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  Jeff Bailey   4/11/02,  9:51:12 PM
I will be on vacation tomorrow and Monday. There's a turkey gobbling in the mountains that my father and I need to go and pay a visit too.

We have all worked very hard this week and from time to time we all need a little rest and relaxation.

Eric Utley will be filling in for me. If I ever wanted to be "cloned" as a trader, then I'd dig out the blueprint of Mr. Utley.

I'll be a little "wild" Tuesday morning and ready to go!

 
 
  Jeff Bailey   4/11/02,  5:39:20 PM
Powerwave Tech (PWAV) (apdate to 05:20:44) ... Conference call has company raising guidance for Q2 expecting revenue and EPS of $100-$110 million and $0.03-$0.04 versus Multex consensus of $90.5 million and $0.04, respectively. Company expects full year revenue and EPS of $430-$450 million and $0.23-$0.27 versus consensus of $384 million and $0.21. Stock trading $14.80.

 
 
  Jeff Bailey   4/11/02,  5:20:44 PM
Powerwave Tech (PWAV) $13.36 ... stock trading higher at $14.49 reporting Q1 (March) earnings of $0.04 per share, 3-cents better than Multex consensus of $0.01. Revenues rose 42.6% year-over-year to $104.1 million versus the $84.6 million consensus. Company saying Q1 sales of 3G products grew 50% sequentially, and that Nortel (NT) accounted for 36% of revenues, while Cingular, LU, and NOK each accounted for over 10%. Link

 
 
  Jeff Bailey   4/11/02,  5:14:20 PM
J.D. Edward (JDEC) $13.26 -17.02% ... forgot about these guys. Same type of product as PSFT, KRON and SAP. I don't see any news on the stock today, but may be seeing some bulls playing defense in the stock after recent earnings warnings from PSFT and KRON.

JDEC Chart Link

PSFT Chart Link

KRON Chart Link

SAP Chart Link

 
 
  Jeff Bailey   4/11/02,  4:53:08 PM
Mercury Interactive (MERQ) $29.30 -6.68% ... reported Q1 pro forma EPS of $0.14, $0.04 better than Multex consensus for $0.10. Revenues were $90.5 million versus consensus of $86.0 million.

Stock trading higher at $31.90 in after-hours action.

(some earlier comments for those trading the stock at 11:24:34)

 
 
  Jeff Bailey   4/11/02,  4:47:45 PM
Juniper Networks (JNPR) $10.34 - 4.96% ... Reports Q1 net income of $0.00 a share, in line with expectations, but below year ago $0.24 a share. Revenues fell 63% to $122.2 million (consensus $122.06 million).

In what looks to be a pre-conference call interview with the Wall Street Journal, Juniper's CEO saying that Q2 revenues will be flat sequentially, or about $122 million, which would be less than Multex consensus estimates of $125.6 million, and pro forma EPS will be flat at about breakeven, vs consensus of a penny profit.

Stock has been active in after-hours between the $10.00-$10.10 level.

 
 
  Jeff Bailey   4/11/02,  3:29:43 PM
Morgan Stanley Cyclical Index (CYC.X) 579 -1.21% ... finally seeing some weakness here as it seems sector just can't fight the broader market bearishness today.

If Phelps Dodge (PD) $40.04 -0.44% is your only position and you're a short-term trader, don't try and prove anything. Either clear out now with small loss, or stay disciplined with profiled stop.

Trading isn't about winning every trade. Manage your account as it needs to be.

 
 
  Jeff Bailey   4/11/02,  3:22:19 PM
SAP Aktiengesell (SAP) $32.59 -3.8% ... getting downside alert at 38.2% retracement of $32.71 (was typing the 03:00 intraday).

Stock sitting right on the 200-day MA and may raise some eyebrowse. The real trouble for bulls comes at $31, so bear can't be complacent. Link

Keeping an eye on PSFT $21.46 -6.3% and KRON $34.65 -3.45% and not seeing any bulls there.

 
 
  Jeff Bailey   4/11/02,  3:16:49 PM
jeff, first compliments on your work ! you are great..just wanted to run this by you..share with others..is JPM a short today ..sure looks like to me.

Thank you!

Yes JPM looks short to me. I will have to go back to recent market monitor commentary, but I do believe I mentioned this name as put last week as stock tested bearish resistanc. My "trader's target" was $30 if memory serves me correct. Link

 
 
  Leigh Stevens   4/11/02,  3:00:41 PM
Index update: DJX & SPX: - Updating DJX - recent lows took out near support at 10,290-10,300, the 10,250 intraday low, then caught at 10,200, which has proven to be a support area numerous times; next support looks like 10,150 area. Since 10,200 has been a widely perceived support, a close UNDER 10,200 should build up even more bearishness than exists already; SPX - fell under the prior low of this week (4/8) at 1111.79, but the index is rebounding a little from intraday low of 1107.34. SPX is now fully oversold on my hourly osciallator -- maybe too much to fall much further, atleast to below the intraday low already seen today.

 
 
  Jeff Bailey   4/11/02,  2:56:07 PM
Krispy Kreme Doughtnout (KKD) $40.14 +0.67% ... had this one on my list for potential short squeeze and getting upside alert that I set just above consolidation. I like this one bullish here, target $45 for stock traders. Stop just below retracement support of $37.91 and looking for rounding 50-day to provide catalyst for short covering.

Under current market environment, would look 1/2 position at this time, but should market catch a bid in next couple of sessions, stock could rock. Link

I have retracement from $45.86 to $25.05, that has 61.8% at $37.91, 80.9% at $41.88.

 
 
  Jeff Bailey   4/11/02,  2:08:52 PM
SBC Communications (SBC) $34 -4.6% ... perhaps some correlation against earlier technicals discussed in last hour's intraday could be correlated to the just discussed SBC chart.

Partial position in the SBC July $35 put (SBCSG) offered $2.60 gives the bear some exposure. What if the bottom just falls out? At least I've gotten some exposure.

Since stock has gotten "whacked" like many in the group last 4 day's, the partial exposure near-term protects against a "bounce" and 3-box reversal on the p/f chart to $37. But that "bounce" then has SBC right back at 50% retracement and then bear could round out to full position in the puts and check back in July or $27-$28, whichever comes first.

If stock doesn't rally and some analyst comes to the table with a downgrade, then I've got some exposure should bottom just fall out.

How many you buy is up to you. Not profiling with a stop, but targeting $27-$28. If we get profitable or market conditions change, we can then fine tune as we go.

 
 
  Jeff Bailey   4/11/02,  2:00:00 PM
SBC Communications (SBC) $33.91 -4.82% ... p/f chart is bearish. Vertical count dating back to October (red A) hints at $26. Is there anything in retracement that perhaps ties in with $26? Link

I promise you, I didn't do this knowingly. The "fitted" retracement actually resulted in a 100% retracement of $26.54.

 
 
  Jeff Bailey   4/11/02,  1:56:57 PM
SBC Communications (SBC) $33.89 -4.96% ... With XTC.X nearing a retracement level which could serve as near-term support, bearish trader in SBC could still look at some puts/short for 1/2 position.

I have just "fitted" retracement on the stock from $47.34 achor, and "fit" the 38.2% at the recent little high of $39.39, along with the 61.8% at the 02/06/02 close of $34.48. This gives us the 80.9% level of $30.51 as target.

Now I'm going to go look at the p/f chart and see what it "says" and if anything I've done with retracement lines up.

Be right back.

 
 
  Jeff Bailey   4/11/02,  1:52:16 PM
SBC Communications (SBC) $33.84 -5% ... Dow component and "telecom" breaking to new lows. Boy is this group under some selling pressure today.

 
 
  Jeff Bailey   4/11/02,  1:43:52 PM
Yahoo! Inc. (YHOO) $15.72 -14.6% ... stock got whacked after reporting earnings, despite company guiding higher on revenue. I have retracent from $22.31 to $8.11. This has stock trading just above 50% retracement of $15.21 and just below the 200-day MA of $15.80. Trader that bought puts ahead of earnings that was expecting downside has gotten it. Don't let the gains slip away if your scenario has played in your favor. Bear's risk now at 61.8% retracement of $16.88.

 
 
  Jeff Bailey   4/11/02,  1:39:49 PM
Broadcom (BRCM) $34.00 +2.07% ...stock trading higher after CE Unterberg Towbin upgraded to "buy" from "Mkt perform."

I will note retracement of $50.13 to $21.37. This has 61.8% at $32.35 and 50% at $35.75. Upgrade came right at retracement support. I'm not buying it as it may have been a call to build some demand if inventory was getting heavy. Look for formidable resistance at downward trend that crosses 38.2% retracement at $39. 50-day MA is barreling lower at $37.00.

 
 
  Jeff Bailey   4/11/02,  1:31:51 PM
bght 5 vzapr45p @.95 on mar 22nd...($500 risked).....sold "too early" today(big grin!) @ 3.2..tidy $1085 profit(after comms)...200% plus!....EXCELLENT JOB JEFF!!!..Can't thank you enough!...Now, I'm taking the day off, and taking the harley for a spin!!!....Gotta keep the battery charged!!!....

Have a nice ride! Fill her up with the premium gas, you can afford it!

 
 
  Leigh Stevens   4/11/02,  1:21:42 PM
Index Update: SPX & OEX - OEX continues lower and the next target that comes into view is 545.50, the area of the double bottom low of late-Feb/early-March. At the rate we are going, we'll be there by the close! 545.50 more or less corresponds with a possible target on GE to around 32.50, which is a next technical objective for the stock. SPX has taken out its prior recent low at 1111.47 and appears headed toward the low end of the hourly downtrend channel at 1103. If the S&P 500 gets to 1103, I don't see why it won't test 1100.

Speculation at NYSE is that, just like a big buy programs took the market up yesterday, a big sell program (e.g., a large institution systimatically liquidating a sizable portion of its holdings)today is taking it right back down. This is cited as an influence and the pressure on GE and AT&T due to earnings and restructuring, respectively.

 
 
  Eric Utley   4/11/02,  1:06:57 PM
Brokers (XBD.X) now lower by more than 4 percent, approaching the potential support zone. Stay disciplined and don't get emotional with the drops in these stocks. Honor your pre-defined exit points.

 
 
  Eric Utley   4/11/02,  1:05:14 PM
...there goes the Nasdaq-100 (NDX.X) below the February 22 low.

 
 
  Jeff Bailey   4/11/02,  12:58:13 PM
Intl. Game Technology (IGT) $58.65 -2.28% ... is "gaming" stock I mentioned as good short on 04/03/02 on gap lower at/near $57. As trade unfolds, stock did indeed "fill the gap" into yesterday's trading, but this one too may find bulls above the $60 level "thankful" for the rally and looking for the door.

Ulike the "healthcare bullish percent" from Dorsey/Wright that is "bull confirmed", the "gaming sector bullish percent is bear confirmed" thus Eric's and my "reason" for bearishness in IGT. Link

I think a short/bear is very early in this one and a nervous bear or one that is overleveraged will have his/her tollerance of risk tested. Lots of work to be done for further downside, but you get the feeling if $60-$61 continues to provide resistance, then bulls may "pull the plug" on a break below the $56.35 level from 04/03/02 low.

 
 
  Jeff Bailey   4/11/02,  12:51:28 PM
Medtronic (MDT) $45.26 -2.35% ... Hi Jeff, I believe it was you who suggested a partial (?) long position in MDT yesterday....well, I missed it, now, with MDT down about a point today, I have another chance to buy it, but of course, the market has me second guessing. So, I will probably wait for MDT to break yesterday's high, which leaves about a point of gain I will miss if it comes back... but buying it here seems like bottom fishing...... I could go back and forth on this all day, any thoughts, or any fib numbers come into play here?

Yes, I do like MDT as partial bullish position. Here's what I'm seeing, if you have caught on to my thinking of the "snake" scenario and how some stocks are the leaders, while others are the mid-portion then this may perhaps make sense.

In recent week, I've mentioned both MDT and Cardinal Health (CAH) as bullish plays. As the Healthcare Index (RXH.X) Link continues to surge (different than the HMO Index Link ) what I believe tends to happen and will happen is that some stocks in the group will have moved too far, but some technically "mid-tier" stocks like CAH and MDT will find bids.

Look at and study the recent action in CAH. I was first bullish on/near the original break at $70, stock popped to $72.00, then pulled right into a rounding 50-day MA. Link

Now look at MDT Link and think of my "reasoning" for only asking bulls to take partial positions and BUY TIME in these two stocks/options.

If you look at the p/f charts of each, I don't consider anyone as being "bottom feeders," but would consider bulls being "accumulators"

Both stocks have some overhead supply nearby.

One can also "relate" Renal Care (RCI) with the healthcare group, but note that RCI is most likely considered a stock at the "head" of the snake, where overhead supply is void.

In RCI, the "smart money" (smart money by my definition is the winning or profitable money) that is selling is profits, not losses looking to get out at break-even.

In MDT and CAH, there's some money above these two stocks that is perhaps "scared" of the broader market action and perhaps holding some Verizon (VZ) that is getting sideways in their account. They now perhaps look at MDT ownership at $48 as "high risk" and happy to get out at $45.50. Meanwhile they'll ride VZ all the way to the cellar if they have to as long as they don't realize a BIG LOSS. This will then become talk at the dinner table as they discuss how fortunate they sold their MDT for a small loss, but the VZ trade will remain a secret as it eats at them like a cancer.

 
 
  Leigh Stevens   4/11/02,  12:47:29 PM
Market Update: GE's move to below its prior (late-Feb.) lows at 34.5-34.7 has as anticipated brought in more selling in the stock and taken the Dow down further. AT&T (T) is sinking in lockstep with GE even though it is much lower priced stock -- pretty amazing, but the market didn't like the reverse split plan it seems. GE might regain the 34.50 area on the close, but the next chart point you can point to is around 32.60, at the intersection of the Dec/late-Feb. down trendline. I don't see how SPX will maintain it's prior low with this action in GE -- in fact we're dipping under the recent prior low as I write this. The low end of the hourly downtrend channel intersects around 1104 currently. 1100-1105 area was a downside S&P 500 target we talked about in our strategy session here week before last.

 
 
  Eric Utley   4/11/02,  12:36:59 PM
Goldman Sachs (NYSE:GS) is now down by about 3.5 percent. The stock is on the OI put play list, so I thought I'd pass along an observation.

The stock is trading at its bullish support line Link right here around $82. This is a logical level for selling to exhaust itself, and for a subsequent relief rally. To take action or not depends on time frame. Short-termers who've enjoyed this three day move lower might remove some risk by booking partial positions or using aggressive stops. Longer-termers -- if you have the same opinion as I do of the brokers -- might also book partial positions, but let some of the trade ride, looking to reinitiate full positions at higher prices. The $84.50 level is where I'd look to short GS again.

 
 
  Leigh Stevens   4/11/02,  12:34:41 PM
Subscriber relays that: "John Bollinger raises an interesting point. He says the VXN.X’s move into the low 40’s is even more bearish for the NAZ since a rising fear factor goes hand in hand with more and more selling."

John often makes some astute observations. The only thing I find still limiting re VXN is that there is not yet a lot of history for it. The low VIX certainly turned out to be quite predictive for this further weakness in OEX especially.

 
 
  Eric Utley   4/11/02,  12:24:22 PM
For the Nasdaq-100 (NDX.X) I think this 1330 to 1335 area is the short-term support level. It's the February low, so some pikers are probably thinking double-bottom, and trying to prop things up here. Also, 1335 is the 61.8 percent retracement in the bracket from September's low to December's high. I think if we get a break below this zone, risk will then shift to the next leg lower, resulting in a swoosh down.

 
 
  Jeff Bailey   4/11/02,  12:23:08 PM
Treasury bonds buying in the 5, 10 and 30 year today. Not a lot, but YIELDS lower. Benchmark 10-year is 5.185%. Past thinking was that this YIELD may edge lower to the bottom of upward regression channel near 5.0% level. Looks to be happening very slowly.

 
 
  Leigh Stevens   4/11/02,  12:21:15 PM
Subscriber writes: "You mentioned buying 1/2 position OEX at 563-565 and 1/2 position at 558-559 with stop at 557. Would you or did you execute this trade with the other market indicators this morning. If you executed you would be flat now and what would you be looking for next?"

Response: I would take a 1/2 position on DJX and SPX around the lows of today and wait and see what developed as far as needing to take a further position on another shot down. I've been too early on suggesting OEX -- as it was falling toward thru 563-565 so quickly, I waited to see if support would develop at 558, but the index quickly fell thru this area, and is following a divergent path from the others. I feel we are close to a turning point in the market and OEX would bottom too, but will key off the SPX as more reliable.

 
 
  Jeff Bailey   4/11/02,  12:20:45 PM
Jeff: You're way too late in an OEX put play, most of the damage is done

Really? Well, I was bearish on the break at $570. The OEX Bullish Percent ($BPOEX) Link hints that the OEX.X is still "overbought". We may just be getting warmed up!

 
 
  Eric Utley   4/11/02,  12:20:25 PM
General Electric (NYSE:GE), which is lower by 7.55 percent, has a vertical count of $28 Link .

Take the sell signal following the most recent buy signal. For GE, its last buy signal came at 40 in November. The next sell signal came in January on the print at 35. Six Os in that column times two gives a subtraction of 12. Take that number from 40 to arrive at 28, which is pretty close to September's low of 29.

 
 
  Jeff Bailey   4/11/02,  12:16:54 PM
Morgan Stanley Cyclical Index (CYC.X) 585.55 -0.12% ... have alert set at $590 as group could get squeezed. Looks a bit like a potential "bear trap" at $560. Trade above $600 leaves no overhead supply for a bear to buy into. Most likely why this group of stocks only down fractional today, despite the route taking place in technology stocks. Link

 
 
  Eric Utley   4/11/02,  12:16:27 PM
This strength in the HMOs (HMO.X) is a thing of bullish beauty. Those knuckleheads running money, hoping for a bottom in tech and telecom, are missing a wonderful move in the HMOs. The index is higher today by 0.40 percent, its fifth consecutive day of higher highs.

The group is being lead higher today by Aetna (NYSE:AET) and Pacificare (NASDAQ:PHSY). OI has three HMOs on the call play list. The way I think a trader needs to manage this recent run is put a tight stop just under a day low. In Tenet (NYSE:THC), for example, sliding a stop up under today's low at $70.70 is about as best as you can do to protect against downside. Another idea is to sell partial positions into strength.

 
 
  Eric Utley   4/11/02,  12:09:01 PM
Macrovision (NASDAQ:MVSN) is a stock I ran across the other day that sports an interesting technical pattern. The stock has a triple-bottom Link at the $23 level. A print at $22 would break that bottom. It's pretty close today.

I'm not sure what the reason is for the weakness; I don't have much insight into the company itself. But I like the pattern on a break below $22, working with the vertical count of $15. Swing traders might find this one interesting as the weekly chart reinforces the descending wedge.

 
 
  Jeff Bailey   4/11/02,  12:05:54 PM
N. American Telecom (XTC.X) $541.29 -4.26% ... getting crushed again today and to a new low. Mentioned as bearish lat week on break below $600 at $581.25 and target was/is $525-$517.

Target is derived from "fitted" retracement just like a market maker might do. Anchor at $862, then "fit" the 38.2% at the rally high of $702 and 61.8% at the low back at 02/19/02 of $600. Thinking was that MARKET needed to assess downside to 80.9% retracement of $523.58 or close to that. She's been seeking that level out like a heat-seeking missile! See Tuesday's 03:00 intraday Link

 
 
  Jeff Bailey   4/11/02,  12:02:06 PM
Jeff: On Verizon I took profits. I shorted at 46 with a stop at 48.5. Made 4.2 points on 2.5 at risk for a 168% gain on capital at risk in a couple of weeks. Could have stayed in but thought today's downgrade by Merrill was a gift. There is no profit until it is booked. Thanks for the great trade

Like a pro... short, then buys the weakness on the downgrade and pays himself for the risk taken. Good trade!

 
 
  Leigh Stevens   4/11/02,  12:02:03 PM
Index Support & Resistance UPDATE: DJX, SPX & OEX - Dow Industrials (DJX) Support levels > 10,290-10,300 exceeded a bit; 10,250 developed so far as intraday support; lower support, 10,200; DJX Resistance > 10,320; then,10,500; SPX Support > 1115 gave way; next lower support at 1111, at prior recent low is holding; next lower is 1107-1108; SPX Resistance > 1125; then, 1130; OEX Support > 554.50 at low end of downtrend channel; 555 gave way slightly intraday; next lower near pport projected at 551-552; OEX Resistance > 557-558.

 
 
  Jeff Bailey   4/11/02,  11:57:43 AM
HMO Index (HMO.X) 538 +1.92% ... today was an "observation day" as yesterday's action had the HMO.X breaking above our regression channel.

My thinking yesterday is that we might see a pullback like we saw back on 11/07/01 and then on 02/11/02, but it isn't happening.

This either hints at just how hungry the MARKET is for this group of stocks, or how unwilling the MARKET is to sell their winners. MACD is extended on the daily chart so trader needs to manage risk in new bullish entries by only taking some partial positions, with the thought that a pullback is best point to then build the position.

Here's yesterday's 01:00 HMO commentary and chart. Link

 
 
  Leigh Stevens   4/11/02,  11:48:48 AM
Subscriber question: "Do you see support for QQQ at 32?"

RESPONSE: Well, I am only able to gauge near-term "support" for QQQ below 33, by following the down trendline lower, on the hourly chart -- that is, I project the line to the right and assume that it will continue to find at least minor support at the low end of the downtrend channel that its in. But meaningful anticipated support based on prior lows is really only found (potentially) at the weekly lows from the late-Sept/early-Oct. weekly lows in the 27-27.50 area.

 
 
  Eric Utley   4/11/02,  11:33:05 AM
We're seeing another smart move lower in the Brokers (XBD.X) this a.m. The index is now lower by more than 3 percent.

The stocks I focused on in the bearish profile yesterday are out pacing to the downside. Merril (NYSE:MER) is leading, lower by about 5 percent; Morgan (NYSE:MWD) is off by about 4.25 percent; Goldman (NYSE:GS) is tracking the XBD.

For the XBD, in the short-term, I can foresee downside between 468 to 475 Link . Short-termers might target that support zone to the downside. Looking out a few months, this legal issue could snowball into something much larger, leading to significant downside.

 
 
  Jeff Bailey   4/11/02,  11:28:47 AM
S&P 100 Index (OEX.X) 60-minute interval chart shows that 50-pd MA really serving nicely was resistance doesn't it? Check it out if you've got intraday charts. Very impressive.

Also, check out the way the MACD on that timeframe has "rallied" back near the zero level, then rolls just about the time that 50-pd MA is encountered.

Once a trader makes those observations, he/she continues to play them. Then if he/she sees any DIVERGENCE from that pattern, he/she gets the feeling something is changing, becomes alert to the change, and perhaps covers short, locks in bearish gain, or takes a small loss in a bearish trade.

 
 
  Jeff Bailey   4/11/02,  11:26:17 AM
S&P 100 Index (OEX.X) 554.60 -1.90% ... have been rather bearish this index in recent week. February 22nd low was 545 and looks to be following the Internets lower too. Put them till you can't stand it anymore! Trader's stop is yesterday's high and target 547.

 
 
  Jeff Bailey   4/11/02,  11:24:34 AM
Mercury Interactive (MERQ) $29.89 -4.84% ... I have retracement from $40.21 to $18.55. This has 80.9% at $36.07 and ties in well when the break of trend from p/f chart at $35 was broken.

Then have 61.8% at $31.93, that was broken yesterday.

Now have 50% at $29.38, this correlates pretty close to the $29 bearish vertical count.

Thinking... if the "bad news comes" and stock bids $29.38 or close at the open, then bear has to assess risk to 61.8% retracement of $31.93. If she gaps lower and opens at 38.2% retracement of $26.82, the bear assesses risk to 50% retracement of $29.38. See how the retracement combined with the P/F data can help? I hope so.

All a trader has to do is fully understand your own risk tolerance and go from there.

 
 
  Jeff Bailey   4/11/02,  11:19:10 AM
Hey Jeff, MERQ getting close to bearish objective of 29, they announce earnings after the close. Last quarter they surprised on the upside, look what happened to the stock. I'm short the calls, whats a guy to do?

Assess your risk. Not sure what calls you have or what strike you're short so can't help you with that. What was your target for the trade? If you're target was $29 from the bearish count, is it "worth" the additional $0.83 reward in the stock for the risk you're taking into earnings?

The MARKET doesn't look like it is expecting a strong number does it? Link in fact, it looks like the MARKET realized something was "up" (or down as the case may be) at the $35 level.

Be ready to "buy" the bad news and judge the MARKET's reaction if you hold until earnings call.

 
 
  Leigh Stevens   4/11/02,  11:17:47 AM
Market Update: Pretty key to the ability of the Dow and the S&P indices to stabalize will be how GE fairs as it approaches it's late-Feb. intraday lows at 34.50-34.70. Again, as with SPX, a push thru prior lows would likely cause follow through technical selling. Stay tuned.

 
 
  Leigh Stevens   4/11/02,  11:11:42 AM
Sector update: Top 5 losing secors are the (CBOE) Internet Index (NX.X), Telcoms (XTC.X), Wireless (YLS.X), Software (GSO.X) and Networking (NWX.X); The 5 sectors that are trading higher are Health Providers (RXH.X), Retail (RLX.X), Precious Metals (GPX), Oil Services (OSX.X) and Natural Gas (XNG.X).

 
 
  Leigh Stevens   4/11/02,  11:03:00 AM
OEX has taken out its prior low at 557.18, on pressure from GE, T and IBM, as it hit 555.53. SPX prior low is 1111.79 -- if that is taken out, pressure could increase on technical selling.

 
 
  Leigh Stevens   4/11/02,  10:57:27 AM
DJX and S&P weakness is coming from pressure on bellwether General Electric (GE), - $6, on earnings disappointment; also, AT&T (T), also down about 6; and, big blue (IBM) is crying the market blues at -4.6;

 
 
  Jeff Bailey   4/11/02,  10:54:36 AM
Cisco Systems (CSCO) $15.05 -3% ... breaking yesterday's "inside day" to downside. Bearish trader can take stock short here, stop above yesterday's high of $15.73. Looking for a "bad number" or guidance from Juniper (JNPR). (see 09:51:28)

 
 
  Leigh Stevens   4/11/02,  10:51:37 AM
Index Update: NDX & QQQ - The Q's have held, so far, above 33 area -- this is the area of its recent low and also where QQQ bottomed in late-Feb. There is the possibility of a double bottom if 33 is not penetrated, particularily on a closing basis; QQQ Resistance > nearby at 33.85-34.00; then, 34.25; and, 35.00 - close over 35.00 is needed to generate a minor bullish breakout; NDX support > 1333, at recent low; then, 1325-1326;

 
 
  Jeff Bailey   4/11/02,  10:48:33 AM
Jeff, can you see an end to the up trend (short covering) on CCK?

Not really. Will note the stock just recently broke longer-term downward trend. Bullish vertical count from January was to $12.50. Link

Use the retracement technique mentioned this morning like we did in RCI. What are some levels where a fitted retracement might show a resistance level at?

 
 
  Jeff Bailey   4/11/02,  10:41:36 AM
GSTI Software Index (GSO.X) 139.8 -3% .... leads the sector decliner list.

Who the heck would be buying SAP? Only trader buying SAP in my mind is a bear locking in a gain. When he/she is done, should move lower.

 
 
  Leigh Stevens   4/11/02,  10:39:47 AM
OEX is re-testing its 4/8 low around 557 area. That didn't take long! SPX is fairing a little better as it still a bit above its prior low which is around 1112. The bear comes roaring back. Stay tuned.

 
 
  Jeff Bailey   4/11/02,  10:39:17 AM
Kronos (KRON) $36.20 +0.83 ... is stock SAP bear is monitoring. Perhaps thinking here that "bid" in KRON has a short-term short in SAP from yesterday sitting SAPS bid at the daily low?

PeopleSoft (PSFT) $21.44 -6.4% ... is another stock that SAP bear is monitoring. PSFT also sitting right at yesterday's low trade. If she violates that low and KRON violates its low, the bear that is taking some short-term gain in SAP might pull his/her bid as stock could go lower in sympathy. *** This is the way I think on a very short-term trading basis.

 
 
  Leigh Stevens   4/11/02,  10:37:33 AM
ON THIS DAY in 1956 Elvis Presley reached the top spot on the Billboard music chart with his first double-sided hit: "Heartbreak Hotel" & "I Was the One" and the record stayed #1 for 8 weeks. Where is Elvis when we need him? Well, we still have Bob Dillon - ON THIS DAY in 1961, Bob Dillon made his professional debut in Greenwich Village, singing "Blowing in the Wind", which is what this market is doing this morning. In honor of two of our most famous music mavens, take an aspiring musician to lunch.

 
 
  Jeff Bailey   4/11/02,  10:34:50 AM
SAP Akteingesell (SAP) $33.48 -1.23% ... stock sitting just above yesterday's low. Will be interesting to see what happens if the $33.45 level is taken out.

 
 
  Jeff Bailey   4/11/02,  10:30:32 AM
Renal Care Group (RCI) $35.80 +1.41% ... getting upside alert here at 50% retracement (see 09:00 Intraday commentary). Trader with some June $35 calls can sell partial position here, and remove some risk from the trade. Then target the $37.54 level near-term for the rest. MACD on daily a bit extended, but it was "extended" at .50 too. Link

 
 
  Leigh Stevens   4/11/02,  10:28:57 AM
Index Support & Resistance levels: DJX, SPX & OEX - Dow Industrials (DJX) Support levels > nearby, at 10,290-10,300; then 10,200; DJX Resistance > 10,500; then,10,650; SPX Support > 1115-1116; then, 1111-1112, at prior recent low; then, 1107-1108; SPX Resistance > 1130; then, 1133; OEX Support > recent lows at 557-558; then, 555-556; OEX Resistance > 565-566; then, 568-570.

 
 
  Jeff Bailey   4/11/02,  10:26:42 AM
Verison (VZ) $42 -4.35% ... While this isn't a NASDAQ stock that has market makers involved, retracement from $57 to $40.37 used in the same manner. Three days ago, stock fell below the 80.9% retracement level. Trader short from $46.72 and 61.8% retracement (I profiled as short just after that decline below retracement) now moves a stop down like a market maker would just above the 80.9% retracement of $43.54 and now targets 100% retracement of $40.37. Over time, if that is broken, the we would simply "roll down" retracement as discussed in the "Bailey's Basics" article refered to this morning in the 09:00 Update.

 
 
  Jeff Bailey   4/11/02,  10:20:59 AM
Oakley (OO) $18.50 +1.8% ... this is a name I've been bullish on from mid-March, thinking potential earning's run into Spring quarter and perhaps summer numbers as a seasonal play. Today's trade at $18.50 gets p/f chart back into column of X. Link

We traded this one as a "day trade" a couple of day's ago (April 5th) on bullish of break at $17.26 for a nice little day trade scalp.

 
 
  Jeff Bailey   4/11/02,  10:17:06 AM
BE Aerospace (BEAV) $12.51 +10.7% ... the other day a subscriber asked... what is it that I (Jeff) look for in "gaps higher" to tell me or hint that stock just isn't going to fill the gap back lower?

I hate to say this, but it's from looking at thousands of charts. It also seems to be a bit of a "feel" for the stock. See yesterday's spike in volume on BEAV, but this morning's market reaction, though bullish, doesn't seem to have a real big spike in volume. At least, not as big of a spike or sudden "realization" by the market that something longer-term has been revealed where an institution is saying, "I've GOT to get some exposure to this stock." Link

If I look back to the left, I would think 5 million shares or more would be needed to get the impression that a bull is really looking for some exposure. Put this one on the watch list for a pullback near $11 as bullish. Not looking to short it though. Sector is "hot" and this one has a good vertical count going longer-term.

 
 
  Leigh Stevens   4/11/02,  10:14:39 AM
Index update: The opening of the Big Show came in about as I would expect: somewhat lower from profit taking and bearish selling. Sentiment is fairly bearish among traders, which, in a contrary sense, is one of 3 of my indicators that has lined up in a buy mode for the S&P. More on this was written in my Index Trader summary of last night at Link

Agree completely with Jeff - for Index call plays, look at DJX; also, the S&P indices, SPX & OEX. I favor the May out of the money (OTM) calls on dips. I'll update expected Index support & resistance levels shortly. My work suggests we got into a buy zone at recent lows -- backing & filling will go on, so my strategy is to look for a moderate pullback to take 1/2 of an Index position, leaving room to take the second half in case we re-test the recent lows in DJX, SPX & OEX.

 
 
  Jeff Bailey   4/11/02,  10:08:05 AM
BE Aerospace (BEAV) $12.57 +11.23% ... stock surging after meeting estimates last night. However, action very interesting as only one analyst was polled by Multex and First Call estimates only has input from 2 analysts. Link

My thinking right now is that perhaps there is some interest from some more institutions, perhaps accumulating a position and soon to bring coverage. Again, this is just my thinking and not a statement of fact.

 
 
  Jeff Bailey   4/11/02,  9:59:32 AM
SAP Aktiengesell (SAP) $33.81 -0.26% ... profiled this name as short/put yesterday near the $34.21 level. GSO.X is down 2% today and this should help drag stock lower.

SAP 30-minute chart shows the 50-pd MA doing its job as resistance. Short-term trader that is short the underlying now "comfortable" with a stop above $36, or more aggressive stop above $34.68.

 
 
  Jeff Bailey   4/11/02,  9:51:28 AM
Cisco Systems (CSCO) $15.38 -1.02% ... yesterday was "inside day." Bear could look to play CSCO short/put ahead of Juniper's (JNPR) numbers on a break of yesterday's low in CSCO at $15.06. Trader trading the "inside day" technique would then follow with a stop just above yesteray's high of $15.73 if trade at $15.06 were to happen. Link with a short-term trader's target of $14.25.

IF Juniper is overly cautios/negative in their evening conference call, then not sure what could take place in Cisco (CSCO) but would think $14.25 good target. I think it just depends on what Juniper (JNPR) says.

A bear that currently has a short/put in Juniper does not need further exposure in Cisco (CSCO).

 
 
  Jeff Bailey   4/11/02,  9:45:59 AM
Redback Networks (RBAK) $2.31 -10% ... another networker that can't find any defenders for its shares. Stock breaking below its February 28th relative low and looks to test October lows. Hints that other networkers perhaps lack sponsorship from bulls. Link

Perhaps the "tail" portion of the networkers, with Juniper (JNPR) Link being in the middle portion of the snakes body. Cisco (CSCO) Link is at the head. All have been trading lower. "The snake is headed south."

 
 
  Jeff Bailey   4/11/02,  9:39:44 AM
CBOE Internet Index (INX.X) $102.01 -2.72% ... will note this index did trade just below its 02/22/02 low in early morning trading. Bar chart here very similar in technicals to the NASDAQ-100 Index (NDX.X).

INX.X Chart Link

NDX.X Chart Link

At this point, anaysis is that INX.X may be hinting that NDX.X also will break the Feb lows.

 
 
  Jeff Bailey   4/11/02,  9:36:01 AM
Juniper Networks (JNPR) $10.52 -3.3% ... have profiled this networker as short from Friday evening. Breaking another previous days low. Company expected to report earning tonight after the bell. I'm not looking for a good number or bullish guidance. Plan has been to hold a put/short, let the chips fall where they will. If stock gaps lower tomorrow morning, then will lock in gains on April puts, potentially hold May puts if news is "real bad."

Those that are short the underlying, can move down an aggressive stop to break-even from previously profiled of Monday morning's open of $11.04, or just above yesterday's high of $11.56.

 
 
  Jeff Bailey   4/11/02,  9:29:25 AM
Phelps Dodge (PD) $40.24 ... outlined a bullish trade in this stock and would still be willing to look long despite the jobless data.

Keeping an eye also on May Copper futures (hg02k) this morning and seeing prices tick higher at $0.725/lb. Phelps Dodge is a large producer of Copper and also considered a cyclical.

 
 
  Jeff Bailey   4/11/02,  9:24:43 AM
NASDAQ-100 Bullish % ($BPNDX) 37% ... in this morning's commentary, I mention the NASDAQ-100 bullish % nearing a level of bullishness found in February (red 2). This tells us nothing about QQQ or NDX.X direction, but does tell us we are nearing a level of similar "risk." We could well see the bullish percent reach the 0% level. All you need to know is where you are on the proverbial football field. Bears "score a touchdown" at the 30% level or lower. Right now, bears have the ball and are in field goal range. Don't be afraid to put some points on the board! Link

 
 
  Jeff Bailey   4/11/02,  9:19:37 AM
Dow Industrials (INDU) 10,381 ... yesterday's trading at 10,350 gets index back on a "buy signal" and get index back to a bullish vertical count. Current column of X is what we're counting and hints at 10,800. The 10,100 level now becomes a very good place for a stop as a trade at $10,100 would be a triple-bottom sell and break of upward trend. Link

In my view, this is the major market average that is the "head of the snake." If the NASDAQ-100 or NASDAQ is going to get pulled out of its rut, this is market average that will have to do it.

Before I could even think of buying a QQQ call, I would want to have a DJX call in the account. Without a DJX call, I would be faking any conviction I had in the Q's. It's that blunt.

 
 
  Jeff Bailey   4/11/02,  9:14:18 AM
Renal Care Group (RCI) $35.30 ... I cover this stock in great detail in this morning's 09:00 update at the bottom of the update. This may be educational and useful to bull's in the "healthcare" sector.

 
 

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