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  Jeff Bailey   12/16/20,  8:56:26 PM
Pivot Matrix for tomorrow at this Link

I think I've gone and done it again! Today's profiled bearish swing trade in the QQQ was profiled with a stop loss of $35.12. (see DAILY R1 and WEEKLY Pivot)

In tonight's Index Wrap, I'm suggesting bears holding the QQQ swing trade short, allow a little more room, to $35.16 if this is allowable.

It was on December 8th that I lowered a stop intra-day on the QQQ to $35.45. On December 9th, the QQQ bid higher early (DAILY R1 was $35.45) the QQQ traded a session high of $35.46, then fell to what was the bearish target.

While I do not like to adjust stop losses, I will change bearish profile, with stop raised from $35.12, to $35.16.

  Jeff Bailey   12/16/20,  4:46:43 PM
Closing Market Internals at this Link

I've made a couple of modifications.

I added the NYSE Composite ($NYA.X), and grouped it with the NASDAQ Composite (COMPX).

Grouped the INDU,SPX,OEX together

Grouped the Russell-2000 and QQQ together.

Grouped Gold/Treasury YIELD together.

  Linda Piazza   12/16/20,  3:53:06 PM
Ray's 15:50 post should be read by everyone, new trader and experienced trader alike. I still take a step back when I've had several losing trades in a row. Either I'm wrong or the market is wrong, or I'm wrong to be in the wrong market. Different market conditions require different trading strategies, too.

  Linda Piazza   12/16/20,  3:50:35 PM
Now that the OEX dropped a little, is it on its way to printing another shooting star today? (See my 15:10 post.) If it is, it's going to have to hurry, because it should probably close below 531.50-532 before we could consider it a shooting star. That doesn't appear likely.

  Ray Cummins   12/16/20,  3:50:30 PM
Spreads/Combos/Premium Selling -- E-mail Replies: Success Basics

Regarding the earlier question about how to be successful in option trading:

The fact is (and it was proven again Monday), no one can successfully predict the market in every case, so the key is to take small profits regularly and prevent losing plays from significantly eroding capital. Losses are bound to happen -- they are inevitable -- but that shouldn't keep you from profiting on a regular basis. Of course, it's very difficult for new traders to close out losing plays early but those who are successful have learned there is no reason to hang on to a losing position when there are so many other profitable plays that deserve their time and money. One of the best ways to ensure this type of position "management" is to use a trading plan with pre-determined exits. Study and identify trends within individual issues before opening a position. Don't jump into trades on emotion, but rather wait for the proper entry points. Use technical support areas as buying opportunities and sell on rallies towards resistance. Stop-loss orders can be used to remove "on-the-spot" decision making from the equation, and trailing stops can be used to follow a position into greater profits while protecting for reversals. If you discover that your losses are consistently larger than your gains, stop trading! Step back, take a break, and a few days off. When you are ready to try again, evaluate your trading strategies and review the losers to learn from previous mistakes, then move on! Success will come when you create a favorable balance between hard work, sound judgment and patience. Too many traders give up after a few losing plays, long before they have time to learn and absorb the various methods required for profitable trading.

  Linda Piazza   12/16/20,  3:45:18 PM
The OEX has not yet been able to close above the (20,2) upper Donchian channel boundary. That boundary remains at 535.58 for this 30-minute period.

  Linda Piazza   12/16/20,  3:26:57 PM
What are foreign markets doing on a P&F and bar chart basis? Closing today at 10,271.60, the Nikkei remains on a buy signal with an upside target of 12,350, but it's below a bearish resistance line and currently in an "O" column, showing short-term weakness. It's below its 50-dma. Closing today at 4333, the FTSE 100 is also on a buy signal with an upside target of 4950.00. It's currently in an "X" column, so showing more short-term strength than the Nikkei. It closed about three points below its 50-dma, however. Closing today at 3486.60, the CAC 40 is on a buy signal with an upside target of 3950, and it's currently in an "X" column. It trades above its 50-dma at 3395.10. Closing today at 3865.98, the DAX has an upside target of 4300, and is currently in an "X" column. The DAX also trades above its 50-dma at 3258.59. Some of these indices have been showing the same bearish divergences we've seen on the daily charts of our own indices.

  Ray Cummins   12/16/20,  3:23:19 PM
Spreads/Combos/Premium Selling -- Portfolio Activity: MGAM and HOV

I mentioned earlier in the day the bullish activity in MGAM shares and another website is now listing the issue as a "High Short Interest Point Gainer" with short positions consisting of 41% of the float. Indeed, MGAM shares are trading near session highs, up $3.74 at $39.75, and the next level of resistance is near $42. Another volatile stock in recent weeks is Hovnanian (NYSE:HOV) and shares of this well-known homebuilder have rebounded today, up $2.76 at $87.46. Traders who favor "premium-selling" positions might consider selling OTM options or credit-spreads (short calls near $100 and/or short puts near $75) as the issue cycles in what appears to be a new trading range near $85.

  Jim Brown   12/16/20,  3:17:18 PM
Amazing levels on the VXO today. Market hitting highs and the VIX just keeps moving down. (note white chart) The A/D line is moving up slowly and very close to going positive. While I was typing this the TICKS jumped to +1050. The buyers are not done yet. Link

  Linda Piazza   12/16/20,  3:10:58 PM
Yesterday's daily OEX candle was a shooting star (or inverted umbrella, depending on your preferred terminology). Yesterday when Jane and I were discussing the OEX, I mentioned that when such candles occur after a climb, they're generally reversal signals, but that we should watch for confirmation today since the OEX wasn't always playing by the rules lately. In normal course, that confirmation would have come, but of course that's not what we we're seeing today. However, even though we're not seeing weakness today, such candles may be signaling an early warning that there's some hesitation. It's not unusual to see two potential reversal signals in a row printed, either, as if one wasn't quite good enough, so I'll be interested to see how today ends. It's still possible for a stark decline to print another shooting star, for example. So far, though, none of my daily oscillators signal any weakness yet. The 5(3)3 stochastics, fickle as they are, have changed directions a couple of times today, but currently look bullish. From about 3:45 EST yesterday afternoon, the OEX has established an ascending trendline that's now crossing at about 533.40, so I'll be watching that first line of defense to the downside.

  Jim Brown   12/16/20,  3:10:42 PM
Notice the drop in new 52-week highs today compared to any day since Thanksgiving. Other than the spike on the Saddam news yesterday the internals as referenced by the new highs/lows is weakening. Link

  Jane Fox   12/16/20,  3:06:38 PM
The nation's largest public pension, California Public Employees' Retirement System (Calpers), is suing the NYSE and the seven "specialist" floor-trading firms that do business there "for jointly scheming to short change investors over the past five years in a trading fraud scheme so widespread it has generated untold shareholder losses." They allege the NYSE knew "rampant" problems with specialist trading existed

  Jeff Bailey   12/16/20,  3:05:21 PM
QQQ $34.78 (unch) ... after test of WEEKLY Pivot (34.94) and QQQ session high of $34.96.

INDU 10,112.67 +0.89% just off session high of 10,125.86, which came right at the bond market's close.

Treasuries found gains with the benchmark 10-year YIELD ($TNX.X) falling 4.1 basis points to 4.234%.

  Jeff Bailey   12/16/20,  3:04:11 PM
03:00 Internals posted at this Link

  Jim Brown   12/16/20,  3:02:32 PM
GE trading over $30.75 after Immelt said he was very comfortable with the GE and the outlook for the future. He guided inline with estimates for the 4Q.

  Ray Cummins   12/16/20,  2:59:35 PM
Spreads/Combos/Premium Selling -- E-mail Replies: Success Basics

(condensed) From: questions@OptionInvestor.com...I just subscribed - did the trial first - and though I have done a lot with stocks, it seemed best to ask for some suggestions before I begin buying options. There is so much to learn, how should I get started? RT

Here are a few suggestions for beginners: [1] Read the newsletter, especially the back issues on the OIN website, and any other worthy publications about trends in the equity markets and the U.S. economy. [2] Study all you can about options and review some of the so-called "bibles" of trading such as: Options as a Strategic Investment, Option Pricing and Volatility, Options: A Personal Seminar, Secrets For Profiting in Bull and Bear Markets, Trading for a Living and Martin Pring on Market Momentum. [3] Learn the rules and trade (initially) with a variety of proven techniques, then repeat whatever you do successfully -- don't bother with exotic strategies that you don't understand or can't utilize effectively. [4] Get a good broker who can teach you position management skills and who will monitor your portfolio while you are away from the market (one of the most popular among readers is Andrew Aronson at onestopoption.com). [5] If you choose to use an online (discount) brokerage, find one that provides timely executions and good customer service -- both of these components will be necessary for a successful career in option trading. [6] Other thoughts might come from the professionals on the OIN Market Monitor, all of which are happy to offer their knowledge and expertise to help make you a better trader. Good Luck!

  Linda Piazza   12/16/20,  2:51:56 PM
The upper (20,2) Donchian channel on the 30-minute chart measures 535.58. I mention this because the 30-minute candles frequently pierce an upper or lower Donchian channel boundary but rarely close outside that boundary. A close above that level would constitute a breakout, but it's far more likely that the OEX will close 30-minute candles below that level. Or at least, that's the theory. "Far more likely" doesn't mean "absolutely will," however.

  Jonathan Levinson   12/16/20,  2:46:16 PM
With equities up, bonds up, where is the 7.75B going to come from to pay back the FED. Rich R

Rich, I was wondering the same thing. If the bidding in our treasury and equity markets isn't coming from foreign central banks, then I'm quite simply at a loss. 6B of that sum was added to the system yesterday, along with a 24 day repo. We simply can't know, but the trading following the treasury market's close should provide some guidance. The drain gives us a negative bias for today, and so selling into the close would fit the plan- so far, there's no evidence of that happening.

  Jeff Bailey   12/16/20,  2:45:24 PM
QQQ $34.92 +0.4% ... back to test the weekly pivot, while INDU now challenges WEEKLY R1.

Dow Jones news reported that UK Prime Minister Tony Blair said inspectors had found "evidence of a massive clandestine laboratory network system" inside Iraq hit the wires at 12:45 PM EST, right before the QQQ was about to challenge its morning lows was fully factored into these markets, the sudden afternoon rebound is worthy of some note.

Blairs comments date back to a recent U.S.-ed Iraq Survey Group in October, but may have some thinking that Saddam may be singing like a canary.

  Linda Piazza   12/16/20,  2:42:44 PM
Those accustomed to using the symbols "OEX" or "$OEX" on Q-charts should be aware that they're now getting delayed data using that symbol, with data delayed 10 minutes. Use "OEX.X" or "$OEX.X" for real-time quotes.

  Linda Piazza   12/16/20,  2:34:33 PM
D.S., your system is refusing my email, but you'll find your answer in my 14:18 post.

  Ray Cummins   12/16/20,  2:32:49 PM
Spreads/Combos/Premium Selling -- Portfolio Activity: Multimedia Games (NASDAQ:MGAM)

One of the more popular issues for "premium-sellers" in recent months is Multimedia Games and today the stock is back to its old antics with a "gapping" reversal from a short-term downtrend after CIBC World Markets upgraded the issue. Shares of MGAM are up $2.98 at $38.99 and the rally came just in time to save our bullish (put-credit) spread at $35. Traders who like to sell options should consider both OTM puts and calls as the issue seems destined to remain in a range-bound pattern ($32-$43) for the next few weeks.

  Linda Piazza   12/16/20,  2:26:44 PM
After all that effort, the BIX and GSO finally popped above their 30-minute 100/130-pma's, helping to spring the OEX above its 30-minute 21-pma. The SOX is climbing, too. With those other indices now cooperating a bit, the OEX may be able to make some headway, but the GSO in particular just broke above one resistance level to immediately face another.

  Jeff Bailey   12/16/20,  2:21:19 PM
Daily Tabulated Internals at this Link with 5-day average and 10-day average NH/NL ratios.

The NSDQ NH/NL 10-day average is currently "bear confirmed," where this indicator of bullish leadership turned bear confirmed on 11/21/03, when it fell to a reading of 90.0%.

The NYSE NH/NL 10-day average is still "bull confirmed," and would have to slip back lower to 92% to turn "bull correction."

  Linda Piazza   12/16/20,  2:18:33 PM
Reader Question: If I sell 10 puts at 100 on IBM and I'm assigned I get 1000 shares of IBM for about $100K. If I sell 10 puts on the OEX at 525 and I'm assigned do I get 1000 "shares" for $525K and how do I get rid of them. Thanks.

Response: Good question to be asking. Since OEX options are cash-settled options, there aren't any shares involved, as you assumed since you put the word "shares" in quotation marks. However, if an option you sold was ITM at option expiration, you would be required to deliver from your account a cash amount that's equal to the difference between the strike price of the option you sold and the index's closing price times $100. For example, if you had sold an OEX 535 put and the OEX settles at 534, your account would be debited $100 x 1 (point difference). That's a lot better than imagining that you're going to have to buy 100 "shares" of the OEX at $535 a pop, right? For the OEX options, you'll find this information on this link: Link Look at the section titled "Settlement of Option Exercise." The CBOE has similar information for other index options, too.

  Jeff Bailey   12/16/20,  2:14:46 PM
02:00 Internals at this Link

  Jeff Bailey   12/16/20,  2:04:57 PM
Head and tail of the snake ... here's an intra-day chart of the INDU, with QQQ comments. Really gives the feel at both ends of the snake/inchworm. Link

INDU is head and strong, while QQQ tail and weak.

Range definded by QQQ WKLY S1, and INDU WKLY R1 right now.

  Linda Piazza   12/16/20,  2:00:16 PM
Checking volume patterns, I see an even 200 new highs, with 18 new lows. That new highs figure remains much lower than we used to see a few weeks ago. Up and down volume are roughly equal on the NYSE, but down volume is much higher than up volume on the Nasdaq. Total volume was 883 million on the NYSE and 1.2 million on the Nasdaq.

  Ray Cummins   12/16/20,  1:46:18 PM
Spreads/Combos/Premium Selling -- Portfolio Activity: The "Bears" are still active!

Despite today's moderate buying pressure in the broader market, there are number of issues enduring downside activity. Among the bearish positions in our portfolio, many are trading lower including: Amazon.com (NASDAQ:AMZN), Cabot Micro (NASDAQ:CCMP), CTI Molecular (NASDAQ:CTMI), Harley-Davidson (NYSE:HDI), Hyperion Solutions (NASDAQ:HYSL), Krispy-Kreme (NYSE:KKD), MDC Holdings (NYSE:MDC), Mercury Interactive (NASDAQ:MERQ), Mohawk Industries (NYSE:MHK), Marvell Technology (NASDAQ:MRVL), Power Integrations (NASDAQ:POWI), Sears, Roebuck & Co. (NYSE:S), Sepracor (NASDAQ:SEPR), Sandisk (NASDAQ:SNDK), Synopsis (NASDAQ:SNPS), and Symantec (NASDAQ:SYMC). And I bet you thought we were always biased to the bullish side (Well, that's because most of the time, we are! :-)

  Linda Piazza   12/16/20,  1:43:43 PM
I've returned to find that the SOX and the GSO each did mount a semblance of a bounce, as I mentioned in my last post before leaving that they would have to do if the OEX wasn't going to head down. The GSO currently turns down from yet another test of its 30-minute 100/130-pma's, but the SOX has plenty of room to climb before it hits those 30-minute averages. The BIX also once again challenges those averages. With those slight bounces on the tech-related indices and the BIX, the OEX does battle again with its 30-minute 21-pma. As it does, thirty-minute MACD tries to turn up again, but other oscillators are mixed, as they are across other indices. If all these indices could spring through the various resistance levels they're simultaneously testing, real gains might be made, but if not, there might be further consolidation while oversold pressure is relieved and then another decline. There seems to be so much upward pressure at once that it might be safest to bet on the upside and an improving advdec line suggests that, too, but I'm not 100% convinced yet. Not much progress has been made despite all that upward pressure.

  Mark Wnetrzak   12/16/20,  1:27:24 PM
Covered-Calls -- E-mail Replies: Choosing the "right" option:

(condensed) Hello Mark, I have been successful with some of your newsletter picks but I also like to sell calls on stocks I find through my own research. Also, I have a few long-term holdings that could benefit from the covered call strategy. I generally base the time frame on technicals but how do I decide which option strike to use with each individual stock? PW

In most cases, short-term positions are much more successful if you sell in or at-the-money options. In this manner of "conservative" option writing, you should strive for plays that return a minimum of 2%-3% per month while retaining downside protection of at least 10% of the current stock price. The overall position that is constructed using these guidelines will be relatively low risk (regardless of the volatility of the underlying stock) since the levels of protection will be large and there is still the expectation of a reasonable return.

For long-term covered-call positions, the goal is to reduce the overall cost of the stock with the income from monthly sales of near-term options. Investors that participate in this strategy with bullish stocks generally utilize out-of-the-money calls to reduce the chance of having their short positions exercised (in which case delivery of the underlying issue would be required). The problem with this technique is that when one sells an out-of-money option, the overall position tends to reflect more of the result of the stock price movement and less of the benefits of writing the call. This occurs because the premium of the out-of-the-money call is relatively small the overall position is very susceptible to loss if the underlying stock declines. The key to success is to find a balance (between premium/ROI and downside risk) in the overall position that fits your personal style and portfolio outlook. Regards...Mark

  Jeff Bailey   12/16/20,  1:04:04 PM
01:00 Internals at this Link

  Jeff Bailey   12/16/20,  12:56:32 PM
Dow Industrials (INDU) 10,079 +0.56% ... QQQ $34.60 -0.51%.

  Jeff Bailey   12/16/20,  12:52:25 PM
Volume alert ... Synopsys (SNPS) $33.01 -2.3% saw jump in volume on move lower from $33.25-$32.89. Session low is 5-MRT Red #2.

  Jeff Bailey   12/16/20,  12:39:21 PM
Dow Industrials (INDU) 10,069 +0.46% .... QQQ $34.50 -0.8%.

Intra-day charts are about as inverse as can be.

  Ray Cummins   12/16/20,  12:34:16 PM
Spreads/Combos/Premium Selling -- Portfolio Activity: The "watch" list

Among the bullish positions in our portfolio, a number of issues deserve close attention as we approach the December options expiration. Some of these stocks are: American Healthways (NASDAQ:AMHC), Angiotech (NASDAQ:ANPI), Broadcom (NASDAQ:BRCM), Harmon Int'l Industries (NYSE:HAR), ImClone (NASDAQ:IMCL), Martek Biosciences (NASDAQ:MATK), NTL Inc. (NASDAQ:NTLI), Novellus (NASDAQ:NVLS), and Photon Dynamics (NASDAQ:PHTN). Even a few of the new positions (January Expiration) are suspect after Monday's sell-off. These include: Accredo Health (NASDAQ:ACDO), Digital River (NASDAQ:DRIV) and NPS Pharmaceuticals (NASDAQ:NPSP).

  Jeff Bailey   12/16/20,  12:33:38 PM
QQQ bearish swing trade alert $34.51 -0.7% here, stop $35.12 to begin, target $34.11.

  Jeff Bailey   12/16/20,  12:17:23 PM
QQQ bearish trade cancel alert ... QQQ $34.58 -0.57% ... cancel QQQ swing trade bearish entry point of $34.75.

I'm seeing same thing as Jim's 12:13:49, where INDU holding MONTHLY R2 of 10,075.

  Jeff Bailey   12/16/20,  12:11:23 PM
12:00 Internals at this Link

  Ray Cummins   12/16/20,  12:03:07 PM
Spreads/Combos/Premium Selling -- Portfolio Activity: Engineered Support Systems (NASDAQ:EASI)

Another struggling issue is EASI; down $4.08 at $54.09, and traders are attributing the decline to capture of former Iraqi President Saddam Hussein as that could mean slower sales for companies that sell arms and supplies to the U.S. Department of Defense. Indeed, the defense group is now on the "defensive" and EASI, which makes generators and protective shelters for the military, could fall victim to a slump in the sector. Our (bullish) position at $50 seems safe for now, but a move below the December low near $52 would certainly suggest a potential "early-exit" for conservative traders.

  Jeff Bailey   12/16/20,  12:02:19 PM
Dow Industrials (INDU) 10,0079 +0.56% ... just off session high of 10,085.41. Noting here that this would be test of MONTHLY R2 10,075.25 (within 10 points).

This gives observation that INDU trying to lead an advance, but right now, QQQ pulls at the other end.

SPX 1,070 +0.25% and OEX 533 +0.48% both in the middle.

  Jonathan Levinson   12/16/20,  11:55:15 AM
Feb gold is down 1.50, while the HUI and XAU are getting slammed, HUI -7.42 at 232.63, XAU -2.89 at 104.97.

  Ray Cummins   12/16/20,  11:52:08 AM
Spreads/Combos/Premium Selling -- Portfolio Activity: Sandisk (NASDAQ:SNDK)

Profit-taking is definitely "taking its toll" on a number of issues today and as Jim mentioned earlier, one of the hardest hit in the technology segment is SNDK. Shares of the storage equipment-maker are now off $6.41 at $54.45 and the share value has additional room to fall. Our current position is bearish at $70, so the downside activity is favorable, but traders should also be looking for new "premium-selling" opportunities in the stock when it rebounds.

  Jeff Bailey   12/16/20,  11:51:20 AM
QQQ $34.67 -0.31% ... lows of session have been $34.42, which has found a bounce from its WEEKLY S1 of $34.43.

  Linda Piazza   12/16/20,  11:28:16 AM
Once the SOX dropped below the 12/10 low, it dropped quickly, but I keep looking at how far extended it is below the 1.35% envelope surrounding the 21-pma on its 30-minute chart. It hasn't been this extended to the downside since September. Failing at its test of its 30-minute 100/130-pma's this morning, the GSO has already fallen to its bottom envelope line, too, on that 30-minute chart. The BIX still valiantly tests those averages. With the tech weakness weighing on it, the OEX is now rounding down from its test of its 30-minute 21-pma this morning, perhaps heading down toward a retest of this morning's low. If that fails to hold as support, the OEX may be testing its own 30-minute 100/130-pma's, down at 528.78 and 527.78.

I need to run an errand and will be gone for a little over an hour. At this time, I'm still unsure what to expect in the markets, with the financials valiantly trying to hold up markets made weak by tech weakness. I wouldn't be surprised to see the OEX testing those 30-minute 100/130-pma's later today, though, unless the SOX and GSO stocks can manage at least some semblance of a bounce.

  Jonathan Levinson   12/16/20,  11:18:19 AM
The put to call ratio is hanging steady at .75, VXO 16.72. It's worth remembering that below 20 on the VXO has always been considered high-risk territory for bulls, and below 17 is extreme. That said, to look at the YM holding rock solid above 10k this morning, it's difficult to believe that we could see trouble in paradise.

  Linda Piazza   12/16/20,  11:12:51 AM
With options expiration quickly approaching and with OTM calls losing value more quickly than OTM puts do, both calls in the hypothetical OEX 535/540 bear call credit spread that I priced almost two weeks ago are now losing money quickly. The bought call, further OTM, now drops more quickly, so that right now it would not be possible to exit the bear call credit spread for a profit. However, all the value in the sold 535 call is also time value with the OEX at this level. Unless the OEX settles above 535.00 on Friday, that call is going to expire worthless, and all the credit would have been retained in the trading account. It's possible that we would have seen another tense day or two before we knew how this bear call credit spread would have performed, but not as tense as it would have been if ATM puts had been purchased at the same time this spread was priced. Those would have surely been deeply underwater by now.

  Jane Fox   12/16/20,  11:11:37 AM
Industrial production rose 0.9%, the biggest increase since October 1999, in November that followed a revised 0.4% gain in October. Capacity use rose in November to 75.7%, the highest level since September 2002, from a revised 75.1% a month earlier.

  Jeff Bailey   12/16/20,  11:06:26 AM
11:00 Internals at this Link

At SPX 1,069, this would be just below MONTHLY R1 (1,070.83) and above WEEKLY Pivot (1,067.44). Break much below SPX 1,067 vulnerable to 1,063 and WEEKLY 61.8% retracement, which today is correlative with DAILY S1.

  Jeff Bailey   12/16/20,  11:02:31 AM
Swing trade bearish alert .... for QQQ $34.64 -0.41%, on bounce back to $34.75, stop $35.12, target $34.06.

  Jim Brown   12/16/20,  10:58:08 AM
The drop in SNDK today is an example of the profit taking drop we are expecting in January on most of the techs. There are multiple reasons being given for the SNDK drop but the bottom line is the drop on good news. The Top 50 Stocks renewal special is a way to capitalize on this type of move by providing the setups in advance of the January drop. If you have not reserved one already you need to get your order in this week. All orders by next Sunday will have the CD by Christmas. Link

  Jonathan Levinson   12/16/20,  10:48:30 AM
Jeff, I'm not a conspiracy theorist. My only point here is that the mainstream media no longer does its job, which is to scratch below the surface to get to the truth, which is the role that the constitutional founders originally foresaw for them. With some notable exceptions (ie David Brinkley), much of our media has been reduced to cheerleaders and bullhorners. I do not agree with your comments about "constant conspiracy theoriest". But I do find the failure of the Saddam rally quickly followed by a news release about the capture of his second in command to be amusing- and the tape barely twitched in response to it.

Great discussion- back to the salt mines :)

  Jeff Bailey   12/16/20,  10:48:07 AM
QQQ $34.65 -0.37% ... back near the lows of the session.

SNDK -6.7%, DLTR -4.5%, BBBY -4.14%, MCHP -2.58% lead weakness

RYAAY +4.45%, ERTS +3%, CHKP +2.6%, ADCT +2.28% lead advancers

Heavyweights MSFT +0.78%, INTC -0.79%, CSCO -0.5%, AMGN -0.18%.

  Linda Piazza   12/16/20,  10:47:41 AM
The financials as represented by the BIX and the BKX continue to challenge the important 30-minute 100/130-pma's. As Jeff has pointed out in the past, the BIX is more closed aligned with the OEX performance. The GSO turns down from a similar test, however, and the SOX falls soundly below the 12/10 low, eliminating the possibility of a double-bottom in the making. There's mixed performance here, although it's still not possible to claim that the financials are showing great strength since they're still challenging rather than surmounting those key averages.

  Jeff Bailey   12/16/20,  10:44:47 AM
That it Jonathan! ... Now I'm wondering where your more .... pessimistic commentary comes from.

  Jane Fox   12/16/20,  10:39:45 AM
Here here Jonathan, my sentiments exactly.

  Jonathan Levinson   12/16/20,  10:37:18 AM
It's for that reason that I'm a technical trader, Jeff. Charts, unlike news and statistics, tend not to lie.

  Jeff Bailey   12/16/20,  10:35:46 AM
That's great Jonathan. Eventually price action in the INDU, SPX, OEX will confirm all these bearish thoughts. It might be starting to show up in the NDX/QQQ. However, all this conspiracy stuff, which has been around since March, hasn't had much impact on price action (to the downside).

Nervous shorts, are probably traders that are short, based on conspiracy theory, and when price action moves against them due to some "unexpected" event, where they've been lulled into complacency by constant conspiracy talk, have to close out positions when the heat becomes to great.

It's "funny" when you're not short, but when you've got money at risk, its very different. Especially when dealing with futures, where yesterday morning, bears were sweating bullets. Non event? Anything that can impact investor/trader psychology is an event, and something bulls and bears must consider. Stocks didn't jump at the open yesterday because it was a non event, and more than a few probably had to close out to mittigate risk of the unknown.

  Jonathan Levinson   12/16/20,  10:25:06 AM
I have no idea, Jeff, but I've read some excellent and very compelling arguments supporting the assertion that he did. Again, I'd believe anything. My point here is that most of this "news" is a non-event for the markets, and much of it is being used for manipulation purpose, both of public opinion and investor sentiment. The only people other than nervous shorts who were swayed by Saddam's capture are people like my mom, who thought it would be bearish for gold, and then instantly agreed with me when I poo-pooed it.

9/11 was a catastrophe, but many of the global financial scenarios current in play are equally serious. That's a very big statement. Don't doubt for a minute that news like Saddam's capture or the killing of his sons or whatever wouldn't be used, or even delayed or timed to fit the perceived ends of those closer to the top of the decisionmaking chain.

  Linda Piazza   12/16/20,  10:20:52 AM
Both the GSO and the BKX have at least temporarily drawn back from their tests of their 30-minute 100/130-pma's. The BIX continues to flatten without yet touching its linked averages. The SOX bounce is at least temporarily failing. The advdec line dips again. So far, these various indications don't support continued strength, but it feels a bit as if the markets are gingerly feeling out the upside, feeling out the downside, trying to make a decision.

  Jeff Bailey   12/16/20,  10:20:44 AM
Jonathan ... do you believe President Bush knew about the September 11th terrorist attacks prior to their happening?

  Jonathan Levinson   12/16/20,  10:19:25 AM
Jeff, I'll laugh harder if they announce that they've "found" OBL tomorrow. How many believe that they've been holding Hussein captive for the past few months? At this point, I'd believe anything.

  Jeff Bailey   12/16/20,  10:17:28 AM
Per Jonathan's 10:13:31 I'm not sure too many shorts were laughing Sunday morning or at Monday's open.

  Jeff Bailey   12/16/20,  10:13:28 AM
10:00 Internals at this Link

  Jim Brown   12/16/20,  10:12:19 AM
Rumor making the rounds that Saddam's second in command has been captured.

  Jonathan Levinson   12/16/20,  10:10:35 AM
The put to call ratio has opened at .72, VXO 16.49- neutral readings.

  Linda Piazza   12/16/20,  10:08:30 AM
The GSO now tests its 30-minute 100-pma, inching slightly above that average. RSI, Momentum, and CCI hook up, but CCI still is below signal as is Momentum. The BIX perhaps begins to flatten beneath its linked averages, with oscillators showing similar configurations. This flattening could be a consolidation before another push or a sign of hesitation before a decline, with oscillators not clearly supporting either thesis. The SOX has continued its bounce, but rather weakly so far. The OEX managed a climb above Keltner resistance, but it's going to need continued and/or renewed strength from the big caps in these other indices to keep building on these gains. It all feels a bit precarious as yet.

  Jonathan Levinson   12/16/20,  9:56:41 AM
1.75B reverse overnight repo for a net drain of 7.75B. Could be the Fed trying to slow the destruction in the dollar.

  Jeff Bailey   12/16/20,  9:54:55 AM
QQQ $34.78 -0.02% ... session low has been $34.63, which comes at our WEEKLY 61.8% retracement. WEEKLY Pivot of $34.94 viewed as resistance, with potential "max pain" option expiration of $34.00.

  Linda Piazza   12/16/20,  9:53:23 AM
The SOX came within a few cents of hitting that 12/10 low and now tries to bounce. The BIX draws even closer to the linked averages I mentioned earlier. The OEX retraced a little more than 50% of the first five-minute candle, but now rises strongly, hitting a new high for the day, but it's going to need the continued cooperation of the financials and some of the big-cap techs to continue to climb. Keltner resistance for the OEX is beginning to gather just above its current level.

  Jeff Bailey   12/16/20,  9:48:35 AM
Lack of bid for homebuilders now has me a bit skeptical for bid in the S&P Banks (BIX.X).

Was not able to cover the banks in last night's wrap, but I did think today's construction numbers were going to be important after recent mortgage lender warnings.

  Linda Piazza   12/16/20,  9:47:43 AM
The Kbw Bank Index BKX also shows some strength this morning, but it's also headed directly into a test of its linked 30-minute 100/130-pma's. If the financials represented by BIX and BKX can pull above those averages, they might stabilize other sectors, but if they roll over beneath those averages, they'll contribute to the overall weakness.

  Jonathan Levinson   12/16/20,  9:47:03 AM
Easy Al ain't so easy, with a reverse repo announced. With 6B expiring today, at least that much is draining. I await the quantum when it's announced at 10AM.

  Jeff Bailey   12/16/20,  9:46:16 AM
Toll Brother (TOL) alert $39.46 -0.7% ... stopping out on day trade long

  Linda Piazza   12/16/20,  9:45:15 AM
Of the indices I'm monitoring, the BIX (S&P Banks) Index is showing the most strength, headed up for a retest of its closely linked 30-minute 21-, 100-, and 130-pma's, all between 330.75 and 331.10, with the BIX currently at 329.75.

  Jeff Bailey   12/16/20,  9:45:03 AM
Dow Jones Home Construction (DJUSHB) 571.62 +0.44% ... sitting right on mid-point of upward trending regression.

  Jeff Bailey   12/16/20,  9:43:08 AM
Toll Brothers (TOL) $39.77 +0.05% .... will adjust stop lower from $39.75 to just under RED #2 of $39.54.

  Linda Piazza   12/16/20,  9:40:51 AM
The SOX deepens its declines, but it's pierced through the outer 1.35% envelope on its 30-minute chart, continuing to show that it's extended to the downside and has been for a while now. It's approaching the 476.35 low of 12/10, so this could be a prime bounce point for the SOX. The presumption now is that it would then roll over at one of the overhead resistance levels, but sometimes when an index or equity is so overstretched, it's propelled through that resistance.

  Jeff Bailey   12/16/20,  9:38:51 AM
Toll Brothers (TOL) alert $40.05

  Linda Piazza   12/16/20,  9:37:29 AM
The GSO gapped up this morning but now deals with the 30-minute 100/130-pma's. It pierced both those averages this morning before beginning a retracement.

  Linda Piazza   12/16/20,  9:34:19 AM
The first five minutes of the OEX saw a range from 530.53 to a high of 532.25, with a midpoint at 531.39, and the OEX currently above that level. Let's see what happens during the first reversal. (Note: I'm not sure my data feed is reliable today.)

  Jeff Bailey   12/16/20,  9:34:11 AM
Day trade long alert ... Toll Brothers (TOL) $40.36 +1.53% for pullback entry of $40.05, stop $39.75, target $41.50.

  Jane Fox   12/16/20,  9:28:31 AM
According to a quarterly MANPOWER Inc survey, more U.S. employers expect to boost hiring than to reduce jobs during the first quarter of 2004. The company said it has been five years since hiring expectations rose between the fourth-quarter survey and the first quarter

. Employers in the West are the most bullish, while those in the Midwest are the least.

  Linda Piazza   12/16/20,  9:27:47 AM
As Jim mentioned on the futures side of the board, we see mixed signals for the OEX today, based on yesterday's candle. That type of candle is usually followed by a decline, so we'll be especially watchful at the open, knowing that the October 9 similar candle was followed by a consolidation day and then a climb.

  Jonathan Levinson   12/16/20,  9:14:35 AM
+DJ US November Industrial Production +0.9%; Consensus +0.5%

*DJ US Nov Capacity Use Up 0.6-Pt To 75.7%; Consensus 75.3%

*DJ US Oct Industrial Production Revised To +0.4% From +0.2%

*DJ US Oct Capacity Use Revised To 75.1% From 75.0%

  Jane Fox   12/16/20,  9:08:25 AM
As part of its plan to settle allegations that it allowed improper trading of its funds, Alliance Capital has offered to reduce its mutual-fund management fees by 20% for the next five years, saving investors an estimated $350 million. This will come on top of the $250 million fine that Alliance is expected to pay to settle civil fraud, the largest ever levied against a mutual-fund company.

  Jonathan Levinson   12/16/20,  8:43:43 AM
They have completely failed to mention building permits which came in at -5.4% or 1.8874M. expected was 1.901M This is not positive compared to the housing starts. It seems that CNBC does not mention any of the less than expected news unless they have to. Any input. Suzanne

Not on the data itself, because it's still way up in blowoff territory. The details don't concern me, and analyst expectations are equally irrelevant to the global trend, more of a way of manipulating sentiment than anything else- the markets have reason to rejoice on bad data if it exceeds analyst expectations, that sort of thing. As for CNBC, it's clear that they're loyal to their employer, which would be GE. I'm told that CNBC Europe is far more balanced in its reporting- obviously not a difficult feat.

  Jonathan Levinson   12/16/20,  8:33:00 AM
Housing starts 2.07M, permits 1.874M, 20 year high.

  Jonathan Levinson   12/16/20,  8:32:10 AM
Current account -135B.

  Jonathan Levinson   12/16/20,  8:29:52 AM
CPI -.2 largest drop since April, core -.1 largest drop since 1982.

  Jonathan Levinson   12/16/20,  8:10:27 AM
At 8:30AM, we await Building permits for Nov, exp .1%, core CPI exp. .1%, CPI exp. .1%, Q3 current account -136B and housing starts, exp. 1.914M. Capacity utilization is expected at 9:15AM, 75.4%, as well as industrial production at .5%.

  Linda Piazza   12/16/20,  7:19:41 AM
Good morning. The Nikkei fell in Tuesday's trading, although it didn't erase all of Monday's gains. It closed down 219.17 points or 2.09%, at 10,271.60. The Bank of Japan concluded its two-day meeting, leaving rates unchanged as expected and saying that the economy's strength would offset the deleterious effects of the strengthening yen. The bank revised up October's leading indicators index and its outlook for the economy in December. Market watchers cited yen strength against the dollar and disappointment with Wall Street performance yesterday as reasons behind the decline. Some banks and automakers were hit hard by the yen's strength. Many tech-related exporters declined. One exception was Toshiba, closing flat after it upped sales estimates for China. NTT DoCoMo was also hit by a media report that it would not go forward with a planned joint venture with Time Warner's AOL division.

Other Asian bourses traded down, too. The Taiwan Weighted lost 0.62% and South Korea's Kospi lost 1.38%. The financial sector in South Korea was hit hard by fears that banks may be impacted by loans issued to the troubled credit card division of LG Group. Singapore's Straits Times fell 0.81% and Hong Kong's Hang Seng declined 2.08%. The Hang Seng was hit hard by big losses in BOC Hong Kong. China's Shanghai Composite fell 0.27%.

Most European markets also trade lower to flat this morning, many hit by dollar weakness and disappointment with the performance of U.S. markets yesterday. The euro hit new record highs against the dollar in overnight trading. Also, Cap Gemini lowered expectations, citing contract delays by some of its IT customers.

Currently, the FTSE 100 has lost 5.50 points or 0.13%, to trade at 4342.50. The CAC 40 has lost 18.11 points or 0.52%, to trade at 3472.31. The DAX has declined by 28.59 points or 0.74%, to trade at 3846.88.

  Jeff Bailey   12/15/20,  8:56:08 PM

Pivot Matrix for tomorrow at this Link

  Jim Brown   12/15/20,  6:54:21 PM
2003 Annual Renewal Special

OptionInvestor's TOP 50 Stock Picks for 2004

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  OI Technical Staff   12/15/20,  6:52:48 PM
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