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Tab Gilles : 5/3/2005 2:07:01 AM

$GOLD weekly Link

Tab Gilles : 5/3/2005 2:06:25 AM

In reference to Linda's post 3:29 PM on 3/2/05. A reader asked what would gold do if China revalued it's currency? Personally- it's my opinion is that China would not want to disrupt the world economies be revaluing the Yuan. Currently, I think it would be pretty hard for gold to fall below $380 even if the U.S. Dollar rallies. The fiscal nightmare that's been created by this administration has put us on the path to a steadily weaker currency.Today, the annual increases in the US federal budget deficit are greater than the total federal government debt was in 1971. This is an alarming trend. Even during reported budget surpluses in 1998 and 1999, total government debt still grew year after year to the current level of $7 trillion. The US is now paying over $300 billion in interest to holders of federal debt. If this rate of increase continues, eventually annual tax revenues will not be enough to even service interest costs.

Because of wealth preservation and hedging benefits, gold bullion cannot be viewed like other portfolio holdings. The hedging benefits of bullion are achieved because gold is negatively correlated to traditional financial assets such as stocks and bonds. These hedging benefits become particularly pronounced during periods of economic stress. When you compare how poorly stocks, bonds, real estate and currency performed relative to gold during recent currency crises in Russia, South East Asia and Argentina, these benefits become apparent.

The US Current Account deficit now stands at over $650 billion, and represents about 6% of GDP. Do you know - it now takes $7 of new debt for every $1 increase in GDP. How much confidence would you have in a corporation that needed to borrow $7 annually just to increase its gross revenues by a dollar? Clearly this can not go on much longer. No wonder Alan Greenspan recently warned that - "foreigners' appetite to continue to invest in the US may not be adequate to fully sustain the expected growth in the net indebtedness of the US". Bottomline.... is that eventually foreign investors will stop lending the US any more money.

Historically, a reliable indicator for the trend direction of gold and equities is the DOW:gold ratio. When the ratio increases, it is a good time to be overweight equities and when it declines, it is better to be overweight gold. The ratio was 1:1 in 1935. In 1980, when gold was $850 and the DOW was 925, it again approached to 1:1. The ratio peaked at 43:1 in 2001, but has steadily declined to its current level of 24:1. Link From 1982 low to 2000 peak we've retraced about 50%.

Here's an interesting article that can explain in more detail some dollar/yuan/gold scenarios. Link

Jeff Bailey : 5/3/2005 12:16:01 AM

June Crude Oil (cl05m) down $0.19 at $50.73

Jeff Bailey : 5/3/2005 12:07:02 AM

e-mini S&P (es05m) down 0.25 at 1,163.25

Jeff Bailey : 5/3/2005 12:06:22 AM

e-mini NASDAQ (nq05m) up 1.00 at 1,428.50

Jeff Bailey : 5/3/2005 12:04:57 AM

NASDAQ Comp. NH/NL ratio chart at this Link with some recent COMPX Price low benchmarks.

Jeff Bailey : 5/2/2005 11:44:44 PM

NYSE NH/NL ratio chart at this Link

Jeff Bailey : 5/2/2005 11:40:43 PM

Program Trading Levels for Tuesday ... HL Camp & Company has their computers set for program buying at $+2.82 and set for program selling at $-0.38.

OI Technical Staff : 5/2/2005 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 : 5/2/2005 7:44:41 PM

Dow Diamonds and components (sorted by price weighting) and May's "Max Pain Theory" levels found at this Link

Jeff Bailey : 5/2/2005 6:39:08 PM

Pivot Matrix for tomorrow at this Link

Jeff Bailey : 5/2/2005 5:04:24 PM

Closing U.S. Market Watch found at this Link . On Monday, June Crude Oil futures rose $1.20, or 2.41% to settle at $50.92. June Unleaded rose $0.0184, or 1.23% to settle at $1.5145.

Jeff Bailey : 5/2/2005 4:37:03 PM

Closing Internals found at this Link

Jeff Bailey : 5/2/2005 4:34:22 PM

According to EIA, the retail price of gasoline here in the U.S. was steady last week, falling a penny at $2.235 per gallon. East Coast +0.8c per gallon at $2.211 Midwest -0.9c per gallon at $2.156 Gulf Coast -0.08c per gallon at $2.133 Rcky Mntns +1.3c per gallon at $2.265 (rather cold last week) West Coast -0.4c per gallon at $2.433 California -0.5c per gallon at $2.560 ** Telephone sampling of approx. 900 retail gasoline outlets.

Jeff Bailey : 5/2/2005 4:08:33 PM

Current OPEN MM Profiles at this Link

Linda Piazza : 5/2/2005 3:57:06 PM

And the OEX is above the 200-sma, jammed up underneath Keltner resistance, below the 200-ema. Not a comfortable place for someone in a long position to be ending the day, I'd say--much better to have ended comfortably above the 200-ema--but who knows what tomorrow's open will be like.

Jonathan Levinson : 5/2/2005 3:53:37 PM

QQQQ will leave off with a mixed cycle picture. The daily cycle is in an upphase and will so remain above Friday's low. The 30 min cycle is in a downphase that appears to be faltering before reaching oversold territory. This on its own would be a perfect bullish scenario. The complication comes from the 60 min cycle, which is still in the early stages of its downphase. The opposition of that cycle should result in upward chop, provided that today's lows don't get violated. A break above 35.25 should be enough to whipsaw the channel to the upside, in which case it would enter a very bullish trending move.

Jeff Bailey : 5/2/2005 3:48:11 PM

Swing trade long 1/2 bullish position alert for the QQQQ $35.08 here, stop $34.80, target $35.60.

Linda Piazza : 5/2/2005 3:39:50 PM

If that was a bull flag decline on the OEX today, as it was always possible it was, then the OEX has broken out to the upside. Don't rejoice just yet if in a bullish position, though, because as the day draws near the end, the OEX rises to test Keltner resistance just under the previous HOD, near the 200-sma. Question if you want to hold overnight with the OEX now jammed underneath that 200-sma. As I said this morning, I think all this is more about pre-FOMC positioning than what's on the charts, but so far, the charts have worked fairly well to show the small, intraday movements, but that's not going to tell us what's likely to happen tomorrow morning. The Nikkei will be closed tonight as will many other Asian markets with those countries celebrating Golden Week, so there could be some floppy trading patterns during the overnight session.

Linda Piazza : 5/2/2005 3:29:14 PM

Reader Question: In your opinion what will happen to gold and Uranium type mining stocks and the price of gold and metals if China revalues their currency as you mentioned in your analysis today? Will it also affect interest sensitive stocks like IAF and energy trusts.

Response: Great question, and one that was the subject of much discussion this morning on CNBC, or at least the effect of the revaluing on our interest rates. The discussion centered on the vulnerability of our long-term bonds and the dollar to a steep decline if the yuan really were unpegged from our dollar. I don't watch the yuan, but apparently it did swing outside its normal boundaries for "nanoseconds," according to a commentator. Greenspan himself is concerned about the effect on the global economy of a too-swift change in the way the yuan is valued, or at least he was back in March, when he noted that if China were to swiftly allow the yuan to float freely, such a move could imperil China's fragile economy and the global economy.

The easy answer is that gold will rise if the dollar declines, but will the dollar decline? The first question is going to be whether there will be a reaction in interest rates and if the dollar will plummet as some speculate. Of course, interest-rate sensitive issues are going to be dependent on the interest rate, but the action of long-term yields (or rather, inaction in the face of rising interest rates) has been a conundrum to those more learned in economics than I can pretend to be and doesn't depend on only one variable, such as the impact on the long-term yields, but movements in the whole yield curve. If I don't (and others don't) find it easy to explain the continued relatively low yields on long-term rates, I don't feel qualified either to speculate on how they might change and how correct that guest analyst might have been on CNBC this morning. Others have floated various theories about what might happen to the dollar and long-term interest rates, but I honestly haven't been able to weigh one against the other in any meaningful way that leaves me anything other than confused. Any other writers have any ideas that might prove more helpful than mine?

Jonathan Levinson : 5/2/2005 3:24:35 PM

QQQQ is breaking above 7200 tick SMA resistance here at 35.04, but just approaching the 30 min channel ceiling at 35.10, with declining 60 min resistance at 35.15. If price can hold above 35.00 for 10-15 minutes, those channels will begin to moderate their declines and possibly shift higher. Otherwise, the short cycle will wind up being corrective off the lows. Link

Jeff Bailey : 5/2/2005 3:16:38 PM

Boy ... I just can't get a grasp on what the market reaction will be to tomorrow's FOMC decision. I (Jeff Bailey) think the FOMC will raise 25 bp (no surprise there), maintain their stance of gradual increase, with some cautionary mention that oil prices have "taxed the consumer" in recent months.

Jonathan Levinson : 5/2/2005 3:11:48 PM

QQQQ 100 tick chart update at this Link . 7200 tick SMA resistance is down to 35.01 with the short cycle oscillators edging toward a new upphase. That upphase should be corrective within the declining 30 and 60 min channels, but that will change if price can surpass the 35.10-.13 resistance zone.

Jeff Bailey : 5/2/2005 3:08:54 PM

03:00 Internals at this Link

Linda Piazza : 5/2/2005 3:03:58 PM

I just noticed that in my 2:29 post about the TRAN (now my 3:01 post, as the time stamp changes when we edit them) I'd inadvertently typed that the Keltner chart suggested that the TRAN was not vulnerable when I'd meant now vulnerable. Hopefully, the context of the post made the intent clear, but I've corrected it, just in case.

Jonathan Levinson : 5/2/2005 3:02:38 PM

Ten year bonds firmed sufficiently to close the TNX back below 4.2%, -.7 bps at 4.194%. Daily chart at this Link

Jeff Bailey : 5/2/2005 3:01:51 PM

03:00 Market Watch at this Link

Linda Piazza : 5/2/2005 2:56:39 PM

The OEX managed a tentative 15-minute close above the Keltner line currently at 553.06, a Keltner line that has been pressuring the OEX lower since about 12:45. The tentativeness of that higher close is being demonstrated currently, with the OEX immediately reversing to retest the former resistance and see if it holds as support. If it does, the OEX will next face 15-minute Keltner resistance at 554.15-554.55, near the 200-sma. Earlier today, I said that I had shut down one online broker's site to keep myself from trading what I didn't think I should be trading. So far, I'm not unhappy with that decision. I'm watching some hedged plays to make sure they're safe, but not tempted into daytrading.

Jonathan Levinson : 5/2/2005 2:43:52 PM

QQQQ bouncing here from a low of 34.886, with declining 7200 tick SMA resistance at 35.02: Link

Linda Piazza : 5/2/2005 2:41:23 PM

The TRAN rises to test resistance that should be strong, near 3468-3475.00. Meanwhile, it's testing first resistance on the 15-minute chart, with that resistance at 3463.88 and with the TRAN currently about a point below that.

Jonathan Levinson : 5/2/2005 2:33:36 PM

Nymex crude closed +1.175 at 50.90, +2.36% for the day. 30-tick 4-day chart at this Link

Jonathan Levinson : 5/2/2005 2:31:45 PM

Volume breadth has weakened, with the TRIN up to 1.11 and the TRINQ 1.25, both reflecting neutral selling pressure. Declining volume leads advancing volume 1.64:1 on the Nasdaq, while on the NYSE, advancing volume is in the lead, but only 1.07:1.

Linda Piazza : 5/2/2005 2:31:31 PM

The SOX now looks vulnerable down to 382.30. It could rise up to test resistance, but that resistance, up to 386-388.44, now looks far stronger than nearby support, suggesting that vulnerability. The bounce to test resistance isn't guaranteed, just possible.

Linda Piazza : 5/2/2005 3:01:35 PM

The TRAN's 15-minute Keltner chart suggests that it's now vulnerable to a much deeper drop, but all isn't lost yet, according to the three-minute chart. The TRAN is trying to cling to last three-minute and 15-minute support, with that 15-minute support now at 3454.88 and the TRAN at 3457.27 as I type. The TRAN looks vulnerable to 3431.62-3441.75, but perhaps not until another test of resistance near 3465-3470, if support here should hold.

Linda Piazza : 5/2/2005 2:25:11 PM

As worrisome as it might seem for the OEX to be declining off the day's high, the reason that I haven't been so sure that a decline would take the OEX all that low is that the decline takes the tight pattern of lower highs and lower lows that's indicative of a possible bull flag and it hasn't retraced even 38.2% of the decline off the rally from Friday's low. It would still just be a bull-flag pullback.

Jonathan Levinson : 5/2/2005 2:22:38 PM

No weakness for oil, with June crude now up 2.41% or 1.2 at 50.925, off a high of 50.95.

Jeff Bailey : 5/2/2005 2:24:05 PM

June Crude Oil (cl05m) $50.30 +1.16% (30-min. delayed) ... WEEKLY Pivot Levels ... $45.26, $47.43, Piv = $51.66, $53.83, $58.06.

Linda Piazza : 5/2/2005 2:22:30 PM

The OEX's three-minute chart suggests that the OEX could have some difficulty getting over that 15-minute Keltner line that it needs to close above to erase the vulnerability to continued tests of support. The three-minute chart shows the OEX rising against a thicket of Keltner resistance lines. A three-minute chart is less reliable to than the 15-minute one, of course, but sometimes helps corroborate just how strong a support or resistance level might be.

Linda Piazza : 5/2/2005 2:18:00 PM

(Post first entered at 2:12.) The OEX dipped to next Keltner support, support that should be relatively strong. The OEX is attempting a bounce, but needs to get back agove 553.20 on 15-minute closes before it removes that vulnerability to further tests of support.

Jeff Bailey : 5/2/2005 2:12:07 PM

02:00 Internals at this Link New Highs stalling, with some continued softening at the bottom.

Linda Piazza : 5/2/2005 2:08:27 PM

The SOX was susceptible to a decline, and didn't even manage the small bounce I thought it might first. See my 1:49 post.

Jonathan Levinson : 5/2/2005 2:04:26 PM

QQQQ update at this Link with price testing 30 and 60 min channel support. A failure to bounce quickly above 35.07 will see those channel supports decline further.

Jonathan Levinson : 5/2/2005 2:02:57 PM

Session high for crude oil at 50.85 here, +1.125.

Jeff Bailey : 5/2/2005 2:01:49 PM

02:00 Market Watch at this Link

Linda Piazza : 5/2/2005 1:56:41 PM

Just as the OEX's 15-minute Keltner chart was right in predicting where resistance would be, the three-minute one was right in predicting where support would be, but now the OEX needs to produce 15-minute closes above the Keltner line currently at 553.44, or else it's vulnerable down to 551.75.

Jeff Bailey : 5/2/2005 1:53:50 PM

Verizon (VZ) $35.37 -1.20%

Jeff Bailey : 5/2/2005 1:53:19 PM

Qwest Communications (Q) $3.54 +3.80% ... saying it will not make another bid for MCI (MCIP) $25.57 -3.61%.

Linda Piazza : 5/2/2005 1:49:17 PM

In case I haven't made myself clear today, I have thought for about the last two and a half hours that a pullback was in the works, but I have never been sure that the pullback was going to be all that deep, an impression corroborated so far by the Keltner channel setup. I wouldn't go long with OEX options here, not ahead of strong resistance and tomorrow's FOMC meeting, but I also am not certain that a bearish play is all that good an idea, either.

Linda Piazza : 5/2/2005 1:43:53 PM

So far, Keltner resistance has proven stronger than support on the OEX, as the 15-minute Keltner chart suggested it would be. It's now testing the support that had been suggested by the three-minute chart, down to 552.69. If that's going to hold, now's the time.

Jonathan Levinson : 5/2/2005 1:42:28 PM

Breadth has turned mixed, with 1.2 advancing NYSE shares for each declining, while on the Nasdaq there are 1.05 declining shares for each advancing. The TRIN and TRINQ are hovering aroung 1, TRIN at at 1.03 and TRINQ at .91. With the 60 min cycle just starting to tick down, I'm thinking that breadth will continue to deteriorate.

Jeff Bailey : 5/2/2005 1:40:28 PM

Current OPEN MM Profiles at this Link

Jonathan Levinson : 5/2/2005 1:37:32 PM

QQQQ is back to testing the session lows, printing 35.01 with 30 and 60 min channel support lined up at 34.96. Link

Jonathan Levinson : 5/2/2005 1:34:51 PM

Trapped on a call- back shortly.

Linda Piazza : 5/2/2005 1:49:44 PM

The SOX is looking susceptible to a decline, but perhaps not until it rises first to retest the 386.50-387.30 level. If it's going to rise again, it needs to punch through that resistance and then 388.75.

Jeff Bailey : 5/2/2005 1:33:53 PM

Barrick Gold (ABX) $22.24 -0.35% ... offers to buy 19.8% diluted stake in Diamondex Resources at C$0.90 via subscribing for 7.6 million units.

Jeff Bailey : 5/2/2005 1:27:34 PM

Administaff (ASF) $17.07 +24.87% ... provider of human resources jumping in today's session after reporting quarterly profits that fell surpassed expectations. Company said quarterly net income fell to $4.6 million, or $0.18 per share from $9.2 million, or $0.33 in the year-ago quarter, which benefited from a $5 million settlement with health insurer Aetna (AET) $74.08 +0.96%. Wall Street was looking for ASF to report quarterly EPS of $0.12 per share.

Linda Piazza : 5/2/2005 1:26:39 PM

I continue to watch the TRAN for clues, and the TRAN continues to find support on 15-minute closes at a Keltner line currently at 3470.26, but the TRAN has not been able to achieve a new HOD or even touch the previous one. It's a stalemate for the time being.

Linda Piazza : 5/2/2005 1:22:06 PM

Some will have noticed a potential inverse H&S on the OEX's 15-minute Keltner chart, but since that occurs within a consolidation period, I'm not giving it as much credence as I would otherwise. It's still in the process of forming a right shoulder.

Jonathan Levinson : 5/2/2005 1:17:14 PM

QQQQ update at this Link with price back below 7200 tick SMA resistance at 35.11. Volume is extremely light compared with Friday, with just 39.6M QQQQ shares traded so far.

Jonathan Levinson : 5/2/2005 1:53:12 PM

The 28B in 3 and 6 month treasury auctions saw weak foreign central bank participation of 7.2B. The 3 month auction generated a bid to cover ratio of 2.16 with a high rate of 2.87%, while the 6 month auction generated a bid to cover ratio of 3.13 at a high rate of 3.085%. The market apears unimpressed, with yields holding above 4.2%- TNX is up to flat at 4.2%.

Jeff Bailey : 5/2/2005 1:13:47 PM

01:00 Internals at this Link

Linda Piazza : 5/2/2005 1:10:09 PM

Over the short term, the OEX's nearby 15-minute Keltner resistance continues to look stronger than the nearby support, but dialing down to a three-minute chart shows that both are about equally weighted, so I continue to think the OEX may need to see either a strong buy or sell program or else some more bumping about before a next direction is chosen.

Jeff Bailey : 5/2/2005 1:05:00 PM

01:00 Market Watch at this Link

Jeff Bailey : 5/2/2005 12:59:49 PM

Interesting Dow Jones op-ed piece regarding possible buying opportunity for Treasuries. In brief, article talks about pattern of consecutive Fed tightening moves for one year. History has shown buyers of longer-dated Treasuries benefit when buying 3-months PRIOR to eventual halt of Fed tightening. April was a very profitable month for 10-year Treasury bulls. Link

Linda Piazza : 5/2/2005 12:52:02 PM

The TRAN climbs again toward its HOD, although it's showing a dangerous tendency to tip over again before reaching that HOD. The TRAN is so far finding support at 15-minute closes on a Keltner line currently at 3468.64. As long as that continues, it might continue to climb toward next Keltner resistance, currently at 3478.28 and then at 3495.54. If it's stopped by resistance, stronger support is down near 3460.

Jeff Bailey : 5/2/2005 12:51:10 PM

June Crude Oil Futures (cl05m) $49.60 -0.24% (30-min delayed) ... IEA Chief saying it is way to early to tell if oil prices will fall further, but market doesn't appear to need more oil now.

Linda Piazza : 5/2/2005 12:45:56 PM

Here's what the OEX's 15-minute Keltner chart suggests, with the caveat that I just don't trust the action today: the OEX may rise to test the 554.60 level, although that's not a given, but then it looks vulnerable to another pullback, perhaps just to 553, but perhaps a bit more likely to 551.50 or so.

Jonathan Levinson : 5/2/2005 12:44:41 PM

QQQQ is camping on the 7200 tick SMA after breaking briefly above it. So far, the short cycle upphase is just as weak as the upphase that preceded it, and while there remain potentially hours before it peaks, the lack of strong he low volume and narrow range have the 30 min channel narrowed to a range between 34.94 and 35.24. Link

Jeff Bailey : 5/2/2005 12:43:32 PM

Southwestern Energy (SWN) $65.19 +10.96% Link ... new 52-weeker on heavy volume of 1.38 million shares.

Jeff Bailey : 5/2/2005 12:41:51 PM

DirecTV (DTV) $14.88 +5.38% Link ... stock spiked to intra-day high of 15.40, but has eased off those levels. Volume heavy at 5.8 million shares.

Marc Eckelberry : 5/2/2005 12:38:03 PM

INTC june 22.50 call at 1.40, our entry a little over a week ago

Linda Piazza : 5/2/2005 12:37:15 PM

As the 15-minute Keltner chart suggested, the 554-554.60 zone is holding as resistance. Dialing down to the three-minute chart, however, shows that resistance near 554.60 and support near 553 may be about equally weighted, so it's possible that the OEX may do some bouncing around until one or the other lightens up.

Jonathan Levinson : 5/2/2005 12:36:10 PM

Crude oil down to 49.50, -.225 or .45%.

Jeff Bailey : 5/2/2005 12:34:28 PM

QQQQ $35.13 +0.42% ...

Jeff Bailey : 5/2/2005 12:34:06 PM

GSTI Software (GSO.X) 148.49 (unch) ...

Jeff Bailey : 5/2/2005 12:32:19 PM

Adobe Systems (ADBE) $56.95 -4.23% ... stock moved higher at the open to $60, but has reversed those gains and then some. Looks to test rising 200-day SMA ($56.29) after brief daily violation on 04/18/05. Will note multiple broker upgrades since that 04/18 relative low.

Linda Piazza : 5/2/2005 12:25:19 PM

The OEX does rise again toward the 554 level. Keltner resistance from 554.15-554.52 looks strong enough to hold the OEX on 15-minute closes, but I'm just not betting on much of anything panning out the way it looks today.

Jonathan Levinson : 5/2/2005 12:24:11 PM

QQQQ bounces back up to test 7200 tick SMA resistance here at 35.13. 30 min channel resistance is down to 35.21. Link

Jeff Bailey : 5/2/2005 12:21:29 PM

12:00 Internals at this Link

Jonathan Levinson : 5/2/2005 12:11:16 PM

June gold is holding above 430, currently down 5.10 at 431 and off a low of 429.60. Silver is down a dime at 6.842, with HUI -1.01% at 176.24 and XAU -.67% at 82.95. Nymex crude is up to a .025 loss at 49.70.

Linda Piazza : 5/2/2005 12:09:18 PM

If I were sure the OEX was through challenging the 200-sma and if this wasn't the day before an FOMC meeting, I'd sure know what to do about the OEX's current position--attempt a bearish entry: Link However, I'm not sure the OEX is through challenging its 200-sma and this is the day before an FOMC meeting, when pre-FOMC maneuvering may overrule anything seen on charts. Furthermore, the 15-minute Keltner charts don't preclude another test of the 200-sma, either. So, although this would normally shout that a test of a bearish position was worth a try with a quick stop (probably just above the actual descending trendline off the March 7 high), I just don't see it as a high odds entry. I've literally shut down my connection to one of my on-line brokers to keep myself from trying to trade what perhaps ought not to be traded. I've seen too many days when signals seem to set up but never see follow-through in the projected direction to be tempted today. May be sorry, but perhaps won't be, either.

Jeff Bailey : 5/2/2005 12:05:27 PM

There was a "bad tick" in the QQQQ to $34.90. I've got $35.04 as current session low.

Jeff Bailey : 5/2/2005 12:04:03 PM

12:00 Market Watch at this Link

Jonathan Levinson : 5/2/2005 12:01:44 PM

Volume breadth has weakened, with the TRIN and TRINQ up to .99 and .83 respectively. Advancing shares outnumber declining shares 1.27:1 on the NYSE and 1.21:1 on the Nasdaq. QQQQ is down to 35.05, with the 30 min channel just starting to tick lower, support down to 34.93.

Jeff Bailey : 5/2/2005 11:56:15 AM

May Max Pain Theory Levels ... DIA = $102 ($1 increments), DJX = $104 ($1 increments), SPX = 1,170 (5-point increments), SPY $116 ($1 increments), OEX= 550 (5-point increments), NDX= 1,450 (25-point increments), QQQQ= $36 ($1 increments), SOX= 400 (5-point increments), SMH= $32.50 ($2.50 increments)

Linda Piazza : 5/2/2005 11:52:12 AM

I thought earlier that it might be possible that the TRAN would tumble at least 20 points off its HOD, and it's done so now. It's settling above stronger possible Keltner support, from 3452.28-3455.11, but the shape of the tumble questions whether that support will hold, either.

Why watch the TRAN? Because it sometimes leads other indices, the way the SOX sometimes leads the tech-related indices. One of those indices is the OEX, and it's now fallen beneath its breakout level from this morning, tumbling beneath what should have been strong support if the OEX was also strong today. Next support is near 552.78, but stronger support is all the way down at 551. I would expect perhaps a retest of the 554 level somewhere along the way.

Jonathan Levinson : 5/2/2005 11:51:46 AM

Ten year bonds are stabilizing near the lows, with TNX currently up 1.8 bps at 4.219%. The Treasury is auctioning 3-month and 6-month bills at 1PM, and bond prices usually trade flat until the results are released.

Jeff Bailey : 5/2/2005 11:49:49 AM

Most Actives .... QQQQ $35.08 +0.27%, MSFT $25.10 -0.79%, SIRI $4.98 +4.62%, SPY $115.91 +0.13%, INTC $23.49 -0.12%, CSCO $17.22 -0.28%, ELN $6.26 +13.61%, AIG $54.39 +6.96%, MWD $49.20 -6.5%, NT $2.44 -2.0%, SEBL $8.69 -3.44%

Jonathan Levinson : 5/2/2005 11:42:42 AM

QQQQ 100-tick chart at this Link with price below 35.10. The short cycle downphase is not yet oversold but it's getting close. So far, 34.97-35.00 support looks good for the 30 and 60 min channels, as the short cycle downphase has been so-far corrective.

Jeff Bailey : 5/2/2005 11:38:59 AM

Securities Broker Dealer (XBD.X) 134.36 -2.22% ... weighed lower with Morgan Stanley (MWD) $48.97 -6.93% a notable loser after the company's board reaffirmed its support for Chief Executive Philip Purcell. This new spooked investors as it has been feared that other top executives and perhaps some "key accounts" at the firm might be ready to walk to competing firms.

Linda Piazza : 5/2/2005 11:35:00 AM

The TRAN continues to drop, now at 3465.86 and just above the next Keltner support that's risen to 3463.60.

Jeff Bailey : 5/2/2005 11:35:43 AM

American Intl. Group (AIG) $54.30 +6.78% ... percentage gainer among Dow Ind. components after company said it will restate financial reports because of accounting errors that mislead investors about the company's fiscal health. AIG said it will restate financials for 2000, 2001, 2002 and 2003. The insurance giant also said it has once again delayed its 2004 10-K annual report, but hopes to have it filed with the SEC by May 31.

Linda Piazza : 5/2/2005 11:30:06 AM

The OEX's five-minute 21/100/130-ema chart with CCI (see my 10:56 post) was showing a likely pullback, as I thought it might be. Now, the OEX has pulled back to first Keltner support. Those hoping for further gains today would like to see the OEX continue to produce 15-minute closes above the lines currently from 553.74-553.94, and then see the OEX push definitively above the 200-sma again. The 200-ema lurks above, though, and that's going to be tougher than the 200-sma. Or should be.

Jonathan Levinson : 5/2/2005 11:24:43 AM

Stepping away for 10 minutes.

Linda Piazza : 5/2/2005 11:16:12 AM

The OEX pulls back in what currently looks like a bull flag to next Keltner support, currently at 553.80. Those wanting to see more upside would like to see that hold on 15-minute closes.

Linda Piazza : 5/2/2005 11:15:14 AM

The TRAN clings to last Keltner support before a bigger drop off the HOD, but perhaps that drop won't be as big as it threatened earlier today. More Keltner support moves up to 3461.37, iwth the TRAN currently at 3472.30.

Jeff Bailey : 5/2/2005 11:13:45 AM

11:00 Internals at this Link Friday's Internals found at this Link

Jonathan Levinson : 5/2/2005 11:08:39 AM

Nymex crude is down .25 here at 49.475, off a low of 48.975.

Jonathan Levinson : 5/2/2005 11:05:04 AM

QQQQ is printing a sideways range, drifting through 7200 tick SMA support. The 30 and 60 min channels are flattening, and the 30 min cycle oscillators have grown overbought. A break of 35 would signal a new downphase, in which case the current chop is the "weightless" period as the 60 min cycle carves out a top. Link

Jeff Bailey : 5/2/2005 11:01:52 AM

11:00 Market Watch at this Link

Linda Piazza : 5/2/2005 10:56:41 AM

A look at an OEX five-minute chart with CCI and 21/100/130-ema's: Link

Jonathan Levinson : 5/2/2005 10:49:23 AM

Session low for ten year bonds here, TNX now up 2.5 bps to 4.226%. Next resistance is at 4.24%, but with a new daily cycle kicking off and awaiting Macd confirmation, a break of that level will project potentially to the 4.4% level and above. Daily chart updated at this Link

Jonathan Levinson : 5/2/2005 10:45:10 AM

The TRIN and TRINQ both reflect neutral buying pressure at .85 and .88 respectively. Volume-wise, there are 2.22 advancing NYSE shares for each declining, 1.58 advancing Nasdaq shares for each declining.

Linda Piazza : 5/2/2005 10:45:17 AM

The TRAN did charge up toward 3490 (see my 10:11 post), not quite reaching it before beginning a pullback. The HOD is 3486.59 so far. Nearest TRAN 15-minute Keltner support is at 3471.39, with the TRAN currently at 3473.52, but support below that is way down at 3448.26-3454.45. If the TRAN can't maintain that first Keltner support, it's subject to another 20-point drop off the HOD. At least.

Jeff Bailey : 5/2/2005 10:47:31 AM

S&P Insurance (IUX.X) 297.53 +1.96% Link ... sector finds a bid early Monday after Warren Buffett says he has $1 billion insurance deal in the works. "We love the insurance industry," said Mr. Buffett at annual shareholders' meeting. Mr. Buffett hinted he would like to make a larger acquisition, but hasn't found any good opportunities lately.

Jeff Bailey : 5/2/2005 10:37:54 AM

Dow Diamonds (DIA) $102.42 +0.53% ... updated daily interval chart with WEEKLY/MONTHLY Pivot Levels found at this Link ... $103.83 will be most formidable resistance with FOMC meeting tomorrow. Overlap at $103.83 as well as starting to round flat 200-day SMA $103.81. This may well be correlative with a QQQQ at its WEEKLY R1 of $35.65. Pretty close to a bullish target of a stopped out swing trade long in the QQQQ to $35.60.

Linda Piazza : 5/2/2005 10:36:11 AM

The OEX still consolidates near the 200-sma, still hanging above the breakout level.

Jonathan Levinson : 5/2/2005 10:27:21 AM

June gold has lost 430, down to 429.60 and bouncing as I type, but the break of 432 has been quick, with the daily cycle oscillators now on sell signals from overbought territory. Next support is at 428, with 20-day bollinger support down at 424.20. Daily chart at this Link

Linda Piazza : 5/2/2005 10:26:34 AM

So far, the OEX holds above the breakout level on the 15-minute Keltner chart. Support has temporarily softened somewhat, but is trying tofirm up again near 553.50 and then again near 550.70. Not quite there yet.

Jeff Bailey : 5/2/2005 10:24:15 AM

Current OPEN MM Profiles at this Link

Jonathan Levinson : 5/2/2005 10:17:56 AM

Gold has broken the 432 support with a bang, down to a low of 430, with HUI -1.06% at 176.14 and XAU -.8% at 82.84.

Jonathan Levinson : 5/2/2005 10:23:49 AM

QQQQ continues to trade an uncertain range between 35.10 and 35.21, trading both sides of the 7200 tick SMA. With a short cycle due here, the action is not bearish, as a sideways-down phase for the short cycle within the upphasing 30 and 60 min cycles would set the stage for a strong/impulsive upphase to follow. That outlook will change if the 34.97 area fails, as that would likely see a downside whipsaw for the 30 min cycle. Link

Jeff Bailey : 5/2/2005 10:17:33 AM

Bema Gold (BGO) $1.96 -3.92% Link ... notable 52-weeker.

Jeff Bailey : 5/2/2005 10:14:50 AM

10:00 Internals at this Link ... current NYSE 10-day NH/NL ratio would be a 3-box reversal higher at 28%.

Linda Piazza : 5/2/2005 10:11:52 AM

The TRAN, often driving up or down at speeds in excess of those seen in other indices, has already nearly approached its upside Keltner channel target. That target is at 3490.33, with the TRAN currently at 3482.76. I wouldn't be surprised to see the TRAN charge up toward 3490-3500, but then the TRAN may soon be ready for a pullback and it's far outstripped its Keltner support.

Jonathan Levinson : 5/2/2005 10:10:49 AM

Session low for ten year notes, TNX flipping back above 4.2%, +1.4 bps at 4.215%.

Jeff Bailey : 5/2/2005 10:09:55 AM

Silicon Valley Bancshares (SIVB) $48.00 +1.26% ... notable 52-weeker

Linda Piazza : 5/2/2005 10:08:08 AM

The OEX comes down to test Keltner support, with that support at 553.40, then at 552.42 and then much stronger grom 549.85-550.77. So far, the OEX is just oscillating around its 200-sma.

Jonathan Levinson : 5/2/2005 10:05:52 AM

June crude has reopened, currently -.30 at 49.425.

Jeff Bailey : 5/2/2005 10:05:36 AM

VIX.X 15.18 -0.84% ... DAILY Pivot Levels ... 14.38, 14.90, Piv= 15.91, 16.43, 17.44.

Jonathan Levinson : 5/2/2005 10:08:28 AM

Headlines:

U.S. APRIL ISM MANUFACTURING INDEX 53.3% VS 55.2% MARCH

U.S. APRIL ISM MANUFACTURING INDEX BELOW 54.6% EXPECTED

U.S. APRIL ISM JOB INDEX 52.3% VS 55.2% IN MARCH

U.S. APRIL ISM FACTORY INDEX LOWEST SINCE JULY 2003

Jonathan Levinson : 5/2/2005 10:04:46 AM

Bonds edged back slightly off the high but are still holding the bulk of their gains, with TNX -1.3 bps at 4.188%. Gold is resting at 433, off a low of 432.80.

Jonathan Levinson : 5/2/2005 10:03:04 AM

SM Index 53.3 vs. 55.0 exp.; Prices Paid 71.0 vs. 71.2 exp.

Jeff Bailey : 5/2/2005 10:02:17 AM

10:00 Market Watch at this Link

Jonathan Levinson : 5/2/2005 10:01:43 AM

Still waiting for the ISM.

Linda Piazza : 5/2/2005 10:00:50 AM

I keep theorizing wrong today. That wasn't a small-bodied candle after all that last 15-minute period. The OEX is now between the 200-sma and 200-ema.

Jonathan Levinson : 5/2/2005 10:00:35 AM

Headlines:

U.S. MARCH CONSTRUCTION SPENDING STRONGER THAN EXPECTED

U.S. MARCH CONSTRUCTION SPENDING UP 0.5%

Linda Piazza : 5/2/2005 9:58:52 AM

The OEX may produce a small-bodied candle or a doji during the current 15-minute period, it appears. If so, it may finally be time for a pullback. First Keltner support can be found at 553.16-553.45, with those hoping for more gains wanting to see continued 15-minute closes above that Keltner support or at least above the Keltner line currently at 551.81. Both would keep the smallest Keltner channel pointed higher, although a drop to the second level of support would erase the breakout signal. Again, pre-FOMC, I'd be wary of trusting all charting signals today. I'm going to list what I see, but I'm limiting my own trades today.

Jonathan Levinson : 5/2/2005 9:56:30 AM

Thanks, Keene- I missed the ISM, 55.0 exp., prior 55.2.

Jonathan Levinson : 5/2/2005 9:54:58 AM

The Fed's open market desk has announced a 5B overnight repo to replace the 4.75B expiring, for a net add of 250M.

Jonathan Levinson : 5/2/2005 9:54:04 AM

7 minutes to the Construction Spending report, est. +.3%, prior +.4%. Also awaiting the disposition of the Fed's 4.75B weekend repo.

Jonathan Levinson : 5/2/2005 9:51:50 AM

Bonds have firmed, TNX down to a 1.3 bp loss at 4.188%, still unable to challenge 4.2% resistance. QQQQ is holding just below the premarket highs, edging back from 35.20 on this attempt.

Linda Piazza : 5/2/2005 9:50:03 AM

At about 557.00, the OEX will test the descending trendline off the March 7 high. Although QCharts draws the OEX's descending regression channel with a lower trendline, at about 554.90 currently, I think I'd be using that 557 level, especially with the 200-ema at 556.90, as a demarcation of a breakout level.

Jeff Bailey : 5/2/2005 9:46:11 AM

Yellow Roadway (YELL) $50.82 +3.6% ... higher after company said it was boosting its cash portion for its offer to buy USF Corp. (USFC) $45.01 +5.58%. USFC shareholders will now receive about 65% cash and 35% YELL stock. Original offer was 50/50 cash and stock.

Linda Piazza : 5/2/2005 9:43:27 AM

For reference, the OEX's 200-sma is at 554.54 and the perhaps-more-important-lately 200-ema is at 556.89. Although the 200-sma is of course important, the OEX appears to be moving across the 200-sma more easily than across the 200-ema since the middle of March. This morning, however, it may be the 200-sma that's capping the first attempts to move higher. The OEX remains within its descending regression channel, within the now-narrowing-to-a-diamond consolidation pattern, below these averages. No breakout yet.

Unless something drastic happens in the next couple of minutes, however, I was wrong about the first 15-minute close and the OEX likely will set an upside target of 558.68. That's an upside target I'd treat with a hefty dose of skepticism, however.

Jeff Bailey : 5/2/2005 9:42:44 AM

Eclipsys Corp. (ECLP) $12.18 -9.84% ... percentage loser after First Albany downgraded the healthcare IT company to "neutral" from "buy."

Jonathan Levinson : 5/2/2005 9:39:58 AM

QQQQ 100 tick update at this Link with price bouncing from Friday's closing high, now support and trying to test the premarket high at 35.23. A failure there will kick off a broader short cycle downphase, while a move above it will confirm the 30 min upphase and target next resistance in the 35.33-.35 area.

Linda Piazza : 5/2/2005 9:39:06 AM

The RLX climbs this morning, but is currently jammed under daily Keltner resistance at 400.84-403.08. If the RLX can punch up higher today and maintain higher prices, however, it will have created a morning-star formation on its daily chart. Still a long way to go before that happens, however.

Jeff Bailey : 5/2/2005 9:36:36 AM

Corixa (CRXA) $4.32 +39% ... GlaxoSmithKline to buy company for $300 million. The deal values CRXA at roughly $4.40 per share.

Linda Piazza : 5/2/2005 9:33:35 AM

Only a slight gap higher on the OEX, and it's pushing up against that Keltner resistance that I mentioned in my first OEX-related post this morning. Those hoping for more gains today and a new upside target want to see a first 15-minute close above a Keltner line currently at 552.84, but it's possible that the OEX won't close above that line but rather will close near it, perhaps even pushing the line a little higher, too. Remains to be seen, but I think that a strong possibility.

Jonathan Levinson : 5/2/2005 9:31:48 AM

Gold is down to a session low, June gold -3.10 at 433. 432-433 is key support, with the daily cycle due for a downphase. A move below 432, which support was tested on Friday, should be sufficient to kick off a new daily cycle downphase. Currently, HUI has opened lower, -.24 at 177.79.

Jonathan Levinson : 5/2/2005 9:03:03 AM

Ten year treasuries continue to hold their fractional gains, with yields (TNX) down 0.5 bps at 4.196%, just below key resistance. Daily chart at this Link

Tab Gilles : 5/2/2005 8:44:32 AM

Electronic Arts (ERTS) Back in March Electronic Arts scared the market when it warned that 2005 wasn't going to be that great. By guiding earnings expectations to come in between $1.62 to $1.64 a share -- about $0.20 less than the video game maker had originally projected -- the stock was sent tumbling down. So, in a sense, there may be some relief going into tomorrow's earnings report. There is a fair degree of pessimism already priced into the stock. Then again, Wall Street is going to want a little more clarity here. Have things improved or wrsened since March? Expect a little volatility here one way or another. Here's a longterm chart of ERTS... Link

Basic Materials (XLB) Link

Linda Piazza : 5/2/2005 8:39:11 AM

Before I say anything else about how the OEX's charts appear, I want to note that Monday is likely to be more about pre-FOMC positioning than anything on these charts. Trade with care if you feel compelled to trade. Markets are likely going to be maneuvered somewhere and parked there into the FOMC meeting, but where? The daily chart shows the OEX having confirmed a H&S formation with a blunted right shoulder, and then rising over the last couple of weeks in a flag-like formation to retest the neckline of that formation, as well as the 200-sma and -ema. A 120-minute chart shows the OEX still trading within a long-term descending regression channel, forming a diamond shape within that formation: Link

Perhaps it shouldn't be surprising that the OEX showed some signs of instability ahead of May's FOMC meeting. Now the question is whether the OEX will break out of that diamond before the FOMC meeting and which direction it might break. Here's what the 15-minute Keltner channel chart showed at Friday's close: The OEX had run up into Keltner resistance, the top of a channel that contains most OEX movements. If the OEX should gap higher this morning and produce a first 15-minute close above the Keltner line currently at 552.73, it sets a tentative upside target of 558.58. However, early morning breakouts don't prove as reliable as some others, and that's a target that may be somewhat difficult to reach, given that the OEX would have to punch through both the 200-sma and the 200-ema to reach it. It was the 200-ema that provided support from the middle of March until the middle of April, so that might be resistance now. Perhaps that upper Keltner line might have descended to the 200-ema by the time it could be tested.

Futures are higher this morning, suggesting an up opening if the cash markets open in accordance with futures. They don't always do so. Friday, the OEX had produced a doji at that resistance, so without a gap above the resistance, perhaps it's more reasonable to expect a pullback early Monday. Keltner support lies near 550.55 and then again at 548.94-549.22, with those levels looking firm enough to support the OEX on a first retest of the support. Perhaps it will be the behavior of the OEX at that support or on a bounce attempt that will give up information about the next direction. Another test of Friday's high certainly looks possible, but beyond that, not much is clear as yet from a Keltner viewpoint.

Jonathan Levinson : 5/2/2005 8:24:01 AM

Bonds have firmed here at the cash open, with ZN futures positive and TNX down .8 bps at 4.193%. 4.2% remains key resistance for daily cycle bulls.

Jonathan Levinson : 5/2/2005 8:23:16 AM

QQQQ is pulling back here slightly to the overlapping 30 and 60 min channel resistance lines. Currently, both longer intraday cycles are in upphases, but the channel tops are at 35.16-.17 QQQQ. Any pullback directly from here should be merely corrective, to relieve the overbought short cycle. A break of the 7200 tick SMA at 34.98 would change that to a more bearish outlook.

Jonathan Levinson : 5/2/2005 7:22:38 AM

Equities are up, ES trading 1162.5, NQ 1435.5, YM 10234 and QQQQ +.07 at 35.05. Gold is down 1.6 at 434.5, silver -.065 at 6.84, ten year notes down 1/32 to 111 13/32 and crude oil -.575 at 49.15.

We await the 10AM release of Construction Spending, est. .3%.

Linda Piazza : 5/2/2005 7:20:58 AM

Good morning. This weekend, North Korea test fired a short-range missile, the missile falling into the Sea of Japan. North Korea tried the same saber-rattling tactic during other standoffs related to its nuclear weapons program. Given that tendency in the past, the test was not a surprise, but still of concern as the U.S. is expected to seek an agreement among United Nations members to take action against North Korea and Iran's nuclear programs. The Nikkei slipped lower, closing barely above 11,000, but that decline was attributed more to a reweighting of the Topix than to concerns over North Korea's action. Many other Asian markets were closed for Golden Week holidays, as the Nikkei will be for the next three days. The FTSE 100 is also closed, but other European markets benefit from a decrease in crude and climb despite troubling eurozone economic numbers this morning. Our futures traded sideways down into the European open but then climbed and are positive now. As of 6:23 EST, gold was down $1.30 and crude, down $0.58 to $49.14. More detail about Asian and European markets follows in succeeding paragraphs.

In one of only two days the Nikkei will trade this week, with Friday being the other, it opened near 10,950, but climbed most of the day back toward the flat-line level. The Nikkei closed lower by 6.79 points or 0.06%, at 11,002.11 in trading that one article characterized as the thinnest in eight months. April's new vehicle sales rose 10.8%. A shifting of weightings in the Topix resulted in declines among some big caps, with market watchers speculating that Yahoo Japan, Toyota, NTT DoCoMo, Nissan Motor Company, and Seven-Eleven Japan will likely be hardest hit by the new weighting.

Many other Asian markets were closed for Golden Week activities, with some speculating that China will use this week to revalue the yuan. The Taiwan Weighted gained 1.02%, and South Korea's Kospi gained 0.78% despite North Korea's weekend actions. Singapore's Straits Times was closed as were Hong Kong's Hang Seng and China's Shanghai Composite.

The FTSE was closed for a holiday today, too, but other European markets gain despite troubling economic data. This morning, the April eurozone manufacturing PMI fell below the 50 expansion-or-contraction number to a reading of 49.2, far below the forecast 49.9. A look underneath the headline number showed disturbing results, with output, new orders, and employment all tumbling. New orders and employment were also below the 50 benchmark. In a country-by-country breakdown, France's numbers perhaps proved most disturbing, some thought, falling to 49.8 against an expectation of a decline to 51.5. Another economic number, the Sentix indicator, surveys private and institutional investors. The Sentix indicator reported May's current conditions component declining from the former 4.0 to -18.8 and expectations falling from the former 6.8 to -6.0.

Airlines rose as crude dropped. In company-specific news, Adidas-Salomon beat expectations on Q1 results. The company also said that the year's new income should reach the top of its 10-15% projected growth rate and increased its operating margin target to 10%. It did not increase its sales outlook for the year, however, but said that it felt increasingly better about prospects for North and Latin America. French reinsurer Scor dropped after announcing that it would restate financials for 2002 and 2003, with the stock falling even though the company said that the restatement wouldn't affect cash or technical reserves or result in default on debt or other contracts. Siemens rose in early trading even though a newspaper reported that the German government will not allow the company to sell its mobile phone unit as planned. The government worries about a further loss of jobs, an article reported.

As of 6:55 EST, the CAC 40 had gained 30.30 points or 0.77%, to trade at 3,942.01. The DAX had gained 46.71 points or 1.12%, to 4,231.55.

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