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  Jeff Bailey   3/11/02,  4:35:46 PM
Protein Design Labs (PDLI) $16.48 -5.82% ... Company announces it has initiated Phase II clinical study to evaluate its humanized antibody Nuvion in patients with steroid-resistant, acute graft-versus-host disease (GvHD), a potentially fatal complication of hematopoietic cell transplantation. Link

Stock trading up fractionally in after-hours at $16.52.

I have a regression channel (2-std deviations) from the 12/06/01 high down and stock recently rallied to upper end of this downward regression. Any meaningful bullishness would come at $19. I also have old retracement from $44.41 to $17.37 that has 19.1% retracement at $22.53 and correlates well right now with falling 50-day MA.

  Jeff Bailey   3/11/02,  4:05:03 PM
Caterpillar (CAT) $59.05 -0.47% ... on Thursday we noted that Credit Suisse had raised earning's estimates on CAT for 2002 to $3.00 from $2.75.

Same numbers today from Prudential on Cummins (NYSE:CUM) $46.86.

Both are big players in the diesel engine business. Cummins at $46.86 seems cheep given same EPS targets.

  Jeff Bailey   3/11/02,  4:00:23 PM
GSTI Software Index (GSO.X) 178.56 ... in 03:00 Update, I show GSO.X with retracement there. I also have another chart with a larger range of retracmenet from 241.63 to 116.45. That gives me 61.8% at 164, 50% right here at 179 and 38.2% up at 193 and then 19.1% higher at 217. A lot of resistance levels right in here with 200-day, bearish resistance and some retracement. Don't want to get too bullish and get hung out to dry.

  Jeff Bailey   3/11/02,  3:55:53 PM
Cummins Inc. (CUM) $46.93 +6.36% ... I just bought a new Dodge Ram with the Cummins Diesel. Love it.

Stock looks strong too after recent double top at $40 and break of downward trend. Current vertical count is $56. Link

Prudential upgrading the stock today to "buy" from "hold" on belief that prospects are improving for earnings driven by reduced structural costs, mkt share gains in the post prebuy environment, and expected market improvement beginning in 2nd-half with sustained truck market improvement beginning in 2nd-half of 2003. Raising 2003 estimates to $3 from $2.65.

"Friends don't let friends drive Fords." (grin)

  Jeff Bailey   3/11/02,  3:47:53 PM
Austin spotted near Lake Erie Austin ran into bad weather near Lake Erie. Should be here tomorrow!

  Jeff Bailey   3/11/02,  3:45:24 PM
Rockwell Collins (COL) $25.10 +3.97% ... subscriber wondering where he might look to sell his "lottery" April $25 calls (COLDE) from profile here in mm at $0.85. Currently bid $1.20.

First thing to think about is account management. If trying to rebuild an account and mixed in this lottery play, then profits are key to rebuilding an account and I wouldn't be looking for home runs. With that said, would simply asky myself what kind of profit do I need to get my account on right track right now. If I need the profit, then take it.

I have retracement "fitted" from $12.95 to $28.46. This "fits" rather nicely with 38.2% at $18.87, 50% at $20.70, 61.8% at $22.53 and 80.9% just ahead at $25.49.

I've also taken a regression channel from the 10/31/01 low right up this nice run COL has had. See how COL "spiked" above this regression on 01/25/02 and then came back down through and tested the lower end of regression? Now it is right back near the top.

We get "crossing" of upper end of regression and 80.9% retracement at $25.49. A "gap above there" would be nice, then would set an "alert" at $25.49 and bull needed a profit could exit on weakness. If stock were to continue up to 100% retracement at $28.46, then all the better, but I've hopefully outlayed a strategy to help you all.

  Jeff Bailey   3/11/02,  3:04:50 PM
Ciena (CIEN) $10.47 +12.94% ... stock said to be rising on speculation that company is take-over candidate. Also gets upgrade from Buckingham as firm says names like CIEN, Sonus (SONS) $4.27 +11.48% and ONI Systems (ONIS) $7.27 +11% are "survivor" companies that should benefit from stabilizing order patterns. Buckingham believes investors have quit reacting to negative news and large short-covering taking place.

  Jeff Bailey   3/11/02,  3:00:09 PM
Things to think about The S&P 500 bullish % is "bull confirmed" at 74.8%. Got a question from subscriber regarding comments made on OEX Bullish % from 12:23. "How could the OEX have actually gone up in price, while the OEX bullish percent fell back?"

Rotation! That's how. You can get one group or two that was up at 80% bullish that sees some rotation out of the sector, while a sector like the Software at 44% bullish actually moves higher to say 70% bullish.

Net impact can be a more broader 100 stocks of the OEX.X made up of different stocks from different sectors that moves higher, but if one group gets rotated out of, the net impact could be a loss of bullishness.

Remember! The bullish % is very good a telling us about "risk," but does not necessarily tell us about the direction of things.

  Jeff Bailey   3/11/02,  2:27:46 PM
Rational Software (RATL) $21.17 +8.2% ... is a name in the software group that I've liked in recent couple of sessions. Like the test of bullish support trend and resulting double-top buy signal at $21. Link

What I don't like is that relative strength vs. SPX is currently on sell signal and column of O. Link

Then I get a bit torn as relative strength vs. the GSTI Software Index (GSO.X) is rather bullish and would read (buy signal, but column of O) and hints this may be a leader in the group. Link

Can play long, but most likely best strategy is to start out with 1/2 position bullish and get all relative strength going right direction.

According to Dorsey/Wright and Assoc., software sector is "bull confirmed" at 44%.

  Jeff Bailey   3/11/02,  2:21:04 PM
Microsoft (MSFT) Open interest is large in MSFT at the Mar $65 call (MSQCM) with 45,804 open interest. Put open interest larget at Mar $60 (MSQOL) with 32,381.

May be seeing a bit of early "triple-witching" take place here. Never sure how open interest may impact direction, but would think stock hangs withing $2.50 of $65 until Friday.

  Jeff Bailey   3/11/02,  2:16:55 PM
Microsoft (MSFT) $64.57 +0.93% ... is "key stock" for software and making its way back above the 200-day MA today. Link

  Jeff Bailey   3/11/02,  2:13:13 PM
GSTI Software Index (GSO.X) Big test underway near-term. One test found at bearish resistance trend of 180 Link and the other found at the 200-day moving average right here. Link

  Jeff Bailey   3/11/02,  1:55:50 PM
Emulex (EMLX) $32 -8% ... trade at $32 is double-bottom sell signal and turns vertical count bearish to $27, which would be pretty close to that bullish support trend. Link

In recent days I've noticed a lot of these types of patterns, where we get a "false" sell signal, then the stock reverses up and gives a "false" buy signal, then reverses back down and gives a sell signal.

EMLX looks near-term bearish to me and would be using the higher levels of bullish support to have some bearish thoughts toward the stock.

Bar chart Link shows that 200-day moving average just below and that most likely was technical "reason" for stock to bounce from the $31 level to begin with.

This is something I think also was in play with Marvel Technology (MRVL) back at $30. Link . Notice the triple-bottom and break of bullish support that now looks very much like it was a massive "bear trap" that I got trapped into.

Will perhaps learn a lesson from MRVL with EMLX and not get too "bearish" on EMLX. Will need to see some break and close below that 200-day MA.

  Mark Phillips   3/11/02,  1:07:38 PM
Here we are, almost at the end of the lunchtime lull, and it has clearly been a rangebound day, with none of the major indices making much of a move in either direction. This is clearly borne out by the breadth indicators, with ADVDECV.NY hovering near the flatline and the ADVDECV.NQ negative, but showing no signs of collapse.

As for the major indices, DJIA hasn't been anywhere near support (10,500) or resistance (10,650) all day. The NASDAQ is showing a bit of a downward bias, but there is by no means a flood of sellers. And the SPX is just meandering around the unchanged level -- up a bit, and then down a bit, but with no directional moves apparent at this point in time.

Interesting to note that the VIX and VXN popped to the upside this morning, but that upward move is relaxing as the day progresses. It looks like they are destined to head back towards the lows seen late last week, and probably lower.

  Jeff Bailey   3/11/02,  1:03:00 PM
Austin P Got an e-mail from his wife. She did not say anything about Austin. She is sending me jokes. I have feeling Austin just not at his final destination yet, but that he is OK. Thanks for everyone's concern.

  Jeff Bailey   3/11/02,  12:46:39 PM
Cubist Pharma (CBST) $21.35 +3.6% ... stock edging above downward trending 50-day MA of $21.21.

I've taken retracement from 03/21/01 close of $15.31 to 08/27/01 close of $43.08. This has 80.9% at $20.67, 61.8% at $25.92. Nice little gap that could be filled to upside and trader could limit downside with tight stop under yesterday's low of $19.70.

Gap higher on Thursday Link came after company announced that its Cidecin NDA package was found acceptable for filing by FDA.

Point/figure shows recent spread-triple-top at $18.50. Current bullish vertical count is $36.50. Link

  Jeff Bailey   3/11/02,  12:30:32 PM
S&P 100 (OEX.X) 588.38 -0.25% ... tricky is this index. Look at the multiple "bull" and "bear" traps just recently. Bear trap at 545 two times; once in October (after red A) and again this February (red 2). Trapped some bulls perhaps at 600 in January (red 1).Link

Support should be building at 575.

Would like to have some cash on hand if Applied Materials (AMAT) $51.34 -4% will pull back near $49.Link and trader could correlates some support at recent triple-tops between AMAT and OEX.X

  Jeff Bailey   3/11/02,  12:23:10 PM
S&P 100 Bullish % ($BPOEX) You have to go back to November 1998 to find the bullish % for this index to read 78%.

It's interesting to note that the OEX.X still moved higher in price despite this higher level of bullishness.

  Jeff Bailey   3/11/02,  11:57:07 AM
Boeing (BA) $50.20 +1.61% ... Will hold conference call toat at 12:00 PM ET, when CEO Phil Condit will announce a personnal change. Call-in number for those interested is 719-457-2651 (pass code: #559520).

  Jeff Bailey   3/11/02,  11:41:27 AM
Adaptec (ADPT) $13.33 -4.7% ... Reader e-mail.. ADPT had a big move up on Friday, only to test the 38% retracement today and back off. The 50 DMA is sloping down. Would you short it at $14, targeting 12.75 and 11.4

I have retracement like subscriber from $7.46 to $18.41, which has 19.1% at $16.32, 38.2% at $14.23, 50% at $12.94 and 61.8% at $11.64.

Near-term target on bar chart would be $12.94 or trending higher 200-day at $12.28.

P/f Chart Link is bearish and vertical count bearish to $8.50. Can short with stop just above $14.50, target 80.9% retracement at $9.55 would be my thinking longer-term.

  Jeff Bailey   3/11/02,  11:29:38 AM
Providian (PVN) $6 +4.27% .... "Jeff, do you like PVN?"

I'm a "little warm" on PVN as stock recently gave "bullish triangle," but would only suggest "risk capital" at this point. Be willing and able to buy some time, then "forget" about the stock/option for awhile. Link

Current vertical count is bullish to $9.50. Looking at the Jan03 $5 calls (VQVAA) offered $2.60. Since I'm not in a hurry to own it, might just wait until this Friday and triple-witching to see if stock doesn't gravitate back near $5 level.

Some of the credit card stocks like American Express (AXP) $41.21 +1.82% have been doing better. Link along with Capital One (NYSE:COF) $61.21 +4.7% Link

  Jeff Bailey   3/11/02,  11:23:26 AM
Where's Austin? He left Denver on his way to New York. Not sure if he got caught in the snow storm that roared through Denver or just where he is.

  Jeff Bailey   3/11/02,  10:40:59 AM
Rockwell Collins (COL) $24.30 +0.66% ... stock edging up most likely on Iraq news of not letting in UN weapons teams. (see 09:42)

Honeywell (HON) $39.44 -1% and United Tech (UTX) $75.29 -0.03% are Dow components and down fractionally here.

Defense Index (DFX.X) 189.8 +0.22%. Link

  Jeff Bailey   3/11/02,  10:35:32 AM
Subscriber e-mail What a surprise!!! I look at market monitor this morning and there is this little analysis done on Saturday about using % in the P & F charts. Just for the heck of it I decided to look at PMCS Link using this method and wow, the stock hit a downtrend line and bounced down away from it. I had been tracking this play and playing it on a day trade basis and yes I have made a little money. You have just armed me with another way of looking at the charts that can help me make decisions. I will be testing a number of plays that I track on paper to see how well the % charts assist my decision making.

I got a lot of e-mail on this technique. I should tell everyone that the 3% box is for upward price movement, not downward price movement.

Note that the move in PMCS on the % scale shows a 3-box reversal lower. This is a 8.5% decline, not a 9% decline. Ahhh, the wonders of math.

  Jeff Bailey   3/11/02,  10:06:09 AM
Oak Technology (OAKT) $13.08 -3.46% ... "Jeff, what you think of OAKT) as a short?"

Stock is above trend right now, but would give "sell signal" with trade at $12. With bullish percent high right now, we get feeling that market is "overbought," but also rather bullish and need to be careful of potential "bear traps." Link First test of bullish support trends (blue +) can be painful for bears, so would tread light.

May want to keep an eye on relative strength of OAKT vs. SPX as it may give sell signal with reading of 11. If we were to see triple-bottom on p/f chart and RS also give sell signal then that may prove worthy for a bear with some puts. Link

  Jeff Bailey   3/11/02,  9:58:27 AM
Treasuries firm and hovering near unchanged levels. 10-year seeing marginal buying at 5.295% YIELD. Link

  Jeff Bailey   3/11/02,  9:56:40 AM
Sector Weakness Semiconductor Index (SOX.X) 620 -2.6%, Networking (NWX.X) 272 -1.72%, Fiber Optic (FOP.X) 100 -1.47%, Wireless Telecom (YLS.X) 77 -1.46%.

  Jeff Bailey   3/11/02,  9:54:40 AM
Sector Strength has Oil Index (OIX.X) 323 +1.04%, Oil Service (OSX.X) 98.74 +2.13% and Gold/Silver (XAU.X) 62.25 +2.21%.

  Jeff Bailey   3/11/02,  9:51:17 AM
Bank of America cutting equity weighting to 50% from 55% and cuts 12-month price target on NASDAQ to 2,250 from 2,350 Link feeling recent runup in stock mkt is due to better-than-feared economic news, short-squeeze in japan, and widespread anxiety of "mission out" on new bull market; however, firm says this is not the dawn of a new bull market (just the extension of one) and suggests that investors remain patient and look for more rewarding entry points. In addition, technology and telecoms still have full valuations and are not likely to recover in 2002.

I (Jeff Bailey) agree with BofA

  Jeff Bailey   3/11/02,  9:42:41 AM
April Crude Oil higher (+1.38%) at $24.17/bbl on reports that Iraq has said it will not allow UN weapons inspectors back has the market on edge amid increased fear of some type of military action.

  Jeff Bailey   3/11/02,  9:40:27 AM
Juniper Networks (JNPR) $12.88 -3.2% ... Trader talk in market that JNPR has lost its deal with Ericsson (ERICY) to Cisco (CSCO); this talk is thought to be related from a Dresdner Kleinwort note on the issue which says that Cisco probably is challenging Jumiper deal, but concludes that Cisco is unlikely to replace Juniper as the wireline solutions provider for Ericsson's 3G offering.

Juniper Link

Cisco Link

  Jeff Bailey   3/11/02,  9:35:15 AM
Electronic for Imaging (EFII) $22.07 ... stock getting hit to downside at $16.80 (-23%) as company lowers guidance for Q1 and Q2. Q1 outlook now $0.03-$0.04 on revenues of $80-$83 million (consensus $0.16 and $105.43 million). For Q2 EFII sees only slight increases in EPS and revenues from the Q1 level (consensus $0.22 and $115.9 million). EFII blames slowdown in capital spending on color printers and copier in both the professional printing and office markets. Link

  Jeff Bailey   3/11/02,  9:28:35 AM
Intl. Business Machine (IBM) $105.09 ... IBM downgraded this morning by Bernstein to "market perform" from "outperform"; cites expected weakness in global services group, no imminent IT rebound and a belief that IBM will benefit less from a rebound when it does occur, valuation, and continued ESP growth withought revenue growth. Link


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