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  Jeff Bailey   2/28/02,  5:41:53 PM
Marvell Technologies (MRVL) $30.69 -10% ... "you are the weakest link.... goodbye." Link

We can also play "pattern association." Do you remember any other stocks that broke their bullish support trends AND gave triple-bottom sell signals on the same day? Check out Qualcomm (QCOM) back at $49. Link

 
 
  Jeff Bailey   2/28/02,  5:15:24 PM
Celestica (CLS) $32.90 -7.86% ... nice trade for bears from $35.40 (see 10:39) and would be moving stop down further to minimum of break even or could use 60-minute chart and snug stop just above still trending lower 50-pd at $34.05. Session low was $32.51 and almost perfect peg of retracement at $32.57. Obvious hurdle for bears from here is the $32 level and bear would like to see break lower, get some "capitulation" and towel throwing from CLS bulls.

60-minute chart Link

 
 
  Austin Passamonte   2/28/02,  3:53:23 PM
Once again we had choppy, irrational markets in the morning and orderly trends in the afternoon. Short the OEX near 568 or the S&P 500 near 1118 at the 1:07pm time frame was pretty methodical. Traders had several chances to get short(er) on every 10/5/1 minute chart stochastic bearish reversal for smaller or numerous gains as well.

Same as yesterday, and hopefully even better tomorrow! See you tonight in the gameplans and Index Wrap.

 
 
  Jeff Bailey   2/28/02,  3:24:50 PM
Intel (INTC) $28.98 -2.64% ... key stock for "semiconductor traders" and not looking too good here with break of 200-day MA Link

Breaks of 200-day should be monitored closely as depicted by "networking" bellwether Cisco Systems (CSCO). Link

 
 
  Austin Passamonte   2/28/02,  2:59:32 PM
... looking good to the short side from 1:07:13pm EST post. 1118.00 was a good spot to enter, and current markets are giving up +10 index points of gain as volume surges to the downside. Perhaps money sucks out of equities to cover bonds reallocation? We guessed it might get busy by 3:00pm!

 
 
  Austin Passamonte   2/28/02,  2:51:17 PM
Looks like those bearish triangles broke on an intraday chart basis, and every intraday timeframe chart is now in full bear roll. Looking for a peek at Wednesday lows before the closing bell rings.

 
 
  Jeff Bailey   2/28/02,  2:48:39 PM
Celestica (CLS) $33.40 -6.4% ... still some weakness in tech. Will show in update, but next test remains recent low of $31.76. Would move stop down now to just above $35.52. Then if break of $31.76 looking for decline to "round number" $30 or eventual target near $27.79.

 
 
  Austin Passamonte   2/28/02,  2:46:40 PM
Fairly tight range in the indexes today after the initial morning moves. Price action continues to wedge via lower session highs and flat lows as observed within 30-min or shorter term charts.

This would be a bearish descending triangle that breaks to the downside (flat side of pattern) roughly 70% of the time. With stochastic values descending from overbought zones within these intraday charts, market noise between now and the closing bell is suggested to be lower.

However, this has the makings of a noisy session and I'm betting small to the downside. Call me gunshy, but three straight days of volatile chop makes me more concerned about sheltering gains from loss than adding greatly to them!

 
 
  Jeff Bailey   2/28/02,  2:40:40 PM
Word Association ... Riverstone Networks (NASDAQ:RSTN) $3.79 -50.06%.

 
 
  Jeff Bailey   2/28/02,  2:32:02 PM
Maxim Integrated (MXIM) $46.37 ... I have retracement from $69.06 to $33.55. This puts 38.2% at $47.11 (breaking it today) and 19.1% at $40.33. Has me thinking fund managers getting this one out of the portfolio.

Moving into Staples (SPLS)?

 
 
  Jeff Bailey   2/28/02,  2:27:29 PM
Maxim Integrated (MXIM) $46.37 -3.05% ... looks good short/put with bearish vertical count of $42. Some downside left in this one. Link

Relative strength vs. MARKET (S&P 500) not too strong. Link

Relative strength vs. SECTOR (SOX.X) also weak. Link

 
 
  Austin Passamonte   2/28/02,  2:02:11 PM
Readers Write: "Hello, It must not be true, but is this the first time I have heard you say be alert to news items as well as the charts? The 2/28/02 1:12:17 PM comment jumped out at me for that reason. [J]"

I look for news items in Yahoo and other places just for personal amusement when I'm bored or nervous about open trades when the market is not going in my favor. Sometimes I pick out an item that's tradable, but usually on a forward basis.

If a stock or commodity is profiled we can assume that info has already been traded, i.e. reports on oil production or crop failures of small grains somewhere. That info moved the commercials first and public last, so let's look at those particular charts and see if a counter move is building to begin.

And sometimes we see other good things like improvement in the MNF booth, a very important thing to me!

 
 
  Austin Passamonte   2/28/02,  1:52:32 PM
Got a little nervous on the shorts from 1:07pm post when S&P traded near 1119 area but time took over and we're in the black now. Worst that can happen is stopped out for small gain, but all intraday charts suggest we could see revisit to Wednesday lows at support before this one closes out at the bell. Might get especially busy near 3:00pm when bonds cease trading, as lots of settling to be done over there as Rick Santelli noted on CNBC this morning.

 
 
  Jeff Bailey   2/28/02,  1:46:25 PM
Kohls (KSS) $67.82 +1.9% ... I have stock as "retail". Current vertical count is bullish to $85, with first sign of trouble coming at $63 or $62. Link

Relative strength vs. sector (RLX.X) is longer-term bullish, but near-term weak, would read as "buy signal, but column of O) Link

Relative strength vs. market (S&P 500) is strong and would read (buy signal, column of X).

Would consider this aggressive bear play and I'm not too interested in shorting retail at this point as consumer has been about only consistent stronghold for economy lately. Could see pullback to $60, but stop at $71.

I see the stock as a "market perform" on any downside moves and "market outperform" on any gains.

As such, I like to try and short/put stocks that look likey they will outperform the MARKET to the downside and not seeing that in KSS at this point. Again, would be for aggressive bears.

 
 
  Austin Passamonte   2/28/02,  1:12:17 PM
Best news I've read all day is John Madden joins Al Michaels in the MNF booth! Out with Dan Fouts and Dennis Miller, who added zero to the show. Other than that we wait for the afternoon market action or lack thereof and continue to cruise all the important news sites for latest tidbits of info as they break!

 
 
  Austin Passamonte   2/28/02,  1:07:13 PM
For those who asked thru the morning, I covered my initial short and await the next entry ahead. That may be very soon as all intraday chart signals are looking quite bearish right now.

This last day of the month has the undercurrents of a trap session as price action could get rocky into the close, via month-end posturing in bonds by 3:00pm and stocks by 4:00pm.

Many big speculator pros refuse to trade the last day (and first) of any calendar month but I prefer to be more cautious about entries, use less capital exposed and let the charts guide me from there.

 
 
  Austin Passamonte   2/28/02,  1:02:33 PM
One reader took great exception to my recent comments about CSCO being a compelling buy when it reaches $5 in share price. Sent me a detailed list of all reasons why the stock is poised to explode, here's the bottom, etc. May I venture a wild guess this person is not flat CSCO right now?

I'll say this: if CSCO is such an excellent buy right here, why isn't the company itself announcing a $10 billion stock repurchase? I mean, they have that mountain of cash all the bulls refer to (as does MSFT) just sitting there gathering dust. What better investment purchase could it make other than either company's own stock?

I'll get long-term bullish on mighty CSCO and MSFT when they put their own cash out there in front of me to buy those stocks!

 
 
  Austin Passamonte   2/28/02,  12:58:30 PM
Readers note that some very large volume has traded across both strikes of SPX March 1100 calls and puts today. Not only that, there have been block trade buys and sells alike. This is not activity we can really use as a trade filter for directional bias right now.

On another note, a few readers report that their research in various places on the web shows insider selling going on over at EBAY recently. I have no idea if that's accurate and suggest any who are interested to research this for themselves. One would think Mary Meeker would have disclosed that type of info in her list of reasons to buy the stock today if it's true... right?

 
 
  Jeff Bailey   2/28/02,  12:32:39 PM
Mutual fund quarter ending late March is usually end of quarter and time for mutual fund managers to begin "dressing up" their portfolios.

Pretend you're account is a mutual fund portfolio and at the end of March, you have to show your portfolio to your board and your investors in the quarterly report.

Is it going to be full of beaten down technology where the investor may wonder why they are sitting in a bunch of losers in an uncertain economic envirionment, or will it hold some stocks that are breaking to some new 52-week highs where the business model is easily understood and may not undergo the scrutiny of accounting issues?

 
 
  Jeff Bailey   2/28/02,  12:27:38 PM
Office products Reason I like SPLS is what we've noted in past from

Office Depot (ODP) Link

Ikon Office Solutions (IKN) Link

and now Staples (SPLS) Link

 
 
  Jeff Bailey   2/28/02,  12:25:03 PM
Staples (SPLS) $19.79 +2.64% ... forgot about this one and I can't believe it. Been watching this one as bullish for months and got the break today at $19.50. Link

I like this one as bull. Buy some time and let her run for a longer-term trade.

 
 
  Austin Passamonte   2/28/02,  12:20:16 PM
Looks to me like the S&P is failing at 1118 area right now, a lower relative high than 1122+ from earlier. I expect this choppy, see-saw battle in a range until 2:00pm or so when the afternoon volly is fired.

Another midday session for most to avoid, it appears.

 
 
  Austin Passamonte   2/28/02,  12:15:32 PM
MS Mary Meeker upgrades EBAY as a "strong buy"!!!

With her track record from 1999 to present, should we fade this one strongly or what? I'm not sure what one should do with her call, but for darn sure I wouldn't personally follow it!

 
 
  Austin Passamonte   2/28/02,  12:07:20 PM
Readers Write: "Austin, Thanks for your guidance. I think that I am finally getting the hang of this after one year of trying. I have progressed towards putting my trades on a much shorter leash. Today I have made 6 trades with 4 winners. Yesterday 8 out of 11 trades were positive. The winners were not large, but the main thing was that the losing trades were very small. In the past, my losers would wipe out my winners and then some. It takes a lot of focus, but it is worth it. Thanks again, you are doing a great job. [LL]"

And won't it be nice when we can all just take an entry on one day, hold it a session or two and exit with solid gains? That has not been possible for index plays lately, especially for part-time traders relegated to entering at the open and taking their chances from there.

This whipsaw action is extremely frustrating for part-time traders who pre-stage orders, go to work, come home and see the plays went up in value and then back down thru their stops in one fell swoop. Sometimes those missed gains exceed a week's wages at the job, but what are these people to do?

Consider focusing on lower-beta targets like Sector Share selections or Bailey's excellent picks like PD, etc that move more methodically and don't require constant attention right now is my suggestion.

 
 
  Jeff Bailey   2/28/02,  11:45:04 AM
Plexus Corp. (PLXS) $22.64 -8.75% ... subscriber wondering what is going on for downside action?

I don't see any news. Will note this company is "contract manufacturer" just like Celestica (CLS) **see 10:39** and company is presenting today at Robertson Stephens Tech Conf. in San Francisco. Link

 
 
  Jeff Bailey   2/28/02,  11:39:03 AM
Cephalon (CEPH) $58.05 -3.65% ... Getting downside alert at $57.92, which comes from retracement. I have retracement from $77.59 -$38.25, which puts 38.2% above at $62.56, 50% here at $57.92 and 61.8% at $52.37.

 
 
  Jeff Bailey   2/28/02,  11:31:25 AM
ESS Technology (ESST) $17.03 -10.4% ... trading halted as company raises Q1 revenue guidance to $68-$70 million (consensus $58.7 million). Projects EPS of $0.22-$0.25 versus previous guidance of $0.11-$0.14 (consensus $0.12). Link

 
 
  Austin Passamonte   2/28/02,  11:25:36 AM
Looks to me like a good session for shorting every 10/5 minute chart signal alignment that goes overbought and cover for quick, small but easy gains if lower relative highs should continue to fail into the closing bell.

 
 
  Austin Passamonte   2/28/02,  10:59:59 AM
Right now the S&P 1122 area is a stone wall of bearish defense. In football terms, each time the bulls try to run the ball across that first down marker they get stuffed in the backfield for loss of yardage. Subsequent attempts today might see a fumble returned for a touchdown by the bears.

Not impressed at all with upside attempts in the indexes and all D/60/30 min timeframe chart signals are topping out near overbought extreme once again. I'll play the downside from 1120 with stops trailed down below as price action permits. "Free Play" working right now, so the rest is autopilot from here.

 
 
  Austin Passamonte   2/28/02,  10:46:50 AM
While penning the last message in here, my sell-stop order at 1120.00 was tripped and we'll see where the downside takes us this morning. I would have been far more anxious to play the upside on an early selloff that bounced from Wednesday support. These sessions that start off higher have not been able to hold the past few attempts, and it seems that fading the early move pays off into the afternoon more often than not.

Such patterns & tendencies seem to repeat as traders who made or lost money the times before remember their respective lessons and then react accordingly.

 
 
  Austin Passamonte   2/28/02,  10:42:47 AM
Jeff... did anyone cover PD longs at $200? [huge grin]. That would've been a nice trade, indeed!

Anyways, markets have been in a straight-up ascent off the open but that may not last forever. S&Ps are up there touching 1122 area and I wouldn't be surprised if a few sell programs aren't lying in wait. Bulls will have their work cut out for them pressing thru overhead resistance, and month-end mutual funds propping to puff monthly statements might need to step up their efforts to do so.

 
 
  Jeff Bailey   2/28/02,  10:39:51 AM
Celestica (CLS) $35.40 -0.89% ... not convinced with this latest rally for stock. Looks short here, stop yesterday's high and target the recent lows or further to $28. Link

On bar chart, I have retracement from $48 to $23.02, which puts 38.2% above at $38.47, 50% here at $35.52, 61.8% at 32.57 (found support 4 sessions ago) and 80.9% at $27.79, longer-term target.

 
 
  Jeff Bailey   2/28/02,  10:37:57 AM
Genesis Micro (GNSS) $25.54 -37% ... placing retracement from $8.37 to $66.57 really gives trader some good levels that fit with historical trading. This gives us 61.8% at $30.60 (good place for stop just above) then 80.9% at $19.49 (near-term bearish target) and finally 100% down at 8.37.

Now, if you don't like the stop above $30.60, you then understand risk from current trading in a short to potential near-term target of $19.49.

 
 
  Jeff Bailey   2/28/02,  10:28:05 AM
Market Internals Three of our major market internals in the S&P 500 Link , S&P 100 Link and NYSE bullish percents Link are all in a "bull phase" of their bullish %.

2 are still in a "bearish phase" in the NASDAQ-100 Link and NASDAQ Composite Link . Bulls can be trading technology bullish, but would be well advised to be trading stocks that are ABOVE their bullish support trends and having given some type of "buy signal."

 
 
  Jeff Bailey   2/28/02,  10:18:46 AM
Phelps Dodge (PD) $38.37 +0.81%... bad tick at $200. Bulls can still be positive with today's economic data and may even get a bit of boost from telecom bill. Lots of copper in those cable modem circuits!

 
 
  Jeff Bailey   2/28/02,  10:17:21 AM
Genesis Micro. (GNSS) 24.81 -40% ... stock getting hammered after resumption of trading after being downgraded by 4 different firms on accounting/reveneu/earnings issues. Stock has exceeded any prior vertical counts and current bearish count is now $5. Would simply lower stop to $31 and let her do her thing. Link

 
 
  Jeff Bailey   2/28/02,  10:12:51 AM
Sectors building gains gains have now been boosted across the board with many now up better than 1%. In order of % gain are Internet, Telecom, Networking, Biotech, Banks, Brokerage

Weakness is marginal in Healthcare, Natural Gas and Gold/Silver.

 
 
  Jeff Bailey   2/28/02,  10:10:33 AM
Chicago PMI much better than expected at 53.1. Economists were expecting a reading of 45.1. This is a more regional number and not as great an impact if it were from ISM, but good number for the bulls here.

 
 
  Jeff Bailey   2/28/02,  10:07:26 AM
Activision (ATVI) $29.11 +0.2% ... stock broke a quadruple top and gave buy signal at $29 yesterday on strong volume of 4.9 million shares. Technicals here are bullish. I've turned on the volume on this chart. Would only consider 1/2 position at this time as sector bullish % still weak. Link

 
 
  Austin Passamonte   2/28/02,  9:57:59 AM
Don't know about you, but I can't wait for the next CEO interview on CNBC that goes something like this, "Glad to be here with you David, but wish I had better news to report. Business is slow, our sector is still clogged with too many struggling competitors and I'm afraid many of them will not make it. Hopefully our company will be one that does."

"Forward guidance for us is sketchy: even if the economy recovers later on this year, our stock price is so far out of whack with historical valuations that I'm afraid it will take years of solid performance just to catch up. Those go-go players in 1999 really ramped us up and the capital flow was good, but now we all have to bite the bullet, pay the piper and all those other cliches."

Who will be the first CEO to give that type of honest report? Literally hundreds of candidates could, I'm just wondering if any will.

 
 
  Jeff Bailey   2/28/02,  9:54:54 AM
Economic data still to come Chicago PMI still ahead at 10:00 AM. This number measures manufacturing activity in the Chicago Fed region and has been lagging the recovery of the more broad ISM Index, which rose 49.9% in January compared to the Chicago PMI's 45.1%. Economists are expecting a 47.0% increase for February.

 
 
  Jeff Bailey   2/28/02,  9:47:09 AM
Sector strength is across the board, but many up just under 1% with Internet (INX.X) +1.4% and Combined Telecom (IXTCX) +1.12% leading gains.

 
 
  Austin Passamonte   2/28/02,  9:46:12 AM
Looks like the markets will remain in a holding pattern until the 10:00am EST report comes out, as if one more tiny piece of the giant puzzle will make all the difference in market direction from here. Aren't human emotions a strange thing to logically understand?

 
 
  Jeff Bailey   2/28/02,  9:44:35 AM
Microsoft (MSFT) $58.37 -0.05% According to an Assoc. Press story, MSFT and Justice Dept. disclosed significant changes this morning to the proposed settlement in their antitrust case; the most important change deletes the provision of the settlement that some state attorneys general accused MSFT of manipulating so the company could use valuable hardware technology patents from computer makers without paying them. In addition, other changes incluse the broadening of some technical definitions to clarify MSFT responsibilities to ensure that rival software functions as well as its own on the Windows operating system, and changing another key provision to expand the types of technical information MSFT must disclose to rival company's about how software operates with business-level Windows server software.

 
 
  Jeff Bailey   2/28/02,  9:38:15 AM
Telecom Bill Regarding last night's news regarding the passage of the telecom bill in the House, Bear Sterns says that the bill's success potentially accelerates the deployment of DSL, which could also prompt acceleration of cable modem service deployment as a response. This could be a positive for semiconductor companies that have exposure to cable modem and DSL broadband access markets, such as : ALA, BRCM, TUNE, CNXT, GSPN, CTLM, ADI, ELNT, TXN, CNXT, INTC, STM.

 
 
  Jeff Bailey   2/28/02,  9:33:56 AM
Polycom (PLCM) $25.55 ... trading higher in pre-market to $26.55 after company announced in received $3.35 million order from China Unicom. China Unicom has selected PLCM as one of its major system providers for the "world's largest Internet Protocol video communications network." Link

 
 
  Jeff Bailey   2/28/02,  9:29:06 AM
Genesis Microchip (GNSS) $41.00 ... stock halted with news pending. Link

 
 
  Austin Passamonte   2/28/02,  8:56:17 AM
Great Morning!

Will we see another volatile ride today as Wednesday & Tuesday both provided? Bulls do not want to see that repeat again, as severe volatile instability is a sign of turning points in the market, and seldom to the upside. Especially when rallies turn to selloffs instead of the reverse.

 
 

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