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  Jeff Bailey   10/17/20,  6:08:42 PM
Pivot Matrix for next week at this Link

In PINK I've made note of QQQ $34.20 and not too far from the $34.25 discussed in Thursday's wrap. So... QQQ has a habit of overdoing things a little (note QQQ traded MONTHLY R2, NDX didn't) and I think best pullback bullish entry trade to look for a bounce is actually IN BETWEEN the WEEKLY S2 and S1.

The BIX.X will probably be the key sector for strength and will note two correlation of 320 and 317, which will be important sector support for the major indices that traders should monitor.

Shorts may still be jittery and eager to cover. Note eBay (EBAY) with lofty valuation closes near session high, and Amazon.com (AMZN) $59.69 -0.36% which isn't "cheap" finished down just $0.22, while Yahoo! (YHOO) $42.24 +0.07% edged up 3 cents.

 
 
  Jeff Bailey   10/17/20,  4:48:57 PM
Darden Restaurants (DRI) $20.72 +0.48% ... discussed in today's intra-day updates. CEO on CNBC right now.

 
 
  Jeff Bailey   10/17/20,  4:32:06 PM
Brooktrout (BRKT) $12.75 +50% ... Jeff: Thanks for this morning's alert on BRKT. I made some quick money day trading it today. I have a question. I can't remember what site you go to in order to get short interest data. This one is acting like a short-squeeze is in swing. What do you think?

Wow! Today was an impressive day for BRKT that is for sure and I must say I'm surprised that this one gained an additional 14% from this morning's post. I had looked at BRKT several weeks ago and didn't mention it as it looked like the stock was stuck below $8.00 and short interest wasn't what I would consider all that high, though it was building, so I thought it was going to just sit there. I should have kept up on it. It used to be one of my "favorite names" among technology as I think the fish is perhaps one of the most colorful among the trout family.

I get short interest data for FREE at the NASDAQ market site Link and all you have to do is put a stock symbol in one of those 10 boxes, click "flash quotes." A new window should pop up. In the pulldown menu, where you see "FlashQuotes" go to -Short Interest and you should see a new window with BRKT's short interest as of Sept. 15, which was 44,466 shares and days to cover of 2.85.

Not much in the form of short interest in my opinion to indicate a squeeze, and has me wondering just how undervalued this stock might be based on today's impressive gains. Pnf chart has a bullish vertical count growing to $30.25 today. Link

 
 
  Linda Piazza   10/17/20,  4:16:14 PM
Swing Trade Summary: OEX/SPX/DJX/DIA/SPY
10/15: Entered a bullish OEX trade at OEX 525.43.
10/15: Stopped at 523.
Result for that day: 2.43 OEX points against us.
Results for the week: 2.43 OEX points against us.
I was pleased to see how well some of the indicators I'm using worked in the later part of the week this week, but I've got lots of backtesting to do this weekend.

 
 
  Linda Piazza   10/17/20,  3:47:14 PM
I just noticed this: In early October (about the 3rd), 60-minute MACD, CCI, and RSI began forming trendlines of lower highs. Those trendlines had since been violated to the upside. With CCI, that happened about the 8th, and with MACD, it happened a little later in the month. Today, both CCI and MACD came back down to test that trendline, with CCI curving back up after doing so, about an hour ago--about the time the OEX was testing its 130-pma. MACD sort of looks as if it wants to flatten here along the top of the trendline. RSI has a similar trendline, but it turned up before it ever retested it. Again, this is end-of-day trading on opex Friday, so I'm not drawing the conclusion that the OEX has successfully tested its 60-minute 100/130-pma's and will bounce up on Monday. I'm just making the observation that these indicator trendlines can be important to watch, too.

 
 
  Linda Piazza   10/17/20,  3:37:58 PM
Several of the five-minute Keltner channel bands cross near 516.90, just above the current location of the OEX 60-minute 130-pma. That suggests that the OEX may steady here, but that's a dangerous conclusion a couple of minutes before MOC orders on an opex Friday. Again, I'm just benchmarking my impressions based on what's showing up. If we had entered a bearish trade based on the five-minute Donchian channel breakout this morning, I probably would have suggested that we be closing that trade right now, for slightly more than 3 points of profit.

 
 
  Linda Piazza   10/17/20,  3:15:56 PM
If this were not late on an opex Friday, I would suggest that we should enter a bearish position if the OEX violates the 60-minute 130-pma and a bullish position if it bounces back above the 100-pma after testing the 130, but a lot of strange things happen during end-of-day trading and even stranger things happen on an opex Friday. We don't know yet how much of this is opex related, so I don't suggest such an entry. Why do all the good entries lately come at the end of the day?

 
 
  Linda Piazza   10/17/20,  3:12:38 PM
Scan back to September to see how the OEX has traded in relationship to the 100/130-pma's to see why I think they're important to watch today and why I'm currently watching these averages on the 60-minute rather than the 30-minute chart: Link At other periods in time, the corresponding averages on the 30-minute chart has been more important to watch.

 
 
  Linda Piazza   10/17/20,  3:08:25 PM
The OEX now tests that 60-minute 130-pma.

 
 
  Linda Piazza   10/17/20,  3:02:36 PM
An OEX five-minute close beneath 517.70 would be another close beneath the five-minute Donchian channel. (There was a five-minute close beneath that level.) So far, we would have been in good shape entering a bearish trade on the first OEX breakout of the five-minute Donchian channel, at 520.66. We would have been in better shape taking the bearish side using Jeff's 5MRT when the OEX moved below 522.68, but the 5MRT system hasn't always worked as well on the OEX as it is today. So far, also, the five-minute Keltner channels have been fairly good at showing when we'll see bounces and how far they're likely to carry.

A note of caution to both bulls and bears. The OEX now dips below the 60-minute 100-pma, and will soon test the 130, at 516.38. The OEX has adhered fairly well to these 60-minute averages over the last month, so that a touch of the 130 and then a bounce back up through the 100, might predict a stronger bounce attempt into the close, and a break through the 130 might precipitate a stronger decline.

 
 
  Jeff Bailey   10/17/20,  2:46:47 PM
01:00 and 02:00 Internals ....

NYSE ... A/D 1065:1984 and 1005:2095, while NH/NL 159:1 and 167:1

NASDAQ ... A/D 1004:1965 and 941:2078, while NH/NL 193:8 and 200:8

 
 
  Linda Piazza   10/17/20,  2:40:53 PM
The OEX is trying to bounce from its test of the 60-minute 100-pma, but the bounce isn't convincing so far. The OEX will hit a descending trendline somewhere near 519, depending on how quickly it rises and whether it continues to rise.

 
 
  Jeff Bailey   10/17/20,  2:38:02 PM
eBay (EBAY) $54.84 -4.6% ... here's a bar chart where I hope to explain trading strategy for those that may be long the stock, or calls from my prior bullish profiles. Link

Chart is per 12:55:43 comment and gives trader a plan based on prior history.

 
 
  Linda Piazza   10/17/20,  2:29:13 PM
The observations of the five-minute Keltner channels (my 14:24 post) coincide with the observation that the OEX now tests the 60-minute 100/130-pma's, with those averages at 517.54 and 516.37, respectively. This might be a bounce zone, and one that would be important. The five-minute Donchian channel showed another two five-minute closes beneath the channel, showing breakdowns, however, suggesting that it's possible that the OEX could break below those averages. This is an important test, then.

 
 
  Linda Piazza   10/17/20,  2:24:03 PM
Five-minute Keltner bands suggest this may be a bounce zone (60-minute 100/130-pma's do, too) with a likely upside between 519-519.70 if the OEX continues to follow its pattern today. They also suggest that the OEX might be approaching a bigger bounce zone soon.

 
 
  James Brown   10/17/20,  2:08:49 PM
For Jon and anyone who remembers the "Hamburglar". Link

 
 
  James Brown   10/17/20,  2:01:42 PM
...no we agree there. Seems that everyone hates Euroworld Disney. (I almost mentioned it in my last post)

 
 
  James Brown   10/17/20,  1:58:35 PM
Jon, that goes against all the brand awareness and good will they've been building for decades here at home. Besides, European aristocrats may not like America but most of the populous seems to like all things American. What's more American than a Big Mac (in an unhealthy, high-fat kind of way).

 
 
  Linda Piazza   10/17/20,  1:57:07 PM
As the five-minute OEX Keltner channels predicted, the bounce began at the test previous day's low for the OEX. If the OEX follows the pattern it's been following today, the next downturn would probably come between the current level and 519.63, or perhaps from as high as 520 or even 521. It does not currently appear that the OEX would move higher than 521, however. We know from other methods of technical analysis, too, that 521 is likely to be a resistance zone.

 
 
  James Brown   10/17/20,  1:52:12 PM
On a lighter note a Reuters article is reporting that McDonalds (MCD) is trying to stir up some new business for its lagging European chains. It's new attraction? Tours of the fast-food chain's kitchens. Evidently the french fry machine and the Big Mac station are big hits.

 
 
  James Brown   10/17/20,  1:46:03 PM
Shares of Lear Corp (LEA), the automobile interior and component maker, had produced a very strong run in October from $53 to $63 but is now seeing some profit taking after this morning's earnings announcement. LEA beat estimates by 7 cents with $1.10/share. Revenues were up 4.6%. The company guides higher for Q4 revenues.

Currently the stock is down 3.3% but holding near the $61 mark.

 
 
  Linda Piazza   10/17/20,  1:39:36 PM
The OEX now tests the day's low. A five-minute close below 518.72 will be another close outside the five-minute Donchian channel. Again, don't count on a close outside that channel until it happens because it's uncanny how often the OEX closes back inside that channel after testing it. However, the OEX has trended down today after its first close outside that channel and we would have been in fairly good shape to have taken that signal. The five-minute Keltner channels have been good to watch for possible bounce or rollover points, too. They're predicting a bounce either right here or down closer to 518. If the OEX bounces here, they predict that the bounce might find resistance at 519.40 or 519.82, if the OEX follows the form it's been following all day.

 
 
  James Brown   10/17/20,  1:36:57 PM
In a research note this morning Lehman Brothers said they don't expect the Fed to raise rates until 2005.

 
 
  James Brown   10/17/20,  1:30:39 PM
We see an interesting pattern in shares of Lexar Media (LEXR). The stock has been on a huge run and the company just announced very strong earnings yesterday. LEXR beat estimates by 3 cents with 12 cents/share. Revenues were up 115% and much better than expected. LEXR raised their guidance for Q4 by 4 cents to 15c/share. The strong report prompted an upgrade from SG Cowen who raised LEXR from "market perform" to "strong buy".

The stock gapped up higher this morning but is quickly fading, currently down 4.6%. The stock is painting a bearish engulfing candlestick and just barely hanging on to the $20 level.

 
 
  James Brown   10/17/20,  1:19:41 PM
Another equity getting taken to the woodshed today is RSA Security (RSAS). The company reported earnings yesterday and beat estimates by a penny with 6 cents/share. Revenues were up more than 9% for the quarter but RSAS guided somewhat lower for the fourth quarter. Analysts were quick to react to the lowered guidance. Wachovia downgrades RSAS from "out perform" to "market perform". JP Morgan downgrades from "hold" to "Under weight". SoundView downgrades from "neutral" to "under perform".

The stock is down 18.6% to its simple 50-dma. Volume is six times the average.

 
 
  James Brown   10/17/20,  1:11:26 PM
Ouch! Insurance company XL Capital Ltd (XL) is getting hammered for a 10% drop (more than $8) after warning this morning that Q3 earnings would miss expectations. XL now sees $1.16/share vs. estimates that were $2.05/share. Merrill was quick to downgrade the stock from a "buy" to a "neutral" on the news. XL is set to report near Oct. 29th.

 
 
  Linda Piazza   10/17/20,  1:09:22 PM
We're seeing the OEX flatten, its range narrowing as it begins to form a symmetrical triangle. Ordinarily, we expect these to break in the direction in which the OEX was headed before it stopped and consolidated, so down, but it wouldn't be surprising to see small-bodied triangles just march out the apex of the triangle as the OEX gets pinned near 520. This is typical behavior for an opex Friday.

 
 
  James Brown   10/17/20,  1:01:37 PM
The XAL airline index is holding up pretty well despite news this morning that Southwest Airlines (LUV) reported finding some plastic bags with box cutters and "other items" with notes saying they were intended to simulate a threat.

The feds have ordered that all commercial aircraft must be searched in the next 24 hours.

 
 
  Jeff Bailey   10/17/20,  12:58:40 PM
eBay (EBAY) $54.70 -4.9% ... trying to make a bit of a comeback and session high here.

 
 
  James Brown   10/17/20,  12:57:18 PM
In this sea of red today Broadcom (BRCM) is the biggest decliner int he SOX. Shares are currently down 6.7% to $30.50. The stock, which was trading at 52-week highs, received a downgrade from Smith Barney this morning. SB cut BRCM to a "sell" on valuation concerns. Price target is $28.

 
 
  Jeff Bailey   10/17/20,  12:55:43 PM
eBay (EBAY) observation.... last time EBAY gapped lower was 07/25. While looking for a level to write a covered call, or establish strangle/straddle, I took a retracement in that gap with anchors of $57.57 to the 07/25 open of $55.02. Made note how next day, EBAY gapped higher at open to trade session high near $56.37, which would have been 50% retracement.

If I do EXACT same thing today, take 100% at yesterday's low, and 0% at today's open, then 50% is at $55.80.

 
 
  Linda Piazza   10/17/20,  12:51:38 PM
No confirmation as yet on the QQQ double bottom, and it looks as if the QQQ's are instead heading back down to test the level that marked the double bottom. That's why you don't want to count those formations before they confirm! So far, the current action, complete with a lower five-minute high, is turning the QQQ formation into a symmetrical triangle at the bottom of the day's range--likely to break to the downside--but that's not a given, either. That formation could morph into yet another possibility.

 
 
  Linda Piazza   10/17/20,  12:46:28 PM
Why it pays to study weekly charts before making buying/selling decisions: When I was doing chart scans this morning, I happened upon this (undoctored) chart of CA I'd posted in response to a reader question on October 10: Link CA was declining fast that day, but I'd marked likely support from the weekly chart that might be likely to provide a bounce. Studying the chart now, I see that CA did find support at that level. CA reports earnings 10/22 and I always advise staying away from stocks due to report, but this looks to me as if CA is now rising to test that broken support. A lot of moving averages converge now near the bottom of its former rising regression channel. CA is stuck in the middle of July's gap, too, and it may be difficult to break through that resistance. If this were any time other than the week before it reports, I might expect CA to roll over below $26.00, but next week's earning's report throws all the technical analysis I can devise out the window.

 
 
  Jeff Bailey   10/17/20,  12:44:26 PM
QQQ $34.87 -1.63% ... looking at daily interval bar chart and see that QQQ's Stochastics' %K at 44.36, so about half way to "oversold" at this time. Might just match some of the things noted in last night's Index Trader Wrap to be looking for next week.

 
 
  Jeff Bailey   10/17/20,  12:38:33 PM
Per Linda's 12:24 and 12:26 .... my market monitor doesn't refresh anymore and I can only see updates when I close it down and then open it up again, but yes Linda... it does look like we're seeing some of the same things.

 
 
  Jeff Bailey   10/17/20,  12:34:37 PM
11:00 and 12:00 Internals comparison ...

NYSE A/D 953:1882 and 1014:1961 while NH/NL 133:1 and 149:1

NASDAQ A/D 865:1875 and 938:1945 while NH/NL 159:5 and 177:7

 
 
  Jeff Bailey   10/17/20,  12:30:15 PM
eBay (EBAY) $54.28 -5.6% .... Stock opened $54.30, found selling to $53.81 in first 5-minutes, and session low was $53.70 5-minutes later. Stock just sitting in its 5-MRT neutral area. I think bounce potential into next week of $56.00.

 
 
  Linda Piazza   10/17/20,  12:29:52 PM
Remember that double bottoms must be confirmed by a move above the peak that separates the two troughs. Until then, it's just a potential double-bottom, and that's what we're seeing on the QQQ's--just the potential. I always hesitate to count my formations before they confirm and would be doubly hesitant on this opex day.

 
 
  Linda Piazza   10/17/20,  12:26:58 PM
Sounds as if Jeff and I are thinking along the same lines, too, complete with our hesitancy on this opex day.

 
 
  Linda Piazza   10/17/20,  12:25:32 PM
Jane and I must be on the same thought wave today, complete with our "if" statements.

 
 
  Jeff Bailey   10/17/20,  12:24:58 PM
QQQ $34.84 -1.74% .... tempting day trade long after seeing intra-day bouble bottom test of WEEKLY Pivot and overlapping MONTHLY 19.1% retracement. Will keep an eye on things, and I'm hesitant to trade on an option expiration, but settlement might be back near round number $35.00. May get good trade setup later this afternoon.

As QQQ trades WEEKLY Pivot, will note BIX.X trading its WEEKLY R1.

 
 
  Linda Piazza   10/17/20,  12:24:50 PM
Studying various charts, I note that the QQQ's made an equal low while 5(3)3 stochastics made a higher low. If the QQQ's and the stochs continue to bounce, that's bullish divergence setting up. If the QQQ's make it back above $35.00, a double bottom has been set up on the five-minute chart, but it has a minimal upside target of only about $35.27. There are still a lot of "if" statements to be fulfilled there before we start planning on the "then" statements being fulfilled, however.

 
 
  Linda Piazza   10/17/20,  12:12:07 PM
The OEX did make it almost up to the 520.50-520.60 level predicted by the shortest-term Keltner band before it turned and fell out of its bear flag pattern. The longest-term five-minute Keltner band I've got on my chart indicates that we should see another pause at about 518.35. Again, I'm not making predictions, but only benchmarking what I'm seeing on the various new charting tools I'm studying, seeing what's helpful and what's not. I've been watching the 1.35% envelopes surrounding a central 21-pma for much longer than these other tools, and also watching the 100/130-pma's on those charts. I note that the 30-minute 130-pma is now at 518.99, the level now being tested. By our old system, a test of the 130-pma and then a move back above the 100-pma, currently at 519.92 would then be a sign to go long. However, over the last few weeks, I've found that the corresponding 60-minute averages usually prove more predictive, and the OEX has not yet tested those averages, currently at 517.50 and 516.29, respectively.

 
 
  Jeff Bailey   10/17/20,  11:54:11 AM
Darden Restaurants (DRI) $20.62 (unch) Link .... broke above 21-day SMA in yesterday's trade and now looks to test its trending flat 50-day SMA of $21.81. Should now begin looking for support at $20 and futher bullish above 50-day SMA. Bar chart at this Link

YUM! Brands (YUM) $33.18 +0.21% holding tough.

 
 
  Jeff Bailey   10/17/20,  11:51:03 AM
Sirius Satellite Radio (SIRI) $2.43 +2.53% ... trades 52-week high despite some fractional broader market weakness. While low priced stock, has been among most actively traded last couple of weeks.

 
 
  Linda Piazza   10/17/20,  11:48:34 AM
Jane mentioned the MACD divergence on the ES 30-minute chart. I've also been watching MACD divergence on the daily chart on the OEX. At yesterday's close, I posted a daily chart that showed MACD coming up to test its descending trendline just as the shortest-term regression channel headed up to the top of the daily regression channel, so that the two resistance levels were converging. A MACD downturn beneath its descending trendline might show that resistance would hold, while a break above that trendline might confirm (not predict, because MACD is a slow-mover) a break above the regression channels. So far, MACD appears to be flattening under that descending trendline.

 
 
  Linda Piazza   10/17/20,  11:36:42 AM
One tool that has worked particularly well for many months is Fib retracements. The 50% retracement of the range from yesterday's high to today's low lies at about 521.50. If the current rise is a measured distribution pattern, as I imagine that it is, then the OEX will break down again before reaching that 521.50 level. Since the 60-minute 21-pma lies at 522.18, we might give the OEX allow a little fudging on that 50% level, though, as the OEX might overshoot it a little to test the 60-minute 21-pma and fall back from there, with that action still being bearish. Keltner channels show first resistance now near 520.63 and then between 521.26 and 521.90, however, so that 50% level might hold the OEX back after all. That rising trendline the OEX violated this morning now crosses at about 521.25, so there's lots of possible resistance that should be coming into play around that level. This is opex Friday, however, and anything can happen.

 
 
  Jeff Bailey   10/17/20,  11:36:06 AM
11:00 Update at this Link

 
 
  Linda Piazza   10/17/20,  11:20:00 AM
Five-minute Keltner bands have shown the OEX being pressured each time it approaches the midline of the short-term bands. That midline is now just below 520, but I'd actually like to see a bounce back toward the top of that short-term Keltner band, near 520.55 and just below the rising trendline that the OEX broke through this morning. A move back to and rollover down from that trendline might give bears more strength to drive the OEX down further. I was told yesterday that max pain for the OEX was 515, a figure I haven't had an opportunity to verify, but the information came from a trusted reader. At that time, that seemed very far away from the OEX then-current level. OEX 520 is not so far away from that max pain level, if that information was correct.

 
 
  Linda Piazza   10/17/20,  11:01:50 AM
Benchmarking what methods would have been predictive in early trading, I note that Jeff's 5MRT system would have had us entering a bearish OEX position at 522.08, with a first target of 519.75 (which has been reached) and an ultimate target of 519.31. We would now have a stop at 521.85. The five-minute Keltner channel breakout would have had us entering at 520.66. Using the envelope system, a break of the 60-minute 21-pma occurred at 522.18, but I would not have entered bearish until there was also a break of that ascending trendline from 10/7, with that break occurring at 520.80. That has pretty good congruence with the Keltner channel breakout. Actually on opex Friday, I would have been reluctant to enter such a trade with the 100/130-pma's so close below even if I hadn't been suffering under a buy-the-top/sell-the-bottom syndrome lately, but I'm just benchmarking the different trading tools I'm watching and seeing what's working and what's not.

 
 
  Linda Piazza   10/17/20,  10:51:37 AM
The OEX broke below the five-minute formation I had been watching. Here's something to note on the 30-minute chart. See where the OEX trades in relationship to this ascending channel and the 100-pma? It's now below the 100-pma, but still above the 130-pma, and right at the bottom of that channel, where it might either bounce or break to the downside. I've also marked the ascending trendline I had been watching. Link

 
 
  Jeff Bailey   10/17/20,  10:50:03 AM
Dow Jones Home Construction (DJUSHB) 520.75 -1.2% .... despite stronger housing data, homebuilders lower. May be playing out per Wednesday's Index Trader Wrap. Here's chart from Wednesday's wrap. Link

 
 
  Linda Piazza   10/17/20,  10:44:32 AM
I actually now would like to see the OEX retest that broken trendline and then roll over from there. May not happen.

 
 
  Linda Piazza   10/17/20,  10:43:21 AM
The current five-minute consolidation pattern appears to be a symmetrical triangle. The presumption with these is that they'll break in the same direction in which the market was trending before their formation--so down. This type of formation usually forms about midway down a decline (or midway up a rise), so a downside break should indicate another 3 points of downside or so, but I keep studying the 100/130-pma's on the 30-minute chart and wondering if the OEX could get that far. I do note that the 100-pma on the 60-minute chart is about three points below the current OEX level. Note that the formation has not yet broken either to the upside or the downside.

 
 
  Jeff Bailey   10/17/20,  10:42:04 AM
DoubleClick (DCLK) $9.46 -22% Link ... lower after CIBC World Markets downgrade.

 
 
  Linda Piazza   10/17/20,  10:24:00 AM
The five-minute OEX close beneath the five-minute Keltner channel at 520.66 was predictive of more downside. We're in a likely bounce zone here, though, with the 30-minute 100/130-pma's at 519.89 and 518.92, and with the 60-minute 100/130-pma's at 517.39 and 516.19. I've noted in the past few weeks that the OEX often overshoots the 30-minute 100/130-pma's, so have turned to watching the 60-minute counterparts lately. Backtesting shows that the 30-minute and 60-minutes alternate in holding the most important status with relationship to the OEX's trading, however.

 
 
  Linda Piazza   10/17/20,  10:19:10 AM
The same reader who pointed out the inverse H&S on the COMPX chart yesterday noted this one regular H&S this morning, with the neckline now having been broken: Link The OEX five-minute chart also sports a H&S, but it's a little sloppier than this one and so it's a little more difficult to determine its neckline. However, the presence of this more tightly formed H&S on the COMPX confirms the view that the formation on the OEX is also a H&S. Maybe H&S's are going to work the way they're supposed to work now?

By the way, the OEX is now below that trendline and is testing that 30-minute 100-pma, at 519.90.

 
 
  Jeff Bailey   10/17/20,  10:16:14 AM
Brooktrout (BRKT) $11.50 +35% Link ... higher after upgraded to "strong buy" at Raymond James. Firm cites strong Q3 results, good trends among its peers AUDC Link and NMSS Link along with improving IT and communications spending patterns, a 1 million share buyback program, and thinks stock trades at 50% discount to peers. Price target $17.

 
 
  Jeff Bailey   10/17/20,  10:09:48 AM
Sectors red across the board. Internet (INX.X) -3.27%, Semiconductor (SOX.X) -1.53%, Gold Bugs ($HGX.X) -1.5%, Insurance (IUX.X) -1.23%

 
 
  Linda Piazza   10/17/20,  10:09:19 AM
We had a five-minute close outside the five-minute Keltner channel, this time to the downside, however. This post is meant to benchmark that five-minute close at 520.66 on the 10:00 candle. Let's see how it plays out. Yesterday, I watched some five-minute closes outside the channel, with each resulting in a several-point move, but when I was backtesting the 30-minute channels, I noted that when the next candle closed back inside the channel, the outcome sometimes wasn't profitable as when that did not occur.

 
 
  Linda Piazza   10/17/20,  10:04:54 AM
OEX trendline test now occurring: That trendline has been touched at least seven times since 10/7, and has had more near-touches, with the OEX bouncing each time. If it doesn't bounce this time, that's a definite break in pattern, but the 30-minute 100-pma lies just beneath that trendline. A trusted trader and subscriber mentioned yesterday that the OEX was stretching out the number of days that it had traded above the 100-pma without touching or testing it to a near maximum, hinting that it was time for a touch of that average.

 
 
  Jane Fox   10/17/20,  10:03:18 AM
Great analogy Linda.

 
 
  Linda Piazza   10/17/20,  10:01:33 AM
I think a lot of those positions got killed yesterday, Jonathan. I kept imagining a sinking ship yesterday afternoon, listing from side to side, dumping first one set of passengers into the sea and then the set on the opposite side of the ship.

 
 
  Linda Piazza   10/17/20,  9:59:05 AM
The OEX now hits the bearish #2 on Jeff's 5MRT system and heads down toward the 520.80-521 level that's both historical S/R and the location of the ascending trendline from 10/7.

 
 
  Linda Piazza   10/17/20,  9:53:55 AM
Like Jonathan, I'd like to see the markets make another upward push today. I'm trying not to be biased about market direction and thinking particularly bearish thoughts, but there's been such a strong effort to maintain equilibrium levels lately that I think such an effort would result in the OEX coming back to the 60-minute 21-pma again by the end of the day. I just don't know if we're going to get that opportunity.

 
 
  Jeff Bailey   10/17/20,  9:51:18 AM
Michigan Sentiment came in at 89.4, which was above 88.2 forecast.

 
 
  Linda Piazza   10/17/20,  9:50:03 AM
No five-minute close outside the five-minute Keltner channel. As I mentioned the other day, you absolutely cannot anticipate a five-minute close outside the channel, because it's uncanny how the channel encases the candle bodies.

 
 
  Linda Piazza   10/17/20,  9:47:51 AM
Just to benchmark what I'm watching, the five-minute Keltner bands and the five-minute Donchian channels show next resistance between 523.64-523.73, showing fairly good correspondence between the two. That doesn't mean that the OEX won't get any higher than that, but it does show that the current level might be one where we'd expect a first pullback. A five-minute close over 523.64 during this five-minute period would be an upside breakout on the Keltner channel, but I've done NO backtesting of this information.

 
 
  Linda Piazza   10/17/20,  9:42:47 AM
We now have a descending trendline on the OEX from the 9:30 candle on Wednesday (I remember it well, unfortunately) down through yesterday's high. It crosses now at about 524.75, but will be descending during the day, of course. The ascending trendline from 10/7 now crosses near 521.

 
 
  Jeff Bailey   10/17/20,  9:41:18 AM
Forest Labs (FRX) $51.00 +2.93% Link .... FDA approves its Namenda drug for the treatment of moderate to severe Alzheimers disease.

Neurobiological (NTII) $6.70 +2.75% Link gaining 18 cents. NTII manufactures Memantine for the Namenda drug and is FRX's partner.

 
 
  Linda Piazza   10/17/20,  9:37:28 AM
I wouldn't be surprised to see the OEX 60-minute 21-pma and the rising trendline off the 10/7 low being tested once again in early trading today. In fact, I wouldn't be surprised to see the OEX settled somewhere near the zone demarked by those two levels. After the last week's trading has centered mostly around that zone, punctuated by quick bursts above it and just-as-quick moves back down, I wouldn't be surprised by anything, however.

 
 
  Linda Piazza   10/17/20,  9:35:15 AM
In the first five minutes of trading, the OEX traded a high of 523.56 and a low of 523.11. The 50% retracement of that value lies at 523.34. While we often watch that 50% retracement value, this candle was not particularly large in comparison to recent five-minute candles, and so I'm not sure that the 50% retracement holds special significance today. Right now, the OEX is of course below that 50% retracement value, perhaps indicating some slightly weakness in early trading.

 
 
  Jeff Bailey   10/17/20,  9:30:21 AM
eBay (EBAY) Link is trading $54.68 ahead of the opening bell and those traders long from $55 or $58 with option expirations past November might look to write a covered call at the $55 strike, or even develop a straddle or strangle in the January expiration with a $55 put.

No technical damage, but 2004 guidance not as bullish as I would have liked.

 
 
  Linda Piazza   10/17/20,  9:24:04 AM
Jonathan, I just logged back on after jogging with the dogs. My sympathies to you, too.

 
 
  Jeff Bailey   10/17/20,  9:20:12 AM
09:00 Update posted at this Link

 
 
  Linda Piazza   10/17/20,  6:36:55 AM
Good morning. With President Bush and Prime Minister Koizumi scheduled to meet later in the day, the Nikkei opened above 11,050 in Friday's trading. Trading was steady during the day, with the Nikkei closing in the middle of its day's range, up 12.74 points or 0.12%, at 11,037.89. A newspaper reported that Sony and Samsung Electronics will form a joint venture for the purpose of making television liquid crystal display panels, and Sony gained. Investors were selective, however, in the stocks in which they invested, declining to spend on many exporters with businesses that might be negatively impacted by the outcome of that meeting between the heads of the two governments. Financials gained and so did many companies that had reported solid earnings.

Other Asian bourses were mixed. The Taiwan Weighted gained 0.12%, but South Korea's Kospi lost 1.19%. Singapore's Straits Times gained 1.03%, and Hong Kong's Hang Seng gained 0.14%. China's Q3 GDP increased 9.1%, and some now project full-year growth of 8.5%, above the government's forecast. China's Shanghai Composite gained 0.37%.

European bourses show a mixed trading pattern today. Semiconductor stocks rose in early trading, but the troubled Ahold's report was far from upbeat. The company said competition from supermarkets, including Wal-Mart, and higher-than-expected costs, including the cost of paying advisers, will impact both revenue and earnings for the year. In Germany, insurer Munich Re announced that it would sell $4.4 billion of shares. Both Ahold and Munich Re were dropping in European trade.

As of this writing, the FTSE 100 was near the flatline, down 0.40 points or 0.01%, at 4339.30. The CAC 40 was up 13.11 points or 0.39%, at 3370.60. The DAX was down 17.47 points or 0.49%, to 3560.25.

 
 
  Jeff Bailey   10/17/20,  3:23:16 AM
Nikkei 225 ($NIKK) 11,056.31 +0.28% Link ... sesson low/high so far 11,027.44-11,112.29. If no trade at 10,800, then would see a reversal back higher to 11,100.

 
 
  Jeff Bailey   10/17/20,  3:23:09 AM
Pivot Matrix for tomorrow at this Link

 
 
  OI Technical Staff   10/17/20,  3:23:01 AM
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