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  Jeff Bailey   11/3/200,  5:08:36 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   11/3/200,  4:13:32 PM
New day tomorrow .... GRMN Link day trade bulls that traded for some gains today may have TRMB Link on watch list for tomorrow. I didn't get the upside alert at $30.00 today, but with HUGE short interest, stock could come unglued to the upside on such a break. Link

I thought about a bullish day trade profile today, but TRMB didn't have the nice BIG 5-minute bar to start the session.

Here's an e-mail I received over the weekend from a trader/subscriber ... Jeff, I hope you are having a good weekend. Earlier this week, you asked what was happening with these two stocks. After watching the commercial for n-teenth time of how the guy docks his PDA to his car, picks up a tailor to mend his pants, while his PDA uses GPS to find his way to his appointment, it dawned upon me that that's the software that TRMB and GRMN are selling. I'm wondering if the excitement that took SIRI and XMSR to new highs a few years ago is what's driving TRMB and GRMN higher.

PDA? You mean something like a RIMM Link BlackBerry?

  Linda Piazza   11/3/200,  4:01:53 PM
The SOX punched through its daily chart upper BB today.

  Linda Piazza   11/3/200,  3:53:43 PM
The OEX has not been able to break above the 10/15 high of 525.90. Today, it closely approached the upper Bollinger band, with today's candle likely showing an upper shadow that tried to pierce the 526.25 upper band, but could not do so. Still, that upper BB has turned up, and the OEX has a tendency to climb the underside of the BB when it slants up. If the OEX had risen closer to 527-529 today, it might have been okay to risk a bearish entry, or if it had retreated, after the ISM number, to 521, it might have been easier to risk a bullish entry, but neither of those events happened.

  Linda Piazza   11/3/200,  3:37:33 PM
The OEX 60-minute MACD is now close to a bearish cross. Having reached a higher high after all, it is not, however, showing bearish divergence with the price.

  Jeff Bailey   11/3/200,  3:36:11 PM
03:15 PM EST update at this Link

  Linda Piazza   11/3/200,  3:26:42 PM
The OEX 60-minute chart shows an expanding formation that Pring calls an orthodox expanding formation. Supposedly, it usually resolves to the downside, but that just hasn't been happening lately: Link

  Jonathan Levinson   11/3/200,  3:16:50 PM
Incredibly, GE is still below 29. It remains a tale of 2 markets, with Dow futures up .96 and the Nasdaq futures up 2.05%.

  Linda Piazza   11/3/200,  3:16:40 PM
If we had entered a long trade today at 10:00 at 523.51 based on a (20,2) Donchian channel upside breakout this morning, we would have exited the trade at 2:30 at 523.78 on one type of exit (a close beneath a short-term channel) but would still be in the long trade based on the other type of exit (a thirty-minute close that is 2 points lower than the previous 30-minute close).

  Linda Piazza   11/3/200,  3:12:50 PM
While it's possible that the OEX will reach that 525.50-527 zone I've mentioned several times, I've been reluctant to go long, scared by that low VXO. I can remember being worried when the VXO (then the VIX) first dropped below 30 and then below 25, too, not sure if the VXO was returning to its traditional 20-30 range or if a market turn had been approached. Below 20 just scares me, though. I'd perhaps have remained willing to play the long side with tight stops, except that the OEX was already close to resistance by the time the ISM number was released. If the OEX had instead been between 518-520, I'd have been much more willing to risk a long position.

  James Brown   11/3/200,  3:08:09 PM
I will note that most of the bullish commentary I read has been careful to allow for the possibility of a short-term pull back in November.

  James Brown   11/3/200,  3:05:50 PM
Just read an article discussing the expectation for a strong fourth quarter, the traditional Santa Claus rally, January effect and the thought that fund managers may push stocks higher into the year end as they try and "catch up" to the market averages despite months of gains in equities.

  Linda Piazza   11/3/200,  3:03:54 PM
The OEX hit a new high by a few pennies as someone front-ran the bond closing. Sixty-minute MACD lines turned back up again, while RSI flattens again. As I mentioned earlier, the point at which MACD lines approach each other is dangerous. The action looks bearish and may very well be in many cases, but that's the very point at which a bounce sometimes occurs, separating the lines and turning them up again. Perhaps the OEX will see that 525.50-527 zone today after all, but the 30-minute MACD still looks iffy.

  Jeff Bailey   11/3/200,  3:00:24 PM
Treasuries closed.... 10-year YIELD ($TNX.X) rose 6.7 bp by the close to finish with a 4.368% YIELD.

Stocks look to ramp further gains here with NASDAQ Composite (COMPX) 1,966.73 just now making a new 52-week high.

  Jonathan Levinson   11/3/200,  2:59:44 PM

  Jane Fox   11/3/200,  2:59:09 PM
INDU and SPX have not traded above their first hour pivots. COMPX has by a mere 2 points. Pretty even race today.

  Jeff Bailey   11/3/200,  2:40:12 PM
Garmin Ltd. (GRMN) $52.94 +5.88% .... Day trade bull from $50.46 most likely took to the exit on trade at $52.90 when stock fell to $52.58 just after 02:00 PM EST. That's OK, stock made another good move intra-day. Will keep an eye on GRMN, as I think there will be more to come for day traders.

  Jeff Bailey   11/3/200,  2:34:46 PM
GSTI Software Index (GSO.X) .... $149.76 +1.91% ... battling with 150 resistance. Microsoft (MSFT) $26.59 +1.75% getting a good bounce after Thursday's test of 200-day SMA.

  Linda Piazza   11/3/200,  2:31:43 PM
I will be offline for a few minutes, as I have someone here to work on the computer.

  Linda Piazza   11/3/200,  2:30:13 PM
Earlier today, the support offered by the nested five-minute Keltner bands clumped together as several levels of channel support aligned. (See my 11:21 post for a chart.) Now the support from the various channels and midlines are strung out across a wider zone, not aligning. I'm making this observation, wondering if that predicts that the OEX might more easily move down through those levels? Still, we have historical S/R levels, too, to provide support now.

We didn't get within the 525.50-527 zone that I thought the OEX might see today, but were we close enough to constitute a test of that zone? Daily Bollinger bands and 60-minute envelopes and longer-term five-minute Keltner channels all flare up, allowing for a higher climb before those bands and channels are hit. Bearish divergence on the 30-minute MACD/price hint at a continued rollover, and as I mentioned earlier, the low VXO keeps me from being interested in a long trade anyway. I'm wondering now about a dip to 520-521 or maybe even 522, and at least a bounce attempt there.

I'm hesitant to suggest a bearish position here, though, as I think a bearish player has exposure possible to 527 this afternoon and I'm not sure any rollover would be accomplished today. The OEX has not yet retraced even half of the first hour's candle yet.

  Jeff Bailey   11/3/200,  2:30:12 PM
Ford Motor (F) $12.22 +0.74% Link ... said October sales fell 2%.

  Jeff Bailey   11/3/200,  2:28:10 PM
General Motors (GM) $42.93 +0.6% Link ... said October sales fell 7%.

  Jeff Bailey   11/3/200,  2:26:46 PM
Daimler Chrysler (DCX) $37.49 +1.48% Link ... said October sales rose 11%.

  Jeff Bailey   11/3/200,  2:19:10 PM
ICOS Corp. (ICOS) $45.72 -2.18% .... I'm looking at a bullish entry into ICOS around the 30 day moving average around 44. Do you agree with that entry point?

I don't use the 30-day SMA, but if you've had success with this SMA in the past, then I do see that as good bullish entry. Stock found "suspicious" support at $29 on first test of bullish support trend, built a "low pole warning" and vertical count is bullish to $60. Stock recently gave triple-top buy signal at $44, and pullback into $43 where your 30-day SMA is, would like up nice, where we'd expect good demand support. Here's the PnF chart of ICOS Link

  Jonathan Levinson   11/3/200,  2:14:07 PM
The put to call ratio is down to .57. The VXO is at 17.07, like waving a red flag in the face of bulls, only for bears.

  James Brown   11/3/200,  2:12:23 PM
Sectors hitting new one-year highs today:

RLX retail index,
DJUSHB homebuilders,
DFI defense index,
XBD broker/dealers,
BIX banking index,
BKX banking index,
NWX networking index,
SOX semiconductors,
TRAN Dow Transports.

  Linda Piazza   11/3/200,  2:09:18 PM
We now have a bearish cross on the OEX 30-minute MACD (8,18,6). That suggests a test of the 30-minute 21-pma, currently just over 522.

  Jonathan Levinson   11/3/200,  2:09:03 PM

No kidding. Last I heard, you could show up at the local Mitsubishi dealership wearing nothing but a barrel, and drive off the lot in a new Eclipse with no money down, no payments for a year or 2, and a bonus $1000 in the pocket of your new pink suit. Then again, my memory might be off...

Dec gold remains near its lows of the day, -7.40 at 377.20, TNX is up 6.5 bps, and equities holding firm despite slight weakness in GE and small dips within the current range.

  Jeff Bailey   11/3/200,  2:08:57 PM
Marvell Technology (MRVL) $45.32 +3.37% Link .... Jeff Would appreciate any comments on mrvl chart and outlook.I am still holding bullish position. Thank you. N

Not much to add "N" from 10/22/20 02:34:35 market monitor Link ... stock a little stronger than I expected as didn't get the pullback entry to $38-$39 as stock found support at rising 50-day SMA of $40.00. Recent trading at $45 has stock working through any near-term supply. Should be bullish with vertical count at $66 giving upside room. I've got a regression channel on MRVL, where mid-point of regression is at $41.91, and upper end is $48.82 today, where I think MRVL trends up toward $50, maybe a pullback then to $45, then another leg higher.

  Andy Aronson   11/3/200,  2:07:18 PM
Dow Futures find support in the 9720 area. The objective is 9945. A sideways/ uptrend is firmly in place. If we close over 9840, this allows the next wave-up to 9945. Only a close under 9605 voids the bull signals and reinstates the 9441 objective. A major event could change the trend very quickly. With volatility so low, protective puts must be considered.

  James Brown   11/3/200,  2:06:44 PM
Afternoon Sector Winners:

SOX semiconductors: +3.66%
NWX networking index: +2.41%
INX Internet index: +2.39%
GSO software index: +1.94%

XBD broker/dealer: +1.49% DJUSHB homebuilders: +1.49%

Sector Losers:

XAU gold & silver: -2.98%
HMO Healthcare index: -2.04%
OSX oil services index: -1.86%

  Andy Aronson   11/3/200,  1:57:55 PM
Low Option Volatility is currently found in the following markets: S&P 500, Sugar, Coffee, Oats, and Corn. Consider these markets for premium Buying strategies; Option purchases, Back Spreads, straddles and/or strangles, hedging futures with options etc. Aaronson@OptionInvestor.com

  Linda Piazza   11/3/200,  1:57:05 PM
I apologize for my periodic absences today. I added new computer equipment last week, and have had difficulties since. I have been on the telephone today trying to resolve the problems. I will probably be offline again one more time this afternoon. I'm watching 30-minute and 60-minute OEX MACD now begin to look more bearish, with 30-minute MACD close to a bearish cross. This is a danger point, however, as when the lines touch this way, they sometimes turn up again. The OEX has fallen through the rising Keltner band support now, but possible strong support now lies in the 522.90-524 and 521-522 zones. The 60-minute 100/130-pma's are now down at 517.45 and 516.96, with that zone also likely to be strong support.

  James Brown   11/3/200,  1:52:19 PM
Just had an email regarding an entry point on ICOS. ICOS is a current OI call play and I really like the chart pattern on the stock and a bounce from $44 or $45 looks tempting. However the company is set to announce earnings after the bell tomorrow and we do not suggest opening new bullish plays. As a matter of fact we will probably close the ICOS play tonight.

That doesn't mean speculators can't make a bet that ICOS will beat earnings or that they'll have positive things to say about the upcoming Cialis drug launch. But if they don't then any call position could quickly evaporate.

  Jonathan Levinson   11/3/200,  1:47:21 PM
GE to a new low of the day, down .52%.

  James Brown   11/3/200,  1:45:42 PM
Both IBM and MSFT are up today after the two tech giants announced an agreement to use IBM's microchips in future Xbox consoles.

IBM is trading back above the $90 mark and MSFT is bouncing from its 200-dma.

  Jonathan Levinson   11/3/200,  1:41:41 PM
Porsche North American just reported that Oct U.S. car sales rose 84%.

  James Brown   11/3/200,  1:37:10 PM
We're seeing new highs in both Home Depot (HD) and OI call play Lowes Companies (LOW). LOW has broken above resistance at $60.00 after a week of consolidation between $58 and $60.

Both companies are due to announce earnings in mid-November.

  James Brown   11/3/200,  1:30:32 PM
Hitting new three-year highs is the Securities Broker-Dealer Index (XBD).

The group is being lead by gains in Goldman Sachs (GS), Bear Stearns (BSC), Merrill Lynch (MER), Morgan Stanley (MWD) and Legg Mason (LM). Many of which are up strongly today.

  Jonathan Levinson   11/3/200,  1:20:23 PM
GE printing a Low of the Day.

  Jonathan Levinson   11/3/200,  1:15:43 PM

  Jonathan Levinson   11/3/200,  1:15:21 PM

  Jim Brown   11/3/200,  1:07:55 PM
I spoke with a Qcharts official this morning about the terrible reliability last week. He said over half of their server farms receive quotes by satellite and the solar flares over the last two weeks had been playing havoc with the data. He apologized but said there was nothing they could do.

  Linda Piazza   11/3/200,  1:03:35 PM
If we had been trading this morning's Donchian channel breakout at the close of the first 30-minute candle above the 20,2 channel, we would have entered at 523.51. We wouldn't have come close to exiting yet. A close below 523.70 during this 30-minute period (1:00-1:30) would exit the trade using one tested exit system. The other would occur on a close below 523.05. Using either type of system, the trade would be exited on a four-point move below the entry, not waiting for a close. I want to test a SAR exit, but Q-charts unfortunately does not offer SAR.

  James Brown   11/3/200,  1:02:47 PM
Current OI call play QLogic Corp (QLGC) is up 3.19% on the strength in the chip sector. Shares are close to bypassing last week's high and are currently trading above their 200-week moving average. QLGC is also trading above the old from December '01 and January '02.

The company recently announced it will be participating in the 11th NASDAQ Technology Conference in London and Frankfurt on November 5 and 6.

  Jeff Bailey   11/3/200,  12:59:11 PM
Garmin Ltd. (GRMN) $53.30 +6.74% ..... Day trade bulls can snug a stop up to $52.90 here after trade at BLUE #5, or lock in another nice gain for day trade.

  Linda Piazza   11/3/200,  12:58:04 PM
As of a few minutes ago, volume patterns remained bullish, with adv:dec ratios at 22:9 for the NYSE and 21:10 for the Nasdaq. There were ZERO new lows on the NYSE and only 9 on the Nasdaq, while the combined exchanges saw 450 new highs. Total volume was 654 million on the NYSE and 1.1 billion on the Nasdaq.

  Jeff Bailey   11/3/200,  12:51:44 PM
Garmin Ltd. (GRMN) $52.88 +5.6% Link .... stock pulled back to BLUE #3 of $52.10 after early morning high of $52.79, then got bounce to current levels. Still shy of BLUE #5 of $53.20. However, today's trade at $53.00 gets the 3-box reversal back higher.

Just feels like market makers built some inventory after strong move up last week. Let the stock settle into $50.00, now making the build back higher as they hopefully work the stock to its bullish vertical count of $79 longer-term.

  James Brown   11/3/200,  12:50:26 PM
Another stock that looks like a tempting short is Reinsurance Group of America (RGA). The stock broke its rising channel on Oct. 24th after its Q3 earnings report. Shares consolidated for several days by hugging its 50-dma. Now the stock is slipping lower again on news it is offering another 10.5 million shares of stock. Considering that the company only has 49 million shares outstanding that is a pretty big chunk of new stock, which dilutes current shareholder's value. The reaction in the stock appears to be less exaggerated than it could be because Metlife (MET), RGA's majority shareholder, is expected to buy a large percentage of the new shares.

  Jeff Bailey   11/3/200,  12:45:50 PM
Late October "beaten downs" looking good today... SONE $8.54 +5.68%, CIEN $6.61 +3.12% (not quite above $6.75), DRI $21.43 +2.3%, UNTD $19.87 +3.27%, KSS $55.80 -0.49%. Only laggard is Kohls (KSS) and would prefer something back toward $53.50.

  Jane Fox   11/3/200,  12:44:37 PM
Putting the first hour pivot markers on the DOW, SPX and the COMPX I see all of them at the first hour highs but none breaking above yet, so we have no read on which is the stronger market. Will be interesting to see which one breaks out or down first.

  James Brown   11/3/200,  12:41:57 PM
Our new put play in JetBlue Airways (JBLU) is off to a good start. Shares are down 2.7% and the drop looks like a break from a short-term bear flag pattern.

  Jonathan Levinson   11/3/200,  12:38:23 PM
Dec gold is down 6.20 at 378.40, silver -.108 at 4.957. HUI is down 9.42 at 206.74, XAU -2.92 at 95.16.

  James Brown   11/3/200,  12:31:44 PM
Rising toward two-year highs is Elizabeth Arden (RDEN) who announced this morning they would be consolidating their U.S. warehouse operations and cut 10% of its workforce.

  Ray Cummins   11/3/200,  12:29:33 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

As the broader market soars to new highs, the majority of bullish positions in the portfolio are enjoying increased buying pressure. One of the recent winners in the group of Synthetic Positions is Photon Dynamics (NASDAQ:PHTN) and today the issue is up another $1.70 at $39.52. That brings the potential credit in the speculative play (JAN-40C/JAN-25P) to $3.00; a substantial gain in less than one month. Another big mover is Engineered Support Systems (NASDAQ:EASI), which is up $2.33 at $47.41 after this morning's "pre-market" 3:2 stock split. Our position in this issue was delta-neutral (debit straddle) and the play offered favorable profits soon after it was initiated. Other portfolio issues worth noting include Cymer (NASDAQ:CYMI) and Novellus (NASDAQ:NVLS), both of which are contributing to the rally in semiconductor shares.

  James Brown   11/3/200,  12:24:30 PM
Enjoying the strength in the semiconductor sector is Analog Devices (ADI). ADI is up 2.23% and trading near new one-year highs despite a downgrade from Goldman Sachs from "out perform" to "in line". The GS analysts likes ADI's fundamentals but believes the stock is rich at 34 times its 2004 earnings estimates.

  Jane Fox   11/3/200,  12:23:55 PM
A confidential report, reviewed by the WSJ, has found the Specialist trading firms shortchanged investors $155 Million over 3 Years. The SEC report was a severe reprimand to the NYSE and to the specialists depicting a floor-trading system endemic with abuses, specialist routinely placing their own trades ahead of customers and little regulation.

  Linda Piazza   11/3/200,  12:20:48 PM
Warning: the OEX feed has become spotty again, so be sure what you're seeing is the correct price.

So far, as far as I can tell, the OEX has not been able to achieve a new high.

  Linda Piazza   11/3/200,  12:18:36 PM
After OEX 524 support held, the OEX now rises to test the previous high of the day, at 525.12. As I type, the OEX is a few cents below that level.

  James Brown   11/3/200,  12:17:44 PM
27 out of 30 Dow components are green. Leading the gainers is Alcoa (+3.54%), AT&T (+2.58%), Intel (+2.36%) and Microsoft (+2.06%).

  Linda Piazza   11/3/200,  12:14:45 PM
OEX 524 support holds again.

  Jonathan Levinson   11/3/200,  12:13:07 PM
Dec gold is holding its losses so far, -5.50 at 379.10, HUI -8.67 at 207.49, silver -.081 at 4.981.

  Linda Piazza   11/3/200,  12:07:52 PM
The OEX dips below the 524 support and then jumps up again, but we'll have to see what happens by the time this five-minute period closes. If there is a five-minute close below 524, that's a first sign of short-term weakness, and we'll begin watching for others. It may be nothing more than an expected pullback to deeper support, however.

  Linda Piazza   11/3/200,  11:55:27 AM
Earlier, the 523.60-523.90 level that the nested Keltner bands predicted as support did hold as support. That support has now risen to 524.10-524.25. As I'm watching those levels, I'm also noticing some 30- and 60-minute oscillators either flatten or move down, but not all. They could be just echoing the consolidation that we're seeing with our own eyes, but if that 524 support breaks, I'll start watching them even more closely. I'm not necessarily expecting that break of support, however, as volume patterns remain strongly bullish.

  Jeff Bailey   11/3/200,  11:45:02 AM
U.S. Dollar Index (dx00y) 93.72 +1.06% .... strong gains for the dollar today on the heels of much stronger than forecasted economic data.

December Gold futures (gc03z) 381.0 -0.93% starting to feel some of the stronger dollar impact.

  Jeff Bailey   11/3/200,  11:41:35 AM
Garmin Ltd. (GRMN) $52.64 +5.28% .... nice move going here and looking strong at 5-MRT BLUE #4. Day trade bull can slide a stop up under BLUE #3 of $52.09, say.... $51.90, but continue to target BLUE #5 at $53.20.

  Jeff Bailey   11/3/200,  11:39:47 AM
Andrew Corp. (ANDW) $13.42 +1.82% Link .... Jeff: Would like your opinion on andw just got in for aday trade at13.33 had upgrade to 18 on strong qt.thanks David

You've got an intra-day triangle forming on ANDW. One thing I saw on ANDW today was they also announced that they had acquired certain assets of Yantai Fine Cable Company. As it relates to a day trade, sometimes an acquisition announcement will put a lid on a stock for a few days and make it tough to get a real good bullish move.

PNF chart is bullish after "low pole warning" earlier this spring. Vertical count is bullish to $18.50.

  Linda Piazza   11/3/200,  11:35:52 AM
One can find all sorts of ways to characterize what's happening on a chart, depending on the bias. I'm trying hard to stay as unbiased as possible. That's always difficult, and for the last few days, I've been letting my bias about entering bullish trades with a low VXO keep me out of the market. However, I've been trying to point out bullish developments as I see them, including the fact that the OEX currently trades up in the upper half of its ascending regression channel. As I speculated might happen, today's pop did change the direction of the indicators. Link They had been threatening to hook down but have rolled back up again. The OEX will hit the top of the channel near 529-530, depending on how quickly it climbs if it does continue to climb. A climb from the current 524.45 level up to 529-530 certainly gives one enough room to participate in a bullish OEX play, but I can't convince myself to do it.

  Jeff Bailey   11/3/200,  11:33:54 AM
11:00 Update posted at this Link

  Ray Cummins   11/3/200,  11:33:37 AM
Spreads/Combos & Premium-Selling -- E-mail Replies

Regarding a Delta Neutral Position: Part III

As far as "how and when to hedge the options" in a specific position, I don't know of any common guidelines among professional traders. I am sure that many use a percentage-based (change in delta) indicator to initiate adjustments, but when and how to hedge the delta is really a decision that everyone should make on their own, based on personal trading style, experience level and risk/reward outlook. Sorry I couldn't be more helpful in that respect...perhaps you can find some useful information in the material written by George Fontanills. He is considered to be one of the foremost experts in delta-neutral trading and his books are widely available. Here is a link to his books: Link!

  Jonathan Levinson   11/3/200,  11:28:23 AM
Dec gold has just gotten clocked, down 7.60 at 377, silver down .125 at 4.938, HUI -8.51.

  Ray Cummins   11/3/200,  11:21:56 AM
Spreads/Combos & Premium-Selling -- E-mail Replies

Regarding a Delta Neutral Position: Part II

One important thing to remember is that delta measures the effect of the change in the stock price on the value of the option without regard to volatility or the passage of time. Another fact to be aware of is the closer an option is to being at-the-money, the more its delta changes when the stock price changes. Thus you will have to make more adjustments when hedging the delta of near-the-money options. In contrast, when volatility and time periods change, the deltas for out-of-the-money options are most sensitive while the deltas of the at-the-money options are less affected by these components.

I am not sure what strategy you are using but the reason most traders want to be delta-neutral is they are expecting an increase or decrease in implied volatility, and don't want to speculate on the direction of the stock. In the case of a credit strangle, for example, you would buy and sell stock as the price of the underlying -- and the delta of the position -- changes. When practical, buying stock is generally easier as it it has no gamma, theta, or vega, as do options. However, the carrying cost of stock is usually higher, so many retail traders buy (or sell) options to adjust their positions. At the same time, the effects of "slippage" become an even greater factor with options and the commissions will likely be higher as well. The fact is, maintaining a delta-neutral position (or portfolio) requires lots of trading and it can be difficult for the average person to make money with this strategy in all but the most favorable markets.

  Linda Piazza   11/3/200,  11:21:24 AM
Here's an OEX five-minute chart showing how the 523.90 level looks on these nested five-minute Keltner bands: Link This information backs up other methods of determining support, reinforcing the idea that the 523.60-523.90 level could be important.

  Linda Piazza   11/3/200,  11:17:40 AM
As Keene mentioned in his 10:58 post with reference to the futures, this decline certainly looks like a bull flag type decline. On the OEX, the test of 523.60-523.90 support, currently underway, should tell us a lot about whether that is or isn't some type of measured accumulation pattern such as a bull flag, but flags sometimes retrace as much as 50% of the flagpole rise, so the OEX could fall below that level and still be setting up a flag formation. Since so much support groups there now, though, I'm considering that level important and will consider a breach of that level a first possible sign of weakness. I'm probably not going to pile into puts the moment that happens, but will be watching then for other signs of possible weakness.

  Ray Cummins   11/3/200,  11:15:46 AM
Spreads/Combos & Premium-Selling -- E-mail Replies

Regarding a Delta Neutral Position:

Due to the recent increase in the volatility of the market, it's becoming increasing difficult to build up a delta neutral position and still make profit. Whenever I go in for hedging the position, I make losses. Hence, in order to avoid it, I was looking out for a way to find out how and when to hedge the options (delta neutral position). Do you use any practical method for hedging and when should someone hedge his position?

Jayesh (Mumbai, India)

Hello Jayesh...As you mentioned, delta "hedging" involves maintaining a delta-neutral portfolio (or position). Since delta is a dynamic measure that changes often, a delta-neutral portfolio has to be adjusted periodically. This is generally known as "rebalancing."

The delta of a hedged portfolio is equal to zero. To find the net delta of each of your positions, multiply each option's theoretical delta by the quantity of options and then by 100 (the number of shares obligated by a standard option contract). The position delta can then be used as a hedge ratio because it shows you how much stock to buy or sell to get "delta neutral." As an example, a position with a delta of 100 would require the sale (short) of 100 shares of stock to bring the delta back to zero.

  Jonathan Levinson   11/3/200,  11:14:42 AM
The put to call ratio printed .54 again, with the VXO at 17.01. At this point, complacency is so high that I'm afraid it might be making bears complacent :)

  Linda Piazza   11/3/200,  11:11:01 AM
The OEX tips over toward the 523.60-523.90 support. We'll see if it holds.

  Jeff Bailey   11/3/200,  10:57:05 AM
S&P futures (sp03z) ... today's high of 1,059.80 and break to new highs now has upside risk to bears at 1,073.28, so bullish bias to that level. Will note that SPX MONTHLY R1 is 1,071.01. Will also note that INDU MONTHLY R1 is 10,008.50.

Thus my thinking we see Dow 10,000 in the not to distant future.

  Jonathan Levinson   11/3/200,  10:56:59 AM
HUI is now down 7.09 at 209.07, Dec gold firming a touch, down 1.60 at 383.

  Linda Piazza   11/3/200,  10:55:31 AM
OEX support appears to be firming near 523.60-523.90. While signaling that the OEX is likely to find support there on any pullback, that firming of support would give a fall through that level more significance, too.

  Linda Piazza   11/3/200,  10:48:24 AM
The OEX 30- and 60-minute charts do show possible bearish divergence setting up with the MACD indicator, but it's only "possible" as yet. MACD still points up, so if price steadies here and MACD continues to climb, it could still catch up to the OEX higher highs and print its own higher high. As yet, MACD on these charts shows not the slightest tendency to curl over and produce a bearish cross. While I understand that MACD is among the slowest of the indicators, I usually don't want to jump in front of a bullish run when MACD appears so strong and at least want the lines to begin to roll or flatten. Momentum also signals possible bearish divergence, but doesn't yet turn down. I'm caught in limbo, believing it possible that the OEX could test 525.50-527 today, if not higher, but not sure of enough upside to jump into a long play, and also not wanting to jump into a short play if the OEX is still going to move a couple of points against me before even beginning to signal a rollover, much less actually rolling down.

  Jonathan Levinson   11/3/200,  10:46:51 AM
The selloff in HUI deepens further, now lower by 6.08 at 210.08. Dec gold -2.60.

  Jeff Bailey   11/3/200,  10:44:46 AM
Dow Industrials (INDU) 9,879.05 +0.79% .... session high has been 9,895.64, which was just shy of WEEKLY R1. Also has the WEEKLY 19.1% retracement of 9,897.16 close by. With MACD now above Signal, should see 10,000 this week, with support firm at 9,642 (WEEKLY S1/ MONTHLY Pivot).

  Jonathan Levinson   11/3/200,  10:36:31 AM
2nd half hour put to call ratio .54.

  Jonathan Levinson   11/3/200,  10:33:26 AM
Jeff, I have -2.60 at 382 realtime, with HUI -4.31 currently.

  Jeff Bailey   11/3/200,  10:32:29 AM
December Gold futures (gc03z) ... $384.10 -0.13% ... Jeff: How is gold doing after ISM data? ...

Hanging in there. While I'm 30-minute delayed future quote, off just $0.50.

  Linda Piazza   11/3/200,  10:30:40 AM
OEX pullbacks should now find support between 523.50-523.80, and then stronger support should occur between 522.90-523. The midpoint of the first hour's range lies at 522.96, within that last-mentioned support band. A violation of that would look short-term bearish, while a test of that level and a move up would continue to support a bullish outlook.

  Jeff Bailey   11/3/200,  10:24:55 AM
Garmin Ltd. (GRMN) $51.95 +3.9% Link ... nice bullish move early and closing in on BLUE #3. Would like to see a trade at $53.00 today, get PnF chart showing the 3-box reversal, then builds for catapult type move.

  Linda Piazza   11/3/200,  10:24:41 AM
Jeff's 5MRT, modified to a 3MRT, would have worked well this morning so far. That would have gotten a trader into a bullish OEX play at 523.29 with a current stop at breakeven and a current upside target of 526. Hmm. That 526 number keeps appearing in all kinds of contexts.

  Jonathan Levinson   11/3/200,  10:22:36 AM
The VXO is down to 16.96 currently.

  Linda Piazza   11/3/200,  10:21:00 AM
I'm kind of wondering whether we might not get an OEX move up to 525.50-527 today, if not higher. I just don't feel compelled to buy calls probably inflated by this morning's action to ride the OEX up to test that level, not so far away now. That impression is affirmed when those gains were made during a period that's notorious for quick reversals later in the day.

  Jonathan Levinson   11/3/200,  10:18:09 AM
HUI is sliding further, now down 4.11 at 212.05, with Dec gold down 2.10 at 382.50. Silver is down to 5.004, -.061 on the day.

  Linda Piazza   11/3/200,  10:15:38 AM
On the futures side, Jane pointed out some observations she'd noted that supported the bullish tenor today. Early volume patterns have been, too, with adv:dec ratios at 20:7 for the NYSE and Nasdaq this morning. Volume remained light as of a few minutes ago, however, another warning to watch.

  Linda Piazza   11/3/200,  10:12:24 AM
Keltner bands can be used to trigger breakout signals, too, and both the five-minute Keltner bands and the 30-minute Donchian channels (20,2) have given breakout signals. This is also a time of danger, of course, as these breakout signals given during the first 30-minutes of trading are often reversed, and I'm frankly too afraid of a pop-and-drop to consider a long. Call me Chicken Little this morning, but I just can't get over that bias until we've had a pullback and I see how deep it is. The OEX next resistance can be found at the October high of 525.90, and then the OEX gets up to the 528-530 level that's seen as next (light) resistance on the weekly chart. If the OEX can maintain these levels, however, next stronger resistance doesn't occur until 546.

  Jonathan Levinson   11/3/200,  10:06:03 AM
Dec gold is down 1.10 currently at 383.50, HUI -2.41, and XAU -.40.

  Jim Brown   11/3/200,  10:05:39 AM
VXO trading at 16.93 and under the critical 17.0 barrier

  Jonathan Levinson   11/3/200,  10:03:42 AM
Opening put to call ratio .53, VXO -.11 at 17.04.

  Linda Piazza   11/3/200,  10:02:40 AM
I tried to change my thinking this weekend. I really did. I'm not all that bearish yet. Markets perform well so far, and I do think it's plausible that the VXO could establish a new range, with the OEX itself perhaps testing 528-530, but I just cannot bring myself to go long right now.

  Linda Piazza   11/3/200,  10:00:03 AM
The OEX is above the bullish #2 on the 3MRT system, and is now testing 524 resistance.

  Jonathan Levinson   11/3/200,  9:59:10 AM

  Jonathan Levinson   11/3/200,  9:56:30 AM
The Fed has just rolled over the expiring repo with a 2.5B overnight repo just announced.

  Linda Piazza   11/3/200,  9:55:37 AM
Remember this old chart from March, when we started tracking the "bearish" rising wedge? Link There were two possible trendlines describing that wedge, one I drew in green (my original) and one suggested by a reader. The real breakdown, such as it was began when the pink line was violated, so I've kept in on the chart as valid. That breakdown, however resulted in the OEX trading sideways-to-slightly-up rather than falling as expected. Now it's about to challenge the extended green trendline again.

  Jeff Bailey   11/3/200,  9:53:58 AM
Kohls (KSS) $56.00 -0.12% .... chart of KSS per this weekend's Ask the Analyst. Link

  Linda Piazza   11/3/200,  9:47:51 AM
The OEX now tests the midpoint of the first five-minute range. Since I'm watching the OEX based on a 3MRT today, it might be helpful to note the midpoint of that range, too, with that midpoint at 521.42.

Really, though, this early action is just a setup for what comes later--the really meaningful action.

  Jonathan Levinson   11/3/200,  9:47:49 AM
The Fed has 2.5B in weekend repos expiring this morning- awaiting the 10AM announcement.

  Jeff Bailey   11/3/200,  9:45:58 AM
Garmin Ltd. (GRMN) $50.46 +0.92% .... upside alert here from "inside day."

Day trade bull can play long here, stop just under today's low of $50.31, target BLUE #5 at $53.20 from 5-MRT.

Disclosure.... I currently hold bullish position in GRMN.

  Linda Piazza   11/3/200,  9:41:13 AM
Because the OEX first five-minute range was so large, I'm going to watch the OEX today based on a 3MRT system rather than a 5MRT one. For those who would like to do so, too, and who do not have access to three-minute charts, that first three-minute range printed a low of 520.80, of course, and a high of 522.04.

  Jim Brown   11/3/200,  9:41:10 AM
ISM for October is due out at 10:AM and the estimates are for 56.0. This would be an increase from the 53.7 in September which was a slight drop from August at 54.0. This is a critical release and a drop would be serious. Anything over 54 should be seen as positive.

  Linda Piazza   11/3/200,  9:37:09 AM
If the OEX were to close above 520.93 in this first 30-minute period, it will have given a breakout signal on the 20,2 Donchian channel setup I've been watching. These 9:30-candle breakouts proved tricky in my backtesting, however, with the signal often quickly reversing when given during this time period.

  Jeff Bailey   11/3/200,  9:36:47 AM
QQQ $35.45 +0.79% .... here is QQQ chart with updated WEEKLY/MONTHLY pivot retracement levels. Link

  Linda Piazza   11/3/200,  9:35:33 AM
The first five-minute range of the OEX included a low of 520.80 and a high of 522.47. The midpoint of that range lies at 521.64, and that's the earliest number we'll be watching for strength or weakness. The markets have a tendency to be maneuvered to a key level just before the release of an important economic number, ready to pop higher or fall lower after the release of that number, sometimes with that first reaction not being the final reaction. I wouldn't be surprised to see that occur today, either, although it's still too soon to be sure whether the OEX will be pinned underneath 522.75-524 resistance or just above 519.50-521 support.

  Jonathan Levinson   11/3/200,  9:18:47 AM
The futures are holding their gains but have not advanced for the past few hours. Bonds are still weak, and gold is trading flat. The test of the 52 week highs could come quickly at the open, and shorts are either going to panic or they're not. I don't see a lot of room for upside in the short term oscillators, but a strong blast through the previous year high could give us a quick gap up and carry the daily cycle oscillators along. This would be a trending move/flagpole rally on the intraday cycles, and that's what bears are worried about today.

  Jeff Bailey   11/3/200,  9:14:15 AM
09:00 Update posted at this Link

  Linda Piazza   11/3/200,  8:35:14 AM
Friday, many OEX daily oscillators began to tip over, although not confirming the bearishness by a full bearish roll. In contrast, the daily candle was a bullish one that nearly matched Thursday's range, with price consolidating in the upper half of the ascending regression channel. The OEX is above the 60-minute 100/130-pma's, which is also a bullish action, but it couldn't sustain levels above 521.00 resistance, which is not as bullish. All it will take is a strong push to curve those oscillators back up again or a strong downdraft to complete their rollovers. I'm not going to be making any decision ahead of the ISM numbers at 10:00 this morning, however, finding myself as undecided as these various indicators appear to be.

  Linda Piazza   11/3/200,  7:00:02 AM
Good morning. The Nikkei was closed for a holiday Monday, but many expect trading to be choppy this week as the November 9 general election approaches. In Asia today, telecoms and chips gained. On Sunday, the Semiconductor Industry Association announced September sales figures, showing those sales climbing to $14.4 billion from August's $13.6 billion. Quarterly revenue climbed more than 17% over the year-ago level, with Asian-Pacific markets seeing the biggest gains. In addition, the U.K. reversed a preliminary ruling that would have levied punitive tariffs on DRAM imports of Hynix Semiconductor. The Taiwan Weighted gained 0.70% and South Korea's Kospi gained 1.23%. Singapore's Straits Times gained 2.15% and Hong Kong's Hang Seng climbed 1.61%. China's Shanghai Composite tacked on 1.17%.

European bourses climb this morning, too, with the DAX, at least, achieving a year's high today. This morning, Reuters announced that its index measuring European manufacturing activity reached 51.3 in October, the first measurement showing an over-50 expansion-level number since July 2002. The dollar was firming against the euro in early trading, also helping European markets. Semiconductors rose in Europe, too.

Currently, the FTSE has gained 35.90 points or 0.84%, to trade at 4323.50. The CAC 40 has gained 47.15 points or 1.40%, to trade at 3420.35. The DAX has gained 60.52 points or 1.66%, to trade at 3716.51. It climbed above its previous 52-week high, achieved September 4 when the DAX traded an intraday high of 3671.42 and closed at a 52-week high of 3668.67.

  Jeff Bailey   11/2/200,  7:56:45 PM
Pivot Matrix for Monday at this Link

New WEEKLY and MONTHLY levels.

Here's a chart of the SPX with new WEEKLY/MONTHLY retracement. Link

  OI Technical Staff   11/2/200,  7:56:35 PM
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