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  Jeff Bailey   5/4/2004,  5:19:07 PM
Closing Internals at this Link

Note: at 04:00 PM EDT, QQQ was trading $35.42, closes at 04:15 PM EDT at $35.25.

 
 
  Jeff Bailey   5/4/2004,  5:11:30 PM
Good Gravy! on April 21, INDU closed 10,317.27 ....

 
 
  Jeff Bailey   5/4/2004,  4:57:58 PM
Refresher for tonight's Wrap. Here's the link to the 04/21/04 Index Wrap Link

 
 
  Jim Brown   5/4/2004,  4:09:54 PM
Earnings After the Close - Reduced List:

HIG est = +1.47, actual = +1.93
LNC est = +0.91, actual = N/A
PRU est = +0.73, actual = +0.74
RNR est = +1.61, actual = +1.93
SNIC est = +0.17, actual = +0.17
OCLR est = +0.33, actual = +0.29
PDLI est = -0.11, actual = -0.13
WWCA est = +0.11, actual = +0.32
WFMI est = +0.50, actual = +0.54

 
 
  Jeff Bailey   5/4/2004,  4:03:55 PM
Semiconductor Index (SOX.X) 448.31 +1.68% ... closed right between the 446.54 and 449.53 of our MONTHLY/WEEKLY pivot retracement zone.

 
 
  Jeff Bailey   5/4/2004,  4:02:25 PM
Buy/sell program premium notes ... QQQ $35.41 +0.85% ... OK, checking the QQQ also. Note that on April 21, these darned QQQ found support at CURRENT MONTHLY pivot of $35.66, the day of all the program premiums.

Today's high in the QQQ was $35.75, but got chopped off pretty quick at the MONTHLY Pivot ($35.66).

Thinking.... traders might not want to be overly aggressive tomorrow morning, but if a bearish setup is to take place, QQQ might find BID early, then get whacked back lower.

 
 
  Linda Piazza   5/4/2004,  3:59:30 PM
Remember the 72-ema I watch with respect to the OEX? Here's why I watch it. Note today's action: Link Somebody besides me is watching this average.

 
 
  Jeff Bailey   5/4/2004,  3:56:51 PM
SPX buy/sell program notes ... looking at 60-minute chart. On 04/21/04, SPX was able to hold a close above our CURRENT MONTHLY pivot of 1,121.61, on 04/22/04, SPX dipped lower at the open, but then shot higher.

Thinking.... if SPX can hold a close above 1,121.61 (trades 1,119.47), then positive bias into tomorrow, if not, could be a rejection back lower.

 
 
  Jeff Bailey   5/4/2004,  3:52:21 PM
Program Trading notes ... just now remembering action from April 21 and notes regarding a lot of program trading premium (mostly sell) that day.

Quick check shows that current levels of SPX trade almost identical to that day.

On April 22, 2004, the move was a big one to the upside.

A LOT of disagreement about price action from these levels.

 
 
  Linda Piazza   5/4/2004,  3:49:52 PM
CAI update. CAI certainly took a tumble after I mentioned it in bearish connotations earlier today. In fact, it tumbled all the way to support, just above $40.00. This was almost a guaranteed spot for a bounce, especially as it has fallen so quickly today. Any who might have entered a bearish trade after my earlier profile should be taking steps to protect profit here if they haven't already done so after reading my suggestions about support levels. I'm not sure how long the bounce will last.

 
 
  Jeff Bailey   5/4/2004,  3:49:31 PM
Buy Prog. Premium SPX 1,119.79

 
 
  Linda Piazza   5/4/2004,  3:31:51 PM
What was that about the OEX holding above 547? I could barely get that typed before the OEX headed lower. It's nearing mid-channel Keltner support at 545.89. I wouldn't be surprised to see another bounce here, up to 547-547.80 or so.

 
 
  Linda Piazza   5/4/2004,  3:29:29 PM
The OEX's 30-minute chart pattern is certainly anything but bullish with this 30-minute period almost completely retracing the previous 30-minute period's gains. However, the OEX is holding, so far, above 547, the breakout level. Sometimes after these market-moving events, the OEX has to come back and have a do-over, to see if it really meant to do what it did. We're about to see.

 
 
  Jeff Bailey   5/4/2004,  3:24:35 PM
Motorola (MOT) $18.68 +2.57% ... that was a bad tick down to $17.75, but showed a block of 150,000 shares.

 
 
  Linda Piazza   5/4/2004,  3:21:43 PM
The OEX spiked up to the 60-minute 100/130-pma's and has since fallen back under the 30-minute 100/130-pma's. This should be a sell signal, but I'm still not sure the post-Fed-announcement volatility has been shaken out. If bearish traders took that signal, they should be ready to exit just as quickly as they jumped in, too.

 
 
  Jeff Bailey   5/4/2004,  3:19:15 PM
U.S. Market Watch at 03:15 PM EDT. Link

Volatility for sure!

 
 
  Ray Cummins   5/4/2004,  3:16:42 PM
Combos/Premium Selling -- Oversold Bounce: Sierra Wireless (NASDAQ:SWIR)

After losing half of its value in only two weeks, SWIR shares are on the rebound today, up $2.98 at $24.48 on news of a contract sale. Sierra Wireless announced that VeriFone, the worldwide leader in electronic payment solutions, has chosen one of Sierra's embedded wireless modules for VeriFone's Omni family of mobile and countertop IP-enabled, wireless point of sale payment terminals. The agreement also names Sierra Wireless as the exclusive provider of wireless modules for VeriFone in global markets. Investors are obviously pleased with the new contract and traders who think a "bottom" may be forming in the near-term SWIR price pattern might consider selling a MAY-$20 put for a credit near $0.30.

 
 
  Jeff Bailey   5/4/2004,  3:15:03 PM
Sell Program Premium ... SPX 1,120.56 ... back at WEEKLY Pivot.

Three little pigs trying to shut the door on rally.

 
 
  Jeff Bailey   5/4/2004,  3:13:33 PM
Sell Prog. Premium SPX 1,121.72 ... session high was 1,112.89, so pretty notable reversal going on here.

 
 
  Jeff Bailey   5/4/2004,  3:08:41 PM
03:00 Internals at this Link

Note build in NL at the NYSE. Most likely interest sensitive.

 
 
  Linda Piazza   5/4/2004,  3:07:24 PM
Currently, the OEX is trapped between the 30- and 60-minute versions of the 100/130-pma's, not an easy position from which to judge strength vs. weakness.

 
 
  Linda Piazza   5/4/2004,  3:01:52 PM
There go the 30-minute versions of the 100/130-pma's, with the 60-minute versions being tested as I type. The 120-minute versions, which I find more correlative for the OEX, are currently at 551.03 and 552.13. We've had a breakout signal on the OEX five-minute Keltner chart, with an extreme push through the channel, so it's time for bulls to begin measures to protect their profits, including raising stops to follow the OEX. I expect some steadying as those 120-minute versions are approached, if not a pullback.

 
 
  Jeff Bailey   5/4/2004,  2:57:18 PM
Dow Industrials (INDU) 10,368.79 +0.53% ... pounded its way above WEEKLY and MONTHLY pivots 15-minutes ago, where buy program premium was found.

 
 
  Linda Piazza   5/4/2004,  2:53:47 PM
Okay, so we're getting the test of the 30-minute versions of the 100/130-pma's on the OEX, as I said I wouldn't be surprised to see post-Fed-announcement. What happens next? I'm not sure about that, as I'm just not sure that the volatility has been expended and we're settling down to real trading yet.

 
 
  Linda Piazza   5/4/2004,  2:51:29 PM
The OEX broke through the top of that regression channel depicted in my 14:42 post and is currently challenging the 30-minute 100/130-pma's, with the 60- and 120-minute versions layered above.

 
 
  Jeff Bailey   5/4/2004,  2:47:09 PM
Dow Industrials (INDU) 10,328 .... 5-minute bar chart looks like a wolf pounding (or huffing and puffing) at the three little pigs' door and WEEKLY Pivot.

 
 
  Jeff Bailey   5/4/2004,  2:44:01 PM
10-year YIELD ($TNX.X) ... now higher by 5.5 bp at 4.556%.

Major indices seem to give little notice.

Dow Jones Home Construction (DJUSHB) 586.79 -0.98% not doing all that much, still off session lows (before FOMC) of 585.96.

 
 
  Linda Piazza   5/4/2004,  2:42:24 PM
OEX 547 is so far holding as resistance. Here's a regression channel I'm watching: Link A fall back through the post-Fed gap would look bearish.

 
 
  Jeff Bailey   5/4/2004,  2:40:03 PM
Sell Program Premium .... SPX 1,119.36 +0.16%

 
 
  Jeff Bailey   5/4/2004,  2:35:35 PM
Treasuries ... benchmark 10-year YIELD ($TNX.X) whips back higher, with selling now coming in. YIELD higher by 2.3 bp at 4.524%.

 
 
  Jeff Bailey   5/4/2004,  2:32:10 PM
It's been an intra-day gap fest for the SPX last 15-minutes on the 5-minute bars. Can't make its mind up.

Session high still 1,121.38, trades 1,118.19 here.

 
 
  Linda Piazza   5/4/2004,  2:31:44 PM
The OEX two-minute chart is ugly. Price is jumping around so much on that chart that it's difficult to tell where the price bar is. As Jonathan said earlier, whatever you do, use stops.

 
 
  Jeff Bailey   5/4/2004,  2:31:08 PM
S&P Banks (BIX.X) 338.53 +0.35% .... just off session high of 339.24 and trades its DAILY R1 here.

Bullish post FOMC bias, but not overly so.

 
 
  Jeff Bailey   5/4/2004,  2:28:25 PM
QQQ $35.21

 
 
  Jeff Bailey   5/4/2004,  2:25:17 PM
SPX.x 1,120.68 +0.28% ... has moved into MONTHLY Pivot/Weekly Pivot zone.

Right at its DAILY R1 of 1,120.68 here. Just sitting here.

 
 
  Jeff Bailey   5/4/2004,  2:23:59 PM
Dow Diamonds (DIA) 103.58 +0.27% ... post FOMC high was 103.65, a penny shy of today's DAILY R1.

 
 
  Jeff Bailey   5/4/2004,  2:22:31 PM
Buy Prog. Premium ... SPX 1,121.38

 
 
  Jim Brown   5/4/2004,  2:21:57 PM
Fed statement in full: Link

 
 
  Jeff Bailey   5/4/2004,  2:21:22 PM
QQQ $35.37 ... post FOMC high has been $35.42, just under DAILY R1

 
 
  Jeff Bailey   5/4/2004,  2:20:24 PM
Big move in treasuries 10-year YIELD ($TNX.X) darts lower, now down 5.7 bp at 4.444%

 
 
  Jeff Bailey   5/4/2004,  2:19:35 PM
Day trade bearish stop alert QQQ $35.37

 
 
  Linda Piazza   5/4/2004,  2:19:37 PM
Here comes the OEX test of the 547.20 resistance, and if that is breached, the 30-minute 100/130-pma's.

 
 
  Jeff Bailey   5/4/2004,  2:18:43 PM
Buy Program Premium SPX 1,119.41

 
 
  Ray Cummins   5/4/2004,  2:18:25 PM
Combos/Premium Selling -- Bearish Trend Underway: American Pharmaceutical Partners (NASDAQ:APPX)

This popular "premium-selling" candidate appears to be in the beginning stages of an intermediate downtrend, despite a lack of public news to explain the activity. The stock is down $2.28 at $40.15 and the next level of substantial technical support is near $36 (150-DEMA and NOV03-FEB04 trading range). Readers who agree with a bearish outlook for the issue might consider selling the MAY-$50 call for a credit near $0.50. Keep in mind, however, this is a very volatile issue and there is potential for a large upside move in conjunction with the announcement of the Abraxane filing acceptance.

 
 
  Jeff Bailey   5/4/2004,  2:18:14 PM
Sell Program Premium ... SPX 1,118.13

 
 
  Jeff Bailey   5/4/2004,  2:16:41 PM
Sell Program Premium

 
 
  Jim Brown   5/4/2004,  2:16:38 PM
FOMC announcement - No rate change, dropped the patient phrasing, risks balanced, measured moves ahead

 
 
  Jeff Bailey   5/4/2004,  2:14:25 PM
potential interest rate hike alert ... very short-term 13-week YIELD ($IRX.X) 9.91 is at session high. This is 0.991%, but notable gain from the 13-week note with FOMC any minute now. Link

 
 
  Linda Piazza   5/4/2004,  2:13:59 PM
The OEX 30-minute 100/130-pma's have been slanting strongly toward the current OEX position and are currently at 548.50 and 549.35, respectively. The possible reverse H&S on the OEX 30-minute chart drew back to form a second right shoulder, beginning to form a pattern of higher lows beneath horizontal resistance near 547. Based on all that evidence, I wouldn't be surprised to see a blip above that resistance and a test of those MA's after the announcement. I wouldn't be surprised to see the OEX head back toward 542, either, though, or to see both within a short period of time, for that matter, however.

 
 
  Jeff Bailey   5/4/2004,  2:13:01 PM
QQQ $35.15 .... any minute now ....

 
 
  Jeff Bailey   5/4/2004,  2:12:10 PM
Motorola (MOT) intra-day chart with upper/lower 5-MRTS. Link

 
 
  Linda Piazza   5/4/2004,  2:08:56 PM
Jeff, I've had my eye on MOT, too.

 
 
  Jeff Bailey   5/4/2004,  2:06:28 PM
Need a day trade long candidate? .... I've got an eye on Motorola (MOT) $18.59 +2.03% .... stock has pulled back after big move up a couple of weeks ago. Nice big 5-minute bar this morning. Hanging just below BLUE #2 right now.

 
 
  Jane Fox   5/4/2004,  2:06:01 PM
Here is what John Berry a columnist for Bloomberg has to say about today's FOMC meeting Federal Reserve officials won't raise interest rates at today's Federal Open Market Committee meeting. What they will do is take another rhetorical step or two in that direction.

That won't be enough to satisfy a growing number of economists and analysts who firmly believe inflation has accelerated and that the Fed should have begun raising rates before now.

Yesterday, a group of monetarist economists, the Shadow Open Market Committee, said the Fed should raise overnight rates by 25 basis points because "economic growth has substantial momentum [and] common measures of inflation have accelerated."

 
 
  Linda Piazza   5/4/2004,  2:03:23 PM
Here's a trendline I'm watching on the OEX 15-minute chart: Link

 
 
  Jeff Bailey   5/4/2004,  2:02:32 PM
SPX.X 1,115.92 -0.14% ... couldn't be anymore in the middle of 1,111.46 to 1,121 as we await the FOMC.

 
 
  Jeff Bailey   5/4/2004,  2:00:10 PM
SOX.X ... intra-day chart of SOX.X at this Link

QQQ trades $35.20 at time of this SOX screen capture.

 
 
  Linda Piazza   5/4/2004,  1:59:40 PM
I'm just taking note that the Nasdaq has not yet broken out of yesterday's inside-day range. After the FOMC release, perhaps? As several of us have cautioned, remember that the first movement after a market-moving event is not always the final one.

 
 
  Jane Fox   5/4/2004,  1:52:23 PM
I was just talking to my sister who lives in Vancouver and asked her the price of gas up there. She said it was $0.94/liter. There is 3.79 liters in an American gallon so my sister is paying $3.56/gallon. I don't think I will complain about the $2.00/gal. I am paying.

 
 
  Jeff Bailey   5/4/2004,  1:50:38 PM
Semiconductor Index (SOX.X) intra-day observation .... those with intra-day chart access, if I look at 5-minute interval chart of SOX.X, I see a potential h/s bottom pattern. I don't make a lot of these intra-day type of patterns, but here's what I think.

See the "left shoulder" from Friday's late session low? OK, that's at 441.35.

As such, I'll now make note that TODAY's DAILY Pivot is 442.73, which would mark a potential "right shoulder" of an intra-day or very short-term h/s bottom pattern.

Setting downside alert at DAILY Pivot, as well as SOX.X DAILY S1 (431.11), which is derivd from Monday's lows.

A descending neckline looks to have the mid-point of neckline right at today's DAILY R1. So upside alert set there.

 
 
  Linda Piazza   5/4/2004,  1:38:01 PM
Although through today, the OEX has been bouncing back and forth from one boundary to the other of a Keltner channel that now measures 546.20 on the topside and 544.10 on the bottom. Remember that these Keltner channels are dynamic and move a bit with the price.

 
 
  Jeff Bailey   5/4/2004,  1:18:01 PM
Immersion Corp. (IMMR) $4.25 -5.11% ... looks vulnerable to $3.35, which would be its head/shoulder top downside pattern objective. Head $10.21, neckline $6.75.

 
 
  Linda Piazza   5/4/2004,  1:09:52 PM
How are you spending the day today as markets settle into their pre-FOMC configurations? I'm scanning a lot of charts. I'm noticing many H&S formations on weekly and daily charts, some of which have been completed and some not. However, I note that as last week ended, ADBE had been looking as if it was setting up to rise into the right shoulder of a possible H&S on its daily chart. The left shoulder and head were nicely formed, with bearish divergence as the head was formed. ADBE did something about that potential H&S, however. It raised guidance for Q2 from $0.36/share to around $0.42/share. The stock shot up above the head yesterday and continued gains today in a rejection of the H&S pattern. However, it's down quite a bit from the day's high, retreating as it approached the early November high of $46.38. Is this week's move a fake-out move?

Perhaps traders have long memories because that early-November high was followed by a gap down the next day. ADBE's retreat from its high today has brought it back to the top of that gap. This sets up the possibility for an equal high on that daily chart, but a further-back look on the weekly chart shows a more bullish possible interpretation. From early 2001 until the summer of last year, ADBE fell back in what looks like a reverse H&S. After breaking above the neckline and then approaching resistance on the weekly chart, ADBE fell back to the trendline, testing that in early March of this year. It then began climbing on appropriately strong volume. Now it approaches resistance again, with strongest resistance layered from the now current $45.00 level up to $47.00, but with presumed resistance at the round-number level of $50.00, too. It has a P&F upside target of $66.00, supporting the bullish view. It's scheduled to release earnings June 17.

Yesterday's breakaway gap would have made a decent entrance in to a long play, but unfortunately, I didn't find its chart yesterday. I sure wouldn't want to jump in now, just ahead of a test of that November high. A good pullback entry might be on a pullback to test this week's gap while a breakout entry would be on a move above that November high, keeping in mind all that resistance just ahead. What if ADBE instead rolls down? A break below $43.00 would suggest that a rollover might have begun, but there's strong support now at the 30-dma at $41.50 and at $40.00, of course. I'm offering these observations about ADBE, but urging you to do your own due diligence and make up your own minds. As you can see from my commentary, it's possible to interpret these chart characteristics many ways.

 
 
  Jeff Bailey   5/4/2004,  12:44:00 PM
S&P Banks Index (BIX.X) 337.05 -0.08% ... not much going on here.

 
 
  Jeff Bailey   5/4/2004,  12:40:38 PM
QQQ $35.06 -0.11% ... just off session low of $35.03. Little bugger dropped right to RED #2 didn't it? Not much volume on this dip lower so doesn't really suggest a exit in the QQQ on worries over FOMC. Not yet....

 
 
  Jeff Bailey   5/4/2004,  12:38:31 PM
Semiconductor Index (SOX.X with UPDATED weekly/monthly pivot retracement. Can probably make some ties with zone from 446.54-449.53 with what we've seen in the majors and their WEEKLY/MONTHLY pivots. Link

 
 
  Jim Brown   5/4/2004,  12:34:38 PM
Another fun day in tech land. For the second time in a week I have lost a hard drive. The first one last weekend was a backup drive and caused no problems. I just popped it out, put in a new one, recopied the data and went on with my business.

The one we lost last night was 100GB of pictures and video. My wife does wedding photography as a hobby. I constantly tell her to backup anything she does not want to lose. You guessed it. Last backup was months ago. I just spent the last hour removing the failed drive. Fortunately we have cultivated a strong relationship with a data recovery company here in Colorado. The price for simple recovery of most drives $250-$350. Very reasonable in my opinion and I highly recommend them. Link

I did check out another service this morning to compare rates, DriveSavers.com. Their quoted rates were $900-$2900 per drive and they were not bashful about saying that most recoveries tended to the high side of that range.

I am posting this for a reason. I have lost 11 disk drives over the last three years on my personal computers. (7 PCs) There is never any warning and the failure always comes at precisely the worst time.

Please do yourself a favor and back up this week anything you do not want to lose. This public service message has been brought to you by the voice of experience. Better safe than sorry.

 
 
  Linda Piazza   5/4/2004,  12:16:54 PM
GE is showing one pre-FOMC to-be-expected pattern. The daily chart shows that it's settled into a symmetrical triangle shape over the last month and a half, with GE currently right at the horizontal level of the apex and with oscillator evidence mixed. How are you going to make decisions about market direction like that? You don't, if you're not already in a play. You wait for a breakout one direction or the other, and prepare for the possibility that the breakout could be a fake-out move and that it could turn tail and head the other way.

 
 
  Jeff Bailey   5/4/2004,  12:15:48 PM
QQQ $35.16 +0.17% ... here's intra-day chart (5-minute intervals) with a lower 5-MRT (used pink to differentiate between WEEKLY/MONTHLY retracement). Link

 
 
  Ray Cummins   5/4/2004,  12:12:21 PM
Combos/Premium-Selling -- Rally In Progress: PDI Inc. (NASDAQ:PDII)

One of the more popular issues for "premium-selling" strategies is moving higher today after a bullish earnings report. Shares of PDII are up $1.06 at $27.15 after posting net revenue of $88 million for the quarter, 30% higher than net revenue for the same period last year. Additionally, the company announced the execution of two new contract sales programs and said it is increasing its 2004 diluted EPS estimates to a range of $1.20 to $1.30, up from a range of $1.15 to $1.25. That's great news for PDII investors and traders who sold ($22.50/$25.00) puts on the issue are comfortably profitable with only two weeks until May option expiration.

 
 
  Linda Piazza   5/4/2004,  12:01:09 PM
After that blip up yesterday afternoon and this morning, the OEX has settled itself into an equilibrium position again on the Keltner channels on the five-minute chart. This would be a natural place for it to hold into the FOMC meeting, gyrating back and forth across that mid-channel level, currently at 545.49.

 
 
  Ray Cummins   5/4/2004,  12:00:50 PM
Combos/Straddles -- "Early-Exit" Opportunity: QLT Inc. (NASDAQ:QLTI)

Our recent straddle candidate in QLT has enjoyed some excellent short-term volatility and today the position exceeded our maximum target profit. Not surprisingly, the issue slumped on news of "soaring sales" of its Visudyne treatment for blindness and a one-time gain from an acquisition that helped the company double its first-quarter profit. But, shares of the biotechnology firm sold-off on disappointment that it did not raise its sales forecasts following recent announcements of reimbursements for Visudyne use in the United States and Japan. The activity was great for straddle players as it provided up to $1.50 profit on $3.00 invested in only two weeks.

 
 
  Jeff Bailey   5/4/2004,  12:00:36 PM
Day trade short alert .... for the QQQ here at $35.15, stop $35.37 and target to $34.65.

First 5-minutes was $35.17-$35.30, and has been hovering here at RED #1 (along with DAILY Pivot $35.17), where RED #6 ($34.61) not all that far from today's DAILY S2.

"Can't short it $35.00 and have much reward" so I'm thinking better to take a shot at bearish side, where I can better manage near-term risk.

 
 
  Linda Piazza   5/4/2004,  11:39:09 AM
CAI continues to drop lower since my earlier report on it. It's approaching support one support level near $43.00.

 
 
  Linda Piazza   5/4/2004,  11:36:24 AM
The OEX is falling back below the mid-channel Keltner support again. It just couldn't maintain that 547 level after several trials. It's headed toward next Keltner support at 544.61, but if that level doesn't hold it, lower Keltner support at 542.10 is the next Keltner level that shows up.

 
 
  Keene Little   5/4/2004,  11:33:30 AM
The gold stocks have gotten a nice lift today. Perhaps we saw the bottom and now we're starting the rally leg higher. I didn't like the way the decline ended because it wasn't a clean wave pattern but this gap-up today needs to be respected if you were holding any shorts. Here's an update to the NEM chart I had shown last week when price was hitting the lower channel line and where wave-C was equal to wave-A (at 37.55) and where price was hitting the 50% retracement (37.18) of the rally from March to December 2003. Link

Even though there was a lower projection for this decline, including the H&S projection, I felt there were too many things coming together at this level to ignore the possibility for at least a bounce. So the bounce has started and now I'll be watching the pattern to see if it becomes impulsive or corrective. For longs, the appropriate stop is a new low. For now we'll watch the rally develop and see if it turns into an impulsive rally with no overlapping highs and lows, which will give me confidence to stay long.

 
 
  Jeff Bailey   5/4/2004,  11:24:47 AM
June Gold (gc04m) .... Dorsey's 2-point box chart showed bearish vertical count to 398, which was exceeded to trade recent low of 378. This bearish count was derived after this contract traded $416. First sign of strength would be double-top buy at $402.

 
 
  Linda Piazza   5/4/2004,  11:24:42 AM
Thanks, Jeff for the offer to check Dorsey's site for information on the gold futures' P&F target. Too bad you can't ring up someone on the FOMC or in China to find out what decisions they're going to make, because I sure think that information would be helpful/needed, too.

 
 
  Jeff Bailey   5/4/2004,  11:21:56 AM
Linda ... when I get a chance, I'll also check Dorsey's gold futures chart. Maybe it has achieved its bearish vertical count too.

 
 
  Linda Piazza   5/4/2004,  11:21:48 AM
I'm beginning to hear people talk about curtailing their driving because of the gas prices. I'm not talking about long cross-country trips, either, but am talking about young adults just starting out in their adult lives who are curtailing regular errand-running activities because they can't afford to fill up the gas-guzzlers they bought over the last few years.

 
 
  Jeff Bailey   5/4/2004,  11:17:53 AM
11:00 Internals at this Link

Yesterday's Internals at this Link

 
 
  Linda Piazza   5/4/2004,  11:14:42 AM
I was just looking at AU, too, Jeff. It's an OI long option play and this morning's gap moved it above the small triangle it had been building on the daily chart, with that gap then becoming a breakaway gap on the chart. I've been concerned that the stock had vulnerability to $27, based on the target projected by the H&S on its weekly chart, but I believe the play was initiated as a countertrend play on the thoughts that it was so oversold, with the P&F downside target having been met, and with turning-up oscillators supporting the theory that it was ready for a bounce. Nison would certainly agree with the idea of a short-term trend change based on the number of record sessions, with a record session in a downtrend being a session in which a lower low was reached. Nison suggests a trend change might be signaled when we've seen 8-10 of those. We've certainly seen that on AU.

However, I believe complicated intermarket relationships are impacting this stock. Perhaps China's silence the last few days during the May holiday is allowing the miners to rebound somewhat, for example. All mining stocks were hit hard by the clamp-down seen in China last week. All these complicated relationships are what have always made me cautious when trading the HUI and XAU stocks. For more insight into these matters, you might check with Jonathan, too.

 
 
  Jeff Bailey   5/4/2004,  11:05:15 AM
Good Gravy! just seeing the HUI.X up 3.77%. What's up with that? What's up with AU $33.33 +4.61% Linda?

 
 
  Linda Piazza   5/4/2004,  11:04:54 AM
XOM is performing strongly today, looking as if it's preparing another assault on the $44.00 level that has been turning it back lately. However, daily charts show that oscillators are forming a series of lower highs as XOM makes the equal highs that challenge this level. That's bearish divergence. The weekly chart shows a troubling characteristic, too. The climb off the November low looks distinctly like a rising wedge, and those are considered bearish: Link A break above $44.00 will soon hit the top of the wedge, at about $44.75, but that trendline is climbing steeply, of course. Often with these wedges, the final break can extend quite high, so it's possible that XOM could continue climbing the underside of that top line for quite a while. So how would you play this? I wouldn't unless I were an agile day-trader with aggressive tendencies balanced by a knowledge of how much of my account to risk on such an aggressive play. What if XOM also breaks to the upside out of that wedge? I'd want to see an expansion of volume, but XOM's current $51.00 P&F upside target does give a nod to that kind of play. I'd be careful of an immediate dip back inside the formation, however. What about a downside break? I'd probably reluctantly pass there, too, unless I were an aggressive trader who could move quickly into and out of a trade. The weekly chart shows fairly strong support near $40, with a 38.2% retracement of the current rally off the November low near $40.50. That's not much downside to capture if XOM were to break soon without traveling much higher, especially since you're working against the P&F target. If XOM had moved up toward $45.00 before breaking, that might give the play more room. Over the last year, we've seen some stocks or indices break out to the downside, but then trade sideways. That's often a prelude to another rise to test the broken support, sometimes resulting in an extended climb along the underside of that line. Be aware of that possibility if you elect to play the downside in this stock

 
 
  Jeff Bailey   5/4/2004,  11:01:38 AM
S&P 500 Index (SPX.X) here's intra-day chart. I'm still looking into observation made in last night's Index Wrap, and reviewing past WEEKLY Pivots. Just noting that past two weeks, 1,106.50 has been the SPX's WEEKLY S2. Link

The two buy/sell program premiums seem to be some "balancing" or "fine tuning" at this point, but come just below the correlative DAILY R1 (1,120.68) WEEKLY Pivot (1,120.46) and MONTHLY Pivot (1,121.61)

 
 
  Jeff Bailey   5/4/2004,  10:46:39 AM
I missed the buy program premium at 10:00 AM EDT at premium 0.00.

With FOMC today, I wanted to keep tabs on any buy/sell program activity. This program lifted the SPX to the current session high of 1,119.64. SPX trades 1,119.02 as I type.

 
 
  Jeff Bailey   5/4/2004,  10:39:55 AM
Petro Canada (PCZ) $46.18 +2.44% Link .... back at this major horizontal resistance of $46.00. Has been building a rather nice base. I profiled bullish back in early March on what appeared to be a reverse h/s pattern, but was stopped on failure of right shoulder. Current levels of trade would be the then "neckline"

 
 
  Jeff Bailey   5/4/2004,  10:38:24 AM
Taser Intl. (TASR) here's where I use SAME retracement technique to "explain" TASR trade at $33.34 and $38.16. Do you see how market makers may be using this BROWN retracement just like our pink one? Helps narrow some levels doesn't it? Link

See (10:20:42)

 
 
  Linda Piazza   5/4/2004,  10:33:32 AM
Still no luck in hitting or maintaining 547 on the OEX.

 
 
  Linda Piazza   5/4/2004,  10:29:59 AM
The OEX has tried a couple of times to maintain levels above 547 with little luck so far. I believe it's setting up for another test, however.

 
 
  Linda Piazza   5/4/2004,  10:23:19 AM
Whatever else might be bouncing, defense contractor CAI isn't one of those companies whose stocks are heading higher. As I type, CAI tests its 50-dma at 44.42, with CAI currently at 44.20. It's already below its 200-dma, with bearish oscillators. MACD's bearish cross was from above signal, however, although the histogram is now negative. Volume has been picking up slightly to the downside over the last couple of days. CAI has support near 41, and also at the 40 level, with that support from a former descending trendline that CAI broke through in late March. The company is investigating whether some of its employees acted improperly in the abuse of Iraqi citizens in the infamous Abu Ghraib prisoner abuses that have drawn so much attention lately, although the company states that it has no information that its employees were involved.

 
 
  Jeff Bailey   5/4/2004,  10:20:42 AM
Taser Intl. (TASR) $32.10 +2.62% .... Good morning Jeff, Not sure if you received my email. Could you comment on TASR, if you have a moment? Regards, RP

I didn't, but here's what I've been working on this morning. Quick refresher on what TASR looked like prior to my vacation and TASR 2:1 split at this Link and now I've adjusted this retracement for 2:1 split at this Link

 
 
  Linda Piazza   5/4/2004,  10:12:34 AM
The OEX broke above the neckline of the supposed reverse H&S on its 30-, 60-, and 120-minute charts. As I mentioned this morning, I'd be hesitant about jumping on any trade pre-FOMC as the light volume might produce false breakouts against a strong tendency to pin the markets to key levels and hold them there. That tendency may be being demonstrated just now as the OEX immediately turns back below that neckline. Many layers of resistance lie just overhead. However, I do note the breakout. Time will tell whether it was real or a fake-out move.

 
 
  Linda Piazza   5/4/2004,  10:04:09 AM
The Nasdaq still has not broken above the high produced on yesterday's inside-day setup.

 
 
  Jonathan Levinson   5/4/2004,  10:03:51 AM
The open market desk is taking no action today, allowing 7B in overnight repos to expire for a net drain in that amount.

 
 
  Linda Piazza   5/4/2004,  10:02:36 AM
Depending on your bias, you could view this TRAN chart as bullish or bearish: Link Note: I've used the 720-minute chart because the daily chart leaves out some daily bars. The 72-ema actually shows more correspondence with the trading pattern on the daily chart.

 
 
  Jim Brown   5/4/2004,  10:00:07 AM
Factor Orders = +4.3% , (est 2.3%, last 0.3%)
Challenger Layoff Report = +6.1% 72,184, (last 68,034)

 
 
  Linda Piazza   5/4/2004,  9:54:43 AM
We're seeing our first retracement of the day, with that first retracement typically ending within the next few minutes. (Note: the retracement may have ended as I began typing.) On the OEX, that retracement isn't taking the index far, at least not yet. It's finding support at the first level of Keltner support below the level that turned it back. Several Keltner resistance lines gather near the high of the day, however.

 
 
  Linda Piazza   5/4/2004,  9:48:21 AM
The BIX is starting out the day underwater today, still safely within the rising regression channel, however. That rising regression channel may well be a bear flag rising off the 200-dma, rising into resistance offered by the neckline of the H&S on its daily chart. As Jonathan mentioned in his Wrap last night, many indices or stocks have been pinned between resistance and support as we head into the FOMC decision and statement. I follow the BIX because Jeff has taught us to pay attention to this index when watching the OEX action because some of the big caps in the OEX are also components of the BIX.

 
 
  Jeff Bailey   5/4/2004,  9:46:12 AM
Sell Program Premium

 
 
  Linda Piazza   5/4/2004,  9:42:53 AM
Remember that we had an inside-day setup on the Nasdaq. While I've often mentioned my distrust of trades triggered by an inside-day setup, others are not so reluctant, and so I always watch them to see where other traders might be jumping in. Yesterday's high and low were 1954.62 and 1926.09. My problem with inside-day setups is that I've seen too many false breakouts. Of course, others would argue that even if you're lured into a play on a fake-out move, you have clear-cut parameters about where to set your stops and when to know that the play isn't working.

 
 
  Linda Piazza   5/4/2004,  9:38:24 AM
The OEX is headed up toward that 547 historical resistance level, also the neckline level for a possible reverse H&S. It's hitting one level of Keltner resistance as I type, bulging the Keltner lines out as they try to capture the OEX again. During the first five minutes of trading, the OEX spanned a range from 545.95 to 546.50.

 
 
  Jeff Bailey   5/4/2004,  9:34:10 AM
VCampus (VCMP) $3.74 -3.10% .... Jeff, any comments on VCMP's recenlty rally? Regards. Link

I've placed a fitted retracement on VCMP's 60-minute interval chart to try and get a feel/observation of some levels of trade. Yesterday's jump at the open came on relatively light volume, and it would be my thoughts that market makers might have been trying to get a sense for buyer intrest above $4.50.

I had profiled a bullish trade in VCMP a couple of weeks ago (04/19/2004), which was stopped for a loss (1/2 at $5.45 and 1/2 at $5.07), as we were seeing several micro-caps make a big move higher, pullback, then surge higher again. In the past couple of weeks (starting with VCMP) the more bullish and euphoric trade in micro-caps has abated, and I think some of yesterday's action is aggressive bulls may be cutting back on positions when they get a chance.

Recent percentage gainers list hasn't shown as many 100%, 200% moves from the micro-caps, and may suggest a more cautious market.

 
 
  Linda Piazza   5/4/2004,  9:17:01 AM
I wanted to offer a warning to our readers about the Sasser worm. Despite the cautionary measures my husband's international company (well, not his, but you know what I mean) has enacted, the Sasser worm hit all their computers around the globe yesterday. My husband, a corporate counsel for one of their divisions, lost many files which the IT department is diligently unraveling from the worm's travels through his computer. Other departments lost many files, too. Make sure you have protections in effect.

 
 
  Jeff Bailey   5/4/2004,  9:13:18 AM
09:00 Update at this Link

 
 
  Linda Piazza   5/4/2004,  8:56:56 AM
In Monday's trading, the OEX bounced up from its long-term ascending trendline, but continued to have difficulty with 547 resistance and never approached the next resistance zone from 549.50-551. With upper Keltner channel resistance descending to 548.73, it's going to take a big and fast move up to bump that Keltner resistance back into that higher resistance zone again. Otherwise, it's going to have descended toward 547 before the OEX tests that level, adding its weight to the historical resistance there. The 30-minute 100-pma has descended to 549.17, also ready to lend its weight to the 549.50-551 zone if the OEX should climb that far.

This view of heavy resistance must be balanced by a statement about the possible reverse H&S that's forming on the OEX 30-, 60-, and 120-minute charts. It's a well-formed pattern complete with bullish divergence as the head was formed on the 30-minute chart. Also, the 120-minute chart sports a reverse H&S on the RSI, with that H&S already confirmed, with the neckline already retested successfully. Sometimes RSI serves as a leading indicator, with this formation suggesting but not promising that the OEX will also break through its neckline. If all candle shadows are included, the neckline lies near 547. The upside target is just under 553, but the OEX would have to plow through Keltner resistance as well as 30-, 60-, and 120-minute 100/130-pma's to get there.

So, we have known strong resistance balanced by the hint of a big bounce. We'll have to see how the two balance out. I'd be careful about placing bets this morning, as volume is likely to dry up completely ahead of the FOMC meeting. What about after that meeting? Jim mentioned last night in the Futures Wrap the tendency of markets to react and then correct immediately after a market-moving event, with the final outcome not known until after the initial volatility settles out. That may not be until tomorrow. I've been thinking about that likely reaction, trying to decide how the markets might react in the event that the Fed does change the bias statement. What I've been wondering is whether China has done a lot of the Fed's work for it, as global markets took a pounding after the recent measures the Chinese government enacted. Have the markets already discounted the whole gamut of rate-hike/bias-statement possibilities? That's a distinct possibility in my opinion--and is evidenced perhaps by that reverse H&S that's forming--but I'm not entirely convinced just yet. It's just something I'm mulling over as I think about the possibilities. I halfway expect some front-running of an anticipated post-Fed bounce today, but am not convinced it will get far.

 
 
  Jonathan Levinson   5/4/2004,  8:30:24 AM
Awaiting factory orders for March at 10AM, est. 2.4%.

 
 
  Linda Piazza   5/4/2004,  6:59:47 AM
Good morning. Japanese and Chinese markets were closed again today, with semi gains helping to send the other bourses we typically watch higher. Many semi stocks were gaining after yesterday's SIA release of information on global chip sales. Hynix Semiconductor, Taiwan Semiconductor, and United Microelectronics all gained. Hynix's gain was strongest, almost 10%, but that company's gain was also prompted by news that Citigroup's private equity unit upped its offer for one of Hynix's units. Many stocks or sectors hit hard last week rebounded Tuesday. Posco Steel rebounded. So did Hyundai Motor, gaining after a report that DaimlerChrysler would sell its 10.5% position in the company. Was that sell the rumor, buy the fact?

The Taiwan Weighted gained 2.63%, but South Korea's Kospi gained a more modest 0.16%. Singapore's Straits Times gained 1.42% and Hong Kong's Hang Seng gained 1.24%.

European bourses turn in mixed performances this morning. In London, Vodafone and the banking sector reported were leading the bourses higher this morning, while in the eurozone, early strength in UBS and Swiss Re haven't been a match for tech declines. UBS gained modestly after reporting net profit that was dubbed "the best quarterly performance on record" by one news source. The company report commented on the strength in financial markets but said that strength would likely not be carried forward through the end of the year. The company noted that some of the strength could be attributed to seasonality issues as some businesses had their strongest quarters in the first quarter of the year. Swiss Re benefited from a U.S. court ruling that the 9/11 attacks on the World Trade Center should be considered one event rather than separate events. That decision lowered Swiss Re's liability. Other gainers included Swiss chemicals group Clariant, gaining after its earnings report, and Air France, gaining after its CEO confirmed in a newspaper interview his expectation that the French government would reduce its stake in the company.

As of this writing, the FTSE 100 has gained 36.00 points or 0.80%, to trade at 4525.70. The CAC 40 has lost 15.53 points or 0.42%, to trade at 3689.95. The DAX has lost 11.76 points or 0.29%, to trade at 3995.89.

 
 
  Jeff Bailey   5/3/2004,  12:04:41 AM
Dow Industrials (INDU) with UPDATED weekly/monthly pivot retracement at this Link

INDU PnF chart at this Link

 
 
  Jeff Bailey   5/3/2004,  11:15:36 PM
S&P 100 (OEX.X) with UPDATED weekly/monthly pivot retracement at this Link

OEX PnF chart shown with unconventional 2.5-point box size at this Link

 
 
  Jeff Bailey   5/3/2004,  10:25:00 PM
S&P 500 Index (SPX.X) with UPDATED weekly/monthly pivot retracement at this Link

Point and figure chart of SPX at this Link where trade at 1,080 would be first sign of meaningful weakness.

S&P 500 Bullish % ($BPSPX) at this Link

 
 
  OI Technical Staff   5/3/2004,  10:03:42 PM
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