Option Investor
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  Jeff Bailey   7/20/200,  7:49:05 PM
Microsoft (MSFT) and some call option open interest, which could be exercised ahead of the $3 one-time dividend at this Link

Based on current open interest, the top 1/3 of the option chain is in the money and would expire prior to the shareholder vote on the $3 one-time dividend. I would have to think the bulk of it gets exercised, calling stock of approximately 32,973,300 shares.

The January 2005 calls (25, 27.50) also likely to be exercised ahead of the ex-dividend date for the one-time $3 dividend, with the $30 calls a high probability should underlying stock trade above $30. Here's an additional 57,552,000 shares of demand.

Throw in June 15, 2004 short interest of 167,736,316 with average daily volume of 57.9 million, and Mr. Softee could see a nice little bid in coming weeks.

There may not be too many new, or existing shorts (some sellers) that want to cough up an additional $3.00 per share.

  Jeff Bailey   7/20/200,  5:43:28 PM
QQQ ... $35.43 +2.39% ... tracking higher at $35.68.

  Jeff Bailey   7/20/200,  5:37:58 PM
MSFT $29.88 ... continues to build in after-hours. 52-week highs of $30.00 just ahead.

  Jeff Bailey   7/20/200,  5:31:39 PM
Current OPEN MM Profiles I've made at this Link

  Jeff Bailey   7/20/200,  5:21:34 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   7/20/200,  4:56:20 PM
Closing Internals at this Link

  Jeff Bailey   7/20/200,  4:32:03 PM
Microsoft (MSFT) $29.14 and has turned over 15 million in extended session.

  Jeff Bailey   7/20/200,  4:26:53 PM
Giving you up-ticks Keene ...

  Jeff Bailey   7/20/200,  4:24:01 PM
Swing trade 1/2 position long for the QQQ $35.50 in extended hours, stop $34.50, target $37.75.

I can say I'm bullish, but if I don't profile the QQQ long... means nothing.

This one-time MSFT dividend should bode well for the QQQ too.

  Jonathan Levinson   7/20/200,  4:20:07 PM
This end of session move closed the door on yesterday's downside doji spike and left the 10-day stochastic on a preliminary bullish cross. The daily cycle low looks to be in. The 30 min cycle is not maxxed out in overbought, but upside should be difficult without some kind of consolidation or correction. I'm guessing at consolidation because I'm bullish on both the daily cycle and the 60 min, the latter of which points higher. The post-cash move here has drilled the QQQ above both 30 and 60 min resistance. Channel support is now 35 for the 30 min channel and 34.91 for the 60 min. A short cycle downphase has been due for hours, and I would look for a higher low for the eventual downphase, not just for the short cycle but also the 30 min cycle. As long as today's lows hold, I would see that as confirmation of what I believe was a daily cycle bottom printed yesterday.

  Jeff Bailey   7/20/200,  4:18:20 PM
Microsoft (MSFT) $28.32 +1.32% ... jumps to $29.07... approves $0.08 per share quarterly dividend, plans to buy back $30 billion of company's stock over next 4 years and pay a special one-time dividend of $3 per share.

full story at this Link

  Jeff Bailey   7/20/200,  4:08:20 PM
QQQ packing it on at $35.44 ....

  Jim Brown   7/20/200,  4:07:52 PM
ALERT - Microsoft will announce new dividend plan ($3.00 per share) and $30 billion share buyback tonight.

  Jeff Bailey   7/20/200,  4:07:12 PM
Buy Program Premium (from yesterday's buy/sell levels) ...

  Jim Brown   7/20/200,  4:03:57 PM
Alert - Earnings after the close:

ET est +0.19, actual +0.31
AFCI est 0.08, +0.06 (lots of items)
AMCC est +0.00, actual +0.01
CAKE est +0.34, actual +0.34
CNF est +0.58, actual +0.64
CYMI est +0.29, actual +0.27 miss
LLTC est +0.30, actual +0.31
MCHP est +0.26, actual +0.27 increased dividend
MOT est +0.18, actual +0.21 after items
PXLW est +0.12, actual +0.13
RFMD est +0.04, actual +0.06, flat rev guidance
SANM est +0.06, actual +0.07
STX est +0.00, actual +0.01
STK est +0.31, actual +0.32
SUNW est -0.04, actual +0.24 ??
TER est +0.37,
TXN est +0.25, +0.25, guiding 26-29 Q3 est 29
WEBX est +0.21, actual +0.22, guidance inline

  Linda Piazza   7/20/200,  3:56:44 PM
The OEX did not quite make it up to the 539.80 level suggested by the Keltner bands going into the last 30 minutes, instead finding resistance at 539.56. Going into the last few minutes of trading, it's clinging to the pullback level that it needs to maintain in order to keep the Keltner channels from turning lower again, although as long as it doesn't maintain values below 538.18, it still has a chance at moving higher.

  Linda Piazza   7/20/200,  3:51:31 PM
The TRAN extended yesterday's gains. It has also climbed above Friday's high and is challenging the 3150 resistance level. The BIX and the TRAN are doing their parts to try to rev up these markets. They need the cooperation of other sectors, however. The drop in crude prices down toward $40.00 probably helped the TRAN today. Strange to think of anything connected with $40.00/barrel helping the TRAN.

  Linda Piazza   7/20/200,  3:48:47 PM
The BIX has climbed above today's opening level, but hasn't yet quite moved above yesterday's intraday high. If it closed at its current level, however, that would be a new relative closing high for the BIX.

  Jeff Bailey   7/20/200,  3:47:34 PM
200-day SMA alert .... Russell-2000 Index (RUT.X) 562.76 +1.45% Link

Some type of "hammer" yesterday?

  James Brown   7/20/200,  3:44:16 PM
Traders looking for a bearish play can keep an eye on insurance stock XL Capital (XL). The stock is flirting with a breakdown at long-term support. Chart: Link

  Linda Piazza   7/20/200,  3:43:31 PM
The SOX edges above its 15-minute 100/130-ema, but most would also want to see it above the 7/15 high of 425.49 before considering short-term strength confirmed, and then there's gap resistance beginning at 429 to consider. As I mentioned yesterday, the SOX has resistance in close intervals. It doesn't seem logical to expect it to bounce through all those levels without some pullbacks or a rollover. Of course, with TXN reporting tonight, I wouldn't be taking bets either direction, and I urge you to be cautious about it, too.

  Linda Piazza   7/20/200,  3:35:03 PM
Turning to the OEX's five-minute Keltner chart, I see resistance at 539.60 or so, but moving up, and nearby support strongest at 537.50. The configuration of the chart now looks as if 539.74 will be challenged and perhaps surmounted, with 540.80 a possibility as long as the OEX stays above 538.60 or so on pullbacks, with that number changing as the OEX rises.

  Jonathan Levinson   7/20/200,  3:32:03 PM
Session high for NQ futures and QQQ here.

  James Brown   7/20/200,  3:31:12 PM
Speculators might want to look over Omnicom (OMC). The stock is enjoying the market rebound today with a 1.66% bounce of its own back above round-number support/resistance at $70.00. Shares are very oversold and were due for a bounce. A 38.2% retracement of the June-July drop would put it at $73.50 while a 50% retracement would target the $75 region. Earnings are expected on July 27th.

  Jonathan Levinson   7/20/200,  3:30:23 PM
Session high for INTC. I would expect the option-expensing story to be bullish for tech bellwethers that have not been expensing stock options.

  Jonathan Levinson   7/20/200,  3:29:07 PM
QQQ just tested the rising 7200-tick SMA again, now at 35.05. The short cycles are edging lower and look to me to be in a downphase here. 30 min channel support remains at 34.90, 60 min support 34.85.

  James Brown   7/20/200,  3:20:24 PM
Fedex Corp (FDX) is breaking out over resistance at the $82.00 level. Its MACD is close to producing a new buy signal.

  Linda Piazza   7/20/200,  3:19:09 PM
The OEX's action over the last few minutes has not so much flattened the smallest Keltner channel on the 15-minute chart as it has widened it, the product of increasing volatility. The OEX presents as mixed a picture on a normal technical analysis viewpoint, too. It pushed above the neckline of that reverse H&S, but now has fallen back to the neckline again. That may be just a test of the neckline's former resistance to see if it holds as support, but it also questions whether the breakout might have been a false one on shortcovering ahead of Greenspan's speech or as his text was released. The OEX is again challenging the mid-channel Keltner resistance, with nearby resistance now ranging up to 539.85. Unless the OEX rises quickly, it's possible that resistance could firm, and it's already important resistance.

  Jonathan Levinson   7/20/200,  3:16:55 PM
Session low for gold here, down 5.80 at 399.90 on Globex.

  Linda Piazza   7/20/200,  3:12:06 PM
The SOX never did fall beneath that 416.50-417-ish support and is not back above the 15-minute 100-ema, although it has not yet been able to climb above the 130-ema.

  Jonathan Levinson   7/20/200,  3:08:49 PM
Off topic:

LOS ANGELES (Reuters) - Pop star Michael Jackson (news), facing a trial on child molestation charges, is about to become a father to four more children -- quadruplets -- by way of a surrogate mother, Us Weekly magazine reported on Tuesday.


  Jonathan Levinson   7/20/200,  3:07:03 PM
3:05pm AUG CRUDE DOWN 78C TO CLOSE AT $40.86 AFTER $42.30 HIGH

  Jonathan Levinson   7/20/200,  3:04:35 PM
A lower high here will confirm a short cycle downphase at long last. A higher high will mean more trending.

  Jeff Bailey   7/20/200,  3:03:57 PM
02:55 Market Watch at this Link

  Linda Piazza   7/20/200,  3:01:02 PM
For those in options plays, remember that we have earnings tonight from MOT and TXN, with those earnings much anticipated. Both have been the recipients of negative analysts' comments this week and have deepened their losses as a result. Of course, I have no idea what they'll report, but each report could be market moving, in either direction. Decide soon if you want to hold overnight.

  Jonathan Levinson   7/20/200,  3:00:52 PM
Session low for bonds here, with TNX up 8.7 bps now at 4.448%, a 1.99% gain for the day.

  Jonathan Levinson   7/20/200,  2:59:24 PM

  Linda Piazza   7/20/200,  2:55:54 PM
The SOX has dropped beneath the 15-minute 100/130-pma's, but is so far holding above the 416.50-417-ish support level. This rollover beneath these averages is a bearish event, but it's still within striking distance of those averages.

  Jonathan Levinson   7/20/200,  2:49:45 PM
QQQ is heading for a test of its 7200-tick SMA at 35 currently- that moving average has supported the price on each of the 4 tests today. A break below that level will kick off a short cycle downphase targeting 34.90 as the lower 30 min channel for starters. If the move is strong enough, look for the 30 min cycle, which had been growing toppy, to reverse back down as well.

  Linda Piazza   7/20/200,  2:48:51 PM
Surpisingly, to me, at least, given the spikes seen in some other markets, the SOX has not been able to make it above its 15-minute 100/130-ema's as yet and in fact threatens to roll down beneath those averages, not a bullish event. It's still perched on the 100-ema, still below the 130-ema. That 420-421-ish resistance is holding. That offers a warning to bulls. The OEX offers another: it has not yet been able to sustain levels above the Keltner channel line that usually stops it, currently at 539.63, and now it's dropping below the mid-channel level again. The OEX needs to maintain the current 538.25-ish level to keep that channel pointed higher, although a maintenance of values above 537.25, as long as it bounced soon after touching that level, could also keep it pointed higher.

  James Brown   7/20/200,  2:43:20 PM
Hmm.. the rebound from the $59-60 level in RIMM is already failing with today's 4.75% loss back toward the $60 level. Aggressive traders might want to consider bearish plays on a breakdown below $59. Look for support at its 100-dma near $53.50.

  Jonathan Levinson   7/20/200,  2:43:19 PM
TNX continues to climb above 4.4% resistance, now up 7 bps at 4.431%. ZN futures are down to 110.71.

  James Brown   7/20/200,  2:38:45 PM
The rebound in Staples (SPLS) is looking pretty steady. Today's 4.2% rally puts it above minor resistance at $29.50. SPLS might be a decent covered call candidate. Earnings are mid-August.

  Jeff Bailey   7/20/200,  2:38:11 PM
CBOE Internet Index (INX.X) 178.60 +2.96% ... lurches to session high. Reclaiming its rising 200-day SMA (177.50)

  Linda Piazza   7/20/200,  2:35:59 PM
As Greenspan's speech text is released, the OEX spiked right up to Keltner 15-minute resistance at 539.60, but spiked right back down again. However, it's holding so far at the mid-channel level. A sustained move above 539.60 would mean a breakout, and would suggest an eventual move up toward 544-547, but that's a sustained move. Currently, the OEX bulls want to see the OEX remain above 538.74 or at least 538.17 on a sustained basis.

  Jonathan Levinson   7/20/200,  2:35:35 PM
Other than a couple of spikes, that was anticlimactic. Perhaps the traders have retired to their lounges to read the text in detail.

  James Brown   7/20/200,  2:35:34 PM
Biotech giant AMGN is leading the charge higher for the BTK biotech index. AMGN is up 2% and seeing strong follow through on yesterday's intraday bullish reversal from its test of the $54 level.

  Jim Brown   7/20/200,  2:33:20 PM
Text of Greenspan's prepared remarks: Link

  Jeff Bailey   7/20/200,  2:32:42 PM
Aluminum Corp. China (ACH) $54.58 +1.86% .... ticks a session high and reclaims 80.9% ($54.55) retracement of April 6 to May 17 decline.

  Jonathan Levinson   7/20/200,  2:32:33 PM
ZN bond futures to a session low at 110.921, TNX +3.2 bps and breaking 4.4% resistance here.

  Jonathan Levinson   7/20/200,  2:31:58 PM


  Jim Brown   7/20/200,  2:31:53 PM
Greenspan saying real GDP growth between 3.5% and 4% and inflation has been spurred by increases in energy. Inflation not currently a real threat. The Fed can return to a patient rate policy at a measured pace. A pace of rapid and aggressive rate hikes would be harmful to the economic recovery.

  Jonathan Levinson   7/20/200,  2:31:42 PM
GE and NQ to session highs. Looks like the markets like the headlines.

  Jeff Bailey   7/20/200,  2:31:19 PM
Stanley Works (SWK) $45.08 +1.07% .... back at morning highs.

  Jonathan Levinson   7/20/200,  2:26:51 PM
This is again just a wavelet downphase starting, but with the short cycle oscillators precariously perched so deeply within overbought, every downtick looks like the start of the long-overdue downphase. 30 min channel support is up to 34.90 for QQQ, 60 min support up to 34.78. A move below 34.98 would likely kick off the short cycle downphase, but the 7200-tick SMA (currently at 34.98) has held as support on all 4 tests today.

  Linda Piazza   7/20/200,  2:26:35 PM
If that OEX reverse H&S is still valid--uncertain because of the level to which the right shoulder dipped and because there had not been bullish divergence as the head was formed--the OEX has now moved through the neckline. Since gains accelerated as the OEX moved through that neckline at about 538.21, there's a temptation to consider it valid and then look at its upside target at about 542.14, but that acceleration in gains may have been due to the move through the 200-ema and not due to that neckline. Have you ever noticed how often those neckline tests line up with important resistance or support (in the case of a regular H&S), though?

  James Brown   7/20/200,  2:25:30 PM
Bears may want to take another look at InfoSpace (INSP). The stock broke down sharply on Monday with a drop through support at its 200-dma and the $30.00 level. It also happened to break the upward slanting neckline to its H&S pattern. Today shares are bouncing back but I'd watch it for a failed rally under $31-32 and then consider bearish positions on another drop through $30. The H&S pattern points to a $15 target whiles its P&F chart points to a $17 target. Look for earnings on July 28th.

  Linda Piazza   7/20/200,  2:21:59 PM
Remember when I talk about Keltner levels, I'm talking about levels the OEX needs to sustain. Because the lines are dynamic, they can be bulged outward, but still carry the OEX back within their containment, sort of like a safety net for a high-wire performer. The move through that net's resting level bulges it outward, but it's still captured the performer, and it propels the performer back the other way. Only if the performer hits hard enough to punch a hole through the net does that not happen. Similarly, the OEX has to move through a Keltner level hard and fast enough that it punches through that resistance or else it just bulges it in the direction of the OEX's trade without truly being broken. It rebounds and propels the OEX the other direction.

  Linda Piazza   7/20/200,  2:17:09 PM
The OEX currently faces Keltner mid-channel resistance at 538.73, and the resistance that usually stops advances at 539.36. A sustained move above 539.36 would constitute an upside breakout, but it hasn't happened yet. On a 15-minute basis, the OEX needs to sustain levels above 537.17 and hopefully above 537.85 to keep its smallest Keltner channel pointed higher.

  Linda Piazza   7/20/200,  2:13:54 PM
The OEX has made a definite upside break out of the "bearish" rising wedge. Just doesn't know how to behave. This is one reason I like Keltner charts. They were showing that support was stronger than resistance, at least up to 539 or so.

  Linda Piazza   7/20/200,  2:11:56 PM
The OEX still trades within the possible rising wedge and currently testing the 200-ema. Unlike the 200-sma, which served as an axis around which the OEX oscillated rather than a distinct point that stopped advances or declines, the 200-ema has tended to stop advances over the last three trading days. It was penetrated on each of those three days, but then dropped back.

As I type, the OEX is attempting an upside break out of the supposedly bearish rising wedge. It needs to break quickly or Keltner resistance is going to tug it back.

  Jeff Bailey   7/20/200,  2:09:27 PM
Taser Intl. (TASR) $31.56 -13.1% ... Will be looking to sell another covered call on any bounce back near $40 at this point.

  Jeff Bailey   7/20/200,  2:07:28 PM
Stillwater Mining (SWC) $15.80 +0.5% .... has bid back into positive territory.

  Jonathan Levinson   7/20/200,  2:05:23 PM
I agree, Keene. This is how squeezes start- an upward "crash" through resistance as the shorts begin to cover.

  Jeff Bailey   7/20/200,  2:04:53 PM
QQQ $35.09 +1.4% .... with weekly/monthly retracement at this Link

Right in the near-term zone of resistance. With internals at the NH/NL as they are, might get another shot at bull entry back near $34.80.

  Jonathan Levinson   7/20/200,  1:59:02 PM
I see a few volume spikes on QQQ and NQ, but my tick charts have slowed to a crawl. The short cycle oscillators are buried in overbought and look ready to roll over at any time. That may be, but I've personally learned to ignore trending oscillators and focus on the next longer timeframe. In this case it's the 30 minute cycle, which is closing in on a cycle high. There's resistance at 35.15 and 35.25, and they look like decent candidates for a 30 minute cycle top. The bullish angle derives from the 60 min cycle, still strongly up, and the daily which looks to be making a bottom.

  Linda Piazza   7/20/200,  1:45:29 PM
Yesterday I was watching a bullish falling wedge on the OEX; now I'm watching a bearish rising wedge on the five-minute chart: Link It's not anywhere near the apex, but it's had the standard two touches of the top line, so now it's time for a rollover at a further distance from the top line, without quite touching it and then a breakdown through the bottom line. That's if it's really a bearish rising wedge and if the OEX pays attention to what it's supposed to do, something I wouldn't count on happening ahead of and during Greenspan's testimony. Note that the apex of that formation heads right up into the 538.50-539 resistance zone, so it suggests that the OEX will fail ahead of or at the test of that zone. Again, that's if the OEX pays attention to the rules and follows them.

  Linda Piazza   7/20/200,  1:32:19 PM
The BIX still hasn't been able to build on yesterday's gains, but it hovers near yesterday's closing high. The SOX still hasn't been able to break above the 15-minute 100/130-ema's, but it's poised between the two averages, just below 420.

  Jonathan Levinson   7/20/200,  1:32:05 PM
Nominal new session high for NQ here, with a slight pickup in volume on NQ and QQQ.

  Linda Piazza   7/20/200,  1:21:31 PM
Support is beginning to look firmer than resistance on the OEX's five-minute nested Keltner chart, but that still just sends the OEX up into the 538-539 resistance zone. The 15-minute chart suggests that the most likely top for any OEX movement in the short term is 539.28. Of course, if Greenspan says something that excites the markets or even if shorts get scared ahead of his talk and maintain values above 539.30, then the 544-547 range comes into play, according to that 15-minute chart.

  Jeff Bailey   7/20/200,  1:19:51 PM
01:13 Market Watch at this Link

  Jonathan Levinson   7/20/200,  1:17:42 PM
The 30 min cycle oscillators are pausing here with the 300 minute stochastic overbought, but the 60 min oscillators continue to run higher. The going should begin to get tougher for bulls, particularly given the very toppy short cycle oscillators.

  James Brown   7/20/200,  1:13:03 PM
Tenneco Auto Inc (TEN) is up 16.9% to $14.44 after announcing earnings this morning and beating estimates by 16 cents. Shares are breaking out from their six-week trading range.

  Jeff Bailey   7/20/200,  1:09:41 PM
01:00 Internals at this Link

Yesterday's Internals at this Link

  Linda Piazza   7/20/200,  1:08:06 PM
Support has attempted to firm up beneath the OEX's current position, from 536.93-536.94. That support looks firmer than resistance, but MACD flattens, not helping to form a conclusion. If there should be a rise, first resistance gathers between 537.74-537.96.

  Jonathan Levinson   7/20/200,  1:02:26 PM
QQQ is in a trending short cycle upphase, and the current dip is a wavelet pullback. That wavelet pullback is nested within the short cycle upphase, which is nested within a 30 min cycle upphase, which itself is nested within a 60 min cycle upphase, and the 60 min upphase is pushing at the upper resistance of a daily cycle channel that is no longer descending. So long as 34.80 support isn't violated the scenario should result in the daily cycle turning up, and those upphases are generally good for approximated 2 weeks. Former intraday resistance should now act as support at 34.96. Upper 30 min ressitance is now 35.10.

  Jim Brown   7/20/200,  1:00:20 PM
Earnings after the close:

AFCI est 0.08
AMCC est +0.00
CAKE est +0.34
CNF est +0.58
CYMI est +0.29
LLTC est +0.30
MCHP est +0.26
MOT est +0.18
PXLW est +0.12
RFMD est +0.04
SANM est +0.06
STX est +0.00
STK est +0.31
SUNW est -0.04
TER est +0.37
TXN est +0.25
WEBX est +0.21

This is probably only a quarter of the companies reporting tonight. It should be a heavy session with plenty of small caps to spice up the winners/losers list.

  Linda Piazza   7/20/200,  12:58:21 PM
The SOX continues to challenge its 15-minute 100/130-pma's, with those averages at 418.70 and 421.05 as I type. The RSI hooks down now and MACD hints at a flattening, but the SOX could continue to challenge these averages. A push above the 130-ema and then above 425 would be at least short-term bullish, while a rollover now down through those averages and 417-ish support would be at least short-term bearish.

  Jonathan Levinson   7/20/200,  12:56:39 PM
Still stuck on the phone and still noticing the absence of volume on the break.

  James Brown   7/20/200,  12:48:00 PM
CNBC reminding us that 35 years ago today we first stepped on the moon (conspiracy theories not withstanding).

  Jeff Bailey   7/20/200,  12:47:56 PM
Broker/Dealer Index (XBD.X) 117.74 +3.69% Link ... Back at conventional 38.2% retracement. 120 would be viewed as more formidable resistance.

I would associate this index with Dorsey's Wall Street Bullish % (BPWALL)

See sector bell curve at 12:00:26 post.

  James Brown   7/20/200,  12:46:34 PM
The FDA approved Allergan's (AGN) latest use for Botox. The company now says it can use Botox injections to stop excessive under arm sweating.

From their press release:
AGN announced that the U.S. Food and Drug Administration (FDA) approved BOTOX® (botulinum toxin type A) for the treatment of severe primary axillary hyperhidrosis (severe underarm sweating) that is inadequately managed with topical agents. Primary axillary hyperhidrosis often goes undiagnosed, misdiagnosed and untreated due to lack of awareness on the part of the patients and physicians alike.

Hyperhidrosis is a medical disorder that results in sweating that exceeds the normal amount required to maintain consistent body temperature. Severe underarm sweating that is not adequately managed by topical agents has been shown to frequently interfere with one's daily activities.

  Jonathan Levinson   7/20/200,  12:45:15 PM
Stuck on a phone call here as NQ hits a new high.

  Jeff Bailey   7/20/200,  12:43:45 PM
JDS Uniphase (JDSU) $3.27 +4.8% .... will release Q4 earnings after the close on Wednesday, July 28. Consensus is for company to report a loss of $0.01 per share.

Corning (GLW) $12.54 +11.26% Link .... after earnings.

  James Brown   7/20/200,  12:38:38 PM
Legg Mason (LM) is trying to soothe the sting from yesterday's post-earnings price drop. Today the company has announced a cash dividend increase from 10 cents to 15 cents a share and a 3-for-2 stock split. The stock is producing an oversold bounce +4.75% to $79.24.

  Jeff Bailey   7/20/200,  12:37:16 PM
Stillwater Mining (SWC) $15.56 -0.89% ... Workers at the company's palladium and platinum mine outside Nye, Montana voted to accept a new 3-year contract. Mining is expected to resume when the day shift is scheduled to report tomorrow.

The strike shut down nearly three-quarters of total U.S. production of palladium and platinum for a week.

  Jonathan Levinson   7/20/200,  12:36:48 PM
The 30 min Keltner channel has narrowed to a 25 cent range for QQQ, support now at 34.80, resistance 35.05.

  James Brown   7/20/200,  12:35:36 PM
Interland Inc (INLD) is up 12.25% to $3.48 and close to breaking out of its descending channel. The stock is moving after Needham upgraded the stock from "hold" to a "buy" and gave it a $10 target. I'm not suggesting a play here but bulls can look for a move through the simple 100-dma.

  Linda Piazza   7/20/200,  12:32:32 PM
The OEX is still trading in an equilibrium position with regard to its Keltner channels, just scooting along the central level at 536.87, trading a little over it and a little under it.

  Jonathan Levinson   7/20/200,  12:29:33 PM
Naz futures and QQQ are hitting session highs, but the volume remains flat.

  Jonathan Levinson   7/20/200,  12:22:47 PM
The triangle resistance line is getting tested here- still on light volume.

  Linda Piazza   7/20/200,  12:20:55 PM
Today the TRAN isn't suffering under the specter of rising crude costs. It's currently near its high of the day, at 3130.99 as I type.

  Jonathan Levinson   7/20/200,  12:18:17 PM
QQQ daily chart at this Link.

  Jonathan Levinson   7/20/200,  12:15:07 PM
Jane's comment regarding the NQ quad-top is indeed ominous for bulls, but it could prove to be a rising bullish triangle- the 34.96 level is key, and we'll want to see expanding volume on any breakout to confirm the pattern in play. This remains a key level and a tricky spot: Link

  Linda Piazza   7/20/200,  12:13:13 PM
Thanks, Keene, for the information in your 12:08 post about GNTA. I'm sure the reader appreciates the input. I'm not certain about the delisting, either.

  Jonathan Levinson   7/20/200,  12:11:55 PM
Thanks, Keene re your 12:08- good to know.

  Linda Piazza   7/20/200,  12:10:42 PM
Right now, the most likely range for the OEX in the near term appears to be 535.50 to 537.80. A break below 536.55 might head the OEX down toward the lower end of that range, and a break above 537.26 might send it up toward the higher end.

  Keene Little   7/20/200,  12:08:09 PM
Linda, your 11:45 post reminded me to remind readers about a little known method to roll out short puts when they've been assigned to you, which is particularly effective if they have time value remaining on them. It's called Same Day Substitution and it means you take assignment of the stock, sell it and resell the puts you had short in the first place. If all of this is done on the same day the stock was assigned to you, there is zero impact to your margin requirements (whereas if you took the stock, there would be a significant equity requirement).

If the puts had any time value remaining when this occurs, you get to keep that time premium since the stock was assigned to you, and you get to do it again! The only cost of course are the commissions for these multiple transactions. It's very cool, and I often liked getting assigned stock if I was short the puts. So the reader who was assigned GNTA collected the remaining premium and can evaluate the premium value (I haven't looked at them) to see if it's worth doing it again.

The risk of course with GNTA is that if the stock is rumored to be delisted (I have no idea), the stock value will continue to drop and being in naked puts is not what you want to do.

  James Brown   7/20/200,  12:00:42 PM
More homebuilders...

Lennar (LEN) is down 3.2% and falling out of its recent trading range but still above round-number support at $40.00. P&F chart points to $27 but has support near $37. Earnings should be mid-September.

Pulte Homes (PHM) is down 2.93% but still trading in its seven week trading range. Earnings July 26th.

Hovnanian (HOV) is down 3.14% and breaking through support at the $30.00 level. The P&F chart is very bearish and points to a $15 target but does have some support at $26. Earnings are expected in early September.

KB Home (KBH) is slipping more than 3% but still in its trading range. Earnings are mid-September.

Toll Brothers (TOL) is down 2.57% and breaking through support at the $39.00 level that has held for the last two months. The P&F chart points to a $31 target. Earnings are expected in late August. Be careful, looks like TOL has more support near $37.00-37.50.

more homebuilders: MTH -2.60%, MHO -1.6%, SPF -2.5%

  Jeff Bailey   7/20/200,  12:00:26 PM
Dorsey/Wright's Sector bell curve at this Link

Semiconductor Bullish % (BPSEMI) chart at this Link

If nothing else, bears should have taken some profits in the sector. Bulls start to pick away at relative strength performers at "bull alert" and would get more aggressive at "bull confirmed."

  Linda Piazza   7/20/200,  11:56:31 AM
While the OEX is settling into that equilibrium position on its five-minute nested Keltner chart, it's also settling into a symmetrical triangle. It's nearing the apex of that triangle already, so unless candles are going to issue out in a straight line through the apex, the OEX is due for a break one direction or the other. The problem is that such breaks now might not get far ahead of Greenspan's testimony.

  Jonathan Levinson   7/20/200,  11:54:42 AM
Kremlin orders fire sale of Yukos unit


  James Brown   7/20/200,  11:53:04 AM
The 8.2% drop in June housing starts is the largest drop in 10 years. The homebuilders are naturally not reacting well to the slowdown. The DJUSHB home construction index is down 2.93% to 539 hitting new two-month lows. Some of the following homebuilders might be decent bearish candidates. Just watch for earnings.

BZH is down 2.2% and breaking under the $90.00 mark but still above historical support in the $89-88 range. The P&F chart is bearish and points to $77. Earnings July 29th.

RYL is down 2.2% and breaking down intraday under the $70.00 mark but currently bouncing back. The P&F chart points to $58. Earnings July 21st.

CTX is down 2.7% and breaking under support at the $42.50 level. The P&F target is $31. Earnings are July 26th.

  James Brown   7/20/200,  11:46:10 AM
Catalog computer-retailer CDWC reported earnings today. The company beat by a penny but came in light on revenues yet shares are actually up 4.8% to $61.46 and breaking out from its recent trading range.

The company was certainly up beat on the quarter:
"Growth in sales continued to outpace the market as we gained additional market share. Along with this success, we are pleased with the strong profitability we generated in the second quarter of 2004. Year-over-year net income grew 500 basis points faster than sales due to solid gross margin and operating margin performance. We attribute this achievement to our ongoing focus of finding new and better ways to provide outstanding service to our customers. These initiatives include our marketing segmentation strategy, strong vendor relationships, and ongoing training of our sales force."

  Linda Piazza   7/20/200,  11:45:54 AM
Reader Request: Could you please post a message asking your many readers if anyone has news on Gnta? I have been assigned puts that were to expire in November and I have been told I am not the only one. Is this a sign that it could be delisted?

OIN doesn't generally follow sub-$5.00 stocks, but does anyone know of news regarding GNTA?

  Jonathan Levinson   7/20/200,  11:43:02 AM
The wavelet downphase bottomed at a higher low for QQQ, with the price doji-ing up from the 7200-tick SMA at 34.82 QQQ, the first such bounce in 2 days. The short cycle oscillators are trying to roll over, and a failure to revisit the session high of 34.97 would mean that a new short cycle downphase is in progress.

  James Brown   7/20/200,  11:42:23 AM
OI put play MGA has rolled over again after yesterday's oversold bounce. Look for a drop through the $80 level.

  James Brown   7/20/200,  11:40:37 AM
Yesterday's weakness in the XAU and mining stocks drug PD back under the $80.00 level. Today a sharp 2% drop in copper prices is contributing to another round of profit taking in PD and shares have hit our stop loss.

  James Brown   7/20/200,  11:38:36 AM
OI call play ZBRA is rebounding from the $82.00 level and its simple 40-dma. Shares are now above minor resistance at the 10 and 21-dma's as well as the $84.00 level. ZBRA +2.22% to $84.02.

  Linda Piazza   7/20/200,  11:37:07 AM
Jonathan has commented on the rise in crude prices. In my 22:12 post about the OEX, I noted how many obstacles the OEX would likely face as it tried to rise and in the Wrap last night, I noted that rising crude costs would be likely to pressure equities, too. I had thought that the OEX might stall at one of the named resistance levels ahead of Greenspan's testimony and wait there, and that still remains a possibility. The OEX's five-minute nested Keltner chart is now trying to settle into an equilibrium position, between 538-ish resistance and 535-ish support.

  James Brown   7/20/200,  11:36:38 AM
We've been stopped out of Alliant Tech Systems (ATK) this morning after Jeffries downgraded the stock from "buy" to "hold" based on valuation. Shares opened at $64.00 and dipped to $61.60 before bouncing.

  Jane Fox   7/20/200,  11:29:34 AM
Dateline WSJ - NEW YORK -- In a surprise move, the board of Charles Schwab Corp. dismissed its chief executive, David S. Pottruck, handing the company's reins back to founder and Chairman Charles R. Schwab.

The unexpected announcement came as the embattled discount brokerage firm tries to right itself. Faced with weaker stock-trading by its investor customers and operating in a highly competitive industry, the company also reported a 10% drop in earnings during the second quarter.

  Jonathan Levinson   7/20/200,  11:25:50 AM

  Jonathan Levinson   7/20/200,  11:25:33 AM
This drop in QQQ is just another wavelet downphase, but with the short cycle oscillators trending in overbought, it or any future wavelet downphase could be the one that breaks the short cycle uptrend in place this morning. Short cycle channel support is being broken with these prints below 34.90, and 30 min channel support is higher at 34.74.

  Linda Piazza   7/20/200,  11:15:23 AM
The SOX comes up to challenge its 15-minute 100/130-ema's for the first time since 7/13. Those averages are at 418.70 and 421.33 respectively, and might lend their resistance to round-number resistance near 420. It was the fall through those averages on 7/01 that began the SOX's steep recent decline, so a sustained break above them would be significant, with the emphasis on "sustained," since the SOX has momentarily broken above these averages since.

  Jonathan Levinson   7/20/200,  11:13:56 AM
Another session high for NQ futures here, but the volume just isn't there yet. My tick-based indicators are slowing to a crawl. Looks like everyone's waiting for the other guy to take the first step.

  Jeff Bailey   7/20/200,  11:08:14 AM
11:03 Market Watch at this Link

  Linda Piazza   7/20/200,  11:04:48 AM
The neckline of the OEX's reverse H&S and the 200-ema are just overhead, with the 299-ema at 538.22. This should be tough resistance, but a strong break through to the upside could encourage bulls and scare shorts. Be careful, however, in making assumptions as the congestion recently means that possible historical resistance is layered thickly overhead. TRIN just isn't giving us any clues, either, is it, Jane?

  Jonathan Levinson   7/20/200,  11:00:13 AM
The futures continue to print session highs, but yesterday's highs remain untested and volume remains unimpressive. QQQ needs to break confluence at 34.96-35.02 before the fireworks can start. The short cycle oscillators remain toppy and there's a small bearish divergence on the short cycle Macd histogram- it's too early to break out the champagne, but another buy program or two from these levels could get us there.

  Linda Piazza   7/20/200,  10:55:43 AM
The BIX is bouncing up toward the day's high and yesterday's close.

  Linda Piazza   7/20/200,  10:51:45 AM
The OEX is inching above the mid-channel level on its five-minute chart, but hasn't yet inched high enough that we can consider it clear of that resistance. If it can stay above 537, it looks as if 537.73 will be the next Keltner resistance faced.

  Jonathan Levinson   7/20/200,  10:47:09 AM
NQ to a session high here along with INTC. QQQ broke the previous high and needs to hold it here- the short cycle oscillators are on the verge of trending in overbought.

  Linda Piazza   7/20/200,  10:44:49 AM
So far today, the BIX has not been able to build on yesterday's gains. Although it remains above 350 and above the 350.20 support, at 350.86 as I type, it has drifted down from yesterday's closing level. It pierced 350 once today, climbing back, but OEX bulls hoping to see some help from the BIX would like to see a follow-through on the breakout.

  Jeff Bailey   7/20/200,  10:42:24 AM
Altria (MO) $48.66 -0.34% Link ... reported quarterly EPS of $1.25 (excluded $0.15 per share gain and $0.13 per share charge) versus consensus of $1.28 and year-ago EPS of $1.26. Altria said revenues grew 10.5% compared to the same quarter last year.

  Linda Piazza   7/20/200,  10:36:38 AM
The OEX tested first Keltner resistance near 536 and was able to climb above it. Resistance lines are scattered overhead on the five-minute chart, but less scattered than support, widely spaced beneath the current OEX position. However, bulls still have hope. If the OEX can steady and move up from here, it has hope of creating bullish divergence, Keltner style. Next Keltner resistance lies at 536.63-536.80, where resistance lines are trying to converge. As I type, it looks stronger than support, but that could change.

  Jeff Bailey   7/20/200,  10:34:00 AM
Broker/Dealer Index (XBD.X) 115.31 +1.54% .... Ameritrade (AMTD) $10.15 +8.09% .... reported Q4 net income of $62.3 million, or 15 cents a share (consensus $0.15 per share) , up from 12 cents in the year-ago period. Revenues were up 15% year-over-year to $222.7 million, but shy of consensus estimates of $231.8 million.

  Jonathan Levinson   7/20/200,  10:30:17 AM
The anticipated wavelet bounce for QQQ is getting great price traction but very weak volume. A break above 34.89 could get the volume coming in with a new day high, but otherwise it will be a double top within the rolling short cycle oscillators that are trying to start a downphase from overbought territory. This is a key level for the QQQ intraday.

  Jonathan Levinson   7/20/200,  10:20:57 AM
The persistent weakness of the last 10 minutes was enough to stall the short cycle upphase, and a downphase should kick off anytime, perhaps with a lower high on what I expect to be a wavelet bounce due to commence now. 34.88 is short cycle resistance, and it looks like the 30 min channel resistance won't get hit on this go-round.

  Linda Piazza   7/20/200,  10:19:25 AM
The OEX couldn't hold onto the right shoulder level and now moves toward the 535 level that the Keltner channels were predicting it might see at yesterday's close. Unless the OEX can maintain levels above 536, it looks as if 535 at least is in the works.

  Jonathan Levinson   7/20/200,  10:13:13 AM
Gold and silver to session lows here at 399.9 and 6.46. 398 is key support for gold, below which there's support at 395 and 392.

  Jeff Bailey   7/20/200,  10:11:04 AM
10:06 Market Watch at this Link

  Jonathan Levinson   7/20/200,  10:10:36 AM
Short cycle support rises to QQQ 34.78.

  Jonathan Levinson   7/20/200,  10:09:08 AM
Session low for GE here.

  Jonathan Levinson   7/20/200,  10:06:19 AM
QQQ's short cycle upphase is toppy but not yet maxxed out. A break above 35 would likely cause it to trend, but for that to happen the 30 min cycle will have to get a lot more committed to the upside than it's been since yesterday afternoon. Support remains the same old 34.55, resistance slightly higher to 35 even.

  Linda Piazza   7/20/200,  10:02:22 AM
The OEX flattens its smallest Keltner channel, but hasn't been able to maintain levels that would turn it higher again, at least not yet. The current pattern on the intraday charts is consistent with the formation of a right shoulder to go with the reverse H&S formation, but now we just have to wait to see whether the OEX breaks below the right-shoulder level or breaks above the neckline.

  Jonathan Levinson   7/20/200,  9:59:28 AM
The Fed has announced a 4.25B overnight repo against 5B expiring for a modest .75B drain.

  Jeff Bailey   7/20/200,  9:54:43 AM
Current OPEN MM Profiles at this Link

TASR nearing its PnF chart's bearish vertical count of $32.

  Linda Piazza   7/20/200,  9:46:22 AM
Here's the potential reverse H&S on the OEX, as seen on the 15-minute chart: Link Note that there was no bullish divergence as the head was formed, so that it's less than ideal. A drop too below 535.50 would tend to negate the formation, while a climb above the 200-ema at 538.21 would confirm it. Note that there's already been one break above that trendline, however, soon reversed, showing the possible danger to those investing in long plays.

  Jonathan Levinson   7/20/200,  9:46:11 AM
The 30 min channels are flat, but if bulls can avoid dropping the ball from these levels, the upphase will reassert itself. A short cycle upphase is in progress and projects to a preliminary target of 34.96, but 34.70 support will need to hold. That 34.70 level is the bottom of the rising short cycle channel and, coincidentally, the session low today.

  Jeff Bailey   7/20/200,  9:44:17 AM
Wells Fargo (WFC) $58.15 -0.51% .... reported quarterly EPS of $1.14 (ex multiple items, may not be comparable to consensus) where analyst's forecasted EPS of $1.03. Revenues rose 7.2% year-over-year.

  Linda Piazza   7/20/200,  9:41:25 AM
The OEX is trying to turn that smallest Keltner channel higher again on the five-minute chart. If the OEX can maintain levels above 536.57, it has a chance of flattening the channel, at least, and if it can push above 536.36 and maintain levels above that, it has a chance at turning it higher again. Remember other resistance just above that, in the form of a neckline of a possible reverse H&S and the 200-ema at 538.21. Lots of pitfalls here.

  Jeff Bailey   7/20/200,  9:40:41 AM
Freeport McMoran (FCX) $33.86 -4.18% Link .... miner lower after reporting quarterly loss of $0.10 per share (ex-items), which was better than Reuters consensus for a loss of $0.20. Revenues fell 20.2% year-over-year.

  Linda Piazza   7/20/200,  9:38:44 AM
The TRAN tries to move up again, moving now into resistance in the 3117-3128 zone. The TRAN is at 3118.54 as I type.

  Jonathan Levinson   7/20/200,  9:35:59 AM
Session low for gold here, down 4.1 at 401.60, now into the key 398-402 confluence zone.

  Jonathan Levinson   7/20/200,  9:35:28 AM
Naz futures are leading their peers to the upside, +.43% currently with the Dow up .06% and the ES up .09%. QQQ is up .40%. All are fighting with previous support here, and an upside break is required to avoid that early 30 min downphase. A lower high would be very bearish here and would give us good odds of a break through yesterday's lows.

  Linda Piazza   7/20/200,  9:34:05 AM
The OEX opens near yesterday's close. So do the SOX and BIX, with the SOX climbing as I type and the BIX falling back slightly as I type.

  Jonathan Levinson   7/20/200,  9:30:17 AM
The 30 minute cycle upphase is rolling over from yesterday's sharp closing closing decline on QQQ. Any weakness at the open will give a fresh and very premature 30 min sell signal, signalling that the daily cycle downphase still has more gas in the tank. 30 min channel support is down slightly to 34.58.

  Jeff Bailey   7/20/200,  9:30:02 AM
Taser Intl. TASR $36.32 Link .... lower at $34.55 after the stun gun maker reported quarterly EPS of $0.14, which was a penny better than consensus estimates.

  Jeff Bailey   7/20/200,  9:25:12 AM
09:00 Update at this Link

  Linda Piazza   7/20/200,  9:09:54 AM
Futures have reacted overnight in the manner that those hoping for a bounce wanted to see: they stayed steady with Nikkei weakness and then climbed after the Nikkei stopped trading. Now OEX bulls need to see price action follow the optimism of the futures, by following these steps outlined in my 22:12 post: OEX bulls want to see the OEX maintain levels above 536.66 and preferably above 537.32. They then want to see the OEX move above the neckline of its possible reverse H&S, with that neckline just above 538. They want to see the OEX successfully challenge the 200-ema, currently at 538.22. They want to see the OEX climb above the 15-minute 100/130-ema's, averages that were challenged yesterday before the OEX dropped into the close, with those averages now at 538.84 and 539.55, respectively. As I mentioned last night, that's a lot to accomplish, especially with Greenspan to speak this afternoon, but if enough of these levels are hit, shorts might begin covering, escalating the gains. The weakness shown in the indices has been great enough that some technical damage has been done, and it's possible that any bounces are just countertrend bounces up to test former support. Be on guard for rollovers at some of these key levels or even for cash action not to follow the futures. Remember that the smallest Keltner channel was still pointed down toward 535 as trading ended yesterday, and the OEX needs to maintain those 536.66 and preferably 537.32 numbers to turn it higher again.

  Jonathan Levinson   7/20/200,  8:49:59 AM
Ten year notes are slipping slightly, with TNX now higher by 2.3 bps to 4.384%. 4.4% is previous support, now resistance on this bounce in the yield.

  Jonathan Levinson   7/20/200,  8:40:59 AM
QQQ is holding its earlier gains, up 15 cents at 34.75 here. 30 min channel support is at 34.60.

  Jonathan Levinson   7/20/200,  8:33:05 AM
The futures haven't reacted yet to the numbers. Gold and silver, bonds, equities- none are moving, with equities pulling back fractionally, gold up fractionally and bonds unchanged for the last 5 minutes. TNX is up 1.5 bps to 4.376%.

  Jonathan Levinson   7/20/200,  8:31:41 AM




  Jonathan Levinson   7/20/200,  8:28:35 AM
Gold and silver continue to plummet as we approach the 8:30 data, down to 402.60 and 6.51 here. Equities are holding their gains, while bonds have steadied just off their lows.

  Jonathan Levinson   7/20/200,  8:11:11 AM
Session low for bonds, gold and euro futures here.

  Jonathan Levinson   7/20/200,  8:02:16 AM
Dow futures are up 11 to a session high here at 10083, ditto ES at 1100 with NQ up 4.5 to 1399.50. QQQ is up 12 cents from its closing washout, trading 34.72 here. Gold and silver are at session lows of 404 anf 6.561 respectively, with bonds down .09 at 111.23 on the ten year treasury future. We await building starts and housing permits for June at 8:30AM, est. 2.005M and 1.99M respectively.

  Linda Piazza   7/20/200,  7:12:28 AM
Good morning. After being closed yesterday due to a national holiday, the Nikkei had its first opportunity to react to Friday's and yesterday's losses in U.S. bourses. The Nikkei gapped down and soon violated the 11,250 support on its daily chart. By the afternoon, the Nikkei had dipped just below 11,200, but it recovered some of those lost points to close down 177.63 points or 1.55%, at 11,258.37. Semi-conductor stocks saw the biggest declines in early trading, with the declines prompted by the Semiconductor Equipment & Materials International's release of the semi book-to-bill number. That number was 1.08, above the benchmark 1.00, but the trajectory of recent numbers showed slowing semi-equipment orders at North American companies. Advantest closed lower by 4.7% and Tokyo Electron dropped 4.6%. Rising crude costs were also tagged as one reason for the declines. Banking stocks saw mixed results as two issues involved in merger plans, Mitsubishi Tokyo Financial Group and UFJ Holdings, headed opposite directions. Mitsubishi Tokyo Financial gained 5.7% while UFJ Holdings dropped 6.1%. Troubled Mitsubishi Motors dropped 5.3%.

Other Asian bourses turned in mixed performances, although the bourses normally tracked on this page all traded lower. The Taiwan Weighted was hit particularly hard by the weakness in semi-related shares and also by Merrill Lynch's downgrade of AU Optronics to a sell rating. The index dropped 2.98%. South Korea's Kospi fell 1.79%, and Singapore's Straits Times dropped 0.88%. Hong Kong's Hang Seng fell 0.36%, and China's Shanghai Composite declined 0.66%.

European bourses also turn in mixed performances, although the three typically tracked here are flat or modestly higher. In the U.K., economic reports suggested that the rise in house prices is slowing. In addition, mortgage lender Northern Rock suggested that the market for house purchases would continue to slow but that re-mortgage activity was expected to remain strong. Banks dropped. In Europe, Germany's July ZEW Indicator of Economic Sentiment rose to 48.4 points against an expectation that it would fall from June's 47.4 points, surprising to the upside. Perhaps that upside surprise helped support German chip manufacturer Infineon Technologies after it surprised to the downside. Revenue rose 14%, but Infineon took charges related to antitrust investigations. Infineon rose in early trading, outperforming other European chip manufacturers. However, reinsurer Converium warned that it will miss expectations because of casualty losses in the U.S. in 1997-2001, sending Converium over 40% lower and hurting other European insurers. On a day heavy with earnings announcements, drug manufacturer Novartis beat estimates and gave an upbeat outlook for the year's operating and net profits, and gained strongly in early European trading. Luxury goods manufacturers Christian Dior and Pinault-Printemps-Redoute, owner of Gucci, reportedly saw rising sales of luxury goods in the second quarter.

As of this writing, the FTSE 100 trades higher by 6.30 points or 0.15%, at 4,327.40. The CAC 40 trades higher by 3.26 points or 0.09%, at 3,595.89. The DAX trades higher by 9.94 points or 0.26%, at 3,822.57.

  Linda Piazza   7/19/200,  10:12:05 PM
OEX Notes: The OEX's 200-ema has figured in trading patterns over the last several days, with Monday's test of the 200-ema marking the top of the OEX's intraday move. That move produced a doji at the bottom of a decline, a potential reversal signal. The reversal signal is not a classic one on the OEX, but it was echoed by potential reversal signals across several other indices. Potential for a bounce should be considered.

To gauge that potential, watch how the futures behave with respect to the Nikkei's performance and then to European markets' performances. After the cash close, futures eased rather than bounced, affected by disappointment in some aspects of FLEX's earnings release. As I'm preparing this post, the Nikkei has dropped 178.30 points or 1.56%, however, and futures are holding fairly steady. So far, that's what those with bullish hopes want to see, although it would be preferable to see the Nikkei gain and the futures gain along with it. As I type, the Nikkei skirts along 11,250 support, with a drop below that support representing a drop beneath significant support on the Nikkei's daily chart.

Monday, the OEX remained in the lower half of its nested Keltner channels, the bearish half, not able to break above or sustain values above the mid-channel level on either the five- or fifteen-minute charts. As Monday ended, the intraday charts were far from assuring a bounce, as the smallest channel on the five-minute chart still pointed toward 535.09, next Keltner support on that chart, and the smallest channel on the fifteen-minute chart threatened to turn lower again. I don't see 530-533 as an impossibility, but neither do I see 539-540 as an impossibility, with a test of that zone then telling us more about whether 544-547 is more likely than 530-532. Tomorrow, OEX bulls want to see the OEX maintain levels above 536.66 and preferably above 537.32. They then want to see the OEX move above the neckline of its possible reverse H&S, with that neckline just above 538. They want to see the OEX successfully challenge the 200-ema, currently at 538.22. They want to see the OEX climb above the 15-minute 100/130-ema's, averages that were challenged yesterday before the OEX dropped into the close, with those averages now at 538.84 and 539.55, respectively.

Whew! Does that sound like a lot to you? It does to me, especially with Greenspan scheduled to deliver his twice-a-year address before the Senate Banking Committee tomorrow afternoon at 2:30. If the OEX should attempt a bounce, I think it's likely to stall at one of those levels and wait to see what Greenspan has to say. If the OEX should fail to bounce, and instead should move back down to test 535.09, as looked likely at the close, or even 533.80 if the higher support should fail to hold, it's likely that the decline might stall at one of those levels or perhaps nearer 530-532, waiting to hear what Greenspan has to say. Let's see how futures behave overnight before we make too many guesses this evening.

  OI Technical Staff   7/19/200,  8:10:07 PM
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