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  Mark Davis   8/3/2004,  6:48:25 PM
Today's momentum stocks...

SEB FKL PETD AMED UPL IPS BPT REXI EXM TLCX NGPS GDP BGY CALM PNFP ARKR NUS PHI HSVLY TLWT IST TEAM UFPT MEM ATPG TRGL EGY WSTF NVI PGLAF

 
 
  Jeff Bailey   8/3/2004,  5:06:01 PM
Closing Internals at this Link

 
 
  Jeff Bailey   8/3/2004,  4:37:12 PM
Current OPEN MM profiles at this Link

Today's activity....

Stopped out of the 1/2 bullish position in Aluminum Corp. China (ACH) at $47.45, ($-4.70, or -9.01%) (100 shares based on $10,000 being full position).

Swing shorted $10,000 worth, or 268 shares of JP Morgan (JPM) at $37.25, stop $37.55, will take at LEAST 1/2 off the table if $36.70 is traded.

Swing put 3 out-the-money Whole Foods Market (WFMI) and the August $75 puts (FMQTO) at $0.90. No stop, and would most likely take 2 off the table if 100% gain found near-term, where ultimate pre-expiration would be rising bullish support trend at $71.00.

JDSU short underlying and NAKED Aug. $3 call .... should profit/loss become equal, will IMMEDIATELY look to close out the UNDERLYING SHORT, then have the LONG Dec. $3 calls, as HEDGE against the Aug. $3 call.

I'm watching the JDSU option chain. I did not see any option-related trade to be thinking $3.00 at this time. Would look for heavier volume in $3 strikes, especially calls to hint of in-the-money call selling, ahead of a bigger position selling of stock. No sign of that today.

 
 
  Jeff Bailey   8/3/2004,  3:59:43 PM
Swing trade put option alert .. for Whole Foods Market (WFMI) $78.78 -2.48% .... taking 3 of the out the money August $75 puts (FMQTO) $0.90 offer.

Trader e-mail question I saw just prior to close. PnF looks nasty to bullish support trend target (similar to OSIP trade) where WFMI's PnF bearish vertical count has some room to $61.00. PnF chart at this Link

 
 
  Mark Davis   8/3/2004,  3:59:08 PM
Day Trade Entry Point Alert -

Feeling brave?

Go long 1/2 position... SPTHB (SPX Aug 1110 call) @ 7.00, hold overnight.

 
 
  Linda Piazza   8/3/2004,  3:55:54 PM
It looks possible that the OEX will end the day stuck between those 60-minute 100- and 130-ema's. RSI tries to hook up and MACD remains pointed down. A perfectly ambiguous ending for a perfectly choppy trading day. Viewed on a weekly chart, today's action continues to show that 541-542 level to be holding as resistance, so continuing the vulnerability of the OEX to retest the weekly support level from 526-530. On the daily chart, the 542.50-544.50 level continues to hold as resistance, but the OEX still attempts to climb toward that resistance within a rising regression channel in place since 7/26. The OEX tests the support of that channel as I type, but hasn't yet violated it. Can't wait to get away from the market a couple of hours and then take a fresh look at charts.

As of last night, this is what I thought would happen today: A sustained OEX move above 541.50-541.60 sets up a possible push toward 543-544. A failure to sustain levels above 539 sets up a possible downside test, first of the 538 region (and 200-ema) and then of 535-536 if that support fails to hold. As of Monday night, I still consider the OEX chopping around weekly Keltner and historical support, not yet having decided a direction. I'm still suggesting quick targets and plans made ahead of time to protect profits. We got the failure to sustain 539 and then the test of 538, although not the lower test. All this afternoon, I've had the feeling that the OEX might finally be getting ready to break out of the weeks-long chop. Now I want to see if anything on the charts supports that feeling. As Jeff has said before, we don't want to trade on feelings, but sometimes feelings are garnered from minute cues picked up.

 
 
  Jonathan Levinson   8/3/2004,  3:55:38 PM
30 min channel support is down to 34.20 QQQ here. The 60 min channel suppoirt is above at 34.32.

 
 
  Jeff Bailey   8/3/2004,  3:52:00 PM
JDS Uniphase (JDSU) $3.31 -4.32% ... challenges yesterday's low.

 
 
  Jonathan Levinson   8/3/2004,  3:50:58 PM
34.44 held again as QQQ falls back to new session lows.

 
 
  Jonathan Levinson   8/3/2004,  3:43:39 PM
QQQ continues to chip away at resistance in the 34.44 area, with yesterday's low now resistance at 34.47. The intraday oscillators are due for an upphase and one should ideally kick off at the close or tomorrow's open. The daily cycle upphases are still intact, but the Nasdaq in particular is going to have a problem if that bounce is late or fails to match or exceed this morning's high.

 
 
  Mark Davis   8/3/2004,  3:42:15 PM
Day Trade Exit Point Alert -
Stopped out of remaining 1/2 position @ 1101, +19.5%

Average gain +24%

 
 
  Linda Piazza   8/3/2004,  3:41:48 PM
The OEX has moved up to challenge its 60-minute 130-ema with Keltner resistance waiting just overhead near 539 if it makes it through that average.

 
 
  Linda Piazza   8/3/2004,  3:35:17 PM
Congratulations on that trade from me, too, Mark.

 
 
  Linda Piazza   8/3/2004,  3:33:50 PM
Are you surprised to find that the OEX is still caught between its 60-minute 100- and 130-ema's? I'm not. I thought the OEX might get caught there a while since it was so frequently caught there on the way up. While it's not bullish that the OEX broke below the 130-ema again, it's so far holding above the 100-ema and so still has hopes of proving that this was just a test of the former resistance to see if it holds as support. (If an index can be presumed to have "hopes," but you know what I mean.) The five-minute Keltner chart suggests that the OEX isn't going to find it easy going to break above 538.85-539.09, however, so even if it squeaks past the 130-ema again, it might have difficulty climbing.

 
 
  Jim Brown   8/3/2004,  3:32:31 PM
That was a wise move Mark. The futures are holding the line and now you have locked in a profit and can let the other 1/2 run. Good trading!

 
 
  Mark Davis   8/3/2004,  3:31:05 PM
Day Trade Exit Point Alert -

Exiting 1/2 position here, +28.5%

Lowering stop on remaining 1/2 position to SPX 1101.00

 
 
  Linda Piazza   8/3/2004,  3:29:56 PM
Depending on the neckline version you used, the OEX has either confirmed the H&S on its five-minute chart or flirts with doing so. As it flirts with that possibility, it's creating a possible inverse H&S on the two-minute chart. I feel as if I'm looking down into a spiral, with tighter and smaller formations moving opposite each other as the spiral deepens. A move above 538.60 would appear to confirm that new inverse H&S on the two-minute chart while a move below 537.70, fast approaching as I type, would tend to negate it. I interpret this inverse formation as a sign that bulls are trying to muster strength to steady the markets at key levels, but not necessarily as proof that they'll be able to do so.

 
 
  Jonathan Levinson   8/3/2004,  3:25:34 PM
I keep thinking of that 6.5B repo drain from the Fed- QQQ and the Naz futures have barely been able to chop sideways at the anticipated bounce points. The market has been low on steam all day.

 
 
  James Brown   8/3/2004,  3:23:16 PM
more energy stocks to watch: APA, APC, AHC.

 
 
  James Brown   8/3/2004,  3:22:16 PM
Energy stocks BR & BHI are both trading higher at or near new highs. BR might be a decent covered call candidate.

 
 
  James Brown   8/3/2004,  3:19:19 PM
Devon Energy (DVN) is breaking out to new highs over resistance in the $70.00-70.50 level.

 
 
  Linda Piazza   8/3/2004,  3:17:26 PM
OEX Keltner resistance firms up near 539.

 
 
  James Brown   8/3/2004,  3:14:15 PM
Dow-component CAT is also looking pretty weak here, down 2.5%, nearing its July low. I'd keep this stock on my watch list for a breakdown under $70. Actually, it could be a bearish candidate now with the spread triple-bottom breakdown sell signal pointing to a $64 target.

 
 
  Linda Piazza   8/3/2004,  3:13:02 PM
The OEX is still stuck between the 60-minute 100- and 130-ema's.

 
 
  Jeff Bailey   8/3/2004,  3:12:13 PM
03:00 Internals at this Link

New highs have come to a standstill at the NASDAQ, but new lows steady at +10 per hour.

 
 
  Jonathan Levinson   8/3/2004,  3:11:32 PM
Former support at 34.38-.47 QQQ is doing its thing here, with the current bounce attempt struggling at 34.41. The short cycle oscillators are trending uselessly in oversold territory as the 30 min cycle oscillators works its way down into oversold territory.

 
 
  James Brown   8/3/2004,  3:08:12 PM
Bob Pisani just mentioned CVX. The oil giant is up 2.15% and nearing the $100 mark.

 
 
  James Brown   8/3/2004,  3:07:03 PM
Dow-component IBM is looking weak here, down 1.34%, after spending the previous two sessions failing to breakout over its 40 and 50-dma's. Technicals are suggesting more weakness ahead.

 
 
  James Brown   8/3/2004,  3:05:10 PM
Bank of America (BAC) has been stuck in a tight trading range for weeks but now shares are creeping higher and challenging the $86 level. BAC hasn't traded this high since August of 1998. The bullish P&F chart points to a $104 target.

 
 
  Jeff Bailey   8/3/2004,  3:03:39 PM
03:00 Market Watch at this Link

 
 
  James Brown   8/3/2004,  3:02:49 PM
Dow-component ExxonMobil (XOM) showing lots of strength today hitting new highs not seen since November of 2000.

 
 
  Linda Piazza   8/3/2004,  3:02:15 PM
Again, the OEX appears to be bouncing in a formation that could be a bear flag. The last flag didn't last long. This one has already faced and failed one resistance level, at 538.24, and now it's testing it again. Bears would like to see that level continue to serve as resistance. Bulls want to see the OEX push above the lines trying to converge near 539 and maintain levels above 539. For now, 536.18 still looks possible if you're looking only at the Keltner chart. Turning to the 60-minute traditional chart, however, shows the OEX finding support at its 100-ema, balanced between that average and the 130-ema. It's a familiar position for the OEX over the last week, only those other times, the OEX was approaching those averages from beneath, not falling toward them from above. I wouldn't be surprised to see the OEX get stuck here a while.

 
 
  Mark Davis   8/3/2004,  3:01:22 PM
Day Trade Exit Point Alert -

I'm beginning to see the slightest MACD bullish divergence. Conservative traders may want to take their +20% and run here... your decision.

 
 
  Jonathan Levinson   8/3/2004,  3:01:07 PM
Recovering from a power brownout here that knocked out all of my charts, trying to catch up. Is anyone aware of an applet that can save and reload an entire system configuration? It takes me more than 5 minutes just to reopen windows and bookmarks.

 
 
  James Brown   8/3/2004,  2:59:48 PM
Internet retailer AMZN is also looking weak today with a new short-term lower high as the stock tests support at the $37.50 level. The bearish P&F chart points to a $21 target.

 
 
  James Brown   8/3/2004,  2:58:21 PM
The failed rally in software stock MERQ is picking up speed and shares are now breaking support at the $35.00 level. This might be a bearish entry point. The P&F chart points to a $17 target. I suspect MERQ would find some support at $30.00.

 
 
  Mark Davis   8/3/2004,  2:50:23 PM
Day Trade Exit Point Alert -

Cinch your stops down to SPX 1102.50, just above the last swing high. I want to get something out of this trade and SPX 1100 is a natural bounce point. It's also the "edge of the cliff" and I've learned from the school of hard knocks that edge of the cliff plays rarely play out because everybody else also sees the edge and too many traders get short, tipping the boat over.

If SPX does drop over the edge though, you'll be able to afford that George Foreman Grillmaster you've always wanted.

 
 
  James Brown   8/3/2004,  2:50:04 PM
YHOO is down 4.4% and falling under the $30.00 mark and its simple 10 and 21-dma's.

Meanwhile EBAY is slipping 3% after an early morning attempt to breakout over resistance at $80.00 failed. Shares look headed toward the 200-dma near $70. This might be an aggressive trader's entry point for bearish positions.

 
 
  Linda Piazza   8/3/2004,  2:48:13 PM
The OEX is easing below its 200-ema at 538.07, with the OEX currently at 537.76.

 
 
  Linda Piazza   8/3/2004,  2:45:48 PM
The bear flag broke down on the OEX and the OEX has now dropped toward the 60-minute 100-ema at 537.63. If you remember how many times I typed that the OEX was between the 100-ema and 130-ema over the last week, you'll know how much time the OEX spent establishing a base at this level before moving higher. That means that the OEX is not out of danger of another bounce attempt yet. The five-minute Keltner chart suggests that the OEX is likely to find resistance at 538.18, 538.54, and at just over 539, if it does bounce, with bears wanting the 538.18 level to hold as resistance. The downside target predicted by the five-minute chart is now 536.21 unless the OEX can climb above 529 and maintain levels above that number.

 
 
  Jeff Bailey   8/3/2004,  2:44:50 PM
JP Morgan (JPM) $36.93 -1.28% ... here similar use of retracement on JPM as we used on the BKX.X. Gives two good downside targets. Link

Tie in observations of NYSE (1, 2 and 3-lettered stocks) as well as BKX.X

Also nice to have INDU Daily/Weekly/Monthly pivots as a guide with JPM.

 
 
  Jonathan Levinson   8/3/2004,  2:43:34 PM
This is very bearish action here, with key support now resistance from QQQ 34.38-.44. It could be a throwunder or whipsaw, but with the 30 min cycle pointed south and the daily cycle upphase faltering, the weakness from yesterday is now doing damage to the bull case. Look for support at 34.32 (currently in play), 34.20, and 34.05-.08.

 
 
  Jane Fox   8/3/2004,  2:43:01 PM
Nice trading Mark!

 
 
  James Brown   8/3/2004,  2:42:41 PM
Remember we need to exit the CEPH put play before the close to avoid the company's earnings report after the bell tonight.

 
 
  Mark Davis   8/3/2004,  2:42:18 PM
Day Trade Exit Point Alert -

Stopped out of SPX Aug 1110 calls, break even.

We now have a full 1 1/2 hours for the puts to work with momentum on our side. The play is currently up about +20%.

 
 
  James Brown   8/3/2004,  2:41:47 PM
OI call play Textron (TXT) is up two days in a row (and up 7 out of the last 9 sessions) and hitting new four-year highs.

 
 
  James Brown   8/3/2004,  2:39:59 PM
HUG is also reversing yesterday's strength and is now trading back under support/resistance at $60.00.

 
 
  James Brown   8/3/2004,  2:39:11 PM
In the same vein OI call play FDX broke out over resistance at the $82 level yesterday but is slipping back under the same level today.

 
 
  James Brown   8/3/2004,  2:38:18 PM
OI call play ETN had broken out above resistance at the $65 level yesterday but the stock is slipping again under the same level today.

 
 
  Linda Piazza   8/3/2004,  2:37:25 PM
The current OEX bounce, if it can be called that, looks like a possible bear flag trying to set up on the five-minute chart. Resistance is trying to firm up just above 539, but bears would really like to see the OEX turned back at 538.80, the basis line for its smallest Keltner channel.

Congratulations, Mark, for the current no-lose situation on your SPX play.

 
 
  James Brown   8/3/2004,  2:37:21 PM
OI call play ADSK is back above resistance at the $40.00 mark.

 
 
  Jonathan Levinson   8/3/2004,  2:32:45 PM
Session high for bonds here, TNX down 3.2 bps at 4.42%.

 
 
  Mark Davis   8/3/2004,  2:29:26 PM
Day Trade Exit Point Alert -

Cinch up your stops to break even on both the puts (1104.50) and the calls (1100.50). We are now in a no lose situation.

 
 
  Jonathan Levinson   8/3/2004,  2:26:49 PM
This decline has the 10-day stochastic on a bearish kiss here. Any further weakness should give us our first daily cycle sell signal, though Macd confirmation would be at least a day away. If the bulls mean business, we should not see today's QQQ low exceeded.

 
 
  Linda Piazza   8/3/2004,  2:25:04 PM
The BIX is back below 350. The TRAN's chart still shows a doji at the top of a climb, a doji formed below a descending trendline.

 
 
  Linda Piazza   8/3/2004,  2:22:32 PM
And the OEX breaks through the mid-channel support on the five-minute Keltner chart. On the 15-minute chart, it's now set a downside target of 536.68-537.48, but don't forget the 60-minute 100-ema at 537.02 and the 130-ema at 538.53. The OEX is between the two now. As I mentioned earlier today, the OEX spent four days trying to break above these averages. Some might consider this downturn merely a retesting of the broken resistance to see if it holds as support, and so might be willing to buy this level. (I'm not suggesting this, just suggesting that's how this downturn might be viewed by some.) The OEX could still attempt a bounce from these averages. It's also interesting that the OEX bounced exactly from one version of the neckline I'd drawn for the H&S on the five-minute chart. If it does bounce, the five-minute Keltner chart suggests that it might be turned back at 539-539.25 if not from a lower level.

 
 
  Mark Davis   8/3/2004,  2:22:20 PM
Day Trade Entry Point Alert -
Here's the setup I was waiting for... Go long now... SPTHT (SPX Aug 1110 call) @ 12.40 - stop SPX 1099.00

Benchmarking... SPX = 1100.39

Let the puts run...

We've now locked in profits on the puts and will either let the calls get stopped out or exit on a rollover for a scalp.

 
 
  James Brown   8/3/2004,  2:22:03 PM
Yesterday we mentioned that WFMI looked weak with the bounce failing at its simple 100-dma. Now shares are down 2.7% and breaking support at the $80.00 mark. The move is bolstered by weakness in rival Whole Foods (OATS -26%). The drop today looks like a bearish entry point and its P&F chart points to a $61 target. My concern would be potential support at the $75 level and its simple 200-dma.

 
 
  Jonathan Levinson   8/3/2004,  2:18:41 PM
NYMEX crude current sitting at 44.20.

 
 
  Jeff Bailey   8/3/2004,  2:17:44 PM
NYSE Composite ($NYA.X) 6,414 -0.19% .... slips below its 200-day SMA.

 
 
  Linda Piazza   8/3/2004,  2:16:01 PM
OEX traders should be watching the SPX, too, of course. If the SPX should continue declining and should fall beneath the 1100 level, traders might watch the 200-ema, located at 1094.74, for possible support. This average isn't as closely watched or as important as the 200-sma, of course, but here's a chart with just the 200-ema: Link Be your own judge as to whether it might also play a slight part in recent trading patterns.

 
 
  Jonathan Levinson   8/3/2004,  2:15:48 PM
There's strong volume on this decline. QQQ is hanging on by its fingernails at 34.395 (current session low). A break below this level will look like the head and shoulders breakdown we've been discussing.

 
 
  Jeff Bailey   8/3/2004,  2:14:00 PM
Aluminum Corp. China (ACH) $46.85 -9.55% .... Jeff: ACH said it has lowered its spot sale price of alumina. (source: XFN via COMTEX)

Thanks for this new item Brian!

 
 
  Jonathan Levinson   8/3/2004,  2:12:26 PM
New session lows breaking out. The 6.5B repo drain is hitting equities here, as bonds hold the bulk of their gains.

 
 
  Mark Davis   8/3/2004,  2:12:13 PM
A lower high on that last upswing... now all we need is a lower low (below SPX 1102.72) to give this trade a better chance of success. Oops! we just got it with a print of 1102.67.

 
 
  Linda Piazza   8/3/2004,  2:11:47 PM
The OEX is coming back to test the mid-channel level on its five-minute OEX chart. Each time it bounces from that support, it bounces into a lower high, which is not the picture of strength bulls might want to see.

 
 
  Jeff Bailey   8/3/2004,  2:04:33 PM
"Job stocks ... checking in on Monster Worldwide (MNST) $21.64 -2.91% and Paychex (PAYX $31.07 (unch).

Both little changed since the Conference Board's July Help Wanted Index was released last week.

Has been a seller in MNST at $22.50 for sure.

 
 
  Jeff Bailey   8/3/2004,  1:59:33 PM
Current OPEN MM profiles at this Link

Stillwater Mining (SWC) .... I'm not certain of time, but tomorrow, before 12:00 PM EDT, is scheduled to release quarterly earnings. Only 3 brokers covering the stock where consensus is for profit of $0.13 per share. Low estimate is $0.07, while high estimate is $0.22. No changes to current SWC positions at this time.

 
 
  Linda Piazza   8/3/2004,  1:59:26 PM
The OEX continues to bounce from the mid-channel level on its 5-minute chart, currently at 539.23. Support ranges from that level down to 538.68.

 
 
  Jim Brown   8/3/2004,  1:58:55 PM
I agree with Mark. With the TRIN pushing steadily higher and the VXO doing the same the setup is looking bearish. However, the A/D is refusing to drop and holding near the aftenoon highs. As we approach 2:PM the odds are growing that we will see a direction appear. That would definitely be refreshing regardless of direction.

 
 
  Jonathan Levinson   8/3/2004,  1:58:43 PM
Given how oversold the short cycle oscillators were and the importance of support from 34.38-.47, this is a very low volume, dismal bounce attempt so far underway for QQQ. 34.60 is first minor resistance, and so far the bulls have been unable to challenge it.

 
 
  Mark Davis   8/3/2004,  1:54:49 PM
Day Trade Exit Point Alert -
That was close... we came within 0.09 SPX points of being stopped out, just as it appeared we were about to roll over again. A little luck never hurts, but we could still see another poke higher, or even an upside break, although with SOX near it's LOD and TRIN in bearish territory the odds are still in favor of the downside IMO.

Agressive traders may want to raise their stops to 1106.50. You'll be risking about a 10% hit... your decision

 
 
  Jonathan Levinson   8/3/2004,  1:40:58 PM
Once again, the bounce is distinctly weak given the deeply oversold short cycle oscillators for QQQ. 34.47 proved to be the session low and the 2 day chart continues to look like a head and shoulders formation as discussed this morning. Link

 
 
  Linda Piazza   8/3/2004,  1:40:27 PM
On the OEX's five-minute nested Keltner channel, resistance is now firming up, squeezing the OEX against also-firm-appearing support. One is going to win out and one lose . . . or maybe the OEX will just rattle around some more. (Note: As I typed, the support won out and the OEX headed up again.) I've been noting for a while that I thought the OEX was just chopping around above weekly Keltner and historical support. Having always expected the OEX to chop around there for at least a couple of weeks, I'm now noting that the OEX has spent this requisite minimal time in that chop and could perhaps break out at any time. The trouble is that I also expected increased volatility preceding the true breakout, so that we might get some false moves one direction or the other. One key level to watch is the 541.30 level, as a sustained breakout above that level would set up the possibility of a push toward the top of the smallest weekly Keltner channel. The problem is that we're talking about a sustained breakout on a weekly basis, not an intraday basis, and so the OEX could spend a couple of days above that level mid-week, say, but then fall back below it and produce a weekly candle that shows that level holding as resistance.

 
 
  James Brown   8/3/2004,  1:25:33 PM
Whirlpool (WHR) is down 1.7% to $61.80 after announcing that its CFO has resigned for "family reasons". Normally Wall Street gets a little spooked when high level execs suddenly leave. The bearish P&F chart points to a $53 target but traders might want to look for a drop through round-number support at $60 before considering positions.

 
 
  Mark Davis   8/3/2004,  1:24:19 PM
Potential Day Trade Setup Alert -
I'm waiting for another swoosh to the downside to initiate a concurrent counter long (call) on SPX as close to the swing low as possible. This will lock in profits on the put play and "bracket" the chop. We'll then let the market decide which play is the winner and let the losing position get stopped out. The 1100 area (on the cash index) would be a natural place to look for such a setup. Whether or not we are presented with that opportunity is anybody's guess, but at least we have a "no lose" trade going, with the potential for further gains.

Leave your stops at break even (1104.50) on the SPX Aug 1100 puts.

 
 
  Jonathan Levinson   8/3/2004,  1:19:42 PM
Oct gold is at a new session high of 395.70, up 2.5 here. NYMEX crude +.20 at 44.025.

 
 
  Linda Piazza   8/3/2004,  1:18:42 PM
The OEX comes down to test the 60-minute 100/130-ema's to see if they'll hold as support. They did earlier this morning and should provide at least a bounce attempt this time, too. However, bearish divergence shows up on this time interval chart, too, as it has on shorter time intervals, as the OEX reached for yesterday's high. That suggests some underlying weakness, but perhaps only enough to send the OEX back to test that support. We'll soon see, but the OEX is ringed by supposed strong resistance and supposed strong support, and it's difficult to assess which will win out over the short term.

 
 
  James Brown   8/3/2004,  1:17:08 PM
Vishay Intertech (VSH) is down more than 15.6% to $13.44 after reporting earnings today that missed estimates by 2 cents. The company's revenues rose more than 20% but still came in under analysts' estimates.

 
 
  Jonathan Levinson   8/3/2004,  1:14:06 PM
QQQ testing yesterday's low at 34.47 here.

 
 
  Jeff Bailey   8/3/2004,  1:13:15 PM
01:00 Internals at this Link

 
 
  Mark Davis   8/3/2004,  1:12:32 PM
Day Trade Exit Point Alert -
Cinch your stops down to SPX 1104.50 and break even

 
 
  Linda Piazza   8/3/2004,  1:10:17 PM
The OEX eases down to the midline level on its 5-minute nested Keltner charts. Support ranges from 538.81-539.18. This level should provide a bounce attempt, especially since the 60-minute 130-ema is just below, and it will be the height of that bounce that tells us more about weakness or support. Bulls want to see the OEX bounce above 540.23 or at least 539.77 and maintain levels above those numbers. Bears want to see the OEX remain below 539.77.

 
 
  Jonathan Levinson   8/3/2004,  1:07:21 PM
Session lows here for QQQ and Naz futures. The short cycle upphase aborted early and is back in oversold territory, verging on a trending move if 34.50 support fails.

 
 
  Jonathan Levinson   8/3/2004,  1:05:28 PM
Bonds have moved higher, with the TNX now down 2.8 bps at 4.424%, headed for a test of 4.4% support.

 
 
  Jeff Bailey   8/3/2004,  1:04:41 PM
01:00 Market Watch at this Link

 
 
  Linda Piazza   8/3/2004,  1:02:58 PM
The OEX turned down toward the levels I mentioned in my 12:48 post, with those Keltner lines now from 538.84-539.17. This is a level which should produce at least a bounce attempt if reached. A breakdown below 538.84, if sustained, would set a possible downside target of 536.24. Note, however, that the 60-minute 100/130-ema's are at 537.01 and 538.53, respectively. It took the OEX four days to break through those averages, so they might be expected to provide some support, too.

 
 
  Jeff Bailey   8/3/2004,  12:55:45 PM
KBW Bank Index (BKX.X) 95.25 -0.15% .... chart at this Link with two conventional retracement. Thoughts behind a JPM short today.

Also see 12:45:54 post and NYSE Comp.

 
 
  Jonathan Levinson   8/3/2004,  12:54:51 PM
Back. There was volume confirmation on what looks like a bear flag breakdown here. Look for channel support at 34.50, and then key support in the 34.38-.44 confluence zone: Link.

 
 
  James Brown   8/3/2004,  12:52:04 PM
Starbucks (SBUX) and XM Satellite Radio (XMSR) have announced an exclusive multi-year strategic marketing alliance.

XMSR is going to debut the "Starbucks Hear Music" channel, the music customers hear in SBUX locations, to all of XMSR's 2.1 million subscribers. Meanwhile SBUX customers will be exposed to XM Satellite Radio's broadcasting in more than 4,000 stores.

 
 
  Linda Piazza   8/3/2004,  12:48:59 PM
The OEX still rounds over into what could be a possible right shoulder of a H&S formation on the five-minute chart, but it's still far above the needed confirmation level, between 538.40-538.75. The right shoulder is getting a little long now, so the OEX needs to roll down if it's going to do so. Right now, however, nearby support looks stronger than nearby resistance on the five-minute chart, although the OEX is testing that support now. Bulls want to see the OEX bounce back above 540, hopefully above 540.21 and preferably above 540.71. If the OEX can't sustain values above 540-540.21, it risks turning down toward 538.85-539.16 to test that zone's support. This formation competes with and is part of the right-shoulder of a larger inverse H&S on the 15-minute chart. I often see these competing formations when the OEX is chopping around, though, as both bulls and bears make a run at producing a breakout or breakdown.

 
 
  Jeff Bailey   8/3/2004,  12:45:54 PM
NYSE Composite ($NYA.X) 6,426.37 (unch) .... in last night's Market Wrap, Jan Fox discussed the NYSE Comp. Here's my updated chart with conventional retracement and simple moving averages. Resistance just above at 6,435. Link

 
 
  James Brown   8/3/2004,  12:44:27 PM
A positive earnings report is not helping shares of luxury apparel retailer Coach (COH). The company beat earnings estimates by 3 cents and came in above analyst expectations on revenues. Management then guided higher above consensus for the next quarter. Despite the news shares of COH are down 3.9% and heading toward support at the $40 mark and its simple 200-dma.

 
 
  Jonathan Levinson   8/3/2004,  12:43:38 PM
Back in a moment- stuck on a phone call here.

 
 
  James Brown   8/3/2004,  12:39:36 PM
Sandwich chain Schlotzsky's Inc (BUNZ) is down more than 57% to $0.70 a share after filing for Chapter 11 bankruptcy this morning.

 
 
  Linda Piazza   8/3/2004,  12:35:37 PM
Sorry, Mark, I was studying charts so intently, trying to make something happen, that I missed your 12:20 post until now. I was using the term in a Keltner manner, breaking out of one of the channels, either to the downside or the upside, but I'll vote for your short and say breakdown. Grin. Seriously, I note TRIN moving up, the TRAN facing strong resistance, the SOX still moving down (although now into possible support), the SPX not yet able to push back above its 200-sma, and some other signs suggesting that bulls should be warned of a possible downturn. The OEX is battling resistance I thought might be tough. On the OEX, however, I'm still not sure how far it will get if it does occur since the OEX shows some signs of continued chop, too.

 
 
  James Brown   8/3/2004,  12:34:37 PM
The oversold bounce in semiconductor maker Semtech Corp (SMTC) is failing at the $20 and 21-dma resistance levels. A downgrade to "hold" by AG Edwards is ushering the stock's 4.9% decline today.

 
 
  Mark Davis   8/3/2004,  12:30:13 PM
The SOX is leading the charge down (my SOX-dicator), TRIN is trending higher and the Russell is down. So why are SPX and OEX waffling around and not joining the party? Could this just be more rotation from tech stox to the safer largecaps?

Where is Jeff's inchworm? Let's kick him in the head so the tail has a better chance in this fight.

 
 
  Linda Piazza   8/3/2004,  12:29:06 PM
The TRAN needs to climb strongly today to avoid printing a doji at the top of its climb. The TRAN sometimes ignores potential reversal signals, but this one is being produced just under the descending trendline off the early July high, which perhaps would give it more significance.

 
 
  James Brown   8/3/2004,  12:26:49 PM
Precision Drilling (PDS), an oil well/services stock, is up 5.3% to $51.49 - a new all-time high after Raymond James upped the stock to a "strong buy".

 
 
  James Brown   8/3/2004,  12:23:05 PM
The automakers are releasing some of their July sales numbers today.

Ford is reporting that their F-Series picks ups rose 15%. Total truck sales were only up 1%. Passenger car sales were down 11% and total U.S. July sales were down 4%.

Porsche said U.S. sales rose 6%.

Nissan is reporting that their Nissan-brand vehicles rose 34.9%.

GM is expected to report July sales later today.

 
 
  Linda Piazza   8/3/2004,  12:21:30 PM
Turning back to the 15-minute Keltner chart now, I see that the OEX has been holding fairly well above the basis line of the smallest 15-minute Keltner channel, something that bulls want to see happen. However, it hasn't been able to break back above the midline of the ascending regression channel in which it's traded since July 26, something that bulls don't want to see. The 15-minute channels still turn higher, and bears would need to see the OEX sustain values below 538.96 to turn the smallest channel lower again, toward 536.53-537.21.

 
 
  Mark Davis   8/3/2004,  12:20:41 PM
Breakout? You meant to say break-DOWN, right Linda? (grin)

 
 
  Linda Piazza   8/3/2004,  12:18:27 PM
Competing H&S and inverse H&S formations: The OEX 5-minute chart now displays a potential H&S, competing with the bigger potential inverse H&S on the 15-minute chart. The five-minute version is a topping formation, one I usually tend to trust more than continuation-form ones. It saw bearish divergence as the head was produced at Monday's late-day high. Depending on how you draw the descending neckline, that neckline could range from 538.35-538.75. One argument against believing any more strongly in this formation than in the continuation-form one is the presence of the two competing formations. That signals that bulls are bears are still battling it out, still fitting my thesis of chop above the weekly historical and Keltner support. However, the OEX has been chopping around above that support long enough now that a decision might be made at any time, making it difficult now to decide when to jump in and when to abstain, in hopes of avoiding the chop. Based on previous patterns, I expected more volatility just before the breakout, complete with false breakouts one direction or another. Your choice is to begin jumping in, with direction based on your bias, but only if you're willing to be whipsawed, or to wait and hope to catch a chunk of the move when it comes rather than all of it.

 
 
  Mark Davis   8/3/2004,  12:14:27 PM
Jane, if the truth be known, I think we all do it from time to time (at least in our minds)

I'm seeing some cracks in the dam but no collapse yet.

 
 
  Jeff Bailey   8/3/2004,  12:12:01 PM
12:00 Internals at this Link

 
 
  Jonathan Levinson   8/3/2004,  12:09:43 PM
USD Index (30 min delayed) has found support at a higher low of 89.50. Link

 
 
  Jonathan Levinson   8/3/2004,  12:07:19 PM
Session low for MSFT and INTC here.

 
 
  Jonathan Levinson   8/3/2004,  12:05:43 PM
The daily cycle upphase that has brought us the bullish bias oin last week's double bottom is faltering since yesterday's lower high and negative close on QQQ. The 30 min cycle downphase in progress this morning is getting poor price traction, and I believe that the uncertain downward chop is being caused by the juxtaposition of the 30 min downphase against the daily cycle upphase. I agree with Jim that the resolution of these conflicting cycles should result in a big move- on those key timeframes, I too can argue either side and don't know how it will resolve. A breakout above 35.10 or below 34.38 should give us that direction.

 
 
  Jane Fox   8/3/2004,  12:02:36 PM
Mark I didn't know you did that too. (11:59 post)

 
 
  Jeff Bailey   8/3/2004,  12:02:12 PM
12:00 Market Watch at this Link

 
 
  Mark Davis   8/3/2004,  11:59:55 AM
I'm on my knees bowing in front of my monitor and praying for a MACD bearish kiss... we'll know in the next few minutes

 
 
  Jeff Bailey   8/3/2004,  11:58:29 AM
Current OPEN MM Profiles at this Link

 
 
  Linda Piazza   8/3/2004,  11:55:54 AM
The OEX punched through the resistance offered by its smallest Keltner channel, but once again could not maintain the breakout levels. Keltner resistance is trying to firm up near 540.70-541 and support is trying to firm from 539.60-539.80, but some bearish divergence, Keltner style, is beginning to show up in the way the different channels are positioned, giving a possible slight edge to the resistance over the support.

 
 
  Mark Davis   8/3/2004,  11:52:42 AM
Day Trade Entry Point Alert -
Go short now... SPTTT (SPX Aug 1100 put) @ 10.50 - stop SPX 1106.50

Benchmarking... SPX = 1104.55

 
 
  Jonathan Levinson   8/3/2004,  11:44:25 AM
Session high for October gold here at 393.50, +.3. HUI and XAU are still fractionally higher, while bonds are holding just above unchanged, TNX -.5 bps at 4.447%. The short cycle upphase remains distinctly uninspiring for QQQ, and the 60 min cycle rollover remains intact as the 30 min rollover is going flat. So far, it's a choppy day with a downward bia and no clear signals in either direction at these levels.

 
 
  Mark Davis   8/3/2004,  11:43:46 AM
Potential Day Trade Setup Alert -
Sell signal developing... stand by to go short for a scalp (if it confirms), aggressive traders/risk money ONLY

 
 
  Linda Piazza   8/3/2004,  11:36:54 AM
Currently, the OEX's five-minute chart shows only single-line resistance all the way up to 542, making it look possible for the OEX to push through some of those resistance lines, at least. The trouble is that the OEX has had difficulty this morning breaking above the first one, the upper resistance of its smallest channel. That's at 540.32 currently, and the OEX needs to maintain values above that or at least above 540 to keep the OEX's smallest channel pointed higher. For those who might be in bullish positions, I'll walk you through each development I see even though I didn't feel comfortable recommending such positions today. I see the potential for a climb, but also much potential for chop.

 
 
  Linda Piazza   8/3/2004,  11:25:15 AM
The SOX is moving into a potential support zone from 406-408.

 
 
  Linda Piazza   8/3/2004,  11:24:11 AM
The BIX, also displaying a potential inverse H&S on its 15-minute chart, is coming up to challenge 350 again. The neckline of its inverse H&S would be far above that, at just under 352.

 
 
  Jonathan Levinson   8/3/2004,  11:20:54 AM
Session low for GE at 33 here.

 
 
  Linda Piazza   8/3/2004,  11:17:53 AM
I'm watching the VIX and VXO this morning, interested in the fact that they also appear to be producing inverse H&S's this morning, although on their five-minute charts. I'm interested in whether the VIX and VXO behave in ways that are similar to those found in equities according to traditional technical analysis. Also, I'm interested because if the volatility indices do confirm their inverse H&S's and follow through with a rise, that's going counter to the evidence suggested by the potential inverse H&S on the OEX, for example. Mixed evidence.

 
 
  Jeff Bailey   8/3/2004,  11:16:58 AM
11:00 Internals at this Link

 
 
  Jonathan Levinson   8/3/2004,  11:16:37 AM
Bulls are hoping here that a break below 34.58 doesn't violate 34.46 QQQ. Recall the 34.38-.44 confluence zone- looking at the formation since Monday morning, 34.46 looks like a head and shoulders neckline. A move below 34.38 would confirm that break and set up an implied target around 33.90.

 
 
  Linda Piazza   8/3/2004,  11:08:11 AM
At today's low, the OEX had drifted down to retest the 60-minute 100/130-ema, almost touching the 130-ema at 538.49. Those who believe more in continuation-form H&S's than I do might use that so-far successful retest of those important 60-minute averages, near the possible right-shoulder level of that formation, as an entry into a bullish play, but like Mark, I have some reservations due to the weakness in other indices. A big reservation would be the SPX's failure to move back over its 200-sma this morning, along with weakness in some other indices. Although TRIN is in neutral territory, it's well off its low, and crude futures are at levels that make those at-first-outlandish-seeming claims that crude might reach $50/barrel now seem not quite so outlandish. Taken all together then, and adding in my feeling that the OEX is just chopping around above weekly Keltner and historical resistance, even the successful (so far) test of the 60-minute 100/130-ema's and the potential inverse H&S don't encourage me to suggest such bullish plays. The OEX may get its test of the 542.50-544.50 region today, and that inverse H&S sure seems like a siren's call to believe in the possibility, but I'm too worried about those other factors.

 
 
  Jeff Bailey   8/3/2004,  11:04:15 AM
11:00 Market Watch at this Link

 
 
  Jonathan Levinson   8/3/2004,  11:03:45 AM
QQQ has resistance at 34.80 on this bounce, with a declining 30 min channel target of 34.92. The 30 and 60 min rollovers are not yet full-blown downphases, and a sustained move above 34.80 should be enough to remove the downward bias in those cycles. It will take a move above 34.90 to restore the upphases.

 
 
  Mark Davis   8/3/2004,  11:01:55 AM
Stepping away for an appointment...

 
 
  Linda Piazza   8/3/2004,  10:59:21 AM
I forgot to mention on that 10:56 post that another reason for distrusting the bullishness implied by a potential inverse H&S is that along with the bullish divergence as the head was produced, there was bearish divergence at yesterday's higher high. MACD produced a lower high.

 
 
  Linda Piazza   8/3/2004,  10:56:57 AM
This figure on the OEX's 15-minute looks a little inverse H&S-ish, complete with bullish divergence as the head was produced, but if that's what the figure is, the neckline is pure guesswork. Link (Note: this figure is forming above a larger, already-confirmed inverse H&S on the 60-minute chart.) I don't tend to trust these continuation-form inverse H&S's, either, but watching this formation will help us measure strength or weakness. It tells us there may be some underlying bullishness in the markets but doesn't yet tell us whether bulls can follow through on that incipient bullishness.

 
 
  Jonathan Levinson   8/3/2004,  10:54:25 AM
QQQ update at this Link , showing 30 min and 60 min channel rollovers just commencing. The short cycle bounce is occurring right on time, but so far it's yielded only a weak and choppy bounce in price. If this bounce proves to be a flag/wedge (Linda's "b" distribution pattern), then look for next support at 30 min channel support of 34.51.

 
 
  Jeff Bailey   8/3/2004,  10:47:45 AM
Swing trade short alert for JP Morgan (JPM) $37.25 here, stop $37.55, target $36.70.

 
 
  Mark Davis   8/3/2004,  10:46:56 AM
I think we may have just seen the bottom for SPX today (1101.61) but I'm hesitant to try another long entry with the SOX leading the charge down. Even if we got a good entry point upside would probably be limited until the SOX turns around, not to mention all the factors other writers have noted.

 
 
  Linda Piazza   8/3/2004,  10:45:30 AM
According to the SOX's 15-minute nested Keltner chart, the SOX needs to climb above 413.19 or preferably 415.77, to arrest the downward tilt of its smallest Keltner channel, but it may have trouble doing so, with Keltner resistance trying to firm up from 410.60-411.31.

 
 
  Jeff Bailey   8/3/2004,  10:41:28 AM
S&P Banks (BIX.X) 349.17 -0.6% .... session low has been 348.76, where MONTHLY Pivot (348.73) kept things in check.

SPX.X session low has been 1,101.61.

 
 
  Linda Piazza   8/3/2004,  10:37:28 AM
The TRAN is now turning lower, below the descending trendline off the early July high. The potential support of the 30-dma waits below, however, with that average at 3110.53 and the TRAN at 3125.38 as I type.

 
 
  Jonathan Levinson   8/3/2004,  10:31:57 AM
Short cycle oscillators are looking maxxed out to the downside here, and with price resting on combined 30 min and 60 min channel support, this would be a logical spot at which to expect a bounce. If it doesn't come within the coming minutes, as in 5 or so, those longer channels will begin to roll more aggressively to the downside, and an oversold trending move will look much more likely.

 
 
  Jonathan Levinson   8/3/2004,  10:28:53 AM
Just double checked and found a 6-day 3.5B repo expiring today as well. The Fed's net drain for the day is therefore 3.5B larger at 6.5B today. That's a big amount and should provide a negative bias today. With bonds higher, TNX down 1.1 bps at 4.441%, it appears so far that the weakness is reserved for equities.

 
 
  Jonathan Levinson   8/3/2004,  10:26:12 AM
Linda points out interesting and counterintuitive action from the TRAN today- crude futures are currently above 44 at 44.025 as I type.

 
 
  Linda Piazza   8/3/2004,  10:25:10 AM
Here comes the test of OEX 538.50-538.90 that the 15-minute Keltner charts were suggesting would be possible. OEX bulls want to see 538 hold to avoid turning the smallest channel on this chart down toward 536.81.

 
 
  Mark Davis   8/3/2004,  10:24:35 AM
Day Trade Exit Point Alert -
Stopped out, -2 points I really wish the SOX were behaving today. It's once again dragging everything else down with it.

 
 
  Jonathan Levinson   8/3/2004,  10:23:31 AM
QQQ testing 30 and 60 min channel support here. Bulls need these levels to get rejected quickly to avoid a combined 30 and 60 min downphase.

 
 
  Linda Piazza   8/3/2004,  10:22:54 AM
Despite the rise in crude futures that Jonathan has already mentioned, the TRAN has gained today. As it gains, however, it's headed up toward the descending trendline off the 7/01 high. That trendline is at about 3156, with the TRAN at 3139.89 as I type. MACD is just making a bullish cross on the daily chart and both stochs and RSI look bullish.

 
 
  Jonathan Levinson   8/3/2004,  10:20:41 AM
Session low for GE here at 33.05.

 
 
  Jeff Bailey   8/3/2004,  10:17:16 AM
Current OPEN MM Profiles at this Link

Stopped out of 1/2 bullish position (100 shares) in Aluminum Corp. China ($-4.70, or 9.01%) .... (see 09:48:31)

 
 
  Jonathan Levinson   8/3/2004,  10:15:45 AM
The failure to bounce has the 30 min QQQ channel in a new downphase here, with support down to 34.64. 60 min channel support remains 34.60 for now. Link

 
 
  Jonathan Levinson   8/3/2004,  10:13:17 AM
Session lows for MSFT and SPX and Naz futures here.

 
 
  Linda Piazza   8/3/2004,  10:12:30 AM
Looking at the OEX's 15-minute Keltner chart shows a possibility that the OEX will drift down toward 538.50-538.90. The OEX has dropped below the basis line of the smallest Keltner channel, suggesting a drop to test bottom support of that channel line. Don't take this as gospel, however, because the OEX appears to be just wandering around, trying to decide on short-term direction this morning. It's trying to bounce above the basis line again, at 539.99, and if it does so during this 15-minute period, it will change the outlook produced by the current candle.

 
 
  Jonathan Levinson   8/3/2004,  10:12:24 AM
I'm watching the October e-mini contracts as front-month for gold- currently trading a session high of 393.10, down .10. HUI is up .45% at 187.15, XAU +.36% at 87.57.

 
 
  Jonathan Levinson   8/3/2004,  10:09:52 AM
Delayed USD Index chart at this Link , with the USD falling from its morning highs. Euro and CDN dollar futures are printing session highs here at 1.2067 and .7561 respectively.

 
 
  Jonathan Levinson   8/3/2004,  10:05:04 AM
NYMEX crude is currently up .15 at 43.975.

 
 
  Linda Piazza   8/3/2004,  10:04:42 AM
The SOX hovers just above the confirmation level for the double-top formation on its 60-minute chart, with that formation a small one with a confirmation level below 411.61, the trough between the two peaks.

 
 
  Jonathan Levinson   8/3/2004,  10:04:37 AM
Note in the QQQ chart just posted that the short cycle oscillators are oversold- not yet bottomed, but on their way. 34.68-.70 still has a chance of holding for this retest, but if price hangs around long enough, the 30 min cycle upphase will abort and open the door for an oversold-trending move in the bottomy short cycle.

 
 
  Jonathan Levinson   8/3/2004,  10:02:27 AM
The 30-min QQQ channel is no longer rising, beginning to rollover has QQQ and Naz futures hit session lows: Link . 30 min channel support is down to 34.69, but if price doesn't bounce immediately, that level will decline.

 
 
  Jeff Bailey   8/3/2004,  10:02:16 AM
10:00 Market Watch at this Link

 
 
  Linda Piazza   8/3/2004,  10:00:56 AM
The OEX drops toward the 539.40-539.64 support that OEX bulls want to see hold in order to avoid turning the smallest Keltner channel down toward 538.30-538.50.

 
 
  Mark Davis   8/3/2004,  9:57:38 AM
Day Trade Entry Point Alert -
Go long now... SPTHB (SPX Aug 1110 call) @ 8.60... stop SPX 1102.50

Benchmarking entry point... SPX = 1104.36

 
 
  Jonathan Levinson   8/3/2004,  9:54:38 AM
Reuters is now covering the "old data" story regarding the terror alerts: Link

 
 
  Jonathan Levinson   8/3/2004,  9:52:31 AM
The Fed has just announced a 6B overnight repo against 9B expiring, for a net drain of 3B.

 
 
  Linda Piazza   8/3/2004,  9:51:43 AM
As Jane has mentioned, the TRIN sure isn't supporting any kind of bearish thesis this morning. That sounds a warning to bears, but the action so far on the OEX doesn't promote one theory or another of what the day's action is likely to be. The slight weakness of the SOX, BIX and Russell 2000 need to be turned around before it's possible to believe too strongly in a bullish thesis, either. Therefore, I'm finding it difficult to believe too strongly in movement either direction. Until we get some consensus in the markets, I'd certainly be careful about positions, particularly since I still believe that the OEX is just chopping around above weekly historical and Keltner support, trying to decide on a direction.

 
 
  Jonathan Levinson   8/3/2004,  9:51:30 AM
Support looks firm at 34.70 QQQ- so much so that the last attempt on that level was repelled at 34.76. Resistance at 35 looks equally compelling, but with the 30 and 60 min channels, as well as the daily oscillators all pointed higher, 35 looks like the weaker of the two. A break below 34.60 or above 35.10, being the outside channel limits currently, should see acceleration in the direction of the break. So far this morning, it's been pure chop.

 
 
  Jeff Bailey   8/3/2004,  9:48:31 AM
Swing trade bullish stop alert for Aluminum Corp. China (ACH) $47.45 -8.39%.

I have been unable to find any news on this China-based ADR this morning.

 
 
  Linda Piazza   8/3/2004,  9:47:33 AM
The BIX is lower this morning, too, but remaining above 350.

 
 
  Linda Piazza   8/3/2004,  9:45:09 AM
The volatility this morning has expanded the OEX's smallest Keltner channel on the five-minute chart, without exactly turning it up or down. Bulls want to see the current 540-ish level hold but want 539.30 to hold if that doesn't. Bears want the current 540-ish level to hold as resistance or 541 to hold if that doesn't.

 
 
  Linda Piazza   8/3/2004,  9:42:57 AM
As it did yesterday morning, the SOX heads lower this morning, turning down from yesterday's close. The SOX bounced yesterday, so the possibility exists that it will today, too, but it's having difficulty with that 420 level. Is that perhaps because the 60-minute 100/130-ema's are at 418.84 and 420.80? Those bullish the semi stocks don't want to see the SOX drop below 411.61, as that would confirm the double-top formation on the 60-minute chart and would also confirm the second downturn from a test of those averages. The downside target from that double-top formation would be only about 8 points or so, however, perhaps sending the SOX down only for the purpose of forming a right shoulder to go with a possible reverse H&S building on that chart. Therefore, those bearish the semi stocks should be particularly watchful in the 406-408 area for the SOX to steady and then bounce up again.

 
 
  Jonathan Levinson   8/3/2004,  9:42:20 AM
If QQQ can clear 34.92, next resistance is at 35.

 
 
  Jonathan Levinson   8/3/2004,  9:40:47 AM
2-day 100-tick QQQ at this Link.

 
 
  Jonathan Levinson   8/3/2004,  9:38:03 AM
A short cycle downphase is underway for QQQ but the shortest cycle, the wavelet, is already oversold and trying for a bounce. If the bounce is weak, the 30 min channels should begin to let go of their upphase and flatten, but so far this is just chop within that 30 min upphase. Lower channel support is at 34.70.

 
 
  Linda Piazza   8/3/2004,  9:37:03 AM
During the first five minutes of trading, the OEX spanned a range from 539.63 to 539.40.

 
 
  Linda Piazza   8/3/2004,  9:35:00 AM
The OEX gaps lower this morning, but stays above the 60-minute 100/130-ema's, at least so far.

 
 
  Jonathan Levinson   8/3/2004,  9:32:00 AM
Session lows for QQQ and Dow futures here.

 
 
  Jeff Bailey   8/3/2004,  9:30:46 AM
Ligand Pharmaceuticals (LGND) $13.58 ... sharply lower at $10.23 and this morning's most active after the company reported a wider than expected loss of $0.19 per share, compared to consensus estimates of $-0.07%. The company also announced that it is ending its 4-year relationship with its independent auditor Deloitte & Touche.

 
 
  Jonathan Levinson   8/3/2004,  9:29:54 AM
Regarding yesterday's terror alerts, reader Martin has just sent me the following article being run by the BBC:

The US administration admits that new warnings of attacks on American cities were based on information gathered by al-Qaeda up to four years ago.

Link

 
 
  Jonathan Levinson   8/3/2004,  9:09:30 AM
QQQ is finding support at lower short cycle channel support within the rising 30 min cycle channel. Below 34.86, there's channel support at 34.70 and, below that, rising 60 min channel support at 34.59. 35.02 is upside price resistance, but the cycle channels have risen, with 30 min channel resistance now up to 35.10. The 30 min oscillators are in gear to the upside with the daily oscillators.

 
 
  Jonathan Levinson   8/3/2004,  8:37:01 AM
Futures have drifted slightly lower on the data, with ES now trading 1104.25, NQ 1404, YM 10147 and QQQ 84.863. Bonds are up to flat at 110.87.

 
 
  Jonathan Levinson   8/3/2004,  8:31:54 AM
8:29am U.S. JUNE PERSONAL INCOMES UP 0.2% AS EXPECTED

8:30am U.S. JUNE CONSUMER SPENDING DOWN 0.7% VS -0.1% EXPECTED

8:30am U.S. JUNE REAL CONSUMER SPENDING DOWN 0.9%

8:30am U.S. JUNE CORE PCE PRICE INDEX UP 0.2%, 1.5% Y-O-Y

8:30am U.S. JUNE PERSONAL SAVINGS RATE 2%, LARGEST SINCE AUG.

 
 
  Jonathan Levinson   8/3/2004,  8:24:31 AM
There's been a move higher in the US Dollar Index this week Link with the Index testing resistance at 90. The 89.4 level had been strong resistnace, and it should now act as support.

 
 
  Jonathan Levinson   8/3/2004,  8:11:58 AM
We're awaiting the 8:30 releases of Personal Income for June, est. 0.3%, and Personal Spending for June, est. -0.1%.

 
 
  Jonathan Levinson   8/3/2004,  8:05:15 AM
Equities are lower this morning, with ES trading 1104.5, NQ 1405, YM 10154 and QQQ down 8 cents to 34.88. Gold and silver are at session lows of 389 and 6.501, while NYMEX crude is up .175 to 44, with a session high of 44.175 this morning. Bond futures are lower by .156 to 110.72 for the 10-yr note.

 
 
  Linda Piazza   8/3/2004,  6:50:24 AM
Good morning. The Nikkei opened and made a rush for the 11,250 level in early trading, but couldn't maintain that level. Rebuffed by that resistance, the Nikkei fell through the rest of the morning and early afternoon and then steadied just above 11,100. The Nikkei closed lower by 81.67 points or 0.73%, at 11,140.57. Headlines mentioned rising oil prices as one pressure on Japanese bourses, sending exporters lower on fears that those rising prices would dampen economic growth in the U.S. and other countries. Auto manufacturers were weak, also hit by profit taking ahead of Toyota Motor's after-the-close earnings report and industry data revealing that Mitsubishi Motors' July domestic sales had fallen 60.1%. Mitsubishi Motors fell 12.2%. Toyota's earnings report beat expectations.

UFJ Holdings, Sumitomo Mitsui Financial Group, and Mitsubishi Tokyo Financial Group were back in the news. UFJ Holdings had been proceeding with plans to merge with Mitsubishi Tokyo Financial Group, but Sumitomo Mitsui sought an injunction to exclude some assets that UFJ Holdings had previously planned to sell to Sumitomo. Then Sumitomo made a bid for UFJ Holdings, a bid UFJ rejected. Now shareholders are getting involved, asking the troubled UFJ to consider Sumitomo's offer. UFJ Holdings fell 0.7%.

Most other Asian markets closed higher, with many tech stocks performing well. The Taiwan Weighted gained 0.31%. One tech stock that did not perform well was South Korea's Hynix Semiconductor, declining 3.4% after speculation that Japan might slap countervailing duties on the DRAM chips Hynix produces. South Korea's Kospi still gained 0.95%. Singapore's Straits Times gained 1.29%, and Hong Kong's Hang Seng gained 1.28%. China's Shanghai Composite was one of the few declining bourses, however, dropping 0.50%.

Currently, most European bourses trade higher with some oil majors benefiting from the rising crude prices but with worries over those rising crude prices dampening gains elsewhere. Financials were weak in the U.K., capping gains in the U.K. bourses. Insurer Prudential was in the news after revealing that it was no longer considering the sale of its 79% position in U.K. Internet bank Egg, with that news sending Egg lower by more than 20% and Prudential lower by almost 3%. In continental Europe, some tire manufacturers gained after Continental's raising of 2004's operating profit target. Other stocks also reacted to earnings reports or analysts' comments. UBS upgraded Deutsche Telekom's rating from a neutral rating to a buy rating, and that stock climbed. Morgan Stanley reiterated its underperform rating on German drug manufacturer Altana. Altana's earnings report beat expectations, but Morgan Stanley noted that the company's launch of asthma drug Alvesco is now later than had been anticipated. Altana was rising in early European trading due to that earnings report.

As of this writing, the FTSE 100 had dropped 1.60 points or 0.04%, to 4,414.10, erasing earlier modest gains. The CAC 40 was up 14.39 points or 0.40%, at 3,638.18. The DAX had gained 16.09 points or 0.42%, to trade at 3,878.80.

 
 
  Linda Piazza   8/2/2004,  9:35:11 PM
Each day, I review what's happened with the OEX and what I think might be likely to happen the next day. Lately, I've been more garrulous in these reviews than perhaps either you or I prefer, but there just seems to be a lot to cover.

Monday, the most important fact to note might be that the SPX tested and then closed just beneath its 200-sma. Many writers have been advising that traders should watch market behavior if the SPX's 200-sma was touched, and in its usual enigmatic manner, the markets closed with us wondering whether to believe the touch of the 200-sma to be bullish or the failure to maintain it to be bearish.

All in all, the OEX acted much as I expected. In my 00:22 post Monday morning, I ended by saying that I expected a pullback and then would watch for a test of the 30-minute 100/130-ema's. If the OEX should bounce from those averages again, as it did, I advised watching the 60-minute versions for first resistance. They did provide resistance for a time. I advised making plans to protect profits if necessary in the 539.50-542 zone and again in the 543.50-547 zone. Actually, I probably should have lowered that final zone to 542.50-544.50 since several moving averages and converging Keltner lines have drifted down to that zone from the previous 544-547 zone. I didn't say so in that first post, but I thought 539.50-542 would probably top out the OEX's advances, and that zone did.

What about tomorrow? Looking at the OEX's trading pattern from a traditional technical analysis viewpoint, the OEX had moved up by the close to challenge the 120-minute versions of the 100/130-ema's, with those averages at 539.81 and 541.00, respectively, so those averages might be watched for possible resistance to add to the historical resistance found in this zone. The OEX broke above the midpoint of the rising regression channel in which it's been trading since 7/26, with the top of that channel just above 544 and with midline support now at just above 540. Some might now guess that the OEX would reach toward the top of that channel now, at 544. If that happened, the OEX would follow the SPX in its touch of its 200-sma since the OEX's 200-sma is now at 544.39, with the 30- and 50-dma's just below that.

What about other indices? The Nasdaq produced a bullish candle with RSI and stochastics committing to the upside, and with the Nasdaq continuing its rise from the bottom of its descending regression channel. However, the Nasdaq did not top Friday's intraday high with a new intraday high. Similarly, if looking at one version of its descending regression channel, the SOX closed higher, continuing its rise from the bottom of its regression channel. However, it should be noted that the SOX also could not beat Friday's intraday high. The BIX pushed up again within its broadening formation, closing above 350 for the first time since 7/20, but since that formation is a broadening one, it's difficult to draw many conclusions about the rise through that formation. After looking weak earlier in the day, the TRAN finally found traction and closed back above its 30-dma, with its intraday high barely eclipsing Friday's. The Dow rose, but, like the OEX, hasn't yet touched its 200-dma. It's not far away, however, and I would advise traders to watch the Dow's test of its 200-dma, too, with that average only about 50 points away from Monday's close. The Russell 2000 closed higher, too, but, like the SOX, could not beat Friday's intraday high, printing an intraday high just below Friday's. Crude closed just above Friday's close.

I'm curious about the implications of the SOX. Nasdaq, and Russell 2000 not having the strength to reach above Friday's intraday highs. Perhaps they had already led the way and could rest? Perhaps there's no great meaning in their performance, but I found it curious that these leading indices didn't lead by this measure. Taken all together, the traditional look at technical analysis suggests that markets showed some strength today, many continuing a move up off the bottoms of their descending regression channels on daily charts, with oscillators beginning to support the upswing. The perhaps-curious/perhaps-not behavior of the tech-related indices signals some caution. Taken all together, the behaviors of the various indicators and indices might suggest a continued attempt to rise but perhaps some doubt as to whether that attempt would result in a move all the way to the 544-ish level or just another attempt at the 541-542 zone. Jim noted in his Futures Wrap that futures were not sustaining the gains made today, so perhaps even that attempt might not occur. Watch the behavior of the futures in the overnight session.

I've come to love Keltner charts, however, so want to take a look at what they suggest, too. As I've been noting, week before last the OEX approached the converging support on the weekly chart, with trading patterns suggesting that it could spend at least a couple of weeks chopping around that support while it decided on ultimate direction. At the end of last week, the OEX's smallest channel on that weekly chart had begun to turn down, and it won't be until the OEX maintains values above 541.34 on a weekly basis that it would be able to stop the descent of that channel, and not until it sustained values above (the now current) 555.87 level on a weekly basis that it would turn that smallest channel higher again. That was one basis for my feeling that the 541.30-ish level might be a difficult one for the OEX, and it proved to be so Monday.

The daily chart shows Keltner resistance massing from today's high up to 544.76, just above the OEX's 200-sma. As I've also mentioned at other times, that resistance looks strong. The OEX pushed through a similar configuration in May and then consolidated just above that for about a week, but the OEX's 200-sma wasn't at that same level then, and nor were the 30- and 50-dma's all converging in that zone, either. That may move that resistance from the realm of strong resistance into the realm of formidable resistance, which is one reason that I imagine that it will be difficult for the OEX to just push right through that Keltner resistance. It did so in May, and it did so when that resistance was just about in the exact price level it is now, so it's perhaps possible. Perhaps whether it does or not will depend as much on the SPX's and Dow's behavior tomorrow around their 200-sma's as the OEX's behavior, but it would seem that the OEX would need some sort of pullback, either intraday or longer, to gather strength again before launching itself through that resistance, if it does.

Both the 5- and 15-minute Keltner charts showed the OEX having difficulty maintaining or producing breakouts of important Keltner lines late Monday. The OEX broke out of its middle channel, reaching up to touch the upper channel resistance, but it could not break out above that resistance, currently at 541.58. It was still within striking distance of that breakout, but bearish price/MACD divergence was showing up late Monday. The 15-minute chart shows the OEX having difficulty breaking out of its middle channel, with more significant bearish price/MACD divergence showing up on that chart as the OEX attempted a breakout. Such a breakout, if achieved, would set an upside target of 543.56. The bearish divergences and the OEX's behavior suggest that the OEX might not have the strength to break through and create new breakout signals, but that bearish divergence could be erased if MACD continued rising while price did. The OEX can still continue higher without creating a breakout signal, but a slow climb or a steadying allows Keltner lines to snake above it, firming up the resistance. The 5- and 15-minute charts show MACD on the verge of bearish crosses, although from above signal, while the 30-minute-and-up intraday charts show MACD still in bullish mode.

Both traditional and Keltner charts depict the OEX ending the day just beneath/at resistance, close enough to break through and make a run for the 542.50-544.50 zone, but likely to stall there or just above there, at least on first approach. They also depict the possibility of waning strength as the day closed, with that suggesting a possible pullback toward 538-539 or even 535-536. Early morning action may be needed to help determine likely direction. I wouldn't be surprised to see the SPX punch above its 200-sma early tomorrow, for example, with the result helping to determine whether bears rush to cover and bulls to buy or whether bulls rush for the exits and shorts pile on. Depends on whether sellers are able to drive it quickly below that average again or if bulls are able to drive it quickly above it.

A sustained OEX move above 541.50-541.60 sets up a possible push toward 543-544. A failure to sustain levels above 539 sets up a possible downside test, first of the 538 region (and 200-ema) and then of 535-536 if that support fails to hold. As of Monday night, I still consider the OEX chopping around weekly Keltner and historical support, not yet having decided a direction. I'm still suggesting quick targets and plans made ahead of time to protect profits.

 
 
  OI Technical Staff   8/2/2004,  8:35:14 PM
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