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Jeff Bailey : 10/31/2005 11:45:28 PM

Chesapeake Energy (CHK) $32.10 +2.13% Link ... Late Monday the oil and gas producer said Q3 income jumped 74% to $149.1 million, or $0.43 per share vs. $85.6 million, or $0.29 per share in the year-ago period.

Recent results include a $66.8 million loss related to its hedge program and a $500,000 loss for paying off debt, as well as a $17.7 million cut in net income related to a preferred stock transaction.

Excluding items, income was $234.1 million, or $0.65 per share on revenue of $1.08 billion.

Consensus was for $0.62 per share on revenue of $966.2 million.

The company added that its average realized natural gas price rose to $6.64 per mcf of equivalent from $5.95 in the year-ago quarter. Its average realized oil price rose to $53.30 per barrel from $42.82 in the year-ago quarter.

Jeff Bailey : 10/31/2005 11:16:28 PM

Program Trading Levels for Tuesday ... HL Camp & Company has their computers set for program buying at $+3.72 and set for selling at $+1.49.

OI Technical Staff : 10/31/2005 9:59:59 PM

The Market Monitor has been archived.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

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Jeff Bailey : 10/31/2005 6:58:32 PM

Last 3 MONTHLY Pivot Matrix found at this Link

Jeff Bailey : 10/31/2005 6:42:52 PM

Weekly/Monthly Pivot Matrix levels found at this Link ... New MONTHLY Pivot Levels for November.

Jeff Bailey : 10/31/2005 5:02:51 PM

Dell Computer (DELL) $31.88 +2.64% ... sharply lower at $30.10 in extended session after the world's largest PC maker said it expects earnings for its third-quarter to be at the low end of its previous forecast, amid weaker U.S. and U.K. personal computer sales.

The company also said it will take a Q3 charge of about $450 million, or $0.14 per share. Including the charge, DELL expects net income of $0.25 a share.

The company now expects to report revenue of $13.9 billion, below the company's earlier forecast of $14.1 billion to $14.5 billion and analysts' estimate of $14.3 billion.

Jeff Bailey : 10/31/2005 4:49:08 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 10/31/2005 4:43:08 PM

Closing Internals found at this Link ... For the month of October, NYSE volume averaged 2.36 billion shares per day, up 11% from September's 2.12 billion shares per day average. Last year, October's average daily volume at the big board averaged out at a more modest 1.50 billion shares per day.

For the month of October, NASDAQ volume averaged 1.76 billion shares per day, up 4% from September's 1.70 billion share per day average. Last year, October's average daily volume at the NASDAQ averaged 1.72 billion shares per day.

Jeff Bailey : 10/31/2005 4:22:40 PM

Current OPEN MM Profiles found at this Link

Today's Activity ... Swing trade sold two (2) of the Chesapeake Energy CHK Nov. $35 Calls (CHK-KG) at the bid of $0.65. These are partially covered by the 160 share long in the underlying stock.

Swing trade lowered bearish stop for the Nortel (NT) 1/2 position short to $3.35.

Linda Piazza : 10/31/2005 9:21:25 PM

The bell saved the OEX from confirming a double-top formation on its 15-minute chart. Not good.

Linda Piazza : 10/31/2005 3:58:29 PM

This is looking more bearish than we usually see on closes lately. Bulls, make sure you know whether you want to hold into the close with this kind of action. I do believe those 240-minute 100/130-ema's are important on the OEX.

Linda Piazza : 10/31/2005 3:56:13 PM

We're going to be left guessing. It looks as if the OEX is going to end the day near its 240-minute 100-ema. It looks as if the TRAN is going to end the day near its 7/28 high. It looks as if the RUT is going to end the day near its 10/26 high and at or just below its 72-ema. And so it goes. I think there should be a pullback at some time from the OEX's 240-minute 100/130-ema's to test support, but will that come after a punch through them intra-240-minute period or before? It could happen either way. I could see a punch up to 560-561 and then a pullback below those averages, but there could be a downturn tomorrow morning, too, straight from the 100-ema at 558.10. In fact, it could have already begun. I wouldn't count too much on that downturn having already begun, though, with the OEX still above the 557.11 level on 30-minute closes, and with that Keltner level supporting it since midmorning Friday, although if time doesn't run out, the OEX may drop below it or to it by the close.

Linda Piazza : 10/31/2005 3:43:39 PM

The OEX's 72-ema is at 560.08--Hmm, awfully close to that fitted Fib target of 560.10, isn't it?--and that average does have some congruence in the OEX's trading behavior. The 50-sma is nearby, too, at 559.87. The 240-minute 100/130-ema's are at 558.12 and 559.63. The descending trendline off the September 9 high is at about 562.27.

Jeff Bailey : 10/31/2005 3:42:37 PM

Chesapeak Energy (CHK) $32.09 +2.09% ... comes to morning highs.

Linda Piazza : 10/31/2005 3:41:14 PM

The RUT has climbed up to its daily 72-ema. It is testing the 10/26 high of 648.01, with the RUT's high of the day at 648.26. Lots of double-top tests going on today. The RUT is now at 647.63 with its 72-ema at 648.12.

Linda Piazza : 10/31/2005 3:38:00 PM

TRAN's 7/28 high was 3821.96 and the TRAN just passed it up. I knew there was going to be an attempt at that high when I noticed that the TRAN was just below it. The TRAN has passed it up by less than 50 cents, though, so we're getting an equal-top test today. There is, so far, bearish price/RSI divergence, but that can still be erased. There's also bearish price/MACD divergence, but the MACD moves more slowly than RSI and may just not have caught up with the TRAN's swift price action as it moved off the October low.

Linda Piazza : 10/31/2005 3:33:29 PM

OEX Keltner picture, 60-minute chart: The OEX has hit Keltner resistance at 558.12 on 60-minute closes. As long as it's maintaining 30-minute closes above a Keltner line currently at 556.84, however, it might go on challenging resistance . . . and it hit a new HOD as I typed. The fifteen-minute target is now 559.43, and I'm remembering that fitted Fib bracket I mentioned this morning that looked as if it fit better if the OEX's upside target was 560.10. I discounted that because of the 240-minute 100/130-ema's that are between the OEX's current level and that upside target, though, and I still do, somewhat. The OEX doesn't usually just breeze through its 240-minute 100/130-ema's, although it did do so on 6/29, during the first 240-minute period of the day. It fell back afterwards, though. It just usually either spends a number of periods testing it or else bounces back (or up, depending on the case) to next support (or resistance) to regain a firmer footing before trying again. That's not always true, of course, but most piercings or even actual tentative closes above (or below) those averages on a first test are rebuffed. It just doesn't usually happen that easily--strong rise up to them and through them.

Linda Piazza : 10/31/2005 3:25:58 PM

The OEX hit its previous HOD exactly.

Jeff Bailey : 10/31/2005 3:23:14 PM

S&P Banks Index (BIX.X) 349.96 +0.28% ... best levels of the session.

Jeff Bailey : 10/31/2005 3:22:39 PM

November Fed Fund futures (ff05x) 96.00 (unch) ... Predicting 100% probability of 25 basis point rate hike at tomorrow's meeting.

Linda Piazza : 10/31/2005 3:20:55 PM

Previous HOD for the OEX at 558.40. The OEX is at 558.24 as I type.

Linda Piazza : 10/31/2005 3:17:41 PM

The advdec line is testing that resistance. The advdec line set up today in the way it often does when the prices are going to attempt a rise into the close, but a lot will be told by the way it acts on this test. If I hadn't been so distracted by other things, including the fact that my electricity was going off again today, so that I wasn't sure if I could post at any one time, I would have called a bearish play this morning, but would have taken at least partial profit and maybe full profits at the time of my 12:19:26 post when the OEX was trading on either side of 556.50. I'm not sure whether I would have automatically closed out the entire position or not since I wasn't in the play and it's impossible to say what you would or wouldn't have done in that case, but I do know that I was already warning that the advdec line had reached the support it usually held on the days when it was setting up as it had. Later, in the afternoon, it almost seemed to slip below that support, but not far enough, and I warned that it needed to drop further beneath it before I considered a new bearish play. However, signs have been a bit strange today, and there seemed to be times that the advdec line was going to slip lower and that resistance would hold. That resistance is holding only tentatively. The OEX has risen again to retest the important 240-minute 100-ema and here we are again at important resistance.

I thought that the TRAN was aiming for its 7/28 high, and it was, now having reached within a dime of that high. What now? If this were any other time of day, I'd say this was a good level to attempt a bearish play just based on the resistance being tested because you'd have a close stop (above the 240-ema at 559.61), but this is not any other time of day. It's a time of day when shorts are going to be running scared and will be covering on every dip, and I just don't see the definitive sign yet that all those shorts have covered and won't run the indices up into the close. I can't tell you how many times I've seen signs set up this time of day and I've entered a bearish play, only to see the dip occur the next morning instead, after a several-point runup into the close. I've gotta see more evidence.

Jeff Bailey : 10/31/2005 3:14:31 PM

Qwest Communications (Q) $4.40 +7.31% ... Official statement on FCC's telecommunications merger approvals at this Link

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

03:00 Internals found at this Link

Jeff Bailey : 10/31/2005 3:02:49 PM

03:00 Market Watch found at this Link

Jeff Bailey : 10/31/2005 3:00:46 PM

FCC approves mergers between SBC Communications (SBC) $23.93 +0.16% / AT&T (T) $19.80 +0.35% and Verizon (VZ) $31.59 -0.34% / MCI Communications (MCIP) $19.87 +0.25%.

Linda Piazza : 10/31/2005 2:51:13 PM

The TRAN punched up within three points of that 7/28 high. It's down a little from that level now.

Linda Piazza : 10/31/2005 2:50:23 PM

The advdec line's resistance tentatively holds, at least through the just completed 10-minute period.

Linda Piazza : 10/31/2005 2:49:50 PM

Those OEX 240-minute 100/130-ema's are at 558.09 and 559.61, respectively. OEX at 557.21 as I type. . . . no, it's dropped to 556.88.

Linda Piazza : 10/31/2005 2:47:19 PM

Advdec line rising to test resistance, and we'll soon see whether it really is tough enough to hold back the advdec line. The advdec line is already nudging that resistance higher, with the resistance now from 3150-3200 and the advdec line at 3113, QCharts value. Next resistance up near 3425.

Linda Piazza : 10/31/2005 2:41:51 PM

The OEX has traded sideways out of its bull flag formation, so it's broken "out" but not up just yet. The advdec line looks as if it's about to test resistance again, with that just overhead, up to 3200 or so right now, with the advdec line at 2995, QCharts value.

Linda Piazza : 10/31/2005 2:36:29 PM

All day, or at least after the first hour, the TRAN has been producing a series of small-bodied 30-minute candles at Keltner resistance. While those candles have moved the TRAN's prices sideways to sideways-higher, RSI has drifted slightly lower. It looks to me as if the TRAN needs to drop at least toward a Keltner support level now at 3801.45 but still rising, but the TRAN can fool you sometimes and I just know that 7/28 high is being watched.

Linda Piazza : 10/31/2005 2:33:08 PM

If tested, the 3100-3200 zone looks like fairly firm resistance for the advdec line, now at 2907. It's not absolutely rock-solid firm, but firm enough to stop anything but a strong surge higher, it appears.

Linda Piazza : 10/31/2005 2:31:42 PM

Mark, your title for the tool makes as much sense to me. QCharts calls it a Toggle Auto-Wave Fibonacci Pattern-Finder Study. I see the patterns in there, and the numbers, but I don't know what it means. On the five-minute chart, the top line turns lower; on the 15-minute, it still turns higher; on the 60-minute, a whole bunch of lines converged at today's high, some ascending and some descending.

Linda Piazza : 10/31/2005 2:27:20 PM

I'm just not getting clear clues at this point or else I'm just not interpreting them clearly. The advdec line has risen to retest resistance, but hasn't fallen away from it. The OEX has fallen below 556.94 Keltner resistance, but that resistance still turns higher in a manner that suggests it's not particularly strong, and the OEX holds to 30-minute support at 556.32. The five-minute chart still suggests vulnerability to a line currently at 554.63 but still rising, so that the line may actually rise into the OEX price rather than have the OEX drop to that line.

My impression overall is that this looks as if prices should fall, but that bulls have had a lot of encouragement and that there's not enough discouragement on those charts yet to suggest that a new bearish entry would be a good risk vs. reward setup.

Linda Piazza : 10/31/2005 2:21:47 PM

Fibs I use a lot.

Linda Piazza : 10/31/2005 2:21:22 PM

Charts give mixed-up views today, but that's normal when bulls and bears are confused. Bulls are buying dips and bears are selling highs and we're getting a mixture of signs. I thought a while ago about giving a new bearish signal, but the advdec line had neither dropped far enough below that support that it usually holds to on the days when markets are going to attempt late-day climbs nor had it risen to retest resistance and failed from there. I said earlier that the advdec line was going to have to drop significantly below that line because it tended to straddle it all day, seeing prices both above and below it before it bounced. When I saw where the TRAN was with respect to its 7/28 high, I thought we're probably going to have to endure an attempt to reach that previous swing high before we know what markets are going to do. That and the Nasdaq's 50-sma and the Dow's 200-sma. By the way, the Dow has fallen all the way back to its 200-ema, with that daily candle not a particularly pretty one.

Linda Piazza : 10/31/2005 2:15:02 PM

I don't use pivots either, Marc, although I do note that the OEX came right up to the weekly R1 today before dropping back.

Linda Piazza : 10/31/2005 2:13:45 PM

I really, really want to figure it out. (See my 2:07:28 and Marc's 2:10:34 posts.) That reminds me of the times when all the nerdy college physics students and the professors would hole up in one of the empty classrooms and try to figure out some problem that would take days and days to work. (I was one of the nerdy students.) I probably don't have as many brain cells left to devote to figuring things out these days, but that just intrigues me. It doesn't seem to project the next movement, though.

Linda Piazza : 10/31/2005 2:10:09 PM

The TRAN's 7/28 high was 3821.96 and the TRAN is currently at 3815.25, near the HOD. They're trying to bring it up past that 7/28 high. Fell back a little as I typed.

Linda Piazza : 10/31/2005 2:09:02 PM

I just posted something about the possibility of the OEX continuing lower when it climbs. The advdec line is not climbing with it, however. The OEX has been trying to lead the advdec line a lot lately, so a bounce may be on its way, but, if so, it's going to face resistance . . . and the advdec line begins its bounce attempt.

Linda Piazza : 10/31/2005 2:07:27 PM

Marc, QCharts has many great tools, including snap-on pivot levels for those who use those. They've also got this fantastic little tool that fascinates me, but that I can't figure out: Link

Jeff Bailey : 10/31/2005 2:06:11 PM

02:00 Market Watch found at this Link ... Note: Broker/Dealer and Insurance hit 52-week highs

Linda Piazza : 10/31/2005 2:03:37 PM

The OEX's pullback definitely looks bull flag-like and the OEX is rising to test the top of that trendline. HOwever, the advdec line is looking weaker by some comparisons than it has since early Friday morning, so unless the advdec line can get back above 3150 or so, it's looking as if the OEX might continue lower. Advdec line at 2775 as I type, QCharts value.

Linda Piazza : 10/31/2005 2:00:41 PM

I mentioned earlier today that GE had a rough H&S on its 10-minute chart and that it was difficult to pinpoint the neckline, but that the 10-minute 100/130-ema's might serve as the neckline. A few minutes ago, GE dropped down to test those MA's and is now tentatively bouncing from them. It's possible that what I took to be a right shoulder was just part of the head formation and that a right shoulder is still to be formed and that's what GE is doing now. The 15-minute 100/130-ema's are also close to the 10-minute versions. A 15-minute close beneath 33.84 would violate all those averages. GE is at 33.88 as I type.

Jeff Bailey : 10/31/2005 1:54:24 PM

Kellogg (K) $43.78 -5.76% Link ... World's largest cereal maker said Q3 profits rose 11% to $274.3 million, or $0.66 a share, from year-ago profit of $247 million, or $0.59 a share on sales that rose 7.3% to $2.62 billion from $2.45 billion.

Consensus was for EPS of $0.64 on sales of $2.58 billion.

For Q4, Kellog projected flat-to-lower earnings growth, due to one less selling week from last year, on expected sales growth in the mid single-digit percentage range. The company earned $0.45 a share on revenue of $2.39 billion in the year-ago period.

For fiscal 2006, Kellogg now projecting earnings between $2.50 and $2.55 per share, which excludes the effects of stock option expenses, estimated at $-0.08 per share. 2006 consensus was for $2.37 per share.

Linda Piazza : 10/31/2005 1:53:52 PM

Back. For the first time since midmorning on Friday, the OEX has closed a 30-minute period below the 10-minute 21-ema, but it's rising right back to retest it. According to the five-minute Keltner chart, it's maintained its vulnerability to a test of a Keltner line now at 554.37, but still rising. There's other support between the OEX's current level and that support, particularly at about 555.32, but I'm benchmarking what the five-minute chart suggests.

Jeff Bailey : 10/31/2005 1:44:18 PM

Placer Dome (PDG) $19.79 +19.86% Link ... Outlook placed on CrditWatch "Positive" at S&P. Meanwhile, company executives saying they will not comment on Barrick Gold (ABX) $25.21 -7.31% Link offer until fully reviewed.

Linda Piazza : 10/31/2005 1:36:45 PM

Stepping away for a few minutes.

Linda Piazza : 10/31/2005 1:36:12 PM

True to form, the advdec line has been clinging to that same support line that it clings to on the days when the markets are most likely to see a pullback only and not a deeper drop. However, it's testing that support again, now down to about 2890. The advdec line would have to drop soundly below that support before we decided that it wasn't holding as support, though, because the candles sometimes straddle that line for the rest of the day, occasionally bouncing from it. I don't know, though: it just looks a little weaker today for some reason.

Linda Piazza : 10/31/2005 1:29:48 PM

Back. The OEX has been testing the top of its bull flag descending regression channel, but couldn't break above it, at least yet. That 10-minute 21-ema is at 556.48, with the OEX at 556.86.

Jeff Bailey : 10/31/2005 1:26:04 PM

CBOT Holdings (BOT) $106.51 -4.90% ... weakness may be due to Dow Jones news that Wolverine Trading has stopped making certain payments to the Philadelphia Stock Exchange.

In doing so, the Chicago-based market maker risks violating terms of its membership on the exchange, but its Chief Operating Officer James Harkness said Wolverine has taken this step to protest the rules which entangle it in a system that it finds ethically questionable.

"The issue that we are raising is that the exchanges should not use their regulatory authority to mandate a practice that we believe is potentially harmful to customers," Harkness said.

Philadelphia Stock Exchange Chairman and Chief Executive Meyer "Sandy" Frucher said the fees that Wolverine is boycotting are part of its membership obligations, and that the exchange can't selectively enforce its rules.

That said, Frucher added that he sympathizes with Wolverine's position. Indeed, Frucher is an outspoken critic of payment-for-order-flow, though he said he can't unilaterally end the practice at Philadelphia because of competition concerns.

Under the system of payment-for-order-flow, firms responsible for facilitating trading in an option, called specialists or primary market makers, pay brokerage firms for their business.

Wolverine and other critics argue that this raises a host of conflicts, in particular with expectations for best-execution and the interests of clients.

Supporters, though, counter that the payments have contributed to the astounding growth in options trading because they help keep brokerage commissions low. In this sense, the system benefits everyone involved, including Wolverine, they say.

Currently, the money paid by specialists to brokerages comes from a pool of funds. That pool is generated through so-called marketing fees which are charged to all market makers who trade in a particular option. These marketing fees are what Wolverine is boycotting.

Linda Piazza : 10/31/2005 1:20:11 PM

Stepping away for a few minutes.

Jeff Bailey : 10/31/2005 1:11:56 PM

01:00 Internals found at this Link

Linda Piazza : 10/31/2005 1:07:48 PM

Interesting information in your 12:57:50 post, Jeff. I didn't know that Mexico has had avian flu for more than a decade.

Linda Piazza : 10/31/2005 1:06:48 PM

OEX still within its possible bull flag. Unlike the SPX, it didn't erase its downside target predicted by the five-minute chart, with that target on the OEX at 553.95 currently but still rising, with the target in place as long as the OEX produces five-minute closes beneath resistance currently at 557.21. The SPX did erase its target. It also traded above its 240-minute 100/130-ema's today, so it's showing some divergence from the big-cap OEX by that measure. I'm watching GE, with that stock having a sort of H&S on its ten-minute chart, in addition to the one talked about on its daily chart (confirmed but with GE today moving back above the neckline). GE's intraday H&S is rough enough that I'm not sure where the neckline is exactly, but I'd put it at the ten-minute 100/130-ema's at 33.85 and 33.84, respectively, with GE currently at 33.93.

Jeff Bailey : 10/31/2005 1:03:00 PM

01:00 Market Watch found at this Link

Jeff Bailey : 10/31/2005 12:57:49 PM

Bird Flu ... CP - A senior Canadian government source said Monday that several wild birds in Quebec and Ontario have turned up carrying H5 flu viruses.

The source said officials don't know yet if the birds have the dangerous H5N1 subtype of the avian flu, and even if they do, whether it is the exact strain responsible for lingering poultry outbreaks in southeast Asia.

The birds are among thousands that have been sampled in Canada. Health officials won't know until mid-week whether they have H5N1.

H5 avian viruses have been found before in North America. Parts of Mexico have suffered through an outbreak of H5N2 avian flu in poultry operations for more than a decade.

Linda Piazza : 10/31/2005 12:56:28 PM

OEX 15-minute Keltner picture: The OEX is sitting on Keltner support now at 556.36 on 15-minute closes, but is finding resistance at the Keltner line currently at 556.68 on 15-minute closes. One or the other, short-term resistance or support, is going to give. If the resistance gives, the upside target is 556.65 and then 558.92. If the support gives, 555.92 on 30-minute closes and then 553.59-554.25 look like next support. As I type, the OEX rises to test that first resistance.

Jeff Bailey : 10/31/2005 12:53:31 PM

BioCryst Pharma (BCRX) $14.12 +3.59% ... burst of volume (366,879 shares) in last 5-minutes. Lifts stock from session low of $13.53.

Linda Piazza : 10/31/2005 12:51:29 PM

The TRAN hasn't dropped significantly and it now attempts to rise again.

Jeff Bailey : 10/31/2005 12:48:30 PM

Vice President Cheney names David Addington Chief of Staff and John Hannah as his national security adviser.

Linda Piazza : 10/31/2005 12:46:43 PM

Another reason that I might have held onto a partial position in a bearish trade is the OEX's action on its five-minute Keltner channel. As long as it's producing five-minute closes beneath the line currently at 557.11, it's setting up a potential test of a Keltner line that's now at 553.76 but is still rising sharply. Same thing with the SPX: as long as it maintains five-minute close below resistance now at 1205.04, it's setting up a test of a line that's now at 1197.85, having risen from much lower level it was at when I made my 10:19:28 post. It would have been a danger from this point on holding onto any bearish play as the easy money would have been made and the outcome is far from certain from this point on. As I glance back at my OEX chart, I see that it pierced but has bounce back above that 10-minute 21-ema.

Linda Piazza : 10/31/2005 12:41:20 PM

When I try to fit a Fib bracket to the OEX's climb off its climb off the late-Thursday low, it looks to me as if it fits best if the OEX's eventual target were up around 560-560.10. However, I'm not sure that's achievable with the 240-minute 100/130-ema's in between and with some weakening showing up on other charts. That fitted Fib target and the advdec line's drop into the support that usually holds it is the reason that I would have been advising at least partial profits and all profits for conservative traders if I had been leading a bearish play. (See my 12:19:26 post.) I'm not in the play, so I'm not sure what I would have done, but I might have just closed the play for all traders and watched the bounce, if one showed up. It's impossible to say what you would have done if you weren't in a play. The OEX is now dropping to test the 10-minute 21-ema, a short-term indicator MA that I watch. It hasn't closed a ten-minute period beneath that MA since midmorning on Friday and that average is congruent with the bottom of rising wedge shape that it violated last week and then punched above this morning. The 10-minute 21-ema is now at 556.31, with the OEX at 556.55. Bulls want that average to hold.

Jeff Bailey : 10/31/2005 12:38:30 PM

June 2003 WEEKLY Pivot Matrix ... How the BIX.X and major indices traded AFTER the BIX.X found trade for a second-straight week at WEEKLY R2 at this Link

Jeff Bailey : 10/31/2005 12:29:04 PM

Merck (MRK) $27.79 +0.90% Link ... stock reclaims its trending lower 50-day SMA ($27.70). Closing arguments begin in second Vioxx product liability trial where Boise, Idaho postal worker, Frederick "Mike" Humeston claims Vioxx caused his September 18, 2001 heart attack.

Linda Piazza : 10/31/2005 12:21:53 PM

After piercing that rising wedge that rose off the 10/21 low to the upside, the OEX dropped back inside the wedge and now tests what was former support, at about 556.20, if I've drawn the line correctly. During the current 15-minute period, it dropped to within two cents of that value but has now bounced to 556.62.

Linda Piazza : 10/31/2005 12:19:25 PM

If I hadn't had so much going on this morning, I would have called a bearish OEX play this morning during the second 30-minute period of the day. However, I would now be cautioning that bears needed to take partial profit at least and that conservative bears would take all profit, as the advdec line is now testing the support level that usually holds it up if we're going to have one of those days when the markets just climb and climb and climb after an initial dip. I don't know that the markets are going to do that, but I do know that this is a point of some danger to those in bearish plays. If the advdec line does bounce now, you'd like it to stay below about 3100 and below about 3400 if that doesn't hold.

Tab Gilles : 10/31/2005 12:18:47 PM

Cisco Systems (CSCO) Link

Jeff Bailey : 10/31/2005 12:19:55 PM

Wal Mart (WMT) $46.95 +3.18% Link ... World's largest retailer said over the weekend that it expects October same-store sales to grow by 4.3% vs. October of last year as it saw general merchandise sales exceed food last week, but said that should reverse over the coming week because most of the Halloween candy sales would likely have been over the weekend with the holiday falling on Monday. The Southeast was strongest region for sales in recent weeks.

The company also reported that as of Saturday morning, one Supercenter was closed because of Hurricane Rita and five Wal-Mart stores were closed because of Hurricane Wilma.

Nine locations remain closed due to Hurricane Katrina: six Supercenters, one Sam's Club and two Wal-Marts.

The company plans to release monthly sales figures Thursday; third-quarter earnings will be released November 14.

Linda Piazza : 10/31/2005 12:15:42 PM

I didn't notice what the TRAN was doing, Jane. Sorry about your entry, but we've certainly got an important test going on now, with the TRAN testing that late-July high. If the TRAN should drop back today and sustain values below that 3780 level, then this looks like a possible fake-out move above the top of the diamond. The TRAN has been pulling back since my last post, although only a few points. It's at 3809.47 as I type, but I wouldn't be surprised to get a retest of the 3780-3790 zone.

Jane Fox : 10/31/2005 12:12:05 PM

Linda I had IYT, a transportation ETF, on my radar and I just missed getting an entry.

Jeff Bailey : 10/31/2005 12:11:00 PM

12:00 Internals found at this Link

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

Whoa! Anyone notice the TRAN? It's only a few points below its 7/28 high of 3821.96, with the TRAN currently at 3815.34. We have a major test coming up. If that was a diamond at the top of the TRAN's weekly chart, as I thought it was, the TRAN is attempting to break out of it to the upside, which is not the usual direction of such a breakout. Market bulls do not want to see the TRAN drop back below about 3780.60 by the close of this week, as that's the approximate level of the descending trendline that marks the top of the right side of the diamond. We have a double-toppish test in the making.

Linda Piazza : 10/31/2005 12:02:24 PM

Advdec line sinking a little through the nearest layer of potential support, with stronger support near 2730 and with the advdec line now at 2945, QCharts value. It's that support to which the advdec line usually clings when it's going to climb the rest of the day after pulling back. It may trade either side of it a bit, but most 30-minute candles form along the slightly rising line. So, bears want to see the advdec line drop steeply beneath that and then fail to move back above it on any retests. Bull want to see the support hold. It may hold on this first test, but then I'd want to see what happened near 3330.

Jeff Bailey : 10/31/2005 12:02:05 PM

12:00 Market Watch found at this Link

Linda Piazza : 10/31/2005 11:57:19 AM

Marc just mentioned something about GE on the Futures side, and I was watching its chart, too. GE rose up to test the 72-ema today and then dropped back, with that MA at 34.11. That formation at/under that MA, since early October, looks like a H&S, already confirmed, but with Friday's and today's action bringing GE back above the neckline again. Perhaps it's going to be a two-right-shouldered H&S? Or perhaps the formation is being rejected? If it is, GE certainly needs to sustain values above that 72-ema.

Jeff Bailey : 10/31/2005 11:55:55 AM

10 Most Actives ... QQQQ $38.84 +1.35%, SPY $120.70 +0.75%, MSFT $25.69 +0.62%, CSCO $17.49 +1.98%, LU $2.81 +0.71%, SUNW $3.88 (unch), INTC $23.54 +0.90%, PFE $21.70 +0.93%, PDG $19.70 +19.32%, SIRI $6.10 +1.32%

Linda Piazza : 10/31/2005 11:54:04 AM

I'm not sure this is the pullback yet. It still looks possible that there could be another attempt to bounce again. The chart setups really are unclear, or the various distractions (electricity problems, my granddaughter's medical procedure this morning) are clouding my judgment. I'd like to see what the advdec line does if it bounces from the support it's currently testing.

Linda Piazza : 10/31/2005 11:50:45 AM

First advdec line support about to be tested. The OEX approaches support, too, near 557.

Linda Piazza : 10/31/2005 11:45:25 AM

The SPX is still testing that 72-ema, having pierced it earlier today but now being back below it. That average is at 1206.44 and the SPX is currently at 1205.98.

Linda Piazza : 10/31/2005 11:44:09 AM

Looks as if the advdec line has fairly strong support down to about 2800, QCharts value. It's at 3170 as I type. Bears are going to have to either drive the advdec line lower with a sharp move down or else just stagnate long enough for the support to thin. For right now, it looks strong enough to provide support on a first test.

Linda Piazza : 10/31/2005 11:42:18 AM

Lost electricity. Back in a few minutes.

Tab Gilles : 10/31/2005 11:36:04 AM


Jeff Bailey : 10/31/2005 11:30:48 AM

Current OPEN MM Profiles found at this Link

Linda Piazza : 10/31/2005 11:28:52 AM

Here's the OEX's Keltner picture, starting with the 60-minute chart: The OEX produced a minimal 60-minute close above the Keltner resistance currently at 557.52, but then a little lower. The OEX now drops below that Keltner resistance, but only slightly. Essentially, though, that resistance is holding, with the 60-minute RSI registering that the movement is overbought, but not showing bearish price/RSI divergence with respect to the last swing high on 10/26.

Linda Piazza : 10/31/2005 11:26:47 AM

That little H&S on the OEX's five-minute chart has not confirmed. The right shoulder is extending sideways. Bad sign for bears who had hoped to see it confirmed, but not yet a great sign for bulls. As long as the support is holding, there's a chance for another attempted push higher, though.

Linda Piazza : 10/31/2005 11:18:19 AM

Just a little chink in the bullish armor, but the advdec line has slipped beneath support that has held every time tested since Friday morning. It has now risen to retest it from the bottom. This is just first support and doesn't necessarily predict a big downfall, but bulls should protect profits in case the pullback is more than a pullback, if one ever occurs. Note the potential H&S on the OEX's five-minute chart.

Jeff Bailey : 10/31/2005 11:18:05 AM

11:00 Internals found at this Link

Jeff Bailey : 10/31/2005 11:12:07 AM

Swing trade sell covered call alert ... Let's sell two (2) of the Chesapeake Energy CHK Nov. $35 Calls (CHK-KG) at the bid of $0.65.

CHK $31.31 -0.38% ... Currently long 160 shares in MM Profiles.

Linda Piazza : 10/31/2005 11:08:17 AM

We're having a huge thunderstorm here. If I should disappear for a time, it's probably because I've lost my electricity and my broadband connection. I'll let you know if I have to step away for a few minutes due to something going on with my granddaughter, but I won't be able to give you advance warning if my electricity goes out. I'll have to switch to dial-up on my laptop if that happens and it could take me a while to get everything up and running.

Linda Piazza : 10/31/2005 11:04:18 AM

The advdec line tests first support and has not fallen below it yet.

Linda Piazza : 10/31/2005 11:02:55 AM

I want you bulls to protect your profits, so I'm going to show you a sneak preview of one of the charts from my Traders Corner article this weekend: Link Now look at this morning's first 60-minute close and look where the stochs were. This is the reason that I want to see you protect your profits this morning. This chart was admittedly showing a range-bound period when stochs worked well, but I did testing a couple of years ago that went back a much further period of time and I found then, too, that suspicion ought to be attached to those early morning Donchian channel breakouts. Just because something usually works a certain way doesn't mean it always will, but it sure means that you need to know what you'll do if it does.

Jeff Bailey : 10/31/2005 11:02:33 AM

11:00 Market Watch found at this Link

Jeff Bailey : 10/31/2005 11:00:30 AM

Semiconductor Index (SOX.X) 431.74 +1.61% Link ... World Semiconductor Trade Statistics (WSTS) association said September global sales of semiconductors rose 5.6% to $19.6 billion from a year earlier. Sales were up 5.2% since August as industry prepares for the holiday shopping season.

"The market drivers were personal computers, the communication segment with mobile phones, and digital consumer, as Christmas this year will be dominated by digital devices such as MP3 players, digital TV and DVD recorders," said Patrice Vaslot, vice-chairman for Europe at the WSTS.

Linda Piazza : 10/31/2005 10:55:58 AM

The advdec line comes down to test support at about 3250. The advdec line is now at 3376, QCharts value.

Linda Piazza : 10/31/2005 10:54:39 AM

By the way, if you're looking at OEX options chains, you're noticing some strange symbols. Weeklies have been added, options expiring each week. I'm not trading them yet and haven't even checked whether these OEX options expire Friday or Thursday of each week. They don't have big volume or open interest or many strikes available, so I'm not interested yet. Just be careful if you're looking for an OEX option that you don't accidentally get a weekly when you'd intended an option to expire November 18. They're cheaper, of course, but right now, I don't even see any ITM puts. The least OTM is the RZAWK, the 555 put.

Jeff Bailey : 10/31/2005 10:47:23 AM

Valero (VLO) $105.20 +5.68% Link ... Nation's largest oil refiner reported Q3 net income of $858 million, or $2.94 per share vs. $431 million, or $1.57 per share for the same period last year.

Excluding a $621 million pretax inventory charge related to its September acquisition of Premcor, earnings were $1.3 billion, or $4.37 per share.

Revenue totaled $23.3 billion, vs. $14.3 billion a year ago. Consensus was for $18.96 billion.

Linda Piazza : 10/31/2005 10:45:17 AM

The advdec line still trying to climb.

Linda Piazza : 10/31/2005 10:40:54 AM

The advdec line has not been below a support level that's now risen to about 3150 since Friday morning. Advdec line flattens now, but hasn't dropped below that. Advdec line at 3534 (QCharts value) as I type.

Linda Piazza : 10/31/2005 10:38:48 AM

The RUT has approached presumed resistance from 646.50-648.00 and then again at round-number resistance at 650. The RUT is at 646.18 as I type, with a HOD at 646.24.

Linda Piazza : 10/31/2005 10:37:12 AM

SOX has been approaching its 200-sma at 435.09, with the SOX currently at 432.84 but with the HOD at 433.35.

Linda Piazza : 10/31/2005 10:33:11 AM

At least the advdec line warned this morning (my 9:31:15 and 9:50:23 posts) that a strong climb was to be expected. Other charts suggest the likelihood of a pullback at least. That would be reasonable to expect with the OEX testing the resistance that finally sent it into the October low after failing for several days to breach it, with this being the 240-minute 100/130-ema's, currently at 558.13 and 559.67. I'm watching the SPX with regard to a Keltner line currently at 1201.71 for a guide as to whether a pullback has begun or is likely, but currently, the SPX shows no attempt to pull back to that line and even test it, much less close beneath it on a five-minute close. The advdec line still climbs.

Jeff Bailey : 10/31/2005 10:32:28 AM

Chiron (CHIR) $44.28 +2.02% ... shares trade higher after Swiss drug maker Novartis (NVS) $53.42 +0.03% increased its offer to $5.1 billion from $4.5 billion for remaining shares it doesn't already own.

Linda Piazza : 10/31/2005 10:27:21 AM

The OEX may well close this 60-minute period above the Keltner line currently at 557.34, with the OEX now at 558.20. This would constitute a minimal close above that line, but still a close above it. The OEX still tests the 240-minute 100-ema at 558.13, with the 130-ema at 559.68 currently, and with those averages being important to its performance.

Linda Piazza : 10/31/2005 10:20:58 AM

Advdec line still bouncing. No pullback begun yet.

Linda Piazza : 10/31/2005 10:20:07 AM

The early-bird setup I've been watching, to be covered in this next weekend's Traders Corner article would see an SPX Donchian channel breakout in the first 60-minute period. Done. Then, it would see a five-minute close beneath the SPX's Keltner line that's currently at 1201.02, but still rising. That's not done yet. If it were, it would set up a possible retracement down to a line currently at 1192.70, but still rising and likely to be higher by the time it's touched. This is not a play recommendation but rather a benchmarking so you can see how it would work in real life before you read the information this weekend.

Linda Piazza : 10/31/2005 10:16:24 AM

Wish I were making the kind of profits that would fly everyone in and take them to lunch. I think we'd have to return to early 2000's kind of action to enable that, though.

Jeff Bailey : 10/31/2005 10:17:39 AM

Chicago PMI for October ... 62.9 vs. Sep 60.5.

Prices Paid index 79.6 vs. Sep 76.3

Employment index 51.3 vs. Sep 48.4

New Orders index 72.6 vs. Sep 63.4

Supplier Deliveries 63.6 vs. Sep 57.4

Linda Piazza : 10/31/2005 10:14:16 AM

OEX pausing at the 240-minute 100-ema, also at the ascending trendline that had formed the top of its rising wedge shape. It's possible that the OEX is likely to pull back to 555.50-556 or so. If that support doesn't hold, a decline toward 554 is possible and maybe deeper, but that would depend on what happened at 554. OEX at 557.43.

Jeff Bailey : 10/31/2005 10:12:22 AM

10:00 Internals found at this Link

Friday's Internals found at this Link

Tab Gilles : 10/31/2005 10:12:22 AM

$SOX Link Link Link

Jane Fox : 10/31/2005 10:12:01 AM

Linda you can take us all out for lunch so we can enjoy your profits :)

Linda Piazza : 10/31/2005 10:10:46 AM

Laughing. Just noted that my 10:09:49 post original said for bulls to be careful and protect "my" profits instead of "any" profits. Oh, and I had suggested that you enjoy my profits, too. Aren't I generous?

Linda Piazza : 10/31/2005 10:09:24 AM

SPX pulling back to that important 72-ema after punching through it. That's at 1206.46, with the SPX at 1206.71 as I type. Here's a chart: Link

Linda Piazza : 10/31/2005 10:09:49 AM

Bulls, I would be careful and protect (and enjoy!) any profits. I think there's likely going to be a pullback or at least a pause. The OEX is now testing its 240-minute 100-ema at 558.13. The OEX spent a couple of days testing the 240-minute 100/130-ema's in late September and early October before keeling over and falling into October's low. The OEX is also approaching a 50% retracement of the drop from the September high into the October low, with that level at about 558.89. The Donchian channel action often suggests a pullback at least (maybe after the first hour of trading, maybe during) and the advdec line has zoomed into strong resistance.

Tab Gilles : 10/31/2005 10:04:14 AM

Time Warner (TWX) Link Link

Jeff Bailey : 10/31/2005 10:03:16 AM

10:00 Market Watch found at this Link

Linda Piazza : 10/31/2005 10:00:15 AM

Pause in the advdec line's climb, but no appreciative pullback yet. OEX still testing 60-minute Keltner resistance at 557.30 currently, with the OEX at 557.93 and with 30 minutes left in this first period of the day.

The SPX and OEX are both creating suspect Donchian channel breakouts on their first 60-minute periods, but suspect only in the form of a pullback at least being likely. I'll watch for the possibility of a pullback and let you know.

Jeff Bailey : 10/31/2005 9:58:21 AM

September Personal Income rose 1.7% after 0.9% decline in August. The Commerce Department said the wild swing was due to the impact of the storms on rental income, which were depressed severely in August by uninsured losses from Hurricane Katrina.

Excluding the impact of uninsured hurricane-linked losses on property owners, however, incomes rose 0.5% in September after rising 0.3% in August. Economists were expecting incomes to rise 0.3%, according to a survey conducted by Dow Jones.

Meanwhile, prices jumped on higher energy prices. The personal consumption expenditure price index rose 0.9% in September, the biggest increase since February 1981.

Jeff Bailey : 10/31/2005 9:53:47 AM

Placer Domer (PDG) $19.82 +20.04% ... sharply higher after company received hostile $9.2 billion bid from Canada's Barrick Gold (ABX) $25.85 -4.96%.

Linda Piazza : 10/31/2005 9:50:23 AM

The OEX has hit resistance at 557.27 on the 60-minute Keltner resistance, with the 60-minute close being of importance. A 60-minute close above that level suggests a breakout. A 60-minute close below suggests that the resistance holds. The OEX is also testing the top of its former rising wedge shape. The advdec line may be taking a form that suggests that after a pullback, it will try to rise higher again, following a form seen on 10/21 and 10/24 and even on Friday. That remains to be seen when we see what happens with the pullback, but it's not encouraging me to suggest bearish trades on the pullback right now.

Linda Piazza : 10/31/2005 9:41:57 AM

Stepping away for a moment.

Linda Piazza : 10/31/2005 9:41:13 AM

No Donchian channel breakout on the SPX yet, by the way, but it's getting close . . . here it comes in a breakout above 1204.01. Strictly speaking, there should be a 60-minute close above that level, but doesn't have to be for the attempt to be suspect. "Suspect" just means that it's due for a pullback, by the way.

Jeff Bailey : 10/31/2005 9:40:22 AM

Bearish swing trade lower stop alert for Nortel (NT) to $3.35.

NT $3.27 +0.92% ...

Linda Piazza : 10/31/2005 9:38:41 AM

The OEX has produced a highly suspect Donchian channel attempted breakout during this first period of the day. I'll have an article on Donchian channel breakouts when they occur during the first 60 minutes of the day for this weekend's addition of the newsletter, but the gist of it is that these tend to be suspect when they occur during the first 60 minutes or last 60 minutes of the day. I see no other signs of any difficulty or any imminent pullback, and this first 60-minute breakout can break out higher than it has, so I'm not suggesting that bears jump on a bearish play. I am suggesting that bulls keep ratcheting up their stops.

Linda Piazza : 10/31/2005 9:35:08 AM

At about 557.24, the OEX hits the rising trendline that had defined the top of that rising wedge shape off the 10/21 low.

Linda Piazza : 10/31/2005 9:34:17 AM

Advdec line already into first potential resistance. No pullback yet.

Linda Piazza : 10/31/2005 9:33:19 AM

SPX above the 200-sma, moving toward the 10/26 high of 1204.01. I'd also watch the 72-ema at 1206.35 for potential resistance. The SPX does show some correspondence in its trading pattern with this MA.

Linda Piazza : 10/31/2005 9:32:19 AM

The OEX tests the bottom of its former rising wedge shape, moving a little above that as I type. OEX tests 30-minute Keltner resistance at 555.11 on 30-minute closes, at 556.97 on 60-minute closes.

Linda Piazza : 10/31/2005 9:31:13 AM

Advdec line shows the possibility of a continued climb, but bulls don't want to see a quick reversal into negative values.

Linda Piazza : 10/31/2005 9:29:17 AM

Remember that big rising wedge on the OEX's 30- and 60-minute charts, rising off the 10/21 low? The OEX broke through that wedge to the downside on 10/27, and now has climbed back up to retest the former support. That former supporting line is at about 555.25, currently.

Linda Piazza : 10/31/2005 8:53:36 AM

Friday, the OEX saw its highest close since 10/04. It retraced three days of losses. Unfortunately, it still essentially trades within its recent range at the bottom of the decline off the late-July high, and it hasn't yet retraced more than 38.2% of that decline, with that Fib level at 556.33. We just cannot yet presume that the OEX is breaking out of that formation topped so far by the 10/26 high of 555.77, until it does break out, preferably with a daily close above the 38.2% Fib level. This caution is especially warranted by the SPX's failure to close the week at or above its 200-sma at 1199.20 and its 30-sma at 1200.71. However, the OEX and other indices have now been consolidating long enough that I don't think we can just presume that the consolidation zone is going to be preserved from now on. I think we have to be aware of the possibility of a breakout one direction or the other.

It looked to me as if the SPX was aiming for those converging 200- and 30-sma's, and that time just ran out, and so it might be presumed that there will be an attempt to run the SPX up to retest that important MA this morning, bringing the OEX up with it. Futures are higher as I type, although that higher-than-expected just-released rise in incomes and the personal consumption expenditure price index raises the specter of higher interest rates, so that 200-sma test may come.

If the OEX rises, too, the OEX is going to hit important Keltner and other resistance at 554.90 on 30-minute closes and then again at 556.80 on 60-minute closes. If there's a bounce this morning, those levels should be watched for potential resistance and pullback/rollover potential. I'm going to have to see how it sets up this morning before I make decisions. Some charts at Friday's close suggested that, after some initial follow through this morning, there would be a pullback, and we'll have to see if it looks as if it's going to be just a pullback before another dip-buying opportunity for bulls or something more significant.

I'm not sure at this point whether I'll be issuing an official play if that pullback sets up or else if evidence of a continued rally sets up. The reasons for this are several. First, although the initial setup was put in place late Friday for a pullback this morning, perhaps after some follow through to the upside, there's much uncertainty in the markets. In addition, the time comes for a possible upside breakout or breakdown. Those are the market-related uncertainties. In addition, my fragile granddaughter is undergoing a test this morning that will determine some important issues related to her quality of life. Because a paramedic friend is accompanying my daughter and granddaughter and because Jonathan is out today, I elected to stay at the computer and update you rather than pace back and forth through my house, nervously munching all the Halloween candy in the house, but that situation and the need for me to be available for updates on my granddaughter's situation will call me away from the computer for a few minutes from time to time. The way that works is--as anyone who has traded for any length of time knows--that the few minutes I'm called away will be the critical ones for markets. Never fails. So, unless the setup is stellar and there's little doubt about a pullback at least or else for a continued bounce, I'm going to update you on what I see but not call official trades.

I do have this to say. Whatever play you're in or elect to enter, know your stops and be ready to bail if it moves too far against you. Don't hope a play will turn around, because this week begins a period when we might stop having those alternating days. It's time for someone to gain power and run with the markets. I hope.

Jane Fox : 10/31/2005 8:40:27 AM

Bonds have recovered and are making new daily highs (based on a 8:20EST pit open).

Jane Fox : 10/31/2005 8:34:55 AM

The 8:30 data was a non-event for the equity markets.

Jane Fox : 10/31/2005 8:33:53 AM

DAteline Bloomberg Oct. 31 (Bloomberg) -- U.S. consumer spending rose in September as Americans spent more on gasoline after two Gulf Coast storms sent oil prices soaring. Incomes rebounded last month after plunging in August because of uninsured losses from Hurricane Katrina.

The 0.5 percent gain in spending last month followed a 0.5 percent decline in August, the Commerce Department reported today in Washington. Personal spending adjusted for inflation, which strips away the rise in energy prices, fell 0.4 percent after falling 1 percent in August, the first back-to-back drop since 1990. Incomes rose 1.7 percent, the biggest gain since December 2004, from a 0.9 percent decline.

Jane Fox : 10/31/2005 8:32:30 AM

Tbonds break overnight lows on the 8:30 data. I am still looking for those numbers.

Jane Fox : 10/31/2005 8:14:57 AM

Dateline Reuters WASHINGTON (Reuters) - President George W. Bush nominated conservative judge Samuel Alito to the U.S. Supreme Court on Monday in a move likely to set off a partisan battle with Democrats as he tries to right his struggling presidency.

Linda Piazza : 10/31/2005 7:30:50 AM

Good morning. All markets typically covered in this report gained last night, with Nikkei gaining almost 2%. As of 7:20 EST, gold was down $1.00 to $473.80, and crude, down $0.58 to $60.64. More details about Asian and European markets follows in succeeding paragraphs.

Monday morning, the Nikkei gapped higher by more than 100 points, on its way to a 259.96-point or 1.95% gain. The Nikkei closed at 13,606.50, its highest close since October 5. It was a day full of economic releases, a central bank meeting and a reshuffling of the cabinet, so it must have kept traders on their toes. That cabinet reshuffling included the appointment of the popular Shinzo Abe as the top spokesperson for the government, putting Abe into a key position to succeed Koizumi when he retires next September. Koizumi kept Takigaki as finance minister.

Before the open, the JMMA PMI for October rose to 54.7 from September's 54.5. According to one source this has reached its highest level in more than a year. New orders and output indices rose, but the export index inched lower. In a separate release, September's overtime pay rose 0.4% year over year, total cash earnings rose 0.8%, and summer bonuses rose 1.8%. Regular working hours inched up 0.2%, and overtime working hours rose 1.0%. This was the first time in two years that summer bonuses increased year over year.

The Bank of Japan met and was expected to keep monetary policy unchanged, and that's what happened. The central bank's twice-yearly report on the economic outlook and prices was due later. When that appeared, perhaps in the afternoon or even after the close, the central bank believed that CPI would remain positive and that economic expansion would be sustained. The recent narrowing of the output gap could prompt inflationary pressures, and risks included oil prices, the U.S. economy and domestic private demand. The chairman of a major department store chain says that he thinks private consumption has bottomed out, but he does see disparities in income, producing demand in only very expensive and inexpensive items. In a separate release, September's housing starts declined 0.2% year over year. They had been expected to rise. Construction orders rose 0.6%.

Stock-specific developments included Matsushita Electric Industrial Co.'s stock leading exporters higher in the early going, with that stock climbing after its earnings report and closing higher by 3.4%. Higher demand for plasma display televisions and digital cameras helped it post a 32% increase in profit for the second quarter. Toyota Motor Corp. gained after a media report speculating that its group operating profits might rise 5% this fiscal year. Orix Corp. climbed after confirming some of the details of its acquisition of U.S. investment bank Houlihan Lokey Howard & Zukin. Nippon Steel raised its earnings outlook for the full year. Companies such as drugmaker Eisai Co., robot-maker Fanuc, property developer Mitsui Fudosan Co. and NTT DoCoMo benefited from earnings reports released today or last week. Hitachi Ltd. did not participate in the gains, however, with its hard disk drive operations losing more than expected. The company also trimmed its full-year forecast more than had been anticipated.

All other Asian markets turned in positive performances, too. The Taiwan Weighted gained 2.33%, and South Korea's Kospi climbed 1.52%. Singapore's Straits Times rose 1.11%, and Hong Kong's Hang Seng gained 1.20%. China's Shanghai Composite climbed 1.11%.

Some European markets appeared to be closed, but the three typically covered on this page post strong gains, buoyed in part by M&A news. Spain's Telefonica will buy the U.K.'s O2. While Telefonica's shares were suspended, O2's gained. The U.K.'s shipping company P&O is also reportedly in early and preliminary talks with an unnamed party, with those talks perhaps to lead to a bid for the P&O. Chiron's board has agreed to a higher offer for Switzerland's Novartis. In other company-specific news, Dutch bank ABN Amro climbed after a strong earnings report.

Sunday, a newspaper reported that Germany's Federal Labor Office forecasts only a marginal dip in unemployment next year. This forecast was derived from a discussion paper used for producing the budget and it shows unemployment remaining higher than Germany's top think tanks' projections. October unemployment figures are due Tuesday. The budget remains a primary focus as investors and government officials mull disagreeable choices to trim the deficit. Pressure grows on Angela Merkel to reach compromises with other members of the grand coalition. Negotiations have been going on for two weeks without a consensus being reached. Today, September's retail sales showed a decline of 1.6% month over month and 0.7% year over year. This release disappointed, but it was compared to revised-higher August data.

In the U.K., September's consumer credit rose slightly less than had been expected. Mortgage lending rose by a slightly lower-than-expected number. Mortgage approvals rose. The much-awaited October consumer confidence index disappointed, falling much more than had been expected, to -8 from the prior -5. The components measuring the economic situation for the next 12 months, personal finances for that period and major purchases climate all dropped. Savings intentions eased. Higher crude and energy costs were blamed.

As of 7:10 EST, the FTSE 100 was high by 88.20 points or 1.69%, at 5,301.60. The CAC 40 was higher by 65.11 points or 1.50%, at 4,401.52. The DAX was higher by 99.08 points or 2.06%, at 4,905.13.

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