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  Jeff Bailey   1/12/200,  4:40:06 PM
Closing Internals at this Link

  Linda Piazza   1/12/200,  4:11:18 PM
The Dow inched above its 10-dma at the close, as did the $TRAN. Does this inching above the average at the end of the day look any more conclusive than its inching below it at the end of the day Friday? Not to me. As I thought it might, the OEX ended the day by taunting us with a close right at the midpoint of Friday's tall red candle and the 60-minute 18/21-pma's. There's nothing inconclusive about a new closing high for the COMPX, however, is there?

  Jeff Bailey   1/12/200,  4:06:54 PM
tmb ... my e-mail reply regarding shorting the QQQ was bounced back as undeliverable. I'm not much on trying to pick tops, and stopped when the QQQ broke above $36.00 resistance on 12/29/03.

I may profile day trade shorts in the QQQ, but too strong for this trader's (Jeff Bailey) liking at this point.

  Ray Cummins   1/12/200,  3:46:38 PM
Spreads/Combos & Premium-Selling -- E-mail Replies: Trading Basics

(condensed) Hi Ray, I have been looking at a few of the back issues on the site...trying to learn more about options, and one thing I can't seem to grasp is the difference between the types of volatility. Historical (statistical?) seems easy enough because that is based on stock movement...but I don't quite grasp implied volatility. Can you help? CS

The volatility component of option valuation is a measure of the range the underlying security is expected to change over a given period of time. Mathematically, the measurement of volatility is the standard deviation of the daily price changes in the security. In simpler terms, the more volatile the stock in the past, the greater the potential for future movement and the higher the price of the option. There are two basic categories of volatility: Historical Volatility and Implied Volatility. Historical Volatility (HV) is simply a statistical value based on past prices, however Implied Volatility (IV) is a bit more complex. To determine an option's IV, one must start with the current option price and work backward to calculate the theoretical value of volatility that is equal to the market price minus intrinsic value. The "plain English" definition: Implied volatility is the volatility value that makes an option's fair value equal to its actual market price. Since the market price is the key to the equation, it's obvious that IV can be more affected by the current demand for an option price than the historical volatility of the underlying asset. Keep that in mind next time you are buying options ahead of an important date or event such as an earnings announcement, FDA meeting, etc. Hope that helps!

  Linda Piazza   1/12/200,  3:45:21 PM
It looks to me as if the OEX means to taunt us, closing near that 50% retracement of Friday's tall red candle at 559.45 and the 60-minute 18/21-pma's at 559.32 and 559.42, although the OEX has begun dropping a little as I began typing. There's that bearish cross on the 60-minute moving averages above, balanced by a bullish cross on the 60-minute MACD. There's the bullish performance of the Nasdaq balanced by the difficulty the Dow is experiencing with its 10-dma. Take your pick as to which you're going to believe. Bears need a strong whoosh down to believe in the bearish view.

  Linda Piazza   1/12/200,  3:34:47 PM
I'm wondering if today's stalemate has anything to do with the Nikkei's holiday today. At least one source predicts the Japanese economy will be the fastest growing over the next year. I'm wondering if all eyes aren't turning to the Nikkei to watch how it reacts.

  Linda Piazza   1/12/200,  3:32:03 PM
The Dow is now a few cents above its 10-dma, but only a few cents. The $TRAN is still about 5 points below its 10-dma.

  Linda Piazza   1/12/200,  3:29:25 PM
The 60-minute OEX 18/21-pma's are currently at 559.42 and 559.44, with the 18-pma having just made a bearish cross of the 21-pma. Each is right at the 559.45 level that represents the midpoint of the tall red candle from Friday. A test of one is going to constitute a test of all. Bears want to see that test turn out one way, and bulls want the opposite. The way it's going, it looks as if bulls are more likely to get their way, but let's see. Remember that we're looking at where we want closing values to be.

  Ray Cummins   1/12/200,  3:23:45 PM
Spreads/Combos & Premium-Selling -- Market Movers

Among the bullish positions in our portfolio, these issues are enjoying notable upside activity during today's session: Altiris (NASDAQ:ATRS), Career Education (NASDAQ:CECO), Corinthian Colleges (NASDAQ:COCO), Faro Technologies (NASDAQ:FARO), Flamel Technologies (NASDAQ:FLML), ImClone (NASDAQ:IMCL), New Century Finance (NASDAQ:NCEN), Netflix (NASDAQ:NFLX), and Yahoo! (NASDAQ:YHOO).

  Linda Piazza   1/12/200,  3:20:39 PM
That last move took the OEX above its 30-minute 21-pma, although the OEX now moves down to rest on that average again. It hasn't quite moved the OEX up far enough to test 60-minute version, at least according to livecharts.com, the charting service I'm using on my dial-up connection. That puts the OEX trapped between the two averages again.

  Jeff Bailey   1/12/200,  3:17:27 PM
03:00 Internals at this Link

  Ray Cummins   1/12/200,  3:14:10 PM
Spreads/Combos & Premium-Selling -- Broadcom Blowout!

The rally in BRCM shares (that we mentioned this morning) continues to gain strength with the issue now up $3.77 at $40.55. The catalyst for the move appears to be some comments by an analyst who believes BRCM could have a better first quarter than expected. In a research note issued today, CIBC World Markets analyst James Jungjohann reiterated his "sector outperformer" rating and said he was increasingly optimistic about Broadcom's first quarter due to strength in orders from satellite broadcaster EchoStar Communications. Our new position is a bullish debit spread at $32.50, however speculative traders might consider "premium-selling" plays at $35 and $37.50 (using February options).

  Linda Piazza   1/12/200,  3:12:05 PM
I had tried to post the following content when my broadband provider went down: The five-minute nested Keltner channels I watch on the OEX show the OEX having descended to first support at 557.70-557.87, with next support at 557 and 555.63. The channels show resistance at 558.30-558.37, 558.75 and 561. The channels are in a state of equilibrium, lined up fairly equal distance one inside another. After a short period of equilibrium, sometimes up to an hour or two, this state usually precedes a breakout one direction or another. This hints that we may see something happen after the bond market closes in a few minutes.

It looks as if that breakout was to the upside. I'm working from a dial-up connection now, and it's not going to run all my streaming charts. Sure wish there was DSL in my area. All the fancy new equipment I've bought this year doesn't do me much good when Comcast keeps going down in the middle of the afternoon with some regularity.

  James Brown   1/12/200,  3:06:09 PM
Speaking of YHOO, don't forget that we had planned to close the current call play tomorrow afternoon ahead of its Wednesday earnings announcement. However, we may consider closing the play this afternoon if shares can make it to the $50 mark.

  Jeff Bailey   1/12/200,  3:03:38 PM
Yahoo! Inc. (YHOO) $49.33 +2.47% Link ... edging to another 52-week high. Making a little earnings run ahead of Wednesday's after-the-bell earnings where consensus is at $0.10 per share versus hear ago $0.08.

PnF chart gives impression weak hands may have let go at $40, while quick reveral back higher has bears under water. Current column of X is bullish vertical count to $68.

Nice looking reverse head/shoulder pattern on bar chart too. Link

Turn this weekend's Ask the Analyst intra-day chart of the QQQ upside down, and you've got Yahoo! with a nice little "bear trap" at that head. See it? Yep... bears getting crushed in this one.

  James Brown   1/12/200,  2:59:01 PM
Sector Losers this afternoon:

DJUSHB homebuilders: -2.61%
XAU gold & silver: -1.8%
XAL airlines: -0.95%

  Jeff Bailey   1/12/200,  2:58:35 PM
MGI Pharma (MOGN) $44.96 +7.55% Link ... Jeff: Anythoughts on MOGN?

Stock pulled into the $34.00 level and has been building series of higher lows and higher highs. Today's action a new 52-weeker, with bullish vertical count of $50. Can play 1/2 positions at this point, as risk/reward to bullish vertical count not attractive enough for my taste to warrant full position.

According to Dorsey/Wright and Assoc., the Drug Sector Bullish % (BPDRUG) just recently reversed back up into "bull confirmed" at 62.77%, and sector internals look to be building strength.

  James Brown   1/12/200,  2:58:07 PM
Sector Leaders this afternoon:

INX internet index: +2.66%
NWX networking index: +2.57%
SOX semiconductors: +2.4%

Disk drives, hardware and software are all up more than 1% as well.

  Linda Piazza   1/12/200,  2:36:21 PM
As a reminder of an earlier post, bullish OEX traders would be cheered by a close today above 559.45, the midpoint of Friday's tall red candle, while bearish traders would be cheered by a close below that midpoint. Either possibility is still within reach.

  Jeff Bailey   1/12/200,  2:34:11 PM
AMEX Gold Bugs ($HUI.X) 245.48 -1.31% .... only equity sector now lower by more than 1%.

NWX.X +2.37%, INX.X +2.18%, SOX.X +2.05%, RXH.X +1.4%.

  James Brown   1/12/200,  2:30:51 PM
Chip stocks continue to soar today and current OI call play MXIM is rising right along with them, breaking through the $55 level. Short-term traders might want to consider taking profits at current levels or at least tightening their stops.

Current estimates are for global chip sales to rise 20% in 2004 but I just read that one analyst firm believes sales could double that amount.

  Linda Piazza   1/12/200,  2:29:49 PM
Reader Request: Explain more your last post (my 14:13 post) and who is the sister index.

Response: Great question. I'm glad you asked since other readers might wonder the same thing. The Dow Jones Industrials (the Dow) and the Dow Jones Transportation Index ($TRAN) are considered sister indices. Those who follow Dow theory like to watch the performance of the two in conjunction with each other. Basically, the action of one should confirm the action of the other. If the $TRAN is reaching a new relative high or low, the Dow should, too, within a few days to two weeks. The closer together the two reach that new relative high or low, the more powerful the confirmation. (One note: we're talking about closing levels here, not intraday levels.) For about three weeks now, I've been mentioning that I was going to be closely monitoring the $TRAN as it approached and tested that swing high from March. The closing daily high from that period was 3049.96. The Dow closing high from that March was 10,635.20. Here's a weekly $TRAN chart: Link I haven't reviewed Dow theory in a while, so it's possible that I'm forgetting some nicety of the theory, but that's the gist. For those not familiar with Dow theory and its importance, both Pring and Murphy address Dow theory in their technical analysis texts and we may even have information on that theory in an archived article.

  James Brown   1/12/200,  2:25:40 PM
Mmm...pancakes. IHOP (IHP) announced same-store sales were up 6% in December. Plus the company plans to open between 40 and 55 new restaurants in 2004. The company also expects to make a profit in 2004 as sales rise to 1.8 to 1.9 billion.

The stock is currently down more than 1 percent but off its lows for the session near $36.

  Jeff Bailey   1/12/200,  2:23:08 PM
QQQ $38.02 +0.76% .... just off session high of $38.11, which was Friday's "neckline" of an intra-day head/shoulder top.

Good observation day for the QQQ today. If pressured to get long, break much above $38.25 and MONTHLY R2 should find another wave of short covering.

  James Brown   1/12/200,  2:20:21 PM
I honestly haven't been following the dual-listing story that began last week, I believe with HPQ, but as of this morning there have been five more defections. These stocks, in addition to Hewlett-Packard (HPG), will be dual listed on the NYSE and NASDAQ and will trade on the NASDAQ using their same three-letter symbols: Apache (APA), Cadence Design (CDN), Charles Schwab (SCH), Countrywide Financial (CFC), and Walgreen (WAG).

  Jeff Bailey   1/12/200,  2:14:59 PM
02:00 Internals at this Link

  Linda Piazza   1/12/200,  2:13:21 PM
The $TRAN is rising once again to test its 10-dma. Last time, it fell back quickly, but only into the shoulder level of a possible inverse H&S formation, as it turns out. If it can break firmly above that 10-dma, at 3018.86 currently, it's setting up a potential retest of its March 2002 swing high and it might pull its sister index up with it.

  Linda Piazza   1/12/200,  2:07:50 PM
The OEX did rise to test its 30-minute 18/21-pma's, as I thought it might do. (See my 11:55 post.) I had thought that test might come during the 1:35-1:55 usual stop-running period, but it's come a few minutes later than I expected. Now we see what happens next--a push through to the 60-minute versions or a rollover from here.

  James Brown   1/12/200,  2:04:58 PM
Beleaguered shares of Fedex (FDX) got a reprieve today after Bear Stearns upgraded the stock from "peer perform" to "out perform". The firm did confirm the belief that FDX has been losing market share to UPS but suggested it is temporary and will eventually improve. The rebound from the $60 level has also put FDX back above its 200-dma. If you're skeptical on the upgrade look for the $70 level as potential resistance or maybe the 50-dma near $72.50.

  Linda Piazza   1/12/200,  2:04:25 PM
While the OEX is below its 30- and 60-minute 21-pma's, the COMPX is above both, with 30-minute MACD making a bullish cross from above signal. Other 30-minute oscillators are inconclusive, however, and 60-minute MACD has not yet made a similar cross. So far, however, this suggests a climb back toward the upper envelope bands, at 2111 and 2122, respectively. The climb today has looked a bit bear-flag-ish, but the COMPX is above the 2099 level that's a 50% retracement of the decline. Since the COMPX regularly overshoots targets, we're still in iffy territory as to whether this could still be a bear flag or not.

  James Brown   1/12/200,  1:54:37 PM
Shares of Hanover Compressor (HC) are at an inflection point. The company is involved with natural gas compression and equipment and natural gas prices have soared over the last six weeks, which have lifted HC. Today's move to $12.38 has broken long-term resistance in the 12.25-12.30 range and sets up for a rally to $15.00 and beyond. Unfortunately, HC has not yet conquered its P&F chart resistance currently at $12.50. This could be a bullish play above $12.50.

  Linda Piazza   1/12/200,  1:50:37 PM
The OEX 30-minute 18/21-pma's are now only cents above the current OEX level, at 558.53 and 558.78, respectively. I'm expecting a push up toward them and possibly above them to the 60-minute versions. That's when we'll really see what kind of strength the OEX has or doesn't have. If the OEX fails to test those averages and just rolls over, we know that it lacks much strength at all.

  James Brown   1/12/200,  1:47:23 PM
Not much of a reaction in shares of Guidant (GDT) today after Bank of America raised the stock from a "neutral" to a "buy" and pushed their price target to $75. GDT is up 1% to $65 but last week's announcement from JPMorgan, that GDT was one of their top picks for the next year, produced a bigger pop. I'd be careful chasing the stock here. A pull back to $60-61 looks like a better entry point.

  Linda Piazza   1/12/200,  1:43:04 PM
With internals as strong as they've been today, I'm surprised we haven't seen more upside, but perhaps the Nasdaq is going to provide that for us, dragging the other indices up, too. Adv:dec ratios were at 18:14 for the NYSE and 18:13 for the Nasdaq, as of a few minutes ago. Up volume was 1.2 times down volume on the NYSE but a strong 2.2 times down volume on the Nasdaq. New highs numbered 598 with new lows on 6. Total volume was 811 million on the NYSE and 1.3 billion on the Nasdaq. Is volume preceding market direction, so that these volume patterns predict more upside this afternoon or is something else going on? Jane would tell us that the $TRIN is neutral rather than bullish.

  Linda Piazza   1/12/200,  1:37:10 PM
We're moving into the 1:35-1:55 time period that sometimes sees a stop-running move. Sometimes this move hits stops and then immediately turns around and sometimes it keeps going, but the object is to test higher or lower levels, to see whether support or resistance holds. That tells big-money players a lot about market strength or weakness, and hopefully it will tell us, too.

  James Brown   1/12/200,  1:36:35 PM
There may be a potential trigger point developing in Universal Health (UHS). The stock looks weak and has broken its simple 50-dma and is currently holding just above support at $50.00. If recent analyst actions are any sign of things to come then UHS will likely continue lower.

Last week Oppenheimer started coverage on UHS with a "sell" rating and a $45 target claiming the stock is over valued. JPMorgan followed that with a downgrade to "neutral" today.

However, bears need to be careful. The next support level is the 200-dma near $47.50. Not only is this daily support but it's also the rising trendline of support from February 2003. If you're bearish look for a breakdown below this level. Chart: Link

  James Brown   1/12/200,  1:22:47 PM
M G I C Investments (MTG), a provider of private mortgage insurance, is soaring today, up 15% on massive volume (vs. its average) after announcing earnings this morning. The company beat estimates by 7 cents with $1.03 a share. Revenues were up more than 8% to $449.3 million.

  Linda Piazza   1/12/200,  1:18:58 PM
While the $VXO is moving up with this downturn in the OEX, the $TRIN isn't moving up yet, and Jane and others have taught us to want to see an upturn there, too, to confirm a bearish move.

  James Brown   1/12/200,  1:16:27 PM
The rally in Juniper Networks (JNPR) continues to run. Currently the stock is up 25% for 2004. Volume has been pretty strong on the move and its P&F chart just broke through overhead resistance. Fueling the 6.3% move today are two firms Piper Jaffray and Pacific Growth who raised their revenue guidance for JNPR. Both expect a very good December quarter. Pacific Growth raised their rating from "equal weight" to "over weight".

I certainly wouldn't chase the stock here but there doesn't appear to be much overhead resistance for JNPR until the $27-28 levels.

  Linda Piazza   1/12/200,  1:11:24 PM
At this point, the OEX isn't going to have to produce much of an upward blip before it tests the 30-minute 18/21-pma's, since they've descended not far over the current OEX price. They're at 558.69 and 558.85, respectively, with the lower of the two just above the 50% retracement of the fall out of Friday's bear flag. Just above those averages are the still-rising, but beginning-to-flatten 60-minute versions, at 559.57 and 559.27, respectively. Since the OEX has a habit of overshooting the 30-minute versions, I wouldn't be surprised to see it rise far enough to test the 60-minute versions during a stop-running push over the next 45 minutes. If the bullish tenor has switched to a much more bearish tenor, we might see none of this action. A break to a new daily low today before a retest of any of those averages would show us that the tenor had changed.

  James Brown   1/12/200,  1:09:11 PM
Bob Pisani is highlighting some recently weak retailers. One of them on his list is Tiffany & Co (TIF). We've had TIF on our watch list a couple of times in the last week or two. Shares just broke support at $41.50 and are holding just above round-number support at $40.00. If TIF breaks the $40 mark a test of the 200-dma near 37.50 is a good bet. This happens to coincide with the September double bounce near $37.25.

  Jeff Bailey   1/12/200,  1:06:04 PM
01:00 Internals at this Link

  Linda Piazza   1/12/200,  12:49:10 PM
Since my 12:34 post, the $TRAN has fallen 7 points, falling away from its test of its 10-dma. Guess that's one test that didn't go so well, right?

  Jeff Bailey   1/12/200,  12:41:00 PM
12:00 Internals at this Link

  Linda Piazza   1/12/200,  12:34:21 PM
Friday, the Dow closed cents below its 10-dma, leaving a question mark as to whether the violation of the moving average was significant or not. It had been the first close beneath that average since November 21, so we knew it was significant from that viewpoint, but had it just overshot that average in the last few minutes of trading? Today, that average lies at 10,477 and a study of the intraday chart shows the Dow trying to pierce the 10,475-10,480 level and falling back. The outcome is as yet undecided, but the 10-dma does appear to be pressuring the Dow so far.

The Dow's sister index, the $TRAN, is currently rising to test its 10-dma, at 3018.90. The five-minute TRAN chart shows a large inverse H&S (not confirmed by bullish divergence on the oscillators) with a neckline near that level, so this may be a significant test for the $TRAN. It's currently testing its inverse H&S neckline, and if it could also climb above the 10-dma, that might set up a climb toward the 3048.50 upside target predicted by that inverse H&S. It's notable that last week, the $TRAN tested and then fell away from the 3050.40 swing high from March 2002, with the $TRAN's high at 3042.65. If that inverse H&S were confirmed and the upside target reached, that would constitute an even-closer test of the March 2002 swing high. That's far from happening yet, however, and we should see whether these confirmations occur and upside targets are approached before deciding about strength and weakness. The potential exists: let's see if it's fulfilled.

  Jeff Bailey   1/12/200,  12:17:28 PM
Overstock.com (OSTK) $17.34 -0.91% .... Jeff: Please confirm -- target today is $21, with current price around $17.10? Thanks

Incorrect. Only Day trade targets are for the day.

Swing trades I profile are for minutes, hours, days, weeks, months.

January MONTHLY Pivot Levels = S2= 12.28 , S1= 16.08, P = 19.51, R1 = 23.31, R2= 26.74.

  Gerald Melson   1/12/200,  12:10:53 PM
Interesting to note that SOV (Soverign Bank) January 25 calls are now selling for .20 to .25 with expiration this Friday. Those calls are 1.18 out of the money now in what is normally a low beta stock. Buyout rumors persist with SOV after the Royal Bank of Scotland was turned down what was reported to be a 28 per share offer. Soverign indicated they were looking for a figure of around 30. However, what was more important was SOVs indication of their willingness to sell. (yours truly generally trades 1,000 plus shares and options on SOV).

  Ray Cummins   1/12/200,  12:09:43 PM
Spreads/Combos & Premium-Selling -- Career Education (NASDAQ:CECO)

The recent recovery in this issue is continuing today with the stock up $1.74 at $48.89 and it appears to be headed for a test of the 2003 high near $55. Some of you may recall how CECO shares tumbled in early December after a former employee accused company officials of inflating enrollment numbers to boost profits. Similar charges had been made the previous month by another former employee at the company's Gibbs College unit in Montclair, N.J. and the announcement weighed heavily on CECO's reputation. Now it seems that "all is well" and even with some recent class-action lawsuits, the stock is once again in a bullish trend. Our new "premium-selling" position (JAN-$40P) is comfortably profitable and speculative traders may find additional opportunities (in February) at the $40 and $45 strikes.

  Linda Piazza   1/12/200,  12:08:04 PM
I'm thinking now that the OEX might reach up to test those 30-minute 18/21-pma's as early as the stop-running rush coming up in the next hour to two hours, if it's going to do so. Those averages have fallen fairly quickly and are now trying to level off a bit. They're at 558.96 and 559.29, respectively, with the 18-pma having made a bearish cross of the 21-pma.

  Jeff Bailey   1/12/200,  12:05:17 PM
NASDAQ Composite (COMPX) 2,101.23 +0.68% ... back above the 2,100 level. Should negate "downward trend" from Friday's 52-week high.

SOX +1.78%, INX.X +1.75%, DDX.X +1.71%, NWX.X +1.89% .... BTX.X -0.12%.

  Jeff Bailey   1/12/200,  12:00:47 PM
Swing trade long alert .... Overstock.com (OSTK) $17.03 -2.4% ... bullish entry here, stop $15.50, target $21.00.

January MONTHLY Pivot Levels = S2= 12.28 , S1= 16.08, P = 19.51, R1 = 23.31, R2= 26.74.

  Linda Piazza   1/12/200,  11:55:41 AM
For a long while, one action we've been watching is this: the OEX zooms up in early trading and then trades sideways in a series of small-bodied candles while the 30-minute 21-pma rises underneath the price. That usually requires at least most of a day and sometimes requires until the next day. Then, just before the two collide, the OEX dips down to test that average--faking out bears--and then rebounds from it, rising again.

Now the OEX is below that average. It fell steeply and now trades sideways in a series of small-bodied candles while the 21-pma falls toward it. Now I'm wondering if we're going to see the opposite action in effect. As the line of small-bodied candles and the 21-pma draw closer together, perhaps this afternoon or maybe tomorrow morning, will the OEX rise to test it--faking bulls this time--and then rebound away from it, falling again? That's just a possible scenario and not a prediction, but now we can watch to see whether it occurs or not.

  Ray Cummins   1/12/200,  11:53:33 AM
Spreads/Combos & Premium-Selling -- Power Integration (NASDAQ:POWI)

In spite of a small rally in the chip segment, shares of POWI are down $1.85 at $31.58 and there is little news to explain the selling pressure. One trader suggested that a mutual fund manager waited until the new year to start "booking profits" and that might explain Friday's large volume (on a down day) as well. Regardless of the reason, the slump is favorable for our bearish "premium-selling" position at $35 and we expect the issue to test the bottom of a recent trading range (near $30) before any rebound occurs.

  Linda Piazza   1/12/200,  11:45:16 AM
European markets traded in a tight range all day. The FTSE fell out of that range at the end of the day, closing near its low, down 16.70 points or 0.87%, at 4449.60. The CAC 40 closed down 14.70 points or 0.41%, at 3560.10, and the DAX kept testing 4000 all day, but couldn't stay above it. It was down 20.27 points or 0.50%, at 3995.91. This is the first close below 4000 this year.

  Ray Cummins   1/12/200,  11:41:59 AM
Spreads/Combos & Premium-Selling -- Martek Biosciences (NASDAQ:MATK)

Another recent candidate in the debit straddles portfolio is making a move today. MATK shares are up $1.54 at $67.44 after Smith Barney raised its price target to $90 on expectations the company will "continue to benefit from multiple expansions." The rally has pushed MATK to a 52-week high and with over 5 million shares of short interest, there is certainly some potential for additional bullish activity. Our new straddle play (MAR-$65 Call/Put) has yet to become profitable -- on a simultaneous order basis -- however it won't take much more upside movement to put the position "in the black."

  Linda Piazza   1/12/200,  11:37:26 AM
Here's one thing I'm watching on an OEX five-minute chart: Link

  Ray Cummins   1/12/200,  11:25:56 AM
Spreads/Combos & Premium-Selling -- Petrochina (NYSE:PTR)

This stock is "on the move" today, down almost 10% at $49.20 after BP PLC announced this morning that it intends to sell its 2% stake in PTR into public markets. The news was less than favorable for PTR investors but great for short-sellers and volatility traders. Our recommended position in the issue was a debit straddle in February at the $55 strike however with today's sell-off, the only viable strike price would be $50 at a combined debit (per contract) near $6.75 for 6 weeks of time value.

  Linda Piazza   1/12/200,  11:25:01 AM
The COMPX and NDX are showing H&S-ish formations on their intraday charts, at the top of today's rise, although they're far from classic. They're better seen on a line chart than on a bar chart. Neither has yet confirmed by a fall through a neckline. In fact, it's somewhat difficult to determine where that neckline would be, which perhaps gives these formations little validity.

  Linda Piazza   1/12/200,  11:18:48 AM
Keltner support and resistance is finally sorting itself out somewhat this morning on the OEX. Closest Keltner resistance is at 557.43, with the OEX appearing to have a little trouble with that level. It's a single line of resistance, however, and might not hold. Just above that, 557.98 looks like stronger resistance, with resistance layering out more thinly if the OEX can make it above 558. Support is thinner, at 556.89, 556.37, and 555.27.

  Ray Cummins   1/12/200,  11:13:28 AM
Spreads/Combos & Premium-Selling -- Broadcom (NASDAQ:BRCM)

Shares of the popular "system-on-a-chip" designer are notably higher this morning, up $1.32 at $38.10 despite a lack of significant news concerning the company. The move brings the issue to a 52-week high and some traders say a test of $40 is likely prior to earnings in late January. Our outlook for the issue is bullish in the near-term and a call-debit spread at $32.50 offers reasonable reward potential with some downside margin, in the event of an unfavorable quarterly report.

  Linda Piazza   1/12/200,  11:13:26 AM
It's difficult to characterize today's chart pattern on intraday OEX charts, but the 30-minute chart suggests that it's possible that this could be a "b" distribution pattern with Friday's steep drop forming the stem of the "b" and the consolidation since then being the bulb of the "b." If so, the predicted break will be to the downside, but sometimes these form on the daily chart, too, so that today could begin one of several days of sideways trading at this level while the bulb of the "b" forms on the daily chart. I hope not, and Friday's drop didn't really seem big enough in proportion to consider it the stem of a "b," but it's always possible. It's possible that this isn't a distribution pattern at all and something more bullish, of course.

  Jeff Bailey   1/12/200,  11:12:29 AM
11:00 Internals at this Link

  Linda Piazza   1/12/200,  11:07:47 AM
Careful, OEX traders. I'm not getting consistent up-to-date OEX feed on my charting system today. If the OEX price appears to be sitting at one level at times today . . . well, it might not actually be sitting there.

  Linda Piazza   1/12/200,  10:58:17 AM
There has been no confirmation of that higher five-minute low on the OEX, as there's been no confirming move to a higher high as yet. That could still happen, of course, as the OEX tries to rise again. The five-minute 21(3)3 stochastics just unkissed a bearish kiss, showing how fickle this oscillator can be. If the OEX should roll over beneath the former five-minute high with an accompanying rolldown of the oscillators, bearish divergence will have been shown, but we still might get that higher high.

  Linda Piazza   1/12/200,  10:52:22 AM
Analysts have been busy this morning with a preponderance of downgrades and upgrades. Downgrades include a Deutsche Bank downgrade of Nabors Industries (NBR) and Maverick Tube (MVK) to hold ratings, a Lehman Brothers call to trim Royal Dutch (RD) and Shell Transport (SC) to equal-weight ratings, a Banc of America trimming of Regeneron Pharmaceutical (REGN) and Trimeris (TRMS) to neutral ratings, and a Prudential downgrade of Alcoa (AA) to underweight and Alcan (AL) to neutral weight. Banc of America raised HCA (HCA), Synnex (SYNX) and Guidant (GDT) to buy ratings, JMP Securities started Manugistics (MANU) at a strong buy, and JP Morgan raised Community Health (CYH) to overweight rating. Pacific growth raised Jniper (JNPR) to overweight. These are just a few of the ratings announcements coming out today.

  Jonathan Levinson   1/12/200,  10:49:13 AM
How do you get the futures on ndx dow etc. I Noticed the value of options or stocks change before it shows on dow or nasdaq etc.

My broker, Interactive Brokers, provides e-mini futures quotes by symbol, ESH4 (S&P March '04 contract), YMH4 (Dow) and NQH4 (Naz). These symbols should also work on quote.com and Qcharts. On Prophet, the symbols are expressed as "ESH04", YMH04 and NQH04. For silver, the symbol is SI4H (full-sized) or YI4H (e-mini-contract), gold is YG4H (e-mini) and GC4H (full-sized).

  Linda Piazza   1/12/200,  10:31:13 AM
We have a higher five-minute low on the OEX, to be confirmed when a higher five-minute high has been reached. There was no bullish divergence as the higher low was reached, however.

  Linda Piazza   1/12/200,  10:27:00 AM
Sometimes lately, hasn't it seemed that the big moves occur late-week in the week before opex week? I'm wondering if that will be true of this opex cycle, too.

  Jeff Bailey   1/12/200,  10:21:06 AM
10:00 Internals at this Link

Friday's Internals at this Link

  Linda Piazza   1/12/200,  10:19:13 AM
The OEX 30-minute 100-pma lies at 555.02, not so far beneath the current OEX level. Although I've found the 60-minute version more important over the last few months, that doesn't mean that the 30-minute version might not provide some bounce power. According to the way the OEX usually behaves with respect to those envelopes, any such bounce would likely roll down somewhere below the 30-minute 21-pma, now at 559.81, although I've found that the OEX overshoots the 30-minute version more often than it does the 60-minute, which is why I prefer to watch the 60-minute chart for guidance.

  Jane Fox   1/12/200,  10:05:48 AM
DOW ratio is a totally neutral 15:15 and the TRIN is neutral to bearish 1.11.

  Jeff Bailey   1/12/200,  10:04:25 AM
NASDAQ-100 Tracking (QQQ) $37.74 +0.03% ... here's QQQ with new WEEKLY Pivot retracement. Link

  Jonathan Levinson   1/12/200,  10:02:18 AM
The expiry of a 2.25B reverse repo with a new 6.5B overnight repo makes for a total of 8.75b in Fed money added today. This should bolster either stocks or bonds, and it's a significant amount for that purpose. If, on the other hand, the Fed uses it to buy foreign currencies, then it's relatively much smaller. We'll watch the different markets for clues today.

  Linda Piazza   1/12/200,  9:59:29 AM
Bullish OEX traders want to see the OEX close above 559.45, the midpoint of Friday's tall red candle. Bearish OEX traders want to see the opposite.

  Gerald Melson   1/12/200,  9:59:19 AM
First 20 minutes is gone and as expected we start to see the sellers coming in now. Definite weakness in the NYSE area with the Nasdaq trying to hold a neutral stand. Need to hold until after 10 AM for a more definitive outlook. Normally at around10 buy programs may jump in, but the trend is expected to go negative overall.

  Linda Piazza   1/12/200,  9:52:47 AM
The OEX is back below the midpoint of the first five-minute candle, now showing weakness in earliest trading. I'm still watching that possible inverse H&S on the five-minute chart, since the OEX did turn around within the period that could have constituted a turnaround at an ascending neckline. It should now steady, however, and begin to move back up, if that inverse H&S is going to finish forming. Oscillators are not confirming this pattern, but we've seen some complete without oscillator confirmation lately, so I'm keeping an open mind.

Oops. The OEX appears to be dropping too low for a right shoulder now. That means that we have another sign of apparent weakness in earliest trading--a bullish pattern that didn't finish forming, much less confirm or meet its upside target.

  Jeff Bailey   1/12/200,  9:47:55 AM
Service Corp. (SRV) $6.09 -2.45% .... swing trade stop alert here from $5.70 entry.

+$0.39, or +6.8%.

  Linda Piazza   1/12/200,  9:45:32 AM
The $TRAN edges back above 3000 in early trading, at 3001,45 as I type. It's trying to cling to the ascending trendline off the June low, having long ago broken through a steeper and less sustainable trendline, but it's unclear whether it will be able to maintain either level.

  Jeff Bailey   1/12/200,  9:43:41 AM
S&P Banks (BIX.X) 336.15 -0.26% ...

  Jeff Bailey   1/12/200,  9:42:59 AM
S&P 500 Index (SPX.X) 1,124.62 +0.24% .... with new WEEKLY pivot retracmenet. Support building firm 1,106-1,109. Near-term resistance 1,131-1,133. Link

  Linda Piazza   1/12/200,  9:42:32 AM
It doesn't look as if the OEX is going to form that inverse H&S, unless it turns around immediately. It may instead charge straight up toward the 60-minute 21-pma, currently at 559.18, although it's too early to be sure where selling might hit. The expectation (now that the OEX is below that MA) is that it would be likely to roll over, either there or at the 30-minute version, but similar expectations have not been met lately.

  Linda Piazza   1/12/200,  9:38:29 AM
During the first five minutes of trading, the OEX spanned a range from 556.99 to 557.95. The OEX is above the midpoint at 557.47, showing strength in earliest trading, but let's watch that first reversal. If the OEX should dip toward 556.75-557 in the next few minutes, I'd be on the watch for a possible inverse H&S on the OEX five-minute chart with a head at Friday's low and an ascending neckline just above 558. If such an inverse H&S were formed and then confirmed, the upside target would be near 560.

  Jane Fox   1/12/200,  9:36:57 AM
The DOW ratio opens up bullish at 20:10 but the TRIN is a bearish 1.2.

  Jane Fox   1/12/200,  9:34:56 AM
Welcome aboard Gerald.

  Linda Piazza   1/12/200,  9:32:55 AM
Welcome, Gerald. It's nice to have another face on the options side.

  Jeff Bailey   1/12/200,  9:28:29 AM
09:00 Update posted at this Link

  Gerald Melson   1/12/200,  9:27:24 AM
Earnings this week begins in full operation. Traders will be centered on January 14nth (Wednesday) with YHOO, QLGC, and AAPL. There are others of course, but for volatility and liquidity you can't beat these three. Hence, traders that want to play volatility will certainly center on these mentioned stocks. However, just prior to earnings watch it. The rule generally is to back off right before the announcement. US markets are green prior to the opening but it is expected that traders will sell into this rising market shortly after the opening. Aside from earnings traders will also have triple witching this Friday. Again, this makes for great scalping and day trading. Stocks and options tend to move all over the lot, especially the highly liquid ones where traders will direct their interest.

  Linda Piazza   1/12/200,  9:16:40 AM
Friday's OEX candle was a bearish engulfing candle, a completed reversal signal. That doesn't mean that all promised reversals actually happen or that they happen in a straight line down, either. The 60-minute chart shows a possible reversal signal building (to bullish trading on the short-term) with the OEX poised just above the bottom 0.675% envelope band. This hints that the OEX might now come back up to retest the 60-minute 21-pma from the underside, with that average at 559.02 currently, but that potential short-term reversal signal has not yet been completed and the 60-minute oscillators do not yet hint of that retest. The nested Keltner channels on the five-minute chart show the OEX at bottom support, also suggesting a bounce, perhaps to the central average at 559.49. Futures seem to support this view.

Bullish sentiment has been such lately that these bullish targets are always overshot while bearish ones are not achieved. Those trying to gauge whether it's truly time for a pullback should be watching to see if that pattern--overshooting bullish targets and not achieving bearish ones--continues or is switched. If the markets can't move up after all, not completing the short-term reversal signal on the hourly chart, or if the markets don't meet upside expectations, the tenor has changed, at least on a short-term basis.

  Jane Fox   1/12/200,  9:15:09 AM
I'm shocked Jane, totally shocked. Imagine that; you mean there is manipulation in the markets.

(8:59 post) I can't tell you now this makes me sick. My son, who lives in Canada, pays more than $200/ mo. for his natural gas heated house. This just sticks it to the little guy.

  Jane Fox   1/12/200,  9:08:06 AM
Earlier I announced the NASDAQ was trying to entice companies from the NYSE to list on the NASDAQ but compromised with allowing companies to list on both. The only company at that time to list on both was Hewlett-Packard (HPQ). Well the list just got longer and now includes Charles Schwab (SCH), Apache (APA), Cadence Design Systems (CDN), Countrywide Financial (CFC) and Walgreens (WAG).

  Jane Fox   1/12/200,  8:59:22 AM
From the And the Beat Goes on Column - The Commodity Futures Trading Commission (CFTC), which regulates commodity futures and options markets in the U.S is investigating allegations of market manipulation and has subpoenaed New York Mercantile Exchange (NYMEX) natural-gas floor traders' telephone records as far back as Dec. 15, when Nymex gas futures approached 10-month highs. The subpoenas cover all firms trading in the Nymex's gas "ring" and don't target individual firms. The price of natural-gas futures on the Nymex, has gained 48% since Thanksgiving, raising questions about market manipulation.

  Linda Piazza   1/12/200,  7:15:33 AM
Good morning. The Group of 10 central bank governors currently meeting in Switzerland will likely tackle the dollar's decline against the yen and the euro. While counseling that the dollar's devaluation against those other currencies isn't yet alarming, a market watcher said that the central bankers likely would not accept a free-falling dollar. Another likely topic of the G-10 meeting is a set of new rules for bank lending.

Against that background, Asian exporters suffered, pressuring some Asian bourses. Asian bourses turned in a mixed performance. The Nikkei and a couple of other Asian markets were closed Monday for a national holiday. The Taiwan Weighted lost 0.12%, but South Korea's Kospi gained 0.65%. In South Korea, creditors agreed to a long-awaited bailout plan for LG Card. Together parent LG Group and Korea Development Bank agreed to meet a 500 billion won shortfall, if such should occur within the next year, with Korea Development Bank's 25 percent apparently larger than many had believed it would be. Creditors will swap loans for shares. Many Korean banks gained as a result, although credit-card company LG Card did not. Reportedly, investors have little faith that that the bailout will result in long-term survival for the company, despite the 1.15 trillion won that the company will receive. In other news, the chairman of conglomerate SK Group was arrested and charged with diverting 788 billion won from one of the company's units.

Singapore's Straits Times lost 054%. Hong Kong's Hang Seng lost 0.25%, but China's Shanghai Composite gained 2.34%. In Shenzhen, China, officials have announced a fourth suspected case of SARS, with that town near Hong Kong, too.

European markets mostly trade lower. Last night, Marketwatch.com reported that a study showed a rise in U.K. profit warnings, but the bourses appear to be reacting to Friday's U.S. economic data and market performance; euro strength against the dollar; and Royal Dutch's reassessment of the quality of 20% of its oil reserves, announced last week. In stock-specific news, The Financial Times reported that Airbus majority owner EADS would be hit hard by currency issues, and that stock was declining in early trading. Swiss staffing group Adecco announced possible problems in accounting, control, and compliance issues in its North American operations, with one analyst speculating that this meant that the Olsten deal announced in 2000 had fallen apart. The company delayed the release of its full year accounts, and was slammed in today's trading, down 40% at one point. Dresdner Kelinworth Wasserman cut the company's rating to a sell rating from a previous buy. In other stock-specific news, Siemens sold about 21% of its outstanding share capital of German chipmaker Infineon, sending that company's stock lower. JP Morgan downgraded Duetsche Bank to underperform from neutral on valuation concerns. UBS downgraded Adidas-Saloman to a Neutral 2 rating from a former Buy 2 rating, citing a disconnect between share price appreciation and EPS forecasts.

As of this writing, the FTSE 100 was down 7.50 points or 0.17%, to 4458.80. The CAC 40 was down 14.61 points or 0.41%, to 3560.19. The DAX was down 22.53 points or 0.56%, to 3993.65, slipping beneath 4000 again in intraday trading. The DAX first climbed above 4000 intraday on January 2, and has been closing above that benchmark level since that day.

  Jeff Bailey   1/11/200,  11:33:13 PM
WEEKLY Recap of signals given

Swing Bullish QQQ 12/30/2003 in $36.57; out 01/06/04 $37.25 +0.68 or +1.9%

Swing Bullish QQQ 01/06/04 in $37.41; out 1/9/2004 $37.64 +0.23 or +0.6%

Day SRV Bullish 01/06/04 in $5.59; out $5.70 +0.11 or +2.0%

Swing SRV Bullish 01/06/04 in $5.70; out (still open) stop $6.09 and targeting $6.65.

  Jeff Bailey   1/11/200,  2:45:50 PM
Pivot Matrix for next week at this Link

  Jeff Bailey   1/11/200,  2:27:08 PM
Friday's Closing Internals at this Link

  OI Technical Staff   1/9/2004,  10:55:36 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

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