Option Investor
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  Jeff Bailey   10/14/20,  9:14:12 PM
Closing Internals at this Link

  Jim Brown   10/14/20,  5:12:09 PM
JNPR Raising Guidance

  Jim Brown   10/14/20,  5:11:42 PM
NFLX Halted Company saying they are reducing their subscription rates due to increased competition.

  Jim Brown   10/14/20,  5:02:09 PM
CLST missed estimates

  Jim Brown   10/14/20,  5:01:51 PM
PKS Six Flags warning

  Jeff Bailey   10/14/20,  4:25:28 PM
Current OPEN MM Profiles at this Link

  Jim Brown   10/14/20,  4:09:11 PM
Earnings after the close

FCS_ est +0.25, actual = +0.26
SYK_ est +0.33, actual = +0.33
CHKR est +0.17, actual = +0.13
CNET est +0.00, actual = +0.01
CREE est +0.28, actual = +0.32
JNPR est +0.11, actual = +0.13
LEXR est -0.04, actual = -0.04
NFLX est +0.32, actual = +0.35
NMSS est +0.02, actual = +0.02
RMBS est +0.06, actual = +0.07
SUNW est -0.03, actual = -0.00 beat

SUNW headline number of -0.05 cents
included 5 cents charges.

CNET guiding lower

MGAM halted after warning

PHTN halted after warning

  Mark Davis   10/14/20,  4:06:56 PM
There is a nice double bottom on the SPX daily chart (1101.38 and 1102.06) plus we are down 5 out of the last 6 trading sessions and we are very close to 1100 round number support. Odds favor a bounce IMO and it would take a total meltdown on an opex Friday (not likely) to take us substantially lower. I'll take my chances, or more properly, my "calculated risks".

  Linda Piazza   10/14/20,  4:04:25 PM
Reader Question: I study all the charts that are posted, as I am a new "trader" and am very interested in the chart you posted of the OEX breakout. There actually were three times when the purple line was pierced, so the McD was what told you when to be short?

Response: Great observations, and welcome from another trader who still considers herself in learning mode. (See my 15:30 post for a link to the chart to which this reader refers.) I should have mentioned in that post that I was specifically noting what had happened since the bear-flag breakdown, as I'd advised today that those who accepted the risks could enter a new bearish play on a breakdown out of that bear flag. Today, I would have combined traditional technical analysis--the bear flag we were watching--with the MACD bearish cross you noted on that chart and the Keltner breakout. We had three methods of confirmation for that entry, and it worked beautifully. Wish they all did!

  Jim Brown   10/14/20,  4:01:11 PM
Alert - Earnings after the close

FCS est +0.25, actual =0.26
SYK est +0.33, actual =
CHKR est +0.17, actual = +0.13
CNET est +0.00, actual =
CREE est +0.28, actual = +0.32
JNPR est +0.11, actual =
LEXR est -0.04, actual =
NFLX est +0.32, actual =
NMSS est +0.02, actual =
RMBS est +0.06, actual = +0.07
SUNW est -0.03, actual = -0.05 miss
WERN est +0.30, actual =

MGAM halted - news pending

MXO CEO has resigned

  Mark Davis   10/14/20,  3:57:25 PM
Long @ 1102.48, stop 1102.48 and break even, hold overnight

  Jeff Bailey   10/14/20,  3:56:01 PM
March fed fund futures (ff04h) alert .... 97.75 here. Has risen from 50% chance of fed funds being at 2.5% just before the payroll number, to no chance with this trade.

Now sees 95% chance of Fed funds at 2.25% between now and March.

  Linda Piazza   10/14/20,  3:54:51 PM
Make a decision soon, if you haven't already, as to whether you're going to carry bullish or bearish OEX positions overnight. If in a bearish position, I think I'd take at least partial profits or hedge the position some way, such as with a cheap October call. Do this only if you intended your bearish position for more than a day trade, however,and if it was a position-type or swing-type trade meant to be held over days or weeks. If it was always just a day trade, take your profit and congratulate yourself! I'm not really in favor of bullish plays right now, so I think they're risky held overnight, although I think there's every chance we could see a bounce back up to 533.80-535.

  Linda Piazza   10/14/20,  3:43:22 PM
We saw the first five-minute candle close above the Keltner line that demarcates a downside breakout since the breakout this morning. Now watch again for a potential inverse H&S to form, neckline at about 530.45, head at the last five-minute low, shoulders at about 529.70, with the OEX still needing to pull back and form a right shoulder. An inverse H&S is a typical bottoming formation for the OEX, obviously not always successful. Note that this is a short-term bottom we're watching for, not necessarily the October bottom!

  Jonathan Levinson   10/14/20,  3:42:18 PM
Gotta love op-ex week- I'm meditating on pennies for QQQ. The move above 35.40 restored it back to its endless range.

  Linda Piazza   10/14/20,  3:38:25 PM
The OEX tests the breakout level on the five-minute Keltner channels. See my 15:30 post for an explanation. Bears want to see a five-minute close at or below the Keltner line currently at 529.86 to maintain that downside breakout. Will this be the first time the OEX closes above that line since breaking down or will the OEX be slapped back?

  Mark Davis   10/14/20,  3:35:52 PM
Long @ 1102.48, raise stop to 1102.48 and break even

  Mark Davis   10/14/20,  3:33:20 PM
Go long now @ 1102.48, stop 1101.48

  Linda Piazza   10/14/20,  3:30:19 PM
Keltner channels were developed to identify breakout plays. Here's what the OEX's downside breakout looked like on the five-minute Keltner chart today: Link

  Jonathan Levinson   10/14/20,  3:28:13 PM
QQQ struggling with 35.40 resistance now.

  Mark Davis   10/14/20,  3:25:04 PM
If you bought the SPX Oct. 1115 call this morning you paid $3.50... if you want to sell it back now they will give you 10 cents. That trade qualifies as a real stinker.

  Linda Piazza   10/14/20,  3:22:45 PM
The SPX's 9/28 low was 1101.29, and the SPX now is at 1102.72, having reached a low of 1102.06.

  Linda Piazza   10/14/20,  3:21:24 PM
Note that the TRAN is still holding above 3300. Amazing. This is despite confirming a rough H&S-ish formation this morning. It may be trying to reform into a larger H&S, however, just now rounding down into a possible head. There's an early bearish cross on the daily MACD.

  Jeff Bailey   10/14/20,  3:19:58 PM
03:15 Market Watch at this Link

  Jonathan Levinson   10/14/20,  3:16:37 PM
At last... look for 35.40-.42 QQQ to act as resistance.

  Linda Piazza   10/14/20,  3:15:47 PM
I agree with Stephen's 527-529 inflection point for the OEX. See my 12:12 post, and my mention of 527-528.50. I also agree with the question he's posing. Will we see a bounce or a decline through that level? Those in bearish OEX positions from the breakdown out of the bull flag this morning have little wiggle room if the OEX should decide to retrace some of the decline, while those who have been following it down from the rollover beneath 540 have more. It might make sense for some to take at least partial profits, or take other measures. If willing to risk a bounce, those measures might include taking only partial profits, as mentioned, taking full profits and rolling down or out or both into a lower strike, or other such measures. You could adopt Mark's method of buying a hedging long to lock in some of your profits. There's nothing wrong with taking full profits and sleeping well tonight, either!

Note that the OEX has just rejected the bull's latest attempt at forming an inverse H&S.

  Mark Davis   10/14/20,  3:14:04 PM
Stopped out of long play @ 1103.53, -1

  Stephen Tetreault   10/14/20,  3:08:00 PM
We are entering the several support zones that I mentioned, now we are presented with a very tough decision, do we become buyers on this light volume melt-down, due to soaring crude prices and earnings news into the close, or do we sit on the sidelines and look to load into the Pre-market hours, as certainly the Asian and Euro markets will feel out contagion and malaise tomorrow, especially in the insurance group....I have a major inflection market turn signaled for tomorrow and we could see some selling before a reversal or a complete break down, many in my trading group are as skittish as a long tail cat in a room full of rocking chairs Nasdog (1898-1902) OEX (527-529) SOX (370-374) SPX 1104.75-1105.25) DOW (9890-9905) BBH 131.75-132.25) RUT (562-564) ES at 1103.75-1104.75 and the NQ at 1417.1420.

  Jeff Bailey   10/14/20,  3:05:21 PM
December Crude Oil futures (cl04z) .... with fitted retracement at this link, and now rolling out to the January 2005 point and figure chart's bullish vertical count of $58.75. Today's settlement could be telling for tomorrow's equity trade. Link

Can the INDU hold its MONTHLY R1? Can oil hold below its fitted 61.8% might be the question answered to the close.

  Linda Piazza   10/14/20,  3:03:28 PM
By the time I could get that last post uploaded, we saw another new low on the OEX. If the OEX bounces up quickly, we could still be seeing an inverse H&S-ish formation. Since the neckline slants so steeply, it's possible for the right shoulder to actually be a little lower than the head. However, if the OEX drops much lower, I think we can consider the formation soundly rejected. A move above 530.65 would confirm it.

  Jonathan Levinson   10/14/20,  3:03:03 PM
10 year treasuries go out strong, TNX -6.3 bps at 4.015%, a 1.54% decline for the day.

  Linda Piazza   10/14/20,  3:00:33 PM
Here's the inverse H&S that I've been watching since the OEX hit 530, complete with bullish divergence as the head was formed. Link Note that the OEX is in danger of dropping below the appropriate right-shoulder level, again rejecting another bullish formation the bulls tried to set up.

  Jonathan Levinson   10/14/20,  2:59:05 PM
Other than a brief probe below 35.40 QQQ that immediately dojied back up, there's been a steady light volume drift nowhere just above the lows of the day. A wavelet upphase is in progress and at this rate, should be over within the next 10 minutes. Declining 7200 tick SMA resistance is at 35.48 currently and has held back every bounce since 11AM.

  Mark Davis   10/14/20,  2:56:59 PM
Long @ 1104.53, stop 1103.53
We will raise the stop to break even if SPX gets above 1105.50

  Mark Davis   10/14/20,  2:54:09 PM
Readers keep in mind Jim is using futures quotes and we are using the cash index so we were not stopped out just now @ 1103.50. The cash index only dipped to 1103.68 and our stop is @ 1103.53. We have a nice tweezer bottom bounce on the 1-min chart but we also had an even better tweezer bottom 15 minutes ago and it failed so we aren't out of the woods yet. I'm hoping short-covering will take us higher into the close. Right now we are up about +1 on our long play from 1104.53 and the bounce is looking like the real thing... fingers crossed.

  Jeff Bailey   10/14/20,  2:49:30 PM
Russell 2000 Index ($RUT.X) 566.63 -0.48% .... back below its 200-day SMA (569.50) and downward trend.

  Tab Gilles   10/14/20,  2:47:50 PM
Additional perfchart: Link

  Tab Gilles   10/14/20,  2:45:13 PM
As a contrarian, one should look at the latest beaten-down sector, the pharma. Just as is the case with the Semi's, this sector that is currently out of favor is worth a look. Attached are 2 charts that show a possible entry point. If you have a 6-month outlook this sector may provide an opportunity, the pharmaceutical sector at current levels allows for good reward potential relative to risk. Link

  Jeff Bailey   10/14/20,  2:40:32 PM
Lehman iShares 1-3 year (AMEX:SHY) $82.18 +0.07% ... moves above its flat 200-day SMA $82.15.

Has been on the rise ever since nonfarm payroll numbers.

  Mark Davis   10/14/20,  2:39:02 PM
We could see a sharp move either way here but I doubt if a short play would go very far, as in SPX 1100, with only 1 1/2 hours left to trade. It's too late in the cycle to hold options overnight unless you are using November contracts. Shorts will need to decide whether to hold overnight so close to opex and if I were short current month contracts with fat profits so close to 1100 I would definitely be covering before the bell. The TRIN remains troubling but that can change quickly.

  Linda Piazza   10/14/20,  2:37:58 PM
The OEX has confirmed the double-top formation on its daily chart. However, I'd like to see that confirmation occur on a daily closing basis before I gave it complete confidence. I'd be distrustful of that confirmation if there were a strong bounce now, leaving only a candle shadow below that confirmation level. Even if the double-top formation is confirmed and even if it does eventually meet the 512-ish downside target (not a given), nothing says that the OEX would fall straight toward the target.

  Linda Piazza   10/14/20,  2:28:57 PM
The OEX did see a lower low. The tiny five-minute candles tell us that bulls are trying to hold the line, but the OEX is so far still in breakout mode according to the five-minute Keltner channels.

  Mark Davis   10/14/20,  2:28:21 PM
Go long again @ 1104.53, stop 1103.53

  Jonathan Levinson   10/14/20,  2:27:55 PM
Session high for crude oil here at 54.825.

  Linda Piazza   10/14/20,  2:25:56 PM
The Nasdaq approaches 1900, at 1093.34 as I type. OEX bears should continue to follow the OEX lower with their stops.

  Jeff Bailey   10/14/20,  2:23:56 PM
VXN.X 22.44 +1.4% .... most active options at this Link

VXN.X either skewed today with selling of Oct. puts and buying November puts, but somebody's got to be seller in one of these top 4 put contracts.

Nov. $34 puts were the ones I saw yesterday that saw sudden activity, and these buggers haven't budged. Not yet at least.

  Jonathan Levinson   10/14/20,  2:18:35 PM
QQQ back to session low of 35.40 right here. There's plenty of room to run in lower in the short cycle, nowhere near oversold yet. Bears have a good chance of getting their break.

  Linda Piazza   10/14/20,  2:17:04 PM
No new low on the OEX yet. The low of the day has been 529.88.

  Jonathan Levinson   10/14/20,  2:16:57 PM
Nymex crude hanging tough at 54.55, +1.68% here.

  Mark Davis   10/14/20,  2:14:30 PM
Stopped out of long play @ 1105.83 and break even.
The easy money may have already been made this week

  Linda Piazza   10/14/20,  2:14:25 PM
Just a few more cents and OEX bears have that lower low.

  Jeff Bailey   10/14/20,  2:13:16 PM
China Automotive Systems (CAAS) $12.30 +43% ... atop the percentage gainers list for second-straight session.

Will be presenting at the Global Chinese Financial Forum in Toronto this weekend.

Jonathan.... you going?

  Jim Brown   10/14/20,  2:12:23 PM
RIMM breaking out to a new 52-week high at 79.95

  Jonathan Levinson   10/14/20,  2:10:42 PM
Session high for bonds here, with ZN at 113.51 and TNX -5.4 bps at 4.024%.

  Linda Piazza   10/14/20,  2:07:40 PM
The OEX may be slipping out of the bear-flagish formation in which it's been climbing since about 1:20. If so, the neckline for that potential inverse H&S is going to be a descending one rather than a horizontal once because the OEX never got as high as 531.70. Bears want to see a new low to negate that potential formation. Bulls or want-to-be ones want to see the OEX steady not too far below 530.40 and round up again into a right shoulder.

  Mark Davis   10/14/20,  2:00:34 PM
Long @ 1105.83, raise stop to 1105.83 and break even... just in case the bottom falls out.
If we can get above 1108.50 this trade should be a winner but TRIN is creeping up and making me nervous. I'm also not inclined to initiate another short at these levels. We're too close to support, it's late in opex week and we've dropped -37 points in the last 6 trading sessions. Going back to the well for another drink would be pushing it IMO.

  Linda Piazza   10/14/20,  1:52:23 PM
Just checking in for a few minutes, I note that the OEX is still in breakout (to the downside) mode on the five-minute Keltner charts, but testing the resistance that defines whether it's in breakout mode or not. It's still a time for following the OEX lower with your stops, unless you were one of the conservative traders who elected to take automatic profit as the OEX approached this support zone. I'm still watching for the possibility that the OEX may try to form an inverse H&S on the five-minute chart, with a neckline somewhere around 531.75-532. It could be rounding up into the head formation now, which would mean that it would need to form a higher low then to form the right shoulder. This formation wouldn't be one that I'd base a trade on, but rather would be one I'd watch to show whether bulls can muster enough strength to steady above 530.

  Jonathan Levinson   10/14/20,  1:51:02 PM
Daily chart of the ES at this Link . A close at current levels would be look quite bearish to me. Ditto the Dow futs at this Link.

  Jonathan Levinson   10/14/20,  1:46:14 PM
Currently, there's a weak 30 min cycle downphase in progress on the NQ and QQQ which, combined with the daily cycle downphase makes this prime time for bears. I believe that the cycles are getting skewed by op-ex manipulation, but it's much more difficult to fight a daily cycle than it is to fight the short intradays. For this reason, QQQ continues to look bearish to me under 35.78.

  Jonathan Levinson   10/14/20,  1:25:08 PM
35.40's still the line in the sand. Volume has trailed off as this sideways range continues, running the clock on October option holders.

  Mark Davis   10/14/20,  1:24:57 PM
Go long now @ 1105.83, stop 1104.83
I agree with Jim. We should bounce here but we could also see another leg down (thus the tight stop). 50dma for SPX is 1107.68 and current levels are still in "underthrow" territory. B-bands are rapidly converging right at our entry point so we should have our answer soon. I also believe we need to start watching for opex pinning so this trade may not go far. We'll just have to wait and see but risk reward seems to be worth a shot.

  Mark Davis   10/14/20,  1:19:56 PM
Hey I told you guys not to have too much fun without me! Wow! What great trading market. I have made more money on opex weeks over the last couple of months than the rest of the weeks put together. The key (for me anyway) on opex weeks is to get in and out of trades fast and not hold overnight unless you have the market bracketed with a large spread. This "bracketing" technique isn't for everybody but it sure works for me, and it can only be used with puts and calls of differing strike prices.

  Jeff Bailey   10/14/20,  1:15:13 PM
Swing trade sell covered call alert .... sell 5 Semi HOLDR Nov. $32.50 calls (SMH-KZ) at the bid of $0.40.

  Jeff Bailey   10/14/20,  1:12:44 PM
01:00 Market Internals at this Link

  Jonathan Levinson   10/14/20,  1:07:04 PM
Nymex crude +.925 to 54.575 here.

  Jeff Bailey   10/14/20,  1:05:41 PM
01:00 Market Watch at this Link

  Linda Piazza   10/14/20,  1:05:11 PM
The OEX broke to a new low, again good for bears, coming within $0.25 of 530. Bears need to exercise particular care now, however. I wouldn't be surprised to see the OEX attempt to build an inverse H&S now with a neckline at about 531.70 or maybe a little higher. If so, watch the progress of its development to see whether it confirms or is rejected.

I've got to be away for a while, perhaps up to an hour.

  Jim Brown   10/14/20,  1:01:44 PM
Wall Street Journal is reporting that Intel has delayed their long awaited 4ghz chip from the end of 2004 to the end of 2005.

  Linda Piazza   10/14/20,  12:50:50 PM
So far, the OEX's climb has the kind of back-and-forth pattern that's indicative of a bear flag. That's good for bears, but keep a close watch on the advdec line as well as other measures of market strength or weakness. The advdec line is trying to steady and rise, although the attempt isn't convincing as yet.

  Jonathan Levinson   10/14/20,  12:45:43 PM
QQQ is failing from a bounce high of 35.52, currently down to 35.48. A wavelet downphase is imminent, and it has a good chance of breaking 35.40 on the next go-round. Session high for bonds as type, TNX -4.8 bps at 4.03%.

  Jeff Bailey   10/14/20,  12:33:21 PM
Dow Industrials (INDU) 9,935 -0.66% .... just off session lows of 9,914 (MONTHLY S1 9,917.75).

Semiconductor Index (SOX.X) 382.53 -2.72% ... just off session lows of 381.00 (MONTHLY Pivot 380.59).

  Stephen Tetreault   10/14/20,  12:30:36 PM
The morning selling has been extensive as it appears the mantra as I suggested is to sell into the earnings reports this week, and this options expiration week is shaping up just as I had expected; they are taking profits in some of the cyclical-plays, metals and energy; and as we have seen crude prices are very volatile, as is the greenback. I have heard many rumors that Soros and his buddies are manipulating crude prices and the greenback to hopefully impact the Bush election as high oil prices could easily cost BUSH the election as he will certainly be labeled and portrayed as someone who helps his big-oil buddies allows they to screw the little guy/gal and as such this manipulation is true is will have a devastating impact on consumers, and the economy in the long run. My personal belief is that they need to increase the margin costs on energy traders (disclosure I’m short crude via January contracts when it breeched $54.00 as I thought the Bush supports would knock down the price) this escalating price action has taxed consumers more than any Kerry plan (grin) now for the technical side, I believe we are setting up for a tradable bounce at Nasdog (1898-1902) OEX (527-529) SOX (370-374) SPX 1104.75-1105.25) DOW (9890-9905) BBH 131.75-132.25) RUT (562-564) ES at 1103.75-1104.75 and the NQ at 1417.1420. Also remember that sometimes we have seen the age old mantra of selling the new-moon phase and buying the Full-Moon (just some food for thought) I have a major cycle turning/inflection study that has pinpointed tomorrow on the open as a potential Major Inflection point, I do not know the direction, however my wave analysis indicated it could last 3-4 days and either add/subtract 60-70-Nasdog points, 70-85 NDX points and 275-350 Dow points, we have seen increased volatility and so far I have no reading on the overall tonality or direction, something to consider this market is treacherous and sitting on the sidelines until the direction can be ascertained is a play in itself.

  Linda Piazza   10/14/20,  12:24:00 PM
For the reader who wrote me earlier about taxes and options, I finally located a free downloadable 48-page brochure on taxes and options, available from the CBOE's learning center. Here it is: Link This brochure defines and lists those indices subject to the "60/40" rule and those not subject to it.

  Jonathan Levinson   10/14/20,  12:22:42 PM
QQQ update at this Link.

  Jonathan Levinson   10/14/20,  12:21:29 PM
QQQ testing 35.50 resistance here. The day low at 35.40 was not revisited.

  Jonathan Levinson   10/14/20,  12:18:46 PM
Bonds have strengthened slightly, TNX to 4.038% (-4 bps), likewise gold at 418.70 and the miners. Nymex crude +.825 at 54.475 (+1.54%).

  Jeff Bailey   10/14/20,  12:16:16 PM
JDS Uniphase (JDSU) $3.27 +1.8% .... volume increase in last 20 minutes.

  Linda Piazza   10/14/20,  12:12:19 PM
Ultra-conservative OEX bears who might have entered a new position on the push below the bear flag this morning might decide to begin taking profit anywhere through here, realizing that the OEX might actually drop toward 527-528.50 before rebounding. There's much bounce potential near 530, however, especially if the Dow is approaching 9900 and the Nasdaq its 200-ema and the SPX its 200-ema and the expected support of 1,100, all at the same time, as appears to be happening. Those not so conservative can just continue to follow the OEX lower with your stops, take partial profits, or employ other methods.

  Jeff Bailey   10/14/20,  12:10:59 PM
12:00 Internals at this Link

  Linda Piazza   10/14/20,  12:08:08 PM
The SPX is edging below the 50-dma, as someone might have already mentioned. The 200-ema is below at 1100.72, meeting up with the historical and round-number support likely to be found there. OEX bears need to be watchful for the SPX's reaction on its approach toward 1,100.

  Jeff Bailey   10/14/20,  12:06:05 PM
Sell Program Premium .... SPX 1,106 , QQQ $35.43.

  Jonathan Levinson   10/14/20,  12:06:05 PM
If 35.40 QQQ lets go, 30 and 60 min channel support are down to 35.33 currently, below which 35.21 is stronger support.

  Linda Piazza   10/14/20,  12:05:34 PM
The BIX has dropped below 360 now, at 358.91 as I type and fast approaching its 50-dma. At 352.17, the BIX would confirm the double-top on its daily chart. While the BIX is a long way away yet from confirming this double-top formation, the rollover from above 365 was accompanied by bearish divergence on the daily chart.

  Jonathan Levinson   10/14/20,  11:52:36 AM
The bounce is now up to 35.45. So far the day low has held at 35.40, but bulls should hit stiff resistance at 35.50, former support.

  Jeff Bailey   10/14/20,  11:51:51 AM
VIX.X alert 16.04 and WEEKLY R1.

  Jonathan Levinson   10/14/20,  11:50:22 AM
QQQ hit the low of the day at 35.40 and has bounced by a penny. It's do or doo doo time for the bulls here.

  Jeff Bailey   10/14/20,  11:49:32 AM
AIG update $62.90 -6.10% ... stock dropped from $66.50 after company said it estimates hurrican and typhoon losses between $500-$515 million.

The losses reflect the impact of hurricanes Charley, Frances, Ivan and Jeanne as well as 3 typhoons in Japan.

AIG slated to report Q3 earnings on Oct. 21. Consensus has been coming down to $1.08. Was $1.14 in August.

  Jonathan Levinson   10/14/20,  11:48:31 AM
Session lows across the board here.

  Jeff Bailey   10/14/20,  11:47:56 AM
American Intl. Group (AIG) $62.90 -6.09% Link ...

  Linda Piazza   10/14/20,  11:47:28 AM
Continue to follow the OEX lower with your stops. Just checking the descending regression channel on the OEX's daily chart, I note that one version puts the midline at 528.50, so I wouldn't be entirely surprised to see a dip into the 527-528 range and then a bounce from there, with the day's candle perhaps perching on the 530 level. We'll see, but have profit-protecting plans in mind from the OEX's current level on down. Those who entered a bearish OEX position on a drop out of the bear flag, at about 534.30, now have several points under your belt, and you don't want to let a gain turn into a loss.

  Jeff Bailey   10/14/20,  11:47:28 AM
S&P Insurance (IUX.X) 302.11 -3.24% ....

  Jonathan Levinson   10/14/20,  11:44:34 AM
Nymex crude currently +.575 to 54.225, a 1.07% gain. Session high is 54.575.

  Linda Piazza   10/14/20,  11:41:56 AM
Reader Question: I heard that trading in the OEX options allows you to claim long term and short term gains on the profits. Do you know what other options have this property and where I could get literature on this?

Response: Great question. Since I'm not an expert, here's the information from McMillan in Options as a Strategic Investment: When considering "nonequity option positions and future positions . . . [t]he tax rate on these gains and losses is lower than the equity options rate. Regardless of the actual holding period of the positions, one treats 60% of his tax liability as long-term and 40% as short-term. This ruling means that even gains made from extremely short-term activity such as day-trading can qualify partially as long-term gains." He defines a "non-equity option" as "an option whose underlying entity is not common stock; typically refers to options on physical commodities, but may also be extended to include index options."

Even the great McMillan cautions that tax laws change and interpretations of those laws change, too. He urges consultation with tax counsel, and that's what I'd urge, too, since I'm far from expert in this field. I would like to say that I particularly urge you to consult a tax preparer who is familiar with options trades. I've heard from several readers through the years whose accountants did not even know of the existence of the wash rule and did not prepare taxes with that rule in mind.

  Jonathan Levinson   10/14/20,  11:41:45 AM
The most recent bounce attempt has failed at a lower high below fibonacci resistance of 35.60. This suggests another attempt on the day low (3 cents away as I type) and a test of 35.40 support. If breaks, the daily cycle downphase will strengthen, and bears should be in business. I have trouble imagining that we'll get a washout going into the afternoon of opex Thursday, however.

  Jeff Bailey   10/14/20,  11:40:44 AM
Sell Program Premium .... SPX 1,109 , QQQ $35.50.

  James Brown   10/14/20,  11:38:11 AM
Jane Wells, on CNBC, just talking about Starbucks' new gourmet coco drink. It's a hot chocolate call the "Chantico". Evidently its named after the Aztec goddess of the heart, which if you drink this concoction of cocoa butter and whole milk, your heart may stop.

At 390 calories, 21 grams of fat and 51 carbs per 6-ounce serving this will be pretty expensive on your waistline. (source: CNBC and CNN)

  James Brown   10/14/20,  11:35:02 AM
That's amazing, Jane.

  Jane Fox   10/14/20,  11:31:19 AM
James in Vancouver there are many corners with two Starbucks and both are full all the time. I love it.

  James Brown   10/14/20,  11:29:27 AM
It already seems like there's a Starbucks on every other corner but it's going to get worse. The company has upped its long-term store goal from 25,000 shops to 30,000 locations. I think the last count had SBUX near the 8,500 mark.

  James Brown   10/14/20,  11:24:23 AM
Ouch! Novellus Systems (NVLS) is down 9.2% to $24.39 as investors react to last night's earnings report. The company reported inline but then guided lower.

  James Brown   10/14/20,  11:19:02 AM
The Chicago Mercantile Exchange (CME) is completely ignoring any weakness in the markets. CME just spent three days bouncing from the $163 level and now CME is breaking out over the $170 mark (yet another new all-time high).

  Linda Piazza   10/14/20,  11:16:51 AM
Some reasons I'm particularly watching OEX 530: Link

  Jonathan Levinson   10/14/20,  11:14:19 AM
QQQ just sitting on 35.50 support. Session low was 35.47. The uptick in the 30 min channel has aborted, and the channel is back to flat. But if the price hovers in the low end of the range for another 10 minutes or so, that channel will begin to edge lower. Session high remains 35.78, confluence support 35.40.

  James Brown   10/14/20,  11:13:33 AM
Eaton Corp (ETN) is down 5% to $61.50 despite beating earnings estimates by 2 cents this morning. The stock is bouncing off its lows of the session, which was at support near $59.50.

  James Brown   10/14/20,  11:11:26 AM
Dow-component and insurance giant AIG is down 2.3% and nearing support at $65.00.

  Mark Davis   10/14/20,  11:11:25 AM
I have to leave for a doctor's appointment. Don't have too much fun without me.

  Linda Piazza   10/14/20,  11:10:47 AM
The OEX is below yesterday's low, so bears have confirmation of a breakout out of the bear flag. Follow the OEX closely with stops, however, as there may not be that much downside before strong support is hit. There's been a Keltner-chart breakout on the seven-minute chart and the OEX is now at Keltner support on the 15-minute one, threatening a breakout there, too. Remember to have a plan in mind for protecting profit as 530 is approached.

  Jeff Bailey   10/14/20,  11:06:41 AM
December Heating Oil (h004z) A quick look at Dorsey/Wright's point and figure chart has bullish vertical count of $1.59.

  James Brown   10/14/20,  11:01:49 AM
Shares of MMC are slipping fast in the last few minutes (-1.84%)

  Jonathan Levinson   10/14/20,  11:01:12 AM
New session lows across the board.

  James Brown   10/14/20,  11:01:02 AM
CNBC saying that NY Attorney General Elliott Spitzer plans to target scandal in the insurance industry. MMC is the main target but these companies are also named: AIG, ACE, HIG and Munich American.

  Linda Piazza   10/14/20,  10:59:14 AM
The OEX is breaking below the ascending trendline off yesterday's low, below the bear flag, but has not yet reached below yesterday's low. The TRIN declines, however. Puzzling. Those who entered new bearish positions on the breakdown out of the bear flag should have profit-protecting plans in place for an approach to 530, if that should occur, as I warned earlier. Also, new bears have accepted the risk that the OEX will form a double-bottom at yesterday's low, so they want to quickly see a new low.

  James Brown   10/14/20,  10:58:53 AM
Apple Computer (AAPL) is up 10.7% to $44.04 on huge volume after last night's very positive earnings report surprise. These are new four-year highs.

  Jonathan Levinson   10/14/20,  10:55:42 AM
The lack of a drop is seeing the bottomy 30 min and 60 min cycle channels turning up, with support on both cycles lined up at 35.38 and resistance at 35.90. All things being equal, these cycles should continue to turn up, but it's meaningless op-ex noise so long as the price remains below 35.78.

  Jeff Bailey   10/14/20,  10:55:19 AM
Current OPEN MM Profiles at this Link

SanDisk (SNDK) $21.56 -23% Link provides the drag on the SMH.

  James Brown   10/14/20,  10:54:50 AM
Semiconductor company QLogic (QLGC) is down 7% to $28 despite beating estimates by 4 cents and guiding higher for the December quarter.

  James Brown   10/14/20,  10:47:23 AM
The Airline Index (XAL) is bouncing for its third day in a row but still under its trend of lower highs.

  Jonathan Levinson   10/14/20,  10:46:14 AM
Note the doji spike to the high of the day on QQQ that reversed at 35.78, reconfirming resistance.

  James Brown   10/14/20,  10:45:43 AM
The Morgan Stanley Healthcare Index (HMO.X) is up a strong 1.7% today.

  James Brown   10/14/20,  10:43:32 AM
Pharmaceutical Product Development (PPDI) is up 8.3% at $39 to a new all-time high. The company reported earnings this morning that beat estimates by 2 cents with revenues up 20% surpassing analysts' expectations.

  Linda Piazza   10/14/20,  10:41:40 AM
A lot of different types of OEX resistance (Fib, Keltner, trendline, historical) come together at about 536.75-537.00. The top of the bear flag currently crosses at about that level, too. That might be one area to watch for a potential rollover, if the OEX can only work its way higher. On this swing higher, however, the OEX is having difficulty at the midline of the rising regression channel, as I had suggested it might. It has not yet violated the rising trendline off yesterday's low, with that trendline now at about 534.30.

  Jonathan Levinson   10/14/20,  10:34:59 AM
Nymex crude is down 15 cents to 53.50 currently.

  Linda Piazza   10/14/20,  10:34:26 AM
At about 9:50 this morning, the BIX fell out of its bear flag, dropping straight down toward 361.50. It's attempting to rise now. On the five-minute chart, this lower low (as compared to yesterday's) showed tentative Keltner and price/MACD bullish divergence, but that's tentative only. That could still be erased, and may be showing nothing more than that the BIX is going to attempt another bear-flag rise. Is the BIX's action hinting that other indices might fall out of their potential bear flags, too?

  Jim Brown   10/14/20,  10:30:20 AM
Alert - Oil and Gas Inventories = +4.2 MB @ 278.2 MB, (last 274.0 MB)

  Jonathan Levinson   10/14/20,  10:29:05 AM
Very little movement in any of the markets I follow- notably, TNX is still down 1.4 bps at 4.064%, equities mixed around unchanged, gold up 2.70 at 417.30, Nymex crude flat at 53.65. Volume is light on QQQ here within this extending range.

  Linda Piazza   10/14/20,  10:27:36 AM
TRIN continues to move higher, at 1.30 as I type.

  Linda Piazza   10/14/20,  10:25:54 AM
The TRAN has made it above 3300, and is now moving up toward the 3312-3315 resistance zone. Based on the five-minute Keltner chart evidence, that level might not give the TRAN much trouble, however, if the TRAN continues to find support now at 3300 and then moves up quickly and doesn't hesitate too long.

  Linda Piazza   10/14/20,  10:23:06 AM
The OEX continues higher within its possible bear flag, rising up to challenge 535.50, a next level of Keltner resistance.

  Mark Davis   10/14/20,  10:23:05 AM
The SPX buy signal has been good for about +2 points so far with SPX currently printing 1113.88. Next short-term target is yesterday afternoon's swing high @ 1114.38, also a potential rolloever point. TRIN has been rising with price but not significantly.

  Jonathan Levinson   10/14/20,  10:16:58 AM
Yesterday's flat range is still holding, and it looks like the op-ex boyz have found a level they like. 35.78 QQQ remains key resistance, and a break below 35.40 should see directional followthrough if it occurs.

  Jeff Bailey   10/14/20,  10:12:55 AM
10:00 Internals at this Link

Yesterday's internals at this Link

  Jonathan Levinson   10/14/20,  10:10:01 AM
And the feed is back again.

  Linda Piazza   10/14/20,  10:09:24 AM
Although the OEX is clinging to the trendline off yesterday's low, it hasn't yet broken through it. Keltner support attempts to build below the OEX as it pauses until it has enough strength to climb. So far, it looks as if 535.50 may be resistance on this climb up through the rising bear flag, perhaps preventing the OEX from climbing all the way to the top of the flag on this swing up through it. If there is a swing up through it.

  Jane Fox   10/14/20,  10:09:22 AM
Jonathan IB OK over here on the other coast.

  Jonathan Levinson   10/14/20,  10:08:38 AM
Careful all- IB has just dropped its feed on the east coast server.

  Mark Davis   10/14/20,  10:04:56 AM
SPX just printed a fresh buy signal with a 1 point gap that came out of nowhere. Whether or not it will last is unknown.

  Jeff Bailey   10/14/20,  10:02:15 AM
10:00 Market Watch at this Link

  Jonathan Levinson   10/14/20,  10:00:07 AM
The Fed had 16.75B in various repos expiring today, and has announced 18.5B in various repos for a net add of 1.75B for the day.

  Jeff Bailey   10/14/20,  9:56:36 AM
General Motors (GM) $39.15 -5.32% .... reported quarterly EPS of $0.78, which was well below consensus of $0.95 per share. Revenues were up just 3.5% year-over-year to $37.1 billion, but above consensus of $35.89 billion.

Fiscal 2004 guidance (December) is for earnings per share of $6.00-$6.50, where consensus was higher at $7.06 per share.

GM also said it would cut up to 12,000 jobs in Europe.

  Linda Piazza   10/14/20,  9:55:08 AM
An OEX drop below 534.10 or so will violate the ascending trendline off yesterday's 2:00-ish low, but I'm really hoping to see at least one more swing higher through the bear flag.

  Linda Piazza   10/14/20,  9:52:57 AM
The Nasdaq 100-sma and 200-ema, and the bottom of the regression channel in which the Nasdaq has been ascending off the August low all lie between the Nasdaq's current 1914.77 position and 1900 support. This is going to be tough to pierce, but would be significant if it were.

  Jeff Bailey   10/14/20,  9:51:44 AM
TRIN 1.16 (Daily Pivot 1.11)

  Linda Piazza   10/14/20,  9:51:01 AM
The SOX declines today, but it's been finding support lately at the combined 50-dma and the 50% retracement of the big rally off the October 2002 low, with both between 384-386. The SOX tests that support now, with the SOX at 386.23.

  Jeff Bailey   10/14/20,  9:48:26 AM
VIX.X 15.55 +0.84% .... Daily pivot levels as follows ... 13.56, 14.45, Piv = 15.04, 15.93, 16.52.

  Linda Piazza   10/14/20,  9:46:31 AM
Here are some things I'm watching on the OEX's five-minute chart, related to the possible bear flag: Link If someone wanted to take a (risky) bearish entry on a break down out of the flag, one risk that would have to be accepted would be the risk that the OEX would form a double-bottom at yesterday's low. Profit-protecting plans would need to be in place for a test of 530, if that was offered, and I certainly would want the TRIN on my side, although it wasn't yesterday and that didn't preclude lots of bearish gains! I'd pass up any such entry if the OEX retraced more than 50% of yesterday's range and certainly would if it retraced more than 61.8%, standing aside then to see where a rollover might occur.

  Jonathan Levinson   10/14/20,  9:46:00 AM
The 30 and 60 min cycle channels for QQQ are flattened here and undecided. Channel resistance lines up at 35.87 and support is at 35.40. This is a rather wide range, and I'm inclined to simplify it by remaining bearish below 35.78 based on the daily cycle sell signals. A break below 35.40 will confirm that direction.

  Jeff Bailey   10/14/20,  9:41:30 AM
Swing trade short alert ... for the QQQ here at $35.57, stop $36.10, target $34.80.

  Jim Brown   10/14/20,  9:40:02 AM
Speech by Governor Ben S. Bernanke
International Monetary Reform and Capital Freedom Link

  Linda Piazza   10/14/20,  9:34:01 AM
The OEX is holding steady near yesterday's closing price. There's a possibility that it could need to dip toward 534.50 on the first retracement before attempting to resume climbing within the potential bear flag.

  Linda Piazza   10/14/20,  9:32:50 AM
The TRAN opens and climbs straight toward a test of 3300, not quite there yet.

  Jonathan Levinson   10/14/20,  9:26:30 AM
Equities and bonds are lightly positive here, and the post-8:30 move has largely worn off. There's an uptick in the 30 min cycle channel for QQQ, and yesterday's downphase is trying to put in a higher oscillator low. If QQQ can get above that 35.78 level, bulls should be in business for a new 30 min cycle upphase. It should take a sustained move above that level for approx. 10 minutes to confirm the upturn.

  Linda Piazza   10/14/20,  8:58:19 AM
The resilience of our futures against a sea of red in the overnight markets and this morning's economic numbers surprises me. While they're negative, they're not negative by much. Someone wiser than I am once warned to pay close attention to how futures reacted to developments in the overnight markets, so bears might be forewarned that they're showing some resilience. The dollar certainly isn't again the yen, diving as our economic news was released, and now trying to move up again.

Perhaps that resilience in our futures suggests that the bear flag climbs that had begun on some indices yesterday will continue this morning? Let's watch. Those wanting new bearish positions in the OEX should watch for a breakdown of that bear flag. For those who didn't catch it last night, here was my post on the OEX:

Before deciding on a direction for the OEX tomorrow, we'll need to watch what happens in the overnight markets, both with crude and with our futures' reaction to the behavior of Asian and European bourses. The most likely outcome at the close today appears to be a bear-flag rise into resistance and then a rollover from there. Where would that rollover point be? OEX 536.75-537.75 are the 38.2% and 50% retracement of yesterday's range, and most bear flags will break down below a 50% retracement of the precipitous decline that preceded it. In addition, the 38.2% retracement of the rally off the August low lies at just over 537. Today's decline stopped squarely at the 50% retracement, so those retracement levels off the August rally do have some relevance. Therefore, look for a bounce and rollover below 538 for a new entry, with plans to protect profits in the 530 level. A drop below 530 will confirm a double-top formation on the daily chart with a downside target near 512, and I expect the 530 level to be defended. If, tomorrow, the OEX climbs past 538.75, something more bullish may be going on, and bears should probably stand aside for a test of 539.50-542, to see the outcome of that test.

  Jonathan Levinson   10/14/20,  8:37:23 AM
Export prices ex-ag .2%.

  Keene Little   10/14/20,  8:35:40 AM
With all the speculation about oil prices I reviewed the charts last night and I thought I'd throw in my two cents from an EW perspective. The sharp move higher in oil over the past couple of months makes it a challenge to count the individual waves within the pattern, but this 120-min chart shows a potential count for the move up. I show us in the final 5th wave up for the move from early last year (shown as wave-(5) on the chart). Link

This wave-(5) will consist of 5 waves and I show us either starting the 5th wave of this wave-(5) or we could still be in the middle of the 4th wave of wave-(5), which would mean oil goes sideways for a little longer before moving higher again. As for a projection for the top of the run, I look inside this wave-(5) for where wave-5 will equal wave-1 and if I assume wave-4 pullback ended at 51.50, that gives me a projection up to 55.65. I've been hearing projections for oil to hit $54-56 and this EW projection supports that view.

Zooming in a little closer, this 10-min chart shows what the final 5th of wave-(5) might look like. There could be a sharper pullback and it could take longer than what I show on the chart but it gives a sense of where this might be headed. Just as importantly it shows why it reversed course Wednesday at the low and headed back up. Wave-4 is shown as an A-B-C pullback and wave-C went just beyond the point where it was 162% of wave-A, a common relationship between waves A and C. Link

Now we'll see if this follows through, and if it does, what it will do to equity prices. But it's always difficult to predict one market using intermarket relationships. Many times they simply don't work. Yesterday's decline in equities started during the sharp pullback in oil prices and we've also seen stocks rally during oil rallies. Don't always assume the two are tightly linked. Trade individual price action instead.

  Jonathan Levinson   10/14/20,  8:35:09 AM
Equities are lightly negative, QQQ down .04 at 35.60.

  Jonathan Levinson   10/14/20,  8:31:39 AM
The US Dollar has dived against euro and CDN dollar futuers, all at session highs along with gold futures at 419.60.

  Jonathan Levinson   10/14/20,  8:30:54 AM

8:30am U.S. AUG. TRADE GAP WIDENS 6.9% TO $54.0 BLN



8:32am US WEEKLY JOBLESS CLAIMS +15,000 TO 352,000





  Jonathan Levinson   10/14/20,  7:50:09 AM
Equities are back to light positive territory following an overnight repair job in the futures, with ES trading 1114.25, NQ flat at 1437, YM 9998 and QQQ flat at 35.64. Gold is up 2.40 at 417, silver +.165 at 7.065, bonds +.093 at 113.1875 and Nymex crude +.20 at 53.85.

We await the 8:30 release of the August trade balance, est. -51.4B, export prices ex-ag, prior .4%, import prices ex-oil, prior .4%, and initial claims, est. 340K.

  Linda Piazza   10/14/20,  7:11:31 AM
Good morning. Overnight, Asian and European bourses uniformly operated in a sea of red. Pressures included multiple signs that demand may drop in China, with one of those signs being a report by the International Copper Study Group. Crude moved back over $54.00 amid concerns about heating oil supplies. As of 7:03 EST, gold was up $1.90 and crude, up $0.37. Some news sources report a pipeline fire in Russia this morning, saying that there's no word on the cause. Despite the declines in the overnight markets, however, our futures held up well. More detail about Asian and European markets follows in succeeding paragraphs.

The Nikkei opened and dove below 11,050, with commodity-related stocks being pressured. The Nikkei closed lower by 161.70 points or 1.44%, at 11,034.29. Many report that China's efforts to cool its economy probably resulted in a slowing during the third quarter. China's government reports figures on the third quarter's growth next week. Since Japan exports many products to China, a slowing of the economy there concerned investors. In addition, the International Copper Study Group released a study that concluded that China's copper use had dropped 21% from the year-ago level, and Australia's BHP Billiton warned that increased production would result in supply exceeding demand in the second half. Also hurting sentiment in Japan was retailer Daiei's decision to approach the IRC, the state-backed Industrial Revitalization Corp., for help.

Other Asian bourses turned in mixed performances, but the ones typically watched in these early morning reports all closed in the red. The Taiwan Weighted lost 2.21%, and South Korea's Kospi fell 1.12%. Singapore's Straits Times fell 1.00%, and Hong Kong's Hang Seng declined 1.03%. China's Shanghai Composite plummeted 3.88%, moving again toward the bottom of its years' long range.

European bourses trade uniformly in the red, reacting to multiple pressures, including concerns about heating-oil supplies. The ECB's monthly statement reiterated the central bank's concern over the impact of continued higher crude prices on the global economy. Chemicals and technology stocks dropped. Individual stocks also reacted to or ahead of earnings reports or clarifications of forecasts as earnings season gets underway in Europe, too. Nokia was one of the companies due to report today.

As of 7:03 EST, the FTSE 100 had fallen 9.60 points or 0.21%, to 4,625.20. The CAC 40 had declined 22.04 points or 0.60%, to 3,672.28. The DAX had fallen 37.46 points or 0.94%, to 3,938.57.

  OI Technical Staff   10/13/20,  12:41:13 AM
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