Option Investor
Printer friendly version
  Jeff Bailey   6/14/200,  4:07:21 PM
Not sure Linda (per 16:03:36) .... Might be a nice one if the OEX trades 545 tomorrow, gets the "max pain" for June, see VXO.X pop higher still, then collapse as the put sellers show up and start selling the he@@ out of puts below the WEEKLY S2s.

  Linda Piazza   6/14/200,  4:03:36 PM
Is that a possible reverse H&S on the OEX five-minute chart? If so, we should have another dip to 549.20-549.30 to form a right shoulder. A dip much below 549 would negate the potential formation. We'll see what happens tomorrow morning.

  Jeff Bailey   6/14/200,  4:00:49 PM
Inflation check.... CRB Index ($CRB) 267.75 -0.8% Link back at 270. .... Pacholder High Yield (PHF) $8.57 +0.46% Link just sitting here.

Gold below $400.00.....

Oil $37.85 -2.06% ....

  Linda Piazza   6/14/200,  3:59:49 PM
The GSO, the GSTI Software Index, has dropped below its 200-sma today, with that average at 150.10, but it hasn't yet tested the 200-ema, still below at 146.74. As I type, the GSO is at 149.50.

  Linda Piazza   6/14/200,  3:51:55 PM
The OEX continues to push past Keltner resistance, perhaps headed up now to test mid-channel resistance at 550.84.

  Linda Piazza   6/14/200,  3:43:39 PM
I mentioned last week that traders might watch for the possibility that the BIX could find support near its 100-dma and then bounce up to form a possible right shoulder to a potential H&S formation. Today has seen it drop into that named support zone, from the 100-dma down to about 544 or maybe as low as 543.25. Although daily oscillators do not show any propensity to turn up as yet, any upturn should be watched closely for signs of a rollover from 347.30-349 or below.

  Linda Piazza   6/14/200,  3:38:16 PM
The OEX is at the Keltner resistance line that has been stopping it all afternoon. Five-minute MACD has made a bullish cross, but from below signal. It's made bullish crosses all day, continuing to turn up along a line of higher lows while price made lower lows, all to no avail as of yet. Will this time be different?

  James Brown   6/14/200,  3:35:34 PM
Homebuilder HOV is in a similar pattern with today's 3% drop to $33.54. Traders might consider targeting the $30.00 region.

BZH is down 2.31% to $94.12 but shares are down from last Monday's high at $105. This builder looks headed toward support at $90.

  James Brown   6/14/200,  3:34:23 PM
Homebuilder Ryland Group (RYL) is really getting hit today with a 3.65% loss. Shares are breaking down through support at its 20 & 40-dma's as well as the $75.00 mark. Its MACD has produced a new sell signal and its P&F chart is now in a sell signal with a $67.00 price target.

  Linda Piazza   6/14/200,  3:30:04 PM
Mid-channel Keltner resistance on the five-minute OEX chart has now descended to 550.94.

  Linda Piazza   6/14/200,  3:27:59 PM
The OEX is making its way through Keltner resistance.

  Jeff Bailey   6/14/200,  3:26:08 PM
03:00 Internals at this Link

  Linda Piazza   6/14/200,  3:22:24 PM
The SOX is now below the 6/03 low and the 30-dma, but is trying to bounce back to retest those levels.

  Linda Piazza   6/14/200,  3:14:30 PM
So far, there are no worries about the OEX levels we should watch in case of bounces, because the bearish TRIN has been telling the whole tale today.

  Linda Piazza   6/14/200,  3:06:03 PM
I mentioned last week that the OEX was finding support on the 15-minute 100/130-pma's, and that it hadn't sustained levels below those averages since late May. This morning it gapped below them, so we should probably watch those averages for a possible rollover if the OEX should attempt a bounce today or tomorrow. They're currently at 551.85 and 551.58, respectively.

  Jeff Bailey   6/14/200,  2:59:16 PM
S&P 500 (SPX.X) option chain, sorted by most active at this Link

Certainly looks like option market makers are going after that 1,125 strike as discussed in Thursday's 01:00 PM Update. Link

  Jim Brown   6/14/200,  2:55:07 PM
TEVA announces 2:1 split

  Jeff Bailey   6/14/200,  2:49:24 PM
QQQ and OEX at $36.16 and 548.84 both nearing their respective June "Max Pain" levels.

With SOX.X now well below its 475.00, and VIX.X 16.19 +7.65%, only the DIA $103.41 -0.8% still much above its June $102.00 "max pain".

  Linda Piazza   6/14/200,  2:46:33 PM
So far today, the OEX has barely been able to lift its head above bottom-channel Keltner support, with that bottom support being dynamic and trending down all day. The OEX keeps issuing breakout signals to the downside according to the five-minute Keltner charts. An OEX trader who had followed the OEX lower with stops would probably have been in the trade all day. Now I'm again going to reiterate my caution from earlier today: have a plan in mind for how you'll handle the test of 547-547.50, if the OEX should descending that far.

  Jeff Bailey   6/14/200,  2:46:10 PM
Look's like Jim's wife, has gotten her Father's Day shopping done!

  Jeff Bailey   6/14/200,  2:36:43 PM
I'm currently working with our HTML department to try and fix the intra-day updates on the web page and chart/table links. I think we're making progress and things should be fixed by the close.

  Jeff Bailey   6/14/200,  2:34:49 PM
IPIX Corp. (IPIX) $13.17 +7.43% .... had a trader question regarding IPIX's action again today. My only note is that today's high was once again $14.34, which to the penny was Wednesday's high.

The only way I can currently come up with a $14.34 resistance is to anchor the base of retracement at the 03/22/04 close of $1.94, and the other end at the 04/12/04 close of $22.00. This would have the 61.8% retracement at $14.337, or $14.34, the 50% lower at $11.97, which IPIX hasn't closed below since moving above on 06/09/04.

  Linda Piazza   6/14/200,  2:32:55 PM
No confirmation of the double-bottom on the OEX five-minute chart. Instead the OEX rolls down and creates a lower low.

  Linda Piazza   6/14/200,  2:29:09 PM
I agree with some of the observations being made on the Futures side of the Monitor: low summertime volume and opex week render many trading signals untrustworthy, especially with indices establishing a possible congestion zone. In addition, everyone from CNBC commentators to foreign market analysts are commenting on the upcoming Fed meeting, attributing low volume across the globe to hesitation ahead of that meeting.

  James Brown   6/14/200,  2:25:48 PM
The GSO software index is down 1.69% and just edging through support at the 150 level and its simple 200-dma.

  James Brown   6/14/200,  2:17:14 PM
Copper futures continue to sink with the metal down another 1.74% on top of last week's declines. Phelps Dodge (PD) is pacing the decline with a 1.77% drop of its own but shares of the mining stock are still above support at $65.

  Linda Piazza   6/14/200,  2:15:32 PM
Keltner resistance is beginning to thin above the current OEX position. A move above 550.41 will confirm the double-bottom formation on the five-minute chart, suggesting a push up to test mid-channel Keltner resistance on the five-minute chart, with that resistance currently at 551.49.

  Jane Fox   6/14/200,  2:15:31 PM
Too funny James!

  Jonathan Levinson   6/14/200,  2:14:58 PM
LOL James!

  James Brown   6/14/200,  2:14:32 PM
Hmm... I wondered what she was going to get you for Father's day!

  Jim Brown   6/14/200,  2:10:43 PM
James, strange that you should have the Barbie conversation today. My wife just bought this jacket yesterday. Link

  Linda Piazza   6/14/200,  2:09:58 PM
I used to sew those Barbie clothes for my little sister, and you can betcha that the world is not ready for me in Barbie clothes. I imagine that they're aimed at a somewhat younger (by many decades) market, but somehow I just can't imagine my serious-minded, women's-issues-aware, big-law-firm-attorney oldest daughter in them, either.

  Jonathan Levinson   6/14/200,  2:07:52 PM
Does anyone remember that old Saturday Night Live advertisement for their "Gangsta Barbie"?

  Jonathan Levinson   6/14/200,  2:07:08 PM
A likely story, Jane :)

  Jane Fox   6/14/200,  2:06:25 PM
James - I most definitely have heard of Barbie but buying Barbie clothes or perfume will just not happen.

  James Brown   6/14/200,  2:03:59 PM
hey... Barbie has huge, global brand recognition. I'm surprised they haven't done it earlier, although I would expect the line to do better outside the U.S.

  Linda Piazza   6/14/200,  2:02:10 PM
James, I'm still laughing at your 13:39 post. It's not your post, just the idea.

  Linda Piazza   6/14/200,  2:00:30 PM
CSFB holds a Retail/Apparel/Food Conference today. I am not familiar with a CSFB index for this group, and didn't find one when I went searching, but I did take a look at the RLX, the S&P Retail Index. It's not benefiting from the information coming out of that conference, apparently, with the index having declined about 1.30% as I type. It's trying to bounce from support from 403.50-404.50 on the daily chart, however. Daily oscillators try to tilt down but aren't yet full-out bearish: no bearish cross yet on the flattening MACD, RSI turning down but still above 50, and 21(3)3 stochs displaying a bearish kiss but not yet rolling down below signal.

  James Brown   6/14/200,  1:50:28 PM
This news about Starz Encore Group offering a subscription service for downloading movies off the Internet is hitting the competition. Netflix (NFLX) is down 7% to $29 and nearing its 200-dma.

  James Brown   6/14/200,  1:39:22 PM
Toy-maker Mattel (MAT) is trying to capitalize on its Barbie line of toys by introducing a Barbie line of clothes, accessories and perfume for adult women. The new products debuted in Japan earlier this year and could be in U.S. stores before Christmas. (-CNN)

MAT is currently in a P&F sell signal with an $11 price target but the stock is up off its April lows.

  Linda Piazza   6/14/200,  1:39:11 PM
Still no new low on the OEX, although I think it came close enough that we can label that an equal low, don't you? MACD was rising while that equal low was being made, at least on the five-minute chart, again suggesting the possibility of a bounce attempt, but Keltner resistance firms up near 549.60-549.70, so the OEX will have to get through that before it can bounce far.

  Linda Piazza   6/14/200,  1:30:13 PM
Unlike the indices Keene mentions in his 13:26 Futures post, the OEX has not yet made a new low of the day, with the current low being at 549.12. Five-minute oscillators suggest that it could just be trailing those others by a bit, but we'll have to see.

  James Brown   6/14/200,  1:29:45 PM
Former president George H.W. Bush celebrated his 80th birthday by making his fifth skydiving jump yesterday. Bush would like to be an example for the older crowd. "Just because you're 80 doesn't mean you're out of it. You don't have to jump out of airplanes. Just get out and do something."

Bush's last jump was on his 75th birthday.

  Linda Piazza   6/14/200,  1:25:25 PM
Keep a watch on the SOX. It's approaching that 463.20 swing low from 6/03.

  James Brown   6/14/200,  1:20:28 PM
Standard & Poor's is suggesting investors reduce their exposure to equities and increase their cash position.

From the S&P press release:

NEW YORK, June 14 /PRNewswire/ -- The Investment Policy Committee of Standard & Poor's, the leading provider of independent investment research, ratings and indices, today recommended that investors decrease the equity portion of their portfolios and increase their cash allocations.

"Standard & Poor's recommends that investors take advantage of recent price strength by reducing their exposure to domestic and foreign equities and increasing their exposure to cash," says Sam Stovall, chief investment strategist, Standard & Poor's. "We believe that even though equities are projected to outperform bonds and cash in the coming months, a rising interest rate environment has also increased the risks associated with owning equities. As a result, we decided to adjust the overall allocation to reflect a more balanced approach," concludes Stovall.

  Linda Piazza   6/14/200,  1:18:34 PM
The OEX drifts back to see if that Keltner support from 549.66 to 549.81 is going to hold.

  James Brown   6/14/200,  1:16:57 PM
XM Satellite Radio (XMSR) is up 3.64% to $24.46 after announcing that they have topped 2 million subscribers for their service. The company predicts they will have 20 million subscribers by 2010. The stock is down off its highs of the session near $25.25.

  James Brown   6/14/200,  1:12:18 PM
CDWC announced that its May sales jumped 29% over last year to $21.7 million for the month. Sales of notebooks, desktops, servers, printers and data storage all jumped more than 20%. Unfortunately, this news wasn't good enough for Raymond James who downgraded the stock from "strong buy" to "out perform". RJ believes CDWC may struggle against tougher year over year comparison in the next two quarters. Shares of CDWC are down 6.8% to $64 but they are bouncing (somewhat) from its simple 200-dma.

  Jeff Bailey   6/14/200,  1:08:51 PM
01:00 Internals at this Link

  Linda Piazza   6/14/200,  1:05:41 PM
The OEX is trying to move above the last bit of that grouped Keltner resistance near 550. The upper candle shadows on the five-minute candles suggest that it's having difficulty. If it's successful, however, the 550 area becomes support rather than resistance. Light Keltner resistance lies at 550.71, with stronger resistance at 551.52 and mid-channel resistance at 552.00.

  Jeff Bailey   6/14/200,  1:04:40 PM
01:00 PM Market Watch at this Link

  James Brown   6/14/200,  1:01:01 PM
Dow-component Wal-Mart (WMT) affirms its 4-to-6% sales forecast for June but suggested sales may come in at the low end of this range.

Wal-Mart had said last week that the cycle of people waiting to receive their first-of-the-month paychecks to make purchases still appeared to be in place, a sign that many families continue to live paycheck to paycheck despite a recovering U.S. economy. (-Reuters)

  James Brown   6/14/200,  12:59:12 PM
Atrix Labs (ATRX) is up 13.6% to $31.84 after QLTI has announced a $855 million cash and stock deal to acquire the company.

  James Brown   6/14/200,  12:55:34 PM
Veritas Software Corp (VRTSE) announced that it has restated its financial results for 2001, 2002 and 2003. The filing brings Veritas back into compliance with the SEC and the firm expects its symbol to change from VRTSE to VRTS on the NASDAQ soon.

  Linda Piazza   6/14/200,  12:55:19 PM
Here's the OEX five-minute chart I posted earlier today, along with the original annotation: Link Note the head-fake move below that wedge?

I'm still hesitant to consider this anything other than a technical bounce, however, that may bring the OEX up to test gap resistance and see if it holds. If it doesn't, the OEX could rattle around within that 551-557 (now stretched to the downside to 549) consolidation pattern that I thought it might be building. So far, TRIN suggests that the gap resistance or lower resistance could hold, but that could change.

  James Brown   6/14/200,  12:50:27 PM
Net2Phone (NTOP) is up 6.19% to $4.63 after being upped from "hold" to "buy" from Needham. NTOP has recently broken out above technical resistance at its simple 50-dma.

  Linda Piazza   6/14/200,  12:45:34 PM
Now the OEX threatens to break through the upside of that bullish falling wedge I've detailed on some charts today, with that first downside break now looking like a fake. This one could be, too, but may indeed be the countertrend or technical bounce we've been expecting. It could be more, but so far, TRIN levels and other signs aren't saying that it is.

  Linda Piazza   6/14/200,  12:44:02 PM
The OEX is now approaching that gathering Keltner resistance, now at 549.88-550.03.

  Linda Piazza   6/14/200,  12:26:09 PM
Perhaps Jane has already mentioned the trend of the TRIN on the Futures side of the Monitor, but that trend has been generally higher again after the first hour of trading. That doesn't yet support the idea of a real bounce getting underway, so I would still consider any bounce to likely be a countertrend bounce. That trend of the TRIN does still support the bearish case.

  Linda Piazza   6/14/200,  12:16:13 PM
The OEX is breaking to the downside out of that possible bullish falling wedge, as the on-the-verge-of-a-bearish-cross MACD had hinted it might do. MACD has now completed that bearish cross. The OEX sure tries to climb right back into that wedge, however, so bears still need to exercise care. The Keltner breakout continues on the five-minute chart, with resistance firming up from 550.17-550.32. Bearish traders should continue following the OEX lower with their stops and should make a plan for how they'll deal with the 547 support level if it should be reached, as I advised earlier today. Some might consider setting a profit target just above that level; others might lower stops aggressively as it's approached. Still others might widen the stop if they want to stay in the play and not be taken out by a technical bounce, although that may be a risky tactic. Some might take partial profits. All that depends on individual investment style, the percentage of your account taken up in the play, and your temperament, too.

  James Brown   6/14/200,  12:08:09 PM
Merrill Lynch has cut ARE, CLP, CPT, DRE, NXL, and SKT, to sell. All of them are REIT's.

  Linda Piazza   6/14/200,  12:07:44 PM
I'm still following that OEX wedge-like formation displayed in the chart linked to my 11:25 post. The OEX is currently challenging bottom support on that wedge as I type. The OEX has not quite made it through 2/3 of that wedge, a typical point at which it would break to the upside if it were going to do so, but probably would reach that 2/3 point sometime within the next hour. MACD had been rising, which could be interpreted as building bullish divergence, but now it's threatening to roll over into a bearish cross, and there's nothing bullish about that. I had considered any bounce, if it should occur, a countertrend bounce, but so far, there's not been any, countertrend or not.

  James Brown   6/14/200,  12:01:04 PM
Another big loser today is Drugstore.com (DSCM). The stock is down more than 32% to $3.31 per share after announcing that its CEO has quit and the company will post a larger loss than expected.

The announcement came on Friday. CEO Kal Raman, who become CEO in April 2001, left to "pursue other opportunities".

DSCM expects its Q2 loss to fall between $4.5 million to $5.2 million on revenues of $85-89 million. (-Reuters)

  James Brown   6/14/200,  11:55:03 AM
99c Only Stores (NDN) is down 28.9% to $14.65 after issuing an earnings warning on Friday. The company is lowering its Q2 guidance from 19-20 cents per share to 4-7 cents per share.

According to their press release:
President Eric Schiffer said, "EPS for the second quarter of 2004 is projected to be impacted $0.03 by lower than planned comp sales and gross margin impact from the growth in grocery sales and escalating dairy product pricing, $0.05 to $0.08 from an additional shrink and markdown provision, $0.02 from higher litigation and workers comp expenses, $0.01 from increased fuel and transportation costs and a $0.01 valuation adjustment on marketable securities.

"The company is interviewing and plans to quickly engage an outside consulting firm to assist in evaluating inventory controls and procedures at both the store level and the Company's various warehouse locations.

Brokers have downgraded the stock with Merrill Lynch cutting NDN from "neutral" to "sell" while Lehman Brothers reiterates their "under weight" but lowers their price target to $11.00.

  Linda Piazza   6/14/200,  11:49:14 AM
The SOX has dropped down now to test its 30-dma, dropping so far within a point of that moving average and within a couple of points of the 463.20 swing low on 6/03. I would imagine that 463-463.20 would provide at least a reflexive or technical bounce if the 30-dma doesn't do that, as that's the confirmation level of a double-top formation on the daily chart. Some dip-buyers might decide to step in at the previously proven support. Whether the SOX can then climb back above the 50-dma is another matter, however.

  James Brown   6/14/200,  11:48:21 AM
UBS has raised their outlook on MGM Mirage (MGG) from neutral to a buy. Shares of MGG are up off their lows of the session but remain down 1.36% at $46.95.

  James Brown   6/14/200,  11:37:54 AM
FYI... Supreme Court Decides Pledge Case

WASHINGTON (Reuters) - The U.S. Supreme Court ruled on Monday that California atheist Michael Newdow lacked the right to bring a constitutional challenge to the words "under God" in the Pledge of Allegiance, avoiding a decision on the key church-state issue.

By an 8-0 vote, the justices overturned a controversial decision by a U.S. appeals court in California that reciting the phrase amounted to a violation of church-state separation.

More: Link

  Linda Piazza   6/14/200,  11:34:23 AM
The BIX is sitting right on its 100-dma this morning, with the BIX at 345.57 as I type, and the 100-dma at 345.32.

  James Brown   6/14/200,  11:26:50 AM
OI call Golden West Financial (GDW) is falling faster than its peers in the banking sector. GDW is down 2.44% versus the BIX's 1.26% drop. Today's decline seems rather sharp and I don't see any specific news to account for it. GDW should have some support near $105 and its 50-dma but its MACD looks bearish now. We are currently untriggered and waiting on the sidelines.

  Linda Piazza   6/14/200,  11:25:55 AM
Here's the wedge-like formation I mentioned on the OEX five-minute chart: Link If we should see an upside break, OEX traders should be watchful of the possibility the OEX could roll over again between 552.80-553.50. If that resistance zone should be tested, we'd need to see how internals looked as it was tested to assess how likely a rollover might be. Although the OEX slipped below 551, I still consider it in a consolidation or congestion zone with trading likely to be choppy within that zone.

  Jeff Bailey   6/14/200,  11:22:22 AM
11:15 Market Watch at this Link

  James Brown   6/14/200,  11:21:02 AM
OI call Boeing Co (BA) is holding up very well and up off its lows for the day. Shares are unchanged at $48.75.

  James Brown   6/14/200,  11:19:02 AM
On the tech stock side, OI put play SYMC is down 2.5% to $43.09 and confirming the recent breakdown under its simple 100-dma. This is a new ten-week low and shares look headed for the $40.00 mark. Its P&F chart displays a new double-bottom breakdown and a $39.00 price target.

  James Brown   6/14/200,  11:16:47 AM
OI put play KSS looks pretty good too with today's 1.7% decline through minor support at $47.00. Its MACD MACD indicator is extremely close to signaling its next sell signal while shorter-term technicals like the RSI and stochastics are already bearish.

  James Brown   6/14/200,  11:14:54 AM
Recently added OI put play CCMP is off to a good start with a 4.9% drop to $28.01 this morning.

  Jeff Bailey   6/14/200,  11:14:17 AM
11:00 Internals at this Link

  Linda Piazza   6/14/200,  11:06:46 AM
While I can't yet draw a bullish descending wedge on the OEX five-minute chart since I don't yet have enough touch-points, the shape is perhaps beginning to look a little wedge-like. Five-minute MACD flattens while price continues to slip lower. That may be bullish divergence beginning to show up, hinting at some kind of bounce beginning. Watch the 552.80-553.50 level for a possible rollover if a bounce does begin.

  Linda Piazza   6/14/200,  11:03:23 AM
The SOX now approaches its 30-dma at 464.09.

  Jeff Bailey   6/14/200,  11:03:19 AM
Bullish swing trade exit alert for Microsoft (MSFT) $26.82 +0.18% here. Session high has been $26.87, and pretty close to bullish target of $26.95. With QQQ showing some softness below WEEKLY S1, will move to sidelines on MSFT at its 200-day SMA.

  Linda Piazza   6/14/200,  10:53:17 AM
Uh-oh. The OEX threatens to fall out of the possible bear flag already. On the 15-minute chart, it's inching below a channel line that usually supports it, but those channels lines are dynamic. It can snake below the OEX again if the OEX just holds steady or even makes a moderate attempt to rise. On that 15-minute chart, a serious violation of the current channel line suggests a swoop all the way down to next 15-minute support at 547.60. That serious violation hasn't occurred yet. The last time the OEX hit bottom-channel Keltner support on the 15-minute chart was May 12.

  Jonathan Levinson   6/14/200,  10:50:20 AM
Following Jane's quote, from the New York Times at this Link :

For six consecutive years, ChevronTexaco has had good news for anyone worried that the world is running out of oil: the company has found more oil and natural gas than it has produced. Over that time, ChevronTexaco's proven oil and gas reserves have risen 14 percent, more than one billion barrels.

But near the bottom of ChevronTexaco's financial filings is a much less promising statistic. For each of those years, ChevronTexaco's wells have produced less oil and gas than the year before. Even as reserves have risen, the company's annual output has fallen by almost 15 percent, and the declines have continued recently despite a company promise to increase production in 2002.

ChevronTexaco is not the only big oil company whose production is falling despite rising reserves, though it has the largest gap. As consumers, economists and governments around the world wonder if oil supplies can keep pace with rising demand, production trends at the industry's publicly traded companies are not promising.

Collectively, they paint a picture of an industry that has depleted nearly all of the world's easily exploited reserves outside the Middle East and that is now struggling to sustain production, much less increase it. Fears about supply shortfalls and rising demand have already caused prices to climb about 20 percent this year, hovering around $40 a barrel. The four biggest companies own only about 4 percent of the world's reserves, which are mostly government-held, but they offer a unique glimpse of supply trends because they must disclose their reserves and production each year.

  Jane Fox   6/14/200,  10:47:45 AM
Dateline WSJ While crude-oil prices are calming down, natural-gas prices in the U.S. are poised to stay strong. And unlike with oil, there are no big natural-gas producers to step up and fix the problem.

The economic recovery and proliferation of natural-gas-fired power plants continue to rev up demand for the fuel. But energy companies aren't keeping up. In fact, they are struggling just to maintain supplies, which may make natural gas vulnerable to an unprecedented summertime price increase in coming months.

Natural gas -- used for industry, home heating and for the generation of electricity -- is expected to remain pricey for the next year. It has cost more than $5.50 a million British thermal units nearly all year, and last month, traders on the New York Mercantile Exchange bid up contracts for the next 12 months to an average price of $6.75 a million British thermal units, a record. Though both near- and long-term prices have retreated along with crude oil, they still remain high.

  Jonathan Levinson   6/14/200,  10:46:55 AM
Bilingual :)

  Linda Piazza   6/14/200,  10:46:49 AM
The SOX has tumbled out of the short-term ascending regression channel displayed in the chart linked to my 9:42 post, but it's still above the 30-dma at 464.68 and the early June swing low at 463.20. If the SOX continues to decline, as the 21(3)3 stochs suggest is possible, watch those levels for possible support. A drop below 463 would confirm the double-top formation on the SOX daily chart.

  Jim Brown   6/14/200,  10:46:22 AM
I try to be bilingual and not conform to any standard on the punctuation.

  Jonathan Levinson   6/14/200,  10:46:21 AM
That's a common one, Linda. Some of the best (and some of the worst) writers I've read have been from the US, but that fits with the fact that the US is easily the largest publishing market- there's more room (and more reach) to accomodate and broadcast loose editing.

  Linda Piazza   6/14/200,  10:43:22 AM
I'm gratified, too, Jonathan, to find that the author doesn't blame Americans for the deterioration in grammatical skills.

  Jonathan Levinson   6/14/200,  10:41:47 AM
Thanks, Linda. I'm both edified and flattered.

  Linda Piazza   6/14/200,  10:41:41 AM
This pullback feels really damaging, doesn't it? It may be, especially as the OEX is dropping below some of the support detailed on this chart, shown at various periods over the last couple of weeks: Link However, bulls could look at that chart and say that's a bull-flag pullback before another push higher, and there's nothing just yet on the chart to refute that possibility. A decline below 547 might begin to refute that possibility, but that hasn't happened yet. Be careful, whatever position you're in.

  Jim Brown   6/14/200,  10:37:33 AM
Russell Shuffle
Remember we have the Russell shuffle in two weeks and the additions/subtractions to the Russell indexes were announced on Friday. This could pressure the Russell 2000 all week and the Russell tends to lead the market. For more details here is the link to the Russell changes. Link

  Jeff Bailey   6/14/200,  10:36:19 AM
NASDAQ-100 Index (NDX.X) 1,465.44 -0.55% .... trades WEEKLY S1.

Only the INDU 10,354 -0.54% and DIA $103.75 -0.47% have yet to trade WEEKLY S1 (10,296 : $103.42), but I think they are next.

  Linda Piazza   6/14/200,  10:35:30 AM
We all know that Jonathan has impeccable grammar skills. I used to be known for mine, too, although they're deteriorating lately, I find. I'm reading a book that perhaps explains why Jonathan and I display differences in punctuation marks that come at the end of quoted material. I would place that punctuation within the quotation marks while Jonathan places them outside them as he did in his 10:28 post on the Futures side of the MM. The author of Eats, Shoots & Leaves explains that this is a difference between American and British/Canadian punctuation styles.

  Linda Piazza   6/14/200,  10:28:56 AM
Watch for a possible bear flag or other type of measured-distribution pattern to form on the OEX, with that pattern taking the OEX up to test the 50% retracement of the decline from Friday's late-afternoon high, at 552.79. Bears would hope that any such test will occur with the type of back-and-forth movement that's typical of a flag rather than an impulsive spike higher. Such a test might take as little as a few minutes or as long as several hours.

  Jeff Bailey   6/14/200,  10:26:37 AM
10:00 Internals at this Link

Thursday's Internals at this Link

  Jonathan Levinson   6/14/200,  10:20:42 AM
please explain the effects of this net 750 m addition: market going UP/DOWN/NEUTRAL ?? What is the minimum amount of repo for the market to move ?

Please see the first article I wrote at OIN on this topic at this Link . In brief, this is money provided temporarily by the Fed to its (now) 23 primary dealers with which to enter any market(s) they choose. Generally, it results in strength for bonds or stocks, but the money can wind up anywhere- awhile ago there was a fine levied against one of the dealers for investing it in Cuban securities, if memory serves. 750M is a small amount- we've seen recent adds as large as 9 or 10B. Overall, this is close to a neutral bias for the day.

  Jeff Bailey   6/14/200,  10:15:06 AM
Semiconductor Index (SOX.X) with new weekly pivot retracement at this Link

  Linda Piazza   6/14/200,  10:10:11 AM
The OEX may be getting ready for a countertrend bounce. When would that bounce not be considered countertrend any longer? In my opinion, when the OEX has sustained levels above a 50% retracement of the last five-minute high from Thursday afternoon and today's low, at 552.79, with some leeway given because of early-morning volatility. We're still inside amateur hour, here. Keltner channels show resistance being moderate at 551.80-551.90 and then again at 552.66 and 553.06, but stronger at mid-channel at 553.43.

  Linda Piazza   6/14/200,  10:01:49 AM
Careful, OEX bears. TRIN and advdec levels still support the bearish case, but the OEX has now violated lower Keltner support on the five-minute channels, giving a breakout signal. While this can be a valid signal, it also shifts risks to the bears, and it's coming as known historical support was tested. Follow the OEX lower with your stops, knowing that if that stop is violated but then the OEX then rolls down from higher resistance, you can get back in again. Mid-channel resistance on the five-minute chart is at 553.50, but bears might be attentive for the possibility of a rollover a bit lower, possibly closer to 553, too. Bulls, although the OEX has reached a possible bounce point, TRIN and advdec levels suggest that it would be awfully risky to consider a long play just now. Maybe lucrative, but too risky in my opinion. Maybe if we get a trend in the TRIN later, there might be some logic behind an attempt at a long play, but right now, it wouldn't be my idea of a good risk vs. reward play. This is especially true because in my opinion, the OEX is still within a consolidation zone and choppy action might prevail within that zone.

  Jonathan Levinson   6/14/200,  10:00:58 AM
There is a 3.5B 4-day repo expiring today. In addition to the activity from the "open mouth committee", the Fed's open market committee has just announced a 4.25B 2-day repo, which effects a net 750M addition for the day.

  Jeff Bailey   6/14/200,  9:56:25 AM
Dow Industrials (INDU) 10,361 ... with new weekly pivot retracement at this Link

I left many of the same "zones" on this chart as we saw last week. I'm still having some QCharts problems with net gain/loss and % gains loss.

  Linda Piazza   6/14/200,  9:52:07 AM
The OEX currently sits just above light daily Keltner support, at 550.39, but stronger support firms up from 543.85 to 546.48. Bearish traders should already have a plan in place for handling the approach to 547, if that should occur.

  Linda Piazza   6/14/200,  9:48:37 AM
If the OEX should continue dropping, numerous pitfalls to bearish plays exist in the form of possible historical support levels layered fairly closely. Strongest support may be at the 50-dma at 547.13, with that a known area of historical S/R. Interestingly (to me, at least), last week both daily and weekly Keltner channels were showing a possibility of a test of 563, but the daily ones showed at least a 50/50 chance that the OEX would first descend to 547 or perhaps a little lower before rising to test 563, if Keltner channel setups hadn't changed by then. I'd thought it possible that 551 might prove too strong a support level to let the OEX drop that far, but we're likely going to see this morning. I believe 547 may be possible, but risk of a bounce may be increasing, too.

  Linda Piazza   6/14/200,  9:42:49 AM
Here's where the SOX is with relationship to the short-term ascending regression channel and the longer-term descending one on its daily chart: Link The oscillators suggest more downside is possible, although MACD hasn't yet committed to a rollover, RSI is in neutral territory, and it's possible that the stochs could just trend. If the SOX drops out of the short-term ascending channel, watch the 30-dma in black for possible support.

  Jeff Bailey   6/14/200,  9:38:27 AM
S&P 500 Index (SPX.X) 1,130.75 -0.5% .... with new weekly pivot retracement at this Link

  Linda Piazza   6/14/200,  9:38:25 AM
During the first five minutes of trading, the OEX ranged from 552.41 to 551.57, moving nearer possible support at 551 and also near bottom-channel Keltner support at 551.37. It's currently trying to move above the midpoint of that first five-minute candle, but hasn't been able to do so yet.

  Jeff Bailey   6/14/200,  9:35:15 AM
QQQ $36.51 -0.89% ... bar chart with new weekly pivot retracement at this Link

  Jeff Bailey   6/14/200,  9:29:56 AM
IPIX Corp. (IPIX) $12.24 Link ... active in pre-market at $14.02 after company said late Thursday that it had been asked to meet with Olympics organizers directly following the G8 summit regarding the Summer Games in Athens, Greece. IPIX also said it has launched shipments of its security cameras to paying customers with 400 orders placed since the April 2004 launch.

  Jeff Bailey   6/14/200,  9:24:44 AM
Pivot Matrix for this week at this Link

  Jonathan Levinson   6/14/200,  8:41:45 AM
The TNX is up to 4.83%, a 3.1 bp gain this morning.

  Linda Piazza   6/14/200,  8:41:44 AM
Late Thursday, the OEX finally broke above the 554.40 level that had proved to be resistance since falling through that level Wednesday morning. It had oscillated along mid-channel Keltner support on the five-minute chart and just above that support on the fifteen-minute chart all day Thursday. On the 15-minute chart, that breakout suggested a test of historical resistance at 557. Can we trust a breakout in the last few minutes of trading pre-holiday? Futures suggest that perhaps we shouldn't. I don't always trust those last-minute breakouts on low volume just before a long weekend, as I noted Thursday afternoon. Truthfully, as long as the OEX is roughly between 551 and 557, I still consider that it might just be building a consolidation zone at that level, with movements likely to be choppy within that zone.

We'll see this morning. If the OEX should open near support and try to rise this morning, an event that seems the less likely but not impossible outcome this morning, our first test may come near daily Keltner resistance at 556.47, with that line being dynamic and perhaps ready to move up toward 557 before it's tested. A breakout above 557 suggests a try at 563 on a Keltner basis. A failure to break out above 557 could send the OEX back toward support, and the SOX may be the index to watch to see if a breakout can occur or if a breakdown is more likely. This weekend, two firms--Deutsche Bank and UBS--expressed concerns about demand in the second half of the year and possible building inventories. Both suggested reducing weightings of semi-related stocks, and UBS reduced its rating on the semiconductor industry to a neutral rating from its previous overweight rating. The SOX eked out a close above the 50-dma, but it was below important resistance, too. If the SOX rolls down, I'd keep a watch on the 30-dma, with that MA providing a bounce for the SOX earlier in June. That average is currently at 464.09, near the round-number support at 460. A fall through that 30-dma might suggest another trip down through the descending regression channel that has been in place over this year.

If the SOX and OEX appear to be rounding over, watch the OEX 552 level for possible support, that being the lower boundary of the support suggested by the 100/130-pma's on the 15-minute chart, with the OEX finding support at those averages lately. It's possible that the OEX will establish a consolidation zone from 551-557 before making a real breakout.

  Jonathan Levinson   6/14/200,  8:31:34 AM




  Jonathan Levinson   6/14/200,  8:31:03 AM
8:30am U.S. MAY RETAIL SALES UP 1.2%, EX-AUTOS UP 0.7%


  Jonathan Levinson   6/14/200,  8:16:26 AM
We await the 8:30 release of the Trade Balance for April, est. -45B, retail sales for May, est. +1%, and retail sales ex auto, est. +.4%.

  Linda Piazza   6/14/200,  7:05:59 AM
Good morning. Although our markets were closed for President Reagan's funeral on Friday, Asian and European markets were open. Asian markets were mixed, with the Nikkei initially climbing above 10,600, but then falling on a huge volume spike in the afternoon and ending at the flat-line level just above 10,500. In China, May consumer prices rose 4.4% from the year-ago period but fell 0.1% from April's number, with that month-to-month fall cheering market watchers. European bourses treaded water, with the FTSE 100 down 0.05%, the CAC 40 down 0.32%, and the DAX down 0.18%. Volume was characterized as being thin on European bourses. Chip stocks were weak with Deutsche Bank saying that the firm did not believe the digital slowdown had yet run its course. Deutsche Bank suggested reducing holdings in chip stocks. In stock-specific news, accounting firm Deloitte & Touche refused again to sign off on the accounts of Italian airline Alitalia, sending the airline's stock lower. Other news Friday included hotel group Accor's announcement that it would take a 28.9% position in Club Mediterranee, with analysts calling the move unexpected and expressing concern about the price paid.

That 10,500 level has been a price magnet for the Nikkei over the last week, with the Nikkei opening just below it Monday. The Nikkei then climbed above 11,600 again, but dropped back below 11,500 before the close, closing lower by 35.16 points or 0.31%, at 11,491.66, on light volume. It almost, but not quite, confirmed a double-top formation, needing to drop only about five more points to confirm that formation.

Merrill Lynch commented that Japanese financials might hike their positions in equities at the expense of bonds, sending some domestic-oriented stocks higher and bonds lower. However, UBS dampened enthusiasm for equities by agreeing with Deutsche Bank that it was time to reduce holdings in semi-related stocks, with UBS also reducing its rating on the semiconductor industry to a neutral rating from its previous overweight rating. Tokyo Electron and Kyocera Corp headed down in early trading and many tech stocks closed lower, too. Banking stocks declined. Some telecommunications stocks performed well early in trading, however. Stock-specific stories included the news that retailer Aeon has decided to continue selling Sharp products. Last week, it had announced that it would not do so after Sharp filed suit against a Japanese unit of Taiwan's Teco Electric and Machinery, with Teco being a supplier to Aeon. Also, a newspaper speculated that troubled automaker Mitsubishi Motors might trim its domestic sales target for this financial year, helping to send that stock lower by 4%.

Other Asian bourses turned lower, too, after many had opened higher, with tech stocks such as Samsung Electronics (South Korea), United Microelectronics (Taiwan), and Chartered Semiconductor (Singapore) all declining. A spokesperson for Samsung Electronics spoke out, saying its annual sales target for the year had been conservative and his personal estimate was higher, but the stock still closed lower by 1.8%. The Taiwan Weighted dropped 2.81% and South Korea's Kospi dropped 1.70%. Singapore's Straits Times fell 0.50% and Hong Kong's Hang Seng fell 2.58%. China's Shanghai Composite dropped 2.26%.

European bourses are dropping this morning, too, on volume that is reported as thin. In the U.K., banks are reported lower this morning. European elections this weekend increased the presence of fringe and "eurosceptic" representation, according to CNBC World, amid light voter turnout, especially in new euro-member nations. The elections will make it more difficult to pass some legislation, a commentator speculated. In stock-specific news, Nokia reworked its product portfolio, but the reworking did not impress at least one analyst and the stock was dropping in early trading. Swiss-Swedish engineering group ABB declined in early trading after revealing accounting fraud in one of its Italian groups, while Dutch company Royal Ahold, revealing its own accounting irregularities in a U.S. unit last year, gained in early trading after reporting earnings. U.K. biotech Xenova soared almost 9% earlier today after it reported results that were labeled encouraging in tests of a cocaine addiction vaccine.

As of this writing, the FTSE 100 has dropped 41.20 points or 0.92%, to 4442.80. The CAC 40 has dropped 50.26 points or 1.36%, to 3649.12. The DAX has dropped 57.28 points or 1.43%, to 3957.28.

  OI Technical Staff   6/13/200,  12:05:59 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