Option Investor
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  Jeff Bailey   4/16/02,  10:13:52 PM
Buying time and not overleveraging I think an option trader will set themselves up for DISTRUCTION if they try buying near-term call option in many technology stocks.

I get so many questions regarding stops on options and I personally feel that options should not be traded with stops unless the options trader is buying "in the money" and very short-term oriented (2-5 days horizon).

However, some option traders that consider themselves "short-term" traders, don't want to take 30% gains in an option if they've got them 2-5 days later as the stock always looks "longer-term" bullish (for calls) or bearish (for puts).

What often happens then is the stock begins to either "stall out" and premium on near-term expiration begins to erode, or a sudden pullback in the stock has the trader exiting with a loss because they "knew" they should have pulled the plug with a profit.

It's very difficult for me to get to all e-mails during the day and I hate to see that some subscribers were counting on me to get back to them with some trade advice. The most difficult ones are those that may buy an April expiration and strike, that is different that one that I may have profiled here in the market monitor.

It is so difficult form me to profile a May $35 put and then try and give some type of insight as to what a trader should be doing with an April $30 put as the stock moves against the trade.

While I firmly believe in only risking in an option what a trader can afford to lose, this type of strategy also works most efficient for the type of format that the market monitor allows.

We try and cover a lot of different stocks here in the market monitor. I don't nor does Eric trade every stock we mention on a daily basis in the market monitor. If I did, I would only be comfortable with risk capital to begin with and not using a stop. I personally can't keep up with the option trades I do run in my account if I had to be monitoring them for stops.

It is much more efficient and I do believe profitable to simply initiate a trade, set a target and an alert just above my ultimate target (to give me a heads up to get ready to take profit at/near target) on each trade.

While some think it's just not worth it to trade just 3 contracts of a $4 option ($1,200 risk) when you begin spreading that among 5 or 6 plays instead of risking $5,000 in just one trade, you will find you are actually "spreading some bets" in the market. This also increases a trader's chance for profitability and also allows for more prudent risk management.

  Jeff Bailey   4/16/02,  9:57:22 PM
NASDAQ stock on my buy list is share of Applied Materials (NASDAQ:AMAT) $54.16. This stock will trade "post split" tomorrow morning. This is one of the few technology stocks I would have some confidence in from the bullish side of things, but look for this stock to be a continued leader in the NASDAQ-100.

I have been waiting for a pullback to the $47-$48 level and it just hasn't come. I consider myself a very "patient" trader and I've given this stock plenty of time to pull back to an attractive entry point.

While today's "confession" and closing of a recently profiled bearish trade in this stock from the $50 level resulted in a loss for traders, part of "my test" was to see just how strong/weak this stock was. My original intention was to short the stock at $50, pad my account with a nice little $3-$4 gain and then turn into a bull near $47-$48 and have the $3-$4 gain in the account to help pad against some volatility for bullish profile.

Instead, the stock has earned my respect and bullishness continues to be evident. As such, I would begin once again looking long the stock with 1/2 position. The "reason" for 1/2 position is that I think there may be a chance to get the stock on a pullback near the $26 post-split level and will want to keep some powder dry, but keep the bulk of bullish capital focused on some of the more cyclical names as we have been doing in recent months.

  Jeff Bailey   4/16/02,  9:47:04 PM
NASDAQ-100 Bullish % ($BPNDX) After today's action, current reading is "bull correction" at 40%. A reading of 42% would be needed for this indicator to reach "bull confirmed." Link

While we don't get a "final" reading until after the markets have closed and all 100 p/f charts are tabulated for their buy or sell signals, the recent bearish level near 36% is very close to levels found in February (red 2) when the NASDAQ-100 (NDX.X) jumped from its February lows.

In Thursday morning's 09:00 intraday update Link I discussed some correlation between the NASDAQ-100 bullish % ($BPNDX) and the NASDAQ-100 Index (NDX.X) chart. Traders might want to review those notes as it looks to be in play currently.

  Jeff Bailey   4/16/02,  4:39:18 PM
API data Gasoline inventories were up 0.723 million barrels for week ending 04/22/02. Crude stocks down 7.315 million barrels; distillate stocks down 1.880 million barrels. Refinery runs gained at 92.1% versus last weeks 90.7% utilization.

  Jeff Bailey   4/16/02,  4:33:20 PM
Intel (INTC) trading $30.95 (+5% from close of $29.45) as conference call gets underway. For Q2, INTC sees revenues of $6.4-$7.0 billion (consensus $6.7 billion) and puts gross margins at +/- 53% which is higher than Q1 gross margin of 51.3%. INTC projecting capital spending for 2002 of approximately $5.5 billion, which is inline with previous capex spending.

  Jeff Bailey   4/16/02,  4:28:33 PM
Vitesse Semiconductor (VTSS) $9.91 +22% ... stock trading lower at $8.90 after company reports Q2 loss of $0.11, inline with consensus. Revenues fell 65% versus year-ago quarter to $42.1 million, but stronger than expected consensus revenue estimates of $41.2 million.

CEO says "we continue to remain cautious about end system demand for the remainder of calendar 2002."

Note: VTSS was 11th biggest gainer in today's trading!

  Jeff Bailey   4/16/02,  4:21:52 PM
Intel (INTC) $29.45 +4.76% ... stock trading higher in after-hours at $30.40 after reporting Q1 earnings of $0.15 a share and revenue of $6.8 billion. Both numbers inline with consensus at $0.15 and $6.79 billion respectively.

  Jeff Bailey   4/16/02,  4:17:42 PM
Internet Security (ISSX) $22.03 -4.8% ... stock trading higher at $23.18 after reporting Q1 EPS of $0.10, which was inline with consensus. Revenues came in at $58.4 million versus consensus of $59.3 million.

Company expects Q2 EPS of $0.11 to $0.12, and guides towards the lower end of previous 2002 guidance of $0.55-$0.60 (consensus is for Q2 of $0.12 and yr of $0.55)

  Jeff Bailey   4/16/02,  4:02:23 PM
Crum! I don't think I typed fast enough on that Du Pont (DD) $47.99 +2.4% ... lets put that on the list for tomorrow morning. Link

I like the rounding MACD right near the zero level and think stock runs and better performer in the cyclicals near-term.

Correlate bar chart agains the CYC.X and get similar correlation from MACD. Link

  Jeff Bailey   4/16/02,  3:59:15 PM
Du Pont (DD) I like this one into the close as bullish at $48. Cyclical Index (CYC.X) looks to close at the high and breaking above recent relative highs.

  Jeff Bailey   4/16/02,  3:44:56 PM
Jeff, I've been thinking of putting on a lottery play on MSFT. They report earnings on Thursday and I was thinking of buying the Apr 55 Puts for .35. I'm thinking that the chances of MSFT reporting anything positive are pretty slim. Considering most of the major software stocks have been hit hard recently I expect MSFT to have similar results also. What do you think? Good to see you back! Take care.

If looking for a "lottery play" in software, I'd be more inclined to look at SAP. My thinking is that "like stocks" that sell similar software is PSFT and KRON along with JDEC. PSFT and KRON got smacked hard.

The "trouble" I would have with MSFT is that they are more "diversified" among their software offerings.

One note I did see earlier today on MSFT is that some traders are "concerned" that MSFT will be lowering their price on Xbox over in Europe later this week. This is/was a "rumor" circulating last week, and there has been no confirmation.

(grin)... "confirmation of rumor" what the heck is that? The only time we will get any "confirmation" of such rumor is when the company (MSFT) actually says anthing.

I've said before, I don't like to try and trade "rumor." It has come back to bite me more than I've every gained from it. When the rumor doesn't pan out, then those that "bet on it" usually head for the door and the trade can go against you.

Again... I'd be more willing to bet on SAP going down. At least I have a past observation of both SAP and KRON missing earnings by a penny and giving cautious guidance that had there stocks getting hammered. I don't know if SAP will do the same thing, but all three are similar ducks that look and quack the same.

  Leigh Stevens   4/16/02,  3:33:19 PM
Index Update - final hour: Looks like we are not going to pull back today as the shorts are on the run. Bond market took a hit and bears have been reminded that there are some bullish possibilities on the horizon. I don't want to get hung up in the bullish or bearish viewpoint. There is the Intel report to get through and other earnings reports. The indices are now overbought on the hourly charts, so I suspect that we will see a correction in the morning or tomorrow in the afternoon, if the morning continues strong.

The tone and market internals on the next correction should tell the story on whether we are beginning an intermediate-term upswing. The important thing in terms of trading strategy in this market is that there will be two-sided trading swings. If we are in a SPX 1100-1170 trading range, not surprsing to rally when we got down near the low end of the range (and got pretty oversold). There could be even better volume, but we have seen some good advance-decline figures, a steady pick up in new highs over the past week and decent upside volume relative to downside.

  Jeff Bailey   4/16/02,  3:32:32 PM
CNF Inc. (CNF) will note that the September $35 calls (CNFIG) are unusually active today with 28,300 contracts traded, while open interest before today was just 127.

Not seeing any type of offseting puts that may be indicative of selling the puts and using that premium to buy the calls.

  Jeff Bailey   4/16/02,  3:29:17 PM
We have been going back and forth talking about CNF. Someone did something with 1800 June 35 calls today, the ones you talked about a long time ago and I asked about averaging down on about a week ago. Can you tell if they bought or sold the calls?

Tough to tell... my time/sales shows best bid $0.85 and ask $1.10 at 12:52 was PHLX. Then at 01:21 I see the 1,300 trade at $0.90 on PHLX. Since it is at the "lower end" of the bid/ask I'm thinking it was a "sell induced" trade.

  Eric Utley   4/16/02,  3:03:47 PM
Intraday here, I'm wondering what's going on with the Nasdaq-100 Bullish Percent. The indicator has been trading down near where it bottomed in February Link , but hasn't yet reversed back into a column of Xs. A reversal would have the indicator back into bull confirmed, and below the 50 level. That would be a bullish development for tech shares; it's something we have to look for this evening.

  Eric Utley   4/16/02,  2:50:37 PM
Int'l Game Tech (NYSE:IGT) is a stock that we've been profiling as bearish over the last two weeks. The stock is moving against the market today, lower by 4.18 percent.

Multimedia Games (NASDAQ:MGAM) -- a maker of electronic gaming products -- was dealt a blow today by the National Indian Gaming Comission. I'm thinking that today's news is adding to the recent string of negative business developments in the gaming sector. (When we first looked at IGT, we wrote a little bit about the political risk at play concerning state legislation.)

I have a retracement on IGT from the September low to $70, which has the 50 percent retracement level at the $53 mark. That might be the first that a bear will target. Still lower is the bullish support line Link coming into play at the $50 level, which is reinforced by the 61.8 percent retracement level of the bracket. Longer term, bears will want to keep in mind the vertical count at $43.

Bears also encouraged by the loss of relative strength Link versus the S&P 500 (market).

  Jeff Bailey   4/16/02,  2:33:37 PM
Western Digital (WDC) $7.20 +1.83% ... is a "tech stock" I've like for partial positions in recent weeks from the $6.50-$7.00 level for an options trader. Nice little break from some consolidation from past couple of months here today and looking strong. Link

On my bar chart, I've "fit" retracement that results in a retracement from $10.30 to $2.05. This has 38.2% at $5.20 (February support), 50% at $6.17 (stock gapped above on earning's and too strong to re-test) and now we see break above 61.8% retracement of $7.14 today and puts bulls target up at $8.72.

  Leigh Stevens   4/16/02,  2:18:04 PM
Market Index Update: As per my earlier discussion, we are starting to poke above technical resistances at the upper boundaries of the downtrend channels in QQQ, OEX and SPX, at 35, 560, and 1123-1125 respectively. If the market remains strong into the close, I would back off from taking out Index puts for now. The Dow is still a bit under its up trendline resistacne which I measure as coming in 10,330 area. However the hourly chart has traced out a bull flag pattern, which, assuming a move above today's high at 10,100, yields a target to around 10,400, which is the next area of resistance and a possible place to then play the short side.

  Jeff Bailey   4/16/02,  2:11:50 PM
Interesting and will put to the test Solomon Smith Barney out with several "Technical Upgrades" (stocks that look good on their charts)

IRF upgrading from 2 to 1 Link I can't disagree here. Triple-top buy at $47 above bullish support and vertical price count of $62. Check out that "bear trap" at $42.

NSM from 2 to 1 Link I agree once again. Spread-triple-top at $35 here. I like this one as actionable here. Will want to check some relative strength charts, but first look here is bullish.

KLAC from 3 to 1. Link thinking stock was technically rated a "3" on break of triple-bottom at $63, but today's buy signal at $58 has bullish target of $81 and trend looks to be holding as bullish. Will note how stock "violated" bullish trend back at $48 and rocketed higher. Looks same again.

AMAT 3 to 1 we talked about this one earlier this morning at 10:32 and 10:38. My thinking would have been more in the past as a "Solly" 2 technical ranking. Maybe they were thinking like I was that stock was a little too high and might pull back to the $47-48 level.

INTC from 4 to 3 Link I agree with this one also. Noting the two consecutive sell signals, but tought to really get a feel for the stock technically right now. Thus a decent job of "rating" the stock technically as a 3 and may help "Solly" clients only establish partial or less aggressive bullish positions in shares of Intel (INTC) and have them sticking with the stronger technicals in other names.

What we see a bit of here is some of the things I've commented on in some of the semiconductor equipment names and that they've been technically stronger. Note that Intel (INTC) makes semiconductors and not equipment.

  Eric Utley   4/16/02,  2:11:18 PM
The SOX/SMH trade I tried yesterday obviously ended with a loss this morning. Unfortunately, the gap higher in the group increased the risk in my position. But the loss was pretty well contained, and I'm not going to lose sleep over it.

There was definitely some others betting in the same direction I was yesterday, because the SMH doesn't gap up nearly $2 unless there's significant demand coming in from the shorts. The most deterimental development to my SMH position was the move in Texas Instruments (NYSE:TXN), which accounts for about 15 percent of the HOLDR; Novellus (NASDAQ:NVLS) accounts for only about 2 percent. Additionally, I think some of the short covering was excerbated by April expiration, as positions come off over the next few days.

  Jeff Bailey   4/16/02,  1:07:09 PM
SBC Communications (SBC) $34.50 +3.07% ... Jeff, I've been following your July 35 put play on SBC. I was hoping that you could update...are you looking to close or are you still planning to possibly add the other 1/2 position?

As previously outlined, I had perhaps "planned" for the possibility of a rally from last Thursday's profile. Still looking for another 1/2 position, but I want to see if the stock will continue to rally to the downward trend and 50% retracement level at/near $36.94. I have "fitted" retracement from $47.34 to $26.54, which puts 61.8% right in here at $34.48. Lots of time until July expiration and gives us plenty of time to monitor other telecom stocks going forward.

It may be easy for some "bulls" to think I'm way off base and should have been looking long SBC on Thursday. Some of those same bulls may want to remember some stocks from the past that hit 52-week lows, then hit more 52-week lows months later.

Keep an open mind and understand that SBC hit a fresh 52-week low just last week. I have made it clear to all that I don't try and buy bullish stocks hitting 52-week lows, but will short/put them.

With 1/2 position put in SBC to July, should be open to potential round to full position, but will assess all information over next couple of weeks.

  Leigh Stevens   4/16/02,  12:29:56 PM
Subscriber QUESTION: "where is DJX resistance--ie a good place to sell?"

RESPONSE: Sorry, I omitted to update DJX levels a while ago on Market Monitor. The Dow got fairly oversold on this last shot down, at least on the daily indicators that show this kind of thing. This rally will put the short-term oscillators into overbought territory by late today/early tomorrow. In terms of levels: key near resistance comes in to play at the 10,330 area extending up to 10,350. I would consider a close over this zone, to be bullish on an intermediate-term basis. If so, I would be inclined more to play the DJX calls, buying on pullbacks over the next few days. However, even if events unfold bullishly like this, it is unlikely that we will just be up, up and away. For short-term traders, I would have to say short in the 10,330-10,350 area, looking for a pullback that tested support around 10,220.

  Leigh Stevens   4/16/02,  11:39:12 AM
Index update: S&P 500 (SPX)- Very similar technical structure to OEX as far as current levels being right at upper hourly resistance trendline -- SPX is just starting to move thought this line. If SPX keeps going, index may next challange overhead resistance in 1130-1132 area. Next resistance and perhaps more key, is 1134, at 21-day moving average. A reversal in this area, would be the "safer" short in my estimation. 1112-1115 area is support -- those holding SPX calls, waiting & watching market action, suggest appropriate stop is to exit on a break of 1112. Given lead of Semiconductor sector, which is a good "bellwether" for leading tech at least, am reluctant to automatically short prior upside target at 1123-1125, although bears may be waiting to pounce. Go with the MO (momentum)for now.

  Jeff Bailey   4/16/02,  11:38:46 AM
Hey Jeff, Welcome back! If u didn't find enough turkeys during ur hunting trip, u can probably get ur quota today! Hey, MDT trying to get through 46.50 level again for third day in a row......do you still like it?

Eating ham for Thanksgiving as of right now. (grin)

Yes, I still like MDT. For trade setup, yesterday was "inside day" so willing to play today. Still getting some sellers at the $47 level which was support back from 01/29/02 to 02/12/02. With stock at $46.69 more cautious bull would wait for $47 to be cleared.

DON'T buy near-month call options! I'm getting way too many e-mails from option traders that are trading these 3-lettered healthcare stocks with near-month expiration, then disappointed in two weeks. BUY some TIME!!!!!

  Leigh Stevens   4/16/02,  11:29:03 AM
Index Update: OEX - As with QQQ, S&P 100 (OEX) has made a bottom in same area as the late-Feb/early-March lows -- triple bottom low at this point, or low end of trading range. OEX is more oversold on long-term basis than SPX. OEX is NOT yet overbought on short-term basis and is touching overhead resistance at top end of hourly downtrend channel and looks like it will break out above this channel by moving above current intraday high in 560 area -- this is key, a further strong move above 560 would suggest at least a test of next resistance in 566 area. If so, short-term trade is to sell 566 area, for pullback to 560 again. Waiting and watching here on OEX -- if long with a few day view, stay with calls, looking for 566, with a stop just under support at 555.

  Leigh Stevens   4/16/02,  11:17:49 AM

RESPONSE: The BIG question and have been evaluating this, and updating as follows: QQQ - Q's are overbought on a short-term basis and they will hit possible resistance in 35 area, based on top of hourly chart downtrend channel. Causing me to hesitate shorting is likelihood that Q's have made a double bottom low basis the daily chart. A close over 35.30, at 21-day moving average, would suggest further upside potential. Wait & watch. If Q's falter at 35, short-term traders could play short side, with tight stop just over 35.30. For a "postiion" type trade, will stay with QQQ long position I have, to see if this rally leads to an intermediate, rather than short-term move. Will update others shortly.....stay tuned.

  Jeff Bailey   4/16/02,  10:47:06 AM
Sungard Data Systems (SDS) $29.19 -8% ... Link stock hit after cautious comments from CSFB call to take profits in stock ahead of this week's earings report. CSFB has the opinion that the disaster recovery business is slowing and now prefers name like ADS Link.

  Jeff Bailey   4/16/02,  10:38:53 AM
Applied Materials (AMAT) $54.11 +5% ... Stock is scheduled to split 2:1 today after the close of trading.

We can take the p/f and change the scale to a $2 box to compensate for the 2:1 split. What we would then do once scale is changed is then take the prices on the right of the chart and simply divide by $2. This gives us an "early look" at the p/f chart on a "post-split" basis. Link

This chart may now explain why the stock really wanted to hold the $50 level late last week.

I was really looking forward to covering short at $47-$48 and then looking long the stock at that level, but today's guidance higher from Novellus (NVLS) put a "kink" in that plan. Not willing to risk anything further and cut this trade prior to split.

  Leigh Stevens   4/16/02,  10:36:15 AM
Hugo Chavaz, back in power as President in Venezuela, states that he is going to heed the OPEC quotos and this has put crude oil futures up about 40 cents. CNBC and a WSJ started a conversation just now with "He's Baack!", referring to Chavez of course. I made a more desparaging remark about him the other day and said the "clown" is back -- whereupon, one of our Venezuela subscribers to OIN, took me to task for referring to the people of the country in such disparaging terms. The people there have suffered through quite a lot lately and the reference was not referring to the people at all. Maybe my Cuban friends, upset with Chavez's love affair with Castro, have lent me their jaunticed view of President Chavaz!

  Jeff Bailey   4/16/02,  10:32:48 AM
Applied Materials (AMAT) $54.11 +5.19% ... this is stock I profiled as short/put back on 04/08/02 near the $50 level. Stock continues to trade strong and getting boost today out of Novellus (NVLS) and Texas Instruments (TXN) comments regarding earnings.

Stock just too strong and would look to cover any open shorts in the stock at current levels.

  Jeff Bailey   4/16/02,  10:25:14 AM
H&R Block (HRB) $41.89 -5.82% ... not sure I'm willing to chase today with full position, but p/f chart looking more defensive. Potential "high pole" warning (O's from $50-$43) then double-bottom sell today at $42, gives preliminary vertical count as "bearish" to $37. If $51 were the top, then could begin a downward trend from there which would now be at the $49 level. If thinking "put" then start out small (1/2 position) and buy plenty of time. Link

  Jeff Bailey   4/16/02,  10:21:17 AM
H&R Block (HRB) $41.55 -6.58% ... stock down after Goldman Sachs downgrades to "market perform" from "market outperform" given less visibility on FY03 due to recent data calling tax client traffic growth prospects into question and the cyclical pressures facing Block Financial and Option One.

  Jeff Bailey   4/16/02,  10:18:35 AM
H&R Block (HRB) $41.56 -6.56% ... stock under pressure here. (End of tax season?). Link

  Jeff Bailey   4/16/02,  10:17:24 AM
Sony Corp. (SNE) $52.92 +1.43% ... still a name I like in the "technology" area and stock trades tough. MACD on daily starting to hook around nicely just above the zero level. Near-term target of $55.62, but have some expecations for longer-term in the $70's. Link

I have retracement from $78.04 to $33.20, and this has 38.2% acting like support at $50.32, 50% at $55.62 and 61.8% at $60.91.

  Jeff Bailey   4/16/02,  10:12:30 AM
Green across the board with exception in the DJ US Home Construction Index (DJUSHB) 354.75 -1.1% Link and Gold/Silver Index (XAU.X) 68.87 -1% Link .

Construction numbers from this morning surely having some impact, while the tame inflation data has gold stocks under a little pressure.

Current technicals from both have longer-term still looking more bullish.

  Jeff Bailey   4/16/02,  10:03:36 AM
Alcan Inc. (AL) $39.20 +1.13% ... "Aluminum" stock that reported earnings this morning. Reported Q1 earnings of $0.33 per share, 3-cents better than consensus of $0.30. Revenues fell 10.2% to $2.94 billion versus the consensus of $3.11 billion.

Back on January 23rd (stock trading $37), we mentioned some notes out of Merrill and their thinking that the recent completion of a capital spending program, cost-savings initiatives, and an improving aluminum price outlook would be beneficial for stock performance.

In this morning's numbers we see that cost cutting is helping the bottom line, but the top line revenue yet to hit.

I'm not an "aluminum" expert, but I do know this is more cyclical commodity that should do well under improving economic backdrop. They've cut the costs, but the still slow revenue numbers hints business isn't booming.

This has me looking for technical strength in stock above the 50-day (similar to what we saw back in January) for stock to get a move on. Link

This may also be somewhat beneficial to monitor along with copper producer Phelps Dodge (PD) in coming sessions.

Again... these are some companies that are considered "deep cyclicals" that produce/use commodities that price of the commodity will rise with economic activity.

  Leigh Stevens   4/16/02,  9:57:35 AM
On the SOX calls -- when I suggested the May 570's the Index was still bouncing around the 560 area. The 570's are expensive now as they are deep in the money as the SOX has soared to the 596 (+ 25!) area and the calls are trading at 40. The May 650's are trading at 6.00, and appears to have the most open interest. I would wait for a pullback to play this sector however.

  Jeff Bailey   4/16/02,  9:51:25 AM
Jeff: Played the May 30 puts on SAP. Although the stock is down almost a dollar, the puts have not moved .85 by .95. The MM does not want to pay. Evidently this can happen frequently in options that are thinly traded. Comments?

Not sure that the "market maker not wanting to pay" is necessarily true, nor the "thinly traded" having impact on bid/ask for this option.

May $30 puts are out of the money and most likely won't see some premium kick unless stock gets closer to that strike.

Personally, would consider the SAP May $30 puts as a lottery play. Retracement from $49.10 to $22.58 has 38.2% at $32.71 and 19.1% at $27.64, which would be my goal for a May $30 put player.

  Leigh Stevens   4/16/02,  9:49:00 AM
The Semiconductor index ($SOX.X), which I have been highlighting in my Index Trader last night at Link and in Sector trader section over past 2 days at Link as looking good technically over past week as lows held its key up trendline. I said that decisive upside penetration of 581 is a breakout above the down trendline dating from the early-March high. SOX has valted thru this technical resistance today. I wanted to carry over my suggestion of buying the SOX May 570 or May 580 calls yesterday -- correction and apologies as those levels got completely screwed up in my column & came out as May "750" & "760" calls. No, not THAT far out of the money. Again, apologies for anyone trying to translate this.

  Jeff Bailey   4/16/02,  9:45:06 AM
U.S. Treasuries seeing a good round of selling this morning. Yesterday afternoon, 10-year YIELD ($TNX.X) closed right on a rounding higher 50-day MA and YIELD bouncing higher this morning at 5.206%. Lower part of upward regression now at/near the 5.1% level and I'm not sure we're going to make it to my previous target for lower YIELD of 5.0%. Link

  Jeff Bailey   4/16/02,  9:41:29 AM
Bank of Canada hikes rates 25 basis points The bank of Canada raised its overnight rate by 25 basis points to 2.25%. This is first post-Sept. 11 rate hike by a major central bank and marks the turn of the global rate cycle. More hikes are likely to be coming soon, with some speculating that Australia perhaps raising rates on May 7th, and perhaps the Fed here in U.S. in June.

  Jeff Bailey   4/16/02,  9:34:55 AM
SAP Aktiengesell (SAP) $33.37 ... hasn't opened for trading yet. Lots of questions when I was gone on vacation.

Stock is slightly higher than when I took off for vacation on Thursday evening. Earnings are scheduled for release on Thursday (04/18) before the bell.

Not sure what everyone's risk tolerance is, but I'd be looking to hold over earnings and see if puts don't work out as both PSFT and KRON got hit on their earnings guidance. SAP has said nothing up until now.

50-day is rolling at $35.25 and looking for resistance there. Link

  Jeff Bailey   4/16/02,  9:30:52 AM
Juniper Networks (JNPR) $11.67 +6.07% ... Announces a contract win in partnership with Ericsson (ERICY) for Guangxi Mobil Communications (in China). Guangxi is using JNPR systems to build the mobile edge and backbone IP network for eight cities in the province.

  Leigh Stevens   4/16/02,  9:25:44 AM
A good morning & it's showtime too! Market is due higher. It is also getting more oversold, but a sustained rally doesn't seem likely until we are further along in the earnings parade. There is a slightly better tone, especially in techland, as not every stock is getting slammed on every earnings disappointment. Whent the market, or a segment of the market, stops going down on "bad" news, it is often a harbinger of at least an oversold rebound. Of course, as well, the Dow is widely perceived as having big time support in the 10,000 area. We'll see -- stay tuned.


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