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  Jeff Bailey   5/25/200,  5:22:32 PM
Closing Internals at this Link

NASDAQ Composite NH/NL 10-day average ratio reversed up to "bull alert" status.

  Linda Piazza   5/25/200,  3:56:45 PM
The OEX has now climbed above the 120-minute 130-pma as well as above the top of the QCharts-drawn ascending regression channel, but is still within a range that might be considered testing that important average.

  Linda Piazza   5/25/200,  3:48:35 PM
Reader Question: With Schwab's announcement of lower equity commission pricing and downgrade by Friedman, Billings, SCH is trading down, but look at the potential candlestick pattern forming on the daily. Looks like a "hammer" on high volume. Potential reversal to the upside?

Response: Great observations. That does look like a potential hammer and the volume is impressive--capitulation, possibly? That hammer has also pierced the bottom of the descending regression channel in which SCH has traded since early in the year, bouncing prices back up into the channel, just as did the impressive hammer in early March. That previous hammer resulted in a climb back through to the top of the descending regression channel, but it did not produce a breakout of that channel or interrupt the downtrend.

Of course, volume patterns should not be ignored, and this one perhaps hints of a capitulation-type event in this stock. Look back at the November 19 hammer, however, also produced on strong volume. After a few weeks of forming a base, SCH rose after producing that hammer, rising far enough that bullish players certainly could have benefited from a bullish play, but rising into a lower high that resulted in the current downtrend.

It could be that SCH is ready now to move up to the top of that descending regression channel and then break above it, rising to challenge $11.00 resistance and then the 200-dma, but it's not my kind of play just yet. I know many who capitalize on these types of plays, and those doing so would hopefully want to see a gap higher tomorrow creating an abandoned baby pattern, but that's too risky to me. I remember those days when we all tried to catch knives in 2000 a bit too strongly.

  Jeff Bailey   5/25/200,  3:48:14 PM
Rediff.com (REDF) $8.36 +6.49% .... Jeff: I'm thinking of holding REDF for a couple of days. What do you think, and what would an upside target be?

I've still got my chart set up as shown several weeks ago, and right now, the main point of resistance would be the overlapping $9.60 level and from there, a "zone of resistance" from $11.05-$11.29.

  Linda Piazza   5/25/200,  3:30:47 PM
I'm on a telephone call regarding a serious family illness.

  Jeff Bailey   5/25/200,  3:20:31 PM
03:15 market watch at this Link

  Linda Piazza   5/25/200,  3:19:46 PM
Reader Question: I sold an OEX 560/565 call spread yesterday (5/24). The price I sold 560 was $1.10. Today, OEX is up $2 and I expected the option price be about the same but it is $.70 for bid. Why the price has gone down about 36%?

Response: Lawrence G. McMillan has an entire chapter that deals with this subject in his book, Options as a Strategic Investment, with the title of that chapter being "How Volatility Affects Popular Strategies." Basically, the idea is that today's collapsing volatility has collapsed the prices of options, too. The relationship is a direct one. Basically, that sold option is losing value as the OEX climbs because the OEX isn't climbing fast enough to overcome the effect of that collapsing volatility, a really impressive collapse. This chapter discusses the impact on outright options purchases and sales as well as on various combination strategies. It's a great book, a must have, and it's available in our bookstore, too.

  Jeff Bailey   5/25/200,  3:08:06 PM
Swing trade call option alert for Overstock.com (OSTK) $34.72 +8.02% Link and the July $35 calls (QKTGG) $3.70. Target $42.00 in the underlying stock.

  Linda Piazza   5/25/200,  3:05:06 PM
The OEX is trying to move up to the upper channel boundary at 542.35 on its fifteen-minute chart, but while it's been pausing, Keltner resistance has been snaking above it, with that resistance currently at about 539.93. Usually after that happens, there's a pullback, perhaps after one last piercing of that resistance. A frequent pattern is to see a pullback that's relatively small and then another rise to test the current Keltner resistance line. That test sometimes results in a deeper pullback, but perhaps that pattern is only a recent pattern from inside the congestion zone, and not one that would show up if we're going to get directional trading patterns again.

  James Brown   5/25/200,  3:02:46 PM
Bulls can note the breakout over resistance at $81.00 and the new all-time highs for Whole Foods Market Inc (WFMI).

  James Brown   5/25/200,  2:53:09 PM
Natural gas supplier Williams Cos (WMB) is nearing new two-year highs with today's 6.8% rally to $11.86 on strong volume.

  Linda Piazza   5/25/200,  2:52:47 PM
Here's where the OEX is with respect to the triangle that it broke above this afternoon, the ascending regression channel which it currently challenges, and the 120-minute 100/130-pma's, which it also currently challenges: Link

  James Brown   5/25/200,  2:51:41 PM
Nordstrom Inc (JWN) is approaching major resistance in the $40.50-40.75 range. Bulls can look for the breakout.

  James Brown   5/25/200,  2:50:00 PM
Chinese Internet stock Netease.com (NTES) is soaring today, up 6.35% to $43.15. SINA is up 5.6% and breaking out over its 50-dma while SOHU is up 3.4% and edging over the $20 mark.

  James Brown   5/25/200,  2:46:34 PM
Correction - APOL is not a current call but a put so we'll probably drop it soon. Our stop is currently at $92.00, which has not yet been touched.

  James Brown   5/25/200,  2:36:25 PM
The 3-for-1 split for ASD is just around the corner and the pre-split momentum is underway. ASD is up three days in a row with yesterday's move breaking through its 40 & 50-dma's and the $110 level of resistance and today a follow through on that move. The next overhead resistance level is $115.

  Jeff Bailey   5/25/200,  2:33:39 PM
Day trade stop alert for Rediff.com (REDF) $8.25

  James Brown   5/25/200,  2:32:18 PM
Georgia Pacific (GP) might be a decent play for more patient investors. The stock is up 2.33% today and over resistance at its 50-dma. A trigger over the $35 mark might work for an entry point. I'd probably target the $40 region.

  Jeff Bailey   5/25/200,  2:32:14 PM
North Amer. Telecom (XTC.X) 588.56 -0.07% ... edges red. Only equity-based sector I show currently in the red.

Dow components SBC $23.85 -1.4% and VZ $35.12 -0.67%

  Jeff Bailey   5/25/200,  2:30:14 PM
Day trade raise bullish stop alert .... for Rediff.com (REDF) $8.36 +6.49% to $8.25.

  James Brown   5/25/200,  2:26:16 PM
Sector update...lots of winners

(Biggest) Winners:
DJUSHB homebuilders: +3.69%
DDX disk drives: +2.72%
INX Internet index: +2.31%
GHA hardware index: +2.06%
XNG natural gas: +2.03%

XAL airlines index: +2.53%
XAU gold & silver: +2.01%
RLX retail index: +1.77%
SOX semiconductors: +1.78%
NWX networking: +1.36%

DRG Drug index: +1.63%
BTK biotech index: +1.38%
TRAN Transports: +1.37%

  Jeff Bailey   5/25/200,  2:25:05 PM
Last Buy Program Premium came at 01:30-01:35, which had the SPX 1,108.19 +1.16% moving to then session high and DAILY R2 of 1,106.24 / WEEKLY R1 1,106.56.

  Linda Piazza   5/25/200,  2:24:10 PM
OEX 540.63 is a 19.1% retracement of the climb from the March 2003 low to this year's high.

  Linda Piazza   5/25/200,  2:21:40 PM
Here's another warning that may or may not be important. As the OEX reaches highs that equal those of 5/19, 30-minute RSI and MACD do not (yet) reach equal highs, with a possibility of bearish divergence setting up. MACD moves slower, and so it may just not yet have had time to catch up to price movements, a factor that it will remedy later, but RSI is usually a leading indicator, and it's leading to a conclusion of potential bearish divergence. So far.

  James Brown   5/25/200,  2:20:48 PM
We had Avon Products (AVP) on the watch list recently for a breakout over $86.00. That move happened today with shares currently up more than 2% to $87.

  James Brown   5/25/200,  2:19:03 PM
APOL, a current OI call play, is up 2.35% and looking good with the move over $91 and its 40-dma. Its MACD is close to producing a new buy signal.

  Linda Piazza   5/25/200,  2:16:54 PM
The Russell 2000 is also challenging its 120-minute 100/130-pma's, with those averages at 557.59 and 561.18, with the RUT currently at 560.32. If we consider the RUT's recent consolidation pattern to have been a rectangular pattern, the upside target upon today's breakout is 572, near the 50-dma currently at 571.72. The double-top breakout P&F signal produced today has a much bigger upside target: 615. However, I wouldn't consider the RUT to have broken cleanly above round-number resistance at 560 as yet, and especially not above the recent daily S/R level at about 564. Although this current climb looks impulsive, as Keene might label it, and not typical of the back-and-forth pattern produced on a measured distribution pattern, this climb over the last week has not yet retraced even 50% of the decline off the early April high, and so we can't with certainty label it a bullish development yet. I'm always warning of something or other, and today I'm warning that we should consider these factors while watching the RUT for guidance as to how the other markets might react.

  James Brown   5/25/200,  2:16:10 PM
Nike Inc (NKE) looks tempting here with a three-day rally underway and today's gain a breakout over resistance at $70.00. The move comes after two weeks of consolidation above new support at $66.

  James Brown   5/25/200,  2:10:22 PM
ITW is hitting new all-time highs at $90.00 after yesterday's breakout over its short-term trend of lower highs. The four-day rally has produced a new MACD buy signal.

  James Brown   5/25/200,  2:08:05 PM
QCOM, a current OI call play, is enjoying today's rally with a 1.87% gain of its own and a convincing move off support/resistance near $65.

  Linda Piazza   5/25/200,  2:06:07 PM
The OEX now tests the 120-minute 100/130-pma's. In late April when the OEX fell below the 60-minute version of these averages, it also fell through the 30-minute and 120-minute versions almost simultaneously, as they were all grouped closely. Since then they've spaced out, with the OEX challenging each pair separately today, one after the other. The 120-minute versions are at 540.49 and 542.36, respectively, with a move over the 120-minute 130-pma also representing an upside break out of the ascending regression channel in which the OEX has traveled much of May, if such a move should occur. As I mentioned this morning in one of my early posts, it's not until a move above that 543 level that I would consider that a breakout above that regression channel has been accomplished. As of now, we can say that the OEX broke out of the triangle and headed up to test the top resistance of the ascending regression channel, but we can't yet be sure of much else. Keep a watch on that VXO, though.

  James Brown   5/25/200,  2:06:06 PM
Phelps Dodge (PD) is up 2.3% and currently trading just above its 200-dma. Bullish traders should keep a wary eye on resistance at $70 still overhead.

  James Brown   5/25/200,  2:03:19 PM
American Express (AXP) is edging over resistance at $50.00 and its 40 & 50-dma's.

  James Brown   5/25/200,  2:01:32 PM
Verizon Communications (VZ) is also trying to turn around this morning's early weakness. The breakdown under $35 and its 200-dma looked pretty discouraging and VZ could have been a put play candidate but the rally in the Dow is lifting this recently added component. The real test will be the $35.50 level.

  Jeff Bailey   5/25/200,  1:58:23 PM
SPX Most active options .... June 1,150 calls (SPTFJ) (7,814:52,044), June 1,050 puts (SPQRJ) (6,107:76,175).

SPX 1,108.14 +1.16%

VIX.X 16.08 -11.06% ... "has to be call buying and put selling"

  James Brown   5/25/200,  1:58:14 PM
United Parcel Service (UPS) is looking bullish with a 1% gain and a breakout over resistance at $70.00 and its 50-dma. Unfortunately, there is more resistance just overhead at $72.00.

  James Brown   5/25/200,  1:57:04 PM
Fannie Mae (FNM) is bouncing from its early lows this session near $66. Today's candlestick currently looks like a "hammer", which is typically a one-day reversal pattern (that needs confirmation). Yet I would be careful considering bullish positions since the downtrend is still very much intact.

  Linda Piazza   5/25/200,  1:54:46 PM
The VXO doesn't usually make three-point drops in a single day. In fact, it hasn't ever in the time that QCharts began tracking the VXO, but today it's approaching a drop of that magnitude. QCharts didn't transfer the historical data to this chart when the VIX was recalculated but kept it on the VIX chart.

However, the VXO has had a number of 2-point or 2+-point ranges over the recent months.

  Linda Piazza   5/25/200,  1:36:06 PM
Although I might have been skeptical of the OEX's ability to meet the upside target predicted by that reverse H&S being met, because of the way it formed, it looks as if the OEX is meeting that upside target. (See my 12:04 and 12:11 posts.) That's why I profiled the formation even though I was skeptical.

The OEX 15-minute nested Keltner channels show a possibility now that the OEX could reach 542, with that being within the 540-543 range that I thought we might see upon an upside breakout of the triangle on the 60-minute chart. (See the chart linked to my 9:22 post.)

  Jane Fox   5/25/200,  1:34:52 PM
Be careful about your report of Sanchez. There are conflicting statements. The most widely and well stated is it is time for him to 'rotate' since he has been there for 13 months.

All agree on the other General.

You are absolutely correct and I reported that incorrectly. Sanchez will be replaced and Karpinski is suspended. My apologies.

  James Brown   5/25/200,  1:32:54 PM
Express Scripts Inc (ESRX) is up 1.86% and breaking out over minor resistance at $78.00. Shares had been consolidating between $76 and $78 for the last several days.

  Jeff Bailey   5/25/200,  1:31:05 PM
Jane noted earlier that the Market Volatility Index (VIX.X) 16.35 -9.56% was down, it's really imploded to the downside, and my be seeing BIG option hedges unwinding.

  James Brown   5/25/200,  1:30:53 PM
FLIR Systems (FLIR) is touching new all-time highs as it inches closer to resistance at $50.00. A failure here could be a big double-top.

  James Brown   5/25/200,  1:28:47 PM
Golden West Financial (GDW) is marking its fourth gain in a row and challenging resistance at $106 and its 50-dma. This looks like a potential bullish candidate.

  James Brown   5/25/200,  1:27:11 PM
Lafarge North America Corp (LAF), part of the construction sector, is up strongly today +2.4% and breaking out over several minor resistance levels. Today's move has also produced a new MACD buy signal.

  Linda Piazza   5/25/200,  1:24:59 PM
The OEX broke above the upper-channel resistance on the five-minute Keltner chart, but has pulled back. This is a time for those in bullish plays to begin raising their stops according to OEX movements. This can be a valid breakout signal (to go along with the other breakout signals we've had today), but it also comes as the OEX reached up to challenge the important 60-minute 100/130-pma's, so the OEX has hit resistance that has held since late in April. The Russell 2000's action this morning indicates that such a break could occur, if the Russell is indeed leading the way, but there's danger here of a rollover, too. The 60-minute 130-pma is at 538.56 and the 100-pma is at 537.13, so a rollover now beneath 537 and especially back through the 200-dma would be a bearish development.

  Jane Fox   5/25/200,  1:22:15 PM
Two top U.S. military officer in Iraq, who have become symbols of lax supervision at the Abu Ghraib prison, Gen. Ricardo Sanchez and Brig. Gen. Janis Karpinski, have been suspended from their commands.

  Jeff Bailey   5/25/200,  1:20:42 PM
Day trade raise bullish stop alert for Rediff.com India (REDF) $8.30 +5.73% to break even.

Session high has been $8.48, but so far, hasn't been able to find 5-minute close above BLUE #6 ($8.40)

  Jeff Bailey   5/25/200,  1:08:41 PM
01:00 Internals at this Link

  Linda Piazza   5/25/200,  1:07:09 PM
Like the Russell before it, the OEX now tests its 60-minute 130-pma. The OEX has not had more than a brief upside penetration of that MA since April 28.

  Keene Little   5/25/200,  1:03:21 PM
The gold stocks, along with gold, got a nice bounce today. Gold may get a bounce up to its 200-dma so perhaps a little higher push in the metal, which in turn may help to lift the gold stocks a little higher. But I'm thinking stocks in general are near the top of their bounce and are due another leg to new lows, below the lows put in for this month so far. That would drag down gold stocks as well.

Gold stocks, as seen in the XAU index, are overbought on just about all time periods. The daily chart shows it hitting the top of its Bollinger Band which almost always marks at least a short term reversal after bouncing up to it like this from the lower descending band.

As can be seen in this 60-min chart of NEM, a good proxy for the gold stocks, NEM is at the top of an ascending wedge pattern, normally a bearish pattern. It's daily chart shows the same thing as XAU. Therefore, I'm thinking these stocks may have peaked or are very near peaking at current levels. Sometimes price will "over-throw" to the top side of these patterns and then collapse back inside. If you were to see that happen, that's a good short signal. Link

  Jeff Bailey   5/25/200,  12:59:16 PM
Buy Prog. Premium ... SPX 1,102.86 +0.68%

  Linda Piazza   5/25/200,  12:58:47 PM
The fifteen-minute Keltner channel that usually turns back OEX advances shows resistance at 537.31, near the 60-minute 100-pma at 537.11. Remember that Keltner lines are dynamic and can rise with rising prices, too.

  James Brown   5/25/200,  12:56:04 PM
The rally continues for shares of US Airways (UAIR). Five days ago UAIR closed at $1.46 after several days of basing near the $1.50 level. Today the stock is at $3.28, up 17% and challenging its simple 50-dma. A move over $3.50 would be a new P&F buy signal.

  Jeff Bailey   5/25/200,  12:48:13 PM
Day trade long alert ... Rediff.com India (REDF) $8.09 here, stop $7.70, target $8.75.

First 5-minute range was $7.72-$7.85.

  Linda Piazza   5/25/200,  12:39:18 PM
The Russell may have broken out of a recent consolidation zone, but the OEX still battles with the upper trendline of its triangle formation and the 30-minute 130-pma. The Russell led the way up to a test of upper resistance, but the OEX is reluctant to follow too far, hanging a little behind, as are several other indices. The COMPX, however, looks willing enough to rise to test the 1940 resistance level, currently at 1936.45.

  Linda Piazza   5/25/200,  12:32:38 PM
Should have been a clue: At this morning's open, the Russell 2000 broke above the consolidation zone in which it had been captured since about May 7. Link Now it's moving toward next resistance, however, from 557-560.

  Jeff Bailey   5/25/200,  12:27:12 PM
12:00 Internals at this Link

Correction to CRB Index ... should be 275, not 375.

  Jeff Bailey   5/25/200,  12:12:08 PM
OSI Pharma (OSIP) $82.00 +3.09% Link ...

problem is...

eBay (EBAY) $83.62 +1.82% Link also strong...

  Linda Piazza   5/25/200,  12:11:40 PM
The OEX is now testing the 30-minute 130-pma, having moved above the 100-pma, and is also testing the descending trendline that defines the upper boundary of its triangle shape. If the OEX can climb above these resistance levels, the 60-minute 100-pma at 537.11 is next resistance, matching up with historical resistance in the same level. That reverse H&S, now confirmed by a move above the neckline, sets up a possible upside target near 539-540, depending on exactly where you consider the neckline to have been. Still, be careful as we've had a false downside move out of the triangle and could well be having a false upside one, too. I'm particularly skeptical of the upside target of that reverse H&S.

  James Brown   5/25/200,  12:10:33 PM
Williams Sonoma Inc (WSM) is up 1.46% to $31.81 after reporting earnings this morning that beat estimates by 2 cents. The company announced a 2.5 million share buyback with their earnings announcement. Currently WSM has 115.9 million shares outstanding. The stock remains under resistance at its 200-dma.

  James Brown   5/25/200,  12:07:59 PM
After hitting new all-time highs yesterday and this morning, shares of RIMM are down fractionally to $113.70. The stock looks very short-term overbought from its recent lows near $90 so bulls looking to jump on this momentum train might want to look for a dip back toward the $107.50 range.

  Jeff Bailey   5/25/200,  12:05:09 PM
Tenneco Auto (TEN) $11.97 +17.2% ... higher after withdrawing canceling a $150 million, or 11.9 million share secondary offering. Company canceled the deal saying pricing was no longer attractive.

  James Brown   5/25/200,  12:04:56 PM
The XBD broker-dealer index is today's worst performer down 1.55%. That has us looking again at Goldman Sachs (GS) for a breakdown under the $90 level of support. GS is currently down 0.69% to $91.09.

  Linda Piazza   5/25/200,  12:04:01 PM
There's a nicely formed reverse H&S on the OEX five-minute chart, with the neckline level having been just tested and with the OEX falling back. I say that this is a nicely formed pattern, but it is forming at a consolidation zone rather than after a decline, and that's somewhat problematic. It's also a little problematic to determine the exact neckline. Here it is: Link

I'm not presenting this formation as a "done deal" or saying that it would fulfill its upside target if it did move across that neckline area, wherever it might be, as I'm a bit skeptical about it because of its formation in a consolidation zone. Still, there it is.

  James Brown   5/25/200,  12:01:54 PM
Northrop Grumman (NOC) is leading the defense sector higher with a 1.2% gain to $101.44. A breakout over $102 might be a potential entry point for bullish positions but watch for additional resistance at $105.

  James Brown   5/25/200,  11:59:16 AM
Toro Corp (TTC) is up 2.99% to $59.81 and breaking out over resistance at its 50-dma after reporting earnings this morning of $2.00 per share, which was 19 cents better than estimates. TTC also raised its full year estimates.

  James Brown   5/25/200,  11:54:21 AM
Charles Schwab (SCH) has been downgraded from "market perform" to "underperform" by FBR. Shares of SCH are down 7% to $8.88 on very strong volume.

AMTD is following suit with a 4.5% drop to $10.45. E*trade (ET) is down 1.96% to $11.00.

  Linda Piazza   5/25/200,  11:51:37 AM
The OEX is also testing the 30-minute 100/130-pma's, currently at 535.12 and 535.76, respectively.

  James Brown   5/25/200,  11:51:32 AM
Shareholders on both sides have voted to approve the JPM/ONE bank merger, which will create the 2nd largest U.S. bank based on assets. The merger is expected to be completed by mid-year.

  Linda Piazza   5/25/200,  11:50:39 AM
The OEX is coming back up to test its 200-sma again, currently at 535.81. When I study all those candle spikes on the daily chart, I think that when the OEX finally breaks out of this consolidation zone, we're not going to believe it's happening, are we, because we've seen so many false breaks. Be careful if in a bullish mood, because some of those spikes have been above the 200-dma.

  Jeff Bailey   5/25/200,  11:44:53 AM
11:00 Internals at this Link

  Linda Piazza   5/25/200,  11:40:52 AM
So what do we have happening today when we look at the OEX daily chart? So far, there's another doji lining up beneath the 200-sma, with flat-lining oscillators. If you're a "the cup is half full" kind of person, you'd likely be thinking that after many days of holding the OEX mostly below the 200-dma, bears haven't been able to drive the OEX lower and that it's building a base for another climb. If you're a "the cup is half empty" kind of person, you'd likely be thinking that after many days of attempting to push the OEX back over the 200-dma, bulls have been unable to keep the OEX above that level, and it's soon going to collapse. The truth is, we're just not sure what's going to happen as the market weighs the likely impact of various factors and bulls and bears battle it out. When the OEX first settled near the weekly central Keltner channel support a couple of weeks ago, I noted that most touches of that support resulted in at least two or three weeks, if not many more, of weekly candles printing near it before the OEX moved away again, and thought we'd likely have choppy action, and that's exactly what we've had. From the look of the narrowing 60-minute triangle today, it looked as if it's possible that an attempted breakout could come, but I'm still not sure it will travel much further than 543 to the upside or 527 to the downside if it does. It looked this morning as if a break might be beginning, but such whipsawing action is common as triangles narrow.

  Linda Piazza   5/25/200,  11:27:48 AM
Does this pattern on the TNX 30-minute (and up) look like a falling wedge to anyone but me? Link That's typically a bullish pattern, with the typical breakout to the upside.

  Linda Piazza   5/25/200,  11:09:20 AM
Late yesterday, I mentioned that the OEX triangle (60-minute chart) had narrowed down to a three-point spread, narrow enough for the OEX to span the entire range in a day, and it's done that already, breaking below it, then heading up to test the top resistance and bouncing back from that, too. As feared, that first pre-economic-release drop below the triangle was subject to the volatility that often results when a triangle narrows toward its apex and when there's an important economic release. The OEX may be headed down to retest that triangle one more time, however. Be prepared for some whipsaws today.

  Jeff Bailey   5/25/200,  11:02:26 AM
10:58 Market Watch at this Link

  Linda Piazza   5/25/200,  10:55:37 AM
So far, the OEX is getting turned back by Keltner and short-term historical resistance, with the 10:35 five-minute candle having risen exactly to the Keltner line before turning back. However, the OEX hasn't turned back far, staying above the mid-channel support. Bears want to see the OEX move back below that mid-channel support, currently at 534.21 on the five-minute chart and 534.65 on the 15-minute chart.

  Jeff Bailey   5/25/200,  10:50:28 AM
Dow Jones Home Construction (DJUSHB) 578.84 +2.46% .... sector winner now after stronger than forecast existing home sales.

Tomorrow, new home sales for April are forecasted at 1.2 million annual rate, down from March's 1.228 million annual rate.

  James Brown   5/25/200,  10:41:16 AM
Our put play in Guidant (GDT) has been stopped out. Shares of GDT shot higher at the open as investors reacted to bad news out of Medtronic (MDT). It's a good example of why we use stops. As of yesterday GDT was failing under resistance as expected. No one could have known that MDT's Phase I data for its Endeavor stent would have been bad and sent its rivals' stocks higher.

  Jeff Bailey   5/25/200,  10:39:06 AM
Buy Program Premium 1,098.66 +0.29%

  Linda Piazza   5/25/200,  10:37:24 AM
OEX Keltner and short-term historical resistance approach at 535.15-535.40. So far, nothing has stopped the OEX, however, as it climbs right back inside the triangle it broke below earlier this morning.

  James Brown   5/25/200,  10:36:05 AM
Homebuilders are on the move again. The DJUSHB is now up four days in a row and building on yesterday's breakout over the 560 mark and its 200-dma.

Looking at some of the big movers...
MTH +2.38% - nearing resistance
KBH +1.99% - breaking out over $65.00
RYL +1.61% - still under its 200-dma
HOV +1.58% - still under resistance at $35.00
BZH +1.13% - breaking out over its 200-dma today
TOL +1.66% - under resistance at $40.00
LEN +1.54% - still under its 200-dma

CTX +2.01% - is breaking out over its 21-dma and the descending trendline of resistance. For those following our suggested put play we were looking for a pop towards $47.00 and a roll over back under $46.00 as our entry point. If the stock closes over $47.00, essentially the trendline of lower highs, we'll drop it untriggered.

  James Brown   5/25/200,  10:28:37 AM
Hmmm... AMZN is trying to bounce again. If it breaks over the $42.50 level I'll start to worry about our put play. We've been suggesting that short-term traders consider taking profits as it nears the $40 mark and it has bounced from $40.50 twice now.

  Linda Piazza   5/25/200,  10:28:28 AM
That first resistance at the 50% retracement of the decline from yesterday's last five-minute high to this morning's low didn't hold, and now the OEX has begun to gap higher on the five-minute chart, into this morning's gap. The top of that gap is now being tested, as is the mid-channel resistance on the 5-minute Keltner chart. This could be just the expected volatility after an economic release, but be careful of plays either direction. Fifteen-minute mid-channel resistance lies at 534.65, while the descending trendline that marks the top of the triangle is at about 536.17. Bears don't want to see a move back above that trendline. The 60-minute 100-pma is even more important, at 537.32 currently.

  James Brown   5/25/200,  10:25:34 AM
Sector update....

OIX oil index: +1.12%
DJUSHB homebuilders: +1.07%
XAU gold & silver: +0.95%
XNG natural gas: +1.01%

XBD broker-dealers: -1.79%
SOX semiconductors: -1.10%

  Linda Piazza   5/25/200,  10:20:55 AM
The OEX did bounce from that 15-minute Keltner channel line that usually provides support, but that was also from the target level of this morning's confirmed double-top formation. The confirmation level also marks the 50% retracement of the decline from yesterday's last five-minute high to this morning's low, so that 533.40 confirmation level should be one we watch for possible first resistance.

  Linda Piazza   5/25/200,  10:17:47 AM
Bearish traders would do well to keep that SPX 200-dma on their radar screens today if the markets should continue to decline, as touches of that average have prompted market bounces over the last couple of weeks. Currently, the 200-sma for the SPX is at 1083.27. You've got time, so make plans for how you'll handle approaches to that average, if they should occur. Will you exit part or all of your position just ahead of that average, letting the rest run if you've exited only part? Will you tighten stops? Will you even expand them, expecting some volatility? Each of those strategies is valid depending on one's account management style and goals, but know ahead of time what you intend to do.

  Jeff Bailey   5/25/200,  10:17:25 AM
Dow Diamonds (DIA) $99.55 -0.31% ...

  Jeff Bailey   5/25/200,  10:17:02 AM
OSI Pharma (OSIP) $80.00 +0.59% ...

  Jeff Bailey   5/25/200,  10:14:16 AM
Buy Program Premium SPX 1,092.49 -0.26%

A lot of program activity right in here at overlapping WEEKLY Pivot and MONTHLY S1.

  Jeff Bailey   5/25/200,  10:13:19 AM
10-year YIELD ($TNX.X) down 3 basis points at 4.709% ... should be finding some yield resistance build at overlapping WEEKLY Pivot (4.751%) and MONTHLY 19.1% retracement of 4.751%.

  Jonathan Levinson   5/25/200,  10:12:39 AM

  Linda Piazza   5/25/200,  10:12:17 AM
On the OEX 15-minute chart, a Keltner channel line that usually supports the OEX on declines is now at 531.26 (but dynamic and declining), so I'd expect at least a moderate bounce attempt as that level is tested. Perhaps instead of a bounce, there could be a short-term steadying as those Keltner lines snake lower, as sometimes happens.

  Jeff Bailey   5/25/200,  10:08:30 AM
Sell Prog. Premium ... SPX 1,092.67 -0.25%

  Jonathan Levinson   5/25/200,  10:08:03 AM

  Jeff Bailey   5/25/200,  10:08:01 AM
eBay (EBAY) $82.41 +0.36%

  Linda Piazza   5/25/200,  10:07:30 AM
Here comes the expected bounce on the OEX. We have a double-top formation (although it's not much of a "top") on the five-minute chart that's been confirmed, with a confirmation level at about 533.40, so that will be one first area to watch for resistance, as well as this morning's gap level. The OEX did reach the projected downside target for that double-top formation.

  Jeff Bailey   5/25/200,  10:05:10 AM
Buy Program Premium ... SPX 1,092.28 -0.28% ...

  Jonathan Levinson   5/25/200,  10:03:55 AM

Don't forget the $7b 14 day repo from 13 May that expires on Thursday...

Have a good day, CC

Thanks, CC. I tend not to track them anymore, as they're usually rolled over and always in the 5-8B range. But you're quite correct. A few billion here and there has the Fed talking real money.

  Jeff Bailey   5/25/200,  10:03:25 AM
Sell Program Premium ... 1,091.36 -0.36%

  Jonathan Levinson   5/25/200,  10:00:19 AM
Con con 93.2

Existing home sales 6.64M

  Jeff Bailey   5/25/200,  9:59:07 AM
Brokers .... SIEB -7.6%, AMTD -5.02%, SCH -5.02% .... a retail/online theme.

  Linda Piazza   5/25/200,  9:58:57 AM
Remember that the first reaction after an economic release is not always the last one. That's not a reason for not honoring your stops, but perhaps is for widening them a little if there's a sound reason to do so. In this case, since action has been bearish, prepare for a possible countertrend bounce in case that should happen.

  Jonathan Levinson   5/25/200,  9:52:27 AM
6B in 3 day repos were added yesterday, with 7B in 6 day repos on Friday- so there's still a whopping 13B in short term money due to expire on Thursday. The Fed has already done plenty, even without entering the market today.

  Jeff Bailey   5/25/200,  9:52:15 AM
Above 50-day alert ... Stillwater Mining (SWC) $14.88 +3.33% Link

Industrial metals have been on the move of late and partial boost to CRB Index ($CRB) $275.45 +0.34% Link

  Jonathan Levinson   5/25/200,  9:50:47 AM
The Fed has just announced that its open market desk is not entering the market today- with nothing expiring, there are no changes from yesterday.

  Jeff Bailey   5/25/200,  9:50:09 AM
Sector Weakness early is Broker/Dealer (XBD.X) 123.32 -1.83%

Sector Strength is Oil (OIX.X) 344.07 +1.04% and Oil Service (OSX.X) 101.32 +1.26%.

  Linda Piazza   5/25/200,  9:48:43 AM
We're twelve minutes away from the release of the Consumer Confidence and Existing Home Sales numbers.

  Linda Piazza   5/25/200,  9:46:38 AM
Although the OEX is below the uptrend line from the 5/12 low, it's also just now hitting/testing the bottom of the QCharts-drawn ascending regression channel. I specify that it's a QCharts-drawn version because this version has been pierced a couple of times by candle shadows. A hand-drawn version might actually follow more closely that ascending trendline off the 5/12 low, with it being unclear at the moment which version might be most valid.

  Linda Piazza   5/25/200,  9:41:59 AM
The OEX is breaking through the uptrend line off the 5/12 low and is confirming that by a move below yesterday's 12:30 low of 532.62, with today's low at 532.29. However, that low was close enough and comes so near the typical first retracement of the day that I'd be cautious if considering entering bearish positions. This looks like a clean break, but it comes just ahead of a typical first retracement and of an important economic release. Tip-toe into these waters if you're so inclined, but don't do a belly-flop.

  Jeff Bailey   5/25/200,  9:40:33 AM
Dyax (DYAX) $9.33 -34.9% Link ... plunges after FDA stops the company from continuing clinical trials on its experimental drug for hereditary angioedema, a rare condition that leads to swelling and inflamation, because of questions related to findings in animal studies.

  Linda Piazza   5/25/200,  9:36:22 AM
During the first five minutes of trading, the OEX ranged from 533.63 to 533.19.

  Jeff Bailey   5/25/200,  9:34:14 AM
IPIX Corp. (IPIX) $8.01 +17.74% Link is NASDAQ most active in early trade. ... issued patent for it AdMission platform. News at this Link

  Linda Piazza   5/25/200,  9:32:33 AM
The OEX challenges the ascending trendline that defines bottom support of the triangle in which it's been consolidating.

  Jane Fox   5/25/200,  9:29:11 AM
Yesterday Oil closed at another record, $41.72, due to a safety shutdown at a Royal Dutch/Shell oil platform in the Gulf of Mexico, which cut the oil supply by 150,000 barrels a day. This was not a well-timed outage.

  Linda Piazza   5/25/200,  9:22:39 AM
Is today the day the OEX will finally break out of the most recent consolidation zone? With rising oil prices pressuring overseas markets, our futures head lower. Here's a look at that consolidation zone and some levels to watch in today's trading: Link One warning: we have economic numbers being released at 10:00, so be careful of betting the farm ahead of that release.

  Jonathan Levinson   5/25/200,  8:21:46 AM
A quiet day- we await the 10AM releases of Consumer confidence, est. 94, and existing home sales, est. 6.45M.

  Linda Piazza   5/25/200,  6:59:39 AM
Good morning. With crude oil futures closing at a record high on Monday, the Nikkei opened in negative territory Tuesday morning and dove below 11,000 again before the first hour had elapsed. Staying within the first-hour ranges for the rest of the day as crude oil prices eased a little in after-hours trading, the Nikkei closed down 138.71 points or 1.25%, at 10,962.93.

Many exporters declined. So did most banks, although five out of seven of the majors saw a net profit in the previous year according to a report issued Monday. With an industry number showing April's supermarket sales declining 3.6% over the year-ago level, some retailers dropped.

Despite the early losses, two gainers in early trading were Sony and Internet investor Softbank. A newspaper quoted Sony's Chairman as saying the talked-about deal to buy MGM's software assets might not amount to as big an offer as some people speculated. In addition, the chairman revealed plans to introduce by 2006 a television that employs the chip it's developing in conjunction with IBM. Sony closed higher by 0.3%. Softbank's early rise was also news driven after the company acknowledged that it was thinking over a deal to buy Japan Telecom from Ripplewood Holdings. Softbank gained 1.7%. Other gainers included Nippon Oil, climbing after a report that the Japanese oil wholesalers would likely hike gasoline prices in June, with Nippon Oil being one of those wholesalers.

Other Asian bourses turned in mixed performances, with more trading down than up. The Taiwan Weighted gained 0.27%, but South Korea's Kospi lost 1.95%. Singapore's Straits Times declined 0.75%, but Hong Kong's Hang Seng gained 0.25%. China's Shanghai Composite declined 2.08%.

European bourses head lower in today's trading, with Vodafone and Emap leading declines in the U.K., and Vodafone, Deutsche Telekom, and chemical firms such as BASF and Bayer as notable decliners in the eurozone countries. Media group Emap reported earnings, noting the increasingly deleterious effect of the euro's weakening and increased competition in the French TV listings market on Emap France. Vodafone reported earnings but investors did not like the company's plan to shovel billions of dollars into a Japanese unit that reported a greater drop in average revenue per user than any of its other units. Deutsche Telekom dropped after an announcement that its wireless subsidiary T-Mobile USA would unwind its joint venture with Cingular Wireless, with T-Mobile USA acquiring full ownership of the shared networks.

Rising crude oil prices strain these indices, too, with that development pressuring the chemical companies. Another pressure perhaps was the release of the German Ifo Index, falling to 96.1 in May versus the previous 96.3, with May's number meeting consensus expectations. The business expectations component rose slightly while the business conditions component fell. Some retailers climbed, however, after April's French household consumption gained a higher-than-expected 1.5% and Wal-Mart's CEO noted in an interview that it might make large acquisitions in Europe and expand U.K. retailer Asda into other countries.

As of this writing, the FTSE 100 has lost 23.60 points or 0.53%, to trade at 4405.30. The CAC 40 had declined 20.01 points or 0.55%, to 3608.81. The DAX has fallen 47.11 points or 1.22%, to trade at 3820.73.

  OI Technical Staff   5/24/200,  8:20:48 PM
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