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Tab Gilles : 2/9/2005 11:49:59 PM

I've been revisiting the drug sector after the Oct '04 bottom. Looking at PFE, $DRG and PPH charts. I know this sector still has some litigation factors ahead of it, but we may get an opportunity to buy at some longterm low valuations if the markets correct in the coming weeks and month.

Interesting story today on Medicare budget cost for prescription drugs. Link

Pfizer (PFE) I've been studying the chart of Pfizer and looking at it's fundamentals. In the past five years, S&P 500 earnings have grown at only 3.2 percent a year while PFE's earnings grew at more than 20 percent a year during the same period. PFE's quarterly dividend payout has nearly doubled, from 9 cents to 17 cents a share, while S&P 500 dividends increased by just 30 percent in the same period.

The trailing 12-month price-to-earnings (P/E) ratio of PFE, at 21.07, is the same as it was in 1995, which would have been an excellent buying opportunity. In contrast, the P/E ratio of the S&P 500 has risen from 16 to 21 since 1995, meaning that the valuation of PFE relative to the S&P 500 is better now than it was in 1995.

Several government charts. Link

PFE Charts Link Link Link Link Link

Jeff Bailey : 2/9/2005 11:12:30 PM

March Crude (cl05h) up $0.09, or 0.19% at $45.55. S&P e-mini (es05h) up 0.75, or 0.06% at 1,193.75. NASDAQ e-mini (nq05h) up 1.50, or +0.09% at 1,510.50.

Jeff Bailey : 2/9/2005 11:08:12 PM

Program Trading Levels for Thursday ... HL Camp & Company has their computers set for program buying at $1.67 and set for program selling at $-0.23.

OI Technical Staff : 2/9/2005 9:59:59 PM

The Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 2/9/2005 9:29:51 PM

Dow Industrials Bullish % ($BPINDU) ... Wednesday's action had the Dow Industrials Bullish % ($BPINDU) Link rising 3.33% with a net gain of 1 stock to a point and figure buy signal. This has this very narrow bullish % reversing back up to "bull confirmed" status from "bull correction" at 70%. It would currently take a reading of 62% for this market to turn "bear confirmed." Stocks generating a reversing higher point and figure buy signal (HPQ $22) Link

Jeff Bailey : 2/9/2005 7:30:21 PM

Google Inc. (GOOG) $191.58 -3.55% Link ... (per trader's question) Point and figure chart is longer-term bullish, but recent action has PnF chart giving a high pole warning. Trader looking for a bullish entry point may be well served to be patient. I've had some success waiting for stock to decline (as it is) and listen for "lockup worries" to escalate. Might get a shot at bullish entry of $180. Options are expensive on this one, and buying out the money $20-$30 from entry point and then selling when stock hits the strike has worked best. Might want to monitor Yahoo! Inc. (YHOO) $33.59 -2.24% Link as it nears its bearish vert. count of $30.00 and suggests some near-term weakness for Internet search.

Jeff Bailey : 2/9/2005 6:32:25 PM

Some hefty volume of 672,500 in the last 5-minutes of trade for the DIA. With yesterday's AA $29.24 -2.53% trade observations, I'm thinking expiration action well underway.

Jeff Bailey : 2/9/2005 7:52:09 PM

Closing U.S. Market Watch at this Link Closing Internals at this Link Pivot Matrix for Thursday at this Link Short-term traders should be alert for possible "dump and pump" tomorrow morning as INDU/SPX/OEX come back to test failed right shoulders. DIA at this Link

Jeff Bailey : 2/9/2005 6:57:00 PM

Current OPEN MM Profiles that I've made at this Link Today's activity .... Profiled a day trade short for Hewlett Packard (HPQ) but from $21.75, never got the uptick to $21.90. Would have been a honey as stock easily fell to bearish target $21.17. Day traded long shares of Chinadotcom (CHINA) at $3.89, but was stopped out at $3.83. ($-0.06, or -1.54%) Day trade short shares of Blue Nile (NILE) at $28.22, stop currently $28.25, with target at $27.01. Carried this trade overnight. I'm having some problems with QCharts' option quotes and decimalization. I've edited per CBOE stated bids for CD and DIA options.

Tab Gilles : 2/9/2005 4:40:22 PM

60 minute $VIX/$SPX Link

Tab Gilles : 2/9/2005 4:25:03 PM

Watching USD/GOLD, here are several annotated charts. Link Link Link Link

Jeff Bailey : 2/9/2005 4:12:01 PM

Buy Program Premium ... DIA $106.76, SPY $119.38

Linda Piazza : 2/9/2005 4:01:49 PM

Downside breakout on the OEX's three-minute Keltner chart, but as I said earlier, we start fresh tomorrow morning with that Trade Balance number. This was not a good day, however, with both the TRAN and the SOX retreating below (only slightly in the SOX's case) the 50% retracement of the decline off the recent highs. See you tonight in the Wrap and then tomorrow morning.

Jeff Bailey : 2/9/2005 3:58:42 PM

Bearish day trade hold overnight alert ... with indices looking to close near their lows, will hold Blue Nile (NILE) $28.15 overnight.

Jonathan Levinson : 2/9/2005 3:53:37 PM

The 30 min cycle has reached oversold territory, while the daily cycle, still in its upphase, is beginning to show a slight downtick near overbought territory. What this suggests is that QQQQ is becoming oversold on an intraday basis, but that any bounce should fail at a lower high. In this case, a break above QQQQ 37.20-.22 that holds for 10 minutes or better will target a retest of the 37.35, 37.40 and 37.61 resistance levels. Any 30 min cycle failure below 37.80 would be enough to permit the daily cycle to continue what appears to be the beginning of its topping pattern. Obviously, the lower the bounce, the more likely we've seen the daily cycle top.

Linda Piazza : 2/9/2005 3:52:12 PM

Too much lower and the OEX will have undone the last bullish hope for the day, that inverse H&S building on the three-minute chart . . . probably has been undone as I type, without a very quick bounce.

Linda Piazza : 2/9/2005 3:45:47 PM

The SOX is easing back below the 50% retracement of the decline off the December high.

Linda Piazza : 2/9/2005 3:44:21 PM

The OEX is trying to build an inverse H&S on the three-minute chart, but I'm not sure if it has the strength or the time to confirm it and move higher before the close. All bets will be off tomorrow morning.

Linda Piazza : 2/9/2005 3:43:38 PM

The whole world has been speculating about tomorrow's Trade Balance number, so decide soon if you want to hold ahead of the release of that number.

Jeff Bailey : 2/9/2005 3:36:46 PM

Bearish day trade lower stop alert ... for Blue Nile (NILE) $27.97 +12.10% ... to $28.25

Linda Piazza : 2/9/2005 3:29:10 PM

It feels as if nothing has moved for hours, but it has. The OEX continues to make a series of lower lows. It's trying for a higher five-minute high as I type, but has essentially been grinding slowly lower since about 10:30. The three-minute Keltner chart shows the OEX facing resistance now, near 573.20, but to face stronger resistance at just below 574.

Jonathan Levinson : 2/9/2005 3:28:46 PM

QQQQ challenges declining 7200 tick SMA resistance here at the 37.20 confluence. 30 min resistance just overhead at 37.26.

Jeff Bailey : 2/9/2005 3:23:51 PM

March Unleaded (hu05h) settled up $0.021, or +1.74% at $1.2374. Last Wednesday's settlement was $1.2935.

Jeff Bailey : 2/9/2005 8:26:09 PM

March Crude Oil (cl05h) settle up $0.06, or +0.13% at $45.46. Last Wednesday's settlement was $46.69. Continuous Oil ($WTIC) and conventional $0.25 box at this Link

James Brown : 2/9/2005 3:13:01 PM

If you're brave enough to trade it TravelZoo (TZOO) looks poised to break down from its current two-week trading range and drop through the simple 200-dma. There appears to be some support near $50 but the next real support level looks like the $40 mark.

The P&F sell signal points to $46.00 but a drop under $53 would produce a new spread triple-top breakdown.

TZOO currently does not have options to trade.

Jonathan Levinson : 2/9/2005 3:11:04 PM

30 min channel support has made it down to 37.05, but it should continue to descend so long as QQQQ holds below the descending 7200 tick SMA, currently 37.24.

Tab Gilles : 2/9/2005 3:10:45 PM

$SOX Link

Linda Piazza : 2/9/2005 3:08:16 PM

The OEX again appears to be testing/falling below the neckline of the H&S on the 15-minute chart. Watch the 572 level, though, as it's potential support on the 60-minute Keltner chart.

Jonathan Levinson : 2/9/2005 3:03:38 PM

Back. QQQQ's drifted net sideways over the past half hour, but the 30 min and 60 min channels have also ticked lower, with resistance down to 37.33 for the 30 min and 37.40 for the 60 min channel. The 7200 tick SMA is down to 37.27, and QQQQ remains bearish below that level.

Jeff Bailey : 2/9/2005 3:12:01 PM

03:00 Market Watch at this Link 03:00 Internals at this Link

Linda Piazza : 2/9/2005 2:59:55 PM

There's not much clarity to be found in three- and five-minute OEX Keltner charts. They show more supporting lines grouped just below the OEX than strung out above it, but "strung out" is an appropriate tag for both the support and resistance. Nothing is firmed up.

Jeff Bailey : 2/9/2005 2:56:36 PM

Bearish day trade short alert for Blue Nile (NILE) $28.22 here, stop $28.55, target $27.01

Jeff Bailey : 2/9/2005 2:46:00 PM

Bullish day trade stop alert ... for Chinadotcom (CHINA) $3.83

Linda Piazza : 2/9/2005 2:33:18 PM

The OEX is not falling precipitously after confirming that H&S, so either the neckline was wrong or the move was a fake-out one, or else bulls just aren't ready to give up yet. Normally, I would be highly suspicious of a bounce in the making with such hesitancy to follow through, but we saw this in reverse Friday, when the OEX created an upside breakout signal but did not move on it through several periods. The OEX is hanging just underneath the 15-minute Keltner mid-channel level, with that chart showing that a drop to 569 is possible unless the OEX starts producing 15-minute closes above the Keltner line currently at 573.13 and preferably above the one currently at 573.55.

Jane Fox : 2/9/2005 2:32:41 PM

I wonder if Jonathan was watching the internals earlier.

Jonathan Levinson : 2/9/2005 2:30:28 PM

Stepping away for a few minutes to nurse a headache.

Jeff Bailey : 2/9/2005 2:27:27 PM

Sell Program Premium ... SPX.X 1,193.11 -0.77%, DIA $106.75, QQQQ $37.18

Linda Piazza : 2/9/2005 2:23:05 PM

The OEX is at 15-minute Keltner support, approaching 60-minute. It's also testing the neckline of a H&S on the 15-minute chart, with that neckline descending. Depending on how you draw that neckline, the OEX may already be below it, so that 15-minute Keltner support may not hold, but bears also do not want to see a quick bounce above that neckline. Link

Jonathan Levinson : 2/9/2005 2:15:43 PM

QQQQ is finding support off the 60 min channel bottom, lined up with confluence at the old 37.20 resistance. Look for 37.27-.32 to act as new resistance- if it doesn, then the 30 min cycle downphase is back in effect after this afternoon's stall.

Linda Piazza : 2/9/2005 2:08:55 PM

The SOX again moves down to test the 50% retracement of its decline off its early December high, easing below the 200-sma and -ema again. I just can't help repeating that the bulls do not want to see the SOX close here, completing a tweezer-top formation, below those 200-ema and -sma's.

Jonathan Levinson : 2/9/2005 2:08:50 PM

New session lows across the board.

Jonathan Levinson : 2/9/2005 2:05:27 PM

QQQQ has broken bear flag support here. Volume is so far light, but 37.32 should hold as resistance. Link

Linda Piazza : 2/9/2005 2:04:12 PM

The Russell 2000 sits right on its 50-sma.

Jeff Bailey : 2/9/2005 2:11:55 PM

02:00 Market Watch at this Link 02:00 Internals at this Link

Jonathan Levinson : 2/9/2005 2:02:14 PM

Session high for April gold futures here at 415.10, with QQQQ dipping below the past 2 hours' lows, testing lower bear flag support here at 37.32.

Jeff Bailey : 2/9/2005 1:58:55 PM

March Crude (cl05h) $44.70 -1.54% (30-minute delayed) ... session lows.

Jeff Bailey : 2/9/2005 1:56:14 PM

Dow Diamonds (DIA) $107.06 -0.17% ... Mar $107 C (4,937:7,073) by far today's most active. Feb. $108 C (529:6,589)

Jonathan Levinson : 2/9/2005 1:52:58 PM

A new session high for ten year treasuries, TNX down to 3.986%. There's support down to the October lows at the 3.95% level.

Jeff Bailey : 2/9/2005 1:52:33 PM

Chinadotcom (CHINA) $3.86 x $3.87

Jeff Bailey : 2/9/2005 1:51:54 PM

DIA $107.02 , SPX.X 1,197.20, QQQQ $37.37

Jeff Bailey : 2/9/2005 1:51:10 PM

TRIN 1.20 +7.14% ... moves above DAILY Pivot and session high. (Not good for day trade bulls)

Jonathan Levinson : 2/9/2005 1:48:48 PM

The short cycle upphase stalled an hour ago but kicked back up as QQQQ drifted higher. The oscillators are starting to flatten out near the top of their range and the upphase is running out of racetrack. That would indicate that this resistance zone to 37.45 (current level of upper 30 and 60 min channel tops) is going to hold. Of course, the short cycle is the easiest cycle to pin in an overbought or oversold trending move. A break below 37.32 (current bear flag support) for at least 5 minutes will kick off the next downphase.

Linda Piazza : 2/9/2005 1:42:43 PM

Leading the way for the OEX, the TRAN current tests its five-minute 100/130-ema's, with those averages at 3587.80 and 3589.26, and with the TRAN at 3586.20. So far, they're holding as resistance, with some tentative CCI signs that the TRAN may retreat again (CCI ghost), but without confirmation by a strong price retreat.

Jonathan Levinson : 2/9/2005 1:40:01 PM

And pulling back below it after ticking up to 37.42.

Jonathan Levinson : 2/9/2005 1:38:44 PM

QQQQ cracking 37.40 resistance here.

Linda Piazza : 2/9/2005 1:29:35 PM

The Russell's decline has been a bit worrisome today. It's approached the 50% retracement of the decline from the late December high, although it hasn't breached that 629.88-ish level yet. It's also testing a long-term trendline I've had on my chart, crossing just at that same level. Bulls would certainly like to see a strong bounce into the close.

Jonathan Levinson : 2/9/2005 1:27:24 PM

QQQQ's traded less than 5M shares the past half hour, with virtually no movement on the tick-driven chart: Link . Bonds continue to firm, however, with TNX now down to 3.998%.

Jeff Bailey : 2/9/2005 1:25:52 PM

Dow Diamonds (DIA) $107.00 -0.23% ...

Jeff Bailey : 2/9/2005 1:40:30 PM

TRIN 1.06 -5.35% ... session highs here. VIX.X 11.78 +1.55% ... back below WEEKLY Pivot. Just above DAILY R2

Linda Piazza : 2/9/2005 1:20:02 PM

Interesting observations on the TRAN's five-minute Keltner chart: Link

Jeff Bailey : 2/9/2005 1:28:33 PM

March Crude Oil (cl05h) $45.15 -0.55% (30-min delayed) March Unleaded (hu05h) $1.220 +0.31% (30-minute delayed) ... still holding positive.

Linda Piazza : 2/9/2005 1:12:31 PM

The TRAN just confirmed an inverse H&S on its five-minute chart, and has zoomed up toward the 3588.30-ish upside target. That upside target is at the mid-channel resistance on the TRAN's five-minute Keltner chart. The TRAN does tend to find S/R at Keltner channel lines on the five-minute chart, but over the last couple of days, it has just zoomed from one side of the widest channel to the other. The top of that widest channel is now at 3606.14.

Jonathan Levinson : 2/9/2005 1:08:44 PM

The 5 year treasury note auction is over, with indirect bidders taking 44.8% or 6.7B of the 15B total, and a bid to cover ratio of 2.53, yield 3.618%.

Currently, ten year notes are strengthening, with TNX now down 3.5 bps and challenging 4.0% support, currently at 4.002%.

Linda Piazza : 2/9/2005 1:07:07 PM

Big push above the five-minute 21-ema. The 100/130-ema's are at 574.97.

Jeff Bailey : 2/9/2005 1:07:38 PM

SOX.X 421.15 -1.48% ... reclaims DAILY S1 here. QQQQ $37.40 (DAILY S2) ... rally caps?

Jeff Bailey : 2/9/2005 1:14:26 PM

01:00 Market Watch at this Link 01:00 Internals at this Link

Jeff Bailey : 2/9/2005 1:01:14 PM

eBay (EBAY) $79.88 +1.73% ... comes back to test this morning's gap higher open.

Jonathan Levinson : 2/9/2005 12:57:49 PM

Volume is very thin here for QQQQ, and thin overall with just 46.8M shares traded so far today, less than half the average daily volume. QQQQ is above 7200 tick SMA resistance but still within the bear flag, looking for a break above 37.40 on a surge in volume to invalidate it and kick off a new 30 min cycle upphase, or below 37.29 on volume to signal a breakdown. Link

Linda Piazza : 2/9/2005 12:50:14 PM

The OEX has paused long enough at this level on a 60-minute basis that a 60-minute Keltner channel is trying to move underneath and cup the candles, supporting them. It's tenuous support, but it may send the OEX up to test resistance. That resistance has softened a little, too, although it still looks stronger than the support until the OEX gets to 571.84 or perhaps 568-568.50. Resistance is at 574.84-576.24 on a 60-minute closing basis.

I think that instead of watching those numbers over the short-term, though, I'd be watching Fib levels snapped off today's range and the five-minute 21/100/130-ema's, with the 21-ema at 573.87 and the others just above 575.

Jeff Bailey : 2/9/2005 12:53:35 PM

Bullish day trade long alert ... for Chinadotcom (CHINA) $3.89 offer, stop $3.83, target $4.10. Look for strength to new session high ($4.00) should QQQQ $37.35 reclaim DAILY S2 ($37.40) with build toward DAILY S1 ($37.57).

Linda Piazza : 2/9/2005 12:41:55 PM

The OEX is at 573.74; the five-minute 21-ema at 573.88. TRIN rises. So does the advdec line, but I'm not certain how bullishly to take that since it's at -2055.

Jonathan Levinson : 2/9/2005 12:38:45 PM

QQQQ 100-tick chart updated at this Link

Jonathan Levinson : 2/9/2005 12:28:13 PM

Ten year treasuries remain pegged at 4.015%, despite the Fed's drain today and the scheduled 5B treasury auction, the results of which are due out at 1PM. So far, the only real weakness has been in equities despite this week's ongoing treasury auctions and repo drains.

Jonathan Levinson : 2/9/2005 12:22:32 PM

For the 2 cents' worth of security, short cycle QQQQ bears would look for a break of the 37.25 low for a fresh breakdown in the short cycle. Any short from there would want a stop at the 7200 tick SMA, currently 37.36, or very close above it. This is on a day trade basis. On a 30 min cycle basis, the downphase is growing extended, and the correct placement for a swing short on that basis would have been yesterday, when the cycle first rollowed over in the morning from a lower high. On a swing basis, traders would look to be long above 37.40, with a stop below the 7200-tick SMA support.

Linda Piazza : 2/9/2005 12:21:56 PM

So far, the OEX hasn't even been able to rise toward its five-minute 21-ema, with that average at 573.95 as I type.

Jeff Bailey : 2/9/2005 12:17:11 PM

Jonathan ... will you be profiling a short at QQQQ $37.27?

Linda Piazza : 2/9/2005 12:16:03 PM

The TRAN approached the 3568.45 bottom of a rectangular trading range in which it's traded for the last seven trading days. The TRAN is at 3576.77 as I type. A breakdown below this zone could send the TRAN down to test its daily 100-ema at 3523.65. The TRAN hasn't traded below that level in 7 days, however, so be wary of potential support.

Jeff Bailey : 2/9/2005 12:15:24 PM

Shutting down... be back in a few.

Linda Piazza : 2/9/2005 12:13:44 PM

The SOX still tests its 200-sma and 200-ema.

Linda Piazza : 2/9/2005 12:13:11 PM

The OEX rises toward its five-minute 21-ema, the first time it will have tested it since 10:10 this morning, with that average at 574.00 as I type.

Jonathan Levinson : 2/9/2005 12:11:00 PM

The short cycle oscillators are showing a downtick here, not quiet an early downphase starting yet but certainly enough to qualify as a stall in the so-far weak upphase off the lows. A break below 37.27 should be enough to get the ball rolling.

Jonathan Levinson : 2/9/2005 12:05:27 PM

QQQQ 100 tick chart updated at this Link

Jeff Bailey : 2/9/2005 12:10:51 PM

12:00 Market Watch at this Link 12:00 Internals at this Link

Linda Piazza : 2/9/2005 12:02:51 PM

I wouldn't be surprised if OEX bulls haven't given up on bouncing the OEX over the short-term. I wouldn't be surprised to see the OEX climb toward the five-minute 21-ema now at 574.05 and find resistance there on a five-minute closing basis, and then fall back, but to a higher low, perhaps in an attempt to form an inverse H&S on that five-minute chart. The upside target would bring it up only to about the 50% retracement of the day's range. Let's watch.

Jonathan Levinson : 2/9/2005 12:00:32 PM

QQQQ is testing declining 7200 tick SMA resistance here at 37.35 as the 30 min channel downphase begins to stall.

Linda Piazza : 2/9/2005 12:00:03 PM

The SOX inches above its 200-sma, but not the 200-ema just yet.

Linda Piazza : 2/9/2005 11:52:24 AM

New low for the OEX. That flag-like formation barely set up before the OEX broke to the downside. The 60-minute chart still shows vulnerability down to 571.75 and perhaps lower, to 576.76-568.39, but perhaps not until after there's a bounce from the 571-572 level back to test resistance. Short-term bears should be protecting profits. The SOX is balancing right on that 50% retracement of the decline off the December high, and if it balances there too long, a bounce attempt might get underway.

Jeff Bailey : 2/9/2005 11:51:56 AM

March Crude Oil (cl05h) $45.82 is up $0.42. Stuck its head above the $46.20 level to session best $46.40, but chopped there.

Jeff Bailey : 2/9/2005 11:56:39 AM

Thinking/looking about/for a 4 or 5-lettered (NASDAQ) long with QQQQ firming at WEEKLY S1.

Jeff Bailey : 2/9/2005 11:45:30 AM

Chinadotcom (CHINA) $3.92 +11.04% ... upgraded at Pacific Growth earlier this morning.

Jonathan Levinson : 2/9/2005 11:39:28 AM

Bonds have firmed further, TNX now down 2.6 bps at 4.011%. Gold has recovered to a 20 cent loss at 414, with HUI and XAU both green, HUI +1.69% at 195.89.

Linda Piazza : 2/9/2005 11:36:22 AM

Unless the OEX dips back to the day's low, you can begin to draw an ascending regression channel now for the OEX's climb of that low, a likely bear flag, and can watch to see whether it's turned back at one of the Fib levels off today's range or one of the five-minute 21/100/130-ema's.

Jeff Bailey : 2/9/2005 11:31:50 AM

Blue Nile (NILE) $28.79 +15.39% ... nice pop today after earnings.

Jonathan Levinson : 2/9/2005 11:29:33 AM

QQQQ chart updated at this Link . While a break above 37.40 will change my mind, this action so far looks and feels like Linda's "b" distribution pattern. Note how light the volume is getting as the price advances.

Jonathan Levinson : 2/9/2005 11:24:16 AM

This bounce is generating the first upticks in the short cycle oscillators, but it will take a break above 37.40 QQQQ to generate a new short cycle upphase. A move beyond that level for longer than 5 minutes will stall the 30 min cycle downphase as well.

Linda Piazza : 2/9/2005 11:24:08 AM

Looks as if the OEX is forming up either into a "b" distribution pattern or a flag. The five-minute 21-ema has now swooped lower to 574.63, and that should be the first resistance watched, on a five-minute closing basis. The 38.2% retracement of the day's range is just above that average. The 50% retracement is at about 575.11 and the 61.8% near the turning-lower five-minute 100/130-ema's, at 575.62 and 575.46.

Linda Piazza : 2/9/2005 11:15:07 AM

The OEX may be trying to set up a "b" distribution pattern at the bottom of the day's decline, while all the losses are absorbed. These are usually bearish, but certainly not always as Mark pointed out a while ago with some chart studies. It's also possible that the OEX could be trying to form up into a rising flag, also usually bearish. The difference is that the flag might rise further before we know if it's going to break to the downside or the upside. Anyway, I expect that we might have some period of consolidation, long or short, before we know next direction.

Jeff Bailey : 2/9/2005 11:13:35 AM

Bearish day trade cancel order alert ... Cancel the order to sell short shares of Hewlett Packard (HPQ) $21.33 +5.9% at $21.90

James Brown : 2/9/2005 11:08:31 AM

OI put play APOL is breaking down from last week's trading range following yesterday's failed rally at the $80.00 resistance level.

James Brown : 2/9/2005 11:06:12 AM

OI call play and oil-related stock Amerada Hess (AHC) is bouncing. Traders bought the dip this morning towards 90.60 and shares are now hitting new three-month highs at $92.29. Readers can prepare to exit at AHC nears our target at $94.00.

James Brown : 2/9/2005 11:03:30 AM

Insurance giant and Dow-component AIG is up 2.2% and breaking out over its 200-dma and the top of its five-week trading range after reporting earnings this morning. The company beat estimates by 4 cents per share.

Jeff Bailey : 2/9/2005 11:09:49 AM

11:00 Market Watch at this Link 11:00 Internals at this Link

Jeff Bailey : 2/9/2005 10:58:54 AM

TRIN 0.90 -18.75% ... session high of 1.05 never did test DAILY Pivot. SPX.X 1,196.35 -0.49% with DIA $106.90 -0.32%

Linda Piazza : 2/9/2005 10:56:10 AM

I'm looking out to a 60-minute chart for the OEX now. That chart now suggests a vulnerability down to 571.67 or perhaps even 567.60-568.30, but only if resistance at 575.54 continues to hold on a 60-minute closing basis. The last 60-minute upside target was never met, although curiously the original upside target, when the breakout first occurred, was. I've noticed this before on the OEX. When the breakout is from one channel to the next, the original upside or downside target is often met, but sometimes the new one, obtained when movements of the OEX cause the dynamic lines to move, sometimes isn't. It's something I want to start noting, so we can all watch it together. It may be only something that shows up once in a while, a coincidence.

Jeff Bailey : 2/9/2005 10:56:21 AM

Current OPEN MM Profiles I've made at this Link Hewlett Packard (HPQ) $21.62 +7.34% ... not filled on the day trade short ($21.90) at this point. Hugging Red #3 at $21.58

Jonathan Levinson : 2/9/2005 10:47:35 AM

QQQQ has 30 min channel support down to 37.20, which is also confluence support. Look for next support at that level.

Linda Piazza : 2/9/2005 10:47:44 AM

SOX below both the 200-sma and 200-ema, headed now for the 50-sma. Bulls do NOT want to see the SOX end the day anywhere near its current level, creating a tweezer-top formation, seeming to repeat its pattern of recent months of popping above its 200-sma only to drop back below it again. It's still within a possible bounce zone, pausing now near the 50% retracement of the decline off the early December high, so don't make assumptions. Keep watching.

Jeff Bailey : 2/9/2005 10:42:43 AM

DIA $106.81 -0.41% ... most active options has the Mar. $107 C (1,499:7,073), Jun $96 P (268:749), Mar $102 C (50:1,162)

Jeff Bailey : 2/9/2005 10:40:56 AM

VIX.X 11.94 +2.93% ... jumped above WEEKLY Pivot on EIA weekly statistics.

Jonathan Levinson : 2/9/2005 10:40:53 AM

QQQQ update at this Link . 7200-tick SMA resistance is down to 37.58, below which the 30 min cycle remains negative. Channel support is down to 37.30.

Linda Piazza : 2/9/2005 10:40:42 AM

The OEX did meet that downside target for the H&S this morning, with five-minute candles closing right on the target line. What next? The decline was precipitous, so I think that over the very short term, unless we see a strong V-shaped bounce, we can consider the trend down. Those that entered bearish plays on the rollover this morning should have measures in place to protect profits, however. Set stops depending on whether you intended to scalp a few points or have a belief that markets are in the process of rolling over. A scalper doesn't want to let a winning play turn into a losing one, something that can happen rather quickly. Scalper or long-term, keep a watch on the SOX's ongoing tests of its 200-sma. The TRIN still isn't giving bears a cozy feeling, either.

Jonathan Levinson : 2/9/2005 10:35:46 AM

Session high for 10 year bonds at 113 1/64, with TNX -1.6 bps at 4.021%.

Linda Piazza : 2/9/2005 10:34:54 AM

The TRAN has just broken below a supporting trendline--take your pick as it's either for a rising wedge or H&S on the 60-minute chart, setting up a downside target of about 3508, unless the TRAN manages a quick bounce back above that 3580-3585 trendline and closes above it on a 60-minute closing basis.

Jonathan Levinson : 2/9/2005 10:34:27 AM

Crude oil inventories fell 1M barrels. Prices are rising, Nymex crude now up 27.5 cents to 45.675.

Jeff Bailey : 2/9/2005 10:33:20 AM

That sell program was a big one .... SPX 1,196.63

Jonathan Levinson : 2/9/2005 10:32:17 AM

Looks like they didn't like the oil inventory data.

Jeff Bailey : 2/9/2005 10:31:54 AM

Sell Program Premium ... SPX 1,196.89, DIA $106.90

Jonathan Levinson : 2/9/2005 10:29:27 AM

The 30 min cycle channel continues to point steeply south, and should remain bearish with price below 37.65, the current 7200 tick SMA resistance line.

Jeff Bailey : 2/9/2005 10:26:29 AM

S&P Banks (BIX.X) 370.98 -0.39% ...

Jonathan Levinson : 2/9/2005 10:26:09 AM

QQQQ is currently below the lower 30 and 60 min Keltner channels, which should result in at least a sideways consolidation at the lows to permit the bands to catch up. It's very rare that a band violation lasts for long- only in the strongest of trending moves.

Jeff Bailey : 2/9/2005 10:28:57 AM

Bearish day trade short setup alert ... Look to short shares of Hewlett Packard (HPQ) $21.75 +7.99% on an uptick at $21.90, stop $22.30, and target $21.17. February "Max Pain" theory $20 ($2.50 increments) Note: WEEKLY R2 at $21.21 with 5-MRT Red #5 at $21.16.

Jonathan Levinson : 2/9/2005 10:22:20 AM

QQQQ chart update, breaking to new lows as I type. Link

Linda Piazza : 2/9/2005 10:20:02 AM

Crude inventories numbers soon to be released. The OEX attempts to rise, although the attempt is tepid so far. Watch those five-minute 100/130-ema's from the underside, with those averages at 576.12 and 575.80 as I type.

Linda Piazza : 2/9/2005 10:18:49 AM

The TRAN rolled over under 3600, at 3589.85 as I type, approaching a 3580-3585 potential support level. The TRAN is at 3589.20 as I type.

Linda Piazza : 2/9/2005 10:17:10 AM

Looks as if the OEX is trying to reach that 573.75 downside target rather quickly, doesn't it? Watch out, though. The SOX is testing its 200-ema (there now) and -sma (almost there). A drop through these averages should further damage sentiment, but a strong bounce from them might improve it.

Jonathan Levinson : 2/9/2005 10:15:30 AM

At long last, yesterday's 37.60-.62 support zone is broken and should now act as resistance. 37.51 is the 127% fib extension of yesterday's range.

Linda Piazza : 2/9/2005 10:12:36 AM

The OEX's five-minute 21-ema held as resistance. Now the 100/130-ema's are being tested. Bears want the OEX to break below them, with the OEX trying its best to do that as I type, and bulls want a bounce from them. Downside H&S target of 573.75 still a possibility.

Jonathan Levinson : 2/9/2005 10:08:54 AM

QQQQ bounced from the 37.62 level but is bumping its head on the previous range support. The 30 min cycle should remain bearish below 37.73, but that 37.60 level needs to break soon. Link

Jeff Bailey : 2/9/2005 10:05:32 AM

VIX.X 11.48 -1.03% ... DAILY Pivot Levels ... 11.35, 11.45, Piv= 11.55, 11.65, 11.75.

Linda Piazza : 2/9/2005 10:04:49 AM

I'm turning to the OEX's 60-minute chart. It's giving a more bullish possibility than the five-minute chart, while the 15-minute one looks rather balanced between support underfoot at 575.76 and resistance overhead up to 577.34.

Jonathan Levinson : 2/9/2005 10:03:46 AM

Wholesale inventories +.4% vs. .9% expected.

Linda Piazza : 2/9/2005 10:02:57 AM

The OEX's five-minute 21-ema being tested now.

Jeff Bailey : 2/9/2005 10:11:07 AM

10:00 Market Watch at this Link 10:00 Internals at this Link Yesterday's Internals at this Link

Linda Piazza : 2/9/2005 10:01:33 AM

The OEX currently tests its five-minute 100/130-ema's at 576.16 and 575.80. It has already fallen beneath the neckline of the H&S on the five-minute chart, but a strong bounce from these averages could perhaps turn that decline into a fake-out move. It doesn't look to be so far, with the break below the 576.50 neckline (neckline was ascending, so was higher when hit this morning than it was pre-market) now setting a downside target near 573.75. We're getting the neckline test and test of the five-minute 21-ema now, with the five-minute 21-ema at 576.70. Those hoping to see that downside target certainly want to continue to see five-minute closes beneath that 21-ema. I wouldn't count on anything too strongly today and would be ready to jump out if proven wrong. So far, that's what's showing up. TRIN certainly isn't strong enough to make bears feel all cozy, although the advdec line is so far cooperating.

Jonathan Levinson : 2/9/2005 9:57:28 AM

Another tight day for the Fed, with the Open Market Desk announcing no action against the 2.25B in expiring overnight repos, for a net drain of 2.25B for the day.

Linda Piazza : 2/9/2005 9:56:33 AM

SOX at 422.79, approaching those converging 200-sma and -ema's.

Linda Piazza : 2/9/2005 9:53:03 AM

So far this morning, the SOX turns down from the 61.8% retracement of its decline off the December high. It's got the 200-sm and -ema waiting not too far below, at 419.93 and 421.43, so it's possible that they could supply support on a further decline. If you look at a daily chart of the SOX with the 200-sma on that chart, you might note that the SOX has a habit of overrunning that average for a day or two and then declining. It did it in mid-November, early December, and the end of December and early January. Bulls do not want to see that happen again. Sometimes the SOX paused near that average a day or two and sometimes it simply fell straight through it again.

Jane Fox : 2/9/2005 9:52:37 AM

TRIN is neutral at 0.93, the AD line is probing its previous day lows and the VIX has pierced its previous day lows but back into its previous day range. Opps I see AD line now piercing PDL as well.

Jonathan Levinson : 2/9/2005 9:51:59 AM

QQQQ update at this Link

Jeff Bailey : 2/9/2005 9:49:51 AM

Dow Diamonds (DIA) $107.35 +0.09% ... edges back after session high of $107.48. With seven sessions left until expiration, I get the feeling it will be very close for the NAKED Feb. $108 calls.

Linda Piazza : 2/9/2005 9:49:15 AM

Interestingly, the advdec this morning confirmed a H&S on its five-minute chart.

Jonathan Levinson : 2/9/2005 9:47:44 AM

Session lows for QQQQ, heading for 1st support at 37.65, below which 37.60-.62 are key support at yesterday's lows.

Linda Piazza : 2/9/2005 9:46:53 AM

Correction to my post about the TRAN: It's almost 25% above the 200-week moving average, not 30%.

Jonathan Levinson : 2/9/2005 9:44:34 AM

Don't forget the Wholesale Inventories data at 10AM and the oil inventories at 10:30.

Linda Piazza : 2/9/2005 9:46:32 AM

The TRAN is at 3605.04 as I type, slightly lower this morning but still above 3600. The TRAN is looking overbought on the basis of its almost 25% move above its 200-week moving average, at least, but still showing a bullish potential inverse H&S on its 60-minute chart, too. One more push higher? It's possible, but resistance is massing between 3630-3640, and it's going to have to push hard to get above it.

Jeff Bailey : 2/9/2005 10:36:47 AM

eBay (EBAY) $80.27 +2.19% .... Merrill Lynch upgrade.

Jonathan Levinson : 2/9/2005 9:43:42 AM

Gold is holding its losses, down 2.1 to 412.10 with a lower low of 411.30, though the miners are relatively stronger, HUI -.09% at 192.46 and XAU -.3% at 88.37.

Jeff Bailey : 2/9/2005 9:43:17 AM

Intuitive Surgigal (ISRG) $48.60 +18.24% ... surging after the surgical robotics maker reported a profit of $11.7 million, or 32 cents a share. Sales in the recent quarter rose 64% to $45.2 million versus $27.6 million in the year ago quarter.

Linda Piazza : 2/9/2005 9:41:34 AM

The OEX's three-minute Keltner chart isn't giving as much information as usual because of all the zooming around this morning. It shows a possibility that the OEX could rise up to 577.21-577.42 or fall to 576.12-576.40 before it faces decent resistance or decent support, and before we know which will hold.

Linda Piazza : 2/9/2005 9:39:47 AM

The OEX is back testing the right-shoulder level again.

Jonathan Levinson : 2/9/2005 9:39:23 AM

Session high for QQQQ here at 37.80, but still no break in either direction.

Linda Piazza : 2/9/2005 9:34:57 AM

Wait about 30 seconds and you get a different view of the OEX. It bounced from just above the neckline of that H&S I'd noted on the five-minute chart, zoomed above the five-minute 21-ema, all the way up to the right-shoulder level, retreated, and now hovers just above the five-minute 21-ema at 576.82. A five-minute close below this represents this resistance holding, at least temporarily. Too early to be sure, but this isn't looking like particularly strong behavior over the very short term.

Jonathan Levinson : 2/9/2005 9:33:44 AM

Bonds remain fractionally negative, TNX +.9 bps at 4.046%.

Jeff Bailey : 2/9/2005 11:23:53 AM

Research in Motion (RIMM) $76.31 Link ... (per trader's question) Point and figure chart starting to shape up to the bullish side. Trader looking for an entry point may want to look for pullback to $73-$74 as entry point for 1/2 bullish position (maybe some $75 or $80 calls), then look for strength and add to position on trade at $79. Recent double top buy signal at $73 and building column of X has bullish vertical count hinting at $94. Quick check of relative strength chart versus the QQQQ has RS back on a buy signal too. Link Current "Max Pain" theory for February expiration is $72.50.

Linda Piazza : 2/9/2005 9:30:51 AM

Not an up open, at least not yet. You just can't always tell with futures action. The OEX heads right down to test the five-minute 100/130-ema's at 576.11 and 575.74.

Jeff Bailey : 2/9/2005 9:57:02 AM

Pre-market most actives ... CSCO $18.33 +0.49%, HPQ $22.46 +11.5% (CEO Fioriana steps down), ERICY $30.80 +4.05%, ISPH $9.50 -40%

Jonathan Levinson : 2/9/2005 9:21:39 AM

QQQQ is holding within yesterday's endless sideways range, with the 30 min cycle oscillators in a so-far weak, corrective downphase. A move above 37.81 or below 37.62 is needed to set up a directional move, with 30 min channel resistance just overhead at 37.87. Link

Linda Piazza : 2/9/2005 9:01:45 AM

I'm reading that Atlanta Fed president Guynn is speaking, saying that he believes that the "measured and accommodative" language could eventually be removed from the Fed statement. Of course it could, eventually, but the dollar, at least does appear to be reacting to his statement, strengthening. He says that the FOMC never promised that rates would be raised in a measured manner. The note I'm reading reminds that Guynn has said similar things in the past and has been known to be in a hawkish minority.

Jane Fox : 2/9/2005 8:56:39 AM

Gads Mark does this mean you put me in the same category as Carly? I'm impressed. :)

Jonathan Levinson : 2/9/2005 8:52:57 AM

Mark, I suspect that she's impervious to it by now. As I recall, her arrival was mourned by many at the time.

Mark Davis : 2/9/2005 8:51:21 AM

That has to make Carly feel pretty bad, eh Linda? How would you like it if the entire financial world celebrated your exit from the scene? Man, that's brutal.

Linda Piazza : 2/9/2005 8:47:50 AM

Mark, I was just trying to figure out what caused that spike in the futures, but it never occurred to me that it might have something to do with the Fiorini resignation. I wasn't watching the futures as the announcement was made, but looking at them afterwards and so didn't see the connection. Interesting. I imagine it's big news in my old neighborhood in Houston, too, where a lot of the old Compaq employees live. (See Mark's 8:23 post and my 8:15 post.)

Mark Davis : 2/9/2005 8:47:03 AM

Jane... You're fired! Link
Don't feel bad. Carly got fired today too (grin)

Linda Piazza : 2/9/2005 8:43:05 AM

Tuesday, the OEX produced a stronger-looking candle than did the SPX, but even the OEX's left an upper shadow behind. It was a sturdy little small-bodied candle, though, respectable enough a refutation of the potential evening-star pattern that had already produced two of the three needed candles. The OEX chugs up toward a double-top level and a years-long S/R line that I've had drawn on my OEX chart at about 577.80, in a 577.30-578.60 or so zone. I had noted that zone as seeming important on the monthly chart years ago. That zone appeared to play a part in the OEX's trading pattern in January, with the OEX reaching toward and even above that zone in January, but always closing below it on the daily chart. Now the OEX reaches toward it again.

Other indices show a mixture of results. The SPX produced a doji just above 1200 but just below an ascending trendline that served as resistance in September and October, then as support in November and December, and then resistance again since January. The TRAN produced another doji under the descending 30-sma, looks very overbought according to its distance away from the 200-week ema, but nevertheless pushes up toward the neckline of a potential inverse H&S, with that neckline at about 3630. The SOX swooped all the way up to the 61.8% retracement of the decline off the December high, but moved into a congestion zone from November and December, with that zone possibly to slow gains for a while. The GHA and GSO both did battle with their 50-sma's, neither index winning just yet. The RLX still consolidates within the big gap from the middle of January, with important retailers due to begin reporting over the next couple of weeks. The Nasdaq faced upper resistance from its rising regression channel, a channel moving up toward 2100 resistance, the 50-dma and the 50% retracement off January high.

We see a mixture of results from Tuesday's trading. And then there are CSCO's results to factor into the mix. As of this writing, futures are well off overnight lows, pressing up into yesterday's last resistance levels.

If futures action follows through into the cash market open, something that doesn't always happen, and if the OEX behaves in accordance, it, too, may press up toward yesterday's last resistance level. That might be at about 576.80-577.20. There's some nervousness ahead of tomorrow's trade balance numbers, with that certainly being a prime topic among currency traders at least, so I'm not anxious to predict a reaction to that test of yesterday's resistance pre-open. There's been much hope/hype that the trade balance will narrow, but some might be nervous that it won't as tomorrow's report draws nearer. This morning, we'll look for signs of a breakout above January's resistance or a downturn at a possible double-top area.

Our first test of strength/weakness is likely to be the test of the five-minute 21-ema at 576.82, to see if that holds as resistance. If that or the 577.20-ish last five-minute high holds, our next test of strength/weakness is likely to be a test of the five-minute 100/130-ema's at 576.11 and 575.73, with a move through those averages also confirming a H&S on the five-minute chart, with a downside target of about 573.50-573.60 if confirmed. Bulls will want to see a bounce from those averages again.

Jane Fox : 2/9/2005 8:39:19 AM

Please forgive my morning post here with nothing in it. The posting website requires me to make a post in the MM before I can post to the futures side.

Jonathan Levinson : 2/9/2005 8:33:33 AM

And a session high for QQQQ, +.04 to 37.78.

Jonathan Levinson : 2/9/2005 8:27:09 AM

Session low for bonds and gold and CAD futures, TNX +.5 bps at 4.042%.

Mark Davis : 2/9/2005 8:23:46 AM

The funny thing is Linda... that news coincided with a big spike in the futures. It's big news around here (Silicon Valley) but I wouldn't think it would affect the markets. Weird

Linda Piazza : 2/9/2005 8:15:38 AM

News being released that Carly Fiorina has resigned as chairman and CEO of Hewlett-Packard.

Jonathan Levinson : 2/9/2005 7:51:56 AM

Equities are mixed, ES trading 1202, NQ 1531.5, YM 10720 and QQQQ -.05 at 37.69. Gold is down a dime at 414.10, silver down 2.4 cents at 6.536, ten year notes up .0938 to 112 15/16, and crude oil is down .15 to 45.25.

We await the 10AM release of Wholesale inventories, est. .9%.

Linda Piazza : 2/9/2005 6:40:54 AM

Good morning. A third day of trying to close above 11,500 ended with a third failure on the Nikkei, with that bourse closing modestly lower. Most other Asian bourses were closed for the Lunar New year. European markets turn lower this morning, impacted by weakness after CSCO earnings, downgrades of BP and Rio Tinto and perhaps by some easing in the dollar this morning. Our futures have recovered off their overnight lows, with the ES contract punching briefly below 1200, and are modestly lower as this report was prepared. As of 5:40 EST, gold was up $0.40, and crude, down $0.30. More detail about Asian and European markets follows in succeeding paragraphs.

The Nikkei made another stab at staying above 11,500 in early trading Wednesday, its third consecutive day making the attempt. For the third consecutive day, that attempt failed. The Nikkei closed lower by 17.08 points or 0.15%, at 11,473.35. Exporters, including most car manufacturers, gained, but some techs proved weak. Software company Trend Micro suffered when Microsoft announced that it would buy Sibari Software, a rival anti-virus software maker. Microsoft had in December announced plans to use Trend Micro's technology in MSN Hotmail. Weakness in CSCO sales also impacted some techs.

Chip-manufacturer Elpida Memory did not share in general tech weakness, gaining 1.5% after a company spokesperson for the joint venture of NEC and Hitachi revealed that it would be supplying Sony with DRAM chips for its new game console. Other Asian markets were closed for the Lunar New Year, and that event may also have capped gains in exporters, as some lunar cycle theorists thought the dollar would decline from yesterday's highs until Friday and some thought exporters might have been sold ahead of the holiday.

Most European markets trade modestly lower as this report was prepared. The UK received economic data that was better than expected, but both BP and Rio Tinto received downgrades. December's U.K. trade deficit narrowed and industrial output surprised to the upside. However, manufacturing costs climbed strongly. In continental Europe, CSCO's sales numbers and an earnings disappointment by German drugmaker Schering trading. European exchange Euronext also fell as it detailed expected benefits and costs if successful in its takeover bid for the London Stock Exchange. French software developer Dassault Systemes declined after trimming its sales outlook, blaming U.S. dollar weakness.

As of 6:31 EST, the FTSE 100 traded lower by 7.60 points or 0.15%, at 4,987.90. The CAC 40 traded lower by 3.21 points or 0.08%, at 3,977.56. The DAX traded lower by 11.48 points or 0.26%, at 4,359.91.

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