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  Jeff Bailey   8/9/2004,  5:31:12 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   8/9/2004,  4:53:52 PM
Closing Internals at this Link

  Mark Davis   8/9/2004,  4:10:54 PM
Recap of Monday's trades...

Long SPQHN (SPX Aug 1070 call) @ 10.50
Stopped out SPQHN (SPX Aug 1070 call) @ 9.50, -9.52%

Short SPQTL (SPX Aug 1060 put) @ 9.30
Stopped out SPQTL (SPX Aug 1060 put) @ 8.50, -8.60%
Total gain/loss for Monday = -1.80, -18.12%

Total gain/loss for the week = -1.80, -18.12%

  Jeff Bailey   8/9/2004,  4:08:21 PM
Current OPEN MM profiles at this Link

Today's activity ....

Day trade short Amgen (AMGN) at $53.95, closed out at $53.32 before the close. ($+0.63, or +1.17%).

  Jeff Bailey   8/9/2004,  4:01:01 PM
Amgen (AMGN) $53.23 -1.05% ... goes out at lows of the session.

  Jonathan Levinson   8/9/2004,  3:58:47 PM
Crude oil currently 44.825 here.

  Mark Davis   8/9/2004,  3:58:34 PM
*** Note to Readers

I've been able to post throughout the entire trading day all last week and today, in an attempt to get up to speed as the new guy on the block, however, starting tomorrow a more normal posting/trading pattern for me will be for the first 2-3 hours in the morning and then away for the remainder of the day.

  Jeff Bailey   8/9/2004,  3:57:58 PM
Taser Intl. (TASR) $26.77 -0.29% ... tries to claw back to unchanged.

  Linda Piazza   8/9/2004,  3:57:22 PM
We may run out of trading day before we know whether the 15-minute Keltner support held or not. So far, the OEX has spent most of the day bouncing between 5-minute Keltner resistance, looking firm, and 15-minute Keltner support, looking firm but a little less firm than it did earlier. Nothing has been decided yet. Make up your mind now if you want to risk holding overnight.

  James Brown   8/9/2004,  3:56:13 PM
Level 3 Communications (LVLT) dipped to new two-year lows today with its breakdown under minor support at $2.80. Sellers were unable to break support at the $2.00 level back in 2001 and early 2002. Speculative traders may want to keep this on their watch list for a bounce from the $2.00 region should LVLT dip that far.

  Linda Piazza   8/9/2004,  3:53:15 PM
Well, what do you know. The correlative fan theory worked. (See my 15:45 post.) As I suspected would happen earlier today, the OEX has headed down to retest the support on the 15-minute Keltner chart, with that support now at 522.42-522.75.

  Jeff Bailey   8/9/2004,  3:52:46 PM
Bearish Day trade exit alert ... for Amgen (AMGN) $53.32 offer.

($+0.63, or 1.17%)

  James Brown   8/9/2004,  3:52:08 PM
The small pop in OI put play AZO toward the $75.00 level of support/resistance is fading. This may prove to be another entry point for bearish plays. Look for a dip back under the $74.00 mark.

  Mark Davis   8/9/2004,  3:51:13 PM
Day Trade Exit Point Alert -

Stopped out of SPQHN (SPX Aug 1070 call) @ 9.50, -9.52%


  James Brown   8/9/2004,  3:48:00 PM
A number of the airliners are sinking to new lows: NWAC, XJT, ALK, CAL, BAB...

  Linda Piazza   8/9/2004,  3:45:48 PM
The OEX is breaking minimally below the ascending trendline off Friday's low. It's already broken through two more trendlines off that low, the highest one at about 11:55 and the second one at about 1:35. According to the correlative fan theory, this break should be "the" one unless the OEX quickly bounces back above that trendline. Of course this is one of those days that confounds technical analysis and technical analysts, too. I haven't thought it was a good day for long plays and had my doubts about short ones, too, because of possible nearby support, but I still think it likely that we saw the high of the day a bit earlier.

  James Brown   8/9/2004,  3:44:57 PM
Traders can keep an eye on QCOM. The stock has weathered the market's abysmal July rather well. Now shares are bouncing from technical support at the simple 100-dma. Is this an oversold bounce that will fail at $70.00 before it rolls over again or a bullish entry point similar to dips in May and June? More conservative traders can wait for a push past the $72.50-73.00 level of resistance before considering bullish strategies.

  James Brown   8/9/2004,  3:40:40 PM
... What goes up must come down??? Nothing goes straight up for very long. Keep an eye on Ispat Intl (IST), an iron/steel producer. The company reported Q2 earnings today with net income rising to $54.1 million compared to a loss of $19.7 million last year. Sales increased 38% as the average selling price rose 32$ to $541 per ton from $409 per ton a year ago. The company did say that due to high demand they expect the third quarter to out perform the second quarter.

The stock is up 150% from its May 2004 lows and up 1200% from its January 2003 lows.

  Jonathan Levinson   8/9/2004,  3:40:13 PM
The 30 min cycle upphase is still intact for QQQ, still getting crummy price traction and still suggesting a doozy of a downphase when it finally reverses. Q2 GDP is due at 8:30AM and the FOMC announcement is at 2:15PM. There's the potential for fireworks on the 8:30AM data, but the Fed's tame open market opsof the past 2 days don't suggest any particular fear surrounding the data.

  James Brown   8/9/2004,  3:31:26 PM
Meanwhile property and casualty insurer ACE is trading close to unchanged but near a bearish breakdown at the $38.00 level. A trigger under $38.00 could work as an entry point for puts.

  Linda Piazza   8/9/2004,  3:30:26 PM
The OEX just keeps battling that mid-channel resistance on the OEX's five-minute chart. From previous observations, when resistance is this strong, it usually takes consolidation long enough to let the lines separate before the OEX can move through them, but the OEX is also supported by converging Keltner lines from 522.51-522.93 on the fifteen-minute chart. Either support or resistance will eventually win out, but it's not clear yet which one or whether the breakout will occur today. The evidence on the five-minute chart suggests that the OEX has seen its short-term high, perhaps the high of the day, but then there's that support.

  James Brown   8/9/2004,  3:30:16 PM
Life insurance provider Manulife (MFC) is still creeping higher and nearing a bullish breakout over resistance at $41.00.

  James Brown   8/9/2004,  3:28:41 PM
Bears and bulls can keep an eye on oil stock Amerada Hess (AHC). The stock is bouncing from long-term technical support at the simple 50-dma but the bounce is fading at round-number resistance at $80.00. Shares really could go either way here.

  James Brown   8/9/2004,  3:26:24 PM
Express Scripts (ESRX) may be up today but it's still sinking under its short-term trend of lower highs. Watch for a breakout or a breakdown at the $60.00 level soon.

  James Brown   8/9/2004,  3:22:44 PM
Wm Wrigley Jr (WWY) is seeing some decent follow through on Friday's bounce. The stock is up 1.5% today and breaking out over resistance near $61.00 and its simple 21 and 100-dma's.

  Jonathan Levinson   8/9/2004,  3:22:07 PM
Session low for ten year treasuries here, with TNX closed at 4.244%. ZN futures are down to 112.4219 here.

  James Brown   8/9/2004,  3:20:35 PM
This could be a bearish entry point in MedImmunce (MEDI). The stock is breaking down from its six-month trading range and cracking support at the $22.00 level.

  Linda Piazza   8/9/2004,  3:15:28 PM
Now we have the OEX's five-minute pattern resolving into another pattern--a possible bear flag rise off the Friday afternoon high. The mid-channel resistance on the five-minute chart still ranges up to 524.81, with the Keltner channels setting up a potential upside target of 527.90 if that 524.81 can be reached and then maintained on pullbacks. The mid-channel resistance still looks firm, however.

  Jeff Bailey   8/9/2004,  3:15:02 PM
Bearish day trade lower stop alert .... for Amgen (AMGN) $53.60 -0.35% ... to break even at $53.95.

  Mark Davis   8/9/2004,  3:14:50 PM
Stepping away for a few minutes to do an errand...

  Mark Davis   8/9/2004,  3:13:37 PM
Day Trade Exit Point Alert -

Keep your stops on SPQHN (SPX Aug 1070 call) @ 9.50 (entry = 10.50)

I have an aversion to losing more than -20% in one day so I'm going to resist any more plays today. At this point I'd be quite happy to get out of this @ break even, which would require a breakout to the upside. We've made a series of 3 bearish kisses in a row on the SPX 1-min MACD oscillator, but I'm also seeing a potential buy signal developing. We should know in a few minutes which way the SPX will be going for the remainder of the day.

  Jonathan Levinson   8/9/2004,  3:13:34 PM
Nymex crude oil update at this Link.

  Jonathan Levinson   8/9/2004,  3:12:39 PM
QQQ update at this Link.

  Jeff Bailey   8/9/2004,  3:09:18 PM
03:05 Market Watch at this Link

  Linda Piazza   8/9/2004,  3:04:50 PM
The OEX is not holding above 524 as short-term bullish traders might have wished, but it's coming back to test it again. Resistance looks firm from 524.62-524.80. On the 15-minute chart, support looks fairly firm from 522.54-522.90. I wouldn't be surprised to see that support tested again.

  Jonathan Levinson   8/9/2004,  3:00:39 PM
Instead of an explosive surge in volume, QQQ seems to be racking up a slow accumulation of volume at the horizontal resistance line, always well below 33.00.

  Linda Piazza   8/9/2004,  2:59:06 PM
The OEX is pulling back beneath the mid-cannel level on the 5-min Keltner chart, and, while it does, the resistance is firming up even more. It still looks to me as if the OEX is going to have difficulty getting past that resistance. In fact, it looks even tougher than it did earlier.

  Jonathan Levinson   8/9/2004,  2:54:42 PM
The 30 and 60 min cycle channels are turning up here, with resistance now lined up at 33.08, support at 32.66- "session highs" for the cycle channels.

  Jeff Bailey   8/9/2004,  2:48:31 PM
Current OPEN MM Profiles at this Link

  Jonathan Levinson   8/9/2004,  2:43:13 PM
Volume never confirmed a breakout, and price hasn't either. If the price doesn't dive back to the low .80's, the bulls can still hope to see the 30 and 60 min channels begin to uptick- 10 minutes in this area should be enough to do it.

  Mark Davis   8/9/2004,  2:42:36 PM
Stepping away for about 15 min...

  Linda Piazza   8/9/2004,  2:41:58 PM
And the OEX pauses at the mid-channel level on the five-minute Keltner chart. The OEX hasn't been above that mid-channel level or even made a close approach since early Thursday morning, so even if it's going to eventual push through that level, it's probably going to pull back or consolidate here first. The mid-channel level is at 524.87, near Friday's 524.80-ish support for most of the day, so historical and Keltner resistance line up here. This could be tough resistance for the OEX, although I wouldn't be surprised to see 527 or 530 tested, either, although a test of 530 would probably require more than a day's rally. Bulls who hope to see those higher levels tested now want to see the OEX hold above 524 on any pullback, other than a possible brief piercing of that level. Bears want to see the OEX drop below 523.44 and maintain levels below that.

This could be a rollover point for the OEX, but I'm just not certain that it's through trying to bounce.

  Mark Davis   8/9/2004,  2:39:33 PM
Jim I have dain bramage (get it... "dain bramage"???)
When you have to explain a joke you know it was a real bomb... lol

  Mark Davis   8/9/2004,  2:37:22 PM
Day Trade Exit Point Alert -

Stopped out of SPQTL (SPX Aug 1060 put) @ 8.50, -9.41%

Keep your stops on SPQHN (SPX Aug 1070 call) @ 9.50 (entry = 10.50)
Current spread on SPQHN is 10.60/11.40 so we're in the green by about +5.00%

  Linda Piazza   8/9/2004,  2:32:17 PM
And the Keltner charts prove themselves again. The OEX's bar chart had been showing a potential H&S earlier today while the 15-minute Keltner chart showed that support appeared to be firming, suggesting that a bounce was still likely. We've now had an upside break of the rectangular pattern on the OEX, setting up a potential 525.30 upside target. The OEX is fast approaching the mid-channel level on its five-minute chart, with that level at 524.88, near that upside target from the rectangular pattern. I've been thinking more in terms of the 527- or 530-ish levels stopping any countertrend bounce, but we'll see what happens here, too. The five-minute chart shows that if the OEX can successfully break above and maintain levels above that mid-channel level, that it's creating a breakout situation that could bring it up to test 528.

  Jonathan Levinson   8/9/2004,  2:31:30 PM
QQQ just hit a new session high by a penny, but volume so far is failing to expand. The candle's still printing, and am watching for signs of a breakout. Look for a move above 33 to confirm.

  Jonathan Levinson   8/9/2004,  2:29:30 PM
Note that QQQ's volume is a fraction of what we had seen by this time on Friday- I'm currently showing 58.8M shares so far today.

  Jeff Bailey   8/9/2004,  2:28:44 PM
Don't know if trader's caught that comment just a little while ago from CNBC interview with oil trader at the NYMEX. He mentioned .... "we're trading fibonacci retracement and will have to wait until today's session is completed to get tomorrow's numbers."

He was probably talking about the daily pivot levels.

  Jonathan Levinson   8/9/2004,  2:28:42 PM
GE session high at 32.

  Jonathan Levinson   8/9/2004,  2:28:22 PM
QQQ taking yet another run for the session highs and rising triangle resistance.

  Mark Davis   8/9/2004,  2:28:11 PM
Day Trade Exit Point Alert -

Cinch up your stops on SPQTL (SPX Aug 1060 put) to 8.50 (entry = 9.30)
Cinch up your stops on SPQHN (SPX Aug 1070 call) to 9.50 (entry = 10.50

  Jeff Bailey   8/9/2004,  2:26:26 PM
Amgen (AMGN) $53.88 +0.14% ... OK.... I realize that "pop" to $54.05 came from the buy program.

  Jeff Bailey   8/9/2004,  2:24:56 PM
Buy Program Premium .... SPX 1,068.00

  Jonathan Levinson   8/9/2004,  2:24:38 PM
Another session high for GE here at 31.96. The Dow is benefiting from a thick layer of lipstick sponsored by the move in GE today- but every stock counts.

  Jeff Bailey   8/9/2004,  2:24:07 PM
Day trade short entry alert for ... Amgen (AMGN) $53.95 +0.25%.

  Jeff Bailey   8/9/2004,  2:21:08 PM
Amgen (AMGN) $53.75 -0.09% ... slooooowly sinking right now.

Intra-day correlations between RED #2 and DAILY S1 at $53.40, with Red #3 at $53.11 and DAILY S2 at $52.98.

DAILY Pivot has been serving up resistance at $54.23.

  Jonathan Levinson   8/9/2004,  2:21:08 PM
I agree, Linda. While I'm bullish on oil for fundamental reasons- ineslastic demand, geopolitical, terrorist, and business risk, and other such classic factors- I've been following the news today and it looks just as bad for oil bears as a bull could want. Combined with the fact that oil prices are at levels that qualify for frontpage news, with even my mom discussing it, I'm thinking that we could be approaching some kind of nearterm top for oil. When things look the bleakest (or most bullish) and the news begins to make headlines even in non-financial sources, that's when it's time to begin doubting the move. I'd look for the first daily close below 43 to confirm the first sign of trouble, but until then, the trend remains up and supported by bullish fundamentals.

  Jeff Bailey   8/9/2004,  2:17:36 PM
Whole Foods Market (WFMI) $76.03 +2.06% .... Jeff: I wish i had sold 1/2 my WFMI puts last week. I had bot 6 and sold 3 for a small profit on friday. So the ones I have are essentially "free". Nonetheless (coulda, shoulda, woulda) sold the remaining 3 on friday for as much as 2.20. Now they are 1.25 bid.

Are you still waiting for 71, 61? Hate to lose much more on these. Thanks for the regression chart. I printed it out.

I'm not looking for $61 by August expire, but $71 might be there. It depends so much on market reaction to FOMC tomorrow. Like you, we're holding last put in MM profiles as "free," but if WFMI trades $71, we will be GONE!

  Linda Piazza   8/9/2004,  2:14:58 PM
We have to thank Jonathan for updating us on current crude prices. It's hard to believe that the indices can make too much upward progress with that pressure on the markets, which is why I'm thinking that any bounce, if it occurred, would be a countertrend bounce.

  Jonathan Levinson   8/9/2004,  2:14:28 PM
Session high for GE here at 31.88.

  Mark Davis   8/9/2004,  2:13:03 PM
Day Trade Exit Point Alert -

Cinch up your stops on SPQHN (SPX Aug 1070 call) to 9.60

  Jonathan Levinson   8/9/2004,  2:11:21 PM
Nymex crude currently up .90 at 44.85 from a high of 45.25. Link

  Jonathan Levinson   8/9/2004,  2:10:41 PM
QQQ is again testing secondary rising support at 32.82, with range support to 32.78. If that level breaks, look for a potentially quick run to the session low of 32.65 as the short cycle upphase reverses.

  Jeff Bailey   8/9/2004,  2:08:21 PM
Amgen correction alert looking to short higher at $53.95, not $53.85.

  Linda Piazza   8/9/2004,  2:07:16 PM
The right shoulder on the potential H&S on the OEX's intraday chart now is beginning to be extended way out of proportion to the left shoulder, giving the formation less validity than it had earlier. Perhaps the formation did nothing more than widen the rectangular range of the OEX, so that it now spans the distance from 522.76 up to 524.01. If that's the case, and if there were a downside break, we wouldn't need to know if the formation had been a valid H&S, because a break out of a rectangular formation would have the same 521.50 downside target.

  Jeff Bailey   8/9/2004,  2:06:51 PM
Day trade short setup alert .... Amgen (AMGN) $53.80 +0.01%, on trade higher at $53.95, stop $54.33, target $53.11.

  Jonathan Levinson   8/9/2004,  1:59:11 PM
QQQ is taking another run at horizontal resistance above the rising triangle. Note that the secondary rising support line held on the last test. This is a sign of strength from the short cycle, but once again, 33 QQQ is the first minor test that bulls need to pass: Link.

  Mark Davis   8/9/2004,  1:57:28 PM
Day Trade Exit Point Alert -

Cinch up your stops on SPQHN (SPX Aug 1070 call) to 9.60

  Jeff Bailey   8/9/2004,  1:54:14 PM
September Oil Futures (cl04u) $44.82 +1.97% ... update at this Link

  Mark Davis   8/9/2004,  1:48:37 PM
Potential Day Trade Setup Alert -

I have to agree with Jonathan's earlier sentiment that if it takes this much energy for bulls to sustain a 0.29% move on SPX, then the next move down could be pretty nasty (and very profitable for shorts). I've been waiting for an opportunity to bracket the index with some puts, in addition to the calls we already have in place. I was hoping to do it from the 1068-1068.50 area but am now wondering if I didn't just miss my chance with that last swing high to the 1067.65 area. The 1-min CCI just printed a reading of over -200 from a higher level on the index so there is still hope we will get a higher short entry, or even begin trending higher (I can dream can't I?).

Watching/waiting for a good short entry...

  Jonathan Levinson   8/9/2004,  1:46:24 PM
Bonds continue to drift lower with TNX up 2.8 bps here to 4.245%. QQQ continues to just drift. Interestingly, while the 30 min cycle channel has lost its upward bias, the 60 min channel has only recently flattened and currently has an upward tilt. I believe that we're merely seeing lag in the longer period channel, only now reacting to the morning's bounce. Nevertheless, that slight upward bias should raise the bar for any weak decline in the 30 min channel- in other words, it will take a strong bout of selling to break the combined 30 and 60 min channel supports in the 32.60 area. The current range has narrowed to 32.78-32.90. I continue to await a break of 33 QQQ before considering bullish thoughts, while a break of 32.60 that doesn't bounce back immediately will likely kick off a more powerful drop as it aborts the pathetic 30 min cycle upphase we've seen so far today.

  Linda Piazza   8/9/2004,  1:42:36 PM
The SOX continues to build a doji or near doji just above its 50% retracement of its rally off the September 2002 low.

  Linda Piazza   8/9/2004,  1:41:45 PM
The OEX continues rounding over into the possible shoulder of a potential H&S formation. As it does, however, it rounds down to test 15-minute Keltner support that appears to be firming and perhaps strong enough to support the OEX now, with that support at 522.63-523.01. Will the OEX find support and bounce, negating the potential H&S or will the OEX break through that support and confirm the H&S?

  Jonathan Levinson   8/9/2004,  1:35:15 PM
Nymex crude update at this Link.

  Linda Piazza   8/9/2004,  1:32:19 PM
Arguing against the Keltner evidence in my 13:29 post is the potential H&S being produced today, with the OEX currently appearing to round down from the right-shoulder level. Again, there's mixed evidence here, and it's treacherous to try to trade it. Someone who is trying to trade it could benefit (or maybe not if the OEX just bumps around), but which trader, the bullish or bearish, is that going to be?

  Linda Piazza   8/9/2004,  1:29:16 PM
This slow movement today is allowing the mid-channel and upper-channel Keltner resistance to both drift lower. As I've mentioned before, a prolonged violation of the lower Keltner channel support usually resolves with a touch of the mid-channel level resistance, currently near 524.50-525.20, but sometimes results in the OEX being slung all the way back to the top of its Keltner channel. That resistance line is dropping so quickly--from 532 to 528.50 today, so far--that it will soon coincide with lower resistance, perhaps near 526-527.

Meanwhile, however, Keltner support builds beneath the OEX on the 15-minute chart, at least temporarily looking rather strong and ranging from 522.58-523.39. That suggests at least a bounce attempt. So, perhaps a bounce attempt, perhaps up to 525, with results unknown after that?

  James Brown   8/9/2004,  1:27:20 PM
Dow-component McDonalds (MCD) is not seeing any bounce today and continues to sink under its simple 200-dma after reporting July same-store sales were up 6.4%.

  Jonathan Levinson   8/9/2004,  1:26:34 PM
GE to a new session high of 31.83 just now as QQQ bounces to once again stabilize the 30 min cycle channel. Jim's early call for chop today was right on.

  James Brown   8/9/2004,  1:25:47 PM
Priceline.com (PCLN) is also seeing a continuation of Friday's intraday rebound with a 2.7% rally today. Monday's gain is being fueled by an upgrade to "out perform" by CSFB. Candlestick traders may note Friday's candle was a "hammer" and today's rally should confirm the one-day reversal pattern. Just be careful - oversold bounces haven't been lasting very long in this market.

  James Brown   8/9/2004,  1:21:27 PM
Deere Co (DE) is up 1.9% and bouncing from Friday's gap down after UBS upgrades the stock to a "buy" on valuation.

  James Brown   8/9/2004,  1:16:13 PM
Revlon Inc (REV) is up more than 9% and breaking out from its narrow, seven-week old descending channel. The move is sparked by an upgrade to "overweight" from "underweight" by Prudential.

Rival Estee Lauder (EL) is up 1.8% and bouncing from its simple 200-dma.

Avon (AVP) is up 0.92% and bouncing from the $42.00/100-dma level.

  Linda Piazza   8/9/2004,  1:14:04 PM
The OEX has now been testing the 523.50-ish level, just as it spent the morning testing 524. Resistance appears to have moved down a half point.

  Jonathan Levinson   8/9/2004,  1:13:33 PM
Seeing the 30 min cycle channel losing its slight uptick, back to flat with upper resistance down to 33.02 QQQ and support down to 32.65.

  James Brown   8/9/2004,  1:12:41 PM
Knight Trading Group (NITE) is up more than 6% to $8.81 after announcing that Citigroup would pay about $225 million for NITE's derivative markets business.

  Jonathan Levinson   8/9/2004,  1:12:02 PM
Session high for GE here.

  James Brown   8/9/2004,  1:09:13 PM
Bank of America has cut Sierra Health Services (SIE) from "neutral" to a "sell". The stock is down 4% and cracking technical support at the simple 100-dma and breaking under round-number support at the $40.00 level. This could be an entry point for bearish positions. The next level of support is the $35.00 region near its simple 200-dma. The bearish P&F chart points to a $34 target.

  Jonathan Levinson   8/9/2004,  1:06:54 PM
The 30 min cycle upphase, despite the bullish divergence and synchronous short cycle / 30 min cycle upphase setup, has gone net nowhere this AM: Link . Once again, if it's cost the bulls this much energy to hold a .34% gain on QQQ and the Naz futures, then the next downphase should be a doozy.

  James Brown   8/9/2004,  1:06:31 PM
Ouch! The Wet Seal (WTSLA), an apparel retailer, is down another 20% to $1.94, following an extremely painful drop from $5.00 at the end of July. Volume has been very big. The company reported a drop in same-store sales last week while this morning the company reports that its creative director has resigned.

  Jonathan Levinson   8/9/2004,  1:05:04 PM
CHICAGO (CBS.MW) -- More than 4 million contracts were traded at the Chicago Board of Trade Friday, the third busiest day in terms of volume in the history of the futures exchange, the CBOT said Monday. The exchange also set an all-time volume record in 10-year U.S Treasury note options on Friday, with 652,229 contracts exchanging hands, the CBOT said.

  Jonathan Levinson   8/9/2004,  1:00:27 PM

All I've got is the headline on this story, but that's a long way behind the eightball for the traders in that firm.

  James Brown   8/9/2004,  12:59:49 PM
Smith Barney has upgraded Toys R Us (TOY) from a "hold" to a "buy" and raised its price target from $15 to $22 but shares of TOY aren't moving much up just 38 cents to $16.40. Interested traders can watch for a breakout over resistance at $17.00 but watch out for earnings due out next week.

  Linda Piazza   8/9/2004,  12:56:30 PM
If the potential H&S that I detailed in my 12:43 post is a valid formation, the neckline appears to be at about 522.76. The downside target, if confirmed would be at about 521.50. I don't have much faith in anything meeting a target today, however, and would be careful with positions.

  Jonathan Levinson   8/9/2004,  12:56:15 PM
Current chart of Nymex crude at this Link.

  Jeff Bailey   8/9/2004,  12:54:59 PM
12:50 Market Watch at this Link

  Jonathan Levinson   8/9/2004,  12:54:54 PM
QQQ has broken the lower rising support line of the rising triangle discussed earler, but is so far respecting a secondary rising line on the 100-tick chart Link . Unfortunately, the bulls have managed to go nowhere in over 3 hours of a short cycle upphase and a weak 30 min upphase, and a weak upphase is most often followed by a strong downphase. In this case, that puts the day low of 32.65 on uncertain footing. 30 min channel support is at 32.68, resistance is at 33.07, but so far 33.00 has yet to be tested.

  James Brown   8/9/2004,  12:54:34 PM
If you don't mind someone knowing where, when and how fast you drive Progressive (PGR) is offering 5,000 Minnesotans a chance to pay 25% less for car insurance. During this test concept drivers plug in a data recording GPS monitoring type device into their car and then share it with the company. Sounds to me like something Orson Wells would have written about.

  Mark Davis   8/9/2004,  12:51:23 PM
Stepping away for a few minutes...

  Jeff Bailey   8/9/2004,  12:46:18 PM
September Crude (cl04u) $44.95 +2.27% .... (30-minute delayed) .... contact highs.

  Linda Piazza   8/9/2004,  12:43:54 PM
Is this a H&S top at the top of today's OEX climb, with the head formed of the triple top, or just another formation that will resolve into something else? Link

  Mark Davis   8/9/2004,  12:41:55 PM
Day Trade Exit Point Alert -

Lower your stops on SPQHN (SPX Aug 1070 call) to 9.20

I'm just doing a bit of fine tuning here. SPX 1066 (cash index) is the number I didn't want to see taken out and we came very close with a print just below 1066 that only lasted long enough to make a 1-minute candle, so a stop placed at 9.20 roughly corresponds to an SPX print of 1065.75, at which point risk would outweigh reward IMO.

MACD on the SPX 1-min chart has rolled over and it threatening to cross down. If it does then chances are we'll be stopped out. If instead we get a bullish kiss then we may get some wind back in our sails again... right now we're stuck in the doldrums.

  James Brown   8/9/2004,  12:40:19 PM
Jon has already mentioned the volume news coming from Chicago Mercantile Exchange (CME). Reuters is reporting the same with Friday's volume on the CME hitting 6.3 million contacts, it's second highest day ever. Most of that volume was the CME's Eurodollars futures contract, "which measures expectations for U.S. short-term interest rates and tends to be busiest at times of maximum uncertainty." The spike in volume was a reaction to the disapppointing jobs report. The same article says August volume, thus far, is about 50% above last August, which suggests CME could turn in a pretty strong quarter.

The stock is up $1.23 to $131.14 and breaking out above its simple 40 and 50-dma's and potential resistance at $130.00.

  Jonathan Levinson   8/9/2004,  12:38:27 PM


  Jane Fox   8/9/2004,  12:35:21 PM
Dateline WSJ - Is the oil curse striking again?

Oil shocks have accompanied every American recession over the past three decades. Now, this summer's sharp rise in fuel prices appears to be hampering the current expansion, as shown by Friday's weak jobs report.

Oil shocks helped cost two recent American presidents re-election: Jimmy Carter in 1980 and George H.W. Bush in 1992. The 2004 fuel jolt may threaten Mr. Bush's son's bid for a second term as well. Less than a week ago, George W. Bush was saying, "When it comes to creating jobs for America's workers, we've turned the corner, and we're not turning back." But the news that employers added just 32,000 jobs in July -- the lowest total this year and a sharp deceleration from the spring -- presents the White House with a dilemma: whether to acknowledge trouble (and imply the president's economic measures to date haven't worked so well), or insist the expansion remains on track (and risk appearing out of touch with workers' worries).

With polls showing voters more confident of Democratic challenger John Kerry's economic stewardship, Bush aides are honing a series of economic campaign proposals, discussing everything from simplifying the tax code to adding more tax incentives to expand access to health insurance. Just a few weeks from the Republican convention, President Bush is close to making final decisions on a second-term agenda that will stress economic initiatives under the theme of an "ownership era," according to one adviser.

  James Brown   8/9/2004,  12:32:01 PM
CNBC mentioned that YHOO and Google (GOOG) have resolved their patent dispute. A Reuters article states that the settlement dismisses the patent suit, shows GOOG licensing an Overture patent from YHOO and gives YHOO shares of stock in GOOG.

  Linda Piazza   8/9/2004,  12:31:50 PM
So far, we're seeing the kind of trading conditions that I dread seeing for readers' sakes. One pattern resolves into another, one bullish and the other bearish, or the other way around. The OEX broke below the rising trend off Friday's low, as Keene just noted on the Futures side with respect to another trading vehicle, rose to test the broken trendline, fell back, but then rises again. Along the way, it resolved into various shapes. It's beginning to turn its lowest Keltner channel down again, however, and unless it succeeds in maintaining 523.27 or preferably 523.68, it risks heading down toward 521.98-522.25 to test support again. As I mentioned in my first OEX-related post today, I wouldn't have advised trading this morning's bounce as I view it as a likely countertrend bounce. Be careful out there.

  Jonathan Levinson   8/9/2004,  12:27:09 PM
Session high for gold at 401, +.20. HUI and XAU are recovering from their worst levels of the session, currently down .48% and .51% respectively.

  Jonathan Levinson   8/9/2004,  12:25:42 PM
Crude oil to 44.85 here, just below the session high of 44.925, currently up .90 or 2.05%.

  Jonathan Levinson   8/9/2004,  12:20:36 PM
Following Keene's comments, it's worth noting that the Fed's stance is comprised not just of its overnight rate, but also its position via its open market desk. As Bernanke discussed awhile back in one of his speeches, not just the cost of money but also the supply of money are determinative of monetary policy. The Fed was not accomodative on Friday, actually draining reserves from its 23 primary dealers via its open market ops, and after the wipeout in stocks on Friday, it didn't drain today, but added a very paltry 500M. That tells me loud and clear that equities are not a priority for the Fed- while treasuries, which benefited on Friday and are only slightly softer this morning, probably are.

  Linda Piazza   8/9/2004,  12:11:29 PM
The former possible bearish rising wedge or possible bullish right triangle on the OEX has now resolved into a rectangular pattern roughly from 524 down to 523.29, but be careful, bulls. The two-minute chart shows the OEX gapping down below 523.50, slightly violating the lower support on the rectangle, and now rising to test the 523.50 level again. Was that indeed a bullish right triangle that was instead broken to the downside? As I type, that appears entirely possible, with 523.50 serving as resistance on the retest. I think we're in the process still of discovering whether support will hold or not.

  Jonathan Levinson   8/9/2004,  12:11:11 PM
Bonds fell with stocks there, with the TNX rising back to a 2.2 bp gain at 4.239% as QQQ loses the 32.90 level again. I'm very bearish on the failure to touch 33, let alone surpass it, but it's worth noting the pattern of higher lows since 10AM. That suggests at least a bullish rising triangle for QQQ, possibly the right side of an extended reverse head and shoulders pattern on the 100 tick chart. Placing the resitance lne at the session high of 32.94, we get an implied target of 33.23, inside the confluence zone from 33.15-33.40 discussed earlier. Once again, however, a break of 33.00 is the barest prerequisite for anything bullish. Look for a break to new session highs on expanding volume for the first clue.

  Jeff Bailey   8/9/2004,  12:02:08 PM
12:00 Market Watch at this Link

  Jonathan Levinson   8/9/2004,  11:54:01 AM
GE to a new session high of 31.78 here.

  Mark Davis   8/9/2004,  11:53:58 AM
This is like watching paint dry, but at least we are drifting sloooooooowly higher. It looks like everybody is afraid of their shadow today.

Current spread on SPQHN (SPX Aug 1070 call) is 10.00/11.20 so theoretically splitting the bid (and giving the MM the fat part) would make for an exit price of 10.50... so we're sitting right at break even after 2 hours in this play. No party hats yet... still just twiddling our thumbs. Today's market is quite a contrast from Friday.

  Jonathan Levinson   8/9/2004,  11:51:12 AM
Crude oil is higher, however, up .55 at 44.50 currently, +1.25%.

  Jonathan Levinson   8/9/2004,  11:50:23 AM
Bonds are also stalled, with TNX still up 1.6 bps.

  Jonathan Levinson   8/9/2004,  11:49:02 AM
The current short cycle bounce continues to hold up without making progress. The oscillators are not yet overbought, and there's plenty of room for further upside. However with over 2 hours down since the cash open, bulls have so far managed to run the clock without advancing much, with the first objective of 33.00 QQQ still untested.

  Jeff Bailey   8/9/2004,  11:40:20 AM
Paychex (PAYX) $28.97 -0.85% .... edges to 52-week low.

  Linda Piazza   8/9/2004,  11:37:08 AM
The OEX continues to maintain the levels it needs to maintain to avoid turning its smallest channel lower again. If you're short-term bullish, you see the latest pattern as a bullish right triangle with a flat top and ascending bottom trendline, with that flat top at about 524. If you're short-term bearish, you're seeing that same pattern as a possible bearish rising wedge. I see it as dangerous, as I see trading the OEX to be today.

  Jonathan Levinson   8/9/2004,  11:28:07 AM
Session high for GE here at 31.70, +.57%. The Dow is up .35% at 9849 here.

  Jonathan Levinson   8/9/2004,  11:21:18 AM
Marketwatch is reporting that Friday was the second busiest day in the history of the Chicago Mercantile Exchange, with just under 6.3M contracts trading it. The largest day was May 7th, 2004 with 6.5M contracts' volume.

  Linda Piazza   8/9/2004,  11:19:59 AM
The OEX is maintaining the levels the OEX needs to maintain to keep from turning the smallest Keltner channel lower again.

  Mark Davis   8/9/2004,  11:18:46 AM
Stepping away for a few minutes...

  Jonathan Levinson   8/9/2004,  11:17:37 AM
Both the NYSE and Nasdaq TRINs are in neutral-bullish territory at .77 and .62 respectively- no clues that I see there. As well, the put to call ratio, while still high just below 1.0, is nevertheless off its multiyear-high sustained readings seen on Friday. Again, these readings above .90 are higher than usual and suggest caution for bears, but the signal isn't as clear as we'd want. Again, price is our primary indicator, and it's so-far staying below levels that would suggest that the bulls want to run the ball back up the field.

  Jonathan Levinson   8/9/2004,  11:12:31 AM
QQQ 30 min channel resistance is holding slightly lower at 33.05, support at 32.60.

  Jonathan Levinson   8/9/2004,  11:10:12 AM
Session high for gold here at 400.70, down .10. XAU is down 1.04% at 85.77, HUI down .89% at 182.

  Mark Davis   8/9/2004,  11:10:11 AM
Day Trade Exit Point Alert -

Lower your stops on SPQHN (SPX Aug 1070 call) to 9.50

We have a little wind in our sails now and I don't want to get stopped out of this play.

  Jeff Bailey   8/9/2004,  11:08:58 AM
11:00 Internals at this Link

Various data feeds having trouble with accurate NH/NL indications.

  Jonathan Levinson   8/9/2004,  11:06:30 AM
Just like equities, bonds and gold are flatlined as well, with TNX down up 1.6 bps at 4.232%, down .4 bps from its earlier reported level, while gold is trading 400 even. QQQ is hanging around the 32.90 level. My own feeling is that unless this is a stealth accumulation for equities and distribution for bonds and gold, it's a very weak correction of the powerful moves from Friday. The oscillators are suggesting that it's accumulation, but the price is going to need to at least come close to confirming, which it has yet to do.

  Linda Piazza   8/9/2004,  11:04:51 AM
For the first time today, the OEX has at least temporarily moved back inside the largest Keltner channel, trying to erase that breakdown signal. The OEX now needs to maintain values above 523.27-523.32 on pullbacks, other than a brief piercing of that level.

  Mark Davis   8/9/2004,  11:00:07 AM
Day Trade Exit Point Alert -

Raise your stops on SPQHN (SPX Aug 1070 call) to 10.50 and break even

  Jeff Bailey   8/9/2004,  10:59:24 AM
10:56 Market Watch at this Link

  Linda Piazza   8/9/2004,  10:53:51 AM
The OEX faces that 15-minute Keltner resistance again, from 523.41-524.46. It's leaving upper shadows on its fifteen-minute candles--never a good sign for bullish hopes--but it's also clinging to the Keltner support line it needs to maintain in order to keep from turning its smallest Keltner channel lower again. Mixed signals. That resistance still looks firm, but if the OEX manages to maintain a move above that resistance, Keltner resistance lines thin out. So far, resistance still looks firm.

  Mark Davis   8/9/2004,  10:52:41 AM
It looks as if I accidentally deleted my original long entry post while trying to add an afterthought. Here is the original post...

Day Trade Entry Point A1ert -

Go long now... SPQHN (SPX Aug 1070 call) @ 10.50, stop 10.00

Keep your stops at 10.00. I don't want to risk too much in such an uncertain environment. We will be raising the stops to break even as soon as we get a chance (IF we get a chance)

  Linda Piazza   8/9/2004,  10:50:00 AM
The BIX is poised this morning just above its 200-ema at 342.14 and just below its 100-sma at 343.61, with the BIX at 343.05 as I type. It's dropped slightly below the descending trendline that marked the bottom of its broadening formation on its daily chart. This isn't good news for bulls, although the BIX could still spring higher today, leaving only a candle shadow below that trendline. The MACD is just rolling below signal, however.

  Linda Piazza   8/9/2004,  10:46:36 AM
Thanks again, Jonathan, for the crude chart. (See Jonathan's 10:40 post.)

  Jonathan Levinson   8/9/2004,  10:44:46 AM
Here's a fresh view of the 30 min Nasdaq futures chart from earlier this AM. Link The bullish divergence on the 300 min stochastic is intact and there's a confirming cross from the Macd. But again, the picture will continue to look very frail to me until at least 33 is broken, and it would be prudent to look for confirmation with a break of 33.15 QQQ before believing any upside we may be seeing this AM. Given the status of the 30 min and daily cycle oscillators in oversold territory, there should be plenty of room to the upside if this bounce attempt is going to work out.

  Linda Piazza   8/9/2004,  10:41:20 AM
The OEX keeps getting turned away at nearest 15-minute Keltner resistance, now at 523.49-523.84, with close resistance just above that at 524.65. Short-term bulls want to see the OEX maintain 523.08 on pullbacks.

  Jonathan Levinson   8/9/2004,  10:40:31 AM
Here's an up-to-date 2-day chart of crude oil, Linda: Link

  Linda Piazza   8/9/2004,  10:38:58 AM
Crude continued higher after Jonathan's 10:01 post about prices, at $44.68/barrel as of 30 minutes ago. A couple of benchmarks to watch are the 13:00 8/06 high of $44.65, just exceeded as of 30 minutes ago, and the 3:15 8/06 high of $44.77.

  Jeff Bailey   8/9/2004,  10:38:47 AM
QQQ $32.87 +0.45% .... with new WEEKLY Pivot retracement at this Link

  Jonathan Levinson   8/9/2004,  10:37:15 AM
The 30 min keltner channel is rising for QQQ as well as for the Dow and Nasdaq futures, with resistance up to 33.08 here, now lining up with still-descending 60 min channel resistance. The inability of QQQ to even make it to 33.00 is very bearish, however, and regardless of where the daily and shorter cycles want to go, it remains a bearish trending move below 33.00.

  Linda Piazza   8/9/2004,  10:27:37 AM
The OEX faces the Keltner resistance on its 15-minute chart, with that resistance now from 523.57-523.90, and again at 524.91. After that, resistance is more widely spaced, with resistance at 527.16 and again at the firmer-appearing 530-532 range. The five-minute chart shows that the OEX ideally (if thinking short-term bullish) needs to maintain 523.02 on pullbacks.

  Mark Davis   8/9/2004,  10:23:15 AM
The good news is there was plenty of time for us to establish a long position.

The bad news is we are going nowhere fast... not the way I like to see a play start, but things can (and probably will) change in an instant. I just hope we picked the right direction.

  Linda Piazza   8/9/2004,  10:23:14 AM
In my 23:09 post, I mentioned that the SOX had ended Friday at its 50% retracement of the rally off the September 2002 low. I mentioned that this number could be a powerful support. It's one that many will be watching, too, one that aggressive buyers might be willing to buy. This morning's trading shows the SOX trying to steady at that level, creating a small-bodied candle just above it. As I also mentioned in that post, my descending regression channel--drawn a little differently than that of some other writers--shows vulnerability down toward 380 before hitting the bottom of the channel. Others show that it's already hit the bottom of their channels. I'm still watching the SOX for guidance as to behavior on the tech-related indices anyway.

  Jonathan Levinson   8/9/2004,  10:22:59 AM
QQQ is back to its prior range, still within the flat 30 min channel. The higher wavelet low strengthened the short cycle upphase and has given the broader channel a slightly upward bias, with resistance rising to 33.02 and support still at 32.60. This chop will need to get resolved, and while all the oscillators from short cycle up to daily are looking for an upphase, the weekly cycles are in gear to the downside. If there's a drop from here, it will be a trending move caused by the weekly downphase- but ideally the daily and shorter cycles should have some sort of bounce here, either sideways/corrective or something stronger. A break of 33.15 is the first confirmation, and if 33.40 QQQ breaks, we'll know that the upphase is stronger and more meaningful.

  Jeff Bailey   8/9/2004,  10:22:47 AM
Stillwater Mining (SWC) $12.79 -2.66% Link .... today's trade at $13.00 is a double bottom sell signal and now has bearish vertical count to $9.00.

Will look to sell 6 Sept. $15 covered calls on any bounce back near $15.00.

  Linda Piazza   8/9/2004,  10:19:07 AM
The OEX is still in breakdown mode on the 15-minute Keltner chart, not yet able to maintain values needed to change that mode. The first condition is that it needs to maintain values above the line currently at 522.95, just to stop the downward slant of its smallest channel. The second condition is that it needs to climb above and maintain values above 524.54. Conditions are less stringent on the five-minute chart, requiring that the OEX maintain values above 523.71.

  Linda Piazza   8/9/2004,  10:11:51 AM
The OEX hasn't quite decided whether five-minute Keltner support is going to hold or not. That support now is near 521.85.

  Jeff Bailey   8/9/2004,  10:11:06 AM
Current OPEN MM Profiles at this Link

  Mark Davis   8/9/2004,  10:11:00 AM
Potential Day Trade Setup Alert -

Long signal developing... stand by

  Jonathan Levinson   8/9/2004,  10:08:25 AM
The drop stabilized above the lower 30 min Keltner support of 32.60, bouncing from 32.65. The failure to tag either the upper or lower channel boundaries suggests chop- looks like Jim's earlier call was correct.

  Mark Davis   8/9/2004,  10:06:54 AM
Drrrrrrrrrrrrrrrrrr (that's a cyber drum roll)

  Linda Piazza   8/9/2004,  10:05:11 AM
That 524-ish resistance from the 15-minute chart did prove too firm for the OEX to push through, as I suspected that it would. Nor has the OEX been able to maintain levels above 522.86, a level that would have kept the smallest channel on the five-minute chart pointed higher. On that five-minute chart, support is trying to firm at 522.08. If the OEX can hold that support, other than a brief piercing, it can avoid turning that channel lower, but the OEX's behavior is erasing any plus signs on the bullish side of the page. Note: The OEX dipped below that support as I typed.

  Jonathan Levinson   8/9/2004,  10:04:59 AM
QQQ's short cycle is rolling over from the mid-point- never made it to overbought territory.

  Jeff Bailey   8/9/2004,  10:04:45 AM
10:00 Market Watch at this Link

  Jonathan Levinson   8/9/2004,  10:03:04 AM
Session low for Naz futures, QQQ and INTC. QQQ now down a cent at 32.71.

  Jonathan Levinson   8/9/2004,  10:01:57 AM
Upside surprise for wholesale inventories, +1.1%.

  Jonathan Levinson   8/9/2004,  10:01:34 AM
Crude oil at session high of 44.30 here, +.35, ditto gold at 400.50.

  Mark Davis   8/9/2004,  10:00:24 AM
Today I'm not really trusting anything because anything is possible... There are lots of hungry sharks swimming around looking to regain some of last week's staggering losses. If you decide to take a dip today keep your eyes peeled and your antennae fully extended. A little shark repellant wouldn't hurt either. ^^^^(:o^^^^

  Jonathan Levinson   8/9/2004,  9:59:50 AM
Still no cues from the 30 min cycle channel which remains flat at current levels. Resistance 33.00, support 32.60.

  Jonathan Levinson   8/9/2004,  9:57:47 AM
Wholesale inventories due in 3 minutes, est. +.6%.

  Jonathan Levinson   8/9/2004,  9:57:26 AM
The Fed has announced a 4.75B overnight repo, which results in a small 500M net add against the 4.25B expiring. Looks entirely neutral to me.

  Linda Piazza   8/9/2004,  9:54:34 AM
Not much of an OEX pullback during the typical first pullback of the day, a plus for bulls. The OEX is now rising to test that 524-525 first Keltner resistance on the 15-minute chart. That resistance looks firm, especially just over 524. It doesn't look as if the OEX should be able to get over it on the first approach, at least.

  Jonathan Levinson   8/9/2004,  9:52:58 AM
Awaiting word from the Fed as to its expiring 4.25B weekend repo. The announcement is due any minute.

  Jonathan Levinson   8/9/2004,  9:43:28 AM
QQQ's bounce this AM is pushing upper 30 min channel resistance of 33, close enough to have halted the 30 min channel downphase. That channel is currently flat, and if the price can hold these levels or better for the next 10 minutes, the channel will turn up.

  Jeff Bailey   8/9/2004,  9:42:13 AM
S&P 500 (SPX.X) with updated weekly pivot retracement at this Link

Little "zone" of resistance right in here, where I think a bounce into FOMC comes just below WEEKLY Pivot and above MONTHLY S1.

  Linda Piazza   8/9/2004,  9:41:12 AM
It's too early to tell much of anything, but the OEX is laboring up above the first Keltner resistance on the five-minute chart, moving up toward that shown on the 15-minute chart. That's about where I expected the OEX to get before the first retracement of the day, so if it's not up to that 524-ish zone in the next couple of minutes, it will actually not have quite met my expectations for the first few minutes.

  Jonathan Levinson   8/9/2004,  9:38:54 AM
Bonds are weaker this AM, with the TNX up 2 bps to 4.237%. So far, the correction of Friday's move has equities higher, metals and foreign currencies lower, bonds lower and the USD Index higher.

  Linda Piazza   8/9/2004,  9:35:11 AM
If the OEX makes it past 523.27, shown as first resistance on the five-minute Keltner chart, perhaps-more-significant resistance waits from 524.22-524.82 on the fifteen-minute chart. If the OEX makes it up to that resistance before the first retracement of the morning, typically beginning in a little less than 10 minutes, that or the 523.27 level would be an appropriate place from which the first pullback could begin. The depth of the pullback, if any, would tell us about strength or weakness.

  Jonathan Levinson   8/9/2004,  9:34:45 AM
Second that, Linda- I can't find the number or release time either but will dig for it.

  Linda Piazza   8/9/2004,  9:32:11 AM
I don't know if Jonathan has mentioned it already, but today sees Kansas City's Manufacturing Index for July, with June's number at 26. I'm not sure when that number will be released and have been unable to locate the information.

The OEX opens and rises toward first Keltner resistance on the five-minute chart at 523.27.

  Jonathan Levinson   8/9/2004,  9:27:42 AM
Yes. Welcome back, Keene.

I did the right thing and picked up an uniterruptable power supply on Friday night, and so my system should be now be stable. I've been getting 3-5 brownouts per day here, and the little beep from the battery backup sounds like sweet music.

  Linda Piazza   8/9/2004,  9:15:34 AM
Futures held up well last night when the Nikkei opened negative and dropped heavily into the first few minutes of trading. Then they climbed when the Nikkei did, although the Nikkei was climbing from very negative numbers to less negative ones, never turning positive. That's the way we expect futures to behave if we're being set up for a bounce. Only after the information about the workers killed at a nuclear power plant in Japan (due to a release of steam) hit the airwaves and after the European markets' weakness became clear after their openings did the futures drop. Now they're trying to recover. This does set up the possibility, without offering proof, of course, that the markets could attempt a countertrend bounce. Only adept scalpers should venture in with long positions, I believe, even though rallies off oversold conditions can be sharp and profitable to trade. They can also falter just after they've begun, and you never know which is going to happen. It depends on the fortitude of shorts, among other factors. Anyway, let's sit back and watch the opening, seeing if a bounce can really get started, and then watching for signs of a rollover at one of the previously mentioned (my 23:09 post) resistance levels, either later today or later this week.

  Jonathan Levinson   8/9/2004,  9:10:59 AM
Nymex crude oil is strong this AM ( Link ), and strength in oil has so far been proving lethal for equities. On the other hand, the 300 minute stochastic on the 30 minute Naz futures chart (proxy for QQQ using overnight data) at this Link shows a bullish divergence confirming on the bounce this AM. Now, we saw numerous such divergences fail last week, and in every case last week, the key resistance levels listed as minimum confirmation levels for a bounce would have kept patient bulls from stepping in front of what proved to be a speeding train to the downside. This morning, that confirmation level is 33.15 QQQ. First resistance on this bounce is 33.00, but anything more than a sideways 30 min upphase (ie a 30 min cycle that would actually be tradeable to the upside) will have to pass 33.15 QQQ. Friday's range has confluence to 33.40, but traders eager to jump in would look for a strong cross of 33.15 with a tight stop to catch a move up in the 30 min cycle that would have a decent chance of reversing that oversold daily cycle to the upside. If 33.15 can't be more than tickled by a sideways 30 min cycle upphase, then it's more likely that there's more downside to follow.

  Jonathan Levinson   8/9/2004,  8:58:43 AM
Nymex crude oil is strong this AM ( Link ), and strength in oil has so far been proving lethal for equities. On the other hand, the 300 minute stochastic on the 30 minute Naz futures chart (proxy for QQQ using overnight data) at this Link shows a bullish divergence confirming on the bounce this AM. Now, we saw numerous such divergences fail last week, and in every case last week, the key resistance levels listed as minimum confirmation levels for a bounce would have kept patient bulls from stepping in front of what proved to be a speeding train to the downside. This morning, that confirmation level is 33.15 QQQ. First resistance on this bounce is 33.00, but anything more than a sideways 30 min upphase (ie a 30 min cycle that would actually be tradeable to the upside) will have to pass 33.15 QQQ. Friday's range has confluence to 33.40, but traders eager to jump in would look for a strong cross of 33.15 with a tight stop to catch a move up in the 30 min cycle that would have a decent chance of reversing that oversold daily cycle to the upside. If 33.15 can't be more than tickled by a sideways 30 min cycle upphase, then it's more likely that there's more downside to follow.

  Jonathan Levinson   8/9/2004,  8:23:32 AM
We had an overnight bounce in the futures that got sold when Europe opened and is now recovering, with ES +1.5 to 1064.75, NQ +4.50 at 1322 and YM +5 at 9804. QQQ is up .11 at 32.83. Gold is down 1.60 to a session low of 399.20, with euros also at a session low of 1.2242. Nymex crude is down .075 at 43.875.

We await the 10AM release of wholesale inventories for June, est. .6% (prior 1.2%).

  Linda Piazza   8/9/2004,  6:57:02 AM
Good morning. In its first day of trading after last Friday's disastrous U.S. non-farm payrolls number and ahead of this Friday's Cabinet Office report on the Japanese economy, the Nikkei opened 150 points below Friday's close and dove below 10,750. At its low, it had lost 235 points. Exporters led the early declines. Toyota, Sony, Advantest, Canon and Tokyo Electron numbered among the declining exporters in early trading. Bucking the trend was UFJ Holdings with Sumitomo Mitsui Financial Group rumored to be planning an offer for UFJ as soon as this week, according to one article. Also gaining was Mitsubishi Motors, gaining 8.8% by the close after reports of some of its restructuring plans.

After hitting that low of the day within the first 30 minutes of trading, however, the Nikkei climbed the rest of the day, erasing some of the losses and closing lower by 63.87 points or 0.58%, at 10,908.70. June's private-sector machinery orders number was released in the afternoon session, showing that those orders rose a stronger-than-expected 3.9% in a seasonally adjusted figure. Expectations had been for only a 0.4% rise.

Just after the close of the market, an incident at a nuclear plant in Fukui killed five workers and injured many others. Steam was released in the incident, killing the workers but not releasing any radiation, according to one report. Japan depends on nuclear power to meet one-third of its power needs, according to the same article, but animosity toward the nuclear power plants has been building recently, and it's possible that this event could weigh on markets already pressured by rising fuel costs.

Other Asian markets turned in mixed performances. The Taiwan Weighted was flat, gaining 0.01%, but South Korea's Kospi gained 1.11%. Singapore's Straits Times lost 0.67%, and Hong Kong's Hang Seng declined 0.09%. Although the exact timing of the release of China's industrial production number for July wasn't known last night, and I couldn't find information about its release this morning, the number could be released any time. Market watchers speculate that production may have risen 15.9%, below June's 16.2% rise, indicating a slowing of the growth China's economy. China's Shanghai Composite gained 0.39%.

Currently, European bourses are tumbling, with some a few points off their just-reached lows of the day. Economic numbers this morning showed that Italy's Q2 economic growth rose 0.3%, less than the growth in the previous quarter. Also, although that nuclear incident occurred after Japanese markets closed, it impacted European markets.

Automakers and technology companies traded lower. Insurers tumbled, with JPMorgan Chase & Co. and Lehman Brothers both trimming reinsurer Munich Re's stock price target. Munich Re is the world's largest reinsurer, according to one report. Some banks in Europe and the U.K. traded lower, with developments including Commerzbank's decision to stop talks to acquire a German commercial bank from ING. In stock-specific news, British Airways announced that it would more than double a surcharge imposed on long flights in an effort to recoup some of the costs from rising fuel prices. The company also announced earnings that slightly beat expectations, but it had dropped 6.3% at one point earlier. Also reporting earnings was Dutch telecom KPN, with that company faring better than British Airways and gaining after its earnings report. Morgan Stanley commented, however, that revenues on mobile and fixed lines were lower than expected.

As of this writing, the FTSE 100 trades lower by 42.50 points or 0.98%, at 4,295.40. The CAC 40 trades lower by 43.47 points or 1.23%, at 3,485.46. The DAX trades lower by 55.26 points or 1.48%, at 3,672.48, below the much-watched 3,680 level.

  Linda Piazza   8/8/2004,  11:09:08 PM
All morning Friday, I kept expecting an OEX bounce that might begin anywhere from Thursday's closing level to 524. Didn't happen. Although I frequently mentioned my uncertainty about the bounce, the possibility that the OEX would instead fall down to 520-522 instead before bouncing, and the fact that any such bounce would likely be a countertrend bounce that would roll over again, I still thought the bounce would likely come and the downside was probably too limited to commit to a bearish play. When the OEX finally broke out of its bearish right triangle, I commented that the OEX was following through just as it should on bearish developments, and that we should treat that breakdown for the bearish event that it was, but still felt the downside could be limited and didn't feel comfortable suggesting bearish plays. Wrong again. I saw the possibility for the event that happened, but just didn't feel that it was the high odds development.

Here's the chart that suggested that it was possible that the OEX could drop to 520-522, an event that did happen: Link As you can see from the annotations on the chart, I'm again questioning whether the OEX is likely to bounce or continue its drop without bouncing first. The chart notes some conflicting evidence, such as bullish price/MACD divergence, but then a bearish MACD cross that threatens to break below the trendline of higher lows.

Is there anything on other indices that might give us a clue as to likely direction? When I turn to the SOX, I note that Friday the SOX came within a few cents of the 385.40-ish level that's the 50% retracement of the rally off the September 2002 low. That 50% retracement level can be a powerful one, and one that often produces a bounce, so there's at least the possibility if not the probability of a SOX bounce. I've got my SOX descending regression channel drawn a little differently than some draw theirs and I note the possibility that the SOX could descend down to 380 or slightly below before hitting that bottom support. Of course, there's always the possibility of the SOX violating that channel, and perhaps drifting down toward 370-375-ish support before steadying, but the near confluence of Friday's low, the 50% rally retracement and the bottom of that descending regression channel make a bounce seem possible from near Friday's closing level down to 380. The TRAN appeared to slightly violate its descending regression channel, but ended Friday less than 10 points above its 200-sma. Like the SOX, then, the TRAN ended the day with a slight vulnerability to a move lower before hitting likely strong support. The BIX ended a little more than a point above its 200-sma, and produced a candle that's a possible reversal signal, but offered conflicting evidence, too. The BIX's formation has been a broadening one, usually indicative of a bearish eventual outcome, so any climb should be suspect, and treated as if the BIX might fail from that climb at any moment.

The Dow ended only a few points away from possible support near 9800, although the Dow's descending regression channel and the presence of the 200-week sma and ema's from 9649-9678 suggest that the Dow could have near-term vulnerability down to that level, too. The Nasdaq broke out of its descending regression channel and its daily candle seemed to be hanging out in space, but it could be argued that there's some slight weekly support near Friday's close. The 38.2% retracement of the Nasdaq's rally lies near 1755, near stronger historical weekly support, so it may be that the Nasdaq also has some vulnerability to lower values before reaching steadier support, but could steady anywhere between Friday's close and 1750.

Like the OEX, the SPX appeared to hit the bottom of its descending regression channel exactly. It ended the week just below the 1068-1069 level that was the 38.2% retracement of the bear-market decline, but near support that extends down toward 1058.50. So the SPX also looks as if a bounce is possible, either from the current level or from a few points lower.

Several indices either reached or nearly reached possible support levels Friday. Several have vulnerability to slightly lower levels before reaching next possible firm support. That sets up the possibility of a bounce beginning first thing tomorrow morning or else a continued slight pullback to next support before we know if that next support will hold and produce a technical or oversold bounce. As I type, the futures are holding up well although the Nikkei drops. Perhaps the SOX will be key to watch.

What do Keltner charts show as possible for the OEX? The weekly chart shows that the OEX was not able to maintain the 539 channel line currently needed to halt the descent of the smallest Keltner channel. It has turned below the mid-channel line. That gives a short-term bearish view, although the OEX could redeem itself by moving above that basis line on a weekly basis. One weekly channel line just beneath the OEX crosses at 520.58, but it's turning down and might not provide support. If the OEX's smallest weekly Keltner channel can't be turned higher again, the downside target is 497.55. Since the P&F downside target is 492, there's fair correspondence there. That's the weekly view, giving the bearish viewpoint a slight edge, although the slide isn't yet unstoppable.

The daily chart shows bullish price/MACD divergence, as mentioned earlier, but no Keltner-style bullish divergence. The OEX is threatening to create a breakdown signal on that chart--may have already done so--that gives a downside target of 502. The OEX needs to climb and then sustain levels over 533.94 to stop the downside movement of the smallest daily channel, but even if the smallest channel is turned higher again, the daily charts suggests that there's significant resistance in the 541-543.50 level. I don't think we have to worry about the 541 level Monday, however. Five- and 15-minute charts show other resistance.

Both five-minute and 15-minute charts show the OEX to be oversold short-term and vulnerable to a bounce at any time, but don't predict when that bounce would occur. Both charts also show a possibility of the OEX declining further, fitting with the premise that it could decline a few more points along with other indices before attempting a bounce.

After Friday's decline, the OEX 524.50-525 zone looks like significant first resistance on the 15-minute chart, with the line currently at 523.18 having stopped advances all day Friday. A sustained move above that line (with its location changing as the day progresses) will mark a change in tenor. On the five-minute chart, the blue channel is below outside the wider channel, and it will take a sustained movement over 523.63 to move that blue channel back inside, so that 524.18-523.63 level looks important on both charts. The mid-channel level on the five-minute chart is at 527.48, but is still descending quickly. From an examination of these charts and various Keltner lines on them, it appears that 524-525 might be significant resistance, then, but it might be possible for the OEX to rise to test 526-527, the May and July lows, or that it might even rise the 530-532 level if a bounce could be sustained for more than a day.

Those hoping for a bounce (either to play a risky countertrend long or for an opportunity to enter a new bearish trade) should first watch for the OEX to sustain values above 523.63 and hopefully above 524 early Monday morning. Those numbers will change as trading begins and Keltner lines move, but that's where they are now. That will turn the OEX's smallest channel up toward next resistance at 525.78, and then toward the mid-channel level at 527.48 if that next resistance can be surmounted and the level then maintained. Those in countertrend bullish plays should first make plans to protect profits in the 524 zone, and then at 526-527, and then as the OEX nears 529-531.

What if the OEX instead drops Monday morning? We know from several time frames that there's vulnerability to 497-502. Although I clearly see that vulnerability and have seen it since February when the OEX first began showing signs of bearish divergence, Keltner style, on the weekly chart, its possible that the OEX could find support in the 517-521 area, the top of a zone in which the OEX traded from August until late November last year. Again, the SOX might be key, as breakdown out of its descending regression channel and immediate an deep plunge might signal that other indices will follow where it's led. As of this writing, however, I still feel less comfortable about a bearish entry near currently levels than I would after a bounce and rollover.

  OI Technical Staff   8/8/2004,  10:20:11 PM
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