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  Jeff Bailey   7/28/200,  5:31:36 PM
Pivot Matrix for tomorrow at this Link

 
 
  Jeff Bailey   7/28/200,  5:11:17 PM
Closing Internals at this Link

 
 
  Jeff Bailey   7/28/200,  4:07:17 PM
Current OPEN MM Profiles at this Link

Day traded short GE for break even.

Day traded short TASR for $0.76, or 2.39% gain.

Day trade long YELL for $0.53, or 1.26% gain.

Out of "pure disgust" sold the August $3 covered call against the JDSU Dec. $3 calls. I've had enough fiber for the rest of the month.

 
 
  Jeff Bailey   7/28/200,  3:50:53 PM
Broker/Dealers (XBD.X) 118.85 -0.41% .... lagging and haven't really been able to challenge morning highs of 120.00.

 
 
  James Brown   7/28/200,  3:46:55 PM
This might be a bullish entry point on ZBRA. The company reported earnings this morning and beat estimates by 2 cents. The stock is rebounding from a test of support at $75.00 and its simple 100-dma, where ZBRA has bounced in the past. Short-term technicals are turning bullish from oversold and its MACD is hinting at a new buy signal in the near future. More conservative players could wait for ZBRA to clear potential resistance at $82.50 and/or at $84.

 
 
  Jeff Bailey   7/28/200,  3:45:33 PM
Monster.com (MNST) $21.99 -1.47% ... has come back from the swamp.

 
 
  Jeff Bailey   7/28/200,  3:44:35 PM
American Express (AXP) $49.87 +0.88% .... above 21-day and 200-day SMA.

 
 
  Jonathan Levinson   7/28/200,  3:44:05 PM
Yesterday's high was 34.70. This is a trending move against the rising 30 min Keltner resistance band, but I'd expect to see some kind of short term resistance at that 34.70 level. The 30 min cycle upphase launched from a higher oscillator low on a bullish divergence within the nascent daily cycle upphase. I expect higher prices from here based on the rising 30 min and daily cycles, allowing for a short cycle pullback due anytime within them. The short cycle downphase should bottom from a higher low- support is at 34.38-.44, 34.20 and 34.10, with 34.10 being rising lower 30 min channel support.

 
 
  Jeff Bailey   7/28/200,  3:43:09 PM
Intel (INTC) $23.55 +1.2% .... threatens to close at highest level since quarterly earnings.

 
 
  Jeff Bailey   7/28/200,  3:40:22 PM
Bullish day trade exit alert ... for Yellow Roadway (YELL) $42.50

 
 
  James Brown   7/28/200,  3:39:40 PM
Whole Foods Market (WFMI) is bouncing sharply from its lows of the session ahead of its earnings report due out after the bell today. Estimates are for 50 cents a share.

 
 
  Jonathan Levinson   7/28/200,  3:37:46 PM
You could almost set your watch by it, Jim.

 
 
  James Brown   7/28/200,  3:34:44 PM
CNBC reporting that ChevronTexaco (CVX) has announced a 2-for-1 stock split.

 
 
  Jeff Bailey   7/28/200,  3:34:36 PM
eBay (EBAY) $79.01 +0.8% .... makes a move above yesterday's highs.

 
 
  Jonathan Levinson   7/28/200,  3:34:04 PM
Session highs breaking out here. QQQ 1 cent away.

 
 
  Jonathan Levinson   7/28/200,  3:29:55 PM
Another 30 min Keltner channel violation to the upside. The higher low on today's session low is what bulls wanted to see from the 30 min cycle downphase as discussed this morning, confirming the strength from the daily cycle upturn. An upside break of the morning highs would be a nice cherry on top, just 12 cents away for QQQ.

 
 
  Jonathan Levinson   7/28/200,  3:25:13 PM
30 min channel support rises to QQQ 33.90, resistance to 34.35. The short cycle upphase is into overbought territory and is not nearly maxxed out yet, but in any event, for two weeks we've been watching the short cycle trend in overbought or oversold for hours on end. This is a good sign, as the daily ranges have been expanding- I find anything better than the lack of movement we've seen at other points this year. Previus resistance at 34.20 should now act as support, below which is lighter support at 34.10 and stronger support at 33.96-34.00.

 
 
  James Brown   7/28/200,  3:22:16 PM
OI call play HUG is finally edging past resistance at the $60 level again.

 
 
  James Brown   7/28/200,  3:21:45 PM
OI call play FDX is up 50 cents and back above the pivotal $80 level.

 
 
  Jonathan Levinson   7/28/200,  3:11:51 PM
The move here just ran straight to QQQ 34.38 and is pulling back now. .38-.44 remains key confluence in both directions.

 
 
  Jeff Bailey   7/28/200,  3:08:01 PM
Dow Transports (TRAN) 3,086 +0.76% .... putting it in high gear ...

Move comes after September Oil (cl04u) closes at $42.90.

 
 
  Jeff Bailey   7/28/200,  3:07:06 PM
Taser Intl. (TASR) $31.85 +6.26% .... gets some volume on this little move higher.

 
 
  Jeff Bailey   7/28/200,  3:05:30 PM
Dow Industrials (INDU) 10,065 -0.17% .... 9 points above DAILY Pivot (10,056.90)

 
 
  Jeff Bailey   7/28/200,  3:02:50 PM
Dow Transports (TRAN) 3,075 +0.36% ... best levels of session.

YELL $42.15 -0.91% ...

 
 
  James Brown   7/28/200,  3:02:34 PM
Internet play Ask Jeeves (ASKJ) is down 11% to $27.55 and flirting under its simple 200-dma after reporting earnings today. Estimates were at 22 cents a share and ASKJ beat them by 2 cents. Revenues skyrocketed more than 135% during the second quarter to $60.3 million, which was above analysts' consensus estimates. Unfortunately, ASKJ has guided lower for the third quarter. Management expects earnings to fall near 24 cents a share vs. Wall Street's estimates of 27 cents.

The drop today has produced a new triple-bottom breakdown sell signal on its P&F chart, which now points to a $22 target.

 
 
  Jonathan Levinson   7/28/200,  3:01:40 PM
QQQ is at 30 and 60 min resistance here. That would be a sell signal if the 30 and 60 min oscillators were at a peak, but here they're making a trough. So long as support at 34 holds on any pullback, the bulls should be in business for a new 30 min cycle upphase.

 
 
  James Brown   7/28/200,  2:56:48 PM
It will be interesting to see if and/or when the retail sector will mount a back-to-school comeback. According to a CNN article consumers will spend almost $15 billion on stuff for their children as school begins (think: clothes, computers, shoes, bags and supplies). Right now the challenge may be hardest for the apparel retailers who are already starting to markdown their clothing.

The CNN article suggest that Wal-Mart (WMT) and Target (TGT) will benefit from 76 percent of the back-to-school crowd. Department stores and office supply stores will also see big business.

 
 
  Jeff Bailey   7/28/200,  2:54:16 PM
02:50 Market Watch at this Link

 
 
  Jonathan Levinson   7/28/200,  2:50:35 PM
30 min channel resistance has risen on QQQ to line up with 60 min resistance at 34.20 here. The short cycle upphase is stalling the 30 min downphase, and that wider channel is beginning to turn up. Support has risen to 33.77.

 
 
  Jonathan Levinson   7/28/200,  2:46:49 PM
Session high for bonds here, with TNX down .3 bps to 4.592%.

 
 
  Jeff Bailey   7/28/200,  2:45:10 PM
Sell Program Premium .... SPX 1,087.14

 
 
  James Brown   7/28/200,  2:40:29 PM
Ouch! Online jewelry retailer Blue Nile (NILE) is down more than 21% to $26.02 after reporting earnings this morning and beating estimates by more than 2 cents. Revenues jumped 29% to $35 million but analysts were looking for revenues of $35.3 million. The weakness is also due to NILE guiding lower for the third quarter.

 
 
  Jonathan Levinson   7/28/200,  2:35:01 PM
QQQ just broke 34 resistance, reaching current 30 min channel resistance at 34.10.

 
 
  James Brown   7/28/200,  2:34:16 PM
UTStarcom Inc (UTSI) is down more than 27% to $18.41. Yesterday the company reported earnings and missed estimates by 2 cents. UTSI did have some positive news with revenues up almost 70% to $689.6 million for the quarter, which is above analysts' revenue estimates. The company guided lower for the third quarter but reaffirmed its full year estimates. Wall Street's reaction is mixed with some firms downgrading the stock and others reiterating their positive outlooks.

 
 
  Jeff Bailey   7/28/200,  2:33:23 PM
Biotechnology Index (BTK.X) 469.27 +0.09% .... edges green.

 
 
  Jonathan Levinson   7/28/200,  2:33:10 PM
ASKJ is getting smoked, currently down 15.12% after beating on earnings by 2 cents but warning that Q3 profits will miss current expectations by 3 cents per share.

 
 
  Jeff Bailey   7/28/200,  2:29:14 PM
Bullish day trade long alert for Yellow Roadway (YELL) $41.97 -1.33% here, stop $41.75, target $42.50.

 
 
  Jonathan Levinson   7/28/200,  2:25:05 PM
QQQ 34 holds again. The last bounce invalidated what was shaping up to be a sloppy descending triangle and has upped it a rectangle. Bears and bulls have been working within a 20 cent range all afternoon, and a break of either 34 or 33.80 should set to the tone for the rest of afternoon.

 
 
  Jeff Bailey   7/28/200,  2:20:26 PM
Boeing (BA) $48.74 +1.11% and Caterpillar (CAT) $73.23 +1.45% join Verizon (VZ) $38.47 +1.61% for percentage gainers in the INDU 10,040.

 
 
  Jeff Bailey   7/28/200,  2:11:05 PM
Bearish day trade stop alert .... for TASR $31.10.

 
 
  Jane Fox   7/28/200,  2:08:20 PM
The advance-decline volume always starts the day at 0 but yesterday we saw a steady climb and today it has been a straight line down Link

 
 
  Jeff Bailey   7/28/200,  2:06:22 PM
Bearish day trade lower stop alert for Taser Intl. (TASR) to $31.10.

 
 
  Jonathan Levinson   7/28/200,  2:05:59 PM
Bonds are steady on the news, with TNX holding its .8 bp gain at 4.603%.

 
 
  Jonathan Levinson   7/28/200,  2:05:12 PM
2:00 Beige Book: many regions have slower growth

2:00 Beige Book: Retail sales slowed through mid-July

 
 
  Jane Fox   7/28/200,  2:03:57 PM
The TRIN started the day bullishly with a low of 0.58. It has now risen to 1.24 and still climbing.

 
 
  Jonathan Levinson   7/28/200,  2:03:55 PM
Beige Book: "Federal Reserve districts reported that economic activity continued to expand in June and early July, although several districts reported that the rate of growth moderated."

 
 
  Jonathan Levinson   7/28/200,  2:01:17 PM
2:00pm BEIGE BOOK: HIGHER PRICES AT PRODUCER LEVEL COMMON

2:00pm BEIGE BOOK: LABOR MARKETS STILL STRENGTHENING

 
 
  Jonathan Levinson   7/28/200,  1:56:13 PM
Short cycle QQQ chart at this Link.

 
 
  Jonathan Levinson   7/28/200,  1:52:19 PM
Beige Book due in 8 minutes.

 
 
  Jeff Bailey   7/28/200,  1:49:45 PM
Taser (TASR) $31.27 +4.26% .... has been tight between $31.48 and $31.18 last hour. Volume really drying up in here.

 
 
  James Brown   7/28/200,  1:45:00 PM
Interesting bit for the basketball fans out there... Disney is working with the NBA to sponsor the first-ever NBA games in China. The Houston Rockets and the Sacramento Kings will play two pre-season games in Shanghai and Beijing in October. Disney's ESPN network will televise the games.

 
 
  Jonathan Levinson   7/28/200,  1:44:50 PM
30-min chart of QQQ at this Link . Bulls need to hold current levels to turn the stalled 30 min cycle channel back up. Resistance on that channel is currently close overhead at 34.11. A higher low on the 300 min stochastic would be enough to preserve the bullish divergences discussed earlier.

 
 
  James Brown   7/28/200,  1:40:18 PM
VERITAS (VRTS) reported earnings last night and beat estimates by 2 cents a share. Revenues jumped almost 19% and came in above analysts' consensus estimates. Guidance was in-line but VRTS did announce a $500 million stock buy back program.

CIBC followed up today with an upgrade to "sector out-perform" and a $25 price target.

Shares of VRTS tried to rally higher and gapped up to $19.50 but couldn't breakout over resistance at the $20.00 mark.

 
 
  James Brown   7/28/200,  1:33:55 PM
Sonic Automotive (SAH) soared more than 10% yesterday on its earnings report even though the company missed estimates by a penny. Today the stock gapped higher again on an upgrade to "over weight" from JP Morgan. Yet shares have been falling ever since and are now down 5.5% and painting a very ugly bearish engulfing candlestick.

 
 
  Jonathan Levinson   7/28/200,  1:33:47 PM
The 24B 2-yr treasury note auction generated a bid-to-cover ratio of 2.36% at a median rate of 2.78%.

 
 
  James Brown   7/28/200,  1:30:21 PM
Ouch! Allied Waste (AW) is down more than 19% to $9.90 hitting new one-year lows. Yesterday the company reported earnings and missed estimates by 3 cents per share. Revenues also came in under consensus. Wall Street followed the report with at least two downgrades.

 
 
  Linda Piazza   7/28/200,  1:29:17 PM
I have to leave for an appointment now. Happy trading!

 
 
  James Brown   7/28/200,  1:27:40 PM
United States Steel (X) is up 5.66% to $36.00. X reported earnings yesterday and beat estimates by 29 cents. Prudential followed up today with an upgrade to "over weight".

 
 
  James Brown   7/28/200,  1:24:21 PM
Varian Semiconductor (VSEA) is down 7.68% to $26.70, hitting new one-year lows after JP Morgan downgraded the stock to "neutral". Lehman Brothers is trying to defend the stock by reiterating their "over weight". Shares are very oversold from their June 30th close above $38.50.

 
 
  Linda Piazza   7/28/200,  1:22:34 PM
The OEX has succeeded in turning its smallest Keltner channel higher on the five-minute chart, turning it up toward a test of the mid-channel resistance. Resistance doesn't look particularly strong on the five-minute chart, but it appears much stronger on the 15-minute chart, from 532.05-532.84. It looks to me from the perspective of both charts that the OEX is trying to settle itself into an equilibrium position. The 15-minute chart suggests that it's likely that the OEX could move in a 3-point (if it finds support/resistance at the mid-channel level) to 6-point range within that equilibrium state. A warning: sometimes when these equilibrium states set up, we see patterns begin to form but fall apart or breakouts appear to be made but get reversed. It's only until we're all sick of being whipsawed that the real move tends to get underway.

 
 
  Jonathan Levinson   7/28/200,  1:22:20 PM
Perhaps the Beige Book, due in 40 minutes, will help. So far, despite bullish divergences on the short cycle TRIX and Macd, the price can't hold a rise for longer than a few minutes and the short cycle stochastics continue to trend in oversold. Resistance above for QQQ is at 34, 34.12, 34.20, 34.31 and 34.38-.44.

 
 
  James Brown   7/28/200,  1:21:23 PM
Ouch! Wright Medical Group (WMGI) is down more than 17% to $26.26 after reporting earnings last night. The company reported in-line and guided in-line. Analyst reaction is mixed with some reiterating their positive outlooks but JP Morgan has downgraded the stock from "overweight" to "neutral".

Today's drop has produced a new triple-bottom breakdown sell signal on its P&F chart and it broke through rising P&F support.

 
 
  James Brown   7/28/200,  1:12:31 PM
Career Education Corp (CECO) is down more than 21% to $34.83. Last night the company reported earnings and beat estimates by 4 cents a share. Yet the company guided lower on Q3 revenues. The analyst community has had a mixed reaction with some downgrading the stock while other are defending it.

 
 
  Jonathan Levinson   7/28/200,  1:11:28 PM
Bonds have eased off the highs, back to fractional negative territory with TNX up .8 bps to 4.604%. Nymex crude is back down to 42.775, up 2.21%, while gold is holding its gains, up 2.50 at 389.50.

 
 
  Linda Piazza   7/28/200,  1:10:16 PM
The OEX's 15-minute chart shows resistance gathering from 532.09-532.87.

 
 
  James Brown   7/28/200,  1:09:16 PM
Semiconductor stock LSI Logic (LSI) is down more than 14% to $5.00 after Smith Barney cut the stock to a "sell". Yesterday LSI reported earnings that were in-line but guided lower for the future.

 
 
  James Brown   7/28/200,  1:06:49 PM
The slow bleed lower in shares of Emulex Corp (ELX) is picking up speed today with a 4.87% drop to $10.15. The move follows coverage initiated by Smith Barney with a "hold". ELX's P&F chart is extremely bearish with a $1.00 price target.

 
 
  Jeff Bailey   7/28/200,  1:04:14 PM
12:55 Market Watch at this Link

 
 
  James Brown   7/28/200,  1:02:11 PM
Ball Corp (BLL) has announced a 2-for-1 split and a 12 million share (post-split) buyback program. Shares are up 1% to $70.33. The company is expected to announce earnings tomorrow. Estimates are at $1.43 a share.

 
 
  Jeff Bailey   7/28/200,  1:01:47 PM
Cabela's (CAB) $28.15 +3.26% .... nice move after getting back above 50% of IPO range.

 
 
  Linda Piazza   7/28/200,  1:00:53 PM
The OEX approached supposed strong support on a historical and Keltner basis, but this morning's action shows the OEX turning back drom the first resistance level on the daily Keltner channel, near 535, and turned down toward next daily Keltner support, currently near 526. That suggests that on a daily Keltner basis, anyway, it's still a time to sell resistance rather than buy support, at least until the OEX can clear 536. Even then, the daily and other charts show that 543.50-547 may be the limit of the topside over the near term, with resistance looking stronger than support. That Keltner evidence fits fairly well with the evidence shown on the OEX's 15-minute chart with a potential reverse H&S that would be confirmed on a move above 536.60 and with an upside target of 546, if confirmed.

However, all that overhead resistance suggests a vulnerability to a rollover at any time with that resistance pressuring indices. Then there are the rising crude prices to offer pressure, too.

Other charts, such as the five-minute chart, now suggest that the OEX got close enough to 529 and now might try for a test of 532.17 mid-channel resistance. At this point, resistance is scattered thinly on the five-minute chart, and a test of 536 might even be possible. Support is only slightlllly stronger than resistance, however, and the OEX could still dip instead of climb, with bottom Keltner support now at 528.35.

I'll be leaving sometime within the next 30-45 minutes and will probably be gone most of the afternoon. For the time being, I consider upside limited, but a breakout above 536.60 suggests a move up to test first resistance near 539.50-541 and then 543.50-547 if that's surpassed. I'm not so sure, however, that any of those levels will be surpassed, including the 533 level and most assuredly the 536-537 level. If inclined to participate in a bullish play now, be prepared for vulnerability down to 526 or so, and make plans to protect profits at each of the levels I've mentioned. I don't think with rising crude costs and with the TRIN rising most of the day that I'd feel particularly comfortable in a bullish play, but of course just thinking those thoughts probably licenses the OEX to zoom away to meet each of these upside targets.

If already in a bearish play, watch each of these levels, too, for hopes of a rollover. Depending on the type of play--daytrade, swing, position, etc.--you may want to set a stop just above the 532-533 level or one of the other resistance zones I've mentioned. I think all traders should be aware of the possibility of choppy trading conditions until the OEX establishes whether that strong weekly support will continue to hold as support or not. I think we can probably expect some attempts this week or next to drive the OEX below that 528.50-529 level and some to drive it higher, too, with some whipsawing action possible.

 
 
  Jonathan Levinson   7/28/200,  1:00:45 PM
Surprisingly, the 30 min channel remains flat here, only beginning to show a downtick. Once again, bullish bids are being deployed, with the largest bullish volume candle of the day just printed, with IB reporting just under 4M shares within 100 ticks. I find that number incredible. 7200-tick resistance is now at 34 even, and it will take a move at least to that level to begin another short cycle upphase attempt. I agree with Jim and Jane- the going looks very tough from here, and 34.38-.44, the key confluence overhead, seems a long way away.

 
 
  Jonathan Levinson   7/28/200,  12:39:02 PM
Gold is up to 389.50 for the August e-mini, next resistance 392. HUI is up 2.63% at 182.04, XAU +1.59% at 84.78.

 
 
  Jeff Bailey   7/28/200,  12:38:30 PM
Bearish day trade stop alert .... GE $32.68

 
 
  Jonathan Levinson   7/28/200,  12:36:37 PM
Session lows for QQQ and NQ here, INTC as well. The 30 min cycle downphase continues, with channel support down to 33.70 now. The short cycle oscillators are little help as they continue to trend lower. It would take another sharp selling spike to get us to lower channel support here, but those are abundant in the past hour, with the first negative 2.5M share 100-tick volume bar printing a few minutes ago.

 
 
  Jeff Bailey   7/28/200,  12:35:19 PM
Bearish day trade lower stop alert for Taser Intl. (TASR) $30.86 +3.03% .... to $31.55.

 
 
  Jeff Bailey   7/28/200,  12:24:36 PM
American Express (AXP) $49.38 -0.12% ... still hanging around its 200-day SMA.

 
 
  Linda Piazza   7/28/200,  12:24:07 PM
Nearest Keltner resistance on the OEX is at 530.60 with nearest support at 530.04, but resistance currently looks stronger than support. The OEX still looks to be sliding slowly toward 528.50-530, but it's certainly a reluctant slide. The OEX is currently trying to steady at an equal-low level.

 
 
  Jeff Bailey   7/28/200,  12:22:47 PM
Bearish day trade lower stop alert for General Electric (GE) $32.53 -0.85% ... to break even of $32.68 which is also a penny above the mid-morning high.

 
 
  Jonathan Levinson   7/28/200,  12:20:30 PM
Session highs for bonds, gold and silver here, with crude oil a nickel off its highs.

 
 
  Jeff Bailey   7/28/200,  12:16:02 PM
10-year YIELD ($TNX.X) .... up just 0.2 bp at 4.597%.

Pacholder High Yield (PFH) $9.29 up a penny, but session range for thinner trade close-end junk bond has been $9.11-$9.30.

 
 
  Linda Piazza   7/28/200,  12:13:56 PM
Here's another reason for bulls to hope to see the OEX steady near 529-530, and for bears to be aware that bearish gains might be limited: a possible reverse H&S on the OEX's 15-minute chart. Link

However, bulls should be aware that we just saw a potential reverse H&S on the two-minute chart fall apart, and that could happen with the larger one on the 15-minute chart, too. The psychology behind the formation of reverse H&S's suggests that bullish hopes are leading the OEX into such a formation, but that doesn't promise that there's enough strength to follow through on those bullish hopes and confirm the formation or meet its upside target. Several years ago, these formations were so reliable that it was possible to buy as soon as the right shoulder seemed to be forming, but that day is long gone. Wait for confirmation and then hope the upside target is fulfilled, is the best outlook now.

Keltner charts now give greater probability to a test of 528.50-529 before a retest of 532.40-533.

 
 
  Jeff Bailey   7/28/200,  12:12:09 PM
Current OPEN MM profiles at this Link

MNST has been all over the map this morning. Now lower.

 
 
  Jonathan Levinson   7/28/200,  12:09:56 PM
Session high for gold here at 388.90, +1.90 and trying to regain 388 support. The TNX is down to 4.599%, up just .4 bps here, giving back most of its gains.

 
 
  Jeff Bailey   7/28/200,  12:07:59 PM
12:05 market watch a this Link

 
 
  Jonathan Levinson   7/28/200,  12:07:37 PM
QQQ volume is rising on this dip within the currently flat 30 min cycle channel with support still at 33.78, resistance 34.22.

 
 
  Jonathan Levinson   7/28/200,  12:05:17 PM
Nymex crude is back to session's high at 43, up 2.75%.

 
 
  Linda Piazza   7/28/200,  12:01:19 PM
Currently a test of 529 and a test of 533 look to have about equal chances of occurring on the OEX.

 
 
  Jeff Bailey   7/28/200,  12:01:03 PM
General Electric (GE) $32.59 -0.67% .... traded session low of $32.35 just after 11:00 AM EDT. Didn't quite backfill yesterday's gap higher.

 
 
  Linda Piazza   7/28/200,  11:54:08 AM
There goes the reverse H&S on the OEX's two-minute chart. The OEX is dipping below the probable right-shoulder level, although I suppose that if the OEX could stabilize here, it could be argued that the right shoulder is just a little out of shape. The failure to push through the neckline and this drop lower than is optimal show that bulls don't yet have as much strength as they would like. This may be a day in which we see targets fail to be hit and patterns fall apart.

 
 
  Jeff Bailey   7/28/200,  11:49:20 AM
Swing trade covered call alert ... sell 29 of the JDS Uniphase (JDSU) $2.90 -4.6% August $3 calls (UQDHG) at bid of $0.10

Selling against the Dec. $3 calls currently long.

 
 
  Jonathan Levinson   7/28/200,  11:47:52 AM
We're getting some sideways action in QQQ here after peaking on the last bounce just above 34.10. This sideways move is actually a wavelet downphase just ending, and the pullback was light enough to permit the short cycle oscillators to begin to tick up out of trending oversold territory. Bulls need to at least hold the 34 level to give a short cycle upphase a chance to start- hopefully those oscillators won't get their heads chopped off the way they did an hour ago on the last attempt. 30 min channel support is down to 33.79, resistance 34.22.

 
 
  Linda Piazza   7/28/200,  11:46:13 AM
If you zoom down to a 2-minute chart on the OEX, that "bear flag" turns into a nicely formed reverse H&S with a neckline at 531.70 or so. The upside target would be 1.70 points above the neckline, so at about 533.40. As I type, however, the OEX is dropping back again toward the right-shoulder level instead of pushing toward the neckline. That suggests that bulls didn't have enough strength to push through the neckline the first time. Will they the second?

 
 
  James Brown   7/28/200,  11:41:25 AM
The volatility in OI put play STJ continues. The stock is down 2.24% after failing at the $68 level of resistance.

 
 
  Linda Piazza   7/28/200,  11:41:02 AM
It looks as if there's a potential bear flag forming on the OEX as it moves up toward the mid-channel level, now at 532.60-532.80. This move up doesn't look impulsive yet on the OEX, to borrow Keene's term.

 
 
  James Brown   7/28/200,  11:38:33 AM
OI put play PGR has hit another new relative low this morning. The stock broke round-number support at the $75 level before bouncing. We're still suggesting readers consider taking some money off the table here.

 
 
  James Brown   7/28/200,  11:34:53 AM
OI put play DISH is slipping under the $28.00 level. Shares are down 2.98%. Our target is the $25 region.

 
 
  James Brown   7/28/200,  11:32:26 AM
OI call play TXT is not reacting much to the market weakness. TXT is down 34 cents and holding the $61 level for now. Should TXT dip lower readers can look for a bounce from the $60 level as a new entry point.

 
 
  James Brown   7/28/200,  11:30:18 AM
Shares of newly added call SYMC dipped lower this morning but traders bought the dip at the $44 support level. Currently SYMC is struggling just under the $45 mark.

 
 
  James Brown   7/28/200,  11:28:19 AM
OI call play HUG is holding up okay during this market dip. The stock is only down 10 cents but it's still stuck under the $60 mark.

 
 
  James Brown   7/28/200,  11:27:30 AM
Weakness in the Dow Transports continues to weigh on shares of Fedex (FDX). The stock is cracking support at the $80.00 level again.

 
 
  Jonathan Levinson   7/28/200,  11:26:47 AM
Sept crude easing off the highs, down to 42.75 now, up 2.15% on the day.

 
 
  Linda Piazza   7/28/200,  11:25:09 AM
The OEX has been resisting falling all the way to 529. It's now facing first converging Keltner resistance, however, at 531.30-532.40. Above that, resistance is scattered a bit more, so this may be an important test for the OEX. Those hoping to see it hit 529 or lower want to see this resistance hold, or 532.14-532.69 hold if that doesn't. Those hoping for the rally to resume want to see a sustained move above 532.69-533.07. However, it's still possible that today won't see targets met either direction, and will continue to be a day in which the OEX chops around.

 
 
  Linda Piazza   7/28/200,  11:20:15 AM
Reader Question Regarding Sears: Do you know why S has been going up of lately? The posted earnings were horrendous.

Response: S is not a stock I regularly follow. None of my news sources included any news of upgrades or other information that would explain the bounce lately. S reported earnings 7/22, and S&P lowered its outlook on the company's debt to negative that same day. The daily charts shows that the bounce that began that day, after the gap lower, occurred on strong volume and yesterday's was also on larger-than-normal volume. That signals caution to those hoping this bounce is only an oversold bounce. That morning's gap lower sent S into a support zone from last summer and into a congestion zone from much of 2000, so it's possible that some were buying round-number support as S approached $30.00. S's P&F downside target had been $29.00, so it had nearly fulfilled that target. Possibly improving consumer sentiment helped, as did KMart's strong performance of late. Perhaps some other writers or readers have other ideas?

A look at the weekly chart shows that S's trading pattern has been conforming rather well to the Fibonacci retracement levels. Link The weekly chart shows that last week, S pierced and then bounced above the 61.8% retracement of last year's rally, and it's now approaching the 50% retracement level at about 37.30, retesting that level that proved to be support throughout the spring and early summer. The presumption now is that it might find that former support level to be resistance. A stock that retraces 61.8% of its former rally risks retracing all of its former rally.

However, since early 2004, S's pattern while declining has been a possible falling wedge, a potentially bullish shape. The top line of that descending wedge now crosses at about $38.22, above the 50% retracement of the rally, but that line is descending and by next week or so will correspond with that 50% retracement level. The 200-week MA and several other weekly averages, including the important 30-week MA are trying to converge somewhere between $40-41, so that would be another possible level to suspect that resistance might hold.

If I had bearish hopes for a rollover, I'd keep an eye on that bullish falling wedge. We've observed that wedges have not been performing as expected for a while, so if I had bullish hopes, I'd be careful about betting the farm on an upside breakout. Sometimes after wedge breakouts lately, prices trade sideways for a while then resume trading in the previous direction.

For now, price action with regard to the Fib levels suggest that S may have difficulty with the 50% retracement level, and this morning's pullback from the test of that level fits with that assumption. However, that volume pattern and the potentially bullish falling wedge offer a strong caution to believing that S will necessarily resume its downward spiral, too. Mixed evidence. If already in a bearish play, today's rollover from that 50% retracement level might be cheering, but I'd have plans in place to protect any profits, too, in case S is done with declines for a while.

 
 
  Jonathan Levinson   7/28/200,  11:16:15 AM
The current buy program was the heaviest 100-tick volume of the day, with Interactive Brokers reporting 2.5M QQQ shares going off within 100 ticks.

 
 
  Jonathan Levinson   7/28/200,  11:13:51 AM
Keene and Jane raise an important point- the speed of the drop has exceeded the ability of the longer intraday oscillators to keep pace with the price. A reversal any time soon would launch a new 30 min upphase from a much higher oscillator low. But, of course, the key is to get that upside break. Because I'm watching for that daily cycle upphase, patience is a virtue- bulls can wait for a break above 34.44- actually, 34.51, being the session high- for confirmation that a reversal is underway.

 
 
  Jeff Bailey   7/28/200,  11:04:44 AM
Sell Program Premium ... SPX 1,085.39.

 
 
  Jeff Bailey   7/28/200,  11:03:48 AM
10:56 Market Watch at this Link

 
 
  Jonathan Levinson   7/28/200,  10:59:29 AM
Another wavelet bounce here within the trending oversold short cycle downphase for QQQ. 30 min descending channel resistance is currently 34.30, lining up with the 7200-tick SMA. Upside resistance is at the 60 min channel top of 34.60.

 
 
  Jonathan Levinson   7/28/200,  10:57:10 AM
10:55am SEPT CRUDE UP $1.06 AT $42.90 AFTER $43.05 RECORD HIGH

Interactive Brokers currently reports the high at 43 on the NYMEX.

 
 
  Linda Piazza   7/28/200,  10:55:46 AM
OEX resistance now gathers in several bands overhead, with 531.61-531.96 comprising one and with further resistance trying to firm near 532.86. Bears hope that the OEX is not able to bounce back above the 533.30 level, but would prefer to see it remain below 532.41 except for a brief piercing of that level. Short-term bulls should probably not still be in a trade on a pullback from 536-537, hopefully having put into effect the plan they had prepared ahead of time for a test of 536-537, but if they are in long-term position trades with wider stops, they're hoping for a move back above 533,30 and a maintaining of that level. Depending on their entry levels, they may just be hoping that the 527-529 level will again serve as support if the OEX should continue toward that 529 downside target. This doesn't yet look to be a time for new bullish entries, at least not based on intraday Keltner charts.

 
 
  Jeff Bailey   7/28/200,  10:55:11 AM
Semiconductor Index (SOX.X) 392.17 -2.66% .... violates yesterday's low.

 
 
  Jonathan Levinson   7/28/200,  10:53:16 AM
Real-time Sept crude futures are currently trading up 2.51% at 42.90.

 
 
  Jeff Bailey   7/28/200,  10:51:49 AM
U.S. Dollar Index (dx00y) 89.86 +0.07% (30-minute delayed) ... session high has been 90.14.

 
 
  Jonathan Levinson   7/28/200,  10:49:44 AM
Short cycle oscillators now trending in oversold for QQQ as the 30 min channel support declines to 33.90.

 
 
  Jonathan Levinson   7/28/200,  10:46:07 AM
U.S. CRUDE FUTURES SET RECORD HIGH AT $42.50 ON ORDER TO HALT YUKOS SALES -- Reuters

 
 
  Linda Piazza   7/28/200,  10:45:45 AM
The OEX is dropping through support, creating a breakout situation, setting up a possible downside target near 529. Resistance now looks stronger than support.

 
 
  Jeff Bailey   7/28/200,  10:43:29 AM
Taser (TASR) $31.35 +4.56% .... with lower 5-MRT (red retracement) at this Link

 
 
  Jonathan Levinson   7/28/200,  10:42:58 AM
QQQ breaking yesterday's low now.

 
 
  Jonathan Levinson   7/28/200,  10:38:43 AM
QQQ and Naz futures back to new lows as the wavelet upphase aborts early.

 
 
  Jonathan Levinson   7/28/200,  10:35:35 AM
10:34am U.S. CRUDE STKS UP 1.2 MLN BRLS LAST WK: ENERGY DEPT

10:34am U.S. GAS STKS DOWN 700,000 BRLS LAST WK: ENERGY DEPT

10:34am U.S. DISTILLATE STKS UP 700,000 BRLS LAST WK: ENERGY DEPT

 
 
  Jonathan Levinson   7/28/200,  10:33:18 AM
100-tick chart of QQQ at this Link . The short cycle oscillators are oversold, but so far only the wavelet oscillator (3rd pane from the bottom) is showing life to the upside. 30 min channel support is down to the 30 min bull wedge apex at 34.05. A break of 34.22 should see the short cycle channel turn back off to kick off the next upphase.

 
 
  Linda Piazza   7/28/200,  10:30:22 AM
I have an appointment this afternoon, and will probably be leaving about 1:00. I don't expect to be back before the close of trading today, but will post if I return in time.

 
 
  Jeff Bailey   7/28/200,  10:29:54 AM
U.S. Dollar Index (dx00y) 90.13 +0.35% (30-minute delayed) .... WEEKLY R1 and DAILY R1 and MONTHLY R1 here.

$HUI.X 178.04 +0.37% found its session low (176.31) about 30-minutes ago.

 
 
  Linda Piazza   7/28/200,  10:29:30 AM
If the OEX pauses at the current level too long, Keltner resistance just overhead at 532.80-533 is going to firm too much for the OEX to push through it easily. That would make the fall toward 529 more likely. The OEX hasn't broken through the channel line currently at 532.43, however, trying to hold onto that support.

 
 
  Jeff Bailey   7/28/200,  10:26:14 AM
Day trade short alert .... for Taser (TASR) $31.86 here, stop $32.50, target $30.00.

 
 
  Jonathan Levinson   7/28/200,  10:25:50 AM
Unless my data is incorrect, it looks like just under 6M QQQ shares traded within 300 ticks there.

 
 
  Jonathan Levinson   7/28/200,  10:25:04 AM
Big volume coming in on these bids. QQQ bouncing from deeply oversold short cycle oscillators below 30 and 60 min channel support.

 
 
  Linda Piazza   7/28/200,  10:24:05 AM
The OEX needs to hold up here, or else the OEX is going to break through a channel line that usually supports it. If the OEX pushes through that level, as it's trying to do now, that sets up a breakout situation, with the smallest Keltner channel pointing toward 529. The OEX has not yet, however, broken through that support . The channel line is at 532.48, but it's dynamic and can be bulged out without being broken if the OEX bounces quickly back above it or quickly stabilizes. Unless the OEX can maintain values above 534.28, however, that smallest channel will continue to point down, at the least suggesting a continued testing of the mid-channel level if not an eventual plunge toward 529. I suspect, however, that we might first get a push back up toward 534 and then a test of 533 again, and maybe a second bounce up toward 534. In other words, I suspect we'll see some chopping around. If the OEX dips first through 532 and maintains that level, however, that thesis is wrong and the drop might be more likely.

 
 
  Jeff Bailey   7/28/200,  10:22:34 AM
Day trade lower stop alert .... for GE $32.54 -0.79% ... to $32.81

 
 
  Jeff Bailey   7/28/200,  10:21:02 AM
Broker Dealer Index (XBD.X) 118.91 -0.36% ...

 
 
  Jonathan Levinson   7/28/200,  10:16:06 AM
Session lows across the board here. TNX has stopped rising however, with bonds trying to firm near the bottom- currently TNX is up 3.2 bps at 4.627%.

 
 
  Jonathan Levinson   7/28/200,  10:13:11 AM
QQQ's 30 min channels are rolling over, and the 30 min cycle upphase is stalled, with the oscillators about to confirm a new Macd downphase. That high came from a lower price high, and the bulls' principal hope here is going to be for a higher low to confirm the attempted daily cycle upturn. But the inability to hold above 36.44 for longer than a few hours is very bearish. The bullish descending wedge apex from yesterday's 30 min chart is down to 34.05 currently.

 
 
  Jeff Bailey   7/28/200,  10:11:58 AM
Day trade short alert .... for General Electric (GE) $32.68 here, stop $32.91, target $32.31.

 
 
  Linda Piazza   7/28/200,  10:11:38 AM
The OEX heads down toward the 533 level, toward mid-channel Keltner and historical support. It looked earlier as if it might need to retreat to this level to test that support or gather strength again.

 
 
  Jonathan Levinson   7/28/200,  10:07:16 AM
Session low for QQQ and Nasdaq futures here at 34.31 and 1382.

 
 
  Jonathan Levinson   7/28/200,  10:06:47 AM
TNX is up to 4.636%, knocking at the door to next resistance at 4.64%.

 
 
  Jeff Bailey   7/28/200,  10:05:52 AM
Current OPEN MM profiles at this Link

 
 
  Jonathan Levinson   7/28/200,  10:03:19 AM
30 min channel support has descended to 34.28, resistance to 34.70. The short cycle oscillators are approaching oversold territory but are not there yet.

 
 
  Jeff Bailey   7/28/200,  10:03:03 AM
10:00 Market Watch at this Link

 
 
  Jonathan Levinson   7/28/200,  10:00:59 AM
Session lows for gold at 385.70 and bonds at 109.359 as the Fed announces the first net repo drain of the week with a 6-day repo of 3.5B, which is a net 2.5B drain.

 
 
  Linda Piazza   7/28/200,  10:00:55 AM
The Keltner resistance that I characterized as relatively strong appears to be holding on the first OEX approach, with that resistance now ranging from 535.89-536.75. At the same time, however, this morning's dip tested the 15-minute 100/130-ema's from the upside, and their support held. The battle isn't over yet, and may go on quite a while. The OEX has managed to arrest the downward slide of its smallest Keltner channel, but needs to maintain values above 536 to turn it higher again. If it instead maintains values below 434.30, it risks turning that channel down toward mid-channel Keltner and historical support near 533. If already in a bullish trade today, have plans in place to protect your profits, as I suggested yesterday for the 536-537 region. The 15-minute chart shows that a consistent maintenance of 536.50 would point the OEX's smallest channel on that chart toward 541. As trading patterns look now, I suspect that resistance will be found somewhat lower than 541, and so don't know that I'd feel comfortable suggesting new bullish entries unless the picture looks different if 536.50 is hit. Don't know that I'd feel comfortable suggesting new bearish entries, either, as 533 may well hold as support on any downturn.

 
 
  Jeff Bailey   7/28/200,  9:58:57 AM
Broker Dealer Index (XBD.X) 120.00 +0.55% Link .... session high and edges above its 21-day SMA.

 
 
  Jonathan Levinson   7/28/200,  9:56:43 AM
Session high for MSFT here. NQ and QQQ still negative.

 
 
  Jeff Bailey   7/28/200,  9:56:16 AM
Treasuries extending yesterday's losses .... 10-year yield ($TNX.X) up 4 basis points at 4.636%.

Dow Industrials (INDU) 10,093 +0.07% .... edge into positive territory.

 
 
  Jonathan Levinson   7/28/200,  9:53:08 AM
Session lows for bonds, session highs for Dow futures, and QQQ is back above 36.44.

 
 
  Jeff Bailey   7/28/200,  9:52:42 AM
Taser Intl. (TASR) $32.71 +9.2% Link ... reclaims its 50-day SMA.

 
 
  Jonathan Levinson   7/28/200,  9:48:11 AM
More weakness for bonds, with new highs for the move at 4.633% for the TNX, +3.8 bps. I'm very curious to see whether the Fed will be adding or draining today. So far this week, they've been adding, following last week's aggressive drains.

 
 
  Linda Piazza   7/28/200,  9:47:35 AM
As the OEX moves into the first retracement period of the day, it faces the first level it should surpass in order to arrest the downward tilt of its smallest Keltner channel. That level is 535.05. Next resistance above that ranges from 535.85 to 536.68, and looks relatively strong. The OEX may need to retrace toward 533 again and regroup, but this first period should tell us something about today's action.

 
 
  Jeff Bailey   7/28/200,  9:46:30 AM
200-day SMA alert .... American Express (AXP) $49.53 +0.18%. Link

 
 
  Jonathan Levinson   7/28/200,  9:43:13 AM
Note that the Dow and SPX futures have fully recovered from the durable orders dunk, which NQ remains weak, with QQQ down .16 below the 34.38-.44 confluence zone.

 
 
  Linda Piazza   7/28/200,  9:42:40 AM
Yesterday was a relatively big-range day for the OEX, so it wouldn't be unexpected to see a small-range day today, perhaps as dip-buying bulls battle shorting bears. What bulls do not want to see, however, is a more than 50% retracement of yesterday's gains. Watch those crude futures.

During the first five minutes of trade, the OEX ranged from 535.21 down to 533.97.

 
 
  Jonathan Levinson   7/28/200,  9:42:23 AM
Session low for 10-yr bonds here, with TNX back to positive territory, +3.1 bps at 4.626%.

 
 
  Jonathan Levinson   7/28/200,  9:39:00 AM
The TRINQ is offering few clues here, printing a neutral 1.0.

 
 
  Linda Piazza   7/28/200,  9:37:13 AM
The OEX opens and dives to 534, but it's finding support temporarily at a Keltner channel line that supported it yesterday and provided resistance Monday. It needs to get back above 536.15 to turn the smallest channel higher again or at least above 535.18 to arrest its downward tilt.

 
 
  Jonathan Levinson   7/28/200,  9:34:56 AM
QQQ breaking 34.38 support here, session low of 34.34.

 
 
  Jonathan Levinson   7/28/200,  9:33:06 AM
Session lows in the futures at the open, with all indices opening on 30 min channel support at previous resistance. If the indices fail to bounce within the next 10 minutes or so, we can expect a fresh 30 min cycle downphase to kick off. That would fit with the bullish daily cycle scenario on which I've been doting for a week now, provided that it bottoms at a higher low. With the risk of a trending move to the downside very strong here, a lower low is a distinct possibility and would do great damage to the bullish cause.

 
 
  Linda Piazza   7/28/200,  9:08:43 AM
Overnight, futures continued that troubling inability to hold onto gains. As I mentioned in my 21:21 post, that wasn't particularly encouraging to those nursing bullish hopes. Perhaps that was a result of cautiousness ahead of this morning's durable goods number. If so, that caution was well placed, with that number disappointing. In addition, CNBC was showing crude at 42.30, another pressure on the markets if I read the number correctly. My charts show crude futures at that level about an hour ago, at least, but I'm 30 minutes delayed.

Those three factors--the inability of futures to hold onto any gains overnight, the disappointing durable goods number, and rising crude futures--may blow apart any bullish thesis for today, and I'd be cautious about expecting further follow-through on yesterday's gains. In that 21:21 post, I mentioned levels that should be watched in early trading for clues as to direction: Bulls want to see the OEX climb above 536.46, the breakout zone, and maintain values above that level in early trading. Bears want to see the OEX slip below 534.89 in early trading and maintain values below that level, turning the smallest Keltner channel lower. These levels might provide some guidance until we see what breadth indicators and other action show us. As I mentioned in that same post last night, if bulls can push the markets higher, stops might begin to be hit and shorts might rush to cover, and gains could escalate. Be cautious, however, because until the OEX consistently posts values above 541.50 on a weekly basis, it's not going even be able to arrest the downward slope of its smallest channel on the weekly chart, much less turn it higher.

Bears have reason to be cautious, too, as the OEX reached likely weekly support over the last week and that support held. That may encourage bulls to step in and buy the dips again. In overseas trading, it appears to me that I'm seeing the big caps begin to outperform some other stocks, too, either gaining or not falling as steeply when bourses decline, although that evidence is anecdotal only and may be completely erroneous. My thesis for the week has been a chopping around between the weekly historical and Keltner support levels near 526-530 and the weekly historical and Keltner resistance levels near 544-547, and maybe even lower.

 
 
  Jonathan Levinson   7/28/200,  8:43:51 AM
Gold is higher by .80 currently at 387.80. Silver down .06 at 6.18, and crude is up .41 to 42.25.

 
 
  Jonathan Levinson   7/28/200,  8:40:00 AM
QQQ, still down .10 at 34.43, is testing lower 30 min channel support as well as the top of .38-.44 confluence. Bonds are at session highs, with TNX now down .7 bps at 4.588%.

 
 
  Jonathan Levinson   7/28/200,  8:32:20 AM
Futures are diving on the data, all equities to session lows and bonds up to unchanged, TNX still opening +1.3 bps at 4.608%. QQQ is down 10 cents to 34.43.

 
 
  Jonathan Levinson   7/28/200,  8:31:15 AM
07/28/2004 08:30 *DJ June Durable Goods Orders, Ex-Defense, -0.4%

 
 
  Jonathan Levinson   7/28/200,  8:31:02 AM
Durable goods +.7%, downside surprise.

 
 
  Jonathan Levinson   7/28/200,  8:17:48 AM
We await the 8:30 release of durable orders for June, est. +1.5% (prior -1.6%), and at 2PM, the Beige Book.

 
 
  Jonathan Levinson   7/28/200,  7:54:31 AM
Equities are flat, with ES up .25 to 1092.75, NQ unchanged at 1390.5, YM +1 at 10062 and QQQ -.01 at 34.52. Gold is down .20 at 386.80, silver -.025 at 6.215 and ten year bond futures up .015 at 109.6719.

 
 
  Linda Piazza   7/28/200,  6:49:22 AM
Good morning. Wednesday morning, Japan's June retail sales were reported. A decline of 2.5% on the year was expected, but the number showed a worse-than-expected fall of 2.9%. Sales fell 0.6% month-over-month. Large retail stores saw sales fall 4.9% year over year. Despite those declines, the Nikkei gapped higher by more than 100 points on the open, buoyed by the performance of U.S. markets after the release of the U.S. consumer confidence number on Tuesday. The Nikkei closed higher by 172.83 points or 1.57%, at 11,204.37. Despite trying all through the afternoon, the Nikkei could not climb above former support at about 11,250, however.

Techs and exporters led the gains, with blue chips among those stocks performing especially well ahead of after-the-close earnings announcements by Advantest, Canon, Honda Motor, NEC, Sharp and Sony. The semiconductor unit of NEC Electronics reported Q1 net profit 43.4% higher than the year-ago level and cited increasing demand for chips as the reason behind the profit growth.

Two stocks not gaining in early trading were UFJ Holdings and Mitsubishi Tokyo Financial Group, with Mitsubishi Tokyo throwing a hitch the merger plans of the two institutions. Rather, it was a Tokyo court that threw that hitch, excluding some assets from the merger, so that by early in the day, Mitsubishi Tokyo Financial had decided to slow down the process. A Tokyo District Court issued the injunction against the merger that Sumitomo Trust & Banking had sought. By the end of the day, Mitsubishi Tokyo Financial Group had reversed its losses to close higher by 1%, but UFJ fell 3%. Many other banks joined Mitsubishi Tokyo Financial and closed higher.

Most other Asian markets gained as techs bounced after recent declines. The Taiwan Weighted was one of the two declining Asian bourses, however, closing lower by 0.28%. South Korea's Kospi closed higher by 0.80%, and Singapore's Straits Times gained 0.33%. Hong Kong's Hang Seng gained 0.15%, and China's Shanghai Composite gained 0.34%.

Currently, European bourses all trade higher, led higher by car manufacturers. Articles cite Renault's raised forecast behind the performance of the car manufacturers. Consumer products manufacturer Unilever was dropping in early trading after reporting rising profits but a drop in revenue, leading brand sales and market growth. In the U.K., mortgage lender HBOS beat expectations and was rising in early trading. The lender said that the U.K.'s cycle of rising interest rates was impacting the housing market. Many other banks rose in the U.K.

As of this writing, the FTSE 100 has gained 33.80 points or 0.78%, to trade at 4,358.70. The CAC 40 has gained 29.35 points or 0.82%, to trade at 3,594.45. The DAX has gained 23.95 points or 0.63%, to trade at 3,838.03.

 
 
  Linda Piazza   7/27/200,  9:21:09 PM
Tuesday, the OEX completed the third candle of a three-candle reversal pattern known as a morning star. It did so at historical and Keltner weekly support from 527-530. Unfortunately, both candlestick and Keltner daily charts show that the OEX may have difficulty moving above the 544-547 region, at least on the first attempt. The candlestick chart shows a river of moving averages in that region, including the 30-, 50-, 100-, and 200-sma's. It may be difficult for the OEX to push through all those moving averages grouped so closely together. The daily Keltner chart also depicts a river of channel lines, with these congregating closely in the 543.87-544.49 zone.

The OEX spent a few days oscillating around the 200-ema, currently at 537.98, so it's possible that the OEX could at least pause at that level, too, although if bullish sentiment carries through to tomorrow and some stops get run, the OEX could shoot right through that MA. It was never so much a support or resistance level as it was a level around which the OEX oscillated for a few days. Some evidence suggests that 539.50-541 might also be difficult, so that's a particular level at which bulls might make plans to protect profits.

What about the other scenario? The one in which the OEX doesn't climb? Be sure to check the behavior of futures during the overnight session before you buy too heartily into the bullish scenario. As I type, futures have fallen back from the highs reached after the cash market closed and are near that closing level again, not seeing as much follow-through as some bulls might hope, especially with the Nikkei gapping and gaining strongly as I type. Crude futures closed a cent above the previous record closing high. Although there are bearish price/oscillator divergences as crude futures reach this equal high level, they serve only as a warning of possible weakness on this second push higher, and not as a promise. Although markets appeared to ignore the push higher Tuesday, they may not continue to do so, however.

The OEX also ended the day at one resistance zone. Despite the gains and that morning-star reversal pattern, some slight evidence existed that the OEX might be tiring. That slight evidence came in the form of a breakout on the five-minute Keltner channels, after which the smallest Keltner channel immediately fell back inside the larger channel rather than following through. One clue may come from early action tomorrow morning. Bulls want to see the OEX climb above 536.46, the breakout zone, and maintain values above that level in early trading. Bears want to see the OEX slip below 534.89 in early trading and maintain values below that level, turning the smallest Keltner channel lower.

As I type, there's no evidence that the bearish scenario will be preferred and no reason to doubt the bullish one presented by yesterday's action. However, any breakout on the OEX's Keltner channel shifts the risk onto the shoulders of bullish traders, traders who should have plans in mind to protect profits. In addition, most times when the OEX tests the kind of weekly Keltner support that's been tested last week and this week, the OEX spends at least a couple of weeks, if not longer, chopping around those channel lines before deciding on direction. It may move as much as 20 points or as few as 9 during each of those weeks, and still be producing rather small-looking candles hugging that configuration of Keltner lines on a weekly scale. Many of the candles are doji, which means the OEX often ends the week pretty much where it began it. Therefore, I'm keeping my targets modest, suggesting that traders make plans to protect profits at each key level, and not presupposing that the OEX will get all that far away from that Keltner support in a week's time. Not until the OEX maintains levels above 541.50 consistently on a weekly basis will it even flatten its smallest channel on a weekly basis and not until it maintains values above 556.66 on a weekly basis will it turn that channel higher again. So trade what you see, but always be prepared for a reversal just when all looks well.

 
 
  Jeff Bailey   7/27/200,  8:01:22 PM
They're baaaack .... Link

 
 
  OI Technical Staff   7/27/200,  7:25:11 PM
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