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  Jeff Bailey   7/2/2004,  6:57:15 PM
Pivot Matrix for Tuesday and next week at this Link

SPY = DAILY S1 and DAILY R2 would mark very similar retracement levels found in today's 01:00 PM EDT update.

Little BLUE square between OEX Daily S1 and Daily S2. Probably nothing, but marking that 06/01/04 "doji," where after that day, the OEX tested 543 as a meaningful support level to then trade higher above downward trend.

Note: Correlative WEEKLY S1 and MONTHLY S1 in OEX.

SOX.X = DAILY S2 marks recent relative low of 06/18 and 06/21. See Index Trader Wrap "Bulls defended where they had to...." from 06/22 as to progression for strength.

Note: SOX MONTHLY S2/WEEKLY S2 if DAILY S2 gives way on Tuesday.

 
 
  Jeff Bailey   7/2/2004,  4:36:35 PM
Aluminum Corp China (ACH) $53.95 +1.96% .... haven't forgotten.... could become a HUGE equity winner on the recent dollar weakness should help reflate China.

 
 
  Jeff Bailey   7/2/2004,  4:25:24 PM
Don't know about you but since I started following the dollar more closely with the SWC trade, I've been amazed/impressed how the dollar trades within in pivot matrix levels.

U.S. Dollar Index (dx00y) 88.01 -0.87% (30-minute delayed)

Jonathan's Futures Wrap (which I'm just reading this afternoon) was spectacular on the dollar and Treasuries. Get that pivot matrix going and 10-year Yield just about pegs the MONTHLY S2, while dollar sucked into the WEEKLY S2 like a champ.

 
 
  Jeff Bailey   7/2/2004,  4:17:41 PM
Current OPEN MM Profiles at this Link

 
 
  Jeff Bailey   7/2/2004,  4:07:53 PM
Ditto Jim's 16:03:22 as the QQQ ticks at $36.84 ....

 
 
  Linda Piazza   7/2/2004,  3:56:38 PM
I just got an email from an investment-related website, with the title of that email, "The Joy of Cash." Being in cash would have been a joy today, for sure, for those who were sweating bullets waiting for the market to finally move.

 
 
  James Brown   7/2/2004,  3:55:21 PM
Heads up for all the high-rollers out there. Berkshire Hathaway, Class A shares (BRK.A) are poised to breakout over resistance at $90,000 and make a run toward the $96,000 level.

The baby shares (Class B, BRK.B) are close to breaking out over the $3,000 level with the next major resistance at $3,200.

 
 
  Jonathan Levinson   7/2/2004,  3:53:50 PM
Well put, Linda. Happy 4th, all!

 
 
  Linda Piazza   7/2/2004,  3:53:11 PM
I join Jane in wishing everyone a happy long weekend. Part of having a happy long weekend is not worrying over positions. If you're in a position that's going to keep you worried all weekend long, perhaps your exposure is too great. Consider lightening up positions, protecting positions, or taking other such steps so that you can rest well this weekend and come back ready to trade next weekend.

 
 
  Jeff Bailey   7/2/2004,  3:51:46 PM
S&P 500 Index (SPX.X) .... loves this 1,125 level today. MACD certainly suggests 1,113 at this point. Godman Sachs' institutional customers probably nipping away on Ms. Cohen's recent analysis/forecast.

OEX.X 547.08 -0.34% .... didn't quite get the test of 545 and that "doji" at DAILY S1. Might be saving that for Monday?

 
 
  Linda Piazza   7/2/2004,  3:50:28 PM
Was it Keene or Jonathan or both who speculated earlier that markets might be held at their then-current levels into the close? Whoever it was, that person was correct. The Keltner channels were suggesting something similar except for that of the SOX, which has been suggesting an imminent breakout all afternoon without one ever occurring.

 
 
  James Brown   7/2/2004,  3:50:27 PM
The week is almost over. I want to wish everyone a happy Fourth of July holiday!

 
 
  Linda Piazza   7/2/2004,  3:43:29 PM
This market still has a holding-on-by-the-fingernails feel to it, although perhaps I'll feel differently after I study charts this weekend. The breakdown did not follow through this afternoon--or at least it hasn't so far--so markets can perhaps recover.

 
 
  Linda Piazza   7/2/2004,  3:36:03 PM
The OEX now comes up (finally) to retest that broken support from the symmetrical triangle. Mid-channel resistance is overhead from about 548.22-548.45.

 
 
  Linda Piazza   7/2/2004,  3:28:29 PM
A study of the OEX's daily chart shows the OEX looking as if it's actually broken down out of the recent trading range, but is hanging on by its fingernails to the 50-dma, with that average representing the edge of the cliff. If it falls over that cliff, however, it's got both the 200-sma and 200-ema waiting below to perhaps catch it.

 
 
  Jeff Bailey   7/2/2004,  3:21:10 PM
03:15 Market Watch at this Link

 
 
  James Brown   7/2/2004,  3:12:40 PM
Shorts continue to get hammered in KMRT, which is up another 3.18% to another high. Short interest measured more than 23% of the float last time data was available.

 
 
  Jeff Bailey   7/2/2004,  3:06:17 PM
Russell 2000 Index (RUT.X) ... chart at this Link with some market theory, and scenario for "second leg of the greatest bull market."

With the RUT.X so near an all-time, yes.... all-time high, there can be no question with a trade above 615 for a second leg confirmed.

For traders that follow moving averages, is there any question as to what the RUT.X is trying to tell us as it relates to Fed policy? Certainly not. With that aside, what's left? The economy!!!!!

You can turn a 10-year yield chart "upside down" and perhaps see the impact that YIELD rise had. Not just on the RUT.X, but the ECONOMY.

Nowwwwwww.... Treasuries begin to reflect Fed comments of "measured pace."

Who better than Alan Greenspan to head the Fed? Nobody... in my opinion.

 
 
  Linda Piazza   7/2/2004,  3:04:41 PM
I'm not being lazy today, make less frequent posts than I usually do, but instead I'm scanning all kinds of charts, trying to find the first clue to likely market action. It's not there, at least not that I can find. I'm afraid to post anything that might encourage someone to hang onto a play too long or enter one that ought not to be entered. In the bullish camp, the OEX did not start an immediate plunge after breaking to the downside out of the symmetrical triangle at the bottom of today's plunge. The advdec line has been sort of gently sloping higher, but that's almost a stretch to call it moving higher. Still, I'm trying for as unbiased a look as possible. On the bearish side, the OEX hasn't been able to climb above mid-channel resistance, much less move back toward 551 historical S/R and upper Keltner resistance. Also in the bearish camp, after steadying after that triangle breakdown, it hasn't zoomed up, with fake-out moves often resulting in a quick reversal. Unless a strong bounce begins soon, it's going to end another week below the 200-week sma, too. TRIN isn't suggesting anything bullish here. So, does that mean I'm neutral? No, uncertain.

 
 
  Keene Little   7/2/2004,  2:54:51 PM
Good analysis on the dollar Jeff. I'll add my two cents, based strictly on the EW pattern, especially when I compare it to some foreign currencies which look ready to reverse lower against the USD. The USD may drop a little further from here, though the current level could mark its low for this move down. But the longer-term picture says the probability is that the USD is going to get another rally leg higher, which will take it back above its last high of 92.29 in May. I'm looking for the USD to peak out around 93-95, likely taking a few months to get there, before it rolls over for the next big leg down to new multi-year lows.

 
 
  James Brown   7/2/2004,  2:49:58 PM
Any guesses on when the (bottle) rocket is going to run out of fuel in Travelzoo Inc (TZOO)? Shares are up about 100% in 8 sessions on big volume.

 
 
  James Brown   7/2/2004,  2:45:11 PM
Software stock MicroStrategy (MSTR) is down another 2.16% in its continuing trend of lower lows and lower highs. Traders might want to consider new shorts if it breaks the $40.00 mark.

 
 
  Jeff Bailey   7/2/2004,  2:45:07 PM
I'm going to chime in on Jonathan's question regarding dollar weakness.

In past, dollar weakness found an "oil trade" where hedgers were reportedly bidding oil as the hedge against weaker dollar. This was during a time of great geopolitical unrest in the Middle East, as well as a stubborn OPEC that had been cutting production.

Things have changed a bit, at least from the OPEC side of things. However, the geopolitical unrest in the Middle East will be around for sometime. At least I think it will.

So.... with the market now reflecting further Fed policy confidence, i.e. lower Treasury yield, then the weaker dollar should benefit broader equities, IF the oil/dollar trade no longer is in play. Which I don't think it is, with OPEC's recent comments.

Lower dollar should help with foreign trade, maintaining corporate profitability.

 
 
  James Brown   7/2/2004,  2:42:38 PM
CNBC reporting that the 11-state super-lotto is up to a record $290 million and that ticket sales are reaching 3600 a minute.

 
 
  James Brown   7/2/2004,  2:38:54 PM
Interesting... there's been no bounce in shares of Titan (TTN) after the stock cratered last week when its merger with Lockheed fell apart.

 
 
  Linda Piazza   7/2/2004,  2:36:06 PM
By the time the SOX does make a move, ALL the Keltner channel lines will have coursed down on top of it, so that any tick up will be a move through all of them at once. Actually, that's not possible, of course, but three Keltner channel lines or midlines sit right on top of it now, with three just below it or at the current SOX level. I don't think I've ever seen Keltner lines pressed together so tightly.

 
 
  Linda Piazza   7/2/2004,  2:29:25 PM
The OEX is rising up to retest that broken trendline, but like every other movement today, it's rising up excruciatingly slowly. Keltner resistance is coursing down to meet it at about the time it retests that neckline, which should be somewhere around 547.45.

 
 
  Jeff Bailey   7/2/2004,  2:23:31 PM
Current OPEN MM profiles at this Link

Getting close to bearish stop on trucker CNF ....

 
 
  Linda Piazza   7/2/2004,  2:16:08 PM
The OEX just broke through the downside support of the symmetrical triangle at the bottom of its plunge today. Let's see if it holds. The breakdown would be confirmed by a move to a new low of the day. The OEX looks as if it's going to come right back up and retest the broken support, however.

 
 
  Linda Piazza   7/2/2004,  2:04:48 PM
Here's how the FTSE 100, CAC 40, and DAX ended the day. The FTSE 100 was down 17.30 points or 0.39%, at 4,407.40; the CAC 40 was down 31.14 points or 0.84%, at 3,685.06. The DAX was down 36.25 points or 0.90%, to 3,998.77, closing below 4,000.

 
 
  Linda Piazza   7/2/2004,  1:56:18 PM
The OEX is moving up to challenge the top of its triangle on the five-minute chart. Well, the OEX is actually creeping up to test it.

 
 
  Linda Piazza   7/2/2004,  1:52:50 PM
The SOX remains caught between Keltner support and resistance at the bottom of today's price range.

 
 
  Linda Piazza   7/2/2004,  1:43:04 PM
Finally a pattern! The OEX has spent the day narrowing into a triangle on its five-minute chart: top now at about 548.25-548.50, depending on where the line is drawn, and bottom now at about 547.25-547, depending on how the line is drawn. Be wary of false breakouts this time of day, but now we have something to watch.

 
 
  James Brown   7/2/2004,  1:38:03 PM
Bears can keep an eye on JCI. The auto-related stock has been falling on big volume the last few days. If it breaks support at $50.00 it might be a decent short play.

 
 
  Jeff Bailey   7/2/2004,  1:34:55 PM
CBOE Internet Index (INX.X) 194.21 -0.24% ... challenges mid-session high. Came close to that horizontal support of 192 with session low of 192.35.

 
 
  Jeff Bailey   7/2/2004,  1:33:14 PM
I'd be pounding offer on Overstock.com (OSTK) $38.14 +0.26% in here.

 
 
  Linda Piazza   7/2/2004,  1:31:44 PM
By the way, if I never again have to type OEX 547 and 557, I'll be a happy camper. I'm getting tired of those numbers: aren't you?

 
 
  Linda Piazza   7/2/2004,  1:31:06 PM
So far, that next OEX Keltner resistance has held. We're entering the stop-runing time of day, however, so watch for a possible test of support or resistance. The OEX won't have far to go to encounter either one.

 
 
  Jeff Bailey   7/2/2004,  1:29:07 PM
Bearish day trade close out alert for the QQQ $36.85 here.

 
 
  Jeff Bailey   7/2/2004,  1:26:04 PM
01:22 Market Watch at this Link

 
 
  Linda Piazza   7/2/2004,  1:25:20 PM
The OEX tries to bounce. Nearest Keltner resistance is near 547.90.

 
 
  Linda Piazza   7/2/2004,  1:22:33 PM
After displaying bearish divergence at today's peak, the BIX did retreat, but not too far yet. It still has not retraced more than 50% of the flagpole climb, so the pullack could still be a bull flag.

 
 
  Jeff Bailey   7/2/2004,  1:20:20 PM
01:00 Internals at this Link

Leaving out new high/lows as now I have no agreement from any data source on this important breadth indicator. As example, some feeds show NASDAQ NL was 77 at 11:00 AM, but now 73. Can't have fewer new lows at this hour than earlier in the day.

 
 
  Linda Piazza   7/2/2004,  1:15:57 PM
The SOX is getting squeezed so hard between Keltner support and resistance at the bottom of its nested Keltner charts, that it looks as if it must break out any moment.

 
 
  James Brown   7/2/2004,  1:15:41 PM
Dow-component and NDX-component Intel Corp (INTC) is down another 2.25% to $26.41 after Deutsche Bank downgraded the stock from "buy" to "hold".

 
 
  Jeff Bailey   7/2/2004,  1:12:20 PM
TRIN ($TRIN) 2.62 .... I have set an upside alert on $TRIN today. If I were to get any type of spike there, as QQQ trades WEEKLY/MONTHLY correlation, then I begin to really look for a bounc in equities.

 
 
  James Brown   7/2/2004,  1:09:09 PM
One of today's biggest losers is also suffering from an earnings warning. WebMethods (WEBM) is down 32.6% to $5.62 after warning that earnings would fall to a 19-22 cent LOSS on the quarter versus estimates for a loss of just 2 cents.

Here's an excerpt from the company's press release:
" We are disappointed in our revenue performance this quarter, even though like other companies in the enterprise software industry we historically have found our fiscal first quarter to be challenging. We are especially disappointed given the sequential revenue growth and operating margin expansion we posted in our previous three quarters," said Phillip Merrick, chairman and CEO, webMethods, Inc. "We had an unusual number of seven figure opportunities in our pipeline that did not close, ... , lower closure rates of these large deals contributed significantly to our shortfall in the June 2004 quarter."

 
 
  Linda Piazza   7/2/2004,  1:06:57 PM
Many of you know I often watch the OEX with respect to its 72-ema. Here's how it's traded with respect to that average recently, with the OEX dropping below it today: Link

 
 
  James Brown   7/2/2004,  1:03:37 PM
Boeing (BA) continues to slip and has now broken through its 21-dma and the $49.00 mark. BA was on the watch list last night with the expectation for more weakness.

 
 
  Jeff Bailey   7/2/2004,  12:54:49 PM
Bank bulls .... need to be getting some candidates line up for BIX.X above 350 in my opinion.

 
 
  Jeff Bailey   7/2/2004,  12:48:11 PM
Dow Industrials (INDU) 10,282 -0.5% ... refuses to give up that zone of support from 10,269-10,277 from the WEEKLY/MONTHLY Pivot retracement. Has pulled into it twice today and buyers stand firm.

Immediately equate with QQQ $36.58-$36.67 at this point.

Good gravy.... its there in the SPX too.... WEEKLY S1 to MONTHLY 61.8% at 1,125.69.

Banks the key... BIX.X 347.91 +0.84% for holding things somewhat together today.

Treasuries too.

 
 
  Linda Piazza   7/2/2004,  12:46:18 PM
So far, the SOX has not benefited from that bullish price/MACD divergence seen on its five-minute chart. It continues to warn bears in semi-related stocks to protect their positions, but it hasn't produced a bounce. In fact, if the MACD should flatten and turn down again here, it's been bearish that the SOX hasn't been able to benefit from the upward momentum indicated on the MACD. It's at Keltner resistance at the current 457.27 level, and faces more at 459.25.

 
 
  Jeff Bailey   7/2/2004,  12:42:29 PM
U.S. Dollar Index (dx00y) 88.02 -0.86% (30-minute delayed) .... session low and WEEKLY S2 here.

Jonathan's missing all the action.

 
 
  Jeff Bailey   7/2/2004,  12:39:52 PM
S&P Banks Index (BIX.X) 347.33 +0.81% .... hovering around our downward "cheater's trend".

Huh... just noting that yesterday's low kissed the original downward trend and bounced like a rubber ball as if buyers couldn't get enough. Most likely broader sector bears.

 
 
  Linda Piazza   7/2/2004,  12:38:26 PM
For reference, the OEX's 50-dma lies at 546.37. It's appeared to play a part in trading activity over the last couple of days, with the OEX slightly violating it each day but then bouncing back above it. The 30-dma also appears to be playing a part, with that average at 548.91, and with the OEX below it most of the day today.

 
 
  Jeff Bailey   7/2/2004,  12:33:58 PM
SOX.X 456.94 -2.16% .... 60-minute interval chart for some time perspective, with QQQ tie in at this Link

 
 
  James Brown   7/2/2004,  12:27:59 PM
Another earnings warning is taking its toll on eSpeed Inc (ESPD). The stock is down 25.88% to $12.94 after the company warned last night for the second quarter. ESPD lowered its earnings forecast from 19-20 cents per share to 15-16 cents per share. Wall Street estimates were 20 cents.

Here's a comment from their press release: "Our weaker than expected performance during the second quarter was due to erosion of our market position from competitive pricing pressure and lower than expected market volumes in Europe."

 
 
  James Brown   7/2/2004,  12:22:48 PM
The stock price isn't reacting much but Airtran Holdings (AAI) said its June traffic numbers were up 19% over last year.

 
 
  Linda Piazza   7/2/2004,  12:18:00 PM
The OEX's 15-minute chart shows little support for the OEX, with resistance firming near 549.20. Support lines lie at 547.06, 546.43 and 544.91 on that chart, but they're single lines only.

 
 
  James Brown   7/2/2004,  12:15:21 PM
Mixed news on AAPL this morning. The company said their new iMacs launch would be delayed two months to September. Merrill Lynch reduced their estimates for AAPL on the news while Smith Barney fought back and upgraded AAPL from "hold" to a "buy".

 
 
  Linda Piazza   7/2/2004,  12:15:03 PM
Despite the fact that Keltner resistance looks little stronger than support, which isn't strong at all, the OEX is tilting down again, but it's so far holding above the 547.50-ish short-term support zone.

 
 
  Jeff Bailey   7/2/2004,  12:13:39 PM
Semiconductor Index (SOX.X) 458.21 -1.88% .... just shy of a test back at its MONTHLY S1/WEEKLY S1 correlation.

QQQ came within a penny of my bearish stop. Not too bad for trying to eyeball the stop, but need SOX.X weakness to current "zone of support" from 449.43-451.50.

 
 
  Jeff Bailey   7/2/2004,  12:06:19 PM
S&P Dep. Receipts (SPY) $113.012 +0.07% ... daily interval bar chart with conventional retracement. Added current MONTHLY S2 and MONTHLY S1 levels. Chart at this Link

 
 
  Linda Piazza   7/2/2004,  11:55:26 AM
I'm getting ahead of myself here, but what else is there to do on a day like today but to scan charts? A look at the OEX's weekly chart shows that once again, the OEX spent the week testing the 200-week sma. The OEX pierced it and fell back (unless a big rally occurs the rest of today). That chart looks as if the OEX could still roll down toward the bottom of its descending regression channel, but it hasn't quite fallen far enough away from the top of that channel or the 200-dma to be certain. Stochastics have made a tentative bearish cross, but it's tentative only. Other weekly oscillators are inconclusive.

 
 
  James Brown   7/2/2004,  11:55:01 AM
OI put SLAB is out performing the SOX to the downside. The SOX is down 2.05% while SLAB is down 2.9% and back under round-number support at $45.00.

 
 
  James Brown   7/2/2004,  11:52:49 AM
Meanwhile, just added OI put play NTES tried to rally back above the $40 mark this morning and failed.

 
 
  James Brown   7/2/2004,  11:51:51 AM
Recently triggered OI put play GCI tried to rally back above support/resistance at $84.00 this but failed.

 
 
  James Brown   7/2/2004,  11:50:32 AM
CORRECTED: OI call play MMM has been stopped out at $87.49.

 
 
  James Brown   7/2/2004,  11:49:37 AM
OI call play MERQ has been stopped out at $48.50.

 
 
  James Brown   7/2/2004,  11:48:34 AM
OI call play ETN is down 1.86% and slipping toward support near $62.00. The stock needs to bounce before traders consider any new positions here.

 
 
  Jane Fox   7/2/2004,  11:48:09 AM
Here is the link to the story on Marlon Brando. Cause of death unknown. Link

 
 
  Linda Piazza   7/2/2004,  11:46:12 AM
About all I can say definitively about the OEX on the short-term is that it remains below mid-Keltner channel resistance, with that fact weighing in on the bearish side. However, the Keltner channels are trying to flatten after falling steeply. If they're successful, the OEX could just squiggle along in an equilibrium position for a while. How long a while? Keltner channels don't predict that.

 
 
  James Brown   7/2/2004,  11:45:44 AM
Marlon Brando was 80 years old. Unfortunately, I recently heard he was $20 million in debt. They are not releasing the cause of death (yet).

 
 
  James Brown   7/2/2004,  11:43:40 AM
OI call play EBAY is down another 77 cents and cracking support at the $90.00 mark. The next important level to watch is the $89-88 range.

 
 
  Jane Fox   7/2/2004,  11:43:35 AM
Dateline CNN Legendary actor Marlon Brando has died in a Los Angeles hospital, his attorney tells the AP. CNN working to confirm.

 
 
  James Brown   7/2/2004,  11:41:55 AM
OI call play DHR, is another industrial company like CAT. DHR is slipping under its simple 10-dma with today's 1.39% decline but has still managed to hold support at the $50.00 mark.

 
 
  James Brown   7/2/2004,  11:40:29 AM
OI call play CAT isn't looking so hot today. The stock is down 1.85% and it's slipping through technical support at the 200-dma. Make sure your stop is in place.

 
 
  Jim Brown   7/2/2004,  11:33:43 AM
Earnings begin next week led by YHOO on Wednesday as well as AA, DNA, SCHN, CAN, ISCA and MSM. Friday has GE and ABT. The following week steps up the activity significantly with over 300 companies reporting. Of note will be INTC on Tuesday the 13th

 
 
  Linda Piazza   7/2/2004,  11:33:40 AM
While the BIX was showing bearish price/MACD divergence on its upper-Keltner-channel resistance violation, the NDX is showing bullish divergence on its violation of its lower Keltner channel support this morning. Nevertheless, the rise itself, predicted by that bullish divergence, looks remarkably like a bear flag. Right now, the NDX is ringed closely by Keltner support and resistance. Resistance is at 1482.70-1483.55 and above at 1489.25-1490.13.

 
 
  Linda Piazza   7/2/2004,  11:29:25 AM
The BIX's violation of its Keltner chart and the bearish divergence created does not mean that it will decline, but warns those in bullish positions in BIX component issues to protect positions, perhaps by following their stocks higher with their stops. As I type, BIX Keltner support from 347.30-347.45 looks about equally weighted against resistance from 348-348.10.

 
 
  Jim Brown   7/2/2004,  11:26:00 AM
BSX trading down on news of a death and 16 injuries from one of their stent products.

 
 
  Linda Piazza   7/2/2004,  11:19:54 AM
This morning's move higher on the BIX has violated the upper Keltner channel resistance, creating strong bearish divergence as it did so.

 
 
  Jeff Bailey   7/2/2004,  11:12:53 AM
11:00 Market Watch at this Link

 
 
  Linda Piazza   7/2/2004,  11:07:30 AM
OEX Keltner support is trying to firm up near 548-548.30. It's not clear whether it's yet firm enough to hold. Not much of anything is clear at this point.

 
 
  Jeff Bailey   7/2/2004,  10:57:24 AM
Day trade short alert for the QQQ $36.80 here, stop $36.95, target $36.50.

Just off a test of WEEKLY Pivot.

 
 
  Linda Piazza   7/2/2004,  10:54:18 AM
Keltner resistance on the OEX's five-minute chart is now firming up and looking a bit stronger than support again, suggesting at least on a short-term basis that the OEX is more likely to pull back than to rise. Still no confirmation of the double bottom.

 
 
  Jeff Bailey   7/2/2004,  10:51:31 AM
Pacholder High Yield (PHF) $8.90 +1.25% .... broader market equity bulls should be encouraged by the action in this "junk bond" closed end fund.

Disclosure: I currently hold a bullish position in PHF.

Analysis: While recent economic data suggest economic slowing, ability to hold or build gains among junk bonds should be signal from bond market of sustainable economic growth under the backdrop of low rates of inflation.

 
 
  Linda Piazza   7/2/2004,  10:51:10 AM
So far, the OEX has not been able to confirm its double-bottom formation by moving above the 549.52 confirmation level. It's still trying. We did see bullish price/MACD divergence as the equal low was hit.

 
 
  Jeff Bailey   7/2/2004,  10:44:14 AM
Dow Jones Home Construction ($DJUSHB) 597.08 +3.14% ... sector winner and session highs. Technicals have index breaking out of downward regression.

10-year yield ($TNX.X) down 11.1 bp at 4.453% ....

Disclosure: I currently hold bullish positions in DHI Link and TOL Link and due to recent changes in company policy, I can not profile positions bullish/bearish that I hold in my own account.

 
 
  Jeff Bailey   7/2/2004,  10:36:50 AM
Networking Index (NWX.X) 248.28 -0.77% ... testing its rising 21-day SMA and recently broken to the upside downward trend at this Link

Overlaid a conventional retracement from Jan high to recent low.

 
 
  Linda Piazza   7/2/2004,  10:31:37 AM
The OEX moves back above the gap on the five-minute chart, headed toward the mid-channel level on the Keltners, with Keltner resistance separating a little there. That perhaps hints that the OEX can make it through that level, but there's still Keltner resistance near 549.60-550.

 
 
  Linda Piazza   7/2/2004,  10:29:10 AM
The TRAN is following through on the reversal signal created by yesterday's key reversal day, and is now back below the intraweek high of 3157.44 traded the week of 12/31/00. If it should continue falling, it has next weekly support in the 3090 region, although I would imagine that the round-number 3100 level would provide some support, too. With the exception of RSI, daily oscillators have not yet turned fully bearish, however, creating the possibility that the TRAN could steady.

 
 
  Linda Piazza   7/2/2004,  10:21:55 AM
Earlier this morning, I mentioned an Al-Qaeda (Al-Qaida? Has anyone ever nailed down the spelling of this?) threat to Europe. A helpful subscriber sent along this clipping, which details the threat and also mentions that the German government does not consider it particularly credible: Link Thanks, M., for the link.

 
 
  Jeff Bailey   7/2/2004,  10:20:43 AM
TASER Intl. (TASR) $44.58 +2.01% Link .... Earlier this morning, company officials said that a lawsuit against the company from the in-custody death lawsuit filed in U.S. District Court was dismissed. This now prohibits an re-filing of this litigation.

Technical Note: Potential "bullish triangle" pattern now in play, but for pattern to unfold, trade at $46.00 is needed.

In March (red 3) TASR's PNF chart triggered a bullish triangle at $29. In Mid-April, TASR's PnF chart triggered a bearish triangle at $37.

 
 
  Linda Piazza   7/2/2004,  10:18:28 AM
The OEX hesitates at the top of this morning's gap on the five-minute chart.

 
 
  Jeff Bailey   7/2/2004,  10:15:38 AM
10:13 Market Watch at this Link

 
 
  Linda Piazza   7/2/2004,  10:13:28 AM
Confirmation of the double-bottom formation requires a move above 549.80. The OEX is trying to push above Keltner resistance now, at just above 548, also a site of the early June low, with Keltner resistance at the mid-channel level beginning to separate a little, perhaps not quite as firm as it had been earlier.

 
 
  Jeff Bailey   7/2/2004,  10:12:25 AM
Buy Program Premium

 
 
  Jeff Bailey   7/2/2004,  10:10:47 AM
S&P Banks (BIX.X) 347.02 +0.73% .... session highs.

SPY $112,98 +0.03% ...

QQQ $36.84 -0.53% ... session low has been $36.63.

 
 
  Jeff Bailey   7/2/2004,  10:08:15 AM
Current OPEN MM profiles at this Link

 
 
  Linda Piazza   7/2/2004,  10:07:11 AM
I've shifted to a two-minute chart to try to see anything on the OEX. On that two-minute chart, the OEX appears to be trying to form up a (bear?) flag, but either my charts are moving incredibly slowly (a possibility) or else there's just not much movement there, and it's not yet clear whether the OEX can firm up that formation.

 
 
  Linda Piazza   7/2/2004,  10:02:21 AM
The drop this morning occurred so quickly that price/MACD comparisons are showing bullish divergence on the OEX equal low. The OEX is trying to surmount 547 resistance and come back to retest this morning's gap on the five-minute chart. At least, I presume there really was a gap there and that my charting service didn't just leave out the price bar! If the OEX can pull free of the current level, next Keltner resistance looks to be just under 548, at the top of that gap and then at 549.50-549.60. The OEX hasn't pulled completely free just yet, however.

 
 
  Jonathan Levinson   7/2/2004,  10:01:36 AM
10:00am U.S. MAY DURABLE GOODS DOWN 1.8% VS EARLIER 1.6% FALL

10:00am U.S. APRIL FACTORY ORDERS REVISED -1.1% V EARLIER -1.7%

 
 
  Jonathan Levinson   7/2/2004,  10:00:44 AM
10:00am U.S. MAY FACTORY ORDERS DOWN 0.3% VS FORECAST 0.8% FALL

 
 
  Jonathan Levinson   7/2/2004,  9:57:40 AM
14.25B in various repos expire today. The Fed has just added 7.5B for a net 6.75B drain today. Today's repo expires on Tuesday.

 
 
  Jeff Bailey   7/2/2004,  9:57:34 AM
Sector winners .... Gold Bugs ($HUI.X) +2.15%, Home Builders +1.27%, Utilities +1.02%.

Sector losers Semiconductors 457.25 -2.09%, Disk Drive -1.88%, Networking -1.33%, Airline -1.23%.

 
 
  Linda Piazza   7/2/2004,  9:55:56 AM
At about 454, the SOX will hit the ascending trendline off the April low. A sustained fall through that trendline suggests a fall back toward the June low at least, if not back toward 445 and then 440, but I think we should expect at least a bounce attempt from that trendline, even if the attempt could be a tepid one.

 
 
  Linda Piazza   7/2/2004,  9:51:17 AM
Bulls want to see the OEX steady off here, to form a double-bottom formation.

 
 
  Jeff Bailey   7/2/2004,  9:50:16 AM
Dow Transports (TRAN) 3,154.04 -0.56% .... slips below 3,160 support.

CNF Inc. (CNF) $41.30 +0.36% ....

 
 
  Linda Piazza   7/2/2004,  9:47:08 AM
We're not seeing much of a "first retracement" this morning, are we? The OEX has dropped back below the right-shoulder level of the reverse H&S that bulls tried to build yesterday afternoon, rejecting that formation this morning. Bulls want to see the OEX stay above yesterday's low. As Keltner channels are positioned now, the OEX still looks vulnerable down to 546.95 and then to the day's low if that level fails to hold, but the Keltner's don't preclude a bounce up to 548-548.40 first. Well, they don't preclude anything, but you know what I mean.

 
 
  Linda Piazza   7/2/2004,  9:37:50 AM
The SOX certainly isn't benefiting from the SIA data, and has broken through the 50-dma and yesterday's low.

 
 
  Jeff Bailey   7/2/2004,  9:37:25 AM
Correction to 09:00 Update .... I've corrected the web page, but not this morning's 09:00 e-mail where I mistakenly reported that May's nonfarm payroll data was revised higher by 13,000 to 248,000.

May's nonfarm figures were revised lower by 13,000 to 235,000 from 248,000.

 
 
  Linda Piazza   7/2/2004,  9:37:04 AM
The TRAN opens near yesterday's low.

 
 
  Linda Piazza   7/2/2004,  9:36:46 AM
During the first five minutes of the day, the OEX spanned a range from 548.84 down to 548.36.

 
 
  Linda Piazza   7/2/2004,  9:35:21 AM
As futures were predicting, the OEX opened right back on the neckline of its reverse H&S on its five-minute chart. It's got Keltner resistance near 549.50-550, with possibly lighter support down to 548.17. As the Keltner charts are positioned now, down looks more likely than up until the first retracement of the day, usually beginning in a few minutes.

 
 
  Jonathan Levinson   7/2/2004,  9:25:21 AM
Re: End of month window dressing:

ANNANDALE, Va. (CBS.MW) - Did many mutual fund managers break the law again Wednesday? It sure looks as though they did.

Just as they have at the end of countless previous calendar quarters, it appears as though a number of fund managers on Wednesday engaged in illegal activity right before the close of trading. This had the effect of boosting their standings in the quarterly mutual fund rankings.

The fact that fund managers resorted to such desperate tactics should not come as a surprise. Several finance professors discovered the behavior several years ago, and I wrote a column in the New York Times about it at the time. In addition, over the past year have devoted two of my MarketWatch columns to the topic.

Link

 
 
  Jane Fox   7/2/2004,  9:14:44 AM
(This is long but worth the read) Dateline WSJ - The U.S. economy will enjoy steady expansion for the rest of this year, thanks in part to industrial growth taking off, with unemployment falling and the inflation rate abating, according to a midyear survey of 55 forecasters by The Wall Street Journal.

The nation's gross domestic product -- the broadest measure of economic activity -- is projected to grow at an annual rate of 4.4% in both the second and third quarters, and 4.2% in the fourth quarter. Those projections represent an increase from actual growth of 3.9% in the first quarter and reflect a forecast panel that is moderately bullish on the economy's prospects. The economists forecast slower growth of 3.7% during the first half of 2005.

We're entering a phase where the economy is picking up momentum," says Diane Swonk, chief economist at Bank One Corp. Companies have "record profits, record cash flow ... top-line revenue growth and order backlogs -- you can't ask for more."

In part, forecasters attribute their expectations for continued growth to an improving industrial sector. The economic recovery began in late 2001 but was confined mainly to consumer-related industries. Now, "the industrial sector appears to be leading the current growth cycle," says Gene Huang, economist for FedEx Corp.

Forecasters aren't too concerned about two trends that seem to be worrying Wall Street: inflation and interest rates. Only 40% of the economists characterize rising prices as "worrisome," while 60% say inflationary pressures are due to temporary factors such as high food and oil prices and likely will dissipate as the year progresses. On average, economists expect consumer prices to be rising at a year-over-year rate of 2.9% by November, tamer than the 3.1% reading seen in May.

 
 
  Linda Piazza   7/2/2004,  9:02:40 AM
Yesterday, the OEX plunged to the bottom of its recent consolidation zone, piercing the 549 level that had been holding as support over the last couple of weeks and even piercing the 6/14 low of 548.18. The OEX hit and bounced from the 50-dma and historical support near 546-547, however. The move hooked the RSI down again and created a full bearish roll on the 21(3)3 stochastics, turning them down again after they had hooked up over the last several days. Of course, if a single day can turn them down again, a single day can turn them back up, too. MACD shows a bearish cross with a histogram with negative values, but the cross was from above signal, so is possibly not as strong as it might be. The closing hit the descending best-fit trendline off the February low, the one that the OEX has been following down.

The OEX feels as if it's on the verge of toppling over, heading down for a retest of the 200-sma at 541.70 or perhaps even the 200-ema at 537.85, but the reaction to this morning's economic numbers will tell us more. That initial reaction was a plunge in futures, but they're trying to steady as I type. I'm trying to factor in the SIA information about global semi sales, but I don't have figures for the expectations for those sales, and so can't determine if they were stronger or weaker than expected. Strong demand for wireless components could possibly at least benefit those companies in that food chain, however.

The OEX ended the day having confirmed the neckline of a reverse H&S, with that neckline at about 548.70, but then having dropped back down to rest on that neckline after being rebuffed by Keltner resistance. If futures are indicative of the opening--they're not always--it's possible that some indices could open near or slightly under their closes. The OEX ended the day below the 30- and 60-minute 100/130-pma's, with the 60-minute versions the closest at 551.50-552.10. The 30-minute versions lie at 552.43 and 552.50, so in close proximity to the 60-minute versions, perhaps with all four ready to fence off the OEX if it should try to climb.

I think we have to see what happens on the first retracement of the morning before we know the whole story. If the OEX should bounce this morning, we'll be looking for a retest of either 549-550 or of those 100/130-ema's, watching for a potential rollover beneath that former support. After yesterday's bearish day, the presumption is that there will be follow-through on the declines, but that presumption should not blind us to other possibilities. As we know 553 should serve as resistance, too. As Jane mentioned yesterday in one of her first updates, when we've seen a prolonged consolidation pattern, everything is support or resistance, but the presence of the weekly 200-sma at 552.96 gives this level extra relevance. A sustained move above 553 appears to suggest that a retest of 557-558 is possible, but beyond that, beyond the top of the congestion zone, I don't see anything that predicts what will happen next.

One note: I've been mentioning that the big-cap heavy NDX and OEX have been the laggards with regard to reaching their 200-week-sma's, and have been saying that the generals needed to come along for the ride if a rally was going to be sustainable. The OEX has been pressured downward by its 200-week-sma throughout most of this year, while the NDX had been nowhere near its 200-week sma. It's closer now, or was, as of Wednesday's high. That 200-week sma is at 1534.82, with Wednesday's high at 1523.48. Was that close enough to constitute a test of that moving average? I don't know, but I'll be watching that over the next week if the NDX should rise. I'll also be watching the TRAN, with the TRAN completing many of the requirements of a key reversal day yesterday. A rise in crude futures also pressured the TRAN yesterday. For market guidance, then, I'll be paying special attention to the TRAN, the SOX, and crude futures. Continued declines in the TRAN and the SOX and another rise in crude futures might pressure equities. If the TRAN and SOX head different directions, OEX traders might be stuck with a bifurcated market and choppy trading conditions. If both rise and crude futures ease, markets might try to move back up through their recent consolidation zones, making it a miserable day to judge what's going to happen next with support and resistance layered everywhere the markets move.

Some changes in my morning pre-market schedule might dictate that I make some changes in when I post my take on the OEX and the markets. Beginning next week, I might be more likely to post that OEX-related post in the evening rather than first thing in the morning. The advantage to you is that you'll be able to read it well ahead of the market open, at your leisure. The disadvantage is that it won't take into account what happened after the release of 8:30 economic numbers. My post on Asian and European markets will still appear about the same time each morning.

 
 
  Jonathan Levinson   7/2/2004,  8:32:33 AM
Unemployment rate 5.6%.

 
 
  Jonathan Levinson   7/2/2004,  8:31:37 AM
8:30am U.S. JUNE AVERAGE HOURLY WAGES UP 0.1%

8:30am U.S. MAY NONFARM PAYROLLS REVISED TO 235,000 V. 248,000

8:30am U.S. JUNE MANUFACTURING PAYROLLS DOWN 11,000

8:30am U.S. JUNE SERVICES PAYROLLS UP 122,000

8:30am U.S. JUNE AVERAGE WORKWEEK DOWN 2/10 TO 33.6 HOURS

8:30am U.S. JUNE HIRING DIFFUSION INDEX 57% VS. 64.6%

 
 
  Jonathan Levinson   7/2/2004,  7:43:29 AM
We await the 8:30 release of the June employment report, with the average workweek estimated at 33.8, hourly earnings est. +.3%, nonfarm payrolls est. 250K, and the unemployment rate est. 5.6%. At 10AM, we get May factory orders, est. -.7%.

 
 
  Linda Piazza   7/2/2004,  7:09:07 AM
Good morning. After Morgan Stanley forecast that Intel's revenue might not meet expectations, semi-related stocks fell in Asian trading, leading the Nikkei and many other Asian bourses lower. The Nikkei opened more than 120 points underwater and dipped below 11,700 before attempting to climb, but it never got far. The Nikkei closed down 174.52 points or 1.47%, at 11,721.49.

Figures released by car manufacturers showed Asian auto manufacturers capturing more than a third of the U.S. car market, but Mitsubishi Motors declined in early trading on news that its domestic sales fell 64.3% over the year-ago level. Mitsubishi Motors closed lower by 0.6%, but had been lower earlier in the day. Other exporters fell, too, as did banking stocks. Smith Barney's downgrade of Yahoo to a hold rating from its former buy rating affected Japanese counterparts. In other stock-specific news, Time Warner decided to bid against Sony for Metro-Goldwyn-Mayer.

Other Asian bourses were mixed, with semi-related issues mostly lower. The Taiwan Weighted sank 1.55%, and South Korea's Kospi declined 2.91%. Singapore's Straits Times declined 0.26%. Hong Kong's Hang Seng was down 0.53%, but China's Shanghai Composite was flat, up 0.01%.

European bourses trade lower. The behavior of U.S. bourses yesterday, some concerns expressed by the ECB's Trichet, and possibly an Al-Qaida warning to European markets pressure those bourses this morning. The ECB's Issing spoke today about his concerns about inflation, with Issing's concerns perhaps more strongly voiced than Trichet's yesterday. In the U.K., June's housing prices rose 1.2% according to figures released by a mortgage lender, but that price increase was smaller than any this year, with the overheated housing market of concern in that country. Supermarket stocks trade lower in the U.K. after the second day in a row when a supermarket offered a warning. European automakers turn in mixed performances, with individual car manufacturers reacting according to June's U.S. sales figures released last night, impacted by their performance in U.S. markets. German chip-maker Aixtron soared after announcing that it would acquire U.S. rival Genus, but other European chip makers mostly trade lower, perhaps also impacted by the negative statement about Intel. This morning, the SIA announced figures showing that May's global semiconductor sales were higher by 2.1% than April's, with those sales at their highest since December 2000. The association deemed the demand for wireless components to be particularly strong.

As of this writing, the FTSE 100 trades lower by 9.10 points or 0.21%, at 4,415.60. The CAC 40 trades lower by 14.67 points or 0.39%, at 3,701.53. The DAX trades lower by 7.90 points or 0.20%, at 4,027.12. All are off their lows.

 
 
  OI Technical Staff   7/1/2004,  9:33:41 PM
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