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  Jeff Bailey   5/2/02,  10:50:42 PM
Jeff, Just purchased AMAT calls when stock dropped to 22.87 at the close. I am assuming that you would advise holding through earnings on May 14.

This depends..... June is a long time away. If the stock trades $25 tomorrow and we get a double, then will have to think about holding until earnings. If the stock trades target of $27 on May 13th (day after Mother's day up 11 of last 13), you probably won't find me waiting to see if AMAT can spoil the party with any negative news.

The downside? I assigned myself to that when the trade was put on. Now I let the trade work to its outcome. At $22.87, sell signal on p/f chart is $20.00, so risk $2.87 in the stock, which is a little more than the $2.40 risked in the ANQFX.

  Jeff Bailey   5/2/02,  10:40:35 PM
NASDAQ-100 Bullish % ($BPNDX) still bear confirmed. Just 25% stocks still showing a buy signal on their p/f charts. Levels below 30% are considered "oversold" and very different than December's (red C) and mid-March's (after red 3) "overbought" levels above 70%. Link

Would expect NASDAQ market makers to be measuring order flow (buy orders vs. sell orders) very carefully here and beginning to square inventories toward neutral for many larger-cap NASDAQ stocks.

Traders should understand and be doing the same with their account management. While we can't measure order flow like a market maker can, we can still manage risk in the account with the adjustment in stops, booking gains that look more excessive, and establishing partial positions in stocks that are trading in upward trends and perhaps pulled back into support.

As discussed before, AMAT is a component of the NASDAQ-100, trades in upward trend, and 1 of the 25 stocks still showing a buy signal on its p/f chart. Link

Conversely, CSCO is a component of the NASDAQ-100, trades below trend, and 1 of 75 stocks still showing a sell signal on its p/f chart. Link

  Jeff Bailey   5/2/02,  10:28:40 PM
Starbucks (SBUX) $23.65 +0.12% ... reports that April same store sales grew 8%, stock edging up 15-cents at $23.80. Link

  Jeff Bailey   5/2/02,  10:25:36 PM
Avant! Corp. (AVNT) $15.87 -0.87% ... reports Q1 earnings of $0.79 per share, 6-cents better than consensus of $0.73. Revenues rose $15.4% year/year to $108.1 million versus the $107.5 million consensus. Link

AVNT has been a "gapper" Link

  Jeff Bailey   5/2/02,  10:18:15 PM
FreeMarkets (FMKT) $16.59 -2.41% .... announced long-term agreement with Compaq (CPQ) in which CPQ will leverage FreeMarket's FullSourse solution to reduce costs of acquiring key system components on a global basis; agreement follows successful completion of pilot program with FMKT and CPQ that began in 2001.

FMKT Link edging down 1-penny at $16.58.

  Jeff Bailey   5/2/02,  10:12:15 PM
Adobe Systems (ADBE) / Macromedia (MACR) Adobe wins verdict in intellectual property case against Macromedia. U.S. District Court of Deleware found willful infringement on a patent that covers Adobe's reconfigurable tabbed palette patent, which is Adobe's method of displaying and working with multiple sets of information in the same area of the computer screen. Adobe was awarded $2.8 million in damages and anticipates the court will issue an injunction to stop Macromedia's infringement.

ADBE $37.85 -5.65 Link on the session trading up at $38.16 in after-hours.

MACR $21.41 -3.81% Link on the session trading flat at $21.41 in after hours.

  Jeff Bailey   5/2/02,  5:05:30 PM
just wondering about your bullish call on AMAT. the weekly stochastics show a bearish divergence and is still bearish. Daily macd is almost vertical - down - while daily stochstic is turning up. in light of these indicators would you elaborate on your position?

My position.... point/figure is bullish and stock sits right on upward trend. Vertical count is bullish to $40, so this has me looking at risking $3 to potentially make $17. Link

Semiconductor Index (SOX.X) $504.05 -4.39% sits right near the $500 level and has shown rebounds from current levels since November (red C). Bearish vertical count of $520 has been met. This can always be exceeded, but an observation.

I consider AMAT a strong stock in the semiconductor sector. I can test AMAT's relative strength versus the SOX. Link

I consider AMAT a strong stock in the MARKET. I can test AMAT's relative strength versus the S&P 500. Link

I see a strong stock, in its sector (that has achieved a bearish vertical count) sitting on bullish support trend.

A trader that trades weekly stochastics (I don't) and daily MACD (I take into consideration, but ranks below p/f chart) and daily stochastics (I'm not a fan of stochastics as it can keep traders from trading long in HMO stocks that are "overbought" that have now doubled, or keeps traders from shorting stocks that have been further cut in half at triple-bottom breaks) that doesn't like the trade setup, may take some notes, but wates until his indicators line up and is comfortable with the trade.

  Jeff Bailey   5/2/02,  4:19:36 PM


My crystal ball is broken right now. Actually, this becomes a risk/reward trade for the technical analyst and the question can only be answered by the individual trader as it relates to your risk/reward profile and account management.

Yes, with retracement set at $17.30 to $0.68, the 38.2% retracement at $7.03 has held for 4 consecutive sessions (on a closing basis) and ties in with the 02/22/02 low. If broken, then downside level of retracement is $3.86.

Given that, bearish trader is looking at roughly $3.19 potential reward. A stop above the recent 4-session highs would be $7.67, so risk from here ($7.05) is $0.62.

Question for you is... is it worth risking $0.62 to see what might take place on a break to new lows and potential decline to retracement support of $3.86?

When a stock that I'm trading is sitting right on a potential level of support like CIEN is, this is how I have to view things.

The p/f chart Link is bearish and vertical count is to $0.50. Either the trade at $7.00 was truly a triple-bottom and spells further declines per Professor Davis' study, or it's a "bear trap." Trader with a tight stop at $7.67 sees good downside, but only comfortable with the trade if willing to now risk a stop to $7.67.

  Jeff Bailey   5/2/02,  3:55:53 PM
C'mon "Smurfit" show those 4-lettered stocks what they should be doing. (see today's 03:00 Update)... SSCC $16.20 +0.3%

  Jeff Bailey   5/2/02,  3:49:26 PM
Providian Financial (PVN) $6.34 -6.76% ... the other day I got an e-mail from a fellow trader and he'd put on a strangle in the stock. I haven't forgotten about you!

I will say, I think the strangle put on in the June $7.50 and June $10 call was "ok", but I didn't like the June $10 call part of that strategy as I think it was just too far from the level of then trading $8.00.

As such, the put has most likely gained enough right here, that if sold, would make the entire trade about break-even.

I've got retracement from $12.93 to $2.01, which has 50% retracement at $7.47 (I did this on purpose to reflect a straddle from $7.50).

What this does is gives the trader a "bottom band" or retracement level of support at 38.2% of $6.18. This $6.18 level was support on Monday. For true gains, need to get a close below $6.18!

Use this as you will. An "account management" call would have me simply closing the put out for a nice gain and making the whole thing "break even." Could hold the call and look for a rebound, then get rid of that call (my opinion) as I think just a little too far out the money for a strangle.

  Jeff Bailey   5/2/02,  2:48:23 PM
Applied Materials (AMAT) $23.00 -5.69% ... On premierinvestor.net, we have the stock as bullish entry on today's break BELOW $23. If you liked it at $27.50, then you got to "love it" here.

Trader must be able to take some potential heat to 200-day MA of $21.50, with stop below that (for stock).Link

P/F chart is bullish Link with vertical count of $40. First sign of trouble is trade at $20. Option trader has the advantage over stock trader here and can limit risk in the trade with the June $22.50 calls (ANQFX) $2.40. If you'd normally buy 100 shares, then just 1 contract. No stop on the option and target $27.

  Leigh Stevens   5/2/02,  2:37:25 PM
Index Update: The S&P and DJX indices are slipping under near technical support levels, as the TRIN level on NYSE is over 1.5. Nasdaq TRIN up to a real extreme above 3.50 area. Pressure on tech is intense due to downside volume running over 3 to 1 relative to advancing volume. Declines in Nasdaq are not that extreme in terms of numbers, but selling predominates so much in declining stocks.

COMP, NDX and QQQ have been dipping under their intraday lows.

  Jeff Bailey   5/2/02,  2:20:23 PM
Express Scripts (ESRX) $59 -9% ... stock down after company issued 8-K filing disclosing that on April 22nd, it received an administrative subpoena ducestecum issued by the U.S. Attorney's Office in Boston. On April 26, a substantially identical subpoena was issued to Express Scripts' wholly-owned subsidiary Diversified Pharmaceutical Services. The company has not been advised that it or DPS is a target of any investigation. The subpoenas state that they are issued in connection with an investigation of various health care offenses and other federal crimes. The subpoenas ask for information pertaining to Express Script's and DPS' relationship with TAP Pharmaceuticals, and specifically with respect to TAP's two principal drugs, Lupron and Prevacid. Link

  Jeff Bailey   5/2/02,  2:11:37 PM
QUALCOMM (QCOM) $28.88 -2.98% ... (per 02:05:25) ... yes here it is. On 04/24 at 10:07 Link , profiled the AAWSF at $2.85 for bears. Vertical count is $25. With regression overlaid, stock now finding mid-regression as resistance. Stock looks weak so would continue to hold the put if this is congruent with your account management.

  Jeff Bailey   5/2/02,  2:05:25 PM

AAWSF is the QUALCOMM (QCOM) July $30 put. I know I had mentioned this as a put play not too long ago. Had set an alert at $4.00 and that was triggered at 01:11 when I was writing the intraday update. May have been a target for bears to be taking a gain.

  Jeff Bailey   5/2/02,  1:52:46 PM
CAH When I first "got bullish" on CAH (right near current levels) I mentioned the bar chart and similar technicals found in April-June of 2000. If you've got q-charts or a charting system that you can look back historically on, it may once again be noteworthy to study the "positioning" of the 50-day MA and 200-day MA. Similar correlation from that time also shows up in the p/f charts now.

  Jeff Bailey   5/2/02,  1:47:57 PM
Cardinal Health (CAH) $70.75 +0.64% ... stock edging higher. Bar chartist has "old" downward trend currently in play here (trend from 10/22/01 high, attached to 04/01/02 high). This trend was pierced through on 04/19/02 at $71.50 and then followed through higher the next day to 73.70. Bears are "hoping" this trend is still in play as the overriding trend right now is up and 200-day and 50-day MA's have served as support also. Bar chart bulls want to see that MACD cross above signal and get some momentum into the stock. Link

Point and figure chartist bends down, pets the dog and goes to get a cup of coffee. Needs to see a trade at $71.00 to get chart back into a column of X. Link

  Leigh Stevens   5/2/02,  1:37:48 PM
Index Update: An important note here is the amount of time that the SPX and OEX have been holding key levels at 1082 and 546, respectively. These indices have basically traded in trendless fashion - meanwhile, the hourly stochastics has been trending -- lower! -- this indicator is now at oversold levels on a "5" setting and approaching fully oversold at the long "21" setting.

Meanwhile, the daily 14-day stochastic continues to show upward momentmum. DJX is now on first upside crossover in the 5-bar stochastic model, from an oversold level. NASDAQ: In COMP, the quick-trigger stochastic is at oversold and COMP is finding stability where it should. SPX/OEX most bullish outlook occurs with lows (today's) are above yesterday's -- only then do we uptrending lows. Important point. NDX same picture as COMP, especially that its most bullish if current intraday low is it on the downside, the way its looking right now. QQQ > needs to hold above 30.6 on an hourly basis. Stay tuned.

  Leigh Stevens   5/2/02,  12:22:29 PM
Index Update: SPX & OEX - The key tests of downside support have come in SPX and OEX. They have passed the "test" so far but stay tuned! S&P 500 "tested" the 1082 level -- that is, the index dropped back to this area, didn't fall below it, then rallied from there. The S&P 100 (OEX) dipped to 536 and held this area but is back to it. We still could see one of these bear forays push below these areas. Once a perceived resistance area is exceeded by a move higher, this is often only part of the story. Its important as to what happens on a subsequent pullback to key price areas like the above. Do these levels now prove to be support points? One reason, these areas "become" support, is that prior sellers in this area, take the opportunity to exit when prices come back to their "breakeven". Often, sellers don't get out quickly enough when price movement goes against them the first time - maybe they should have used STOPS!

  Jeff Bailey   5/2/02,  11:52:19 AM
Jeff... just sold my Oct TGH calls today for an unthinkable gain, something I really didn't expect. Wanted to say thanks and that I'm getting to be a believer in those X's and O's.

A "believer".... son you're preach'n to the choir! Good trade!

  Jeff Bailey   5/2/02,  11:43:18 AM
Jeff, Gillette (G) is a stock I have been monitoring lately. It broke out of a spread triple top after a multi-year base. I am waiting for a pullback, but it is a stock that should do very well with a weaker dollar. Another thing I like about it is that it has done so poorly for so long no one seems to be paying much attention to it. Any thoughts?

Hey.. it "fits" the weaker dollar and CONSUMER scenario.

The p/f chart from stockcharts.com look to be incorrect and most likely a "bad tick." I don't see a trade at $35 in Feb. 2001 (red 2), thus recent buy signal would be double top. However, a trade at $37, would be spread-triple. Link

I do see bullishness building in G, that's for sure. Bullish vertical count is $54, stock trades above trend, has less than 4-letters in the stock symbol and isn't "tech" related and perceived as a "boring" stock.

Can perhaps see G in relation to PG Link and JNJ Link

Hey... I take a bath at least once a week and grab a shave every now and then!

  Jeff Bailey   5/2/02,  11:30:38 AM
Any thoughts as to what might be happening with HIG?

Latest news I see was April 23rd Wall Street Journal article on asbestos liability concern for HIG, CNA, ACE and TAP.A.

Point figure still strong, bullish count of $82 and first sign of trouble is $64. Link

Bar chart shows stock likes to trade off of 50-day ma, but resistance clear near-term at $70. May take a few sessions, but watch your MACD and look for it to start rounding out, preferably above the zero level. Link

  Leigh Stevens   5/2/02,  11:04:00 AM
Index Update: SPX and OEX are faltering around current levels and the DJX is still stalled. Meanwhile, with this pause, hourly stochastics are heading down. Going sideways will cause an oscillator type indicator like this to move from "overbought" to "oversold". Not to say that the downward momentum showing on the declining stochastic, won't result in an actual dip in the indexes. Watch near support for clues: SPX > 1082; OEX > 536; DJX > 100. If the indices drop back to these areas and don't break below them, this retains a bullish technical outlook.

The Nasdaq is laggin of course. Here we have key resistance that is focus -- unless there is upside penetration of them, we can anticipate more sideways type action OR a pullback again to the area of recent lows. Key Index resistance: COMP > today's high at 1695; NDX > 1290; QQQ > 32.1-32.2; Key support levels: COMP > 1650, then 1642; NDX > 1240, then 1232; QQQ > 30.8, then 30.6

  Jeff Bailey   5/2/02,  10:50:20 AM
The trend in the Dow I'm most concerned about/paying attention to, is from the p/f chart at 10,200. Link

  Jeff Bailey   5/2/02,  10:48:31 AM
Dow Industrials (INDU) 10,078 +0.18% ... early morning gains came to 10,117.54 and this was just under downward trend. Lots of bears shorting here I'm sure.

Why aren't I? Because the NASDAQ and S&P are clearly the weaker averages. True, Dow is probably good risk/reward bearish trade with tight stop just above, but I think she'll get through this trend over the course of next couple days.

  Jeff Bailey   5/2/02,  10:44:14 AM
Morgan Stanley Cyclical Index (CYC.X) 568.77 +0.8% ... edging above last week's highs and bucking things a bit here. Test will be the rolling 50-day MA. Link

  Jeff Bailey   5/2/02,  10:36:31 AM
To tell the truth Back when GE broke back below the $40 level, I gave up on idea of looking long a break above $42 and even felt stock was short, with stop at $42.01. I would think a trader short the stock, migh be well served to at least be selling some puts at current levels, you know, create a little extra dividend. By selling the $30 puts, you're obligating yourself to buy the stock back at $30, but not bad if short $40 or $35 for that matter. Link

I did further find conviction in setting a disciplined action point of $42.01 for bulls though. We challenged the stock to prove it could trade $42 to have us trading long. Never did trade it, so never ran the trade. Obviously saved ourselves a loss, which can sometimes be just as important as having a winning trade.

  Jeff Bailey   5/2/02,  10:32:43 AM
Hey Jeff, Is this still a stock that perhaps should bear watching in light of your $USD observations from late yesterday and overnight in your Market Wrap? Noticed that it still is having a difficult time and had an inside day yesterday. Also, it appears to be having trouble in the 31.90 range. Isn't it like the "ultimate" multi-national? It's sure been a turkey lately....

Yes! Excellent stock to monitor and perhaps trade. If a scenario for a weaker dollar benefiting multinationals is in play, the GE should be a benefactor.

However, as hinted to last night. I think best benefactors of US-based multinationals will be CONSUMER PRODUCT related. GE very dependent to a degree on CORPORATE spending. However, weaker US$ should still help if scenario is in play.

Technicals worth noting. Retracement from $53.36 to $30.37) (30.37 was the close on 09/20/01) has 19.1% $34.76. Also, an most important... take an upward trend from the 09/21/01 low, attach to 04/15/02 low of $31.64 and extension of that trend (trend was broken) serving as resistance. A break back above trend would put the stock "back on trend" and might be a place where shorts do some covering. Link

Trader playing the DJX or Dow Industrials from the call side, would sure like to see GE anchor a bottom here, then get back to the $40 level and act like a tide to push the Dow higher.

Conversely, a bear would like the stock to break hard below $29 and get some doubts going further.

  Jeff Bailey   5/2/02,  10:21:08 AM
SAP (SAP) $30.70 -5.10% ... with understanding of bullish support, good strategy for trader holding some gains in puts or short stock from $33, can place a profit stop just above today's high or place stops at break-even at a minimum.

  Jeff Bailey   5/2/02,  10:19:20 AM
Software Spectrum (SSPE) $36.24 +117.71% Link ... agrees to be acquired by Level 3. Deal is all cash, no stock.

Interesting isn't it how SSPE held that bullish support trend? Almost like somebody was actually watching it! (Those that are holding SAP Link.

  Jeff Bailey   5/2/02,  10:06:01 AM
Kronos (KRON) $42.00 +1.8% ... stock edging above 200-day MA late yesterday and again today. Expect some short-covering from bar chartists on this break. Looking for overhead supply from $42-$45 to keep stock in check. ORCL, PSFT, SAP are "like stocks" with similar products. Link

Trade at $42, will have chart back in column of X today. Would still hold puts.

Also on bar chart. Have had retracement from $58.61 to $17.41. This has 38.2% at $42.87, 50% at $38.01 and 61.8% at $33.15. With regression channel, upper end of regression just ahead near $43. This is also like haveing downward trend on the bar chart. Need MACD to roll and right now it's trending higher. Link

  Jeff Bailey   5/2/02,  9:58:29 AM
finally! I am still in those SAP puts! :-) looking for that 27.50! :-)

Good for this subscriber. SAP $30.87 -4.57% Link .... It's sometimes "better" to trade those options without a stop. Keeps you calm and collected and gives the trade time to work. Look for some "psychological" support at $30, round number and that bullish support trend as a place to lock in some gains. Vertical count is bearish to $22, but trend still bullish.

  Leigh Stevens   5/2/02,  9:55:30 AM
Index Update: The Nasdaq Composite looks like it will challenge key overhead resistance at 1693. The benchmark near resistance in NDX (Nasdaq 100) is 1290; in QQQ, 32.2 is the breakout point.

  Leigh Stevens   5/2/02,  9:51:59 AM
Index Update: Hey, this rally may have legs! The bears barely dented the consolidation that was occurring over the last couple of hours yesterday. We have broken out again to the upside in SPX and OEX -- the Dow average is lagging at bit and has not busted up and out of the highs of yesterday. Stay tuned!

  Jeff Bailey   5/2/02,  9:51:47 AM
Adolph Coors (RKY) $68.28 +0.23% ... as mentioned last night in the Market Monitor. I like a call play here in the Oct. $70's (RKYJN) at $3.80 offer. No stop, and target the $89 level, just below bullish vertical count of $92. Link

For covered call writers, I also like the underlying stock, look for a pop to $73.42 to write the $75's.

  Leigh Stevens   5/2/02,  9:47:21 AM
Wall Street Journal today has front page reports on how "Iraq Reaps Illegal Oil Profits" and why the costs of drugs are so high -- cronicles the big bucks that Pfizer spent, without success, to develop a "youth" pill. Hey, I would have lined up for that one! If you thought Viagra was BIG, wait until the aging boomers get ahold of that one. The other market influencing story was how Treasury Secretary O'Neill is resisting business pressures to weaken the dollar. The greenback has been strong of late, except against the Euro - so who else do we trade with!? Oh, China!! Can you find anything anymore that is NOT made in China? The other lead Journal story is about the resignation of Sun Micro's Pres. and COO (not bird coo but chief operating dude), Ed Zander -- Ed has been at Sun 15 years, but his stepping away is misfortunate timing as he is 4th. senior exec to leave in past 2 weeks. Tough in the exec suite, but even tougher if you own the stock -- ouch!

  Leigh Stevens   5/2/02,  9:35:26 AM
ON THIS DAY, May 2nd. in 1957, Elvis Presley recorded the song "Jailhouse Rock," the title song to his next movie. In the film, Elvis choreographed the dance sequence that accompanied the song. Hey, it was pretty cool, looking back on it now. In honor of Elvis the Pelvis, first rocker to really shake up baby boomer parents, rock around the clock -- opps that was Bill Haley!. No, in honor of Elvis, treat your hound dog to a steak today and give em some respect.

  Jeff Bailey   5/2/02,  9:29:48 AM
Xerox (XRX) $9.07 ... stock dropped $1.00 to around $8.00 in overnight trading in Germany and trading near those levels on Instinet. Late yesterday, Moody's cut Xerox debt to "junk" status, saying the ratings outlook for the copier company was negative. Xerox Chairman and CEO Anne Mulcahy lamented the action, saying that it was "inconsistent with the company's progress and momentum."

If red downward trends are momentum and progress, then we've been in a bull market for the past two years! Link

Point figure chart of XRX was trying to shape up, but recent sell signal at $8.50 has chart further bearish and hinting at vertical count of $5.50.

  Jeff Bailey   5/2/02,  9:22:41 AM
Protein Design Labs (PDLI) $17.33 ... stock getting hit lower at $14.70 after CEO and Pres of R&D resign. Laurence Jay Korn has relinquished his responsibilities as CEO, and will continue to serve as Chairman of the Board and be active in areas of investor relations and business development. Also, President of R&D Daniel J Levitt has resigned to purse other interests, effected May 3. Link

Not sure if there's a subscriber long the underlying stock, but would hedge with a $15 put.

  Leigh Stevens   5/2/02,  9:19:18 AM
Good Morning - It's nearly showtime! Not much to report this morning yet. Futures are a bit lower, with DJ futures down slightly. Ditto Nas. They are off a scant amount so opening could be unchanged or up a bit. Or, we weaken from the bell as profit taking sets in. Indexes are now showing a minor overbought too. This has to be worked off. The usual way that has happened of late is that the market gets slammed. The other way it CAN happen, is that the market goes down a bit but marks time and goes sideways. A sideways move will also "throw off" an overbought situation too. Just another possibility to keep in mind.

Key support levels: 1080 in SPX, 536 in OEX and 100 in DJX. If there was aa hourly close below these levels, that would call into question the staying power of this rebound. Back to back gains are bullish, but nothing is proved until the bears get another shot to take stocks down again. The market needs to hold up and not dip below the levels mentioned, to suggest that this countertrend rally has some legs to it.

  Jeff Bailey   5/2/02,  9:17:49 AM
Mixed to lower open just ahead. Futures all dipping marginally red. S&P futures down 0.10 points, NASDAQ off 3.50 and Dow futures coming up a bit, but still down 5.

  Jeff Bailey   5/2/02,  9:16:34 AM
Good Morning!


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