Option Investor
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  Jeff Bailey   5/24/200,  8:13:57 PM
Pivot Matrix for Tuesday at this Link

  Linda Piazza   5/24/200,  3:57:25 PM
Once again today, we approach the end of the day watching to see if the OEX will or won't end the day above its 200-dma. So far, above the 200-ema and below the 200-sma looks like a possibility, as it has been on many days lately.

  Linda Piazza   5/24/200,  3:55:06 PM
By tomorrow morning, the OEX triangle will have narrowed to about a 3-point width, so that the OEX can easily span the entire width in a single day. We could see a false breakout or two, but perhaps the minimal upside penetration that we saw this morning and then the minimal downside one this afternoon performed the needed stop-running service, and we won't see the usual stop-running shenanigans tomorrow.

  Jeff Bailey   5/24/200,  3:49:18 PM
Buy Prog. Premium SPX 1,096.46 +0.26%

  Jeff Bailey   5/24/200,  3:47:26 PM
eBay (EBAY) $82.30 +2.43% Link ... questions regarding the July $70 puts. Would continue to hold and while toay's move above $81.00 not good, first sign of strength is trade at $84.

Traders that now wish they had never bought $70 puts (changes from day to day) will close out on weakness to $78.

According to Dorsey/Wright & Associates, Internet Sector Bullish % (BPINET) still "bear confirmed" at 26.47%. Was unchanged on Friday.

  Jane Fox   5/24/200,  3:46:44 PM
A "normal" intermarket relationship is stocks and bonds move together but against the yield however, since 2000 they have moved in opposite directions. At least until August of 2003 when the relationship recoupled and stocks and bonds once again moved in the same direction suggesting the "normal" relationship had reappeared. I was curious has to whether this recoupling was an anomaly of the trend since 2000 or the relationship had indeed resurfaced. So I sent an email to John Murphy, author of Intermarket Analysis and here is his response.

From the start of 2000 to the second half of 2003, bond and stock prices became decoupled. That meant that they were moving in opposite directions. This unusual situation usually occurs during periods of unusually low inflation, or deflation. There were preliminary signs of a recoupling of the two markets during the second half of 2003, but the evidence was far from conclusive... It was my view, however, that the falling dollar and rising commodity prices would lead to rising inflation pressures which historically led to rising interest rates (and lower bond prices). Rising inflation pressures would prompt a return to a more normal bond-stock relationship. In other words, rising rates and falling bond prices would prove to be bearish for stocks. That’s pretty much what happened when rates started rising during March and stock prices fell."

  Linda Piazza   5/24/200,  3:45:39 PM
As of a few minutes ago, volume patterns showed strength, with advancers far outnumbering decliners and up volume far ahead of down volume. Volume was tepid, however, at 991 million on the NYSE and 1.2 billion on the Nasdaq. New highs vs. new lows were roughly equal, a little ahead on the NYSE and a little behind on the Nasdaq. If the Nasdaq does eke out some gains today, as it appears it will do again, those gains are so far not supported by expanding volume. Perhaps that's because it's still within the recent consolidation zone.

  Linda Piazza   5/24/200,  3:39:52 PM
The triangle that Keene first mentioned today on the Futures side of the Monitor also shows up on the OEX, of course. (See my 13:37 post.) Extrapolating the lines of the OEX's version out, it looks as if the apex will be reached by 10:30 tomorrow morning, which could mean that we'll see a breakout one direction or the other near tomorrow's open, if not this afternoon. Although some old TA texts say that these triangles lose their validity if there's not a breakdown by about 2/3 of the way into the triangle, I read research about a year ago that disputed that theory. Unfortunately, I can't locate the source right now.

  Jane Fox   5/24/200,  3:33:53 PM
Dateline WSJ New York Attorney General Eliot Spitzer today filed a lawsuit against former New York Stock Exchange chairman Dick Grasso over what the suit referred to as an "excessive compensation package." The suit seeks to recover more than $100 million from Mr. Grasso.

The suit also named Kenneth Langone, the former head of the NYSE's compensation committee.

Representatives of Mr. Grasso had no immediate comment on the lawsuit. A spokesman for the NYSE said that "we are supportive of Attorney General Spitzer's efforts in this matter. As a named party, it would be inappropriate to comment further."

  Linda Piazza   5/24/200,  3:29:39 PM
Here's a daily chart of the TRAN, showing why I continue to watch the 72-ema. It's the green moving average on this chart: Link

  James Brown   5/24/200,  3:23:28 PM
Looks like crude oil is closing at an all-time high of $41.72 a barrel.

  James Brown   5/24/200,  3:21:52 PM
Builder BZH also looks strong, up 3.28% to $95.33 but is just under its 200-dma.

  James Brown   5/24/200,  3:21:03 PM
Ryland Group Inc (RYL), a homebuilder, is breakout over resistance at $76, which has produced a new MACD buy signal. The next level of resistance is the 40-dma at $78.85 and its 200-dma near $80.00.

  James Brown   5/24/200,  3:19:39 PM
The homebuilders have also turned higher again this afternoon. The DJUSHB is up 2.17% now and very close to breaking out over the 560 level.

  James Brown   5/24/200,  3:17:43 PM
Energy stocks are extending their gains...

OSX oil services: +4.71%
XNG natural gas: +2.34%
OIL oil index: +2.07%

  Linda Piazza   5/24/200,  3:17:07 PM
In response to the 14:14 post about Canadian Oil Trusts, a respected subscriber sent along the following links and/or charts for the benefit of those looking into this issue: Link Link Link Thanks, T.G. I haven't been following this issue, and so don't have more to offer, but thought this might interest some readers.

  James Brown   5/24/200,  3:14:36 PM
TIBCO Software (TIBX) is surging 7.5% on an upgrade from "over weight" to a "strong buy". The move has broken its trend of lower highs and has produced a new buy signal in its MACD.

  James Brown   5/24/200,  3:11:43 PM
One of today's big movers is Applied Micro Circuits (AMCC) which has managed to maintain its 10% gain from this morning. The breakout over resistance at $5.00 was fueled by a positive article in Barron's over the weekend.

  Jeff Bailey   5/24/200,  3:08:39 PM
03:00 Internals at this Link

On track for lightest volumes of the year.

  Linda Piazza   5/24/200,  3:07:29 PM
The bond market closed without the TNX breaking out to the upside again, but also in the upper half of Friday's bullish engulfing candle. Still, stochs, MACD, and RSI all roll down, suggesting that bond yields may consolidate sideways or pull back while those oscillators cycle down. If this were an equity and not a bond yield we were studying, the sky-high ADX, currently at 48.59, would suggest that we shouldn't trust the evidence of those oscillators, however.

  Linda Piazza   5/24/200,  3:02:30 PM
James mentioned a new MACD buy signal on the Russell 2000, and the OEX MACD is trying its best to produce a bullish cross, although from below signal. So far, the potential bullish price/MACD divergence that I've been noting on the OEX has not yet been erased by a downturn and lower low on the MACD, but the bullish divergence isn't confirmed yet, either. Still that potential bullish divergence warns OEX bears to be careful. (Since I referenced James' post about the Russell 2000, I wanted to clarify, as I did last week in a Wrap that there was no bullish price/MACD divergence on the Russell 2000, one of the few indices not to have displayed this divergence.)

  James Brown   5/24/200,  2:59:59 PM
Reuters is reporting that the European Commission plans to object to Sony Music's plans to merge with Bertelsmann BMG music division. The joint venture would be larger than Time Warner's music division. The commission's deadline to decide is July 22nd.

Shares of SNE are down 1% but still above support at $34.00.

  Linda Piazza   5/24/200,  2:57:38 PM
The Nasdaq retraced a little more than 50% of this morning's gap higher. Ideally, bulls don't want to see more than 50% of a gap higher retraced. In addition, the Nasdaq climbed into a lower high, but it hasn't confirmed that by a lower low, instead this time finding support near the 50% retracement of the gap, near 1918. It's hovering near that level now, so we'll be able to see if that 50% retracement level continues to provide support.

  James Brown   5/24/200,  2:51:30 PM
Just noticing how the Russell 2000 (RUT) has been struggling with its 200-dma today and two-week old resistance at 553. I do note that the MACD has produced a new buy signal with today's earlier strength.

  Linda Piazza   5/24/200,  2:43:09 PM
The OEX appears to be headed down to test its low of the day with TRIN headed higher (hope it's reliable again) and advdec headed again toward midday lows. Yields head lower, too, though, so either the recent relationship between yields and equities is not working today or we ought to be skeptical of moves lower in the equities.

  Linda Piazza   5/24/200,  2:35:26 PM
The OEX is spending a lot of timing hanging around just above the rising support off the 5/12 low, but it hasn't broken through yet. I'm still thinking that a break below the day's low might lead to a drop to 529-530, perhaps further, but there's still the risk that any break would be a stop-running move that would soon reverse.

  James Brown   5/24/200,  2:25:56 PM
Crossing the wires today is news that Toys-R-Us (TOY) has filed suit against Amazon.com (AMZN). TOY claims that AMZN has violated its exclusivity rights in the toy, game and baby products categories. (-Reuters)

Shares of TOY are up 1.9%. AMZN is up 1.04%.

  Jeff Bailey   5/24/200,  2:24:43 PM
Career Education (CECO) $62.61 +0.07% Link .... has regained Friday's close. Stock gapped lower this morning at $58.71 on chatter of accounting errors.

  James Brown   5/24/200,  2:22:42 PM
For the soda drinkers out there Pepsi (PEP) says their new low-carb drink will hit stores in mid-June.

  James Brown   5/24/200,  2:21:30 PM
Current OI put play Guidant (GDT) issued a press release today that GDT has invested $15 million into Evalve, a Redwood City, California developer of catheter-based technologies to repair heart valves. Yet the news isn't inspiring any buying interest. The stock has failed at resistance at its 10-dma and the $60.00 level as we expected. This looks like a new entry point for bearish positions.

  Linda Piazza   5/24/200,  2:19:17 PM
Late Friday afternoon and then again today, the OEX hit five-minute lows between 532.62 and 532.85. Bulls don't want to see those lows violated.

  James Brown   5/24/200,  2:14:50 PM
I got some reader responses to the move in oil stocks today. One reader suggested...

You might want to look at some of the Candian Royality Trusts as they are selling at about a 30% discount from their recent prices..they typically yield 12% or greater, and pay monthly dividends. They have been sold off due to factors other than the Price of Oil for instance Candian Government withholding of 15% on capital returned (has not become law or may not in Canada)....

  Jeff Bailey   5/24/200,  2:13:47 PM
02:00 Internals at this Link

  Linda Piazza   5/24/200,  2:06:09 PM
The OEX 60-minute MACD has flat-lined, not giving any guidance, of course. That's to be expected in a congestion zone. The 15-minute chart shows Keltner channels narrowing down into an equilibrium position again, as often happens prior to a breakout one direction or another. That equilibrium can continue a while, however.

  Linda Piazza   5/24/200,  1:57:33 PM
Jim mentioned in his weekend wrap that he'd been receiving some emails saying that readers didn't want both sides presented but just wanted guidance about which way to expect the markets to move. The recent trading pattern makes it clear that there hasn't been a direction to the markets, and that those of us who have been counseling wariness in the face of possible choppy trading behaviors have been giving guidance. Perhaps the frequent warnings that congestion zones weren't particularly amenable to technical analysis and were subject to sharp moves without warning, with those moves soon being reversed, kept traders from jumping into plays that were soon stopped. The truth is that such choppy zones are not particularly suitable for options plays, in particular. Perhaps the longer this congestion zone continues, the more pent-up energy will attend the breakout when it occurs, but for now, there's no breakout. I think it's got to happen soon, but it hasn't yet. Part of building a sound trading strategy is in knowing when to trade and when not to trade, recognizing when you're likely to get chopped to pieces.

  Linda Piazza   5/24/200,  1:41:50 PM
Okay, here we go again, with the OEX finding support at the steepest rising trendline off the 5/12 low and headed up to test the 200-sma and -ema's, with those averages at 535.60 and 534.14, respectively.

  Ray Cummins   5/24/200,  1:37:35 PM
Spreads/Straddles/Premium-Selling -- Portfolio Management

With the beginning of a new expiration period, it's a great time to take a look at our existing positions and make any necessary adjustments. Among the most critical plays is the bearish spread; JUN-110C/105C, on Vimplecom (NYSE:VIP), which is up $2.01 at $97.19 and currently testing last week's high of $97.25. A close above $100 would likely signal a (conservative) exit in the position. On the bullish side, Martek Biosciences (NASDAQ:MATK) and Given Imaging (NASDAQ:GIVN) are candidates for exit or adjustment on further downside activity. Traders might also consider using any near-term bounce to roll these spreads to a lower (future) strike price. Other spread plays on the "watch" list include Electronic Arts (NASDAQ:ERTS), Gen-Probe (NASDAQ:GPRO), and Inamed (NASDAQ:IMDC). In addition, "premium-selling" positions in Raytheon (NYSE:RTN) and Silicon Labs (NASDAQ:SLAB) require close attention as they test recent support (RTN) and resistance (SLAB) areas.

  Linda Piazza   5/24/200,  1:37:13 PM
I was interested to see the chart Keene linked to his 13:18 post because I've been staring at that ever-changing-shape congestion zone, thinking that it was narrowing down into a probable triangular shape within the ascending regression channel. Does that make sense? Here's what I mean: Link

  Jeff Bailey   5/24/200,  1:08:32 PM
01:00 Internals at this Link

  Linda Piazza   5/24/200,  1:05:05 PM
Ten-year bond yields head toward the lower end of today's range and toward the midpoint of Friday's range, with that midpoint being at 47.245 and the TNX currently measuring 47.40.

  James Brown   5/24/200,  1:04:05 PM
more oil service stocks... BHI is up 2.86%, BJS is up 3.65%, HAL +2.03%. Despite today's strength none of them look very attractive for new bullish positions.

  James Brown   5/24/200,  1:02:24 PM
Schlumberger (SLB), another oil service stock, is up 1.46% to $57.45 but remains stuck within its tight $2.00 range between $56-58.

  James Brown   5/24/200,  1:01:07 PM
With the OSX oil services index on the move I wanted to look at some of the stocks in the group. Transocean Inc (RIG) is up 3.8% to $26.70 after consolidating the last couple of weeks. Unfortunately, RIG is under plenty of its moving averages but the gain today does appear to have produced a new buy signal on its MACD.

  Jeff Bailey   5/24/200,  1:00:56 PM
12:55 Market Watch at this Link

July Light, Sweet Crude futures (cl04m) $41.72 ..

  Linda Piazza   5/24/200,  12:51:19 PM
The OEX is still testing that steepest best-fit trendline off the 5/12 low, at times easing beneath it, but certainly not plummeting as if it had broken through support. Where is the point at which the OEX would plummet, since neither the 200-sma or 200-ema is that point? Could be 531.80, the current site of the lowest version of the rising trendline off the 5/12 low. Could be 530. Could be 527-528.50. Or the OEX could just creep lower to firm up support and then rise again. I'm sort of leaning toward a break of 531.80 being the starting point if there's to be a starting point, with some bounce potential near 530 and strong bounce potential in the 527-528.50 zone, so that "plummet" might not be much of a drop after all. Remember, too, that support could always hold, keeping the OEX within that congestion zone for another day or two. It's got to break out of that congestion zone some direction or another some time or another, and I think we're getting closer, but the bulls and bears are currently still evenly matched, it appears.

  Jeff Bailey   5/24/200,  12:48:18 PM
Taro Pharma (TARO) $39.48 -4.66% Link ... Could you provide some thoughts on TARO?

TARO's PnF chart is longer-term bearish, where downside risk is difficult to assess at this point as stock has exceeded its current bearish vertical count of $46. According to Dorsey/Wright and Associates, their Drug Sector Bullish % (BPDRUG) is still "bear confirmed" at 44%, so not much help from the sector for strength at this point.

First sign of strength at this point would be $47 for TARO. I placed a fitted 38.2% retracement on TARO's bar chart (attach to $72.30 high and then 38.2% at 03/32-03/31 congestion lows, and today's action has TARO falling below 80.9% ($40.84) and looking further vulnerable to resulting 100% at $33.40.

  James Brown   5/24/200,  12:45:30 PM
The early strength in the INX Internet index helped lift AMZN to its high for the day at $42.30 but the stock is fading again now at $41.52. Traders can use these lower highs to tighten stops if you're concerned about a bounce from $40.

  James Brown   5/24/200,  12:39:53 PM
Sector update...
Plenty of green today but most of the moves are mild. Here are some of the biggest movers:

OSX oil services: +3.01%
OIX oil index: +1.37%
XNG natural gas: +1.50%
DDX disk drives: +1.12%
INX Internet index: +1.07%

DRG drug index: -0.95%
XAL airlines: -0.66%

  Jeff Bailey   5/24/200,  12:38:32 PM
Vicuron Pharma (MICU) $13.06 -40% Link ... shares were hit lower this morning after FDA said the company's Anidulafungin drug for the treatment of yeast infection of the esophagus couldn't be marketed.

The FDA did indicate that the Anidulafungin could potentially receive approval for esohageal condidiasis after completion of ongoing Phase III tials or completion of further testing.

  Linda Piazza   5/24/200,  12:32:20 PM
On the OEX 15-minute chart, Keltner resistance is firming up from 534.90-535.19, with lighter resistance at 534.09. The OEX is currently just above 532.99 support, with stronger support near 531.87.

  Linda Piazza   5/24/200,  12:27:28 PM
The OEX is now testing that steepest best-fit trendline off the 05/12 low, at least temporarily finding support there. Earlier this morning, we saw that recent resistance held and now we'll get a glimpse of whether recent support will hold, too, with that support being that I detailed in my 9:02 post and in subsequent posts.

  James Brown   5/24/200,  12:13:10 PM
Community Health (CYH) is up 2.82% to $25.11 after UBS upgraded the stock from "neutral" to a "buy" this morning and gave it a $31 price target. Unfortunately, like many of today's movers shares of CYH remain under recent resistance.

  James Brown   5/24/200,  12:10:10 PM
Both Applebee's (APPB) and P.F.Chang's (PFCB) are up today after CIBC upgraded the two restaurants to sector outperformer this morning. Unfortunately both stocks remain within their recent trading range.

  Linda Piazza   5/24/200,  12:07:20 PM
It's possible to draw various ascending trendlines lines off the 5/12 low on the OEX, including a best-fit one and one that cuts off no lower shadows. The OEX appears to have been finding support today from the steepest best-fit one rather than a lower one or from the bottom of the QCharts-drawn regression channel. While today's action looks bearish, the OEX is still where it's been for much of the last couple of weeks--hovering around its 200-dma. Action has looked bearish each time it's headed below the 200-sma on the daily chart, with not much resulting from those dips previously, so while this looks anything but bullish to me, I'm trying to remember the results of those previous tests and not jump to conclusions.

  James Brown   5/24/200,  12:05:32 PM
It's been a tough four weeks for BEAS. The stock has dropped from north of support at $12.00 toward the $8.00 level with a big drop on May 14th after a disappointing earnings report. Now the company is trying to defend its stock price with an announcement this morning of an additional $200 million dedicated to its current stock buy back program.

  Jeff Bailey   5/24/200,  12:05:01 PM
12:00 Internals at this Link

  James Brown   5/24/200,  12:01:23 PM
Interesting. Are parents not buying bikes for their kids anymore? I haven't done any digging but shares of Huffy Corp (HUF) peaked at $8.00 a year ago on July 16th. Now they're trading at 98 cents and have been consolidating near the $1.00 mark for a week now.

  James Brown   5/24/200,  11:57:00 AM
Dow-component Boeing Co (BA) is up 1.79% to $44.18 after CSFB upgraded the stock from "neutral" to an "outperform" this morning. CSFB put a $52 price target on the stock. Also boosting investor confidence here is news that 2800 union workers (machinists) have agreed to a new 3-year contract with BA.

  James Brown   5/24/200,  11:53:23 AM
We had Dow-component CAT on the watch list this weekend because the stock has pulled back to support near $71 and looked poised to drop again. This morning CAT popped to nearly $75 after Merrill Lynch upgraded the stock from "neutral" to a "buy" with a price target of $102.

  Linda Piazza   5/24/200,  11:50:23 AM
I've been studying the SPX weekly chart, noting that it's spent the last few weeks challenging the 200-week MA, currently slipping below it as MACD turns lower: Link I haven't noted the 200-week ema, an average I'll certainly be watching for possible support, too, if the SPX should drop since that 200-week moving average served as resistance throughout much of October, with that number currently at 1067.87. Of course, the 200-dma's at 1082.68 (simple) and 1081.12 (exponential) are important to watch, particularly as it's been the tests of the 200-dma that have prompted recent bounces.

  Jeff Bailey   5/24/200,  11:50:12 AM
Buy Prog. Premium ... SPX 1,093.43 -0.01% ...

  James Brown   5/24/200,  11:50:10 AM
Thor Industries Inc (THO) is up 1.96% after reporting earnings this morning. The company earned 57 cents per share vs. 35 cents a year ago. Estimates were for a profit of 48 cents. Revenues jumped more than 56% for the quarter.

  OI Technical Staff   5/24/200,  11:47:26 AM
Jim is on vacation this week and will not be in the monitor today

  Jeff Bailey   5/24/200,  11:46:46 AM
Wells Fargo (WFC) $58.39 +0.58% .... several media outlets reporting that WFC could be set to buy Strong Capital Management for $400 million. If so, then the $400 million price is about 1/2 of what many industry watchers said Strong Capital would have fetched prior to allegations of improper mutual fund trading.

  OI Technical Staff   5/24/200,  11:45:36 AM
Jonathan is away on business today and will not be in the monitor

  James Brown   5/24/200,  11:43:55 AM
Copper futures are up another 2.04% to $1.245 a pound today and marking its third strong session in a row. That has shares of Phelps Dodge (PD) up 1.7% to $65.53 but the stock remains just under resistance at its 200-dma.

  Linda Piazza   5/24/200,  11:40:43 AM
The OEX approaches 15-minute Keltner support at 533.34 with stronger Keltner support at 531.92.

  James Brown   5/24/200,  11:39:18 AM
The DRG.X drug index is breaking down under its 200-dma and that's good news for our new FRX OI put play. FRX is down another 1.09% to $58.53.

  Linda Piazza   5/24/200,  11:35:53 AM
The OEX heads below/tests its 200-ema.

  James Brown   5/24/200,  11:35:12 AM
After two weeks of consolidating along its 200-dma the CYC.X cyclicals index looked poised for a bullish move higher. There was a strong enough pop this morning to produce a new MACD buy signal but its early strength is fading.

  Linda Piazza   5/24/200,  11:34:40 AM
Crude generally headed up, TRIN generally headed up, VIX trying to head higher, advdec generally headed down: these trajectories are not particularly bullish for equities if they continue. However, TNX can't seem to maintain yields above Friday's high and the VXO isn't reacting the same as the VIX, throwing a wrench in the various relationships.

  James Brown   5/24/200,  11:29:21 AM
This bump in the homebuilders has Centex Corp (CTX) up 1.86% with a new MACD buy signal but the stock is struggling with resistance near $46. We're looking for a failed rally under $47 and/or its 21-dma (essentially the descending trendline of lower highs).

  Linda Piazza   5/24/200,  11:28:40 AM
After breaking to a new high of the day, TNX is rolling down again now, testing support from an ascending trendline it began establishing today, with that trendline currently at about 47.50.

  James Brown   5/24/200,  11:24:46 AM
The DJUSHB home construction index is up 1.45% and breaking out over its simple 200-dma but still under short-term resistance at 560.

  Linda Piazza   5/24/200,  11:23:45 AM
I watch both the 200-sma and 200-ema on the OEX. That 200-ema is currently at 533.97.

  Linda Piazza   5/24/200,  11:12:01 AM
This morning, the TRAN rose within a few cents of the 72-ema, one average that does seem to resonate on the TRAN's daily chart, before falling back to the current level. That rise also brought the TRAN to the top of the rising regression channel that has contained it since 5/10, showing that the upper-channel resistance held once again. That also constituted a retest of the 2888-2890 resistance zone. This coming-together of various types of resistance illustrates how hard it will be for the TRAN to rise, with similar conditions existing on other charts for other indices. The action also reinforced the possibility that the recent rise in the TRAN could be a bear flag rising into resistance. This is important to watch because the TRAN's action often leads the Dow's, and because transports are so important to watch these days when crude prices are impacting the behavior of the markets.

  Linda Piazza   5/24/200,  11:04:54 AM
Crude oil headed up, ten-year yields headed up: that's not great news for equity bulls unless the recent inverse relationships have been changed. Be careful, but remember that most indices are still mired in recent congestion zones and prone to a lot of choppy behavior.

  Jeff Bailey   5/24/200,  10:57:03 AM
10:55 Market Watch at this Link

  Linda Piazza   5/24/200,  10:55:30 AM
Ten-year yields just broke above Friday's 47.69 high, and have since pulled back slightly. Keep a watch on this level--equity bears wanting to see a push above it again and equity bulls wanting to see a rollover--and then on the 48.15 level, the level at which I show the TNX again breaking above a neckline level on a big reverse H&S on its weekly chart.

  Keene Little   5/24/200,  10:49:47 AM
The gold stocks got a little lift today and I see that Jeff stopped himself out of the bearish NEM play. But I think Jeff has the right idea (both in playing this bearishly and stopping himself out when it hit his stop level). Looking at this 60-min chart of XAU, I've been watching to see if it will hit its Fibonacci target zone of 86.62-87.03, which is based on an internal wave projection for this bounce from the low on the 10th (an A-B-C correction where wave-A = wave-C), and to the level typical for a 4th wave correction (38% retracement of the previous wave-3). XAU's high today (so far) is 86.69 and has therefore reached this fib zone. Notice the upper trend line of the ascending wedge that price is forming--currently at about 87.00. So XAU may work its way a little higher, but I think we're very close to the end of this run and I'd be looking to short the gold stocks to a new low (XAU downside target remains 74.00). Link

  Linda Piazza   5/24/200,  10:42:15 AM
Gap support is so far holding on the OEX, contributing to the confusing picture today. I'm still worried about the impact of rising crude prices on equities, however, and wouldn't consider gap support confirmed until and unless the OEX makes a new daily high.

  Linda Piazza   5/24/200,  10:35:15 AM
I'm 30-minute delayed, but note that crude moved above $40.00 again. That could have been a momentary spike, already reversed, of course. Ten-year yields have not been able to climb above Friday's high, however.

  Jeff Bailey   5/24/200,  10:30:57 AM
QQQ $35.32 +0.86% .... chart with new WEEKLY Pivot retracement at this Link

  Linda Piazza   5/24/200,  10:29:19 AM
This morning, the Dow (DJX as proxy on QCharts) moved up to 100.45 with the 200-sma at 100.38, so that constituted a test of the 200-sma from the underside. However, the Dow, like several other indices, is within a congestion zone, only minimally below 10,000.

  Linda Piazza   5/24/200,  10:26:12 AM
The OEX now moves down to retest this morning's gap.

  Linda Piazza   5/24/200,  10:24:27 AM
Today's OEX action obviously isn't bullish action, turning down the OEX below the midline of its ascending regression channel, the 60-minute 100-pma, and the 200-sma, but the OEX remains above the 200-ema at 534.14 and within the recent congestion zone. It's just going to be hard to draw many conclusions and feel good about them while the OEX is within that choppy zone. So far, though, this action shows resistance holding, a bearish thing to have happen. Now we have to see if support holds, too.

  Linda Piazza   5/24/200,  10:15:42 AM
The OEX is trying to steady here, but Keltner channels show the next support currently from 535.28-535.49 rather than at the current level.

  Jeff Bailey   5/24/200,  10:14:57 AM
Dow Industrials (INDU) 10,117 +0.5% ... with new WEEKLY Pivot retracement at this Link

  Linda Piazza   5/24/200,  10:11:13 AM
I see that the 60-minute versions of the 100/130-pma's are important in recent SPX trading patterns, too, with today having seen a test of those averages, with a pullback below them again. That's confirming the resistance the OEX has seen: Link

  Jeff Bailey   5/24/200,  10:09:19 AM
Sell Prog. Premium ... SPX 1,099.41

  Linda Piazza   5/24/200,  10:07:53 AM
The OEX 60-minute 100/130-pma's still hold as resistance, but so does $40.00/barrel on crude (at least on the delayed feed I get) and Friday's high on the TNX. There's no clarity here just yet, at least from these three actions.

  Linda Piazza   5/24/200,  9:59:13 AM
I note that the OEX trades squarely in the middle of the ascending regression channel that has contained its movements since 5/10 or so. It's right at the midline of that channel, prepared to either charge up toward the top of that channel or else fall toward the bottom. The 30-minute oscillators suggest that there may still be more upside to go, but those oscillators could expend their upward movements while the OEX stalls at various levels of overhead resistance, too, as it is so far doing at the 60-minute 100-pma.

  Jeff Bailey   5/24/200,  9:57:23 AM
S&P 500 Index (SPX.X) 1,100.94 +0.67% .... with WEEKLY/MONTHLY retracement at this Link

Almost identical to last week. Overlap support at 1,093, with MACD just crossing above its signal. Looks to me as if SPX has some bounce potential this week back near 1,120.

  Linda Piazza   5/24/200,  9:50:37 AM
As I make these early posts, remember my admonition earlier that we may be working off some post-opex week volatility this morning. I expected to see a retest of these 60-minute averages, but the OEX faces several layers of strong resistance beginning at the current level and continuing up toward 543, so is still within a congestion zone that could produce choppy trading conditions.

  Linda Piazza   5/24/200,  9:48:33 AM
The OEX began pushing up again before I could finish that last post, and is now slightly above the 60-minute 100-pma, testing it again, perhaps headed up to test the 130-pma at 539.27. Upper-channel Keltner resistance is at 538.77, but turning up.

  Linda Piazza   5/24/200,  9:46:43 AM
The OEX came within 7 cents of the 60-minute 100-pma at 537.72 before it pulled back to the current level, showing that this average still is important to watch. The five-minute chart shows the OEX at next Keltner support at the current 536.60 level, but with strongest support near 535-12-535.76.

  Jeff Bailey   5/24/200,  9:43:47 AM
Treasuries quiet early with 10-year yield ($TNX.X) down 0.8 bp at 4.756%.

  Linda Piazza   5/24/200,  9:43:17 AM
The ten-year yields hover near Friday's high of the day--a possible warning to equity bulls--but so far can't push above Friday's high--a possible warning to equity bears.

  Jeff Bailey   5/24/200,  9:42:59 AM
Bearish day trade stop alert for Newmont Mining (NEM) $38.76 +0.93% ...

  Linda Piazza   5/24/200,  9:41:38 AM
The OEX retreats from its first test of the 60-minute 100-pma, but it's early yet. Let's see what happens on the first retracement of the day, due to begin in another minute or two. Those in bullish trades should have a plan in mind if these averages turn back the OEX as they did last week, remembering that the OEX so far remains within the congestion zone it's been (rather messily) establishing lately.

  Jeff Bailey   5/24/200,  9:40:31 AM
Newmont Mining (NEM) $38.58 +0.41% .... not getting the gap down, but will hold short here for a bit, with stop at $38.76.

U.S. Dollar Index (dx00y) 90.81 +0.35% (30-min delayed)

  Linda Piazza   5/24/200,  9:38:12 AM
During the first five minutes of trading, the OEX zoomed from 535.38 to 537.04, and it's now on the verge of testing the 30-minute 100/130-pma's at 537.74 and 539.26, respectively.

  Linda Piazza   5/24/200,  9:02:40 AM
Inconclusive daily oscillators, daily candles grouping around a 200-dma with candle spikes heading every which way: the OEX daily chart is a mess. Bears can't drive the OEX much below the 200-dma; bulls can't drive the OEX much above it. That may change this week as we move past opex week, with futures looking as if the first breakout test will come to the upside. Link If the OEX opens higher in accordance with the higher opening predicted by the current futures reaction, then it's likely to open right at resistance. I'd be particularly careful to guard any bullish profits at the 60-minute 100/130-pma's and at 540.80-543, if they were to be tested early in the session, as those are the two zones at which I'd expect to see a rollover if one is going to occur.

That same 60-minute chart shows support at 531.50 to be important, as that's the location of a rising trendline off the 5/12 low, but near 530 is the bottom support of a QCharts-snapped ascending regression channel. However, 527-528.60 are ready to provide supplemental support on a breakdown out of that rising regression channel.

Will the OEX roll over again at resistance, if it does open high enough to test that resistance, as looks possible as I type? One clue may be the reaction of crude oil futures, with a dip in those futures resulting in today's higher futures. Another test of $40.00 a few minutes ago appears to have turned those futures lower again, but another bump above the psychologically important $40.00/barrel could turn our markets lower. In addition, watch the ten-year treasury bond yields, TNX. Friday's candle was a bullish engulfing candle, with all Thursday's decrease (in yield) being made up. This morning, yields opened inside Friday's candle, but in the top half of Friday's range, and they are climbing as I type. Here's what I'm watching: Link A continued climb above the benchmark levels marked on that chart could pressure equities.

Saudi Arabia's pronouncement that it would increase production has fueled this morning's rise in foreign markets and in our own futures, but there's as yet been no formal consensus by OPEX countries and doubts remain that production can be upped enough to drive fuel prices much lower. My first thought is that markets might try to rally as we head into the official OPEX meeting June 3 in a kind of buy-the-rumor run, but that we're vulnerable to news-driven spikes lower and "try" might be the operative word. We'll have a better look this morning, but subscribers should note that we might still be working off some post-opex volatility this morning that could skew what we see. Wednesday will see the release of the latest figures on crude oil/gasoline/distillate inventories, and, in this climate, that may prove a market-moving number. However, our primary concern today is today's trading pattern, and we'll just have to see how volume patterns, TNX, and crude oil behave as the market opens and experiences its first retracement of the day.

  Linda Piazza   5/24/200,  7:06:35 AM
Good morning. This weekend's informal OPEC meeting did not produce a decision by the OPEC nations, with those nations deferring a decision until their official meeting June 3. However, Saudi Arabia promised to increase production by more than 15% and urged other OPEC countries to boost production, sending crude oil lower. The Nikkei opened about 25 points in the green, climbed above 11,150, but then ended the morning session only a few points above the opening level. It never reached the early high again, falling almost 100 points late in the afternoon, even turning negative for a short period, but then recovering to close up 31.39 points or 0.28%, at 11,101.64.

Banks gained ahead of earnings due later in the day and possibly also on a news-driven rise. Takenaka, Japan's Economic and Fiscal Policy Minister, spoke encouragingly of the banks' ability to meet bad-loan ratio targets by March 2005, saying they could reduce the percentage of bad loans by half by that target date. In addition, UFJ will sell its trust banking business to Sumitomo Trust & Banking Co., with both rising after their agreement, and Shinsei Bank announced the settlement of a lawsuit. In stock-specific news, Toyota responded to an unverified report that it would sell Lexus cars in China by the end of the year by rising early in the day, but then closed lower. Some tech stocks were lower, and appeared mixed throughout Asia.

Other Asian bourses turned in mixed performances. The Taiwan Weighted lost 0.38%. In South Korea, Hynix Semiconductor gained 13.5%, perhaps helping the Kospi to post a 1.69% gain. Citigroup Venture Capital Equity Partners upped its bid for the non-memory chip portion of Hynix's business, with most creditors agreeing to the new terms. An emergency meeting of Hynix's creditors will be held tomorrow, with a government ministry presenting the benefits of building a plant in China. Singapore's Straits Times gained 0.71% and Hong Kong's Hang Seng gained 0.75%. In Hong Kong, Harbin Brewery received the expected cash offer from SABMiller for all the company's shares. Harbin ended the day flat. China's Shanghai Composite lost 0.51%.

With crude oil futures dipping below $40.00, European bourses trade higher this morning. That move in oil futures turned oil majors Shell, BP, Total, and Royal Dutch lower, but at least some of those moved into positive territory again. In stock-specific news, breweries appear to be in the news across the globe, as Mexican brewery FEMSA makes a cash offer for Interbrew's stake in FEMSA Cerveza. Airlines also featured in European news with Merrill Lynch downgrading Lufthansa to a neutral rating after the company's puzzling discounted share offer to raise money to buy Airbus A380 planes. Air France also traded lower after this weekend's collapse at a Paris airport. The terminal that collapsed was mainly used by Air France.

As of this writing, the FTSE 100 trades higher by 22.70 points or 0.51%, at 4454.10. The CAC 40 trades higher by 31.98 points or 0.89%, at 3639.00. The DAX trades higher by 62.25 points or 1.62%, at 3894.09.

  Jim Brown   5/24/200,  2:55:22 AM
Potential Momentum Trade Setup Alert -

Vacation - I mentioned on Friday that I would be on vacation this week but would try to monitor momentum entries on Monday. Unfortunately it is not working out and I will be away from the monitor for most of the day.

The overnight futures are trading just above 1095 and are at the momentum averages. Considering the resistance from 1095-1102 I would hesitate to go long on a move over 1095 until the 1102 resistance is broken. I would go short with any failure at 1094. An optimistic target for a breakout would be 1120-1125 and an optimistic target for a breakdown would be 1090. Unfortunately we have traded for two weeks in these ranges and there is a lot of congestion making any kind of directional move more difficult. Good luck and I will check in as soon as I can!

  OI Technical Staff   5/23/200,  12:03:33 AM
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