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Marc Eckelberry : 7/21/2005 1:56:19 AM

Jeff, trading has switched to September for CL and QM (U5). See volume. Nymex typically switches now. August volume will be pretty much dead Thursday. Link

Jeff Bailey : 7/21/2005 1:40:16 AM

August Crude Oil (cl05q) down 74 cents at $56.72.

Jeff Bailey : 7/21/2005 1:39:34 AM

Here's a take from the Associated Press on oil's trade at this Link

Jeff Bailey : 7/21/2005 1:33:42 AM

CAFE and CAFEW ... As time passes, I've ascertained that if we were to take the price of CAFE and multiply it by roughly 0.638, we'd come pretty close to deriving the value of CAFEW. My interest here was to see what the CAFEW might trade if CAFE were to achieve its bullish vertical count of $23.25 Link

Good heavens ... just seeing this news .... Link

That probably explains my 07/20/05 02:54:05 observation.

Jeff Bailey : 7/21/2005 1:17:11 AM

Look at these FWLTZ and FWLTW ... I don't know here. FWLT trades with options, so no real need to be a warrant trade. The "best" warrant trades come in stocks that don't trade with options. Makes sense doesn't it? A speculative bull will look for leverage with a warrant.

However... the OPTIONS minimize the risk.

Jeff Bailey : 7/21/2005 1:08:10 AM

Warrants I'm not sure what this is, or isn't about. Throughout a day, I've been looking for % gainers with a "w"arrant at the end of the symbol. It's late at night and you get weird readings via QCharts' U.S. Stocks Volume once the clock strikes 12:00 AM EDT. Here's what I'm seeing and I can't make too many assumptions. Link ... VBFC looks to me like one of those small regional banks. In recent months, we've noticed some of these regionals fetching some very nice premiums over their public traded value. Nice looking financials. Link

Why would somebody be buying the warrants today? They weren't gobbling them up, but they and the common don't trade much volume on a day-to-day basis. Suspicious.

Jeff Bailey : 7/21/2005 12:44:41 AM

Program Trading Levels for Thursday ... HL Camp & Company has their computers set for program buying at $+4.42 and set for selling at $+2.08.

Jeff Bailey : 7/21/2005 12:45:22 AM

Good Gravy! ... Universal Stainless & Alloy (USAP) $15.96 +23.72% ... then $17.45 last tick in extended session. The deep cyclicals might be making a comeback! Q2 profits doubled Link

Marc Eckelberry : 7/20/2005 11:31:11 PM

EBAY back above 200 day ema after hours. That leaves the door open to 42, 200 dma and if it can move into the January gap at 43.35, it even has a chance to close that gap at 51.50. Watch that key area between 42 and 44 tomorrow. That has been a heavily shorted stock with some negativity option-wise, so it can move up, no doubt, regardless of valuation.

Jeff Bailey : 7/20/2005 11:20:40 PM

Shoot ... those were all Premier Investor plays! I'm wiped out. I'll go over the OI plays with sector association tomorrow.

Marc Eckelberry : 7/20/2005 11:11:30 PM

The last time VXO (old VIX) went below 10 was in December 1993. SPX proceeded to lose 10% of its value within two months. 10%. That would be 120 SPX points today by September. I'm not saying that will happen, but it is the same environment, rising rates, big bull run, no fear, etc... Sentiment is the closest thing we have to a crystal ball.

Marc Eckelberry : 7/20/2005 11:00:27 PM

There will be more money to be made short in a one week drop (heck, a three day drop) than long a two week rally. Easily. Which is why September or October puts will be very profitable no matter where you start now. Especially if you factor in rising premiums from here.

Marc Eckelberry : 7/20/2005 10:59:23 PM

In fact, a case can be made for the low volatility keeping us boxed in a trading range. The great 90"s bull flourished because of all the non-believers. The VIX traded over 25 and 30 most of the time in the late 90's, and never went below 16. In fact, the latest bull market of March 2003 started with the VIX at 40. This latest push here started with a VIX high reading of 13.75 following the terror attack in London. 13.75. There is no fear, I mean no fear. This is why rallies will go nowhere on a sustainable basis. Will we actually see options selling for no premium? I doubt it, and a low VXO today of 9.12 should mean bulls are dancing on air.

Jeff Bailey : 7/20/2005 11:19:08 PM

Was looking at tonight's Market Wrap and list of PI plays (I don't know who picks them, and that's just as well). Interesting .... Do they make sense with what you see in the Sector Bell Curve?

Steel Dynamics (STLD) The sector bull % is STEE and is currently "bull confirmed" at 54%. Hey! This sector achieved "bull confirmed" on 07/08/05 at 36%! A lot of bullish things took place on 07/08.

American Axle & Mfg. (AXL) ... its an AUTO. Here's its PnF chart at this Link . Sector status is "bear correction" at 58% and would currently need a 68% reading to achieve "bull confirmed" status. This sector reversed up to "bear correction" status on 06/07 at 40%.

Vital Images (VTAL) $19.69 +4.01% Link is a SOFT, and has been in play as a bullish candidate since 07/19. This sector reversed up to "bull alert" status on 06/03/05 at 38% and just built another X to 46% today. VTAL looks to be a leader in the sector as it gave a reversing higher PnF buy signal in early May (5) at $16.50.

ATI Tech (ATYT) $13.19 -0.82% Link ... Stocks can always exceed their bearish vertical counts, but sometimes they peg them, and that's the bottom. This is a short/put play from 07/17/05 and is a COMP (computer). This sector reversed up to "bull alert" status on 05/25/05 at 40% and currently measures 46%. It would currently take a reading of 58% to achieve "bull confirmed" status.

Marc Eckelberry : 7/20/2005 10:40:43 PM

Jeff, per all sentiment readings, including equity pc ratios, VXO, bearish advisors, it seems bulls are not the least worried. In fact, they are the least worried they have ever been, per indicators I follow, going back 5 years, 12 years for VXO, old VIX. VIX is a traded hedge vehicle, so I no longer use that, unreliable. VXO, VXN do the job.

Jeff Bailey : 7/20/2005 10:32:17 PM

Sector Bell Curve comparison from a prior 03/07/05 inflection high to current (07/20/05) at this Link ... Are bulls the group of market participants that should be overly worried at this point, or should it be bears?

Since reversing up to "bull confirmed" in late May, the S&P 500 Bullish % ($BPSPX) reads a reversal high of 70.00%.

Jeff Bailey : 7/20/2005 10:12:49 PM

Sector Bell Curve comparison from 07/13/05 to 07/20/05 at this Link

OI Technical Staff : 7/20/2005 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 : 7/20/2005 9:59:11 PM

From Dorsey Wright ... each night I get a breakdown as to the number of stocks in each of Dorsey's bullish % groups that find new 52-week highs and 52-week lows.

Most NHs were BUILding 34, SEMIconductor 29, BANKs 28, REALestate 26, BIOMedics 25, HEALthcare 24, RETAil 23 and so on.

Most NLs were FINAnce 3 and HEALthcare 3.

Jeff Bailey : 7/20/2005 9:47:24 PM

Pivot Matrix for tomorrow at this Link

Jeff Bailey : 7/20/2005 9:20:47 PM

Current OPEN MM Profiles at this Link ... Today's Activity ... Sold four (4) Hanover Compressor HC Aug. $12.50 Calls (HC-HV) for $0.60. (selling $13.10) Raised stop to $11.31 (for stock and options).

Swing trade bullish two (2) Union Pacific RR UNP Nov $70 Calls (UNP-KN) at $1.65. A trader that likes the common could use a stop of $60.00.

Closed trades are dated in PINK (out date) at this Link

Marc Eckelberry : 7/20/2005 8:05:01 PM

So EBAY is now going to trade at the same PEG ratio as GOOG? Somebody wake me up, are we in 1999?

Tab Gilles : 7/20/2005 6:12:41 PM

BOOOO0-YAHHH!!!!!!

Jeff Bailey : 7/20/2005 6:02:03 PM

What the heck? Cramer's going Springer on us.

Jeff Bailey : 7/20/2005 5:44:58 PM

Closing U.S. Market Watch at this Link

Jeff Bailey : 7/20/2005 5:37:25 PM

Closing Internals found at this Link

Jeff Bailey : 7/20/2005 5:20:59 PM

EIA Weekly Energy Table found at this Link ... looks like refiners are starting to switch back to unleaded gas. Some "relief" at the pump should be on its way!

Linda Piazza : 7/20/2005 4:43:50 PM

VXO low 9.12. VIX low 9.88, with the VIX bouncing a bit, to 10.14 by the close.

Jeff Bailey : 7/20/2005 4:42:13 PM

QQQQ thoughts ... follow up to yesterday's work and last night's e-mini NASDAQ observation. Updated e-mini NASDAQ chart at this Link ... didn't get the settle above 1,613.88, so "happy bull" to take some QQQQ gain.

Did today's "short covering rally" in the NASDAQ start today mid-session? Or did it start last night at 1,587?

Jeff Bailey : 7/20/2005 4:34:04 PM

Jonathan's got it ... (04:20:18)

Jeff Bailey : 7/20/2005 4:33:07 PM

eBay (EBAY) $34.87 -1.41% ... jumping to $39.07 on headline numbers.

Jeff Bailey : 7/20/2005 4:47:34 PM

Filled on 500 QQQQ at $39.60 in extended session for personal account (selling lon). I "knew" a bear would pay up!

Jeff Bailey : 7/20/2005 4:28:48 PM

Tab ... now I don't see the "inputs" part on the EIA spreadsheet. I swear it was there, but now it is gone. EIA Link

Jonathan Levinson : 7/20/2005 4:20:18 PM

EBAY +8.51% at 38.39.

Jonathan Levinson : 7/20/2005 4:19:52 PM

QQQQ blowing through the session high, currently 39.65 and back above the 30 min channel at 39.57 as EBAY announces a 40% rise in Q2 revenue.

Linda Piazza : 7/20/2005 4:08:46 PM

Best-guess fitted retracement bracket for the SOX: Link

Tab Gilles : 7/20/2005 4:03:57 PM

$SOX components Link Link

SMH components Link Link

Linda Piazza : 7/20/2005 4:03:52 PM

Many indices lately have been finding support from their tests of the 15-minute 100/130-ema's. The TRAN shows a 3769.18 value as I type, with the 15-minute 100/130-ema's at 3666.10 and 3656.03, respectively. The RUT at 677.40 as I type, and those averages at 667.21 and 666.26, respectively. SOX, 476.60, with the averages at 466.10 and 464.05. This morning, the SOX did dip right to those averages, pierced them, and then bounced, which Jim in the old days would have said was a long signal. RLX, at 477.66 with those averages at 471.04 and 469.49, respectively.

Linda Piazza : 7/20/2005 3:55:38 PM

Here's where the OEX ends the day on a 2-hour Keltner chart: Link Obviously, indices have been breaking out above Keltner and other types of resistances all week, so we don't doubt that the OEX can break above this, but it hasn't today, and the black channel's relevance is clear from the OEX's behavior at its boundaries. So, a breakout above this would be significant, too, although it has to be a stronger breakout than that seen on 7/14. That was a first-thing-in-the-morning breakout, anyway, and those are sometimes suspect. Those who trade them need to adhere to stops. They sometimes run, but when I was researching Donchian channels long ago, I learned that early-morning and last-thing-in-the day breakouts or breakdowns were much more vulnerable to reversal than others.

Jeff Bailey : 7/20/2005 4:00:59 PM

Union Pacific (UNP) $66.00 +3.07% Link ... Xs get the square. Would be nice to get an overnight upgrade from a major broker wouldn't it? Unleash the "bullish triangle" at $69? Maybe Bear Stearns!

Linda Piazza : 7/20/2005 3:49:59 PM

Small-range days sometimes follow big-range days, so you should make end-of-day decisions with that in mind. I'm not so sure that maxim will hold true this time as some indices are just breaking out today over some important resistance levels, such as the SOX testing a breakout above that long-term ascending regression channel on its weekly chart. However, we have to remember that the formation is best seen on a weekly chart, and we don't yet know how the week will end. The OEX is already ending the day close to that resistance band that I've mentioned on many occasions lately.

Jeff Bailey : 7/20/2005 3:49:18 PM

QQQQ $39.52 +0.86% ... see that spike in volume as QQQQ trades $39.57 high?

Jonathan Levinson : 7/20/2005 3:48:25 PM

VXO 9.26

Linda Piazza : 7/20/2005 3:46:57 PM

RUT again approaching daily Keltner resistance, now at 680.14, with the RUT at 677.47. This resistance turned the RUT lower on the first test on 7/12, and there's bearish price/RSI divergence as the RUT moves higher than that 7/23 high today, but we're going to quit mentioning those bearish divergences, right? Anyway, watch that 680-ish level as a target and potential resistance. Those hoping for a market pullback to reinstall some kind of sanity would look for it first from the recent market leaders such as the RUT and RLX, and some of the others being watched, such as the TRAN today.

Jonathan Levinson : 7/20/2005 3:42:52 PM

QQQQ violates upper 30 min channel resistance on a surge of positive volume, with total volume just now exceeding yesterday's below-average 78.7M shares. Link

Linda Piazza : 7/20/2005 3:42:35 PM

TRAN charging higher. I have never seen such a 15-minute Keltner breakout on the TRAN, or perhaps even on any index, and don't remember it happening since I've been watching the TRAN on Keltner charts. Perhaps on an individual stock.

Tab Gilles : 7/20/2005 3:42:25 PM

$TRAN Link EXPD Link

BNI Link

CNF Link

CXS Link

JBHT Link

NSC Link

UNP Link

UPS Link

YELL Link

Link

Jonathan Levinson : 7/20/2005 3:41:56 PM

VXO 9.36, VXN 12.58

Linda Piazza : 7/20/2005 3:41:15 PM

New HOD on the RUT, too, invalidating a potential H&S setting up there on the five-minute chart. Bulls absolutely still in control, even over the very short term.

Linda Piazza : 7/20/2005 3:39:57 PM

No new high on the RLX, although close to it. Silly to even think there won't be . . . and there is, while I typed.

Jeff Bailey : 7/20/2005 3:37:41 PM

QQQQ $39.44 +0.66% ... DAILY R2 here. Bulls long back above the DAILY Pivot, you may want to stick out an offer at $39.60. (see yesterday's MM at 12:20:18) Link

Linda Piazza : 7/20/2005 3:35:17 PM

H&S on the RLX's five-minute chart? We'll soon know, as a rise beyond the previous 477.34 high would invalidate the formation, with the RLX currently at 477.03.

Jonathan Levinson : 7/20/2005 3:33:22 PM

The US Dollar Index broke sharply on the move below 90 support: Link

Linda Piazza : 7/20/2005 3:32:34 PM

The OEX is attempting another breakout above the best-fit descending trendline off the 7/14 high. It's pierced this trendline several times this afternoon, but fallen back below it by a 15-minute close on each previous test. Got lots of minutes in the current 15-minute period to go, so anything canhappen on this test. The trendline is at about 575.60, with the OEX currently at 575.83, testing 15-minute Keltner resistance that's also (mostly) been holding on 15-minute closes.

Linda Piazza : 7/20/2005 3:30:24 PM

OEX's next 15-minute Keltner resistance is at 575.90 on 15-minute closes; next support at 574.74 on 15-minute closes. OEX at 575.39 as I type.

Jonathan Levinson : 7/20/2005 3:29:53 PM

QQQQ back to the session high, 30 min channel resistance at 39.48. The 30 min cycle indicators continue to rise, the 60 min cycle in a choppy/sideways downphase that is stalled and directionless here. A sharp break of of 39.20 support support could crystallize this setup into a bearish divergent downphase, but similar setups for the past 8 trading days have failed to do so. The daily cycle upphase, which launched off the London bombing low, has reached overbought territory but shows no sign of stalling or turning yet.

Linda Piazza : 7/20/2005 3:27:53 PM

Is the TRAN on its way up to 3970? Here's an old chart of the TRAN, using envelopes, although I caution that the TRAN's pattern on this chart looks like a broadening one, and there really shouldn't be another touch of the upper resistance if the broadening formation is to hold true to form. Few of these have lately, though, have they? Link

Jonathan Levinson : 7/20/2005 3:25:16 PM

Sept. crude oil has reopened, trading +.10 at 58.125.

Linda Piazza : 7/20/2005 3:23:07 PM

TRAN still charging higher. Seriously, it's as if one index after another is tackled and shorts squeezed, and when that one tires the least little bit, another can be found that's zooming to the moon, in the words of the writers on the boards.

The OEX isn't one of those yet. It's still inside that Keltner channel that now spans from 571.49 on the downside to 575.86 on the upside, with these numbers important on 15-minute closes.

Linda Piazza : 7/20/2005 3:18:28 PM

The SOX's current pullback looks bull flag-ish, and we should know soon as it inches up toward the current 576.52 HOD, with the SOX currently at 475.33.

Linda Piazza : 7/20/2005 3:17:37 PM

The OEX erased that tentative breakout signal on its 15-minute chart, but found support on a Keltner line now at 574.72, and powers right back up to retest the breakout level. Strange behavior.

Jeff Bailey : 7/20/2005 3:14:36 PM

Note: The NYSE Composite ($NYA.X) intra-day high looks to be 7,454.32 (not 7,495.11). This 7,455 h/o/d matches that of 07/14/05. I would also note that today's 03:00 NH/NL readings are almost identical to those found at the close of trade on 07/14/05.

Jonathan Levinson : 7/20/2005 3:13:51 PM

Volume breadth is positive, +1.62:1 on the NYSE and +1.33:1 on the Nasdaq- tame readings considering the impressive price action.

Jonathan Levinson : 7/20/2005 3:12:55 PM

QQQQ surges back to the highs, VXO dropping to 9.48 and VXN to 12.73. The low was a penny or so higher than the previous low, but again never came close to the 72 SMA at 39.22. The short cycle channel and oscillators have yet to curl back up, but another 3 cents' of upside should be enough to do it and set the indicators trending: Link

Jeff Bailey : 7/20/2005 3:11:30 PM

03:00 Internals found at this Link

Jonathan Levinson : 7/20/2005 3:02:36 PM

TNX closes -1.2 bps at 4.177%, below 4.18% support.

Jeff Bailey : 7/20/2005 3:01:49 PM

03:00 Market Watch found at this Link

Tab Gilles : 7/20/2005 2:58:55 PM

Biotech ($BTK) Link Link

Linda Piazza : 7/20/2005 2:58:31 PM

The TRAN does often adhere to its five-minute and 15-minute Keltner charts and both are showing extreme breakouts, to a degree that question the sustainability. The TRAN is currently in the process of perhaps creating an evening-star reversal signal on the 15-minute chart, and watching what happens the rest of this period (signal confirmed or not) and then after its confirmation, if that does occur, would give some insight into short-term sentiment here. Going back to last November, I can't find a single instance when the TRAN broke out to this degree. It's just outlandish in terms of what the TRAN usually does.

Jonathan Levinson : 7/20/2005 2:55:38 PM

Ten year notes staged a dramatic turnaround, with ZN now 13/64 in the green at 111 61/64 and TNX down 1.2 bps at 4.177% and breaking yesterday's low. This is good news for daily cycle TNX bears, suggesting that we've seen the high for this daily cycle upphase. Next support is at 4.14%-4.16%, and TNX remains bearish/ten year notes bullish with TNX below 4.2%.

Linda Piazza : 7/20/2005 2:54:24 PM

Just reached new HOD on the RUT, during the previous 15-minute period. Potential rough H&S on the five-minute chart, right shoulder still to be formed, so a bump up to 675.45 or so and downturn from there would fit that scenario. Not much of a downside target on this tiny H&S, so I'm watching just to see how bearish/bullish scenarios are playing out rather than for something to trade.

Jeff Bailey : 7/20/2005 2:54:05 PM

Host America -Warrants (CAFEW) ooooeeee! All over the map today. Currently $9.53 -1.75 after morning low of $7.80 and afternoon high of $11.44.

Linda Piazza : 7/20/2005 2:50:44 PM

The RLX just confirmed a double-top formation on the 5-minute chart, but immediately bounced right back to/slightly above the confirmation level. I remember this action oh-so-well when it was happening in 2003 and puzzled me so much. If all of us were seeing the markets set up a lower downside target, why not wait until near the target to do the dip-buying instead of doing it right when the target was set? I guess I'm too cautious, but even if I wanted to buy, I'd want to see how the target was met: exceeded or not quite met, blown through with a strong downtrending move or met with an ambling flag-ish type of move? When I see that kind of thing, it just doesn't make sense to me, and either I'm missing something or something or someone else is behind the thing, keeping those targets from being met. Maybe just buyers lurking and jumping the gun whenever there's the slightest dip. Anyway, the RLX currently tests that confirmation level and is still just slightly back above it, but turning down just a little as I type.

Jeff Bailey : 7/20/2005 2:51:02 PM

Landstar Systems (LSTR) $34.23 +3.66% ... some phones are ringing at the Bear Stearns trading desk and analysts office today (06/08 downgrade).

Nice bullish call from Legg Mason on 06/29.

Jonathan Levinson : 7/20/2005 2:47:51 PM

August gold is holding a 3.1 gain at 423.20, with the gold shares up strongly today. The daily cycle is turning up for gold futures, but bulls will want to see a break of the 426-428 area to rule out a bear flag off the lows here: Link

Jonathan Levinson : 7/20/2005 2:45:28 PM

The short cycle indicators are coiling back for anothe downphase on higher-volume drop here for QQQQ. The indicator has been tracking the price, both making higher lows, but it's not trending quite yet. Below the 72 SMA at 39.20, there's confluence support at R1, 39.11. I don't believe the pullbacks anymore, as they've been consistently bought with a vengeance. With the VXO down at 9.68 and the VXN at 12.71, it appears that the market doesn't either.

Linda Piazza : 7/20/2005 2:45:12 PM

SOX confirmed a lower high on the 15-minute chart--first one I've seen all day if I'm looking at it correctly. Sell all semi's! (That's a joke.) I'm watching the SOX on a one-minute Keltner chart now, and it's currently testing 1-minute mid-channel support near 474, and so possibly could find support here and bounce. The one-minute chart sets a downside target of 472.53 if the SOX doesn't manage that steadying.

Jeff Bailey : 7/20/2005 2:37:40 PM

VIX.X 9.92 -5.07% ... edges to new 52-weeker.

Linda Piazza : 7/20/2005 2:36:09 PM

OEX "breakout" and 577.80-ish target still look tentative to me. In any other market climate, I wouldn't even count them as set yet.

Jonathan Levinson : 7/20/2005 2:35:22 PM

QQQQ retests its session high at 39.40, with 30 min channel resistance rising to 39.44. With the Fed's 9B in new money clearly getting traction today and the intraday cycles walking their way higher, there's no reason to expect a sudden reversal so long as the price stays above the 72 SMA- now up to 39.20. Link

Linda Piazza : 7/20/2005 2:35:15 PM

SOX rising to retest the HOD. Hasn't topped it yet, though. Previous HOD at 476.52 with the SOX at 475.21 as I type. It's 30-minute candles are showing the same tentativeness they showed most of yesterday as it rose after the first couple ofhours, but it did continue rising nevertheless yesterday.

Linda Piazza : 7/20/2005 2:32:39 PM

Turning to the 30-minute OEX chart, next resistance is at 576.45.

Linda Piazza : 7/20/2005 2:32:18 PM

OEX again testing the breakout level on its 15-minute chart, having just closed a 15-minute period about seven cents above that breakout level. That's a tentative signal only, but in this climate, I'm frankly surprised that the OEX hasn't followed other indices to the outer band, now at 577.77 for the OEX, much less into breakout territory above that outer band. It's trying to rise to test that outer band now, as I type, though. New HOD.

Linda Piazza : 7/20/2005 2:27:46 PM

The SOX completed a H&S on its 1-minute chart but didn't quite reach the 473.67 downside target. Bears aren't in control yet, even over the very, very short term.

Linda Piazza : 7/20/2005 2:25:30 PM

The TRAN moved above that ascending trendline I mentioned earlier, in the 3735 region, although that's a trendline on the daily chart and we'll have to wait for a daily close to be sure that it's really violated that trendline. The TRAN has moved more than 100 points off its LOD, and it's not abating yet, just under 3750 as I type. The TRAN sometimes leads its sister index, but the Dow has only reluctantly followed today, currently being stopped at the black channel line that's stopping the OEX, too, on its 15-minute chart. No breakout even to the outer channel on either, although the OEX's currently pullback could be a bull flag. That's how it looks so far. The OEX's channel line is at 575.50 on 15-minute closes and the Dow's at 10,667.96 on 15-minute closes. Both currently test those channel lines.

Jeff Bailey : 7/20/2005 2:21:15 PM

Filled on two (2) of the UNPKN at $1.65.

UNP $65.57 +2.45% here ....

Linda Piazza : 7/20/2005 2:20:27 PM

Another new HOD for the RLX in the last 30-minute period. Another instance of bearish price/RSI divergence on the 15-minute chart while that higher high was produced. These divergences suggest to bulls that they have their profit-protecting plans in place, but obviously don't signal an immediate pullback. They are warnings only in a strongly trending market.

Jonathan Levinson : 7/20/2005 2:20:25 PM

Stepping away for 5 minutes.

Jeff Bailey : 7/20/2005 2:18:49 PM

Swing trade call option alert Let's take two (2) of the Union Pacific UNP Nov. $70 Calls (UNP-KN) at the offer of $1.70.

Linda Piazza : 7/20/2005 2:18:29 PM

The SOX produced a doji on the last 30-minute candle after a strong white candle for the 30-minute period before that. As Keene said earlier, that means another climb, doesn't it? Seriously, this does give us a clue to watch with the SOX, because it shows a potential reversal signal setting up (short-term reversal or pullback) on that 30-minute chart. If that's rejected by a move to a new high, then bulls can continue to feel safer. If the reversal signal is confirmed, something the SOX doesn't seem in a hurry to do with only 14 minutes left in this period, then bulls know to have plans made to protect profits, but then can watch the nature of any pullback, if one should occur. So far, as I said, there's just another doji on this 30-minute period, so neither confirmation nor refutation of that reversal signal.

Jeff Bailey : 7/20/2005 2:16:52 PM

Union Pacific (UNP) $65.47 +2.29% Link ... Oooooeee! Possible setup for a "bullish triangle" on a trade at $58.

Jeff Bailey : 7/20/2005 2:15:26 PM

CSX Corp. (CSX) $45.67 +1.76% Link ... recently achieved its bullish vertical count. Time for a split?

Jane Fox : 7/20/2005 2:13:42 PM

This is from Mark Gogloff at the WSJ and I think a very good read. A little long for most but I like the way this fellow summaries Greenspan's speech.
Alan Greenspan signaled the Federal Reserve's determination to keep raising short-term interest rates, even if the spread between short- and long-term rates narrows or inverts -- typically a harbinger of economic pain.

Mr. Greenspan, in testimony before the House Financial Services Committee, said the U.S. economy was growing nicely and that inflation was under control, but he warned that the only way to maintain the status quo is for the Fed to keep raising rates. Central bankers have raised their target for the federal funds rate, an overnight bank lending rate that influences borrowing costs throughout the economy, nine times in the past year to 3.25% from a 40-plus-year low of 1%. Mr. Greenspan has said the Fed is on a quest for a Shangri-La called Neutrality, where the fed funds rate neither fuels inflation nor stunts growth. Is that rate 4%? 4.5%? Your guess is as good as his. We'll know it when we see it, he has said.

Meanwhile, longer-term interest rates have stayed stubbornly low, another mystery to Mr. Greenspan. Theoretically, long-term rates should be rising along with short rates, and strong economic growth and the looming demands on the U.S. Treasury of a baby boom generation soon to take up shuffleboard en masse should also be driving long rates higher. "Such a pattern is clearly without precedent in our recent experience," Mr. Greenspan said. The combination of rising short rates and steady long rates has shrunk the gap between them, historically a sign of slowing economic growth or outright recession. But Mr. Greenspan thinks this time might be different, citing reasons why low long-term rates might not be pointing to a slowdown -- globalization and productivity gains have kept inflation tame, and there's a glut of savings in the world that is not being invested. "There's more tolerance that a flat yield curve is not sending the same message it has in past cycles," said Alan Ruskin, research director at market research firm 4CAST Inc.

If Mr. Greenspan's guess is wrong, however, then the Fed's neutrality crusade could wind the economy in hot water, as it has in the past. "If they insist on going to 4%, 2006 is going to be a tough year for the economy," said Paul Kasriel, chief economist at Northern Trust.

Jeff Bailey : 7/20/2005 2:14:03 PM

Norfolk Southern (NSC) $34.72 +4.04% Link ... there's a nice little triple top buy signal. Breaking above its trending higher 200-day SMA. (see Friday's MM post)

Jeff Bailey : 7/20/2005 2:12:20 PM

Burlington Northern (BNI) $51.25 +4.01% Link ...

Linda Piazza : 7/20/2005 2:13:15 PM

OEX next 30-minute resistance/target at 576.37, with the OEX having approached it in the last 30-minute period.

Jeff Bailey : 7/20/2005 2:08:37 PM

02:00 Internals found at this Link

Linda Piazza : 7/20/2005 2:05:30 PM

RUT high and dry above the breakout level on the 30-minute chart, with first support now near 672.81-673.32, with the lower of those two representing the breakout level on that chart.

Jeff Bailey : 7/20/2005 2:02:46 PM

02:00 Market Watch found at this Link

Linda Piazza : 7/20/2005 2:02:16 PM

Okay, back to that pattern that I had discovered on the OEX, with regard to long climbs along the 60-minute 10-sma. That study of such occasions for the last year showed that when there was a first break of that average after such an extended climb, that there was always a retest of the previous high, at 576.70 on the OEX for this instance. A confirmed lower high usually resulted in at least a 38.2% pullback, while a higher high was almost always a sign to step aside. I maybe have missed a few instances when I was studying that last year of patterns, but that's what I discovered to be true, in all but one case, with that one leading into the prolonged May/June wide consolidation band. I thought on Monday that we'd had the lower-high-or-higher-high test and gotten it past us, but today's action puts me on watch again. A higher high than last week's will mean the OEX isn't through, although in at least one case that higher high just constituted the head formation of a H&S that was later confirmed. Although the OEX has so far stopped short of violating last week's high or even the descending trendline off that high, we are far, far from having that fact confirmed now. That's why I was warning conservative traders on Monday to protect bearish profits at 572, because of the possibility that it would serve as support and bounce the OEX higher again.

I did not perform this same test for other indices, but obviously, some have moved past last week's highs, and bears should certainly have understood that they should stand aside if in positions on those indices.

Jonathan Levinson : 7/20/2005 1:59:14 PM

VXO rises from a low of 9.45 to 9.67 here, both the TRINQ and TRINQ positive at 1.18 each, despite the positive volume breadth on both exchanges.

Jeff Bailey : 7/20/2005 2:00:54 PM

Oh My! ... Dow Jones Home Construction (DJUSHB) 1,118.56 +2.01% Link ...

Jonathan Levinson : 7/20/2005 1:54:46 PM

Sept. crude oil, -.425 here at 58.275: Link

Linda Piazza : 7/20/2005 1:52:50 PM

The OEX produced a tentative 15-minute close above a Keltner line currently at 575.35, setting a tentative upside target of 577.68. Under normal circumstances, I wouldn't even count that upside target as being set, but if other indices are going to keep zooming, we have to consider even a tentative setting of a target as meaning that target may be hit. So, there's a tentative upside target of 577.68, but not if the OEX closes the current 15-minute period back below that breakout line. It's only 2 cents above it as I type.

Jeff Bailey : 7/20/2005 1:53:33 PM

Hmmm... Gardner Denver (GDI) $42.41 +18.66% Link .... marketer of compressor and vacuum products, as well as fluid transfer products.

I certainly hope traders that may be selling calls in Hanover Compressor (HC) are doing so as COVERED CALLS and not Naked!

Linda Piazza : 7/20/2005 1:49:52 PM

The RUT has confirmed an upside breakout on the 30-minute chart, with a 30-minute close above a Keltner line currently at 672.75. The RUT currently tests the 7/12 high of 674.33, having moved a little above it, but not yet high enough to erase the possibility of a double-top formation. What is that, you say? A formation that used to occur now and then and indicate a decline equal to the distance from the peaks down to the trough between them. As I commented last week when the RUT began pulling back from daily Keltner resistance, now at 675 and 679.86 but lower then, the RUT has not broken down out of that steep rising regression channel off April's low, and until it does, we can't count on it pulling back much.

Tab Gilles : 7/20/2005 1:46:29 PM

Dow Jones Industrial ($INDU) Link

Dow Jones Transportation ($TRAN) Link

Back on 7/11 11:14 AM posting Link Link

Jeff Bailey : 7/20/2005 1:46:23 PM

Global Energy DJ - Brazil and Venezuela saying they will build a $2.5 billion oil refinery in the northeastern Brazilian state of Pernambuco. The refinery will be the first in Pernambuco and will process heavy oil, with capacity to produce 250,000 barrels a day. It will take two years to build and create 10,000 new jobs.

Linda Piazza : 7/20/2005 1:45:29 PM

TRAN now approaching that rising trendline off the 5/23 high. Everything else has broken above ever resistance level approached, so why not the TRAN, too? Seriously, the 3735-ish level marks that ascending trendline, with the TRAN currently at 3732.34, and the just-reached HOD at 3734.72. Other indices have broken over similar trendlines on their daily charts, and so we can't assume that the TRAN will pull back here, but it's a level to be watched.

I feel silly even posting resistance levels. They haven't mattered. At all. No bearish formation matters. I'm not against a rally, but this just doesn't feel normal and so I'm on the sidelines except for scrambling along with everyone else to cover any bearish positions I have (in the form of bear calls spreads) and contributing in my own little way to the climbs. My bull put spreads are doing fine, however. Smile.

Jonathan Levinson : 7/20/2005 1:42:56 PM

Volume breadth +1.77:1 on the NYSE and +1.3:1 on the Nasdaq, QQQQ pulling back from its upside keltner break to 39.40, back below daily R2: Link

Linda Piazza : 7/20/2005 1:39:49 PM

Wilshire 5000 obviously broke out of its wedge to the upside.

Jeff Bailey : 7/20/2005 1:40:08 PM

Garmin (GRMN) $51.72 +2.33% Link ... it has a sun and moon feature on its Rino 120. I haven't yet approached the company with the idea of adding some stock market predictions, but thinking about it. You think they will listen?

Sets up for important test of bearish resistance trend.

Jonathan Levinson : 7/20/2005 1:36:34 PM

Noting that the CBOE total put to call ratio is holding at .86, both for the past half hour and realtime according to DTN- nowhere near an extreme low reading such as to suggest a blowoff.

Jonathan Levinson : 7/20/2005 1:34:59 PM

Session high for QQQQ on a fresh surge of volume, bringing the total to 52.8M shares for the day, on track to break yesterday's 78.7M total. Upside 20-day bollinger resistance is up to 39.45, with price still holding above the upper intraday keltner channels as it tests daily R2: Link . Just like yesterday, the upper channel breaks should reverse in most cases, and their failure to do so indicates trending strength. Above 39.20, the benefit of the doubt stays with the bulls.

Jeff Bailey : 7/20/2005 1:33:42 PM

Semiconductor HOLDRs (SMH) $37.58 +0.21% ... they're baaaaack.

Jeff Bailey : 7/20/2005 1:29:17 PM

United Parcel (UPS) $72.00 +2.63% Link ... X gets the square.

Linda Piazza : 7/20/2005 1:28:46 PM

The TRAN is now less than 13 points away from a test of an ascending trendline and is now at daily Keltner resistance at 3715.75 (on a daily closing basis), with the TRAN currently at 3723.71.

Linda Piazza : 7/20/2005 1:22:59 PM

OEX above this morning's gap, now just under 575.15 next Keltner resistance (on 15-minute closes) and the descending trendline off last week's high, now at about 575.75. The OEX is at 574.83 as I type.

Jonathan Levinson : 7/20/2005 1:21:43 PM

VXO 9.64

Linda Piazza : 7/20/2005 1:21:55 PM

RUT not only hit its 30-minute target but exceeded it. At 673.44, it's not far away from its 7/12 high of 674.33, but that means that it's also in potential double-top territory. Seems silly to go on warning on these things, doesn't it? It might be noted that the RUT has not yet closed a 30-minute period above the breakout zone, so hasn't nailed down this new breakout just yet.

Jonathan Levinson : 7/20/2005 1:19:54 PM

New session highs across the board, QQQQ violating upper 30 and 60 min channel resistance at 37.26.

Linda Piazza : 7/20/2005 1:18:57 PM

New HOD on the SOX.

Linda Piazza : 7/20/2005 1:18:29 PM

Here goes the OEX, up to test the gap. Next significant Keltner resistance at 574.95, descending trendline off 7/14 high at about 575.75.

Jonathan Levinson : 7/20/2005 1:17:40 PM

Volume breadth goes positive on the NYSE, +1.05:1, and +1.04:1 on the Nasdaq as I type. Volatility drops, VXO at 9.96 and VXN 12.86.

Jonathan Levinson : 7/20/2005 1:16:35 PM

QQQQ bouncing from a higher low above 72 SMA supportm the short cycle downphase stalling early as price returns to the session highs: Link

Jeff Bailey : 7/20/2005 1:20:46 PM

Canadian National Rail (CNI) $62.54 +3.92% Link ... Posts 30% jump in Q2 profits. Company said net income came in at C$416 million, or C$1.47 per share. That compared with the net profit of C$326 million, or C$1.13 per share, in the second quarter of 2004. ($1 = C$1.22)

CNI also upping 2005 per-share earnings forecast, saying it now expects to report a profit 20% to 25% higher than C$4.34 a share in 2004. The company had previously forecast a 10% to 15% rise.

CNI board also authorized a new share buyback program of 16 million shares.

Tab Gilles : 7/20/2005 1:12:56 PM

Testimony of Chairman Alan Greenspan Federal Reserve Board's semiannual Monetary Policy Report to the Congress Before the Committee on Financial Services, U.S. House of Representatives July 20, 2005

"Thus, our baseline outlook for the U.S. economy is one of sustained economic growth and contained inflation pressures. In our view, realizing this outcome will require the Federal Reserve to continue to remove monetary accommodation. This generally favorable outlook, however, is attended by some significant uncertainties that warrant careful scrutiny."

Link

Linda Piazza : 7/20/2005 1:12:45 PM

The RUT has now broken above the descending trendline off the 7/12 high of 674.33, but hasn't broken above that high, now at 671.46.

Linda Piazza : 7/20/2005 1:11:24 PM

OEX just trading sideways.

Jeff Bailey : 7/20/2005 1:10:02 PM

01:00 Internals found at this Link

Linda Piazza : 7/20/2005 1:08:59 PM

TRAN at 3704.18. Ascending trendline off 5/23 high is at about 3735.

Linda Piazza : 7/20/2005 1:07:30 PM

SOX rising off 470, but no new HOD yet. As one of the other writers has already mentioned, the SOX's bounce might tell us something about the rest of the day, but we have to keep the TRAN's action in mind, too.

Jeff Bailey : 7/20/2005 1:04:26 PM

Canadian National Rail (CNI) $62.90 +4.48% ... surging after a trading halt. Reports earnings today. Will check new in a minute.

Jeff Bailey : 7/20/2005 1:02:43 PM

01:00 Market Watch found at this Link

Jonathan Levinson : 7/20/2005 1:00:05 PM

Volume breadth returning to its best levels of the day, -1.18:1 on the NYSE and -1.3:1 on the Nasdaq.

Jeff Bailey : 7/20/2005 12:59:57 PM

Oh My! ... TRAN 3,702 +1.80% Link ... Hey Keene! "Moon Transport"

Linda Piazza : 7/20/2005 12:57:53 PM

The RLX is now below the support of its new diamond shape at the top of its climb (15-minute chart), but I don't trust it because it traded sideways out of that. And there the RLX goes, climbing to retest the just-broken support.

Jonathan Levinson : 7/20/2005 12:54:14 PM

Ten year notes are bouncing and clearing 72 SMA resistance for the first time since breaking below this morning, TNX down to a 1.1 bp gain at 4.2% support.

Jeff Bailey : 7/20/2005 12:52:46 PM

Semiconductor Index (SOX.X) 471.36 +0.55% ...

Semiconductor HOLDRs (SMH) $37.24 -0.69% ...

Linda Piazza : 7/20/2005 12:51:23 PM

So far, the Dow is not following where her sister index, the TRAN, leads.

Linda Piazza : 7/20/2005 12:50:05 PM

Do you feel sometimes as if the hedgies are running relays with various indices? First, one zooms up, and some others follow, and when it lags a bit by some measure, another takes over and runs out front. The TRAN takes over currently, having just punched up to 3699.52 and not so very far from that now.

Linda Piazza : 7/20/2005 12:46:45 PM

The RLX appears to be turning down from a lower high, but it hasn't confirmed that by a move below 471.58, the trough between the two highs. Remember that broadening formation on the RLX, too, with bottom support all the way down just below 470, too. Sometimes those broadening formations narrow into a diamond, so I'll be watching for that possibility, too, and it look as if that might be happening. So far, the RLX has not confirmed a lower high, nor moved to a higher high, though.

Jonathan Levinson : 7/20/2005 12:45:59 PM

The USD Index is pulling back from at high of 90.25, testing the 90 level from above: Link

Jeff Bailey : 7/20/2005 12:45:56 PM

Able Laboratories (ABRX) $2.10 +26.50% ... percentage gainer after recently filing for Chapter 11. (see prior MM notes)

AP story at this Link

Tab Gilles : 7/20/2005 12:42:47 PM

Intel (INTC) Follow up to 1:25:57 AM posting. Link Link

Linda Piazza : 7/20/2005 12:41:22 PM

All the other indices' traders are having all the fun, or all the drama if they're on the wrong side of trades, while the OEX just rattles around within a channel from 571.06-574.99. The OEX currently turns slightly lower beneath the mid-channel level, but only tentatively. Resistance appears stronger than support, but appearances can be deceiving when we're dealing with the mid-channel S/R when those channels are lined up one within the other.

Linda Piazza : 7/20/2005 12:37:58 PM

The RUT's movement off the high still looks corrective, and the 30-minute 672-ish target remains possible. The actual target and presumed resistance level is now 672.17, but the RUT has been showing some Keltner-style bearish divergences with each test of this upper channel, so that's why I haven't been certain it would be touched.

Jeff Bailey : 7/20/2005 12:35:55 PM

Current OPEN MM Profiles found at this Link

Jonathan Levinson : 7/20/2005 12:35:25 PM

QQQQ's short cycle indicators have printed sell signals on this decline from the highs, but the slope of the decline is weak and sideways compared with the prior bounce. Price is bumping along above the 72 SMA, and the 30 min channel is moving sideways, resistance at 39.25, support at 38.85. Link

Linda Piazza : 7/20/2005 12:35:04 PM

TRAN still headed higher, just a few points below 3700 now.

Jeff Bailey : 7/20/2005 12:31:48 PM

Bullish swing trade raise stop alert ... raising stop in the Hanover Compressor (HC) to $11.31.

Establishing a stop in today's covered calls and stop on these should stock trade $11.31 or lower.

Linda Piazza : 7/20/2005 12:24:06 PM

SOX still dropping off the day's high, but not below round-number 470 or yesterday's 469-ish resistance zone.

Jeff Bailey : 7/20/2005 12:23:27 PM

Hanover Comp. (HC) $12.62 +0.55% ... PACX has backed off now at $0.45 x $0.70. I'm showing 12 cross the wire at $0.70 at 11:52:46, but I don't see my three with time stamp of 11:46:49.

Jonathan Levinson : 7/20/2005 12:22:00 PM

Stepping away for 10 minutes.

Linda Piazza : 7/20/2005 12:21:33 PM

On the 15-minute chart, the RUT's pullback still looks corrective, but the breakout on the 15-minute chart looks tentative at best, so there's some possibility of a continued flag-like pullback at least. On the 30-minute chart, which really has more relevance for the RUT, the potential upside target remains set in the 672-ish level, at 672.16. Watching the other fast-moving indices to see how they're behaving, too.

Jeff Bailey : 7/20/2005 12:19:21 PM

I see that I'm filled on five (5) of the naked IBM Aug. $75 Puts (IBM-TO) at $0.05. If you haven't been, you probably will be soon.

Linda Piazza : 7/20/2005 12:16:57 PM

TRAN zoomed higher this morning, too, continuing yesterday's late-day move. Today, it's broken above the 6/07 high of 3670.79, with the TRAN currently at 3687.53.

Linda Piazza : 7/20/2005 12:15:12 PM

I spoke too soon when I said the OEX was moving smoothly through mid-channel resistance but did speak correctly when I said it might be narrowing its range. It got snagged, so far, by a 15-minute Keltner resistance line currently at 573.06, on 15-minute closes. It's in the middle of the channel with boundaries at 570.99 and 575.14, without much indication as to final direction.

Jeff Bailey : 7/20/2005 12:11:15 PM

12:00 Internals found at this Link

Linda Piazza : 7/20/2005 12:10:53 PM

Wilshire 5000 also beginning to turn down ahead of a third test of the top trendline of its broadening formation. It's early, though, and the drop isn't anywhere near the 12,226 (but still descending, of course) bottom of that broadening formation. The Wilshire 5000 is at 12,268.04 as I type.

We don't know which way these will break. We do know that these broadening formations we're beginning to see are indicative of disorganized or emotion-based trading and that trading within them is notoriously difficult.

I'm still watching the RUT and SOX and RLX, because as long as the markets are showing that kind of exuberance in selected indices, it's difficult to believe that any will decline too fast. All showing some pullback in the last 15-minutes, but nothing to be certain about so far.

Linda Piazza : 7/20/2005 12:06:50 PM

RLX turning down ahead of a third test of the top of its broadening formation, behaving as good little bearish broadening formations should do. Hold on, though, because it's far from having fallen through bottom support, now dropped way down almost to 470 with the RLX at 473.63. This is just a tentative downturn at best.

Jeff Bailey : 7/20/2005 12:04:37 PM

12:00 Market Watch found at this Link

Linda Piazza : 7/20/2005 12:04:57 PM

The RUT still hasn't broken above the 7/12 high of 674.33, with the RUT near 671 as I type, and currently testing the descending trendline off that 7/12 high. Gosh, sometimes I feel as if I should be just typing "to the moon." Those of us who lived through 2000 are made extremely wary by this behavior, although I had a lot more fun before March 2000 than I'm having at this moment, because I wasn't as worried by this as I am now. VXO (old VIX) now easing below 10.00 again.

Jonathan Levinson : 7/20/2005 12:03:12 PM

Crude oil is bouncing from its 57.50 low to 57.95, -.75. Intraday resistance is at 58.175-58.20.

Linda Piazza : 7/20/2005 12:01:02 PM

The SOX is in breakout territory on all intraday charts, including the 2-hour one. In fact, it sprang up from two-hour support to burst through that breakout level, but this two-hour candle has not completed yet. The breakout level is 467.48 with the SOX currently at 472.88. The daily Keltner chart now has an upside target of 483.00 for the SOX, but there's so far continuing price/RSI bearish divergence on that chart, which may be just the result of the SOX outrunning the RSI, which can't rise too much further anyway.

Jeff Bailey : 7/20/2005 12:02:38 PM

Keane, Inc. (KEA) $12.44 -11.07% Link ... notable percentage loser (see MM comment from 07/07/05 01:01:14) Link ... If short/put, I would be looking to take some profit on this second test of bullish support trend.

Ciber (CBR) $7.50 +0.80% Link ... right about the mid-point of its 07/07/05 gap lower. Bar chart Link

Linda Piazza : 7/20/2005 11:51:23 AM

I mentioned a 672-ish upside target and resistance level for the RUT, as based on the 30-minute Keltner channels. The RUT didn't quite reach that, at least not yet, with a high of the day at 671.28. The RUT sometimes pierces these 30-minute levels, but then adheres to them fairly closely on 30-minute closes. That doesn't mean that the RUT can't go higher than 672 or lower than some downside target that might be set at some time. Of course it can, but these are levels that can be watched for profit-protecting reasons or as potential targets or to see how the RUT or any other entity behaves with respect to targets and S/R.

Jonathan Levinson : 7/20/2005 11:49:30 AM

QQQQ returns to the broken trendline, now testing it as support. The short cycle indicators are reaching overbought territory, but the pullback should not be trusted so long as price holds above the 72 SMA at 39.07. Volume picked up on the break but remains light overall, and so far the bounce looks almost as dubious as the drop which preceded it. My guess, based on the toppiness in the daily cycle, is that a sideways range from here would be the daily cycle making its turn, to be followed by a 1-3 week decline. But, the picture remains bullish until price begins breaking the prior days' lows. Link

Jeff Bailey : 7/20/2005 11:50:47 AM

Filled on three (3) of the Hanover Compressor HC Aug $12.50 Calls (HC-HV) at $0.60 in personal account. "Thanks PACX" AMEX still at $0.45 bid

HC $12.63 +0.63% here ....

Jeff Bailey : 7/20/2005 11:40:48 AM

Dow Transports (TRAN) 3,685 +1.32% ... finding a gear here.

Jeff Bailey : 7/20/2005 11:39:45 AM

IBM (IBM) $84.57 +1.03% ... sets up for challenge of yesterday's highs.

Linda Piazza : 7/20/2005 11:38:24 AM

Unlike the RUT and the SOX, the RLX has not yet topped yesterday's high. It's perhaps forming a broadening formation now at the top of its climb, a sign of disorganized trading and notoriously difficult to guage. Link

Linda Piazza : 7/20/2005 11:35:39 AM

As I mentioned might happen earlier, in the context of how the OEX might move with the Keltner channels apparently settling into an equilibrium position, the OEX is moving rather smoothly now across mid-channel resistance. It might move just as smoothly below it again later, but perhaps not until it moves closer to or tests the black-channel resistance at 575.16. If the OEX is in an equilibrium position, then we'd likely expect it to bounce from one side of that channel to the other, ignoring the mid-channel lines, perhaps in a narrowing range, though. An upside breakout would occur on a 15-minute close above the line currently at 575.17, setting an upside target of 577.57, right in that long-term S/R band on my charts.

Jonathan Levinson : 7/20/2005 11:34:54 AM

QQQQ retests yesterday's high, invalidating the right shoulder. Volume breadth recovers to -1.11:1 on the NYSE and -1.29:1 on the Nasdaq, while crude oil has dropped to a new low of 57.50 in the past 2 minutes.

Linda Piazza : 7/20/2005 11:32:07 AM

The RLX tests 15-minute Keltner resistance, trying to move above it as I type. I tell you, you just can't kill this one. A 15-minute close above a channel line currently at 474.33 confirms the breakout signal, already tentatively reset by a 15-minute close above 473.52.

Linda Piazza : 7/20/2005 11:29:44 AM

The RUT looks s if it's on the verge of creating a 672.02 upside target on the 30-minute Keltner chart, depending on what happens in the next minute.

Jeff Bailey : 7/20/2005 11:28:21 AM

11:17 Internals found at this Link

Jonathan Levinson : 7/20/2005 11:28:21 AM

QQQQ's daily cycle indicators have entered overbought terrutory and are at levels from which a new downphase could begin. QQQQ has yet to break yesterday's low (or high) today, and so it's too early to count on a daily cycle rollover. Currently, the boucne printing could be the right shoulder of a broad head and shoulders pattern from yesterday, but if so, the 39.15 level is as high as the pattern can tolerate before being invalidated. Any new high would do it, while bears need to targe out the 38.85-.90 area on volume for a possible downside breakout. Link

Jeff Bailey : 7/20/2005 11:26:09 AM

Semiconductor Index (SOX.X) 469.66 +0.18% ... bids green.

Jonathan Levinson : 7/20/2005 11:24:53 AM

Session low for September crude oil 57.95, -.75.

Linda Piazza : 7/20/2005 11:23:03 AM

SOX just punched above yesterday's high.

Jeff Bailey : 7/20/2005 11:19:37 AM

11:17 Market Watch found at this Link

Jonathan Levinson : 7/20/2005 11:18:21 AM

QQQQ clears 72 SMA resistance and surges to daily S1: Link

Jeff Bailey : 7/20/2005 11:15:10 AM

Trimeris (TRMS) $13.20 +16.60% Link ... Jumping above its trending lower 200-day SMA ($11.92) on above average volume of 240,636 after the drug developer reported a net loss of $3.1 million, or $-0.14 a share, which compared favorably to a loss of $16.2 million, or $-0.75 a share in the second quarter of last year. The company attributed a 48% gain in revenues ($53.9 million vs. year-ago $36.4 million) to it AIDS drug Fuzeon.

Jonathan Levinson : 7/20/2005 11:15:07 AM

Volume breadth is firming for QQQQ, up to -1.7:1, while it has deteriorated on the NYSE, down to -1.98:1. Declining volume continues to lead, but volume is as light as it's been for the past 2 days, 31.5M QQQQ shares traded so far.

Linda Piazza : 7/20/2005 11:14:07 AM

The Russell 2000 also bounces strongly.

Linda Piazza : 7/20/2005 11:13:34 AM

Like the OEX's, the Wilshire 5000's bounce looks corrective so far, up to test 12,250-ish resistance, with the DWC at 12,243.21 as I type. Like the OEX, the DWX has been bouncing from one side to another of a channel from 12,211.57 to 12,285.97, currently. No breakout either direction of this channel and first Keltner resistance approached is so far holding. Nothing much to conclude from this as yet. There was tentative bullish price/MACD divergence as this morning's low was hit, but that can still be erased.

Jeff Bailey : 7/20/2005 11:09:10 AM

TranSwitch (TXCC) $1.63 -20.48% Link ... percentage loser at the NASDAQ after the networking chipmaker reported widening Q2 losses. The company reported Q2 net revenues of approximately $8.0 million and a net loss of ($12.7) million, or ($0.12) per basic and diluted common share. This compares to Q2, 2004 net revenues of approximately $8.7 million and a net loss of ($7.2) million, or ($0.08) per basic and diluted common share.

Linda Piazza : 7/20/2005 11:05:44 AM

The OEX's bounce so far looks corrective, but resistance on the 15-minute chart hasn't really firmed up the way bears would like to see it do, either. As I type, the RLX is still testing the former support to see if it holds as resistance, so that's unresolved just yet. The SOX bounced strongly up into the gap, pausing now near the top of this morning's gap but already having performed more strongly than bears would have liked, so that's unresolved, too.

Jonathan Levinson : 7/20/2005 11:05:34 AM

QQQQ contunues to edge higher, filling the opening gap as it approaches descending 72 SMA resistance at 39.06. Although the bear flag pattern is still intact and volume breadth still negative, the short cycle indicators are printing a preliminary bullish cross from oversold territory. Above the 72 SMA, the 30 min cycle downphase will stall. Updated chart at this Link

Jeff Bailey : 7/20/2005 11:02:59 AM

First Bancorp (FBP) $25.27 +19.14% Link ... percentage gainer on the big board after the San Juan, Puerto Rico-based bank holding company reported Q2 earnings of $57.1 million, or $0.57 a share, which was up from year-ago earnings of $39.9 million, or $0.36 a share. Consensus was for $0.47 a share. The company cited strong loan originations for the rise in quarterly net income.

Jonathan Levinson : 7/20/2005 10:49:22 AM

QQQQ continues to edge higher below yesterday's range. Volume is thin but volume breadth remains negative, and price is holding below the 72 SMA so far- but clearly not the impulsive decline that bears want to see from the synchronous intraday downphases this morning. Updated 3 min chart of QQQQ at this Link

Linda Piazza : 7/20/2005 10:45:54 AM

The RLX so far turns down from former Keltner support, but I don't think it has given up testing the former support.

Jeff Bailey : 7/20/2005 10:46:20 AM

Naked put stopped alert for the two (2) Yahoo! Inc. Aug. $35 Puts (YHQ-TG) at $1.95.

YHOO $33.44 -11.39% ...

Jonathan Levinson : 7/20/2005 10:43:55 AM

Upside spike in the US Dollar Index here, challenging 90 resistance: Link

Jeff Bailey : 7/20/2005 10:42:41 AM

Swing trade sell covered call alert ... after a morning test of its rounding lower 200-day SMA, and bearish EIA data, let's sell four (4) of the Hanover Compressor HC Aug. $12.50 Calls (HC-HV) at the bid of $0.45. Bid/offer is $0.45 x $0.65.

HC $12.53 -0.15% ....

Linda Piazza : 7/20/2005 10:40:19 AM

The OEX bounces from Keltner support without creating a breakdown signal and setting a new downside target. Next resistance is at 572.62-573.83, but if the OEX is settling into an equilibrium position on these Keltner channels, as it appears to be doing, then it might move easily across mid-channel S/R levels, rattling within a channel that currently spans 571.14-575.32 in an increasingly tight range. Bears instead want that resistance to hold and for the OEX then to create a new breakdown signal. Bulls want a move to the top of the channel and for the OEX to create a new upside breakout signal.

Linda Piazza : 7/20/2005 10:37:49 AM

The RLX is now moving up to retest that former support for so long, to see if it holds as resistance. Watching.

Linda Piazza : 7/20/2005 10:34:30 AM

BIX at 465.85. The 200-sma is at 364.53. I mentioned yesterday that the BIX didn't look healthy, traveling down again after not even quite touching the top of its broadening formation this time. It's near enough to the 200-sma, almost exactly at the apex of that broadening formation, that perhaps bears ought to watch out for a potential bounce. I don't think a move below it would look good for bulls. Here's the chart with the broadening formation: Link

Jonathan Levinson : 7/20/2005 10:33:51 AM

September crude oil is down to a 30 cent gain at 59 here, off a low of 58.60 and a high of 59.65.

Jeff Bailey : 7/20/2005 10:35:48 AM

SciClone Pharma (SCLN) $6.92 +1.91% ... taking 3/4 of a position off the table here today. I think this stock surged from the $5.00 level on news of its new drug application for SCV-07 and this move may be a little overdone. (see 07/14/05 MM) Link

Jonathan Levinson : 7/20/2005 10:31:55 AM

Headlines:

U.S. DISTILLATE STKS UP 2.3 MLN BRLS: ENERGY DEPT

U.S. UNLEADED GAS STKS DOWN 1.3 MLN BRLS: ENERGY DEPT

U.S. CRUDE STKS DOWN 900,000 BRLS LAST WK: ENERGY DEPT

Linda Piazza : 7/20/2005 10:31:25 AM

Wow. The RLX has erased its upside breakout signal on the 15-minute chart. It's sort of like being pregnant and being overdue. You know the blessed event will eventually happen but you stop really believing in it anyway. With that said, the RLX is not declining wildly. It's now got potential Keltner resistance overhead from 473.04-474.80, but that may not have completely firmed and it's yet to be tested to see if it holds as support. The RLX sits on 15-minute support at 471.81 with the RLX at 472.31. A bounce up might be expected at some time, perhaps from here as the RLX is attempting, but a 15-minute close below that supporting Keltner line will set a new target of 467-69-469.73.

Linda Piazza : 7/20/2005 10:27:33 AM

Greenspan speaking, inventories due. Know how you'll handle volatility, if that's what we get. Sometimes the opposite happens, as markets clamp down instead.

As I type, the OEX sits on 15-minute support, testing a double-bottom area with Monday's low, not yet having created a new breakdown signal that would set a downside target of 567.77, but still vulnerable to doing so by a 15-minute close below the Keltner line currently at 571.24.

Jeff Bailey : 7/20/2005 10:25:28 AM

Current OPEN MM Profiles found at this Link

Linda Piazza : 7/20/2005 10:18:41 AM

New low for the OEX below this week's, but the OEX bounced back. OEX approaching daily Keltner support at 571.04, support that bounced the OEX when that line was tested earlier this week. I think the OEX's 2-hour Keltner chart perhaps has even more relevance, and here's what it shows: Link

Jonathan Levinson : 7/20/2005 10:18:02 AM

Ten year notes are failing from their bounce off the 111 25/64 low, with TNX holding a 1.1 bp gain at 4.2%. Bond bulls/yield bears need to see 4.2% hold for a lower high to confirm the looming rollover in the daily cycle upphase, while bond bears want to see new highs for TNX above 4.2% and an eventual move to 4.4% resistance.

Jonathan Levinson : 7/20/2005 10:13:54 AM

August gold holds a 2.3 gain at 422.40, with XAU +.88 at 91.17 and HUI +2.71 at 196.64. Session high has been 423.40 for gold.

Jeff Bailey : 7/20/2005 10:12:08 AM

Yesterday's Internals found at this Link

Linda Piazza : 7/20/2005 10:11:57 AM

The RUT's daily Keltner chart has shown some relevance lately. Here it is: Link

Jeff Bailey : 7/20/2005 10:10:53 AM

10:00 Internals found at this Link

Keene Little : 7/20/2005 10:09:58 AM

Greenspan's remark about the economy being able to handle a drop in home prices is like me saying my 95 year old grandmother will be able to handle a slip and fall on the ice. Who's to know? Sometimes I really wonder about that man...

Jonathan Levinson : 7/20/2005 10:07:55 AM

Volume breadth has recovered to -1.21:1 on the NYSE and -2.32:1 on the Nasdaq.

Linda Piazza : 7/20/2005 10:05:28 AM

The SOX's five-minute Keltner chart shows a corrective-type climb up to 463.80-ish Keltner reistance, with more resistance gathering near 465.80, but not yet firmed. So far, the first resistance mentioned is holding the SOX back, but that hasn't been confirmed by a new LOD.

Jonathan Levinson : 7/20/2005 10:04:11 AM

Text of Greenspan's testimony at this Link

Jeff Bailey : 7/20/2005 10:03:44 AM

VIX.X 10.73 +2.87% ... DAILY Pivot Levels ... 10.07, 10.22, Piv = 10.51, 10.66, 10.94.

Linda Piazza : 7/20/2005 10:03:35 AM

RLX testing the breakout level on its 15-minute chart. A gentle easing below that breakout level wouldn't necessarily signal the end of the climb for the RLX. That would require more signs. However, it's the absolutely first thing needed to signal that the exuberance of the climb is at least being tempered.

Jonathan Levinson : 7/20/2005 10:02:37 AM

QQQQ back to 38.91 on a high volume decline.

Headlines:

GREENSPAN SEES SUSTAINED GROWTH, CONTAINED INFLATION

GREENSPAN: MAY SOFT PATCH NOT START OF SERIOUS SLOWING

GREENSPAN: LABOR COSTS, ENERGY PRICES KEY RISKS

GREENSPAN: ECONOMY CAN HANDLE HOME PRICE DROP

GREENSPAN: LONG TERM RATES CAN'T FALL MUCH FURTHER

GREENSPAN: TRADE SECTOR WILL BE DRAG ON GROWTH

FED MUST CONTINUE TO REMOVE ACCOMODATION: GREENSPAN

Jeff Bailey : 7/20/2005 10:01:49 AM

10:00 Market Watch found at this Link

Keene Little : 7/20/2005 10:00:03 AM

Jeff, something came to mind last night when you mentioned the possibility that traders might have stock put to them if they had naked YHOO August 35 puts. While I agree that's unlikely with the amount of time premium left on those options, it has happened to me in the past. I thought it would be a good time to remind readers of Same Day Substitution (SDS). This is a little known technique that avoids the need for extra margin in your account in the event stock is ever put to you.

The way it works is that you simply resell the stock that was put to you, then resell the put options and you're back to where you were before the stock was assigned to you. Your only cost is the commissions required to get all that done. As long as this is done on the same day you were notified that the stock is being assigned to you then you incur no additional margin demands. And if there was time premium left on the options there's a good chance you'll make a little extra money during this transaction by getting the time premium again. SDS will give traders a little more time to calmly figure out what they're going to do with their underwater naked options which you're taking them through. Nice job.

Linda Piazza : 7/20/2005 9:59:57 AM

Time to look at the RLX again. All day yesterday, I kept watching it with respect to its breakout signal on the 15-minute Keltner charts. It's now maintained that signal all week, with a minor breach on Monday for one 15-minute period only. This morning, it came down to retest that breakout level, and, as it's done so many times, it bounced from that Keltner line currently at 472.77. It hasn't bounced far, however, with the RLX at 473.34 as I type. I think at the least that the RLX has to stop its unfettered climb and calm down a bit before OEX bears have much hope.

Jeff Bailey : 7/20/2005 9:59:10 AM

Yahoo! Inc. (YHOO) $33.92 -10.12% .... YHQ-TG bid/offer $1.60 x $1.70.

Jonathan Levinson : 7/20/2005 9:58:46 AM

The Fed announces a big 9B overnight repo, for a net add in that amount.

Jeff Bailey : 7/20/2005 9:58:11 AM

Google (GOOG) $306.00 -1.25% ....

Jeff Bailey : 7/20/2005 9:57:51 AM

Internet Initiative Japan (IIJI) $9.99 +2.04% ...

Linda Piazza : 7/20/2005 9:57:11 AM

Getting close to a 15-minute close beneath the OEX's Keltner line currently at 572.70, but so far, it's a tepid breach of that Keltner line and the period isn't over yet. Downside target 571.45 if that close below that line happens. A 15-minute close beneath 571.45 sets a new downside target of 567.85. RSI is reaching oversold levels, however, as this support is tested, so unless RSI is to start trending, the OEX might still be due for either a bounce or sideways trending while RSI rises. Note: As I typed, the OEX began bouncing.

Jeff Bailey : 7/20/2005 9:55:13 AM

10 Most Actives ... INTC $26.95 -6.13%, YHOO $33.80 -10.4%, AMGN $78.83 +11.84%, QQQQ $38.97 -0.53%, MSFT $25.99 -0.64%, CSCO $19.78 -1.98%, LU $2.95 -2.31%, JDSU $1.66 -2.35%, MOT $19.97 +0.60%, SPY $122.60 -0.34%

Jonathan Levinson : 7/20/2005 9:52:27 AM

There are no expiring repos scheduled for today, and so any amounts added by the Fed will be net adds. Awaiting the announcement any minute.

Linda Piazza : 7/20/2005 9:51:56 AM

Here's a SOX chart I posted yesterday, showing the SOX at the top of a long-term ascending regression channel, so perhaps subject to another pullback within that channel, but also having bumped above a descending trendline off the January 2001 high. I made the point that this was a weekly chart, and so we should be looking at how this week closes, but here's the update, showing the precarious position for both bulls and bears: Link

Jonathan Levinson : 7/20/2005 9:50:08 AM

QQQQ bounced to yesterday's daily R1 and got clipped back to 38.90 support, currently back to 38.95: Link . Currently, all intraday cycles are in or just commencing downphases, none yet overbought. Volume breadth remains negative, but not overwhelmingly so, and volume is light as well- direction is bearish intraday, but price needs to stay below the 72 SMA to avoid stalling these fickle intraday cycles.

Linda Piazza : 7/20/2005 9:48:28 AM

OEX 572.70 support being tested again. Bears want to see a 15-minute close beneath that support, setting a downside target of 571.54.

Jeff Bailey : 7/20/2005 9:48:02 AM

Sell Program Premium ... SPX 1,226.17, DIA $105.96, QQQQ $38.93.

Linda Piazza : 7/20/2005 9:46:22 AM

The OEX rose to test the gap during the first retracement of the day and turned right back down toward 572.70-ish support. Bears need a new LOD and a break of that support.

Linda Piazza : 7/20/2005 9:44:05 AM

SOX pierced the 15-minute 100/130-ema's, both of them, and has now bounced back slightly above the 100-ema. Bears don't want to see it keep bouncing, although I'd think a gap test might be in the works after such strong gains on the SOX. Just on the face of it, I wouldn't think that bulls would want to give up so quickly. We'll see, though. So far, just a lot of volatility as these averages are tested. The last time they were actually touched was on the morning of 7/07, the day of the London blasts, and we know what happened when they were tested then. Today's drop down to test them is more . . . shall we say "violent" than even that on 7/07, so this is troublesome for bulls, but some still might defend this and we've seen such strange things happen lately on the markets. Such exuberance.

Jeff Bailey : 7/20/2005 9:41:46 AM

Bullish swing trade stop alert ... for the Semiconductor HOLDRs Nov. $32.50 Calls (SMH-KZ) here at $4.90 bid.

SMH $36.70 -2.05% ...

Linda Piazza : 7/20/2005 9:40:26 AM

Big bounce on the Wilshire 5000, up to the midpoint of the day's range so far. Candlestick theory suggests that bears want that midpoint resistance, at about 12,269.20, to hold since the first 15-minute candle so far has been a bigger-than-normal one. The DWC is now at 12,268.16.

Jonathan Levinson : 7/20/2005 9:39:59 AM

Volume breadth -1.26:1 on the NYSE and -2.66:1 on the Nasdaq, but overall QQQQ volume is looking light for this time of day, so far at 7.4M shares today.

Linda Piazza : 7/20/2005 9:37:39 AM

The OEX is now testing that 572.70-ish Keltner support on the 15-minute Keltner chart, trying to steady and bounce here. It's got a gap to test this morning, perhaps at the first retracement of the day? Bulls want a gap fill and a move higher from there, while bears want gap resistance to hold and another downturn.

Jeff Bailey : 7/20/2005 9:37:23 AM

Naked put establish stop alert ... for the Yahoo! Inc. YHOO Aug. $35 Puts (YHQ-TG) ... With the common trading $34.05 -9.75% the options are $1.70 x $1.75.

Let's place a stop at $1.95 on these options.

Jonathan Levinson : 7/20/2005 9:35:33 AM

Stripping out the premarket data, QQQQ has opened below the 30 and 60 min channel bottomsat 39-39.02. 72 SMA resistance is at 39.12, below which the 30 and 60 min cycle bias remains bearish. Link

Linda Piazza : 7/20/2005 9:34:42 AM

Big drop on the SOX, of course. It's dropping straight down to the former trendline off Thursday's high, now at about 460.30, with the 15-minute 100/130-ema's at 462.14 and 460.29, and the SOX at 461.52. That would be a good place to watch for a bounce attempt. So far, no bounce in the making.

Jeff Bailey : 7/20/2005 9:31:11 AM

Yahoo! Inc. (YHOO) $34.20 -9.35% ... open for trade. I've got the YHQ-TG bid/offer $1.50 x $1.55.

Linda Piazza : 7/20/2005 9:31:03 AM

The OEX gaps immediately to 573.50-ish support, but it doesn't look as if it's holding. OEX 572.70 is next support. Bears want that broken, too.

Jeff Bailey : 7/20/2005 9:38:54 AM

Yahoo! Inc. (YHOO) $34.34 Link ... outlined some thoughts and strategy regarding how to handle the YHOO Aug. $35 Puts (YHQ-TG) in yesterday afternoon's MM at this Link

Linda Piazza : 7/20/2005 9:20:37 AM

Sorry for the late and jumbled OEX outlook, but there's been a bit of a short-term crisis here in our household, now handled. So what the heck is happening with these markets? Yesterday, the RLX and SOX were pulling the OEX one direction and the BIX was pulling it another. By the end of the day, the OEX had reversed much of Monday's declines, turning the pullback off the 7/14 high into a potential bull flag pulling back from the 577.40-578.60-ish long-term resistance band, also near a potential 15-minute Keltner target and resistance level of 577.34, not yet set. This is -ish resistance, not exact numbers but a locus of many highs, lows, opens, or closes across several years. It's a best-guess location. The top of the OEX's broadening formation is near 580.50 or so, near a daily Keltner target of 579.76. It's perhaps been the OEX's 2-hour Keltner chart that's had more relevance than the daily one lately, though, and that one shows next resistance at 476.47-476.76 as of yesterday's close.

So these various Keltner targets corroborate the possibility of resistance ahead in that same long-term resistance band marked on my daily charts. In keeping with a bull-flag pullback, a down or doji day might be expected today, so the action of the futures suit the parameters of a bull flag unless and until the OEX begins falling out of that formation. Some of those upside Keltner targets mentioned in the previous paragraph have been set, and some not. For example, the 15-minute Keltner target has not yet been set, and would require a 15-minute close above a Keltner line currently at 575.28.

For all that the OEX erased almost all Monday's losses, it did not do much Keltner-wise on that 15-minute channel. Instead, it just rattled around in the upper half of a channel that currently spans from 571.74 to 575.28. It never violated Friday's high, much less last week's high and didn't even seriously test the trendline off that Thursday-morning high, with that trendline now at about 575.85, if I've drawn it correctly. Recent evidence on other indices have shown that such breakouts above the trendlines do signal something important, and so bulls should hope for such a breakout. The OEX itself is building a continuation-form inverse H&S with a neckline on that descending trendline, giving it a little more weight, no matter how we feel about the unpredictability of these continuation patterns. They've been okay to trade lately, although I still don't count on them confirming or reaching upside targets. Yesterday, I said again that I wouldn't recommend long positions, and the long side of any OEX play was over within the first hour of trading with the OEX kind of drifting after that. I absolutely still feel concerned about the strong resistance that the OEX faces, long-term resistance. As I said yesterday, I did not have a good handle on the bounce from the 7/07 lows and did not expect it to carry so far, so take my worries about long positions with a grain of salt.

So what about those already in bearish plays, perhaps entered on one of the tests or near tests of that descending trendline off Thursday's high or on Monday's lower high? Yesterday's action scattered the Keltner channel lines on the 15-minute chart, so that it's difficult to pinpoint where strongest support might be, but certainly 573.25-573.50, 572.70, and 571.75 are levels to be watched, with profit-protecting plans needed for a test of 571.75. If the OEX should close a 15-minute period below that level, it will be setting a downside target of 568. Those already in bearish plays should be prepared today for a drop and then bounce reaction if the futures have already done all the work. What about a new bearish entry? We'd have to see how things work out today after the open, but the best entries have probably been on tests of that descending trendline, but entries that didn't appear to have good short-term risk vs. reward parameters because of the SOX and RLX action as they were tested yesterday.

It should go without saying that the SOX and RLX should be watched today. So should the Wilshire 5000, also breaking above recent consolidation, but failing to reach a high above last week's or even come too close to testing last week's high.

Jonathan Levinson : 7/20/2005 8:39:20 AM

From the Mortgage Bankers Association website:

WASHINGTON, D.C. (July 20, 2005) - The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 15. The Market Composite Index - a measure of mortgage loan application volume - was 801.1, an increase of 1.2 percent on a seasonally adjusted basis from 791.9 one week earlier. On an unadjusted basis, the Index increased 26.5 percent compared with the previous week and was up 28.6 percent compared with the same week one year earlier.

The seasonally-adjusted Purchase Index decreased by 0.1 percent to 488.7 from 489.0 the previous week whereas the Refinance Index increased by 2.5 percent to 2618.2 from 2554.3 one week earlier. Other seasonally adjusted index activity includes the Conventional Index, which increased 0.8 percent to 1206.8 from 1196.9 the previous week, and the Government Index, which increased 6.9 percent to 124.2 from 116.2 the previous week.

In an effort to better represent short term trends in the major indexes, four-week moving averages for seasonally-adjusted indexes will be included on a weekly basis. The four week moving average for the seasonally-adjusted Market Index is up 0.4 percent to 806.2 from 802.6. The four week moving average is up 0.5 percent to 494.0 from 491.7 for the Purchase Index while this average is up 0.4 percent to 2622.5 from 2611.7 for the Refinance Index.

Jonathan Levinson : 7/20/2005 8:36:49 AM

NEW YORK (MarketWatch) -- General Motors (GM: news, chart, profile) reported a second-quarter loss of $286 million, or 51 cents a share, vs. a profit of $1.38 billion, or $2.42 a share in the same period a year ago, as its North America business continued to disappoint. Excluding non-recurring items, such as restructuring charges and tax benefits, the loss would have been 56 cents a share. Revenue fell 1.5% to $48.51 billion from last year's $49.25 billion, as a 2.5% decline in total auto revenue offset a 3.5% increase in financing revenue. Inventories declines by 224,000 in the first quarter.

Jonathan Levinson : 7/20/2005 8:35:31 AM

I've managed to log in using a proxy server, as it appears that my usual DNS server is kicking me out of the optioninvestor.com servers. This is a jury rig, and if I fall out again, I'll try to contact Linda to give you a heads up.

Bonds are flat, with equities taking a fresh tumble following GM's earnings a few minutes ago. QQQQ is at the bottom of its now declining 30 and 60 min channels. Based on premarket data, the channel bottoms are between 38.85-.93, but so long as price holds below the 39.00 line, we should see those channels work their way lower.

Linda Piazza : 7/20/2005 8:00:31 AM

This from Jonathan, who is having difficulties posting this morning:

Equities are down, but recovering from their overnight lows on a 3AM surge with Europe's open. ES is trading 1230, NQ 1590, YM 10638 and QQQQ down .20 at 38.98 here.

There's no major data scheduled, other than the petroleum inventory report and, of course, Greenspan's congressional testimony.

I arrived at work to find my computer offline and our router and switches all in need of reset-apparently caused by a storm and/or high winds last night. I'm not able to log into my mail server or the MM posting window, but hope to be back soon.

Linda Piazza : 7/20/2005 7:14:32 AM

Good morning. The Nikkei posted a gain, but fell back from its HOD after a test of the July 15 high. Most other Asian markets gained, too. European markets are mixed, with some gyrating around the flat-line level after climbing out of negative territory. Our futures are lower, off both their overnight highs and lows. As of 6:53 EST, gold was higher by $0.70, and crude, higher by $0.40 to $57.86. More detail about Asian and European markets follows in succeeding paragraphs.

With auto manufacturers leading the way, the Nikkei showed modest gains on the open. A firmer dollar helped Nissan Motor Co., Toyota Motor Corp. and Honda Motor Co., and all were to close positive. The Nikkei wasn't helped by techs, though, with some falling after INTC and YHOO dropped post-market in the U.S., after their earnings reports. Economic reports may have factored in trading, too, with the first half machine tool orders rising 16.2%. About the time of the mid-day break, information about June's consumer sentiment began to appear, with the Nippon Research Institute reporting that the June figure improved to its best numbers in four years and showing the sharpest improvement since the index was begun. In this report, numbers below 100 are sought, showing more positive than negative outlooks, and the sentiment index fell to 133. The number of those with positive outlooks increased 3%, and the number of those with negative outlooks fell 8.4%. When the afternoon session opened, the Nikkei climbed, but it was to reach its high of the day early in the afternoon, as it tested but didn't quite touch the July 15 HOD. After that test, it fell steeply into the close, but remained positive, up 24.51 points or 0.21%, to close at 11,789.35.

Most other Asian markets rose. The Taiwan Weighted gained 0.12%, but South Korea's Kospi dropped 0.10%. Singapore's Straits Times rose 0.71%, and Hong Kong's Hang Seng climbed 0.24%. Figures released last night showed that China's first half GDP rose 9.5% on the year, high than the expected 9.3% gain. Projections are that export and import growth will slow in the second half. June PPI rose 5.2% on the year, while the first half PPI rose 5.6% on the year and first half CPI rose 5.2% for the same period. First half real estate investment rose 23.5% on the year, and nominal retail sales grew 13.2%. The Shanghai Composite still rose 0.66%, despite worries that China's efforts to curb growth are not entirely effective. In a separate report last night, the BBC reportedly said that China planned to revamp its steel industry to ramp up production and reduce pollution. The BBC posited that China would accomplish this goal by forcing mergers and closures.

European markets are mixed. The Eurozone trade surplus for May narrowed, coming in line with expectations, but against an upward revision to April's number. Exports rose 1.4% month over month, but energy costs drove imports higher by 2.6% month over month. The first quarter's trade surplus was revised lower. All in all, the data indicates that a downward revision to the first quarter's GDP growth may still be possible and that GDP growth may slow in the second quarter. The Bank of England's notes, from a meeting in which the rates were unchanged, were interesting in that the committee was informed of the bombings before the conclusion of the meeting, but did not yet know much information about them by the end of the meeting. One source's summation of those notes indicates that the money policy committee's conclusion was that they didn't believe that activity would likely deteriorate further in the near term, and the vote to keep rates unchanged was a split 5 to 4 one, indicating with each successive meeting a greater inclination to cut rates. The committee discussed the revisions to the GDP data and the possible necessity to revise forecasts for the August Inflation Report. The committee did think that energy costs would trim growth and prompt a rise in the CPI but the extent of the effect on growth wasn't yet known. The conclusion of this source was that the central bank could lower rates, perhaps as early as the August meeting.

Some chip-related stocks trade lower in Europe, but one article notes that software companies are mixed. Earlier in the week, I reported speculation that PepsiCo would make an offer for Groupe Danone and today that French food company builds on gains made earlier in the week on that speculation. Pharmaceutical Roche Holding, biotech Serono, and healthcare-related Akzo Novel were among reporting companies, with Roche and Serono gaining after their reports and Akzo Novel easing. Anglo-Dutch technology company LogicaCMG PLC posted a strong gain after noting in line growth for the first half of 2005, but saying that 2005's organic growth was likely to weigh in at the top half of its the previously noted range.

As of 6:55 EST, the FTSE 100, slight on techs, was higher by 26.40 points or 0.51%, to 5,227.90. The CAC 40 was down 1.10 points or 0.02%, to 4,423.15. The DAX was higher by 4.81 points or 0.10%, to 4,775.35.

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