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  Linda Piazza   4/30/200,  3:57:20 PM
Is it really Friday? I've been thinking it was since Wednesday. Have a great weekend, everyone. The OEX appears ready to end the day sitting on that key trendline, ready to move up through the triangle we've been watching or else drop below it to test its 200-dma.

 
 
  Linda Piazza   4/30/200,  3:54:25 PM
Yes, most people do seem to be paying attention to the 200-sma, James, and it pays to pay attention to what others are watching, too. Sometimes those bounces come right on top of the 200-ema after the -sma appears to have been violated, though, so I wonder if somebody out there isn't watching the -ema's, too.

 
 
  Jim Brown   4/30/200,  3:53:10 PM
Most computer programs are focused on the simple averages (SMA) not the EMA.

 
 
  James Brown   4/30/200,  3:51:31 PM
Linda, I agree about the difference between sma and ema, but Art did talk about whether or not the NASDAQ would hold 1933, suggesting he was focused on the simple 200-dma.

 
 
  Linda Piazza   4/30/200,  3:48:49 PM
Art Cashin on CNBC mentioned earlier this afternoon that the Nasdaq was headed down for the second test of the day of its 200-dma. That would be the -sma. It's violated that, at 1933.56, but it's still above the 200-ema and bounced from above it, with that average at 1913.82. As I mentioned the other day, that gives a slightly different picture, doesn't it?

 
 
  Linda Piazza   4/30/200,  3:45:36 PM
The OEX violated that ascending trendline off August's low again, but it's now bounced high enough to be sitting on that trendline rather than under it. That's not much of a bounce, but we'll see what the next few minutes bring. This isn't encouraging to the bulls so far, but technically this looks as if it should at least attempt a bounce. Maybe today's trading pattern was that attempt?

 
 
  Linda Piazza   4/30/200,  3:32:32 PM
Remember that 72-ema that I mention watching on some tech stocks and some indices? I just happened to click onto a TASR chart. Look what I found (with the 72-ema being the green line): Link

 
 
  Linda Piazza   4/30/200,  3:21:03 PM
The OEX is reaching a double-bottom level, if it could steady here, but we'll know soon. All yesterday and today, that mid-channel resistance on the Keltner channels has been holding the OEX back, but the OEX has been rising up to that resistance, relieving oversold pressure, freeing it to drop again. The mid-channel resistance just keeps drifting lower, too. That resistance is now 545.90, with upper channel resistance now at 550.52. Sooner or later, the OEX is going to need to pop all the way up to the upper channel line, but if it keeps dropping, that won't be too big of a pop.

 
 
  James Brown   4/30/200,  3:19:06 PM
The 3:15 PM update: Link

 
 
  Linda Piazza   4/30/200,  3:12:53 PM
Busy signals? I think I meant "buy" signals in my 15:03 post. I've corrected that statement and the misinformation that record days consisted of days that were making higher highs or higher lows. I meant higher highs or lower lows, of course.

 
 
  Linda Piazza   4/30/200,  3:03:04 PM
Reader Observation: I know you follow the OEX but I was doing a trend search on the QQQ (I want to pick a bottom) and found that if the Q's close negative it will make 5 negative sessions in a row. The last time we had 5 down session was in June 2003 and before that it was in 2002. I don't know what it means because it feels like we could drop another 5 sessions but just an observation. All the hourly stochs have been buried for some time and the daily stochs are just crossing into oversold with their averages lagging behind. What it all means I don't know, maybe you do?

Response: I wanted to include this email in my posts because I believe this reader is doing a great job of looking at all sorts of information when making a decision, including studying the historical tendencies of the QQQ. It's a good idea to keep that historical tendency in mind. The famed Steve Nison of candlestick fame mentions a candlestick pattern that refers to eight to ten record sessions. A record session is a candle that makes a higher high or a lower low than the previous candle. When you have eight-to-ten record sessions in a row, that's a sign that it might be time for a trend change. Nison says it's okay if you see a session or two of consolidation along the way, but they should be almost consecutive.

So, looking at an index the way this reader has studied it is a good thing to do, validated by Nison's study. Of course, the QQQ's are far from producing that 8-10 record lows in a row since their downturn, but I notice that the QQQ's don't produce 8-10 record sessions in a downturn lately. They're more likely to produce 8-10 record days (higher highs) during a rally. However, will that change? Was that a symptom of the rallying mentality only? Time will tell, but that might make me hesitant about trying to pick a bottom.

What about those oversold oscillators? One useful tool to add to a trader's toolkit is the ADX. Jane is more familiar with the ADX than I am, but it's a good measure of a trend's strength. It doesn't matter if the trend is a downtrend or an uptrend--a rising ADX shows that the trend is strengthening. Why is that important? That's because we can't trust buy signals when a downtrend is strong. They may indicate nothing more than consolidation rather than a big bounce. I note that the ADX for the QQQ's currently is only 16.85, not indicative of a strong trend yet in place, but the selling pressure line has made a bearish cross above the buying pressure line, and that selling pressure line is headed up toward 30. Perhaps any buy signals, should they develop, shouldn't be trusted completely? By the way, the settings that I use for stochastics and RSI don't show the QQQ's to be measuring oversold conditions just yet.

That's some background. What does the chart show? While other writers are probably more familiar with the QQQ than I am, here are a couple of impressions: Link The QQQ's have entered a zone of much congestion during October-December last year, so it's possible that its descent could slow. The MACD histogram is negative already, but the lines are just on the verge of moving below signal, a point at which they sometimes do the unexpected and turn back up again. There's more downside possible according to the other indicators. To me, the QQQ's appear vulnerable down to that H&S neckline just above $34, although I would expect some sort of bounce attempt when that's hit. If I were going to jump into a long play on that basis, I'd sure be ready to jump right back out again if the QQQ's headed back toward that neckline. It's possible that bounce could come sooner, too, with the QQQ's bouncing up to test those massed MA's and historical resistance near $36. So, all in all, I'm impressed that the reader is working hard to study these matters, but I urge caution. This might be better information for bearish players to use to measure their risk of a bounce than for bottom-picking.

 
 
  James Brown   4/30/200,  2:57:45 PM
HPT might be worth keeping an eye on. The stock appears to be painting a bear flag pattern. A breakdown under its 200-dma and the $38 level might be a potential entry point.

 
 
  James Brown   4/30/200,  2:36:48 PM
It is encouraging to see OI call play WFMI holding its gains near $80.00 this week.

 
 
  James Brown   4/30/200,  2:35:22 PM
Harman Intl (HAR) is down another 2.58% and under support at its 100-dma (and $80.00 and its 50-dma) but the stock is up off its lows and bouncing from historical price support near $74 from last month. Noteworthy is the strong volume on the last three sessions of declines.

 
 
  Linda Piazza   4/30/200,  2:18:42 PM
Jim has discussed some of the impressions of readers about how event risk is viewed as we head into the weekend. I'd like to add that Iraq isn't our only event risk right now, with decisions coming out of China that might impact global markets. Some feel that China's suggestion/order to banks to suspend loans until May 1 was a ploy that will then allow a rate hike next week, although one article implied that such a rate hike had already been enacted. China has enacted other policies, too, and could employ others. They're not always telegraphed, as I mentioned in an earlier post. Add to that the fact that Japan's markets will not be open Monday through Wednesday. Market participants won't be able to watch the reactions of that market before trading begins here the early part of the week. For those used to turning to the Asian and European markets to see how news is impacting them, it's a little like having to dress for work without knowing if the day will bring a blizzard or a scorcher. I'm wondering if markets might not just wander around in those conditions. To those of us in the options side of the Monitor, then, the risk might not be in which direction the markets will trade, but whether they'll head any direction at all or just wander around while some of this newfound volatility leaks out of those options prices. Plan carefully.

 
 
  James Brown   4/30/200,  2:16:04 PM
Bearish entry? We've had LEH and MWD on the OI watch list recently for a potential bearish play if they break support. That occurred today. LEH has broken support at $75 and its 200-dma while MWD has broken support at $52.00.

 
 
  Linda Piazza   4/30/200,  2:09:36 PM
The OEX keeps turning back from mid-channel Keltner resistance, currently at 546.24. Upper channel resistance lies at 550.95 now, but there's Keltner and historical resistance near 547, too. Keltner support is at the current OEX level, and also at 544.54, 543.32, and 541.53.

 
 
  Linda Piazza   4/30/200,  1:49:55 PM
I should have stayed around long enough to see IPO Intersections or INTX begin trading today. With a first five-minute range of 20.51 to 21.49, INTX subsequently triggered a bullish play on Jeff's 5MRT with a move above 22.48. That set up an upside target of 25.69. The stop originally was at 20.51, but would now have been moved down to either breakeven or just below 23.10. INTX currently trades at 23.80, having moved down from its 24.70 high of the day. Remember we're still just paper-trading these IPO's. Yesterday's two hypothetical trades would have produced a small gain in one and a breakeven trade in the other.

 
 
  Linda Piazza   4/30/200,  1:43:21 PM
I'm back, but it seems as if I never left, at least based on the levels of the OEX at the time when I left. I note that the Dow is making another foray above the 10,300 level, however, right during the usual stop-running time of day. Let's see if this push holds.

 
 
  James Brown   4/30/200,  1:38:04 PM
There appears to be some interesting action in QLogic Corp (QLGC). The company reported earnings on Wednesday and results were inline with expectations but the company guided lower on the current quarter's sales. Normally news like that tends to sink stocks but QLGC gapped higher on Thursday and breaking out of its short-term descending channel and above its simple 10-dma.

Looking deeper it would appear that Wall Street feels the worst is behind it for QLGC. At least that was the general consensus yesterday. Analyst reaction titled to the positive side with a couple of upgrades as the most likely culprit for the gap higher. Valuations are a strong consideration here with QLGC trading at 50% of its November highs. However, the stock is sinking again today. Would I consider new shorts here? Maybe. The weakness in the SOX will help the bears but I would be careful that QLGC is not just filling the gap from yesterday. I would keep an eye on it though. If the stock broke down under the $26.00 mark I would probably consider bearish plays with a target toward historical support near $20.00.

 
 
  James Brown   4/30/200,  1:23:53 PM
Ah... we're starting to see talk of the "Sell in May and walk away" strategy again. According to the Stock Traders Almanac election year Mays tend to be worse under performers than usual. Yet the Almanac also states that the Industrials have closed higher on the first trading day in May for five out of the last six years.

 
 
  Jim Brown   4/30/200,  1:09:14 PM
Appears there are not any funds doing any month end window dressing in techs.

 
 
  James Brown   4/30/200,  1:07:09 PM
The 1:00 PM update: Link

 
 
  Jim Brown   4/30/200,  12:57:22 PM
The London markets are closed on Monday for a holiday and Japanese markets are closed Monday-Wednesday for holidays. With the Fed meeting on Tuesday that Japan open on Thursday should be exciting. Can you imagine the U.S. markets being closed for three days over a Fed meeting?

 
 
  James Brown   4/30/200,  12:49:34 PM
Krispy Kreme (KKD) continues to sink and is nearing support at the $32.00 level again.

 
 
  James Brown   4/30/200,  12:45:55 PM
Crude oil futures hit $38.05 per barrel earlier in the session and is giving the OIX oil index a bounce today.

 
 
  James Brown   4/30/200,  12:45:51 PM
Ouch! American Power Conversion Corp (APCC) is down 18.8% to $18.83 after reporting earnings last night that missed estimates by 2 cents per share. Revenues also came in under expectations but that hasn't stopped First Albany from upgrading the stock to a "buy".

 
 
  James Brown   4/30/200,  12:44:21 PM
There has been no bounce in the NWX networking index. The group is down five days in a row with Thursday's decline a breakdown under support at the 250 level and its 200-dma.

 
 
  Jim Brown   4/30/200,  12:40:21 PM
The Nasdaq is coming very close to its 200dma at 1933 and this is a very likely bounce point. Horizontal support at 1900 would be my next choice. Tech stocks tend to honor the 200dma, especially on the first test.

 
 
  James Brown   4/30/200,  12:39:03 PM
test

 
 
  Jim Brown   4/30/200,  12:38:30 PM
The Nasdaq is coming very close to its 200dma at 1933 and this is a very likely bounce point. Horizontal support at 1900 would be my next choice. Tech stocks tend to honor the 200dma, especially on the first test.

 
 
  James Brown   4/30/200,  12:38:05 PM
There has been no bounce in the NWX networking index. The group is down five days in a row with Thursday's decline a breakdown under support at the 250 level and its 200-dma.

 
 
  Jim Brown   4/30/200,  12:38:04 PM
The Nasdaq is coming very close to its 200dma at 1933 and this is a very likely bounce point. Horizontal support at 1900 would be my next choice. Tech stocks tend to honor the 200dma, especially on the first test.

 
 
  Jim Brown   4/30/200,  12:30:00 PM
GUC - Got Gucci? If you do you saw your shares drop off the NYSE today as the exchange halted trading in the stock. Outstanding shares fell below 600,000 and the threshold for listing on the NYSE. A French retail group has been buying all the shares of Gucci it did not already own.

 
 
  Jim Brown   4/30/200,  12:22:52 PM
The SOX has rolled over and is negative for the day. This has been the anchor for the Nasdaq and is currently at a six month low. The Russell is still clinging to the high ground at 564 with critical support at 556. A break of that support would put the $RUT.x at a four month low. Coupled with the already broken SOX this would be very negative for the market and probably predict a serious additional drop.

 
 
  Jim Brown   4/30/200,  12:16:33 PM
Monday has a key economic report in the ISM at 10:00. This is a key look at the current state of the economy and not a look back like the GDP. This is the day before the FOMC meeting and coupled with the Jobs data on Friday should give the Fed the data they need to make a decision.

 
 
  Linda Piazza   4/30/200,  11:48:10 AM
It looks as if that OEX 547 level is the level to watch this morning. I'm taking off now and will return as soon as possible.

 
 
  Jane Fox   4/30/200,  11:46:34 AM
James I wonder if the move in HELE has anything to do with the new Brad Pitt movie Troy. (just kidding!)

 
 
  James Brown   4/30/200,  11:46:21 AM
Sirius Satellite Radio (SIRI) is up 5.7% to $3.32 after announcing this morning that its market share of the retail market had risen to 44% in March. According to their press release the number of Sirius Satellite radios sold in March hit more than 32,000 units. This is a 110% jump over March of last year and a 38% jump from February of this year.

Its chief rival, XM Satellite Radio (XMSR), was down just 9 cents to $23.98.

 
 
  James Brown   4/30/200,  11:41:23 AM
Helen of Troy (HELE) is up 11.49% and breaking out over resistance at $32.50 to a new all-time high. The move was sparked by news that HELE would by Oxo International for $275 million in cash. The acquisition would boost its 2005 earnings outlook from $2.30-2.40 per share to $2.50-2.70.

 
 
  Linda Piazza   4/30/200,  11:34:35 AM
While I'm gone today, OEX traders might keep an eye on the key 30-, 60-, and 120-minute 100/130-pma's if the OEX should continue to rise. Earlier in the week, these averages were clumped so tightly together that they presented a united front, but the steep drop has separated them a little, with the 30-minute averages reacting more quickly, of course. These averages now range from 551.68 to 553.31. In addition, on the daily chart, the 72-ema is now at 551.72, which is also the site of the steepest of the ascending trendlines off the 3/24 low. A lot of resistance appears to be converging from 551.50-553.50. Any in bullish plays should take measures to protect profits as that level is approached, and any who want new bearish entries should watch for a rollover from below 554, if not from 547-548. As I mentioned this morning, however, be conservative about any entries ahead of the weekend.

 
 
  Jim Brown   4/30/200,  11:25:21 AM
TASR - Down -2.39 to 35.40 after splitting 2:1 last night. Going to be a little harder to push it around with twice as many shares available now.

 
 
  James Brown   4/30/200,  11:24:39 AM
Time Warner Telecom (TWTC) is doing its best impression of a dead cat bounce. Yesterday the stock fell from $5.53 to close at $3.75 after hitting an intraday low near $3.45. Today shares are up 4.26% to $3.91. The big drop yesterday was investor response to TWTC's earnings miss. Analysts were looking for a loss of 27 cents and TWTC reported a loss of 34 cents. Revenues actually fell 2%.

 
 
  James Brown   4/30/200,  11:19:32 AM
Ouch! Ingram Micro (IM) is down 27% to $11.70 after reporting earnings last night that were inline with estimates but the company guided lower for the second quarter. Analysts were looking for 22 cents a share for Q2 and IM now believes earnings will fall closer to 13-16 cents per share.

 
 
  Linda Piazza   4/30/200,  11:17:10 AM
The BIX is trying to find its footing again and climb up through its ascending regression channel on its daily chart. As the BIX has not yet met the downside target projected by its H&S formation, it's possible that the regression channel could be a bear flag climbing into resistance, so be watchful for a possible breakdown out of that flag sometime before the BIX reaches the neckline area again, at 345. A push back above that neckline would be more bullish.

 
 
  Linda Piazza   4/30/200,  11:14:16 AM
Mid-channel resistance on the OEX is now at 547.17, with further resistance ahead of that at 547.87. That higher five-minute low will be confirmed on a push above the mid-channel resistance.

 
 
  James Brown   4/30/200,  11:12:30 AM
The 11:00 AM update is posted. Link

 
 
  Linda Piazza   4/30/200,  10:58:53 AM
Yesterday, we followed two hypothetical daytrades on IPO's using Jeff's 5MRT system, at least through part of the day, but I wanted to mention how the trades would have ended. BTRX triggered a bearish trade with a trade under $14.32, but then climbed without climbing high enough to hit the stop, and sank again. It ended the day at $14.00, so there would have been a gain in the position. It never approached its downside target, not even hitting the bearish #3 after triggering the play at the bearish #2. Still, a gain is a gain.

CYTK triggered a bullish play on a climb above $16.32, but then it sank without sinking far enough to hit the stop. It climbed in the afternoon, but closed at $16.41, about $0.09 above the stop. This would have been a breakeven play, depending on the time of the exit, however, as it traded back and forth across the entry level all through the last twenty-five minutes of trade.

For those who want to track another paper trade in my absence today, another IPO is due to be released. It's INTX or Intersections.

 
 
  James Brown   4/30/200,  10:41:41 AM
Sector Update...

Winners:
OIX oil index: +0.87%
DJUSHB Homebuilders: +0.54%
DRG drug index: +0.44%
IUX insurance: +0.22%
...also in the green is banking, utilities and natural gas.

(Biggest) Losers:
INX Internet index: -2.74%
NWX Networking index: -2.36%
DDX disk drives: -2.01%
HMO Healthcare: -1.54%
BTK biotechs: -1.38%
XBD broker-dealers: -1.22%

 
 
  James Brown   4/30/200,  10:38:23 AM
H R Block (HRB) issued some relatively positive news this morning that fees as of April 15th jumped 4.8% and that the company expects to top its year-end targets. Yet the stock's early morning strength quickly faded at its simple 10-dma. This short-term moving average has been used as a guide to sell the stock for the last two months as HRB has fallen from $61 to $45.

 
 
  Linda Piazza   4/30/200,  10:35:29 AM
The OEX is headed right back for another test of that ascending trendline off the August low, with that trendline now at about 542. I'm beginning to see some bullish divergence on the five-minute Keltner charts, but those bullish divergences were good for little more than tepid bounce attempts soon aborted when we saw them yesterday.

 
 
  James Brown   4/30/200,  10:31:04 AM
Allergan Inc (AGN) is down 2.39% and breaking through support at $90.00 and its 10-dma. The company reported earnings this morning that beat Wall Street's estimates by 2 cents on very strong revenue numbers. Unfortunately, AGN's guidance was a little light and investors are choosing to take profits.

 
 
  James Brown   4/30/200,  10:27:11 AM
Ouch! Foundry Networks (FDRY) is down 21.4% to $11.13 after missing earnings last night and guiding lower for the second quarter. Analysts were expecting Q1 numbers at 17 cents per share. FDRY reported 14 cents. Management then lowered their Q2 guidance to 13-15 cents vs. expectations of 17 cents.

Wall Street's reaction has been very mixed. Some brokers are downgrading FDRY. Others are upgrading it. Several are reiterating their bullish outlooks for the stock.

 
 
  James Brown   4/30/200,  10:21:45 AM
SonoSite Inc (SONO) is up 22.6% to $24.05 after reporting earnings last night that beat estimates by a penny. Revenues jumped 37% to $23.5 million, also beating estimates. A.G.Edwards has upgraded the stock from a "hold" to a "buy" on the news. Today's reaction seems a bit over done considering the earnings report.

 
 
  Jonathan Levinson   4/30/200,  10:13:45 AM
Chicago PMI 63.9%.

 
 
  Linda Piazza   4/30/200,  10:09:51 AM
XAU: Yesterday a reader wrote asking for my impressions of the XAU. I had cautioned that although the XAU had broken below one support level, it was approaching the target of its H&S and might be due for a bounce up to the 50% level of the flagpole drop or other resistance levels that I mentioned. After the market close, Keene weighed in on the MM side of the Monitor, in a 4:42 post. I thought some of you might have missed it. It's my impression, if I was reading that post correctly, that while both of us believe that the XAU might be due for a bounce, Keene feels at least slightly more comfortable playing that bounce that I would. For those of you who want to participate in a long play in NEM on the hopes of a bounce in that stock and the XAU, you might check out Keene's post in the archives for things to consider.

 
 
  Jonathan Levinson   4/30/200,  10:04:57 AM
13.5B in Fed money expires today against 5.75B just announced for another net drain. This should be felt bearishly by the markets today.

 
 
  Jim Brown   4/30/200,  10:00:12 AM
Chicago PMI = 63.9 , (est 60.0, last 57.6)

 
 
  Jane Fox   4/30/200,  9:56:32 AM
Linda let me assure you how much I miss the $TRIN. I have tried using the QC:TRIN but it does not print like the $TRIN. I called Qcharts yesterday about it and they said it is top priority.

 
 
  Linda Piazza   4/30/200,  9:54:30 AM
I sure wish the TRIN issue would get resolved. I see that it's not today. As Jane or Jim may have noted already today, advdec is positive today, but not entirely convincing. As I type, the OEX is testing Keltner support near 545.52, slipping a little beneath it, but still caught in its net. If this support fails, next support is near 544.38 on a Keltner basis, with 542.86-543.32 below that.

 
 
  James Brown   4/30/200,  9:52:05 AM
Currently AU is slipping lower in what appears to be a move to fill the morning gap. Look for a bounce from the $31.75 region.

 
 
  James Brown   4/30/200,  9:50:32 AM
As Jon mentioned on the FuturesMonitor, Gold is up. Currently the precious metal is u $2.60 to $389.70. The XAU gold & silver index is up 1.08%. Our speculative play in Anglogold (AU) has been triggered on the gap open at $32.25. I'll feel a lot more confident if AU can close above $32.65 today.

 
 
  Jim Brown   4/30/200,  9:49:16 AM
SSP - Announced a 2:1 stock split

 
 
  Jim Brown   4/30/200,  9:47:23 AM
Consumer Sentiment = 94.2 , (est 94.0, last 93.2)

 
 
  Linda Piazza   4/30/200,  9:42:50 AM
Like Keene on the Futures side of the Monitor, I'm going to need to leave this morning, too. I, too, will be gone at least through the lunchtime lull, but am not sure of the exact time of my return. OEX traders looking for guidance should refer to my 8:43 post or watch Jim's ES commentary on the Futures side of the Monitor.

 
 
  Linda Piazza   4/30/200,  9:38:21 AM
I'm watching the Dow challenge 10,300, with it popping 15 points above as I typed. An important challenge today, I think.

During the first five minutes of trading today, the OEX spanned a range from 544.54 to 545.92, as it heads up toward central Keltner resistance at 547.86.

 
 
  James Brown   4/30/200,  9:38:05 AM
The morning update: Link

 
 
  Linda Piazza   4/30/200,  8:43:32 AM
First, let me begin this post by saying that I'd be cautious about initiating any new position on a Friday before the week in which a potentially market-moving FOMC meeting will take place. That's especially true with China inaugurating a series of moves intended to puncture its ballooning economy, moves they don't always carefully telegraph to the global investment community before initiating them. We've seen what beginning tightening measures in China's roaring-hot economy has done to global bourses, and you can imagine what will happen if our Fed governors hint at or enact any measures to tighten ours, too. Perhaps China's moves have already accomplished much of the initial damage that could be done by the hint of or beginning of a tightening cycle here, too.

With the big losses over the last few days, it's surprising to step back and realize that the OEX still hasn't broken through the lower triangle support on its daily chart, although it did of course break through the smaller triangle. In fact, it tested that lower-triangle support and mounted a small late-day bounce in the last few minutes of trading: Link Daily oscillators still suggest that there could be more downside to go, but the OEX has also reached the bottom support of the broadening formation in which it's been trading since early April. Those of you who have been reading my early-morning reports know that while I acknowledged the possibility that the April pullback could be a bull flag, I was skeptical of that broadening shape. It wasn't the typical type of broadening formation, most of which have bearish connotations, but it sure wasn't typical of a flag, either, which put me on the fence about its implications. Now, however, the bottom support of that megaphone shape converges with the rising trendline support, both of which converge with historical support near 542. That was the perfect place for a bounce to begin.

How far will it carry? Keltner channels have been signaling oversold conditions since late Tuesday, but since they can give valid breakout signals, too, I've been suggesting that bears follow the OEX lower with their stops. Perhaps it's time for another test of the mid-channel Keltner resistance on the five-minute chart, currently at 547.73. It may even be time for a test of upper channel resistance, now at 552.66 but still descending. OEX 547-548 and 552-554 each represent areas of historical S/R or significant moving averages, too, so each of those represents resistance from another perspective, too. Right now, I'd say a rollover entry at one of those points would make the best sense for a bearish play, although I think I'd want to use smaller positions when initiating any new positions beginning now. A break below yesterday's low might see a fall down toward 534.

What about a bullish entry? I'm not interested ahead of the FOMC meeting, although I acknowledge that a bounce up to upper-channel Keltner resistance would be a nice play, if it occurs. There could be some justification for considering a long on another touch of and bounce from that rising trendline but I note tonight that both the Dow and the Nasdaq have broken through similar supporting triangle trendlines. That suggests that the OEX could do so, too. A better long entry, perhaps, would be on a bounce from the 200-ema or -sma. Even then, I'd consider such an entry a risky one, and I wouldn't want to do it on a Friday before next week's FOMC meeting, I don't think.

 
 
  Jonathan Levinson   4/30/200,  8:31:04 AM
Personal income up .4%, spending up .4%.

 
 
  Jonathan Levinson   4/30/200,  8:07:55 AM
We await the 8:30 release of personal income for March, est. .4%, personal spending, est. .7%, then at 9:45AM Michigan sentiment, est. 94, and at 10AM the Chicago PMI, est. 61.

 
 
  Linda Piazza   4/30/200,  7:13:24 AM
Good morning. The Nikkei fell off a ledge early Friday. It gapped lower and tumbled straight down, more than 350 points with the first hour of the market opening. The Nikkei then traded in a narrow range the rest of the day until the last hour before the close when it climbed steeply into the close. It closed down 242.50 points or 2.02%, at 11,761.79. That was its lowest close since April 2, although the April 16 close was nearly as low.

You would have thought the news was all bad, but March's jobless rate actually declined to 4.7%, a three-year low. That information was tempered by a big drop in salaries, with those salaries falling 2.7% in March. That information renewed worries about consumer demand, slow to recover. Core consumer prices fell again in March, although during the last year, core consumer prices dropped less than they have in the previous few years. In addition, market participants reacted to fears that both China and the U.S. would raise interest rates, with other sources reporting that China had already begun that tightening cycle, raising interest rates half a percentage point. Since I can't find confirmation of that and since other sources speak of a rate hike possibly being considered next week during the May holiday, treat that information with some skepticism. Later in the trading day, news surfaced that China had canceled construction on a steel project and arrested local banking and government officials to clamp down on spending. Some bankers are confirming an order to halt lending until May 1, an order the Chinese government denies issuing. A government spokesperson issued a clarification to the press earlier in the week, saying that was a suggestion only and not an order.

Suggestion or order, the move had an impact across the globe, as it did in Japan on Friday. Exporters fell with computer-related stocks leading the decline in the morning session. Miners and producers of raw materials declined. Nippon Steel closed down by more than 6%. Some market watchers said the thin post- and pre-holiday (Japanese markets will be closed again Monday through Wednesday) trading contributed to the sell-off. However, despite the massive losses, Mitsubishi leaped more than 11% higher after the conclusion of a special shareholders meeting.

Other Asian bourses were mixed, although most closed lower, too. The Taiwan Weighted plummeted 4.44%. South Korea's Kospi lost 1.44%, but Singapore's Straits Times climbed 1.65%. Hong Kong's Hang Seng declined 0.52%, but China's Shanghai Composite climbed off its low of the day, down in negative territory, to close up by 1.02%.

European bourses turn in a mixed performance today, with the FTSE 100 and CAC 40 trying to hold onto the flat-line levels with mixed results. Both slip lower as this report is prepared. However, the FTSE 100 is helped in that effort by the gains in troubled bank Abbey National, reportedly in talks with a Spanish bank, and pharmaceutical GlaxoSmithKline, rising after its earnings report. Mining stocks trade lower. In Europe, post-earnings gainers in early trading included Credit Suisse, Germany retailer Metro, Volkswagen, and PSA Peugeot Citroen. In addition to those gainers, Sanofi-Synthelabo received positive broker attention, sending the stock higher by more than 4% in early trading. Post-earnings losers in early trading included Alcatel, Deutsche Bank, enterprise software maker Business Objects, and IT group Atos Origin. Business Objects plunged 20% and Atos Origin fell more than 6%.

As of this writing, the FTSE 100 trades lower by 9.30 points or 0.21%. The CAC 40 has dipped lower by 7.02 points or 0.19%, to 3682.37. The DAX has fallen 26.78 points or 0.67%, to 3982.13, slipping beneath the 4000 level.

 
 
  OI Technical Staff   4/29/200,  9:32:02 PM
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