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  Jeff Bailey   12/12/20,  7:31:27 PM
Pivot Matrix for next week at this Link

Making note of QQQ WEEKLY R1 ($35.76) as it relates to Thursday's bullish swing trade target of $35.75 for the QQQ.

Begin to observe from the MATRIX, for the QQQ to have a shot at $35.76, then will most likely need the Dow Industrials (leader) to continue to trade strong above MONTHLY R2/DAILY R1 (10,070-10,075) zone on Monday. Otherwise, QQQ tentative support (dashed green) at DAILY S1/WEEKLY PIVOT needs to hold. If broken to downside, then next stop is DAILY S2 of $34.75, which would be 10-cents below entry. For most part, I'm not interested in holding the QQQ back to unchanged. If its going to ramp up, Monday is as good a day as any as MACD begins to turn higher from zero, but still BELOW its Signal. Stochastics have now recovered just more than 1/2 its way up to "overbought" area.

Here's QQQ chart with new WEEKLY Pivot levels and retracement. Link

I've marked the 10/24/03 relative low at 11/07/03 52-week high. QQQ has traded in this $2.50 range for just over a month, where the other major indices have been able to trade to the upside. With NASDAQ Comp. bullish % Link reversing lower this week to "bear alert," and NASDAQ-100 Bullish % ($BPNDX) Link "bear confirmed," QQQ bull more inclined to sell bullish targets, and raise stops to break-even .

  Jeff Bailey   12/12/20,  4:43:20 PM
Closing Internals at this Link

  Jeff Bailey   12/12/20,  4:26:42 PM
QQQ $35.24 -0.16 ... Bad tick lower at $35.08 (04:00 PM EST) 20-minutes ago. What is it about this $35.08 level?

Still remembering that QQQ bullish day trade bullish (12/09/03 at 2:12:15)) from just below $35.00, where the QQQ started to rebound, and it couldn't have been seconds after I said at 02:17:07 Link "looking for strength intra-day above $35.08" than the QQQ got hit hard with selling at that level.

Taking notes come option expiration.

  Jeff Bailey   12/12/20,  4:06:29 PM
Stock traders.... you'll want to keep today's 01:00 PM EST update and list of stocks going into the NASDAQ-100 at the ready about a week before (December 15-19) the December 22nd rebalancing for the QQQ.

Make special not of yesterday's closes as a benchmark.

Don't necessarily assume that all of those stocks being taken out of the NASDAQ-100 are "sell candidates" and begin monitoring CIEN Link for support at $5.50, where the stock gave a triple-top buy signal.

ICOS Corp. (ICOS) Link for support at bullish trend (last year, NASDAQ-100 added a bunch of biotech, probably too much).

  Linda Piazza   12/12/20,  4:00:36 PM
That's one of my favorites, too, Keene. (See Keene's 15:51 post.)

Today's OEX candle bounced from the 527-529 zone that had been resistance. Daily oscillators turned up. The candle body was big enough that it probably avoided a categorization as a spinning-top. One fly in the ointment is that the OEX has been following its upper BB up for some time now, and it probably needs to retrace down toward the 21-dma again and regroup some time soon.

  Ray Cummins   12/12/20,  3:50:19 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

Despite the upside activity, a number of issues continue to show signs of neutral to bearish trends in the near-term. These include: Career Education (NASDAQ:CECO), Krispy-Kreme (NYSE:KKD), Mohawk (NYSE:MHK), Sandisk (NASDAQ:SNDK), Sears (NYSE:S) and Take-Two Interactive (NASDQ:TTWO) Software. Look for more new plays in week-end edition of the OIN and please send your Spreads/Combos questions to ray@OptionInvestor.com

  Jim Brown   12/12/20,  3:43:09 PM
What more could the market managers (makers, excuse me) ask for than going out over 10,000, at the high of the day and the year on the weekend before the Santa rally is due to begin?

This ramp job needs to succeed because there is another saying that makes the rounds about now.

If Santa Claus should fail to call
Bears may come to Broad and Wall.

  Ray Cummins   12/12/20,  3:42:35 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity

As the week comes to a close with a bullish bias, it's worth noting some of the stronger issues in the portfolio. Among these stocks are: Forest Labs (NYSE:FRX), Harmon Int'l (NYSE:HAR), Hovnanian (NYSE:HOV), ImClone (NASDAQ:IMCL), Newmont Gold (NYSE:NEM), Noble (NYSE:NE), NTL Inc. (NASDAQ:NTLI), QualComm (NASDAQ:QCOM), Rambus (NASDAQ:RMBS), Schnitzer Steel (NYSE:SCHN), Smith International (NYSE:SII), Valero Energy (NYSE:VLO) and UtStarcom (NASDAQ:UTSI).

  Linda Piazza   12/12/20,  3:37:51 PM
Isn't that a lovely sentiment our state chose? (See Jonathan's 15:29 post.) Certainly fits the mind-set many times.

  Jane Fox   12/12/20,  3:37:30 PM
As I was flipping through some daily charts I came across the $NHB.X and thought HMMM I've seen this chart somewhere. Remember earlier I showed a chart of the $RUT.X and how it was deteriorating? Here is the RUT and the NHB. Look familiar? Link

  Linda Piazza   12/12/20,  3:34:12 PM
What would we be doing with the hypothetical bear call OEX 535/540 credit spread this afternoon, if it had been an actual position? Again, probably nothing. It's further under water this afternoon as spreads have widened due to the volatility, but it's still under the 535.95 level at which we'd start losing money at options expiration, and a couple of days of premium decay will help the position. The OEX has been climbing the upper Bollinger Band since December 1, so should retreat for a day or so at some point in the next week, even if only back to test the 527-528 levels to establish support.

  Linda Piazza   12/12/20,  3:25:25 PM
As has been typical since March, the normally bearish orthodox broadening formation was not resolved with a fall, as is usual for these formations, but instead has broken to the upside. I tell you, they're going to have to rewrite all the TA texts.

  Jeff Bailey   12/12/20,  3:16:51 PM
QQQ ... I'll make a guess at today's close... $35.16. Not that it is worth anything, but if today is PURE HEDGE for rebalancing news, the mid-point of today's range... $35.16.

  Linda Piazza   12/12/20,  3:12:44 PM
Maybe the OEX is going to make a play for that 534/535 range after all. That's what the 30- and 60-minute 1.35% envelopes were suggesting this morning, but it sure didn't look likely. Both the BIX and the SOX leaped over the resistance levels they had been challenging, however, with the BIX now back over both the 30-minute 100- and 130-pma's. The OEX has lacked their cooperation all day until now. The SOX may not have all that much further to go, though, because it will hit its 30-minute 100-pma at 498.49 and its 130-pma at 500.97.

  Jeff Bailey   12/12/20,  3:08:04 PM
03:00 Internals at this Link

  Jim Brown   12/12/20,  3:03:22 PM
2003 Annual Renewal Special

OptionInvestor's TOP 50 Stock Picks for 2004

Reserved yours yet? Click here: Link

  Jeff Bailey   12/12/20,  2:58:31 PM
NASDAQ-100 rebalancing thoughts... ... OK... I'm going to give, what I think is an unbiased analysis of today's QQQ trade.

Yesterday's 2% didn't make sense and probably 1/2 of the move was due to NASDAQ-100 rebalancing, thus the determined selling after the 04:00 strike, when ADBE reported upside earnings and got a rather bullish repsonse.

Today's 0.62% may not make all that much sense considering the SPX is unchanged and Dow Industrials higher. Sure, NDX/QQQ has been the weaker index.

OK... split the difference, make the case for bulls and bears. Take today's high and yesterday's low, develop the range. What's 50% of $34.49 (yesterday's low) and $35.39 (yesterday's high). I come up with $34.94.

If it is true that "hedge" means 50/50, then dividing the range in half (50/50) might mean that today's QQQ/NDX trade is geatly influenced by the hedge trade, to account for rebalance.

I suggest today's NDX/QQQ trade is skewed, or not natural.

I also suggest the INDU/SPX/OEX/RUT.X trade is more natural.

  Linda Piazza   12/12/20,  2:52:13 PM
It's the holiday season for many of us. I was just looking over the OptionInvestor bookstore, seeing if I needed to add any of the offerings to my holiday and birthday wish list. Here's a link, if you've never looked at what's offered: Link You'll find Jeff's beloved Dorsey book on P&F charting and one my favorites by Nison on candlestick charting. A must-have is Options as a Strategic Investment by McMillan. In fact, in the lead-in to my stock choices for 2004, I've suggested that all play participants use that book to familiarize themselves with the strategies I'm suggesting. Clifford Pistolese's book, Using Technical Analysis, was one of the first books I read about technical analysis and one of the most helpful. Hmm. I'll have to read it again and see if he has any explanation for 2003's trading pattern.

  Linda Piazza   12/12/20,  2:35:49 PM
The OEX continues to do battle today with that ascending trendline from 11/03, the one depicted in my 12:02 post. If it makes it above that, it's soon going to face another ascending trendline. This one was begun at the August 4 low. That trendline supported the OEX until late September, when it slipped beneath it for a while, but it's continued to figure in OEX movements since then. That trendline now crosses at about 534.60, the same point that the 30- and 60-minute 1.35% envelopes suggested early this morning as an upside target for today. (They now have moved even higher.) I don't think 534-535 is the most probable scenario, but I can't discount it entirely, either.

  Linda Piazza   12/12/20,  2:19:40 PM
The BIX climbed back above its 30-minute 21-pma, and now is testing the 100/130-pma's. The SOX rises again to rest its 30-minute 21-pma from the underside. It seems as if we've been at this point for days, with each of these important indices testing support, testing resistance, sometimes moving in concert, sometimes at cross purposes.

  Jonathan Levinson   12/12/20,  2:09:31 PM
14:01 ET Nov Budget deficit -$43 bln vs -$52 bln consensus

  Linda Piazza   12/12/20,  2:02:35 PM
The BIX is threatening to fall below its 30-minute 21-pma now.

  Jonathan Levinson   12/12/20,  2:00:56 PM
The US Dollar Index drops to 88.48. Link

  Ray Cummins   12/12/20,  1:59:41 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity: American Int'l Group (NYSE:AIG)

This long-time bearish candidate is finally showing some signs of a recovery as it tests the NOV highs near $62. Yesterday's close above the sold (call) strike at $60 was cause for a conservative "early exit" in our call-credit spread and this morning's gap-up at the open ended any hopes of a near-term consolidation. The stock is currently $1.21 higher at $62.05 however speculative traders should probably wait for the outcome of today's activity, which is occuring near a "key" resistance level, before passing further judgment on the issue.

  Jonathan Levinson   12/12/20,  1:59:40 PM
Short cycle downphases beginning. Feel lucky, bears? Link

  Linda Piazza   12/12/20,  1:54:56 PM
Per the comments Jeff and James have made about KO, I haven't watched it much in the past six months, but prior to that, KO had a real tendency to ramp up into options expiration, breaking out of bearish-looking formations and shooting up, only to fall back and resume its downtrend after options expiration. I don't know if that's still happening, but I learned fast not to buy bearish positions on KO heading into the last ten days to two weeks of an opex cycle. Only took me about five options expiration cycles. (Just kidding.)

  Linda Piazza   12/12/20,  1:50:49 PM
The SOX has now drifted sideways through its 30-minute 21-pma and is now below it, with 30-minute oscillators turning down. It doesn't quite look as if it wants to give up, however. It's certainly not plunging after drifting below that average and my guess is that it will try to rise a couple of points before doing so. Being that this is a Friday afternoon and there's a tendency to hold the markets steady, I'm kind of wondering if it will get propped up here. The BIX remains above its 21-pma, and that possible H&S gets more misshapen with each succeeding 30-minute candle. I don't know if it any longer has any validity. This index is now squeezed tightly between the 30-minute 21-pma at 330.49 and the 30-minute 100-pma at 331.06, and something's gotta give soon. The 30-minute MACD looks as if it wants to turn up with other oscillators having flattened. Hard to guess what's going to happen with this index.

Now I'm beginning to wonder if the tight-range, hold-Dow-at-10,000 thesis is going to hold up into the close. The SOX looks as if it's staying up near the 30-minute 21-pma only with great effort, and something is going to change soon on the BIX, one way or the other. Maybe there will be more movement into the close? I sure can't say which direction, though.

  James Brown   12/12/20,  1:49:52 PM
Earlier Jeff mentioned that Dow component Coca-Cola (KO) was hitting a new 52-week high. The stock has been very strong the last several days in a row as investors push it higher due to rising growth expectations for 2004. I will be more impressed if KO can break its four-year downtrend of lower highs.

KO peaked back in 1998 just under the $90 mark but ever since mid-1999 there has been a long-term trend of lower highs. KO needs to break out above this trendline near the $51 level.

  Ray Cummins   12/12/20,  1:47:56 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity: OSX, OIH

Our recent optimism for the Oil Service sector was validated again today as the group rebounded from Thursday's losses on weather-related news. With winter fuel demand causing higher natural gas and heating oil prices, energy traders are optimistic about the current bullish trend in oil industry issues. During the past two weeks, the Philadelphia Stock Exchange Oil Service index (OSX), has rallied over 10% and there is certainly additional upside with the relatively lean supply of U.S. energy resources. Another catalyst is the short-term forecast, which calls for normal to below normal temperatures for the eastern half of the United States. A bit further down the road is the upcoming OPEC meeting, scheduled for 2/10/04. All things considered, the outlook is favorable for oil service stocks and share values in the group should drift higher over the next two months.

  Jane Fox   12/12/20,  1:40:43 PM
One of the reasons I have become bearish long term is the deterioration in the small cap/large cap spread. I have shown the spread a couple of times over the last few days but now I would like to show you the deterioration in the $RUT.X, the index I use in my spread. Link

  James Brown   12/12/20,  1:38:13 PM
Bullish traders might want to keep an eye on Borg Warner (BWA). Shares broke out above resistance at $82 sending it to a new all-time high. Volume should have been stronger but it is holding its gains. Surprisingly, BWA does not have a split history so the odds of management declaring should be rising as it approaches the $100 mark.

  Jonathan Levinson   12/12/20,  1:36:07 PM
NEW YORK, Dec 12 (Reuters) - Shipping container company Greif Inc. (GEF.N: Quote, Profile, Research) plans to cut an additional 700 jobs and close several facilities as part of an ongoing restructuring effort, according to an announcement late Thursday.

  Linda Piazza   12/12/20,  1:31:31 PM
I'm watching, but trying not to micromanage. That's the biggest danger to a trading account on days like this, I think, because each little blip convinces you to jump in or jump out.

To update, the bear call credit spread is again under water, but by only $0.15 as I type, however, even with a strong movement up over the last couple of days and even with the elapsed time. That wouldn't have been true of a December ATM put purchased Thursday of last week when the OEX was pushing 528, when I priced this spread. That put would have been deeply underwater now, with much money lost. If we'd actually been in the bear call credit spread, we'd be comfortable into the weekend, knowing that time was going to be working even harder to make our position profitable.

  Ray Cummins   12/12/20,  1:22:34 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Harmon Int'l Industries (NYSE:HAR)

HAR is "on the move" today, up over $3 at $72 with no public news other than its posting of quarterly results with EDGAR Online Financials. Despite the lack of any real catalysts, the issue has once again successfully tested its 20-DEMA and that's fine with us as our bullish position (DEC-$62.5P/$65P) is now comfortably profitable.

  James Brown   12/12/20,  1:17:11 PM
Current put play Kohls (KSS) continues to drop after failing at its simple 10-dma yet again. Now the stock is under the $45 level of support and is approaching its one-year lows near $44.00.

  James Brown   12/12/20,  1:13:43 PM
Current call play United Technology (UTX) has surged higher this morning. The company reaffirmed its guidance and Prudential upgraded the stock to an "over weight". Shares are breaking out above the $90 level and we have hit our profit target, which means it is time to take some money off the table or significantly tighten stops.

  Jeff Bailey   12/12/20,  1:09:39 PM
Light bulb goes on ... some, not all, but some of today's NDX/QQQ weakness may be due to NASDAQ's announcements of changes. I'm writing this up for 01:00 Update.

Just as GRMN rose on the new, those on their way out seeing selling.

This may make some sense. Just after the 04:00 mark yesterday, I profiled a QQQ bullish day trade at $35.27. Despite upside earnings from ADBE and it shooting higher in after-hours, QQQ just sat there with formidable selling at $35.30. What was likely taking place was fund managers holding the NASDAQ-100 stocks seperately, were shorting the heck out of the Q's, with formulas much more complex than I would have, to offset the rebalance.

  Mark Wnetrzak   12/12/20,  1:07:56 PM
Covered-Calls -- E-mail Replies: Naked-Puts vs. Covered-Calls Part II

With regard to the potential return on investment, a naked-put has an advantage over a covered-call due to the lower initial investment and the lower cost of commissions. In comparing ITM covered-calls and OTM naked-puts (strike price below the current stock price), the naked-put writer can generally sell a put one or two strikes lower than the covered-call writer and still achieve a similar, if not superior, return on investment. Both strategies require a slightly bullish to neutral outlook and offer limited downside protection, but neither approach protects for a protracted downturn or catastrophic drop in the underlying equity. As always, there is risk of loss in any trading strategy!

  Jeff Bailey   12/12/20,  1:05:51 PM
01:00 Internals at this Link

  Mark Wnetrzak   12/12/20,  1:03:45 PM
Covered-Calls -- E-mail Replies: Naked-Puts vs. Covered-Calls

Hi Mark: Is it a basic rule (risk wise) that selling a naked put is exactly the same thing as selling a covered call? As a rule, would a trader prefer the naked put versus the covered call, aside possibly from collecting a dividend, etc.? Thank you, GM

Yes, the naked-put strategy and covered-call strategy are very similar and are essentially equivalent. However, there are differences to consider: naked puts generally require a smaller initial investment (approx. 25% margin versus the initial 50% for a stock purchase); the naked put writer can use collateral in his portfolio to initiate the position, as opposed to the cash outlay for buying stock; uncovered option trading requires a higher experience-level approval by brokerages; covered-calls can be used in most IRAs; and covered-call writers receive dividends (provided the stock isn't assigned) where put writers do not.

  Jeff Bailey   12/12/20,  1:00:13 PM
Coca Cola (KO) $49.00 +1.28% Link ... moving to a new 52-week high and clearing June's resistance on a more notable basis.

  Ray Cummins   12/12/20,  12:52:51 PM
Premium-Selling Plays -- Portfolio Activity: Rambus (NASDAQ:RMBS)

Rambus roared higher this morning after the company received some favorable commentary in a Forbes article and announced it will acquire the high-speed signaling assets of privately held Velio Communications. RMBS shares are up over $2 at $31.73 and the rally should help the recent uptrend remain intact. We have a number of bullish positions in the issue -- most with a cost basis of $25 or less -- so it was nice to see some new buying pressure in the stock after a week of mediocre activity.

  Linda Piazza   12/12/20,  12:45:13 PM
The SOX again sits on its 30-minute 21-pma, with 30-minute indicators again looking rather weak. The BIX turns down toward that average again, with oscillators looking neutral to weak. Jeff's analogy of the snake, using the OEX as the head, rings true, as I mentioned yesterday that the OEX appeared to be leading the indices that usually lead it. Maybe it's a two-headed snake, with one head wanting to go one direction and the other, the other direction? The OEX was reaching a new high as those other indices, usually somewhat aligned with OEX behavior, were already turning down. Strange.

  Ray Cummins   12/12/20,  12:41:11 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Harley Davidson (NYSE:HDI)

Shares of HDI are trading higher today after the motorcycle maker said it doubled its quarterly dividend to 8 cents a share. Merrill Lynch quickly jumped on the "buy" bandwagon with an upgrade of the issue, citing the company's phenomenal brand power and customer loyalty, history of sustained growth, solid and experienced management team, successful financial track record and commitment to returning capital to shareholders through dividends and share repurchases. Our recent outlook for the stock has been neutral to bearish in the wake of HDI's guidance disappointment in mid-October, but the renewed interest in America's "Bad Boy of Biking" suggests a change of character may be forthcoming. With that in mind, we are going to close our bearish position (DEC-$50C/$47.5C) and watch for a move back into the recent trading above $50 before initiating a new bullish play.

  Jeff Bailey   12/12/20,  12:39:55 PM
S&P 100 Index (OEX.X) 531.08 ... approaching its WEEKY R2 of 532.19 here.

While I don't think it can, if the OEX moves much above 533, the SPX 1,072.31 could add 4-points pretty quick to its WEEKLY R2.

In the concept of the head and tail of a snake, or inchworm, the head is leading here, and the tail (QQQ) is trying to anchor itself after a rather sharp snap back rally of 2% yesterday. QQQ $35.07, DAILY Pivot $35.06. OEX is at its DAILY R1.

  Jeff Bailey   12/12/20,  12:26:30 PM
Dow Transports (TRAN) 2,983.70 +0.6%....

  Linda Piazza   12/12/20,  12:23:59 PM
Jeff mentioned a way you could test yourselves, trying to decide in advance how market internal numbers would look. He suggested that as a way to keep us honest. I also suggest a test, developing a market scenario before trading begins, and then testing that scenario against the market behavior. Write it down. That not only keeps you honest but lets you know quickly when you might be wrong about what will happen, letting you replan your entrance or exit strategies. My thesis as the market began this morning (in my 9:16 post) was that the biggest theme today would be a need to hold the Dow above 10,000. That made me expect tight-range, choppy trading, but I thought there was a risk of the OEX moving up to the 534-535 range, too. So far, nothing has happened to make me change that thesis.

  Keene Little   12/12/20,  12:22:31 PM
So we need the tail to break off to let the snake snake up higher, or the head needs to turn around to see who's doing the tugging.

  Jeff Bailey   12/12/20,  12:21:06 PM
Per Keene's 12:19:59 I hear you there Keene, but what's the "head doing?" It looks to me like its leading, internals look strong. If the head leads, what should follow?

I use it every second of every day. That's why I had HON alert set at $31.00, as it looked like a potential leader stock should it break out from that 1.5 month slump.

  Keene Little   12/12/20,  12:19:59 PM
Jeff, remember that snake analogy you used to use? I see the techies pulling on the snake's tail this morning.

  Jeff Bailey   12/12/20,  12:18:01 PM
Honeywell (HON) $31.42 +1.42% ... still leading the Dow's advance.

  Jeff Bailey   12/12/20,  12:16:48 PM
Dow Industrials (INDU) 10,029.71 ... new 52-week highs here. If anything... should look for bears to at least back off their shorting. Will see. There's a determined seller in the QQQ below $35.15. QQQ $35.13 here.

  Jonathan Levinson   12/12/20,  12:15:37 PM
Feb gold is near its session high at 409.20, HUI up 5.73 at 241.11.

  Jeff Bailey   12/12/20,  12:11:47 PM
12:00 Internals at this Link

  Linda Piazza   12/12/20,  12:02:51 PM
The SOX 30-minute chart sports a formation that's similar to the BIX one depicted in the chart linked to my 11:43 post, but it's even less well formed than the one on the BIX chart.

I note that the OEX is today challenging an ascending trendline that has been capping advances since 11/03. Here it is, as seen on the 240-minute chart: Link

  Jeff Bailey   12/12/20,  11:58:36 AM
QQQ $35.12 ... trying to hold tough in our intra-day "zone of support" from DAILY Pivot $35.06 and MONTHLY Pivot $35.11.

Are you looking forward to the 12:00 Internals? I am!

If you're a day trader, try making a prediction now.

It doesn't matter if you are a bull or a bear. Make the prediction of what you THINK the internals will be. Then decide how weak or strong you think they need to be to have you making any adjustments to your bias.

What this does is keep you honest, remove emotion.

My guess is (I'm more bullish near-term) is that NASDAQ A/D about even, slight positive. NYSE positive without a question

3 more new lows on NYSE, 4 on NASDAQ. 10 more NH on NYSE, 8 on NASDAQ.

  Linda Piazza   12/12/20,  11:43:57 AM
Here's what I'm watching on the BIX as an indicator of underlying strength or weakness in the OEX, too: Link

  Jeff Bailey   12/12/20,  11:14:40 AM
Sovereign Bancorp. (SOV) $23.15 +6.43% Link ... higher on renewed chatter of takeover candidate.

  Jeff Bailey   12/12/20,  11:12:31 AM
11:00 Internals at this Link

  Linda Piazza   12/12/20,  11:05:36 AM
The SOX now threatens to drop below its 30-minute 21-pma, but RSI has flattened, giving the slightest hope to SOX bulls. As I expected earlier today, the BIX has risen again but so far has not risen far enough to negate the possible H&S forming. It's now testing its 30-minute 100-pma again. We have slightly mixed pictures here, then, with the SOX sitting on likely support and the BIX testing likely resistance. The OEX now falls close to its own 30-minute 18/21-pma's, so a test is in order soon there, too. The combined picture makes me think there might be some short-term choppiness unless the SOX falls through its 30-minute 21-pma and the BIX concurrently falls from the current test of its 30-minute 100-pma.

  Jeff Bailey   12/12/20,  11:03:00 AM
Garmin Ltd. (GRMN) $55.73 +3.66% Link ... being added to NASDAQ-100

  Jonathan Levinson   12/12/20,  10:53:44 AM
Jonathan, on qqq 60 min. i see reverse H&S. is this setting up for 35 expiration next week and santa rally for 2000 close by year end. may be i am wrong. thanks.

You may be right, but reverse head and shoulders patterns are bottoming patterns that should occur at the bottom of a wave, and not near or at its top. I'm wondering the same as you, however, and would regard the 35.40 "neckline" level as a significant resistance to watch in any case.

  Linda Piazza   12/12/20,  10:48:53 AM
Just as the OEX Keltner channel resistance lines had spread out earlier, indicating that resistance might not hold just before the last rise, the Keltner channel support lines are now beginning to spread out slightly, indicating that support might be weakening slightly.

  Jeff Bailey   12/12/20,  10:48:06 AM
Dow Industrials (INDU) 10,010.82 ... just tested its WEEKLY R2 of 10,020, but couldn't get through. Not yet ....

QQQ $35.00 after resistance test of MONTHLY Pivot ($35.11)

Begin to define some intra-day levels for any sign of strength.... INDU 10,030, QQQ $35.15.

  Linda Piazza   12/12/20,  10:39:34 AM
Jim mentioned the dramatic fall in the number of new highs in his Wrap last night or maybe this weekend. Can't remember which it was. Anyway, I thought I'd take a look today. Right now, there are 225 new highs and 10 new lows. That is dramatically different than what we had grown accustomed to seeing this time of day.

  Jeff Bailey   12/12/20,  10:38:43 AM
QQQ $35.12 ...

  Jonathan Levinson   12/12/20,  10:36:51 AM
The put to call ratio has dropped to .60 as everyone rushes to buy the dip. VXO 16.77.

  Jane Fox   12/12/20,  10:33:22 AM
The DOW ratio has most definitely had a change of character. It is now a neutral/bearish 10:20. This is quite different from the previous few days and from this morning.

  Linda Piazza   12/12/20,  10:31:30 AM
Both the SOX and the BIX tumbled down from their tests of their 30-minute 100-pma's, but both found support just above their 30-minute 18/21-pma's, as would be expected. The BIX now shows a possible H&S (with only one shoulder and the head formed) on its 30-minute chart, so I'm now watchful that the BIX will eventually turn down again at the shoulder level, which would fit an expectation now that the BIX would roll down from a lower level after having failed to move above the 100-pma. One hitch in this theory, though, is that that there was no bearish MACD divergence as the potential head was formed.

Taken together, this evidence still warns me to be leery of what we're seeing on the OEX, although it also hints that the OEX is probably going to rise again or consolidate over the next few hours.

  Jeff Bailey   12/12/20,  10:30:56 AM
SPX action 1,069.70 here... fell back below WEEKLY R1 (1,070.65) and MONTHLY R1 matrix correlation and now comes back to test as resistance here. Move above 1,072 signals strength, but near-term vulnerable to WEEKLY Pivot if sesson lows taken out.

  Jane Fox   12/12/20,  10:28:50 AM
U.S. Attorney's office in Northern Virginia, with help from the Defense Department's Criminal Investigative Service, have launched a new criminal probe into Boeing (BA), which could hinder the company's latest efforts to resolve the legal and ethical issues threatening its relationship with the U.S. government. The investigation focuses on dealings between Boeing's former chief financial officer, Michael Sears, and Darleen Druyun, an ex-Boeing executive who served as a high-ranking Pentagon official before joining the company. Boeing fired both executives late last month.

  Jeff Bailey   12/12/20,  10:20:56 AM
Honewell (HON) $31.01 +0.06% ... abrubt move higher in last 10 minutes.

Helping lift the Dow Industrials (INDU) 10,008 back to unchanged.

  Linda Piazza   12/12/20,  10:17:11 AM
Keltner channel lines spread out above the current OEX position, not converging. Sometimes I find that when that happens, the OEX moves more easily through those levels. Those channels show that 531.50 would be a breakout zone, though, with the OEX breaking out if it moves above that level.

  Jeff Bailey   12/12/20,  10:11:31 AM
QQQ $35.04 -0.67% ... session low so far is $34.93, where intra-day 5-MRT has RED #6 at $34.92.

  Linda Piazza   12/12/20,  10:07:48 AM
So far, the OEX did find support just above that 528.29 level that the Keltner channel was predicting would be support.

  Jeff Bailey   12/12/20,  10:07:35 AM
10:00 Internals at this Link

Yesterday's complete internals at this Link

Hmmm.... NYSE and NASDAQ were both higher in price at yesterday's open, but today lower. Note that early 10:00 reading today shows fewer new 52-week lows, as if there is some strength at the bottom. Most likely indicative of some short covering taking place early this morning on weakness.

  Jonathan Levinson   12/12/20,  10:05:26 AM
Put to call ratio neutral at .70, VXO +5.42% to 16.72.

  Jane Fox   12/12/20,  9:59:49 AM
An audit of Halliburton (HAL) has found evidence of "substantial overcharging" in $1.2 billion worth of fuel sales and that the company may have overcharged by as much as $61 million for gasoline in Iraq. The audit is sure to become politically explosive because of Halliburton's past ties to Vice President Dick Cheney and allegations that the company won its lucrative contracts in Iraq through political favoritism. Halliburton subsidiary Kellogg Brown & Root is working in Iraq under two contracts now worth about $5 billion.

  Jonathan Levinson   12/12/20,  9:59:33 AM
The Last Bear dusts off her helmet following the UMich data: Link

  Jeff Bailey   12/12/20,  9:57:08 AM
Percentage change errors ... I'm just noticing that some of my charts, or indices are showing incorrect percentage changes. The S&P Banks Index (BIX.X) 330.06 -2.11% (hand calculated), not higher.

  Jonathan Levinson   12/12/20,  9:57:01 AM
The Fed has announced a 3B weekend repo, draining net 2B against the 5B overnight repo expiring.

  Jim Brown   12/12/20,  9:55:35 AM
Rumor making the rounds that DISH could be an acquisition target.

  Jim Brown   12/12/20,  9:53:35 AM
The majority of the decline in Consumer Sentiment was due to a drop in the present conditions component from 102.5 to 93.6. Expectations also dropped slightly to 87.1 from 88.1. Considering that there were whisper numbers in the 98.0 range this is a major upset. Now the question is why? Unemployment? News reports about weak post Thanksgiving sales?

  Jonathan Levinson   12/12/20,  9:52:13 AM
Note that the HUI is higher here, as is gold. +4.93 at 240.31 for HUI, 409 gold. Ten year bonds are up 3.1 bps.

  Jeff Bailey   12/12/20,  9:51:07 AM
Dow Transports (TRAN) 2,955.36 -0.35% ...

  Jeff Bailey   12/12/20,  9:50:33 AM
S&P Banks (BIX.X) 330.11 ... off session high of 331.62.

  Jeff Bailey   12/12/20,  9:49:23 AM
Pivot Matrix Observations ... Major indices testing DAILY Pivots.

Dow Diamonds (DIA) $100.06 just below its daily p of $100.11.

  Linda Piazza   12/12/20,  9:48:02 AM
Next OEX Keltner channel support shows up at 528.29, but it's weakening as I type.

  Linda Piazza   12/12/20,  9:46:31 AM
Too funny, Jonathan. (Jonathan's 9:45 post.)

  Jeff Bailey   12/12/20,  9:45:51 AM
QQQ $35.10 -0.55% ... testing MONTHLY Pivot on the weaker than expected U. of M. Sentiment.

  Jonathan Levinson   12/12/20,  9:45:30 AM

  Linda Piazza   12/12/20,  9:45:00 AM
After having pierced its 30-minute 100-pma, the SOX pulls back below that important moving average. That's a sign of possible weakness, but 30-minute oscillators have not turned down, and that may have been only the first attempt. Still, the presumption remains that the SOX will eventually turn down from these averages (because it's already below them, and so presumed to be weak, and because the 100-pma made a bearish cross of the 130-pma). Yesterday afternoon, the BIX moved above both averages and then fell below them, supposedly a sell signal, but it's testing them again. The BIX 30-minute oscillators are beginning to show some weakness now, however, and it's going to take a big move to change them back to a more bullish stature. A move back above those averages would probably be big enough, but so far, this is following a "likely to turn down below the averages" scenario.

  Jim Brown   12/12/20,  9:43:56 AM
Michigan Consumer Sentiment for December = 89.6 (est 95.5, last 93.7)

  Jeff Bailey   12/12/20,  9:41:35 AM
QQQ $35.25 -0.14% ... here's an updated 60-minute chart of QQQ for today. Link

  Linda Piazza   12/12/20,  9:35:41 AM
Over the first five minutes of trading, the OEX ranged from 530.15 to 531.04, with the midpoint of that range at 530.60. This is a run-of-the-mill first five-minute candle, so I don't know that I could make many predictions about today's likely range size based on that candle.

  Linda Piazza   12/12/20,  9:33:50 AM
As of a few minutes ago, it would have been possible to exit the hypothetical bear call credit spread that I price last Thursday when the OEX was points lower than it is now, at breakeven. That may change during the day, as options prices tend to be inflated early in the day.

  Jeff Bailey   12/12/20,  9:20:37 AM
09:00 Update at this Link

  Linda Piazza   12/12/20,  9:16:59 AM
You may be right, Keene. (See Keene's 9:10 post.) I've been thinking for a while now, as these markets try repeatedly to just retrace in a normal and expected fashion but can't do so, that perhaps we need to have some sort of buying crescendo before the markets can perform even a normal retracement. I've also been thinking that once Dow 10,000 has been hit, there's been the needed confirmation for the general public that everything's all right and markets will then be allowed to relax a bit.

What do the charts show about the OEX today? Yesterday's rally turned OEX daily oscillators back up again. RSI and stochastics hooked up and MACD no longer looks close to a bearish kiss from above signal. The daily candle pulled back at the close, preserving that possibility of an orthodox broadening formation forming on that chart, with a few candle shadows spiking above the formation. Because of that formation, it's difficult for me to feel too bullish, other than on the very short-term, because that type of formation usually has a bearish connotation. It doesn't always resolve that way, but that's the connotation.

Big-range days are often followed by small-range days, and I would think a bull's first task today is just to preserve that DOW 10,000 level, a victory if that happens. Back on the OEX, the 30-minute and 60-minute charts show indicators that keep tending to hook over, but then swing back up as price does, too. This looks vulnerable to me, but those channels I watch now show a possible move up to 534-535, too. I want to see what happens in early trading before I make too many decisions, but right now, I'm happy to be tracking a bear call credit spread and not be in an unhedged directional options trade.

  Keene Little   12/12/20,  9:10:00 AM
Linda, what's interesting, from an EW perspective, about the media hype over the 10,000 achievement is that we need some excitement in the market to get us a climax run to get us an over-throw outside the ascending wedge we've been in. This is a very typical and classic finish to these patterns. As I've mentioned in the FM side for any who may have missed it, if we run up and tag the 1080-1090 area of the SPX and then drop back down below current levels, that is an excellent get-shorty signal. Buy some LEAP puts and hang on for the ride south.

  Jane Fox   12/12/20,  9:07:24 AM
The Nasdaq announced yesterday the annual re-ranking of the NASDAQ-100 effective with the market open on Monday, December 22, 2003. The following eight issues will be added to the NASDAQ-100 Index: Marvell Technology Group, Inc. (MRVL), Garmin Ltd. (GRMN), Career Education Corporation (CECO), Lam Research Corporation (LRCX), Level 3 Communications, Inc. (LVLT), Intersil Corporation (ISIL), ATI Technologies Inc. (ATYT) and Research in Motion Limited (RIMM). As a result of the re-ranking of the NASDAQ-100 Index, the following eight companies will be removed: ADC Telecommunications, Inc. (ADCT), Brocade Communications Systems, Inc. (BRCD), CIENA Corporation (CIEN), LM Ericsson Telephone Company (ERICY), Human Genome Sciences, Inc. (HGSI), ICOS Corporation (ICOS), Monster Worldwide Inc. (MNST) and, RF Micro Devices, Inc. (RFMD).

  Linda Piazza   12/12/20,  9:03:56 AM
All our local stations were touting "the market" being over 10,000, too. (Just floors me that 30 stocks are considered "the market.") Of course, here in Dallas, economic issues were featured heavily because of Greenspan's visit here yesterday. Note: This post was in reference to comments made by Jonathan and Jane on the Futures side of the Monitor.

  Jonathan Levinson   12/12/20,  8:28:27 AM
PPI -.3%, core -.1%, trade balance -41.8B.

  Jonathan Levinson   12/12/20,  8:01:17 AM
My friend Grot's on fire! Here's a chart of one of his favorite symbols: Link

  Jonathan Levinson   12/12/20,  7:56:10 AM
We await the PPI, est. .1%, the core PPI est. unchanged, and trade balance, est. -41.8B. At 9:45 comes the preliminary Michigan sentiment survey, est. 96.

  Linda Piazza   12/12/20,  7:29:33 AM
Good morning. The much-watched Bank of Japan quarterly tankan survey of corporate sentiment produced a better-than-expected +11 in the quarter ending in December, up from the previous quarter's +1, and much higher than the predicted +6. Other economic numbers showed corporate bankruptcies falling and an industrial output revised up to 0.1% from the previous 0.08%. The Nikkei closed off its high of the day, but still closed up 94.52 points or 0.94%, at 10,169.66. Banks were mixed, automakers traded higher, and techs were mixed, trading up or down according to news stories that impacted them. Canon and Fujitsu announced good news and traded up; Softbank plummeted after announcing that it would issue new shares and convertible bonds.

Other Asian bourses mostly traded higher, too. The Taiwan Weighted was one of the two Asian declining bourses, trading down 0.15%. South Korea's Kospi gained 1.89% and Singapore's Straits Times gained 0.44%. Caught up in what was labeled "IPO fever" by some news sources as China Life's IPO was due to be priced, perhaps today, and Chia Hsin Cement Greater China's IPO was released today, Hong Kong's Hang Seng climbed 0.32%. China's Shanghai Composite was flat, up 0.05%.

In Europe, most bourses traded higher. Economic numbers released today showed French industrial production rising in October a much higher-than-expected 1.3% while October's account surplus narrowed from September's number. Many European retailers declined after Spain's Inditex reported that like-for-like sales had been negative. European automakers and techs generally gained, however. Germany's Siemens announced that it would move about 10,000 jobs to Eastern Europe and offshore centers, with the news sending the stock higher in early trading.

Currently, the FTSE 100 climbed 18.10 points or 0.42%, to 4349.40. The CAC 40 climbed 23.50 points or 0.68%, to 3491.40. The DAX rose 35.81 points or 0.93%, to 3894.66.

  Jeff Bailey   12/11/20,  10:14:01 PM
Adobe Systems (ADBE) ... While it is impossible to look at all the stocks in the NASDAQ, here's a very good point and figure chart for trader/investors to understand, as it relates to both the NASDAQ-100 Bullish %, and NASDAQ Composite Bullish % right now.

ADBE gave the triple-bottom sell signal at $38.00, holds bullish support trend, and now looks to snap back higher and today alone gained 4.4%. Understand here the "sell signal" and taking away of 1 stock to a point and figure sell signal as it relates to the bullish %, but then the quick move back up of a 4.4% gain, which still doesn't register on the chart. Link

OSTK is a NASDAQ listed stock (not NASDAQ-100), but here too a PnF chart that recently gave a sell signal, trades $17.50, then BOOM! is now 10% higher.

We could go on and on with the other 6% net loss of stocks for the NASDAQ Composite stocks that have shown PnF sell signals, but I can tell you this. It's when you actually HAND CHART stocks on graph paper using the PnF charting methodology, that you can really begin to sense what a stock is doing, and I dare say... when you chart the NASDAQ-100 Index (100 stocks) or S&P 100 Index (100 stocks) you would have a much better feel for how each stock is trading, and also have an EXCELLENT feel for the index itself.

  Jeff Bailey   12/11/20,  9:03:52 PM
Pivot Matrix for tomorrow at this Link

  OI Technical Staff   12/11/20,  9:03:43 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

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