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  Jeff Bailey   3/9/2004,  9:44:40 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   3/9/2004,  9:40:43 PM
Bullish swing trade raise stop alert .... Sun Communities (SUI) $41.53 -0.38% .... raising bullish swing trade stop to $40.84 from $40.30.

  Jeff Bailey   3/9/2004,  4:42:08 PM
Closing Internals at this Link

  Jim Brown   3/9/2004,  4:17:14 PM
PG announced a 2:1 Split and raising dividend and beat estimates for the quarter
Stock is halted.

  James Brown   3/9/2004,  4:06:00 PM
The volatility indices all made pretty big moves today yet none of them have created any new higher-highs (a.k.a. they remain in their descending trends).

  Linda Piazza   3/9/2004,  3:58:05 PM
Those still in bearish OEX trades have a decision to make this afternoon. Stay in or exit? The OEX hit the downside target I'd thought was reasonable for today, with me having mentioned that 559.50-560.50 target in my first OEX-related post today and in several subsequent ones. It's still possible that 557.36 will be tested, and even possible that the OEX will confirm that double-top formation, but that bullish falling wedge has been warning that there might be a bounce before any such test occurs, if it does. The OEX might rise to test broken support at its 120-minute 100/130-pma's, with those averages at 563.61 and 565.02, respectively, with those numbers corresponding fairly closely to mid-channel Keltner resistance on the 5- and 15-minute charts. Make the decision that's right for you, but I've been suggesting all afternoon that some might consider taking all or partial profits as the OEX hit that 559.50-560.50 zone, and I still think that was a good idea. Some might prefer then to ride out a test of the 120-minute 130-pma after having taken those partial profits or others might be smugly watching as the OEX climbs now, their total profits in their pockets (or trading accounts). If still in a bearish trade, be careful if the OEX should move above 562, as that's the next resistance level to watch, with 562.68 important Keltner resistance above that.

  James Brown   3/9/2004,  3:55:17 PM
Another one for the brave-hearted...shares of Transocean Inc (RIG), the oil driller, are bouncing from the bottom of its sharply rising channel.

  Jeff Bailey   3/9/2004,  3:51:54 PM
Semiconductor Index (SOX.X) 485.42 +0.03% ... only sector in the green and trying to recapture its WEEKLY S2 of 485.23 by the close.

  James Brown   3/9/2004,  3:51:35 PM
Looks like the NASDAQ might close over 2000 after all!

  Linda Piazza   3/9/2004,  3:49:01 PM
The OEX has definitely broken above the upper trendline of the possible bullish falling wedge on the 15-minute chart. Now it faces another short-term trendline just under 562, near the next 15-minute Keltner resistance at 561.88.

  James Brown   3/9/2004,  3:48:55 PM
One could argue that Allergan Inc (AGN) is overbought given its 9-week run up but shares are bouncing from its intraday low today near $88.00, which was previous resistance.

  James Brown   3/9/2004,  3:44:39 PM
Speaking of one-day reversals the candlestick on St Jude Medical (STJ) is a bearish engulfing candlestick. Yet I would hesitate to short it above $75.00 and given the bullish news from the ICD study yesterday, which suggested the ICD market is about to double.

  James Brown   3/9/2004,  3:40:07 PM
For the truly brave (or reckless) today's candlestick on MXIM's chart looks like a bullish reversal above its 200-dma and round-number support near $45.

  Linda Piazza   3/9/2004,  3:36:08 PM
The OEX tests the top of what could be a bullish falling wedge on its 15-minute chart, but is so far finding resistance at the top line.

  James Brown   3/9/2004,  3:35:43 PM
BWA has been a common candidate on the watch list and we've been looking for a breakdown under $90.00. The last few sessions have seen it oscillate under and over this support level but today's move looks pretty convincing as it trades toward $87.00. There is minor support at $85.00 and more support near $81.50.

  James Brown   3/9/2004,  3:32:26 PM
The market pull back is also affecting Corning Inc (GLW). Shares of GLW are approaching their long-term supporting trendline that dates back to October of 2002. Every time it drops to this support the stock looks pretty sour and you can hear the bears scrambling for position on a possible breakdown. Yet every time it bounces. Will the trendline hold yet again?

  Linda Piazza   3/9/2004,  3:32:05 PM
RIMM moved low enough to confirm a double-top formation on its 60-minute chart, with that confirmation level at 96.08, but RIMM has since then been resisting falling further. That's because the 60-minute chart also shows it sitting just above its 60-minute 100-pma at 95.87, with some 60-minute candles piercing this average, but all the 60-minute candle bodies forming above it. Those hoping to play the double-top formation, with a downside target of about $90.50, would probably then need to wait for a confirming fall through the 60-minute 130-pma, since the 100-pma has proven to be such strong support and since today's move could be a trap. The 130-pma is at $94.73, so some might feel that the risk (back up to the 60-minute 100-pma before you know you're wrong) vs. reward ($90.50) scenario isn't good enough for them. There has been bearish price/oscillator divergence on the daily chart. I mention RIMM because I know some people are interested in this stock after the December jump and the subsequent soaring straight up to $100.00. I haven't checked short interest in this stock, but I suspect it would be quite high, so I think I'd be worried about the potential for it to bounce right back up as shorts decided they'd been unsuccessful in confirming that double-top formation after all. Note that there was a H&S formation on the daily chart in mid-January to early February, with the failure to push prices below the neckline and sustain them there sending the stock sharply higher. Dangerous stuff here, and I don't know that I'd be trading it either way.

  James Brown   3/9/2004,  3:29:04 PM
If you're playing the channel in shares of Best Buy Co (BBY) or you've been looking to play the channel shares have pulled back to the bottom of its channel near $50.00 and its simple 200-dma.

Or... if you think the market weakness is going to push BBY lower, look for a breakdown under the 200-dma and target the $45 region.

  James Brown   3/9/2004,  3:25:18 PM
Like UTX, shares of CAT are weakening but the stock has not yet broken support near $75.00. Should that occur look for a test of support near its 200-dma currently at $71.

  Jeff Bailey   3/9/2004,  3:24:57 PM
Commonwealth Biotech (CBTE) $8.84 +119% Link surges to new session high. Reported it has executed two major bio-defense related contracts valued at nearly $1 million.

Point and figure notes: Stock nearing its bullish vertical count of $9.50.

  James Brown   3/9/2004,  3:20:46 PM
General Motors (GM) is breaking support at $47.00 and appears headed toward support at $45.00. All the technicals are bearish. Its 200-dma is secondary support near $43.00.

  Linda Piazza   3/9/2004,  3:19:24 PM
If that's a bullish falling wedge on the OEX 15-minute chart, there's been no upside breakout as yet, but the 15-minute oscillators are just beginning to turn up, with both the 5(3)3 and 21(3)3 stochastics lines having made bullish crosses. The 21(3)3's haven't yet been tugged up out of territory indicating oversold conditions, however, and the MACD bullish cross was made from below signal. These bullish signals are coming on a day when the OEX has been trending down and so are countertrend, and therefore untrustworthy. I wouldn't use them to enter a bullish trade, but would use them to warn me of possible upside if in a bearish one. For those in bearish trades today, it's been a slow and agonizing creep down from the 560.50 level to the 559.50 level, however, despite the trend. That trend has been a slow creep after the first big move.

  James Brown   3/9/2004,  3:16:23 PM
Dow component UTX is looking pretty weak here ($88.88) after yesterday's failed rally at the simple 10-dma. Investors have already forgotten yesterday's positive broker comments. The 200-dma may be a decent target near $83.00.

  Linda Piazza   3/9/2004,  3:13:37 PM
Today the DAX managed to bounce from just above its 50-dma at 4066.28, with the DAX low of the day at 4077.03, but the bounce wasn't convincing. The DAX closed beneath 4100, at 4087.55. Here's the daily chart, showing the importance of the 50-dma and then of the 3960-4000 level: Link With Germany being the world's third largest economy, it's important to watch what's happening there, too.

  Jeff Bailey   3/9/2004,  3:12:00 PM
Bearish day trade stop alert ... General Electric (GE) at $31.52 -0.96%

  Jeff Bailey   3/9/2004,  3:11:08 PM
03:00 Internals at this Link

  James Brown   3/9/2004,  3:09:30 PM
The DDX disk drive index is also testing support at its 200-dma.

  James Brown   3/9/2004,  3:07:52 PM
Heads up on the XAL airline index... it's breaking support at 58 and its simple 200-dma.

  Linda Piazza   3/9/2004,  2:58:46 PM
The VIX is near the high of the day, at 16.54 as I type. The VIX is now only a short distance away from the daily 100-ema at 16.93, but not yet at the 130-ema at 17.65, with that average more closely approximating the break-out zone for the VIX. (See my 12:34 post for a chart.)

  Jeff Bailey   3/9/2004,  2:58:04 PM
Sell Prog. Prem.

  Linda Piazza   3/9/2004,  2:54:45 PM
Careful, OEX bears. That 15-minute OEX chart is looking more and more bullish falling wedge-ish to me. Again, we've seen several potentially bullish formations that never confirmed, so that's not definitive evidence that the OEX is going to pop higher, but be forewarned, especially as it's approaching the bottom of the 559.50-560.50 zone that I thought would make a good short-term target this morning. It may be time for it to bounce up to test the 120-minute 130-pma and central Keltner channel resistance, with that resistance currently at 563.25 but falling. "May" should be the operative word here, though. It could continue a cascading fall down toward 557.36 instead.

  Linda Piazza   3/9/2004,  2:50:18 PM
Currently at 356.60, the BIX has fallen beneath the slightly rising trendline formed off recent highs after breaking above that trendline on Friday. RSI has rolled down out of territory indicating overbought conditions and 21(3)3 stochastics have made a bearish kiss without yet rolling completely down out of that territory. MACD is on the verge of a bearish cross, but from above signal, giving the oscillators a somewhat mixed outlook. RSI and MACD both show bearish price/oscillator divergence, however. The BIX currently rests on a former ascending trendline off some lows in late January and early February, threatening to fall below that, too, although not yet doing so. The 50-dma has been important in the BIX's behavior over recent months, and that average lies at 348.80, with the 10-, 21-, and 30-dma's all lying between the current BIX position and that 50-dma. It looks as if it's time for the BIX to come down and test that 50-dma, but we don't have definitive evidence as yet that it's likely to do that. This week's action looks bearish so far, but whether that's short-term bearish or intermediate-term bearish, it's difficult to say so far.

  Jeff Bailey   3/9/2004,  2:47:28 PM
Sell Program Premium

  Jane Fox   3/9/2004,  2:46:28 PM
Interesting article in the WSJ To figure out whether stocks are about to fall or to keep rising, Brian Pears, a stock trader in Cleveland, watches several variables -- including one he calls the Garage Indicator. It looks at how much financial television local mechanics are watching. Too much, and stocks are ripe for a fall.

Brian Belski, a market analyst in Minneapolis, tracks earnings, interest rates and the amount of speculative froth he senses when other hockey dads sidle over to ask stock questions during his son's games. Peter Bernstein, a financial historian and investment consultant, focuses on the dollar, inflation and the risk of a terrorist attack.

With stocks in the midst of a bullish run, a number of seasoned investors have started to study their favorite tea leaves, searching for hints of a possible retreat. After bottoming out 17 months ago, stocks recently have soared to their highest levels in two years or more. The Dow Jones Industrial Average has risen 45% since October 2002, while the Nasdaq Composite Index is up 80%. A good number of stocks have hit record highs.

  Linda Piazza   3/9/2004,  2:41:07 PM
The OEX 15-minute chart has begun to take on a little of the look of a bullish falling wedge (support and resistance lines both heading down). It's possible to draw this as a simple descending regression channel, however, which would have a different implication, so I'm keeping at watch on it but not necessarily expecting an upside break. We've seen several potentially bullish formations that failed to confirm today, the reverse of what we've grown accustomed to seeing when it was the bearish formations that failed to confirm.

  Jeff Bailey   3/9/2004,  2:38:54 PM
Correction to earlier SOX.X post that I made. Intra-day resistance of 486.34 came from the retracement neckline of our head/shoulder top, not the MONTHLY Pivot.

  Jeff Bailey   3/9/2004,  2:32:41 PM
02:00 Internals at this Link

  Jeff Bailey   3/9/2004,  2:24:26 PM
That last sell program premium sent the SPX 1,138.42 to its session low of 1,137.99, which has its WEEKLY S2 of 1,135.17 in play by the close.

  Linda Piazza   3/9/2004,  2:22:57 PM
The TRAN has dropped below the 2/24 low of 2836.48, although only minimally below it so far.

  Linda Piazza   3/9/2004,  2:20:53 PM
In reference to Keene's 14:16 post on the Futures side of the Monitor: Isn't it nice to see some patterns and formations working again the way they're supposed to work, whether bullish or bearish patterns? Those of us trading options (or futures) shouldn't care that much whether markets go up or down, as long as we have a way of increasing our odds of being on the right side of the trade. Over the last year, studying formations and patterns hasn't been the way to be on the right side of a trade. Now that I've discovered over the last week the unlikely importance of a little-watched average (72-ema, perhaps, or perhaps the 78-ema) in the trading pattern of some stocks and indices, it's about time for markets to revert back to their usual trading patterns and that MA to lose its relevance again, right? We'll see when the OEX hits those averages.

  Jeff Bailey   3/9/2004,  2:18:32 PM
Sell Prog. Premium

  Jeff Bailey   3/9/2004,  2:15:17 PM
General Electric (GE) $31.43 -1.25% ... session low continues to be that $31.31 level and RED #4.

S&P 100 Index (OEX.X) 560.98 is just below its MONTHLY 61.8% retracement of 561.32, where session low of 559.83 came just above WEEKLY S2 of 559.38.

  Linda Piazza   3/9/2004,  2:14:47 PM
The TRAN came less than 3 points away from its mid-February low today, but has not yet violated that low. Daily oscillators still look as if that's a possibility, however, but then it will face the 2815.66 low from early February. A new sell signal will be given on a print at 2800, but the oscillators have moved pretty far down toward levels indicating oversold conditions already without being quite there yet. Unless those oscillators are going to start trending in oversold levels, with price trending downward, too, the TRAN may be nearing the bottom of its decline. That's always a possibility, but it's just difficult to determine if it's a probability at this point. The break of the neutral triangle has a downside target somewhere near its 200-dma, at 2737.19, so a new sell signal does remain a possibility.

  Linda Piazza   3/9/2004,  2:08:53 PM
The OEX is trying to hold the fort at 560, a nice round number. It's bunching up five-minute candles just above that level, and just above the weekly S2, the historical 559.50 support level, and various other possible forms of support that come into play here. Five-minute oscillators are trying to turn up and overhead Keltner resistance lines are beginning to separate. Let's see what happens, but until now the OEX has been held back by the very Keltner resistance lines that it's now facing, so a move much over the current (561.37) level and a five-minute close above 561.10 or so could mean that the OEX is attempting a breakout. It's still got a short-term descending trendline at 562, however.

  Jim Brown   3/9/2004,  2:04:51 PM
DNA -3.41 for the day and back to $108.59

  Linda Piazza   3/9/2004,  1:46:21 PM
Reader Questions: I was wondering if you can provide me with the formulas for using "retracements." I do not know and have not had the opportunity to find how to calculate them. Although they are widely used, I do not know how to calculate or infer when someone talks about a 68% retracement from a low or specific point on a chart.

Also I know you do not follow but could you provide some details or your thought on TASR. You have commented before and maybe you could tell me a few of your ideas if I am currently long.

Also if you can suggest any good books that are simple and to the point about technical trading would be great. I am looking for short term trades and the things to look for when setting up a chart and trading program.

Response: I'm glad to see some of our newer subscribers asking questions that other new traders might have, but be reluctant to voice. That's a great way to learn.

Last question first: Leigh Stevens, who writes for OIN, has written a great book on technical analysis. It's available in our bookstore. In fact, Leigh has written an article discussing retracement levels, so you can check out information on retracements and get to know Leigh's style while reading this article: Link Leigh's article discusses how the often-watched Fib levels are derived from calculations made by Italian mathematician Leonardo Fibonacci and also tells you how to make those calculations for yourself. Many charting services will do it for you, if you anchor the start of the Fib retracement tool at a swing high/low and the end of the tool at the swing low/high.

One of my favorite first texts on technical analysis is Using Technical Analysis by Clifford Pistolese. This is a user-friendly book that explains the basics of TA, including trendlines and formations. The Technical Analysis Course by Thomas A. Meyers is another favorite for those new to technical analysis. Each of these books allows you to test your knowledge.

What about TASR? We're prohibited by the SEC from giving specific advice to traders on their investments. However, I can discuss the chart characteristics and let you make decisions for yourself. Here's an updated TASR chart I've posted periodically over the last weeks, with trendlines and possible retracement levels marked on the chart: Link The retracement bracket is one that I fit onto TASR's chart rather than anchoring it to a high and a low. Anchoring it to known lows, I was looking for S/R levels that seemed to fit a retracement level so that I could project a possible upside target and watch action as TASR was hitting new highs. This retracement bracket might or might not have any validity, then. For example, looking at it after Friday's trade, I could see that perhaps the brackets should have been placed so that the 50% level was just under (rather than over) that consolidation pattern in mid-January and the 61.8% level was just under, rather than over the mid-February swing low. It's all guesswork when you fit a bracket onto a chart, so I'm using it as a guide only. I suspect that TASR will make an equal or lower low on this daily chart, but as yet that's only a suspicion.

  Jeff Bailey   3/9/2004,  1:16:06 PM
S&P 100 Index (OEX.X) 560.19 -0.61% ... approaching its WEEKLY 80.9% retracement of 559.57.

Let's tie that in with GE $31.31 bad tick for now.

  Linda Piazza   3/9/2004,  1:14:21 PM
Weekly S2 for the OEX is at 559.43, near the 559.50 level that was proved more important in the climbing period than the 561.23 level that represented the 38.2% retracement of the bear-market decline. The 120-minute 1.35% envelope also points out the 559 level as the lower envelope support, although that's declining. The 15-minute Keltner charts show 559.70 as lower support.

This accumulation of likely support near 559-559.70 points out increasing vulnerability to a bounce but not the probability of one. As I've mentioned all day, those aggressive traders who elected to enter a bearish OEX trade on a break of 563 might consider taking at least partial profits through this zone. The possibility remains of a drop to the 557.36 confirmation level of the double-top formation on the daily chart, but I'm not sure the OEX will make that, but some might elect to keep partial positions, following the OEX down with their stops.

  Jeff Bailey   3/9/2004,  1:13:15 PM
Bearish day trade lower stop alert .... General Electric (GE) $31.36 -1.47% .... lower bearish stop to $31.52. Session low of $31.32 came a penny above that bad tick from this morning at $31.31. Not sure if that was a program set up earlier or not, but if that's the session low, then want to move down stop.

  Jeff Bailey   3/9/2004,  1:10:46 PM
01:00 Internals at this Link

  Linda Piazza   3/9/2004,  1:04:49 PM
The OEX did not confirm the potential double-bottom formation on the five-minute chart, so we now have a second potential bullish formation that did not confirm. There's still the possibility of a rectangular consolidation or reversal pattern building, however. TRIN continues to rise. At what point has it risen so high that we can consider it a contrarian sign? We'll have to turn to Jane, Jim, or Jonathan for an answer to that, as they're more experienced watching the TRIN than I am. (Hey, Keene, I just noticed that you and are the only non-J-name regular contributors here, adding Jeff and James to the ones I just mentioned.)

  Jeff Bailey   3/9/2004,  12:56:51 PM
Winn Dixie Stores (WIN) $7.35 +10.69% Link ... Today's trade at $7.50 gets WIN's point and figure chart back in a column of X after achieving its bearish vertical count of $6.00. First sign of strength would be a trade at $10.50. Stock higher after Merrill upgraded to "neutral." Might also be seeing some short-squeeze with 31% of the float short.

Bulls long the LEAPS January 05 $7.50 calls (zghau) and/or January 06 $7.50 calls (yhhau) from 02/05/04 Link starting to lick their lips and warming up for "whistling Dixie"

Mr. Dasberg showing some paper profits that's for sure.

  Linda Piazza   3/9/2004,  12:42:40 PM
The OEX is now dealing with the descending trendline off the morning's highs, turning down again after touching it. I'm not sure it's yet through testing that trendline, however, as the oscillators have not yet turned down. There's been no move through the double-bottom confirmation level, and mid-channel Keltner resistance has now dropped to 564.77. At this rate, it will descend to the 120-minute 130-pma and align itself with that average rather than with the higher-up 100-pma.

  Jeff Bailey   3/9/2004,  12:39:56 PM
Petro Canada (PCZ) $46.05 +0.21% .... similar trade to yesterday, with fractional trade above our reverse head shoulder neckline of $46.00.

  Linda Piazza   3/9/2004,  12:34:20 PM
Here's what I'm noticing on the VIX daily chart: Link

  Jeff Bailey   3/9/2004,  12:33:50 PM
NYSE Composite (NYA.X) 6,715.99 -0.37% Link ... session low of 6,708.93 came right near its rising 21-day SMA of 6,709.

  Jeff Bailey   3/9/2004,  12:31:02 PM
12:00 Internals at this Link

  Jeff Bailey   3/9/2004,  12:28:57 PM
Bearish day trade lower stop alert .... General Electric (GE) $31.45 -1.19% .... lowering bearish stop to $31.62.

  James Brown   3/9/2004,  12:25:40 PM
I put INFY on the watch list this Sunday because it looked like a bearish play on a breakdown under $81 or $80. So far so good. The stock broke support at $80.00 on Monday with strong volume and we're seeing another 3.36% decline today as INFY trades toward the $75 level. My suggested target at the 200-dma is now approaching the $72.00 level.

  Linda Piazza   3/9/2004,  12:24:17 PM
While off its high of the day, the VIX is nevertheless continuing the climb off the sub-14 low hit last week and again on Monday. It's at 16.10, but it will take a move above 17.58 to break it out of its months-long descending regression channel and above the descending trendline formed off the lower highs formed since November.

  Jeff Bailey   3/9/2004,  12:19:52 PM
Semiconductor Index (SOX.X) 485.37 +0.02% .... psychological positive for technology to see green in the SOX.X, but so far today, our head/shoulder top retracement neckline of 486.34 has held as resistance.

  Jane Fox   3/9/2004,  12:18:43 PM
Dateline CNN Judge sentences Washington-area sniper John Allen Muhammad to death.

  Linda Piazza   3/9/2004,  12:12:40 PM
Double bottom on the OEX five-minute chart? It's a possibility. Although the OEX hit a lower low, the five-minute candle bodies formed at an equal low. Confirmation would require a move above the peak between the two troughs, so a move above 562.82, and would again have an upside target near mid-Keltner channel resistance, now descended to 565.10 but still headed lower. Let's watch this potential formation now as a measure of strength or weakness. Failure to confirm it would instead confirm weakness.

  Linda Piazza   3/9/2004,  12:05:43 PM
The inverse H&S on the OEX five-minute chart obviously did not confirm and has now been negated. This confirms the weakness on the OEX. Earlier today, I'd suggested that those who did not elect to take full or partial profit on bearish OEX trades as the OEX approached 560.50 might look to exit on a move above the last five-minute high at 563.02 or above the 120-minute 130-pma. Neither of those happened, although the OEX certainly came close. Now the OEX has hit that 559.50-560.50 zone that it just missed earlier, and I'd still be following those stops down closely, still considering taking partial profits if not opting to take full profits. It's possible that the OEX can continue down toward 557, as I mentioned earlier. The TRIN tells one story and the high put/call ratio that Jonathan mentioned may be telling another, so be careful and make the decisions that are right for your trading style.

  Jeff Bailey   3/9/2004,  12:02:43 PM
Sell Program Premium

  Jeff Bailey   3/9/2004,  12:02:30 PM
General Electric (GE) $31.53 -0.97% ... bid at $31.55 is gone.

  Linda Piazza   3/9/2004,  11:59:50 AM
If this formation on the OEX five-minute chart is a valid inverse H&S, then it's time for it to move up again toward the neckline. A move much below 561.60 would negate the formation. I've been watching this formation as a measure of weakness or strength, not as a trading tool.

  Jim Brown   3/9/2004,  11:59:43 AM
I think the real motive on the removal of the supersize fries is not health conscious consumers but a chance to raise profits while appearing to be health conscious. Those who order supersize fries now will be forced to order two of the smaller orders (higher margin) to get the same quantity. McDonalds appears to be more health conscious and raises overall margins in the process. A win-win scenario for McD's

  Linda Piazza   3/9/2004,  11:57:55 AM
Here's something I'm watching on the SOX daily chart: Link

  Jeff Bailey   3/9/2004,  11:57:03 AM
General Electric (GE) $31.55 -0.87% ... has been this rather LARGE bid (500,000 shares) since 10:45 AM EST. I'm not certain, but may be related to today's news that yesterday's stock offering will now have S&P rebalance at quarter's end upping the weighting of GE in both the SPX and OEX.

Current trade is right at RED #1 of $31.58. I see a bad tick to $31.31, which would be today's 5-MRT RED #4 of $31.31.

  Linda Piazza   3/9/2004,  11:42:19 AM
The OEX has come close to confirming that inverse H&S on its five-minute chart, although it hasn't quite done so. I'd look at move over the last 563.02 five-minute high as a confirmation. Much energy has been expended on that five-minute chart while the neckline has been tested, however, with the OEX looking tired on a five-minute basis. Perhaps a second right shoulder will be formed? Or the formation will be rejected? It's too early to know, but those thinking of switching sides and going long should be aware of the 120-minute 100/130-pma's at 565.22 and 563.71, with that 130-pma not having been breached (until late yesterday) since November. (And I think Jane would warn you about the high TRIN level, too.) It's possible that one of those MA's could serve as strong resistance now, especially since central Keltner channel resistance has descended to 565.48, about the level of the upside target on any confirmation of the inverse H&S.

  James Brown   3/9/2004,  11:37:59 AM
Frequent McDonald's customers may be upset that the company is removing its "super sized" fries from its domestic stores in an effort to be more health conscious. However, be careful picking up that salad if you're trying to lose weight. A Reuters article recently reported that a McDonald's ceasar salad with chicken has 18.4 grams of fat compared to just 11.5 grams of fat in a regular cheeseburger.

  James Brown   3/9/2004,  11:32:34 AM
Goods news from OI call play CFC today. The mortgage lender announced that its February funding volume surpassed January's by 13% to hit $23 billion. The daily applications were up 11% and CFC reports a strong pipeline of $44 billion in "near-term" funding.

The stock has almost filled the gap from last Friday and traders can use a dip to $93.00-93.50 as an entry point.

  Linda Piazza   3/9/2004,  11:21:59 AM
The TRIN is rising again, so perhaps, bullish divergence or not, that potential inverse H&S on the OEX five-minute chart will not confirm, showing us weakness instead of strength. That's why we watch these five-minute patterns on the OEX. While they can be helpful to time entries and exits, we really need bigger moves than those predicted on a five-minute chart to profit.

  James Brown   3/9/2004,  11:21:45 AM
Technical traders may want to keep one eye on Phelps Dodge (PD). The mining stock is falling on the drop in copper but shares are approaching technical and psychological support at $80.00 and its rising simple 50-dma.

The last time shares of PD pulled back to $80.00 it was a great entry point and the stock hasn't closed under its 50-dma since last May. However, I would be patient here and wait for a bounce. Both copper and PD have been severely overbought. PD may be nearing its 50-dma but copper futures still have a good chunk to fall before it nears support at its own 50-dma.

Obviously bears can look for the breakdown under $80 and its 50-dma. Should this occur I'd target the January-February lows near $72.

  Linda Piazza   3/9/2004,  11:19:26 AM
Here's the potential inverse H&S on the OEX with bullish divergence as the head was formed, as depicted on the price/MACD divergence: Link Remember that this is a potential formation only, not yet confirmed. In fact, the right shoulder hasn't even formed and hadn't begun forming when I first mentioned the possibility, so this is early yet. Don't go betting all your loot on the thought that this will definitively confirm. A drop below the shoulder level would negate this possibility.

  James Brown   3/9/2004,  11:15:34 AM
Sector update @ 11.20 AM ET

UTY utility index: +0.09%
INX Internet index: +0.04%

(Biggest) Losers:
NWX networking index: -1.98%
XBD broker-dealers: -1.30%
OSX oil services: -1.16%
XAL airlines index: -1.55%

and... Copper futures are down 1.85%

  Linda Piazza   3/9/2004,  11:14:47 AM
Inverse H&S warning: The OEX is setting up the potential for an inverse H&S on the five-minute chart with the shoulder level at about 561.60, the head level at 560.60 and the neckline at about 562.80 (if a descending neckline is the right neckline to draw). If this formation is valid, look for a possible drop back toward 561.60 before a push back through the neckline. There was bullish divergence as the head was formed. The upside target would be just over 565, just under the central Keltner resistance.

  Jeff Bailey   3/9/2004,  11:14:00 AM
11:00 Internals at this Link

  Linda Piazza   3/9/2004,  11:11:26 AM
OEX central Keltner resistance has now descended to 565.79. Earlier this morning, I speculated that this resistance might descend low enough to align itself with the 120-minute 100-pma before the OEX rose to test that central resistance, so that a test of one would constitute a test of both. That's what's happening, as the 120-minute 100-pma is now at 565.27, so they're drawing closer. I'm still not sure whether the OEX is quite ready to bounce up to that level just yet, however.

  James Brown   3/9/2004,  11:09:39 AM
February same-store sales for drug stores

CVS' s-s sales +5.4%
- total sales +7.3%

RAD's s-s sales +4.5%
- total sales +4.2%

LDG's s-s sales +2.1%
- total sales +4.5%

  Linda Piazza   3/9/2004,  11:06:01 AM
The OEX is easing above Keltner resistance now, with that resistance moving up to 562.63, near the 50-dma at 562.62. This is a critical point for the OEX, and those bearish players who did not elect to take partial or full credit at 560.50 was approached (but not quite hit) should be watchful.

  James Brown   3/9/2004,  11:04:42 AM
Wachovia upgraded several sporting goods related stocks today. Receiving an "out perform" this morning is: Sports Authority (TSA), Hibbett Sporting Goods (HIBB), Dick's Sporting Goods (DKS), Big 5 Sporting Goods (BGFV). While Galyan's (GLYN) was starting with an "under perform".

I'd keep an eye on DKS. The stock might be a tempting bullish play on a bounce from its 50-dma as it nears support near $55.00.

  James Brown   3/9/2004,  11:00:14 AM
Goodyear Tire (GT) is struggling today as the company reports that several of its senior management in its European division are leaving as the corporation continues with its accounting probe into its overseas division. GT said that the current investigation will force them to cut $16 million from earnings over the last 5 years. The stock is down 2.31% to $8.01, following a failed rally at its 50-dma last week.

  Jeff Bailey   3/9/2004,  10:51:23 AM
Day trade short alert .... General Electric (GE) $31.56 here, stop $31.75, target $31.10.

  Jeff Bailey   3/9/2004,  10:49:39 AM
Russell 2000 ($RUT.X) 588.59 -0.66% .... testing its rounding higher 21-day SMA here.

  Linda Piazza   3/9/2004,  10:45:55 AM
The OEX came within $0.19 of that 559.50-560.50 original target on a break of 563. Those traders in bearish plays who don't elect to take partial or full profits might now set a stop just above the last five-minute high, at 563.02. With the 120-minute 130-pma at 563.70, some might elect to tie exits to that benchmark average, although I wouldn't switch to a long position ahead of a test of the 120-minute 100-pma. It's just too risky at this point for my tastes even though there's a possibility of a bounce up to that 120-minute 100-pma to retest it.

  Linda Piazza   3/9/2004,  10:41:15 AM
This morning, I mentioned that aggressive players might enter a bearish trade on an OEX break of 563 with a limited downside target of 559.50-560.50. That's obviously looking more likely now. Daily S2 is at 559.28, with known historical support near 559.50, so some might elect to take partial profits or full profit as the target is approached. Since there's a possibility but maybe not a probability of a drop toward 557.50, some traders might elect to exit part of their positions at the original target and follow the OEX down closely with stops if it continues to drop below 559.50-560.50.

  Linda Piazza   3/9/2004,  10:37:15 AM
Central Keltner channel resistance has now descended to 566.38 and is still dropping, although it will steady if the OEX bounces. Here's what I'm thinking, though: that central Keltner channel resistance may descend quickly enough that it aligns itself with the 120-minute 100-pma, now at 565.25, so that a test of one will constitute a test of the other. I'm not sure whether we should expect that test to come now or after a further drop, however. That limited downside target I mentioned this morning upon a break of 563 might still be possible, with first Keltner channel resistance now descending to 562.09 and 562.92, near the 50-dma, but as I mentioned this morning, there's always vulnerability to a bounce.

  Jeff Bailey   3/9/2004,  10:36:36 AM
Sell Program Prem

  Jeff Bailey   3/9/2004,  10:35:01 AM
Swing Trader Bearish Target Alert ... Semiconductor HOLDRs (AMEX:SMH) ... bearish target achieved at $39.25.

  Jeff Bailey   3/9/2004,  10:30:40 AM
Semiconductor Index (SOX.X) 483.05 -0.45% ... session low of 482.32 comes right at MONTHLY 80.9% retracement of 482.31 (session low has been 482.32)

  Linda Piazza   3/9/2004,  10:29:56 AM
The OEX is sitting just below its 50-dma at 562.61, and that, coupled with the various strong levels of resistance converging between 563-563.75 are now going to provide tough resistance. So far, the daily S1 has combined forces with the 38.2% retracement of the bear-market decline at 561.23 to provide support, too. Dow 10,500 and COMPX 2000 are probably more significant to watch than the OEX daily S1, however.

  Jeff Bailey   3/9/2004,  10:28:52 AM
NASDAQ Composite (COMPX) 2,003.40 -0.28% ... session low so far has been 2,000.14. First sign of any strength in my opinion would be back above 2,022.14.

  Jeff Bailey   3/9/2004,  10:21:04 AM
Sector action broadly lower with only the AMEX Gold Bugs ($HUI.X) 230.81 +0.79% showing a gain.

Weakness has Networking (NWX.X) 279.47 -1.87%, Airline (XAL.X) 58.35 -1.55%, Transport (TRAN) 2,851.48 -1.43%, Broker/Dealer (XBD.X) 721.46 -1.02% leading declines.

  Linda Piazza   3/9/2004,  10:19:28 AM
The bear flag on the OEX five-minute chart did break to the downside. Watch that 561.23 level, although it didn't appear to have much relevance on the way up.

  Jeff Bailey   3/9/2004,  10:12:48 AM
Digital Lightwave (DIGL) $3.27 +59.8% Link ... percentage gainer and off morning high of $3.95 after company announced that Telecom Italia selected DIGL's Network Information Computer for their Optical Transport Network (OTN) deployment and testing. The announcement marks the first major international carrier that has standardized on DIGL's OTN product. Terms of the deal have not been disclosed.

  Linda Piazza   3/9/2004,  10:11:56 AM
The BIX's daily candle is sitting on former resistance formed from an ascending trendline off the 1/28, 2/17, and 3/01 highs, testing that former trendline to see if it will now hold as support. Today's decline continues yesterday's, and a move back below that trendline again would negate the bullishness implied by the breakout on Friday.

  Linda Piazza   3/9/2004,  10:08:07 AM
"Lack of ideas." We began hearing that phrase repeated often yesterday, and Bob P. is repeating it today, but I also heard it all night last night on CNBC Europe when I was having trouble sleeping. I don't know about you, but I'm growing tired of that phrase already.

  Jeff Bailey   3/9/2004,  10:06:46 AM
10:00 Internals at this Link

Yesterday's Internals at this Link

  Linda Piazza   3/9/2004,  10:04:37 AM
Today's OEX low as just above the 38.2% retracement of the bear-market decline at 561.23, and the OEX now rises in what appears to be a bear flag. Strong Keltner resistance is now converging near 563.50-563.75, the level of the 120-minute 130-pma. Central Keltner channel resistance has now descended to 566.72, with the idea being that such a strong penetration of the lower Keltner channel band predicts an eventual move up toward that central Keltner channel resistance, if not toward the top band, now at 570.16, but also beginning to turn down steeply. Those resistance lines can descend steeply along with price declines, so that the eventual testing of those resistance lines comes at a much lower level than their current level, but there's vulnerability to such a bounce. For now, however, 563.75 is looking ever more solid resistance than it did earlier this morning. Let's see if it holds.

  Jim Brown   3/9/2004,  10:01:49 AM
The DVD release date for Lord of the Rings, Return of the King was set for May-25th. The film has already grossed over $1 billion and brought the total gross for all three films to nearly $4 billion.

  Jonathan Levinson   3/9/2004,  9:59:50 AM
The Fed has drained 3B, announcing a 3.5B overnight repo to replace the 6.5B expiring.

  Jim Brown   3/9/2004,  9:59:49 AM
Richmond Fed Manufacturing Survey for Feb = 19 , (Jan was 18)

  Jeff Bailey   3/9/2004,  9:53:55 AM
Not only Japan/Fed/U.S. Treasury but Japan and China issue.

  Jonathan Levinson   3/9/2004,  9:50:57 AM
Excellent slides contained in Jeff's link of 9:45:25. Interestingly, I became most interested in gold at the start of 2002, around the time when the reduction of Japanese deposit insurance (at the time, I thought it was eliminated) had fueled a huge surge in demand from Japanese retail investors.

It appears from my dialogue with Jeff that monetary statists on both sides of the Pacific are chasing their tails, or close to it. The growing disharmony between the BoJ, the Fed and the US Treasury is worth watching, particularly because Japanese intervention has been such an important market component for the past year.

  Linda Piazza   3/9/2004,  9:50:35 AM
Here's the OEX with respect to its 120-minute 100/130-pma's over the last couple of months: Link With the OEX bouncing, we should watch for a rollover back beneath the (green) 130-pma or a bounce up through the (blue) 100-pma.

  Jim Brown   3/9/2004,  9:48:09 AM
10 min until Richmond Fed Manufacturing Survey (Jan was 18)

  Linda Piazza   3/9/2004,  9:46:23 AM
The TRAN dropped through the 19.1% retracement of its recent plunge, a level that had been proving support over the last few days. Currently at 2851.70 and just off the low of the day, its next test will be the 2836.48 low from 2/24, if it should continue falling.

  Jeff Bailey   3/9/2004,  9:45:25 AM
I refer to Fukada's comments as rather ludicrous and self serving. Here's one reason, or thought behind Japan's recent decision to start adding to its gold position above $400. Better late than never? Link

Mr. Snow's comments are directed at intervention, where currencies are "manipulated." It is interesting that "gold bugs" were critical of manipulation in gold by central banks when price was below $350, but now see manipulation of dollar as being OK, where Treasury Secretary Snow now "lacks coherence or integrity."

  Linda Piazza   3/9/2004,  9:43:06 AM
First Keltner resistance has now descended to 562.57, with next resistance between 563.50-564.50, with the strongest resistance near 564.50. Mid-channel resistance is at 567.23, but descending.

  Linda Piazza   3/9/2004,  9:41:15 AM
Here's an update of the daily OEX chart I've been showing: Link Presumably, the OEX is now headed down to test the 557.36 level that would confirm the double top formation, but first it will encounter several support levels that could produce a bounce. This is still a choppy zone.

  Linda Piazza   3/9/2004,  9:38:12 AM
Remember that OEX 561.23 is the 38.2% retracement of the bear-market decline. That might be a potential bounce point, although 559.50 appeared to be more important on the way up than that 561.23.

  Jonathan Levinson   3/9/2004,  9:37:45 AM
I refer to John Snow's explicit comments about his support for a strong dollar dating back to February last year, and the almost perfect contrarian signals that his comments have tended to represent. At some point, I assume that he'll be right, but fading John Snow has been the correct call for the past year with few exceptions.

  Linda Piazza   3/9/2004,  9:37:03 AM
No bounce on the OEX yet. First resistance has now descended to 563.08 and is dropping fast.

  Jeff Bailey   3/9/2004,  9:35:17 AM
Per Jonathan's 08:22:25 ... Maybe it is Fukada that lacks coherence. When gold was trading north of $320, didn't Japan start buying gold in greater amount?

  Linda Piazza   3/9/2004,  9:34:53 AM
During the first five minutes of trade, the OEX spanned a range from 563.77 to 562.47.

  Linda Piazza   3/9/2004,  9:34:07 AM
The OEX has violated the five-minute Keltner channels by a big distance, so we should now expect a bounce, with first resistance now near 563.52.

  Linda Piazza   3/9/2004,  9:32:13 AM
The OEX is breaking below 563, below the 120-minute 130-pma, an average it hasn't violated since November.

  Jonathan Levinson   3/9/2004,  9:30:48 AM
Off-topic. I've received close to 20 virus emails in the past 12 hours. Some of them tried to activate in my "Deleted Items" folder. Make sure that your software is updated, as mine is sending me updates almost daily now. Don't open anything unless you have no doubt as to its safety and origin.

  Jeff Bailey   3/9/2004,  9:18:00 AM
09:00 Update posted at this Link

  Linda Piazza   3/9/2004,  9:09:40 AM
Is today the day the OEX is going to break out of that narrowing triangle on the daily chart? Perhaps. Perhaps not. As yesterday ended, the OEX had violated that triangle's support by a few cents, which could have amounted to a slight overshooting of the support in the rush for the exit. Perhaps more importantly, it slightly violated the 120-minute 130-pma, an average it hasn't violated since November. Still, the violation was by less than 20 cents here, too, and could have amounted to an overshooting of a target in the last-minute rush for the exit. A rollover through this average would be significant since it's been so long since it's been violated.

I haven't talked about Donchian channels much lately, but yesterday afternoon saw several closes below the (20,2) Donchian channels, signaling a downside break. The 21(3)3 stochastics were not fully in territory indicating oversold conditions when that first breakout occurred, however, and my backtesting showed that Donchian-channel breakout signals were sometimes iffy when stochastics weren't yet signaling oversold conditions. A breakout signal is effective only if a strong trend is in place or beginning, with such a trend sometimes accompanied by trending stochastics, too. ADX was also below 30, verifying that the breakout signal was an iffy one according to my backtests.

Speaking of breakouts, the OEX five-minute Keltner channels signaled a breakout, too, with the OEX violating the lower support line. While Keltners also can give valid breakout signals, eventually the OEX should work its way up to central channel resistance again, currently at 567.38 but beginning to fall fast now. Those already in bearish OEX trades should protect profits by following the OEX down with their stops. Since Keltners sometimes give valid breakout signals, such a violation isn't always a sign that bearish trades should be exited or longs entered, but it signals a vulnerability to a bounce.

What about new entries? That's a tough one. I've been mentioning the difficulties of trading the OEX within the zone defined by the recent tops and the confirmation level of a double-top formation, with that confirmation level at 557.36. Multiple support levels intervene between the current OEX level and the 557 level, and the short-term oversold conditions could kick in a bounce at any time. This is complicated by the fact that OEX bid/ask spreads combined with collapsing volatility on the slightest uptick over the last months has made it increasingly difficult to profit from OEX plays. Two possibilities exist for aggressive traders. One is to watch for a bounce up to the 120-minute 100-pma at 565.32 and another rollover from that average or a bounce above it as an entry for a bearish or bullish play, depending on the action. This is because the 120-minute averages have become important benchmarks over the last months as volatility decreased. Another tactic is to wait for a drop beneath 563, with perhaps a limited downside target of 559.50-560.50. Either type of entry is risky because of reasons I've outlined for weeks now.

  Linda Piazza   3/9/2004,  8:45:37 AM
Funny, Jonathan. (See Jonathan's 8:22 post.) Or is it scary? I'm not sure I can decide.

  Jonathan Levinson   3/9/2004,  8:22:25 AM
It looks like John Snow's lack of coherence or integrity is finally being noticed at the higher echelons:

Japan Fukuda: Thought Snow Was Advocate Of Strong Dollar DOW JONES NEWSWIRES

TOKYO (Nikkei/Dow Jones)--Japan's top government spokesman Tuesday shrugged off criticism overnight by U.S. Treasury Secretary John Snow of currency intervention.

Following a speech to the National Association of State Treasurers, Snow said: "We favor a strong dollar, but the relative value of currencies are best set through open and competitive currency markets."

He added: "But no currency can be considered strong if it is propped up on life support with intervention ."

"I'm not sure what Snow was trying to say," Japanese Chief Cabinet Secretary Yasuo Fukuda told a regular press conference.

"He's an advocate of a strong dollar, isn't he?" Fukuda added.

  Jonathan Levinson   3/9/2004,  8:20:32 AM
No major economic reports due this morning.

  Linda Piazza   3/9/2004,  7:02:39 AM
Good morning. After market researcher IDC reported that this year will mark the peak in growth for global sales of computer chips, the Nikkei tried a new tactic in Monday's trading, gapping down instead of gapping up. After finding support at 11,440 throughout the morning and early afternoon session, the Nikkei climbed more than 80 points in mid-afternoon, dipped almost back to 11,440, and then soared again. It closed on the high of the day, up 29.18 points or 0.25%, at 11,532.04, almost 100 points off the day's low.

Also impacting the Nikkei was the news that Japan's January core private-sector machinery orders, considered a leading indicator of corporate capital spending, fell a worse-than-expected 12.2%. Because December's number had risen 8.1%, economists had expected that number to fall this month, but not as much as it did. In addition, U.S. Treasury Secretary Snow spoke yesterday, saying that the Fed could be patient about raising rates, with his comment sending the dollar lower against the euro and the yen, raising concerns about the profits of Asian exporters. Many of those exporters traded lower early Tuesday. Car makers headed lower, as did many tech-related stocks. Car makers ended the day with a mixed performance, but chip-related stocks fell across Asia, most closing lower. One article credited a late-day rally in the banking sector with pushing the Nikkei into positive territory, with Mizuho Financial, Sumitomo Mitsui Financial, Resona Holdings, and Mitsubishi Tokyo all turning in gains by the end of the day.

Stock-specific news included declines by both Fujitsu and Hitachi after Monday's revelation of their plans to build a new plasma display panel plant in Japan. Sony fell after Monday's announcement of a joint venture with Samsung Electronics to become the world's largest manufacturer of large-screen liquid crystal TV's. Ford's plan to use Toyota's technologies to manufacturer a hybrid Escape SUV, the world's first hybrid SUV to debut, reportedly this summer, helped Toyota post a small gain.

Other Asian bourses turned in mixed performances. The Taiwan Weighted gained 1.05%, but South Korea's Kospi lost 0.95%. Singapore's Straits Times traded lower by 0.17%. Hong Kong's Hang Seng fell by 1.30%, but China's Shanghai Composite was flat, falling only 0.045 points or 0.00%.

As the euro gains against the dollar, most European bourses trade lower. Despite TXN's after-the-bell upbeat report, TXN competitors Philips, Infineon, and STMicroelectronics traded lower early Tuesday. CNBC Europe commentators focused much attention this morning on Volkswagen's labeling of its first quarter as lousy and on the company's cost-savings plan. Volkswagen traded lower by more than 3% in early trading, with other car manufacturers hit, too. Deutsche Bank is having a bad day as its CEO squelched the latest acquisition rumors, saying that the bank was not prepared for a merger and a hostile bid was unlikely. In other stock-specific news, Standard & Poor's cut Deutsche Lufthansa's debt rating, sending that company's stock lower, too.

As of this writing, the FTSE 100 was down 17.80 points or 0.39%, with the FTSE 100 not considered a tech-heavy index and so not hit as hard by declines in techs as many Europen bourses were. The CAC 40 had declined 32.25 points or 0.85%, to 3749.13. The DAX had fallen 37.61 points or 0.91%, to 4108.38. The DAX did dip briefly below 4100 support this morning, hitting a low of 4093.58 before climbing off that low, but it's been in negative territory all day and hasn't yet retraced to its high of the day.

  Jeff Bailey   3/8/2004,  9:38:55 PM
50 largest cap OEX components at this Link

This was market cap sort of 1-60 on 09/14/03 Link

  Jeff Bailey   3/8/2004,  9:30:27 PM
S&P 100 Index (OEX.X) chart with WEEKLY and MONTHLY Pivot retracement at this Link

  Jeff Bailey   3/8/2004,  9:17:43 PM
Pivot Matrix for tomorrow at this Link

  OI Technical Staff   3/8/2004,  8:30:57 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

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