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  OI Technical Staff   12/16/20,  9:43:27 PM

Click here for bonus info: Link

  Linda Piazza   12/16/20,  8:37:57 PM
Thursday saw some strange action on the indices, including an advdec line that was contrary to TRIN and the volatility indices. Delving deeper into volume patterns showed that decliners were far stronger than advancers as well as down volume being much stronger than up volume. This somewhat negated the possibility that we were just seeing concentrated selling of a few issues, although that's what I expected to find when I studied the pattern, since Jim had mentioned the re-weighting in the Russell. The Nasdaq did show a slightly heftier proportion of down volume to up than decliners to advancers, so perhaps that re-weighting was part of what was occurring. Selling into the highs might have been part, too.

The OEX completed the third candle of a possible "Advance Block Bearish" formation, a three-day pattern in which each day has a higher close than the previous day's. Although that sounds bullish so far, it isn't. With this pattern, each day opens within the previous day's candle, and the second and third day's candles would have long upper shadows. While Wednesday's OEX upper shadow wasn't exactly "long," the OEX's last three days fit many other parameters of this pattern. With that said, these candles are being produced above the broadening formation, and perhaps just represent consolidation after the breakout. As I said on the Monitor, I wouldn't even mention this pattern at a time when it's only natural that the OEX should be consolidating except that we're seeing potential reversal signals on other indices--the TRAN, SOX, COMPX, GSO, etc. We know that in a strongly trending market environment, the candle needed to complete a reversal signal may be the only reversal seen, so take this information with some caution. However, it may be time to begin looking for further corroboration that the OEX is ready for a retracement, at least. On a decline below Thursday's low, the OEX will have completed a regular H&S with a downside target of about 566.85. Tomorrow morning, we'll look at what's happened overnight to help make further observations. Until now, buying bounces from the five-minute 100/130-ema's was a good strategy, as it was Thursday morning, but it certainly wasn't Thursday afternoon, perhaps a first sign of at least a short-term trend change.

  Jeff Bailey   12/16/20,  6:34:35 PM
KB Home (KBH) $105.59 +0.08% Link ... jumps to $107.65 after reporting quarterly EPS of $4.42, easily surpassing Wall Street's consensus estimate of $4.13. Company saying backlog remains strong, future bright. Sees fiscal 2005 EPS of $14.50, well above consensus of $13.33.

Please note: Stock achieved its PnF bullish vertical count (which can always be exceeded, sometimes never achieved) in today's session.

Pulte Home (PHM) $64.80 -0.29% ... looks "technically cheap."

  Jeff Bailey   12/16/20,  6:09:11 PM
Closing Internals at this Link

  Jim Brown   12/16/20,  6:02:49 PM
Semi Book-to-Bill = 1.00

  Jeff Bailey   12/16/20,  5:22:00 PM
Current OPEN MM Profiles at this Link Notes: If JDSU closes above $3.00 tomorrow, will exercise that option. Cost basis for stock will be $3.00 + $0.75 (per contact) or $3.75 per share. On Monday, would then follow with a STOP on the underlying stock at $2.90 and see what happens from there.

Today's activity ....

Stopped out of the overnight day trade short in the Semiconductor HOLDRs (SMH) at $33.40. ($-0.20, or -0.6%)

Closed out the three (3) NAKED SMH Dec. $32.50 puts (SMH-XZ) profiled on 12/08/04 at $0.40 per contract at the offer of $0.05 today. ($0.35, or +87.50%)

Day traded long Network Appliance (NTAP) at $34.30, stopped at $33.97. ($-0.33, or -0.96%)

  Jeff Bailey   12/16/20,  4:43:17 PM
Even when you think you've got it figure out .... it can still be a tough trade. Updated SMH Option Chain from last night at this Link

The biggest "RISK" and the $32.50 calls may have gotten some "Max Pain" today

If YOU were the options market maker, and your book was SHORT 65,961 Dec. $32.50 calls, and SHORT 21,677 Dec. $35 puts, did YOU make any money today?

I added the Dec. $30 calls to tonight's option chain, which was the next in the money call strike lower and most likely found some bulls liquidating that position instead of RISKING further volatility/uncertainty in tomorrow's expiration.

Now think about Linda's observations regarding TRIN and today's advance/decline lines.(03:41:24)

Me thinks .... light volume selling at the BID and buying at the offers (thus a low TRIN), but a determined heavy offer to try and push things on a short-term basis toward a favorable close.

If it was happening here (SMH) then you can probably think the same thing was happening elsewhere.

  Jim Brown   12/16/20,  4:25:42 PM
LF - Leapfrog warned

  Jim Brown   12/16/20,  4:16:58 PM
CRUS warning

  Jim Brown   12/16/20,  4:13:22 PM
SYMC - LEAPS The Leaps section will be going long the SYMC 2007 $25 LEAP Calls OBL-AE currently $6.00, Buy JAN-2005 $22.50 PUT SYQ-MX currently $0.55 as insurance against a further drop. See the weekend LEAPS section for further details.

  Jeff Bailey   12/16/20,  4:10:53 PM
Buy Program Premium .... SPY 120.84, DIA 107.10

  Jeff Bailey   12/16/20,  4:01:12 PM
Back'er up ... Amerco (UHAL) $44.07 +2.2% ...

  Linda Piazza   12/16/20,  3:56:10 PM
For those thinking about whether to hold overnight or not, first consider whether you're holding front-month options due to expire tomorrow. If so, you're going to need a big movement relatively quickly tomorrow morning to overcome the effect of overnight option decay.

Second, the OEX sits at the top of its broadening formation. It's broken out of that formation and may be consolidating there. However, the OEX's pattern looks a lot like an "Advance Block Bearish" formation, a three-day pattern in which each day has a higher close than the previous day's. Sounds bullish so far, doesn't it? With this pattern, the second and third day's candles would have long upper shadows. I don't know that I'd call yesterday's upper shadow "long," but the OEX last three days fit many other parameters. I wouldn't even mention this except that we're seeing potential reversal signals on other indices--the TRAN, SOX, COMPX, GSO, etc. We know that in a strongly trending market environment, the candle needed to complete a reversal signal may be the only "reversal" seen, so this shouldn't necessarily convince those holding bearish positions to hold overnight unless they feel that other conditions favor that tactic, but those holding short-term bullish positions should weigh the risks and make account-appropriate decisions.

  Linda Piazza   12/16/20,  3:45:44 PM
The SOX is back just above its 200-ema after having pierced it earlier.

  Jeff Bailey   12/16/20,  3:45:36 PM
Good observations Linda (03:41:24) .... and be ready next week!

  Linda Piazza   12/16/20,  3:44:34 PM
The TRAN still consolidates just above its five-minute 100/130-ema's. The TRAN is at the top of an ascending regression channel that it built off today's low, so due for either a pullback through it or breakout above it.

  Linda Piazza   12/16/20,  3:42:40 PM
And the OEX retest of the five-minute 100/130-ema's was brief, with the OEX now breaking above the two candles that constituted the "consolidation zone."

  Linda Piazza   12/16/20,  3:41:24 PM
Why is the advdec line so contrary today to what TRIN and the volatility indices are showing us? Those aren't bearish, but the advdec line and its trend have been. As of a few minutes ago, adv/dec ratios, something I like to study now and then, were 10:23 on the NYSE and 11:20 on the Nasdaq. Up/down volume showed that down volume was 1.54 times up volume on the NYSE but a stronger 2.28 times up volume on the Nasdaq. If the adv/dec ratios didn't show such bearish patterns, we'd have a situation in which we were just seeing a lot of concentrated selling of a few issues, but that doesn't appear to be what's going on.

  Jeff Bailey   12/16/20,  3:34:29 PM
52-week high alert .... Amerco (UHAL) $43.50 +0.88% (note: stock does NOT trade with options)

  Linda Piazza   12/16/20,  3:33:23 PM
The OEX climbs right back in a V-shaped recovery. It's dangerous to mess with a V-shaped recovery by trying to find the top with a bearish entry as they're usually a sign that bulls are coming back in force. I know. I've tried plenty in the past to find that one resistance level that was going to stop a climb. But . . . the OEX is returning to the scene of the crime, the trendline from which it broke down earlier today.

As I type, the OEX heads back to retest the 100/130-ema's.

  Jonathan Levinson   12/16/20,  3:30:47 PM
QQQQ has regained 40.00. Next resistance is the 40.10-.15 zone, also current upper descending 30 min channel resistance.

  Linda Piazza   12/16/20,  3:29:05 PM
The OEX is climbing above its five-minute 100/130-ema's, spending less time testing them on the way up than it did on the way down.

  Linda Piazza   12/16/20,  3:25:24 PM
Jeff, thanks for the information on CSCO. I remember a lot of talk about how it had not been expensing options, but then a lot of companies had begun that voluntary program and I wasn't sure if CSCO was one.

  Linda Piazza   12/16/20,  3:24:00 PM
So far, today's OEX action has served only to bring the OEX back to test the trendline of its broadening formation, not a terrible thing. However, one problem with a broadening formation is that it is broadening. What if the OEX were just broadening the broadening formation? So far, there's no evidence that this is what's happening, but if the OEX were to fall below 570, I'd certainly begin thinking about that possibility more seriously, with all outcomes up for grabs again. The TRAN could be in the process of printing an evening-star pattern, depending on how far this bounce takes it at the end of the day, and the SOX could, too, at an appropriate right-shoulder level for a H&S. The SOX could do almost anything, though, depending on tonight's SEMI book-to-bill number, but Chartered Semiconductor's lowering of guidance does possibly induce a little fear into the sector ahead of this evening's number.

  Jeff Bailey   12/16/20,  3:21:29 PM
CSCO hasn't been expensing options.

CSCO $19.40 (unch)

  Linda Piazza   12/16/20,  3:16:33 PM
For reference, the OEX's five-minute 100/130-ema's are at 573.13 and 572.92, respectively.

  Jonathan Levinson   12/16/20,  3:15:03 PM
I don't believe so, Linda, but I'm going by memory.

  Linda Piazza   12/16/20,  3:14:24 PM
I can't remember, Jonathan. Has CSCO begun expensing its options yet?

  Jeff Bailey   12/16/20,  3:14:15 PM
03:00 Internals at this Link

  Jonathan Levinson   12/16/20,  3:13:44 PM
The FASB's ruling on stock option expensing could have very negative consequences for companies that have not already begun voluntarily expensing.

  Linda Piazza   12/16/20,  3:11:52 PM
The OEX is attempting a bounce from the mid-channel level on the 15-minute Keltner chart. That chart shows next resistance at about 572.75 or slightly lower, but the 7-minute chart shows the whole space between the OEX's current level and 572.80 litered with potential resistance lines.

  Jonathan Levinson   12/16/20,  3:04:47 PM
NEW YORK - The nation's accounting rulemaker decided Thursday that companies will have to begin deducting the value of stock options from their profits next year, a move cheered by shareholder advocates but scorned by many companies who rely heavily on options to beef up compensation packages. Link

  Jeff Bailey   12/16/20,  3:04:15 PM
03:00 Market Watch at this Link

  Linda Piazza   12/16/20,  3:03:43 PM
The SOX is turning down into an evening-star pattern.

  Linda Piazza   12/16/20,  3:00:34 PM
The next level of support for the OEX is the 570.70-ish level, mid-channel level on the 15-minute Keltner chart.

  Jonathan Levinson   12/16/20,  3:00:15 PM
QQQQ's just broken 39.88 support, now heading for the .80 line.

  Jeff Bailey   12/16/20,  2:56:41 PM
NTAP $33.96 , QQQQ $39.91 (Q's testing DAILY R2, WEEKLY Pivot)

  Jeff Bailey   12/16/20,  2:50:50 PM
Current OPEN MM Profiles at this Link

XOM $49.28 , INDU 10,685

  Jonathan Levinson   12/16/20,  2:44:47 PM
QQQQ chart updated at this Link.

  Jonathan Levinson   12/16/20,  2:43:01 PM
40.00 has just held on the bounce attempt, suggesting a retest of 39.88 confluence on the way to 39.80 and 39.72 QQQQ. The buy programs are increasing in volume, with 2 programs of 2M QQQQ shares each (within 150 ticks) in the past half hour.

  Linda Piazza   12/16/20,  2:41:01 PM
The OEX didn't quite make the 575.75 upside target predicted by the inverse H&S confirmed earlier this week, but perhaps I drew my neckline a little off or included or didn't include a candle shadow. The difficulty of getting these exact is the reason behind the suggestion to begin protecting profits earlier today.

  Linda Piazza   12/16/20,  2:39:10 PM
The TRAN still hasn't confirmed with a new low of the day.

  Linda Piazza   12/16/20,  2:33:48 PM
The OEX approaches 15-minute mid-channel Keltner support at about 570.70. The OEX sliced right through the mid-channel level on shorter-term time frames, but there's some potential historical support from about 571.40 to 570.70, so it's possible that will slow the OEX. That would also be the likely neckline area for another H&S. If the OEX should bounce from that level, then, watch for a potential rollover in the 574-ish right-shoulder area.

  Jeff Bailey   12/16/20,  2:32:02 PM
Not a single buy/sell program premium since this morning

SPX 1,199.89

  Linda Piazza   12/16/20,  2:30:54 PM
And there goes the TRAN, breaking to the downside through the symmetrical triangle. It hasn't confirmed by printing a new LOD, however.

The OEX has broken below its five-minute 100/130-ema's, confirming the break below its latest ascending regression channel.

  Jeff Bailey   12/16/20,  2:25:45 PM
SMH $32.84 -1.49% ....

  Jeff Bailey   12/16/20,  2:25:16 PM
Bullish day trade stop alert ... for Network Appliance (NTAP) $33.97

  Jonathan Levinson   12/16/20,  2:23:49 PM
QQQQ now testing 40.0 support, below both 30 and 60 min channel support. If the bulls don't push back now, this will become a trending move, targeting next major support in the 39.80 and 39.72 area.

  Jeff Bailey   12/16/20,  2:22:29 PM
02:00 Internals at this Link

  Linda Piazza   12/16/20,  2:21:51 PM
The TRAN is forming a possible symmetrical triangle at the bottom of its drop. Since it entered this formation declining, traditional technical analysis suggests that it will exit it the same way, as this is perhaps more likely a continuation than a bottoming pattern. You never know with the TRAN, but such patterns often come about halfway into a decline and that would fit nicely with a TRAN test of 3700. The TRAN is at 3730.16 as I type, near the apex of that triangle.

  Linda Piazza   12/16/20,  2:14:51 PM
I lost my broadband connection for a few minutes, but I see I didn't miss much. The OEX did fall out of its latest ascending regression channel, but hasn't confirmed that fall by a rollover beneath the five-minute 100/130-ema's, at 573.42 and 573.10, respectively. I said in my last post before losing my connection that the OEX looked vulnerable down to 573, and it's come close. Keltner-wise, the OEX tests the Keltner lines that have supported it since 12/10 except for a brief (one 15-minute close) time below it yesterday morning. That most important Keltner line is currently at 573.05, and bulls would prefer not to see another 15-minute close beneath that line. Although the OEX recovered once, they'd prefer not to risk it again.

  Jonathan Levinson   12/16/20,  2:06:24 PM
Note that the Dow futs haven't even twitched- this is restricted to the NQ and QQQQ primarily, with only a slight echo in the ES futures. 40.12 has held as the low so far. If the bounce fails soon near these levels, then the bears might have a chance to start a 30 min cycle trending move, but currently we see 30 and 60 min channel support asserting itself at price confluence.

  Jeff Bailey   12/16/20,  2:05:01 PM
Network Appliance (NTAP) $34.19 -1.29% ... its "Max Pain" is $25, I checked before today's bullish profile, and I don't think it would be overly influenced by December expiration.

  Jonathan Levinson   12/16/20,  2:03:49 PM
QQQQ is now below yesterday's low, trading 40.12 currently.

  Jonathan Levinson   12/16/20,  2:03:06 PM
QQQQ trading a new low of 40.15 here. The drop was the larged volume spike of the day, 1.2M QQQQ shares within 150 ticks.

  Jeff Bailey   12/16/20,  2:02:24 PM
Swing trade close out naked put alert .... let's close out the three (3)SMH Dec. $32.50 puts (SMH-XZ) at the offer of $0.05.

I profile this close out, just one day ahead of expiration, more for those that have 10 or more. I would not want to "risk" any sudden gyrations into tomorrow's expiration.

SMH $33.14 -0.59% ... starting to slip like I thought it might yesterday.

  Jonathan Levinson   12/16/20,  1:59:38 PM
And breaking the session low as I type. Next support is the 40.10-.15 confluence.

  Jonathan Levinson   12/16/20,  1:59:13 PM
QQQQ is back to testing 40.25 from a much lower high on this last bounce.

  Linda Piazza   12/16/20,  1:58:32 PM
Slight rise in the OEX since my last post, but the lower trendline of the ascending regression channel has also risen, of course, and the OEX still hugs the lower trendline. Keltner-wise, the OEX looks vulnerable now to at least 573, if not lower.

  Jonathan Levinson   12/16/20,  1:47:57 PM
QQQQ looks to want to hold the lower support line at 40.25, currently back to 40.30, the same level it was printing when I was hoping that we wouldn't have to watch QQQQ drift sideways all day.

  Linda Piazza   12/16/20,  1:38:47 PM
I can see all these dire signs, as can we all, but the OEX just keeps chugging higher through a new ascending regression channel that it began building off yesterday's low, after falling out of the previous one. So far, it hasn't shown any bearish divergences with respect to its approaches to the top trendline describing that channel. Each approach has touched or even pierced the upper trendline, currently at about 581.80. None have fallen short yet. No five-minute swing highs have failed at the midline, currently about 574.70. None have broken through the lower support, currently at about the location of the five-minute 100-ema. There have been bearish price/RSI divergences on the five-minute chart, giving us an inkling of a warning to be careful. We'd likely expect some bearish divergences on approaches to the top before we'd expect the OEX to fall through the bottom, but this has been a strange day with confusing market behaviors, and the OEX has currently turned around to retest the bottom trendline again.

  Jonathan Levinson   12/16/20,  1:30:16 PM
QQQQ full 2-day chart with updated trendlines at this Link.

  Linda Piazza   12/16/20,  1:27:11 PM
The newest and lowest trendline drawn off yesterday morning's OEX low now crosses at about 573.37, the exact location of the OEX's five-minute 100-ema. The 130-ema is at 573.01.

  Linda Piazza   12/16/20,  1:23:52 PM
The TRAN pulls up just short of hitting its 3722 downside target for its H&S.

  Jonathan Levinson   12/16/20,  1:13:05 PM
QQQQ chart updated at this Link.

  Jonathan Levinson   12/16/20,  1:11:51 PM
40.25 is old confluence to 40.22, and is currently 30 min channel support well. Very conviently, 60 min support is now 40.15, which is at the head of confluence support to 40.10.

  Jeff Bailey   12/16/20,  1:11:47 PM
01:00 Internals at this Link

  Jonathan Levinson   12/16/20,  1:11:08 PM
7200-tick support let go with a bang just now and a small spike in volume. 40.25 support is being tested now.

  Linda Piazza   12/16/20,  1:09:43 PM
The OEX's five-minute 100/130-ema's are now at 573.33 and 572.95, respectively, with those averages often providing support.

  Linda Piazza   12/16/20,  1:08:40 PM
There goes the OEX H&S, now confirmed, and the TRAN's, now confirmed, too.

  Linda Piazza   12/16/20,  1:06:03 PM
We've now entered the part of opex week when indices typically start getting pinned to certain numbers. If that's going to happen on the OEX, that usually means that it settles into an equilibrium position on its Keltner charts, when all channels align themselves around the central average. Instead, the OEX is now at the top of the channels, pushing the two smaller channel up away from the central average. Either the OEX has to consolidate here until the midchannel level cycles up to catch up with it or the OEX has to fall toward the central channel level if equilibrium is going to be established. I'm watching both the TRAN (because it functions as leading index, the way the SOX used to do) and the advdec line to see if I can get a heads-up as to which is most likely. The TRAN is now rolling down toward the neckline of its H&S on its 3-minute chart, with that neckline at about 3730, but it hasn't confirmed that formation yet. The TRAN has a lot of support near 3700, so the TRAN could conceivably find support there again if it confirms the formation. In other words, it might not fall much further if it does fall.

  Jeff Bailey   12/16/20,  1:04:32 PM
01:00 Market Watch at this Link

  Jeff Bailey   12/16/20,  12:58:57 PM
NTAP $34.30 -0.98% ... what do you think of that call option action?

Selling the Jan. $40 calls (2,532 volume) for $0.40, then taking those proceeds and buying 286 contracts in the March $40 calls?

Don't know if NTAP can get to $40 by January, but just never know for sure.

  Jeff Bailey   12/16/20,  12:54:23 PM
Pfizer (PFE) $28.89 +2.01% Link ... also strong today. PnF chart still seems to show some concern regarding COX-2 drugs though.

  Jeff Bailey   12/16/20,  12:52:14 PM
Forest Labs (FRX) $47.28 +4.14% ... nice move today. Bearish signal reversed on the PnF. Link

  Linda Piazza   12/16/20,  12:45:54 PM
The SOX has retreated back below the 200-sma. The TRAN builds a potential H&S on its three-minute chart. The OEX does, too. But I guess we'd have to say that since about 10:30 this morning, the advdec line has had a gentle upward slope.

  Jeff Bailey   12/16/20,  12:45:13 PM
January Crude Oil (cl05f) either side of that $43.60 level isn't it?

Exxon/Mobil (XOM) $50.16 -0.69% Link .... didn't "act right" yesterday, but still may be influenced by December "max pain" of $50.00.

Maybe get a head/shoulder top and break of neckline in XOM as oil moves lower?

Get a little rotation going into 3M (MMM) Link $80.37 +1.61% and play its REVERSE head/shoulder pattern?

XOM achieved its point and figure chart's bullish vertical count of $51.

MMM has some room to its bullish vertical count of $99

  Jeff Bailey   12/16/20,  12:39:18 PM
Semiconductor Index (SOX.X) 434.01 (unch) .... battles its correlative 21-day SMA (433.97) and still trending lower 200-day SMA (434.21).

  Jonathan Levinson   12/16/20,  12:36:09 PM
Bonds have weakened further, TNX adding another 1 bp to clear 4.16% resistance, currently up 9.4 bps to 4.17%, a 2.31% gain for the day. Gold is now down 2.90 at 439.30 as QQQQ continues to drift along the gently rising 7200-tick SMA, now at 40.35. The 30 and 60 min cycle channels are moving sideways, but on my tick-driven charts, they're barely moving at all due to the exceptionally low volume. QQQQ has traded just 29.3M shares so far, not even one third of its ADV of 92.1M shares.

  Jeff Bailey   12/16/20,  12:33:11 PM
Network Appliance (NTAP) $34.13 -1.47% ....

Was looking at today's option chain. Somewhat "unusual" action in the Jan. $40 calls (NUL-AH) with 2,532 traded and 1,471 OI.

I've got a "fitted 38.2%" retracement from the low of $15.92, with "fit" at that 10/04/04 close of $24.83.

Results of that are $27.59, $30.34, 34.80 (almost marks yesterday's close) and then 100% at $39.26.

  Linda Piazza   12/16/20,  12:18:24 PM
The TRAN is showing some patterns that hint at some short-term weakness after this morning's bounce from the low of the day. The advdec line threatens to achieve a new LOD. These aren't heartening signs for bulls, but they certainly haven't kept the OEX from reaching new highs today. They're frankly disturbing, however. As Jim commented earlier with respect to differing ES and ER (MR on QCharts) behavior, something has to give.

  Jonathan Levinson   12/16/20,  12:17:01 PM
Here's another test of 7200 tick SMA support at 40.34, the fourth since the 10:45AM upside break. A failure here could set up a small h&s pattern projecting to 40.25, but I'm just squinting too hard. Volume remains light.

  Jeff Bailey   12/16/20,  12:16:15 PM
12:00 Internals at this Link

  Jeff Bailey   12/16/20,  12:14:01 PM
12:00 Internals at this

  Linda Piazza   12/16/20,  12:12:52 PM
With a high of 575.26, the OEX has progressed closed to the 575.75-ish upside target predicted by the inverse H&S confirmed earlier in the week. Have profit-protecting plans in place. The OEX hit upper Keltner resistance on both the 7- and 15-minute charts. That resistance continues to climb and is now at 575.40 for the OEX, but keep following the OEX higher with those stops.

  Jeff Bailey   12/16/20,  12:02:43 PM
12:00 Market Watch at this Link

  Jonathan Levinson   12/16/20,  12:01:01 PM
Another bullish successful test of 7200 tick SMA support just now at 40.34.

Stepping away for 10 minutes.

  Jim Brown   12/16/20,  12:00:19 PM
Alert - Philly Fed Survey = 29.6, (est 18.7, last 20.7)

  Jeff Bailey   12/16/20,  11:58:53 AM
Jonathan... You're in Toronto right? Is it unusually cold/warm there today? Wondering why oil softens up a bit.

  Jonathan Levinson   12/16/20,  11:47:43 AM
Nymex crude is currently down 1.41% at 43.575, off a session low of 43.425. TNX continues to hold the 4.16% confluence top, +8.4 bps (a 2.06% move today).

  Linda Piazza   12/16/20,  11:45:00 AM
The SOX has now inched above the 200-sma again. While this is cheering to bulls, they really need to see a close above this average. The SOX is still within the appropriate range for a right shoulder for a H&S formation on its daily chart. I imagine much will depend on what the SEMI book-to-bill shows tonight.

  Linda Piazza   12/16/20,  11:40:06 AM
On the OEX's 15-minute chart, the OEX has begun showing some 15-minute closes minimally above the Keltner line that had been previously stopping its advances. Actually, those closes are so close to the line, I really don't think that the OEX has broken above it. If it does, the 15-minute chart still shows upper Keltner resistance just above it, at 575.17, not so far from the 575.75 upside target of the OEX's inverse H&S confirmed a few days ago. All those lines still climb. Follow the OEX higher with your stops. Because of the TRAN's action this morning and the advdec's, I'm still skeptical of this climb, but the OEX keeps climbing nonetheless. The TRAN's and advdec line's bounces from this morning's lows look like possible oversold bounces, so keep an eye on those two for another downturn.

  Jonathan Levinson   12/16/20,  11:36:56 AM
30 min channel resistance is holding at 40.50 QQQQ, and the 40.45 resistance level has held so far on this short cycle upturn.

  Linda Piazza   12/16/20,  11:24:41 AM
With some misgivings about the OEX's abilities to reach upside targets this morning, I note that the OEX has been finding resistance (on 15-minute closes) all morning at a Keltner line currently at 574.66 and has been finding support (on 15-minute closes) above a Keltner line currently at 572.30. Both support and resistance lines continue to climb. A break of that pattern to the downside will tell us that something has changed, but so far, each bearish development has been met with more buying. It's dangerous to try to catch the top in that kind of environment, but I sure would think it would be dangerous to enter new bullish positions, too, with some danger signs in the market. If you're already in a bullish position, follow the OEX higher with your stops and have your plans ready for how you'll handle 575.75 if the OEX should hesitate at or near that level.

  Jonathan Levinson   12/16/20,  11:17:17 AM
QQQQ pulled back bfrom its low volume bounce but has just found support at the 7200-tick SMA support line, creating a potentially positive bias within this sideways chopzone.

  Jeff Bailey   12/16/20,  11:16:03 AM
Triggered long alert ... NTAP $34.30

  Jeff Bailey   12/16/20,  11:15:36 AM
3M (MMM) $79.75 +0.83% .... back near December "Max Pain" of $80.00

Been monitoring its DAILY interval bar chart? Take a look....

  Jeff Bailey   12/16/20,  11:13:27 AM
11:00 Internals at this Link

Yesterday's internals at this Link

Need/look for more new highs to really get some conviction for further squeeze action.

  Jeff Bailey   12/16/20,  11:06:07 AM
11:00 Market Watch at this Link

  Linda Piazza   12/16/20,  11:05:32 AM
Today TRIN wins over the advdec line, as the OEX continues climbing. Bulls, keep that 575.75 upside target for the OEX's inverse H&S confirmed earlier in the week in mind, having profit-protecting plans in place for a test of that level, if it should occur. I don't like this climb, though, with the TRAN, one of the indicator indices I watch, and the BIX, to some degree, showing weakness, and the advdec line so negative.

  Jeff Bailey   12/16/20,  11:00:00 AM

  Jeff Bailey   12/16/20,  10:59:37 AM
Bearish day trade stop alert .... for the SMH $33.40 +0.2%

  Jeff Bailey   12/16/20,  10:59:00 AM
Forest Labs (FRX) $46.48 +2.37% .... there were some rumors flying around yesterday that company is an acquisition target.

True story.... I was talking with my brother over Thanksgiving about the company's CEO (been there 25-years) and his large amount of insider selling. My thoughts were that CEO probably ready to retire, but his selling of shares might suggest FRX on the auction block.

  Jonathan Levinson   12/16/20,  10:57:52 AM
Volume is growing lighter still. 7200-tick SMA resistance is at 40.33, with the 30 and 60 min cycle channels stalled. This high anxiety/low volume drift is classic op-ex (in)action as the 40.25-.45 range continues to hold.

  Linda Piazza   12/16/20,  10:54:30 AM
The TRAN has been plummeting, perhaps a negative sign for the S&P's and Dow, as the TRAN sometimes leads them. It's dropped all the way to 3722 currently, dropping below Tuesday's low. It's at a potential support level, so there's bounce potential, but if the TRAN were to end the day right here or near it, it would have completed an evening-star pattern at the top of its climb.

  Jeff Bailey   12/16/20,  10:51:57 AM
Day trade long setup alert ... for Network Appliance (NTAP) $34.09 -1.58% ....

Looking to go long on a trade at $34.30 (would like to see a 5-minute close above $34.28), would follow with a stop at $33.97, and target some squeeze action higher to $35.25.

  Jeff Bailey   12/16/20,  10:44:49 AM
Looking for a potential long in NTAP $34.14 -1.44% ....

Daily Pivots ... $32.51, $33.57, Piv= $34.28, $35.34, $36.05.

WEEKLY Pivots ... $30.51, $31.77, Piv = $32.88, $34.14, $35.25.

First 5-minute bar was from $34.44-$34.72

  Linda Piazza   12/16/20,  10:44:35 AM
The advdec line has not been a good guide this morning because the OEX at least continues higher. However, I would not advise ignoring a continued decline in the advdec line. If in bullish plays, I'd sure be knowing where my stops ought to be as appropriate for my trading style and be adhering to them.

  Jeff Bailey   12/16/20,  10:38:31 AM
Pacholder High Yield (PHF) $9.86 -0.95% ....

10-year yield ($TNX.X) up a sharp 9.7 bp at 4.173%

5-30 spread +0.20

SPX 1,204.74

  Jonathan Levinson   12/16/20,  10:37:56 AM
QQQQ is holding at 40.25 on very light volume. The session low of 40.22 is close enough to qualify as a throwunder. The short cycle downphase continues, but it's obviously getting poor traction here.

  Jonathan Levinson   12/16/20,  10:34:10 AM
Session lows for silver, -2.54% at 6.705.

  Linda Piazza   12/16/20,  10:33:08 AM
This is one of those few days when the OEX's action has scattered the Keltner lines so that there's not much good in predicting direction. The three-minute chart reveals some bearish divergences at swing highs (Keltner and price/MACD), and shows the OEX finding resistance at a single Keltner line without others converging (usually a bearish sign), but there still appears to be a lot of support underneath that has to be worked through (or sprung through, as on a strong sell program) before the OEX could retreat much below 572.50. If that doesn't happen, and perhaps if it doesn't happen soon, the OEX is likely to bounce at least to 573.74.

  Jeff Bailey   12/16/20,  10:32:40 AM
Current OPEN MM Profiles at this Link

  Linda Piazza   12/16/20,  10:28:31 AM
The TRAN still drops.

  Linda Piazza   12/16/20,  10:23:24 AM
The bulb portion of that possible "b" distribution form on the OEX's five-minute chart could be the right shoulder of a roughly shaped H&S formation with a neckline now at about 572. The bottom of it could also be a second right shoulder for the inverse H&S formation that it confirmed yesterday. I never trust these continuation-form inverse H&S's, and this morning's quick trip back below the neckline, all the way to the right-shoulder area only confirms that distrust. However, the fact that there are competing formations here--with the top of this morning's consolidation the top of a right shoulder for a regular H&S and the bottom of this morning's consolidation pattern the right shoulder for an inverse one--suggests that bulls and bears are fighting it out here. Like Mark earlier on the Futures side, my gut tells me that this might not be a boring day, but sometimes we see this bulls-and-bears fight resolve with a stalemate. Coupled with the observation that stocks and indices are often pinned to a certain level by midmorning on opex Thursday, something perhaps had better get started soon.

  Jeff Bailey   12/16/20,  10:21:12 AM
10:00 Internals at this Link

  Linda Piazza   12/16/20,  10:14:30 AM
The TRAN is doing a nice job of approximating an evening-star formation on its daily chart. Today is far from over, of course, but the TRAN has already retraced most of Tuesday's gain after printing a doji at the top of its climb yesterday.

  Linda Piazza   12/16/20,  10:13:22 AM
The BIX turns down below 375 again.

  Jonathan Levinson   12/16/20,  10:08:20 AM
Here's the test of 40.25 QQQQ at a new session low.

  Linda Piazza   12/16/20,  10:07:48 AM
I was interested to see whether the semis would be impacted by Chartered Semiconductor's overnight lowering of guidance. Chartered is one of the world's five top semiconductor companies. This morning, the SOX turns back from its 200-sma, but it hasn't dropped far yet. Tonight is the SEMI book-to-bill number, so we could see some emotion-based trading today ahead of that number. However, so far, the SOX's pattern remains a potential H&S on the daily chart.

  Jonathan Levinson   12/16/20,  10:06:04 AM
TNX is testing the 4.16% resistance zone, above which 4.2%-4.21% is next resistance. Currently up 8.3 bps at 4.159%.

  Jeff Bailey   12/16/20,  10:05:10 AM
10:00 Market Watch at this Link

Steepening curve should put a floor under SPX at 1,200

  Linda Piazza   12/16/20,  10:00:57 AM
The OEX coils in what looks like a potential "b" distribution form at the bottom of this morning's descent. This drop is just taking the OEX back down to retest the trendline that it broke through yesterday, not something that's particularly alarming and actually should be expected. However, the shape and timing of the quick fall this morning as well as the behavior of the advdec line put me off from feeling that this is a buying opportunity. It may be, but the markets aren't behaving in a way that give bulls confidence of that fact.

  Jonathan Levinson   12/16/20,  9:59:55 AM
The Fed has added a 4B overnight repo to complete the day's adds, which results in a net drain of 5.75B for the day.

  Jonathan Levinson   12/16/20,  9:58:16 AM
This being op-ex Thursday, the charts have an even greater propensity to respect sideways ranges. To avoid gorging on Maalox within meaningless chop, it looks safest to wait for a range break on high volume, either above 40.50 or below 40.10. Narrower bands are at 40.25 and 40.45. Hopefully, we'll be spared a flat session as the option writers run the clock.

  Jeff Bailey   12/16/20,  9:49:35 AM
VIX.X 12.33 -0.16% ... Daily Pivot Levels ... 11.85, 12.06, Piv=12.43 12.64, 13.01

  Linda Piazza   12/16/20,  9:46:57 AM
The OEX has come up to retest the trendline it broke through this morning. Although it broke through the three-minute 100/130 ema's but bounced from the five-minute versions. However, I don't like the way that the drop occurred or the confusing way that the breadth indicators are currently behaving in relationship to each other. TRIN is dropping while the advdec line does, too. VXO is now rising. If TRIN weren't so low, I'd have a definite "pullback in progress" thesis in mind.

  Jonathan Levinson   12/16/20,  9:43:27 AM
Session low for ten year notes, with TNX up 4.9 bps at 4.125%. 4.14%-4.16% is overhead resistance.

  Linda Piazza   12/16/20,  9:40:44 AM
We should refer to Jane's posts, but I don't see good correspondence between what's happening with TRIN (dropping), VXO (slightly climbing) and advdec (dropping), no good support for either a bearish or bullish thesis. I don't like bullish plays when advdec is dropping, though.

  Linda Piazza   12/16/20,  9:34:58 AM
The OEX dropped right to the three-minute 100/130-ema's, doing so with a strong drop through them. All bets are off as far as bounces from that average. Things have changed. This is a sign that I warned we had to watch for in my post last night. Let's see what happens at the first retracement and how breadth indicators stand before we start getting too bearish, however.

  Jonathan Levinson   12/16/20,  9:31:44 AM
The Fed has given the market 7B in 14-day repos so far against the 16.75B in various term repos expiring. That leaves 9.75B in expiries to address with the 10AM short-term repo announcement.

  Linda Piazza   12/16/20,  9:29:11 AM
In addition to other factors that must be kept in mind today, the market will be dealing with a lot of new stocks flooding the markets, with eight or nine IPO's today.

  Jonathan Levinson   12/16/20,  9:27:48 AM
The rally in the CRB continues to trickle down to the retail level. The 14% hike in coffee prices by Maxwell House (not sure if I'm recalling the correct retailer) announced earlier this week is followed up by HSY's announcement a 4.1% price hike in chocholate products and an average 3% increase for roughly half of its candy products. The company is saying that the hikes will offset a rise in input costs.

  Jonathan Levinson   12/16/20,  9:20:23 AM
The euro and CAD have been sinking against the USD since the release of the data, as have gold and silver. Perhaps the current account was "less bad" than whatever whisper number was making the rounds? I have no clue, but the dollar strength in the wake of the record current account gap is certainly curious.

  Jonathan Levinson   12/16/20,  9:18:05 AM
QQQQ failed at yesterday's 40.43-.45 confluence below combined 30 and 60 min channel resistance at 40.53. Yesterday's lows were at 40.15 and 40.18, and given 30/60 min support at 40.14, that should be today's key support area- bears will want to see confirmation of any break with a move below 40.10.

  Linda Piazza   12/16/20,  9:06:32 AM
Overnight, futures have been mostly steady in the face of a sinking dollar--steadying now ahead of our open--as well as slightly lower crude prices and the economic releases. With no other evidence to guide traders, nothing has changed from last night's 23:48 post, found below. I'll want to see how breadth indicators set up, however, in the face of that declining dollar and disappointing foreign investment numbers yesterday.

  Jonathan Levinson   12/16/20,  8:44:30 AM
Bonds have sold following the release of the data but only lightly, retracing part of yesterday's gains, TNX +2.9 bps at 4.105%. Gold is actually lower to 443, up 80 cents for the day, and silver has dipped to negative territory.

  Jonathan Levinson   12/16/20,  8:33:55 AM
Housing starts came in at 1.771M, Building permits 1.988M.

  Jonathan Levinson   12/16/20,  8:31:56 AM

8:29am U.S. 4-WEEK AVG. JOBLESS CLAIMS DOWN 4,500 TO 337,750


8:29am U.S. WEEKLY JOBLESS CLAIMS DOWN 43,000 TO 317,000



8:43am .2 U.S. Q2 CURRENT ACCT DEFICIT REVISED TO $164.4 V $166.2

  Jonathan Levinson   12/16/20,  7:47:19 AM
Equities are mixed. ES flat at 1207.25, NQ -1 at 1632, YM -2 at 10695 and QQQQ +.04 at 40.37. Gold is up 1.60 at 443.80, silver +.063 at 6.943, bonds flat at 112.875 and Nymex crude -.25 at 43.95.

We await the 8:30 releases of Housing starts and Building permits for Nov., est. 1.98M and 2.01M respectively, the Q3 current account, est. -171B, and initial claims for the week ended 12/11, est. 342K.

  Linda Piazza   12/16/20,  6:44:21 AM
Good morning. In its first reaction to the further Wednesday night drop in the dollar against the yen and rise in crude, both continuing after its close, the Nikkei traded lower Thursday. Other Asian markets were mixed, with lowered guidance from Chartered Semiconductor hitting Singapore's market. Most European markets currently trade higher. Our futures flat-lined through the night. As of 6:31 EST, gold was up $0.10 and crude, down $0.33 . More detail about Asian and European markets follows in succeeding paragraphs.

After failing to break above 11,000 yesterday and dropping into its Wednesday close, the Nikkei gapped lower Thursday morning and coiled. It broke higher in the afternoon, turning positive for almost an hour before dropping again into the close. It closed down 32.09 points or 0.29%, at 10,924.37.

Yesterday's steep decline in the dollar against the yen, continuing after the Nikkei closed Wednesday, hit the index Thursday. Crude had risen, too, with those two events hurting exporters such as autos and techs. In addition, both Mazda Motor and Nissan Motor reported fires at plants, but Nissan's did not affect production. Struggling retailer Daiei plunged as a newspaper reported that part of the state-backed Industrial Revitalization Corporation's restructuring plan for the company will require it to cut common shares by 99 percent.

Other Asian markets turned in mixed performances. The Taiwan Weighted gained 0.28%, and South Korea's Kospi, 0.56%. Singapore's Straits Times declined, however, by 0.71%, hurt by Chartered Semiconductor's 9.3% drop after the company revised Q4 revenue forecasts downward. The company cited weakness in several areas. Hong Kong's Hang Seng also fell, by 0.38%, and China's Shanghai Composite declined 0.61%.

Most European markets trade in positive territory this morning, with a primary impetus appearing to be gains in Dutch bank ABN Amro after the company announced cost-cutting measures. Philips Electronics also moved higher as it announced plans to outsource or transfer some of its products to Hong Kong's TPV Technology. Adidas-Salomon benefited from its statement that it expected record soccer sales and increasing global market share. Deutsche Telekom announced its intention to sell about half its stake in a Russian telecom, and gained as a result.

As of 6:40 EST, the FTSE 100 traded 10.30 points or 0.22% higher, at 4,738.50. The CAC 40 had gained 11.69 points or 0.31%, to trade at 3,814.68. The DAX had gained 13.34 points or 0.32%, to trade at 4,227.03.

  Jeff Bailey   12/15/20,  1:11:05 AM
Pulte Home (PHM) with an "old" fitted 38.2% retracement (pink) I had on the stock from earlier this summer, as well as a conventional (blue) I had placed on the stock after the "Las Vegas pricing" problem was warned about. Link

Now I need some type of explanation as to "why" PHM stopped its decline at $47.46, and rallied to close at $59.15 on November 15?

This morning's little gap above $60.47 sure seemed to find some buyers didn't it? I'm thinking some short squeeze action.

What's the saying.... what goes on in Las Vegas, stays in Las Vegas?

Here's my added "why" fitted retracement (red). Link

Next quarterly earnings aren't due until Jan. 26 (unconfirmed date). Consensus is for $3.04 per share vs. year ago $1.94.

I don't know if PHM has corrected it "pricing problems" in Vegas. If the stock can get to $70 ahead of earnings, will probably sell at least 1 of the options in the MM Profile portfolio. Would help if Treasury yields stay low, keep sector sentiment positive.

  Jeff Bailey   12/15/20,  12:26:32 AM
Are you BULLISH? .... or are you BEARISH?

Are you undecided?

E-mail me five (5) of Your most important stocks that you feel will decide further market direction over the next 5 months

When you send them to me, give me an UPSIDE level where if the stock trades that LEVEL, you would believe the stock signals BULLISHNESS, or BEARISH (if its a contrarian stock) for the S&P 500.

Then give me a DOWNSIDE level where if the stock trades that LEVEL, you would believe the stock signals BEARISH implications for the S&P 500, or BULLISH (if its a contrarian stock).

Your name will NOT be used, this is NOT a contest, but I want to compile a list of stocks, and levels of bullish/bearish implications. I want to write up an "Ask the Analyst" column using a list of stocks that traders/investors see as being "key stocks" for the MARKET in the next few months.

For each of your 5 stocks, tell me if you are leaning BULLISH, or BEARISH toward the stock. If you deem the stock "key to market direction," but are still NEUTRAL as to what the stock is telling you at this point, then label the stock "neutral"

DO NOT give me a stock that is trading $50, with an UPSIDE level of $55, and a DOWNSIDE level of $10 (that would be unfair). What would be good is a stock that is trading $50, with an UPSIDE level of $55 and DOWNSIDE level of $45.


What I hope to do is get 5 XYZ stock with various BULLISH/BEARISH bias.

Get another 5 ABCD stock with various BULLISH/BEARISH bias.

Get another 5 NOP stocks with various BULLISH/BEARISH bias.

Then... as each stock gives a DOWNSIDE or UPSIDE trigger (based on the average of levels I receive) I can include a TOTALLY UNBIASED trader/investor alert in a weekly update.

What would be most telling is if a stock that every respondent labeled as BULLISH gave a DOWNSIDE signal, or a stock that every respondent labeled as BEARISH gave an UPSIDE signal. This type of action would DIVERGE from what could be broader market psychology.

If you're interested in participating in this, send me an e-mail, with "5 stocks" in the subject heading.

  Linda Piazza   12/15/20,  11:48:25 PM
Like the Dow, the OEX broke above its broadening formation on the daily chart, producing a near-doji at the top of a climb as it did so. Since 12/09, the OEX has been bouncing from its five-minute 100/130-ema's, with one brief exception this morning. As long as breadth indicators support such a play, continue to buy pullbacks to and bounces from those averages, currently at 572.19 and 571.85. Be ready to jump back out if the OEX should roll over, however, as this uptrend has been in place for a while. A gap lower tomorrow morning or a steep descent would put that upside breakout in question. I once read an article that suggested that it was an ominous sign to see a punch through resistance followed by immediate volatility that moved prices back under the resistance, and I've found that to be true, too. So, let's look tomorrow morning at how futures behaved overnight, and alter the buy-the-dips philosophy if we see something disturbing there, just after the OEX broke out.

  OI Technical Staff   12/15/20,  11:48:18 PM
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