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Jeff Bailey : 9/22/2005 3:25:29 AM

Valero Energy (VLO) $113.14 Link ... $113.65 in extended session, which if were were to open up here tomorrow morning, would be just above my bullish target.

That's the good news, now a plan.

First things first. The stock may be trading new highs (52-week high is $115.12) into/after Rita so let's take a look at tomorrow's DAILY Pivot Levels, which are based on Wednesday's high/low/close of $113.30/$110.81, $113.14.

DAILY Pivot Levels $109.93, $111.53, Piv=$112.42, $114.02, $114.91.

WEEKLY Pivot Levels from QCharts are $102.53, $105.26, Piv= $110.03 $112.76, $117.53.

Here's a 30-minute interval chart of VLO, with some observations relative to 21, 50 and 200 SMA as well as QCharts' WEEKLY Pivot Levels at this Link

With 1/2 bullish position in a trader's account, it is so tempting to cancel the bullish target of $113.50, as see what VLO has left in its tank.

Yes. Deviating from plan can offer pleasant surprise, but it can also offer up some very bad tastes.

The 30-minute interval chart allow observation of how VLO traded just into, then after Hurricane Katrina. Good gravy! It didn't look like Katrina was any "big deal" on 08/29/05. Then as the market got a little more information, "ka-boom!"

Here's what I'm going to do, and what I will do with my own account tomorrow.

See those three WEEKLY resistance levels I circled $117.97, $118.14 and $117.53? That's "suspicous" isn't it? Is that the pre-destined bull target for first amount of "upside risk?"

Now, it is not all that often that I short a stock, then become "convinced" I should be buying it. I usually have some convictions, and even when proven wrong and stopped out, I don't go back for seconds. One "fundamental" reason I profiled a SHORT for VLO on 09/15/05, and I think this will be an important note, is that Unleaded Gas futures and Crude Oil Futures ... FELL BELOW THEIR PRE-KATRINA levels. Hey! That's got to be a hint of a "top" right? Horrible news, and the commodity falls below a benchmarked price!

Boom! Wrong, suddenly Tropical Storm Rita appears off in the distance, SE of Florida, and it is headed toward the Gulf of Mexico (stop short).

Buuuut .... I kept an eye on VLO, even after the disgust of a losing trade.

Ok you technicians out there. While a reverse head and shoulder pattern at a "top" isn't all that telling, see how VLO so "easily" came back into that recent gap? The day VLO bears (myself included) got stopped out at $110.50?

When ANYTHING so easily backfills a gap, it can be a sign that DEMAND may be starting to fall off a bit.

Back to the possible reverse head/shoulder pattern. Doesn't the WEEKLY R1 of $112.76 look like a "neckline" where the opening gap (stop short) at WEEKLY Pivot looks like a "left shoulder" and our recent bullish entry comes right in the "head." Now tonight, VLO closes above the NECKLINE.

You can eyeball it as well as I can. Head to neckline is roughly $108 to $112.75, so $4.75. Add the $4.75 back to the "neckline" of $112.75 and I come up with ... $117.50.

Hmmm.... there's that $117.50.

Now, what does risk management say about adjusting targets, or stops? I'm not big either, but here's what I'm going to do with 1/2 bullish position.

Let's cancel bullish target of $113.50 and extend that target higher to $117.00.

What am I doing? I'm trying to get another $3.50 reward, but I need to be willing to take the risk that I don't get gapped BELOW my current BULLISH stop of $110.45.

Trade management should also take into consideration risk/reward. A trader might easily say ... "my target was $113.50 and I've got it, so close out." That's great, and I will never critique a trader for taking a profit! However, if I/you want to try and "let it run," to a potential further upside target then risk management requires a trader to do this....

IF looking for an addition $3.50 reward, it doesn't make sense to then allow more than $3.50 risk. Does it?

From last regular session of trade at $113.14 and a current stop of $110.45, I'm pushing the limit of RISK as $2.69 from current trade.

IF VLO trades $115 tomorrow, a trader could then raise a stop to (target - current trade = reward) $117.00 - $115.00 = $2.00, or $115 - $2.00 = $113.00. If a trader does not like a stop at $113.00 and would be happy to raise a stop to their initial bullish target of $113.50 then that is also appropriate! You're trying to "assure" a profit at your initial target, but also trying to see what further upside the trade has left in it.

Things can get "wild" for VLO and many stocks you may be trading, but I want to try and prepare traders, or give traders some ideas on how they might look at trade/account management in the coming sessions.

Jeff Bailey : 9/22/2005 2:23:57 AM

Valero Energy (VLO) $113.14 ... $113.65 in extended session, which if were were to open up here tomorrow morning, would be just above my bullish target.

That's the good news, now a plan.

First things first. The stock may be trading new highs (52-week high is $115.12) into/after Rita so let's take a look at tomorrow's DAILY Pivot Levels, which are based on Wednesday's high/low/close of $113.30/$110.81, $113.14.

DAILY Pivot Levels $109.93, $111.53, Piv=$112.42, $114.02, $114.91.

WEEKLY Pivot Levels from QCharts are $102.53, $105.26, Piv= $110.03 $112.76, $117.53.

Jeff Bailey : 9/22/2005 3:29:59 AM

Now, keep an eye on those October unleaded and heating oil futures.

One reason I didn't "roll" to November today (with Crude Oil) is that there is even GREATER jitters in these contracts. Why? Oil traders are "happy" that they found expiration in their October contracts, as they got a final settlement ahead of Rita. October energy futures have a great deal of uncertainty still ahead.

Yes! One trader's e-mail was "on course" when he wondered why unleaded, heat oil and even natural gas prices where so sharply higher than crude oil.

This is the RISK premium built in! For unleaded, one contract is 42,000 gallons, or 1,000 barrels.

One "reason" that September Unleaded futures (hu05u) launched from $2.00 to over $2.80 in the final three days of trade (08/31/05 for unleaded) was the obligation to be able to deliver the commodity when Hurrican Katrina hit!

Should we assume the same will happen again? I don't think so, and traders of energy stocks and refiners need to have ACTION PLANS in place now!

It should not be assumed that refiners' equities have "no downside risk" right now. What are some refiners doing? I don't know for sure, but I assume that some of their contracted output is being hedged in various futures markets! And one could assume that refining companies are focused greatly on Rita's path.

Nobody knows what type of damage, if any, refiners might suffer in the coming days. The hedges are on, and Rita is days away!

Jeff Bailey : 9/22/2005 1:03:26 AM

ym05z intra-day trader's chart (5-minute intervals) at this Link ... with QCharts' WEEKLY and DAILY Pivot Levels.

What do you think about what happened AFTER the FOMC made its decision on interest rates? Based on my thoughts/comments from yesterday regarding "what the market expects" is that buyers did NOT like what the FOMC said in its statement regarding Katrina "do not pose a more persistent threat." The market could interpret this as "tightening policy stands," or "don't worry, be happy this is a one-time event."

Then/now, Hurricane Rita builds to category 4!

So we start the day out with a "gap down" for cash opening. Think about today's trade in Treasuries. There are only two reasons I can come up with as to why a trader/investor buys Treasuries as the FOMC doesn't give hint of pause in rates. One reason is "flight to safety," and the other reason is "I was short Treasuries in anticipation of Fed pause, time to cover as I was "wrong."

Look at point A in today's trade. See how "crazy" that trade would be to interpret as the YM gets whipped around at somewhat correlative Weekly S2 and Daily S1? At that point, I was looking at a trade for the YM, but with a then "dynamic" (little blue retracement) a trader can surmise the intra-day range that had developed was way too tight, and nothing could be surmised from this technique using the then session low/high.

Hmmmm... let's scrap the BLUE "dynamic."

What's today's "top story?" Hurrican Rita in my opinion. Did anyone catch the guy on CNBC saying something like .... "this is similar to Pearl Harbor?" Good gravy! We've got to go lower!

A trader might then take his/her "dynamic" down to some other level. How about still anchoring at morning high and just for fun, pull that "dynamic" PINK down to DAILY S2, another lower RISK LEVEL. Point B.

In my opinion, my mistake wasn't looking long today (I know some traders that held short positions from these levels all the way back to 10,700 earlier this month that were short from 10,650). My mistake was either trading the first sign of strength from the level I thought buyers would be more firm. Either that, or I'm using too tight a stop and have to be willing and able to take more than 20 points of heat.

No ... in my mind, what I "should have done," (I tend to learn from reviewing my mistakes) was to observe the buying at the predicted level, then see if there is the STRENGTH to activate my trade trigger. But in a weak market with little "good news" and a formidable storm approaching some of the nations oil/natural gas refineries, a bull can probably be more patient and after a possible sign of strength like a trade at 10,417 being followed with a trade at 10,435, look for a retest of identified support to show firming, and then the "confirmed" move back to the initial trigger.

An example today would have been POINT C. See where I got stopped? I think I had the level correct, and the setup correct, I just didn't execute as I probably should have. I can make that observation, an adjust in the future.

Now .... I also think I have a "feel" for the YM and sure enough, when the YM jumps back to WEEKLY S2, it gets whacked! An I mean "whacked!"

This observation is important right now. Especially at a level where we would have expected buying and when broken to the downside, should be viewed as a level of resistance.

I can't say for certain that today's "whack" at WEEKLY S2 is FOMC related, or Rita related. All I do know at this point is that computers, and/or human traders have a sell bias at that level right now. See how the WEEKLY S2 found "mixed trade" when first tested this morning? Assume for now that buyers and sellers got "active" on that test. It is the resolution to the downside to DAILY S2 and bounce back to that level, which finds greater conviction that becomes a key level of resistance.

From what I "learned" with an intra-day trade today, would I buy a move back above WEEKLY S2 tomorrow? No! (unless I was short from August 10,700 and have seen 10,400 come and go to 10,700). What I'd look for (and perhaps keep track of with Rita) is just what took place when the YM traded 10,435, then broke back under 10,417 before the "pop" to 10,476.

Look at tomorrow's DAILY Pivot Levels. From what I've seen, Rita isn't expected to hit land until Saturday. But as each day passes, the course of the storm will become a little more "clear." Have you read the National Hurricane Center's explanation of how it assigns various "probabilities" to the course of a storm?

It doesn't matter if you DID NOT take my YM bullish trade today, but think of its action upon review.

Tomorrow, if I saw strength above WEEKLY S2, I'd look for sellers at DAILY R1.

Think about it. If I made the mistake of "buying" today's first move above 10,434 and the YM traded back to test that support, then should buyers be expected to make their conviction move with Rita approaching, on the first move above WEEKLY S2? I would think any strength finds sellers at DAILY R1 and it wouldn't surprise me at all if the YM traded back to WEEKLY S2, floundered a bit (is the storm headed further west/south than refiners?) and didn't find any conviction until a test back at the DAILY Pivot.

Tab Gilles : 9/21/2005 11:38:08 PM

I was away from my pc most of the day Wednesday, however...I just spent a few hours now going through the charts. Here are some annotated charts.

$NDXI had noted that I exited the long trade on the $NDX via UOPIX Profund and was in cash waiting the OpEx and FOMC outcome. Wednesday's move broke below the 50ma and trendline. The $NASI is still iin sell mode. However, the market is once again selling off on hurricane/oil concerns as Rita heads towards Texas. When Katrina hit New Orleans on 8/29 the market reversed and rallied. Question now is...will the market do the same when Rita hits? Link



$SOX Link

SMH Link

$VIX/$SPX Link

20+ Year Treasury Bond Fund (TLT) Link

Eaton Vance Limited Duration Fund (EVV) Link

Materials Select Fund (XLB) Link

Murphy Oil (MUR) Link

Jeff Bailey : 9/22/2005 3:22:51 AM

Current OPEN MM Profiles at this Link ...

Today's (Wednesday's) Activity ... Swing trade sold four (4) Semiconductor HOLDRs naked calls and the SMH Oct $37.50 Calls (SMH-JU) at the bid of $0.30.

Swing trade shorted 1/2 position in shares of Apple Computer (AAPL) at $52.72, but after rationalizing recent trade action in the bearish Goldman Sachs (GS) position, and not seeing what I felt to be "mass exodus" of a stock that is overextended and has met its PnF chart's bullish vertical count (good reasons for bulls to be protecting profits), I decided to closed this trade out at $52.31 ($+0.41, or +0.78%).

With the Dow Industrials back to test its bullish support trend Link (where institutional buyers often lurk) I started looking at a futures trade in the ym05z earlier this morning. I profiled a ym long setup, in the futures monitor at 01:53:14 and almost to perfection, the ym traded the setup and was triggered long at 10,435. What didn't go to plan was the ym then falling to 10,413 and undercutting my stop of 10,415 (-20, or $100 per contract).

More on this ym trade, as it may be telling as to how focused/jittery traders are. Yes, bullish and bearish traders.

OI Technical Staff : 9/21/2005 9:59:59 PM

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

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Jeff Bailey : 9/21/2005 9:35:24 PM

Second bit of GOOD News today! ... JetBlue flight lands safely in Los Angeles!

Tab Gilles : 9/21/2005 8:43:28 PM

The World Spot Price - Asia/Europe/NY markets Change from NY GOLD 09/21/2005Time (EST) 20:38 Bid 471.80 Ask 472.30 +3.50 +0.75%

Jeff Bailey : 9/21/2005 7:58:29 PM

JetBlue (JBLU) MSNBC covering airliner with landing gear problems in Los Angeles making emergency landing.

Experts predict high probability of safe landing!

Jeff Bailey : 9/21/2005 5:58:37 PM

Lockheed Martin (LMT) $60.56 -1.70% Link ... thinking about Friday/Saturday's note to President Bush and LMT's close below its 200-day SMA .... Note Defense Index (DFX.X) Link weak last 5-sessions. Market may be starting to discount sector as "budget cut" if tax payers are going to help fund entrepreneurs to rebuilding from Katrina. Depending on Hurricane Rita's activity, it is only fair that any impacted areas also expect federal aid to rebuild. Atwood, KS comments were only an example.

Jeff Bailey : 9/21/2005 5:38:30 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 9/21/2005 5:08:24 PM

Closing Internals found at this Link

Jeff Bailey : 9/21/2005 4:27:15 PM

Current OPEN MM Profiles found at this Link ... Today's Activity .... (I'll update later this evening after writing tonight's Market Wrap)

Jeff Bailey : 9/21/2005 4:31:41 PM

Valero Refinery locations ... looks like 5 of 18 have "Rita Risk" Link

Received a couple of questions regarding what type of negative impact Hurricane Rita might have on VLO should path strike "dead center."

Click on the red * to see what products each operation refines.

Jonathan Levinson : 9/21/2005 4:13:39 PM

QQQQ - Exit Point Alert -

Stopped Out of QQQQ long at 38.49, breakeven

Linda Piazza : 9/21/2005 4:00:01 PM

The SOX looks as if it's ending the day just above the 8/16 intraday swing low of 457.29, with the SOX at 458.08, trying to cling to the 72-ema at 458.63 into the close. The 8/16 close was at 458.20, so the SOX obviously tries to find support here and avoid confirming a lower high on the daily chart. (Looks double-toppish on the weekly, though.)

Jeff Bailey : 9/21/2005 3:53:08 PM

Sell Program Premium ... DIA $103.82, SPX 1,211.42, QQQQ $38.51

Linda Piazza : 9/21/2005 3:52:28 PM

Time soon for end-of-day decisions for OEX bears. I want to show you a chart of the advdec line on Keltner channels. Note the position of today's candles with respect to the lower black channel line and then note where the advdec line was at the next day's open. After closing at this black channel line on the 8th, 13th, and 19th, the advdec line jumped to the top near the open on the 9th, 14th, and 20th, with the OEX climbing, at least in the early part of the day, each of those days. Link Until proven otherwise, I would consider any bullish plays to be countertrend one, so this isn't meant to encourage bullish plays, but rather to help bears think about whether they want to hold overnight.

Jeff Bailey : 9/21/2005 3:50:22 PM

Valero (VLO) $113.15 +3.65% ... pushes session high. Nearing my swing trade bullish target of $113.50.

Should close highs of session, whatever they are. BLUE #6 is $114.05, and I see some orders lined up on Instinet at $114.00.

Jonathan Levinson : 9/21/2005 3:38:11 PM

I need to step away. Leave the stop in place and we'll see if the bulls can do it for us.

Linda Piazza : 9/21/2005 3:37:52 PM

Bulls keep trying. The OEX bounced from just above the previous LOD, but needs a move above 563.61, the peak between the two troughs, to confirm a double bottom. Bears know what to do, as they've had a leisurely day in which to plan their stops, end-of-day strategies, and other matters. I haven't been advocating a long play, but if any attempted them, they still want a 15-minute close above Keltner resistance now from 562.04-562.48.

Jonathan Levinson : 9/21/2005 3:35:50 PM

QQQQ - Stop Loss Adjustment Alert -

QQQQ long at 38.49, raise stop to breakeven.

Linda Piazza : 9/21/2005 3:32:23 PM

The OEX invalidates that inverse H&S. An equal bottom is still possible, but so far, bulls can't manage to confirm potentially bullish formations or even get a real bear flag going. There's some hint of an attempt to form a bottom still going on, but there have been hints all day. It's still easy: if you're in a bearish position, you've had time to set stops, so just adhere to them.

Jonathan Levinson : 9/21/2005 3:32:19 PM

QQQQ - Entry Point Alert -

Long QQQQ at 38.49, stop 38.44

Jonathan Levinson : 9/21/2005 3:28:45 PM

Session highs for gold, silver, crude oil and natgas here.

Jeff Bailey : 9/21/2005 3:27:46 PM

Valero (VLO) 112.20 +2.74% ... puts together a little charge to the close. Was $110.85 at 02:25 PM EDT.

Jeff Bailey : 9/21/2005 3:25:17 PM

Humph ... AAPL $52.05 -2.14% ... right back at WEEKLY R1

Jeff Bailey : 9/21/2005 3:24:46 PM

Sell Program Premium ... DIA $103.88, SPX 1,211.66, QQQQ $38.54

Linda Piazza : 9/21/2005 3:24:23 PM

SOX bouncing back above that 72-ema. See my 12:57:53 post for a chart.

Jonathan Levinson : 9/21/2005 3:24:19 PM




Linda Piazza : 9/21/2005 3:19:51 PM

There's still the potential for an inverse H&S on the OEX's five-minute chart. The OEX dipped a little lower than the best right-shoulder level, but hasn't yet invalidated the formation. It needs to confirm, soon, though, or it will be apparent that buyers (including shorts deciding to take some profit) just aren't able to overwhelm the sellers even over the short term. The OEX needs to maintain a 15-minute close above Keltner resistance at 562.31-562.70, also.

The gist of all this is that there's the potential for a countertrend flag to continue forming, but even that is iffy right now. Current bears have been lowering their stops, or should have been, and should adhere to them if hit. I'm not recommending a long play, but if you tried one anyway, you want that 15-minute close above that Keltner resistance and you want it as quickly as possible.

Jonathan Levinson : 9/21/2005 3:14:49 PM

Stepping away for a few minutes.

Linda Piazza : 9/21/2005 3:08:19 PM

As I thought, the OEX dipped back to the five-minute 21-ema to test its support. If it holds, or almost holds, the likelihood of an inverse H&S or a continued bear-flag climb continues. OEX slipping a bit beneath it as I type, though.

Jeff Bailey : 9/21/2005 3:08:18 PM

Sell Program Premium ... DIA $103.99, SPX 1,212.68, QQQQ $38.58

Jeff Bailey : 9/21/2005 3:07:01 PM

03:00 Market Watch found at this Link

Jonathan Levinson : 9/21/2005 3:02:12 PM






Jeff Bailey : 9/21/2005 3:01:14 PM

I was looking for more "long liquidation" to have continued in Apple (AAPL) $52.30 -1.67% at this point in the session after the stock achieved its bullish vertical count.

History with a strong stock like Goldman Sachs (GS) has me hesitant to hold AAPL. Small gain better than no gain if Rita moves off course.

Linda Piazza : 9/21/2005 3:00:07 PM

This is why it was important to watch how the OEX reacted in response to the five-minute 100/130-ema's. Now, it's punching above the Keltner resistance currently at 562.52-562.99, but hasn't yet closed a 15-minute period above it, and the possibility of a pullback to the five-minute 21-ema still, to retest that support, still exists. That Keltner resistance will look like only weak support if the OEX does close above it. Watch the five-minute 100/130-ema's at 565.53 and 565.32 for next resistance, with the 38.2% retracement of the precipitous drop at about 564.98.

Jonathan Levinson : 9/21/2005 2:57:35 PM

Big burst of volume at the top of the wavelet upphase here, clearing 72 SMA resistance and driving volume breadth up to -2.81:1 for the Nasdaq here.

Jeff Bailey : 9/21/2005 2:57:27 PM

Bearish swing trade close out alert ... for the 1/2 bearish position in Apple Computer (AAPL) $52.31

Linda Piazza : 9/21/2005 2:55:38 PM

Potential for an inverse H&S on the OEX, so if there's a pullback, watch the five-minute 100/130-ema for potential support. That's at 562.21, with the OEX currently at 563.25.

Linda Piazza : 9/21/2005 2:45:41 PM

Another OEX move above the five-minute 21-ema. That's a first tiny step toward a possible bear-flag rise. Here's what should happen next if the OEX is going to be able to maintain that bear flag. It needs to close 15-minute periods above the Keltner resistance from 562.69-563.08. I'm not recommending long positions but know there are some of you out there attempting them, so this is what you want to see happen next.

Jonathan Levinson : 9/21/2005 2:41:42 PM

This sideways chop is starting to feel like a 60 min cycle bottom- those turns always seem to last too long, as this one is. If so, then the 38.48 low should be it, and a break above the previous 38.70 would be the tell. I will try to enter a long as close to the previous low as possible, stop just below, to try and catch the move while putting as little as possible at risk. Link

Linda Piazza : 9/21/2005 2:40:27 PM

OEX still can't quite maintain five-minute closes above that five-minute 21-ema, but it hasn't produced a new low this time and is still up near that average, now at 561.96, with the OEX at 561.77.

Jeff Bailey : 9/21/2005 2:37:26 PM

02:11 Internals found at this Link

Jonathan Levinson : 9/21/2005 2:32:51 PM

Crude oil finished +.70 at 66.90, natgas -.01 at 13.02. Session highs were 68.25 and 13.61 respectively.

Linda Piazza : 9/21/2005 2:31:16 PM

The OEX has produced a five-minute close above the five-minute 21-ema. It's a tentative close above it, with the OEX coming right back down to test it, and it's a tentative first sign anyway, but bears should keep watching for signs that the OEX might be trying to firm up a stronger bear flag. I will consider this a countertrend play and won't be recommending any long plays on this countertrend play. However, if a bounce should get started, current bears should assess their willingness to weather a 19.1% or 38.2% bear-flag bounce. The 38.2% level is just under 565.

Jonathan Levinson : 9/21/2005 2:30:33 PM

Price dojied back down from that trendline touch: Link

Jonathan Levinson : 9/21/2005 2:26:25 PM

QQQQ approaches declining intraday trendline resistance here, 6 cents below the declining 30 min channel top: Link

Jonathan Levinson : 9/21/2005 2:19:01 PM

Volume breadth is actually worsening here, -3.62:1 for the Nasdaq. Price is primary indicator, however, and QQQQ is testing declining 72 SMA resistance at 38.60. Link

Jonathan Levinson : 9/21/2005 2:15:27 PM



Jeff Bailey : 9/21/2005 2:13:40 PM

02:11 Market Watch at this Link

Jonathan Levinson : 9/21/2005 2:11:24 PM

Session low for GE here at 33.51, -.33 or .98%.

Linda Piazza : 9/21/2005 2:10:38 PM

OEX at 561.25, in its latest puny bear flag climb; five-minute 21-ema at 562.07. The first step needed to begin even a moderate bear-flag climb is for the OEX to begin producing five-minute closes above that average, consistently, and not just at that average, as it did about 1:00. Nothing to do but for current bears to follow the OEX lower with their stops. I'm not going to recommend a countertrend bullish play if one should set up. After such deep drops, it could retrace a significant number of points if it decides to head up to a 38.2% retracement, but that's a countertrend play with perhaps lots of weak bullish hands dying to get out.

Jonathan Levinson : 9/21/2005 2:10:29 PM

Could be a steep bullish divergence building on the wavelet cycle indicator here for QQQQ on the dip back to 38.49 just now, but only if they can clear 38.58-.59ish and turn it back up: Link

Jonathan Levinson : 9/21/2005 2:07:53 PM

Session high for gold here, +3.40 at 473.50. Silver is up .035 at 7.415. Crude oil is up 1.25 at 67.45, natgas +.13 at 13.16.

Jonathan Levinson : 9/21/2005 2:03:53 PM

Volume breadth has deteriorated to -2.69:1 here for the NYSE, -3.49:1 for the Nasdaq.

Linda Piazza : 9/21/2005 1:55:03 PM

SOX below the 72-ema now, approaching the 8/16 swing low of 457.29, with the SOX at 457.58 as I type.

Jonathan Levinson : 9/21/2005 1:53:45 PM

QQQQ still feels like an accident waiting to happen despite the flattening intraday cycles. 30/60 min channel support edges lower to just above S1 at 38.45. Link

Linda Piazza : 9/21/2005 1:52:46 PM

OEX at 561.06 as I type; five-minute 21-ema at 562.29. Lots of bullish divergences showing up on that five-minute chart, but no consistent closes above that average that's been knocking it back since about 2:00 yesterday. Bears, keep watching that for the first tentative sign that a countertrend bounce could be beginning. I'm still not going to recommend a long play if such a bounce should get started, no matter whether it might be profitable. Other signs I watch also indicate the potential for a bounce building, but they're not good market-timing tools and I'd just be watching that five-minute 21-ema.

Linda Piazza : 9/21/2005 1:44:01 PM

The OEX still can't maintain five-minute closes above the 21-ema at 562.51. Until it does, the downtrend hasn't changed. I suggested earlier that the OEX traders watch that MA for a sign of a short-term change in trend. There's been none yet.

Linda Piazza : 9/21/2005 1:43:03 PM

SOX at the 72-sma. See my 12:57:53 post for a chart.

Jonathan Levinson : 9/21/2005 1:42:25 PM

Treasuries hold their gains, TNX down 6.4 bps at 4.179%, IRX down an amazing 18.3 bps at 3.342%, a 5.19% change for the day.

Linda Piazza : 9/21/2005 1:42:00 PM

The BIX has now broken below the support of its broadening formation on its daily chart. Also this week, it broke through the H&S I've mentioned on its weekly chart. As I type, it's slipping just below the intra-week low from April, with that intra-week low at 340.63 and with the BIX now at 340.29. It's still testing potential support in this area, but hasn't shown any inclination to stop yet. Watch for a potential bounce, bringing it back to test the 343-345 first resistance or the 349-350 next resistance. Barring a strong spring higher by the end of this week, this looks long-term bearish, but this is a weekly chart we're watching, so it's the end-of-the-week action that will matter.

Jonathan Levinson : 9/21/2005 1:38:56 PM

Session lows across the board.

Jonathan Levinson : 9/21/2005 1:34:38 PM

Volume breadth holding at -2.33:1 for the NYSE, -3.17:1 for the Nasdaq.

Jane Fox : 9/21/2005 1:33:20 PM

Dateline WSJ If Katrina was "unimaginable," in a word used by a number of U.S. politicians, what can we call Rita's pending strike?

Barring a sudden change in trajectory and/or weakening -- Rita is now a Category 4 hurricane with winds of 140 miles per hour -- the U.S. Gulf Coast will be hit by a second catastrophic storm in a month. From its inception in the warm waters of the equatorial Atlantic to its crossing of the narrows between the Florida Keys and Cuba and its slow, strengthening twirl through the Gulf of Mexico, Rita has been the most-closely followed tropical cyclone in history. Regardless of what you may have thought of Katrina and its horrific aftermath, in Rita's case, almost nothing has been left to the imagination.

Jeff Bailey : 9/21/2005 1:32:15 PM

Buy/sell program premiums ... just got another sell program premium within last 15 minutes. My count to this point based on 5-minute intervals is 4 sell premiums and 0 buy premiums generated.

Linda Piazza : 9/21/2005 1:26:11 PM

Checking in. The OEX hasn't been able to maintain five-minute closes above the five-minute 21-ema, but I'm not sure the OEX is through trying. Some signals still suggest a potential bounce, but they're not a good market-timing tool. You know what to do if you're in a bearish play--just keep ratcheting down the stops. I'm not suggesting any long plays right now, so there's nothing to do but watch any countertrend bounce for a potential rollover, if a bounce begins, or adhere to your lowered stops if you're in a bearish position and they're hit.

Jeff Bailey : 9/21/2005 1:18:02 PM

01:00 Internals found at this Link

Jonathan Levinson : 9/21/2005 1:14:54 PM

The wavelet has been trending in overbought for the past half hour as the short cycle works its way higher, but the move just can't get going within the stronger downward tide of the 60 min, daily and weekly cycles: Link . It still looks like the 30 and 60 min cycles are trying for a bottom, but volume breadth remains 3:1 in favor declining volume, and the price is still acting heavy.

Jeff Bailey : 9/21/2005 1:06:03 PM

01:00 Market Watch found at this Link

Jeff Bailey : 9/21/2005 1:03:29 PM

Johnson & Johnson (JNJ) $65.09 +1.07% Link ... breaks to session highs after near-test of 50-day SMA. 200-day SMA just ahead.

INDU has tested its bullish support trend Link

Linda Piazza : 9/21/2005 12:57:52 PM

Before I go, here's a chart of the SOX with respect to its 72-ema. Obvious possible support here, so it will be important if breached. There's a potential double-top formation, too, not quite confirmed yet. Bears, assess whether you're willing to weather a possible countertrend bounce here. Your choice, depending on whether you were scalping or are in a long-term position. Link

Linda Piazza : 9/21/2005 12:53:53 PM

I've got to disappear again for a little while, but took a look at the charts. The OEX approached the 38.2% retracement of the entire bear-market decline, with that number at 561.23, and that's obviously a potential support zone. Some internals suggest the possibility of a bounce, but it will definitely be considered a countertrend bounce. The 38.2% retracement of the decline off yesterday's last 15-minute high is at 566 and the 50% retracement at about 567.27, both known S/R, too. Not sure if the OEX can get that far, but watch the five-minute 21-ema for clues. That average has been turning back OEX advances since about 2:00 yesterday. It's flattening now, and the OEX is testing it now, with that average at 562.84 and the OEX currently at 562.64. If the OEX bounces above that average and maintains values above it, then it might strengthen enough to build a bear flag a little stronger than the puny ones that have been seen ever since about 2:00 yesterday. If in a bearish position, assess your willingness to weather a retracement, with those Fib levels in mind. I don't believe long positions are a good idea for anyone other than scalpers who don't need my suggestions.

Jonathan Levinson : 9/21/2005 12:52:36 PM

Volume breadth -2.47:1 for the NYSE, -3.15:1 for the Nasdaq.

Jonathan Levinson : 9/21/2005 12:44:54 PM

This wavelet pullback is getting weak traction, resulting in the right shoulder of a sloping reverse h&s so far: Link

Linda Piazza : 9/21/2005 12:36:58 PM

Jonathan, I'm still going to be out for a while, still too distracted with multiple phone calls to make good sense to readers, but wanted them to know where I was.

Jane Fox : 9/21/2005 12:36:42 PM

Glad to see you safe Linda and that Rita will not impact you.

Jonathan Levinson : 9/21/2005 12:34:43 PM

Welcome back, Linda!

Linda Piazza : 9/21/2005 12:34:08 PM

My hometown, Port Arthur (well, Nederland, actually), is being voluntarily evacuated, and I'm on the phone with friends and relatives this morning, making plans for where they'll be staying.

Jeff Bailey : 9/21/2005 12:33:06 PM

FedEx (FDX) $82.29 +6.85% Link ... big bounce today after the air/ground courier and printer said increasing volumes helped bolster profits despite higher oil prices.

The company reported Q1 profits of $339 million, or $1.10 per share, which was up from $330 million, or $1.08 per share in the year-ago quarter. Excluding a one-time charge from changing its lease accounting, earnings would have been $1.25, which is comparable to consensus of $1.17 per share.

Q1 revenue (ending Aug. 31) came in at $7.71 billion, up 10% from the $6.98 billion last year. Consensus was for $7.58 billion.

The company noted that operating expenses jumped 11% to $7.12 billion, with fuel costs surging 51% to $728 million from $428 million a year ago.

Jonathan Levinson : 9/21/2005 12:29:06 PM

Stepping away for a few minutes.

Jonathan Levinson : 9/21/2005 12:27:34 PM

I wouldn't be surprised to see the price run higher from here, and those with a tolerance for wider stops can either lower the stop or just wait out the wavelet dip. The wavelet is the easiest cycle to trend, but with volume breadth running -3.02:1 on the Nasdaq, I'm not willing to take chances on bullish strength.

Jonathan Levinson : 9/21/2005 12:25:26 PM

QQQQ - Exit Point Alert -

Out QQQQ long from 38.58 at 38.64. Wavelet topping out after a lukewarm run, leaving not enough cushion above our stop.

Jeff Bailey : 9/21/2005 12:19:56 PM

12:00 Internals found at this Link

Jonathan Levinson : 9/21/2005 12:11:54 PM

The wavelet cycle upphase is getting really weak traction, and it's not what I want to see for my long with a tight stop. The short cycle is due for an upturn, and I entered at the wavelet low to allow a tight stop. I don't want to get ticked out on a "noisy" pullback, and would prefer to hit the silk before that if the wavelet shows signs of rolling over. The wavelet is the oscillator in the second to last pane- a 10,5,3 stochastic on the 100 tick chart. Link Link

Jeff Bailey : 9/21/2005 12:05:50 PM

12:00 Market Watch found at this Link

Jonathan Levinson : 9/21/2005 12:02:35 PM






Jonathan Levinson : 9/21/2005 12:01:26 PM

QQQQ - Entry Point Alert -

Long QQQQ at 38.58, stop 38.52

Jonathan Levinson : 9/21/2005 11:55:03 AM

30 and 60 min channel support point to 38.55 QQQQ here: Link

Jonathan Levinson : 9/21/2005 11:53:38 AM

New lows across the board, QQQQ at 38.58.

Jeff Bailey : 9/21/2005 11:53:30 AM

Bullish swing trade raise stop alert ... on the 1/2 bullish position in Valero Energy (VLO) $111.61 +2.20% .... to $110.45.

Jonathan Levinson : 9/21/2005 11:47:03 AM

The divergences are weaker than they were earlier this morning when QQQQ was at these levels. While the 30 min cycle is growing oversold, the 60 min and daily cycles continue to point south with plenty of room to run. The 30 min cycle bottom remains above 38.55 QQQQ: Link

Jonathan Levinson : 9/21/2005 11:42:22 AM

Volume breadth -2.13:1 for the NYSE here, -2.45:1 for the Nasdaq.

Jeff Bailey : 9/21/2005 11:38:27 AM

Matrix Service (MTRX) $8.00 +7.96% Link ... X gets the square.

Jeff Bailey : 9/21/2005 11:32:32 AM

November Crude (cl05x) $67.25 +1.58% (30-min delayed) ... here's my futures chart with the "same" two bullish fitted 38.2% retracement carried over from October's contract at this Link ... In a minute I'll add the bearish fit 38.2% (it will be red)

Jonathan Levinson : 9/21/2005 11:20:40 AM

QQQQ breaks back below the 72 SMA here, the 30 min cycle channel stalling in its upphase as the short cycle indicators begin to tick down. Looks like the dealers expected more out of that bill pass announcement. Link

Jonathan Levinson : 9/21/2005 11:17:02 AM

The Fed's bill pass was big at 1.247B, removing just under half of the day's net repo drain. This is permanent money, and is thought to have a greater effect than were it added via a temporary repo.

Jeff Bailey : 9/21/2005 11:14:46 AM

11:00 Internals found at this Link

Jeff Bailey : 9/21/2005 11:05:12 AM

11:00 Market Watch found at this Link

Jeff Bailey : 9/21/2005 11:02:52 AM

NYSE Composite (NYA.X) 7,565.69 +0.03% ... edges green.

Jonathan Levinson : 9/21/2005 10:57:29 AM

QQQQ update at this Link with price testing yesterday's lows from below.

Jonathan Levinson : 9/21/2005 10:56:28 AM





Jonathan Levinson : 9/21/2005 10:55:18 AM

Note that GOOG jumped above the 311 level almost immediately when the Fed announced that bill pass.

Jeff Bailey : 9/21/2005 10:54:14 AM

Current OPEN MM Profiles found at this Link

Jonathan Levinson : 9/21/2005 10:53:59 AM



Jonathan Levinson : 9/21/2005 10:53:48 AM

Marc, the Fed doesn't need a special team to pump money into the system- the recent Treasury paydowns and Fed OMOs are doing it actively- though the weak foreign central bank participation at yesterday's 4-week auction was probably worrisome. In my view, the money being added effectively neutralizes any overnight hike at the expense of the value of the currency.

Jonathan Levinson : 9/21/2005 10:46:53 AM

The Fed has announced a bill pass, despite the fact that the stop out rate on their small net drain was 9 bps below the new target rate. This is effectively a permanent repo, a net add to liquidity- but no amount has been announced yet.

Jonathan Levinson : 9/21/2005 10:45:47 AM





Jonathan Levinson : 9/21/2005 10:44:35 AM

Heavier volume than usual for QQQQ, 36M shares traded so far, back to the "old" levels before the summer doldrums. Yesterday's volume was way above average, 115.5M QQQQs traded for the day.

Jonathan Levinson : 9/21/2005 10:43:16 AM

NEW YORK (MarketWatch) -- The American Petroleum Institute said crude inventories fell by 158,000 barrels for the week ended Sept. 16 -- that's just over half the government's reported 300,000-barrel decline. Motor gasoline inventories rose 2.1 million barrels. Distillate stocks were up 3.2 million barrels, the API said.

Jonathan Levinson : 9/21/2005 10:39:37 AM

Ten year notes holding their gains, TNX -6.1 bps at 4.182% and IRX -7.3 bps at 3.452%.

Jonathan Levinson : 9/21/2005 10:33:33 AM

QQQQ breaks 38.72 resistance and now tests the declining 72 SMA at 38.75: Link

Jonathan Levinson : 9/21/2005 10:32:13 AM





Jonathan Levinson : 9/21/2005 10:31:35 AM

Crude oil +1.125 here at 67.325.

Jonathan Levinson : 9/21/2005 10:31:09 AM

From the EIA website:

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) inched lower by 0.3 million barrels from the previous week. At 308.1 million barrels, U.S. crude oil inventories remain above the upper end of the average range for this time of year. Total motor gasoline inventories rose by 3.4 million barrels last week, putting them in the lower half of the average range. Distillate fuel inventories increased by 0.8 million barrels last week, and are above the upper end of the average range for this time of year. Total commercial petroleum inventories rose by 6.8 million barrels last week, and are near the upper end of the average range for this time of year.

Jeff Bailey : 9/21/2005 10:29:49 AM

Swing trade sell short alert ... 1/2 position of Apple Computer (AAPL) $52.72 -0.86% Link here, stop $53.55, target $49.00.

Jonathan Levinson : 9/21/2005 10:28:08 AM

Correction: I wish the exit had been at 39.70. It was 38.70 QQQQ- don't want to alter the timestamp.

Jonathan Levinson : 9/21/2005 10:27:31 AM

3 minutes until the EIA Petroleum report.

Jonathan Levinson : 9/21/2005 10:24:30 AM

QQQQ - Exit Point Alert -

Out QQQQ at 39.70. Resistance is holding at 38.72.

Jonathan Levinson : 9/21/2005 10:22:09 AM

Volume breadth has improved to -2.26:1 for the NYSE, -2.18:1 for the Nasdaq. Price action trying to stabilize but still feels weak.

Jeff Bailey : 9/21/2005 10:22:02 AM

10:00 Internals found at this Link

Jonathan Levinson : 9/21/2005 10:13:21 AM

QQQQ - Entry Point Alert -

Long QQQQ at 38.64, stop 38.61

Jonathan Levinson : 9/21/2005 10:10:57 AM

Volume breadth solidly negative here, -2.31:1 on the NYSE and -2.65:1 on the Nasdaq.

Jonathan Levinson : 9/21/2005 10:09:07 AM

QQQQ's actually in a short cycle upphase here- "corrective" is the word, and so far it doesn't look safely tradeable. Link

Jeff Bailey : 9/21/2005 10:03:20 AM

10:00 Market Watch found at this Link

Jonathan Levinson : 9/21/2005 9:55:17 AM

The Fed has just drained 2.75B via a 2.25B add against the 5B expiring. This drain has boosted the stop out rate to 3.66, still below the 3.75% target rate.

Jeff Bailey : 9/21/2005 9:54:09 AM

Treasuries find strong bid morning after FOMC raises rates 25 bp to 3.75% with shorter-dated 5-year yield ($FVX.X) falling 4.7 bp to 4.003%, 10-year down 5.9 bp to 4.184% and 30-year down 6.1 bp to 4.458%.

Jonathan Levinson : 9/21/2005 9:49:22 AM

Stuck on a call- back in a minute.

Jonathan Levinson : 9/21/2005 9:38:20 AM

There's a bullish Macd divergence against yesterday's low shaping up here, if QQQQ can actually bounce back up- until there, all cycles from weekly down to short cycle are all in downphases. Link

Jeff Bailey : 9/21/2005 9:37:29 AM

Swing trade sell naked calls let's sell four (4) of the Semiconductor Holdrs SMH Oct. $37.50 Calls (SMH-JU) at the bid of $0.30.

SMH $36.00 here.

Jonathan Levinson : 9/21/2005 9:31:33 AM

Volume breadth is -2.12:1 for the NYSE at the open, -1.19:1 for the Nasdaq.

Jonathan Levinson : 9/21/2005 9:26:38 AM

QQQQ holds at the bottom of the expanding wedge pattern, after breaking again below it this AM. With the short, 30 min, 60 min, daily and weekly cycles all in gear to the downside, I'd prefer to hope for a tradeable bounce than to bet on it. A long with a tight stop from an oversold short cycle bottom could be another story, however, which is what I'm watching for- other than that, my first priority is to get a short position we can hold for the daily/weekly cycle downphase.

Jeff Bailey : 9/21/2005 9:23:44 AM

Program Trading Levels ... HL Camp & Company has their computers set for program buying at $+7.08 and set for program selling at $+4.96.

Jonathan Levinson : 9/21/2005 9:09:10 AM










Jonathan Levinson : 9/21/2005 8:55:34 AM

Big drop for ten year note yields, TNX down 5.1 bps at 4.192%. IRX is down 5 bps at 3.475%.

Linda Piazza : 9/21/2005 9:05:34 AM

I will be away from the MM for the open this morning.

Linda Piazza : 9/21/2005 9:05:53 AM

I have received feedback from a reader that I think some others might be feeling, too, labeling me flaky or wishy-washy. Here's my reply, as I think people might need to look a little deeper into my efforts to provide information for all our readers, both bulls and bears.

Thanks for your feedback. I'll take it into consideration. On our site, we often have subscribers who are scalping, swing trading, or position trading the OEX. While one trader may be in a bearish position, another may be in a bullish position. When, long ago, I was a subscriber and not a writer, but still making my own trading positions, I often found myself in a position opposite that being covered by the writers, and I had no feedback as to whether my position was still working. I could make decisions for myself and I do, every day, but I would have liked feedback, since I felt that I was paying for that service. When I was recruited to work for OIN, I vowed that I wasn't going to leave any trader without feedback. That's why you get the bulls want/bears want. However, I'd like you to consider how the day really unfolded yesterday, by looking at some specific posts.

Yesterday's 10:21:56 post commented: "In almost all cases when the OEX tests the boundaries of this particular channel, it's a good idea to take at least partial profit and raise stops on the rest, if not exit the whole position. If you're in a bullish OEX position, you might consider taking partial profit now and racheting up the those stops." Then I went on to lists the drawback of taking such a measure. Go back and look at the OEX chart again, at 10:21. I think you'll find that was almost at the high of the day. It was a good idea to take those profits. I would not have advised a bullish play, and in fact, advised early on that such a play was not looking like a good bet, but I sure knew there were subscribers out there who had been in one, and I sure knew they needed to be taking steps to protect that profit. I was right.

At 10:51:17, I advised that "If you're the kind of trader who likes to hit certain levels with a trial play, then this is one level to test a bearish OEX play, with a stop a quick account-appropriate amount above that triangle's resistance at about 573.05 now." I further advised of the risk the trader was taking, of another last push higher. In the next minute after that post appeared, the OEX traded in a range of 572.35-572.52, so a trader who considered himself or herself to be the kind of trader who accepted that kind of risk would have entered a bearish play somewhere within that range.

At 12:15:57, I warned that "If you're an OEX trader who tried a bearish OEX play after my 10:51:18 post, then you should be aware of potential support approaching from 570.57-571.22. If your intention was just to scalp a point or two, you might consider enacting your plans as that support is approached. If your intention was to hang in, then you would like any bounces to stay beneath 571.79 on 15-minute closes, or at least beneath 572.34-572.78. Pretty specific information again for those traders.

At 1:23:27, I said, "Any who might have tried a bearish play after my 10:51:18 post need to consider whether they'll go ahead and exit the position if the OEX should dip there (15-minute 100/130-ema's) pre-FOMC or hang on." I noted that such traders should be either profitable or breakeven by that point. I said, "Make your decision soon." I went on in a later post to say, "There's no right or wrong decision about holding onto a bearish play entered earlier this morning (as the FOMC decision approached), as that depends on your trading style, your entry, the number of contracts you entered and your account size, for example, and offered further warnings as the decision approached.

At 2:19:20, I advised that the OEX had reached Keltner support at 569.34, "and that's a place where short-term bears might take partial profits, if they haven't already done so." Pretty specific information.

At 2:22:29, I warned where the OEX's triangle boundaries were. No mixed bullish and bearish messages.

At 2:27:03, I warned that if any short-term bears had not yet taken partial profit, "now is a good time to take at least partial profit and ratchet down your stops. Both the OEX and the advdec line are at points that could prompt bounces, but aren't guaranteed to do so. Protect profits and don't let it turn into a loss." At 2:27, the OEX ranged from 569.38-569.62. Again, seems like a good place to have taken partial profits and ratcheted down stops. No mixed messages. No saying, "get out now." No advising that a bullish position was a good idea. Nothing wishy-washy or flaky. The OEX did bounce, almost from the moment of that post, and did rise up to hit the 15-minute 100/130-ema's. In a later post, I'd warned that was where current bears or would-be new bears would want to see the bounce stop, although I wasn't advising new bearish entries, and the OEX did stop right there. I gave feedback as to what bears wanted to see, so they'd know if their plays were still working. They were.

At 3:19:55, I noted the Keltner support at 565.36, saying that the support had already been hit, and said it was a time for bears to protect profit, "but not necessarily yet a time for a bullish play, even for scalpers." I said that I was expecting a bounce to retest the 200-sma or even up toward 568, and said that "bears need to be prepared for either contingency and know what they'll do in either case." In the minute after that post, the OEX ranged from 565.90-565.94, just off the 565.31 LOD. It did subsequently bounce up to retest the 200-sma, reaching 567.02 on the 3:42 candle. Bears did need to be prepared for that bounce and know what they would do.

At 3:44:26, I cautioned that bears "need to make a decision as to whether they'll hold overnight or not." I gave several matters for consideration and ended by saying, "Depending on account characteristics and whether partial profit has been taken, and the amount of cushion on the position, holding overnight might be an okay decision, but I wouldn't do it unless I'd taken at least partial profit."

It's clear that I was guiding bearish traders all day with rather specific information about what to watch out for, what they wanted to happen, and where they might take partial profits, as well as end-of-day decisions. The confusion might come about because I'm also trying to give specific information to bulls who might have guessed wrong pre-FOMC and be trapped in their positions. So, in my attempts to be helpful to all, I might be frustrating those who want only a "Do this now, and do that now," approach, without too much discussion of the risks to be considered with each decision and without any discussion being directed at those who might be in an opposite trade.

Each kind of writer and each kind of commentary has its pros and cons. I've chosen a route that I hope proves helpful to the maximum number of traders while giving rather specific information about rather specific trades. I know traders could have profited from those comments yesterday, but I don't know what kind of trader each reader considers himself or herself to be, and I also hope I provided warnings that encouraged those trapped in a wrong play to get out.

Jane Fox : 9/21/2005 8:24:45 AM

Here is Hurricane Rita's Strike zone. Link

Jane Fox : 9/21/2005 8:23:53 AM

Dateline WSJ Hurricane Rita strengthened early Wednesday into a Category 4 storm, after lashing the Florida Keys and raising anxiety as it headed into the Gulf of Mexico.

Mandatory evacuations have already been ordered for New Orleans and Galveston, Texas, one day after Rita skirted past the Florida Keys as a Category 2 storm, causing minimal damage.

At 8 a.m. EDT, Rita's eye was about 195 miles west of Key West and 790 miles east-southeast of Corpus Christi, Texas. The storm was moving west near 14 mph -- a track that was pulling it away from the Keys and into the Gulf of Mexico

Jonathan Levinson : 9/21/2005 8:18:14 AM




I show front-month natural gas at 13.47 currently.

Jonathan Levinson : 9/21/2005 8:16:05 AM

Although the major services don't list it as a major report, lettuce not forget the EIA Petroleum Inventory report at 10:30.

Jonathan Levinson : 9/21/2005 8:14:03 AM

From the MBA's website:

WASHINGTON, D.C. (September 21, 2005) - The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending September 16. The Market Composite Index - a measure of mortgage loan application volume - was 772.2, an increase of 1.5 percent on a seasonally adjusted basis from 760.6 one week earlier. On an unadjusted basis, the Index increased 11.9 percent compared with the previous week and was up 12.0 percent compared with the same week one year earlier.

The seasonally-adjusted Purchase Index decreased by 2.6 percent to 500.3 from 513.4 the previous week whereas the Refinance Index increased by 7.0 percent to 2353.7 from 2198.7 one week earlier. Other seasonally adjusted index activity includes the Conventional Index, which increased 1.5 percent to 1160.5 from 1142.8 the previous week, and the Government Index, which increased 1.1 percent to 124.1 from 122.7 the previous week.

The four week moving average for the seasonally-adjusted Market Index is up 0.5 percent to 756.7 from 752.7. The four week moving average is up 0.6 percent to 495.9 from 492.9 for the Purchase Index while this average is up 0.4 percent to 2274.3 from 2264.4 for the Refinance Index.

The refinance share of mortgage activity increased to 45.6 percent of total applications from 42.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 29.8 percent of total applications from 28.2 percent the previous week.

Jonathan Levinson : 9/21/2005 8:12:13 AM

Looking at QQQQ's weekly chart, Link , I see that price is testing lower rising bear wedge support at current levels. The oscillator picture is far from bullish, on the cusp of a bearish divergent decline that has 1st bollinger support at 36.43 and a potential bear wedge target in the 34.20 area.

Keene has been discussing "one last wave" to the upside on an Elliot basis, and within the context of a weekly bear wedge, that is certainly possible. But lower wedge support and the August low at minimum need to hold. A strong down day today would be enough to kick off the next overdue weekly cycle downphase.

In the shortest timeframes, there's support as low as 38.82 on an expanding wedge. Link But the 30 and 60 min cycles have rolled over, and there's a good chance that it's going to break. I hate to chase moves, and my methodology is based on fading over-extended moves using keltner channels as a proxy for the oscillators we track. The ideal entry was yesterday on the failure at 39.54, confirmed by the break at 39.45 as I mentioned just before 11AM yesterday. I was at an appointment and couldn't post the official entry when the break came, but those who entered on the 39.45 break are well-positioned. Those who did not can either enter on a break below 38.80, or wait for the top of the next bounce to short. With the weekly and daily cycles getting into gear to the downside, we're entering "short all rallies" mode.

Jonathan Levinson : 9/21/2005 8:02:55 AM



Jonathan Levinson : 9/21/2005 7:43:10 AM

Equities are lower, ES trading 1226.5, NQ 1588.5, YM 10518 and QQQQ -.08 at 38.85. Gold is trading 469.90, silver 7.36, ten year notes +15/64 at 110 51/64, crude oil +1.175 at 67.375 and natgas +.28 at 13.31.

There are no major economic reports scheduled for today.

Linda Piazza : 9/21/2005 7:03:17 AM

Good morning. The Nikkei kept charging higher, up into the next resistance zone after passing the psychological 13,000 barrier. Other Asian markets were mixed, with more closing lower than higher. European markets turn lower this morning. As of 6:56 EST, gold was unchanged at $470.00, and crude, up $1.15 to $67.35. Our futures were lower at that same time. More detail about Asian and European markets follows in succeeding paragraphs.

This week, a Bank of Japan report warned about hitches in the economic recovery that could be caused by a low birth rate and fiscal deficits but had more upbeat things to say about the effects of corporate restructuring and global economic conditions. A newspaper column devoted to watching the Bank of Japan speculated that the Nikkei could reach 14,000, the level of the Nikkei when the current easy monetary policy was adopted. The closer approach to that previous level heightens the impression that it's the time to talk about ending that easy monetary policy and solving fiscal deficits, the writer speculated. Several Bank of Japan members have been speaking out lately in favor of ending that easy monetary policy, and last night was no exception.

At the open last night, the Nikkei charged right up into the 13,180-13,225 resistance zone identified by some as important, but it couldn't hold those levels without dipping briefly into negative territory and recharging. It eventually was to reach an intraday high of 13,235.42, but couldn't hold onto that, either, and closed the day off that high, but 48.00 points or 0.37% higher, at 13,196.57. Volume was high. Investors drove the prices of some bank stocks higher in early trading after the government reported that Tokyo land prices rose for the first time in 15 year, with Bloomberg reporting that figure. Many property developers' stocks closed higher. Exporters dropped in early trading, however, and Sony was to lose 0.5% at the close. Sony is slated to reveal a restructuring plan Thursday.

Most other Asian markets declined. The Taiwan Weighted lost 0.62%, but South Korea's Kospi gained 0.48%. Tuesday, the bourse had closed at a record high, and built on that high Tuesday. Singapore's Straits Times dropped 0.38%, and Hong Kong's Hang Seng lost 0.12%. China's Shanghai Composite fell 2.03%. Some articles attributed the loss to speculation that the domestically listed Merchants Bank would join in a stock-reform program that's not popular with investors.

European markets decline this morning, impacted by crude costs and the Fed decision yesterday, according to some sources. Europe also had economic data of its own to ponder, however, and that view that they're always reacting to U.S. developments always seems a bit egocentric to me. Of course, in these days, the global issues must be considered, too, but perhaps not always given preeminence over a region's own developments. For example, July's current account for the twelve EU countries showed a much wider-than-anticipated deficit, the widest in more than four years. A decrease in the goods surplus at least partly accounted for the downside surprise, with a steeper-than-expected widening in the income balance also responsible. This morning, the EU has declared that the U.K. is in violation of its budget deficit guidelines. The Bank of England's Money Policy Committee's September minutes were released. The vote for unchanged rates was unanimous, as was the agreement about inflation risks. The minutes noted the inflationary impact of higher crude prices and also detailed weakness in consumption and business investment. France's July and August consumer spending data showed more cheerful information, noting gains of 1.2% and 1.9% month over month, respectively, much higher-than-expected gains. Year-over-year rates were 3.6% and 5.7%, respectively. In Germany, Bundesdank has revised higher July's factor orders estimate to 4.1% month over month, from the previous 3.7% number. This upward revision in the orders number suggests that industrial production could have continued its increase into more recent months. Domestic demand is still viewed as flat, with foreign demand beefing up the orders number.

European chemical stocks tended to decline. Stock-specific news included a leap higher in the U.K.'s Aegis, with the company announcing a preliminary bid, with some then speculating that the bid might be from Havas, with the plan to perhaps create a joint venture of the media buying operations of the two entities. Another company seeing a surge in its stock prices was Biofocus after that company received an offer to buy the company. Spain's retailer Inditex gained after its earnings report, and the U.K.'s Woolworth's Group gained after reporting an improvement in sales since July at its main retail stores. Deutsche Bank wasn't among Europe's gainers, though, dropping after J.P. Morgan trimmed the bank's rating to a neutral one from its former overweight rating. J.P. Morgan reduced its rating of the European investment banking sector to a neutral rating, too.

As of 6:52 EST, the FTSE 100 was lower by 34.50 points or 0.64%, at 5,381.90. The CAC 40 was lower by 52.00 points or 1.15%, at 4,479.80. The DAX was lower by 64.31 points or 1.30%, at 4,898.55.

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