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  Jeff Bailey   5/12/200,  6:13:16 PM
Closing Internals at this Link

I added Tick and TRIN indication for today, note session lows for equities, and some trade action for gold.

 
 
  Jeff Bailey   5/12/200,  5:17:38 PM
Tick or TRIN Has any of the OI staff written an article on the Tick or TRIN?

I see Jane Fox made a comment on TRIN at 01:13 and this indicator was at 2.58 at 12:00, fell to 2.47 at 01:00, fell to 3.47 at 02:00 then jumped to 1.86 by 03:00 PM EDT.

Same time observation for the Tick had Tick -665 at 12:00, at 01:00 jumped to +357, at 02:00 fell back to +4, at 03:00 had jumped to +371.

Some DIVERGENCE seemed to take hold at 01:00 PM EDT readings.

I (Jeff Bailey) don't follow either indications (not that I shouldn't), but I'd be interested in learning more. I have a general understanding of what they represent, but don't know how to use them. Might have been helpful today.

The only thing I noted at 01:00 (because I was updating the Market Snapshot) was a brief, but abnormal little dip lower in the 10-year YIELD.

Was the 01:00 DIVERGENCE between the Trin and TICK a potential alert to the VERY NASTY looking intra-day bear trap that took place at 02:00 as the major indices all uncercut their 12:00 price lows?

 
 
  Jeff Bailey   5/12/200,  4:39:50 PM
Agreeing with some of Jim Cramer's brief comments on trade pattern/perspective right now. I don't think traders look for similar type of OEX/SPX move found from the March relative lows, but take view that bounce back to something near MONTHLY Pivot could be in play.

 
 
  Jeff Bailey   5/12/200,  4:15:16 PM
es04m looks to settle above 1,091.75 again ... Link

 
 
  Jeff Bailey   5/12/200,  4:06:28 PM
eBay (EBAY) $80.79 +1.15% Link ... put buyer saying "yuck" right now.

 
 
  Jeff Bailey   5/12/200,  4:00:51 PM
QQQ $35.22 +0.16% .... trying to hold its WEEKLY Pivot.

 
 
  Jim Brown   5/12/200,  3:59:00 PM
The only material earnings for tonight are: DIS 0.27, VSAT 0.17, CPWR 0.09 and ANN 0.65.

 
 
  Jeff Bailey   5/12/200,  3:57:09 PM
SPX.X ... Touched on this "reversal" potential in last night's Wrap (used OEX chart though). Here's chart and what bears may just now be discovering. Link

 
 
  Linda Piazza   5/12/200,  3:53:59 PM
The OEX is breaking back above that trendline of lower lows that supported prices since April. However, this break is tentative. The daily candle is one that often is viewed as bearish, but this one is coming in a consolidation zone, so it's not certain that it would have the same bullish implications. This feels like a "save," an attempt to close the indices back above those important 200-dma's, but whether it's one that sticks or not, I'm not sure at this point. I want to step back from this trading day and examine charts.

 
 
  Jeff Bailey   5/12/200,  3:52:09 PM
OSI Pharma (OSIP) $78.00 +5.43% ... X gets another squarter "bullish triangle" unfolding. Now we see what kind of conviction any short have.

 
 
  Linda Piazza   5/12/200,  3:50:21 PM
Reader Question: I have been watching LLL for the last month. It has been holding up well. Do you see any reason why it stalled?

Response: The only news I see regarding LLL today is that one if its divisions was awarded a contract by the U.S. Air Force. Has anyone else heard anything, perhaps about a LLL competitor? On a P&F basis, it neared its $64.00 upside target, perhaps a reason for a loss of momentum. On its monthly chart, we see that it approaches it all-time high at $66.78, with greatest resistance near $64.00, echoing that possible cause for a slowing of momentum. On a bar chart basis, something else shows up, however. The May high was matched by a lower high on MACD, RSI, and stochastics: bearish divergence. Bearish divergence exists on the monthly chart, too. That presents the possibility--a possibility that might never be fulfilled--that LLL's pattern could be a H&S in the making, with the current rise being a rise into a right-shoulder formation. That wouldn't be confirmed until a fall below about $59.50, with the 50-dma currently rushing up just beneath that level, perhaps providing support. I do note, however, that LLL has moved a considerable distance away from its 200-dma, always worrisome to me when I see it on a chart. On-balance volume remains high, however, giving a contrary view. As always, let price be your guide, as we've all seen how strongly stocks gain when potential bearishness is erased, but be forewarned of the bearish possibilities that exist, too.

 
 
  Jeff Bailey   5/12/200,  3:45:07 PM
Cisco Systems (CSCO) $21.85 -1.75% .... still got them calls? $23 seems like a long way way too.

Hmmmm.... Just looking and noticing that May's "max pain" is $22.50 though.

 
 
  Jeff Bailey   5/12/200,  3:44:32 PM
S&P 500 Index (SPX.X) 1,096.03 +0.05% ...

 
 
  Jeff Bailey   5/12/200,  3:43:59 PM
OSI Pharma (OSIP) $77.50 +4.7% ... and $78 seemed so far away

 
 
  Jeff Bailey   5/12/200,  3:41:28 PM
Swing trade longer alert ... QQQ $35.04, stop $34.75, target $35.75.

 
 
  Linda Piazza   5/12/200,  3:30:00 PM
Guess where the OEX is? Above the 200-dma and jammed up underneath the trendline of lower lows that built since April. Wasn't this where we were as yesterday ended?

 
 
  Jeff Bailey   5/12/200,  3:19:34 PM
QQQ $34.84 -0.97% ... session low was $34.27. (WEEKLY S2 $34.30)

Heck... at that point, QQQ and SPX were probably pretty close in their WEEKLY Pivots, in unison.

 
 
  Jeff Bailey   5/12/200,  3:17:48 PM
03:15 Market Watch at this Link

 
 
  Jim Brown   5/12/200,  3:16:27 PM
Jeff, I do not know. A long time reader/broker told me yesterday Goldman had accumulated 100,000 of the QQQ May 34 puts at 25 cents as the market was rebounding. We speculated that it could be speculation, a hedge or part of a combination position. There is obviously no way to tell.

 
 
  Jeff Bailey   5/12/200,  3:13:21 PM
Jim I've been looking for past commentary, where months ago there was big buyer of $33 puts. Markets traded significantly higher from there after a couple days of declines. Wonder if these are just floors for big buying of underlying?

 
 
  Linda Piazza   5/12/200,  3:13:02 PM
Well, the OEX has certainly broken above the gravitational pull of the previous level of Keltner support, hasn't it? It's now testing the 200-dma. Upper Keltner support is at 535.87. What happened? Be careful of a downturn just as quick.

 
 
  Jeff Bailey   5/12/200,  3:10:14 PM
OSI Pharma (OSIP) $77.00 +4% Link ... X gets another square. Don't really see any unusual or heavy volume at this point.

 
 
  Jeff Bailey   5/12/200,  3:08:35 PM
Sector strength ... OSX.X +0.38%, HMO.X +0.24%, BIX.X +0.16%

 
 
  Jeff Bailey   5/12/200,  3:02:08 PM
Alria (MO) $49.59 -7.13% ... defensive again today. Noted yesterday (01:00 PM EDT update) of concern regarding recent Florida court ruling. Today, Dow Jones reports that Florida Supreme court also notes Florida Court ruling from yesterday that it will review an appellate court decision in the Engle case, which had thrown out a $145 billion verdict against the tobacco industry.

In essence, there are fears that litigation may be back on the table.

RJR $57.86 -6%, LTR $55.99 -1.7%, BTI $28.37 -1.76% and VGR $15.14 -2.32%.

 
 
  Jeff Bailey   5/12/200,  2:56:42 PM
S&P 500 Index (SPX.X) 1,084.23 -1.02% ... intra-day chart. Is this an optiion expiration bounce underway? Max Pain for May is 1,125. Link

 
 
  Linda Piazza   5/12/200,  2:49:58 PM
The OEX has now achieved the needed higher five-minute high, but it's now at next Keltner resistance, at 529.45. If it can tug free of the gravitational pull of this resistance, it would next find resistance at the mid-channel level, currently at 530.72-530.94. (Note that the OEX began moving higher as I typed.) Upper channel resistance is now at 535.29, but is still descending, and might soon descend low enough to meet up with the 200-dma. So far, this move up isn't yet indicative of particular strength, but then I keep remembering that the OEX hit the mid-channel support on the weekly chart, a level from which we could expect at least intraday bounces and perhaps even bounces over several days. The OEX sometimes chops around that mid-channel level on the weekly chart for two or more weeks after it touches it.

 
 
  Jeff Bailey   5/12/200,  2:49:52 PM
OSI Pharma (OSIP) $76.00 +2.62% ... X gets another square. Haven't listened to their conference call, but here's a link for those with audio. Link

 
 
  Jeff Bailey   5/12/200,  2:27:59 PM
What?.... .... OSI Pharma (OSIP) $75.09 +1.47% ... showing a little bid.

Had set an al_rt above yesterday's high, as an al_rt to any type of strength.

Looking and feeling a bit more like TASR of months ago as each day passes. Today's trade at $75 is a 3-box reversal back up, but it would take a trade at $78 to unleash the "bullish triangle" pattern. However, in a "bear phase" market, we can't use Professor Davis' study of probability for the "bullish triangle." However, we could use Professor Davis' study for a "bearish triangle." Link

Triangles represent building of pressure, and disagreement among market participants.

 
 
  Jeff Bailey   5/12/200,  2:27:09 PM
Actually Jane ... it was YOUR market monitor comments from yesterday that had me making mention in today's intra-day.

The one thing we only need to be cognizant of, is that when the MARKET suddenly turns against equities, it can be broad and indiscriminant as investors just want to rid themselves of stocks.

The best tool that I've ever been able to find to explain such action is the bullish %, and when they come back in favor, when bulk of risk has been reduced, then is the time to be more aggressive buyer with longer-term horizons.

My point here would be, if Oil goes to $60, I don't think oil stocks will below current levels.

 
 
  Jeff Bailey   5/12/200,  2:22:20 PM
Beetle's Benchmarked at this Link , where I begin testing scenario of rotation back toward bonds. Note that I've added the cr00y, as it would have to be falling commodity prices to bring some buyers back toward bonds.

 
 
  Linda Piazza   5/12/200,  2:16:36 PM
That lower five-minute low on the OEX was accompanied by higher MACD values, so produced bullish divergence. However, the OEX moves up to 528.68-528.99 Keltner resistance.

 
 
  Jeff Bailey   5/12/200,  2:06:11 PM
Thought/scenario based on the Continuous CRB contract at this Link

 
 
  Linda Piazza   5/12/200,  1:58:35 PM
Reader Question: Any thoughts about COF?

Response: Starting with the P&F chart because that always gives us a good basis from which to look at the bar chart, COF has a bearish downside preliminary target of $49.00, but the bullish support line at $54.00 intervenes between the current COF position and that downside target. Since producing a sell signal on April 21, COF has not yet had a single three-box reversal. Is it time now?

What does the bar chart show? In early March, COF broke through the $75.00 range that had been serving as resistance since late December, but when it broke through, the upside break produced bearish price/oscillator divergence. That bearish divergence was realized when COF broke through a trendline that had been in place since March 2003, also breaking below a 19.1% retracement of the rally off that March 2003 low. Something else interesting occurred when that trendline break occurred. A theory called the correlative fan theory suggests that rallies often progress in three stages. A first uptrend begins, but it's too steep, and prices eventually break through to form a trendline with a more gradual slope. That's often too steep, too, and prices break through that trendline and eventually set up a more sustainable trendline. It's when that third trendline breaks that the rally is considered completed. The trendline that COF recently broke could be considered the third trendline, although of course others may draw trendlines differently and have different opinions. Link Note: Not all those trendlines are visible on this chart.

Altogether, then, the P&F chart, the bearish divergence on the daily chart, and the break through that third trendline and the 19.1% retracement give us a bearish bias, so we're looking at bearish entries, always aware that nothing is foolproof and that any entry requires a firm stop loss. The 38.2% retracement of the rally off the March 2003 low lies at about $57.70 with the 50% retracement at about $51.40. With the P&F bullish support line at $54.00, I'm not sure that I'd expect that 50% retracement to be reached, if any lower retracements are.

So is it likely that COF will continue lower? The stochastics and RSI indicate that COF has been oversold for a while now, but with an ADX at 37.66, we know we can't trust those oversold indicators. We should instead look to action around moving averages. Any upturns may indicate nothing more than a brief consolidation. That kind of consolidation, whether it's to be brief or not, is occurring now as COF hovers just above the 200-dma. The 10-dma lies just above the current price, with the 21-dma higher, near that 19.1% retracement level. As I type, COF appears headed down for a retest of that average. It's also headed for the support of a QCharts-drawn ascending regression channel on its 30-minute chart, with the support at about the same level as that 200-dma.

Despite this weakness, I'm finding it difficult to assess where I'd consider the breakdown level to be, and where I'd consider a new bearish entry. Risk vs. reward concerns me. Although the P&F target and other evidence suggest that a bearish entry below the 200-dma might be feasible, COF then immediately moves into an area of congestion from last fall. Particularly worrisome is the fact that COF produced a H&S from $55 to just over $64 last fall, a formation that it rejected in mid-December, sending it sharply higher into the March high. That shows me that there are some willing buyers in that range, or were last fall, so that it's difficult to assess how far into that congestion COF may fall or how slowly it might fall, with a slow, creeping descent a death knell to options prices. Those interested in a bearish play on COF might be better off if it doesn't break down right now and instead bumps up toward $68-70 on low volume and then turns down again. I sure would want to reassess the chart characteristics before making a decision at that point, however, as they might have changed completely, giving a more bullish bias to the chart. So, altogether, although I sure see some possibility for a downturn to $54-57, I sure see some trouble signs along the way, too, and I sure would want to be setting firm stops if I were considering playing the downside. Fortunately, on a downside break through the 200-dma, you have a firm place to put the stop--just above that level.

 
 
  Jeff Bailey   5/12/200,  1:48:40 PM
Cancel Swing trade long alert for Newmont Mining (NEM) $36.23 -1.28% (from 12:31:55)

 
 
  Jim Brown   5/12/200,  1:44:52 PM
Jim’s location appears to be having power issues. He is down again, and will be back as soon as power is restored.

 
 
  Jeff Bailey   5/12/200,  1:19:07 PM
01:16 PM EDT Market Watch at this Link

 
 
  Jeff Bailey   5/12/200,  1:09:10 PM
10-year YIELD ($TNX.X) quick little drop to 4.758% on results of Treasury auction.

Not much from the $HUI.X 177.59 +0.07% though.

 
 
  Linda Piazza   5/12/200,  12:51:04 PM
The OEX is rising into what may be a bear flag or may be something different. We might have expected such a rise from the weekly mid-channel Keltner support. As such, we should probably pay special attention to the midpoint of today's plunge, with that level at about 531.55. Typically a bear flag does not retracement more than 50% of such a plunge, although the OEX sometimes overshoots those levels a bit. The five-minute mid-channel resistance is now at 532.18, still descending.

 
 
  Keene Little   5/12/200,  12:48:53 PM
I see Jeff and I are eyeing the gold stocks similarly here, thinking bullishly. But I'm a little worried after today's pullback. Here's an update to the chart I posted earlier this morning. Link

I had mentioned this morning that I didn't want to see this morning's gap get filled. It did that and then some and in so doing, it created overlap between the highs and lows of the rally from the 10th. This overlapping gives the bounce the appearance of being corrective which would mean we've got another low coming. This is why I'm waiting for evidence of an impulsive rally (no overlap) to tell me we have a trend change, and then I'll get long on the first pullback from there. I'm rooting for Jeff's play here but I'm a little nervous about it.

 
 
  Jeff Bailey   5/12/200,  12:47:16 PM
Gold Bugs Index ($HUI.X) 178.14 +0.38% ... 60-minute chart I've been monitoring of late. Observations are that $HUI.X found some buyers at "fitted" retracement result which I've had in place at its 80.8%. Now seeing some action around the $HUI.X weekly pivot, which served resistance until late yesterday, now finding some support after a spike up at the open to WEEKLY R1. Might be under some near-term accumulation. Link

With broader equities defensive, might see some money move back towar Treasuries, result in lower YIELD, give gold a bounce.

 
 
  Jane Fox   5/12/200,  12:38:09 PM
Jeff futures traders can buy the single stock future on NEM also.

 
 
  Jeff Bailey   5/12/200,  12:31:55 PM
Swing trade long alert ... Newmont Mining (NEM) for bullish entry on trade higher at $36.85, stop $36.00, target $40.00.

Might look for some rotation back to Treasuries, YIELD falling, give bid to sector.

NEM $36.70 (unch) ... $HUI.X held its WEEKLY Pivot of 175.70 so far. $HUI.X 178.37 +0.51%.

 
 
  Linda Piazza   5/12/200,  12:20:45 PM
The OEX is trying to steady near the mid-channel support on the weekly Keltner channel chart. I turned to this weekly chart because I've been watching it since February, when I first posted that weekly chart and when the OEX hit a Keltner resistance line that it hadn't touched since March 2000, showing bearish divergence on a Keltner-chart basis when it hit that line. At that time, the mid-channel support was near 524, eerily near the historical S/R zone near 524-525, but it's risen since then to its current 528.40 level.

 
 
  Jeff Bailey   5/12/200,  12:18:37 PM
CRB Commodities Index ($CRB) ... Jeff: I recently remember you discussing commodity prices and gave a chart symbol for the CRB. Can you post it again?

Yes... Stockcharts.com has a symbold $CRB Link but doesn't update until after the close.

I think the QCharts continuous symbol is CEC:cr00y (cr zero zero y). I'm 30-minute delayed but cr00y 271.14 -0.05% is currently backfilling this morning's gap higher from yesterday's close of 272.55.

 
 
  Jeff Bailey   5/12/200,  12:08:51 PM
12:06 PM EDT Market Watch at this Link

 
 
  Linda Piazza   5/12/200,  12:04:43 PM
Based on the Keltner channel breakdown, bearish OEX traders should continue to follow the OEX lower with their stops, as such action can produce a valid breakout signal. As I mentioned this morning, a move below Monday's low may give us a quick peak at what support at 524-525 looks like. The argument against that conclusion, however, is that weekly Keltner channel shows mid-channel support being tested right now, but these Keltner lines can be somewhat flexible and 3-4 points more downside perhaps won't completely break through them. I'd sure have an exit plan in mind if it bearish plays, however, from this point on. Laddering out of partial positions or just following the OEX lower with stops are two choices.

 
 
  Jeff Bailey   5/12/200,  11:56:52 AM
Buy/Sell Program updates .... MM was down when I tried to post.

Sell Program Premium was found at 11:26 AM at SPX 1,085.21

Buy Program Premium was found at 11:38 AM at SPX 1,081.54.

Look for resistance at 1,085 right now and building at WEEKLY S1.

 
 
  Linda Piazza   5/12/200,  11:41:50 AM
OI Put Play AMZN: AMZN also produced a completed a convincing morning-star reversal signal yesterday, and also heads down today. It has moved below yesterday's low, and the 10-dma has now cycled lower, down to $43.31, perhaps helping to provide resistance if AMZN should try to rise again. Play participants next want to see it move below Monday's low and then below $40.00. So far, so good, however.

OI Put Play LTR: LTR once again tests its 100-dma. Play participants want to see it below that average and then below Monday's low. This has been a frustrating play, with LTR slipping lower most of the time, but doing it so slowly that options prices cannot benefit. We continue to urge that play participants set stops for themselves according to options prices and their account parameters, as well as according to LTR's price. It's possible that a drop below Monday's low will finally get a bigger drop started, but first that has to happen.

 
 
  Jim Brown   5/12/200,  11:37:23 AM
Jim has lost power at his location. He will not be able to post until his power is back up

 
 
  Jane Fox   5/12/200,  11:16:14 AM
Linda that is too funny. The other day I tried to bring up a 30 minute chart to answer a subscriber's question and it just would not fill. I don't use the 30 minute time frame at all.

 
 
  Linda Piazza   5/12/200,  11:16:11 AM
I like Francis' warnings to stand back when we're having choppy market conditions, expressed on the Futures side of the Monitor. If you stand back today, you realize that the OEX is still trading within the range of Monday's candle, not above it and not below it, either. It could still be building a choppy congestion zone near 530. We may soon find out something different, but that's what's happening now.

Despite that, I lean more to the bearish than the bullish side today, if I have to express any leaning at all.

 
 
  Linda Piazza   5/12/200,  11:12:45 AM
I have a daughter with epilepsy, and we read that if epilepsy is untreated, the brain learns to have seizures, putting down neural pathways that might eventually cause her partial focal seizures to become generalized. I'm wondering at times if something similar isn't happening to my charting system. Some days, it seems to have learned which charts I tend to watch most often (OEX, of course) and which time frames I watch most often, and that's all it's gonna give me. If I try something else, no charts.

 
 
  Linda Piazza   5/12/200,  11:08:45 AM
OI Put Play WHR: Despite the convincing morning-star reversal signal completed by yesterday's candle, WHR heads lower today, so far trading totally within yesterday's range. That may be setting up the possibility of an inside-day today, with a breakout not expected until tomorrow. It's still far too early to tell, with WHR having lots of time to move outside yesterday's range, but for now play participants should be cheered by the downturn. Keep a watch on stochastics, trying to roll up through the signal line. RSI hooks back down again, however, and MACD straightens out again after trying to flatten and turn up. The 10-dma descends to $64.21, well below our stop.

 
 
  Linda Piazza   5/12/200,  11:00:39 AM
The OEX hit bottom support on the five-minute Keltner channels. As I've often suggested, it's certainly time for bearish traders to begin following the OEX lower with their stops. The OEX has not violated that channel, so has not produced a downside breakout signal on that basis. I think we should have expected a bounce attempt from somewhere near Monday's low, so I'm not convinced yet that it will carry far, however. I know Jane has mentioned some divergence, and I'm seeing bullish divergence on the five-minute RSI, too, suggesting a bounce attempt. I'm not seeing it on the OEX five-minute MACD, however, which makes me wonder, as I have in the past, whether this will be a bounce attempt only.

 
 
  Linda Piazza   5/12/200,  10:52:55 AM
Jeff, Mark and I conferred on the WL for OI last night, with Mark suggesting the OSIP play and me actually writing it. I put lots of warnings in that write-up, including the recommendation that it was only for those traders with a high risk tolerance. Readers should note that the WL recommendation includes a trigger that would produce a new P&F sell signal in OSIP and would not initiate a play at current levels. Although I personally don't like trading down into gaps, this was suggested if and when such a gap fill should begin, and not ahead of a violation of the top of the gap. This would be a countertrend play, not suitable for all traders, and would not obviate the possibility of further climbs in OSIP. The recommendation noted the midpoint of that gap and suggested that traders have an exit plan in mind well ahead of that midpoint, as I would expect to see a bounce from that level if not from above it.

Jeff knows this already, but for readers' benefit, further explanation might be necessary. Just as Jim's Momentum Model might be offering a long signal at the same time that one of the other futures traders suggests a short daytrade, different time frames can produce different trade recommendations. I noted that Jeff was suggesting July options for a position-type play, and I'm sure your play participants expect some back and forth movement in OSIP during that time. Even if it reaches Jeff's goal, it's probably not going to head straight up. The WL suggestion was intended as a short-term play for aggressive traders only, on a partial gap fill once that gap fill had begun, and only if certain conditions arose. No gap fill should be assumed if it hasn't begun because it's certainly possible that it will never occur, and those conditions have definitely not yet been met. That's why it was a WL play.

I'm glad Jeff mentioned for the benefit of readers that he won't have his feelings hurt if one of the other writers responsible for the WL recommendation responded. That brings up something that I think readers should know. We're here for their benefit. I can't imagine that we often get our feelings hurt if someone differs with an opinion we've expressed--I don't. In addition, sometimes our opinions only appear to differ because we're looking at different time frames. Even if our opinions are radically opposed, as does sometimes happen, readers benefit once they work through their confusion and evaluate what each writer has to say. Personally, I enjoy the input from all the other writers, even when it differs from mine. Sometimes especially when it differs from mine. Many a time, a differing viewpoint has caused me to pause and take stock, perhaps proceeding with more caution than I would have otherwise, even if I still hold to my original opinion.

 
 
  Jeff Bailey   5/12/200,  10:34:31 AM
Swing trade put option alert for the eBay (NASDAQ:EBAY) July $75 puts (XBASO) limit $3.50, no stop, target $66.00.

EBAY $78.48 -1.74% Link ...

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

Should the stock achieve its current bearish vertical count of $70, will lower stop profit in this out-the-money option.

 
 
  Jeff Bailey   5/12/200,  10:23:59 AM
OSI Pharma (OSIP) $72.94 -1.43% ... Jeff,

Could you please comment on your swing trade recommendation in MM on Tuesday and the contrary opinion in the watch list of tonight's newsletter update. I am long the swing trade and I hope the gap does not fill.

Thanks,

Tim

I haven't read the contrary opinion in the watch list, but I've known that gap has been there since I first began setting up my bullish swing trade in OSIP. Yes... there's a gap there, and like any swing trade bull in OSIP, I'd prefer it not get filled to the downside.

I'm not sure who wrote the watch list, and if they would like to further express their opinion, it will not "hurt my feelings," and I don't consider it a personal attack if a contrary opinion is expressed. I will not deny my bullish bias toward OSIP. Link

First sign of weakness in my opinion would be a trade at $67.

 
 
  Linda Piazza   5/12/200,  10:21:05 AM
Instead of the BIX helping to lead the OEX, it may be a case of the OEX eventually leading the BIX lower, however, with the OEX slipping down toward Monday's low. So far, the former support offered by the trendline of lower lows since March has held, with the OEX turning down below it again.

Still, Monday's low has not yet been breached and I'd be cautious about marrying any one position or bias.

 
 
  Linda Piazza   5/12/200,  10:19:32 AM
The BIX is slipping slightly lower now, coming down to test the support of its flag rising off Monday's low. However, it hasn't slipped beneath that support yet. This would be another bad sign for the OEX, if the BIX should slip lower, but it might be important to watch if it continues to find support on that rising trendline. That flag shape is probably still a bear flag, but even bear flags can climb.

 
 
  Linda Piazza   5/12/200,  10:12:58 AM
Unlike some other indices, the BIX is holding to the high end of yesterday's range although it is trading lower, of course. This may be important to watch. The BKX is printing an inside-day within an inside-day.

 
 
  Linda Piazza   5/12/200,  10:08:56 AM
The TRAN heads lower since breaking down out of the bear flag (rising wedge?) on its 60-minute chart. Confirmation will come on a break below 2800 and then Monday's low of 2789.08. The TRAN will hit a former descending trendline that provided resistance through the early part of the year at about 2772, just above the March low.

 
 
  Jeff Bailey   5/12/200,  10:02:32 AM
Swing trade bullish stop alert for QQQ at $34.92 (+$0.17)

 
 
  Jeff Bailey   5/12/200,  10:01:00 AM
10:00 Market Watch at this Link

Note: My futures quotes are delayed and not real time. (DX00y) is 30-minute delayed.

 
 
  Linda Piazza   5/12/200,  9:59:07 AM
How is the news of the increase in crude oil prices hitting the TRAN? It breached yesterday's low of the day, bounced, and is now just cents above that low of the day again. (Note: It fell below it as I typed.) On the 60-minute chart, it looks as if it's broken down below a bear-flag formation.

 
 
  Keene Little   5/12/200,  9:58:00 AM
We're getting a nice bounce in the gold stocks today, following a move up from the low on the 10th. As can be seen in this 60-min NEM chart, price gapped above its downtrend line (on XAU as well). We'd like to see this line hold; in other words we don't want to see price drop to fill this morning's gap since an unfilled gap would give further evidence that this is a break-away gap. Link

The price pattern is only 3 waves up though so it could be just a corrective a-b-c bounce against the longer-term decline. But for you Elliott Wavers, you can see I've labeled the bottom as the end of wave-(4), meaning a new high in wave-(5) is coming. I'm watching for evidence of an impulsive (5-wave) move to the upside to confirm a trend change to up. Then when there's a pullback, it will be time to get long. This should take a few days to set up so no hurry on this play. It's still questionable as to whether or not a new high is coming, but I'd like to attempt a long play and then watch to see what develops.

 
 
  Jeff Bailey   5/12/200,  9:52:17 AM
S&P 500 Index (SPX.X) 1,089.88 -0.5% .... right where yesterday's afternoon buy program was found. (WEEKLY S1 1,089.02)

 
 
  Linda Piazza   5/12/200,  9:52:13 AM
That sure didn't rate high as a first reversal of the day, did it? The reversal and then downturn below a 50% retracement of the first five-minute candle reinforced the idea of weakness. The OEX reaches important Keltner support now, however, with that support at 532.57, so we should see another bounce attempt here. Resistance seems a bit more solid than support, however.

 
 
  Jeff Bailey   5/12/200,  9:49:41 AM
Swing trade raise stop alert for the QQQ to $34.92, just under today's DAILY S1.

The weaker INDU 9,960 -0.59% below its DAILY S1 (9,983) and nearing WEEKLY S2 (9,936)

 
 
  Jeff Bailey   5/12/200,  9:43:08 AM
Cisco Systems (CSCO) $22.00 -1.2% ... first 5-minute bar was a large one from $21.91-$22.25.

 
 
  Jeff Bailey   5/12/200,  9:41:33 AM
OSI Pharma (OSIP) $73.29 -0.95% ....

 
 
  Linda Piazza   5/12/200,  9:41:12 AM
We're about to get our first reversal of the day, so newer traders need to be aware of what's happening. Bulls want to see the OEX quickly above the midpoint of that first five-minute range, while bears don't want it to be able to maintain levels above that midpoint at 534.58. Although we'll soon be able to turn to other indicators to measure strength or weakness, this is one early indicator. If there's no bounce at all . . . well, that's not good news for bulls.

 
 
  Jeff Bailey   5/12/200,  9:39:59 AM
Semiconductor Index (SOX.X) 462.96 -1.52% ... is only sector I currently show down more than 1%.

QQQ $35.12 -0.19%, where opening 5-minute bar was from $35.02-$35.15.

 
 
  Linda Piazza   5/12/200,  9:38:16 AM
During the first five minutes of trading, the OEX spanned a range from 535.60 to 533.56. It's currently below both 200-dma's, the -sma and -ema.

 
 
  Linda Piazza   5/12/200,  9:32:04 AM
The OEX opens and heads right back for the 200-dma's (-sma and -ema) to retest them.

 
 
  Jeff Bailey   5/12/200,  9:26:25 AM
Pre-market most actives MAXM $9.96 , CSCO $22.18, QCOM $64.74, SIRI $3.32, FLEX $15.98, MSFT $25.98, INTC $27.69

 
 
  Jeff Bailey   5/12/200,  9:20:36 AM
09:00 Update at this Link

 
 
  Linda Piazza   5/12/200,  9:15:46 AM
The OEX found support yesterday, at least temporarily, on its 200-dma, producing tentative bullish price/oscillator divergence on its daily chart. However, the OEX also ended the day jammed underneath the new resistance offered by the trendline of lower lows that had supported the OEX throughout all of April and the early part of May. It ended the day inched just above a 50% retracement of the last flagpole plunge seen on the 30-minute chart, apparently headed up toward 540.74, the 30-minute 100-pma and an area of historical S/R. Appearances can be deceiving, however, and the reaction to CSCO's earnings, with the Nasdaq and S&P 500 futures drifting lower afterwards, puts that conclusion in jeopardy.

That 540-541 area is also the area of a 19% retracement off the March 2003 low. Over the last several months, that retracement level has served as both resistance and support. Now the OEX needs to get above that level again, or risk rolling down again and retracing to the 38.2% bracket, all the way down near 508, although I believe higher support near 524-525 would be likely to at least produce a bounce if the OEX should decline that far, with Monday's low possibly also proving capable of producing a bounce.

Steadying at the 200-dma is a first step, but is it enough? We begin to see today. While the slight weakness in the futures last night questions the ability of the markets to climb, the also-slight reaction to highs not seen since 1988 in the June crude oil prices on the New York Mercantile Exchange also questions whether the markets will go lower. Wise writers on these pages have cautioned that we should pay attention to the reaction in the futures market to news, and this sort of non-reaction both directions puzzles me, and warns me that markets still might not know what direction they want to go. Of course, that could all change the moment the markets open, and market participants get a read on how other participants react.

To move higher, the OEX needs to maintain levels above 536, a level the Keltner charts show to be next resistance. It will then run into Keltner resistance again from 537.86, the location of the mid-channel resistance on the 15-minute chart, up to 538.38, upper-level resistance on the five-minute chart. A roll back down below the 200-dma and especially below Monday's low would look bad indeed and might give us a quick peek at how the OEX will handle that 524-525 area.

 
 
  Jane Fox   5/12/200,  9:11:16 AM
Dateline WSJ The U.S. trade deficit swelled to an all-time high during March, as a strengthening economy stoked demand for foreign-made products and oil prices hit the highest mark in 21 years.

The U.S. deficit in international trade of goods and services expanded to $45.96 billion from a revised shortfall of $42.12 billion in February, the Commerce Department said Wednesday. Economists had forecast a trade gap of $42.80 billion. The February deficit was previously reported at $42.09 billion.

Although imports grew faster than exports, sales of U.S. goods and services to other countries also climbed to a record in March -- encouraging news for U.S. manufacturers and exporters. U.S. exports grew by 2.6% to a record $94.70 billion in March, while imports rose 4.6% to a record $140.66 billion.

 
 
  Linda Piazza   5/12/200,  7:29:17 AM
Good morning. CSCO's earnings report might not have been met with excitement here in the U.S., as Jim mentioned last night in his Market Wrap, but Japanese investors viewed the report differently. Cheered by CSCO's and Toyota Motor Company's earnings reports and a report by the Organization for Economic Development and Cooperation, the Nikkei gapped higher by more than 100 points in Wednesday's trading. Early yesterday the OECD, the Organization for Economic Development and Cooperation, released a report on the global economies, and that report concluded that Japan's recovery was stronger and broader than anticipated.

The Nikkei traded in a tight range throughout the morning session, but then climbed sharply in the late afternoon, closing up by 246.40 points or 2.26%, at 11,153.58. However, this chart shows that the Nikkei's recent sharp plunge has dropped it below a long-term ascending trendline to test its 200-dma, and a technical bounce might have been expected from just the point at which it began. (Note: Stockcharts has not yet updated to include Wednesday's trading.) Link Since Stockcharts does not update the Nikkei's chart until after trading begins on U.S. markets, this chart does not include today's activity, but that trading brought it up into a first possible level of resistance. The Nikkei will not retest that ascending trendline until about 11,400, where it could find resistance now, with the 50-dma above that, just over 11,600. As one article mentioned, the Nikkei is still more than 8% below recent highs.

Although yesterday Toyota closed flat after reporting earnings that made it the first Japanese company to see an annual profit of more than 1 trillion yen, it climbed in early trading Wednesday and closed higher by 5.6%. In addition to those earnings, Bridgestone Tire announced that strong overseas sales and a weaker yen prompted it to raise estimates for H1 profits, with that profit perhaps climbing by as much as 41%. Bridgestone also climbed in early trading. Banks rose, as did computer-related stocks. In other stock-specific news, Kobe Steel and Yahoo Japan, soon to be added to Morgan Stanley Capital International Inc.'s indices, climbed. Kobe Steel had gained 4.3% by the end of the day and Yahoo Japan closed higher by 4.6%. Softbank, recently hard hit after earnings, gained 7.7%, at least in part due to Yahoo Japan being one of its affiliates. Game software maker Konami rose ahead of its after-the-close earnings in which it released record sales and operating profit numbers. NEC announced strategies meant to help it regain market share from Dell in Japan, including a promise to deliver PC servers within two days after orders are received.

Other Asian bourses mostly traded higher, too. The Taiwan Weighted gained 1.23% and South Korea's Kospi gained 3.30%. In South Korea, Hyundai Motor gained 2.4%, even though market watchers expected DaimlerChrysler to formally announce its intention to sell its 10.5% position in the company, with some market watchers saying that investors have already discounted that announcement. Singapore's Straits Times was one of two Asian bourses that declined, but its loss was only a 0.07% loss. Hong Kong's Hang Seng gained 0.17% and China's Shanghai Composite gained 2.28%.

Most European bourses decline, however. This morning, CNBC commentators focus on the impact of the climb of oil prices above $40 a barrel. The IEA, the International Energy Agency, warned that an increase in global consumption would tax production capacities in oil-producing countries. Perhaps emphasizing the fact that many economies are expanding, France's economy unexpectedly showed a Q1 GDP growing 0.8% quarter-over-quarter, higher than the expected 0.5% growth. With tax cuts helping to increase consumer spending, consumer spending increased more than exports decreased.

Stocks in the news included Dutch insurer Aegon, aerospace group EADS, and German airline Deutsche Lufthansa, all dropping in early trading after reporting earnings. Although not reporting earnings of their own, Alcatel and Ericsson eased lower in early trading based on the reaction received by CSCO after its earnings report, with CSCO easing lower in after-hours trading. DaimlerChrysler gained after apparently making the formal announcement of its intention to sell its stake in Hyundai Motor. Germany's Siemens agreed to purchase part of U.S. Filter Corp's businesses, sending Siemen's lower in early trading, and France's Thomson signed an agreement to build set-top boxes for Directv, sending Thomson's shares lower, too.

As of this writing, the FTSE 100 had lost 21.10 points or 0.47%, to trade at 4433.60. The CAC 40 had lost 6.22 points or 0.17%, to trade at 3600.19. The DAX had lost 29.46 points or 0.77%, to trade at 3820.38.

 
 
  OI Technical Staff   5/11/200,  10:05:18 PM
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