Option Investor
Printer friendly version
  Jeff Bailey   1/14/200,  5:38:00 PM
Closing Internals at this Link

  Jeff Bailey   1/14/200,  5:36:27 PM
Ugh! ... e-mini S&P 500 futures settled 1,131.25. (see 15:47:46)

  James Brown   1/14/200,  5:29:00 PM
IBM Earnings - Yahoo earnings has IBM scheduled to report after the close on Jan-20th. IBM announced after the close today that they had moved their earnings date to TOMORROW the 15th. IBM's website says they will host an earnings call at 8:30AM NOT after the close.

Expect IBM to rock the market again before the open tomorrow.

  Jeff Bailey   1/14/200,  5:10:12 PM
James Cramer on CNBC makes note that ONE Feb. $47.50 and Jan. $47.50 were abnormally active today. Sure enough...Feb. $47.50 traded 3,576 with OI of just 3,905, while Jan. $47.50 calls traded 2,968 with OI of just 1,331.

Mr. Cramer advises the big call buyer to contact his/her lawyer.

  James Brown   1/14/200,  5:08:44 PM
Thanks, Jeff.

  Jeff Bailey   1/14/200,  4:40:40 PM
QQQ $38.08 +0.34% ... after hours is $37.80 here. Here's unconventional $0.25 box size PnF chart Link

YHOO $48.39 -0.84% Link ... lower at $46.32 (Nice call from James B on YHOO calls yesterday)

INTC $33.39 -0.59% Link ... lower at $32.70

AAPL $24.20 +0.33% Link ... lower at $22.83

  James Brown   1/14/200,  4:31:11 PM
Earnings after the close

INTC est 25 cents --- actual = .33, 9 cent chg, rev $8.74 B
YHOO est 11 cents --- actual = .11, Rev $654M
AAPL est 14 cents --- actual = .17, rev $2.01B
QLGC est 38 cents --- actual = .39, rev $137M, (est $138M)

INTC - flash memory units flat
INTC down -94 cents in after hours
AAPL raised guidance for Q1
YHOO Q1 guidance $470-$505 M, est was $492 for Q1
AAPL trading down -1.17
YHOO trading down -2.40
QLGC trading down -2.63

  Jeff Bailey   1/14/200,  4:26:11 PM
Regional Bank HOLDRs (AMEX:RKH) $130.32 +0.69% ... somebody took down 7,500 at $131.85 and 11,000 at $131.83.

  Jeff Bailey   1/14/200,  4:22:20 PM
Regional Banks ... SOTR Link and NTRS Link seeing some after-hours upside action.

  Keene Little   1/14/200,  4:20:07 PM
DOW futures spiked down to 10,494. Getting a bounce here, currently 10,515. SPX and NDX futures currently closed but started to get whippy just before the close. They'll reopen at 16:30.

  Keene Little   1/14/200,  4:15:59 PM
Futures are a tad violent in here, now dropping after spiking up.

  James Brown   1/14/200,  4:15:39 PM
Earnings after the close

INTC est 25 cents --- actual = .33, 9 cent chg, rev $8.74 B
YHOO est 11 cents --- actual = .11, Rev $654M
AAPL est 14 cents --- actual = .17, rev $2.01B
QLGC est 38 cents --- actual =

INTC - flash memory units flat
INTC down -90 cents in after hours
AAPL raised guidance for Q1
YHOO Q1 guidance $470-$505 M, est was $492 for Q1
AAPL trading down -1.00
YHOO trading down -1.40

  Jonathan Levinson   1/14/200,  4:14:05 PM
Dow futures up 115 at 10528, session high of 10534.

  Keene Little   1/14/200,  4:13:38 PM
ES still holding its high here, 1132.00 while YM fights to hold near its pre-close high of 10,528. NQ, the laggard, at 1538 hasn't yet reached its pre-close high of 1539.50.

  Jeff Bailey   1/14/200,  4:12:19 PM
Thanks Keene ... what are dow futures doing now with JPM lower on merger news? JPM is lower priced Dow component, but just wondering.

  Jeff Bailey   1/14/200,  4:11:26 PM
JP Morgan (JPM) $39.22 +0.82% Link .... Dow component ... lower at $37.25 here after Wall Street Journal report (see 16:06:42)

  Jeff Bailey   1/14/200,  4:06:42 PM
Bank One (ONE) $45.22 +1.26% ... Oh my alert! surging to $51.35... Wall Street Journal reporting that JP Morgan buying ONE for 20% premium!

This acquisition might light a fire under banks on further speculation of merger activity!

ONE is a component of the BIX.X

Implications for SPX/OEX should be bullish.

  Keene Little   1/14/200,  4:06:21 PM
Jeff, ES (e-mini futures) just smoked up to 1132.50. DOW futures just making a new high now. NDX futures still not making a new high.

  Jeff Bailey   1/14/200,  4:05:10 PM
Buy program premium alert .... I'm delayed quotes on futures... Maybe Keene sees what is taking place...

  Jeff Bailey   1/14/200,  4:02:39 PM
Dow Industrials (INDU) 10,537.+1.06% .... session high was 10,548.51. That wasn't enough for a 3-box reversal was it? Link

Waiting in Dow component Intel (INTC) Link

Which will most likely have some impact with IBM Link and HPQ Link

  Jeff Bailey   1/14/200,  3:59:23 PM
Dow Diamonds (AMEX:DIA) 105.54 +1.00% ... did see trade at its WEEKLY R1 of 105.63.

U.S. Dollar Index (dx00y) 86.08 +0.66% came close at 86.16.

  Linda Piazza   1/14/200,  3:55:32 PM
For what it's worth, an OEX close today below 559.45 would continue the pattern of closes beneath the midpoint of Friday's tall red candle, a candle that completed a bearish engulfing pattern, a reversal signal. That reversal, however, should be seen in the context of a reversal that takes the OEX down inside a possible bull flag pullback.

  Jeff Bailey   1/14/200,  3:51:57 PM
Not one program premium alert so far. Gosh.. it's those days when I'm most prepared and really focused that nothing happens.

  Jeff Bailey   1/14/200,  3:47:46 PM
One of my key "bias" indicators as the S&P futures contract..... Link

I read this as very bullish, with caution advised to bulls. Bullish bias increases should futures settle above 1,131.25, as settlements above a level has hinted pressure to be long.

Note rather strong rebound after coming close to testing a "next level lower" after trade at upper level.

  Linda Piazza   1/14/200,  3:45:24 PM
The $TRAN has still not been able to sustain levels above a 50% retracement of today's range.

  Linda Piazza   1/14/200,  3:41:12 PM
As the day draws to a close, it's time to make decisions about carrying plays overnight, with important earnings and economic numbers facing us between now and tomorrow morning. I sure won't be carrying anything overnight unless it's a hedged position. Consider carefully any play in a stock that's reporting, as even a hedged position will include options that are likely inflated due to higher volatility in that particular option. Those option premiums will begin to deflate fast after earnings.

  Linda Piazza   1/14/200,  3:18:14 PM
I expected to see a small white candle produced today on the OEX daily chart (see my 4:03 post from yesterday), but I didn't expect it to exceed the 30-minute and 60-minute 21-pma's by as much as it has. It still fits the parameters of a possible bull flag pullback, with alternating bullish and bearish days, and there hasn't yet been a breakout of that possible bull flag. This is a bigger climb than I expected at yesterday's close, although not after today's open when I saw little Keltner resistance ahead of 559.50 (see my 9:49 post). Sure wish I hadn't been stopped out of that call position I'd bought against just this eventuality.

  Jeff Bailey   1/14/200,  3:13:01 PM
03:00 Internals at this Link

Observation is that advancers at both NYSE and NASDAQ making session high.

  James Brown   1/14/200,  3:12:55 PM
Hitting new two-year highs are shares of Invitrogen Corp (IVGN). The stock recently bounced off its 50-dma and has now surpassed its recent resistance near $71.00. The challenge to new bullish plays is that the stock appears to be rising in a relatively tight channel and upside may be limited here.

  Linda Piazza   1/14/200,  3:05:15 PM
Remember that I mentioned this morning that the OEX 60-minute RSI had broken through its rising trendline and that sometimes such a RSI trendline break preceded a price trendline break? That seems to have proven true today, too. I'm still a little worried about the close proximity of that neckline on the H&S that was confirmed yesterday, perhaps just barely cleared now, but these H&S formations haven't proven too trustworthy for a long while now.

  Linda Piazza   1/14/200,  3:00:11 PM
Now the OEX has exceeded its previous day's high and has climbed above the descending trendline off the 1/09 high.

  Jeff Bailey   1/14/200,  2:59:48 PM
Trimble Navigation (TRMB) $40.81 +1.59% Link ... continues to impress after trade at $30. New 52-week high alert here.

  Linda Piazza   1/14/200,  2:58:58 PM
The OEX is so far not able to reach a new day's high, although the SPX did, by a penny, and the OEX is still trying. Both show bearish price/MACD divergence on the five-minute chart, but until each reaches a new five-minute low, that's not confirmed. Still, bulls might be watchful of the possibility of a double-top on that five-minute chart. On the OEX, that would occur on a drop below 556.61, a long, long way below in this bullish environment.

What about other indices? The TRAN has not been able to successfully climb above a 50% retracement of the day's range, although it's still challenging that level. The important Wilshire 5000 shows an almost-equal high, with bearish divergence showing up there, too, in price/MACD comparisons. The Wilshire 5000 would have to drop below 10,958.80 before that divergence was confirmed, however. The DJI has of course reached a new high, but five-minute charts so far show that same bearish price/MACD divergence. Bulls want to see MACD catch up, although they don't sell options based on MACD levels, but on price. The Nasdaq saw a lower high, with stochastics at an equal high, but that's just so far.

  Jeff Bailey   1/14/200,  2:55:27 PM
Daily Pivot level observations really has the look that the INDU is trying to resume leadership doesn't it?

INDU first to move above DAILY R1, SPX just under DAILY R1, QQQ has managed to just nudge above DAILY Pivot.

BIX.X, which gives observation "away" from majors sees trade at DAILY R1.

  James Brown   1/14/200,  2:55:10 PM
High-end retailer Saks Inc (SKS) is hitting four-year highs. The stock actually broke out two days ago after Prudential raised the stock from "under weight" to "neutral weight" but investors cheered the move. Traders might want to consider bullish positions if SKS can trade above the $16.50 mark. Earnings are the middle of February.

  Jeff Bailey   1/14/200,  2:52:42 PM
S&P Banks index (BIX.X) 336.23 +0.68% ... has clawed its way back to WEEKLY S1 after trading below WEEKLY S2 yesterday.

Still think that SPX above 1,130 is going to need this group.

  Jeff Bailey   1/14/200,  2:51:05 PM
Intel (INTC) $33.37 -0.65% ... sessiion low has been $33.14, trying to make an end of session comeback.

SOX.X 542.80 -0.42% ... still in the red.

  James Brown   1/14/200,  2:50:52 PM
If you don't like OHP check out

Pacificare Health Systems (PHS). The stock has pulled back from resistance near $70 to support (previous resistance) at $60. The bounce today looks tempting but earnings are Jan. 21st.

  James Brown   1/14/200,  2:48:28 PM
Price check on major internets:

YHOO ($48.46) is holding up pretty well ahead of its earnings report. Shares are down 35 cents, bouncing from its intraday low off its simple 10-dma.

AMZN ($55.61) is stretching its gains to four days in a row and breaking out above the $55 mark.

EBAY ($66.11) is also marking its third day of gains hitting new all-time highs.

  Ray Cummins   1/14/200,  2:47:18 PM
Spreads/Combos/Premium Selling -- Market Movers

James also "beat me to the punch" on Oxford Health Plans (NYSE:OHP), but I must mention that Spreads/Combos readers were offered a bullish position (FEB-$40P/$42.5P) in this issue earlier this week (1/11/04). With the stock now trading near $49, the credit spread is comfortably profitable.

  Jeff Bailey   1/14/200,  2:46:34 PM
Dow Industrials (INDU) 10,522 +0.9% ... session highs

  Linda Piazza   1/14/200,  2:43:35 PM
SPX cash index just hit a new high of the day, although the OEX hasn't yet.

  Ray Cummins   1/14/200,  2:41:20 PM
Spreads/Combos/Premium Selling -- On the "watch" list: Omnivision (NASDAQ:OVTI)

James mentioned the bearish trading opportunity in Sandisk (NASDAQ:SNDK) however another popular high-flyer of late is also in a short-term funk. Shares of Omnivision are down $2.55 at $56.97 in a second consecutive day of losses on moderate volume. Briefing.com mentioned Tuesday's "aggressive reversal" in its morning commentary and OVTI definitely has some bearish potential. Our bullish position, which expires Friday, is short (put) at $55, so the issue now qualifies as a candidate for the early-exit "watch" list.

  James Brown   1/14/200,  2:41:01 PM
Insurance company P M I Group (PMI) has an unexplained bullish breakout on 3x the average volume that occurred two days ago. I can't find any news to explain the move and shares have been able to follow through on the move to break the $40 mark. The next obstacle for the stock should be $42.25 and then $44.00.

  Linda Piazza   1/14/200,  2:39:00 PM
The $TRAN is now testing the midpoint of today's range, with that midpoint at 3031.26 and with the $TRAN at 3031.79 as I type.

  Jeff Bailey   1/14/200,  2:37:04 PM
Swing trade bullish alert ... S1 Corp. (SONE) $9.21 here, stop for THIS trade profile, $8.90, and look for new highs.

Traders have seen me talk about how an institutional bull will drive a stock to a fresh 52-week high for a Friday close, so it prints in bold ink for the weekend paper. Here's a stock that I think fits the bill for good trade setup.

Pnf chart has bullish vertical count of $21.75, gives a little upside from current levels. SONE blew away quarterly estimates last quarter, and today's pop might be the beginning of an earnings run into Feb. 12 release.

  James Brown   1/14/200,  2:35:10 PM
Short-term traders may also have a bullish play developing in shares of Fastenal (FAST). The stock has been consolidating in a bullish wedge the last six weeks and the trend of higher lows looks ready to give birth to an upside breakout. A trigger above $51.15 or 51.25 might work but watch out for earnings on Jan. 21st.

  Linda Piazza   1/14/200,  2:33:47 PM
For reference, the OEX previous high of the day has been 558.97.

  James Brown   1/14/200,  2:32:40 PM
Something is happening with Oxford Health Plans (OHP). The stock broke resistance at $46.50 on Jan. 9th with very strong volume but I can't find any news to explain it. The rally has continued and shares are up 7 days in a row now. The recent surge has produced a triple-top buy signal on its P&F chart. I hesitate to recommend bullish plays here because it feels like a chase. Earnings are expected in early February.

  Jeff Bailey   1/14/200,  2:29:35 PM
Dow Industrials (INDU) 10,516 +0.85% ... clue #2

  James Brown   1/14/200,  2:28:21 PM
Traders may also have a bearish opportunity developing in T C F Financial (TCB). Regional banks have not been offering very optimistic views for 2004 and TCB is due to announce earnings tomorrow. The stock is already weak with a breakdown under round-number support of $50.00 yesterday. We don't like to hold a play over earnings but aggressive traders can keep their eyes on this one for a move toward its 200-dma near $46.

  Jeff Bailey   1/14/200,  2:25:47 PM
Dow Industrials (INDU) 10,505 .... that wasn't it was it?

  James Brown   1/14/200,  2:24:35 PM
Short-term traders may want to consider potential bearish plays in SanDisk Corp (SNDK). The stock has failed to breakout over its simple 50-dma near the $70 mark and today's reversal is a 4.6% decline with decent volume. Bears could target a move toward the $60 level but watch for earnings on Jan. 21st.

  Linda Piazza   1/14/200,  2:23:06 PM
There's the OEX, right back at the descending trendline off the 1/09 low, right back at the ascending trendline that formed the violated neckline of the H&S formation. Haven't we been here before today?

  Jeff Bailey   1/14/200,  2:21:35 PM
INDU 10,512 ... upside alert I had set earlier this morning.

  James Brown   1/14/200,  2:21:16 PM
Everest Re (RE) might be a bullish candidate in the insurance sector. Shares recently broke out above resistance at $85 and they've been digesting these gains the last two sessions but have maintained their positions above the $85 level. Earnings should be Feb. 2nd.

  James Brown   1/14/200,  2:18:40 PM
One banking stock enjoying a technical breakout today is New York Community (NYB). Shares are up 2.49% producing a fresh buy signal in its MACD oscillator. There is probably some resistance near $39.50 but the recent consolidation suggests NYB may be ready for new highs. Earnings are Jan. 28th.

  Jeff Bailey   1/14/200,  2:18:06 PM
02:00 Internals at this Link

Everything looks "flat" for past three hours. Almost like an equilibrium is being found right now.

  Ray Cummins   1/14/200,  2:12:31 PM
Spreads/Combos/Premium Selling -- Accredo Health (NASDAQ:ACDO)

Shares of ACDO are trading at a new 52-week high today, possibly on speculation of a merger/buyout offer from one of the larger companies in the sector. The stock is up $1.14 at $33.10 and investors believe the recent industry consolidation (Express Scripts bought CuraScript in December; UnitedHealth Group purchased Mid Atlantic Medical in October; AdvancePCS and Caremark Rx agreed to merge in September) may lead to an acquisition of ACDO or Priority Healthcare (NASDAQ:PHCC) in the coming months. Traders who like the outlook for the company might consider a bullish synthetic position ($35C/$30P) in February or a long-term calendar spread at the $35 strike.

  Jeff Bailey   1/14/200,  2:09:52 PM
Buy/sell programs ... nothing at this point. SPX pinned at 1,126.00

  Jeff Bailey   1/14/200,  2:07:52 PM
Amazon.com (AMZN) $55.38 +0.85% Link ... tentative, but higher after spread-triple top today at $55.

  Linda Piazza   1/14/200,  2:07:49 PM
The $TRAN has not yet retraced 50% of its day's range, although it is now challenging the midpoint of its 30-minute candle. A move back above 3031.28, or at least a close above that level, would erase the bearishness seen earlier on this index when it tumbled mid-morning. That zone should now presumably provide resistance, however. We'll just have to see.

My small white candle thesis for the OEX today, proposed at yesterday's close, now looks more and more likely, although it certainly hasn't looked that way at certain points today. Two trendlines provide strong resistance, while important MA's provide important support, and it's all still being sorted out. If either the bulls or the bears gain the upper hand, though, watch out. Still wish I had that protective call position back today. The MRT system doesn't fail to provide guidance often, but the indices refused to behave in accordance with it today, at least using the 1MRT. That seemed to have some validity, though, since the upper target was near 559, the upper target projected by other means, too.

  Jeff Bailey   1/14/200,  2:05:00 PM
General Electric (GE) $31.96 +1.10% ... session highs... clue #1.

  Jeff Bailey   1/14/200,  2:04:02 PM
Beige Book out traders just looking at each other... indices doing nothing.... I'm looking for clues.

  Jeff Bailey   1/14/200,  2:00:49 PM
Day and Swing Trade longs ... good sector to be looking for a bullish shorter-term trade might well be the homebuilders today.

Treasury YIELDS back lower, sector has pulled back the past couple of days. If SPX break is to the upside of 1,130, individual names in group might snap back higher.

Nice BIG 5-minute opening bar on Toll Brother (TOL) .... use your 5-MRT

  Linda Piazza   1/14/200,  1:57:45 PM
The OEX five-minute nested Keltner bands show the OEX in a state of equilibrium, with the channels nested centrally within each other. That usually predicts a breakout (upside or downside) after a period of equilibrium.

  Ray Cummins   1/14/200,  1:55:39 PM
Spreads/Combos/Premium Selling -- Intuit (NASDAQ:INTU)

Shares of the popular provider of small business and personal tax preparation software are rebounding today. The stock is up $1.17 at $49.74 as investors begin to think about the upcoming tax season and the effects it will have on tax software providers such as INTU and H&R Block (NYSE:HRB). Our current position is bullish with a cost basis near $47 so the move is favorable. But, we hesitate to recommend a new (directional) play at this time as the issue seems destined to trade in a range in the near-term. However, "premium-sellers" might consider a short-strangle at $55C/$45P with February options.

  Jeff Bailey   1/14/200,  1:49:46 PM
SPX 1,126.48 +0.46% ... ugh! back at that downward trend. Why couldn't it have pulled back to 1,121 first?

Beige Book 10-minute away....

still a bit of a reverse h/s pattern, just not as symetrical as I like.

  Linda Piazza   1/14/200,  1:45:43 PM
There's a possible inverse H&S building on the OEX 30- and 60-minute charts, to match the regular H&S. A couple of factors argue against that interpretation, however. First, although these can be continuation patterns and have been continuation patterns during the rally, they're usually bottoming patterns, so we have to be a little cautious about them. We'd like to see bullish price/MACD divergence or something similar. We're not seeing that. MACD moved to a lower low as the head was formed. However, if bullish sentiment remains as strong as it has, we do have to at least give this some consideration, and while MACD did not show bullish divergence, it is forming its own inverse H&S formation.

  Ray Cummins   1/14/200,  1:38:54 PM
Spreads/Combos/Premium Selling -- YHOO/SINA: Part II

A number of companies in the Asian Internet group are "riding the wave" of the new Yahoo!/Sina deal including (bullish) portfolio issues Sohu.com (NASDAQ:SOHU) and Netease.com (NASDAQ:NTES). Traders should consider positions in these stocks as well as a possible play in our recent covered-call candidate; Chinadotcom (NASDAQ:CHINA).

  Linda Piazza   1/14/200,  1:36:50 PM
We're drawing up to the usual stop-running time of day, with this push coming a bit earlier than usual. The outcome of this push could tell us more about afternoon direction (please, let there be a direction). The OEX comes back up to challenge that descending trendline off the 1/09 high again and it again approaches the violated H&S neckline, too. Seems it isn't finished with either test. The 30-minute oscillators, fickle as they are in a trending environment, are becoming iffy to bullish.

  James Brown   1/14/200,  1:29:15 PM
It's about time! TASER Intl (TASR), which has been soaring as shorts continue to get squeezed, has announced a 3-for-1 stock split. The split will take affect on Feb. 10th for shareholders on record as of Jan. 26th.

The stock was trading for under $5.00 from October 2002 through the first half of April 2003. Now shares are breaking the $110 level.

  Ray Cummins   1/14/200,  1:28:24 PM
Spreads/Combos/Premium Selling -- Sina Corporation (NASDAQ:SINA)

One of the biggest movers in our portfolio is SINA, up $4.08 at $47.05 on news the company plans to set up a web-based auction service in China with Yahoo! (NASDAQ:YH00). The company announced late Tuesday that the jointly run and operated auction/e-commerce service will be geared towards small- and medium-sized businesses and buyers and sellers in the Chinese mainland. The service will provide both a fixed-price and bid-price model for the sale of consumer goods and offer a range of services. Terms were not disclosed, however investors are obviously confident of the market dominance that will come from the combination of these two Internet giants and traders can speculate on continued upside activity in the issue with a (February) "premium-selling position at $35 or $40.

  James Brown   1/14/200,  1:25:27 PM
WR Hambrecht has upgraded all the major video game makers (not the consoles but the software titles) from "hold" to "buy". Electronic Arts (ERTS), Take-Two Interactive (TTWO) and THQ Inc (THQI) are all higher on the session but the gains appear somewhat muted. If you're bullish on the group I'd look for ERTS to break above the $50 level of resistance before considering any new entries. TTWO is fighting with resistance at its decline 50-dma and THQI jumped to the $20 mark before falling back as investors sold into strength.

  Linda Piazza   1/14/200,  1:18:49 PM
It's difficult to weigh the different viewpoints today concerning the OEX. Earlier, I posted the 60-minute chart showing that today's rise brought the OEX up to test the violated H&S neckline, with the OEX turning down from that test. That's bearish. However, if you watch the OEX with respect to the descending trendline off the 1/09 high, it's possible to see that downturn as a potential bull flag pullback from that trendline challenge, with the OEX not yet having retraced more than 50% of the flagpole climb. The 30-minute oscillators support the bearish thesis, but we all know how much we trust those these days, even the usually trustworthy MACD. To further complicate matters, the daily chart shows that all this could be happening within the context of a potential bull flag pullback on that chart. I think I felt better when I had that bullish insurance this morning in the form of an OTM call position, but stops are stops, and mine was set according to Jeff's MRT system, using the first 1-minute interval, and the stop was hit.

  Jeff Bailey   1/14/200,  1:16:23 PM
01:00 Internals at this Link

Higher odds of bullish entry for SPX near 1,121 if internals are strong.

I'm pricing out some Feb. SPX calls. Thinking 1,130 strike at the neckline on SPX 1,121 trade

  Ray Cummins   1/14/200,  1:16:14 PM
Spreads/Combos/Premium Selling -- Cephalon (NASDAQ:CEPH)

Despite the midday consolidation, a number of issues are continuing to rally and one of these stocks is our newest candidate for a (bullish) synthetic position. CEPH shares are up $1.10 at $54.13 on the release of positive data from its earlier clinical trials with R-modafinil and information about the Phase III clinical program for the compound that the company initiated in December 2003. Cephalon expects to file an NDA for R-modafinil with the U.S. FDA in the fourth quarter of 2004. In addition, the company will commence a study of R-modafinil in patients with Shift Work Sleep Disorder early this year and intends to file a supplemental NDA for that indication as well. Traders with a bullish outlook on the stock have a number of ways to participate in any future upside movement including a (February) "premium-selling" play at $45, a bull-put or bull-call spread at $50, and a LEAPS/Covered-calls combination at the $60 strike.

  James Brown   1/14/200,  1:13:42 PM
PCAR is a common candidate on our watch list and after approaching resistance at $90 last week shares have slowly faded back toward the $85 level. Actually, shares almost $84 this morning after Prudential downgraded the stock to "under weight" based on valuation but shares are bouncing from their lows of the session. If the stock can crack $86 again it might be worth a short-term trade back toward $90. Earnings are in early February.

  James Brown   1/14/200,  1:09:14 PM
the talking heads on TV aren't kidding. Everything is churning sideways. I thought my charts had stopped.

  Linda Piazza   1/14/200,  1:06:39 PM
The OEX now sits at the 60-minute 21-pma and just above the 60-minute 100-pma at 555.96.

  Linda Piazza   1/14/200,  12:59:27 PM
The OEX is now back below the 60-minute 18/21-pma's, although minimally. If it continues falling, it will soon challenge the 30-minute versions at 556.20 and 556.65, respectively. (There's been a bearish cross of the 18-pma down through the 21-pma.) The 30-minute 100-pma is just below that, at 555.95. This should be solid support for the OEX, so it should be tough to get through this zone, with all those MA's to support it. However, I'm still focusing on this morning's test of the violated neckline on the 60-minute OEX H&S, with the OEX turning down from that test. We haven't seen a turndown from similar tests lately. Usually there's a minimal break of the neckline, an immediate run-up to retest that neckline, and then a zoom up as the formation is rejected. (That's why I had that protective call position this morning.) This pattern at least follows more classical behavior, although it doesn't mean that the turndown will stick.

  Jeff Bailey   1/14/200,  12:57:00 PM
INDU session high has been 10,511.18 and taking note of DAILY R1 at 10,502. Add 10-points as we often do and come up with 10,512. Setting upside alert on INDU at 10,512 here.

  Jeff Bailey   1/14/200,  12:54:20 PM
QQQ $37.89 -0.12% ... will note that while I also see POTENTIAL reverse h/s pattern in INDU, it doesn't show up in the QQQ. As such, QQQ traders will most likely be following SPX/INDU action closely.

Hey... the QQQ got a trade at MONTHLY R2 already this month.. right?

  Linda Piazza   1/14/200,  12:53:51 PM
Careful, OEX traders. My OEX feed on one of my charting services is slow today. Be careful about making assumptions based on what you think you're seeing on the chart, because that may not be what's happening.

  Jeff Bailey   1/14/200,  12:51:01 PM
Program Premium alerts now set in place.... will monitor closely in coming hours. So far, only program premium alert found on 5-minute chart was first two bars on 5-minute interval.

SPX 1,125.01 +0.33% and easing back from session high of 1,128.34. The plot thickens and the story begins to unfold. How will it end?

  Jonathan Levinson   1/14/200,  12:43:47 PM
Fed Governor Bernanke's latest paper at this Link

  Jeff Bailey   1/14/200,  12:43:15 PM
12:00 Internals at this Link

  Linda Piazza   1/14/200,  12:37:14 PM
The TRAN closed the last 60-minute period below the midpoint of the first hour's tall white candle. In fact, it closed far below that midpoint, confirming the reversal signal on its 60-minute chart.

  Linda Piazza   1/14/200,  12:35:43 PM
Yep. The OEX is bouncing. Figured as much when that call position sold as easily as it did. Let's see how high this carries the OEX back. I may be buying that position back again.

  Linda Piazza   1/14/200,  12:32:32 PM
I just sold the OTM OEX call I'd bought this morning as insurance against a bearish position, creating an OTM straddle, and it sold a bit too quickly for my liking, with the OEX falling rapidly. Sometimes when that happens, the fall is short-lived. We'll see. Doesn't look that way now, and the OEX has continued falling steeply.

  Jeff Bailey   1/14/200,  12:29:18 PM
Intel (INTC) $33.28 -0.89% .... look for support at $33.00. Pull up a 30-minute interval chart if you can. Looks like a little h/s top pattern, objective $33.

If INTC begins to firm at $33.00, then makes a move back above $33.50, could rally strong into earnings.

  Linda Piazza   1/14/200,  12:23:49 PM
This is one of those days when nothing is happening yet but you can't afford to look away from the screen for a moment, isn't it?

  James Brown   1/14/200,  12:22:31 PM
You may have just heard Bob Pisani talking about the breakdown in the XAU gold & silver index below its simple 50-dma today. One such gold stock following the index's decline is Newmont Mining (NEM. Shares appear to have put in a double-top near $50.25 and have now pulled back to break its own 50-dma.

Yesterday Mark and I were discussing the idea of NEM as a possible short under the $45 level of support (It's trading above $45 now) but given the constant drop in the dollar we're pretty hesitant to short gold.

Now nimble traders can probably get away with it. Use a trigger below the current low of $44.90 and target $40.00 (watch for some support in the 42.00-42.50 range). Personally, I'd use a tight stop to take me out quick if I was wrong.

The other side of the coin is to wait and see if investors buy this dip to $45 in NEM (and 100 on the XAU). This could just be a bear trap like the breakdown under the 50-dma in early October 2003.

  Linda Piazza   1/14/200,  12:19:33 PM
Remember the big 60-minute H&S on the OEX yesterday? Here's what's happening with relationship to that formation: Link In the old days (pre 2003), the presumption would be a downside break. Over the last few months, the break has been to the upside. Either way, maybe this formation and the OEX's pattern in relationship to it argues against the steady-all-day thesis. A break either direction should produce a big move. Should, but this is opex week.

  James Brown   1/14/200,  12:11:28 PM
Yesterday German software compoany SAP Aktiengesell (SAP) undermined the entire software sector with news that its Q4 sales were down. Today JPMorgan is slicing the stock to "under weight" but it's not having much affect. The stock is bouncing from a gap lower this morning and is currently up 26 cents to $42.44.

  Jeff Bailey   1/14/200,  12:10:31 PM
Stillwater Mining (SWC) 10.06 +0.6% ... Remember, this is a palladium mining stock, not a gold mining stock. I've received several questions if we should be concerned about SWC. While there may be some near-term impact from gold stocks getting hit lower, just remember that SWC is palladium miner, not a gold miner.

  James Brown   1/14/200,  12:07:24 PM
PanAmSat Corp (SPOT) has been cut to "under weight" by Lehman Brothers this morning and shares are down 4.8% on the news. The drop is breaking what should have been round-number support at $20.00 for the stock. The last 2+ months SPOT has produced a rounded top and the stock looks vulnerable to further weakness. I wouldn't be surprised to see it test its 200-dma currently near $18.00.

  Linda Piazza   1/14/200,  12:05:18 PM
Keltner channels and the 60-minute 21-pma say that the OEX now has retreated to a possible bounce point. If it doesn't bounce, we know that there's more weakness than this morning's trading has suggested. I'm again looking at possible H&S building, this one on the five-minute chart, so bulls will want to see the OEX follow today's pattern so far, and reject that possibility by making a new day's high before it rolls down again . . . presuming that it does bounce.

  James Brown   1/14/200,  12:03:50 PM
There are a handful of stocks that have not seen any slow down in their momentum higher and American Standard Co (ASD) is one of them. Shares are higher today on fresh broker coverage by A.G.Edwards with a "buy" and a $115 price target. I'd keep an eye on ASD for a pull back to the $102 level as a possible bullish entry point but be aware of ASD's earnings report due out Jan. 26th.

  Gerald Melson   1/14/200,  12:02:24 PM
It's now official. Reuters reports that the Boston Options Exchange, BOX as it is known, has won regulatory approval to become the sixth US equity options exchange, joining a competitive field in the electronic trading arena. Trading at Boston is expected to begin this month. It is quite similar to the International Securities Exchange, which has become the largest US equity options exchange offering only electronic trading. BOX is jointly owned by the Montreal Exchange and Interactive Brokers and will NOT require firms or individuals to buy memberships in order to trade. Its going to offer a three second auction allowing brokers, etc., to trade against their orders at a penny better than the national best bid and offer. This should give BOX an edge in what is considered a very competitive market.

  Jeff Bailey   1/14/200,  12:01:23 PM
SPX 1,126.53 +0.47% .... intra-day chart of SPX at this Link

Timing is almost "perfect"... how about a pullback into the Fed's 02:00 PM EST release of the Fed's Beige Book to SPX 1,121 or so, then rally into INTC/YHOO, maybe getfollow through on some type of "bullish suprise" to 1,145.

  Linda Piazza   1/14/200,  12:01:12 PM
The TRAN now pulls back to 3030.01 as I type, just above the 3028.09 level that marks the midpoint of the tall white candle from the first 30 minutes of trading today. A 30-minute close below 3028.09 would confirm the reversal signal, but it looks as if the $TRAN just squeaked by in that 30-minute period. That midpoint should be a possible support level, which is why it's significant.

  James Brown   1/14/200,  12:00:02 PM
Just as shares of Abercrombie & Fitch (ANF) were starting to come back over the last several days Bear Stearns has downgraded the stock to "peer perform" this morning. The stock has really been suffering. Early December saw a strong drop on very poor November same-store sales figures and last week ANF reported December same-store sales that continued to decline (-13%). Despite the bad news there may be a floor under the stock with a double-bottom at $23.00 but ANF has to deal with resistance at $26.00, where if failed this morning (it also happens to be old support from last summer).

  Linda Piazza   1/14/200,  11:53:41 AM
Reader Question: Your thoughts on PPL as a long term hold please. Price 43.5, PF 51. Not certain how to read chart. Double top?

Response: The SEC doesn't allow us to give investment advice to individual traders, but we can take a look at generalities based on what the charts say. First, if someone considers a long-term play, I think the P&F charts are a good place to start. You've already noted the $51 price objective. Also note that a new sell signal will be given on a trade at $38.00, with the bullish support line below that at $36.00. Although I'd probably set my own stop a little higher if I were in a bullish play in such a stock, I'd certainly consider exiting if a stock created a new sell signal if I were in a long-term play. Each individual trader has a different risk/reward profile, however, and I don't know where this trader might have bought the stock or even if this trader has bought the stock as yet, but is only considering it. Some might be comfortable, especially if they had a protective put, following the stock all the way down to the bullish support line, but I personally draw the line when a new sell signal is produced, if not before.

I've linked a chart showing some of my impressions. Link I don't know whether I'd label that a double-top as yet. Rather, it looks more like a natural hesitation just below important resistance, carried forward over many years. Perhaps not everyone agrees with this assessment, but the June, 2003 high at $44.34 occurred at a S/R zone that had been important several years ago, so I consider it an important zone. The pullback from that level this summer confirmed that impression. It's likely now that we're seeing a (perhaps smaller) pullback ahead of another challenge of that level. One worrisome aspect of the chart, however, is that OBV has been declining since the end of December. That does happen sometimes during consolidation, but it's been a pronounced enough difference that I find it somewhat worrisome. Another caveat is that PPL reports the end of January, and I'm reluctant to enter a play, either a stock or options play, any closer than two weeks before the reporting period.

If I didn't already own the stock, then, I don't know that I'd want to acquire it right here as that challenge was being made and OBV was dropping, and as earnings approached, too. I'd prefer to wait for a pullback closer to the 50-dma, now just above $41.50, and a bounce from that level, or else a punch through the resistance, with confirming volume expansion in either case. I'd also prefer to wait until it settled down a bit after its earnings report.

  Jane Fox   1/14/200,  11:38:53 AM
Comments from Tony Crecenzi, the bond guru. "The economy’s underlying fundamentals, particularly low inflation, low interest rates, strengthening corporate and individual balance sheets, and a rock-solid financial system, are significant offsets to the risks often cited by pessimists in their assessments of the U.S. economy. The pessimists continue to place too much emphasis upon the U.S. budget and trade deficits, and on the level of consumer indebtedness, as they have for 20 years. They also continue to overemphasize the notion that the recent gains in income and wealth have not been equally distributed (I can’t see how capitalist societies will ever produce equal gains in income and wealth, especially when income and wealth levels vary greatly to begin with)."

And, of course, since I posted this I fully agree with Mr. Crecenzi's comments. Oh no here come the emails.

  Jeff Bailey   1/14/200,  11:34:22 AM
11:00 Internals at this Link

  Linda Piazza   1/14/200,  11:31:18 AM
Careful here, OEX traders. The OEX is turning back right at the descending trendline, falling out of what looked like a bull flag on the 1-minute chart, but it's still in bullish territory according to the 1MRT system and it now has the 60-minute 21-pma just below it. I think we're just seeing some volatility as this important test occurs, with the outcome not yet known.

  Linda Piazza   1/14/200,  11:26:49 AM
The OEX has now risen even closer to that ascending trendline off the 1/09 high, perhaps preparing to charge through. It's high enough now above the 60-minute 21-pma that we can consider it having cleared that MA, but not the trendline. The Wilshire has charged through its similar trendline, although it hasn't yet had a 30-minute close above it and it's just now challenging 11,000. I'd like to see the Wilshire above its 11,018.46 recent high to confirm the breakout. It's now at 10,998.70, so there's still danger that these indices could get slapped back. So far, that's not happening and the bullish case will win if these indices can hold on here.

  Jeff Bailey   1/14/200,  11:25:05 AM
VIX.X alert 16.63 -7.81% ... alert I set here at morning lows.

Most active options... Mar 1125 call, June 900 put (take note), Jan 1,125 call, Jan 1125 put.

Goodness look at those volume roll.

Why the June 900 puts?

  Jeff Bailey   1/14/200,  11:14:37 AM
SPX 1,126.96 +0.51% .... per 10:59:45 .... looking/observing 60-minute interval chart. If you've got your WEEKLY Pivot analysis retracement on your chart, do you see what I see developing?

See what took place on 01/09/04 at 1,120? See what took place yesterday? Now we watch for what might take place on any pullback to 1,120, and a bounce from there.

Too soon to tell, but begins to look like a reverse h/s pattern. With neckline at approx. 1,130 and head at 1,115, I could calculate bullish objective of 1,145.

1,145.... hmmmmmm

Remember this weekend's Ask the Analyst column? Remember the sharp rise in the VIX.X, which reverses sharply today? Did a bunch of put buyers in the SPX yesterday get caught in a "bear trap" type of move yesterday?

I can almost see it now... either Fed Beige Book, Intel, or Yahoo, something, to give investors/traders a "reason to sell" SPX back to 1,120, SPX firms at 1,120, then begins move back higher. Play SPX long 1,122.50, with target of 1,145-1,150 into next week. The TEST is 1,130.

Ties in WONDERFULLY with our fitted retracement on the e-minute S&P futures too

  Linda Piazza   1/14/200,  11:12:30 AM
The Wilshire continues to build small-bodied candles just under the descending trendline off the 1/09 high. It's currently at 10,984.62 with that trendline just ahead. The 30-minute oscillators are bullish-to-iffy, depending on the oscillator, but progress needs to be made soon to turn them from iffy to iffier and then to bearish. So far, though, this looks like a bull flag, but progress needs to be made.

  Linda Piazza   1/14/200,  11:00:50 AM
The $TRAN's 30-minute chart now shows a possible reversal signal building--tall white candle followed by a small-bodied candle with a tall upper shadow (the reversal signal), and now followed by a bearish red candle. To confirm, we need to see the TRAN close a 30-minute period below the midpoint of the tall white candle, so below 3028.09. I've been watching the $TRAN for a while because of its importance in Dow theory.

  Jeff Bailey   1/14/200,  10:59:45 AM
Excellent Observation ... good morning jeff, as i follow your thoughts more closely for market direction, i see that u are less vocal(certain) in your commentary. in the monitor, could u provide us your thoughts. thanks mike

You arre correct Mike. Last night's Index Trader Wrap may also give you some input as to my current thought process.

There were many dynamics that had be quite bullish in recent weeks, and bulk of it was my thought that there were some BIG shorts under water, especially in NASDAQ-100 QQQ. However, I think bulk of that may have run a near-term course.

Indices are the TOUGHEST trade around, and "easy money" from the bull side is made near-term. There will be BETTER opportunity from the bull side in sessions to come, when the set up is right.

What I'm doing right now, is turning my focus to individual stocks, with same bullish set up as we've had in the major indices.

One thing that has been VERY obvious to me, is BULLISH rotation. And it is this year's "top 10" annual renewal special, which has actually helped me greatly. What I've done is backtested my "top 10" picks, treated them as a portfolio, or like a mutual fund, similar to the Janus 20. I've got several candidates outside my "top 10" as if they are football players I've got sitting on the bench, ready for action when another player begins to stall out.

What is obvious, is that a stock with STRONG supply/demand characteristics, with BIG bullish counts, will sprint for about two months, then digest those gains, but watch out! Another stock that made a BIG move months earlier, that recently rested for a month, begins its leg higher, as if moving toward its longer-term goal. This type of action is VERY bullish for a market longer-term as long as it lasts.

Right now... I get the impression, from a supply/demand perspective, (see last night's Index Trader Wrap) that the major indices have made a BIG near-term move that hopefully we've all benefited from, and now I turn attention to individual stock names. For the indices, I'm more quiet, as I'm sitting, observing, and taking notes. There will be a time when I'm ready to act, but only when I feel the opportunity is right.

  Andy Aronson   1/14/200,  10:57:30 AM
Option Volatility Notes: S&P Option Implied Volatility at new multi-year low on the S&P. 98% of the time, volatility has been higher than current levels over a 6 year period. This has been a bearish indicator for over 3 months. The question is not if, but WHEN will this break’? The current bullish run could continue, but history tends to repeat itself.

  Linda Piazza   1/14/200,  10:49:51 AM
The OEX just can't pull free of the 60-minute 21-pma or above the trendline off the 1/09 high. A bullish (but currently rising) $TRIN, bullish action according to the 1MRT system, and a positive advdec number (although currently the line descends) haven't been able to push it much above that average. Other indices show similar difficulties, with the Wilshire challenging a similar trendline and the $TRAN pulling back after making new highs. Those intraday pullbacks could be pullbacks ahead of another assault, but the danger lies in having bullish energy expended in the challenge.

  Linda Piazza   1/14/200,  10:44:12 AM
Is that another potential H&S on the one-minute OEX chart? There's once again bearish price/MACD divergence as the head was printed. The last one, earlier this morning, was rejected, letting us know that we might see higher prices, letting us know that bullish fervor was overcoming bearish sentiment.

Note: As I typed, the OEX again rejected the potential H&S, again showing us the same thing, but then it moved immediately down, clouding the bullish picture. The OEX still faces that descending trendline, and now the 60-minute RSI flattens, looking much less bullish than it did a while ago. Evidence is still mixed.

  Linda Piazza   1/14/200,  10:36:21 AM
The Wilshire's three-minute chart shows a likely bull flag pullback as it consolidates just underneath its descending trendline off the 1/09 high, but that's still to be proven by an upside break of that trendline and then of recent highs.

  Gerald Melson   1/14/200,  10:30:37 AM
SOV Rumor once again that The Royal Bank of Scotland will come back to Sovereign Bank with a $30 bid. Again, it is just a rumor but it is coming across the wires. The stock this morning is up strong at 24.14.

  Linda Piazza   1/14/200,  10:30:13 AM
OEX Keltner channels now show support at 557.53, with support under that layered somewhat more thinly.

  Linda Piazza   1/14/200,  10:27:18 AM
The Wilshire still sits just beneath the descending trendline off its 1/09 high, still challenging it, but still not able to break through it. Sixty-minute MACD for this index shows a positive histogram, with RSI, Momentum, and CCI all positive, too. There's a danger, though, that it could sit there and expend its bullish energy challenging that trendline without pushing through it. As I said earlier, this is make-it-or-break-it time for many indices today, and I don't know which way it's going to go. Could be either way.

  Linda Piazza   1/14/200,  10:20:02 AM
As the OEX moves toward a challenge of its descending trendline off the 1/09 high, so does the 60-minute MACD. The 60-minute RSI has already broken through its own similar trendline, although only minimally so far. RSI trendline breaks sometimes precede price movements, suggesting that it's possible for the OEX to break through that trendline, too.

The Wilshire is right at a similar trendline, closer than the OEX. This is make-it-or-break-it time for many indices.

  Linda Piazza   1/14/200,  10:13:23 AM
The OEX heads straight up toward the 559 level that represents the descending trendline off the 1/09 high.

  Jeff Bailey   1/14/200,  10:11:49 AM
10:00 Internals at this Link

Yesterday's internals at this Link

  Linda Piazza   1/14/200,  10:11:43 AM
The OEX now challenges the 60-minute 21-pma. It has inched above the bullish #2 on the 1MRT system.

Meanwhile, the $TRAN achieved a new high, confirming the bull-flag breakout, although it's drawing back a bit now.

  Jane Fox   1/14/200,  10:07:09 AM
The SEC found 14 out of 15 brokers received cash payments for selling mutual funds, a practice known as "revenue sharing." Fund advisors also reward brokers for featuring their funds by directing brokerage trades to them. The SEC also found about half of the brokerage firms paid brokers more for selling their own in-house funds. Half of the brokerage firms surveyed disclosed the payments, but the SEC said it isn't clear whether investors were adequately informed about conflicts of interest that might occur when a broker is paid to favor certain mutual funds over others.

  Linda Piazza   1/14/200,  10:06:47 AM
The potential one-minute H&S on the OEX is rejected, with the OEX moving above the head level. That tells us that bulls are overcoming the bears, at least on the very short term. The OEX still has to do battle with the 60-minute 21-pma, however, and it still keeps turning down just under the bullish #2 on the 1MRT system.

  Jonathan Levinson   1/14/200,  10:05:13 AM
A 5B 2-day repo results in a net addition of 1.5B against the expiring 3.5B repo.

  Linda Piazza   1/14/200,  10:04:23 AM
The Wilshire 5000 (TMW.X and WLSH.X, depending on your charting service) is moving up today, too, and is currently at 10,981.60. At about 10,994, it hits a descending trendline off the 1/09 high. This looks like a possible bull flag pullback, too, with 60-minute oscillators now charging up in full bull mode, but with no breakout as yet. Of course, the important 11,000 level is just above the breakout zone. This is going to be some day, isn't it?

  Linda Piazza   1/14/200,  10:00:03 AM
The one-minute OEX chart shows a possible H&S formation with a descending neckline. There was bearish divergence between price and MACD as the head was formed, but this is a one-minute formation with a small downside target of about .80, so I'm using this to measure strength and weakness and not as some sort of trading tool. I want to see if it's confirmed and if the downside target is hit, or if it's rejected. The neckline is at about 556.60, but is descending.

  Linda Piazza   1/14/200,  9:56:51 AM
We're seeing a big jump in the $TRAN this morning. It charged up to a high of 3038.19, and is just below that now, at 3035.12. It's again within striking distance of the 3049.96 closing high and 3050.40 swing high from March 2002. Its ATR (average true range) is 32.60. What's showing up on the daily chart looks like a bull-flag breakout and bounce from the 21-pma and a rising trendline, warning bearish traders that we could see a similar action on other indices. This has been a really tough level for the $TRAN, though, so I don't consider the breakout confirmed until it hits new highs.

  Linda Piazza   1/14/200,  9:49:36 AM
OEX Keltner channels show little resistance now until 559.50. The 60-minute OEX chart shows something different, however, with the 60-minute 21-pma just overhead at 557.74. Usually there's better correlation, so I'm not sure which to believe. The 60-minute chart does show that descending trendline off the 1/09 high at about 559, so there's relatively good correlation at the higher level. I've switched to a one-minute MRT system since the OEX first five-minute range was so large, and the bullish #2 using that one-minute range (555.75 to 556.68) is at 557.64, a fairly good correlation with the 60-minute 21-pma. Also, the OEX turned down this morning just below that level, giving it some validity. It may be turning down now, too, although it's too early to tell. I'm beginning to wonder if my consolidation-at-the-MA-through-several-hours theory from yesterday might come into play after all.

  Jonathan Levinson   1/14/200,  9:49:29 AM
A 3.5B overnight repo expires today, awaiting the Fed's 10AM update. Bonds are currently weak, down 3 bps currently on the ten year futures.

  Jeff Bailey   1/14/200,  9:49:29 AM
Talking about VIX.X on CNBC

  Jeff Bailey   1/14/200,  9:48:43 AM
S&P Banks (BIX.X) 335.06 +0.32% ... trying to bounce from its rising 50-day SMA after close trade yesterday of MONTHLY S1 (331.94).

  Jeff Bailey   1/14/200,  9:45:29 AM
VIX.X 16.75 -7.15% ... day before index expiration, VIX.X falling sharply.

Jan 1,025 put and Feb 1,125 call most active at 500 each

  Jeff Bailey   1/14/200,  9:43:33 AM
NAND Flash comments ... SNDK -4.8% and LEXR -2.44% after Morgan Stanley says two new suppliers of NAND flash memory are coming on line, where Renesas could become a threat in 2nd half of 2004 and Samsung will be ramping production. Morgan Stanley continues to believe SNDK and LEXR are the two main names leveraged to NAND pricing issues.

  Linda Piazza   1/14/200,  9:37:25 AM
During the first five minutes of trading, the OEX spanned a range from 555.75 to 557.39, with a midpoint at 556.57, and with the OEX currently above that midpoint, and so demonstrating strength in early trading. Let's see what happens as the first reversal of the morning begins in a few minutes.

  Linda Piazza   1/14/200,  9:35:19 AM
At the close yesterday, this was the area where I expected the OEX to hesitate while the 30-minute and 60-minute oscillators cycled up. This morning's quick charge changes that picture, however, so that it's going to be much easier for momentum to propel the OEX through that average or for it to rebound even more strongly from that average. (Remember high school physics?) I'm not sure yesterday evening's scenario will fit today's action at all.

  Jeff Bailey   1/14/200,  9:34:46 AM
S1 Corp. (SONE) $9.24 +9% ... thar she goes!

January MONTHLY Pivot levels ... S2=6.62, S1=7.34, P=8.24, R1=8.96, R2=9.86.

  Linda Piazza   1/14/200,  9:31:41 AM
The OEX charges immediately up to the 30-minute 21-pma at 556.71. The speed of the charge might propel it above that MA, and up toward the more-important 60-minute version at 557.71.

  Linda Piazza   1/14/200,  9:24:14 AM
All eyes are on Yahoo today. Bloomberg TV just put up a chart showing relative performance of Yahoo to the Internet Index and the S&P 500, showing the Internet Index's outperformance relative to the SPX and then Yahoo's extreme outperformance relative to its own sector. The commentator implied that it had gotten a little ahead of itself, but that doesn't mean that I'm suggesting that someone enter a bearish play on Yahoo, especially just ahead of earnings. Be careful about considering any Yahoo play, bearish or bullish, just ahead of earnings, if for no other reason than that implied volatility is likely to be especially high in those options. A move tomorrow in your direction, if you happened to guess right about YHOO's announcement and the market reaction to that announcement, could still see you losing money or not making much as volatility collapses.

  Jeff Bailey   1/14/200,  9:16:21 AM
09:00 Update at this Link

  Jane Fox   1/14/200,  9:12:50 AM
Andrew Fastow, former Enron finance chief, and his wife have agreed to plead guilty for their roles in a massive accounting scandal. An impasse that erupted last week over a judge's refusal to give Lea Fastow only a five-month prison sentence has been resolved. Ms. Fastow is expected to plead guilty to a tax charge after her husband pleads guilty in a deal that involves a 10-year prison sentence, although it isn't clear to what crimes Mr. Fastow will plead guilty. Under federal sentencing guidelines, Ms. Fastow's sentence could be as long as 16 months, although Judge Hittner could potentially give her a sentence of as long as three years.

Based partly on information provided by Mr. Fastow's cooperation, prosecutors have prepared a criminal complaint against, Chief Accounting Officer Richard Causey, but the filing of the Causey criminal case has been held up pending the resolution of the plea issue.

  Jane Fox   1/14/200,  9:06:23 AM
Reversing November's 0.3% decline, the PPI rose 0.3% in December. The closely watched core index, which excludes food and energy items, fell by 0.1% for a second month in a row. This supports the Federal Reserve's view of inflation remaining tame and that the central bank can keep interest rates low for much of 2004.

  Linda Piazza   1/14/200,  9:05:26 AM
Yesterday, as trading ended, the OEX appeared ready to move back up to challenge first its 10-dma at 555.88 and then its 30-minute 18/21-pma's at 556.64 and 556.79, respectively. It closed just above its 30-minute 100-pma, leaving traders in question as to whether it was really pulling away from that average or not. I mentioned yesterday that I wouldn't be surprised to see a small white candle today as the OEX zigs and zags its way down inside a possible bull flag pullback on the daily chart. However, if futures remain as strong as they are so far this morning and if cash markets open in accordance, we're going to get that test of the 30-minute 21-pma and possibly of the 60-minute version at 557.83 rather more quickly than the measured rise I'd expected. That changes things a bit and forces me to alter the scenario I'd been building. What I'd expected to see was that measured rise with perhaps several to many 30-minute candles clinging to the 21-pma until we eventually saw whether the OEX would move through it or would turn down from it. If the OEX moves quickly, however, it could punch through it quickly or be slapped down quickly, too, changing the outlook a bit. In addition to those moving averages, I'll be watching the descending trendline off the January 9 high, with that trendline now crossing at about 559. A strong move through that trendline could see buying accelerate while a failure could see the opposite.

  Jane Fox   1/14/200,  9:00:55 AM
The Commerce Department reported the trade deficit fell to $38.01 billion in November from a revised $41.58 billion a month earlier the lowest since October 2002, when the gap was $35.20 billion. Economists had expected a shortfall of $42 billion. A sign that economic growth abroad may be strengthening, exports rose for the third straight month whereas when the U.S. economic growth outpaced that of its trading partners, U.S. imports were stronger than exports.

  Jonathan Levinson   1/14/200,  8:34:17 AM
PPI +.3%, core PPI -.1%.

  Jonathan Levinson   1/14/200,  8:32:53 AM
Balance of trade 38B, lowest since Oct 2002.

  Jonathan Levinson   1/14/200,  8:24:52 AM
At 8:30 we await the Dec PPI, exp. .2%, core PPI exp. .1%, and the Trade balance for Nov, exp. -42B.

  Linda Piazza   1/14/200,  7:00:13 AM
Good morning. With concern that a November machinery orders number due later in the day would show a slowing of the economy, the Nikkei opened below 10,800, and soon coiled just under that key level, ready to charge toward it. The expectation for the machinery orders was a drop of 7.4% from October's number, with that orders number being a predictor of capital spending several months out. By the time the number was released in the afternoon in Japan, the Nikkei had already launched itself above 10,850, but the 7.8% drop in machinery orders perhaps tempered any further gains. The Nikkei held steady, however, closing up 13.32 points or 0.12%, at 10,863.00. Another number, released earlier in the day, revealed that the current account surplus rose to 1.48 trillion yen, when expectations had been for a fall to 1.33 trillion yen. Growth was seen in exports to the U.S. and China, with exports growing 1.3% and imports rising 6.3%. The growth was expected to offset the deleterious effects of the weakening dollar.

Stock-specific news that helped to send the Nikkei higher included a Goldman Sachs upgrade of Sony to an outperform rating from its previous in-line rating. The firm mentioned the company's restructuring efforts and likely strong holiday season. Sony and many other tech stocks gained. Automakers were mixed, with Mitsubishi plunging more than 3% on speculation that it might request a 100-billion-yen capital increase from shareholders, with that capital increase accomplished through private placement of new shares. Worries over Avian flu pressured some food, restaurant, and retail stocks, with some countries having banned imports of poultry from Japan.

Other Asian markets were mixed. The Taiwan Weighted gained 1.04% and South Korea's Kospi gained 0.14%. Merrill Lynch raised its target price on South Korean chipmaker Samsung Electronics, due to release earnings on Thursday. Despite that action, the stock fell 1.7%. Singapore's Straits Times was flat, down 0.06%, but Hong Kong's Hang Seng fell 0.57%. China's Shanghai Composite fell 1.26%.

The decline of the euro and British pound against the dollar helps European bourses this morning, with most trading higher. Yesterday, an ECB member mentioned the possibility of euro selling, apparently reassuring some investors that the euro's climb against the dollar would be moderated. News on CNBC Europe this morning also centered on steel group Arcelor after the company mentioned that it would be raising prices for flat-roll steel, with that news sending that company's and competitors' stocks higher. Retailer Marks and Spencer was the focus of attention on disappointing holiday sales, while retailer Tesco and electronics retailer Dixon saw strong holiday sales. Marks and Spencer apparently lost market share in its clothing unit, and this morning the company announced that it was letting go a company exec with that unit. JPMorgan downgraded SAP and that stock fell in early trading. Daimler Chrysler's recall hampered that company's participation in gains by other automakers, although it was trading higher in Europe at one point this morning.

As of this writing, the FTSE 100 has gained 14.60 points or 0.33%, to trade at 4454.70. The CAC 40 has gained 27.90 points or 0.78%, to trade at 3604.08, just above the key 3600 level. The DAX has gained 21.01 points or 0.53%, to trade at 4017.23, having regained 4000 this morning. All bourses are off their highs but also well off their lows of the day. All opened either slightly negative or flat.

  Jeff Bailey   1/13/200,  11:28:50 PM
Tuesday's VIX.X close 18.04 +7.25% ....

Most active options Mar 1,125 put (v=10,675: oi=42,126)

Mar 1,125 call (v=9,857 : oi=46,085)

Jan 1,125 call (v=9,663 : oi=42,569)

Mar 1,025 put (v=9,469 : oi=41,974)

  Jeff Bailey   1/13/200,  11:22:43 PM
Pivot Matrix for Wednesday at this Link

  OI Technical Staff   1/13/200,  7:49:45 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.


Market Monitor Archives