Option Investor
Printer friendly version
  Linda Piazza   7/12/200,  11:30:49 PM
OEX notes: Monday, the OEX climbed high enough to test and surmount its 15-minute 100/130-ema's for the first time since July 1. That 6/30-7/1 move above these averages was relatively short-lived. Will this one be, too? As Monday closed, RSI had hooked down, threatening to move through the signal line again, hinting that it's at least a possibility that the move to test those averages could be short lived.

Monday's action constituted another day of oscillation around the 200-sma, with the OEX trading part of the day below that average and part above it. Since the OEX spent 11 days oscillating around that average in May before it finally decided on direction, these few days spent so far don't seem out of line, and we could even have a few more and be well within the norm expected for a test of an important level. The day was also another spent finding support on the midline of the descending regression channel in which the OEX has traded since the first of the year and at the 19.1% retracement of the rally off the March, 2003 low. Monday's action was enough to kick up the shorter-term and less-reliable 5(3)3 stochastics and the RSI, turning the stochastics up through the signal line. The OEX needs to do more than consolidate while those stochastics cycle up, however. A first step to show that it was beginning to break out would be a move through the 50-dma at 545.24, an average that turned the OEX back on Wednesday and Thursday of last week. A second step would be a move above 547-548.

An important pair of 100/130-ema's for the OEX over the last few months has been the 120-minute 100/130-ema's. These averages have figured as a pivotal point for many a short-term high or low over that several-month period. They're currently converging at 547.92 and 547.98.

These are the steps that might be needed to say that the OEX has successfully tested its 200-sma and is moving up, but are they likely to happen? The 15-minute nested Keltner charts suggest that resistance is gathering under 545, so the OEX needs to push through that resistance quickly in order to keep it from firming up and fencing the OEX off from further gains. Specifically, the OEX needs to maintain levels above 543 and hopefully above 544 to keep the smallest channel on its fifteen-minute chart turned higher, and it needs to maintain levels above 544.40 to keep the middle-length one turned higher. That's important because it's usually the middle-length channel, currently with an upper line at 544.38, that delimits the OEX's movements. If the OEX can break above that resistance, next resistance on the 15-minute chart lies at 549.09.

What about downside possibilities? If the OEX maintains values below 542.92 and especially if it maintains levels below 541.77, it risks turning the Keltner channels lower again, toward 539.76, or perhaps toward 537.60 if that first support should fail.

One warning: the last time the OEX consolidated at its 200-sma, the oscillations around that average grew more violent, so that the OEX seemed to break out of the consolidation only to reverse and head the other direction, whipsawing anyone brave enough to take a position. That could happen again. Monday, the OEX attempted a breakout, but didn't quite make it. It needs to build on that breakout potential Tuesday, and do so quickly, or else that resistance will firm.

  Jeff Bailey   7/12/200,  5:29:22 PM
Current OPEN MM Profiles at this Link

Overstock.com (OSTK) $36.09 -4.44% Link .... was notably weak today, and might have been attributed to general commentary by the "Fool," which based on past bullish commentary, might have been misconstrued when the Fool added that David Meier "is afraid for her (his wife's) wallet to tell her about Overstock.com.

I (Jeff Bailey) think Mr. Meier's fears were that his wife would shop at Overstock.com. I say this only because the Fool was looking for pullback entries in OSTK several weeks ago.

Here's an article where OSTK was mentioned, in relation to Google's dutch auction IPO. Link

  Jeff Bailey   7/12/200,  4:59:40 PM
Pivot Matrix for tomorrow at this Link

S&P Banks (BIX.X) 348.25 +0.97% closes above MONTHLY and WEEKLY Pivots and suggests broader market strength.

Semiconductor (SOX.X) 441.18 -2.2% ... hangs on by a wafer and couldn't quite trade its MONTHLY S2 for a second time this month.

  Jeff Bailey   7/12/200,  4:31:09 PM
Closing Internals at this Link

  Linda Piazza   7/12/200,  4:02:07 PM
The TRAN's doji today occurred from within a building consolidation zone, so wouldn't have the same connotation as a possible reversal signal. It just signifies what the building zone does--indecision. That doesn't mean that the TRAN can't bounce tomorrow. It can, but today, bulls and bears were evenly matched.

  Linda Piazza   7/12/200,  4:00:05 PM
The SOX made it back above 440, moving up to challenge the broken support from the bear flag of the last few trading sessions.

  Linda Piazza   7/12/200,  3:57:52 PM
The 15-minute OEX chart still shows the OEX challenging, but not yet surmounting resistance that ranges from 543.35 to 544.38. If the OEX can sustain levels above 544.50, then it will be aiming its smallest Keltner channel toward 549 resistance next, but it hasn't yet shown itself capable of moving out of the pull of the current resistance band.

  Jeff Bailey   7/12/200,  3:57:50 PM
Allergan (AGN) $82.10 -3.61% .... halted after sharp drop from $87.00.

FDA advisory panel was supposed to discuss whether to recommend the FDA to approve the company's drug Tazoral, for treatment of severe psoriasis.

  Jonathan Levinson   7/12/200,  3:54:58 PM
But not on the Naz.

  Jonathan Levinson   7/12/200,  3:54:11 PM
We're looking at a key outside upside reversal day here, with a lower low closing above Friday's high on the Dow.

  Jonathan Levinson   7/12/200,  3:46:21 PM
I agree, Jane. There's hopefully a lucrative business opportunity for those able to remove the chips for others.

  Jane Fox   7/12/200,  3:44:34 PM
Jonathan - we are getting closer to 1984 all the time. The book that is. (15:30 post)

  Jonathan Levinson   7/12/200,  3:39:31 PM
The higher low printed at 3PM is commensurate with a 30 minute cycle upphase, and given the fact that the upphase launched from a bullish oscillator divergence, I don't think that bears are out of the woods yet, despite the inability to return to the day highs. Until this 30 min cycle upphase ends, there's the possibility of a strong, high-traction move to the upside.

  Jonathan Levinson   7/12/200,  3:30:14 PM
Off topic but stunning nonetheless: Link

The rights and wrongs of RFID-chipping human beings have been debated since the tracking tags reached the technological mainstream. Now, school authorities in the Japanese city of Osaka have decided the benefits outweigh the disadvantages and will now be chipping children in one primary school. The tags will be read by readers installed in school gates and other key locations to track the kids' movements.

  Linda Piazza   7/12/200,  3:16:47 PM
I have to be away from my desk for a little while.

  Jonathan Levinson   7/12/200,  3:14:36 PM

  Jonathan Levinson   7/12/200,  3:14:10 PM
Session high for GE here.

  Jonathan Levinson   7/12/200,  3:08:15 PM
QQQ volume has slower to a crawl as the wavelet oscillator tries to bounce here. 30 min channel support has risen to 35.25, while resistance is up to 35.66. The short cycles are rolling over here, and a break of 35.45 could set up a retest of the low. After hours of numbing boredom on Friday and today, there's at last some movement developing.

  Linda Piazza   7/12/200,  3:05:15 PM
The SOX made it high enough to challenge mid-channel resistance on the Keltner charts, but not yet high enough to test this morning's gap. Resistance is beginning to firm up again near 440.80-441.40.

  James Brown   7/12/200,  2:59:56 PM
OI call play ITT has come alive to climb 1.82% and push through minor resistance at the $84.00 level. Its MACD looks that much closer to producing a new buy signal.

  Jonathan Levinson   7/12/200,  2:49:58 PM
Bonds are dropping precipitously here, with the TNX up to a 1.9 bp loss at 4.447% currently.

  Jonathan Levinson   7/12/200,  2:49:04 PM

  Linda Piazza   7/12/200,  2:48:07 PM
I've had intermittent troubles with my broadband access today and just got knocked off, just in time to miss the bigger push. The OEX came up to hit mid-channel resistance on the 15-minute chart. Earlier today, in my 13:16 post, I had mentioned that the Keltner charts were showing that if the OEX could maintain levels above 542, that Keltners predicted that it might then test 544. I had said that the 200-sma was within that range, but that Keltners sometimes surprised me by showing that there was not any resistance where the historical or other resistance suggested there would be. That's what happened again today, with the OEX zooming past the 200-sma as if it was no hazard at all. There's now been a Keltner channel violation on that five-minute chart, so those in bullish positions should begin guarding their positions.

  Jeff Bailey   7/12/200,  2:42:51 PM
Buy Program Premium was witnessed 5-minues ago, which had major indices at best levels of session.

OEX 543.49 +0.15% session high was 544.52.

  Jonathan Levinson   7/12/200,  2:39:38 PM
This looks like the pop suggested by the bullish 30 min cycle divergence noted earlier. All 30 min channels pointed north here, with 30 min resistance no 35.61 (currently exceeded).

  Jeff Bailey   7/12/200,  2:37:18 PM
VIX.X 14.82 -6.08% ....

VXN.X 21.64 -3.17% ....

VXO.X 16.47 +6.23% .... ?????

  Jeff Bailey   7/12/200,  2:35:23 PM
QQQ $35.56 -0.47% .... battles back to $35.55 and 61.8% conventional retracement (from May low to recent high).

  James Brown   7/12/200,  2:34:38 PM
Aggressive bulls and bears will want to keep an eye on Chicago Mercantile Exchange (CME). The stock has slipped from the $148 level to $134 in the last several days and looks ready to test support at its rising 40-dma near the $130-131 level. CME has bounced from its 40 & 50-dma's in the past several months and could be due for an oversold bounce now down 10% from its highs. Obviously a breakdown under the 50-dma would be very bearish. Earnings are due out on July 22nd.

  Jonathan Levinson   7/12/200,  2:32:42 PM
30 min channel resistance has risen to 35.55, while short cycle resistance (pointed almost vertical now) is up to 35.60, lining up with the top of the 60 min channel. 35.40 now looks like short cycle support from here.

  James Brown   7/12/200,  2:30:10 PM
Dow-component UTX is surging higher in the last 30 minutes and has broken back above the $90.00 mark. Shares recently tested support at $88.00 and its simple 200-dma.

  James Brown   7/12/200,  2:28:45 PM
Another downgrade has sent Zebra Technologies (ZBRA) falling more than 5% to test support at its rising 50-dma and the $80.00 level. This is a big test for ZBRA, which has been bouncing from the 50-dma for months.

  Jeff Bailey   7/12/200,  2:27:12 PM
Dow Industrials (INDU) 10,225 +0.11 .... with new WEEKLY pivot retracement at this Link

Still think we flip-flop around here for a couple of days.

  James Brown   7/12/200,  2:26:55 PM
Hmm.. we're actually seeing Dow-component IBM trying to bounce. The stock is very short-term oversold and due for an oversold bounce. Earnings are July 15th after the market's close.

  Jonathan Levinson   7/12/200,  2:22:43 PM
Session high for Dow futs here, also GE and INTC.

  Jonathan Levinson   7/12/200,  2:20:47 PM
GE to a session high here.

  Jonathan Levinson   7/12/200,  2:20:18 PM
Remember the bullish 30 min cycle divergence. The 30 min channels are not yet tilted higher, but that setup could yield a big pop if they do.

  Jonathan Levinson   7/12/200,  2:19:31 PM
The move has violated Keltner resistance on the 30 and 60 min channels for Dow and SPX futures, but not for QQQ which has a target of 35.52.

  Jonathan Levinson   7/12/200,  2:18:53 PM
QQQ 35.45 currently, correcting all the losses since 10AM.

  Jeff Bailey   7/12/200,  2:18:48 PM
Buy Program Premium .... SPX 1,111.82, OEX 542.29, INDU 10,219, QQQ $35.45.

  Jonathan Levinson   7/12/200,  2:18:29 PM
QQQ and the futures are breaking to new highs above the previous wavelet tops here.

  Linda Piazza   7/12/200,  2:15:28 PM
That push came a little later than the typical 1:35-1:55 time zone for a stop-running push, but actually began during that time period. The OEX is dealing with current Keltner resistance, but if it can now maintain levels above 540.64, it looks possible for the OEX to push up toward 541.47-541.56 resistance. This is the same resistance that was just above 542 earlier today. It's moved down as the OEX did. If the OEX can't maintain that level or especially if it can't maintain 540.32, then there's danger of turning the smallest channel down again.

  Jonathan Levinson   7/12/200,  2:05:55 PM
Apparently that fire in Norway took out half of the refinery's 180,000 bpd capacity.

  Jeff Bailey   7/12/200,  2:02:52 PM
Buy Program Premium

  Jonathan Levinson   7/12/200,  2:02:16 PM
Session high for GE here.

  James Brown   7/12/200,  2:01:39 PM
A contributing factor to crude oil's 1% rise back over the $40.00/bbl mark is a fire at Norway's largest oil refinery. Norway is the world's third largest exporter and the fire has halted production at the plant. There was no suggestion of foul play as the cause for the fire but it heightens concerns over terrorist-led interruptions in the crude oil market.

  James Brown   7/12/200,  1:56:36 PM
FYI: MCI, previously known as Worldcom, has launched a lawsuit against former CEO Bernie Ebbers for $400 million in loans in interest.

  Linda Piazza   7/12/200,  1:55:40 PM
Bulls are certainly defending OEX 540 today. It seems to be a line in the sand, with 15-minute Keltner support lining up just under and just over that level. Further 15-minute Keltner support lies down at 538, just below the 200-ema.

  James Brown   7/12/200,  1:53:19 PM
Dow-component, NDX-component and SOX-component Intel (INTC) continues to trade under the $26.00 level, down 2.67%, after Merrill's downgrade from "buy" to "neutral" following Merrill's downgrade of the semiconductor sector from "over weight" to "under weight".

INTC is due to report Q2 earnings after the closing bell tomorrow. Estimates are at 27 cents a share.

  Jonathan Levinson   7/12/200,  1:50:33 PM
Jane, I have July Maxpain for QQQ at 36, but 37 is a close second.

  Jonathan Levinson   7/12/200,  1:49:09 PM
Still not the rip-snortin' bull for which we were hoping, but the lows continue to hold. Volume is terrible here- just 617M NYSE shares traded so far, and not the stuff of which strong bases are made. Nevertheless, the bullish stochastic divergence persists on the 30 min QQQ chart, and the short cycle oscillators remain closer to oversold than to overbought.

  James Brown   7/12/200,  1:48:06 PM
If you haven't heard yet Google plans to list on the NASDAQ exchange for the IPO that could occur this month. The company's trading symbol has not yet been chosen. A few possibilities are GOOG, GOGL, GGLE.

  Linda Piazza   7/12/200,  1:46:35 PM
Total volume so far has been a pitiful 583 million on the NYSE and 841 million on the Nasdaq, at least as of a few moments ago.

  James Brown   7/12/200,  1:46:15 PM
We haven't had any stock split announcements in a while. Aaron Rents (RNT) just announced a 3-for-2 split with its stock near all-time highs at $32.67. Shares have climbed consistently from its February 2003 lows near $11.50.

  James Brown   7/12/200,  1:43:39 PM
Marvel Enterprises (MVL) announced a $100 million stock buy back program. According to their press release: "The authorization follows Marvel's redemption last month of its remaining long-term debt, freeing the Company to consider share repurchases as one use of its current cash holdings and future cash flows. Marvel currently has over $150 million in cash, certificates of deposit and commercial paper. Without any share repurchases, Marvel expects that year-end 2004 cash levels would exceed $200 million. "

  James Brown   7/12/200,  1:39:26 PM
After two months of consolidating sideways between $17.00 and $18.00 shares of Sprint (FON) are up 2.05% and trying to breakout above the $18.00 level after Legg Mason upgraded FON to a "buy" this morning.

  Linda Piazza   7/12/200,  1:37:54 PM
We're entering the time of day when we often see stop-running moves. Those moves are meant to test the resolve of bulls or bears, so sometimes follow through in the direction of the move or sometimes get quickly reversed. It's always difficult to know what to do with your stops during this time of day, but it's usually best to adhere to your planned stops and then just get back in if the move is quickly reversed. An example of possible action might be a quick drop today to Keltner support that's as quickly bought.

  Jonathan Levinson   7/12/200,  1:37:16 PM
Stepping away for 10 minutes here.

  Jonathan Levinson   7/12/200,  1:17:53 PM
There's a bullish divergence setting up on the Nasdaq futures / QQQ. If bulls can hold the day lows for the rest of the session, there's a good chance that the 30 min cycle upphase could be explosive. A break of the session lows invalidates that, but for the time being the setup is there.

  Linda Piazza   7/12/200,  1:16:27 PM
The OEX still keeps getting turned back at the former support of its bear flag pattern on the five-minute chart this morning, but it also still has not confirmed that breakdown by violating the day's low yet. As I type, nearby resistance, near 541, looks stronger than nearby support, suggesting that 540.11 could be tested and that if that fails to hold as support, 539.20 is still a possibility. If the OEX can maintain values above 541 instead, however, a test of 541.80 may be possible. If the OEX could then maintain levels above 542, the Keltner charts suggest 544 might be possible, but the 200-sma is right within that range and might prove to be formidable resistance. The Keltners surprise me sometimes, however, when they fail to show some historical support or resistance level to be important, and it turns out not to be. I wouldn't ignore the 200-sma on that anecdotal evidence, however.

  Jeff Bailey   7/12/200,  1:16:23 PM
01:07 Market Watch at this Link

  James Brown   7/12/200,  1:15:54 PM
CEC Entertainment (CEC) a.k.a. Chuck E. Cheese's is up 2.44% to $30.63 on a "buy" upgrade but shares are struggling with resistance at $31.50 and its simple 50-dma.

  James Brown   7/12/200,  1:14:20 PM
Apple Computer (AAPL) with an announcement today...from its press release:

"Apple today announced that music fans have purchased and downloaded more than 100 million songs from the iTunes Music Store, marking a major milestone for the emerging online music business."

  Jonathan Levinson   7/12/200,  1:08:56 PM
Bonds are rising strongly here, with TNX down 3.1 bps to 4.435%.

  James Brown   7/12/200,  1:06:57 PM
NVDA, MCHP, LSI, ISIL, and ATYT also make the Merrill "sell" list this morning.

  James Brown   7/12/200,  1:05:38 PM
Merrill Lynch also cut Integrated Device Technology (IDTI) to a "sell" this morning. The stock is down 5.27% and hitting new 11-month lows at $11.14.

  James Brown   7/12/200,  1:02:45 PM
Merrill Lynch cut PMC Sierra (PMCS) to "sell" this morning and I'm surprised to see the stock only down 3.55% to $11.66. PMCS had been under performing the SOX recently with a sideways consolidation versus the SOX's oversold bounce. Earnings for PMCS are due out on the 15th.

  Jeff Bailey   7/12/200,  1:00:50 PM
SPX Most active options at this Link

I would think Aug. 1,075 is call buying today, with July 1,125 call selling and July 1,050 put and July 1,100 put selling.

The Aug. 1,075 could also be call selling, offset by Aug. 1,125 call buying to hedge the selling of July premium into this week's expiration.

General thought is selling of July premiums where found, but using August expiration not as directional, but hedge against a break from range.

  Linda Piazza   7/12/200,  12:55:37 PM
If we think the SOX has suffered a precipitous loss over the last week, the loss suffered by the GSO, the GSTI Software Index, looks worse. This index confirmed a H&S formation by falling through the neckline. Actually, it appears to have broken that neckline before, in May, but then to have pulled itself back from the ledge and risen into two equal but lower-than-previous-highs peaks, before falling again through the neckline. The downside target for this formation is a seemingly impossible low of 116.03. The P&F chart sets a current downside target at 126, but it's still in the process of forming the P&F downside target, so it could go lower. However, shorter-term, it appears that the GSO might be trying to form some sort of measured distribution pattern such as a "b" distribution pattern or a bear flag climb into resistance. That would be natural after such a steep descent. A fall through Thursday's and Friday's lows might send it hurtling downward instead, but the bear-flag climb looks at least as likely right now. Whether the drop or the measured-distribution climb occurs may rely on general market weakness or strength, at least in part. If in bearish software-related plays, however, make plans for how you would handle a possible bear-flag climb into resistance if it should occur.

  Jonathan Levinson   7/12/200,  12:39:31 PM
The higher low on the pullback confirms short cycle strength and has the 30 min channels for QQQ rising now to 35.20 support. However, the fact remains that in over two hours there's been no bounce to speak of, and if the bulls can't gain some ground during the upphase, the next downphase should do more damage.

  Linda Piazza   7/12/200,  12:35:22 PM
Crude futures are above $40.00 again this morning, at $40.72 as of 30 minutes ago. This adds another pressure to the markets in addition to that added by the weak semi sector.

  Linda Piazza   7/12/200,  12:26:04 PM
This morning's climb had all the earmarks of a bear flag. It was a tight pattern of higher highs and higher lows after a sharp decline. It turned back at a 50% retracement of the sharp decline, and subsequently broke below the flag's support. It retested the broken support and then turned down again. However, it did not then confirm the breakdown by moving to a new low of the day. This shows me that although there's some bearishness in the market's behavior (typified by the measured distribution pattern in the bear flag), bulls are trying to catch a bottom, stepping in ahead of support that held earlier. The bull vs. bear battle is not done yet, it seems.

  Jonathan Levinson   7/12/200,  12:20:10 PM
Despite the short cycle weakness, the 30 min channels remain flat. Support is at 35.17 QQQ (for the futures, 10133 / 1104.75 / 1422), and for the time being this looks like a consolidative short cycle pullback. If we don't get an immediate bounce from 30 min channel support, however, the further decline could be ugly given the weakness of the current bounce.

  Linda Piazza   7/12/200,  12:18:20 PM
The OEX broke down out of this morning's bear flag, but it hasn't confirmed that breakdown by a move to a new low. Keltner support is trying to gather beneath the OEX's current position, from 540.12-540.23.

  Jonathan Levinson   7/12/200,  12:16:37 PM
I agree with Jane. This bounce belongs in an after-school special.

  James Brown   7/12/200,  12:15:34 PM
Hmm... Biotech stock DNA is not seeing much bounce from support at the $50.00 mark and its simple 200-dma. Bears are probably circling for a breakdown under these key support levels. Its bearish P&F chart points to a $39 target.

  Jeff Bailey   7/12/200,  12:13:32 PM
12:07 Market Watch at this Link

  James Brown   7/12/200,  12:06:10 PM
Ouch! Eon Labs (ELAB) is down 11.8% to $32.14 after ThinkEquity downgraded the stock to a "sell". We had ELAB on the watch list this weekend because shares had dipped and begun to bounce from its rising technical support near the simple 100-dma. Volume has been huge and a handful of other brokers are defending the stock. The stock is bouncing from support near $31 above its 200-dma.

  Jonathan Levinson   7/12/200,  12:02:47 PM
This last pullback is threatening the short cycle upphase on QQQ.

  James Brown   7/12/200,  12:02:35 PM
For those readers following the Enron fallout... Lea Fastow has begun her one-year prison term today. Lea was an Enron executive while also married to Enron's ex-CFO Andy Fastow.

  James Brown   7/12/200,  11:58:05 AM
Titan Pharma (TTP) is up 14.8% to $2.63 after announcing that the FDA has granted "fast track" status to the company's Spheramine treatment of Parkinson's disease.

  Linda Piazza   7/12/200,  11:55:47 AM
I keep seeing bullish divergences set up, Keltner style, but the OEX can't seem to keep that smallest Keltner channel turned up toward 542. It needs to maintain values above 540.83 or preferably above 541.21 to do that.

  Jonathan Levinson   7/12/200,  11:52:55 AM
I'm hearing that a great deal of attention was being paid to the AMAT presentation at the scheduled semiconductor conference. The word is that they are very optimistic but provided little actual data by way of support. The presentation ended a few minutes ago.

  Jonathan Levinson   7/12/200,  11:45:08 AM
Ten year treasury yields are hanging at 4.447%, down 1.9 bps for the day, and taking a weak sideways bounce from the session low below 4.44%. The low from last week was 4.41%, and the bounce has been generally uninspiring. A break above 4.5% or below 4.4% should be directional.

  James Brown   7/12/200,  11:41:31 AM
NCR Corp (NCR) is one of today's big winners, up 10.6% to a new high over resistance at $50.00. The company issued positive Q2 earnings guidance this morning before the bell. NCR is forecasting earnings to come in 35 cents or above compared to analysts' estimates at 18 cents. The formal earnings report is July 29th.

  Linda Piazza   7/12/200,  11:39:20 AM
The climb off this morning's low is now looking suspiciously like a bear-flag climb. If it is, it probably shouldn't retrace more than about 50% of the drop from this morning's high to the low, with that 50% retracement occurring at about 541.26. A 61.8% retracement lies at about 541.62, and a move above that would suggest that the OEX would retest the day's high.

  James Brown   7/12/200,  11:38:16 AM
IRF is another OI put play that is sinking on the chip-sector downgrade. Shares gapped under round-number support at $35.00 and are currently down 2.5% to $34.44.

  James Brown   7/12/200,  11:36:40 AM
OI put play SLAB is trading lower on the weakness in chips after Merrill Lynch downgraded the semiconductor sector this morning. SLAB dipped to $40.51, which was not quite to our target at $40.00. Readers may still want to exit now at $41.30 for a profit or significantly tighten their stop loss.

  James Brown   7/12/200,  11:34:21 AM
OI put play APPX has reached our $25.00 target. Shares dipped to $24.76 this morning and have produced an oversold bounce back above the $25.00 mark. We are suggesting readers exit for a profit and close the play, which we will do this evening.

  James Brown   7/12/200,  11:32:25 AM
We've been stopped out on OI call play QCOM. The general market weakness and some cautious comments from Smith Barney about expectations potentially rising too fast were enough to send QCOM through support at the $70.00 level. Its MACD has produced a new sell signal.

  Linda Piazza   7/12/200,  11:31:52 AM
The OEX did maintain the lower level it needed to maintain to keep the smallest channel on its five-minute chart pointed upward. It's about to face resistance from 541.28-541.30, and now needs to maintain levels above 540.93 or at least 540.50 to keep that channel pointed up toward 542.07-542.54.

  Jonathan Levinson   7/12/200,  11:27:20 AM
This is prime time for the bulls. The bounce is so far slow and weak, far from impulsive, but the 30 min channels are no longer sloping steeply down. If bulls can hold these post-bounce levels, the 30 min cycle downphase could abort and shirt the intraday bias to the upside. Current 30 min channel resistance is 35.53.

  Linda Piazza   7/12/200,  11:25:09 AM
On the five-minute chart, next Keltner resistance is at 540.84, but there's converging resistance at 541.27-541.43. It doesn't appear particularly strong, however, looking fairly balanced on a five-minute basis with the support from 540.27-540.40.

  Jonathan Levinson   7/12/200,  11:18:46 AM
Short cycle support is currently 35.31, above 30 min support of 35.17 QQQ.

  Linda Piazza   7/12/200,  11:17:09 AM
The OEX needs to maintain values above 540.90 or at least 540.50 to keep the smallest Keltner channel pointed up toward 542. Those support levels could be breached temporarily, but not maintained if that channel is to stay pointed upward.

  Jonathan Levinson   7/12/200,  11:09:52 AM
A wavelet bounce is growing overbought here, but the short cycles are in a young upphase here. Look for a higher low (anything above the session low) on the next wavelet downphase.

  Jonathan Levinson   7/12/200,  11:02:41 AM
30 minute Keltner support is currently at 35.15 QQQ, with short cycle support up to 35.27

  Linda Piazza   7/12/200,  11:01:12 AM
The TRAN still remains above its 30-dma. Other averages, such as the 50-dma, 100-dma, and 200-sma, remain far below, however, suggesting that the TRAN remains vulnerable to a pullback. Having dropped more than 100 points over the last week or so, it's possible that this bellwether index could attempt a bounce or consolidate longer at the current level before falling further.

  Linda Piazza   7/12/200,  10:54:57 AM
The SOX sort of split the the difference between last Tuesday's low and the May 3 low, and is attempting a so far tepid bounce from between those two lows. MACD remains fully bearish. The formation over the last week looks like an attempted bear flag climb that has now broken to the downside.

  Jeff Bailey   7/12/200,  10:53:24 AM
Current OPEN MM Profiles at this Link

JDSU Link was stopped at $3.25 earlier this morning.

Please note: ALL OPTION position's profit/loss column is derived from bid/ask, NOT last trade, so figures should be accurate with current market bid/ask.

  Jonathan Levinson   7/12/200,  10:48:18 AM
We had a nominal new low below the prior 35.28 low, but the short cycles did not give fresh sell signals. Look for QQQ to continue building a base in this area, but if the recent low breaks, the short cycle bounce will abort.

  Linda Piazza   7/12/200,  10:45:54 AM
The five-minute Keltner charts were previously showing bullish divergence, Keltner style, but they no longer show that bullish divergence. It still shows up on the fifteen-minute chart, however, with support still trying to firm just under the OEX's current position. This warns bears to protect positions, but doesn't mean that the OEX can't decline further.

  Jeff Bailey   7/12/200,  10:44:06 AM
NASDAQ-100 Tracker (QQQ) $35.31 -1.2% .... with weekly/monthly pivot retracement, as well as current outline of naked put and underlying short.

  Linda Piazza   7/12/200,  10:33:18 AM
The OEX is trying to steady at the current level, with the 15-minute Keltner channels showing resort snaking beneath that current level. Fifteen-minute support lies at 539.86-540.24, with bullish divergence so far still showing up.

  Jonathan Levinson   7/12/200,  10:28:08 AM
Session low for gold here at 406, down 2.1. For equities, the bounce is so far weak, but there are multiple cycles that would need to have bottomed at 35.28 QQQ. So long as that intraday low holds, we should see the longer intraday cycles begin to turn up. But bulls want to see some impulsive moves higher, and so far they're a no-show.

  Jonathan Levinson   7/12/200,  10:25:01 AM
The current intermarket action seems to fit with UNCONFIRMED rumors I'm hearing from some traders to the effect that the FBI is concerned about terrorist strikes again. That would explain the weakness in equities/strength in bonds this AM. Silver's up, gold's down. Some readers have been asking about my thoughts on the binary dollar trade and intermarket relationships in general. I won't say that they're "broken" lately, but they are in a state of flux. Best to watch and wait until a clear new pattern emerges.

  Linda Piazza   7/12/200,  10:22:24 AM
Currently, as the OEX heads down to test lower Keltner channel support at 439.40, the five-minute nested Keltner channels are showing bullish divergence, Keltner style, warning bears to be careful but not necessarily signaling that the OEX will attempt more than a cursory bounce. That divergence will be explained in my article later this week, but as with much divergence, it can be erased.

  Jeff Bailey   7/12/200,  10:21:39 AM
Sell Program Premium

  Linda Piazza   7/12/200,  10:14:41 AM
The TRAN has been forming another possible "b" distribution pattern just above its 30-dma. It's come down to retest that average this morning, but is so far holding just above it.

  Jonathan Levinson   7/12/200,  10:13:41 AM
Session high for bonds here, spiking up with TNX down 2.8 bps now at 4.438%.

  Linda Piazza   7/12/200,  10:11:04 AM
This move down has now turned the OEX's smallest Keltner channel lower, suggesting now a possibility that 539.50 could be tested, unless the OEX can maintain levels above 542 again. Nearest Keltner resistance now lies at 540.70-540.84, with the OEX rising to test that nearest resistance.

  Jonathan Levinson   7/12/200,  10:10:29 AM
We have a wavelet bounce trying to form here, the shortest cycle I follow, still opposed by downphases in all timeframes up to 60 minutes. The current low print at 35.28 is the reference against which the eventual short cycle bounce will be judged- if the next wavelet downphase bottoms at or above 35.28, a new short cycle upphase will be underway.

  Jeff Bailey   7/12/200,  10:05:05 AM
Swing trade bullish stop alert for JDS Uniphase (JDSU) $3.25 -3.27% ....

  Jonathan Levinson   7/12/200,  10:01:33 AM
Session lows across the board here. The anticipated bounce is so far a no-show, with QQQ down .92% so far this AM.

  Linda Piazza   7/12/200,  10:00:59 AM
When I look at the OEX's fifteen-minute chart, I see a lot of candles lined up along an axis at about 542.20. This morning, the candles are a little bigger than those Friday afternoon, perhaps suggesting a breakout in the making (but not the direction), and perhaps just indicating the normal rise in volatility during amateur hour. As long as those candles line up nicely that way, trading conditions won't be nice, however. Dialing down to the five-minute chart shows that the OEX is likely to cycle down toward the morning's low again, and that a failure to maintain levels above 541.11 could even send the OEX down to test 539.68 or so. If I were in a bearish trade, I'd be making plans for how I'd consider an approach to 537-538, however, with the OEX's 200-ema at 538.15 and with some historical support in the 537 area.

  Jonathan Levinson   7/12/200,  10:00:16 AM
A 5.5B overnight repo adds 2.25B net to the 3.25B expiring today.

  Jonathan Levinson   7/12/200,  9:58:08 AM
Bonds are sliding from their earlier highs here, weakening along with equities. The short cycles are oversold, with channel support currently at 35.40 QQQ.

  Linda Piazza   7/12/200,  9:52:15 AM
The BIX is trying to rise here, but daily stochastics and MACD still point down and the BIX remains within its recent consolidation zone, so there's little definitive to say about its climb today.

  Jeff Bailey   7/12/200,  9:50:27 AM
Central Garden and Pet Co. (CENT) $28.18 -17.3% Link .... Warned that Q3 earnings would be between $0.84 and $0.86 per share on sales of $370 million. Analysts were looking for EPS of $1.03.

  Jonathan Levinson   7/12/200,  9:50:00 AM
GE to a session low here. Gold is nearing its session low, with HUI down 1.18% and XAU down 1.24%. Bonds remain steady, holding their earlier gains.

  Jonathan Levinson   7/12/200,  9:47:22 AM
Session low for QQQ and NQ futures here.

  Linda Piazza   7/12/200,  9:44:52 AM
The SOX has dropped down toward last Tuesday's 435.23 low, but hasn't breached it yet. As I type, the SOX is at 437.18. Watch for a possible bounce attempt from the current level, that 435-ish level or from slightly lower, at 432.97, the site of the early May low. However, a failure to bounce from a level at or above the May low confirms the failure at the retest of that ascending trendline off the May low. Some might consider that trendline the neckline of possible continuation-form H&S on the daily chart. You all know how distrustful I am of these continuation-form H&S's, but not distrustful enough that I would discount it completely.

  Jeff Bailey   7/12/200,  9:44:49 AM
Bonso Electronics (BNSO) $7.36 +38.8% .... percentage gainer after reporting quarterly EPS of $0.39 on revenues that jumped 61% year-over-year to $74.7 million.

  Jonathan Levinson   7/12/200,  9:44:35 AM
It's a tale of two markets with QQQ down at the session lows as the Dow futures push higher, pulling the SPX with them.

  Linda Piazza   7/12/200,  9:39:29 AM
During the first five minutes of trading, the OEX ranged from 541.62 to 542.57.

  Linda Piazza   7/12/200,  9:37:37 AM
To those not watching Jane's possible comments on the Futures side of the Monitor: bulls watching OEX gains this morning should keep a close watch on TRIN and advdec levels and trends. So far, they're not particularly supporting a bullish case, but not strongly bearish, either, although TRIN is above Friday's levels, something Jane warns us to watch. I think Jane tells us that she usually ignores or discounts the first five minutes of the TRIN levels, but the trend definitely should be watched.

  Jonathan Levinson   7/12/200,  9:36:27 AM
I'm flying blind on my short cycle indicators as I wait for the morning data to accumulate sufficiently to generate Keltner projections, but the persistence of the morning lows since 7 AM suggests a bottom forming in the short cycle oscillators. The 30 minute cycles remain ambiguous and in a weak downphase against the weak 60 minute upphase. The key daily cycle remains lower. I expect a short cycle/30 minute bounce to take hold at some point today, but it should fail at a lower high within the daily cycle downphase.

  Linda Piazza   7/12/200,  9:34:04 AM
The OEX dipped down to 541.62, but sprang right back up again, rising to retest the 200-sma.

  Linda Piazza   7/12/200,  9:32:02 AM
The SOX opens and heads down, currently have erased all of Friday's gains. It's headed toward possible 440-ish support, however.

  Jonathan Levinson   7/12/200,  9:31:59 AM
Gold is current up a dime at 408.20, silver up 8 cents to 6.56. Equities are back in the red with QQQ trading a penny off its session lows.

  Jonathan Levinson   7/12/200,  9:27:40 AM
Regarding the article Jane quotes in the Futures Monitor, here's a hair-raising chart that provides food for dollar bears: Link

  Jane Fox   7/12/200,  9:25:18 AM
Dateline WSJ - - Back in the 1980s, Ronald Reagan's advisers worried that his federal budget deficits risked causing an economic calamity. But the calamity never came.

That goes a long way toward explaining why politicians are more complacent over today's deficits -- and why, ironically, a deficit-induced crisis may be far likelier.

The main threat of deficits is that they consume scarce savings, money that could be more productively invested in factories, research and development, and must eventually be repaid -- with interest -- by future taxpayers.

Today there is also a smaller, but more hair-raising, deficit threat that is receiving increased attention from some economists: that the investors who finance our deficits by buying Treasury bonds and bills, especially the foreigners who buy a larger share of them than ever, will question our ability to repay them, and balk at lending more -- triggering a big drop in the dollar and much higher interest rates.

  Jonathan Levinson   7/12/200,  9:15:43 AM
Despite the previous bounce, QQQ and Russell 2K futures are back at session lows here.

  Jonathan Levinson   7/12/200,  9:13:47 AM
Bonds are holding their opening gains, with TNX down 1.7 basis points to 4.449%, a .38% decline so far.

  Linda Piazza   7/12/200,  8:58:00 AM
Although ES futures did see a bump higher near the open of the European markets, they've since drifted down again. NQ futures have likely been hit by the Merrill Lynch downgrading of several global chip stocks. Friday the SOX had risen to retest the former supporting ascending trendline off the May low, rising in what could be a bear flag, so watch the SOX action, too. As I type, crude futures had eased a little, but they should be watched, too. It's always difficult to judge where the OEX might open based on the action of the ES contract pre-market, but look at my 22:37 post for some signposts to watch in early OEX trading.

  Jonathan Levinson   7/12/200,  8:50:51 AM
We're seeing a slight bounce here, with YM back to unchanged. Otherwise, it's a very sleepy morning so far.

  Jonathan Levinson   7/12/200,  8:12:38 AM
There are no major economic reports due today.

  Jonathan Levinson   7/12/200,  8:12:16 AM
Session low for QQQ here at 35.55.

  Jonathan Levinson   7/12/200,  8:04:19 AM
Equities finally got moving after Friday's murderous range, but of course did so outside the cash session. ES is down 2 to 1110.5, NQ -8.5 to 1433.5 and YM is down 8 to 10194. Gold is down 1 to 407.10, silver flat at 6.48 and bonds are lightly positive, up .125 to 110.703.

  Linda Piazza   7/12/200,  7:26:33 AM
Good morning. Although Prime Minister Koizumi's party did lose seats to the opposing party in this weekend's election, the ruling LDP party lost fewer seats than expected. A relief rally ensued in early trading in Japan, with the Nikkei climbing in early trading, oscillating around 11,550. Just before the close of the morning session, it began climbing again, and ended the day up 158.75 points or 1.39%, at 11,582.28. Also helping sentiment was speculation that the central bank will report at the conclusion of its meeting tomorrow that Japan's economy had grown faster than the bank had originally forecast. In stock-specific news, telecommunications companies DKKI and NTT DoCoMo both posted gains. KDDI gained on news that it would cooperate with Hitachi and Toshiba to use miniaturized fuel cells to power mobile handsets as soon as 2007. NTT DoCoMo gained on news that in four months, it had added another million subscribers outside Japan to its mobile Internet Service. When Mitsubishi Motors closes its Okazaki factory, perhaps at the end of 2005, Toyota Motor might take on its skilled workers. Mitsubishi Motors dropped in Monday's trade, but Toyota Motor gained.

Other Asian bourses mostly traded lower. With major tech stocks Taiwan Semiconductor and United Microelectronics weak on Monday, the Taiwan Weighted lost 0.33%. South Korea's Kospi lost 0.16%. Stock-specific news in South Korea included the upcoming debut of LG Electronics' and Philips Electronics' joint-venture L.G. Philips LCD, with the IPO offering reportedly set to begin trading on July 23 in both South Korea and New York. Singapore's Straits Times gained 0.48%, and Hong Kong's Hang Seng was down 0.09%. China's Shanghai Composite lost 2.34%, dropping under 1,400 again to close at 1,397.148.

European bourses are mixed this morning. Chip-related stocks traded lower early in the session, as they had been in Taiwan. Merrill Lynch lowered the ratings of several chip-related companies, including those of Intel and STMicroelectronics. Some telecom stocks were higher, also repeating a pattern seen in Asian trading. Credit Suisse First Boston initiated coverage of Vivendi with a neutral and made some ambiguous statements about its prospects, but the stock was rising in early trading. Under rumors that it will miss profit expectations, Volkswagen dropped. Bayer eased after announcing that it would not reduce its work force as much as it had earlier planned. In the U.K., retailer Marks & Spencer had slipped lower in early trading. The company is making plans that will rebuff takeover efforts by billionaire Philip Green.

As of this writing, the FTSE 100 had dropped 19.40 points or 0.44%, to 4,373.80. The CAC 40 had dropped 2.75 points or 0.07%, to 3,665.73. The DAX had dropped 20.97 points or 0.53%, to 3,903.52.

  Linda Piazza   7/11/200,  10:37:57 PM
The OEX is trying to steady above the 200-sma. The last time that happened, back in May, the OEX spent 11 trading days trying to steady before deciding on final direction and climbing into the June high. We can hope that the OEX won't take quite as long to return to directional trading this time, but as of Friday, bulls buying the 200-dma support still battled with bears sure that the OEX would head lower. That battle was depicted in the mixed oscillator evidence, with daily MACD trying to head down through the signal line and 21(3)3 stochastics trying to produce a bullish kiss from just below signal. A strong push higher may produce that stochastics kiss while a push lower might finally tug MACD lines below signal. How likely is either of those actions and how likely is any move to see a quick reversal? That's difficult to predict. If history repeats itself, we could still be in for some difficult trading conditions throughout this option expiration week.

The OEX spent much of Friday settling into an equilibrium mode on its five-minute Keltner channels. On both that time interval and on the fifteen-minute chart, the OEX trades in the bearish half of the Keltner channels, slightly below the mid-channel level. The fifteen-minute channels show that if the OEX can maintain levels above its 200-sma or preferably above 543.27, it's likely to challenge a descending channel line that's now at 545.06. Since the 15-minute 100/130-pma's now cross at 543.82 and 544.53, I wouldn't be surprised to see that descending channel line drift down to the level of the 15-minute 100/130-pma's, joining force with those averages. A breakout above that 545.06 channel line could then see a test of the 550-550.20 level on the short-term, according to Keltner channel evidence. The fifteen-minute nested Keltner channels show that sustained levels below the 200-sma or preferably below 541.40 would likely see a retest of 540.30 or even 538.38 if levels below 540.30 are maintained. With the 200-ema at 538.24, there's good correlation with that average, a possible bounce level, and lower Keltner channel support. It's possible that we could see the OEX trapped between the 200-sma and -ema, too. Zooming out to the daily Keltner channels show that the OEX is slipping beneath central Keltner channel support on the daily chart. That shows a possibility that the OEX could slide all the way to 532.25 unless it can climb above and maintain levels above 546.37 or preferably 553.09, but of course that condition wouldn't have to be met tomorrow. Maintaining values above 546.37 or 553.09 might suggest an eventual retest of 564.20.

Futures are down as I type, despite the Nikkei's bounce in its early session. That warns traders to watch for possible weakness, but the values of the futures could have changed by the time tomorrow's cash market opens. In contrast, crude futures were lower as I typed this, with lower prices there perhaps taking pressure off the equities if they continue lower. Watch futures, especially crude futures, and watch the bellwether SOX, TRAN, and BIX indices for clues in the market tomorrow morning. When the OEX consolidated around the 200-sma back in May, it produced some wild intraday swings, so try to get as many factors on the side of your trade as possible, prepare to be whipsawed, and take profits when offered.

  Jeff Bailey   7/11/200,  8:50:55 PM
S&P 500 Index (SPX.X) with weekly/monthly pivot retracement at this Link

  OI Technical Staff   7/9/2004,  1:49:03 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