Option Investor
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  Leigh Stevens   5/17/02,  7:08:57 PM
Subscriber COMMENT: "It's really really cool you got to talk with mark weinstein. even better that mark shared his knowledge with you. it would also be quite cool if someone wrote a book about mark. a long interview, with maybe old charts of old trades and mark's reasoning.

i read your book. it's good. the info on measuring moves was valuable. and i liked reading about your psychology---simple consise and it's right. PS - from your comments in the book about always reasessing your opinion throughout a trade -- anyone who trades has to figure that out too. i did. -- it's a big step."

RESPONSE: yes, a big step. THANKS for positive feedback. Am glad that it was a useful read for you... Mark, like many if not most big professional private traders, does not like revealing himself. It took him several weeks of going back and forth about signing the release to let Jack use his material in his Market Wizards book.

One thing it took me time to understand -- the most successful private traders do NOT want to be known to the "public". They are not trying to sell anything and, in fact, anonymity helps them operate more efficiently with fewer people trying to pick off their orders.

  Jim Brown   5/17/02,  7:07:31 PM
Pivot Trade Wrap (What is this?) Link

Should have turned off the PC and gone to see the "Attack of The Clones" is what one reader said. The action today was even more boring than yesterday if that is possible. However, there was a very important shift in bias at the close. The markets opened up on the positive Dell earnings, exploding Book-to-Bill numbers and a surprise jump in the Consumer Sentiment. However the jump and the conviction was not nearly as strong as you would have expected.

The markets all sold off within the first hour and dropped back to threaten current intraday support levels. The Dow traded in a 30 point range for the next four hours. The S&P traded in a four point range until 3:PM. Is that boring? The news you want to hear was the stealth rally is alive and well. Each dip was shallower, each high was minutely higher as buyers fought the odds and bought stock.

Considering the strong gains earlier in the week we should have sold off intraday to the tune of -100 points or so. Instead we continued to firm as shorts and buyers alike continued pushing stocks higher. After 3:PM the market makers and hedge funds tried their best to hold the S&P to 1100, the Dow to 10300 and QQQs to $32. This is where the most options would expire worthless and produce the maximum profit for those who write options. It was a valiant effort but it failed when they were overwhelmed with end of day buyers.

The markets broke out of several levels of resistance and closed at the highs of the day with the S&P at 1106 and Dow at 10351. The Nasdaq was the laggard but it did stretch its winning streak to five days. Monday should be interesting. Most traders do not want to hold over the weekend after being burned so many times. After seeing the barrage of news over the weekend about the winning week in the markets we could see scores of retail buyers return next week. Fund managers, many rumored to have in excess of 20% of their assets in cash, could join in the fun if they think the train is gaining speed. Any rally next week could be short lived as the S&P has the mother of resistance at 1121 where almost every long-term average converges. After a strong week there could be a strong Monday but after that all bets are off. See you at 9:15 !

  Leigh Stevens   5/17/02,  6:52:51 PM
Subscriber QUESTION: "Enjoy your reports - learned a ton- Thank you. Question:- Is there a place on the website that details " Envelope Bands"? Also, noticed you use different parameters for the various indices- I would like to do the same with a basket of stocks - are there any guidlines- or is it pretty much a trial and error approach. "

RESPONSE: trial and error. Envelope bands "work" best on the Indexes in my limited experience. Now, this is not to say that individual stocks, particularly bellwether stocks like Cisco and GE, won't tend to trade with a reoccurring average volatility.

As you have guessed, its trial and error by eyeballing past few weeks/months highs and lows. I will put something on the website at some point. In meantime, you can read my book for details if you want.

I have done my envelope line percentage levels by trial and error almost exclusively once I saw how valuable they were in showing not only oversold/overbought areas, but at what PRICE -- this is what makes them more valuable than simple oscillators. For they are, really, a type of oscillator on the indexes.

My theory about this has to do with the nature of an index. The S&P 500 has traded 90-95% of the time within simple moving average bands or trading envelops that have not varied by more than 3% on the low end and 5% on the high side (most common however is 3-4%) for some 15 years that I have used them.

  Leigh Stevens   5/17/02,  6:34:04 PM
Subscriber QUESTION: "Leigh, when you say:" 'last run up in 5 & 21 hourly stochastics did not 'confirm' the most recent higher relative high.' "are you referring to a trend line across the highs of the stochastics or something else?

RESPONSE: I am referring to an index going either to:

1.)a new relative high - new high for a move - whereas the oscillator does NOT, instead making a lower relative high.

2.) a new relative low - new low for a move - where the oscillator does NOT also go to a new relative low and instead makes a higher high

#1 is a bearish divergence and #2 is a bullish divergence. You can illustrate this with a trendline as I sometimes do; or, just notice that the two (price and momentum oscillator) did not do the same thing.

  Leigh Stevens   5/17/02,  6:12:01 PM
Subscriber QUESTION: " Leigh, I noticed that the down trend line from Mar 19 on the SPX has not been broken on a closing basis. My thinking is until this happens we are not going up. How do you view this?. Incidentally, O-I is just doing a terrific job, many thanks."

RESPONSE: From the March high, using a line (close-only) chart, I have the S&P 500 ($SPX.X) closing above the March - May down trendline. Specifically, at the 1097.28 close on 5/14, then there was a return "touch" to the trendline (as I construct it), at 1091.07 on the 5/15 close. With the past two days rebounding strongly, SPX is well above this trendline. Can show this chart on my Sunday Index Trader commentary.

  Jim Brown   5/17/02,  4:01:01 PM
Pivot Trade Entry Point Alert - DJX/OEX/SPX
Was that prophetic or what? We were triggered at 15:57:10 when the SPX traded at 1106. I am always leery about holding index positions over the weekend but the bulls overcame significant resistance to post this breakout. Monday will definitely be interesting.

  Jim Brown   5/17/02,  3:56:36 PM
Pivot Trade Entry Point Alert - SPX/OEX
Cautious traders should cancel the open signal to go long the DJX/OEX/SPX at 1106. There is an increased chance of profit taking on Monday but there is also an increased chance that a close over 1106 could cause a serious short covering open. I am leaving the signal open just in case.

  Jeff Bailey   5/17/02,  3:52:13 PM
What's your take on DPH? Was looking at the point and figure? Any possibility of breaking out?

Hmmmm.... I like Daimler/Chrysler (DCX) at $48 Link as bullish count hints at $72

I'd sure have to think "automotive" with DPH and very similar technicals here too. $17.50 would be a spread-triple and vertical count is bullish to $23. Link

These are "boring" stocks so I'd look to buy some time and not try and short-term option trade them.

  Jeff Bailey   5/17/02,  3:39:40 PM
I want to thank you for your advice on Sony. However the stock has already had a big leap and may be one waits for a pull back. Can you advise the what pull back price should one expect to enter?

We had success with the options on entry at the pullback near $50.32 and 38.2% retracement. Now I would think a pullback for entry would be the 50% retracement of $55.62. This assumes the stock will pull back. These retracement levels are shown in today's 01:00 Update.

If the stock rockets above the $60.91 level and fills that gap from $61-$64, then you might look for a pullback to $60.91 as entry.

  Leigh Stevens   5/17/02,  3:11:49 PM
Subscriber NOTE: 'Subject: bang for short term buck'."Hello Leigh, I've got a quick question regarding your answer to the 10:58:44 (Market Monitor) subscriber question: you said you" 'generally favor OTM options' "because you try to trend ride. But for someone who dislikes holding overnight in this volitile trading environment and is looking to squeeze the maximum profit from relatively short index moves, isn't the best choice one strike ITM options? This seems to be the case with QQQ options anyway. Haven't checked DJX etc.yet. Any observations or comments appreciated."

RESPONSE: Agree with you on the reality that YOUR time horizon resulting in different, best choices in index option strikes and dates.

For what you describe -- "one strike, ITM (In The Money) options".

One of the great things about options is how creative you can be. My mentor was much more creative in their use, but he has regularily traded 1000's of OEX options on their expiration day. I'm not in his league.

  Jim Brown   5/17/02,  3:07:52 PM
Pivot Trade Signals
Option expiration Friday is following the recent pattern of watching the stocks/indexes gravitate to the strike that will cause the most options to expire worthless. That number for the Dow would be 10200 which means there could be some uncomfortable traders left there. The S&P number is 1100 and we are right on track to close on the money. This brings up an interesting scenario. If the retail buyers appeared and started pressuring the S&P just how much would the market makers and hedge funds be willing to spend to push it back down to 1100?

The number on the QQQ is $32. This could be why the Nasdaq/QQQs are having such a hard time today. As we near the close things could get interesting.

  Leigh Stevens   5/17/02,  2:58:54 PM
Subscriber QUESTION: 'Subject: call/put ratio'. "Leigh, Are you implying that a trend reversal based on this ratio means that within next 1-5 days the mkt should be trending down? How does VIX reading play in to your ratio? Thanks".

RESPONSE: Within 1-5 days of an extreme reading (e.g., "1", or, call-to-put volume ratio of 1:1), the market often REVERSEs its CURRENT trend.

If my Call/Put ratio is registering at or under "OVERSOLD" level, the reversal is UP; At fully "OVERBOUGHT" levels or above(e.g., "2.4" & up), there a DOWNside reversal is often coming soon.

Foregoing description is without a chart, but you probably saw that already on my 5/12 Sunday Index Trader wrap at Link

CBOE Volatility Index (VIX) number is not one of my primary market indicators, as I find that trader sentiment is most reliably measured using direct options readings daily. I classify VIX as a (price) volatility measure mostly.

  Jeff Bailey   5/17/02,  2:48:02 PM
Williams Cos. (WMB) heavy volume today in the Aug $15 and $12.50 puts at more than double the open interest. A break at $14 would have stock at new lows. Looks defensive here. This was one of the stocks mentioned in yesterday's WSJ article on "cash crunch" candidates. With what has take place in Enron and Dynegy (DYN) recently, bulls are going to be hard to find is my thinking. Link

  Leigh Stevens   5/17/02,  2:35:13 PM
Subscriber NOTE: "You wrote the other day as follows: 'CALL EXAMPLE: 5/13: June 1190 Call level at SPX 1160 = 15.00; 5/14: Open greater than 1075 trade objective; sold June 1190 Call at Open = exited at 25.70, for a 10.70 profit.' "My question is about your sentence: '5/14: Open greater than 1075 trade objective" - "do you mean, OPEN a trade as long as the SPX trades over 1075?"

Sorry it wasn't clear - edit as follows: 'the' open (was) greater than the objective.... 'therefore' the sale of the call on that higher opening (well above the suggested 'objective') should have been done to follow my trade recommendation regarding the trade objective.

A stated trade objective may result in selling on a much higher (lower) opening, due to overnight news. That trade rec of mine, with monday close just under 1075 objective, with a Tuesday opening actually resulted in SPX call openings that reflected an "actual" opening at 1086. I was trying to describe the results of the trade as it played out with the sharply higher opening of Tues., which you can really only see on the futures (SP02M) opening. The way the SPX cash index is calculated it doesn't take into account all those gap up openings on big S&P stocks when the first tick doesn't come at 9:30, very common whenever there are large order imbalances from a gap "event" such as some big earnings surprise.

  Leigh Stevens   5/17/02,  1:52:51 PM
Subscriber QUESTION: "As you know Wellpoint (WLP) dropped dramatically at the open climbed up and then fell back down..under 70. What are your short term thoughts at this time. Is it time to cool our heals on the Healthcare sector ($HMO.X) or is it time to pick up a baragin or two? Your thoughts please.

RESPONSE: Yes I noticed WLP drop on 14th. I still like the group and WLP appears to be consolidating nicely above 70 level. The 5-14 slip under 70.00 looked like they took out some stops.

WLP low (67.77) stopped right at a new trendline drawn to 3 points at the March low. Volume was a big jump on that sharp down day. A lot of selling was absorbed. I like the July 80 calls (WLP GP).

When other market sectors become in favor, there are corrections like this one, as money comes out of these stocks and goes into cheap stocks. These stocks are no longer cheap, but they do reflect a strong investment "theme" of managed health care and an aging population.

  Jeff Bailey   5/17/02,  1:46:27 PM
Jeff, I presume B Bid / B Ask is Best Bid & Best Ask. Aside from that, are there any difference when I should use them? It seems that it affect HOLDers and NYSE stocks more than NASDAQ stocks. Why is that? If I use these, do they affect how well the orders get fill? Please advise.

Your assumptions are correct. HOLDRS are listed on the AMEX where a specialist is involved, as are securities listed on the NYSE. These two markets are often called "true markets" as there is really just one bid/ask from the specialist. You will from time-to-time see NASD, CHGO, BOST, CINC, PHIL show up on the "inside" of AMEX and NYSE stocks, but they are usually running smaller orders or working an order for a client at a potentially smaller transaction fee.

For NASDAQ, you can have multiple market makers from all the various firms that are listed as market makers that are hopping around from bid/ask and this has the best bid/best offer really more volatile or at least ever changing. This can have an impact on how your order gets filled. There are all kinds of "rules" for market makers and how they must fill an order, but in some cases, not have to fill an order if an over-the-phone negotiation is taking place, despite them showing an offer to sell/buy at their stated offer/bid.

If I'm trading a NYSE or AMEX listed stock, I care more about where the NYSE or AMEX specialist has his/her bid/offers than I do about CHGO, BOST, CINC. Those are the smaller regional exchanges.

  Leigh Stevens   5/17/02,  1:38:45 PM
Subscriber QUESTION: "I see you talk of using a 5 hour and 21 hour stochastic setting. What do you use for the other settings? Is it 5,3,3 and 21,10,5? Thanks for the info in advance. I'm a new user to Qcharts and I'm just trying to get my charts setup the same way you guys use them so I can see what you are talking about on the Monitor. I really like your commentary, keep up the good work."

RESPONSE: I use 14 for daily with TradeStation software. I don't use any other stochastic settings than length 5, 14 & 21. 5,8,13,21 is fibonacci number sequence, that's why we use them. 14 is one off from 13, but got popular, so 14 length especially on daily, got to be the norm. I tend to use length 8 or 13 on weekly chart RSI and Stochastics.

I accept my applications' default smoothing settings; e.g., 3,3 - I suggest not bothering to change smoothing functions. 3 is norm. Play with lengthes.

  Leigh Stevens   5/17/02,  1:27:10 PM
Index Update: regarding momentum - there are periods of sideways consolidation, such as over the past 3 days in our present case, when momentum trading models don't "work", so to speak. An example of trading based on momentum is using stochastics as a primary aid to making trading decisions. Momentum ideas should always be checked against any recognized classic chart pattern, especially the current pronounced rectangle on the indexes.

A rectangular move in one or all the market averages is when the market trades in a narrow range for days at a time and highs and lows tend to fall on a similar/same level line, above and below. This box like pattern, after a strong move, is one of the most common continuation type patterns; ie, a pattern that most often resolves itself with a continuation of the prior trend.

  Jim Brown   5/17/02,  1:26:01 PM
Pivot Trade Signals
Hey Jim, I agree about a possible run but if that happens and the vix gets below 21 why would you sell your puts? I am holding Dow puts for June 10300, shouldn't I hold if the vix goes lower?

My timeframe may be shorter. I think the fact that the indexes did not rise today at the open was due to profit taking from the week's gains. The fact that they did not drop more than they did was the BTB numbers, which are very bullish for techs. I think everyone was waiting for a big profit taking drop that never came. This could cause anxious shorts to start covering at anytime. They do not want to get caught short on a gap up on Monday. There could be another rally this afternoon and Monday (stress "could"). Resistance is still strong here. Eventually the VIX will prevail and we will get a serious drop. I just think we may get a better entry point for puts later.

  Leigh Stevens   5/17/02,  1:14:29 PM
Index Update: ALL continue in the sideways pattern on the hourly chart, trading in a narrow range having probably (you think!?) to do with index options expiration today. Meanwhile, as I've said before, the sideways trend is causing the stochastic models to come DOWN. This for those of you who think they can always trade on momentum.

  Jim Brown   5/17/02,  1:13:45 PM
Pivot Trade Exit Point Alert - OEX/SPX
The OEX/SPX/DJX short should be closed at 1101, our entry point. The internals are improving and each index is trending higher. Let's get ready to go long on a breakout above today's highs.

  Jim Brown   5/17/02,  1:00:31 PM
Pivot Trade Signals - Tick Data
The data I was reporting for the TICK on Tuesday was incorrect. It was being shown in the net CHANGE field in my Interquote. I talked to an IQ support rep last night and the conversation went like this:

Me: What does the data represent in the "NET CHANGE" field for the TICK symbol in Interquote? I can't relate it to numbers from other quote services.
IQ: (long pause) The correct info used to be in the "CHANGE" field but now it is in the "LAST" field. The data in the CHANGE field does not represent anything anymore.
Me: Then why is it there?
IQ: Your guess is as good as mine!
Me: Wow, thanks for the info!

  Jim Brown   5/17/02,  12:58:21 PM
Pivot Trade Signals
Things are looking up some as the Dow approaches 10300 again. I considered closing the short DJX/OEX/SPX play early but I want to see if the Dow can get over 10300 first. The adv/dcl ratio is rising at .97 and nearing a switch to positive. (below 1.00 represents more declines, over 1.00 represents more advancers) The VIX has fallen back below 21 again and could be setting up for a close under 20 if we get a bullish run this afternoon. (bearish indicator) Let's just sit on our hands for awhile and see what develops.

  Jeff Bailey   5/17/02,  12:39:56 PM
Japan Ishares (AMEX:EWJ) $8.90 +2.65% ... Jeff: EWJ moving up nicely today, also Nikkei made golden cross 50 over 200 DMA

Yepper.... Look at those EWJ's... looks like a nice reverse head and shoulder, with neckline right here at $9.00. Lots of volume spike on the right side of the pattern, hints MARKET is interested. Link

  Jeff Bailey   5/17/02,  12:28:39 PM
LLL since today is option expiration, also noting some open interest at the $120 strike (call/put). Heaviest open interest is 1,613 at the May 135 call. Has me thinking stock settles out near $125 and more "neutral" to current option expiration. Take as much money out of play as possible.

  Jeff Bailey   5/17/02,  12:24:27 PM
Jeff, Current OIN play, LLL, is getting hit today. Showing sell signals across all time frame charts. Checked for anything on news wires with nothing negative. Stock getting ready to hit it's MA. Any thoughts?

I see good support at $120, which would be the 50-day MA, but does look vulnerable to a little pullback here to that level. Link

  Jeff Bailey   5/17/02,  12:09:50 PM
Kronos (KRON) $40.56 -3.3% ... suspicious drop in stock past 2 session. May be expiration related, but still keeping an eye on the stock. Break at $38 could be what we were looking for all along. Link

  Jeff Bailey   5/17/02,  12:05:31 PM
It's interesting to perhaps... the other night I was sitting at a restaurant eating dinner and was board. Started flipping through the mutual fund section and noticed a lot of "foreign" equity funds have done quite well in the past quarter. This perhaps ties in with past commentary we made regarding a Merrill Lynch call from early March, that foreign investments were perhaps "cheap" compared to the then valuations of U.S. stocks here. We did see some selling in the U.S.$ and Treasuries at that time too.

  Jeff Bailey   5/17/02,  12:00:20 PM
U.S. Dollar Index (dx02m) $113.19 -1.04% .... talked about this a couple of weeks ago.Link

Achieved its bearish vertical count of $113.50 and today's break needs watching.

Can have a "double-edged" affect on things. Good for multi-nationals based here in the U.S. that export goods/services overseas as the weaker U.S.$ creates a more competitive pricing structure to their product.

Conversely, a sharp decline can create "inflation" among U.S. consumers for goods/services that are imported to the U.S. as their dollar doesn't go as far as it used to. Saw a little bit of this in this morning's trade gap numbers.

Seeing a good round of selling in the U.S. Treasury today, and this too hints that some money may be leaving U.S. shores.

This is one reason too that we were bullish on Sony (NYSE:SNE) $57.91 +2.53% on the break above $50 back on March 6th. To get some exposure to Japan economy. Just one "bet," but so far has been a good one.

  Leigh Stevens   5/17/02,  11:25:35 AM
Index Update: DJX - Index has same pattern as S&P, as last run up 5 & 21 hourly stochastics were well under prior stochastics peak. 'Missed by a country mile', comes to mind! The downside crossover stochastic "sell signals" on DJX are "confimred" by a break of the recent well-defined horizontal support line at 102.3. A fair amount of selling will likely come in if this level is pierced. DJX support, below 102, looks like 101.1, then 100.6.

  Jim Brown   5/17/02,  11:21:05 AM
Server Issues
Obviously everyone has seen the challenges we are having with the Market Monitor this morning. It is not a server problem even though that is the message you are seeing. We have a programming problem from a change made last night and we are working diligently on getting it fixed.
We have been able to implement a stop-gap fix to allow the monitor to display but it is only temporary. We should have it fixed completely in the next 10-15 minutes. Until then the posts will be limited.
Thank you for your patience.

  Jim Brown   5/17/02,  11:04:17 AM
Pivot Trade Signals
The advance/decline ratio just went negative (-.94) With declines now beating advancers 2903/2738 on a combined basis. This is a significant change from the bullish 2:1 adv/decl at the open. Profit taking is probably the culprit but only time will tell.

  Leigh Stevens   5/17/02,  11:03:35 AM
Index Update: OEX - last run up in 5 & 21 hourly stochastics did not "confirm" the most recent higher relative high. Both indicators are now on bearish sell signals from overbought areas. Line up of both has usually been a decent "sell signal" for a good-sized pullback. Initial sell indications on stochastics models are "confirmed" on break of 541-540.

  Leigh Stevens   5/17/02,  10:57:37 AM
Index Update: SPX - minor double top now on hourly chart and index is breaking minor hourly up trendline. "Confirmed" correction underway on futher break of 1090 support.

  Leigh Stevens   5/17/02,  10:53:14 AM
Subscriber NOTE: "Dollar is down, Gold is up. Do we have new up-trending channels or do we have bearish rising wedges per the daily charts on QQQ, DJX, SPX, OEX, BBH. I believe this rally is options week related. looking for a drop next week Tues/Wed. Will be watching for rising wedge breakdown. Any thoughts?"

RESPONSE: A bearish rising wedge is not typical at market bottoms, but it can occur. The rising trend in SPX, OEX, COMP, and NDX have patterns of narrowing trendlines with an outline like a reverse megaphone which are like wedges.

Typically the rising wedge has a duration of at least 3 weeks, with anything less considered to be a pennant. Useful trade action with the pattern, whether it forms at a top or not, is to sell on a downside breakout of the lower rising up trendline, which is true of any trendline. The Q's are starting to dip below its lower trendline at the moment.

  Jim Brown   5/17/02,  10:51:32 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
We are now short the OEX/DJX/SPX when our entry point at 1101 was penetrated at 10:44:16. I should have gone with my gut feel at 1105 but hindsight is always 20:20. I am going to put a pretty tight stop on this play at 1103.50

  Jeff Bailey   5/17/02,  10:48:52 AM
Accenture (NYSE:ACN) $20.01 +0.05% ... heavy volume after pricing 93.5 million shares at $20. Dow Jones reporting that Goldman Sachs, which had been lead underwriter of the secondary offering, pulled out of the $1.87 billion deal, leaving co-lead Morgan Stanley as the lead underwriter. "Street talk" that lead underwriter was left buying a large chunk (perhaps 35 million) of the deal as a result.

Bearish traders should be on the alert should ACN discount below $19.50. Could have Morgan "dumping the shoe" if they can't support the offering.

  Jim Brown   5/17/02,  10:16:05 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
I also recommend we go LONG the DJX/OEX/SPX if it trades above 1106. The high of the day 1105.60. The battle is fierce here at resistance but if the bulls win and we get a trade above the days high we should go long. Further resistance is in the 1108-1109 range but it is not near as strong as the 1105 level. We will follow this trade up with a tight stop to prevent a roll over.

  Jeff Bailey   5/17/02,  10:15:19 AM
General Electric (GE) $32.90 +2.68% .... Hi Jeff, Volume seems heavy so far, and buying is a little "excited". Good call!!

Hey! This was a subscriber question for bullishness. I just liked it due to lower risk trade from "inside day" and decent target near $34.90. Link

  Jim Brown   5/17/02,  10:13:14 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Let's put my reluctance aside and short the DJX/OEX/SPX if the SPX trades below the opening tick of 1101. The advance/decline ratio is falling (now 1.55) on advances of 3149 and declines of 2031. Still positive but falling. The VIX has fallen below 21. I am also recommending a LONG in the next post.

  Jeff Bailey   5/17/02,  10:12:26 AM
Movie Gallery (MOVI) $18.53 +1.47% .... per last night's market monitor .... I've placed a retracement bracket from $8.96 to $27.51 on this stock. This gives me 50% retracement at $18.24, close to the recent secondary of $18.25. This then provides a "collar" with 38.2% at $16.05 and 61.8% at $20.42. Any break of that "range" could trigger action in direction of eventual break. Link

Looking at a December "strangle" in the $20 calls (QLVLD) $3.20 and $17.50 puts (QLVXW) $3.00. Options a little expensive in here due to option expiration where premiums usually get a little higher either side of expiration day. If stock will cooperate and hang in here for next week or two, then will get better premiums I would think.

  Leigh Stevens   5/17/02,  10:02:55 AM
Index Update: Support & Resistance - COMP resistance > 1759.3 at prior high, then, at 1780; COMP support > 1715; NDX resistance > at 1350.5 at prior high, then 1386-1387 area at top of hourly uptrend channel; QQQ: Resistance > 33.6 at prior high; then, 34.5 at top of channel; over course of the day top of channel rises to 35.

  Jeff Bailey   5/17/02,  10:01:36 AM
Michigan Sentiment came in at 96.0, which was above consensus of 93.0. Also above April's reading of 93.0.

  Jeff Bailey   5/17/02,  9:58:42 AM
Cisco Systems (CSCO) $17.45 +2.58% .. breaking above 200-day MA today. Will monitor for volume. I like to see BIG volume on breaks back above 200-day MA. For CSCO, I'd want to see something above 160 million.

  Jim Brown   5/17/02,  9:56:45 AM
Pivot Trade Signals
The Consumer Sentiment gained +3 points to 96 for May when analysts were expecting a slight drop. Just another bullish indicator for traders. However after an initial pop on the release the markets have paused again. The strong resistance right here is proving tough to overcome. I am suppressing a strong urge to short the markets right here at 1105. Somebody grab my mouse before I hurt myself!

  Leigh Stevens   5/17/02,  9:50:16 AM
Index Update: Support and resistance - One way to estimate "resistance" is by looking at the top end of the emerging hourly uptrend channels in expectation that resistance comes in at the upper trend channel boundaries. SPX: support > 1088-1090; resistance > 1104, at prior high, then in 1113-1115 area, at hourly upper channel line. OEX cleared prior high at 549.4; resistance > 555-556; support > 540-541; DJX resistance > 103.5 at old high; then, at 104.3 at top end of uptrend channel; support > 102-102.3

  Jim Brown   5/17/02,  9:49:37 AM
Pivot Trade Signals
There is serious selling into this rally. Many of the chip stocks are dipping into negative territory. Still the bulls are fighting to hold their ground. My personal bias is bullish based on the underlying strength in the markets this week. My trade bias is down based on an apparent struggle at resistance this morning. Other traders are definitely having the same confused thoughts and this promotes a volatile market rife with indecision and lack of conviction. We had best watch from the sidelines a few more minutes to see who wins this battle.

  Jeff Bailey   5/17/02,  9:47:42 AM
Jeff: still holding some OVER puts, what do we do as market seems to be more bullish?

I have retracement from $40.90 to $6.12, which is "fitted" retracement. This has 61.8% at $19.40 and would keep a snug stop just above there at $19.51 on the stock.

Yesterday was "inside day" and today might be too. Stock should break from option expiration next week. Stock has really underperformed the NASDAQ gains this week and relative strength is hinting that stock is getting out of favor. Watch that rounding MACD on the daily chart. That's the negative for a bear right now, thus protecting with a tighter stop at $19.50. Link

  Jeff Bailey   5/17/02,  9:45:41 AM
Jeff: still holding some OVER puts, what do we do as market seems to be more bullish?

I have retracement from $40.90 to $6.12, which is "fitted" retracement. This has 61.8% at $19.40 and would keep a snug stop just above there at $19.51 on the stock.

Yesterday was "inside day" and today might be too. Stock should break from option expiration next week. Stock has really underperformed the NASDAQ gains this week and relative strength is hinting that stock is getting out of favor. Watch that rounding MACD on the daily chart. That's the negative for a bear right now, thus protecting with a tighter stop at $19.50.

  Jim Brown   5/17/02,  9:41:21 AM
Pivot Trade Signals
Interesting that the markets have stopped right on resistance. If the 1.20 BTB and the largest gain in a year can't energize the markets then what will? Advancers are beating decliners 2797/1534 (combined) and new highs are beating new lows 79/15 (combined).

  Leigh Stevens   5/17/02,  9:40:12 AM
Index TRADING update: Liquidated my long SPX put being held per trade rec of 5/15 on Market Monitor, when I had anticipation of straight away pullback to 1080 - revised SPX stop at 1101 has been hit. The ironic thing is that I'm bullish and got clipped being short. There will eventually be trades on put side to pick off, but right now - don't fight the tape as, in this initial lift off phase, the bulls are not taking any prisoners.

  Jeff Bailey   5/17/02,  9:38:42 AM
Bull Confirmed! yesterday's action has the S&P 500 Bullish % ($BPSPX) reversing back into X's at 64% and now in "bull confirmed" status. Link

  Jim Brown   5/17/02,  9:37:30 AM
Pivot Trade Exit Point Alert - OEX/SPX
The high for the SPX during the first minute of trading was 1101.05, which we will use for our exit on the short play. This is only 20 cents below the original stop.

  Jeff Bailey   5/17/02,  9:36:26 AM
Genesis Microchip (GNSS) $29.41 +3.6% ... getting upside alert here at $29.76. Comes at 19.1% retracement of $29.76 (retracement from $72.41 to $19.70).

  Jeff Bailey   5/17/02,  9:34:50 AM
Sony Corp (SNE) $57.71 +2.17% ... stock gapping higher and trade at $57 is "bullish triangle" from p/f chart.

  Jeff Bailey   5/17/02,  9:33:46 AM
Emulex (EMLX) $32.44 +4% ... gapping higher this morning. Looked at this one yesterday for potential "inside day" setup today. Will look bullish 1/2 position here as I don't like chasing 4% gaps, but stock could move with NASDAQ-100 bullish % now bull confirmed.

  Jeff Bailey   5/17/02,  9:32:09 AM
Bull Confirmed! The NASDAQ-100 Bullish % ($BPNDX) is currently "bull confirmed" at 50%. Last Friday's closing reading was 28%. Link

  Jim Brown   5/17/02,  9:30:33 AM
Pivot Trade Exit Point Alert - OEX/SPX
The stop on the open OEX/SPX/DJX short is 1101.25. I want to close this play on the opening tick just in case it is lower than the 1101.25 stop. We will pick it up again once we see what is going to happen.

  Jim Brown   5/17/02,  9:30:23 AM
Pivot Trade Exit Point Alert - QQQ
I want to cancel the open LONG signal on the QQQ. The signal was to go long with a Nasdaq trade over 1735. Because the markets are likely to gap open above or exactly into resistance I want to see if it holds before starting a new QQQ long play. Repeat, cancel the QQQ long signal.

  Jim Brown   5/17/02,  9:30:11 AM
Pivot Trade Signals (What is this?) Link

The book-to-bill numbers are causing an opening bounce today. Dell is still positive with a +$.58 cent gain from yesterday's close. S&P futures closed right at resistance of 1104 after trading as high as 1109 overnight. The key here is to see if the good BTB news can power us over resistance after four days of gains already this week. (3 for the Dow)

The Dow resistance is 10300-10350, S&P 1100-1108, Nasdaq 1735-1750. A break over these levels would produce short covering. Those still short are already worrying about the BTB since chip stocks are seeing a nice bounce in pre-market trading.

  Leigh Stevens   5/17/02,  9:21:18 AM
Index Update: We're looking higher this morning, on the back of Dell's better than expected earnings. Nas Futures are up 22, S&P +5, DJ fututes up 40.

  Leigh Stevens   5/17/02,  9:19:22 AM
GOOD MORNING! We're having a little technical glitch, so will add our morning comments, for now, on top of yesterday's updates!


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