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OI Technical Staff : 10/21/2005 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The Market Monitor has been archived.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.

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Tab Gilles : 10/21/2005 7:38:10 PM

$NDX/$NASI/$NAHL/$VXN Link

Jeff Bailey : 10/21/2005 7:06:28 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/21/2005 6:58:28 PM

Closing Internals found at this Link

Tab Gilles : 10/21/2005 6:22:26 PM

Citrix Systems (CTXS) Followup chart [12:10 AM post] Link

Energy Select (XLE) Finding support at 200-ema/$45. Link Link

Murphy Oil (MUR) Link

Nasdaq100 ($NDX) Following pattern I projected yesterday [10:40 aM post]. Link Link

$NDX/$NASI/$VXN Link

$NAHL weekly/daily Link Link

20+ year Treasury Bond Fund (TLT) Link

Eaton Vance Limited Duration Fund (EVV) Link Link

Jeff Bailey : 10/21/2005 5:43:23 PM

Current OPEN MM Profiles found at this Link ... Weekly / Month-to-date Trade Blotter of CLOSED Trades at this Link

Jeff Bailey : 10/21/2005 5:00:45 PM

SPY $118.13 +0.39% ... darned close to that $118.17 level from April 05 isn't it? See large block observations from that night in MM. Get feel for how SPY traded after that. Check the S&P 500 Bullish % conditions, NH/NL indications, breadth. Know what to look for, what NOT to look for (divergence to the past).

Jeff Bailey : 10/21/2005 4:57:26 PM

Individual stock trader alert! Watch some of this afternoon's after hours time and sales for any BIG BLOCKS, then compare to your previos thoughts on where you thought the stock might close. A directional play may await early next week! Try to think "who is on the wrong side of this trade and looking for the exit to the trade." Think bullish and bearish.

Remember, there are OBLIGATIONS that need to be met and delivered upon.

Jeff Bailey : 10/21/2005 4:35:49 PM

SanDisk (SNDK) $56.45 +21.71% ... goes out at high of the session! Here's a trade recap with screen capture just prior to today's close. Notes: for future stop based on stock's open (we were stopped out at pre-defined $52.90) so I try and make some corrections for the future, let's say 2.5% (maybe that's the point to look for "best entry" on a gapper).

I show my own account personal decision to exit 02:40-02:45 interval (witnessed a sell program premium). Still... stock with no overhead supply goes out at the highs. Day trader's chart at this Link

The 2.31% note was based on the opening tick of $54.00. I can remember 2.5% as a round number percentage in future.

Jeff Bailey : 10/21/2005 4:01:13 PM

Applied Materials (AMAT) $16.93 -0.41% ... just below its $17 open interest.

Jeff Bailey : 10/21/2005 3:56:39 PM

KLA-Tencor (KLAC) $47.90 -0.08% ... sessioni lows. How about the $47.50 put sellers?

Jeff Bailey : 10/21/2005 3:55:47 PM

Schlumberger (SLB) $79.98 -0.73% ... how about the $80 put sellers?

Jeff Bailey : 10/21/2005 3:55:00 PM

Valero Energy (VLO) $94.69 +1.87% ... doesn't the naked put sellers want to take it home?

Jeff Bailey : 10/21/2005 3:51:49 PM

BioCryst Pharma (BCRX) $15.26 +7.63% ... lurches from the $14.80 level. "Bird Flu" play.

Jeff Bailey : 10/21/2005 3:51:01 PM

PETCO Animal Supplies (PETC) $18.54 -2.42% ...

Jeff Bailey : 10/21/2005 3:50:25 PM

PETsMART (PETM) $22.51 +0.35% ...

Jonathan Levinson : 10/21/2005 3:49:39 PM

LOL!

Linda Piazza : 10/21/2005 3:50:23 PM

I have to take off a few minutes early today.
OEX Trade Recap
Today:
OEX at entry 547.02. OEX 560 put at entry 12.20-13.50. Profit stop of 545.35 hit. Oct 560 put was at 14.30 x 14.90.
1.67-point move in the trade's favor.
Week
3.37 points in the trades' favor.

Jeff Bailey : 10/21/2005 5:53:18 PM

CNBC reporting that a parrot in the UK has contracted Avian Flu!

Don't eat any parrots over the weekend.

Jonathan Levinson : 10/21/2005 3:47:39 PM

The uptick in the 60 min cycle is doing nothing constructive for QQQQ, but the 30 min downturn has the price feeling heavy here. Zooming out to the broader channels, the daily did indeed turn up off last week's low, but the weekly cycle was only printing a sell signal, which held in its bearish cross through this week's lower-high bounce. There remains a big overhang above 38.80 going back to July, and the bulls will need a decisive move back above that level next week to threaten what is an otherwise bearish picture in that longer timeframe. Last week's 37.25 low is the goal for bears seeking to whipsaw the daily cycle upturn, while a close below 38.00 support should be enough to stall it.

Linda Piazza : 10/21/2005 3:43:34 PM

I wouldn't touch an OEX trade the rest of the day unless you've got some lottery money that you want to spend and have a better clue than I do about what will happen next. It looks to me as if they've decided where they want to pin the OEX, whether or not that effort will be successful. The advdec line still clings to that support I mentioned.

What about for Monday? I mentioned earlier today that until the OEX broke out of its pattern, it was likely still doing its churning thing after a big move, and that we were likely to continue seeing big moves one direction reversed the next day, with perhaps a doji day sprinkled in here and there for good effect. We got the doji day today, or at least will have it, barring a big move either direction in the last few minutes of the day. Most opex Friday's, we're pinned to "the number" by now, but this has been anything but a typical week so far. If that doji is produced today, be aware that the OEX usually does at least attempt a climb the next day when it's produced a similar doji in its churning-around pattern. We occasionally have a break from that pattern, so it's not set in stone.

As I typed, the OEX began testing the bottom of its descending regression channel again and the advdec line slipped a little lower. Nothing definitive yet.

Jeff Bailey : 10/21/2005 3:42:31 PM

SNDK $56.12 +21.02% ... to the close ...

Jeff Bailey : 10/21/2005 3:41:09 PM

OEX Option Chain where I sorted by October open interest, marked what finished in/out and at the money.

Note today's high/low in the OEX. Now, we've had several (more than I've posted) sell program premium al_rts for.

Think like an options market maker. YOU were OBLIGATED to deliver on your promises. OEX is BEARISH until it can clear the 550 level.

Screen capture was taken at 12:39 PM EDT and lower part, I had sorted by the then most active.

Chain at this Link

Linda Piazza : 10/21/2005 3:30:44 PM

Advdec line and OEX both climbing after my 3:23:43 post. So far, it's just churning still, but we could not trust that last little OEX jot down again when the advdec line wasn't also falling. There's nothing to trust here.

Jonathan Levinson : 10/21/2005 3:29:11 PM

Volume breadth steady at +1.95:1 on the NYSE, +2.07:1 on the Nasdaq.

Jeff Bailey : 10/21/2005 3:29:02 PM

03:13 Internals found at this Link

Linda Piazza : 10/21/2005 3:23:43 PM

Advdec line not yet dropping with the OEX. Sometimes lately, the OEX has been leading the advdec line, but unless the advdec line follows fairly soon, this OEX drop is a bit suspect.

Jonathan Levinson : 10/21/2005 3:21:37 PM

Strong volume for the Qs again today, though well below yesterday's 1.32.7M shares, currently 99.4M traded, 5M above the average daily volume.

Jeff Bailey : 10/21/2005 3:18:07 PM

WellPoint (WLP) $77.82 +2.96% ... all time high alert!

Linda Piazza : 10/21/2005 3:17:33 PM

Advdec line clinging to that support. OEX settling down near 545, so far. It's resisting confirming this latest potential H&S, but still testing the 19.1% retracement of the decline off Wednesday's high into today's low, the bottom of a new descending regression channel off today's last five-minute high. You might note bullish price/RSI divergence on the three-minute chart, but not the five-minute. If you're bullish, you think that advdec line support is going to hold and the support on the OEX is going to hold and the OEX is going to bounce. If you're bearish, you think the opposite, but the advdec line is just clinging with no clear direction as yet. I still think between 545-550 is where the OEX is most likely to end the day, but that's just guesswork.

Jeff Bailey : 10/21/2005 3:16:13 PM

03:13 Market Watch found at this Link ... running a little late.

Jeff Bailey : 10/21/2005 3:11:28 PM

Matria Healthcare (MATR) $31.44 +3.28% ... Here's a chart I put together last night at this Link ... Not a heavily traded option chain on this one, but see 14 contracts traded in Mar $30 Calls $4.90, 12 in Nov. $30 Calls $3.20 and 10 Nov $30 Put $0.80.

Is the call option trade a buyer, or a seller? Add the current premiums to the $30 calls and I get feeling it is a seller against those levels.

Jonathan Levinson : 10/21/2005 3:09:57 PM

After rising for most of the day, QQQQ's 30 min cycle oscillators have turned down. And, after falling all day, the 60 min indicators have stalled and show a slight uptick. The daily cycle has remained up throughout. The short cycle indicators are getting bottomy in their most recent downphase. All of these cycles have been getting poor traction all day, and whatever's going to happen next, there will be an oscillator to explain it. My guess, however, is for more sideways chop, and if I'm wrong, I expect the move to be to the downside. QQQQ maintains an intraday bearish bias below the 72 SMA, but so far, we've seen little followthrough to any of the breaks. Link

Linda Piazza : 10/21/2005 3:04:50 PM

Is the OEX perhaps setting up a different H&S than the one I imagined, this one with the neckline along that descending trendline from earlier, now at about 544.90? Watching to see if this rise tops out about 546.25-546.50, as that remains a possibility with this a new right-shoulder rise.

I did not see a setup earlier, no matter how nice the H&S looked and no matter if the advdec looked as if it was going to pull back, because the advdec line would be pulling back into known support. And there's been little follow-through to the downside. An adept scalper could perhaps have eked something out of the play, but the advdec line was telling us that the setup just wasn't there. And now we come to the last hour of trade, with a setup not quite there, either, although looking more possible than it did earlier. There hasn't been a break through that support and then a rise to retest it, and until that happens, that support might continue to be support.

This doesn't mean that the OEX might not crater and you bears out there might not be saying "told ya so" or that it might not zoom and you bulls might not be saying the same thing. It is saying only that I don't see a setup for my kind of play.

Jonathan Levinson : 10/21/2005 3:01:53 PM

Headlines:

NOV NATURAL GAS ENDS THE WEEK 34.7C, OR 2.6%, LOWER

NOV NATURAL GAS ENDS AT $12.872/MLN BTUS, DOWN 0.8% ON DAY

Jonathan Levinson : 10/21/2005 2:55:52 PM

Volume breadth remains strong at +2.07:1 on the NYSE, +2.08:1 on the Nasdaq.

Linda Piazza : 10/21/2005 2:53:19 PM

The advdec line is trying to bounce again, but is once again beneath massive resistance on the 5-minute chart. That didn't stop bulls from sending it and the indices higher this morning, especially since it was also finding support this morning on a longer-term chart, at the very same configuration from which it's trying to bounce as I type. No confidence in either direction and no clear signals for me.

Linda Piazza : 10/21/2005 2:45:17 PM

Advdec line edging just below that former trendline now, with the advdec line dropping to test that support, at about 1720 on 15-minute closes, with the advdec line now at 1828, QCharts value. The advdec line can become much more bearish, setting up the way I'd mentioned, but it isn't yet. So far, it's just retesting the same support configuration that bounced it earlier today.

Jeff Bailey : 10/21/2005 2:44:24 PM

Selling long alert ... SNDK $55.37 in personal account.

Jonathan Levinson : 10/21/2005 2:44:08 PM

QQQQ violates that 38.60 level and breaks below the 72 SMA, turning the 30 min channel back down: Link

Jeff Bailey : 10/21/2005 2:43:24 PM

Sell Program Premium ... OEX 545.46 , QQQQ $38.58

Linda Piazza : 10/21/2005 2:40:42 PM

H&S confirmed on the OEX, but it's just dropped to that former descending trendline and it's attempting a bounce. Not sure if it will be successful.

Linda Piazza : 10/21/2005 2:38:40 PM

We are so close to a bearish setup on the advdec line, but it needed to do something first that it hasn't done. It needed to drop below a line currently at about 1720 and then rise up to retest that resistance again, failing this time,and it just hasn't done that, so that line might still be support, as it was earlier today. With this being opex Friday and max pain looking about equally weighted between 545 and 550 to me, and with that known advdec support (because it was tested and held earlier today) not yet retested, I just can't recommend it. And I'm having to sit here and watch a potential H&S set up. Would have been so perfect to have the two coincide, but they didn't, and good setups come along often enough that we don't have to take iffy ones on an opex Friday.

Jonathan Levinson : 10/21/2005 2:33:35 PM

Crude oil closed +.55 at 60.575, 1.45 off the session low, while natgas finished -.08 at 13.165, 22 cents off the low.

Jonathan Levinson : 10/21/2005 2:30:00 PM

The yield curve has flattened again today, with TNX currently down 6.7 bps at 4.392%, failing to get back above that broken 4.4% level, while the 13-wk bill rate is up .5 bps at 3.765%.

Linda Piazza : 10/21/2005 2:29:23 PM

That potential regular H&S is still building on the OEX. I noted that the decline might stop near the three-minute 100/130-ema's or perhaps as low as 545.75, the site of a descending trendline the OEX punched through. That trendline has dipped alittle lower now, but I'm watching for a bounce now into a right shoulder.

Jonathan Levinson : 10/21/2005 2:28:18 PM

QQQ 38.60 has been consistently bought since breaking above just before 1PM. A break below would target the 30 min channel support at 38.51, but the last test dojied sharply off it: Link

Jeff Bailey : 10/21/2005 2:25:49 PM

02:00 Internals found at this Link

Jonathan Levinson : 10/21/2005 2:24:12 PM

Volume breadth holds strong, +2.23:1 on the NYSE, +2.19:1 on the Nasdaq as QQQQ and the SOX continue sideways/up within their range below the highs.

Linda Piazza : 10/21/2005 2:31:39 PM

Just a reminder: If you're been putting on several positions during the month, you might just check your positions on your online broker's site. I've known of people who forgot about options positions and found a surprise in their emails on Monday morning.

Jeff Bailey : 10/21/2005 2:19:24 PM

Bearish swing trade short triggered alert ... for the 1/2 bearish position in Matria Healthcare (MATR) $31.75 +4.30%

Jonathan Levinson : 10/21/2005 2:17:20 PM

Crude oil continues to run higher with 14 minutes before the close of the session, just printed 60.40 at a new high, +.375. Natgas edges green, +.005 at 13.25 here.

Linda Piazza : 10/21/2005 2:17:14 PM

Possibility for the OEX to find support again on the three-minute 100/130-ema's, at 546.33 and 546.57, or perhaps down nearer to 545.78, the site of a trendline that the OEX broke through earlier and the likely neckline of a potential H&S on the three-minute chart. It still needs a right-shoulder.

Linda Piazza : 10/21/2005 2:15:44 PM

OEX just bounced again from the three-minute 21-ema, but I'm thinking the bounce this time might be through a narrowing range, so topping out the 547.65 level that's the descending trendline off the day's high(s). Yep, headed down as I typed.

Linda Piazza : 10/21/2005 2:10:06 PM

They are selling that 548 zone for sure on the OEX. It's dropped down to test that three-minute 21-ema again, at 546.77. The advdec line is showing some signs this time that resistance is holding, but it's not dropping back, and might find support at about 1600 if it did. It's climb is beginning to look a little labored, though, more so than earlier. Again, nothing upon which to hang an official trade on an opex Friday, particularly with a possibility that the OEX will end up in this 545-550 zone. I'm not certain of that, of course, but thought it a possibility since yesterday.

Jeff Bailey : 10/21/2005 2:08:37 PM

Sell Program Premium ... DIA $102.46, SPX 1,184.32, OEX 546.89, QQQQ $38.67.

Linda Piazza : 10/21/2005 2:07:23 PM

Advdec line still climbing. The OEX bounced again from its three-minute 21-ema and climbs, perhaps into that 548 zone from which it's been knocked back so soundly. Watch for a potential triple-top in the 548.09 zone, if the OEX should rise that far. It's hesitating a bit beneath it, at 547.60 as I type. Spending lots of time between 545-550 this afternoon.

Jonathan Levinson : 10/21/2005 2:06:32 PM

Session high for crude oil here, +.225 at 60.25. Natgas is up to a .095 loss at 13.15.

Jeff Bailey : 10/21/2005 2:06:21 PM

02:00 Market Watch found at this Link

Jeff Bailey : 10/21/2005 1:59:45 PM

SNDK ... all-time high for the Oct. $55 Calls (SWF-JK) was $2.30.

$55 + $2.30 = $57.30. OI as of last night was 10,962.

Jeff Bailey : 10/21/2005 1:58:04 PM

SanDisk (SNDK) $56.00 +20.74% ... Blue #2. Drag up that dynamic if still long.

Jeff Bailey : 10/21/2005 1:57:10 PM

Bearish swing trade stopped alert ... on the 1/2 position in Schlumberger (SLB) $80.25

Linda Piazza : 10/21/2005 1:57:02 PM

For the last 30 minutes, the OEX has been bouncing from the three-minute 21-ema, currently at 546.54. The OEX just came down to touch it again before rising, now at 546.85. As long as that trend stays intact, the OEX might continue to rise, but I'd sure watch that 548 zone for potential resistance if I were in a bullish play. As I type, the advdec line is turning down slightly from resistance, but still well above the support from which it bounced earlier.

Jonathan Levinson : 10/21/2005 1:56:00 PM

Headline:

GREENSPAN TO TESTIFY AT JOINT ECONOMIC COMMITTEE NOV. 3

Jeff Bailey : 10/21/2005 1:54:26 PM

Dave & Busters (DAB) $13.06 +0.23% Link ... still no bounce. Even as gasoline prices fall.

Jeff Bailey : 10/21/2005 1:52:46 PM

Bearish swing trade short alert ... for Matria Healthcare (MATR) $31.91 +4.82% Link ... short 1/2 position should stock trade $31.75, stop $34.07 to begin, target $28.00.

Stock got crushed yesterday with guidance that was just a penny shy of forward looking consensus. Market might see a bigger problem.

Linda Piazza : 10/21/2005 1:47:48 PM

Big spikes down every time the OEX hits the 548 level, with 548.30 now the 50% retracement of the decline off Wednesday's high into this morning's low. That's not bullish, but the OEX still trades within a rising regression channel off today's low. That channel is only about 1.3 points wide, though, so there's not much opportunity for trading it from one side to another, even if one were inclined to do that.

Jeff Bailey : 10/21/2005 1:48:08 PM

Linda (12:36:01) ... No worries, thought you might have an observation off the top of your head.

I'll do some work today as it could be telling early next week.

NYSE Bullish % ($BPNYA) went "bear confirmed" and finishing open interest relative to settlement could be telling.

Some initial thoughts .... We've seen/noted three large block sell induced trades in "big oil" into this expiration and S&P has done its part to make sure "energy" is a bigger component of SPX/OEX in recent months. We saw/noted one large block trade roll to Home Depot (HD) $39.79 +0.55% .

I will want to look at where OEX and SPX settled relative to OPEN INTEREST in puts and calls. Think like a MARKET MAKER and understand that at what is probably the low end of October expire settlement, there may have been some LARGE AMOUNTS of stock delivered. The stuff that was/is on its way out will be most vulnerable.

Jonathan Levinson : 10/21/2005 1:41:59 PM

There's no direction in the longer intraday cycles, and while the short cycle for QQQQ has turned down, the lack of price traction just adds to the confusion. This action feels bearish to me, but it can be read either way and feels like a coin toss here. This has been a very tiring week. Link

Linda Piazza : 10/21/2005 1:41:33 PM

The OEX's inverse H&S has now met its upside target of about 547.90, with the OEX rising above 548. The advdec line hit resistance again, but so far holds to support, too. Really iffy from here on out, and I don't see myself issuing any more signals.

Jeff Bailey : 10/21/2005 1:37:14 PM

Bearish swing trade lower stop alert ... for Schlumberger (SLB) $80.04 -0.67% ... to $80.25 at this point.

See VLO $96.09 +3.37% ... past Option Chain observations.

Jonathan Levinson : 10/21/2005 1:33:13 PM

Volume breadth improves to +2.54:1 on the NYSE, +2.62:1 on the Nasdaq as QQQQ tests its previous high.

Jonathan Levinson : 10/21/2005 1:30:14 PM

Dec. gold is holding its gains here, a higher high and higher low for the day. However, the daily cycle downphase has yet to take notice, and the bearish divergent setup suggest weakness in the longer timeframes as well. A minimal "return to the scene of the crime" bounce would be to 472, and more likely 476, factoring out the lower doji spikes. Daily chart of Dec. gold future contract at this Link

Jeff Bailey : 10/21/2005 1:22:54 PM

01:00 Market Watch found at this Link

Jonathan Levinson : 10/21/2005 1:15:39 PM

QQQQ breaks back to 38.62, the short cycle upphase stalling early here as the SOX returns to 444.25. Ten year notes have weakened slightly, TNX rising back to 4.396%.

Jeff Bailey : 10/21/2005 1:13:40 PM

Drag it up .... SNDK new high of day.

Linda Piazza : 10/21/2005 1:12:21 PM

Advdec line shows the potential to pull back into the 1500 level, from its current 1952, QCharts value. OEX pulling back currently to test the three-minute 100/130-ema's, and it's pulling back from below the 547.90 target of its inverse H&S (by the way, it gapped above that neckline, extra confirmation for short-term bulls). I don't have a prediction from this point on as it depends on how the OEX handles those averages and whether or not the advdec line's next support holds again if it drops back. I'm guessing it will and I'm guessing that the OEX will likely end up somewhere between 545-550, as I said earlier, and will likely chop around some the rest of the day. That's just guessing, although not pure guesswork, of course.

Jeff Bailey : 10/21/2005 1:09:18 PM

01:00 Market Watch found at this Link

Jonathan Levinson : 10/21/2005 1:03:22 PM

QQQQ's short cycle upphase has entered overbought territory but is not yet maxxed out. Yesterday's high above 38.80 has not yet been tested, and 30/60 min channel resistance currentl align at 38.78-38.80. Link

Jeff Bailey : 10/21/2005 1:01:45 PM

Valero (VLO) $95.71 +2.96% ....

Jeff Bailey : 10/21/2005 1:00:37 PM

Schlumberger (SLB) $80.03 -0.68% ... back at the $80 strike. See some $80 put/call action of $0.30.

Linda Piazza : 10/21/2005 12:59:55 PM

Sorry, readers. I saw this as a possibility but didn't initiate a trade because of the massive advdec resistance on the five-minute chart. I've been pointing out that either sideways-to-sideways-higher or an actual bounce were possibilities and gave the parameters for the inverse H&S, but there was too much conflicting evidence to issue a trade signal. Wish I had, but I have to follow the guidelines of my methodology for these official plays.

Jonathan Levinson : 10/21/2005 12:57:15 PM

Session highs for gold and silver at 469.50 and 7.691 respectively. Ten year note yields are down 7.1 bps at 4.388%, crude oil -.30 at 59.725.

Jonathan Levinson : 10/21/2005 12:55:37 PM

Volume breadth rises to +2.07:1 on the NYSE, +2.04:1 on the Nasdaq.

Linda Piazza : 10/21/2005 12:53:40 PM

Advdec line zooming, breaking through the five-minute barrier.

Linda Piazza : 10/21/2005 12:52:43 PM

OEX's inverse H&S confirmed. The OEX is now testing the three-minute 100/130-ema's, averages that have had some congruence with its trading pattern. They're at 545.94 and 546.42, respectively. OEX at 546.04 as I type.

Jonathan Levinson : 10/21/2005 12:49:15 PM

The oscillator picture is still muddy for the Qs. The daily cycle remains up off last week's low. Within that cycle, the 60 min cycle downphase continues weakly, nowhere near oversold, while the 30 min cycle upphase off yesterday afternoon's low is stalling below overbought. The 38.40-.50 magnet seems to be truncating these key intraday cycles as the price continues sideways in its range. Link

Linda Piazza : 10/21/2005 12:47:55 PM

OEX pulling back into a possible right shoulder for the inverse H&S, with that right shoulder level down to about 544.25 and with the OEX currently at 544.59. The neckline is somewhere between 545.30-545.60. The upside target would be about 547.90, depending on where you draw the neckline, but the OEX would have to cross over a number of 100/130-ema's on different time periods to get there. Max pain sets that 545-550 zone as a possible target by the end of the day and the advdec line also sets up the possibility that the advdec line could bounce from the support it's hugging, but it could drop beneath that support, too. There's absolutely nothing but smoke and mirrors here and nothing to hang a play on. Sorry for the mixed images, English majors among you.

Linda Piazza : 10/21/2005 12:40:57 PM

OEX testing the neckline for that possible inverse H&S on its five-minute chart. It still needs a right shoulder, though, so could pull back, even if it's eventually going to confirm. We don't know that it will yet.

Linda Piazza : 10/21/2005 12:39:52 PM

So far, the advdec line is hugging that support, as I thought it possible that it might do. See my 12:23:20 post for a chart. If it continues to do this all day, then choppy sideways movement (if it just hugs it and doesn't really bounce from it) or an actual bounce are possible in equities.

When I scale down to a five-minute advdec line chart on nested Keltner channels, though, I see massive resistance just overhead now, with the advdec line at 1314 as I type, so it looks as if, for a while at least, the hugging option is more likely than the bouncing one, and even the hugging one is in some question.

Linda Piazza : 10/21/2005 12:36:01 PM

Jeff, sorry but I missed your 12:01:27 post. No, Jeff, I don't do a lot, although I do look at the open interest and volume the last few days of the opex cycle and try to get a feel for where the max pain level might be. I'm not a huge proponent of the max pain theory, but that doesn't mean that I ignore it. But, Jeff, honestly, I could never replicate the depth of work you do with that, and it's not my strength. I have other technical strengths, but that's not been one of them.

Jonathan Levinson : 10/21/2005 12:33:23 PM

Session high for Dec. gold here, +2.10 at 465.50, silver -.004 at 7.656. Crude oil has recovered to a .35 loss at 59.675- the low was 59.125.

Linda Piazza : 10/21/2005 12:32:58 PM

Possibility of an inverse H&S on the OEX's five-minute chart. If that's what it is, there's the possibility that the OEX might pull back from 545.30-545.60, back toward 545.20, and then round up into a right shoulder. OEX at 544.94 as I type.

Jonathan Levinson : 10/21/2005 12:31:56 PM

QQQQ bounces back to the top of its descending linear channel, but clears 72 SMA resistance at 38.53 in the process and turns the oversold short cycle indicators up in the process. 30 min channel resistance is at 38.70 here. Link

Linda Piazza : 10/21/2005 12:23:20 PM

Here's the possibility I've been mentioning on the advdec line: Link If the advdec line cascades lower, the OEX ultimately won't be able to hold up, but the possibility of chop (like that on the 7th, after the advdec line began hugging the black channel line) or even a bounce exists if the advdec line generally holds to that black channel line.

Jonathan Levinson : 10/21/2005 12:20:35 PM

Volume breadth is down to +1.05:1 on the NYSE, +1.46:1 on the Nasdaq. Still positive, as it's been all day, but well off its earlier highs.

Jeff Bailey : 10/21/2005 12:18:21 PM

10-year YIELD ($TNX.X) down 6.9 bp at 4.390%. WEEKLY S1 here.

Jeff Bailey : 10/21/2005 12:16:54 PM

12:00 Internals found at this Link

Linda Piazza : 10/21/2005 12:15:46 PM

The advdec line did zoom right up to that resistance, as I expected. Now let's see if it hugs it or fails again beneath it. The OEX rose, too, bouncing exactly off that bold red line I'd had drawn on the bottom of my chart as a target, I think for the breakdown of that big triangle but perhaps as a fitted Fib bracket target. Let's see if it all holds, though.

Linda Piazza : 10/21/2005 12:12:02 PM

Advdec line trying to bounce now, at 929 as I type, QCharts version. It now has resistance in the 1100-1400 region, but I really wouldn't be surprised to see it rise up into that resistance again and sort of hug it the rest of the day. I wouldn't be surprised to see the OEX end the day somewhere between 545-550. I'm not making predictions here as my typical setups are not there right now.

Jonathan Levinson : 10/21/2005 12:08:13 PM

Another new session high for ten year notes at 109 21/32, with TNX down to 4.386% here, -1.64% or 7.3 bps for the day. Link

Linda Piazza : 10/21/2005 12:06:28 PM

I have a big red line drawn on my OEX chart at 542.65. I think that was my target for the big triangle that the OEX broke out of on 10/4. This triangle was visible on the OEX's chart on the 60-minute chart at the time.

Jeff Bailey : 10/21/2005 12:06:10 PM

12:00 Market Watch found at this Link

Jonathan Levinson : 10/21/2005 12:05:23 PM

QQQQ tests 38.40 support: Link

Linda Piazza : 10/21/2005 12:04:48 PM

Yesterday's OEX low was 543.31, with the OEX currently at that level. There's potential bullish price/RSI divergence as it's tested. Be careful, bears, as you might expect an automatic bounce attempt. Not sure how successful it would be, but watch out. So far, the advdec line still drops, so that's in your favor. . . and the OEX slipped below yesterday's low as I typed.

Jeff Bailey : 10/21/2005 12:01:26 PM

Linda! ... did you do any work with the OEX open interest and settlement based on strike open interest?

Linda Piazza : 10/21/2005 12:01:17 PM

SOX and RUT still green.

Linda Piazza : 10/21/2005 12:00:28 PM

Double bottom possibility in the OEX. Advdec line isn't bouncing yet, although it's testing support.

Jonathan Levinson : 10/21/2005 11:59:50 AM

Session low for GE here, -.53% at 33.70, lagging the Dow futures which are down .60 at 10226.

Jeff Bailey : 10/21/2005 11:58:09 AM

SanDisk (SNDK) $54.02 +16.47% ... day trader's chart with "dynamic" (PINK) added at this Link

Linda Piazza : 10/21/2005 11:56:56 AM

Advdec line close to a test of next support, in the 800-1000 region, with the advdec line now at 1235, QCharts value. On some days when the advdec line behaves as it has today, it hugs that supporting line the rest of the day, sort of climbing along with it. There's no guarantee that it will do that today, but it's a possibility, which would mean sideways to sideways-higher on the advdec line and possibly the same in the OEX. I don't see a trade setup in the works right now, although it's still possible that one could set up, if the advdec line either rises to test resistance now and sets up bearish value/RSI divergence when it does, or if it drops through this support being tested, and then rises to retes that former support, with the lines converging to show it's likely going to hold as resistance. That's just pure speculation at this point. I don't feel there's strong enough evidence to play a bounce, if one looks like it's getting started from this advdec support being tested. Might be a great play, but it's not for me, especially not on an opex Friday.

For now, I'll be watching to see if the advdec line holds that support or falls beneath it, which wouldn't be good for equities.

Jonathan Levinson : 10/21/2005 11:54:48 AM

Doesn't look serious so far, Mark. If it were, they would have evacuated the Capitol building.

Jonathan Levinson : 10/21/2005 11:53:10 AM

Ten year note yields continue to slide, now down 6.9 bps at 4.39%, the daily cycle indicators printing a fresh sell signal: Link

Jonathan Levinson : 10/21/2005 11:50:02 AM

WASHINGTON (MarketWatch) -- Capitol Hill police were investigating a suspicious vehicle near the U.S. Capitol Building, and had blocked off several streets in the area. Reports were that an individual in the vehicle was saying there was a bomb in the vehicle. The Capitol building had not been evacuated.

Jeff Bailey : 10/21/2005 11:47:45 AM

SanDisk (SNDK) $53.90 +16.21% ... session low has been $52.75, which undercut my bullish stop of $52.90.

Stocks that gap higher by more than 7% usually get driven higher to their close. I'd still protect a long with a stop just under the now defined session low.

Get a "dynamic" retracement on this one too. 50% of current range is $53.83, with 61.8% (a tighter bullish stop) at $53.57. Session high has been $54.90.

Linda Piazza : 10/21/2005 11:42:56 AM

Back. Advdec line now dropping, finally, into that 800-1000 support zone. If it had done this earlier, I wouldn't have set such a close stop. On days when the advdec behaves as it did today, that support sometimes holds. Not always. The OEX is currently testing Keltner support at 543.78-544.29 on 15-minute closes.

Jeff Bailey : 10/21/2005 11:43:54 AM

Chicago Board of Trade (BOT) $109.00 +19.92% Link ... Would look to take profits if bullish this one from Wednesday's IPO. Trading a bit too much like BIDU Link did early.

Jonathan Levinson : 10/21/2005 11:41:17 AM

The automatic linear regression lines are setting the current drift up as a possible bull flag (another), but it's getting long-in-the-tooth. Note as well that the 60 min channel (keltner90 in grey) seems to be cresting as the 30 min continues to decline. The 38.40-.50 range remains key here, but so far, it remains choppy above support from this morning's gap up open. Link

Jonathan Levinson : 10/21/2005 11:35:08 AM

Session high for ten year notes, with TNX breaking below 4.4%, currently -6.3 bps at 4.396%. IRX is flat at 3.76%.

Linda Piazza : 10/21/2005 11:28:56 AM

Stepping away for a few minutes.

The advdec line has so far not even dropped to the 800-1000 region. It's instead climbing higher along top Keltner resistance. This is not the way it typically behaves on a pop-and-drop day. It typically has begun retreating by now.

Jeff Bailey : 10/21/2005 11:28:07 AM

Hurricane Watch ... DJ - Wilma's inner eyewall reaches Cozumel.

NHC Link

Jeff Bailey : 10/21/2005 11:26:24 AM

Research in Motion (RIMM) $61.15 -5.42% ... stock defensive.

DJ - Court of Appeal denies company's motion for stay in patent dispute.

Linda Piazza : 10/21/2005 11:26:11 AM

The OEX didn't even dip all the way to that 15-minute Keltner support yet. It's rising instead to test the next Keltner resistance. If you look at this on a 15-minute chart, you can see that it's still just coiling and the direction of a break out of a coil is difficult to predict in the best of times. Aren't you glad you're not still in this morning's bearish play, waiting it out, wondering where the OEX will head? I am.

Jonathan Levinson : 10/21/2005 11:24:43 AM

Further weakness like crude oil, printing a session low at 59.225 here, natgas steady at 13.05, -.195.

Linda Piazza : 10/21/2005 11:21:17 AM

OEX Keltner picture: The OEX's 15-minute Keltner support is at 554.12-554.40, and it looks as if it's firming up. That wouldn't be strong enough to withstand a strong downthrust and it does look possible that it could get tested again, but it looks strong enough to support anything other than a strong downthrust or else a repeated tested that scatters the lines.

And the OEX started down as I typed.

Jeff Bailey : 10/21/2005 11:17:44 AM

11:00 Internals found at this Link

Jonathan Levinson : 10/21/2005 11:17:38 AM

Volume breadth declines to +1.74:1 on the Nasdaq, price still holding above 38.50. The 30 min cycle upphase is roughly half-done, but it has not yet turned up the 60 min cycle oscillators. Confusing the picture even more is the fact that on the tick-chart, the 30 min channel points down and the 60 points up. Rather than guess at how to read this, I read the price action as being bullish above 38.40, bullish above 38.50, and a pure coin toss in the middle. Link

Jeff Bailey : 10/21/2005 11:12:50 AM

Valero Energy (VLO) $95.06 +2.25% ... reclaims the $95 strike.

Linda Piazza : 10/21/2005 11:10:54 AM

Okay, here's what I see: The OEX's currently climb look bear flag-like. The advdec line is finally slipping beneath first support, but has plenty more in the +800-1000 region. It was my thought earlier that the OEX might drop to that support in the first hour of trade, giving us our scalp, but then I wasn't sure at all whether it would find support there, as it sometimes does, or fall through that support, and I didn't want to risk the support holding on an opex Friday. Sometimes the advdec line drops to that support and then clings to it the rest of the day, with the OEX just chopping around and I thought that might be a likely occurrence with this being opex Friday. The chance of that increases as we move into the midmorning period. From this point on, technical signals are not always trustworthy.

Linda Piazza : 10/21/2005 11:07:23 AM

Jane, I didn't see your earlier question about how many profitable trades. On my personal account, that's 16 in a row. (I did get into the play after I'd gotten everyone else in, but at a worse entry because of the time of setting up the entry, etc.) Woo hoo! Of course, some of those were $14.10/contract. Smile.

Traders, though, that does not mean that you should just plow into my scalping plays. In my first OEX-related entry today I talked about some of the problems with my style of trading. A trade that nets $200 for a couple of contracts, for example, might see $600 in unrealized losses before it goes the right way. Because I'm basing this on the movements of the advdec line, the timing on the OEX isn't always exactly right, as you might understand. Because making a profit requires that you get high-delta opens, even two or three points in the wrong direction mean that you're going to be wincing at the unrealized loss (and sometimes, of course, it is a realized loss). In my own trading, I don't stop out unless the advdec line's action tells me to, but I can't set up trades that way on the MM, so I'm honestly not sure how well they'll translate into MM plays.

With all those concerns, it's of course a methodology that excites me, and I'm happy and scared both to share it with readers. I will not continue to do so, however, if I find that the need to set OEX-based stops causes a lot of plays to stop out before the advdec line produces a profitable trade and results in a lot of losses for readers.

Jeff Bailey : 10/21/2005 11:04:19 AM

11:00 Market Watch found at this Link

Jonathan Levinson : 10/21/2005 11:01:37 AM

Session low for gold here, -.70 at 462.70. Crude oil holds its loss, -.45 at 59.575, and natgas is down .22 at 13.025. Ten year note yields are at key 4.4% support here, -5.9 bps, a 1.32% decline for today.

Jeff Bailey : 10/21/2005 10:58:27 AM

Schlumberger (SLB) $78.85 -2.19% Link ... Sets up for critical test of $78 support and rising bullish support trend.

Jane Fox : 10/21/2005 10:57:38 AM

VIX and ES both break their respective daily high and low at the same time so the VIX is reliable today.

Linda Piazza : 10/21/2005 10:55:47 AM

Thanks, Jane. This is what I like about the advdec line studies. I came into the day thinking that there would be a bounce and that a long scalping play would set up, but the positioning of the advdec line at the open told me immediately that was a bad idea (although those who were long from the close yesterday had time to benefit) and that I should be looking for a bearish play opportunity instead. Wish I'd gotten traders in a few minutes sooner, but the HOD was 547.34 and the entry was 547.02, so that's not too bad.

For traders out there watching the OEX go further down after your profit exit, I really would not worry too much about that today. If you collect any profit on an opex Friday and get to keep it, you're doing pretty good. Besides, these little scalps come along fairly often, sometimes a couple of times a day. I can't promise I won't see something set up again today, but for now, I think I'd like to stay flat until something stellar shows up. Lots of opportunity for chop from here on out and Friday's are not my best trading day and opex Friday's are just crazy sometimes.

If you elected not to take profit, I'll still be telling you what I see.

Jonathan Levinson : 10/21/2005 10:53:20 AM

Tale of two markets, with YM down 32 and NQ +7. QQQQ holds at 26 cent gain at 38.56, volume breadth +1.55:1 on the NYSE, stronger at +1.91:1 on the Nasdaq.

Linda Piazza : 10/21/2005 10:50:47 AM

OEX Trade Recap
OEX at entry 547.02. OEX 560 put at entry 12.20-13.50. Profit stop of 545.35 hit. Oct 560 put was at 14.30 x 14.90. I can't guarantee that you got any of these prices, but what I've done is note the prices just after the entry and exit uploaded.

Jane Fox : 10/21/2005 10:50:55 AM

Linda great trade! How many profitable trades is that now?

Linda Piazza : 10/21/2005 10:47:45 AM

OEX Trade Exit Point Alert
Profit stop of 545.35 hit. Looks as if the Oct 560 put was at 14.30 x 14.90 as it was hit, although you might have been able to get a better price, as it actually dipped a little lower.

Jonathan Levinson : 10/21/2005 10:51:45 AM

Jeff, with all respect, I went to great pains to not make a "doomsday" prediction. I can't see the future, and I'm not predicting doomsday. Each chart tells its own story, and while there are similarities between the charts, there are also important differences. And, "doomsday" has a habit of not occurring- it's the least likely of all outcomes, as always.

I do agree with you that in the event of such a terrible event, oil stocks would be a sell along with most everything else. Even if oil, gold, real estate or bonds outperform or underperform, most everything would likely be marked down in a "deflation." Except, perhaps, for GOOG (big grin).

It must have been fascinating to be on the "inside" during the crash at a great company like Mobil. I recall pure desperation that week- there were suicides in Montreal that I heard about, one person who jumped head-first into the expressway. Was there a feeling that it was just a correction, or did sentiment change drastically. On the longterm (multidecade) charts, the crash is just a small correction in the incredible bull run of the last century.

Linda Piazza : 10/21/2005 10:45:23 AM

Here we go.

Jeff Bailey : 10/21/2005 10:42:05 AM

Gone! Should close high of the day

Linda Piazza : 10/21/2005 10:41:38 AM

Swing Trade Signals
This is where the OEX sticks every time, just below 546. It's at 545.95 as I type--popped higher as I typed. Needs to drop below 545.83 to get below this support this morning. Advdec line is easing just a little lower, but not enough to help yet. I would again suggest that any conservative traders use any dips down to 546 to exit the play for breakeven or a small profit. I'm going to hang on for a little while longer to see if this little formation breaks to the downside and then we should get our 545.35 profit exit, but I'm still not liking the advdec line's refusal to keel over. It's usually begun by now. I'm not looking for a big rollover in the advdec line, just a small pullback, which is why I want a quick exit.

Jeff Bailey : 10/21/2005 10:40:30 AM

SanDisk (SNDK) $54.51 +17.63% ... BLUE #1 here.

Jeff Bailey : 10/21/2005 10:38:56 AM

Jonathan ... if your doomsday prediction is correct (1987 crash), I will tell traders/investors that you may not want to be long oil stocks. I remember that day like it was yesterday. I was working at Mobil Oil and saw Mobil's stock cut in half in just a couple of days.

Exxon/Mobil (XOM) $55.43 +0.41% ...

Jeff Bailey : 10/21/2005 10:31:51 AM

Current OPEN MM Profiles found at this Link

Jonathan Levinson : 10/21/2005 10:28:23 AM

There has been no further activity indicated on the Fed's website, and so the 5.5B 6-day repo results in a 1B net add for the day.

Linda Piazza : 10/21/2005 10:28:12 AM

The OEX is trading along that Keltner line currently at 546.73 rather than dropping beneath it. It may already be doing the typical opex thing where it sets up a target, either upside or downside, but never really moves far away from the line that sets up that target.

Jonathan Levinson : 10/21/2005 10:26:32 AM

The SOX and QQQQ are trading in sync today, with SOX gap support at 442 corresponding with the Q's gap support at 38.50.

Linda Piazza : 10/21/2005 10:21:37 AM

OEX Trade Exit Point Alert
Lower stop to 548.85. That's just above the top of the triangle the OEX is building on its five-minute chart and just above the five-minute 100/130-ema's. Keep profit target at 545.35 for now, but I'm still not liking the advdec line's refusal to keel on over, and still advise conservative trades to exit at breakeven or when small profits are offered.

Jeff Bailey : 10/21/2005 10:19:19 AM

10:00 Internals found at this Link ... Yesterday's Internals found at this Link

Jonathan Levinson : 10/21/2005 10:17:25 AM

Crude oil holds its losses at the reopen, -.55 at 49.475 here. Natgas is down .205 at 13.04.

Jonathan Levinson : 10/21/2005 10:16:24 AM

QQQQ breaks descending channel resistance here. The 30 min channel top holds at yesterday's high. Link

Linda Piazza : 10/21/2005 10:14:52 AM

Advdec line still not retreating. I don't like the way it's acting, but it's still at a level that indicates that it's vulnerable to a pullback. Does not mean it will happen, but RSI is overdone all the way up to the 30-minute chart, and there's bearish divergence all the way up to that 30-minute chart.

OEX coming up to challenge that resistance at 546.75 on 15-minute closes, with the OEX at 546.75 as I type, and with the climb so far off yesterday's low still looking corrective.

Linda Piazza : 10/21/2005 10:11:07 AM

OEX Keltner picture: The OEX is currently finding resistance on 15-minute closes at a Keltner line currently at 546.69. As long as it's doing that, it maintains vulnerability to a line currently at 544.95. This is opex Friday, though, and anything goes. OEX at 546.24 as I type.

Jonathan Levinson : 10/21/2005 10:09:11 AM

QQQQ's current decline still presents that bull flag/bear topping pattern dilemma. If the former, a break above 38.64 should be accompanied by a burst of volume to confirm a breakout. If the latter, look for the same action on a break below 38.49.

Linda Piazza : 10/21/2005 10:07:33 AM

OEX Trade Exit Point Alert
I want to take a quick exit on this official play, so exit at 545.35, if hit. Those who are nervous about the play have already had an opportunity exit at either breakeven or for a small profit, and I wouldn't feel a bit badly about doing that at any time during the course of this play.

Jeff Bailey : 10/21/2005 10:07:51 AM

Caterpillar (CAT) $49.39 -6.80% Link ... probes its 200-day SMA on earnings outlook.

Jonathan Levinson : 10/21/2005 10:07:11 AM

Headlines:

LOUISIANA SEPT. EMPLOYMENT DOWN 251,000

LOUISIANA SEPT. UNEMPLOYMENT RATE 11.5% VS. 5.8%

MISSISSIPPI SEPT. EMPLOYMENT DOWN 59,700

MISSISSIPPI SEPT. UNEMPLOYMENT RATE 9.6% VS. 6.8%

I'll try to track down the source of these reports.

Jeff Bailey : 10/21/2005 10:06:20 AM

10:00 Market Watch found at this Link

Jonathan Levinson : 10/21/2005 10:05:39 AM

Volume breadth is down to +1.92:1 on the NYSE, +2.15:1 on the Nasdaq.

Linda Piazza : 10/21/2005 10:01:18 AM

Advdec line still not dropping. Would like to see it drop after the second 15-minute period's doji.

Jeff Bailey : 10/21/2005 10:02:48 AM

CBOE Internet Index (INX.X) alert ... 205.25 +2.17% ... breaks above major resistance of 204.45. Chart from 08/03/05 Market Wrap at this Link

Jonathan Levinson : 10/21/2005 10:00:46 AM

With 4.44% support broken for the ten year note yield this morning, 4.3%-4.4% is key support below which the overdue daily cycle downphase should kick off.

Jonathan Levinson : 10/21/2005 9:58:42 AM

Session high for ten year notes following the repo announcement, TNX down to a 5.3 bp drop at 4.406%. IRX is down .5 bps at 3.755%, more flattening of the yield curve.

Linda Piazza : 10/21/2005 9:57:58 AM

OEX Trade Signals
So far, nothing alarming happening, but the advdec line is not doing what we want yet, either. It's producing a doji on top of a climb, but needs to follow through with a drop. If you're worried, you should be able to exit now for about BE.

Jonathan Levinson : 10/21/2005 9:57:34 AM

The Fed announces a generous 5.5B 6-day repo, adding net 1.25B and driving the stop out rate down to 3.69. There was less of a demand for the money than yesterday, and the 6 day repo leaves the door open for another operation over the next half-hour.

Jonathan Levinson : 10/21/2005 9:55:50 AM

QQQQ is tracing what is either a steep bull flag or a rounded top off the opening high. The drop looks too steep to be a bull flag, but anything goes this week. A short cycle downphase has kicked off here, with 72 SMA up to 38.42 confluence, below which the 30 min cycle upphase will at least stall. Link

Jeff Bailey : 10/21/2005 9:55:14 AM

Bullish day trade stopped alert ... for SanDisk (SNDK) $52.90 +14%

Jeff Bailey : 10/21/2005 9:51:07 AM

SanDisk (SNDK) $53.51 +15.35% ... day trader's chart at this Link

Linda Piazza : 10/21/2005 9:50:54 AM

Here's what I see on the advdec line. It has begun dropping, but not too far yet. We want it to drop further, and would like to see it below 1250 by the end of the first 30-minute period. I'm not sure it will drop that far. It's at 1675 now.

Linda Piazza : 10/21/2005 9:49:38 AM

OEX Entry Point Alert
OEX at entry 547.02. OEX 560 put at entry 12.20-13.50. I'm learning one of the drawbacks of posting trades live. I didn't get into the play as I was so busy noting this information for you, waiting until after I'd posted and written this down to attend to my own entry. Too late then, but ethically, I didn't want to try to get in front of you with my own entry. Sometimes I will because I will have taken an even riskier entry. OEX currently at 546.26 and rising within its bear flag shape.

Jonathan Levinson : 10/21/2005 9:46:41 AM

Volume breadth is down to +2.06:1 on the NYSE, +2.98:1 on the Nasdaq, still quite strong.

Jonathan Levinson : 10/21/2005 9:46:12 AM

GOOG has no doubt sent another busload of bears off to the hospital... a repeat of last quarter's earnings (and since).

Linda Piazza : 10/21/2005 9:43:17 AM

OEX Entry Point Alert
Aggressive traders only. This is riskier than my usual plays and a good time for you to just monitor a play if conservative or with a small account. Enter a bearish OEX play. Set stop at 550.05. May be a quick one, and feel free to take your profit the moment you have any.

Jeff Bailey : 10/21/2005 9:43:11 AM

Bullish day trade long alert for SanDisk (SNDK) $53.96 +16.23% here, stop $52.90, target $57.00.

Jonathan Levinson : 10/21/2005 9:42:37 AM

The Fed has 4.5B in expiring repos today, the announcement due in 15 minutes.

Linda Piazza : 10/21/2005 9:40:41 AM

OEX Entry Point Alert
May be setting up for a bearish play, but it will be a high-risk. Aggressive traders only. Stand by. I'm not sure yet.

Jonathan Levinson : 10/21/2005 9:38:49 AM

Shorts who can tolerate wider stops will be looking to use yesterday's high as a benchmark. With at 38-39 op-ex range, I will be avoiding placing any bets near the middle of the range, and will try to hold out for a panic upside run to fade. QQQQ/NQ have been stronger than their peers this week.

Linda Piazza : 10/21/2005 9:37:13 AM

OEX Keltner picture: This gives a different picture than does the advdec line. The OEX is climbing strongly, straight into the first resistance at 546.99 on 15-minute closes, with the OEX currently at 547.53 and with much time still left on the 15-minute period. The advdec line is already way overdone to the upside, though, setting up as it sometimes does on pop-and-drop days. That's not confirmed, though, as there's been no pullback in the advdec line. I'm watching, and would love to see the OEX up as high as possible and then have a bearish play set up, but I'm not going to call a play on opex Friday with so much craziness going on and without a stellar setup.

Jonathan Levinson : 10/21/2005 9:36:02 AM

QQQQ edges back from a high of 38.71, whereit broke 30 and 60 min channel resistance again. 38.50 is first support, with the 72 SMA now at 38.40, which acted as a pivot yesterday: Link

Jonathan Levinson : 10/21/2005 9:34:25 AM

Back online (phew).

At the open, volume breadth is +4.38:1 on the NYSE, +5.69:1 on the Nasdaq.

Linda Piazza : 10/21/2005 9:34:09 AM

Markets are setting up for a possible pop-and-drop day. Not confirmed yet, but I'm still watching.

Linda Piazza : 10/21/2005 9:32:41 AM

Careful out there, as the advdec line may be setting up for a pop-and-drop scenario.

Linda Piazza : 10/21/2005 9:31:35 AM

OEX rising in early trading, but advdec line is not setting up for a long play.

Linda Piazza : 10/21/2005 9:30:55 AM

Jonathan has just called and has said that his Internet is down and that he'll get to another computer and post as soon as he can.

Jeff Bailey : 10/21/2005 9:21:44 AM

Google (GOOG) $303.20 Link ... Most actively traded stock in this morning's pre-market and higher at $347.13.

Jeff Bailey : 10/21/2005 9:20:14 AM

Albertsons (ABS) $23.60 Link ... 1.9 million share block being crossed in pre-market at $23.60.

Jonathan Levinson : 10/21/2005 9:13:42 AM

WASHINGTON (MarketWatch) -- The Federal Open Market Committee will likely drive short-term rates to 4.75% by March to counter higher inflation and growth, Lehman Bros. chief economist Ethan Harris said Friday in a note to clients. Previously, Lehman was forecasting a top federal funds rate of 4.50%, up from 3.75% currently. Harris increased his forecast for consumer price inflation to 4.6% from 4.1% in both the fourth and first quarters, while gross domestic product will grow at a 3.5% rate in the first quarter, up from a forecast of 3% earlier. Lehman stills expects the FOMC to cut rates late next year.

Jonathan Levinson : 10/21/2005 9:06:16 AM

Yesterday morning, I posted a chart of the months preceding the Oct. 1987 crash, highlighting the daily cycle upturn that took place 4 days before the fateful slide. A rally launched from an oversold daily cycle and doji bottom, breaking the previous 2 days' highs before settling back above the previous day's high. The next day, the rally was completely reversed in a bearish engulfing candle, and the decline continued for 2 days, following which the bottom dropped out. Link

This morning's bounce needs to take out yesterday's high in order to invalidate a variation on that scenario. Wednesday's rally was relatively stronger than that which preceded the 1987 crash, and yesterday's precipitous drop on the Dow didn't take out the previous day's low. On top of these differences, it's worth adding again that crashes are extremely rare and unlikely events. Analysts seem to have a great affinity for calling for "crashes," and I'm not doing that here. But it's worth studying the old charts to consider all options. Bulls want to hold and add to these gains today in order to further differentiate this week's action from that which we see in the chart above.

Linda Piazza : 10/21/2005 8:55:29 AM

Wow! Wasn't yesterday a bearish day on the OEX! And wasn't that surprising after such a strong day the day before? And wasn't it nice for bears to get that strong run down?

If anyone read yesterday morning's OEX update, you know where I'm going with this, don't you? Is anyone suspicious? I'm not suspicious, but I do believe this is all just part of a churning-around thing that the OEX does after it's moved strongly. Sometimes it churns for days, but most often it does for at least a week or two. And that's what it's been doing now. And, until it stops, we should assume that we're going to have alternating up and down days, with an occasional doji sprinkled in to add a little challenge. Doji days are terrible to trade.

The advdec line set up the possibility of a bounce this morning. That will be particularly true if one of two things happens: if the advdec line opens near -3600 to -3900 and then reverses higher and hard in the second or third 15-minute period of the day or if the advdec line opens near -1200 to -900 and then climbs. Be wary, though, if the advdec line opens near +800 as we'll be watching very closely for a rollover if that happens.

An early morning bounce might not produce anything other than a scalping move, even if parameters set up for such a move. My first thought, however, is that aggressive scalpers will be looking for an opportunity to get long this morning, and I'll watch to see if that happens. If there's a stellar setup, I'd like to enter a scalping long close to yesterday's low as possible, though, as there's at least a fair possibility that the OEX might settle somewhere around 550. Front-month OEX options are going to be absolutely pouring premium this morning, though, and so an entrance has to be stellar. I'm not going to call it if it doesn't set up that way. If it does, expect the play to be over quickly and don't expect to be greedy with the profit. Friday is not my best trading day on any week and opex Friday's can be horrible to trade.

A note to traders again about the trades I might post. My trades are scalping plays only. They usually require high-delta options so you can get enough movement in the option to be profitable if there's only a 2-point move in the OEX. I like to have deltas of .7 or above for calls and of -.7 or below for puts. Today, being opex Friday, I think it's okay to try a lower-delta option, but the difference between a profitable and losing OEX options play is sometimes established when you decide which option to buy. The OEX can move your direction and you could have gotten a good entry and exit, but if your option has too low a delta, it might not move enough to cover your commissions and the part of the bid/ask spread you had to pay on both sides of the trade.

I explained how I chose options in my Traders Corner article last weekend. You can find the information there, and also the cautions. A high-delta option is going to lose money quickly if the trade goes against you, and my type of trades sometimes go really bad before they go good. That's just the way the system works. I don't recommend that you just take my trades automatically as they might not be suited for you. If you're going to be too squeamish about those unrealized losses, then you'd be likely to bail at the wrong time and then you're accumulating too many losses. I said yesterday that it's a backwards system and it is. Most systems keep losses small, let winners run, and have a hefty proportion of losing to winning trades, as many as a third of the trades being losing ones, but the winners make up for the losers. Mine are different, as the winners are often quite small, the unrealized losses often quite big, but almost all trades profitable. Ultimately. If you can stand the heat. And, of course, if an exit must be taken, then the loss is often bigger than is entirely comfortable. It is not a system for all. If you have a small account and our first trade is a losing one and a big losing one, then, well, you've risked too much for the comfort of your account. If you can't afford to buy high-enough deltas, you're not going to see the same results. If your account is smaller than $25,000 (don't be embarrassed--I've been there before, too), you can't scalp in and out more than three times a week if those day-trading rules are still in effect (never did understand those rules as its your money and your decision, in my mind), and if those trades happen to be losing ones, well, then you might not be able participate in the big profits when it comes along. In the last two months, I have never had more than two losing trades in a row (and that was only once, on the last opex Friday), but that doesn't mean that I won't start right now. It's nerve-wracking doing this in public, and you can expect some errors.

So, I would never blindly follow another trader without tracking some of his or her trades. Over the last several months, I've been kind of unofficially calling plays. You'll find lots of references to "if you're an aggressive OEX trader," for example. If you haven't been tracking those and seeing how you feel about them, then certainly track some of these before you invest your money in trades I'm calling. Make sure you feel comfortable with the way they proceed.

Jonathan Levinson : 10/21/2005 8:52:36 AM

The strong bounce in QQQQ has turned the 30 min cycle up from above oversold territory, while the 60 min cycle continues early in its downphase. The price has actually exceeded 30 and 60 min channel resistance at 38.56, and a short cycle upphase is just approaching overbought territory. This cycle opposition usually yields net chop as traders working different timeframes battle it out, and sidewats chop is classic op-ex stuff. There's a decent chance of a gap & crap open from this setup, and QQQQ is edging back as I type, but as we saw yesterday, this has been a violent op-ex week so far and surprises can easily happen.

Jonathan Levinson : 10/21/2005 8:23:24 AM

GOOG has made it to a 13.72% gain here at 344.85, and the broader market is up strongly, QQQQ now +.30 to 38.61. Bonds are in the green as well, TNX down 1.3 bps at 4.446%. Natural gas slides further to a new low at 13.06, -1.4%, and crude oil is down .40 at 59.625, 20 cents off the low.

Jonathan Levinson : 10/21/2005 7:09:49 AM

Equities are up, ES trading 1183.75, NQ 1571.5, YM 10326 and QQQQ +.21 at 38.53. Gold is up 1.80 at 465.20, silver -.017 at 7.643, ten year notes are up 1/4 at 109 1/4, crude oil is down 35 cents at 59.675 and natgas is down .045 at a session low of 13.20.

There are no major economic reports scheduled for release today.

Linda Piazza : 10/21/2005 6:01:41 AM

Good morning. The Nikkei was more than 150 points in the red at one point last night, but eked out a positive close. Many other Asian markets closed in the green, too, but European markets turn lower this morning. As of 5:55 EST, gold was higher by $1.90 to $465.10, and crude, lower by $0.25 to $59.77. More details about Asian and European markets follows in succeeding paragraphs.

Before the Nikkei's open, Japan's August Tertiary Industry Index was released, with that number rising for the first time in two months. It increased a higher-than-expected amount, to a 1.7% gain, month over month. The All-Industries Activity Index also rose more than expected, by 1.1% month over month. Those numbers weren't enough to save the Nikkei from an early rout, though. The Nikkei gapped almost 125 points lower at the open, dipped down a bit lower, and then climbed most of the rest of the day. It eked out a positive close, up 9.49 points or 0.07%, at 13,199.95.

In earliest trading, exporters had declined after the U.S. bourses fell and the leading indicators disappointed, with investors afraid that their earnings may be impacted by any downturn in the U.S. economy. Toyota Motor Co. ended the day lower. Toshiba gained in early trading, however, after the company announced that it would increase capital spending so that it could speed up production of flash memory chips. It ended the day 2.3% higher. Tokyo Steel Manufacturing Co. was an early decliner, with the electric-furnace steelmaker noting that Chinese shipments into Japan had increased. The company trimmed its profit forecast for the full year. Other steel-related issues dropped, too.

Other Asian markets were mixed, but the ones usually covered in this report were mostly higher. The Taiwan Weighted lost 0.16%, but South Korea's Kospi gained 1.83%. The Monetary Authority of Singapore reported expectations for a rebound in the construction industry. Singapore's Straits Times rose 0.56%. Hong Kong's Hang Seng climbed 0.55%, and China's Shanghai Composite gained 0.47%.

European markets turn lower. CNBC Europe commentators noted that yesterday's reporting companies helped buoy the markets, but today's have added pressure. Ericsson reported a 6% decline in third-quarter sales and a decline in gross margins to 45.2% from the previous 47.1%. In addition, U.K. catering group Compass plunged after it announced the resignation of the chief executive of a division as a result of a UN corruption probe, an investigation the company had already revealed. In France, September's Household Spending fell 0.6% month over month, with the results considered roughly in line with expectations. The number had been expected to show a stronger decline, but August's number was revised lower, so the number stood about where expected when compared to that revised-lower August figure. The third-quarter average remains about 2.3% above the second quarter's, buoying hopes for France's GDP to recover from recent stagnating numbers, although retail spending was one of the components lower in the September number. In Italy, August's Retail Sales climbed 0.6% after declining in the previous two months. The year-over-year rate rose to 2.4% from its previous -2.1%. Since consumer confidence rose in September, many look forward to more gains in retail sales in that month. In the U.K., the GDP rose 0.4% quarter-over-quarter and 1.6% year-over-year. This number was characterized as meeting expectations, both in print and on CNBC Europe. Most of the growth came from services. Hotels and restaurants saw declines, however, at least partially attributable to the results of this summer's bombings.

As of 5:56 EST, the FTSE 100 was lower by 12.00 points or 0.23%, to 5,152.10. The CAC 40 was lower by 6.54 points or 0.15%, to 4,384.12. The DAX was lower by 10.36 points or 0.21%, to 4,853.89.

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