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  Jim Brown   5/9/02,  6:17:11 PM
Swing Trade Signals Wrap (What is this?) Link

The market drop accelerated at the close with the Dow coming to rest only +29 points from support at 10,000. The S&P closed above 1072 and only two points above 1070 support. The Nasdaq is well above support at 1605. This provides us with a mixed picture for Friday. The Dow and S&P could be relatively stable if we get another down day but the Nasdaq could be in danger. The S&P also has support at 1065.

Typically a close at the low of the day would indicate a down open. Should that occur I would be looking to close the open short positions in anticipation of an end of day bounce. We will do this with a trailing stop on the way down and on the first appearance of a bottom simply close the trade. My target on the S&P short is something below 1070 but depending on the market conditions at the open we could scalp another couple points. My target on the QQQ is $30 despite the possibility of a further drop. My reasoning is the possibility of an afternoon bounce as traders square positions before the weekend.

Current Signals
QQQ Short triggered at $31.09 at 10.34 AM
Current stop $32.10
SPX Short triggered at 1078.75 at 10:27 AM
Current stop 1082.50

The "digestion" sell off today was just enough to satisfy the overbought conditions and also just enough to worry the bulls that the Cisco honeymoon was over. Either way Friday could be exciting. See you at 9:15 AM!

  Leigh Stevens   5/9/02,  4:39:13 PM
Subscriber QUESTION: "Hi. Can you explain how you get the numbers 1594.6 - 1625.7 for yesterday's nasdaq gap area? Nasdaq gapped up at 1627.95 and never looked back. Looks like you used the difference between bars' lows for the calculation. In this case, shouldn't the gap area be 1572 (which is the low of the hourly bar on Monday) and 1627 (the opening and low price of the hourly bar on Tuesday)?"

RESPONSE: I always use the Daily chart to measure price gaps, except in the case of the S&P which substitutes closing prices for an initial opening tick if there is not yet an "open",which is pretty common when there are opening order imbalances around big "gap" events. With S&P, I have to use the hourly charts, but would use the daily chart if I could. Gaps are always measured from the High to the next bars Low in the case of upside gaps -- the reverse with a downside gap.

  Jim Brown   5/9/02,  4:07:12 PM
The close at the lows of the day by the Nasdaq and SPX paint a negative picture for Friday. The big cap techs like MSFT, INTC, IBM led the drop despite some positive guidance from several non-tech issues. Cisco gave back some of yesterday's gains but still held near $15.75. There is simply no conviction either way and buyers watched the action patiently from the sidelines. Was it profit taking or a return to the pre-Cisco trend? Tomorrow morning will be the key.

  Jeff Bailey   5/9/02,  3:55:04 PM
Treasury YIELDS finished near their session lows, though range was rather tight. Short-term defensive action today.

  Jeff Bailey   5/9/02,  3:52:46 PM
Dow Diamonds (AMEX:DIA) $100.60 -0.67% ... would hold overnight as it doesn't look like target of $100 is going to be achieved to downside. Range-bound on the 60-minute between the 50-pd at $100.06 and the 200-pd at $101.39.

  Jeff Bailey   5/9/02,  3:47:02 PM
Healthsouth (HRC) $14.80 +5.56% ... Recieved notice from the Department of Justice indicating it was withdrawing its notice of partial intervention n a civil False Claims Act case against HRC. The notice indicated that the DoJ had now determined that the sace was barred by the filing of two earlier cases. The notice also indicated that the DoJ had been informed by the relator-plaintiff that he intended to withdraw his complaint in the Manning case. Link

  Jim Brown   5/9/02,  3:44:33 PM
A reader asked if we should hold open short positions overnight.

If the S&P looks like it will finish under 1075 I would say yes. If it rallies to 1080 or above I would close them. An impending finish between those levels should be left up to the individual investor and your market outlook. As of this moment I would hold.

  Jim Brown   5/9/02,  3:37:43 PM
Bulls are trying to rally them here in the last 30 min of trading but the attempt has been weak so far. Volume is light today and there is no conviction either way. The markets have held to a loss of only about a third of yesterday's gains which traders will take every time. If they can hold here going into the close the prospects for tomorrow will improve

  Jim Brown   5/9/02,  3:16:02 PM
Swing Trade Exit Point Alert

I am lowering the stop on the SPX short to 1082.50 just above the high of the afternoon. The S&P is near the low of the day but a bounce is always possible.

  Jim Brown   5/9/02,  3:10:23 PM
Swing Trade Signal Update

Open Signals
Short QQQ at 31.10 stop at 32.10
Short SPX at 1078.75 stop at 1086

The markets are weakening as we enter the final hour. The Nasdaq is nearing the lows of the day and failed to recover on the WCOM bounce. If the earlier lows are broken the speed of the drop could accelerate. The Dow low was 10016, S&P 1073, Nasdaq 1653.

  Jeff Bailey   5/9/02,  2:28:42 PM
Jeff, Several days ago you profiled RKY. It triggered my stop loss this AM with the gap down. What are your current thoughts here? Thanks.

Hmmm.... on 05/02/02 did profile RKY as bullish at $68.28 in the Oct. $70's (RKYJN) at $3.80, no stop and target $89, just below bullish count of $92.

For stock, was looking for a pop to $73.42 (hasn't happened) to write the $75's.

If stopped out on the stock, then that is what fit your risk profile. I'd be looking for support at the rising 50-day MA of $65. Link

  Leigh Stevens   5/9/02,  2:19:30 PM
Subscriber QUESTION "I missed getting out of UTH yesterday and the option has dropped dramatically in price. Should i consider holding for a day or two or take my lumps and go.Your thoughts please?"

RESPONSE: The Utilities Holders Trust (UTH), has retraced 50% of its last upswing and the overall market has been rallying. You could set a stop order under the low made yesterday and see how things unfold. For me, it had reached our risk point (stop) and it was time for exit. Had I bought into the 50% retracment, which can be a good entry point, I would risk to 90.70 just under the 5/8 low. Looks like there may be be significant resistance or supply coming in at 95 -- it you see UTH in this area, you may want to exit if it falters there.

  Jeff Bailey   5/9/02,  2:15:57 PM
General Electric (GE) $31.87 -2.98% ... 60-minute chart here has GE testing its curling higher 50-pd MA this morning at $31.45 and bounceing a bit to $31.87. As it ties in with Dow, MSFT, then GE a weaker stock. Would think a move below today's low in GE of $31.45 could be signal for weakness.

  Jeff Bailey   5/9/02,  2:13:10 PM
Microsoft (MSFT) $52.60 -4.28% ... noticing that MSFT 60-minute chart looks very similar to the Dow Indu (INDU) 60-minute chart as it relates to both the 200-pd and 50-pd MA's.

  Jeff Bailey   5/9/02,  2:09:41 PM
Hello Jeff, Yesterday you mentioned CIEN as a possible short. Do you still think of it as a short? Where would your stop loss be? Thanks

Ciena (CIEN) $7.22 -2% .... so far, today's an "inside day." Looking for some type of good trade setup. Right now, I'd expect market makers are still making some inventory adjustments. Yesterday's surge higher most likely has market makers looking to get squared if they aren't already. Today becomes in essence an "order flow" test. What kind of "buy" or "sell" interest is there? How does that match my inventory position? If I'm a market maker in CIEN and just not getting the "sell" order flow and I've been shorting above $7.00, then I most likely sit some bids, take a few offers to get my inventory under control.

For you and I, we sit and wait. Look for some type of trade setup where we can control our risk. Right now, the 50-day up at $8.25 would be my risk level for a bearish trade. With the NASDAQ-100 Bullish percent "oversold" I'm not too willing to give that kind of move up right now.

Also watching CSCO, it too has "inside day" building.

  Leigh Stevens   5/9/02,  2:08:25 PM
Subscriber NOTE: "Leigh, On the INDU 5 min chart aren't we setting up a bear flag?

Don't see the bear flag pattern -- it could be a rounding top for sure. 5-min time frame is a little too short-term for me.

  Leigh Stevens   5/9/02,  2:01:47 PM
Subscriber QUESTION: "At 11:59 you said that you expected a pullback to at least 30 in the Q's. Has your opinion changed?"

Well, I can anticipate one thing, then when market action unfolds it starts to look like something else. Right NOW it looks like the Q's could be setting up for another upswing here but its too soon to say that there is going to be the necessary follow thru. The COMP is showing better relative strength than the Nas 100 & QQQ. If another rally develops it may fail at the prior high, then the stock tanks.

So, the idea of QQQ reaching 30 area support again can occur later, over coming days. So far, they have had a 25% retracement and are trying to rally, but it’s a pretty anemic attempt so far. I thought the Q's might well set back more than they have so far TODAY, and they may still. I did say last night that I thought there might be early weakness, then another later rally to confound the bears. Summing this up, QQQ may well drop further over subsequent days and I still have this view and anticipation. However, my Market Monitor comments are about the unfolding shorter-term patterns at the time.

  Jim Brown   5/9/02,  1:55:59 PM
The intraday dip failed to rattle the bulls and the indexes have clawed back to the mornings support. The weakness in the last several minutes could be fear of the FOMC minutes which will be released at 2:PM. While everybody thinks the comments will be the same as we heard on Tuesday there is a worry factor that could appear.

  Jeff Bailey   5/9/02,  1:50:10 PM
Dow Breadth improving a bit from earlier today. 14 up at 16 down. Smile for a bull and a bear wears a frown?

  Jeff Bailey   5/9/02,  1:44:59 PM
I think it was Jeff who mentioned the 35 calls at .75 for a possible double. Any new thoughts on this one?

Nope... the May $35's (AAEG) bid $0.65 haven't doubled from $0.80 (profiled on 05/03 near $34.62), nor has the stock hit its 50-day MA of $37 which was my bullish target. Link

First hurdle is the 200-day MA. Need a break at $36 to get some bears to cover and push to target.

  Leigh Stevens   5/9/02,  1:41:30 PM
Index Update: -- All the indices, SPX, OEX, DJX, COMP, NDX and QQQ look like they are setting up for another rally attempt. All have flag type patterns that, so far, suggest consoldidations rather than reversal type patterns. Time will tell.

I took a look at the extent of the retracements of their recent rallies for clues: SPX has retraced 38%, a "minimum" retracement when a trend is strong; SPX retraced 38% and touched support area around 531; DXJ - ditto, retraced 38% so far; COMP showing unusual resilience, has only retraced 25% of its recent prior upswing -- Gann (W.D.) also considered this a retracment level to watch; NDX - ditto, has retraced just under 25%; QQQ - 25% retracement so far. Pretty impressive that so far retracements have been so minimal.

  Leigh Stevens   5/9/02,  1:29:38 PM
Subscriber NOTE: "I think it was Jeff who mentioned the AA 35 calls at .75 for a possible double. Any new thoughts on this one? Thanks"

RESPONSE: Well, if you want me to comment, rather than Jeff, I may not have the same view. Opinions differ sometimes. I do see possible continued recovery rally in Alcoa (AA), such as back up to technical resistance at 36.6.

For myself, I'm not sure if I'm ready to hold the stock for a long-term play, as the stock may still be in a basing process and may dip again toward the low end of this 33-40 trading range it has been in since December.

  Leigh Stevens   5/9/02,  1:15:30 PM
Index Update: Nasdaq Composite (COMP) - hourly 5-bar stochastic turning up from an oversold area and may crossover. The robound and intraday low occurred from the previously broken down trendline or top of former downtrend channel -- resistance, once exceeded, often "becomes" support later. By end of the day, this trendline will be down to 1640, which is why I said that it could close in this area and still look ok technically. COMP looks like a intraday bottom is setting up if it continues higher, or after another dip.

  Jeff Bailey   5/9/02,  1:02:33 PM
Goodrich (GR) $32.36 +1% ... trying to make a move from a consolidation pullback. Good day-trader's stock for a scalp to $33.50. Stop under today's low.Link

  Leigh Stevens   5/9/02,  1:01:19 PM
Subscriber QUESTION: "hi there, i think that maybe about 10 days ago someone mentioned a head and shoulders pattern. It was thought that 545 would not be reached if this was the correct pattern. Any thoughts now?"

RESPONSE: Am not sure of the reference. Assume from your "545" reference you must be talking about the S&P 100 (OEX). I don't recall talking about a head & shoulders pattern. 545-547 is quite significant technical resistance, as it was the area of the Feb-March lows in OEX.

  Jeff Bailey   5/9/02,  12:58:49 PM
Crazy.... Applied Materials (AMAT) $26.00 +1.7% ... back in the green. Won't break $25 will it?

  Leigh Stevens   5/9/02,  12:36:31 PM
Subscriber Note: "Many of the HMO stocks that have doing well as of late are got hammered again yesterday with many hitting the pullback levels you had noted previously,(ohp,wlp,unh,hum,mme,phsy.etc.etc.), are we looking at further consolidation or is it time to take advantage of these lower levels and pursue some June calls?

RESPONSE: Thanks, will update this on my Sector Trader wrap up tonight in detail. But the fact that the Healthcare sector ($HMO.X) is back up today, suggests that buying the recent correction may work out - IF that correction has run its course. I am still a bit cautious as they have gone up so much in recent weeks and have had only a minor corrective pullback so far.

Actually, of the stocks in the HMO sector that I suggested in my 5/2 Sector Trader summary, only one, PacifiCare Health Systems (PHSY) dropped back into my suggested 23.5-24.7 buying zone on the recent correction when it got to as low as 23.85 yesterday.

I like Oxford Health Plans (OHP) as one of the stronger stocks in Healthcare sector, but was hoping for a deeper correction, such as back to 43 at least. The low point yesterday for OHP was 43.88. Today the stock appears to have broken out of the recent sideways congestion area and is off again - last at 46.45. Time will tell if it can take out the prior high at 48.30. If so, stock should get to the 50 area and above, next. If not, I think a deeper correction can happen.

  Jeff Bailey   5/9/02,  12:31:51 PM
Louisiana Pacific (LPX) $12.13 +4.12% ... Forest/Paper Products (FPP.X) component showing gains today after UBS Warburg upgrades to "buy" from "hold," saying that the sale of plywood and timberland operations should focus the company on more profitable units as well as pay down debt. Sale should be completed in the next 12-18 months and net about $600-$700 million. Link

  Jeff Bailey   5/9/02,  12:21:34 PM
WorldCom (WCOM) $2.00 -6% ... Moody's lowers debt rating on WCOM senior unsecured debt to Ba2 from Baa2 and on co's for commercial paper to Not Prime from Prime-2. The long-term ratings remain on review for possible further downgrade. Moody's rating cut to "junk" comes from Moody's anticipating that WCOM may have to provide security to its bank creditors in connection with the renegotiation of its 364-day facility. Should collateral be provided, the public debt would e effictively subordinated to future outstanding bank debt.

  Jeff Bailey   5/9/02,  12:14:57 PM
Applied Materials (AMAT) $25.00 -2% ... has given back all of this morning's gains as broader market action limits bullishness. If you played this one long from $22.99, error on the side of caution and make sure you get some gains.

  Jeff Bailey   5/9/02,  12:10:56 PM
Anthrax found in Fed mail facilities News reports that anthrax was found in the Federal Reserve mail facilities; headlines suggest trace amounts were found on standard pieces of commercial mail and that there was no powder, which could indicate that this is another case of spores remaining from last October, as was the case in Connecticut a few weeks ago.

  Jeff Bailey   5/9/02,  12:08:27 PM
Links to the site should now be working. "Bailey's Basics" Link

Has the PHLX lost its mind? Point and Figure charts? Link

  Jeff Bailey   5/9/02,  12:00:14 PM
Jeff: Would you be so kind, ref. yesterdays email, is the banking sector going to roll over, as stated in one of the OIN report over the weekend, MER situation etc. would cause a further down turn in the GS/MER/JPM, what do you read as far as put on GS/ also could you give me the index/sector symbol for the banks...files not onhand..writing this on laptop/wireless. S&P Bank Index (BIX.X), KBW Bank Index (BKX.X) and Securities Broker/Dealer Index (XBD.X).

For GS, most likely some shorts right at this level, using the relative low break of $80.35 and recent sessions highs of $80 as an action point.

Wild card in all of this is... nobody knows for certain what types of fines (if any) will be given. Who will be fined (if anyone) and if any fine may be simply covered by insurance.

With that said, just trading the technicals and not worrying about it is the best thing to do. The only time an option trader should worry is if/when they have overleveraged and have risked more than they can afford to lose. Point and figure is bearish Link , with vertical count of $66, stop at $82.

  Leigh Stevens   5/9/02,  11:59:13 AM
Subscriber NOTE: "Hi leigh, I would like to get your opinion on this. I currently have several contracts of the QQQ sep.-27 puts. while waiting for a pull down on Nasdaq was called into a meeting and the rest, as they say, is history. The options are down 50% from where I purchased them. Should I take the money and get out at a sign of a pullback or wait? Thanks for your opinion. (I know I should have entered a stop-loss before going into this meeting.)"

RESPONSE: Not putting a stop in place WHEN you make a trade has led to a grief at one time or another for most of us. I think you will see a pullback to the 30 area in QQQ, at a minimum. I am also watching with interest the area of the upside price gap that exists from 29 to 30, stemming from the higher opening on Wed. There is tendency for gaps to get "filled in" by trade down into these areas again. So, exiting your puts may be possible in the 29 area. That's the downside - a hoped for area to exit on a dip, with assumption that market is bottoming. On the upside, you can protect remaining value, assuming you do NOT want to risk the entire value of the puts, by exiting on a move to new highs, such as above 32.

  Jeff Bailey   5/9/02,  11:46:07 AM
please tell Jeff I said hello and that I am nauseous because I just bought Expedia June and July calls today. Oh well if every trade was a winner I would be stinking rich and what fun would that be(Yes I do have a fever).

Covered EXPE in the 11:00 Update. Not sure why a trader would buy BOTH June and July calls. Isn't one strike/expiration enough to begin with? Sounds like some OVERLEVERAGING going on and this too would make me sick. I've never understood why an options trader would initiate a bullish or bearish position with different expiration months. I can see buying a June call one day, then maybe two weeks later buying a July call as the trade works in my favor, but not at the same time. Burp!

  Jeff Bailey   5/9/02,  11:39:16 AM
FedEx (FDX) $53.27 +0.96% ... watch stock closely here for bullishness above $54. Talked about this one in this weekend's wrap. Doing battle with the 61.8% retracement of $53.23 and the 200-pd MA from 60-minute chart here. I "missed this one" as bullish yesterday at the open.

  Jim Brown   5/9/02,  11:06:14 AM
Swing Trade Position Update

Open Signals
Short QQQ at 31.10 stop at 32.10
Short SPX at 1078.75 stop at 1086

The markets are holding rather well after giving back only a small portion of the Wednesday gains. The direction has been sideways for the last 30 min as the markets consolidate and look for support. Numerous buy/sell programs after the open have stopped and everyone appears to be waiting for someone else to make the next move.

  Leigh Stevens   5/9/02,  11:04:48 AM
Subscriber NOTE: I noticed your comments on CSCO and went back and reviewed the financial information. I am surprised that in the words of Mr Chambers, "they hit a home run". Their growth was flat with the previous quarter, the 2% growth from Q3 last did not keep up with inflation. This does not say anything about the huge write off of inventory last year in Q3 which drove their net income negative. Also CSCO has been buying back shares to increase their earnings per share. In fact, their earnings are flat, net income is down by $100+M and they have a flat-line growth. Mr Chambers paints a bright picture, when in fact there's no growth to speak of and no forward guideance that things are getting better. I will short this stock, because some one will see this as smoke and mirrors reporting and drive the stock back to where it should be.

COMMENT: CSCO is trading back under its 50-day moving average today, so has sliping momentum; at a minimum, expect stock may work back down into its upside price gap, that begins around 15 and extends down to 13.5

  Jeff Bailey   5/9/02,  10:50:43 AM
Is there somewhere on the site I can review how to calculate bullish/bearish vertical counts? I am familiar with p&f signals and primarily use it for support/resistance, but would like to learn more. Thanks in advance!

Yes. In the "Bailey's Basics" section there are actually 3 pieces that I rate as a "must read" for those wanting to learn more about p/f charting.

"Understanding risk is key" "The bullish vertical count" "The bearish vertical count"

  Jeff Bailey   5/9/02,  10:42:33 AM
Hi Jeff, Good Morning. Do you think it is still a good time to enter the MACR play at 21.70? Missed this one when you profiled it.

Good morning back at ya! Yes, I like MACR here $21.52 -0.64% at the market. If you can watch the stock more closely, would look for a break above yesterday's at $22.05, or weakness below $21. Hey... $1 saved is $1 earned. 60-minute chart is interesting. Stock sitting right on the 50-pd, with 200-pd serving as support on Tuesday.

  Jim Brown   5/9/02,  10:39:54 AM
Swing Trade Entry Point Alert

The QQQ short was triggered at 10:34 when the QQQ traded below $31.10. Our stop is $32.10 which is 21 cents over the high of the day and a dime off the $32 price magnet.

  Jim Brown   5/9/02,  10:36:34 AM
Swing Trade Entry Point Alert

The SPX short was triggered at 10:27 when the SPX broke intraday support from yesterday and traded below our entry point of 1078.75. We are going to set a stop at 1086 which is today's intraday high. We will adjust that stop downward as the day progresses.

  Leigh Stevens   5/9/02,  10:36:12 AM
Index Update: Downside momentum is accerating as the NYSE Arms Index (TRIN) is at 1.3; Nasdaq TRIN is up to around 2.6. SPX is below near support, looks heading for the 1070 area; OEX is dipping under first support in 535 area - next support looks like 530-531; I earlier pegged COMP near support at 1650 - however, going back to the charts, natural support looks like 1642-1640

  Jeff Bailey   5/9/02,  10:34:37 AM
jeff, any thoughts on a short position on expe after the strong run up and the negative news yesterday??? thanks

As mentioned yesterday... from 60-minute chart, I show the 200-pd having served as support on 04/10/02 at $64.35, then again on 04/23/02 at $68.33 and yesterday at $73.96. Based on this, aggressive bear would at least want to see a violation of the 200-pd on the 60-minute chart. Stop above the 52-week high of $84.65?

  Jim Brown   5/9/02,  10:32:03 AM
Swing Trade Entry Point Alert

The Nasdaq appears to be the weakest index on a percentage basis. Maybe the Cisco bloom has finally faded. The QQQ has fallen to support levels from yesterday in the $31.25 range. I am going to initiate a trade signal on the QQQ to buy puts if it trades below $31.10. Our stop will be $32.10 if triggered.

  Jeff Bailey   5/9/02,  10:30:29 AM
Correction to 09:55:40 ... 10-year YIELD alert was at 5.248% retracement, NOT 5.48%. I didn't type the "2". Now you know where the "bad ticks" come from in stocks sometimes.

  Leigh Stevens   5/9/02,  10:23:29 AM
Sector update: the old favorites are bacck!, as the Healthcare Index ($HMO.X), Health Providers ($RXH.X), Forest & Paper products ($FPP.X), and the Precious Metals Index ($XAU.X) are all up fractions of a percent today, while tech sectors are back in the doldrums and in the red.

  Jeff Bailey   5/9/02,  10:12:40 AM
Dow Industrials (INDU) breaking back below yesterday's intraday support of 10,084.

10-year YIELD responds, slipping back below the 5.245% level.

Dow bear could short the diamonds here (AMEX:DIA) $101.06, stop above today's high at $101.61 target Dow 10,000 or $100.00.

  Jeff Bailey   5/9/02,  10:10:31 AM
Dow Breadth negative with 21 down, 9 up.

Losers GE -2.46%, WMT -2.46%, XOM -1.2%, DIS -1.5%.

Gainers BA +1.23%.

  Jeff Bailey   5/9/02,  10:03:33 AM
Semiconductor Index (SOX.X) 523.8 +0.27% ... turning green here Link . Playing follow the leader in AMAT? (grin)

Test from the bar chart just ahead at the 200-day MA. Link

  Jeff Bailey   5/9/02,  10:01:53 AM
Dynacare (DNCR) $22.76 +24.78% Link .... to be acquired by LabCorp (NYSE:LH) $99.97 -0.53% Link for approx. $480 million in cash/stock, plus assumption of $205 million in debt. LH expects the deal to be immediately accretive in 2002 EPS.

Isn't it funny how DNCR bounced hard from its bullish support? Almost like somebody was watching it.

  Jeff Bailey   5/9/02,  9:55:40 AM
10-year YIELD ($TNX.X) getting upside alert here at 5.248%. This comes from retracement of 68.16 to 42.80, which defines the range from the January 2000 highs to both the Sept. 1998 and Oct. 1998 lows.

  Leigh Stevens   5/9/02,  9:52:40 AM
Index Update: the pullback from yesterday's highs have caused the shortest (5) to longest (21) setting I use on the hourly stochastics to roll over -- both models now have had downside crossovers. So far, none of the indices have retreated back into their hourly downtrend channels, so are holding up OK on a technical basis. COMP could set back to as low as 1640 by day's end and still not violate technical support. SPX could pull back to 1070 and still maintain a bullish hourly chart, assuming it then held at or above this level.

  Jeff Bailey   5/9/02,  9:52:33 AM
Applied Materials (AMAT) $25.77 +0.82% ... bucking the broader market and sector action here. Bears may be a little jittery. Could put a bid in the semiconductors. Link

  Jeff Bailey   5/9/02,  9:47:06 AM
Dow Industrials (INDU) 10,092 -0.49% .... watching 60-minute chart here. 200-pd trending lower at 10,138 and 50-pd curling higher at 9,985. This defines a shorter-term trader's range. Could see a pullback test of 10,000. Yesterday's mid-session support was 10,084.

  Leigh Stevens   5/9/02,  9:36:07 AM
Index update: support areas look like - SPX > 1080, then 1070; OEX > 535 - 537; DJX > 100; COMP > 1650; NDX > near support at 1240, then around 1232; QQQ > 30.6, then 30.2-30

  Jim Brown   5/9/02,  9:32:52 AM
Swing Trade Entry Point Alert

After looking at the afternoon support on the SPX at 1084 and 1081 I am going to reinstate the SPX short if the SPX trades at 1078.75. This is under the midday low of 1081.25. If the play is triggered I will set a stop loss at that time.

  Jeff Bailey   5/9/02,  9:31:17 AM
5-year YIELD ($FVX.X) 4.599% .... I have retracement from 50.34 (5.034%) to 34.40 (3.440%). This gives me 50% retracement at 4.237%, 61.8% at 4.425% (broke back above this yesterday) and at 80.9% 4.729%.

  Leigh Stevens   5/9/02,  9:27:32 AM
I was thinking about this, this morning - a broad bottoming process, which is what I think we are in, will take time. These sudden rallies have set up false expectations before. The type and characturistics of this first correction to the monster rally of yesterday should tell us what we need to know -- especially, if the better trading opportunities will start to come on the long side.

The pull back here comes at resistance at the top end of hourly downtrend channels in some of the indices and after the market got overbought on a short-term basis.

  Jeff Bailey   5/9/02,  9:26:51 AM
Jeff: What level should a BEAR be worried about in bond YIELDS (5 10-year)

5-year ($FVX.X) 4.603% = Current levels or above 4.425% 10-year ($TNX.X) 5.230% = Current levels or just above 5.25%.

  Jim Brown   5/9/02,  9:22:31 AM
Swing Trade Signals (What is this?) Link

Nothing goes up or down in a straight line. The market needs to digest the gains from yesterday and the futures are indicating a slightly lower opening. Because of the large Wednesday numbers the first hour or or so this moring could be volatile. We could trade on both sides of the line as some traders take profits and others still attempt to cover.

We need to wait for this volatility to pass before attempting to open a new position. The SPX closed right at resistance at 1088 with more resistance at 1092 only four points away. The Dow has room to run with serious resistance not until 10250. The QQQ also closed near resistance at 32 and could struggle gaining ground. This corresponds with the Nasdaq resistance at 1700.

The bottom line is plenty of resistance ahead and a huge unsupported spike yesterday. Logic would tell you that our direction could be down but logic is not always what moves Wall Street.

  Leigh Stevens   5/9/02,  9:20:51 AM
Sun Micro (SUNW) has also been a leader in the tech sector, trading up another 5-6 %, after being up 12% yesterday. Buying came in after Morgan Stanley upgraded SUNW to an "equal weight" from underweight - now its becoming a heavyweight again.

  Leigh Stevens   5/9/02,  9:17:50 AM
Good Morning! It's showtime!, as the market tacks down some on profit-taking. Nas futures off 8, DJ down 34 points and the S&P is minus 3. Most of the early pressure emerged in tech as Cisco Systems (CSCO)has sold off a bit following its sizable run up (over 20%), after its better-than-expected earnings.


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