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  Jeff Bailey   4/10/02,  10:42:50 PM
Aggressive Internet Bulls Keep an eye on TMP Worldwide (TMPW) $31.65 -0.72% ... stock ticked higher in after-hours trading to $31.75 after Yahoo (YHOO) released earnings and talked about their "Internet job posting" business. Yahoo guided higher on revenues with belief that online jobs business would help.

Again.. aggressive bulls only. Jobless data is due out tomorrow morning before the bell. If the jobless claims number is a good one, then perhaps that would be a near-term catalyst for bullishness in TMPW that owns "Monster.com". I "said this to myself" BEFORE I pulled up this chart of TMPW Link

Hmmmm... stock is sitting right on the bullish support trend. That's "odd" I thought. AOL "Internet releated" got crushed today on heavy volume. Yahoo was somewhat positive regarding their Internet job posting business.

If we were to get a favorable jobless number in the morning, then that might just have TMPW finding a bid. "Technical reason" would be that stock managed to hold the bullish support trend.

Yes, vetical count is bearish to $22, but an AGGRESSIVE BULL could limit his/her risk in a bullish trade with a stop just under Monday's low of $30.80 ($1.10/share from $30.80)

With the deeper cyclicals really catching a bid today, I get the feeling that some market participants are still thinking something bullish about the future. Maybe they'll start hiring some worker back at the industrial level?

A strong jobs number might even have a "lottery play" in the TMPW June $35 (BSQFG) $2.45 paying off in a couple of months. Again AGGRESSIVE BULLS ONLY that are pehaps dreading capital gains that they may have built in the first quarter. Risk capital only in the options.

  Jeff Bailey   4/10/02,  6:55:18 PM
Jeff, I have a basic trading question. I've noticed in after-hours trading that a block trade will be shown as "Average Price" or "Agency Cross." To my recollection, they don't print at the bid or ask. Are these true trades?

Yes, you will often times see trades "printed" like this in after hours. What these are is a report from a trader that was "working" a large order for a client. In essence, if you are the trader for my mutual fund, I call you and say, "Trader... work me 500,000 shares to sell (or buy) between $25 and $26."

You may have other order to "work" also. By the end of the day, you may have actually accumulated some 30 different orders to accumulate my 500,000 shares I needed done. Instead of going back and finding out just what each of the 30 orders actually comprised a cost of (unless the stock just got crushed lower or ran higher) you'd just take the average trade range for the day. As long as it was "between" what I wanted to pay, then I'm happy. At the same time, you and your firm is pretty happy too at 3-5 cents a share commission.

  Jeff Bailey   4/10/02,  6:44:00 PM
Jeff Am holding BCE puts and would like pnf analysis on the stock. I see no strong support ?

BCE ... p/f some help here, as bearish vertical count is $14 and you just never know if "smart money" sniffed out $14 on the spread-triple bottom at $20. Link

I think we've discussed retracement before as I have retracement from $27.06 to $13.98 ($14.00) and looky there! 50% at $20.50 tied in very nice with the 09/19/01 low, then consolidation low from 02/13/02-02/25/02. Baby... when that got broken on 03/22/02 and traded $20 the bulls pulled the plug!

Now we have 80.9% at $16.47 (stop just above there to protect your gain) and 100% down at $13.98. Stop above today's high and you should be fine!

Nice trade!

  Jeff Bailey   4/10/02,  6:00:53 PM

Phelps Dodge (PD) I added some more thoughts to the 05:46 comments as things keep getting more interesting.

  Jeff Bailey   4/10/02,  5:46:40 PM
Phelps Dodge (PD) $40.24 +2.39% ... with the Morgan Stanley Cyclical Index (CYC.X) 586 +2.49% breaking above downward trend (from bar chart), bulls may want to have a trade in PD ready to go for tomorrow.

Last week in the April 5th Market Monitor (10:03 PM EST) we had a quick discussion regarding an obscure options trade that looked "fishy" right at the rising 50-day MA. Link. Those 360 contracts of the April $570 calls (CZYDN) that traded for $8.00 now are bid at $16.50 (+106%) and the 360 puts that a subscriber noticed had traded in the April $570 puts (CZYPN) at $10.50 are now bid $0.60 (-94%).

Ever since that trade, the CYC.X has moved higher. I'm thinking an Institutional boy sold the puts and bought the calls. At least, that's what "smart money" looks to have done. This could put a solid floor at 570 if "smart money" is betting higher. So far, a call buyer is winning.

Then... if we look at the $5 box scale of the CYC.X (this is scale most institutions will default to) do you see what I see that may be developing? Is that "sell signal" at $560 the same type of "bear trap" that took place at $515 in February (just after red 2)? Link

We're never sure, but if I traded long at $545 (double top) trader got a good run to 595 (+9%). Therefor, setting an alert at $590 and formulating some good "cyclical" stocks to trade bullish in for a cyclical trade and break at $590 might not be a bad idea. Not much overhead supply in the way either.

Phelps Dodge (PD) has treated us rather well in the past, so I want to stick with a winner.

Look at the bar chart of PD Link and then compart to bar chart of $CYC.X Link

If CYC.X is going to new highs, the my thinking is PD does the same. Take note of similarity between the 50-day MAs.

  Leigh Stevens   4/10/02,  4:39:11 PM
Closing comment: OEX/SPX - The S&P indexes closed near the highs of the day and OEX closed well above the hourly bullish declining wedge that I highlighted in my closing Index Trader wrap up last night at Link . I suggested on the first OEX move up to the 564 area to buy OEX calls on dips, such as back to the 562 area -- to put some fear into the bulls, they took the OEX calls all the way back to the 559 area! -- where they reversed right from the lower down trendline of the wedge. The May 570 Calls dipped to almost 8, but closed at 10.50, for a gain of 2.00 on the day.

The only "official" position I have is long QQQ -- I would gladly trade 1 QQQ for 1 May OEX 570 call, bought on that dip! Any takers?

The media talking heads are wondering why the cyclical big caps are up so big and not the techs, or much else. Well, I have news for them -- it's always this way when you come out of bear market which we are slowly doing. There will be a LOT of backing & filling along the way of course.

Don't accuse me of being TOO bullish, I do look to to a place to buy when the market gets oversold and traders get overly BEARISH as now AND I am looking for 2-3 week trades, not 2-3 days. I actually love BEARs - they are fuzzy & cute -- when sleeping! Otherwise, the bear is pretty grumpy & fierce when aroused.

  Jeff Bailey   4/10/02,  4:05:20 PM
Centex (CTX) $52.71 -2.51% ... I bought extra time in ctx with may puts, I've not used a stop and still hold it despite its recent pop, thinking that the same pressures will reassert themselves over the coming four weeks to the downside. Am I wrong to allow stop violations on the come? Or should I escape today taking advantage in the current downward trend? Paying high tuition, but sticking with it in Minneapolis.

CTX is the type of stock a "bear" needed to buy some time in. "Housing stocks" may indeed take some time to see bearishness. Group has been so strong over last 2-years that it takes some really bad news to eventually get things going in your favor.

That said... I have retracement from $29.15 to $62.42 and this perhaps "defines" a range. 19.1% is up ahead at $56.06 and correlates with a rounding 50-day MA. That is a level that a bear needs to asses potential rally to. Then 38.2% retracement is at $49.71 and this is level where CTX did hold support last week.

With MACD on daily interval starting to curl higher, bear is thinking that he wants to see MACD eventually trend up, then start to roll, right under the zero level. See similar MACD back in September of last year and correlate against the 50-day MA? Link

I've said before that I'm not a big proponent of using stops on option positions, only because I've tried and tried to teach traders to only risk what you can afford to lose. If however you may have risked too much and can't take the heat to the 50-day MA, then either close out some of them on weakness today, or very tight stop on a portion of the options.

P.S. I consider May "short-term" as it relates to CTX or any home builder.

  Jeff Bailey   4/10/02,  3:52:41 PM
Software bears ... may want to take a look at some 30-minute interval charts and check out the action at the 50-pd MA.

For several days, it sure looks like bears were using this 50-pd MA on 30-minute timeframe to sell from in Oracle (ORCL). Can be important observation for ORCL bear.

Check out PSFT on 30-minute. Even after stock got hammered last week, look at Monday morning's action at the 50-pd MA.

Then today in SAP on 30-minute. 50-pd MA sure came into play on rally at $34.50.

Bear that may have "missed" Kronos (KRON) move lower, may also be watching same as 50-pd on 30-minute chart is up at $41.90 right now.

This type of observation is for short-term traders.

  Jeff Bailey   4/10/02,  3:32:46 PM
Fiber Optic Index (FOP.X) $81.45 -2.15% ... now leading sector decliner. Looks weak enough to break the all-time lows since inception of 10/23/01. Link

Any fiber optic stocks you can think of that may weigh in the balance? I'm thinking Juniper's (JNPR) earnings tomorrow could be key.

  Leigh Stevens   4/10/02,  3:20:27 PM
Market comment: My old PaineWebber buddy, Art Cashin, who started his monring comments on our internal squauk box every day with "ON THIS DAY" stories which I borrowed - thank you Art -- said on CNBC that wholesale buying in high caps is program-style, probably from some fund. The orders are coming in piecemeal on the electronic order system on the floor of the Big Board. Somebody believes in the NYSE Market prospects -- at least they are exchanging excess pieces of paper with dead presidents on it for funny pieces of paper with company names on the face.

  Jeff Bailey   4/10/02,  3:03:26 PM
NVIDIA (NVDA) $38.50 -5.9% ... there are reports that Merrill Lynch will host a conference today at 3 ET to discuss the potential impact Xbox could have on NVDA.

I will note... in past I've said that I've had retracement on NVDA from $71.68 to $13.93. That had 50% at $42.81 and stock gravitated around that level for about a week. Today's sharp decline to $35.60 low, came right at 61.8% retracement of $35.99. My guess is that was a good bearish short-term target and some gains were locked in there.

  Jeff Bailey   4/10/02,  3:00:24 PM
It's as obvious as the nose on my face Notice how the NASDAQ is LOWER than it was on February 8th, while the Dow Industrials (INDU) is HIGHER than it was on February 8th as is the S&P 500 Index (SPX.X) from its Feb. 8th close.

Is there any question right now as to what may be "in favor" and what might be "out of favor" in relation to these 3 major market averages.

  Leigh Stevens   4/10/02,  2:58:54 PM
OEX is starting to break out above that down trendline on the hourly charts that I mentioned and SPX is threatening but we'll see at the close. At least this rally is waking me up a bit due to decent volume and sharp increase in new highs yesterday.

I don't have a permanent BULLISH bias, as some may have wondered, but have been anticipating a rally -- given oversold market and based on fact that so many traders are quite BEARISH. I tend to fade the majority opinion when it makes sense.

Mostly I look at risk to reward and try to capture the intermediate price swings. When I wrote bearish market CNBC.com columns when Nasdaq Comp was at 5000, I nearly got lynched. People actually tracked me down at Cantor Fitzgerald and dressed me down -- being on the 105th. floor of World Trade Tower was no protection from this or anything else, as you know. Stay tuned.

  Jeff Bailey   4/10/02,  2:51:29 PM
13-week YIELD ($IRX.X) 1.67% ... we continue to see buying in this very short-term note as YIELD sinks to multi-week low Link

The 13-week is what many money market and shorter-term savings accounts are pegged to. Hints to the trader that a lot of money is/has been moving to the sidelines to wait things out. Will watch the 1.67% level closely. This represents the 02/08/02 closing YIELD where we then saw good round of selling and YIELD moved higher.

We might note that on 02/08/02 the NASDAQ had just been in a 2-week decline, but managed to close at a session high that day, then got a little rally for 3.5 sessions to a 2/14/02 high of 1,844.

What a bearish trader with some nice gains may want to do is lower some stops in some gains that have gotten large.

  Jeff Bailey   4/10/02,  2:41:20 PM
Honeywell (HON) $39.65 +5.39% ... Dow component in the "aerospace/defense" sector that is driving gains for Dow Industrials today. Stock set off "bullish triangle" back at $35. At that time, we mentioned just 1/2 bullish trade in the stock with near-term target of bearish resistanc, currently encountered. If bull sees a trade at $41, would round up to full position for longer-term. Link

Vertical count currently $61, but could grow if X column were to grow.

  Jeff Bailey   4/10/02,  2:34:12 PM
Natural Gas Inventories The American Gas Association reports a 9 bcf draw down in natural gas inventories in the latest week.

May Nat. Gas Futures (ng02k) up 0.9% at $3.23/btu

  Jeff Bailey   4/10/02,  2:33:04 PM
AT&T (T) $14.32 -4.5% ... company announcing plans to do a reverse stock split. Who would have ever imagined a Dow component ever doing a reverse stock split?

  Jeff Bailey   4/10/02,  2:30:57 PM
Chiron (CHIR) $46.44 +7% ... one of the strongest technically in the Biotech HOLDRS (AMEX:BBY).

CHIR point figure Link has bullish vertical count of $68 and trades above bullish support. Biotech bull looking for a bottom in the sector might consider this name as bullish. Start out with partial position, then add on bullishness above $50. Option trader would be well served to buy some time.

  Leigh Stevens   4/10/02,  2:28:59 PM
OEX update: OEX rally faded from top end of its down trendline on the hourly chart, but is back up challanging that resistance around 563. More key resistance is 565 -- a close above 565 is needed to get the Index back above the up trendline on the daily chart. We are getting more volume today - NYSE UP Vol. at 670 million is running well ahead of yesterday's pace, when it was 570 million. For that matter, Nasdaq UP vol. is already double that of yesterday with nearly 2 hours to go. Coming on again after 1 pm, with the best volume relative to prior 8 sessions, is something to note -- not a bad looking rally on the NYSE side. Watch resistance at 563, then 565.

  Jeff Bailey   4/10/02,  2:19:58 PM
National Semi (NSM) $32.07 +1.64% ... reaffirms guidance that the company is on track to meet analysts' consensus estimates for Q1 and 2002 of $0.90 and $4.31 respectively. Link

  Leigh Stevens   4/10/02,  2:10:02 PM
QQQ/NDX Update: "You might also look toward NVDA as a factor in QQQ weakness".

Yes, it's down more on percentage basis as Navidia (NVDA) is off some 10% from yesterday. It does not weigh as heavily in the capitalization-weighted Nasdaq 100 as ORCL, but it adds to weakness. Nvidia Corp. makes chips for Microsoft's (MSFT) Xbox game system & weakness is attributed to an analyst report(s) commenting on Xbox video game consoles falling short of sales expectations.

  Jeff Bailey   4/10/02,  1:50:16 PM
AOL Time Warner (AOL) $20.39 -6.68% ... will simply take note that the current bearish vertical count is $13.00. If looking bullish based on some type of "capitulation" then my want to do it gradually here. I'd opt for Cardinal Health (CAH) or some stock that has a longer-term bullish count associated with it though.

Here's the AOL P/F chart. Link

  Eric Utley   4/10/02,  1:45:16 PM
Random Observation I remember back to September 20, when a big block of stock went for sale in Disney (NYSE:DIS) for $15.50. The $15.50 level in Disney, by the way, marked a six month bottom in the stock. Today, a big block went off in AOL Time Warner (NYSE:AOL) at $20...

  Jeff Bailey   4/10/02,  1:42:51 PM
Morgan Stanley High Tech (MSH.X) 416.26 -1.01 ... came very close to violating the relative low of 02/22/02 at 412.73, with a trade of 412.82 today.

Funny, but I have retracment from the 04/19/01 close of 640 that we actually "fit" to the 04/04/01 close of 465 at our 38.2% retracement level. That resulted in a 0% retracement of 357, which almost represents the "bottom" found in September. This has the 19.1% retracement at 411.47, which is very close to offering the near-term "support" from 02/22/02 low and current daily low.

One will note that the 50% retracement is at 500. Anything interesting happen there lately? How about the 03/11/02 rally high of 500.48? Then what about 38.2% of 465? How about the "rally" on 04/01/02 of 463.99, pretty close to 465 if you ask me.

If the MSH.X doesn't hold the 411 level, then bull has to protect agains 0% at 357.

  Eric Utley   4/10/02,  1:38:53 PM
We saw the print in KLA-Tencor (NASDAQ:KLAC) Link earlier this morning, that I highlighted yesterday. Bailey covered the details earlier. KLAC's move helped to increase my bearish conviction on the semis.

On an intraday note here, the SOX.X traced a new relative low in its recently-established descending trend Link at the 550 mark. That level corresponds with a key retracement level that I have, plus it's near the 200-dma. The money managers might try to defend this level here in the SOX, which should have short-term bears checking their upside risk.

  Jeff Bailey   4/10/02,  1:31:52 PM
What are your thoughts on sunw. I've been thinking about buying some but with it breaking below $8.00 today I'm not sure if my downside risk has increased. I'm fairly new to charting so I'd really appreciate your opinion.

How can we be thinking of buying SUNW? Maybe some LEAPS, but the stock isn't even on my radar screen. Link . The p/f chart perhaps says it all... wait for this bugger to break the downward trend. Bears have been hammering it at every rally.

I'd rather risk the $0.50 to a stop at $7.50 on a piece of bubble gum. Those are my thoughts on a bullish trade in Sun Microsystems (SUNW).

  Leigh Stevens   4/10/02,  1:31:16 PM
QQQ update: The Q's intraday low (33.13) took out yesterday's low at 33.49, but not the 2/22 intraday low at 33.09, at least not yet. Pressure is coming especially from hammering that Oracle (ORCL) is taking today, which appears to be technical selling -- at least I have not seen any news on the wire. ORCL weakness may relate to selling in Siebel systems (SEBL), where there was a report that their quarter just ended was pretty negative for earnings.

  Eric Utley   4/10/02,  1:08:54 PM
The Juniper (NASDAQ:JNPR) MAY 10s that I picked up yesterday are close to a double today. What I'm probably going to do is look to take half the position off for a double, if the stock continues lower, then let the other half ride over the earnings report tomorrow evening.

  Eric Utley   4/10/02,  1:07:16 PM
The Brokers (XBD.X) recently broke a double-bottom Link , and looks to me as if the index has downside to 468 over the next few weeks. I think that downside is purely business conditions-related, independent of the NY AG's probe.

There are three stocks in the group that correlate well with the set-up in the XBD. First is Merrill Lynch (NYSE:MER) Link , with its bullish support down around $48. Morgan Stanley (NYSE:MWD) Link is another to watch at its double-bottom at $54, with downside potential to $50. And finally, the weakest of the three, Goldman Sachs (NYSE:GS)Link , has downside to $82 in the short-term.

I think some of the observations that Bailey made recently concerning J.P. Morgan Chase (NYSE:JPM) can be applied with this trade too.

There are three stocks I'd stay away from for a bearish trade: Bear Sterns (NYSE:BSC), A.G. Edwards (NYSE:AGE), and Raymond James (NYSE:RJF). The Bear is rumored as an acquisition, and the other two aren't as exposed to the investment banking business.

  Leigh Stevens   4/10/02,  1:03:58 PM
Market update - Indexes: OEX & SPX - OEX appears to have had only a head fake with the pop up above its hourly downtrend channel. The key resistance is on the daily chart, as OEX would need to get back above 565 to cause the Index to regain its up trendline. OEX looks vulnerable to eventually sinking down to 545 area and retesting its last downswing low from Feb. S&P 500 (SPX) is looking more bearish than the 100 (OEX), as it continues to retreat from the upper channel line where it reversed at its intraday high. Looks like SPX is heading back down toward area of recent low at 1114 area. SPX could sink past this level and retreat to 1109-1108, at low end of hourly downtrend channel. Stay tuned.

  Jeff Bailey   4/10/02,  1:03:08 PM
Oracle (ORCL) $10.96 -8.5% ... getting "whacked" as it looks like software bulls are pulling out.

  Eric Utley   4/10/02,  12:54:33 PM
I don't know how the New York Attorney General's probe into Wall Street's Houses of Mirrors will end. There was a really good article in the New York Times Link a few days ago about Mr. Spitzer's probe into Merrill Lynch (NYSE:MER). CNBC is reporting now that Spitzer is expanding his probe.

I think this development increases the downside potential in the Brokers (XBD.X), who, let's be honest, haven't been the most forthcoming market participants in the last five years. The probe comes at a time when the brokerage business plain stinks. Trading revenues are down; we know that much from Knight Trimark's (NASDAQ:NITE) blow-up a few days back. M&A activity is non-existent. And besides the flood of converts, underwriting is very weak. The poor business conditions give the group a lot of downside. This new political risk increases the downside.

This is a trade that I love for its minimal upside risk and outsized downside. More to come...

  Leigh Stevens   4/10/02,  12:52:00 PM
Market update - Indexes: NDX & QQQ - Nasdaq 100 (NDX) and the QQQ tracking stock are now down on the day and are trading at the low end of their downtrend channel. Both NDX and QQQ face the prospect of taking out their prior swing lows of late Feb -- at 33 on QQQ and 1320 in NDX; due no doubt to Intel (INTC) taking out its prior low today, Cisco (CSCO) fading back to its intraday low, and weakness in Oracle (ORCL) today. No sign of a bottom yet in Nasdaq. The weak get weaker.

  Jeff Bailey   4/10/02,  12:46:31 PM
DIVERGENCE really showing itself today with the Morgan Stanley Cyclical Index (CYC.X) +1.43% and Morgan Stanley High Tech Index (MSH.X) -1.33%. Almost a complete separation just as oil and water will separate.

  Jeff Bailey   4/10/02,  12:43:12 PM
EMC Corp. (EMC) $9.86 -4.92% ... breaking below the "support" level of $10. That bearish triangle Eric so urgently noted back at $14 now looking powerful. Link and bearish vertical count of $8.50 looks in play.

  Jeff Bailey   4/10/02,  12:38:12 PM
Juniper (JNPR) $10.64 -3.44% ... recently profiled "lottery play" in the April or May $10 puts looking interesting aren't they? JNPR set to report earnings tomorrow after the bell. Multex consensus for break-even. (we shall see).

  Eric Utley   4/10/02,  12:36:21 PM
Telecom Observations

With the North American Telecom Index (XTC.X) hitting another multi-year low this a.m., I decided to dig a little deeper into some of the components of the index. One stock that really sticks out of the group is Alltel (NYSE:AT). It has held up very well relative to its telecom peers. Check out AT's relative strength versus the XTC.X: Link

From my preliminary research, I gather that AT's relative strength stems from the niche market that it serves. The company is focused more on the rural market, where competition from the major carriers is not as fierce as in the bigger, metro markets. Indeed, AT is expected to earn about $3.20 per share this year on sales of just under $8 billion -- about a 30 percent sequential increase.

My thinking is with as widespread as the damage is in telecom that the rural market will eventually be hit with either increased competition or slack demand. There's obviously some big expectations for AT judging by its relative strength. Therefore, the first sign of weakness in any of its business lines should result in a step drop.

I'm seeing a potentially very bearish pattern on the PnF chart, with a print at $52 forming a bearish triangle: Link I think that the market might be preparing for a shortfall, in a head-of-the-snake type of move turning towards its tail, right Bailey?

I think that the JUL 50s, offered at $1.60, make for a nice bearish bet on a print at $52.

  Leigh Stevens   4/10/02,  12:35:13 PM
Market view & support & resistance - Indexes: DJX & DJT - Recent lows in the Dow (DJX) have been hugging the 50-day moving average & bullish for the Dow. Near support > 10,200 - 10,125; near resistance > 10,336, at daily chart down trendline; 10,400 is resistance implied by the 21-day mov. avg. It's still possible to get 1 more shot down to major support at 10,000-9950; 9957 is current 200-day mov.avg.

Helped by Airline sector strength, DJT (Dow Transportation avg.) is back above resistance at 2800, a bullish plus. More bullish even would be if DJT regains or gets back above its Sept-Nov-Feb up trendline by piercing 2860, which I take as next important resistance to watch. Near support > 2800, at prior resistance. Key support > 2717, at recent downswing daily low.

  Leigh Stevens   4/10/02,  12:09:39 PM
Market view & support & resistance - Indexes: SPX -Key to the SPX is that the rally here today did not achieve the same bullish breakout above it's down trendline as seen on OEX hourly chart -- S&P 500 intraday high reversed right from a touch to this line. This divergent action suggests less relative strength for the broader S&P 500 relative to the 100. Nothing surprising here. SPX key resistance > 1129-1130. Absent a decisive upside move thru 1130, am reluctant to play this SPX bounce. Will see what it looks like on a pullback. Momentum indicators based on the hourly & daily charts have generated crossover buy "signals", but we've seen false starts before. To like about POSSIBILITY that SPX may be bottoming around recent lows, is that it's at the 62% retracement level. Support > 1113-1116 area, around recent hourly lows. Next lower support > 1108, extending to 1105, at lower boundary of hourly downtrend channel.

  Jeff Bailey   4/10/02,  12:04:45 PM
Medtronic (MDT) $46.18 +1.42 ... another "healthcare" type stock a longer-term bull should consider. I was rather bullish back on November 20th, just ahead of earnings. Stock gapped higher and ran to $52. Nice little pullback last couple of months. Stock back above the 200-day MA today. Kind of like we see in Cardinal Health (CAH).

MDT also has p/f chart back in column of X Link so bull has easy stop of $43. Longer-term bullish vertical count is $76, so risk/reward longer-term is $4 risk/ $29 potential reward. If you were an institution that tends to accumulate a position over time, are you interested is the question?

Relative strength of MDT versus SPX would read "buy signal and column of O" so hints that stock lost favor near-term. A RS reading of 42 would have stock back in X and outperforming SPX. Last night's reading was 41.25.

Remember, RS calculation is simply the stock's price divided by the index you are measuring against.

  Jeff Bailey   4/10/02,  11:54:53 AM
Siebel (SEBL) $26.00 -5.69% ... stock sunk as low as $24.78 on heavier volume. "Trader talk" is that Bloomberg story has/had SEBL presenting in Madrid and company reported to have called Q1 possibly worst in history.

I'm thinking this "trader talk" may have had the GSO.X dipping red earlier, maybe some softness in fellow software stock SAP too. How about you?

  Jeff Bailey   4/10/02,  11:41:49 AM
SAP $33.79 +1.53% ... interesting... stock rallied right to that 50-pd MA on 30-minute chart interval at $34.50 and looks to have found some sellers.

SAP bears don't mind seeing the GSTI Software Index (GSO.X) showing a little red either.

  Jeff Bailey   4/10/02,  11:38:06 AM
Some Red creeping onto the screen. Software (GSO.X) -0.2%, Semiconductor (SOX.X) -0.2%, Wireless (YLS.X) -0.12%, Comined Telecom (IXTCX) -0.66% and N. Amer. Telecom (XTC.X) -0.82%.

Smells a little bit "techy" doesn't it? Just fractional, but a little different than earlier this morning.

  Jeff Bailey   4/10/02,  11:32:13 AM
CNF Inc. (CNF) $32.22 +2.44% ... What is your thinking on CNF? It is up today. I was thinking oil problems would keep it down. I'm still holding some June 35 calls from way back when you first talked about. I'm trying to decide if I should average down.

Hmmm. tempting to "average down." How about this? I have downward trend on the Dow Jones Transports (TRAN) at 2,870. Right now, they are battling with a rounding 50-day MA at 2,822.

I'd be more willing to "average down" in the June options (only if you took 1/2 position to begin with, if you took a full position, then don't average down) if the TRAN can get back above downward trend. Let's get the group back above trend before committing further money.

Plenty of time until June, so hang in there.

  Jeff Bailey   4/10/02,  11:25:41 AM
Cardinal Health (CAH) $69.69 +1.72% ... stock broke above "inside day" yesterday (inside day was Monday) and back above the 200-day MA.

One of my "new" favorites for a longer-term call play. It held the 50-day MA nicely on Friday's pullback, pretty close to the $67 level where you and I thought bears might be looking to cover.Link

Would be "neat" to see it simply catipult itself and cram a loss right down a CAH bear's throat wouldn't it?

  Leigh Stevens   4/10/02,  11:24:27 AM
Market view & support/resistance - Indexes: OEX - OEX has broken out above its bullish falling wedge on the hourly charts. While the rally doesn't look very impressive so far, chart breakout could be start of something. If you want to play this short-term, trade would be to buy OEX calls on a dip, such as OEX back to 562. A drop much below 562 makes this rally could like a false breakout. Potential support under 562 is 555 area. Upside may be back up to 575, but there is near resistance at 564-564.5, then at 567. Watch 567, if reached. This market is still pretty trendless or uptrends at least have been short-lived.

  Leigh Stevens   4/10/02,  11:07:49 AM
Market view & support/resistance - Indexes: NDX & QQQ - Nas 100 (NDX) support > 1343-1345, at low end of hourly downtrend channel. The 21-hour stochastic has generated bullish crossover buy signal. Key near resistance > 1380, at upper trendline resistance. QQQ - near support > 33.50, then 33.00. Near resistance > 34.50-35.00, at upper end of downtrend channel. 21-hour stochastic generated a crossover buy signal. 14-day stochastic has also generated crossover buys on NDX & QQQ. If you are trying to catch a move to the upside here, watch the resistance areas -- sell at any signs of a reversals, especially if it occurs at resistance.

  Jeff Bailey   4/10/02,  10:59:36 AM
Cummins (CUM) $50.14 +3.12% ... here's a name we mentioned as bullish a couple of weeks ago near $42. "On fire" and busting to new highs. Strong and steady, just like the diesel engines they manufacture. Link

Bear market? What bear market? (grin)

  Jeff Bailey   4/10/02,  10:54:36 AM
Wow! HMO Index (HMO.X) 528 +1.34 jumping above our regression channel today. Similar to spikes found 11/06/02 and 02/08/02. Good time to sell partial positions based on past. Link

even better time to observe tomorrow's action. In past, group has drifted back over a two-week period and right back into lower channel and tested that lower support trend.

Oxford Health (OHP) $43.28 +2% busting to new 52-weeker. Link

  Jeff Bailey   4/10/02,  10:43:16 AM
While one might logically think that AMAT should pull back to its 50-day, in order to "line up" with KLAC and NVLS at their 50-day's, we also get the feeling that AMAT finds bidders in here, as the pros watch KLAC and NVLS find support at the rising 50-days.

What this can actually do thought, is have an AMAT bear assessing current risk/reward to support. For instanc, AMAT trading $51 has potential reward to the 50-day at $48.54 of $2.50, while risk to yesterday's high of $53.84 at $2.84. This puts short-term risk/reward roughly at 50/50 and not much reason to be shorting this level.

Most likely then has a trader (me) thinking an AMAT bear needs KLAC and NVLS to violate their 50-day MA's to get further weakness going in AMAT.

Please remember, while I'm short-term bear in AMAT, my original goal for short was to pad account a bit and then turn bullish near $47. Thinking if we could short $51 test strength/weakness for awhile, then if stock traded $48-$47 and everyone wanted out, we could step in at that level as bullish, have $3-$4 worth of gain from a short, to help take some potential heat until stock firmed up, then resumed longer-term upward trend.

All the time, monitoring the sector bullish % from Dorsey/Wright to help us understand sector risk.

  Leigh Stevens   4/10/02,  10:42:35 AM
As Jeff mentioned, the Semiconductor Index (SOX) is off a couple of points and is a minor drag on the averages. Today's low of 549.40 is right at an up trendline drawn through the Sept-Oct. lows, with a touch at the late-Feb. - today's low made the 3rd. point of a trendline. This gives us another number to watch here, along with Cisco at 15.00. A break of 549 in the SOX and 15.00 in CSCO, especially on a closing basis, would suggest that Nasdaq especially would be unlikely to hold recent lows.

  Jeff Bailey   4/10/02,  10:39:58 AM
Novellus (NVLS) $47.94 -0.29% ... also noting that this semiconductor equipment stock trading right down to a rising 50-day MA. Link

Here's the bar chart of KLAC Link

and let's not forget the Biggest gun in the group in Applied Materials (AMAT) Link

Almost like one of those Disney animation movies where the artist flips through a bunch of animated pictures to create motion for the character, this is a technique used by technical analysts of various "like stocks" to get a picture of technical strength/weakness as it relates to an important moving average.

  Jeff Bailey   4/10/02,  10:34:31 AM
KLA-Tencor (KLAC) $62.51 -2% ... Jeff: KLAC just had a quad bottom breakdown with a print @ $63.

Yes it did. Stock also sitting right on upward trending 50-day MA from bar chart and bullish support trend. Very good technicals to be monitoring here. If looking short, control your risk to initiate a trade and start with smaller position. On Monday, I profiled AMAT as short and we saw stock trade strong for about 2 sessions. Understand the strength that the group has had and be able to take some heat. Link

  Jeff Bailey   4/10/02,  10:26:01 AM
Research in Motion (RIMM) $20.94 -9.97% ... after reporting earings last night and then guiding analysts lower on future quarter, stock falling back below its 200-day moving average. Link

P/F chart shows bulls trying to defend the bullish support trend. If short/put, would play it safe and lock in partial gains at technical support trend. Link

Also noting that relative strength versus the S&P 500 still rather strong and has not given a sell signal at this point. Could then invision how a break of bullish support trend from point figure chart above, might then have relative strength giving a sell signal. Here's the RS chart of RIMM vs. SPX Link

  Jeff Bailey   4/10/02,  10:20:53 AM
Green across the board for sectors. Only Semiconductor (SOX.X) -1.12% and N. American Telecom (XTC.X) -0.53% are in the red.

  Jeff Bailey   4/10/02,  10:19:09 AM
SAP bears like myself will be monitoring "like stocks" in Kronos (KRON) and PeopleSoft (PSFT) from hear on out. Both names warned on earnings and would currently represent "weaker" stocks compared to SAP, which has not said anything negative.

KRON has been trading rather flat after getting hit hard yesterday.

PSFT edging lower and really hasn't gotten much of a bid since last weeks debacle.

This has me thinking there isn't much interest from bulls in the group right now.

  Jeff Bailey   4/10/02,  10:09:03 AM
Semiconductor Index (SOX.X) 552.58 -0.9% ... has been stronger group in technology and not "bidding" like one might have thought with broader bullishness in major market averages and many technology sectors. Could put a damper on early morning enthusiasm should weakness in group continue. Link

  Leigh Stevens   4/10/02,  10:05:13 AM
Cisco (CSCO) is trading back above its uptrend, which it closed slightly under yesterday. The level to watch is $15.00. Besides being at possible support, another noteworthy fact is that as the stock went sideways to lower over the past 2-3 weeks, On Balance Volume (OBV) has been trending higher. This is a minor bullish divergence and suggests that the stock is being accumulated. CSCO is a bellwether for the NDX and QQQ -- if it can stay at or above 15.00, there is a possibility of a QQQ double bottom --a double bottom is usually a tradable "signal" and formation. Such a pattern suggests not only some upside potential but gives a place to risk to -- the appropriate stop is just under the lows. Placement of stops is always less of a problem when an index is at or near a prior downswing low or upswing high, as a break of the swing top or bottom is predictive for a further move in that direction. Stay tuned.

  Jeff Bailey   4/10/02,  10:03:19 AM
Intl. Game Tech (IGT) $59.80 +0.3% .... a couple days ago I thought short/put this "gaming stock" near $57 ... stock continues to edge higher and looks to want to "fill the gap lower". Looking for overhead resistance near $61. Link

30-minute interval chart shows the 200-pd MA served as a resistance level back on March 28th near $63, currently resides at $60.71.

  Jeff Bailey   4/10/02,  9:59:58 AM
SAP $34.17 +2.7% ... looks like somebody's coming in looking for some upticks on the stock. Would be looking short/put right in here.

  Jeff Bailey   4/10/02,  9:53:56 AM
WorldCom (WCOM) $5.06 -6.8% ... bears all over this telecom service provider and stock sinking to new multi-year low. Link

Just look at that bearish resistance trend do a job on the stock.

  Jeff Bailey   4/10/02,  9:50:03 AM
Cisco Systems (CSCO) $15.38 +3.71% ... I'll be looking for a rally near the $16.00 level as a shorting opportunity. Yesterday we decided to lock in some gains at retracement support of $15.27 (eventually violated to downside) and anything above $15.75 becomes "fair game" as 50% retracement is at $16.52 and should offer near-term resistance.

  Jeff Bailey   4/10/02,  9:41:56 AM
Japanese Yen (jy02m) strong against the US$ this morning.

Under such a scenario, I still like Sony Corp. (NYSE:SNE) $52.12 +1.57% for partial positions longer-term. Link

Sony "call of choice" is the Oct $50 (SNEJJ) or Jan(03) $50 (VYAJ), with longer-term target of $80-$90.

  Jeff Bailey   4/10/02,  9:38:58 AM
Commerce Bankcorp (CBH) $46.10 ... reports Q1 ESP of $0.45, 3-cents better than consenus. Revenues came in at $180 million, in line with consensus of $182.2 million. Company says it is targeting EPS and revenue growth of 15-20% and 25% respectively. Link

  Leigh Stevens   4/10/02,  9:38:46 AM
I mentioned Cisco and it is due fractionally higher, so watch for a bounce. If so, the Nasdaq Composite, Nas 100 and the Q's may get a lift. I am long QQQ, a partial position, but have the feel I might be early in getting in, but time and the market is going to tell me that. I noticed that new Nasdaq highs increased to 196 on Tues, from 144 on Monday - number of stocks making new 52-week lows fell to 50, from 61. NYSE stocks making new highs also rose substantally.

  Jeff Bailey   4/10/02,  9:34:42 AM
SAP Aktiengesell (SAP) $33.28 ... Option traders may like the SAP May $30 puts (SAPQF) offered $1.00, or the May $35 puts (SAPQG) offered $3.10. If she'll "pop" to $35, then that would be nice.

  Jeff Bailey   4/10/02,  9:29:51 AM
Siebel Systems (SEBL) $27.56 ... stock edging lower to $27.00 after SoundView cuts estimates and lowers price target to $35 from $40. Link

In last night's Market Monitor we discussed a short/put in fellow CRM software maker SAP Link and SoundView mentions in comments that they also see some risk to 2002 license revenue and EPS estimates for ORCL Link and SAP.

In recent sessions, fellow CRM software makers PSFT Link and KRON Link warned on earinings.

(where the heck was I on KRON?) "First test of bearish resistance can be painful for the bulls."

  Leigh Stevens   4/10/02,  9:28:17 AM
ON THIS DAY in 1849, Walter Hunt of New York City patented the safety pin. Today most everyone has a few around stuck in jars and in drawers and if your pants pop, they are a lifesaver. Mr. Hunt, however, didn't seem to have any more conviction than the average day trader. He thought the safety pin to be only a minor convenience and sold the patent for just $400, although in present dollars that is nothing to sneeze at. In case you are feeling stuck and in a rut, you could remember how even small contributions make a difference.

  Leigh Stevens   4/10/02,  9:19:03 AM
It's showtime! The market is due just slightly higher: S&P maybe a point higher, the Dow up a few points based on the futures, as well as Nasdaq; crude oil is off a bit, as is gold. More of the same -- does it feel like the summer doldrums already? Possible double bottom in QQQ if we hold in the 33-34 area. We'll see. Problem is the weakness and lack of a bottom and buying interest in MSFT, INTC and especially CSCO. Today may tell the story. Everyone is waiting for earnings. Merrill's morning call defended Cisco's current execution of it's business strategy in a difficult environment. Difficult for us index and options traders too!

  Jeff Bailey   4/10/02,  9:02:57 AM
NASDAQ-100 Bullish % ($BPNDX) The NASDAQ-100 had a net loss of 1 stock yesterday to a sell signal and currently reads "bull correction" at 40%. Remember, levels above 70% are considered "overbought," while levels below 30% are considered "oversold." Link


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