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Jeff Bailey : 2/1/2006 3:04:13 AM

OK Don ... Here's my ISRG work. The $130 marks the trade that would currently be a PnF "sell signal" to negate the current bullish vertical count of $162. My bar chart Link

Bull case: Mutual funds that were buying from $40 to current KNEW this one had $162 in it. Ah there's always a bull market somewhere! Now here we are. NDX adds ISRG as a component, and the BLOW OUT earnings that mutual funds KNEW were coming from $40 are just around the corner. Yes, EVERYBODY will want in, especially the shorts from $100, $123 and now $137. Love to short them 52-week and all-time highs! The "exhaustion gap" comes on earnings, maybe throw in a 2:1 split announcement, get that stock to $162.

Bear case: Oh yes. Another "last year's winner" gets added to the NDX as they dump a dog and then the winner gets crushed as "they can't do it again." Test: Stock can't get a close above $137.44 into Thursday close as the smart money has reached their $137 retracement objective, and the earnings while good, not good enough. Thursday we look at the ISRG option montage and note some suspicious up/dntick volume in an OUT THE MONEY PUT.

Dorsey/Wright lists ISRG as belonging to the "healthcare" sector bullish % (BPHEAL). Current status for this sector is "bear correction" at 54%. It would currently take a 58% reading for this sector to achieve "bull confirmed" status. A reversal lower reading of 48% would have the sector back in "bear confirmed" status.

Jeff Bailey : 2/1/2006 2:22:35 AM

Question: ... Jeff: Take a look at ISRG. Look at the chart last two years. It's a med device firm, I know docs who are really into this stuff. I just had a hernia op where their devices were used. All that part is good. But the p/e is high. How does a trader know if this paradigmn is coming to an end or if they can do it again, earning are Thursday (after the close), and play the strangle or sell a naked put (you can make a grand on the 105's)? The premiums are high so you have to risk $15-20K on a buy, or a prayer book on a sell. Would a pro walk away from this one?


Reply: Don: I'll try and work on this one tomorrow. Hey, PnF bullish vertical count is to $162, so there is some POTENTIAL UPSIDE room. Link

Now, slap some RETRACEMENT brackets on ISRG. Even a "bull fit 38.2%."

I'd like YOU to do this on your own.

Then ... I'll do the same. Let's compare notes. Do we find SIMILAR identifiable levels?

OK ... once we get that done, THEN let's look at the options chain. Price things out, see if there's an AFFORDABLE risk/reward trade to be had.

Then we will see if we should leave well enough alone, or put together a play.

Hey! ISRG is being added to the NDX/QQQQ prior to market open on Wednesday, February 1, 2006.

Maybe we can use today's GOOG option montage observation on Thursday. ISRG's earnings look like they are due out AFTER Thursday's close.

Jeff Bailey : 2/1/2006 2:02:02 AM

ISRG bar chart Link ... One observation ... PnF chart very bullish, with bullish vertical count to $162.

Now look at bar chart. I see "break away gap" in August. Then a "running gap" in late October. What's next? The "exhaustion gap" on earnings? Achieves its bullish vertical count then retreats?

Note today's volume. Stock was added to NDX/QQQQ.

Jeff Bailey : 2/1/2006 1:54:08 AM

NDX/QQQQ New component! ISRG Link replaces SEBL Link at Tuesday's close.

I had a question on ISRG into Thursday's earnings. I'll try and work on a response tomorrow.

Jeff Bailey : 2/1/2006 1:39:18 AM

Google (GOOG) ... Here's a 5-minute interval chart with some of Monday's trade (plus Monday's extended session) and today's TUESDAY's trade (plust extended session) at this Link

Now, I do have QCharts' WEEKLY Pivot Levels turned on, but when you do this with "extended/all sessions" you usually get different levels calculated than when you use the "cash" session levels. MOST TRADERS STICK TO THE CASH HIGH/LOW/CLOSE.

Still, it is notable how GOOG crawls back to ALL SESSION WKLY S2.

"I spoke the truth" when GOOG was trading $434 today. I was truly 50/50 (PINK retracement is 50%). WEEKLY Pivot $431.66.

CASH WKLY S1 was right where GOOG was halted after initial decline, and that would be my "BEST" level to try and short from. Several "levels" to look for sellers.

Since last week's question from a fellow CSU alumni (01/24/06), we saw GOOG close darned close to $434 (BLUE 19.1% and PINK 50%).

It could be tough for GOOG to now get above 396-$394 (BLUE 38.2% and PINK 0%) based on that $434 observation. Right? Based on BLUE/PINK, it is $394-$396 that would be the next "zone."

I don't put a lot of weight in EXTENDED session trade. We've seen stocks move up in an extended session trade, then get flushed lower the following cash session trade. Recently, EBAY got hit lower in an extended session trade, only to jump higher the following cash session.

I don't expect GOOG to finish tomorrow's session ABOVE $410, and once the cash session gets underway, we'll be hearing "buy/sell" calls out of every fundamental shop.

Scenario #1 : Cash session begins with GOOG opening AT or ABOVE $395. If so, then look to sell 1/2, or even just 1/4 position short near $410. ACCOUNT FOR VOLATILITY by using smaller trade size!

Scenario #2 : Cash session begins with GOOG opening AT or ABOVE $385. At most, I'd only short 1/4 position at/near $395. Then wait, get a feel for things. Maybe take a look at the options montage. Question: Despite HUGE volatility spike in the PUTS, is there a lot of ACTION at $350 or $300 PUT strikes with uptick vol well outpacing downtick vol? If so, then $395-$400 become the level to leverage a short against, maybe add another 1/4 short on FAILURE back below CASH WEEKLY S2.

IF YOU'RE GOING TO SELL NAKED (put/call) just remember GOOG is a $300 stock. 1 contract is $30,000 give or take a few bucks of the underlying shares. If you can't take the heat, stay out of the kitchen!

See those Feb $390 Puts (GOP-NR) from today's earlier snapshot? DnTick was 365 vs. UpTick 176. Somebody (hedged, maybe NAKED) was selling those like candy. If naked, they were selling with an OBLIGATION to buy $380 based on the then AvgOHLC of $10.20 (390 - 10.20 = $379.80)

Here's today's earlier GOOG montage snapshot Link

Again, it was the Feb $400 Puts that "stood out" a bit. See the DnTick vs. UpTick compared to the other put contracts? These can be subtle observations, that if remembered in the future, can be a "tip" of a directional event. I'll have to try my hardest to "remember GOOG on 1/31/06 and that PUT option observation" for future trading.

Still, knowing what I know now, I can't say I would have been an eager buyer of the Feb $390 Puts. They still look "expensive."

Jeff Bailey : 2/1/2006 12:22:29 AM

GOOG Option Montage at the close at this Link ... Again, my 01:46:06 PM observation was just that. An observation of that Feb $400 Put where dn/up tick volume stood out.

Now, I kept an eye on GOOG in extended. Bugger ticked $350.00 to the penny, then last ticks at $379.01.

Something's going on at $350, and most likely, every long put holder was trying to lock in some type of gain by buying the underlying. I don't know that for sure, but if I were long the Feb $400 Puts and got a GOOG decline to that strike, I'd sure have had to think long and hard about not trying to hedge some of the gain.

Tomorrow, we should expect the PUTS to see the big spike in Implied Volatility. Right?

Put yourself in those shoes. What would you do? Sell the PUTS and lock in the gain? Yep. That will creat some bullishness as PUTS get close out.

See the Open Interest in the Feb Calls from $420 and higher? I think that's where a trader looks for the resistance if we're going to see GOOG get an early morning bounce.

What are traders that were buying $350 to last tick $379.01 going to do tomorrow morning? Sell their long puts, look for the stock to bounce back near $400-$420, then let go and liquidate long. Action/scenario to be al_rt for, and something I'll try and keep an eye on.

Jeff Bailey : 1/31/2006 11:56:11 PM

GOOG Question: Hi Jeff (and Drake),

My trading buddies and I are trying to devise an options strategy just before GOOG earnings. It seems like everyone is looking for an options play to profit from a big move, UP or DOWN.

Last quarter GOOG earnings were the day before options expiration and I bought some cheap calls 20 points OTM and profited from the huge upside move after blowout earnings. But this time the Implied Volatility has really "pumped up" the premiums and I imagine a lot of that bloated premium will deflate immediately after earnings.

One of my friends has a lot of deep ITM GOOG Feb calls and got lucky holding ITM calls through earnings last quarter, but I think he is playing Russian Roulette holding those through earnings again.

Have you thought about profiling a speculative play such as strangles, bullish/bearish spreads, etc. on Market Monitor?

Thanks, Peter

Reply: Peter:

I looked at the GOOG Feb/Mar option montage this afternoon in MM 1:41:49, but even the 390 puts looked "expensive" considering the stock was trading right near my confluence of 434. Couldn't pull the trigger call, or put. You're right, Implied Volatility was "pumped up."

Looks like the "hedge" trade (see 01:46:06 PM) and $388 might have been telling.

For the price of the options, I'm darned tempted tomorrow to short 1/2 position on any type of morning bounce back near $415-$420, give it a $20-point cushion and at least look for a test of this evening's post-session lows of $350.00. Maybe $300 if it trades as AAPL did after its earnings.

OI Technical Staff : 1/31/2006 9:59:59 PM

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Jeff Bailey : 1/31/2006 7:26:51 PM

Last 3 Monthly Pivot Matrix found at this Link

Jeff Bailey : 1/31/2006 7:21:20 PM

Weekly/Monthly Pivot Matrix found at this Link

Note: New MONTHLY Pivot Levels with today's close.

Jeff Bailey : 1/31/2006 7:00:33 PM

Current OPEN MM Profiles found at this Link

Today's Activity ... Swing trade the Napster NAPS Jun $2.50 Calls (RXU-FX) at $2.05 on report that GOOG might be interested in partnering/acquisition. Closed out for loss at the bid of $1.65 when GOOG denied ($-0.40, or -19.51%).

Swing trade close out the remaining RKH Feb $140 Calls (RKH-BH) at the bid of $2.70 ($+0.70, or +35%).

January Trade Blotter found at this Link

Jeff Bailey : 1/31/2006 6:44:42 PM

Google Inc. (GOOG) $432.66 +1.36% ... Last tick was $379.01.

QQQQ $42.00 -0.45% ... Last tick was $41.65.

Jeff Bailey : 1/31/2006 6:44:23 PM

Closing U.S. Market Watch found at this Link ... Quick Notes: ... Really lost curve steepening today (I tend to focus more on 5, 10 and 30, but realize where 13-week is relative to Fed Funds). Curve still steepening over 20-days (5-year yield to 30-year yield), but want to protect profits in BIX/RKH.

Didn't catch Valero's (VLO) $62.43 -1.21% earnings report at this point. Quick check of crack. 20-day Net shows deterioration (Crude + 4.21%, while refined unleaded -2.70% and Heat Oil +0.54%). Watch Unleaded inventories tomorrow. Big build and crack spread could evaporate.

Jeff Bailey : 1/31/2006 5:59:02 PM

QQQQ $41.59 ...

Jeff Bailey : 1/31/2006 5:58:46 PM

Google (GOOG) $377.00

Jeff Bailey : 1/31/2006 5:57:54 PM

Closing Internals found at this Link

Jeff Bailey : 1/31/2006 5:37:15 PM

QQQQ $41.58

Jeff Bailey : 1/31/2006 5:36:40 PM

Google (GOOG) alert $372.82

Jeff Bailey : 1/31/2006 5:31:44 PM

As of January 31, 2006 (Regulation NMS) NASDAQ and listed (NYSE/AMEX) orders for stocks priced below $1.00 can be entered to four decimal places.

Jeff Bailey : 1/31/2006 5:24:17 PM

Google (GOOG) $364.00 ... still churning. Post-halt low/high looks $350.00-$380.00.

Jeff Bailey : 1/31/2006 5:17:48 PM

4:13 PM EST Temperatures with March Nat. Gas and Heating Oil settlements at this Link

March Unleaded settled down $0.037, or -2.01% at $1.8051.

March Crude Oil settled down $0.43, or -0.63% at $67.92.

Jeff Bailey : 1/31/2006 4:40:15 PM

Might help with GOOG ... When AAPL reported its recent quarter and dropped sharply, wasn't able to regain a WEEKLY Pivot until this week.

Jeff Bailey : 1/31/2006 4:34:49 PM

QQQQ $42.00 -0.45% ... $41.66 here ... extended session low has been ... $41.42

Jeff Bailey : 1/31/2006 4:33:19 PM

Google (GOOG) ... 372.82 ... low has been 350.00.

Jeff Bailey : 1/31/2006 4:31:05 PM

Google (GOOG) alert ... released for trade $350

Jeff Bailey : 1/31/2006 4:30:38 PM

Google (GOOG) still halted. Here's a 60-min interval chart with extended session. Same set of retracement, but add regular market hours WEEKLY Pivot Levels. Stock halted right at WEEKLY S1 and PINK 19.1% retracement. Link

Jeff Bailey : 1/31/2006 4:17:17 PM

GOOG ... WEEKLY Pivot Levels ... 384.70, 409.10, Piv= 431.66, 456.06, 478.62.

Jeff Bailey : 1/31/2006 4:15:08 PM

GOOG ... INET Level II at this Link ... Bar chart with retracement shown at 01:26:19 Link ... Mass confusion on report ... easy does it!

Jonathan Levinson : 1/31/2006 4:10:59 PM

And bounces back: Link

Jonathan Levinson : 1/31/2006 4:09:39 PM

QQQQ loses 41.50: Link

Jeff Bailey : 1/31/2006 4:06:44 PM

Google (GOOG) ... halted for trade

Jonathan Levinson : 1/31/2006 4:06:17 PM

QQQQ chart updated at this Link

Jeff Bailey : 1/31/2006 4:04:23 PM

Google (GOOG) $432.66 +1.36% ... it's the GOOG ... $410 in extended.

Jonathan Levinson : 1/31/2006 4:04:14 PM

GOOG earnings report at this Link

Jeff Bailey : 1/31/2006 4:03:49 PM

Sell Program Premium ... DIA $108.50, SPY $127.84

Jonathan Levinson : 1/31/2006 4:03:21 PM

QQQQ at 41.80 here.

Jonathan Levinson : 1/31/2006 4:03:11 PM



Jonathan Levinson : 1/31/2006 4:02:57 PM

GOOG chart Link

Jonathan Levinson : 1/31/2006 4:02:31 PM

Huge drop for GOOG down to 406 here. Is the news out?

Jonathan Levinson : 1/31/2006 3:59:43 PM

QQQQ back below 72 SMA support and S1 here, back to this morning's range. So far the bulls and the bears have been shanked by whipsaws in both directions- feels like op-ex week again. Link

Jeff Bailey : 1/31/2006 3:51:37 PM

Bullish swing trade call exit alert ... the remaining Regional Bank HOLDRs RKH Feb. $140 Calls (RKH-BH) at the bid of $2.70. $2.70 x $3.10.

RKH $141.65 -0.13% here ...

WB $54.80 (unch), JPM $39.88 +0.07%, USB $29.93 +0.80% .... BAC $44.19 -0.65% and still below that large block from last week.

Jonathan Levinson : 1/31/2006 3:39:42 PM





Jonathan Levinson : 1/31/2006 3:37:19 PM

QQQQ still hasn't challenged this month's high, but the daily cycle downphase is giving up the ghost relatively early in its run. The lows near 41.00 are a distant memory with price holding just above the middle of this month's range. GOOG after the bell will be an important factor and could break the deadlock. Daily chart of QQQQ at this Link

Jeff Bailey : 1/31/2006 3:32:44 PM

BIX.X 364.99 (unch) ...

Jeff Bailey : 1/31/2006 3:31:04 PM

VIX.X alert 12.55 +1.29% ... back under WEEKLY Pivot.

Jeff Bailey : 1/31/2006 3:30:14 PM

Buy Program Premium ... DIA $109.12, SPX 1,284.52, QQQQ $42.21

Jonathan Levinson : 1/31/2006 3:17:08 PM

QQQQ pulls back to the rising flag trendline connecting the post-FOMC lows, the short cycle upphase stalling out. The 30 min cycle has turned up, however, although I suspect that the intraday cycles just trying to keep up with the price swings at this point. Link

Jeff Bailey : 1/31/2006 3:12:39 PM

03:00 Internals found at this Link

Jeff Bailey : 1/31/2006 3:05:33 PM

Dow Transports (TRAN) ... all-time higher alert!

Jeff Bailey : 1/31/2006 3:04:32 PM

03:00 Market Watch found at this Link ... Lost quite a bit of our curve steepener today. Showing 5 and 20-day net for 5-30

Jonathan Levinson : 1/31/2006 3:04:04 PM

QQQQ breaks resistance and clears the pivot on a surge of volume. 30 min channel resistance overlaps at R1, 42.27: Link

Jeff Bailey : 1/31/2006 3:00:47 PM

Microsoft (MSFT) $28.20 +0.71% ... busting a move higher.

Jeff Bailey : 1/31/2006 2:58:51 PM

RKH $141.70 -0.22% ... volume 671,200 ... average daily volume 846k

Jonathan Levinson : 1/31/2006 2:56:59 PM

Right to the top of the flag for QQQQ here at 42.10: Link

Jeff Bailey : 1/31/2006 2:56:48 PM

Buy Program Premium ... DIA $108.83, SPX 1,281.81, QQQQ $42.10

Jonathan Levinson : 1/31/2006 2:55:22 PM



MSFT trades +.14 here at 28.14.

Jeff Bailey : 1/31/2006 2:48:02 PM

Buy Program Premium ... DIA $108.78, SPX 1,280.38, QQQQ $42.03

Jonathan Levinson : 1/31/2006 2:47:05 PM

Looks like another corrective bounce to me, possibly a bear flag or wedge. Bulls need to see the north side of 42.05-.10 to invalidate it. Link

Jonathan Levinson : 1/31/2006 2:46:00 PM

Volume breadth up to -1.45:1 on the NYSE, -1.2:1 on the Nasdaq.

Jeff Bailey : 1/31/2006 2:41:54 PM

Sell Program Premium ... DIA $108.61, SPX 1,278.29, QQQQ $41.95

VIX.X 12.99 +4.84% ... session highs and above its WEEKLY Pivot.

Jeff Bailey : 1/31/2006 2:40:38 PM

Buy Program Premium ... DIA $108.72, SPX 1,279.92, QQQQ $41.99

Jeff Bailey : 1/31/2006 2:37:19 PM

5-year up 1.8 bp, 10-year up 1.6 bp, 30-year up 1.2 bp

Jeff Bailey : 1/31/2006 2:36:23 PM

Google (GOOG) 434.62 +1.82% ... still pinned.

Jeff Bailey : 1/31/2006 2:34:48 PM

Sell Program Premium ... DIA $108.56, SPX 1,277.97, QQQQ $41.94

Jonathan Levinson : 1/31/2006 2:34:38 PM

QQQQ finding resistance below the overhang from the 11AM-1:30PM range: Link

Jeff Bailey : 1/31/2006 2:34:01 PM

RKH $141.50 -0.23% ... RKH-BK $2.50 x $3.00

Jeff Bailey : 1/31/2006 2:31:49 PM

02:30 Market Watch at this Link

Jeff Bailey : 1/31/2006 2:29:26 PM

Buy Program Premium ... DIA $108.70, SPX 1,279.30, QQQQ $41.94

Jeff Bailey : 1/31/2006 2:25:28 PM

RKH-BH $2.50 x $2.90

Jeff Bailey : 1/31/2006 2:24:59 PM

BIX.X alert 363.35 -0.44% ... session low and hits WEEKLY Pivot.

Jeff Bailey : 1/31/2006 2:24:25 PM

5-year yield jerks higher ... up 1.1 bp at 4.472%

30-year yield up 0.8 bp at 4.716%

Jonathan Levinson : 1/31/2006 2:23:21 PM

Volume breadth -1.65:1 on the NYSE, -1.45:1 on the Nasdaq here.

Jonathan Levinson : 1/31/2006 2:21:04 PM

Session low for ten year notes, TNX up .4 bps at 4.539%.

Jonathan Levinson : 1/31/2006 2:20:35 PM

QQQQ slams back down here, burying the prints back to pre-11AM: Link

Jeff Bailey : 1/31/2006 2:19:46 PM

Sell Program Premium ... DIA $108.89, SPX 1,280.54, QQQQ $41.96

Jonathan Levinson : 1/31/2006 2:18:19 PM

Big volume on the surge to 41.15 here, at the confluence of 30 and 60 min channel resistance. Link So far, each buy spike has dojied back down.

Jeff Bailey : 1/31/2006 2:17:28 PM

Sell Program Premium ... DIA $108.99, SPX 1,282.17, QQQQ $42.08

Jeff Bailey : 1/31/2006 2:16:56 PM

Regional Bank HOLDRs (RKH) $142.15 +0.09% ... Volume now 585,000

Jonathan Levinson : 1/31/2006 2:16:07 PM










Jeff Bailey : 1/31/2006 2:15:39 PM

Buy Program Premium ... DIA $109.00, SPX 1,281.98, QQQQ $42.07

Jonathan Levinson : 1/31/2006 2:15:18 PM

Complete Fed statement at this Link

Jeff Bailey : 1/31/2006 2:15:08 PM

JP Morgan (JPM) $40.03 +0.45% ...

Jonathan Levinson : 1/31/2006 2:15:01 PM

Fed raises overnight rate .25% to 4.5%.

Jonathan Levinson : 1/31/2006 2:14:47 PM

QQQQ chart updated at this Link

Jeff Bailey : 1/31/2006 2:14:41 PM

Citigroup (C) $46.78 -0.08% ...

Jeff Bailey : 1/31/2006 2:12:06 PM

RKH $141.83 -0.13% ... volume benchmark ... 470,000 shares traded.

Jonathan Levinson : 1/31/2006 2:08:03 PM

Session high for ten year notes, ZN +1/4 at 108 39/64, TNX -2 bps at 4.515%, flatter against IRX which is up 1.5 bps at 4.357%.

Jeff Bailey : 1/31/2006 2:07:51 PM

02:00 Market Watch at this Link ... Quick snapshot ahead of FOMC.

Dollar very weak and may certainly suggest near-term end of Fed tightening.

Slight steepening of curve with 5-year down 2.2 bp, 30-year down 1.8 bp now.

BIX.X still red, but edging off lows, WEEKLY Pivot still firm.

Jeff Bailey : 1/31/2006 1:59:46 PM

17-minutes until FOMC Interest Rate Statement.

Jeff Bailey : 1/31/2006 1:59:00 PM

Bullish swing trade call alert ... Let's place an order to sell the rest of the Regional Bank HOLDR RKH Feb $140 Calls (RKH-BH) at $7.50.

Regional Bank HOLDRs (RKH) $141.82 -0.14% ...

Jonathan Levinson : 1/31/2006 1:58:03 PM

Back to find QQQQ ticking above S1 for the first time since breaking below it this AM. The short cycle indicators have maxxed out in overbought territory after retracing part of this AM's impulsive drop, testing 30 min channel resistance at 42.08 here: Link . If the bulls can break and hold 60 min resistance at 42.14, a trending move in the short cycle will be underway, but the bulls will have to mean business.

Jeff Bailey : 1/31/2006 1:50:17 PM

Russell 2000 Index (RUT.X) 731.01 +0.01 ... first major to edge green today.

Jeff Bailey : 1/31/2006 1:46:06 PM

See the Feb $400 Put dn/up of 339:874? That stands out. Never know for certain, but could be a bull hedge against an underlying long position. If so, 400 - 12 = $388.

Jeff Bailey : 1/31/2006 1:41:49 PM

Google (GOOG) ... Feb and March Option Montage at this Link ... Simply looking at #1, #2, #3 most open interest seems to point at $440.00 on more common basis. Then add in roughly $32 either side to establish range of $400-$472.

Jeff Bailey : 1/31/2006 1:26:19 PM

Google (GOOG) ... chart with retracement shown last week at this Link

Jeff Bailey : 1/31/2006 1:23:18 PM

Google (GOOG) $434.62 +1.83% ... I'm 50/50 on this bullfight.

Jonathan Levinson : 1/31/2006 1:21:30 PM

Stepping away.

Jeff Bailey : 1/31/2006 1:22:35 PM

Jonathan ... did you just see that CNBC replay of the bull jumping into the stands at that bullfight in Mexico?

AP - Link

Jeff Bailey : 1/31/2006 1:19:41 PM

01:00 Internals found at this Link

Jonathan Levinson : 1/31/2006 1:09:18 PM

Volume's very light for QQQQ. The Fed's dealers and the fundies must be otherwise occupied. Link

Jeff Bailey : 1/31/2006 1:07:39 PM

01:00 Market Watch found at this Link ... With 20-day Net Change.

Jonathan Levinson : 1/31/2006 12:52:03 PM

QQQQs' trading both sides of the 72 SMA but holding below S1 and 42 confluence resistance. The 30 min cycle is on hold, but the 60 min cycle downphase continues to keep a lid on the action. The short cycle has also peaked, but it's getting no traction either way- tractor-beam trading ahead of the Fed. Link

Jeff Bailey : 1/31/2006 12:43:19 PM

Current OPEN MM Profiles at this Link

Jonathan Levinson : 1/31/2006 12:41:17 PM

Session highs for swiss francs at .788, euros at 1.2214 and gold at 571.90.

Jonathan Levinson : 1/31/2006 12:33:29 PM

Session high for gold here at 571, silver 10 cents off its 9.95 high.

Jeff Bailey : 1/31/2006 12:29:39 PM

BIX.X 363.91 -0.29% ... session low so far 363.61.

Jeff Bailey : 1/31/2006 12:28:47 PM

Flat as a pancake ... 5, 10 and 30-year yields all down 1.8 bp.

Jonathan Levinson : 1/31/2006 12:27:14 PM

Volume breadth holds negative, -1.5:1 on the NYSE, -1.4:1 on the Nasdaq. QQQQ is being held down by its 72 SMA and the ongoing 60 min cycle downphase. The 30 min cycle has room to run lower and never reached oversold, but could go either way from here with the 72 SMA so close overhead: Link

Jeff Bailey : 1/31/2006 12:19:54 PM

Alcan (AL) $48.39 +3.79% Link ... "on fire." Doesn't make sense if economy is slowing.

Jeff Bailey : 1/31/2006 12:04:04 PM

The NAPS Mar. $5 Calls (RXU-CA) did see some action (643) at $0.10 on 01/18/06, but at this point, hard to tell if a speculator long, or call seller then.

Jonathan Levinson : 1/31/2006 12:01:48 PM

Stepping away.

Jeff Bailey : 1/31/2006 12:01:45 PM

Probably not a lot of "risk" in the NAPS June $2.50 and could sell $5 calls against. However, with two (2) profiled, I decided to call it quits.

Premiums still "jacked up" on the out the money's.

Could be another company interested in NAPS for acquisition and New York Post might not have the right name in GOOG as the acquirer.

Jeff Bailey : 1/31/2006 11:57:20 AM

filled alert ... RXU-FX at $1.65.

Jeff Bailey : 1/31/2006 11:55:33 AM

Bullish swing trade exit alert ... Per 11:52:14, let's close out the two (2) Napster NAPS Jun $2.50 Calls (RXU-FX) at the bid of $1.65.

NAPS $4.00 +27.8% ...

Jeff Bailey : 1/31/2006 11:52:14 AM

Napster (NAPS) alert $4.01 +28.52% ... Google denies report company is in talks with Napster.

Reuters Story - Link

Jonathan Levinson : 1/31/2006 11:49:11 AM

Volume breadth is -1.35:1 on the NYSE, -1.1:1 on the Nasdaq.

Jonathan Levinson : 1/31/2006 11:48:51 AM

QQQQ reaches S1, now overlapping 72 SMA resistance, with the wavelet indicators reaching overbought territory: Link

Jeff Bailey : 1/31/2006 11:45:39 AM

U.S. Dollar Index (dx00y) 89.05 -0.41% Link (0.50-box size)

Jeff Bailey : 1/31/2006 11:42:40 AM

Altria (MO) $73.26 -0.86% Link ... Dow component lower after missing Wall Street's expectations.

Earnings story at this Link

Jonathan Levinson : 1/31/2006 11:32:59 AM

Natgas is back to positive, +.02 at 9.41, off a low of 9.175. 100 tick chart at this Link with price holding above the 72 SMA at 9.10.

Jeff Bailey : 1/31/2006 11:34:09 AM

Napster (NAPS) $4.00 +28.2% Link ... stock has turned just over 27 million shares.

Jeff Bailey : 1/31/2006 11:31:01 AM

Napster (NAPS) $4.00 +28.20% ... quick decline on HUGE volume (3.8 million last 5 minutes) after giving up early morning low of $4.29.

Jeff Bailey : 1/31/2006 11:26:51 AM

Headline ... DJ - Alito on Way to High Court Confirmation as US Senate Votes

Samuel Alito appears headed to confirmation Tuesday as the Senate votes on his nomination to become the next Supreme Court associate justice.

As of 11:08 a.m. EST, 51 of 100 senators had voted to confirm Alito's nomination. But senators were still casting their votes, and those who have voted could still change their decisions.

A majority of votes is all that is needed for confirmation.

Alito, 55, will replace retiring Justice Sandra Day O'Connor, the first woman to serve on the Supreme Court and the court's most powerful swing vote for much of her 24 years there. Alito has served for 15 years as a federal appeals judge for the 3rd Circuit Court of Appeals in Philadelphia. Previously, he worked for conservative lawyers in the Reagan administration.

President George W. Bush sent Alito's nomination to the Senate on Oct. 31. The nomination was sent after Bush's first pick for the seat, White House counsel Harriet Miers, withdrew after taking steady fire from conservatives worried about her position on abortion.

Alito was expected to join Bush in the White House's Roosevelt Room to watch the Senate vote on his confirmation.

If confirmed, the White House said Alito will be sworn in later Tuesday at the Supreme Court with a ceremony in his honor Wednesday and in the White House's East Room.

Jonathan Levinson : 1/31/2006 11:16:59 AM

QQQQ's short cycle upphase has been getting weaker traction than the decline that preceded it, and has yet to test either S1 just above the 42.00 confluence or the declining 72 SMA. There's still room for a break, but so far the short cycle is looking corrective against the broader intraday downphases in progress. Link

Jeff Bailey : 1/31/2006 11:14:06 AM

11:00 Internals found at this Link

Yesterday's Internals at this Link

Jonathan Levinson : 1/31/2006 11:08:01 AM

Volume breadth holds -1.75:1 on the NYSE, -1.45:1 on the Nasdaq.

Jeff Bailey : 1/31/2006 11:04:48 AM

11:00 Market Watch found at this Link ... Some quick 5-day yield curve and BIX/BKX observations.

NDX/QQQQ/SOX do see trade at WEEKLY Pivot, but hold firm.

Jeff Bailey : 1/31/2006 10:49:10 AM

Apex Silver (AMEX:SIL) $15.59 +1.36% Link ... Stock was very active in last night's extended session during James Cramer's "Mad Money." Hasn't been able to make the move above WEEKLY Pivot ($15.68) at this point.

Jeff Bailey : 1/31/2006 10:45:23 AM

Apache Corp. (APA) $73.46 +0.36% Link ...

Jeff Bailey : 1/31/2006 10:44:46 AM

El Paso Corp. (EP) $13.60 -0.43% Link ...

Jeff Bailey : 1/31/2006 10:43:49 AM

Chesapeake Energy (CHK) $35.03 +1.97% Link ... spread triple top buy signal here.

Jeff Bailey : 1/31/2006 10:42:45 AM

Sepracor (SEPR) $55.76 +15.25% Link ... Higher on stronger-than-expected earnings.

Earnings story at this Link

Jeff Bailey : 1/31/2006 10:40:23 AM

10-Most Active ... CSCO $18.58 -1.64%, SUNW $4.48 +2.51%, QQQQ $41.89 -0.71%, NAPS $4.48 +43.58%, MSFT $27.94 +0.25%, INTC $21.41 -1.10%, JDSU $3.03 -2.88%, SPY $128.04 -0.31%, ORCL $12.48 -1.03%, SEPR $55.76 +15.25%

Jonathan Levinson : 1/31/2006 10:30:47 AM

A bullish divergence in the wavelet cycle suggests that the 41.81 low wants to hold, at least long enough for a short cycle upphase from here. That upphase should be corrective at best, given the broader 30/60 min cycle downphases. 1st sign of trouble for those broader downphases will be a break above 42, and the 30 min cycle will stall on a break above the 72 SMA, currently at 42.15. Link

Jeff Bailey : 1/31/2006 10:28:54 AM

5-year yield is down 0.4 bp at 4.457%, 10-year unch at 4.535% and 30-year up 0.1 bp at 4.709%.

Regional Bank HOLDRs (RKH) down $0.22, or -0.15% at $141.80. QCharts' WEEKLY Pivot Levels are ... $135.24, $138.81, Piv= $140.91, $144.48, $146.59.

Jeff Bailey : 1/31/2006 10:23:57 AM

Napster (NAPS) short interest Link which has SI at lowest level in 12 months. No info as to number of shares in the public float, while shares outstanding is approx. 43.89 million. Stock has turned just over 17 million at this point.

Jonathan Levinson : 1/31/2006 10:17:06 AM

QQQQ hit the floor at 41.81 and is holding just above it. The short cycle indicators are due for a bounce here, but it will be fighting a downward tide from the 30 and particularly the 60 min cycles. Link Below 41.80, gap support is at 41.55-.62.

Linda Piazza : 1/31/2006 10:09:20 AM

The OEX has potential support from many sources in the 578.30-579.50 region: 50% retracement of the drop from the 1/11 high into the 1/25 low, Keltner, etc. Have a profit-protecting plan in mind if you're in a bearish position as this support is tested. Bears of course want the OEX to crash right through it, while bulls want a bounce. If it does bounce (advdec line is also reaching potential support), watch the Keltner line currently at 581.12 for potential resistance.

I'm not trading before the FOMC meeting. I'm waiting to hear if my granddaughter will be hospitalized again this morning, so am taking off again.

Jeff Bailey : 1/31/2006 10:08:33 AM

Napster (NAPS) $4.35 +39% ... Bar chart with a high-to-low close retracement at this Link

Jonathan Levinson : 1/31/2006 10:06:57 AM

Chicago PMI 58.5 vs. 61 exp., prior 60.8 revised from 61.5.

Con-con 106.3 vs. 105 exp., prior 103.6 revised from 103.8.

Jonathan Levinson : 1/31/2006 10:04:50 AM

Volume breadth -2.05:1 on the NYSE, -1.65:1 on the Nasdaq.

Linda Piazza : 1/31/2006 10:04:30 AM

Here's where the TRAN is according to that weekly envelope I've been watching (and showing) so often: Link As has sometimes happened, the TRAN pierced it by a few points intra-week, doing so yesterday, but you can see how the TRAN has reacted on other tests. Where the TRAN leads, the SPX, OEX and Dow sometimes follow, so both bears and bulls need to be watchful here. I wouldn't feel comfortable with too much risk to the upside here, though, since the TRAN has never broken through this to the upside on all the years QCharts has data, but there's always a first time.

Jonathan Levinson : 1/31/2006 10:03:09 AM

QQQQ tests the bottom of Friday's range, right above gap support: Link

Jeff Bailey : 1/31/2006 10:01:37 AM

Filled alert ... RXU-FX at $2.05 ... NAPS $4.45 +42.3%

Linda Piazza : 1/31/2006 10:00:28 AM

Just stopping by for a few minutes this morning. Note that the SOX is dropping hard into that gap from the morning of the 27th. The close the day before was at 536.22, if my tired eyes are correct. The SOX is at 541.51 as I type, and you should watch for potential gap support there. The SOX's pullback into that gap had looked bull flaggish until now, but this is steeper. Still, be careful about assumptions today and still believe only half what you see.

I've been suspicious of the sustainability of the SOX's rally since the previous gap, which looked to me like an exhaustion gap. But I had one possible Fib target of 560 and another near 565. I wasn't so sure the SOX could meet that target with that possible exhaustion gap, but it did so, with another spectacular gap. So, this looks suspicious to me, but it still keeps charging higher (not today, of course), so I'd be careful of any assumptions.

Jeff Bailey : 1/31/2006 9:58:26 AM

Bullish swing trade call option alert ... Let's take two (2) of the Napster NAPS Jun $2.50 Calls (RXU-FZ) at the bid of $2.05. Currently $2.05 x $2.15.

NAPS $4.46 +42.94% ...

Target $7.12

Jonathan Levinson : 1/31/2006 9:56:15 AM

QQQQ tests S1 here at 42.01, failing as I type: Link

Jonathan Levinson : 1/31/2006 9:54:31 AM

The Fed has 3.75B in expiring repos, and has just announced a 2.75B overnight repo, draining net 1B. The stopout rate held at 4.4%, 10 bps below the anticipated 4.5% overnight target rate.

Jeff Bailey : 1/31/2006 9:54:14 AM

Napster (NAPS) $4.62 +48.39% ... does trade options, but they are rich today. Option montage at this Link

Jeff Bailey : 1/31/2006 9:44:53 AM

Napster (NAPS) $4.77 +52.88% Link ... #2 most active in early trade after the New York Post, citing sources within the music industry, said Google (GOOG) $428.99 +0.50% Link wants to align with the company in lieu of creating its own music store.

Jonathan Levinson : 1/31/2006 9:44:33 AM

Yesterday's low broken on QQQQ: Link

Jonathan Levinson : 1/31/2006 9:41:27 AM

QQQQ still holding yesterday's pivot at 42.10 support: Link

Jeff Bailey : 1/31/2006 9:41:47 AM

Teva Pharmaceuticals (TEVA) $42.55 +0.66% Link ... Credit Suisse restarts at "outperform."

Jonathan Levinson : 1/31/2006 9:33:06 AM

Volume breadth -1.35:1 on the NYSE, +1.3:1 on the Nasdaq at the open.

Jonathan Levinson : 1/31/2006 9:32:42 AM

QQQQ's 60 min cycle continues to look overbought and bearish-divergent, potential trouble waiting to happen, but the 30 min cycle is getting zero downside traction. 72 SMA resistance is at 42.21, 30/60 min channel resistance 42.30-.35, support at 42.00-42.05.

Jane Fox : 1/31/2006 9:31:46 AM

Dateline WSJ Female ex-employee kills six people, self, in shooting at postal sorting offices in Goleta, California, authorities say.

Jeff Bailey : 1/31/2006 9:27:37 AM

Program Trading Levels ... HL Camp & Company has their computers set for program buying at $+4.26 and set for program selling at $+2.59.

Jonathan Levinson : 1/31/2006 9:16:07 AM

Long time readers will remember some hilarious images of our Fed Chairman, whose 19-year tenure ends today. Link Link Link

Jonathan Levinson : 1/31/2006 9:04:25 AM



Jonathan Levinson : 1/31/2006 8:34:30 AM

Equities dipped slightly on the news, now trading light negative with QQQQ -.05 at 42.14. Ten year notes hold a 3/64 gain at 108 7/16, TNX quoted +.6 bps at 4.541%, flatter against IRX which is +2.5 bps at 4.367%.

Jonathan Levinson : 1/31/2006 8:33:10 AM

WASHINGTON (MarketWatch) - The costs of employing a worker in the United States increased 0.8% in the fourth quarter, matching the third quarter's gain, the Labor Department reported Tuesday. Wage costs increased 0.8% in the fourth quarter, the fastest increase since early 2000. Benefit costs rose 1.1%. The 0.8% increase in the employment cost index matched expectations of Wall Street economists surveyed by MarketWatch. For all of 2005, the employment cost index increased 3.1%, the lowest since the 2.9% gain in 1996. The ECI increased 3.7% in 2004.

Jonathan Levinson : 1/31/2006 8:32:18 AM

ECI +.8% vs. +.9% exp., prior unrevised.

Jonathan Levinson : 1/31/2006 7:45:55 AM

Equities are mixed, ES trading 1287.5, NQ 1724, YM 10907 and QQQQ -.02 to 42.17. Gold is up 4.8 to 570.60, silver +.143 to 9.92, ten year notes +1/16 to 108 35/64, crude oil -.625 to 67.725 and natgas -.165 to 9.225.

We await the 8:30 release of the Employment Cost Index, est. .9%, then at 10AM, the Chicago PMI, est. 59.8 and Consumer Confidence, est. 105. At 2:15, it's the FOMC announcement.

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