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  Jeff Bailey   2/2/2004,  5:09:29 PM
Closing Internals at this Link

  James Brown   2/2/2004,  4:32:03 PM
TASR - Guiding for 100% growth - Now trading up +$14 after their earnings. With more than 50% short interest tomorrow should be interesting.

  Linda Piazza   2/2/2004,  4:01:00 PM
The OEX will close today below the midpoint of the flagpole drop from last week, so well within the potential "b" distribution pattern we've been watching. With that close, we can't be sure of the outcome, as there's yet been no confirmed (on a closing basis) breakout in either direction. MACD still looks bearish, but RSI has flattened after having descended. On a five-minute basis, the OEX moved back up to retest the Keltner channel midline S/R, but did not quite make it back above that by the end of the day. It's a draw.

  Jeff Bailey   2/2/2004,  3:54:45 PM
Day trade stop Newmont Mining (NEM) 41.65

  Jeff Bailey   2/2/2004,  3:52:04 PM
Newmont Mining (NEM) $41.51 -0.36% ... bids back after an afternoon low of $41.11, just shy of $41.05 target.

  Linda Piazza   2/2/2004,  3:51:30 PM
The SOX again sits on its 72-ema at 504.93, an average I began watching almost by accident when I changed Jonathan's 72-sma to an ema and applied it to a daily chart. A touch of that average produced a SOX bounce last Thursday, and has proven important in SOX trading since last April. The SOX did close beneath that average once in mid-December, but most other touches or near touches since April have produced a bounce. This remains an area of danger to both bulls and bears, then, for obvious reasons. A sustained move below this average would show a change in tenor.

  Linda Piazza   2/2/2004,  3:44:18 PM
In my 13:06 post, I mentioned that the OEX had charged above the top of the nested Keltner channels and that this action usually predicted a fall toward the central support, then just above 562, if not to the bottom support. The OEX has fallen beneath that central support, now at 562.93. It looks as if it overshot it, so it could move up to retest it. The OEX now has Keltner resistance intervening at 561.98 and 562.27, however, and Keltner resistance just above the midline S/R at 563.40, just in case the OEX now overshoots that midline level to the upside. This suggests that the OEX will eventually work its way toward the bottom support, currently at 558.74. This is why I suggested caution to OEX bears in that 13:06 post. I'm beginning to like these nested Keltner channels more and more. I watch them on a five-minute basis for the OEX.

  Ray Cummins   2/2/2004,  3:37:24 PM
Spreads/Combos & Premium-Selling -- E-mail Replies: Position Management

(condensed) Ray, I have been lucky in the past few months to pick mostly winners -- some from your section! -- and a few have even caused me a bit of regret for "selling" instead if "buying" options. Now I am getting concerned because a couple stocks have earnings due this week and I was wondering what criteria you use to close a profitable naked-put play early? HG

You are correct about the potential for volatile activity during earnings season and recognizing the need for an "early-exit" in issues with pending reports is an important part of portfolio management. While there is no perfect answer to your question, one of the most practical closing strategies is based on the target return-on-investment (ROI) for the position. For example, if a play originates with a 10% monthly profit and a slightly smaller but reasonable return becomes available at an earlier time (based on a lower yield and shorter time period), the position is a candidate for early closure. In addition, I would consider any issue with marginal or waning technical strength as a potential exit candidate prior to an earnings announcement. Although quarterly profit reports are not public until released by the company, it's surprising how many stocks telegraph the outcome of the report by their activity in the last few sessions prior to the actual earnings date.

  Linda Piazza   2/2/2004,  3:34:00 PM
The TRAN has been another canary in the coal mine. (See Jonathan's 15:24 post, perhaps on the futures side.) It first predicted the Dow attempt at a new swing high on a closing basis and then began what can only be called a plummet from those highs. I've been watching the TRAN carefully for several weeks now because it sometimes is a leading indicator for Dow behavior. It's important in Dow theory. As other writers have pointed out, too, an expanding economy sees growth in this sector.

The Dow did confirm the TRAN new swing high, but it hasn't followed the TRAN in its plummet, holding far above the Dow's 50-dma. Is this bullish divergence now, with the Dow refusing to confirm the TRAN's behavior or has the Dow simply not yet followed? Only time will tell, but the Dow's daily pattern could yet be a bearish distribution pattern.

  Linda Piazza   2/2/2004,  3:27:04 PM
The SOX has now reached a new day's low, although only minimally so, so far. Still, we've seen our test of the 50-dma, with the SOX rolling down beneath it again, so I'd suggest caution here for SOX bulls.

  Linda Piazza   2/2/2004,  3:15:31 PM
The SOX is rolling down again beneath its 50-dma, but it has not yet breached this morning's 508.48 low and is far from Thursday's 502.60 low. It's still within the 510-515.60 congestion zone that has contained much of its movements since its rise off Thursday's low, so defies any attempt to make predictions until we see a sustained breakout either direction. The 60-minute oscillators begin to look more bearish but we know how quickly they can change in a tech-related index, don't we?

  Jeff Bailey   2/2/2004,  3:15:12 PM
Day trade short ... Newmont Mining (NEM) $41.47 -0.45% here, stop $41.65, target $41.05.

  Jeff Bailey   2/2/2004,  3:07:10 PM
03:00 Internals at this Link

  Linda Piazza   2/2/2004,  3:01:37 PM
I'm going to consider the potential H&S on the Dow five-minute chart defunct now as the Dow is possibly forming a third right shoulder or else rejecting the formation altogether. That's possible since the TRIN level never did support a bearish outlook, but there had been bearish price/oscillator divergence, so it was worth watching. I hadn't watched it with the intention of trading it but as a measure of whether bearish formations were confirming and then if their downside targets were being met.

Now that formation looks like a descending regression channel, possibly a bull flag. That interpretation would fit the TRIN's bullish level, but it's getting a little long in the tooth for that interpretation, too.

  Linda Piazza   2/2/2004,  2:53:49 PM
Yes, Jane, I do wish the TRIN's measurements went up as the markets became bullish and down as it became bearish (see Jane's 14:48 post). I'm not sure that would have helped me earlier, however, as I was just thinking so strongly of how the bearish formations weren't matching the bullish TRIN that the wrong word just got plugged into my 14:11 post.

  Jane Fox   2/2/2004,  2:48:29 PM
Linda don't you wish the TRIN would trade the same as the markets? Up bullish down bearish. Dick Arms (fellow who came up with the TRIN) wanted to change it but before he could it had become mainstream and was too late.

  Linda Piazza   2/2/2004,  2:38:37 PM
The Dow formed a second right shoulder on its five-minute chart and is refusing so far to violate the neckline area of its possible H&S formation. It's holding above that neckline as the five-minute oscillators cycle down. If it can continue to do so until they cycle all the way down into territory indicating overbought conditions and turn up again, then there's danger that the H&S formation will not be confirmed, one sign of short-term strength. The neckline is at about 10,544, and is currently being tested again.

  Linda Piazza   2/2/2004,  2:35:31 PM
After violating the Keltner channels to the topside, the OEX is now transitioning back inside the Keltner channels. Usually there's eventually a test of midline support, now at 562.55 but rising, if not the bottom of the channel once that channel has been violated to the upside. It's entirely possible for the OEX to keep climbing in the topside of that Keltner channel as the central support climbs toward the current OEX position, but this is a point of danger for bullish players, because it shows that the OEX has become overbought on a short-term (five-minute) basis at least. There's support at the current position, down to 565.11, and then at 564.20 where it consolidated earlier today. There's resistance just overhead, beginning at 566.15.

  James Brown   2/2/2004,  2:34:52 PM
MGAM - just announced a 2:1 stock split.

  Jeff Bailey   2/2/2004,  2:21:33 PM
Darden Restaurants (DRI) $20.96 +4.8% Link ... Higher after reporting mixed same store sales. DRI said its troubled Red Lobster unit saw sales fall 2.5% for the 4-weeks ended January 25, but saw a 8.5% jump at its Olive Garden chain.

  James Brown   2/2/2004,  2:17:45 PM
Pfizer Inc (PFE), the largest drug component in the DRG drug index, is leading a breakout for its sector. The FDA recently approved two drugs, Caduet and Spiriva. Both drugs have the potential to hit peak sales of nearly $2 billion each. Caduet is for high cholesterol and hypertension. Spiriva, co-developed with Boehringer Ingelheim Pharmaceuticals, is an inhaled medication designed to treat COPD or Chronic Obstructive Pulmonary Disease.

Shares of PFE are up 2.15% and breaking out above resistance at $37.00 while the DRG drug index is up 1.28% and hitting new highs not seen since last June.

  Jeff Bailey   2/2/2004,  2:12:31 PM
02:00 Internals at this Link

  Linda Piazza   2/2/2004,  2:11:06 PM
While the pullback on the DJI five-minute chart looks like a potential H&S, other indices have five-minute patterns that look at bit more like a bull flag pullback, without as well defined a head region. The TRIN remains bullish and the advdec line is strong, if flat for the last hour. As I mentioned earlier, that DJI five-minute pattern is useful to watch to see which patterns get confirmed and targets met, but it may not be predictive of further downside action. It's just a mixed-up day with mixed-up indicators.

  James Brown   2/2/2004,  2:08:29 PM
Amgen Inc (AMGN), the biggest component in the BTK biotech index, is up 3.06% after several days of consolidation above its 200-dma. AMGN is leading a charge in the BTK biotech index, which is up 2.51% and about to breakout to new highs as well.

  James Brown   2/2/2004,  2:06:10 PM
The NWX networking index is bouncing from its simple 21-dma after a 12% pull back from its recent intraday high. Keep an eye on CSCO, the largest player in the sector. CSCO announces earnings after the bell tomorrow afternoon.

Currently CSCO is bouncing from its 40-dma, up 3.15%. Nortel Networks (NT), another networker, is up 5.21%.

  Linda Piazza   2/2/2004,  2:03:34 PM
I mentioned the possible H&S building on the Dow daily chart. There's one on the five-minute chart, also, with a neckline at about 10,544. That one has a downside of only about 24 points, however, but is useful to watch to see if short-term bearish formations are being confirmed and if their downside targets are being met.

  Linda Piazza   2/2/2004,  1:47:05 PM
As a continuation of my 13:41 post, I wanted to mention again the potential H&S formation on the Dow's daily chart, a potential formation I began mentioning late last week when the Dow was approaching last week's low. That was part of the reason I expected a bounce, as I thought the Dow might steady at a neckline level and then rise up to form a right shoulder. If it's going to do that, then it very well might rise above the 10,560 level that's the midpoint of the drop. It might rise toward 10,600 again, the shoulder level, or perhaps even slightly above that since there's some argument to be offered that the neckline could be a rising one and so the shoulder level might rise, too. The DJI did show bearish divergence as the head was being formed. If this formation has any validity, then it might take days for the DJI to rest the 10,560-10,600 level and then finally round down into a right shoulder, and it might even form more than one right shoulder. This is just one possibility that I'm keeping on the radar screen as I try to decide what might happen this week.

  James Brown   2/2/2004,  1:45:33 PM
Traders will also notice that current OI put play in QLGC is under performing the SOX. The SOX has bounced back into the green while QLGC has broken the $44 level, down 2.66%.

  James Brown   2/2/2004,  1:43:41 PM
It's also encouraging to see the bounce continue in shares of OI call play MWD, despite Smith Barney removing it from their recommended list.

  James Brown   2/2/2004,  1:41:37 PM
OI call play DHR is also continuing its bounce from last week although we'd like to see more volume on the rally.

  Linda Piazza   2/2/2004,  1:41:18 PM
The Dow is currently testing the midpoint of its drop from the high of 1/26 to the low of 1/29. That midpoint lies at about 10,560. If this move is presumed to be a bearish distribution pattern such as a bear flag climb, then the Dow shouldn't retrace much more than 50% of the move that immediately preceded it. However, I keep thinking that with the recent bullish fervor, we really ought to give these indices a little extra leeway to the high side of these retracement levels.

  James Brown   2/2/2004,  1:40:37 PM
New OI call play ABK is off to a good start. Shares are breaking out over resistance at $75.00 with a 3.14% gain.

  Linda Piazza   2/2/2004,  1:28:38 PM
As the SOX continues to do battle with its 50-dma, the daily oscillators are trying to steady as they approach levels indicating oversold conditions. We all know that oscillators can and do trend, but this is another sign of the ongoing battle with the outcome as yet unknown. We're accustomed to bounces at support, and so that's what we most expected to see as the SOX hit the 72-ema and approached the 500 level last week, and that's what we have seen so far. However, the TRAN's action has shown us that long-term support doesn't have to continue being support and that the plunge can be brutal if support doesn't hold.

The TRAN is bouncing today after continuing that brutal fall toward next support this morning. In fact, it's up about 45 points off its low of the day, but the presumption now is that the TRAN rises in a measured distribution pattern and that it will roll over somewhere shy of its recent high, with the 50-dma at 2975 and other grouped averages just over historical S/R at 3000 being likely levels for that rollover. I would expect the climb to occupy several days and perhaps a week's worth of daily candles, however.

  James Brown   2/2/2004,  1:17:06 PM
Uh-oh... I have bad news. Punxsutawney Phil saw his shadow this morning, predicting six-more weeks of winter.

Made famous in the movie "Groundhog Day" with Bill Murray, Phil, a groundhog in Punxsutawney, PA. made his winter prediction from Gobbler's Knob.

  Jeff Bailey   2/2/2004,  1:08:53 PM
01:00 Internals at this Link

  Linda Piazza   2/2/2004,  1:06:41 PM
The OEX has charged above a 50% retracement of the flagpole drop from last week's high to last week's low, but only minimally. That's a bullish development if it holds, and that bounce that I was worriedly expecting all day did materialize after all. The question now remains as to whether it will hold, however, since this last move broke the OEX out of the top of its nested Keltner channels. This is a worrisome development for bullish traders. Although the OEX sometimes climbs for an hour or so outside those Keltner channels, this usually predicts a fall down toward the central Keltner support, now at 561.47 but climbing, and many times even to the bottom of the channel, now at 557.42 but climbing. Be careful, OEX bulls. Since the Keltner channels can also give valid breakout signals, the idea now is to set profit stops at account-appropriate distances from the current price and then follow the OEX up if it should continue climbing outside those channels.

  James Brown   2/2/2004,  12:46:18 PM
Deutsche Bank has issued a "sell" rating on Ford Motor Co (F) and sliced its price target to $12.00. Ford was already looking weak after breaking down a couple of days ago. Shares are down 2.54% to $14.16.

  Jeff Bailey   2/2/2004,  12:44:58 PM
QQQ $37.43 +1.01% ... should the QQQ drive above the WEEKLY Pivot $37.46, bulls could push hard toward $38.00.

  James Brown   2/2/2004,  12:37:31 PM
Yet again Barron's magazine has been accused of publishing misleading or outdated information. An article over the weekend casting TASER Intl (TASR) in a negative light was rebuked by TASR's Chairman this morning. The Chairman said the Barron's reporter did a decent amount of research but never bothered to call the company during their research (the sad thing is Barron's staff has done this before).

Part of the Barron's article suggested TASER was approaching market saturation at 50% of the market. In truth TASER is at less than 6% of the U.S. market and less than 1% of the global market.

Once again shorts are being squeezed and shares of TASR are up $4.17 to $137.70. The company is set to announce earnings tonight after the close. Estimates are for 31 cents a share.

  Linda Piazza   2/2/2004,  12:34:55 PM
The expected OEX resistance near 563.30-563.70 did not materialize and once again, the Keltner channels showed us where the real resistance and support lay. I mentioned this morning that once the OEX broke above the then-current level, the next Keltner resistance did not how up until 564.80, the level of the upper Keltner resistance at that time. I'd expected resistance near 563.50, though, and expected Keltner lines to flow toward 563.30-563.70 as the OEX zig-zagged its way higher and for that level to cap any rises, but the Keltner channels had been showing the true resistance all along. That upper boundary now lies at 565.04, but my focus will now turn to 565.40, the midpoint of the OEX's flagpole drop from last week's high to last week's low. If the OEX is to continue its most-recent bearish tenor, it won't move much higher than that midpoint, giving it a little leeway to overshoot it, but if the intermediate-term bullish tenor is to continue, it will.

  Jeff Bailey   2/2/2004,  12:31:26 PM
QQQ $37.35 ... WEEKLY/MONTHLY Pivots. Tried the short just below $36.99 with thought Q's would see weakness back toward WEEKLY S1. Link

  Linda Piazza   2/2/2004,  12:27:30 PM
Here's what I'm watching on one of my NDX 60-minute charts: Link Note that this supposed bear flag is not as tight a pattern as would be usual for a bear flag. Otherwise, this bounce is acting just as expected in the case of a bear-flag bounce into resistance, but I'm skeptical of all bearish developments these days and look for all signs that potentially bearish developments could be something other than what they appear to be.

  James Brown   2/2/2004,  12:27:20 PM
Take-Two Interactive Software (TTWO) issued big news this morning. The company said they would restate earnings for the last couple of years and warned for the current quarter. Shares immediately traded low but have since rebounded higher, up 2.62%. Watch the $30.50-31.00 region. TTWO has a descending trend of lower highs coupled with its 40-dma, 50-dma and 200-dma all in the same area. It could be very tough resistance to break through. Shares are trading at 29.78.

  James Brown   2/2/2004,  12:19:59 PM
Last week VERITAS (VRTS) was hammered for a big loss after its earnings report and shares fell toward the $30 level before settling above its 200-dma. The stock is bouncing and might be trying to fill the gap from last week. Boosting shares today is an upgrade from Bank of America to a "buy". The top of the gap is $36.47.

  Jeff Bailey   2/2/2004,  12:14:40 PM
12:00 Internals at this Link

  James Brown   2/2/2004,  12:13:09 PM
I was starting to think that might be a bull flag on the SOX but it's getting a little long in the tooth, isn't it?

  Linda Piazza   2/2/2004,  12:11:48 PM
James, good chart on the SOX. (See his 11:57 post.) It's certainly helpful to step back and take a look at the forest and not just the trees. The 60-minute chart emphasizes the flagpole drop that's taken place, with the current rise looking like a bear flag rise into resistance. The chart you posted sure looks like that drop is taking place in the context of a bull flag pullback within a rising regression channel, doesn't it? The outcome of the test of the 50-dma might clarify that picture somewhat.

  Linda Piazza   2/2/2004,  12:08:32 PM
The TRAN certainly participated in that bounce, with the TRAN now 26 points of this morning's low of 2856.28.

  James Brown   2/2/2004,  12:06:17 PM
XMSR might be worth watching. Shares bounced from price support last week and news this morning that GM is expanding the number of models that will come with XM Satellite Radio is good news. Look for XMSR to break above resistance but also be aware of its earnings report due out Feb. 12th.

Chart: Link

  Linda Piazza   2/2/2004,  12:05:43 PM
The SOX is back at its 50-dma, a much-watched average for the SOX.

  Linda Piazza   2/2/2004,  12:02:40 PM
And there's the bounce. Just about every post of mine this morning mentioned my worried attempt to talk myself out of a belief that we'd see a bounce attempt. Sometimes we really are sensing something that isn't showing up in the charts, but it's just bad account management practices to trade on a feeling when chart patterns, TRIN, and the advdec line say the opposite. Too bad.

  James Brown   2/2/2004,  11:57:20 AM
I liked Linda's hourly chart of the SOX with the downward channel.

For what it's worth... here's a one-year daily chart of the SOX. Link

  Linda Piazza   2/2/2004,  11:56:20 AM
So we have the bounce I've been expecting all day after all, while I kept trying to convince myself it wasn't going to happen. So far, it hasn't yet eclipsed the pre-10:00 high of the day at 562.49, however, and next Keltner resistance is at 561.97. The OEX is back above central Keltner support, however, showing a small degree of strength. The upper Keltner resistance is descending, and is currently at 564.60, but I've expected Keltner resistance to group near 563.30-563.70 at some point, so perhaps it's descending toward that level now. I expected that level to cap any bounce attempt.

  James Brown   2/2/2004,  11:51:06 AM
JPM is downgrading Safeway (SWY) to an "under weight" and shares are reacting with a 2.3% decline. The stock should have support near the $21.00 level bolstered by its 200-dma but investors may be gun-shy after Winn-Dixie (WIN) self destructed last week. Earnings for SWY should be Feb. 12th.

  Linda Piazza   2/2/2004,  11:49:42 AM
Here's what I'm watching on the SOX: Link

  James Brown   2/2/2004,  11:46:26 AM
I've seen a couple of chip stocks get an upgrade this morning. One of them is AMAT, the largest producer of chip equipment company. Shares of AMAT broke its long-term rising trendline of support last week but bounced from horizontal support at 20.75. Now the stock is trying to reclaim the $22.00 level, currently up 1.01%.

  Ray Cummins   2/2/2004,  11:42:53 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity

Another bearish issue in early trading is Intuit (NASDAQ:INTU) but unfortunately, the downward trend is not in our favor (except for an improved entry price). Intuit announced today that it will release its financial results for the second quarter of fiscal 2004 on Wednesday, February 18, following the close of market, however that shouldn't be cause for the stock to drop $1.03 to $49.34. For those of you who believe the bullish trend will resume, a call-debit spread (FEB-$45C/$47.5C) in the issue is available for $2.10, offering a gain of $0.40 (19%) if INTU remains above $47.50 until the February options expire.

  James Brown   2/2/2004,  11:40:57 AM
Temple Inland Inc (TIN) reported earnings this morning that were 20 cents better than expected. Revenues also crept past analysts' estimates. The initial reaction in the stock was very positive shooting from under $59.00 to over $63.00 (right at resistance) but the rally has failed and shares are back to the $60.00 mark and falling.

  Jane Fox   2/2/2004,  11:38:09 AM
Tough day for daytrading Jeff.

  Linda Piazza   2/2/2004,  11:36:58 AM
The OEX completed an inverse H&S on the one-minute chart, with the upside target at about 561.30, a level that showed up as S/R earlier this morning. The OEX is charging toward that level as I type.

  Jeff Bailey   2/2/2004,  11:34:18 AM
Day trade stop alert QQQ $37.07

And that will be it for me today. Three strikes so early in the day and I'm out.

  James Brown   2/2/2004,  11:29:20 AM
The selling is heaviest in these sectors:

XAL airlines index: -1.80%
XAU gold & silver: -0.92%
INX Internet index: -1.03%
SOX semiconductors: -0l91%
XBD broker-dealers: -0.83%
HMO healthcare index: -0.80%
TRAN Dow Transports: -0.77%

  Linda Piazza   2/2/2004,  11:27:35 AM
This morning's drop on the OEX has brought it back below the 60-minute 130-pma. Supposedly a test of the 100-pma and then a roll down through the 130-pma would be a sell signal, but didn't we have the opposite of this action happening earlier this morning? The difference with the buy signal given on the basis of these two averages this morning was that the signal was given pre-economic number's release and I warned then that it might be dangerous to consider that signal valid ahead of that economic number. However, this sell signal is produced as the OEX trades back into the consolidation range from last week, and it doesn't constitute a breakdown yet, so I have my concerns about trusting it, too. All action since that economic release supports a bearish day, however, and I'm trying without complete success to erase nagging and so-far-unsupported worries of a bounce on the way. For example, I note that the advdec line has been rising over the last 30 minutes, but just rising in a flag-ish type rise and still down 889 issues.

  James Brown   2/2/2004,  11:26:21 AM
Only a handful of sectors are green this morning and of this group a couple are just barely holding on to any gains.

BTK biotech index: +0.99%
IUX insurance index: +0.44%
OSX oil services index: +0.37%
DRG drug index: +0.26%
DFI defense index: +0.07%

  Ray Cummins   2/2/2004,  11:21:49 AM
Spreads/Combos & Premium-Selling -- Portfolio Activity

As the broader market drifts into the red, a number of bearish positions in the portfolio are enduring additional selling pressure. One of our new candidates in this group is Avid Technology (NASDAQ:AVID) and today the issue has dropped $3.56 to $43.48 after a downgrade by First Albany. Of course, the move didn't improve the entry trade in the bear-put debit spread (FEB-$55P/$50P), but it appears there was at least some opportunity to initiate the position at a slightly higher opening debit.

  Jeff Bailey   2/2/2004,  11:15:51 AM
11:00 Internals at this Link

  Linda Piazza   2/2/2004,  11:03:50 AM
The OEX broke below a short-term ascending trendline, formed a bear flag up to test that broken support, and then broke down out of that bear flag. So far, this is all bearish action, with the prices acting just as they would on a bearish day. The OEX is now rising off this morning's low, with Keltner channels showing resistance gathering now near 560.63, an area that was presumed to be support earlier this morning. If the day follows through, we should see a series of measured distribution patterns followed by a fall out of those patterns, and eventually, I'll stop being worried about that bounce that's worried me all day. The OEX needs to break below Thursday's low, however, before bears can really relax.

  Jeff Bailey   2/2/2004,  10:55:08 AM
Day trade short ... QQQ $36.90 here, stop $37.07, target $36.72.

  Linda Piazza   2/2/2004,  10:51:16 AM
I can't find anything that supports a bullish thesis today, unless you consider the extreme drop seen in the TRAN and the need to consolidate some of those losses in a measured distribution pattern or the SOX's approach to the 72-ema that I've been watching on the daily chart (at 505.07), so I don't know why I remain suspicious of a bounce, but I do. I think it's just the weight of the last few months' market behavior.

  Jonathan Levinson   2/2/2004,  10:50:31 AM
The put to call ratio dropped to .64, still neutral, VXO 16.97- no guidance there. Gold and silver are still holding their losses, while treasuries are back to unchanged, up .04% after having been down .3%, so it looks like the USD is still strong. This correlates well with the weakness in equities so far.

  Jonathan Levinson   2/2/2004,  10:44:29 AM

  Linda Piazza   2/2/2004,  10:41:29 AM
While I might be having some difficulty building a scenario that might predict today's action, price patterns look bearish intraday as well as on the daily chart. On the OEX, the climb off the low looks now like a bear flag climb into resistance, with the expectation being that the OEX will break to the downside before retracing more than 1/2 of the steep fall from this morning's high, so before retracing higher than 561.07 or so. That's also at about the point that it would run into the former support on the five-minute chart, support that began building about 2:20 on Friday afternoon. My difficulty might lie in believing what I'm seeing after many months of not being able to trust bearish developments, but nevertheless, I'm still just not quite sure that bulls have given up.

  Linda Piazza   2/2/2004,  10:30:12 AM
This is a hard day to figure out, with $TRIN and VIX now dropping fast, but the advdec line not exactly climbing fast off this morning's low. Blink, and things look different than they did a few minutes earlier.

  Linda Piazza   2/2/2004,  10:21:46 AM
The TRAN has continued Friday's drop, dropping below the 2880 support level, with next support from the weekly chart showing up near 2840. It's at 2866.20 as I type.

  Jonathan Levinson   2/2/2004,  10:19:11 AM
The opening p/c ratio was neutral at .66, VXO currently flat at 17.01.

  Linda Piazza   2/2/2004,  10:17:47 AM
This morning's action shows the wisdom of waiting until after an important economic release before committing money to short-term trades. Sometimes that means missing a trade that turns out to be a good one, but more often it means missing being whipsawed out of a trade. With all this whipping around, however, I note that except for a brief violation of the bearish #2 on Jeff's 5MRT system, the OEX has stayed within the neutral zone all day, although it's approaching another test of that bearish #2 as I type. I still don't have a firm grip today on where the market might go, thinking that the OEX is eventually going to violate the bottom support of a measured distribution pattern on its daily chart, but just not sure whether a days' long bounce or continued consolidation might occur first.

  Jonathan Levinson   2/2/2004,  10:14:58 AM

  Linda Piazza   2/2/2004,  10:11:16 AM
The pullback on the OEX took it below the 560.50-560.80 support level that was showing up pre-10:00, but it's possible that it just overshot that support a bit. Below this next Keltner support isn't seen until 558.87, but we know about historical support near 559.50. I didn't have a firm idea of where the market was going to go pre-market, and apparently, the market didn't, either. As Jeff said earlier, it's getting whipped all around.

  Jeff Bailey   2/2/2004,  10:08:21 AM
10:00 Internals at this Link

Friday's Internals at this Link

  Jonathan Levinson   2/2/2004,  10:03:08 AM
*DJ Nov Construction Spending Revised To +0.5% From +1.2%

  Jonathan Levinson   2/2/2004,  10:01:21 AM

  Jonathan Levinson   2/2/2004,  10:00:49 AM

  Jeff Bailey   2/2/2004,  9:58:04 AM
LSI Logic (LSI) $10.36 +0.68% ... after gap higher, pulling back into this morning's gap.

  Jonathan Levinson   2/2/2004,  9:56:51 AM
A 3.25B overnight repo accomplishes a small 250M drain against the 3.5B expiring today.

  Jeff Bailey   2/2/2004,  9:56:25 AM
S&P 500 (SPX.X) ... updated chart with WEEKLY/MONTHLY Pivot Levels.Link

  Linda Piazza   2/2/2004,  9:56:09 AM
Looking at the five-minute nested Keltner channels on the OEX shows the OEX currently challenging strong resistance. I suspect that it might pull back, perhaps down to 561.57 or 560.50-560.80 before making another charge at that resistance, but if it doesn't, on a Keltner basis, there's not much resistance between 562.50 and 564.80. On a historical and moving average basis, however, there's strong resistance between 563.30-563.70, and I suspect a pullback now will allow Keltner lines to realign along that resistance level. They're usually pretty good at pointing out resistance and support levels.

  Jeff Bailey   2/2/2004,  9:49:07 AM
Getting swung around just about every which way right now.

  Jeff Bailey   2/2/2004,  9:48:22 AM
Swing trade bullish stop alert ... Tweeter Home Ent. (TWTR) $10.20 ($-0.22, or 2.11%)

  Linda Piazza   2/2/2004,  9:45:58 AM
The OEX scrambled above its 60-minute 100-pma. After a test of the 130-pma, a move back above the 100-pma is considered a buy signal by some, but the 10:00 economic release and the historical and moving average resistance from 563.30-563.64 are both approaching fast. So far, the bullish case looks stronger short-term than the bearish one, but be cautious, as last week's steep declines and those bearish daily oscillators warn us that bullish plays may now be countertrend plays. Note: As I typed, the OEX began moving down again, dropping back to that 60-minute 100-pma.

  Jonathan Levinson   2/2/2004,  9:40:01 AM
The Fed has a 3.5B weekend repo expiring this morning. We await the 10AM announcement to see whether the Fed will be draining or adding today.

  Linda Piazza   2/2/2004,  9:37:14 AM
During the first five minutes of trading, the OEX spanned a range from 560.77 to 561.66, with the midpoint at 561.22, and with the OEX currently above that midpoint, showing strength in earliest trading. This strength has brought the OEX up to test strong overhead resistance, however, and this should be the place where the OEX charge slows down or stalls as we near the time of the first morning retracement, typically beginning in a few minutes. It's the depth of that retracement and the reaction to the 10:00 numbers that will give us further clues as to what to expect today.

  Linda Piazza   2/2/2004,  9:34:06 AM
The OEX is charging right up to test its 60-minute 21- and 100-pma's at 561.79 and 561.86, respectively. Its 21-dma is also being tested, with that daily average at 561.56.

  Jeff Bailey   2/2/2004,  9:33:24 AM
Swing trade bearish stop alert ... LSI Logic (LSI) $10.50 +2.13% ... Stopping out here on gap above profiled $10.35 stop. ($-0.33, or 3.24%)

  Jeff Bailey   2/2/2004,  9:20:48 AM
09:00 Update posted at this Link

  Linda Piazza   2/2/2004,  9:08:18 AM
Last week, the OEX ended near the bottom of a consolidation zone that formed after the sharp drop earlier in the week. On the daily chart, this looks like a possible "b" distribution form with the bearish oscillator configurations to back up that observation. However, this consolidation zone is forming mostly above the 559.50 S/R zone that figured so prominently in January's early trading, and it's possible that the OEX could bounce, perhaps to retrace some of last week's steep declines. The picture is mixed, with 30- and 60-minute oscillators trying to rise, but doing so in the shallow angle that sometimes precedes a downturn, and with the OEX soon to face both the 30-minute and 60-minute 100-pma's, at 563.67 and 561.87. Pre-market Friday, I had expected a bounce, but tempered that expectation with the knowledge that the GDP number could change that outlook. It did, and I changed my expectations on Friday to a continued testing of the 60-minute 100/130-pma's, which did happen. Today, I'm not certain what to expect. I had expected a test of 1/3 to 50% of the steep decline, up to 565.40, the 50% retracement, but now I'm wondering if that 30-minute 100-pma at 563.67 isn't going to pretty much cap the gains. Most days, I have a pretty good idea of a scenario against which I can test early action, but I don't have a strong feel for what might happen today. I think eventually a lower high will be formed and eventually the current measured distribution pattern will be violated to the downside, but I don't have a firm idea of the order in which those events might occur.

  Jonathan Levinson   2/2/2004,  8:32:36 AM

  Jonathan Levinson   2/2/2004,  8:32:25 AM
Personal income +.2%, personal spending +.4%.

  Jonathan Levinson   2/2/2004,  8:31:28 AM

  Jonathan Levinson   2/2/2004,  7:52:40 AM
We await personal income for Dec, est. .2%, and personal spending for Dec, est. .4% at 8:30AM. At 10AM, construction spending for Dec, est. .7% and ISM for Jan, est. 64.

  Linda Piazza   2/2/2004,  7:16:51 AM
Good morning. The Nikkei opened this week's trading at the flat-line level and began climbing. As has been true of many days lately, the Nikkei had difficulty maintaining the morning's high, and dropped in the early afternoon. What was missing from Monday's trading pattern was the last-minute burst of buying before trading closed for the day. That didn't happen in Monday's trade, with the Nikkei closing down 6.88 points or 0.06%, at 10,776.73. Since Thursday afternoon, the Nikkei has been climbing off Thursday's low, holding to an ascending trendline. Monday's close was right on that trendline.

Automakers led early gains, prompted higher by Honda's statement Friday that cost-cutting measures and higher sales in Asian markets outside Japan would result in higher annual profit. Some speculate that the early rise might also have been fueled by buying being done by a new investment trust. That buying wasn't occurring in high-cost stocks, though, with some of those stocks declining even while the market was making gains in the morning. Many tech and banking stocks also mostly traded lower even while the morning gains in the Nikkei were being made. Mitsubishi Electric was one tech stock that beat that pattern, gaining ahead of its after-the-bell earnings report. After the bell, the company reported soaring demand for factory equipment and soaring net profit gains, too, according to one report. News that Kanebo's cosmetics operations had drawn the interest of rival Kao sent Kanebo sharply higher, with some calling the proposed buyout the biggest ever seen in a nonfinancial sector in Japan. A newspaper reported that Sumitomo Chemical has located a gene involved in Alzheimer's disease and Down's syndrome.

Other Asian markets turned in a mixed performance. This last week, the World Health Organization, the WHO, said it believed that two Vietnamese sisters may have caught avian flu from their brother, with all three dying. The WHO has warned of possible mutations in avian flu, allowing human-to-human transmission, with such a possibility raising the specter of a pandemic. Until now, the deadly avian flu has not been known to spread human-to-human. The Taiwan Weighted fell 0.87%, but South Korea's Kospi gained 0.75%. South Korea's steelmakers gained as did Samsung Electronics, but Korean Air and Hyundai Motor declined. Singapore's Straits Times gained 0.33%. Hong Kong's Hang Seng fell 2.18%, but China's Shanghai Composite climbed 2.08%.

Most European bourses trade higher as of writing. Speculation has begun to arise that the ECB might lower rates later this week although a Bloomberg article comments that the ECB has been signaling that there's no need to lower rates. The G7 meets this week in Boca Raton, Florida, and the dollar's weakness will be discussed. In addition, a Reuter's Index of purchasing managers in Europe showed January's figure at 52.5, up from December's 52.4, showing an expansion in European manufacturing activity as economic growth offset the effect of the euro's strength against the dollar. Although tech stocks mostly fell in Japan, they're mostly higher in early European trading. Citigroup Smith Barney announced that French IT consulting group Cap Gemini Ernst & Young's decline since September had been overdone. The SIA said that global chip sales for 2004 could rise 19%. Some M&A speculation also proved newsworthy. A Sunday newspaper report said that British banks Barclays and Royal Bank of Scotland wanted to buy Germany's HVB Group, a report that HVB Group denied. According to a newspaper report, Aventis named bidders that might save it from Sanofi-Synthelabo's hostile bid, identifying GlaxoSmithKline, Novartis, Johnson & Johnson, and Pfizer, but according to the same report, no talks have taken place with these companies.

As of this writing, the FTSE 100 has gained 7.60 points or 0.17%, to trade at 4398.30. The FTSE trades near its low of the day, currently testing 4400 support-turned-resistance again. The CAC 40 has gained 35.98 points or 0.99%, to trade at 3674.42. The DAX has climbed 23 points or 0.57%, to trade at 4081.60. The DAX has not been able to trade back over 4100 S/R this morning, however.

  OI Technical Staff   1/30/200,  10:24:38 PM
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