Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
OI Technical Staff : 10/3/2005 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The Market Monitor has been archived.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.

Linda Piazza : 10/3/2005 5:18:44 PM

Jonathan, I was away from the computer and missed your post. Have a joyous holiday and a happy and properous New Year. Jeff and I will take care of the options side of the Monitor.

Jeff Bailey : 10/3/2005 5:16:49 PM

Mississippi ... Senate OKs bill to allow casinos to move onshore.

Jeff Bailey : 10/3/2005 4:39:44 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/3/2005 4:33:16 PM

Closing Internals found at this Link

Jane Fox : 10/3/2005 4:11:24 PM

Have a great New Year Jonathan and C U on Wednesday.

Jonathan Levinson : 10/3/2005 4:10:53 PM

I will be out tomorrow, and unable to watch the QQQQ short play. The stop remains at breakeven, 39.74. I would ideally seek to cover at a 60 min cycle bottom, if the 60 min cycle ever rolls over. If the action starts to feel bottomy to you tomorrow, remember that you can't go wrong taking a profit. Hopefully, however, this will develop into a swing position.

Jeff Bailey : 10/3/2005 4:09:44 PM

Current OPEN MM Profiles found at this Link ... Today's Activity ... No opening trades were profiled. I did establish a stop on the Semiconductor HOLDRs SMH Oct. $37.50 Calls (SMH-JU) for $0.85. (see SMH Option Chain 12:32:36) with higher VIX.X and VXN.X.

Jonathan Levinson : 10/3/2005 4:07:13 PM

Thanks to all for the New Year's wishes and Shana Tovah to all.

Linda Piazza : 10/3/2005 4:03:27 PM

I had two likely scenarios for today. I thought the OEX would likely honor Friday's doji with either another doji day or an actual pullback, as it often does. Today saw the pullback version. The OEX did not, however, close below the midpoint of Thursday's range, so I don't consider it as having produced a valid evening-star formation yet, although the day's candle was anything but bullish.

Jonathan Levinson : 10/3/2005 3:53:58 PM

Headline:

U.S. RETAIL GASOLINE PRICES UP 12.5 CENTS TO $2.928: DOE

Linda Piazza : 10/3/2005 3:53:29 PM

What should you do about end-of-day decisions if you entered an OEX bearish play right after the ISM? I'd take at least partial profit this afternoon, if you haven't already done so. Then, whether you hold overnight on the rest of the position or take full profit depends on your account size, the number of contracts in your position, how well you can sleep when holding an iffy position overnight, and a multitude of other factors. While today was anything but bullish, as I expected, the OEX may be ending the day perched right on those 30-minute 100/130-ema's that have been so important in recent trading patterns, and so be ready for either a bounce from them or perhaps even a gap below them tomorrow morning. Charts aren't clear yet. Bears can point to potential H&S's, and say they're bearish signs, and bulls can point to them and say that bears didn't have the strength to confirm them.

Jonathan Levinson : 10/3/2005 3:50:45 PM

QQQQ's stuck in a weak 30 min cycle downphase currently, while the 60 min cycle is trending, still in overbought territory. The daily cycle upphase still looks strong, and continues to cause the 60 min cycle to trend. SO far, there have been no dips to buy in that daily cycle upphase, with the intraday cycle downphases a no-show today.

Linda Piazza : 10/3/2005 3:49:30 PM

For the last four 240-minute periods, including the current one, the OEX's candle bodies have formed between the 38.2% retracement of the drop off the 9/09 low and the 50% retracement of that decline. Those Fib levels are at about 563.24 and 567.14, respectively. Also, the 240-minute 100/130-ema's at 566.93 and 567.03 have been capping the top of those candle bodies. Candle shadows have pierced those levels, but mostly formed within those two Fib levels. When seen on the 240-minute chandle, this could be viewed as a potential "p" accumulation pattern, but when viewed on other charts, it looks like nothing so bullish. However, a move below the 240-minute 21-ema at 564.90 would look significant if it's sustained. That would probably need to be confirmed by a 30-minute close beneath the 30-minute 100-ema at 564.73. Right now, no breakout either direction.

Jonathan Levinson : 10/3/2005 3:40:11 PM

Headlines:

[GE] GE REAFFIRMS Q3, FY05 EPS FORECAST

[GE] GE STILL SEES FY05 EPS AT $1.80-$1.83

[GE] GE STILL SEES Q3 EPS AT 43C-44C

GE trades -.33 at 33.34 here, 14 cents off the intraday low.

Linda Piazza : 10/3/2005 3:41:59 PM

The SOX hit that potential support I mentioned in my 3:24:39 post (except that there was a typo in none of my numbers). It's attempting to bounce from that support at 478.01-479.11 on 30-minute closes. It ended on this same Keltner support on Friday, before bouncing from it this morning, so bears would really like to see that support fail by the close. SOX at 479.73 as I type.

Jeff Bailey : 10/3/2005 3:29:08 PM

Semiconductor Index (SOX.X) 478.90 +0.75% ... slips back to DAILY R1.

Linda Piazza : 10/3/2005 3:28:29 PM

RLX dropping toward the neckline for its newest, strung-out-sideways H&S, with the neckline at about 438, and with the RLX at about 438.26 as I type.

Jonathan Levinson : 10/3/2005 3:27:59 PM

The SOX is breaking to a new range low. Far off the day low, but a new low for the range. It's on that basis that I'm not going to change the stop on or close the QQQQ short. If the SOX is leading, then the Qs should break 39.54.

Linda Piazza : 10/3/2005 3:27:41 PM

Advdec line dropping again, toward the support band that held it up most of the day.

Linda Piazza : 10/3/2005 3:24:39 PM

SOX dropping back down to 30-minute Keltner support at 478.26-468.89. SOX at 479.69 as I type.

Linda Piazza : 10/3/2005 3:23:07 PM

I could just repeat any number of posts I've made today: RLX still at an appropriate right-shoulder level, OEX still consolidating above the 30-minute 100/130-ema's, still a possibility for a doji day or an actual down day for the OEX, depending on the RLX, the advdec line and the OEX's action around those 30-minute 100/130-ema's.

Jonathan Levinson : 10/3/2005 3:18:54 PM

The bulls tried and failed to regain the morning high, missing our stop by a penny. Volume has dropped back to nothing on QQQQ, however, and whatever forces are battling it out today have clearly taken another breather, leaving the price to drift aimlessly in its range: Link

Jeff Bailey : 10/3/2005 3:18:31 PM

03:00 Internals found at this Link

Linda Piazza : 10/3/2005 3:13:20 PM

Advdec line still trying to climb toward next resistance, now just above 800, with the advdec at 691.

Linda Piazza : 10/3/2005 3:07:11 PM

The OEX has been consolidating long enough now that the right shoulder could either be completed any time or the formation invalidated any time. A push up toward the 567-567.20 area could begin at any time and is perhaps beginning as I type. Keltner-wise, the OEX has resistance at 566.79 and 567.80 on 15-minute closes.

Jeff Bailey : 10/3/2005 3:02:53 PM

03:00 Market Watch found at this Link

Jonathan Levinson : 10/3/2005 2:57:54 PM

Today's volume is solid, though lighter on QQQQ. Volume should drop off somewhat tomorrow for Rosh Hashanah. I will be out for the Jewish New Year.

Jonathan Levinson : 10/3/2005 2:54:26 PM

Volume breadth is up to +1.39:1 on the NYSE, +1.86:1 on the Nasdaq.

Jonathan Levinson : 10/3/2005 2:53:54 PM

QQQQ has broken its range high and is now 3 cents off the session high, 1 cent off our stop at breakeven. This is on the heels of a buy program, and despite a nice entry, you can't fight city hall. All intraday cycles are maxxed out except for the short cycle, but once again, this doesn't appear to be about cycle setups today. Link

Linda Piazza : 10/3/2005 2:50:49 PM

Advdec line testing the resistance that has held it back since about 10;30, with that at about 545 on five-minute closes. The advdec line is trying to press above that, up to 800-ish next resistance. It's at 583 as I type.

Jeff Bailey : 10/3/2005 2:49:35 PM

Little buy program kicking in here.

Linda Piazza : 10/3/2005 2:48:49 PM

The advdec line has just not been able to move either direction, mired in support and resistance. The RLX's pattern is still in keeping with a possible H&S on the 15-minute chart, with the left shoulder beginning its formation Friday morning, the head at today's high and the right shoulder perhaps forming now. The neckline is now at about 437.90, with the RLX at 438.64. The RLX has to move to the downside before the OEX will be likely to do so.

For the OEX, I'm still thinking that a possible doji day or actual downturn fits best, but bears won't like to see the doji because that means a bounce back toward the open . . . which may be beginning as I type.

Linda Piazza : 10/3/2005 2:43:44 PM

If bears can't push the OEX below the 30-minute 100/130-ema's, then bulls are going to try to run it up.

Jeff Bailey : 10/3/2005 2:38:20 PM

iShare Brazil (EWZ) $33.70 +1.14% Link ... nearing its PnF chart's bullish vertical count of $34.00.

Jeff Bailey : 10/3/2005 2:35:57 PM

Global Trade ... Brazil posting a $4.33 billion foreign trade surplus in September. Year-to-date foreign trade surplus currently at $32.67 billion.

Jonathan Levinson : 10/3/2005 2:25:41 PM

Volume breadth is down to -1.06:1 on the NYSE, and +1.62:1 on the Nasdaq. Each time it's reached these levels today, a bounce has followed within the sideways range.

Jonathan Levinson : 10/3/2005 2:23:24 PM

Crude oil is not bouncing into the Nymex close, currently lower by .05 at 65.20, off a low of 64.975.

Jonathan Levinson : 10/3/2005 2:22:48 PM

QQQQ continues to respect that 10 cent range in place since 10AM, the intraday cycle action reduced to the wavelet's ups and downs. No cycle direction is evident today in any other intraday timeframe, and the first directional clue we can expect will be a break of the session low or the 39.67 range high, confirmed by a break above 39.75: Link

Linda Piazza : 10/3/2005 2:16:50 PM

The RLX is hesitating at an appropriate right-shoulder level, but it's far from having confirmed its possible new H&S by falling beneath a slightly rising neckline now at about 437.85, with the RLX now at 438.89.

Jeff Bailey : 10/3/2005 2:16:09 PM

FedEx (FDX) $86.21 -1.05% ... slips to session lows. Sets up for test of correlative WEEKLY Pivot ($85.94) and DAILY S2 ($86.01).

Jeff Bailey : 10/3/2005 2:13:05 PM

02:00 Internals found at this Link

Linda Piazza : 10/3/2005 2:06:49 PM

Advdec line isn't climbing or breaking free. It's still mired between support and resistance. The RLX hesitated at the 439.50-440 zone that marks one appropriate level for a right shoulder for a H&S on its 15-minute chart (with the head being a H&S of its own). OEX dropping back toward the important 30-minute 100/130-ema's at 564.67 and 564.88. The 38.2% retracement of the drop off the 9/9 high is also at 565.24. OEX at 565.27 as I type.

Jeff Bailey : 10/3/2005 2:02:29 PM

02:00 Market Watch found at this Link

Jeff Bailey : 10/3/2005 1:59:49 PM

Biotechnology Index (BTK.X) 661.42 +1.99% ... new 52-weeker again today. Session high of 663.10 just under its WEEKLY R2 (663.46).

Semiconductor Index (SOX.X) 481.69 +1.34% ... has tested its WEEKLY R1 of 482.67.

QQQQ $39.65 +0.48% ... still no test of its WEEKLY R1

Linda Piazza : 10/3/2005 2:00:09 PM

Here's the right-shoulder bounce attempt on the OEX, that I mentioned should begin within the next 30 minutes, in my 1:46:50 post. Keep an eye on the RLX to judge whether the OEX is likely to round down into a right shoulder or invalidate that formation, as the RLX has one on its 15-minute chart, too, and often leads the OEX.

Linda Piazza : 10/3/2005 1:50:00 PM

RLX rising. Watch for potential first resistance in the 439.50-440 zone. RLX at 439.05 as I type. Don't count on the OEX falling at all or much while the RLX climbs.

Linda Piazza : 10/3/2005 1:47:28 PM

Symmetry suggests that it's about time for the OEX to rise toward 567 if it's going to do so, beginning sometime over the next half hour or so. Charts don't give many clues as to the next direction, though.

Jonathan Levinson : 10/3/2005 1:45:05 PM

QQQQ's still chopping sideways-up within the now-sideways 30 and 60 min channels. Ten year notes are holding their losses, but the drop in crude oil and natgas seem to be adding strength to equities. QQQQ's volume breadth has been running steadily in the green just below 2:1 for advancing shares, with the TRINQ at neutral-bullish. 2-day 100 tick QQQQ chart at this Link

Jeff Bailey : 10/3/2005 1:45:05 PM

Royal Dutch Petroleum (RD) $62.80 ... shares have been halted today as the New York Stock Exchange reviews the company's listing.

In a press release Monday, the exchange said the moves come in view of Royal Dutch's voluntary delisting from the Euronext Amsterdam on Friday and its pending application with the Securities Exchange Commission to withdraw its New York registry shares from listing on the NYSE.

Jonathan Levinson : 10/3/2005 1:35:05 PM

Session low for crude oil here, -1.05 at 65.20. Natgas is up 4 cents at 13.96.

Linda Piazza : 10/3/2005 1:32:28 PM

OEX stuck between Keltner support and resistance, its range continuing to be narrow. It's beginning to look as if it's time for either an upside or downside breakout, but it hasn't happened yet. Again, if it's to the upside, bears want to see the OEX stop at the right-shoulder level just over 567, although they'd actually prefer to see resistance kick in earlier.

Jeff Bailey : 10/3/2005 1:31:06 PM

Sun Microsystems (SUNW) $4.18 +6.36% ... Stock has moved to the top of today's most actives where intra-day action had the stock popping from $3.95 at the 11:00 AM mark on news that it and Google (GOOG) $317.46 +0.31% will hold a press conference tomorrow to discuss a new "collaborative effort" between the companies. Sun Microsystems' Chief Executive Scott McNealy and Google CEO Eric Schmidt are scheduled to discuss the plans at the Computer History Museum in Mountain View, Calif. Sun spokespeople wouldn't comment on what would be discussed at the meeting.

Jonathan Levinson : 10/3/2005 1:21:18 PM

Stepping away for five minutes.

Linda Piazza : 10/3/2005 1:17:12 PM

This is still part of the consolidation that the OEX appeared to need to do for a while longer, based on symmetry with the left shoulder of its potential H&S and based on the RLX's refusal to follow through with the downside after confirming its five-minute H&S. The RLX's minimally confirmed H&S may also have been the head of a larger H&S, with the right shoulder still to be finished by a climb toward 439.50-440.00. The eventual outcome is undecided as yet, but I still lean toward either a doji day or a down day.

Jeff Bailey : 10/3/2005 1:15:26 PM

01:00 Internals found at this Link

Jonathan Levinson : 10/3/2005 1:12:24 PM

QQQQ is back above the 72 SMA here, with a wavelet upphase entering overbought territory as the short cycle downphase stalls out. The 30 and 60 min cycle channels never turned down, and the short cycle downphase has generated pathetic traction after its auspicious start. Our short stop remains at breakeven, 39.74, and at this point I have no clue whether it will be hit or not. Feel free to take whatever bear profits are on the table here. For the time being, I'm leaving the stop where it is just in case those longer intraday cycles actually decide to assert themselves. Link

Linda Piazza : 10/3/2005 1:11:33 PM

The OEX is testing Keltner resistance at 565.64 on 15-minute closes.

Jonathan Levinson : 10/3/2005 1:05:35 PM

Foreign central banks took 8.1B of the 32B just auctioned. The 13-week bills sold for 3.525% yielding 3.606%, with a bid to cover ratio of 2.07. The 26 week bills sold for 3.87% yielding 4.002%, with a bid to cover of 2.01. Currently, the 13-week bill rte is 3.475%, TNX 4.375%.

Jeff Bailey : 10/3/2005 1:04:43 PM

01:00 Market Watch found at this Link

Linda Piazza : 10/3/2005 1:04:27 PM

No follow-through on the RLX, and, until there is, bounce potential remains on the OEX.

Jonathan Levinson : 10/3/2005 1:01:06 PM

Volume breadth is -1.02:1 here on the NYSE, +1.62:1 on the Nasdaq.

Linda Piazza : 10/3/2005 12:59:11 PM

The RLX is seeing absolutely no follow-through after confirming the H&S on its five-minute chart, and that's not what bears want to see, and that includes OEX bears. It's still just retesting the neckline, but it needs to fall away, and preferably fall away soon.

Jonathan Levinson : 10/3/2005 12:51:53 PM

The Treasury is auctioning 17B of 3 month bills and 15B of 6 month bills. The results are due in the next 10-15 minutes.

Linda Piazza : 10/3/2005 12:45:44 PM

Unfortunately, I still do not see firm evidence that the OEX is through consolidating today or possibly forming a right-shoulder for a H&S, perhaps by rising again toward 567. It may be through, but neither the RLX, the OEX or the advdec is giving me any confirmation yet. Bounce potential persists and symmetry would suggest that it needs to spend some more time on that right shoulder anyway.

Jonathan Levinson : 10/3/2005 12:39:16 PM

Session low for QQQQ here, testing the lower end of this morning's range off the lows as the short cycle indicators roll back over. No sign of downside from the 30/60 min channels, but with price now below the 72 SMA at 39.62, it should just be a matter of time. Link

Linda Piazza : 10/3/2005 12:39:06 PM

Bears want follow-through here, or there's danger of another bounce attempt. OEX now closer to its 30-minute 100/130-ema's at 564.62 and 564.85, respectively. OEX at 565.09 as I type. This is a test and if bears can push the markets lower, bulls will give it a try instead.

Jeff Bailey : 10/3/2005 12:32:36 PM

Semiconductor HOLDRs (SMH) option chain shorted by month, then open interest at this Link

Linda Piazza : 10/3/2005 12:31:59 PM

The OEX is now being ringed by Keltner support and resistance, too, narrowing its range prior to a breakout one direction or the other. If that breakout is to the upside, bears want to see it find resistance below this morning's high, in keeping with a potential H&S on its 15-minute chart. It's actually got two on that chart, but one, forming since about midday on Friday, could possibly be just the head formation of a larger H&S. That happens sometimes.

Jonathan Levinson : 10/3/2005 12:31:19 PM

Volume breadth +1.15:1 on the NYSE, +1.68:1 on the Nasdaq.

Linda Piazza : 10/3/2005 12:25:17 PM

The RLX currently tests the neckline for its H&S on the five-minute chart. Bears now want to see a precipitous drop, with follow-through and not a quick bounce. RLX at 437.66 as I type.

Linda Piazza : 10/3/2005 12:23:59 PM

The advdec line is ringed now with support and resistance. Bears would like to see it break to the downside again. They'd like to see the OEX push beneath the 30-minute 100/130-ema's, at 564.61 and 564.61, too, but it's also possible that the OEX could consolidate for up to several more hours before it decides on final direction, bouncing between those averages and the 50% retracement of the drop off the 9/09 low, at about 567.14.

Jeff Bailey : 10/3/2005 12:19:32 PM

12:00 Internals found at this Link

Jonathan Levinson : 10/3/2005 12:17:36 PM

QQQQ update at this Link with price resting on the 72 SMA after drifitng sideways on light volume off its low. This is too extended to be a bear flag on its own merits, though the oscillator picture continues to suggest downside from here. Very tricky morning so far.

Linda Piazza : 10/3/2005 12:14:26 PM

The RLX needs to curl on down and confirm the H&S on its five-minute chart or else the right-shoulder will extend so far to the side that it will be invalidated. The neckline is now at about 437.95. The RLX is currently at 438.67.

Jeff Bailey : 10/3/2005 12:10:25 PM

12:00 Market Watch found at this Link

Jeff Bailey : 10/3/2005 12:07:47 PM

QQQQ short interest did slip from 10-month high of 221.8 million shares to 207.2 as of 09/15/05.

The QQQQ closed at $39.16 on 09/15/05.

Jeff Bailey : 10/3/2005 12:03:20 PM

Naked call establish stop alert ... for the four (4) Semiconductor HOLDRs SMH Oct. $37.50 Calls (SMH-JU) at $0.85. Currently $0.70 x $0.75.

SMH $37.57 +1.70% ....

SOX.X $482.34 +1.47% ...

Jeff Bailey : 10/3/2005 11:59:24 AM

QQQQ $39.63 +0.43% ... Technical note: this morning's gap higher open of $39.54 came right at it 09/20/05 FOMC session high of $39.54.

This action, should it persist will way heavily on bearish sentiment in my opinion, or it should on some as it now sets up the possibility for a short squeeze.

Linda Piazza : 10/3/2005 11:55:52 AM

The RLX has neither confirmed nor invalidated that H&S on its five-minute chart. Neckline now at about 437.65. RLX currently at 438.91.

Linda Piazza : 10/3/2005 11:54:40 AM

Advdec line coming down to retest support that held earlier, from 200-320, with the advdec line at 441 as I type. Further support down to -150.

Jonathan Levinson : 10/3/2005 11:44:09 AM

QQQQ's 60 min cycle has rolled over from deep in overbought territory, while that weird 30 min upphase that kicked off at Friday's close has yet to turn, also deep in overbought territory. The short cycle has turned back up, also overbought. Even the little wavelet cycle is overbought. I suspect that this unison of overbought signals will mean little today, as the buying off that premature low has a strange feel to it- but for the moment, I'm holding the short from 39.74 with a stop at breakeven. We may get stopped out, but I'm not buying a setup that's overbought in all the intraday timeframes. Link

Jeff Bailey : 10/3/2005 11:35:00 AM

Exxon Mobil (XOM) $62.86 -1.07% ...

Linda Piazza : 10/3/2005 11:35:10 AM

The advdec line is at least temporarily being stopped at the first resistance band it encounters, just below 850 and down to 700, with the advdec line at 652 as I type, QCharts value. So far, so good, but I would think the OEX would need more of a right-shoulder building exercise than it's had so far--at least another hour or so. The RLX has a potential H&S on its five-minute chart, though, with a head at this morning's high and right shoulders just under 440, and slightly rising neckline at about 437.50. If that gets confirmed and the RLX sees follow-through, the OEX might drop, too. Watch out for a potential invalidation of that RLX H&S, though. The RLX has not firmly erased its bounce potential yet, and it's a sneaky thing that often strikes to the upside when you least expect it.

Jeff Bailey : 10/3/2005 11:34:36 AM

Power restored to Exxon Mobil's Beaumont refinery ... DJ - Entergy saying power to Exxon Mobil's Beaumont refinery was restored on Sunday.

Jeff Bailey : 10/3/2005 11:32:47 AM

Delphi Trust I 8.25% (DPH-A) $8.60 -6.62% ...

Jeff Bailey : 10/3/2005 11:32:07 AM

General Motors (GM) $31.05 +1.43% ...

Jeff Bailey : 10/3/2005 11:31:42 AM

Delphi (DPH) $2.86 +3.62% ... Citigroup raises probability of bankruptcy ... DJ - Citigroup has raised the probability that Delphi Corp. (DPH) will go bankrupt to 60% from 40% given the lack of a restructuring plan from its biggest customer, General Motors (GM), and the United Auto Workers union.

Analyst Jon Rogers cut his price target on Delphi shares to $2 from $4 and reiterated his sell rating.

He said that if Delphi is restructured through GM and the UAW concessions, the stock would be worth $6. But if the company files for bankruptcy, the shares will have no value.

Linda Piazza : 10/3/2005 11:27:25 AM

RLX bouncing again, back up to that same Keltner line currently at 438.76, the line that it tried to cling to earlier today. Bears would like to see that hold on 15-minute closes, with the RLX now at 438.86 and so a little above that line. The previous three 15-minute periods, it did hold as resistance. Next resistance at 440.72 on a Keltner basis, with that near the 200-sma and -ema's.

Jonathan Levinson : 10/3/2005 11:27:11 AM

Crude oil is up to a .425 cent loss at 65.825, off a low of 65.50. Natgas is up .145 at 14.065, off a low of 13.88.

Jonathan Levinson : 10/3/2005 11:19:28 AM

QQQQ is sliding sideways and GOOG is returning to last week's highs. This action is countercyclical, but whatever else it is, it's not bearish. Link

Linda Piazza : 10/3/2005 11:19:19 AM

OEX picture: The OEX rises into next Keltner resistance at 566.10 on 15-minute closes, with the OEX at 565.85 as I type. OEX bears would like to see that resistance hold, but the symmetry of the potential H&S suggests that 567-567.20 could be tested.

Jeff Bailey : 10/3/2005 11:18:54 AM

11:00 Market Watch found at this Link

Tab Gilles : 10/3/2005 11:19:04 AM

20+ Year Treasury Bond Fund Ishares (TLT) 50-ema support broken next level $91. Link

Linda Piazza : 10/3/2005 11:12:46 AM

Despite the OEX's so-far-tepid bounce, OEX bears might be encouraged by the RLX's continued decline. It's dropping further into potentially strong support, however, from 435.95-436.57, with the RLX at 437.78 as I type. That support looks strong enough to bounce the RLX or at least steady it for a time, at least from this vantage point.

Jonathan Levinson : 10/3/2005 11:11:01 AM

Price has flatlined here, and I suspect that the cycle oscillators are just secondary at this point: Link

Tab Gilles : 10/3/2005 11:07:03 AM

As per 9/30 2:08 PM. Friday I exited the 1/2 position via UltraShort OTC (USPIX) $16.30 that was entered on 9/23 @ $16.90 for a 3.5% loss; (see 9/23 6:44PM post). Entered 1/2 position long via UltraOTC (UOPIX) @ $23.56. This trade is based on the daily charts of $NDX, $NASI. Link Link

Weekly $NASI chart has not signal long yet, thus the longer term signal is still bearish. Since August the USPIX has traded in a tight range. Link

This leads me to believe that ultimately there maybe one more bear-cleansing rally left in this market before any major downside. Thus playing this 1/2 long position now. Keep an eye on the $NDX 50-ma.

Linda Piazza : 10/3/2005 11:04:34 AM

Not much of a bounce yet on the OEX or the advdec line, but both are still trying to steady and the OEX pushes up again as I type. All bears have had an opportunity to take partial profit if they wanted to do so, and now it's a matter of waiting out the bounce attempt and keeping those stops set at a level appropriate to you, adhering to them if hit.

Jeff Bailey : 10/3/2005 11:03:23 AM

11:00 Market Watch found at this Link

Jonathan Levinson : 10/3/2005 11:00:09 AM

Volume breadth -1.08:1 on the NYSE, +1.41 on the Nasdaq.

Linda Piazza : 10/3/2005 10:57:11 AM

The advdec line trying to bounce. The RLX is, too, as is the OEX from just above the 30-minute 100/130-ema's, and from the location of the 38.2% retracement of the decline off the 9/09 high. Predictable bounce levels for all. If the bounce continues, OEX bears want to see Keltner resistance at 566.40 hold on 15-minute closes. If that doesn't hold, they want to see the 567.14 level that's the 50% retrace of that drop off the 9/09 high hold as resistance.

Jonathan Levinson : 10/3/2005 10:55:04 AM

Possible sign of trouble for QQQQ bears is that the wavelet cycle downphase reversed from a higher low. Our stop remains at 39.74: Link

Linda Piazza : 10/3/2005 10:48:49 AM

OEX bulls who bought Friday's test of the 30-minute 100/130-ema's were rewarded this morning, and so I would be surprised if there wasn't a bounce attempt beginning anywhere from the current 565.25 OEX level to the 100-ema at 564.54. I would not advise new bullish entries here--that's not what I'm saying--but here's the place for nervous bears to take a first partial profit and lower stops.

Jeff Bailey : 10/3/2005 10:46:14 AM

School Specialty (SCHS) $39.67 -18.67% ... sharply lower on news that deal between company and privately held Bain Capital Inc. (BCI.XX) won't close, as anticipated, during the week beginning Oct. 3 due to a matter of financing. School Specialty said Banc of America Securities, J.P. Morgan Securities and Deutsche Bank Securities terminated an agreement for them to buy $350 million in senior notes, which LBW Holdings Inc. intended to use to pay a portion of the School Specialty purchase price ($49 per share in cash). School Specialty said the "drop dead" date for the merger agreement is Oct. 31.

Linda Piazza : 10/3/2005 10:44:10 AM

The OEX approaches an appropriate level, down to the 30-minute 100/130-ema's at 564.55 and 564.81, from which it could form a neckline and rise up into a right shoulder for a potential H&S. This occurs as the advdec line approaches potentially strong support, too. On a Keltner basis, the support the OEX currently tests doesn't look particularly strong yet, although 564.40 may be a bit stronger, but keep this right-shoulder bounce on your radar screen as you make decisions about your OEX bearish positions. The OEX is not yet at the channel line at which it's usually advisable to take all or partial profits. That's at 563.06 currently, but that doesn't mean that it's not okay to take partial profits at any time if you are not willing to weather a potential bounce.

Jonathan Levinson : 10/3/2005 10:41:26 AM

QQQQ bounced to a lower high, and the wavelet cycle has just completed an upphase. It should begin to roll back over, which would confirm the short cycle downphase and kick off a 30 min cycle downphase as well. The key level is at 39.54, the site of the rising 72 SMA: Link

Linda Piazza : 10/3/2005 10:40:58 AM

Advdec line fell through another level of potential support, but now it drops toward the strongest faced yet, at about -150 to +200. It's at 439 as I type. Bears would love to see the advdec line plummet right through that potential support level, but do need to be careful for bounce potential now or for a steadying, at least.

Jonathan Levinson : 10/3/2005 10:40:04 AM

Ten year note yields remain very firm as ZN bond futures tread water at session lows, TNX +5.6 bps at 4.384%, a 1.29% increase today. IRX is up .5 bps at 3.475%.

Jeff Bailey : 10/3/2005 10:38:30 AM

Energy Secretary saying U.S. stands ready to tap SPR or heating oil reserve.

Linda Piazza : 10/3/2005 10:36:09 AM

I still don't believe that the RLX has dropped far enough to erase its bounce potential, and any RLX bounce is likely going to bounce the OEX. It keeps trying to cling to the Keltner line currently at 439.16. It's below it now, but it keeps dipping below it and then trying to bounce right back to it. So, I think RLX bulls are struggling, but bears just haven't yet won the day.

Jonathan Levinson : 10/3/2005 10:33:52 AM

Volume breadth +1.14:1 on the NYSE, +1.61:1 on the Nasdaq.

Linda Piazza : 10/3/2005 10:33:03 AM

RLX dropping again. That's good, but OEX bears want to see it continue to drop.

Keltner look at the OEX. It currently looks vulnerable to 565.30-565.68, where it will find potential support. Bears want to see 566.67 hold on 15-minute closes if there should be a bounce, to maintain that next Keltner target.

Linda Piazza : 10/3/2005 10:31:24 AM

Advdec line dropping to the next level of potential support, at 700-760, with the low during the previous 5-minute period at 786. Next support near 200-500, but strongest at about -150. Now at 756 by QChart's value.

Linda Piazza : 10/3/2005 10:28:35 AM

The OEX has its 60- and 30-minute 100/130-ema's below it to provide support. The 60-minutes are a little above the 30-minutes, but the 30-minutes have ben more important to watch lately. They're at 564.53 and 564.71, respectively, with the OEX at 566.26. Watch for a potential bounce from just above those averages, if one hasn't begun before then, and for a potential move into a right shoulder for a possible H&S. The right-shoulder level would be at about the 50% retracement of the drop off the 9/09 high, with that Fib level at about 567.14.

Linda Piazza : 10/3/2005 10:23:44 AM

Advdec line still dropping, as bears want to see. It's dropping toward support that appears strongest at about -150, but that begins higher, at the 1000 level being tested now. The advdec line is at 949 as I type, QCharts value. Bounce potential has not been erased yet, but so far, so good for a bearish play. Now if only the RLX would cooperate, which it's not doing yet in a particularly reassuring form.

Jonathan Levinson : 10/3/2005 10:21:22 AM

Ten year note yields are up to a 5.3 bp gain here at 4.381%, and oil and natgas hold their gains as well. QQQQ is bouncing from 72 SMA support at 39.51, the current session low: Link

Linda Piazza : 10/3/2005 10:20:53 AM

The RLX is dropping low enough to erase its breakout signal, as long as it maintains 15-minute closes beneath a line currently at 439.15. It has not yet dropped low enough to test or even breach the support that may be strong from 435.59-436.51 on 30-minute closes. It's at 438.42 as I type. So, although bears like the way the RLX's pullback corroborates the OEX's, the RLX has in no way changed its tenor as of yet. This drop is stronger than any seen since it began climbing off the 9/29 low, but it's already trying to bounce again as I type.

Linda Piazza : 10/3/2005 10:18:27 AM

Remember that one possible scenario for today was a doji. Since my supposition pre-market was that the OEX might climb into the ISM number (see earlier posts) and then pull back, the only way that doji can be produced is if there is that pullback and then a bounce back near the open. Another historical possibility for the OEX is an actual red candle. However, bears should also remain prepared for the possibility of a bounce some time today that brings the OEX back near the open.

Jonathan Levinson : 10/3/2005 10:17:08 AM

Crude oil +.05 at 66.30, natgas +.18 at 14.10.

Jeff Bailey : 10/3/2005 10:14:40 AM

10:00 Internals found at this Link

Linda Piazza : 10/3/2005 10:14:36 AM

Advdec resistance holds but watch for first support approaching, near +1000, with the advdec line at 1230 as I type. There wasn't any bearish divergence on the 15-minute chart, so it could find support and attempt another bounce, carrying the OEX up with it again.

Jonathan Levinson : 10/3/2005 10:13:46 AM

Session lows for QQQQ.

QQQQ - Stop Loss Adjustment Alert -

QQQQ short from 39.74, move stop to breakeven

Linda Piazza : 10/3/2005 10:13:19 AM

Aggressive OEX bears who know that they'll adhere to appropriate stops and limit position size to those appropriate for their accounts could risk an entry now with a stop an account-appropriate amount above the day's high or else above 570, depending on style.

Linda Piazza : 10/3/2005 10:11:32 AM

Advdec line resistance holding, although I sure haven't seen the bearish RSI/value divergence I wanted to see. The RLX is showing bearish price/RSI divergence on its 15-minute chart, but it's already bouncing up, within this same 15-minute period, toward the 440.40-440.80-ish support that it just violated. This is where things could turn around and where they might well, but signs are very, very tentative as yet. They look a bit stronger on the OEX itself, as it's pulled all the way back below a 50% retracement of the drop off the 9/09 high after piercing that strongly this morning.

Linda Piazza : 10/3/2005 10:08:26 AM

RLX dropping more heavily, but needs to close a 30-minute period below 435.70 before bears feel safer that it's not going to lead the OEX higher. RLX at 439.39 as I type.

Jonathan Levinson : 10/3/2005 10:07:12 AM

If the bulls are going to run for new highs, it should kick off now at the bottom of the wavelet cycle. But the short cycle indicators have just printed a sell signal, and I think our 39.74 QQQQ entry is going to stick. Link

Linda Piazza : 10/3/2005 10:06:13 AM

RLX pulling back some, but not convincingly. Advdec line not pulling back at all, but still dealing with potentially strong resistance and not breaking above it. The OEX is pulling back to test its breakout level, however, with that at 567.81 on 15-minute closes. That can serve as support, which is what bulls want to see happen, but if that support fails, and particularly if the potential support just above 567 fails, the OEX will have erased its breakout signal. OEX at 567.92 as I type.

Jonathan Levinson : 10/3/2005 10:05:53 AM

The ISM prices component shows a big jump.

Jeff Bailey : 10/3/2005 10:05:36 AM

10:00 Market Watch found at this Link

Jonathan Levinson : 10/3/2005 10:04:51 AM

Headline:

U.S. SEPT. ISM PRICES 78.0% VS 62.5% IN AUG.

Jonathan Levinson : 10/3/2005 10:03:28 AM

Ten year note yields are up 4.8 bps here at 4.376%. IRX is down .5 bps at 3.465%, the yield curve steepening there.

Jonathan Levinson : 10/3/2005 10:04:40 AM

Headlines:

U.S. SEPT. ISM MANUFACTURING INDEX 59.4% VS 53.6% IN AUG.

U.S. SEPT. ISM FACTORY INDEX ABOVE 52.1% CONSENSUS

U.S. SEPT ISM JOB INDEX 53.1% VS 52.6% IN AUG

Jonathan Levinson : 10/3/2005 10:02:11 AM

ISM 59.4 vs. 52 exp.

Jonathan Levinson : 10/3/2005 10:00:42 AM

Headlines:

U.S. AUG. CONSTRUCTION SPENDING UP 0.4% VS. 0.8% EXPECTED

U.S. JULY CONSTRUCTION SPENDING REVISED UP 0.3% VS. 0.0%

U.S. AUG. RESIDENTIAL CONSTRUCTION OUTLAYS UP 0.2%

U.S. AUG. PVT. CONSTRUCTION OUTLAYS UP 0.4%

U.S. AUG. PUBLIC CONSTRUCTION OUTLAYS UP 0.5%

Jonathan Levinson : 10/3/2005 9:59:26 AM

Our short from 39.74 is in the green and I'm itching to lower the stop to breakeven. But the wavelet cycle downphase is almost half done, and the longer "short cycle" downphase needs to roll over to give us a broader cushion. ISM due in 2 minutes.

Linda Piazza : 10/3/2005 9:59:34 AM

As my earlier posts show, I wasn't surprised to see this early climb this morning on the OEX, going into the ISM. I am surprised at the strength and the height to which it climbed, however, although I guess I shouldn't have been, since I expected the RLX to try to reach its 200-sma and carry the OEX higher with it. I still do not see signs of a rollover, but they could come suddenly after the release. There may not be a play setup, even if there is to be a pullback. All I can say is that the advdec line and RLX are both at levels of potentially strong resistance, without either having pulled back convincingly.

Jonathan Levinson : 10/3/2005 9:57:05 AM

QQQQ chart update at this Link .

Linda Piazza : 10/3/2005 9:55:56 AM

At just a touch over 570, the OEX will be testing the descending trendline off the September high. So, if the OEX should reach that Keltner target, it will encounter historical resistance, Keltner resistance, and that descending trendline there. Bulls need to make a decision now, though, as the OEX is testing its 50-sma and ahead of the ISM, how much profit they're willing to put at risk going into the ISM.

Jonathan Levinson : 10/3/2005 9:56:06 AM

The Fed announces a 7B overnight repo for a 250M net add, but the stop out rate rose to 3.73 for treasury collateral, 33 basis points above Friday's level, showing a greater need for the money on the part of the Fed's dealers.

Jonathan Levinson : 10/3/2005 9:53:38 AM

Volume breadth +2.54:1 on the NYSE, +2.12:1 on the Nasdaq.

Jonathan Levinson : 10/3/2005 9:53:08 AM

Session low for ten year notes at 109 13/16, TNX up 1.7 bps at 4.345%.

Linda Piazza : 10/3/2005 9:52:52 AM

Advdec line now is telling me that the move is getting extended to the upside. I've seen days when the advdec line trends higher all day, and there's the possibility of a breakout move up toward 2750, but RSI and the advdec line's positioning with reference to nested Keltner channels also suggest it's time to be wary of the possibility of a rollover. No signs of one as yet. Advdec line at 1988 as I type, QCharts value.

Jeff Bailey : 10/3/2005 9:51:37 AM

Semiconductor HOLDRs (SMH) $37.50 +1.51% ... AMD $25.90 +2.77%, AMKR $16.95 +2.72%, TER $16.95 +2.72%, MXIM $43.70 +2.40%, LLTC $38.37 +2.10% ... VTSS $1.79 -4.27% is only loser.

Linda Piazza : 10/3/2005 9:50:32 AM

Keltner look at the OEX: It's now set a 570.03 upside target on its 15-minute chart. It's at 568.77 as I type, but take this upside target with a grain of salt unless it reaches it before the ISM, as that could change matters either direction.

Jeff Bailey : 10/3/2005 9:49:24 AM

Semiconductor Index (SOX.X) 483.16 +1.64% ... gets early trade at WEEKLY R1.

Jonathan Levinson : 10/3/2005 9:49:05 AM

QQQQ - Entry Point Alert -

Short QQQQ at 39.74, stop 39.80

Jonathan Levinson : 10/3/2005 9:48:12 AM

QQQQ's R1 is at 39.70, R2 39.75. With all intraday cycles extended here, bulls should be snugging up their stops, particularly ahead of the repo announcement and ISM data.

Jonathan Levinson : 10/3/2005 9:46:42 AM

Awaiting word on the disposition of the Fed's 6.75B weekend repo expiring, due just before 10AM. At 10AM, we get the ISM report.

Linda Piazza : 10/3/2005 9:47:18 AM

The advdec line is into that resistance band now, but hasn't shown any signs of retreating or rolling over. The RLX is right at its 200-sma, retesting it. There's bearish divergence on the RLX's 15-minute chart, and the smallest of pullbacks, but not any real signs of a rollover as the RLX tests this average.

Jonathan Levinson : 10/3/2005 9:44:24 AM

QQQQ breaks to a new high as 30 min channel resistance trends upward to 39.67 here: Link

Linda Piazza : 10/3/2005 9:43:38 AM

Advdec line approaching first strong resistance now, in a band from about 1600-2100, with the advdec line now at 1275, QCharts value. My expectation today was for an early climb, with the possibility of a downturn that at least was enough to create a doji, perhaps at the time of the ISM. I'm not seeing signs of a downturn yet, however. The OEX tests Keltner resistance currently at 567.50 on 15-minute closes, with the RLX currently at 567.95, so I wouldn't be surprised to see a minimal upside breakout on this 15-minute close. Those are sometimes not trustworthy on the first 15-minute candle, however. For now, I see no action except for current bulls to continue profit-protecting measures and to make a decision as to whether they want to hold over the ISM number and risk a reversal. Conservative bulls might consider taking partial profits.

Linda Piazza : 10/3/2005 9:39:56 AM

Breakaway gap for the SOX on the 15-minute chart as it broke today out of a consolidation pattern and steamed up higher. That rising regression channel on the weekly chart is now at about 485.60 (on weekly closes, though) with the SOX now at 479.85. The SOX violated this channel in August on an intra-week basis and in September on an intra-day basis, but hasn't been able to close a week above it. The channel has been forming since the September 2004 low, so it's a long-term channel.

Jonathan Levinson : 10/3/2005 9:38:03 AM

QQQQ update at this Link . This surge at the open should be a throwover above the toppy 30/60 min channel bands, but because it's been trending upward, there's higher than usual risk of it continuing up. My guess is that we break lower, but I'm still getting caught up here.

Linda Piazza : 10/3/2005 9:37:10 AM

As the OEX tests a potential double-top area, I do not yet see any evidence corroborating the idea of a rollover. The advdec line still climbs, and so does the RLX.

Linda Piazza : 10/3/2005 9:36:29 AM

RLX still climbing, back toward the 200-sma and 200-ema, at 441.52 and 440.75, respectively, with the RLX at 440.39 as I type. Important test for the RLX, and for the OEX, too. OEX bears don't want to see the RLX maintain values above its 200-sma. Bulls do, of course.

Jeff Bailey : 10/3/2005 9:34:52 AM

American Express (AXP) $50.58 -11.94% ... Ameriprise Financial Inc. will mark its initial trading as an independent company today. Ameriprise shares will trade on the New York Stock Exchange under the symbol "AMP" and will be a component of the S&P 500 index (SPX.X). Ameriprise, the former American Express Financial Advisors unit, provides financial planning, asset management and insurance services and was officially spun off from American Express Co. on Friday. American Express shareholders received one share of Ameriprise common stock for every five shares of American Express common they own. Approximately 246 million shares of Ameriprise were distributed.

Linda Piazza : 10/3/2005 9:34:08 AM

The OEX is approaching Keltner resistance now at 567.39 and of course also approaches Thursday's high of 567.38, just exceeding it by a penny as I type.

Jonathan Levinson : 10/3/2005 9:33:40 AM

Back from the dentist and getting caught up.

Bonds hold a light loss with TNX up .9 bps at 4.337% and IRX up .5 bps at 3.475%. QQQQQ is up .11 at 39.57 after a slight dip from its early morning levels. Volume breadth currently runs +1.64:1 for the NYSE and +1.81:1 for the Nasdaq.

Linda Piazza : 10/3/2005 9:32:52 AM

The advdec line begins the day just above potentially strong support. We'll have to see how it behaves and whether that support holds, but so far, it is, suggesting at least a continued OEX test of resistance if not further climbs.

Linda Piazza : 10/3/2005 9:31:16 AM

As I expected, the OEX does continue its climb in early trading.

Jeff Bailey : 10/3/2005 9:27:06 AM

Proctor & Gamble (PG) $59.46 Link ... The consumer products giant reiterating outlook after purchase of Gillette.

The world's largest maker of household products still expects earnings will be reduced by 20 to 26 cents in fiscal year ending June 30, 2006 and by 12 to 18 cents in fiscal 2007 in the wake of the acquisition, which closed on Saturday.

The deal is expected to be neutral for fiscal year 2008 and add to earnings in the second half of fiscal 2008, putting P&G back on track with its pre-Gillette earnings growth target for fiscal 2008.

Analysts project earnings of $2.81 per share for fiscal 2006 and $3.18 for 2007.

Linda Piazza : 10/3/2005 9:13:33 AM

I started out Friday by pointing out how often the OEX prints a series of opens, closes, highs or lows along its important 72-ema, with that average currently at 566.96. It just seems to be a magnet for the OEX. However, the various charts I typically scan didn't give much information pre-market on Friday as to whether the OEX would print a candle that sat on that trendline, one that hung from it, or a doji crossing it. It was the doji. So now we have a doji after a strong white candle, two candles in a three-part potential reversal signal.

The OEX often does honor such doji with at least another doji, if not an actual pullback, so the possibility of a pullback Monday exists, perhaps after initial follow-through to the upside. Watch the RLX, however, before you assume that the OEX is going to pull back far. As long as it's continuing to climb, it's going to be unlikely to see the OEX pull back too far. The RLX has been consolidating beneath its 200-sma and -ema's and ended Friday beneath them, too. An RLX climb above its 200-sma at 441.60 that's sustained would signal trouble for any OEX bears.

The OEX tends to move in 4-6 point ranges. The Keltner channels peg that range now at 563.03 on the bottom and 567.31 on the top with the OEX headed toward the top channel at the close, but with that top Keltner channel line already having been touched. That's mixed evidence, as it doesn't always hit the top channel line a second time, and the choppy behavior of the futures pre-market isn't giving many clues today as to what might happen next. The OEX ended the day moving up toward 567.06-567.31 next resistance, forming a potential inverse H&S, but a continuation-form one that isn't as trusted as other forms. The OEX had pulled back to retest the descending trendline off Thursday's high and had bounced from that, so that also supports the idea of an early attempt to continue the gains of the last 15 minutes of trade.

If the OEX should move up for a retest of that zone, I'll be looking for advdec line corroboration that a bearish entry is a good idea. If the OEX should instead gap higher and open above those averages, then the downturn scenario is less likely, although another doji wouldn't be precluded. I'll need to see how the OEX opens and how the advdec line behaves to know whether any setups will present themselves. All traders should keep that potentially market-moving ISM release at 10:00 in mind when making early trading decisions, and should also keep in mind first-of-quarter window undressing possibilities. I've gone back a few months and note that first trading day of a month often results in some sort of candle indicating indecision, so there are multiple reasons to be careful with decisions today. If I don't see anything set up in the right way, then I'm not going to be making any suggestions. A good play will come along and I'd rather miss a move than jump on a wrong one without enough evidence to suggest it as a good risk. To sum up, I'm looking for the possibility of some early follow-through this morning, but since history leads us to expect either a doji or an actual pullback after candles such as those on the previous two days, I'll then be looking for a potential rollover bearish entry. I won't force such an entry, however, especially ahead of the ISM and especially on a day when markets might be unwinding those window-dressing positions from last week.

Jane Fox : 10/3/2005 8:21:33 AM

Dateline WSJ President Bush announced that he is nominating his White House counsel, Harriet Miers, to replace retiring Supreme Court Justice Sandra Day O'Connor.

Ms. Miers, 60 years old, has no judicial experience, and has been leading the White House search to fill vacancies on the high court.

Linda Piazza : 10/3/2005 7:17:28 AM

Good morning. The Nikkei came in for a bout of profit-taking, with some other Asian markets retreating, too. European markets perform more strongly, their gains buoyed by above-50 headline numbers in PMI reports and M&A activity. As of 7:00 EST, gold was down $4.00, and crude, up $0.18, to $66.41. Our futures were modestly higher at that time, above fair value. More details about Asian and European markets follows in succeeding paragraphs.

Japan's much-anticipated quarterly tankan survey of business sentiment among large manufacturers disappointed. The index rose to 19 from the previous quarter's 18 points, but expectations had been for a rise to 20-21. The number for non-manufacturers was steady. Expectations among large manufacturers are for a decline to 18 again at the end of the next quarter, while non-manufacturers expect a rise of a point in the next quarter. Market gurus blamed higher fuel costs for dimming prospects for sustained growth. Large manufacturers do plan to increase capex plans for the full fiscal year, however, one positive that was reported. In addition, the August monthly labor statistics survey revealed that total cash earnings fell 1.3% month over month and also 1.3% year over year,. Working hours, regular pay and overtime pay rose, but special payment dropped 27.6%.

With nearly parabolic movements over the last weeks, or "euphoric" gains as one Bloomberg writer termed it, the Nikkei had plenty of room for profit taking. It opened near the flat-line level and dropped, with financials leading to the downside. Steelmakers declined after an industry group said last week that the Asian steel market should be weaker next year. However, the yen dropped against the dollar after the survey results were released, and that drop boosted some exporters. Canon reached an all-time high. The Nikkei was able to climb off its lows, all the way back to its open, but it tumbled sharply in the last few minutes of trading and closed lower by 49.02 points or 0.36%, at 13,525.28. Near the end of the day or perhaps after the close, the Bank of Japan's Nakahara weighed in on when Japan's CPI might turn positive, seeming to believe that it might be positive earlier than he previously thought, perhaps as early as the October-November period. He reportedly does not favor immediately lowering the liquidity target or raising rates, however.

Many other Asian markets typically followed in this report also dropped. The Taiwan Weighted gained 0.09%, but South Korea's Kospi dropped 0.83%. Singapore's Straits Times fell 0.16%, and Hong Kong's Hang Seng lost 0.22%. China's Shanghai Composite did not appear to have been open.

European markets gain this morning. In Italy, September's manufacturing PMI rose to 51.5, a twelve-month high. Input prices, pushed higher by rising crude costs, pumped up the number, but new orders, business confidence, and consumer confidence also rose. France's PMI rose to 52.7, but employment and export orders components both fell. Other evidence was mixed, too, under the headline number, and some market watchers didn't consider it as offering a particularly strong endorsement of the improving economic conditions. Germany's PMI rose to 51.0, having been below the boom-or-bust 50 level in August. Output and new orders components rose, but there's still little evidence of recovery in the domestic demand sector. Employment remained below 50, but climbed 2 points, and output prices and input prices both fell. The under-the-headlines glimpse showed some encouraging news, some thought. For the Eurozone, the PMI surprised to the upside, rising to 51.7, the third month in a row that it's been above 50. Demand from exports rose, as did new orders and output. However, the employment component stayed below 50 and input prices moved up significantly without output price moving at all. In the U.K., the PMI also surprised to the upside, rising to 51.5, with output, new orders, export orders, output and input prices all increasing. The employment component increased, too, but only to a 47.7, still below that 50 benchmark.

Other news in Europe focuses on the French strikes, including the one at BP's Laverre refinery, suggesting that the refinery could be shut down by Wednesday if the strike is not ended. Some additional Total refineries may be shut down, too. Other news focused on M&A activity, boosting enthusiasm for stocks. While Telefonica later denied the news, the WSJ speculated that Telefonica had offered to buy KPN, with both companies gaining in early trading, KPN by more than 5%. U.K. pharmacy retailers Boots Group and Alliance Unichem announced plans to merge, with both posting strong gains. A newspaper speculated that News Corp. has held talks with Trader Classified Media to buy the company, with Trader Classified soaring. The chairman of Havas announced that he had accumulated 11.38% of Aegis, with Havas and its possible rival bidder for Aegis, Publicis, both rising. Other news saw U.K. mortgage lender Northern Rock falling after its earnings report, British Airways declining as the new Chief Executive took over, and Vodafone falling after Lehman Brothers cut its rating to an equal-weight one and trimmed its price target.

As of 7:05 EST, the FTSE 100 was higher by 30.40 points or 0.55%, at 5,508.10, with CNBC Europe commentators noting its rise above 5,500. The CAC 40 was higher by 29.34 points or 0.64%, to 4,629.36. The DAX was higher by 26.69 points or 0.53%, at 5,070.81.

Jonathan Levinson : 10/3/2005 7:14:18 AM

I need to leave for a dentist appointment at 8AM, and hope to be back by the opening bell.

Jonathan Levinson : 10/3/2005 7:13:24 AM

QQQQ's current bounce drives the price above the 30/60 min cycle channels, but that's more common for premarket moves on thinner volume. The 30 min cycle is stalling in the first stages of a downphase that was kicking off just before the closing upswing, and the 60 min cycle is trending in overbought. These cycles should correct to the downside, but because they're trending, there's more guesswork than usual as to when it will commence. A move below the 72 SMA at 39.35 would confirm a new downphase for the 30 min cycle.

Jonathan Levinson : 10/3/2005 7:07:59 AM

Equities are up, ES trading 1235.75, NQ 1617, YM 10615 and QQQQ +.11 at 39.57. Gold is down 3.90 to 468.10, silver is down .077 to 7.432, ten year notes are flat at 109 59/64, crude oil is up .20 at 66.45 and natural gas is up .07 to 13.99.

We await the ISM Index for September, est. 52, to be released at 10AM.

Market Monitor Archives