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  Jeff Bailey   1/9/2004,  4:31:20 PM
QQQ $37.73 -0.65% ... low high was $37.59-$38.35

Wait... what is it about $38.35.... why did the MARKET decide $38.35 was the high today?

Do you know the answer? Trying to find my notes on what the high volume call contract was the other day. I swear it was the $38 calls.

  Jeff Bailey   1/9/2004,  4:18:11 PM
Per Jane's 16:05 ... good notes Jane. That may further suggest that much of today's action in the QQQ was short-covering by bears.

A sideways short may have seen TRIN, but when price matters most, that's when panic sets in.

I'm not discounting TRIN, but your observation may be of use in the future!

  Jeff Bailey   1/9/2004,  4:15:08 PM
Forest Labs (FRX) $71.64 +3.82% ...

  Jeff Bailey   1/9/2004,  4:13:25 PM
Maxim Integrated (MXIM) $54.05 -0.49%....

  Jeff Bailey   1/9/2004,  4:12:52 PM
Research in Motion (RIMM) $76.25 +6.79%

  Jeff Bailey   1/9/2004,  4:11:39 PM
Comcast (CMCSA) $35.16 +0.48% ...

  Linda Piazza   1/9/2004,  4:07:34 PM
The Dow closed pennies below its 10-dma. Is this significant? Who knows. It would have been if the Dow had closed significantly below it. The $TRAN did close significantly below its 10-dma, but closed just above its 21-dma.

  Jeff Bailey   1/9/2004,  4:05:56 PM
$BIX.X Link here's a PnF chart of the BIX.X. There's bad data prior to July 2003 (red 7 on left).

What pattern do you see? Where's support?

  Jane Fox   1/9/2004,  4:05:39 PM
You know Jeff the one indicator that was telling us this decline was a very good possibility was the TRIN. It was very bearish all day while ES and NQ were making new 52-week highs. I was just not believing it because this whole rally has felt odd to me.

  Linda Piazza   1/9/2004,  4:04:03 PM
The OEX completed its first reversal signal in more than a month. Although it completed an evening star formation November 11-14, that evening-star was formed in the midst of a consolidation band, and so wasn't a significant reversal signal even though the OEX did retreat as a result. Of course, we did see that key reversal day, but I had worried that day that it wasn't meeting all parameters, because the volume pattern wasn't what Pring said it should be. That turned out to be significant because when volume returned, the bearishness was erased. Today's bearish engulfing candle was bigger than yesterday's candle and not of equal size, so it's hinting that there's more downside to come. We've heard whispers of such a thing before without the downside materializing, however.

  Jeff Bailey   1/9/2004,  4:01:35 PM
S&P Banks (BIX.X) 337.28 -0.31% .... this is where the BIX.X can become the trader's "best friend."

When intra-day action looks manipulated (goes up when it shouldn't have, goes down with no reason) it would be my thought that the banks aren't going to be a sector/stock that would be more actively traded.

This sector may now become the "true" market trade, and be a better indicator of the MARKET's real buy/sell bias in coming sessions.

  James Brown   1/9/2004,  4:00:46 PM
A stock to watch for next week may be Compuware Corp (CPWR). Shares rose 5% today and broke long-time resistance at $6.50. Shares might be able to build on the move and run to its next resistance in the 8.00-8.50 range.

  James Brown   1/9/2004,  3:56:14 PM
last night we listed ADBE on the watch list as a potential put candidate. Today shares are breaking support at 37.50 and intraday broke its simple 200-dma. Volume has been strong on the last two sessions of declines and its MACD has rolled over again. Could be a play. We'd target the old lows near $31-32.

  Jeff Bailey   1/9/2004,  3:55:29 PM
Dow Indu. 10,471 -1.14%

SPX 1,123.20 -0.73%

QQQ $37.87 -0.33%

  Linda Piazza   1/9/2004,  3:55:16 PM
The Dow is back above its 10-dma, currently at 10462.12. It's going to be close, but unless the Dow falls steeply in the last few minutes of trading, any possible close below it might be minimal. Unless it bounces strongly, however, any close above it would be, too.

  Jeff Bailey   1/9/2004,  3:50:16 PM
QQQ $37.82 ... afternoon low so far... $37.71 and DAILY S1 ... go figure....

  Jeff Bailey   1/9/2004,  3:48:57 PM
QQQ option notes ..... remember my discussion from the other day about unusual option activity in the Jan $37 puts.

Is there a "floor" at $37.

Again... checking this here, I see the QQQ Jan $37 puts are once again the most active traded at 44,604. In further attempt to "count cards" yesterday's closing open interest was 130,034.

If we should see a sharp decline in open interest, this may suggest the "big put seller" on the move above $37 was indeed a big bear. May have gotten suckered in to closing out his/her short above $38 (more likely) $38.25, and now he/she is short the QQQ $37 put.

If prior analysis was correct, OI in the $37 puts may fall.

Note: When I say "suckered" it by no means should be interpreted as me saying "don't trade stops." No... the point is that if I'm correct in prior analysis, he/she should not have been short to begin with, or may have simply seen the trade get too far out of control.

Then FEAR sets and traders does things in a panic. I've been there, and done that. It is NO fun.

  Linda Piazza   1/9/2004,  3:47:05 PM
The $TRAN has dropped below 3000, falling far below its 10-dma and now sitting on its 21-dma. I've been watching the $TRAN for a couple of weeks because of its significance in Dow theory. This week's high of 3042.65 constituted a test of the 3050.40 swing high from March 2002, in my opinion. However, as bearish as today's $TRAN candle might look, that candle has only brought the $TRAN back down to the ascending trendline off the June low. I don't think it's violated that trendline yet, at least not as I've drawn it.

  Linda Piazza   1/9/2004,  3:38:59 PM
The Dow has dropped all the way to its 10-dma. It hasn't closed below that 10-dma since 11/21. That makes this a possible strong bounce point. If it closes below this level, that's a clear change in tenor. Well, only if it closes soundly below it.

  James Brown   1/9/2004,  3:34:18 PM
Another defense stock approaching new 3 1/2 year highs is Orbital Sciences (ORB). The stock has been consolidating the last couple of weeks in a narrow range between 12.00 and 12.50 and is now breaking out to the upside on decent volume.

  James Brown   1/9/2004,  3:31:11 PM
Defense stock Raytheon Co (RTN) has been pretty strong the last few sessions. A couple of new contract wins have sent the stock up and through resistance above $30 and its simple 200-dma. The next hurdle for RTN is the $32-33 levels.

  Jeff Bailey   1/9/2004,  3:23:01 PM
03:00 Internals at this Link

  Linda Piazza   1/9/2004,  3:18:17 PM
As the OEX consolidates at the low end of its day's range, the Keltner bands expand downward, giving it a little more room to fall without overshooting them. The most likely event, however, would be a climb back to test broken support. Keltner channels show first resistance at 558.15 with next resistance at 559, with that next level backed up by the crossing of the 60-minute 21-pma just above 559.

  Jeff Bailey   1/9/2004,  3:10:52 PM
S&P Banks Index (BIX.X) 337.74 ... begin taking notes... never did manage to get much above that 340 level.

Holding support here at low end of observed pivot matrix range.

  Linda Piazza   1/9/2004,  3:08:36 PM
Actually, we should expect a bounce back up to test the violated 60-minute 21-pma on the OEX. That bounce might occur between 555-556.70, or from the 10-dma at 553.62.

  Jeff Bailey   1/9/2004,  3:07:28 PM
QQQ $37.78 .... its days like today when we take notes on trading our targets, even when things look bullish as heck!

  Linda Piazza   1/9/2004,  3:07:28 PM
Now that's a bearish engulfing candle on the daily OEX chart! Hope it sticks.

  Jeff Bailey   1/9/2004,  3:05:27 PM
QQQ $37.90 ... day trade bear alert .... cancel bearish entry for $38.20.

Never got the ticks higher.

  Jane Fox   1/9/2004,  3:02:49 PM
Lea Fastow, wife of former Enron finance chief Andrew Fastow, failed to advise the court of her "willingness to receive a plea of guilty" under his conditions by noon today, which puts Andrew Fastow's plea agreement in jeopardy. Ms. Fastow's acceptance of the plea would have cleared the way for her husband to agree to a separate deal. U.S. District Judge David Hittner said that her trial would go ahead as scheduled Feb. 10 and reserved the right to impose a sentence longer than the five months suggested by plea agreement.

  Linda Piazza   1/9/2004,  3:02:45 PM
I've been entering plays all week long to participate in a bearish play if the markets should finally begin their usual and expected pullback. It's usual and expected because all markets do retreat to confirm support and build a sound base before rising again. If the OEX does do that, just as I've expected, does that make me right and those who participated in bullish plays instead this week wrong? Fortunately for those in bullish plays, no. They were participating in gains while I wasn't. But keep your stops and don't have faith that the markets will do what you want. I lost money this week being stopped repeatedly after entering too soon, but not because I was trying to hope the markets back my direction. I don't do that--well, sometimes I cheat and do it a little--but no one should do it, ever.

  Linda Piazza   1/9/2004,  2:57:57 PM
New day's low for the OEX. Bears would really like to see the OEX end the day here or lower, to make that bearish engulfing candle larger than yesterday's candle.

  Jeff Bailey   1/9/2004,  2:57:15 PM
QQQ $37.83

  Jeff Bailey   1/9/2004,  2:56:40 PM
QQQ $37.90 ...

  Jeff Bailey   1/9/2004,  2:54:41 PM
QQQ $37.95 ....

  Jeff Bailey   1/9/2004,  2:53:03 PM
See Jim's 14:51:32 observation... tie it to the inchworm.

QQQ $37.96 -0.04% ... falling quickly.

  Jeff Bailey   1/9/2004,  2:51:33 PM
QQQ quick look at my intra-day chart, what I think takes place here. Link

  Jeff Bailey   1/9/2004,  2:42:39 PM
Service Corp. (SRV) $6.15 +5.12% ... swing trade bullish stop alert .... swing trade bulls will raise stops to $6.09 here.

  Jeff Bailey   1/9/2004,  2:39:55 PM
QQQ .... day trade short alert ... in QQQ, for entry at $38.20, stop $38.25, target $37.72.

see 14:37:06.

Might look for support $38.00, bounce back to entry, then lower into the close.

  Linda Piazza   1/9/2004,  2:37:26 PM
By the way, if the OEX should close below 559.31, and particularly if it should close below 559.02, it will have completed a bearish engulfing candle. This would be the first time that the OEX has actually confirmed a bearish reversal signal since . . . since a long time. However, if the two candles that form a bearish engulfing signal are of roughly the same size, Nison says that sideways action is more likely than a steep fall. That's not exactly what bears want, so bearish traders would actually want to see a close significantly below 559.

  Jeff Bailey   1/9/2004,  2:37:06 PM
QQQ $38.12 +0.37% ... may have been noted by other analysts, but seeing an intra-day head/shoulder top form in the QQQ ... testing neckline right here.

BEARISH objective would be $37.70...

HEY!!! that's DAILY S1 in the pivot matrix.

  Jeff Bailey   1/9/2004,  2:30:33 PM
Dow worst 5 for 2003 at this Link

Per Wednesday's Index Trader Wrap Link and today's 01:00 Update.

  Linda Piazza   1/9/2004,  2:30:09 PM
Was that a fake rise up to the 30-minute 21-pma, with the real movement a downward one? We'll just have to see. Until the OEX reaches a new high or else drops soundly below the 60-minute 21-pma, it's just churn. Bullish traders can look to the OEX holding above the psychologically important 560 and claim strength. Bearish trades can point to trade mostly beneath the important Fib level at 561.23 and to the up-to-now daily tweezer-top daily candle pattern and claim weakness. It's a toss-up.

  Jeff Bailey   1/9/2004,  2:23:40 PM
Comcast Corp. (CMCSA) $35.55 +1.6% Link ... a name known by some OI subscribers.

Hey!... that's a spread-triple top buy signal. Overhead supply should now be limited.

  Jeff Bailey   1/9/2004,  2:21:08 PM
Rotation! .... I've gotten several questions on how to actually see/find when rotation takes place.

An excellent way is to use the point and figure charting method of relative strength comparison.

Here is a RS chart of the INDU vs. the NDX. See the 3-box reversal in early January (red 1)? That's when the NDX showed MEANINGFUL amount of bullish rotation. Link

Warning! Relative strength tells a trader/investor about outperformance, but that is it.

Example: It would be incorrect for a BEARISH trader to assume that just because the INDU is currently showing some sign of weakness relative to the NDX, that the INDU is a good short/put. It can well be that the NDX could advance 10% while INDU advance 5%, but still show INDU having weaker relative strength.

Example #2: It would also be incorrect for a BULLISH trader to assume just because an index/security was showing good relative strength vs. a comparative index/security, that price must move higher. It could be the stock/security you are long has fallen $5, while the comparative stock/security has fallen $10.

  Linda Piazza   1/9/2004,  2:20:57 PM
The OEX now tests the bottom support of its rising regression channel. Yesterday, it slipped beneath support to test the 30-minute 21-pma before rising. It's below that average now. Today, will it slip down to test the 60-minute 18/21-pma's at 559.47 and 559.08, respectively? Will it drop through or then rise into the late afternoon, as has been the pattern? Yesterday, I thought it likely that it would rise, following the usual pattern. Today's bearish, but flat TRIN today makes me uncertain.

  Jeff Bailey   1/9/2004,  2:03:59 PM
Maxim Integrated (MXIM) Link

Just noting that pattern again... looking, searching for more...

  Jeff Bailey   1/9/2004,  2:01:04 PM
NASDAQ-100 Heatmap at this Link

Note today's winner in RIMM. Some might have deemed this stock "overvalued." Link

It's a relative term, and may not necessarily influence direction of trade.

I've received several e-mail ragarding valuations may be stretched at these levels.

Keep it in the back of your mind, but only for staying disciplined with your trade.

Best way to think about it is ask yourself if you would short this market based on YOUR technical observation in the prior weeks. This is not to say a trader that ONLY trades short can't make money, but when the trend is against you, it is more difficult.

  Linda Piazza   1/9/2004,  1:57:06 PM
The OEX now turns up from a test of the bottom support of today's ascending regression channel. We're moving right through the usual stop-running time of day without anything much happening, but that was true yesterday, too. The move (or moves, actually, one fake and one real) didn't occur until later. One difference: the OEX was above the 30-minute 21-pma yesterday and the fake dip was a dip down to test the 30-minute 21-pma, a dip I suggested might happen as a prelude to another move up. Today, the OEX is edging slightly below that moving average. Could we today have a fake rise and then a plunge back below that average?

  Linda Piazza   1/9/2004,  1:44:21 PM
After reading my 13:39 post again, I thought it might benefit from a chart, since it was difficult to follow. I've added a chart, linked to the post. Here it is, too: Link

  Linda Piazza   1/9/2004,  1:39:37 PM
The OEX is now setting up an upward-trending regression channel, with the OEX just now turning back (for the third time this morning) from the upper trendline. This ascending regression channel set up after the morning's plunge, but it's not a bear flag, at least not a classic one. There are several reasons for this conclusion. First, it's a rather broad channel with respect to the typical five-minute pattern. Bear flags are usually tight patterns of higher highs and higher lows. Second, it's already retraced more than 50% of the morning's plunge or the day's range. We saw a similar pattern set up yesterday, with a quick plunge beneath the supporting trendline (fake) and then a move up that began on the 14:35 five-minute candle. This morning's plunge took the OEX back below that former ascending trendline today, and the new ascending trendline has an upper boundary that correlates fairly well with the ascending trendline from yesterday. Link I'm reminded of Pring's corrective fan principle, in which one trendline is formed, breaks, and a new supporting trendline forms, and breaks. When a third trendline is formed and then breaks, that's when the (upward) move is over. Of course, I've put all kinds of fanlines on all kinds of charts, and this bit of technical analysis hasn't been working any better than many of the others. For months, the OEX has broken fanline after fanline, and then has just climbed along the next lower one.

  Linda Piazza   1/9/2004,  1:26:41 PM
There's the new OEX five-minute high. The next task for bulls is a new high of the day. Then there's nothing in the way of 564-565. Except fear of heights.

  Jeff Bailey   1/9/2004,  1:18:15 PM
01:00 Internals at this Link

  Linda Piazza   1/9/2004,  1:16:20 PM
The last OEX five-minute high was 561.16. A bull's first task is to achieve a new five-minute high.

  Linda Piazza   1/9/2004,  1:13:48 PM
The 30-minute MACD has taken on that flat angle that sometimes means an upturn is imminent. This occurs as the OEX is testing the 30-minute 21-pma. Always lately when this particularly configuration has occurred, the OEX has headed up. Let's see if it occurs this time, too. A change in the resolution of that particular configuration would mean at least a short-term change in tenor. Don't know if that's going to happen today, however.

  Linda Piazza   1/9/2004,  1:05:42 PM
We're a bit early for the usual stop-running time of day, but I'd be careful anyway over the next hour.

  Jane Fox   1/9/2004,  12:58:36 PM
James (12:47 post) maybe they could make the beer low carb also.

  Jeff Bailey   1/9/2004,  12:53:45 PM
QQQ day trade bull alert ... QQQ $38.15 +0.45% ... cancel current day trade bull entry of $37.86.

  James Brown   1/9/2004,  12:47:04 PM
Interesting note to all the beer drinkers out there...a Reuters article is reporting that a German brewery has designed an "anti-aging" beer. The brew contains minerals and vitamins chosen to slow the aging process. So you're not just sipping suds you're doing your body a favor!

Just imagine, when they start importing this to the states you can have a party with anti-aging beer and low-fat pizza (from Pizzahut).

  James Brown   1/9/2004,  12:40:23 PM
Hitting new year and a half highs is LM Ericsson (ERICY). Shares are up another 4.5% today with an upgrade to hold by Wells Fargo. The stock is enjoying a lot of strength from rival Nokia's announcement two days ago of better than expected earnings.

  Jeff Bailey   1/9/2004,  12:39:13 PM
Dow Industrials (INDU) 10,529.85 -0.58% ... "tail"

SPX 1,128.64 -0.28% "thorax"

QQQ $38.15 +0.45% "head" after trading a session high of $38.25.

  James Brown   1/9/2004,  12:35:54 PM
Enjoying the strength in the tech sector is a little software/programming name you may remember. Atari Inc (ATAR) has broken above the $4.50 level again after months of slowly drifting lower.

  Jeff Bailey   1/9/2004,  12:33:50 PM
Service Corp. (SRV) $6.09 +4.10% Link ... Swing trade bulls that may have played long on Tuesday can raise stops to $5.89 if still long.

Do you see the pattern that is really working right now? Keep on it when you find it. I quickly touched on this in last night's MM at 06:14:20. Link

  Linda Piazza   1/9/2004,  12:32:39 PM
The OEX is slipping back beneath the 30-minute 21-pma, going down perhaps to test the 60-minute version, at 558.85. Until it's safely below that (and this morning's low), those in bearish trades today should not yet be breathing easy.

  James Brown   1/9/2004,  12:32:11 PM
Speaking of networkers the ramp up in shares of Nortel Networks (NT) is not over yet. The stock is up another 2% today to $6.27. NT was trading at $4.00 just a couple of weeks ago.

  James Brown   1/9/2004,  12:30:02 PM
The networking fire is still burning hot for shares of Avaya (AV). The stock is up another 6.3% on top of the previous two days of again. Contributing to the move today is an upgrade to "over weight" by Prudential Securities. A pull back and bounce in the 14.50-15.00 range might be an entry point for more aggressive traders.

  Linda Piazza   1/9/2004,  12:29:28 PM
The OEX still tests the still-rising 30-minute 21-pma, with the outcome as yet uncertain.

  Jeff Bailey   1/9/2004,  12:29:17 PM
12:00 Internals at this Link

  James Brown   1/9/2004,  12:26:03 PM
Smith Barney felling bearish on Plum Creek Timber (PCL) and cutting the stock to a "sell". Shares are down 4.2% but still above support at $28 and its simple 50-dma.

  James Brown   1/9/2004,  12:23:27 PM
Homebuilders Whipsaw! Despite yesterday's sector-crushing (-4.5%) announcement from Ryland Homes (RYL) that new orders were down nearly 9% the homebuilding sector is strongly higher today (+3.68%). Driving today's move is a contradictory announcement from Pulte Homes (PHM) that new home orders for the 4Q are 31%. It looks like there may be some separation in the group between those who are executing and those who have just been riding the investor-frenzy wave.

  Linda Piazza   1/9/2004,  12:22:28 PM
So far, the OEX remains in the neutral territory delineated by either a 5MRT or a 2MRT. It's just gyrating around so far with no really recognizable pattern. The possible bullish right triangle degenerated, being violated to the downside, and a possible bearish rising wedge on the five-minute chart was similarly violated to the downside, seeming to confirm the bearishness. The OEX sure didn't zoom down after violating it, though, so despite oscillators confirming the break (turning down as the break was made), that makes the formation suspect. The whole action since the first drop now looks a bit like a rounding top on the five-minute chart, except that it's not at a top and I am soundly suspicious of anything that looks like it's going to roll over. That's been a prelude to a zoom up lately, with one last tick down to suck in whatever bearish players there might be left willing to risk any money. There won't be any left by the time the thing really does retrace.

  Jeff Bailey   1/9/2004,  12:20:10 PM
QQQ $38.25 ... high of session and MONTHLY R2.

Anticipating a question.... No, I would not be overly eager to short. Overhead supply may still be very limited, and there is nothing worse than being short if bears decide to cover aggressively.

Also ties in with BLUE #11 if using stacked 5-MRT.

  Linda Piazza   1/9/2004,  12:14:59 PM
As of a few minutes ago, volume patterns showed many bullish characteristics and some neutral characteristics. Adv:dec ratios were 18:13 for the NYSE and a neutral 15:15 for the Nasdaq. Up/down volume ratios showed the two roughly equal on the NYSE and up volume a strong 2.7 times down volume on the Nasdaq. Someone is doing a lot of buying in a few Nasdaq issues, since the adv/dec ratio was roughly equal. Total volume was 687 million on the NYSE and a strong 1.1 billion on the Nasdaq.

  Jim Brown   1/9/2004,  12:13:36 PM
Jim, I was involved in the Semi industry for nearly thirty years, and still have many contacts around the industry. From everything I hear, the 4Q03 numbers are going to be excellent. My thinking is that if I know this, all the big money knows this too, and that's why the NDX, QQQ and SOX is rolling. The big money is getting in now, to sell to the retail traders when earnings come out. JMHO - JL

That would jive with the SOX making a new two year high today. Thanks for your comments. Please keep them coming.

  James Brown   1/9/2004,  12:12:30 PM
Current OI call play UTSI has gapped down lower than expected with an opening price of $38.69. Shares are down more than 7% after its announcement last night to sell 12.1 million shares to Bank of America. Considering that this amount is more than 10% of the current number of shares outstanding the company had to readjust its earnings guidance lower and investors aren't happy about it. Despite the drop UTSI remains above its P&F support.

  Jeff Bailey   1/9/2004,  12:11:18 PM
QQQ $38.22 +0.63% ... while my bullish QQQ trade was stopped out for a profit this morning, I would strongly suggest that any bulls still holding this trade, Stick with your plan and sell your target in systematic fashion.

We can always get back on board, as we have done in the past. Stay disciplined in your trading, don't let emotion take over. Emotional trading is bad. More times than not, losses will eventually be suffered.

Pay yourself for correct analysis and the risk you took!

Which as you can continue to see, was less risk than being short.

Should I have shorted at $37.41? Or was it better to buy $37.41?

  James Brown   1/9/2004,  12:08:09 PM
Yesterday shares of Kohl's (KSS) were hit hard in a high-volume (16.5 mln vs. avg 4.75 mln) decline after reporting very disappointing same-store sales for December. In response Merrill Lynch has cut the stock to a "neutral". KSS is quickly approaching the $40 level of support and should this level break it is likely to remain stuck in its 1999 trading range of $32-$40.

  Linda Piazza   1/9/2004,  12:04:18 PM
Keltner channels lines have now separated on the OEX, telling us what we already know: this could go either way.

  Jeff Bailey   1/9/2004,  12:00:49 PM
QQQ $38.18 +0.52% .... session high so far... $38.19.

One begins to wonder if the non-farm payroll data was factored into things. No?

  James Brown   1/9/2004,  11:59:57 AM
Announcing earnings this morning was India-based Infosys (INFY). The company beat estimates by 3 cents with 54 cents/share. Revenues jumped almost 38% to $275.9 million, well above the estimates. The company has also guided higher for the next quarter yet shares are not reacting. As a matter of fact they look weak and the stock almost looks like it will retest the $90 level as resistance. Share are currently trading at $98 near 3-year highs.

  Jeff Bailey   1/9/2004,  11:59:14 AM
Forest Labs (FRX) $70.21 +1.79% Link ... Sees Q3 results ahead of consensus estimates of $0.51.

I'm thinking this news already factored into things.... what do you think?

  James Brown   1/9/2004,  11:54:05 AM
Another chip stock making headway today is RF Micro Devices (RFMD), who is up more than 6% after Piper Jaffray upgraded the stock to "out perform" this morning. Traders interested in following this stock might want to look for a bounce from $11 (just above its 50-dma) or a move above the $12.00 level of resistance. The $12.50 level (its Q4 highs) will also act as resistance.

  Jeff Bailey   1/9/2004,  11:53:02 AM
Texas Instruments (TXN) $32.00 +0.59% ... ties in with James' 11:51:56.

  James Brown   1/9/2004,  11:51:56 AM
Current OI call play MXIM is stretching its run to five days in a row. Honestly, I would have expected the poor jobs data to crater the SOX and all the recent winners but they appear to be wearing their bulletproof vests. Short-term players may want to consider exiting near our initial price target of $55, especially with the stock this extended.

  Linda Piazza   1/9/2004,  11:50:31 AM
We now have a bearish kiss on the daily 5(3)3 stochastics on the OEX. Does that mean anything? Not with the ADX over 50, it doesn't. This could be the start of something or it could be signaling nothing more than a few hours of consolidation. Don't overrate these oscillators in a strongly trending market.

  Jeff Bailey   1/9/2004,  11:50:07 AM
QQQ $38.09 +0.31% ... me too Jim, but I'm still waiting for the morning rally/rebound to subside.

  Linda Piazza   1/9/2004,  11:47:00 AM
The OEX is sinking back to test the 30-minute 18/21-pma's again. Until it's safely below the 60-minute versions, however, currently at 558.66-559, this action remains an exercise in reestablishing support.

  Jeff Bailey   1/9/2004,  11:46:38 AM
Terrorist Threat Level Lowered to yellow .... breaking news...

In my opinion, to think that the lowering of the threat level is responsible for today's rebound is ill-advised.

What eventual impact did the RAISING of the terrorist threat level have on the major markets? What was the observation YOU made.

  Linda Piazza   1/9/2004,  11:34:47 AM
That rising trendline off the 12/10 low has now risen to about 563.65 and will be rising throughout the day. That 564-565 level is looking more and more possible today, but with the OEX now moving back into the congestion zone from yesterday and with other indices testing important levels, that's not a given yet and I'm far from certain of that possibility.

  Linda Piazza   1/9/2004,  11:28:55 AM
The OEX has tried a breakout both directions now, out of the central nested Keltner channel. Hasn't made it either direction, although it's trying an upside break again as I type. I'm still reserving judgment (judgement, for those of you in the U.K. and Canada).

  Linda Piazza   1/9/2004,  11:20:06 AM
OEX five-minute nested Keltner channels are settling into a state of equilibrium, with all the channels nicely lined up inside each other. While that state can persist for a while, it usually doesn't for too long, and the usual resolution lately has been a climb to the upside. The one-minute OEX chart supports this theory, with that chart showing a likely bullish right triangle with a flat top at the bottom of the first one-minute range, at about 560.81. The predicted minimum upside from that right triangle would be at 564.22. Hmm. That's suspiciously near the 564.73 number that represents the bullish #2 on the 2MRT system.

  Linda Piazza   1/9/2004,  11:11:20 AM
Because the OEX's first five-minute range was so large, I've switched to a 2-minute interval to watch, according to Jeff's MRT system. For those who don't have access to intraday levels, the first two minutes ranged from 562.45 down to 560.18. Using a 2MRT system appears to have fairly good correlation with today's action because this morning's plunge stopped exactly on the bearish #2, not violating it. The correlation gives me confidence to watch according to that system. The bullish #2 would be all the way up at 564.73, so between this morning's low and 564.73, the OEX would be deemed to be trading in neutral territory. I could switch down to a 1MRT (562.45 to 560.81) and may do so to watch the action later today, but I like that correlation with today's low. Since that low occurred as the OEX was testing the 60-minute 21-pma and since I consider this action neutral or at least not-bearish until the OEX plunges below that average, then this fits my outlook fairly well.

  Jeff Bailey   1/9/2004,  11:08:02 AM
11:00 Internals at this Link

  Jim Brown   1/9/2004,  11:05:24 AM
FRX just announced they will beat prior earnings estimates.

  Jonathan Levinson   1/9/2004,  11:01:16 AM
A subscriber wrote in and basically said the same thing. Linda added that the market may be tapped already, and that seems to cover both sides of the analysis- certainly interesting times upon us.

  Jeff Bailey   1/9/2004,  10:59:39 AM
I think that is what Mr. Kudlow was thinking anyway. He's mentioned it a couple of time, and from a supply/demand perspective, makes sense to me.

That's why the homebuilders trade is so difficult to determine right now. At least for me.

  Jeff Bailey   1/9/2004,  10:57:45 AM
Day trade long alert for the QQQ, entry at $37.86, stop $37.32 to begin, target $38.20.

  Linda Piazza   1/9/2004,  10:57:42 AM
The OEX is clinging to the 30-minute 18/21-pma's, trading both slightly over and slightly under them. A study of the 30-minute chart shows a possible "b" distribution pattern forming, with this morning's first 30-minute plunge the upright part of the "b" and the current rectangular consolidation the rounded bulb of the "b." This is only one possibility, one somewhat discounted by the fact that the OEX is finding support at a key level. The 30-minute oscillators aren't giving a clear picture, and I wouldn't trust them now even if they did appear to be. The advdec line is positive and $TRIN is bearish but dropping, so that's not clear, either. As I said earlier, I haven't found bearish plays to work particularly well on Friday's over the last year or two, either, although that could change at any time. Price is our only true guide right now. I had expected a bounce or at least a steadying at these important intraday averages, so I'm not surprised to see it happening. Let's just see what gets done with it. Whether in a bullish or bearish trade, this kind of action is useful, because it begins to establish some S/R levels. When indices are zooming up without hesitation, bulls don't know where support lies any more than bears do.

  Jeff Bailey   1/9/2004,  10:56:07 AM
QQQ $38.05 ....

  Jeff Bailey   1/9/2004,  10:54:22 AM
Per Jonathan's 09:04:40 post .... yes he did. The thought is that not unlike any market, when prices, or the cost of borrowing rises from historical lows, it often influences the need to act, after not acting when the opportunity was given.

Dow Jones Home Construction Index (DJUSHB) 560.95 +3.11%.

  Jeff Bailey   1/9/2004,  10:50:43 AM
QQQ $37.99 ... session high... on the alert...

  Jeff Bailey   1/9/2004,  10:49:13 AM
S&P Banks Index (BIX.X) 339.30 +0.26% .... ok... as the session unfolds and trader has had some time to get a true market reaction, I'm noting here that session high has been 340.11, which is today's DAILY R2 (340.10) and still below WEEKLY Pivot (340.46).

This hints to me, that computers are still turned on for some selling intra-day, and upside pivot levels.

Begin thinking.... if BIX.X makes its way above WEEKLY Pivot, then QQQ pushes toward $38.26.

The better risk/reward trade is then seen in a QQQ bullish, but on an intra-day pullback, where the test becomes.... can the banks rebound from low end of a range and lead a Rotation! rally.

  Jim Brown   1/9/2004,  10:46:32 AM
After 10:30 the trading desks tend to go quiet and activity does not really pick up again until around 2 PM. On Fridays things can even get more quiet and desks prefer to balance out their book (positions) rather then add to new positions. Hence, Fridays can easily lean to the downside. Only a news event can get mid-day activity moving. Whether your a day trader, swing trader, and or trend trader, one might view today as downward pressure. The money is to the downside for a Friday close. Gerald

Keep those comments coming guys!

  Linda Piazza   1/9/2004,  10:45:05 AM
I don't know, Jeff. (See Jeff's 10:21 post.) I've been in some bearish trades (and some bullish equity ones, too, by the way), but I haven't been trading based on expected bad news. In fact, I've expected news to improve, but I've been trading on certain technicals and not trying to ignore them. Those technicals include some you taught me to watch when I was only a reader and that I'm especially grateful this year to have been taught to watch, including Fib levels and historically high and risky bullish percent numbers showing too many sectors lined up on one side of a bell curve. I've also been watching known S/R levels, as well as used-to-be-accurate reversal signals. Those kinds of technicals have not been as useful a tool this year, however, and I well know that they're not all good market timing tools. My account can testify for that over this last week. As far as supply goes, I've been looking a long-term charts, which much wiser technicians than I am, such as Pring, Nison, and Murphy say show levels at which we can see a lot of supply waiting, those historical S/R levels. How many people bought CSCO at $48.00, where it lingered for a while and then held on and held on, and are just itching for that opportunity to get out even? I know some. I bet we all do. So, while I've been on the wrong side of some trades lately, and have no trouble admitting that, I'm not doing it because I'm ignoring technicals, just giving the wrong ones too much weight, apparently.

  Jeff Bailey   1/9/2004,  10:41:59 AM
QQQ $37.93 -0.15% .... session high so far... $37.97.

  Jeff Bailey   1/9/2004,  10:40:52 AM
Russell-2000 Index (RUT.X) 579.73 +0.01% ... first major index to turn green.

Tie this in with yesterday's observations... was first to set a new session high.

  Jeff Bailey   1/9/2004,  10:38:06 AM
Dow Industrials (INDU) 10,529 -0.59% "the tail"

SPX 1,127.28 -0.4% "the thorax"

QQQ $37.88 -0.28% "the head"

of the inchworm.

Often times... one would think the more volatile QQQ would be lower. Things haven't really changed today, based on our Index Trader Wrap observations have they.

  Jeff Bailey   1/9/2004,  10:21:43 AM
Today's trade becomes tough doesn't it? Massive short interest suggests lots of money on the wrong side of the trade for months, and now the bears have some "bad news" that they had perhaps been trading on, while ignoring the technicals.

Now that the "bad news" is out, what do they do? The bearish trader now has their bad news, but underwater in their trade. What if good news comes. What next? Do I cover today as I finally have some near-term liquidity, or ... do I wait, and hope price action falls further?

It is when markets/stocks are at highs, and overhead supply limited, that the MASSIVE short squeeze can develop, when the sentiment trader finally gets the news they've been looking for, but price action has moved against them.

For me.... today, and perhaps the next couple of days, becomes a wait and see trade.

The facts on hand that a trader/investor deals with is price, and supply/demand.

We know prices are higher, and supply has been very limited. Weighed against high levels of short interest, the observation that demand may still build is the part a bearish trader must continue to consider right now.

  Jeff Bailey   1/9/2004,  10:10:01 AM
QQQ $37.81 -0.44% .... off its session high of $37.90. Again... all that has taken place, from the supply/demand perspective is that the gap lower has been filled back to the upside.

  Jeff Bailey   1/9/2004,  10:07:56 AM
Biotechnology Index (BTK.X) 499.13 +0.17% .... bidding green here.

  Jonathan Levinson   1/9/2004,  10:07:54 AM
That was a reverse repo from the Fed, for a DRAIN of 2.25B today, and not an addition as I had mistakenly reported. If the Fed is actually draining, then I'm quite sure that the BoJ will be intervening again today. No way they'd suck money out of the markets today.

  Jeff Bailey   1/9/2004,  10:07:19 AM
CBOE Internet Index (INX.X) 177.49 +0.24% .... bidding green here.

  Linda Piazza   1/9/2004,  10:06:24 AM
The OEX has moved above the 30-minute 18/21-pma's and the 50% retracement of the flagpole drop, with those averages and level being only hesitation points once again. When there's no way to establish real support or real resistance, we can't have confidence in any of these levels.

  Jonathan Levinson   1/9/2004,  10:03:09 AM
A 2.25B weekend repo has just been announced, for a net addition in that amount with no expiries today.

  Jeff Bailey   1/9/2004,  10:01:21 AM
S&P Banks (BIX.X) 339.23 +0.26% ... nearing today's correlative DAILY R2 340.10 and WEEKLY Pivot 340.46 resistance.

From an unbiased view, BIX.X should not trade above this level given today's "terrible" economic data.

I saw an interview on CNBC last night, I think it was the CEO of Kelly Services (job placement) and he smirked when CNBC interviewer asked him about today's Non-farm payroll forecasts. He thought they were a little high based on what they were seeing, but made note that hiring was picking up, and thought it hould improve steadily for the remainder of the year.

  Linda Piazza   1/9/2004,  9:58:47 AM
The OEX is now testing the 30-minute 18/21-pma's at 559.95 and 559.62, respectively. These should be resistance or at least hesitation points.

  OI Technical Staff   1/9/2004,  9:58:34 AM
It seems that for the last week or more, it takes 2 to 4 min. for comments to show up on the MM. Is this common to all, or is it just me?

No it was us. The server time was over 3 minutes behind. The posts were happening in real time but the time stamp was off. It has been corrected.

  Jeff Bailey   1/9/2004,  9:58:25 AM
QQQ $37.77 -0.55% ... 5-MRTs on today's very small first 5-minute bar gives very narrow range of trade potential for today. BLUE #6 at $37.98, RED #6 at $37.41.

$37.41? Hmmmmm..... (bullish grin)

  Linda Piazza   1/9/2004,  9:57:22 AM
Here's how the OEX action looks with respect to the 60-minute 18/21-pma's. Link The OEX is bouncing on cue from those averages. As long as the OEX is in the upper portion of the envelope, it's still climbing. The blue and maroon moving averages at the bottom are the 100/130-pma's.

  Jeff Bailey   1/9/2004,  9:54:33 AM
QQQ $37.77 -0.55% ... trying to fill its gap back to the upside, but that's it.

  Jeff Bailey   1/9/2004,  9:53:37 AM
Sector action broadly lower leading sector losses is Networking (NWX.X) 286.87 -1.9% (up 6% yesterday), North American Telecom (XTC.X) -1.8%, Semiconductor Index (SOX.X) 538 -1.2%

  Linda Piazza   1/9/2004,  9:53:24 AM
We've had the flagpole drop. Now we should have the measured distribution pattern, slower than the drop, taking up much of the morning. If the OEX instead drops to a new low without that slow measured distribution pattern, that's even more bearish. If it's a distribution pattern, it shouldn't retrace more than 50% of the flagpole drop, which is at 560.17, but I'd give the OEX a little room to overshoot it a bit since it's been overshooting support levels a bit this morning, too. If the OEX instead zooms right back up, well, then something else is at work (like big money) and all bets are off until we see where it goes.

  Jeff Bailey   1/9/2004,  9:47:10 AM
QQQ $37.72 -0.68% ....

  Jeff Bailey   1/9/2004,  9:46:48 AM
S&P Banks Index (BIX.X) 338.62 +0.07% ....

  Jeff Bailey   1/9/2004,  9:45:57 AM
Dow Industrials (INDU) 10,507 -0.8% .... session low so far has been 10,497. DAILY S2 here at 10,509, WEEKLY R1 10,517. This is first area I would be looking for stability.

  Linda Piazza   1/9/2004,  9:45:29 AM
The OEX is now overshooting the 60-minute 18/21-pma's, but only by a bit, and climbing back as I type. It's possible that the 30-minute versions near 559.50 will now be resistance. OEX 554.76-555 should be support, as should 552.75. This doesn't look good, though, and those support levels may be hesitation points more than real support, just as they were hesitation points and not real resistance on the way up. We'll have to wait and see.

I've been noting for a while that the OEX had extended further above its 60-minute 100-pma than it usually did and that I was expecting it to come down and retest that average. Of course, I've been expecting that for about a week, testing the waters with bearish plays that were doomed to be stopped out, and there's no guarantee that it will test it today or any time soon, either. It's at 548.38 currently, but climbing. That test is going to show us what's really going on, however. Nothing's bearish on the OEX until it moves below the 60-minute 100/130-pma's. Until then, this is just a normal retracement to reestablish support.

  Jeff Bailey   1/9/2004,  9:43:37 AM
Dow Jones Homes Construction (DJUSHB) 553.83 +1.8% ... trying to bounce from our "zone of support."

  Jeff Bailey   1/9/2004,  9:42:52 AM
S&P Insurance (IUX.X) 307.84 +0.16% ... New 52-week highs

  Linda Piazza   1/9/2004,  9:39:20 AM
No bounce attempt at the 30-minute 18/21-pma's. That's not looking so good. The OEX now sits on the more powerful 60-minute versions, however, at 558.53 and 558.19, respectively, and these should provide a bounce.

  Jeff Bailey   1/9/2004,  9:39:02 AM
QQQ $37.64 QQQ swing trade bullish profit stop alert triggered from bullish entry of $37.41.

  Linda Piazza   1/9/2004,  9:37:15 AM
In regards to the discussion on home-buying and interest rates, I've heard for years that people scramble to get into homes when the interest rates first start going up. I've got a daughter who's doing just that, and can remember, as Jim can, I'm sure, when interest rates were zooming above 13%, and many of us were scrambling to get into homes before they went any higher. This time, however, so many have bought while interest rates were low, so low that homeowning was more economical than renting, I don't know if there are that many people left to scramble.

  Jeff Bailey   1/9/2004,  9:35:57 AM
QQQ $37.74 ...

  Jeff Bailey   1/9/2004,  9:34:46 AM
I'm surprised bears are looking for a bounce at this point. 52-week highs... c'mon!

  Linda Piazza   1/9/2004,  9:34:15 AM
Over the first five minutes of trading, the OEX spanned a range from 562.45 to 559.29, with a midpoint at 560.87, near a significant S/R level from yesterday. The OEX is below that midpoint now, indicating weakness in the very earliest trading. We didn't need that midpoint calculation to tell us that, right? We have not yet had the first reversal, however, and should see how the OEX performs at that first reversal. The OEX is just below a point that should have produced a bounce, overshooting it a bit. Now those possible support levels I listed earlier are possible resistance levels.

  Linda Piazza   1/9/2004,  9:30:38 AM
The OEX is headed down toward Keltner and moving average support near 559.50-559.70. We should see a good-sized bounce from that level. If not . . . well, if not, things are fairly dire.

  Jeff Bailey   1/9/2004,  9:30:34 AM
QQQ $37.69 -0.76% ... Will note this is DAILY S1 of $37.71. Has been a resistance level in pre-market, when QQQ gravitated just below this level.

  Jane Fox   1/9/2004,  9:24:58 AM
Jim I so much agree, we love to hear from our readers because, I for one, know there are some extremely good traders out there.

  Jim Brown   1/9/2004,  9:23:05 AM
That last reader comment post by Jane reminds me. We know there are hundreds of insightful traders reading the monitor who have a very good grasp of the market and the news events. We would love to post your comments for the world to see. Why keep them to yourselves? Let everyone benefit. Feel free to send us your comments during the day and we will post them. There are only a dozen pairs of eyes on this end and a thousand pairs of eyes on your end. Let everyone share your thoughts.

  Jeff Bailey   1/9/2004,  9:22:09 AM
QQQ $37.70 .... QQQ swing trade bull alert .... swing trade bulls can snug a profitability stop to $37.64. Target remains $38.20-$38.25.

  Jane Fox   1/9/2004,  9:17:15 AM
Here is part of an email I received from a MM reader, a trader, a system programmer and owner of a semiconductor company. I think this gives him a certain amount of credibility On the other hand, business is really starting to get strong out there but everything is in a deflationary mode except commodities. The stuff I am selling (semiconductors) prices are falling like a rock and the volume is not there to make up the difference. That is why everyone is moving to consumer electronics, flat screen TV, MP3 players etc and it really will be great for the consumer, but you better have good relations in China if you want to make any money. Thanks Jim, I always appreciate your comments.

  Linda Piazza   1/9/2004,  9:16:58 AM
The big drop in the NQ this morning signals that we could see an opening drop in the OEX, too, because the big caps in both have sent the OEX into a trading pattern that mimics that of the NDX more than of other markets. I have to say that I haven't had good results with bearish plays on Fridays over the last couple of years, although that observation has been mixed up a bit lately. I just tend to distrust them because the squaring-up-positions-before-the-weekend action sometimes overrides the breakdown that appears imminent.

What about support levels if the OEX should open lower? Although I'm not a big follower of pivot analysis, on days when program trades might be heavily in play, I do scan them. Yesterday, the OEX tended to follow some pivot levels fairly close, so I'd suggest clicking onto Jeff's pivot analysis table for some of those levels. In addition, the 561.23 level that represents the 38.2% retracement of the bear-market decline should be considered. One pivot level yesterday was at 560.60, creating a historical S/R level there, and the psychological importance of 560 shouldn't be ignored. Keltner channels show support rather thin, at 562, 561.65, 560.87-561 and 559.69, with that last level corresponding rather closely to the 30-minute 18/21-pma's at 559.82 and 559.54, respectively. Unless there's a real plunge today with volume patterns supporting it, there's once again likely to be at least a tepid bounce attempt and maybe a strong one at those 30-minute averages, and an even stronger likelihood of a bounce attempt at the 60-minute versions at 558.39 and 558.08, respectively. It all kind of depends on which way things get going and how fast.

  Jim Brown   1/9/2004,  9:12:22 AM
This lowered alert level throws the sentiment back into a turmoil. Very negative jobs news bouyed by positive terror news. Who will win? I have to think that any relief bounce on the terror news will be sold by those who are more afraid of a slowing/slipping recovery. But then when has the market acted rationally lately?

  Linda Piazza   1/9/2004,  9:09:33 AM
Jim, if the markets went higher with the terror level being raised, perhaps they go lower with it being lowered? Grin. (See Jim's 9:07 post.)

  Jane Fox   1/9/2004,  9:07:27 AM
NASDAQ has been trying to woo NYSE-listed companies to its marketplace for years but may have to settle for a compromise. The NASDAQ is lobbying large, blue-chip companies that trade on the NYSE to list their shares on both NASDAQ and the Big Board, a move that would break a tradition in the U.S. stock markets of only listing on one market. Companies that participate in NASDAQ's program won't leave the NYSE but a decision to also list with NASDAQ could be seen as a rebuke of the Big Board and could give NASDAQ more cachet.

One company to agreed to this dual listing is Hewlett Packard (HPQ) one of the 30 stocks in the Dow Jones industrial average, and which now trades on the NYSE. Does this mean that Hewlett Packard will now have two symbols?

  Jim Brown   1/9/2004,  9:06:38 AM
CNN confirming that terror level going back to yellow

  Jane Fox   1/9/2004,  9:06:04 AM
The labor market remains the one glaring weakness in the nation’s recovery. Only 1,000 jobs were created in December on net, far below consensus estimates. Although the unemployment rate fell 20 basis points, to 5.7%, to its lowest level in 14 months, payroll growth was miniscule, suggesting the unemployment rate may be masking some weakness in the labor market. The Labor Department also cut its earlier estimates of job growth for October and November, saying the job count for those months was 51,000 less than initially thought.

  Linda Piazza   1/9/2004,  9:04:42 AM
I'd like to say that I helped OEX bears out by giving up and selling half my bearish position yesterday.

  Linda Piazza   1/9/2004,  8:57:12 AM
Something I noted this morning in my first post, but feel is worth restating for those who don't read the post about the foreign markets: the Wilshire 5000 was not the only market in the world to test 11,000 in the last 24 hours. The Nikkei did, too. Yesterday, Keene noted the way so many of our markets were hitting significant levels at the same time, and that sentiment can be extended to the global markets, too. That 11,000 number for the Nikkei has psychological significance, of course, but it also is in the middle of a historical S/R zone for the Nikkei, with swing highs from just below 11,000 up to 11,200 or so in the fall seasons of 2002 and 2003. The Nikkei retreated after hitting 11,008 last night, but I wouldn't exactly call the 45-point retreat a plunge, either.

Many foreign markets have been on a tear throughout December and need to retreat and regroup, with many of the European markets already having begun a bit of a retreat. The FTSE and CAC began pulling back in January, but the DAX has consolidated. A pullback wouldn't necessarily be bearish action and, in fact, if it was a regular run-of-the-mill 1/3 to 1/2 pullback, that would be bullish action. Such a global pullback wouldn't necessarily begin today, and perhaps would only begin after markets had popped above next resistance and run up a bit more, but I think the risk shifts to bullish plays on a very short-term basis. On an intermediate-term, I'm not sure until we see how far pullbacks go. Jeff has noted the 12,350 current upside target for the Nikkei on the P&F chart. In addition, the FTSE has a 4950 upside target, the CAC 40 a 3950 upside target, and the DAX a 4500 upside target: all have more upside to go according to the P&F charts.

  Jim Brown   1/9/2004,  8:50:27 AM
If they buy this dip this morning and manage to make new highs I may hang up my mouse. This is very bad news for the bulls and suggests the recovery is a lot weaker than everyone expected. I could see buying the report at a much lower level because it gives the Fed a free pass for the foreseeable future. At the current extended market levels it should make traders wonder if earnings are really going to be as good as expected and cast doubt that too much good news is already priced in.

  Jonathan Levinson   1/9/2004,  8:30:27 AM
8:30am U.S. DEC. RETAIL JOBS DOWN 38,000

  Jonathan Levinson   1/9/2004,  8:28:48 AM

  Jonathan Levinson   1/9/2004,  8:27:47 AM

  Jonathan Levinson   1/9/2004,  8:27:34 AM
Futures diving.

  Linda Piazza   1/9/2004,  7:16:50 AM
Good morning. Our Wilshire 5000 wasn't the only index testing 11,000 in the last 24 hours. The Nikkei opened near 10,950, soon moved up to test that level, and then retreated to gain strength for another assault. In the afternoon session, the Nikkei climbed all the way to 11,008 before dropping back into the close. It closed at 10,965.05, up 127.40 points or 1.18%. The strong performance of U.S. markets, a Merrill Lynch prediction that the Japanese equity market would be the strongest on the globe in 2004, reports of planned increased capital expenditures by companies such as Matsushita and Sharp, Nokia's upbeat forecast, and Sony's planned introduction of a revamped Walkman all added to investor enthusiasm. The afternoon gains accelerated after it was reported that the Bank of Japan intervened again to prop up the dollar. Auto stocks recovered. The banking sector did not participate as fully, however, after an announcement of a planned IPO by foreign bank Shinsei Bank. Market watchers say that the IPO might be a massive one, and that investors might sell other bank stocks in order to participate in the IPO for the profitable Shinsei Bank.

The Taiwan Weighted and South Korea's Kospi gained 0.94% and 2.56%, respectively. Semiconductor companies were big gainers throughout Asia as developments in Taiwan Semiconductor and Samsung added to investor enthusiasm for the group. Taiwan Semiconductor reported that December's sales rose 68% from the previous December's. Samsung added to recent gains first after Daiwa Institute of Research upgraded the stock to an outperform rating and then after news circulated that Dell had chosen the company to help build its laser printer business. LG Card again dropped down its limit for the day, on news that creditors would agree on a final bailout plan later in the day and fears about what that plan would entail. Singapore's Straits Times gained 0.59% and Hong Kong's Hang Seng gained 1.38%. China's Shanghai Composite dropped 1.78%, however.

European bourses are mixed this morning, with many flat or slightly down. The oil majors have been dampening the markets lately, and today Royal Dutch/Shell reclassified the quality of 20% of its reserves, sending it and other oil majors lower. Several important retailers indicated that sales had been weak in the fourth quarter in Germany and France. Many of those retailers reported much stronger sales outside those countries, however. Some were recovering from early losses this morning. Royal Ahold gained after reporting in-line estimates and not giving a feared further profit warning. Chip stocks and telecom-related stocks performed well in early trading.

Currently, the FTSE 100 is down 15 points or 0.33%, to 4479.20. The CAC 40 was up 1.10 points or 0.03%, to 3593.83. The DAX was up 0.41 points or 0.01%, to 4045.84.

  Jeff Bailey   1/9/2004,  3:47:19 AM
es04h chart ... Link

  Jeff Bailey   1/9/2004,  3:39:48 AM
Nikkei-225 ($NIKK) 10,965.05 +1.18% ... session low/high so far 10,861.28-11,008.56. Link

This has the NIKK showing further strength after generating the "bullish triangle" at 10,500 and now has its 52-week highs in play.

  Jeff Bailey   1/8/2004,  11:55:14 PM
Oh My! ... I placed a 5-DRT on the QQQ. Yesterday's trade broke above the 2003 5-DRT Blue #6 of $37.41.

Wait a minute.... $37.41? QQQ Swing trade bulls rule!... for now (grin)

  Jeff Bailey   1/8/2004,  11:55:07 PM
Most Intriguing ... Hi Jeff: Stock Traders Almanac notes the importance of the first 5 days in predicting the direction of the coming year. And that reminds me of your 5-MRT technique. Think a "5-DRT" would be applicable, and if so, would you start it last Friday (01/02/04) or use the first full week -- this one ending tomorrow?

I think Jim Brown reminded us that the first 5-days of January might be bullish and set the tone for 2004 too!

I backtested this trader's question/thought and I find that taking the actual first 5-day's of trade really seemed to have the INDU trading those levels.

By golly! Look what the INDU has been doing since it moved above 2003's BLUE #5 of 10,276, its closing in on BLUE #6 of 10,733! Look at it. It's amazing!

Weekly internal chart of INDU, where similar to our 5-MRT retracement technique for intra-day trading, subscriber wonders if the historical nature of first 5 days of trading year a predictor of final year's tally, could have trader/investor using retracement to measure the range (High and Low) of the first 5-days of the year. Link

Here is a daily interval chart using the "5-DRT" for 2004. Link

I added the January MONTHLY pivot levels (in pink).

Here's the PnF chart of the INDU, with 50-day (Avg) Bollinger bands with 2-std deviations (High/Low). Link

  Jeff Bailey   1/8/2004,  11:54:59 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   1/8/2004,  11:54:53 PM
Holy Smokes! ... I was just looking at a weekly bar chart of the INDU. Today's trade has the INDU closing above the bar chart's all-time, MAX possible, downward trend.

  OI Technical Staff   1/8/2004,  11:54:44 PM
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