Option Investor
Printer friendly version
  Jim Brown   9/16/200,  7:04:09 PM
Alert - Semi Book-to-Bill - ratio fell to 1.00, the fourth consecutive monthly drop and the lowest level since September of last year. It was just reported by SEMI. Anecdotal industry reports suggest some further slowing can be expected in the coming months.

  Jeff Bailey   9/16/200,  5:04:47 PM
Closing Internals at this Link

  Jeff Bailey   9/16/200,  4:34:20 PM
Hmmmmm..... Autodesk (ADSK) $48.18 +1.96% Link has been strong too Jim.

  Jim Brown   9/16/200,  4:32:33 PM
MKSI - Warning

  Linda Piazza   9/16/200,  4:32:01 PM
Thanks, Keene. (See Keene's 15:56 post.) However, I hedged that call with enough reasons that it might not play out that way that I'm not sure I can truly take credit! I felt better this morning when I saw your post and saw that your impression generally matched mine. I think Jim said something similar about today, too.

  Jim Brown   9/16/200,  4:31:53 PM
COMS - Misses earnings by a penny and lower guidance for some segments.

  Jeff Bailey   9/16/200,  4:28:11 PM
Current OPEN MM Profiles at this Link

Today's Activity .... (should have stayed in bed or used wider stops)

Day trade short Taser Intl. (TASR) $41.44, stopped $42.35 ($-0.91, or -2.2%)

Day trade long Bema Gold (BGO) $2.37, stopped $2.34 ($-0.03, or -1.27%)

  Jim Brown   9/16/200,  4:17:43 PM
NTBK - Warning

  Jim Brown   9/16/200,  4:12:57 PM
American Airline flight made a successful emergency landing after losing power just after takeoff.

  Jim Brown   9/16/200,  4:09:31 PM
TEK - blows away estimates of +30 cents with a 43 cent headline number. If there are no items to deduct this would be a huge beat.

  Jim Brown   9/16/200,  4:07:12 PM
VRTY beats the street and guides inline with estimates

  Jim Brown   9/16/200,  4:06:14 PM
CAMD giving guidance slightly less than estimates.

  Jim Brown   9/16/200,  4:01:27 PM
MIK announces 2:1 stock split

  Keene Little   9/16/200,  3:56:34 PM
Linda, good call on the flat day today.

  Linda Piazza   9/16/200,  3:52:44 PM
Over the last hour, the OEX has been finding resistance on 15-minute closes on a Keltner line currently at 543.65. It has occasionally risen to test that line, closing beneath it. If it continues to close beneath it, the OEX could continue to work its way down to the descending trendline that forms the bottom of the broadening formation. So far, though, on each descent, it's been finding support at the Keltner line that usually stops its progress on the five-minute chart. That's at 543.05 currently. The OEX is trading in a roughly 1.3 to 1.5-point range spanning the mid-channel level on that five-minute chart. It's still in an equilibrium position with regard to that chart, then.

  Jeff Bailey   9/16/200,  3:51:58 PM
Kroger (KR) $15.63 -0.44% Link ... announces $500 million stock buyback.

  Jeff Bailey   9/16/200,  3:45:50 PM
CNBC Reporting that Transocean Inc. (NYSE:RIG) $33.20 +1.09% said it is missing one of its drilling ships in the Gulf of Mexico.

  Mark Davis   9/16/200,  3:42:16 PM
Just hearing on Fox News that Hurricane Ivan tore through a fairly large zoo. They had evacuated all the animals except the deer and alligators. They've rounded up and tranquilized most of the deer and are transporting them to safety but there's a 12 foot alligator named "Chuckie" loose in the neighborhoods and they can't find him. How would you like to be a rescue worker checking people's flooded homes and businesses with Chuckie lurking around?

  Linda Piazza   9/16/200,  3:38:40 PM
Here's an update of the QQQ chart I posted earlier: Link The QQQ's did fall through the neckline or course, although there had not been bearish divergence as the head was formed. The downside target predicted by this now-confirmed H&S is $35.00, but I don't watch the ebb and flow of the QQQ's and so don't have a strong sense of how difficult that might be to achieve. Currently, the QQQ's are headed right back up to retest that broken support, with a strong white candle that's already retraced a hefty portion of the drop after the trendline break, in the kind of break-but-turn-right-around action we might expect on an opex Thursday, when we can't expect all targets to be hit.

  Linda Piazza   9/16/200,  3:34:07 PM
You know, the more I look at that RSI neckline break in the chart displayed in my 15:32 post, the more I think that portended the steep decline on 9/15, rather than a break of a potential H&S now.

  Linda Piazza   9/16/200,  3:32:06 PM
We've talked about the broadening formation on the OEX's chart, but here's another one to watch: Link Note the already-confirm H&S on RSI. RSI formation breaks sometimes precede price formation breaks, so be watchful. Note, however, that a break of the broadening formation's descending support trendline would not occur until about 542.20, far below the 542.55 or so level that would be needed to show a neckline break on the above formation. Entering on the neckline break, just ahead of a test of that broadening channel potential support, just ahead of an opex Friday would be a scary thing to do.

  Linda Piazza   9/16/200,  3:24:23 PM
Although the TRAN did reach a slightly higher high than that on 8/13, it, too, is rolling down from that slightly higher high, and is now back below the 8/13 intraday and closing high.

  Linda Piazza   9/16/200,  3:22:55 PM
The BIX did round over into a possible double-top, but it would require a drop below 364 to confirm that double-top formation.

  Linda Piazza   9/16/200,  3:17:11 PM
Now the OEX moves toward the bottom support of the broadening formation, at 542.23.

  Jim Brown   9/16/200,  3:14:39 PM
No material earnings tonight with only five companies scheduled to report.

COMS est -0.08
CHTT est +0.45
CTAS est +0.42
TEK est +0.30
VRTY est +0.07

  Jeff Bailey   9/16/200,  3:07:39 PM
03:02 Market Watch at this Link

  Mark Davis   9/16/200,  3:07:32 PM
Dropping fast now...

  Linda Piazza   9/16/200,  3:07:27 PM
The OEX is dropping below a trendline off the last five-minute low yesterday.

  Linda Piazza   9/16/200,  3:05:59 PM
The OEX is still in the middle of that broadening formation.

  Mark Davis   9/16/200,  3:03:29 PM
If you're long from 1123 a prudent stop at this point might be 1124, just below the 2:18PM swing low @ 1124.34, locking in a +1 point gain. If the swing low is taken out the sell signal from near the top will start to look pretty convincing.

  Jeff Bailey   9/16/200,  2:52:35 PM
Big bid for Treasuries today. 10-year yield ($TNX.X) Link plunging 10 basis points to 4.070%.

Homebuilders strong (DJUSHB) 658.70 +1.62% Link and today's sector winner.

  Linda Piazza   9/16/200,  2:50:48 PM
The TRIN looks as if it's trying to break out of a range, too, doesn't it, ever so slightly widening that tight, tight range. Of course, it tried the same thing about midday and just narrowed down again then.

  Linda Piazza   9/16/200,  2:49:17 PM
Like the TRAN, the BIX has reached for a double-top level, but only on a 10-minute chart and not a 30- or 60-minute one. Unlike the TRAN, the BIX has not been able to push past that double-top level, but its pullback beneath this morning's 10:40 high of 365.24 may be taking the form of a bull flag. There's bearish price/oscillator divergence here, too, or at least it's here tentatively. The BIX, though, remains in danger of turning down and forming a double-top formation.

  Jane Fox   9/16/200,  2:44:01 PM
Dateline WSJ - WASHINGTON -- The unusual strategy adopted by the Federal Reserve in the summer of 2003 for stoking the U.S. economy without cutting interest rates was a clear success, researchers at the U.S. central bank have concluded in a new study.

The study, led by Fed Governor Ben Bernanke, says the central bank managed to exert powerful effects on longer-term interest rates merely by promising to keep the key short-term federal funds rate low for a "considerable period." Those influences were at least five times stronger than the average effect of actual interest-rate changes from 1991 onward.

The study's conclusions validate the confidence that many Fed policy makers showed late in 2002 and early 2003 as Wall Street fretted that the central bank was running out of "ammunition" to boost the economy. By July of 2003, the Fed had dropped the federal funds to a 45-year low of 1% without generating what it could consider a "sustainable" economic recovery.

  Linda Piazza   9/16/200,  2:38:30 PM
So far, the Dow is still beneath the 200-sma. I've been thinking about what big funds do not want mom and pop investor to read in their newspapers this weekend, if anyone still gets market information that way. They don't want them to read that the Dow closed the week beneath its 200-sma. MACD still edges toward a bearish cross, although it's not there yet, but I'm wondering if we won't get continued tests of the Dow's 200-sma.

  Jeff Bailey   9/16/200,  2:34:07 PM
A hedge fund buddy of mine has been pounding TZOO like crazy, trying to inflict as much pain on shorts as possible. So far it has been working pretty good.

  Linda Piazza   9/16/200,  2:32:37 PM
Bearish divergence or not on the 30-minute chart, the TRAN continues to climb today, and is now above the 9/13 high. That bearish price/MACD divergence has been continuing throughout September, with the TRAN climbing the entire until this week's consolidation. That's why we should let bearish price/oscillator divergence warn us, but not act until price weakens. So far, those warnings have not come to fruition in the TRAN. I use the TRAN as an indicator index, as it sometimes leads the Dow.

  Mark Davis   9/16/200,  2:32:01 PM
I can't believe that stock (TZOO) Jeff. I told a friend it might be a good idea to take 1/2 profits @ $60.00. It's a good thing she didn't listen to me.

  Jeff Bailey   9/16/200,  2:30:09 PM
Travelzoo (TZOO) $70.65 +7.2% Link .... good gravy...

  Mark Davis   9/16/200,  2:28:50 PM
SPX printed a sell signal @ 1125.25. Once again the 1125 level shows its importance as resistance. If it is broken to the upside we still have the 1126.06 HOD to deal with. As I type this the sell signal is trying to abort early but not there yet. If you're long from the 1123 area you could probably safely cinch up your stops to 1123.50, just below the 1:16PM swing low @ 1123.81. That would cover your commissions........ I can't type fast enough! The sell signal has now aborted but SPX is running into resistance again @ 1125. If I had to guess I would say this is going to resolve to the upside.

  Jeff Bailey   9/16/200,  2:27:25 PM
Aluminum Corp. China (ACH) $54.45 +10.89% .... pretty good pop today.

  Linda Piazza   9/16/200,  2:15:35 PM
The QQQ's could still be rounding over into a right shoulder for the potential H&S that was shown on the chart linked to my 13:01 post.

  Linda Piazza   9/16/200,  2:12:34 PM
The OEX still tests the Keltner resistance on the 15-minute chart, with that resistance still looking stronger than support, but to confirm that, we need to see 15-minute closes below the Keltner line currently at 544.01. Until that starts happening, but OEX could just keep battering at the resistance long enough that the lines begin to separate.

  Jeff Bailey   9/16/200,  2:07:14 PM
02:00 Internals at this Link

Very strong intra-day internals, but lack of volume is what keeps TRIN above 1.00.

  Mark Davis   9/16/200,  2:05:00 PM
They just ate through 1125 like a rat on a cheetoh.

  Jeff Bailey   9/16/200,  1:57:49 PM
Gold Bugs ($HUI.X) 206.61 +0.41% .... WEEKLY R1 right here.

Has been bound between DAILY S1 204.93 and DAILY R1 207.09 so far today.

  Linda Piazza   9/16/200,  1:54:55 PM
The Dow rose high enough to test its 200-sma at 10,287.81 today, coming within six points of that average, and has so far fallen back from that test. Daily MACD verges on a bearish cross, although we've seen these "verges" on several charts lately, with that tentative cross erased by an afternoon or morning thrust higher. Still, keep a watch.

  Jim Brown   9/16/200,  1:54:55 PM
Speech by Governor Edward M. Gramlich - Oil shocks and monetary policy: Link

  Jeff Bailey   9/16/200,  1:53:43 PM
U.S. Dollar Index (dx00y) 88.77 -0.42% (30-minute delayed) .... session lows and I thought this weakness in the dollar would bring some type of bid to gold and miners, but hasn't happened to this point.

  Mark Davis   9/16/200,  1:51:27 PM
I agree also. Marc has a very good perspective on the marc-et.

  James Brown   9/16/200,  1:51:17 PM
Wow! Golden West Financial (GDW) is seeing some strong follow through (+2.4% to $115.45) on top of yesterday's breakout over the $110 level. GDW is nearing all-time highs/resistance at the $117 region.

  Jeff Bailey   9/16/200,  1:50:01 PM
Bullish day trade stop alert for Bema Gold (BGO) $2.34

  James Brown   9/16/200,  1:46:57 PM
Hello! Last night we put IMDC on the watch list for a breakdown under support at the $50.00 mark. Today shares are down 5.6% to $48.10 on stronger than average volume. A broker downgraded IMDC-rival Mentor Corp (MNT) and shares of IMDC are falling in sympathy. Shares of MNT are down 7% to $32.69.

  Linda Piazza   9/16/200,  1:45:53 PM
The OEX has begun to test the converged resistance on the 15-minute chart, with that resistance from 544.25-544.60. The OEX just reached within a few cents of the lower edge of that resistance and now is dropping back slightly. It's still about as close to the middle of the broadening formation as it's possible for it to get, though, and so not at a point from which either bullish or bearish decisions are easily made.

  James Brown   9/16/200,  1:44:00 PM
Networker FFIV has settled a lawsuit with RDWR and shares of FFIV are reacting positively. The stock is up 2.8% and bouncing from the simple 200-dma while challenging resistance at $30.00.

RDWR is up 3.6% to a new 4 1/2 month high.

  Jeff Bailey   9/16/200,  1:43:44 PM
01:40 Market Watch at this Link

  Linda Piazza   9/16/200,  1:42:21 PM
The TRAN is pushing past the 9/13 high. Is the TRAN also just forming a broadening formation or is this a real breakout in this indicator index I like to watch? The formation doesn't appear to be a broadening one, but we're right in that stop-running time of day, so I'm not sure if this is a false breakout or not.

  Jane Fox   9/16/200,  1:41:56 PM
I agree Linda (13:37 post) Marc does have some very good comments.

  Jeff Bailey   9/16/200,  1:39:02 PM
01:00 Internals at this Link

  Linda Piazza   9/16/200,  1:37:58 PM
Why isn't reader Marc writer Marc? (See Marc's comments as quoted by futures writers on the Futures side of the Monitor.) Always enjoy reading his comments.

  Linda Piazza   9/16/200,  1:35:09 PM
The TRAN has now reached a double-top level when compared to the 9/13 high. The 30-minute chart shows potential bearish price/oscillator divergence when compared to that 9/13 high, but of course the oscillators could still keep moving higher and erase that divergence. The TRAN has signaled bearish divergence on one time interval's chart or another at various times, and yet has kept climbing. On the 30-minute chart, it's been using the 50-pma as a springboard, occasionally piercing it and even occasionally showing a 30-minute close just below it, but then bouncing from it again.

  Linda Piazza   9/16/200,  1:23:50 PM
Currently, resistance still looks much stronger on the OEX's 15-minute chart than does support, with that 15-minute resistance at 543.84 and then much stronger from 544.26-544.61. The picture looks a bit more mixed on the five-minute chart, with resistance a bit stronger, but all Keltner lines are strung out above and below the OEX's current level, and not converging strongly. On the very short term, then, the OEX could either head down, head up to test the resistance showing up on the 15-minute Keltner chart, or just trade sideways. How's that for helpful? I'm not trying to be flip, but instead am suggesting that charts do reinforce the expected scenario for today--a difficult trading environment.

  Linda Piazza   9/16/200,  1:19:41 PM
And the Russell 2000 holds strongly above its 200-sma, although it was once again turned down from the test of 575, as it was on Monday. Each day, it broke a few cents above 575.

  Linda Piazza   9/16/200,  1:18:06 PM
While the TRAN is reaching up toward recent highs, the SOX is pulling back toward the converging 10-, 20- and 30-sma's, near its low of the day.

  Linda Piazza   9/16/200,  1:12:50 PM
The TRAN presses against an ascending trendline drawn across string of swing highs on its 15-minute chart since the morning high on the 14th.

  Linda Piazza   9/16/200,  1:01:49 PM
I don't watch the QQQ often since Jonathan does such an admirable job, but I thought I'd look at it to see if it showed the same broadening formation as does the OEX. It doesn't. Instead, it shows the potential for a H&S. Link Note, however, that there was no bearish divergence as the possible head was formed, something would-be bears sure would like to see as confirmation in a climate like today's.

  Mark Davis   9/16/200,  12:58:44 PM
A bottle rocket ride would be nice Keene... Link
... and a new HOD just might light the fuse, although there is some serious resistance dead ahead. The consolation for anyone aggressive (foolish?) enough to enter that long play is that at least it's a risk free ride now with stops set @ break even.

  Linda Piazza   9/16/200,  12:57:21 PM
The OEX is smack-dab in the middle of that broadening formation. Nothing more to be said.

  Linda Piazza   9/16/200,  12:47:41 PM
We also have the Fed's Gramlich speaking on oil and policy beginning in a few minutes in Kansas City.

  Mark Davis   9/16/200,  12:47:28 PM
SPX has just printed a sell signal @ 1124.45 but the (so far) shallow decline is looking like the bull flags from earlier this morning.

  Linda Piazza   9/16/200,  12:44:08 PM
The OEX preserves the potential for an inverse H&S to form, trying to push up from an appropriate right-shoulder level. However, as I've warned today, we often see formations set up and fail to confirm or confirm and fail to follow through on opex Thursday as well as when the OEX has settled into an equilibrium position on its Keltner charts. I would watch what's happening, prepare for a breakout of the broadening formation if inclined to trade, but be highly suspicious of anything happening while the OEX remained within that broadening formation. I also would not count on the OEX breaking out one direction or the other, not forming too strong a bias ahead of time. Oh, and I would be ready to jump out of the play I'd just jumped into if the OEX were to turn right around and fall back into the broadening formation just after climbing out of it. I think that's just about it on the warnings!

  Mark Davis   9/16/200,  12:43:11 PM
Part of the reasoning behind the long position is the market's nasty habit of going just past support or resistance and then suddenly reversing after shaking people out of their positions. SPX just completed such a reversal. Now the only question is whether or not it will continue upward. It is far enough above the entry point of 1123.01 to set stops to break even... currently printing 1124.53. The trade was entered as a scalp long with the possibility of a short-term trend reversal. If SPX clears 1125 I would consider that very bullish... again, for the short-term.

  Jeff Bailey   9/16/200,  12:42:20 PM
Day trade long alert .... for Bema Gold (BGO) at $2.37 offer, stop $2.34, target $2.43 by the close.

  Jeff Bailey   9/16/200,  12:38:23 PM
12:35 Market Watch at this Link

  Linda Piazza   9/16/200,  12:37:58 PM
MERQ as per Reader's Request: As always, I begin with a P&F chart just to see what that chart suggests. The P&F chart shows a triple-top breakout September 14, as the reader had noted, with a preliminary upside target of $49.00. MERQ trades below a bearish resistance line on the P&F chart, though, with that line at $45.00 coming ahead of the reaching of the target. Therefore, even if bar chart characteristics support a climb, I don't know that I'd set my sights on $49.00. I'd probably have a profit-protecting plan in mind for the $44.00-45.00 level.

Let's see what the bar chart suggests. The first notation I make is that MERQ trades below its 200-sma at $44.37. That reinforces the idea that anyone trading this bullishly should have profit-protecting plans in place as MERQ approaches $44.00. MERQ is also just approaching a level at which it will test that big gap from mid-July. As anyone who's worked with me in choosing stock picks knows, I'm particularly squeamish about trading into a gap, particularly a big one, and particularly one that spans an important round number, such as the $40, as this one does. Gaps often present resistance at the bottom, the top, and the 50% retracement level, so that trading through a gap can be a risky endeavor and one that requires much patience as each resistance level is hit. To be honest, I personally would pass up anything with a gap this big until the gap had been cleared, but then that wouldn't give much room up to the 200-sma, would it?

In addition, I note that RSI has turned down and stochastics have made a tentative bearish kiss. We know both of these are more fickle than MACD. MACD is just pushing toward the signal line, though, and I find that this is a difficult time to gauge the MACD, because just when it's on the verge of passing through a signal line is sometimes the very time when it turns and heads back the direction from which it had sloped toward that line: below signal in this case.

Turning to the weekly chart, I see that MERQ confirmed a H&S that had formed from last summer until early summer this year, fell toward its downside objective, and now climbs again. This formation through the summer takes on some of the aspects of a possible bear-flag climb into resistance, however, when seen from that weekly chart perspective although it looks more like a two-headed inverse H&S in the making on the daily one. If we snap a Fib bracket on the weekly decline that immediately preceded the flag's formation, the 38.2% retracement lies in the $39.35-39.75 range and the 50% retracement falls in the $41.50-41.70 range. Those are places where MERQ would be likely to find resistance based on weekly chart evidence, and both also lie within that big gap on the daily chart, making me even more squeamish about any long plays through that particular gap.

P&F upside breakout or not, lots of basing activity or not, plenty of upside potential or not, I flat just would look elsewhere for a bullish play. Doesn't mean that it won't zoom higher, but there are too many scary factors for me. However, if already in a bullish play and looking for a breakout number that will assure you that you're in the right play, bullish traders want first to see a breakout above $38.50 on strong volume. Those players should have profit-protecting plans in place as $39.35-40.00 is approached, however, as that's about the midpoint of the gap, round-number resistance, and a 38.2% retracement of the decline on the weekly chart. Doesn't leave much upside, does it, if that resistance holds?

However, perhaps this reader is considering a bearish play. Well, that's a bit problematic, too, since there's that P&F bullishness. OBV is in the pits, so it's not supporting that bullishness. However, studying the weekly and monthly charts, I see a lot of S/R in the $32-35 range, particularly near $33.80-33.90. Below that, MERQ moves into a thick band of congestion all the way down to $29.50 or so, and then soon begins another below that. Unfortunately, I don't see good risk/reward there, either, particularly as a descending trendline can be drawn beneath the recent lows--a broadening formation. I could suggest a break below the September low, but in a broadening formation, prices could just hit the forming descending trendline and head up again. Sorry I can't be more encouraging or helpful for suggested plays, but I just don't like this one.

  Jeff Bailey   9/16/200,  12:25:15 PM
Newmont Mining (NEM) $42.93 -0.83% Link .... weighed lower on news out of Peru that roadblocks set up by regional farmers earlier this month, in protest of further gold exploration, could limit output at Latin America's largest gold mine (Yanacocha), which Newmont has a majority ownership in.

  Mark Davis   9/16/200,  12:25:07 PM
SPX has just printed a buy signal. The decline stopped right at a little area of congestion just after the opening bell (9:40-9:55AM). B-bands are rapidly converging in the 1123 area. I don't recommend this very risky trade for readers but I just took a long position @ 1123.01. I'll either be right or very wrong.

  Linda Piazza   9/16/200,  12:13:36 PM
The OEX dropped straight to the level that the five-minute Keltner chart suggested might be next support, and it's trying to find support there. As I suggested earlier today might happen, we now have a possible inverse H&S at work here, with the neckline at the top, ascending trendline of the broadening formation. Whew! However, if the OEX should descend to test the bottom, descending trendline of that formation, it will have negated the inverse H&S potential. For now, the OEX trades in the middle of this broadening formation, not breaking out either direction.

If the OEX steadies here, as it appears to be trying to do, next Keltner resistance on the five-minute chart begins at 543.73 and extends up to 544.28, and then appears again at 544.28. That resistance is trying to converge and is perhaps strong enough to hold the OEX back, but if it pushes hard enough, it could perhaps get past. Bears most want to see five-minute closes beneath the Keltner line currently at 543.73 while bulls most want to see five-minute closes above 544.28.

  Jeff Bailey   9/16/200,  12:08:36 PM
12:00 Internals at this Link

  Mark Davis   9/16/200,  12:03:59 PM
stepping away for a few minutes...

  Mark Davis   9/16/200,  12:01:40 PM
That was quite a red candle just now... starting to see some cracks in the dam.

  Linda Piazza   9/16/200,  11:55:31 AM
The OEX is turning down again within its broadening formation, with the upper rising trendline holding again as resistance. The 15-minute Keltner chart now shows resistance much stronger than support, and so would suggest that the OEX might now be headed down to a test of the lower, descending trendline. The five-minute chart shows a similar outlook, although it suggests that the OEX might first rise to test overhead resistance gathering from 544.04-544.39, as it has been doing as I typed. It also suggests that the decline could be stopped nearer 543.27 than the 542.40-ish level of that descending trendline. Remember that strange things can happen on an opex Thursday, though, and you can't always trust chart formations to be predictive of price action.

  Mark Davis   9/16/200,  11:55:10 AM
Who dat call my name?

  Mark Davis   9/16/200,  11:37:27 AM
TRIN is dropping right along with price... weird.

  Linda Piazza   9/16/200,  11:34:28 AM
The OEX has been in the process of moving up into an equilibrium position with respect to its Keltner charts on both the five- and fifteen-minute time intervals. That reinforces the idea of a difficult trading environment, at least until there's another breakout, because as the OEX oscillates through a tight range while stuck in an equilibrium position, it tends to slide through resistance or support that converges near the mid-channel levels quite easily. It also tends to set up apparent bullish or bearish formations, and either fail to confirm them or confirm them and then fail to follow through. It can remain in an equilibrium position for a number of hours and even longer than a day, although such a position portends a breakout that could come any time.

The OEX remains within the confines, if they can be called "confines," of the broadening formation at the bottom of its decline.

  Mark Davis   9/16/200,  11:22:05 AM
B-bands are getting very tight on the 1-min chart and MACD has flatlined just below the zero line (-0.02). The logjam may be about to break.
Benchmarking... SPX = 1125 ("Surprise, surprise, surprise..." he said in his best Gomer Pyle voice)

  James Brown   9/16/200,  11:20:16 AM
The Atkins diet craze certainly seems to be fading. Panera Bread (PNRA) reported that August same-store sales rose 2.4%.

  James Brown   9/16/200,  11:17:55 AM
Nortel Networks (NT) is down 6.8% to $3.55 after issuing an earnings warning this morning. NT now expects revenues to come in under expectations.

Here's an excerpt from NT's press release:

The Company expects its revenues in the third quarter of 2004 to be lower than the Company's previously announced preliminary unaudited revenues for the second quarter of 2004. On a full year basis, the Company now expects that its 2004 revenue percentage growth over 2003 will be in the mid single digits and that the overall communications equipment market will grow faster than that.

Bill Owens, president and chief executive officer, Nortel Networks, said, "As we work through this challenging transition period, completing our restatement activity and implementing the new strategic plan for the Company, I am confident that Nortel Networks will be positioned to compete strongly in all of our markets with the right products and services as we move into 2005."

  Linda Piazza   9/16/200,  11:14:54 AM
The SOX still balances on top of its converging 10-, 20- and 30-sma's on its daily chart, but also still hasn't been able to push above the 386-387 level that marks the 50% retracement of the rally off the October 2002 low. The SOX first fell below that 50% retracement in August. The SOX is attempting an assault on that level now. If the SOX makes it past that retracement, next watch the 50-dma at 394.40 for possible resistance or for a sign that the SOX is breaking out to the upside again.

  James Brown   9/16/200,  11:14:13 AM
Meanwhile Illinois Tool Works (ITW) is up 2.68% and breaking out over the $90.00 mark and several major moving averages after Prudential upgrades the stock to an "over weight".

  James Brown   9/16/200,  11:13:00 AM
Truck maker Navistar (NAV) is down about 2% after Prudential downgrades the stock to an "under weight".

  James Brown   9/16/200,  11:12:20 AM
Yesterday Guidant (GDT) broke through the top of its short-term trading range to hit new three-month highs. Today the stock is down 2.2% even though the FDA has approved a new smaller stent from GDT for tiny blood vessels. The stock is trading lower on a downgrade from Smith Barney who cut GDT from a "hold" to a "sell".

  James Brown   9/16/200,  11:09:12 AM
Office Depot (ODP) is trying to soften the sting of its recent earnings warning with a $500 million stock buyback program. Shares are up 1.75%.

  James Brown   9/16/200,  11:07:19 AM
Google (GOOG) is now up 9 out of the last 10 days and hitting new highs here at $114.53.

  Jeff Bailey   9/16/200,  11:06:41 AM
11:00 Internals at this Link

  James Brown   9/16/200,  11:06:10 AM
AMZN and YHOO are both turning in big days with a 3.9% gain for AMZN as it challenges the simple 100 and exponential 200-dma. While YHOO adds another 2.4%.

  James Brown   9/16/200,  11:05:07 AM
EBAY is also up six weeks in a row and hitting new all-time highs here at $95.50. What are the odds of some profit taking at $100?

  James Brown   9/16/200,  11:03:08 AM
Retail stocks are also on the rise. The RLX retail index is nearing resistance at its all-time highs from June. The sector is currently up six weeks in a row.

  James Brown   9/16/200,  11:01:55 AM
Defense stocks are extending their gains with another new all-time high for the DFI index.

  Linda Piazza   9/16/200,  11:01:37 AM
Watching TRIN and advdec levels would have stayed a bearish hand early this morning. Although the OEX was steadying right where expected to flatten and form a right shoulder for a continuation-form H&S (see my 9:42 and 9:57 posts), the TRIN's trend and the advdec level were suggesting that rounding-over might not happen and that bears should be careful (see my 9:48 post).

We still don't know whether the outcome of the broadening formation into which the OEX's H&S has morphed will be a bullish or bearish one, or perhaps whether it will now morph into an inverse H&S. We just have to see.

  James Brown   9/16/200,  11:00:53 AM
It is interesting to see the 2% rally in the GHA hardware index. It's a perfect bounce from the simple 200-dma. The group is looking a little extended up five weeks in a row.

  James Brown   9/16/200,  10:59:21 AM
The rise in SPW today puts this put play in danger of being stopped out.

  James Brown   9/16/200,  10:58:07 AM
OI put play APOL tried to bounce back above the $80.00 level again this morning but the rally is failing.

  Mark Davis   9/16/200,  10:58:01 AM
Ditto Keene

  James Brown   9/16/200,  10:57:10 AM
Our concerns yesterday have come true. We've been stopped out of RAI at breakeven.

  Jeff Bailey   9/16/200,  10:56:36 AM
10:52 Market Watch at this Link

Nearly a complete 180-degree turn from yesterday.

  Linda Piazza   9/16/200,  10:56:02 AM
Another great resource on broadening formations: According to our own Leigh Stevens, there are broadening bottom formations. He refers to a study by an MIT professor that finds it to be one of the five technical patterns with "statistically significant test results." Link I thought I remembered Leigh doing an article on broadening formations recently. His more in-depth research confirms my anecdotal impressions. However, usually reliable or not, Pring and Murphy both note that these formations fail sometimes, and there are big continuation moves when they do.

  James Brown   9/16/200,  10:55:27 AM
OI call play BOL is inching to another new high here at $68.78.

  Linda Piazza   9/16/200,  10:43:58 AM
So far, the OEX has closed at the levels needed on the five-minute Keltner chart in order to avoid the retracement hinted at on the 15-minute one. Bulls now want to see five-minute closes above 544.78 or at least above 544.35.

The information in my 10:38 post confirms my impression that today might be difficult to trade, however, with that impression garnered from the often-seen tendencies of an opex Thursday and also of the type of trading that usually follows a large-range day. Bulls and bears have got some sorting out to do, and we might be best standing aside until the goring and slashing are all finished.

  Linda Piazza   9/16/200,  10:38:45 AM
You have it from both Murphy and Pring as well as from me: orthodox broadening formations (megaphone) are indicative of emotion-based trading, or out-of-control trading, as Murphy terms it. Both confirm that such shapes are among the most difficult to trade since it's almost impossible to determine the breakout points. Here's the one on the OEX's five-minute chart: Link I knew all that already, though. The reason I went to those sources again was to confirm my impression that such formations are seen at market tops rather than bottoms, and that indeed was confirmed by these two market gurus. Therefore, what do we make of such a pattern forming at the bottom of a decline rather than at the top of an incline? I think all we can take away is the knowledge that they're almost impossible to trade and that they're indicative of emotion-based, out-of-control trading. If this had come at the top of a rise, we'd be able to say it was bearish and watch for a downside break. I think I've seen a few of these at the bottom of declines as bears and bulls battle it out, and I think I've seen a few break to the upside after the battle was concluded, but that's anecdotal only based on very few examples, and I sure wouldn't bet my money on it.

  Jeff Bailey   9/16/200,  10:35:51 AM
Bearish day trade stop alert .... TASR at $42.35

  Mark Davis   9/16/200,  10:34:56 AM
SPX looks like it wants to go up but is having trouble with the 1125 area, as I suspected it might. This could only be a pause before going higher and it wouldn't take much for the sell signal to abort, so if you go short here @ 1125 I would place a tight stop @ 1126.

  Jeff Bailey   9/16/200,  10:34:32 AM
Bearish day trade raise stop alert .... on TASR to $42.35.

  Mark Davis   9/16/200,  10:24:38 AM
SPX just printed a sell signal @ 1124.80. Let's see if it goes anywhere.

  Jeff Bailey   9/16/200,  10:23:19 AM
day trade short alert ... for Taser Intl. (TASR) $41.44 here, stop $42.20, target $40.00.

  Linda Piazza   9/16/200,  10:22:00 AM
The TRAN trades sideways, with this indicator index not giving us much indication of what happens next.

  Jeff Bailey   9/16/200,  10:21:10 AM
Current OPEN MM Profiles at this Link

NTES Link and SOHU Link strong early.

  Linda Piazza   9/16/200,  10:19:50 AM
As the Keltner channels had suggested, the OEX did shoot up into the 544.33-544.76 zone. See my 9:57 post. Now what? A lot of head scratching, if you're looking only at chart formations. The broadening formation at the bottom of the OEX's drop is one that's typical of emotion-based trading, prior to a breakout, but it makes a breakout difficult to identify just because it's a broadening formation.

Keltner-wise, the OEX challenges that converging resistance that I mentioned in that 9:57 post. The most likely outcome is that the OEX will retreat now to test 543.84, with the outcome of that test telling us what happens next. At least that's what the 15-minute chart suggests. The 5-minute one says that as long as the OEX maintains five-minute closes above 544.35-544.46, it just may have a chance of not retreating at all just yet. It's coming down now to test that level, so it's unclear as yet whether it can hold on with that closes.

  Jeff Bailey   9/16/200,  10:11:56 AM
10:00 Internals at this Link

Yesterday's Internals at this Link

  Mark Davis   9/16/200,  10:11:21 AM
Good morning... just up from a power outage.

  Jeff Bailey   9/16/200,  10:03:15 AM
10:00 Market Watch at this Link

  Linda Piazza   9/16/200,  9:57:21 AM
The OEX still behaves just as you'd expect it to behave if it were going to round over into a right shoulder for a potential H&S. I still have the feeling there's a battle going on, though, and we might just as easily see a zoom up to the head level as a rounding over to the neckline level. Some chart Keltner characteristics suggest that a move up to 544.33-544.76 is likely, but those signs are iffy at best and few signs suggest any move above that as yet.

  Jeff Bailey   9/16/200,  9:52:12 AM
VIX.X 14.45 -1.29% .... daily pivot levels as follows ... 13.65, 14.13, P= 14.39, 14.87, 15.13.

  Linda Piazza   9/16/200,  9:50:56 AM
The OEX's 15-minute Keltner chart shows considerable resistance gathering near 544.34-544.76, with the five-minute chart also showing resistance in that range. On that five-minute chart, the OEX struggles with an important channel line currently at 543.60, unable to move much from that line.

  Linda Piazza   9/16/200,  9:48:31 AM
Advdec level above yesterday's, TRIN's empirical level still bearish but dropping through yesterday's range: Jane has taught us to be careful if in or considering bearish trades under these conditions.

  Linda Piazza   9/16/200,  9:46:28 AM
Here's where the OEX is with respect to its 30-minute 100/130-ema's: Link The red trendline is the rising trendline off the 8/13 low, or one version of it, anyway. That trendline was broken yesterday. The OEX has not yet retested it and that retest wouldn't be out of the question if the OEX were able to break above yesterday's mid-afternoon high, the supposed head of a potential continuation-form H&S.

  Linda Piazza   9/16/200,  9:42:51 AM
The OEX is so far steadying just where you'd expect it to steady if it were going to form the top part of a right shoulder for that continuation-form H&S. There may be a showdown going on, though, with the outcome as yet uncertain. A zoom about yesterday's 2:00-3:00 afternoon highs would undo the potential bearishness of the formation while a move below the supposed neckline, currently at about 542.50, would confirm it.

Note: As I typed, the OEX was trying to break above the steady-off level.

  Linda Piazza   9/16/200,  9:39:38 AM
Yesterday, the BIX broke soundly below a possible bear flag formation on its 30- and 60-minute charts and below the neckline of a small H&S, too. It's also been possible to describe the BIX's pattern differently, however, showing it trading in rectangular pattern from about 362.70-364.67. When the BIX broke below those two formations yesterday, it fell all the way to the bottom of that rectangular range. This morning, it's bouncing strongly from that bottom, at 364.01 as I type, but it hasn't yet retested the bottom support of the rising regression channel, with that former support proving to be resistance all yesterday afternoon.

  Linda Piazza   9/16/200,  9:36:38 AM
The SOX is trying to bounce from the converging 20- and 30-sma's, with the 10-sma just below those.

  Linda Piazza   9/16/200,  9:35:26 AM
Careful, QCharts users. I believe that QCharts is running slow this morning.

  Jeff Bailey   9/16/200,  9:34:53 AM
Research in Motion (RIMM) $72.20 +3.19% Link ... new 52-weeker at the open.

I'd be taking some partial profits off the table. Still some room to bullish vertical count of $87, but just looking a little extended.

  Linda Piazza   9/16/200,  9:33:33 AM
The OEX heads up toward a test of Keltner resistance near 543.66-544.50. If it should roll down before 544 or so, that preserves the possibility of a continuation-form H&S on its five-minute chart. There was no bearish divergence as the presumed head was formed, however, leaving us without any suggestion as to whether the formation is valid or will be confirmed.

  Linda Piazza   9/16/200,  9:32:00 AM
Yesterday, Jim warned that today might be difficult to trade. Keene suggests trying out some paper trades today. I have two different scenarios in mind. As Keene mentioned referencing my Wrap last night, many reasons exist to believe that today could be a difficult-to-trade consolidation day. Overnight trading saw the Nikkei produce just such a day, zooming around from one side of a range to the other and closing about in the middle. If the selling yesterday had been the first sign of a seasonally flushing out of the markets, then I could see a continued decline today, but that's just not certain at this point. Keene pointed out some of the same dangers we've all seen and that I mentioned in my Wrap last night--for example, the OEX being below its 200-sma but SPX above its. Do you enter bearish OEX trades when technicals suggest you do, when the SPX (and Russell 2000) are just about to test their 200-sma's? Do you enter a bullish OEX trade on a test of the 540.80-541 level if the SPX is also bouncing from its 200-sma at the same time, knowing that the OEX is headed up into a test of its 200-sma, a test is essentially failed the previous time?

  Jeff Bailey   9/16/200,  9:28:30 AM
Digital Recorders (TBUS) $5.52 Link ... most active in pre-market trade at $5.98 after security device maker said its Digital Audio Corp. business unit received 3 purchase orders for the CARDINAL next-generation forensic audio processor system. Two orders were from a U.S. federal agency and one from an overseas law enforcement agency. Details at this Link

  Jim Brown   9/16/200,  9:24:16 AM
Jonathan is off today.

  Linda Piazza   9/16/200,  6:55:21 AM
Good morning. The Nikkei gapped below 11,100 at the open Thursday, with exporters sending the index lower at the open. After twice climbing a few points into positive territory, the Nikkei ended the day in the middle of its range, down 19.22 points or 0.17%, at 11,139.36.

Some stocks, such as NTT, Nippon Telegraph & Telephone Corp, lost ground due to news related to their companies, with NTT closing lower by 2.4%. NTT considers cutting its monthly charges for basic services for telephone subscribers as well as phasing out its signup fee. Some competitors have already announced plans to reduce fees, suggesting that competition may build.

Most other Asian markets closed in positive territory, although some climbed there after morning losses as some techs erased their morning losses. The Taiwan Weighted gained 0.34%. South Korea's government released August's unemployment rate, showing that seasonally adjusted rate unchanged from July's 3.6%. The Kospi gained 0.56%. Singapore's Straits Times was one of the few losing bourses, dropping 0.34%. Hong Kong's Hang Seng gained 0.96%, and China's Shanghai Composite gained 1.18%.

Currently, European bourses are mixed, with many trading close to the flat-line level. In the U.K., August's retail sales rose 0.6% over July's, beating expectations for a decline. Perhaps also of interest to U.S. investors in companies related to the building trades, after U.S. senators hashed out a plan to cap future payouts for asbestos claims from a planned compensation fund, U.K. building materials group Hanson rose.

In continental Europe, Dresdner Bank's CEO renewed speculation about mergers among German banks, helping to send the banking group higher. Speculation that Deutsche Bank would also make a retail-related acquisition also helped. Nokia benefited from a CSFB upgrade to neutral from an underperform rating, although the firm also lowered its view of the outlook for 2005's mobile phone sales. The firm increased expectations for Nokia's margins. Several luxury goods makers reported, with varying results. Hermes was trading lower and Richemont higher, although Richemont would not forecast a profit for the year. The company pinned that unwillingness to forecast on uncertainty over the sustainability of the U.S. recovery and Europe's continued sluggish market.

As of 6:53 EST, the FTSE 100 was trading 6.40 points or 0.14% higher, at 4,554.80. The CAC 40 was trading 1.19 points or 0.03% higher, at 3,693.04. The DAX was trading 13.94 points or 0.35% higher, at 3,955.69.

  Jeff Bailey   9/16/200,  4:44:37 AM
Pivot Matrix for tomorrow at this Link

  OI Technical Staff   9/16/200,  4:44:31 AM
The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.


Market Monitor Archives