Option Investor
Printer friendly version
  Jeff Bailey   11/19/20,  5:46:47 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   11/19/20,  4:38:00 PM
QQQ $34.21 ... a lot of work for a lot of nothing today. Here's a full intra-day recap of QQQ trade on 5-minute chart. Link

  Jeff Bailey   11/19/20,  4:04:44 PM
QQQ $34.35 +1.38% ... with 8-minutes to close.

  Jeff Bailey   11/19/20,  4:02:56 PM
Hewlett Packard (HPQ) $22.34 .. higher at $22.59 after headline EPS of $0.36, which was was a penny bettern than consensus. Revenues were $19.9 billion versus $19.04 consensus.

  Linda Piazza   11/19/20,  3:59:16 PM
Swing Trade Summary: OEX/SPX/DJX/DIA/SPY
11/19: Entered a bearish OEX trade at OEX 514.98.
11/19: Stopped at 517.50.
Result for that day: 2.52 OEX points against our position.
Results for the week: 4.26 OEX points against our position.
This has not been a good week, with two plays stopped out and with a missed play that would have been great.

  Jonathan Levinson   11/19/20,  3:57:29 PM
A brilliant Steve McQueen move on HUI and XAU, both back in the green, HUI +1.01 at 236.23.

  Jeff Bailey   11/19/20,  3:51:55 PM
QQQ thoughts for holding I would need to add to my thoughts of holding a QQQ bullish trade overnight as it relates to my holding SPX puts as profiled yesterday.

My mentioning of holding a QQQ trade over HPQ is not a vote of bullishness for the QQQ based on recent dollar weakness and weakness in Asian markets, but more from the perspective of holding an SPX put, where holding the underlying QQQ represents more of a near-term hedge trade.

EACH trader should assess his/her own risk profile, as it relates to today's bullish profile in the QQQ.

With the dollar stronger against the yen today, I would have to think Asian markets stand a greater chance of a rebound than they did yesterday. While I view Japan's intervention as more of a "false" rebound in the dollar and most likely not longer-lasting sign of dollar strength, a shorter-term trader in the QQQ should be able to assess risk/reward to see if holding a trade overnight fits their profile.

  Linda Piazza   11/19/20,  3:49:08 PM
As the OEX has been climbing, the 30-minute and 60-minute 100/130-pma's have been descending. The 30-minute 100/130-pma's are at 517.85 and 518.19, respectively. The 60-minute counterparts are higher, at 518.40 and 518.34, respectively. If we hadn't just been stopped out of our play, I'd say that this would be a fairly good place to enter a short position with a stop at 519, just above those averages. However, MACD has not yet begun to roll over on those charts, so perhaps the OEX will linger around those averages a while tomorrow before deciding to roll down again. If you were in an OEX bearish play, consider whether your options are front-month or December options when deciding whether to hold overnight. Even those with December options should factor in the probability that it is time for another oversold bounce on the Nikkei. If you're in front-month options, and the Nikkei does bounce, and the OEX opens higher tomorrow morning and lingers a while around those averages before rolling down (if it does), then you might be better off getting out this evening and getting back in tomorrow. It's a tough decision.

  James Brown   11/19/20,  3:43:13 PM
This could be an entry point in United Technology (UTX). Shares have bounced off their simple 50-dma more than once as the stock rises in its ascending channel. Patient traders might want to try and target shoot a bounce near $82.00 support as the stock has a habit of piercing the 50-dma before recovering. Of course its relative weakness today, with the DJIA up 60 points and UTX down 25 cents, might suggest traders would do better to wait for the rebound instead of trying to pick the bottom of the channel.

  Jane Fox   11/19/20,  3:38:23 PM
I'm telling ya Linda, its all a conspiracy. (grin) Welcome to the ranks of washed out bears.

  Linda Piazza   11/19/20,  3:35:15 PM
Excuse me while I stomp around my office a while. We were stopped by $0.07 and now the OEX moves down to test support again.

  James Brown   11/19/20,  3:32:52 PM
bullish traders may want to keep an eye on Wellpoint Health Network (WLP) and Anthem (ATH). ATH is acquiring WLP, in a merger announced a couple of weeks ago, so shares of WLP will follow ATH's. ATH appears to have reversed course but remains under resistance at $70 and its simple 200-dma. A bullish breakout in ATH could push WLP up and through the $90 level and probably past its old highs near 92.50.

  Linda Piazza   11/19/20,  3:25:53 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were just stopped out of our OEX bearish position at an OEX trade of 517.50, after entering at 514.98, for a 2.52 point OEX move against our position.

  Jeff Bailey   11/19/20,  3:16:58 PM
Hewlett Packard (HPQ) $22.25 +2.77% session highs ahead of tonight's earnings.

QQQ $34.30 +1.23% ... will plan on holding bullish profiled QQQ trade overnight if target not achieved prior to 04:15 PM EST closing bell.

  Linda Piazza   11/19/20,  3:16:34 PM
We've dodged the bullet, but for now OEX 516.38 is holding as support--that's just above the 50-dma, and I have the feeling there's going to be a real effort to hold the OEX here into the close.

  Jeff Bailey   11/19/20,  3:05:38 PM
Testing.... 1,2,3 .... S&P Banks Index (BIX.X) 328.40 +0.88% and session high. Now looking for QQQ to trade a session high. QQQ $34.33 here, session high $34.40.

I say it now, and test it later.

This is where my thoughts of the MARKET moving like an inchworm comes into play from a trader's point of view. BIX.X is the head and tries to lead, and now begins to look back to see that the QQQ follows.

  Jonathan Levinson   11/19/20,  3:02:42 PM
A thorn in this bear's side is the put to call ratio, which is still quite high at .95 as I await the reading for the most recent half hour block. The TICK.NQ and TRINQ are both in neutral bullish territory.

  Ray Cummins   11/19/20,  3:01:10 PM
Spreads/Combos -- Reader's Write E-mail Replies

(condensed) Hi Ray, I thought about using today's rally to open up some ratio call spreads, based on a possible range-bound market and the relatively cheap call options. I was wondering what your thoughts were on this strategy and how you might adjust if stocks continue to fall. I know there is some chance of further upside too, but I think that's less of possibility. Thanks for your input! LW

Hello LW...As with many option trading techniques, there is more than one way to implement the strategy. The most common philosophy is that ratio call spreads should be established for a credit so there is no chance of losing money on the downside. Traders who use this method generally want the underlying stock to be below the sold strike price when the spread is established and the further the stock is below the strike, the more attractive the spread will be (because it has no downside risk due to the initial credit received).

If the stock price falls significantly after the play is opened, a downside follow-up is not required when the initial spread has a credit. If the initial spread was opened for a debit, the trader may want to roll-down the written calls. Follow-up action for an upside move usually consists of buying some more long calls to reduce the ratio in the spread. Eventually, the goal would be to reduce the spread ratio to 1:1 (a normal bull spread). In addition to these defensive actions, ratio spreads can also be closed early to take a profit or limit losses. The most common "early-exit" situation occurs when the stock price is near the higher strike price and the time value on the sold position has eroded significantly. One final alternative is to re-adjust the ratio to reflect any new opinion on the underlying stock (and the overall market) or to re-establish a neutral profit range. Hope that helps!

  Jeff Bailey   11/19/20,  2:58:30 PM
U.S. Dollar Index (dx00y) 90.95 +0.68% ... while I'm 30-minute delayed quotes, dollar just off session highs of 90.95.

  Jeff Bailey   11/19/20,  2:56:39 PM
QQQ trader usually finds the S&P Banks Index (BIX.X) as being helpful. While there isn't a bank in the bunch, QQQ seems to find its strength from the BIX.X. Link

  Jeff Bailey   11/19/20,  2:43:30 PM
QQQ here's 5-minute chart of QQQ, but this is 5-minute chart of the different QQQ chart shown at 10:21:55, where we focus on the recently broken to the downside upward trend. Link

  Linda Piazza   11/19/20,  2:42:58 PM
Whew! We came within a few cents of being stopped out there, but the OEX is now at next support, so we're far from out of the woods. This isn't a rollover yet, but merely a pullback to next support.

  Linda Piazza   11/19/20,  2:39:49 PM
As subscriber M. points out, all eyes are on OEX 517 right now. Also, they are on Dow 9700, Nasdaq 1900, SPX 1043. It's been difficult letting the OEX position move against us this strongly, but this seemed the most logical point for selling to begin if it was going to hit the indices, and so our stop was set with that in mind. Actually, on this day when I'm not pleased with much about the performance of this position, I am at least pleased that the OEX 517 level correlated so strongly with the tests of these importance index values.

  James Brown   11/19/20,  2:35:37 PM
One of the stronger stocks in the S&P 500 is Eaton Corp (ETN). Shares are bouncing from the $100 level and traders might want to consider bullish positions over $102.30 but real momentum traders might want to wait for a breakout over the $103.50 mark. ETN failed multiple times at this higher level in late 1997 and again in mid-1999.

The stock is probably a split candidate. ETN last split 2-for-1 back in 1993.

  Ray Cummins   11/19/20,  2:23:49 PM
Spreads/Combos -- Reader's Write E-mail Replies

Concerning the large Open Interest in the RDWR (DEC-$20 put) option series; that was a "misquote" by the option exchange. However, I have often experienced similar situations and obviously, institutions have lots of leverage when it comes to options expiration and maintaining the price of the underlying in the short-term. In many cases, they are buyers of puts to support their bullish stock holdings, however there are also many funds (and corporations) that sell uncovered puts during favorable market conditions. Also, with regard to large-volume trades, it's usually very difficult to determine what the actual position was, without knowing who crossed the trade. At the same time, I wouldn't avoid a trade just because there was large open interest due to a block position -- "smart money" players are sometimes less savvy (or simply have different goals) than adept retail participants.

  Linda Piazza   11/19/20,  2:21:27 PM
COMPX 1900 and Dow 9700 are being tested now. Our OEX exit was set to take us out if sell programs didn't hit as those levels were tested. If sell programs don't hit soon, we'll soon be out of our OEX position.

  Jim Brown   11/19/20,  2:19:02 PM
According to a flash news report they have agreed on $3 million bond for Michael Jackson. He will surrender and be booked and released on the bond. He may have trouble coming up with the money. He is currently being sued by about a dozen banks for tens of millions in loans in default. His songs have not been selling well and while he has millions of dollars in titles in his library they have been pledged as security multiple times.

  Ray Cummins   11/19/20,  2:17:02 PM
Spreads/Combos -- Reader's Write E-mail Replies

Hi Ray, Love your naked option picks so much I have changed my online nickname to The Naked Strangler. One question on this week's pick in Radware (NASDAQ:RDWR). I noticed that the OTM open interest for the $20 strike is over 25500 contracts while all the rest of the strikes are less than 200. Being that there is most likely an institutional investor who bought/sold to initiate the huge open interest, is it more or less likely that the stock will trade below 20. Do they know something that us mere mortals do not?

I once heard of the "maximum pain" strike price that says that because of the huge open interest, the institutions won't let it get exercised. I am most interested if you can discuss this in an upcoming article and specifically, how you think it would effect your picks...Thank you!

Reply From Andrew Aronson - Option Principle at Man Financial:

First, I like the fact that you have noticed this big spike in open interest. You are right when thinking that some stocks seem to be attracted or repelled away from certain strike prices at expiration. What we do not know if this was a recommended trade, whether one retail investor or large institution has initiated this position. In addition, this may be initiated as a spread or as a covered put, or even a naked put. A large open interest is good to keep an eye on, however because we do not know the true position that was taken, it is difficult to predict the stock will fall below the $20 level (based on any institutional activity). The more open interest in a position, the better the liquidity in the options. This will result in lower spreads and better fills.

I would never avoid a play that I had researched because of a very large open interest -- if anything, I would be more likely to initiate the play. The main point is to have a game plan for all your trades and stick to that game plan. Andrew Aronson

  Linda Piazza   11/19/20,  2:12:09 PM
I'm laughing, Jane. I wondered what great wise statement I had made at 9:47. My wisest statement, though, was at 13:14 when I advised conservative traders to exit the play if the OEX did not soon drop below 514. That didn't happen, and now I'm afraid that we're going to get stopped out about $0.50 ahead of the next downturn.

  Jane Fox   11/19/20,  2:09:50 PM
I would like everyone to read Linda's comment in the Option Monitor at 9:47. She called it.

  James Brown   11/19/20,  2:08:00 PM
UBS raised their price target on Best Buy Co (BBY) from $62 to $70. The stock might be worth another look if it bounces from the $55 level.

  Jeff Bailey   11/19/20,  2:07:52 PM
QQQ intra-day update on 5-minute bar chart. Short-term bulls were triggered long at $34.24, next test is for further strength above $34.27. Did see some volume (not a lot) on move to intra-day high, so that's bettern than no volume seen earlier. Link

  Linda Piazza   11/19/20,  2:04:29 PM
I keep struggling with whether we ought to close this trade or not. This rise is taking the shape of a rising wedge--a bearish pattern type--on the 30-minute chart, but the problem is that the apex of that wedge will not be reached until around 520, far after we're stopped out of this play. I don't think the OEX will reach that high, but I am afraid it will reach just beyond our stop before it turns around. The 30-minute and 60-minute 100/130-pma's lie near 518 and should stop the OEX ahead of 520. The OEX struggles with the overhead resistance and will soon face the 50-dma, but I just don't like the way this play is behaving. I'd hoped to see another test of the 50-dma occur this morning, not this afternoon.

  Linda Piazza   11/19/20,  1:51:37 PM
I really want to see the OEX below 515 again before I even begin to feel comfortable. There's support near 515.10-515.15, and I want to see that support broken, and then the 514.40-514.70 support broken again.

  James Brown   11/19/20,  1:48:31 PM
Mid afternoon Sector Winners:

INX Internet index: +1.61%
BTK biotech index: +1.29%
UTY utility index: +1.27%
SOX semiconductors: +1.19%

Biggest Sector Losers:

XAL airlines index: -2.60%
DDX disk drives: -1.72%
XAU gold & silver: -1.27%

  Keene Little   11/19/20,  1:44:40 PM
Want an EW perspective on gold and XAU? (See Johathan's 13:28 post). There may be one last poke higher by a minimal amount to finish the move up. I see a significant pullback from there. Then we get into the debate as to whether we've seen THE high in gold for a long time. EW pattern says maybe we see $300 in a year's time. Fundamentals say that's crazy. But if gold is going to pull back and equities are expected to get hurt here shortly, XAU will be trouble.

  Jonathan Levinson   11/19/20,  1:41:32 PM
An important archaeological discovery unearths proof that the Fed represents VERY old money... Link

  Jonathan Levinson   11/19/20,  1:37:54 PM
Another 1.02 put to call reading.

  James Brown   11/19/20,  1:33:02 PM
UTStarcom Inc (UTSI) is starting to look like bullish play candidate. The stock has broken above its simple 50-dma and is about to breakout over the $35.00-35.10 level. The recent lows near $31 mark the 50% retracement of the March to July-August run and now we're seeing a bounce. There is some resistance at $37.50.

  Jonathan Levinson   11/19/20,  1:28:51 PM
HI, Enjoy your posts on option monitor. Always like someone with a sense of humor. I own some April calls on GG and have a profit. Today there was some talking head on TV saying that gold has had it for now until the end of the year and he would not comment beyond that. What is your take on gold beyond this week (ha ha)??? That 400 is certainly proving a hard one to overcome. Also, monitor folks usually comment on the HUI but I follow the XAU. What's the difference and why do you use HUI? Thanks for your time. Sharlene

Flattery will get you everywhere.

I've become a fan of profit-taking this year. As for my outlook, I'm very bullish overall, but as I've discussed ad nauseum in the futures wraps lately, gold is in a heavy resistance zone and looks almost as extended as every other chart (except for treasuries). Now, even within the current uptrend, a pullback to 16 would be expected. You could take profits near here and buy back lower down (risking a miss in case it goes vertical here), or simply place a stop below 16.

The HUI is the Amex goldbugs index, which is comprised of unhedged gold miners, whereas the XAU is heavily exposed to hedgers such as ABX and AU. These are companies that have short positions on gold, and tend to underperform unhedged miners in a rising gold market.

  Linda Piazza   11/19/20,  1:14:51 PM
Swing Trade Signals
Okay, so let's step back and get an overview here. The OEX daily chart shows RSI kicking back up again (bad for us in bearish positions). However, the daily candle spiked up toward the 50-dma and then fell back, leaving an upper shadow. That's not so bad. The daily MACD lines separate and turn down toward the signal line, with histogram values already negative. That's not so bad, either. The 21(3)3 stochastics cycle down. That's good for our bearish position.

Shorter term, matters also look mixed. Sixty-minute MACD turns up, but from below signal. The OEX has been following the 60-minute 21-pma down, but with small-bodied candles, and I just have this sneaking suspicion that it's going to pop back above that MA. If so, then we're almost certainly due for another test of the 50-dma and fairly certainly due for a test of 517, and maybe even a pop up to 518.50, which is going to stop us out of our position.

I had hoped that test would come this morning, and we could get it out of our way. If it comes, it's going to come this afternoon and we will likely be faced with a position that's under water at the end of the day, trying to decide whether to hold over or not. For all those reasons, the most conservative of you might consider closing your positions unless the OEX soon drops below 514.

  Jonathan Levinson   11/19/20,  1:14:22 PM
The put to call ratio is up to 1.02. Careful, bears.

  Jeff Bailey   11/19/20,  1:12:23 PM
QQQ traders have you looked at 60-minute chart of QQQ in relation to GS comments? Might want to do that. Even though GS not part of QQQ, similar supply/demand action right now. Note the November 27th correlation.

I feel better now with bullish profile for QQQ on move higher, and not the entry for pullback.

  James Brown   11/19/20,  1:12:07 PM
A Smith Barney analyst had positive things to say about the online advertising business. They expect online ad spending could jump 20 percent in 2004 and continue strongly into 2005. Smith Barney upgraded DoubleClick (DCLK) from "sell" to "buy". CNET and YHOO also jumped higher on the news.

  Jeff Bailey   11/19/20,  1:02:22 PM
Goldman Sachs (GS) $93.52 -0.22% ... 60-minute chart with "stacked retracement" technique. Link

A trader that "counts levels" and develops a pattern of trade, will see that when GS traded above two levels $87.91 and $88.91, it never came back below two levels until early November, when based on the retracement shown, GS would have traded above $96.38 to come back below $94.77 where a bull may have been stopped out. GS did go on to trade a new high at $97.39 and once again, a bull shold too soon, but took a profit.

Now we see a pattern that is just the inverse, after trading below $95.38 (two levels from $97.39) GS has not been able to trade back above two levels. With this observation, DIVERGENCE from pattern would have a stop placed two levels above the VIOLATED $94.15 level, or $95.38. Very systematic, almost like a computer would be instructed to do.

  Jonathan Levinson   11/19/20,  12:55:18 PM
What is behind the Treasury rally?

You mean yield rally/treasury decline. I assume you don't want me to say that it's just buy-bots running amuck, which is what they're doing in equities. The equity strength is obviously a factor, but in truth I have no way of knowing. WIth gold and bonds falling against equity strength, it appears that traders are relinquinshing their defensive posture. Trouble is, if equities don't keep advancing, you can expect the tide to turn.

  Linda Piazza   11/19/20,  12:45:21 PM
Advancers remain ahead of decliners, which is making any downside headway hard going. The adv:dec ratios as of a few minutes ago were 18:13 for the NYSE and 16:14 for the Nasdaq. Up volume was bigger than down volume on both exchanges.

  Jeff Bailey   11/19/20,  12:40:06 PM
Goldman Sachs (GS) $93.51 -0.23% ... here's updated 60-minute chart from Friday's swing-trade bearish profile. Not much going on, but interesting how stock seems to trade our levels from the head/should top pattern. Link

I looked for any puts a bear short the stock could sell while they wait, but strikes are $90 and $95. Doesn't make sense to sell at November $95, as that doesn't get anything, and the $90's are $0.10 if lucky.

When short a stock and near an trade objective, will sometimes look to sell the put, and have the premium then equalling the downside objective.

It has been my observation over the years that ascending or descending necklines on head/shoulder patterns will take longer to achieve the objective than a horizontal neckline. I think this has to do with a greater unleashing of pressure in the pattern, perhaps not unlike a triple-top or triple-bottom sell signal on a PnF chart.

An ascending neckline still has some stock profitable on the break, and there isn't the immediate tendancy for the stock to get flushed. A horizontal neckline seems to have a greater amount of stock at a loss, that tends to flush the trade lower, when all want to get out in quicker fashion.

  Jane Fox   11/19/20,  12:29:59 PM
Dateline CNN Authorities issue arrest warrant for entertainer Michael Jackson on one count of child molestation, police say.

  Linda Piazza   11/19/20,  12:25:21 PM
One note that's perhaps important: This bounce popped the OEX back above the descending trendline off the 9:40 high from Friday. (I think I gave a different earlier, looking at the wrong candle.) The OEX is coming back to test that trendline again, now near 514.40.

  James Brown   11/19/20,  12:22:00 PM
Bank of America is really going out of its way to start AAPL, DELL, IBM and SUNW with a "neutral" rating today.

  Linda Piazza   11/19/20,  12:21:46 PM
When a potentially bearish formation is not confirmed, or else is confirmed and then there's an immediate move back above the confirmation level, the relief (to bulls) is often so great that the bounce is immediate. That's what happened with the downside break of the OEX H&S-ish formation. The immediate pop back above the neckline engendered this bounce. There's also the possibility that I had drawn my neckline a little higher than the actual neckline so that there was no violation but instead this bounce came as the neckline was approached. Next resistance gathers just over 515.

  Linda Piazza   11/19/20,  12:12:07 PM
And there is the retest of the OEX H&S neckline, before I could even get the post uploaded.

  Jeff Bailey   11/19/20,  12:11:35 PM
QQQ $34.05 +0.52% .... Cancel day trade long entry for $33.97 at this point, but keep bullish long entry for $34.24.

That lack of volume on recent rise to $34.22 has me thinking "if there's going to be any kind of move to the upside today, it is going to have to be triggered from a technical upside move."

I would rather sit on sideline for bullish trade at this point intra-day for QQQ bullish trade, than try and forecast the pullback low.

  Linda Piazza   11/19/20,  12:11:35 PM
The OEX broke through the neckline of its H&S-ish formation. If my calculations are correct, the minimal downside target would be near 513, but sometimes the OEX comes back up to test these necklines, so we should expect that, too.

  James Brown   11/19/20,  12:09:07 PM
It's not doing much to the stock price but Oppenheimer cut Micron Technology (MU) to a sell.

  Jeff Bailey   11/19/20,  12:07:21 PM
CNBC mentioning lack of order flow. They aren't kidding based on that QQQ 12:04:19 chart with volume turned on.

  Linda Piazza   11/19/20,  12:06:42 PM
I hadn't seen Jane's notation about the H&S on the ES until after my post about the OEX, but it looks as if we were thinking along the same lines.

  Linda Piazza   11/19/20,  12:04:46 PM
This looks a bit like a H&S-ish (not classic) formation on the three-minute OEX chart, but if it is, the current bounce should stop short of 515. Link

  Jeff Bailey   11/19/20,  12:04:19 PM
QQQ updated 5-minute bar chart. This is exciting! Link

  James Brown   11/19/20,  11:59:14 AM
Yesterday Symantec (SYMC) was hammered after Computer Associates (CA) said they planned to launch a new rival anti-virus software to compete with SYMC. The selling continues today despite an upgrade by UBS to a "buy". Shares gapped higher this morning but failed near the 62.50 level. The stock then turned lower to trade under the round-number support-resistance level at $60. Currently the stock is up off its lows for the session but bearish traders may want to keep an eye on it to see if it fails again.

  Jonathan Levinson   11/19/20,  11:49:15 AM
QQQ traders wondering about opex pinning for Friday's likely price should take a look at the option string for the Qubes- as noted by Jeff, 34-35 is the likely range.

  Linda Piazza   11/19/20,  11:34:27 AM
There goes that OEX 514.70 support again, propping up the OEX. If I get my bearish wishes, I'm now looking for the OEX to find resistance below 515.50 and then eventually round over beneath 514.70.

  Linda Piazza   11/19/20,  11:29:28 AM
That's better. The OEX has come down to test the trendline it broke through earlier today. Let's see if that trendline holds, though, as we're not out of the woods yet and I continue to halfway expect that test of 516.25-517.25. I think we may have to endure some waiting and some tension in this bearish play, but note how the declines are quick when they occur?

  Jonathan Levinson   11/19/20,  11:24:21 AM
Dec gold is down 2.90 at 394.70, silver -.045, with HUI -3.72 at 231.50. The SUX, I mean SOX, is up 7.7 at 505.12. This is the reverse of yesterday's trend, and if it plays out, we will see a strong finish for the indices and weakness for gold. Ten year notes are down 2.3 bps, threatening to reverse yesterday's gain.

  Linda Piazza   11/19/20,  11:20:33 AM
Here comes the push I've been expecting, but was afraid would not happen. After yesterday's experience, I knew a drop could be quick if it occurred, so decided to risk an entry without waiting any longer for that push. Sigh.

Here's something I just noticed and which might have stayed my hand a while if I'd noticed it sooner. The OEX kept finding support over the last hour at 514.70. That's near the 50% retracement of the flagpole decline from yesterday's 13:18 five-minute high. That gives today's trading a more bullish cast, although it's a short-term bullishness only that's likely to be blunted as the OEX tests stronger overhead resistance. I still expect a rollover, but would have liked to have waited to have entered nearer 516.25-517.25, giving us that stop up at 519. That also means that a drop below 514.70 will have significance and could get things moving more quickly to the downside.

  Linda Piazza   11/19/20,  11:09:29 AM
I continue to believe it's possible that the OEX could rise up to test 516.25, and possibly even 517. If short-covering ensues, 518.60 could be in store, and I even toyed around with the idea of a 519 stop on the bearish play. The current five-minute pattern looks an awful lot like a bull flag pulling back just ahead of next resistance to me, but I didn't want to risk missing the play if the bulls decided to pull back and the bottom fell out, either.

  Jeff Bailey   11/19/20,  11:06:59 AM
QQQ $34.13 +0.76% .... Bullish QQQ trade adjustment from 10:34:28 .... bullish QQQ on higher trade at $34.24 or pullback $33.97, stop $33.65 (to begin) short-term target $34.57.

  Linda Piazza   11/19/20,  11:03:38 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We are in a bearish OEX play from 514.98, with a stop at 517.50 and a first downside target of 517.50.

As I type, the OEX continues to test that descending trendline, and it may even break it to test the 50-dma, but I had to weigh the potential that we would have to weather that test against the possibility of a sudden drop. It was a tough decision, because I do see a possibility of that test, possibly to endure through several hours.

  Jeff Bailey   11/19/20,  11:00:09 AM
QQQ $34.12 +0.7% .... OK... QQQ just off session high of $34.23, where we didn't quite see a 5-minute close above BLUE #3 or DAILY Pivot. A short-term trader most likely now thinking... "go long at $34.24, but until $34.24 traded, stick with pullback bullish entry of $33.97."

  Linda Piazza   11/19/20,  10:59:46 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
The OEX can't seem to push over that trendline. Enter a bearish OEX play here, but only if you can weather (financially, emotionally) an hours-long push up toward the 50-dma, because that still might happen. First target is 511.50, with a possible second downside target of 509. Stop at 517.50.

  Jeff Bailey   11/19/20,  10:54:22 AM
Naked puts ... Jeff: I took both of your naked put profiles in MSFT and NTES this week ahead of November expiration, and so far so good. However, with Asian markets getting hit lower in recent sessions, I'm a little more concerned with holding naked put on NTES and not as comfortable holding the stock if assigned as I would be with MSFT. Could you suggest a stop on NTES for a naked put holder?

Yes... a stop intra-day would be $40.00, where you simply cut the trade. It would be difficult to tell at this point what the premium might be, but I too would be more jittery with NTES than MSFT.

Another strategy, instead of a stop, would be this.....

Since the selling of a naked puts OBLIGATES you to buy the stock at $40, less the premium received ($0.50 at profile) then a strategy of simply shorting the stock on a break below $40.00 could be implemented. Now you're SHORT the stock at $40.00, and the naked put has you OBLIGATED to buy the stock at $40.00 on or before Friday's expiration. What a trader has done here is now shifted bullish risk to bearish risk, where the risk is the stock moving higher, where break-even would be NTES at $40.50 or higher.

  Linda Piazza   11/19/20,  10:44:16 AM
Yesterday, my patience was not rewarded, as the OEX did not have a final push toward resistance as I had expected to see and I missed the entry I had planned to take. Today, my patience may not be rewarded, either, but I think we need to see a little higher print before we consider a bearish entry. The OEX did recoil from its first touch of that descending trendline off Friday's high, but that's a pretty steep trendline and I'm not sure whether I expect it to hold. I did expect at least a close approach to the 50-dma, just above 516. Maybe this was close enough to qualify as a close approach? I may be missing the best entry of the day again.

  Jonathan Levinson   11/19/20,  10:42:35 AM
What an amazing stick save on GE... I can't believe it's back to 29.50 within 2 days.

  Jeff Bailey   11/19/20,  10:40:47 AM
S&P 100 Index (OEX.X) 514.94 +0.53% .... OEX right at today's correlative and tentative resistance found in last night's Index Trader Wrap pivot matrix at DAILY Pivot and MONTHLY Pivot.

I think this may tie in very well for a QQQ short-term trader with this morning's comments regarding QQQ daily pivot of $34.22.

Traders should begin to sense/observe an early morning range with high/low boundaries, where if broken, should dictate rest of today's trade.

  Jeff Bailey   11/19/20,  10:34:28 AM
QQQ $34.13 +0.72% .... bullish profile for entry at $33.97, stop $33.65, and target $34.57.

Never sure of expiration peg levels into Friday, but round numbers of $34 and $35 might be in play.

Those traders that may have taken yesterday's bearish trade in an SPX put from 1,040 might like a little short-term synthetic hedge with a QQQ long too.

  Linda Piazza   11/19/20,  10:33:37 AM
Closest OEX support lies just above 514 up to 514.44. Sure would like to see the OEX work itself a little closer to 517 before rolling down.

  Linda Piazza   11/19/20,  10:31:15 AM
The OEX now tests the descending trendline formed off Friday's high and the 30-minute 21-pma. Above this trendline lies the important 50-dma, at 516.21.

  Jeff Bailey   11/19/20,  10:28:05 AM
QQQ $34.13 +0.69% .... Hey! Look at today's RED #4 at $33.76 from 5-MRT (see 09:58:54) . Thats pretty close to the conventional retracement of $33.76 just shown on the Daily interval bar chart (see 10:31:55) .

  Jonathan Levinson   11/19/20,  10:26:24 AM
GE is printing a session high here, up 3.66%.

  Linda Piazza   11/19/20,  10:24:32 AM
As of a few minutes ago, volume patterns weren't giving many clues about final direction today. Adv:dec ratios were 13:15 for the NYSE and 13:13 for the Nasdaq. Up and down volume were roughly equal on the NYSE and up volume led on the Nasdaq. Total volume was 172 million on the NYSE and 337 million on the Nasdaq. New highs totaled 103 while new lows totaled 22, with those figures vastly different than those we've seen in the last months.

  Jeff Bailey   11/19/20,  10:21:55 AM
QQQ $34.07 .... here's a daily interval bar chart, with some recognition of historical trade for future test. Here I've place a conventional retracement on QQQ. Link

This would give swing trader the impression that QQQ due for bounce back higher from $33.76 support, where test of 50-day SMA $34.56 provides some resistance. Yesterday's break of trend an alert to pending longer-term weakness, which would only be confirmed by a break below $33.76.

  Linda Piazza   11/19/20,  10:16:12 AM
The OEX will soon face this trendline: Link

  Linda Piazza   11/19/20,  10:07:53 AM
That inverse H&S on the five-minute chart is now confirmed. That's a first sign of strength, as a similar one yesterday was not confirmed. Now we can watch to see if the upside target is met or exceeded, another sign of strength, or not met, a sign of continuing weakness. I think we're just standing aside for a little while, though, not taking a position either side, as I expect a rollover but am not sure from what level or on what day.

  Jonathan Levinson   11/19/20,  10:06:33 AM
Opening put to call ratio .77, equity pcr .64 and index 1.19, neutral readings. The VXO is currently 19.90.

  Jonathan Levinson   11/19/20,  10:04:52 AM
Dec gold is down 2.10 at 395.50, HUI -2.23 at 232.99, XAU -1.08 at 103.56. Bonds are up slightly, with equities pushing to new session highs.

  Jeff Bailey   11/19/20,  10:03:22 AM
Dow Transports (TRAN) 2,851.77 -0.52% .... started out weak. Now approaching lower end of our upward trending regressiion channel and 50-day SMA of 2,818.79. Should TRAN break much below the 2,800 level, then next lower level of support would be our 61.8% retracement of 2,693.29.

See 11/06/03 Index Trader Wrap for chart of TRAN and where retracement was taken from. Link

  Linda Piazza   11/19/20,  10:02:37 AM
There's the possibility that the OEX is again forming an inverse H&S on the five-minute chart with a slanting neckline now crossing at about 514. If so, it should probably take a few more five-minute candles to form the cap of the shoulder before it rounds all the way up and pushes through the neckline. (Doesn't look as if it wants to wait through a few more five-minute bars, though.) Again, if confirmed, it has an upside target just shy of 516, a now-familiar number.

  Jeff Bailey   11/19/20,  9:58:54 AM
QQQ $33.90 +0.08% .... did find resistance back at WKLY S2 as expected. Now backfilling morning gap higher at RED #2. This is perhaps the early test for any strength here. If QQQ can get a bounce from this support, and break above $34.22, then would begin to think a bounce underway. (see 09:39:22 and 09:52:10)

  Jonathan Levinson   11/19/20,  9:56:19 AM
The Fed has announced a 3B overnight repo, which is a net 1.75B drain against the 4.75B expiring.

  Jeff Bailey   11/19/20,  9:55:34 AM
S&P Banks Index (BIX.X) 325.70 +0.05% ... fractional gains, but steady. Has me thinking flat to range-bound trade for major indices, with bias to downside. BIX.X WKLY S2 at 326.35. Session high on BIX.X has been 326.04.

  Jeff Bailey   11/19/20,  9:53:30 AM
Russell-2000 Index (RUT.X) 520.58 -0.21% ... moving below yesterday's low, so I'm not thinking major market rebound underway.

  Jeff Bailey   11/19/20,  9:52:10 AM
QQQ ... here is intra-day chart of QQQ. With QQQ below WEEKLY S2, would need to see trade above DAILY Pivot $34.22 to beging thinking bounce potential. Link

  Linda Piazza   11/19/20,  9:47:03 AM
It sounds as if we're all in agreement about what might happen this morning. That's dangerous for us all to be lined up on the same side of the boat, right? Probably means the great humiliator will soon get to work.

  Linda Piazza   11/19/20,  9:45:45 AM
It didn't seem to me yesterday that the OEX selling was quite finished, as I kept seeing some stronger support zones down around 509-511.75 that I thought probably ought to be tested before we saw a decent climb. What I wondered about this morning was whether we might see a brief climb and then a rollover toward that stronger support, but then another climb toward 518. Like Jim on the futures side, I'm hesitant to enter a bearish trade on a rollover if it happens from right here, but also hesitant to go long right here, too.

  Linda Piazza   11/19/20,  9:42:07 AM
Today's first five-minute candle spanned a significant range, but I'm not going to switch to a 3MRT because I notice some correlations with the retracement levels predicted by the 5MRT and some important levels seen on the chart. For example, the bullish #2 on a 5MRT system comes in at 514.45, with the first OEX push this morning stopping just short of that level, confirming its significance.

  Jeff Bailey   11/19/20,  9:39:22 AM
QQQ $34.08 +0.59% .... with 5-MRT set to upside, would look for early resistance intra-day from WEEKLY S2 $34.13 to BLUE #2 of $34.15.

  Linda Piazza   11/19/20,  9:34:11 AM
The OEX first five-minute range contained a high of 513.33 and a low of 512.22, with the midpoint of that range being at 512.78. The OEX currently trades above that midpoint, showing strength in the earliest trading. This is a helpful guide only for the earliest trading, before we gain more information that will help guide us the rest of the day, but so far it supports the thesis that the indices might test overhead resistance this morning.

  Jane Fox   11/19/20,  9:33:34 AM
Linda, I agree with you (9:03 post) and Keene (9:15 futures monitor post) on a sell the rally day. There is just too much resistance above us.

  Jeff Bailey   11/19/20,  9:17:46 AM
09:00 Update posted at this Link

  Linda Piazza   11/19/20,  9:03:11 AM
Until proven otherwise, we're in a sell-the-rally mode rather than a buy-the-dip one. Lately, we've begun to see some potentially bullish formations fail to confirm, all the way from a potential continuation inverse H&S on the daily OEX chart to a potential bottoming inverse H&S on the five-minute chart late yesterday. That change, coupled with the OEX position below the 60-minute 100/130-pma's and in the bottom half of the ascending regression channel, confirms the sell-the-rally mode. Some or all of those conditions would have to change for the mode to be changed. So, with futures up slightly this morning, we have to decide whether we're going to consider a countertrend trade. I don't think so. The Nikkei and European markets have been weak, with the Nikkei suffering another big loss last night. Yesterday, we saw OEX support near 516 hold through several hours, with that support now likely to be next resistance. That impression is reinforced by the fact that a descending trendline drawn off Friday's high capped advances yesterday, with three touches of that trendline, and now crosses near 516. We've recognized 516.50-517.25 or so as an important S/R zone for a while, with that broken support now likely being strong resistance. If the OEX opens higher, that just doesn't give us enough running room before this likely resistance is hit, especially as I now see some possible resistance gathering even lower, near 515. We could get surprised and see a push all the way up to 518-519, particularly as this is opex week. A push above 519 would have us considering a bullish play again as it would confirm a double bottom on the 60-minute chart. If the OEX opens higher and then immediately rolls over, I also don't see a lot of downside before next strong support is hit, so I'm leery of jumping in on the downside unless the OEX pops higher and gives us some leeway. After I missed yesterday's slide, we're in waiting mode today.

  Jonathan Levinson   11/19/20,  8:33:55 AM

  Jonathan Levinson   11/19/20,  8:32:11 AM
Housing starts 1.96M, permits 1.97M, both expected at 1.85M. Futures are green, just below session lows, with ten year notes still higher by .7 bps.

  Jonathan Levinson   11/19/20,  8:31:11 AM
Excellent question:

I will keep this short as possible. I use prior ranges subtracted from the range break and come up w/ targets for various indices. The NASDAQ high to low of the most recent consolidation is 1992-1923= 69 points. 1923-69= 1854 which is the target.

Now here is where is gets interesting and correlations occur. The 38% retracement of the Aug to Nov move is 1856. The 4% band ( in Cyan) around my 13 day moving average is ALSO 1856.....

I look for a pause at the very least here, possibly a strong bounce that can be shorted.... We tend to overshoot targets in the NASDAQ and more support lies at the 1842 level....

My answer to this question is the article that I never have time to write. Briefly, though, I agree with the analysis and would add this: Technical analysis is used to guide trading. The trick to good trading is good decisionmaking, and T.A. provides times and prices at which to make decisions. Fib levels work, even if you're not a "religious" person, because everyone watches them, and it's at those levels that we make our decisions. Your targets are well-chosen, provided that you use them in this flexible way. The past doesn't need to guide the future (this is the Las Vegas fallacy), but by forcing you to keep an open mind as to future price targets in relation to the past, these retracements are a very useful trading tool.

  Jonathan Levinson   11/19/20,  8:23:39 AM
The Fed has 4.75B in overnight repos exipiring today- awaiting the 10AM announcement to see whether the Fed will add or tighten again today.

  Linda Piazza   11/19/20,  8:22:55 AM
(Note: My computer apparently shut down before the upload of my first post this morning was completed. This post was completed just before 7:00 ET, so the European market quotes were from that time period. The performance of those markets has since improved, although all still trade in the red.)

Good morning. The Nikkei never came close to positive values in Wednesday’s trading. It opened down and slid lower all day, closing just off its low of the day. The Nikkei lost 282.45 points or 2.85%, at 9614.60. Technology, especially chip-related stocks, banks, and automakers declined, but the declines were broad based enough to take most sectors lower. Only the defensive stocks or sectors such as pharmaceuticals managed to eke out gains. Worries over the dollar’s weakness, the impact of new U.S. import quotas on Chinese textiles, and terrorism added to the weakness produced by weak U.S. markets. The dollar had hit a new low against the euro, although it stabilized against the yen amid reports that the Japanese government would intervene. Gold briefly popped above $400/oz. Shots were fired at the Japanese embassy in Baghdad, although reports said that no one was hurt.

Most other Asian bourses traded lower, many significantly lower. The Taiwan Weighted lost 1.25% and South Korea’s Kospi lost 3.65%. Singapore’s Straits Times fell 1.82%. Hong Kong’s Hang Seng declined 1.28%, with Hong Kong’s banks not able to build on yesterday’s gains due to the policy change that will soon allow them to conduct personal yuan services. China’s Shanghai Composite was one of the region’s gainers, adding 1.69%.

Most European bourses currently trade lower, too, with CNBC Europe discussions centering around whether the recent declines there and in the U.S. are just pullbacks before the predicted Santa Claus rally or something worse. Currency worries hit these markets particularly hard with the dollar having hit an all-time low against the euro in the overnight market. That sent European exporters lower, but as was true in Asia, losses were broad based. A Morgan Stanley downgrade of the luxury sector, dour statements by Air France officials, an earnings miss by Swiss insurer Zurich Financial Services, and other developments weighed on the markets.

Currently, the FTSE 100 has lost 24.90 points or 0.57%, to trade at 4329.80. The CAC 40 declined 39.31 points or 1.17%, to 3313.61. The DAX had fallen 51.95 points or 1.42%, to 3614.33. The FTSE has moved off its low, but the CAC 40 and DAX still trade near the day’s low.

  Jeff Bailey   11/18/20,  11:10:25 PM
December Gold futures (gc03z) 398.80 +0.3% .... off their session highs of $400.70.

  Jeff Bailey   11/18/20,  11:09:06 PM
Nikkei-225 ($NIKK) 9,649.51 -2.5% Link ... continues Wednesday's slide. Trade at 9,650 now adds another O to Tuesday's trade on the PnF chart.

  OI Technical Staff   11/18/20,  8:55:45 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.


Market Monitor Archives