Option Investor
Printer friendly version
  Jeff Bailey   1/26/200,  7:26:19 PM
Pivot Matrix for Tuesday at this Link

  Jeff Bailey   1/26/200,  4:41:37 PM
Agilent (A) $33.91 +1.4% Link ... released for trade and jumping 12.5% to $38.16 in after-hours trade.

Revises Q1 saying it now sees revenues between $1.63-$1.68 billion, which is above consensus of $1.61 billion. Sees Q1 EPS of $0.20-$0.24, which blows out consensus of $0.12.

  Jeff Bailey   1/26/200,  4:26:13 PM
Closing Internals at this Link

  Jeff Bailey   1/26/200,  4:08:02 PM
Agilent (A) $33.91 +1.4% ... halted, news pending.

CNBC reported company guiding earnings higher.

  Jeff Bailey   1/26/200,  3:59:11 PM
Alcoa (AA) $35.34 ... day trade stop alert stopped break-even here.

  Linda Piazza   1/26/200,  3:58:21 PM
Short of something amazing happening, it looks as if the Dow is going to reach a new swing high on a closing basis, closing above the March 2002 closing high of 10,635.20. This will confirm the TRAN's swing high on a closing basis, achieved last Wednesday, so the two will have confirmed each other within a week. That's considered a bullish development, but it's not failsafe and it's certainly not a market-timing tool.

  James Brown   1/26/200,  3:55:08 PM
Wow! It's been 20 years since the first computer with a mouse hit store shelves on January 24th, 1984. You guessed it! It was a Macintosh.

  Jeff Bailey   1/26/200,  3:54:15 PM
Alcoa (AA) $35.40 (unch) ... only 7 minutes left until the close.

Might look for a late spurt to $35.60, but will look to close out this day trade long just prior to the close.

May well consider a swing trade long in AA tomorrow.

  Linda Piazza   1/26/200,  3:52:21 PM
This afternoon at 1:48 EST, Marketwatch.com reported that John Snow saw 2003 GDP growth in excess of 4%, calling that growth "very strong." He also pledged that the deficit would be cut to a level that's below 2% of our GDP by 2009. Could Snow's statements have anything to do with what happened this afternoon? Perhaps.

  Linda Piazza   1/26/200,  3:50:27 PM
Currently, the Bank of Japan managers are meeting, with one topic being the impact on Japan's economy of the rising yen against the dollar. That meeting began today. I've been trying to decide as trading winds down for us today how the Japanese markets might react to today's action in U.S. markets, but that's going to be complicated by any statements, if any, coming out of that meeting.

  James Brown   1/26/200,  3:46:55 PM
Good news for traders following OI call MWD. The stock did bounce from what should be support at $59.00 and has reclaimed the $60 level. Unfortunately, volume isn't very convincing today.

  James Brown   1/26/200,  3:45:12 PM
Current OI call play HSIC is also performing well, hitting new all-time highs currently above $72.00.

  James Brown   1/26/200,  3:44:11 PM
Current OI call play ESRX is doing pretty well today (+2.5%). The stock has bounced strongly from its simple 10-dma and looks ready to breakout over resistance at $70.00.

  James Brown   1/26/200,  3:41:23 PM
The only sector indices in the red this afternoon are...
Transports (TRAN), Oil (OIX), Utilities (UTY), Natural Gas (XNG), Airlines (XAL), and Gold (XAU).

Feeling the heaviest selling pressure...
XAU gold & silver index: -1.57%
XAL airlines index: -1.19%

  Linda Piazza   1/26/200,  3:38:50 PM
Whatever else today's trading has done, it's pretty well erased the potential for the weekly reversal signal being confirmed on the OEX. This week's trading could produce another reversal signal, but in order to see an evening-star formation confirmed, the OEX should have opened at or below last week's doji and then trading should have been lower all week, with the week closing lower than the opening this morning. This afternoon's move above Friday's level didn't fit with that possible scenario. So, what else is new?

  Linda Piazza   1/26/200,  3:27:17 PM
The OEX looks to be charging up toward the upper envelope band at 574.68. It's now inside a congestion band from early 2001 and again from late 2001 to spring 2002, with resistance thickening through here. Perhaps that resistance will do nothing more than slow the forward charge. I know that some don't believe that horizontal resistance can be carried forward for years, but other technicians do believe it can, including Japanese candlestick watchers, with that method being used for centuries. In one of Steve Nison's books, he recounts cases of experts scanning years-old charts for gaps, for example, looking for gap resistance or gap support. We've seen CA pause at resistance that was important back as far as 2000 and then again in 2001. This morning, I posted a chart of SIRI from early in January, when we saw that resistance from early 2002 impacted recent trading.

  Jeff Bailey   1/26/200,  3:16:29 PM
Alcoa (AA) $35.45 +0.14% ... day trader raise stop alert raising stop to break-even here.

  Gerald Melson   1/26/200,  3:12:58 PM
What started this big rally really moving? Dow Jones reports that the word from the trading floor is that Goldman actually began the rally in stock index futures by buying 200 March Nasdaq contracts. Can it be as simple as that? It sure can, for when traders see the big boys buying they come in (no questions asked) right behind.

  Linda Piazza   1/26/200,  3:11:48 PM
Last week, the TRAN achieved a new swing high on a closing basis when it closed on 1/21/04 above the March 2002 closing high of 3049.96. The Dow closing high during that same period was 10,635.20, with an intraday high of 10,672.80. According to Dow theory, though, it's the closing level that counts, not the intraday level. Once the TRAN hit that new swing high on a closing basis, the markets have been on Dow watch, because the longer it takes the Dow to confirm the new TRAN swing high on a closing basis with its own new swing high on a closing basis, the less bullish the signal is. If it hasn't done so within a couple of weeks, then the Dow has failed to confirm the signal and that's a bearish development. It looks as if the Dow is determined to try for that new closing high today. Note: This isn't a market-timing tool.

  Jeff Bailey   1/26/200,  3:08:56 PM
03:00 Internals at this Link

  Linda Piazza   1/26/200,  3:01:14 PM
The OEX just closed the last 30-minute period above its 30-minute (20,2) Donchian channel. The 21(3)3 stochastics were at levels indicating overbought conditions--one setting often associated with profitable Donchian-channel breakout signals--but 30-minute ADX was a low 14.82, a setting often associated with unprofitable Dochian-channel breakout signals (because the OEX soon turned down again), at least in my research. It's a tossup then.

  Jeff Bailey   1/26/200,  3:01:14 PM
SPX 1,149.97 +0.73% ... trades WEEKLY R1.

Bond market closed here.

  Jeff Bailey   1/26/200,  3:00:05 PM
Express Scripts (ESRX) 69.63 +2.21% ... challenging Friday's highs here.

  Jane Fox   1/26/200,  2:57:50 PM
The Congressional Budget Office projected the federal deficit will hit a record $477 billion this year but ease to $362 billion in 2005. The budget office also estimated that deficits for the decade ending in 2013 would total nearly $2.4 trillion, due in part new costs, such as the prescription-drug benefit created last year.

  Jeff Bailey   1/26/200,  2:57:29 PM
Bond market closes in 3 minutes.

SPX 1,148.94 +0.64% may be the index to monitor near-term as it hasn't yet seen a trade at WEEKLY R1 of 1,149.83.

  James Brown   1/26/200,  2:54:41 PM
A few tidbits for the sports fan out there...

The National Retail Federation (NRF) says that 44 million Americans will attend a Super Bowl party this weekend.

Of those going to or hosting a party almost 90 percent plan to buy food, drinks, new clothes, new furniture or a new TV set for the event.

One industry survey estimates 1.5 million TV sets will be sold in anticipation of the Super Bowl. - source: CNN

  Linda Piazza   1/26/200,  2:54:01 PM
Not only has the OEX temporarily breached its 30-minute Donchian channel during this 30-minute period, but also it's broken out of its five-minute nested Keltner channels. Both hint at a possible pullback, but the OEX sometimes continues to climb for a while after breaking out of its Keltner channels, sometimes for up to an hour. Both types of breakouts can be valid breakout signals, but both also signal danger for bulls, showing the OEX to be too far extended to the upside.

  Jeff Bailey   1/26/200,  2:52:49 PM
QQQ $38.31 +0.78% ... has moved above its WEEKLY Pivot of $38.26, but also its downward trend from the 01/02/04 52-week high of $39.00. Extension of this downward trend waw also right at $38.26.

Will monitor QQQ for ret-test of this trend (resistance broken may serve support).

  Jeff Bailey   1/26/200,  2:49:22 PM
Alcoa (AA) day trade raise stop alert ... Raise bullish stop to $35.19 (from $35.09).

  Jeff Bailey   1/26/200,  2:45:48 PM
Alcoa (AA) $35.40 (unch)

  Linda Piazza   1/26/200,  2:44:51 PM
The TRIN is sinking, the advdec line is climbing, the NDX and TRAN have broken above their 30-minute 100-pma's, and the QQQ's have broken above a descending trendline. So why am I hesitant? First, the OEX has reached one target I thought it could reach today. Also, the OEX has also pushed above its 30-minute Donchian channel. While the OEX often pierces that channel, it doesn't often close above it (569.84), and so this usually predicts a pullback. Of course, Donchian channel signals can be valid breakout signals, too.

  Jeff Bailey   1/26/200,  2:43:50 PM
S&P 500 Index (SPX.X) 1,149.33 +0.68% ... session highs, but just shy of its WEEKLY R1 of 1,149.83.

  Jeff Bailey   1/26/200,  2:42:37 PM
Dow Industrials (INDU) 10,655.77 +0.9% ... WEEKLY R1 here.

  Linda Piazza   1/26/200,  2:39:13 PM
The QQQ's are breaking minimally above a best-fit descending trendline off the 1/20 high. This trendline ignores one candle shadow from the 1/22 high, but otherwise hits the tops of the other shadows. Keltner bands suggest a climb to 38.54 if this breakout can be sustained, but we haven't had even a five-minute close above this trendline as yet.

  Jeff Bailey   1/26/200,  2:34:22 PM
NWX.X +2.71%, DDX.X +1.7%, DRG.X +1.4%, SOX.X +1.19%

HUI.X -1.45%, XAL.X -1.25%, UTY.X -1.07%

  Linda Piazza   1/26/200,  2:32:38 PM
Only a few more cents and the OEX will have charged all the way to the top of Keltner band resistance at 569.89 (happened while I was typing) and to resistance offered by its 30-minute 0.675% envelope at 570.46. It will be facing historical resistance at that level, too, with highs from Thursday and Friday in that region. I expected a test of that region if the OEX broke out of that congestion band, but I'm not sure what to expect next. That depends on the test of the 570 region, but next envelope resistance shows up at 574.41 if this next resistance is cleared, but this whole zone one that marked some congestion on the weekly OEX chart.

  Jeff Bailey   1/26/200,  2:29:16 PM
Alcoa (AA) $35.35 -0.14% ... just off afternoon high of $35.37.

Looks to be reliant on the INDU today.

  Linda Piazza   1/26/200,  2:28:00 PM
The TRAN has also broken above its 30-minute 100-pma, so that two of our leading indices (the TRAN often leads the Dow) are leading higher. Transportation-stock bulls aren't out of danger, yet, though, as the TRAN will soon drive right into the 30-minute 18/21-pma's, at 3054.99 and 3056.26 and into a descending trendline off the 1/22 high, with that trendline crossing at about 3063.50, but descending.

  Jeff Bailey   1/26/200,  2:27:59 PM
Intra-day chart of INDU at this Link

Should have some room to WEEKLY R1

  Linda Piazza   1/26/200,  2:23:36 PM
The NDX is above its 30-minute 100-pma, suggesting a rise toward 1537.88 or 1549.78, if this break above the 100-pma can be sustained. It's only broken above this average in the last five minutes.

  Linda Piazza   1/26/200,  2:18:06 PM
The NDX is moving up to challenge this morning's high at 1533.95, reached in the first 30-minutes of trade. The NDX is now at 1533.38.

  Jeff Bailey   1/26/200,  2:15:16 PM
Dow Industrials (INDU) 10,614.29 +0.43% ... trying to make a move above this WEEK's 38.2% pivot retracement of 10,613.48. This was resistance earlier this morning.

Alcoa (AA) $36.26 -0.39% still lower, and I would expect AA to try and follow the INDU higher, but not happening here.

  Linda Piazza   1/26/200,  2:14:57 PM
The TRAN is now bouncing from its 30-minute 130-pma, again testing its 30-minute 100-pma. It wouldn't be unusual to see a period of consolidation now between the two averages as the TRAN sorts out which direction it wants to go. We've now had a convincing test of both averages, however, so that a sustained move up through the 100-pma would be considered bullish while a sustained move through the 130-pma would look bearish for the TRAN.

  Linda Piazza   1/26/200,  2:10:26 PM
Heading into today, I expected some hours of consolidation at the 30-minute and 60-minute 21-pma's, which did occur. I wanted to see how the test progressed and how the NDX behaved, but thought it at least 50/50 that we'd see an OEX rollover again beneath those averages. As the day played out, however, the TRIN has worked against any bearish scenario, and it refuses to rise. The OEX is breaking away from those 21-pma's, although not convincingly as yet. It's still struggling with the Keltner resistance just above the current level. Still, that 569.75-570.20 level has to be factored in as a real possibility unless we see a change in the TRIN and unless the advdec line turns down again. It's been climbing since this morning.

  Jeff Bailey   1/26/200,  2:09:57 PM
02:00 Internals at this Link

NASDAQ A/D just turning slightly positive.

  Linda Piazza   1/26/200,  2:00:24 PM
The TRAN just rolled over beneath its 30-minute 100-pma and now is back at its 130-pma again. A sustained roll down through this average would be bearish. The 130-pma is at 3039.10, with the TRAN at 3038.90 as I type.

  Linda Piazza   1/26/200,  1:58:40 PM
The OEX tried to tug itself out of this morning's consolidation zone just above the 30- and 60-minute 21-pma's. So far, it's not exactly zooming up after breaking free, however, and it's currently facing Keltner resistance. Was this our stop-running push or is the downward push starting now the real stop-running push? Which will stick?

  Linda Piazza   1/26/200,  1:44:59 PM
We're right in the middle of the usual stop-running push time of day. That usual push hasn't been as usual lately, though, coming at less predictable times or not coming at all.

  Linda Piazza   1/26/200,  1:42:44 PM
As of a few minutes ago, volume patterns showed that while decliners had the edge on advancers on the NYSE by a 14:18 ratio, decliners and advancers were neck-and-neck on the Nasdaq, only two issues apart. Up volume was slightly ahead on the NYSE, while up volume was a strong 1.5 times down volume on the NYSE, showing concentrated buying in some issues. Total volume was 754 million shares on the NYSE and 1.1 billion on the Nasdaq.

  Linda Piazza   1/26/200,  1:31:51 PM
I no sooner got that last entry posted than the NDX gapped above its 30-minute 130-pma, to rise up to test its 30-minute 100-pma.

  Linda Piazza   1/26/200,  1:29:06 PM
I'm still watching for an NDX test of its 30-minute 100-pma. It's trying to ease above its 130-pma now, but the 21-pma has joined forces with that average, providing resistance that might be too formidable. The 30-minute oscillators have been cycling up since late-afternoon Friday, with the NDX coiling beneath those averages as the oscillators relieve some oversold pressure. So far, the action fits a bearish, rollover-probable scenario, but that could change. Those oscillators still have plenty of upside if the NDX wants to spend some time testing that higher average or even to climb above it.

  Jane Fox   1/26/200,  1:28:13 PM
I heard some interesting statistics on the weekend about how much of the personal tax burden is shouldered by the "rich."

0.5% of the US tax paying public have incomes over $500,000/yr. and pay 45% of personal income tax
1.6% of the US tax paying public have incomes between $200,000 and $500,000 and pay 16% of personal income tax
6.1% of the US tax paying public have incomes between $100,000 and $200,000 and pay 11% of personal income tax.
This means 8.2% of the US tax paying public shoulders 72% of the personal income tax burden.

The next time your favorite politician starts screaming about taxing the rich more recite these stats to him/her.
The stats were from IRS last year.

  James Brown   1/26/200,  1:22:21 PM
Actually, I'm surprised that ASD didn't announce a stock split with its earnings report this morning. The company doesn't have any previous split history but shares are approaching the $110 level.

  James Brown   1/26/200,  1:20:54 PM
very funny... I imagine TASR has left a trail of bear carcasses along its climb higher.

  Linda Piazza   1/26/200,  1:18:06 PM
I will be surprised if TASR's shorts haven't all keeled over from apoplexy by then, James.

  James Brown   1/26/200,  1:16:19 PM
I'm guessing that the shorts might get a little breathing room after TASR's 3-for-1 stock split on February 10th. There are only 3.2 million shares outstanding and 2.2 million in the float.

  James Brown   1/26/200,  1:12:59 PM
The latest short-interest data put short interest at 53% of the float for TASR.

It's a short-squeeze that won't stop.

  Linda Piazza   1/26/200,  1:11:50 PM
TASR continues to astonish me. It's up another 8% as I type. I have neither a bullish nor a bearish position in this thing, as it would scare me either direction. One year ago, this stock traded a high of the day of $4.27. Six months ago, it traded a high of $18.40. Three months ago, it traded a high of $55.45. As I type, it's at $129.65 and climbing. I wouldn't want to be long this thing at this level, but I'd have said the same thing six months ago, and certainly three months ago. I also wouldn't be brave enough to go short here since OBV (on balance volume) continues to climb along with price. It's tempting, though, since TASR has jumped outside its Keltner channel once again. Frequently when it does that, it doesn't retrace even to midline support before zooming up again.

  James Brown   1/26/200,  1:11:13 PM
Jeff has already mentioned LXK's earnings this morning. The stock is up 5.4% and breaking out over resistance at $80 on a very strong earnings number that beat estimates by 13 cents. If you looked at LXK's p&f chart you'd see a fresh bullish-catapult breakout pointing to a $92 price objective (stock is trading at $83).

The good news is the company gave slightly improved earnings guidance for the next year but said "While we do see some indications of market improvement, we continue to remain cautious due to the uncertain economic environment and the potential for aggressive price competition." (-company press release)

  Jim Brown   1/26/200,  1:10:28 PM
AXP just reported earnings at 60 cents, beat street by a penny.

  Jeff Bailey   1/26/200,  1:05:09 PM
01:00 Internals at this Link

  James Brown   1/26/200,  1:02:34 PM
The RLX retail index and Wal-Mart (WMT) are mildly in the red despite WMT announcing that January comparable store sales tracking inline with guidance for 3-5% growth.

  Ray Cummins   1/26/200,  1:00:10 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Ceradyne (NASDAQ:CRDN)

One of the more unique technology issues (that exists in the industrial segment) in our portfolio is Ceradyne and the stock has enjoyed renewed buying interest in recent weeks. Today the company's shares are up $2.29 at $47.28, despite a lack of public news to explain the activity. Earlier this month, Ceradyne, which makes ceramic body armor for military vehicles, announced that quarterly sales almost doubled as the Iraq conflict fueled product demand. Apparently, investors are expecting similar results when the company reports earnings in late February and traders who agree with a bullish outlook for the issue might consider using a conservative put-credit spread (FEB-$35P/$40P) to profit from further upside activity in the stock.

  James Brown   1/26/200,  12:58:40 PM
Were you one of the investors waiting for a pull back in shares of Research in Motion Limited (RIMM)? The wait just got a bit longer. Shares have been on fire since its December 22nd earnings report and raised earnings guidance, which produced a strong gap up from the $45 region. Now shares are up another 5.3% to $89.70 after Bank of America initiated coverage on the stock with a "buy" and a price target of $118.

All the analysts are excited over growth in RIMM's Blackberry service but be forewarned that the stock has already shot past some of their price targets and quickly approaching others in the $90 range.

  Jeff Bailey   1/26/200,  12:53:30 PM
Express Scripts (ESRX) $69.06 +1.48% ... pressing session highs after morning low of $67.41.

Those 4-letters in the stock symbol give it a little more volatility than the 1, 2 and 3-lettered variety.

  Linda Piazza   1/26/200,  12:52:30 PM
The TRAN is edging back below its 30-minute 100-pma after having seemed to have found support there earlier today. As I mentioned earlier, a drop through the 130-pma, at 3038.92 currently, would be a bearish development, but right now, the TRAN is still close enough to its 100-pma that we can consider that average still being tested. (Note: The TRAN began moving up as I began typing, so that it's now slightly above its 100-pma at 3043.73. Every time I start typing an entry today, the thing moves!)

  James Brown   1/26/200,  12:48:00 PM
EBAY did a little post-earnings shopping over the weekend and announced the acquisition of Germany's mobile.de, an online auto listing website.

This is the second auto-based listing service EBAY has purchased. Last January it bought Texas-based CARad.com.

EBAY is paying $152 million in cash for the Germany company, which has 800,000 auto listings.

EBAY said the deal will have a "nominal" affect on 2004 earnings.

  Jeff Bailey   1/26/200,  12:47:59 PM
S&P Banks Index (BIX.X) 350.64 +0.26% ... session low of 349.00 was found in first 5-minute of today's trade, and that low was just shy of WEEKLY Pivot support (348.40). Session highs here and should provide bid to SPX/OEX.

  Linda Piazza   1/26/200,  12:45:45 PM
Here's why I've been watching the NDX in particular today for market guidance: Link The red MA is the 21-pma, the blue is the 100-pma, and the purple is the 130-pma. A move above these averages would be bullish and a rollover beneath them would be bearish.

  Ray Cummins   1/26/200,  12:44:31 PM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Broadcom (NASDAQ:BRCM)

One of our few "bullish" bets in the networking segment is trading higher today. Shares of BRCM are up $1.25 at $40.25 and traders say the move is in anticipation of an upbeat earnings report. The company is expected to post its quarterly numbers after the closing bell on Tuesday, January 27 and with that fact in mind, it would be best to consider a new (bullish) position only with speculative funds. Favorable put premiums are available as low as the (FEB) $35 strike, so there is definitely some potential for volatility in the issue.

  James Brown   1/26/200,  12:38:28 PM
Also announcing earnings on Feb. 4th is AFLAC (AFL). Coincidentally, AFL is also being downgraded today from "hold" to "sell", this time from Smith Barney.

  James Brown   1/26/200,  12:35:59 PM
A.G.Edwards is downgrading 99c Only Stores (NDN) from "hold" to "sell". Shares are down 2.6% and breaking recent support at the 26.80 region. Short-term traders may want to wait for a break under the $26 to target a move to $24. NDN's earnings should be Feb. 4th.

  Ray Cummins   1/26/200,  12:33:26 PM
Spreads/Combos & Premium-Selling -- Market Movers: Satellite Stocks

Regarding the ongoing SIRI/XMSR discussion...one of the featured articles this morning on Yahoo! Finance is a Business Week commentary on this popular group. Here is the link: Link

  James Brown   1/26/200,  12:26:16 PM
Deutsche Securities downgraded three oil and gas services/exploration stocks this morning. Being cut to "hold" are APA, KMG, NFX.

Kerr Mcgee (KMG) is starting to look vulnerable to more weakness. Shares have rallied strongly over the last 9 weeks in a rising channel and today's decline brings it toward the bottom of its channel. Its technical oscillators like its MACD, RSI and stochastics are starting to fall from overbought into sell signals. Watch for KMG to announce earnings on Wednesday, Jan. 28th.

Apache Corp (APA) is also beginning to look tired with its technical oscillators rolling over. A breakdown of its 21-dma or the $40 level might be bearish triggers but look for APA to announce earnings on Jan. 29th.

Newfield Exploration (NFX) doesn't look quite so weak. Shares have been very strong the last two sessions and today's action gapped down only to shoot higher again. Another broker-dealer issued a contradictory upgrade to "strong buy" for NFX this morning.

  Linda Piazza   1/26/200,  12:25:50 PM
Readers interested in SIRI, either bullish or bearish, might also check Jim's 12:20 comments on XMSR, and click through to his link. Jim's weekend update focused on many of the fundamentals that will impact both companies, and those fundamentals may overtake the chart patterns some day, too.

  Ray Cummins   1/26/200,  12:24:46 PM
Spreads/Combos & Premium-Selling -- Market Movers: Internet Stocks

One of the stronger areas of the market today is China-related Internet companies. A number of bullish positions in our portfolio including: Netease.com (NASDAQ:NTES) +$1.08 at $48.08, Sina Corp. (NASDAQ:SINA) +$1.03 at $48.11, and Sohu.com (NASDAQ:SOHU) +$2.04 at $39.33, are in this segment and all of them are performing well. China's Internet market has great potential with almost 80 million people "surfing the net" at the end of 2003, a 34% increase in the past year. Traders who agree with a bullish outlook for the group might consider some "premium-selling" plays in the short-term and LEAPS with covered-calls (calendar or diagonal spreads) for longer-term positions.

  Jim Brown   1/26/200,  12:22:47 PM
Speech by Chairman Alan Greenspan on Economic flexibility Link

  Jim Brown   1/26/200,  12:20:54 PM
Editors Play from Sunday XMSR is down -1.72 for the day and below support at 25.50. Link

  Jeff Bailey   1/26/200,  12:18:26 PM
12:00 Internals at this Link

  James Brown   1/26/200,  12:14:58 PM
Last week we mentioned the pull back to various Fibonacci retracement levels in shares of Lucent Technologies (LU), today's most active issue with 68 million in volume this afternoon.

Shares began to bounce on Friday and the bounce got a big boost today (+8%) after Barron's highlighted LU with a very positive light in this weekend's edition. The stock is approaching what might be resistance at $4.50. Despite the big volume today it is only a fraction of the volume from last week when it was falling.

  Linda Piazza   1/26/200,  12:12:48 PM
After reaching a new swing high on a closing basis last week, the TRAN retreated all the way back to its 30-minute 100-pma, where it's been consolidating all morning. Unlike the NDX, the TRAN consolidates above that important average, not below it, so the presumption is that the TRAN will find support here and rise up toward the 30-minute 21-pma, currently at 3063.19. A 30-minute chart shows that the TRAN trades fairly closely in relationship to these important averages. If the TRAN instead rolls down through the 30-minute 130-pma, currently at 3038.87, that would be a bearish development.

  Jeff Bailey   1/26/200,  12:07:49 PM
Day trade long/bullish alert ... Alcoa (AA) $35.34 here, stop $35.09, target $35.84.

  Linda Piazza   1/26/200,  12:07:10 PM
The OEX nested Keltner channels have reached a state of equilibrium, with each nested symmetrically within the other. After a period of equilibrium, the OEX usually breaks strongly. Note: As I typed, the OEX began breaking out of that equilibrium position.

  Linda Piazza   1/26/200,  12:01:03 PM
The OEX continues to consolidate at/just above its 30- and 60-minute 21-pma's. This fits the bearish case scenario I laid out in my 9:37 post (consolidation while the oscillators relieve some oversold pressure), but the last few months have conditioned me to believe that any consolidation is a prelude to a climb rather than a drop. I'm keeping an eye on the TRIN's level, which is not high enough to support a bearish thesis, as well as on the NDX, since the NDX tests its important 30-minute 21/100/130-pma's. A climb above those averages or a rollover beneath them could signal what will happen on the OEX, too.

  Ray Cummins   1/26/200,  11:58:47 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity: Aventis (NYSE:AVE)

There is little activity worth noting in today's session, however one of our new (bullish) candidates has been very active in the wake of pre-market news. Shares of AVE gapped higher at the open today after Sanofi-Synthelabo, Aventis' smaller French rival, made a $60 billion bid for the popular maker of allergy medication Allegra. Aventis officials quickly rejected the offer as too low, but the possibility of a protracted takeover battle will likely govern the stock price in the coming weeks. Our suggested put-credit spread in the issue was not available, however traders might consider moving up to the $70 strike (FEB-$65P/$70P) now that the recent speculation has become public knowledge.

  Ray Cummins   1/26/200,  11:38:20 AM
Spreads/Combos & Premium-Selling -- E-Mail Replies: Option Pricing -- Volatility Data

In order to use the option-pricing calculator, you must have some idea of the recent/expected volatility for the issue. You can get that type of data here: Link

  Linda Piazza   1/26/200,  11:38:03 AM
Reader Request: Could we ask you to give some update comments on SIRI, it touched 3.31 last week and again pulled back, earnings release coming out on 28th Jan. could that impact the stock movement to the upside with OK numbers and good forecast, seems that stock has no plus earnings and price to sales ratio of 392, stock unable to move forward although was at the 4.00 range 3 weeks ago. Your input on Market Monitor as always welcomed.

Response: Here's a chart I posted in early January, complete with the original comments: Link I wasn't surprised to see $4.00 prove problematic, as it was strong S/R from the weekly chart, as you can see from my original comments. As you can also see, SIRI has drawn back to the $3.00 level I detailed in my first comments. After the original plummet, volume dropped. In recent days, red candles may be a bit smaller than the white candles, and some oscillators are trying to steady. That's all a good sign for a potential bullish play approaching, but those are only tentative signs and the whole thing could collapse. In drawing back to $3.00, SIRI pulled back below the bearish resistance line on its P&F chart. It's still got a buy signal and an upside target of $5.50 in place. Rival company XMSR has met its upside objective and is also in an "O" column, as is SIRI, however, adding a bit of caution to the sector. In addition, SIRI's 30-dma hasn't yet risen close enough for SIRI to test it, which I would have liked to have seen happen. One further bit of caution lies in one fact you mentioned: the closely approaching earnings announcement. As you know, we don't encourage holding any short-term position, either bullish or bearish, over an earnings announcement, so that doesn't give you much time for a play to work. SIRI may be close to a steadying and then a bounce from this level, but that depends on earnings and the reaction to the earnings. I'd wait for that earnings announcement and then for the dust to settle a bit before I considered a play, but that's just me. It feels too much like a gamble right now when earnings could send the stock lower, violating those moving averages, and when oscillators remain somewhat iffy, but iffy on the bearish-to-neutral side.

  Ray Cummins   1/26/200,  11:34:43 AM
Spreads/Combos & Premium-Selling -- E-Mail Replies: Option Pricing

Hello Ray...I have two questions I was hoping you could answer for me.

1)If a stock has run up of 20% in the last month to say $30 and I'm interested in selling the 25-strike put is the premium going to be the same better or worse than if the stock had droped 20% in that same month and is currently at the same price of $30 and I'm also interested in selling the 25-strike put.
2)One of your candidates for this week is ADAT the stock as of friday was at 16.80 and the strike to sell the 12.50 is going for .40 cents is there a way to know what the option price would be if the stock gaped down to 12.50 within a few days, is there a way to have an idea at least where that option price might be at if something like that were to happen. Thanks DA

Here are the "quick and easy" answers...and I'll try to work on something more comprehensive later in the week.
1) The put option premiums are generally going to be higher if the stock has dropped 20% in the last month...likewise, call option premiums would generally be higher if the stock had gained 20% in the last month
2) The easiest way to estimate the value of an option with a given stock (underlying) price is to use an option-pricing calculator. There are numerous versions of this type of software on the Internet...and many are free. Here is an example: Link

  Linda Piazza   1/26/200,  11:25:50 AM
That "consolidation for several hours at the 21-pma's and then rollover" OEX scenario still seems plausible as we move into the middle of the morning. We've seen this kind of action resolve to the upside so many times, however, that we have to give strong consideration to the possibility that the OEX could rise from these averages rather than rollover beneath them. The advdec line says the rollover possibility is most plausible, but the TRIN isn't supporting that theory yet. The OEX now retests that midline Keltner support, and it may be this test that gives us another clue. It's edging slightly below that support, but still in the "testing" range.

  Jim Brown   1/26/200,  11:07:49 AM
A reader pointed out that the Amex Japan Index (JPN) is optionable. Thanks George!

  Jeff Bailey   1/26/200,  11:04:18 AM
11:00 Internals at this Link

  Linda Piazza   1/26/200,  11:00:52 AM
This morning, the NDX has been rising to retest its 30-minute 100/130-pma's, with those averages at 1533.20 and 1529.08, respectively. The 30-minute 21-pma has also descended to 1530.20, lending its resistance. A move up through all those levels would show a great deal of strength, but since this retest of those important averages was expected once they were violated, we should also factor in another possible result of that retest: a rollover from this level. Today, the NDX may be one important index to watch.

  Linda Piazza   1/26/200,  10:56:45 AM
Another reader, J., mentions that the ishare list on www.amex.com, to which I referred the reader, is not complete, but that it offers good information on both the ishares and HOLDRS.

  Linda Piazza   1/26/200,  10:54:50 AM
Here's more information from an experienced trader on trading international stocks/funds: JP Morgan also has a good site for foreign stocks trading as ADR; aptly named www.adr.com. You can pull up stocks by country. You're right about the Japan iShares not be optionable. I don't know of any basket of Japanese stocks that are optionable. Thanks, B.

  Linda Piazza   1/26/200,  10:53:14 AM
I keep getting mixed signals, depending on the time frame or the indicator I'm studying. The OEX is holding near the 30-minute and 60-minute 21-pma's as oscillators cycle up or try to do so, indicating that it may be possible that they'll consolidate while 30-minute and 60-minute oscillators burn off oversold pressure, then turn down again as the oscillators do so. The advdec line seems to support this scenario. Yet when I look at the Keltner channels, I see that the OEX is consolidating above mid-channel support, a sign of strength. The TRIN isn't bearish yet, either. When signals are this mixed, that sometimes indicates choppy trading conditions, too, but I've learned to respect Keltner channels. Above this level, Keltner resistance shows up near 567.90, but then it's an easy (Keltner) ride up to 570, so if the OEX isn't turned back at next resistance, then it may be able to zoom up toward 570. I still don't feel confident enough of upside to invest that direction. (Note: As I completed typing this entry, the OEX started a move up.)

  Jim Brown   1/26/200,  10:50:41 AM
Using the Russell as a sentiment indicator today has it trading at the low of the day and down -0.61%. The Nasdaq is only down -0.34%. This would suggest the big cap indexes have farther to fall but the Dow remains the strongest index. With Russell and Nasdaq in the tank the Dow is being held up my MRK, IBM, HPQ and PG. MRK is the strongest and suggests traders are breathing easier that MRK will not make a play for another drug company and/or MRK is seen as a defensive play now that techs are weak. Drug stocks, especially those that have been beaten down in the past are seen as defensive plays when institutions sense market weakness ahead. If they are already beaten up they do not expect any further drops and they become a value play. Just a hunch.

  Linda Piazza   1/26/200,  10:45:16 AM
The OEX did spend the first hour of the day consolidating near the 30-minute and 60-minute 21-pma's while the oscillators either turned up or tried to do so. I don't know if the "consolidate for several hours" scenario still holds, but so far, this is fitting my scenario fairly well. If the rest fits with my scenario, we'll see a downturn at some point as the OEX rolls down from those averages to retest the 100-pma's, but that's the part of my scenarios that frequently goes awry! Sure would like to see the TRIN higher.

  Jeff Bailey   1/26/200,  10:43:16 AM
It's incredible how much information is available on the Internet. Just some places to look.

  Linda Piazza   1/26/200,  10:39:08 AM
Thanks, Jeff, for your information, too, on trading foreign markets. I mentioned that we had the greatest readers in the world. I forgot to mention the greatest co-writers in the world.

  Jeff Bailey   1/26/200,  10:38:00 AM
Another resource for Japan discussed in an Ask the Analyst column at this Link where trader/investor might be able to utilize the Bank of New York's search engine.

  Linda Piazza   1/26/200,  10:34:42 AM
Thanks, Jane, for the great information, helpful to readers who are interested in taking advantage of developments in foreign markets.

  Jane Fox   1/26/200,  10:32:51 AM
Linda your reader (10:27 post) could also go to www.ishares.com and on the left hand side you have all the ETF in categories. I also totally agree with using ETFs for trading international. Most ETF have options also and one, IWM, even has a single stock future - the most widely traded SSF.

  Linda Piazza   1/26/200,  10:27:50 AM
Reader Question: Just a quick note...you seem to follow Asia...do you know of some instruments through which one could trade Japan, e.g. via options listed on a US exchange?

Response: One method of participating in plays on Asian companies is to trade options on specific companies, such as Sony or Canon. Another is to utilize ETF's, exchange traded funds. If you go to www.amex.com, you'll find a sidebar that lists information on ETF's. Click on ETF, and you'll find a market summary and all kinds of information on these funds. They trade like a single stock, so that you can trade them intraday. The ETF for Japan is EWJ, but there are also ETF's for other countries or for the Pacific Ex-Japan (EPP).

One problem, however, lies in the fact that it's often difficult for us to find information about specific companies or about government policies that will affect specific stocks or even the performance of the entire market. For example, the Bank of Japan managers are conducting a meeting now in which they will probably discuss currency issues. As much research as I do each day, I don't have many clues as to what decisions might be made, but I do know that any decision (to intervene, not intervene) can impact Japan's export-heavy markets. Do your homework if this is a route you're considering. Another handicap is that I don't believe there are options available on this ETF, at least.

We have the smartest readers in the world, however, and perhaps some will make other suggestions that you'll find helpful.

  Jeff Bailey   1/26/200,  10:13:44 AM
10:00 Internals at this Link

Friday's internals at this Link

  Jeff Bailey   1/26/200,  10:05:38 AM
Motorola (MOT) $16.57 -1.19% Link ... Lower after Morgan Stanley lowers its 2004-05 forecasts on MOT on lower PCS estimates. Morgan Stanley saying recent news heightens its concerns of possible handset channel inventory build in first quarter of 2004. Lowers target to $20 from $21. Still, Morgan Stanley believes investors will look through the handset concerns and perceive the recent management change and SPS spinout as positive drivers for MOT.

  Linda Piazza   1/26/200,  10:00:08 AM
Perhaps the "consolidate for several hours while 30-minute and 60-minute oscillators cycle up" scenario for the OEX still has some validity? As Jane has mentioned, the TRIN is bullish. The advdec line is not, however, so I'm still watching, still unsure. I'm sure I don't trust the upside enough to invest in a bullish play just yet, however, but that's nothing new, is it? (Grin.)

  Jim Brown   1/26/200,  9:59:46 AM
Existing home sales = 6.47 million, est was 6.10 million, last month was 6.06 million.

  Jonathan Levinson   1/26/200,  9:58:36 AM
The Fed has just announced a 6.75B overnight repo, for a net 4B add against the expiring 2.75B. Looks like Fukui-san and the BOJ are taking a siesta today.

  Jeff Bailey   1/26/200,  9:56:40 AM
American Express (AXP) $50.03 +0.14% Link ... Dow component to report earnings during today's trade. Consensus is for quarterly EPS of $0.59 on revenues of $6.450 billion.

  Jeff Bailey   1/26/200,  9:50:49 AM
Schering-Plough (SGP) $17.29 -1.45% Link ... Reported quarterly EPS of $0.01 which was $0.02 below consensus. Company said revenues fell 17.8% year-over-year to $1.948 billion versus consensus of $1.997 billion.

  Jeff Bailey   1/26/200,  9:48:37 AM
Arkansas Best (ABFS) $31.95 -6.44% Link ... reported quarterly EPS of $0.55 which was $0.08 below consensus. Company said revenues rose 1.4% year-over-year to $387.10 million versus consensus of $389.8 million.

  Linda Piazza   1/26/200,  9:46:47 AM
The OEX continues to test its 30-minute and 60-minute 21-pma's, with 30-minute MACD having made a bullish cross from below signal. Right now, the OEX edges above both averages, indicating that the OEX might continue to climb toward 570 resistance rather than consolidate while those oscillators cycle up, but not having watched market action at the end of last week, I'm hesitant to draw conclusions too quickly.

  Jeff Bailey   1/26/200,  9:46:12 AM
Tyson Foods (TSN) $14.21 +5.25% Link ... Reported quarterly EPS of $0.32 which was $0.06 better than consensus estimates. Company said revenues rose 12.1% year-over-year to $6.505 billion.

  Jeff Bailey   1/26/200,  9:44:24 AM
Sysco Corp. (SYY) $38.86 +1.43% Link ... Reported quarterly EPS of $0.34 which was $0.02 better than consensus estimates. Company said revenues rose 10.8% year-over-year to $7.036 billion versus consensus of $7.004 billion.

  Jeff Bailey   1/26/200,  9:41:50 AM
SAFECO (SAFC) $43.81 +4.85% Link ... Reported quarterly EPS of $1.09 which was $0.22 better than forecast. Company said revenues rose 10.2% to $1.94 billion versus consensus of $1.735 billion.

  Jeff Bailey   1/26/200,  9:39:55 AM
Lexmark Intl. (LXK) $80.65 +2.2% Link ... Reported quarterly EPS of $1.05 which as $0.13 better than consensus. Company said revenues rose 13.4$ year-over-year to $1.369 billion versus consensus of $1.324 billion.

  Jeff Bailey   1/26/200,  9:37:36 AM
Lear Corp. (LEA) $68.42 -0.66% Link ... reported quarterly EPS of $1.90 which was $0.03 better than consensus. Company said revenues rose 13.2% year-over-year to $4.255 billion versus consensus of $3.982 billion.

  Linda Piazza   1/26/200,  9:37:21 AM
During the first five minutes of trade today, the OEX traded a range from 565.09 to 566.26, with the midpoint at 565.68, and with the OEX currently above that midpoint, indicating strength in earliest trading. The OEX is now jammed underneath the 30- and 60-minute 21-pma's, however, with those averages at 566.61 and 566.66. The 30- and 60-minute oscillators are trying to move into a bullish phase, indicating that we could see some hours spent testing these averages while those oscillators cycle up (bearish case), or else we could see a pop and sustained move above them (bullish case).

  Jeff Bailey   1/26/200,  9:34:46 AM
L-3 Communications (LLL) $53.27 Link ... Reported quarterly EPS of $0.95 which was $0.03 above consensus. Company said revenues rose 13.4% year-over-year to $1.481 billion versus consensus of $1.354 billion consensus.

  Linda Piazza   1/26/200,  9:32:38 AM
The OEX five-minute cycles were overridden, as I thought might be possible. It looks as if the OEX is going to forego that first dip and just climb up to test the 30- and 60-minute 21-pma's.

  Jeff Bailey   1/26/200,  9:30:31 AM
Energizer (ENR) $38.52 Link ... reported quarterly EPS of $1.08, which was $0.06 better than consensus of $1.02. Company said revenues jumped 41.8% year-over-year to $811.7 million versus consensus of $808.25 million.

  Jonathan Levinson   1/26/200,  9:30:07 AM
The Fed has 2.75B in weekend repos expiring today, a modest amount by last week's standards- awaiting the 10AM announcement to see what the Fed intends to do.

  Jeff Bailey   1/26/200,  9:28:05 AM
Ashland (ASH) $46.42 Link ... reported quarterly earnings of $0.56 which was $0.13 better than forecast. Company said revenues rose 10.2% year-over-year to $1.974 billion.

  Jeff Bailey   1/26/200,  9:25:31 AM
American Standard (ASD) $106.12 Link ... reported quarterly EPS of $1.14, which was $0.04 better than forecast. Revenues rose 12.8% year-over-year to $2.117 billion versus consensus of $1.973 billion.

  Linda Piazza   1/26/200,  9:25:08 AM
Last week, the OEX printed a doji on its weekly chart, with that doji at the top of a climb. As always, this is a possible reversal signal, but one that must be confirmed by a down week this week. We've seen a lot of potential reversal signals and even confirmed reversal signals that didn't produce the expected pullback, and instead produced a day or two or week or two of consolidation, or was even followed by a climb. As always, price action should be watched closely. The daily chart showed oscillators that were beginning to be tugged down out of territory indicating overbought conditions, but we know that oscillators can't be trusted in a trending market, and we should instead be watching market behavior near important moving averages. The 30-minute chart showed the OEX bouncing from its 30-minute 100-pma at the end of Friday's trading, with 30-minute oscillators trying to kick off a new bullish phase, perhaps predicting a move up to retest the 30-minute 21-pma at 566.70. The 60-minute 21-pma is nearby, at 566.48, and Keltner channels show resistance at the OEX's closing level on Friday and also from 566.25-566.78. The five-minute chart showed a likelihood that the OEX might retreat a bit more before bouncing, but five-minute action is likely to be overridden by this morning's opening. Taken together, this shows a possibility that the OEX could retreat toward 563.99-564.63 in early trading today, bounce up to retest the 30- and 60-minute 21-pma's, and then possibly roll down from there. This is all just speculation based purely on how the charts ended Friday, however, as I build a scenario against which to test early action. I'm handicapped by not being on hand to watch the market action on Thursday and Friday.

I saw Steve Nison on Bloomberg this morning. He commented that candlestick formations have been followed not just for years, but for centuries. They are a visual depiction of market psychology as well as market action. That pinpoints one source of my confusion over these continued rejections of potential or confirmed reversal signals. Market psychology doesn't suddenly change, so something I don't understand has been at work in the markets. Unfortunately, that's made me too cautious over this last nine months.

  Jeff Bailey   1/26/200,  9:19:21 AM
09:00 Update posted at this Link

  Jane Fox   1/26/200,  8:43:04 AM
Welcome back Linda.

  Jonathan Levinson   1/26/200,  8:18:18 AM
We await existing home sales for Dec at 10AM, est. 6.12M.

  Linda Piazza   1/26/200,  7:10:26 AM
Good morning. The Nikkei opened just above 11,000, but fell throughout the morning session and the early part of the afternoon session. In the last couple of hours of its session, the Nikkei erased about half its losses, but still closed down 96.41 points or 0.87%, at 10,972.60. The losses occurred as the Bank of Japan's bank managers began a meeting in which the effect of the yen's rise against the dollar was expected to be debated. Also, a newspaper reported that Japan's Financial Services Agency might investigate UFJ Holdings' records on bad loans, sending the lender tumbling. According to the newspaper report, the bank may not have accurately reported information on bad loans. Another report indicated that a record number of individuals filed for bankruptcy the first 11 months of last year. Other banks and lenders dropped, too, joined by tech and auto stocks. Many tech stocks report earnings this week, including Sony, Canon, NEC, and Fujitsu, with most of those reporting either Wednesday or Thursday. Another economic number showed that Japan's December trade surplus soared 41.2% above the previous December's number.

Other Asian markets turned in a better performance, with many open for the first time after the lunar holiday last week. Fears of the economic effect of avian flu may have dampened gains on some markets, as Indonesia was the latest country to see an outbreak of the deadly illness. Travel-related stocks often traded lower throughout the region. The Taiwan Weighted gained 0.09% and South Korea's Kospi gained 0.55%. An analyst with LG Investment upped his forecast for Samsung Electronics' operating profit for this year, and an analyst at Tong Yang Investment Bank upped his forecast for SK Telecom's six-month price estimate, sending the stocks and the index higher. Also impacting the South Korean index was the news that the WTO would make a ruling on the duties the U.S. and EU imposed on Hynix Semiconductor's chips after a charge that the company received illegal subsidies. Hynix gained. Singapore's Straits Times gained 0.55%, but Hong Kong's Hang Seng lost 0.17%. China's Shanghai Composite gained 0.88%.

Many European markets turn down this morning as automakers and insurers trade lower. German steelmaker ThyssenKrupp dropped after announcing that it would raise steel prices. M&A news appeared to be garnering the most attention, as Sanofi-Synthelabo made the expected hostile bid for competitor Aventis, and as Italian eyeglass maker and retailer Luxottica announced the purchase of Cole National. After the Sanofi-Synthelabo bid for Aventis, both companies were suspended from trading until 9 a.m. EST, but some other European drugmakers were higher on hopes that they would make attractive targets, too.

Currently, the FTSE 100 has lost 14.50 points or 0.33%, to trade at 4446.30. The CAC 40 has dropped 17.81 points or 0.48%, to trade at 3675.55. The DAX has lost 22.20 points or 0.53%, to trade at 4129.63.

  OI Technical Staff   1/23/200,  10:47:50 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