Option Investor
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  Mark Davis   9/22/200,  6:00:56 PM
Reader Marc, always the gentleman, just emailed me...

Well, snickering is a strong word, but happy camper, yes...

... so to set the record straight, "Happy Camper" it is Marc (grin)

  Mark Davis   9/22/200,  5:40:22 PM
This SPX daily chart may be a little confusing but I wanted to revisit the two previous "b" distribution patterns again and compare them to the present one. Take a look at the striking similarities in the bounces off the bottom of the bulb and then the shallow retracements, followed by further upside before finally rolling over again. Even the positions of the various oscillators are very similar. Link
I only highlight the similarities because they suggest we may not necessarily head straight down from here, especially since we are at quote "critical" support. I see two distinct possibilities... either we begin a bounce tomorrow or we drop a little further before bouncing. I won't try to project any further out than that but would note the confirmed inverse H&S on the SPX daily chart has an upside target of 1159 and will not be invalidated until SPX drops below 1108. Note also that the two previous "b" distribution patterns occurred above the 200sma while the last one occurred from below.
Here's another look at the "b" distribution patterns from a fibonacci perspective. Link
All things considered I would regard the SPX 1100 area to be a very important line in the sand. Much below 1094 and I'd have to say the party's over for now.

  Jeff Bailey   9/22/200,  5:35:19 PM
Martha Stewart Living (MSO) $14.98 Link ... surges to $16.00 in extended hours on CNBC's James Cramer comments.

Mr. Cramer saying huge short interest along with Martha Stewart opting for new quarters early is big positive and stock trades $21 in a heartbeat.

According to the NASDAQ, as of Sept. 15, MSO short interest had fallen to 5.3 million shares from Aug. 13 short interest of 6.2 million. However, with average daily volume falling from August 1.38 million to September's 169,000 the days to cover has surged to 31.5.

  Jeff Bailey   9/22/200,  5:30:45 PM
Closing Internals at this Link

  Mark Davis   9/22/200,  4:53:52 PM
Linda I can hear reader Marc snickering about the VIX/VXO and saying "I told you so!" Link

  Linda Piazza   9/22/200,  4:46:45 PM
The OEX opened and plummeted straight to the bottom of the newest descending regression channel on its daily chart, a potential bull flag beneath the top trendline of the larger descending regression channel in which the OEX has traded throughout this calendar year. It never gave time for a bearish entry before it plummeted all the way to potential strong support, with the Russell 2000 and SPX testing their 200-sma's at the time. It fell all the way out of its potential bull flag, also falling out of the broadening formation on the 60-minute chart. It dropped all the way into the 536-537 downside predicted by the H&S on the 60-minute chart. Clearly, that low VIX and VXO did mean it was time to go, at least on the short-term. I think so on the intermediate-term, too. I'm looking for a downturn at least to 533-534, the 50% retracement of the rally off the 8/13 low, but I think a move to 530-531 might be possible, too. That's the midline of the descending regression channel that has controlled the OEX's pattern through this year as well as being near historical support and the 61.8% retracement of that rally.

That means that we've switched to a sell-the-rally mode. I'm hoping for a bounce up to 540-541 and a rollover from there as a new bearish entry, but it's possible that 538-539 may cap any rises. We'll take a look tomorrow morning. A move much over 541.25 might suggest that something other than a mere measured-distribution pattern is underway and might suggest that bears step back and reevaluate. If the OEX drops instead tomorrow morning into the 533-534 range, we'll have to reevaluate the level to which a bounce might take the OEX. However, the OEX ended the day at the 50-dma and the 38.2% retracement of the rally off the August low, so that's a natural place from which we might see some sort of bounce.

  Mark Davis   9/22/200,  4:43:20 PM
Jeff TLT is my favorite instrument for playing the bond market. I usually prefer to just play it short or long with xxx number of shares because it moves so slowly but I see today that TLTJL (TLT Sept $90 call) was a double if you timed your entry/exit perfectly.

  Jeff Bailey   9/22/200,  4:24:15 PM
Excellent Comments on Treasury market from CNBC's Rick Santelli regarding order flow and a lot of bond traders on the wrong side of the market.

I certain he's talking about shorts and that more than likely, just as things got overdone on the downside in May, they may be about to get overdone on the upside near-term.

Mr. Santelli's comments grab my attention as earlier today I was looking at the iShares 1-3 year (AMEX:SHY) $82.16 +0.09% and that volume spike from Monday at this Link

If short from May to June, there's some pain inflicted here.

Even worse has been the iShares 20+ (AMEX:TLT) $89.68 +1.03% and they (shorts) felt continue pain today, perhaps a little capitulation. Link

  Mark Davis   9/22/200,  4:17:17 PM
It isn't over yet Linda, but at least I have a few points locked in going into tomorrow. I may miss a bit of action on the open but if a trend becomes clear I can always drop the losing position, let the winner run and tack on a few more points. If I would have closed out both positions at EOD I might end up tomorrow morning looking through the window at the party inside. This way I'm still in the game.

  Jeff Bailey   9/22/200,  4:10:38 PM
Bearish day trade close out cancel alert .... for Monster Worldwide (MNST) , keep stop at break even for now.

  Jeff Bailey   9/22/200,  4:08:10 PM
Sell Program Premium ... SPY 111.50, QQQ $34.97

  Jim Brown   9/22/200,  4:06:40 PM
PWER warning

  Jeff Bailey   9/22/200,  4:00:39 PM
Monster (MNST) .... somebody jumped and crossed the offer at $22.47. Will hold overnight, or may close in tonight's extended session at $22.43.

  Linda Piazza   9/22/200,  4:00:29 PM
Great play, Mark!

  Linda Piazza   9/22/200,  4:00:11 PM
Now the Russell 2000 makes a lower low, too. The TRAN has still not done so, however.

  Jeff Bailey   9/22/200,  3:59:28 PM
Bearish day trade close out alert .... for Monster (MNST) $22.43 here.

  Jonathan Levinson   9/22/200,  3:57:41 PM
QQQ is losing the 34.90 level here on a pickup in volume. The problem with bullish divergences is that they relieve oversold pressure as price falls- often this sets up a bullish move in the making, but when it fails, it leaves the price vulnerable to further weakness.

  Linda Piazza   9/22/200,  3:55:09 PM
The TRAN is trying to steady. Unlike the OEX, it reached an equal low rather than a lower low. So far, the Russell 2000 is at a higher low.

  Mark Davis   9/22/200,  3:50:01 PM
Short @ 1126.29
Long @ 1112.94
I'm going to leave both plays open overnight with no stops. I'm hoping for an opening bounce tomorrow that fails but it really doesn't matter which way the market goes, as long as it goes. It looks like they are going to run it sideways into the close right at critical support and leave us wondering what will happen next. This is one way to beat that scenario.

  Linda Piazza   9/22/200,  3:48:59 PM
That same Keltner line continues to pressure the OEX lower. No change.

  Jonathan Levinson   9/22/200,  3:45:59 PM
There's a bullish divergence on the short cycle Macd and TRIX for QQQ (again), but as we've been seeing all day, it's meaningless below resistance. Bulls need to break 35.05 on the way to 35.14 for a short cycle bounce to have a chance.

  Jim Brown   9/22/200,  3:43:21 PM
Earnings after the close

BBBY +0.39
CDIC +0.03
COGN +0.26
DRI +0.43
GPN +0.51

Earnings for tomorrow morning

AGE +0.55
SCS +0.01
RAD -0.02

  Linda Piazza   9/22/200,  3:40:48 PM
The OEX is coming up for a test of that Keltner line that has been pressuring it lower all day. That's at 537.21. Those hoping for a bounce want to see a five-minute close above that line.

To be clear, I still consider any bounce to be a countertrend bounce. I would like to see a bounce up to 540.50-541, but so would every would-be bear, which might keep it from getting there. I'm not anticipating that big of a bounce this afternoon, of course, although the OEX is certainly capable of moving that big.

  Mark Davis   9/22/200,  3:37:54 PM
If we can get above 1114 this one may have some juice.

  Mark Davis   9/22/200,  3:36:44 PM
Long again @ 1112.94

  Mark Davis   9/22/200,  3:34:32 PM
Stopped out break even on the long play...

I was just about ask for a show of hands as to how many of you thought they might to run this sideways into the close, leaving us looking over the precipice and wondering what will happen overnight.

  Mark Davis   9/22/200,  3:28:56 PM
Raising stop on long position to 1113.11 and break even (so I can relax again).

  Mark Davis   9/22/200,  3:27:32 PM
SPX just printed a classic buy signal @ 1113.80. I jumped in early on the theory that the "edge of the cliff" play rarely works and I again wanted to lock in gains on the short position, however TRIN is still very bearish @ 2.01.

  Linda Piazza   9/22/200,  3:26:57 PM
Once again, the OEX could not manage five-minute closes above the Keltner line that's been pressuring it lower all day. That's now at 537.39. Those hoping for a bounce want to see a five-minute close above that.

Those in bearish plays should soon be making up their minds about whether they'll hold overnight or not. The OEX currently pauses near the 38.2% retracement of the rally off the Aug/Sep rally as well as the 50-dma. These are natural consolidation/bounce points. In addition, such a big range day might be followed by a day in which those declines are digested or a bounce up to test next resistance, although that truism doesn't hold as true on declines as it does on rallies. OEX 536 is within a known support level. Collecting at least partial profits might be a good idea. Selling the entire position and using only part of the profit to roll down into a lower strike put is a way some keep a toe in the water, if a short-term trader wants to do that. Bracketing the play a la Mark's tactic is one that can be considered. If you're going to exit today, begin following the OEX more tightly with your stops.

If you're in this for the intermediate-term, however, you might make a different decision, keeping wider stops. Still, collecting partial profits might be a good idea for some swing traders, too.

  Jonathan Levinson   9/22/200,  3:23:16 PM
QQQ is testing a low 34.91, not significantly lower than the prior low at 34.92. A retest of the low is compatible with a 30 min cycle bottom, and bears need the bottom to drop out in order to cancel what would otherwise be a bullish retest of the session low.

  Mark Davis   9/22/200,  3:22:46 PM
Long @ 1113.11

  Jeff Bailey   9/22/200,  3:21:41 PM
VIX.X alert
  Mark Davis   9/22/200,  3:19:37 PM
This about to get very ugly unless somebody steps into the gap.

  Mark Davis   9/22/200,  3:17:27 PM
Crunch time again... if we don't firm up pretty soon this could get ugly(er). Usually about the time I think we are going to fall off the cliff is right about the time we don't. If we do it would be the first time in a long time an "edge of the cliff" play (going with the trend) has worked. Watching closely here for any hint of firming. CCI is perfectly setup for a long but MACD is still pointing south.

  Linda Piazza   9/22/200,  3:16:26 PM
The TRAN is beneath 3200 now. Next strong support appears to be in a band of support near 3150-3180.

  James Brown   9/22/200,  3:15:38 PM
We're seeing some follow through in KSS with a 2.5% drop.

  Jonathan Levinson   9/22/200,  3:13:37 PM
Session low for NQ and YM futures. QQQ 1 cent away at 34.92.

  James Brown   9/22/200,  3:13:04 PM
If you are looking for bearish plays check out the following sectors. All of them are near or have already produced new MACD sell signals.

DRG - drugs
XAL - airlines
IUX - insurance
HMO - healthcare
RLX - retail.

  Jonathan Levinson   9/22/200,  3:13:03 PM
The cash bond market is closed, with TNX -5.1 bps or 1.26% at 3.989%.

  Mark Davis   9/22/200,  3:11:07 PM
MACD did cross back up printing a buy signal of sorts... but TRIN is back up to 1.94 and the "buy signal" is in danger of aborting.
Oops! there it goes.

  Jonathan Levinson   9/22/200,  3:08:46 PM
The 30 min cycle is looking very bottomy, while the 60 min downphase continues. The juxtaposition of those two key cycles could be behind the current chop, but the intraday bias remains for a corrective bounce against what I believe to be a daily cycle rollover.

  Jeff Bailey   9/22/200,  3:08:14 PM
Stillwater Mining (SWC) $13.89 -2.18% ...

Taser Intl. (TASR) $38.52 -1.25% ....

JDS Uniphase (JDSU) $3.43 -3.65% ....

Paychex (PAYX) $30.66 -3.31% ....

Netease.com (NTES) $38.00 -2.23% ....

SPX.X 1,114.98 -1.26% .....

Monster (MNST) $22.51 -2.51% ....

  Linda Piazza   9/22/200,  3:06:58 PM
All day today, the OEX has found resistance at the Keltner line currently at 537.62, with all but one five-minute close below that Keltner line. Those hoping for a bounce hope to see that pattern change.

  Mark Davis   9/22/200,  3:05:04 PM
The last 11 1-min candles look like a little bear flag but we did get that CCI reading of -280 and a higher low. MACD is flattening off and could easily turn higher, printing a "stealth" buy signal.

  Jeff Bailey   9/22/200,  3:05:00 PM
03:00 Market Watch at this Link

  Linda Piazza   9/22/200,  3:04:44 PM
$VXO headed up again.

  Linda Piazza   9/22/200,  2:59:55 PM
Both the Russell 2000 and OEX continue to fail at producing or following through on potentially bullish formations. Neither rose quite to the most likely neckline area before pulling back again into what I would have suspected as right shoulders if only the indices had climbed a little higher first. Watching these formations is helpful to help measure bullish or bearish power. Those most-likely neckline areas would have been at about 568.30 for the Russell 2000 and 538.30 for the OEX.

  Mark Davis   9/22/200,  2:57:13 PM
stepping away for a few minutes...

  Mark Davis   9/22/200,  2:56:32 PM
Potential long signal in its early stages with a CCI reading of -280... emphasis on "potential"

  Linda Piazza   9/22/200,  2:56:02 PM
Remember the 72-ema that I used to watch so closely on the daily charts for the tech-related indices? Both the NDX and Nasdaq have been testing theirs this afternoon. They're at 1403.52 and 1891.26, respectively, with those averages having shown some relevance as late as this month.

  Jonathan Levinson   9/22/200,  2:53:56 PM
The wavelet oscillator for QQQ is rolling over here, starting a new downphase from a lower high and confirming the short cycle downphase still in progress.

  Mark Davis   9/22/200,  2:53:20 PM
Stopped out of long play @ 1114.78, +1

  Linda Piazza   9/22/200,  2:49:58 PM
The OEX now faces resistance at 537.90, but maintains five-minute closes above or at the Keltner line currently at 537.48, something that those who want to see the OEX climb want to see.

  Mark Davis   9/22/200,  2:47:33 PM
Raising stop on long to 1114.78

  Linda Piazza   9/22/200,  2:45:04 PM
The OEX and Russell 2000 attempted inverse H&S's earlier, actually confirming them and then failing to follow through with any strength. That's a typical bottoming pattern, so we could see both indices again reach slightly higher than their current positions, pull back into right shoulders and then attempt a stronger bounce.

  Mark Davis   9/22/200,  2:45:02 PM
There's the second high CCI reading @ +280. Watch for a potential rollover in the 1116 area.

  Jonathan Levinson   9/22/200,  2:41:45 PM
Nymex crude is closed for the 1st session at 48.40, +1.65 or 3.53%.

  Mark Davis   9/22/200,  2:40:51 PM
Jim that ceiling coincides with an earlier 1/4 point gap down on the 1-min chart. SPX stalled right at the bottom of the gap. If the gap fills then 1116 is the next upside test on the cash index.

  Jonathan Levinson   9/22/200,  2:40:48 PM
QQQ 34.92 on the nose. You called it. Well done! (a tad more accurate than my 34.90 call...)I'm not sure it will hold in the coming days, but it should be a bounce today and most likely the low, although that oil is bad news and anything is possible on a day like today. Marc

Thanks, Marc. The trick here will be to see where QQQ goes next. There's a persistent bid here above 34.96, but then entire 35.00-35.14 range is packed with longs who will be tempted to get flat on any bounce. 35.20 and 35.29 are also key resistance levels above it. My bias remains to the downside below 35.25, but we need to evaluate the quality of the bounce in the process of forming here.

  Linda Piazza   9/22/200,  2:40:04 PM
Yes, Mark, those bracketed plays are great. Congratulations!

  Mark Davis   9/22/200,  2:36:43 PM
These "bracketing" plays work beautifully on days like today.
Short @ 1126.29
Long @ 1113.78, stop 1113.78
That's +12 1/2 points locked in no matter what happens. You are essentially flat the market. The advantage is you leave the door open for a cascade failure with zero risk. You can also follow the long play up with stops... if the index rolls over you have a nice scalp long and the short is still alive. The extra commissions are well worth the peace of mind.

  Linda Piazza   9/22/200,  2:36:34 PM
The Russell 2000 again shows the strongest bounce attempt. Keltner resistance thins out a bit above the current level, but still several levels show up between 537.35-538.00, so there might be at least a pause there.

  Linda Piazza   9/22/200,  2:33:16 PM
If the OEX can get past the 537.50 level, 537.90 is next close resistance.

  Linda Piazza   9/22/200,  2:28:52 PM
On the telephone, checking on hospitalized granddaughter. Back in a sec.

  Jeff Bailey   9/22/200,  2:28:10 PM
Dow Jones Home Construction (DJUSHB) 678.72 +1.01% ... sector winner

  Jeff Bailey   9/22/200,  2:27:30 PM
02:00 Internals at this Link

  Jonathan Levinson   9/22/200,  2:27:18 PM
35.00 support is now acting as resistance, with the 35.00-35.10 range now overhead confluence. A small wavelet cycle upphase is still in progress and has yet to roll over, while the short cycle oscillators continue to point south. A break above 35.00 will have next short cycle fib resistance at 35.08, and above 35.14, a short cycle upphase will kick off.

  Mark Davis   9/22/200,  2:24:28 PM
Potential short signal developing... same scenario as last time. Will bail long on weakness and let short play run.

  Mark Davis   9/22/200,  2:22:30 PM
Setting stop on long play @ 1113.78 and break even.

  Jeff Bailey   9/22/200,  2:18:43 PM
VIX.X 14.68 +7.46% .... session highs after just kissing WEEKLY R1 14.72.

  Mark Davis   9/22/200,  2:15:15 PM
Entering a concurrent long play here @ 1113.78

  Jonathan Levinson   9/22/200,  2:14:46 PM
YM is back below 10100 here. QQQ is trading 34.94, with 30 min channel support down to 34.90.

  Jeff Bailey   9/22/200,  2:14:30 PM
Bearish day trade lower stop alert .... for Monster Worldwide (MNST) $22.48 -2.59% to break even.

  Mark Davis   9/22/200,  2:13:01 PM
Buy signal is in danger of aborting

  Linda Piazza   9/22/200,  2:12:02 PM
Tentative OEX price/MACD bullish divergence, but tentative only. No Keltner-style bullish divergence, however. As always, let price determine your action.

  Jonathan Levinson   9/22/200,  2:11:59 PM
Ten year note futures are at a new session high, +.375 to 113.6719. TNX is down 5.8 bps to 3.982%.

  Mark Davis   9/22/200,  2:10:26 PM
SPX has just printed a buy signal @ 1114.40 but it needs to get some traction here pretty quick.

  Jonathan Levinson   9/22/200,  2:09:10 PM
I've been out most the session, and have come back curious on whether I should consider a long (for call writing)at 35.02-5? What do the fibs say? I noticed the weekly S2 is 34.80...you think that is more likely? Any hints you can give would be greatly appreciated. Frank

The daily fibs had support at 35.10, while the 60 min chart has a line at 35.05 and at 34.75. However, as I've been discussing, a daily close below 34.92 would spell bad news for the Qubes for the next 2 weeks or so, and while a bounce could be played from 34.92 support, I'd be very quick to exit in the event that it doesn't hold or break above 35.14. The daily cycle is a 4-week cycle, and it's been trending for the past week in overbought. I believe that a downphase from here is the more likely outcome, allowing for an intraday/corrective bounce. I'm bearish below 35.25.

  Mark Davis   9/22/200,  2:07:56 PM
Jim you may have nailed that one (long play).

  Mark Davis   9/22/200,  2:06:30 PM
TRIN @ 1.91 is keeping me out of a long play for now.

  Linda Piazza   9/22/200,  2:06:21 PM
As the OEX continues to track toward the 536-537 downside target of the H&S on the 60-minute chart, bearish traders should continue to follow the OEX lower with their stops. As I've mentioned all day, I don't think this is a time for switching sides and going long, at least not for options traders. The OEX has created a breakout (to the downside) signal on the Keltner five-minute charts and now on the 15-minute ones. Looking to a 30-minute chart to help set a downside target on a Keltner basis, that target would be at 535.65, within the 534.60-537.20 historical S/R zone. Meeting that downside target would first require that the OEX continue to have 30-minute closes beneath the Keltner line currently at 537.40 or at least the one currently at 538.65.

  Jeff Bailey   9/22/200,  2:06:18 PM
Swing trade bullish call exit alert ... Sell the Sohu.com Dec. $15 calls (UZK-LC) at the bid of $3.20.

  Mark Davis   9/22/200,  2:05:05 PM
Trying to firm right at the Sept 9th swing low Jeff mentioned earlier... critical juncture here.

  Jonathan Levinson   9/22/200,  2:02:06 PM
And breaking it. Session low now 34.95.

  Mark Davis   9/22/200,  2:01:47 PM
A concurrent long play is tempting here but if we drop much more we could some acceleration to the downside.

  Jonathan Levinson   9/22/200,  2:00:25 PM
QQQ is testing 35.00 here.

  Linda Piazza   9/22/200,  1:58:15 PM
Only the Russell 2000 followed through on any attempt to bounce, and its attempt was tepid at best, with that tepid upward push now turning lower. Even the Dow pushed easily through that gathering Keltner support that had looked so strong beneath it. Those already in bearish positions do not want to see a quick reversal and move higher now. Those who want to be in bearish positions and want a new entry or those in bullish positions do want to see that quick reversal. I'm afraid that was all the measured bounce that we're going to get, though, not even retracing 19.1% of the decline on the OEX, with the possible exception of a bounce now up toward 538 resistance, where the OEX would likely get turned back again.

  Mark Davis   9/22/200,  1:56:27 PM
Stuck at the front door with a colleague... stopped out @ 1115.50, short play still open.

  Jonathan Levinson   9/22/200,  1:54:26 PM
Stunion, your hotmail address is bouncing.

  Jonathan Levinson   9/22/200,  1:53:49 PM
Not the most impressive short cycle upphase I've ever seen. QQQ is back to 35.05, and while the Macd and TRIX are stalling, the short cycle stochastics are still in their upphase- a bounce from a higher low above 35 will confirm it. A break below that level would be very bearish, as the oscillators are no longer oversold and the bounce failed at much lower price and oscillator highs.

  Linda Piazza   9/22/200,  1:49:57 PM
The Dow still looks as if Keltner support is far firmer than resistance on the five-minute chart, normally suggesting that it will be easier for the index to move higher than lower over the very short term, but it still keeps creeping slightly lower.

  Linda Piazza   9/22/200,  1:44:34 PM
The Dow tests that Keltner support that had looked so strong. The Dow has broken below an ascending trendline off today's low. Maybe that's not so strong after all? It still looks stronger than nearby resistance, though.

  Linda Piazza   9/22/200,  1:43:22 PM
The OEX's push, however, has been to the downside.

  Linda Piazza   9/22/200,  1:42:58 PM
The Russell 2000 is still trying to lead the way higher, but still faces that gap down just after 10:00.

  Jonathan Levinson   9/22/200,  1:39:31 PM
Stepping away for a few minutes here.

  Linda Piazza   9/22/200,  1:38:51 PM
Russell 2000 making a tentative move higher, but has that five-minute gap level to push through now.

  Linda Piazza   9/22/200,  1:37:54 PM
On a five-minute basis, the Dow looks like it has strongest Keltner support beneath it.

  Linda Piazza   9/22/200,  1:34:31 PM
Mark, before you ask: I give a very tentative and shaky vote for a stop-running push to the upside, freely admitting that I often guess wrong on this.

  Linda Piazza   9/22/200,  1:31:52 PM
If I were in a bullish index play right now, I'd be getting worried. Unless there's some follow-through soon on those Russell 2000 and OEX inverse H&S's on the five-minute charts, I think it more likely that this bounce may be all that comes. So far, the OEX hasn't even made it up to the 19.1% retracement of the decline off yesterday's high, with my thinking earlier today that we'd see a 19.1%-50% retracement before the OEX keeled over again. That's still possible, but something needs to happen soon, in my opinion.

  Mark Davis   9/22/200,  1:29:22 PM
Jonathan it was either that or the music police. His earlier stuff was really great.

  Jonathan Levinson   9/22/200,  1:27:42 PM
The local french press is reporting that Cat Stevens has been barred from entering the US from Britain. Perhaps they thought he was packing a patchouli bomb?

  Linda Piazza   9/22/200,  1:27:14 PM
The OEX keeps chipping away at that just-overhead resistance. Those who want a bounce of any kind want to see five-minute closes above 538.10-538.27 and would prefer five-minute closes above 538.41.

  Mark Davis   9/22/200,  1:25:01 PM
This little spike has pushed 1-min CCI readings to +230. It could be the start of a trending move higher or just a bounce before rolling over again. The 10:38AM swing high was SPX 1118.00 so watch that area for signs of a rollover. If they appear I'll probably exit the long for a scalp and continue to let the short run. A spike to the 1118 area would probably produce another high CCI reading and a MACD bearish cross would obviously confirm weakness. Right now MACD is rolling over and close to a bearish cross so we may or may not get to 1118 before a rollover. The current pullback looks like a little bull flag. Stay tuned...

  Jonathan Levinson   9/22/200,  1:24:27 PM
35.14 is holding as resistance so far despite the uptick in volume on the bounce. The 30 min cycle channe is still flat, while the short cycle oscillators have worked off their oversold extreme, still trying to put together a new upphase.

  Linda Piazza   9/22/200,  1:14:47 PM
Here comes the OEX push to test resistance.

  Jeff Bailey   9/22/200,  1:13:56 PM
10-year yield alert 4.00%

Benchmarks ... SPX 1,116.73 , OEX 538.62, INDU 10,141, NDX 1,413 , QQQ $35.12.

PHF $9.63 +1.26%

  Jonathan Levinson   9/22/200,  1:13:49 PM
Nymex crude is down to 47.90, up 2.46% for the session.

  Jonathan Levinson   9/22/200,  1:13:21 PM
The 30 min cycle channel is flattening here from its downphase, a break above 35.14 will target upper channel resistance at 35.20. Above 35.25, a new 30 min cycle upphase will be in progress, and QQQ will have regained this week's rising range.

  Jonathan Levinson   9/22/200,  1:08:46 PM
Bonds extending their gains here, TNX now down 3.3 bps to 4.007%. Support on the weekly chart is in play here to the 4.000% level.

  Mark Davis   9/22/200,  1:05:58 PM
SPX just did a little MACD bearish kiss on the 1-min chart. Not a good sign unless it turns back up soon.

  Linda Piazza   9/22/200,  1:04:16 PM
Yes, taken together, Keene's SPX chart in his 00:36 post, Tab's in my 12:55 post, and Jonathan's in his 12:58 post paint a picture that can look scary. Not to options traders, however, as we have the luxury of trading both directions. What's scary is when there's no direction. Or when the markets failed to give us the needed bounce for an entry before starting today's direction!

I'm still ready to be wrong about eventual intermediate-term direction, though, but will let markets prove to me that I'm wrong. I'm still waiting for a measured distribution bounce and would love to see it head up toward 540.50-540.80 before rolling down, but I'm not sure that opportunity will be offered.

  Jeff Bailey   9/22/200,  1:03:54 PM
01:00 Internals at this Link

  Mark Davis   9/22/200,  12:59:26 PM
I second that... Tab always has excellent charts and annotations.

  Linda Piazza   9/22/200,  12:58:57 PM
The OEX massed resistance noted in my 12:51 post has held. Those hoping for a bounce of any kind want to see five-minute closes above the Keltner lines currently at 538.29 or 539.02.

  Jonathan Levinson   9/22/200,  12:58:22 PM
Great chart, Tab/Linda. Here's the QQQ:QQV ratio chart, showing a rollover today of the QQQ price:volatility ratio: Link

  Mark Davis   9/22/200,  12:57:59 PM
Looking back it's easy to see the buy signal (the rear view mirror never lies) Link
... but it hasn't gone very far at all yet so remains suspect. The SPX daily MACD is trying to make a bearish cross and if it follows the same pattern as the last 4 SPX lower highs we could be looking at SPX 1050 or lower. That's not a prediction... only an observation of a possible scenario.

  Linda Piazza   9/22/200,  12:55:31 PM
Keene posted a chart of the SPX relative to the VXO this morning in his 00:36 post. Here's an OEX/VXO chart, courtesy of reader Tab G., along with his annotations: Link

  Jeff Bailey   9/22/200,  12:54:30 PM
12:50 Market Watch at this Link

  Linda Piazza   9/22/200,  12:51:06 PM
OEX resistance masses up to 538.76 and then thins out, so that a five-minute close above that suggests that measured-distribution bounce could begin. The OEX has to push past that resistance first, though.

  Jonathan Levinson   9/22/200,  12:50:10 PM
Nymex crude is up 1.55 or 3.32% at 48.30. Session high is 48.575 so far.

  Jonathan Levinson   9/22/200,  12:47:37 PM
Daily QQQ chart at this Link . Yesterday's spike high is looking like a daily cycle high from here.

  Linda Piazza   9/22/200,  12:42:58 PM
The OEX now tests its own neckline for an inverse H&S.

  Linda Piazza   9/22/200,  12:42:12 PM
The Russell 2000 can't get much upside traction yet after pulling above the inverse H&S's neckline, but the three-minute Keltner chart shows the smallest Keltner channel squeezing so tight that the Russell 2000 is bound to pop through one direction or another soon.

  Jonathan Levinson   9/22/200,  12:42:04 PM
QQQ's short cycles are still trending in oversold, but the bullish divergences on the TRIX and Macd have developed further and there are the first upticks in the stochastics showing here. Immediate resistance at 35.14 is the first level to break- because the short cycles are trending, I'm not inclined to trust any bullish signals below that level.

  Linda Piazza   9/22/200,  12:33:24 PM
The OEX approaches gathering resistance near 538.50-538.90. Bears want to see five-minute closes beneath 538.87. Want-to-be bears would like to see a higher bounce, into a measured distribution pattern that retraces 38.2-50% of the decline off yesterday's high. Bulls want to see a more-than-50% retracement. If there's no new low, the 50% retracement lies at 541.77.

I bet for a 19.1-50% bounce and a rollover from there, but perhaps not before a slight pullback, perhaps to 537.90-538.20.

  Jonathan Levinson   9/22/200,  12:33:11 PM
60 min chart of QQQ at this Link . A return to the scene of the crime bounce will need to clear the 35.22-.25 level.

  Linda Piazza   9/22/200,  12:27:04 PM
Russell 2000 making an assault on that inverse H&S neckline.

  Jeff Bailey   9/22/200,  12:25:26 PM
Gold Bugs ($HUI.X) 215.05 +0.32% ... bid to session high.

  Jeff Bailey   9/22/200,  12:24:40 PM
December Crude Oil (cl04z) $47.11 +2.14% (30-min delayed) .... did trade its WEEKLY R2.

SPX 1,116.16 -1.16% .... traded its WEEKLY S2.

  Mark Davis   9/22/200,  12:21:09 PM
Setting stop on SPX long @ 1115.50 and break even. Still holding the short from 1126.29. This is the kind of "bracketing" I like. When you can get an 11 point spread (locked in gains) between your long and your short you tend not to get shaken out.

  Linda Piazza   9/22/200,  12:19:24 PM
I'm watching the Russell 2000's five-minute chart for signs that it will confirm the inverse H&S on its five-minute chart or else drop to a new low, undoing that potential formation. That will be our first clue as to whether the Russell 2000 could lead the markets into a bounce or into a cascading fall. With crude shooting up, bulls are going to get scared if the markets can't mount a bounce soon. Critical point.

  Jeff Bailey   9/22/200,  12:18:01 PM
Netease.com (NTES) $38.22 -1.72% ....

Sohu.com (SOHU) $16.98 -2.01% ...

  Jeff Bailey   9/22/200,  12:17:18 PM
Taser Intl. (TASR) $38.71 -0.87% ....

  Jim Brown   9/22/200,  12:16:56 PM
Oil continuing to rise. Now at $48.35

  Jonathan Levinson   9/22/200,  12:14:04 PM
VXO +6.42% at 14.26. QQV +2.33% at 18.88.

  Linda Piazza   9/22/200,  12:13:06 PM
The TRAN still tests the 3200 support, at 3201.49 as I type.

  Jeff Bailey   9/22/200,  12:12:57 PM
12:10 market watch at this Link

  Jim Brown   9/22/200,  12:12:17 PM
LEAP Update
We were triggered on the EBAY Leap entry this morning with the break under $90. We have support in the $88-$86 range that should hold as long as the market does not implode into a major correction.

We were triggered on the MER entry on Monday at $51 and saw a nice spike yesterday to just over $53. The MWD news today took that back and MER is currently trading at $51.50.

We were triggered on the UPL breakout entry at $45 on Tuesday's ascending triangle breakout and UPL is holding at $46.45 today.

The COP and XLE plays are profiting from the continued rise in oil but our OXY watchlist entry is probably hopeless. It has run away from any chance of a long entry until the next pull back in oil. With three oil longs already I would rather pass OXY than hope for a pullback. Go oil!

In light of the drop in Colgate to multi year support lows I will be adding CL as a Leap Call on Sunday.

  Jonathan Levinson   9/22/200,  12:11:47 PM
Nymex crude has made it up to 48.10 here, +2.89%, just below the session high of 48.225.

  Linda Piazza   9/22/200,  12:10:33 PM
The Russell 2000 didn't rise quite as high as I expected (see my 11:24 post) before pulling back again, but now the first rise and the pullback have been completed. The Russell 2000 attempts to rise again. We'll see if it can push past (gap past?) 568.70-569.20 and settle into some kind of measured-distribution rise.

  Jonathan Levinson   9/22/200,  12:09:39 PM
Dec. gold has regained the 408 level, now down 1.50 at 408.50. HUI has gone fractionally positive, while XAU remains fractionally negative.

  James Brown   9/22/200,  12:09:25 PM
Last night hamburger chain Wendy's Intl (WEN) issued an earnings warning for the third quarter and this morning multiple brokers downgraded the stock. Shares of WEN are trading down 4.87% to $33.77.

  Mark Davis   9/22/200,  12:09:21 PM
The underthrow occured as I typed the last post. Long now @ 1115.50 but will hold the short for a little longer in case the bottom falls out. SPX is trying to print a buy signal (of sorts) and there has been bullish MACD divergence with price since 5 minutes after the opening bell. It should kick in at some point.

  Jeff Bailey   9/22/200,  12:07:13 PM
12:00 Internals at this Link

  James Brown   9/22/200,  12:07:13 PM
Fedex (FDX) is seeing some profit taking today down 3.99% to $85.16 after reporting earnings this morning that were in-line with expectations.

  Jonathan Levinson   9/22/200,  12:04:35 PM
Updated 2-day QQQ chart at this Link.

  James Brown   9/22/200,  12:03:46 PM
Bear Stearns (BSC) also reported earnings this morning but BSC beat estimates by 10 cents and raised its quarterly cash dividend 25% to 25 cents a share. BSC is off 2.49% to $87.85.

  Linda Piazza   9/22/200,  12:03:42 PM
No OEX bounce yet that sticks more than a few five-minute bars. The OEX appears determined to meet that 536-537 downside target. Still, the declines are not as steep as before and a bounce could begin at any time. I had a firm stance this morning on a rollover beneath yesterday's close and a move down toward 541, but wasn't sure if the rollover entry would be offered (it wasn't) and didn't have a view in advance for the outcome of a test of the Russell 2000 and SPX's 200-sma's. That's why I suggested profit-protecting plans in place for tests of 541. Those tests will help determine whether there's a cascade-into-the-close decline or one interrupted by a measured-distribution bounce.

  James Brown   9/22/200,  12:02:15 PM
Surprise! Morgan Stanley (MWD) missed the earnings estimates this morning. The company missed by 18 cents and came in under revenue expectations. Management is citing lower trading revenues as the culprit. The stock was down about 8% in earlier trading and is now down 5.7% but under round-number support/resistance at $50.00 and its simple 50-dma.

  Mark Davis   9/22/200,  12:01:33 PM
I'm still expecting some "underthrow" to this decline, as in SPX 1114 and change. Keene introduced me to the concept of underthrow and overthrow, where a security or index goes just past support or resistance (basically it's a stop run). It may or may not happen today but it happens often enough to make it worth keeping in mind. Thanks Keene for your great analysis.

  Jonathan Levinson   9/22/200,  12:00:18 PM
Session highs for 10yr bonds, session low for NQ.

  Jeff Bailey   9/22/200,  11:59:12 AM
Sell naked call alert .... selling 2 of the SPX October 1,135 calls (SPTJG) at $4.90 bid. Stop on 1 will be 50%.

SPX 1,115 here.

  James Brown   9/22/200,  11:57:38 AM
News out this morning about accounting issues with Fannie Mae (FNM) as discovered by the OFHEO's recent audit was not good. The company's practices do not hold up to GAAP and the review uncovered use of a "cookie jar" practice to smooth out earnings. The stock is down 7% to $70.37.

FNM's brother Freddie Mac (FRE) is down 4.33% in sympathy.

  James Brown   9/22/200,  11:52:05 AM
A.G.Edwards is upgrading Colgate-Palmolive (CL) and Procter & Gamble (PG) to "buy" this morning. CL is down to multi-year lows and PG is down to the $54 level of support/resistance.

  James Brown   9/22/200,  11:49:39 AM
Capital One Financial (COF) has announced a deal to buy the Onyx Acceptance Corp (ONYX), an auto loan provider, for $191 million. Shares of ONYX are up 67% to $27.31. COF is down 58 cents to $73.42.

  Jonathan Levinson   9/22/200,  11:49:07 AM
Session high for Nymex crude at 47.675 here, +1.98%.

  James Brown   9/22/200,  11:42:18 AM
OI put play LXK is looking better today with another failed rally at the exponential 200-dma and a 2.7% decline. Shares will be testing that long-term support again soon.

  Jeff Bailey   9/22/200,  11:42:08 AM
Dow Diamonds (DIA) 101.48 -0.86% Link .... also testing its 50-day SMA Linda. Last simple moving average support here.

  Jonathan Levinson   9/22/200,  11:41:50 AM
A reminder that the 20 day ema and 200 day ema on the QQQ both sit at 34.90. That should be a magnet and support. Longs before that are risky, I think.

This is close enough to the 34.92 level I've been emphasizing. Below this level on a closing basis, the key daily cycle will be rolling over and should be good for at least 2 weeks' worth of downside. Longs who are looking to catch a short cycle upphase are buying currently, but will likely be settings stops at or just below this 34.90-.92 line.

  Mark Davis   9/22/200,  11:41:40 AM
James I predict the Twinkie will live on. Even if some other company doesn't start making them, the existing Twinkies have enough preservatives in them to make it through the next ice age.

  James Brown   9/22/200,  11:40:53 AM
OI call play Phelps Dodge (PD) is bucking the market weakness today and adding 1.1%. More importantly PD is breaking out over two-week resistance at the $86.00 level.

  James Brown   9/22/200,  11:38:00 AM
Everyone please bow your head in silence. Interstate Bakeries of Kansas City, the maker of Hostess Twinkies, has filed for Chapter 11 bankruptcy this morning. Interstate Bakeries is also known for its Wonder Bread brand

  Linda Piazza   9/22/200,  11:33:22 AM
Strongest nearby resistance for the OEX is near 539.50, although there's also resistance near 538.80 and 538.40. Bears want to see the OEX maintain five-minute closes below the Keltner lines at any of those levels, although they'd prefer continued closes below the lowest of them.

  Linda Piazza   9/22/200,  11:31:19 AM
We're seeing the predictable attempts to bounce from the Russell 2000's and SPX's 200-sma's.

  Jonathan Levinson   9/22/200,  11:30:50 AM
Session high for 10-yr bonds at 113.4375. TNX is down 2.6 bps at 4.012%.

  Jonathan Levinson   9/22/200,  11:25:44 AM
QQQ 2-day chart update at this Link . The downtrend line is being tested here at 35.10.

  Linda Piazza   9/22/200,  11:24:03 AM
On the Russell 2000, looking for the possibility that it might rise toward 568.70, pull back slightly, and then maybe even gap slightly higher before settling into some kind of bounce that may take the form of a measured distribution pattern.

  Linda Piazza   9/22/200,  11:17:05 AM
I agree with Keene's 11:14 assessment on the Futures side of the Monitor. It will be the nature of the bounce--or the lack of one--that now tells us about market strength or weakness. We're still at risk of cascading lower all day. I hope for a measured-distribution bounce, but that may be an empty hope.

  Jonathan Levinson   9/22/200,  11:15:53 AM
The fed has announced a 400M coupon pass, which is a permanent addition to liquidity. Net drain for the day is now 4.1B.

  Linda Piazza   9/22/200,  11:14:49 AM
New low on the TRAN. It's at 3201.82 as I type.

  Jonathan Levinson   9/22/200,  11:11:09 AM
Session low for NQ and QQQ here. 30 min channel support is down to 34.97. 34.92 QQQ is next confluence support.

  Jeff Bailey   9/22/200,  11:10:42 AM
11:05 market watch at this Link

  Jonathan Levinson   9/22/200,  11:07:50 AM
Nymex crude is up .55 or 1.18% to 47.30 here.

  Linda Piazza   9/22/200,  11:04:12 AM
TRAN testing 3200, at 3205.58 as I type, low at 3202.27.

  Linda Piazza   9/22/200,  10:59:44 AM
Back. I guess that OEX 536-537 downside target predicted by the confirmed H&S on the 60-minute chart doesn't seem so outlandish, does it? Russell 2000 and SPX are still testing their 200-sma's, so there's still bounce potential, especially as tentative price/MACD bullish divergence is beginning to show up on 3- and 5-minute OEX charts. I still consider it a likely countertrend bounce, if it occurs, which would mean that we'd look for a rollover bearish entry, if offered. Not sure it will be.

  Jonathan Levinson   9/22/200,  10:56:52 AM
Volume is picking up here with QQQ's price holding just above the session low. With the short cycle oscillators trending in oversold, bears need to watch for a break in the intraday downtrend, particularly on higher volume. Current resistance is 35.14, followed by 35.22 and 35.29. Above 35.22, the short cycle will begin to uptick and above 35.29, a new upphase will be in place.

  Jeff Bailey   9/22/200,  10:52:00 AM
Swing trade sell 1/2 bullish position alert ... Sell 15 of the JDSU Dec. $3.00 calls (UQDLG) at $0.65 bid.

JDSU $3.48 -2.24% here.

  Mark Davis   9/22/200,  10:51:53 AM
Good morning... just back from an appointment. I guess there is a first time for everything. I have never before had a 5 point loser turn into a 10 point winner overnight. Absolutely amazing. Still short from 1126.29 and following this down with stops.

  Jonathan Levinson   9/22/200,  10:48:25 AM
30 min channel support is down to QQQ 35.06.

  Jeff Bailey   9/22/200,  10:46:22 AM
Sell Program Premium ... SPX 1,117.09 , QQQ $35.11

  Jeff Bailey   9/22/200,  10:45:44 AM
Day trade short alert .... for Monster Worldwide (MNST) $22.73 here, stop $23.05, target $22.05 by the close.

  Jonathan Levinson   9/22/200,  10:44:51 AM
Session low for NQ futures here. QQQ is trading 35.15, session low 35.13.

  Jeff Bailey   9/22/200,  10:41:04 AM
NYSE Composite ($NYA.X) 6,565.81 -1.01% .... just off session lows but has fallen back below fitted retracement zone of 6574-6,611.

Morning support and session lows comes at the QCharts' WEEKLY S1 of 6,560.22.

  Jonathan Levinson   9/22/200,  10:38:58 AM
Dec. gold futures are down 2.40 at 407.60, having bounced from a slightly higher low at 405.90.

  Jonathan Levinson   9/22/200,  10:36:14 AM
QQQ updated 100-tick 2-day chart at this Link.

  Linda Piazza   9/22/200,  10:35:04 AM
I'll be gone for 10-20 minutes. Make the OEX bounce into a bear flag while I'm gone, will you?

  Jonathan Levinson   9/22/200,  10:33:28 AM
Here are the ticker headlines:




  Jonathan Levinson   9/22/200,  10:32:01 AM
QQQ is back to 35.18 here. QQV +3.96% to 19.18.

  Jeff Bailey   9/22/200,  10:30:45 AM
Stillwater Mining (SWC) $13.88 -2.25% ... while just off session low of $13.70, has slipped back under $13.93-$14.04 zone.

  Jim Brown   9/22/200,  10:30:08 AM
Alert - Oil and Gas Inventories = 269.5MB, -9.1MB (last 278.6MB)
This makes the 8th consecutive weeks of drops in oil supplies.

  Linda Piazza   9/22/200,  10:29:35 AM
OEX Keltner resistance is spread out again by the quick plunges, but tries to converge near 540.20-540.50, with nearest resistance at 539.14 and 539.81. Revised fib targets put the 19.1% retracement at 540.11 and the 38.2% one at 541.51.

  Jonathan Levinson   9/22/200,  10:29:10 AM
30 min channel support is down to 35.10, but the short cycles are showing positive divergences on the Macd and TRIX oscillators. If the spike to the session low was just a throwunder, then we'll see the short cycle begin to turn up on a break above 35.28 QQQ.

  Jeff Bailey   9/22/200,  10:28:54 AM
Gold Bugs ($HUI.X) 214.49 +0.06% .... bids green.

  Linda Piazza   9/22/200,  10:26:35 AM
Time for a countertrend long OEX play? Adept scalpers don't need my advice. For the rest, unless you've had a prior circus career dodging falling knives, I don't think so. Options players have different considerations than futures players--those pesky spreads, inflated options, etc.

  Jeff Bailey   9/22/200,  10:22:06 AM
Paychex Inc. (PAYX) $30.95 -2.42% Link ... lower after reporting quarterly earnings of $0.23 per share, which was inline with consensus estimates of $0.23.

Smith Barney made some negative comments this morning saying that lack of clarity in company's earnings release has firm assuming that earnings per share growth will be a result of gains in company's investment portfolio or a lower tax rate.

Given "lack of quality" in the PAYX earnings, the firm remains skeptical on the overall fundamentals in the group, specifically Automatic Data Processing (NYSE:ADP) $41.14 -1.31% Link

  Jonathan Levinson   9/22/200,  10:17:53 AM
QQQ printed a low of 35.20, just knocking at the door to Monday's lows. A break below sets up a move to 34.92, which is key support for the toppy daily cycle. The short cycles are oversold but not maxxed out, and bears have a good chance of getting a downside blast. 35.18 is being tested as I type.

  Linda Piazza   9/22/200,  10:14:32 AM
In my 9:10 post, I listed one risk in waiting for a bounce-and-rollover entry as the possibility that the OEX might plunge from the opening. That's a risk that came true. With the Russell 2000 and SPX testing their 200-sma's, this doesn't appear to be the best bearish entry, however, although there's a possibility that they could both plunge through those averages.

  Jeff Bailey   9/22/200,  10:12:37 AM
10:00 Internals at this Link

Yesterday's internals at this Link

  Jonathan Levinson   9/22/200,  10:03:36 AM
Session lows for ES and YM futures- QQQ is 5 cents above its low.

  Jeff Bailey   9/22/200,  10:02:42 AM
10:00 Market Watch at this Link

  Linda Piazza   9/22/200,  10:02:33 AM
OEX turned back at that first converging resistance, but there's still a chance a broader measured-distribution pattern could form. If so, it could take a while to form.

  Jeff Bailey   9/22/200,  10:00:26 AM
VIX.X 14.22 +4.09% ... DAILY Pivot levels as follows .... 12.86, 13.21, Piv = 13.73 , 14.08, 14.60.

  Linda Piazza   9/22/200,  9:59:10 AM
More OEX resistance converges at 540.81. The OEX might not get that opportunity to bounce far.

  Linda Piazza   9/22/200,  9:58:16 AM
The BKX, the KBW Bank Index, also dropped this morning, all the way to $98.00 support and its 30-dma. This could be a natural bounce point for that index, but it looks now as if it might bounce into a lower high, making that a likely countertrend bounce.

  Jonathan Levinson   9/22/200,  9:57:33 AM
There are 8B in repos expiring today. The Fed has just announced a 4.5B overnight repo, for a net 3.5B drain.

  Linda Piazza   9/22/200,  9:56:42 AM
The BIX confirms the double-top formation on its daily chart . . . wow, dropped massively as I was typing, all the way below 360.

  Linda Piazza   9/22/200,  9:56:11 AM
The SOX turns down below the neckline for its inverse H&S and also below 400.

  Jonathan Levinson   9/22/200,  9:56:02 AM
Session low for 10-yr bonds at 113.109 (basis ZNZ4 futures). TNX is up 1.4 bps to 4.054%.

  Jonathan Levinson   9/22/200,  9:53:58 AM
The 60 min cycle has rolled over on the NQ and is just starting on QQQ. The current session low is 35.25, below which is the key 35.18-.20 level. The synchronous short cycle, 30 min and 60 min downphases suggest that we'll see that lower level tested on this go-round. The short cycles are oversold, and support should begin to assert itself over the next half hour. If 35.18 doesn't hold, then we'll have a trending move taking shape.

  Linda Piazza   9/22/200,  9:52:46 AM
Major OEX resistance is lining up at 543.40-543.60, but lesser resistance lining up at 542.25 or so. Nearest resistance at 540.75 and 541.30. Bears might hope for a measured-distribution pattern such as a flag that rises toward 542.25 or so, also the 38.2% retracement of the decline off yesterday's last five-minute high, but that might not happen. If the OEX blows through there, stand back and watch for 543-543.60 resistance and a rollover from there.

  Jeff Bailey   9/22/200,  9:50:16 AM
AMEX Gold Bugs ($HUI.X) 212.19 -1.01% ... session low has been 211.24. Darned close to the 50% retracement of 211.20.

  Linda Piazza   9/22/200,  9:48:09 AM
The TRAN gapped lower and is currently below the 10-dma for the first time this month. The next support is at 3210-3212, with the TRAN currently at 3222.51.

  Jonathan Levinson   9/22/200,  9:47:40 AM
QQV is up 2.71% to 18.95. VXO 13.97, +4.25%.

  Jeff Bailey   9/22/200,  9:46:34 AM
Mortgage Bankers weekly data Weekly Composite Index rose 1.8% to 690.7 from 678.2.

Purchases Index up 0.2% to 456.6 from 455.7

Refinance Index up 4.1% to 2,052.5 from 1,972.5

Average 30-year fixed-rate mortages fell to 5.66% from 5.68%.

  Linda Piazza   9/22/200,  9:44:55 AM
Some charts suggest 536-537 as the OEX's potential downside target, but this morning's plunge makes a new entry risky at the current level because there's much support here, too. This had been my profit-protecting place for a downside play today. Those hoping for new bearish entries hope to see a measured-distribution bounce, perhaps in the form of a bear flag. May not happen.

  Jonathan Levinson   9/22/200,  9:40:51 AM
Ten year treasuries continue to weaken, with TNX up 1.2 bps to 4.052%.

  Jonathan Levinson   9/22/200,  9:39:43 AM
Nymex crude oil is up a dime to 46.85 here. Gold is down 3.90 to 406.10- next support is 405- with HUI down 1.06% to 212.09 and XAU -.94% to 95.46.

  Linda Piazza   9/22/200,  9:38:23 AM
Waiting for OEX Keltner channels to realign themselves after the quick plunge to see where resistance might line up.

  Jeff Bailey   9/22/200,  9:38:06 AM
Broker Dealer Index (XBD.X) 126.77 -2.14% ... weak early and darts lower near WEEKLY S1 of 126.59.

  Jonathan Levinson   9/22/200,  9:36:39 AM
A quick upside spike reversed from below 35.45 QQQ, leaving a gravestone doji. The short cycle downphase still has room to run, and the 30 and 60 min cycles are in gear to the downside. This is prime time for the bears.

  Jim Brown   9/22/200,  9:36:05 AM
Oil and Gass Inventories are expected at 10:30 (last 278.6MB) We have seen 7 weeks of declines in inventory levels.

  Linda Piazza   9/22/200,  9:35:43 AM
The Russell 2000 turns down, but remains above the 200-sma at 567.12, with the Russell 200 at 571.14 as I type, not so far from a potential bounce point.

  Jim Brown   9/22/200,  9:35:13 AM
All Dow components are now open and only KO is trading in positive territory (+0.04).

  Jeff Bailey   9/22/200,  9:34:20 AM
DECEMBER Crude Oil futures (cl04z) $46.19 +0.06% (30-min delayed) .... updated 30-minute interval chart with QCharts' WEEKLY Pivot levels at this Link

  Linda Piazza   9/22/200,  9:33:36 AM
Worst-case scenario for OEX bears looking for a new entry: the OEX plunged through all the way to the bottom of the descending regression channel in which the OEX has traded since 9/14 or so, also to the bottom support of the broadening formation. Premiums are going to be sky-high on puts. This is the level I would have suggested profit-protecting plans be in place.

  Linda Piazza   9/22/200,  9:27:44 AM
Here's a listing of TRAN components for those who would like to see it: Link

  Jonathan Levinson   9/22/200,  9:27:05 AM
QQQ is back to its session low at 35.42. The 60 min cycle channel is rolling over as expected- if the bulls can't bounce it back above at least 35.60 within the first 20 minutes or so, we can expect a test of 35.18 support, below which 34.92 will be the last ditch for bulls. Below 34.92, we should get a daily cycle rollover at long last.

  Linda Piazza   9/22/200,  9:25:34 AM
In Jeff's intraday update, he noted a pre-market pullback in FDX after in-line earnings. I wanted to note that FDX has been one of the TRAN stocks driving that index sharply higher. In September, FDX has moved from $81.99 to yesterday's close at $88.69. A FDX pullback might impact the TRAN.

  Linda Piazza   9/22/200,  9:10:30 AM
If S&P futures are indicative of the open, the OEX may head first down toward gathering 543.50-544 support. Bears seeking new bearish entries might hope for a bounce from there during the first retracement of the day, up toward 544.50-544.75 and a rollover from there. Profit-protecting plans should be in place on a test of 541, if that should occur. Depending on one's trading style, stops might be set an account-appropriate amount over yesterday's high or perhaps just over the 200-sma.

Bulls hoping for an entry might hope for a breakout above that 200-sma, with profit-protecting plans in place as 548-549 is approached, if it is. That's not much of a move, though. With either entry, be prepared to hop out quickly if proven wrong. As market conditions stand now, my vote goes toward the rollover down toward 542.

One purported strength of women traders is a willingness to be wrong and to acknowledge being wrong. As part of that willingness, I take it as a special task to warn readers of the risks and dangers to potential plays. While I think I'm warning of dangers and risks, I realize that others might read my many warnings as unwillingness to take a stand. I've taken one for today, but risks here include the fact that the OEX still trades within that broadening formation, a notoriously difficult place to enter a trade. Another risk is that waiting for a first-retracement-of-the-day bounce and rollover is that the OEX will plunge straight from the opening. That means you miss a potentially profitable play. I'm willing to let potential profitable plays go by now and then to avoid getting into so many bad ones, and especially getting in at the open when OEX options spreads are so wide and prices inflated, so that you need an even bigger movement to profit. How about you? A potential benefit is that the OEX is so close to the play-proven-wrong place at which an upside breakout would occur.

That's my take on the market but not an official play. I have a granddaughter in the hospital and will be in and out today, and so could not follow a play.

  Jonathan Levinson   9/22/200,  8:44:22 AM
QQQ is back to session low here at 35.42. Bonds have reversed to the downside, with TNX now up .5 bps at 4.045%.

  Jonathan Levinson   9/22/200,  8:27:08 AM
QQQ has slid lower, currently trading on support at 35.45 with a session low of 35.42. That 35.42 level is support under the 60 minute cycle channel, which is just starting to roll over. A failure to bounce at the cash open will set up the 60 min cycle for a new downphase targeting first key support at 35.18.

  Jonathan Levinson   9/22/200,  7:54:05 AM
Equities are slightly lower this morning, ES trading 1125.25, NQ 1432.5, YM 10205 and QQQ -.07 at 35.50. Gold is down 2.10 to 407.90, silver -.044 to 6.325, bonds up .08 to 113.375 and crude oil -.10 to 46.65.

There are no major economic reports scheduled for today.

  Linda Piazza   9/22/200,  6:46:12 AM
Good morning. For those who want a quick review without reading past this paragrph, Asian and European markets turn in mixed performances as they reacted to higher oil prices, cautionary statements out of the Bank of England and the ECB's Trichet, and pressures on chip stocks after a JP Morgan downgrade. Our futures turned down while the Nikkei declined, but have been attempting a grinding move back toward Tuesday's close since about midnight EST.

Here's the more detailed version for those who want more information. Ahead of tomorrow's market holiday, the Nikkei opened at 11,111.30 and plummeted almost 140 points before slowing its descent. Bouncing around between the low of the day and 11,100 through the rest of the session, the Nikkei finally mounted a bounce in the last 90 minutes, trimming some of its losses. It closed lower by 61.46 points or 0.55%, at 11,019.41. That was the fifth session of losses in a row.

End-of-half selling ahead of the month's end, nervousness when the Nikkei didn't climb as expected early in the session, and rising oil prices were listed as market pressures. Semi-related stocks tended to be weak. In stock-specific news, Toshiba and Mitsubishi Electric Corp declined after their announcement after Tuesday's close that they will recommence paying an interim dividend.

Other Asian markets turned in mixed performances. The Taiwan Weighted gained 0.35%, but South Korea's Kospi dropped 2.57%. Singapore's Straits Times dropped 0.42%, and Hong Kong's Hang Seng fell 0.24%. China's Shanghai Composite dropped 1.96%.

Currently, European bourses also turn in mixed performances. The U.K.'s telecom Cable & Wireless dropped after JP Morgan trimmed its rating to a neutral rating. Vodafone, an ADR that trades in the U.S., has been a gainer in the U.K., as has aerospace contractor and medical equipment maker Smiths Group. Vodafone will capitalize on the Christmas period by launching 10 new 3G handset models including sought-after features. Smiths Group raised its dividend and had encouraging things to say about business conditions for next year and expectations for the company's growth as a result.

The Bank of England did not sound so encouraging, however, in today's release of the minutes of September's meeting. A weak U.K. labor market, still-present inflationary pressures, and worries about U.S. consumption and U.K. housing growth led the bank to note that downside risks might have increased.

ECB President Trichet also mentioned inflationary pressures. Rising oil prices were also in focus in Europe, putting a ceiling on gains. Morgan Stanley downgraded STMicroelectronics to an underweight rating and trimmed price targets on several other European chip-related stocks. The firm also downgraded its view of the chip industry to in-line from its former attractive rating. The statement hit individual chip stocks differently. ASML gained, since the firm said that if chip stocks should continue to climb, ASML was the better bet, while STMicroelectronics fell.

As of 6:43 EST, the FTSE 100 was up by 16.50 points or 0.36%, to 4,624.90. The CAC 40 was down 0.75 points or 0.02%, to 3,730.39. The DAX was down 10.55 points or 0.26%, to 3,730.39.

  Linda Piazza   9/21/200,  10:50:34 PM
The OEX still trades within the broadening formation on its 60-minute chart, a notoriously difficult formation to trade within according to market gurus with much more credibility than I have. It was also turned back by a descending trendline off the 9/13 high, so hasn't broken out above the bull flag on the daily chart. Such an upside breakout would appear to occur on a break above yesterday's 546.08 high, but any considering such a trade should be prepared with a profit-protecting plan as the upper boundary of that broadening formation is approached, with that upper boundary currently at just over 549.

I'd probably bet instead on a downturn through the descending regression channel building since 9/13 on the intraday chart, but would be ready to jump out of that trade and enter a long one if I were proved wrong and the OEX broke above that top of that bull flag. As the OEX ended the day Tuesday, it looked to be headed down toward perhaps significant support near 543.50-544, so a bear's first task would be to see that support fail. As I type, futures are dropping along with the Nikkei, something that bears also hope to see. Check futures tomorrow morning before assuming that pattern is holding, though.

  Jeff Bailey   9/21/200,  9:49:04 PM
Pivot Matrix for Wednesday at this Link

  Jim Brown   9/21/200,  9:42:51 PM
VXO at Eight Year Low
The VXO (old VIX) hit 12.66 on Tuesday and this is a level not seen since the week of Jan-5th 1996. The adage "When the VIX is high it is time to buy, when the VIX is low it is time to go" should be on the forefront of every traders mind for Wednesday. There is ZERO fear in the market despite major problems. This is irrational exuberance at its finest.

With earnings decelerating, oil prices soaring, strong terror risk over the next six weeks, struggling economy, bonds soaring and the Fed raising interest rates there is plenty to worry about. The bulls could climb this wall of worry and from the VXO number today it appears they will try to do it. I just caution everyone that with a VXO this low being long is very high risk.

Ten year VXO chart: Link

  OI Technical Staff   9/21/200,  9:36:24 PM
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