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  Jeff Bailey   3/23/200,  5:30:42 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   3/23/200,  4:43:50 PM
Closing Internals at this Link

  Jeff Bailey   3/23/200,  4:22:37 PM
Novell (NOVL) $9.46 -0.63% Link .... higher at $9.60 on RHAT earnings.

  Jeff Bailey   3/23/200,  4:20:05 PM
Red Hat (RHAT) ... volatile... now higher at $19.95.

  Jeff Bailey   3/23/200,  4:16:20 PM
Red Hat (RHAT) $19.41 $5.89% Link ... lower at $18.88 after reporting quarterly EPS of $0.03, which was inline with consensus. Revenues rose 42.8% year-over-year to $36.97 million.

  Linda Piazza   3/23/200,  4:01:07 PM
The OEX is turning down again, but it's possible to draw an ascending regression channel forming off yesterday's low, with support near 535.50, currently. The OEX might just be oscillating within that regression channel, possibly a reforming and larger bear-flag formation. We won't know more until tomorrow morning. See you then.

  Jeff Bailey   3/23/200,  4:00:33 PM
Research in Motion (RIMM) $86.77 -4% Link ... hi jeff, any thoughts on rimm? it broke simple and exp. 50 day. 75 day is around 80 and 100 day at 70. there is also that big gap at 50. thanks mikep.s. daily sto and macd are in full bear roll

PnF chart is near-term bearish with a vertical count hinting at $83. This stock's supply/demand chart reminds me of what we noted in the Dow Industrials (INDU) Link chart last night. I think bulls are going to be in the mood for taking profits, and not unlike the INDU's PnF chart, these consecutive sell signals in RIMM is DIVERGENCE from the past and first sell signals since RIMM said "buy me" at $14.50.

  James Brown   3/23/200,  3:55:55 PM
CNBC just reported that Israeli gun boats opened up on another target... I missed what Maria said they were shooting at.

  Jeff Bailey   3/23/200,  3:53:02 PM
Phelps Dodge (PD) $78.66 -3% Link ... What do the charts have to say about Phelps Dodge? I notice it's at session lows right now and in that $79-$80 range of support thats been talked about in the last month or so. How has the craziness in the market affected outlook?

Phelps' supply/demand chart recently gave a double-bottom sell signal at $79, where the vertical count is bearish to $65. I do think some of the recent geopolitical news, brings some uncertainty to the metals, where there is some question as to what impact it may have on global economic growth rates.

I'm thinking PD might be near-term vulnerable to the mid-low $70's, if it doesn't just sit here and trade sideways for a couple of weeks.

  Linda Piazza   3/23/200,  3:51:51 PM
The OEX has turned back below mid-channel Keltner S/R on the five-minute chart. In my opinion, that right shoulder of the potential H&S has now become too distorted in relationship to the left shoulder and head to consider that formation valid any longer. However, that probably just gives the OEX permission now to pass through that neckline area and fulfill the upside target. As I've been mentioning all day, however, I wouldn't have played this to the long side as I thought there was too much chance that 541-542 might stop any advance even if the OEX did manage to climb above the neckline.

  James Brown   3/23/200,  3:51:35 PM
Seller's remorse? Yesterday we closed our OI put play in CHIR after it hit our exit target of $45.00. Today the stock is down another 1.55% and approaching its P&F bearish target of $44.00. The intraday still looks bearish with steady selling pressure. If you're still in the play consider ratcheting down your stops.

  Linda Piazza   3/23/200,  3:41:02 PM
The SOX remains below its 200-sma and 200-ema, and is roughly at the midpoint of the gap down from the 3/19 open and at the top of the gap up from today's open. It can't seem to get past those gaps or, more importantly, back above its 200-dma's, both exponential and simple. The top of that first gap I mentioned is at 463.49, just above today's high. However, if it does make it past those gaps, it will soon be facing a confirmation level of a possible double-bottom formation on the 30-minute chart, with that confirmation level at 465.87, near its 200-ema. If the SOX instead turns over here, it will have formed a lower high and will more importantly be rolling down again beneath its 200-dma's. Thirty-minute MACD cycles up, but is below signal and approaching the signal line. That's sometimes an iffy point for the MACD, when it looks as if it's about to push strongly through that signal line but instead rolls down beneath it. As I mentioned in an earlier post, daily oscillators are inconclusive, too, and shouldn't necessarily be trusted even if they do offer a buy signal.

  James Brown   3/23/200,  3:34:48 PM
For the more aggressive trader it looks like Lockheed Martin (LMT) is trying to put in a bottom after two months of declines. Today's gain is a breakout over the simple 10-dma.

  James Brown   3/23/200,  3:27:18 PM
The Friday-Monday drop took Dow component UTX to its simple 200-dma near $84.00. Today the stock is trying to bounce but it's struggling with the $85.00 mark.

  Linda Piazza   3/23/200,  3:26:53 PM
The OEX has come back down to test mid-channel Keltner S/R again. It's been trying all day to cross over that neckline of its inverse H&S, but just hasn't been able to do so.

  Linda Piazza   3/23/200,  3:25:43 PM
There's a nice inside-day formation building on the BIX today, with that pattern forming just above the 100-dma. Since the BIX doesn't have options, I've been looking for a component stock that might have the same pattern, but I haven't been able to find one yet.

  James Brown   3/23/200,  3:23:40 PM
I'm still watching Deere Co (DE) for a reverse H&S breakout over resistance at the $68.00 level. The stock is up 1.97% to $66.24.

  James Brown   3/23/200,  3:17:20 PM
Pfizer (PFE) is trying to make a comeback after settling above its 200-dma yesterday. The stock has been in a sharp sell-off for two weeks so its due for an oversold bounce.

  James Brown   3/23/200,  3:13:57 PM
Keep your eyes on the insurance stocks if these terrorism fears don't subside. One of Morgan Stanley's analysts sent out a note yesterday reminding investors that big insurance companies like AIG would have to pay the first $1.9 Billion in losses from any terrorist attack before the U.S. government would step in to help.

AIG dipped to support at $70.00 yesterday and bounced but that bounce is fading today with the stock trading near its low for the session at $70.28.

  James Brown   3/23/200,  3:07:58 PM
Holy Cow! An upgrade last week on March 17th has sparked a major rally in Goody's Family Clothing Inc (GDYS). The stock jumped from its consolidation near the $10 level and has been running higher almost non-stop on HUGE volume on almost every session. Today's 6.26% gain is a new 4-year high.

  Jeff Bailey   3/23/200,  3:06:19 PM
03:00 Internals at this Link

  Linda Piazza   3/23/200,  3:02:07 PM
The OEX has now made it above mid-channel Keltner resistance, but it had lingered near that resistance so long that other resistance lines snaked above it. It's currently caught in that other Keltner resistance as well as by the resistance offered by the neckline of its possible inverse H&S, at about 539.30. Upper channel resistance has lowered to 541.84, headed down into the zone at which I thought either mid-channel or upper-channel resistance would join with the historical resistance zone near 541.50-542.

  Linda Piazza   3/23/200,  2:45:57 PM
I'm not sure if anyone has mentioned the SOX today, but it's trying to steady and move back above its 200-sma, currently at 463.17, but it hasn't yet been able to do so. Especially with tech-related indices, I like to use the 200-ema rather than the 200-sma. That average is at 465.64, with the SOX briefly piercing it today but then dropping back. Here's how it looks with the 200-ema in maroon: Link Note that the 21(3)3 stochastics and RSI are tentatively hooking up, but don't put too much credence in that development as yet. ADX is rising as the SOX drops. Although ADX is now 21.22 and below the 30 level that some quantify as indicative of a strong trend in place, the rising ADX still may be indicating a trend beginning, and for now that trend is down. That means that we might not be able to trust buy signals given by the oscillators. They might indicate nothing more than a slight rise or consolidation while the indicators cycle up. Be careful. An argument could be made for either direction here, but be sure to base your decision to enter, if you should be contemplating an entry, on a firm basis, such as a crossing of the 200-sma or -ema for a bullish entry or a fall below 450 for a bearish one, and then set an appropriate stop and adhere to it. Whatever type of entry was contemplated, a trader might expect to be whipsawed out of trades a time or two until the SOX decides on a direction. I usually prefer to wait until direction is clearer.

  Jeff Bailey   3/23/200,  2:30:50 PM
Winn Dixie Stores (WIN) $8.22 +11.83% Link ... continues to impress. "X" gets the square at $8.00.

  Linda Piazza   3/23/200,  2:16:54 PM
We bandy about terms such as "shadows" and "doji" and other candlestick formations, terms confusing to some newer readers not informed about candlestick theory. Here's a site to begin looking at candlestick theory: Link For more information, though, I suggest one of Nison's books on candlestick charting. I love candlestick theory. Because it's based on Japanese theory employed since the 1700's and since some of that theory was once tied into philosophical interpretations of the formations, some of the formations can have weird names, but don't let that put you off the charting system. It's not hocus pocus. It's so much easier to glance at a candlestick chart with lots of red candles and immediately assess the sentiment than it is to look at a bar chart with those little sticks to either side and try to remember which side is the closing level and which the opening!

  Jeff Bailey   3/23/200,  2:05:43 PM
02:00 Internals at this Link

  Mark Phillips   3/23/200,  2:02:55 PM
The ratio of advancing volume to declining volume on the NYSE and NASDAQ woudl seem to indicate we're unlikely to make much progress in either direction today. ADVDECV.NY and ADVDECV.NQ have remained above the zero line for most of the session, but there's certainly no directional conviction at this point in the day. It is encouraging to see a change from yesterday's all-out selloff with the ratios running so strongly in favor of the bears, but today is clearly a consolidation session. If I had to hazard a guess, I'd vote for an upside break into the close, as the ADVDECV indicators are just now pushing through their highs of the day.

  James Brown   3/23/200,  1:53:12 PM
Of course the real issue here isn't the April earnings. I think Jim pointed it out in his weekend wrap... the markets are looking 6-to-9 months out. By that time the quarter over quarter comparisons are going to get a lot tougher since they'll be trying to out do the big boom in the third quarter of 2003 when the GDP was red hot!

  Mark Phillips   3/23/200,  1:52:50 PM
Thanks for the input Jonathan and Linda. Yes, I think eventually, product does have to move -- otherwise there's no incentive to pay the "product placement" fees. But during an extended strike, it seems the grocery chains could actually see their profits increase as the ratio of income to expenses shifts further into the black.

  Linda Piazza   3/23/200,  1:51:52 PM
The OEX has obviously broken through the smaller of the inverse H&S's I depicted in my 13:39 post, and is headed up to test the neckline of the larger one. First, though, it's encountering the mid-channel Keltner resistance at 537.68, with the neckline level nearer 539.30.

  James Brown   3/23/200,  1:51:21 PM
Is it just the optimist in me or have we been getting a lot more positive pre-announcements than one might normally expect? Below is an incomplete list of upside pre-announcements in the last three weeks. Compared to say maybe 15 or so negative pre-announcements.

...Recent upside guidance...
The Limited (LTD)
Eastman Kodak (EMN)
Steel Dynamics (STLD)
Carnival Corp (CCL)

...Some of the BIGGER companies guiding higher...
3M Co (MMM)
Aetna (AET)
Yellow Roadway (YELL)
Danaher (DHR)
Ingersoll-Rand (IR)
Procter & Gamble (PG)
Fortune Brands (FO)
Jabil Circuit (JBL)
Fedex (FDX)
Lennar Corp (LEN)
General Electric (GE)

...A few more you may remember...
Chattem (CHTT)
Cooper Industries (CBE)
Masco (MAS)
Barnes & Noble (BKS)
Stein Mart (SMRT)
Stanley Works (SWK)
Service Corp (SRV)
Biomet (BMET)
Apollo Group (APOL)
University of Phoenix (UOPX)

Unfortunately, these new terror fears could trump any pre-earnings run up but then we still have a few more weeks before earnings season really gets started.

  Linda Piazza   3/23/200,  1:49:26 PM
Mark, my husband used to be general counsel for a major beverage distribution company. (See Mark's 13:37 post.) Much of his time was spent battling another major beverage company because of practices in which the other company would allegedly pay big sums to grocery stores and other entities to shut out my husband's company's products. Lots of money gets paid that way. That's true in the publishing business, too, with big publishers paying bookstore chains for the privilege of facing their books outward, placing them on tables near the front of the store, and other such measures, to the sum of $5,000 and up per book, depending on whether it's merely faced outward on its appropriate shelf at the back or the store, or placed prominently at the front of the store. I'm not so sure that product doesn't need to be moved, too, though.

  Jonathan Levinson   3/23/200,  1:42:00 PM
Mark, I wonder if there isn't an economy of scale issue there, but it's been far too long since my last microeconomics course. If margins are small, as they are in groceries, then price needs to rise to accompany diminished economy of scale as volume falls off. Or something like that.

  Jeff Bailey   3/23/200,  1:41:13 PM
Astro-Med (ALOT) $11.80 -15.71% Link ... big breakdown after company reported record fourth quarter net income of $1 million, or $0.18 per share, on sales of $14.157 million. Company's Directors also declared the regular quarterly cash dividend of 4 cents per share payable on April 2, 2004 to shareholders of record on March 26.

  Linda Piazza   3/23/200,  1:39:56 PM
Sometimes H&S's or inverse H&S formations are themselves built out of smaller H&S or inverse H&S formations. For example, the head itself might be a smaller H&S or inverse H&S formation. Here's an example from today's OEX five-minute chart: Link This tells me that the OEX is trying to switch into bullish mode, at least on a short-term basis, but hasn't quite made it there yet. The lopsidedness of that right shoulder hints that it might not be able to do so. Taken all together, this evidence just shows what all other evidence has shown today--possible upside combined with vulnerability to the downside, predicting likely choppy trading conditions. If these formations are confirmed, those conditions might change, at least for a day or so, but I'm still wary of that 541-542 level on the OEX.

  James Brown   3/23/200,  1:38:26 PM
One of the strongest industries of late has been the steel sector. Steel Dynamics (STLD) is giving the group another shot in the arm by pre-announcing stronger earnings this morning. Reuters had analysts' estimates pegged at 35 cents a share for Q1 versus STLD's previous guidance of 35-45 cents. Now STLD sees Q1's numbers in the 50-60 cent range.

  Mark Phillips   3/23/200,  1:37:17 PM
Thanks Jonathan. That may be the key.

Here's another one that recently bothered me. Remember the grocery worker's strike that we had out here in CA recently? I was puzzled by the fact that throughout the stalemate, with the affected grocers business off sharply and inventory down to abysmal levels, the prices of the stocks actually rose. Talking to my father-in-law, he said the reason why is that the grocery stores don't make much money on actual product flow. The real cash cow is apparently that the major product suppliers actually pay the stores to have their products displayed in the more favorable sections of the store. Those fees were still paid throughout the strike (for fear of losing the prime "real estate") and that kept the income flowing for the grocery chains. Ironically, it may have been more profitable for these stores in the short run to NOT be selling product because their fixed costs (i.e. employees) had been drastically reduced. I'm not sure if there's any merit to that line of logic, but it's the kind of 'cud' my mind likes to chew on.

  James Brown   3/23/200,  1:31:31 PM
Investors are not reacting well to news that Akamai Technologies' (AKAM) COO is resigning effective April 9th. No replacement is being named for the position and shares of AKAM are down 9.85% to $12.76.

  James Brown   3/23/200,  1:28:56 PM
Lehman Brothers issued some negative comments on two major grocery chains this morning. The firm downgraded Kroger (KR) from "over weight" to "equal weight" and slashed its price target from $20 to $16.50. Shares of KR fell strongly at the open from $17.00 to $16.05 but have rebounded from their lows. This follows a significant price drop in KR when the company issued an earnings warning about two weeks ago.

Safeway (SWY) was also downgraded from "equal weight" to "under weight" and LEH reduced their price target from $20 to $18. SWY also gapped lower at the open but has since recouped most of its losses and it trading near $20.28.

  Jonathan Levinson   3/23/200,  1:28:40 PM
Same here in Montreal, Mark. I think it's the higher rent in urban areas getting factored into the pump prices.

  Mark Phillips   3/23/200,  1:27:50 PM
Great question! One thing that has always puzzled me about CA gas prices is that often prices in the large metro areas are higher and prices in the remote areas of the state are lower. Seems like it ought to be the other way around, if you factor in transportation costs...

  James Brown   3/23/200,  1:24:59 PM
So... what part of the country is pulling the average price down so much? Colorado seems to be right at the average.

  Mark Phillips   3/23/200,  1:23:42 PM
James, those of us in California would kill for prices that low! I haven't seen low-grade unleaded under $2.00/gallon for months!

  James Brown   3/23/200,  1:22:29 PM
It's going to be an expensive summer for consumers as gas prices rocket higher. Numbers out this morning put April unleaded gas futures at $1.146 a gallon. At the pump unleaded gas hit a new record-setting high at $1.738 a gallon surpassing last year's high at $1.737. The bad news is that the summer driving season is still a ways off!

  Mark Phillips   3/23/200,  1:22:18 PM
It certainly looks like the consolidation in gold is ending. The April Futures contract (GC04J) has now broken above the top of the consolidation pattern of the past few months and a run back to the January highs near $430 seems likely. Gold stocks have not yet broken out, as the XAU index is still in its broad consolidation between $95-105 and the HUI index is still stuck in its own consolidation pattern, but price is testing the descending trendline near $230. I still like bullish entries in NEM in this area, although more conservative traders may want to wait for bullish confirmation with a breakout over the $46 level. Note that a trade at $46 will turn the PnF chart bullish again, and issue a tentative bullish price target of $55.

The other side of the precious metals 'coin' shows Silver to be acting much stronger, as the breakout that occurred last year has this metal playing catch up to gold. Since the breakout over $5.50, Silver has really soared, with the July Futures contract currently trading $7.72 and very near another contract high. My favorite mining stock in this arena is PAAS, which has been consolidasting its most recent bullish move to the $18.50 area with a healthy horizontal flag between $16.25-18.50 for several weeks. I like dips near the bottom of the range for establishing new bullish positions, although the more conservative trade will be to wait for a breakout to new highs. Note how the 50-dma ($16.42) has been solid support for several months now and that average has now risen into the lower portion of the current consolidation range. PAAS is technically bearish on the PnF chart right now, but a trade at $19 will create a quad-top Buy signal and have the stock working with a minimum upside objective of $24.50.

  James Brown   3/23/200,  1:19:24 PM
Well the Arvinmeritor Inc (ARM) press machine is in full swing today. The company has issued four press releases this morning. One highlighted a new 5-year deal with a company in China to supply them 20,000 trailer axles a year. The remaining three press releases highlighted a deal with a company in Germany, one in Spain and another here at home. Unfortunately, none of this "good news" is boosting the stock price, which appears to be in free fall. ARM is down four days in a row and down 10 out of the last 12 sessions. It has broken support at its 200-dma and the $20.00 level in the last three days. Volume has been strong on the declines. The next stop is probably historical support near $18.00.

  Jeff Bailey   3/23/200,  1:07:16 PM
01:00 Internals at this Link

  Linda Piazza   3/23/200,  1:02:05 PM
Is the OEX going to rise and confirm that neckline of the potential inverse H&S this time? If it does, that confirmation is going to now be preceded by a test of the mid-channel Keltner resistance, because the two no longer are congruent. The neckline lies higher, at about 539.30 or so.

  Linda Piazza   3/23/200,  1:00:35 PM
Mid-channel OEX resistance has lowered to 537.85, with upper channel resistance now lowered to 542.29--getting ever closer to that 541-542 level that I thought might be firm resistance.

  Linda Piazza   3/23/200,  12:55:26 PM
The TRAN is hovering just above its 200-dma at 2752.52, with a flat MACD and descending stochs and RSI. This would be a good point from which to launch a bounce, but the mixed-up indicators don't yet indicate an upturn in the making.

  Linda Piazza   3/23/200,  12:37:28 PM
The OEX is dropping below what I had tagged as the right-shoulder level of the potential inverse H&S. Unless it turns around quickly, I think we can negate that formation.

  Jeff Bailey   3/23/200,  12:34:56 PM
Bearish day trade stop alert .... Newmont Mining (NEM) $44.50

  Jeff Bailey   3/23/200,  12:28:30 PM
Day trade long alert ... Newmont Mining (NEM) $44.70 here, stop $44.50, target $45.20.

  Jeff Bailey   3/23/200,  12:23:32 PM
Cancel day trade short alert ... for Gilead Sciences (GILD) $51.80 -3.10% ... never got the trade back higher at $53.40 (11:23:19).

  Jeff Bailey   3/23/200,  12:20:13 PM
12:00 Internals at this Link

  Jonathan Levinson   3/23/200,  12:18:30 PM
Agreed, Linda. 17.20 looks better than 17.50 for the upper channel trendline.

  Jane Fox   3/23/200,  12:16:57 PM
Mark (11:50 post) I so much agree with you in that the VIX is coming out of its slumber and us daytraders are loving it.

  Linda Piazza   3/23/200,  12:16:45 PM
Concerning the ongoing discussions about the VIX, I also note that the VIX has "support," if we can use normal technical analysis on the VIX, from a violated-to-the-upside former descending trendline at about 17.20. Even if I were going to use some absolute VIX level to indicate a market turn, which I wouldn't, it wouldn't be 17.50. It would be below that descending trendline. I'm not so sure we're going to see a move back below that trendline soon, however.

  Jim Brown   3/23/200,  12:15:46 PM
EBAY - I have had an alarm on EBAY at $65 since early February and it just went off and I nearly jumped out of my chair. I had forgotten I had any active alarms. It appears the nearly -$3 drop yesterday was followed up by another dip today. The cause could be this negative article in Business Week: Link Buying opportunity? Could be, the 100dma is just under $64 and this stock has been very strong. Beauty is in the eye of the beholder and Meg Wittman claims EBAY has only scratched the surface in the auction business.

  Linda Piazza   3/23/200,  12:13:45 PM
That possible right-shoulder pullback (on a possible inverse H&S) on the OEX five-minute chart is getting a bit long-in-the-tooth. If the OEX is going to stabilize and move up through the neckline, it probably needs to do it soon. Otherwise, bulls will lose their resolve. Oops. The OEX started lower as I typed.

  Jonathan Levinson   3/23/200,  12:08:09 PM
I agree with Mark's comment as well, but disagree as to the absolute nature of the VIX levels implied therein. 17.50 VIX could be viewed as trendline support, below which the VIX should drop back into last year's channel. Overall, 17.5 is a very low reading, but it's not as low as the channel bottom around 13.20. I treat the VIX as a secondary (almost a tertiary) indicator at best, and recommend trading only the price of the chart you're actually trading (and not secondary or tertiary indicators). I'm not the analyst who made the call, and agree with Mark's take on it, but would suggest that there's potentially more to it than merely excessive bullishness and wacky tobaccy.

  Linda Piazza   3/23/200,  12:04:12 PM
I agree with Mark's 11:50 comments about the VIX. I received the same question from the reader, and think that Mark did a better job than I did explaining the dangers of trading based on the VIX levels. I'd like to add that even when a VIX move is followed by a market turn, the two don't always happen within the same day. The VIX might indicate a market turn days before an actual market turn, with indices and stocks continuing to move in the preceding direction before turning. While funds can sometimes weather such action, those of us trading individual accounts often can't. We need better market timing information than the VIX alone provides. Congratulation to this reader for watching VIX levels and examining lots of information, but I add my cautions to Mark's about using the VIX as a market-timing tool.

  Mark Phillips   3/23/200,  11:50:40 AM
Question:A market analyst mentioned yesterday that the market is giving some buy signals, but he would suggest going long after a VIX close below 17.50. What is your view on this comment?

Response: Hmmmm, let me see...I think I can safely say that I'd like some of what that "analyst" was smoking! I mean really -- I've followed the VIX for quite some time and spent a lot of time analyzing it. The one thing that is absolutely crystal clear is that you CANNOT (unless you like gambling) place trades based strictly on the level of the VIX. That would be akin to trying to fly an airplane using only the airspeed indicator and ignoring everything else, including altitude (along with all the other instruments), weather conditions, terrain and fuel supply! If that strategy worked, then buying puts on the major indices for the past 6 months would have been a winning strategy. Know anyone that has made that one work? Of course not -- because there are too many other factors at work.

My current view of the VIX is that it is BEGINNING to come out of its long slumber. Confirmation of that thesis will come from seeing several consecutive weekly closes over the 21-22 area. That should provide some conviction that volatility is returning to normal levels. I think it will be a long time before we can state what the 'normal' floor and ceiling for the VIX is, as over the past 2 years it has stretched the range both to the upside and the downside. But coming back to the "analyst's" comment, it defies logic. We know from years of data, that risk for the bulls rises as the VIX falls below the low end of its normal range. He's advocating going long as the VIX falls back into its complacency zone. I can look at the VIX a number of ways and they all say we can expect higher VIX levels going forward than what we've seen for the past several months. A lower VIX would suggest we're heading back into the doldrums of the past 2 months, where price action on the major indices is a joke.

I view this "analyst's" comment as verification that the bullish sentiment has become far too deeply ingrained in the current market. Does anyone remember what happened the last time the bulls became too complacent? Can history repeat itself? The next 12 months should provide a very interesting answer to that question.

  Jane Fox   3/23/200,  11:50:03 AM
Dateline WSJ WASHINGTON -- In a secret diplomatic mission, Saudi Arabia won a commitment from Afghanistan's Taliban rulers to expel Osama bin Laden in 1998, but the Taliban later reneged on the agreement, a federal panel said Tuesday.

The mission was among the most promising, yet ultimately fruitless, efforts by the U.S. to use diplomacy to stop al Qaeda in the years before the Sept. 11 attacks.

The independent commission reviewing the Sept. 11 attacks said in a preliminary report that the decision to use diplomatic rather than military options against al Qaeda allowed the Sept. 11 terrorists to elude capture years before the attacks.

The panel, known formally as the National Commission on Terrorist Attacks Upon the United States, presented its findings as it began hearings with top-level Bush and Clinton administration officials. The aim was to question officials on their efforts to stop Mr. bin Laden in the years leading up to the attacks.

  Jeff Bailey   3/23/200,  11:43:53 AM
Martha Steward (MSO) $10.90 +6.23% ... gaining in recent 15-minutes from $10.60 level.

  Linda Piazza   3/23/200,  11:33:26 AM
Despite that upside target of 545.80 on the potential inverse H&S on the OEX, with that upside target near the 100-dma, I'm concerned about the 541.50-543 range possibly capping any upside movement. This is near the bottom of that consolidation range from the last week or so, but it's also the location of the mid-channel resistance on the daily Keltner chart, as I've set them up. That resistance is currently at 541.67, confirming my opinion that resistance might be offered there. This is only one of the reasons that I'm not personally comfortable suggesting a long play, even though it's possible that such a long play could be profitable and could persist over a day or two as the OEX relieves oversold pressure. A lot of mixed-up oscillator evidence on different time frames confirms my fear that trading might be choppy, and we don't yet have firm evidence that the OEX is strong enough to meet upside targets, even if bullish formations are confirmed. So far, the OEX has not confirmed that inverse H&S, and a drop much below 535.30 would negate the potential formation.

  Jeff Bailey   3/23/200,  11:23:19 AM
Day trade short alert ... Gilead Sciences (GILD) $53.00 -0.86% Link ... look for short entry on trade back at $53.40, stop $54.02, target $52.10.

Today's trade at $53.00 is a triple-bottom sell signal and BEARISH. I would STRONGLY SUGGEST that BEARS looking to play on a longer-term basis turn to the OPTIONS market. I do NOT like to trade BEARISH and hold overnight in BIOTECH stocks.

According to Professor Davis' study, the triple bottom sell signal in a "bear phase" market is profitable 93.5% of the time, for an average gain of 23% in 3.4 months.

  Linda Piazza   3/23/200,  11:21:40 AM
It looks as if Jane and I were both noticing possible inverse H&S formations on the OEX and ER at about the same time, as noted by Jane's 10:59 comment on the Futures side of the Monitor and my 11:04 one. It's always nice to have confirmation of what I'm seeing by Jane's comments, as I trust the details she notices. When I turn to a 15-minute chart of the OEX, I do note bullish price/MACD divergence as the head was formed, but that bullish divergence doesn't mean that the OEX version will definitely be confirmed or meet its upside target if it does. That upside target would be at about 545.80, near the 100-dma at 545.67, so would constitute a test of the violated 100-dma if such an upside target would be met. I still counsel that you watch your stops in any play you enter because of the possibility of false breakouts or breakdowns.

  Mark Phillips   3/23/200,  11:13:11 AM
With the bounce (weak as it is) in the broad market, we're seeing a bit of a rebound in our put plays this morning. ETN, after hitting a new relative low yesterday just below $54 is trying to bounce, but not gaining much momentum. Traders still looking for an entry should now be looking for a rollover below the 10-dma ($55.63), with resistance now looking firm near $56.

Semiconductor stocks have been pummelled over the past week, and SLAB is no different, falling below $50 in yesterday's selloff and the bargain hunters are trying to pick a bottom this monring. With heavy resistance now in place in the $52-53 area, a rollover below there looks like the next solid opportunity to enter to the short side.

  Jeff Bailey   3/23/200,  11:09:26 AM
11:00 Internals at this Link

  Mark Phillips   3/23/200,  11:08:02 AM
Another Call play that is flexing its muscles this morning is ONXX. After last week's brief dip near the 50-dma, the stock is solidivying suport just above its 30-dma in preparation for another push towards its recent highs near $38. While we'd like to see another dip near the 50-dma to set up solid entry points, the stock's relative strength throughout the recent broad market and Biotechnology weakness suggests that the best we're likely to see is a dip near the 30-dma or possibly down to the $35 level.

  Mark Phillips   3/23/200,  11:04:56 AM
Among the listed OI Call plays, LXK is showing some impressive relative strength this week. With the broad market violating support levels left and right yesterday, LXK didn't even dip to its 10-ema (currently $87.27) before rebounding strongly into the close and that strength continued this morning, with the stock moving almost to the $90 level in the early going. Pulling back a bit since the bullish surge at the open, new entries still look favorable on a pullback near the 10-dma.

  Linda Piazza   3/23/200,  11:04:23 AM
The OEX may be preparing another challenge of the mid-channel Keltner resistance at 539.14 currently. However, make note of this possible inverse H&S developing on the five-minute chart: Link A move above both would be bullish, and a turn down below both would confirm weakness. However, I'd be wary of false breakouts or breakdowns in this choppy trading environment.

  Jim Brown   3/23/200,  10:59:32 AM
Congratulations on getting options on TASR but I am holding out for options on NVR.

  Linda Piazza   3/23/200,  10:57:14 AM
TASR: A reader has asked that I make occasional notations on TASR's action, now that the stock is optionable. Before I comment, I'd like to add that I've never watched a stock's options as those options were first released, when there was no historical basis upon which to decide whether those options are high-priced or not. My assumption would be that TASR's would be, especially as those options first become available. Be careful if TASR looks as if it might steady or creep up or down slowly, as collapsing volatility could mean you lose money in directional options plays even if TASR moves your direction. As I've said, I'm not experienced with this issue, but would be wary. Of course, anyone watching my comments about TASR over the months knows that I'm wary about TASR in general, not liking the spectacular way it rose over the last year or its sometimes sudden moves.

Here's what I note about TASR now, however. A while ago, I fitted a Fibonacci retracement bracket onto TASR's daily chart, and it's worked pretty well so far to show support and resistance levels. Scanning the chart, I could imagine fitting it a little differently, but it's guesswork, and as guesswork, it's functioning fairly well now. On Friday, TASR turned down from below the 80.9% retracement level, for example. It's in danger of forming a double-top formation, complete with a new sell signal on the 21(3)3 stochastics. In addition, TASR's moves have been getting bigger lately, a sign of emotion-based trading. That double-top formation wouldn't be confirmed until a fall below the 3/05 low of $48.23, however, a far distance below the current trading level, and it's possible that TASR is just pulling back ahead of another assault on $65-66 resistance. I'm including a chart which shows near-term support at two ascending trendlines, one currently crossing at about $60, also known to be historical horizontal support, and the other at about $55.35, the approximate location of the 30-dma. Link (Note: I've kept some of my original comments on this chart.) As of this time, TASR is between that $66.00 resistance and $60.00 possible support, so it's difficult to gauge whether a rollover beneath resistance is really in progress, but I do note the bearish divergence in volume as TASR rose this last time.

  Jeff Bailey   3/23/200,  10:41:19 AM
Sectors currently reading "bear alert" ... Aerospace/Airline 52%, Biomedics 52%, Chemical 68%, Drugs 64%.

  Jeff Bailey   3/23/200,  10:33:39 AM
Sectors currently reading "bear confirmed" ... Autos & Parts 58%, Business Products 70%, Computers 50%, Electronic 62%, Forest/Paper Prod. 74%, Healthcare 62%, Internet 48%, Machinery/Tools 68%, Metals Non Ferrous 72%, Precious Metals 56%, Semiconductors 36%, Software 46%, Telephone 54%, Wall Street 68%.

  Jeff Bailey   3/23/200,  10:20:15 AM
Freeport McMoran (FCX) $39.46 -1.69% Link ... lower again today. Has the AMEX Gold Bugs ($HUI.X) 227.22 +0.24% Link still pinned under its January downward trend on bar chart.

  Linda Piazza   3/23/200,  10:19:42 AM
On the OEX, short-term historical S/R and Keltner S/R merge at 536.30-536.70. Bulls want that level to hold. Bears don't.

  Jonathan Levinson   3/23/200,  10:17:30 AM
A 5.25B overnight repo replaces 5.5B expiring, for a net 250M drain.

  Linda Piazza   3/23/200,  10:17:19 AM
An experienced trader provides this information to readers who might like to create their own cheat sheets of charting patterns: Something I've found useful in the charting endeavor is an educational website, Link I've done something similar to a cheat sheet, by cutting/pasting each pattern, with targets, and placed on a single sheet. Hope this helps.

Thanks, Gumby, for the suggestion. I should have remembered this source. This one has the advantage of being free, too!

  Jeff Bailey   3/23/200,  10:04:38 AM
10:00 Internals at this Link

  Linda Piazza   3/23/200,  10:04:22 AM
Jane mentions the struggling markets (on the Futures side), and in the OEX's case, that struggle is going on below the mid-channel Keltner resistance on the five-minute chart, with that resistance at 539.34 currently. I mentioned this morning that we should see a pause in this area, so that's no surprise. It's what happens on this first retracement that's important to watch, and so far, that retracement isn't taking the OEX much lower, either, although a deeper push could be beginning now. That holding near resistance, if it continues, may predict another test of the mid-channel resistance and possibly a push up through that resistance toward the upper channel resistance, currently flattening near 544.12. As Jane mentioned, the TRIN is bullish, but be careful whether trading bullish or bearish today. With the OEX vulnerable to downside toward 525-527 but also vulnerable to a day or two long oversold bounce, trading conditions could be dangerous to a trading account.

  Linda Piazza   3/23/200,  9:59:15 AM
A reader asks about a book or source that might provide a cheat sheet of various chart formations, listing their reliability. This reader has already acquired one of Pring's books, but would like a quicker reference guide. Clifford Pistolese's Using Technical Analysis is a great book to help learn to recognize the various chart formations. Thomas A. Meyers' The Technical Analysis Guide provides information on the technical significance of chart patterns and is easy to follow. Our own Leigh Stevens provides information on chart patterns, too, helping readers to understand them. Someone interested in Leigh's book might read some of his archived articles to gain an understanding of his approach. However, the closest fit to a cheat sheet might be Bulkowski's Encyclopedia of Chart Patterns. Here's an excerpt (copyrighted material): Link Some of these books are available from our bookstore.

  Jeff Bailey   3/23/200,  9:51:57 AM
IBM (IBM) $92.27 +0.27% ...

  Jeff Bailey   3/23/200,  9:45:35 AM
Sectors broadly positive with Airline (XAL.X) 51.37 +2.08%, Disk Drive (DDX.X) 119.91 +1.25%, Networking (NWX.X) 260.16 +1.35% and Semiconductor (SOX.X) 464.30 +1.17% leading gains.

HMO Index (HMO.X) 893.97 -0.17% only equity-based sector I show trading with a loss.

  Linda Piazza   3/23/200,  9:40:50 AM
This morning's OEX gap open transforms yesterday's five-minute pattern from about 2:00 EST on. That pattern had looked more like a bear-flag rising into resistance, but now it can possibly be re-interpreted as a bullish right triangle with an almost flat top at about 536.20 or 536.30 and a rising trendline as bottom support. We should now watch to see if that level holds as support if the OEX should decline in the usual first retracement of the morning. That will be our first test of strength or weakness.

  Linda Piazza   3/23/200,  9:35:43 AM
Mid-channel Keltner resistance is currently at 539.41 for the OEX. It's headed up to test it, and that should provide the first pausing point. During the first five-minutes of trading, the OEX spanned a distance from its gap-higher open at 537.43 to a high of 538.90.

  Jeff Bailey   3/23/200,  9:28:55 AM
palmOne (PLMO) $13.84 ... higher at $16.64 in active pre-market trade after company posted quarterly profit of $0.01, which was better than consensus estimates for a loss of $0.31 per share.

  Jeff Bailey   3/23/200,  9:15:14 AM
09:00 Update at this Link

  Linda Piazza   3/23/200,  8:33:47 AM
Early yesterday morning, as the OEX began rising into a possible bear-flag formation, I speculated that it might be attempting a rise to test mid-channel or upper-channel Keltner resistance, with mid-channel resistance then at about 545 but descending. I noted that I wouldn't be surprised to see that mid-channel resistance declining to 541.50 or at least somewhere in the 540-542 range, meeting up with historical S/R, before the OEX could rise to test it. The mid-channel resistance exceeded my expectations, having already fallen to 539.44 as a result of Monday afternoon's drop. Upper channel resistance has now fallen to 543.90, and it may be that upper resistance that falls toward 541.50 before the OEX can rise far enough to test that resistance. Sometimes when the OEX has violated the lower boundary of the Keltner channels over the course of an entire day or two, it's slung all the way up to the top Keltner channel boundary again, but in this case, it may not be slung far, since that boundary line is still descending.

The OEX ended the day below an ascending trendline off the 8/6/03 and 11/21/03 lows, confirming the OEX weakness. Several measures indicate vulnerability to 525-527. One of those relates to the weekly Keltner channels. Several weeks ago, I posted a chart that showed that the OEX was touching a Keltner channel boundary line that it hadn't touched since March 2000. However, as it touched that channel, bearish divergence showed up. On the March 2000 touch, that channel line had risen higher within a wider channel than it had on the current touch. That suggested a weakening on a weekly basis, which might lead to a decline down to touch mid-channel weekly Keltner support. That support is now near 526.30, near the 527-530 historical support, and also near the 200-dma at 525.09. For reference, the 200-ema is at 527.83. When looking at 200-dma's, I actually usually prefer to watch the -ema rather than the -sma. All those measures, however, show strongest support gathering at 525-527, with some historical support also near round-number support at 530.

Will the OEX drop first to test that 527-530 support or rise first to test the 541-543 resistance? I've been pointing out possible light historical and Fib support in the 534-536 region, so yesterday's lows might be a level from which a bounce might have begun. The five-minute Keltner chart and current futures levels suggest that the rise may occur first, but as Jim speculated this weekend, funds may not be willing to step in until there's firm support beneath the markets. I would expect any rise to be choppy and perhaps to take the form of some sort of distribution pattern such as a bear flag rising into resistance. Such a bounce might take the OEX high enough to make a profitable long play, but until the OEX proves otherwise, it looks as if it would be a countertrend play that would be vulnerable to sudden downside at any time. Let's see what happens as the markets open, but it might be better to look for a rollover entry into a bearish play. Such an entry might not occur today, however, if the OEX needs a day or two to work off oversold conditions. Yesterday's bearishness was strong, as demonstrated by the down vs. up volume statistics that James provided in yesterday's wrap and by the descending vs. ascending OEX stocks that Jeff pointed out in his 22:10 post from yesterday (96 losing vs. 4 gaining stocks). (Thanks, Jeff, for doing all that hard work noting the OEX stocks that had closed down vs. those closing up yesterday.) That kind of bearishness sometimes is a contrarian signal, as is the kind of TRIN levels that were registered yesterday, as noted by reader S.O. Of course, contrarian signals aren't good market-timing tools, but still point to a possible need to work off some oversold pressure. So, altogether, I think there's vulnerability to a short-term countertrend bounce but with the OEX seeming to be drawn inexorably toward a retest of 525-527, or maybe 527-530.

  Jonathan Levinson   3/23/200,  8:24:30 AM
There are no major reports due today.

  Linda Piazza   3/23/200,  7:07:29 AM
Good morning. Tuesday's trading on the Nikkei was a tale of two sessions. Reportedly reacting to Israel's killing of the Hamas leader and other geopolitical upheavals, the Nikkei gapped lower again on Tuesday's opening, gapping more than 100 points below Monday's close. By mid-morning, the Nikkei had fallen another 100 points and at the close of the morning session, the Nikkei had dropped almost 250 points. Exporters dropped in early trading. With some speculating that foreign investors would withdraw from Japanese equities, Japanese big caps dropped. Shinsei Bank, of the much-hailed IPO earlier this year, plummeted in early trading after Merrill Lynch Japan Securities initiated the company with a sell rating.

A burst of strong volume opened the afternoon session, starting a climb that continued through most of the afternoon. The Nikkei even climbed briefly into the green, but couldn't quite stay above that level. It closed down 37.42 points or 0.33%, at 11,281.09, having just completed a H&S on the intraday chart but not yet having met its slightly lower downside target, but still the afternoon climb was remarkable. What prompted the climb? One article attributed the climb to better-than-expected economic data, with January's tertiary industry activity index, measuring the broad services sector, rising 2.6% rather than the expected 1.5%. By the close of trading, the auto sector was mixed, most major banks had turned higher, and semi-equipment makers remained mostly lower. In stock-specific news, Mitsubishi Tokyo Financial Group rose slightly less than 1% after it revealed plans to raise its stake in a consumer finance company, and Yamato Transport gained more than 1% after announcing that it will now deliver printed matter to individuals as well as to corporations.

Other Asian bourses were mixed. Merrill Lynch cut its rating of Taiwan's equities to a market-weight rating from their previous overweight rating, due at least in great part to the political uncertainties after this weekend's assassination attempt, election, and call for a recount. Taiwan's February unemployment rate was released, showing unemployment rising 0.08% from January's level, to 4.61%. The Taiwan Weighted closed down 2.94%, but well off its lows. The afternoon trading pattern did take on a H&S look, but that H&S was unconfirmed at the end of the day. The Bank of Korea released figures saying that South Korea's Q4 GDP rose 2.7% from the Q3 number, the largest gain since 2002's Q1, but 2003's annual growth hit a five-year low, increasing 3.1% over the previous year's growth. Consumer spending fell 0.5%, but exports grew 11% quarter over quarter. Corporate investments grew 4.3%. These figures were characterized as being in-line with expectations, and the Kospi rose off its lows after they were announced. South Korea's Kospi closed up 0.29%. Singapore's Straits Times closed higher by 0.34%. As part of the same statement in which Merrill Lynch suggested that investors cut holdings in Taiwan stocks, the firm suggested buying Hong Kong stocks. Hong Kong's Hang Seng gained 0.30%. China's Shanghai Composite lost 0.80%.

Most European bourses currently trade tentatively higher, but are below their opening levels, rising off lows hit in mid-morning. Many dipped into the red for a short period. Articles attribute the rebound off the lows to tech gains, saying that the gains are not broad-based. Economic numbers this morning surprised to the upside. February's French consumer spending was flat and January's was revised up to 3.3% from the previously estimated 2%. March's consumer confidence number for Italy rose, but the Dutch number fell. The Association of European Airlines revealed information on passenger traffic the week ending March 14, saying that traffic was not down as a result of the Madrid bombs, and some airliners rose as a result. Other news centered on specific stock stories. Deutsche Telecom's investor presentation resulted in an early rise in that stock as its CEO made optimistic statements about regaining market share and growing broadband access. French retailer Pinault-Printemps-Redoute revealed the details of its offer for the shares it does not yet own in Gucci, and declined as those details were digested. Euro Disney announced that its significant stake-holder Walt Disney and lenders will allow it an extra two months to restructure, with Euro Disney also announcing that it had enough liquidity to survive that two-month period. The stock dropped more than 2% in early trading.

As of this writing, the FTSE 100 was up 11.70 points or 0.27%, to 4345.50. The CAC 40 is up 8.18 points or 0.23%, to 3547.40. The DAX has climbed 12.34 points or 0.33%, to 3741.57.

  OI Technical Staff   3/23/200,  4:58:09 AM
Test from the IT staff

  Jeff Bailey   3/22/200,  10:10:23 PM
S&P 100 Index (OEX.X) chart at this Link

Gainer's were MCD $28.35 +0.88% Link , SLE $21.81 +0.73% Link , GD $86.85 +0.66% Link and NSM $39.25 +0.25% Link .

  Jeff Bailey   3/22/200,  8:30:36 PM
Correction to Closing Internals ... at this Link

NASDAQ A/D data feed looks to have been incorrect in prior post and data I had received from usual source.

  OI Technical Staff   3/22/200,  7:48:16 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

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