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  OI Technical Staff   12/9/200,  8:55:51 PM

Click here for bonus info: Link

 
 
  Jeff Bailey   12/9/200,  8:08:54 PM
Jonathan alert! ... Jonathan... could you please re-type what keltner channel setting you use?

 
 
  Jeff Bailey   12/9/200,  7:49:45 PM
NASDAQ-100 Tracker (QQQQ) ... today's option chain, sorted by volume at this Link

VXN.X 19.84 -0.84% was little changed today. Keep an eye on the Dec. $40 put tomorrow. Note how BEARISH option traders appear to be. Lots of open interest in currently out the money puts.

Can't figure out some of the noted BIG volume prints in the QQQQ.

 
 
  Linda Piazza   12/9/200,  7:30:23 PM
Today's OEX daily candle was a strong candle springing up from support, except that candle spans the middle of a broadening formation on the daily chart. It literally is at the middle with about half the day's range below the apex of that formation and about half the day's range above it. These formations are notoriously difficult to trade as I've been warning for a while, and today's trading pattern was one example. While some indices hadn't broken through support yet, the OEX appeared to do so early in the day, also triggering an inside-day bearish trade, and breadth indicators appeared to support a bearish play at the time. I had noted that the advdec line was so low that it might actually be a contrarian indicator of a bounce in the making, but that didn't seem the most likely interpretation. Turned out, it was.

The spring higher began as the OEX broke out of a rising bearish wedge to the upside. While relief sometimes explodes prices higher after a bearish formation is negated, the rise was way out of proportion to the size of the formation, arguing against that conclusion. The dollar had begun a steep decline against other currencies at about the same time that the OEX and other equity-related indices began climbing, and bonds had begun dropping about the same time, too. While I was still trying to figure out what had happened on the OEX, wondering if NSM's middle-of-the-day report might have anything to do with the action, CNBC Europe commentators offered an explanation. They pegged the synchronous sharp drop in the dollar (it had been rising previously) to a disappointing bond auction, saying that foreign banks had shown less interest in U.S. bonds than was typical. In the complicated dance that links bonds/equities/dollar/commodity action, the decline in bonds may have triggered a sell-off in the dollar. That may have resulted in a subsequent rise in equities (my theory, not that of CNBC Europe commentators, as they weren't discussing equities at the time), perhaps considered a better investment if bonds are going to decline. I don't want to peg that theory on someone else if it's an erroneous conclusion.

I'm no expert in evaluating all these moves, but if that lack of interest by foreign banks in our treasuries did cause this cascade of events, the theory does explain the suddenness of the move and the way it appeared to come out of nowhere. Here's a more mundane and bullish picture of the day's action, however: (Note: An annotation on the chart is in error. The top of the OEX's broadening formation is now at about 571.60, not 561.60.) Link As I type, the dollar is trying to reverse its middle-of-the-day losses, making me wonder if equities will reverse their middle-of-the-day gains if the dollar's action carries overnight. That's still to be decided, and if we know anything at all, we know that moves in currencies can be volatile, too. Let's look tomorrow morning. Whatever the cause, today's action reinforces my belief in choppy trading conditions within a broadening formation. I'd think that I just had an unacknowledged bias toward the bearish case and that was keeping me from clearly seeing the bullish case, except that I think bulls are getting stopped out as frequently as bears, and my only real bias right now is toward a belief in those choppy and difficult trading conditions.

 
 
  Jeff Bailey   12/9/200,  7:17:44 PM
Pivot Matrix for tomorrow at this Link

Noting Jonathan's 03:22:59 and WEEKLY Pivot/Daily Pivot correlations.

 
 
  Jeff Bailey   12/9/200,  6:24:29 PM
Today's S&P 500 Premium problem may have been attributed to futures rollover.

I'm not sure, but HL Camp & Company may have forgotten to adjust for it.

For Friday ... HL Camp & Company has their computers set for program buying at $+3.70 and program selling at $+1.30.

 
 
  Jeff Bailey   12/9/200,  5:53:59 PM
Closing Internals at this Link

 
 
  Jeff Bailey   12/9/200,  5:40:07 PM
Apple Computer (AAPL) $63.99 +1.12% ... continues to bid in after-hours. Now at $64.91.

The Cramerians are opening up their wallets.

AAPL ... Weekly pivot levels ... $56.86, $59.79, $64.68 , $67.61, $72.50.

December "Max Pain" is $60 ($5 increments)

 
 
  Jeff Bailey   12/9/200,  4:50:55 PM
Listening to Morgan Stanley's Chief Economist Stephen Roach regarding "housing bubble" and "interest rates."

Now the Sept. 22 news makes some sense. 09/22 Index Trader Wrap at this Link

Scroll down to the Pivot Matrix, then read below.

 
 
  Jeff Bailey   12/9/200,  4:29:37 PM
QQQQ $40.05 ... see that 5,000,000 share print at $40.05. (16:28:47)

December 2nd close was $40.07, today's close $40.05.

December 3rd, QQQQ gaps up to $40.31, makes quick little sprint to $40.59, then closes back lower at $40.14.

Will have to see if this makes sense of a "pattern" tomorrow. Look for SIMILARITY, or DIVERGENCE.

What did the QQQQ do in its Pivot Matrix on 12/03/04? Here was the QQQQ pivot matrix the evening of 12/02/04 for 12/03/04. Link

These big blocks (trade being worked during one session) just "have" to be quarterly expiration related is my thinking.

Please note that I don't sit and watch after-hours trade, but just caught a glimpse of this on my time and sales as I was updating the closing internals. Again... Jonathan leaves during a session when big size prints. Using that strong Canadian dollar?

 
 
  Jeff Bailey   12/9/200,  4:13:58 PM
Current OPEN MM Profiles at this Link

Today's activity ....

Day trade long Sirius Satellite Radio (SIRI) at $7.22, closed out at $7.17 ($-0.05, or -0.69%)

 
 
  Linda Piazza   12/9/200,  3:59:58 PM
Despite the strong spring higher in the SOX, it's possibly closing the day beneath its 200-ema, an average that has proven important in trading patterns since early November. The average is at 426.50, so the SOX might just inch up over it after all. The 50-dma provided the spring today, but the SOX sure needs a gap close and a move back over the 200-sma before bulls can feel too happy. This could be just "buy the 50" action.

 
 
  Jeff Bailey   12/9/200,  3:56:39 PM
National Semi (NSM) $16.75 +4.68% Link

 
 
  Linda Piazza   12/9/200,  3:54:20 PM
I'm back and see that the OEX rose through the neckline of its inverse H&S after building a truncated right shoulder. That sets up a potential upside target near the 12/03 high, but the OEX's rise off that low of the day forms another rising wedge. I think we have to watch for the direction of the breakout from that wedge before we put too much credence in final direction. I think, actually, that we ought not to put too much credence in any direction, no matter the supporting characteristics, while the OEX is inside this broadening formation. This morning's drop occurred with bearish breadth indicators corroborating it, for example, although the fact that other indices had not broken through their analogous supporting trendlines provided a warning that a bounce could occur instead.

 
 
  James Brown   12/9/200,  3:44:41 PM
One of my alerts is going off... MBIA (MBI) is cracking resistance at the $62.00 mark. Technicals are positive and its MACD just produced a new buy signal. The bullish P&F chart points to $75.

 
 
  Jeff Bailey   12/9/200,  3:41:48 PM
QQQQ $40.11 +0.74% .... hmmmmm.... $40.11.

Look for this level next week in the Pivot Matrix. Remember that 2,000,000 share block Thursday evening (MM 12/02/04 04:50:06)

 
 
  Jonathan Levinson   12/9/200,  3:22:59 PM
QQQQ's ongoing 30 min cycle upphase has resistance at 40.30, support up to 39.90 after the short-lived downside whipsaw.

 
 
  Jeff Bailey   12/9/200,  3:15:13 PM
Silicon Valley Bancshares (SIVB) $42.29 +2.73% ... erupting further in last 30-minutes.

 
 
  Jeff Bailey   12/9/200,  3:12:52 PM
03:00 Internals at this Link

 
 
  Jeff Bailey   12/9/200,  3:06:59 PM
Bears looked to have flinched first at the 03:00 hour. QQQQ $40.10

 
 
  Jeff Bailey   12/9/200,  3:03:30 PM
03:00 Watch at this Link

 
 
  Jeff Bailey   12/9/200,  2:59:37 PM
CBOE Internet (INX.X) 207.42 +1.22% ... moves to new high of day.

Bond market closes in 30 seconds.

 
 
  Jeff Bailey   12/9/200,  2:57:47 PM
Rambus (RMBS) $25.93 +10.4% ... on fire today.

 
 
  Jonathan Levinson   12/9/200,  2:56:18 PM
Here comes the surge in volume now.

 
 
  Jonathan Levinson   12/9/200,  2:54:23 PM
QQQQ has just stopped the young 30 min cycle downphase on this latest leg of the low-volume bounce. This is one very tricky day for QQQQ in my opinion.

 
 
  Jeff Bailey   12/9/200,  2:48:44 PM
SIRI $7.19 .... couple penny range last couple of hours.

 
 
  Jonathan Levinson   12/9/200,  2:46:02 PM
Volume has trailed off on this bounce, and so it looks like a weak return to the scene of the crime bounce. A failure from a lower high will confirm the 30 min cycle downphase.

 
 
  Jeff Bailey   12/9/200,  2:36:11 PM
Bulls devend the DAILY Pivot for the majors

SPX 1,183.43, QQQQ $39.90

 
 
  Jeff Bailey   12/9/200,  2:34:02 PM
My QCharts' PREM.X not working today. Still "stuck" at 2.40.

Other trader's report similar problems.

with today's action... maybe its correct????

 
 
  Jonathan Levinson   12/9/200,  2:31:50 PM
QQQQ is finding support now at 39.80, but that level provided zero resistance on the way up. 39.65 is next confluence support, followed by 39.55. The 30 minute cycle has rolled over, and the 60 min cycle upphase is just beginning to stall now.

 
 
  Jeff Bailey   12/9/200,  2:28:24 PM
TRIN 0.92

 
 
  Linda Piazza   12/9/200,  2:28:13 PM
I have to leave now for an appointment, but hope to return just in time for the end of the day. The OEX draws back now, so watch the appropriate right-shoulder level for a rounding up or for a fall that negates the formation. Currently, the daily chart shows a candle springing up from support--bullish looking spring unless you consider that this is occurring smack in the middle of a broadening formation, and so is just part of the expected volatility.

 
 
  Jeff Bailey   12/9/200,  2:27:23 PM
Spread is now 0.14 .... SPX 1,182.39, QQQQ $39.80.

 
 
  Jeff Bailey   12/9/200,  2:25:23 PM
Sirius (SIRI) $7.19 .... decided to move to the sidelines intra-day as I thought the steepening curve would have SIRI breaking above WEEKLY Pivot of $7.25, with DAILY Pivot $7.18 offering the springboard for some squeeze action.

When curve looked to flatten a bit intra-day, that WEEKLY Pivot held at $7.25.

Might be an "exciting" last hour of trade when the bond market closes though.

 
 
  James Brown   12/9/200,  2:21:10 PM
very funny!

 
 
  Jeff Bailey   12/9/200,  2:20:44 PM
James .... per your 02:16:45 .... I'm working on TASR's ad campaign. What do you think?...

Makes a great holiday shocking stuffer.

 
 
  James Brown   12/9/200,  2:16:45 PM
This may be old news for the diehard TASR fans but I just read an article that said the company was introducing a new consumer version of the stun gun in time for the holidays. An ad campaign in Phoenix is under way. The company is trying to promote the new personal stun gun, which is smaller and lighter than those issued to law enforcement and evidently a little less potent. The cost is $999.

 
 
  Linda Piazza   12/9/200,  2:16:18 PM
Is this behind the mystery move? CNBC Europe is now reporting that the sudden drop in the dollar, synchronous with the climb in the equities, was caused when a treasury auction saw far less interest in our treasuries by foreign banks than was usual. As you know, I confess my relative inexperience with balancing the whole dollar/equities/crude/treasuries inter-relatedness, but this is what's being reported there.

 
 
  Jeff Bailey   12/9/200,  2:13:18 PM
Bullish day trade exit alert .... exiting the Sirius Satellite Radio (SIRI) day trade here at $7.17 bid.

 
 
  Jeff Bailey   12/9/200,  2:12:01 PM
Semiconductor HOLDRs (SMH) back at $32.50 -1.6% ....

 
 
  Jeff Bailey   12/9/200,  2:10:35 PM
02:00 Internals at this Link

Big jump in the 5-year yield has curve notably flat from bulk of session's ramp steepening.

 
 
  Linda Piazza   12/9/200,  2:08:45 PM
The OEX continues moving down from the bottom of the congestion zone in which it traded from 12/2-12/7.

 
 
  Linda Piazza   12/9/200,  2:07:36 PM
I was just watching CNBC Europe's discussion of the dollar's moves against the euro and laughing. Apparently, Italy's Berlusconi has threatened that he's coming to the U.S. to "talk to" Bush about the dollar, and the commentators face was droll as he shrugged, paused, and said he didn't think that was likely the cause of the dollar's move. Berlusconi also thinks the ECB's limit on inflation is preposterous. According to the discussion on CNBC, Berlusconi (hope I've spelled that right) faces a vote of confidence tonight and a court decision tomorrow, and so "lame duck" might ably describe him.

 
 
  Jonathan Levinson   12/9/200,  2:05:14 PM
QQQQ extended its moonshot in my absence, and is now printing a decline that looks like a right shoulder on a snall head and shoulders pattern intraday above 39.85 -.87 support. The 30 min channel has stopped rising and is currently flat- a break below 39.85 for 5 minutes or longer should kick off the downphase.

 
 
  Jeff Bailey   12/9/200,  2:03:19 PM
02:00 Market Watch at this Link

 
 
  Linda Piazza   12/9/200,  2:00:01 PM
The OEX has moved right back to this congestion zone in which it traded from 12/2-12/7: Link Gains should slow now. The shape of the OEX's trading pattern since breaking below this zone suggests a potential inverse H&S in the making, so if a pullback should find support at 562 or so and round up again, bears should be aware that it could be rounding up into a right shoulder. If the OEX should drop much below 561.50 and particularly if it dropped to a new low, that would negate the formation and suggest that this was just a last hurrah by the bulls before the OEX heads down to 558-559 and then possibly to 555. (It would also mean that all who entered bearish on an inside-day trigger would have seen the index reverse just far enough to stop them out, and maybe trick a few would-be bulls into entering or bears into switching sides?) A confirmation of the formation suggests that the OEX is headed back toward the top of the broadening formation on its daily chart. So far, I don't understand what happened a little over an hour ago, and so I'm not sure what to expect next. This fits the whole pattern of volatile trading inside a broadening formation, however.

 
 
  James Brown   12/9/200,  1:59:22 PM
Quest Diagnostic (DGX) is showing strength with another new high over the $96.00 level.

 
 
  Linda Piazza   12/9/200,  1:39:01 PM
The OEX now faces the descending trendline off the 12/03 high, at about 565.40. If the OEX were to switch around now and decline, I'd be mad. Not on my own behalf, but on the behalf of all the people stopped out of bearish trades, perhaps encouraged to enter bullish ones (by the inside-day theory). So far, however, the OEX moves higher.

Is there anything in breadth indicators that could have foreseen this zoom up? This morning, I commented that although the advdec number was very bearish, it was perhaps bearish enough that we should look warily at it as it might portend a reversal. However, I've seen days like that when the declines lasted all day. Perhaps when bears let up the pressure a little, the upside explosion occurred.

This seriously reminds me of 2003, when bearish formations set up, were confirmed, saw minimum movement their direction and then were immediately reversed. The only difference is that in this current climate, bulls are getting chopped up as much as bears.

 
 
  James Brown   12/9/200,  1:29:54 PM
The consolidation in the RLX retail index is starting to turn bullish. The group is up two days in a row and short-term technicals are beginning to edge higher. Watch for a move over 460 as a breakout above its short-term trend of lower highs.

 
 
  James Brown   12/9/200,  1:28:21 PM
The DJUSHB home construction index is up 4% as it nears resistance at 720 at the top of its four-week trading range. A move over 720 would be a new all-time high.

 
 
  James Brown   12/9/200,  1:27:18 PM
Dow-component and insurance giant AIG is producing a similar bounce from the $64 level and is nearing minor resistance at $66.

 
 
  James Brown   12/9/200,  1:26:32 PM
The IUX insurance index is bouncing from a test of support at the 310 level. A move past 315 would breakout past the simple 200-dma.

 
 
  Linda Piazza   12/9/200,  1:18:11 PM
The OEX has now bested yeserday's high. This is why I don't like inside-day trades. Too often, I see them do just what was done today. The trade in one direction is confirmed only to see a reversal.

Speaking of reversals, the OEX has now reached an appropriate level from which to pull back into the right shoulder for an inverse H&S formation on its five- and 10-minute charts. If the underpinnings are strong enough, it may eschew formation of the right shoulder and just zoom up. If this climb since mid-morning is without foundation, a downturn could see the appropriate right-shoulder level breached to the downside, but so far, the climb has the advdec line's trend on its side.

 
 
  Linda Piazza   12/9/200,  1:14:50 PM
Interesting that the dollar has been falling against the yen while the markets have been shooting higher. I guess that old binary trading relationship that Jonathan mentions has been reinstated. Sometimes lately, depending on what crude costs and bonds are doing, too, in a complicated interaction that's sometimes puzzling, the dollar and the equities have moved in tandem, but today we're seeing the old 2003-type relationship in intraday trading. We're also seeing the old 2003-type equities-go-up-no-matter-what-charts-say behavior, too.

 
 
  Jeff Bailey   12/9/200,  1:07:44 PM
01:00 Internals at this Link

 
 
  Jeff Bailey   12/9/200,  1:05:26 PM
SPX 1,181.19 ... DAILY Pivot

 
 
  Jeff Bailey   12/9/200,  1:04:40 PM
10-year YIELD ($TNX.X) suddend "jump" to 4.161% and DAILY Pivot

 
 
  Jeff Bailey   12/9/200,  1:03:48 PM
30-year YIELD ($TYX.X) 4.816% is up 3.7 bp and DAILY Pivot here.

SPX 1,180.81

 
 
  Linda Piazza   12/9/200,  1:03:06 PM
The OEX struggles with Keltner resistance at the top of its climb.

 
 
  Jeff Bailey   12/9/200,  12:54:28 PM
12:50 Market Watch at this Link

 
 
  James Brown   12/9/200,  12:48:47 PM
Universal Health (UHS) is breaking out over significant resistance at $47.00. This should produce a new quadruple top breakout buy signal on its P&F chart. More aggressive traders may want to consider bullish positions here. I still see additional resistance at $48.00 at the gap down from March.

 
 
  Jonathan Levinson   12/9/200,  12:47:26 PM
30 min channel resistance has risen to 39.68, close enough to the 39.72-.75 area which should provide resistance on the advance.

I need to step out for an hour.

 
 
  Jeff Bailey   12/9/200,  12:42:15 PM
CBOE Internet (INX.X) 205.35 +0.21% ... edges green

 
 
  James Brown   12/9/200,  12:41:27 PM
Dow-component UTX continues to bounce following yesterday's bullish reversal.

 
 
  Mark Davis   12/9/200,  12:40:44 PM
Linda I see we were thinking the same thing at the same time... see my 11:39 post on the futures side.

 
 
  James Brown   12/9/200,  12:39:11 PM
Newly added OI call play BIIB is breaking out over resistance at $65.00.

 
 
  Jeff Bailey   12/9/200,  12:38:43 PM
Semiconductor HOLDrs (SMH) $32.50 -1.60% .... "Max Pain" here.

 
 
  Linda Piazza   12/9/200,  12:38:27 PM
I'm stumped so far in my search for what happened to send the OEX up so strongly. While a break to the upside out of a potentially bearish formation can sometimes result in a precipitous climb and while I've been warning that as the OEX moves further into the broadening formation that its behavior may become increasingly erratic, this zoom seems puzzling. When in doubt, stay out, and I'm "staying out" of making a decision just yet. If your stops are getting hit on bearish plays, adhere to them. On the OEX in particular, remember that according to inside-day theory, you should have a stop set just a hair above yesterday's high, to allow for a little wiggle room, if you didn't have one set lower. The advdec line is climbing.

 
 
  James Brown   12/9/200,  12:37:32 PM
OI call play ARLP is bouncing from its simple 50-dma as expected.

 
 
  James Brown   12/9/200,  12:36:27 PM
Barr Pharma (BRL), previously Barr Labs, is up 2.4% and breaking out over resistance near $42.50 from September-October and breaking out over a significant descending trendline.

The P&F chart is bullish but BRL still has resistance to deal with there.

 
 
  Jeff Bailey   12/9/200,  12:36:17 PM
SOX.X 421 -2.52% ... best level of the session.

MONTHLY Pivot and WEEKLY S1 provide the early test for any type of bounce to take hold.

 
 
  Jeff Bailey   12/9/200,  12:34:56 PM
30-year yield ($TYX.X) 48.06 up 2.6 basis points. It's DAILY Pivot is 48.16. If curve is to steepen further, the 30-year would be first to move above pivot in my opinion.

 
 
  Jonathan Levinson   12/9/200,  12:34:48 PM
QQQQ is now back within the 30 min cycle channel, with upper resistance having risen to 39.63. A flagpole consolidation here should hold above 39.50 as it's been doing so far.

 
 
  Jeff Bailey   12/9/200,  12:33:28 PM
VIX.X 13.29 +0.75% ... session low, just back under DAILY Pivot.

 
 
  Linda Piazza   12/9/200,  12:32:52 PM
No, the initial reports I'm reading don't suggest that NSM could be responsible for a pop, echoing the doubt I had when I saw that the SOX wasn't participating to the same degree. So far, I see that it says that the company sees Q3's revenue flat, slightly below Q2's.

 
 
  Jeff Bailey   12/9/200,  12:32:43 PM
TRIN 0.97 -21.77% ... session low.

 
 
  Jeff Bailey   12/9/200,  12:31:35 PM
Dow Industrials (INDU) 10,480 -0.13% ... right at its DAILY Pivot.

 
 
  Linda Piazza   12/9/200,  12:30:58 PM
NSM was just halted. I'd warned earlier that it reported midday. I'm looking for reports as to whether the new was good, but the SOX doesn't appear to have participated to the same degree as the OEX, so that makes me doubt that NSM could be responsible. Still searching, but bearish traders should still adhere to their plan and their stops.

 
 
  Jeff Bailey   12/9/200,  12:30:50 PM
Bull's very tentative still. May need a 10-year above DAILY Pivot. 10-year 41.36 here. Up 0.3 bp.

 
 
  Jeff Bailey   12/9/200,  12:29:30 PM
HMO Index (HMO.X) 1,186.69 +0.03% .... edges back green.

 
 
  Jonathan Levinson   12/9/200,  12:29:22 PM
I don't know, Linda, but the ongoing Keltner violation suggests an upside trending move. It came early, interrupting what should have been an impulsive 30 min cycle downphase that was playing out according to schedule. Could it be pre-op-ex week antics?

 
 
  Jeff Bailey   12/9/200,  12:28:53 PM
KBW Bank Index (BKX.X) 101.17 +0.05% .... edges green.

 
 
  Linda Piazza   12/9/200,  12:28:04 PM
Did something happen? Other than possible oversold pressure, I mean? This isn't a normal climb.

 
 
  Linda Piazza   12/9/200,  12:26:10 PM
The OEX is rising into the five-minute 100/130-ema's, the 562-562.50 S/R zone, and is now pulling back a little from the test of those averages at 562.23 and 562.58, respectively. Those in bearish plays should already know their appropriate exit points and should put them into effect if hit, but we'll be watching the OEX with respect to this level and those averages. If the breaks through this S/R level to the upside, 563.75-564.75 look to be the next potential historical and trendline resistance levels.

 
 
  Jonathan Levinson   12/9/200,  12:25:34 PM
QQQQ has just blasted past upper 30 and 60 min channel resistance, and those red paintballs are printing above the keltner break on my 100 tick chart. The move should pause here (pulling back as I type), but above 39.50 the 30 min cycle bias should be to the upside for the next few hours.

 
 
  Jeff Bailey   12/9/200,  12:25:20 PM
S&P Insurance (IUX.X) 312.66 +0.04% .... edges green.

 
 
  Jeff Bailey   12/9/200,  12:24:28 PM
S&P Banks (BIX.X) 372.04 +0.13% ... bid green. C'mon curve, work your bullish magic.

 
 
  Jeff Bailey   12/9/200,  12:22:08 PM
Bullish day trade long alert ... for Sirius Satellite (SIRI) $7.22 +3.63% here, stop $7.10, target $7.50.

 
 
  Linda Piazza   12/9/200,  12:21:08 PM
The OEX broke to the upside out of that "bearish" rising wedge. As I've said lately, these should be renamed.

 
 
  Jeff Bailey   12/9/200,  12:12:17 PM
12:00 Internals at this Link

 
 
  Jeff Bailey   12/9/200,  12:02:14 PM
12:00 Market Watch at this Link

 
 
  Linda Piazza   12/9/200,  12:01:30 PM
Jeff, in reference to your 11:52 post, I've seen mixed outcomes from these bullish inverse H&S's lately, across time frames. I don't tend to trust the continuation-form ones like the BTK's as much as I do bottoming ones, although they can be legitimate continuation forms. Someone is trying to do something bullish with the BTK, though, as the inverse H&S displayed from September through the current time is actually a right shoulder for a larger one, formed since May. Seen on a monthly chart, these formations resolve (since July, 2003) into a symmetrical triangle that's forming just beneath the 50% retracement of the bear-market decline, near 546, so I think, all-in-all, I'd view the developments as neutral.

 
 
  Jeff Bailey   12/9/200,  11:58:35 AM
Amgen (AMGN) $63.38 +0.49% ....

 
 
  Jeff Bailey   12/9/200,  11:57:58 AM
Biogen Idec (BIIB) $65.09 +0.91% ... new 52-weeker

 
 
  Jonathan Levinson   12/9/200,  11:55:41 AM
QQQQ seems to be tracing a broadening/megaphone/bulloney-bullhorn pattern between 39.28 and 39.46 (current location of expanding wedge apex). The short cycles are drifting sideways after stalling midway into their upphase.

 
 
  Linda Piazza   12/9/200,  11:54:20 AM
The OEX still moves up within a formation that might be a bearish rising wedge. That rising wedge is so shallow that it doesn't narrow to an apex until about 2:15 this afternoon, at about 561.70. If it breaks down about 2/3 of the way through, as some do, that would have the OEX breaking down about 1:00 this afternoon, at about 561-561.10. Of course, that's assuming that it will break to the downside at all. If the OEX follows that 2/3's plan, we have a long few hours ahead of us as the OEX trades in an increasingly narrow range.

 
 
  Jeff Bailey   12/9/200,  11:52:36 AM
Biotechnology Index (BTK.X) 530.89 +0.12% ... bids green.

Linda? Have you been having any bullish success with these reverse head/shoulder patterns on intra-day charts?

 
 
  Jeff Bailey   12/9/200,  11:49:45 AM
Current OPEN MM Profiles at this Link

 
 
  Linda Piazza   12/9/200,  11:37:17 AM
Today the SOX gapped lower, opening at its 200-ema. It has moved lower from there, down to a test of its 50-dma. It has a little further to go, down to about 408.60, before it challenges the lowest version of the bottom, ascending trendline for is ascending regression channel, established off the September low. Q-Charts draws that bottom trendline a little higher, at about 411. Their computers are using regression analysis to draw those lines and I'm not, so I would pay attention to what they've depicted, but would confirm by a drop through the hand-drawn version.

That mention of regression analysis makes me laugh to remember that when I first started college as a physics major, we were all whipping out our slide rules to do calculations. I had my dad's old one, a family treasure, about two feet long and three or four inches wide. Of course, the only "crashing" that thing did was when I dropped it.

 
 
  Jonathan Levinson   12/9/200,  11:27:23 AM
QQQQ is back above 39.40, testing this morning's confluence to 39.45. The 30 minute cycle downphase was weaker than yesterday's corrective bounce suggested that it would be. Now we need to watch how far the bounce gets.

 
 
  Linda Piazza   12/9/200,  11:26:25 AM
The TRAN did bounce from the likely neckline of its big H&S, and I think we can expect that rebound to take it up to test 3692, 3700 or maybe even 3725. It's testing the 3692 level, a Fib level off a bracketed rally that began 12/02, with those Fib levels showing some relevance in trading since the decline began. Because of its role as a market leader for months, I think the TRAN is one of the biggest dangers to any bearish plays, and bears really need it to decline and decline quickly.

 
 
  Linda Piazza   12/9/200,  11:20:43 AM
The OEX turns down from that neckline, and the formation perhaps has morphed into a bearish rising wedge now, with the upper trendline now at about 561 and the lower now at about 560.25.

 
 
  Linda Piazza   12/9/200,  11:17:20 AM
I'll be gone for a portion of the afternoon this morning, leaving my desk about 2:20. I'm not certain if I'll be returning before the close, but I hope to be back for the last few minutes of trading.

 
 
  Linda Piazza   12/9/200,  11:15:49 AM
The OEX tests the neckline of that inverse H&S. If you look at that formation on anything other than a one-minute chart, it looks like a potential bear flag or rising wedge, however. Even on the one-minute, the right shoulder is out of proportion. The OEX is inside the 560.80-561.25 S/R zone.

 
 
  Linda Piazza   12/9/200,  11:12:54 AM
For those trading semi-related stocks or indices, be aware that NSM releases earning today mid-day. I haven't found any information that it's released its earnings yet, however, but in the current climate, its news could be market-moving for the semi-related indices.

 
 
  Jonathan Levinson   12/9/200,  11:12:31 AM
QQQQ is testing the 39.40 area, currently trading 39.37. The 30 min cycle downphase is approaching oversold territory, but the sideways action over the past hour suggests less impulsive strength than yesterday's weak upphase suggested. 39.25 is the current 30 min cycle bottom.

 
 
  Jeff Bailey   12/9/200,  11:11:55 AM
11:00 Internals at this Link

 
 
  Linda Piazza   12/9/200,  11:06:03 AM
The OEX attempts to round up now into that right shoulder for the inverse H&S, after having almost negated the whole formation. Neckline is now at about 560.85. Of course it would be near yesterday's 560.94 low, as these things sometimes work out so elegantly that way. The formation is bringing the OEX up to retest that broken support. I wouldn't be "buying" a confirmation of this formation, however.

 
 
  Jeff Bailey   12/9/200,  11:03:29 AM
11:00 Market Watch at this Link

 
 
  Linda Piazza   12/9/200,  11:02:31 AM
The OEX verges on negating the inverse H&S. A drop below 560 would do it.

 
 
  Linda Piazza   12/9/200,  11:01:06 AM
If the OEX should drive down to the bottom descending trendline of its broadening formation and then break through to the downside (perhaps after a bounce attempt), it will have fulfilled the traditional behavior of a broadening formation--two swing highs to establish the top trendline, with the second high higher than the first, of course, and any third approach to that top trendline falling short. The bottom descending trendline is now at just over 555, a potential downside target for the OEX if it can break through that 558-559-ish support.

 
 
  Jeff Bailey   12/9/200,  10:55:48 AM
Semiconductor Index (SOX.X) 415.60 -3.77% ... with WEEKLY/MONTHLY Pivot retracement at this Link

 
 
  Linda Piazza   12/9/200,  10:50:56 AM
The OEX's one-minute chart shows the OEX trying to form another inverse H&S, this with the head at the low of the day and the ascending neckline now near 560.80, upside target near 561.80 if confirmed. This isn't a big formation, but watching whether it is confirmed or rejected allows us to see whether bulls or bears have primacy over the short term.

 
 
  Jonathan Levinson   12/9/200,  10:45:55 AM
QQQQ is retesting 39.35 resistance, invalidating the bearish triangle. If this level holds, it will become a flag-rectangle between 39.25-.37.

 
 
  Linda Piazza   12/9/200,  10:44:32 AM
Lots of potential OEX support comes together in the 558.30-559.20 zones, almost too numerous to mention. There's the former descending trendline off the 11/17 high, for example. The OEX pushed above that trendline early in December, but it's sunken to that level now. There's the 559.20-ish downside target of the H&S confirmed earlier this week. There's 60-minute Keltner support. As I advised early this morning, have profit-protecting plans in place. Know how much of a bounce you're going to be willing to weather before you bail. If you're really conservative just take any profits you might have, minimal as they might be and look for another opportunity to get in later. Have a plan in mind. As I type, the TRAN is approaching its big H&S's neckline, and with the TRAN's nature in mind, it could either plunge straight through that neckline and never do back or bounce and never look back, either. If you have a plan, you know how to react. Speaking as a former deer-in-the-headlights person, that's important.

 
 
  Jonathan Levinson   12/9/200,  10:38:43 AM
QQQQ continues to float along 39.25 after failing on a bounce attempt to 39.35. A lower high from the current wavelet bounce will set up a bearish descending triangle above 39.25 support.

 
 
  Linda Piazza   12/9/200,  10:36:57 AM
The OEX approaches Keltner support on the seven-minute chart, suggesting that it might be time for another bounce. At this point, we're hoping to see each bounce be a bounce attempt only, with Keltner resistance now near that old historical resistance level, 560.80-561.25. The 15-minute chart shows a potential downside of 558.39 as long as the OEX does not show 15-minute closes above 560.80. Note: Bounce attempt began as I typed.

 
 
  Linda Piazza   12/9/200,  10:28:12 AM
The TRIN bounces up again, which should help bears feel slightly better. The OEX has been testing broken support (turning down again as I type), but so far not much damage has been done to those who entered based on an inside-day trigger for a bearish play or even for those who might have squeezed in a bearish entry at the open, before the quick plummet. The TRAN has so far refused to plunge through the neckline of its large H&S, however, and the BIX has not yet confirmed a continuation-form H&S or its double-top formation by falling below 369.74. Other writers have detailed other indices at support levels, so bears shouldn't breathe too easily just yet.

 
 
  Jeff Bailey   12/9/200,  10:28:09 AM
10:00 Internals at this Link

 
 
  Jonathan Levinson   12/9/200,  10:22:24 AM
QQQQ's bouncing from lower Keltner support. 30 min resistance has come down to 39.55 currently, but confluence resistance at 39.40-.44 should hold back the bounce.

 
 
  Jonathan Levinson   12/9/200,  10:16:55 AM
QQQQ is chasing 30 min channel support lower, just now touching the band as I type, at 39.28. Below 39.40, the outlook is bearish for QQQQ, with the 30 min cycle rolling over from overbought territory and room to run over the coming hours.

 
 
  Linda Piazza   12/9/200,  10:16:22 AM
The OEX has moved below yesterday's low, triggering a bearish inside-day trade for those who follow inside-day trades. It's also confirmed its drop below the ascending trendline off the 12/01 low.

The OEX has potential support just below at 558-559. Other indices are just now approaching potential bounce supports. Either the OEX is leading the others by triggering that inside-day trade or it's soon going to move up as other indices bounce. I'm not a huge fan of inside-day trades, so be careful.

 
 
  Linda Piazza   12/9/200,  10:13:09 AM
The OEX fell far enough that it negated that potential inverse H&S. I had been going to add to that previous post that we could probably expect to see the OEX's formation morph a few times. If it weren't for the TRIN's action, I'd know exactly what I thought about the OEX's action, whatever its shape (bearish distribution going on), but the TRIN scares me. Advdec line continues down, but possibly down into "potential reversal ahead" territory on a contrarian basis. A drop below yesterday's low still confirms a drop below that ascending trendline that has held throughout December, however, as well as setting up a bearish inside-day trade.

 
 
  Jonathan Levinson   12/9/200,  10:10:43 AM
QQQQ now cracking 39.40. 30 min channel support is down to 39.325, but that level will drop as the 30 min cycle downphase gathers strength.

 
 
  Linda Piazza   12/9/200,  10:06:46 AM
The OEX attempts to form an inverse H&S at the bottom of its decline.

 
 
  Jonathan Levinson   12/9/200,  10:04:40 AM
Upside surprise from Wholesale Inventories at 1.1% vs. .5% expected.

 
 
  Jeff Bailey   12/9/200,  10:03:01 AM
10:00 Market Watch at this Link

 
 
  Jonathan Levinson   12/9/200,  10:02:24 AM
Session high for ten year notes here, with TNX up .2 bps at 4.134%, failing below the 4.14%-4.16% confluence zone.

 
 
  Linda Piazza   12/9/200,  10:00:10 AM
I heard a discussion yesterday that Japan may already be in a recession and that several eurozone countries may be close. I don't remember where it was, but I think it may have been a wee hours of the morning discussion on CNBC Europe. This was an analyst's opinion, one with a dismal forecast for the global economies. I haven't been reading that opinion in any of my other research as yet, although this week, two economic numbers in Japan did disappoint.

 
 
  Jim Brown   12/9/200,  10:00:04 AM
Wholesale Inventories = +1.1% , (est +0.6%, last +0.5%)

 
 
  Jonathan Levinson   12/9/200,  9:56:57 AM
The Fed has just announced another 7.75B repo, this one an overnight, for a net drain of 2.75B for the day. 4 minutes to go until the Wholesale inventories.

 
 
  Linda Piazza   12/9/200,  9:56:49 AM
Careful, bears. As I'm sure Jane has already mentioned on the Futures side, TRIN dives from the morning's high. I wanted to also mention it for the benefit of those reading only the Options Monitor. Trouble is, the advdec line has been diving, too. While the VXO and VIX have dropped, they haven't yet dropped much, and Jane has taught us to watch to see whether the volatility indices corroborate what we're seeing on TRIN.

 
 
  Jeff Bailey   12/9/200,  9:56:45 AM
VIX.X 13.48 +2.19% .... DAILY Pivot Levels ... 12.86, 13.04, Piv=13.36, 13.54, 13.86.

 
 
  Linda Piazza   12/9/200,  9:53:45 AM
The OEX pierced its ascending trendline off the 12/01 low, but it did not confirm by moving below yesterday's low.

 
 
  Jeff Bailey   12/9/200,  9:52:35 AM
Semiconductor Index (SOX.X) 417.97 -3.24% .... session lows

 
 
  Linda Piazza   12/9/200,  9:52:25 AM
At about 3678-3680, the TRAN also approaches a neckline for a H&S on its 30-minute chart. This is a formation that's been setting up since mid-November. Although when it's apparent that the TRAN is going to move through a neckline, it sometimes does so precipitously, it also rejects them just a precipitously at times. It can be volatile. With the TRAN at 3689.72 as I type, we're approaching a time of some volatility for the TRAN and then likely for other indices, too, as the TRAN sometimes leads the Dow at least. It sometimes appears to do so for the S&P's at times, too.

 
 
  Jeff Bailey   12/9/200,  9:52:08 AM
S&P Banks (BIX.X) 370.27 -0.33% .... session lows

 
 
  Jeff Bailey   12/9/200,  9:51:09 AM
5-year +1.4 bp, 10-year +0.9 bp, while 30-year +2.1 bp and steepening of yield curve.

 
 
  Jeff Bailey   12/9/200,  9:50:29 AM
SPX 1,177.22 -0.47%

 
 
  Jonathan Levinson   12/9/200,  9:50:22 AM
The Fed has 18.5B in various repost expiring today, and has added 8B in 14-day repos. The shorter-dated repos have yet to be announced with 10.5B of expiring money left to go.

 
 
  Jeff Bailey   12/9/200,  9:49:52 AM
My S&P Premium has been "stuck" above $1.35 for 15-minutes.

 
 
  Linda Piazza   12/9/200,  9:47:05 AM
Possible bearish entry coming up? See below.

I'm hoping that the OEX is forming a bearish distribution form such as a flag during this first retracement of the day, climbing up to test resistance ahead of a rollover since the gap down and drop was too sudden to allow entries at the open. Want-to-be bears certainly would want to see TRIN, advdec and other measures support such an entry, though, as there's also the possibility that we're seeing a bounce from support, from a higher low. A trendline drawn from the 12/01 low, through the other swing lows since then shows the OEX having paused this morning right on that trendline.

That suggests that a move below yesterday's low would confirm a breakdown below that trendline. According to inside-day theory, that would also be a bearish entry. I'm not a particular fan of inside-day theory, so make your own decisions about this, but it has corroboration now from two sources.

 
 
  Jonathan Levinson   12/9/200,  9:40:41 AM
The 30 min cycle rollover looks like the real deal. With old 30-min chart confluence at 39.40, that's the level at which bears will have to prove their case. A break of that level should kick off what I'm guessing to be the continuation of Tuesday's impulsive drop. Note: my IB quotes appear to be running slightly behind- checking my connection and server now.

 
 
  Linda Piazza   12/9/200,  9:40:29 AM
Here comes an OEX bounce, at 562.02 as I type.

 
 
  Linda Piazza   12/9/200,  9:40:01 AM
The BIX attempts to bounce again just ahead of 370 and the confirmation level just below that for the double-top on its daily chart.

 
 
  Linda Piazza   12/9/200,  9:39:24 AM
The TRAN is below 3700.

 
 
  Linda Piazza   12/9/200,  9:37:02 AM
The BIX approaches a test of the confirmation level for its double-top formation. Will the TRAN and BIX power the first retracement of the day, usually beginning in a few minutes? If so, watch how the OEX behaves near 562-562.70.

 
 
  Linda Piazza   12/9/200,  9:35:34 AM
The TRAN drives down toward a test of 3700.

 
 
  Linda Piazza   12/9/200,  9:35:07 AM
The SOX dove below the 200-ema.

 
 
  Linda Piazza   12/9/200,  9:34:46 AM
The OEX inches toward 562.

 
 
  Linda Piazza   12/9/200,  9:32:00 AM
The OEX opened and immediately drove lower, without time for bears to enter new positions ahead of that strong drop. If there's a bounce up to 562.00-562.50 and a rollover from there, a new bearish entry might be attempted, but it would be riskier than would have been an entry near yesterday's close.

 
 
  Linda Piazza   12/9/200,  9:29:36 AM
Futures are lower this morning. Those who believe that the OEX is in the process of forming a H&S at its five-minute 100/130-ema's and is likely to roll down below those averages and into a confirmation could risk a bearish entry at the open, but should be aware that they're likely paying a hefty premium on that option. The OEX needs to move down quickly, because a slow move down is going to deplete option premium quickly. Be prepared for likely support at the 562-562.50 zone and for much stronger support from 560.80-561.25, having profit-protecting plans in place for the test of that lower level. I'd place a stop an account-appropriate level above 564.50. According to inside-day theory, a move above yesterday's high is actually a trigger for a bullish play. If the OEX breaks through yesterday's low, make sure you're following the OEX lower with your stops, and again be prepared with profit-protecting plans near 558-559.

Note: if the OEX gaps lower that 562.00-562.50, I'd be worried about a new entry just ahead of the 560.80-561.25 support zone. I might want to see how the OEX acted on the first retracement of the day.

Be aware that any entry, bearish or bullish, is risky while the OEX remains within that broadening formation.

 
 
  Jonathan Levinson   12/9/200,  8:53:09 AM
QQQQ is printing 39.45 here. Bears need to hold below 39.50 past the cash open to confirm the new 30 min cycle downphase.

 
 
  Jeff Bailey   12/9/200,  8:45:06 AM
QQQQ $39.51

 
 
  Jeff Bailey   12/9/200,  8:44:47 AM
SMH $32.23

 
 
  Jeff Bailey   12/9/200,  8:44:16 AM
5-year +3.3 bp, 10-year +1.7 bp, 30-year +3.0 bp

 
 
  Jonathan Levinson   12/9/200,  8:39:11 AM
The 30 min cycle oscillators have rolled over for NQ/QQQQ and are just beginning the downphase discussed in last night's Futures Wrap. A move below 39.50 that lasts 5 minutes past the cash open should confirm it.

 
 
  Jonathan Levinson   12/9/200,  8:35:11 AM
CAIRO (Reuters) - OPEC oil producers said on Thursday that Friday's ministerial meeting would focus on cutting back oversupply to support falling prices and that producers would have to reduce output quotas early next year.

 
 
  Jonathan Levinson   12/9/200,  8:32:54 AM
QQQQ is down to 39.50, ES 1178.25. TNX is up 1.3 bps to 4.145% following the 8:30 release.

 
 
  Jonathan Levinson   12/9/200,  8:31:48 AM
Initial claims came in higher than expected at 357K. Import prices ex-oil +.7%, export prices ex-ag +.4%.

 
 
  Jonathan Levinson   12/9/200,  7:58:36 AM
Equities are lower, with ES trading 1179.25, NQ 1589.5, YM 10465 and QQQ -.28 at 39.53. Gold is trading 437.3, silver 6.883, ten year notes +.593 at 112.875 and Nymex crude +.45 at 42.40.

We await the 8:30 release of export prices ex-ag., prior +1%, import prices ex-oil, prior +2.7%, and initial claims, est. 335K. At 10AM we get wholesale inventories, est. .5%.

 
 
  Linda Piazza   12/9/200,  7:19:38 AM
Good morning. With further evidence of a slowing of growth, the Nikkei fell Thursday. Techs proved weak throughout Asia and Europe, with Asian markets turning in mixed performances and European ones currently mostly lower. Our futures have fallen, too, with NQ futures adding to their post-cash-market declines as European markets turned lower. As of 6:59 EST, gold was down $0.60 and crude, up $0.56. More detail about Asian and European markets follows in succeeding paragraphs.

One day after a GDP disappointment, Japanese investors dealt with more disappointing data. October's seasonally-adjusted core private-sector machinery orders declined 3.1% from September's. Trimmed sales goals from ALTR and XLNX hit techs, although Sony gained as Walt Disney Co. took its side against Toshiba's in the decision as to which company's DVD format to support. Other studios have chosen Toshiba's format. Commodity-related issues dropped. Other than a rebound off its low of the day in the last hour of the session, the Nikkei dropped all day. It closed down 164.74 points or 1.51%, at 10,776.63.

Other Asian markets turned in mixed performances. The Taiwan Weighted gained 0.36%, despite declining November sales reported by Taiwan Semiconductor, but South Korea's Kospi lost 1.20%. Singapore's Straits Times declined 1.06%, and Hong Kong's Hang Seng fell 0.10%. China's November industrial output increased 14.8% from the year-ago level, with that double-digit growth still smaller than last month's, reassuring some market watchers that the government's efforts to slow the economy continue to work. The Shanghai Composite climbed 0.93%.

Almost all European markets turn lower. The FTSE 100 had been positive but is now negative ahead of a Bank of England rate decision. Most expect the Bank of England to keep rates at their current 4.75%. When affirming its expectations, the Royal Bank of Scotland also affirmed evidence from other sources that mortgage activity appeared to be cooling. Homebuilder Berkeley Group said something similar. The FTSE 100 has only one tech stock, but tech weakness affected the CAC 40 and DAX. Vivendi Universal announced that it would sell three-fourths of its sake in water utility Veolia. The French government also decided to sell some of its stock holdings. It was a day for selling, and Swiss Life sold a U.K. life insurance unit.

As of 6:59 EST, the FTSE 100 had fallen 11.30 points or 0.24%, to 4,692.60. The CAC 40 had declined 15.09 points or 0.40%, to 3,759.95. The DAX had fallen 23.70 points or 0.56%, to 4,177.65.

 
 
  Jeff Bailey   12/8/200,  10:56:09 PM
e-mini NASDAQ futures (nq04z) daily interval chart with fitted retracement at this Link

Screen capture for price 1,593.50 at 22:24:16.

 
 
  Jeff Bailey   12/8/200,  10:22:20 PM
Semiconductor HOLDRs initial thought for tomorrow .... I (SMH bull) need the NDX/QQQ market to keep a bid under the chips.

Here are some thoughts/observations from this evening's Index Trader Wrap. In essence, I'm "counting on" the NDX/QQQ strength (see chart at this) Link , to either provide strength, or stability in the SMH.

With SOX.X weakness today, and further chip-weakness in the extended session, I'm looking at the e-mini NASDAQ-100 futures (nq04z) trading 1,595.00 after the ALTR and XLNX warnings.

I've also placed some of tomorrow's DAILY Pivot levels on the chart. Here's what I'm going to do with the NAKED puts I profiled in the SMH tomorrow. As long as the NDX.X can stay above 1,591-1,589, I will look for NDX strength to have the semiconductors showing some type of stability. If the NDX.X begins to slip much below that level, then I must assume that further weakness in semiconductors is the cause, and must then take some type of DEFENSIVE posture with that position.

I will of course provide greater attention to the SMH/SOX.X action, but would only look for NDX.X strength/resiliency to have some type of buying interest holding for the chips.

This week's WEEKLY SMH Pivot levels are ... $31.44, $32.87, Piv=$33.91, $35.35, $36.38.

Here is a 60-minute interval chart of the SMH, with QCharts' Pivot Levels, an upward regression channel I've had on the SMH, and an "old" downward trend. Link

The lower end of the upward regression would be correlative with the SMH's rising 50-day SMA at $32.24.

PnF chart for Altera (ALTR) Link

PnF chart for Xilinx (XLNX) Link

 
 
  Jeff Bailey   12/8/200,  6:25:14 PM
I will note that in tonight's extended session, Jim Brown has noted in the Market Monitor that Altera (NASDAQ:ALTR) $22.20 -1.94% fell to $20.40, and Xlinx (NASDAQ:XLNX) $30.73 -1.66% dropped to $28.52 after warning on various fundamental fronts.

The Semiconductor HOLDRs (AMEX:SMH) $33.03 -2.07% also fell in its extended session to $32.30.

In today's Market Monitor and 01:00 PM EST intra-day update, I profiled/mentioned the SELLING of NAKED puts on the SMH for the Dec. $32.50 puts (SMH-XZ). If tonight's extended session trade holds into tomorrow, I need to get a damage control plan in place for traders that may NOT want to hold this security if assigned.

While my Market Monitor profiles also holds LONG, two (2) Jan. $32.50 calls (SMH-AZ), one plan for consideration that I will have to deliberate on later this evening, is the possibility of either closing out the NAKED Puts, or SELLING Dec. $32.50 calls, or just outright shorting the SMH into next Friday's expiration. Again, I need to think more about this after writing tonight's Wrap.

December "Max Pain" theory is $32.50 ($2.50 increments)

 
 
  Linda Piazza   12/8/200,  6:23:45 PM
The OEX bounced Wednesday, never following through on yesterday's weakness or meeting the 559-ish downside target projected by several methods. Yesterday's extreme lows on the advdec, a concern I mentioned yesterday afternoon, did indicate a bounce might be on the way today. Still, the OEX could not close above a 50% retracement of Tuesday's long red candle. The day was an inside day, so those who are fans of the inside-day pattern will enter bearish trades on a rollover beneath today's low and bullish trades on a move above today's high. I'm not ordinarily a fan of inside-day trades, but those particular levels make respectable entries, as long as one is ready to bail if wrong and if there is some kind of supporting framework for such an entry. Bullish entries should have supporting breadth patterns as should bearish ones, for example. Other indices should be showing similar strength or weakness, not the mixed-up patterns we saw today.

Better entries might be bounces from support or rollovers from resistance. Those hoping for a bearish rollover-from-resistance entry might watch the OEX's behavior tomorrow with respect to its five-minute 100/130-ema's. It's trying to form another H&S at those averages, with a neckline at about 562.66, but what kind of respectable chopped up chart would it be if it didn't also have an opposing potential inverse H&S with a neckline just over those averages, at about 564? So far, the charts still look choppy and dangerous to trade, and that's indicative of an index inside a broadening formation.

 
 
  OI Technical Staff   12/8/200,  6:11:26 PM
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