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  Jim Brown   9/13/200,  5:34:18 PM
LSI warning after the bell

  Mark Davis   9/13/200,  4:43:41 PM
We have 2/3 of an "Evening Star" formation on the SPX daily chart. Nobody knows what will happen tomorrow but I have found daily chart Evening Stars to be extremely reliable bearish patterns, especially on the major indices, so if we gap down and then stay down tomorrow (especially with a large red candle) my bias would begin to tilt from bullish to bearish, even if we stay above the "line in the sand" @ SPX 1114 for the day.

  Jim Brown   9/13/200,  4:38:38 PM
I had two decent entries for no gain but a big move is coming and I am perfectly happy to keep breaking even until that move appears.

  Mark Davis   9/13/200,  4:35:40 PM
That's not fair either Jane... you gave the MM "lunch money" for tomorrow.

  Mark Davis   9/13/200,  4:15:10 PM
Sheesh Jim! That's not fair! You had a great trade there.

  Linda Piazza   9/13/200,  4:04:37 PM
The OEX ends the day with a doji, the open and close just below the 200-sma.

  Linda Piazza   9/13/200,  4:02:06 PM
Reader L. offers this information: Have you been watching the Vix futures? The February 2005 contract is now down under 180! So, the Vix may not be warning us of a top, just yet. The spreads between the various monthly contracts have also been narrowing, suggesting that this upward move might conitnue for some time. Or, at least there will be no significant downward move.

I don't watch VIX futures, but offer this information for the readership, urging you to verify the information for yourselves.

  Mark Davis   9/13/200,  4:01:03 PM
Well they defended SPX 1125 into the close but not very convincingly.

  Jonathan Levinson   9/13/200,  3:58:11 PM
This wavelet upphase on QQQ is pulling the short cycle oscillators reluctantly along, with the first hint of a short cycle bounce showing. It will take a break above 35.49 to suggest that it's going to stick.

  Linda Piazza   9/13/200,  3:57:40 PM
The BIX is bouncing from the bottom of its ascending regression channel, a possible bear flag.

  Linda Piazza   9/13/200,  3:55:38 PM
Strong push higher in the TRAN over the last ten minutes, but it's dealing with Keltner resistance near the current 3221.26 level.

  Linda Piazza   9/13/200,  3:52:56 PM
Bulls need to push or the OEX is going to end the day below the 200-sma after having pierced it and after having reached up to test the upper trendline of its descending regression channel. That will leave a shooting star behind at the top of a steep climb. That's not going to be what bulls want to see. If the OEX then declines tomorrow, it will look oh so simple, won't it? Volatility indices have been warning us for days that a market top might be in the process of being made, as I and several others have cautioned. Several indices reached up to test the tops of their descending regression channels as volatility indices were dropping to cautionary levels. Only is anything ever that simple? I'm not going to take any bearish thoughts for granted until the OEX is below that ascending trendline off the 8/13 low, at least, and until the Russell 200, Dow, and SPX have moved back below theirs. Until then, this is just a retest of former resistance to see if it holds as support. If it does and markets bounce up again, who knows? Volatility could be settling into a new trading range. That's not the most likely explanation, but if early 2003 taught us anything, it taught us not to ignore that possibility while price just keeps moving higher.

  Jonathan Levinson   9/13/200,  3:49:43 PM
Look for former support to act as resistance at 35.42.

  Linda Piazza   9/13/200,  3:45:08 PM
The BIX did pierce the possible bear flag's support, but it has now bounced back up to that supporting trendline again and is now testing it.

  Linda Piazza   9/13/200,  3:39:57 PM
The OEX's 5-minute chart suggests that if the OEX bounces now, as it might, it might find resistance gathering at 545.95-546.41 to be strong enough to hold it back and turn it down again toward a test of that rising trendline off the 8/13 low. However, we're entering that time period when anything can and does happen at the end of a trading day.

  Jonathan Levinson   9/13/200,  3:37:25 PM
We recall the opening resistance, then support at 35.27 QQQ. Below the 35.34 fib line, that's the next support line. The short cycle oscillators are buried in oversold, but then they've just spend 2 days pegged and trending in overbought.

  Linda Piazza   9/13/200,  3:35:40 PM
The OEX heads down to Keltner support from 544.33-544.69, also the site of the ascending trendline off the 8/13 low. Bears should prepare for a possible bounce at that level, if it is hit.

  Mark Davis   9/13/200,  3:33:17 PM
SPX just printed another buy signal and this one could very well hold, at least into EOD. If it doesn't then we'll have a much more bearish situation on our hands. Not much of a bounce so far and it is weakening as I type. These inflection points (HOD today) are always so obvious in the rear view mirror. I still remain bullish until SPX 1114 and this being opex week with SPX max pain at 1100 things could get hairy... oops! They just did.

  Jonathan Levinson   9/13/200,  3:33:16 PM
Dow futures have just ticked negative.

  Linda Piazza   9/13/200,  3:28:36 PM
The SOX does head for next 60-minute Keltner support at 390.58, with support below that at 385.26-386.37. The 15-minute chart shows possible intervening support, however, perhaps near 388-390. Perhaps on a 15-minute basis (not meaning this 15 minutes, necessarily), then, the SOX might dip beneath the 390 level, but bulls would want to see a 60-minute close above the line currently at 390.58.

  Jonathan Levinson   9/13/200,  3:26:21 PM
The 30 min cycle channel has at last rolled over, but at 35.42, QQQ is resting right on now-flattened 60 min channel support. A short cycle bounce to a lower high would seal the deal for the bears on a 30 min and 60 min cycle basis, assuming that the bottom doesn't drop our from here. The short cycle oscillators have just reached oversold territory, but they're not yet maxxed out to the downside.

  Linda Piazza   9/13/200,  3:19:14 PM
So far, Keltner channels have done a good job today on the OEX. This morning, in my first OEX-related post at 9:11, I noted that certain information gleaned from Keltner channels as well as other methods showed that 548.30-549 might be difficult for the OEX, and that OEX bulls ought to have a profit-protecting plan in place if those levels were approached. The OEX high so far has been 548.52, right in the middle of that zone. We've still got enough time that almost anything can happen, but Keltner evidence suggests that unless the OEX can soon produce a 15-minute close above 547.01 or at least above 546.25, it's likely to head down to a retest of that trendline off the 8/13 low. That test, if it comes, will tell us much about future expectations for the OEX, but we might get at least the usual automatic bounce from that trendline.

  Mark Davis   9/13/200,  3:14:43 PM
I'm starting to smell toasted longs as bears keep overpowering every attempt at a rally since HOD. We're right at SPX 1125. If that level gives way I expect to see more acceleration to the downside. If it holds then bulls have defended an important area.

  Jonathan Levinson   9/13/200,  3:14:34 PM
Volume is beginning to pick up now, but there have been no divergent sell or buy programs. There's a slight bullish short cycle Macd divergence, but the short cycle oscillators are still pointing south as 35.42 QQQ support comes into play.

  Linda Piazza   9/13/200,  3:13:26 PM
The BIX is threatening to fall through the support of its possible bear flag, established on 9/09. However, it has pierced this flag's support before and then closed the 30- and 60-minute periods back above that support.

  Jonathan Levinson   9/13/200,  3:12:01 PM
35.49 has just failed, but volume remains flat - no great drama on the break. 35.42 is next support.

  Linda Piazza   9/13/200,  3:09:29 PM
So far, both the Keltner support and resistance I detailed in my 14:52 OEX-related post have held. On a five-minute basis, though, some of the Keltner supporting lines are turning south through the mid-channel level, indicating a slight weakening. The OEX is also hesitating near its 200-sma, of course, but the Keltner chart allows us to assess whether it's strengthening as it tests that support or weakening.

On the 15-minute chart, support is drifting down a little, toward 546.28. Bulls want to see 15-minute closes above that Keltner line to avoid a possible retest of the rising trendline off the 8/13 low.

  Jonathan Levinson   9/13/200,  3:04:01 PM
That 35.49 touch was repelled pretty quickly, but bulls need to regain 35.60 to put a crimp in the afternoon's pattern of lower highs and lower lows.

  Mark Davis   9/13/200,  3:02:30 PM
If bulls cannot stop the bleeding pretty soon (as in right now @ SPX 1126) bears will be sitting pretty with their short positions.

  Jonathan Levinson   9/13/200,  3:02:01 PM
QQQ is testing 35.49 support here.

  Linda Piazza   9/13/200,  2:56:11 PM
The SOX's 60-minute Keltner chart suggests vulnerability down to at least 390.87, but the 15-minute chart suggests that the SOX could attempt a bounce from near 392.92-393.44, perhaps back up to a Keltner line currently at 395.33, before it headed lower, even if it was going to do so.

  Linda Piazza   9/13/200,  2:52:51 PM
We're seeing an automatic bounce from the OEX's test of its 200-sma. Will it get far? The five-minute chart suggests that gathering support near 546.50 might be stronger than resistance although resistance tries to converge near 547.20-547.43. However, I also don't know that the OEX is through testing that support and supporting Keltner lines may have separated by the time it finishes testing that level.

  Jonathan Levinson   9/13/200,  2:49:35 PM
Unless this is a complex top/sloppy head and shoulders here at the intraday highs, the downside feels very weak so far: Link

  Linda Piazza   9/13/200,  2:49:04 PM
The BIX has been testing the bottom support of its rising regression channel from 9/09. Here's an updated chart from this morning, depicting that channel, complete with the original annotations: Link

  Linda Piazza   9/13/200,  2:42:28 PM
OEX 547.63 (the Keltner resistance formerly nearer 547.75) did not hold on a fifteen-minute intra-candle basis, but it did on a 15-minute closing basis. The OEX continues to be vulnerable to a drop, with next Keltner support having risen to 546.25 on the 15-minute chart. A drop below that line on a closing basis sets up the possibility of a move down to test that rising trendline off the 8/13 high. Fifteen-minute closes above 548.34 set up the possibility of another attempt at 549.54, with the OEX perhaps not then following the usual pattern once Keltner-style bearish divergence begins showing up on a Keltner chart.

  Jonathan Levinson   9/13/200,  2:41:20 PM
QQV is back to positive territory, up 1.72% to 17.74.

  Jonathan Levinson   9/13/200,  2:39:33 PM
35.49 QQQ is once again looking like key support. The lower wavelet high and the clear short cycle rollover make a break look very likely here.

  Mark Davis   9/13/200,  2:37:52 PM
That "blink" produced a (very short-term) higher low on the 1-min chart @ 1126.93. Bulls do not want to see 1127 taken out, and even more importantly 1126.56, the swing low off the decline from HOD. We're definitely at a critical juncture and a buy or sell program could turn the tide either way.
I didn't get that typed fast enough before the swoosh down. Trend is now definitely to the downside, unless that was an "underthrow" designed to shake bulls out of their positions.

  Linda Piazza   9/13/200,  2:36:58 PM
When rising to test historical S/R near 400 and 60-minute Keltner resistance currently near 400.88, the SOX also rose to test its 50-dma. It's powered through its 20- and 30-dma's today, but the confluence of these various types of resistance would appear to be tough for the SOX to get through. How many times have I typed that with reference to one index or another lately, though? ? However, it looks vulnerable down to 390.97, according to that 60-minute Keltner chart, or to rising support near 386.50 if that 390-391 area fails on a 60-minute closing basis.

  Linda Piazza   9/13/200,  2:31:19 PM
The OEX's ascending trendline off the 8/13 low is at about 544.20, near Keltner support from 544.42-544.54. If the OEX drops past the 200-sma and then past Keltner support currently at 546.22, then the OEX might be headed down for another test of that trendline. A bounce from that trendline might set up another climb and test of the 200-sma from the underside, and any bears should have a plan in mind as to how to handle such a bounce if it should come.

Clearly, a drop below that trendline would be a change in tenor, but would the OEX only be dropping down to establish another and smaller-sloped trendline off the 8/13 low? Or has it already had three trendlines off that low? Link The correlative-fan theory suggests that it's not until the third trendline is violated that the trend has been broken. Over the last few months, the correlative-fan theory has been working fairly well. Here's one version of drawing three trendlines off that low, but I'm not sure that the trendlines are correct because the 9/01 and 9/03 highs appeared to testing the underside of another, invisible trendline.

  Mark Davis   9/13/200,  2:29:25 PM
Somebody just blinked.

  Jonathan Levinson   9/13/200,  2:25:06 PM
A break above 35.70 should see a burst of short covering as the session highs get taken out. 35.49 QQQ never broke, and the 30 min cycle channel never rolled over. A lower high beneath 35.68, however, will embolden the bears and set up that 35.49 assault. Don't forget that this is opex week- narrow, extended ranges are par for the course.

  Mark Davis   9/13/200,  2:22:37 PM
This bounce is beginning to look like the real deal.

  James Brown   9/13/200,  2:22:28 PM
Best Buy Co (BBY) is up 55 cents to $51.00 following Friday's breakout over the $50.00 level. BBY could be a stock to watch with earnings due out Wednesday morning before the opening bell. Estimates are for 52 cents a share.

  Linda Piazza   9/13/200,  2:21:08 PM
The OEX shows more Keltner resistance gathering from the OEX's current 547.65 position up to 548.30, with that resistance looking perhaps strong enough to keep the OEX from making an attempt at the upper Keltner line currently at 549.46. If that's true, the OEX would be following a typical pattern once bearish divergence, Keltner style, begins to show up on the chart. The third approach is often an approach only and not a touch of that upper Keltner resistance. That's not always true, of course, and so price should be the ultimate guide.

  Mark Davis   9/13/200,  2:20:13 PM
James that's because I sold a painting on eBay today (grin)

  James Brown   9/13/200,  2:19:33 PM
Capital One Financial (COF) is ignoring the weakness in financials today and producing some follow through on Friday's bullish breakout. The stock's P&F chart looks pretty bullish with a new ascending triple-top breakout buy signal and $82 target.

  Linda Piazza   9/13/200,  2:17:57 PM
The TRAN did confirm its H&S at the top of its climb. It has not yet hit the downside target, but it did hit central Keltner support on the five-minute chart: Link See the Keltner support gathering from 3215.83-3218.13 and the resistance trying to gather overhead? At this moment, that support perhaps looks slightly stronger than resistance, but I don't think the TRAN is through testing that support yet and the lines could shift if it continues to find resistance at the red line currently at 3220.09. As I uploaded the chart, the TRAN was still finding resistance at that line, but the support lines had not separated.

  James Brown   9/13/200,  2:17:49 PM
Internet auction titan EBAY is up 1.97% and breaking out over resistance at the $90.00 level.

  James Brown   9/13/200,  2:17:11 PM
RIMM is nearing resistance at the $70.00 mark.

  James Brown   9/13/200,  2:15:58 PM
Software stock ADBE is starting to fade a bit after breaking out over the $50.00 level earlier this afternoon. The stock looks overbought with a 20% gain in the last six-weeks.

  James Brown   9/13/200,  2:14:26 PM
Kimberly Clark (KMB) is bouncing from its retest of support at the $66.00 level. This looks like a bullish entry point after last week's breakout.

  Mark Davis   9/13/200,  2:08:38 PM
We're definitely seeing some buyers come in attempting to catch a bottom in the 1126.50 area. SPX has printed a buy signal again but if it aborts early I see the next real support in the 1125 area.

  Linda Piazza   9/13/200,  2:07:53 PM
Five-minute Keltner resistance lines have now thinned, suggesting that if the OEX could produce five-minute closes above the Keltner line currently at 547.54, it could climb higher than 547.75 or so. Bears want to see five-minute closes beneath that line and fifteen-minute closes beneath 547.65 or at least 548.

  Linda Piazza   9/13/200,  2:04:57 PM
Still watching for an OEX bounce up toward 547.75 or so, but it's possible that the last move up to 547.46 was the test. The three-minute Keltner chart suggests that it wasn't, though.

Couldn't get that typed fast enough. The bounce started from three-minute Keltner support.

  Jonathan Levinson   9/13/200,  2:01:35 PM
The wavelet downphase for QQQ is bottoming here as the short cycles finally rollover, the largest short cycle dip since Friday's open. So far, 35.49 QQQ hasn't been touched. Below 35.49, the 30 min channel will enter a downphase, setting 35.42 and 35.34 as next support.

  Linda Piazza   9/13/200,  1:56:17 PM
An OEX test of its 200-sma appears possible, but perhaps not before a test of nearest fifteen-minute-chart Keltner resistance at 547.71. At this point, resistance looks stronger than support, so the OEX may not get back as high as 547.71 before turning lower again.

  Jonathan Levinson   9/13/200,  1:53:24 PM
35.49 is 30-min cycle channel support for QQQ. A failure to bounce quickly back to the .60's should see that support begin to decline, signalling a rollover in the so-far firm 30 min cycle.

  Mark Davis   9/13/200,  1:51:52 PM
SPX confirmed a sell signal about 1 pt below HOD and has printed 3 successive MACD bearish kisses since the signal (three strikes yer outta there?). As I type this SPX is attempting to print a buy signal right at the 11:00-11:15 swing lows. Another bearish kiss would probably be the kiss of death but a bullish cross could stop the decline.
WHOA! SPX just confirmed the buy signal with a monster green candle... well, maybe "monster" is a bit too strong a word, as the red candle 8 minutes earlier was even larger, and I now see the large green candle has been almost completely retraced.

  Linda Piazza   9/13/200,  1:47:30 PM
Based on evidence on the OEX's fifteen-minute chart, the OEX now looks vulnerable to a drop toward 546.10 or to 544.44, if that first support fails on a fifteen-minute closing basis. Fifteen-minute closes above 547.75 would change that outlook.

  Linda Piazza   9/13/200,  1:45:58 PM
The SOX approached that 60-minute upper Keltner line I had mentioned in my 11:30 post, with some history of recent SOX approaches to that Keltner line mentioned in that post. Now, 60-minute Keltner support thins beneath the SOX. It looks vulnerable on the 60-minute chart to a drop to 389.99 and maybe even to 384.88, depending on whether there are 60-minute closes beneath the Keltner line currently at 389.99 or not. However, we have a number of bears in semi stocks who would just love to cover, I imagine, and they may not let it drop far enough and fast enough in their rush to cover at lower levels.

  Jonathan Levinson   9/13/200,  1:43:32 PM
QQQ is testing 35.58, the site of the last wavelet bounce. A break, which appears to be happening as I type, sets up a test of 35.42 support, below which a short cycle downphase will be in play. The 30 min cycle upphase is stalled, but has yet to roll over.

  Linda Piazza   9/13/200,  1:37:35 PM
If there's a 15-minute OEX close beneath 547.88, then the OEX looks vulnerable down to 546.05 and then to 544.25-544.40, if the first support fails, with that support rising. However, that's on a Keltner chart and that's ignoring the presence of the 200-sma between the current OEX level and the mid-channel support level.

  Linda Piazza   9/13/200,  1:34:18 PM
Stop-running push to the downside. Market participants are waiting to see if it's quickly bought or if the decline steepens. Five-minute support is trying to converge near 547.52, but it may not have time to converge if the descent is steep enough.

  Linda Piazza   9/13/200,  1:32:40 PM
So far, that Keltner resistance on the five-minute OEX chart is holding and it even appears to be firming more. On the short-term, it looks easier for the OEX to decline than to rise past 548.37 on a five-minute closing basis. The 15-minute chart still shows support near 547.80-547.90, so that one of those is going to have to break before the OEX moves very far. If we were to assume that the bearish-style Keltner divergence was going to follow its usual pattern, then we'd assume that the support would break, but on a day like today, that's a dangerous assumption. We also have to assume that there are some hurting shorts just waiting for a dip. If it doesn't come, they're going to capitulate and buy to cover. We may see soon, during the usual stop-running period beginning any moment.

  Mark Davis   9/13/200,  1:31:49 PM
On the SOX daily chart the index rose from the lower b-band to the upper b-band in just 3 trading days (today being the third). The upper b-band sits right at 399.75, making the 400 level all the more formidable a challenge. A move above 400 would be very bullish indeed but we are at very strong resistance.

  James Brown   9/13/200,  1:30:39 PM
Check this out... Navistar (NAV) has announced a new giant pick-up. The CXT or Commercial Extreme Truck is built on the same chassis as their tow-truck and cement-truck models.

The vehicle is 21.5 feet long. That's 4.5 feet longer than the Hummer H2 and 2 inches longer than Ford's F350 crew cab. But wait, there's more... the new CXT is 11 feet tall and is expected to get between 6 and 10 miles per gallon of diesel fuel.

The company only plans to sell about 50 units a year with a price range of $93,000 to $115,000. (source: CNN)

  Jonathan Levinson   9/13/200,  1:28:28 PM
On the weekly chart signals, Ken's comment makes the important point that while a given set of indicators may or may not be issuing signals, those indicators are only relevant in the context of their surrounding timeframes. Here, the Nasdaq is on a fresh weekly buy signal, at the top of a daily cycle whipsaw and a trending 30 minute cycle upphase since Friday. This tells me that while a downphase is due on the shorter timeframes, I should begin expecting higher lows to confirm the weekly upphase- in particular, that would be a higher low on the daily chart (if the daily cycle downphase ever gets moving), or a break above the weekly descending channel to negative the corrective downphase scenario.

  Jonathan Levinson   9/13/200,  1:24:41 PM
Hi Jonathan: What weekly cycle oscillators are you using to get your buy signals? I am using Slow Stochastics (5,3,3) and Slow K crossed above Slow D at the end of July. At the present time my Stochastics show the indices to be overbought with Slow Ks over 80. I, therefore, do not see any Buy Signal on my weekly charts. Thanks for the good work. Ken

Here's my Nasdaq chart with the 10-wk stochastic I use: Link For a more detailed discussion, see tonight's Market Wrap, in which I'll be reviewing the weekly and daily cycle setups.

  James Brown   9/13/200,  1:24:27 PM
OI call play TDS is up 2.3% to $82.10 and hitting new 2 1/2 year highs over resistance at the $80 mark.

  Mark Davis   9/13/200,  1:22:33 PM
I can't verify a Bin Laden capture Keene but here's a rumor that has worked in the past... They found Nemo! Link

  Linda Piazza   9/13/200,  1:17:00 PM
An index that does surprise me, though, Mark, is the IUX, the S&P Insurance Index. Although it's off it's high of the day, it's positive today. Big gains have been made in CB and ALL. Wouldn't ALL have exposure in the hurricane-affected area, and in addition to property and casualty insurance, CB develops commercial and residential properties in Florida. Perhaps the change in Ivan's projected path helped protect it from harm or is it just that investors know the tradition for insurers to bounce after a hurricane?

  Mark Davis   9/13/200,  1:16:06 PM
SPX has printed another sell signal but unless we start dropping from here it will be just another higher low.

  Mark Davis   9/13/200,  1:13:46 PM
It doesn't surprise me that the $TRAN is the weaker index today with Hurricane Ivan entering the Gulf of Mexico and potentially shutting down or even damaging some of the offshore rigs. I'm surprised it is even positive for the day.

  Linda Piazza   9/13/200,  1:11:20 PM
Just as I was typing a notation that five-minute Keltner OEX resistance from 548.21-548.49 continues to firm, looking stronger than nearby support, the OEX rose up to test the top of that support. Bulls continue to want to see five-minute closes above the Keltner line currently at 548.13 or at least above 547.77, while bears want to see five-minute closes below those levels or at least below 548.49. Bears just got their wish with regard to the last five-minute period and that 548.49 level.

  Jonathan Levinson   9/13/200,  1:08:53 PM
The QQV has turned negative, now 1.83% at 17.12. Being at or near the lowest levels ever seen by that index, it's difficult to determine "how low is low". There's another session high being printed here by QQQ, so I guess the QQQ is not yet low enough.

  Jonathan Levinson   9/13/200,  1:04:38 PM
Note that the weekly cycle oscillators for the INDU and COMPQ have printed preliminary buy signals for the first time since May.

  Linda Piazza   9/13/200,  12:58:18 PM
The OEX's five-minute Keltner chat shows it vulnerable to a pullback again, but we've seen that at other times this morning, and it's trying immediately to rise and retest five-minute Keltner resistance from 548.08-548.42. Still, support thins below it, and that resistance looks firmer than support. It looks easier for the OEX to decline than to rise very far, after this resistance test is completed. The 15-minute chart shows support having risen to 547.78, however, with that support looking relatively firm, too, so perhaps any decline would be stopped near there on the first decline, if one should come.

  Mark Davis   9/13/200,  12:58:15 PM
stepping away for a few minutes...

  Mark Davis   9/13/200,  12:56:12 PM
Another 30 min of sideways action close to the highs. Every time that has happened today we've simply moved up to the next level... nothing spectacular yet but still grinding higher. Every sell signal has aborted early today. Sooner or later that has to end but........

  Jonathan Levinson   9/13/200,  12:55:42 PM
QQQ update at this Link shows QQQ working on 35.70 resistance here within the trending 30 min and short cycle channels. 35.58 is the 1st support beneath this range.

  Jonathan Levinson   9/13/200,  12:53:42 PM
Gold held the 398-402 confluence support with a low at 401.30, and is currently bouncing to 406.10 on decent volume of just under 1000 e-mini contracts. HUI and XAU are up .56% and .61% respectively, and bonds are holding their gains.

  Linda Piazza   9/13/200,  12:50:31 PM
Here's a potential H&S to watch at the top of the TRAN's climb, watching it for either a confirmation by a move through the neckline or a refutation by a move above the head level. Note the bearish divergence as the head was formed: Link

  Mark Davis   9/13/200,  12:46:09 PM
A heck of a battle going on right now between bulls and bears very close to the highs.

  James Brown   9/13/200,  12:43:45 PM
Volvo has issued a recall for 460,000 cars to fix the wiring in an electronic control module for the car's main cooling fan (-CNN). About 150,000 of those cars are in the U.S.

  Mark Davis   9/13/200,  12:39:03 PM
Looking back at the SPX daily chart and the confirmed inverse H&S pattern... Link
The neckline and the 200sma both were at about SPX 1114 when the pattern confirmed. Current 200sma has risen to SPX 1114.67... I consider SPX 1114 a very important line in the sand. Above 1114 I remain bullish, below 1114 bearish.

  Linda Piazza   9/13/200,  12:35:25 PM
So far, the OEX produces the 15-minute closes that bulls most want to see, above Keltner support lines currently at 547.43. Below that, support thins, although it's possible for any of the many support lines to catch the OEX. There just not converging. The upper channel resistance has moved up to 549.18, but if the current Keltner-style bearish divergence is to follow its usual pattern, the OEX may not touch that line. As with any breakout situation, OEX bulls should follow the OEX higher with their stops.

  Linda Piazza   9/13/200,  12:32:17 PM
Upper Keltner resistance on the TRAN's five-minute chart has risen to 3229.12, with the TRAN currently at 3228.87.

  Jonathan Levinson   9/13/200,  12:32:03 PM
It wasn't a higher or a lower high, but rather an equal high- a higher low at or above 35.60 could set up a rising triangle, making this a good spot to wait for a range breakout above .68 or below .58.

  Mark Davis   9/13/200,  12:31:27 PM
The SOX buy signal is trying to abort early and SPX just printed a sell signal. We could be topping here but I would want to see some impulsive action to the downside before I believed it. This could just be the "pause that refreshes".

  James Brown   9/13/200,  12:25:19 PM
Time Warner (TWX) has withdrawn its bid for MGM after SNY raised its bid to $5 billion this morning. Here's an excerpt from TWX's press release:

Dick Parsons, Time Warner Chairman and Chief Executive Officer, said: "Although MGM is a valuable asset, we have decided to withdraw our bid. As we pledged to our shareholders, we approach every potential acquisition with strict financial discipline. Unfortunately, Time Warner could not reach agreement with MGM at a price that would have represented a prudent use of our growing financial capacity. We are confident that there are other capital allocation choices that will enable us to continue to build shareholder value."

  Mark Davis   9/13/200,  12:24:18 PM
TRIN is printing .49... Wow or overdone?

  Mark Davis   9/13/200,  12:22:19 PM
Here's what I'm looking at on the SOX 1-min chart... Link
The SOX printed a bullish kiss while I was drawing the chart.

  Linda Piazza   9/13/200,  12:21:46 PM
The SPX and the Russell 2000 may have come the closest to creating classic inverse H&S's on their daily charts. What would their upside targets be? On the SPX, it would be about 1157, while on the Russell 2000, it would be about 588.50. There's been some correlation with S/R and the various Fib levels, so perhaps we can consider them as confirming that the inverse H&S's were perhaps valid, but we can't assume that those targets will be met. Each of those two indices faces a descending trendline off this years' highs, with the SPX to face its version at about 1134 and the Russell 2000 at just under 579. Here's the SPX Link and the Russell 2000 Link

  Jonathan Levinson   9/13/200,  12:17:49 PM
New session highs in the futures, but QQQ hasn't yet broken 35.68.

  Jonathan Levinson   9/13/200,  12:10:37 PM
There was a bounce from short cycle channel support at 35.57 QQQ, but that channel is declining from below 35.68. A bounce to a lower high will confirm a new short cycle downphase trying to start, but with the oscillators still trending, it's difficult to get a read on them from here.

  Linda Piazza   9/13/200,  12:09:35 PM
The TRAN has risen to test the Keltner support that it sank beneath on the five-minute chart. That resistance ranges from 3227.40 to 3228.94. Market bulls want to see the TRAN produce five-minute closes above 3228.94. As the TRAN approached this resistance, it looked strong enough to hold the TRAN back on five-minute closes, but we'll just have to see if it is now.

  Mark Davis   9/13/200,  12:07:18 PM
We have a confirmed buy signal on the SOX from the same oscillator readings that triggered a +11 point rally earlier this morning. If the SOX takes out 400 convincingly (a tall order) that could trigger some serious short covering that would probably spread to all the major indices. So far that's only a possible scenario... stay tuned

  Mark Davis   9/13/200,  12:01:07 PM
I believe we're at an inflection point here. If the "potential" buy signal on the SOX can confirm with a bullish MACD cross the SOX could have 400 in it's sights... I say "potential" because MACD is still pointed down. If MACD instead prints a bearish kiss we may have seen at least a short-term top. MACD is attempting to turn up as I type.

  Linda Piazza   9/13/200,  12:00:56 PM
Careful, OEX bulls. The five-minute Keltner chart is showing the OEX vulnerable to a deeper pullback. Bulls want to see 15-minute closes above 547.36 or at least above 546.78, near the 200-sma.

  Linda Piazza   9/13/200,  11:57:55 AM
The BIX broke below the neutral triangle and now has shot above it again as it consolidates sideways out of the apex of the triangle.

  Jonathan Levinson   9/13/200,  11:55:25 AM
Session low for GE at 33.86.

  Linda Piazza   9/13/200,  11:55:25 AM
The OEX tests Keltner support on its five-minute chart. Bulls want to see continued five-minute closes above 547.72 or at least above 547.40. Upper Keltner resistance on the 15-minute chart has now risen to 549.13, but there's a possibility that upper line won't be touched before a deeper pullback to reestablish support, if the usual pattern of bearish divergence on the OEX's Keltner chart is followed. Mid-channel support has risen to 543.95.

  Jonathan Levinson   9/13/200,  11:54:30 AM
This is the deepest wavelet bullback we've seen all day, though the short cycle oscillators have barely twitched yet. 35.60 support is being tested here, below which 35.49 is next.

  Linda Piazza   9/13/200,  11:52:40 AM
After breaking to the upside out of its "bearish" rising wedge, the SOX now breaks down below the wedge's support, and the BIX has broken to the downside out of its neutral triangle. The TRAN breaks lower, too, breaking below Keltner support and possibly headed toward the mid-channel level on the five-minute chart, near 3210-3212 support. As I mentioned earlier, the five-minute SOX breakout was extreme and the SOX has been approaching Keltner resistance line not touched since April.

  Linda Piazza   9/13/200,  11:48:44 AM
Credit where credit is due: We must all bow down to Mark for predicting the SOX bottom: Link I'd only noted the doji printed that day and its potential for a reversal signal, noting that a close above the 20-dma would be a change in trend. Reader T.G. has been noting the potential for a reversal in the SOX, too.

  Mark Davis   9/13/200,  11:48:28 AM
On the SOX 1-min chart CCI is printing -215. The last time it printed over -200 was earlier this morning and that resulted in a +11 point rally. The only difference I see is that MACD was below zero (-0.50) the first time and is currently printing +0.17. As we go sideways again, or put another way, refuse to go down, I can't help but wonder what would happen if the SOX blasted through 400. That's no easy feat but it could trigger some serious short-covering the would probably spread to all the indices.

  Jonathan Levinson   9/13/200,  11:46:55 AM
No sign of weakness in bonds either, with TNX down 2.7 bps at 4.153%. QQQ is only pausing, and barely at that- no corrective pullback whatsoever so far, with not even a wavelet dip.

  James Brown   9/13/200,  11:44:51 AM
The XAU gold & silver index has turned positive.

  James Brown   9/13/200,  11:44:15 AM
Hmm... the RLX retail index is up six weeks in a row now...

  Linda Piazza   9/13/200,  11:42:16 AM
The BIX threatens a downside break out of its neutral triangle, testing the trendline now at 363.59 or so, with the BIX at 363.61. It could of course bounce from that trendline, up through the top of the triangle.

  Mark Davis   9/13/200,  11:41:17 AM
MSFT is notably flat for the day. Imagine where the indices would be if MSFT were rallying along with the rest.

  Mark Davis   9/13/200,  11:39:01 AM
MACD just crossed down and b-bands are rapidly converging on the SPX 1-min chart. We're either going to shoot higher again with the short signal aborting early or have the first real retracement of the day... should know in the next 5 min or so. If we go sideways instead I'd have to say the odds are we will head higher. It's hard to find weakness anywhere this morning.

  James Brown   9/13/200,  11:38:31 AM
It will be interesting to see if the Internet stocks can keep the bounce going. This link goes to a weekly chart of the INX index. Link

whoops.. moving averages:
200-week (red)
50-week (pink)

  Jonathan Levinson   9/13/200,  11:37:20 AM
The upside Keltner violation on QQQ Link generally produces a reversal so consistently that I programmed Quotetracker to paint those violations in red. However, since Friday, a series of those breaks have just kept on going, the signature of a trending move. This suggests that the strength from the daily or weekly cycles is overpowering the shorter term overbought status within the rising cycle channels. In other words, it's a risky place for shorts, even on divergent moves that break the upper channel limits. Support is now at 34.34, followed by 35.60.

  Linda Piazza   9/13/200,  11:36:13 AM
James, thanks for the credit for predicting a bottom in the SOX, but while I suggested in last Wednesday's Wrap that the SOX had produced a potential reversal signal, I think it's been some others here on the MM who have been most strongly trumpeting the SOX's bottoming process.

  Mark Davis   9/13/200,  11:35:08 AM
Short signal developing on SPX but we need MACD to cross down before it confirms.

  Linda Piazza   9/13/200,  11:32:18 AM
The TRAN and the BIX are not participating in this latest push, with both consolidating instead, perhaps in advance of a breakdown or upside breakout. The BIX is currently testing the breakout level.

  James Brown   9/13/200,  11:31:52 AM
I have to give credit to Linda. Wasn't it last Tuesday she predicted the SOX was near a bottom?

  Linda Piazza   9/13/200,  11:30:18 AM
Ouch. There are some semi bears hurting today. This is an extreme breakout on the SOX's 15-minute Keltner chart, though, so suggests that bulls should assume that they're at risk, too, and should be following their semi-related bullish plays higher with their stops. The SOX now approaches upper channel resistance on the 60-minute chart, resistance not touched since April. There was no breakout in April. We haven't seen a 60-minute breakout signal on the SOX's Keltner channel since January and February and since November and December the time before that. That 60-minute top resistance line is currently at 400.20, adding its resistance to that we would expect at the 400 level. We could see a breakout on that chart as well, of course, but this is a level of some risk for both bulls and bears.

  James Brown   9/13/200,  11:30:07 AM
Ugh! The short-covering in the SOX is crazy. The index is up another 3.6% on top of the Thursday-Friday 8.8% gain.

  Linda Piazza   9/13/200,  11:24:16 AM
OEX bulls want to see the OEX maintain 15-minute closes above the supporting Keltner lines currently at 547.03-547.20, with those closes preserving the possibility of a climb toward the next Keltner resistance line, currently at 549.11. Remember that if Keltner-style bearish divergence patterns are to follow their usual pattern after beginning, the OEX might not quite touch that upper channel line before falling back toward mid-channel support, currently at 543.82 and still rising. Profit-protection plans should be in mind in case the OEX follows that usual pattern. Follow the OEX higher with your stops, if nothing else.

  Mark Davis   9/13/200,  11:20:30 AM
CCI just printed +330 on that last spike... the first real overbought reading of the day. That should be good for at least a short-term pullback.
Benchmarking... SPX = 1128.38 (HOD)

  Linda Piazza   9/13/200,  11:20:14 AM
The OEX broke out of its "bearish" rising wedge to the upside, following the SOX's example, but it couldn't hold onto the breakout level and immediately move lower, something that bulls didn't want to see happen. Be aware that in the OEX's case, the OEX could be just widening its channel into an ascending regression channel rather than the rising wedge.

  Jonathan Levinson   9/13/200,  11:17:36 AM
Speaking of quotes, crude oil is up 3.21% to 44.175, +1.375 for the day.

  Jane Fox   9/13/200,  11:17:18 AM
Linda I am not getting a VXN quote on Esignal either.

  Jonathan Levinson   9/13/200,  11:16:51 AM
Linda, I can't get a quote for it on IB either.

  Linda Piazza   9/13/200,  11:15:58 AM
What's with the VXN today? Anybody know? I can't get a chart that includes today's values on QCharts.

  Mark Davis   9/13/200,  11:15:23 AM
National Semiconductor (NSM) is up another +8.50% @ 15.45 today. You could have purchased this stock last Wednesday for 11.80

  Linda Piazza   9/13/200,  11:13:56 AM
The TRAN is coming back to test five-minute Keltner support, now gathered from 3224.91-3227.32, with the TRAN at 3227.58 as I type.

  Linda Piazza   9/13/200,  11:12:51 AM
The BIX hasn't yet broken out of its neutral triangle in either direction.

  Linda Piazza   9/13/200,  11:12:03 AM
It looks to me as if the SOX may be attempting an upside break out of its "bearish" rising wedge as I type.

  Linda Piazza   9/13/200,  11:09:52 AM
Here's a rising wedge to watch on the OEX's five-minute chart: Link There's a similar one on several charts, including the SOX's. Lately, these "bearish" formations have broken to the upside as often as they've broken to the downside, so don't make any assumptions about the way they will break.

  Jonathan Levinson   9/13/200,  11:07:27 AM
If this pattern Link was to the downside, it would be three black crows. Here the daily NQ chart we have ...3 white crows? ...a bullish pattern portending further upside to come. However, the upside Keltner violation should be asserting resistance here, and this looks like a very risky place for new longs. The horizontal support at 1400 should be strong and should hold for any retest.

  Mark Davis   9/13/200,  11:06:19 AM
Despite the new HOD for SPX, CCI is still printing a relatively tame +163... with TRIN @ .58 and the SOX accelerating toward 400 I wouldn't want to be short the market today.

  Linda Piazza   9/13/200,  11:04:41 AM
The BIX's five-minute chart now shows that index coiling into a neutral triangle. Perhaps we'll soon see whether that's a bear flag on the 30- and 60-minute charts or something more bullish.

  Linda Piazza   9/13/200,  11:00:44 AM
The OEX pierced Keltner support on the five-minute chart, but bounced from it, up toward rising Keltner resistance currently at 567.59 on the five-minute chart. On the 15-minute chart, it preserves the possibility of a climb toward upper Keltner resistance, currently at 549.03, but if the usual pattern of Keltner-style bearish divergence is followed, the OEX will not quite touch that upper channel line before dropping toward the mid-channel support again, currently at 543.75 but rising. There's no guarantee that pattern will continue, of course, but it forewarns bulls to have profit-protection plans in place as that level is approached, if it is. Bulls want to see continued 15-minute closes above the Keltner lines currently at 546.70-547.03.

  Mark Davis   9/13/200,  10:58:43 AM
SPX finally printed a confirmed sell signal right at HOD but with a CCI reading just barely over +200. It only knocked about 1.25 pts off the index and ever since the 10:00-10:15 ramp we've been going sideways... coiling again, and very near the highs.
TRIN is printing .59 and it's looking like we may have higher highs dead ahead

  Jonathan Levinson   9/13/200,  10:54:46 AM
Bonds starting to move here- TNX -2.4 bps at 4.156%.

  Mark Davis   9/13/200,  10:49:40 AM
Valentis Corp... VLTS +6.58% is a biotech smallcap thinster but has a surprising PE... 1.74 Link

  Linda Piazza   9/13/200,  10:49:38 AM
So far, the OEX maintains the possibility of a continued rise toward 548.98 on the 15-minute chart, with 15-minute closes above 546.68-546.97, but on the five-minute chart, resistance is trying to gather again near 547.51.

  Linda Piazza   9/13/200,  10:47:17 AM
Oops. I deleted someone else's post other than mine! Mea culpa.

  Jonathan Levinson   9/13/200,  10:43:59 AM
Updated QQQ chart with new fib retracement at this Link . 30 min channel support has risen to 35.12, resistance 35.50. The short cycle oscillators continue to trend in overbought, as they been doing since Friday at this time.

  Jonathan Levinson   9/13/200,  10:41:58 AM
Bonds continue to inch their way higher, and QQQ is maintaining the same stairstep higher from Friday. Thee were two large buy programs exceeding 2M shares within 100 ticks, but the action doesn't feel particularly violent to the upside- just a gradual creep higher.

  Linda Piazza   9/13/200,  10:41:34 AM
The OEX is back at its 200-sma. Bulls want to see a bounce, which is beginning as I type, and they want to see the OEX with five-minute closes back above Keltner resistance on the five-minute chart, with that resistance currently at 547.01 and 547.51. As I type, that resistance looks stronger than support, but that un-shown support on the Keltner chart is the 200-sma.

  Linda Piazza   9/13/200,  10:40:34 AM
I can't be too bullish while the BIX and BKX are both dropping.

  Linda Piazza   9/13/200,  10:38:59 AM
Here's the BIX chart I posted earlier, although I shifted the regression channel a little lower to better correspond to the BIX lows. Link The BIX is falling toward the bottom of the regression channel in which it's traded since 9/09, with us watching that channel to see if it's perhaps a bear flag. The BIX could not maintain levels above a 50% retracement of the decline that preceded the flag's formation, keeping alive the possibility that the channel is a bear flag.

  Mark Davis   9/13/200,  10:37:09 AM
Here is an Interactive Performance Chart of the major indices. Move your cursor over the chart lines to view individual points in time and move the 200-day slider at the bottom of the chart back and forth to see how the indices performed relative to each other going all the way back to 1999. Link
As you can see, the SOX has led us up or down all the way (and probably will continue to do so).

  Linda Piazza   9/13/200,  10:36:28 AM
The OEX tests Keltner support and its 200-sma, currently at 546.80 with the OEX at 547.07. Bulls don't want to se ethe OEX slip beneath that average.

  Linda Piazza   9/13/200,  10:33:41 AM
In breakout situations on the OEX's five-minute Keltner chart, it's usually best to follow the OEX higher with stops if in bullish trades. I use the 15-minute Keltner chart then to set a possible upside target for the OEX, with the 15-minute chart showing that possible target at a Keltner channel line currently at 548.94. The OEX has been showing Keltner-style bearish divergence on the 15-minute chart, though, with the OEX's approaches to that channel line revealing the bearish divergence. The approach on 9/3 pierced that 15-minute line and had some 15-minute closes above it. The approach on 9/7 hit the line but did not pierce it or have 15-minute closes above it. The usual pattern would be for the next approach not to even hit the Keltner line, but to fall short of it and then to retrace to the mid-channel line, currently at 543.63 but still rising. Therefore, bulls should be following with those stops and should have profit protection plans in place at 548.30 or so is approached.

The breakout signal is weakening on the five-minute chart, too, although the OEX still holds above five-minute Keltner support lines currently near 547.

  Mark Davis   9/13/200,  10:29:26 AM
Early gainers on my watchlists...
TZOO +10.09%
NSM +5.65%
CLHB +4.54%
ZEUS +4.04%
AIQ +16.91%
HANS +5.34%
HRT +10.60%
NTMD +5.82%
VLTS +7.22%
AMXC +4.30%
ENWV +8.05%
GMAI +5.05%
CNLG +24.43%
KML +5.13%
VLTR +6.49%

  Jonathan Levinson   9/13/200,  10:27:13 AM
Following Jane's comment, the QQV is up 1.83% at 17.76. These are nosebleed low levels to me, but note that volatility is rising along with price- a phenomenon that occurred in the Spring 2000 Nasdaq-Gone-Wild runup, if memory serves. I've referred to this and other indicators as "secondary indicators" over the past year, and today's another example of why. Price and its direct derivatives are the safer indicators to follow, and it's very dangerous to use other indicators as more than just a reference.

  Linda Piazza   9/13/200,  10:26:38 AM
The OEX is slipping beneath the breakout level on the five-minute Keltner chart, but isn't yet slipping beneath support. Now resistance can be found at 547.30-547.39, with the OEX heading up to challenge it again.

  James Brown   9/13/200,  10:24:50 AM
Here's an interesting thought... a Forbes/financialwire article says that the World Wide Web is in danger of collapsing. Experts are worried that as millions of new computers from developing countries sign on the web will eventually become overloaded. Intel, Cisco Systems, Hewlett-Packard and AT&T are working on the issue.

  Linda Piazza   9/13/200,  10:23:40 AM
Those in bullish OEX positions should have profit-protecting plans in place in case the 548.30-549 level should prove difficult for the OEX, if that level is reached. They should be watchful at the current level, too, as the OEX sank just under Keltner resistance on the five-minute chart. On a five-minute basis, bulls would like to see five-minute closes above 547.39 or at least above 546.80. Bears would like to see closes beneath those levels and preferably below 546.35. Below the Keltner support currently at 546.80, support thins dramatically.

  Linda Piazza   9/13/200,  10:20:14 AM
The OEX is setting up another breakout situation. If it can maintain 15-minute closes above 546.41 or preferably above 546.78, it preserves the possibility of moving up to the next Keltner resistance on the 15-minute chart, with that resistance currently at 548.89. However, if it has 15-minute closes beneath 546.36 or particularly beneath 535.37, it erases that breakout potential, at least for the time being. We're seeing definite bearish divergence on the five-minute chart, for whatever that's worth.

Note that the SOX is currently testing 390, falling back just a bit from that test.

  Jonathan Levinson   9/13/200,  10:17:55 AM
New session highs. Look for 35.24 to act as new/higher support above the levels previously posted.

  Mark Davis   9/13/200,  10:17:03 AM
TRIN @ .60... only one piece of the puzzle but a bullish piece

  James Brown   9/13/200,  10:15:43 AM
If you haven't read Linda's 09:11 AM post this morning scroll back and read it. We have an interesting divergence in the market.

  Mark Davis   9/13/200,  10:15:11 AM
SPX is walking its way up the upper b-band but CCI still hasn't printed a number over +200 yet... currently +175.90

  Linda Piazza   9/13/200,  10:14:21 AM
Is the BIX's climb off Thursday's low a bear-flag climb or something more bullish? Here are a couple of things to watch: Link

  Jonathan Levinson   9/13/200,  10:12:52 AM
CORRECTION: I don't know if it's my eyes playing tricks on me, or an update to the Fed's site, but the daily repo was 6B, and not 3B as earlier reported. That gives us a NET ADD of 3B for the day.

  Mark Davis   9/13/200,  10:12:12 AM
Sideways action out of the gate on an opex Monday... there's unusual item #2 for you. We're coiling for something. I wish I knew what... I can tell you most people are expecting a failure here and you know what the market likes to do to a "consensus". Of course, if we were to fail here as most expect that would be unusual item #3.

  Jonathan Levinson   9/13/200,  10:10:35 AM
QQQ is falling away from its rising 30 min cycle channel, with the trending short cycle channel flattening from its prior upphase. Link Support is at 35.20, below which we watch confluence gap support at 35.10.

  Linda Piazza   9/13/200,  10:08:45 AM
Here's a look at what the OEX faces, as seen on the daily chart: Link On another daily chart I have, QCharts draws the regression channel a little differently, with the top trendline closer to 548.30, where some Keltner and other resistance also shows up, but this chart certainly shows the possible importance of the current level.

  James Brown   9/13/200,  10:07:31 AM
Software stock MicroStrategy (MSTR) is up 13% to $41.96 after First Albany upgrades it to a "strong buy" with a $56 price target. This could be a short squeeze in progress considering MSTR's level of short interest.

  Jonathan Levinson   9/13/200,  10:07:19 AM
Bonds are at session highs for the ZN futures, with TNX down .5 bps at 4.174%. There's little movement here, while gold has sunk to 401.30 and HUI -.53% at 201.99. Still looking for a confirmation of direction in these markets.

  Jonathan Levinson   9/13/200,  10:06:00 AM
There's 3B in weekend repos expiring today. The Fed's announcement at 10AM is for 3B just added, for a net wash, no net change from Friday.

  Linda Piazza   9/13/200,  10:05:15 AM
Lots of indices challenging important resistance. The SOX is one. Here's a chart: Link

  James Brown   9/13/200,  10:04:44 AM
Biotech stock ImClone Systems (IMCL) is gapping higher and trading +4.4% to $51.87 after being upgraded to a "buy" this morning. As of Friday the stock has broken down through round-number support at $50.00.

  James Brown   9/13/200,  10:02:42 AM
Natl Semiconductor (NSM) stretches its rally to a third day with a 3.8% gain on another upgrade this morning.

  James Brown   9/13/200,  10:00:46 AM
What a deal...Broadcom (BRCM) warns that Q3 revenues will come in under analysts' expectations and shares are trading higher by 5% to $29.07.

  Linda Piazza   9/13/200,  10:00:31 AM
The OEX coils tighter, predicting a breakout one direction or the other. A break above Friday's 547.07 high would suggest an upside breakout, but one that might soon run into resistance again at the top of the OEX's descending regression channel, and a break below 546.30 support suggests a downside break, soon to face Keltner support and a rising trendline off the 8/13 low from 543.30-544.50, depending on the trendline version you like best. TRIN suggests higher; the TRAN bounces again off Keltner support, so far preserving at least the possibility of preserving the breakout on the five-minute Keltner chart, even if it looks a bit iffy at this point; but the BIX is possibly getting turned back again at its mid-channel Keltner resistance, not showing any strength. These indicator indices are perhaps giving mixed clues as to market direction. Bulls don't want to see the TRAN weaken.

  James Brown   9/13/200,  9:58:47 AM
Joe Kernen on CNBC is watching GE. If shares can trade at $34.57 it would be a new two-year high. Of course it has to crack its 200-week moving average at $34.27 first.

  James Brown   9/13/200,  9:54:52 AM
Campbell Soup Co (CPB) reported earnings this morning and missed estimates by a penny. The company also guided lower for fiscal year 2005. Investors are reacting by selling the stock. Shares are down 1.22% and breaking technical support at its 21, 40 and 50-dma's. Its MACD has now produced a new "sell" signal with today's movement.

  Linda Piazza   9/13/200,  9:52:23 AM
The BIX gapped slightly lower this morning, dipped down and now is bouncing, but hasn't been able to close the gap. It's holding above its 10-dma, currently at 362.62, with the BIX currently at 363.40, but is not showing strength this morning to help the OEX.

  Mark Davis   9/13/200,  9:51:30 AM
SPX printed a buy signal right at the open (actually completed a buy signal that started late Friday)... it is now rolling over a bit but CCI never came close to printing +200 (overbought level) so if the index fails here it will have done so without giving a clue on the 1-min chart. That would be a bit unusual.

  James Brown   9/13/200,  9:50:40 AM
The Chubb Corp (CB), an insurance stock, is up 1.16% and breaking out over resistance at the $70.00 level to hit new four-month highs.

  James Brown   9/13/200,  9:49:28 AM
ONNN, another semiconductor company, has also warned for the third quarter. ONNN expects Q3 revenues to slip 6% from Q2 levels. Surprisingly, shares are only down 1 cent to $2.99.

  Linda Piazza   9/13/200,  9:48:53 AM
I like to watch the TRAN on a five-minute Keltner chart. Lately it's had fair correlation with the Keltner lines on that chart. This morning, the TRAN dipped down to test the breakout level on that chart--at 3217.82-3218.90--and bounce from there. Unfortunately (for bulls), though, it's struggling with first resistance above that breakout level, at a Keltner line currently at 3221.68. Bulls want to see five-minute closes above that Keltner line or at least above the gathered support from 3217.82-3218.90, to preserve the breakout on the TRAN. A fall beneath that support might see it test the support nearer 3210-3212 and then from 3200-3205.

  Jonathan Levinson   9/13/200,  9:48:18 AM
QQQ took one downside spike into the gap and dojied back up immediately, and then returned to the overnight highs. Volume isn't strengthening, and so this just looks like short covering so far, but a break above 35.30 that lasts for longer than a couple of minutes would look like sufficient confirmation of the overnight strength to get more bulls piling in. On QQQ, I'd look for a move below 35.10 to indicate a reversal of even the short cycle strength. Above that, the uptrend from Friday remains intact.

  James Brown   9/13/200,  9:45:21 AM
Semiconductor company ISIL, who recently issued an earnings warnings, has now announced a $150 million stock buyback program.

  Linda Piazza   9/13/200,  9:44:43 AM
Well, Mark, there the OEX is--challenging that 200-sma again. Let's see if it holds. Keltner resistance on a five-minute chart certainly isn't more important than the 200-sma, so am glad you noted that 200-sma, too. So far, the Keltner resistance (and the 200-sma) continues to hold.

  James Brown   9/13/200,  9:42:51 AM
It's a busy morning for BAC. The firm has also raised apparel retailer Chico's FAS (CHS) and electronics/controls maker Enersys (ENS) to a "buy". Shares of CHS are gapping higher up 4.4%. ENS is up +0.52%.

  Linda Piazza   9/13/200,  9:42:36 AM
The OEX found first resistance where the five-minute Keltner chart suggested it would, then found first support where the five-minute Keltner chart suggested it would. Now the OEX moves up to challenge Keltner resistance lines now at 546.81-546.95, but those lines turn higher, so it's unclear whether they'll hold as resistance. So far, they are.

  James Brown   9/13/200,  9:39:29 AM
Bank of America has also upgraded Lear Corp (LEA) to a "buy" this morning. The stock is up 3.18% and gapping above its simple 40 and 50-dma's.

  Mark Davis   9/13/200,  9:39:25 AM
Linda I was about to post that OEX had finally broken above its 200sma @546.55 but it has already dropped back below, currently printing 546.26 after the initial pop took it to HOD @ 546.84. I'd love to see OEX get (and stay) above the 200sma... I'm going to set an alert for that level

  James Brown   9/13/200,  9:38:42 AM
The rally continues for software stock MERQ after Bank of American upgrades the stock to a "buy" this morning. Shares have gapped higher and trading +3.75% just under resistance near $37.

  Jonathan Levinson   9/13/200,  9:35:23 AM
The 30 minute cycle on the NQ futures (overnight proxy for QQQ) is extended to the upside, but still pointed north.

  Linda Piazza   9/13/200,  9:33:41 AM
The OEX opens near Keltner resistance on the five-minute chart, continuing the bounce that had begun during the last five minutes of trading on Friday. That Keltner resistance lies from 546.72-546.89, but has now turned higher. So far, though, it's holding.

  Jonathan Levinson   9/13/200,  9:31:56 AM
Session high for 10-yr bonds here, TNX -.6 bps at 4.174%.

  Jonathan Levinson   9/13/200,  9:31:32 AM
Below gap support 35.10-.14 confluence, there's lighter support at 35 and strong support at 34.92. Link

  Jonathan Levinson   9/13/200,  9:12:37 AM
This is Monday of Op-ex week for September equity options. Quick moves, long narrow-ranges... anything goes this week. Currently, QQQ is trading north of its upper 30 minute Keltner band, but it's been doing that at various points since Friday morning. 35.10-.15 is immediate downside support.

  Linda Piazza   9/13/200,  9:11:10 AM
I was able to condense some appointments into an approximate two-hour span tomorrow instead of all day today, and so will happily be present on the Market Monitor today.

We've got some problems to reconcile when deciding on trades. First, there's the usual volatility that's related to options expiration week, volatility that we might be facing as making trading decision. That leads into another concern: the low values on the volatility indices, coupled with fear of the common fall declines this time of year. Could the low values be related to opex? Of course it could, but a look at the last five opex cycles did not show a correlation between the swing lows in the volatility indices and the Thursday and Friday of the week before opex week. Something else is going on with the volatility indices. As I've been stating, they signal caution to those in bullish trades, but we also have to keep the early 2003 model in our mind if we're tempted to pile into bearish positions based on the values of the volatility indices. They sounded a warning then, too, approaching and then falling through values that had for years signaled market tops in the making. The volatility indices continued lower while prices continued higher.

Still, I'm feeling a bit cautious. There's something else going on, too. Despite hearing about troubled airlines due at least in part to the impact of rising crude prices, the TRAN keeps climbing. Friday, the TRAN broke soundly above 3200, closing at its highest weekly high since late summer, 1999. (All through the middle of 1999 and into March 2000, the TRAN was tumbling while the Dow was climbing into 2000, setting up bearish divergence between the sister indices.) While their trading patterns are not completely analogous by some measures now, both have been climbing since early August. I've noted before that there's something puzzling about the TRAN's climb in a climate of overall higher crude prices, even if they are now off their recent highs. What is the TRAN trying to tell us about the economic recovery? What are gains in companies such as FDX, NSC, YELL, and R telling us? Are products moving and being shipped? Or have some of these companies and the TRAN itself gotten ahead of itself? I don't pretend to have enough education in economics to know, but it's telling us something, and it's possible that bears should be as forewarned as bulls should be.

So what are we to do as techs attempt a bounce as we head into one of the most treacherous weeks in the month in one of the most treacherous months of the year, with the volatility indices perhaps sounding a warning to bulls and the actions of the TRAN perhaps sounding one to bears? First, we should continue to watch crude prices and the TRAN's reaction to those crude prices. We watch other indices. Scanning those other indices, I note that the BIX did not join other indices in posting big gains, but it did bounce off its 10-dma as did many other indices. I note that the SOX managed a close above its 20-dma for the first time since late June, signaling a change in its pattern with respect to that average, but that the SOX did not close above the 50% retracement of the rally off the October 2002 low. SOX bulls want to see the SOX close above 386-387 and then above the 8/23 high of 394.58 next, and then move above its 50-dma and the 400 level. The SOX still has a lot of work to do to push past this important resistance.

And what about the OEX? Friday, the OEX pierced its 200-sma but could not close above that average, so was that action bullish or bearish? That 200-sma is climbing along with price, and now is located just under the confluence of horizontal historical resistance at about 548.35 and the top of the descending regression channel in which the OEX has been trading since early 2000, with the top of that channel at about 548.75. That shows strong correlation with the top Keltner resistance seen on the OEX's 15-minute Keltner chart. On the surface, at least, that appears to be strong resistance, and resistance that's being approached as volatility levels head down, perhaps signaling too little fear in the markets. There are other fear-related indicators, such as put/call ratios, but low levels on volatility indices should also be watched. It's possible then to soon see consolidation or a pullback, perhaps beginning at about 548.30, if not sooner. The OEX is also maintaining an ascending trendline off the 8/13 low. If the OEX consolidates sideways, it could do so until the ascending trendline had climbed up under it. Any pullback could take the OEX back to that trendline, with the trendline now crossing at either 543.25 or 544.20, depending on whether all candle shadows are incorporated or not. If the OEX pulls back or consolidates until it hits that trendline, bulls will want to see a bounce that takes the OEX back above the 200-sma and hopefully closes it there. Bears want to see the OEX fall through that trendline and then below the 9/09 low of 541.78. The daily Keltner chart shows that as long as the OEX maintains daily closes above 542, the possibility of an eventual move up toward 553.49 remains.

Let's dial down again to see what Keltner charts show us is most likely early Monday morning. As Friday ended, the OEX had pulled back slightly to test support from Keltner lines currently at 545.85-545.99, and was attempting a bounce from that Keltner support. Below that level, support thinned dramatically, with possible support at 545 and with more support trying to converge near 544-544.24, the site of one version of that ascending trendline off the 8/13 low.

If the OEX continued that bounce it had begun in the last five minutes Friday, it might then rise to test Keltner resistance lines currently at 546.30 and 546.65-546.77. A breakout above that resistance, including fifteen-minute closes above the Keltner line currently at 546.65, could set up a potential test of that 548.30-549 zone. Those currently in bullish plays might have a profit-protection plan in mind as that level is tested. Bears want to see fifteen-minute closes below the Keltner line currently at 545.56 in earliest trading to set up the possibility of a test of that rising trendline off the 8/13 low. By the time either that trendline or the 548.30-549 level is tested, we should have some information about volume patterns to help guide later trading.

A couple of other cautions: This weekend, news began to circulate that North Korea may have tested a nuclear weapon. Both South Korean and U.S. officials have speculated that the weapon was probably not nuclear, despite the presence of a so-called mushroom cloud. If that information should change, that might also change anything that's showing up on the charts as of the close of Friday's trading. In addition, Ivan's projected landfall has now shifted to the west, and it might now hit oil rigs in the Gulf of Mexico. As I type, crude futures for October delivery have moved higher, so traders should keep a watch on those crude futures. It might be that any problems will be deemed temporary, and so that a rise in crude might not impact equities strongly, but let's watch anyway. Also pay special attention to Jonathan's notations about whether there's a net infusion of cash this morning or not.

  Jane Fox   9/13/200,  9:09:49 AM
Dateline WSJ - Bowing to overwhelming financial pressures, US Airways Group Inc. yesterday sought protection from its creditors in bankruptcy court for the second time in 25 months. The filing, in U.S. Bankruptcy Court in Alexandria, Va., came three years and one day after the terrorist attacks that precipitated the deepest crisis in U.S. airline history.

The action means that two of the nation's six so-called legacy carriers -- those whose costs and cultures are rooted in the pre-deregulation era -- now reside in bankruptcy, a fate that could befall others as passengers increasingly choose discount carriers. The other is UAL Corp.'s United Airlines; Delta Air Lines is struggling to avert a similar fate.

Over the weekend, US Airways, the nation's seventh-largest carrier by miles flown by paying passengers, ran out of time in its efforts to wrest savings from its labor unions so it could ride out the current storm. The Arlington, Va., company faces crucial financial hurdles in the coming days and weeks. It decided it had no alternative but to seek the court's approval to stave off its creditors while it attempts to implement an audacious turnaround plan.

  Jonathan Levinson   9/13/200,  8:04:05 AM
Equities are higher this morning, with ES trading 1126.50, NQ 1423.5, YM 10323 and QQQ +.15 at 35.27. Gold is down 1.80 to a session low of 402, ditto silver at 6.157. Bonds are down .046 to 113.3594, and crude oil is up .375 to 43.175.

We await the 2PM release of the treasury budget, est. -40B.

  Linda Piazza   9/13/200,  6:58:45 AM
Good morning. Encouraging comments made by TXN's chief executive about demand for the chips needed for mobile phones sent chip-related stocks higher throughout Asia. Lower oil prices helped techs and exporters. The Nikkei opened more than 50 points in the green, and soon had climbed into triple-digit gains. It added more gains during the afternoon session, to close higher by 169.88 points or 1.53%, at 11,253.11.

Stock-specific news included Kyocera's announcement that it would launch a personal hand-phone system for data communications in China as early as this fall. Toyota Motor reportedly considers manufacturing passenger cars in Russia, and its president also reportedly expects strong global sales of its hybrid vehicles. Canon plans to open a new R&D center in Tokyo. All those companies gained, with Kyocera climbing 3.8%. UFJ Holdings dropped, however, due to developments related to its planned merger with Mitsubishi Tokyo Financial Group.

Other Asian markets mostly closed higher. The Taiwan Weighted gained 1.40%. South Korea's Samsung announced a stock buyback program, helping that company's stock to a 3.8% gain and helping the Kospi to a 1.86% gain despite a mysterious explosion in North Korea late last week. South Korea's bourse usually reacts strongly to developments in North Korea. Singapore's Straits Times gained 0.92%. Hong Kong's weekend elections resulted in the pro-democracy contingent capturing only 25 out of 60 seats, fewer than had been expected. The Hang Seng gained 1.04%. China's August consumer price index climbed 5.3% from the year-ago level, with that climb raising chances that China might see a rate hike. The Shanghai Composite was one of the few declining Asian bourses. It dropped 2.08% to 1,260.32, a new five-year low.

Currently, most European bourses trade higher, with pharmaceuticals and banks in the news. Germany's Bayer released details of its alliance with Schering-Plough, with the details sending Bayer higher and Schering lower. Drugmaker Altana also dropped. In the U.K., AstraZeneca dropped after its oral anti-clotting drug Exanta failed to receive FDA approval. AstraZeneca (AZN) fell more than 5% in early trading.

In the U.K., bank HBOS climbed modestly after speculation that it would make a hostile bid for Abbey National, bidding against Spain's Banco Santander. In Germany, however, Deutsche Bank's chief executive refuted speculation that the country's largest banks were considering mergers, at least so far as his company was concerned. Deutsche Bank climbed modestly.

As of this writing, the FTSE 100 had gained 9.80 points or 0.22%, to trade at 4,554.80. The CAC 40 had gained 30.31 points or 0.82%, to trade at 3,707.92. The DAX had gained 46.19 points or 1.19%, to trade at 3,932.22.

  OI Technical Staff   9/12/200,  1:51:36 AM
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