Option Investor
Printer friendly version
  Jeff Bailey   3/26/02,  5:46:54 PM
API Data for week ended March 22 U.S. crude stocks fell 6.217 million barrels in the latest period; U.S. gasoline stocks down 2.078 million barrels in the week; U.S. distillate stocks down 2.021 million barrels in week; U.S. refinery runs at 86.3% versus 86.2% last week.

May Light, Sweet Crude Oil futures (cl02k) up 1.57% to $25.76 in early Thursday trading.

  Jeff Bailey   3/26/02,  5:32:44 PM
CDW Computer (CDWC) $49.57 +1.16% ... Rumor circulating that CDWC placed a spot offering of 2 million shares priced at $48 per share. Link

Stock trading $48.50 in after-hours.

  Jeff Bailey   3/26/02,  5:29:20 PM
Coca Cola (KO) $52.60 +1.64% ... after hours, company says it expects 4-5% unit volume growth for Q1. Many analysts were looking for 4-5% unit growth from overseas, but unit growth in the 2-3% range here in the U.S. so some saying "blanket" unit volume growth guidance from KO is positive.

Goldman Sachs says volume growth was inline with its estimates. Firm saying that aside from the volume number, sentiment will continue to improve towards this stock in coming months as a strengthening world macro-economic environment and US product news drive stronger unit growth.

KO seeing some after-hours trading at $52.00

  Jeff Bailey   3/26/02,  4:11:22 PM
Adelphia Communications (ADLAC) Correction! Reports earnings/losses before the opening of trading tomorrow morning. Multex looking for loss of $-0.99 a share, while Zacks looking for loss of $-0.89.

  Jeff Bailey   3/26/02,  4:08:11 PM
Treasuries were rather "volatile" today with YIELD whipping back and forth. 10-year YIELD ($TNX.X) settled near low of the session so buying in bonds, with YIELD finishing at 5.334%. Link

Back when I originally profiled MSFT as short, one thing we kind of wanted to see for that trade to work was a YIELD break in the 10-year below the 4.8% level. That never really happened. Now MSFT lingering back near the $58 level and get the feel that a move back lower in 10-year YIELD may also act like a "sledge happer" and drive MSFT lower.

MSFT has a lot of institutional sponsorship as it is very liquid stock that gives quick tech exposure. As with broader tech, pretty much out of favor in recent months and MSFT not that much different.

  Jeff Bailey   3/26/02,  4:03:14 PM
Microsoft (MSFT) $58.73 -0.81% ... this is the "key stock" for short/puts in the QQQ. I profiled this one as short/put back on 02/21 or 02/22 on break at $58. Stock back near that level once again.

"This time" we see MACD now rolling, but up near zero level. If she's going to break, this would be the time. MSFT is largest weighting in QQQ so important stock for QQQ action. Link

  Jeff Bailey   3/26/02,  3:59:51 PM
Coca Cola (KO) $52.40 +1.25% ... I'm following the KO trade from a while back. It's doing pretty well, the current ask is about 25% above my entry. What are your thoughts on targets for this today.

Well... stock hasn't traded below the previous day's low since we mentioned the spread-triple at $51. Actually, hasn't traded more than 3-cents below a previous day's low since starting its run from "inside day" of 03/13/02.

Short-term trader can just keep snugging up a stop if he/she likes under previous day's low if you're playing the April expiration. MACD getting up there and a little extended. Link

  Jeff Bailey   3/26/02,  3:51:41 PM
Birthday thanks I see Austin has let the "cat out of the bag" and that my birthday has rolled around. Seems like it happens every year about this time.

Thanks to all that sent me an e-mail. Makes me happy.

What would make me even happier is a little present from Adelphia (ADLAC) after the close. Will have to see.

Trading is not unlike some b-day presents. Lots of "hope" when you're doing the unwrapping. I got a tea-pot from my Aunt that is shaped like a teddy bear. Not sure what she was thinking. Well... it was the thought that counts.

Well... never give back a present that was sent with good intentions. With ADLAC, don't give back gains if you need them. Assess your account, then risk/reward of the trade from current levels. Then fill with water, turn the heat up, and see if she whistles!

  Jeff Bailey   3/26/02,  3:45:36 PM
Ciena (CIEN) $8.32 -0.35% ... with Lucent (LU) $4.32 -4.2% and Nortel (NT) $4.31 -2%, I DO NOT like this one (CIEN) at $8.32.

  Jeff Bailey   3/26/02,  3:41:35 PM
Adelphia Communications (ADLAC) $20.33 -3.4% ... Reminder! that company reports earnings/losses tomorrow morning, before the open of trading.

Those with full positions that "need a profit" may want to take 1/2 off the table before the close, then let the other half ride and see what happens. Today's action looks like some "defense" being played ahead of earnings.

On negative market response, might think that market makers "gap stock lower" at $18.76. On positive response "gap stock higher" at $21.42. Both "gap levels" derived from retracement where market maker would be monitoring levels.

Only you can do what is appropriate for your account. Assess risk levels from retracement and go from there.

  Jeff Bailey   3/26/02,  3:35:19 PM
Verizon (VZ) $45.94 +0.61% ... earlier I mentioned stock as I had gotten several e-mails from subscribers "concerned" about bullishness.

If this morning's "strength" was a bit more than you had bargained for, then you may need to par back on your position size as a 2% move in this name not uncommon. Now is your chance to adjust your trade size with stock back near unchanged. Get the position to a size you are comfortable with and this will allow you to let the trade play out.

Sometimes we trade too much size and get "freaked out" by a near-term move. Usuall I will "freak out" when I've traded to big of size. Simple solution is to avoid trading too much size.

  Austin Passamonte   3/26/02,  3:29:15 PM
Exit stop hit on 1137.00 pop and out of the action for this session. Let it close as the final 45 minutes may... I'm finished until tomorrow. No anxiety of holding over the close, angst over who reports what tonight, etc. New day, new opportunity tomorrow while markets remain mixed, volatile and without trend right now.

See you in the morning!

  Jeff Bailey   3/26/02,  3:26:41 PM
Cox Communications (COX) $36.79 -2.54% ... bears in Adelphia (ADLAC) have an eye on Cox and what is taking place here at COX 50-day MA. Bears in ADLAC want to see a like stock in sector give up its 50-day and help give some confirmation of weakness in sector. Link

In past commentary I said that I felt COX may be the "sledge hammer" that drives the "nail" (ADLAC) into the coffin. Time for that to be tested once again.

So far it has been "tap, tap, tap" and not a long of pounding going on. Time will tell, but get the bugles ready to play Taps?

  Jeff Bailey   3/26/02,  3:19:42 PM
NASDAQ-100 Trust (QQQ) $35.45 -0.28% ... would be rather aggressive short/put here as QQQ breaks back into negative territory. BIG tech seems to be void of buyers and bears will look to leverage on that going into trade-shortened weekend. Can get aggressive here with full positions with stop just above $37.14 and be targeting the $33.60 level.

Daily Interval bar chart shows MACD crossed below signal and now below the zero level. Using rounding 50-day MA as leverage and stop just above. Link

  Austin Passamonte   3/26/02,  3:18:51 PM
Looks like the big boys over on the CME floors are taking 'em down after bond markets just closed. Many bond traders move over to the equity futures pits once bonds cease trading at 3:00pm EST.

We'll trail dowjn our stops exactly 1.50 index points above each trade until the next slight pop takes us out. Simple as that!

  Austin Passamonte   3/26/02,  3:14:13 PM
We'll trail down our short S&P stop to 1138.00 on this very orderly and predictable decline. If that stop is taken out to the upside ahead, it will lock in 8 index points captured. One put option or S&P contract on this play equals just over a year's subscription to OI. Ten - Twenty contracts palying the downside covers OI subscription until about 2013.

A good friend asked why I felt the upside pop this morning was untradable, due to the distance it covered and possibility within. In my opinion a trader would have to be more lucky than good to catch such an unexpected and wild pop. However, all of us had plenty of time to observe price action failing below resistance, posting lower highs, chart signals all turning bearish in sequence, chart patterns forming and breaking lower, etc.

Factoring live market evidence, deciding on how much capital to risk and entering the downside play had zero to do with luck... just experience. That's not gambling; that is trading. Maybe some traders caught a nice move higher and I'm truly thrilled for them, but it eluded me. I'll take these orderly declines (or rallies) such as yesterday and this afternoon often as the good markets can oblige!!!

  Austin Passamonte   3/26/02,  2:16:06 PM
Still short from 1146.00 and holding trailed stop at 1143.00 for a "free play" with guaranteed gains locked in and no possibility of capital loss. We'll see what the final two hours have in store for us from here with zero downside risk along the way. Traders had numerous chances to short at or higher levels than this across all index & sector markets long after my initial post, so hopefully I'm not alone in the action here today!

  Austin Passamonte   3/26/02,  1:38:37 PM
On a personal note, would you please join me in wishing our very own Chief Market Technician Jeffrey Bailey, the happiest of birthdays today? The old codger's pushing 40 (and so am I) but he's still youthful, spry and fit to climb these Denver-area hills for many decades to come.

Happy Birthday from all your fans here at OI and PI, myself certainly amongst that extensive fold!!!

  Austin Passamonte   3/26/02,  1:34:57 PM
All major index intraday charts (60 min and shorter) are forming very clear neutral wedge patterns I expect will break within the final two hours of today's session. Which way? The patterns are neutral so we need another study or two for confirmation. Price action trades just below resistance, which is a negative. Intraday oscillators are also at overbought extreme and give us a second downside bias.

Hence, I'm shorting overbought failures in 10/5 min chart signals against the upper resistance lines of those wedges while wagering the downside as higher odds. Tight stops on modest positions will take me out with minimal damage if indexes ramp higher instead. Just playing higher odds of probability here!

  Austin Passamonte   3/26/02,  1:29:13 PM
It must be noted that daily-chart candlesticks are trying to form bullish "Tweezer Bottom" patterns if today's price action closes higher somewhat equal to monday's drop. If price action closes higher than Monday's high, it would be an outside day or bullish engulfing candle as well.

I would interpret either as suggestion that price action ramps into the eom rally most traders currently expect and are waiting for. Holiday weeks are usually fraught with low volume volatility and this could easily be one of them. Trading smaller size capital right now is a great idea, and might be the way to play for a bit until price action shows trend behavior again.

  Jeff Bailey   3/26/02,  1:14:34 PM
Semiconductor Index (SOX.X) 589 +2.68% is gainer in technology. Gains in TXN +4.68%, ALTR +3.8%, LLTC +3.55%, LSI +3.33% and MU +3.12%.

Will note that TXN just now getting above yesterday's high, but rest of group not yet doing so. Hints that there may be some near-term lack of selling.

Micron (MU) may be best looking risk/reward play near-term with bullish stop just under the 200-day and yesterday's low of $33, with 50-day rolling and near-term hurdle at $34.65. So far today we see "inside day" and may be good to monitor near-term. Link

  Austin Passamonte   3/26/02,  1:00:09 PM
We might have caught the high tick to short in S&Ps or any sympathetic market as price action slides a bit and 60/30/10/5 minute chart signals look totally weak to bearish in major indexes.

I personally prefer to trade the S&Ps because on methodical market days it's akin to printing fresh $100 bills with minimal effort. Individual stocks, their options and index options all offer varying forms of higher reward but that requires additional effort to profit.

Whatever our preferred vehicles to trade is far less relevant than WHEN to trade and HOW to manage downside risk versus upside reward. Truth is, there are always far too many moving targets for any of us to play. Like flock shooting ducks versus picking just one, focus creates high odds for success.

Singling out one to a handful of potential trade targets on any given day is critical for success. Doesn't matter to me what the symbols are... chart alignment for entry/stop-loss defense points are key consideration.

  Jeff Bailey   3/26/02,  12:59:57 PM
Waste Management (WMI) $26.51 -1.48% ... stock seeing selling after Reuters report that company may have inflated profits by as much as $1.2 billion. Looks short/put, stop just above today's high of $28. Link

P/F chart has been bearish, with vertical count of $11

  Jeff Bailey   3/26/02,  12:57:42 PM
Internet Security (ISSX) $23.00 -8.73% ... was "recommended put" play of OptionInvestor.com on 03/16/02 at $28.20. Link

I have taken retracement from $50.17 to $9.50 to define the range of 07/02/01 high to 09/27/01 low. This has 50% up at $29.83, 38.2% now above at $25.03 (would lower stop to profitability just above this level) and 19.1% down at $17.26, which would be near-term target.

Will note yesterday's break below "inside day" from Friday's action. Thus, trader that may have established short/put from yesterday's action on break of $25.77 would currently have stop at yesterday's high of $26.53.

Looks lower to me.

  Jeff Bailey   3/26/02,  12:48:54 PM
Brocade Communications (BRCD) $26.17 +6.8% ... we've mentioned this stock recently, last week in fact when we noted that stock had traded its bearish vertical count of $22 back on Feb. 28. Link

Tough trade long or short here and I would monitor and would rather be on the sidelines.

JP Morgan analyst William Lewis told clients this morning that Brocade's new product cycle is driving growth and he kept his estimates steady, maintained a "long term buy" rating, as well as a $35 price target.

On bar chart, I've got a regression channel (2 std. dev.) from the 01/09/02 relative high down, and BRCD trades right at upper level of this regression right now. A break of Friday's high ($27.05) might be a bear's stop if still short/put.

I also have retracement from $53.26 to $12.90, which has 38.2% just above at $28.31 and 19.1% below at $20.68.

With all this combined and in back of my mind that BRCD did achieve bearish count of $22, I'm really trying to look elsewhere right now for some technology short candidates.

  Eric Utley   3/26/02,  12:45:36 PM
Near the close yesterday, we made some observations in the Semiconductor Index (SOX.X) price action. I opined that the triple-bottom breakdown Link would result in follow-through into this morning's trading, which it did by a very small amount prior to the consumer numbers. The rally following the consumer release revealed the danger in shorting a breakdown. Think about this way: It requires a lot of selling to break a meaningful (triple) bottom. When that bottom is finally broken, selling could be exhausted in the short-term, which is what we're seeing today in the SOX's snapback rally. If you're a risk manager, trading breakdowns is a very difficult endeavor.

In this market, with a few short-term exceptions, going against the crowd has made the most sense. That includes buying strong stocks on weakness and shorting weak stocks on strength.

  Austin Passamonte   3/26/02,  12:38:34 PM
After the initial surge higher on emotional reaction to emotional sentiment numbers, indexes are moving sideways in consolidation fashion. We see broad market indexes price action right beneath recent support/resistance while 60/30 min chart stochastic values trek toward overbought extreme once again.

With 10/5/1 minute chart signals poised for bearish reversal as the S&P trades right at 1146.00 here I'll try a short play of 1/2 size. May be a tad early on this one and bulls may try a surge higher to new session heights once the lunchtime lull clears, so I'll dabble one-half shot for now.

If/when 60/30 min charts go overbought and begin to turn bearish from there, it's time to play WITH the W/D chart signal trend having more confidence in the entry.

  Jeff Bailey   3/26/02,  12:37:39 PM
Forest & Paper Index (FPP.X) 364.6 +2.02% ... important sector for bulls in IP to be monitoring. Decent correlation perhaps with IP at $44 should FPP.X trade up to its 50-pd MA on 60-min chart Link

  Jeff Bailey   3/26/02,  12:33:33 PM
Intl. Paper (IP) $42.70 +2.49% ... looking good for bulls here as stock edges above 50-day (see 11:00 update/ 10:11 market monitor).

If we turn to 60-minute interval, trader sees 50-pd MA is next hurdle at $43.50, with 200-pd MA on 60-min at $43.98, pretty close to earlier mentioned day target of $44. Link

  Jeff Bailey   3/26/02,  12:25:24 PM
Southwest Airlines (LUV) $19.22 +5.02% ... has "eaten" through that seller at $19.20, but not much surge since. 50-day MA is "hurdle" right in here. Link

Most important will be SECTOR from here (XAL.X) and what takes place at the 200-day MA Link

As you may see.... trade unfolds favorably for bulls if/when LUV and XAL.X clear both these hurdles to upside. Setting alert on XAL.X at $106, which would be break of yesterday's high. That should have some bears looking to cover perhaps and help out a bull. Break much below $100 would be negative and short-term trader in LUV would be alert for potential weakness.

  Jeff Bailey   3/26/02,  11:28:25 AM
Airline Index (XAL.X) 103 +2.96% ... now leading sector gainer.

Southwest Airlines (LUV) $19.20 +4.9% ... looks to be a seller on the offer at $19.20 .... look for a break of $19.21 to have the seller finishing out his/her order and stock could move should MACD on daily get turned around like she did in mid-January. Link

P/F chart shows nice little pullback into support. Link

  Jeff Bailey   3/26/02,  10:42:41 AM
Adelphia Communications (ADLAC) $20.71 -1.66% .... breaking to session low and this not good for bulls (BIG grin) with broader market showing gains. Looks like somebody wants out.

  Austin Passamonte   3/26/02,  10:40:37 AM
Eric & I were just talking about how one trades such a move as this morning's. My honest answer is "we don't". When the Dow blasts up +60 index points in a flash, how do we get in front of that? I have a trade window open on one computer all the time, usually with prestaged orders one or two clicks from entry. By the time I even fathom what to do the move is running away.

Compare that to yesterday where the market opened flat, broke clear pivots and trended methodically for 6.5 hour's time. Easy, easy trading conditions. Typical of firm bear markets, the rallies explode with such ferocity that getting ahead of them is very tough indeed!

  Jeff Bailey   3/26/02,  10:38:31 AM
Verizon (VZ) $46.21 +1.2% ... On Friday I was bearish stock, that hasn't changed. Stock is getting a boost with broader market today. Looking for resistance to hold near the $47 level. Link

I'm also thinking that Ciena (CIEN) $8.36 +0.14% (see 09:14) isn't laying off more workers because their pull-through is looking strong.

  Jeff Bailey   3/26/02,  10:35:12 AM
Adelphia Communications (ADLAC) $20.89 -0.8% ... despite some broader-market bullishness, stock continues to linger near session lows. Volume is very light and doesn't look to be much interest. Bears should be OK here with stop just above 80.9% retracement of $21.42 and near-term target remains $18.76. Link

  Jeff Bailey   3/26/02,  10:30:29 AM
NASDAQ Composite (COMPX) 1,839 +1.45% ... technicals here still show resistance at the rounding lower 50-day of 1,860 and 200-day at 1,884. MACD has crossed below signal and also below zero level, so need to be cautious getting overly bullish from today's consumer confidence numbers. Link

  Jeff Bailey   3/26/02,  10:21:09 AM
Pennzoil Quaker State (PZL) $21.51 +38% ... if long, would go ahead and sell, take BIG gain and move on to another name. Wouldn't be willing to risk this type of move should some type of "event" have the deal falling through with Shell.

  Austin Passamonte   3/26/02,  10:19:17 AM
We could easily see where weak-hand shorts bailed on the CC news release and sector rotation from defense to offense as gold dropped, bonds dropped and mo-mo stocks popped. We can also see how irrational and illogical the markets truly are! How big a paradigm shift on the entire U.S. and global economy can possibly occur on each sentiment indicator like this? None... zero... nada.

Hence the vital improtance of being a trader willing to play both directions as needed. Rest assured that big players (and small ones) are shorting this emotional pop all the way. If markets can break above the initial surge it's possible to have a +200 Dow session by the close. Should that initial surge fail, we could see it close flat or even red. Heaven knows we've seen volatile, inexplicable days like that many times before!

  Jeff Bailey   3/26/02,  10:17:39 AM
Sector Strength shows many up better than 1% with Disk Drive (DDX.X) +1.93%, Semiconductor (SOX.X) +1.8%, Software (GSO.X) +1.6%, Fiber Optic (FOP.X) +1.9%, Banks (BIX.X) +1.2% (BKX.X) +1.6% and Broker Dealers (XBD.X) +1.65%.

  Jeff Bailey   3/26/02,  10:15:10 AM
Sector Weakness rather limited with Gold/Silver (XAU.X) -2.8%, Oil Service (OSX.X) -0.54%, N. Amer. Telecom (XTC.X) -0.48% and Utility (UTY.X) -0.41%.

  Jeff Bailey   3/26/02,  10:11:36 AM
International Paper (IP) $41.93 +0.64% .... I like this one long for short-term traders looking for a pop off confidence numbers. Stop just below today's low of $41.20 and target $44 near-term. Link

  Jeff Bailey   3/26/02,  10:09:16 AM
Consumer Confidence for March surges to 110 level, which was much stronger than expected as estimates were for a reading of 97.2.

  Austin Passamonte   3/26/02,  10:08:48 AM
As Leigh pointed out, Eastman Kodak changed the way our entire global population view the world. Can you imagine what life without pictures would be like? In fathomable, yet that's how most of humanity lived & died their entire lifespan without viewing a single fuzzy snapshot taken horizontal when it should have been vertical.

However, my father-in-law just retired from EK after 35 years of service and he nor none of his friends are wining & dining starlets on 401Ks full of that stock! PBJ sandwhiches and soup, perhaps. Living proof that any company can rise & fall thru the endless cycle of life... GE, MSFT and CSCO included.

Early pre-market shorts ahead of the economic news could have been easily covered with a trailed stop to par or very close. Intraday charts have begun to cycle up from oversold extreme to release downside pressure built over -400 Dow points drop. I would not (am not) buy index call options with timespan greater than intrasession time frame. No longs over any close for me until W/D charts turn bull friendly again.

Consumer confidence numbers and knee-jerk reaction to it should create the next short-play entry soon, but expect higher price levels first.

  Jeff Bailey   3/26/02,  10:07:28 AM
Consumer Confidence due out anytime

  Jeff Bailey   3/26/02,  10:06:58 AM
Dow Breadth decidedly positive in early morning trading. Currently 25 up and 5 down.

Weakness is EK -0.72%, DIS -0.60%, HWP -0.6%, PG -0.50%, UTX -0.09%.

Strength is C +1.2%, GE +1%, IBM +1%, JPM +1.5%, MO +1.3%.

  Jeff Bailey   3/26/02,  10:00:57 AM
Network Associates (NET) $21.10 ... trading here has stock violating bullish support trend. Trade at $20 is action point for bear as this would be break of trend and double-bottom sell signal. Bulls long the stock should be laying out contingency play for potential hedge should stock trade the $20 mark. Link

  Jeff Bailey   3/26/02,  9:54:19 AM
Internet Security (ISSX) $21.81 -13% ... I've had this on my "watch list" for short/put and like it here to downside. Yesterday's trade at $25 was double-bottom sell signal and turned count bearish longer-term to $17. Today's action has that count growing to $11. Since stock "gapped" lower this morning, not willing to chase with full position, but would begin legging in with 1/2.

  Leigh Stevens   3/26/02,  9:49:29 AM
There are 280 days left in the year, so we have a lot of time to correct those trading mistakes or extend our winning ways. ON THIS DAY in 1885, the Eastman Dry Plate & Film Co. of Rochester, NY manufactured the first commercial motion picture film. In honor of this day take a film star (or starlet) to lunch.

On this day I am also thinking about what a great short gold would be at or above $300. The weekly chart of XAU looks like the Gold & Silver Index could get up to 73. Anything in the 73-75 area will likely be a great put buy, at least for an initial position; a short squeeze could push XAU up toward 80, but in the past these spikes have been short-lived. We do not have much inflation and the precious metals are only precious when we have a lot of it (inflation), such as was the case in he 70's. Meanwhile the gold bugs NEVER give up.

  Jeff Bailey   3/26/02,  9:47:45 AM
Internet Security Systems (ISSX) $22.29 -11% ... Robertson Stephens says channel checks indicate that current quarter is tracking below plan and company may miss its numbers; also believes that June quarter revenue guidance of 7% sequential growth may have to be reduced. Link

  Jeff Bailey   3/26/02,  9:45:15 AM
Microsoft (MSFT) $59.06 -0.28% ... Dow Jones reporting that MSFT has amended financial reports for the last two quarters to correct mistakes in cash flow statements company says were caused by a clerical error. MSFT stated that the change had no impact on net cash from operations. Link

  Jeff Bailey   3/26/02,  9:41:47 AM
Ciena (CIEN) $8.11 -2.87% ... announces an immediate workforce reduction of approx. 650 employees, or roughly 22% of its total workforce, resulting in $125-$135 million charge. In Q2, company also expects to take a charge of $200-$225 million, primarily related to excess inventory associated with its long-haul transport products and purchase commitments with suppliers. Puts annualized cost savings at $145-$155 million. Link

  Leigh Stevens   3/26/02,  9:32:34 AM
It's showtime, as the Big Show is about to begin! The latest consumer confidence numbers will be out in less than an hour and while the bulk of us consumers may be more confident, it has not translated into stock buyers, who were on strike yesterday. Looks like the S&P 500 (SPX) is headed toward where I see best support, and buying interest, in the 1120-1125 area. However, the market is also now due for a bounce, as short-term momentum oscillators are in an oversold area. The same indicators on a longer-term 2-week basis are getting there, but are not registering fully oversold. In terms of a bounce, 1140 in SPX will be tough near-term resistance; above this level, 1145.

  Jeff Bailey   3/26/02,  9:31:56 AM
Bull Correction ... The NASDAQ-100 is now in "bull correction" status with 64% of the stocks in this universe/market showing a buy signal on their p/f chart. The recent level of bullishness reached in March (after red 3) was not as high as that found in December (red C) and hints this market may be tiring. Caution for bulls is advised and bull's should be looking for stocks that exhibit good relative strength characteristics, trade in upward bullish trend and good upside to bullish vertical counts. Link

  Austin Passamonte   3/26/02,  9:23:11 AM
We hear and read a lot about how this recent decline has come on light volume, etc. By the same token, most of the recent rally has arrived on light volume save for a few sessions as well. Volume is an obscure indicator of market direction or strength beyond the following few days from an event. Volume will likely dwindle into the end of this week as big traders move into holiday mode a bit early.

  Austin Passamonte   3/26/02,  8:48:33 AM
Great Morning!

Looks like today's durable goods report wasn't so durable once we back out transports, etc. Early risers could have caught a nice short-play entry in the S&Ps on a bear flag break in the 10/5 charts at 1138.00 with stop at 1142.00

That would be doing just fine for now as Monday lows will be tested next. A failure to bounce strongly AND HOLD from there will send this index down to the 1125 area post-haste.


Market Monitor Archives