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OI Technical Staff : 5/20/2005 9:59:59 PM

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Linda Piazza : 5/20/2005 3:51:40 PM

Thank goodness this long, long day has nearly ended. As it does, there's a hint of a CCI ghost (H&S on the CCI) forming on the 15-minute chart, the first time we've seen such a potentially bearish CCI formation over the last few days. The daily Keltner chart gives a rather bullish interpretation to the action, with Keltner support now near the 560 area, down to about 559.50. I still think a pullback is overdue, and now we'll see if that support holds. If you're in a bearish play or contemplate one next week, I'd be really careful of my profits in that zone, if the OEX does indeed begin such a pullback.

Jane Fox : 5/20/2005 3:43:59 PM

I also see the VIX making new daily lows but the TRIN is not so I think this is helping to keep things pretty neutral today.

Jane Fox : 5/20/2005 3:42:59 PM

Linda you are right the AD line has improved a great deal but you would never know it from equities.

Linda Piazza : 5/20/2005 3:42:24 PM

The SOX breaks out again. I'm noting, however, that the OEX has not today been able to break over the historical 567 S/R.

Linda Piazza : 5/20/2005 3:21:26 PM

Well, once again the OEX still looks vulnerable to 564.61, but it's still not moving there.

Linda Piazza : 5/20/2005 3:08:15 PM

Will the third time be the charm? The OEX heads down once again--I think and Keltner evidence says--to test the Keltner line that has now risen to 564.58. Will the OEX break that support this time and head toward next support, at 561.53-562.53? If it had done this earlier today, I would have said yes. Now, I'm not sure.

Linda Piazza : 5/20/2005 3:01:08 PM

Remember how much fun opex Friday's used to be, when markets would zoom around and you'd either make a bunch of money or else lose, but lose only the cost of a good dinner out?

Linda Piazza : 5/20/2005 2:58:59 PM

The SOX comes down to retest the Keltner support that represents the breakout level. Test isn't over yet.

Marc Eckelberry : 5/20/2005 2:56:37 PM

Nevertheless, 5 up days in a row and maxxed out oscillators are pointing down for next week.

Marc Eckelberry : 5/20/2005 2:55:57 PM

I have to correct COMP 2047, the 50% fib is 2040.71, so we are above. I had a fib retrace dialed in from April.

Jonathan Levinson : 5/20/2005 2:54:22 PM

I need to leave in the next few minutes and won't be back before the close.

Today's move higher reversed the downtick in the 30 and 60 min oscillators, which now point upward from just below overbought territory. Any weakness on Monday will result in new downphases on a steep bearish divergence, but once again, until the sellers actually sell, the benefit of the doubt goes to the bulls in an uptrend. 37.35 is first confluence for QQQQ below the 30 min channel bottom at 37.48. Key support below which a new daily cycle downphase should confirm is at the 37.18-.20 line.

Linda Piazza : 5/20/2005 2:49:39 PM

Keltner resistance still looks strong on the OEX's 15-minute chart, and it's showing tentative Keltner-style bearish divergence. Give it fifteen minutes and this could all change.

Linda Piazza : 5/20/2005 2:46:20 PM

The BIX and RLX are rising, too, but don't look the same on a Keltner basis as some of the stronger indices. Either they'll play catch-up, or they'll drag the others down . . . or indices will stay trapped in a tight range.

Linda Piazza : 5/20/2005 2:44:32 PM

The SOX is charging higher. CCI isn't, though, but you don't want to hear about bearish divergences on a day like this, do you? I didn't think so.

Jonathan Levinson : 5/20/2005 2:43:50 PM

Nymex July crude finished lower by 10 cents at 48.65, off a low of 48.20.

Jonathan Levinson : 5/20/2005 2:43:15 PM

For those following CAD futures, the Liberal minority government survived yesterday's vote Link and still maintains its shred of power. The CAD futures are back to near lows for the move, .7889 so far. If you're a chart purist, then the news is for suckers only (credit to Granville). Fundamentalists will point to the fact that a minority government that is holding power by a 1-vote majority isn't much of a government at all, and, of course, the whole sponsorship scandal stinks no less than it did yesterday. The bottom line is that the CAD continues its slide- good and long-awaited news for Canada's export-driven economy. Not so good news for Ebayers and travellers to the US.

Jonathan Levinson : 5/20/2005 2:36:30 PM

QQQQ's reaching for the combined channel tops at 37.70, with the short cycle oscillators reaching listlessly for overbought territory. Barring a surprise surge in volume, 37.70 should at least give bulls pause. But the longer that price holds above the 72 SMA (up to 35.55 here), the more likely that those levels will continue to edge higher. Link

Linda Piazza : 5/20/2005 2:34:20 PM

If the RLX were to end the day at its currently 433.20-ish level, it will have completed a tweezer-top reversal signal. With today's action, I won't venture to guess whether that will happen the rest of the afternoon, but the RLX had moved up just underneath daily Keltner resistance and the huge gap down from January, so it may be time for a pullback whether or not it will eventually resume that climb.

Linda Piazza : 5/20/2005 2:27:47 PM

The SOX tests yesterday's high. It's obviously confirmed its inverse H&S, but being that it was a continuation-form inverse H&S, I'm not counting on the upside target being met. Watch for potential resistance here in the 424 area.

Marc Eckelberry : 5/20/2005 2:18:53 PM

Put buyers and call sellers can set conditional tied to COMP 2047/2049 for entries. That looks like the top coming up.

Jonathan Levinson : 5/20/2005 2:16:11 PM

Volume breadth remains mixed, but it's firming on the NYSE, up to 1.18:1 in favor of declining shares. On the Nasdaq, advancing volume leads 1.54:1. The TRIN is down to .47, TRIN .95.

Marc Eckelberry : 5/20/2005 2:16:05 PM

Now is the time to start buying July puts. Don't buy June now, too expensive for a few days.

Jonathan Levinson : 5/20/2005 2:13:03 PM

QQQQ to a new session high at 37.62, walking along above the 72 SMA at 37.53. The 30 min channel points lightly higher, with resistance unchanged at 37.70. Updated chart at this Link

Linda Piazza : 5/20/2005 2:11:41 PM

One moment, Keltner support looks stronger on the OEX's 15-minute chart. A few minutes later, resistance does. Right now, support does, but it hasn't really mattered. There hasn't been any movement since Wednesday.

Jonathan Levinson : 5/20/2005 1:59:20 PM

July crude dropped to a low of 48.20, currently down .425 at 48.325. QQQQ broke the previous high by a penny and is now back down to 37.55. There was a small uptick in volume, but it remains very quiet with 45.6M shares traded so far. The SOX tested 423 resistance and pulled back, a new high for the day but still 1 point below yesterday's high.

Linda Piazza : 5/20/2005 1:57:53 PM

Just when we all go to sleep, something will change. They'll catch us by surprise. There's little to note about the various indices I've been watching today. Moment by moment, the outlook might change slightly, only to switch the other direction. Nothing much to determine the when or where about the next move.

Jonathan Levinson : 5/20/2005 1:51:26 PM

Channel resistance is up to 37.70 here for both the 30 and 60 min cycles.

Jonathan Levinson : 5/20/2005 1:50:34 PM

Session highs for QQQQ at 37.60, NQ at 1528.

Linda Piazza : 5/20/2005 1:49:42 PM

The article I've written for this weekend's Traders Corner follows a specific Keltner-based OEX trade from last week. If any readers have questions after reading that article, I encourage you to write me. If you write through our support line and address the question to me, it will be forwarded to me. Remember that I can't answer questions about specific trades that a trader contemplates or has entered, but I can answer questions about Keltner charts.

Jonathan Levinson : 5/20/2005 1:48:52 PM

Session low for Nymex crude here at 48.45, -.30.

Jonathan Levinson : 5/20/2005 1:40:03 PM

QQQQ has traded approximately 5M shares during the past hour- very thin.

Jonathan Levinson : 5/20/2005 1:37:44 PM

Ten year notes are bouncing sharply off the retest of the 112 low, with TNX down to a .7 bp gain at 4.115%. So far, there appears to be little impetus to test the 4.14% confluence resistance.

Linda Piazza : 5/20/2005 1:33:01 PM

I'm really hesitant to make any predictions, Keltner or otherwise, about what might happen next. This is one of those days when chart evidence is less important than where big-money people want the indices to end the day, I think, and I'm afraid that an idle observation might convince someone to plunge in with a play going one direction or the other. For example, a few minutes ago, the OEX sure showed signs of heading down to 564 again, but did it get there? No, and now it looks stronger again, Keltner wise.

Linda Piazza : 5/20/2005 1:26:08 PM

The SOX rolls back again, but watch for potential Keltner support near 420, if the SOX should continue to roll lower. This is near the right-shoulder area for its potential inverse H&S. Much lower than that, particularly if the SOX heads lower than 418, and it's probably rejecting that formation.

Linda Piazza : 5/20/2005 1:24:57 PM

Now the OEX heads down again to retest that Keltner line that's now at just over 564, previously lower than that. . . that's if the OEX closes the current 15-minute period below the Keltner line currently at 564.94.

Jonathan Levinson : 5/20/2005 1:23:42 PM

QQQQ just broke 72 SMA support at 37.50, violating the rising triangle support. Below 37.35, QQQQ bears will have a key outside reversal- if it occurs.

Jonathan Levinson : 5/20/2005 1:21:16 PM

Session low for 10-yr ZN bonds at 112, TNX up 2.6 bps to 4.134%. Upside resistance is at 4.14%-4.16% confluence.

Jonathan Levinson : 5/20/2005 1:21:29 PM

Headlines:

GREENSPAN: CHINESE YUAN WILL BE REVALUED AT SOME POINT

GREENSPAN: CHINA REVALUE TO BOOST U.S. DOMESTIC PRICES

GREENSPAN: CHINA REVALUE WILL NOT CUT U.S. TRADE GAP

GREENSPAN: PRESSURE BUILDING ON CHINA TO REVALUE YUAN

Linda Piazza : 5/20/2005 1:12:30 PM

The SOX still hasn't confirmed that continuation-form inverse H&S, but it hasn't drifted far from the confirmation level, either. One way or the other, it's going to be one heck of an afternoon. Either it's going to be mind-numbingly boring or we're finally going to get something going after more than a day of mind-numberingly boring action.

Jonathan Levinson : 5/20/2005 1:03:22 PM

Session high for NQ futures just now, QQQQ 1 cent away from the 37.60 high. Volume remains very light.

I need to step away for 10 minutes here to make way for the cleaning staff.

Linda Piazza : 5/20/2005 12:56:51 PM

Advdec line still climbing.

Linda Piazza : 5/20/2005 12:56:38 PM

The RLX is rising to test Keltner resistance. It's softened a bit from earlier, in this ever-shifting picture. Still looks firmer than nearby support, but that can change, too.

Jonathan Levinson : 5/20/2005 12:49:08 PM

QQQQ update at this Link with volume down to a crawl, total volume light at 38.8M shares. No resolution to the current coil below 37.57-.60.

Linda Piazza : 5/20/2005 12:46:17 PM

Waiting for something to change. Nothing is.

Jonathan Levinson : 5/20/2005 12:38:28 PM

Headlines:

GREENSPAN: OIL INVENTORY RISE EASES PRICE AS EXPECTED

GREENSPAN SEES OIL INVENTORY BUILDUP CONTINUING

GREENSPAN: HIGHER OIL PRICE A TAX OF ABOUT 3/4% OF GDP

GREENSPAN: ECONOMIC RISKS GROW IF OIL PRICE MOVES UP

GREENSPAN DOES NOT DISCUSS MONETARY POLICY IN TEXT

Linda Piazza : 5/20/2005 12:34:59 PM

The SOX hasn't been able to confirm that potential inverse H&S on its intraday chart. Because it's a continuation-form inverse H&S, it may not be as reliable as some other formations, even if it does confirm, but it's worth watching anyway to gauge investor sentiment.

Jonathan Levinson : 5/20/2005 12:34:52 PM

QQQQ is pulling back a third time from the 37.57-.60 top, but it needs to break the 72 SMA here at 37.48 to violate the intraday trend of higher highs and higher lows (resembling a bullish ascending triangle).

Linda Piazza : 5/20/2005 12:29:12 PM

Notice that the advdec line has turned up again. This is all just microanalysis, though, in the absence of any real movement.

Jonathan Levinson : 5/20/2005 12:23:51 PM

While op-ex Friday inevitably skews the volatility and p/c ratios, the current readings today show the total CBOE p/c ratio holding above 1.0 for the past hour and a half- generally indicative of excessive bearishness. This is a very iffy sentiment indicator even on a normal day, and Third Friday is anything but that- so I don't attribute much weight to the readings.

Linda Piazza : 5/20/2005 12:22:59 PM

The OEX looks vulnerable again to a retest of the Keltner line that's currently just under 564. If it produces 15-minute closes beneath the Keltner line currently at 563.96, it then becomes vulnerable to 560.72-561.81. The techs are helping to support the OEX, though, with the BIX and RLX heading down.

Linda Piazza : 5/20/2005 12:23:29 PM

The BIX still looks vulnerable to a test of the Keltner lines currently at 362.77-363.15, although that doesn't preclude at test of resistance first. Resistance looks strong enough to turn it lower toward that support again.

Linda Piazza : 5/20/2005 12:15:44 PM

The RLX still looks vulnerable to a Keltner line currently at 429.98. It's testing resistance now, but that resistance so far looks strong enough to turn the RLX lower again.

Linda Piazza : 5/20/2005 12:08:28 PM

There's a roughly formed continuation-form inverse H&S on the SOX's intraday chart. Because there have been lots of spiky candles whenever the SOX rises to swing highs on the intraday charts, it's a bit difficult to identify the neckline, but it may be at about 422.51. These don't always confirm, and their upside targets aren't always reliable when they do confirm.

Jonathan Levinson : 5/20/2005 11:51:48 AM

QQQQ bounced off the 72 SMA, but needs to break the prior high to reverse the downtick starting in the short cycle oscillators: Link

Linda Piazza : 5/20/2005 11:50:07 AM

If there's a 15-minute OEX close beneath a Keltner line currently at 563.88, the OEX begins to look vulnerable to 560.58-561.65.

Linda Piazza : 5/20/2005 11:43:58 AM

The BIX still looks vulnerable to Keltner lines currently at 362.70-363.09, with the BIX currently at 364.19. The RLX looks vulnerable to 429.86, and perhaps even much lower, depending on how it handles that 430-ish zone. The RLX has significant resistance building at about 432.50-433. The BIX and RLX performances are important in the OEX's, too. It should be hard for the OEX to bounce too far if these are both headed down, but if they hit support and bounce, the OEX could, too.

Linda Piazza : 5/20/2005 11:39:40 AM

And the OEX finally hits that Keltner line. The line had risen to 563.85 before the OEX finally did hit it. Now, if the OEX follows the patterns of other indices, it will bounce, but it might find resistance at a Keltner line currently at 564.74. Or might not. Some rose further, into the next level of resistance.

Jonathan Levinson : 5/20/2005 11:32:52 AM

The Fed's coupon pass is 1.098B deliverable Monday. Based on today's announcements, a net 1.598B has been added by the Fed.

Linda Piazza : 5/20/2005 11:31:29 AM

The dollar is still headed higher, and lately, that's usually meant that equities head lower. Don't take that as an absolute, though. Not today.

Jonathan Levinson : 5/20/2005 11:28:49 AM

June gold just hit a new low at 416.80 with the USD Index holding at the highs. Dramatic action from the USD Index this morning: Link

Jonathan Levinson : 5/20/2005 11:25:59 AM

Session lows for ES and YM futures, with QQQQ and NQ just crossing from unchanged to negative territory. With the op-ex print for the non-tech symbols completed at today's open but the Nasdaq not yet done, I believe that we're seeing the true post-op-ex direction in the Dow and SPX. If so, the Nasdaq should join in on the downside Monday, but that's just a guess.

Linda Piazza : 5/20/2005 11:25:00 AM

The SOX turns lower, but now Keltner support and resistance look almost equally weighted. The SOX looks vulnerable to 418.62-419.35, but it could easily rise to 423.11, too.

Linda Piazza : 5/20/2005 11:19:23 AM

The OEX's nearby Keltner resistance still looks far firmer than support, but not so firm that it prevents a bounce up to test that resistance, beginning at about 565.83.

Tab Gilles : 5/20/2005 11:16:27 AM

$CRB/$TYX/$NYA Link

Jonathan Levinson : 5/20/2005 11:15:44 AM

Ten year bonds are drifting higher off the lows, TNX down to a 1.5 bp gain at 4.123% and holding above yesterday's high. Updated TNX chart at this Link

Linda Piazza : 5/20/2005 11:10:48 AM

How are equities holding up with the advdec line in the basement?

Tab Gilles : 5/20/2005 11:10:17 AM

Strong Dollar Strength in the $USD putting continuing pressure on the commodity sector $CRB and $GOLD. Link Link Link

Fed Funds Rate and the Dollar. Link

EUR/USD nearing retracement level. Link

Linda Piazza : 5/20/2005 11:09:22 AM

The RLX is showing vulnerability to a Keltner line just below 430 now.

Jonathan Levinson : 5/20/2005 11:08:24 AM

QQQQ update at this Link with price failing from a high of 37.59. Volume breadth has gone positive on the Nasdaq, 1.25 advancing shares for each declining, but the NYSE has weakened during the same time.

Linda Piazza : 5/20/2005 11:08:24 AM

Okay, the OEX still loks vulnerable to a Keltner line currently at 563.82. When the OEX first started showing vulnerability to this line yesterday, it was down a point lower. It's still rising.

Linda Piazza : 5/20/2005 11:00:57 AM

There's a tendency about midmorning on some opex Friday's to see indices pinned down to certain numbers. We're all going to fall head-first onto our keyboards, sound asleep, if indices get pinned any tighter than they've been for the last couple of days.

Jonathan Levinson : 5/20/2005 10:55:38 AM

The Fed announced a coupon pass just after 10:30AM, though no amount has been stated yet. This is a permanent addition to its dealers reserves, and acts like a "permanent repo." So far, there are 500M of net adds from the Fed on a temporary basis, now to be supplemented by this coupon pass.

Jonathan Levinson : 5/20/2005 10:52:20 AM

Session high for QQQQ at channel resistance at 37.57-.60. Bears need a break below 72 SMA support at 37.46 to avoid the launch of a new 30 min cycle upphase.

Linda Piazza : 5/20/2005 10:51:00 AM

The OEX is rising again, too, currently testing Keltner resistance at 565.11, slightly above that, but not yet having closed a 15-minute period back above it. More Keltner resistance waits at 566.11-567.00.

Linda Piazza : 5/20/2005 10:46:29 AM

The SOX continues bouncing.

Jonathan Levinson : 5/20/2005 10:41:12 AM

QQQQ bounced off the 37.35 low and has now drifted back to the range high. Volume is light with 18.7M shares traded so far, though volume breadth remains negative. This has so far been an extension of yesterday's range.

Linda Piazza : 5/20/2005 10:38:09 AM

The BIX now looks vulnerable to a deeper decline, to Keltner support at 362.58-363.16.

Linda Piazza : 5/20/2005 10:31:38 AM

The OEX still looks vulnerable to a Keltner line currently at 563.72 (it's rising), but the OEX sure isn't getting there. Keltner resistance is firming, though.

Linda Piazza : 5/20/2005 10:23:39 AM

The SOX is bouncing, but the BIX is not, and neither is the RLX.

Jonathan Levinson : 5/20/2005 10:23:17 AM

June gold is down 4 to a session low of 416.90, with HUI -1.37% at 170.36 and XAU -1.53% at 80.45. The move in gold reverses an uptick in the oversold daily cycle, suggesting a retest of the 414-415 May low. Note that that level lines up with current declining bollinger support as well: Link

Jonathan Levinson : 5/20/2005 10:16:06 AM

Session low for July crude, -.15 at 48.60.

Jonathan Levinson : 5/20/2005 10:15:52 AM

Volume breadth remains negative, ADV:DECV currently 1.98:1 on the NYSE and 1.43:1 on the Nasdaq with the TRIN 1.02 and the TRINQ back down to .82.

Linda Piazza : 5/20/2005 10:14:09 AM

Nothing to add yet. The OEX still looks vulnerable to a Keltner line currently at 563.61.

Jonathan Levinson : 5/20/2005 10:02:20 AM

Support for QQQQ is in play here at Wednesday's high, with QQQ bouncing from 37.35. However, the short cycle downphase continues, and price is holding (so far) below the 72 SMA. Still no range break, and while it feels bearish, we're still just chopping sideways within yesterday's range. Link

Linda Piazza : 5/20/2005 10:01:00 AM

So far, the OEX still looks vulnerable to a Keltner line that's now at 563.61.

Linda Piazza : 5/20/2005 9:58:00 AM

The OEX still looking vulnerable to Keltner support at 563.54. If it acts like the SOX and BIX did when touching this support yesterday afternoon, it will then attempt a bounce higher to test former Keltner support to see if it's now holding as resistance. If it acts as the SOX and BIX did after testing this resistance, the OEX will turn lower again after that test. Not much else is coming out of the SOX and BIX actions just yet, but I'm watching. Note: The RLX is diving now.

Jonathan Levinson : 5/20/2005 9:54:32 AM

The Fed's 3.5B overnight repo has just been replaced with a 4B weekend repo for a net add of 500M today. The indices are printing session lows on the heels of the announcement, with bonds holding just above the lows, TNX up 1.7 bps here at 4.125%.

Linda Piazza : 5/20/2005 9:53:12 AM

The TRAN reached a slightly higher high today. It turns slightly lower now, but still has Keltner support just beneath it.

Linda Piazza : 5/20/2005 9:50:21 AM

The SOX is looking more vulnerable to Keltner support currently at 414.04-415.29 as long as it continues 15-minute closes beneath a line currently at 419.43. It looked vulnerable to the same Keltner support yesterday, but then saw a late-day bounce. This Keltner support is one layer deeper than the support that the OEX may be headed toward.

Jonathan Levinson : 5/20/2005 9:48:16 AM

And I will have to leave at 3PM today.

Linda Piazza : 5/20/2005 9:48:00 AM

The OEX once again looks vulnerable to a line currently at 563.55, but perhaps not until after a bounce attempt, up to 565.93.

Linda Piazza : 5/20/2005 9:47:15 AM

Don't know if everyone caught Jeff's notice night before last, but he's going to be out today, through Tuesday, I believe.

Jonathan Levinson : 5/20/2005 9:47:11 AM

Session lows across the board, TRINQ up to .95. Next confluence is at QQQQ 37.32.

Linda Piazza : 5/20/2005 9:45:10 AM

The OEX looks as if it's going to end this 15-minute period very near the Keltner line currently at 565.41, not giving a conclusive break of that support. Those hoping to see a rollover would like to see a dip down to 563.47 or so and then a rise to retest the resistance, and a failure there.

Jonathan Levinson : 5/20/2005 9:41:14 AM

Breadth is negative for a change, with advancing:declining volume 2.05:1 on the NYSE and 1.35:1 on the Nasdaq, with the TRIN up at a neutral 1.12, ditto the TRINQ at .84. There's still no direction evident pricewise, though.

Linda Piazza : 5/20/2005 9:39:58 AM

The advdec line is negative today. Looking forward to reading Jane's interpretations of internals as the day goes on.

Linda Piazza : 5/20/2005 9:36:06 AM

The OEX heads lower, below Keltner resistance. A 15-minute close below the line currently at 565.39 suggests vulnerability to a line currently at 563.47.

Jonathan Levinson : 5/20/2005 9:35:27 AM

The SOX printed a bad tick to just below 422 and is currently testing 419 support. Yesterday's low at 417 is the goal for bears, while bulls need a higher high above 424.

Linda Piazza : 5/20/2005 9:31:58 AM

The OEX hovers just above Keltner support on its 15-minute Keltner chart. The SOX opens higher but then turns down into the gap. The BIX turns lower, too, with Keltner resistance holding so far.

Jonathan Levinson : 5/20/2005 9:28:10 AM

The oscillators on an intraday and daily basis remain opposed and ambiguous as discussed at yesterday's close. At this point, while the cycles are due for a downside correction, it's overdue and a trending move could well be at hand. For that reason, a range break will more easily resolve it, and I expect a move above 37.60 or below 37.30, confirmed by a break of 37.17, to be directional.

Jonathan Levinson : 5/20/2005 9:16:46 AM

Gold continues to march lower, now down 2 at 418.90, while ten year notes are taking a bounce off their morning low at 112 (basis ZN contract), with TNX currently up 1.3 bps at 4.121%.

Jonathan Levinson : 5/20/2005 9:05:09 AM

The US Dollar Index is surging higher Link as silver, gold and ten year treasuries print lows. Equities remain in negative territory but are no weaker than they were an hour ago, QQQQ -.05 at 37.46.

Linda Piazza : 5/20/2005 8:47:49 AM

Tuesday, the OEX confirmed an inverse H&S on the daily chart, and it's been climbing ever since. On the daily Keltner chart, mid-channel S/R was roughly congruent with the neckline of that inverse H&S, corroborating the break through the neckline. At some point, we should expect a retest of the neckline and mid-channel Keltner level to see if it now holds as support, an important retest as we head into the summer doldrums, but when will that test come? Yesterday, the BIX and SOX both erased their breakout signals, looking weaker on a Keltner basis than did the OEX, but the shared components of the RLX kept the OEX from following suit as the RLX preserved its upside breakout. However, the OEX might not be able to rely on RLX strength much longer. The RLX is only a few points away from January's huge gap lower. Gap resistance might be found at the bottom, middle and top of that gap.

As the RLX approaches gap resistance, the OEX approaches 567 historical S/R. In addition, an inverse relationship between the dollar and equities (dollar up, equities down; dollar down, equities up) has mostly held true over the last couple of weeks, and, as I type, the dollar is zooming up to levels last seen in mid-April.

It looks as if it's time for an OEX pullback soon, but it looked that way yesterday morning, too. What do I want to see to believe a pullback has begun? The same thing that we saw beginning on the SOX and BIX yesterday: a drop below Keltner support, down to next support, a rise into that former first support, a holding of that former support as resistance, and a rollover from there. Until then or until a strong impulsive downward thrust that is not bought, it's still a time for bulls to continue efforts to preserve profits, whether that's stepping out of partial positions along the way, raising stops, or whatever. I think short-term bulls may be living on borrowed time.

Jonathan Levinson : 5/20/2005 8:34:03 AM

AP is reporting that OPEC has warned that it might cut output in June if inventories continue to build, and is attributing the gains to that report. July crude is up 32.5 cents, hardly a rally, at 49.075 currently. As well, Greenspan will address the NY Economic Club at 12:20PM (EST), scheduled to speak about energy.

Jonathan Levinson : 5/20/2005 7:52:04 AM

Equities are lower, ES trading 1189.75, NQ 1521.5, YM 10485 and QQQQ -.062 at 37.45. Gold is down 70 cents to a session low of 420.20, silver up .039 to a session high of 7.179, ten year notes down 3/32 to 112 1/32 and crude oil is up .40 to 49.15.

There are no major economic reports scheduled for release today.

Linda Piazza : 5/20/2005 7:11:15 AM

Good morning. The Nikkei ended its rebound last night, closing in negative territory. Other Asian markets were mixed. European markets trade somewhat timidly this morning, near the flat-line level although they're improving as this report is prepared. Our futures turn modestly lower. As of 6:52 EST, gold was down $0.20, and crude, up $0.42 to $47.34. More detail about Asian and European markets follows in succeeding paragraphs.

After Thursday's big gain, the Nikkei consolidated just above the flat-line level early Friday. Exporters gained again, as they had Thursday. In its May economic report, the Japanese government had raised the outlook for exports to a flat expectation against the previous weakening one. A late-day dive took the Nikkei back into negative territory, however, and it closed down 39.87 points or 0.36%, at 11,037.29.

The Bank of Japan announced board meeting results in the afternoon, perhaps being responsible for the late-day drop, although one article concludes there was limited reaction. One result of that meeting was a decision to let the c/a balance fall temporarily below the previous target. The Minister of Finance certainly had a reaction, demanding that the Bank of Japan governor explain the decision.

Other Asian markets were mixed. The Taiwan Weighted lost 0.27%. South Korea's Q1 GDP gained 0.4%, slowing from the previous quarter's 0.9% growth and below forecasts for 0.5% growth. GDP was 2.7% higher from the year-ago level. Exports grew less than in the previous quarter as higher steel costs and currency issues impacted this component. Manufacturing activity increased by only 0.1%. Still, some point to increasing domestic demand as a sign of improvement in the economy. The government plans to extend tax breaks on big-ticket consumer items into the end of the year to increase sales and that important domestic demand. The Kospi was nearly flat, up 0.01%. Singapore's Straits Times climbed 0.27%, and Hong Kong's Hang Seng climbed 0.13%. China's Shanghai Composite dropped 0.38%.

European markets trade near the flat-line level although they improved as this report was prepared. An ECB member spoke today, saying that current interest rates were appropriate and that although economic recovery may currently be sluggish, he thought growth would resume. However, a disappointment in the French Q1 GDP argued against that conclusion. The economy grew 0.2% against expectations for a 0.5% rise. Household consumption growth stood at 0.7%, and exports fell. On May 29, France has a referendum on the European constitution, with some in France fearing that the country will experience more unemployment if it adopts the charter, and this GDP report isn't likely to soothe those worries. Also disappointing today were March Italian industrial orders, falling 1.7% month over month and 3.6% year over year. Yet another disappointment was a slowdown in lending in the U.K., with mortgage lending and credit card borrowing both dropping. Loan approvals and net advances gained, however, so some believe that the housing market may be steadying.

Earnings reports were light, but Hilton Group PLC reported and rebounded a bit after an initial drop. The company reported dropping pretax profit before exceptional items. A report speculated that reinsurer Munich Re had sold a portion of its stake in German insurer Allianz, and Allianz dropped. Morgan Stanley upgraded chemicals company Clariant, but only to an equal weight rating.

As of 7:02 EST, the FTSE 100 had gained 10.30 points or 0.21%, to trade at 4,973.00. The CAC 40 had gained 8.04 points or 0.20%, to trade at 4,094.02. The DAX had gained 3.87 points or 0.09%, to trade at 4,364.29.

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