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Market Wrap

Long Holiday

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      03-27-2002          High     Low     Volume Advance/Decline
DJIA    10426.91 + 73.55 10453.90 10337.86 1.17 bln   2113/1033
NASDAQ   1826.75 +  2.58  1832.01  1811.64 1.45 bln   1923/1543
S&P 100   577.49 +  2.32   579.24   573.16   Totals   4036/2546
S&P 500  1144.58 +  6.09  1146.95  1135.33             
RUS 2000  505.85 +  4.19   506.05   501.16
DJ TRANS 2906.67 + 31.30  2913.68  2863.15
VIX        19.25 -  0.50    20.40    19.23 
VXN        37.16 -  0.52    39.66    36.75
TRIN        0.82 
Put/Call    0.53

Long Holiday
Austin Passamonte

We get three days of from flashing screens this weekend, but it might as well have been five or six. Most traders are just mailing in their effort or not even showing up to the floor. volume is thin and action is directionless with anticipated chop each day.

(Weekly/Daily Charts: Dow)

It must be noted that the Dow has closed roughly +150 index points above intra-session lows this week. We've got mixed signals in the picture here again, which pretty much suggests price action will remain directionless and choppy until they realign in harmony again. I feel like the weatherman forecasting a week of inclement weather saying such a thing, but looks that way from here tonight.

(Weekly/Daily Charts: NDX)

Compounding confusion is the Nasdaq picture here. Both weekly and daily charts are still in full-bear mode with no signs of turning higher for a trend move right now. Eric and Jeff have both been touting "sell tech" for days now and I tracked short the QQQ, SMH, BBH and others in Sector Share model first of this week. All of them are faring fine right now and may very well continue that pace into next week. As the NDX remains pinned in that steep wedge of descent, ride out the shorts and keep stops just above the upper line depicted here. Simple as that.

(Weekly/Daily Charts: OEX)

So the Dow doesn't look to bearish while the NDX does. Blend them together and we get S&P indexes... notably the OEX depicted here. This is far from a bullish picture but with daily charts in oversold terrain, who wants to buy & hold new shorts? By the same token, weekly chart signals, moving averages etc, negate waving the bullish pompoms either. When things looked mixed on a longer term basis, I prefer to simply look elsewhere for clearer pictures than persist in squinting to see something that just isn't there.

(Monthly/Daily Charts: ADLAC)

Speaking of something that just isn't there any more, that describes the business future of Adelphia Communications. Bailey has been profiling this one for many days now and "she" broke down beautifully into the hands of OI shorts this afternoon. Huge volume (not shown) traded as investors fled for the exits on news that all isn't well with their math. As noted by Eric in the Market Monitor 3:20pm post today:

[Eric] "In the conference call this morning, questions were raised about the company's borrowing practices and its ties with a spin-off. Jeff Bailey was right on the money when he suggested that a rat was lingering around. That rat, as it turns out, is ADLAC's Business Solutions (NASDAQ:ABIZ) subsidiary. ABIZ filed for chapter 11, which leaves ADLAC with about $500 million of debt to deal with. When asked about the debt, a company official said, "We...will have to figure out what it all means..." Investors didn't like that response as the stock is now trading 20 percent lower!

I've been doing some technical work trying to find an intelligent downside target, but am having difficult spotting a short-term downside target. I believe that emotion is taking over, thus negating any technical levels. By all means, if you've been shorting this stock or buying puts, use this massive move to take some money off the table. I don't want to put words in Bailey's mouth, but I think he'd suggest taking some gains in here."

Thanks Eric... that saves me from restating what you already said! Based on these two price charts above I'll happily toss in my five bucks about price targets ahead, which is exactly the downside goal. Next level of support in the daily channel is $14 area, but dialing up to a monthly chart (left) going all the way back to lows in 1997 may be where this stock ends up. The word "communications" in there pretty much sums up a crowded sector where many will fall by the wayside ahead and I think we're seeing Darwin at work right here.

I personally have never traded this symbol myself, but if it consolidates sideways from here I'll be investing in some back- month puts myself! July 15s are bid 2.10 right now and if this one dares pop higher in relief, I'll try a few of those. Most likely to continue lower for awhile, though. Screaming short for any who were looking back at the $25 area but I wasn't one of them scanning this, sad to say.

Not a whole bunch to say tonight. Jim's weekend piece will elaborate on next week and beyond but right now we have Thursday clogging up our view. Expect plenty of intraday chop and possibly a real strong move on light volume as the pile is easily pushed right now. Current action is somewhat artificial as program trading has a greater effect on markets as usual. Our job is to sell the weaklings dragged higher on the backs of S&P programs or buy the strong ones dragged lower on program selling. Thursday is an intraday trader's market likely rife with noise. Trade with care or better yet, enjoy a four-day weekend!

Happiest Of Holidays!
Austin P

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