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  Jeff Bailey   2/15/02,  4:02:24 PM
Forest Labs (FRX) $82.64 +2.35% ... our "favorite" drug stock looks ready to put an assault out on the recent 52-week high. Been consolidating for a couple of weeks and looking strong. Decent pickup in volume today. Link

  Jeff Bailey   2/15/02,  3:57:00 PM
AES Corp. (AES) $6.03 -36% ... stock got whacked hard from 11:43 commentary near $8.00. No problem seeing traders take some profits here. Good short-term trade. 25% in a day! Are you kidding me?

  Austin Passamonte   2/15/02,  3:54:27 PM
Done for the day, week and Feb expiration month. Took a total of 13 trades in & out today and most were favorable. No big scores like we all dream of and I missed the two biggest moves this session, but at least we can pay the bills. Beats any type of employment I've ever endured, although the fatigue feels similar to those 12+ hour factory shifts I pulled in my youth.

Time for a hot shower and cold drink to unwind. See you in the weekend article editions!

  Austin Passamonte   2/15/02,  3:25:32 PM
I think Jeff's right on about the BBH HOLDRs and Biotech in general: looks like the strongest sector at this time relative to all other techs I've scanned.

Great medium-term play in the BBH shares or options in my opinion as well.

  Austin Passamonte   2/15/02,  3:19:10 PM
Doesn't look like the indexes will manage to pull out of the downward spiral today. I've been stopped out repeatedly going both directions for modest gains or par and am tired of the incessant chop.

If I try one more attempt either direction today it's most likely going to be near 3:30pm if/when all charts signals align. Otherwise I look forward to a nice three-day weekend and hope you enjoy the same!

  Jeff Bailey   2/15/02,  2:58:02 PM
Biotech Index (BTK.X) getting greener. I like the recent pullback to retracement support at $493 and the curling higher 50-pd moving average on 60-minute chart. Link

  Jeff Bailey   2/15/02,  2:56:37 PM
Biotech HOLDRS (BBH) $120.25 +0.71% ... will take some BBH bullish here and hold over the weekend. Then may look to pump them out on Tuesday for nice gain.

  Jeff Bailey   2/15/02,  2:54:37 PM
Market's closed on Monday! just a reminder to some options traders that markets are closed on Monday for Presidents' Day.

According to Stock Trader's Almanac, the day after Presidents Day (Tuesday) has been up 6 out of last 8.

  Austin Passamonte   2/15/02,  2:52:02 PM
VIX and OEX.X data in Qcharts is faulty... switch to INDEX:OEX for CME feed and clean numbers for Qchart users.

OEX.X is CBOE feed and it's wrong, unless the index plunged -64 points while you were holding long puts. That would be roughly -1,000 Dow points of a move for the OEX and long Feb puts at any strike would work very well if that data were true!

  Jeff Bailey   2/15/02,  2:51:13 PM
Green on the screen Starting to see the Biotech Index (BTK.X) get green at $504.13 +0.2%, Russell 2000 Index (RUT.X) ever so fractional at $470.90 +0.03%.

  Austin Passamonte   2/15/02,  2:49:44 PM
All 60/30 min chart signals have turned decidedly bullish. Look for a rally attempt into the close, and it could cover a fair bit of higher ground from here.

Long from S&P 1106.00

  Jeff Bailey   2/15/02,  2:44:50 PM
S&P 500 60-minute chart short-term traders may be looking for 50-minute interval to serve as support, but each hour's high has been lower. Current hour has been "inside hour". Link

  Austin Passamonte   2/15/02,  2:39:44 PM
Now looking good for a higher pop into the close as all intraday charts begin turning bullish. My most recent long has stops advanced to entry and will trail it close on further upside strength. ATM or slightly ITM options would be my personal choice from here, but only if/when their respective 10/5 minute chart signals went back to oversold extreme, which should happen at least once in the next 1.5 hours.

Splittin' hairs & having fun!

  Jeff Bailey   2/15/02,  2:38:19 PM
VIX.X reading at 68.18, this has to be a bad tick.

  Jeff Bailey   2/15/02,  2:37:19 PM
Analyst Upgrades/Downgrades Lots of questions on these. Are they worth anything?

I like most subscribers question any upgrade/downgrade. I started doing this about 8 years ago when analysts for the firm I worked at would rate a stock, I load clients up on it and it would tank.

Then I "got smart" and simply started using them as "idea generators" and all I do is pull up a chart of the upgrade/downgrade on the p/f chart and see if the market agrees.

For instance, one subscriber question's Pru's morning call for "sell" on J.P. Morgan (NYSE:JPM). Let's put it to the test and see if the MARKET agrees with Pru.

Point/figure has given three consecutive sell signals since December (red C). Thinking ... OK, Pru has been telling somebody to sell for three months (I always play devil's advocate with analysts). Is Pru trying to get me to short the stock to provide liquidity so that they can cover their short without driving the price up? They wouldn't do that, would they? No.

Vertical count is bearish to $29. Hmmmm..... stock traded $29 just recently.

Now I'm not sure. Stock does look weak, but near a bearish price objective. Thinking I'd better be careful if short, but if stock break $28, I don't see any support. Stock can and do sometimes exceed bearish price objectives. Link

  Eric Utley   2/15/02,  2:33:37 PM
Anybody notice the pullback in the Biotechs (BTK.X) over the last few sessions? I think it's market-related, which is a good thing for bulls. The sector gets interesting to me, from a bullish basis, back down between 450 and 475.

  Jeff Bailey   2/15/02,  2:20:02 PM
Convertibles no, not the cars, the various offerings company's will do as mentioned per Adelphia Communicatons (ADLAC) $19.24 -7.8% (see 11:48).

Not all secondaries are short/puts and they can blow up on the unleveraged short. I wrote an update one day on Analog Devices (ADI) and a convertible that was done by them Link

This may be worth reading if you want some thoughts on what can happen with these convertibles.

Note! That was written September 26, 2000, not 2001.

  Austin Passamonte   2/15/02,  2:15:26 PM
Covered short S&P from 1110.75 to 1105.75 and switched to the long side at 1106.00 as I wager that the next two hours will pop up from oversold extreme. Stops must be tight or 100% risk-capital used, depending on our chosen trade vehicle.

Expect a solid market move to begin any time between now and 3:30pm EST. Indexes can easily plunge further down but with all intraday chart signals buried in oversold extreme I will test the upside while treading very lightly with high-risk capital!

  Jeff Bailey   2/15/02,  2:13:21 PM
NVIDIA (NVDA) $57.36 -7.73% ... I did some work on this one last night with retracement. As it turns out, retracement actually ended up being "conventional" retracement from $71.68 to $13.93.

What I had done without looking was really try and honor what looked to be a major pivot in the stock at the $50 level. You can really see it on the bar and p/f charts. When the stock broke the $50 mark in November, it ran to $55.99, then pulled back to $50 and bounced like a rubber ball.

Conventional and even fitted retracement as that above really honors the 38.2% level at $49.62. Last night I noted that stock traded $55 in after-hours and that is smack dab between 19.1% retracement of $60.65 and 38.2% of $49.62. Very neutral in the range of retracement by market makers is my thinking.

Believe it or not, the vertical count right now is bullish to $81. I think had this SEC thing not creeped in, the stock could well have headed there. Stock is still in bullish upward trend. I will note that the "first sell signal" off the top was bearish to $49 and that would tie in very good with retracement. Link

Here's what a bear needs to happen in my eyes. Look at the Relative Strength chart of NVDA vs. S&P 500. If this holds (sell signal on RS) then that may get some institutions to give up near-term and have the stock falling to $49.62. Link

  Austin Passamonte   2/15/02,  2:03:26 PM
Readers Questions in one fell swoop: Many ask what my prediction is for next week, several weeks, several months ahead, etc. A number of readers also point out what other advisory services predict and ask me to look at them, give an opinion, etc.

I realize most OI readers also subscribe to numerous other services as well, and cross comparison is natural. However, I have no opinion now or ever on what other index or stock advisory services have to say. My sole opinion is based upon what I see in the charts and nothing else. If that agrees with others so be it and if it runs counter-to, you must figure out which is right.

I have no opinion on future market direction right now beyond 4:15pm as I hold a short S&P play from just above 1110 and looks favorable from here. We'll deal with next week inside the weekend OI Index Wrap while focusing on closing out this session alive & well!

  Austin Passamonte   2/15/02,  1:55:15 PM
Pretty typical expiration Friday where volatile moves at the open then chop sideways thru the lunch hour, and then setup a sudden move into the close.

Much of the time we have chart signals mixed & fuzzy due to staccato price movements instead of deliberate trends. Right now I have no strong opinion on the closing direction today, and any clarity that forms will come on a moment's notice if at all.

Most traders hate reatinary trading: it gives them no time to get comfortable emotionally with their decision. Most humans like to make calculated, deliberate decisions and then act upon that binding of thought & feeling process.

Such is not the stuff short-term trading is made of, where decisions must be made under battlefield conditions where most humans naturally freeze. This is not an easy game we short-term traders play, but neither has been the buy & hold approach for these past two years and probably several more to come.

  Eric Utley   2/15/02,  1:48:04 PM
Little inside day shaping up in the paper stocks (FPP.X). I'm bullish on this group, one of my favorites.

  Jeff Bailey   2/15/02,  1:20:13 PM
Sector Components! In the Market Posture section of the site, you can click on any of the various indexes and get a list of the components that make up each sector. Link

For instance... if you wanted the list of stock components for the Broker/Dealer Index (XBD.X), just click the XBD under SYMBOL and you're there!

  Austin Passamonte   2/15/02,  1:12:49 PM
I don't see any real clear option trade entries right now, although the downside has yielded more opportunity to profit so far. I covered my S&P long on a stop-out at 1110.50 and went short on a sell-limit at 1110.75 so we'll see what happens next.

This is strictly following 10/5 min chart signals from overbought extreme and trying to catch very tiny index moves during a rather small-range session. I'm scratching out some meager gains today while missing the two best moves so far, but this is all just trading "market noise" for now.

Certainly not fit for most players, but those who like (or at least don't mind) fast action and high adrenaline, there have been some pennies to eke out. Sure like buying on Monday and covering Thursday afternoon for massive gains better with three-day weekend after that. But when have those days presented themselves lately?

  Eric Utley   2/15/02,  1:00:32 PM
Getting an upside alert here in the Oil Index (OIX.X) at 300.00, which is a double top in the index:


  Austin Passamonte   2/15/02,  12:45:22 PM
I hate this lunchtime lull period... wish it were warm enough outside for a one-hour bike ride around the block. That's a great way for me to release intra session stress and handle the afternoon action relaxed, focused and ready to win.

Guess we'll settle for non-market chores around the office while stops are set and one eye on the market until 1:30pm approaches. Distance breeds clarity and freshness for optimum trading decisions!

  Austin Passamonte   2/15/02,  12:42:33 PM
First the Canadian figure skaters got the shaft, now they get the gold. But their biggest gold mine has certainly been global coverage and their gracious handling of the blatant Enron-like (new adverb?) collusion in judging the event.

Wonder if that cute couple will get any endorsement deals from this? Great for them... they deserve all the best & more!

  Austin Passamonte   2/15/02,  12:36:53 PM
One thing that pleases me greatly today is the volume of email from readers who've made good money playing calls and puts (or both) in what has been a rather difficult, whippy market. I personally have underperformed today and that is always irksome on a personal level, but more importantly I see plenty of old IS and new OI/IS peers are catching on how to limit risk and avoid massive loss first, then mastering how to eke out methodical gains after that.

  Jeff Bailey   2/15/02,  12:28:56 PM
Steel tubing that goes in the ground Both Maverick Tube (MVK) $12.01 +2.47% Link and Lone Star Tech (NYSE:LSS) Link provide the steel tubing that goes into a lot of oil/gas wells. Notice how these stocks are lagging.

This is part of the reason that I am still rather cautious toward oil service. Need production activity to increase to build the demand for these services and products.

Even if a move gets away from you to the bullish side in service stocks like SLB, HAL, BJS, NE and others, can still turn to the LSS and MVK's to make some good money as they usually lag the move.

  Austin Passamonte   2/15/02,  12:24:21 PM
Looks like I've found myself trying to get long today in a falling market. The two biggest intrasession moves have both been failed pops. I've managed to squeak out some gains in the smaller move upwards, and 60/30 min charts have been little help. They flashed weak bullish indication earlier and then turned bearish right after my last upside order got filled.

When I find this happening to me, I immediately tighten stops (if used) or exit plays the first chance possible and get flat. That allows me to reassess the market with clear head: any bias or hope based on open play's emotional tug can only make matters worse.

I still think we'll get a bounce off these recent higher lows, but wouldn't be surprised if that fails on a lower high than last time and sells off again. Very tight turn market today... wouldn't a trend continuation with occassional pause to let us in be nice?

  Jeff Bailey   2/15/02,  12:23:10 PM
CHC Helicopter (FLYA) $13.01 +0.85% ... not interested in owning this one, but noticing the bullishness. Link

This company provides helicopter transportation services for flying petroleum geologists/engineers around to various offshore platforms. Better than any ride you can find at Disneyland too. Link

  Jeff Bailey   2/15/02,  12:17:44 PM
Oceanering Intl. (OII) $23.23 +3.19% Link is an interesting "oil service" that traded some good volume yesterday on an upward move. Support should be firm at $20 and current vertical count is $28.50. What I/you may want to do is look at some charts in the sector. What I'm seeing in part is some "off shore" flavor of bullishness. That is, stocks that serve offshore or oceanic drilling/exploration.

  Austin Passamonte   2/15/02,  12:13:42 PM
We'll try our luck with another round of S&P longs at 1108.25 and sell-stop at 1106.00, just under session lows. Intraday charts are looking mixed to weak, but all are near or deep within oversold extreme so we'll probe the bottom here with limited risk of partial gains from earlier today.

Dicey conditions for scalpers right now but I'm betting earlier lows hold with nervous conviction on my part, exhibited by small positions played.

  Jeff Bailey   2/15/02,  12:04:33 PM
Carbo Ceramics (CRR) $36.15 +0.69 ... "oil service" stock giving a double top buy signal after recently pulling into bullish support trend. Link

  Austin Passamonte   2/15/02,  12:03:16 PM
As we guessed before, the bears didn't buy that first pop off this morning's low and shorted it all the way. They will really press the pedal if earlier lows get broken on a test. But if those prior session lows hold, buyers will step in and press back toward the highs later on.

That's how the game is played in the CME futures pits and CBOT bond pits which in turn drives stock market action on directionless days like this. It will most likely get turbulent in the final 30 minutes or so today, so let's see how the afternoon shapes up.

  Austin Passamonte   2/15/02,  11:58:53 AM
Readers Write: "I got in at .75 but didn't get out fast enough.. watched the $800+ gain evaporate to $200!waahhh.. saw it at $1.75 and that's when I should have pulled the trigger. oh well, it was still a good call! :)"

"Hi Austin, I took the OEX trade and I was shocked at how quickly it moved. In hindsight I should have at least taken 1/2 off the table. Now it has pulled back. The life of trading! My point in light of the timing (expiration Friday), I should have a taken a solid profit when it presented itself even it does run up from this point on. Thanks for spotting the trade."

"Nice call Austin... Bought 200 contracts at .7 sold at 1.10... rebought them at .7 again and sold at .9.....this is first time I trade OEX index and I like it. Very Liquid. Thanks"

This type of action repeats itself every third week of every calendar month without exception. There are always a few doubles (or much better) available once worthless time premium gets stripped away. The key is to wait for ideal intraday chart setups and quick trigger fingers at the entry and especially exits.

Once in a while we get a large-range move that pays to stay with a trade, but a general rule of targeting doubles on a 1/1 risk-reward is solid when high-odds chart setups keep our win percentage well above 50/50. Add in the ocassional big hit, and skilled traders using PROPER MONEY MANAGEMENT can do quite well over time during options expo week.

  Jeff Bailey   2/15/02,  11:50:53 AM
Longer-term Put Players Look at the ADLAC Jan03 $20 Puts (OFYMD) bid $4.60. Don't overleverage, but look for this one to trade the $5 level eventually.

  Jeff Bailey   2/15/02,  11:48:38 AM
Adelphia Communicatons (ADLAC) $20 -4.4% ... BIG convertible from 01/16/02 underwater on this one and they'll be shorting to hedge it. Stock looks very weak and any dilution is going to have "fundamental" investors wondering what happened to the earnings.

This one looks ugly and vertical count today with the sell signal at $20 gives bearish target of $6. Link

  Jeff Bailey   2/15/02,  11:43:48 AM
AES (NYSE:AES) $8.00 -15.78% ... Stock breaking to new lows yet again... point/figure is bearish with a vertical count of .... $0.00? Link

  Austin Passamonte   2/15/02,  11:27:14 AM
Readers Write: "Nice advice Austin. Bought 50 contracts of the OEX 565 at .75 and sold it for $1.50 just now. Thank you. [DB]"

Sounds like a fair day's wages, DB. Think how nice it would have been to catch the morning drop preceeding this play as well! But we cannot see them all in the setup, and that bigger move at the open just simply "fell out of bed".

I'm happy to catch one out of two or three viable moves as my focus is more on missing losers than catching risky winners. That being said, there could be one more upside play later this session and into the close for those who are now flat and willing to wager SMALL amounts of capital for potentially big gains.

  Eric Utley   2/15/02,  11:20:39 AM
A couple of things that stick out to me this a.m.:

The financial complex trades heavy again. The brokers (XBD.X) are lower by about 2.5 percent and the banks (BKX.X) are down by 1.25 percent. Meanwhile, the bid in gold (XAU.X) remains and so does the bid in bonds. The benchmark 10-year yield (TNX.X) is measurably lower. Telecom is a place of peril.

  Austin Passamonte   2/15/02,  11:07:59 AM
One thing I will not do is short this market today while 60/30 min chart signals are rising or pointing up from oversold extreme. This is a "buy the dips" only session unless those 60/30 charts turn bearish later on.

  Austin Passamonte   2/15/02,  11:05:51 AM
Out of the S&P play at 1113.00 stop for +6.00 index points. OEX calls are now trading at 1.50 or +100% of our entry at 0.75

Some players actually got in at 0.65 to 0.70 behind me, but I can live with missing a few ticks from the turn! Mental stop is now set at 0.80 as I'm willing to lose it all but no need to do so from here. Bid reaches 0.80 and I hit "sell-limit" 0.75 in a flash... but will hold this play into afternoon looking for greater multiple than current.

Traders could sell half the position, recover all initial capital and let the rest ride on a "free play". I'll take my daily wage from the S&P play and look for big payout on the OEX call play slot machine from here!

  Austin Passamonte   2/15/02,  11:00:35 AM
S&P stop now moved to 1113.00 for +6.00 index points locked in, and OEX calls are trading 1.20 right now.

Looks like the upside party's getting started and we caught the bottom if this current action can hold.

  Austin Passamonte   2/15/02,  10:56:33 AM
Breakfast is over... did I miss anything?

Looks like the S&P play needs a stop raised from 1105.00 to 1110.00 and the call options are on their own. Intraday charts buried in oversold give us good odds of an afternoon pop into the close, but I wouldn't rule out at least one more test of session lows before that happens.

  Jeff Bailey   2/15/02,  10:37:39 AM
Cabot Micro (CCMP) $57.57 -2.8% ... stock looks to be breaking down further. Point/figure has been been bearish and currently carries a bearish vertical count to $55. Stocks can always exceed their counts and this one looked like it might. Link

If so, then would look short/put 1/2 position as we are close to a bearish count. Volume was rather heavy yesterday on the break of the $60 level. Stop just above the rounding 200-day of $66.60 or tighter stop just above $60. Link

  Austin Passamonte   2/15/02,  10:26:57 AM
Trades are in, risk is defined and time must take over from here. Think Madison & I will go whip up some scrambled egg whites cooked in extra virgin olive oil with a touch of garlic powder and half-dash of red pepper. Top that off with grated aged parmesan cheese (block form, not shaker can) and apple/cinnamon oatmeal drizzled with honey.

Keep an eye on the markets for us, ok?

  Jeff Bailey   2/15/02,  10:26:12 AM
Time Warner Telecom (TWTC) $7.40 -9.20% ... stock achieved bearish vertical count of $7.50. Trader short/put should snug down stop here or lock in gains. Link

Another "telecom-related" stock that is under pressure.

  Austin Passamonte   2/15/02,  10:23:07 AM
OEX Feb 565 Calls [OEB-BM] filled at 0.75 using 100% risk capital. Breakeven at expiration is OEX 565.75 and the rest is gravy, if we get that far. I'm risking the entire small purchase to loss on the chance that 60/30/10/5/1 chart signals all near bottom of oversold cycle to kick back up later today.

A double would be nice and more is welcome as well!

  Jeff Bailey   2/15/02,  10:19:12 AM
Phelps Dodge (PD) $38.16 -1.26% ... we've had a nice little run in this one from the $34 level and I'd look to protect some gains here at 50% retracement. With market jittery and willing to sell, could see pullback to the rounding 200-day MA at $36.50. Willing to take some gains here, or could use stop just under yesterday's low of $37.55.

  Austin Passamonte   2/15/02,  10:19:04 AM
I'll try a tiny tad of OEX Feb 565 calls [OEB-BM] now trading 0.70 range and hold into the afternoon as my first small play of the day. IBM down 6.00 but looking to bounce, and if so will snap this market back in a hurry.

Also long the S&P at 1107.00 with stop at 1105.00

  Jeff Bailey   2/15/02,  10:16:41 AM
Michigan Sentiment 90.9 is reading for early February and this was weaker than expected as consensus was for 94.0. In January, the reading was 93.0.

This decline will create some concern that the improvement in consumer sentiment/confidence is reaching a near-term top and perhaps fading a bit.

Since it has been the consumer that has been the one holding things up in the economy, this data should be monitored closely. Today's number looking a bit negative

  Austin Passamonte   2/15/02,  10:15:19 AM
Readers Write: "You know I appreciate all your teachings and everything :-) but I'm shorting any rally with a vengence, the tide has clearly turned IMO. [KM]"

That may indeed be the course to take, depending on what time frame of trade. Shorting in the hole from here to the close today could be a big mistake. Shorting next week and thereafter may be what we all do. Rest assured the majority herd wants to and is shorting right now, and we'll see how it works ahead. I'm playing either direction when charts line up and none when charts are mixed while using options.

  Jeff Bailey   2/15/02,  10:12:10 AM
Dow Industrials (INDU) $99.38 -0.63% .... pulling back after giving triple top. One thing I will note here that is somewhat bearish is that rally came right up to a downward trend. If you take a 45-degree channel line down from the $10,350 level and project down to the right, that trend would be right at the recent rally high of $10,050. If the bullish support trend (blue +) were broken to the downside, then that trend from $10,350 would be the bearish resistance. Link

This would have me closing out any call option play on the DJX.X at this time from earlier in the week.

  Austin Passamonte   2/15/02,  10:07:58 AM
Last Friday was a drop & pop session... will this one be the same? Right now we see no price turn in sight, but 5 hours of live trading remains!

  Austin Passamonte   2/15/02,  10:06:27 AM
Readers Write: "Austin, c'mon man - that early drop was a goner watching 10/5/1 charts, shorted the e-mini at 1116 and now 1111 & dropping like a stone. Aren't you watching your own charts? Regards [CK]"

Yes, CK you are absolutely right. Option traders have a tough time playing just 10/5/1 min charts when 60/30 and longer periods differ. Wide bid/ask spreads and lower liquidity than your vehicle means option traders must wager on clearly aligned charts to profit over time and many trades.

Options offer much bigger multiples for gains but far less margin for error, so cannot gamble mixed charts as easily. Nice trade, by the way!

  Jeff Bailey   2/15/02,  10:05:05 AM
PMC Sierra (PMCS) $21.60 -0.36% ... stock has been building a rather large wedge on its bar chart and looks suspect. This one too looks vulnerable near-term to retracement at $19. Link

Relative strength of PMCS is "sell signal and column of O's" vs. S&P 500. Link

  Jeff Bailey   2/15/02,  9:59:49 AM
Shorts I still like Citigroup (C), Celestica (CLS).

  Austin Passamonte   2/15/02,  9:59:20 AM
An instant plunge to just under Thursday session lows begins the expiration morning volatility. We usually see one sharp move in the first hour and then one more in the final hour. My guess based on chart readings was a pop to the upside soon, but price action countered that and fell instead.

Still waiting for all 60/30/10/5 minute charts to align in unison before I attempt my first play, and no idea if/when that may happen. We are in full "lock & load" mode right now with safety on and finger off the trigger, but perring through the scope at our target.

  Jeff Bailey   2/15/02,  9:58:29 AM
Treasuries seeing a lot of buying, not good for equities in my opinion. Today's economic data still that of a slow economy and may be seeing some bulls pull the plug on short-term trades. Not liking that QQQ bullish trade from yesterday and willing to move to sidelines with small loss. Way too much negativity on accounting concerns. NVDA and IBM trying to throw their hat into the ring to help that worry.

  Jeff Bailey   2/15/02,  9:56:15 AM
Sector Weakness Networking (NWX.X) $260 -1.7% Link

Internet (INX.X) $112 -1.65% Link

Telecom (XTC.X) $626 -1.78% Link

  Jeff Bailey   2/15/02,  9:52:25 AM
Sector Strength Gold/Silver Index (XAU.X) $69.10 +1.5% Link , Oil Service (OSX.X) $87.60 +1.08% Link and Airlines (XAL.X) $91.82 +1.11% Link

  Austin Passamonte   2/15/02,  9:52:20 AM
Readers Write: "Austin, You said recently that that the futures market drives the cash market. Say the futures open up, then the cash market opens @ 9:30 down, and stays that way. Soon the futures will come down to the cash market. So it appears to me that the cash market drives or leads the futures. Thanks, [B]"

Partially true. When B speaks of pre-market futures pricing, this is just the market's best guess on where cash markets will trade near the open. That is often jostled by pre-staged buy or sell orders during the first 30 minutes of live trading.

However, the futures market is not pre or post-market action only as many equity traders think. Index futures trade at the CME all day, and that's where the really big money moves in & out of the equity market in a flash. Therefore, preset buy or sell programs or impulsive reaction to breaking news drives the live futures market first, which then steers the cash market as hedging from there spills over to actual stocks.

  Jeff Bailey   2/15/02,  9:44:44 AM
IBM (IBM) $104.08 -3.4% ... stock down after New York Times article that IBM did not disclose that the sale of an optical business to JDSU had generated $300 million that the company used to lower its operating costs in Q4 earnings that were reported in mid-January. The company did not provide details of the transaction to investors or account for it as a one-time gain, as is the practice.

After achieving then exceeding a vertical count of $122 from the point and figure chart, shares of IBM have reversed course and given a "high pole warning." First sign of trouble would be a trade at $100, a double bottom sell signal. Longer-term trend still bullish at $94. A trade at $100 would give a vertical bearish count of $90. Link

  Austin Passamonte   2/15/02,  9:43:45 AM
Readers have noted it's been a dull expiration week so far. I see no clear signs that this fact will change greatly today, but with intraday charts all aligning within oversold extreme right now it's a safe bet that an upside pop is in the offing, probably near the 10:00am mark.

If/when 10/5 min chart signals drop to oversold extreme, I will play ATM or slighty OTM OEX calls (depends on where price action is relative to available options) using 100% risk capital and hold into the afternoon.

  Jeff Bailey   2/15/02,  9:35:29 AM
Sell ratings Prudential reiterating "sell" ratings on JP Morgan (NYSE:JMP) $30.21 Link and FleetBoston (NYSE:FBF) $33.75 Link . Cites that unused credit lines are getting drawn down at a fast pace at these two banks in particular, and firm believes that asset quality will continue to deteriorate.

  Jeff Bailey   2/15/02,  9:31:20 AM
Take-Two Interactive (TTWO) $18.56 ... after being halted for trading since January 22nd, stock set to resume trading today at 10:00 AM EST. "We wish to once again extend our most sincere apologies to our shareholders for any inconvenience they have been caused due to the halt in trading of our Common Stock. The past several months have been a difficult time for Take-Two and its management, but we have worked hard to restate our historical financials, as well as continue to build for what promises to be a very bright future utilizing the valuable lessons we have learned."

  Jeff Bailey   2/15/02,  9:25:20 AM
Industrial Production ... shows a decline of -0.1%, which was pretty much inline with consunsus looking for a decline of -0.2%.

Capacity Utilization ... came in at 74.2% and this number was also inline with expectations.

S&P futures (sp02h) creeping into positive territory and up just fractional at $1,116.90.

  Jeff Bailey   2/15/02,  9:19:39 AM
Halliburton (HAL) $14.66 ... stock trading higher near $17 after it received asbestos claims stay. HAL reported that a U.S. Bankruptcy Court has issued a temporary restraining order staying more than 200,000 pending asbestos claims against its subsidiary Dresser Industries. The ruling came in connection with the bankruptcy filing by Harbison-Walker Refractories, which was spun off from Dresser in 1992. The stay of claims represents the majority of the pending asbestos claims against Halliburton.

Would expect a rise in Hallirburton to coincide with a rise in the Oil Service Index (OSX.X) $86.66.

  Austin Passamonte   2/15/02,  9:18:17 AM
Great Morning!

Last day of trading for February American-style setled options... in other words it's expiration Friday. Just as the SPX 1125 put went from 6.00 to 12.00+ yesterday afternoon (QQQ and OEX same or better) we should see at least one double or triple between both bells.

For the high-risk players only, I will point out any high-odds market turns visible today for consideration with ATM or slightly OTM option contracts on the QQQ or OEX. Traders who opt to follow along better be 150% sure of how much capital is risked, managing entry & exit points, etc.

Trading today is carefully managed risk IF using 100% risk capital, no stops and the understanding that zero can be the result easily as doubled or tripled capital on a play.


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