Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
  Jeff Bailey   3/22/02,  11:22:52 PM
Turning over stones and finding some rats The plot thickens a bit in Adelphia Communications (ADLAC). Was looking to see when company last reported earnings and what the stock did ahead of earnings. Last earnings was November 9th and stock "popped" from a low on November 8th (similar to pullback that we've seen until now). Then gapped lower after earnings were released before the bell on November 9th, held sideway for several days then went on torrid run higher from $21-$32.

I found this news item Link that was in regards to a publicly traded business unit of theirs called Adelphia Business Solutions (NASDAQ:ABIZ) $0.082 +2.5%. This ABIZ also did one of these "convertibles" like ADLAC just did on January 16th.

Maybe it is just me, but if I had bought the ABIZ convertible, I'd sure have wanted to hedge it with the common as a short. Look what happened to ABIZ Link

Headline on April 17, 2000 ... Adelphia Business Solutions (ABIZ) $28 13/16 : Salomon Smith Barney's Jack Grubman raises price target to $100 from $75; rates ABIZ "buy" after updating ABIZ business model, following the company's 3/15 announcement of its Commonwealth of PA contract and expanded data plans. How did that one do? I began this chart on April 17, 2000 on "Solly's" upgrade. Link

Keep a stop in place (bull or bear) and have a great weekend!

 
 
  Jeff Bailey   3/22/02,  10:32:15 PM
"Gold Bugs!" looking like a potential "short squeeze" coming in gold. Was looking at the April Gold futures (gc02j) with retracement from $263.30 to $316.20 which was a "fitted" retracement we did some time ago. I'm seeing support came in at 50% of $289.75 and today's break above 38.2% at $295.99 may have some bears contemplating next level of retracement up at 19.1% $306. With MACD on the daily just now crossing above signal after trending right back down to zero level, could apply some upside pressure near-term.

With retracement set on the Gold/Silver Index (XAU.X) which is "fitted" similar to that of the futures contract, I have retracement from 0% 49.56 to 82.30 100%. I "fit" the 50% level back at the 05/21/01 closing high for that run at 65.88.

Now... that "fit" at 50% resulted in a 38.2% of 62.00 and it sure looks like that dip below on 03/08/02 was a trap to suck in some bears. What's looking a bit like a short-squeeze in the making is yesterday's action. See the break above 50% intraday, but bears were able to push her below the $65.88 level by the close. Today however, moved back above and move into the close to $67.86 and MACD on daily also rounding up and crossing above signal, just above zero level has a bear in a precarious situation. Bear is assesseing near-term risk to 61.8% retracement of $69.75 and funny enough, that was the 02/08/02 high and 02/15/02 high. A break above the $70 level then has bear assessing risk to $76.02.

Here's the bar chart of the XAU.X. Wish I could show the retracement, but if you've got q-charts or station with regression give her a shot.

If you're going to trade these gold stocks, make sure the hat you're wearing has a chin strap as things could get wild/volatile.

Earlier today we looked at the $2 box as it is most likely the one that institutions will use. (see 03:28:38) here's the $1 box that shows a potential spread-triple-top at $70. Link

 
 
  Jeff Bailey   3/22/02,  10:01:28 PM
Weekly stats

NYSE Composite -1.2%, Dow Indu -1.7%, S&P 500 -1.5%, S&P 100 -1.9%, NASDAQ Comp. -0.9%, NASDAQ-100 -1.7%, Russell 2000 +0.06%.

Sector winners were ... Gold/Silver (XAU.X) +9.5%, Utility (UTY.X) +3.3% and Natural Gas (XNG.X) +1.8%.

Sector losers were ... Airlines (XAL.X) -3.7%, Forest/Paper (FPP.X) -3.7%, Networking (NWX.X) -3.6%, Fiber Optic (FOP.X) -3.5%, Wireless (YLS.X) -3%, N. Amer. Telecom (XTC.X) -3%

Since Dec. 31st ..... Winners ... Gold/Silver (XAU.X) +25.6%, Airlines (XAL.X) +19.3%, Semiconductor (SOX.X) +13%, Health Payors (HMO.X) +12.9%, Oil Service (OSX.X) +12.3%, Forest/Paper (FPP.X) +9.1%, Transportation (TRAN) +9%

Losers ... Wireless (YLS.X) -26%, Networking (NWX.X) -24.8%, Combined Telecom (IXTCX) -24.2%, N. Amer. Telecom (XTC.X) -22.5%, Fiber Optic (FOP.X) -20.8%, Software (GSO.X) -9.3%, Biotech (BTK.X) -9%

 
 
  Jeff Bailey   3/22/02,  7:19:56 PM
Verizon (VZ) $45.61 -3.01% ... Company reaffirming commitment to debt portfolio strategy, including reduction in overall debt, reduction in short-term debt and increase in percent of commercial paper backed by bank lines of credit. To reduce overall debt, VZ reiterated plans to apply proceeds from $2.8 billion in wireline asset sales, as well as from sales of other non-strategic assets, to debt reduction in 2002. Also, as previously announced, company plans to reduce capital spending requirements to $15-$16 billion in 2002 from $17.4 billion in 2001.

see earlier 10:16 comments.

 
 
  Jeff Bailey   3/22/02,  4:39:54 PM
S&P 500 (SPX.X) 1,148.70 ... up $0.62 for the year! If you've been overly bullish, you've gone nowhere. If you've been overly bearish, you've gone nowhere. If you've been rather nimble and open to both up and down at various times and willing to trade for some profits (however small) then that looks to be what the market is giving.

 
 
  Jeff Bailey   3/22/02,  4:03:25 PM
Airline Index (XAL.X) 105 +3.18% finding a bid again and support looks to be firming near more psychological $100 level. Back above the 200-day without much of a fight today.

Dorsey/Wright displays "standard" chart with $2 box, so lets stay on same page as most institutions Link . Kind of a toughy in here, but may have to price out a strangle/straddle trade again.

Still monitoring that strangle we worked up from Continental Airlines (CAL) back on November 9th, and boy oh boy has that one payed some rewards for a 50/50 trade. Those June 20 calls (CALFD) are up 175% to date, while the June 15 puts (CALRC) are down 89%, with net being +48%.

Here's the Link to how we set up that strangle trade, and might be of some help for other strangles/straddles you might be considering. All you want is some volatility from your entry point.

 
 
  Jeff Bailey   3/22/02,  3:52:10 PM
Anglogold (AU) Personally, I think the call options are a little pricey. To me, it doesn't make much sense to buy the May 25's for $0.95, if my upside may be $27.50.

Then has me prefering the stock bullish as a buy, run, write (buy the stock, see if she'll run, then sell the covered call options and get some jacked premium).

 
 
  Jeff Bailey   3/22/02,  3:49:00 PM
Anglogold (AU) $23.46 ... this retracement kind of interesting. I've "fit" retracement from the 04/02/01 low of $13.97, the "fit" the 50% to honor the 05/18/01 close, which also was a resistance point in January of this year two times. Interesting then that the higher 38.2% retracement sure seemed to be a support level for February, until just recently broken, but look how that 50% retracement came back into play as support. Just today, stock making a break above 38.2% retracement of $22.51 rather firmly.

What's even more interesting is that "result" of fitting gives us 0% at $27.80. What did we say was the bullish vertical count? $27.50 (see 03:42)

 
 
  Jeff Bailey   3/22/02,  3:42:25 PM
Anglogold (AU) $23.48 +5.24% ... sometime when I "miss the move" in a stock, I'll look for some past "inside days." For example... yesterday was "inside day" on AU and trader watching the stock may have traded bullish today on break of yesterday's high at $22.90. Link

MACD on Daily chart just rounding out and crossing above signal, so maybe not "chasing" stock here. Trader might "pretend" they went long at $28.90. Now ask... "has stock moved too far, or am I too profitable right now?"

If trading "inside day" stop would be below yesterday's low of $22.25. The question for a trader is "is the stock/technicals too expensive at $23.40" to warrant a trade and risk a stop at $22.20? What's the longer-term potential (bullish count) and will MARKET stay interested?

Bullish vertica count is $27.50. Would take a trade at $24 to get chart back in column of X. May note that after 3-box reversals lower (see the three O's) stock has had a tendency to move up at least 5 X columns. Link

 
 
  Austin Passamonte   3/22/02,  3:34:08 PM
Looks like I'm done for the day and week from here. We'll take 7 index points and look forward to next week's action ahead, so whatever happens into the close will do so without me aboard. The session's largest move was actually upward in counter-trend fashion, but that's often the case these volatile days.

Amazing that the VIX is still at 20 and put/call ratio down to 0.25 today... Bubbleonians are buying every dip just like shades of 2000 spring used to see. I for one sure hope the markets simply pick either direction and go, but my guess is we endure most sessions just like this with an occasional day of trend sprinkled in between.

See you in the weekend website editions!

 
 
  Jeff Bailey   3/22/02,  3:28:38 PM
Gold/Silver Index (XAU.X) 67.83 +3.39% ... jeff would you please give a update comment on gold please? i hate to chase these stocks, but they keep going higher.

I wish I could "explain" what is taking place.

The $2 box (conventional scale used by Dorsey/Wright) shows that a bull may not necessarily be "chasing" this sector. Link

Current bullish count on $2 box would be $106. About all a "new bull" could do here is leg into a position. If you "feel" like you're chasing, then cut down on your position size and buy some time.

 
 
  Austin Passamonte   3/22/02,  3:12:32 PM
Looks like that "planet alignment" of signals noted at 1:45pm caught a nice little move down in the indexes and we'll end the week in this household on a winning note. Had I nixed that #2 trade it'd have been a stellar day, but as detailed earlier it sure seemed like a viable entry at the time of decision.

And that's trading... negating losses fast while giving the plays that perform a chance to stair-step our equity curve higher. The toughest self-challenge I ever faced in this game (still do) is to keep losses small or nil so account balance isn't merely churning sideways over time. Ever happen to you, or is that human weakness to hold losses too long exclusive to me?

 
 
  Austin Passamonte   3/22/02,  1:45:33 PM
When indexes made the last session highs, small wedges formed on the 10/5 min charts. A break lower from 1157.00 was my last short entry for the day with stop set tight at 1159.75 (above current highs) if I'm wrong.

We still have D/60/30/10/5/1 min chart signals all aligned in bearish fashion and 1:00pm EST timeframe is leading edge of post lunchtime lull reversal into afternoon trend. In addition, I misread that 0.40 or lower put/call reading as bullish when in fact it is bearish... my mistake! Still trending between 0.40 and 0.45 as we speak.

To top it off, both NY and NQ ADV/DEC measures fell right off a cliff from the lunchtime uptrends as well.

That's enough circumstantial evidence for me to get short up near recent highs and we'll see if these measures all added together result in lunch money by the close or slight overall loss for the day!

 
 
  Eric Utley   3/22/02,  1:25:48 PM
I'm debating with putting out some Brocade (NASDAQ:BRCD) Link in here. The fact that it hit its vertical count at $22 and then reversed has me a little nervous with shorting in here. Plus, ahead of the holiday and end-of-quarter, I'm more inclined to wait for slightly higher prices, specifically up around $28.

On the other hand, I have the stock pegged at $27 retracement. Additionally, I've seen two new sell signals in the Nasdaq-100 (NDX.X) today which should have its bullish percent back into a column of Os. That increases my bearish conviction on BRCD, which is one of the weakerLink components. If I do go short today, I'll probably use a stop in the $27.50ish area. If, however, I can get the stock higher next week around $28, then I'll use a stop at $30. The downside could be big on a breakdown from the potential bearish triangle.

 
 
  Eric Utley   3/22/02,  1:03:00 PM
KLA Tencor (NASDAQ:KLAC) is higher by about 34 percent year-to-date. Its performance makes the stock one of the better performing Nasdaq-100 (NDX.X) components. I think it's a likely target for quarter-end window dressing. A trade above $68 Link might be good for a few points going into next Tuesday or Wednesday.

 
 
  Austin Passamonte   3/22/02,  12:58:16 PM
Putting my OI education to work: I shorted the pre-open move for positive performance this morning based on a break below session lows on a standard follow thru play. Covered that one when ADV/DEC on both the NY and NQ markets (Mark Phillips recent articles) broke the morning downtrend and turned positive on our first bounce off session lows.

I tried a second short when D/60/30 min chart signals were still bearish, 10/5 min chart signals were overbought and turning lower, ADVDEC.NY trend broke down and lower-high price failure seemed imminent. That's enough planets aligned for me to try another short play risking earlier gains and no original capital. Didn't work out regardless all the tools we use that told us it was high-odds play.

One caveat to further shorts was standard put/call ratio (Steve Leigh weekend article) dipped to 0.29 bullish extreme and bounced from there. I couldn't decide whether higher lows or lower highs in the 10/5 min charts were the actual trend, so kept capital risk very conservative.

I'd love to win every trade as would you, but my primary goal is to take high-odds entries when presented, control adverse risk and stay in the game until the next directional pop is caught. One or two captured moves of 10 to 20+ S&P index points a week will pay lots of bills if we can keep loss minimal while trying to hitch the rides in between!

 
 
  Jeff Bailey   3/22/02,  12:53:25 PM
Celestica (CLS) $36.75 +2.5% ... stock breaking above yesterday's high, so move to the sidelines here.

 
 
  Jeff Bailey   3/22/02,  12:45:48 PM
Ryland (RYL) Also... relative strength just turned back into a column of X today vs. the SPX so just like that, stock now outperforms the market on a longer-term and near-term basis once again.

What does set up in the potential for a RS "sell signal" at a higher level now with a reading of 73. I could correlate that with a break of yesterday's low or trade at $83.

May also want to consider that the spring/summer season can be a stronger housing season as weather more mild.

 
 
  Jeff Bailey   3/22/02,  12:39:13 PM
Ryland (RYL) $89.17 +4.79% ... Jeff: RYL April 85 puts have dropped to 2.70. I was thinking of buying them here. Is it too late to get in, or should I wait a litle longer. What direction are you looking at from here?

Too late? If anything... a trader/investor is very early in thinking bearish. Yes, we've got a red flag hooked up to the flag pole in the group and YIELDs have moved higher, thus mortgage rates edging up a bit. Here's what I'd do with supply/demand chart. Let's "imagin" the top was $97 and eventually RYL breaks bullish support. Take a 45-degree trend from the top (put a trend from the $98 box, then just move down 1 box and over to right one box). This would become the "bearish resistance trend" if bullish support (blue +) were ever broken. That is where one might expect an "ultimate rally" to come to. I have it at about $92.

Now... where would a "buy signal" take place? That would be $90. If RYL is "going down hard" then stock shouldn't trade much above there because all the smart money would want out right?

I think the area you need to understand is that found back in January (red 1) See that series of lower highs and lower lows, the BOOM! The reversal comes and bulls unleashed a furious rally?

Now.... I'd only be looking to "leg into" any puts right now, and I'd be wanting to buy more time than just April Expiration.

Here's the chart Link

 
 
  Austin Passamonte   3/22/02,  12:38:06 PM
Look for a break above Thursday session highs in the futures market to trigger stops, kick in some buy programs and get those cash indexes turning green. That's the point of defense right now big players are gaming, and happen to be clear pivot points as charted in last night's Swing Trade gameplan section as well.

Link

 
 
  Austin Passamonte   3/22/02,  12:34:31 PM
Stopped out of my second play for total par this session. Not likely to see any tempting setups before next week from the look of mixed chart signals right now. Yesterday offered +20 index points potential in easy trades while today is merely noisy with tight-range chop. A run higher into the close is possible, but I don't see clear evidence of that setting up intraday charts right now.

Some days we print money with ease, other days we spin our wheels instead. Nothing lost while trying to profit is always my 1st priority these days and potential gains come along after that.

 
 
  Jeff Bailey   3/22/02,  12:26:55 PM
Solectron (SLR) $8.21 -0.48% ... stock came close to new 52-week low with earlier trade of $8.01, but managed to find some buyers (I think from short-covering).

Regardless... as mentioned previously in regards to Celestica (CLS) $32.60 +0.97, a CLS bear wants to see further weakness in "the tail of the snake" in SLR to provide some doubt among CLS bulls and get them to sell. Otherwise, may see shorts come in on CLS and take profits, thus create near-term demand and have stock higher.

As such, keep stop snug just above yesterday's high for short-term trader, otherwise assess risk of rally to 38.2% retracement of $38.47.

 
 
  Austin Passamonte   3/22/02,  12:10:58 PM
Looks like I might be fighting the tape today as D/60/30 min chart signals are clearly bearish but 10/5 min charts post higher lows and lower highs. Worst case scenario is I breakeven on my first two trades and we'll see what the afternoon may bring. Yesterday was a very methodical market move each direction while I was away.... arrgh!!!

 
 
  Austin Passamonte   3/22/02,  12:08:39 PM
I've cruised more advisory websites these past three years than most people have in their entire trading career. Most of that was research to see what the other guys did during my two-year tenure here with OI. In all that time I've yet to find better stock pickers than Jeff & Eric anywhere.

Both these guys do an outstandong job of buying support, selling resistance and never chasing extended markets either way. The stock universe is so huge, why would anyone want to chase one stock when 1,000s of others are currently poised perfectly right now? If more time by traders was spent scanning & screening for perfect entries rather than trying to justify chasing a move away from ideal entry, there'd be plenty more Wall Street riches stories to tell!

 
 
  Austin Passamonte   3/22/02,  12:03:26 PM
I've taken my last 1/3 gains from this morning's first play and added to shorts at 1154.00. All chart signals still look bearish and beginning to roll over. Stop set at 1156.00 on the entire position and if hit, my first play today is washed on the second for par results this session.

 
 
  Jeff Bailey   3/22/02,  11:53:26 AM
Looking for a "basket" of Utilities? How about the AMEX Utility HOLDRS (AMEX:UTH) $96.80 +1.23%. Hey! They're breaking above their 200-day MA today! Link

P/F gave triple-top at $88 and recently broke bearish trend. Link I calculate bullish count as ((12*3)*1)+85 = $121 right now.

Here is a Link to the components of the Utility HOLDRS.

 
 
  Jeff Bailey   3/22/02,  11:45:35 AM
TXU Inc. (TXU) $54.34 +0.89 ... "Utility" stock trading new 52-weeker. Gave triple-top at $50.

Subscriber question... Do you still recommend buying on a pullback to 51 area? It may not make it. Is it OK to buy here with lots of time?

I'd still like to try and wait for a pullback, if she doesn't, then so be it.

Instead, might want to research company, fully understand what they do. Dorsey/Wright has them as "Electric" utility. Are there other "Electric" utility with similar technicals developing like TXU had back in February (red 2) at new breakout? Link

Instead of "chasing" TXU, what about an initial bet in earlier mentioned Ameren (AEE) Link as it had a triple-top at $43 and stock trading $41.82 here. If she trades $44, then that's another "buy signal" and you're in good shape.

 
 
  Austin Passamonte   3/22/02,  11:42:23 AM
A quick scan (five minutes) of all Dow components shows zero symbols aligned in oversold extreme for long-term bullish plays. The following are all in early stages of overbought bearish reversals and look to have tradable downside ahead:

AA, AXP, DD, GM, IP, JNJ, MO, SBC, DIS, UTX.

IBM is coiling up into a wedge on its daily chart and merits watching from there. WMT and HD are overbought and look weak but are in string price channel uptrends I wouldn't short unless those lower trendlines in day charts are broken below.

 
 
  Jeff Bailey   3/22/02,  11:34:19 AM
Coca Cola (KO) $51.24 +1.6% ... yesterday at 10:31 we thought good call was the November $50 (KOKJ). Trading $4.00 here and this would be my selected call play.

 
 
  Austin Passamonte   3/22/02,  11:31:50 AM
The tape is creeping higher into our lunchtime lull period here, but chart signals noted before are still mixed to bearish. I'll ignore the upside for now even though dipsters may very well press markets higher into the close. That would be no more than a 50/50 wager on my part to trade, which is a losing probability over time.

If my second play stops out before 2:00pm I'll look for one more move toward the close in whichever direction may prevail today, if there is going to be prevalance at all.

 
 
  Jeff Bailey   3/22/02,  11:30:11 AM
Coca Cola (KO) $51.26 +1.70% ... yesterday we mentioned stock could trade $51 and triple-top buy signal. Here it is and trading strong. Link

 
 
  Austin Passamonte   3/22/02,  11:10:55 AM
I'll try another short right here at S&P 500 1152.00 with stop set at 1156.00

This risks 2/3rds the first trade's gain as maximum loss and I'm looking to trail down stops and further reduce risk as market action permits.

 
 
  Austin Passamonte   3/22/02,  11:07:30 AM
Not much of substance to say this session. Early short covered on +6 index points and now we see 10/5 minute chart signals cycled back up to overbought extreme while D/60/30 chart signals are still bearish. Which means the next short attempt is probably just ahead if price action fails at a lower-high than posted so far today.

 
 
  Jeff Bailey   3/22/02,  10:42:25 AM
Newmont Mining (NEM) $25.86 +2.45% ... Several days ago (03/15) I thought decent short, with tight stop above $25. Stock hit that stop two days later. Now challenges 52-week high of $25.90 set on 02/06/02. Link

Just as "first test of bearish resistance can be painful for the bulls" one also knows that "first test of bullish support can be painful for the bears" If a bear tried to short $19.00 on 03/08/02, he's feeling some pain.

 
 
  Jeff Bailey   3/22/02,  10:39:47 AM
Gold/Silver Index (XAU.X) 67.34 +2.6% ... continues to find a "crazy bid" and trades strong. April Gold Futures (gc02j) $294.40 +0.47% has been trying to base last two-weeks. If she breaks above 295, could see some shorts get squeezed a bit in some stocks.

 
 
  Jeff Bailey   3/22/02,  10:33:38 AM
Celestica (CLS) $35.47 -1.05% ... slipping a bit today on SLR future guidance lower. Current trading on CLS right at 50% retracement. Since we profiled as short/put near $38.50, stock has not been able to get above a previous day's high. Bears now targeting 61.8% retracement of $32.57, which was February relative low.

Yesterday, subscriber made good point. The point/figure chart does have a bullish vertical count associated with its chart. Reason we were looking short was that stock just tested bearish trend and often times, "the first test of bearish resistance is painful for the bulls." Trader slips in a short/put on 3-box reversal as relative strength still negative Link and would read "sell signal, column of O". Doesn't entirely "discount" the bullish vertical count and uses it to understand that a stop on the trade MUST be used if shorting the underlying.

Do you see how the RS chart might give another sell signal below the March (red 3) level of 29? Is there any type of "technical event" that might take place on a break of a March (red 3) level on the p/f chart?

Hmmmm.... potential triple-bottom sell signal at $31. With bullish % charts in the NASDAQ-100 and S&P 500 above 70% and "overbought" we can only imagine the possibilities.

 
 
  Jeff Bailey   3/22/02,  10:16:56 AM
Verizon Communications (VZ) $46.06 -2% ... outlook revised to negative by S&P, ratings are unchanged.

P/F chart still bearish on VZ Link as stock remains below trend and vertical count bearish to $39. Good looking short/put here , stop $49 and target new lows.

Bar chart shows stock finding resistance at/near the 50-day. MACD just crossing below the signal. Link

 
 
  Austin Passamonte   3/22/02,  10:13:44 AM
All D/60/30 min major index chart stochastic values in pure bear mode today. Looks like our intraday chart analysis in Swing Trade Gameplan is following thru and shorts are the way to play right now. At this time I'm leaving the stop-loss order on my short play from 7:00am just below entry to cover costs, etc. Either the market goes lower and runs deep in the money or it pops from here and I lose nothing... not one cent. What could be wrong with doing that more days than not?

 
 
  Jeff Bailey   3/22/02,  10:07:50 AM
April Natural Gas futures (ng02j) rather strong this morning at $3.50 +2.15% and back into last summer's base range. Looking for some sideways consolidation and formation of a "cup and handle" here.

Contract low was 01/28/02 of $2.05, with contract high coming 01/16/01 at $4.92.

I've taken retracement from $4.80 to $2.34 to come up with some levels that really "fit" nicely with retracement. Have 80.9% at $2.81, 61.8% $3.28, 50% 3.57 and 38.2% at $3.86. 200-day MA was broken to upside at $3.00 and I'd like to see a pullback to that level, then look for some new entries in some Nat. Gas stocks. One I've got my eye on is shares of VPI, but looking for others too.

 
 
  Jeff Bailey   3/22/02,  10:02:55 AM
Dow Breadth rather negative this morning with 7 up and 23 down. Biggest gainers are MRK +0.22% and PG +0.22%. Weakness is HWP -3%, MCD -1.8%, T -1.9% and BA -1.3%.

 
 
  Jeff Bailey   3/22/02,  9:57:12 AM
Ameren (AEE) $41.50 -0.45% ... ideally, I'd like to look for an entry point at the $41 level. I have retracement from $46.81 to $37.37, this has 38.2% retracement at $40.97, which correlates with rounding lower-to-flat 200-day MA. 50% just above at $42.09 and 61.8% up at $43.20. Target would be range between 80.9% $45 and 100% $46.81. Good stop to control risk would be just below upward trend on bar chart at $39.95.

If looking to play the option, buy time. From current levels, stock trader risking about $1.50 a share. September $40 calls (AEEIH) currently bid $2.35.

May be a good stock to consider for retirement account and covered call candidate. Annual dividend is $2.54, so dividend YIELD about 6.1% on underlying stock from current levels.

Point/figure chart is bullish having given triple-top buy in January (red 1). Vertical count is bullish to $52. Link

Relative strengh of AEE vs. the Utility Index (UTY.X) is bullish and reads "buy signal, column of X" so strong stock in the sector. Link

 
 
  Jeff Bailey   3/22/02,  9:45:19 AM
Adelphia Communication (ADLAC) $21.80 -0.04% ... if some bears took profits yesterday on break above $21.42 from market monitor, I'd think about slipping back in short 1/2 position here, stop just above $23.

 
 
  Austin Passamonte   3/22/02,  9:44:43 AM
My morning shower is complete, and stop-loss order on the early S&P short is now trailed to just inside of entry. Got a "free-play" working here with no possible way of losing money on this one, save for the Fed announcing a surprise rate cut to gap markets higher [huge grin!]. Like I said, no possible way to lose and gaining value every minute.

Think it's time to whip up a nice breakfast... scambled egg whites, cinnamon brown sugar oatmeal and a fresh grapefruit. Then we'll see if the markets have kicked out my trailed stop for slight gain or we're still running deeper into the black!

Love these methodical markets!!!

 
 
  Jeff Bailey   3/22/02,  9:41:47 AM
Ameren Corp (AEE) $41.69 ... this is a "utility" stock I was looking at last night. They did a secondary and convertible offering back on 02/26/02, priced some common at $39.50. See the volume spike that day? Then see another volume spike on 03/06/02? I think there was big short ahead of secondary and convertible, and got squeezed a bit. The convertible looked rather attractive with a 9.75% dividend. Link

Here's a link to an article describing the secondary and convertible. Link

 
 
  Jeff Bailey   3/22/02,  9:29:39 AM
Salomon downgrades media stocks Salomon Smith Barney is downgrading 5 media stocks, saying that valuations are becoming full and that a "market weighting" is now more appropriate. Reducing CCU, EVC, LAMR, RGCI and UVN.

Go figure... then Salomon raises price targets in other media names ... EMMS to $30 from $22, CXR to $32 from $28, HSP to $28 from $26, and EVC to $15 from $14.

 
 
  Jeff Bailey   3/22/02,  9:23:58 AM
Solectron (SLR) $8.25 ... as mentioned last night, company guided lower for next quarter. ABN AMRO lowering their price target well below the current price, to $6-$7 from $8-$9, due to "inefficient execution, a slowdown in its end-markets, and integration issues.

Keep an eye on this one if you are short/put Celestica (NYSE:CLS). Same type of business. There's bad news in the group, so CLS should trade lower today. At some point we "know" that all the bad news comes out and things improve. We never know for sure when that day will come. One way to protect yourself and gains currently at hand is to simply lower a stop just above yesterday's high. If there's more bad news coming, the "smart money" wont be buying and stock should continue to trade lower.

 
 
  Austin Passamonte   3/22/02,  9:10:13 AM
Well, my first play of the day opened on a short trigger hit just minutes ago. Looks like we're testing the downside right from the get-go, and now slightly in the black waiting for cash markets to open.

 
 
  Austin Passamonte   3/22/02,  8:45:16 AM
Most amusing news story of the morning was AOL's corporate admittance that their email service is glitched, and they now permit employees to use other services that actually work! Heck, I could have told them that years ago. Most people I know who use AOL and switch over to other service cannot believe the difference involved.

One way AOL might boost share value is by cutting expenses, and backing off on free CD distribution might be one of those. I throw away upwards of 50 discs a year from bulk mailings, software bundling, magazine stuffings, mail package stuffings and several other packaged venues that escape me right now. Is that kind of saturation really working? Perhaps it's the dandelion seed theory of marketing distribution. Just blow millions into the wind and see where they land.

But the desire to receive these discs from people I know reminds me of zucchini squash season in NY state: leave a zucchini sitting on the front seat of your car and someone is liable to break in and leave six more right beside it.

 
 
  Austin Passamonte   3/22/02,  8:38:08 AM
Great Morning!

Another mixed picture at the open, but that beats any gap-open move that wastes profit distance. Looks like the bulk of tech companies that reported earnings last night beat their dart-thrown street numbers but came in light on revenue. Big surprise, and traders better get used to that fact!

Pre-market futures are flat to red via fair-value with an hour to go before the show. As depicted in last night's Swing Trade gameplan, I'll ignore the upside for option trades and watch for early failure at / beneath resistance.

Bid/Ask spreads and time value packed in are both too high right now for deftly switching directions without eating too much slippage in the process, so one needs to be right the first or second entry at the most when trading them.

 
 

Market Monitor Archives