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Upside open ahead of Greenspan

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Stock futures are showing some gains this morning ahead of today's testimony in front of the Senate Budget Committee by Alan Greenspan. Many believe Mr. Greenspan will try and smooth over some cautious comments made two weeks ago regarding the still fragile, yet improving state of the U.S. economy.

S&P futures are trading higher by 5 points at 1,134, while NASDAQ futures are up 24 points at 1,570 and Dow futures are higher by 52 points at 9,780.

Fair value for the S&P 500 today is $0.93. HL Camp & Company has their computers set for program buying at $2.04 and set for program selling at $-0.58. Fair value for the NASDAQ-100 today is $4.40. If you would like more information on fair value and how it is calculated, please visit www.programtrading.com.

Bonds are seeing some selling before stocks open for trading as the 10-year YIELD ($TNX.X) ticks higher with a YIELD of 5.004%. For me, this is a positive sign toward stocks. The bond market is looking as if it expects a rather upbeat testimony from Mr. Greenspan and this could help bolster stocks today. Current action in the bond market does NOT indicate a rush out of bonds, but a slow trickle. Regardless, we're seeing some selling in Treasuries and that can raise cash that could find its way into stocks.

Jobless claims continue to abate

Helping bolster stocks futures is this morning's economic data that shows jobless claims falling by 15K to 376K in the week ending January 19th. This was better than the expected jobless claims number of 395k.

Nokia jumps 9.5% in European trading

Shares of Finland-based Nokia (NYSE:NOK) jumped 9.5% in European trading (trading $23.40 on Instinet here in the U.S) after the cell phone giant reported Q4 net earnings of $0.21 a share, exceeding consensus estimates of analysts that were looking for $0.18 a share.

Another excellent question...

Got a quick question for you...As I sit here staring at a 3% move in the NDX and a 2% move in the COMPX, I am wondering where in the heck should've one gotten into the game today...I was following bond yields, SOX, BTK, INX, BKX and several other indexes. I had my watch list of stocks that for the most part gapped open and pretty much made me freeze dead in my tracks when I looked at the p&f charts and saw for the most part, resistance not far above where they and a bunch of stocks I was watching were trading. Some broke above, some held steady and others fell slightly. What I am currently in is FRX and AL. What bugs the hell out of me is sitting here and not getting in on the upside. Does this happen to you or am I, in your opinion, looking at the wrong "buy" signals. Gosh this can be frustrating....

Thanks for your time.

Yes, this happens to me quite often. Not long ago, a subscriber made me feel like I missed the move in the QQQ up in the $40's, but I didn't feel comfortable making a trade in the QQQ with the NASDAQ-100 at "overbought" levels. If any of us feel like we "missed the move in the QQQ above $40" then we can probably take offers (buy) all day and get a good belly full below the $40 level and still feel like we've saved some cash.

Did subscribers miss today's "bullish move" in shares of Micron (NYSE:MU) if they sold the stock on December 5th near $34 as mentioned in 01:00 Update? http://members.OptionInvestor.com/archive/intraday/120501_3.asp

Trading is so much about discipline, calling your own shots, and trading you outline plan. Evidently, you have a "discipline" to not chase gaps and you followed your discipline. While yesterday's 2.75% gain to $38.43 in the QQQ looks impressive on the cover, ask the trader that bought the close on Monday at $38.59 how much of a move you missed yesterday. You might get a different story.

There's an old saying that I firmly believe in. "It's better to not be in a trade and wishing you were, than be in a trade and wishing you weren't."

You can't look at a trade in the rear view mirror and then get frustrated that you didn't take it. The reason you probably have the "discipline" of not chasing gaps is that you've had one too many gaps crammed back down your throat that eventually resulted in a loss. I've had my share over the years too, and I don't chase them unless I feel I can properly control my downside risk and there's enough upside to make the most nervous of bears (in the current market environment) keep chasing and driving the stock to my exit target.

One stock I liked on a lukewarm basis yesterday that was trading "hot" was Emulex (EMLX) at $41.75 (see market monitor at 9:41:21). Yes, there were positive comments on the stock, but note the p/f comments that I made. I figured there were enough shorts in that one, just above the recent triple-top of $41, to get a pop out of the stock. I've said before that tech bulls need to be short-term focused on their trading right now. There's no way with the stock closing at $44.13, that I'm now going to risk a move back lower (it's not in my risk profile at least). If everything's as good as most want to believe, then this stock shouldn't trade below yesterday's low of $41.25 and I'd move my stop up under that level.

One of the most important things you can do as a subscriber is keep a diary or logbook of your thoughts and observations. Then, over time, go back and review notes that you write and check against what you were feeling and observing. Should you have traded against your discipline, or are you glad you didn't?

Jeff Bailey
Senior Market Technician
Option Investor

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