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  Jim Brown   5/21/02,  4:57:23 PM
Pivot Trade Wrap (What is this?) Link
A fun day in the markets. It was only fun if you were short but it was directional and fairly easy to trade. The gap and crap was picture perfect, (wish we had played it) and the rising Dow wedge between 10:00 and 11:00 was diverging from the broader markets, which telegraphed the eventual direction. The two short plays were successful for 3.5 and 3 OEX points each. ( 6.75 & 5 SPX points each) Not a home run but much better than Monday's results.

The Dow closed exactly at the 10100 level and has completely retraced the May-14th gap up. The SPX closed at 1080 and five points above the gap retracement level of 1075. The OEX closed at 538 and five points above its retracement level. The Nasdaq retracement level is 1650, about 14 points below the close. Leigh has been laying out these levels as critical for several days.

With the indexes so close to those retracement levels stated above there is a good chance the drop will at least slow if not rebound. This was the second daily drop of -123 points for the Dow and the Nasdaq came close to yesterday's -39 points with a -37 point drop. We all know nothing goes down in a straight line and even with all the negative news today the oversold pressure is building. With earnings news dwindling the chances for negative news outweigh the positive. The wall of worry is building as well. Wednesday should be exciting. See you at 9:15.

 
 
  Leigh Stevens   5/21/02,  4:01:07 PM
Index Update: The DJX and QQQ have reached my downside objectives for filling in their upside chart gaps from last week at 101 and 31 respectively. SPX, OEX, COMP and NDX are getting close. Stay tuned.

 
 
  Jim Brown   5/21/02,  3:56:15 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
The OEX/SPX/DJX short play was stopped out for a 3 point gain at 15:51:56 when it traded at 538.03 and above the 538 stop. The SPX was 1079.80 at the time the stop was triggered.

 
 
  Jim Brown   5/21/02,  3:51:19 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Change the stop loss to 538 (SPX 1080 approx)

 
 
  Jeff Bailey   5/21/02,  3:45:21 PM
Hi Jeff- Will you be looking to hold this QQQ position overnight or are you intending to close it out? Thanks, er, tanks in advance :)

If trader took some gains earlier as profiled from 1/2 position, then I'd hold the other 1/2 position overnight. We'll then get a reading on the NASDAQ-100 Bullish % ($BPNDX) and I'd want to see a reversal back lower.

QQQ still hasn't completely "filled the gap" to $30.98 and with weakness into the close and MSFT having filled its gap and then some, worth waiting for me until tomorrow morning.

No economic data tomorrow morning and Durable Goods and Jobless claims won't come out until Thursday before the bell.

 
 
  Jim Brown   5/21/02,  3:43:29 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Close or not? Here we are again. A winning position approaching the close. Historically, 3 of the 4 positions we have held over the close over the last three weeks have been stopped out at the open. Technically the Dow is at 10100 which has exactly filled the gap from May-14th The SPX has a little farther to go, about 5 points. The OEX level would be about 535 or about three points below here. VIX is rising, TRIN is rising, A/D has stabilized at about a 1:2 ratio. I am thinking "take the money and run." We could get a dip at the open OR a gap open on buying at support. With 20 min to go I am going to keep squeezing the stop until we are stopped out. If we get a sell off into the close I will close the play at 5 min till the close.

Change the stop loss to 539 (SPX 1081 approx)

 
 
  Jeff Bailey   5/21/02,  3:37:44 PM
Jeff: I'm holding some NVDA calls, any idea on what I should be doing?

I paraphrase the above as I don't know if they are profitable, at a loss, etc. I'm in the dark as to position of the trader, or what strike/expiration.

If profitable, I'd sell and take profit, move to sidelines and wait things out.

If at a loss, I'd sit tight and see if the stock doesn't firm up at/near the $36 level. I've got retracement from $71.76 to $13.99, which has 50% at $42.85 nad 61.8% at $36.02. Stock recently broke above downward regression right near the $36.00 level and look for that to be near-term support. 50-day MA sure looks like near-term resistance and first hurdle that bull needs to clear if target of $42.85 is to be achieved. Link

 
 
  Jim Brown   5/21/02,  3:16:49 PM
Pivot Trade Signals
Advance/declines are nearing the low of the day with a .52 ratio (4238 D, 2247 A) The TRIN has risen to 1.08 and neutral. The VIX is now at 22.23 and still on the bearish side of neutral. If there is going to be an afternoon bounce it should happen in the next 15 minutes but there are no signs of yet. I think Leigh's targets are right on the mark. Are we having fun yet?

 
 
  Jim Brown   5/21/02,  3:09:18 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Change the stop loss on the OEX/SPX/DJX short to our entry point of 541. (1084.50 approx) If we get an end of day bounce we want to prevent a loss on this position.

 
 
  Jim Brown   5/21/02,  2:59:53 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Free fall! That same 541 level that drew some buyers once hit now appears to have triggered a sell program as well. The Dow, SPX and Nasdaq are trading at the lows of the day as we move into the final hour.

I am changing the stop loss on this signal to 542 (1086.50 approximate)

 
 
  Jim Brown   5/21/02,  2:49:55 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
The short on the OEX/SPX/DJX was triggered at 14:43:50 when the OEX traded below support at 541. The initial stop loss is 544 (1089) but will be lowered as the signal progresses. The SPX level at the time of the OEX trigger was 1084.84

Of course the OEX came to a screeching halt once the 541 level was broken as support buyers got their orders filled !

 
 
  Jim Brown   5/21/02,  2:33:31 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
That was close ! The OEX traded down to 541.57 and the SPX to 1085.77. The trend has been sideways since 11:10 but after several attempts to break the upper range of the afternoon the trend appears to be leaning down. Traders call this a "heavy" market. The next drop could be the one that does not stop with OEX support, which is less than once point away at 541.

 
 
  Jeff Bailey   5/21/02,  2:31:43 PM
QQQ $31.45 -2.3% .... Lowering stop from earlier profiled stop of $32.20 (see 11:30/57) to $31.61. This would be just above the trending lower 50-pd MA on 5-minute chart interval.

Disclosure.... I currently hold both bullish/bearish positions in the QQQ.

 
 
  Jim Brown   5/21/02,  2:18:42 PM
Pivot Trade Signals
Jim, I am a novice and learning by watching. I would like to know, when you list alerts on Market Monitor (for example at 1:27 pm today) what instruments (and symbols) are you trading when these levels are reached? Also, where on the site is the overall description of the strategies for daily trading found? I thoroughly enjoy the articles but am having difficulty paper trading and following the ideas precisely as yet. Thanks, Linda

Linda, everyone has their preferences for what options they trade. Some like the wider spreads and wider range of movement on the S&P (SPX) Others are not as comfortable with those parameters and would rather trade options on the DJX which is the holders for the Dow. The DJX holders move like the QQQs which are also very popular. Very narrow spreads, sometimes only 10 to 20 cents.

I do not get into the individual options strikes in my recommendations. That discussion would take reams of electronic paper and weeks to argue out. There are three things you do not discuss in mixed company. Religion, politics and option strikes! (grin) Of course that is a joke but it is almost that bad. Every time I publish strikes in any of my articles I get dozens of emails asking me why I chose those particular ones. I also get dozens telling me I am crazy because I did not choose the strikes they like. I have elected to only make calls on entry points in the Market Monitor and avoid the email flood. This way I can concentrate on watching the market and not arguing ITM/QTM/OTM and front month verses 2mo,3 mo, 6 mo.

If you want information on what I am doing here in the Pivot Trade model click here: Link

If you want more in depth information concerning strikes and option trading in general then visit:

Options 101 Library Link
Traders Corner Library Link
Bailey's Basics Link
Ask The Analyst Link

 
 
  Leigh Stevens   5/21/02,  2:12:30 PM
Index Update: SPX, OEX, DJX, COMP, NDX & QQQ - All are on stochastic downside crossover "sell signals" now, and all the indices appear to be on target to downside objectives per my 11:17 update, repeated here: SPX > 1080, perhaps to 1075; OEX > 535; DJX > 101 area; COMP >1653 area; NDX > 1243 area; QQQ > 31.

 
 
  Jim Brown   5/21/02,  1:47:37 PM
Pivot Trade Signals
Jim..you state... "ONLY after prior support levels are passed. " Do you allow a certain number of ticks to pass or minutes or just so long as it goes past the number..

Personally I like to watch it for a minute or two until I am sure it is passed. A good rule of thumb is a whole candle on a five min chart. If the next candle confirms the trend then I go. It is just hard to automate that in a trade signal so that everyone can act on it.

 
 
  Jeff Bailey   5/21/02,  1:41:35 PM
Hi Jeff, Missed the stop on EMLX. Can you reconfirm the stop limit when you had mentioned this one as Long last week. Thanks, Appreciate your time.

Trader trading the "inside day" technique on the May 17th break higher at $32.50 (above Thursday's high of $31.48) would have been stopped out this morning on the break below yesterday's low of $31.32.

Those still long can use the converging 50-day and 200-day MA's or stop just below $29.29, say $29.24. Link

Point/figure chart is bullish, with first sign of trouble coming at $25. Link

Was profiled as bullish for 1/2 position long on May 17th in market monitor at 09:33:46. Did not profile a stop as trade was based on "inside day." If you aren't familliar with the "inside day" trading technique, please visit "Bailey's Basics" and review "The inside day trading technique." Link

 
 
  Jim Brown   5/21/02,  1:27:57 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
With a bounce underway from our slightly oversold conditions I think the prudent entry point for a long play would be ONLY after prior support levels are passed. Those levels for the broader market are S&P 1089, OEX 544. The Dow level for reference would be around 10225. We do not know if the bounce has legs or it is just an intraday oversold adjustment.

I am going to issue a signal for both directions so you can decide options/strikes in advance and be ready whichever direction the market moves.
Go long if the OEX trades above 544.25 (1089.50) with a stop at 542 (1086).
Go short if the OEX trades below 541 (1085.50) with a stop at 544 (1089).

 
 
  Jim Brown   5/21/02,  1:11:06 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
We were stopped out for a profit on the OEX/SPX short at 13:05:18 when it traded above 542.50 (The SPX equivalent at 1087.25 was not hit with 1087.12 the value when the OEX stop was hit. I told you it was approximate !!)
I am leaning toward a long as the next play. Stay tuned

 
 
  Jim Brown   5/21/02,  1:00:23 PM
Pivot Trade Signals
Interesting divergence among the indexes. The Dow/Nasdaq/S&P have all broken their intraday support levels dating back to May-14th. (10225. 1700, 1088) The OEX is the only major index that has held its support (so far) at 541. The analysts on stock TV have been talking about the "big cap rally" last week and this confirms the big cap strength. The Russell-2000 has fallen nearly -20 points since last Tuesday and is down nearly -7% again today. Look at a chart of these indexes that shows only the last ten days of trading and you will see what I mean.

 
 
  Jeff Bailey   5/21/02,  12:53:51 PM
Qwest Communications (Q) $4.92 -6.9% ... stock hit lower in last 30-minutes on rumor that one of the ratings agencies is going to downgrade Q's debt to junk.

 
 
  Jeff Bailey   5/21/02,  12:48:34 PM
Microsoft (MSFT) $52.30 -3.16% ... trading at session low and providing negative impact on QQQ that bear was looking for.

Disclosure... I hold both bullish and bearish positions in the QQQ based on calls/puts and bullish/bearish positions on the underlying security itself.

 
 
  Jim Brown   5/21/02,  12:48:09 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
We are nearing the 541 support level, which could provide a bounce. This may look like nit picking but let's lower the stop to 542.50. (SPX 1087.25) The Nasdaq is continuing to lead the indexes down as it fills the gap from May-14th. The Dow has slowed its decent but SBC is the only Dow stock up more than +.50 cents.

 
 
  Jeff Bailey   5/21/02,  12:34:58 PM
Dow Breadth more negative with 18 down, 12 up.

Continued session weakness in shares of Home Depot (HD) $45.64 -5.89%. Technology stocks like HPQ -2.3%, INTC -3.4% and MSFT -2.6% also worthy of note.

 
 
  Jim Brown   5/21/02,  12:28:38 PM
Pivot Trade Signals
Jim I realize the majority has spoken about wanting OEX alerts. However there has to be traders like myself that trade the SPX. In your 11:02 post you did put the SPX trigger in brackets(1094) but in subsequent posts (11:12 ,11:33) you did not put an exit point for the SPX. Would you please post this information for us SPX traders. In future would you please refer to SPX triggers at least in brackets. As a Canadian I cannot use Perferred Trade so that trade entry is not available to me. I have been a faithful subscriber for 2+ years now and all you guys have taught me "a ton" (hey maybe I should have used metric), so keep up the great work

I will try to remember to add that data. Yesterday, a SPX trigger was hit and the OEX equivalent was not. I got a flood of email about that one. The difference is normally minimal but a shift into big caps can throw the relationship off by several points. Just be aware the numbers are approximate.
Only 2+ years !! A short timer!

 
 
  Jim Brown   5/21/02,  12:22:23 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Let's lower the DJX/OEX/SPX stop loss to 544 (SPX 1090) and look for another entry point if we get a bounce. This is just above the last relative intraday high of 543.84.

 
 
  Jeff Bailey   5/21/02,  11:58:53 AM
Jeff: Can you update me on IGT. Still short from $61.50, but stock just not doing much.

I've been monitoring Intl. Game Tech. (IGT) $62.70 -1.6% closely and I still like IGT short. I have retracement as mentioned before from $71.06 to $38.90, which has 80.9% serving as resistance recently (stop just above there at $65.05). Looks like we need a close below the 50-day MA of $60.72 pretty soon though.

I also have regression channel on the stock and the stock has broken above this regression. Near-term, I do not like that action. Will continue to hold short, with stop at $65.05 and monitor closely. If stock comes down to $61 level and begins to firm, will then look to close out for small loss.

On thing I am liking is that MACD on the daily interval is beginning to round/flatten out a bit. Most likely need a sharp break of $58.77 (61.8% retracement) to get it below the zero level. Link

Disclosure: I currently have a short position in the underlying shares of IGT.

 
 
  Jeff Bailey   5/21/02,  11:48:19 AM
Microsoft (MSFT) $52.94 -1.99% .... trader that will flip to 15-minute chart interval gets some insight based on past. Note the 50-pd and 200-pd positioning currently. Very similar to that found on May 13th. Now we look for one of two things.

1) The past... where MSFT rallies to the 200 and 50-pd (currently at $54) and breaks above as found on 05/13, then gap higher on 05/14 or...

2) DIVERGENCE from the past

 
 
  Jim Brown   5/21/02,  11:33:03 AM
Pivot Trade Signals
541 is the next intraday support level for the OEX from May-15/16th. We could see a further pause there if we get another down draft. The drop, which began at 10:56 was especially violent but only covered a 70 point range on the Dow. It did push the VIX from 21.12 to over 22 in just a few ticks. Traders are trying to decide if it is safe to buy the dip and it appears they are beginning to nibble.

 
 
  Jeff Bailey   5/21/02,  11:30:57 AM
MSFT/QQQ For first 1/2 position short in QQQ from (10:04:22) near $32.16, will go ahead and close that 1/2 here at QQQ $31.46, as MSFT did fill its gap. Will hold the other 1/2 position QQQ short, but move stop down to $32.20 from previous $32.71.

 
 
  Jeff Bailey   5/21/02,  11:26:51 AM
Microsoft (MSFT) $52.91 -2.1% ... has "filled the gap" per 11:00 Update chart. Bear in the QQQ from earlier now monitoring closely and should look for QQQ to fill its gap to $30.99. QQQ trading $31.41 here. Seeing some bad ticks at $31.00.

 
 
  Leigh Stevens   5/21/02,  11:17:13 AM
Index Update: ALL have broken under near support levels and have downside MOmentum. Repeating the downside objectives I've had for a while: SPX > 1080, perhaps to 1075; OEX > 535; DJX > 101 area; COMP >1653 area; NDX > 1243 area; QQQ > 31.

 
 
  Jim Brown   5/21/02,  11:12:06 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
The drop is accelerating and I am going to change the stop loss to 545 which is just below our entry point of 546. The Advance/decline ratio has fallen to .64 with declines beating advances 3508 to 2269. TICKs are -690. The downgrade of the software sector and potential litigation against other brokers based on the details of the Merrill settlement are given as the reasons.

 
 
  Jim Brown   5/21/02,  11:02:48 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
We were triggered on the DJX/OEX/SPX short at 10:58 when the OEX traded below 546. (SPX 1094) The initial stop loss is a trade above 548. We will trail this stop down as the play progresses. The Nasdaq drop just picked up speed and the advance/decline ratio is worsening. Ticks are -540.

 
 
  Jeff Bailey   5/21/02,  10:58:33 AM
QQQ $31.86 -1.2% ... trader short 1/2 QQQ from earlier profile can round to full position short here. Stop on entire position just above $32.71. Will show both MSFT and QQQ 60-minute chart comparison in 11:00 Update.

 
 
  Jim Brown   5/21/02,  10:57:24 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
The broader indexes OEX/SPX are appearing weaker than the Dow. The Nasdaq/QQQs are setting new intraday lows. Let's short the DJX/OEX/SPX if the OEX trades below 546, just below the intraday lows. Let's put a tight stop on this at 548 if triggered.

I am changing to signals based on the OEX due to the high volume of reader email. The vast majority of our readers are trading the OEX options due to cheaper cost and higher volume. Many use Preferred Trade and can put in a trade trigger based on the index just like I am doing in the entry/exit point signals. Your wish is my command! OEX it will be.

 
 
  Leigh Stevens   5/21/02,  10:53:54 AM
ON THIS DAY in 1927 Charles Lindbergh landed in Paris and the world was never quite the same again. In honor of this achievement book a flight to Paris and check it out. May in Paris is nice too and the Parisians are not as rude as their reputation. Remind any that are unkind that we saved their hides in WWII -they love to be reminded of this.

 
 
  Jim Brown   5/21/02,  10:45:34 AM
Pivot Trade Signals
Indecision rules. The impulse to pick a direction here and launch a trade is tempered by the facts. The S&P needs to break the last relative intraday high at 1086.86 to give a long signal to the upside but with strong resistance at 1100-1105 there is no real upside potential. The risk/reward ratio is limited in light of the indecisive markets. To play the downside the S&P would need to trade below 1094 (the relative intraday low) to generate a signal to short. Just like there is limited upside potential the downside potential from 1094 is also limited. Support at 1090-1092 only gives us a handful of points before a potential bounce. I think the key here is the Nasdaq. If it continues to set new intraday lows then the other indexes will eventually follow. I am leaning to shorting resistance or a breakdown of support as the next signal.

 
 
  Leigh Stevens   5/21/02,  10:41:10 AM
Subscriber QUESTION: "Thank you for all of your valuable education and insight. I just bought your book and I'm looking forward to digging in. A few weeks back you were profiling stocks from the XAU, to take positions in the event of a pullback. I was wondering if I missed an update, or if you have stopped coverage. Could you comment in the Sector beat what your current assessment is of that sector and your previous plays?"

RESPONSE: Yes, will comment on XAU tonight. I didn't highlight the Precious Metals sector again as no substantial correction has developed that would allow a "safer" entry on some new positions. I am still revising and planning how to structure Sector Trader so that it is even more useful. Anticipate having a revised format by the end of this week.

 
 
  Jim Brown   5/21/02,  10:30:55 AM
Pivot Trade Signals
The advance/decline ratios just went negative indicating a worsening of the market internals. The TRIN is currently .60, which is still in overbought range. The intraday ranges are narrowing for the Dow/S&P as traders battle for control. We have a series of lower highs and higher lows on the Dow. Something needs to break soon.

 
 
  Leigh Stevens   5/21/02,  10:29:56 AM
Subscriber QUESTION: "Leigh: You do a superb job of explaining the technical jargon you speak about on the monitor!!! I need an answer, when the SPX is overbought(hourly chart) and the 5 and 21 rollover, would you play the downside until oversold??"

RESPONSE: I try. Yes to selling, when both stochastic lengths are overbought and have downside crossovers from the top of their range; also, it's significant if daily oscillator (14-day stochastic or RSI) is also at an overbought extreme. Of course, since the market appears to have bottomed (or is in that process) the downside is not the easy lay up type trade that it was.

 
 
  Leigh Stevens   5/21/02,  10:19:40 AM
Index Update: Key support levels - SPX > 1088; OEX > 540-541; DJX > 102-102.3; COMP > 1692; NDX > 1283-1284; QQQ 31.9-32; BREAK of any of these levels, with subsequent failure to get above them, would turn the short-term trend lower, from sideways.

 
 
  Jim Brown   5/21/02,  10:18:42 AM
Pivot Trade Signals
The morning shorting drop did not force the markets below support. The Dow dipped to 10230, Nasdaq 1700, S&P 1094 before bulls either bought the dip or sellers ran out of stock. The rebound was unsuccessful in reaching the morning's highs but the battle is still in progress. The Nasdaq and the QQQ have now gone negative and the Dow and S&P are weakening again. Still anybody's guess as to how the first hour of trading will end. Be patient.

 
 
  Jeff Bailey   5/21/02,  10:13:54 AM
Interesting was looking at 60-minute charts. I recently had to replace the Retail Index (RLX.X) with the Retail HOLDRS (AMEX:RTH) $98.50 -1.5% in order to have a sector to monitor with the retailers. I'll note a 3.12 million share trade from 05/01/02 at 13:30:00 from $96.15-$96.50. This was rather large trade and may be a level to watch closely. Home Depote (HD) comprises 40 shares of RTH and big weighting.

 
 
  Jeff Bailey   5/21/02,  10:09:01 AM
QQQ breadth a little more weakness now with 18 down. Most weakness is software with SEBL -3.5%, VRTS -2.9%, PSFT -2.2%

 
 
  Jeff Bailey   5/21/02,  10:07:12 AM
Microsoft (MSFT) $53.78 -0.5% .... 60-minute chart shows MSFT breaking just below a converging 50 and 200-pd. Gap from $52.06 to current levels could be filled, thus impacting QQQ negatively.

 
 
  Leigh Stevens   5/21/02,  10:06:53 AM
Index update: Resistance levels to watch - Nasdaq Composite (COMP) gapped higher on hourly chart above minor hourly chart down trendline; key resistance > 1740, high end of recent trading range; COMP would have to clear this level AND stay above it, to suggest that Nasdaq was busting out of its trading range; Nasdaq 100: 1341-1342 is top end of recent trading range and NDX needs to clear this level and stay above it in subsequent trading to suggest significant further upside potential; QQQ key resistance > 33-33.4; only a close above this level would suggest that this rally was going to extend higher.

The Nasdaq rally appears to be fading already. This is perhaps an aspect of what I talked about last night in Index Trader (at Link )about the attraction lower toward the chart gap areas and a sideways to lower move to cause a drop in the overbought daily stochastic readings.

 
 
  Jeff Bailey   5/21/02,  10:04:22 AM
GSTI Software Index (GSO.X) $128.99 -0.89% .... yesterday's we thought GSO break below the 129 level is what a bear in the QQQ's wanted to see. Getting some weakness in the GSO.X here and QQQ $32.16 -0.18% fractionally red.

Looking at QQQ on 60-minute interval and see a rising 50-pd MA at $31.90. Short-term trader can come in here with a QQQ short on 1/2 position, then would add to full on break of $31.84 should further weakness in the GSO.X be observed.

 
 
  Jim Brown   5/21/02,  10:00:02 AM
Pivot Trade Signals
We are nearing the end of the first 30 min of trading and the morning gains are evaporating. We will look for a bounce off support at 10200/1700/1090 or a breakdown of those levels. Today was a perfect example of the gap and crap scenario and a perfect reason for not buying the open on a regular basis. Aggressive traders can short the bounce and scalp a few points but this should only be done if you can enter/exit on a moments notice and can stand the losses from those days that do not turnaround. Advancers still outnumber decliners 27:22 and new highs outnumber new lows 65:34. The VIX dropped below 21 briefly at the open and still remains at a dangerous 21.22.

 
 
  Jeff Bailey   5/21/02,  9:50:26 AM
NASDAQ-100 Breadth positive with 92 up, 7 down and 1 halted (ADLAE)

Gainers have SPLS +6.2%, PDLI +3.4%, MLNM +2.9%, JNPR +2.9%, ABGX +3.3%,

Losers IMCL -3.3%, PSFT -2.5%, NXTL -0.5%

 
 
  Leigh Stevens   5/21/02,  9:47:39 AM
Index Update: Resistance levels to watch - S&P 500 (SPX) resistance > 1105-1106; hourly close over this level would be a bullish for still more upside, perhaps to 1120 area; S&P 100 (OEX) key resistance > 553.5; trade above this level for more than an hour suggests possible upside target to 560; DJX key resistance > 103.5; hourly close above this area suggests potential up to 105;

 
 
  Jeff Bailey   5/21/02,  9:47:31 AM
Dow Breadth positive with 26 up, 2 down and 2 unch.

Gainers have JMP +3%, SBC +1.4%, AXP +1.1%, C +1%

Losers are HD -4.6%, PG -0.86%.

 
 
  Jeff Bailey   5/21/02,  9:45:23 AM
Home Depot (HD) $47.01 -3.07% ... after reporting better than expected earnings, on conf. call, company says it remains cautious about the overall economic environment, but is forecasting Q2 comparable store sales to be up 2-4%. In Q2, HD will open 48 new stores, including 2 new design centers. Separately, expects Q2 gross margin rate to reflect modest expansion versus 2Q 2001. Link

 
 
  Jeff Bailey   5/21/02,  9:38:21 AM
Jeff: Yesterday's emails, regard MU, DRAM prices dropping, etc., retracements to lower level. Is a PUT play in place?, if so, what numbers are you looking at. Please include this in your morning comments/analysis, if you have the opportunity, since hundreds of emails are addressed to you daily. Thank you

I looked at MU yesterday and I'm torn 50/50 on put or call. Priced a straddle/strangle, but options look pricey.

I've had retracement from $44.99 to $16.39 and here too 50/50 with 38.2% retracement above at $27.31 and 19.1% below at $21.85, so stock is right in between these two levels and tough to assess near-term.

Point/figure chart is bearish with vertical count of $6.00.

If shorting due to more expensive options, would look to short just 1/2 position in here, and slap a stop just above the $37.31 level. Need a break below $21.85 to have shot at 0% retracement of $16.39.

 
 
  Jeff Bailey   5/21/02,  9:32:04 AM
Williams Cos. (WMB) $16.00 ... Company says that in its review of trading activity during the last two years shows the company did not engage in the strategy of so-called "round-trip trading" for the purpose of inflating volumes or revenues; because WMB reports its revenue on a net basis, less than 1% of reported trades it found with "round-trip" characteristics were not included in its reported revenues. CEO says, "round-trip trading didn't add a nickel to our revenues." Link

 
 
  Leigh Stevens   5/21/02,  9:30:56 AM
Index Update: The 5 & 21-hour stochastic models, already on bullish (upside) crossovers in the shorter 5-hour model, and about to in the 21 bar hourly stochastic - both from oversold areas. Looks like another short-term rally is underway. Still am a bit concerned about overbought readings on daily oscillators. Would like to see them back down for safe buy for longer-term call purchases.

 
 
  Jeff Bailey   5/21/02,  9:26:16 AM
PeopleSoft (PSFT) $21.84 ... stock edging lower at $21.68 after the Wall Street Journal reports that the SEC has charged Ernst & Young LLP with violating SEC rules by entering into lucrative business deals with PSFT. The SEC alleged that the accounting firm's profit-making marketing agreement in the late 1990s with the software company prevented the firm from serving as an unbiased auditor. Ernst & Young contests the charges, noting that the SEC is not claiming any error in the firm's audits or its client's financial statements. Link

 
 
  Leigh Stevens   5/21/02,  9:24:56 AM
Index Update: Merrill Lynch (MER) is active and higher by over 2 bucks as there is talk of a settlement with the NY Attorney General - Merrill will make a statement of "contrition". I suppose they'll say they are sorry that they duped investors by having many worthless Nasdaq buy recommendations on worthless tech stocks, as the Nasdaq went down in flames. So sorry, but come back to us and buy some more!

Normally, MER is a good guage of the market. Not a predictor, but it used to trade reliably in line with the market. Stock closed at 43.38. Has significant resistance at 45.50. Needs to clear this area, expecially on a closing basis, to suggest that its trend was reversing to the upside.

 
 
  Jeff Bailey   5/21/02,  9:20:50 AM
QLogic (QLGC) $50.41 ... stock edging higher at $51.05 after announcing that its Fibre Channel "switch-on-a-chip" has been implemented in the new Cisco SN 5428 Storage Router. Link

 
 
  Jim Brown   5/21/02,  9:11:43 AM
Pivot Trade Wrap - Update

S&P Futures are up slightly at +4.40 as yesterday's oversold conditions look for equalization this morning. The major indexes closed at support of 10225, 1700, 1090 and we would hope those levels will hold. The -125 point Dow drop on Monday was slightly more than 25% of the +440 points gained last week. Traders would gladly trade a +440 gain for a -125 loss every week.

News of a settlement between Merrill Lynch and the New York Atty General has contributed to a positive outlook for the beaten down brokers. The terrorist warning, which was used as an excuse for Monday's selling appears only a distant memory today. The Dow has now traded in a narrow range between 10200 and 10350 for five days now. The same range on the S&P equates to 1089 to 1106 and 1700-1750 on the Nasdaq.

The trade I would like to make here would be to buy the open on the lower end of this trading range and hope for a rebound back to the top of the range. However, we need to see if yesterday's weak close with no rebound at the bell is still lurking under the positive futures. We don't want to go long at the open only to see the markets roll over once the initial bounce it over. Stay tuned!

 
 
  Leigh Stevens   5/21/02,  9:11:18 AM
Good Morning - It's Showtime! Indication of a higher opening, based on the index futures - S&P 500 futures are higher by 4 pts., Nas futures up 10; DJ + 39 at moment. Looks like holding near-term support yesterday was telling for the market, at least for the short haul. Stocks just didn't have the selling to push them lower, below technical support in the indices, so looks like they try taking them higher. Chip makers are active this am and due a bit higher.

 
 
  Jeff Bailey   5/20/02,  4:44:33 PM
Today's action has already been archived. Please click this Link to view today's (Monday) entries.

 
 

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