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  OI Technical Staff   1/6/2005,  8:38:47 PM

Lock in your subscription rate NOW!: Link

 
 
  Jeff Bailey   1/6/2005,  7:32:13 PM
Closing Internals at this Link

 
 
  Jeff Bailey   1/6/2005,  6:07:37 PM
QQQQ decent block of 400,000 at $38.37 after the close.

 
 
  Jeff Bailey   1/6/2005,  5:39:38 PM
UTStarcom (UTSI) $19.94 -3.71% ... plunges to $16.65 after saying it now sees Q4 revenues in the range of $740-$745 million versus initial guidance of $875-$885 million (consensus $864 million)

Blamed challenging market environment in China, including overall slowing of the Chinese economy, maturation of PAS market, and decreased capital spending.

 
 
  Jeff Bailey   1/6/2005,  5:37:33 PM
Darden Restaurants (DRI) $27.37 +3.79% ... reports Red Lobster December comps jumps 14.0%. Consensus was for more modest 4.5% rise.

 
 
  Jeff Bailey   1/6/2005,  5:33:41 PM
General Motors (GM) $39.45 +0.84% ... higher at $39.65 after saying it posted a record year of sales in China, where vehicle sales surged 27.2%, to 492,014 units. Market share rose from 8.5% at end of 2003 to an estimated 9.3% in 2004.

 
 
  Jeff Bailey   1/6/2005,  5:17:51 PM
Sounds a little like the 90's doesn't it Larry? i.e. falling gold, rising dollar, measured pace of raising rates

 
 
  Linda Piazza   1/6/2005,  5:15:09 PM
Thursday, the OEX's range spanned Wednesday's almost exactly. Both days left upper shadows. If the two candles were combined, they would have created a doji at the bottom of a steep decline: small body, both upper and lower shadows. A doji is indicative of indecision. That would be indecision about sending the OEX lower, indecision about sending it higher. The potential reversal still needs to be confirmed. In my eyes, that reversal might be only temporary when it comes, and the following paragraph describes why.

Because of a potential H&S on the OEX's 60-minute chart, bulls should remain skeptical of the rise and be ready to take quick profits, if necessary: Link If you look closely at the congestion at the bottom right of that chart, you'll see that it could be a roughly formed inverse H&S at the bottom of the decline, so bulls have not yet given up on the idea of a bounce, no matter how weak efforts seemed Wednesday. If confirmed by a move above the neckline (currently about 569.10, but descending), that inverse H&S would set an upside target near 573.30, inside the 572-574-ish zone that might form the top of a right shoulder. Therefore, any bulls should have profit-protecting plans in mind for that level as it is touched, if it is.

First matters first, though. The OEX could not maintain a position above its five-minute 100/130-ema's on Wednesday, and it's formed a likely bear flag beneath the one it formed yesterday. A breakdown below Thursday's last five-minute low at 566.81 confirms a breakdown out of that flag and a breakdown below 565.30 furthermore negates the potential inverse H&S. Some Keltner support exists at that 565.30 zone, but if the OEX crashes through that, the 60-minute Keltner chart sets up potential downside to 560.22.

What do I think? I think we may still see choppy attempt to rise tomorrow, but I think there's danger it could all give way, too, and that downside Keltner target could be approached. I'd bet on the choppy attempt to rise into 572-574 first, but only if futures action overnight supports that possibility.

 
 
  Jeff Bailey   1/6/2005,  5:03:27 PM
Day trade long alert ... for Accenture (NYSE:ACN) at the offer of $26.00, stop $25.70, target $26.50.

Reports Q1 (Nov.) earnings of $0.32 per share, penny better than consensus.

Stock finished regular session at $25.42 -0.89%.

Take two retracement... one from the 10/13/04 low to recent high, then another from the recent high to today's low.

Zone $25.56-$25.70, overlap at $26.65.

 
 
  Jeff Bailey   1/6/2005,  4:58:51 PM
QQQQ additional note: If taking this week's high, and current week's low (today's low of $38.34) and using today's close $38.35, then next week's WEEKLY Pivot would be $38.99.

 
 
  Jeff Bailey   1/6/2005,  4:45:36 PM
Current OPEN MM Profiles that I've made at this Link

 
 
  Jeff Bailey   1/6/2005,  4:05:08 PM
QQQQ tomorrow's DAILY Pivot levels .... $38.10, $38.22, Piv = $38.47, $38.59, $38.84.

Begin thinking about a "knee-jerk" reaction lower for a bullish entry, perhaps covering a currently held short, with a bounce back toward DAILY R2.

This would still allow for no re-test of WEEKLY S2 as discussed in Tuesday evening's Market Monitor.

Today's QQQQ option chain, sorted by volume at this Link . Not a lot of help from VXN.X 20.13 -0.24%, which was down a very fractional 0.05 point.

Questions that should be asked .... Why buy to open Jan. $39.63 puts? Why buy to open $37.63 puts? Why by to open Jan. $39 calls? (then turn the table and ask why sell to close, or sell to open)

VIX.X and VXO headed in different directions. Look for unison tomorrow.

Bond market should give early read on things, when QQQQ trades pre-market.

 
 
  Jeff Bailey   1/6/2005,  4:00:20 PM
QQQQ $38.35 -0.5% ... at the close as the "destiny trade" comes to fruition.

 
 
  Linda Piazza   1/6/2005,  3:58:50 PM
Of course, when trading acts as it does today, you know that conflicting chart formations are going to show up, and they're to be found today. To combat the potential H&S on the 60-minute chart, there's kind of a rough inverse one on the 15-minute chart.

 
 
  Linda Piazza   1/6/2005,  3:50:02 PM
Today's OEX range retraced almost all of yesterday's. If you combined the two day's candles into one, you'd have a doji with a small body, but that's also a potential reversal signal at the bottom of a steep decline. Five-minute Keltners have settled into an equilibrium position so that they're not going to give us much information going into the close. I'm still watching for the potential that the OEX could rise into a right shoulder for the H&S on its 60-minute chart, doing so over the next couple of trading sessions, pausing or maybe even rounding down into that shoulder somewhere near 572-574.

 
 
  Jonathan Levinson   1/6/2005,  3:47:53 PM
QQQQ failed at 38.55. The apex of what appears to be a descending triangle is now 38.40-.55 QQQQ.

 
 
  Linda Piazza   1/6/2005,  3:43:22 PM
Speaking of unreliability (earlier discussion on the Futures side), my cable broadband connection has been cutting out with some regularity lately. Just did. I'm in the process of booting up again with dial-up.

 
 
  Linda Piazza   1/6/2005,  3:26:44 PM
The support near OEX 567.90-568.30 did not hold, but the OEX approaches another potential support now near 566.60. Resistance masses overhead, though, near that former potential support, and it's looking to me as if the OEX might have difficulty getting much past that resistance. It might be easier to decline than to climb much further than 568.30.

 
 
  Jonathan Levinson   1/6/2005,  3:22:42 PM
Key test of the session lows just a few cents away for QQQQ. The 30 and 60 min channels are both pointed south, and a break from here should confirm the very long-awaited downphases in those timeframes. QQQQ descending intraday resistance is now at 38.55, and the outlook is bearish below that level.

 
 
  Jeff Bailey   1/6/2005,  3:18:50 PM
03:00 Internals at this Link

 
 
  Jeff Bailey   1/6/2005,  3:15:41 PM
Crisis ... the straight dope ... Link

 
 
  Jim Brown   1/6/2005,  3:11:12 PM
Speech by Fed Governor Donald L. Kohn
Crisis Management: The Known, the Unknown, and the Unknowable Link

 
 
  Jim Brown   1/6/2005,  3:10:44 PM
MATR announcing a 3:2 split

 
 
  Linda Piazza   1/6/2005,  3:08:58 PM
Today's TRAN trading pattern is a puzzle. If one has a bullish outlook, it looks like a bullish right triangle, with a flat top near 3680 and with a rising supporting trendline off the series of higher lows. However, the pattern at the top of this afternoon's climb (since 1:00 EST) looks a whooole lot like a potential H&S forming. We're about to see, as the TRAN is currently charging right up to the right-shoulder level. A move much past the current 3678.69 level will negate the formation.

 
 
  Jonathan Levinson   1/6/2005,  3:07:51 PM
QQQQ is right back to the lower rising support line: Link

 
 
  Jeff Bailey   1/6/2005,  3:06:29 PM
03:00 Market Watch at this Link

 
 
  Jeff Bailey   1/6/2005,  3:05:10 PM
Excellent reporting/analysis Rick Santelli (on CNBC)... or at least I agree with it.

 
 
  Linda Piazza   1/6/2005,  3:05:07 PM
This is important support for the OEX. It needs to hold up here.

 
 
  Linda Piazza   1/6/2005,  3:04:19 PM
Correction to my 14:41 post. I meant to type that it might be possible that the OEX would fall back to 567.90-568.30 (not 563.30) before continuing much higher. The original post has been corrected.

 
 
  Jonathan Levinson   1/6/2005,  2:56:20 PM
QQQQ is now up 4 cents from its 8:30AM level. Whattaday.

 
 
  Jeff Bailey   1/6/2005,  2:55:43 PM
Bond basis point changes today, last 5 and 20 days. PHF as an observation of "junk bond," which at $9.72 and monthly dividend of $0.075 would put effective yield at 9.25%.

For new junk bond bullish entries, really want something with a cost basis of yield more than this, when comparing to the benchmark 10-year. Time will come.

Link

Keep today's action in mind when considering today's weekly jobless claims figures, then tomorrow's December nonfarm data.

If you heard CNBC's Rick Santelli reporting earlier this morning on the trade from bond traders, tie it in with last night's wrap, this should make some sense.

 
 
  Linda Piazza   1/6/2005,  2:51:40 PM
The GSO has found resistance at its 50-dma all day today, the first time that the GSO has been below its 50-dma since early September. Over the last few weeks, I've been mentioning a potential H&S at the top of the GSO's climb, although Jeff and I discussed in the MM a few times whether that right shoulder might not have extended too far. I thought it probably had, but the straight-down plummet of the last few days suggests otherwise. Below 165, there's not really much to halt the GSO except some slight congestion near 161-162 and presumed round-number support near 160 until it reaches the 100-ema at 158.53, currently just above the 38.2% retracement of the rally off the August low. That would also be the downside target of the H&S. Seeing the GSO plummet that far would not be good for the tech-related indices, but I would expect a slowing of the decline and a retest of the neckline before the GSO made the final plummet, anyway. Maybe.

 
 
  Linda Piazza   1/6/2005,  2:41:24 PM
It may be possible that the OEX falls back to 567.90-568.30 before continuing much higher.

 
 
  Jonathan Levinson   1/6/2005,  2:39:42 PM
This latest coil for QQQQ is printing in a higher range just below the key 38.70-.73 zone. Volume is very low in this area, and was preceded by two buy programs. My guess is that this is a consolidation that will break to the upside, but again, a move above 38.73 (or below 38.35-.40) should provide the answer for us.

 
 
  Linda Piazza   1/6/2005,  2:34:46 PM
There's still a confusing picture. The OEX's three-minute Keltner chart shows that nearby resistance, up to 569.07, looks stronger than nearby support, suggesting that it will be easier for the OEX to decline than to climb much higher than the current day's high. All day long, however, some of these signs have been defied. That's what it says for now, however.

 
 
  Linda Piazza   1/6/2005,  2:24:44 PM
Here's the promised chart on the potential H&S seen on the OEX's 60-minute chart, with the H&S forming since the middle of December: Link

 
 
  Jeff Bailey   1/6/2005,  2:20:23 PM
SOX.X and $HUI.X ... buggers look rather similar don't they of late?

 
 
  Linda Piazza   1/6/2005,  2:19:12 PM
And the OEX did hesitate long enough for Keltner lines to snake above it on the three-minute and other short-term charts. It's now unclear whether it can push above that resistance again.

Keep in mind that the 60-minute and 120-minute charts show a large H&S perhaps building since the middle of December. Any bounce now should be looked at as a possible rise into a right shoulder. Chart to follow.

 
 
  Jonathan Levinson   1/6/2005,  2:14:58 PM
QQQQ's just broken back into the pennant apex, now testing 7200-tick SMA support. A break below 38.38 is the next goal for bears if 38.55 breaks. The short cycle oscillators are trying to roll over again, and should do so if 38.55 does not hold.

 
 
  Jonathan Levinson   1/6/2005,  2:08:30 PM
QQQQ failed at the 38.73 level again and is now testing 38.60, the broken trendline, from above.

 
 
  Jeff Bailey   1/6/2005,  2:06:23 PM
Semiconductor Index (SOX.X) 406.66 +0.59% ... it's the darndest thing, and I can't figure it out, and I do see it often.

December's MONTHLY S1 of 403.28 has been tested three times this week. Once yesterday and twice today.

Only reason I notice this is that I haven't had time to update its WEEKLY/MONTHLY Pivot retracement yet.

 
 
  Linda Piazza   1/6/2005,  2:04:42 PM
If the OEX hesitates here too long, Keltner lines are going to snake above it. Already the breakout is looking more tenuous on the five-minute Keltner chart. All day, we've seen breakouts and breakdowns that don't go much of anywhere, and I wouldn't be surprised to see this breakout suffer the same fate.

 
 
  Linda Piazza   1/6/2005,  1:56:00 PM
The OEX's three-minute Keltner channel chart now gives a potential upside of 569.74.

 
 
  Jonathan Levinson   1/6/2005,  1:53:18 PM
38.73 QQQQ is the line in the sand for intraday bears, also conveniently lined up with 30 and 60 min channel resistance now.

 
 
  Jonathan Levinson   1/6/2005,  1:49:50 PM
Here's the descending trendline test now for QQQQ.

 
 
  Linda Piazza   1/6/2005,  1:49:40 PM
The OEX is lining small-bodied candles up on top of its five-minute 100/130-ema's, perhaps in preparation for a bounce . . . may have begun as I typed.

 
 
  Linda Piazza   1/6/2005,  1:44:16 PM
Now there's a competing continuation-form H&S at the bottom of the OEX's decline, seen on the five-minute chart and not yet confirmed. In reality all of today's trading has just been forming and reforming itself into a rising regression channel that is slightly lower than but parallel to yesterday's. Top resistance is currently at about 568.60 or perhaps slightly above. Bottom support is now at about 566.25. Both support and resistance have been pierced today, with the OEX then moving back inside the channel.

 
 
  Jonathan Levinson   1/6/2005,  1:42:08 PM
The program 'bots have been fighting it out over the past hour with those 1M+ share trades, but price remains net unchanged, still holding at those 8:30AM levels. The trendlines on my previous chart are converging, with the range now narrowed to a mere 15 cents between 38.45 and 38.60.

 
 
  Linda Piazza   1/6/2005,  1:35:53 PM
Some positive signs but tenuous ones: The OEX closed a five-minute candle above its 100/130-ema's, but the next five-minute candle was a doji, a potential reversal signal. The OEX closed a 5-minute candle above a Keltner line that's been holding it back since early Monday morning, but only barely, and the current 15-minute candle is red as the OEX turns back again. There's a potential inverse H&S, but the OEX turns back from the confirmation level. When the OEX was testing those averages and that Keltner line, it failed, so far, to reach a new five-minute high. I'm not convinced although I think it wants to go up more than down over the very short term. I think this is a market that didn't quite finish the intended downside, wants to bounce into at least an oversold bounce, but maybe is getting held back because the last weak longs were never flushed out. Hence, the choppy action.

 
 
  Linda Piazza   1/6/2005,  1:27:58 PM
The OEX just punched above the five-minute 100/130-ema's again, but the current five-minute candle is showing definite doji qualities. Careful here.

 
 
  Jonathan Levinson   1/6/2005,  1:24:43 PM
Updated QQQQ chart at this Link . The intraday trendlines suggest that key descending resistance is just overhead at 38.62. If it breaks, watch the 38.73 level.

 
 
  Jonathan Levinson   1/6/2005,  1:14:21 PM
Session high for crude oil here, +5.01% at 45.575.

 
 
  Linda Piazza   1/6/2005,  1:13:13 PM
If the OEX falls much further or moves sideways longer, it will have invalidated the potential inverse H&S at the bottom of its five-minute chart.

 
 
  Jeff Bailey   1/6/2005,  1:11:46 PM
01:00 Internals at this Link

 
 
  Jonathan Levinson   1/6/2005,  1:10:01 PM
30 and 60 min channel support haven't changed, and the current buy program has QQQQ to within pennies of the 38.39 level just above the session lows. A failure to bounce within the next 10 minutes will roll these channels as well as the oscillators over to the downside, confirmed by a break to new lows for the day.

 
 
  Jeff Bailey   1/6/2005,  1:04:50 PM
01:00 Market Watch at this Link

 
 
  Linda Piazza   1/6/2005,  1:02:59 PM
Watch for a potential inverse H&S on the OEX, with a head at this morning's low, left shoulder at yesterday's, an ascending neckline and a potential right shoulder right in the OEX's current location. Lots of competing formations today, but I don't want to leave out the potentially bullish ones, because watching them can tell us whether the bulls have gained supremacy over the short-term or whether bears still hold the power.

 
 
  Linda Piazza   1/6/2005,  1:00:18 PM
The OEX resistance that's held since early Monday morning held again, proving supreme over shorter-term support. (See my 12:48 post for a description of each.)

 
 
  Jeff Bailey   1/6/2005,  12:51:15 PM
Various energy futures at this Link

see 12:43:24 thoughts

 
 
  Marc Eckelberry   1/6/2005,  12:50:57 PM
I'm starting to look at some INTC Feb calls. I think the stock is due for a very nice bounce. We have a triple bottom forming and conditions are ripe. 22.5 Jan strike is .77 ratio and a little more pessimism ahead of earnings could make it a play.

 
 
  Jonathan Levinson   1/6/2005,  12:48:51 PM
A big volume spike just now for QQQQ, over 1M shares within 100 ticks. It generated little price movement, however. Key resistance remains 38.73.

 
 
  Linda Piazza   1/6/2005,  12:48:42 PM
The OEX is about to be squeezed between Keltner support at a line currently at 567.29 and Keltner resistance, at a line at 568.13. The OEX has been closing 15-minute candles above the lower line for the last seven 15-minute candles, but it hasn't been able to close a 15-minute candle above the higher line since early Monday morning.

 
 
  Jeff Bailey   1/6/2005,  12:43:24 PM
Stronger bid in crude oil than one would think based on natural gas inventories alone.

I'm thinking there's some strong additional buying with the Iraq elections set for later this month. Probably some "hedge against events" that black gold provides, which the yellow might not.

 
 
  Linda Piazza   1/6/2005,  12:40:33 PM
The TRAN is spending a second day trying to balance on its 50-sma, with that average at 3349 and the TRAN at 3668.95 as I type. So far, the TRAN has not broken above yesterday's high nor below yesterday's low.

 
 
  Jeff Bailey   1/6/2005,  12:38:11 PM
Pulte Home (PHM) $61.75 +2.33% ... interesting option action in the January/February Calls, and January/February puts. Has a $64 look to it.

 
 
  Jeff Bailey   1/6/2005,  12:34:34 PM
Genzyme (GENZ) $58.39 +2.6% ... lends to biotech strength after saying it had bought back rights to its osteoarthritis pain drug Synvisc from Wyeth

 
 
  Jonathan Levinson   1/6/2005,  12:33:44 PM
The 30 min and 60 min oscillators are not advancing, but have not rolled over either, and despite the downtick in the channels, this is still a consolidation that could break in either direction. A move above 38.73 or below 38.35 QQQQ should provide direction, and these ambiguous oscillators should follow.

 
 
  Linda Piazza   1/6/2005,  12:32:52 PM
Sometimes that sense of confusion that tells me a choppy day is likely hits me premarket when I'm staring at charts and seeing too many conflicting formations. Sometimes it hits early in the market day when things just aren't adding up and there's a bad "feel" to the market. That's what happened today. I came into today pretty much thinking I knew what I would be watching for, but early action has scrambled matters enough that it's difficult to trust any movement, up or down. Marc, to add to your QM comment (12:23 post), the dollar is doing some zooming around one way and then another, too, perhaps in reaction to what's going on in other markets or in corroboration.

 
 
  Jeff Bailey   1/6/2005,  12:26:32 PM
Genentech (DNA) $53.70 +1.03% ... higher after receiving FDA approval for warning label for its Avastin drug. The labeling warns of n increased risk of adverse events like heart attack and stroke in chemotherapy patients.

 
 
  Mark Davis   1/6/2005,  12:25:21 PM
Linda they haven't finished their third martini yet. They need to get a good buzz going before they come back and orchestrate a stop-running push that would scare the spots off a trout.

 
 
  Jonathan Levinson   1/6/2005,  12:24:16 PM
Bonds have firmed, TNX -1.6 bps at 4.261%, while gold has dropped to a low of 422.30, which is old support above the 418 and 412-415 zones. The miners are lightly lower, however, while crude oil is up 4.03% at 45.15. QQQQ continues to trade its 8:30AM levels, sliding sideways.

 
 
  Linda Piazza   1/6/2005,  12:21:32 PM
Here's one signal that's something is wrong today: Despite producing several 15-minute candles with long upper shadows, the OEX refuses to fall. I mentioned about 30 minutes ago that I wasn't sure how deep any decline might be, and there just hasn't been any decline at all. That suggests an underlying bullish tenor, but bulls haven't been able to build on gains, either.

 
 
  Jeff Bailey   1/6/2005,  12:17:39 PM
I stand corrected to last night's Index Trader Wrap when I said that the Oil Bullish % from Dorsey Wright was the first sector bullish % to reverse lower to "bear confirmed" status. It was the Precious Metals Bullish % (BPPREC) to hold that honor.

 
 
  Linda Piazza   1/6/2005,  12:05:58 PM
Another 15-minute candle with a long upper shadow and a small body. This suggests that the OEX has hit a very short-term top, but how far will it decline? I'm losing faith in a movement either direction. Keltner channels suggest that the 566.60-ish level might be support now, in addition to that offered at the day's low.

 
 
  Jonathan Levinson   1/6/2005,  12:03:19 PM
Volume has stalled out considerably, with QQQQ unchanged from its 8AM levels. The 30 and 60 min cycle channels have adopted a slight downward posture, which fits with my earlier interpretation of a failure of the corrective 60 min cycle upphase carrying over from yesterday. Channel support is currently at 38.40-.45 for the 30 and 60 min cycle channels.

 
 
  Jeff Bailey   1/6/2005,  12:02:58 PM
12:00 Market Watch at this Link

 
 
  Linda Piazza   1/6/2005,  11:54:25 AM
Earlier, I asked if this was going to be another choppy consolidation day, and it that's what we've had so far. Markets have had that bullish-one-moment-bearish-the-next complexion today. Breakdowns and breakouts haven't seen follow-through. Be careful. If big money people don't yet know which stance they're taking, the switches can be painful to your trading account.

 
 
  Jeff Bailey   1/6/2005,  11:50:33 AM
Airlines, retail and software sector losers. Miners look ready to join.

 
 
  Jeff Bailey   1/6/2005,  11:49:56 AM
Homebuilders, biotech, disk drives, oil, natural gas are sector winners early.

 
 
  Linda Piazza   1/6/2005,  11:47:30 AM
The just-completed OEX 15-minute candle is leaving a long upper shadow behind it, a shadow that pierced resistance, with the candle then forming below the resistance. On its face, this isn't a bullish development, but is instead one that sets up the possibility of an evening-star formation on the 15-minute chart. That's just a possibility at this point, however, and the current 15-minute candle is not particularly following the scripted scenario. That would have the current candle falling from the previous candle's close and that's not happening. There's a small rise instead.

 
 
  Jonathan Levinson   1/6/2005,  11:41:33 AM
QQQQ failed at the 38.72 line again, with the short cycle oscillators rolling over right on time. However, it will take a break below 38.50 to confirm the failure.

 
 
  Linda Piazza   1/6/2005,  11:36:32 AM
The OEX charged up to the five-minute 100/130-ema's and test them now, testing the ascending trendline it broke through yesterday afternoon at the same time. Volatility indices drop, the advdec line climbs again, and the TRIN loses its upward momentum. Once again, if this is rollover territory, internals are hiding that fact from us.

 
 
  Tab Gilles   1/6/2005,  11:33:31 AM
WTIC testing upper end of downtrend channel on natural gas news. Link

 
 
  Linda Piazza   1/6/2005,  11:26:47 AM
The worry that I expressed in my 10:47 post is playing out. Without a bigger bounce from which to roll over, the OEX didn't have enough downward momentum to propel it through yesterday's low. The 60-minute Keltner chart shows that until the OEX begins demonstrating 60-minute closes above the Keltner line currently at 567.53, the downward trend continues. The OEX's current rise is taking it up to retest the five-minute 100/130-ema's again, since they've had time to sink to meet the OEX. They're at 567.73 and 568.20, respectively. This just doesn't feel good either direction today.

 
 
  Jeff Bailey   1/6/2005,  11:20:53 AM
Oil higher after report that natural gas inventories fell by 151 bcf to 2,698 bcf. Analysts were looking for a decline of 141 bcf.

 
 
  Jonathan Levinson   1/6/2005,  11:16:35 AM
Same here Linda.

 
 
  Linda Piazza   1/6/2005,  11:15:59 AM
Caught on the telephone.

 
 
  Jeff Bailey   1/6/2005,  11:14:28 AM
11:00 Internals at this Link

Yesterday's Internals at this Link

 
 
  Linda Piazza   1/6/2005,  11:04:17 AM
We're seeing the to-be-expected bounce from yesterday's low. It's also a bounce to be feared, but so far, it's not putting on a fearsome face.

 
 
  Jeff Bailey   1/6/2005,  11:03:38 AM
11:00 Market Watch at this Link

Futures, dollar, CRB 30-min delayed.

 
 
  Jeff Bailey   1/6/2005,  10:59:31 AM
Treasuries ... finding some buyers. 5-year yield down 2.1 bp, 30-year yield down 0.2 bp.

 
 
  Jeff Bailey   1/6/2005,  10:58:03 AM
Dow Industrials (INDU) 10,594 -0.03% ... moves to session low

 
 
  Jeff Bailey   1/6/2005,  10:57:31 AM
Crude Oil jumps $1.37 to $44.76 (real-time).

WEEKLY Pivot levels ... $40.35, $41.90, $42.80 $44.35, $45.25.

 
 
  Jeff Bailey   1/6/2005,  10:56:30 AM
CBOE Internals Index (INX.X) 199.59 -1.32% ...

 
 
  Linda Piazza   1/6/2005,  10:55:59 AM
The OEX tests yesterday's low.

 
 
  Jonathan Levinson   1/6/2005,  10:55:57 AM
Here's the test of 30 min and 60 min channel support now.

 
 
  Jeff Bailey   1/6/2005,  10:55:05 AM
Google (GOOG) 189.53 -2.03% Link ... quick drop from 193.

 
 
  Linda Piazza   1/6/2005,  10:53:22 AM
The OEX is about to roll down below the 566.10-ish horizontal support it established today. The breakdown might not feel just right, but so far, it's the best show in town. If in bearish positions, I'd have profit-protecting plans in place for yesterday's low. If the OEX can sustain prices below that, then begin looking at profit-protecting plans for the 561-ish level. This still doesn't feel as if we had enough of a bounce, but the 60-minute Keltner chart suggests that we did.

 
 
  Tab Gilles   1/6/2005,  10:49:08 AM
SPX has retraced 38.2% from November 2 low and is near it's 50-ma. Thus far in the first 4 days of trading for 2005, it has rallied and finished lower for each day. Will this pattern continue? Link

 
 
  Jonathan Levinson   1/6/2005,  10:47:37 AM
QQQQ cracked range support and has next support at 38.39, where currently both the 30 and 60 min channel supports line up. The 30 min channel has rolled over again, and I suspect that this current chop is resulting from the lag between the 30 and 60 min channels- the 60 min usually takes longer to complete its tops than the 30, which was starting to roll over as of yesterday's close. It will take a break above 38.72 to challenge that bearish interpretation.

 
 
  Linda Piazza   1/6/2005,  10:47:14 AM
This bear-flag "breakdown" doesn't feel any more right than the climb did. I was always suspicious of a breakdown from this level, but now we can watch the new coiling formation. Here's my concern: without a bigger bounce now, ahead of a breakdown, I'm afraid that we'll see one from yesterday's closing low instead, so that bears would be enticed into a play just ahead of the real and bigger bounce. Also watch the now-coiling advdec line for help.

 
 
  Jeff Bailey   1/6/2005,  10:41:30 AM
Yesterday there was some "frightening" comments made regarding the financial sector, Fed tightening, low rates

Another article that might "ease" these fears as depicted by how the MARKET can react to Fed policy. Link

For those still with us, you will also remember these "fears" were raised in May of last year.

When reading articles, it can be helpful to look and see how the MARKET traded. Many scenarios (bullish/bearish) will often-times find a period in market history, where similar dynamics were taking place.

 
 
  Jeff Bailey   1/6/2005,  10:38:25 AM
Per Linda's 09:48:27 and reader's question regarding DJX and OEX.

An Ask the Analyst column Link to give some addition information as to why there isn't a numerical correlation.

 
 
  Linda Piazza   1/6/2005,  10:36:41 AM
If that was a bear flag, the OEX is already breaking down below its support, but then bouncing right back up to test the supporting trendline. This potential bear flag doesn't have a good shape, but I still think it looks flag-ish. I think we just had a test and for now bulls absorbed the supply that bears just threw at them, but whether they'll be able to continue doing so certainly feels iffy at this point. We still haven't even had a test of the five-minute 100/130-ema's, something that I expected to happen a bit earlier today.

 
 
  Jonathan Levinson   1/6/2005,  10:33:41 AM
Look for a directional move on a break either above short cycle channel resistance at 38.72 or below 38.50. QQQQ is coiling within this narrow range.

 
 
  Linda Piazza   1/6/2005,  10:31:17 AM
So, are we going to be seeing another consolidation day, perhaps? As I scan charts for other indices, I see the SOX between one support band and one resistance band, with perhaps some need to consolidation sideways here until bulls and bears figure out who is strongest at this level. I see something similar on many indices, but things feel so tenuous that it feels as if either bears or bulls could easily lose a foothold here and the markets could skid the opposite direction.

 
 
  Jeff Bailey   1/6/2005,  10:27:05 AM
Symantec (SYMC) $23.52 -5.95% Link ... downgraded by CSFB to "neutral" from "outperform."

 
 
  Linda Piazza   1/6/2005,  10:25:09 AM
Contributing to confusion, the TRAN confirmed an inverse H&S this morning, but immediately turned down again to retest the neckline, where it lingers now, at about 3672.

 
 
  Jeff Bailey   1/6/2005,  10:23:40 AM
10:00 Internals at this Link

 
 
  Linda Piazza   1/6/2005,  10:19:30 AM
So, this OEX climb is looking like another bear flag to me, which means that unless it's typical tight pattern of higher highs and higher lows resolves into something else, bears can watch for a breakdown below the flag's lower trendline. I'd sure like to see it have a better formation and a bigger climb, though, because there's not much cushion before yesterday's low and potential support are hit again. I'd like to see a climb into the 567.50-569 level at least, with a test of the five-minute 100/130-ema's, currently at 568.14 and 568.62, respectively. TRIN just keeps rising, so I'm not at all sure that or the test of the 572-574 right-shoulder level will happen.

 
 
  Jeff Bailey   1/6/2005,  10:16:27 AM
Biotechnology Index (BTK.X) 532.08 +1.19% .... moves above yesterday's high.

WEEKLY Pivot Levels ... 523.05 (tested yesterday), 533.82, Piv=541.89, 552.65, 560.72.

 
 
  Jonathan Levinson   1/6/2005,  10:16:19 AM
February gold has just been whacked to a new session low of 423.5, bouncing here to 424.40. Surprisingly, HUI and XAU held positive throughout, currently +.34% at 202.44 and +.24% at 93.56 respectively. Bonds remain lightly positive as well, TNX -.8 bps at 4.269%.

 
 
  Linda Piazza   1/6/2005,  10:11:34 AM
The OEX did retreat to the 566 level to recharge, as Keltner charts suggested that it would do, but it's not getting much of a recharging from this level, at least not yet. It looks to me as if it's trying to set up into another bear flag to climb into resistance, but it's touch-and-go here. That vulnerability to lower values remains and whether the OEX breaks down now or rolls down from a higher value or just keeps climbing is still in question.

 
 
  Jeff Bailey   1/6/2005,  10:08:37 AM
VIX.X 13.80 -2.05% ... Daily Pivot Levels ... 13.01, 13.45, Piv=13.69, 14.13, 14.37

 
 
  Jonathan Levinson   1/6/2005,  10:08:33 AM
QQQQ failed just below 38.73 and is now below flat 7200-tick support at 38.60. The 30 min cycle upturn stalled as quickly as it started, and this action appears to be a continuation of yesterday's corrective 30 min cycle upphase.

 
 
  Jeff Bailey   1/6/2005,  10:02:48 AM
10:00 Market Watch at this Link

 
 
  Linda Piazza   1/6/2005,  10:00:03 AM
Was that it? A 30 minute test of the ascending trendline that the OEX broke through late yesterday? It's difficult to believe that's all that will be mustered. The OEX is kind of hanging out in space on the Keltner charts, though, suggesting that it may need to pull back toward 566 at least and regroup. I'm just finding it difficult just yet to believe that this is the rollover, although I expect one eventually. I could be wrong, of course.

 
 
  Jeff Bailey   1/6/2005,  9:56:06 AM
TASER Intl (TASR) $28.22 -2.21% ... lower on USA Today report of possible end of quarter "channel stuffing."

Taser President Tom Smith saying "We did not do anything out of the ordinary course of business."

 
 
  Jonathan Levinson   1/6/2005,  9:56:01 AM
The Fed has an impressive 24B in expiring repos to account for today. So far, the open market desk has announced a 9B 14-day repo and a 5B overnight for a large net drain of 11B.

 
 
  Linda Piazza   1/6/2005,  9:53:27 AM
As Jane has just noted on the Futures side, TRIN rises, but there's some confusion among other indicators of market health. The OEX pauses at the trendline that it broke through yesterday while the five-minute 100/130-ema's cycle down toward it. Still no strong evidence of a rollover in progress, but no evidence yet of a strong bounce in the making, either.

 
 
  Linda Piazza   1/6/2005,  9:48:27 AM
Reader Question: Is there any numerical correlation between these two [OEX and DJX] indexes?

Response: None of which I'm aware. The DJX is based upon the Dow Jones Industrial Average, of course, being 1/100th of the current value of the Dow Jones Industrial Average. I'm not certain of any numerical correlation between the OEX and Dow or DJX, however. Anyone else?

 
 
  Jeff Bailey   1/6/2005,  9:47:05 AM
Toys R Us (NYSE:TOY) $20.30 -0.58% said holiday seasonal sales decreased 3.3% compared to last year, while same store sales fell 3.7%.

 
 
  Jeff Bailey   1/6/2005,  9:46:05 AM
Cendant (CD) $22.64 +0.44% ... Company announces that its board approved the spin-off of its mortgage and fleet businesses through the distribution of 100% of the shares of its PHH Corp subsidiary to stockholders of Cendant. The distribution will be payable on January 31 to stockholders of record as of the close of business on January 19.

Cendant expects to distribute one share of PHH common stock for every twenty shares of CD common stock oustanding as of the record date (Jan. 19). Fractional shares will not be distributed, and any shareholder entitled to receive a fractional share will instead receive a cash payment.

In connection with the deal, Cendant will enter into a mortgage origination venture with PHH to continue to participate as an owner in the earnings from the origination of mortgages from customers of CD's real estate brokerage and relocation businesses. PHH will manage this venture and retain all servicing asset risk.

 
 
  Linda Piazza   1/6/2005,  9:39:54 AM
The OEX now faces the ascending trendline off Tuesday's low, a trendline it broke through late yesterday afternoon. I'm looking forward to Jane's comments on the internals once early volatility has settled down, but the TRIN certainly does not yet support the idea that indices are about to keel over just yet.

 
 
  Jonathan Levinson   1/6/2005,  9:36:14 AM
Session highs across the board in the futures, with QQQQ reaching toward 38.73 30 min channel resistance. A short cycle upphase is progress, and the 30 min channel appears to be on the verge of joining it.

 
 
  Linda Piazza   1/6/2005,  9:33:48 AM
The OEX opens near the flat-line level, and not as high as I expected it to open--you just never can tell with futures performance versus cash index performance. It's climbing toward the bottom fo the first resistance zone, near 567.50-569.

 
 
  Jonathan Levinson   1/6/2005,  9:21:06 AM
The 30 min cycle sell signals generated by yesterday's post-4PM drop have whipsawed in the futures with the break back above yesterday's pre-4PM low. The cycle channels are still pointed south, and for bulls to re-establish the stalled upphase from yesterday, it will take at least 10 minutes' persistence at or above current levels following the 9:30AM bell. Current 30 min channel resistance is at 39.73 QQQQ currently.

 
 
  Linda Piazza   1/6/2005,  9:12:22 AM
After the close yesterday, I noted that the day's candle was one that was sometimes seen as a potential reversal signal. It appears that equity investors are viewing it that way this morning. Yesterday's decline took the OEX below the ascending regression channel in which it had traveled for two months. It spent quite a bit of time consolidating at the bottom of that channel--eight 60-minute candles--before it finally tumbled below that level, so I would now consider that likely first strong resistance, with the hand-drawn and QCharts-drawn lines at about 567.55 and 568.55, respectively. With the five-minute 100/130-ema's at 568.43 and 568.91, respectively, these averages look like good benchmarks to use for those wanting to gauge short-term bullishness or bearishness. This is backed up by the fact that 60-minute Keltners show that until and unless the OEX can produce 60-minute closes above the Keltner line currently at 568.04, it remains vulnerable down to 560.86. If futures action follows through with OEX gains, the OEX may test that region soon after the open.

It's likely time for an oversold bounce, but we won't know whether it's more than that for a while, especially with Keltners showing that vulnerability to lower values. Anyone contemplating bullish plays should consider them countertrend plays for the time being, having profit-targets in mind as they're entered and being ready to take profits or losses quickly if necessary. The 120-minute chart shows a possibility for a H&S at the top of that two-month climb, a H&S that began forming in the middle of December. On any bounce past 569 now, bulls should pay particular attention to the 572-574 region, the likely region that the OEX would begin slowing gains and flattening in preparation for a right shoulder, if one is to form. Whether the OEX will roll over into a right shoulder or continue climbing, some hesitation will likely be found at that level, if it's reached. So, to summarize, those who want to play the markets with a bullish bias today should first realize there's currently vulnerability to a move lower and should expect resistance near 567.50-569.00, with that level serving as one benchmark for strength or weakness. Profit-protecting plans should again be in place for the 572-574 region, as one possible location for a rolling over into a right shoulder for a large H&S formation spanning several weeks. Those wanting bearish plays should first look for rollovers near 567.50-569 or 572-574, if they should come. Either side wants to have internals behind them when making a decision.

 
 
  Jonathan Levinson   1/6/2005,  8:42:47 AM
Bonds have risen slightly, TNX now down .4 bps at 4.273%. QQQQ is back to a 3 cent gain at 38.57. Overall, a very quiet market, though gold has gained a buck since the 8:30 release.

 
 
  Jonathan Levinson   1/6/2005,  8:31:55 AM
QQQQ has gone negative, -.01 to a session low of 38.53. Bonds are negative as well, TNX +.4 bps to 4.281%. There's little reaction to the news so far.

 
 
  Jonathan Levinson   1/6/2005,  8:31:05 AM
Headlines:

8:30am U.S. INSURED UNEMPLOYMENT RATE STEADY AT 2.2%

8:30am U.S. CONTINUING JOBLESS CLAIMS UP 61,000 TO 2.84 MLN

8:30am U.S. 4-WEEK AVERAGE NEW CLAIMS STEADY AT 333,000

8:30am BIGGEST JUMP IN U.S. JOBLESS CLAIMS SINCE MARCH 2002

8:30am U.S. INITIAL JOBLESS CLAIMS UP 43,000 TO 364,000

 
 
  Jonathan Levinson   1/6/2005,  7:48:54 AM
Equities are up, ES trading 1187, NQ 1573, YM 10619 and QQQQ +.06 to 38.60. Gold is down .40 to 426.90, silver -.081 to 6.455, ten year notes up .031 to 111.4375 and crude oil -.375 to 43.025.

We wait the 8:30 release of initial claims, est. 330K.

 
 
  Linda Piazza   1/6/2005,  7:34:39 AM
Good morning. Asian bourses were mixed overnight as markets responded to lower crude prices, a higher dollar, and Xilinx's outlook, but most European markets currently trade in the green. As of 7:09 EST, gold was down $0.70, and crude, down $0.44. Our futures have climbed. More detail about Asian and European markets follows in succeeding paragraphs.

The Nikkei continued lower at the open Thursday, but then climbed, based, and climbed more. It closed at its high of the day, up 54.74 points or 0.48%, at 11,492.26. Early negative influences were the performance in the U.S. markets and news that the Japanese government would dump a hefty portion of its NTT stock on the market, sending that company's shares sharply lower at the open. NTT closed lower. Xilinx's lowered revenue guidance for the third quarter hit some tech stocks in Japan and throughout Asia. Autos and banking stocks performed well.

Other Asian markets were mixed. The Taiwan Weighted fell 0.10%, and South Korea's Kospi declined 1.57%. Singapore's Straits Times climbed 0.91%, but Hong Kong's Hang Seng fell 0.38%. China's Shanghai Composite declined 1.00%.

Many European markets trade higher. Lower crude costs and a stronger dollar help some to post gains. Insurance companies perform well as do mining stocks. In the U.K., housing stocks got a boost when one builder gave an encouraging summary of the previous months' performance.

As of 7:28 EST, the FTSE 100 had gained 26.30 points or 0.55%, to trade at 4,832.30. The CAC 40 had gained 33.86 points or 0.88%, to trade at 3,863.22. The DAX had gained 37.67 points or 0.88%, to trade at 4,295.91.

 
 
  Tab Gilles   1/6/2005,  2:04:00 AM
The Semiconductor Holders SMH and Phili Index $SOX, although slightly different appear to have begun a new downtrend channel. See attached charts. SMH chart Link SOX Link One of the indicators I track is the $NASI- Nasdaq Summation Index. Within the last year it has been fairly accurate in calling the entry and exit points. NASI NDX chart Link Tuesday's 7:55AM post I asked if the Dollar was starting to reverse, having put in a bottom (bullish divergence) If so a 5% pullback on the SPX would be very likely as indicated on charts. $USD chart Link USD SPX chart Link

 
 
  Jeff Bailey   1/5/2005,  9:44:41 PM
Fair value for the S&P 500 today (Thursday) is $+1.90. That price will not change during the session. HL Camp & Company has their computers set for program buying at $+2.90 and set for selling at $+0.72.

DTN-IQ traders. New premium symbols are SP-PREM.Z , EM-PREM.Z , and ND-PREM.Z

 
 
  OI Technical Staff   1/5/2005,  7:35:43 PM
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