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  Jeff Bailey   8/16/200,  5:54:06 PM
Pivot Matrix for tomorrow at this Link

  Jeff Bailey   8/16/200,  5:18:45 PM
e-mini NASDAQ-100 (nd04u) ... settled 1,322.00, trading flat. (10-minude delayed)

  Jeff Bailey   8/16/200,  5:16:19 PM
e-mini S&P (es04u) ... settled at 1,077.50, trading 1,076.75. (10-minute delayed)

  Jeff Bailey   8/16/200,  5:11:17 PM
September Unleaded Gas futures (hu04u) $1.30 .... edging below Monday's low of $1.302.

  Mark Davis   8/16/200,  4:39:55 PM
Final thoughts...

Today was a tough day unless you were long over the weekend and that seemed more like gambling than trading on Friday afternoon. We waited to get long on a retracement that never came so that left only scalping opportunities.

Tomorrow we start with a clean slate again and will assess which direction seems most likely after the opening bell. I did notice when studying past "b" distribution patterns that when there was a strong move up off the bottom of the bulb (SPX 1060), the next day was often a consolidation day with a slight downward bias. Keene's EW analysis of today's action seems to support this, along with other writer's commentary that we're nearing resistance, so my bias at this point is DOWN for tomorrow and I'll be looking for an opportunity to get short for a quick scalp trade. My bias for the slightly longer-term is still UP. Past "b" distribution patterns, especially the two that most closely resemble the current pattern have provided for excellent long plays so we may be looking at SPX Sept calls in the near future. Link

  Jeff Bailey   8/16/200,  4:29:20 PM
Closing Internals at this Link

  Jeff Bailey   8/16/200,  4:19:35 PM
QQQ goes out at $32.89 +1.12% ....

  Jeff Bailey   8/16/200,  4:16:23 PM
Current OPEN MM Profiles at this Link

Today's Activity ...

Stopped out of bearish day trade carryover in General Electric (GE) at $31.92 offer ($-0.16, or -0.50%).

Swing trade long Dollar Tree Stores (DLTR) $23.25 at the offer, stop $22.90, targeting $23.90.

  Mark Davis   8/16/200,  4:08:34 PM
Recap of Monday's trades (08-16-04)...

SPQTN (SPX Aug 1070 put) @ 4.50
SPQTN (SPX Aug 1070 put) @ 4.00, -11.11%

SPQTO (SPX Aug 1075 put) @ 5.40
SPQTO (SPX Aug 1075 put) @ 6.00, +11.11%

SPQTO (SPX Aug 1075 put) @ 4.40
SPQTO (SPX Aug 1075 put) @ 4.90, +0.50, +11.36%

Total gain/loss for Monday = +0.60, +11.36%
Total gain/loss for the week = +0.60, +11.36%

Total gain/loss since inception (07-29-04) = +18.45, +165.34%

  Mark Davis   8/16/200,  3:59:42 PM
Potential Day Trade Setup Alert -
Cancel long play... SPQIP (SPX Sept 1080 call)

We missed our entry back at SPX 1077.40 and it's too chancey to hold overnight without a cushion IMO.

  Linda Piazza   8/16/200,  3:58:08 PM
Subscriber T.G. sent along this chart of the SOX: Link Thanks, T.G.

  Mark Davis   8/16/200,  3:54:49 PM
Day Trade Exit Point Alert -
Stopped out... SPQTO (SPX Aug 1075 put) @ 4.90, +11.36%

  Jeff Bailey   8/16/200,  3:54:31 PM
Wal-Mart (WMT) $54.23 +1.61% .... gets a trade at WEEKLY R1.

  Linda Piazza   8/16/200,  3:53:58 PM
The SOX did not exactly zoom higher today, coming nowhere near a retest of the 50% retracement of its rally off October 2002 lows, with that number near 385-386. The Nasdaq, however, did bounce off its 38.2% retracement of that same rally, with that retracement level near 1756-1757.

  Linda Piazza   8/16/200,  3:51:00 PM
I wouldn't be surprised to see another slight OEX push up either this afternoon or early tomorrow morning, either into a lower high or maybe even up to that 530-531 level after all. If it weren't for all the various permutations possible on crude costs, I'd have felt fairly comfortable suggesting a short position once the OEX hit 527 for those who didn't mind a wide stop. However, there are all those various permutations as to what could happen to crude costs due to many geopolitical uncertainties, including but not limited to Venezuela, Yukos, unrest in Iraq, the U.S. government's stockpiling of crude, possible election outcomes, etc. If crude costs continue dropping, the OEX and other indices could be supported through tomorrow.

  Mark Davis   8/16/200,  3:49:37 PM
Potential Day Trade Setup Alert -
Considering a long play... SPQIP (SPX 1080 call)

  Jonathan Levinson   8/16/200,  3:47:34 PM
The 30 min cycle oscillators for QQQ are rolling over here, with channel support holding at 32.92 but no longer rising. Below 32.92 is support at 32.84. Note, however, that the short cycle oscillators are approaching oversold territory. I don't expect them to stem a fresh 30 min cycle downphase, but that could explain the choppy, uncertain feel to the selling here.

  Linda Piazza   8/16/200,  3:43:32 PM
The OEX's smallest Keltner channel has turned back within the widest channel on the five-minute chart, with that smallest channel turning lower again.

  James Brown   8/16/200,  3:42:05 PM
The 2.66% rally in the DJUSHB home construction index is pushing the index through technical resistance at its simple 100 and 200-dma's.

  Linda Piazza   8/16/200,  3:41:09 PM
If you compare the OEX's 8/10 high of 528.52 and today's high of 528.08, you notice that 15-minute MACD was higher today than at that slightly-lower/almost-equal 8/10 high. That's bearish divergence, but bearish divergence that can be erased if the OEX's prices push higher than that 8/10 high. It serves as a warning only that it took a lot of energy to push the OEX up to today's high, more than it took to push it up to the 8/10 high. During the recent decline, we saw days when bullish divergences were being signaled for more than a day before a reversal occurred, and that could happen the opposite way now: bearish divergences signaled while the reversal does not come immediately and the OEX continues to climb. For now, however, the 527-528.50 level has proven strong enough to at least stall the OEX, even though the Keltner channels had suggested that it had the possibility of moving up toward 530-531. That's why I mentioned earlier that the 527-528.50 level's possible resistance should not be discounted.

I still wouldn't be surprised to see the OEX level off somewhere between the current level and 525.50, and then attempt another rise, perhaps to a lower high.

  James Brown   8/16/200,  3:40:36 PM
Speaking of channels the XBD broker-dealer index appears to be breaking out through the top of its descending channel. A move through the 120-122 level and its simple 50-dma would be a confirmation of the breakout.

  Mark Davis   8/16/200,  3:40:29 PM
If we can take out that last swing low @ 1077.39 we may have a nice play going here. 1-min MACD is threatening to cross down below the 0 line.

  Jonathan Levinson   8/16/200,  3:38:27 PM
Ecbot e-mini gold is still testing the 405 resistance level, up 3.5 at 404.70 here. The miners have advanced, however, with HUI now up 1.98% at 193.57 and XAU up 1.47% at 89.13.

  James Brown   8/16/200,  3:38:11 PM
Today is the second bounce from the simple 200-dma in the Dow Transports in two weeks. Maybe this one will stick. The group appears to be in a new six-week old descending channel. A push through 3100 would be a breakout through the top of the channel. The index is up 73 points to 3040.

  James Brown   8/16/200,  3:36:19 PM
It may be time to exit the SYMC call play. The stock is not participating in today's rally and the current consolidation doesn't look healthy.

  Mark Davis   8/16/200,  3:34:37 PM
Stepping away for a few minutes...

  Jonathan Levinson   8/16/200,  3:32:26 PM
The 30 min QQQ channel is flattening here. If QQQ holds at or below the 33.05 level for another 10 minutes, we should see the channel begin to tilt down.

  Mark Davis   8/16/200,  3:28:42 PM
Day Trade Exit Point Alert -
Cinch up your stops... SPQTO (SPX Aug 1075 put) to 4.90

  Linda Piazza   8/16/200,  3:28:26 PM
So far, the trendline shown on the OEX's 60-minute chart in my 14:45 post is holding as resistance. Now the OEX drops down to the trendline that has been supporting its prices since about 10:40 this morning . . . and drops through it as I type. It's headed down toward its 30-minute 100-ema, currently at 525.91. Bulls want to see the OEX hold above that average except possibly for a brief piercing that's quickly (within that same 30-minute period) reversed.

  Jonathan Levinson   8/16/200,  3:26:27 PM
Session low for INTC here at 21.48.

  Mark Davis   8/16/200,  3:24:48 PM
Day Trade Exit Point Alert -
Cinch up your stops... SPQTO (SPX Aug 1075 put) to 4.40 and break even

We're going to follow this one down so get ready to cinch up your stops again.

  Mark Davis   8/16/200,  3:21:11 PM

  Mark Davis   8/16/200,  3:20:29 PM
SPX 1-min b-bands are getting pinched pretty tight. We should know very soon which way this is going to break.

  Linda Piazza   8/16/200,  3:19:02 PM
The OEX's five-minute chart shows nearby resistance building: the 15-mintue chart shows support building from 526.50-527.20.

  Jeff Bailey   8/16/200,  3:18:22 PM
Dollar Tree Stores (DLTR) $23.25 +3.51% .... still well off its WEEKLY R1 of $23.94, finds some buyers at WEEKLY Pivot ($23.11)

  Mark Davis   8/16/200,  3:18:01 PM
We really need to stop the upward progress here and then take out the last swing low @ SPX 1079, below which I would breathe a little easier. If that doesn't happen pretty soon I'm going to consider exiting this trade.

  Jeff Bailey   8/16/200,  3:17:28 PM
Wal-Mart Stores (WMT) $54.17 +1.44% .... challenging its WEEKLY R1 ($54.23)

  Jeff Bailey   8/16/200,  3:16:42 PM
Family Dollar Stores (FDO) $26.64 +4.06% .... makes its way above WEEKLY R2 ($26.60)

  Jeff Bailey   8/16/200,  3:14:31 PM
03:00 Internals at this Link

  Linda Piazza   8/16/200,  3:09:22 PM
The OEX's 10-dma is at 527.38, with the OEX currently at 527.33.

  Mark Davis   8/16/200,  3:06:34 PM
Day Trade Entry Point Alert -
Go short now... SPQTO (SPX Aug 1075 put) @ 4.40, stop 4.00

  Jonathan Levinson   8/16/200,  3:06:12 PM
The 30 min channel upphase for QQQ has been relentless today, and it's still holding its upward bias even as the short cycle pulls back below 33.20. Channel support is up to 32.93, resistance still 33.22, but despite the strength I would be wary of a move back to the 33 level. The 30 min cycle oscillators have delivered a strong (nearly 2%) move in price for QQQ, but they're overbought here. A downturn in the 30 min channel would likely kick off a cycle downphase from overbought.

  Linda Piazza   8/16/200,  3:05:55 PM
We see another likely bull flag on the OEX's five-minute chart, but it's meeting testing resistance that's building on the Keltner chart at 527.52, and then again at 527.79.

  Jeff Bailey   8/16/200,  3:05:10 PM
03:00 Market Watch at this Link

  Mark Davis   8/16/200,  2:58:09 PM
Potential Day Trade Setup Alert -
I'd love to get short with SPQTO (SPX Aug 1075 put) in the SPX 1080 area but we may not get the chance. If we do get the chance there's no telling if it will look like a good play at the time... stay tuned.

We're either going to bounce right about here (SPX 1079.09) or violate the lower b-band on the 1-min chart.

  Linda Piazza   8/16/200,  2:57:27 PM
Like some of the other traders, I haven't been sure of what happens next. I've thought 527-528.50 might well be the topside over the near term, but also thought it possible that the OEX could overrun that and break up to 530-531, most probably in a late-afternoon or early-morning overrunning of resistance. I think the OEX has either hit or is within three points or so of hitting the point from which it would roll down, but so much depends on what happens with crude prices that it's difficult to predict what will happen with equities, too. Plus, we have that infusion of Fed funds with which to contend today.

  Jonathan Levinson   8/16/200,  2:46:59 PM
The 30 min cycle upphase is not over for QQQ, but the oscillators have entered overbought territory and should be maxxed out by the 33.40 resistance level. 33.60 QQQ, former triple bottom support turned resistance, should be very heavy resistance and I'd be shocked to see it penetrated without a consolidative pullback first. Link

  Linda Piazza   8/16/200,  2:45:41 PM
Here's something I'm watching on the OEX's 60-minute chart: Link

  James Brown   8/16/200,  2:42:32 PM
Biotech IMCL is trying to produce some follow through on last week's bounce from the $50.00 mark but it's still struggling with its simple 200-dma in spite of today's 2.95% gain. (Technically it is over the simple 200-dma but a move over $56 would be more convincing.)

  Mark Davis   8/16/200,  2:42:24 PM
I've been reprieved by the cancellation of an afternoon appointment so will be with you again for the remainder of the day... although I'm not sure I really want to be here in this confusing environment (grin). Looking back over the previously mentioned "b" distribution patterns, where there is a strong move up from the bottom of the bulb... many times there is a consolidation day following, although not always. My target for this move up was SPX 1080 and we exceeded that number slightly at HOD. My bias is ever so slightly to the downside so I'll be looking for opportunities to get short for a scalp. As Keene mentioned earlier, the fear of going long after such a strong move is having the honor of turning out the lights after the party is over. The fear of going short is being flattened by a runaway freight train... both scenarios are a distinct possibility in the short-term. Intermediate-term I'm looking for more upside.

Short-term in my book is measured in hours and intermediate-term is measured in days. I rarely hold a position more than 2-3 days.

It looks like we just missed a nice shorting opportunity (or maybe not), but we may get another chance.

  James Brown   8/16/200,  2:38:30 PM
I've been watching Alltel (AT) for a breakout over resistance at the $53.00 and 53.50 levels. That move has happened today and the stock is hitting new 18-month highs. The P&F chart points to a $72 target.

  James Brown   8/16/200,  2:36:38 PM
A few more homebuilders...starting to look pretty bullish here..

Centex Corp (CTX) is up more than 2% to breakout over its 40 and 50-dma's and the $45.00 level.

KB Home (KBH) is up 2.2% and pushing through its 40 & 50-dma's and the $65 level.

Ryland Homes (RYL) is pushing through resistance at $80.00 but still under its simple 200-dma.

  James Brown   8/16/200,  2:34:18 PM
Homebuilder Pulte Homes (PHM) has broken out above resistance at $58.00 to hit new all-time highs.

  James Brown   8/16/200,  2:33:06 PM
Bulls may want to keep an eye on copper producer Phelps Dodge (PD). The stock is up more than 3.3% to $79.26. The move has been spurred by a sharp rally in copper prices to $1.30 a lb. This level was resistance back in March and April. A move over $1.32 a lb. in copper would be new highs.

Looking at PD readers will notice the stock has broken its four-week trend of lower highs and its short-term technicals are bullish. Plus we see the MACD is very close to a new "buy" signal. Traders might want to consider a move over $80.00 as an entry point but there is some resistance near 81.50 (the July highs).

  Linda Piazza   8/16/200,  2:28:59 PM
We have a lot of indices testing or else edging above their 10-dma's as I type: the Dow, the SPX, the OEX, the TRAN. The SOX and Nasdaq are not, however, underperforming by that measure.

  James Brown   8/16/200,  2:27:11 PM
LifePoint Hospitals (LPNT) is down more than 16% to $27.41 after announcing a $1.13 billion cash and stock deal to buy rival Province Healthcare Co. (PRV). Shares of PRV are up 42% to $19.34.

  Linda Piazza   8/16/200,  2:25:34 PM
The OEX continues to maintain the levels needed to be maintained in order to preserve the breakout signal on the 15-minute chart and preserve the possibility of the move toward 530-531. I continue to advise those already in bullish trades to be wary of this 527-528.50-ish zone. I wouldn't be surprised to see that push toward 530-531 either this afternoon or tomorrow morning, but neither would I be surprised for the current resistance zone to hold.

  James Brown   8/16/200,  2:24:24 PM
Ron Insana just mentioned Kmart Holding (KMRT) is trading higher after a strong earnings report. The company reported earnings of $1.54 per share, which was $1.40 ABOVE analysts' estimates of 14 cents. Yet revenues fell more than 15% to $4.79 billion.

The stock is up 14.7% to $74.49 and breaking out over resistance at the $70.00 mark and its 10, 21, 40 and 50-dma's.

  Jonathan Levinson   8/16/200,  2:21:53 PM
Nymex crude is testing the head and shoulders neckline again, currently trading 46.05: Link

  James Brown   8/16/200,  2:21:24 PM
Dow-component Wal-Mart (WMT) is up 1.2% and breaking out over its simple 50-dma and the $54.00 level after reporting that same-store sales in August are tracking with their 2-4% growth target range.

  Jonathan Levinson   8/16/200,  2:19:09 PM
30 min QQQ support is up to 32.88 here, with resistance up to 33.22.

  Jonathan Levinson   8/16/200,  2:13:05 PM
QQQ is testing 30 min channel resistance here, but the short cycle oscillators are only approaching overbought territory and are not nearly maxxed out yet.

  Jeff Bailey   8/16/200,  2:13:02 PM
Swing trade long alert ... for Dollar Tree Stores (DLTR) $23.25 here, stop $22.90, target $23.90.

  Jeff Bailey   8/16/200,  2:10:45 PM
02:00 Internals at this Link

  Jonathan Levinson   8/16/200,  2:06:54 PM
Session high for QQQ here at 33.11 just printed. 30 min channel resistance is 33.16: Link.

  Linda Piazza   8/16/200,  2:06:13 PM
The OEX keeps rising to test its 30-minute 130-ema, currently at 527.02, but can't quite close 30-minute periods above that level, especially with the historical resistance band at 527-528.50 or so joining up with that ema's resistance. The OEX continues to find support at its 30-minute 100-ema on each pullback, however. The OEX has consolidated at these averages about the average number of 30-minute candles that it's consolidated there on recent tests, so it may soon be getting time to break out, one direction or the other. (Note: The OEX began breaking out as I typed.)

Keltner resistance is beginning to gather slightly above the current OEX position on the five-minute chart, but that Keltner resistance still turns higher, so there's a mixed picture. However, this is the first time today that so much Keltner resistance has gathered above the OEX's position. If it maintains levels below 528.57, that resistance will likely growth stronger and perhaps begin to flatten, but so far, it's still turning higher.

  Jeff Bailey   8/16/200,  2:02:59 PM
02:00 Market Watch at this Link

  Jeff Bailey   8/16/200,  1:57:50 PM
Securities Broker/Dealer Index (XBD.X) 119.00 +2.98% .... back to test 120.00 while edging above its downward trending regression channel.

WEEKLY R1 117.65 and WEEKLY R2 119.70.

  Linda Piazza   8/16/200,  1:40:49 PM
Thanks for keeping us up-to-date on the current chart for crude costs, Jonathan. As crude moves up, the OEX is testing again what would have been the neckline for its H&S, if it hadn't shot up and rejected that formation. That's now the supporting trendline established since about 10:40, however, and it currently crosses at about 526.10. The confirmation level for the OEX's possible double-top formation is at 525.55.

  Jonathan Levinson   8/16/200,  1:34:02 PM
Crude oil is back up to 46.40 after testing Linda's head and shoulders neckline: Link.

  Mark Davis   8/16/200,  1:25:54 PM
Recap of Monday's trades (08-16-04)...

SPQTN (SPX Aug 1070 put) @ 4.50
SPQTN (SPX Aug 1070 put) @ 4.00, -11.11%

SPQTO (SPX Aug 1075 put) @ 5.40
SPQTO (SPX Aug 1075 put) @ 6.00, +11.11%
Total gain/loss for Monday = +0.10, +00.00%
Total gain/loss for the week = +0.10, +00.00%

Total gain/loss since inception (07-29-04) = +17.85, +153.98%

See you tomorrow morning.

  James Brown   8/16/200,  1:25:16 PM
Corning Inc (GLW) is up more than 6% after Needham upgraded the stock to a "strong buy". While this looks like a reversal after last week's drop be careful. GLW produced a new sell signal on its P&F chart last week.

  Linda Piazza   8/16/200,  1:25:03 PM
A slightly higher high for the OEX, with this signaling a definite rejection of the H&S on that chart while the crude futures approach/test the neckline area of the H&S on that chart. This OEX slightly-higher-high has not been accompanied by a higher MACD high on the 3- and 5-minute charts. That sets up potential bearish divergence. That bearish divergence can still be erased if MACD continues moving higher, but it's there now.

  James Brown   8/16/200,  1:22:35 PM
Gambling stock Isle of Capris Casinos (ISLE) is up almost 7% to $17.65 and breaking out above its simple 40 and 50-dma's after Roth Capital upgraded it to a "strong buy". The stock had been trying to put in a bottom near the $16.00 level.

  James Brown   8/16/200,  1:20:24 PM
Estee Lauder (EL) has been upped to a "buy" at Oppenheimer. The stock doesn't appear to be reacting much to the news but shares are trying to put in a bottom above its simple 200-dma. Meanwhile rival Avon Products (AVP) is down 1.3% for the first sign of profit taking after its five-day rally.

  James Brown   8/16/200,  1:16:13 PM
Retailers Kohls (KSS) has produced a significant technical breakout today. The stock is up more than 2% to $47.03 after Goldman Sachs upgraded the stock to "out perform" this morning. Last week KSS reported earnings that beat estimates by 1 cent and reported strong profit margins. Analysts have been predicting a turnaround in KSS for months based in part on easier year over year comparisons (because last year was so bad for KSS). Now it appears those comparisons will finally improve in the third quarter.

While bulls will be happy to see KSS breakout over minor resistance at $46 what makes this significant is that KSS has broken (one of) its long-term descending trendlines and its simple and exponential 200-dma's. Now KSS isn't totally out of the woods yet with still more overhead resistance but it's looking stronger!

  Mark Davis   8/16/200,  1:09:19 PM
Potential Day Trade Setup Alert -
Cancel Potential long play... SPQHP (SPX Aug 1080 call)

First of all it just looks too iffy... in addition to that I will be away for the remainder of the day and don't want to leave the scene with an open trade. I wouldn't be surprised to see the indices move suddenly higher OR lower. I also wouldn't be surprised to see them remain rangebound for the rest of the day. When in doubt, stay out.

  Jeff Bailey   8/16/200,  1:08:39 PM
01:00 Internals at this Link

  James Brown   8/16/200,  1:07:32 PM
It's a sad day for bicycle maker Huffy (HUF). The stock has dwindled from the $8.00 level a year ago to 58 cents last Friday. NYSE has suspended trading of the stock and will move to delist it now that HUF has fallen under its market cap requirements.

  Linda Piazza   8/16/200,  1:05:38 PM
The OEX is lining 30-minute candles up between the 30-minute 100-ema and 30-minute 130-ema. Those averages are at 525.80 and 527.03, respectively. A push above the 130-ema would be viewed as bullish while a drop below the 100-ema would normally be viewed as bearish, although in each case, the further movement might be limited.

  James Brown   8/16/200,  1:04:44 PM
Smith Barney has done the same thing with a downgrade to "hold" for (MAT) and a downgrade to "sell" for Leapfrog (LF).

  James Brown   8/16/200,  1:03:04 PM
Lehman Brothers has downgraded toy makers Hasbro (HAS) and Mattel (MAT) and seriously lowered their price targets. The move follows an announcement from Toys R Us (TOY) last week who could be closing several stores and selling its toy business.

  Jonathan Levinson   8/16/200,  1:01:27 PM
Stepping away for 10 minutes to get some air. The coffee I just had was too strong and I'm having trouble typing- not good.

  Jonathan Levinson   8/16/200,  1:00:44 PM
100-tick QQQ update at this Link . The 30 min channel upphase is flattening but still technically within its upphase. A break below 32.93 support (fibonacci and 7200-tick SMA) would end the 30 min upphase and set the stage for a test of 32.84 lower channel support.

  James Brown   8/16/200,  1:00:25 PM
Defense contractor Lockheed Martin (LMT) is up 1.88% to $53.98 after announcing another contract win worth $83 million. The stock is breaking its month-long trend of lower highs and bouncing from technical support at the simple 50-dma. Short-term technicals like the RSI and stochastics are positive and its MACD is nearing a new "buy" signal. This could be a potential entry point although I'd probably feel more comfortable if the DFI index was back over the 750 level.

  Jonathan Levinson   8/16/200,  12:57:40 PM
From that earlier article, I was surprised to read that the Federal reserve system still employs DOS based platforms. DOS was the first computer language at which I ever became proficient - that and Integer BASIC at age eleven or 12. I'm glad someone's still using it :)

  Linda Piazza   8/16/200,  12:55:20 PM
I'm watching the TRAN to get a first heads-up on how indices might be reacting to movements of crude futures. The TRAN's right shoulder is elongating. As Jane mentioned earlier with respect to another vehicle, this right shoulder might be getting a bit prolonged to consider the formation valid, but the TRAN has not officially rejected the formation by a move to a new high. It's certainly trying to do so. The OEX's H&S doesn't look quite so malformed, although it's time for it, too, to round over or we should soon consider the formation negated if not rejected.

  Jeff Bailey   8/16/200,  12:53:49 PM
12:50 Market Watch at this Link

  Jonathan Levinson   8/16/200,  12:51:54 PM
10-tick 2-day crude oil chart update with Linda's H&S neckline: Link (alternate horizontal necline is a 45.90-.925).

  Linda Piazza   8/16/200,  12:46:49 PM
A chart Jonathan posted earlier shows the possibility that the crude oil futures might be rounding over into the right shoulder of a possible H&S. As I type, crude futures have not broken through the neckline of the possible H&S, but I find it interesting that both indices and crude futures show a potential for a H&S on their intraday charts. If the inverted relationship between the two is preserved--crude down, indices up/crude up, indices down--then one of those sets of H&S's is going to be rejected.

  Linda Piazza   8/16/200,  12:40:52 PM
The OEX is so far maintaining 15-minute closes above the 15-minute Keltner line now at 525.60, as bulls would like to see it continue to do.

  Mark Davis   8/16/200,  12:35:53 PM
Potential Day Trade Setup Alert -
Considering a long play here... SPQHP (SPX Aug 1080 call)

  Linda Piazza   8/16/200,  12:32:53 PM
The neckline level of the OEX H&S is being approached as I type, with that neckline at about 525.70, and with the downside target, if confirmed, at about 524. That would just bring the OEX back for a retest of the 15-minute 100/130-ema's, to see if they now hold as support.

  Jeff Bailey   8/16/200,  12:32:46 PM
TRIN ... intra-day chart with today's DAILY Pivot and WEEKLY Pivot levels. Link

WEEKLY R2 higher at 4.34 and would most likely take some type of "event" to get the TRIN up at that level, most likely at a a session open. (My thinking at least).

Today's thought is don't try to short/put unless TRIN above 0.64.

  Jonathan Levinson   8/16/200,  12:28:38 PM
August 15, 2004 -- With little fanfare, the Federal Reserve will begin transferring the nation's money supply over an Internet-based system this month — a move critics say could open the U.S.'s banking system to cyber threats.

The Fed moves about $1.8 trillion a day on a closed, stand-alone computer network. But soon it will switch to a system called FedLine Advantage, a Web-based technology.


  Linda Piazza   8/16/200,  12:27:33 PM
The OEX is currently testing the possible shoulder level of its H&S on its five-minute chart, following the script exactly as proposed in my 11:31 post. The trouble is that somewhere between the rollover at the right shoulder and the brief confirmation is the point where the whole thing gets rejected, if it's going to be, and the index zooms up to a new high.

  Jonathan Levinson   8/16/200,  12:26:19 PM
The Fed's repo is an uncertain indicator, but it certainly warrants caution on the part of bears. That money could be used by the fed's dealers in almost any markets. Bonds are quite weak today and equities quite strong, and my guess would be that US equities are the major recipients of that cash. In any event, however, the daily and 30 min cycles for QQQ and the futures suggest some overdue buying today building off Friday's doji. A bounce would not be running against the tide, but the Fed's open market desk may well help it along.

  Jeff Bailey   8/16/200,  12:24:09 PM
Got Milk? .... Lucille Farms (LUCY) $3.28 +41% .... after filing 10-Q Link where sales surged on higher cheese prices.

  Linda Piazza   8/16/200,  12:19:36 PM
It's good to have Jane's 12:03 input on the TRIN, on the Futures side of the Monitor.

  Jeff Bailey   8/16/200,  12:19:35 PM
Current OPEN MM Profile .... update at this Link

  Mark Davis   8/16/200,  12:17:03 PM
Day Trade Exit Point Alert -
Exiting now... SPQTO (SPX Aug 1075 put) @ 6.00, +11.11%

  Linda Piazza   8/16/200,  12:16:48 PM
The OEX made it safely through the 15-minute 100/130-ema's, but has been stuck at the 30-minute versions this morning, currently testing retesting the 30-minute 100-ema. If the OEX does roll down beneath these averages, it might at least temporarily find support on the 15-minute versions nearer 523.80-524. The OEX still preserves the possibility of producing a H&S, one I mentioned as a possibility in an 11:31 post. Bulls should now be careful of bounce and then a rollover beneath 526-526.60 and then a move down through 525.50 or so, a potential neckline area. Such a confirmation might just send the OEX down to retest the 15-minute 100/130-ema's.

So far, the OEX preserves the possibility of that move toward 530-531, but it's testing levels now that bulls want to see hold as first support to preserve that breakout signal. As I mentioned earlier today, I wouldn't discount that 527-528.50 resistance zone. However, neither would I discount that repo Jonathan mentioned today. Others can read the rollover possibilities as well or better than I can. If such a rollover were to look imminent, that would be an ideal time to put some of that cash to work on broad equity indices. We've seen it happen before just as indices broke through key levels, with the rejection of the breakdown then sending them to new highs, and it can happen again. Although the markets discount a lot, I don't know that they discount a sudden infusion of Fed cash, and so technical analysis isn't always a great help in predicting that outcome.

  Jonathan Levinson   8/16/200,  12:15:43 PM
Short cycle 2-day QQQ chart update at this Link shows what has so far been a very weak correction in the short cycle oscillators are price chops along near the highs. The 30 min channel is moderating its steep upphase but has not yet stalled. A move below 32.97 for another 10-15 minutes should be enough to spark a new 30 min downphase, but the shape of the 30 min oscillators suggests that there's still more life in this upphase. A move below 32.80 or above 33.20 should be directional here, but I'd guess at more chop within the current range instead.

  Mark Davis   8/16/200,  12:12:21 PM
Day Trade Exit Point Alert -
I'm considering exiting this play... SPQTO (SPX Aug 1075 put) unless we get some downside traction pretty soon.

  James Brown   8/16/200,  12:11:34 PM
We've been looking for a breakout in PIXAR (PIXR) for several days now. The stock has finally pushed through significant resistance at the $71.00 level. This looks like a bullish entry point. The next level of resistance is at $75.00. PIXR's bullish P&F chart currently points to an $89 target.

  Jeff Bailey   8/16/200,  12:11:25 PM
12:00 Internals at this Link

  Jeff Bailey   8/16/200,  12:02:49 PM
12:00 Market Watch at this Link

  Mark Davis   8/16/200,  12:01:54 PM
Finally... starting to see some cracks in the dam

  Linda Piazza   8/16/200,  11:59:19 AM
The OEX tests nearest Keltner support, with strongest nearby support currently at 525.87. The bulls want to see that level maintained. If the OEX instead maintains levels below the Keltner line currently at that level, the smallest channel will turn lower again.

  Keene Little   8/16/200,  11:58:51 AM
Mark, I'm just hoping we're not expecting it to roll over, and therefore so are just a few other traders. That will surely mean a rally ahead and we should be thinking long. I just can't get long here--I know I'll be the last sucker to buy it.

  Mark Davis   8/16/200,  11:58:25 AM
TRIN is printing an incredible .43

  Linda Piazza   8/16/200,  11:56:23 AM
The BIX is within the orthodox broadening formation in which it's traded since late May. It's again above 350, at 350.29 as I type.

  Mark Davis   8/16/200,  11:55:49 AM
Keene I think we experienced the Vulcan mind-meld just now.

  Mark Davis   8/16/200,  11:54:06 AM
This is very frustrating watching our short play go nowhere. We don't have any capital at risk with our stop at break even, but I'd sure like to see some weakening and I'm not seeing it yet.

  Linda Piazza   8/16/200,  11:51:07 AM
Nearby OEX Keltner support still looks slightly stronger than nearby resistance on the five-minute chart, but Keltner supports begins to look a little less firm, too. So far, there's no cause for alarm for those in bullish positions, but the OEX is struggling at resistance where historical resistance said it should. The TRIN isn't suggesting a rolldown, with the exception of the fact that it's reached levels that recently have marked lows for the TRIN, so that it perhaps hints that on a contrarian basis, bulls should be cautious, having plans in place to protect profits.

  Jonathan Levinson   8/16/200,  11:46:51 AM
The 30 min NQ broke upward out of its 30 min bullish descending wedge this morning and is up to the 61.8% retracement off the low. Next fib resistance on the 30 min QQQ chart is at 33.22, with the upside wedge target at 33.48. However, the short cycle is very overbought and trending here, and bulls are looking for a shallow pullback, possibly to the 32.80 channel support, to consolidate this morning's gains.

  Linda Piazza   8/16/200,  11:42:51 AM
The SOX isn't far from the 8/11 swing high of 374.42, reached after the SOX made a recovery off that morning's lows. That could be resistance for the SOX, as could the two gaps from that morning, with the top of one gap at 372.92. As I type, nearby five-minute Keltner support still looks stronger than nearby Keltner resistance, but that could change if the SOX pauses long enough under 374 to allow resistance lines to snake above it.

  Jeff Bailey   8/16/200,  11:39:47 AM
11:00 Internals at this Link

  Jonathan Levinson   8/16/200,  11:36:02 AM
QQQ's 30 min channel continues to advance, with current support now lined up at 32.80 with the rising 7200-tick SMA, while resistance is up to 33.12.

  Jonathan Levinson   8/16/200,  11:35:21 AM
Daily Nasdaq chart link corrected- I posted the wrong chart earlier. My apologies: Link

  Jonathan Levinson   8/16/200,  11:34:02 AM
Realtime chart update of Nymex crude at this Link.

  Mark Davis   8/16/200,  11:32:38 AM
We have bearish MACD divergence on the SPX 1-min chart since 20 min after the opening bell. That's not a guarantee the short play will be a success but it does tilt the odds in our favor and at this point we have zero risk with stops at break even.

  Linda Piazza   8/16/200,  11:31:58 AM
OEX Keltner support is trying to firm up near 525.72. Be careful of a pullback to that level, a bounce to a lower high, and then a rollover through the neckline of the then-produced H&S. A move to a new high undoes that possibility.

  Mark Davis   8/16/200,  11:29:03 AM
Day Trade Exit Point Alert -
Cinch up your stops... SPQTO (SPX Aug 1075 put) to 5.40 and break even

We now have a confirmed short signal and are beginning to get some traction to the downside, but if this reverses back up I don't want to get tagged for another loss. We will follow this one down with stops, assuming we get the opportunity.

  Linda Piazza   8/16/200,  11:28:27 AM
Careful, bulls. I've been watching crude prices tick higher again on the CNBC screen, at $46.50 a barrel as I type.

  Jonathan Levinson   8/16/200,  11:25:37 AM
Daily chart of the Nasdaq at this Link . No trend reversal, but the 10-day stochastic is still showing that potential bullish divergence.

  Linda Piazza   8/16/200,  11:22:49 AM
The TRAN tests its 10-dma. It has not been able to maintain closes above this average since 8/04.

  Linda Piazza   8/16/200,  11:20:43 AM
Here's what I'd be wary of if in bullish OEX positions: a move down to 525-525.60, then a bounce up to 526-526.50, and then a rollover from there down through 525. However, that would just set up a possible test of mid-channel support on the 15-minute chart, with that support near 523.40-523.75.

  Mark Davis   8/16/200,  11:19:00 AM
Day Trade Entry Point Alert -
Go short now... SPQTO (SPX Aug 1075 put) @ 5.40, stop 5.00

  Linda Piazza   8/16/200,  11:15:58 AM
I keep thinking about Jonathan's 10:15 post about the Fed infusion today. With that infusion and the TRIN's level, I'd be careful about trying to catch the top here, although I'd also advise care to protect profits if in bullish plays. As Jane has often warned us, watch the trend of TRIN as well as its actual number. The OEX is approaching known resistance from 527-528.50 or so, but the 15-minute chart still suggests the possibility of a run toward 530-531 as long as the breakout level is maintained. I'm particularly watchful as OEX 527 is challenged now, however, especially with the OEX approaching the top of the gap from 8/11. Bulls want to see the OEX maintain values above the channel line currently at 525.93 on any pullbacks. Bears want to see the OEX move below and maintain values below the channel line currently at 525.30.

  Jonathan Levinson   8/16/200,  11:11:26 AM
Session highs across the board here. 30 min resistance moves to 33.10.

  Linda Piazza   8/16/200,  11:09:22 AM
The SOX has not hit a new high of the day, unlike some other indices, and it's beginning to suggest that its breakout attempt could fail. It needs to maintain values below the Keltner line currently at 370.47 to turn its smallest Keltner channel lower again. Bulls want to see it break out above the Keltner resistance now gathering just above 372, and to reach a new day's high.

  Mark Davis   8/16/200,  11:07:40 AM
Stepping away for a few minutes...

  Linda Piazza   8/16/200,  11:06:40 AM
The OEX has moved into the gap zone from the gap down on 8/11. Despite the 15-minute Keltner channel chart's suggestion that the OEX could climb straight toward 530-531, I'd be careful of protecting profits through here if in a bullish play, since gap resistance can sometimes be strong, particularly when it comes at a level of known historical S/R, as this one does.

  Mark Davis   8/16/200,  11:04:35 AM
Day Trade Exit Point Alert -
Stopped out... SPQTN (SPX Aug 1070 put) @ 4.00, -11.11%

  Linda Piazza   8/16/200,  11:03:45 AM
There's the new high as soon as I uploaded the last OEX post. The 15-minute chart suggests that the OEX is going to charge straight toward 530-531 without pausing at 527-528.50, but I'd caution bulls to have a profit-protecting plan in place for that zone anyway.

  Linda Piazza   8/16/200,  11:02:17 AM
No new high yet on the OEX, although it's close as I type, and the five-minute MACD verges on a bearish kiss. OEX bulls want to see that new high and also want to see the OEX maintain values above the Keltner line now at 524.89.

  Mark Davis   8/16/200,  11:01:42 AM
Keene I hope to join you on that long play... AFTER the deeper pullback (grin)

  Linda Piazza   8/16/200,  10:56:35 AM
So far, the OEX has held to the breakout levels on both the five- and fifteen-minute Keltner charts. That needs to be confirmed by a move to a higher high, however, something that hasn't yet happened as I type.

The TRAN still leads the way, having printed a higher high and moving on up toward next resistance. The TRAN has an upside target of 3062 if it maintains its breakout.

  Jeff Bailey   8/16/200,  10:53:33 AM
10:50 Market Watch at this Link

  Jonathan Levinson   8/16/200,  10:51:52 AM
Gold continues to edge higher toward 405 resistance, currently up 4 to 405.20, with HUI up 1.11% at 191.95 and XAU +.98% to 88.7. Above 405, next resistance is at 408, followed by major confluence at 412-414.

  Mark Davis   8/16/200,  10:50:32 AM
Day Trade Entry Point Alert -
Go short now... SPQTN (SPX Aug 1070 put) @ 4.50, stop 4.00

  Mark Davis   8/16/200,  10:49:10 AM
Potential Day Trade Setup Alert -
Potential short signal developing... if I enter it will be with SPQTN (SPX Aug 1070 put)

  Linda Piazza   8/16/200,  10:46:23 AM
Look at the TRAN go! It's charging right up toward the 10-dma, currently near 3030.60. This index really moves when it gets going. It's still within the consolidation zone that's produced two reversal signals in a week's time, however, so I wouldn't draw too many conclusions as it zooms around within this zone. A move above 3074.90 will confirm the potential double bottom seen on the TRAN's 30- and 60-minute charts, but it will face possible resistance in the 3030-3040 range first, and then again near 3068-3075.

  Jonathan Levinson   8/16/200,  10:37:32 AM
Short cycle channel support is at 32.88, while 30 min channel resistance has risen to 33.03 QQQ. If the short cycle channel gets tested for longer than 3 or 4 minutes, the short cycle oscillators will begin to fall back out of overbought territory. If that occurs, look for support below the move at 32.65, current 30 min channel support as well as the location of the 7200-tick SMA.

  Mark Davis   8/16/200,  10:36:35 AM
I hesitate to take any position at this point. The strength of this rally cuts both ways... shorting it is very dangerous but going long may have limited upside, at least for today.

  Linda Piazza   8/16/200,  10:35:54 AM
The OEX's fifteen-minute chart shows that index creating the potential for a possible reversal signal, but in order to confirm that reversal signal, the OEX would need to close this 15-minute period below the 524.50-ish level and ideally below the 523.60-ish level.

That may be difficult for bears to accomplish since there's fairly significant support on that 15-minute chart near 524.60. If that support does hold, the OEX could continue pushing toward 530-531, according to the Keltner charts. In between, the OEX hits the 527-528.30 strong historical resistance. I wouldn't yet discount that resistance as Keltner lines sometimes move toward a traditional S/R level before its tested, but if the Keltner lines don't descend, they could be telling us that the OEX will make a run higher, perhaps a false break out of the possible "b" distribution pattern.

  Linda Piazza   8/16/200,  10:32:46 AM
The OEX is in breakout mode on its five-minute Keltner charts. As I often advise (although lately to bears, not bulls), such a breakout mode is a suggestion that risk has shifted to their shoulders. It's a time to be careful about following the OEX higher with stops, but not necessarily a time yet to exit plays. Keltner channels were designed to identify breakouts, with plays ideally entered on breakouts, not exited. The trouble is that this may be a countertrend play, and so the OEX's climb could be less reliable than the recent downside breakout signal. Here's what bulls want to see happen: they want to see the OEX maintain values above the Keltner line currently at 525 to maintain the breakout signal. If that level can't be held, they want to see the OEX maintain values above the Keltner line currently at 524.47 to keep the OEX's smallest channel from turning down.

Here's what bears want to see: they want to see the OEX maintain values below the Keltner lines currently ranging from 523.46-523.77. If that doesn't happen, they at least want the OEX maintaining values below the Keltner line at 525.46 in order to flatten the smallest Keltner channel.

  Jeff Bailey   8/16/200,  10:30:12 AM
S&P 500 Index (SPX.X) 1,076.07 +1.05% .... bar chart with updated WEEKLY pivot retracement at this Link

  Mark Davis   8/16/200,  10:29:23 AM
Here comes the first retracement of the day, complete with MACD bearish divergence and a MACD bearish kiss on the SPX 1-min chart.

  Jonathan Levinson   8/16/200,  10:27:45 AM
QQQ is testing the 32.97-33.02 resistance level here with short cycle oscillators overbought but not maxxed out.

  Linda Piazza   8/16/200,  10:26:40 AM
On 8/11, the SOX gapped down at the open and then again ten minutes after the open, with the top of that second gap at 372.92. This morning's high has been 372.74, with the SOX pausing as it approached the top of that second gap. A later swing high that day was at 374.42, so that's another place to look for possible resistance if the SOX can make it past that light gap resistance. Watch also the gap from the open on 8/11, with that gap from 391.59 down to 381.46. This gap spans the 50% retracement level of the rally off the October 2002 low, in the 385-386 range, so has more significance.

  Linda Piazza   8/16/200,  10:17:56 AM
As I suspected (10:07 post), there was no consolidation or pullback at the OEX's 15-minute 100/130-ema's. For those in bullish plays, the OEX now approaches another possible consolidation or pullback point, but that sounds like an empty warning now, doesn't it? For those who are reluctant to trade plays that are likely to be countertrend plays, even ones that could carry forward for a couple of days, now is a time to stand back and watch for a possible rollover, but one that might not take place today or might take place at any moment. Remember that between 522-528, the OEX is just within the chop zone defined by the bulb of the possible "b" distribution pattern on its daily chart. Friday afternoon, I was thinking that we might get a bounce for a couple of days with Wednesday being a possible reversal day, but then the behavior of the futures last night seemed to undo some of the bounce potential.

  Jonathan Levinson   8/16/200,  10:15:38 AM
The Fed used a 4-day repo on Friday, and so there are no expiries today. They've just announced a large 7.5B overnight repo for a net add in that amount. This should provide a positive bias to the markets today.

  Mark Davis   8/16/200,  10:11:15 AM
The skeptical side of me is thinking this rally will go just high enough for bulls to send out the "all clear" signal, then the bottom will drop out and we'll put in a REAL bottom, well below current levels. If I had to guess the timeframe for this I would say late Q3/early Q4 (the traditional timeframe). The market has a nasty habit of extracting the maximum amount of capital from the maximum number of investors.

  Jeff Bailey   8/16/200,  10:07:39 AM
10:00 Internals at this Link

  Linda Piazza   8/16/200,  10:07:04 AM
Like the TRAN, the OEX is challenging its 15-minute 100/130-ema's. Here's a chart showing the relationship of the OEX to these averages lately, showing their importance. Link I would expect a steadying or a pullback from this level, but I'm not certain it will come today. We'll just have to see. If you've been playing this bounce on the bullish side, now is a time to be careful.

  Mark Davis   8/16/200,  10:05:15 AM
Linda, Keene calls it "morphing"... we call it a "headfake" (grin). Either way it makes monkeys out of all of us. As a former reader I used to be frustrated by all the qualifying statements accompanying a directional call. Now I understand.

  Linda Piazza   8/16/200,  10:01:29 AM
The TRAN has moved above 3000 again, at 3005.72 as I type. It's moving up toward the 10-dma, currently at 3028.97. However, it's also challenging its 15-minute 100/130-ema's. Not only is it challenging them, but it pushed above both and has now fallen just below both, creating a potential reversal signal at that resistance during this 15-minute period. Be watchful.

  Jonathan Levinson   8/16/200,  9:56:07 AM
Gold is strong today, clearing back above the 402 resistance level to 404.30 currently, up 3.10 with the HUI up .91% at 191.58 and XAU up .90% at 88.63. Bonds are quite weak however, with TNX up 1.16% at 4.262%.

  Linda Piazza   8/16/200,  9:55:44 AM
Mark, I agree with your comments in your 9:36 post. Ever since March, 2003, we've seen an undoing of many technical analysis "truths," particularly any that suggest that a formation is likely to break to the downside. Lately, we've some days when those former knowns about technical analysis worked beautifully, but the truth is that if there's enough underlying bullish sentiment, bearish formations will break to the upside, and if there's enough underlying bearish sentiment, bullish formations will break to the downside. That's why I let these formations guide me to be watchful of a certain development only and don't plunge into a play based on what I think ought to happen.

  Jeff Bailey   8/16/200,  9:54:26 AM
Current OPEN MM Profiles at this Link

  Linda Piazza   8/16/200,  9:51:09 AM
I'm back. The OEX is in breakout mode on the five-minute Keltner channels, setting up an upside target of 524.50, but it's already risen up to test mid-channel resistance on the 15-minute chart. That resistance ranges from 523.47-524.07. This is the typical time for a first retracement of the day, so if the OEX should retrace, bulls want to see that former resistance near 522.30-522.40 hold as support now. They especially want to see 521 hold, where other support appears to be gathering.

  Mark Davis   8/16/200,  9:50:39 AM
Sheesh! Looks like we should have bought Sept. calls and held them over the weekend. I feel like I'm standing outside in the cold looking through the window at a party.

  Jonathan Levinson   8/16/200,  9:50:22 AM
Nymex crude has firmed up and is now up .025 to 46.60. But the QQQ bounce is also firm, and the 30 min candle descending wedge on the Naz futures is taking what look like the first steps of an upside breakout. Resistance on this timeframe is at 32.97-33.02, then 33.20, and then the implied target of 33.38-33.48.

  Jeff Bailey   8/16/200,  9:42:47 AM
Bearish day trade stop alert for General Electric (GE) $31.92 +0.05%.

  Mark Davis   8/16/200,  9:36:00 AM
Good morning... after reading Linda's excellent market wrap and her comments about the current "b" distribution pattern on the major indices, I took a look at all the "b" distribution patterns on SPX since just before it topped out. What I found was surprising. In virtually every case the direction following a "b" distribution pattern was UP. Link.

  Jonathan Levinson   8/16/200,  9:17:49 AM
The futures continue to chug along at prior levels, with NQ and QQQ staying ahead of the pack. QQQ is sitting on upper 30 min channel resistance at 32.67 as the short cycle oscillators continue to form a new upphase.

  Linda Piazza   8/16/200,  9:09:04 AM
I'm leaving for my appointment and will be back as soon as possible, but probably about 30 minutes after the market opens.

  Linda Piazza   8/16/200,  8:46:05 AM
As Jonathan noted earlier, the Empire State Index was a downside surprise. With the Venezuelan referendum settled in favor of Chavez, oil futures had dipped overnight, allowing the Nikkei to trim some of its losses and some European markets to rise. As I mentioned in my 00:12 post, the movement of oil prices will likely impact our markets inversely today. The fifteen-minute chart reveals a possible bear flag in the making on crude prices, but it's getting a little long in the tooth, perhaps as more information becomes available about the protests against the election results in Venezuela. Venezuela is the fourth-largest importer of crude into the U.S., and a previous protest involving Chavez did result in production delays, so there's some relevance here. If crude prices break lower, we could see an opportunity for a bounce (countertrend) on our markets while if crude breaks higher again, markets would likely be pressured.

As the opening draws closer, watch these crude prices as well as the behavior of our futures after the release of the Empire State Index for clues as to direction. I have to leave for an appointment and will likely be gone for the first 30 minutes of trading. Watch Mark's posts about the SPX for guidance as to likely direction on the OEX, too, although their trading patterns aren't always completely analogous. Review my 00:12 post for possible sticking points on the OEX.

  Jonathan Levinson   8/16/200,  8:33:18 AM
The futures are lower but not negative, and QQQ remains firm at 32.68 currently. It's worth noting that the Empire State Index is a relatively new index and is not a major market mover, as we're currently seeing.

  Jonathan Levinson   8/16/200,  8:31:07 AM




  Jonathan Levinson   8/16/200,  8:16:19 AM
Still more bullish divergences in the Naz futures (proxy for QQQ with pre-market data): Link

  Jonathan Levinson   8/16/200,  8:04:55 AM
Equities are higher, with ES trading 1067. NQ 1315.5, YM 9838, and QQQ up .16 to 32.68. Gold is up .40 at 401.60, while crude oil is down .225 at 46.35 and ten year bond futures are down .234 at 112.5469.

We await the 8:30 release of the Empire State Index, est. 32.3.

  Linda Piazza   8/16/200,  7:09:40 AM
Good morning. The Nikkei opened just under the flat-line level and dove throughout the morning and early afternoon session, reaching a low of 10,545.89, more than 200 points below Friday's close. The bourse spent the rest of the afternoon climbing, however, erasing much of its losses and closing down 69.39 points or 0.65%, at 10,687.81. The day's trading produced a long-legged candle that sprang up from just above May's closing low but from almost 60 points above May's intraday low, a potential reversal signal, but one that would need to be confirmed by tomorrow's trading pattern. The Nikkei declined on volume that was characterized as light and the declines were characterized as broad based. Although markets were open in Japan, some traders were still away celebrating a holiday. Foreign investors weren't celebrating, however, with many selling Japanese stocks after last week's shocker GDP number. At least through the early afternoon period, decliners swamped advancers, according to one article. Crude futures were hitting another new high through the early-afternoon period in overnight trading, too, adding pressure to Japanese stocks.

Honda and Toyota both declined, although Honda will need to add contract workers to meet increasing demand and Toyota plans an expansion into Russia. One stock showing gains was troubled retailer Daiei, gaining 2.2%. Last week, the retailer's creditors suggested they would ask the Industrial Revitalization Corporation, a state-backed entity, to rescue the retailer, but Japanese equity fund Kiacon may invest in the company. One article linked that fund to George Soros.

Other Asian markets were mixed, but with more bourses closing lower than higher. The Taiwan Weighted lost 0.70%, and South Korea's Kospi lost 0.28%. Singapore's Straits Times was one bourse that gained, rising 0.25%. Hong Kong's Hang Seng lost 1.13%, and China's Shanghai Composite lost 1.02%.

Currently, European bourses show mixed performances, too, although more trade higher than lower. Preliminary results of the Venezuelan election have been released, although already disputed, and those results show the referendum for a new election failed, with President Chavez safe from a new vote. Oil dipped off its overnight high as a result, but if the dispute continues after official results have been released, trouble might continue. The dip in oil prices allowed European bourses to climb off their morning lows, however.

Chip stocks have been mixed in early trading. Oil majors have been mixed today, too, as a London newspaper reported that France's Total might make a takeover bid for Shell, a possibility that worried Shell officials. German financials Allianz and Deutsche Bank performed well in early trading, after Allianz's earnings report and Deutsche Bank's upgrade by J.P. Morgan Securities. J.P. Morgan admitted that its upgrade might seem early, but the firm believes that share prices adequately reflect the earnings outlook. Swatch Group rebounded after last week's drubbing. The company said that the U.S. Labor Department has dismissed the tax-evasion complaint against the company filed by two former employees.

Currently, the FTSE 100 has gained 10.80 points or 0.25%, to trade at 4,312.30. The CAC 40 has lost 9.32 points or 0.27%, to trade at 3,475.52. The DAX has gained 18.90 points or 0.52%, to trade at 3,665.89. It is so far finding resistance under 3680 and at a descending trendline off last Monday's high.

  Linda Piazza   8/15/200,  12:12:54 AM
The OEX and most other indices ended the day Friday poised at a potential bounce point or a potential dropping-off point. Many indices produced doji or other small-bodied candles indicative of indecision Friday: indecision about sending the indices any lower as well as any higher. Logic certainly suggests that it's time for the OEX and some other indices to bounce, but that logic may not apply if crude prices continue to rise. A referendum election in Venezuela this weekend could result in political upheaval and steps have already been taken to attempt to safeguard fields, refineries and storage tanks in the country that is the fourth-largest importer of crude oil into the U.S.

Two bellwether indices we've been watching lately give conflicting evidence about the possibility of a bounce or a further decline. The SOX produced a second candle of a potential reversal signal Friday, although it's not a classically correct potential reversal signal. That potential reversal signal would need to be followed by an opening at or above Friday's close and a climb Monday morning. The TRAN looked much weaker on Friday, dropping all the way to the 200-sma, completing a one-week round trip from that average to a more-than-100-point gain and back to that average again. That couldn't have felt good for bulls in transportation-related stocks. The turndown also occurred at the midline of the TRAN's descending regression channel, with the TRAN unable to maintain values in the upper half of that channel, a sign of weakness. The TRAN's weekly chart showed signs of underlying weakness as the TRAN hit the late June highs, and now the impact of rising crude costs may be pressuring this index. Bulls who bought the last test of the 200-sma may now be questioning whether they want to take that drive with the TRAN again. New bulls may not be willing to venture it.

So, for now, I'm still looking at any potential broad market bounce, if one should occur, as a likely countertrend bounce. If markets bounce, I would be particularly watchful as the SOX approaches the 385-386 level for a potential stall or rollover, and perhaps on other indices as they follow the example of the SOX. A move above that level might indicate a further push higher, perhaps toward 400, with the tech-related indices at least coming along for the ride. Of course, other sectors have been weighing down the Nasdaq and the OEX, too, including the biotechs. The BTK is also at a possible bounce-or-sink point, closing the week last week at 450.

As of Sunday evening, when this reports is being prepared, futures are sinking as the Nikkei does, too, and as crude futures rise above Friday's intraday high. The results of Venezuela's referendum election had not been made public yet, but upheaval already appeared to be brewing, with an incident at one polling place. Some theorize that crude will continue to rise through this week. If it does, some indices could be pressured lower. Watch the TRAN's behavior, particularly if it retests its 200-sma, for a first clue as to the impact of that pressure. Watch for an SPX fall beneath 1060.

Because of the way the OEX has traded in relationship to 522.20-522.30, that level appears to have been the support that had marked the bottom of the OEX's "b" distribution pattern, so as long as the OEX is below that level, we might consider that it's violated that pattern. This is a risky conclusion, however, as other indices had not violated similar formations at the time the OEX fell below that level. There is some corroborating evidence for that conclusion in that at the time the OEX fell through that level, the MACD also crossed below a trendline of higher lows that had been building since March. Link

At Friday's close, the OEX appeared to be about to challenge Keltner resistance near 521.30-521.60. If futures continue to drift lower overnight, that move toward next resistance may not occur, but Europe's performance and other factors could influence futures before tomorrow's open. Check their levels before drawing conclusions. The five-minute Keltner chart shows support trying to gather near 520-520.20 and again near 518.80-519.30, with the 15-minute chart showing support to be lower, near 518.30-518.60. Bulls want to see that first support hold and bears want to see the lower level fail. If the OEX can plow through 522, a test of 524 looks possible, but as I type, bounce potential appears to be fading.


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