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  Jeff Bailey   2/27/02,  10:30:51 PM
Fed notes from today's testimony a very interesting read. Make note of "weakness" and specifis to "telecom" and this helps us perhaps understand Cisco (CSCO) $14.24 -8% and how much of a beating telecom has taken and risks for "telecom equipment" stocks. Fed really concentrated on this.

Also note Fed comments on "defense spending" and some of the bullishness there. This may help us understand just why we were noting bullishness in recent days/weeks in UTX, HON and COL.

Link to Fed notes. Link

Then at bottom is the Fed February 2002 monetary policy report. This is what may have triggered the "bond bulls" today. Link

 
 
  Eric Utley   2/27/02,  4:20:56 PM
We're starting to see some weakness in some of the energy names. The Oil Service (OSX.X) group finished about 1.5 percent lower today. The sector needs a pullback to remove some of the short-term downside risk. After that, it's primed for another push higher in my opinion.

 
 
  Eric Utley   2/27/02,  4:12:29 PM
Strong close in the Airlines (XAL.X) near session highs, along with the rebound in the Transports ($TRAN). I'll be watching that 98 level in the XAL tomorrow.

 
 
  Jeff Bailey   2/27/02,  4:07:22 PM
Copper "Hoppers" and bulls in Phelps Dodge (PD) $38.10 +1.79% did get a bit of a rise out of March Copper Futures (hg02H) to $0.718 +2.35% and this was most likely technicals at work along with stronger than expected durable goods orders.

 
 
  Jeff Bailey   2/27/02,  4:04:03 PM
Dow Transports (TRAN) 2,855 +1.67% back at session high and holding strength. Today's trade at 2,850 is triple-top and looks strong to 3,000 doesn't it? Yes it does. Link

 
 
  Austin Passamonte   2/27/02,  3:41:20 PM
Readers Write: "I made a good week's wages on the breakdown of the OEX. However, I am kicking myself for chickening out and taking profits too soon. I feel good, though because at least they are booked. I also understand the system and I can make it work again! That is the important part. Thanks [RD]"

Key words that leap out at me from RD here are profits booked and system I can make work. The rest takes care of itself.

 
 
  Jeff Bailey   2/27/02,  3:36:22 PM
Is the market cratering? trader that holds Microsoft (MSFT) $58.15 -0.66% short from $58 sure doesn't think so. If market is cratering, then this one should crater with it.

Phelps Dodge (PD) $37.98 +1.46% ... it isn't "computer tech" and it has 2-letters in its stock symbol. More "economic sensitive." Gives trader/investor time to assess acount and make some decisions as it relates to raising cash or staying the course.

Rockwell Collins (ROC) $23.20 +2.97% ... it isn't "computer tech" and it has 2-letters in its stock symbol. Not as "economic" sensitive and very dependent on govt. spending. Gives bull time to assess account and make some decisions as it relates to raising cash or staying the course.

Amazon.com (AMZN) $14.25 -1.04% ... not getting crushed, but this one had 4-letters and I didn't like the small loss with broader market negativity short-term. P/F chart still strong, but high valuations and 4-letters in the symbol easier decision for me to let this one go, raise some cash and sit tight.

 
 
  Jeff Bailey   2/27/02,  3:26:33 PM
More economic data! As if the past three days hasn't been enough!

Jobless claims, Gross Domestic Product, Chicago PMI will be closely watched and most likely dictates market action.

 
 
  Austin Passamonte   2/27/02,  3:25:18 PM
I'm flat right now as either way looks equal odds into the close, and I have no desire to hold open plays over the bell. Might miss a big surge either way from here but the markets will just have to party on without my money involved in the process. See you in tonight's Market Wrap!

 
 
  Austin Passamonte   2/27/02,  3:23:26 PM
Looking for a bounce into the close from session lows as the next test held at a higher low, all tick charts turning bullish. Typical price reversal time is 3:20pm to 3:40pm EST so shorts beware!

 
 
  Austin Passamonte   2/27/02,  3:09:02 PM
... just shorting every overbought reading in the 1-min charts that fail this afternoon... this is fun!!!

 
 
  Austin Passamonte   2/27/02,  3:04:41 PM
CSCO looks like a compelling buy to me when it reaches $5 or lower, which I believe it will.

Meanwhile as Jeff is wont to say, "The first test of resistance can be painful for the bulls" as futures traders smelled weakness in the pits and hammered the SP00S to drop all cash markets down to current levels. Sell programs kicked in, price action plunged, simple as that.

With an hour to go before the close and index price action stair-stepping its way down, things could accelerate into the red before the bell rings. Pays to be a reactionary trader with "enter" orders prestaged & ready to go these days!

 
 
  Jeff Bailey   2/27/02,  2:52:31 PM
Dow Breadth slightly positive with 17 up and 13 down. Gains found in HON, UTX, BA, AXP, AA, DIS (hmmmm... HON, UTX and BA all aerospace/defense)

Weakness in GM, HD, INTC, MO, PG ... very mixed weakness here and don't see a theme.

 
 
  Jeff Bailey   2/27/02,  2:46:29 PM
Amazon.com (AMZN) $14.32 -0.55% ... short-term trader that took this one long from this morning at $14.50, I'd be taking Small loss here. I have enough dislike for some 4-lettered stocks as it is and wouldn't favor holding one with a tech flavor with current reversal in markets that we are seeing.

 
 
  Jeff Bailey   2/27/02,  2:42:50 PM
eBay (EBAY) $50.00 -5.97% ... subscriber from this morning... "it's setting off alert, do you still like this as bearish?"

Stock continues to give sell signals for most part. Past vertical counts from the top have been $60, then $46 and now $45. As such, would be targeting near-term targets of $45-$46. Link

May have liked it more on break of yesterday's low, but tough to assess risk/reward at $50 for trading here. Looks weak, but I like idea like Eric had in CREE where trader could better assess risk/reward in the bearish trade.

 
 
  Jeff Bailey   2/27/02,  2:32:18 PM
Microsoft (MSFT) $58.43 -0.2% also coming under some pressure from earlier gains. Haven't made a chart entry on this one since Friday's trade at $58 and the double-bottom sell signal. Wonder what's going on here? Link

 
 
  Jeff Bailey   2/27/02,  2:29:19 PM
Should create an economic report called the Cisco confidence indicator that would be real negative rating today on big tech psychology as one of the "old favorites" negative action really weighs on investor psychology.

"If it can happen to Cisco, then it might happen to my other stocks too" is the thought. And that has had stocks turning rather somber and lower.

Greenspan testimony is over and bears look to be back at work.

 
 
  Jeff Bailey   2/27/02,  2:25:42 PM
Kulicke and Soffa (KLIC) $18.58 +5.92% ... getting upgrade from Robertson Stephens here to "buy" from "market perform" as firm believes that utilization rates at customers have continued to improve despite seasonal factors and that KLIC may be increasing wirebonder production for the first time since downturn began. Robertson Steph. believes company on track to return to profitability in the 2nd quarter and to achieve profitablility for the year as a whole. Link

 
 
  Austin Passamonte   2/27/02,  2:08:37 PM
So, what gives here? Markets remain propped up because Greenspan lulled traders to sleep? Did they wake up and hit the sell buttons?

Regardless, I got short S&Ps at 1121.00 and covered on a trailed stop at 1114.00 just now. The last message posted was when the S&P was at 1120.00 level and it fell fast.

60/30 min charts look like they have further downside to go from here and with two hours left I'm looking for one last play of the day. If/when 10/5/1 min chart signals reach overbought and turn bearish from there, I'll hit the downside one more time and cover at the close.

This is all just working choppy market noise without a hint of trend either way in place right now.

 
 
  Jeff Bailey   2/27/02,  2:07:26 PM
SanDisk (SNDK) $15.20 +2.9% ... subscriber wondering about this one. We mentioned as bullish on break higher at $16.50 and she has another service saying "buy above $15.35."

Point figure is my $16.50 point as this would be "bullish triangle." Link

On bar chart, I can draw downward trend from 05/22/01 high of $30.00 and attach to 06/29 rally of $27.90. Extension of that DOWNWARD trend is currently around $16.00 so that trend isn't broken.

I think $15.35 a little too early for me personally. Would like to see some type of break of downward trend.

To tell the truth, at current levels, stock is better looking short than it is a long based purely on risk reward, but even a trend from the bottom shows the BIG triangle/pennant formation that is forming. MACD is of little help and oscillating right at zero level. Thing to do really is wait for some type of break. Link

 
 
  Jeff Bailey   2/27/02,  1:56:28 PM
Staples (SPLS) $19.10 +0.57% ... yes to subscriber noting today's trade at $19.20 ... I have my alert set at $19.50, which would be triple-top buy signal. Link and I have this one on my watch list. Have spoken about SPLS as bullish in past as others in the group ODP and IKN have traded strong.

SPLS currently has bearish vertical count of $13.50, so I'm more likely to wait for $19.50 just to get a bullish vertical count in a bull's favor.

 
 
  Austin Passamonte   2/27/02,  1:44:38 PM
All intraday chart signals are turning bearish, and the midday wedges have broken to the downside. Short-term players should stronlgy consider exiting longs and/or going short the market on further weakness from here.

Very choppy times right now... smaller than normal positions are suggested!

 
 
  Austin Passamonte   2/27/02,  1:25:47 PM
For three hours now the major indexes have been coiling into tight wedges near session highs... a bullish continuation coil that usually breaks to the upside after pausing to gather strength. However, with all chart signals quite toppy right now I would not chase it via new longs right now, especially using options. Wide bid/ask spreads are tough to eat when extended markets turn sharply against us if we buy the top!

 
 
  Eric Utley   2/27/02,  1:22:35 PM
Watching the Transports ($INDU) tick higher here towards the 2850 level. An advance above that mark would signal a break above triple-top resistance as well as bearish resistance line. Link

 
 
  Austin Passamonte   2/27/02,  1:21:01 PM
Swing trade stops should be held near levels of entry at the open today:
QQQ 35.00
DJX 101.50
OEX 566.00
SPX 1115.00

We currently have intraday charts looking toppy and a final-hour surge could take the Dow 100 index points either direction. Hold stops near entry or book modest gains while they exist is my advice.

 
 
  Austin Passamonte   2/27/02,  1:15:09 PM
If the Dow reaches 10,300 and the S&P 1125 today, these are two measures that the entire trading world is watching for resistance failure. Plenty of short-stop orders parked in the futures pit near those levels for sure. A late-day surge here to those marks might find quick rejection, so I'd be sure to tighten stops on open longs or exit/close myself.

 
 
  Eric Utley   2/27/02,  12:56:35 PM
I'm seeing a bit of slippage in the Networking Index (NWX.X), now lower by about 0.50 percent. Two stocks are pressuring the sector, Adaptec (NASDAQ:ADPT), which is lower by more than 9 percent, and Cisco (NASDAQ:CSCO), which is lower by about 4.50 percent. Cisco has been trading heavy all day off of the number cuts this morning by Wachovia.

 
 
  Jeff Bailey   2/27/02,  12:45:05 PM
DuPont (DD) $47.88 +1.78% ... another trader noting that daily stochastics (5,3,3) is around 75 and coming down, why go long here?

If stock doesn't meet your criteria, then move on to another that does meet your criteria as stated in your trading discipline. Good comment from subscriber.

here's chart he may be looking at. Link and might note that stochastics were also at 80 when stock was trading $44. Stock's now at $47.

As subscriber pointed out, stochastics aren't fool proof, nor is any type of technical analysis, but they are used to help trader assess potential upside/downside in trading strategyies.

 
 
  Mark Phillips   2/27/02,  12:40:15 PM
Traders trying to short into the markets continual surge higher have been met with failure throughout the session so far. While I'm not contemplating opening any new longs at this point on the major indices (overbought Stochs across all intraday timeframes), I see zero justification to trying to game the downside right now. Daily Stochs still pointing north and the weekly is early in its bullish reversal attempt.

But the clincher is my new favorite intraday indicator, the chart of ADVDECV for both the NASDAQ and the NYSE. Despite numerous dips in the price charts of the SPX, DJIA, and NDX throughout the day, the chart of Advancing volume minus Declining volume continues to march higher, with nary a retracement to be seen. Certainly the NASDAQ is weaker internally than the other two big indices, but even there I see no evidence of internal weakness inviting the bears to come out and play.

The longs have the ball for now and the only clouds on the horizon are the moderate overall volume and the fact that the VIX is approaching the lower end of its historical range. But a low VIX doesn't even start to get my attention until it falls below 21 and history shows that even that level is sustainable for weeks on end if the bulls decide to charge ahead.

Sure, my long-term bias remains to the downside and I'll short every failed rally with gusto, but for now I am reminded of the fact that the market can remain irrational far longer than I can remain solvent. I'll buy the dips until the market tells me to do otherwise. Internally strong, the market is currently saying "Rally Ho!"

 
 
  Jeff Bailey   2/27/02,  12:31:34 PM
Dow Transports (TRAN) 2,840 +1.14% ... getting upside alert here as alert was set for break above recent relative highs of 01/04/02. Bulls in this sector and perhaps broader market want to see close above the 2,840 level by session's end.

In my past commentary, we pointed this group out as important to monitor if not trade on thoughts of bullish economic backdrop. Getting some confirmation from MARKET here, but will continue to monitor.

CNF Inc. (NYSE:CNF) $31.83 -0.06% finding resistance at that 50-day MA we thought was hurdle to clear. Steady here and get feeling we need some further bullishness from TRAN to get some sellers off and bring in some bulls to stock. Link Will make note that we do see MACD cross above signal so some near-term bullishness, but most likely need move above the 50-day MA to get MACD above the zero level, and that could then provide the push to $35 or higher near-term. Bulls still in the game on this one, but still some work to be done.

 
 
  Austin Passamonte   2/27/02,  12:20:17 PM
Jeff's long AMAT/short MSFT scenario is precisely the way we'll want to play single-stock futures when they open, scheduled to begin in April. They will be cross listed in equity and futures trading accounts, traded in electronic & open outcry markets all night around the world.

Single stock futures will offer better leverage than stocks, far less extrinsic value headaches than options and should be exempt from silly day-trading rules of $25K account balance minimum as well.

A trader will be able to go long the strong horse, short the weak sister and set contingency stops all over the place to exit, protect, etc. Anyone who likes spread trading options will LOVE spreading the single-stock futures like this, and futures on sector indexes to follow. Long biotechs/short telecom spread? Works for me!

 
 
  Jeff Bailey   2/27/02,  12:13:40 PM
DuPont (DD) $47.92 +1.87% ... subscriber writes... "double-top buy signal at $46 and having trouble at $48."

P/F chart bullish with vertical count of $65. "Reason for trouble at $48" is no different than two prior times at $48. See them? Link

Trade at $49 would be spread-triple. What does Professor Davis say about that probability?

Now lets turn to our "favorite" short-term trading technique in the "inside day." Hey, yesterday was an inside day and today was a break to the upside. Link

Thinking ... if long from double-top buy and break of downward trend at $45, then can "imagine" I took today's inside day bullish trade and follow with tight stop under yesterday's low.

At same time, trader that took today's "inside day" break higher as bullish, was obviously playing the "it's going to break that $48 barrier, trade $49 and then looking for a potentially powerful move in coming sessions.

Perhaps we see how we can combine some short-term trading techniques to help manage a trade, along with some longer-term observations from the point/figure charts to try and get on the right side of a potentially longer-term bullish stock.

What's the Morgan Stanley Cyclical Index (CYC.X) doing these days? Are we bullish or bearish on the deeper cyclicals? Link

 
 
  Jeff Bailey   2/27/02,  12:02:54 PM
Oxford Health (OHP) $38.05 +2.22% ... yesterday I was hit with lots of e-mail on this one. I have no clue what the news was, and to be frank, don't care.

For you the investor you need to refer to your log book that you keep and make notes in. How did you feel yesterday. Do you wish you had taken your profits off the table at $40?

If so, the stock has rallied back to yesterday's open Link and I would sell the stock/options if that was your feeling yesterday. Then either monitor going forward with some longer-term bullish thoughts, or move on.

I can't answer YOUR risk/reward tolerance feelings. Every trader/investor has their own tolerance. I can try and help with thoughts and observations, but I can't answer how you may feel about risk/reward and your needs toward account management.

 
 
  Austin Passamonte   2/27/02,  11:56:30 AM
Readers Write: "I have 5 positive trades (26% incl commish). I have one open trade (mar 100 djx put) that is neg at this time. I could not have done it without you. We're aren't talking major bucks....yet. Just taking my time and learning as I go. Many thanks, [S] P.S. - I traded my djx.x MAR 102 call right at the hourly top. I achieved my 25% target at 1.85. I got nervous when all the charts stochs were near or over overbought."

The key words that jump out at me from this email are, "taking my time and learning..."

Here is a prime, prime example of inexpensive, low beta options on the Dow Industrials that churn out slow but methodical gains while the trader boosts confidence and learns good personal habits. I'm about to begin my first yoga lessons next week and you won't see me diving into any contorted positions from night one. Downward Dog looks adventurous enough to me!

Why do so many new or inexperienced traders insist on starting with the fastest games of all in our profession? I know why but don't understand.

 
 
  Jeff Bailey   2/27/02,  11:52:33 AM
Think both sides a "big tech" trader may not mind being long $1,000 of AMAT stock and short $1,000 of MSFT. Rather neutral in account, but playing the probabilities of being long a strong stock AMAT and short a weaker stock MSFT as it relates to "big tech."

 
 
  Jeff Bailey   2/27/02,  11:50:50 AM
Microsoft (MSFT) $59.91 +2.3% ... not all is rosey in "Jeff's world" as this one still holds tough from earlier bearish comments of $58.00.

Am I ruined? No as gains in some bullish plays offset somewhat, but market just not cooperating with me on this one right now. Overhead supply does help keep in check for bear, but sticking with stops as outlined. Link

Every trade is a "test" of my analysis and this one was for the "next leg down in technology." It will really take a trade up at $63 to move me off this one, but I'm getting sense from the MARKET that she isn't ready to throw in the towel just yet.

Perhaps we also sense this from the recent reversals higher in the bullish percent data for the S&P 100 and S&P 500. At least I do.

 
 
  Austin Passamonte   2/27/02,  11:46:48 AM
Is Easy Al still droning on? CNBC is so much more palatable on mute!

Anyways, new readers often ask how to best manage risk when trading. Seems like many believe that short-term trading, i.e. scalping the markets with options is somehow safer than longer-term plays.

Such is not the case, as short-term trades require more precision entries and faster, much faster entry & exit decisions. No time for pondering or deliberation here, just enter or exit first and ask questions later. Experience and instinct take over.

I firmly believe the beginning trader should start by trading shares or LEAPS first, then move to shorter time vehicles. For example, Sector Share model is commonly filled with low beta plays, most of them with low share prices and/or inexpensive options. You can look back in archived history and see that roughly 80% of these simple trades would make money or breakeven if traded.

No large, flashy, sexy gains right here but none of the immediate and larger than bearable losses, either. New traders must begin at a walk before trying to run with the veterans, and there is slow but good money to be made in that arena along the way.
Link

 
 
  Eric Utley   2/27/02,  11:45:55 AM
Quadruple-top broken in Activision (NASDAQ:ATVI) today with its advance past $29. Relative strength chart versus the S&P 500 is showing strength as well. Link

 
 
  Jeff Bailey   2/27/02,  11:44:19 AM
Defense Index (DFI.X) 601.66 +2.01 ... maybe 600 wasn't near-term resistance. If short, what you going to leverage off of now? Not sure, don't care. We aren't short the DFI.X or "defense" stocks are we?

 
 
  Jeff Bailey   2/27/02,  11:37:33 AM
Applied Materials (AMAT) $45.74 +2.6% ... yes, yesterday was an "inside day" and trader could have taken bullish this morning on break above yesterday's high of $45.44, stop under yesterday's low of $43.72. Link

We have discussed the p/f chart as being quite bullish on a "bigger picture" and longer-term basis. Link with a current bullish vertical count of $61 and first sign of trouble for a bull being a trade at $41.

In my opinion, one of the best risk/reward bullish trades in the semiconductor sector.

 
 
  Austin Passamonte   2/27/02,  11:33:17 AM
Keep in mind that the last two days of a calendar month and first day or two of the next are heavily influenced by mutual fund dressing: especially this close to tax-return season when all that moss-covered sideline cash is coveted as "manna from on high" by the dumb funds.

They are now pressing some stocks artificially, and who knows which stocks they are? We'll know for sure if a rally may last or not by next Tuesday or Wednesday, and Monday could be a pivotal session as well.

 
 
  Austin Passamonte   2/27/02,  11:26:29 AM
Plenty of readers pointing out how intraday index charts are reaching overbought extreme, the VIX readings are low, etc. "Is it time to play the downside" is our popular question during times like this.

My answer is, "I don't know".

My approach is to take modest, short-term positions as chart signals line up favorably using tight stops. Soon as markets go in my favor I trail those stops up to at or above entry. If/when a big move suddenly breaks and it goes against me, I'm out with nil or zero loss. But if that big move suddenly breaks in my favor, I "worked" all week for the total payout that may come in mere hours or minutes from that entire timespan.

People who worked in the real world on wages or salary have the mistaken idea that type of methodical payment return applies to the market when it doesn't. We may work an entire week or three only to make all our profits in a blip of time while the rest was merely setup for those results.

 
 
  Eric Utley   2/27/02,  11:18:25 AM
The rally in Treasuries and sell-off in Gold (GC02M) make sense as they relate to an ease in inflation fears. As Bailey pointed out earlier, the bond market had been expecting an increase in short-term rates by August. Greenspan's testimony extended the market's perception of an increase in rates and thus inflation. My thinking is that the extension of inflationary expectations is pressuring retail shares today, as the Retail Sector Index (RLX.X) is lower by about 0.50 percent. Not a big move by any means, but noticeable in light of the strenth in equities. Retailers welcome increasing prices as they boost margins and profitability.

 
 
  Eric Utley   2/27/02,  11:12:28 AM
Chaotic Constructs The bullish triangles in one- two- and three-letter names are working very well. Specifically the cyclical names. Exhibit A: Honeywell (NYSE:HON) Link

 
 
  Jeff Bailey   2/27/02,  11:01:01 AM
Input/Output (IO) $7.88 -0.88% maker of energy exploration seismic equipment reduces Q1 outlook to a loss of $0.09-$0.13 a share, which is below estimates looking for profit of $0.01. Company saying continued weakness of oil and gas prices resulting in reduced exploration expenditures.

I show this press release only as it relates to our past commentary that oil service stocks need to see some demand side issues resolved that would be brought on by economic growth spurring demand for energy, then get OPEC to raise production, etc.

Months ago we talked about IO and another exploration related stock Seitel (SEI). These "exploration" type stocks are usually last to move in an energy market. Still haveing some trouble so thinking any move in energy at this point is still very, very early in a bullish phase.

Would want exposure to producer 1st, the service 2nd.

 
 
  Eric Utley   2/27/02,  10:55:32 AM
I shared my bullish bias on Airline (XAL.X) shares yesterday and wanted to follow-up on those comments in light of today's continued strength. The XAL is better by about 1.5 percent today. We're seeing broad participation in the group; shares of American (NYSE:AMR), Delta (NYSE:DAL), Southwest (NYSE:LUV), United (NYSE:U), and Alaska (NYSE:ALK) are firmly higher.

I'm watching the long standing bearish resistance line at 97, which is where the XAL is trading today.

Link

The ultimate break of that bearish line, maybe today, would add credence to my bullish posture. Separately, I've been reading some bullish reports on the group, most recently in the New York Times and Denver Post, about several carriers increasing load factors and adding new routes. I like this group.

 
 
  Jeff Bailey   2/27/02,  10:44:22 AM
Rockwell Collins (COL) $23.26 +3.19% ... getting upside alert here to new relative high. Still monitoring the IPO spinoff all-time high of $23.88 from 07/02/01. Very little overhead supply is my thinking.

 
 
  Jeff Bailey   2/27/02,  10:41:07 AM
Bond market has seen a reverse from earlier action and now seeing some buying with YIELDS lower across the board.

"Trader talk" is that action here is bond market perception that Fed not so likely to raise rates on August 13th. Prior to today, many had thought Fed would raise on August 13th to 2%, but perception changing a bit from early testimony.

At play seems to be the still strong productivity numbers. This is what Mr. Greenspan watches as one component for "lid on inflation."

 
 
  Jeff Bailey   2/27/02,  10:26:52 AM
Geenspan benchmark as testimony begins Dow = 10,178, SPX=1,116, NASDAQ=1,782

 
 
  Jeff Bailey   2/27/02,  10:25:27 AM
Housing data thoughts Are new home sales lower at the expense of a "buyers market" in the existing home sector? Could be at play here.

Early thought after data is that we may want to be looking for some home builders that look weak as potential bearish candidates. On the "existing side" then thinking about potential retailers like a Home Depot (HD) that may benefit from the "fix her up" type of things that an existing home may see before and after sale.

 
 
  Jeff Bailey   2/27/02,  10:22:29 AM
Greenspan testimony "Good news and bad news" as Greenspan plays both sides. "The typical dynamics of the business cycle have re-emerged and are prompting a firming in economic activity. An array of influence unique to this business cycle, however, seems likely to moderate the speed of the anticipated recovery."

 
 
  Jeff Bailey   2/27/02,  10:19:47 AM
Defense Index (DFI.X) 594 +0.85% ... key level to monitor most likely 600. After "inside day" on Monday, group working higher. Stocks we've outlines as bullish recently are UTX, HON and COL.

 
 
  Austin Passamonte   2/27/02,  10:17:13 AM
Jeff... why file horns when you can go long the S&P at 1114.00 and cover at 1119.00 in less than 20 minutes this morning? That'll pump up any troops who played such a "free money" move as this.

I'll sport blunted horns myself like those Pro Bull Riding Association critters Wendy wants us to raise one day, so long as weekly/daily charts remain bullish. What do the DUX.X charts look like? Last night it seemed to be towards the rattles end of our Dow snake.

 
 
  Jeff Bailey   2/27/02,  10:15:47 AM
Forest Paper Products (FPP.X) $359 +1.% ... another cyclical group breaking to new 52-week highs. Link

 
 
  Austin Passamonte   2/27/02,  10:13:33 AM
Existing home sales are up while new home sales fell? Wonder where housing money is flowing? Not into those pressboard palaces popping up all over the Colorado prairie for $300K - $800K per chintsy structure. Jason of "Friday The 13th" movie fame had more square angles in his shanty shack than some of the new houses do I've seen out here.

Anyways, look for the bulls to try and shrug off that fundamental fact that the oft-touted new housing boom will last forever and the consumer has bottomless pockets. Plenty of evidence shows otherwise, but the market will ignore these things until last possible minute. Much like the Enron analysts who rode that crooked hog of a company right into bankruptcy with strong buy ratings all the way!

 
 
  Jeff Bailey   2/27/02,  10:13:12 AM
Amazon.com (AMZN) $14.36 -0.34% .... only thing wrong with this one is it's got "4-letters" in its stock symbol.

 
 
  Jeff Bailey   2/27/02,  10:12:12 AM
Phelps Dodge (PD) $38.78 +3.6% ... working to session high here and looking strong.

 
 
  Jeff Bailey   2/27/02,  10:11:24 AM
New Home Sales fell 14.8% to 823,000, which was well below the forecasted 939,000 rate.

Market response muted at this point, with some gains found since home sales number.

 
 
  Jeff Bailey   2/27/02,  10:06:59 AM
Bond market rather quiet. Treasuries seeing some modest selling after this mornings durable goods order. Revision lower in December's number to +0.9% from earlier reported 1.7% took some of the "umph" out of this morning's number and planted a seed that it may also be revised lower in future.

Bond market will be quite sensitive to Greenspan testimony and should be monitored. Selling in the 10-year ($tnx.x) above the 5.0% YIELD Link level could be indication from bond market that trader's perception there is that Fed is done tightening and then turning to "management of growth" and becoming more watchful of inflation risks.

Time will tell and we'll take it one day at a time.

 
 
  Austin Passamonte   2/27/02,  10:00:59 AM
Many readers relate that they are still bearish the market and look to short any rally that looks to fail. Me too.

But that doesn't mean we have to sit out any upside action without testing longs in that direction, does it? Trust me: price action will not go straight down every day, every week until the indexes reach zero. Rallies are part of a bear market, and I for one want to play them when possible.

Traders who only want to sell rallies right now are akin to the dip-buyers only of yesteryear who only played half the market (actually, one-third) and missed out on profits going the opposite direction.

 
 
  Jeff Bailey   2/27/02,  9:55:47 AM
Austin! do you have the file? My horns need sharpening.

 
 
  Jeff Bailey   2/27/02,  9:55:02 AM
Tony Robbins If you've ever been to a Tony Robbins seminar, you can imagine perhaps how "worked up" an audiance can get once the're pumped up.

MARKET could get "pumped" on Dow Transport (TRAN) move above 2,850. Link

just as Morgan Stanley Cyclical Index (CYC.X) has been pumping up. Link

 
 
  Austin Passamonte   2/27/02,  9:50:50 AM
A gap-up open looks to hover sideways for awhile. Once we clear Lieberman's opening statement longer than the Dead Sea scrolls, the buffoon analysts can be verbally skewered and we'll move on to Greenspan's jibberish. Quite an entertaining lineup filled with dynamic speakers today, isn't it?

 
 
  Jeff Bailey   2/27/02,  9:50:50 AM
MarchCopper Futures (hg02h) shows nice pullback to $0.70 level and tight consolidation for past three sessions. Thinking this will unwind to upside right from upward trend. That potential unwinding to upside along with some stronger than expected economic data in recent days is catalyst for further move higher in Phelps Dodge (PD).

 
 
  Jeff Bailey   2/27/02,  9:47:57 AM
Phelps Dodge (PD) $38.25 +2.19% ... I'd be aggressive bull with this one here. Stop just under $35.50 and targeting mid-$40's. Link

 
 
  Jeff Bailey   2/27/02,  9:46:07 AM
Microsoft (MSFT) $58.96 +0.66% ... stock in check and not getting away from a bear. Short-term trader that is now more cautious as bullish % for S&P 500 and S&P 100 have reversed higher, can place firm stop just above $60 as outlined yesterday.

Longer-term trader may refer to point/figure chart and place stop at $63, which would be double-top buy signal. Link

 
 
  Jeff Bailey   2/27/02,  9:42:44 AM
Amazon.com (AMZN) $14.61 +1.45% ... Getting upside alert at $14.50 ... this is "bullish triangle" and would be good bullish stock for bull to consider. Link

Cautious bull ahead of Greenspan can take 1/2 position, stop $12. Vertical count is bullish to $28.

 
 
  Jeff Bailey   2/27/02,  9:39:51 AM
Greenspan testimony will begin at 10:00 AM EST.

 
 
  Jeff Bailey   2/27/02,  9:38:30 AM
Biotech's should see some gains today as the "tail of the snake" in ImClone (IMCL) gets some upside action. This could help with any sell-side pressure put on the group recently as it relates to some of the recent negative news from ImClone.

 
 
  Jeff Bailey   2/27/02,  9:36:28 AM
ImClone (IMCL) $15.52 ... stock trading halt lifted and stock active at $22.80 after Reuters report that company had positive meeting with FDA (see 09:00 update). Link

If short would cover here. I'm not interested in it as a long at this point. Aggressive bulls do have a buy signal to work with here, but downside risk must be assessed to the lows.

 
 
  Jeff Bailey   2/27/02,  9:32:04 AM
Current Risks Yes there are risks. Mr. Greenspan will testify before Congress today and I didn't get a copy of his testimony. There are perhaps some "risks" to both bulls and bears in his testimony.

Middle-east problems are still a factor. These will not go away anytime soon. These risks have been with the market before and after September 11th.

Accounting risks ... these too should be considered. If they are for real and not limited, then bull needs to understand. If the recent market decline was based on these risks and they are not there, then economic data has been improving and bears are at risk.

It's just too easy to trade/invest with some discipline, push the worries to a "warm burner" and move on with your trading and account management.

 
 
  Jeff Bailey   2/27/02,  9:27:20 AM
Bull Confirmed Yesterday morning we mentioned that the narrower S&P 100 bullish percent reversed into bull confirmed status and yesterday's action saw a net gain of two stocks to buy signals. Link

Dumb money or smart money? Who cares. Money is flowing into these stock. The "dumb money" will not use stops or set targets for profits. The "smart money" will stick with discipline, set stops to control risk and set target where stops will either be moved up or profits taken.

 
 
  Jeff Bailey   2/27/02,  9:23:32 AM
Bull Confirmed Yesterday's action has the S&P 500 bullish % ($BPSPX) reversing higher and into a column of X and back into bull confirmed status. The offensive team is back on the field in this market. Link

 
 
  Austin Passamonte   2/27/02,  9:16:57 AM
So, a few of the many analysts who held Enron as a strong buy right into bankruptcy are being grilled by congrees today? Might one of them be Abbey Joseph Clueless who listed Enron as a "compelling value" at the $25 range last fall?

She touts her fundamental valuation model as some perfect-pricing science when in fact it appears to be anything but. The fallen Queen of Wall Street still commands a seven-figure salary to help guide you with your investment success, however!

 
 
  Austin Passamonte   2/27/02,  8:55:39 AM
Great Morning!

Pre-Market futures up slightly an hour in front of the bell. Looks like Tuesday session highs will be tested early and if broken should trigger plenty of stops in bullish fashion from there.

As noted in last night's Index Wrap, this market desperately wants to go higher and will do so on any absence of malice. Also, mutual funds will be propping up their fallen holdings to puff performance and suck in all the dumb money they can get in the early part of tax season here.

 
 

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