Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
  Jim Brown   5/20/200,  7:00:45 PM
FR Board: Speech by Chairman Greenspan
Acceptance of the Eisenhower Medal for Leadership and Service Link

 
 
  Jeff Bailey   5/20/200,  6:17:36 PM
Pivot Matrix for tomorrow at this Link

 
 
  Jeff Bailey   5/20/200,  5:29:56 PM
Closing Internals at this Link

 
 
  Jeff Bailey   5/20/200,  4:07:56 PM
Pacholder High Yield (PHF) $8.65 +1.76% ... edged above yesterday's highs. Since this "junk bond" security doesn't trade with options, could be more of a natural read on today's decline in Treasury YIELD as not entirely related to option expiration.

 
 
  Linda Piazza   5/20/200,  4:03:11 PM
Another OEX close below the 200-dma's. That's not encouraging, but the SPX managed another close above its 200-dma. Just wondering--will the close of trading of May SPX options this afternoon and settlement tomorrow morning remove the impetus to keep the SPX near 1100 and above the 200-dma? We'll have to see.

 
 
  Jeff Bailey   5/20/200,  4:02:28 PM
Buy program premium ... better late than never.... QQQ $34.80

 
 
  Linda Piazza   5/20/200,  4:00:10 PM
NILE, another of today's IPO's, never triggered a trade today according to Jeff's 5MRT system, either bullish or bearish.

 
 
  Jeff Bailey   5/20/200,  3:59:29 PM
Bullish day trade close out alert for the SMH $36.56 here.

 
 
  Linda Piazza   5/20/200,  3:59:08 PM
PUMP, one of today's IPO's, signaled a bullish trade today according to Jeff's 5MRT on a move above $17.85, and would now have a stop at/just below $17.25, with PUMP now at $18.10. It's having trouble with the next Fib level over the point at which it was triggered, and is going to have to do some moving to hit that $19.81 upside target in the next three minutes! Still, a daytrader exiting as this post was prepared would have exited with a profit.

 
 
  Jim Brown   5/20/200,  3:57:24 PM
FR Board: Speech by Governor Bernanke - Gradualism Link

 
 
  Jeff Bailey   5/20/200,  3:54:12 PM
Bullish day trade exit alert for the SMH $36.57 -0.48% ... should it pop back to our RED #1 of $36.67.

Just trying to "bounce" after test of intra-day upward trend of $36.48.

 
 
  Linda Piazza   5/20/200,  3:50:42 PM
The bad thing about days like this is that they're boring. The good thing about days like this is that they bring us closer to a real directional move, setting up such an action. Part of being an accomplished trader means knowing when to trade and when not to trade. That may depend on whether you're trading stocks, options, or futures, or whether you intend a daytrade or a longer-term position. It's difficult for anyone to make reasoned decisions in the midst of a consolidation zone, however, so be patient and wait until we get a clear break out of this one. Now, if only this OEX formation had been a little cleaner, so we would know when that OEX break would occur!

 
 
  Jim Brown   5/20/200,  3:45:58 PM
Bernanke saying he expects Fed to be gradual in moves. Said economic conditions have tightened and that will reduce the risk of inflation.

 
 
  James Brown   5/20/200,  3:43:37 PM
The BTK biotech index looks weak with its steady trend of lower highs and the fourth test of its 200-dma in the last seven days. This looks ready to breakdown. The recent weakness in AMGN, its biggest component, doesn't help matters.

 
 
  James Brown   5/20/200,  3:42:24 PM
The DFI defense index looks encouraging with a three-day bounce underway and its MACD close to a positive buy signal.

 
 
  Linda Piazza   5/20/200,  3:41:02 PM
The OEX is above the mid-channel level on the five-minute Keltner channels, but below it on the 15-minute, both important charts to watch on a Keltner-channel basis for the OEX. It's above the 200-ema but below the 200-sma.

 
 
  Linda Piazza   5/20/200,  3:27:09 PM
The OEX heads up for another test of the 200-dma's as well as mid-channel resistance on the 5- and 15-minute charts and the neckline of the reverse H&S. Obviously, a move above all these levels must mean something--just happened as I typed--but how much on a Thursday afternoon with SPX options having only a few minutes left to trade and with the OEX still within a congestion zone? Is this move artificial? The upside target of that reverse H&S suggests that the OEX could move all the way up to upper Keltner resistance, currently at 537.75 on that five-minute chart, so it suggests a possible test of upper-channel resistance. First, it has to maintain these other levels and it's heading down to retest them already. Be careful.

 
 
  Jeff Bailey   5/20/200,  3:23:39 PM
Day trade raise bullish stop alert for the SMH $36.68 -0.19% to break even here. Get your finger on the sell button .....

 
 
  Jeff Bailey   5/20/200,  3:17:24 PM
SMH $36.64 -0.29% ... Just noting this.... the SMH's WEEKLY Pivot is $36.79, so I'd really want to sell the bull day trade target if hit.

 
 
  Linda Piazza   5/20/200,  3:17:03 PM
I'm going to be running slow for a few minutes. My husband just emailed me information about a trip we're going to be taking in the fall with an itinerary attached--only he didn't attach any itinerary. I'm running virus scans now.

 
 
  Linda Piazza   5/20/200,  3:14:53 PM
The reverse H&S on the OEX five- to fifteen-minute charts remains a possibility, with the OEX not yet having dropped below the possible right-shoulder level. The neckline appears to be at about 534.35 now, so near mid-channel resistance on both the five- and 15-minute Keltner charts, but, more importantly, near the 200-dma's. I'd certainly give a cross of those averages more credence than a cross of a neckline on a reverse H&S on a five-minute chart, but that formation's presence helps us to judge whether bullishness builds or fails to build.

 
 
  Jeff Bailey   5/20/200,  3:12:16 PM
SMH $36.57 -0.48% ... here's updated 2-minute chart. Have to start on 03:15 update. See you near the close... Link

 
 
  Linda Piazza   5/20/200,  3:11:04 PM
Reader Question: Can you explain bear flags?

Response: Sure, I'd be glad to try, although it's true that they're sometimes counterintuitive. Bear flags form after a steep fall. After that steep fall, stopping at some support level, prices begin climbing in a tight pattern of higher highs and higher lows. That should be bullish, shouldn't it? That's where the counterintuitive part comes in. If that pattern is tight in relationship to the previous trading pattern and if volume decreases during the climb, then you should begin suspecting that the climb is a bear flag. Usually bear flags do not retrace more than 50% of the flagpole climb that preceded their formation, so I always snap on a Fibonacci retracement tool to watch that 50% retracement level. Martin Pring, an expert in technical analysis, notes that they usually take the form of a parallelogram. Here's a chart (not current) that displays a bear flag formation on the OEX, showing the usual break to the downside: Link (Note: remember that this is not a current chart.) They can occur on anything from a one-minute chart to a monthly chart. A note of caution: Even a well-formed bear flag with all the right characteristics can break to the upside instead of down, so always let price action guide your decisions. However, being able to recognize a bear flag helps keep you from being fooled when you see such a bounce into entering bullish positions that perhaps shouldn't be entered.

Bull flags exist, too. They're the opposite, forming a tight pattern of lower highs and lower lows after a steep climb. They usually break to the upside.

 
 
  Jeff Bailey   5/20/200,  3:03:19 PM
03:00 Market Watch at this Link

 
 
  James Brown   5/20/200,  3:02:31 PM
IPXL looks like a potential short play with today's drop under support at $20.00. Next support looks like its 200-dma near the 17.50 level.

 
 
  James Brown   5/20/200,  3:01:06 PM
Sector update heading into the last hour...

Winners:
XAL airlines index: +1.87%
UTY utilities: +0.77%
BKX & BIX banking: +0.70%
DFI defense index: +0.56%

Losers:
HMO healthcare index: -1.12%
XAU gold & silver: -1.17%
NWX networking: -1.24%
DDX disk drives: -1.49%

 
 
  Jeff Bailey   5/20/200,  2:57:17 PM
Bond market closes in 3 minutes 10-year YIELD ($TNX.X) down 7.8 bp at 4.718%.

While may be option expiration related, I'm thinking stocks rally to the close.

 
 
  Jeff Bailey   5/20/200,  2:53:36 PM
SMH $36.52 -0.62% ... here's intra-day chart where I'm using 10-year YIELD action to trigger long, as well as SMH DAILY Pivot and 5-MRT to pick a zone of support from $36.43-$36.45. Link

 
 
  Linda Piazza   5/20/200,  2:49:41 PM
Note the possible reverse H&S building on the OEX five- and fifteen-minute charts with bullish price/MACD divergence as the head was formed. A drop much below 532 would negate that possible formation.

 
 
  Jeff Bailey   5/20/200,  2:47:03 PM
10-year YIELD ($TNX.X) 47.20 and session low yield. (real time)

 
 
  Jeff Bailey   5/20/200,  2:45:27 PM
Day trade long alert for the Semiconductor HOLDRS (SMH) $36.46 here! Stop $36.35, target $36.80.

 
 
  Jeff Bailey   5/20/200,  2:42:38 PM
CRB Index (cr00y) 269.65 -0.8% .... for grins, turned on my QCharts DAILY pivot tool. DAILY S1 is 269.02.

Since 30-minute delayed, what I'm doing in my mind (from day trade point of view) is looking at the 10-year YIELD, and pretending that today's yield lows 4.721%, are equivalent to today's CRB lows. 10-year YIELD currently back lower at 4.724%.

 
 
  Linda Piazza   5/20/200,  2:39:20 PM
So far, we haven't had a higher OEX five-minute high or a move above the mid-channel Keltner resistance. It's holding as resistance.

 
 
  Jeff Bailey   5/20/200,  2:38:15 PM
Day trade long alert setup .... for the Semiconductor HOLDRs (SMH) ... going to monitor for support pullback near $36.43 for a day trade long. Please wait for pending signal.

 
 
  Jeff Bailey   5/20/200,  2:33:01 PM
June crude oil futures (cl04m) while 30-minute delayed, session lows at $40.90 -1.68% ....

 
 
  Jeff Bailey   5/20/200,  2:27:10 PM
02:00 Internals at this Link

Intra-day update on CRB Index (cr00y) shows that just at 12:30 bounce in the major indices took place, the CRB was session low at 270.00.

Since that time, CRB fell to current session low of 269.48 at 01:00-01:05 internval, bounced back to 270.00 from 01:40-01:45, now back to test session low at 01:55-02:00

 
 
  Linda Piazza   5/20/200,  2:23:03 PM
If that was a rising bearish wedge on the OEX five-minute chart, it broke to the upside rather than the downside. That's another reason why it's dangerous to micro-analyze on a day like this. So far, however, mid-channel Keltner resistance and those 200-dma's are holding as resistance.

 
 
  Linda Piazza   5/20/200,  2:17:59 PM
The OEX approaches mid-channel Keltner resistance on the five-minute chart, with that resistance at 534.66. Fifteen-minute mid-channel resistance is at 534.96.

 
 
  Linda Piazza   5/20/200,  2:09:43 PM
It's so tempting on a day like this to micro-analyze everything (such as mentioning that the current five-minute OEX pattern looks like a bearish rising wedge), but that's dangerous. That's dangerous when markets are in a choppy zone, as they are now, and that's dangerous as opex nears, and that's doubly dangerous when both conditions exist.

 
 
  Jim Brown   5/20/200,  1:53:39 PM
Fed's McTeer saying recent appearance of inflation a concern. (This is news?)

 
 
  Linda Piazza   5/20/200,  1:53:18 PM
Not only are the indices sticking within consolidation zones, but today's two IPO's also trade in a tight zone of their own. NILE has traded in a $0.60-point range since about noon and actually has traded in a $0.25-point range through the last portion of that time. PUMP has traded in a $0.10-point range since about 12:30. Each is currently within the first five-minute range.

 
 
  Linda Piazza   5/20/200,  1:47:34 PM
Mid-channel Keltner resistance on the OEX five-minute chart has descended to 534.74 and has now been joined by another Keltner resistance line. Both resistance lines still drop. Upper channel resistance is now at 538.08 and is still dropping.

 
 
  Jeff Bailey   5/20/200,  1:45:20 PM
Pharmion Corp. (PHRM) $40.00 +48.14% ... should be day trade stopped alert at $39.75.

Updated 2-minute interval chart at this Link

Traders that may want to hang in there, most likely sell on rally back to upward trend as PHRM a little sloppy at 5-MRT today.

 
 
  James Brown   5/20/200,  1:44:49 PM
Guidant is also looking weak today with a 2% drop through its 200-dma near $57.50. Its P&F chart is very bearish with a target near $44.

 
 
  James Brown   5/20/200,  1:40:35 PM
Forest Labs (FRX) has broken support at $62.00 and is testing support at $60.00 and its 200-dma today. A break under today's low (59.80) might be a potential bearish trigger.

 
 
  Linda Piazza   5/20/200,  1:35:56 PM
For reference, the SPX 200-dma (simple) is at 1081.46. I'm watching that level for a possible breakdown or bounce.

 
 
  James Brown   5/20/200,  1:27:26 PM
Altria Group (MO) continues to struggle under the $50 mark and its 200-dma.

 
 
  James Brown   5/20/200,  1:25:36 PM
Once again Oracle (ORCL) is approaching major support near the $11.00 mark. It has bounced here several times since August last year but its most recent bounce wasn't very high and didn't last very long.

 
 
  Linda Piazza   5/20/200,  1:20:58 PM
I agree, Keene. (See his 13:18 post.)

 
 
  Keene Little   5/20/200,  1:18:15 PM
Linda, watching this market lately, it's more like, splat (in the eye), it was a bird.

 
 
  Linda Piazza   5/20/200,  1:10:43 PM
Those of you about my age will remember those old Superman promos asking, "Is it a bird? Is it a plane? No, it's Superman!" I was reminded of those questions when I studied the OEX's current consolidation pattern, as it keeps evolving from one shape to another, some more bearish than others: Link

 
 
  James Brown   5/20/200,  1:04:59 PM
Tenneco Auto Inc (TEN) is down 3.79% and breaking through support at the $11.00 mark today.

 
 
  Jeff Bailey   5/20/200,  12:58:03 PM
No buy/sell program premiums so far today. Might not get any if things are pinned in for "max pain" though.

 
 
  Linda Piazza   5/20/200,  12:56:36 PM
So far, that bullish price/MACD divergence on the five-minute OEX chart is fulfilling its promise, but confirmation won't come until a new five-minute high is reached. The mid-channel Keltner resistance has lowered to 535.04, near the last five-minute high at 534.92, so it may be difficult to make that higher high.

 
 
  Jeff Bailey   5/20/200,  12:53:29 PM
Question has anyone found a service that has real time U.S. Dollar Index (dx00y) and might have CRB Index (cr00y) quote? From what I've read, these two are always 30-minute delayed.

My e-mail is jeff@OptionInvestor.com

 
 
  Jeff Bailey   5/20/200,  12:49:57 PM
QQQ ... oooo.... see this bounce? $34.76 +0.2% from session low of $34.56? Looks like it took place about 30-minutes ago.

 
 
  Jeff Bailey   5/20/200,  12:48:52 PM
CRB Index (cr00y) 30-minute dayed shows CRB at session low of 270.08. Will be alert at 269, see if it gets a response.

Pacholder High Yield (PHF) $8.50 (unch)

 
 
  Jeff Bailey   5/20/200,  12:46:32 PM
Pharmion (PHRM) $40.11 +48.55% ... here's 2-minute interval chart workup. Link

 
 
  Linda Piazza   5/20/200,  12:44:29 PM
The OEX bounce is beginning right where that trendline I've drawn on my 30-minute chart suggested it should begin, but will the bounce hold? Thirty-minute MACD suggests that it won't, a problematic feature of the chart for those who, instead of considering bearish entries, want to consider a bullish one on the theory that the OEX will bounce within the ascending regression channel that has contained it since the middle of May. As I mentioned this morning, I'm not particularly comfortable with any trade within that consolidation zone, as a breakdown or upside breakout could come without warning, but for those who are so inclined, it might be as easy to make a bullish case as a bearish one, with both having clear-cut entries and stop losses. That's not my kind of trade. If I had to guess, I'd personally lean toward a possible breakdown below that May trendline, but I'd sure be jittery if inclined to play the bearish side, too. Within a zone like this, all is guesswork, however, and my guesses shouldn't be given more importance than they warrant.

 
 
  Jeff Bailey   5/20/200,  12:37:33 PM
Day trade raise bullish stop alert for Pharmion (PHRM) to $39.75.

Not getting much bullish help from the major indices right now.

 
 
  Linda Piazza   5/20/200,  12:37:04 PM
The OEX is testing the ascending trendline off the 5/12 low, also testing the support of the descending trendline off the series of lower lows that began building in April. The OEX has since traded above that April trendline, but now comes down to test it again. The OEX needs to find support here and bounce if bulls are to have hope of an upside break out of the current consolidation pattern, but I'd tread carefully here if considering a bearish play as well without a confirming drop below the May low. Currently, the daily chart still shows possible price/MACD bullish divergence, and opex week sometimes produces strange action. In addition, the spikes both above and below that current consolidation pattern make it difficult for all to assess the point at which a convincing case for a breakdown could be made. A drop below 531 is a first step for sure, but any considering bearish entries should certainly enter only if prepared to be whipsawed, if that should happen, and only if the trading account can take that kind of action.

 
 
  Linda Piazza   5/20/200,  12:31:33 PM
The Networking Index (NWX) might have been one of yesterday's gainers, but it's down 1.69% as I type. The Disk Drive Index (DDX) is another losing one today, down 1.96% as I type. The Morgan Stanley Healthcare Index, HMO, adds to yesterday's losses, down 1.62%. The Dow Jones US Home Construction Index also adds to yesterday's losses, down 0.50%. Sectors in the green are few and far between, but include the Airline Index (XAL), up 0.80%, and Oil Services Sector Index (OSX), Natural Gas Index (XNG) and Utility Sector Index (UTY).

 
 
  James Brown   5/20/200,  12:28:44 PM
Navistar Intl (NAV) is down sharply -15.4% to $34.00 after announcing earnings this morning that beat by a penny. The real bomb here was its Q3 earnings guidance in the 60-70 cent range versus estimates of 99 cents.

 
 
  Jeff Bailey   5/20/200,  12:24:36 PM
12:00 Internals at this Link

 
 
  Linda Piazza   5/20/200,  12:21:19 PM
The OEX again approaches lower Keltner support, with possible bullish divergence setting up on this five-minute lower low. That bullish divergence can still be erased and a break below that Keltner support can give a valid breakdown signal. As I typed, a bounce began. I continue to urge that you not put too much trust in these micro-managing observations, however, as long as the OEX remains within that recent consolidation zone.

 
 
  Jeff Bailey   5/20/200,  12:19:58 PM
Pharmion (PHRM) $40.82 +51.18 ... post-profile high here.

 
 
  James Brown   5/20/200,  12:12:08 PM
Phelps Dodge (PD) may be a bearish candidate with the drop in copper futures today. Noteworthy in PD was yesterday's failed rally under $68 and its simple 200-dma. A breakdown under support at $60.00 (currently at $62) could be used as a trigger.

 
 
  Linda Piazza   5/20/200,  12:09:50 PM
The OEX has pulled back from its tests of the 200-dma's (both) but so far remains above the supporting trendline established off the 5/12 low. It's possible to draw several versions of a best-fit trendline on the 30-minute chart, but one currently crosses at about 532, with another crossing closer to 531. I mentioned earlier that traders should watch this trendline for a possible bounce or a possible breakdown.

 
 
  Jeff Bailey   5/20/200,  12:08:55 PM
Per James' 12:06:45 .... I've approached PG to try and sell advertising spots on each chip. Charge advertisers a penny per chip to place their logo on the chip.

Haven't heard back from them on that one yet.

 
 
  James Brown   5/20/200,  12:08:12 PM
UTStarcom Inc (UTSI) is down 3.55% to 26.89 and still stuck in its declining trend after Prudential downgraded the stock to "under weight" this morning.

 
 
  James Brown   5/20/200,  12:06:45 PM
What will they think of next... Procter & Gamble (PG) has announced that their Pringles chip unit will soon roll out chips that will have text printed (in food coloring) on individual chips. Initially the chips will have trivia questions and animal or "fun" facts for kids. I wonder how long it will be before they start advertising on each chip.

 
 
  Jeff Bailey   5/20/200,  12:06:10 PM
QQQ $34.71 +0.05% ... backfilling this morning's little gap back to the downside here.

 
 
  Jeff Bailey   5/20/200,  12:01:08 PM
Day trade raise bullish stop alert for PHRM to break even.

Post profile high has been $40.68, then pulled back to $39.55, and now back up to test that $40.25 level again.

If it can't make it back above here, then may do nothing rest of session.

 
 
  Jim Brown   5/20/200,  12:00:13 PM
Philly Fed Survey = 23.8 (est 31.5, last 32.5)

 
 
  James Brown   5/20/200,  11:58:09 AM
Comcast (CMCSK) and Microsoft (MSFT) announced a licensing agreement this morning for Microsoft's TV Foundation Edition software, a product designed to enhance the digital experience like video-on-demand. There is no reaction in either company's stock price.

 
 
  Linda Piazza   5/20/200,  11:55:49 AM
The OEX is trying to work its way back to an equilibrium position on the five-minute Keltner chart, with the mid-channel resistance now at 535.64, but with that resistance line still moving lower. However, the five-minute MACD flattens beneath the signal line so that it's not clear whether the OEX will be able to push up to or past that mid-channel resistance. In fact, this morning's bear flag may be breaking down now.

 
 
  James Brown   5/20/200,  11:51:21 AM
Brocade Communications (BRCD) is up 9.35% to $5.61 and above resistance at $5.50 and its 21-dma after reporting earnings last night that were inline. Wall Street has responded this morning with a number of upgrades.

 
 
  James Brown   5/20/200,  11:47:59 AM
Ouch! Black Box Corp (BBOX) is down 14.8% to $41.07 after the company reported earnings last night that missed estimates by 6 cents. The $40 level is longer-term support but that's an ugly drop that has violated its P&F support line.

 
 
  James Brown   5/20/200,  11:44:34 AM
Tiffany & Co (TIF) has pulled back to its P&F chart support and is trying to bounce. The company may be trying to defend its stock price with this morning's announcement with a 20% increase in its dividend to 6 cents per share payable in July.

 
 
  James Brown   5/20/200,  11:42:39 AM
Thanks, Linda!

 
 
  Linda Piazza   5/20/200,  11:41:57 AM
James, welcome back. As someone who has substituted for only a portion of James' duties while he was away, I can verify that he deserved time away. I had to scramble to complete only a portion of his work each day, and I am so glad to see him back.

 
 
  Linda Piazza   5/20/200,  11:38:17 AM
Yep, Jonathan. (See Jonathan's 11:37 post.)

 
 
  Jonathan Levinson   5/20/200,  11:37:47 AM
Amazing.

 
 
  James Brown   5/20/200,  11:37:23 AM
crossing the headlines... Police destroy a small bomb near Athens Olympic games site - AP

Plus... a "blast" is being reported near a McDonald's in Istanbul. The blast turned out to be a car bomb.

 
 
  Jonathan Levinson   5/20/200,  11:37:04 AM
Linda, is the symbol really PUMP?

 
 
  Linda Piazza   5/20/200,  11:35:19 AM
Another of today's IPO's is PUMP, Animas Corp. This company manufactures and sells insulin pumps to those with diabetes. PUMP began trading at 11:15 and saw a first five-minute range from $16.65 to $17.25. It currently trades within that first five-minute range.

 
 
  Linda Piazza   5/20/200,  11:32:29 AM
NILE, one of today's two IPO's, began trading at 10:40, with a first five-minute range of 25.00 to 27.45. It has not yet traded out of the neutral range according to Jeff's 5MRT. See my 9:37 post for more information about NILE.

 
 
  James Brown   5/20/200,  11:31:03 AM
Delta Airlines (DAL) is up 11% to $5.79 after Lehman Brothers upgrades the stock to "over weight" this morning.

 
 
  Jeff Bailey   5/20/200,  11:29:30 AM
Day trade raise bullish stop alert for Pharmion (PRHM) to $38.30.

Making some headway here at $40.47.

 
 
  Jeff Bailey   5/20/200,  11:26:33 AM
PHRM $40.29 +49.3% ... little kick above $40.25. Needs a 5-minute close above and would be looking good. Decent volume of 128,000 on this 5-minute bar.

 
 
  James Brown   5/20/200,  11:24:51 AM
Sector Update...

Winners:
XAL airlines index: +2.57%
BTK biotech index: +0.87%
XNG natural gas: +0.67%
BKX banking index: +0.58%

Losers:
HMO healthcare index: -1.16%
DDX disk drives: -1.04%
DJUSHB homebuilders: -0.66%
DRG drug index: -0.62%
NWX networking: -0.60%

 
 
  Linda Piazza   5/20/200,  11:24:17 AM
As Jonathan mentioned earlier on the Futures side with reference to another underlying, the current bounce on the OEX also looks like a flag, a possible bear flag.

 
 
  Jim Brown   5/20/200,  11:17:52 AM
FR Board: Speech by Governor Gramlich
Workplace Financial Education Link

Speeches later today:
1:PM McTeer
3:45 Bernanke
5:00 Greenspan

 
 
  Linda Piazza   5/20/200,  11:09:39 AM
Although I watch the OEX most often, I agree with Jim's assessment last night in the Futures Wrap that it should be the SPX that we should be watching with regard to its 200-dma for guidance in the market today. In fact, I'd meant to write just that in my own article, adding that caution in addition to urging that traders watch the crude and ten-year yield levels.

 
 
  Linda Piazza   5/20/200,  11:07:37 AM
The OEX has again risen to test its 200-sma, with the daily MACD doing its best to curl up and produce a bullish cross (not there yet) and maintain the current incipient bullish divergence (lower price low and higher MACD low). That hasn't been accomplished yet, and a downturn from the test of the 200-dma could erase that possible bullish divergence and turn MACD lines down again.

 
 
  Jeff Bailey   5/20/200,  11:06:58 AM
Pharmion (PHRM) $40.23 +49% ... here's my intra-day chart of PHRM with a "fitted 38.2%" retracement and lower 5-MRT, with observation of a volume spike that suddenly came in a "zone of support". Link

Need price strength above $40.25, and the more volume the better.

 
 
  Linda Piazza   5/20/200,  10:54:15 AM
Reader Request about OI Call Play ADP: This reader asks that I take a look at ADP's chart, looking for possible support and resistance levels. While ADP isn't a stock that I've covered during my time serving as a substitute for another pick team member, I'd of course be glad to take a look at chart characteristics and point out what I see. First, however, I glanced at the P&F chart, noting a bullish upside target of $61.00. ADP is currently in an "O" column, however, showing short-term weakness, but it will take a trade at $40.00 to create a new sell signal.

Here's the bar chart for reference: Link This morning, ADP tests the 50-dma and has begun a bounce from that moving average. It's also bouncing from weekly support indicated by the lower horizontal red trendline and from slightly above recent horizontal support near $43.50. Although I didn't mark this on the chart, that bounce from a slightly higher low is accompanied by a lower-low on some oscillators: possible bullish divergence building. At the same time, however, MACD makes a lower high with each price high, continuing the bearish divergence that has been building over several months.

ADP travels higher within a rising regression channel that began forming in March 2003. Its move above that weekly horizontal resistance was important and the current test of that former resistance-turned-support was to be expected, but ADP needs to climb back above the second support level and then to a new high to confirm the bullish divergence showing up on some oscillators as well as the strength implied by the move to a new recent high.

There's a danger, of course, that ADP will instead drop to or toward the bottom of the channel, or maybe only to the 100-dma, currently at $43.04. Because that's below the stop loss for this play, bullish players want to see the 50-dma hold instead. If not, next support may be top-of-the-gap support at $44.80. Below that, mid-gap support or the 100-dma may be next. MACD action indicates that such a drop might be possible, but the MACD also nears the signal line, a point at which I sometimes find it turning higher again, just when matters looked most dire.

I also wanted to note one possible development that can be seen on this daily chart. Note that April's high and then May's high both resulted in a return to the $43.50 level? When I see that kind of development, particularly when the second and higher high was accompanied by price/MACD bearish divergence as it was this time, I begin wondering about the possibility of a H&S forming. If I'm in a bullish play and the stock starts rising again, I pay particular attention to that right-shoulder level when it's hit. I make plans to protect my position if the stock should round down into a right shoulder. It's difficult to assess when an exit decision should be made, as there often might be a pause for a day or so even if the stock does eventually shoot up past the right shoulder and head levels.

All in all, here's my assessment. There's danger of ADP falling to the bottom of the regression channel before it climbs again, but incipient bullish divergence and today's current bounce from the 50-dma and other support provide hope that a bounce will occur first. On a rise, careful attention should be paid to the possible right-shoulder level and then to the recent high, of course, with the top of the channel currently around $48.00.

 
 
  Jeff Bailey   5/20/200,  10:52:47 AM
Day trade long alert .... Pharmion (PHRM) $39.24 here, stop $37.20, target $44.00.

 
 
  Jeff Bailey   5/20/200,  10:51:32 AM
10:45 Watch at this Link

CRB up, 10-year YIELD down. 50/50 in my opinion.

 
 
  Jeff Bailey   5/20/200,  10:37:47 AM
Semiconductor Index (SOX.X) 457.31 -0.09% ... not much going on here right now. Morning low of 455.69 fully fills yesterday's gap higher void, and fractional undercut of WEEKLY Pivot.

QQQ $34.85 +0.42% just above its WEEKLY Pivot. Bugger might just trade the $34.82-$35.00 range today. Session high $35.02 was chopped off quickly at the MONTHLY 61.8% retracement of $35.00. Here's the QQQ intra-day chart from last night's Index Trader Wrap. Link

 
 
  Jeff Bailey   5/20/200,  10:31:25 AM
Max Pain .... I'm quite new to the site..and don't know what Max Pain is....

Help. Thanks! Frank

Here's an article from the "Ask the Analyst" section regarding the "max pain" theory. Link

 
 
  Jeff Bailey   5/20/200,  10:26:50 AM
Biotechnology Index (BTK.X) 496.82 +0.49% ... was leading percentage loser among sectors yesterday. I thought it suspicious that it was weak based on analysis of "inflation" or "higher oil price."

Without not yet looking, I'm now thinking "max pain" maybe 500.00? Let's check.

Nope.... value is 540 for May.

Biotech HOLDRs (BBH) $145.01 +0.07% .... also below its "max pain" of $150.00.

 
 
  Jeff Bailey   5/20/200,  10:24:31 AM
eBay (EBAY) $79.95 +0.83% .... has been either side of May's "max pain" value of $80.00 (high $80.40 and low $79.18)

 
 
  Linda Piazza   5/20/200,  10:21:09 AM
The OEX is testing its 200-ema as I type, with that average at 533.97 and the OEX at 533.37. Earlier it had risen above that to test the 200-sma at 535.13, with the OEX high at 534.41. This is an important test to watch, as repeated failures to move above and stay above those averages could eventually defeat the bulls.

 
 
  Jeff Bailey   5/20/200,  10:20:49 AM
OSI Pharma (OSIP) $77.72 +1.19% ... 60-minute chart at this Link which is same one we've been following. I turned on the Volume at Price study to get perspective of where interest is at.

 
 
  Jeff Bailey   5/20/200,  10:12:08 AM
10-year YIELD ($TNX.X) down 4.8 basis points at 4.746% ... quick check of May "max pain" is 4.75%.

 
 
  Jeff Bailey   5/20/200,  10:08:40 AM
Intuit (INTU) $38.90 -8.97% Link ... Technicals had been bearish and recent trade at $41 was further negative, triggering a "bearish triangle" pattern. Bearish vertical count is to $28.

Several brokers out in defense, especially Merrill, saying that while the writing was on the wall, thinks INTU's conservative revenue guidance is setting up for upside earnings beats next year as bar is now set low.

I (Jeff Bailey) think any bounce back above $40 is good entry for some 3 to 4-month out puts. I need to do some digging, but earlier this year, I read/heard of a government site that offered taxpayers access to its own tax preparation software.

 
 
  Linda Piazza   5/20/200,  10:04:16 AM
Without Jane here today, I'm not certain whether we can trust the TRIN values being displayed on QCharts, but $TRIN measures a rather bearish 1.35 while QC:TRIN.NY measures 1.24. If these are trustworthy and if they stay at current levels or move up, they support a bearish rather than bullish case. However, as I typed, both began moving down.

 
 
  Linda Piazza   5/20/200,  10:00:15 AM
Unfortunately, I'm 30-minute delayed on crude oil, so I can't give up-to-date indications of how that contract performs, but near this morning's open it was moving back up again. Ten-year yields have not headed up appreciably again, however, despite a small bounce taking place over the last few minutes.

 
 
  Jim Brown   5/20/200,  10:00:11 AM
Chicago Fed National Activity Index = +0.64, (last 0.17)
Conference Board Leading indicators = +0.1%, (est +0.1%, last +0.3%)

CBLI was revised to +0.8% from +0.3% for last month.

 
 
  Jonathan Levinson   5/20/200,  9:57:05 AM
A 6B overnight repo from the Fed adds 750M in overnight money against the expiring 5.25B today.

 
 
  Jeff Bailey   5/20/200,  9:49:39 AM
Dow Diamonds (DIA) $99.87 +0.17% Link .... has been a good point and figure chart for bullish/bearish vertical counts. Achieved its prior bearish count of $74 in March of 2003, and recent highs of $106 exceeded it current bullish vertical count of $105.

Will probably take a couple of weeks of gyration, but think we'll eventually get a 3-box reversal up, then a column of O down, which gives the sell signal and establishes some type of bearish vertical count.

 
 
  Linda Piazza   5/20/200,  9:49:15 AM
Here's the rising regression channel that has contained the OEX movements since 5/10, showing support near 531. If the OEX should approach 531, traders should watch for a bounce or a drop through that channel support line. Link Those already in bearish plays should be particularly careful to guard profits if that level should be approached, making plans in advance for how they will do that: set an automatic profit target, sell partial positions and hold onto the rest in case there's a downside break, lower stops aggressively to be taken out if there is a bounce, etc.

 
 
  Linda Piazza   5/20/200,  9:44:05 AM
Bearish OEX traders should remain aware of the risk of a move back up to 535.25 or 539.43 (suggested by the nested channels on the 15-minute chart). On both the 5- and 15-minute nested Keltner channels, the OEX has reached support lines that often produce a reversal. Since the breakout signal given by the five-minute channels can be a valid one, that risk must be assessed but might never be realized. The OEX could just continue down.

 
 
  Linda Piazza   5/20/200,  9:39:11 AM
Futures steady or not, the OEX heads lower in early trading. During the first five minutes of trading, it ranged from 532.70 to 532.33.

 
 
  Linda Piazza   5/20/200,  9:37:27 AM
Today sees the introduction of a highly thought of IPO, Blue Nile (NILE). I'm not sure when it will launch. This company sells diamonds over the Internet, and, according to one article, boasts a proven low-cost operating model profitable since 2002 with positive cash flow from operations for three years. Operating expenses measure just a little more than 14% of sales, beating AMZN's 19% of sales. Also according to that article, NILE will offer buyers the ability to order customized rings that will compete with AMZN's newly announced "Create a Diamond Ring" feature on its "Jewelry Store" site. I'm not suggesting that readers invest in an IPO, but this might be one to watch today using Jeff's 5MRT system for those comfortable with the system. We've had mixed results when watching IPO's according to this system, with some performing admirably, some never triggering a trade, and some soon reversing just after triggering a trade, so I'm still advocating paper trading that system for use with IPO's until you've tracked enough results to be comfortable with them. We have few tools to use when thinking about daytrading IPO's, and that's always been an endeavor for only the most aggressive of traders.

 
 
  Jeff Bailey   5/20/200,  9:32:07 AM
Pharmion Corp. (PHRM) $43.90 +63% Link ... higher after getting FDA approval to market its Vidaza drug as a treatment for a class of bone marrow disorders.

First 5-minute bar was from $42.52-$44.80

 
 
  Keene Little   5/20/200,  9:28:14 AM
I had shown a chart yesterday of the sideways consolidation pattern in gold and how it pointed to another leg down, which should be the last one before we get a larger rally. The gold stocks are fitting the same EW pattern--it looks like one last push lower and we should get the next rally leg started. I've been thinking new annual highs will be coming in gold stocks and gold, but I'm getting ahead of myself--I'll just watch the pattern develop to see how the impulsive waves get going to the upside to confirm this.

I had been referring to a fib target of 31.51 for NEM and 73.00 for XAU. I was reviewing these charts last night for a reader and noticed an error on my XAU chart. The correct downside target for XAU is 74.00 and that coincides very nicely with the H&S pattern on the daily chart, shown here: Link

Yesterday morning I felt that the gold stocks were probably near a top for the move up before resuming its decline. Gold stocks rolled over with the rest of the market so we'll see if there will be follow-through as I believe there will be. I think it's still too early to be thinking long the gold stocks, or gold, but we should be getting close with one more leg down.

 
 
  Jeff Bailey   5/20/200,  9:19:09 AM
09:00 Update at this Link

 
 
  Linda Piazza   5/20/200,  9:18:33 AM
With the OEX mired within a consolidation zone on the daily chart, I decided to start with a study of the weekly chart last night. The pullback from the year's high occurred as the OEX had risen to test its 200-week simple moving average, currently at 560.66, with that descending average pressuring the OEX lower, too. In addition, that weekly chart shows the OEX RSI and stochastics still headed lower, not yet signifying fully oversold conditions, with the MACD histogram growing more negative.

Still, when viewed on a weekly chart, the pullback since RSI and stochastics rolled over looks mild. Except for one fact: that pullback took the OEX below the 200-week exponential moving average three weeks ago. After dropping below that average, it fell down toward 526 weekly support. Wednesday it rose within a few points of that 200-week (exponential) moving average, now at 543.07, before pulling back again. On the weekly chart, it appears that a fall beneath 526 would next see weekly support near 520.60.

What do shorter-term charts show? The daily chart shows the OEX still mired within a congestion zone, but yesterday's candle perhaps hinted that the OEX might be ready to test support before it tests resistance again. However, the behavior of the futures throws a hitch into that theory. Despite the rise in the crude contract above $41 again and despite losses in Asian and European markets, our futures have had a milder reaction. While we can't always trust the behavior of the futures in pre-market action, it would be unwise to ignore this reaction as it sounds a warning to bears that our futures are not being impacted in the expected manner. Perhaps that's due to the slight pullback as the cl04m contract approached the 5/17 high, with the thought that it might rollover into a double-top formation. As I speculated in the Market Wrap last night, there has been a monumental effort to hold the indices steady and this effort may be evidenced by what we're seeing in the futures market. We'll see if that effort continues to prove successful as the cash markets open, but as long as equity markets trade in an inverse relationship to the crude contract, keep an eye on that contract (cl04m on QCharts). In addition, futures may be reacting to the pullback in yields on the benchmark ten-year treasury note, with those yields currently dropping back below the neckline of a reverse H&S on the weekly chart.

That action of the futures and the short-term pullbacks in the ten-year yields and the crude contract require that we assess the possibility for a move up instead of the move down to test support that was suggested by yesterday's action. If a move up occurs, a move above the 30-minute 100/130-pma's at 536.15 and 537.06 gives a first signal that some strength might be returning, but yesterday's action around the 60-minute versions at 538.81 and 540.45, respectively, prove that bulls shouldn't consider the OEX strong until and unless it can breach these averages. Even then the 120-minute versions lurk just overhead at 542.36 and 544.21, but over the last few weeks, it's been the 60-minute versions that have turned back advances. The 15-minute Keltner chart shows that the OEX would reach possible reversal zones at 536.55, 539.64, and 543.50. The presence of that 200-week exponential moving average just overhead, too, makes me wonder if any move up might be just another move up to test resistance.

What if support is tested this morning? Just where a downside breakout would occur is made difficult by the spiky configuration, broadening as the OEX reaches higher highs and lower lows without quite breaking free of the formation. The 60-minute chart shows the OEX having touched the 100/130-pma's and then rolled down beneath them, a clear bearish sign, but approaching a supporting trendline off the 5/12 low, with that trendline at about 531, not far below the current price. Perhaps a breakdown below that trendline would be a first sign of an impending breakdown out of the consolidation zone, confirmed by a breakdown below the 5/12 low. Perhaps instead the OEX will find support at that trendline, as it now demarks the lower boundary of an ascending regression channel that began forming off that 5/12 low. That's one clear level that bears and bulls both should be watching, then.

The 15-minute nested Keltner channels show the OEX having reached likely support at yesterday's close, but with a clear break of that support (perhaps on a break below 531?), suggesting a fall toward 527.60, with that dynamic Keltner support line perhaps snaking lower toward 526 if the OEX should also fall. The five-minute Keltner channels show that a downside breakout signal has been given, with bearish traders needing to assess the possibility of a bounce back up to mid-channel Keltner resistance, if not upper-channel resistance.

All in all, then, I'd be careful in any trade within the current consolidation range and particularly careful of bullish trades, which are currently working against the weekly oscillator downdraft. Any move up may be short-term one that reverses unexpectedly.

 
 
  Jonathan Levinson   5/20/200,  8:31:21 AM
Initial claims 345K

 
 
  Jonathan Levinson   5/20/200,  8:17:32 AM
It's a mercifully quiet news week, with initial claims due at 8:30, est. 326K, then at 10AM leading economic indicators, est. .2% and the Philly Fed at noon, est. 31. There are no major reports scheduled for Friday.

 
 
  Linda Piazza   5/20/200,  7:03:33 AM
Good morning. The Nikkei opened slightly in the red Thursday morning and then climbed above 11,000 for the first time since May 13. It couldn't maintain that level, however, rolling over in the afternoon and dipping below 10,800 again. Bouncing in the last hour after another near approach to its 200-dma, it moved 100 points off the low of the day to end down by 105.70 points or 0.96%, at 10,862.04. Worries about crude oil prices and profit taking as the Nikkei hit the 26-day moving average were credited with sending the bourse lower.

While tech strength had lifted the Nikkei Wednesday, tech weakness pressured it Thursday even while the Nikkei had been making early gains. Banking stocks built on recent gains in early trading, however, with the sector ending mixed. UFJ Holdings has been soaring on the impression that it was making headway in clearing up bad debt and it posted more gains after speculation that it would sell the operations of a banking unit to Sumitomo Bank. In other stock-specific news, Sony confirmed that it had entered a 20-day negotiation period to buy MGM, but it couldn't hold onto early gains, either, closing lower by 1.3%. A silicon wafer manufacturer plummeted after announcing lower-than-expected net income.

Other Asian bourses mostly closed lower, too. The Taiwan Weighted lost 0.77%. With speculation rising that Samsung Electronics may be a takeover target, Samsung fell 1.1% and South Korea's Kospi sank 1.31%. Singapore's Straits Times lost 1.34%. Hong Kong's Hang Seng fell 1.13% with China Telecom contributing to the weakness as it fell 3.2%. Reports surfaced that the company had participated in a share placement program to raise $1.7 billion to be used to purchase its parent company's telephone networks. Perhaps also of interest to some U.S. investors, Anheuser-Busch (BUD) has apparently bought a 29% position in Harbin Brewery Group. This increases talk that Harbin may favor an offer from Anheuser-Busch over a hostile takeover attempt by SABMiller. China's Shanghai Composite declined 0.59%.

Several European bourses are closed for Ascension Day, but the ones that are open trade lower, too, with higher crude oil prices being mentioned as one pressure on the bourses. Volume is light, too, on the open bourses. Merrill Lynch raised earnings forecasts for European oil majors for the second quarter, mentioning Total as one of its four top picks, but the stock eased in early trading today. In London, oil majors BP and Shell Trading and Transport also eased as crude prices headed higher again. Also in London, fixed-line operator BT Group and brewer SABMiller gained after their earnings reports, although Merrill Lynch's comments about BT's earnings were mixed and JPMorgan noted that SABMiller might soon faced stepped-up competition from Anheuser-Busch and Coors. Other European stocks-in-the-news mostly trade lower, with drugs stocks Bayer and Aventis trading lower even after receiving FDA approvals. Top decliners in Europe include DaimlerChrysler and Alcatel.

As of this writing, the FTSE 100 has lost 40.10 points or 0.90%, to trade at 4431.70. The CAC 40 has declined 34.57 points or 0.95%, to trade at 3608.75. The DAX has lost 51.58 points or 1.33%, to trade at 3820.68.

 
 
  Jeff Bailey   5/19/200,  12:37:58 AM
S&P 100 Index (OEX.X) chart at this Link

#2 weighted XOM $42.60 May "max pain" value is $42.50.

#3 weighted MSFT $25.62 May "max pain" value is $25.00

#4 weighted PFE $35.17 May "max pain" value is $35.00

#5 weighted WMT $54.78 May "max pain" value is .... any guesses? $55.00.

Other stocks, I'm interested in ... EBAY $79.29 "max pain" $80.00

OSIP $76.78 "max pain" $40.00.

Hmmmm.... already discussed CSCO $21.36, which actually finished up 1.71% on Wednesday. It's "max pain" is $22.50.

 
 
  Jeff Bailey   5/19/200,  10:04:56 PM
Daily tracking of NH/NL indications for NYSE and NASDAQ at this Link

No reversal up on the 10-day average ratio, which we chart on a 2% box scale PnF bullish % style chart, where a 3-box (6%) reversal is needed for a meaningful sign of change.

Column AE for the NYSE shows inflection low reading of 3.7% for 5-day average ratio (Biggs' bottom), while yesterday, I begin coloring column AE to show 5-day average above 10-day, as if short-term bullish leadership improving. Column AF/Row 339 is black-underlined to mark an inflection low.

Same thing for NASDAQ columns AI and AJ, where today's completed trade would have the 5-day ratio above a still falling 10-day average ratio.

If going to try and associate any of these readings with actual price, then I would have to think downside risk is measured to recent lows.

With some sign of renewed bullish leadership present in NYSE NH/NL indications, make that association with this bar chart of NYSE and three equal lows of late. Link

For NASDAQ, where 10-day NH/NL average ratio still falling, might make association with the NASDAQ Composite (COMPX) chart, where a single spike low is found. Link

May sound crazy, but if looking to trade long right now, might be better to stick with 1, 2 and 3-lettered stock symbols, list on the NYSE, where there is at least a chance for buying, where some technical support is built on near-term basis.

 
 
  Jeff Bailey   5/19/200,  9:45:11 PM
Per tonight's Index Trader Wrap and some comments hear today that trade was highly dictated by this week's option expiration, and bears trying to defend positions.

Part of me shruggs it off, based on my observations of oil/crb.

However, I will note that GE was a stock I commented on today. Its May "max pain" theory value is $30.00. Link

 
 
  OI Technical Staff   5/19/200,  7:33:15 PM
The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

 
 

Market Monitor Archives