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  Jeff Bailey   6/1/2004,  4:49:35 PM
Closing Internals at this Link

 
 
  James Brown   6/1/2004,  4:10:16 PM
AT&T (T) is one of today's losers with a 3.19% decline to new one-year lows near $16.00.

 
 
  James Brown   6/1/2004,  4:10:12 PM
Insurance stock First Health Group (FHCC) is trying to find a bottom. Shares are up 1.92% to $15.39 after days of consolidation between $14.50 and $15.50.

 
 
  James Brown   6/1/2004,  4:10:06 PM
Also noteworthy is the bullish turnaround in EBAY. Shares have reversed earlier losses and are trading higher again and challenging resistance at $90.00.

 
 
  James Brown   6/1/2004,  4:10:01 PM
Internet giant YHOO is building on last week's rally with a 6.16% gain today to $32.55. This is a new 3 1/2 year high.

 
 
  Jim Brown   6/1/2004,  4:09:18 PM
We are continuing to have hardware challenges with the monitor today. We will be taking the servers down tonight after 6:PM in hopes of getting the problem fixed before tomorrow. We appreciate your patience as we address this problem.

 
 
  Linda Piazza   6/1/2004,  3:30:32 PM
The OEX surges strongly up toward mid-channel Keltner resistance on the five-minute chart, with that resistance currently at 543.60, but still declining. The OEX is going to catch up fast at this rate, however, with the upsurges stronger than the pullbacks over the last hour. The OEX is already back above the mid-channel level on the 15-minute chart.

 
 
  James Brown   6/1/2004,  3:29:12 PM
We listed ASKJ as a bullish candidate at the top of our weekend watch list. Now shares are up another 4.38% to $42.10 and over last week's highs. Aggressive players might still be able to ride this one. ASKJ has a bullish quadruple top breakout on its P&F chart with a $55 price target.

 
 
  Jeff Bailey   6/1/2004,  3:27:17 PM
03:00 Internals at this Link

 
 
  James Brown   6/1/2004,  3:26:48 PM
Patterson Dental Co (PDCO) still looks like a potential bullish play with its bull flag pattern breakout on Friday. The stock is up another 54 cents and over short-term resistance at $76.00. The easy target is $80.00 but its bull flag suggests a target of $85 to $90.

 
 
  James Brown   6/1/2004,  3:25:05 PM
There is no slow down in the rally for Midway Games Inc (MWY), which was red hot last week. The stock is up another 2.76% to $11.14.

 
 
  James Brown   6/1/2004,  3:23:17 PM
DLTR is still struggling with its major trendline of resistance near $28.70 (connect the peaks from Nov. 1st, 2003) despite its bullish technicals.

 
 
  James Brown   6/1/2004,  3:19:37 PM
ASD is trading at its new post 3-for-1 split price today. Look for a move over resistance at $38.50.

 
 
  James Brown   6/1/2004,  3:17:17 PM
Illinois Tool Works (ITW) is hitting new highs with its rally above $90.00 today. There is an old rule that says stocks that trade $90.00 tend to trade toward $100 (on momentum with $100 acting as a magnet) but I would be careful here. ITW is short-term overbought from last week's rally.

 
 
  James Brown   6/1/2004,  3:14:46 PM
Breakout alert! Quest Diagnostic (DGX) is up 1.75% and breaking out over major resistance at $86.50. Volume is better than average on the move.

 
 
  James Brown   6/1/2004,  3:12:55 PM
IDEXX Labs (IDXX) is up another 2.85% on top of last week's strong rally. Shares look ready to breakout over the $68 level.

 
 
  Jeff Bailey   6/1/2004,  3:12:29 PM
CBOE Internet Index (INX.X) 189.41 +0.46% .... session highs. Pretty good spat of buying last 15-minutes.

 
 
  James Brown   6/1/2004,  3:09:48 PM
Ouch! CME is down $7.69 or 5.95% to $121.50 (after bouncing from $119.89 this afternoon) after Merrill Lynch downgraded the stock to a "neutral".

 
 
  James Brown   6/1/2004,  3:08:19 PM
I'm still keeping an eye on LEA. The stock's rally last week from $55 toward $60.00 is starting to struggle under the combined resistance of the $60 mark, the 40-dma, 50-dma, and 200-dma.

 
 
  Linda Piazza   6/1/2004,  2:42:54 PM
The OEX broke through the lower support of the five-minute Keltner channels, signaling OEX bears that it's time to begin following the OEX lower with stops, as the OEX is vulnerable to a bounce up toward mid-channel resistance, currentlya t 543.84 but diving fast now. As always, this can be a valid breakout signal, too, so isn't necessarily a signal that it's time to exit and switch sides, particularly as long as the OEX remains below its 100/130-ema on the daily chart, with the 130-ema at 542.47. I would expect a retest of that average, beginning any time, perhaps already having begun. The OEX has historical support from 539.40-541, too.

 
 
  Linda Piazza   6/1/2004,  2:36:36 PM
The Nasdaq holds only cents above its 50-dma at 1973.18, but it remains above it, so far. The 60-minute oscillators indicate that there could be more downside to go, however.

The Nasdaq dipped below its 50-dma as I typed, but is trying to steady.

 
 
  Linda Piazza   6/1/2004,  2:33:00 PM
Concerning RIMM,, that Reuter's article linked to my 14:08 post also mentioned that RIMM is taking market share, bounding up to the #4 spot in the globe on handhelds, with HPQ losing market share.

 
 
  Linda Piazza   6/1/2004,  2:28:21 PM
The TNX is dropping off its high of the day, but studying the SPX chart again, I note that it has dropped below its 50-dma and has retraced almost all last Thursday's gains, with the last three candles still looking a lot like a reversal signal in the making, although not a classic one. Here's a chart: Link SPX bulls don't want to see the SPX end the day anywhere near this level or below it. They want to see a bounce and a strong one.

 
 
  Jeff Bailey   6/1/2004,  2:22:17 PM
Research in Motion (RIMM) $121.29 +1.13% .... Was wondering what your thoughts are on RIMM--after going up over $25 since the middle of May is it time for it to back off? Do you attribute the big increase to high short interest or some other factor?

Shorts getting crushed, but may also be attributed to today's news out of Sony (NYSE:SNE) $36.41 -1.24% saying it was rethinking its PDA strategy. Rogers Wireless and RIMM also announced the availability of the RIMM's BlackBerry 7780 Wireless Handheld in Canada.

 
 
  Linda Piazza   6/1/2004,  2:13:42 PM
Watch out, OEX bears. The OEX has hit a potential double-bottom area on the five-minute chart with that area also occurring at the mid-Keltner channel level on the 15-minute chart. This is a potential bounce zone, so plans should be made to protect profits. That doesn't mean that the OEX will necessarily bounce, as the five-minute chart now suggests that it will eventually work its way down toward 541.44, but you'll feel more in control and will make better decisions if you have a plan.

 
 
  Linda Piazza   6/1/2004,  2:08:01 PM
Reader Question Regarding FLSH: This stock had been moving up strongly during the last few sessions but today is dropping 5%. I have been looking everywhere for fresh news that might be causing the drop but have found none. In your systems, do you have any new info on FLSH?

Response: I've looked everywhere, too, and don't find any news specifically about FLSH. When that happens, I begin searching news about competitors (INTC, Samsung, SNDK, for example) or for news about suppliers or companies to which it supplies its products. The only thing that I can find today is a Reuters report today that smartphone sales were outdoing sales of PDA's. The report mentioned that shipments of handheld computers manufactured by PalmOne and Hewlett-Packard, two companies to which FLSH supplies products, were flat. My best guess, and it's only a guess, is that investors took note of those flat sales and decided to flatten FLSH a bit, too. Here's a link to the article: Link Perhaps someone else is more knowledgeable in this area and can contribute other ideas.

 
 
  James Brown   6/1/2004,  2:07:09 PM
After breaking out over resistance at $26.50 back in November shares of Quicksilver (KWK) have soared to $50.00 in May. The company announced a 2-for-1 stock split for June 30th today.

 
 
  James Brown   6/1/2004,  2:02:38 PM
Sector update...

Winners:
OIX oil index: +1.32%
XNG natural gas: +1.48%
HMO healthcare: +0.83%
and...
Copper futures: +1.53%

(Biggest) Losers:
XAL airlines: -2.56%
DDX disk drives: -2.14%
XBD broker-dealers: -1.53%
DJUSHB home builders: -1.38%
XAU gold & silver: -1.23%
GSO software: -1.28%
SOX semiconductors: -1.15%

 
 
  Jeff Bailey   6/1/2004,  1:58:23 PM
Stillwater Mining (SWC) $15.00 -0.99% .... off session high of $15.50. Spot Palladium $245.00 down $6.00. Link

 
 
  Linda Piazza   6/1/2004,  1:42:46 PM
While studying the OEX five-minute chart since my last OEX-concerned post, I had decided that the rising formation was more likely a rising wedge (a bearish formation) than a flag. If so, the wedge support has broken, but here's where the formation sometimes does widen into a flag, so bears want to see a push below the current OEX low, at 542.32. Next Keltner support is at 542.68, with next support below that at 541.52. These are on the five-minute chart. The 15-minute shows the OEX now moving toward mid-channel support at 542.49.

 
 
  James Brown   6/1/2004,  1:27:00 PM
Current OI call play QCOM is finally on the move after three days of trading sideways in a very tight range. The stock is up 0.83% to $67.63.

 
 
  James Brown   6/1/2004,  1:26:04 PM
Current OI call play IMCL is up 1.56% and back above the $75.00 mark after bouncing from $73.40 this morning.

 
 
  Linda Piazza   6/1/2004,  1:15:34 PM
I still haven't seen the looked-for bullish price/MACD divergence on the OEX five-minute chart that might tell me that the current formation is something more bullish than a possible bear flag rising into resistance. That doesn't mean that the OEX might not rise and continue rising, but this sign hasn't arrived to hint at bullishness building, so the first theory--a bear flag rising after a steep fall--isn't yet disproved.

 
 
  Jeff Bailey   6/1/2004,  1:04:57 PM
01:00 Internals at this Link

 
 
  Linda Piazza   6/1/2004,  1:00:17 PM
The 347.50 historical S/R on the BIX proved too much for the index, but it's so far holding above the 343.40 historical support level and the 100-sma at 344.63, too. Today's decline has retraced more than 50% of last Wednesday's gains, however, and is presenting the possibility that the BIX could fall below that support zone. Oscillators show that possibility, too, although they haven't committed to a downturn. Stochastics tip over, however, having made a bearish kiss, but they haven't turned down below the signal line. RSI hooks down. MACD has just pushed above signal, but tries to flatten.

 
 
  James Brown   6/1/2004,  12:56:43 PM
AXYS is up 10.85% after announcing a 3-for-2 stock split.

 
 
  James Brown   6/1/2004,  12:54:21 PM
Yes, it sounds rather contradictory but BLUD has announced both a 3-for-2 stock split and a stock buyback program this morning.

 
 
  Jeff Bailey   6/1/2004,  12:53:49 PM
12:45 PM Market Watch at this Link

 
 
  James Brown   6/1/2004,  12:50:50 PM
Major OUCH! Pozen Inc (POZN) is down 41% to $5.86. Shares gapped lower after the FDA sent the company a "non-approval" letter for its experimental drug MT100, which is a combination of naproxen and another drug. This experimental migraine treatment did not prove to be more effective than existing treatments as a second round of clinical trials failed to meet certain standards. (-Reuters).

 
 
  Linda Piazza   6/1/2004,  12:49:24 PM
The current five-minute OEX pattern looks like a possible bear flag rising up to retest mid-channel Keltner resistance, now at 544.32 but descending toward the intervening 543.90-544 resistance zone. As I study the five-minute chart now, I note that resistance appears to have thinned somewhat more than support has, perhaps suggesting that the OEX could find it easier to rise over the short term than to decline far. That resistance is important resistance in Keltner terms, however.

 
 
  James Brown   6/1/2004,  12:43:33 PM
Copper prices are on the rise again. The July contracts are up 1.25% to $1.29 a pound. Two weeks ago they were trading at $1.13 a pound.

Phelps Dodge (PD) tried to breakout over the $70.00 mark again this morning but have failed. Shares of PD are up 0.88% to $68.50.

 
 
  Linda Piazza   6/1/2004,  12:39:17 PM
The TRAN has been trading in a fairly correlative inverse relationship to crude prices lately and took the to-be-expected dip this morning. However, it didn't dip past the 2940 short-term support level and it's trying to move up again and is just above the 2950 level as I type. Near 2978 is the descending trendline off the year's high, a level it approached 5/27.

 
 
  James Brown   6/1/2004,  12:39:00 PM
Zoran Corp (ZRAN) is up 5.57% to $18.55 and challenging resistance at its simple 200-dma after an upgrade from "market perform" to "buy" this morning from Unterberg.

 
 
  James Brown   6/1/2004,  12:34:40 PM
Manugistics (MANU) is down 6.29% to $4.17 but up off its lows for the session ($3.80). The company issued an earnings warning this morning. Analysts expected $58.5 million in revenues but MANU is guiding lower toward $51-52 million. Earnings estimates were set at 2 cents but MANU now expects a loss of 6 to 7 cents per share.

 
 
  James Brown   6/1/2004,  12:27:12 PM
EBAY is down 1.56% to $87.41 after a downgrade to a "hold" from a "buy" out of AmTech. This follows last week's very strong rally from $80 to $90.

 
 
  James Brown   6/1/2004,  12:22:43 PM
Shares of Oracle Corp (ORCL) have been deteriorating in a trend of lower highs for months but it has consistently bounced from support near $11.15-11.20. Now shares are very close to breaking down under this $11.15-11.20 level with the stock down 1.57% to $11.22.

 
 
  Linda Piazza   6/1/2004,  12:21:59 PM
I don't see note of any IPO's today.

 
 
  James Brown   6/1/2004,  12:19:22 PM
Trucking company USF Corp (USFC) is up 5.7% to $30.40 after Bear Stearns has upgraded the stock from "peer perform" to "out perform". Last week USFC was pummeled with heavy losses when it shut down its Red Star unit due to Teamster troubles.

 
 
  Jeff Bailey   6/1/2004,  12:15:58 PM
12:00 Internals at this Link

 
 
  James Brown   6/1/2004,  12:14:06 PM
Guidant Corp (GDT) is down another 1.63% to $53.45 after last week's significant losses due to problems with its drug-eluting stent development. CSFB has downgraded the stock this morning from "out perform" to "neutral".

 
 
  Linda Piazza   6/1/2004,  12:12:59 PM
The much-watched-today SPX 50-dma is currently being tested. Link In my opinion, the most recent rise in the SPX was a bounce up to test broken support from the big symmetrical triangle on the SPX daily chart, with that bounce prompted, as might have been anticipated, by a test of the 200-dma. Today's candle is in danger of completing the third candle of a possible reversal signal formed at resistance, although that reversal signal would be far from the classic form. Although the 50-dma is a frequently watched MA, it may gain extra significance today because a sustained move below it may hint at a possible rollover beneath that resistance. We've seen some reversal signals that never retreat more than the retreat that formed the signal itself, but SPX bulls don't want to see a close beneath this 50-dma, either. Be careful, bears, however, as this test of the 50-dma could prompt a bounce, too, as so many are watching this average, at least according to CNBC this morning.

 
 
  Jeff Bailey   6/1/2004,  12:08:12 PM
Dow Industrials (INDU) with updated WEEKLY/MONTHLY Pivot retracement at this Link

 
 
  Linda Piazza   6/1/2004,  12:03:51 PM
Jane, thanks for the extra input on the SOX. (See Jane's 11:54 post.)

 
 
  Jane Fox   6/1/2004,  11:54:13 AM
Linda here is another look at the SOX making the 200 SMA and the tweezer top all the more important. Link

 
 
  Linda Piazza   6/1/2004,  11:48:25 AM
The SOX has now pulled back below its 200-sma, with the candle formation looking like a possible tweezer-top formation. The day is far from over, however, but SOX bulls don't want to see a close below that 200-sma or a close near Friday's low.

 
 
  James Brown   6/1/2004,  11:46:20 AM
There isn't much reaction in Dow-component UTX but the company's Pratt & Whitney unit has won an additional $431 million contract to its existing contract with the Air Force to make the F-22 Raptor engines. Shares of UTX are actually failing at round-number resistance at the $85.00 mark. Shares are down 35 cents to $84.26.

 
 
  Linda Piazza   6/1/2004,  11:45:53 AM
Ten-year bond yields continue higher, currently at the high of the day--until I uploaded the post, of course, at which point they pulled back slightly.

 
 
  Linda Piazza   6/1/2004,  11:41:08 AM
Nasdaq has been testing its 50-dma, currently at 1973.19, close the Nasdaq's current 1974.20. Bears and bulls alike should be careful here. RSI hints at a possible rollover, but that remains a hint only, especially as long as the Nasdaq is above that 50-dma.

 
 
  James Brown   6/1/2004,  11:40:09 AM
Serologicals Corp (SERO) is up 4.4% to $17.90 after announcing this morning that the company has received its patent on its proprietary purification process, "which inactivates infectious prions in its bovine-based EX-CYTE(r), the leading cell culture growth medium in the world." Prions are defective proteins that cause "mad cow" disease. (source: SERO press release).

 
 
  Linda Piazza   6/1/2004,  11:38:52 AM
The OEX steadied just cents above the daily 130-ema, currently at 542.49, near important historical support for the OEX, too. This might be a bounce point, as a drop through this level looks bearish, seeming to confirm a beginning rollover. However, either bullish or bearish plays are burdened by nearby strong support or nearby strong resistance. On the OEX, that support lies in close increments down past 540.

 
 
  Jeff Bailey   6/1/2004,  11:35:35 AM
11:30 Market Watch at this Link

 
 
  James Brown   6/1/2004,  11:35:30 AM
The jump in crude oil to $42 a barrel has the OIX oil index ramping up again. The OIX is nearing short-term resistance at 347.

Looking at some of the larger oil stocks you'll notice that ConocoPhillips (COP) is up 1.95% to $74.78 and nearing resistance at $75.00. COP appears to be breaking out of a reverse H&S pattern on its 60-minute chart (over the last three weeks or so.

Shares of ExxonMobil (XOM) are not quite so bullish with a 35 cent-gain to $43.60 and under resistance at $44.

ChevronTexaco (CVX) is up 1.1% to $91.40 but has not yet broken its short-term trend of lower highs. Its MACD is close to producing a new buy signal.

 
 
  Linda Piazza   6/1/2004,  11:32:14 AM
The OEX is now below the confirmation level of the double-top formation that showed up on the intraday charts, with those double tops formed Thursday. However, it's not far below that confirmation level and appears to be trying to steady. Lower Keltner support lies at 541.74 currently, if the OEX cannot quickly bounce back above that confirmation level. Such a quick bounce and sustained trade above the confirmation level might throw that confirmation into doubt.

 
 
  Linda Piazza   6/1/2004,  10:35:13 AM
Jim has been following the Russell 2000 futures over on the Futures side of the Monitor, but traders wanting to keep a gauge on the influences on the markets might also watch the Russell 2000 with respect to its 50-dma. This morning's rise saw a test of the 50-dma, with that average at 571.48 and the RUT high of the day at 571.22. They're talking a lot about these 50-dma's on CNBC this morning, too, so others will be watching these averages, too. Since Thursday also saw a test of the 50-dma on this index, subsequent to its small consolidation or pullback, that average has proven important in recent trading, so bears watching.

 
 
  Jeff Bailey   6/1/2004,  10:32:43 AM
10:30 AM Market Watch at this Link

 
 
  Linda Piazza   6/1/2004,  10:29:24 AM
Keep an eye on the SOX today, too, currently just above the 200-sma at 485.85. That's also near the top of the descending regression channel that has contained the SOX since early in the year. Bullish traders don't want to see the SOX close today beneath that 200-dma because that may suggest that the SOX rise has just been a rise within a declining formation.

 
 
  Linda Piazza   6/1/2004,  10:25:27 AM
Just testing out my first early morning scenario for the OEX, I note that we did see the early test of mid-channel Keltner support, and we did see a rise after the ISM numbers. I had thought that the OEX's rise might be best watched for a rollover, but that rollover happened fairly quickly without creating much of an overbought situation, so I feel uncertain as to whether we've had enough of a test today of that overhead resistance. The OEX has, however, dropped beneath a supporting descending trendline that formed since Thursday afternoon. We may soon see whether there's been enough of a test of overhead resistance as 544 support is retested.

 
 
  Jeff Bailey   6/1/2004,  10:21:36 AM
QQQ $36.38 -0.46% .... with new WEEKLY/MONTHLY pivot retracement/levels at this Link

 
 
  Jeff Bailey   6/1/2004,  10:17:29 AM
S&P 500 Index (SPX.X) with updated WEEKLY/MONTHLY pivot retracement/levels at this Link

 
 
  Jonathan Levinson   6/1/2004,  10:14:25 AM
A 6.75B overnight repo replaces 3.75B expiring for a 3B net gain from the Fed.

 
 
  OI Technical Staff   6/1/2004,  10:13:31 AM
Market Monitor Problem
We are having technical problems with the market monitor this morning. We hope to have it fixed in the next 30 min. Until then SOME users may experience delays. There is no need to notify us, we are working on it.

 
 
  Jim Brown   6/1/2004,  10:13:22 AM
Economic Report
ISM Index = 62.8, (est 62.0, last 62.4) Prices Paid 86.0
Challenger Report = 73,368, (last 72,184)
Construction Spending = +1.3% , (est +0.4%, last +1.5%)

 
 
  Linda Piazza   6/1/2004,  9:36:13 AM
The OEX now tests the 544 support, last ditch Keltner support before 542.26. Remember that these lines are dynamic, however, and can snake above or below the OEX after it pierces them if the piercing isn't too severe.

During the first five minutes, the OEX spanned a range from 545.13 to 544.21. Remember to be cautious ahead of this morning's economic releases at 10:00.

 
 
  Linda Piazza   6/1/2004,  9:32:24 AM
There's the test of mid-channel Keltner support on the OEX, right at the open as I suspected might happen. The OEX moved below that support, but not beneath the nearby support and so might still bounce back above mid-channel support.

 
 
  Jonathan Levinson   6/1/2004,  9:31:26 AM
NEW YORK (CBS.MW) - Global sales of semiconductors in April rose 37 percent over the same period a year ago, and 4.1 percent from March, to $16.94 billion, according to the Semiconductor Industry Association, the highest level seen since July 2000.

 
 
  Jeff Bailey   6/1/2004,  9:30:50 AM
Pivot Matrix with new WEEKLY and MONTHLY levels at this Link

 
 
  Linda Piazza   6/1/2004,  9:29:57 AM
Was Friday's OEX downturn beneath this gathered resistance the real thing or was it only a product of the low volume? Link Daily 21(3)3 stochastics (not shown) meet up with a descending trendline off the stochastics highs since January. The OEX has not yet challenged a trendline off its early-year high, but instead challenges a lower and steeper trendline off the March high. Daily RSI attempts to hook over, but can reverse itself again. MACD turns higher, but is still below the signal line. The OEX ended the day just below the 50-dma, although most other indices other than the Dow have cleared that average.

The OEX 60-minute chart shows oscillators that try to tip over, but haven't quite managed to roll down in full bearish manner, all the while the OEX formed a loose triangular shape and then appeared to trade mostly sideways out of the apex of that formation Friday afternoon. The OEX resisted moving below the confirmation level of the potential double-top formation. Oscillators across many intraday time frames showed flattening patterns as the price flattened, too. Bears did not appear to have enough strength to move the OEX low enough to confirm that formation, but bulls didn't appear to have enough strength to drive the OEX past those double tops, either. Price bars show inconclusive evidence, and so do oscillators across those intraday time frames.

Futures are lower as I type, however, suggesting that another test of mid-channel Keltner support on the OEX five-minute chart may be seen again, with that mid-channel support currently at 544.81, but with nearby support ranging from 544.24-544.81. Below 544, next Keltner support does not appear until 542.39 according to that five-minute chart. That would coincide with a test of the daily 130-pma at 542.52 and with historical support near 542.30, and would be below the confirmation level of the double-top formation on the five-minute chart, with that level at 542.94. For those who watch markets according to the 100/130-ema's across several times frames, a rollover beneath the daily 130-ema after a move up to test the 100-ema would be a bearish event. Although I've acknowledged in the past that I've never been great at estimating where the OEX might open based on a look at S&P futures, especially this far ahead of our cash market open, it's possible that we could see a tentative move toward that mid-channel 544.81 support test early in the day if equity index futures remain lower into the open--and perhaps more importantly, if crude futures remain higher. Traders should note, too, that ten-year yields have jumped this morning. Last week, I had been watching a possible bullish falling wedge, with an upside break being typical of such formations. Instead, Thursday, the wedge broke strongly to the downside. Friday on the MM, I kept noting that the TNX candles had come back up to retest the supporting trendline of the wedge, and this morning, the TNX opens above that wedge. Perhaps the formation has just been broadening into a descending regression channel. If so, TNX candles now butt up against the upper resistance trendline of that formation. Is it a bull flag? Possibly. If so, will it now break to the upside? Possibly, although even if it's a bull flag, yields could retreat again toward support.

All last week, I kept tracking the inverse relationship of yields and crude futures against equity action, so the rising yields and crude futures signal that equities may be pressured. I had thought early last week that equities might rise into the OPEC meeting this week, perhaps seeing a sell-the-fact reaction afterwards, but the weekend's events have perhaps put a stop to that into-the-meeting rise in equities. Market watchers will wonder how much Saudi Arabia's avowal to increase output will matter when measured against stepped-up terrorist attacks.

Of course, all this is complicated by this morning's economic releases at 10:00 EST, so a possible scenario is a near-the-open test of support, some volatility around the economic releases, and then an attempt to rise, depending on what the numbers reveal. Bad numbers, a continued rise in crude and yields, and that attempt may never be made. Market participants may decide to bail and continue that rollover that appeared to have begun.

Even if the OEX should rise, the increasing pressures on markets would appear to make such a test of resistance an opportunity to go short rather than one to go long, but if markets need a wall of worry to climb, they've certainly got one. An upside breakout above the descending trendline off the March high appears to occur on a break above 547.25, but the OEX then enters a resistance zone that extends up to about 553, with resistance perhaps strongest near 551.

 
 
  Jonathan Levinson   6/1/2004,  8:09:48 AM
There are no scheduled releases for 8:30 today- awaiting the 10AM release of Construction spending for April, est. .4%, and the May ISM, est. 61.5.

 
 
  Linda Piazza   6/1/2004,  7:27:15 AM
Good morning. Although our markets weren't open yesterday, Asian and many European markets did see trade, with the weekend's hostage situation in Saudi Arabia and the upcoming OPEC meeting being mentioned as influences on trading patterns. The Nikkei closed lower Monday by 73.20 points, having tried throughout the morning session to move into positive territory. Failing to do that, it dropped more than 200 points early in the afternoon session, all the way down to close Friday morning's gap, but then recovered the rest of the afternoon. Investors took profits in banking and tech stocks while auto stocks closed flat to slightly higher. Two stocks saw big gains, however. Softbank posted 11% gains after its CEO predicted the company would achieve profitability in the year that will begin April 2005. Cosmetics manufacturer Kanebo gained 12.5% ahead of its after-the-close restructuring plans. It will ask banks to forgive debt, reduce its capital, and ask Sumitomo Mitsui Financial Group and Japan's state-run Industrial Revitalization Corp. to contribute to raise its capital again.

Trading was mixed Monday across other Asian bourses, with the Taiwan Weighted losing 2.60% and South Korea's Kospi dropping 1.55%. In Taiwan, Taiwan Semiconductor, United Microelectronics and flat computer screen manufacturer AU Optronics saw big declines. Despite all we're hearing about shipping traffic being strong, Daewoo Shipbuilding and Marine Engineering of South Korea dropped after April's net profit decreased 29.4%. Singapore's Straits Times gained 0.08%, Hong Kong's Hang Seng gained 0.67%, and China's Shanghai Composite dropped 0.04%.

London markets were closed Monday, too, but both the CAC 40 and the DAX posted 0.48% gains. The terrorist attack in Saudi Arabia focused many European investors' thoughts on the upcoming OPEC meeting, but markets stayed steady in light trading as a Saudi representative reassured the world that oil production and output in Saudi Arabia had not been impacted by the attacks. In stock-specific action Monday, Nokia rose on a report that it was regaining market share, with many other telecommunications stocks gaining, too.

Tuesday, the Nikkei seemed determined to make up all its losses, opening and climbing straight up toward Friday's highs, but not quite able to make it up to those highs. It came close enough to set up the possibility of a double-top formation, however, troubling to those who had hoped to see the Nikkei continue to build on the strength from its new P&F buy signal or on its move above the neckline of a reverse H&S on its daily chart. Still, these early week moves may have just constituted a neckline test and the Nikkei is far from confirming that double-top formation as yet. It closed higher by 60.39 points or 0.54%, at 11,296.76.

Although banks had been under pressure Monday, banks joined exporters such as autos in leading the gains early Tuesday. Kanebo tacked on more gains to the spectacular gains it made Monday. Nissan gained in early trading, too, on news that the company would lower the weights of its vehicles by 10% within the next five years.

Other Asian bourses turned in mixed performances, but most of the ones we typically watch closed higher. The Taiwan Weighted gained 0.14% and South Korea's Kospi gained 1.48%. Singapore's Straits Times gained 0.19%, but Hong Kong's Hang Seng lost 0.76%. China's Shanghai Composite gained 1.53%.

Most European bourses currently trade lower, pressured by oil's move back above $40.00, one impact of this weekend's attack in Saudi Arabia. In economic news, May's eurozone manufacturing index increased from April's 54 to 54.7 against an expectation of a decline to 53.8. New orders and output components rose to levels not seen since the fall of 2000, but the news wasn't all good for manufacturers. An in-depth look at the numbers reveals that manufacturers were not able or did not choose to pass on all of their increased costs to their consumers, but instead absorbed some of those costs in the form of lower margins.

In stock-specific news this morning, Swiss staffing firm Adecco said that its audit of 2003's accounts showed that no restatement of those accounts would be needed, and named Friday as the date for the release of its Q1 2004 profits report. Fiat shares rallied in early trading after being hit over the weekend by the surprise resignation of its CEO. After the death late last week of its chairman, the board named the Ferrari CEO as the new chairman, and Fiat's CEO had tendered his resignation, leading some analysts to question the stability of the company's leadership. Another airline, Irish discount airline Ryanair, added to the number of airlines mentioning the pressure of oil prices and terrorist threats on its outlook and earnings in addition to the pressures of currency issues and competition.

As of this writing, the FTSE 100 has dropped 8.80 points or 0.20%, to trade at 4421.90. The CAC 40 has lost 44.19 points or 1.20%, to trade at 3625.44. The DAX has lost 51.54 points or 1.31%, to trade at 3869.87.

 
 
  OI Technical Staff   6/1/2004,  7:22:24 AM
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