Option Investor
Printer friendly version
  Jeff Bailey   6/8/2004,  5:48:59 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   6/8/2004,  4:56:15 PM
Closing Internals at this Link

  Jeff Bailey   6/8/2004,  3:57:52 PM
Amazon.com (AMZN) $51.82 +0.13% ... keep this one in mind with two retracement at this Link

  Linda Piazza   6/8/2004,  3:56:30 PM
As of a few minutes ago, volume was slightly less than 1 billion on the NYSE and slightly less than 1.3 billion on the Nasdaq. Summer volume has arrived.

  Linda Piazza   6/8/2004,  3:52:45 PM
Yesterday, I advised OEX bulls to think about whether they wanted to hold overnight with the OEX facing 557 resistance, with an expected small-range day today that might eat into their options premiums. Today, the OEX faces that same 557 resistance as we near the close, but there's additional concern today, because the OEX has printed the second in a classic three-candle reversal pattern, the evening star pattern. That pattern requires confirmation by a tall red candle tomorrow, with that candle retracing at least half of Monday's gains, if not more, but decide if you feel comfortable holding over to see whether the confirmation occurs or whether the OEX instead zooms higher tomorrow. Except for some continued bearish divergences on some indicators on the daily chart, those indicators don't yet show a likelihood that the OEX will reverse, but the continued Keltner channel breakouts do suggest that sooner or later, the OEX will retrace all the way down toward lower-channel support, currently just under 552. If the OEX should instead push strongly above 557 by the close, bulls might feel a little more comfortable, but then they face the possibility that the OEX might spend another day or two consolidating both yesterday's and today's gains while those options premiums deflate. It's your decision and it's one that should take into account a lot of parameters.

  Linda Piazza   6/8/2004,  3:41:55 PM
The BIX is currently below 350, but close enough that it could still climb above 350 by the close. It's above the 50% retracement of yesterday's tall white candle, so there's mixed evidence seen in those observations. RSI has hooked down, but we all know how easily RSI does that. It offers a warning, but one that might never be realized.

  Linda Piazza   6/8/2004,  3:37:41 PM
For reference, mid-channel Keltner support on the OEX is now at 554.20 and beginning to level off, with lower-channel support now at 552.00, also having leveled off. That support is dynamic, so it's possible that if the OEX continues declining, mid-channel support could slip to the 553.40 historical support level before the OEX tests it. Below that mid-channel support, there's nothing else until lower-channel support, at least on the five-minute chart.

  Linda Piazza   6/8/2004,  3:32:22 PM
The SOX is trying hard to cling to the 200-dma, but has currently slipped beneath it. The SOX never did manage a move above the 100-dma today.

  Linda Piazza   6/8/2004,  3:27:44 PM
Strongest nearby support on the OEX five-minute Keltner chart is 554.62 and 554.20, with the lower of those two being mid-channel Keltner support.

  Linda Piazza   6/8/2004,  3:19:03 PM
Bulls don't like what they're seeing on the OEX today. So far, a doji prints at the top of the climb. The OEX has produced other doji on its climb off the May low, but those others have been produced from within congestion zones and so merely echo the indecision that the congestion zone itself suggested. This one is different, although any potential reversal signal would need to be confirmed by tomorrow's action. Actually, it would need to be confirmed by the end-of-day trading, too, as a strong zoom higher in the last few minutes of the market could turn that doji into something more bullish. The extreme oversold conditions on a Keltner channel basis argue against that possibility, but shorts who hoped to see a reversal today and have not seen one could elect to cover into the end of the day, driving the OEX higher after having confirmed support today. We'll have to see, but so far, we're indeed seeing that small-range day following a big-range day, complete with a false breakout or two: just the kind of day that I suspected we might have.

  Jeff Bailey   6/8/2004,  3:15:14 PM
Day trade bullish stop alert ... Amazon.com (AMZN) $51.49

  Jeff Bailey   6/8/2004,  3:11:41 PM
03:00 Internals at this Link

Little "pop" in NH at both NYSE/NASDAQ

  Linda Piazza   6/8/2004,  3:11:08 PM
The SOX is right above the 200-dma at 487.31, still within testing range, with the SOX currently at 487.55.

  Linda Piazza   6/8/2004,  3:07:53 PM
$TRIN is rising again, now at 1.00.

  Jeff Bailey   6/8/2004,  2:58:06 PM
Exxon/Mobil (XOM) $43.92 -0.18% Link .... aggressive bear might go for the double top.

  Linda Piazza   6/8/2004,  2:57:09 PM
Do I dare point out the bearish price/MACD divergence on the Russell 2000's five-minute chart as the Russell made that slightly higher/equal-ish high? It's there, at least tentatively, but it's been occurring with each new high since yesterday morning's without ever stopping the Russell 2000 from making each new or equal high. Be careful, though.

  Jeff Bailey   6/8/2004,  2:55:57 PM
July Crude Futures (cl04n) $37.40 -3.25% 30-minutes ago. Here's my updated chart with fitted retracmenet, zones. Link

  Linda Piazza   6/8/2004,  2:48:00 PM
$TRIN is now 0.84.

  Linda Piazza   6/8/2004,  2:45:19 PM
That gap mentioned in my 14:32 post has now been filled. Although it looked like a breakaway gap, that filling-of-the-gap puts that conclusion in doubt, and we now must consider the possibility that it was an exhaustion gap, something I mentioned in that post. In reality, we may still just be seeing some zooming around here. Well, zooming may not be quite the right word for this steady creep, right?

  Jeff Bailey   6/8/2004,  2:37:59 PM
July Crude Futures (cl04n) $37.90 -1.96% ... 30-minutes ago, get downside al_rt at support zone from $37.50-$37.85.

  Linda Piazza   6/8/2004,  2:32:34 PM
On the five-minute chart, the OEX moved back to that rising wedge, and then gapped higher. That's a breakaway gap, the type that breaks out of a formation, and they're not always filled. If this one should be, then perhaps the assessment of it as a breakaway gap is wrong, and we're looking at a possible exhaustion gap instead.

  Linda Piazza   6/8/2004,  2:30:16 PM
OEX bulls should again have an idea of how they're going to handle that 557 possible resistance.

  Linda Piazza   6/8/2004,  2:26:31 PM
The OEX is ringed by Keltner support and resistance, both looking equally firm. Strangely enough, this probably suggests a breakout/down soon, although I'm still not sure the OEX will get far. It's getting very overbought on a Keltner basis, needing to retreat to mid-channel or lower-channel support to establish support, with those levels now at 553.83 and 551.73, respectively, but that doesn't mean the breakout will be the downside--in fact, it's breaking out to the upside as I type.

  Jeff Bailey   6/8/2004,  2:26:24 PM
Day trade long alert .... Amazon.com (AMZN) $51.92 here, stop $51.50, target $52.50.

  Jeff Bailey   6/8/2004,  2:23:57 PM
Overstock.com (OSTK) $37.31 +3.15% ... stealth move to session highs.

  Jeff Bailey   6/8/2004,  2:19:53 PM
02:00 Internals at this Link

  Jeff Bailey   6/8/2004,  2:16:44 PM
Intel (INTC) $28.88 +0.41% ...

  Linda Piazza   6/8/2004,  2:11:03 PM
Here's what's happened with respect to that rising wedge on the OEX's five-minute chart, a pattern that I've mentioned a couple of times today: Link The OEX broke below it, rose to test it, and now turns down again, but the OEX needs to move below last hour's low before that downturn is confirmed.

  Linda Piazza   6/8/2004,  2:07:01 PM
So far, buying this morning's dip to 552.80-553.50 support wouldn't have brought big gains to traders buying that dip, at least for options traders, with the volatility indices declining from this morning's high while prices steadied and made small gains. So far, any possible gain hasn't been worth the risk of a downturn, although that might change during the next couple of hours. This is why it's worthwhile to try to build a scenario pre-market and then to test market action against that possible scenario. Doing so sometimes keeps you from jumping into a play that might not be optimal. I always thought it possible that dips to support might see a rise, but I didn't expect a rise to be a big one, at least not early in the day while the market watchers dissected what Greenspan had to say, and there was always a risk of a downturn back through to deeper support. It's also possible that even if there's a small-range day today, creating a doji or small-bodied candle, that day could be followed by a third candle in a possible reversal signal rather than by an extension of a climb.

  Linda Piazza   6/8/2004,  1:57:08 PM
There has been the slightest uptick in the advdec just now. It's not much, but bears watching. Bulls always want to see positive volume patterns precede or accompany any upticks in price, and that just hasn't been happening until now. It may not be happening much right now, either, as this was only a minor change.

  James Brown   6/8/2004,  1:44:18 PM
Keep an eye on BEAS for a move through resistance at $9.00. Should it occur bulls can try and trade a "fill the gap" move back toward $10.00-10.50.

  Linda Piazza   6/8/2004,  1:41:40 PM
If you study the advdec line just right, you can see that it sort of generally slants up today, but that slant is minimal and the advdec number is still -1485, not a bullish one. $TRIN remains neutral, however, and so far we're just having a small-range day following yesterday's big gain. The advdec line warns bulls to pay attention to the possibility of a pullback.

  James Brown   6/8/2004,  1:40:12 PM
Apollo Group (APOL) is breaking out over resistance at $96.00. The next stop should be $100.

  James Brown   6/8/2004,  1:35:32 PM
Dow-component UTX is pushing through resistance at its simple 200-dma.

  James Brown   6/8/2004,  1:33:24 PM
IBM is on the move. Shares are breaking out over resistance at $89.00 and its 40-dma. Plus they're challenging resistance at $90.00 and its 50-dma.

  James Brown   6/8/2004,  1:30:21 PM
PG's string of multi-year highs continues. Shares are up 73 cents and pushing through round-number psychological resistance at $110.

  Linda Piazza   6/8/2004,  1:30:10 PM
The OEX is now dropping out of that rising wedge, but it's doing so as we approach one typical stop-running time of day. If the OEX now trades sideways for a period instead of dropping precipitously, then that drop should be consider suspect. Note: The OEX is now climbing right back into that wedge.

  James Brown   6/8/2004,  1:29:01 PM
ExxonMobil (XOM) is only up 15 cents but it is breaking out over six-week old resistance at $44.00.

  Linda Piazza   6/8/2004,  1:24:37 PM
The OEX now tests the support of the possible rising wedge on its five-minute chart. According to classic technical analysis, these should be reliable formations that should typically break to the downside, but we've sure seen a lot head higher instead over the last year.

  Linda Piazza   6/8/2004,  1:22:57 PM
Russell 2000 traders, check out Jim's 13:15 post on the VXO as compared to the Russell 2000, with that post on the Futures side of the Monitor. The chart he includes would hint that the Russell 2000 could turn down beneath the neckline of that oddly shaped possible reverse H&S formation that I detailed in my 13:08 and 13:13 posts, rejecting the neckline.

  James Brown   6/8/2004,  1:21:45 PM
Heads up on Northrop Grumman (NOC). NOC is nearing resistance at $105.00. A failure to breakout here could either be the beginning of the handle part of a cup and handle formation or a big double top.

The high yesterday was $105.00. Shares are down 19 cents to $104.81.

  James Brown   6/8/2004,  1:16:12 PM
Whoa! Check out Sears (S). The stock is rocketing higher (for Sears) with shares up 7.5% to $41.17 - a breakout over its 20, 40, and 50-dma's as well as resistance at the $40.00 mark. Sears had been stuck in a narrow trading range for the last four weeks and this breakout looks very bullish.

There isn't any hard news to explain the move but rumors are circulating that Sears might be a takeover candidate.

  Linda Piazza   6/8/2004,  1:13:35 PM
If that was a reverse H&S on the Russell 2000, as detailed on my 13:08 post, bulls don't want to see the Russell 2000 immediately turn down below 573.50 or below the 50-dma, as that would seem to reject the formation, as badly formed as it might be.

  James Brown   6/8/2004,  1:12:01 PM
Capital One Financial (COF) is another stock we've been following for days on the watch list for a breakout over resistance at $70.00 and its 50-dma. The move came yesterday with a surge through $70.00, its 50-dma and its 100-dma. Bulls can target a move toward $75.00 or its highs near $77.00.

  Linda Piazza   6/8/2004,  1:08:07 PM
The $RUT.X daily chart now has an out-of-proportion reverse H&S, with the shoulders small in proportion to the head. It's so out of proportion that I don't know whether it has any validity, and there was no bullish divergence as the head was formed. Link

  James Brown   6/8/2004,  1:07:46 PM
Starwood Hotels (HOT) still looks like a tempting bullish candidate after its recent bull flag pattern breakout and the move over $43.00.

  Jeff Bailey   6/8/2004,  1:07:18 PM
01:00 Internals at this Link

  James Brown   6/8/2004,  1:06:15 PM
Hmm... we're seeing a strong, three-day rally in Alaska Air Group (ALK). The stock is up another 3.5% and breaking out over the $22.00 level and its 40-dma today.

  Jim Brown   6/8/2004,  1:05:38 PM
I just had a conversation with a reader about the VXO. It is at its historical lows near 14 since the symbol changed from VIX to VXO. Each time this has happened we have seen strong selling within three days. Link Link

This suggests we could be at the end of our run. The SPX has very strong resistance at 1140-1142-1146-1150. Any of which could be the tripwire for selling to begin. The bullish sentiment seems to be very strong and much stronger than this time on the calendar would normally see.

I am starting to feel like there is a challenge in our immediate future only we do not see it yet. Some of the biggest drops occur when there is nothing on the surface to provide an advance clue. I am starting to get nervous.

Conversely, the VXO can remain at the lows for a considerable period of time before reversing. Just keep your stops tight if you are long.

  James Brown   6/8/2004,  1:03:49 PM
Yet another bullish breakout over major resistance this time in Staples Inc (SPLS). Shares closed over the $28 level yesterday and today is seeing a 3% follow through on the move. Its P&F chart reflects the fresh triple-top bullish breakout. This might be a better covered call candidate than a directional call play.

  James Brown   6/8/2004,  1:02:00 PM
Corn Products Intl (CPO) is down 1.88% to $44.79 but it looks like profit taking after yesterday's big gain and breakout over resistance. Technicals are mixed with a bullish MACD but stochastics looking weak after reaching overbought levels.

  Linda Piazza   6/8/2004,  1:00:02 PM
The OEX five-minute pattern is beginning to look slightly like a rising wedge, but lately those haven't typically broken to the downside, as they would in classical technical analysis.

  James Brown   6/8/2004,  12:59:31 PM
We've been following Hershey Foods (HSY) on the watch list for several days now. Shares are finally breaking out over significant resistance at the $90.00 mark with a 2.4% gain today. Its MACD has produced a new buy signal. One note of caution is its P&F chart target is only $93.

  Jeff Bailey   6/8/2004,  12:56:43 PM
Utility Index (UTY.X) 308.31 -1.02% ... sinks to session low and June monthly support of 308.

  Linda Piazza   6/8/2004,  12:46:10 PM
As of 30 minutes ago, crude oil prices had recoiled from their test of the $39.00 level and had dropped back to $38.30.

  James Brown   6/8/2004,  12:43:47 PM
Yesterday we noted the very big breakout over resistance at $65.00 in shares of Countrywide Financial (CFC), one of the country's largest mortgage lenders. This morning CFC reported that its loan application volume for May fell 39% from last year. Loan fundings fell 20% to $31.82 billion in May. (-Reuters).

CFC is down 1.76% but traders bought the dip as it approached $65.50.

  James Brown   6/8/2004,  12:39:49 PM
FedEx (FDX) announced that its FedEx Express unit has won a contract from the U.S. Postal Service to take over its overseas Global Express Guaranteed packages. The USPS currently has a deal with DHL Worldwide to handle its overseas express packages but DHL said they were losing money on the deliveries. FDX takes over on July 1st.

Shares of FDX are up 35 cents to $75.98. The $76 level was resistance in early April so we could see a breakout here.

  Linda Piazza   6/8/2004,  12:39:06 PM
Did we just have our first OEX false breakout of the day, something I've anticipated that we might have today? Perhaps, although it could be that the OEX was just coming back to retest the 554.75-555 support level. As has been true so often over the last few days--and has mattered so little--there's bearish price/MACD divergence at today's five-minute high, as compared to the late-yesterday high. TRIN continues to drop, supporting a bullish view, but the advdec line is flat-lining and not either preceding or following prices higher. That's another troubling sign for bulls.

  James Brown   6/8/2004,  12:29:07 PM
SERENA Software (SRNA) is down 4.1% to $20.31 after Merriman downgraded the stock from "neutral" to "sell".

  James Brown   6/8/2004,  12:27:34 PM
ExpressJet (XJT) is down 4.11% after JPM downgraded the stock from "neutral" to "underweight" (a.k.a. sell).

  James Brown   6/8/2004,  12:24:03 PM
JPMorgan is really sticking their neck out by starting coverage on AMZN, ASKJ, CNET, DCLK and MNST with "neutral" ratings this morning.

JPM did choose to start EBAY and YHOO with an "overweight".

  James Brown   6/8/2004,  12:22:46 PM
Tribune Co (TRB) is down 3.96% to $46.76 but shares are up off their lows of the session. The stock gapped down this morning after the company issued a revenue warning last night and at least one analyst downgraded the stock before the opening bell.

TRB said sales for its publishing group are significantly slower than expected and the company will have to take a charge to account for the drop from 5.5% growth to 3% growth. The company will enacted several plans to cut costs including a 200-person reduction in staff.

  Linda Piazza   6/8/2004,  12:20:52 PM
Keene mentioned having difficulties with his DSL service, and I'm having difficulties with my broadband service, too. I've gone offline twice today, so if I disappear for a time, that's what's happening. While I was offline, the OEX broke through the top of the triangle I had been watching on the five-minute chart and is now hesitating after that breakout, with a possible bull flag showing up on the one-minute chart. The TRIN has dropped back to 1.03, but the advdec line isn't really doing much, and I'd like to see volume patterns preceding price breakouts. I'm not so sure whether I'm ready to abandon the tight-range-day scenario as yet in favor of an adding-to-gains one.

  Jeff Bailey   6/8/2004,  12:20:15 PM
MM trade profile updates at this Link

Not alot going on. OSTK did get an X at $37 today. Link OSTK June "Max Pain" calculated at $30.00.

SWC fell back into $14.75-$14.88 zone, gets a slight bid from there intra-day. Link

SWC June "max pain" is calculated at $15.00.

  James Brown   6/8/2004,  12:17:47 PM
SonicWALL (SNWL) is up 5.5% to $8.41 and breaking out over resistance at $8.00 and its 50 and 200-dma's on strong volume. The move follows an upgrade to "out perform" by RBC Capital this morning. SNWL's P&F chart points to a $14 price target but the stock needs to push through its descending trendline of lower highs and its 100-dma.

  Jeff Bailey   6/8/2004,  12:13:37 PM
12:10 Market Watch at this Link

Homebuilders easing off their lows, Dow Industrials trying to get a test of WEEKLY R2.

  James Brown   6/8/2004,  12:13:28 PM
Ashland Inc (ASH) is up 1.89% to $49.93 on top of yesterday's gains with decent volume on both sessions. The rebound over the last couple of weeks has turned the sell signal on ASH's p&f chart into a bear trap. This morning Prudential upgraded ASH to an "overweight".

  Jeff Bailey   6/8/2004,  12:06:53 PM
12:00 Internals at this Link

  Jeff Bailey   6/8/2004,  11:59:39 AM
CBOE Internet Index (INX.X) 195.70 +0.24% .... reasonably benevolent.

  James Brown   6/8/2004,  11:57:13 AM
The rally in Midway Games (MWY) is reaching a fevered pitch. Shares are up 11.68% to $13.40 on top of its gains over the last two weeks.

Sumner Redstone has recently purchased an additional $14 million in MWY stock bringing his ownership up to 74 percent. One of this morning's headlines said Redstone has hired a financial advisor for MWY and is considering taking the company private.

Last November shares of MWY bottomed at $2.62 per share.

  Jeff Bailey   6/8/2004,  11:52:51 AM
Semiconductor Index (SOX.X) 484.07 -0.84% .... with new WEEKLY/MONTHLY retracement. I've checked June's "Max Pain" for both SOX.X and SMH, where SOX.X is 475 and this week's Pivot. Link

May well look for some flip-flopp between 490-470.

  James Brown   6/8/2004,  11:52:47 AM
Comments coming from the G8 summit have the U.S. expecting 3.5% GDP growth in 2005.

  Linda Piazza   6/8/2004,  11:51:36 AM
Since about 10:15 yesterday, the OEX has been following an ascending trendline higher. That ascending trendline now crosses at about 554, so a move below that trendline would be a first indication that the trend from yesterday morning has changed. Be watchful for possible probing movements (stop runs) below that trendline and quick reversals higher as the dips are bought, however. That sometimes happens on days like today when the main job of the indices is to test and confirm support or test it and see that support fail. This trendline describes the bottom support of a rough triangle that's now beginning to form (with only two touch-points to establish the top descending line as yet). I've been expecting a triangle to form, a typical formation after a day like yesterday, and perhaps this is it. (See my 10:03 post.)

  James Brown   6/8/2004,  11:45:35 AM
The action in the homebuilders is also disappointing. Yesterday's 5% gain in the DJUSHB was a significant breakout over resistance at the 600 mark and its 50 and 100-dma's. Today's 3.4% drop makes yesterday look like a bull trap.

  James Brown   6/8/2004,  11:43:15 AM
Copper's weakness today has completely erased yesterday's gains. Oddly shares of Phelps Dodge (PD) are not reacting too strongly to the drop in copper prices. PD is down 98 cents to $68.37 but holding above previous resistance at its 40 and 200-dma's.

  James Brown   6/8/2004,  11:41:18 AM
Sector update

OSX oil services: +0.66%
INX Internets: +0.19%
OIX oil index: +0.17%

(Biggest) Losers:
DJUSHB homebuilders: -3.38%
XAU gold & silver: -2.13%
XBD broker-dealers: -1.03%
BTK biotech index: -0.92%
UTY utilities: -0.82%
XAL airlines: -0.91%
SOX semiconductors: -0.85%
Copper futures: -2.88%

  Linda Piazza   6/8/2004,  11:40:33 AM
Bulls should be aware that the TRIN is rising again, with that not being welcome news for the bulls.

  Linda Piazza   6/8/2004,  11:35:54 AM
Here's what the OEX has been doing today with regard to the 100-dma, the best-fit trendline off the February high, and the horizontal support: Link So far, that support is holding, with the short-term 5(3)3 stochastics continuing its rise after bouncing off its own rising trendline. So far, this fits the picture of a tight-range day following a big-range day, with that tight-range day spent establishing whether recently broken resistance will hold as support. Bulls need that information before sending the indices higher. The day is far from over, with the daily 21(3)3 stochastics still showing bearish divergence, so danger of a downturn through that support again is far from over, too. So far, so good for the bulls, but I'd sure be watching that support zone. Unfortunately, on a day like today, I'd also be expecting a false breakout or two.

  James Brown   6/8/2004,  11:35:29 AM
Traders in OI call play BCR can start to turn cautious. Shares are slipping under their simple 10-dma and headed toward minor support at $56.00. Odds are good that it might be headed for a retest of stronger support at $55.00.

  Jim Brown   6/8/2004,  11:26:43 AM
The shipments component in the Richmond Fed Survey jumped from 13 to 22 in May but new orders fell to 12 from 17. The backlog of orders fell back into negative territory at -1 from 9 last month and was the second monthly decline. The six-month outlook fell to 16 from 22. This suggests the manufacturing in the Richmond area could have peaked in May and the negative orders are showing the beginning of a summer slump or worse. The good news was a jump in the employment index to 9 from only 1 in April. With rising employment and falling orders this is not the kind of divergence analysts want to see.

  Jane Fox   6/8/2004,  11:21:51 AM
Dateline WSJ Federal Reserve Chairman Alan Greenspan suggested Tuesday that Fed policy makers can boost now super-low interest rates gradually, but he didn't rule out more aggressive action to keep inflation at bay.

Although Mr. Greenspan repeated the Federal Open Market Committee's view that any coming rate increases would likely be at a very methodical pace, he said that assessment was made on policy makers' best judgment of how economic and financial forces will evolve in the months ahead.

"Should that judgment prove misplaced, however, the FOMC is prepared to do what is required to fulfill our obligations to achieve the maintenance of price stability so as to ensure maximum sustainable economic growth," Mr. Greenspan said in prepared remarks to an international monetary conference in London. He spoke via satellite.

  Linda Piazza   6/8/2004,  11:20:50 AM
Both the daily and weekly OEX Keltner charts suggest a possibility that the OEX could move up toward 563, but the daily suggests about an equal likelihood that the OEX would first retreat toward 544-547.40 before it touches 563. I'm not as accustomed to watching the OEX's Keltner charts on a daily and weekly basis as I am on intraday charts, so take these observations with a grain of salt. I'm just benchmarking observations here and not suggesting that you trade based on these observations.

  Linda Piazza   6/8/2004,  11:08:40 AM
A lower OEX five-minute high will be confirmed with a move below the day's low of 553.44, with Keltner support below that at 552.98 and 552.41. A higher five-minute high will be confirmed with a move above yesterday's late-afternoon high of 555.55, with either a lower or higher high possible at this moment.

  Jeff Bailey   6/8/2004,  11:08:33 AM
11:00 Internals at this Link

  Linda Piazza   6/8/2004,  11:06:03 AM
Upper Keltner resistance does appear to be holding on the OEX, although the OEX keeps bumping that resistance just a little higher. It's currently at 555.18, and the OEX just doesn't appear ready to give up trying to move above it. If it does, it's in danger of creating a lower five-minute high.

Please don't read too much into these notations of current intraday action, however, because I've thought all along that we might see a tight-range day, perhaps one rife with one false signal after another. The moment we stop noting some intraday development, however, will be the moment a big move begins, so I note them. Nothing has happened yet to disprove the scenario with which I began the day, so I'm watching and noting, but watching with a skeptical eye.

  Jeff Bailey   6/8/2004,  10:57:57 AM
Yahoo! Inc. (YHOO) $32.86 +1.07% ... new 52-week highs here.

  Linda Piazza   6/8/2004,  10:53:33 AM
The OEX is charging up to challenge top Keltner resistance now, with that dynamic resistance having moved up to 555.08. Remember that the OEX can move slightly above that resistance and then get tugged down again by its gravitational pull.

  Linda Piazza   6/8/2004,  10:45:04 AM
Maybe buying the dip would have been a good idea? Maybe, but I'm still working on a possible tight-range, scrambled-indicators type of day scenario. Pre-market, I had thought it possible that buying the dip at the 552.80-553.50 level might be a good idea but wanted to see some of the intraday bearish divergences erased first. As that level was being tested this morning, the TRIN and advdec levels did not favor buying-the-dip plays, however, and the bearish divergence hadn't yet been erased on the 60-minute chart. Nor did the SOX dip below the 200-dma or the RUT's below the 100-dma encourage me to suggest buying the dip. Now the OEX rises to test Keltner resistance, with that resistance overhead up to 554.99, with it as yet being unclear whether the OEX can break above that resistance and achieve a new high. As I type, it looks as if the resistance might hold.

  Linda Piazza   6/8/2004,  10:35:27 AM
The volatility indices are dropping, although the VXN doesn't appear to be dropping as much as the VIX and VXO.

  Linda Piazza   6/8/2004,  10:32:08 AM
Jane has probably already noted this on the Futures side, but the TRIN has been moving down steadily, and is now at 1.17 if QCharts is correct.

  Linda Piazza   6/8/2004,  10:30:56 AM
On the OEX, Keltner resistance is thinning out a little, but I'm not sure it's thinned out enough for the OEX to break through. That dynamic resistance lies from 554.66-554.87.

  Linda Piazza   6/8/2004,  10:28:58 AM
The SOX is turning down beneath the 200-dma today, but is trying to find support at the top of its regression channel: Link Like the Russell 2000, the SOX needs to avoid retracing more than 50% of yesterday's big-range candle, but also like the Russell 2000, the SOX has support below that 50% retracement level at the 50-dma. If that support should not hold, however, the SOX risks challenging the bottom support of the short-term rising regression channel that's contained within the longer-term descending regression channel. So far, none of those dire things have happened yet, with the SOX holding fairly steady. Bulls will not like the possibility of a lower/equal-ish high on the SOX, however, and will want to see the SOX steady now.

  Linda Piazza   6/8/2004,  10:22:12 AM
The Russell 2000 turns down from yesterday's high and slips below the 100-dma today. It needs to find support above the midpoint of yesterday's big-range candle, with that level at 573.33, or it's in danger of creating a tweezer-top two-candle arrangement today. The Russell's decline, if it should continue, adds doubt to the small-range-day-following-big-range-day theory with regard to the other indices, too. Also of note, the Russell's 50-dma is at 572.28.

  Linda Piazza   6/8/2004,  10:15:43 AM
With TRIN in bearish mode today and advdec level negative, and with that 60-minute OEX bearish divergence so far this morning resulting in a potential evening-star reversal signal on the 60-minute OEX chart, I wouldn't be counseling buying the dips just yet, although it's possible that the OEX will find support and steady, in a test-the-former-resistance, tight-range mode today.

  Jeff Bailey   6/8/2004,  10:15:23 AM
10:00 Internals at this Link

Yesterday's Internals at this Link

  Jeff Bailey   6/8/2004,  10:07:56 AM
Microsoft (MSFT) $26.44 +0.03% Link ... just off session high of $26.49. Company has officially appealed to European Union courts against the European Commission's recent decision/fine regarding the way it sells its Windows software.

  Linda Piazza   6/8/2004,  10:03:58 AM
The OEX first retracement of the day stopped at about the 50% retracement of the decline from the late-yesterday high to this morning's low. That's not what bulls want to see. Bears now want to see the OEX move to a new low of the day, but that's going to be pushing the OEX into that 552.80-553.50 support zone. As I type, the OEX appears to be bouncing from above that zone again, perhaps on its way to establishing a triangle formation this morning on the five-minute chart, a favored formation the day after a big-range day. If the OEX is true to form, the next thing to happen will be a false breakout or two after the formation of that triangle.

  Jeff Bailey   6/8/2004,  10:03:19 AM
10:00 Market Watch at this Link

  Jonathan Levinson   6/8/2004,  10:02:46 AM
The Fed has announced a 6B overnight repo, for a net 3.5B drain.

  Jeff Bailey   6/8/2004,  9:53:57 AM
Adobe Systems (ADBE) $46.89 -0.99% Link .... Fulcrum downgrade to "neutral" from "buy" based on valuation. While Fulcrum sees potential upside to quarter, firm believes the bulk is reflected in the stock at 30-times fiscal 2004 estimates.

  Linda Piazza   6/8/2004,  9:52:50 AM
The TRAN hovers at yesterday's closing level--slipping just below it as I type, though--with the oscillators not yet indicating whether this is likely to be a small-range day at the top of yesterday's range or whether there's to be a deeper retracement, with the TRAN pressured by rising crude prices this morning. This index's reaction may be important to watch as it may be one of the first to react to the action in crude futures.

  Jonathan Levinson   6/8/2004,  9:51:48 AM
The Fed's announcement regarding the fate of yesterday's massive 9.5B repo is due any minute. I'm very curious to see whether and how much they drain today.

  Jeff Bailey   6/8/2004,  9:48:10 AM
Overstock.com (OSTK) $37.00 +2.21% Link .... moves above recent June 2 relative high of $39.81.

Looks to play some catch up to CBOE Internet Index (INX.X) 196.00 +0.40% Link

  Linda Piazza   6/8/2004,  9:47:17 AM
The Nasdaq retests the 100-dma today as well as the descending trendline off the year's high. Traders might note that it's in the middle of a gap from April 1 to April 2, with gaps sometimes providing resistance, even months after their occurrence. On April 2, the intraday low was 2037.19 but the open was at 2046.05, so traders might watch both of those levels for possible resistance.

  Linda Piazza   6/8/2004,  9:42:31 AM
Mid-channel Keltner support on the OEX five-minute chart is now 551.74. Keltner resistance now lies overhead just above 554.50, as well as at 555.26. Bulls want to see the OEX climb above that first Keltner resistance and the 50% retracement of the five five-minute range, while bears do not. They want to see the OEX continue down toward that mid-channel level. Keltner support ahead of that mid-channel level is at 553.54 and 552.48.

  Linda Piazza   6/8/2004,  9:40:22 AM
During the first five minutes, the OEX spanned a range from 555.06 to 553.45, falling back into one supposed support level.

  Jeff Bailey   6/8/2004,  9:37:11 AM
Cisco Systems (CSCO) $23.65 -0.96% .... Smith Barney issuing favorable comments ahead of quarter, saying their checks with enterprise-related resellers and distributors indicate networking sales are up 8-10% quarter-over-quarter in June, which would support most company's meeting or beating quarterly expectations. Smith Barney thinks CSCO is the most exposed to the overal U.S. enterprise market and has nearly two full months to go to complete its July quarter.

  Jeff Bailey   6/8/2004,  9:33:24 AM
Rite Aid (RAD) $4.86 ... delayed.... reports May same store sales increased 4.8%.

  Jeff Bailey   6/8/2004,  9:31:37 AM
Stem cell higher GERN $8.10, STEM $1.59 and ASTM $0.94 higher in pre-market after Washington Post reports that a majority of the Senate have sent a letter to President Bush asking him to loosen the restrictions on human embryonic stem cell research that he imposed nearly 3 years ago.

  Jeff Bailey   6/8/2004,  9:27:32 AM
Shanda Interactive (SNDA) $15.08 .... jumping to $16.18 in pre-market trade after company said it has signed a deal with Intel (INTC) to develop digital entertainment software for computers, TVs and cellphones. Terms of the deal were not disclosed, but both company's will set up a testing center to develop software partly focused at the estimated $308 million Chinese online gaming market.

  Jim Brown   6/8/2004,  9:26:11 AM
Remarks by Chairman Alan Greenspan
Central Bank panel discussion: economic developments Link

  Jonathan Levinson   6/8/2004,  9:21:43 AM



  Jim Brown   6/8/2004,  9:20:41 AM
Due to President Reagan's services on Friday the schedule for the rest of the week has changed.

PPI will now be Thursday instead of Friday. Michigan Confidence will move to Monday instead of Friday. Senate hearings on Iraq have been moved to next week. Greenspan's confirmation testimony has been moved to the 15th from the 10th. All exchanges will be closed on Friday.

  Linda Piazza   6/8/2004,  8:54:19 AM
Yesterday the OEX zoomed higher, cutting through multiple possible resistance zones. It closed above a best-fit trendline off the February high as well as above the 100-dma, printing a tall white candle on the daily chart. It turned indecisive oscillators higher again. It moved a little closer to creating a new P&F buy signal on a print at 565.

However, before the OEX gets anywhere near 565 or even 560, it's got to get through 557, with that level representing the 200-week moving average as well as historical S/R. Other indices such as the SPX, DJX, and COMPX have already moved above the 200-week moving averages or stayed above them, so perhaps we should expect the OEX to do so, too.

Perhaps that won't occur until there's a pullback or a hesitation at current levels while some of the short-term overbought pressure is relieved. This is especially true of this morning, with Greenspan on the schedule today, due to speak at the International Money Conference at 9:15 EST.

The OEX has created a breakout signal on a Keltner channel basis on both the five- and fifteen-minute charts. Both can and do produce valid breakout signals, so I usually suggest that bullish players continue to raise stops after such a breakout, letting the OEX take them out of bullish plays if a pullback violates an important level. However, the longer such a Keltner channel breakout carries on, the more likely it is that the OEX will be slung at least to mid-channel support, if not all the way down to lower-channel support. On the OEX five-minute chart, that mid-channel support is at 551.62 and lower-channel support is at 549.36. Both are dynamic and still rising. Sometimes what happens is that the OEX consolidates while those lines move up to important historical support levels, at which point the OEX dips down to test that mid-channel level or just stays level. At that point, the dip isn't much of a dip. It may not be this time, either, with 552.80 support perhaps being strong, but that remains to be seen. I'd ordinarily be suggesting that pullbacks to and bounces from 552.80-553.50 would be good buying opportunities, but I'd sure like to see some of those bearish divergences we've been mentioning on some intraday charts disappear before I made any such recommendations.

As is often true after a big-range day, I'm on the watch for a possible tight-range day today as the OEX and other indices consolidate gains. The TRIN was a good guide to watch yesterday and I suggest that readers remain watchful of TRIN levels and trends. In addition, watch Jonathan's posts about Fed infusions of cash into the markets as that's been a fairly good barometer over the last few trading days. The crude oil futures bounced from their 50-dma yesterday, rising up to test the $39.00/barrel level again. Bullish traders should be aware of possible damage that might be done on a crude oil move above $40.00 again, although we should perhaps expect $40.00 to be retested from the underside. If this were an equity, we'd expect a retest of a broken support level. I'm also going to be particularly watchful of the SOX this morning after last night's TXN update. TXN is trading down in pre-market, with TXN having a 5.41% weighting in the SOX, according to the phlx.com site: Link The SOX managed a close just above its 200-dma yesterday, but not quite above the late May high or the 100-dma, and I'm not sure how much impact the TXN news will have. I'll also watch the BIX, managing a close above 350 and now facing resistance near 351.

So, my best guess, a guess only, is that we'll see either a tight-range day or perhaps a retreat to test broken resistance and establish it as support, at least ahead of and during the early part of Greenspan's testimony. I think the rest depends on what he says, with a tight-range day or perhaps a climb if that support holds and if Greenspan doesn't say anything damaging. That's a lot of "if" statements, though. I think the SOX has to hold onto most of its gains and maybe break through resistance of its own, crude has to pull back from its test of $39.00 or at least not advance past $40.00, and various other factors have to pull together in order to see gains.

  Jonathan Levinson   6/8/2004,  8:12:18 AM
There are no major economic reports scheduled for today.

  Linda Piazza   6/8/2004,  7:17:16 AM
Good morning. The Nikkei opened above 11,500, climbed slightly, dipped back down to just above the flat-line level and then sprang up to close near the opening level. The day's pattern created a doji at the top of its recent climb, so tomorrow market watchers will be warily looking out for a bearish candle that gaps down from that doji. Volume decreased from Monday's volume as the Nikkei closed up by 82.01 points or 0.72%, at 11,521.93. On Monday, the Nikkei created a double-top breakout buy signal. Over the last week, new buy or sell signals come every couple of days as the Nikkei zooms one direction or another. The upside target this time is 12,300 as of yesterday, with a bearish resistance line interfering at 11,700.

Early gainers included tech stocks Tokyo Electron, Fujitsu, and Advantest, as well as troubled cosmetics company Kanebo. Banks also gained in early trading, with UFJ adding to recent gains, closing higher by 1.4%, but with Sumitomo Trust & Banking being the leader in banking issues, up 3.9%. Nippon Oil was another early gainer, rising after speculation that it and PetroChina would collaborate, with Nippon Oil processing crude oil in Japan for PetroChina. Nippon Oil closed higher by 4.6%. Domestic-demand stocks climbed, with retailers gaining. Most auto makers fell, however.

Other Asian bourses mostly gained, but a few bourses traded lower. The Taiwan Weighted gained 0.86%, with Taiwan Semiconductor, United Microelectronics, and China Steel rising. South Korea's Kospi traded flat, down 0.02%. Although auto stocks were down in Japan, Hyundai Motor climbed. Samsung Electronics also saw moderate gains, but Daewoo Heavy Industries and Hana Bank declined. Singapore's Straits Times gained 0.12%, perhaps benefiting from moderate gains by Singapore Airlines and Chartered Semiconductor, with Chartered Semi having raised its outlook for the current quarter. Hong Kong's Hang Seng gained 0.14%, with PetroChina declining. China's Shanghai Composite lost 1.54%.

Trading is mixed on European bourses, with the three we typically watch trading near flat-line levels. Trading volumes apparently are light ahead of Greenspan's speech today. In Germany, the Federal Labor Agency announced that May's jobless number increased by a seasonally adjusted 9,000 and the jobless rate remained steady at 10.5%. Economists had expected a loss of 15,000 jobs, so the number was actually better than expected. The agency also noted that May saw vacancies rise by 3,000, an encouraging sign.

Stock-specific news saw SAP and rival Business Objects both benefiting moderately from news that Microsoft had been interested in buying SAP. Large-cap pharmaceuticals have apparently been subject to profit-taking, as were many of ours yesterday. Nokia has apparently been losing cellular-phone market share to rivals Samsung and Motorola, according to an announcement by Gartner Inc., with that announcement released after the close of Asian markets. Deutsche Bank downgraded Alstom, sending the French manufacturer of everything from turbines to cruise ships lower. The French prime minister spoke out, saying that he would not oppose a joining of Alstom and Siemen's.

As of this writing, the FTSE 100 has gained 17.20 points or 0.38%, to trade at 4508.80. The CAC 40 has gained 5.75 points or 0.15%, to trade at 3727.98. The DAX has gained 3.44 points or 0.09%, to trade at 4021.25.

  OI Technical Staff   6/7/2004,  12:49:35 AM
The Market Monitor has been archived. You may view it and any previous days here: Link

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

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


Market Monitor Archives