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Jeff Bailey : 10/28/2005 1:36:32 AM

Program Trading Levels for Friday ... HL Camp & Company has their computers set for program buying at $+4.11 and set for program selling at $+1.49.

Tab Gilles : 10/28/2005 12:58:04 AM

$NASI/$VXN/$NAHL/$NDX daily and weekly charts Wednesday, based on the weekly chart, entered a 1/2 position on the UOPIX Profund. I was looking for a break over 1600 to add, however it appears that a retest of the recent low of 1520 maybe on the horizon. The daily $NASI reversed again as it has in the last several weeks as highlighted on the chart. The $VXN had a huge jump on the daily chart. Let's watch over the next several days, we may even get a reversal on the weekly $NASI. That said I still believe we are more near a bottom and that a year end rally is coming. Link Link Link

OI Technical Staff : 10/27/2005 9:59:59 PM

The Market Monitor has been archived.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

Disclaimer: Stocks discussed in the Market Monitor are for educational purposes only and any analysis is not meant to imply a recommendation for or against that stock. The analysts in this forum as on any other website are prohibited by the SEC from giving any specific advice to ANY individual trader. All information posted is for ALL readers and is not meant to be directed to any individual. Our analysts cannot answer any email questions regarding any specific stock. Please do not ask and please do not take offense if requests are denied.

Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in most cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.

Jeff Bailey : 10/27/2005 8:25:47 PM

KLAC ... OPTION chain shown earlier this afternoon at this Link . $45.00 - 0.88 = $44.12. Last tick in extended session was $44.13 and gives idea that a computer is squaring up against that OPEN INTEREST.

Now here is the closing option chain, sorted again my November daily volume. See how the $47.50 CALLS "ramped" in volume to finish #2? Link

$47.50 - 2.06 = $45.44.

It is pretty early to be thinking about November expiration, but traders know where the OI currently is, and most likely, the market maker wants the $45 and $47.50 strikes to go "POOF."

Jeff Bailey : 10/27/2005 8:21:17 PM

KLAC ... OPTION chain shown earlier this afternoon at this Link . $45.00 - 0.88 = $44.12. Last tick in extended session was $44.13 and gives idea that a computer is squaring up against that OPEN INTEREST.

Now here is the closing option chain, sorted again my November daily volume. See how the $47.50 CALLS "ramped" in volume?

$47.50 - 2.06 = $45.44.

It is pretty early to be thinking about November expiration, but traders know where the OI currently is, and most likely, the market maker wants the $45 and $47.50 strikes to go "POOF."

Jeff Bailey : 10/27/2005 7:57:22 PM

Trader's Tip Alert ... Here's something I've been noticing in stocks that have seen some sharp gaps lower of late. 3 Chart montage of LSI, PLAY and now try and envision what KLAC might do in the morning. Link ...

Trade Strategy for KLAC could simply be to close out the two (2) puts at the open and move on. Don't get "APPL'd".

Another strategy is to understand volatility will be high. Use it and close out one (1) of the options, then have the POSSIBILITY of distribution lower to the close, and POSSIBLE greater profitability on the other put. With this strategy, the DIVERGENCE to the past as noted in LSI and PLAY. If a trader sees DIVERGENCE, then close out the other put option.

Remember how we got "juked" out of our GAP HIGHER trade in SNDK as it juuuuust undercut the opening minute lows? Then rocketed higher to close at HIGHS of the session on 10/21/05? Here's that Link

Jeff Bailey : 10/27/2005 6:38:36 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/27/2005 6:32:14 PM

Closing Internals found at this Link

Jeff Bailey : 10/27/2005 6:04:52 PM

KLA-Tencor (KLAC) extended session alert ... Stock trades $44.00 here.

IF a trader bought 2 of the KLAC Nov. $47.50 Puts (KCQ-WT) for $1.75 then ...

Buying 200 shares of the stock here in extended session, would lock in 100% on the put options.

$1.75 x 2 = $3.50. $47.50 - $3.50 = $44.00.

Jeff Bailey : 10/27/2005 5:22:53 PM

Kla-Tencor (KLAC) alert ... dropping suddenly in extended to $44.66. Conference call underway. I'm not listening, but see 86,000 traded on downtick from $47.00 to $46.35.

Jeff Bailey : 10/27/2005 5:12:42 PM

Current OPEN MM Profiles found at this Link

Today's Activity ... Swing trade put a full position (two 2) of the KLA-Tencor KLAC Nov. $47.50 Puts (KCQ-WT) at the offer of $1.75. Have established a stop of $1.40 on the options, so probably equivalent to $48.60 on the stock. Would close for a double, but stock has been steady in extended session.

Jeff Bailey : 10/27/2005 5:02:40 PM

Swing trade short lower stop alert ... for the 1/2 bearish position in Nortel (NT) $3.27 -2.38% ... to $3.37.

Jeff Bailey : 10/27/2005 4:41:03 PM

Swing trade put establish stop alert ... With KLAC $46.62 here in extended session, will establish a stop on the two (2) KLAC Nov. $47.50 Puts (KCQ-WT) at $1.40.

Jeff Bailey : 10/27/2005 4:20:33 PM

KLA-Tencor (KLAC) $47.23 -2.49% ... active at $46.50. Headline $0.50 (excluding charges of $0.12 per share) vs. consensus of $0.49.

Jeff Bailey : 10/27/2005 4:15:28 PM

KLA-Tencor (KLAC) alert $47.23 -2.49% ... waiting on earnings here.

I've stuck an extended session bid at $42.60 against long $47.50 puts. IF a knee jerk trade at $42.60 is hit, then protected by the puts and a profit locked in.

Linda Piazza : 10/27/2005 3:55:34 PM

The advdec line is set up to show a potential for a bounce tomorrow, but that could be a bounce from a gap lower and it doesn't suggest how high any bounce could be. The OEX has reached potential support, too, but with the GDP before the open, we start over tomorrow morning.

Linda Piazza : 10/27/2005 3:54:14 PM

And the OEX is just cents away now from its 30-minute target.

Linda Piazza : 10/27/2005 3:52:18 PM

It's not sticking, with the OEX drifting down a little, but not below the LOD yet. That's at 545.95, with the Keltner 30-minute target at 545.65.

Linda Piazza : 10/27/2005 3:49:10 PM

Looks as if the shorts are going to try to cover into the close, since they couldn't drive the markets lower after MOC orders hit, but the advdec line really isn't climbing yet, so it's a little iffy as to whether this will stick.

Linda Piazza : 10/27/2005 3:46:06 PM

OEX still testing that Keltner resistance at 546.77 on 15-minute closes, with the OEX at 546.63 as I type. The advdec line is trying to steady, but not really bouncing yet.

Linda Piazza : 10/27/2005 3:41:11 PM

From this point out, it's all about positioning before the close, and chart formations may have little predictive power over what's going to happen the last few minutes of the day. The OEX continues to find resistance at 546.77 on 15-minute closes with the next downside target at 545.68 as long as it's doing so, and that's about all that can be gleaned from the charts right now.

Jeff Bailey : 10/27/2005 3:42:45 PM

Not a single sell program premium since the one at 11:50-11:55. That one was shallow too at 1.45.

Also gives me the observation that the selling isn't overly harsh, just not a lot of aggressive/eager buyers.

QQQQ $38.17 ... when volume came in at the lows (as SPY filled its gap) that was the best showing among buyers today.

Linda Piazza : 10/27/2005 3:35:45 PM

OEX bouncing a little. Bears want it to continue closing 15-minute period beneath the Keltner resistance now at 546.80. OEX at 546.66 as I type, bouncing more as I typed.

Linda Piazza : 10/27/2005 3:33:43 PM

Remember that MOC orders in a few minutes, at about 3:40, could change things, so keep tightening those stops.

Linda Piazza : 10/27/2005 3:32:53 PM

OEX just above the previous t46.00 LOD. Advdec line going sideways. Oops. There went the OEX, just a touch below the previous LOD.

Linda Piazza : 10/27/2005 3:28:26 PM

The OEX is currently testing resistance at 546.90 on a 15-minute close, and bears would like to see that resistance hold on the close of this current 15-minute period. OEX at 546.49 as I type.

Jeff Bailey : 10/27/2005 3:25:55 PM

SPY for a real bearish close, watch that WEEKLY Pivot now. If they wack it there and SPY goes out at lows of the session, then I'd have to view that as negative for tomorrow morning's open.

Linda Piazza : 10/27/2005 3:24:58 PM

Speaking of the RUT, it's hit or at least approached the actual ascending trendline off the October low, with that trendline at about 623.14. I mentioned it earlier today and I think Keene mentioned something about that level, too. The RUT LOD has been 623.54, so it's come pretty close and it's now at 624.61, having bounced a little from the LOD. Keep a watch on this, as bulls are trying to step in here and buy this trendline and the RUT can sometimes give us a heads up on sentiment.

Jeff Bailey : 10/27/2005 3:24:54 PM

Aha! ... That big volume in the QQQQ, you see it too. Check out the SPY $118.23, where it fills that gap from 10/21 close to 10/24 open. Understand too the "large block" level dating back to April of $118.17.

After an SPY $120.50, has to be some short covering on this excessive weakness. No?

Jeff Bailey : 10/27/2005 3:21:35 PM

There's some volume ... QQQQ $38.13 -1.75% ... 6.42 5-minutes ago and comes from session low of $38.04 to $38.12.

Linda Piazza : 10/27/2005 3:21:00 PM

I certainly wish there would be a gully-washer type ending to the day and bulls would just capitulate (but not too much since my RUT bull put spread would be in trouble--smile) and then we could get a trend started. I don't care which direction as long as we stop these wild swings.

Linda Piazza : 10/27/2005 3:19:23 PM

Advdec line still continuing lower, but it's also hitting potential support.

Linda Piazza : 10/27/2005 3:18:23 PM

OEX approaches its 30-minute target at 545.77. This channel usually holds the OEX prices, although it doesn't always of course. Keltner channels were invented to determine breakout plays, so of course there are breakouts. However, be wary of the possibility of a bounce now. I thought this had a decent chance of being hit, but I'm not sure of much more below this. Just not sure.

Linda Piazza : 10/27/2005 3:14:52 PM

I agree with Keene's 3:12:17 post about following more closely with your stops as the end of the day approaches. If you've got a full bearish position, I'd certainly be stepping out of it and then letting a bounce take me out. I wouldn't want to be holding anything other than a lottery-money position overnight.

Linda Piazza : 10/27/2005 3:12:54 PM

Close approach to the 30-minute target for the OEX, with that at 545.83, and with the OEX LOD at 546.39. As long as the OEX is producing 15-minute closes beneath 547.06, there's a decent chance of seeing that 30-minute target.

Jeff Bailey : 10/27/2005 3:05:54 PM

03:00 Market Watch found at this Link

Linda Piazza : 10/27/2005 3:04:20 PM

Advdec line still declining, reaching another potential level of support at about -3570, with the advdec line now at -3395, QCharts value.

Linda Piazza : 10/27/2005 3:02:24 PM

There was just a minimal close beneath 15-minute Keltner resistance, but minimal only. If the OEX stays beneath 547.16 on 15-minute closes, it has a better chance of reaching the 30-minute target. That sounds simplistic, and it is a bit, but the Keltner channels give up specific numbers to watch. Continued 30-minute closes beneath 548.50 keep that 30-minute target alive, but bears would rather see the OEX produce find resistance at that 547.16 level on 15-minute closes. It's being tested as I type.

Jeff Bailey : 10/27/2005 3:00:01 PM

Folks ... each time today we see one of these pushes lower, it sure looks to me like its a "bid puller," as if buyers just step away.

Linda Piazza : 10/27/2005 2:59:35 PM

There's the new LOD. The OEX is hitting the 15-minute Keltner support and actually dropping beneath it, so bears should be watchful for a possible bounce back above it, at 547.18. The 30-minute target is now 545.89, however. There's a fair chance at seeing it, although not yet probable.

Jeff Bailey : 10/27/2005 2:57:39 PM

Keene ! I'm just seeing your 12:05:36 post at the bottom of the MM.

Grin ... It could have been. Most CBOE traders root for the Cubs and don't like the Sox.

(grin)

However, it might have been the weakness in the dollar.

Linda Piazza : 10/27/2005 2:53:15 PM

I don't see any one chart formation that tells me definitively what's going to happen, and I'm convinced that during the last 30 minutes and maybe last hour of trading, that chart formations aren't going to dictate much anyway. It just depends on how people want to be positioned ahead of the MSFT earnings and the GDP tomorrow.

So far, there's been no change in trend in the advdec line. It's still finding resistance where it's always been finding resistance today, currently at -2900 to -2700, with the advdec line below that now, at -3199. The OEX is finding resistance on 15- and 30-minute closes where bears would want it to find resistance. There's danger of a double-bottom formation, but that's what stops are for.

Jeff Bailey : 10/27/2005 2:54:14 PM

KLA-Tencor (KLAC) $47.40 -2.14% ... Option Chain at this Link ... Tonight and tomorrow morning, depending on market reaction to earnings ...

For a "gorilla" trade to the downside, it would have to be my thought that bears need to see a GAP BELOW $44.00.

Trader's might review my "what I should have done" relating to the Apple Computer (AAPL) put trade we had on the night they reported. I made the "should have done" the following day at this Link and 10/13/2005 12:12:21 AM EDT.

Linda Piazza : 10/27/2005 2:50:01 PM

OEX Keltner resistance at 548.42 on 15-minute closes. Stronger resistance at 548.98 on 30-minute closes. OEX at 548.11 as I type.

Linda Piazza : 10/27/2005 2:42:11 PM

New LOD on the advdec line, but only minimally, and the OEX is trying to hold up and form a double-bottom formation. OEX at 547.70 as I type, with Keltner support at 547.33-547.40.

Linda Piazza : 10/27/2005 2:40:21 PM

OEX testing LOD.

Linda Piazza : 10/27/2005 2:38:11 PM

No new low on the OEX. Sure looks like it's going to keel over, but it just isn't doing it, and if it doesn't do it soon, then bears are going to get worried and start covering and bulls are going to get bolder and start buying. The Keltner resistance at 548.56 on 15-minute closes is still holding, and the advdec line stopped trying to climb, so there's hope for bears.

Jeff Bailey : 10/27/2005 2:31:22 PM

KLA-Tencor (KLAC) $47.42 -2.10% ... just under its WEEKLY Pivot $47.62.

WEEKLY Pivot Levels ... $45.20, $46.61, Piv = $47.62, $48.98, $49.99.

Jeff Bailey : 10/27/2005 2:29:38 PM

QQQQ $38.33 -1.23% ... slips back under WEEKLY Pivot here.

SOX.X 430.81 -1.99% ... pegged WEEKLY S1 from 01:20-01:25 PM EDT.

Linda Piazza : 10/27/2005 2:27:18 PM

OEX bears still want to see a move below the previous 547.61 LOD.

Linda Piazza : 10/27/2005 2:21:05 PM

Since the OEX held support at the 61.8% retracement of the rally off last week's low, it might be reasonable to expec it to attempt to retest the 50% retracement and see if it can get above that. That's at about 549.26. Bears would probably rather the OEX not climb that high, though, and continue to find resistance on 15-minute closes at the Keltner line now at 548.72. The OEX is at 548.65 as I type.

Linda Piazza : 10/27/2005 2:17:29 PM

No new LOD for the OEX to confirm its failed retest of resistance. No new LOD for the advdec line. The OEX retests first Keltner resistance at 548.70, currently, with 15-minute closes so far remaining below it. Keltner support is now at 547.51-547.77.

Bears need to be keeping their likely end-of-day decisions (hold overnight or not, lighten positions or not) in mind as they watch the OEX this afternoon. If your intention is to be flat by the end of the day, for example, you'd want to consider taking partial profits at some point, if you haven't already and then follow the OEX lower with your stops, letting it take you out on a bounce.

Jeff Bailey : 10/27/2005 2:15:53 PM

Have an enjoyable trip Jonathan!

Jeff Bailey : 10/27/2005 2:15:06 PM

02:00 Internals found at this Link

Jonathan Levinson : 10/27/2005 2:10:54 PM

See you on Tuesday.

Jonathan Levinson : 10/27/2005 2:09:12 PM

QQQQ is failing below declining 72 SMA resistance: Link

Linda Piazza : 10/27/2005 2:07:57 PM

The OEX has retested the triangle's resistance, and now bears need to see a new LOD to confirm that it's turning down from that resistance. Previous LOD 547.61. OEX at 548.16 as I type.

Jonathan Levinson : 10/27/2005 2:06:34 PM

Thanks, Linda.

Linda Piazza : 10/27/2005 2:05:47 PM

Have a good trip, Jonathan.

Jeff Bailey : 10/27/2005 2:04:08 PM

02:00 Market Watch found at this Link

Linda Piazza : 10/27/2005 1:59:57 PM

The OEX is testing the bottom support of today's triangle. It's also testing Keltner resistance, at 548.80 on 15-minute closes. Bears want it to continue to produce closes beneath that line to preserve today's trend. It's at 548.69 as I type. The advdec line rises, too, and bears want it to stay beneath about -2500, to preserve its downside trend. It's at -2862 as I type.

Jeff Bailey : 10/27/2005 1:57:09 PM

SPX 1,186.82 -0.38% ...

Jeff Bailey : 10/27/2005 1:56:33 PM

VIX.X 15.18 +4.04% ... tentative to the upside. Just under WEEKLY Pivot.

Jonathan Levinson : 10/27/2005 1:50:05 PM

I need to leave in the next 30 minutes, as I will be heading out of town. I will be back on Tuesday morning.

Although the intraday cycles are looking for a bounce at or near the bottom of steep declines, the tide appears to have turned for QQQQ from its higher high and lower low yesterday. Today's lower high and much lower low confirms what I take to be a turn in the daily cycle, though the indicators have yet to confirm. Barring a very strong bounce to close above 38.80 by the close today, the daily cycle should begin turning down, signalling a shift from "buy the dips" to "sell the bounces."

In the meantime, that intraday bounce is overdue, and volume breadth remains solidly negative at -3:1 on the NYSE and -4:1 on the Nasdaq.

Linda Piazza : 10/27/2005 1:46:51 PM

We're entering one prime stop-running time of day. Be careful here and decide ahead of time how you'll react--widen stops, narrow them? Bears with profits, I'd keep lowering those stops, remembering MSFT, as Marc warned, but also that GDP number tomorrow morning. This afternoon could be wild.

Linda Piazza : 10/27/2005 1:43:36 PM

The advdec line is trying to climb again. As long as it stays beneath -2500 or so, the downtrend won't have changed, and bears don't want it to have changed.

Jonathan Levinson : 10/27/2005 1:38:38 PM

60 min QQQQ chart, at bullhorn support: Link

Jonathan Levinson : 10/27/2005 1:36:59 PM

Marc, it's served as confluence in the past, and was the midpoint of a 38.20-.40 range 3 weeks ago before the price broke and fell to the 37.40 area. 38.20 looks like more serious support on that basis- acted as support and resistance earlier this month.

Linda Piazza : 10/27/2005 1:36:39 PM

OEX pausing at the 61.8% retracement of the rally off last week's low into this week's high. That's at about 549.26.

Jonathan Levinson : 10/27/2005 1:33:52 PM

Volume breadth is down to -3.1:1 on the NYSE, -4.44:1 on the Nasdaq. Last Friday's lows are being tested at current levels, commensurate with the secondary bear wedge that broke yesterday. The implied target on the primary bear wedge could be lower, in the 37.60 area. As the daily cycle upphase is looking more and more like it topped, the bears continue to have the edge. First sign of trouble for bears will be a break above S2 at 38.40. The flag top at 38.55 is the top of more serious confluence. 5 day 100-tick compressed chart at this Link

Linda Piazza : 10/27/2005 1:27:07 PM

OEX jumping back up to retest the broken support of its triangle formation. Bears never like to see candles that spring up as the last five-minute one just did, but prices haven't broken back inside the triangle, so that's good. Bears, keep lowering your stops as appropriate, and remember tomorrow's GDP number as you're making decisions. I'd sure want to take some profits off the table sometime today, if you haven't already.

Linda Piazza : 10/27/2005 1:24:24 PM

On any bounces of the advdec line, bears want to see it stay below about -2450 to -2400. It's a -3018 as I type, QCharts value.

Jonathan Levinson : 10/27/2005 1:23:31 PM

Crude oil is up a nickel here at 60.70, 40 cents off the low, natgas -.48 at 13.58, 21 cents off the low.

Linda Piazza : 10/27/2005 1:23:14 PM

OEX back at the 15-minute Keltner target, now at 547.66, pushed lower by the OEX as it dropped. On any bounces, OEX bears want to see the OEX find resistance on 15-minute closes at the Keltner line currently at 549.10.

Linda Piazza : 10/27/2005 1:21:25 PM

New LOD for the OEX. If this consolidation was happening midway through the drop, as sometimes happens, we may yet see that 30-minute Keltner target, now at 546.09.

Jonathan Levinson : 10/27/2005 1:20:57 PM

New sell signal for the short cycle on QQQQ- the bounce never managed to turn the oversold 30 min cycle back up, currently trending in oversold territory.

Linda Piazza : 10/27/2005 1:19:15 PM

Previous LOD was 548.24 and the OEX just ticked down to 548.30, testing that previous LOD. Bears need to drive the OEX lower to avoid a potential double-bottom setup. Advdec line headed lower again, so it's possible.

Jonathan Levinson : 10/27/2005 1:17:57 PM

Volume breadth hits new lows, -3.16:1 on the NYSE, -3.23:1 on the Nasdaq.

Jonathan Levinson : 10/27/2005 1:17:33 PM

QQQQ drops back out of the rising channel and tests double bottom support: Link . Failing as I type.

Jeff Bailey : 10/27/2005 1:16:45 PM

Chiron (CHIR) $43.95 +1.31% ... lurched from the $43.00 level on news that the U.S. Govt. awarded the company a $62.5 million contract to develop a vaccine against the Bird Flu.

Linda Piazza : 10/27/2005 1:16:23 PM

The OEX kept trying to break out of the triangle to the upside, but never could, so now it's testing the bottom support of that triangle, now at 548.57. The OEX's next support is at 547.82-548.22 on the 15-minute chart, but I think it's the triangle that's guiding its trading pattern now. The OEX is at 548.60 as I type.

Jeff Bailey : 10/27/2005 1:14:03 PM

01:00 Internals found at this Link

Linda Piazza : 10/27/2005 1:07:27 PM

OEX still closing 15-minute periods along the resistance (now also support?) of the Keltner line currently at 549.47 on 15-minute closes. Next resistance from 550.42-550.80 on 15-minute closes. Next support 547.92-548.49.

Jeff Bailey : 10/27/2005 1:03:19 PM

01:00 Market Watch found at this Link

Jonathan Levinson : 10/27/2005 1:00:50 PM

Recall that even his "helicopter drop/printing press" speech was just on the heels of the 2002 drop, when deflation was much more of an immediate concern. If the fear is asset-price inflation, he might be less dovish now than he was in 2002. Again, just guesses.

Linda Piazza : 10/27/2005 12:59:13 PM

Thanks, Jonathan. I've heard so many things that my head is reeling. I've heard he's more dovish than Greenspan and, conversely, that he'll follow Greenspan's script, in part to gain credibility, as the article you read suggested, that he's his own man and likely to not be a slave to former policy, and, conversely, that he hasn't expressed any independent thoughts other than wanting to see harder targets. About the only thing people seem to agree upon is that Greenspeak may be on its way out.

Jeff Bailey : 10/27/2005 12:55:22 PM

Exxon Mobil (XOM) $56.13 -0.12% ... OEX heavyweight and INDU component trades near unchanged after the energy giant said net income surged 75% to $9.92 billion, compared to $5.68 billion a year ago. Excluding items, profit was $8.3 billion, or $1.32 a share, which was below the $1.38 consensus.

Revenue rose 8% to $76.44 billion, in spite of an 11% decline in oil and natural gas output.

According to the Associated Press, XOM's Q3 revenue was greater than the annual gross domestic product of some of the largest oil producing nations, including the United Arab Emirates and Kuwait.

Linda Piazza : 10/27/2005 12:54:08 PM

So far, the OEX keeps finding resistance on 15-minute closes at the Keltner line currently at 549.40. As it does so, the nearest support and the nearest resistance flatten and firm up. The Keltners don't know where the OEX is going next, either, or at least don't reveal it.

Jonathan Levinson : 10/27/2005 12:54:16 PM

Linda, one thesis I've read (I think in the New York Times) is that Bernanke will need to continue raising so as to gain some credibility as an inflation fighter. It's all guesswork, but the expectation under that thesis was for a move to 5% as representing "neutral" policy. Who knows. 5% would surprise me quite a bit, but it wouldn't be the first time.

Linda Piazza : 10/27/2005 12:44:27 PM

Remember GDP tomorrow morning, before the open, and FOMC decision next Tuesday. The close proximity of the two will likely lead to a lot of positioning this afternoon ahead of the GDP decision. It's difficult to guage which direction that's likely to be. Will participants count on a strong GDP and will that be good or bad with Greenspan leaving and Bernanke likely taking over the reins before the end of the tightening cycle? Do we go ahead and hope for a strong GDP because Bernanke is less likely, we think, to tighten once too many times?

Linda Piazza : 10/27/2005 12:36:55 PM

OEX was tentatively breaking above the triangle's top trendline now, but the advdec line hasn't yet been able to pop above resistance, so no confirmation. Advdec line testing resistance now.

Linda Piazza : 10/27/2005 12:36:05 PM

Keene's right with his comments on the Futures side as to the formation on the ES. The OEX is also forming a triangle at the bottom of the decline. Or is that a double-headed inverse H&S (which is possible. At any rate, the OEX is testing the descending trendline/neckline/whatever, and a sustained break above it would have us on the watch for a retest of the former ascending trendline off last week's low.

Jonathan Levinson : 10/27/2005 12:34:57 PM

Volume breadth is -2.48:1 on the NYSE, -2.34:1 on the Nasdaq.

Jonathan Levinson : 10/27/2005 12:34:05 PM

Despite this bounce, there's been no improvement in volume breadth. But the price has exceedede the declining 72 SMA at 38.50, the first sign of trouble for intraday cycle bears. Price is still very heavy, but the trending 30 min cycle downphase is over so long as price holds above 38.50. I expect very little from a 30 min cycle upphase here, and 30/60 min cycle channel resistance are no more than 18 cents above current levels: Link

Jeff Bailey : 10/27/2005 12:22:57 PM

12:00 Internals found at this Link

Table of Internals found at this Link . At very bottom of table, I also like to track the 5-day and 10-day a/d average.

Linda Piazza : 10/27/2005 12:22:41 PM

Bear flag. Possible inverse H&S. Possible larger bear flag. Possible rectangular consolidation zone. These are the progressions the OEX's current consolidation has been going through. Some of those are bearish, one bullish, and another bearish, but with a more bearish probable outcome since it formed after a drop. It's just hard to tell what the OEX is going to do next until it does it. Resistance holds so far on the advdec line, showing the potential for a drop to -2900 to -3400 as long as that resistance continues to hold. Bullish value/RSI divergence has been showing up since late yesterday on that line, not meaning anything so far, but certainly offering a warning to be careful.

Linda Piazza : 10/27/2005 12:14:03 PM

Advdec line still not able to break above first resistance, now at about -2300 to -1950, with the advdec line at -2521, QCharts value.

Jonathan Levinson : 10/27/2005 12:11:10 PM

Headline:

SEN. SHELBY SEES BERNANKE FED CONFIRMATION HEARING IN NOV

Linda Piazza : 10/27/2005 12:07:46 PM

What I think is happening is that the OEX is trying to form up a wider bear flag, perhaps to rise high enough to retest the 550.40-551 zone. I don't know if it's going to be successful or not, as I said earlier. Just have to wait it out. I think there's a decent chance, but not yet a probability, of seeing the 30-minute downside target of 546.29, but probably not before a retest of the 550-551 zone, and we just can't predict whether that resistance will hold or not until we see the test.

Jane Fox : 10/27/2005 12:06:08 PM

The red trendline is where I think the bears should start to worry. Link

Jonathan Levinson : 10/27/2005 12:05:55 PM

Stepping away for a few minutes.

Jonathan Levinson : 10/27/2005 12:04:13 PM

The bounce is back to testing the broken rising support: Link . Quite right, Mark- it's a mini/fractal-version so far of the broader wedge breaks we saw earlier this week at higher levels. The difference for QQQQ here is that the 30/60 min cycles are oversold instead of overbought, so there's the potential of the bounce having more teeth. So far, the double-bottom test has held.

Jeff Bailey : 10/27/2005 12:02:56 PM

12:00 Market Watch found at this Link

Linda Piazza : 10/27/2005 12:03:26 PM

The inverse H&S scenario is undone, which shows us that bulls didn't have enough strength to accomplish it. Next Keltner support at 548.00-548.15, but it appears to be trying to pull up ahead of the LOD, but not certain if that's going to be successful yet. Just have to wait this out and watch your stops.

Jonathan Levinson : 10/27/2005 11:55:51 AM

Session lows being tested here on a break of the rising flag- QQQQ's short cycle upphase is stalled and in the process of losing it midway through its run: Link

Jeff Bailey : 10/27/2005 11:54:43 AM

Sell Program Premium ... DIA $102.77, SPX 1,186.46, QQQQ $38.44

Linda Piazza : 10/27/2005 11:48:02 AM

Advdec line still headed lower. So far.

Jonathan Levinson : 10/27/2005 11:46:07 AM

Headlines:

U.K.'S FTSE 100 ENDS DOWN 0.9% AT 5,182

FRANCE'S CAC-40 ENDS DOWN 1.7% AT 4,336

GERMANY'S DAX ENDS DOWN 1.9% AT 4,806

Linda Piazza : 10/27/2005 11:42:59 AM

Slipping and sliding. The OEX bulls are having trouble holding onto that inverse H&S scenario. The OEX has tentatively broken out of its last bear flag, but that's part of an inverse H&S scenario. Has to break out to form the flat part of the right shoulder. The bulls need to round that shoulder up, though, or the formation will be invalidated and a trip to the day's low might be expected. Keltner support now at 548.29-548.09 on the 15-minute chart

Jonathan Levinson : 10/27/2005 11:42:39 AM

QQQQ back below 37.50, the short cycle upphase so far flaggish and corrective. So far, it's just a deadcat bounce. Link

Linda Piazza : 10/27/2005 11:36:23 AM

Remember the inverse H&S possibility on the OEX. It looks as if the bulls weren't able to hold it up quite well enough, and too much more of a dip will invalidate that formation, but so far, it's still valid, and there was bullish price/RSI divergence as the head was formed.

Linda Piazza : 10/27/2005 11:32:48 AM

The advdec line currently tests strong resistance. So far, the OEX's attempts to front-run the advdec line bounce haven't resulted in bringing the avdec line much higher and certainly not in bringing it above first resistance.

Linda Piazza : 10/27/2005 11:31:31 AM

The OEX closed the just-concluded 15-minute period at or slightly below Keltner resistance at 549.80. It's still testing it, and a pop up to 550.65-551.28 next resistance isn't impossible to imagine.

Linda Piazza : 10/27/2005 11:29:55 AM

Looks as if Jeff and I agree--his 11:28:54 and my 11:28:42 and other posts.

Jeff Bailey : 10/27/2005 11:28:53 AM

Daily Pivot analysis observations ... to this point, all the major indices (INDU/DIA, SPX/SPY, OEX, NDX/QQQQ) have held their DAILY S2.

NDX/QQQQ has been weakest and pegged its DAILY S2 of $38.43.

Day trader shorts probably take some off the table.

Linda Piazza : 10/27/2005 11:28:42 AM

Whatever your profit-protecting plans for OEX bearish traders, adhere to them. You can bet that if we had entered a new bearish play at the conclusion of the 11:30 fifteen-minute candle yesterday, we'd have taken partial profit by now and cinched up stops. The OEX is testing 15-minute Keltner resistance, at 549.81 on 15-minute closes, and has not yet closed a 15-minute period above it. The next resistance is at 550.67-551.35 on 15-minute closes, and it looks relatively strong. However, the OEX may be trying to form in inverse H&S on its five-minute chart, which would mean that a pullback could begin anywhere from the currently level up to 550.30 or so, and take the OEX back to 549.25 or so, and then rise again to try to confirm the formation. If confirmed, the OEX might rise all the way to a retest of the former ascending trendline off last week's low, now at about 551.45. These are just possible scenarios to keep on the radar screen and help you make up your mind about your stops. If it's going to be a really bearish day, bullish intentions will show up in potential formations, but they won't be confirmed or will fail to meet targets.

Jonathan Levinson : 10/27/2005 11:25:03 AM

Volume breadth is up to -2.37:1 on the NYSE, -2.09:1 on the Nasdaq, still solidly negative. The short cycle upphase has kicked off, and is so far generating very poor traction for QQQQ with the 30 min channel still pointed south.

Jeff Bailey : 10/27/2005 11:24:33 AM

S&P Banks (BIX.X) 344.20 +0.58% ...

Jeff Bailey : 10/27/2005 11:20:19 AM

11:00 Market Watch found at this Link ... roughly same number of new lows as found yesterday at 03:00 PM EDT.

Linda Piazza : 10/27/2005 11:19:53 AM

Thanks, Jane. The problem is in translating these trades to the MM, because I have to set OEX-based stops rather than use the stops I use in my own personal trading, which are based on the movements of the advdec line. What I should have done yesterday is get traders back in a bearish play at the conclusion of the 11:30 candle on the advdec line, because a new signal was given then, but I was just too shell-shocked to trust my impressions and wanted extra proof which never came. These trades do work, and even if we didn't get into that trade yesterday in the late morning, the fact that it did work out so well is more proof that these can work. We just have to work out how to set those stops on a system that's playing off the advdec line but trading the OEX.

Linda Piazza : 10/27/2005 11:16:51 AM

The OEX's 15-minute Keltner support appears to be firming somewhat. I'm not sure the OEX is through testing overhead resistance, at least not without a strong push lower to break through that support. It may have to do it without much help from the advdec line, though, because resistance looks fairly strong there. If the advdec line craters, that could provide the oomph to push the OEX below that support.

Jane Fox : 10/27/2005 11:15:39 AM

Linda I have been following the bearish trade you posted yesterday and if you would have stayed in it, it would be about $300/contract. I have learned to never trade against your suggestions.

Linda Piazza : 10/27/2005 11:15:11 AM

After breaking out of its neutral triangle on the daily chart to the downside, the SOX has continued lower, violating the 200-sma. (Note: The triangle can be seen if ignoring that candle shadow from 10/19. The triangle is nicely formed if ignoring that.) If my calculations are correct, the SOX has set up a 425.50-ish downside target from that neutral triangle, which would set up a retest of the 10/19 low, if the SOX should drop that far. The SOX is at 432.79 as I type, just above the 431.75 LOD.

Linda Piazza : 10/27/2005 11:10:04 AM

The OEX broke above the three-minute 21-ema, the same average that had held it back earlier today. As I said this morning, these little spikes show that the bulls haven't yet given up, so any in bearish positions are subject to these spikes. This one did not come out of nowhere, but at clear 15-minute Keltner support, just below the 549-550 S/R zone. So far, the advdec line hasn't risen to any level that would be alarming, and the OEX has not breached the Keltner resistance at 549.90 on a 15-minute close, so while looking alarming on a three- or five-minute chart, the bounce hasn't done any damage. I still believe that bears need to have those profit-protecting plans in place. I thought a drop to 549-550 might be achievable this morning, but anything below that is gravy for those in bearish plays. I think it could happen, but you earned your pay with a drop to 549-550, and anything else is just a bonus.

Jonathan Levinson : 10/27/2005 11:08:29 AM

72 SMA resistance is down to 38.60 QQQQ, above which this bottomy 30 min cycle decline will stall. But the daily cycle upphase is weakening on today's drop, and the market feels wrong for a long play. I will wait through any bounce and look for a lower high on which to get short. The broken wedge supports and confluence levels at 38.80-39.00 should prove to be very stiff resistance from here, and it's very possible that yesterday's daily gravestone doji was the daily cycle top.

Linda Piazza : 10/27/2005 11:06:18 AM

Today, the RUT dropped all the way back to a 50% retracement of the climb off the April low into the summer high. That 50% retracement is at about 629.28, with the LOD at 629.32 and with the RUT currently at 630.09. It's also testing a best-fit rising trendline off October's low, but the actual rising trendline is lower, at about 623.20, because that best-fit version lopped off one candle shadow. QCharts says it's testing the support of its rising regression channel.

Unless it can bounce back above its 200-sma and -ema's, in the 635 region, it may go on testing that support. A break there might mean a retest of the October low or lower.

Jeff Bailey : 10/27/2005 11:05:45 AM

11:00 Market Watch found at this Link

Jeff Bailey : 10/27/2005 11:03:17 AM

Swing trade put alert ... taking two (2) of the KLA-Tencor KLAC Nov. $47.50 Puts (KCQ-WT) at the offer of $1.75.

KLAC $47.85 -1.21% here.

Disclosure: I currently hold a bearish position in KLAC.

Linda Piazza : 10/27/2005 11:06:32 AM

Here's a bounce in the OEX that we could have expected from 15-minute Keltner support. It's a little bigger than bears would like, but it hasn't done any damage on a Keltner basis, at least. On a MA basis, bears would really like any advance to be stopped by the three-minute 21-ema, now at 549.22, as it was that average that stopped the last little bear flag climb. The advdec line hasn't bounced much, and stays beneath the optimum -2050 to -1900 that bears would like it to remain below, at least for now. It's a -2390, QCharts value.

Linda Piazza : 10/27/2005 10:58:33 AM

Okay, I think I'm seeing correct quotes now. For those on QCharts, get off the Miami servers, as those seem to be having the most difficulty. When you press control/alt/N, you get a list of servers. Switch to one that does not have "mia" in the server name/info.

Jonathan Levinson : 10/27/2005 10:56:21 AM

Wise advice, Jeff. I'm taking it. I'd prefer to be short than long here. The thought of trying to fight this tide is making my stomach hurt.

Linda Piazza : 10/27/2005 10:55:16 AM

I'm not finding a server yet that's giving me up-to-date data that I can trust on the OEX, so I'm of course not sure that I'm getting correct information on the advdec line, either, since that information isn't available on my other quote source. The OEX is testing the 15-minute Keltner channel's support, and so conceivably could bounce, but as long as it's maintaining 15-minute closes beneath 550 or perhaps beneath 550.71, it's more likely to go on testing support. The 30-minute target is lower, at 546.36, as of a few minutes ago.

Jonathan Levinson : 10/27/2005 10:54:10 AM

Volume breadth is down to -2.97:1 on the NYSE, -2.68:1 on the Nasdaq.

Jeff Bailey : 10/27/2005 11:43:26 AM

Sometimes the obvious trade doesn't pan out, but more times than not, it does. ... SOX and SMH components at this Link

For just about two weeks now, I've been noticing the disparity (technical) of how weak NVLS was after reporting quarterly earnings on 10/18/05, but that hasn't carried over to the extent I would have thought in AMAT and KLAC.

I would think KLAC gets the same type of reception this evening.

Jonathan Levinson : 10/27/2005 10:51:11 AM

That plunge should have been the 30 min cycle low there, but the bounce isn't cutting it, and the 60 min cycle has plenty of room to run. I'm tempted to get back into the long play to catch that bounce, but I will wait for a move above the previous high at S1 before risking a deeper stop- the 30 min channel bottom has slide to 38.36 here, and there's the potential to get sliced up by this falling knife. Link

Linda Piazza : 10/27/2005 10:48:55 AM

Just realized that I'm having trouble with my charting service and the feed isn't staying up-to-date on the OEX. Not sure how reliable my comments will be. I've been changing servers, trying to see if I can optimize my connection.

Linda Piazza : 10/27/2005 10:40:24 AM

Another possible bounce point on the OEX as it touches Keltner support on the 15-minute chart. If so, bears want to see it stay beneath 550.37-550.75 on 15-minute closes.

Linda Piazza : 10/27/2005 10:38:50 AM

The advdec line is still headed down, so that's in favor of bearish plays. It's testing support, but it sometimes clings to that support for the rest of the day after testing it at this time of the day. It's a different story when it pierces it on the first 15 minutes of the day. It may soon attempt a bounce and then bears would like to see it stay below about -2000, but at least below about -1550. It's at -2385 as I type, QCharts value.

Jonathan Levinson : 10/27/2005 10:38:08 AM

S'OK- You were right. That plunge to 38.42 just banged the stop at the low tick of the day.

QQQQ - Exit Point Alert -

Out QQQQ at 38.42, -.08

Linda Piazza : 10/27/2005 10:36:01 AM

I'm back. The OEX did see a lower open and then an early bounce that was reversed. I had suggested that some, those who felt comfortable trading a day ahead of an important economic number and when bulls were still spiking markets higher out of nowhere, might try a bearish entry on a bounce that stopped beneath 551.70 or so and then rolled over. Presumably, some of you entered bearish plays. However, I advised that you have profit-protecting plans in place for a test of 549-550, because that was likely strong support that could see at least a bounce attempt. The OEX is there now, at my return, and hopefully, some of you have considered whether you want to take at least partial profits, if you're in a short-term position. The OEX's 15- and 30-minute charts suggest downside targets of 548.53 and 546.48, respectively, so more downside is possible, perhaps even more than indicated on those charts, but take some sort of protective measures right now, even if it's just lowering stops to breakeven.

Jonathan Levinson : 10/27/2005 10:35:27 AM

QQQQ - Entry Point Alert -

Long QQQQ at 38.50, stop 38.42

Jeff Bailey : 10/27/2005 10:33:27 AM

Current OPEN MM Profiles found at this Link

Jonathan Levinson : 10/27/2005 10:32:56 AM

Headlines:

U.S. NATURAL GAS STKS UP 77 BLN CUBIC FT: ENERGY DEPT

NOV NATURAL GAS DROPS 4.2% TO $13.45/MLN BTUS ON SUPPLY RISE

Jonathan Levinson : 10/27/2005 10:32:32 AM

QQQQ's 30 min channel continues to dropm now down to 38.48, and only a break of 72 SMA resistance (down to 38.72) will stall it. The low so far has been 38.54.

Jonathan Levinson : 10/27/2005 10:23:57 AM

Ten year note yields are down 3.9 bps at 4.552% here, IRX down .5 bps at 3.8%.

Jonathan Levinson : 10/27/2005 10:23:25 AM

Volume breadth is -1.83:1 on the NYSE, -1.77:1 on the Nasdaq.

Jonathan Levinson : 10/27/2005 10:16:33 AM

I will be evaluating a long on a test of the lower 30 min channel at S1, 38.50, to try to catch an anticipated short- and 30 min cycle upphase. Because the daily cycle upphase is still valid, there should still be some bounce left in the market from those oversold readings at support.

Jeff Bailey : 10/27/2005 10:13:14 AM

10:00 Internals found at this Link

Yesterday's Internals found at this Link

Jonathan Levinson : 10/27/2005 10:11:03 AM

The decline is gradual and laborious, but it is causing the short cycle indicators to trend in oversold: Link . Note the small potential bullish-D in the Macd, however (bottom oscillator pane).

Jonathan Levinson : 10/27/2005 10:04:39 AM

QQQQ's intraday channels are in steep declines here, approaching S1 at 38.51: Link

Jeff Bailey : 10/27/2005 10:04:01 AM

10:00 Market Watch found at this Link

Jonathan Levinson : 10/27/2005 10:02:14 AM

Help Wanted Index 39 vs. 36 exp., prior revised up from 35 to 38.

Jonathan Levinson : 10/27/2005 10:01:11 AM

TOL drops to a 1.99% loss at 36.00 on the news.

Jonathan Levinson : 10/27/2005 10:00:51 AM

Headlines:

U.S. SEPT NEW HOME SALES UP 2.1% TO 1.222M VS 1.24M EXPECTED

U.S. AUG. NEW HOME SALES REVISED TO 1.197M VS. 1.237M

U.S. SEPT. NEW HOME INVENTORY UP 3.1% TO RECORD 493,000

U.S. SEPT. NEW HOME MEDIAN PRICE UP 1.9% Y-O-Y TO $215,700

U.S. SEPT. NEW HOME INVENTORY 4.9-MONTH SUPPLY

Jonathan Levinson : 10/27/2005 9:59:26 AM

Awaiting the Help Wanted Index, est. 36, and New Home Sales, est. 1.25M.

Jonathan Levinson : 10/27/2005 9:58:20 AM

A big overnight repo in the amount of 12.5B results in a net add for the day of 1.75B, pushing the stop out rate back down to 3.79. There have been very few days above 3.75 in recent weeks, but this is still well below the 3.9 level hit on the 14-day announcement earier this morning.

Jonathan Levinson : 10/27/2005 9:51:06 AM

WASHINGTON (Reuters) - President George W. Bush's nominee for the U.S. Supreme Court, White House counsel Harriet Miers, abruptly withdrew from consideration on Thursday after fierce criticism from the right and the left about her credentials for the lifetime job.

Link

Jonathan Levinson : 10/27/2005 9:46:37 AM

QQQQ is trading heavily at the lows, and the tightening from the Fed with the stop out rate fits with equity weakness. The overnight announcements are still 10 minutes away, though, and the short cycle indicators have grown very bottomy. A bounce above 38.82 could see a quick run to the 38.96 line and a kickoff of a new short cycle upphase to threaten the broader 30 min cycle downphase. Link

Jonathan Levinson : 10/27/2005 9:39:07 AM

The Fed announced a 4B 14-day repo, leaving 10.75B to address at 10AM with the short term announcement. The stop out rate is up to 3.9 here, on its way to the anticipated 4% overnight target rate to be announced for the next Fed meeting and showing a rising demand for the Fed's overnight money.

Jonathan Levinson : 10/27/2005 9:34:19 AM

Volume breadth is -1.48:1 on the NYSE, -1.21:1 on the Nasdaq at the open.

Jonathan Levinson : 10/27/2005 9:29:27 AM

QQQQ's 30 min cycle downphase has reached oversold territory, while the 60 min continues to decline at the midpoint of its run. The daily cycle upphae wasn't impressed with yesterday's decline, and continues to run higher, 3/4 of the way through its climb. There remains a chance of a move to new highs (above yesterday's high), but the bulls first need to overcome the synchronous intraday downphases- 1st sign of which will be a break above the 72 SMA at 38.96. Link

Jane Fox : 10/27/2005 9:08:09 AM

Dateline WSJ Harriet Miers withdrew her nomination to be a Supreme Court justice in the face of stiff opposition and mounting criticism about her qualifications.

Jonathan Levinson : 10/27/2005 8:47:33 AM

Dec. gold is ticking above 476 resistance fo the first time on this move, currently trading 20 cents below the 476.80 session high. As discussed earlier this week, the break of that level has turned up the daily cycle indicators and printed the first preliminary buy signal on the 10-day stochastic. The possible head and shoulders setup isn't yet invalidated, as this run could still constitute a tall right shoulder, but it's nevertheless a bullish day within a bullish move. Above 480, the h&s setup will be rejected. Year-to-date daily chart at this Link

Jonathan Levinson : 10/27/2005 8:40:00 AM

The Fed has 14.75B in expiring repos to address today. The 14-day repo announcement is scheduled first, followed by the shorter term repo(s) at 10AM. As well, the 902M coupon pass is deliverable today, reducing the effective expiration from 14.75B to 13.83B.

Jonathan Levinson : 10/27/2005 8:31:51 AM

After some gyration, QQQQ is down .03 at 38.78, ES -4 at 1192. TNX is down 2.4 bps at 4.567%, crude oil +.525 at 61.175.

Jonathan Levinson : 10/27/2005 8:31:06 AM

Headlines:

U.S. SEPT. DURABLE-GOODS ORDERS DOWN 2.1% VS 1.1% EXPECTED

U.S. SEPT. DURABLE-GOODS SHIPMENTS UP 0.1%

U.S. SEPT. DURABLE-GOODS INVENTORIES DOWN 0.1%

U.S. AUG. DURABLE ORDERS REVISED TO UP 3.8% VS 3.4% PREV

U.S. WEEKLY INITIAL JOBLESS CLAIMS FALL 28,000 TO 328,000

HURRICANE-RELATED CLAIMS TOTAL 24,000 IN LATEST WEEK

CONTINUING JOBLESS CLAIMS RISE TO 2.9 MILLION

Jonathan Levinson : 10/27/2005 8:25:46 AM

Ten year note yields are quoted -2.2 bps at 4.569% ahead of the 8:30 data. Weekly TNX chart at this Link

Jonathan Levinson : 10/27/2005 8:18:45 AM

Ten year notes are building back their gains approaching the cash open, with ZN +1/4 at 108 31/64.

Jonathan Levinson : 10/27/2005 7:31:21 AM

Equities are down, ES trading 1192.75, NQ 1580, YM 10345 and QQQQ -.03 at 38.78. Gold is up 2.4 at 475.5, silver is up .005 at 7.868, ten year notes are up 11/64 at 108 13/32, crude oil is up .55 at 61.20 and natgas is down .16 at 13.90.

We await the 8:30 releases of Initial Claims, est. 340K, Durable Orders, est. -1.2%, then at 10AM, the Help Wanted Index, est. 36, and New Home Sales, est. 1.25M.

Linda Piazza : 10/27/2005 6:22:05 AM

I'm going to be gone this morning, almost certainly through the open and probably for a couple of hours after the open.

Yesterday, the OEX ended the day testing the rising trendline off last week's high, with that trendline at about 550.80 and the OEX closing at 550.51. The OEX ended right on the 30-minute 100-ema, though, with that average at 550.54. The advdec line ended in a position that could indicate an early bounce tomorrow, either at yesterday's close or after a slightly lower open. As I edit this post this morning, it looks as if any bounce, if there is one, will occur after a lower open.

If there's a bounce and if internals fit a bearish trade, consider entering a rollover on any bounce that stops below 551.70 or so and then rolls down again. However, if there's not a bounce to give you some cushion and if you're forced to choose a bearish position either on a break of that trendline off last week's low or on a gap lower this morning and then bounce only up to retest the trendline, be aware of potentially strong support at 549.85 or so as you make your decision. That support is strong enough that, if already in a bearish position, I'd suggest that you consider taking profit-protecting measures at that level because there's the potential for a climb into a right shoulder for a possible H&S.

It's possible that the OEX will forego that right-shoulder building exercise, but I'd expect at least some sort of bounce attempt from 549-550, so if a bounce doesn't allow for a bearish entry early in the morning, then traders might watch for a bounce from 549-550 and see if it eventually gives an opportunity for a bounce-and-rollover bearish entry. Don't force an entry. Be sure you're seeing a rollover and be ready to exit if proven wrong.

Be aware that we're seeing crazy spikes as volatility increases, and any play, no matter how good it looks, can be stopped by one of these out-of-nowhere spikes. I think the bulls are far from having given up yet.

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