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  Jeff Bailey   7/7/2004,  5:03:19 PM
Closing Internals at this Link

  Jonathan Levinson   7/7/2004,  4:53:54 PM
QQQ broke yesterday's low, down 1.08% or .39 at session low of 35.64. This is based on a selloff following positive earnings reports from YHOO, AA and DNA- bodes ill for tomorrow.

  Jim Brown   7/7/2004,  4:53:33 PM
Alert - SEBL warning in after hours

  Jim Brown   7/7/2004,  4:47:57 PM
EBAY now down -6.88

  Jim Brown   7/7/2004,  4:37:52 PM
EBAY -3.50 after YHOO earnings

  Jim Brown   7/7/2004,  4:37:04 PM
YHOO down -4.14 in after hours

  Jonathan Levinson   7/7/2004,  4:36:41 PM
QQQ testing yesterday's low, down .21 at 35.82 here.

  Jim Brown   7/7/2004,  4:31:37 PM
Internet stocks trading down in response to light revenue from YHOO and warning that Q3 revenue and earnings will be less than expected.

  Jeff Bailey   7/7/2004,  4:22:28 PM
Current OPEN MM Profiles at this Link

Closed the swing trade short in CNF at $41.60 for 43-cent loss, or -1.04%.

  Jim Brown   7/7/2004,  4:13:33 PM
Alert - Earnings Today After the Close

AA est +0.47, actual = +0.46 miss
DNA est +0.19, actual = +0.19
YHOO est +0.08, actual = +0.08

  Jonathan Levinson   7/7/2004,  4:00:07 PM
Program trading breaks 70% Link.

  James Brown   7/7/2004,  3:59:31 PM
CNBC reporting that Ken Lay has just been indicted.

Ken is the former CEO to Enron during its collapse.

  Jeff Bailey   7/7/2004,  3:57:51 PM
S&P Banks Index (BIX.X) 347.56 +0.48% ... faded from their 02:50 PM EDT high of 349.20.

  Jeff Bailey   7/7/2004,  3:56:31 PM
How hard could it be... for the Broker/Dealer Index (XBD.X) 120.18 -2.04% to have traded 120.00?

  Jeff Bailey   7/7/2004,  3:45:49 PM
Phelps Dodge (PD) $78.83 +5.06% ... makes a move above 06/25/04 relative high.

  Jeff Bailey   7/7/2004,  3:43:50 PM
Close out cancel alert .... cancel order to close out the DIA July $100 puts for $0.25.

Let's see what happens as the Broker/Dealer Index (XBD.X) 120.03 -2.14% gets really close to 120.00.

  James Brown   7/7/2004,  3:42:46 PM
Phelps Dodge (PD) also looks good with today's 4.9% gain on stronger than average volume. The move is a breakout from its recent trading range and follows a 2.78% jump in copper prices to $1.25 a lb.

  James Brown   7/7/2004,  3:40:20 PM
Looking for a way to play the bullish move in the XAU gold & silver index today? RTP is an optionable stock that just broke out above its simple 200-dma and the $100.00 mark. Unfortunately, the stock trades as an ADS on the NYSE and the stock gaps open every morning as it adjusts to price changes on its primary exchange, which I believe is in London. Option volumes are pretty low as well.

  Jim Brown   7/7/2004,  3:39:31 PM
Earnings Today After the Close

AA est +0.47
DNA est +0.19
YHOO est +0.08

  Jeff Bailey   7/7/2004,  3:35:50 PM
Covered Call alert ... for TASR $40.92 -8.3% .... Sell the July $40 call (QURGH) $2.70 bid.

AGAINST the Dec. $45 Call.

July "Max Pain" calculated at $40 (increments of $5). Not sure if this is impacting today's price action or not as many safety/protection stocks have been under pressure.

  James Brown   7/7/2004,  3:32:14 PM
You might remember Magal Security Systems (MAGS) erupting on the seen in mid-March when security stocks rocketed higher in a wave of speculation. Now MAGS is struggling under a series of lower highs. The stock is approaching month-old support at $16.00 while breaking down through technical support at its 40, 50 and 100-dma during today's 9% drop. The push-pull battle between the bulls and the bears could be a tough one. The $16.00 level is not just support on the daily chart but also support on its bearish P&F chart.

  Jonathan Levinson   7/7/2004,  3:31:48 PM
QQQ wiped out two hours' worth of gains in 2 candles, or 300 ticks. Someone wanted out.

  James Brown   7/7/2004,  3:27:00 PM
Biotech bulls should take another look at ImClone Systems (IMCL). The stock has been out performing its peers for weeks and trading at new highs just a couple of days ago. Today looks like an opportunity for bullish positions. IMCL has found consistent support at its simple 21-dma for the last couple of months and once again shares have pulled back to this technical level and are starting to edge higher in the last half hour.

  James Brown   7/7/2004,  3:11:18 PM
Ask Jeeves (ASKJ) is looking pretty weak here down 2.9% and back under the $35.00 mark. If it breaks the simple 100-dma (34.15) it would look like a tempting short candidate with potential targets at $30.00 or the 200-dma near $27.50. The challenge here is that YHOO's earnings announcement is a huge wildcard that could send the whole sector higher. Of course with expectations so high for YHOO it might be easier to bet on a disappointment.

  Jeff Bailey   7/7/2004,  3:06:08 PM
03:00 Market Watch at this Link

  Linda Piazza   7/7/2004,  2:53:25 PM
I've been battling a bug and it's getting the better of me this afternoon, so I'm going to shut down shop for a while. The OEX is laboring toward that 546.59-547 level. A sustained move above 547 will represent a breakout on the five-minute chart, setting up the possibility that the OEX could then reach toward 552.10, but I'd be extremely careful of believing too strongly in that upside, protecting my positions if going along for a bullish ride. If you're in bullish plays today, I'd have a plan in mind for how you'll treat 546.50-547, if reached.

  Jeff Bailey   7/7/2004,  2:48:33 PM
S&P Banks Index (BIX.X) 349.20 +0.95% .... making a nice little move today. 1% pretty big for the BIX.X

  Jeff Bailey   7/7/2004,  2:47:44 PM
Yahoo! (YHOO) strangle question. What do you think of the July 35 call and the 30 put? Link

  James Brown   7/7/2004,  2:47:41 PM
Candlestick traders might want to give Lifeway Foods LWAY) another look. The sharp two-week rally may be ready to reverse with today's bearish engulfing candlestick and 9% loss.

  James Brown   7/7/2004,  2:42:21 PM
Another way to play oil is Knightsbridge Tankers (VLCCF), which operates a fleet of oil tankers. The stock has been soaring the last couple of days and has more than tripled from its October 2003 lows. Another tanker Teekay Shipping (TK) is also trading near new highs.

  James Brown   7/7/2004,  2:39:08 PM
Oil refinery stock Valero Energy (VLO) continues to march higher. Today's 1.68% gain confirms the recent breakout over the $75 level. The stock is extremely overbought and has already met its P&F bullish target at $61.00 but we wouldn't want to step in front of this much momentum with a short (at least not here). There are a limited number of oil refiners in the U.S. and they're all close to operating near capacity.

  Linda Piazza   7/7/2004,  2:37:21 PM
I was just reading that Fed Vice Chairman Ferguson was discussing the outlook on inflation a few minutes ago. I hope I'm paraphrasing this correctly, but he thinks the current period of increased inflation is transitory, but reassures listeners that the Fed is ready to move faster than the currently planned measured pace if inflationary pressures pick up. I don't know that market watchers will deem that statement too reassuring, however.

  James Brown   7/7/2004,  2:35:18 PM
Fedex (FDX) is following the Transports higher with a 0.96% gain. Yesterday FDX had fallen through the bottom of its narrow rising channel. Today the stock is rebounding back into the channel but its MACD remains over bought and is still in a new sell signal. Bears might be looking for another chance to short the stock at the $82 resistance level.

  Linda Piazza   7/7/2004,  2:27:17 PM
That latest five-minute climb on the OEX sure looks rising bearish wedge-ish to me. We've seen a number of these break to the upside, but the shape gives us a possible warning. So far, though, 546.70-547 still looks possible, with the OEX now needing to hold above 544.88 or preferably 545.25 to continue that possibility.

  Jonathan Levinson   7/7/2004,  2:21:15 PM
From Bloomberg:

July 7 (Bloomberg) -- Gold futures in New York had their biggest gain in 13 months after Russia's central bank reduced reserve requirements to avert a banking crisis, boosting the metal's appeal as a haven.

Russia central bank lowered the amount of money banks must set aside to 3.5 percent from 7 percent, effective tomorrow. Gold gained on Friday after U.S. employers in June added about half as many jobs as expected by analysts, sending the dollar to its biggest decline in almost four months.

"There are some problems appearing in Russia, and the employment numbers on Friday didn't look that good," said Robert McEwen, chief executive of Toronto-based Goldcorp Inc., Canada's fourth-largest gold producer. "Some of the problems that everybody thought had disappeared are starting to appear again, and that has some people concerned."

  Linda Piazza   7/7/2004,  2:12:16 PM
Looks as if the bulls are making a run for it. The OEX just gapped higher. As long as it does not breach 544.59 on a sustained basis (or preferably 544.95), it still looks possible for it to challenge 546.70-547, but that's dependent on keeping that channel pointed higher.

  Linda Piazza   7/7/2004,  2:08:35 PM
The TRAN has so far been stopped at the 3146-3147 level that kept showing up as S/R over the last couple of weeks.

  Linda Piazza   7/7/2004,  1:47:28 PM
After the OEX did follow through and test today's low, both the OEX five and fifteen-minute nested Keltner charts now (finally?) show a greater likelihood that the OEX will reach toward 546.60-547 than toward yesterday's low, but that's predicated on the OEX staying above 544.25 except for a brief piercing of that level.

  Jeff Bailey   7/7/2004,  1:37:57 PM
Market Volatility Index (VIX.X) 15.90 -2.03% ... session lows.

Somebody's active in the July 925 puts (SXBSE) at 10,551 contracts.

July 1,100 puts (SPTST) second-most active now at 5,123 contract, b/a $3.40 x $3.80.

Buyer in the Aug. 1,100 call (SPTHT)

  Linda Piazza   7/7/2004,  1:33:47 PM
The OEX achieves a new high of the day, but not all indices have. The SOX and Russell 2000 have not yet been able to do so.

  Jeff Bailey   7/7/2004,  1:30:32 PM
Swing trade put close out alert .... for the DIA July $100 puts... bid/ask is $0.15 x $0.30. Would try working between at $0.25.

  Jeff Bailey   7/7/2004,  1:28:20 PM
S&P 100 Index (OEX.X) 545.00 +0.32% .... and its June 1 "doji"

  Linda Piazza   7/7/2004,  1:23:53 PM
The TRAN has broken above 3140.

  Jeff Bailey   7/7/2004,  1:22:03 PM
01:00 Internals at this Link

A/D line at NASDAQ has been fading, while NYSE has been steady.

  Jonathan Levinson   7/7/2004,  1:17:16 PM
5-yr treasury auction of 15B generated 2.33 bid-to-cover ratio at an average yield of 3.663%.

  Linda Piazza   7/7/2004,  1:14:29 PM
Today's SPX candle is so far forming beneath the 50-dma, currently at 1118.98. This presents the possibility that the SPX could be forming a "b" distribution pattern on the daily chart, with the bulb of the "b" forming at/just under that 50-dma. The SPX's 200-sma is below at 1100.33. It was touches of that average that led to May's/June's bounce, so traders should keep this average on their radar screens if the SPX should continue to decline.

  Jeff Bailey   7/7/2004,  1:10:20 PM
Bearish Swing Trade Stop Alert ... for CNF Inc. (CNF) $41.60 +1.2% here.

Moves above 5-day resistance and overhead supply is limited.

  Linda Piazza   7/7/2004,  1:09:51 PM
The Nasdaq's steadying at the current level suggests a possibility that it could rise again toward 2025, round off there, and then roll down into the right shoulder of a H&S formation. The 5(3)3 stochastics are trying to steady off, too, although they're far from yet completing a bullish cross. Although MACD moved higher as the head was formed, both RSI and stochastics produced lower highs as the head was formed--bearish divergence. This scenario is purely speculative at this point, but if the Nasdaq should rise for several days and then begin to steady off at that 2025 level, those in bullish positions will be forewarned to guard their profits.

  Jim Brown   7/7/2004,  1:09:46 PM
FR Board: Speech by Vice Chairman Ferguson
Productivity: Past, Present, and Future Link

  Jeff Bailey   7/7/2004,  12:55:39 PM
12:45 Market Watch at this Link

Kind of like watching a game of baseball, with two ace pitchers at the mound. Boring, but you keep watching just in case something exciting happens and you don't want to miss it.

  James Brown   7/7/2004,  12:55:28 PM
A reader came up with a good idea on how to play the YHOO earnings announcement tonight after the close. YHOO is currently at $32.63. That's close enough to consider a $32.50 straddle (buy a put and a call at the same strike). Since we're only looking to capture some short-term volatility traders can still use the July options that expire a week from this Friday. The July 32.50 call is going for $1.60 and the July 32.50 put is about $1.50. So if we expect YHOO to move more than $3.00 on its earnings report then the play should work. Alternatively, we could buy a July $35.00 call for $0.65 and a July $30.00 put at $0.65, which sounds more affordable.

  Linda Piazza   7/7/2004,  12:54:33 PM
The TRAN and the BIX are showing some bounce-ability today (although the TRAN is running up against possible strong resistance as I type), while the Russell 2000 is displaying weakness, and the SOX pulls way back from its high of the day. These bellwether indices need to get their act together either to the upside or the downside if we're going to avoid choppy markets.

  Linda Piazza   7/7/2004,  12:49:52 PM
The TRAN is reaching up toward its day's high of 3137.31, trying to best that high. As I type, the TRAN is at 3136.38.

  Linda Piazza   7/7/2004,  12:38:20 PM
The Russell 2000 did violate the ascending trendline off yesterday's low, headed down now to test yesterday's low. Is the Russell 2000 leading other indices lower?

  Jonathan Levinson   7/7/2004,  12:36:59 PM
On that chart just posted, short cycle support is just above 35.95, with 30 min support down to 35.90 and 60 min support at 35.81.

  Jonathan Levinson   7/7/2004,  12:33:27 PM
Saw your MM note yesterday on QQQ. Wanted to ask about the best oscillators to use for confirmation short term trends. I take trades for 1-2 days to very short term moves <60 min. Typically base my entries and exits on S&P futures and $SOX

1. what %K%D to be used for intra-day stochastics on QQQ

2. other indicator ideas?

Just trying to line things up in our favor.

Thanks, Jeff. At this Link is a 150-tick chart of the QQQ showing my SST and TRIX settings. I use a nested cycle approach, in which I try to fade extreme moves against the broader trend. The short cycle is measured by the combination of the SST's (slow stochs), confirmed by the direction of the TRIX. That short cycle is approximated by the 10 period Keltner channel (red) which oscillates within the broader 30 min (orange) and 60 min (grey) channels. The whole mess is again summarized by the green and red bands just above the time scale. Fading Keltner breaches is a generally reliable technique with these settings, but there's a multitude of different settings and timeframes that can be used within this one set of indicators alone.

  Linda Piazza   7/7/2004,  12:29:46 PM
On both the OEX 5- and 15-minute charts, Keltner resistance currently looks stronger than Keltner support. That configuration could change if the OEX maintains the current level long enough for Keltner support lines to cycle up and converge underneath the OEX position. Usually when Keltner resistance lines converge overhead, but support lines are more widely separated below, advances are dampened and it proves easier for the OEX to drop than to climb.

  Linda Piazza   7/7/2004,  12:20:18 PM
If the OEX should round over here or anywhere below 544.50 or so, it's in danger of completing a H&S on its five-minute chart. A drop below the current day's low would confirm that formation. If the OEX instead moves above the day's high, it will then have confirmed the double-bottom formation reached this morning. Competing formations: competing views on the markets. When I see competing bullish and bearish formations like this, I expect choppy market behavior complete with false breakouts, at least until the bulls and bears sort out which is going to win over the other. So far, this fits the scenario I'd been kicking around for today, although I believe there's more of a bearish tenor than I expected. I'd expected a tight-range day with a slightly bullish (but probably doomed to fail) tenor, but instead we're getting what I would term a tight-range day with a slightly (and maybe growing more so) bearish tenor.

  Jeff Bailey   7/7/2004,  12:16:13 PM
Sector Bullish % updates as of last night ... Since the 06/27/04 Ask the Analyst column....

From left to right... PREC moved up to 22-26%, AUTO move up to 58-62%, WAST up to 68-72%, CHEM up to 68-72%, STEE up 64-66%, LIES up 64-66%, FORE up 74-78%.

No sectors would have shown a decline in scale.

  Linda Piazza   7/7/2004,  12:14:38 PM
Like many other indices today, the TRAN formed its own reverse H&S today. Like the Russell 2000, the TRAN appeared to confirm its reverse H&S earlier this morning, only to turn around and head back below the neckline again. The TRAN has just about settled into an equilibrium position on its five-minute chart with regard to the nested Keltner channels. That five-minute chart reveals a possible cup-and-handle forming below 3140 resistance, however. It's possible that the TRAN will just oscillate around the mid-channel level for a period, however, just below 3140, maintaining that equilibrium position. If the TRAN instead maintains levels above 3137.30, it may then reach toward 3149. The upside target of the cup-and-handle formation would be higher, but that's where upper Keltner channel resistance lies.

  James Brown   7/7/2004,  12:10:47 PM
Meanwhile Lehman Brothers (LEH) is breaking six-week support at the $72.00 level and Morgan Stanley (MWD) is breaking down through support at the $50.00 mark.

  James Brown   7/7/2004,  12:09:44 PM
The XBD broker-dealer index is slipping another 1.78% toward support at the 120 level.

  Jeff Bailey   7/7/2004,  12:04:50 PM
Truckers .... Broker Stifel commenting on trucking stocks this morning saying they would be trimming bullish exposure to the group as they believe expectations that company's will meet/exceed Q2 estimates are "baked in." Stifel thinks higher diesel fuel costs could make the quarter a difficult comparison. Stifel currently covers HTLD $26.93 +0.48%, KNGT $27.80 -0.10%, MRTN $17.96 -1.26%, JBHT $37.91 (unch) and WERN $20.25 +0.74%.

Stifer more bullish on JBHT and WERN and that Q2 earnings will be strong enough to push their earnings and price targets higher.

  Jonathan Levinson   7/7/2004,  12:04:37 PM
QQQ is popping higher here, with a slight bullish wavelet divergence in progress. The short cycle downphase is nowhere near oversold, but upside volume is rising on the 150 tick chart. Short cycle resistance is 36.14, with 30 min resistance at 36.31.

  Jeff Bailey   7/7/2004,  11:54:32 AM
Securities Broker/Dealer Index (XBD.X) 120.46 -1.81% Link ... notably weak and sector loser. Tests critical support just above 120.

List of XBD.X components at this Link

  Linda Piazza   7/7/2004,  11:44:54 AM
Days such as today are frustrating, aren't they? As frustrating as they might be, however, they serve a purpose and may help us later in the week. This idling around is helping to establish support and resistance levels that we might need to recognize later in the week.

  James Brown   7/7/2004,  11:44:30 AM
Oh my gosh! I've never seen so many people get TRAMPLED in the running of the bulls in Pamplona, Spain (in the TV coverage just shown). The running of the bulls is part of the Fiesta de San Fermin. The festival lasts from July 6th through July 14th.

  Linda Piazza   7/7/2004,  11:43:22 AM
The Russell 2000 (not 200, as I typed earlier) is trying to steady at the ascending trendline off yesterday's low. The steadying looks tentative as yet, however, but it so far has not breached that trendline.

  James Brown   7/7/2004,  11:41:34 AM
....whoops... there it goes... EBAY just traded under $87.50.

  Jonathan Levinson   7/7/2004,  11:40:52 AM
The coupon pass I noted earlier has been quantified at a large 1.557B, larger than usual. That results in a net addition of 1.557B in liquidity from the Fed for today.

  James Brown   7/7/2004,  11:40:17 AM
We're still watching EBAY. The stock has been trading in a tight 80-cent range all day. Our stop is at $87.50. More aggressive traders willing to take the heat might want to put their stop under the simple 40-dma currently at $86.00. EBAY's next move will probably depend on reaction to YHOO's earnings announcement after the closing bell tonight. Since YHOO is expected to blow away the estimates I suspect EBAY will rally tomorrow. The challenge here is that YHOO (and EBAY) might continue to slip lower this afternoon on any pre-earnings jitters. The outbreak of earnings warnings isn't giving investors much confidence.

  Linda Piazza   7/7/2004,  11:36:18 AM
The Russell 2000 is approaching the ascending trendline that it began building about 2:30 yesterday afternoon, with that ascending trendline currently near 572.80.

  James Brown   7/7/2004,  11:35:02 AM
..a follow up on OI put play OMC... the stock is now down 4.78% and has broken support at the $70.00 mark on huge volume that is more than twice the norm. A reader emailed to let us know that Squawk Box on CNBC this morning mentioned something about OMC being connected to the COCO accounting scandal... Thanks for the note!

  Jim Brown   7/7/2004,  11:33:25 AM
The program trading numbers are correct at 70.5%. I wrote about this twice last week. Here is the link to the NYSE page. Link

  James Brown   7/7/2004,  11:31:59 AM
Drug giant Pfizer (PFE) plans to help 43 million uninsured Americans with their drug bills. The average savings is expected to be about 37% as PFE offers low-income Medicare beneficiaries a flat fee of $15 per prescription after they have used their $600 credit.

  Linda Piazza   7/7/2004,  11:27:30 AM
The OEX is turning the shortest-length of its Keltner channels lower again, suggesting that a retest of this morning's low and maybe even of yesterday's low is currently more likely than a test of 547. That could change, but it would require a sustained push above 544.

  Jane Fox   7/7/2004,  11:26:17 AM
Makes day trading more of gamble than ever and harder to play the probabilities.

  James Brown   7/7/2004,  11:25:32 AM
Jim Jubak talking about good things driving oil/energy stock AHC higher in addition to shorts getting squeezed. AHC is a current OI call play.

  James Brown   7/7/2004,  11:25:01 AM

  Jonathan Levinson   7/7/2004,  11:24:16 AM
That's right, James. Amazing, isn't it?

  James Brown   7/7/2004,  11:23:25 AM
Jim Jubak (on CNBC) saying retail trading volume is very low and program trading jumped from 50% to 70% of overall trading for a time last week... (did I hear that right? 70%?)

  James Brown   7/7/2004,  11:21:01 AM
...U.S. mortgage loan applications jumped 19.5% in the past week as rates slipped from 6.2% to 5.96%.

  James Brown   7/7/2004,  11:18:17 AM
William Lyon Homes (WLS) really isn't a tradable stock for us. Volume is way too low and there aren't any options but the homebuilder did issue some positive comments today. Its Q2 backlog is up 39% while its Q2 orders jumped 19%.

  James Brown   7/7/2004,  11:16:09 AM
Game-maker Mattel (MAT) is down 4.29% to $17.16 after Bank of America downgrades the stock to a "sell".

  Linda Piazza   7/7/2004,  11:13:33 AM
Is the OEX now settling into an equilibrium position with respect to the Keltner channels on the five-minute chart? Could be. That would fit the scenario I was kicking around for today: a small bounce that led to a tight-range day. For me, that small bounce could have included a move up to 547-547.50, however, with that being the approximate mid-channel level on the 15-minute chart. I had a sort of "if/then" statement in mind. If the OEX could sustain levels above 545, it might try for 547-547.50, settling into an equilibrium position there.

  Jeff Bailey   7/7/2004,  11:12:38 AM
Fate of the gold bugs is in the hands of Stillwater Mining (SWC) $15.88 +4.06% .

IF SWC can make the move above $16.50, the $HUI.X might be able to follow above that 205 resistance.

  Jeff Bailey   7/7/2004,  11:10:24 AM
11:00 Internals at this Link

Yesterday's Internals at this Link

  James Brown   7/7/2004,  11:06:49 AM
Marathon Oil (MRO) is down 3.8% to $36.38 after the company issued a warning that oil and gas production would "fall short of forecasts for the second quarter and full year due... The Houston company said it now expects second-quarter oil and gas production to average 341,000 barrels per day, down from its previous forecast of 348,000 bpd. For the full year, it said it expects production of 360,000 bpd, down from its previous estimate of 365,000 bpd. It said it expects administrative expenses of $85 million to $95 million, well above its forecast of $62 million, due to costs related to outsourcing activities as well as the impact of its higher stock price on employee compensation plans." (Reuters)

  James Brown   7/7/2004,  11:03:55 AM
Ascential Software (ASCL) is down 13% to $12.19 after issuing a Q2 earnings warning last night. The stock is up off its lows of the morning at $11.30.

  James Brown   7/7/2004,  11:01:45 AM
Internet stock KANA is down 24% to $1.60 after the company issued a Q2 earnings warning last night.

  Jonathan Levinson   7/7/2004,  11:01:27 AM
NEW YORK (Dow Jones)--U.S. benchmark oil prices will average $37 a barrel in the third quarter, $1 more than expected last month, the federal Energy Information Administration said Wednesday.

Prices have fallen from their early June highs above $40, but remain in the high $30s despite improvements in U.S. commercial inventories of crude oil and higher output by members of the Organization of Petroleum Exporting Countries, the EIA, the statistics arm of the U.S. Department of Energy, said in its July Short-Term Energy Outlook.

  James Brown   7/7/2004,  10:55:44 AM
FYI: reports are coming in that China, Thailand and Vietnam are all seeing new outbreaks of the avian flu in their chicken population again.

  Linda Piazza   7/7/2004,  10:55:43 AM
The OEX's fifteen-minute 100/130-ema's have dropped to 546.92 and 547.81, so that a test of upper Keltner resistance, if that should come today, would also be a test of these averages. The OEX's current positioning within the Keltner channels suggests that unless the OEX bounces soon, above 544.10 and preferably above 544.48, it's showing more likelihood of retesting this morning's low and perhaps even yesterday's than it is to reach 547, however.

  Jonathan Levinson   7/7/2004,  10:50:44 AM
Ten year bonds are printing a session high here, with TNX down 1.2 bps at 4.468%.

  Jonathan Levinson   7/7/2004,  10:50:04 AM
Looks like the 10B repo added tody to keep the ledger balanced wasn't enough. The Fed has just announced a permanent open market op in the form of a coupon pass. These are usually between 500M and 1B of permanent reserves, but the quantum hasn't been announced yet.

  Jeff Bailey   7/7/2004,  10:48:53 AM
Netease.com (NTES) Link .... per James' 10:40:30 ... Nice trade! Achieves its bearish vertical count of $33 too!

  James Brown   7/7/2004,  10:45:33 AM
Exit point alert on OI put play Omnicom (OMC). OMC is down another 3.82% today to $70.11. We initiated the play at $77.14 with a target in the $71-72 range. OMC is quickly approaching what should be support at $70.00.

Something could be happening here... OMC is falling sharply... and we can't find any news on the stock. If you're not willing to close the play consider tightening your stop significantly.

  Jeff Bailey   7/7/2004,  10:42:43 AM
50-day SMAs provide morning resistance except for the NYSE Composite ($NYA.X) Link and NASDAQ-100 Tracker (QQQ) Link

  James Brown   7/7/2004,  10:40:30 AM
Exit point alert on OI put play Netease.com (NTES). We jumped in at $39.38 on NTES a few days ago and this morning NTES gapped down to $32.84 and traded to $30.22 before bouncing. It's time to close the play and take our money off the table. The August 40s and 45 puts have jumped from $3.90 and $7.30 to $9.40 and $14.10, respectively.

The 15% drop today sparks from a revenue warning NTES issued for the second quarter. Here's an excerpt from their press release today:

NetEase.com also announced today that its preliminary second quarter 2004 revenue for its wireless value-added and other fee-based premium services, which are predominantly short messaging services (known as SMS), were lower than management had anticipated. Based on these figures, management believes that revenue (net of applicable business tax) derived from wireless value-added and other fee-based premium services for the second quarter will decline by between approximately 37% and 41% compared to the prior quarter.

"Although we will not have final results until later in the month, preliminary indications are that second quarter revenue from wireless value-added and other fee-based premium services, net of applicable business tax, will be between US$4.3 million and US$4.0 million, which represents a decline of approximately 37% to 41% from US$6.8 million in the first quarter. This is primarily attributable to a decline in our sales of SMS services due to a decrease in the total number of new users of these services between the first and second quarters of 2004 and an increase in turnover of our SMS users during the period...

  Linda Piazza   7/7/2004,  10:39:54 AM
The TRAN is bouncing today, too, but the positioning of its daily oscillators suggests that this is a countertrend bounce. At least so far, that's what that positioning suggests.

  Jeff Bailey   7/7/2004,  10:34:32 AM
Current OPEN MM Profiles at this Link

  Linda Piazza   7/7/2004,  10:33:15 AM
The BIX has broken above yesterday's inside-day range, although it hasn't yet bested Friday's high of 548.52. The BIX remains squarely in the middle of a consolidation zone, so I'm watching this as a sign of a short-term movement only, subject to be stopped by heavily layered resistance at any moment.

  James Brown   7/7/2004,  10:32:50 AM
OI put play IRF is bouncing a bit. We mentioned last night that shares were oversold and due for a bounce. Look for a roll over under the $38.00 level. IRF is up 2.75% to $36.89.

  James Brown   7/7/2004,  10:31:42 AM
OI put play GCI continues to sink despite the minor rebound in the major indices. Shares are down 1.14% to the $82.00 level.

  Linda Piazza   7/7/2004,  10:31:14 AM
The OEX still lingers at the mid-channel Keltner level, not yet able to climb above it and yet not dropping, either.

  James Brown   7/7/2004,  10:30:00 AM
SG Cowen is now the third major broker in a week to issue positive comments on QCOM and how it's the best play in wireless. Shares of this OI call play are rebounding from support at $70.00.

  James Brown   7/7/2004,  10:27:07 AM
Uh-oh! Prudential downgraded the Internet sector to "Neutral" this morning and with their comments they specifically downgraded EBAY to "neutral" as well. The stock gapped lower to $87.80 and traded to $87.58 before bouncing a bit. Currently shares are down 2.14%. While we have not yet been stopped out the move under the $88.00 mark is discouraging!

  Jeff Bailey   7/7/2004,  10:22:39 AM
Market Volatility Index (VIX.X) 15.97 -1.72% .... Breaks below yesterday's lows.

SPX most active options have put sellers showing up in the Dec. 1,005 puts, August 1,050 puts, Aug. 1,075 puts. These are three most actives. With VIX.X lower, has to be put sellers.

In fact.... 5 most active options are all put.

  Linda Piazza   7/7/2004,  10:21:01 AM
The OEX's three-minute chart showed bearish divergence on that last push higher, although the five-minute did not. Hmm. Take your pick which you believe.

  Jeff Bailey   7/7/2004,  10:16:30 AM
IPIX Corp. (IPIX) $11.14 -9% Link .... break important near-term support of $11.50.

Trade at $11.50 has IPIX's PnF chart generating a triple bottom sell signal. Vertical count turns bearish to $8.50.

  Linda Piazza   7/7/2004,  10:12:52 AM
The OEX hesitates at its neckline of its reverse H&S, although it didn't turn back far. As I study the markets this morning, all looks tentative. There are some early signs of a countertrend bounce in effect, a bounce that could conceivably carry the OEX up to 547 before it even creates a breakout signal on the Keltner charts, but both bulls and bears appear to be tiptoeing around this morning. We could get that kind of choppy, tight-range trading that we sometimes see after a day such as yesterday's. I'm leaning toward that thesis, but since I believe any bounce could be a countertrend bounce until proven otherwise, markets appear vulnerable to the downside at all times, too.

  Jonathan Levinson   7/7/2004,  10:11:34 AM
Session high for MSFT here.

  Jonathan Levinson   7/7/2004,  10:10:20 AM
QQQ has been struggling with the previous intraday high, which is 3 cents below 60 min channel resistance at 36.27 (below 30 min resistance at 36.35). The short cycles are overbought within these rising channels, which explains the current hesitation. There's still room to climb, but my indicators suggest that there should be stiff resistance at that upper 36.35 level.

  Jeff Bailey   7/7/2004,  10:06:31 AM
Stillwater Mining (SWC) $15.52 +1.7% .... edges out of 5-day consolidation.

  Linda Piazza   7/7/2004,  10:05:20 AM
The OEX challenges the neckline of irs reverse H&S.

  Linda Piazza   7/7/2004,  10:04:45 AM
The Russell 2000 also sports a reverse H&S on its five-minute chart, complete with bullish divergence as the head was formed. Depending on how you draw that neckline, the Russell 2000 could already have broken above the neckline, and have just drifted down to retest it (at about 575). The Russell 2000 hasn't made it above mid-channel Keltner resistance, however, with that level at 576. We've seen some incipient bullishness on the Russell 2000, but I'd qualify it as tentative as yet. Be careful.

  Jeff Bailey   7/7/2004,  10:02:47 AM
S&P Banks Index (BIX.X) 347.40 +0.43% .... first to trade WEEKLY Pivot. Edges above "cheater's" downward trend.

  Jonathan Levinson   7/7/2004,  10:01:42 AM
QQQ has an intraday high of 36.24 here. The short cycle is in gear with the 30 min cycle to the upside, with 30 min resistance up to 36.35.

  Linda Piazza   7/7/2004,  10:00:34 AM
It looks as if an OEX move above 545 will also constitute a confirmation of a reverse H&S building now on the five-minute chart, with the head at yesterday's low, and the neckline an ascending one. There was bullish divergence on that five-minute chart as the head was formed. Yesterday we saw a number of potentially bullish formations fail to follow through on their bullishness, so the fact that this potential formation is setting up shouldn't be taken as a guarantee that bulls are gaining strength. A rejection of the formation could result in disappointment that sends the OEX back to test yesterday's low again.

  Jonathan Levinson   7/7/2004,  9:58:15 AM
10B expiring, 10B just added for no net change from the Fed's open market desk.

  Linda Piazza   7/7/2004,  9:57:25 AM
The OEX continues to challenge the mid-channel Keltner level on its five-minute chart, with resistance showing up from 544.46-544.68, and then again at 545 from a descending trendline. The level is proving difficult for the OEX, as I expected it to be, but the OEX hasn't given up yet.

  Jeff Bailey   7/7/2004,  9:53:26 AM
Buy Program Premium .... SPX 1,117.65, OEX 543.82, INDU 10,231, QQQ $36.19,

  Jeff Bailey   7/7/2004,  9:51:28 AM
09:45 Market Watch at this Link

  Linda Piazza   7/7/2004,  9:49:42 AM
I'm not a big fan of inside-day set-ups, but for those who believe in them, the BIX is challenging the top of yesterday's range, the top of the inside-day candle created yesterday. I'm watching this because the BIX is one of the bellwether indices that Jeff taught us OEX traders to watch.

  Jonathan Levinson   7/7/2004,  9:47:42 AM
Session highs for ZN bonds and August gold. I'm very curious to see what the Fed repo balance will be today. Awaiting the 10AM announcement on that.

  Linda Piazza   7/7/2004,  9:45:38 AM
The OEX now approaches mid-channel Keltner resistance, with that resistance roughly from 544.36-544.61. Just above lies yesterday's descending trendline off the highs, somewhere near 545, depending on how it's drawn. If the OEX can sustain levels above 545, Keltners suggest it could try for 547, but that mid-channel level could prove tough.

  Linda Piazza   7/7/2004,  9:42:50 AM
The SOX bounces this morning, but hasn't yet retraced half of yesterday's range, a point at which it might experience resistance. The midpoint of yesterday's range was at 446.27.

  Jonathan Levinson   7/7/2004,  9:41:42 AM
Session high for GE here.

  Linda Piazza   7/7/2004,  9:37:06 AM
During the first five minutes of trading, the OEX traded a tight range of 542.89 to 543.33. It's bouncing now, trying to turn that Keltner channel higher again.

  Linda Piazza   7/7/2004,  9:33:29 AM
If the OEX maintains levels this low this morning without bouncing soon, it's in danger of turning the shortest-length Keltner channel lower again, turning toward 542 rather than up toward 545.

  Jeff Bailey   7/7/2004,  9:33:10 AM
Accenture (ACN) $27.24 .... discussed in a recent "Ask the Analyst" column .... company saying this morning that it ssaw third quarter earnings increasing "significantly" due to a 37% jump in outsourcing revenues and a 13% rise in consulting sales. ACN reported Q3 profits of $210.4 million, or $0.37 per share, which was inline with analysts estimates. Net revenue for the quarter was up 21% from the year ago quarter at $3.69 billion.

For Q4 ACN said it expects revenues to be between $3.4 billion and $3.5 billion and earnings per share between $0.26-$0.29.

  Jim Brown   7/7/2004,  9:28:28 AM
FILE trading down -7.83 at $20 afer its warning.

  Jim Brown   7/7/2004,  9:26:01 AM
Prudential cut the Internet sector to neutral this morning. EBAY, YHOO, AMZN, NTES are trading down in pre market. NTES down -4.76 SINA down -2.78

  Linda Piazza   7/7/2004,  9:20:24 AM
You can find my OEX-related post at 23:08, the first post on this Market Monitor page. Futures could not hold onto overnight gains, dropping back near their closing levels yesterday. Bulls could interpret the overnight push higher as a sign that the markets will move higher with the least encouragement while bears will point to the H&S-ish formations in the overnight session and the drops that followed their confirmations as signs that gains are not sustainable. Perhaps both are true, and that thesis--a possible countertrend bounce that will eventually fail--is the one we'll see. Remain skeptical today, however, as it's common to see a choppy, tight-range consolidation day follow such large-range days.

  Jonathan Levinson   7/7/2004,  9:12:31 AM

  Jim Brown   7/7/2004,  9:02:07 AM
SMTL is warning.

  Jonathan Levinson   7/7/2004,  8:46:06 AM
QQQ continues to hold the upper end of yesterday's closing range, having risen to 36.14 but currently back to 36.031. Short cycle support is down to 35.93, 30 min support lined up with 60 min support at 35.77. The short cycle upphase that brought us these gains is showing its first signs of weakness.

  Jonathan Levinson   7/7/2004,  8:23:46 AM
The lower treasury rates we've been discussing equals more mortgage borrowing. The MBA reported that the Composite Index rose by 19.5% from the previous week. The Refi Index rose by 27.6%, and the Government Index rose by 9.7%.

  Jonathan Levinson   7/7/2004,  7:58:10 AM
There are no major economic reports due today.

  Linda Piazza   7/7/2004,  7:04:54 AM
Good morning. Last night, the Nikkei created a new P&F sell signal at its open, gapping down more than 115 points and soon dropping 100 more points to its low of the day. The Nikkei made up some of those losses through the rest of the day, closing lower by 90.41 points or 0.79%, at 11,384.86. As the dollar dropped against the yen, computer-related shares joined other exporters in leading the index lower. Issues related to domestic demand tended to perform better. In stock-specific news, a newspaper speculated that consumer finance company Promise will end its partnership with a UFJ Holdings unit. Both Promise and UFJ Holdings closed higher, although UFJ Holdings at first declined.

Other Asian bourses turned in mixed performances, although computer-related shares tended to be weak throughout Asia. The Taiwan Weighted lost 0.10%, but South Korea's Kospi gained 0.45%. Singapore's Straits Times lost 0.04%, but Hong Kong's Hang Seng gained 0.29%. China's Shanghai Composite declined 0.83%.

European bourses turn in mixed performances, too. Germany's May factory orders surprised to the upside, rising 1.6% against expectations of a flat number. Underneath the headline number, it appears that the exports drove that higher-than-expected number, with domestic demand still questionable. Domestic orders declined by 0.6%. In stock-specific news, the previously troubled French engineering group Alstom announced that orders were soaring although sales had fallen due to low orders a year ago in certain units.

As of this writing, the FTSE 100 has gained 8.50 points or 0.19%, to trade at 4,379.20. The CAC 40 has gained 8.76 points or 0.24%, to trade at 3,669.44. The DAX has lost 4.42 points or 0.11%, to trade at 3,940.46.

  Linda Piazza   7/6/2004,  11:08:08 PM
Note: Beginning today, I will probably post my take on the OEX's behavior in the late evening rather than early morning. That gives you more time to read it, and me more time to prepare it, although we're of course missing information that might come from 8:30 economic releases and futures behavior in the overnight market.

Ending Tuesday just above its 200-sma, the OEX followed through on its third straight day of losses. The OEX wasn't alone. Some of the other bellwether indices we frequently watch to monitor likely OEX action also saw declines continue. The TRAN weakened, falling toward 3100 but stopping near the 3120 support. In the process, the TRAN's daily stochastics began turning down below the signal line, RSI did fall below its signal line and MACD completed a tentative bearish cross, although from above signal. Each of those oscillators still has a far distance to go before registering levels that indicate the TRAN is oversold, so the TRAN, at least, could still have much more downside before its decline is completed. The SOX fell through the ascending trendline that had been building since early May, tumbling almost all the way to the midline support of the descending regression channel in which it's traded most of this year. It held above 435 weekly support, but closed just below 440. Its three days of losses have mostly retraced the gains it spent all of May laboring to produce. The BIX held up better than the others, finding support at its 100-dma and producing an inside-day candle within a recent consolidation zone.

Those three days of losses on many of those bellwether indices suggest that it may be time for a tight-range consolidation day, if not for a bounce, but global conditions affecting oil prices might impact the behavior of the bourses. Yesterday's continued rise in crude prices added to other market pressures. Any bounce is now suspect, as it appears possible that the OEX may be in the process of rolling down through the descending regression channel visible on its weekly chart, having been rebuffed at the 200-week moving average again. Nevertheless, let's look at what the Keltner charts are showing us about the possibility for a bounce. As Tuesday ended, the Keltner channels were positioned so that if the OEX should climb and maintain levels above 545, it's likely to reach toward 547. A sustained level above 548 might see a test of 553.50. Each of these channel lines is currently descending and so might be lower than these levels by the time it's tested.

A sustained move below the 200-dma would likely find support again near yesterday's low, at least according to the current predictions of the Keltner channels. If that fails to support the OEX, the 200-ema lies just below, too, at 538.12. It's possible that we could be setting up for another prolonged consolidation period with the OEX caught between the 200-sma and -ema.

As I type, futures hold up well despite the Nikkei's plummet during its morning session and our own after-hours warnings. That supports the consolidation-or-oversold-bounce theory, but there are still many hours to go before the market opens tomorrow morning.

  OI Technical Staff   7/6/2004,  11:06:13 PM
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