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  Jeff Bailey   4/4/02,  6:08:41 PM
EMC Corp. (EMC) $11.71 +2.27% ... company issues press release saying "we will not comment on any implications the warning by our supplier McData may have on our own business."

Stock trading down 31-cents at $11.40 in after-hours trading. Link

One can only imagine can't they? Bearish vertical count is to $8.50. Earnings are due out April 18th and may not be able to comment during "quiet period."

May $10 Puts (EMCQB) offered $0.45 might be a lottery play, but don't want to pay more than $0.75 tomorrow.

Stock bears may be able to find an up tick in after-hours, stop placed above $12.26.

 
 
  Jeff Bailey   4/4/02,  5:57:27 PM
Minnesota Mining (MMM) $114.20 +1.07% ... stock active in after-hours for listed NYSE stock after company guides higher.

MMM saying it expects Q1 EPS to be at or slightly above $1.20 per share, versus previously expected range of $1.05-$1.20 and consensus of $1.11. Also saying worldwide sales volumes declined about 4.5% in Q1, near the midpoint of expected range.

seen trading $116.85 in after-hours. Link

 
 
  Jeff Bailey   4/4/02,  5:31:11 PM
McData (MCDT) $12.55 -1.95% ... stock getting "whacked" in after-hours at $10.50 after company warns on earnings. Link

This has other storage names like QLGC Link , EMLX Link , NTAP Link and direct competitor BRCD Link trading lower.

 
 
  Jeff Bailey   4/4/02,  4:11:47 PM
Transports (TRAN) Lots of concern yesterday from subscribers about TRAN and Arilines (XAL.X) trading weak. Were stronest sectors today and this might just figure if market is going to firm.

Transports have been one of the stronger groups and got a bid today as energy prices fell a bit. To soon to say, but lots of nervousness yesterday being answered near-term by the transports. Probably a week or two away for some better bullish trade setups.

Regardless... taking some notes.

Will also note that the Semiconductor Index (SOX.X) +1.18% were also strong. They too have been the strongest sector for technology.

Software has been one of the weaker tech of late and showed again today with GSO.X -2.81%. Much "easier" to have been made from short/put this group in past two sessions than in semiconductors is my thinking.

Always try and short/put weakness and buy strength for best probabilities. Will lose from time to time, but the odds are in your favor.

 
 
  Jeff Bailey   4/4/02,  4:00:00 PM
Market Volatility Index (VIX.X) still at relatively low levels and hints of complacency by bulls perhaps. Link

Will most likely take some type of violation from recent lows in PSFT to get the market a little worried.

Cisco (CSCO) $16.79 +1.08% continues to trade rather tough considering some of the carnage taking place in technology. Lots of anticipation for some positive news holding her up. Range bound between retracement of $16.16 and $17.86.

 
 
  Leigh Stevens   4/4/02,  3:58:00 PM
I spoke to soon - Dow update . This little short-covering type pop may put the Dow back above 10,200 at the close. Actually, in my earlier update I mispoke, as 10,260 level has been more key on the hourly charts. This was support, now resistance. So, unless we get back above 10,260, I see lower lows ahead relative to the current decline. I doubt that we'll see the transports close back above 2800, which is now key resistance there.

 
 
  Jeff Bailey   4/4/02,  3:54:25 PM
Media Talking about AOL (NYSE:AOL) $22.41 -3.31% at new lows. The "media" group has been getting whacked lately too. As noted in ADLAC, COX. Market is ruthless when stuff get "out of favor."

 
 
  Jeff Bailey   4/4/02,  3:51:25 PM
Pepsico (PEP) $50.56 +1.22% ... Could you please give your opinion on PEP?

Strong upward trend Link that has really held tough for over a year. Bull could do a lot worse. I like PEP for a "lazy bull" trade at $50.60, stop at $48.70 and just play the trend. May not be a bad little buy, run, write (buy the stock, let her run, then sell the covered call.)

 
 
  Eric Utley   4/4/02,  3:48:00 PM
In my Market Wrap last night -- hope you enjoyed it, I try to make it fun to read -- I touched upon a set-up in the Transports ($TRAN) in conjunction with the set-up in CSX (NYSE:CSX). Early signs seem to suggest that the bulls are willing to defend the TRAN at its former long-standing resistance line around 2750. I think that CSX is a good lower beta trade, looking out maybe a month or two, where risk is so very easy to manage right here. Heck, the stock gives you three choices for stops Link at $35, $34, or $33. I think the upside potential is in the low $40s, maybe $41 or $42. But let me make it perfectly clear that this trade is predicated upon further improvement in the economy. I don't know if that's going to happen, but I like the ease of risk management in case I'm wrong.

 
 
  Jeff Bailey   4/4/02,  3:45:33 PM
Williams Co's (WMB) $22.99 -0.38% ... Company says that the news stories (Wall Street Journal) stating WMB is "facing inquiries" by the SEC regarding its financial reporting from Q3 of 2001 are apparently related to an issue that was resolved in February. WMB saying that the information requested by the SEC dealt exclusively with items related to WMB's former telecom business and after the co provided the info the SEC notified WMB on Februar 22 that they had no further questions and WMB was not asked to amend any filings.

 
 
  Leigh Stevens   4/4/02,  3:42:03 PM
Dow Transportation average(TRAN): - Since I was just commenting on the Dow Industrials, thought I'd comment on weak technical action occuring in the Dow 20 transports. There were a number of prior lows in the 2800 area last August (before the train wreck in Sept), that subsequently became resistance as the transports topped out there several times early in the year. Thinking was that given the high at 3050 level, a pullback might hold 2800. NOT!

This recent decline to back below 2800 is being perceived as a distinct technical negative. I can get downside objectives to as low as the 2600 area now. 2646 is the 200-day moving average. What I continue to expect is that weakness in the the closely watched Dow Averages will build up a more bearish climate. It is a more significant level of bearishness that usually causes a final washout, before a tradable bottom is seen.

 
 
  Jeff Bailey   4/4/02,  3:33:20 PM
Oakley (OO) $17.25 ... Link wait for $17.26, take it and look for specialist to fill out a bulls order into the close and perhaps try and print $17.50-$18 near session's end.

Never sure, but will see if she can trade $17.26.

Offer size has now come down to 16,500.

 
 
  Jeff Bailey   4/4/02,  3:30:34 PM
Day traders Keep an eye on Oakley (NYSE:OO) $17.23 +0.23% for a trade at $17.26 as bullish. Been a seller sitting here at $17.25 and hints that specialist may be getting ready to move the stock higher.

NYSE offer $17.25 with 40K sitting there. 50-day MA acting as support and late day order fill for a big bull into the close could have stock higher near the close.

 
 
  Leigh Stevens   4/4/02,  3:16:53 PM
LAST HOUR - The blue chip rally has fizzled. There may not be enough sellers to drive the Dow down much, but the buyers strike continues. Traders have been watching the Dow 10,200 level, as it has been seen as the near technical support. Actually, 10,260 has been the low end of the recent hourly trading range, until yesterday, when the Industrials slipped under this level. Subsequent hourly highs have now been topping in this area -- proving once more that support levels, once broken often become resistance, as prior buyers at support bail when prices come back up to that area, where they can get out break even.

Looks to me, based on this same hourly chart pattern, that there is another downswing ahead to at least 10,100.

 
 
  Eric Utley   4/4/02,  3:05:04 PM
Reader asking about InVision Tech (NASDAQ:INVN), which is getting hit especially hard today. On the PnF chart, I noticed a pattern Link of lower highs and lows. Today's move has taken INVN down to a new relative low at a quadruple-bottom at $36. A quad-bottom is a significant support level. If a trader was short on the last reversal, now may be a time to look to lock in gains or continue with a tight stop.

 
 
  Eric Utley   4/4/02,  2:53:33 PM
Some thoughts on eBay (NASDAQ:EBAY)

A short/put position here is about a 50/50 risk proposition. I define upside to $58 Link and downside to $49. The better short/put entry was near bearish resistance/double-top at $60. There, risk was easier to manage. Here, it doesn't really interest me from either side.

 
 
  Jeff Bailey   4/4/02,  2:41:53 PM
JP Morgan (JPM) $34.35 -1.88% ... interesting isn't it? If I go in a short JPM here, where would my stop be in relation to the p/f Chart? Break of trend would be $37 or $38 right? Link

If I'd short 200-shares and risk $37 to a stop, the I'd be risking about $2.65 per share right?

Speculator could actually reduce his/her risk with an option trade. Could buy 2 of the May $35's for $1.90 and actually "take my loss now" and look for a pullback to $30-$32 couldn't they? Don't need to do anything then except set an alert at $32 where you'd then be looking for some profits. Do I need a stop on $1.90 if I'd be risking $2.65 to a stop in the underlying to begin with? Heavens no.

 
 
  Jeff Bailey   4/4/02,  2:33:58 PM
JP Morgan (JPM) $34.34 -1.9% ... Jeff: Check out the action in JPM May 32.5 Puts (JPMQZ). 22,000 contracts compared to OI of 3,500. I wonder if Enron has anything to do with it.

I'm not sure, but that is rather interesting. I would have thought most Enron stuff has been uncovered at JPM by now.

May just be institution looking for some insurance as stock gets a little soft from consolidation.Link or just a large speculator looking for a pop and a drop.

May also be hedging against the p/f chart and getting close to downward trend. Link

Not a bad trade for some more aggessive put traders either. Target $33 or $32 perhaps.

 
 
  Jeff Bailey   4/4/02,  2:04:12 PM
Adelphia Communications (ADLAC) $10.20 -7.6% ... Jeff, All of the long-term short/put players in ADLAC should have been stopped out yesterday. (nice play, got 100%+)

Sell signal still intact, reversal didn't hold, looks like she wants to bust down through 10 again on the way to that bearish objective of 4 (yes, I know you think it's 5, but I'll let you slide :-) ). What would make you hop on to ride it again?

How about risking a small portion of the gain on a lottery play in the $5's? Heck, those capital gains are going to haunt you come end of year. (grin). A small lottery play may give you a tax loss against the previous gain, that's the worst thing that could happen.

Even worse would be the company going "belly up" if things are really bad and stock goes to zero. Then you'd have to pay more taxes on a lottery $5 put play.

This is rather tongue and cheek of course, but is an idea for those that did stop out on break of previous days high.

Conversely, depending on any news between now and then, will be looking to short/put a rally anywhere close to the $15 level. Those convertible holders have got to be less than happy and looking to hedge on rallies, if they haven't already done so.

 
 
  Jeff Bailey   4/4/02,  1:50:35 PM
flash your 30's Here.. try and look at these 30-minute charts. They are delayed, but trying to get short-term traders to look at some of the bigger stocks in the OEX, then perhaps benchmark off the 50-pd and 200-pd MA's to put each stock in perspective.

Seek out the "commonality" of each. Make some observations and then make some statements. Kind of like this.

WMT - Link Trading 50-pd, think short for next hour, bounce above 59.57

GE - Link its above 50-pd, needs to see weakness back below for OEX to weaken. Move above 37.25 could bounce.

PFE - Link "crushed" below 50-pd, this is what I want to see for OEX success in short/put.

OK , you get the feel. If they all start looking bullish and getting above your "stated" levels where they could bounce, then you get feel that bounce could take place.

What this helps a trader do is "look inside" and not just at the OEX.X on a bar chart. Hey, if your oscillators and indicators are saying OEX lower (stockastics, MACD, etc) but your just not sure, take a look at the "guts" and see what they look like on the same time frame.

Never take advice from a doctor that takes one look at your outward appearance and then diagnoses you with some type of illness. Make him work for it.

 
 
  Jeff Bailey   4/4/02,  1:41:06 PM
S&P 100 Index (OEX.X) 565.61 -0.07% ... Jeff: Where's the OEX going in the next hour?

Yesterday I felt that bear should be putting/shorting this index on the break below Leigh's past observation of support at $570, and today looks to be "inside day" building right now. Tought to make calls on an hourly basis, but looking lower.

Sector that is proping her up today looks to be the Retail Index (RLX.X) +1.17%, so OEX bear wants to see some weakness from this group. Since Wal-Mart (WMT) $59.09 +0.83% is 4.55% weight, it is stock to also monitor. OEX bear wants to see a daily strong stock weaken I would think. If I'm trying to call the market for the OEX then, I'd turn to a shorter-term time frame in WMT. How does the 30-minute chart look? Link

Other heavy weights are GE, C, XOM, PFE, MSFT. Here's a link to OEX.X components/weightings. Link

I can't possibly describe GE, C, WMT, XOM, PFE, MSFT all in 30-minutes to help call a market, but a trader that is looking at 30-minute time frames on their own and perhaps quickly flash some charts of each to get a feel.

And you thought you could simply look at a daily bar and call the market by the hour? It's hard work.

 
 
  Eric Utley   4/4/02,  1:21:15 PM
More on Merrill's gaming downgrade...

I learned last night that Merrill's downgrade of Int'l Game Tech (NASDAQ:IGT) was partly based upon the shelving of legislation in Kentucky whose aim was to legalize slot machines at horse racing tracks. Other states are expected to delay similar legislation this year.

This morning, Gtech (NYSE:GTK) reported a very solid quarter. The stock is better by almost 9 percent. Others, including IGT, aren't reacting as much.

 
 
  Eric Utley   4/4/02,  12:45:31 PM
FYI for those tracking the Hanover Compressor (NYSE:HC) profile, I've been scaling out of my position into this morning's strength. The stock achieved my short-term target and I, as a short-term trader, am booking gains. I still like this one longer term, but I'm more concerned with short-term performance as a short-term trader.

 
 
  Jeff Bailey   4/4/02,  12:45:30 PM
Micromuse (MUSE) $8.19 -4.32% ... before bulls go wild and start buying the stock on the thought that an institution is accumulating the stock, think about this.

If the institution wants the stock real bad, why are they dinking around in the options market? Just buy the stock if you're that bullish is my thinking.

For me, I'm not much into trying to pick bottoms.

Now think of this. Way too much coincidence. Bearish vertical count from point/figure is/was $9.50. Maybe a "smart money" short is selling naked puts to assure gain, but may be short well above the $10 level. Link

 
 
  Jeff Bailey   4/4/02,  12:36:19 PM
Micromuse (MUSE) $8.24 -3.73% ... What do you make of all the put selling in Micromuse July 7.5 (QUMSU)

Wow! That is a lot of action, but I'm showing the action is coming between the spread (bid and ask). So I don't know if it is selling or buying.

I can look at the 5-minute chart and see the stock has edged up from the bottom. This could have me thinking that the put action is indeed selling as the stock has trended up. Link

Now the question is. Naked or covered? Is the potential selling simply a short from $10 selling the premium of $0.90 and obligating the seller to buy at $7.50? If short at $10 and obligated to buy at $7.50 less the $0.90 premium, that doesn't sound like a bad idea. I like shorting stocks at ten and buying them back at $6.60.

Or is the selling naked? Is a new bull showing up and willing to establish a position with a cost basis of $6.60?

All this tells us perhaps is that there is some type of interest in the stock near $7.00.

A trader short at $10 or $9 makes notes and if they are looking for an "excuse" to cover, then they've got it.

If a bear is targeting $7, then they may not be sitting around wondering if they should lock in a bearish gain at that level either.

 
 
  Jeff Bailey   4/4/02,  12:17:16 PM
Intl. Game Tech (IGT) $58.28 +0.25% ... could you update thoughts on IGT short?

Stock is up 15-cents right now and hovering right around the 200-day MA. Not much happening here. I have retracement from $71.11 to $38.90. This has 61.8% at $58.80, 50% at $55.00.

Some traders seem to be a little too nervous about this play. Usually when I find this, then the trader has simply OVERLEVERAGED in the trade and they are uncomfortable with the stock showing any type of gain. This then brings emotion into the trade eventually and it just won't work for them. If "nervous" don't fight the nerves. Close the trade or reduce your trade size.

 
 
  Jeff Bailey   4/4/02,  11:11:28 AM
Question Jeff: When I looked up the option it showed the last price at 3.70 and the new ask at 5.10 with no change in the price for today. Is this justified in your opinion?

Yes:

The "last" was from March 15th at 15:49:18. I know we have been mentioning the utilities as bullish before that date and may have also said something on the 15th too.

The UTH was trading $92-$93 on that date so the options have properly (in my mind) accounted for the move.

Maybe options on some of the "boring" sectors aren't that bad after all? Nice little gain going for the trade huh?

 
 
  Jeff Bailey   4/4/02,  10:59:34 AM
QLogic (QLGC) $50.78 +4.86% ... stock found bidders from the open and has traded strong. I have retracement from $18.25 to $64.96, that has 61.8% at $47.11 serving as support in past week. 80.9% retracement above at $56.02 is near-term target for bulls.

P/F chart still quite bullish and good stock for bulls to be looking long. Vertical count is $73. Link

Don't try and play the "time game" with the April options. Pay a little more and buy some time into May or July. Support should be firm at $45. With market conditions "choppy" would be best for partial positions.

The "kicker" may be a reverse head/shoulder pattern with neckline at $52.00. See the "shoulders" at $45? If "neckline" at $52.00 broken, then "head" is $38. This would give a reverse head shoulder projection of $66. Link

 
 
  Jeff Bailey   4/4/02,  10:52:48 AM
Siebel Systems (SEBL) $28.27 -2.55% ... discussed this one yesterday I believe, yes 04:01:38 Link

Stock broke upward trend yesterday on bar chart. Has violated retracement at $28.55 this morning like it did back on 02/22/02, 02/28/02. Stock holds "tough" here so I'm thinking there's a buyer at current levels. For bear to have success, most likely need to see break or close below the $27.25 level. Risk for a bear right now has to be assessed to the 50% retracement of $33.60. Link

I have retracement from $54.97 to $12.23. This has 50% at $33.60, 38.2% at $28.55 (current levels) and 19.1% at $20.39.

 
 
  Jeff Bailey   4/4/02,  10:42:06 AM
Utilities HOLDRS (AMEX:UTH) $96.40 +1.04% ... Options traders that have yet to get bullish the utilities may want to take a look at the Aug $95 calls (UTHHS) or (MYAHS). The MYHAS has 250 open interest and may be better option for future liquidity. Could play long, then use 50% stop on full position. Target is $105-$110 before expiration.

I like the strategy of "legging" in with a small position to begin with, then add with time. This is for longer-term options trader and not watching like a hawk on a minute-by-minute basis. Link

 
 
  Leigh Stevens   4/4/02,  10:30:46 AM
Market Update: Resistance levels - The little rebound we're getting here should not be surprising. From a technical standpoint, the oversold Indexes are attempting to rally from the lower end of some well-defined hourly downtrend channels.

Taking a closer look at the top end of these hourly downtrend price channels, I'll repeat and refine RESISTANCE areas on the key Indexes as follows: OEX > 571-573; SPX > 1131-1135; Dow > 10,230 - 10,280; QQQ > 35.5 - 35.75; NAS 100 (NDX) > 1420 -1425. At this point a rally into these areas would be a gift for those looking to do more selling, as there is no sign yet of a bottom.

 
 
  Jeff Bailey   4/4/02,  10:30:45 AM
Utilities HOLDRS (AMEX:UTH) $96.40 +1.04% ... I like a bullish trade in the underlying HOLDRS. Make sure if you enter an order you are getting the HOLDRS. I get a "Union Tex Pete Holdings" on q-charts if I just type in the symbol "UTH" which is listed on the NYSE? Thus I'm specifying (AMEX:UTH) for the Utility HOLDRS.

I'm looking to play the technical action in the Utility Index (UTY.X) 342.86 +0.69% here.

 
 
  Jeff Bailey   4/4/02,  10:26:08 AM
Cardinal Health (CAH) $69.90 -1.96% ... Jeff: why the beating in CAH today?

I see no news. Volume is thin. Stock didn't exhibit BIG volume on the break above the 200-day on 03/28/02, so look for 200-day support at/near $69.00.

I also have retracement from $76.52 to $60.84 that would have the 50% at $68.68. Looking for some bids to be firm near $69.00. Link

Also noting that the triple-top break at $68, should find buyers near that level. Good place to be looking for bullish entry points near $69. Link

 
 
  Jeff Bailey   4/4/02,  10:15:55 AM
Symantec Corp. (SYMC) $37.15 -5.63% ... I'm looking for some resistance intraday near the $37.63 level based on retracement level at 80.9%. Here's the link to yesterday's 03:00 update that shows the bar chart we were looking at yesterday. Link

 
 
  Jeff Bailey   4/4/02,  10:11:41 AM
Symantec (SYMC) $36.95 -6% ... stock gapped lower in sympathy with CHKP this morning right to upward trend on bar chart (anchor at 09/27 low and attached to 02/07/02 low of $30, then trend extended). I will note that the stock did find buyers at that level and most likely short-term bears locking in a gain.

Bear that took a position yesterday from comments in Market Monitor 02:34:40 Link can leg further into a put on break of this bar chart trend if you already bought a partial position.

Those looking to establish a position can leg in here after the break of triple-bottom at $38. Reason we are legging in and not recommending full positions is that stock is still above trend and this has been a strong stock in the software space. Link

Here's yesterday's 03:00 intraday update that discussed SYMC. Link

 
 
  Jeff Bailey   4/4/02,  9:54:25 AM
Check Point Software (CHKP) $21.50 -21.48% ... stopped on bearish profile here. Good trade.

 
 
  Leigh Stevens   4/4/02,  9:49:46 AM
ON THIS DAY in 1859 Daniel Emmett introduced the song "Dixie", called at first "Wish I was in Dixie’s Land" in New York City. In honor of this day, take a southern belle or man to lunch and toast the land of cotton with southern comfort. And, stick in a wish to bring back the bull market so we can roll in clover again!

 
 
  Jeff Bailey   4/4/02,  9:47:51 AM
Check Point Software (CHKP) $20.68 -24% ... I'm showing a "bad tick" at $22.60, so stock should not have triggered stops at this point. I will note that stock did hold the lower part of our regression bracket this morning. We're not the only one's short/put and looking to lock in gains.(grin)

 
 
  Jeff Bailey   4/4/02,  9:33:11 AM
Internet Security Systems (ISSX) $22.19 ... is another "software" stock in the same "space" as CHKP and has also been mentioned as short/put on OptionInvestor.com and here in the Market Monitor. Stock is trading lower in pre-market at $19.60. I've got retracment from $50.17 to $9.50 and bears are currently targeting the $17.26 level. Technicals here are/were almost identical to that of CHKP. Link

If you're browsing some other software stocks and see some of these that have tested their bearish resistance trends and turned lower, think about them for short/put candidates.

 
 
  Leigh Stevens   4/4/02,  9:31:18 AM
Support & Resistance Levels - Indices: S&P 500 (SPX): near support > 1120; near resistance > 1131-1135; OEX: Near support: 560-562; near resistance > 570-571; NAS 100 (NDX): near support > 1375-1377; near resistance: 1420-1422; QQQ: near support > 33-34; near resistance > 35.5 - 35.75.

 
 
  Jeff Bailey   4/4/02,  9:29:13 AM
Check Point Software (CHKP) $27.46 ... stock getting hammered in pre-market at $20 after warning on quarterly earnings.

I had profiled this as "short" in Market Monitor on 03/28/02 at 02:10 Link and I would now aggressively lower a stop just above the $21.50 level to assure a profit. I have had retracement from $48.37 to $20.70, but the stock has gapped below this retracment bracket and a "rolled" down retracement that has the 61.8% fitted to last night's close would have the 80.9% retracement at $21.01 and a new 100% retracement at $14.56, which would be a new bearish target. Link

 
 
  Leigh Stevens   4/4/02,  9:20:46 AM
It's Showtime! Futures are lower this morning pointing to a lower opening in the indexes - S&P futures about 4-5 lower; Dow, down 38 & NAS futures off about 20. No respite from the bears. There continues to be a lack of buying interest rather than heavy selling. The market is oversold on a short-term basis, so don't be surprised by rally attempts.

 
 

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