Option Investor
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  Linda Piazza   11/17/20,  3:55:56 PM
My research into a year's worth of data showed that after a first touch of the lower 1.35% envelope boundary, the OEX then touched the 30-minute 21-pma an average of 10.79 30-minute bars later. Today, the OEX touched that average on the 11th 30-minute bar after the first touch of the lower envelope boundary this morning. This fit the parameters exactly. Too bad one of those bars took that little dip too low, stopping us out first.

  Linda Piazza   11/17/20,  3:49:01 PM
I wouldn't be surprised to see the OEX fall back toward 515 or even 514 support and then push up again to retest this resistance, but perhaps not today. OEX 517 represents the support offered by a rising trendline that's been supporting daily OEX candles (with a few shadow spikes below it) since September 30, so it's an important trendline. Perhaps the retest will take some time, perhaps even over another day or so.

  Linda Piazza   11/17/20,  3:42:41 PM
The OEX 30-minute 21-pma has now descended to 516.71, a known historical S/R level, with that level extending up to 517.25 or so. That's the first place I will now be watching for a rollover, with the next the 519.25-521 level. That marks a confluence of the 30-minute 100/130-pma's and the corresponding averages on the 60-minute chart. I'm not sure that rollover would happen today, though.

We're now seeing the push I expected to see this morning, but from a level a point lower than I expected to see the push. It still would have made a good countertrend bullish play, if only I'd waited a bit longer to enter. Be careful if you're in such a play, however, as that first level of resistance is being tested now.

  Jeff Bailey   11/17/20,  3:23:45 PM
Buy Program Premium alert .... SPX = 1,040

  Linda Piazza   11/17/20,  3:18:51 PM
OEX 30-minute MACD already has made a bullish cross, although from below signal. The histogram registers positive values. Despite that, however, it wouldn't be surprising to see the OEX come back again to test the day's low or at least the 512.50 level. The five-minute chart sports a formation that could possibly be deemed an inverse H&S in the making with a neckline just above 514. That's why it wouldn't be surprising to see the OEX move back toward 512.50 or so and then round up through the 514 level, as the 30-minute MACD hints it might do. I still consider any bounce a counter-trend move, however, as I did this morning.

  Linda Piazza   11/17/20,  3:06:30 PM
The OEX is now testing its previous 514.17 five-minute high. It needs to go higher than that or else it's going to preserve the bearish divergence on the five-minute 21(3)3 stochastics and MACD, with both already having reached higher highs. If the OEX doesn't hit a higher high, too, that preserves that bearish divergence.

  Jonathan Levinson   11/17/20,  3:06:25 PM
Put to call ratio .87 currently, VXO up a whopping 2.29 to 19.92.

  Jeff Bailey   11/17/20,  2:48:55 PM
Buy/Sell program premium levels .... HL Camp & Company has their buy/sell program levels posted now. Set for buying at $0.19 and selling at $-1.59.

QCharts symbol is $PREM.X

Other than sell program at the open when cash caught up, or down as was the case to futures, only see one sell program at 13:10-13:15, which had SPX falling from 1,038.05 to 1,035.97. SPX 1,037.50 -1.22% right between that range right here.

  Linda Piazza   11/17/20,  2:42:37 PM
After almost two months of struggling to move back over its 200-dma, Dupont (DD) is pushing back below $40.00 again today. Since July 2002, DD has traded in a 10-point range from about $35-45.00, and it looks dangerously close today to rolling down to head toward that $35.00 level. RSI and 21(3)3 stochastics both are in full bearish roll. OBV has been declining all during the time DD has struggled to move back above its 200-dma. MACD lines threaten to touch from below signal. However, if one squints just right, it's possible to make out a rough and jagged possible inverse H&S with a neckline near that 200-dma. If so, DD is in the process of forming a second right shoulder, and it had better begin rounding up soon to form that shoulder. A decline much past the current $39.50 level would negate that inverse H&S possibility. DD pays its dividend December 14, so puts may be inflated, reflecting that $0.35 expected decline in the shares as the stock goes ex-dividend. Because DD is in the middle of its $35.00-45.00 range, this probably isn't a great place to enter a trade anyway, but I mention what's happening to DD because it's a Dow component that held up rather well last week, but is not holding up so well this week. (Disclosure: I hold December puts on DD.)

  Jonathan Levinson   11/17/20,  2:40:59 PM
The put to call ratio is back to .90- no guidance there, as it's at the high end of neutral.

  Jeff Bailey   11/17/20,  2:38:36 PM
QQQ $34.40 -1.82% ... here's daily interval chart of QQQ Link , not unlike some of the charts that Jonathan showed in Sunday Index Trader Wrap Link , but taken from the March 12 low to August 8 pullback of $29.93. This is perhaps the "last" upward trend currently in play on the QQQ.

Will note WEEKLY S2 is $34.13, and if that is taken out to downside near-term, then next level of risk would have to be assessed to MONTHLY S1 of $33.11.

  Jonathan Levinson   11/17/20,  2:21:38 PM

  Linda Piazza   11/17/20,  2:12:18 PM
Each of these OEX rises takes the form of a bear flag rising into resistance, and that's no different for the current five-minute rise. However, one of these is likely to break to the upside toward stronger resistance. The 516.50-517 level needs to be tested to establish it as resistance before bears would feel comfortable driving the index much lower, for example. Of course, nothing has stopped bears from doing so, so far.

  Jeff Bailey   11/17/20,  2:09:14 PM
Microsoft (MSFT) $25.05 -1.76% Link ... Jeff: MSFT Nov. 25 Put bidding $0.30, do you still like it?

Yes I do still like a trade for SELLING a NAKED MSFT November $25 put (MSQWE) for $0.30, but only for those ABLE to take the stock if exercised at this point. If exercised, would then take on a strategy of selling a covered call (IF EXERCISED ON THE PUT and then holding the stock long) with December expiration at the $27.50 strike (MSQLY) on bounce above $26.50.

Remember ... November expiration is Friday!

While not overly bullish, Stock Trader's Almanac note November expiration has shown higher trade in 7 of last 12 years, but think MSFT "peg level" might be around round-number $25.00.

  James Brown   11/17/20,  1:59:47 PM
FYI: the GSO software index has broken its simple 50-dma. No doubt its largest component, Microsoft (MSFT), has been little help. Shares of MSFT are hitting new relative lows. After breaking support at its 200-dma and the $26 level last week it has now broken old price support near $25.50. Currently, MSFT is trading at $25.04, down 1.8%.

  Jonathan Levinson   11/17/20,  1:58:40 PM

  Jonathan Levinson   11/17/20,  1:58:10 PM
Treasury budget due to be released shortly, with expectations for a 71B deficit.

  Keene Little   11/17/20,  1:56:46 PM
Actually all indexes are in agreement. We had some bearish non-confirmation at Friday's high in the SPX and NYSE, by not seeing new highs in the DOW and NASDAQ for example.

  James Brown   11/17/20,  1:55:25 PM
Keene, are you basing that on the S&P 500? Or another index?

  Keene Little   11/17/20,  1:54:47 PM
BTW James, I'm calling this the start of a new downtrend because I count the waves up from March as 5 complete (3 waves up with 2 corrections in between). Rally done. We go down now.

  Mark Phillips   11/17/20,  1:53:45 PM
Interesting development on the longer term view for the NASDAQ-100 Tracking stock -- QQQ. I've been watching the stock work higher in its ascending channel the past several months, using the 50-dma as a secondary measure of support. Gapping down this morning, the QQQ is currently sitting with a 2% loss on the day and has punctured both the lower channel line and the 50-dma. This could be the beginning of that long-awaited decline from an overblown rally, but we need to be careful. Note how the QQQ broke both those measures of support in late October, late September and early August before going on to set new highs for the year. So we have the risk that this third violation of that support will once again find eager buyers to propel it to new yearly highs again. Link

But that's not the way I'll be playing it. I'm not eager to chase this breakdown, but the QQQ is looking better by the day for bearish position entries on subsequent failed rally attempts. For those of you following the LEAPS Put Watch list play on the QQQ, I would now look to lower that entry target to the $35.50-36.00 area. I'm not convinced the top is actually in for this rally, but if it isn't, I suspect it isn't very far over the recent highs.

  James Brown   11/17/20,  1:52:39 PM
A momentous occasion beckons (grin)... in about 5 minutes Arnold will be sworn in as governor of California.

  Keene Little   11/17/20,  1:52:07 PM
Sorry James, I got distracted. Per your 13:26 question, when we start a new downtrend (assuming for the moment we have), the first move down won't necessarily abide by a typical retracement. We can certainly expect 38%, 50% and then 62% levels to provide support, but since it's the start of a new trend, it'll only be bounce points.
If we're still in an uptrend, then I would look to see if we've already had one major correction on the way up and see if this would be expected to be the 2nd major correction. If it was going to be the 2nd one, then I would expect only a 38% retracement. Hope that's clear enough without drawing charts which is my favorite way of visualizing this.

  Jeff Bailey   11/17/20,  1:49:37 PM
Bema Gold (BGO) $3.66 -1.87% ... should be stopped on bearish trade from $3.58, when BGO traded up through $3.63.

With HUI.X reaching a bullish objective, (thought BGO not a component of HUI.X), was/am looking for some "sell the good news" as we may have been seeing in broader equities recently. May still get it after Treasury Budget, but not seeing it with BGO above $3.63, which I didn't think BGO could trade intra-day, ahead of the numbers.

  Linda Piazza   11/17/20,  1:46:34 PM
Chiming in on James's 13:23 post about Rowling, most authors of children's and teen's books earn far less, less than minimum wage, in fact. A 200-page manuscript for a teen novel may net the author a $5,000-$10,000 advance, for example, with that advance often being the only monies earned on that book. Advances must be "earned out" before royalties are paid. Since most marketing budgets are minimal to nonexistent for the majority of books, consisting only of designing an eye-catching cover, and since that dooms most books to being placed on the shelves spine-out (publishers must pay to have books placed front-out in the bookstores), most books are doomed to an early demise. Why is that important to us in the investing world? Because, increasingly, book publishers rely on one or two big sellers to carry the earnings, and that can be dangerous. Just take a look at Scholastic's problems back in 1996-1997 when R.L. Stine books began to wane in popularity.

  Jonathan Levinson   11/17/20,  1:38:54 PM
The put to call ratio is back to .90. Note that it's not as extreme as we saw last week when it stayed north of 1.0 all day. Volatility is still high, bonds are holding their gains, gold and silver recovering part of their losses. Equity traders, myself included, are now wondering- to bounce or not to bounce?

  Linda Piazza   11/17/20,  1:37:06 PM
The particular Pring book to which I referred was Technical Analysis Explained. (See James's 13:28 post.) I looked up the reference, too, with Pring observing on page 43 that the reaction usually "lasts from 3 week to 3 months (occasionally longer) and normally retraces between one-third and two-thirds of the preceding" movement. Of course, that depends on us identifying the rally as an intermediate trend. Then, on page 46, he refers to Gartley's "conclusion . . . that the smaller in magnitude the primary intermediate-term movement was, the larger the retracement tended to be, and vice versa." So, I guess a lot depends on whether you consider the rally a primary intermediate-term movement or not, and perhaps those results shouldn't be extrapolated to all retracements.

  Jonathan Levinson   11/17/20,  1:31:08 PM
Linda, your 13:27 post sums up my understanding as well.

  James Brown   11/17/20,  1:28:53 PM
What is the title to Pring's book, Linda?

  Linda Piazza   11/17/20,  1:27:55 PM
I, too, have read that a 50% retracement a typical amount, but that 1/3 to 2/3 (or actually 38.2 to 61.8%, slightly different levels) retracements are within the normal scope. Still, though, I'm not suggesting that the Russell will retrace 61.8% or 2/3 of its rally or even that it will necessarily retrace rather than consolidate. If I remember my Pring well, if a pullback should retrace say only 19.1% of the rally (smaller than the typical 1/3-2/3), then we could expect the next leg up to be big proportionately, so that would be a bullish result. If a pullback retraced say 80.9% (bigger than the typical 1/3-2/3), then the next leg up would be expected to be small, so that would have been a bearish result, fitting in with what you read, James.

  James Brown   11/17/20,  1:26:01 PM
Keene, your comments were worded for the first leg down in a new downtrend. Should the same numbers apply to an uptrend? Thus, we've had this huge "wave" higher from March...so the first "bounce" lower should retrace 50-60% of the up move?

  James Brown   11/17/20,  1:23:30 PM
Interesting factoid...J.K.Rowling, author of the Harry Potter series, is the world's best-paid author. Earlier this year her fifth book in the series, "Harry Potter and the Order of the Phoenix" was the biggest book launch in history. The Sunday Times estimated her income over the last year reached $211 million. If you break that number down she earned about $655 per word for her latest book. By the time she is done writing her seventh book in the series she could become the first billionaire author in history. [Prior to the Order of the Phoenix her net work was estimated around $400-$500 million, which makes her wealthier than the Queen of England.] (source: Reuters)

  Keene Little   11/17/20,  1:18:42 PM
James, I'll stick my nose in here and say that from an Elliott Wave perspective, normal bounces will be 38-62% and the different waves have different typical retracements. For example, after the first leg down in a new downtrend, the first bounce will typically retrace 50-62% of the decline. After the next leg down, the bounce following it will typically retrace only 38%. So it's not necessarily a bullish vs bearish bounce, but has more to do with the emotional content of the bounce.

  James Brown   11/17/20,  1:14:26 PM
Linda, I can't quite remember where I read it but I always thought that a "normal" retracement was 50% of the move. A retracement of 25% to 38.2% was "bullish" and indicated that the prevailing trend may continue. A retracement greater than 50%, normally the 61.8% to 66% was "bearish" and suggested that while we may see a bounce the trend has changed. I'll have to try and find which book I read that in.

  Jonathan Levinson   11/17/20,  1:07:20 PM
The put to call ratio is holding up, last reading at .89, with the up 2.34 at 19.91. Those mid-16 readings seem like a long time ago. Treasuries have given back some of their gains, now up 3 bps on the ten year note, while gold and silver remain weak. I keep wondering where the Fed's money is going today- so far no sign of it whatsoever.

  Linda Piazza   11/17/20,  1:06:34 PM
Yes, James, a 2/3 retracement does sound nasty, doesn't it? (See my 12:49 and James' 12:54 posts.) However, according to my beloved Pring text, 1/3-2/3 is a normal retracement range. We just haven't seen anything like that for a long, long while. Actually, I'm not sure that I think that if the RUT opted for retracement instead of consolidation that it would retrace that far, because there are also some figures in the Pring text relating the expected retracement to the size of the previous move. Since the rally was so big, the retracement would be expected to come in at the small end of the range, if those figures are to be trusted.

  Ray Cummins   11/17/20,  1:06:21 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

With the major equity averages vacillating near session lows, there are number of candidates for exit (or adjustment) trades and most of them are in the chip sector. Some of these issues are: KLA-Tencor (NASDAQ:KLAC), Marvel Technologies (NASDAQ:MRVL), Maxim Integrated (NASDAQ:MXIM), Photon Dynamics (NASDAQ:PHTN), PMC Sierra (NASDAQ:PMCS), and Varian Semiconductor (NASDAQ:VSEA). Among the broader market sectors, Apollo Group (NASDAQ:APOL), Black & Decker (NYSE:BDK), Electronic Arts (NASDAQ:ERTS), Hitachi (NYSE:HIT), Lincare (NASDAQ:LNCR), Sealed Air (NYSE:SEE) and Visx (NYSE:EYE) are enduring strong selling pressure.

One of the day's surprises is a recent "bottom fishing" candidate: American Pharmaceutical Partners (NASDAQ:APPX). The stock is up over 10% after receiving approval from the Food and Drug Administration to launch Piperacillin for Injection -- its generic version of Piperacil -- to treat serious infections. Other bullish portfolio issues are Eon Labs (NASDAQ:ELAB), Nam Tae Electronics (NYSE:NTE) and NTL Inc. (NASDAQ:NTLI).

  Jeff Bailey   11/17/20,  12:58:52 PM
October Treasury Budget is due out at 02:00 PM EST, and may bring some late session volatility to equities, and gold stocks/futures.

Economists' look for October's deficit to increase to -$71.0 billion from -$54.1 billion.

  Jeff Bailey   11/17/20,  12:54:42 PM
Not allowed to short ... received a couple of e-mail regarding certain online brokers not allowing traders to short BGO because it is under $5.00 or $6.00.

Using your 5-MRT technique, might also look at Newmont Mining (NYSE:NEM) $42.84 -3.16% short here, stop $43.25, target $41.75.

Many of the intra-day charts looking "identical"

  James Brown   11/17/20,  12:54:41 PM
Linda, a 2/3rd's retracement in the RUT sounds pretty nasty, not normal, to me. *grin*

  Linda Piazza   11/17/20,  12:49:09 PM
How are the small caps doing today? At 523.27 as I type, the Russell 2000 has approached one version of a rising trendline off the March lows, with that trendline crossing near the 50-dma at 519.27. MACD has been showing bearish divergence as has RSI, but so far, the Russell maintains that ascending trendline. It's also testing weekly support. The Russell had an intraweek high at 523.79 the week of 4/14/02 and an intraweek high at 519.89 the week of 5/20/01, with the Russell climbing above that weekly S/R only recently. Stronger support lies just below, near 513.75. What's next? I would expect either a steadying just above weekly support as the weekly oscillators cycle down (best case) or a normal 1/3-2/3 retracement of this year's rally (normal case) or worse. Those bearish divergences suggest at least a normal retracement. The rally in the small caps has been an important aspect of the market's climb and so the Russell should probably be watched.

Interestingly, the last two MACD highs on the S&P SmallCap 600 Index ($SML.X) did not show bearish divergence, with MACD highs minimally higher as price moved higher, too. The same was true of the last two RSI highs. Visually, this index does not appear quite as close to testing its ascending trendline off the March lows, either. I'm not sure what differences in the makeups of these two indices would account for the slightly stronger performance of the $SML.

  Jeff Bailey   11/17/20,  12:44:46 PM
AMEX Gold Bugs ($HUI.X) 217.27 -3.8% Link ... leading sector weakness now. Several weeks ago set up this bar chart whith lower ends of two retracement anchored at relative low, but both fit to a high of 226, which is the bullish vertical count from the PnF chart. Link

  Ray Cummins   11/17/20,  12:38:38 PM
Spreads/Combos & Premium-Selling -- E-Mail Replies: Part II

Regarding the second question and the subject of time value, the most obvious concept demonstrated by the bell curve is that the amount of time value in an option is greatest "at-the-money." In a bell curve diagram, an ATM option is near the top of the curve. That means the ATM option has the most “time value” or “time premium” in its price (now you why traders who participate in time-erosion strategies often sell ATM options...it’s because they are trying to sell the MOST time value).

So, three things we know:

Time value is constant in all options
Time value is highest in at-the-money options
Time value decreases as you move in- or out-of-the-money

Now, think of the curve again: The rate of change depends on how far away the option is from the strike price: the further the option is in- or out-of-the-money, the smaller the rate of change (flatter curve) on a one point move in the underlying issue. With that in mind, it should be easy to see that when the stock price moves away from the strike price, you gain more in intrinsic value than you lose in time value. Here's a link to a good article on the use of the bell curve and probability analysis in option trading; Link

  Jonathan Levinson   11/17/20,  12:35:19 PM
The put to call ratio is up to .90 for the last half hour.

  Jeff Bailey   11/17/20,  12:30:15 PM
Day Trade Short .... Bema Gold (BGO) $3.58 -4.02%, stop $3.63, target $3.43.

bid/offer $3.58 x $3.59.

  Jonathan Levinson   11/17/20,  12:28:06 PM
Mark, re: your 12.25.55 post and comments about the VIX, looks like arena participants are headed for the exits: Link

  Jeff Bailey   11/17/20,  12:26:02 PM
Dow Industrials (INDU) 9,676 -0.94% Link .... point and figure chart may have INDU near-term vulerable to 9,500 based on Nikkei-225's Link decline. Here is INDU bar chart with new weekly pivot analysis and retracement levels. Link

If I see a INDU back near 9,700, may look for bearish entry point today.

  Mark Phillips   11/17/20,  12:25:55 PM
New Life In The VIX? With equities under steady selling pressure all day, the VIX has had its largest percentage move in quite some time, gaining 13.5% from Friday's close at its intraday peak (so far) of 19.24. This puts the VIX at its highest level since early October, but more importantly, it has the VIX poking above a trendline I've had on my chart for over a year. That trendline was violated both in March and then more recently in late September. Will the third time be the charm, where the VIX moves back into more normal territory and we finally see some weakness in the major indices? Note on the attached chart how weekly Stochastics are trying once again to hook upwards and give a bullish (bearish for equities) signal. Link

  Ray Cummins   11/17/20,  12:25:56 PM
Spreads/Combos & Premium-Selling -- E-Mail Replies

(condensed) Hi Ray, I have been doing very well with your straddle picks, but there are a few things I don't understand yet about volatility and premium. One area I have difficulty with is determining which strike prices to use and how much time to buy. Another thing I have been struggling with involves a comment I read about time-value. The article said something to the effect that an option gains more in intrinsic value than it loses in time value when it moves further out-of-the money. Any help on these subjects would be much appreciated! PW

First, thanks for the generous comments concerning the Straddle portfolio -- it has certainly been a good environment for that strategy! As with most option trading techniques, the key to success is knowledge of option pricing theory. Recall that option premium consists of two components: Intrinsic value and Time value. Assume that the current stock price is equal to the strike price. In this case, the option premiums (both the call and the put) do not have any intrinsic value, only time value. The main factors that influence time value include:

(1) The number of days until expiration
(2) Implied Volatility
(3) How far the option is in- or out-of-the-money.

At-the-money options have the highest time value. As the option starts moving in- or out-of-the-money, the time premium begins to decrease. In addition, the closer an option is to expiration, the more an option's premium will shrink (per day) due to time decay. This gives us a general guideline in selecting both a strike price and a time frame for straddle. We have to pick an expiration date so that the price of the straddle will not be too high (not too far from expiration). However, it should still provide enough time for the stock to perform as expected, before we have to exit the trade to preserve capital.

  James Brown   11/17/20,  12:24:52 PM
Merrill Lynch updated some of their sector ratings today:

sector -- new rating
software -- equal weight
hardware -- under weight
Internet -- under weight
wireless -- equal weight
semiconductor -- over weight

  James Brown   11/17/20,  12:18:31 PM
The sell-off has claimed all market sector indices - not one is trading higher at the moment.

  James Brown   11/17/20,  12:16:47 PM
Early Afternoon Sector Movers:
(a.k.a. the biggest losers)

DDX disk drives index: -3.46%
NWX networking index: -2.62%
INX Internet index: -2.28%
GHA hardware index: -1.94%
GSO software index: -1.92%

XAL airlines index: -2.76%

XAU gold & silver: -3.48%

  Linda Piazza   11/17/20,  12:15:37 PM
The OEX hits the resistance that was established this morning near 514. The three-minute chart shows bearish divergence (higher stochastics and MACD highs, lower price high) unless the OEX can climb above 515.08 before rolling fully down, but I'm not convinced we'll see lower lows just now. I think, instead, we may have been stopped out of our bullish play by a stop that I set about $0.20 too high. I'm not willing to risk a repeat performance of this morning's loss, however.

  James Brown   11/17/20,  12:12:08 PM
United Online Inc (UNTD) is retesting its simple 200-dma as support and has produced no reaction to an upgrade by Kaufman Brothers who raised the stock to a "buy". UNTD is also hovering precariously above support on its P&F chart

  Jonathan Levinson   11/17/20,  12:08:49 PM
The put to call ratio is up to .85, with the VXO up 11.63% to 19.68.

  James Brown   11/17/20,  12:05:23 PM
Shares of Morgan Stanley (MWD) are only down 7 cents after announcing a $50 million settlement with the SEC. Investors discovered that MWD had been taking payments from various mutual fund companies for pushing their products to MWD clients. The stock had dropped heavily on Friday as the markets wondered which broker would be the SEC's next culprit. The $50 million fine may be a lot smaller than investors had been fearing, which could account for the lack of reaction in MWD's stock today.

  James Brown   11/17/20,  11:58:31 AM
Not a business headline but the Sniper suspect (in DC) has been found guilty in four charges against him.

  Jeff Bailey   11/17/20,  11:54:18 AM
QQQ $34.48 -1.59% .... here's QQQ with updated WEEKLY Pivot Matrix levels overlaid. Link

Will look for $35.30 to provide some more formidable near-term resistance, and support here at MONTHLY Pivot may be highly dependent on Japan's Nikkei-225 at its bullish support trend. (see 10:28:29)

  Linda Piazza   11/17/20,  11:51:54 AM
Remember last week when I said that I liked to watch for RSI trendline breaks as they sometimes confirmed or even preceded price breaks? Last week, I had been skeptically watching the formation of a possible continuation inverse H&S formation on the OEX, mentioning that RSI bearish divergence on the daily did not suggest that it would be confirmed. I also mentioned that I was watching the RSI descending trendline for a possible upside break as a signal that the formation could be confirmed. Instead, the OEX fell through the bottom ascending trendline, confirming the OEX trendline break that occurred this morning. Here's a chart: Link

  Jeff Bailey   11/17/20,  11:36:41 AM
11:00 Update at this Link

  Linda Piazza   11/17/20,  11:29:02 AM
Stops are a necessary evil. The OEX is turning around from a few cents below our stop, but like Jim on the futures side, I'm out of the business of trying to pick a bottom. We'll be watching for a climb and then a rollover, perhaps in the 517 zone but perhaps higher, near 520. We may not get that entry today, as further drops could send the OEX cascading lower.

In retrospect, we got a drop early today and then a quick test of 517 before the OEX rolled over again. I've been watching that 517 level for weeks now, as evidenced by my frequent posting of the pitchfan pinpointing the importance of that level, but the OEX has a history of bouncing from just below 517 and I thought it would make that attempt today, too. It may do so again, but it will unfortunately do so without us.

  Linda Piazza   11/17/20,  11:21:10 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were just stopped out of our long OEX play at 512.75, having entered at 514.49, for a 1.74-point OEX move against our position. We were stopped by $0.13. If the OEX now turns around and reaches our target, I'll be kicking myself.

  Linda Piazza   11/17/20,  11:07:33 AM
We have a confirmed continuation H&S on the OEX one-minute chart, with a downside target of about 513.25.

  Linda Piazza   11/17/20,  11:03:20 AM
What we want to see happen now is an equal low on the OEX rather than a lower low.

  Linda Piazza   11/17/20,  10:59:14 AM
Reader Question: Good morning. I am curious if anyone charts the average moves of the major indexes. My thought is that if I knew the average move of the OEX (plus standard deviations) it might influence getting in or out of trades.

Response: Great question. Fortunately, we don't have to chart that information by hand. It's provided by a great indicator called Average True Range, first developed by J. Welles Wilder for use in commodities trading. Q-charts offers ATR as does Stockcharts.com. I'm not sure about other providers. Currently, the ATR for the OEX (daily) is 5.106. Here's information from Stockcharts.com's Chart School on ATR: Link

  Jonathan Levinson   11/17/20,  10:55:02 AM
Makes you wonder where that money's being deployed, Linda. So far, it looks like the fed's dealers are buying bonds, as there's zero strength in equities. I continue to think that a base is being built here as the intraday oscillators continue to flatten, but if the bottom drops out, it could get ugly in a hurry.

  Linda Piazza   11/17/20,  10:51:31 AM
Jonathan's 9:50 and 10:06 reports of Fed repo money was one reason I was willing to risk this countertrend long OEX position today. Of course, that money does not have to be used to support equities and might go elsewhere, but nevertheless, I did factor that into my decision.

  Linda Piazza   11/17/20,  10:44:30 AM
The current OEX rise is taking the form of a bear flag rise into resistance. The closest strong resistance now lies between 516.30-517, so we'll need to be particularly watchful as that zone is approached.

  Jonathan Levinson   11/17/20,  10:39:50 AM
The put to call ratio is up to .78, but the equity pcr has actually exceeded the index pcr, which is very rare. I usually think to fade the equity pcr and follow in the index pcr, which in this case would translate to a buy signal. The put to call ratio is a secondary "soft" indicator, and so one does not follow its signals blindly.

  Linda Piazza   11/17/20,  10:32:40 AM
For the last month, I've been researching how the slope of an envelope impacts the way the OEX acts after touching that channel. I've wanted to find a way to distinguish those times when the OEX was likely to rebound quickly and those times when it was likely to slide along the envelope. One outcome of that research was that it takes, on average, about 5 1/2 hours from the time of a first touch of the lower 30-minute 1.35% envelope until the OEX touches the central 21-pma average. If that's true this time, then sometime this afternoon, we should see the OEX reach the 520 level. I'm not so confident that this is one of those "average" times, however, as I wouldn't be surprised to see the OEX roll over again ahead of a touch of that average. Maybe right now, if we're particularly unlucky.

  Jeff Bailey   11/17/20,  10:28:29 AM
Nikkei-225 ($NIKK) 9,786 -3.7% Link ... notable break of the 10,100 support and 10,000 level, not to mention trade just at/below the bullish support trend. While a technical bounce not out of the question, Nikkei should start finding resistance building at 10,500. (Note that Monday's chart does not yet show today's supply (O) falling to 9,800, where session low was 9,756.50)

  Linda Piazza   11/17/20,  10:26:06 AM
We have bullish divergence on the OEX five-minute 21(3)3 stochastics, although not on the five-minute MACD. This is still an iffy, countertrend play.

  Linda Piazza   11/17/20,  10:22:07 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We are long the OEX from 514.49. Stop 512.75. First target 517. Possible second target 519.

  Linda Piazza   11/17/20,  10:21:07 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Aggressive players only, go long here. Stop 512.75. First target 517 (and I suggest conservative players set profit targets and get out there). Second target 519.

  Jeff Bailey   11/17/20,  10:20:08 AM
VeriSign (VRSN) $15.60 -3.33% Link ... You mentioned VRSN a week ago and I thought the $ 15.60 level is a good buy??

I'd look long VRSN on this pullback, but would like to see a trade at $16 with some of today's broad market weakness. The apex of the bullish triangle is at $15.00 and might tie in with the rising 50-day SMA.

So would look long $15.00 or $16.00

  Jonathan Levinson   11/17/20,  10:09:22 AM
Bonds are at their high of the day here, with ten year bonds +4.4 basis points.

  Linda Piazza   11/17/20,  10:07:37 AM
Swing Trade Signals
Still watching to see if support is going to hold.

  Jonathan Levinson   11/17/20,  10:06:15 AM
The Fed has added 16B in intervention money this morning. I can only guess why, but it's not because they're optimistic.

  Linda Piazza   11/17/20,  10:05:40 AM
Swing Trade Signals
Okay, I'm considering a risky, countertrend long play from this level, only because we're so close to next support and so overstretched. Stay tuned. Use only risk capital.

  Jonathan Levinson   11/17/20,  10:03:28 AM
The put to call ratio for the first half hour is .76, with the VXO up .85 at 18.48.

  Linda Piazza   11/17/20,  9:58:10 AM
I see massive resistance gathering near 518 for the OEX, but see several layers of support near 514.50-515, too.

  Jeff Bailey   11/17/20,  9:56:56 AM
Sector action broadly lower in early trade with Disk Drive (DDX.X) 132.01 -2.19%, Airline (XAL.X) 65.09 -1.56%, Internet (INX.X) 157.43 -1.6% and Gold Bugs ($HUI.X) 223.06 -1.27% leading declines. No equity sectors showing a gain, but S&P Insurance (IUX.X) 275.23 -0.19% showing relative strength after merger news of St. Paul Companies (SPC) $39.00 +6.06% to merge with Travelers (TAP.A) $16.35 +1.99%.

  Linda Piazza   11/17/20,  9:56:56 AM
Many of the earliest volume patterns were most bearish, as could be expected. As of a few minutes ago, adv:dec ratios stood at 6:17 for the NYSE and 6:20 for the Nasdaq. These early volume patterns can be distorted, especially as volume was so light, so we'll watch for the trajectory of volume patterns as the day progresses.

  Linda Piazza   11/17/20,  9:51:54 AM
Because the OEX traveled a much larger span than usual the first five minutes, I'm going to use a 3MRT system today to watch the OEX. The first three minutes produced a high of 518.36 and a low of 516.23, for those of you who do not have access to three-minute charts.

  Jonathan Levinson   11/17/20,  9:50:50 AM
A whopping 12B overnight repo has just been announced, for a net add of 8.25B today.

  Jeff Bailey   11/17/20,  9:48:09 AM
Kulicke & Soffa (KLIC) $16.94 +6.33% ... reported Q4 (September) loss of $0.57 per share, which included mutliple chages and was not comparable with consensus estimates for a loss of $0.11. Revenues rose 5.8% year-over-year to $129.3 million, which was below consensus estimates of $131.3 million.

Stock higher after company issued upside preanouncement for Q1 (December) with company revising Q1 revenues to $150 million, which was above consensus of $135.7 million.

  Linda Piazza   11/17/20,  9:46:38 AM
Here's my take on the OEX situation. I think an entry at 516 with a stop at 514 might have been a great play, but the upside was so limited, with possible strong resistance beginning at 519 or possibly even lower, that it's not a great OEX play. A great futures play, perhaps, but unless the OEX cuts right through that important 520.80-521 zone as easily to the upside as it did to the downside, our upside was too limited for an options play. Of course, the OEX may do just that, but if it does, we'll be waiting to play the long side. If the OEX had hit 514.50, I might have risked it, but I just didn't feel comfortable entering with a bearish TRIN and such possible limited upside.

  Jim Brown   11/17/20,  9:46:07 AM
A friend called me this weekend and said a gold bug was trying to get him to buy gold/silver bullion. The pitch was that China was going to allow individuals to own gold/silver bullion beginning in January. With 320 million upper class households the theory was this would put a squeeze on global supplies if only a small percentage made purchases.

I am not a metal merchant and have not heard this. Can anyone shed any light on this or is it just a scam to sell metal domestically?

  Jonathan Levinson   11/17/20,  9:39:55 AM
Dec gold is currently lower by 2.60, silver by .056. HUI is down .39 at 225.55, XAU -.77 at 101.43.

  Linda Piazza   11/17/20,  9:38:41 AM
I actually wouldn't be surprised to see the OEX drop to 514.50-515 before rebounding, although it could also do so from this level. That lower level is the site of a descending trendline off the October 15 high, since broken, but those old trendlines sometimes come into play again. Also the lower 60-minute 1.35% envelope band crosses exactly at that level. The OEX may not descend that far, but I would expect another bounce attempt from that level if it did.

  Linda Piazza   11/17/20,  9:34:40 AM
The OEX first five minutes reached a high of 518.36 and a low of 515.52, with a midpoint of that range at 516.94. The OEX currently trades below that midpoint, demonstrating weakness in the earliest trading. Let's see what happens during the first retracement that usually begins in a few minutes, however, as intraday oscillators show the OEX really overstretched to the downside.

  Linda Piazza   11/17/20,  9:31:56 AM
The OEX now tests the bottom of its range, as we expected at the open. The presumption is that the OEX will bounce from this level. It's also testing the 50-dma at 516.12.

  Jonathan Levinson   11/17/20,  9:28:56 AM
The Fed has just announced a 52 day repo of 4B. I've never seen one of these before, but so it goes. 7.75B expires today, so we await the next announcement regarding the net 3.75B remaining.

  Linda Piazza   11/17/20,  9:25:22 AM
The OEX remains in a two-week-long trading range with a lower boundary between 516-517 and an upper boundary between 525-526. It's likely to open near the bottom of that range today, but I'm not as confident as my co-writers about bounce potential. While I bow to the greater experience many have with the market, I'm concerned about a possible positive but tight-range day today as the OEX bounces between that range support and the resistance that will be offered now between 520-521. I also noticed the three-candle pattern produced on the daily chart, with that type of pattern (up day, consolidation day, and down day that's not quite an evening star pattern) often followed by a tight-range positive day before another dip, somewhat confirming my worries about today. With my concern being that we could get caught in a tight-range bullish play today, I'm going to need confirmation from volume patterns and other sources before I enter a bullish play ahead of the 30 and 60-minute 100/130-pma's. That may mean that I miss the move entirely.

  Linda Piazza   11/17/20,  7:28:13 AM
Good morning. The Nikkei opened lower and plummeted 380.23 points or 3.74%, closing at 9786.83, just off the low of the day. That was the first below-10,000 close in three months. Banking stocks fell after banks received orders to increase their reserves against bad loans. That new government directive may cause some banks to miss estimates, and it also heightened concerns that Prime Minister Koizumi's efforts to clean up bad loans had not been as successful as many had hoped. Internet-related stocks also plummeted. The yen climbed in morning trading, heightening currency worries and sending exporters lower.

The banking sector also plummeted in South Korea, with J.P. Morgan cutting the sector to a neutral weighting from its previous overweight rating. The Kospi fell 1.90%, and most other Asian bourses declined, too, despite a Goldman Sachs upgrade of its 2004 growth forecasts for Singapore, South Korea, Taiwan, and Hong Kong. The Taiwan Weighted fell 1.53% and Singapore's Straits Times fell 2.22%. Hong Kong's Hang Seng declined 1.69%, but China's Shanghai Composite declined a more modest 0.22%.

Most European bourses currently trade lower, too, impacted by Wall Street and Nikkei weakness. Worldwide, governments are on the alert against possible al-Qaeda attacks, with threats being leveled at the U.S., U.K., and Japan, and with a possible al-Qaeda attack this weekend in Turkey. Currency worries impact European trading, just as they had Japanese trading. Merrill Lynch cut Siemens, Germany's biggest engineering company, to a sell, sending that company's stock lower.

Currently, the FTSE 100 trades lower by 45.40 points or 1.03%, at 4351.60. The CAC 40 has lost 67.59 points or 1.96%, to trade at 3381.01. The DAX has lost 94.86 points or 2.50%, to trade at 3702.54.

  Jeff Bailey   11/16/20,  10:20:55 PM
Pivot Matrix for next week at this Link

Here's an updated chart of the SPX with the new WEEKLY levels. A little wider S2 to R2 range this week. Link

Bulls got another new 52-weeker in the SPX!

  OI Technical Staff   11/16/20,  10:20:40 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

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