturing that possible H&S seen in my 9:52 post, but this time pictured as a (hand-drawn) ascending channel. Link Gives a different picture of the action, doesn't it?

  Jeff Bailey   10/14/20,  9:57:13 AM
S&P Banks Index (BIX.X) 323.70 +0.08% .... edging green. SPX 1,042.38 -0.28% and OEX 519.52 -0.27%.

  Jeff Bailey   10/14/20,  9:56:08 AM
Russell 2000 Index (RUT.X) 527.78 +0.05% .... first broader market index to edge into positive territory this morning.

  Linda Piazza   10/14/20,  9:52:53 AM
Here's a view of the possible H&S and neckline, best seen on the bar chart: Link Caution, this could also be seen as a run-of-the-mill ascending channel if extended back further with parallel highs.

  Jeff Bailey   10/14/20,  9:51:24 AM
First Data Corp. (FDC) $37.86 -5% Link ... moving below its trending higher 200-day SMA after reporting Q3 earnigns of $0.51 per share, which was in line with consensus of $0.51. FDC said revs rose 9.9% year-over-year to $2.14 billion, which was below consensus of $2.2 billion. For 2003, FDC said it now sees EPS of $1.87-$1.93, which surrounds consensus of $1.91.

  Jeff Bailey   10/14/20,  9:46:34 AM
L-3 Comm. (LLL) $45.00 +0.73% Link .... moving above its 21-day SMA. SG Cowen saying LLL is bance chance for Q3 upside in the large-cap defense sector.

  Jeff Bailey   10/14/20,  9:43:25 AM
Lucent (LU) $2.32 -2.1% Link ... The Wall Street Journal reporting that Lucent's CEO Patricia Russo said she doesn't yet see signs of a recovering in the still ailing telecommunications-equipment market. While being interviewed in Geneva, Switzerland, she states the gear-making industry was "approaching a feeling of stability." However, Ms. Russo did no point to a recovery currently in progress.

  Jeff Bailey   10/14/20,  9:39:33 AM
Sirius Satellite Radio (SIRI) $2.40 +4.8% Link ... upside alert here at 52-week high.

  Linda Piazza   10/14/20,  9:39:26 AM
The ascending trendline I mentioned watching this morning is also a possible neckline of a potential H&S formation.

  Linda Piazza   10/14/20,  9:38:02 AM
I did more testing of the Donchian channel breakouts last night. That testing wasn't nearly as positive as the previous testing. In fact, it was downright disappointing. When we get our first market lull, I'll discuss what I found.

  Linda Piazza   10/14/20,  9:36:03 AM
The OEX first five-minute range included a high of 520.97 and a low of 519.93. The 50% retracement of that range lies at 520.45. Watching how the OEX behaves around this retracement level can be a key gauge of early market strength or weakness when the usual first retracement begins in a few minutes. The OEX is obviously below that midpoint so far, confirming early weakness.

  Jeff Bailey   10/14/20,  9:35:39 AM
S&P Banks Index (BIX.X) 322.72 -0.21% .... Bank of America (BAC) $81.89 +0.18% after earnings, while AmSouth (ASO) $22.5 +0.22% also showing fractional gains.

  Jeff Bailey   10/14/20,  9:34:11 AM
Documentum (DCTM) $28.93 +18.5% ... announced it has agreed to be acquired by EMC (NYSE:EMC) $13.55 -6.22% in a stock-for-stock deal, based on yesterday's closing value, of $31.42.

EMC said it expects the deal to be dilutive in Q1 of 2004 by $0.02 per share, but that the acquisition is not expected to materially impact EPS for the remainder of 2004, and is expected to be slightly accretive in 2005.

  Linda Piazza   10/14/20,  9:33:14 AM
If the OEX declines this morning, I'm watching an ascending trendline that formed off the low of 10:00 candle on 10/07 as a guide to trading action today. So far, the OEX has bounced on every test of that ascending trendline, so a sustained break below it might be important. It's currently crossing near 518.50-518.60, depending on how it's drawn.

  Linda Piazza   10/14/20,  9:25:46 AM
Futures are down slightly as I type. The Swing Trade Model is flat today, but we're hoping for more volume to support a trade today. The OEX spent yesterday testing the 60-minute 21-pma again, trying to establish that moving average as support. Thirty-minute envelopes, Keltner channels, and Donchian channels, and daily Bollinger bands indicate upside targets between 423 and 428 if that support is established and the OEX moves up from here. Those same channels and envelopes predict downside targets from 517-513 if the OEX should roll over instead. Daily MACD and RSI remain bullish and the OEX remains above its 30-minute 100-pma, so the presumption should be that it remains a good time to buy dips. The chart formations seen on the daily chart look eerily similar to that of many tech stocks just before recent breakouts.

These observations appear to differ widely from those of most of my co-writers, however, so I'm doubtful of my own observations. The VIX level frankly scares me to death. We're all afraid of the coming rollover, and who wouldn't be, knowing of the usual seasonal trading patterns for this time of year. Over the last couple of weeks, we've seen total non-movement in the indices for hours on end punctuated by spikes, both downward and upward. That just doesn't make for ideal trading conditions, especially for the OEX. Because my observations differ from those of many of my co-writers, and also because of seasonal trading patterns, the low VIX, and the observed trading patterns over the last couple of weeks, I'm going to have to see a stellar setup before we enter an official trade today. It's going to have to happen early, too, because I want us out ahead of this afternoon's INTC earnings.

I'm not reluctant to call a signal, just reluctant to call it if the trading environment isn't conducive to trading. One of my responsibilities is deciding when the right conditions exist. For now, though, as long as the daily MACD remains bullish, the OEX consolidates just above key moving averages, and the OEX remains above those key moving averages on daily, 60-minute, and 30-minute charts, I'll have to say that buying dips remains the best choice, while I remain ready to switch that opinion as soon as those conditions break down.

  Jeff Bailey   10/14/20,  9:24:56 AM
09:00 Update posted at this Link

  Linda Piazza   10/14/20,  6:47:43 AM
Good morning. After a three-day holiday, investors in the Japanese markets came back ready to buy. The Nikkei opened higher and spent the early morning climbing toward 11,000, a number it reached within the first two hours of trading. Light profit-taking ensued then, and the Nikkei closed up 180.39 points or 1.67%, at 10,966.43. Many companies gained ahead of their earnings reports or on enthusiasm due to the higher close in the U.S. Rumors surfaced that the Bank of Japan had again intervened to weaken its currency against the dollar with the dollar firming at one point by more than a yen. In addition, the Bank of Japan again raised its outlook on Japan's economy, although it mentioned the uncertainties caused by currency issues.

Although the Nikkei traded higher and South Korea's Kospi gained 1.25% after political worries eased somewhat, other bourses declined. The Taiwan Weighted lost 0.57%, and Singapore's Straits Times lost 1.15%. Hong Kong's Hang Seng declined 0.89%, and China's Shanghai Composite lost 0.82%.

Many European bourses trade slightly lower, too, with profit taking and tech weakness being reported on CNBC World. Europe's largest consumer-electronics maker Royal Philips Electronics reported Q3 profits that proved to be the highest in almost three years. Those profits came at least partially on cost-cutting measures with sales declining again. Currency issues impacted those sales. The company had expected the North American electronics unit to be profitable in Q4, but now reports that it will be near the break-even level. With Philips being such a bellwether stock, other European tech stocks dropped in response. In addition, CNBC World is reporting that Germany's ZEW index fell for the first time in 10 months. This index measures investors' expectations for economic growth. The October number was 60.3, down from September's 60.9, and far below the expected 63.

Currently, the FTSE 100 has lost 10.40 points or 0.24%, to trade at 4351.90. The CAC 40 has lost 1.79 points or 0.05%, to trade at 3358.55. The DAX has declined by 1.44 points or 0.04%, to trade at 3536.95.

  OI Technical Staff   10/13/20,  12:40:52 AM
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