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  Jeff Bailey   1/5/2004,  6:01:50 PM
Pivot Matrix for tomorrow posted at this Link

Considering today's volume build, another "gap and crap" (see 15:48:05) might be alert to is a gap above today's high, maybe QQQ WEEKLY R2, and a surge in bearish short covering.

  Jeff Bailey   1/5/2004,  4:25:25 PM
Closing Internals at this Link

  Linda Piazza   1/5/2004,  4:00:57 PM
Jeff may have mentioned this already, but as of a few minutes ago, the new highs for today were 938.

  Linda Piazza   1/5/2004,  3:57:23 PM
Over the last few weeks, I've watched a number of individual stocks hit important Fib levels--NTES hitting a 50% retracement of this year's rally off its bear-market lows, for example--and then bouncing from those important levels. That's why I'm watching the OEX's 38.2% retracement of the bear-market decline so closely and thinking it will be important. MACD and Fib levels have evolved into my favorite tools this year, as they're the only ones that have proven to have any sticking power. Even bullish percents have not been as helpful this year as in the past, because they've been showing us the risk in bullish positions for a long while now, without that risk materializing. For those of us concerned with risk control, that has curbed our ability to participate freely in the gains.

  Jeff Bailey   1/5/2004,  3:54:19 PM
I'm aware that reverse head/shoulder pattern tend to be bottoming patterns. I was just wondering if any bears thought it correlative that the objective was very close to the current upside risk level for bears based on the fitted retracement I've been showing in this contract.

  Linda Piazza   1/5/2004,  3:53:43 PM
If the OEX overshoots the 38.2% retracement of the bear-market decline, at just above 560, next strong resistance shows up near 572-574, with resistance pretty thick up to 578 on the weekly chart.

  Linda Piazza   1/5/2004,  3:50:28 PM
Keltner support for the OEX now gathers rather thickly at 556-556.45.

  Jeff Bailey   1/5/2004,  3:45:57 PM
Jonathan/Jim/Keene.... is that a reverse head/shoulder pattern on the es04h? Neckline at 1,118? Price objective about.... 1,132.50? Shoulder at my bullish bias level of 1,112?

  Linda Piazza   1/5/2004,  3:40:52 PM
Friday I mentioned that one element missing from our interpretation of the trading pattern as a key reversal day was volume. Pring has strict parameters for considering a day a key reversal day and one of those is explosive volume on the first move in the prevailing direction. Of course since Friday was a holiday-week day, trading volume was not explosive. That means there was no buying crescendo to shake out all weak shorts so that the market could then go down. We're seeing today that we should have all parameters in place before counting our reversal signals, as I warned on Friday, but really, we've had one after another reversal signal for much of December, and even throughout the year since March, without those signals meaning much. This is truly going to be the year that rewrites the technical analysis texts. I'm not bearish: just scared to commit money when the markets are not retracing and consolidating their gains, showing me where support lies.

  Jim Brown   1/5/2004,  3:37:26 PM
Initial market on close orders mixed with a BUY side bias

  Linda Piazza   1/5/2004,  3:28:00 PM
Wow. Maybe I was serious about OEX 560 being tested today. After all, we've got 30 minutes left and only 3.40 points to go.

  Linda Piazza   1/5/2004,  3:15:19 PM
The OEX should have first support at 555.60 according to the Keltner channels, with 555 likely to be strong support beneath that.

  Jeff Bailey   1/5/2004,  3:13:36 PM
QQQ $37.13 +2.11% ... session highs (grin) and nearing WKLY R2 of $37.16 .... Swing trade bull alert ... will stick with exit at $37.25 if hit today before 04:15 PM EST close.

With S&P futures and es04h threatening to close well above 1,112.00, may see BIG follow through session to upside tomorrow. Until then... will stick with plan.

  Linda Piazza   1/5/2004,  3:13:26 PM
The OEX has broken out of the Keltner channels, which says that it's very extended on a five-minute basis. Such a breakout usually, but not always, produces a downturn. However, upside breakout signals can be produced by Keltner channels, too, so that this signals a time of danger to both bulls and bears. Well, just bears, probably.

  Linda Piazza   1/5/2004,  3:07:29 PM
Obviously, the one-minute H&S did not reach its downside target and the market action showed us strength rather than weakness. As is true of rejected H&S formations--at least something remains true these days--the reaction was swift and explosive when the H&S was rejected and the OEX moved higher. Now, if only technical analysis truisms worked the other direction, too, we'd have something we could work with and believe in.

  Jeff Bailey   1/5/2004,  3:04:42 PM
03:00 Internals at this Link

  Jeff Bailey   1/5/2004,  3:03:50 PM
QQQ $37.10 +2.03% ... session highs. With bond market closed, looks like there are some jittery bears that don't want to go home short.

  Linda Piazza   1/5/2004,  3:03:28 PM
And another new day's high for the OEX. OEX 560, here we come? (Note: This is not a serious market prediction.)

  Linda Piazza   1/5/2004,  2:57:31 PM
For what it's worth, or not worth, the OEX has confirmed a H&S on the one-minute chart, with a downside target at about 554.45. However, immediately after dropping through the confirming neckline, the OEX is steadying, so it's not sure whether even this very short-term downside target can be met. The only reason I mention such a short-term target is that it helps us to watch whether bearish formations are being confirmed and then if the downside targets are met. This helps us watch short-term strength and weakness.

  Linda Piazza   1/5/2004,  2:41:46 PM
Key reversal days, doji, gravestone doji, shooting stars: it doesn't matter which reversal signal has been produced during the December climb. The OEX has continued climbing. It's almost funny.

  Linda Piazza   1/5/2004,  2:39:03 PM
Since pushing up through its descending trendline in early December, daily MACD has been climbing as price climbs, being the best indicator now of price action. Although it had looked a bit as if it wanted to flatten at the end of last week, it's still climbing. I can't stop focusing on the sharpness of the December climb, however. Short of going completely vertical, it's hard to imagine a sharper climb or a less sustainable one, but OEX 560 remains both a price magnet and the strongest resistance the OEX will have faced in a while. I don't know whether the force of that magnet is going to draw the OEX up to 560 or whether the force of the resistance is going to repel it before it can climb much higher. It's a draw as far as I'm concerned. I'm not intending a bearish stance here, but again focused on what's sustainable and what's not.

  Jeff Bailey   1/5/2004,  2:22:00 PM
02:00 Internals at this Link

  Linda Piazza   1/5/2004,  2:08:58 PM
The TRAN is far from hitting new or equal intraday highs. Last week, I mentioned the Wilshire, too, and like Jim I want to see how it's performing. Right now, it also is not yet hitting an equal or higher intraday high, although it's putting on a more convincing test of this morning's high than is the $TRAN, at 3016.75 well below this morning's 3031.52 high.

  Linda Piazza   1/5/2004,  2:05:54 PM
Just as I entered that last post, the OEX pushed high enough above this morning's high to undo the possibility of the intraday double-top at least. We might give the longer-term one a little more leeway, but it would certainly require a leap of faith to draw the conclusion that the OEX is going to turn around right here since 30-minute oscillators remain mixed and 60-minute ones look bullish. The OEX is hitting Keltner resistance and again challenging the trendline off the 12/10 low, but it's been climbing the underside of that trendline most of the day.

  Jeff Bailey   1/5/2004,  2:02:38 PM
Dow Dog's / INDU Forecast ... Hi Jeff: I really liked this weekends column on the Dow Dogs, and the notes you made on the historical performance 1996 and 1997 is rather bullish. I know you don't like to try and forecast a close for 2,004, but do you think it is unreasonable for the Dow to trade 12,000 this year?

No I don't think it unreasonable at all. In fact, after last Wednesday's NASDAQ Composite close of 2,003, why not a Dow Industrials 2004 close of 12,004 ?

  Linda Piazza   1/5/2004,  2:01:19 PM
We still have that possibility of those two double-top formations. My 1:49 post is not showing up on my MM, so I'm not sure if it's showing up for readers, either. I'm repeating it here just in case, since it lists a couple of possible confirmation levels and a couple of possible downside targets, if those confirmation levels should be hit: Now we have the possibility of two double tops on the OEX. One is a double-top formation off today's two intraday highs, with a drop through 553 confirming that intraday double top and setting up a downside target near 551. This potential double-top formation is part of a larger double-top formation, with a confirmation level down at Friday's low near 548. A fall through that confirmation level would set up a downside target 7 points lower, so down near 541. Neither of these has happened yet, and it's still possible and maybe even probable given the nature of the markets these days that there will be a push toward new highs. I just can't see the OEX pushing easily through 560 without a regular and expected pullback to consolidate December gains, though, but as Jonathan says, I've been fooled before.

  Linda Piazza   1/5/2004,  1:56:11 PM
The OEX just hit a new high, by a penny.

  Linda Piazza   1/5/2004,  1:49:05 PM
Now we have the possibility of two double tops on the OEX. One is a double-top formation off today's two intraday highs, with a drop through 553 confirming that intraday double top and setting up a downside target near 551. This potential double-top formation is part of a larger double-top formation, with a confirmation level down at Friday's low near 548. A fall through that confirmation level would set up a downside target 7 points lower, so down near 541. Neither of these has happened yet, and it's still possible and maybe even probable given the nature of the markets these days that there will be a push toward new highs. I just can't see the OEX pushing easily through 560 without a regular and expected pullback to consolidate December gains, though, but as Jonathan says, I've been fooled before.

  Jane Fox   1/5/2004,  1:45:35 PM
The Semiconductor Industry Association has stated global sales of semiconductors rose 26% in November, a exceptionally strong month caused by an unexpectedly strong demand for such products as computers, mobile phones, consumer electronics devices such as flat television sets and portable gadgets such as music players. This has pushed sales for the 11 months in 2003, 17% ahead of the same period in 2002. The SIA also expects total 2003 sales to exceed the forecast of 15.8% growth.

  Jane Fox   1/5/2004,  1:37:08 PM
IBM has dismissed three executives of its 2,500-person Korea unit as a result of a bribery and bid-rigging scandal. The Seoul District Prosecutor's office indicted 48 individuals and companies on charges of bid-rigging and bribery in the sale of computers and services to Korean government agencies and businesses including the armed forces, the tax service and telephone and broadcasting agencies. Among those indicted were the 3 IBM Korean IBM fired.

  Linda Piazza   1/5/2004,  1:35:40 PM
Thirty-minute oscillators show momentum headed down, MACD turning back up, and both CCI and RSI, usually the earliest movers, completely flat. That's the type of maddening configuration we've see far too often lately. I've been surprised today that RSI hasn't been moving since it's usually the first to indicate an incipient move, but maybe I've been looking at it wrong. Maybe it has been pointing the way all day--and that way has been flat.

  Linda Piazza   1/5/2004,  1:28:48 PM
The OEX is turning down again ahead of 555.05. This still isn't settled, although if the OEX continues to drop, special attention now should be paid to 553.70, the location of the top support of what we should now presume was a bull flag. We're coming up on the usual stop-running time of day, too, but remember that markets sometimes do continue in the direction of the stop-running push.

  Jeff Bailey   1/5/2004,  1:23:37 PM
Net2Phone (NTOP) $7.79 +15.82% .... upside alert here at 52-week high.

  Jeff Bailey   1/5/2004,  1:19:26 PM
Jim's 13:14:31 comments.... guess what happened at futures 1,112.00?

  Jeff Bailey   1/5/2004,  1:18:42 PM
QQQ $36.99 +1.7% ... highs of the day

  Jeff Bailey   1/5/2004,  1:17:43 PM
Buy Prog. Prem. Alert SPX = 1,117.07 ... this should bring in some substantial short covering.

  Linda Piazza   1/5/2004,  1:12:48 PM
The OEX did break through the top of what appeared to be a bull flag. Wait now for a confirming move over 555.05, Friday's high, to obviate the possibility of an equal high. Even then, there's 560 staring us in the face.

  Jeff Bailey   1/5/2004,  1:12:40 PM
Dow Industrials (INDU) 10,503 +0.89% ... edges to a session higher here. After that sell program premium alert hit and drove INDU to afternoon low, its been a strong intra-day bounce back higher.

  Jeff Bailey   1/5/2004,  1:10:58 PM
01:00 Internals at this Link

  Jeff Bailey   1/5/2004,  1:06:27 PM
S&P 500 Index (SPX.X) 1,116.51 +0.72% ... trying to make its way above that 1,116.00 level. If a buy program comes in, could see a nice intra-day pop back higher... take out the session highs... get a little short-squeeze going.

  Ray Cummins   1/5/2004,  1:02:50 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Strong Sectors

Earlier, I mentioned the robust upside activity in semiconductor shares and among the other portfolio issues in this group are Fairchild Semiconductor (NYSE:FCS), Linear Technology (NASDAQ:LLTC), Qlogic (NASDAQ:QLGC) and Microchip (NASDAQ:MCHP). Another "hot" market segment includes the China-related companies and our new positions in Sina Corporation (NASDAQ:SINA) and Sohu.com (NASDAQ:SOHU) are performing very well. The oil industry has been bullish in recent weeks and today's session lifted Marathon Oil (NYSE:MRO) to a multi-year high while ending recent profit-taking in Smith International (NYSE:SII) and Noble (NYSE:NE). In the broader-market sectors, buying pressure has reemerged in Chicago Mercantile Exchange (NYSE:CME) and also continues in Winnebago (NYSE:WGO), which is testing "all-time" highs near $70.

  Jeff Bailey   1/5/2004,  12:56:14 PM
S&P Cash/ futures ... do traders see what took place with that sell program (MM 12:27:45)? SPX (cash) tried making a move above 1,116.00 right when sell program hit, which also came right as es04h traded 1,112.00 (1,111.75).

Sell program premium generated with sell basket of cash, buy futures.

This may now mark an important afternoon range.

  Linda Piazza   1/5/2004,  12:54:09 PM
The OEX 30-minute 18/21-pma's now converge near 552.80, with the dip this 30-minute period to 553.02 constituting a dip to those moving averages. Thirty-minute oscillators show a tendency to flatten with clear bearish divergence from this morning's equal highs, but nothing much has come of that bearish divergence as of yet. This still could be a double top in the making and this still could be a bull flag pullback. Until the OEX reaches a lower 30-minute low, that bearish divergence can still be undone, too, but I think we're going to have to wait to see whether we get the afternoon ramp job to be sure. It's possible that the OEX could ping-pong between 550 (the 60-minute 21-pma) and 560 before it finally decides what it needs to do.

  Jeff Bailey   1/5/2004,  12:34:56 PM
Microsoft (MSFT) $28.00 +2.04% Link .... today's high so far $28.10, just a penny below its January MONTHLY R1.

Today's trade at $28.00 is 3-box reversal back higher, and after hovering around $25.00 back in November, demand looks to be building once again. Still longer-term bullish and vertical count of $44.

  Linda Piazza   1/5/2004,  12:31:07 PM
Instead of the OEX falling through the bottom support of the possible bull flag, as appeared to be happening as I was hurrying to add the last post, the OEX instead bounced from that bottom support, heading from the top to the bottom of the flag and perhaps up again, all during the course of two five-minute candles.

  Linda Piazza   1/5/2004,  12:28:27 PM
The current OEX five-minute candle pierced the descending trendline off today's high--the possible top line of the bull flag--and then immediately fell back. It's falling now toward the bottom of the possible flag, and may be falling through bottom support as I type.

  Jeff Bailey   1/5/2004,  12:27:45 PM
Sell Prog. Prem. Alert (first one today) ... SPX = 1,115.15 , QQQ = $36.90.

  Jeff Bailey   1/5/2004,  12:15:34 PM
Swing trade bull alert ... Update .... Friday's update was to raise stop to $36.17 and raise target to $37.25. With today's bullish action, will most likely raise bullish stop to break-even should QQQ close at session high, which I think all major indices will do today. Will check tomorrow's DAILY Pivots. Bullish % reversals from Friday's action looks to have demand back on the build.

  Jeff Bailey   1/5/2004,  12:09:42 PM
12:00 Internals at this Link

  Ray Cummins   1/5/2004,  12:08:54 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Semiconductor Shares Rally!

Among the better performing stocks in the market today are semiconductor shares and in this group, KLA-Tencor (NASDAQ:KLAC) appears to be one of the strongest issues. KLAC is up $2.35 at $59.79 after S.G. Cowen said the chip sector will benefit from what it expects will be a 35% increase in capital spending in 2004 and 2005 and "panicked buying" after years of limited investment. The brokerage estimates industry orders could rise 45% or more, substantially bolstering the bottom-line for the larger companies in the group. Cowen also noted that KLAC has the sector's best long-term fundamentals given its "monopoly position" in the diagnostics and control market. Our current "premium selling" position in KLAC is bearish at $60, based on the recent trading-range top near that strike, however we expect a (technical) change of character to occur if the issue closes above short-term resistance at $60.

  Jonathan Levinson   1/5/2004,  12:08:01 PM
The put to call ratio has jumped back up to neutral territory in the past half hour to .75, VXO 17.69. The TRINQ has been steady above .80 since its sudden jump up from .28. Despite this equalization in the internals, price has remained firm, and it's a tossup as to which way these divergences will resolve themselves.

  Jeff Bailey   1/5/2004,  12:01:55 PM
QQQ $36.87 +1.4% ... intra-day chart of QQQ at this Link , where WEEKLY R1 certainly finding buyer support.

  Linda Piazza   1/5/2004,  11:59:05 AM
So far today, the $TRAN continues following Friday's pattern, with a gravestone doji so far showing a tall upper candle reaching up toward that March 2002 high and falling back. The day is far from over, but the $TRAN's daily 21(3)3 stochastics are now rolling down but not yet out of territory indicating overbought conditions--they could still just be making an inconsequential move while trending at that level. MACD looks as if it wants to roll down, but hasn't quite yet. The 5(3)3 stochastics have already rolled down and reached far toward territory indicating oversold conditions, all while the $TRAN has consolidated near its recent high. That roll down while prices consolidate can be a sign of strength, but if the $TRAN continues to fall lower during today's trading, it will soon face its 10-dma at 3000, and that's where we'll get our first corroboration of either strength or weakness.

  Jim Brown   1/5/2004,  11:54:08 AM
I am using the Wilshire 5000 as my real resistance test for January. There is monster resistance at 11,000 and we are nearing that level now. The Wilshire is not as sensitive to the Dow stock movement and it contains the majority of the tech stocks. It is the broadest cross section of the market and should be the most reliable predictor of support/resistance levels. The 11,000 resistance is suggesting we are not going much higher. This would probably equate to Dow 10600 or so if we do get a continued bounce. The Dow has the same resistance at 10650. Link

  Jeff Bailey   1/5/2004,  11:51:06 AM
Intel (NASDAQ:INTC) $32.73 +1.74% Link moving back above a rounding flat 50-day SMA. Trade at $33.00 would be 3-box reversal back higher, giving bulls leverage with stop just below at $29.00.

  Jeff Bailey   1/5/2004,  11:49:05 AM
NASDAQ-100 Heatmap (15-min delayed) at this Link

Per 11:00 update, semi-equipment AMAT, KLAC, NVLS hold 4 of top 10.

  Linda Piazza   1/5/2004,  11:47:55 AM
The current OEX pullback still looks as if it might be a bull flag pullback although other evidence argues against that interpretation. The midpoint between today's high and today's low lies at 553.07, so I would expect an upside break possibly before that level is reached. However, if one includes the total range from Friday afternoon's low to today's high, the midpoint lies lower down, near 551.50, so I don't think we can negate the possibility of this being a bull flag until and unless the OEX moves lower than that.

  Ray Cummins   1/5/2004,  11:47:54 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Homebuilders Slump!

One of the few industries underperforming the market today is the homebuilders segment and fortunately, our new plays in Centex (NYSE:CTX) and Ryland Group (NYSE:RYL) are bearish. CTX shares are off $2.74 at $101.66 while RYL is down $2.64 at $82.44, however both stocks opened the session near Friday's closing prices. That means there was some (limited) opportunity to participate in the suggested call-credit spreads, albeit at slightly lower prices, and we did notice a few traders in each position.

  Ray Cummins   1/5/2004,  11:37:01 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Inamed (NASDAQ:IMDC)

It's easy to talk about all the winners in our portfolio but it is necessary to monitor the losers as well and one of the few bearish issues in today's session is IMDC. Shares of the maker of products for use in plastic and reconstructive surgery are down $0.88 at $47.12, despite a report confirming that the Food and Drug Administration has denied two petitions seeking to delay a review of Inamed's pre-market approval application for silicone gel-filled breast implants. In a press release this morning, the company said the FDA denied two petitions seeking to block the application process on procedural grounds and the decision has no bearing on the current review. That's great news for IMDC, since the company is still trying to have its version of implants approved, and some analysts believe the administration will complete the current phase of its review in the next few weeks. Our position is bullish with a basis near $43, so the activity in IMDC shares will likely have our undivided attention in the near-term.

  Jeff Bailey   1/5/2004,  11:32:18 AM
Buy Prog. Prem. Alert SPX = 1,115.56

While I'm 10-minute delayed on futures... my guess is es04h may be kissing that 1,112.00 bullish bias level.

  Linda Piazza   1/5/2004,  11:22:18 AM
Lots of possibilities, all conflicting, remain today. The OEX could still be in the process of developing a double top formation, with 30-minute MACD having reached a lower high while price was reaching that equal high. However, the pullback seen on that 30-minute chart looks suspiciously like a bull flag, and 60-minute indicators in full bull run with room to go hint that even if this is a double top, the OEX may not yet be ready to roll down. Personally, I wouldn't be surprised to see a spurt up closer to OEX 560, but I would be very surprised to see that surpassed by much without a real and long overdue pullback to consolidate gains. I wouldn't be surprised to see that the pullback is already in progress, either.

  Ray Cummins   1/5/2004,  11:16:02 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Gen Probe (NASDAQ:GPRO)

Stocks are flying high on the first "real" day of trading in 2004, however one issue has refused to participate in the upside activity. Gen-probe shares are off $2.32 at $34.19 in the wake of a downgrade by Merrill Lynch. Merrill noted the company's P/E of 58, which is certainly high on a relative basis, and said that GPRO's "excellent prospects" are already reflected in the current stock price. Our position is bullish with a cost basis near $34.50, thus we are tasked with determining whether the event is simply justification for a near-term correction or if it foretells of a new downtrend.

  Linda Piazza   1/5/2004,  11:13:44 AM
The OEX is slipping below what should have been Keltner support, but the next level that should be watched closely is 553.45, as a drop below that will be a drop below the low that has been seen after the first five-minute climb.

  Jim Brown   1/5/2004,  11:05:26 AM
Up volume 4:1 over down volume but it is not heavy. It appears there is still a lot of indecision by the institutions. Probably still waiting for the mail from today to be opened and the retirement cash inflow added up.

  Jeff Bailey   1/5/2004,  11:03:10 AM
11:00 Internals at this Link

  Linda Piazza   1/5/2004,  11:01:54 AM
Both 30- and 60-minute MACD, an indicator that I've grown to trust more this year than other indicators, remain flat and inconclusive as the OEX continues to test recent highs. RSI is flat, too, and RSI usually is the first indicator to signal a possible move. However, the move off today's high, as seen on the 30-minute chart at least, could be a bear flag pullback, one that might soon break to the upside.

  Jonathan Levinson   1/5/2004,  10:47:04 AM
There's an additional 6.75B in 5 day repos from Dec 31st expiring today, bringing the total to 10B in net drains. This is a very large drain, and hints at fear on the part of the fed, most likely in defense of the dollar following the large dip following the speeches from Al Green and Bernanke.

  Jim Brown   1/5/2004,  10:44:40 AM
New Bernanke speech today:
Monetary Policy and the Economic Outlook: 2004 Link

New Ferguson speech:
Lessons from Past Prodctivity Booms Link

  Linda Piazza   1/5/2004,  10:40:06 AM
It looks as if the OEX is going to make a charge at that previous high again, although 30-minute RSI--usually quick to move with price--isn't moving up. It's still flat.

  Linda Piazza   1/5/2004,  10:33:50 AM
The possibility of a double-top formation still exists on the OEX, with 30-minute RSI showing bearish divergence with the equal high reached today.

  Linda Piazza   1/5/2004,  10:27:51 AM
This sideways trade just below the day's high has negated the possibility of a H&S formation on today's intraday chart.

  Jeff Bailey   1/5/2004,  10:16:30 AM
HMO Index (HMO.X) 833.78 -3.29% Link .... lower this morning after Goldman Sachs downgrades managed care group, along with Pacificare (NYSE:PHS) $65.08 -5.02% Link and Humana (NYSE:HUM) $21.31 -7.06% Link

Goldman think Medicare reform most likely played out at this point and sees less upside to sector given higher valuations with PHS's forward P/E up over 50% from a year ago to 10.5-times Goldman's 2004 EPS and HUM's forward P/E up 80% from a year ago to 13.3-times thier 2004 EPS.

  Linda Piazza   1/5/2004,  10:15:43 AM
The OEX shows the possibility of forming a H&S top at this morning's climb. A move much above 554.50 would negate that possibility, however.

  Jeff Bailey   1/5/2004,  10:12:10 AM
QQQ $36.80 +1.21% .... post-economic report pullback in QQQ has been $36.74, but 5-minute bars won't close below WEEKLY R1 of $36.76 at this point. Hints computers have turned to some buying at this WEEKLY R1 and Friday's highs.

  Linda Piazza   1/5/2004,  10:10:17 AM
The $TRAN also has not yet moved above recently hit highs. The daily chart reveals a possible symmetrical triangle forming at the top of the climb. While such a triangle sometimes is expected to break in the direction the market was going before the triangle formed, weekly bearish price/MACD divergence hints that may not be true this time. We just have to wait to see. Lately, we've some price/MACD bearish divergences erased. As I've mentioned several times over the last week, I've thought the $TRAN test of the March 2002 swing high at 3050.40 might be important to watch. This is a make-it-or-break-it point for the $TRAN.

  Jeff Bailey   1/5/2004,  10:05:57 AM
10:00 Internals at this Link

Friday's Closing Internals at this Link

  Jonathan Levinson   1/5/2004,  10:04:27 AM
Opening put to call ratio .52, VXO down to 17.68, at the very low end for the p/c ratio.

  Jonathan Levinson   1/5/2004,  10:02:17 AM
A 6.25B overnight repo has been announced against the 9.5B repo expiring today, for a net drain of 3.25B.

  Linda Piazza   1/5/2004,  10:01:47 AM
First OEX support should be at 554-554.30, then at 552.50-553.25. The midpoint of the gap lies near 551, so that would be next support below the previous two.

  Jeff Bailey   1/5/2004,  9:59:35 AM
QQQ $36.81 +1.21% ... session high has been $36.87, which is right at our WEEKLY 19.1% retracement.

  Linda Piazza   1/5/2004,  9:58:33 AM
I still keep watching that OEX gap from this morning. Gaps aren't always tested or filled on the day they're produced, but I'm still watching for a possible gap test.

  Jeff Bailey   1/5/2004,  9:58:22 AM
Buy Program Prem. Alert SPX = 1,118.43 +0.89% ... 4th of the morning. No sell program prem. alerts yet today.

  Jim Brown   1/5/2004,  9:57:17 AM
Construction Spending = +1.2 % , est +0.9%

  Linda Piazza   1/5/2004,  9:55:47 AM
The OEX appers to have almost equaled Friday morning's high, with a trade at 554.96 almost equaling Friday morning's 555.05 high. I'm not confident of my numbers, however, because of the uneven feed and it's not yet clear that the OEX is turning down from this level. This could be setting the OEX up for a double-top near strong resistance, but it's far too early to make that assumption.

  Jeff Bailey   1/5/2004,  9:47:58 AM
QQQ $36.79 +1.17% .... moving above WEEKLY R1 ($36.76) here.

  Linda Piazza   1/5/2004,  9:41:22 AM
Careful. I continue to get spotty feed for the OEX on my charting system. If the OEX is sitting at a certain price . . . well, it's just possible it's not sitting there after all.

  Linda Piazza   1/5/2004,  9:40:04 AM
That's a big gap this morning on the OEX. We should expect a test of that gap, possibly at the first reversal, although if bullish sentiment carries, that might not happen. Bulls want to see such a reversal take the OEX no lower than the midpoint of the morning gap, at about 551.08, while bears want to see the OEX driven lower than that midpoint.

  Jeff Bailey   1/5/2004,  9:39:50 AM
Hongkong Ishares (AMEX:EWH) $10.50 +2.74% Link .... upside alert set here from Ask the Analyst column (10/12/03) Link

This double-top buy signal now establishes a preliminary bullish vertical count of $16.50.

  Linda Piazza   1/5/2004,  9:37:03 AM
Keltner channels, Donchian channels, and 30-minute 0.675% envelopes indicate a possible upside for the OEX between 554.50-555.40, but the OEX is now up against the rising trendline off the 12/10 low, and there hasn't yet been a first reversal, so it's difficult to be sure whether the OEX has the ability to reach toward those projected highs.

  Jeff Bailey   1/5/2004,  9:34:32 AM
Advance Auto Parts (AAP) $40.81 +0.24% Link ... trading 2:1 split today.

  Linda Piazza   1/5/2004,  9:33:51 AM
During the first five minutes of trading, the OEX spanned a range from 552.54, at one resistance zone, to 553.45, with a midpoint at 553. The OEX is above that midpoint, indicating strength in earliest trading, but as is always true, the first morning reversal has not yet occurred. We need to watch what happens during that first reversal.

  Jeff Bailey   1/5/2004,  9:32:31 AM
QQQ $36.68 +0.88% ... here's bar chart with new WEEKLY retracement overlay. Link

  Linda Piazza   1/5/2004,  9:31:50 AM
My charting service is now updating the OEX feed.

  Linda Piazza   1/5/2004,  9:31:20 AM
Be careful. My charting service is not getting the correct OEX feed. Yours might not be, either.

  Jim Brown   1/5/2004,  9:21:47 AM
Greenspan and Bernanke both spoke over the weekend:

Speech by Governor Bernanke on Fedspeak Link

Risk and Uncertainty in Monetary Policy Link

Monetary Policy in a Low-Interest Rate Environment, Reinhart Link

  Jeff Bailey   1/5/2004,  9:09:00 AM
09:00 Update posted at this Link

Three status changes in the bullish %.

  Linda Piazza   1/5/2004,  8:45:20 AM
The markets look poised to move higher in early trading this morning. As trading ended Friday, the OEX was moving up in what appeared to be a bear flag moving off the afternoon low with the expectation that the flag would break down before it retraced more than half the flagpole drop, with that midpoint at about 551.57. Keltner channels showed resistance gathering near 551.16 and the 30-minute 21-pma lies just above 551, both decent correlations with the point at which the bear flag should break down.

None of that took into account a possible gap up this morning. All bets appear off as the institutional trader returns to the market, and as firms issue a rash of upgrades and some downgrades this morning. Frankly, I'm not good at predicting where the OEX will open based on where the ES futures trade. Dollar weakness, news from the Detroit auto show, upgrades and downgrades: I expect it to take a while for the markets to sort out all the competing information. OEX 552.50-552.75 was a S/R zone from Friday, and 553.25 and 554 also provided some resistance, with the 553-554 zone being a S/R zone that shows up on monthly charts as well as the location of the rising trendline off the 12/10 low. My expectation now is a rise to test resistance in early trading, but beyond that I'm trying not to have too many expectations, watching to see how the early volatility might resolve. I continue to believe the 560 level will be the strongest resistance the OEX has faced in a long while.

In addition, the SPX currently faces one version of a neckline of the is-it-or-isn't-it H&S formation on its monthly chart, the formation that was hotly debated throughout part of 2002 and early 2003. Since the head was so out of proportion to the rest of the body, many questioned the validity of that H&S formation, and I was one of those unsure of its validity. However, my doubt doesn't mean that I'm ignoring that neckline, and neither should anyone else. The SPX has risen to face one version of that neckline, in fact turning down from that version on Friday.

  Linda Piazza   1/5/2004,  7:04:34 AM
Good morning. In its first day of post-holiday trading, the Nikkei opened almost 100 points higher and charged up another 77 points in the shortened session, settling about 37 points below the day's high. The Nikkei closed up 148.53 points or 1.39%, at 10,825.17. Although the dollar fell further (against the euro) after Federal Reserve Governor Ben S. Bernanke characterized the risk of a dollar crisis as quite low, automakers led the charge. Although these exporters are typically hit hard on dollar weakness, Honda, Nissan, and Toyota representatives spoke at a Detroit auto show, saying they expect increased sales in the U.S. Honda announced that it would enter the truck market and Toyota announced plans for the biggest truck in the U.S., a truck planned to compete with Ford's 150. Semiconductors also rose after industry spokespersons reported plans to increase capital spending. Banking stocks gained.

Other Asian markets traded higher, too. The Taiwan Weighted gained 1.39% and South Korea's Kospi climbed 0.35%. In South Korea, , troubled credit card company LG Card fell limit-down again, however, amidst worries about the structure of the bailout. South Korean semiconductor companies Samsung Electronics and Hynix Semiconductor both plan to increase spending to boost production, sending semiconductors higher. Singapore's Straits Times gained 2.08% and Hong Kong's Hang Seng gained 1.59%. China's Shanghai Composite climbed 3.37%. These gains in China came despite the government's seizing of control of China Southern Securities, the country's fifth-largest brokerage, on suspicion that the company had committed fraud against investors. Investors were cheered by government efforts to act against abuses in the financial sector.

European bourses are mixed this morning. The euro's rise against the dollar hit exporters, and this morning saw the release of disappointing economic numbers and a downgrade of European cyclicals to neutral by Goldman Sachs. GS plans to underweight European aerospace, autos, chemicals, and steel sectors. November's German retail sales dropped 1.8% over the previous month's, not meeting expectations. Although automakers were strong in Japan, many slipped lower in Europe despite a Smith Barney upgrade of Daimler Chrysler from sell to buy. Tire manufacturer Michelin announced that Honda and Nissan 2005 models will drive on its tires, with Michelin gaining as a result of that announcement. Telecoms were gaining in early trading after a Merrill Lynch upgrade of Dutch telecom operator KPN from neutral to buy. Siebel System's raising of Q4 estimates sent rival SAP higher in European trading.

As of this writing, the FTSE 100 has lost 5.10 points or 0.11%, to trade at 4505.10. The CAC 40 has lost 12.70 points or 0.35%, to trade at 3584.10. The DAX trades near the flat line, up 1.68 points or 0.04%, to trade at 4020.18.

  Jeff Bailey   1/4/2004,  12:00:28 AM
Japan's Nikkei-225 ($NIKK) 10,825.17 +1.39% in early trade. This has Nikkei-225 breaking back above its bearish resistance trend. Link

  Jeff Bailey   1/4/2004,  11:56:22 PM
S&P 500 Index (SPX.X) with new WEEKLY Pivot retracement. Link

  Jeff Bailey   1/4/2004,  11:49:12 PM
Last 3 weeks pivot matrix at this Link

  Jeff Bailey   1/4/2004,  11:43:59 PM
Last 3 month's pivot matrix at this Link

  Jeff Bailey   1/4/2004,  11:39:55 PM
Pivot Matrix for Monday at this Link

  OI Technical Staff   1/4/2004,  8:31:05 PM
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