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  Jeff Bailey   5/1/02,  9:46:11 PM
Whew! A lightbulb has come on and something I'm going to follow closey.

It all starts perhaps with the Dow Industrials and the p/f chart. I know that I pointed out in the past that there were 2-vertical counts we did on the Dow Industrials. The first one off the top hinted at 9,900, while the current vertical count was bearish to 9,800. With the past three session showing trading between 9,900 and 9,800, I become more than curious. Link

Why the rally today on GM's news? It can't be all that good. Can it?

Now bring in the weaker US $. Hey, this move in gold begins to make some sense on the "inflation" theme. Weaker US$ makes imports more expensive, thus the catalyst for gold (to an extent).

The catalyst for some Dow stocks? US-based multinationals that are competing in foreign markets. Remember some multinationals complaining that a strong US$ has hurt earnings in recent months? Guess what the weaker US$ might do for earnings in overseas markets in the coming quarters? If you're thinking stimulate foreign sales of US products, then we might be onto something.

Now, back to the inflation thing and weaker US $. I think "degrees" of weakness needs to be used here. Let's face it, there's plenty of production capacity at both US and foreign-based manufacturing facilities yet to be utilized.

There's plenty of capacity still in US factories, we know that from the capacity utilization numbers. Remember those trade gap numbers that have had the US trade gap widening? Hmmmm.... stronger dollar was most likely part of the problem there too! With the US$ strong, it was easy for consumers in the US to buy product from overseas. Hey... maybe with a weaker US$, US consumers will opt to buy US-made products over some foreign "like" products. This might create a "double-benefit" to some us-based consumer-type stocks.

Check out Proctor&Gamble (NYSE:PG) $91.80 +1.7%. Link I know I wrote an update sometimg back titled, "this stock will trade $100 before the end of 2002. I think the stock was trading $82 at the time. Anyway... MACD on the dialy is rounding out just above the zero level. Looks kind of like RKY too.

  Jeff Bailey   5/1/02,  5:23:04 PM
Rocky Mountain High! Colorado Avalanche are marching toward the Stanley Cup! Still a long way to go to get there.

Same thing for Adolph Coors (RKY) $68.12 +1.89%. Stock triggered the "triple-top" at $68 today. Bullish vertical count is to $92. Still a long way to get there. Link

Dorsey/Wright and Assoc. has the stock classified as "food/beverage" and that sector is "bull confirmed" at 74%, which is "overbought." Trader understands that sector is very bullish, but overbought. Doesn't mean it can't get more overbought, but doesn't want to overleverage in longer-term options. First sign of trouble would be trade at $63. From $68, risking $5 to the sell signal, thus not going to risk more than $5/contract in the options. RKY Oct. $70's (RKYJN) at $3.80 look good.

Even more interesting. Take a retracement from the Sept. lows of $43.37 and then take top to $92 (bullish vertical count from p/f chart). Wow! 38.2% at 61.94, 50% at $67.68 (served as resistance since March 28th) now broken today. Gives 61.8% at $73.42 (short-term trader's target) and 80.9% at 82.71 and 100% at $92. MACD on daily trying to hook higher and still above zero! Link

  Leigh Stevens   5/1/02,  3:16:22 PM
Index Update: - Nasdaq Indices - Will say again what I think are the breakout points are for the Composite (COMP) > 1694-1695; Nasdaq 100 (NDX)> 1290 ; QQQ > 32.1-32.2. My old trading comrade in arms at PaineWebber, Art Cashin on CNBC, was just talking about how the fact that we did not make a lower low on the indexes brought in rapid short-covering this AM - no kidding!

Given the: 1.) jump in volatility as measured by VIX; 2.) the back to back Arms Index (TRIN) readings above 2.00 on Friday & Monday, showing EXTREME selling pressure; 3.) PLUS the fact that the indexes were trading at the low end of the envelope bands I show a lot in my Index Trader column -- this rally should not be surprising. You stretch a rubber band tight enough, it snaps back.

  Leigh Stevens   5/1/02,  3:04:36 PM
Index Update: - SPX, OEX and DJX - SPX and OEX have joined the Dow in breaking out above the "line" of highs yesterday in the 30/60 min. charts. On SPX, this level is 1080-1082, a key level as pointed out by Jim Brown last night in his market wrap up -- 1080 area was where, on closing basis, SPX bottomed in late-Feb./early March. What was support, once broken,tends to "become" resistance (on a rebound). The breakout point on OEX was 535-536. DJX breakout point was 100.

  Leigh Stevens   5/1/02,  2:53:33 PM
Subscriber QUESTION: "Hello Leigh, I was wondering if you have explained somewhere how to set the blue bands that float 4 percent above and below the 21 day moving average line, on QCharts? I don't recall anything. You don't recommend Bollinger Bands set at 20.2 as is suggested elsewhere on the site? Thanks."

RESPONSE: In a Q-charts chart window with a chart displayed, right click will bring up "Studies" and from there select "Envelopes". In "envelopes" window, with study parameters highlighted, "edit" will allow setting LENGTH of your moving average (eg., 21) and the Percent figure; e.g., 4%. I start with 3-4 percent and work up depending on what percent value will "touch" near the highs or lows most often on the back and forth Index price swings over the preceding weeks/months.

I don't like Q-charts functionality quite as much as TradeStation as to the settings choices, as the later software will allow me to set one envelope percentage above, and a different value for the band or envelope line below. This is not a big deal - on the Indexes sometimes the volatility on the upside is greater than on the last decline or vice-versa. The workaround for this is to look and see if you need to adjust the envelope percent value depending on whether the index is above or below the moving average.

On Bollinger bands, the value you suggest is fine.

  Jeff Bailey   5/1/02,  2:50:24 PM
The other day I was remembering.... I used to host a radio program here in Denver and just about every other week, a caller named "Ralph" would call the program. He was an "older" gentleman and always disclosed that he was short Cisco (CSCO) and long gold stocks. He'd explain his reasons.

I'd look at the p/f charts and analyze that CSCO was giving buy signals and gold was giving sell signal. Week after week this continued as CSCO marched higher and gold went lower.

Caller was eventually proved right (up to now). Lesson in all this is something I learned long ago. It's great to lay out the scenario's for reasons for something to happen. The key to trading investing to to implement the strategy of trading the scenario when the MARKET finally begins to agree with your scenario!

Ralph, if you're out there! I congratulate you on your scenario. You were way early, took alot of heat in your trades (way too much for my liking) for several months, but you were eventually proven right.

  Jeff Bailey   5/1/02,  2:42:48 PM
Gold Silver Index (XAU.X) $75.77 +2.4% .... "gold bugs" have to be hopeful with p/f chart of XAU.X bullish and vertical count of $106. Dorsey/Wright uses $2 box scale, so we will show here and use this bullish count. Link

The $1 box would have the bullish count of $98. Link

Just Friday, we alerted gold bulls to Barrick Gold (NYSE:ABX) $20.42 +1.74% to triple-top at $20. Link

Gold trader should perhaps understand that Barrick Gold (ABX) does hedge production, so may not get full impact of a surging gold commodity if they've hedged forward production.

  Jeff Bailey   5/1/02,  2:29:33 PM
Tocquevill Gold Fund (TGLDX) has fund manager on CNBC talking about his bullish case for gold. Thinks US$ is overpriced and coming down and is reason for investor to have gold on hand. Does the market agree with him? Test your mutual funds (company's 401K offerings) against the fund managers selections to see if the MARKET agrees with the fund manager. Link

Coincidence perhaps, but may tie in with today's comments from 12:36:17 and 12:41:00. Just never know do we? Coincidence or not, setting alert on US Dollar Index (dx00y) at $113.50. Break much below that level could spell trouble and potential inflation from weaker US$. Currently trading 114.53.

  Leigh Stevens   5/1/02,  2:25:55 PM
Subscriber NOTE: "By the way, the 14-DAY stochastic is now on bullish "buy signal". On the Q's, do you recommend, if going short-term long, buying calls OTM or ITM? Right now sitting at 30.92."

RESPONSE: There was a daily crossover yesterday. Once the stochastics gets that oversold, even a slightly higher close will cause a lift in the stochastics. I lean to being on the buy side right now -- seems that we may get a tradable rally.

I tend to be one to stay close to the money or ITM (In The Money)- This has more to do with the fact that I find myself less likely to overtrade that way. Pay more for fewer options.

Does that make sense? Probably not! An ITM option loses value in terms of percentage of its cost,faster on an ADVERSE market move than OTM options do because of a higher delta. Trade safety is not dependent on ITM intrinsic value here, it's totally dependent on underlying market movement. So, be right on the direction of the market, is the thing isnt it. If I was more confident that we wee seeing the start of a big move higher, I would tend to go with OTM (Out of The Money) calls.

  Jeff Bailey   5/1/02,  2:23:16 PM
NASDAQ-100 Breadth negative with 21 up and 79 down.

Gainers have CMCSK +9.3% (MEDIA), GILD +8.45% (BIOTECH) , GMST +7.14% (SOFTWARE), CHTR +3% (MEDIA), YHOO +3% (INTERNET), ESRX +3% (DRUG), SBUX +2.8% (RESTAURANT).

Losers have SUNW -14.4% (COMPUTER), WCOM -9.2% (TELEPHONE), ORCL -8.7% (SOFTWARE), BEAS -5.7% (SOFTWARE), NTAP -5.5% (COMPUTER), SEBL -4.7% (SOFTWARE).

  Jeff Bailey   5/1/02,  2:14:15 PM
Stocks in the NASDAQ-100 showing a buy signal on their p/f chart are ESRX (DRUG), SBUX (RESTAURANT), ADRX (DRUG), FISV (COMPUTERS), MCHP (SEMICONDUCTOR), SPOT (TELEPHONE), ATML (SEMICONDUCTOR), MOLX (ELECTRONICS) ... WILL COMPLETE FURTHER, BUT YOU TOO CAN LOOK AT THE P/F CHARTS. Look for above trend, good relative strength vs. SPX and good bullish vertical counts for best bullish candidates.

Make some "associations" with past commentary if you like regarding semidonductors being strongest group in technology. Don't rule out some of the "boring" sectors like healthcare too (grin).

  Jeff Bailey   5/1/02,  2:03:48 PM
NASDAQ-100 Bullish % ($BPNDX) reading last night was 28% and saw no new net sell signals. Traders/investors will note that levels below 30% are considered "oversold." Not to be used by itself, but to understand "risk." In December (red C) the bulls had the risk with readings "overbought" above 70%. Now bears have the risk. Understand it and manage your trading accordingly. Not only in the QQQ's , but stocks that comprise the NASDAQ-100. Link

  Leigh Stevens   5/1/02,  1:59:46 PM
Google & AOL - AOL made a good decision to go with Google as its search engine. I love google, have for some time and it's pretty much the only one (search site) I use. Wish I could buy their stock, but they ain't public and they don't seem to be eager to do the IPO dance. What, dot commers who are not lusting for richs in the stock market!? -- of course, they may be waiting for a Nasdaq market that isn't going down down down.

  Leigh Stevens   5/1/02,  1:54:23 PM
Subscriber NOTE: "I bought puts on the QQQ when it broke support at 31.50. Thanks."

RESPONSE: Well, don't thank me yet, as QQQ is rebounding right to that area again. A hourly close back above 31.5 would suggest that this roller coaster action we are seeing is part of some basing action that may lead to a rally that takes the indexes higher for more than a day or two. I take it as a more key event if the Q's penetrated 32.2 , at the top of yesterdays consolidation on the 30 and 60min charts.

  Jeff Bailey   5/1/02,  1:46:35 PM
SBC Communications (SBC $32.10 +3.38% ... retracement from $47.34 to $26.54 has trader looking at 80.9% of $30.51 having served as support and stock appears to bounce. Risk now becomes 61.8% retracement of $34.48. If short/put at $36, would take some profits off the table and play it safe.

  Jeff Bailey   5/1/02,  1:44:53 PM
Dow Breadth positive now with 25 up and 5 down. Just the exact oppisite type of action we saw yesterday with good breadth early, then turned negative.

This is the example of "uncertainty" by both bulls and bears. Only determiner for bears is to lock in gains on those positions with lesser amount of technical downside to risk of rally to resistance.

  Jeff Bailey   5/1/02,  1:39:12 PM
Centex (CTX) $57.26 +1.7% ... is homebuilder I've mentioned with some good upside to upper regression channel of $72 now. Stock finding bidders at the 50-day and good bullish candidate for traders. Link

  Jeff Bailey   5/1/02,  1:37:50 PM
DJ US Home Construction (DJUSHB) 383 +1.11% ... feel the power of a strong group catching a bid and back at session highs. 52-weeker just ahead with alert set at 387.83.

  Leigh Stevens   5/1/02,  1:37:29 PM
Index Update: The Dow, led by KO, SBC, DIS, MO, and an odd assortment of DJIA stocks, has come back like gangbusters and is close to breaking out above key near resistance at 100 in DJX.

  Jeff Bailey   5/1/02,  1:35:43 PM
S&P 500 Index (SPX.X) 1,077.74 +0.07 ... it too edging green here. Bit of a rally trying to build.

  Jeff Bailey   5/1/02,  1:34:23 PM
Dow Industrials (INDU) 9,955 +0.09% ... edging green here. Bear that was short some stocks yesterday and wishes he wasn't, make take the opportunity today to lock in some gains with Dow finding a bit of a bid on not getting whacked like technology.

Dow Indu can have a major influence on investor psychology.

  Leigh Stevens   5/1/02,  12:59:52 PM
Index Update: -- It appears that those trading EITHER the short or long side has to nimble, has to be quick, as, so far, recent lows in the Indexes held at or above the prior bottom. We have possible double bottoms on the 30/60min. charts and the same "fast"(5-bar setting) slow stochastic that gave a pretty good sell signal late yesterday is now on a "buy signal" --that is, it is highlighting upside price momentum as the hourly stochastic just achieved an upside crossover (the two lines crossed on the upside).

By the way, the 14-DAY stochastic is now on bullish "buy signal". I take these things with a grain of salt, so use the "quotation marks" sometimes when I use the word "signal". Would not believe any rally being more than short-term unless we can regain 1080 in the S&P 500 (SPX) and hold it on subsequent pullbacks.

  Leigh Stevens   5/1/02,  12:47:04 PM
Subscriber QUESTION: "I have a question about your book Essential Technical Analysis. How much of it is based on Mark Weinstein's strategies and what ever happened to him? Did he retire? I remember reading the interview in Market Wizards which also made brief mention of you. I've been curious about his techniques ever since.

Mark is still trading but always as a private trader. (STAN Weinstein is a different guy) What I gained from Mark is an attitude or approach to market analysis that makes use of everything and does not just focus on particular indicators or patterns, etc. For example, if Elliott Wave is suggesting that an Index or stock is in a 3-wave up, he would buy into it heavily as the power part of the move. But he was not one to try to figure out every chart in terms of its EW pattern. He was VERY eclectic in his approach.

The other thing is that he has a lot in common with some of the other "wizards" in terms of being more focused on NOT losing than on how much can be made on a trade -- only the market will determine how much can be made safely on any given trade, whereas losing is mostly a matter of mental mistakes -- at least at this level.

  Jeff Bailey   5/1/02,  12:46:38 PM
United Health (UNH) $89.71 +2% ... stock traded $91.74 and that was just above bullish vertical count of $91. Take minimum 1/2 off the table here and follow with stop of $85 on the rest (sell signal on p/f chart). Link

  Jeff Bailey   5/1/02,  12:41:00 PM
Check it out! Weekly chart of the US Dollar Index (dx00y) (dx, zero, zero, y)... take a trend from the 10/04/98 lows to 10/10/99 and extend that trend. Comes in pretty darned close to bearish vertical count from p/f chart of $113.50.

Also... take a downward trend from the 10/22/00 high and attach to the 03/25/01 relative high and extend that trend lower. See the criss-cross right at/near the $113.50 level? Could be some type of key level that could further trigger markets action for stocks.

Stocks seem to have followed the US% weakness lower in recent weeks haven't they! Excellent and exciting observation from subscriber!!!!!

  Jeff Bailey   5/1/02,  12:36:17 PM
hi Jeff, quick question what box size do you (or Dorsey Wright) use for the USD?....figured this was in trouble for some time and it still seems to be. tried .25 but I'm not sure if that's a standard size or not.... no need to reply just post to the MM if benifical to others

Dorsey's chart shows $0.50 box. Link and has bearish count of $113.5.

One way to test your scenario perhaps for "in trouble for some time" is to monitor Treasuries closer. If the WORLD hates the U.S. dollar then Treasuries might see selling too. Again.. thinking "what good is the debt if the currency stinks?"

A trader looking bullish some stronger multi-national US-based company's may see a catalyst from weaker U.S.$ as a US-based exporter to other countries sees his/her products a little more price competitive on a weaker US$ in foreign markets.

  Leigh Stevens   5/1/02,  12:25:49 PM
Subscriber QUESTION: "Leigh, SPX has gone above 200ma in 5min chart,above 20day main 60min.chart. Where is next strong resistance.?"

RESPONSE: I don't always get to these mails on the same day -- this one came yesterday. I update these numbers every night in my Index Trader summary and during the day on the Market Monitor.

Key resistance in SPX is 1080-1082 of course, at the prior low. Support, once broken, "becomes " resistance -- a good rule, which I should remember always -- most recent example was the tip off to sell SPX again in the 1080 area. I held off myself thinking it might get through this area, then come back down later. The Indexes have been pretty predictable -- they rarely take out any key resistance and they usually turn south on every minor overbought reading.

  Jeff Bailey   5/1/02,  12:10:25 PM
Error!.. Error! Crud! In the 11:44:29 comments, I typed the symbold "KG" regarding the Barron's article. It wasn't KG mentioned, it was Kellog (NYSE:K)! I'm correcting the 11:44:29 comments. Please disregard!!!!

I'm so sorry and this frustrates me ... if you did trade KG in the last hour, then scenario regarding Barron's article NOT in play. Risk/reward in KG still the same, but not the Barron's article regarding the fundamentals.

Note: I've now changed the 11:44:29 to reflect Kellog (K)

  Leigh Stevens   5/1/02,  12:08:09 PM
HOT Sectors: For those looking for a pullback in the Healthcare sector ($HMO.X), being led by strengh in Oxford Health (OHP), Wellpoint (WLP), United Health Group (UNH), Humana (HUM),Mid Atlantic Medical (MME),Tenet Healthcare, Aetna (AET), and PacifiCare Health Systems (PHSY), FORGETABOUTIT! Was talking to Jeff about these stocks, and we noted how much the charts in the "straight up" part of their moves, look like many of the Nasdaq hot stocks in the last months of the late great bull market. Healthcare bubble? I listed some areas that I would like to buy the aforementioned stocks or their calls, on pullbacks. Ha! It won't be that easy. Once the train has got enough momemtum, its hard to jump on board.

Sameo,sameo on the other sectors up substantially today -- the Gold & Silver Index ($XAU.X), Oil Services ($OSX.X) and Health Care Providers Index ($RXH.X) are all on the top of the list of gainers today. Pharmaceuticals ($DRB.X) are up also, but have been going down steadily for weeks and this sector is oversold.

  Jeff Bailey   5/1/02,  12:02:45 PM
It looks like I sold to soon but a profit is a profit. All the trades now that I have made money at I have sold to soon or the price has went higher just after I put my order in. I know you can not always get in at the low out at the high but I am still a bit skittish yet from the beating I took before I found your service.

I know I will get better at it. It is just the nervous factor that I have from the days of old always on the loosing side. Buying options and watching them expire useless.

Guess what! The only way you take a profit is by "selling too soon" when profitable. In the years I've trade, I "picked the ultimate low/top" just twice. My batting percentage for picking the extremes is about .000000001 is my guess. However, that doesn't mean a trader that can't pick the extreme tops/bottoms in stocks can't make money in the market! Chances are, if you're making money in the market, you're probably doing better than 70% of the buy and holders right now!

  Jeff Bailey   5/1/02,  11:53:50 AM
Jeff: Yesterday you were bullish on IMCL. Stock's up today and trading against the market/sector, you still bullish?

For AGGRESSIVE bottom feeders only!!! Last night I did some retracement work. Took retracement from $30.01 to $13.77. This gives an "action point" for further short-covering at 19.1% of $16.87, then 38.2% at $19.97 (right near yesterday's bullish trading target).

Still bullish because.... despite tech pummeling in recent weeks, bears not able to push IMCL to new lows. Stock ran from current levels to $30 in about 7 sessions in early March, an not looking for anything close to $30 in yesterday's profile. Link

  Jeff Bailey   5/1/02,  11:44:29 AM
AdvancePCS (ADVP) $34.68 +2.59% ... stock showing good strength versus broader market action. Will note April 20th mentioning in Barron's cover story listing the top 500 US and Canadian companies, ranked by a measure which includes cash flow return on invested capital and stock market performance. Top five were BBY Link , ADVP Link , PFGC Link , AZO Link , K Link

  Leigh Stevens   5/1/02,  11:41:39 AM
Index Update: The way the hourly and half hourly charts look, this recent pause is only that -- a pause or consolidation, before they take out the prior recent lows and presumed support at SPX 1062, OEX 525 area, DJX 98, COMP 1640, NDX 1230 and QQQ at 30.5. Most bullish thing that can be said is that hourly stochastic is down at oversold levels again.

  Leigh Stevens   5/1/02,  11:33:47 AM
Bond Market Update: Yields on the 5 and 10-year Notes are down today, as June Bond futures are up about 18/32nds. The 5-year T-Note Index (FVX.X) is off -0.94. Per my recent comments, think we will continue to see lower yields on balance, based on a bearish technical picture presented by the 5 & 10-year Note Index charts. Both yield charts have broken their Nov-Feb-Mch up trendlines.

Buying in bonds has come in as a safe haven investment (same thing that is propelling gold to some degree) and from money diverted from the stock market as discouraged investors have shifted some assets to fixed income. If bond prices go up, YIELDS come down. A classic inverse relationship. This trend in yields may be one of the factors keeping the dollar under pressure lately as the Eurodollar has rallied very stongly since April and is up sharply today. Wish I had converted those euros THIS week, instead of 2 weeks ago!

  Jeff Bailey   5/1/02,  11:24:52 AM
Overture (OVER) I'd be bearish with the November $20 puts (GUOWD) $4.00, no stop, target $10.

  Jeff Bailey   5/1/02,  11:20:35 AM
Overture (OVER) $23 -32% ... alert here at triple-bottom and break of trend. Gives bearish count of $10. Link

If you're a "nervous" trader and can't take volatility, or a trader that OVER LEVERAGES and lacks discipline, then AVOID!!!!

  Jeff Bailey   5/1/02,  11:18:10 AM
SBC Communicatons (SBC) $31.49 +1.38% ... stock bucking the broader market trend and sector today. Yesterday, CIBC said it saw RBOC's (regional bells) like BLS, SBC and VZ trading at valuations in line with electric utilities compared to an average premium of 35% and peak premiums of 100%; does not expect RBOC's to get any cheaper on a relative basis and says valuations present the most compelling entry point in over a decade!

  Leigh Stevens   5/1/02,  10:49:45 AM
Index Update: - After getting poked and proded this morning at my doc's, I missed the opening this morning on the drum beat of more bearish news. So much for the 1-2 day rally, being TWO days. As soon as the hourly stochastic (5-bar setting) got overbought, BAM!, wham, down again. I figured there was some more upside IF the indices got thru pivot points I laid out in Index Trader last night. Selling out of the gate took the indexes through near support levels at SPX 1074, OEX 530, DJX at 99, COMP at 1670, NDX 1260 and QQQ at 31.5, which was the trigger to exit any calls and take to the short side again -- that is, if you ever left the bear/put side. Trading any of these short-term swings, only seems possible if you can watch the market like a HAWK.

Key support levels at the recent prior lows are: SPX 1062, OEX 525 area, DJX 98, COMP 1640, NDX 1230 and QQQ at 30.5. We are getting down toward oversold again in the hourly stochastics, but arn't there yet.

  Jeff Bailey   5/1/02,  10:38:47 AM
Cisco Systems (CSCO) $$14.00 -4.5% ... bear is lining up a trade for 13.87 or lower, which would be a break of relative lows and target $12.25-$12.50, just above the 52-week lows of $11. You get the picture on the "networkers" from past comments. CSCO is the "golden child" among bulls and "last play" for bears looking for names above $10. Link

  Jeff Bailey   5/1/02,  10:31:01 AM
Ciena (CIEN) $7.00 -6% ... was name I was bearish on Monday and again yesterday in market monitor Link.

Trade at $7.00 is actionable as outline on Monday. Aggressive bears and longer-term $5 puts into the end of the year. Link

  Jeff Bailey   5/1/02,  10:27:19 AM
Oracle (ORCL) 9.17 -8.5% ... Will note that bearish vertical count from p/f chart was $9. With stock here, bears should be looking to lock in some gains. Link

  Jeff Bailey   5/1/02,  10:20:37 AM
GSTI Software Index (GSO.X) 126.95 -4% ... sitting right on lower end of regression here and session low. This trade right in here is below Monday's low of 127.47 and new 52-week low.

  Jeff Bailey   5/1/02,  10:18:07 AM
Dow Breadth negative with 21 down and 9 up.

Gainers have PG +1% (consumer prod.), MO +0.73% (consumer prod.), JNJ +0.67% (consumer prod.), MRK +0.58% (drug). (all rather "defensive" sectors).

Losers HPW -3.8% (computer), INTC -2.6% (semiconductor), MSFT (software) -2.2%, CAT -2% (heavy equip).

  Jeff Bailey   5/1/02,  10:12:41 AM
ISM fell to 53.9% from 55.6% in March; this is worse than expected rate of 55.0% consensus.

Construction spending fell 0.9% in March, much weaker that the 0.1% consensus.

Both numbers having negative impact on stocks.

  Jeff Bailey   5/1/02,  10:02:12 AM
VRTS / GSO.X yesterday we talked about "relationship" and technicals for trader short/put VRTS to be watching. GSO.X 128.73 -2.6% leads sector loser. VRTS close behind with 3% loss. Obvious stop for VRTS put holder is this morning's high (based on yesterday's comments at 03:46 mm)Link . Lower end of regression on VRTS is about $25.

  Jeff Bailey   5/1/02,  9:58:03 AM
Treasury Watch yesterday we noted that Treasury YIELDS not really showing robust selling and that created thought that stock rally was more likely short-covering. This morning's bond action has YIELDS across the board edging lower (slight buying in Treasuries). 10-year YIELD lower at 5.074%. Equity bulls want the 5.0% level to hold as support. Link

  Jeff Bailey   5/1/02,  9:53:21 AM
Dow Jones US Home Const. Index (DJUSHB) 380.86 +0.51% holding steady in recent sessions after setting 52-week high on April 24th at 387. Link

  Jeff Bailey   5/1/02,  9:50:28 AM
At 10:00 EST will get ISM data where economists are looking for 55.0%, which is slight drop off of March's 55.6% rate.

Also to be released is Construction Spending and economists looking for 0.1% gain, compared to previous 1.1%.

  Jeff Bailey   5/1/02,  9:44:36 AM
Advanced Micro (AMD) $11.41 +2.05% ... Needham upgrades to "strong buy" from "buy" due to valuation and the belief that significant upside potential exists for 2003 estimates as microprocessor average selling prices benefit from a richer mix of higher priced offerings to portable PC and low-end server applications. Sets price target of $20. Link

  Jeff Bailey   5/1/02,  9:40:28 AM
Veritas Software (VRTS) $27.90 -1.5% ... enters new distribution agreement with Hitachi Ltd, in which Hitachi Ltd. will co-brand and distribute Vertias NetBackup and Backup Exec data protection software with its system management solution suite. Link

  Jeff Bailey   5/1/02,  9:30:29 AM
Overture Services (OVER) $34.19 ... stock can't make up its mind recently. Lower this morning at $24 after company loses AOL to Google. Analysts saying this is major win for Google, as it only recently entered the pay-per-click ad market, and will lead to concerns about OVER's competitive position in the market. Link

Last night, OVER also updated guidance for 2003 with EPS guidance of $0.53-$0.83, below the Multex consensus of $0.88, indicating that even though OVER hadn't assumed the AOL deal would continue, many market analysts had. OVER's revenue guidance for 2003 of $640-$690 is above consensus of $604.1 million.

  Jeff Bailey   5/1/02,  9:26:51 AM
Agile Software (AGIL) $9.16 ... software name getting whacked in pre-market at $6.12 after company warns on Q4. AGIL now expects to post a loss of $0.23-$0.26 a share versus consensus of $-0.13 a share. Says revenues most likely near $15 million versus consensus of $19.74 million. AGIL announces reorganization that will include the elimination of 15% of its workforce. Link

  Jeff Bailey   5/1/02,  9:22:43 AM
Oxford Health (OHP) $46.16 ... reports Q1 earnings of $0.78 per share, 4-cents better than consensus. Revenues rose 8.4% to $1.17 billion versus the $1.14 billion consensus. Link

  Jeff Bailey   5/1/02,  9:20:09 AM
Peregrine Systems (PRGN) $6.85 ... stock getting hammered at $4.60 in pre-market after CIBC and others downgrading the stock due to PRGN delaying earnings report. CIBC saying the combination of the delay caused by continued auditing activities by KPMG as well as a weak environment for software spending dramatically alters the risk profile. Link

  Jeff Bailey   5/1/02,  9:15:30 AM
Cisco Systems (CSCO) $14.65 ... stock edging lower at $14.52 after announcing definitive agreements to acquire privately-held Hammerhead Networks and Navarro Networks. Under the terms, CSCO stock worth up to $258 million will be exchanged for all outstanding shares and options of the companies not already owned by CSCO. Link


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