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  Jeff Bailey   2/26/02,  5:04:38 PM
A couple of weeks ago, subscriber was wondering why Treasury bonds were hanging around current levels, but stocks were drifting lower. Where was money going?

One thought I has was just moving to cash or paying off debt.

Today light buld goes on as Abgenix (ABGX) $23.98 +2.78% announces it plans $200 million convertible offering.

In recent weeks, I've lost count of the number of companies reporting that they were doing convertible offerings. These convertibles are sucking some cash from the stock and bond markets for sure.

  Mark Phillips   2/26/02,  3:53:22 PM
Interesting note from an eSignal user. Apparently, the ADVDECV.NY indicator in Qcharts can be had in eSignal as well -- the symbol is $VOLD. Thanks John! Additionally, he points out that there is an interesting correlation with the S&P500 futures and e-Mini contract that bears watching. I'm on it! I'll let you know if I have any meaningful revelations...

  Jeff Bailey   2/26/02,  3:47:57 PM
Applied Materials (AMAT) $44.80 -0.31% ... this may be one for more "cautious" semiconductor equipment bull to monitor.

Looks like "inside day" today on bar chart and may be able to use that tomorrow and help control risk for short-term traders. Link

P/F chart bullish somewhat neutral to bullish. Vertical count is bullish to $61 and recent reversal on chart came from bullish support. First sign of trouble is trade at $41, so from $44.80, risking $3.80 or 8.4%. (short-term trader can perhaps reduce this risk with "inside day" technique).Link

I think AMAT may be better trade, but that come with risk/reward and trade setup.

Ahead of economic data and market a little jittery, will want to look bullish in tech only in an area where some longer-term bulls may be present.

I also like the 50-day moving average and 200-day MA just below to offer some technical support in AMAT, whereas in KLAC the 200-day MA is down at $50.

Just thinking "negative" and "what if" economic data is weak? More likely that KLAC would get hit to downside more than AMAT at this point.

Just trying to weigh the +'s and -'s.

  Jeff Bailey   2/26/02,  3:36:54 PM
KLA-Tencor (KLAC) $59.87 +0.85% ... subscriber wondering if this good bullish candidate from p/f chart?

Current vertical count is $76 and first sign of trouble is $54. Stock likes to hold bullish support trend. Link

Relative strength chart of KLAC vs. SPX also strong so can't say trade isn't compelling from bullish side. Link

Can see potential for nice move if economic data is strong. If not, stock could pull back to mid-$50's.

Will look at Applied Materials (AMAT) too.

  Mark Phillips   2/26/02,  3:16:02 PM
As the lagging index that it is, the NASDAQ is giving similar indications, with the ADVDECV.NQ breaking out of the midday consolidation and price action attempting to follow suit. But it is definitely the weak sister to the DJIA and the S&Ps, as Austin continues to point out.

Simply put, the bulls are continuing to buy the dips now that the daily charts are once again in ascent mode. How long it lasts will take a sharper brain than mine to figure out!

  Mark Phillips   2/26/02,  3:11:36 PM
Interesting observation from my new indicator, the Advance/Decline volume...Noticed that the ADVDECV.NY pushed through its session highs around 2:40pm, and now 25 minutes later, it looks like the DJIA is attempting to follow through in price. DJIA is now pushing above 10,130, the intraday highs after the early drop following the Consumer Confidence numbers.

While this could be an early bullish indication, it's too late in the day for this trader to try to game the move, especially with Greenspan on deck for tomorrow. I'm still observing, but gaining confidence in my new tool.

  Austin Passamonte   2/26/02,  3:06:02 PM
I continually watch various time-frame charts thru each day so as not to get tunnel vision in one spectrum while ignoring a larger one. In essence we have weekly/daily charts telling us the markets want to move higher, while intraday charts coil in sideways consolidation to form bullish triangles in the 60/30 minute charts today.

See those higher session lows and flat highs today? Roughly 70% of the time such patterns break to the upside. On top of that, W/D/60/30 min chart stochastic values are all pointing up as well.

Based on this I think we will see higher index levels ahead, especially tomorrow if "Easy Al" Greenspan soothes the market in his speech as he tries so hard to do these days.

  Jeff Bailey   2/26/02,  2:52:41 PM
April Light Sweet Crude (cl02j) up rather sharp in last 90-minutes to $21.43 +4.58%. Don't see much news but know that American Petroleum Institute report later today. May be just technical risk/reward trade from earlier observations. (see 10:40)

  Jeff Bailey   2/26/02,  2:33:26 PM
MSFT vs. CCMP Maybe a trader that is thinking short/put may see how the vertical counts could come into play when trying to make a decision on short/put a stock as part of selection criteria.

Is there enough potential downside from the vertical counts to keep bears interested? Vertical count is bearish on both, but MSFT is $47, while CCMP is $52.

  Mark Phillips   2/26/02,  2:31:10 PM
Administrative note It's a good thing I spent the early part of the day answering email, as my email server is currently dead -- with an unknown time of recovery. So if you've sent me email in the past few hours, its safe to say I haven't seen it yet. Be assured I'll get to them whenever my server comes back to life. Until then, this is my only form of communication. It's a good thing its a quiet day in the markets!

  Jeff Bailey   2/26/02,  2:30:55 PM
Cabot Microelectronics (CCMP) $57.53 +1.24% ... subscriber asking about stock.

I think we've talked about this one in the past too. Stock had a couple of vertical bearish counts that were indicating $55 to $52.

The $55 vertical count was from the very top back in January. The $52 was/is the most current vertical count (column of O's just to right of red 2). Link

Not sure about this one as short/put at this time, but not really interested in long either. RS chart of CCMP vs. SPX just reversing into column of X's and we've seen this in past. For now, would follow any short/put with a stop just above today's high, with thinking that vertical counts have been pretty close to how stock has traded. Link

  Mark Phillips   2/26/02,  2:16:14 PM
Speaking of the broad markets treading water, take a look at the ADV/DEC Volume indicators I spoke of last night (ADVDECV.NY and ADVDECV.NQ). Despite several attempts by the markets to both rally and sell off, the breadth indicators are saying there is no conviction either way. Confirmation that today is a day to rest and wait for the next directional move -- likely to be spurred by whatever Uncle Alan has to say in his testimony tomorrow.

  Austin Passamonte   2/26/02,  1:29:29 PM
Indexes have treaded water in sideways fashion all day after the early volatile moves. Next decisive action will come beyond 2:00pm if there is further to go either direction today. All or nothing these days... 95% boredom and 5% pure adrenaline, so no napping in between!

  Jeff Bailey   2/26/02,  12:58:31 PM
Day trader has to be pretty flexible and take what market gives them.

Swing trader getting a cup of coffee, petting the dog and seeing some bullishness, but not overly excited about things at this point.

  Jeff Bailey   2/26/02,  12:57:08 PM
Dow Transports (TRAN) and Airlines (XAL.X) back at session highs and hint they may be trying to lead market back into the green.

have YIELD alert on 10-year at 4.913% for short-term as that would be a break above 02/20/01 recent high YIELD and could see YIELD move up to retracement of 4.983%, which correlates well with both the 50-day and 200-day MA's. Very range bound feeling here, but pressure could be building.

  Mark Phillips   2/26/02,  12:54:06 PM
Just refereshed my Market Monitor window and saw that Eric beat me to the punch on Biotech comments. It's good to see that we're pretty much in agreement -- this sector looks good from the long side, but we'd prefer to see a bit more potential risk taken out with a bounce down in the $450-475 level on the BTK index, which corresponds to the $112-115 level on the BBH. So maybe I'm being a bit too aggressive with my $114-116 target. Use your own judgement for entries, but remember that controlling risk is our FIRST priority!

  Jeff Bailey   2/26/02,  12:51:17 PM
NYSE Composte (NYA) also just starting to show some green.

I got some e-mails from a couple of traders that shorted MSFT near $60 this morning. If you're a scalp trader and got $1, then this would be point to lock in gains on MSFT. Otherwise risking to stop just above $60.36. Weigh the risk/reward and make your decision.

  Mark Phillips   2/26/02,  12:49:23 PM
It has been a busy morning, responding to the flood of email that I awoke to, but now I'm back looking at the market.

Thinking that I made the right call yesterday in not chasing entries on any of our LEAPS plays, as all are showing weakness -- which should come as no surprise based on the Consumer Confidence news and Iraq rumors.

With that being said, there is no arguing with the fact that everything on my watch list is trading above the lows from last week and that is encouraging. Pullbacks may be good for bullish trading entries on the likes of IBM, BRCM, GS and BBH, so long as the selling exhausts itself ABOVE our entry targets. Renewed bounces above those levels would have me considering bullish entries.

Here's the rub though...prevailing sector weakness for all of the above mentioned plays indicates this upward move on the daily charts could just be a head fake tied to the end of month monkey business by the mutual funds that Jeff mentioned earlier this morning.

The only play listed above that I'm seriously considering at this juncture is the BBH, which is trying to put in a solid bottom. Like I (and Jeff and Eric) have mentioned recently, the $115 level looks interesting for new long positions, so long as that support level holds. It makes risk much easier to manage with a stop at $111.50, just below the early February lows. I would target new entries on any solid bounce from the the $114-116 level.

  Jeff Bailey   2/26/02,  12:48:34 PM
Short-term traders! 10-year YIELD is ticking higher and just above the 4.9% level. Gold stocks are on the move and has me thinking some thoughts to economic growth.

Short-term trader that is short MSFT (trading $58.37 here) may want to close out here. Looks like she's getting a bid from market.

Noting that Russell 2000 or smaller caps also getting some bids as that index turns green.

These observations are for short-term trader's only.

  Eric Utley   2/26/02,  12:39:13 PM
When we first tried that bullish trade in the Biotechs (BTK.X) on February 7 -- their relative low at 450ish -- we talked about some of the downside risk in the group shifting into the Semiconductors (SOX.X). That scenario has played out over the past few weeks and is again showing in today's session with the SOX lower by about 2 percent and the BTK only fractionally lower.

I like the biotechs for another bullish bet closer to the 450 level; the closer the better. I've been talking about waiting for the BTK to pullback between the 450 and 475 range. It did that ever so slightly yesterday, but I think it could work lower still before offering a better risk set-up.

As for the SOX, I think that's where a chunk of the downside risk in tech currently resides. There is the valuation issue as well as the potential for a down-tick in the PC market. The decline in the consumer numbers today, I think, add credence to the notion that the PC market is weakening.

On the technical front, the SOX has given up some relative strength versus the BTK. This relative strength chart depicts as much:


Moreover, the SOX rebounded from a most important support level late last week at 500. This chart reveals the importance of the 500 level:


The test of the bullish support line, if it comes, will help to reveal how the market perceives the downside risk in the SOX. A rebound would have to be taken into the next progression of upside risk, where the bears will look for lower highs. While a flat-out breakdown below that high-profile 500 level would cause the shorts to press.

  Jeff Bailey   2/26/02,  12:38:13 PM
GT Dorsey/Wright chart looks to be right, so will e-mail stockcharts.com some changes.

New bulls that this point may take 1/2 position, but look for pullback near $24 as opportunity to buy strong stock on pullback should it happen.

  Jeff Bailey   2/26/02,  12:33:56 PM
Goodyear Tire (GT) $27.22 ... big test here at bearish resistance trend on p/f chart and this will be big test near-term. May dilly/dally here for days, never sure. Must monitor. Trader that took buy signal on alert at $20 now faced with 30% gain. Depending on how your account has done (if out of tech since December, then probably OK) may hold and let action unfold. Link

Stockcharts.com and Dorsey/Wright p/f charts are different. On Dorsey, they have stock breaking above bearish resistance today. Will have to see whos chart is right/wrong. Bad ticks in the data most often the cause for chart differences.

  Jeff Bailey   2/26/02,  12:28:21 PM
Goodyear Tire $27.22 +2.98% ... that silly thought back in November of 0% financing for cars may have GT in play as demand for tires might be increasing looks to be paying reward. Stock continues to "burn rubber" and has upside now to retracement of $28.91. (retracement from $17.72 to $31.64).


  Eric Utley   2/26/02,  12:24:36 PM
The Oil Service (OSX.X) group is modestly lower today after its strong two-week run. Through yesterday's close, the OSX was better by about 12 percent in the prior two weeks. That was a healthy move, part of which I think was attributable to the talk of invading Iraq.

The talk today that Bailey has been tracking hasn't caused any move of significance in the OSX. That has me wondering about just how much of the news is already priced into the group???

It is my belief that the way to trade these news, or potential news, events is by being in ahead of time. You can't intelligently manage your risk on an announcement of an invasion in Iraq, for example. You can be in ahead a position ahead of time, however, by monitoring the supply/demand of a particular group.

With that said, I like the OSX on a pullback over the next several days as the technicals permit. I don't know whether the U.S. will invade Iraq; in fact, there may be some other catalyst at play, such as a rebound in oil demand and a reduction in supply. Independent of the Iraq news/rumors, the demand in the OSX begs watching for bullish set-ups.

  Jeff Bailey   2/26/02,  12:24:24 PM
LPX $9.64 ... can take retracement on bar chart from $13.84 (5/17/01 high) to $5.80 (09/2/01 close) and see 38.2% retracement at $8.87, 50% at $9.82 and 61.8% at 10.76.

This may have near-term hurdle being 50% retracement at $9.82 but could see near-term rally to 61.8% retracement of $10.76, which correlates nicely with consolidation back in September just prior to terrorist attacks. Link

For strong move past the $10.76 level, would need to see some type of increase in volume. Bulls always like to see strong volume on breaks of 200-day, otherwise we can see pullbacks to test.

  Jeff Bailey   2/26/02,  12:14:41 PM
Louisiana Pacific (LPX) $9.69 +3.6% ... subscriber asking about this one.

I have stock as "forest/paper products" and that peaks my interest immediately as this is sector that we discussed yesterday from Stock Trader's Almanac as being bullish sector historically for March.

LPX shows quadruple-top buy yesterday and break of downward trend. This is quite bullish technicals on p/f chart. I like this one as bullish and vertical count now bullish at $14. Link

Relative strength of LPX also bullish vs. broader market S&P 500 Index. Link

  Eric Utley   2/26/02,  12:11:13 PM
If you're a believer in an economic recovery, you have to take note of the action in the Dow Jones Transports ($TRAN). The trade well today and are again challenging the triple-top resistance at 2800.


For more of a micro view, I'm watching the Airlines (XAL.X) trade higher today, out pacing the broader market, including the $TRAN. The airline group is one I like for bullish positions throughout this year, thinking more of an intermediate- to longer-term position. The recovery of the business is well underway. And I know that from using a conventional retracement from 09/10 to the low in September. Through today, the group has recovered about 62 percent of its losses surrounding the September 11 event.

The XAL is poised to test its long standing bearish resistance line.


If it follows precedent, it should pause at the bearish resistance line. But the future is unknow, so that's not a prediction.

I think a pullback from a pause at the bearish resistance line would offer a favorable risk set-up in some of the stronger companies in the group. The two I like most are Southwest (NYSE:LUV) and Frontier (NASDAQ:FRNT).

The upcoming Jet Blue IPO should serve as an intelligent gauge into the sentiment surrouding the airline biz. It's another of the profitable airlines, such as the aforementioned two, that could garner investor interest and help the broader sector higher.

I suppose there could be some concern over the recent rise in the price of energy. But the more I study the cost structures of the airlines, the more I believe that the economy plays the bigger role for these stocks. From what I gather, the price of energy accounts for roughly 10 percent of an airlines costs, on average of course. The bigger issue is a pickup in business travel and consumer travel, which are both levered to the economy in one form or another.

  Jeff Bailey   2/26/02,  12:07:11 PM
Dow Industrials Breadth 8 stocks higher, with 22 stocks lower. Gains found in some of the more cyclical names like DuPont (DD), Intl. Paper (IP). Retailer Wal-Mart (WMT) and Aerospace/Defense United Technologies (UTX) showing gains.

Stocks with a "tech" flavor like Intel (INTC) -3.7%, Intl. Business Machine (IBM)-2.29%, are showing largest % losses here.

  Jeff Bailey   2/26/02,  12:03:27 PM
Treasury Bonds now showing YIELDS back in the green across the board and back at levels just prior to the Fox news report of troops in Iraq. (see 10:36, 10:40, 10:41)

  Jeff Bailey   2/26/02,  11:58:29 AM
Dow Transports (TRAN) 2,800 +0.83% ... this economically sensitive sector doing rather well again today. Yesterday participated in gains, and today bucking short-term weakness.

Key level of near-term resistance in my mind remains the 2,840 level and if broken could have a broader market bullish bias.

Last night I was looking closely at CNF again. We talked about stock again yesterday. I do like the way that it looks like bulls defended their positions at the $30.00. Notice the gaps higher on big volume from December 5th and 6th. Have observation that bulls weren't willing to let position "fall apart" and looked to buy at the $30 level, just above a flat 200-day MA.

Test for CNF now looks to be that now rounding 50-day. Most likely news to impact things near-term is tomorrow's economic data and Greenspan testimony. Link

  Eric Utley   2/26/02,  11:52:20 AM
In technology, I'm noticing some heavy trading in the Semiconductors (SOX.X). Intel (NASDAQ:INTC) is the source of the weakness, with shares lower by more than 3 percent. The heavy chips work in favor of Jeff's bearish thesis in Microsoft (NASDAQ:MSFT).

  Austin Passamonte   2/26/02,  11:50:30 AM
Readers Write: "Following up on earlier e-mail from GS and why he should think for himself. When Jeff suggested to short/put MSFT friday, I looked at the chart and was not crazy about the play at that level. I did like it if it hit resistance @60. Today I bought puts when it reached 59.95 with a stop at 60.25.

THANKS JEFF. Even though I did not take the play at that time it now is a great play. Up $650 in hour and a half. Before Jeff's recommendation, I wasn't thinking of MSFT. Thinking for yourself with OIN as help is the key. You guys don't stink!!!(maybe he was referring towhen when you guys are out fishing). [T]"

I add this post out of many, many that replied to GS in rapid fashion. This is not a day-trading room nor chatroom, so let's stay on the educational track here. "T" makes the valid example of what we intend to offer here: trade setup ideas and digestion of live market action to help make trading decisions.

Bailey gave an excellent suggestion as he & Utley often do. The reader used this information as a filter to make personal decisions from there. The reader just improved his trading ability an nth degree because of it. Multiply that each week for months & years and we'll all grow rich in careful, methodical fashion!

  Jeff Bailey   2/26/02,  11:45:18 AM
Microsoft (MSFT) $58.37 -1.2% ... this trade getting a lot of attention from subscribers.

I have no knew feelings on this one. Only observation is that stock down 1.2% and sector GSO.X up 0.32% and this "lag" by MSFT is not any different than yesterday where stock's gains lagged that of the sector.

Speaking of that, last night I was looking at MSFT vs. GSO.X relative strength and understand that there is work to be done. Link

MSFT trading $58.37 and GSO.X trading $158.90 has rs calculation here at 36.7 and would like to see level of 33 give some confirmation to recent underperformance of MSFT vs. sector.

  Jeff Bailey   2/26/02,  11:31:48 AM
Mixed opinions Tons of e-mail from "bulls" and "bears".

As it relates to "Special Forces in Iraq" one subscriber thinks they are there and Pentagon usually denies such reports for security purposes.

Another saying that "lottery play" should have had us selling the Rockwell Collins (COL) calls instead of buying them.

Two very different opinions. Wondering if reader number two actually sold the calls naked and willing to take that risk, or just trying to get a dig in?

Money talks....

  Austin Passamonte   2/26/02,  11:25:13 AM
Readers Write: "Hi Austin, I'm sure I am not the only one with this problem but here is a littly synopsis of my trades the last few days.

2/22 bought ATM Calls in OEX and DJX based on chart alignment. Stopped out later in the day using the "I don't want to lose my whole account theory". Afternoon of 2/22, big move up and I'm not in it.

2/25 another big up day and I'm not in it. Afternoon of 2/25, all charts are overbought and look to move lower. I buy OEX ATM Puts and wait for the down trend to start. Stocks move up but I'm not going to get stopped out this time so I hold overnight.

This morning, stocks are moving up again and I read in MM that the mutual funds are trying to make themselves look good and that many big traders don't trade this time of the month so I reluctantly hit the Sell button to get out of the puts with a 50% loss.

Within 30 Secondsthe consumer confidence number is announced and markets drop like a rock. Not only would my 50% loss be erased but I would actually have a small profit on the puts. This is the third time in 2 weeks that I have found chart patterns that predicted a move but have been in and out too early to actually participate. Have you ever been in a funk like this and if so, how did you get out of it?

Sorry for rambling like this, but it is extremely frustrating to feel you know enough to be able to read the charts and find high odds entry points and still lose money. Thanks for listening [KS]"

KS, I've been there numerous times myself and so has every other options trader I know of. Mainly what I hear you saying is a lack of trade conviction to stay in the game. What that usually means for me is I have too much money on the line for present account size. Coupled with a string of losses and we get even more trigger happy.

My solution when trading options is to play smaller, only buying 100% risk-loss capital amounts of contracts and no stops used at all. This also means less leverage of the account balance and smaller potential gains, which goes against the emotional baggage of wanting to "win it all back" on the next trade. That weakness coupled with low confidence equals a busted account before long. I would consider trading much smaller, using no stops and focusing on a return to prevailing wins without worrying about actual dollars in profit made.

  Austin Passamonte   2/26/02,  11:01:55 AM
Plenty of email feedback on earlier postings and I'll get to them later. But first, a chronology of the whipsaw markets so far.

We've seen intraday charts in overbought extreme and weekly/daily charts turned bullish since last Friday. That means overall bias is higher, but within that framework there is pressure building to be released downward. All it needs is a spark, which we got today at 10:00am EST.

When sell programs kick in, price action plunges and takes out resting stops which triggers more selling action, etc. We can see all this as price levels peel off in straight down fashion. But that is still artificial action and once it stops, price levels are likely to bounce rapidly.

Short-term bearish plays must be exited quickly or at least trailed with tight stops before the usual counter-move ensues, unless the trader has a longer-term outlook. If the first downmove is missed a second one may emerge after the reflexive pop fails at a lower session high.

And that's where we are right now: watching indexes struggle to regain previous session highs where plenty of sellers wait to greet that move. Traders trying to hold plays for days and weeks on end are at a distinct disadvantage in these sideways but volatile conditions, a topic for later discussion in here.

  Jeff Bailey   2/26/02,  10:51:04 AM
That is why we should always have some various groups of stocks to look at to seek out any type of DIVERGENCE that would help us confirm earlier reports. We didn't see anything in crude oil, defense stocks that really confirmed the Iraq reports from Fox news.

Maybe the market does "know everything."

  Austin Passamonte   2/26/02,  10:49:14 AM
Can you stand to stomach watching these Enron scumbags lying their lily-liver butts off in front of Congress? Maybe Skilling knew nothing about all of the dirty, filthy, blatantly illegal operations within his company. Maybe he really is stone-stupid like he purports to be after quitting his job right when stock prices broke to create the inevitable collapse of the corporation under his watch.

But I don't buy that for one second, so CNBC is mercifully on mute while we dial up the Outdoor Channel instead. "Gold Fever Show", anyone? I love those good ol' Massie boys who tromp across the tundra searching for the precious metal in its rawest form. Enron chronicles don't even hold a distant-second in level of interest to me by comparison.

  Jeff Bailey   2/26/02,  10:49:11 AM
Pentagon denies reports that there are any U.S. troops in Iraq.

  Jeff Bailey   2/26/02,  10:48:37 AM
Bond market now calming down and YIELDS pretty much at unchanged levels and right back at yesterday's close levels.

  Jeff Bailey   2/26/02,  10:45:42 AM
Rockwell Collins (COL) $22.50 -1.14% ... if trader did play yesterday's bullish "lottery" play, then that trader not really looking for further exposure to defense group. If big bullish action eventually found, should be covered on this end of things. Link

  Jeff Bailey   2/26/02,  10:44:02 AM
United Technologies (UTX) $71.38 +1.89% is stock seeing some upside, but this comes from some nice consolidation and looks technical in nature. Decent looking long in Dow component. Link

  Jeff Bailey   2/26/02,  10:41:42 AM
Defense stocks like NOC, COL, LMT not seeing any upside here either. Maked me wonder about validity of report or if it has any type of meaning. Just not seeing a bullish reaction from areas we may look for DIVERGENCE from broader market action.

  Jeff Bailey   2/26/02,  10:40:03 AM
April Light Sweet Crude ($cl02j) $20.58 +0.48% ... checking crude to see if it is getting any type of knee-jerk reaction, but I don't see it here. Will monitor, but not seeing it.

I would think this futures contract good trade as 50-day is curling right under this contract and makes for very low risk, high potential return for futures trader with stop just under $20.00. I say this considering Iraq news from Fox.

  Austin Passamonte   2/26/02,  10:38:21 AM
Readers Write: "You stink! Where was your call to go short this morning when the markets drop and now you tell us you're short? What gives?" [GS]"

I imagine newcomers may wonder the same thing GS does. As we so often repeat this window is not a live trading service in here. It is for market commentary, news and tracking plays listed within the newsletter website. I report some trade activity of mine merely as amusement for readers who request such notes.

Today's action was one of those read & react type of things where I watched intraday charts all flash bearish signals for the umpteenth time in two days, but a catalyst finally broke to make things happen. If the trade window wasn't open and "sell-market" order staged for a one click entry I'd have missed half the current move instead of only missing one-third!

  Jeff Bailey   2/26/02,  10:36:57 AM
Fox news reporting that US special forces are on the ground in Iraq and this may be part of reason for stock market negativity.

  Mark Phillips   2/26/02,  10:36:24 AM
So Many questions, so little time. My inbox is full this morning with inquiries on how to find and use the Advance/Decline Volume indicator I spoke of in last night's Trader's Corner article.

For those just looking for the specific indicators I mentioned, don't bother trying to dig up the QCharts Breadthalyzer files -- just use the symbol you are interested in. ADVDECV.NY for the NYSE and ADVDECV.NQ

Hardier souls that are interested in all that QCharts has to offer on market breadth will want to follow these steps:

1.Create a new quote sheet

2.From the Quote Sheet menu, select Import and then Symbols.

3. This brings up a dialog box from which we can select any of the canned symbol files that QCharts provides when we install it. Too bad they don't think to let us know all this good stuff is here, huh? Anyways, open the Quote.com Breadthalyzer and you'll find a symbol file for the Dow 30, all US Stocks, The NYSE, The NASDAQ, and even for the AMEX. Select the one you want and like magic, your Quote Sheet will fill in with all kinds of symbols you've probably never seen before...

Happy Exploring!!

  Jeff Bailey   2/26/02,  10:34:53 AM
10-year YIELD ($TNX.X) major level for me at this point is the 4.8% level. Currently trading with a YIELD of 4.843%. Current move is just that of caution, but much below 4.80% would move to that of concern about something.

  Jeff Bailey   2/26/02,  10:32:34 AM
Bond market now we're getting a reaction. Lower YIELDS across the board and this could be bad for stocks. Happened very quick.

  Austin Passamonte   2/26/02,  10:30:01 AM
Looks like shorts found the catalyst needed to step on this latest bear-market rally and sell programs are flying thru. What a bolt from the blue! Indexes are peeling lower with no halt in sight right now, but we can expect several bumps along the way today. I'd short any 10/5 min chart signal returns to overbought extreme IF 60/30 min chart signals remain in full-bear roll as they are right now.

Very volatile times suited for reactionary traders in the indexes. A number of readers complained this morning that put plays held over got stopped out at or beyond their threshhold of pain right before markets broke. Such is the challenge of trying to preplan plays in these current markets too far in advance!

  Jeff Bailey   2/26/02,  10:24:27 AM
Bond market has not shown the "defensive" action that we've seen in stocks since the consumer confidence numbers were released, so MARKET reaction really focused on stocks at this point, but doesn't look to be a bond market factor of depression.

If sky were falling, then I'm thinking we should see some type of move toward bonds, but not seeing it here. Just keeps me from dumping longs and getting over-short.

  Jeff Bailey   2/26/02,  10:19:50 AM
Remember! Market is very short-term right now. Down one day on negative news, up the next on positive news, now down today on weaker consumer confidence.

Tomorrow we get Durgable Goods and New Home Sales along with Greenspan testimony before Congress.

  Jeff Bailey   2/26/02,  10:18:20 AM
Confidence reaction now being felt and it is rather negative. Broader market averages have gone from "green" to "lean" and now in the red.

We've talked bullish and bearish in recent sessions and focus would be to look short those we've identified as weak, and look for pullbacks in some of the stronger stocks on any potential reversals to breakouts, but trade light position to begin with, then add if further breakdown takes place on short, or break out on longs.

  Austin Passamonte   2/26/02,  10:17:04 AM
Consumer confidence slid a bit this month? Wait until tax season rolls around! Trust me on this one: plenty of mutual fund annual statements lie stuffed away on desks and in drawers all across America from "investors" who cannot bear to see where stocks are right now. They cling to hope that it will all be back to "normal" soon.

Now that tax preparation is forcing them to face reality, can we expect all that cahs on the sidelines with six feet of moss growing on top to find its way into the stock market in general, let alone dead-fish tech stocks? If people thought mutual funds suffered from lack of inflow last spring, they ain't seen nuthin' yet!

I personally know several quite affluent families with sharp people who have not looked at a mutual fund statement since last May. My guess is there are others as well.

Short the S&P from 1112.75 as my market entry order missed several points off the session high when 10:00am news broke. Still looks favorable for continuation from here, though but I won't hold the downside play for long. Trailed stops will take me out sometime today.

  Jeff Bailey   2/26/02,  10:15:50 AM
Why stop on WMI and not MSFT? is subscriber question.

I must say I'm more "bearish" toward technology than I am on a more "boring" stock like WMI at this stage of the game.

  Jeff Bailey   2/26/02,  10:11:12 AM
Microsoft (MSFT) $59.56 +0.82% ... stock did rally right to $60.00 on release of consumer confidence then traded back a bit. Short-term trader very comfortable now with stop just above $60.36 (see 09:46).

  Jeff Bailey   2/26/02,  10:08:56 AM
Consumer Confidence reading comes in at 94.1 which was below consensus of 97.4. This may be enough to see some pullback in stocks near-term. Will take a while to digest.

  Jeff Bailey   2/26/02,  9:59:40 AM
United Parcel (UPS) $57.36 +0.45 ... I'm avoiding this one only because of labor talks in progress right now and this is a "wild card" I simply want to avoid. Technicals look good, but just avoiding uncertanty. Link

  Jeff Bailey   2/26/02,  9:57:25 AM
Airborne Freight (ABF) $18.05 -0.16% ... I missed this one yesterday and shouldn't have. This is stock we've had profiled on PremierInvestor.com for sometime as bullish and stock blew to upside yesterday. Link

  Jeff Bailey   2/26/02,  9:55:13 AM
Dow Transports (TRAN) 2,802 +0.9% ... making another strong move today and this is "key" for economic bulls monitoring scenario that Transports will lead in an economic recovery. Break above 2,840 could have them hitting second gear.

  Jeff Bailey   2/26/02,  9:49:18 AM
Waste Management (WMI) $26.05 +3% ... getting upside alert here and would move to the sidelines on longer-term puts at this point and preserve some capital. We may re-visit this one at a later time. Still some decent longer-term downside in the technicals, but near-term stock may move higher back into upper end of congestion.

  Austin Passamonte   2/26/02,  9:46:25 AM
Index players remain trapped in a cunundrum. All intraday charts are pinned in overbought extreme, but we also know about "end-of-month" effect starting soon. That is where the big, stupid mutual funds trapped in all manner of technology dogs use the last two or three days of each calendar month and sometimes one or two of the next to ramp prices in their favor.

These monthly markups are predictable as sunrise UNLESS some type of market news thwarts the low-volume rally effort to markup performance and fleece the next batch of fund investor sheep. So, we can expect an upward bias until at least next Monday minus any unexpected market news.

Hence, I'll be looking to buy dips much more so than sell short-term resistance for now. Once the stumbling funds begin to unwind their artificial buying, we can probably get short and do some real good next week.

Many of the biggest index futures players refuse to trade the last days of a month for this very reason and we're talking big, big money players.

  Jeff Bailey   2/26/02,  9:46:18 AM
Microsoft (MSFT) $59.13 +0.03% ... will want to hold this one short until consumer confidence at 10:00 AM at least. For short-term trader, I'm watching the 60-minute chart and rounding lower 50-pd MA that looks to have come into play in final 90-minutes of trading.

If we get bullish reaction to sentiment numbers, then short-term trader could stop on break above February 20th high of $60.36.

60-minute chart Link

  Jeff Bailey   2/26/02,  9:40:21 AM
Human Genome Sciences (HGSI) Yesterday stock was downgraded, to gets upgraded by AG Edwards to "strong buy" from "buy." AG Edwards saying that concerns over the upcoming Mirostipen data should not overshadow what the firm considers to be the key pipeline drivers for the stocks: BLyS and the albumin fusion protein product line; believes that over the next 12-18 months the stock should work its way back to the mid-$30's on clinical data, new products and partnerships. Link

  Jeff Bailey   2/26/02,  9:36:24 AM
Juniper Networks (JNPR) $10.15 ... stock trading $10.31 after in was announced that Cable and Wireless (CWP) is building out its global Internet Protocol network using Juniper M-series Internet routers.

  Jeff Bailey   2/26/02,  9:33:35 AM
Wast Management (WMI) $25.23 ... reported earnings this morning of $0.31 a share, which was inline with guidance of $0.31 given on February 1. Revenues fell 3.2% year-over-year to $2.79 billion vs. the $2.79 billion consensus.

This is stock we felt short at $25 and after today's earnings, I would watch stock rather close today and place a stop just above the $26.05 level. This will give us some time to measure the MARKET reaction. This is all that matters. Link

  Jeff Bailey   2/26/02,  9:27:58 AM
Bull Confirmed! Yesterday's action has the S&P 100 Bullish % reversing back into a column of X and now reads bull confirmed. Link

The S&P 500 bullish % is still in "bull correction" status at 59%, but it is getting close to also reversing back into a "bull confirmed" if a reading of 60% were achieved. Link

A fully invested portfolio of stocks weighted with approximately 60% long and 40% short would be a decent weighting at this point.

  Austin Passamonte   2/26/02,  8:53:19 AM
Great Morning!

Pre-market futures are flat to slightly rising. No real news or catalyst to get those pre-staged market orders cookin' so we'll see another quiet open. Worked out to be a large-range session yesterday off a flat open... will we see the same today? I expect a slight to modest pullback soon, most likely this session. But time will tell as charts line up ahead.


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