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  Jeff Bailey   4/3/02,  8:55:52 PM
Micron Tech (MU) $30.78 -5% ... I should mention that there may be an error in the www.stockcharts.com p/f chart I showed earlier. It looks as if there may have been a "bad tick" at the $36 level back on 02/27/02 as the stock looks to have only traded $35.51, not $36 for the needed 3-box reversal higher.

If so, then we would not have two column on the chart (X from 34-36) and (O from 35-33). If we take those two columns out, then MU sits right on bullish support trend.

This may be "nothing" but I think we should be aware that MU has not broken its longer-term bullish support. I would not like to be responsible for earlier mentioning if this stock bounces like a rubber ball from this support trend.

I've notified www.stockcharts.com to see if there was indeed a bad tick at $36 which would impact the chart construction.

Here's the chart as it stands now. Link

 
 
  Jeff Bailey   4/3/02,  6:57:47 PM
Dow Transports (TRAN) Transports have been under pressure in recent weeks as fuel prices have risen and economic data and some earnings still not as robust as some would think.

$50 box is longer-term look and 2,600 is trouble. Link

$20 box shows upward trend still intact, but "old" vertical count was bearish to 2,580 and current vertical count (O's from 2,900 to 2,740) currently hints at 2,540. Link

$10 box and shorter-term view still has group above trend. Current vertical count is 2,550. Link

All total, the current vertical counts from the $10 and $20 box scale have bulls assessing risk to potential 2,550 area. This would represent a 7.17% decline from current levels.

If so, then may want to double that for technology stocks?

 
 
  Jeff Bailey   4/3/02,  6:41:10 PM
Microsoft (MSFT) $56.33 -1.69% ... stock edging higher in after-hours to $56.75 after company announces some management restructring. Most significant is removal of Rick Belluzo as President and COO. Belluzo to remain with company through September during transition.

 
 
  Jeff Bailey   4/3/02,  5:48:56 PM
Western Digital (WDC) $6.00 +0.16% ... stock higher in after-hours after disk drive maker issues upside preannouncment for Q3; sees earnings of $0.08 a share versus consensus estimates of $0.04 a share. WDC sees Q3 revenues of $590 million versus current estimates of $562.2 million. Link

P/F chart of WDC remains bullish. First sign of trouble is trade at $5.00. Longer-term bullish count is $18.75.

Bar chartist could "fit" a retracement bracket on the stock (ends up $10.30 to $2.05) with 0% at $2.05, fit the 38.2% at the 02/22/02 pullback to $5.20 and get a resulting 50% at $6.17, 61.8% at $7.14 (relative high on 03/06/02) and 80.9% at $8.72.

If she's going to $18.75, then this retracement gets you started. Bulls couldn't buy enough of this one back in 1997 at the $50 level.

 
 
  Jeff Bailey   4/3/02,  5:41:34 PM
Compuware Corp. (CPWR) $11.10 -0.09% ... stock hit in after-hours trading to $7.95 (-28% from close) after the systems software designer said it sees Q4 earnings in the range of $0.07-$0.08 a share versus consensus estimates of $0.15 a share. CPWR expects Q4 revenues in the range of $400-$408 million versus estimates of $448.5 million. Link

After hours action would have p/f chart breaking bullish support trend. Vertical count has been bearish to $7.50. As such, damage may be done and if subscriber were short/put, would be looking to lock in some gains.

 
 
  Leigh Stevens   4/3/02,  4:41:22 PM
CLOSING MKT COMMENT: "Dear Leigh, Where were you when we needed a comment just before the close today. GRIN. Did you buy calls at spx 1120 to hold over night or do you expect more down side to 1100 level? Please comment on Market Monitor."

Thanks for reminder to get myself back to the screens! I was engaged in some other projects, but had intended to note being stopped out on QQQ recommendation at 34.5.

Re getting back into the market with call purchases, you would know about any recommendation because I would put out a clear-cut suggestion on the Monitor and/or in my evening commentary. Having attempted purchase early, I am waiting until ALL my indicators lined up. This could be in the 1125 area or it could be lower. I can't predict when they all be in line, that is, at what level. When they do, it's usually the appropriate area for another trading opportunity -- meaning that the risk to reward is very much in my favor.

At the present juncture, with the market drifting lower due to lack of buying interest rather than agressive selling, taking new short positions (e.g., shorting or put buying) is not favorable on a risk to reward basis, as I see it.

If short or long puts, stay put. When I see a bullish opportunity, I will go that way.

 
 
  Jeff Bailey   4/3/02,  4:39:48 PM
Bristol Myers Squibb (BMY) $37.70 -0.68% ... stock getting hit lower at $35.15 in after-hours trading after company lowers guidance to a revenue decline of 7% and EPS of $0.44-$0.47, versus EPS consensus of $0.56; for 2002, BMY expects sales to decline in the low single digit range and EPS to decline 25-30% to $2.41 EPS versus consensus of $2.27. Also announces that Richard J. Lane, President of Worldwide Medicines, will be leaving company. Link

One trader said, "this is a double-dose of bad medicine."

 
 
  Jeff Bailey   4/3/02,  4:28:34 PM
Rational Software (RATL) $14.09 +3.45% ... Jeff, Any idea to what may be pushing RATL up today? Its up almost 4.5% now and I can't find any news on the stock that would be causing people to buy it today. Considering the sector and market are down today its kind of interesting to see this one up. Any ideas?

My first thought when I read was that a "smart" bear was simply covering some profits on sector weakness.

I do see a "blurb" that Goldman Sachs cut estimates on the enterprise software sector based on PeopleSoft's (PSFT) surprise. Goldman doesn't expect larger infrastructure software names (MERQ, QSFT, RATL, VRTS, WEBM) to warn for March quarter. However "Goldy" is lowering their estimates for the balance of this year and next year for all. Says RATL and QSFT look particularly attractive on a near-term valuation basis.

 
 
  Jeff Bailey   4/3/02,  4:08:06 PM
Gateway Computer (GTW) $6.00 -4.76% ... I guess First Albany might consider GTW the "worst trailer in the park?" Link

 
 
  Jeff Bailey   4/3/02,  4:05:49 PM
Dell Computer (DELL) $26.08 -1.88% ... will host analyst meeting tomorrow in New York. First Albany believes company will likely issue a press release this evening updating Q1 guidance. Firm expects Dell to reiterate its prior sales (down 3-5% sequentially) and EPS (+$0.16 a share) guidance. Firm believes Dell is "best house in a lousy neighborhood." Link

 
 
  Jeff Bailey   4/3/02,  4:01:38 PM
Siebel Systems (SEBL) $29 -8.8% ... Stock flirting with "potential disaster" and violating bullish support trend today. Hand chartist on the p/f begins new bearish resistance trend at the $38 box, then goes down and to the right at a 45-degree angle. Trade at $27 is either the axe falling or a "bear trap". Vertical count is bearish to $23 right now. Link

With MACD below signal and below and zero level, leaning toward the bearish side. On bar chart, I've got retracement placed from $54.97 to $12.23. This "fits" nice with rally to 01/24/02 high of $38.38 at 61.8% retracement and consolidation found in December, support in late February and today's low near $28.55 at 38.2% retracement. Really needs to get below the $27 level to have bulls questing the stock. Target would be 19.1% retracement of $20.

 
 
  Jeff Bailey   4/3/02,  3:38:56 PM
Verizon (VZ) $45.21 -0.41% ... Jeff, can you give us some comments on VZ in the market monitor. Holding on to $50 apr puts.

Be glad to. Since subscriber is holding April expiration, then I'm thinking he/she must be a short-term trader. As such, would place a stop above $46 as not a lot of time left. Target near-term would be the $43.50 level considering the April expiration.

Would be more comfortable with options past April expiration as a bear wants to see a break at $43, which would be spread tiple-bottom and that's when things might get real interesting. Link

 
 
  Jeff Bailey   4/3/02,  3:32:43 PM
Dow breadth decidedly negative with 3 up at 27 down. Gainers are J.P. Morgan (JPM) $35.00 +0.08%, Phillip Morris (MO) $53.37 +0.58% and SBC Communications (SBC) $37.44 +0.64%.

 
 
  Jeff Bailey   4/3/02,  3:30:39 PM
Red Across the Board as I look at the sectors.

Leading declines are Internet (INX.X) -3%, Semiconductor (SOX.X) -3%, Gold/Silver (XAU.X) -3%, Software (GSO.X) -2.85%, Networking (NWX.X) -2.15%.

Relative strength in Healthcare (HMO.X) -0.02% and RXH.X (-0.58%), Forest/Paper (FPP.X) -0.49% and Utilities (UTY.X) -0.46%.

 
 
  Jeff Bailey   4/3/02,  3:20:53 PM
"Links" not working Many of the links in the market monitor are to charts at www.stockcharts.com, which is a free charting service that we find fantastic.

From time to time their server will get overloaded and the links won't work. Keep trying them from time to time. They should be working now.

 
 
  Jeff Bailey   4/3/02,  2:45:52 PM
Treasuries Now we're starting to see a pickup in buying in the 10-year YIELD ($TNX.X) 5.293%. This should perhaps concern "tech-stock" investors the most. NASDAQ has had a hard time attracting cash to begin with and if it rotates back into bonds next couple of weeks, could really starv some technology stocks. Past thoughts have been the 10-year YIELD could pull back to 5.0% level, which is lower end of upward trending regression.

 
 
  Jeff Bailey   4/3/02,  2:34:40 PM
Coincidence? Symantec (SYMC) $38.67 -3.18% ... "trader talk" is that there may be some headcount reductions underway.

Now I get e-mail from subscriber noting a potential triple-bottom sell at $38. Link

If nothing else, this is a stock in the software group that would be at the "head of the snake" in the software are. Is she looking back to see what's pulling at the tail?

For those playing "domino" or "snake" theory that we talk about all the time, then looking to leg into a put trade at $38 to begin with.

 
 
  Eric Utley   4/3/02,  2:29:05 PM
Reader is asking for a little help reading the Siebel System (NASDAQ:SEBL) chart, thinking is bullish.

If you're in the business of catching falling knives, then you could look for a bounce in SEBL from the $28 level Link , which would be a triple bottom in the stock. For me, this knife is too sharp.

Software is hurting big time, evidenced first by Oracle (NASDAQ:ORCL), then by PeopleSoft (NASDAQ:PSFT) and Softee (NASDAQ:MSFT) yesterday. If you're betting bullish here in anything software-related, in my mind, you're betting on a short-term bounce, nothing more. It's a low probability trade, in which the reward does not outweigh the risk. Why try such a difficult bullish trade, when other easier trades exist? That's the way I see it.

 
 
  Eric Utley   4/3/02,  2:08:22 PM
C-O-M-E O-N Hanover (NYSE:HC), give me $20!!!

 
 
  Eric Utley   4/3/02,  2:02:02 PM
...gaming sector continued

The third stock I'm watching is Penn National Gaming (NASDAQ:PENN). This stock remains at an actionable point at its triple bottom Link at $33. I'd prefer to get this one higher, near resistance, but I'm willing to trade a breakdown below the triple bottom. I've got a retracement for PENN at the $33 level, which reinforces that level as support. If broken, I believe PENN trades down to $28.

All three of the stocks I mentioned are optionable. If I do use options to implement these trades, then I'll use some extra time because the juice in these contracts is still pretty low with the VIX where it is.

 
 
  Jeff Bailey   4/3/02,  2:01:55 PM
Food for thought I don't usually post "thoughts" from subscribers that I don't have an opinion on myself. Here's an eloquently written comment regarding this morning's Broadcom (BRCM) post at 09:29

I think we've(all of us in the market) gotten a little far afield on "accounting issues."

If BRCM's relationship with the investee is sufficient for BRCM to exercise significant control over them, then the revenues and equity will be eliminated on consolidation. If not, then the revenue recognition is not impaired by the relationship.

Further, the method of payment for services rendered does not invalidate the revenues earned. Would this be noteworthy if the payment was specified in Euros? Probably not, at least vis-a-vis the propriety of the revenue recognition.

After WW I the French constructed the Maginot Line, proving the axiom that generals train to fight the last war. Deconsolidation for debt offfload or revenue padding is the last accounting war.

Signed XXXXX CPA

 
 
  Eric Utley   4/3/02,  1:57:03 PM
More on the gaming sector...

First, congrats to those who printed a few bills from the Int'l Game Tech (NYSE:IGT) downdraft on the Merrill downgrade. From what I've gathered, Merrill's downgrade was based upon the failure of gaming friendly legislation to pass in several states. The economic downturn last year caused shortfalls in states' revenues, which in turn increased the appeal of gaming-related revenues for the states. The recession, in fact, was conducive to the gaming sector. But now Merrill is saying that the necessary legislation to drive growth further failed to pass. I haven't yet read the specifics of the downgrade, but I'm actively researching the development, and will relay my findings as they become known.

If Merrill's correct, the downgrade could mark the top to the multi-year bull market in gaming stocks. The way I'm playing it after today's big move lower across the sector is waiting for some stocks to come back up to resistance.

There are three stocks I'm focusing on for bearish positions. The first is Multimedia Games (NASDAQ:MGAM), which sold-off sharply late yesterday on what appeared to be a seller "in the know" taking action ahead of this a.m.'s downgrade. The stock completed a bullish signal reversal Link today, which brought to an end its long-standing bullish trend. I'm looking to short this stock between $33 and $34 with a downside target of $24 to $25.

The second stock I'm watching is Gtech Holdings (NYSE:GTK), which is a listed stock that tends to trade a little more "correctly." Today's move in GTK generated the first sell signal Link in about 20 months.

 
 
  Jeff Bailey   4/3/02,  1:54:10 PM
Pacificare Health (PHSY) $18.77 +6.53% ... couldn't figure out what might be driving the HMO.X today with some gains. Here it is. Link

P/F chart looking bullish once again and beaking downward trend. Looks like a "laggard" in the healthcare getting a bid as money rotates to the group. Link

 
 
  Leigh Stevens   4/3/02,  1:49:32 PM
STOCK VIEW: Merck & Co. (MRK): "Can you please give some short and long(2 months probably) opinion on MRK. If possible can you put this in market monitor?"

VIEWPOINT: Although MRK (Merck & Co.) appears to have had a HUGE correction, if you look at long-term monthly and weekly charts using the "semi-log" scale to see the percentage moves,it's readily apparent that the stock has had an HUGE run up in the last 15 years. The recent correction, while big in point terms (from 97 down to 56 area) has only retraced to date about half of the last big upswing in percent terms, from '94 to the '01 top.

Enough of the big picture, but that is where I start, as I need to keep things in perspective. I think risk to holders of the stock is down to around 45-46. I would think this stock may complete its bearish cycle within a few more months. Although the stock is also registering oversold readings on the oscillators (e.g., RSI), its chart pattern still yields a bearish outlook for the next 1-2 months, maybe including over the summer. Near-term, it's due for a bounce, such as back up to the $60 area.

 
 
  Jeff Bailey   4/3/02,  1:49:12 PM
Honover Compressor (HC) $19.57 +2.4% .. I missed the boat on HC calls. Do you think I could catch it in consolidation. I have to modify my action plan. any suggestions?

Missed the boat? I've profiled this as a longer-term call play with a target in the upper $20's lower $30's (bullish count is $33.50). Leg into a position to begin with and then looking to add on a break of bearish trend. Link

 
 
  Jeff Bailey   4/3/02,  1:42:18 PM
NVIDIA (NVDA) $43.50 +2.4% ... Jeff: NVDA still sitting here and doesn't seem to want to break. I'm still holding some April $50 puts, should I close out?

Only "explanation" I can come up with is as discussed before in market monitor. Stock achieved its bearish vertical count of $42 from point/figure chart Link and sits right on 50% retracement of $42.81 (retracement from $71.68 to $13.93). $42 was "my" ultimate target for bears to target.

So my answer would have to be YES I would lock in a gain, at least on part of the position. Target achieved!

 
 
  Jeff Bailey   4/3/02,  1:33:48 PM
Hewlett Packard (HWP) $17.40 -0.28% ... Jeff: Can you take a look at Jim's play on HWP-I am still holding some puts on it. More downside potential?

I can't speak for Jim, but I'd treat somewhat similar to "my" CPQ play. HWP technically looks like support from here after break of $17.50 is consolidation of $16.87 dating back to early November. Link

I personally would want a tight stop like mentioned in the CPQ trade and move it down to just above the 04/01/02 high of $18.10.

The only "risk" I see to a bear besides "market risk" is if the CPQ and HWP deal falls through. Under that scenario, HWP could jump higher (it has when the deal has been in doubt).

 
 
  Jeff Bailey   4/3/02,  1:24:00 PM
Adelphia (ADLAC) $11.13 -5.745% ... stock recovering from the session low of $9.52 after trading floor rumor circulated that a "Texas family" investment firm may be taking a stake in the stock.

Trader short would only use this as a "reason" to lock in a gain, but I wouldn't use it as a reason to buy the stock long.

 
 
  Leigh Stevens   4/3/02,  1:17:32 PM
DOW TRANSPORATION AVG.(TRAN)UPDATE: "Leigh, Nobody's mentioned D.J. Trans (TRAN) seems like a break below 2818-2800 would set the markets in a downdraft. This was very key in the rise from 9/11. What's your thinking.?"

You're quite right -- today's break of 2800 establishes a couple of technical negatives: a break of the prior highs, which did not offer support -- prior resistance (tops) once exceeded often "become" support later on. Also, yesterday saw the intraday action break an internal up trendline dating from the Sept. lows. The 50-day mov. avg. also was penetrated.

Key TRAN > support is in 2650 area, which is "minimum" 38% retracement and in area of the 200-day mov. avg. (2846). Transports look lower, with a possibility 2500 could be reached. Near resistance > at our recent support - is at 2800-2820. Only a close back above this area would revert the picture on the Trans back to possibly bullish.

 
 
  Jeff Bailey   4/3/02,  12:59:58 PM
Compaq Computer (CPQ) $9.82 -3.72% ... starting to unfold nicely from bearish profile 03/28/02 10:44 of $10.46. Link

Today we see a break of yesterday's "inside day" and bulls look to be pulling the plug as a decision now has to be made. My target was the $9-$10 range for short-term trader. Retracement from $12.35 to $7.66 has 50% at $10.00, so snug a stop down to profitability at $10.05 and 38.2% at $9.45 makes for a nice target to cover on weakness at $9.51.

 
 
  Jeff Bailey   4/3/02,  12:52:51 PM
Applied Materials (AMAT) $53.44 -1.1% ... still showing good relative strength. Short-term bullish trader notes that stock broke below an "inside day" so may move to the sidelines as risk to 80.9% retracment of $52.59 may be a little much. MACD on the daily showing a little "bearish divergence" after stock achieved a new relative high, but MACD not confirming. Link

I truly feel that institutions are bullish this one and buying on the pullback. I've been waiting for the $48 level, but she hasn't cooperated. I'm pretty patient though.

 
 
  Jeff Bailey   4/3/02,  12:48:13 PM
Hanover Compressor (HC) $19.58 +2.45% ... nice little bid coming in after this morning's 2% decline. Maybe somebody is interested in this thing from the instituttional level (grin). No, I'm not talking about "Mr. Institution" himself AKA Eric Utley.

 
 
  Jeff Bailey   4/3/02,  12:42:09 PM
WMS Industries (WMS) $18.55 -1.43% ... I noticed the gap below the 200-day MA back on Aug. 9th, how about you?

Point/figure paints an interestingly "bearish" picture. Link as an "old saying" among p/f chartists is that the first test of bearish resistance (red +) can be painful for the bulls. Check out that "high pole warning" back in July-August of last year. Bearish vertical count right now is $15.50, but could grow if current column of O were to get longer. Looks short/put to me with a stop at $21. Still some air under the January lows of $14.50 if broken.

 
 
  Jeff Bailey   4/3/02,  12:36:21 PM
"Gaming stocks" that have broken their 200-day MA's. Cryptologice (CRYP) $14.38 -1.51% Link Mikohn Gaming (MIKN) $5.77 +2.65% Link Youbet.com (UBET) Link Wells-Gardner (WGA) Link and WMS Industries (WMS) Link

 
 
  Leigh Stevens   4/3/02,  12:34:25 PM
DJX PUT PLAY: "One of the plays that Austin and Jim B mentioned was buying the DJX MAY 104 puts at the 10,600 level. For those of us that are still holding these puts .... what would you advise? Are we at risk for a shortterm rally on the DOW at this point? My concern is premium deterioration".

I agree on your premium concern.... The Dow (INDU) has turned lower from the top end of a downtrend channel. While I have been "ready" to be bullish, weight of evidence for the Dow looks lower, even to under 10K. What I am not seeing for what I call an intermediate term bottom is a build up of bearishness.

We at OIN have also been commenting on the low VIX, which also suggests complacency whereas most bottoms occur with more playing of the downside thru puts. I can't foresee what would get everyone super bearish again, but a close under 10,000 seems likely to bring the bears out of their caves. If such a dip occurs it may be the place to take profits.

 
 
  Jeff Bailey   4/3/02,  12:23:37 PM
Gaming Sector According to Dorsey/Wright and Associate, the gaming sector is "bear alert" status at 64% bullish after reaching a 72% level of bullishness in early March. A reading of 62% bullish would have the sector turning "bear confirmed" from a rather high risk level for bulls.

Will note that IGT "was" a stock that was on a "buy signal" but today's trade at $60 has the stock giving a sell signal, thus taking one stock away from the bullish percent. Link

 
 
  Jeff Bailey   4/3/02,  12:03:53 PM
IGT $58 -5.15% ... Jeff!: IGT is back above $58

Then put it? (see 09:53, 10:02, 10:17)

Here's the bar chart Link

Some bar chartists have noted that the 200-day MA is considered a "longer-term" moving average. In July of last year, the longer-term moving average was trending higher. Now we're starting to see the longer-term trend flattening out a bit.

 
 
  Jeff Bailey   4/3/02,  11:47:52 AM
Microsoft (MSFT) $56.08 -2.12% ... firmly breaking 50% retracement of $57.54 today and volating relative low of 02/25/02. This has bear looking for target of 61.8% retracement of $53.76. (retracement has been $73.59 to $41.50) which ties in well at 80.9% retracement of $47.63 and lows set back in September.

 
 
  Jeff Bailey   4/3/02,  11:44:37 AM
Good tie in perhaps with GSTI Software Index (GSO.X), Microsoft (MSFT) $56.20 -1.92% and impact that MSFT has on QQQ as MSFT is largest weight in QQQ. No reason to be bullish the QQQ today and this is what some traders call "bear food."

 
 
  Jeff Bailey   4/3/02,  11:43:23 AM
GSTI Software Index (GSO.X) 152.58 -1.75% ... slipping below the mid-point of our regression channel that bears were monitoring for support. Now bears will be watching the relative low near 150 from 02/22/02 with eyes set on lower regression of 140 as target.

If GSO.X is "tail of the snake" as a sector and correlating agains the QQQ which hasn't tested its mid-point of similar regression, then a QQQ trader wants to see GSO.X continue to pull lower.

 
 
  Leigh Stevens   4/3/02,  11:42:48 AM
TRADING STRATEGY NOTE: "Leigh, I mentioned one time to Austin that I had a "Bullish Bias" and he said that was a sure way to go broke. I assume you have a BB just for the moment, based on the charts."

ANSWER: Absolutely. I saw what looked like a chart breakout occurring to the upside and made a trade recommendation.

Mainly I look at risk to reward. Whenever I see profit potential at 3-4 or more times what is I can risk to, I tend to like the trade. For example, if a decline has taken prices down to a decent support area, I know I can take an initial flyer on the long side and risk to just under support. If the stop is hit, it won't generally be an accident, but because I was WRONG and that apparent support was just a way station on the way to the final high or low. This strategy keeps losses small.

This is important when a top or bottom is setting up. It sometimes but not always takes a while. I often have taken 2-3 small losses before I catch the bottom or top. Unlike stock trading where you can play momentum, the best gains in options come when you anticipate a top or bottom. That's what I have done for years, as an index trader and one that has to be concerned about a rapid jump in premium after a trend reversal.

 
 
  Jeff Bailey   4/3/02,  11:40:17 AM
Understanding Risk For newer subscribers wanting to better understand "market risk" and just how the bullish percent charts can help you in understanding "market risk" you should read the Bailey's Basics article "Understanding Risk is Key" Link

 
 
  Jeff Bailey   4/3/02,  11:35:21 AM
QQQ $34.92 ... point/figure perspective still bearish, recent little rally to $39 came near the bearish double-bottom sell of $38. Vertical count is bearish to $25. Not sure we'll see $25, but if we see lower end of regression from bar chart channel we've mapped out at $30, will be a happy camper. P/F chartist will also have a "channel" line that is simply and extension of the "old" bearish resistance line (red +). If we extend that down we see it comes into play at the $34 level. Link

NASDAQ-100 Bullish % now reads 54% after another rally to "overbought" at 70%. Might just see another reading back at February levels of mid-30% level. Still some risk to be removed from this part of market. Link

 
 
  Leigh Stevens   4/3/02,  11:30:19 AM
Market Update - Support areas - SPX: Tip of the hat to a more alert Monitor watcher than me!: "You said next lower SPX support looks like all the way down to the low-1100 area (1100-1105) - what happened to the support at 1120-1125 area (from last night)? You advised cover there for reverse to long."

You're right of course & I meant to say "major" support -- next support does look like 1125 area. I would look to cover some shorts there and/or begin to sell puts. Will time next try on the long side for when the market again gets VERY oversold on all ways that I measure it; this might not occur until 1100-1105 major support area; I'll continue to evaluate and advise on how my key indicators line up. thanks....

 
 
  Jeff Bailey   4/3/02,  11:28:48 AM
QQQ $34.84 -0.68% ... from 03/26/02 03:19:42 comments, would now begin to lower stop from outlined $37.14 to break-even of $35.45. MACD now picking up some downside action and getting further below zero level. "Trader's target" is mid-point of regression near $33.73. Link

 
 
  Jeff Bailey   4/3/02,  11:00:58 AM
Pride Intl. (PDE) $15.64 -3.7% ... notice you folks took PDE off the watch list last night. Was there some news that required that even though it broke the 16.50 level yesterday but closed lower?

I (Jeff B) don't write the plays for OI and can't speak for why this one was dropped. I do like the oil/gas/service longer-term as economy improves, but I will note this.

Look at the "big picture" of Pride (PDE) and blow up a chart. See those relative highs back in September 2000 and again in March 2001? Then the "blow off" 1-day surge to $35? Let's say that the MARKET saw the top at $29, so anchor retracement at $29, then pull her down to the low at $9.75.

This gives us 19.1% retracement at $13.42 and that sure acted like resistance in January of this year and part of February. Lets call 0%-19.1% as the "zone of accumulation". Now we see a nice run to 38.2% retracement near $17.10 (yesterday's high was $16.86). May be time for a rest is my thinking.

Look for strong support on pullback near the $13.42 to $15 level. The lighter the volume pullback the better. A light volume pullback may just hint that buyers are working the stock.

Remember... institutions tend to sell in one trade, but tend to accumulate or work a bullish position over many trades as they leg into longer-term holdings.

Point/figure chart Link is starting to improve. Vertical count is bullish to $24. Nice 8-month base has formed and looks to be starting to break out longer-term. One thing I've "picked up on" with some of these energy-related stocks is the tendency for them to give a sell signal in the upward trend. Right now, that would be at $14. That has been a "buying opportunity."

Remember Apache (APA) $58.13 -1.6% at $45? Link

 
 
  Leigh Stevens   4/3/02,  10:59:19 AM
Market Update - Support & Resistance: NAS 100 (NDX): Today's new lows have taken NDX under support in the 1400 area; next downside objective, in terms of where buying support might come in, is in the 1360 area; Near resistance > 1425; above this area, resistance is at 1450. QQQ: Potential support at 34.75-35.00 is not holding up as the Q's trade under 35; key support now looks to be 33, at the late-Feb. downswing low.

 
 
  Jeff Bailey   4/3/02,  10:54:30 AM
Micron Tech (MU) $31 -4.32% ... stock breaking below 200-day MA. Trade at $31 also violates bullish support after giving quad-bottom sell. Vertical count is bearish to $24. Would leg into a put/short, but be careful of potential "bear trap." Link

Will note, this is "first sell signal in the upward trend" and sometimes institutions will be sitting near. Best strategy is to ease in from the short/put side. Then if she just falls apart you've got a position. If she rallies, can assess further, look at some other stocks in the group and go from there.

 
 
  Leigh Stevens   4/3/02,  10:48:15 AM
Market Update - Support & Resistance: Dow: (INDU): - Near support at 10,260 has been penetrated; next lower level support looks like 10,200, which is a 50% retracement of the last upswing; Near resistance > 10,400;

 
 
  Leigh Stevens   4/3/02,  10:44:19 AM
Market Update - Support & Resistance: SPX > The Index has dipped under near support at 1131-1132; next lower support looks like all the way down to the low-1100 area (1100-1105); Near resistance > 1147-1150 OEX: - Has dipped under near support in the 570-571 area; next lower support looks like 564-565; Near resistance > 580 - 583 area;

 
 
  Jeff Bailey   4/3/02,  10:17:07 AM
Intl. Game Tech (IGT) Link point/figure chart now has bearish vertical count of $33. For now, would leg into a position and I like the Jan $60 put (VGGML) $9.90, or the Jan $55 put (VGGMK) $5.70.

One thing that strikes me as "interesting" is the rather severe gap lower on this kind of "downgrade." Is it because there just aren't any buyers interested in the stock at these levels? Is this the end to a 3-year bullish run? Subscribers that have been with us awhile remember my story that I was actually buying this stock in client accounts back in 1999. My "sales pitch" was that the stock was setting up for a nice long-term run as it had been out of favor for years and that the sector (gaming) was due for renewed growth longer-term. I didn't think IGT would ever trade as high as it has, but it's been a nice 2+ year run.

 
 
  Jeff Bailey   4/3/02,  10:09:35 AM
Adelphia Communication (ADLAC) $10.02 -15% .... "Are we there yet?" asked Jeffrey in the loaded car as the family went on vacation.

Hold on son, just $4.95 left to go!

Leigh and I were talking earlier this morning on just how "ruthless" the market can be (to bulls and bears).

While some subscribers made a good profit in the puts, the best e-mail came in yesterday from a new subscriber that actually held some stock in an IRA. Was able to get out with a stop at $19 from prior commentary. He set the stop at a level he was "sure" it wouldn't trade. Sometimes we do good by simply saving a subscriber from a sharp loss and preserving some capital. For bear's still short/put, just lower stop now to above earlier morning high of $10.67. Squeeze her down to assure profit. Assess risk/reward in the trade from time to time.

 
 
  Leigh Stevens   4/3/02,  10:03:45 AM
There is a number in the NAS Composite (COMP) that traders have been looking at as key -- 1800. These round numbers at 100, often end up being important support & resistance. There could be a dip under 1800, which would cause some further selling. 1793 is even more of key level to me -- representing both the 62% retracement level, but also key chart support of some late-Feb. relative highs on an hourly basis. 1793 area was top of first rally -- often these prior peaks will become support on a subsequent pullback.

 
 
  Jeff Bailey   4/3/02,  10:02:14 AM
Intl. Game Tech $57.14 -6.55% ... Merrill Lynch downgrades to "buy" from "strong buy" and trims 2002-03 estimates and cuts price target to $68 from $80; prior rating had been predicated on the potential for the proliferation of gaming given that states were struggling with budget shortfalls, but over the past several weeks enabling legislation in many states has become increasingly unlikely. Cuts 2002 estimates to $3.30 from $3.40 and 2003 to $3.90 from $4.00.

I remember back in September-December that many were expecting some states to loosen up on gaming restrictions in hopes of increasing tax flows that gaming can bring. I do appreciate Merrill at least telling people that their scenario has changed. Some would wait until a bottom to lay things out. Kudos to Merrill for at least being honest here and telling us what they think.

 
 
  Jeff Bailey   4/3/02,  9:53:53 AM
Intl. Game Tech $56.36 -7% ... Agggggghhh! Had pointed this one out as potential short/put candidate last week, but wanted to see a break below $60. Look for a rally near $58 and get some puts. Link

Relative strength has been giving it back and I'm thinking longer-term liquidation soon to be underway. I would prefer to buy some time. See the sell signals in the RS chart vs. SPX and the more consistent tops at 61 reading? Link

 
 
  Jeff Bailey   4/3/02,  9:45:28 AM
April Gold futures (gc02j) $304.10 -0.58% ... I want to note that months ago we had rolled up retracement on this contract from $316.20 to $263.30. At that time, it gave us a 19.1% retracement at $306.09. Days later, this contract jumped above the $306 level and our thought was to sell strength or snug stops up under bullish plays.

Well, that was a level that found selling back down to 50% retracement of $289.75.

Now we see yesterday's high was $306.80 (back to the very 19.1% retracement) and finding some resistance early today. Snug up those stops in your gold trades!!!!

 
 
  Jeff Bailey   4/3/02,  9:36:34 AM
RF Micro Devices (RFMD) $17.50 ... getting a bid in pre-market at $18.07. Hearing that Soundview is positive on RFMD; saying checks indicate increasing GaAs wafer orders and rising module assembly throughput in Taiwan, and firm believes company is gaining significant market share in handsets and should benefit from WLAN, PDAs, and Bluetooth; believes design wins and pipelines are better than ever in RFMD's history, and firm would buy stock at current levels.

Jeff says "good risk/reward trade with stop at $17, target $21 near-term. Link

 
 
  Leigh Stevens   4/3/02,  9:32:10 AM
Jeff is correct when he said last night, at a time far beyond your Bed times, that OEX was down to a very key support at 570-571. It has to hold this area to keep some bullish hope going. NAS 100 (NDX) Index took out prior hourly lows at 1422, but has been following the previously broken up trendline lower. They could have been blowing out longs with that little push and NDX will rebound to back above 1420-1422, which is what would keep me mildly bullish ahead. Absent that, fourgataboutit!

 
 
  Jeff Bailey   4/3/02,  9:29:51 AM
Broadcom (BRCM) $34.49 ... stock trading down at $33.75 in pre-market Link . Talk is that the Center for Financial Research and Analysis (CFRA) issued a note on BRCM today; the primary issue raised in the note is apparently a concern regarding a 2-way transaction noted in BRCM's 10K in which BRCM invested $20 million in a private company in Oct. 2001 and will receive $10 million in additional equity for providing services to that company. CFRA notes concerns both with the related party nature of the transaction and the recording of equity compensation as revenue.

Traders should note that $10 million would represent roughly 1% of BRCM's sales.

 
 
  Leigh Stevens   4/3/02,  9:20:24 AM
ON THIS DAY in 1860, the Pony Express mail service began in St. Joseph Missouri. The rider in question started for California. Each rider had a 75 - 100 mile run before a switch was made with another Rider. The Express service delived the mail within 10 days, proving that there is nothing new under the sun. In honor of American ingenuity, buy a tech stock today, or just take one to lunch.

 
 
  Jeff Bailey   4/3/02,  9:20:23 AM
Adelphia Communications (ADLAC) $11.83 ... was halted for trading earlier this morning. Company confirms has received inquiry from SEC. Stock now resumes trading at $10.50. Link

For those holding the Jan $20 puts would move stop down to $12.50 level to assure gain. Downside to P/F vertical count of $5 getting closer, but now just $5.50 away. Risk/reward decreases as stock has moved significantly lower.

 
 
  Leigh Stevens   4/3/02,  9:12:51 AM
4/3/02, 9:09:58 AM It's Showtime! The Market is due to open a bit higher if prices open in line with the Index futures at this hour. NAS Futures +10. I'm holding the QQQ's at and under 36, with a stop at 34.5 per my comments last night on Index Trader at Link. Oversold bounce or more ? All I know is what my dear ol Pappy told me -- "never short a dull market, Son". That would be low volume and we've had that.

 
 

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