Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
Marc Eckelberry : 9/9/2005 1:07:33 AM

Tab, good one on SHLD. Nice RSI bullish divergence on the daily.

Tab Gilles : 9/9/2005 12:11:18 AM

Sears Holdings (SHLD) Eddie Lampert took some action today and according to CNBC's James Cramer, he made a call on tonight's shows stating SHLD has bottomed or near bottomed +/- a few bucks. Let's look at some annotated daily and weekly charts... Link Link

OI Technical Staff : 9/8/2005 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The Market Monitor has been archived.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.

Jonathan Levinson : 9/8/2005 4:31:07 PM

TXN raised Q3 sales targets to 3.48B-3.62B from 3.29B-3.56B, and expects to earn .36-.38, up from .31-.35 for the quarter.

Jonathan Levinson : 9/8/2005 4:29:24 PM

SAN FRANCISCO (MarketWatch) -- Intel Corp. (INTC: news, chart, profile) , the world's largest maker of computer chips, late Thursday narrowed its third-quarter sales forecast to a range of $9.8 billion to $10 billion. That compares with its previous estimate of $9.6 billion to $10.2 billion. Intel said its gross margin would be 60% of sales, in line with prior guidance.

Linda Piazza : 9/8/2005 4:06:52 PM

TRAN hit the 200-sma and bounced. It closed between the 200-sma and the 72-ema, both important in the TRAN's behavior.

Linda Piazza : 9/8/2005 4:00:08 PM

The OEX still retraced all of yesterday's gains.

Jonathan Levinson : 9/8/2005 3:56:24 PM

QQQQ's 30 and 60 min cycles are still in the early stages of their downphases. Traders holding a profit from the 39.54 short can close out now and take 15 cents off the table, leave the stop in place at 39.55, or widen it to the initial stop location at 39.60. The afterhours news is the wildcard. For the purposes of the play, I will be leaving the stop at 39.55, one penny above breakeven.

Linda Piazza : 9/8/2005 3:56:23 PM

The OEX is moving back above the five-minute 100/130-ema's, which means that we have to now begin watching the descending trendline off the week's high, with that now at about 570.85. Hope you short-term bears had your profit-protecting plans in place. Today's candle will probably still not be a bullish candle, but, barring a big zoom down in the last few minutes, it's not going to be that big bearish engulfing candle, either. We just didn't get a good signal today, which was why I kept posting that not all signals were confirming in the way I'd like them to do. As I said, though, that's still not a bullish candle for the day.

Jonathan Levinson : 9/8/2005 3:50:45 PM

It's time for QQQQ's wavelet cycle to kick off its overdue downphase. If it doesn't or if it is very weak, it will result in a reverse h&s projecting to the 39.50-.55 area: Link

Jonathan Levinson : 9/8/2005 3:46:16 PM

Headlines:

YELLEN: EVEN WITH KATRINA RISK, ECONOMY DOING 'PRETTY WELL'

YELLEN: INFLATION CONTAINED BUT KATRINA RAISES UPSIDE RISK

YELLEN: HIGHER OIL PRICES MAY RAISE CORE INFLATION

YELLEN: MONETARY POLICY PATH NO LONGER SO OBVIOUS

YELLEN: INCOMING DATA KEY TO FED RATE POLICY

YELLEN: FED FACES 'COMPLEX CHOICES' FROM KATRINA

YELLEN: SLOWER GROWTH, THEN SURGE FROM KATRINA

Linda Piazza : 9/8/2005 3:43:05 PM

OEX still testing those five-minute 100/130-ema's.

Linda Piazza : 9/8/2005 3:34:59 PM

OEX pushing above the level that OEX bears would wish it to push, once again testing those five-minute 100/130-ema's from the underside, with those at 570.38 and 570.26, respectively. There's the possibility for an inverse H&S to form now with a neckline approximately at those averages, so watch for a possible pullback to about 569.50 and a rise from there. Bears want such a formation to be invalidated, if it forms, and bulls want it to confirm.

Jonathan Levinson : 9/8/2005 3:33:10 PM

An hour's worth of selling wiped out in 5 minutes here. QQQQ has 72 SMA resistance lined up with R1 at 39.42.

Linda Piazza : 9/8/2005 3:31:16 PM

The SOX had a H&S on the top of its five-minute chart today, and it did meet or approximately meet its downside target when it dropped during the last 30-minute period. It is not, however, closing that 30-minute period a comfortable (for bears) distance below the Keltner lines currently at 478.60 and 479.06, with the SOX at 478.47 as this period ended. That's an ambiguous close, as it's a close on those Keltner lines rather than significantly lower than those lines, as bears would have wished. That leaves open the possibility that it will try to claw its way higher again along those Keltner lines or at least rise to retest them.

Linda Piazza : 9/8/2005 3:23:10 PM

Next potential OEX support from 568.22-568.40, with the OEX at 569.12 as I type. Have your profit-protecting plans in place for that approach, if the OEX does get there. I would anticipate some sort of bounce attempt from there, but as long as the OEX is producing 15-minute closes below 569.89-570.22, it's likely to go on retesting that support. If the OEX ends the day anywhere near its current level, then it's produced a bearish engulfing candle on the daily chart (or nearly--it didn't engulf the small upper shadow from yesterday). That's obviously bearish, but keep in mind the OEX's tendency to move big and then spend a couple of weeks alternating big moves higher with big moves lower, with an occasional doji day sprinkled in here and there, while it drives bulls and bears alike crazy. So, bears, don't get too excited by such a close, and keep your plan in mind.

Linda Piazza : 9/8/2005 3:16:46 PM

Depending on how this 30-minute period closes, the SOX may have erased its breakout signal and that upside target, currently 482.78. The resistance at the top of the weekly rising regression channel (chart in my 1:14:19 post) has held again.

Jonathan Levinson : 9/8/2005 3:16:34 PM

Session lows across the board. QQQQ's premarket low is 39.26, which conveniently lines up with current 30 min channel support.

QQQQ - Stop Loss Adjustment Alert -

QQQQ short at 39.54, lower stop to 39.55

Jonathan Levinson : 9/8/2005 3:09:53 PM

Volume breadth goes neutral for the Nasdaq at -1.03:1, for the NYSE -1.91:1.

Linda Piazza : 9/8/2005 3:09:41 PM

Potential for another bounce here. Just potential and certainly nothing confirmed, but if there is one, OEX bears want the OEX to stay below 570.27 on 15-minute closes. The five-minute 100/130-ema's are at 570.47 and 570.32, respectively, so near that same Keltner level.

Jonathan Levinson : 9/8/2005 3:06:57 PM

QQQQ bears from our 39.54 now have an 18 cent cushion and can lower their stops to 39.55, just above the 30 min channel top. That channel should decline from here, but with INTC and TXN on deck, anything can happen. Alternatively, there's a profit on the table right here. I'm going to leave the stop at 39.60 and reassess toward the close.

Linda Piazza : 9/8/2005 3:04:03 PM

OEX looking vulnerable to 568.20-568.38 now, but only if it maintains 15-minute closes below 570.08. OEX at 569.32 as I type.

Linda Piazza : 9/8/2005 3:01:39 PM

The TRAN is now just a few points above its 200-sma, with that at 3640.66 and the TRAN currently at 3648.06. Of course, the 200-sma is potential support for the TRAN. It's pierced it a couple of times during the last few weeks of the TRAN's consolidation period, but always managed to close above it. Will it today? Dropped a bit further as I typed.

Jonathan Levinson : 9/8/2005 3:01:37 PM

WASHINGTON (MarketWatch) -- U.S. consumer credit rose by $4.4 billion, or 2.45% in July, the Federal Reserve said Thursday, well below the $11.2 billion expected by economists. Revolving credit, like credit card debt, fell by $1 billion, or 1.5%, and non-revolving credit like auto loans gained $5.4 billion, or 4.8%, the Fed said. Economists surveyed by MarketWatch were expecting consumer credit to rise by $11.2 billion.

Jonathan Levinson : 9/8/2005 3:01:21 PM

Briefing was reporting 10B as the consensus, but either way, the number came in well below it.

Jonathan Levinson : 9/8/2005 3:00:55 PM

Headline:

U.S. CONSUMER CREDIT RISES $4.4 BLN VS. $11.2 BLN EXPECTED

Linda Piazza : 9/8/2005 2:59:03 PM

Keltner resistance held on the OEX. OEX bears now want to see a new LOD. I'm still worried because of the lack of confirmation on other signals, but that's beginning to look better now.

Jonathan Levinson : 9/8/2005 2:56:44 PM

Another wavelet bounce is just about done, just entering overbought territory. The short cycle inidicaotrs are trying to turn up from oversold. That bounce would be premature, and I'm guessing at a terminal push lower before acting on any bottom in the short cycle indicators. The low 39.30s is a likely target, from which point we'll evaluate in light of the longer intraday cycles. Link

Jane Fox : 9/8/2005 2:51:41 PM

DAteline WSJ Hurricane Katrina is likely to slow growth and boost inflation pressures in the second half of this year, economists believe. But the economy could receive a modest boost early next year amid recovery efforts on the Gulf Coast.

That's the view of economists who participated in this month's Wall Street Journal Online forecasting survey. To reflect the expected economic impact of Katrina, they marked down their annualized forecasts for growth in gross domestic product for the second half of this year by 0.4 percentage point. The survey was conducted Sept. 2-7.

These private-sector economists expect a somewhat smaller impact than what has been predicted by the Congressional Budget Office, which has said that second-half growth could be trimmed by a half to a full percentage point.

Linda Piazza : 9/8/2005 2:48:39 PM

OEX coming up to retest the five-minute 100/130-ema's and the midline of its most recent rising regression channel from the underside, to see if it holds as resistance. Bears want to see 15-minute closes below Keltner lines currently at 570.33-570.34. OEX at 570.23 as I type. Sure wish there were stronger confirmation that the choppy behavior near the week's high was over, but there's not. Some tentative weakness, easy to reverse, is all I see.

Jonathan Levinson : 9/8/2005 2:44:52 PM

Awaiting the 3PM release of Consumer Credit, est. +10B.

Jonathan Levinson : 9/8/2005 2:35:58 PM

Short cycle, 30 min and 60 min cycle support all line up at 39.33 QQQQ, 2 pennies above the pivot: Link But with the 30 and 60 min cycles just starting their rollovers and potentially hours from oversold, it's still looking early to cover the 39.54 short.

Linda Piazza : 9/8/2005 2:31:56 PM

SOX dropping into first 30-minute Keltner support, currently at 478.43-478.57 on 30-minute closes, with the drop so far a measured, corrective-looking decline. Bears want a stronger whoosh down.

Jonathan Levinson : 9/8/2005 2:29:08 PM

Session high for natgas, +.12 at 11.32 with 2 minutes to go. Crude oil is up to unchanged at 64.375. The market is rendering judgment on Bodman's earlier comments.

Linda Piazza : 9/8/2005 2:26:37 PM

Okay, OEX bears, you had your profit-protecting plan in place for a test of the midline of that rising regression channel and you put it into effect, whatever it was, I'm sure. Smile. Now you want the OEX to stay below 570.53 on 15-minute closes. Now you need to be thinking, if you haven't already, of how you'll deal with the 568.13-568.48 next Keltner support. Depending on how that's handled, there could be vulnerability to the bottom of the OEX's rising regression channel, currently at about 566.79, the level of the 30-minute 100-ema, but bears are far from out of the woods just yet and that target is far from assured just yet. I see signs of some weakening, but not definitive confirmation that the danger of this continued chop is over.

Jonathan Levinson : 9/8/2005 2:25:22 PM

Volume breadth +1.24:1 for the Nasdaq, -1.74:1 for the NYSE.

Jonathan Levinson : 9/8/2005 2:23:49 PM

Note that it was a repo drain today despite the multiple announcements. Those haven't meant much lately- but it might avoid an end of session meltup.

Linda Piazza : 9/8/2005 2:20:54 PM

Now that the OEX has reached a minimal new LOD, OEX bears do not want a quick spring higher, either in the OEX (careful, may be beginning) or the advdec line. That's not beginning, at least not yet.

Linda Piazza : 9/8/2005 2:19:55 PM

SOX still above 30-minute Keltner support from 478.24-478.53 on 30-minute closes. It's at 479.46 as I type.

Linda Piazza : 9/8/2005 2:19:05 PM

OEX now below the midline of its latest rising regression channel, testing the previous LOD at 569.79, with the OEX at 569.82 as I type. Other signs are finally weakening, too, but only tentatively so, so far.

Jonathan Levinson : 9/8/2005 2:17:50 PM

I'm hearing that Bernanke has now changed his tune and is saying that the effects of Katrina may be "palpable." Still searching for a link.

Linda Piazza : 9/8/2005 2:15:59 PM

The OEX needs a strong flush to get it moving lower although I'm not yet sure that lower is the next immediate direction. It's now being squeezed between Keltner support and resistance on the 15-minute chart. Other signals are looking weaker now, too, finally, but only tentatively so.

Linda Piazza : 9/8/2005 2:07:46 PM

The descending trendline off this week's OEX high is now at about 571.30, if I've placed my cursor correctly. If the OEX should break through that to the topside, those hoping for a pullback then want to see the OEX reach a lower or equal high to this week's 572.52 high. The top of the OEX's most recent rising regression channels has now risen to just above 574. Still not seeing confirmation that the chop is finished, which is the reason for listing these upside figures.

Jonathan Levinson : 9/8/2005 2:06:49 PM

Headlines:

ENERGY SEC. BODMAN: WILL TAKE TIME TO RESTORE INFRASTRUCTURE

BODMAN: OIL RESERVE RELEASE COULD BE HIGHER THAN 30MLN BLS

BODMAN: INDUSTRY EFFORTS WILL BRING GAS PRICES DOWN

BODMAN: 'MEANINGFUL DECLINE' IN GAS PRICES POSSIBLE

Linda Piazza : 9/8/2005 2:00:29 PM

SOX still consolidating ner the high of the day. Hasn't erased its upside target, now at 482.37, as that would require a 30-minute close below a Keltner line currently at 478.21.

Linda Piazza : 9/8/2005 1:58:10 PM

I'm sorry to say that there's just no confirmation on my charts that the chop near the high of the week is over yet. It could be, but I'm just not getting any confirmation that it is, and here the OEX is also trying to regroup just above the previous LOD.

Jonathan Levinson : 9/8/2005 1:52:57 PM

QQQQ retests this morning's bounce point: Link

Linda Piazza : 9/8/2005 1:52:04 PM

Previous LOD for the OEX was 569.79, to benchmark. The OEX is currently 570.20. Watch for the possibility that any drop is a stop-running. The other indicators I watch are now looking weaker, but still haven't quite confirmed that this choppy behavior is finished.

Linda Piazza : 9/8/2005 1:50:11 PM

Thanks, Jonathan.

Jonathan Levinson : 9/8/2005 1:50:03 PM

QQQQ drops 5 cents and it feels like the climax of an ABC Afterschool Special for our short play... 30 min channel support is at 39.40.

Jonathan Levinson : 9/8/2005 1:44:57 PM

QQQQ breaks 72 SMA support here at 39.50, technically the first bearish indication for the 30 min cycle since breaking above it at 10AM.

Jonathan Levinson : 9/8/2005 1:43:44 PM

Congratulations, Linda!

Linda Piazza : 9/8/2005 1:43:15 PM

It's my turn now for a family wedding after Jonathan and Jane had family weddings to attend. I'll be leaving early tomorrow, perhaps as early as mid-morning or perhaps noonish. I'll be back Monday morning, although I don't promise to be chipper after the quick trip and a ton of family activities all packed into a single weekend. Smile.

Linda Piazza : 9/8/2005 1:41:41 PM

The OEX has actually broken below the rising trendline off today's low. It hasn't confirmed a breakdown out of today's coiling formation by printing a new LOD, however, and it's currently testing the five-minute 100/130-ema's as well as Keltner and midline rising regression channel support. Still a potential for a bounce. The other signals I watch are still not giving a strong confirmation that the chop is over.

Linda Piazza : 9/8/2005 1:39:03 PM

SOX testing the previous HOD. Thirty-minute Keltner target 482.28 currently, with this also being next resistance. The 15- and 30-minute charts are showing that this move is extended, but no one has told that to the SOX.

Jonathan Levinson : 9/8/2005 1:38:55 PM

QQQQ's wavelet upphase aborted early and the short cycle is now pointing down, but there's no conviction in any direction at this point. Obviously, the 30/60 min cycle downphases should have done much more damage than they actually did, and the absolute refusal of the indices to decline cannot possibly be bearish. If the bulls can take out our stop at 39.60, then they can have it. By the same token, a long trade from current levels would be pretty much a pure gamble, being justified by none of my principal price-based indicators.

Linda Piazza : 9/8/2005 1:29:43 PM

OEX dropping to test the midline of its most recent rising regression channel, with that midline now at about 570.40. Remember, I personally would want to see a new LOD before I believed that the OEX had really dropped out of today's coiling formation. This midline may be one level of support, as I mentioned earlier, especially as I'm still not getting that signal that I'd like that this coiling action is likely finished. The OEX also has 15-minute Keltner support at 570.19-570.36. We're approaching the typical stop-running time of day, so be careful of a potential quick move down, just as quickly reversed. That's not what bears want to see.

Next Keltner support below the support in the above paragraph has now moved up to 567.98-568.40. Bears need a profit-protecting plan for a test of that level, too.

Linda Piazza : 9/8/2005 1:22:34 PM

SOX trying to move up again. Thirty-minute Keltner target and next resistance now 482.17.

Linda Piazza : 9/8/2005 1:14:18 PM

The SOX is approaching the top of this rising regression channel again: Link Remember that it would be the weekly close that mattered, not an intra-week move above this channel's top resistance. Notice that the SOX also tests the 61.8% retracement of the decline off the January high.

Jonathan Levinson : 9/8/2005 1:13:35 PM

The wavelet upphase is now in progress and roughly half way through its run. Price is so far not responding much, and is net unchanged from our short entry 2 cents off the day high at 10:40. The pattern of higher lows off the initial drop to 39.39 suggests building bullish energy, but I'm resisting the urge to tighten the stop.

Jonathan Levinson : 9/8/2005 1:03:03 PM

The 10 year note auction sold at 4.134%, generating a bid to cover ratio of 2.68. Foreign central banks took a light 1.76B of the 8B total.

Linda Piazza : 9/8/2005 1:02:50 PM

OEX attempting another bounce within its coiling formation, and I'm still not getting a signal that the choppy behavior near the week's high is finished.

Linda Piazza : 9/8/2005 1:01:50 PM

The TRAN's possible "b" distribution pattern is no longer valid, I think. It's trying to reform into . . . a rough inverse H&S? A flag? Still to be determined.

Jonathan Levinson : 9/8/2005 12:58:52 PM

The short cycle stochastics and Macd are sporting bearish-D's, but the wavelet downphase is approaching oversold, and there's been little oomph to the downside since the last set of new highs. To compound the issue, volume has been dropping through this latest decline. I'm debating whether to get out of the short play or just leave the stop in place at 39.60. There's ample justification to do either. Link

Linda Piazza : 9/8/2005 12:54:24 PM

The SOX would have to drop below 476.82-477.73 on a 30-minute close to erase its 30-minute upside target and possible next resistance, currently at 482.10. It's signaling that it's overbought on a short-term basis, but overbought can become more overbought. SOX bulls should have their profit-protecting plans in place just in case, however.

Linda Piazza : 9/8/2005 12:51:45 PM

No breakdown in the OEX just yet, and the signals I watch don't give me a clear signal yet that the OEX is through chopping around.

Jonathan Levinson : 9/8/2005 12:44:55 PM

Stepping away for 5 minutes.

Linda Piazza : 9/8/2005 12:44:52 PM

The RLX has been rising in a flag-like shape off this morning's low, finding resistance so far at the 38.2% retracement of the steep drop. OEX bears want to see the RLX roll down out of this morning's flag-like climb and then hit a new LOD, dropping below the 72-ema at 455.08 and the 10-sma at 452.97. The RLX is at 456.54 as I type.

Jonathan Levinson : 9/8/2005 12:37:18 PM

There was a big pickup in QQQQ volume on that 39.57 high attempt, but overall volume remains very light at 36.1M QQQQs so far, compared with yesterday's very light total of 57.5M.

Linda Piazza : 9/8/2005 12:35:34 PM

OEX approaching the midline of its most recent rising regression channel, with that midline at about 570.15 currently. That's potential support. If the OEX were instead to break to a new LOD, with the previous low at 469.79, then we can consider the coil and/or diamond at the top of the formation broken to the downside. Next Keltner support from 570.09-570.31 on 15-minute closes, so right in that same range.

Jonathan Levinson : 9/8/2005 12:33:33 PM

Volume breadth is even more bifurcated than before, now -1.57:1 for the NYSE and +1.83:1 for the Nasdaq.

Jonathan Levinson : 9/8/2005 12:32:35 PM

Only a slight bid for treasuries here. TNX -.7 bps at 4.131% and IRX -1.5 bps at 3.39%.

Linda Piazza : 9/8/2005 12:33:13 PM

SOX has now extended beyond its Keltner target on the 15-minute channel. Turning to the 30-minute shows a current upside target of 481.93, with that serving as next resistance, too.

Linda Piazza : 9/8/2005 12:28:10 PM

Either that's a diamond on top of the OEX's five-minute chart (bearish implications) or we're just seeing a neutral triangle, which has different implications. I've been saying all morning that the indicators I watch have not yet given me a clear signal that the chop at the top of the OEX's climb is finished, and it's certainly been chopping around. The advdec still climbs off the day's low while it continues that chop, which might be considered a wee bit bearish, but there's just no clear signal on the indicators that I watch. That means I may well miss a strong move, but I'm not yet convinced that there couldn't be more bounce in the OEX. I still think from here to the top of the most recent regression channel might be topping out the OEX's movement, but that means that bears are vulnerable to an OEX move up toward 574.

Jonathan Levinson : 9/8/2005 12:23:16 PM

QQQQ just bounced on NSM's earnings, but so far hasn't exceeded the prior top at 39.56.

Jonathan Levinson : 9/8/2005 12:15:39 PM

QQQQ is back to testing the now-rising 72 SMA at 39.45: Link

Jonathan Levinson : 9/8/2005 12:10:05 PM

The Fed's new TIPS pass is 450M, a small addition deliverable tomorrow.

Jonathan Levinson : 9/8/2005 11:59:40 AM

INTC is up 1.33% at 26.00 ahead of its update this afternoon. Link

Linda Piazza : 9/8/2005 11:59:24 AM

The SOX popped back above Keltner resistance currently at 476.88, reinstating its breakout signal. New target and resistance is 479.03, but I'd watch for possible resistance at the previous high of 478.31.

Tab Gilles : 9/8/2005 11:56:30 AM

All morning on CNBC I've been hearing talk of Richard Russell who is #2 market timer according to Hulbert. Mr. Russell uses the Dow theory and also the DJ Utility Index. Which just set a 5 year high. He's calling for the $SPX to make a several hundred point run of it breaks over the 1250 level. Here are some charts. *Note I'm not taking either side of his view, just thought it would be interesting to look at his observations. Link Link

Jonathan Levinson : 9/8/2005 11:48:21 AM

The Fed has announced another permanent market operation, another net permanent add to reserves. No amount has yet be stated, and it will be delivered tomorrow. Imagine where the markets might actually be without these continuous injections of money.

Linda Piazza : 9/8/2005 11:45:46 AM

I'm grabbing for signs, but the OEX's pattern at the top of its climb on the five-minute chart now takes on the shape of a diamond, an often bearish formation. The other signals I watch still show some doubt about whether the OEX is through with a choppy behavior near this week's high, though. In fact, that signal gave a buy signal about an hour and a half ago, when the OEX was at 570.83. I didn't take it, and am so far glad I didn't, but I didn't take it for the same reason that I'm not shouting "buy puts now," because of that mixture of signals.

Linda Piazza : 9/8/2005 11:42:13 AM

The TRAN's nice little "b" distribution shape isn't so neatly formed any longer. There was a jot lower and one higher, both sending the TRAN back within that rough consolidation pattern at the bottom of this morning's drop. So, there have been little stop-running moves either direction without any sound conclusion.

Jonathan Levinson : 9/8/2005 11:40:52 AM

QQQQ's wavelet cycle rollover whipsawed up and is now overbought. This latest bounce "shouldn't" have happened, at least on an idealized cycle basis, and as a result, the short cycle downphase has stalled. Much above our 39.54 short entry and it will kick off a new upphase. Bears can snug down the stop, or just leave it in place at 39.60, already a tight stop. The 30 min cycle channel has yet to turn up.

Linda Piazza : 9/8/2005 11:40:17 AM

And the OEX continues to attempt a bounce. It's currently testing 15-minute Keltner resistance at a line currently at 570.90. It's a little above it now, and bears would certainly like to see the OEX end this 15-minute period back below it. Failing that, they want continued 15-minute closes below the line currently at 572.49. OEX at 571.19 as I type.

Linda Piazza : 9/8/2005 11:29:21 AM

The mixture of signals I see on the indicators that I watch still doesn't give me confidence that the testing of this week's high and the choppy behavior near that high is yet concluded. I think there's still risk up to the top of the latest rising regression channel, now at just under 574. I'm not saying the OEX will reach that high, but only that the current mixture of signs that I typically watch doesn't yet give me confidence in anything other than some continued choppy behavior. I still think the OEX should be topping out over the short-term, but I wish those other signs would line up, too. They're still suggesting a possible bounce attempt, which we have been getting, and it certainly hasn't been going far.

Linda Piazza : 9/8/2005 11:21:43 AM

The SOX is so far finding resistance at a Keltner line currently at 476.53 on 15-minute closes, effectively erasing its breakout signal. Those hoping for a SOX pullback, though, need the next step to be 15-minute closes beneath a Keltner line currently at 475.75. SOX at 476.07 as I type.

Jonathan Levinson : 9/8/2005 11:21:34 AM

Crude oil -.175 at 64.20 here, natgas -.105 at 11.095. Gold is up 1.8 at 450.80, off a high of 453.80, silver -.147 at 7.053, off a high of 7.165.

Jonathan Levinson : 9/8/2005 11:16:10 AM

The wavelet upphase just stalled below overbought territory, just as I was beginning to regret not cashing out of the short at the 72 SMA. Below 39.39, the short cycle downphase will re-confirm and the 30 min cycle, flattened currently, will resume its descent.

Jonathan Levinson : 9/8/2005 11:10:02 AM

Volume breadth -1.53:1 for the NYSE, +1.43:1 for the Nasdaq.

Jonathan Levinson : 9/8/2005 11:07:33 AM

Here's the wavelet upphase within the short cycle downphase. If my cycle interpretation is valid, the wavelet upphase needs to fail at a lower high, beneath 39.56.

Tab Gilles : 9/8/2005 11:08:49 AM

Material select Sector SPDR (XLB) On Friday 8/27 2:56PM post; I stated that the XLB @ $27 would be a good entry point.

Chart from 8/29 2:01PM post Link today's chart Link

Linda Piazza : 9/8/2005 11:03:00 AM

So far, the OEX still looks as if it might be topping out where I thought it might, near the converging resistances from the current rising regression channel and the longer-term one already violated. Remember, then, that this says that all this climb may just be a retest of broken support to see if it holds as resistance. To fully come to that conclusion, however, the OEX would have to break down out of its current flag, with that flag's support just below the 200-sma. The trouble with this conclusion is that the other indicator that I watch is just not yet supporting the idea that there will be a strong whoosh down, leading me to suspect that there could be a lot more choppy behavior to come and that bears aren't yet safe from another retest of recent highs or even from a higher high. As said earlier, watch the midline of the OEX's current rising regression channel for possible support, with that now just under 570. Bears need to know how they're going to handle a test of 566-568, with multiple possible support levels through that zone. Decide ahead of time what you're going to do if that level is approached. Taking partial profits might be a good idea, snugging your stops down on the rest. I wish all my ducks would line up in a row so I could say with confidence, go ahead and enter a bearish play, but they're just not. Absolutely just not, just yet.

Current bulls, hopefully, you've taken partial profits and snugged up your stops as the OEX rose, and you've either already been taken out or will be taken out at some other predetermined level, if hit.

Jonathan Levinson : 9/8/2005 10:58:37 AM

QQQQ's finding support on the first test of the 72 SMA, as the wavelet downphase bottoms out. This is the place for day traders to reel in a 14 cent profit on the 39.54 entry. Longer term day and swing traders can hold the stop where it is, or snug it down to breakeven, as the short cycle indicators are just printing their first sell signal now. Link

Linda Piazza : 9/8/2005 10:55:53 AM

SOX dropping after tagging its 15-minute Keltner target. It's down to first Keltner support, now, at 475.57 and 476.26 on 15-minute closes. SOX bears want to see it close this 15-minute period below both.

Tab Gilles : 9/8/2005 10:51:19 AM

*Follow-up to 9/7 7:29AM post*

After getting a buy confirmation using the $NASI yesterday, went long via UOPIX on closing NAV of $23.60. Switching out of $NDX short position-USPIX, that was entered back on 8/8 (see 8/8 10:17 AM post). USPIX was entered at $16.42 exited at $16.28 for a -0.85% loss.

$NASI/UOPIX/USPIX weekly Link daily Link

Linda Piazza : 9/8/2005 10:51:30 AM

The TRAN's pattern on its five-minute chart could still be a "b" distribution pattern. Those often break to the downside. They're "supposed" to do so, at least. If so, the target for this break lower would be a retest of the TRAN's 200-sma at 3640.73. The TRAN would have to break to a new low to confirm that target, below its current 3660.56 low, and bears wouldn't want to see a quick bounce after it broke to a new low. The TRAN is at 3661.76 as I type, so not so far off a new low.

Jonathan Levinson : 9/8/2005 10:46:28 AM

I can't wait to snug down the stop on this short. QQQQ bears need to see the south side of 39.39, the current 72 SMA, to confirm the rollover in this stronger-than-expected but-now-topping short cycle upphase. Link

Linda Piazza : 9/8/2005 10:45:55 AM

SOX tapping upper Keltner resistance on the 15-minute chart now. Unless it get slapped back quickly, below 476.34, the 30-minute chart suggests an upside target of 481.23. Don't know how much I'd count on that, though. It's pulling back from that upper Keltner target as I type, at 477.65.

Linda Piazza : 9/8/2005 10:43:07 AM

I don't have a strong feeling for next direction, because the indicators I use to watch action are showing mixed possibilities. I think the OEX could well be topping out between the current level and the top of that newest rising regression channel, but the other indicators I watch suggest the possibility--not yet the probability, though--that more rally could be possible. The OEX should be ready for a pullback, but betting on "should's" isn't a winning proposition.

Jonathan Levinson : 9/8/2005 10:41:00 AM

Price is above the channel bands here and this should be it. QQQQ - Entry Point Alert -

Short QQQQ 39.54, stop 39.60.

Linda Piazza : 9/8/2005 10:40:22 AM

The TRAN isn't doing much since the inventories release. Its five-minute chart shows a consolidation zone that may be taking the form of a "b" distribution pattern. It's testing top resistance of that congestion zone as I type, maybe even breaking through it, so that pattern may resolve into something else.

Jonathan Levinson : 9/8/2005 10:39:46 AM

Stopped on the high tick of the day for our short, -.09.

Jonathan Levinson : 9/8/2005 10:37:57 AM

Volume breadth -1.31:1 on the NYSE, +1.47:1 on the Nasdaq.

Linda Piazza : 9/8/2005 10:36:57 AM

Next Keltner resistance on the SOX is at 478.36 on 15-minute closes, with the SOX currently at 477.71 and still climbing.

Linda Piazza : 9/8/2005 10:35:54 AM

We have the bounce going that I expected on the OEX, up toward a retest of yesterday's high. The top of the OEX's latest rising regression channel is at about 573.25 currently. Bulls would like to see that tagged before any pullback. Bears would like to see a lower or equal high with bearish price/RSI divergence. Bears would like continued 15-minute closes below the Keltner line currently being slightly exceeded, now at 570.96, but failing that, would like 15-minute closes beneath 572.10-572.98, with preference to the lower end of that band. The move higher still looks corrective so far, as bears would wish.

Jonathan Levinson : 9/8/2005 10:33:44 AM

Session low for crude oil at 64.15, -.225. Natgas is down 1.95 cents at 11.005, 3 cents above the low.

Jonathan Levinson : 9/8/2005 10:32:36 AM

Headline:

U.S. NATGAS STKS UP 36 BLN CUBIC FT LAST WK: ENERGY DEPT

Jonathan Levinson : 9/8/2005 10:32:18 AM

Headlines:

U.S. CRUDE STKS DOWN 6.4 MLN BRLS LAST WEEK: ENERGY DEPT

U.S. UNLEADED GAS STKS DOWN 4.3 MLN BRLS: ENERGY DEPT

U.S. DISTILLATE STKS DOWN 800,000 BRLS: ENERGY DEPT

Linda Piazza : 9/8/2005 10:31:33 AM

SOX at high of the day. Advdec line trying to bounce, but unclear if it can do so.

Jonathan Levinson : 9/8/2005 10:30:53 AM

QQQQ - Entry Point Alert -

Short QQQQ at 39.44, stop 39.53

Jonathan Levinson : 9/8/2005 10:30:15 AM

From the EIA website:

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell by 6.4 million barrels from the previous week. At 315.0 million barrels, U.S. crude oil inventories remain well above the upper end of the average range for this time of year. Total motor gasoline inventories declined by 4.3 million barrels last week, putting them below the bottom end of the average range. Distillate fuel inventories decreased by 0.8 million barrels last week, and are above the upper end of the average range for this time of year. A slight increase in high-sulfur distillate fuel (heating oil), was more than compensated by a decline in low-sulfur distillate fuel (diesel fuel) inventories. Total commercial petroleum inventories dropped by 14.9 million barrels last week, and are near the upper end of the average range for this time of year.

Jonathan Levinson : 9/8/2005 10:27:40 AM

Crude oil is +.25 at 64.625 here, off a high of 65.15 and a low of 64.275.

Jonathan Levinson : 9/8/2005 10:26:59 AM

According to the EIA, the Petroleum report is due in 192 seconds.

Jonathan Levinson : 9/8/2005 10:23:36 AM

Looks like it wants to roll over early, but volume breadth is still positive. Of course, there's the EIA report, another wildcard due in 8 minutes. I have no bullish thoughts at current levels, and am only waiting for the short cycle upphase to deliver the entry. Eager bears can dive in now and gamble on the EIA report. I prefer to miss an entry than force it, so will wait to try for a post-EIA spike.

Linda Piazza : 9/8/2005 10:19:23 AM

SOX into potential 477-477.30 resistance, at 477.19 as I type.

Jonathan Levinson : 9/8/2005 10:17:21 AM

Waiting for QQQQ's short cycle upphase to reach the top of its run- should be within the next 10 minutes at the current tick-rate, and should coincide with the 39.47 30 min channel top.

Linda Piazza : 9/8/2005 10:17:59 AM

I don't know if you all read my Asia/Europe report in the mornings, but there's been some concern voiced that the release from IEA member nations of oil products to the U.S. would contain less gasoline than had been originally assumed. This report noted that the total release of gasoline from the IEA-member nations would total only a little more than one day's consumption in the U.S. So, while the first impression was that the U.S. would be receiving more gasoline than our own strategic reserves afford us, that impression was somewhat combated.

Linda Piazza : 9/8/2005 10:13:43 AM

I've been waiting for a bounce on the OEX and possible retest of yesterday's high. The OEX has been trying to steady and now is attempting that bounce. Those hoping for a deeper pullback would like for it to find resistance on 15-minute closes at a line currently at 571.04 and, if not there, then at 572.15-572.88, with preference for 572.15. OEX at 570.83 as I type.

Jonathan Levinson : 9/8/2005 10:12:49 AM

QQQQ clears 72 SMA resistance, with 30 min channel resistance rising to 39.47: Link

Linda Piazza : 9/8/2005 10:11:41 AM

On the SOX, there's possible resistance in the 477 zone, quickly being approached. SOX at 476.46 as I type.

Linda Piazza : 9/8/2005 10:10:17 AM

Mixed messages on various indices. SOX zooming higher. The RLX is helping to pressure the OEX lower. It's dropping below its important 72-ema on the daily chart, having currently erased all of yesterday's gains, plus some. It's still within testing range of that 72-ema, however, with that average at 455.02 and the RLX at 454.35. If it doesn't find support soon, it will have dropped back into the congestion zone from the last couple of weeks, making this week's pop out of that zone look like a fake-out move. Still lots of day ahead of us to do almost anything, though.

Linda Piazza : 9/8/2005 10:05:09 AM

SOX moved above 475, at 475.16 as I type.

Jonathan Levinson : 9/8/2005 10:03:25 AM

The long-awaited short cycle buy signal appears imminent, and will be confirmed by a break above the declining 72 SMA at 39.37: Link

Linda Piazza : 9/8/2005 10:01:58 AM

The TRAN often zooms one direction or the other before the release of the inventories number. It's doing it now, zooming lower, but doing so within a congestion zone in which its traded since September 1. As I type, it's testing the important 72-ema at 3662.22, with the TRAN at 3666.01. The 200-sma is below, at 3640.35. The reaction post-release could be important, to the TRAN and to the general markets.

Jonathan Levinson : 9/8/2005 10:01:55 AM

Wholesale inventories -.1% vs. +.6% exp., prior revised down from .7% to .4%.

Linda Piazza : 9/8/2005 9:59:39 AM

Careful, bears. SOX pushing up to test Tuesday's high of 474.78. It actually exceeded that high by three cents, but has currently pulled back to 474.53. There's tentative price/RSI divergence on the 30-minute chart, but this can still easily be erased by a continued RSI climb. Bulls need to be watchful, too, in case this is a last hurrah for the SOX and it turns down from this double-top area.

Jonathan Levinson : 9/8/2005 9:56:36 AM

A 5.25B overnight repo completes the picture, for a net drain of 3.05B.

Linda Piazza : 9/8/2005 9:56:12 AM

Advdec line at -1844 (QCharts), approaching next level of support at -2300, but really essentially trying to steady at the 30-minute support level of -1500.

Linda Piazza : 9/8/2005 9:53:36 AM

As I expected, there's been a bounce attempt beginning, although it hasn't made much progress yet. The OEX closed a 15-minute period well below the line that it had been following higher, and now those hoping for a pullback want to see the OEX find resistance on 15-minute closes at a line currently at 571.20 or at higher resistance from 572.09-572.80, with preference given to the lower end of that range. If the OEX should instead continue dropping, current bears need to have profit-protecting plans for the test of the 567.23-567.84 level, although another bounce attempt could begin at the midline of its rising regression channel, at about 569.45 or so. The bottom of that channel is down near 566, so the next profit-protecting level needs to be the nearby 200-sma at 566.57.

Jonathan Levinson : 9/8/2005 9:51:27 AM

We have Wholesale Inventories at 10AM, and the EIA Petroleum report at 10:30AM.

Jonathan Levinson : 9/8/2005 9:47:54 AM

Volume breadth is -1.22:1 on the Nasdaq and -1.58:1 on the NYSE.

Linda Piazza : 9/8/2005 9:44:29 AM

Thanks, Jonathan.

Jonathan Levinson : 9/8/2005 9:42:30 AM

Linda, I'm still learning, but one obviously example would be the 9/11 liquification in 2001. The markets had been weak ahead of the crash, and resumed their decline from January of 2002. But circumstances are very different now- the prices of energy, food and other essential commodities impose (in my own opinion) a pretty strict limit on how far the Fed can ease. They've spent a great deal of firepower since 2001, as the rallies in commods and energies, foreign currencies, real estate, etc. demonstrate.

Linda Piazza : 9/8/2005 9:42:11 AM

OEX approaching first Keltner support on the 15-minute chart, at 569.95-570.23, with the OEX currently at 570.44. If there's going to be a bounce back up to retest yesterday's high, this would be one spot from which such a bounce might begin. The advdec line is between a just-violated support level and next support near -2250, though, so I'm not sure of the bounce potential, but I'd watch for it. Oops, just checked the more important 30-minute Keltner chart for the advdec line and it is at support there.

Linda Piazza : 9/8/2005 9:39:29 AM

Jonathan, do you have any sense/memory/data of how long the Fed tends to continue these big infusions of cash when there's a crisis and what happens afterwards? Does that infusion usually just go on a matter or days, or is it weeks? Do markets finally pull back when the infusion is over, or do they keep it up until a real rally begins? Any impressions?

Linda Piazza : 9/8/2005 9:36:48 AM

The OEX tests the 30-minute Keltner line that it's been following higher, dropping a little below it as I type. This, so far, is not a big drop, however, and constitutes only a retest of that support. The advdec line approaches first support, with further support below near -2250, with the QCharts advdec line now at -1440. I really expected to see this pullback yesterday afternoon and it didn't occur then, so either my timing is just off, or I'm misjudging what the markets will do. A retest of yesterday's high is not yet precluded, but my original impression, going into yesterday, was that the OEX would probably top out near 572 and then pull back, at least in to a bull flag, but with the nature of the pullback yet to be determined.

Jonathan Levinson : 9/8/2005 9:35:24 AM

Still looking for an impending bottom in the short cycle downphase as QQQQ holds the 39.30 area: Link

Jonathan Levinson : 9/8/2005 9:21:38 AM

The Fed's big open market operations continue this AM, as a 13B 14-day repo is announced for a net 1B add in that timeframe. 9.5B in remaining expirations are to be addressed at the 10AM announcement. As well, the 1.2B coupon pass from yesterday gets delivered today, which is an addition, effectively leaving 8.3B to be covered.

Linda Piazza : 9/8/2005 9:06:02 AM

Yesterday, I thought the OEX might rise to retest Tuesday's high, perhaps even rising into a higher high. I thought it might rise as high at 572. I thought it would pull back into a doji and that the day would be a choppy trading day. That was my best guess, with my second-best guess that the OEX might show a continuation of Tuesday's rally, with a strong white candle that built on Tuesday's gains. Well, I was right, sort of: we got all of that, but the timing was just a wee bit different than I expected. The morning's gain came later and wasn't as high as I expected. The OEX spent a whole lot of the day sporting that best-guess doji on the daily chart. Yet all through the day, the OEX never convincingly broke the uptrending pattern it had established about mid-morning the day before, and it climbed into the close, finally hitting the levels I had expected it to hit earlier.

That close was problematic for me. The continuation of the previous day's rally should point to more gains, but the OEX closed here: Link On this chart, it looks as if the OEX has already broken through the shorter-term flag's resistance, too, but that's not true. That's just a consequence of trying to show that flag on the daily chart. The upside resistance of the current flag is now near 573. As is apparent on the daily chart, RSI has already zoomed up almost, but not quite, to levels indicating overbought status on the daily chart as this test was conducted. The same can be said for the important 240-minute chart I often watch, while shorter-term charts like the 30- and 60-minute have already trended in overbought status and have begun showing bearish price/RSI divergences.

So, what's going to happen next? I'm not sure. I expected a pullback from near 572, and I expected that pullback to happen yesterday and for a doji to be sitting on that daily chart. I expected a pullback, probably to the 200-sma or close to it over the next few days, and then I expected to see how matters looked when that test occurred.

So, all I can say now is that the OEX has established an easy-to-identify rising trend: it's trending along the 30-minute Keltner line currently at 471.16, and the OEX needs consistent 30-minute closes beneath that Keltner line before we can say that it's changed its trend. If it should drop, say to the Keltner line currently at 569.71, a retest of the yesterday's high still isn't ruled out, but if such a retest fail and rolls down, the OEX may be ready to pull back within its most current rising regression channel. That rising regression channel's bottom support is currently being traced by the rising 30-minute 100/130-ema's, with those at 565.95 and 565.73, respectively, but mid-channel support is near 569.48. On any pullback, bears might be watchful for first support there, and then in the 567-568 level, and then at the bottom of the channel.

Current bulls need to have profit-protecting plans always in place, as the rally looks extended on 15-, 30- and possibly 60-minute charts. They can always get more extended. I suggested at Tuesday's and yesterday's closes that bulls consider taking partial profits, and if you've done that, you have gains pocketed and a cushion with the rest of your play, so just keep following the OEX higher with your stops and let a deeper retracement make your decision for you, if that's your preferred way of managing such plays. It might be a good idea now, since you've got that cushion, but pay particular attention to this morning's open. If the OEX should open beneath the Keltner line currently at 569.71 and then retest it and roll over from there, a pullback through that channel might be beginning. I still feel that the current level could be strong resistance, but the close left that conclusion more ambiguous than it had been earlier, so that I'm not confident of that resistance, but just "think" it could be strong enough resistance. I'll tell you what I see as the day unfolds.

Jonathan Levinson : 9/8/2005 9:05:55 AM

QQQQ has rolled over its 30 and 60 min cycles, the former with a steep bearish divergence. What prevents this setup from being an immediate sell is that the short cycle has just about bottomed in the premarket, and price is already below the 30 min channel band at 39.30. My guess is for a weak/short-lived bounce, whcih will be a short entry- 39.40-.45 should cap any short cycle bounce this morning, above which the longer intraday cycle declines will be in trouble.

Jane Fox : 9/8/2005 8:36:10 AM

Dateline WSJ Less than five months from retirement, Federal Reserve Chairman Alan Greenspan faces an unusually delicate challenge in deciding whether Hurricane Katrina should force a pause in the Fed's 14-month campaign to raise interest rates.

The storm has hurt near-term economic growth prospects, which normally would call for lower interest rates, but it also has elevated prices and potential inflationary pressure, which normally would call for higher interest rates. The question facing Mr. Greenspan and his colleagues is: Which is the dominant concern?

Fed officials say they will see how markets and the economy behave between now and their next meeting on Sept. 20 before deciding what action to take. Before Katrina, markets had assumed the Fed would raise short-term interest rates for the 11th consecutive time by a quarter of a percentage point, from 3.5%. Now, though, markets see some possibility that the Fed will pause in its rate-increase campaign, though they put the odds at less than 50%.

Jonathan Levinson : 9/8/2005 8:33:03 AM

Equities did not react to the initial claims data, nor did bonds with the former holding their losses, the latter their gains. QQQQ is edging up to 39.30 here, TNX quoted -2.6 bps at 4.112%. 13-week bill rates (IRX) are down 2 bps at 3.385%.

Jonathan Levinson : 9/8/2005 8:31:33 AM

Headlines:

10,000 HURRICANE-RELATED JOBLESS CLAIMS FILED, DOL SAYS

U.S. CONTINUING JOBLESS CLAIMS FALL 5,000 TO 2.59 MILLION

U.S. 4-WK AVG. INITIAL JOBLESS CLAIMS RISE 2,000 TO 318,500

DOL: UPWARD REVISIONS TO JOBLESS CLAIMS POSSIBLE NEXT WEEK

Jonathan Levinson : 9/8/2005 8:16:37 AM

The MMS Hurricane Katrina Evacuation and Production Shut-in Statistics Report as of Wednesday, September 7, 2005 at this Link

Jonathan Levinson : 9/8/2005 8:13:56 AM

Food for thought as we await the Initial Claims data: Link

Jonathan Levinson : 9/8/2005 7:48:37 AM

Equities are down, ES trading 1232, NQ 1594.5, YM 10593 and QQQQ -.13 to 39.28. Gold is down .20 to 448.80, silver -.087 to 7.113, ten year notes are +5/32 to 112 47/64, crude oil is up .575 to 64.95 and natgas is +.035 to 11.235.

We await the 8:30AM release of initial claims, est. 315K, then at 10AM, Wholesale Inventories, est. .6% and at 3PM, Consumer Credit, est. +10B.

Linda Piazza : 9/8/2005 7:14:37 AM

Good morning. The Nikkei dropped last night, with other Asian markets mixed. European markets decline this morning, although the DAX is off its low of the day. As of 7:07 EST, gold was unchanged, and crude, up $0.43, to $64.80. Our futures were lower at that time. Overnight news noted that the IEA's release of 2.1 million barrels of oil products from member nations' stocks to the U.S. would contain only 369,000 barrels of gasoline. This report noted that the total release of gasoline from the IEA-member nations would total only a little more than one day's consumption in the U.S. More detail about Asian and European markets follows in succeeding paragraphs.

The Nikkei headed lower Thursday morning and then steadied in the afternoon and treaded water in a 40-point range. The Nikkei ended the day lower by 73.70 points or 0.58%, at 12,533.89. Banks dropped after a report indicated that foreign investors slowed their buying of Japanese equities to the lowest levels in six weeks. Who's left to buy? This thing has been zooming up non-stop since May with barely a twitch lower, much less a bona fide bull-flag pullback. However, data also showed that Japanese institutional investors were spending their money at home, on Japanese assets. Bank lending was also recovering somewhat, giving hope that Japan could begin to move out of deflation.

Machinery stocks fell ahead of the afternoon's release of July orders. The early decline was also taking place ahead of a Bank of Japan policy decision. As expected, the central bank kept monetary policy unchanged, retaining the current liquidity target. Then, the awaited July Machinery Orders came in, showing a 4.3% month-over-month figure, better than the feared 5.0-6.0% drop. Non-manufacturers saw a 5.1% month-over-month drop. Underneath the headline number, it was oil/coal and transport-related sectors that rose, while electric machinery and communications sectors fell more than expected. This number can be volatile, so a three-month-average is usually watched. That's still high since numbers were higher earlier in the year. A newspaper article noted that it expected the mid-year results of Japan's eight major automakers to be helped by currency-related developments.

Later, perhaps after the close, the Bank of Japan's September report noted that the economy continues its recovery, with exports and household incomes continuing a moderate increase. Private consumption and housing investment were described using the terms "steady" and "nearly flat." For the first time, the central bank included a projection that consumer prices would be flat or would rise slightly. The previous phrasing has projected that those prices would continue falling slightly. This change is in line with the central bank's Governor Fukui saying earlier in the summer that he believed that consumer prices would begin rising by either late this year or early next year. Speaking later, Fukui would not commit to a time frame for raising rates in Japan. He wants CPI to turn positive and to give the country enough time to make sure that CPI doesn't show another deflationary downturn after doing so. He believes that crude prices and the results from Katrina could pose risks for the world's economy.

In stock-specific news, steel producers Nippon Steel Corp. and JFE Holdings raised their profit forecasts for the first half of the year as a result of their decision to raise steel prices for some manufacturers.

Other Asian markets were mixed. The Taiwan Weighted gained 0.14%, and South Korea's Kospi rose 0.20%. The index hit a record high, above the previous 1994 high, before dropping back off that high. The central bank said that it might raise rates next month since growth was accelerating and higher crude costs threatened inflation. Singapore's Straits Times climbed only 0.04%, and Hong Kong's Hang Seng dropped 0.38%. China's Shanghai Composite rose only 0.01%.

European markets are lower, although the DAX, at least, is off its low of the day. A move higher in crude prices helped spark the decline. Germany's July Trade Surplus narrowed a bit more than expected, with both exports and imports rebounding off June's decline. July's surplus appears to be about 1% lower than the average for the first quarter. In the U.K., the anticipated Bank of England decision dampened the markets, too. The Bank of England kept rates steady. The ECB released its September bulletin today, saying that its rates are appropriate and are providing a boost to economic activity. Risks remain weighted to the downside with inflation risks weighted to the upside due in part to excessive liquidity, but some data hint that the GDP could rise in the second quarter. The ECB intends to watch carefully for signs of inflation.

France's Lafarge's earnings report put pressure on European construction-related issues, with Lafarge plummeting after it said that net profit fell 23.8% in the first half and operating profit dropped 9.3%. Other companies reporting earnings received mixed receptions. IT services group Capgemini rose after raising its target for the year's operating margin. InterContinental hotels reported a decline in net income and revenue in the second quarter, but also announced a further share buyback program. It gained in early European trading. In other news, British Airways fell after announcing that it would increase the fuel surcharge for long-haul flights, although it intends to keep the surcharge where it is for shorter flights. Reuters benefited from an upgrade to a buy rating and Rolls-Royce gained after announcing that it had captured a $400 million contract from LOT Polish Airlines.

As of 7:04 EST, the FTSE 100 was lower by 8.20 points or 0.15%, at 5,357.70. The CAC 40 was lower by 13.84 points or 0.31%, at 4,472.35. The DAX was lower by 4.44 points or 0.09%, at 4,983.70, up from its 4,976.15 low of the day.

Market Monitor Archives