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  Linda Piazza   10/7/200,  9:25:26 PM
Thursday, the OEX created a bearish engulfing candle under the 200-sma on the daily chart. That looks bad for bulls and good for bears (the opposite of what I inadvertently said in my 15:54 post today!). However, the OEX ended in a potential bounce zone and tomorrow's numbers could perhaps produce that bounce. That could set up a retest of resistance. The resistance would likely first be found near 544-544.50, and those wanting new bearish entries could watch for a rollover from that level. If the OEX climbs past Thursday's mid-afternoon high at 544.79, however, want-to-be-new bears should perhaps stand aside and wait for a retest of the broken rising trendline off Tuesday's low. That trendline now crosses at about 546.40, but will be rising through the day and might soon be underneath the 200-sma again. Rollovers beneath the 200-sma and the Thursday's opening high would also be possible new bearish entries, while a push above the 200-sma and the 9/13 high would possibly make appropriate breakout bullish entries.

A special concern to those in bearish plays or considering new bearish entries is this potential formation: Link This is a continuation-form inverse H&S, and the head is way out of proportion to the shoulders, so there are several reasons to distrust this formation, but distrusting it doesn't mean I'm ignoring it. That would be ignoring bullish potential, and that's an unwise thing to do. A move above the 200-sma and 9/13 high will confirm this potential inverse H&S, setting up a potential additional 18 points of upside.

Bears want to see a quick move below 540 and the appropriate right-shoulder level, while bulls want to see the OEX steady at that 540-543 and then turn up. Bulls should be aware of the potential for this formation to be undone by a fall below the appropriate shoulder level or by another rejection at the neckline level.

What about bullish entries? I mentioned the breakout entry over the 9/13 high, but what about an entry from this potential bounce zone reached Thursday afternoon? For a while now, I've been considering bullish entries to be countertrend entries, and the downturns from the 200-sma and today's bearish engulfing candle tend to confirm that impression. I suggested near the close Thursday that those carrying bearish positions overnight and considering hedging their positions with a long do so, but that was a "just in case" hedge in case tomorrow sees blow-out numbers and a blow-out upside reaction. Such a hedge might need to be closed early tomorrow morning, depending on how futures look and how the open proceeds.

Where it gets more difficult is in looking for new bearish breakdown entries. I don't see a strong likelihood that we'll see one tomorrow, although I'll keep on the lookout. Such a breakdown entry would almost have to be to be way down at 539.50. There's much potential for a bounce from the current level down through several points, getting stronger as 539.50 is approached. Weekly Keltner channels and weekly MACD are flat-lined, not giving much sense of ultimate direction, but the historical and Keltner support in that area combine with a rising trendline off the 9/28 low, crossing at about 540, so there's still bounce potential from that level.

  Jeff Bailey   10/7/200,  6:04:47 PM
Pivot Matrix for tomorrow at this Link

  Mark Davis   10/7/200,  5:32:13 PM
We have mixed signals going into tomorrow's Jobs Report, making it all the more important, as if it didn't carry enough weight already... Link

Set your alarm early tomorrow. The Jobs Report comes out an hour before the opening bell. In a way this is good because the dust will have probably settled by the opening bell... still, have your finger on the trigger. You may have to be faster than a parakeet on benzedrine to keep up with the action. I will adjust the stops as/if needed before the market opens. If the report is a disappointment we will probably exit the long play on the opening print and let the short play run (BIG potential for the short). If the report is a surprise to the upside we will also probably exit the short at the opening print (BIG potential here too although we're starting out -1 point in the hole). We have +4 points in the bank on the short so even with a good report we can probably exit with a profit and let the long play run. A bad report and we may book some LARGE profits on the short as we already have a good head start. If the report comes in as expected anything can happen. I would lean to the upside but will let PRICE, not bias, determine what action to take. See you BEFORE the bell.

  Jeff Bailey   10/7/200,  4:51:42 PM
Closing Internals at this Link

  Jeff Bailey   10/7/200,  4:32:52 PM
Current OPEN MM profiles at this Link

Today's Activity ....

Bought 5 out the money and rather speculative Pfizer Jan. $25 puts (PFE-ME) for $0.35 per contract.

  Mark Davis   10/7/200,  4:11:19 PM
LOD for SPX was 1130.46... check the neckline on the Inverse H&S pattern (daily chart). It sits @ 1130.30 Link

  Mark Davis   10/7/200,  4:06:39 PM
Short @ 1134.95, stop 1134.95 and break even
Long @ 1131.60, stop 1129.60 (closing print 1130.65)... hold both overnight
The selloff into the close went further than I expected but hit Keene's target almost on the button.
No matter what happens tomorrow with the Jobs Report we have +4 points locked in with the potential for a big move. I may change the stops in the morning so stay tuned.

  Jim Brown   10/7/200,  4:03:29 PM
AA reports inline at 34 cents

  Mark Davis   10/7/200,  3:56:39 PM
Lower stop on long play to 1129.60

  Linda Piazza   10/7/200,  3:54:38 PM
Now might be a good time to buy a protective call if you plan to stay in a bearish OEX position overnight.

The TRAN will complete a tweezer-top reversal signal at the top of its regression channel, barring a miracle in the last few minutes of trade. The OEX will create a bearish engulfing candle under the 200-sma. It looks bad for bears and good for bulls, but tomorrow's numbers could perhaps produce some kind of retest of resistance, too.

  Jeff Bailey   10/7/200,  3:49:56 PM
Since the opening tick ... not one buy/sell program premium.

  Jeff Bailey   10/7/200,  3:47:38 PM
SPX Option Chain sorted by volume Link

  Linda Piazza   10/7/200,  3:47:07 PM
OEX bears want to see five-minute closes below the Keltner line currently at 543.26. Begin making a decision now about how you want to handle the overnight decision. Those who want to hold a bearish position overnight could consider hedging it with a call, perhaps a slightly OTM one. Some might elect to take partial or whole profits and just watch for a new entry tomorrow. Some could also elect to use only part of the profit taken to roll down into a lower strike or out into a later-month one or both. You have lots of options (pun intended), and if you don't know about all of them, I recommend Options as a Strategic Investment by McMillan.

  Jeff Bailey   10/7/200,  3:42:37 PM
VIX.X 14.40 +8.43% ... pops above WEEKLY R1 first time this week.

  Jeff Bailey   10/7/200,  3:42:09 PM
JNJ, MO look to have been targets of this INDU decline.

  Mark Davis   10/7/200,  3:36:29 PM
Stepping outside for some fresh air...

  Mark Davis   10/7/200,  3:35:02 PM
Morning Star on the SPX 1-min chart... right at LOD

  Linda Piazza   10/7/200,  3:30:02 PM
A drop below 543 that isn't being quickly reversed on the OEX: 542.60-ish support on the 15-minute chart is next support, perhaps producing a bounce up to retest 543, but 541.50-542 still look possible. Continue to follow the OEX lower with your stops if in short-term positions and to set account-appropriate new stops if in longer-term ones.

  Mark Davis   10/7/200,  3:28:34 PM
Go long now... 1131.60, stop 1130.60

  Tab Gilles   10/7/200,  3:28:05 PM
Recall this chart from a few days ago? Watch that VIX divergence: Link

  Mark Davis   10/7/200,  3:25:13 PM
SPX LOD is within spitting distance @ 1132.53... currently printing 1133.01. A new LOD would put every bullish trade for today underwater, that is, the ones that held on. Oops! There goes LOD.

  Linda Piazza   10/7/200,  3:24:22 PM
The OEX heads down toward 543 support again, this time with a new bearish MACD cross on the seven-minute chart. Those still in bearish positions again want to have profit-protecting plans in place, but I assume that any now left in those positions intend to hold long-term. Still, considerations must be given to the importance of tomorrow's jobs numbers when making a decision about holding overnight or setting stops now. Some charts now show a potential for a drop down to 541.50-542, but that requires a break of 543 that isn't quickly reversed.

  Mark Davis   10/7/200,  3:21:17 PM
There's another Evening Star on the 1-min chart @ 3:15... not nearly as strong as the last one but nevertheless still an Evening Star.

  Jim Brown   10/7/200,  3:21:14 PM
JNJ warning of a label change on Remicade to include risk of severe complications.

  Linda Piazza   10/7/200,  3:21:10 PM
OEX Keltner resistance can be found near 544 and 544.30, but is strongest near 544.45. A breakout above that on a seven-minute closing basis might see the OEX test that broken rising trendline off Tuesday's late-day low after all, but that doesn't appear the highest-probability event at this point: Link

  Jim Brown   10/7/200,  3:18:32 PM
Earnings tonight:

AA est +0.34 (already warned)
AMD est +0.12 (already warned)
AMHC est +0.27

Earnings tomorrow morning:

GE est +0.38 (Q4 est +0.49)

  Mark Davis   10/7/200,  3:17:30 PM
I want to be short and long (holding overnight) going into tomorrow's Jobs Report so I'm looking for an entry point to go long. The lower we go the better so we get a larger spread between the short and the long. SPX 1130 is probably too much to ask for but you never can tell and with +5 locked in it would be very hard for us to lose money, no matter what the report says. The results of the report have added weight because of tomorrow's debate. If it's bad Kerry will have a large hammer to use against Bush, and vice-versa if it's good. We may have already missed our best entry at the last swing low near 1133.25 but we still have 45 minutes of trading left in the session. I'm not in the mood to chase a long play up from these levels unless it really gathers some strength.

  Jeff Bailey   10/7/200,  3:14:00 PM
03:00 Internals at this Link

Look how tight the last 4 hours have been. Going cross-eyed today.

  Linda Piazza   10/7/200,  3:12:54 PM
The TRAN is now trapped between apparently strong Keltner support and apparently strong Keltner resistance on the five-minute chart. Breakout due.

  Jim Brown   10/7/200,  3:12:48 PM
Speech by Greenspan - Reflections on Monetary Policy: Link

  Jim Brown   10/7/200,  3:11:57 PM
Consumer Credit dropped -$2.41 billion in August instead of a +$5.9B rise as expected. This was the reason for the 3:PM dip.

  Mark Davis   10/7/200,  3:05:38 PM
Short @ 1134.95, lower stop to 1134.95 and break even

  Jeff Bailey   10/7/200,  3:04:55 PM
03:00 Watch at this Link

  Linda Piazza   10/7/200,  2:59:11 PM
Now the OEX is dropping away from that bear flag, after breaking down out of it. The 19.1% retracement of today's range is just above 543.90, with the OEX pausing there earlier this afternoon, so it could provide another pause point on the way down, too. Those who elected to stay in a bearish trade for a test of 545.40 or the ascending trendline off the late Tuesday high may be in for a treat and have a rollover below that level. This is iffy, however, and I wouldn't be surprised to see a steadying around 543.90-544, and then a small bounce from there before another rollover.

Oh, forgot . . . or for the often-seen-lately ramping up above the H&S's head, negating the formation.

  Mark Davis   10/7/200,  2:55:31 PM
There's a H&S pattern on the SPX 5-min chart with the neckline @ 1135.50 (currently printing 1134.64)... downside target is 1129 so Keene may get his wish (posted earlier on the Futures Monitor) for a drop to 1130 and a nice entry point for a long play. SPX just printed a classic and nasty looking Evening Star on the 1-min chart. I know, I know... it's only a 1-min chart but go back and check Morning and Evening Star patterns on the 1-min chart of the index or stock of your choice. Dismiss them at your own risk.

  Jonathan Levinson   10/7/200,  2:53:59 PM
QQQ volume is very light at 64M so far today compared with yesterdy's 88M and the average of 90M. The market's just running the clock today.

  Jeff Bailey   10/7/200,  2:53:38 PM
Ruby Tuesday (RI) $24.51 +2.76% .... looks terrible on its bar chart Link

but rather compelling on the PnF chart Link

I've never eaten at one, and I've got one just down the street. Might have to do some research tonight.

  Linda Piazza   10/7/200,  2:48:17 PM
The OEX's bounce stopped almost exactly at the 38.2% retracement of today's range, with that Fib level at about 544.86. It now appears to have fallen out of the bear flag it was forming as it climbed, but it's doing that kinda-hanging-around-the-breakdown point that's suspect, instead of dropping straight away.

  Jonathan Levinson   10/7/200,  2:47:13 PM
This leg of today's decline gives us the same setup as we saw earlier when the wavelet oscillator was trying to roll over- it's now in a weak downphase which looks to be headed for a higher low above 36.33. If that occurs, look for a short cycle upphase confirmation and a move to challenge 36.50. Above 36.55, the 30 min cycle upphase will start, and bears will have lost today's race to reach 36.11 support.

  Linda Piazza   10/7/200,  2:43:22 PM
The TRAN's range yesterday was from 3334.44 to 3387.69. The midpoint of that range is at 3361.07. Market bulls want to see the TRAN spring up and close in the bullish half of yesterday's range, the upper half, while bears want the TRAN to stay just where it is, below that midpoint. They prefer for the TRAN to close at or below yesterday's low, to complete a tweezer-top (or perhaps even bearish engulfing) candlestick formation.

  Jeff Bailey   10/7/200,  2:41:05 PM
Ihop (IHP) $38.97 -0.63% Link .... looking through some RESTaurant stocks.

  Jonathan Levinson   10/7/200,  2:36:28 PM
QQQ intraday chart update at this Link . I've added a secondary trendline to connect the most recent high of the day. Below 36.40, I'll be looking for a retest of 36.31-.33 support.

  Mark Davis   10/7/200,  2:32:48 PM
Stopped out of long play @ 1135.21, +2.50

  Mark Davis   10/7/200,  2:31:47 PM
Long @ 1132.71, raise stop to 1135.21

  Jeff Bailey   10/7/200,  2:31:46 PM
Disney (DIS) $24.91 +2.3% Link ... bullish follow through after yesterday's move above the 200-day SMA.

  Linda Piazza   10/7/200,  2:30:47 PM
The OEX's low today has been 542.98, 0.02 below the 543 level at which bears were warned to have profit-protecting plans in place. Those profit protecting plans might have meant that some took automatic profit and are congratulating themselves now. What about those who didn't? Some will have stops set that take them out at breakeven, and they may have already been stopped. If that last inverse H&S had finished forming, it would have had an upside target around 545.40. I've found that some of these H&S or inverse H&S that don't finish forming nevertheless do go on to meet their would-be targets, so bears might be facing upside risk at least to 545.40. Such a rise would constitute a sound test of the broken rising trendline off Tuesday's late-day low. If someone entered a bearish position based on a break below a certain trendline, a break back above it would likely show that something about the original reasoning wasn't working as planned, so a last-ditch stop for those that entered this morning on a break of that trendline might be placed an account-appropriate amount above that trendline. Others who entered on the test of the 200-sma might have different parameters, depending on their option and the time they intended to hold it.

Just because there's risk of a move up to a certain level doesn't mean that it's going to occur. The OEX is currently doing battle with Keltner resistance up to 544.65 on the 7-minute chart. Bears will hope to see closes beneath that Keltner line and hopefully below the one at 544.52, while bulls will want to see closes above both.

  Mark Davis   10/7/200,  2:27:46 PM
Bearish MACD divergence, rising TRIN and an impulsive move off the 12:11 swing high have me thinking down now, unless that was a good headfake. If so we still have the long play from 1132.71, which is why it is good to have your line in the water. You can't catch fish any other way.

  Jim Brown   10/7/200,  2:23:47 PM
Greenspan speaks at 2:30 to round out the trio of Fed appearances today. His speech will be on "Reflections of Monetary Policy"

Bernanke winding down now with closing comments that the economy will likely grow at 4% for the year and above its potential. He also said any further economic weakness would warrant a pause in the Fed rate hike cycle. This suggests they are not planning for any slow down in hikes at present.

  Jonathan Levinson   10/7/200,  2:22:00 PM
The 30 min cycle channel is flattening from its downphase, and the oscillators are also pausing in their run for QQQ. Channel resistance is currently at 36.59, and a move above 36.55 should see the flattening channel begin to turn back up. Suffice it to say that this will have been a very weak downphase if it reverses here, confirming daily cycle strength and making a retest of the session high very likely. But bulls have to clear 36.50 resistance first.

  Mark Davis   10/7/200,  2:21:21 PM
Go short again... 1134.95, stop 1135.95

  Linda Piazza   10/7/200,  2:19:19 PM
The OEX never formed a right shoulder for its latest inverse H&S, or rather formed a stunted one before heading straight up. Unless it's quickly slapped back at this 544.60-544.80-ish level, it looks determined to rise high enough to retest the broken rising trendline off Tuesday's late-day low. That trendline is now at about 546, but the OEX has to do battle with this current level first before we can start taking bets on whether it will climb all the way up to retest that trendline.

  Mark Davis   10/7/200,  2:18:28 PM
Stopped out of short play @ 1135.49, -1
Long @ 1132.71, stop 1134.71 and now almost +3
SPX really needs to stay above 1135.50

  Jeff Bailey   10/7/200,  2:17:34 PM
02:15 Market Watch at this Link

  Linda Piazza   10/7/200,  2:15:40 PM
The TRAN broke above that gathered Keltner resistance, as it had looked as if it was trying to do, and now heads up. As that chart linked to my 13:41 post displayed, Keltner resistance thinned out significantly above those massing Keltner resistance lines, which is why I warned that the TRAN could pop higher if it could spring above that resistance. Keene on the Futures side earlier mentioned a rounding-bottom-look to the consolidation on some indices, and that was true of the TRAN. The trouble with rounding bottom formations is that you rarely know exactly where the lip of the formation is. When you're dealing with an equity, volume patterns will tell you when you're safely past the lip's resistance because volume should explode as the equity breaks above the lip. We don't have that information on the TRAN, however. For that reason, I'll be watching Keltner levels and Fib levels. The 19.1% retracement of today's range lies at about 3352, near the Keltner resistance trying to converge just above that level. The 50% retracement lies at about 3366, just under top Keltner channel resistance on the five-minute chart, so there's some correspondence with these levels. Bulls want to see the TRAN above a 50% retracement of the day's range to avoid that potential tweezer-top interpretation of the day's candle. Bears want to see the TRAN turned back closer to a 19.1-38.2% retracement.

  Mark Davis   10/7/200,  2:12:36 PM
Long @ 1132.71, raise stop to 1134.71 to lock in +2 (TRIN is rising with price... not good)

  Jonathan Levinson   10/7/200,  2:09:00 PM
36.45 is finally cracking. The wavelet cycle downphase was a no-show- trending in overbought currently.

  Jeff Bailey   10/7/200,  2:08:42 PM
02:00 Internals at this Link

  Jonathan Levinson   10/7/200,  2:06:41 PM
Bonds are moving up here, with TNX down to a 1.8 bp gain at 4.242% currently. ZN futures are down .14 at 111.77.

  Jonathan Levinson   10/7/200,  2:05:04 PM
A wavelet downphase is due. If it bottoms at a higher price low above 36.33, then a new short cycle upphase should be confirmed, setting up a possible reverse h&s below 36.45. I'm uncertain of pattern recognition today, because what looked like a bull wedge intraday broke to the upside with no followthrough. The lacklustre drift of the past 3 hours is becoming disorientating.

  Linda Piazza   10/7/200,  1:58:17 PM
The VIX is trying to break/stay above 14.00 again. It's at 13.97 as I type. The last time the VIX got that high, Tuesday afternoon, was followed by the VIX's fall from 14.19 all the way down to yesterday's 13.31.

  Mark Davis   10/7/200,  1:58:08 PM
B-bands rapidly converging... we're going to move soon
Benchmarking... SPX = 1134.37

  Mark Davis   10/7/200,  1:54:03 PM
Go short again... 1134.49, stop 1135.49

  Jonathan Levinson   10/7/200,  1:53:19 PM
36.45 is once again being tested, and once again QQQ looks like it wants to go for it. Above this level is 36.50 resistance, and then the 36.62 top of the morning's opening range. A wavelet cycle upphase is topping out here, but price needs to drop quickly to avoid a shoret cycle upphase.

  Mark Davis   10/7/200,  1:51:54 PM
SPX needs to get above 1135.50 and stay there for the short-term bullish scenario to gain some traction. It also needs to get going to the upside soon.

  Linda Piazza   10/7/200,  1:47:56 PM
The OEX just touched and then turned down from a descending trendline that's been forming off the top of the 11:05, 11:20, 12:10 and then 13:35 candles. Earlier today, I mentioned the possibility that the OEX could be forming an inverse H&S and suggested that it be watched to show whether bears or bulls had the upper hand. It didn't have a big enough projected upside target to try to trade it. Bears won that round, sending the OEX into a lower low, but perhaps bulls are still trying for that inverse H&S, with the head now at the new low of the day. The neckline of that former potential inverse H&S is congruent with the neckline of this one, too, but its completion would likely see the OEX first pull back from this potential neckline into a right shoulder. Once again, this is a formation that should be watched to see which group has the upper hand. A drop to a new or equal low negates it: a zoom above the neckline confirms it.

  Mark Davis   10/7/200,  1:41:10 PM
Stopped out of short play @ 1134.54 and break even
Still long @ 1132.71, stop 1132.71 and currently almost +2
If that was the stop running push let's hope it succeeds (more upside)

  Linda Piazza   10/7/200,  1:41:02 PM
Observations about the TRAN on a five-minute Keltner chart: Link

  Jonathan Levinson   10/7/200,  1:40:04 PM
QQQ intraday update at this Link shows a descending resistance line violation on the move above 36.37.

  Mark Davis   10/7/200,  1:37:25 PM
We have the recipe for a directional move here... tight b-bands on the 1-min chart (sitting right at the upper b-band currently) and it's stop running push time. We should either shoot higher or fail pretty soon. My best guess (emphasis on guess) is we go higher.
Benchmarking... SPX = 1133.94

  Jonathan Levinson   10/7/200,  1:36:20 PM
Nymex crude is up to 52.775 here, +1.44% and 20 cents off the high. Gold is holding its 40 cent loss, while XAU and HUI remain fractionally positive.

  Jim Brown   10/7/200,  1:26:23 PM
Fed Governor Ben S. Bernanke
Central Bank Talk and Monetary Policy Link

  Mark Davis   10/7/200,  1:25:25 PM
I hope the stop running push doesn't take us out of our long play today but I suspect it might. If so be ready to go long again while letting the short play run. A drop to the 1130 area would be ideal but "perfect" setups rarely present themselves. Either they frontrun the obvious support or do an underthrow to shake the tree. Unfortunately their intentions are only visible in the rear view mirrow.

  Jim Brown   10/7/200,  1:25:22 PM
FR Board: Speech by Vice Chairman Ferguson
Free Trade: What do Economists Really Know? Link

  Linda Piazza   10/7/200,  1:24:33 PM
Watch the TRAN, as it's turning down from five-minute Keltner resistance, testing last-ditch Keltner support before a drop toward 3340.

  Jonathan Levinson   10/7/200,  1:24:18 PM
The TRINQ remains at the low end of neutral at .54. Whereas bulls are expending buying pressure slowing the decline, a higher price low for the current 30 min cycle downphase could well result in the bears blinking first. A persistently low TRINQ begins to suggest underlying strength if confirmed by the price, and so far today, price isn't showing as much weakness as the cycle setup might suggest.

  Tab Gilles   10/7/200,  1:17:09 PM
Commodities continue to be strong and I'm updating charts to posts I made back on MM 9/29/2004 11:38:09 & 9/29/2004 11:41:54. Link

  Mark Davis   10/7/200,  1:15:32 PM
Here's a SPX daily chart I drew last night after the close... Link
As you can see it's very bullish as long as we don't drop much below 1130.30

  Linda Piazza   10/7/200,  1:11:53 PM
Here's the TRAN's daily chart (using a 390-minute as a substitute since QCharts has trouble with the TRAN's daily chart, for some reason). Link Unless there's a strong punch higher this afternoon, there's potential for a tweezer-top formation here, not good for market bulls.

  Jane Fox   10/7/200,  1:11:21 PM
Here is the latest input from Steve. I have moved his comments to the Option Monitor so more readers can take advantage of them.

I believe we have another move up this afternoon, most of today’s weakness is related to the Pharmacy/Drugs weakness and the contagion in Crude prices that have soared... watch bonds, they are softening and look like we could have another bout of profit taking...asset re-allocation ahead of the Jobs numbers (disclosure I am LONG ES at 1132.75) looking for a Pole Vault rally, Uncle Al liquidity infusions, and a weakening dollar, and I’m expecting a whipsaw sell-off in crude to a sub-$51 level today, and the fast money will move into the ETF’s and OEX...I’m still seeing buying activity in what I call CRAP small-mid cap stocks with very-questionable earnings...and as such the speculation mantra is still alive and well, many of the high-short-interest players are finding unusual activity...we are close to a TOP...and we could see it tomorrow.... I am still of the belief that they sell GE and the Jobs report....if GE is neutral and the manipulated pro-forma jobs report is better than expected then we could gap up and then I’m expecting a 45-90-minute run to the highs I spoke of, then out of no-where they pull the plug out...and we post a key-reversal down with huge gravestone DOJIs....I’m very bearish on the Energy stocks as they have run in excess of their future earning potential...as either Crude drops back below $40.00 a barrel (within 1-3 weeks) or we risk entering a significant global recession next year...and a depressed retail season...of which I’m also bearish on, as their inventory levels have risen and turn-time have increased as well, not a great sign, despite the strong retail sales data released by many firms...we have seen huge discounting and too many talking-butt heads on CNBC etc. incorrectly assume that increased sales/revenues mean an increase to the bottom line...and we will find it is not so when the firms file their 10-Q’s

  Mark Davis   10/7/200,  1:09:58 PM
Short @ 1134.54, stop 1134.54 and break even
Long @ 1132.71, raise stop to 1132.71 and break even
I believe this will resolve to the upside but if it doesn't I don't want to risk any capital. We can always go long again if stopped out.

For those of you not familiar with my trading style... I like to have two toes in the water most of the time, one long and one short, the larger the spread the better. This allows you to take advantage of unexpected moves that usually occur quickly and don't allow you to take a position before they're too far down the road. If you can get concurrent long and short positions and have stops set to break even (like now) you are in the "Cat Bird's Seat" (ask Linda and Jane for a definition... grin). The point is you have no capital at risk other than trading commissions which are minimal compared to potential gains on a trending move. With concurrent long and short positions you are essentially flat the market until one position gets stopped out. When that happens you usually have the wind at your back with the winning position. If you have a very large spread you can actually lock in points and still risk no capital, as we did today with first the long play held overnight (+3), then the short play entered today (+5). We've given back -2 on the gyrations but that's the cost of trading. I'll give back -2 for +8 any day.

  Jeff Bailey   10/7/200,  1:06:52 PM
01:00 Internals at this Link

  Linda Piazza   10/7/200,  1:05:53 PM
OEX bears would like to see continued 15-minute closes beneath the Keltner line currently at 544.02, with all 15-minute closes beneath this particular line all day so far. The OEX is now dealing with significant 15-minute support here, though. Bears would like to see the OEX continue to print those 15-minute closes beneath that line long enough for Keltner support lines beneath it to begin to separate. We have to wait and see now, but the current support looks strong enough at least for consolidation if not for a bounce.

  Jonathan Levinson   10/7/200,  1:05:06 PM
A central bankster's most effective tool: Link

  Jonathan Levinson   10/7/200,  1:03:13 PM
More molasses action just above 36.33 QQQ. While the drop off the opening range proved to be quick, with an impulsive feel, the current chop is clearly in the bulls' favor, wasting a perfectly set up 30 min downphase well above yesterday's lows. If bears can't get better traction than this, we can expect a retest of the session highs on the next upphase, most likely by tomorrow.

  Jim Brown   10/7/200,  1:02:54 PM
Bernanke saying that Fed public comments are becoming an increasingly important policy tool. (Duh! like nobody knew this before?) Bernanke also saying he will be trying add an official inflation component into Fed policy. He also said inflation concerns are fading and the recovery is gaining strength.

  Jeff Bailey   10/7/200,  1:00:15 PM
12:55 Market Watch at this Link

  Jim Brown   10/7/200,  12:55:23 PM
Pfizer and Celebrex
Pfizer has multiple studies showing no cardiac risk from Celebrex. The same 1.4 million person study that showed 27,000 events on VIOXX showed no risk from Celebrex. Pfizer currently is in trials with thousands of patients for using Celebrex to prevent Alzheimer's and colorectal cancer. As part of these tests patients have been exposed to doses at 2-4 times the recommend dosage for arthritis patients. According to Pfizer there have been no cardiac complications in the multiyear study. The FDA has also published reports from various studies claiming no cardiac risk from Celebrex. Sales of Celebrex would have run nearly $3 billion this year and with patients switching from VIOXX ($2.5B in sales) Celebrex should be close to $5 billion this year. Pfizer was recommended as a new LEAP play on Sunday to take advantage of the support lows at $30 and the expected bounce on Celebrex sales potentially doubling. I still believe Pfizer is a buy today and the current speculation on COX-2 inhibitors will prove Celebrex safe. Traders should only enter the play if they believe the same. (Link to the LEAP recommendation: Link )

The decline in Pfizer and drug stocks in general over the last six months has been on election event risk. It is widely believed that a Kerry victory would put pressure on drug companies to lower drug prices. We still do not know if Kerry will be elected or what damage a Kerry white house could do with a Republican house/senate. Regardless of any potential damage it could be years away and Celebrex will be raking in billions. I report, you decide. (per Jonathan)

  Jonathan Levinson   10/7/200,  12:52:37 PM
Bonds have weakened, with TNX now up 2.7 bps at 4.251%, but like with equities, the market's moving like molasses. Crude oil is up t 52.60 here, .375 off its intraday record high. Gold is flat at 419.90, HUI +.46% currently.

  Jonathan Levinson   10/7/200,  12:51:25 PM
QQQ is chewing at the 36.33 level discussed earlier. The short cycle oscillators are currently choppy within the ongoing 30 min cycle downphase. Below 36.33, look for light support at 36.25, then stronger at 36.18 and 36.11. Bears need to see some acceleration.

  Mark Davis   10/7/200,  12:44:45 PM
Stepping away for a few minutes...

  Linda Piazza   10/7/200,  12:43:07 PM
Surprisingly, the TRAN did not drop down to 3340, as I'd expected to see when I turned to the TRAN's chart. It's still slipping slowly lower, doing so while MACD tried to turn up, but it's currently at 3345.29. Keltners still point to a possible downside target of 3340.00, however, while longer-term Keltners point to even lower possible targets.

  Jeff Bailey   10/7/200,  12:42:07 PM
Swing trade put option alert .... taking 5 of the Pfizer Jan. $25 puts (PFE-ME) at $0.35 per contract.

PFE $29.60 here.

  Linda Piazza   10/7/200,  12:39:41 PM
Bears win. The OEX drops straight to 543, negating that inverse H&S. Bears have had all morning to devise their preferred profit-protecting plan, with some to employ techniques to allow them to participate in further drops, if they're offered, and with more conservative-short-term traders perhaps electing to automatically take full or partial profits. Next Keltner resistance is trying to gather near 543.70, and the five-minute chart shows a potential drop to 542.40.

  Mark Davis   10/7/200,  12:39:01 PM
Go long again... 1132.71, stop 1131.71

  Mark Davis   10/7/200,  12:38:14 PM
Strong support in the 1132.50 area but if it cracks things could get ugly(er). Stand by for a potential long play.

  Jonathan Levinson   10/7/200,  12:36:20 PM
Nymex crude is trading 52.50, still firm at these levels.

  Mark Davis   10/7/200,  12:34:51 PM
Stopped out of long play @ 1133.46, -1
Still short @ 1134.54, lower stop to 1134.54 and break even

  Mark Davis   10/7/200,  12:28:00 PM
Go long now... 1134.46, stop 1133.46
We'll let the market decide again

  Jeff Bailey   10/7/200,  12:27:11 PM
Trying to read up on some COX-2 information to find out who are the major players, and recent studies. Complex stuff for sure. Here's one site that looks pretty detailed. Link

I'm looking at some Pfizer (PFE) Link Jan. $25 puts. PFE's PnF chart is bearish, with vertical count currently building to $20, and after seeing Merck (MRK) Link get shelled, the MARKET certainly sees some type of downside risk in these two stocks.

  Linda Piazza   10/7/200,  12:24:31 PM
OEX bears, watch a potential inverse H&S setting up on the OEX's five-minute chart, with a descending neckline at about 544.35 and upside target of about 545, if confirmed. A drop to a new low would negate the formation, of course. This isn't a formation to trade, but rather one to watch to see who has the upper hand.

  Jonathan Levinson   10/7/200,  12:24:01 PM
QQQ looked like it wanted to go for it there, but 36.45 held, and the short cycle upphase remains entirely weak and, in my opinion, corrective within the ongoing 30 min cycle downphase. Bears need to get and stay below 36.33 confluence, however, because this weak bounce is nevertheless wasting time on the attempt to run to 36.11 support.

  Mark Davis   10/7/200,  12:21:43 PM
Go short again... 1134.54, stop 1135.54

  Linda Piazza   10/7/200,  12:21:32 PM
The TRAN still tries to steady long enough to allow Keltner resistance to thin, but it's still getting pressured inexorably toward 3340, according to the current Keltner picture.

  Mark Davis   10/7/200,  12:19:02 PM
Stopped out of long play @ 1134.53 and break even

  Linda Piazza   10/7/200,  12:18:17 PM
The OEX now bounces up to retest resistance, with nearest strong resistance at 544.80-555 now. That resistance now looks roughly balanced with support near 543.70 at the current moment.

  Mark Davis   10/7/200,  12:13:57 PM
Long @ 1134.53, raise stop to 1134.53 and break even
I don't want to get caught in any sudden downdrafts

  Jonathan Levinson   10/7/200,  12:10:50 PM
The bounce is taking place slowly and on low volume, currently challenging 36.45 resistance. If it break that, 36.50 provides light resistance on the way to 36.60-.62.

  Mark Davis   10/7/200,  12:06:53 PM
Stopped out of short play @ 1134.75, +5

  Linda Piazza   10/7/200,  12:05:17 PM
Careful, OEX bears. The OEX approaches Tuesday's low of 543.13, so short-term bears need to have profit-protecting plans in place as the OEX zigs and zags its way down to that level. The possibility of further drops exists according to some Keltner charts, and those who agree that the possibility exists and plan longer-term trades, to be held over several days or weeks, should adjust stops accordingly. If you want to be in a trade held over several days, for example, you understand that there will be periods when the OEX is moving against your position, and will adjust stops so that you're not taken out with every zig or zag. Mark Davis' strategy of buying hedging positions at appropriate points might be one you consider, too.

  Jeff Bailey   10/7/200,  12:05:02 PM
12:00 Internals at this Link

  Mark Davis   10/7/200,  12:01:31 PM
We have some MACD bullish divergence working for the long play... that's why I lowered the stop on the short so close to the action.

  Linda Piazza   10/7/200,  11:54:09 AM
The TRAN is again trying to mount that bounce, with Keltner resistance gathering from 3352-3357, but with that resistance perhaps not looking quite as strong as it did earlier. It still looks stronger than support, but perhaps not strong enough to prevent the TRAN from even attempting a bounce, as it looked (and turned out to be) earlier.

  Jonathan Levinson   10/7/200,  11:53:37 AM
Lower 30 min channel support held, with a low of 36.33 so far and QQQ bouncing to 36.40 here. This 36.40-.45 level should now act as confluence resistance, and in light of the ongoing 30 min cycle downphase, I'm expecting this bounce to have a tough go of it - should be weak/sideways. Bonds have stabilized, with TNX up 1.4 bps at 4.238%, while Nymex crude is up .45 at 52.475, 50 cents off its session and record high.

  Tab Gilles   10/7/200,  11:51:42 AM
Here's a chart on the $GSO: Link

  James Brown   10/7/200,  11:51:35 AM
La-Z-Boy (LZB) is down 11.3% to $13.85 on big volume after the company issued an earnings warning last night. Analysts were looking for 31 cents and LZB now expects its October quarter to come in between 21 and 23 cents. JPM followed up with a downgrade to "under weight" this morning and CSFB cut LZB to a "neutral".

  Mark Davis   10/7/200,  11:51:08 AM
Stepping out for a few minutes...

  James Brown   10/7/200,  11:47:39 AM
Alternative apparel retailer Hot Topic (HOTT) is up 13.4% and challenging resistance at $20.00 and its exponential 200-dma. Last night the company reported that September sales rose 18% and same-store sales rose 1.1%. BAC upgraded HOTT to a "buy" this morning on the news.

  Mark Davis   10/7/200,  11:41:47 AM
Short @ 1139.75, lower stop to 1134.75

  Linda Piazza   10/7/200,  11:41:32 AM
The TRAN is being pressured ever closer to 3340. It's at 3347.11 as I type, and overdue for a short-term bounce, but this is the kind of day so far when bounces can't gain much traction.

  James Brown   10/7/200,  11:41:19 AM
Eli Lilly (LLY) is down 2.7% and cracking support at the $60.00 mark. Our initial target was $60.00 and I'm tempted to close it here but if LLY closes under $60 we'll keep the play open.

  Jonathan Levinson   10/7/200,  11:40:15 AM
Bears need to break yesteday's low of 36.11 QQQ. While the 30 min cycle downphase is young, a slow-motion drift lower for the next few hours would benefit the bulls. As the daily cycle upphase is up, a higher 30 min cycle upphase bottom (above 36.11) would confirm the daily cycle strength and set us up for higher highs above the current 36.67 level, most likely tomorrow. A break below 36.11 on this run would trap yesterday's and today's buyers, and threaten the daily cycle upphase in the process.

  Linda Piazza   10/7/200,  11:37:07 AM
The OEX's attempt to form a bear flag that climbed toward 545 failed. It's trying to steady again, but now the Keltner line currently at 544.34 appears to be pressuring it lower. Bears would like to see continued five-minute closes beneath this line, but at some point there may be a bounce up to retest the former supporting trendline off Tuesday's late-day low. That trendline has now risen to about 545.30.

  Mark Davis   10/7/200,  11:36:00 AM
Go long now @ 1134.53, stop 1133.53

  Mark Davis   10/7/200,  11:35:09 AM
Short @ 1139.75, lower stop to 1136.75

  Linda Piazza   10/7/200,  11:34:23 AM
The BIX is in danger of completing a H&S on its five-minute chart. It may need a climb up toward 365-366 and a rounding over to complete it, if it's going to form.

  Jonathan Levinson   10/7/200,  11:31:18 AM
QQQ has now lost 36.40 support. 30 min channel support is down at 36.32 currently.

  Mark Davis   10/7/200,  11:30:01 AM
Stopped out @ 1134.36, -1... That was fast! I thought 1135 would provide a good bounce point

  Mark Davis   10/7/200,  11:27:22 AM
Go long now @ 1135.36, stop 1134.36

  Linda Piazza   10/7/200,  11:25:09 AM
Good point, Mark, about options decay.

  Mark Davis   10/7/200,  11:22:51 AM
***Note to readers...
As opex approaches you may want to consider rolling over into November contracts... i.e. take profits on your Oct puts on a dip and then reenter with November contracts on a bounce. This is assuming you believe we've started a larger move down and want to hold overnight. Time decay is beginning to accelerate and will only get worse with time (for October contracts) so holding overnight becomes more dangerous. You can still play intraday moves with October contracts and you can still hold them overnight... it's just riskier.

If you're following my signals with Futures contracts then you have a different set of considerations and a bit more leeway.

  Linda Piazza   10/7/200,  11:22:25 AM
The OEX bounces up to test Keltner resistance gathering near 545-545.30.

  Jonathan Levinson   10/7/200,  11:21:46 AM
A 30 min cycle downphase is kicking off here on QQQ and NQ. A break below 36.40 for longer than 5 minutes will seal the deal. Link

  Linda Piazza   10/7/200,  11:21:10 AM
The TRAN tries to steady, perhaps in preparation for that bounce up toward 3355-3358. Bulls want to see it bounce above 3360 and hold above that level, but Keltner resistance looks significant just below 3360. It looks as if it's going to hold and turn the TRAN back down again. In fact, it now looks significant enough that the TRAN might not bounce all the way up to 3355 and could just fall after steadying without bouncing first.

  Jonathan Levinson   10/7/200,  11:15:07 AM
36.40 held- session low QQQ 36.41.

  Linda Piazza   10/7/200,  11:14:10 AM
The TRAN did not immediately reverse and now drops toward an eventual Keltner target of 3340.75 on the five-minute chart. However, the seven-minute chart shows that it may be due for a bounce first, perhaps up to the 3355.70-3358-ish level.

  Linda Piazza   10/7/200,  11:09:37 AM
After briefly piercing the neckline of its potential inverse H&S, the SOX pulls back again, but it holds above the 382-minute 100/130-ema's I've been watching, with those averages at 395.17 and 401.05, respectively.

  Jonathan Levinson   10/7/200,  11:08:13 AM
QQQ 36.45 support is now in play- 36.40 comes next.

  Linda Piazza   10/7/200,  11:07:54 AM
The cash Nasdaq is in danger of confirming an "almost double-top" formation, with a drop below 1961.92. Yesterday's high was actually a point or two above this morning's, but they're close. This is a potential bounce point, too, perhaps into a lower high. Bears want to see the Nasdaq crack that 1961.92 level and then plunge, not hesitate and then immediately bounce. Keltner support shows up at 1958-1960, near historical support.

  Jonathan Levinson   10/7/200,  11:03:38 AM
Russell2K futures and SPX futures are trading new session lows, but the breakdown remains of the slow-motion variety.

  Linda Piazza   10/7/200,  11:03:38 AM
The OEX again tests/eases below the ascending trendline off Tuesday's late-day low. If it continues lower (as it did as I typed), 544.50 might be good for a bounce attempt, and bears should also have profit-protecting plans in place as 543 is tested. As I said last night, a break of this trendline just above 545 offered a possible breakdown entry for those who did not risk entering just under the 200-sma, a risky entry since breadth indicators were yet showing the entry to be a sound one. Those who took the breakdown entry assumed some risk, too, however, as the possible bounce point is so close and as indices are not all moving the same direction. Some try to pull one way while others try to pull another. For those who took that entry, move stops down as soon as possible.

  Jeff Bailey   10/7/200,  11:02:03 AM
10:55 Market Watch at this Link

  Linda Piazza   10/7/200,  10:58:31 AM
The TRAN is breaking below historical and Keltner support. If this isn't quickly reversed, the TRAN could pull other indices lower, too. The danger for those in bearish positions is that the TRAN could complete a tweezer-top reversal signal today after hitting the top of its ascending regression channel yesterday and today. Keltners suggest that if the TRAN doesn't quickly reverse and pull up past 3360, it's in danger of falling quickly toward 3340-3341.

  Jonathan Levinson   10/7/200,  10:57:40 AM
Session low for 10-yr treasuries here at 111.75 on the ZN contract, TNX +2.1 bps to 4.247%.

  Mark Davis   10/7/200,  10:56:40 AM
Look out below if they can crack 10200

  Jonathan Levinson   10/7/200,  10:56:36 AM
The dip back to the low end of the range here, currently QQQ 36.52, lines up with a still-oversold TRINQ at .50.

  Linda Piazza   10/7/200,  10:54:37 AM
Here's how the TRAN looks with regard to that ascending regression channel in which it's traded since March. Link Note that on the late June/early July touch of the top of this channel, the TRAN took several days to complete a turnaround and begin traveling to the bottom of the channel again, so even if the TRAN is going to reverse here, that reversal might not be completed today. A tweezer-top formation would go a long way toward suggesting that it would, however. Note, too, that bearish price/MACD divergence exists when comparing that last touch of the top of the channel to this one. MACD tries to move higher and could still erase that divergence, however, but logic certainly suggests that it's time for the TRAN to reverse. Logic hasn't worked well with the TRAN when trying to figure out what it would do as crude prices rose, however, so all should be aware of the possibility that the TRAN could continue to climb the underside of the top trendline or could even break out above this trendline and channel.

  Jonathan Levinson   10/7/200,  10:51:02 AM
Following Linda's comments about the TRIN, the Nasdaq TRIN is quite low- not extreme but well below neutral territory at .41 currently. This on its own doesn't tell us much, but given that QQQ has been unable to print a single tick in the green all day, it shows great buying pressure being expended just to keep the price afloat- not the stuff of which huge rallies are made.

  Linda Piazza   10/7/200,  10:46:57 AM
The TRAN has been sinking ever closer to 3355-3360-ish support. Keltner support shows up in that area, too, corroborating its importance. Market bulls want to see that support hold. With crude bouncing down from its test of $53.00 earlier, the TRAN may be allowed a little wiggle room, but the TRAN is in a vulnerable spot at the top of the ascending regression channel in which it's traded since March.

  Mark Davis   10/7/200,  10:46:17 AM
If I weren't already short I'd be seriously considering it right in this area... 1138.50. We just need 1-min MACD to turn back down to confirm a sell signal

  Jonathan Levinson   10/7/200,  10:43:49 AM
QQQ is testing its session high here with a print of 36.66.

  Jonathan Levinson   10/7/200,  10:39:25 AM
Gold is down to 419.30 currently, while HUI is up .45% to 234.42 and XAU is up .31% to 103.31. Nymex crude is down to 52.45 here, and the TNX is up 1 bp to 4.234%. The markets all feel like they've been in suspended animation.

  Linda Piazza   10/7/200,  10:39:01 AM
Funny, Mark, but it's a serious question, isn't it? (See Mark's 10:34 post.)

  Jeff Bailey   10/7/200,  10:38:31 AM
Current OPEN MM Profiles at this Link

  Linda Piazza   10/7/200,  10:37:24 AM
The SOX may be climbing, but the GSO isn't and the GHA so far sits in a doji above yesterday's candle. The SOX now tests one version of the inverse H&S on the daily chart.

  Mark Davis   10/7/200,  10:34:55 AM
SOX new HOD @ 409.30... amazing. Will the SOX pull up the Dow/OEX or will the Dow/OEX "pull the SOX down"? (pun intended)

  Jonathan Levinson   10/7/200,  10:31:11 AM
A short cycle upphase is trying to strengthen, but it will take a break above the current high of 36.65 for at least 5 minutes to give it the push. It's worth noting that the current sideways weakness in QQQ is taking place in the context of a 30 min cycle upphase- that is, on the bulls' nickel. All things being equal, a downphase should start if the current price range just holds, and downphase will follow it from that higher price/lower oscillator bearish divergence.

  Linda Piazza   10/7/200,  10:31:08 AM
And now TRIN drops again.

  Mark Davis   10/7/200,  10:28:03 AM
SOX and BIX have gone green and Dow is holding 10200 (by its fingernails)... what to do? I'm tempted to go long here but the TRIN is rising and considering the Nasdaq was up 7 days in a row short still seems to be the right position. If Dow 10200 gives way that could add some traction to the decline and if you twisted my arm I'd say we aren't finished going down. We've come a long way in a short time from SPX 1102.58 and it's just too early in the downphase to get excited about going long again. I'm not a patient trader so will have to detach myself from short-term thinking a bit here.

  Jeff Bailey   10/7/200,  10:26:30 AM
Overstock.com OSTK $42.00 +6.09% ... surging.

  Linda Piazza   10/7/200,  10:20:42 AM
TRIN heads up. It's still way below its first-five-minute high and apparently struggling with a 1.11-ish "resistance" area, but still generally moving up.

  Jeff Bailey   10/7/200,  10:19:14 AM
COX-2 inhibitors questioned .... Merck (MRK) $30.33 -4.23% and Pfizer (PFE) $29.01 -6.95% are notably weak this morning after two leading heart experts called for urgent investigation into whether all painkilling drugs known as COX-2 inhibitors may raise the risk of heart attack in some people.

  Jonathan Levinson   10/7/200,  10:18:58 AM
Nymex crude is currently trading 52.60, off a session high of 52.975.

  Linda Piazza   10/7/200,  10:18:29 AM
We have bifurcated markets today, with the NDX and Nasdaq holding up relatively well, while the SPX, OEX, and Dow erase a hefty portion of yesterday's gains--especially the OEX. This kind of behavior presents special challenges to traders as it can result in choppy trading conditions. It might be a good day to sit out if you're not already in a trade.

  Jonathan Levinson   10/7/200,  10:14:26 AM
QQQ is flatlined at 35.56, though I have reason to doubt whether IB's realtime feed is on time this AM. The opening range was violated briefly to the downside at 34.47, but the 30 min cycle upphase remains intact while still susceptible to the bearish divergence discussed earlier.

  Linda Piazza   10/7/200,  10:12:58 AM
Current OEX bears need to have profit-protection plans in mind as 543 is approached, if it is. Some might choose automatic profit-taking, perhaps depending on how breadth indicators look at the time, while others might elect to tighten stops as that potential bounce point is approached, allowing for participation if the OEX should dip further, down toward 541.50-542 or lower.

  Jeff Bailey   10/7/200,  10:10:29 AM
10:00 Internals at this Link

Yesterday's internals at this Link

  Linda Piazza   10/7/200,  10:10:27 AM
The OEX has broken below the short-term trendline off Tuesday's late-day low and may rise to retest it, bouncing from somewhere between the current level and 544.49--with the bounce appearing as I type. Nearest Keltner resistance now gathers near 545.16, near that trendline. Bears want to see the OEX roll down again now. Those currently in bearish positions or who might have entered a bearish position on a roll down through that trendline want to see five-minute closes beneath that 545.16 level, but will be almost as happy with five-minute closes beneath 545.85. Bulls want to see five-minute closes above the Keltner line currently at 546.57 but will be almost as happy with five-minute closes above the line currently at 545.85.

  Linda Piazza   10/7/200,  10:05:30 AM
ADVDEC has been diving all morning. It is supporting a bearish case.

  Mark Davis   10/7/200,  10:05:04 AM
Short @ 1139.75, lower stop to 1139.75 and break even
Now the question is when do we go long (or do we go long at all)?

  Linda Piazza   10/7/200,  10:04:14 AM
The OEX has come all the way down to retest the descending trendline off Tuesday's late-day low, and is even beginning to break below that trendline. This is not good news for bulls unless this break is quickly reversed. Yet, so far, unless my TRIN levels are not correct, TRIN is not forecasting a big decline today. Careful.

  Jeff Bailey   10/7/200,  10:02:21 AM
10:00 Market Watch at this Link

  Jonathan Levinson   10/7/200,  10:00:16 AM
The indices continue to sit on the lows without a significant break.

  Mark Davis   10/7/200,  9:58:18 AM
Yesterday we walked up the upper b-band, today we walk down the lower one... Link

  Jeff Bailey   10/7/200,  9:53:23 AM
VIX.X 13.53 +1.88% ... DAILY Pivot levels as follows ... 12.69, 12.99, Piv = 13.54 , 13.85, 14.40.

  Jonathan Levinson   10/7/200,  9:53:20 AM
The Fed drained 1B net via its 14-day repos, but more than made up for it with a 6.5B overnight repo against the 2B expiring, for a net gain of 3.5B for the day from the Fed's open market desk.

  Jonathan Levinson   10/7/200,  9:52:05 AM
Both the Dow and the Nasdaq are perfectly in sync, down .3% each. The futures are also lined up. ES is trading a session low of 1138.75- a slow-motion rollover here. Crude oil is holding at 52.55. QQQ is 3 cents off its low of 36.50.

  Linda Piazza   10/7/200,  9:50:15 AM
The TRIN sits just under 1.00, not supporting bearish hopes just yet, although the OEX drops swiftly back into yesterday's ascending regression channel off the late-Tuesday low. The OEX has not yet violated the ascending trendline off that low, however, with that trendline now at just over 545. Bulls would have preferred to have seen a bounce before now, but the OEX now hits possible Keltner support just under 546. Next support is nearer that 545-ish rising trendline.

  Jonathan Levinson   10/7/200,  9:46:50 AM
Godl continues to trade both sides of 420, currently holding a 40 cent gain at 420.30. HUI is up .45% to 234.44, XAU flat at 102.99.

  Mark Davis   10/7/200,  9:46:02 AM
Stopped out of long play @ 1139.00, +3

  Jeff Bailey   10/7/200,  9:45:58 AM
Lehman 1-3 year iShares (SHY) $81.79 -0.01% .... fractional decline, but did trade just under the $81.79 level.

  Mark Davis   10/7/200,  9:43:46 AM
Go short now... 1139.75, stop 1140.75

  Linda Piazza   10/7/200,  9:43:34 AM
Careful, bears. The TRIN is headed down. Stay watchful of its trend.

  Linda Piazza   10/7/200,  9:42:32 AM
The OEX attempts to bounce. Nearest Keltner resistance appears to be at about 546.50-546.75 on the five- and seven-minute charts.

  Jeff Bailey   10/7/200,  9:41:22 AM
Semiconductor Index (SOX.X) 407.76 +0.38% ... fractional gains.

Biotech Index (BTK.X) 526.31 -1.19% and Drug Index (DRG.X) 304.26 -1.92% are early sector losers.

  Jonathan Levinson   10/7/200,  9:41:10 AM
QQQ held at a low of 36.50 and has bounced to a cash session high of 36.65. There's a slight pullback, providing a 15 cent opening range.

  Linda Piazza   10/7/200,  9:41:00 AM
The GSO, one recent leading tech sector, turns down this morning, just below 150. The GHA, a need-to-watch sector pointed out by Tab yesterday, posts a small gain.

  Jeff Bailey   10/7/200,  9:39:31 AM
Stillwater Mining (SWC) $15.79 +3.33% .... strong move at the open.

  Linda Piazza   10/7/200,  9:39:17 AM
At 406.39 as I type, the SOX remains below one neckline version for an inverse H&S on its daily chart. I would use a move above Monday's high as confirmation of the break above the neckline. Note the daily 100-ema at 413.90, though.

  Jeff Bailey   10/7/200,  9:37:45 AM
S&P Retail Index (RLX.X) 420.20 +0.85% ....

  Linda Piazza   10/7/200,  9:36:31 AM
The TRAN yesterday approached the top of an ascending regression channel in which it's traded since March. This morning it pulls back in earliest trading, but is above the 3360-ish level from which it launched higher yesterday afternoon. It's at 3375.77 and dropping as I type.

  Jonathan Levinson   10/7/200,  9:35:40 AM
Nymex crude is showing very little weakness, holding at 52.55 currently, +.525 or 1.01%. Equities are showing weakness this morning, but are effectively ignoring the oil rally. The Dow-30 is down .12% next to a 1% gain in oil. I don't believe that this disconnect will prove to be sustainable.

  Linda Piazza   10/7/200,  9:33:58 AM
The OEX has dropped to first 15-minute Keltner support, at a Keltner line now at 546.95, and is attempting to bounce from there. We're not seeing a breakdown yet, but I'm waiting to see what TRIN will do today, too.

  Mark Davis   10/7/200,  9:32:10 AM
Lower stop on long play to 1139.00

  Jonathan Levinson   10/7/200,  9:30:28 AM
Bonds stabilized very quickly, with TNX holding a .6 bp gain at 4.23%. 4.2% should now act as support under the yield.

  Linda Piazza   10/7/200,  9:29:59 AM
I remember, back a couple of months ago, listening to a technical analyst on CNBC talk about crude prices. He predicted $47.50 in the short term and $55-57.00 as an upside target. At the time, crude was testing $40.00-42.00, I believe, and his claims appeared inflated to CNBC commentators, at least. They weren't, obviously.

Futures trade slightly lower this morning as crude moves higher. This morning, at least one European airline is being hit by fears of how rising crude will impact that company with the company unhedged for rising crude costs past October.

Some Keltner charts were showing bearish resistance, Keltner style, on the OEX yesterday afternoon. The OEX had just hit 15-minute top Keltner resistance at the close. Bulls want to see a 15-minute close above the Keltner line currently at 547.63, but likely to move up if the OEX does, too, while bears want to see a 15-minute close below the Keltner line currently at 546, but would prefer one below the line currently at 545.09.

  Jonathan Levinson   10/7/200,  9:27:38 AM
Session low for NQ at 1473, QQQ currently 36.525, and session high for silver at 7.29.

  Jonathan Levinson   10/7/200,  9:13:52 AM
Session high for Nymex crude here at 52.625.

  Jonathan Levinson   10/7/200,  9:05:14 AM
The 30 min view of NQ (premarket proxy for QQQ) shows a potentially dangerous setup for bulls. If yesterday's final hour moonshot does not continue to the upside, the next 30 min cycle downphase will kick off from a bearishly-divergent lower oscillator high. Link These setups tend to result in steep downphases. QQQ needs to hold above the 36.40 level at minimum.

  Jonathan Levinson   10/7/200,  9:00:28 AM


Euro futures are currently up .15% to 1.229.

  Jonathan Levinson   10/7/200,  8:47:00 AM
The 4-week MA of initial claims rose 4,250 to 348.5K in this latest week.

  Jonathan Levinson   10/7/200,  8:44:23 AM
I believe that the reason for the muted reaction to the data is the large upward revision to the previous week's data. The 335K figure is a 37K drop from the previous week's revised reading of 372K.

  Jonathan Levinson   10/7/200,  8:35:45 AM
QQQ is up to 36.58, down .07 for the session. Equities are only up slightly, and gold is now down .30 to 419.60. Very muted reaction to the data so far.

  Jonathan Levinson   10/7/200,  8:32:59 AM
Session low for ten year notes, TNX +.8 bps to 4.232%. Another headline as I type:


I report, you decide.

  Jonathan Levinson   10/7/200,  8:30:53 AM

US Jobless Claims -37K To 335K In Oct 2 Wk; Survey -19K

  Jonathan Levinson   10/7/200,  8:15:08 AM
Session low for NQ futures here at 1473.50, -5.5.

  Jonathan Levinson   10/7/200,  8:00:28 AM
We await the 8:30 release of initial claims for the week of 10/02, est. 355K, and at 3PM, consumer credit for August, est. 6B.

  Jonathan Levinson   10/7/200,  7:57:17 AM
Equities are lower, with ES trading 1140.75, NQ 1474.5, YM 10221 and QQQ -.08 to 36.57. Gold is higher +.80 at 420.70, silver -.009 to 7.24, ten year bonds flat at 113.9375 and Nymex crude +.525 to 52.55.

  Linda Piazza   10/7/200,  7:10:57 AM
Good morning. Rising crude costs helped commodity-related stocks in Asia while turning many exporters lower, with the net result of spotty performances among bourses. The Nikkei posted a loss. European markets traded water during early trading ahead of rate decisions by the ECB and Bank of England. As of 7:08 EST, crude was higher by $0.43 to $52.45. More detail about Asian and European markets follows in succeeding paragraphs.

Record highs in crude costs pressured Asian bourses. The Nikkei tried to steady above the flat-line level, but had tumbled into negative territory before the close of the morning session. The Nikkei closed lower by 30.79 points or 0.27%, at 11,354.59.

As oil rose again in the overnight session, commodity-related issues gained while exporters lost. Nippon Oil added to recent gains. Late Thursday, the Financial Services Agency filed criminal charges against UFJ Holdings, charges that a newspaper had already reported would be filed. FSA banned the bank's corporate banking sections from extending new loans in Tokyo and Osaka for six months, beginning October 18. Consumer loans will be allowed. UFJ Holdings had been trading lower in recent days, including today, in fear of such charges.

Other Asian markets turned in mixed performances. The Taiwan Weighted gained 0.70%. With South Korea's central bank deciding to keep the interest rates at the current 3.5% level against expectations that the bank would cut interest rates, the Kospi fell in early trading. Exporters such as Samsung Electronics lost ground in early trading. Although the Kospi erased some of those early losses, it still closed lower by 0.24%. Singapore's Straits Times lost 0.49%, but Hong Kong's Hang Seng climbed 0.38%. China's Shanghai Composite remained closed for a holiday.

With rate decisions expected this morning from the Bank of England and ECB, many European bourses presented small losses or small gains. Most expected both central banks to keep rates steady, and the Bank of England's decision was indeed to leave rates steady. The ECB's decision will not be announced until later.

Oil majors gained. Broker upgrades helped Volkswagen and BMW to post gains. Strong performances by Alcatel and Vivendi also helped European bourses remain steady. A trade dispute over majority owned Airbus sent EADS lower. Swiss Re rose after turning the frequent hurricanes hitting the U.S. into a positive, saying that those hurricanes will encourage renewals of property reinsurance rates.

Air France-KLM slipped lower after reporting figures on passenger traffic, including strong interest in North American routes. In the U.K., low-cost airlines Ryanair and Easyjet show mixed performances, with Ryanair turning lower on worries about unhedged fuel supplies after October.

As of 7:08 EST, the FTSE 100 traded lower by 1.10 points or 0.02%, at 4,705.20. The CAC 40 traded higher by 4.18 points or 0.11%, at 3,768.77. The DAX traded higher by 10.96 points or 0.27%, at 4,060.62.

  Jeff Bailey   10/6/200,  12:54:16 AM
Month-to-month sector bullish % comparisons at this Link

RESTaurants look well positioned for bullish move.

SOFTware looks similar to PRECious metals in early September.

SEMIconductor, COMPuter, ELECtronics, TELEphone, TEXTiles, AEROspace/defense, PROTection/safety are shaping up for 1/2 bullish positions.

  Jeff Bailey   10/6/200,  12:04:19 AM
Current OPEN MM Profiles at this Link

Today's activity ....

Closed out the carryover day trade short in the QQQ from $36.40 at $36.30. ($0.10, or +0.27%).

Sold 2 TASR Oct. $40 Calls (QUR-JH) at the bid of $1.05. Stop if stock trades $43.00, but should be partially hedged by the Dec. $45 Call (QUR-LI).

Bought 1/2 bullish position in the Semiconductor HOLDRs Jan $32.50 calls (SMH-AZ) at the offer of $2.10.

  Jeff Bailey   10/6/200,  11:57:01 PM
Wednesday's Closing Internals at this Link

  Linda Piazza   10/6/200,  11:02:02 PM
The OEX ended the day jammed underneath its 200-sma and the 9/13 high. Those wanting a new bullish entry and not afraid of a breakout entry will have it on an upside break of the 9/13 high at 548.52. The 60-minute chart shows a potential for a cup-and-handle to form on that chart, though, so be prepared for a minimal breakout and then a potential pullback into a handle formation before a final breakout. This handle portion isn't guaranteed to form, but it's a rather common continuation pattern, so it's possible that it will. A handle formation would also fit nicely into a potential pullback late tomorrow ahead of Friday's numbers. On such a breakout above a cup-and-handle formation or just a cup formation, profit protecting plans should be in place for a test of 553-554.

What if you enter long on a breakout above the 9/13 high and the OEX starts pulling back into a handle? When should you exit? One possibility is to set an account-specific stop below the 200-sma, particularly as Monday's high was near that average. Others with more risk tolerance might set a stop below the ascending trendline that began forming off Tuesday's late-afternoon low, with that line now crossing at about 545.

I have to admit to being concerned about breakouts with the TRAN hitting the top of the ascending regression channel in which it has traded since March, and probably due for a pullback within a couple of days, with crude hitting record highs, and with earnings or outlook disappointments possibly hitting indices hard after strong recent gains. Watch the TRAN carefully for signs of a rollover, although lately it seems impossible for the TRAN to turn down instead of up. Guard profits as the SPX approaches 1144-1146; the Dow, its 200-sma; the Nasdaq, 1975 and the SOX, the neckline of its potential inverse H&S.

If the OEX is going to roll over, this is the best spot from which a new bearish entry could be made, but there's no evidence as yet that such a rollover will occur. Let's see how tomorrow develops, but those seeking a bearish rollover entry would do well to watch the TRIN's behavior tomorrow before making decisions. The TRIN's trend would have helped to keep would-be bears out of trouble the last few days.

  OI Technical Staff   10/6/200,  9:12:57 PM
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