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  Linda Piazza   9/9/2004,  9:23:36 PM
Thursday, the Russell 2000 managed a close less than a point above its 200-sma. The NDX squeaked by with a close above the 50-dma and at the descending trendline off the 9/02 high. The SOX, however, did not manage a close above its 20-dma, an average that has been pressuring it for months. The BIX dropped below the tweezer-top formation on its daily chart, but printed a doji just above its 10-dma, indicating that it might be trying to stop its descent. The TRAN printed a doji at the top of a steep climb, in a possible double-top area, creating doubt about whether it will head higher or reverse. The TRAN, Dow, SPX, and OEX preserved the possibility of building H&S's on their 30-minute charts. Bifurcation. We used to hear that word a lot on CNBC.

Perhaps now the tech-related indices are attempting a recovery, adding their power to the markets, but that low VIX warns us not to be all-out bullish without adding in a bit of caution. For several days, the VIX has been hitting sub-14 levels. Over this summer, dips below 14 have marked intermediate-term market tops in the making, but tops that might actually form several days after the first sub-14 level.

The VIX offers a warning, perhaps, but it's price we must watch. The task is easy enough with the OEX: watch for a move below the neckline of the H&S, perhaps at about 542 although there's some leeway for drawing that neckline, as a sign that bears rule, and watch for a move above the 200-sma as a sign that bulls do. Either direction, the OEX soon moves into a congestion zone, so be watchful of your stops and guard profits. One note: the SPX's version of the H&S is perhaps the most classic, with a horizontal neckline at 1113.57, just below the 200-sma. The Dow's neckline is at its 200-sma. Watch these two indices, then, to confirm that they've also broken through their necklines and their 200-sma's before you jump into a bearish OEX play on a break of the neckline. Otherwise, the OEX might just have hit the neckline an instant before those other indices do, and then the others could bounce the markets.

What about those bears more interested into entering nearer the top of the shoulder than the neckline break? That might be riskier with the Russell 2000 shooting above its 200-sma Thursday, as there's no guarantee that the H&S's will confirm. We've seen so many of these over the last year and a half that appear ready to roll over into a right shoulder and instead shoot up past the head, negating the formation. With that caution, here's what I see on the OEX's five-minute Keltner chart. Near Thursday's close, the OEX settled at the neckline of a possible smaller H&S on the five-minute chart. That smaller formation is the top of a possible right shoulder on the larger potential H&S. That sometimes happens. The OEX was possibly ready to rise into a right shoulder on that five-minute chart formation, with the shoulder up toward 544.50. Keltner resistance was at that time trying to converge near 544.20, and it's possible that would be as far as the OEX would get on the first test of resistance. Those interested in taking on that risk of entering a bearish trade nearer the shoulder of the larger formation than the neckline of the larger formation could watch this smaller formation. Watch for either a rollover at a right-shoulder level, below 544.60 or so, or for a move above the head, at 545.47. A move above the head of this smaller formation would negate the formation and show that bulls were still in the lead over the very short term, but this wouldn't be the appropriate place for a new bullish entry, just below the 200-sma. An attempted bounce that rolled over into a right shoulder of that smaller formation (also beginning a rollover on the right shoulder of the larger one) and then moved below the neckline of the smaller formation at about 543.64 would show that over the short-term bears lead the way. An entry at the neckline of that smaller formation, at about 543.64, would constitute an entry just ahead of the 541.50-542 possible bounce zone, though, and has its own risks.

 
 
  Jim Brown   9/9/2004,  5:49:04 PM
ALERT - Oracle wins lawsuit over PeopleSoft bid: Link

 
 
  Jim Brown   9/9/2004,  4:46:41 PM
Alert - Alcoa issuing an earnings warning

 
 
  Mark Davis   9/9/2004,  4:09:52 PM
Why did I just know that last email was from Marc before I finished reading it? (big grin Marc)

 
 
  Jonathan Levinson   9/9/2004,  4:06:24 PM
Jonathan, good work on keeping onpointing the low VIX. Also of note: The VXN has not reached the same lows and I suspect funds are fleeing to the "safety" of big caps in the SPX. That could be what knocks out the market when those guys fail. - Marc

 
 
  Mark Davis   9/9/2004,  4:02:03 PM
This market is very difficult to figure out right now. I don't like the decline on SPX into the close but it could just be money being transferred into beaten down tech stocks. If the tech rally continues tomorrow I would expect it to drag the Dow, OEX and SPX up with it. All things considered we're still well within the current range, which I have @ 1114-1124 on the SPX cash index... closing print is SPX 1118.38 and SPX printed a nice buy signal right at EOD.

 
 
  Jane Fox   9/9/2004,  3:58:10 PM
Bye Linda - take care.

 
 
  Linda Piazza   9/9/2004,  3:57:27 PM
I will be gone tomorrow and probably most of Monday, too. I will be here long enough for the Asia/Europe update tomorrow morning, and I'll post my thoughts about the OEX late tonight. Have a great weekend, everyone.

 
 
  Linda Piazza   9/9/2004,  3:53:37 PM
If that bounce up toward 544.40 is going to happen into the close, has to happen now, from the 543.70-ish level just reached, and time might be running out before the close.

 
 
  James Brown   9/9/2004,  3:51:47 PM
FAST continues to sink now marking its fourth loss in a row after failing to breakout over the $65 level. Today's 2% decline marks a failure at the 40-dma and a breakdown under the $60.00 mark and its simple 50-dma.

 
 
  James Brown   9/9/2004,  3:49:44 PM
NTAP has put together three-days of gains to finally breakout through the top of its descending channel. Shares are now challenging resistance at the $22.00 level.

 
 
  Linda Piazza   9/9/2004,  3:49:43 PM
I'm kinda-sorta expecting an OEX bounce up toward 544.40 or so, but not sure it will happen.

 
 
  Jonathan Levinson   9/9/2004,  3:49:27 PM
The VXO is now up to 13.87, +1.24%. The low print at 13.34 was approximately an 8 year low.

 
 
  James Brown   9/9/2004,  3:48:25 PM
RIMM has added another 2.5% and broken through the $66.00 level. Traders are probably aiming for round-number resistance at $70.

 
 
  Linda Piazza   9/9/2004,  3:48:14 PM
OEX support is trying to firm again near 544.09-544.15 and then again at 543.85. That may be support enough to bounce the OEX, but perhaps not too far, once again. A strong enough downward drive can break through.

 
 
  Mark Davis   9/9/2004,  3:47:35 PM
What a move in NSM today... +12.83% and just off its HOD. I guess with a PE of 16 on such a quality company they decided it was time to start nibbling.

 
 
  James Brown   9/9/2004,  3:47:05 PM
In last night's watch list we mentioned APOL looked like a bearish candidate. The stock has fallen another 1.8% to test support at the $80.00 mark. In doing so it has broken its simple 50 and 200-dma's.

 
 
  Jonathan Levinson   9/9/2004,  3:45:56 PM
QQQ is going net nowhere, chopping sideways within the 34.60-.70 confluence zone. The short cycles are taking the first steps of a short cycle downphase with the wavelet oscillator bottoming here- so far the pullback appears corrective, but QQQ has to hold the 34.60 level to maintain hope of a short cycle bullish trending move.

 
 
  James Brown   9/9/2004,  3:45:51 PM
Internet empire-builder InterActiveCorp (IACI) is down 3.78% and breaking support at the $22.00 level. Its MACD is very close to a new "sell" signal.

 
 
  James Brown   9/9/2004,  3:43:46 PM
Networking titan CSCO is up 3.6% while cracking resistance at the $20.00 mark.

 
 
  James Brown   9/9/2004,  3:43:01 PM
It's interesting that AMGN is not participating in the NASDAQ's rally today. The two or three-day pattern looks like a potential bearish reversal.

 
 
  Linda Piazza   9/9/2004,  3:37:20 PM
The Russell 2000 is still above its 200-sma, but by less than a point.

 
 
  Mark Davis   9/9/2004,  3:33:04 PM
SPX just printed a pretty good sell signal on the 1-min chart... if this is indeed a trending move leading to a break above 1125 it should abort early, before EOD, but it has already knocked more than two points off the index... much further and it may become the real deal. I would not want to see the last swing lows @ 1117.50 taken out if I were in a bullish trade.

 
 
  Linda Piazza   9/9/2004,  3:29:24 PM
The OEX did find it easier to decline than to advance. (Referencing my 15:21 post.) Support is trying to converge beneath the OEX, but is still too scattered to say where strongest support would be. Bears hoping for H&S confirmation want to see five-minute closes beneath the line currently at 544.70. I caution, though, that this could all just be part of a settling-into-equilibrium consolidation at the top of the right-shoulder formation, and we could be stuck here through the end of the trading day. The Dow, TRAN, SPX, and OEX have all preserved the possibility of forming H&S's, but anything can and might happen the last Friday before a 9/11 holiday.

 
 
  Jonathan Levinson   9/9/2004,  3:28:55 PM
QQQ chart update at this Link.

 
 
  Linda Piazza   9/9/2004,  3:21:52 PM
On the OEX's five-minute Keltner chart, support has thinned beneath the OEX. Resistance attempts to converge near 545.10-545.22. If the OEX pushes through it quickly, it can probably get through that resistance, but for now, that looks stronger than support, suggesting that the OEX will find it easier to decline than advance over the very short term.

 
 
  Linda Piazza   9/9/2004,  3:18:17 PM
In reference to my 15:15 post, there is an analogous inverse H&S on the SPX's 10-minute chart, with the neckline also now being retested, but the Dow's is a steeply sloping formation with a steeply descending neckline. That neckline is also being retested.

 
 
  James Brown   9/9/2004,  3:16:26 PM
This seems to be a tech stock and oil stock-only rally. Gains elsewhere in the markets are mild.

 
 
  Linda Piazza   9/9/2004,  3:15:56 PM
We have battling H&S and inverse H&S formations on the OEX today. Here's a confirmed inverse H&S, with the OEX now headed right back to test the neckline level: Link I suspect that if we were to look at the Dow and SPX, we'd find analogous formations.

 
 
  Jonathan Levinson   9/9/2004,  3:11:37 PM
Took the words out of my mouth, Linda- I was about to post that the VXO is down just .03, but it dropped to 13.44, down .26 or 1.90%. These look like nosebleed low levels to me, but QQQ is teetering on the verge of an upside whipsaw reversal on the daily chart.

 
 
  Linda Piazza   9/9/2004,  3:10:10 PM
VIX is at 13.74.

 
 
  Linda Piazza   9/9/2004,  3:08:56 PM
Those potential H&S's on the Dow, SPX, and OEX are looking a bit iffy now, although they can't yet be ruled out. The Dow never broke above an appropriate right-shoulder level. Neither did the TRAN. Both the OEX and SPX broke slightly above levels that made comfortable right shoulders for bearish tastes, but pull back slightly now, preserving the possibility that there was just a stop-run push that's getting reversed now. There's something I don't trust about this day. Maybe we should be paying attention to Jim's comments about support pre-9/11. The formations are bearish across many indices: the internals have not been. On the bullish side of the fence, though, I keep remembering that fat-finger Russell 2000 trade on 9/11, with the markets zooming up the next day and that buy program--whether erroneously entered or not--preceding that zoom.

 
 
  Jonathan Levinson   9/9/2004,  3:08:50 PM
Volume is declining on the pullback from the highs, but the short cycle oscillators are maxxed out and a break below 34.60 QQQ would set up a retest of the 34.47-.50 level we saw an hour ago.

 
 
  Jonathan Levinson   9/9/2004,  3:01:39 PM
QQQ has broken above the previous high for the week and is now less than 10 cents away from the high for the move. As discussed last night, a break above the 34.80 resistance level on a closing basis will begin the process of restoring the daily cycle upphase, while a closing break above 35 will confirm it. I'd expect the short covering along above 34.85 to be enough to get us to 35, following which there should be a new round of sellers waiting at that level.

 
 
  Linda Piazza   9/9/2004,  2:57:59 PM
Whether it was a diamond or neutral triangle, the NDX has broken above the top trendline on the formation on its daily chart, also breaking above the 50-dma. Bulls don't want to see it pushed back below those levels now. So far, TRIN suggests that it won't be, but does something seem weird about the TRIN today to anyone else?

 
 
  Linda Piazza   9/9/2004,  2:55:39 PM
Not wishing to be left behind now that the Russell 2000 has crossed its 200-sma, the OEX attempts a push up toward that average on its chart. A move much past the current 545.45 level would undo the possibility of that H&S forming.

 
 
  Jonathan Levinson   9/9/2004,  2:53:11 PM
QQQ chart update at this Link . Yesterday's high has been broken by a few pennies. Next confluence above 34.70 is at 34.80, following which is 35.00 QQQ resistance.

 
 
  Linda Piazza   9/9/2004,  2:52:20 PM
Here's a chart from last night's Wrap, along with the original annotations, showing why I'm watching the SOX with respect to its 20-sma: Link

 
 
  Jonathan Levinson   9/9/2004,  2:51:37 PM
Session high for ER futures here.

 
 
  Jonathan Levinson   9/9/2004,  2:50:01 PM
The high print is 34.70 QQQ here, the top of confluence resistance.

 
 
  Linda Piazza   9/9/2004,  2:49:44 PM
BIG gain in the SOX. It's testing its 20-sma as I type.

 
 
  Linda Piazza   9/9/2004,  2:47:52 PM
There's the test of the Russell 2000's 200-sma. Bulls do not want to see the Russell 2000 slapped back now.

 
 
  Linda Piazza   9/9/2004,  2:45:22 PM
The Russell 2000 is on the move again, soon to test its 200-sma if it keeps rising.

 
 
  Linda Piazza   9/9/2004,  2:42:15 PM
The TRAN is headed down within its 3180-3200 range, at 3189.85 as I type. The TRAN has a H&S-ish formation of its own, although not as nicely formed as that of the SPX and the OEX and Dow. Link The TRAN's version bears watching, though, because this indicator index could be the first to confirm or refute the formation.

 
 
  Jonathan Levinson   9/9/2004,  2:41:12 PM
No sign of weakness in crude oil today, which closed higher by 1.85 or 4.32% at 44.625. Waiting for the evening session to commence.

 
 
  Jonathan Levinson   9/9/2004,  2:36:38 PM
QQQ chart update at this Link.

 
 
  Linda Piazza   9/9/2004,  2:35:57 PM
The TRIN still isn't supporting anything bearish today. Crude costs have been rising, perhaps adding pressure, although there's been a bit of disconnect this week in the usual inverse relationship between equities and crude costs. We just have to be patient and wait out these H&S formations.

 
 
  Jonathan Levinson   9/9/2004,  2:31:14 PM
QQQ is bouncing back to the prior highs as GE and INTC print session highs. A break above 34.65 should provide sufficient short covering to challenge 34.70, while a failed double top here would encourage the bears to pile on. This is a watershed battle for the current range here.

 
 
  Linda Piazza   9/9/2004,  2:28:40 PM
Well, the Keltner support definitely was firm enough to hold. (See my 14:17 post.) Now the OEX has hit the top-of-the-shoulder level. There's Keltner resistance up to 544.61. It still looks possible that the OEX is trying to settle into an equilibrium position with regard to the keltner charts, so that the OEX could still be trapped in a range for a while longer. Keltner support is still just above 543.50, as well as possibly at 544, and still looking relatively firm.

 
 
  Linda Piazza   9/9/2004,  2:17:55 PM
The OEX didn't get far, and now drifts down toward the gathering Keltner support again. That support on the five-minute Keltner chart is from 543.47-543.59. The OEX is looking weaker now than it did earlier, and it's possible that a downside break out of that support could be attempted, but it still looks relatively firm despite the slight weakening with respect to the last time this support was tested.

 
 
  Jane Fox   9/9/2004,  2:11:59 PM
Dateline WSJ Economists continue to pare their forecasts for hiring and economic growth as high oil prices and other uncertainties sap confidence among businesses.

The 55 economists who participated in the latest Wall Street Journal Online economic forecasting survey, on average, expect the economy to add 182,000 jobs a month for the next 12 months. That's down from an average forecast of 194,000 jobs a month in the August survey and from 207,000 in May.

The economists also marked down their forecasts for gross domestic product, the total value of good and services produced in the economy. They now expect the economy to expand at a 3.6% rate in the third quarter and 4.0% in the fourth period. As recently as June, they had forecast growth at an average rate of 4.3% over the balance of the year. In the second quarter, GDP grew at a 2.8% rate.

 
 
  Jonathan Levinson   9/9/2004,  2:09:48 PM
The line at 34.47 never cracked: Link

 
 
  Jim Brown   9/9/2004,  2:09:09 PM
Fox is reporting there is a new video tape of the number two guy in Al Qaeda making new threats.

 
 
  Linda Piazza   9/9/2004,  2:06:28 PM
The OEX did not maintain the needed five-minute closes in order to keep that upside target near the 200-sma. Currently, Keltner support gathers beneath the OEX from 543.42-543.58, looking firm enough to support the OEX. However, the smallest Keltner channel turns lower and some resistance gathers near 544.50. For the short-term, at least, though, it looks easier for the OEX to rise than fall far.

I originally scrambled to get this post made before the OEX actually began to climb, but wanted to add my cautions that it's possible that any rise won't send the OEX far, either. I think it may be settling into an equilibrium position with regard to that five-minute chart. If so, we could see it trapped in a tight range for a while near the top of the right-shoulder level. The OEX has been there long enough now that it might be ready to either break higher and refute the formation or turn lower, but until proven otherwise, we could still be in for a bit more consolidation in a relatively tight range.

 
 
  Linda Piazza   9/9/2004,  2:01:07 PM
Here are the potential H&S formations I'm watching on the SPX, OEX, and Dow, for either signs that bulls have won by sending the indices past the right-shoulder levels or bears have won by a move through the necklines: Link

 
 
  Jonathan Levinson   9/9/2004,  1:58:46 PM
QQQ is just resting on the 34.47-.48 line and it looks very heavy, but has not yet broken it after 5 minutes at that level.

 
 
  Linda Piazza   9/9/2004,  1:51:38 PM
If those right shoulders for the potential H&S's on the Dow, SPX, and OEX are going to form, we could have a few hours of consolidation near the top of the shoulder level before anything happens. The Russell 2000's behavior suggests that markets might climb instead of rollover and the TRIN sure isn't suggesting a deep decline, but I'm still watching for either further confirmation or for a sound refutation of the formation by a push above the right-shoulder level and then above the 200-sma.

 
 
  Jonathan Levinson   9/9/2004,  1:49:06 PM
The short cycle TRIX is looking toppy here even as the short cycle stochs continue their bull runs on QQQ. Only the wavelet cycle, the shortest cycle I track (3rd pane from the bottom at this Link ) is suggesting a pullback. Above 34.48 QQQ, the outlook is bullish, below it I expect next support at 34.37, below which a new short cycle downphase will begin, setting up a retest of the session lows.

 
 
  Jonathan Levinson   9/9/2004,  1:45:22 PM
That higher bounce from 34.50 is a good sign. A move above yesterday's high should see some short covering come in.

 
 
  James Brown   9/9/2004,  1:44:56 PM
While ChevronTexaco (CVX) is hitting new all-time highs and breaking out over the $100 mark.

 
 
  James Brown   9/9/2004,  1:44:23 PM
ExxonMobil (XOM) is trading at new 3 1/2 year highs here.

 
 
  James Brown   9/9/2004,  1:43:04 PM
Ouch! Ball Corp (BLL) is down 3.39% on heavy volume after breaking out to a new all-time high yesterday. CSFB downgraded the stock this morning to an "under perform" from "neutral" based on valuation.

 
 
  James Brown   9/9/2004,  1:41:11 PM
Software maker Adobe Systems (ADBE) is now up four out of the last five days and hitting new three-year highs over the $48.00 level. The P&F chart has produced a bullish buy signal with a $65 target.

 
 
  Linda Piazza   9/9/2004,  1:38:34 PM
So far, the OEX is holding right where it should to preserve the possibility of moving toward next Keltner resistance--up to about the same level as the 200-sma. However, I just keep looking at that potential H&S formation on the OEX, as well the Dow and SPX, and all are pausing just where you'd expect them to pause for a right shoulder. So, I'm far from confident that the OEX will move up to retest the 200-sma, but also far from confident that the H&S's will confirm. We have opposing patterns . . . now the OEX is dropping below the level it needed to maintain on the Keltner chart.

 
 
  James Brown   9/9/2004,  1:38:26 PM
In spite of reporting a mixed Q1 report and issuing negative Q2 revenue guidance shares of National Semiconductor (NSM) are up 9.4% on very strong volume today.

 
 
  Jonathan Levinson   9/9/2004,  1:37:26 PM
Here's the pullback suggested by the upside 30 min Keltner channel violation. Bulls want to see 34.48 hold on the retest.

Meanwhile, bonds have weakened, with TNX +3.4 bps at 4.197% currently.

 
 
  Linda Piazza   9/9/2004,  1:31:32 PM
The OEX's five-minute chart shows that the OEX has just accomplished a breakout above one channel's top resistance, setting up a possible upside target of 546.23. To keep that target in sight, however, bulls want to see the OEX maintain five-minute closes above the channel line now at 544.26, with that channel line climbing along with the OEX. Otherwise, a quick reversal back inside the channel would tend to refute the breakout.

 
 
  Jonathan Levinson   9/9/2004,  1:30:14 PM
The current move has just violated 30 minute channel resistance at 34.56, below 60 min resistance at 34.65. The short cycle upphase is just getting started, however, and there's a decent chance of a trending upside move if 34.48 holds as support. Link

 
 
  Linda Piazza   9/9/2004,  1:27:40 PM
The SPX is approaching the right-shoulder level for a potential H&S, with that right-shoulder level extending up to 1120 or perhaps 1121: Link Watch for a zoom past these levels (refuting the formation) or a steadying here as a prelude to a roll down toward the neckline.

 
 
  Jonathan Levinson   9/9/2004,  1:25:45 PM
This surge has just powered above the trendline resitance on the previous chart- next test is yesterday's high at 34.56, followed by the 34.60-.70 confluence for QQQ.

 
 
  Jonathan Levinson   9/9/2004,  1:21:38 PM
QQQ update at this Link - trendline resistance being tested here.

 
 
  Linda Piazza   9/9/2004,  1:18:14 PM
Futures traders are commenting on the strength of the Russell 2000's futures. Those on the options side might also watch as the Russell 2000 deals with the current 563-ish area and the 200-sma at 565.85.

 
 
  Mark Davis   9/9/2004,  1:16:50 PM
SOX just printed a new HOD

 
 
  Jonathan Levinson   9/9/2004,  1:16:35 PM
The 10-yr treasury note auction generated a decent bid-to-cover ratio of 2.12, but very little of that demand was generated by foreign bidders. I expect that that's at least in part behind the weakness in bonds today.

 
 
  Jonathan Levinson   9/9/2004,  1:15:18 PM
And session low for 10-yr bond futures, with TNX up 2.7 bps at 4.19%.

 
 
  Jonathan Levinson   9/9/2004,  1:14:52 PM
Session high for Russell2K futures here.

 
 
  Linda Piazza   9/9/2004,  1:13:33 PM
The OEX has retraced more than half of this morning's decline, but is struggling with the 61.8% retracement level, at about 543.66. The OEX is also struggling with mid-channel Keltner resistance on the five-minute chart, with that resistance just below the 61.8% retracement. The Keltner line that usually stops the OEX is now at 544.10.

 
 
  Jim Brown   9/9/2004,  1:12:48 PM
Note the correlation between the spike in the A/D line and the spike in the Russell. It is definitely a small cap day. Link

 
 
  Jonathan Levinson   9/9/2004,  1:11:56 PM
QQQ is taking a bounce as sharp as the drop that preceded it, launching from a bullish Macd divergence that I wish I had seen 20 minutes ago when it was printing. The previous high was 34.37, and it's just getting crossed now, but not on the volume I'd want to see. A move above 34.48 should seal the deal and set up a retest of the session highs if the move above 34.37 doesn't reverse first.

 
 
  Linda Piazza   9/9/2004,  1:08:05 PM
The TRAN broke above 3200 today during the first ten minutes of trading, reaching a high of 3206.85, just below the 3212.45 intraday high of 7/01. The closing high was 3202.09, reached 6/30. The TRAN dropped down after reaching that high, but is now rising again within the roughly 3180-3200 trading range it's established over the last couple of days. It's at 3197.02 as I type.

 
 
  Jim Brown   9/9/2004,  1:07:31 PM
The internals today are completely contrary to what you would expect. The A/D volume is nearly 2:1 in favor of up volume and the A/D line is positive +720. With the Dow down all day and the Nasdaq just now returning to positive territory along with the SPX you would expect the internals to be negative. The buy program currently underway in the Russell must be pumping some serious small cap volume through the system.

 
 
  Linda Piazza   9/9/2004,  1:00:29 PM
So far, the NDX and Nasdaq continue to be pressured lower by their 50-dma's, but that formation at the top of their climbs puzzles me. Is that a diamond shape (likely bearish) or are we just looking at a neutral triangle forming? Link Either way, a sustained break above the 50-dma and the upper trendline would suggest an upside breakout, while a fall beneath the lower trendline would be a breakdown, troublesome, too, because of nearby support.

 
 
  Jonathan Levinson   9/9/2004,  12:56:10 PM
Nymex crude is up 3.21% or 1.375 to 44.15 currently. Link

 
 
  Linda Piazza   9/9/2004,  12:54:04 PM
On the five-minute chart, the OEX's climb looks like a potential bear flag. If so, it will possibly run into difficulties by 543.31, the 50% retracement of the last drop, or 543.66, the 61.8% retracement of that last drop. The right-shoulder level for the OEX's 30-minute H&S would be nearer 544.40 than 543.30-543.60, however. We're not assuming a rollover at one of these levels, but watching carefully to gauge market strength or weakness. Bulls want those levels to be surpassed. Bears of course want rollovers beneath them.

 
 
  Jonathan Levinson   9/9/2004,  12:52:50 PM
Despite the weakness in gold, the miners are up today, with HUI +.76% at 199.86, XAU +.29% at 92.04.

 
 
  Jonathan Levinson   9/9/2004,  12:51:49 PM
Good catch, Linda, re: your 12:49.

 
 
  Linda Piazza   9/9/2004,  12:49:35 PM
Those who are fans of inside-day theory should note that the BIX today dropped below both yesterday's inside-day candle and the previous day's low. I use the BIX as an indicator index, so I wouldn't be buying or selling it, but this confirms at least short-term weakness in this index.

 
 
  Jonathan Levinson   9/9/2004,  12:47:14 PM
As well, a coupon pass of 799M was announced. This is a permanent market operation and an addition to liquidity in that amount, bringing the day's net add to 2.54B.

 
 
  Linda Piazza   9/9/2004,  12:47:05 PM
We've seen a lot of H&S formations, both regular and inverse, that fail to form the right shoulders. Those who know the implications of the formation, as most do now, just go ahead and buy or sell at the neckline, as is appropriate to the formation. If you're in a long position, be cautious and have plans in place to protect profits in case that happens and a right shoulder formation collapses quickly. We don't know that the H&S's on the SPX, OEX, and Dow will ever finish forming, but just be aware.

 
 
  Jonathan Levinson   9/9/2004,  12:46:16 PM
There was a net add from the Fed's open market desk this morning in the amount of 1.75B- a relatively minor amount.

 
 
  Linda Piazza   9/9/2004,  12:44:36 PM
What are the Keltner charts showing about the OEX right now? The five-minute chart showed support gathering near 541.80-542, the downside target of yesterday's H&S. Now, the OEX is facing resistance on that chart at 542.95-543. The 15-minute chart shows resistance gathering at that level, too, and then again at 543.55. Bulls want to see the OEX maintain five-minute closes above the line currently at 542.51 to preserve the hope that the OEX is climbing toward 543.50. Bears want to see five-minute closes below that level to turn the smallest channel lower again.

 
 
  Jim Brown   9/9/2004,  12:44:17 PM
Sorry for the monitor outage this morning. We had a server hiccup early this morning and it took forever to get it back up. At least it always seems like forever when the market is open and we can't post.

 
 
  Jonathan Levinson   9/9/2004,  12:41:27 PM
QQQ printed a lower high at 34.59 below yesterday's 34.66 high, which is bearish within the current range, but there's been no violation of support. The short cycle oscillators are bottomy but not yet showing a bounce, and volume provides no clues so far.

 
 
  Jonathan Levinson   9/9/2004,  12:39:45 PM
Good to be back. QQQ is in a short cycle downphase within a declining 30 min cycle channel, with support lined up with the 60 min channel at 34.05, which we know to be lower confluence. The current range remains a perilous chop zone, and I'm looking for either a downward break of 34.05 to set up a test of range support at 33.80, a break below which needs to pass 33.60 to confirm the daily cycle downtrend, or a break above 34.60- then 34.80 and ultimately 35.00 QQQ, above which the bulls will be in control.

 
 
  Linda Piazza   9/9/2004,  12:39:36 PM
The OEX met the downside target projected by yesterday's H&S and by a continuation-form one this morning. While it was doing so, the SPX tested its 200-dma and we're now getting the to-be-expected bounce. TRIN isn't really going along with a bearish thesis yet. I'm looking at the possibility of a H&S forming on the top of the SPX and OEX climbs, with only the left shoulder and head formed on these, and that fits with the idea of a bounce now into a right shoulder. It's clearest on the SPX's 30-minute chart. That means that bulls should be careful as 1119-1120 is approached, if it is, as that's a possible rollover spot for a right shoulder. Bears should be careful of assuming this forming will complete and confirm, too. We're long past the time when we could make that assumption.

 
 
  James Brown   9/9/2004,  12:36:02 PM
Our recently added put play in MERQ has been triggered with today's 1.99% drop through the $32.50 level.

 
 
  James Brown   9/9/2004,  12:35:52 PM
Current OI call play FO isn't looking that strong so we're probably going to close it tonight.

 
 
  James Brown   9/9/2004,  12:35:31 PM
Wow! Mark, it looks like that short-squeeze has been in progress for a few days. The latest data showed short interest at 37% of the float.

 
 
  Mark Davis   9/9/2004,  12:34:34 PM
James take a look at TZOO, +15.76% ... another short squeeze in progress but it looks like it may be topping out.

 
 
  James Brown   9/9/2004,  12:34:28 PM
YUM Brands Inc (YUM), better known for its Taco Bell, Pizza Hut, KFC, Long John Silver's and A&W franchises, is breaking out to new all-time highs over resistance at the $40.00 mark. The company announced positive same-store sales growth and reaffirmed its guidance for 60 cents a share in the third quarter.

 
 
  James Brown   9/9/2004,  12:34:08 PM
Ulticom (ULCM) is up 5.24% to $11.06 after beating earnings estimates by 4 cents. The company turned in profits of 9 cents per share on sales of $16.1 million.

 
 
  James Brown   9/9/2004,  12:32:41 PM
Comverse Technology (CMVT) is up 6.1% to $18.58 as investors respond to its earnings report this morning where CMVT beat by a penny.

 
 
  James Brown   9/9/2004,  12:32:14 PM
Looks like oil & gas play Anadarko Petroleum (APC) is breaking out to new three-year highs over resistance at $61.00.

 
 
  James Brown   9/9/2004,  12:32:03 PM
Restaurant owner CBRL Group (CBRL) is up 7.5% and breaking out over resistance at its simple 100-dma, the $34.00 level and its exponential 200-dma. The move is investor reaction to earnings this morning where CBRL beat by a penny despite light revenues but they also announced a resolution to the discrimination lawsuit.

 
 
  James Brown   9/9/2004,  12:31:34 PM
Internet auction titan EBAY is actually starting to show some weakness here. After four days of struggling with resistance at the $90.00 mark we're seeing a little bit of profit taking. EBAYhas cracked the $88.00 mark and its simple 10-dma The next support level is the $85.00 mark.

 
 
  James Brown   9/9/2004,  12:31:00 PM
Rent-A-Center (RCII) is one of Thursday's biggest losers. The stock has gapped down and is currently trading at $26.32 (-14%). The move is a reaction to last night's earnings warning from RCII. Analysts were expecting Q3 numbers of 60 cents a share. RCII now expects profits in the 47-48 cent range.

 
 
  James Brown   9/9/2004,  12:30:39 PM
Smith Barney is turning bearish on some high-flying REITs. They've cut CPT, AMB and AVB to "sell" this morning after all three hit new highs in the last couple of days.

 
 
  James Brown   9/9/2004,  12:30:24 PM
Actually, I'm surprised. The insurance stocks are really not that beat up considering we've already had two hurricanes hit Florida and we're expecting another one (hurricane Ivan) to hit the states in the new few days.

 
 
  James Brown   9/9/2004,  12:30:04 PM
Marvell Technology (MRVL) has been out performing its peers and the SOX index over the last three weeks and shares are out performing again today. MRVL is up 3% to $23.85 after UBS upgraded the stock to a "buy".

 
 
  James Brown   9/9/2004,  12:29:36 PM
Texas Instruments (TXN) has gapped higher to $19.75 for a 5% gain as investors respond to its mid-quarter update last night. In spite of the rally today TXN remains under round-number resistance at $20.00 (for now) and its long-term trend of lower highs.

 
 
  James Brown   9/9/2004,  12:28:55 PM
AAPL is holding up pretty well, down 1.06 cents to $35.29, considering that Bear Stearns downgraded the stock to a "peer perform" since the stock has already tagged its $36.50 price target.

 
 
  James Brown   9/9/2004,  12:28:45 PM
Finnish handset maker Nokia (NOK) is trading higher after issuing stronger guidance for their third quarter. Wall Street was expecting earnings and revenues of 0.08-0.10 euros and 6.6-6.8 billion euros, respectively. NOK now sees profits of 0.11-0.13 euros on revenues of 6.8-6.9 billion. The stock has gapped higher to $13.65 (+7.39%).

 
 
  James Brown   9/9/2004,  12:28:37 PM
Look for steel stocks to trade higher today. UBS has started coverage on ISG, NUE and STLD with "buy" ratings.

Nucor (NUE) has announced a 2-for-1 stock split. Plus, it will raise its cash dividend 24% to 26 cents on a pre-stock split basis.

 
 
  Mark Davis   9/9/2004,  12:26:27 PM
After 20 minutes of trading the TRIN has settled in @ .74 and SOX is up 2.37%... as long as those numbers hold it will be difficult for the market to decline, however, we've returned right to the area where we spent most of yesterday... SPX 1119.
SPX did accomplish one small victory. It briefly exceeded yesterday's 2:12 and 2:29 swing highs @ 1120 before dropping back. The 1120 area has repeatedly stopped the market in its tracks so I would consider the taking of this area a bullish development. Just above is the 1121 swing high and then nothing between that and the recent high @ 1124.

 
 
  Jonathan Levinson   9/9/2004,  12:26:27 PM
The USD Index at this Link shows anything but a rally- I'm hearing that they're reporting a dollar rally on TV this morning, but I don't see it.

 
 
  Jonathan Levinson   9/9/2004,  12:26:27 PM
The USD Index at this Link shows anything but a rally- I'm hearing that they're reporting a dollar rally on TV this morning, but I don't see it.

 
 
  Mark Davis   9/9/2004,  12:26:27 PM
After 10 minutes of trading the TRIN has settled in @ .74 and SOX is up 2.37%... as long as those numbers hold it will be difficult for the market to decline, however, we've returned right to the area where we spent most of yesterday... SPX 1119.
SPX did accomplish one small victory. It briefly exceeded yesterday's 2:12 and 2:29 swing highs @ 1120 before dropping back. The 1120 area has repeatedly stopped the market in its tracks so I would consider the taking of this area a bullish development. Just above is the 1121 swing high and then nothing between that and the recent high @ 1124.

 
 
  Jonathan Levinson   9/9/2004,  7:56:11 AM
Equities are lower, with ES trading 1115.75, NQ 1374.5. YM 10299 and QQQ -.14 at 34.18. Gold is down 10 cents to 401.40, silver -.043 to 6.165, ten year bonds up .218 at 113.6406 and crude oil up a nickel to 42.825.

 
 
  Linda Piazza   9/9/2004,  7:08:04 AM
Good morning. Worries derived from the Fed's Beige Book hit Japanese stocks Thursday morning. Exporters fell in early trading, ahead of the expected mid-afternoon release of Japanese machinery orders. The Nikkei climbed into positive territory just before that 2:00 pm release, hitting its high of the day before plummeting into the close after the release of that number. The market was also impacted by renewed terrorism fears after an explosion that damaged the outside of the Australian Embassy and nearby buildings in Jakarta, killing at least six people. The Nikkei closed lower by 108.23 points or 0.96%, at 11,170.96.

July's core machinery orders declined a seasonally adjusted 11.3%. Expectations had been for a 2.2% decline, but some mentioned the volatility seen in these numbers. That didn't stem the broad-based selling that occurred after the release of the number. This number serves as a leading indicator for corporate spending.

Other Asian markets turned in mixed performances. The Taiwan Weighted lost 0.05%, but South Korea's Kospi gained 0.74%. Singapore's Straits Times gained 0.31%, but Hong Kong's Hang Seng lost 0.83%. China's Shanghai Composite lost 1.91%, closing beneath 1,300 for the first time in at least three years.

Currently, European bourses turn lower, too. In the U.K., the Bank of England met, but did not change rates. The Royal Bank of Scotland leads decliners, with Banco Santander having sold half its position in the bank as part of its strategy while seeking a takeover of Abbey National. Defense and aerospace group BAE Systems disappointed, with that company's stock dipping in European trading, but InterContinental Hotels Group rose after its earnings report, perhaps giving a different picture of demand than a hotelier did yesterday. Caterer Compass Group plummeted after it warned.

In Continental Europe, IT consultant Cap Gemini's H1 results disappointed, although the company did report an increase in orders, more than doubling since the year-ago period. The company reported a widening H1 loss, with cost overruns and decreased profit from North America the cause of the disappointment. Reaction to this company's earnings added to the pressure on tech stocks, following through on tech weakness in Asia. Terrorism concerns also weighed on European markets, as did the ECB's statement today that it will need to be vigilant to slow inflation below 2% next year, raising the specter of increased interest rates in the eurozone by the end of the year.

As of 7:00 am EST, the FTSE 100 had fallen 24.40 points or 0.54%, to 4,534.00. The CAC 40 had fallen 38.09 points or 1.04%, to 3,639.46. The DAX had declined 41.23 points or 1.06%, to 3,842.93.

 
 
  Jim Brown   9/8/2004,  10:45:47 PM
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  Linda Piazza   9/8/2004,  9:13:50 PM
The OEX came close to testing the top of its descending regression channel Wednesday when it rose to test its 200-sma. Like the Russell 2000, the OEX has not managed to move above its 200-sma. A break above that average and then above the top of the channel, currently at about 548, might signal an upside break, although the OEX would soon move into congestion beginning at about 549.50 and extending all the way up to 556. Some charts show potential upside likely to be capped at just over 553 on a first test of that level. Link

How likely is an upside break? The OEX had broken below its ascending trendline off the August 31 low by Wednesday's close, so would need to climb back above that trendline before the intraday bearish sentiment improved. A confirmed H&S Wednesday set a downside target between 541.50-542, at historical support/resistance and near the location of the 100-dma at 541.74. OEX 540.80 is also historical S/R and the location of a longer-term ascending trendline off the August 13 low, so that trendline present strong bounce potential, and any in bearish positions should have plans in place to protect profits if the OEX should test that level. A violation of that trendline sets up the potential for a retest of the converging 50-dma and 200-sma.

The five-minute Keltner chart showed the OEX approaching potential 543-ish support near the close, with near-term resistance at 543.67 and stronger at the 544-ish level. That resistance perhaps looked stronger than support, but the 15-minute chart showed that 542.50-543 support may be as strong as resistance.

With the indices approaching the top of their months-long descending regression channels and with the VIX having touched levels that usually indicate a market top soon to be made if not already made, I'm cautious about long positions. However, I'm not so cautious that I'll ignore a breakout, with the potential that the VIX is settling into an even lower range than that to which we've become accustomed.

 
 
  OI Technical Staff   9/8/2004,  9:13:43 PM
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