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OI Technical Staff : 12/16/2005 9:59:59 PM

The Market Monitor has been archived.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

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

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

Jeff Bailey : 12/16/2005 7:44:19 PM

Mon-Friday Temperatures with Nat Gas/Heating Oil Benchmarks ...

Monday Link

Tuesday Link

Wednesday Link

Thursday Link

Friday Link

Jeff Bailey : 12/16/2005 7:35:50 PM

06:12 PM EST Temperatures with Jan/Feb Nat. Gas and Heating Oil daily settlement benchmarks at this Link ... Got pretty busy today and didn't get a mid-day reading. Golf courses here in Denver and all along the front range loaded with Canada Geese. Texas... here they come!

Jeff Bailey : 12/16/2005 5:41:08 PM

Pfizer (PFE) $25.25 in extended. Quick look at option montage Link ... See that Mar06 $22.50 Call action today? That's got to be covered/naked selling. There should be formidable buyers on any pullback to $22.50 + $1.50 = $24.00.

Jeff Bailey : 12/16/2005 5:22:08 PM

Pfizer (PFE) $22.58 -0.92% ... surges to $25.25 after federal judge upheld validity of the company's Lipitor cholesterol drug.

Reuters story Link

Jeff Bailey : 12/16/2005 5:08:58 PM

Current OPEN MM Profiles found at this Link

Today's Activity Closed out the Johnson & Johnson JNJ Dec. $60 Calls (JNJ-LL) at target of $0.50 ($0.25, or 100%).

Jeff Bailey : 12/16/2005 5:02:54 PM

Closing U.S. Market Watch (Q4 Expiration) found at this Link

Jeff Bailey : 12/16/2005 4:52:56 PM

Closing Internals found at this Link

Jeff Bailey : 12/16/2005 4:15:34 PM

Looks like futures traders getting some action late too!

Jeff Bailey : 12/16/2005 4:14:59 PM

Sell Program Premium ... DIA $108.50 , SPY $126.41

Jeff Bailey : 12/16/2005 4:06:49 PM

Buy Program Premium ... DIA $108.75, SPY $126.65

Jeff Bailey : 12/16/2005 5:19:14 PM

Google (GOOG) Options Chain sorted by most active at this Link

I make note of today's high in the Dec. $430 Calls (GOP-LF) as an expample that to make a point of how difficult it can be to get that type of a fill. From 02:15 PM to 02:20 PM this contract jolted from $1.50 to the high of the day, as a buyer (short or agressive long) had the stock jumping from $430.00 to $432.50.

How "short" or "naked" somebody is/was into the 430 strike we don't know, but you'd have to think "very short" as volume for the 430 Calls was 109,295 vs. OI of 31,037.

Jane Fox : 12/16/2005 4:04:09 PM

Linda you will be so missed. I wish you all the best in your other endeavors. (or if you live in Canada endeavours)

Linda Piazza : 12/16/2005 4:01:00 PM

Thanks, Keene, and others for your good wishes. Mark, did you make enough money to buy that cheap crying towel, and can I borrow it?

Keene Little : 12/16/2005 3:59:49 PM

Linda, very simply, you will be missed. Good luck venturing forth in your new endeavors.

Linda Piazza : 12/16/2005 3:58:39 PM

The OEX is slipping lower into the close. The SOX, too, looks as though it might end near the day's low. The TRAN has dropped into negative territory now, dropping back into below the descending trendline off the November high and showing that daily Keltner resistance at 4150.51 held into the daily close. These are not bullish developments, but we'll have to see what next week brings.

Linda Piazza : 12/16/2005 3:54:01 PM

I've been trying to think of something to say that would fully express my gratitude to Jim Brown who first hired me and then to my fellow writers and the subscribers, but I really don't have adequate words. You all mean so much to me. I've learned so much from you about both the technical aspects of trading and the emotional ones. Often readers have challenged me, and I'm humbled by how much some of our readers know and how eager others are to learn. I will miss my moment-by-moment contact with all of you, and it may take me a while to even know what I think about the markets when I'm not writing about them. However, I leave behind an immensely talented group of fellow writers who will serve subscribers well and whom I respect. I'll look forward to having more time to pore over their posts. I will continue to write two articles a week for the newsletter and to drop in from time to time on the Market Monitor, too. Readers, you can still contact me the way you always have. I'll be glad to answer questions and look forward to hearing from you. So many of you have become friends through the three plus years I've been doing this. Thank you for the kind comments that some readers have been sending this week and for those from some of the other writers, too.

Jeff Bailey : 12/16/2005 3:53:17 PM

SPX 1,268.40 -0.19% ... I see session low hits that 1,267 level again today. On Wednesday, we observed big PUT seller of the 1,275 for $8.00 and some change.

Linda Piazza : 12/16/2005 3:48:59 PM

End-of-day decisions: Many of you might have front-month options and have already made decisions as to whether you'll ride those out cash-settled index options into the end of the day or not. However, for those who have January or later options, here's what I see as of 3:35. The OEX for a third day pierced the descending trendline off the November high, but did not maintain values above it, barring some strong move into the close. It also maintained support above the 577-578.40-ish S/R zone, however, as well as above the converging 10 and 21-sma's, at 577.67 and 577.96, also barring some strong move into the close. I thought we'd see either a doji type day or an actual downturn today, and that's what we're getting so far this afternoon. Because of the action the last few days, I'd now reclassify that action off the November high as a broadening formation. That's what I thought it was in the beginning and I think so again. Action within those formations is difficult to project, and I'm finding Monday's direction particularly difficult to project. We've had those three days in a row when the OEX can't maintain values above that descending trendline, so I think that the OEX probably needs to retreat as there is still too much overhead supply in the OEX component stocks. GE's action today kind of reaffirms that belief. However, the part I'm not sure about is how far the retreat would take the OEX. I'm not sure it would drop much lower that those converging 10 and 21-sma's. The drop so far has a sort of bull flaggish look to it.

Balance that against the possibility that the SOX printed an exhaustion gap early in the December. And that the VIX is beginning to show some signs such as bullish divergences and an improving Keltner outlook, and that there was a flight into the big caps this week. And that the Nikkei may have produced a blow-off this week.

So, I think the OEX may need to retreat a bit lower, I'm not sure how much lower, and it's that how-much-lower that will tell us about market strength or weakness. A retreat or sideways trade back to the 10-sma and a bounce from there is not weakness.

Linda Piazza : 12/16/2005 3:26:40 PM

Like GE, the TRAN is pulling back, erasing all the gains made since the open, but not yet going negative.

Linda Piazza : 12/16/2005 3:23:34 PM

OEX beginning to slip below the 15-minute 100/130-ema's. If it continues to fall, remember the historical S/R band in the 577-578.40 region. The 15-minute Keltner chart says that next support is at 576.77, but the OEX would have to plummet through all that potential support to reach that.

Linda Piazza : 12/16/2005 3:21:18 PM

GE has reversed all of today's gains, leaving only a long candle shadow behind. It has not, however, fallen back below that former trendline off the November high. If it closes anywhere near its current $36.03 level, however, this will not be a bullish daily candle.

Jeff Bailey : 12/16/2005 3:22:04 PM

QQQQ $41.58 -0.92% ... session lows. Lots of action here today. Multiple stocks going out and coming in. It's a great day to be a QQQQ trader.

From Jim's Market Wrap Link

Jeff Bailey : 12/16/2005 3:17:07 PM

Goldcorp (GG) $19.98 +0.15% ..... haaaaang'n onto that $20 strike.

Linda Piazza : 12/16/2005 3:16:40 PM

OEX 15-minute Keltner support at 579.14-579.55 on closes. The OEX is trying to steady here. Next resistance at 580.34 on 15-minute closes.

Jonathan Levinson : 12/16/2005 3:14:22 PM

I need to leave in a few minutes for the remainder of the day. Have a good and safe weekend.

Jonathan Levinson : 12/16/2005 3:13:40 PM

QQQQ is bouncing from its channel support violation, but heavy so far. The short cycles are due for an upphase, and a break back above 41.60-.62 with a stop below the session low should be a viable long trade, but until the 30/60 min cycles are oversold, I won't be taking it. Link

Jeff Bailey : 12/16/2005 3:13:19 PM

Feb Nat Gas futures (ng06g) PnF chart with yesterday's (red) and today's (blue) action at this Link

Jeff Bailey : 12/16/2005 3:11:17 PM

03:00 Internals found at this Link

Jane Fox : 12/16/2005 3:11:12 PM

ES is the only market to break previous day lows - so far. Link

Linda Piazza : 12/16/2005 3:10:13 PM

Advdec line approaching next support at about -888, with the advdec line now at -752 but just off a low of -818. There's a lot of potential resistance overhead now, however.

Jane Fox : 12/16/2005 3:08:17 PM

I still don't have my trigger on the IWM puts yets but it is getting close.

Linda Piazza : 12/16/2005 3:07:47 PM

The TRAN is sitting on the descending trendline off its November high, just a point above yesterday's close. Still bounce potential here, but if it closes back inside that descending regression channel off that November high, this will looks like a failure to break to the upside out of that bull flag.

Jane Fox : 12/16/2005 3:07:33 PM

... well not a complete sell signal but it if continues down on Monday it will for sure.

Jane Fox : 12/16/2005 3:06:49 PM

QM is giving a great big sell signal today. Link

Jane Fox : 12/16/2005 3:05:08 PM

Oil Stocks are taking a big hit today.

Jeff Bailey : 12/16/2005 3:03:14 PM

03:00 Market Watch found at this Link

Linda Piazza : 12/16/2005 3:02:55 PM

The SOX is dropping below the confirmation level for that H&S it had been forming, although the bearish right triangle shape into which it appeared to morph might be more applicable now. SOX at 495.74 as I type.

Linda Piazza : 12/16/2005 3:00:33 PM

Even if the OEX didn't also have horizontal support now at the confirmation level of its possible double-top formation, with that horizontal support at about 579.79, it has the possible support of its fifteen-minute 100/130-ema's at 579.85-579.42, respectively. There's bounce potential here. If the OEX falls through that, next support is at 579.19-579.55 on 15-mintue closes. And below that, not a whole lot for a while.

Jonathan Levinson : 12/16/2005 2:59:31 PM

QQQQ tests yesterday's low for a possible bearish descending triangle. If so, a break of 41.60 on a burst of volume would be the pattern breakout: Link

Jane Fox : 12/16/2005 2:57:45 PM

Both AD volume and Ad line are now bearishly below 0.

Linda Piazza : 12/16/2005 2:56:10 PM

The advdec line drops through the support mentioned earlier.

Jane Fox : 12/16/2005 2:56:18 PM

New daily lows across the board.

Jonathan Levinson : 12/16/2005 2:54:26 PM

QQQQ loses 41.70 support, the NQ futures printing a session low at 1711 as the short cycle rolls over from below overbought. Link

Linda Piazza : 12/16/2005 2:51:14 PM

TRAN just a few points above its 4145.77 close now, at 4149.75 as I type.

Linda Piazza : 12/16/2005 2:49:34 PM

The OEX tests an ascending trendline that's been in place since Wednesday morning, now crossing at about 580.28, with the OEX at 580.45.

Jeff Bailey : 12/16/2005 2:48:57 PM

Apache Corp. (APA) $69.88 ... PnF chart from dorsey/wright at this Link

Jane Fox : 12/16/2005 2:38:47 PM

Larry McMillan's weekly commentary. The market is performing fairly well. Last week, we said "the bull is getting tired," and we laid out a plan for buying puts if $SPX should falter and break support. Well, the market got some rest and is acting much more bullish again. The 1250 level held on $SPX and now it has rallied to new 4-year closing highs. Unfortunately, none of the other major averages has done the same, although they are close to doing so ($DJX, $OEX, and QQQQ). $OEX and QQQQ only need a minor boost to register new highs.

The equity-only put-call ratios were toying with sell signals, but - after bouncing around for over a week - finally plunged to new lows and that's bullish. As long as the trend is downward in these ratios, then that's a bullish sign for the overall market. The weighted ratio is getting quite low on its chart, and that perhaps qualifies as an "overbought" condition, but it is still trending downward, and that's the important thing. One small problem: in the last couple of days, the ratios have edged upward. This small upward curl does not constitute a sell signal, but it is something we will definitely be watching in the next few days.

Market breadth was been positive, although not stupendous, this week. It been positive enough, though, to keep breadth as a bullish indicator. Last week, we saw some minor sell signals from breadth, but in general we would not change our major intermediate-term market opinion based only on breadth - it's just not that good of a leading indicator (it's more of a confirming one).

Finally, volatility indices ($VIX and $VXO) reversed what appeared to be a budding uptrend last week, and plunged to new relative lows, with $VIX closing below 11 again today. Low levels of $VIX are bullish as long as $VIX stays low. They only become worrisome if $VIX rises in an uptrend. So we'd grade $VIX as essentially bullish at tis time.

In summary, the fact that $SPX did not break down was very positive, and its subsequent rally has brought the other indicators into a bullish agreement. At the present time, we look for higher prices, especially since there is a year-end seasonality that is bullish.

Jonathan Levinson : 12/16/2005 2:37:02 PM

QQQQ couldn't get back to 41.80, failing below the broken support line at 41.78. No guidance from the intraday oscillators beyond the shortest timeframe "wavelet" (middle oscillator pane), which is in bottom territory and due for a turn up from 41.70 support. Link

Linda Piazza : 12/16/2005 2:35:50 PM

Not so you would notice it on the equities, but the advdec line has been mostly sinking all day. It's now testing support from the current -167 level down to about -370. If it should lose that, the decline might sharpen, but bounce potential remains as of this moment. It doesn't look like it's bouncing, but there's just enough support there that an attempt could be made.

Linda Piazza : 12/16/2005 2:32:16 PM

While I was gone, the TRAN dropped all the way to retest the descending trendline off its November high, and it has bounced off that trendline. That's a bullish event, but the TRAN has now to confirm that by a new high, and there's some slight Keltner evidence that the TRAN is a bit weaker than it was earlier. I'm watching for first possible resistance in the 4160 level if the TRAN should rise again, and for first support at 4149.26 and then 4142.15 on a Keltner basis, but with that descending trendline now at about 4145.75 also likely to serve as support.

Jeff Bailey : 12/16/2005 2:32:48 PM

Somebody just coughed up a fur ball in GOOG on that spike to $432.50.

Linda Piazza : 12/16/2005 2:29:34 PM

What do you know. The OEX confirmed that little H&S on the one-minute chart and dropped toward the downside target, although it isn't there yet.

Jonathan Levinson : 12/16/2005 2:28:13 PM

Session low for crude oil approaching the close, down to a 2.025 loss at 59.075.

Jeff Bailey : 12/16/2005 2:22:50 PM

WILD action in the GOOG chain today ... Link ... Put sellers in the 430 really showed up when GOOG took out WEEKLY R2.

Linda Piazza : 12/16/2005 2:21:34 PM

There's a little H&S on the OEX's 1-minute chart. It has a head at the 581.39 high hit a few minutes before 2:00, a neckline now at about 581.05 but ascending, and a right-shoulder level at about 581.30 but also ascending. OEX at 581.19 as I type, and since this is on a one-minute chart and the shoulder has already begun forming, the OEX needs to confirm it within the next 5-10 minutes or I'd say it's probably been invalidated because the confirmation took too long.

Jeff Bailey : 12/16/2005 2:16:02 PM

02:00 Internals found at this Link

Jeff Bailey : 12/16/2005 2:05:16 PM

02:00 Market Watch found at this Link

Linda Piazza : 12/16/2005 2:01:06 PM

The SOX never did confirm that H&S on its 15-minute chart and now the formation has morphed into a triangle that's been forming since Tuesday. That triangle is a bearish right triangle, but tell that to the SOX, now testing the first trendline (breached temporarily this morning at the open). SOX at 498.35 as I type, with 15-minute Keltner resistance at 498.84.

Linda Piazza : 12/16/2005 1:59:13 PM

I'm back, and I see that doji on the OEX's daily chart. We've still got a couple of hours, however, and we don't know what will happen into the close, but the OEX so far still has trouble staying above the trendline off the November high. As I type, the OEX is pushing up from Keltner S/R at 581.09, with that line having pressured the OEX lower on 15-minute closes since the 11:30 candle. Until this push that started as I sat down to type, the OEX would have looked vulnerable to a drop to Keltner support at 579.15-579.47. Nothing much has changed then, with potential setups going nowhere. Typical opex stuff.

The TRAN has pulled back off its high of the day, too, but remains positive.

Jeff Bailey : 12/16/2005 1:55:12 PM

I missed a "honey" in the GOOG Dec. $430 Calls (GOPLF) for $0.30 at 12:30. Buggers trading $1.20 now.

Was looking at this call for a spec long with good call open interest support, then being added to NASDAQ-100.

The Timer Warner news hits while I was running some calculations.

Jonathan Levinson : 12/16/2005 1:51:07 PM

Volume breadth has weakened to +1.1:1 on the NYSE, -1.5:1 on the Nasdaq.

Jeff Bailey : 12/16/2005 1:42:08 PM

Question ... Why was the SPY open 5 points below yesterday's close yet it shows to be up 5 points?

Reply: Good question. Today is quarterly expiration and marks the ex-dividend date (trades without dividend), which according to the AMEX is $0.67167 per share.

So, the ex-dividend adjustment is made today. The record date is 12/20/05, the payable date is 01/31/06.

For 2005, the SPY will have paid a $2.148/share dividend. (Q1= $0.46709, Q2= $0.48762, Q3= $0.52169, Q4= $0.67167)

Jonathan Levinson : 12/16/2005 1:27:55 PM

The short cycle indicators are getting down there are QQQQ hangs near yesterday's lows. Volume has really dried up. These short cycle lows should see a move back up, but then the picture is complicated because the 30/60 min cycles are just starting new downphases. My guess would be for a weak bounce to a lower high below 41.80 to confirm more weakness, but the cycle picture is taking a back seat to the opex action anyway. Link

Jeff Bailey : 12/16/2005 1:14:12 PM

01:00 Internals found at this Link

Jonathan Levinson : 12/16/2005 1:05:51 PM

Not a lot of fireworks: Link

Jeff Bailey : 12/16/2005 1:05:38 PM

01:00 Market Watch found at this Link

Jonathan Levinson : 12/16/2005 12:48:43 PM

Volume breadth +1.25:1 on the NYSE, -1.55:1 on the Nasdaq.

Jonathan Levinson : 12/16/2005 12:42:21 PM

A look at the Dec. QQQQ option chain shows an expansion of open interest to 317K Dec 42 calls, which confirms the analysis of a low QQV/low p/c ratio resulting from aggressive selling of calls. On the January chain, the p/c ratio suggests support at 41 and resistance at 42 as well, but there are still many sessions to go before January's opex.

Jonathan Levinson : 12/16/2005 12:36:21 PM

QQQQ had traded more volume than this in the first hour yesterday. Price is holding heavily just above rising support connecting the recent lows. Link Today, the total CBOE put to call ratio is rising off its recent spate of .50ish prints, suggesting a slight pickup in put volume, while the QQV remains negative. We've been seeing a drop in the p/c ratio accompanied by a drop in NDX volatility as measured by the QQV, which suggests that calls are being sold more aggressively than puts. QQQQ 42 continues to hold as resistance, but the more difficult question will be what happens after the post-opex rebalancing next week by late Monday/early Tuesday?

Jeff Bailey : 12/16/2005 12:30:00 PM

I'm sitting here looking at the Google options ... a lot of up tick vol in the 420 and 430 to this point 2:1. The 420 puts had 15,696 volume with oi 22,119, but dn/up 265:1,094. Suggests a 425 pin.

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

Volume breadth is +1.4:1 on the NYSE, -1.4:1 on the Nasdaq here.

Jeff Bailey : 12/16/2005 12:11:55 PM

12:00 Internals found at this Link

Jonathan Levinson : 12/16/2005 12:02:31 PM

Back. QQQQ is taking a bounce off its third test of a rising trendline from yesterday's low, retesting as I type: Link

Jeff Bailey : 12/16/2005 12:02:30 PM

12:00 Market Watch found at this Link

Jonathan Levinson : 12/16/2005 11:49:33 AM

Stepping away for a few minutes.

Jonathan Levinson : 12/16/2005 11:30:14 AM

QQQQ edged back from its spike and now drifts sideways above the pivot and 72 SMA. The broader 30 min channel tilts lower but the break above the 72 SMA will reverse if it holds for another 10-15 minutes. The short cycle upphase is getting good traction, but as we've seen all week, cycles aren't the driving force here. QQQQ 41.96-42 is the key resistance to watch. Link

Jeff Bailey : 12/16/2005 11:29:51 AM

Contl. Airlines (CAL) $20.31 +4.20% Link ...

Linda Piazza : 12/16/2005 11:28:17 AM

I'm leaving for a couple of hours now. Over the last few minutes, the SOX popped up toward the top of the right-shoulder level of its H&S and toward the descending trendline off Tuesday's high, but didn't move up through either, so hasn't yet invalidated its H&S formation. The OEX dropped to first five-minute support, resting on it, but not really dropping through it, so we have to consider that it holds so far. So does the resistance near 582.70, with the 15-minute Keltner resistance at 582.73 on 15-minute closes. If I look at these charts one way, I see the OEX in a potential double-top formation, as compared to the 14-15th top, and if I look at it another way, I see something more bullish. It's still possible that we'll get another doji day or even a decline, although the TRAN has to turn around, I think, if that's going to happen.

Jeff Bailey : 12/16/2005 11:28:03 AM

AMR Corp. (AMR) $22.03 +2.75% Link ... simply incredible.

Linda Piazza : 12/16/2005 11:22:47 AM

TRAN dropping toward support, now at 4158.56-4163.63 on five-minute closes.

Jonathan Levinson : 12/16/2005 11:19:02 AM

Volume breadth has firmed to +1.8:1 on the NYSE, +1.1:1 on the Nasdaq.

Jeff Bailey : 12/16/2005 11:18:10 AM

Valero Energy (VLO) $52.80 -1.19% Link ... 2:1 split

Jane Fox : 12/16/2005 11:15:31 AM

TICKs +800.

Linda Piazza : 12/16/2005 11:14:37 AM

The TRAN has invalidated that little potential H&S. The TRAN hasn't given up yet, and that means that bulls are still active.

Jonathan Levinson : 12/16/2005 11:14:24 AM

QQQQ vaults back to the pivot and clears declining 72 SMA resistance at 41.84: Link

Jeff Bailey : 12/16/2005 11:14:09 AM

11:00 Internals found at this Link

Linda Piazza : 12/16/2005 11:09:37 AM

If you've never traded an opex Friday, then perhaps you haven't been treated to a particular nightmare for technical analysts--a move that sets up all day on Friday but never quite follows through, only to perform beautifully the next week, once all those front-month options have expired worthless. This has been an often-seen tendency although opex Fridays used to be a lot more fun back several years ago. Just be aware of the possibility when you're making decisions about trading today. My scenario for the day today for the OEX was either another candle indicating indecision, such as a doji, or an actual pullback, but the TRAN may spoil both scenarios. A doji would include both a climb and a dip, if a doji should be produced, so bulls need to be as wary as bears today.

Linda Piazza : 12/16/2005 11:04:19 AM

The OEX keeps testing the previous high of the day, pulling back into higher lows after each test. That's building a potential bullish right triangle with a flat top and a rising lower trendline. However, there's 15-minute Keltner resistance from 582.44-582.62, and that seems to be capping advances for now.

Jeff Bailey : 12/16/2005 11:04:12 AM

11:00 Market Watch found at this Link

Jane Fox : 12/16/2005 11:02:49 AM

These two are certainly out of sync today. Link

Linda Piazza : 12/16/2005 11:02:08 AM

The TRAN did drop to the point I thought it might and now does rise, but it built a base a bit longer than I thought it would and so the potential right shoulder will soon look a bit long-in-the-tooth, timewise, if the TRAN doesn't soon round down. The TRAN is at 4162.74 as I type, nearing the 4165-ish right shoulder level.

Jeff Bailey : 12/16/2005 10:59:00 AM

WFC and BAC Option Montages at this Link ... I can't say as if I see the "Option Expiration Game" showing up in either of these two banks, but outperformers in the OEX. Neither was really pinned lower against CALL/PUT open interest support.

Jonathan Levinson : 12/16/2005 10:54:37 AM

The other alternative is that the indices just flatline. QQQQ's wavelet upphase is getting no traction, and while the short cycle indicators appear to be gathering for an upturn, there's not enough range to generate a signal.

Linda Piazza : 12/16/2005 10:46:24 AM

The SOX still hasn't confirmed or invalidated that H&S on its 15-minute chart. It came close to confirming it earlier, on the 9:40 five-minute candle, but it sprang right back up gain. TRAN now at 496.66, a little more than a point above the 496.50 confirmation level.

Linda Piazza : 12/16/2005 10:45:01 AM

For the first time today, the TRAN is breaking below the 15-minute Keltner level that it spent all morning so far testing. Remember to watch now for a potential bounce, from anywhere in the current 4157.71 level down to about 4154 and then watch the 4165 level to see if it rounds down again. The TRAN sometimes does away with the whole right-shoulder thing if it really gets going, but this is one scenario that might play out. If it does, watching to see if the H&S (five-minute chart) is confirmed or invalidated will tell you something important about the short-term strength on the TRAN.

Jonathan Levinson : 12/16/2005 10:40:54 AM

Volume breadth is down to -1.47:1 on the NYSE, -1.95:1 on the Nasdaq.

Linda Piazza : 12/16/2005 10:39:34 AM

Watch for the possibility that the TRAN might drop toward 4154-4158 and then rise from there again, perhaps to about 4165. If that happens, watch for a possible rollover down through the 4155 zone to confirm a H&S on the five-minute chart. The TRAN did start dropping as I typed.

Linda Piazza : 12/16/2005 10:37:45 AM

The TRAN's pullback has so far been bull flaggish. Needs to steepen that if bears are to have any hope.

Jeff Bailey : 12/16/2005 10:39:27 AM

S&P 100 (OEX.X) Top 25 an hour into the "Option Expiration Game" at this Link

And how things looked as the games began at this Link

Linda Piazza : 12/16/2005 10:36:38 AM

SOX at 497.40. Confirmation of its H&S appears to be at 496.50.

Linda Piazza : 12/16/2005 10:36:01 AM

Sorry--Just figured out that I was looking at a five-minute rather than 15-minute chart, so all these figures are on five-minute closes: The OEX tests Keltner support at 581.89 on 5-minute closes, with this level also congruent with the (former) descending trendline off the November high. The OEX has to break through this on a 5-minute close before it even begins to change its tenor. The OEX bounced tepidly from that as I typed, and is at 582.02.

Jonathan Levinson : 12/16/2005 10:32:37 AM

Starting to look like a short cycle low forming for QQQQ, as a wavelet downphase gets no traction. Longs can look for entry at S1, whcih lines up with the 30 min channel bottom at 41.63, but with a tight stop below yesterday's low, around 41.55. Link

Jeff Bailey : 12/16/2005 10:28:38 AM

JNJ $61.06 +1.49% ... C'mon Drake ... we're going to PetSmart, give you the real treatment today.

Linda Piazza : 12/16/2005 10:26:33 AM

The expected advdec line bounce began just where expected, but it's not much of a bounce yet. Still, all the advdec line has to do now is cling to a gently climbing support level, from 250-420 now, and it will support higher prices. As has been true since money started rotating into the big caps, the OEX climbed far in excess of the small bump higherin the advdec line, all the way to test the day's previous high. It's turning down slightly from that, but the OEX needs a 15-minute close below the Keltner support at 581.86 before it even slightly begins to change its tenor.

Jonathan Levinson : 12/16/2005 10:26:09 AM

Crude oil is up to a .45 loss at 60.65, off a low of 60.475 (basis February "G" contract). Ten year notes are pulling back off their highs, TNX up to a 3.1 bp loss at 4.437%.

Jeff Bailey : 12/16/2005 10:25:55 AM

JNJ ... with 5-mrt (BLUE) and stacked 5-MRT (PINK). $61.50? Link

Jane Fox : 12/16/2005 10:25:02 AM

Jeff I'm thinking spending the day bathing the dog will probably be more productive than trying to trade the markets today.

Jeff Bailey : 12/16/2005 10:20:46 AM

JNJ $60.85 +1.14% ... gets the trade at BLUE #5. I'm sticking out the remaining calls at $1.00.

It could be a "spa day" for Drake the dog. He needs a bath!

Jeff Bailey : 12/16/2005 10:19:32 AM

10:00 Internals found at this Link

Linda Piazza : 12/16/2005 10:16:25 AM

GE reached a new high (above yesterday's) today, despite yesterday's high volume doji--a sign that there was some selling into the bounces.

Linda Piazza : 12/16/2005 10:14:43 AM

The advdec line has dropped almost to that rising next support, with that support from 220-335, and with the advdec line having hit a recent low of 427. (That's "almost" touching with the advdec line's big numbers.) Bulls would like to see a bounce attempt begin soon. I would expect some type of bounce, with the quality of that bounce perhaps telling something about where markets might be going next.

Jonathan Levinson : 12/16/2005 10:13:10 AM

No new temporary or permanent market ops from the Fed's open market desk, leaving us with the net 9.25B expiry for the day.

Jonathan Levinson : 12/16/2005 10:10:00 AM

The weakness here below yesterday's range has stopped the upturn in the 30/60 min cycles for QQQQ, but it's going to take a break of the 41.60-.64 level at yesterday's low to provide a reliable 30/60 min cycle downside reversal. So far all we've seen for a week have been choppy whipsaws on these longer intraday cycles. The shorter timeframes have been more reliable, and at the moment, those cycles point to a corrective bounce within a new short cycle downphase. Link

Jane Fox : 12/16/2005 10:09:53 AM

I am waiting for IWM (the russell 2000 ETF) to break yesterday's low and I will be buying IWM puts. Linda suggests using options with a delta of 70 or more so I have the May 74's staged for this trade. Link

Jane Fox : 12/16/2005 10:06:05 AM

Just like that the AD line and volume make new daily lows but they are still well above 0 so the bulls still have the reins.

Linda Piazza : 12/16/2005 10:04:59 AM

Advdec line dropping more steeply now. Next support has risen to about 300, and bulls want to see that hold. I would expect some kind of bounce from there, if not sooner. Advdec line at 551, QCharts value, as I type.

Jeff Bailey : 12/16/2005 10:04:09 AM

10:00 Market Watch found at this Link

Linda Piazza : 12/16/2005 10:03:55 AM

Currently, the OEX looks vulnerable to a pullback to 581.23, but the TRAN needs to stop driving sentiment and some stocks higher, I think, before we can be too certain of that.

Jane Fox : 12/16/2005 10:03:26 AM

The VIX continues to make new daily lows and I am now going to read this as bullish. The ADs are not really doing to much but with an AD line at +700 and rising you certainly can't be bearish.

Linda Piazza : 12/16/2005 10:02:53 AM

The TRAN rose after my last post, not creating a doji at resistance, but rather a small-bodied candle that rose from that former resistance. The TRAN isn't giving up yet. Now testing 60-minute resistance at 4159.41 on 60-minute closes, with the TRAN at 4165.10 as I type.

Jonathan Levinson : 12/16/2005 10:02:13 AM

Volume breadth is +1.8:1 on the NYSE, -1.3:1 on the Nasdaq here.

Linda Piazza : 12/16/2005 9:59:47 AM

The SOX has not yet either confirmed or invalidated that H&S on its 15-minute chart, forming since last Friday. It still hasn't extended too far to the side yet, as the left shoulder was a wide one that took two days to form, but it probably needs to confirm it soon if it's going to, within the next 45 minute to hour. SOX at 499.01 as I type.

Jeff Bailey : 12/16/2005 9:59:18 AM

JNJ $60.57 ... for those that want to roll the dice (if they are still holding)... WEEKLY Pivot is just ahead at $60.62. I also slapped a 5-MRT on JNJ with BLUE #1 at $60.35, #2 at $60.50, #3 at $60.60, #4 at $60.68, #5 at $60.84 and #6 at $60.99. WEEKLY R1 is way up at $61.49.

Linda Piazza : 12/16/2005 9:58:10 AM

TRAN so far forming a doji for this 15-minute period, at the top of a steep climb, at Keltner resistance, but there's time left during the 15-minute period. Support is at 4144 on 15-minute closes, with the descending trendline off the November high at about 4148. While it's perfectly in accordance with bullish action for the TRAN to dip down and retest that former resistance to see if it holds as support, market bulls don't want to see it drop below that without getting quickly reversed higher. TRAN at 4158.18 as I type.

Jonathan Levinson : 12/16/2005 9:57:36 AM

The Fed announces a 6-day repo of 6B, draining 9.25B but leaving the door open for another half hour or so for a shorter term repo.

Jonathan Levinson : 12/16/2005 9:56:55 AM

QQQQ bounces from its 30/60 min channel violation, but finds resistance below yesterday's afternoon range low. Bulls need to see QQQQ above the 72 SMA, which lines up here with the pivot at 41.87-.88: Link

Jane Fox : 12/16/2005 9:54:53 AM

VIX just made a new daily low suggesting an ES new daily high but after looking at the chart of the VIX yesterday I'm not sure I would read that as bullish. Internals are not giving any clear signs today.

Linda Piazza : 12/16/2005 9:54:07 AM

Thanks, Mark and Jane. You know I will miss all of you guys, too, although I'll still be out there reading everything you're writing when I'm not whisked away by something going on with Emmi. By the way, I'm going to be whisked away for 2-3 hours midday, too, but will be back to finish the day.

Jane Fox : 12/16/2005 9:51:31 AM

This is bullish but feels like the bulls are not really sure what to do. Link

Jeff Bailey : 12/16/2005 9:50:35 AM

Swing trade filled alert I will filled on four of the JNJ-LL at $0.50 in my personal account. JNJ $60.54.

Linda Piazza : 12/16/2005 9:49:10 AM

Bears want to see the advdec line below 80, but I would imagine that there will be a bounce from that level, if not from before. Advdec line at 856 as I type.

Linda Piazza : 12/16/2005 9:48:03 AM

OEX resistance holds again at the 15-minute Keltner resistance and at the descending trendline off the November high. The OEX still tries, though.

Jonathan Levinson : 12/16/2005 9:47:27 AM

The Fed has 15.25B in various repos expiring this morning. Awaiting the 10AM announcement.

Linda Piazza : 12/16/2005 9:46:05 AM

The TRAN closed at the 15-minute Keltner resistance, but now climbs again, trying to maintain a breakout status. It hasn't yet reached a new high, but this TRAN action is dangerous to any bearish scenarios.

Linda Piazza : 12/16/2005 9:44:45 AM

Advdec line pulling back sharply, below 30-minute resistance at 1230 or so, with the advdec line now at 993. As with everything else, the advdec line is testing that resistance and so far--with a lot of time still left in this 30-minute period--the resistance holds and the candle looks ugly. However, we then need to see further confirmation, and not a next 30-minute period candle that climbs. A doji or an actual drop through the next 30-minute period would be needed or else what we're seeing is just a pullback before another higher test. However, so far, this fits just right with my doji or actual pullback scenario for the day, based on what the OEX usually does after producing a doji at the top of a climb.

Jeff Bailey : 12/16/2005 9:44:41 AM

Swing trade bullish call place order alert ... Let's place an order to sell long the JNJ Dec. $60 Calls (JNJ-LL) at the offer of $0.50.

JNJ $60.49.

Jonathan Levinson : 12/16/2005 9:43:37 AM

Tale of 2 markets: Volume breadth +2:1 on the NYSE, -1.9:1 on the Nasdaq.

Jeff Bailey : 12/16/2005 9:42:39 AM

Johnson & Johnson (JNJ) $60.36 +0.33% ... JNJ-LL are $0.35 x $0.45.

Jonathan Levinson : 12/16/2005 9:42:04 AM

And breaking it.

Jonathan Levinson : 12/16/2005 9:41:41 AM

QQQQ loses 72 SMA support and breaks below the pivot, but so far it's just a wavelet pullback- more of the same action we saw all afternoon yesterday- but testing the bottom of yesterday afternoon's range here. Link

Linda Piazza : 12/16/2005 9:41:40 AM

The SOX has that possible H&S on its 15-minute chart, remember. The neckline is at about 496.50, and it's soon going to be time for the SOX to either confirm that formation or else invalidate it, probably within the next hour or so. The SOX is at 497.86 as I type.

Linda Piazza : 12/16/2005 9:40:25 AM

SOX tumbling.

Linda Piazza : 12/16/2005 9:39:37 AM

Hmm. The OEX pierced the descending trendline off the November high, a line it was piercing earlier in the week, too, but has fallen back below it. So far, fits with the doji or actual pullback scenario, but this is so early in the day. The OEX hit 15-minute Keltner resistance at 582.40 and drew back.

Jane Fox : 12/16/2005 9:38:11 AM

This is a sad day in the monitor. This is Linda's last day.

Linda Piazza : 12/16/2005 9:38:00 AM

The TRAN is at 15-minute resistance at 4159.64 on 15-minute closes, and the TRAN sometimes does adhere rather well to these 15-minute Keltner S/R lines. Not always, of course, and sometimes it tends to overrun them a bit. Of course, it can keep climbing it, nudging it higher, without even needing to break above it. TRAN at 4163.22 as I type.

Jonathan Levinson : 12/16/2005 9:36:18 AM

Volume breadth declines to +3.4:1 on the NYSE, 1:1 on the Nasdaq.

Linda Piazza : 12/16/2005 9:34:35 AM

Advdec line still headed up. It's in the ether zone on the five-minute chart, already way overdone all the way up through the 30-minute.

Jane Fox : 12/16/2005 9:33:08 AM

The bulls have the reins this morning. AD line is +763 and AD volume well above 0.

Linda Piazza : 12/16/2005 9:32:42 AM

The TRAN is currently above the descending trendline off the November high. It of course has not confirmed this strength by even a 15-minute close at this level, much less a move above that November high, but this is nevertheless a sign of strength if it can hold here and a sign of a stop-running move if it can't.

Jonathan Levinson : 12/16/2005 9:31:44 AM

Volume breadth +7:1 on the NYSE, +1.8:1 on the Nasdaq.

Jonathan Levinson : 12/16/2005 9:31:27 AM

QQQQ's 30/60 min channel resistance is 42.02-.04, 72 SMA support at 41.88, 30/60 min channel support at 41.72: Link

Linda Piazza : 12/16/2005 9:31:08 AM

Advdec opens above the midline and climbs, but not too far yet. The OEX climbs right past first Keltner resistance, heading up toward 582.32 on 15-minute closes, as I type.

Jeff Bailey : 12/16/2005 9:29:10 AM

Program Trading Levels ... HL Camp & Company has their computers set for program buying at $+9.78 and set for program selling at $+7.28.

Linda Piazza : 12/16/2005 9:29:04 AM

Sorry to be so late updating, especially on my last day on the Market Monitor, at least for a few months, but I had one of the computer glitches that appear to be bugging some of us lately. Here's the update for this morning, with the news the same as that for the end-of-day decisions post yesterday. For the last two days, the OEX has attempted a breakout above the descending trendline off the 11/23 high, and has fallen back both days. Both days, however, it has remained above the 577-578.40-ish S/R zone and the converging 10-sma and 21-sma's at 577.56 and 577.30, so that part remains bullish. On a Keltner basis, the OEX ended the day above Keltner support at 580.63 on 15-minute closes, which suggests that it could climb again to test 581.36, the appropriate level for a roughly formed H&S on top of the climb off the week's low. This forms at the top of the descending regression channel off the 11/23, so if all were right in the technical analysis world, this would be suggesting a tumble down through that regression channel again. All is not right with the technical analysis world, however, the TRAN's close at a day's high, right under the descending trendline off its November high warns that the TRAN may be about to break higher again, perhaps bringing other indices higher with it, or roll down through its own channel again. Futures suggest--promise--a higher open, too, but remain watchful for that possible doji effect, a higher climb a dip and a close somewhere near the open.

Jane Fox : 12/16/2005 9:11:52 AM

For those of you who have followed my posts about ES and the VIX you know these two move almost tick for tick in opposite directions. Take a look at yesterday. Geesh! Link

Jane Fox : 12/16/2005 9:07:55 AM

ES and YM are now probing overnight highs. ER has broken to a new overnight high.

Jonathan Levinson : 12/16/2005 8:59:12 AM

The overnight and morning strength has resolved QQQQ's 30/60 min cycle funk to the upside, but because these cycles had flatlined at midrange, they're already approaching their upper ranges. Not yet overbought, but with far less room to run than had these cycles bottomed in oversold territory first. The short cycles are rising as well. On the futures, NQ has 30 min channel resistance at 1734, YM at 10985-90, and ES at 1282.5. I won't have the levels for QQQQ until they update at 9:30.

Jane Fox : 12/16/2005 8:55:26 AM

Dateline WSJ Oracle Corp. said profit fell 2.1% in its fiscal second quarter despite a 19% jump in revenue, largely reflecting continuing costs associated with its acquisition of PeopleSoft Inc. Some analysts also expressed concern about sluggishness in the company's core database business.

The Redwood City, Calif., software maker posted net income for the quarter ended Nov. 30 of $798 million, or 15 cents a share, down from $815 million, or 16 cents a share, in the year-earlier period.

Jane Fox : 12/16/2005 8:51:00 AM

Dateline WSJ An investment group of Cerberus Capital, Kimco Realty Corp., and grocery chain Supervalu Inc. is poised to win the auction for Albertson's Inc. for about $9.6 billion, or $26 a share, say people familiar with the matter.

An announcement of the deal could come some time after Albertson's board meets this weekend, say people familiar with the matter. The Boise, Idaho, company is still hashing out details with drugstore retailer CVS Corp., which is in the lead to purchase the company's well-regarded drug chain for up to $4 billion of the overall purchase price.

It is still possible that a rival team of investors could swoop in with a higher offer, say people familiar with the matter. And last-minute negotiations could derail a final contract. But for now, groups of competing investors have resigned themselves to Cerberus striking what will be the second-largest leveraged buyout in history -- with an enterprise value of about $16 billion, when adding the company's $6.4 billion in net debt. The largest was the $29 billion purchase of RJR Nabisco Inc. by Kohlberg Kravis Roberts & Co. in 1988

Jonathan Levinson : 12/16/2005 8:31:40 AM

Equities push higher on the news, ten year notes strengthening as well, TNX down 3.1 bps here at 4.437% and IRX -1 bp at 3.83%.

Jonathan Levinson : 12/16/2005 8:30:44 AM

Headlines:

U.S. Q3 CURRENT ACCOUNT DEFICIT NARROWS 1% TO $195.8 BLN

U.S. Q3 CURRENT ACCOUNT DEFICIT BELOW $203 BLN CONSENSUS

Jonathan Levinson : 12/16/2005 8:28:04 AM

Serious snow storm here in the northeast. I regretted not having brought snowshoes this AM for my walk to the office, as the snow was more than 1 foot deep for long stretches. The city's getting moving again, but traffic is very light. I'd be surprised if market volume isn't lighter today too.

Jonathan Levinson : 12/16/2005 7:50:10 AM

Equities are up, ES trading 1283.5, NQ 1723.5, YM 10970 and QQQQ +.01 at 41.98. Gold is up 1.20 at 507.70, silver is up .067 at 8.704, ten year notes are up 5/64 at 108 31/32, crude oil is down .50 at 59.50 and natgas is down .465 at 13.315.

We await the 8:30 release of the Q3 current account, est. -205B.

Linda Piazza : 12/16/2005 7:07:28 AM

Good morning. The Nikkei fell again last night, and other Asian markets were mixed. European markets climb, however. As of 7:00 EST, gold was higher by $1.30 to $507.90, and crude, down by $0.51 to $59.48. More details about Asian and European markets follow in succeeding paragraphs.

Last night, the Nikkei dropped in early trading, with exporters continuing their decline after the currency moves this week. NTT DoCoMo gained, however, after yesterday's announcement that it would acquire a 10% stake in South Korea's KTF Co. Ltd. Commodity-related issues also dropped. Banks rose, however, bringing the Nikkei into positive territory by the close of the morning session, but it wasn't to stay there. The Nikkei closed lower by 81.37 points or 0.53%, at 15,173.07.

The Bank of Japan's central bank was to keep its monetary policy unchanged and retain its liquidity target. Later, the Bank of Japan's December report was also to keep its outlook mostly unchanged, but with the central bank saying that continuing and gradual improvements in supply-demand would result in a slightly positive CPI, which translates in to the approach of the ending of the liquidity target to avid central bank watchers. Another change was that the effects of the increase in commodity prices and the depreciation of the yen should prompt further increases in domestic corporate goods prices. Of course, the yen has strengthened against the dollar this week, and the speed with which that's happened is disturbing to Japan.

Other Asian markets were mixed. The Taiwan Weighted gained 1.47%, but South Korea's Kospi declined 1.24%. Singapore's Straits Times was nearly flat, down 0.01%, and Hong Kong's Hang Seng dropped 0.19%. China's Shanghai Composite gained 0.35%. A report from Shanghai Security News stated that China prepares to widen the trading band for the yuan, with China recently having denied similar speculations from other sources.

European markets turn higher this morning, buoyed by an important economic release. Today's big release was Germany's IFO survey, coming in much stronger than expected, at 99.6 and up from November's 97.8. The current view and expectations components increased from the original estimates, although the headline number was below October's. The IFO Institute said that an upturn in the business climate began in the spring, and that it saw improvements in the manufacturing, construction, wholesaling and retailing sectors. The upbeat view suggested by the IFO Institute was countered by the OECD's deputy secretary general, who said that although Germany's exports had improved, the domestic economy had not and that he didn't believe that Germany's outlook had improved. Many focused on the IFO report, however, and Germany's Commerzbank and Siemens were leaders to the upside in Europe.

In other economic news, the Eurozone's final November HICP, an inflation measure, saw the core number that the ECB watches increasing, with that result likely to catch the attention of the most hawkish among the ECB members. In another release, the ECRI EU12 inflation gauge increased to 104.3 from the previous 103.8. Also among today's developments, newspaper and television reporters claim that the Bank of Italy's Governor Fazio is being investigated for possible insider trading related to Banca Popolare Italiana's failed bid for Banca Antoveneta.

Company-specific news included a Morgan Stanley advisory to buy shares of France's Suez SA, a water company, helping to send that company's stock higher. A newspaper speculated that Deutsche Boerse AG may want to merge with Euronext SA, a Paris exchange, and Euronext's stock rose. Steelmaker Arcelor SA eased amid speculation that it may make a new offer for Canada's Dofasco. Nestle gained after announcing a joint venture with France's Groupe Lactalis.

As of 6:57 EST, the FTSE 100 was higher by 49.10 points or 0.89%, at 5,544.40. The CAC 40 was higher by 30.38 points or 0.65%, at 4,703.52. The DAX was higher by 43.50 points or 0.82%, at 5,339.32.

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