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OI Technical Staff : 11/29/2005 9:59:59 PM

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Jeff Bailey : 11/29/2005 6:13:36 PM

Hey! For those that may be new to the MM. It was back on 10/17/05 that I profiled a bullish trade in Lucent (LU) at $3.18, juuuuust as it was set to trade that relative high of $3.22 (you see it now, a right shoulder for the h/s top), where over the years, it has been my observation that these two stocks, while very similar in product offering, tend to mirror each other's price. At times, it is as if an "arbitrage" situation presents itself, one stock either moves higher, or lower from the other, but eventually, their prices come back together.

Well, I thought we should play LU long on 10/17, as its price would "catch up" to NT's price. Yes, and if LU would break that (potential at the time) right shoulder, the shorts would come in on some squeeze action.

Well, that didn't happen, and on 10/26 LU bulls were stopped out at $3.05 on less than spectacular earnings.

On the same day, 10/26/05, we went short NT at $3.41, thinking hey.... price might come together. Eventually, on 11/02/05 as markets began their rally, I got our stop a little too tight on NT and we exited at $3.31.

As I look at the LU chart, and its head/shoulder pattern (neckline $3.00), I might be conservative and call the head at $3.40. An objective of $2.60 might still be in the cards, but you can see how LU has found some buyers at $2.69 and $2.68.

Jeff Bailey : 11/29/2005 5:56:56 PM

Back in unison ... Nortel (NT) $2.84 -2.73% Link with Lucent (LU) $2.83 -1.73% Link

Jeff Bailey : 11/29/2005 5:44:18 PM

United Health (UNH) $60.07 +2.85% ... erases bulk of yesterday's losses. Looks like it was atop the list of some other bulls today.

Jeff Bailey : 11/29/2005 5:42:02 PM

Cisco Systems (CSCO) $17.51 +0.17% Link ... Announces it will buy Intellishield Alert Manager assets of Cybertrust for $14 million in cash.

Shares of CSCO traded as high as $17.84 earlier this morning, but retreated toward their close.

Stock is flat at $17.51 in extended session.

Jeff Bailey : 11/29/2005 5:32:04 PM

Closing U.S. Market Watch found at this Link

Jeff Bailey : 11/29/2005 5:26:59 PM

Closing Internals found at this Link

Jeff Bailey : 11/29/2005 5:06:27 PM

Current OPEN MM Profiles found at this Link

Today's Activity ... Bearish day trade short 1/2 position in the QQQQ at the bid of $41.68, close trade at $41.55 ($+0.13, or +0.31%)

Then went long 300 QQQQ shares (using Jan $42 Puts as hedge) at $41.44, stop currently at $41.28, targeting $41.65.

Jeff Bailey : 11/29/2005 4:03:54 PM

Going forward, the key in the Dow, QQQQs, SOX and probably a lot of other markets will be the recent highs seen over the last day or so. 42 in the QQQQs, Dow at 10960 and SOX at 490. IF these highs are taken out, look to take off the QQQQ 42 puts and most likely buy some calls. Downside projection in QQQQ is 40.80ish if our stop gets taken out (current swing trade long). Same thought process tomorrow. IF the SOX and QQQQs get above Weekly S1 then won't get aggressively bearish. A gap lower will have us thinking 40.80 in the near term.

Jeff Bailey : 11/29/2005 3:59:46 PM

The last minute and the QQQQs are only one cent from LOD. WE may see some last minute sell programs.

Linda Piazza : 11/29/2005 3:47:22 PM

The TRAN descends, but unless I have the neckline drawn wrong, it has not yet confirmed that latest H&S.

However, here is what has happened. The TRAN yesterday broke through a broadening formation's support, and today's morning double tops were retests of that broadening formation's former support. The TRAN is dropping after that retest.

Jonathan Levinson : 11/29/2005 3:44:27 PM

Volume looks to come in slightly lighter than or equal to yesterday's 74.7M QQQQ shares, 69.9M traded so far today. Average daily volume is 91.3M.

Linda Piazza : 11/29/2005 3:42:01 PM

That hypothetical play detailed in my 3:36:37 post played out beautifully, didn't it? That's how most played out through November, just after I started posting trades according to this methodology. Then nothing worked, except that fewer trades were even signaled, so I guess that could be considered a sort of backhanded plus for this method.

Jeff Bailey : 11/29/2005 3:40:39 PM

SOX nearing LOD. Of course, this index is also coming into its rising 10 DMA. With only 20 minutes left in the session, I still feel the low in the QQQQs are good; however, market feeling heavy.

Jonathan Levinson : 11/29/2005 3:39:44 PM

Volume breadth is down to +1.1:1 on the NYSE, -1.2:1 on the Nasdaq.

Linda Piazza : 11/29/2005 3:36:36 PM

I had to leave just as a play set up this morning, but I wanted to show you how it would have looked, so you can see what I'm watching. Link I've found the OEX's three-minute Keltner chart useful to watch, and here's where the OEX was as the advdec line was testing resistance, showing that the move was overdone to the upside: Link I would have taken at least partial profit at the 11:12 candle, because the advdec line was hitting support that often holds, with the OEX from 580.33-580.61 on that candle.

Jonathan Levinson : 11/29/2005 3:36:35 PM

Could be a retest of the pennant apex here on the pullback: Link

Jane Fox : 11/29/2005 3:36:07 PM

This pretty well sums up the day so far. All over the place. Link

Jonathan Levinson : 11/29/2005 3:29:26 PM

So far, the bounce has an ominous, flaggy feel to it as the short cycle continues to sputter ahead on QQQQ. 72 SMA resistance held for the first test, and is now down to 41.50: Link

Jeff Bailey : 11/29/2005 3:27:15 PM

Will Weekly S1 hold in the QQQQs on a closing basis? Might be telling. The SOX is now back below Weekly S1 and trapped bulls (including me) for the time being. one cent under water, so it's not like we are in a steel trap.

Linda Piazza : 11/29/2005 3:19:47 PM

Here's the rough-looking potential new H&S on the TRAN's chart, to which I've referred several times today. Link This morning's bounce brought the right shoulder a bit out of proportion to the left and now time drags on. If the bears can't confirm this soon, by the close today or very early tomorrow morning, I think we have to consider it invalidated with all the implications that has about bearish and bullish strength.

Jonathan Levinson : 11/29/2005 3:15:16 PM

Visa's SpendTrak report cites a 26% rise in "Cyber Monday" spending from last year, to 505M.

Jeff Bailey : 11/29/2005 3:14:50 PM

Once again, I see traders (10 - 30 lot traders) buy the QQQQ Jan 42 puts as the underlying bids. They are lifting the offer and getting aggressive. If you trade options, my opinion is to at least work the bid for awhile and only lift the offer on puts in a falling market as the size deteriorates. I think you could wait 10 cents lower and still buy them for 1.15. Sure, could be a hedge and no sense to leg in or vol. play. Still interesting.

Jonathan Levinson : 11/29/2005 3:13:21 PM

QQQQ daily chart at this Link . The 30 and 60 min cycles are opposed, with the 30 min cycle downphase tiring just above oversold territory and the 60 min cycle in a weak upphase from above overbought. If the Qs turn up and clear 41.53 from here, it could kick off a strong synchronous 30/60 min cycle upphase- but even then, with the daily cycle upphase looking out of gas, the climb could be uphill and against the wind.

Jeff Bailey : 11/29/2005 3:12:26 PM

03:00 Internals found at this Link

Linda Piazza : 11/29/2005 3:07:12 PM

The OEX still chops inside what looks like a broadening formation to me on top of its climb from the week before last. This started out as a nicely formed bull flag pulling back, but it's deteriorated into this broadening formation. That's not bullish, but it's not bearish yet, either. As long as the OEX's 60-minute closes are below a Keltner line currently at 580.52, I think the chances increase that it will drop down to test 578.21-578.32.

Jeff Bailey : 11/29/2005 3:06:44 PM

Swing Trade Bullish Alert QQQQs at 41.44 with a stop at 41.28. Hedging our Jan 42 puts.

Jonathan Levinson : 11/29/2005 3:04:02 PM

Volume breadth is up to +1.5:1 on the NYSE, +1.1:1 on the Nasdaq.

Jeff Bailey : 11/29/2005 3:02:43 PM

03:00 Market Watch found at this Link

Jonathan Levinson : 11/29/2005 3:02:22 PM

Gold is coming back, the Dec. e-mini contract up 4.8 off its intraday low and now +1.1 at 499.30. Daily chart updated at this Link

Linda Piazza : 11/29/2005 2:50:45 PM

There was a 15-minute close beneath the 15-minute 100/130-ema's, but only a minimal one and the OEX immediately invalidated that close by climbing above those averages again. The advdec line rises into resistance again, with that near +1300 and with the advdec line at +1119, QCharts value.

Jeff Bailey : 11/29/2005 2:50:08 PM

Let's work to buy 300 QQQQs as a hedge to our QQQ-MP position at 41.44 with a stop at 41.28. If not in the puts, then also look for this trade but position size accordingly. Objective will be 41.65.

Jonathan Levinson : 11/29/2005 2:49:55 PM

Session low for ten year notes at 108 27/32, TNX up 8 bps to 4.488%, a 1.86% gain today. IRX is up 5.7 bps at 3.887%, no longer outpacing the longer-dated yield.

Jonathan Levinson : 11/29/2005 2:47:35 PM

QQQQ surgest to S1 on a small bump in volume, the short cycle upphase in progress. 72 SMA resistance is just above, with the 30 min cycle already flattened and no longer declining. Link

Jeff Bailey : 11/29/2005 2:47:16 PM

Is this weakness end-of-month position squaring (read: profit taking) for longs? Could be, actually. Wouldn't be surprised if it is done today instead of tomorrow. QQQQ's back above 41.50 while the SOX bids. Contemplating long as put hedge.

Linda Piazza : 11/29/2005 2:45:40 PM

This TRAN chart is still a chart that I'm watching closely when trying to measure what markets might do next. The TRAN is obviously hesitating at the resistance shown here, but so far only hesitating. There's long-term and significant bearish divergence on this weekly chart. Link Since the TRAN has never since mid 1997 violated the upper channel line except for a few points intra-week, this could be serious resistance for the TRAN. However, until the TRAN is below about 3830, the likely location of that continuation-form inverse H&S neckline, invalidating the formation, there's nothing here that precludes the TRAN pulling back into a retest of that regression channel or inverse H&S neckline and then rising again into another retest. So, while I think it's possible that the TRAN at least has seen its high for the year, I don't see definitive proof that there won't be yet another higher high for the TRAN.

Jeff Bailey : 11/29/2005 2:43:20 PM

Looking at the earnings calendar....not too much. LNUX and SCMR. It wasn't that long ago when these names were big. There is Chico's after the close and CHS isn't a bad retail company (price and earnings wize).

Jonathan Levinson : 11/29/2005 2:41:01 PM

Crude finished -.875 at a session low of 56.475. As discussed in last night's Market Wrap, this is still compatible with a daily cycle bottom being tested, but bulls don't want to see the underside of 56. Intraday chart at this Link

Linda Piazza : 11/29/2005 2:35:56 PM

I said this morning that the OEX could be setting up another of its 4-6-point ranges, but who knew it would trade it both directions today? I thought there would be an early bounce and then a pullback, but really thought we'd likely see chop after the early pullback. We did for a while, but it's been more directional than I thought. The following chart demonstrates some of my concerns, as messy as the chart is. The OEX got way ahead of its 10-sma last week, and needed to either trade sideways while the 10-sma caught up, which it's been trying to do since or else drop. What actually sometimes happens is a sideways consolidation until the 10-sma has almost caught up and then a quick dip down to test it and a spring up from there. That's what happens when the OEX is strong, anyway. See how that long-term horizontal S/R band I've been showing periodically all year long is forming a natural place above which the OEX might consolidate sideways? Link If it keeps doing that until the 10-sma almost catches up, it could temporarily break below that S/R, tricking some bears into new positions and then trapping them there as it bounces again. That could fuel another attempt to rise, so bears don't want to see a continued sideways consolidation as the 10-sma rises. They want to see the OEX cascade lower.

Jeff Bailey : 11/29/2005 2:32:03 PM

Maybe I am crazy, but it FEELS more bearish than price action suggests (net change). I would say the ES is down 8, QQQQ's down 35 and Dow off 50. But that isn't the case. Mabye it will be later; however, a part of me thinks the gap higher was very, very artificial because then 'good selling' would bring the markets to a more 'softer landing.' Thinking outloud.

Jonathan Levinson : 11/29/2005 2:30:08 PM

So far this is a very weak short cycle upphase, volume breadth holding negative throughout and the rise only sideways. The 72 SMA goal at 41.52 is looking far away from current levels: Link

Linda Piazza : 11/29/2005 2:26:11 PM

It looks as if the RLX confirmed a H&S on its 30-minute chart today, with the neckline at about 463.40 and with the RLX currently at 461.99. There's the possibility that the confirmed H&S is just the head of a larger H&S, however, this one with a neckline at 461.28 and with the right shoulder still lacking. So, look for the possibility that the RLX could drop another point or 0.80 points and then bounce up toward 466-467 again.

Jeff Bailey : 11/29/2005 2:23:33 PM

02:00 Internals found at this Link

Jeff Bailey : 11/29/2005 2:22:43 PM

IF the SOX gets back above its Weekly S1 of 477.94 then we may look to hedge our Jan 42 Puts in the QQQQs by buying 300 QQQQs (expect a price of roughly 41.52). The SOX is still under it's Daily S1 and near LOD, but, as always, this market has a tendency of finding a bid and we need to protect our QQQ-MP. Dow up 7. Another possible daily bearish candle pattern if market closes here.

Jonathan Levinson : 11/29/2005 2:20:23 PM

Session low for crude oil here at 56.575.

Linda Piazza : 11/29/2005 2:17:07 PM

This morning, the OEX bounced from yesterday's late-day test of the 15-minute 100/130-ema's. Now, the OEX retests those averages, with those at 580.06 and 579.25, respectively. The OEX is at 579.74 as I type. A 15-minute close beneath those averages would certainly be one change-in-trend indicator that I'm watching.

Jonathan Levinson : 11/29/2005 2:15:03 PM

QQQQ daily chart updated at this Link with preliminary sell signals on the shortest oscillators and appearing imminent on the remainder.

Linda Piazza : 11/29/2005 2:14:23 PM

The TRAN really shouldn't rise too much longer or it's going to invalidate that latest H&S, a roughly shaped formation already. It probably should confirm by the close today or at least by very early tomorrow morning. Otherwise, I think there's a risk of the TRAN trying to get a bit closer to that envelope boundary near 4235 or the 4275 upside target from a continuation-form inverse H&S. I think the TRAN is in the process of topping out over the intermediate term, with that having implications for the SPX, OEX and Dow, but "in the process" is key. Has it definitively topped out? This H&S may tell us. If the bears can't confirm this H&S by dropping below about 4113 and by confirming that with a 30-minute close beneath it, bulls may become emboldened again.

Linda Piazza : 11/29/2005 2:06:15 PM

Advdec line bouncing from support currently near 230. Advdec line at 726 as I type, QCharts value. This looks characteristic of an overdone bounce, but bears don't want to see the advdec line bounce too high.

Jeff Bailey : 11/29/2005 2:05:33 PM

02:00 Market Watch found at this Link

Jonathan Levinson : 11/29/2005 2:05:15 PM

72 SMA resistance is at 41.56 QQQQ, above which a new short cycle upphase will confim as the 30 min channel downphase stalls. Link However, unless the bulls manage to take out today's high by a strong margin, the damage has been done: lower low and lower high for the day.

Linda Piazza : 11/29/2005 1:59:22 PM

The TRAN hasn't quite met its 4123-ish downside target for its dobule-top formation. It's been climbing in a likely bear flag the last 25 minutes or so and is currently at 4135.71. I think the neckline for its new and roughly formed H&S on top of its 15-minute chart is probably at about 4112, confirmed on a 30-minute close beneath that.

Jeff Bailey : 11/29/2005 1:57:58 PM

Interesting how traders are buying Jan 42 puts on the offer at 1.20 as the QQQQs trade back up at 41.41. Might look to hedge our QQQ-MP buy going long underlying. Watching for confirmation. The 41.34 area seems very important now for short term bulls.

Jonathan Levinson : 11/29/2005 1:56:39 PM

Yes- and, as VTOreports shows, the moving average is still relatively low. Overall a mixed picture that suggests to me that we may be at or near intraday extremes within a broader decline just getting started this week.

Linda Piazza : 11/29/2005 1:55:11 PM

OEX now setting up a pattern in which it finds resistance at the Keltner lines now from 579.51-579.64. The OEX is testing last Keltner support on the 15-minute chart, with that support at 578.97 on 15-minute closes. If it falls beneath that on 15-minute closes, it looks as if it might test the bottom of that broadening formation on its 15-minute chart, displayed in an earlier chart. That trendline is currently at about 577.12, but is still falling. The OEX's 10-sma is at 576.05, but the OEX has that 577-578.40-ish S/R zone between its current level and that 10-sma.

Jonathan Levinson : 11/29/2005 1:54:55 PM

The realtime CBOE total put to call ratio is up to 1.07 here, and the ISEE call/put ratio (which measures retail option trades only) is down to 1.28, just above the 52 week low of 107. Link This shows a great deal of retail pessimism refelcted in low call volume this afternoon, relative to this year's range.

Jonathan Levinson : 11/29/2005 1:47:16 PM

Volume breadth +1.2:1 on the NYSE, -1.05:1 on the Nasdaq.

Jeff Bailey : 11/29/2005 1:44:46 PM

SPX Options Chain this time, sorted by most active at this Link ... That overly heavy volume in the SPX 1,150 Put (SPT-XJ), which is FAR out the money. That can be a "VIX skewer" can't it? Quite a bid of selling relative to other contracts.

What makes the VIX move up or down? Up = CALL BUYING/PUT SELLING , Down = CALL SELLING/PUT BUYING. That's all the VIX measures.

Jeff Bailey : 11/29/2005 1:43:12 PM

Day's range in QQQQs Daily R1 to Daily S1. The volume into Daily S1 of 41.36 wasn't great, so bears still have slight command. One of those things...hard to sell here but would tighten stops if short. Going long might mean in the option market as we could have more downside and as SOX red while Dow only up 11 and could go to unchanged. In a nutshell, sidelines for now.

Jonathan Levinson : 11/29/2005 1:42:04 PM

QQQQ broke trendline support and now tests combined 30/60 min channel support on deeply oversold short/wavelet cycle indicators. I'm bearish on a daily and weekly cycle basis, and today's lower low and lower high confirm it. The intraday cycles are now primed for a bounce- if they fail to do so and begin trending lower, then any remaining bullish thoughts on the November rally will be history. Link

Linda Piazza : 11/29/2005 1:40:45 PM

The OEX did hit the 579.10 target predicted by the three-minute Keltner charts. See my 1:16:46 post for that prediction. This is a double-bottom test for the OEX, although yesterday's low was just a bit lower. I perhaps should have called a bearish play when I saw that 579.10 target setting up, but that left only about a point's gain before this double-bottom level was hit, and you can see the automatic bounce attempt setting up as the target was hit.

Linda Piazza : 11/29/2005 1:37:40 PM

The SOX approaches its 10-sma at 475.17, with the SOX at 477.04 as I type. There's that second November gap just below that, too.

Jane Fox : 11/29/2005 1:37:07 PM

TICKS -800 and another duck falls into place.

Linda Piazza : 11/29/2005 1:36:35 PM

The BIX is below yesterday's low.

Linda Piazza : 11/29/2005 1:34:56 PM

Advdec line dropping more significantly now.

Jane Fox : 11/29/2005 1:34:46 PM

AD volume has now retraced to 50% of its daily volume and Ad line continues to make new daily lows - the bears are getting stronger. However, I see ES making new daily lows but the VIX has not yet made a new daily high so all the ducks are not in a row yet.

Jonathan Levinson : 11/29/2005 1:32:54 PM

QQQQ - Exit Point Alert -

Out QQQQ at 41.41, -.06

Linda Piazza : 11/29/2005 1:32:23 PM

There's Keltner support higher than I thought previously on the OEX, from 579.08-579.51. This is the same support tested earlier today, but it's softened since then. OEX at 579.75 as I type.

Jeff Bailey : 11/29/2005 1:31:58 PM

Volume rises at Dec S&P eminis trade 1261 and finally close day gap. Bears holding breath, but they do have proverbial oxygen now.

Linda Piazza : 11/29/2005 1:30:34 PM

TRAN dropping toward next support near 4130. TRAN at 4134.40 as I type.

Jeff Bailey : 11/29/2005 1:30:25 PM

The next few hours should be key. Will Weekly S1 hold in most major indices (QQQQs, etc)? Are buyers stepping away or is this real selling? Is open interest falling? Voliatility rising? This is the second test for bulls this week. There can't be a crack in the bulls' armour, can there be? From a day traders' perspective, sure. Swing trade bullish support is much, much lower. QQQQs 41.44.

Jonathan Levinson : 11/29/2005 1:25:16 PM

Stepping away.

Linda Piazza : 11/29/2005 1:24:32 PM

As long as the OEX is finding resistance at 580.15 on three-minute closes, it keeps a potential 579.08 target in place, but there's some danger here, as the OEX just isn't falign toward that target yet.

Linda Piazza : 11/29/2005 1:22:05 PM

The OEX is not falling toward that next target, and that's dangerous for bears.

Jonathan Levinson : 11/29/2005 1:21:56 PM

Ten year note yields are down to a 6.8 bp gain at 4.474%, IRX +7.2 bps at 3.902%.

Jeff Bailey : 11/29/2005 1:18:39 PM

QQQQs LOD and watch both 41.42 and 1261 in the Dec Eminis. Why the ES05Z (Qcharts)? That puts the contract to unch and closes a day gap. This could also be an area of support in my opinion. Dec Jan 42 puts finally offers at 1.15. No trade there.

Jonathan Levinson : 11/29/2005 1:17:47 PM

Testing lower trendline support, stop just below it and 30 min channel support: Link

Jonathan Levinson : 11/29/2005 1:17:01 PM

QQQQ - Entry Point Alert -

Long QQQQ at 41.47 stop 41.41

Linda Piazza : 11/29/2005 1:16:45 PM

OEX looking vulnerable to 579.10.

Linda Piazza : 11/29/2005 1:16:16 PM

There goes the advdec line, breaking to the downside out of the support that's been holding it up so far.

Jeff Bailey : 11/29/2005 1:16:08 PM

SOX.X 478.43 -0.06% ... slips red and sets up for another test of WEEKLY S1. Kissed it yesterday and buyers were present.

QQQQ $41.51 -0.07% ... its WEEKLY S1 at $41.41.

Jonathan Levinson : 11/29/2005 1:15:19 PM

It's either a falling wedge, or a falling triangle, bullish in the first case and bearish in the second. The price action feels very bearish, but there has yet to be a decisive break of yesterday's low to seal the deal. Link

Jeff Bailey : 11/29/2005 1:12:56 PM

01:00 Internals found at this Link

Linda Piazza : 11/29/2005 1:10:01 PM

I don't see anything that gives a strong sense of next direction this afternoon, either bullish or bearish. The advdec line is now just going sideways, not sideways up. The TRAN confirmed a double-top formation on the intraday chart, normally a bearish development, but it hasn't fallen much since doing so, and, while not bullish, it's not particularly supportive yet of the bearish case, either, until and unless it drops further. The OEX's formation is beginning to look a lot like a bearish right triangle, but the OEX so far hasn't broken down out of that triangle by trading beneath 580.33. It still coils.

Jonathan Levinson : 11/29/2005 1:09:37 PM

QQQQ bounces from 41.48, from oversold short cycle readings and a small bullish wavelet divergence. Link

Jeff Bailey : 11/29/2005 1:13:25 PM

Bearish Day Trade Exit alert Covered QQQQ short from 41.68 at 41.55. Would have liked some follow through to Weekly S1. Still might see that level by day's end.

Jane Fox : 11/29/2005 1:06:51 PM

I also would like to go on record that there is no one who wants this market to drop more than me because, like I have said so many times before, day trading a bear market is so much easier than a bull market but I just don't see bearishness now. I wish I did.

Jonathan Levinson : 11/29/2005 1:05:00 PM

The 4 wk bills sold for 3.92% yielding 3.987%, with a bid to cover of 1.9. This is the weakest demand this quarter and below the quartly averages going back to 2001.

Jeff Bailey : 11/29/2005 1:03:04 PM

Stops should now be at 41.55 as QQQQs trade 41.50. Worried a bit about a bear trap.

Jonathan Levinson : 11/29/2005 1:03:03 PM

Foreign central banks took a very small 2.13B of the 20B total of 4-week bills auctioned today. This is a poor showing relative to their recent participation levels.

Jeff Bailey : 11/29/2005 1:03:00 PM

01:00 Market Watch found at this Link

Jane Fox : 11/29/2005 1:02:08 PM

I really don't like been the odd man (woman) out here but I am not bearish. I have seen these two in this pattern and I know right now it is a recipe for chop but a tad bullish (AD line at +850 is bullish). Then on top of this the VIX is falling so I am a reserved bull. Link

Jeff Bailey : 11/29/2005 12:59:39 PM

QQQQ 1/2 position short at 41.68. Trade management: IF the QQQQs trade 41.50 then move stop to 41.55 and exit trade at 41.43 and Weekly S1.

Linda Piazza : 11/29/2005 12:57:28 PM

Advdec line coiling along that same three-minute line. I don't know why it tends to do this so often after a morning pullback if that pullback did not crash through that support right away, but it does. I'm watching for any change in this pattern, but haven't seen it yet.

Jeff Bailey : 11/29/2005 12:55:22 PM

Microsoft (MSFT) did fail at it's Weekly Pivot this week at 27.81 but only trades slightly below at 27.75 and this bugger isn't giving bears much leadership. That is why I am kind of micro-managing this QQQQs trade. Come on softie...start to roll.

Jeff Bailey : 11/29/2005 12:50:54 PM

It appears that bears still have a very slight edge regarding the QQQQs, but now this ETF may need to stay under 41.63 going forward and re-test the day's low in the next 10 minutes or so. The SOX is nearing it's low for the day and might test Weekly S1 late today or tomorrow.

Jonathan Levinson : 11/29/2005 12:50:40 PM

Volume breadth +1.77:1 on the NYSE, +2.1:1 on the Nasdaq.

Linda Piazza : 11/29/2005 12:48:51 PM

Strongest resistance for the OEX appears to be at a one-minute Keltner line currently at 581.42. Strongest support appears to be at a two-minute line currently at 580.56. The OEX appears to be trading from support to resistance, but spending an awful lot of time right in the middle of the two, as it is now. OEX at 581.10 as I type.

Jane Fox : 11/29/2005 12:45:56 PM

AD volume to new daily highs.

Jane Fox : 11/29/2005 12:45:01 PM

TICKS +800. This is not a safe environment for bears.

Linda Piazza : 11/29/2005 12:43:21 PM

The TRAN has now confirmed its double-top formation, with the two highs seen on today's intraday chart. The OEX still coils, however.

Jonathan Levinson : 11/29/2005 12:42:27 PM

Session low for 10-year notes here at 108 55/64, TNX up 7.4 bps to 4.48%. The 4-week bill auction results will come out just after 1PM- Treasury will raise new cash (=drain) of 5B at that auction.

Linda Piazza : 11/29/2005 12:42:08 PM

The advdec line drops beneath three-minute support, down to five-minute, but it's still so far basically weaving in and out of the three-minute line now at about 1520. Bears need to do better than that. Advdec line now at 1413, QCharts value.

Jane Fox : 11/29/2005 12:41:40 PM

Es is on it way to test daily lows but the VIX is not testing daily highs so I think those daily lows will hold.

Jonathan Levinson : 11/29/2005 12:41:12 PM

The short cycle has rolled over from a lower oscillator and price high, but price has held the previous low. IF it bounces from here, it will do so with a bullish divergence. If not, then the bears will be firmly in control. I believe that the writing is on the wall for the daily cycle upphase, and will look for any 30/60 min cycle bounce to short. Link

Linda Piazza : 11/29/2005 12:30:19 PM

OEX still coiling.

Linda Piazza : 11/29/2005 12:29:39 PM

TRAN still dropping after its double-top test. It hasn't confirmed the double-top formation with a drop through 4142.44, but it's dropping toward that. It's at 4146.86 as I type.

Linda Piazza : 11/29/2005 12:26:16 PM

The OEX's 60-minute setup honestly looks as if the OEX is likely to see 577.95-578.86, but shorter-term charts are more ambiguous as is the advdec line.

Keene Little : 11/29/2005 12:24:48 PM

Jonathan, just caught your explanation of the bond situation. Makes perfect sense, thanks. So time for equity bears to party! OK, maybe not yet.

Linda Piazza : 11/29/2005 12:23:49 PM

The OEX is softening nearest support, but essentially just coils today.

Jeff Bailey : 11/29/2005 12:22:55 PM

AMGN failed to stay above Weekly S1 at 81.75 and now trades 81.28. Weekly S2 at 80.74 and this biotech weakness should take the QQQQs down. QQQQs finally getting near 41.55.

Jonathan Levinson : 11/29/2005 12:20:42 PM

The current wavelet downphase is oversold here, but it has succeeded in stalling the short cycle upphase as price broke back below the 72 SMA. This is so far a weak short cycle upphase, but it's been sufficient to at least stall the longer intraday cycles. Key support remains at yesterday's low, below which bears will have their confirmation. Link

Linda Piazza : 11/29/2005 12:19:36 PM

The advdec line is so far clinging to that three-minute support that it sometimes follows sideways-up throughout an afternoon. Lately, such movements have not supported the bearish case. Bears want to see a stronger drop in the advdec line.

Jeff Bailey : 11/29/2005 12:17:10 PM

Regarding our 1/2 position QQQQ short at 41.68, let's move the stop to breakeven. This is very aggressive; however, we now have about 6 cents in the trade (covering commissions) and I think the next test of 41.68 will have the QQQQs on a buy program and putting us under water. I thought we could be more near 41.55 now. Still patient, but tightening things up.

Jonathan Levinson : 11/29/2005 12:17:20 PM

Keene, with respect to your question about the weakness in bonds/yield surge today. On the daily chart, this reversal has been setting up, as you know. It seems to have coincided with an aggressive pickup in the pace of new Treasury borrowing. Today's and yesterday's Cash Management Bill issuances (13-day and 14-day basis) total 38B, which is a very considerable drain to the bond markets. For that reason, I don't think that there's as a great a risk of an asset allocation flow from bonds to equities- it seems to be a genuine selloff in bonds to finance new short-term Treasury borrowing.

Linda Piazza : 11/29/2005 12:15:04 PM

Is the OEX widening what had looked like a nicely formed bull flag into a broadening formation at the top of its climb? Link Those are known for their instability and are notoriously difficult to trade. Because they're broadening, it's also difficult to trust any break outside that formation.

Jeff Bailey : 11/29/2005 12:10:21 PM

12:00 Internals found at this Link

Yesterday's Internals found at this Link

Jane Fox : 11/29/2005 12:09:17 PM

Bonds continue to make lower lows and lower highs and new daily lows. This is not good for stocks because that means yields are on the rise. This is not good for me either because I was bullish on bonds.

Linda Piazza : 11/29/2005 12:08:05 PM

Next resistance holds on the advdec line, but the advdec line isn't turning down. RSI flattens, so gives no clue. Three-minute support holds as it often does on sideways-up afternoons on the advdec line (which can mean continued gains on equities), but only tentatively so far. The TRAN does continue to turn down from its double-top test today (double-top of today's intraday highs), but the TRAN is still setting up a potential roughly formed H&S and this is a right-shoulder level that it chop within for quite some time.

The OEX itself has nearest support from 581.10-581.22 and nearest resistance at 581.75 and then 582.06. Support looks slightly more significant than resistance, but only slightly, and that support may be about to be tested.

There hasn't been a clear signal since the OEX hit the top of its three-minute Keltner channel today as the advdec line was hitting its high, but showing bearish divergence as it tested resistance. I missed that one, as I was unfortunately away from the Monitor, and now the advdec line could as easily be setting up for another bounce as for a continued pullback.

Jeff Bailey : 11/29/2005 12:02:07 PM

12:00 Market Watch found at this Link

Jonathan Levinson : 11/29/2005 11:53:27 AM

Session low for 10-year notes at 108 63/64, TNX up 5.7 bps to 4.463%. IRX is up 7.5 bps to 3.905%, a big 1.96% jump today.

Linda Piazza : 11/29/2005 12:00:05 PM

TRAN turning down from its equal-high test. The downturn isn't significant yet. TRAN at 4159.11.

Jonathan Levinson : 11/29/2005 11:52:04 AM

Back. QQQQ's short cycle turned, this time early above the 30 min channel bottom. The break above 72 SMA support will stall the 30 min channel downphase if its holds for another 10 minutes or so (support at 41.63). Volume breadth has recovered to +1.67:1 on the Nasdaq. Daily cycle bears have been denied their lower low so far. Link

Linda Piazza : 11/29/2005 11:51:50 AM

The advdec line is tentatively--but only tentatively--finding resistance below the Keltner resistance I was watching, then just below 1700 but now near 1725. This is on 10-minute closes, and the advdec line could still rise to test it more completely. If the advdec line does turn down, it needs to confirm any weakness by dropping below about 1375 on 10-minute closes. However, it can take a first step in confirming a pullback by closing three minute periods below about 1430. Advdec line at 1552 as I type. Almost anything is possible on the advdec line, as there's no bearish divergence, and is the possibility of the advdec line clinging to the three-minute line just mentioned, doing a sideways-up thing the rest of the day. There's just no clear signal here.

Jane Fox : 11/29/2005 11:46:11 AM

This is not quite as clear a pattern as we have seen on other bullish days but nevertheless it is bullish. Link

Linda Piazza : 11/29/2005 11:45:19 AM

The TRAN again approaches the day's high, testing the right-shoulder level for its newest but roughly formed potential H&S, with the head just under 4200, at last week's highs. The next Keltner resistance is at 4164.97 on 10-minute closes, with the TRAN currently at 4160.99 and with the previous HOD at 4161.77. Watch the TRAN, as a breakout either direction could lead other indices, particularly the Dow, SPX and OEX.

Jeff Bailey : 11/29/2005 11:49:51 AM

Option Trader's Question from yesterday regarding "Don't you think it risky that traders would be selling the SPX Dec. 1,250 Put (SZP-XJ) with the SPX so overbought near-term?"

Reply: I did send a reply late last night, but I haven't been following the SPX/SPY option chains to this point. What I like to do, and have tried to teach traders, is to look at your options chains with Up/Down Tick Volumes turned on. An observation can't be made in just one day, but over the course of several sessions to try and get a feel for what market makers might be doing. What their position is, relative to the indices recent direction, as well as your volatility measures.

Here's a snapshot of the SPX option chain Link (I'd suggest doing the same with the SPY). I've marked the 6-most heavy open interest as of last night's close, then made note of "In" and "Out" the money for those options.

See the even Up/Down Tick Volume at the 1,265 strikes at this point? Let's make that a point of equilibrium at this time. I also like to add and subtract the AvgOHLC to the strike. A buyer is thinking SPX trades 1,265 + $11.05 on or before expiration to break even in the trade. A seller is thinking 1,276 or lower to be able to make money.

Hmmm.... 1,276. See that SPX Dec. 1,275 Call? It is currently OUT the money, but see a slight buy bias.

Now the Dec. 1,250 Put (SZP-XJ). Dn/Up tick volume is selling 5:1 today, and with VIX.X up near WEEKLY R2, pehaps inflated premiums, that trade isn't as "risky" as we might think.

Yes, there's some "Max Pain" that could be delivered to the heavier open interest in the 1,250 Calls, which show 93,834 OI, but also note the current 273 to 1 Up/Down Tick volume.

Linda Piazza : 11/29/2005 11:43:01 AM

There's an inverse H&S, descending neckline, at the top of the OEX's climb, with the neckline currently at about 582.90. These continuation-form inverse H&S's are reputedly not as reliable as bottoming ones, but it might be a good idea to pay attention to this one anyway. OEX at 581.62 as I type.

Linda Piazza : 11/29/2005 11:41:13 AM

Is the OEX establishing another of its infamous 4-6-point consolidation ranges? It's possible, with this one sitting on top of the long-term S/R band that I've had marked on my charts for a long time. If that's what's happening, be particularly careful with any trade.

Looking at a 60-minute chart, I see at the high of the day, the OEX was attempting a break out of the descending regression channel in which it's been pulling back from last week's high, with that channel still looking like a possible bull flag. The OEX could not maintain that breakout, but still tests the upper boundary, at about 582, but on 60-minute closes, which is not particularly useful to short-term traders. A lot can happen in 60 minutes.

Jeff Bailey : 11/29/2005 11:40:03 AM

Chicago Board of Trade Holdings (BOT) down another $4 today to 90.45. Weekly S2 at 96.25 as shares continue to get 'oversold'. BOT should get even more 'oversold' as long as the Weekly S2 remains resistance. Likely.

Jeff Bailey : 11/29/2005 11:37:27 AM

Watching QQQQ Jan 42 Puts go offer as the QQQQs trade almost exactly that 50% retracement. This should be a key level for day traders. In fact, let's go short 1/2 position QQQQ here at 41.68 with stop at 41.90.. Will tighten stop on a 10-cent drop and objective at least 41.42.

Jeff Bailey : 11/29/2005 11:30:36 AM

Speaking of 50% retracements, the half-way mark for the QQQQs today comes in at 41.68 and is the daily pivot and also just under weekly pivot. Bears should protect this area. Volume certainly lighter relative to the 5.5 mln seen in 5-minutes at 10:00 a.m. and just under Daily R1.

Jeff Bailey : 11/29/2005 11:28:09 AM

10-year bond yields ($TNX.X) rising to Weekly R1 at 4.466%, but the recent decline from 4.682 to Weekly S1 and this week's low (4.386) still shows that a 50% retracement to 4.535% a possibility without making the case that yields are headed much higher (bull yields in control still). Curve followers certainly watching as everyone curious what happens if curve goes inverted.

Linda Piazza : 11/29/2005 11:27:08 AM

While I was gone, the OEX found resistance at the Keltner line now at 583.22, with that important on 15-minute closes. The OEX appears to be having difficulty with Keltner resistance currently at 580.96-581.10,with that important on 15-minute closes. If the OEX can't maintain values above that, it's likely to go back and retest support from 578.99-579.83. That support looks softer than it did late yesterday, but the OEX right now is in the middle of the upper half of a Keltner channel, with support and resistance ringing it, but with support still looking slightly stronger than resistance, if softer than it did earlier. That suggests to me that the OEX is likely to continue testing resistance but perhaps likely to chop around some, too. I don't see a new play right now.

Jane Fox : 11/29/2005 11:24:42 AM

I'm not sure if anyone is watching but CME is now down -8.68. Too funny.

Jane Fox : 11/29/2005 11:23:22 AM

AD volume to new daily highs - this is why I was very hesitant to get too bearish.

Linda Piazza : 11/29/2005 11:23:18 AM

Returning, I see that the TRAN did not move above the appropriate right-shoulder level for its newest, largest, but rougher H&S, visible on its 30-minute chart. I'm not certain how valid that formation is. The TRAN also has not dropped beneath 30-minute support, currently at 4143.70 on a 30-minute close. As long as it maintains that support, it's likely to go on challenging resistance, and I see it oving up a little as I type.

The advdec line did pull back, as I expected it to do, but it took a while to do so, and it's now testing the support that sometimes produces the sideways-up movement that sometimes occurs on strong days, after an initial pullback. That support near 1300 currently, with the advdec line at 1399 as I type. Bulls want to see the OEX bounce from that support or at least weave in and out of that line, staying in close proximity to it as it moves. Bears want a steeper decline, perhaps after a test of 1700-ish next resistance, with bearish divergence shown on that next resistance.

Jonathan Levinson : 11/29/2005 11:16:51 AM

Need to step away for a few minutes.

Jonathan Levinson : 11/29/2005 11:13:51 AM

QQQQ's short cycle downphase is now approaching oversold territory Link and while a terminal push could break the 41.50 previous day low, 30 min channel support at 41.45 is looking firm so far. An upphase from or above the 41.50 level would deny bears that lower high/lower low confirmation for a daily cycle downphase, making this a key level to watch.

Jeff Bailey : 11/29/2005 11:13:43 AM

11:00 Internals found at this Link

Jeff Bailey : 11/29/2005 11:04:28 AM

11:00 Market Watch found at this Link

Jonathan Levinson : 11/29/2005 10:56:20 AM

Volume breadth is down to +1.9:1 on the NYSE, +1.1:1 on the Nasdaq. This is the second day that a key move has kicked off from a counter-cyclical position, running against the usually-accurate 30 and 60 min cycles. In both cases, Keltner violations were the only indication preceding the reversal. I'll be looking to follow those more closely than usual, and rely on stops to cover the uncertainty caused by ignoring those key 30/60 min indications if it occurs again.

Jane Fox : 11/29/2005 10:54:29 AM

Bears are picking up steam now but how many times have we seen this happen only to have the bulls slap them back into place. I'm not saying that will happen this time but I certainly will need more proof than I'm seeing now before I become bearish.

Jane Fox : 11/29/2005 10:51:02 AM

The VIX continues to make new daily highs and the AD line is now making new daily lows therefore both are bearish. But the AD line is still at +950 and the AD Volume is still quite bullish. Bears are gaining momentum but they certainly do not have the reins yet.

Jonathan Levinson : 11/29/2005 10:48:03 AM

Sell signals from the short cycle oscillators as the wavelet bounce aborts: Link Yesterday's low is next support, below which a new daily cycle downphase should confirm. Link

Jonathan Levinson : 11/29/2005 10:44:14 AM

Strong volume again this AM, with 27.4M QQQQs traded so far. Advancing shares lead declining shares 1.7:1.

Jeff Bailey : 11/29/2005 10:35:37 AM

U.S. Dollar Index (dx00y) 91.83 +0.93% (30-minute delayed) ... right back at WEEKLY Pivot.

QQQQ $41.64 +0.24% ... just under its WEEKLY Pivot.

SPX.X 1,263.12 +0.45% ... right at its WEEKLY Pivot.

A lot of cash still flowing to U.S. is my thoughts here.

Jonathan Levinson : 11/29/2005 10:35:07 AM

QQQQ tests rising 72 SMA support here. The wavelet cycle is oversold, nearly maxxed out, as the short cycle indicators roll over. Below the 72 SMA, the 30 min cycle upphase will abort early and the short cycle downphase will kick off. A bounce from here to a lower high will be a short entry point. Link

Jonathan Levinson : 11/29/2005 10:32:12 AM

Session low for ten year notes, TNX up 5.3 bps to 4.459%.

Jeff Bailey : 11/29/2005 10:28:34 AM

QQQQ $41.65 +0.26% ... slips back under DAILY Pivot. Bears will breath a sigh of intra-day relief here. Should DAILY R1 be violated, correlation at DAILY R2/WEEKLY R1 is the buyers target.

You and I know the Jan $42 Puts would be stopped there after recent low trades of $0.85. While $0.80 has been an exposed bid the past few days, no willing sellers at $0.80.

Jonathan Levinson : 11/29/2005 10:26:04 AM

Session low for QQQQ, the 30 min channel upphase flattening. An early abort for these intraday upphase will set up a high likelihood of a daily cycle rollover, and a lower low below yesterday's low. So far, we have the lower high for the day. Link

Jeff Bailey : 11/29/2005 10:26:00 AM

Disk Drive Index (DDX.X) 128.55 -0.20% ... reverse earlier gains, just undercut yesterday's lows and today's DAILY Pivot (128.80).

Jane Fox : 11/29/2005 10:22:01 AM

Mark is usually the one to watch CME but I started looking at it yesterday and foolishly suggested it was a good short although I did warn be careful because it was a mover. Well the little bugger is up 8.68 today. This is not a stock for the faint of heart and probably not a stock you want to short in a bull market. What was I thinking?

Jeff Bailey : 11/29/2005 10:23:28 AM

Program Trading Levels for Tuesday ... HL Camp & Company has not yet updated their buy/sell premium levels for today.

At 10:00, the PREMium did jump to as high as 3.42.

At that time the QQQQ challenged its DAILY R1.

Jonathan Levinson : 11/29/2005 10:17:36 AM

Volume breadth declines to +2.65:1 on the NYSE, +2.55:1 on the Nasdaq, still strong.

Jeff Bailey : 11/29/2005 10:14:31 AM

Homebuilders (DJUSHB) 955.68 +3.09% Link ... strong after October new home sales figures.

Jonathan Levinson : 11/29/2005 10:11:05 AM

Looks like another premature drop from the Keltner test, albeit from a higher level. That should continue so long as the 30 min cycle upphase remains in effect- QQQQ must hold above 41.60, the current rising 72 SMA: Link

Jeff Bailey : 11/29/2005 10:10:32 AM

10:00 Internals found at this Link

Jonathan Levinson : 11/29/2005 10:09:41 AM

Headlines:

10:08am JAN CRUDE CLIMBS 14C TO $57.50/BRL IN EARLY NY TRADE

10:08am JAN NATURAL GAS RISES 31.6C, OR 2.7%, TO $11.95/MLN BTUS

Jonathan Levinson : 11/29/2005 10:07:44 AM

Volume breadth +3.5:1 on the NYSE, +3:1 on the Nasdaq.

Jonathan Levinson : 11/29/2005 10:07:06 AM

Session low for ten year notes, TNX now up 3.7 bps to 4.443%. IRX is up 5 bps at 3.88%, flattening the yield curve.

Jane Fox : 11/29/2005 10:06:46 AM

THE VIX confirms the bullishness. Link

Jonathan Levinson : 11/29/2005 10:03:36 AM

QQQQ breaks upper 30 and 60 min channel resistance- usually a sign that the move is done, but here the 30 and 60 min cycles are nowhere near overbought territory and have room to run higher. Bears need to see this surge reversed immediately, but it's early on a cycle basis to assume that it's peaked. Link

Jeff Bailey : 11/29/2005 10:02:46 AM

10:00 Market Watch found at this Link

Jane Fox : 11/29/2005 10:02:30 AM

These two are talking to you again today and you should be listening. Link

Jonathan Levinson : 11/29/2005 10:02:27 AM

Headlines:

U.S. OCT. NEW HOME SALES UP 13.0% TO RECORD 1.42 MLN UNITS

U.S. OCT. NEW HOME SALES BIGGEST RISE SINCE APRIL 1993

Jonathan Levinson : 11/29/2005 10:01:43 AM

Headlines:

U.S. NOV. CONSUMER CONFIDENCE INDEX RISES TO 98.9 VS. 85.2

U.S. NOV. CONSUMER EXPECTATIONS INDEX 88.8 VS. 70.1

U.S. NOV. CONSUMER PRESENT SITUATION INDEX 114.0 VS.107.8

U.S. NOV. CONSUMER CONFIDENCE AT 98.9 BEATS 90.0 FORECAST

Jane Fox : 11/29/2005 10:00:44 AM

There go the TICKS +800. Nope +1000

Jonathan Levinson : 11/29/2005 10:00:36 AM

Headlines:

U.S. OCT. NEW HOME SALES WELL ABOVE 1.22M FORECAST

U.S. SEPT. NEW HOME SALES REVISED TO 1.26 MLN VS 1.20 MLN

U.S. OCT. NEW HOME SALES PRICE UP 0.9% Y-0-Y TO $231K

Jane Fox : 11/29/2005 10:00:25 AM

VIX makes new daily lows confirming ES's new daily highs.

Jonathan Levinson : 11/29/2005 9:57:20 AM

A 4.75B 6-day repo from the Fed results in a 250M drain for the day, but demand for the money fell, with the highest rate submitted at 3.97% and the stopout down to 3.95%, now 5 bps below the overnight target rate.

Jane Fox : 11/29/2005 9:53:13 AM

AD volume to new daily highs and AD line at +1100 is a recipe for disaster for the bears. My only advise right now is stay long or stay out.

Jonathan Levinson : 11/29/2005 9:53:06 AM

Awaiting results of the Fed's disposition of its expiring 5B repo, due in the coming minutes, followed by Consumer Confidence at 10AM.

Linda Piazza : 11/29/2005 9:49:50 AM

I have unfortunately learned I'm going to have to be away much of the morning, so can't post an OEX play. Watch Jonathan and the futures writers for potential plays. The TRAN looks to me as if it might be trying to form another H&S, somewhat more roughly shaped but bigger than the previous one that it confirmed yesterday. The advdec line has begun a small pullback, although nothing major yet. If you're attempting a bearish play today, you want to be particularly watchful of the advdec line, but it looks possible that it could begin a rollover soon, however deep or shallow that rollover might end up being. You'd like to see the advdec line fall through 1300, and then into negative territory. Keep a watch on the TRAN, too. A shallow pullback in the advdec line and then a sideways-up movement the rest of the day won't look good for bearish plays. A TRAN move much above 4165 won't, either.

Jeff Bailey : 11/29/2005 9:51:32 AM

Calpine (CPN) $0.91 -27.20% Link ... Atop this morning's most active list and percentage loser on the big board after the company said its CEO and founder Peter Cartwright and CFO Robert Kelly have left the company.

The independent power producer said "The board believes that these management changes are essential to better address Calpine's financial challenges and to provide a new direction for the company."

Calpine did not provide any further reason for the departure of Mr. Cartwright and Mr. Kelly.

The company appointed board member Kenneth T. Derr as chairman and acting chief executive and said it expects to announce a permanent replacement for Cartwright in the near future. Mr. Derr was the chief executive of Chevron Corp. from 1989 to 1999.

Jane Fox : 11/29/2005 9:47:39 AM

It is impossible to decipher the VIX and ES relationship because both are in such a narrow range.

Jane Fox : 11/29/2005 9:45:05 AM

These two are telling me the bulls have control so far and they just may keep it all day today. Link

Jonathan Levinson : 11/29/2005 9:40:29 AM

Those opening channel breaches are usually unreliable, but here's another QQQQ reversal from within a 30/60 min and short cycle upphase, based solely on the keltner breach: Link

Linda Piazza : 11/29/2005 9:39:42 AM

Advdec line indicates that there should be a pullback, perhaps beginning as soon as during the next 15-minute period, but not guaranteeing how deep that will take the OEX. It could be just a little pullback before continued climbs, and I'm hesitant to suggest which it will be with an equal or new high looking about as likely as a rollover and with economic numbers still to be released. The pullback has not begun yet, however, with the advdec line still climbing.

Marc Eckelberry : 11/29/2005 9:38:19 AM

Consumer Confidence at 10 will dictate the day.

Marc Eckelberry : 11/29/2005 9:36:36 AM

Weekly pivot acting as R. (NQ 1697)

Linda Piazza : 11/29/2005 9:36:30 AM

The OEX has moved above first Keltner resistance, currentlya t 581.01 on 15-minute closes, and charges toward 582-ish historical resistance and then 583.03-583.68 Keltern resistance. There's still much time left in the first 15-minute candle, however.

Jonathan Levinson : 11/29/2005 9:34:11 AM

Volume breadth is +3.2:1 on the NYSE, +2.8:1 on the Nasdaq at the open.

Jane Fox : 11/29/2005 9:33:14 AM

AD volume is positive and AD line is +823. The bulls have the reins this morning.

Jonathan Levinson : 11/29/2005 9:33:09 AM

Canada's House of Commons passed a nonconfidence vote last night, the first in 25 years, effectively dissolving the current Liberal minority government in Parliament and requiring a federal election to replace it. It's expected that that election will take place in late January. CAD futures dipped to a low of .855 following the widely expected news, and is back up to .8567, down .12%.

Linda Piazza : 11/29/2005 9:32:50 AM

As expected, the OEX is climbing, without a gap higher, but climbing strongly during early trading. The advdec line has already hit levels showing that the move is overdone over the very short term and approaching those levels as high as the 15-minute chart.

Jonathan Levinson : 11/29/2005 9:31:21 AM

QQQQ 72 SMA support is at 41.57, 30/60 min channel resistance 41.72-.75, 30/60 min channel support 41.43-.44. Link

Jane Fox : 11/29/2005 9:21:58 AM

Dateline WSJ Spot gold and gold futures topped $500 an ounce in after-hours trading, passing an important psychological barrier that hasn't been eclipsed in almost 18 years.

On Tuesday, gold edged lower from those lofty levels, with spot gold trading at $497.40 in Europe. Gold for December delivery trading was recently trading at $497.50 after hitting a high of $502.30.

In New York, Comex December gold futures are called to open around $2.10 lower Tuesday, traders said. December silver is called to open down 6.3 cents.

Gold last hit the $500-an-ounce level on Dec. 14, 1987, but stayed above the mark for just a single day. It hit its record high of $873 in January 1980.

Jonathan Levinson : 11/29/2005 8:59:29 AM

The setup this AM is little changed from yesterday's close, with QQQQ in the 1/2 half of a 30 min cycle upphase and the 60 min cycle oversold and not yet turned up. An early failure to the 30 min cycle upphase already in progress would be the first suggestion of daily cycle weakness- but until that happens, and with the broader rising price trend still intact, it's too early to assume that the daily cycle bull is dead. A break below yesterday's low from here would force a reassessment of that interpretation. I will update the intraday cycle and SMA levels as soon as they refresh at the opening bell.

Linda Piazza : 11/29/2005 8:54:52 AM

I had an OEX update prepared for yesterday, but a family emergency pulled me away from the markets and prevented me from posting. In that update, I'd made note that of the TRAN's potential H&S on the 15-minute chart, and said I'd be watching for confirmation of that H&S. It was confirmed early yesterday with the downside target reached. I also made note that the SOX had finally closed a little above the descending trendline off the summer's high, but that I wasn't yet giving much weight to a minimal close above that trendline on a half trading day, the day after Thanksgiving, and had said that the SOX might still need to pull back to test its 10-sma or even that gap left on its chart. Yesterday, the SOX pulled back fairly early below that descending trendline off the summer's high, too, erasing the impression that it had broken above that trendline. It has not yet pulled back far enough to test the 10-sma or that gap.

So at least two elements supported yesterday's pullback in the OEX. That pullback took the OEX nearly to the 577-578.40-ish strong support/resistance zone I've had marked on my charts for years. The zone is really broader than that, but that's the area that encompasses the most opens, closes, highs and lows. In addition, the OEX ended the day testing the 15-minute 100/130-ema's at 579.69 and 578.67, and just above 240-minute Keltner support from 577.21-579.08.

Unless the OEX should gap beneath all that support, always possible but not looking likely this morning, it looks like time for a bounce from somewhere within that zone. Futures currently suggest that the bounce has begun. That bounce should tell us whether the intermediate-term high has been put in or not. Last Wednesday, I said that the TRAN's close approach to the envelope resistance (now at 4232.55) and the inverse H&S upside target at about 4275 had led me to suggest a switch in intermediate-term tactics from buying dips into protecting longs, at the least, and that after the TRAN made a closer approach to the top of that envelope--never breached since mid 1997--that it was time to begin looking for bearish opportunities. Link Last week, the TRAN has reached highs in the 4190 zone, and I'm not sure yet whether that's good enough or not. The TRAN also approached potentially strong support in the 4095-4100 zone.

So, unless there's a gap lower this morning, not currently likely, look for a potential bounce. If that comes, I'll see whether it looks play-worthy, always keeping in mind the possibility that it could be the last of the OEX's topping out moves over the intermediate-term, so that extra care should be exercised. I'm going to be particularly concerned about a gap-higher opening this morning, and not particularly inclined to chase it ahead of 10:00 numbers.

On any climb, bears want to look for signs that the rally is finished--bearish divergences and hopefully a rally that can't really get started, perhaps failing in the 580.70-580.90 region or at next resistance, nearer 582. We can't preclude a retest of recent highs yet or another of the OEX's infamous 4-6-point consolidation ranges, so now is a time for extreme care. I think the OEX needs a retest of its 10-sma, now at 575.00, even if it's going to continue to be strong, but that can be accomplished by the OEX moving sideways until the 10-sma rises almost to touch it, and then a quick dip down and spring off the average. That's what the OEX tends to do when it's behaving strongly.

Summing up, unless the OEX gaps lower this morning, I'd look for a bounce from somewhere in the 577-579 region, perhaps already begun. I would not chase a gap-higher open with new economic numbers due. Then I'd look for a potential failure in the 580.70-580.90 region or perhaps near 582. I wouldn't be certain such a rollover will occur, but would look for signs. On a move above 582, a retest of last week's high or even a move above it can't be ruled out, but if that should happen, I'd again carefully watch the TRAN, especially if it's approaching 4235-4275, and look for signs of the TRAN and the OEX also topping out. So, it's possible that no play will set up today.

Jonathan Levinson : 11/29/2005 8:32:27 AM

QQQQ holds a 222 cent gain at 41.76, YM at a session high of 10960. TNX is down .2 bps at 4.404% following the data.

Jonathan Levinson : 11/29/2005 8:31:44 AM

Headlines:

U.S. OCT. DURABLE-GOODS ORDERS UP 3.4% VS.1.4% FORECAST

U.S. OCT. DURABLE-GOODS SHIPMENTS RISE 1.4%

U.S. OCT. DURABLE-GOODS INVENTORIES UP 0.4%

U.S. SEPT. DURABLE ORDERS REVISED TO FALL 2.0% VS 2.4% PREV

Linda Piazza : 11/29/2005 8:26:43 AM

European bourses have been climbing strongly since my earlier report. The DAX, for example, has been climbing into the gap higher from yesterday morning. The DAX had fallen through and below that gap yesterday.

Jonathan Levinson : 11/29/2005 8:20:38 AM

Ten year notes have given back part of their gains, ZN down to a 1/16 gain at 109 15/32. TNX is quoted -1 bp at 4.396%.

Jonathan Levinson : 11/29/2005 7:33:04 AM

Equities are up, ES trading 1264, NQ 1694.5, YM 10943 and QQQQ +.14 at 41.68. Gold is down 1.9 to 496.30, session high 502, silver is down .057 to 8.288, ten year notes are up 7/64 to 109 33/64, crude oil is down .275 to 57.075 and natgas is up .23 to 11.865.

We await the 8:30 releases of Durable Orders, est. 1.5%, then at 10AM Consumer Confidence, est. 90 and Newe Home Sales, est. 1.2M.

Linda Piazza : 11/29/2005 6:49:15 AM

Good morning. The Nikkei closed down, as did other Asian bourses. European bourses are lower, but off their lows of the European session. The big news, however, was that gold topped $500 an ounce in after-hours trading last night, a level it hasn't topped since December 1987. As of 6:33 EST, however, gold was down $3.90 to $494.40, and crude was down $0.44, to $56.92. As of that time, our futures were higher and well above fair value, but we still have economic numbers that might impact futures. More details about Asian and European markets follows in succeeding paragraphs.

Last night, the Nikkei came within 5 points of 15,000 before it began falling into an early afternoon low about 125 points off that high. Retracing some of its losses before the day's end, it closed down 59.24 points or 0.40%, at 14,927.70. October's unemployment rate had disappointed, rising to 4.5% against expectations that it would stay at 4.2%. Wage earner household spending did gain 1.35% year over year, the first year-over-year gain in four months, according to one article. In a separate release, October's industrial production rose 0.6% month over month, less than the hoped-for 1.3% gain. METI upgraded its view of production and the Bank of Japan has made similar projections.

Stocks of exporters such as Sony declined. Energy-related issues dropped. One issue that gained was electronics manufacturer NEC Corp., advancing 3.5% after a media report of a merger of its European office communications equipment business with that of Royal Philips Electronics NV, with NEC to have a 60% position in the new company. Philips's Middle Eastern and African company communications activities will be included in the deal.

Other Asian markets declined, too, with Samsung and Taiwan Semiconductor being among the companies whose stocks dropped in early trading. The Taiwan Weighted dropped 1.04%, and South Korea's Kospi fell 1.11%. Singapore's Straits Times lost 0.44%, and Hong Kong's Hang Seng declined 0.83%. China's Shanghai Composite fell 1.25%.

European markets headed lower in early trading, with oil majors dropping as crude continued Monday's decline during early European trading. In the U.K., banking group Barclays dropped heavily in early trading after its earning report after its reiteration of full-year expectations disappointed investors. Ahold announced earnings and a restructuring plan and continued to see a positive effect from the settlement of the case against it in the U.S.

Economic releases included France's producer prices for October, rising 0.2% month over month, meeting expectations. Core PPI was 1.3%, considered benign. Italy's PPI was 0.7%, with that strong reading suggesting that energy costs may be beginning to raise worries about inflation. Consumer credit figures for the U.K. encouraged the belief that the housing market remains stable, with a rise in mortgage approvals being seen as one component of that number.

As of 6:33 EST, European bourses had tempered some of their losses. The FTSE 100 was down 7.80 points or 0.14%, to 5,469.60. The CAC 40 was down 3.54 points or 0.08%, to 4,571.77. The DAX was lower by 0.69 points or 0.01%, to 5,175.90.

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