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Jeff Bailey : 11/1/2005 10:40:07 PM

Program Trading Levels for Wednesday ... HL Camp & Company has their computers set for program buying at $+3.71 and set for program selling at $+1.29.

OI Technical Staff : 11/1/2005 9:59:59 PM

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Jeff Bailey : 11/1/2005 6:01:32 PM

December Nat. Gas futures (ng05z) ... up $0.12, or 0.99% at $11.98.

Jeff Bailey : 11/1/2005 5:59:39 PM

Chesapeake Energy (CHK) update $31.10 -3.11% ... ticking $30.63. Post-market low has been $29.80.

Jeff Bailey : 11/1/2005 5:30:18 PM

Chesapeake Energy (CHK) alert $31.10 -3.11% ... sharply lower at $30.23 in extended session after the nation's 2nd largest producer of natural gas announces it is launching a private placement for $1.5 billion in notes and preferred stock to fund its acquisition of Columbia Natural Resources.

Selling $400 million in senior notes due 2020, $500 million in cumulative convertible preferred stock ($100 per share liquidation preferance) and $600 million in senior unsecured contingent convertible notes due 2035.

Jeff Bailey : 11/1/2005 4:49:42 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 11/1/2005 4:42:16 PM

Closing Internals found at this Link

Jeff Bailey : 11/1/2005 4:20:58 PM

Current OPEN MM Profiles found at this Link

Today's Activity ... Swing trade bearish short shares of Stillwater Mining (SWC) at the bid of $9.89. Stop currently $10.32, targeting $9.10.

Lowered stop on the 1/2 bearish short in Nortel (NT) to $3.31.

House of horror for the DELL Nov. $35 Calls (DLQ-KG) and looking for an exit if they trade $0.15.

Jeff Bailey : 11/1/2005 4:11:49 PM

Buy Program Premium ... DIA $104.11, SPY $120.47

Jonathan Levinson : 11/1/2005 3:59:18 PM

WASHINGTON (AP) -- No sooner did a $39 billion budget-cut bill come to the Senate floor on Tuesday than GOP leaders moved to spend almost $7 billion of the savings on other purposes such as combating bird flu.

Senate Majority Leader Bill Frist, R-Tenn., is a top sponsor of the $4 billion avian flu plan, which would direct $2.8 billion to developing medicines and vaccines to combat the flu. An additional $1.2 billion would be earmarked to otherwise prepare for a potential pandemic.

Link

Jonathan Levinson : 11/1/2005 3:55:20 PM

With SUNW, SYMC, ERTS and EDS reporting after the close, there's the potential for some wild swings. Day traders would look to close out with a profit here on the short from 39.01. With the 30 and 60 min cycles in downphases here, I will leave the stop in place at breakeven.

Linda Piazza : 11/1/2005 3:54:09 PM

And the OEX turns down again from the top of the right shoulder. I hope we get another right-shoulder test first thing tomorrow morning, but I didn't want to enter a bearish trade this late in day.

Jeff Bailey : 11/1/2005 3:52:37 PM

Sun Microsystems (SUNW) $3.80 -5% ... sudden drop from $3.90.

Linda Piazza : 11/1/2005 3:48:26 PM

Mark just asked whether traders were scratching their heads because of the confusion of patterns. I was just studying the OEX's 240-minute chart, a chart that I like to watch, and noticing that the last three 240-minute candles, while trending down, have real bodies that have tentatively stayed within the real body of the white candle that preceded them. (The OEX has to close this 240-minute period above 554.48 for this to hold true into the close.) This is actually a potential setup for a bullish formation known as a mat hold. What it's showing is that despite bearish efforts, the bears weren't able to drive prices below that previous strong white candle's real body. It has to be confirmed the next day by a tall white candle that closes above the one that preceded the three bearish candles. Then I'm looking at the potential for that H&S on the OEX's 15-minute chart. I'm thinking that even if the OEX does rise into the close, it's just going to print a doji of some form or another on the daily chart, although currently the small real body of the day's candle is inside the real body of the previous day's candles. There are spikes outside yesterday's real body, so this isn't classically an inside day candle, but I'm thinking that I knew what I wanted to see when I came into the markets this morning, and I pretty much saw it, but just at the wrong times, and now I'm going to have to study the charts again this afternoon and start over tomorrow.

Jonathan Levinson : 11/1/2005 3:37:15 PM

Headline:

[USB] U.S. BANCORP UPS PRIME RATE TO 7% FROM 6.75%

Jeff Bailey : 11/1/2005 3:36:59 PM

December Fed Funds futures (ff05z) 95.85 (unchanged) ... After today's FOMC statement Link , market participants don't give much reaction here. 60% probability of another 25 bp hike at next meeting.

Linda Piazza : 11/1/2005 3:33:47 PM

My outlook for today was for a bounce (earlier than it came) into the right-shoulder level (lower when it came with a descending neckline instead of the horizontal one that I'd expected). I'd thought the advdec line setup this morning for a lower-all-day kind of day, but with a morning countertrend bounce. Everything sort of happened in a skewed sort of way, but skewed enough that it threw off the ability to enter. The bounce wasn't in the morning but post-FOMC and too fast for this newby trade poster. The OEX had trended sideways down all day, so that there was no cushion to enter pre-FOMC. I'd thought there might be a post-FOMC post but I wanted it to be the second of the day, to retest advdec line resistance and set up bearish divergence. And now, there's this fairly predictable (and not all that bullish just yet) attempt to keep from confirming that H&S this afternoon. The advdec line is testing resistance again, but not the resistance I want it to test, and I just can't get the right setup, or get it too quickly for me to react.

Now, the OEX is trying to move past Keltner resistance at 555.15 on the five-minute chart. If it's successful, there could be another attempt at 556.30. Strictly speaking, though, the OEX is now at the actual right shoulder for that H&S formation if you just draw a parallel line with the neckline.

Jonathan Levinson : 11/1/2005 3:31:33 PM

A wavelet bounce is slowing here on QQQQ within the broader short cycle downphase, which suggests that the bounce is a bear wedge or bear flag: Link A break above 38.92 or below 38.90 should resolve it one way or the other.

Linda Piazza : 11/1/2005 3:23:32 PM

I would bet there's going to be an effort not to confirm that H&S on the OEX's 15-minute channel, so that there's going to be an attempt to bounce the OEX. I'm not sure how successful that attempt will be, but the OEX just closed another four-minute period above that four-minute 21-ema that was capping earlier gains, before the post-FOMC push. The top of the right shoulder appears to be in the 555.20 level now, up to the post-FOMC high of 556.58.

Jonathan Levinson : 11/1/2005 3:12:50 PM

QQQQ 3-min chart update, with price back below 72 SMA support at 38.83: Link . Bears need a break of the session lows at 38.71 to confirm a new 30 min cycle downphase.

Jeff Bailey : 11/1/2005 3:09:24 PM

03:00 Internals found at this Link

Linda Piazza : 11/1/2005 3:09:31 PM

The advdec line looks as if it might be breaking down from its bear flag now, testing last-ditch support in the -1100 zone. The advdec line is at -1134 as I type. Well, "last-ditch" is a bit of a stretch, but as far as nearby support is concerned, it's last-ditch.

Linda Piazza : 11/1/2005 3:04:52 PM

OEX Keltner picture: The OEX's important mid-channel support is at 553.45 on 15-minute closes, right at the current level of the descending neckline on the OEX's possible H&S. If the OEX should drop to that level and if you were lucky enough to get in a bearish play on today's post-FOMC bounce, know now how you're going to handle a test of that zone, if one should come. It's possible that the OEX could rise again and retest the post-FOMC move, although the 554.70-555.21 level looks fairly strong as resistance now.

Jonathan Levinson : 11/1/2005 3:03:45 PM

Volume breadth is back to -1.53:1 on the NYSE, -1.12:1 on the Nasdaq.

Jeff Bailey : 11/1/2005 3:02:02 PM

03:00 Market Watch found at this Link

Linda Piazza : 11/1/2005 3:00:36 PM

Advdec line testing support, still, although perhaps dropping just below it. OEX testing previous LOD, dropping a cent below it.

Linda Piazza : 11/1/2005 2:54:20 PM

The advdec line has dropped down to test support again and so far just seems to have widened its bear flag climb. It punched higher through that flag, but is now within it again, testing Keltner as well as bear-flag support. The -100 to +220 zone appears to be strong resistance and I'd like to see it tested again with bearish divergence, but I don't know if I'm going to be given that opportunity.

Jonathan Levinson : 11/1/2005 2:52:31 PM

Thanks, Linda. I followed your lead and went "beyond" with my indicators. When QQQQ broke the upper keltner limits just below that 39.05 confluence, I gave a quick look to the Nasdaq TICKQ chart, which also showed a band violation: Link

Linda Piazza : 11/1/2005 2:49:35 PM

Good entry, Jonathan.

I was scrambling to get everything posted and decide on a new stop (I've had several entries made up today, ready to go) based on the post-FOMC bounce, and then it turned around too quickly before I could get the entry posted. I'm a fast typist, but I'm still learning this posting business on the MM, and it's just tough. The OEX came up and pierced five-minute resistance, twice, and then closed the five-minute period below it, but I spent an instant too long deciding whether to place the stop just above that post-FOMC high or at the next Keltner level, at 558.23. I should have remembered Marc's advice to just use the words "al-rt" and "entry" and then add the details later.

Jonathan Levinson : 11/1/2005 2:47:22 PM

TNX is back up to a 1.8 bp gain at 4.577%, though IRX isn't bouncing as sharply, up 5.7 bps at 3.862%.

Jonathan Levinson : 11/1/2005 2:45:15 PM

QQQQ - Stop Loss Adjustment Alert -

QQQQ short from 39.01, move stop to even

Linda Piazza : 11/1/2005 2:39:04 PM

The OEX tests its breakout level. Bulls need to hold it here if they want to see a continuation of the bounce. OEX at 555.08 as I type, just above that four-minute 21-ema that held it back all day.

Jeff Bailey : 11/1/2005 2:38:50 PM

Chesapeake Energy (CHK) $31.30 -2.49% ...

Jeff Bailey : 11/1/2005 2:38:21 PM

Senator Grassley Skeptical of Oil Windfall Profits Tax ... OIX 523.79 +0.70% , XNG.X 388.05 +0.07%

Jonathan Levinson : 11/1/2005 2:37:12 PM

Crude oil finished +.15 at 59.90, off a low of 39.025. Natgas finished -.365 at 11.84, off a low of 11.51.

Linda Piazza : 11/1/2005 2:34:37 PM

The OEX might have pierced 556.23 resistance, now risen to 556.30, but it doesn't look as if it's going to close the five-minute period above it. Headed down to test 555.25 support, its breakout level.

Linda Piazza : 11/1/2005 2:32:00 PM

OEX is able to bounce above 555.23. I'm standing aside until I see evidence from the advdec line and the OEX that the post-FOMC bounce has ended, if it's going to do so. Bulls, be a bit wary here, though.

Jonathan Levinson : 11/1/2005 2:31:56 PM

QQQQ - Entry Point Alert -

Short QQQQ at 39.01, stop 39.10

Jeff Bailey : 11/1/2005 2:31:31 PM

Buy Program Premium ... DIA $104.44, SPX 1,207.24, QQQQ $38.99

Linda Piazza : 11/1/2005 2:30:56 PM

I'm still getting mixed signals, depending on the chart I'm watching. The OEX may have trouble with the 556.23 level. I'm watching closely as it's tested again post FOMC.

Linda Piazza : 11/1/2005 2:28:52 PM

As long as the OEX is maintaining 10-minute closes above support at 555.40, it's got potential to move up toward 557. Iffy time here.

Jonathan Levinson : 11/1/2005 2:28:15 PM

Although QQQQ made a new high and is holding near the top of its range, the SOX is struggling to hold 429, never coming close to its noontime highs.

Linda Piazza : 11/1/2005 2:27:27 PM

The OEX is dropping back immediately to test the right shoulder area after piercing it, but this may be just a retest. Advdec line testing resistance here. Not seeing a clear signal yet.

Jonathan Levinson : 11/1/2005 2:25:58 PM

Ten year note yields bounce back up to a .8 bp gain at 4.567%, IRX +5.2 bps at 3.857%. The reaction in equities is quite muted compared to bonds.

Linda Piazza : 11/1/2005 2:24:07 PM

Advdec line and OEX both still gaining. We would have had no cushion against this if we had entered a bearish position earlier. Watching to see what happens next and if we get a clear signal, particularly if the advdec line should approach the zero level or the +100 level.

Jonathan Levinson : 11/1/2005 2:23:24 PM

Volume breadth -1.2:1 on the NYSE, +1.2:1 on the Nasdaq.

Jonathan Levinson : 11/1/2005 2:21:22 PM

QQQQ ticked up to 38.90 and is back to the high end of the previous range at 38.85- back to the high as I type: Link

Jonathan Levinson : 11/1/2005 2:20:38 PM

TNX is down 1.8 bps here at 4.541%, IRX +4.5 bps at 3.85%.

Linda Piazza : 11/1/2005 2:20:18 PM

The OEX bounces sharply toward the top of the right-shoulder level, with that right-shoulder level at 555.50 or so. Too much above that, and the OEX might be invalidating that formation.

Jonathan Levinson : 11/1/2005 2:20:10 PM

Fed statement at this Link

Jeff Bailey : 11/1/2005 2:19:45 PM

Buy Program Premium ... DIA $104.19, SPX 1,204.17, QQQQ $38.89

Jonathan Levinson : 11/1/2005 2:19:42 PM

Headlines:

FOMC: RATES CAN STILL BE RAISED AT 'MEASURED PACE'

FOMC SAYS RATES ARE STILL ACCOMMODATIVE

FOMC: HURRICANES TEMPORARILY DEPRESSING OUTPUT

FOMC: LOW RATES, REBUILDING EFFORTS WILL SUPPORT GROWTH

FOMC: ENERGY AND OTHER COSTS COULD ADD TO INFLATION PRESSURE

FOMC HIKES RATES BY QUARTER POINT TO 4.0%

ONLY MINOR CHANGES MADE TO FOMC STATEMENT

Jonathan Levinson : 11/1/2005 2:19:01 PM

The Fed raises by 25 bps. Awaiting details.

Jonathan Levinson : 11/1/2005 2:17:57 PM

Has the Fed outsourced this release to the University of Michigan?

Jeff Bailey : 11/1/2005 2:16:25 PM

Bearish swing trade short 1/2 position alert ... for Stillwater Mining (SWC) at the bid of $9.88, stop $10.32, target $9.10

Linda Piazza : 11/1/2005 2:16:23 PM

The advdec line is now threatening to break below its bear flag. OEX headed down to test the neckline of its H&S, at about 553.75. Be careful for potential whipsaws, though, and fake-out moves.

Jonathan Levinson : 11/1/2005 2:16:16 PM

Tick tock...

Linda Piazza : 11/1/2005 2:15:05 PM

It looks as if it might be the consumer-related stocks dragging the OEX down the most. The CMR is below yesterday's low.

Jonathan Levinson : 11/1/2005 2:13:14 PM

TNX +.2 bps at 4.561%, IRX + 6 bps at 3.865%.

Jeff Bailey : 11/1/2005 2:13:10 PM

02:00 Internals found at this Link

Linda Piazza : 11/1/2005 2:12:22 PM

The NDX, another big-cap index, hasn't retraced all of yesterday's gains. Not even nearly.

Linda Piazza : 11/1/2005 2:10:39 PM

The OEX just tested yesterday's 554.48 low. The OEX's LOD today was 554.45. OEX currently at 554.68, going up to test that four-minute 21-ema at 554.73, with that average holding it back almost all day, on each retest.

Jonathan Levinson : 11/1/2005 2:07:15 PM

QQQQ 2-week 15-min chart updated at this Link . Today has been as flat as a pancake so far.

Linda Piazza : 11/1/2005 2:06:40 PM

In addition to the comments in my 2:01:38 post, something strange is going on with the OEX today. It is not acting at all as it usually does in accordance with the advdec line's moves. The advdec line has been bouncing since about 10:00, although bouncing in a bear-flag, probably, but the OEX has drifted lower that whole time. While logic suggests that, if the OEX can't perform any better than this when the advdec line is retracing, then the OEX is really going to decline with any downturn in the advdec line, but I don't like suggesting you trade when there's something funny going on and I don't yet understand its implications. Are bears being suckered in? Or is it as weak as it looks to be?

Jeff Bailey : 11/1/2005 2:02:54 PM

02:00 Market Watch found at this Link

Linda Piazza : 11/1/2005 2:01:38 PM

The OEX has now spent about the same time forming a right shoulder for its potential H&S on its 15-minute chart as it did on the left shoulder, so it's ready to confirm or be invalidated . . . or just fizzle out. I had wanted to see the OEX rise to the top of the right-shoulder level, now at about 555.50 but higher earlier, but it just never did. The OEX's formation today looks a lot like a falling wedge, a bullish formation although a short-term one, and the advdec line still tries to rise, although it has had a minor breakdown from its bear-flag support.

If the OEX had risen to the top of that right shoulder, particularly if it had done so from 556 and had formed a H&S with a horizontal neckline and not a descending one, I would have felt comfortable entering a bearish trade before the FOMC meeting. That would have brought the OEX up close enough to those 240-minute 100/130-ema's that we could have had some cushion plus a sane and logical stop-out level. We have neither right now. I still think it likely that the advdec line will break down again, but I just don't have that cushion I wanted before the OEX hits 553-554-ish support.

Jonathan Levinson : 11/1/2005 1:55:14 PM

Session low for INTC, -3.66% at 22.64. Session high for MSFT, +1.05% at 25.97.

Jonathan Levinson : 11/1/2005 1:53:47 PM

Volume breadth -1.4:1 on the NYSE, -1.26:1 on the Nasdaq, improving slightly.

Jonathan Levinson : 11/1/2005 1:51:00 PM

Headlines:

[GM] MOODY'S OUTLOOK ON GM 'NEGATIVE'

[GM] MOODY'S GMAC RATING UNDER REVIEW WITH 'DIRECTION UNCERTAIN'

[GM] MOODY'S DOWNGRADES GM'S LONG-TERM RATING TO 'B1'

[GM] GENERAL MOTORS OCTOBER U.S. CAR SALES DOWN 11.8%

[GM] GENERAL MOTORS OCTOBER U.S. CAR SALES 114,665 VS 135,062

[GM] GM OCT. U.S. TOTAL TRUCK SALES 142,958 VS 210,996

[GM] GENERAL MOTORS OCTOBER U.S. TRUCK SALES DOWN 29.6%

GM trades -1.64% at 26.95.

Jeff Bailey : 11/1/2005 1:49:51 PM

General Motors (GM) $27.00 -1.49% ... October sales down 23%. Delivered 257,623 vehicles in the latest month. Q4 production forecast unchanged.

Linda Piazza : 11/1/2005 1:47:38 PM

The OEX is again testing the four-minute 21-ema once again, and drawing back just as I type. It's at 554.81, with the OEX now at 554.65.

Jeff Bailey : 11/1/2005 1:45:00 PM

AMEX Airline Index (XAL.X) 47.12 -0.31% ...

Jonathan Levinson : 11/1/2005 1:44:59 PM

So far, QQQQ's 60 min cycle downphase is getting no traction, but neither is the new 30 min cycle upphase that opposes it. The Friday/Monday rally reignited the daily cycle upphase, but it's nearly overbought by this point. Pricewise, the bulls need to clear today's high (6 cents away) and yesterday's 39.05-39.10 confluence to resolve this picture to the upside. 38.60-.65 is confluence from yesterday, just below today's low. The 30 cent range in between has so far proven itself to be a blender. Link

Jeff Bailey : 11/1/2005 1:44:32 PM

Brazil's Petrobras orders 13.1% cut in Jet Fuel Price ... DJ - Brazilian state-controlled energy giant Petrobras (PBR) on Tuesday ordered a 13.1% cut in the price of jet fuel.

It was the first cut this year. From January through the last price hike on Oct. 15, Petrobras had raised the price of jet fuel by 57.3%.

Rising jet fuel prices led all of Brazil's airlines to hike their domestic fares by at least 15% in October.

However, in a conference call earlier Tuesday, Constantino de Oliveira, president of no-frills airline Gol, said a cut in jet fuel prices was imminent. He said such a cut would mean his company would not have to raise fares again in the foreseeable future and might even be able to cut some fares.

Linda Piazza : 11/1/2005 1:41:26 PM

I'm not seeing the setup I wanted pre-FOMC.

Jeff Bailey : 11/1/2005 1:41:07 PM

Current OPEN MM Profiles found at this Link

Jonathan Levinson : 11/1/2005 1:22:06 PM

Stepping away for a few minutes here.

Linda Piazza : 11/1/2005 1:22:16 PM

The OEX still can't make it over that four-minute 21-ema, with that average currently at 554.98. The OEX keeps coming up to touch it or almost touch it and then dropping back down again, but in a right range. It doesn't drop too far away from that descending average. Still watching for a potential bump up to the right shoulder area for the formation on the 15-minute chart, with that right-shoulder zone now at 555.75 or so. Don't know if it will happen. The advdec line is still squeezed between support and resistance, with neither having broken yet.

Jonathan Levinson : 11/1/2005 1:19:13 PM

Volume breadth is currently -1.5:1 on the NYSE, -1.2:1 on the Nasdaq.

Jeff Bailey : 11/1/2005 1:15:07 PM

01:00 Internals found at this Link

Linda Piazza : 11/1/2005 1:11:57 PM

The advdec line is testing resistance at -850 or so, with the advdec line now at -885, QCharts value. The advdec line is squeezed between that important resistance that it's been testing for more than an hour and the rising support of its bear flag climb off the day's low. One is going to break soon.

Linda Piazza : 11/1/2005 1:09:30 PM

There's been a slight hint of a falling wedge to the OEX's shape today. I'm watching the OEX come up toward a test of the four-minute 21-ema, at 555.07, with that average, of all things, topping out the OEX advances since 11:06. The OEX is approaching it now, with the OEX at 554.94, but having reached a high of 555.01 during this four-minute period. See what we're reduced to today, watching four-minute charts?

Jeff Bailey : 11/1/2005 1:05:34 PM

01:00 Market Watch found at this Link

Jonathan Levinson : 11/1/2005 1:03:51 PM

Foreign central banks took 2.82B of the 15B 4-week t-bill auction. The bills sold for a high-rate of 3.725% yielding 3.788%, with 2.66 bids tendered for each accepted.

Jonathan Levinson : 11/1/2005 1:00:47 PM

The US Treasury is this week expected to set out its latest thinking on the creation of a special securities lending facility to relieve exceptional market shortages of Treasury bonds.

The creation of such a backstop facility by the Treasury would mark a significant shift of the government's role in the bond market.

The Treasury is expected to discuss the idea with the Treasury Borrowing Advisory Committee, a group of non-government bond market experts that advise the department. It meets today ahead of the main quarterly refunding announcement tomorrow.

Officials began soliciting comments earlier this year and, in August, said the Treasury would work towards a proposal that would, in effect, make it the market's lender of last resort. Any plan would be aimed at easing strains on the repurchase, or repo, market - where securities are borrowed in exchange for cash - by issuing extra securities on some occasions when the original supply has become scarce.

Link

Linda Piazza : 11/1/2005 12:56:07 PM

Here's my quandary today: First, the FOMC announcement is about 80 minutes away, and chart characteristics just may not mean much over that 80 minutes and for a few minutes afterwards as the markets react. Next, the advdec line is still climbing, and as long as it does, the potential for a bounce exists. While that bounce potential is certainly not showing up in the OEX, a distinct departure from usual action, if other markets can bounce, the OEX might be bought higher with them. The OEX is still within the right-shoulder formation on its 15-minute chart, and it hasn't violated the neckline, which has now dropped to about 554, so that a bounce could come at the neckline test, if the OEX drops that far.

Jeff Bailey : 11/1/2005 12:54:22 PM

Group 1 Automotive (GPI) $28.85 +4.37% ... Said it swing back to a profit in the third quarter. Reported Q3 EPS of $0.88 vs. year-ago $0.42 on revenue of $1.57 billion vs. $1.53 billion.

Consensus was for $0.88 per share.

The automotive retailer said it sees fiscal 2005 EPS between $2.75 and $2.80 per share. Consensus $2.75 a share.

Jonathan Levinson : 11/1/2005 12:51:15 PM

There's also that maxim (or is it a bromide?) about years ending in "5" for what it's worth...

Jeff Bailey : 11/1/2005 12:47:52 PM

Lucent (LU) $2.77 -2.80% ... #10 most active.

Jeff Bailey : 11/1/2005 12:47:05 PM

Bearish swing trade lower stop alert ... for Nortel (NT) to $3.31

NT $3.24 -0.30% ...

Jonathan Levinson : 11/1/2005 12:43:34 PM

QQQQ zigged above the 72 SMA and is now zagging below the rising trendline, violating the apex of the wedge in both directions. The short cycle indicators have degenerated to a sideways drift, and all of the longer intraday channels point sideways. It still feels bearish to me, but by this point, but with today's high only a nickel away, it would take little to squeeze the sellers into a meltup from here. Link

Linda Piazza : 11/1/2005 12:42:26 PM

OEX Keltner situation: The OEX is rising to test the 15-minute Keltner resistance at 555.36, with that resistance having held the OEX back on its earlier test at about 10:45-11:00. Beginning soon, it's going to be more about how people want to be positioned into the FOMC announcement than it is about what's on the charts, however, so be careful about assuming anything.

Linda Piazza : 11/1/2005 12:34:16 PM

Advdec line still climbing into resistance, still within its bear flag formation, but facing strong resistance at about -800 with the advdec line now at -939, QCharts value.

Jeff Bailey : 11/1/2005 12:30:17 PM

December Fed Funds futures (ff05z) 95.84 -0.01% ... currently predicting a 65% probability of two 25 bp rate hikes by 12/13 meeting. Today's verbage out of the FOMC will influence trade.

I'm a bit surprised that this contract isn't closer to the 95.75 level and may suggest market participants looking for some "dovish" commentary.

Jonathan Levinson : 11/1/2005 12:28:33 PM

Headlines:

[F] VOLVO OCTOBER N.A. SALES DOWN 23% VS YEAR-AGO PERIOD

[F] VOLVO OCTOBER U.S. SALES DOWN 25.2% VS YEAR-AGO PERIOD

Linda Piazza : 11/1/2005 12:27:44 PM

New LOD on the OEX by about 8 cents. Advdec line is still challenging resistance. I am certainly glad that I didn't believe in pulling readers into a likely countertrend play this morning, because the advdec line setup and the potential H&S scenario all suggested a countertrend bounce, perhaps up to 557 or so. That just hasn't happened yet. While the advdec line has been climbing, the OEX has been dipping and it looks vulnerable to 554.30 or so. It's still chopping around within a likely right shoulder for its inverse H&S, however, and could still bounce up toward the 556-ish top of that shoulder.

Linda Piazza : 11/1/2005 12:19:03 PM

This is the OEX's third test today of the 554.94-555.00 zone.

Linda Piazza : 11/1/2005 12:17:27 PM

Looking over the components of the OEX, it looks as if some techs, brokerages and energy-related issues may be responsible for a hefty portion of today's declines. Sara Lee is down, and I believe it reports later in the week, perhaps Thursday, if I'm remembering correctly.

Jeff Bailey : 11/1/2005 12:14:31 PM

Ford Motor (F) $8.21 -1.32% Link ... U.S. sales down 25.6% in October. Sales of 199,847 vs. 268.474.

Car sales down 11.1%, truck sales down 31.3%.

Jeff Bailey : 11/1/2005 12:11:55 PM

Daimler Chrysler (DCX) $49.48 -1.13% Link ... Reports 3% decline in U.S. sales for passenger cars in October. 183,163 vs. 188,492.

Jeff Bailey : 11/1/2005 12:09:02 PM

12:00 Internals found at this Link

Linda Piazza : 11/1/2005 12:06:00 PM

Thinking . . . something has changed. Over the last week, the big caps have been front-running any upside movement in the markets, but today the advdec line has been climbing since 10:00 and the OEX has obviously not been climbing steadily since then. There's been some talk among market pundits about the relative strength among the big caps being a defensive move or rotation out of the riskier small caps into the big caps, but what does it mean that the OEX isn't responding today the way it has been over the last week? Now that October has ended, are funds dumping some of the big caps in favor of small caps again, in another round of rotation? Or is everything being sold on rallies?

I'm not sure yet, but something has changed here. Anyway, the OEX is again trying to bounce, and this time, I hope it bounces up to 556 at least, into the now descending level of the right shoulder for its 15-minute H&S with the descending neckline. OEX at 555.23 as I type.

Jeff Bailey : 11/1/2005 12:02:31 PM

12:00 Market Watch found at this Link

Tab Gilles : 11/1/2005 11:59:05 AM

MURPHY OIL (MUR) As per 10/26 10:43 AM & 10/26 1:07 PM posts; watching for 10/20-ema crossover to add to entry position taken on 9/16. Link Link

Jonathan Levinson : 11/1/2005 11:57:18 AM

On the 3 min chart, QQQQ is hugging the rising trendline toward the 72 SMA resistance line at 38.85. The SOX has firmed, back at 430 here, but the short cycle upphases are sideways. My guess is for this setup to break down, but with the Fed announcement looming, directional bets within a quiet sideways range are iffy at best, especially with all but the very widest stops. Link

Jonathan Levinson : 11/1/2005 11:53:33 AM

The Treasury will auction 15B, of which 7B is new debt, the results of which are expected at 1PM.

Linda Piazza : 11/1/2005 11:51:24 AM

The OEX came within one cent of its previous LOD, but the advdec line wasn't dipping while it did that. It's not that the advdec line is strong. It isn't. It's just climbing into reistance in a likely bear flag, but it keeps challenging that resistance.

Linda Piazza : 11/1/2005 11:45:26 AM

OEX coming down to retest the 554.94 LOD, with the OEX now at 555.02. The advdec line maintains its ascending regression channel (bear flag?) so far, though.

Jonathan Levinson : 11/1/2005 11:40:20 AM

Headlines:

GERMANY'S DAX AT 4,922, DOWN 0.1%

FRANCE'S CAC-40 AT 4,434, DOWN 0.04%

U.K.'S FTSE 100 AT 5,344, UP 0.5%

Jonathan Levinson : 11/1/2005 11:38:33 AM

Volume breadth -1.5:1 on the NYSE, -1.32:1 on the Nasdaq. QQQQ volume is just reaching 30M here, compared with yesterday's total (for the day) 115.4M shares and the average of 102.47M shares.

Linda Piazza : 11/1/2005 11:35:21 AM

Advdec line trying to push past the resistance it's been testing since about 10:50. It hasn't quite been successful yet, however. Advdec line at -1098, QCharts value, as I type, with further resistance at -980.

Linda Piazza : 11/1/2005 11:33:01 AM

Now the OEX has confirmed a little H&S on its three-minute chart, with that little H&S part of the right-shoulder formation for the H&S on the 15-minute chart. It's not in a hurry to drop after confirming it, though. It's been the battle of the H&S and inverse H&S's today, visual evidence of the very short-term competition of the bulls and the bears. I think it's likely to be a competition that the bulls win over the very short term (bounce potential still exits) but that the bears ultimately win today. That's how charts are setting up now, but there's that big caveat--this afternoon's FOMC announcement.

Jonathan Levinson : 11/1/2005 11:30:07 AM

QQQQ is drifting through the lower rising trendline here as the short cycle indicators stall: Link

Tab Gilles : 11/1/2005 11:29:58 AM

Citrix Systems (CTXS) My initial observation on CTXS was back on 7/13 11:25 AM, pointing out a Cup & Handle formation. Also followed up on 7/27 4:44PM. Link Link Link

Linda Piazza : 11/1/2005 11:26:39 AM

OEX Keltner situation: The OEX is currently trapped between support at 555.29 and resistance at 555.94, all on 15-minute closes. Both have been holding today on those closes. They're tightening down around the OEX, so it's likely going to pop through one or the other, but the Keltner's aren't giving a prediction. The five-minute chart shows the OEX trailing absolutely along the mid-channel level, ringed by support and resistance that look equally weighted.

Linda Piazza : 11/1/2005 11:22:52 AM

The advdec line is still maintaining its bear flag, still challenging first resistance, but I think we're soon going to have to consider that last inverse H&S possibility on the OEX to have been dissolved unless the OEX breaks higher soon. The right shoulder is too deep and too wide in relationship to the left.

Jonathan Levinson : 11/1/2005 11:19:59 AM

QQQQ seems to have wedged itself between the 72 SMA and the rising trendline support line: Link With the longer intraday cycles pointed south and the short cycles pointed north, there's room for it to continue sideways even through the wedge apex. Beyond that, there's little to suggest the next direction after the wedge finally breaks.

Linda Piazza : 11/1/2005 11:27:47 AM

The OEX needs to turn up now from the 555.40 area if it's going to keep alive that potential inverse H&S formation shown on the chart linked to my 11:04:26 post. I'm actually hoping for a confirmation and a bounce to give us a good potential rollover bearish entry. If not, well, I have likely already missed the the entry for today.

Linda Piazza : 11/1/2005 11:14:07 AM

This is like a game of chicken, waiting for the perfect entry. Will we get it? I don't know, but I do know that it makes a huge difference if an entry is made near 555.50 when there's going to be a bounce up to 557-558, and you have to endure that bounce after your entry. The OEX is so far maintaining support at the 38.2% retracement of the decline off the 9/09 high, with that at about 555.06. As long as it's doing that, there's the possibility of a bounce back to retest or partially retest that 50% level that it tested yesterday. I'm not so sure that the OEX will retest yesterday's high, and in fact doubt that it will, but if the OEX is going to rise into a right-shoulder formation for a possible H&S on the 15-minute chart, and move higher than it has, then I don't want an entry down here near 555.50. It may be that we've had the high of the day, but if so, we haven't lost anything but a missed play opportunity. On an FOMC day, I want the best entry, not just any one. My methodology suggested that there would be a bounce attempt, and there has been, but that methodology, although great in other aspects, is not the greatest market-timing tool for OEX entries, so I want to be sure I've gotten the best I can get on a day like this.

Jeff Bailey : 11/1/2005 11:10:33 AM

11:00 Internals found at this Link

Linda Piazza : 11/1/2005 11:04:25 AM

Once again, the OEX appears to be attempting to reform into yet another inverse H&S, perhaps best seen on a line drawing: Link

Jeff Bailey : 11/1/2005 11:03:14 AM

11:00 Market Watch found at this Link

Jonathan Levinson : 11/1/2005 11:02:20 AM

Session high for natgas here, +.325 at 60.075.

Linda Piazza : 11/1/2005 11:01:27 AM

The advdec line is testing important resistance here in the -1080 area. This is the first resistance that could be strong enough to turn it back. So far, it maintains its bear flag form.

Linda Piazza : 11/1/2005 10:58:54 AM

The OEX is testing first Keltner resistance at 556.14 on 15-minute closes. OEX at 555.96 as I type. Next resistance above that at 557.38-557.97. A symmetrical H&S formation on the 15-minute chart might see the OEX top out closer to 556.50 or perhaps even a little lower. OEX at 556.01 as I type.

Jonathan Levinson : 11/1/2005 10:57:27 AM

QQQQ tests 72 SMA resistance here for the 2nd day today, this time at 38.87. The short cycle has turned up and is on the verge of new buy signals, but it remains opposed to the 15, 30 and 60 min cycle downphases. Link

Linda Piazza : 11/1/2005 10:56:01 AM

And here, finally, is the bounce. Watching the advdec line now to determine where resistance might lie.

Jonathan Levinson : 11/1/2005 10:53:38 AM

Session high for GOOG here at 380.84, +8.7. Another wave of call writers hitting the Rolaids...

Linda Piazza : 11/1/2005 10:53:12 AM

OEX Keltner outlook: The OEX's candles cling to support at 554.95-555.25 on 15-minute closes. That support firms slightly, but the OEX has been unable to maintain any bounce as yet, and has next resistance at 556.06 on 15-minute closes. When I dial down to the 10-minute chart, it looks more likely that the OEX will tumble to 554 or so than bounce past 556, so the two time intervals give slightly different pictures, with support firming on one and resistance on the other. Sounds like a perfect reason for the chop we've been having so far.

Jonathan Levinson : 11/1/2005 10:51:15 AM

Volume breadth is -1.7:1 on the NYSE, -1.35:1 on the Nasdaq.

Linda Piazza : 11/1/2005 10:49:00 AM

Aren't you glad I didn't post a long entry this morning and you're not having to weather this back and forth chop?

Linda Piazza : 11/1/2005 10:46:34 AM

Perhaps what I took to be a right shoulder on the OEX's possible inverse H&S on the three-minute chart wasn't the right shoulder but part of the head formation. Anyway, the OEX heads right back down to retest the right-shoulder level, at about its current 555.17-ish area. Much below this and it will have invalidated the formation.

Linda Piazza : 11/1/2005 10:45:15 AM

Next OEX resistance has now dropped to 556.25 on 15-minute closes. Resistance above that at 557.47-557.94. I'd like to see the OEX rise a little higher than 556.25. I'm watching the advdec line now, wanting to see it bounce high enough to relieve some of the extreme overdone conditions that it reached this morning.

Linda Piazza : 11/1/2005 10:43:23 AM

The OEX may have just confirmed that inverse H&S on its three-minute chart, but I'd wait for a move above 556 to get too sure it's been confirmed. OEX at 555.74 as I type.

Jonathan Levinson : 11/1/2005 10:43:12 AM

Rising trendline support holds for QQQQ. Updated 15 min chart at this Link

Keene Little : 11/1/2005 10:42:44 AM

Thanks Jonathan. My EW analysis agrees with the H&S sell signal.

Linda Piazza : 11/1/2005 10:41:45 AM

If a bounce is going to come, it's certainly being a slow poke. The advdec line still steadies, but not in a form that's at all encouraging as yet. . . . but here goes the OEX, trying to front-run the advdec line and confirm its inverse H&S on the three-minute chart, as I type.

Jonathan Levinson : 11/1/2005 10:39:00 AM

Keene, after the 10AM data release, a ticker headline went by to the effect that the dollar rose on the report. Perhaps, but it's been rising since Thursday: Link . I see rising interest rates and a flattening yield curve as competition for gold and other assets, but beyond that, nothing specific to today that I attribute to the big 6.4 loss to 460.50 currently. . The head and shoulders setup has been on my radar, and the 461-462 level has been looking suspicious in light of the daily cycle weakness: Link

Jeff Bailey : 11/1/2005 10:37:00 AM

Dell (DELL) $29.38 -7.84% .... alert! ... Place a sell order for $0.15 on the three (3) DELL Nov. $35 Calls (DLQ-KG).

It would take a wild pop to the upside to get filled, but this one isn't trading $35.00 by 11/18.

Jonathan Levinson : 11/1/2005 10:36:18 AM

SAN FRANCISCO (MarketWatch) -- FPL Group Inc.'s (FPL: news, chart, profile) Florida Power & Light Co. said Tuesday it has restored power to 2.5 million, or 77%, of the 3.2 million customers impacted by Hurricane Wilma. The company said it has entered the next phase of restoration, which may be slower because of heavy damage to smaller lines in individual neighborhoods and difficulty in accessing sites in need of repair. About 18,000 workers from 33 states and Canada are working to restore power to the 719,600 customers who are still without service, said Florida Power.

Keene Little : 11/1/2005 10:36:02 AM

Jonathan, you hearing anything on gold? Today's large drop is a bit of a surprise to me. Bonds are down a little so maybe they're a little worried about inflation risks and what the Fed might do. But I would think that would prop up gold. The U.S. dollar is up only marginally so I don't think that's having an impact. Not sure what's happening in shiny-metal land.

Linda Piazza : 11/1/2005 10:34:25 AM

Hmm. Just noticing that the OEX also has a small potential inverse H&S on its three-minute chart, with that still needing a right shoulder. The advdec line does sometimes lead the equity markets, of course. The presence of this small potential inverse H&S in no way undoes the larger potential H&S on the 15-minute chart. In fact, confirmation of the smaller one and a rise into its target just under 557 would help to form the right shoulder for the larger formation. The advdec line is having trouble maintaining its neckline for its inverse H&S, though, so this is all still very tentative. Just trying to figure out what might happen.

Linda Piazza : 11/1/2005 10:30:46 AM

The advdec line's three-minute chart has a rough sort of inverse H&S at the bottom of its decline. While these don't always confirm on the advdec line any more than they do on an equity chart, they do sometimes have relevance when they do confirm. It looks as if the neckline is just being tested, with the advdec line at -1221 as I type.

Linda Piazza : 11/1/2005 10:27:41 AM

Advdec line still steadying, slight attempt at bouncing.

Jonathan Levinson : 11/1/2005 10:27:09 AM

Headline:

BUSH ASKING FOR $2.8 BLN TO DEVELOP NEW VACCINE TECHNOLOGY

BUSH ASKING FOR $1BLN FOR ANTIVIRAL DRUGS

Jonathan Levinson : 11/1/2005 10:23:23 AM

Session low for ten year notes, TNX up 1.8 bps to 4.577%. IRX holds a 7 bp gain at 3.875%.

Jonathan Levinson : 11/1/2005 10:22:46 AM

Good eye, Keene. Here's the move on the daily chart: Link

Jonathan Levinson : 11/1/2005 10:19:40 AM

QQQQ tests rising support here on the 15 min chart, the oscillators just now printing sell signals. Link The short cycle indicators are getting bottomy, however, and could help to stall the decline. Link

Linda Piazza : 11/1/2005 10:19:18 AM

The OEX is oh-so-tentatively balancing on the Keltner support at 555.23 on 15-minute closes. If it loses that support, next support is at 552.55-552.87 on 15-minute closes. Next resistance is at 556.40 and then at 557.59-557.91, and I had been hoping that it would rise up into that resistance to form a right shoulder, offering a bounce-and-rollover bearish entry. This uncertainty of bounce potential is the reason that I didn't post a bullish scalping entry this morning, though, as any bounce, if it does eventually appear, would likely be a countertrend move into a right shoulder for a H&S formation on the 15-minute chart. OEX at 555.39 as I type.

Jonathan Levinson : 11/1/2005 10:17:50 AM

Headlines:

BUSH: NO EVIDENCE AVIAN FLU PANDEMIC IS IMMINENT

BUSH: US NEEDS TO SPEED UP PRODUCTION OF FLU VACCINES

Linda Piazza : 11/1/2005 10:16:12 AM

I'm thinking that the advdec line might rise as high as the -40 to zero level or as high as +300-500 if it gets past that resistance. First, though it has to start rising. It has steadied a little, but not really bounced.

Jeff Bailey : 11/1/2005 10:15:34 AM

10:00 Internals found at this Link

Monday's Internals found at this Link

Jonathan Levinson : 11/1/2005 10:12:43 AM

Volume breadth -1.5:1 on the NYSE, -1.4:1 on the Nasdaq.

Linda Piazza : 11/1/2005 10:10:49 AM

Tentative bounce beginning now on both the OEX and the advdec line. I'll be watching for resistance on the advdec line, but the drop was so deep that it's scattered the Keltner lines I watch, so it's going to be difficult to discern where "the" important resistance might lie, at least for a while.

Jonathan Levinson : 11/1/2005 10:10:18 AM

Crude oil is down 40 cents here at 59.35, 15 cents off the low, and natgas is down .52 at 11.685, 17.5 cents off the low.

Jonathan Levinson : 11/1/2005 10:08:09 AM

QQQQ holds above the pivot at 38.73, trading sideways below the 72 SMA at 38.88. The SOX continues to weaken, however, down to 428.17 here. QQQQ chart updated at this Link

Linda Piazza : 11/1/2005 10:06:49 AM

Next OEX resistance at 556.70 on 15-minute closes, with resistance above that just above 558. The 240-minute 100/130-ema's are at 558.03 and 559.53, respectively.

Jeff Bailey : 11/1/2005 10:05:30 AM

10:00 Market Watch found at this Link

Jonathan Levinson : 11/1/2005 10:04:46 AM

That's another big jump in the ISM prices paid component, from 78% in Sept. to 84% in the current month.

Linda Piazza : 11/1/2005 10:04:05 AM

The OEX is trying to steady on that first Keltner support at 555.22 on 15-minute closes. It hasn't convincingly done that yet, especially since the advdec line hasn't steadied yet, but the bullish value/RSI divergences are showing up on the 10- and 15-minute charts now for the advdec line. I'm still anticipating a bounce attempt somewhere through here, but a countertrend one.

Jeff Bailey : 11/1/2005 10:01:27 AM

Sell Program Premium ... DIA $104.20, SPX 1,201.90, QQQQ $38.76

Jonathan Levinson : 11/1/2005 10:02:16 AM

Headlines:

U.S. SEPTEMBER CONSTRUCTION SPENDING RISES 0.5%

U.S. OCT. ISM MANUFACTURING INDEX 59.1% VS 59.4% IN SEPT.

U.S. OCT. ISM MANUFACTURING INDEX ABOVE 57.2% CONSENSUS

U.S. OCT. ISM PRICES 84% VS 78% IN SEPT.

U.S. OCT. ISM NEW ORDERS 61.7% VS 63.8% IN SEPT.

Jonathan Levinson : 11/1/2005 9:57:09 AM

Awaiting the 10AM data- Construction Spending and ISM Index.

Jonathan Levinson : 11/1/2005 9:56:02 AM

A 1.75B overnight repo results in a net 2.25B drain for the day from the Fed. The stop out rate declined 1 bp on treasury collateral to 3.95.

Linda Piazza : 11/1/2005 9:55:38 AM

TRAN shooting higher, toward its 60-minute target of 3825.57, with the TRAN currently at 3830.90.

Linda Piazza : 11/1/2005 9:54:48 AM

Advdec line still dropping. The shorter-term charts, such as the three-minute and five-minute, are showing tentative bullish value/RSI divergences, and the move is about as much overdone to the downside on those charts as I've ever seen it, so I'm still leaning toward a possible countertrend bounce.

Linda Piazza : 11/1/2005 9:53:40 AM

OEX still trying to steady near 556, with 15-minute Keltner support at 555.23-555.71, on closes. If the OEX gives way too much, it will look as if it's just cratering without forming that right shoulder, in which case we will have lost our ideal bearish entry on a bounce and rollover, but a drop to that next Keltner support, if it holds, won't undo the H&S possibility.

Jonathan Levinson : 11/1/2005 9:47:11 AM

QQQQ holds below 72 SMA resistance for the first test: Link . The SOX is down 2.41 at 430.24, -.56% and weaker than QQQQ, -.13% at 38.82.

Linda Piazza : 11/1/2005 9:46:01 AM

Advdec line dropping again.

Linda Piazza : 11/1/2005 9:45:34 AM

Here's the OEX's 15-minute Keltner picture: There's support at 555.19 on a 15-minute closing basis. Resistance is at 557.31-557.96 on a 15-minute closing basis. A steadying at or above 555.19 on a 15-minute closing basis and then a rise into 557.31-557.96 would fit the H&S scenario, so we could see a little further of a drop in the OEX before it can actually steady.

Linda Piazza : 11/1/2005 9:43:12 AM

Not sure the advdec line has quite steadied yet, but there seems to be an attempt to steady it. It's the most overdone that I've seen lately to the downside, so I do think we should have a (likely countertrend) bounce sometime or another this morning.

Jonathan Levinson : 11/1/2005 9:41:43 AM

The yield curve is flatter this AM, TNX -.4 bps at 4.555%, IRX up 6.2 bps at 3.867%.

Linda Piazza : 11/1/2005 9:40:28 AM

The TRAN is moving slightly above yesterday's high, still within testing range of that late July high, still sort of equal-high-ish, but if it climbs much higher, it's going to be a higher high. TRAN at 3826.74 as I type, with 60-minute Keltner resistance and target at 3835.09. That resistance doesn't look particularly strong.

Linda Piazza : 11/1/2005 9:38:35 AM

It looks to me as if today could be the obverse of some other days we've seen recently. It's setting up as a possible down-all-day sort of day, but with a countertrend bounce sometime this morning. That's a very early observation, one that happens to fit with my scenario of a possible OEX H&S building under the 240-minute 100/130-ema's, so perhaps I'm biased. The FOMC announcement could blow the whole chart setup out of the water anyway, but I'm now waiting for a bounce and then looking for a rollover entry, if one sets up.

Jonathan Levinson : 11/1/2005 9:37:21 AM

QQQQQ holds at 30 min channel support here. Bulls need a break above 72 SMA resistance at 38.88 to stall the ongoing 30 min cycle downphase: Link

Linda Piazza : 11/1/2005 9:34:43 AM

On the 10-minute chart, the advdec line has already dropped to a level that indicates that it's overdone. It's possible that we should expect a bounce sometime or another now, but it looks as if this one will be a countertrend bounce. That fits with my possible H&S scenario. With economic numbers at 10:00 and with those 240-minute 100/130-ema's, I'm not going to enter a long if it sets up, I don't think. It looks as if it could likely be a right-shoulder rise, if it does set up. Well, it's trying to already on the OEX, but the OEX is front-running the advdec line again.

Jonathan Levinson : 11/1/2005 9:31:56 AM

Volume breadth is -1.1:1 on the NYSE, -2.23:1 on the Nasdaq at the open.

Linda Piazza : 11/1/2005 9:31:38 AM

I'm watching the advdec line. It's setting up in such a way that shows that we might have some more downside before it steadies (temporarily), but yet the OEX is still trying to steady.

Linda Piazza : 11/1/2005 9:30:30 AM

The OEX drops to what would be the neckline for its potential H&S, if it's going to build one.

Jonathan Levinson : 11/1/2005 9:16:12 AM

Dec. gold has hit a low of 462.80 and is currently down 3.2 at 463.70. This has been another test of the neckline on the potential head and shoulders pattern I've been discussing in recent weeks: Link

Linda Piazza : 11/1/2005 9:15:57 AM

You're right, of course, Marc. I've said before that I'm a daughter of a refinery worker and grew up in a refinery town, with our county having the highest cancer rate in the country at one time. I've literally had hose melted off my legs because of the sulfur admissions from one refinery.

Jonathan Levinson : 11/1/2005 9:14:55 AM

Linda, James Howard Kunstler would refer to that as a "cornucopian" view:

The U.S. peak in 1970 brought on a portentous change in geoeconomic power. Within a few years, foreign producers, chiefly OPEC, were setting the price of oil, and this in turn led to the oil crises of the 1970s. In response, frantic development of non-OPEC oil, especially the North Sea fields of England and Norway, essentially saved the West's ass for about two decades. Since 1999, these fields have entered depletion. Meanwhile, worldwide discovery of new oil has steadily declined to insignificant levels in 2003 and 2004.

Some "cornucopians" claim that the Earth has something like a creamy nougat center of "abiotic" oil that will naturally replenish the great oil fields of the world. The facts speak differently. There has been no replacement whatsoever of oil already extracted from the fields of America or any other place.

Now we are faced with the global oil-production peak. The best estimates of when this will actually happen have been somewhere between now and 2010. In 2004, however, after demand from burgeoning China and India shot up, and revelations that Shell Oil wildly misstated its reserves, and Saudi Arabia proved incapable of goosing up its production despite promises to do so, the most knowledgeable experts revised their predictions and now concur that 2005 is apt to be the year of all-time global peak production.

It will change everything about how we live.

Link

Linda Piazza : 11/1/2005 9:11:14 AM

Good grief! Is that CNBC guest, Craig Smith of Swiss America Trading Corporation, really arguing that the earth has a crude factory under the crust and that there's an inexhaustible supply just waiting to well up and replace what we've used or to be tapped by improved technology? Did I misunderstand? Would that it were true, but I'm just a wee bit skeptical.

Jane Fox : 11/1/2005 8:56:45 AM

Marc you are right the VIX has been bouncing off the 50EMA but it is still as little direction as the markets. However, I do see a range albeit a wide one, that the VIX has been marking. Link

Jonathan Levinson : 11/1/2005 8:55:41 AM

Session lows for gold and silver here, -2.90 at 464 and -.124 at 7.461 respectively.

Jane Fox : 11/1/2005 8:52:57 AM

I would surely like someone to explain to me how the TICKS (number of stocks on an uptick minus number of stocks on a downtick) can hit a daily high at +1177 while the markets are in a sell off.

Linda Piazza : 11/1/2005 8:52:05 AM

Last night, my brother wrote me about shorting Dell. Here are a couple of things I noted on the chart, though, that might signal some caution about potential support at $28-30, specifically the location of two 50% retracement levels from important rallies: Link If you're in a bearish position in Dell, be particularly careful of that zone.

Jane Fox : 11/1/2005 8:49:33 AM

Marc what I found of most interest yesterday was the TICKs. Take a look at this. At 16:09 (4:09) ES was really losing it but the TICKs hit their high of the day at 1177. Link

Linda Piazza : 11/1/2005 8:48:00 AM

Yesterday the OEX shot up to the 240-minute 100/130-ema's at 558.07 and 559.59, respectively. Those are important averages for the OEX. Despite a fitted Fib bracket that showed a best fit if the upside target was 560.10, I doubted the ability of the OEX to meet that upside target with those averages between it and the target. Still, the OEX made a late-day run higher, and touched the 50% retracement of the decline off the 9/09 high. It dropped heavily after reaching that Fib level, not a particularly cheering sight for the bulls, especially since the OEX retraced slightly more than half the day's gains.

While it's still possible that the test of those 240-minute 100/130-ema's and the 50% retracement level could continue today, I think there should be a pullback, even if in the form of candles produced beneath those averages. For now, we'll look for an opportunity to enter bearish trades on a test of the 558-559.50 zone and a rollover from there, if they're offered. The best we do may be a test of the 557-557.60 zone, but we can hope. I'll let you know what I see when I see it, but I'll likely want to be flat going into the FOMC announcement, if that's possible.

Here's what I'm eyeing, too, on the 15-minute chart: a potential setup for a H&S to form at/under those 240-minute 100/130-ema's. So, there's the possibility of a drop toward 556 and then a rise into a right shoulder just above 558. We'll want to be very careful about a bounce from the 556 level into that right shoulder, if the OEX should open a little lower this morning. That could all occur into the 10:00 economic numbers. I'll be watching, but today is a day when we have to see how the internals look. A rise above yesterday's high will invalidate the formation, of course, but I'm not going to want to go long, I don't think, until the OEX is safely past all that resistance. The OEX doesn't usually just breeze through those averages.

Jane Fox : 11/1/2005 8:35:00 AM

... along with auto makers reporting their October sales results throughout the day.

Jane Fox : 11/1/2005 8:33:50 AM

Linda that is what economic calendar says as well.

Jonathan Levinson : 11/1/2005 8:33:39 AM

Thanks, Linda. Quite right. I missed them. Construction spending and ISM are due at 10AM, est. .5% and 57 respectively.

Jonathan Levinson : 11/1/2005 8:32:30 AM

Ten year note yields are down .8 bps here at 4.551%, still holding the lower end of gap support: Link

Linda Piazza : 11/1/2005 8:32:16 AM

My economic calendars show that we have October ISM and September construction spending at 10:00. Is that right?

Jonathan Levinson : 11/1/2005 8:31:10 AM

Thanks, Linda and Jane. Glad to be back

Jane Fox : 11/1/2005 8:29:14 AM

Welcome back Jonathan

Linda Piazza : 11/1/2005 8:27:09 AM

It's wonderful to have you back on the MM, Jonathan. I especially missed your daily input on the repo situation.

Jonathan Levinson : 11/1/2005 8:11:01 AM

The Fed's open market desk appeared to act generously yesterday when it gave its dealers a 4B overnight repo with nothing expiring, for a net add in that amount. But the move wasn't enough to satisfy last week's average levels of demand, as we saw the stop out rate rise above the still-current overnight target rate of 3.75% to 3.88% on Friday and 3.96% yesterday. This lines up with an expected 25 bp overnight rate increase from the FOMC today to 4.0%. The Fed's dealers "paid" a rate of 3.88% for its repo money on Friday, and 3.96% yesterday.

It seems counterintuitive that a net add from the Fed's open market desk would coincide with rising demand from the Fed's dealers. Most likely, the dealers had a greater need for the funds- perhaps to accomodate additional Treasury issuances at the auctions, or for other demands in the many markets in which they participate.

Jonathan Levinson : 11/1/2005 8:01:56 AM

QQQQ and NQ's 30 and 60 min cycles topped out in the final hour of yesterday's session and were in the early steps of synchronous downphases at the close. For NQ, first trendline support is at 1568, followed by 1550. The bulls need to break and hold above 1585-86 to whipsaw the 60 min cycle downphase: Link

Jonathan Levinson : 11/1/2005 7:22:41 AM

Equities are up off their overnight lows but still negative (except for YM), Es trading 1208.5, NQ 1580.5, YM +33 to 10443 and QQQQ -.10 to 38.77. Gold is up 70 cents to 467.60, silver +.02 to 7.605, ten year notes +9/64 to 108 19/32, crude oil is up 2.5 cents to 59.775 and natgas is up 9.5 cents to 12.30.

We await the 2:15 FOMC announcement.

Linda Piazza : 11/1/2005 7:17:26 AM

Good morning. The Nikkei didn't open for trading until the afternoon session due to a glitch that shut down the Tokyo Stock Exchange, but then it hit what I believe to be its highest close since 2001. Most other Asian markets gained, although China's didn't. European markets are mixed, probably reflecting the different makeup of the European bourses. The FTSE 100, light on techs, was positive, for example, while the tech-heavier DAX was probably hit harder by Dell's action late yesterday. As of 7:09 EST, gold was higher by $0.60 to $467.50, and crude, down $0.01 to $59.75. Our futures were mixed, with the Dow's higher but the S&P's and Nasdaq's lower. More details about Asian and European markets follows in succeeding paragraphs.

A system failure on the Tokyo Stock Exchange occurred Tuesday morning and trading was suspended for the entire morning session. That was the first time in eight years that the system was unable to begin trading on time. Late Monday, the exchange carried out some maintenance of its system, and the failure might have been related to that maintenance. Too bad they didn't have a "restore" button to press. Don't you just hate it when you add a new program and everything crashes?

When the stock exchange finally opened, the Nikkei shot straight up, gaining 261.36 points or 1.92%, to trade at 13,867.86, topping its early October high by more than 100 points and reaching its highest close since 2001, if my search was correct. It has almost hit a major resistance level, the descending trendline off the late 1989/early 1990 high.

Fujitsu Ltd. didn't participate in the stock-market gains, however, as some blamed the computer glitch on the chips-to-computer company's trading software. Sanyo Electric Co. reported earnings that saw sales growth and a 50% increase in operating profit in its battery business. Construction machinery manufacturer Komatsu Ltd. raised its full-year profit outlook. The company said that demand from mining and energy industries was strong.

While the Nikkei was still closed, most other Asian markets were climbing. The Taiwan Weighted gained 0.59%. South Korea's Kookmin Bank sent financials higher after the bank reported record profit for the third quarter. CSFB raised its 12-month forecast for the company. Other financials reported strong earnings. In addition, exporters rose. The Kospi gained 2.66%. Singapore's Straits Times did not appear to be open. Hong Kong's Hang Seng gained 1.29%, but China's Shanghai Composite dropped 0.26%. Last night, China's central bank unveiled new steps that would permit Hong Kong banks to do more yuan-denominated business.

European markets are mixed, with chip-related stocks, oil majors and auto manufacturers seeing weakness in the early trading period. Before the open, October's Nationwide House Price Index was released in the U.K., showing its biggest month-over-month increase in more than a year. Prices rose 1.5% month over month and 3.3% year over year. Many had expected improvement after September's softer numbers. This release and yesterday's increase in mortgage loan approvals hints that the housing market may be stabilizing. Then, the CIPS' October PMI was accidentally released an hour early. The headline number rose to 51.7 from the previous 51.5, meeting expectations. Output, export orders, and employment components climbed, but the employment component stayed below 50. New orders slipped to 53.9 from the previous 54.0. Later, in a separate release, the U.K. Distributive Trades Survey improved and produced a higher-than-expected expectations component for November.

France's Manufacturing PMI was released shortly afterward, with that number inching below September's 52.7, to 52.5. Most components rose, with the price component rising strongly, but orders and export components dropped amid discontent that had effectively closed some ports the last month. One article interprets the data as showing that the French activity paused but that it's still in the expansion zone. Germany's PMI stayed above 50 for the second month in a row, with the headline number increasing to 53.1 from the previous 51. This number beat expectations, but it's still mostly exports driving the number and not components measuring the domestic catalysts. The employment index rose to 50.7. The EU12 Manufacturing PMI for October rose to 52.7 from September's 51.7, its highest number in more than a year. The employment component stayed below 50, however, at 49.9, but the trajectory of the number shows that jobs are being lost at a slower rate. Input prices jumped to 62.8 from the previous 59.1, showing the cumulative effect of higher crude prices despite last month's dip in prices. Some interpret this as signaling that the ECB will raise rates before the end of the year.

Company-specific news included UBS AG's increase after its earnings release. The company beat profit and inflows forecasts. The U.K.'s Pearson PLC, a publisher, met its own expectations of strong operating profit and sales increases, and it gained in early trading. The U.K.'s Competition Commission has decided that either the Deutsche Boerse or Euronext would be allowed to acquire the London Stock Exchange. All three gained in early trading.

As of 7:05 EST, the FTSE 100 had gained 22.10 points or 0.42%, to trade at 5,339.40. The CAC 40 had gained 3.65 points or 0.08%, to trade at 4,440.10. The DAX had lost 5.89 points or 0.12%, to trade at 4,923.18.

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