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  Jeff Bailey   5/29/02,  9:19:16 PM
Aquila (ILA) interesting reading in the prospectus for the $250 million notes. Link

  Jeff Bailey   5/29/02,  9:09:40 PM
I smell a rat in Aquila (NYSE:ILA) $13.86 -6.85%. Some things look similar here to what we "uncovered" in Adelphia (ADLAC, ADLAE) sometime ago.

When trading as Utilicorp (UCU), priced 11 million share secondary at $23 on Jan. 25. Needless to say, that secondary is under water with stock at $13.86.

On March 1, company announced a sale through underwriters of $250 million in unsecured, 30-year notes at a coupon rate of 7.875%. Stock was trading around $22.50 in UCU then. That may be in trouble here. If unsecured, then my best guess is that the buyer(s) of that debt are now "securing" its safety by shorting the stock. If UCU/ILA were to go under (only posing a scenario here) then unsecured debt is just that. Not secured by anything. Investment firms that bought those notes that need to manage their downside risk in $250 million may be short or shorting the stock.

Then, on April 19th, after a secondary offering and a placement of $250 million in debt has been offered, ILA lays the bombshell on investors when it reduces Q1 guidance to $0.32 a share, well below consensus of $0.61 a share.

You think that's "bad?" On April 22nd, Bank of America upgrades ILA to "strong buy" from "buy" finding ILA attractive at just 9.3 times FY03 estimated earnings. BofA believing that following Q1 preannouncement, the bad news is not out of the way. Stock was trading $23 that day.

If you're as bearish as I am on this one and think you smell a rat too, don't overleverage, stick with your trading discipline and remain focused.

  Jeff Bailey   5/29/02,  5:31:59 PM
Jeff, It seems like INVN is printing an inside day. Is volume a factor in inside days? Any thoughts would be appreciated.

Yes, INVN $23.50 +0.64% did trade an "inside day" today. To me, volume spikes shows interest and major disagreement between bulls and bears. For every buyer there's a seller and just the opposite is true.

Subscriber has peaked my interest here, and good looking short-term trade setup, but trader has to be disciplined.

I've take a retracement from $2.93 to the opening tick of $48.96 of 03/13/02, the day INVN reached it's 52-week high.

I like this retracement as it gives the trader a 50% retracement of $25.95, in essence 1/2 the range of INVN's bullish run after the September 11th terrorist attacks.

INVN is perhaps the "poster child" for what a straddle/strangle trader looks for.

Technician will note how the stock has been "hovering" around the longer-term 200-day MA last 5 sessions. At same time, that 50% retracement of $25.94 really does divide the stock's range in half. Note how this 50% level of $25.95 ($26 round number) came into play on the upward move as support back in early January.

Now... the retracement from $48.96 to $2.93 has 50% at $25.95, 61.8% at $20.51. Note that the 61.8% was violated to downside on 05/10/02 when stock traded as low as $19.10. Recent action has me thinking that market makers were probably covering some short inventory, but now we see the 50% retracement at $25.95 coming into play as resistance and volume is drying up a bit.

For me, this is a potential sign that there just isn't a lot of order flow from the buy side to get the stock moving higher. I then get a more "bearish" bias to the stock from a market makers perspective. Mind you, I don't know what their order flow is or how strong the buy side might have been at 61.8% or $20.51, but the dropping off of volume (like the market) is hint there isn't a lot of buyers at current levels.

Now... IVNV is one of those "crazy stocks." Nobody really knew the company existed until September 11th. Just like that, the market determines the stock is eventually worth $48.96? The last three months has the MARKET perhaps rethinking things a bit.

This type of "craziness" plays perfectly into a straddle/strangle trader's plan. All a straddle/strangle trader wants is "craziness" or volatility and a sharp move away from a pre-defined or observed "pivot point" like that observed at/near the $26 level. Link

There's also some "crazy" potential for bullishness in the point and figure chart Link . The stock is longer-term bearish as it has broken below its bullish support trend, yet you can see the little "pennant" and the break higher at $21 did unleash some demand pressure on the stock. The current bullish vertical count is to $39.50, and this may give just enough "crazy" upside to have any uncertain bears in the stock a little nervous if the stock breaks above $26.

I could paint both a bullish and bearish scenario for INVN based on the current market environment. The long columns of O's certainly looks like distribution (selling of the stock).

INVN has a rather small float with just 13.7 million shares, and 16.6 million outstanding. Average daily volume is around 1.9 million, so the stock turns over about every 8 trading sessions.

If you think of the float as "supply/demand" and how much trading activity there is in the stock, you can see there's potential for this stock to be very volatile, once a determined move is underway. Again, this can be something that plays into a straddle/strangle traders advantage.

I like a July INVN strangle with the July $25 call (FQQGE) $2.55 and the July $20 put (FQQSD) $1.70. This has the trader spending roughly $4.25 on 1 contract each. Using retracement as outlined, would target upside of 19.1% retracement near $40.17 or downside retracement of 80.9% near $11.72 as targets for the trade.

Stock traders.... I'd prefer to play the downside, look for a break below today's "inside day" and break below $23.11, stop just above today's high of $24.14. First "hurdle" for bear is 61.8% retracement of $20.51, and if stock breaks the recent lows of $17.42 from 05/13/02, then could drop quick to 80.9% retracement of $11.72.

Caution! I would not suggest any trader try and trade the underlying stock of INVN if you can't monitor it rather closely. However, an option trader playing a straddle/strangle may find that option strategy more to their liking if they can't follow the stock more closely, say .... a minute by minute basis. With tensions about terrorism getting much attention, would not simply short the stock, walk away and check back in a couple of days to see what's going on.

  Jim Brown   5/29/02,  5:19:05 PM
Pivot Trade Wrap (What is this?) Link

Triggered at the Close The markets traded sideways all day with several failed rally attempts. The semiconductors led the broader markets down with more negative news from energy companies helping grease the slide. Only six of the Dow 30 posted gains for the day. Support levels continue to shrink and internals are deteriorating.

This could be called the cliffhanger day. Just like the TV shows that leave you breathless with the season finale as the hero teeters on the edge of some calamity. The Dow dipped to 9926 just after 10:00 and then tried unsuccessfully to regain lost ground all day only to close back at 9926.78. Right on the edge of the support cliff.

The Nasdaq gapped down on the chip news and then posted a series of five lower highs before closing at 1624.90 and just below the edge of the support cliff. 1625 is not really a recent support level I can find. The closest would be 1630 on the upside and 1618 on the downside. Still 1625 held right until the close.

The S&P also struggled all day with several buy programs giving the bulls hope but all failing to provide lasting benefit. The morning low was 1068.13 and after trading back to resistance at 1073 it closed right back at the low of the day at 1068.28. With support at 1067 the S&P provided another cliffhanger.

The OEX traded in the 530-531support range four times with an official close of 530.11. The spurt of selling at the close pushed the index to the lowest level of the day and with support at 530 produced yet another cliffhanger.

After the opening volatility passed we established a signal to go LONG after a bounce off support but not until a trade over 535 to avoid the considerable resistance. We also established a SHORT signal to short the OEX/SPX/DJX on any OEX trade under 530. While the official close was 530.11 my Qcharts triggered an alarm at 16:00:16. I had to go to a "tick" chart to see it but between 16:00:14 and 16:00:32 the OEX actually traded under 530 as previous trades cleared. Using the official numbers the signal was not triggered but if there was any chance a trade was executed by a reader we will claim that signal. So we are SHORT the OEX at 530 in the Market Monitor. (SPX 1068 est)

The markets tomorrow could be internally challenged. The new lows beat out the new highs by 164 to 158 for the first time in ages. Declines significantly beat advancers 3855 to 2639. On the bullish side the NYSE TRIN closed at 1.63 and the NASDAQ TRIN at 3.14. Both of these are moderately bullish. This indicates we could see an oversold bounce at the open but with strong overhead resistance it may be of a short duration. Volume is still non-existent and as we near the May lows traders who bought those lows on May-7th may be getting nervous. Volume is a weapon for the bulls. Markets can go down on low volume simply due to a lack of interest but it takes volume to make it go up. Volume is the measure of supply and demand. When there is no demand any supply will push prices down. We still have not had a capitulation event and even Art Cashin is becoming more vocal about the real possibility of that in our near future. Thursday could be interesting. See you at 9:15!

  Jeff Bailey   5/29/02,  4:07:05 PM
Microsoft (MSFT) $52.05 -0.51% ... watched this heavily weighted stock in the QQQ trade today. Didn't do much, but held up "relative" to the QQQ. Stock looks near-term defensive still and most likely needs a move above $55 to get the QQQ going.

Most likely, tomorrow is "D-day" for my QQQ bullish trade from $31.07.

Lots of "garbage stocks" in the QQQ that have been longer-term weak looking weak once again.

  Jim Brown   5/29/02,  3:52:58 PM
Pivot Trade Signals
A little end of day nibbling here by buyers looking for a bounce. The bears have been unable to push the indexes below support as we near the close. This could be more bullish for the open tomorrow. Whenever support holds as well as it did today a few dip buyers will start thinking "new bull market" and come off the sidelines. I am not ready to go long into the close but I am impressed with its failure to fall further. The OEX downtrend I charted earlier is still looming over the buyers at 532.50.

  Jeff Bailey   5/29/02,  3:42:55 PM
Aquila (ILA) Now I remember... was stock listed in the Wall Street Journal article that may have some downside if certain "covenants" were not met (stock price, debt rating, etc.). Will note the stock is a "utility" and my fit with other stocks in the WSJ article like WMB that we've talked about.

  Jeff Bailey   5/29/02,  3:41:00 PM
Aquila (ILA) $14.00 -6.8% .... not sure why, but I had downside alert on stock at $14. Defensive here as stock breaks to new lows and gives another sell signal. Could get "flushed" on this break. Link

  Jeff Bailey   5/29/02,  3:38:17 PM
Biotech / Semiconductor as the session has progressed, the earlier gains in the BTK.X has turned into a -2.6% decline as the SOX.X -3% has stayed near session lows. Never sure, but quick check of relative strength chart between BTK.X and SOX.X shows that BTK.X came right up to a level of resistance. This may have had some hedge fund shorts coming into the biotechs, looking to try and "even the score" and short some near-term ineficiency based on past trading. Thinking BTK.X was weak versus SOX.X and with little bullishness in SOX.X, could prey on negative tech sentiment.

May hint that bears still rather aggressive and willing to lean on things.

RS chart of BTK.X versus SOX.X Link

  Jim Brown   5/29/02,  3:36:40 PM
Pivot Trade Signals
With the close approaching we are faced with what to do with our current trade signals. I doubt the LONG signal is in danger of being executed but the SHORT on a trade below 530 is a possible. With all the negative sentiment and the failure of the markets to mount a credible run intraday I am going to leave that signal open into the close. If we are triggered we will hold it overnight.

The problem of course is the chance that a negative close will result in an oversold bounce at the open. The NYSE TRIN is 1.34 and neutral but the Nasdaq TRIN is bullish at 2.50. The new lows are still ahead of new highs by 150/148 and the advance/decline ratio is sinking at .59. The bottom just fell out of the Russell again with another big dip to 485.75 and a loss of -6.66. It appears the odds are in our favor that this bearishness will hold over night. (Famous last words)

  Jim Brown   5/29/02,  3:26:57 PM
Readers ask why we don't use more charts in the Market Monitor. It is for those readers still on dial up connections. Just one chart can slow their refresh rate by 10-15 seconds. Two charts 15-30 seconds, etc. While we would like to include charts to make our points it is just not feasible in quantity. The actual Market Monitor page can grow to an enormous size on a day when everyone is contributing. We are currently working on a Java applet that will eliminate the automatic refresh and only do the reload when new content has been added. This will reduce the bandwidth requirements for each user to the minimum.

  Jim Brown   5/29/02,  3:19:30 PM
Pivot Trade Signals
The markets continue to weaken and the most telling example is this chart of the OEX. The descending wedge is slowly pressuring support at 530 with the descending trend line around 532.50 at 3:15.

  Jeff Bailey   5/29/02,  2:48:41 PM
"Tobacco stocks" showing some gains. Philip Morris (MO) Link point/figure remains bullish and vertical count still could be under construction and hints at $79. Link

RJ Reynolds (RJR) $69.98 +2.23% point figure chart also bullish. Vertical count is $92 according to Dorsey/Wright. Stockcharts.com RJR chart accounts for stock dividends and I believe this "messes things up" as to how the point/figure chart is charted. Link

This is a point of contention with me. I'm "old fashioned" in that I believe... "if somebody is willing to pay $65 before a dividend is distributed, then by golly, that was demand at that level. Don't go adjusting that $65 trade lower after a dividend is distributed."

Such action then should lead to the point and figure chartist adjusting the price further as investors in a non-tax deferred account would need to adjust the price further to reflect taxes paid on the dividend. See the chain of events that takes place. Pretty soon, you keep adjusting and true supply/demand not reflected in the chart.

  Jim Brown   5/29/02,  2:37:46 PM
Pivot Trade Signals
Anybody want to short this last bounce? It sure looks inviting since we did not reach the noon highs. The new lows finally overtook the new highs with 138 to 133. I cannot remember this happening for quite sometime. Are we seeing a trend change in progress? The "stealth" market may be running out of buyers as well.

  Jim Brown   5/29/02,  2:29:13 PM
Is there a symbol for the adv/dec ratio that you mention or are you doing it by hand (QCharts user). I have been unable to find.

I have been unable to find a Qcharts symbol either. They do have a symbol for advances/declines (ADVDEC) but that does not work for me. I use Interquote for this. I have the symbols for NYSE ADV (IINA.z), NYSE DEC (IIND.z), Nasdaq ADV (IIQA.z) and Nasdaq DEC (IIQD.z). I program Interquote to add the two advances and add the two declines and divide the advances by the declines. This gives me the ratio on a tick by tick basis. I do the same with the high/lows to give me the ratio on a tick basis.

  Jeff Bailey   5/29/02,  2:27:47 PM
Phelps Dodge (PD) $39.35 +3.52% ... interesting level of bullishness today in PD as stock breaks above a rounding lower 50-day moving average. Stock is primarily "copper" producer, not gold. Link

On May 17th, PD was cut to "sell" at Credit Suisse, stock gapped lower that day and has then turned higher. Has me wondering if CSFB was short and looking for some sellers to get liquidity to cover.

  Jim Brown   5/29/02,  2:22:37 PM
Would the owner of that buy program please stand up! We would like to congratulate you for shattering the afternoon doldrums.

  Jeff Bailey   5/29/02,  2:22:20 PM
U.S. Dollar Index ($USD) 111.63 -0.41% ... U.S. Dollar still showing weakness versus major foreign currencies. Current levels match those found just after the terrorist attacks. Technicians should have some alerts set at 111.30, which would be penny below the 111.31 low from September 16th. Q-charts symbol is cec:dx00y Link

  Jim Brown   5/29/02,  2:19:19 PM
While I may appear to be running all over the place with my posts today I am very happy to be sitting in my trading chair instead of "relaxing" like I did last weekend. Many of you probably know what I mean. Instead of taking the weekend off you probably worked in the yard, painted the house, etc. My wife decided she wanted a pond and waterfall in the backyard. We dug up and hauled 3 truckloads of rocks, little "cute" ones to monster 60-100 lb back breakers. Dug a hole big enough for a swimming pool and proceeded to "arrange" those rocks for two days. It still looks like crap, which means a couple more days of "relaxation" ahead. In my spare time on Monday I attempted to rake out the rocks and spread 100 lbs of grass seed on an acre sized lot next door. Compared to my weekend, today is a vacation! Now if only I could move my arms and legs without groaning!

  Jeff Bailey   5/29/02,  2:08:54 PM
Oxford Health (OHP) $46.93 +1.73% ... stock I've like for some time. Nice point/figure chart for trader. Bullish count dating back to November/December remains bullish at $71, stop $43. Link

Discosure ... I currently hold a bullish position in OHP.

First commentary on OHP Link

  Jim Brown   5/29/02,  2:07:17 PM
Jim Wow ! Remember the good ole days ! Wouldn't about one week or one month of 1999 be great about now? I remember all the excitement and trading intensity with stocks like yahoo and QCOM. John

Come on John, we could have all gone all month without reliving those days of huge gains. We may be doomed to this purgatory of trading for several more months before we can count on many stocks rising in value to where the stock price is more than we used to pay for option prices. I can remember paying $20 - $30 for call options on stocks like BVSN, CMGI, ARBA, etc. Now the $2.50 option on BVSN is ask at a nickel. Sheesh !! I remember well those picture perfect earnings runs on YHOO in the $250 range. Thanks John for ruining our day !!!! (grin)

  Jim Brown   5/29/02,  1:57:50 PM
Jim, how about this trade for a slow afternoon? Short BRCD with a target of $14.40. Denise

Looks good to me but I think your target may be a little short. I could see $13 or below in my cloudy crystal ball. Any takers

  Jeff Bailey   5/29/02,  1:54:34 PM
Newport (NEWP) $18.03 -2.38% .... Stock looks short/put here based on FOP.X weakness. I like the stock's inability to get above trend. Recent sell signal at $18, gives bearish vertical count of $13. Link

NEWP August $20 puts (NZZTD) $3.70.

  Jim Brown   5/29/02,  1:50:33 PM
Hi Jim, You mentioned a couple days ago about buying OEX calls around the 530 support level. Is there any change in this strategy? Martin.

Martin, I suggested this morning that we buy a bounce off the 530-532 area but that we hedge that bet by waiting for a trade over 535. As you can see we never made it back over 535 and now we are testing that 530 area again.

I think an aggressive investor would be on the right track buying calls at 530 with a tight stop at 528 but only if you can enter/exit trades quickly. This is commonly referred to as "catching the falling knife." We could easily bounce at 530 again but for trades in the market monitor today I want to see that resistance between 532-535 broken before going long. We could just as easily break 530 with the next stop at 522. With the negative sentiment and failed lower highs, I am now leaning to the bearish side. However, if the bears find they cannot push it below 530 then buyers may appear. The leading indicator here would be the Nasdaq. Where the OEX, SPX and Dow stopped just short of a new intraday low on the 1:30 dip, the Nasdaq DID set a new low. Dow support is 9922 but Nasdaq support is now not until 1600. We are setting up for s strong move as we near the 2:PM pivot point. Let your conscience be your guide !

  Jeff Bailey   5/29/02,  1:41:18 PM
Fiber Optic Index (FOP.X) $64.91 -2.7% ... new 52-week low today. Bearish vertical count grows to $52 and looking defensive. Link


  Jim Brown   5/29/02,  1:35:15 PM
While I am on the subject of Qcharts there is a feature on the new version that I do not remember on the old one. Under "TOOLS" there is a heading for "Symbol Ambiguity". Here you can enter your own symbols and the symbol you want displayed when you enter that short cut symbol.

For instance, I don't like having to remember to enter the symbol $OEX for the OEX so I put OEX into the list with $OEX as the result. Others you could short cut could be $TRIN, $SPX, $VIX, $RUT, etc. Or how about SP2 for the futures symbol SP02M? They already put the QQQ = amex:QQQ in there for you so you don't have to type the whole thing.

  Jim Brown   5/29/02,  1:19:01 PM
Could you post the symbol for TRIN. Thanks Steve

There are several symbols for the TRIN. I use Interquote and Qcharts. The Interquote symbol for the NYSE TRIN is simply "TRIN". The Nasdaq TRIN symbol is "NASTRIN". Using Qcharts the symbol for the NYSE TRIN is "$TRIN". I did not research the Nasdaq Trin for QCharts but here is a master list of all the index symbols for Qcharts.

Symbol List: Link
Click on "Indices" in the box on the left

  Jim Brown   5/29/02,  1:07:52 PM
Pivot Trade Signals
The markets are slipping deeper into the red and internals are deteriorating. This excitement level is like watching grass grow. They say never short a dull market but unless something changes soon that will be the trigger most likely executed. With the adv/dcl ratio back down to .61 and highs/lows 122/118 things are looking grim. AT&T was just downgraded which could give the Dow that extra push down the slope. Stay tuned !

  Jim Brown   5/29/02,  12:57:14 PM
More May-16th Trade Suggestions
Rick Keller suggested shorting AMZN ($19.50) because it had been recently selling off as it went into the close. That trend continued through May-22 when it hit a low of $18.22.

With IMCL at $13.50 Leon M suggested a $12.50 put. The stock gapped down the following Monday and traded below $10 on the 23rd. Good call Leon !!!

With NVDA at $38 Joe suggested buying calls. NVDA ran up to gap open to $40.65 on the 21st before dropping like a rock to $32.59 today. Like every play recently, if you were quick on the trigger you could have profited but you need to keep those stops tight!

With the OEX at 547 Ron wanted to buy May-545 puts. Good call, I hope you bought Junes and held them through the spike to 553 on the 17th and kept them until today! May's would have expired on the 17th ! (my error!)

  Jeff Bailey   5/29/02,  12:39:05 PM
Tenet Healthcare (THC) $73.04 +1.4% ... making a bullish move after recent test of rising 50-day moving average. MACD on daily interval very similar to that found in the RXH.X of which THC is a component. Link

Today's trade at $73 has p/f chart back into column of X. Needs a trade currently at $76 to get chart back on a "buy signal" and get vertical count back to the bullish side. Longer-term trend remains bullish. Link

  Jim Brown   5/29/02,  12:36:43 PM
On Thursday May-16th I asked for some trade suggestions from the readers to help us pass the time while the markets moved sideways. The winner of the day was Jonathan Levinson who suggested shorting the SMH on a break below $43.01. That suggestion turned out to be prophetic since the SMH has been dropping daily ever since. Good call Jonathan!

I am going to recap some of the others as the day progresses. Stay tuned!

  Jim Brown   5/29/02,  12:31:19 PM
Pivot Trade Signals
It appears the congestion mentioned in my 11:38 post has held. The day is far from over but once the buy program at 11:52 ran its course there was no follow through and 9980 on the Dow has held temporarily. The midday range has been very narrow with light volume the norm again. For a short time the new highs/lows were tied at 100 each but the highs have edged into the lead at 116/110 but only slightly. Any sustained downdraft this afternoon could reverse that.

  Jim Brown   5/29/02,  11:38:03 AM
Pivot Trade Signals
Nice bounce but we are approaching congestion at 9980/1640/1073/534. If the bounce has legs it will power through but if it is going to fail we are getting close to the level where it will happen. Adv/dcl ratio has improved some to .58 but new highs are still neck and neck with new lows at 100/98. If that ratio turns negative it could be a longer-term bearish indicator.

  Jeff Bailey   5/29/02,  11:30:16 AM
Genesis Microchip (GNSS) 25.00 -0.33% ... a stock we've mentioned in recent weeks. Perhaps good understanding here that this stock is "on a buy signal" from $25. Recently traded as high as $29, but we were actually cautious of stock at that level and looked for bullish 1/2 position entry at that time on pullback near $25. Stock gave that pullback right back to the triple-top at $25. Link

While I talk about how the market moves like an "inchworm" and follow the various sectors in that analogy, the same can and should be done within a sector. Perhaps GNSS is "tail of the inchworm" in the sector that is trying to show some bullishness. Bull in sector/stock wants to see firming at/near this past base, get a reversal going at $28, then see the stock create another buy signal at $30.

Note, once a stock has given a "buy signal" like GNSS has, it won't contribute to the Semiconductor bullish percent any further. Each stock gets "one vote" as it pertains to the bullish percent. Either its on a buy signal or a sell signal, but can't add to bullishness once a buy signal is given.

  Jeff Bailey   5/29/02,  11:23:44 AM
Semiconductor Bullish % from Dorsey/Wright and Assocates shows the sector is back in "bear confirmed" status, with 45.3% of the stocks in the group showing a "buy signal" (Column of X having exceeded a previous column of X) on their point/figure charts. AMAT is one of the stocks on a "buy signal" while INTC is not. Both trade in longer-term upward trends, but easily identifiable when/if they don't.

  Jeff Bailey   5/29/02,  11:20:30 AM
Semiconductor Index (SOX.X) 483 -2.7% ... trade earlier at $480 was enough to have the $20-box scale of SOX's p/f chart reversing 3-boxes and now sits on bullish support trend. Link

Good technicals to monitor and understand as it relates to Applied Materials (AMAT) Link and Intel (INTC) Link p/f charts. If you're monitoring these three things in semiconductor, you've pretty much covered the sector.

  Jim Brown   5/29/02,  11:00:00 AM
Pivot Trade Signals
The temptation to lower the upper LONG trigger is very strong given the dead stop just above our support levels. However, there is a lot of overhead resistance that pushed us down to the support levels to begin with. We want to wade through this resistance before going long. From the current 532 area to a trade over 535 is only 3 points. Be patient and let the trades come to us.

  Jeff Bailey   5/29/02,  10:47:10 AM
Biotech Index (BTK.X) $421.54 -0.8% ... turning red now. Only 4 sectors showing gains on my screen, not one of them is "tech" related.

Marginal gains in Retail HOLDRS (RTH), Drugs (DRG.X), Health Provider (RXH.X) and HMO (HMO.X).

  Jim Brown   5/29/02,  10:43:20 AM
Pivot Trade Signals
The advance/decline ratio is very negative at .49, which means there are twice as many decliners as advancers. The VIX is near the high of the day at 23.32 but not specifically bearish. The Nasdaq TRIN is bullish at 2.32, which means tech stocks are trading in oversold territory. The NYSE TRIN is in the midrange of 1.30 and neither bullish or bearish. New highs are barely beating new lows 87 to 81 and the closest race I have seen in sometime. In a nutshell, the markets are becoming more oversold after the opening attempt to bounce has failed.

  Jeff Bailey   5/29/02,  10:40:41 AM
Research in Motion (RIMM) $14.98 -5.78% .... getting downside alert here at $15, which is triple-bottom sell signal. Profiled this one as put in the RIMM Dec. $15 puts (RULXC) on 5/23/02. This is the level bears needed to see broken. Link

Disclosure... I currently hold a bearish position in RIMM.

  Jim Brown   5/29/02,  10:38:01 AM
Pivot Trade Signals
Now approaching those support levels I mentioned earlier.
Dow 9922 (now 9934)
S&P 1067 (now 1068.50)
Nasdaq 1632 (now below at 1628)
OEX 530 (now 530.93)

If there is going to be a bounce off this support it better happen soon!

  Jeff Bailey   5/29/02,  10:37:41 AM
Jeff, Do you have a target on WMB? A stop?

On 05/17/02 I profiled the WMB November $15 puts (WMBWC), no stop, with target to bearish count of $11.50 from p/f chart.

For stock trader, p/f chart gives good stop at $18.50, which would be triple-top buy signal. Link

  Jim Brown   5/29/02,  10:34:17 AM
Pivot Trade Signals
Despite the relative strength in the Dow/Nasdaq today the Russell-2000 has fallen off the cliff again with a -5.09 drop to 487.38. Mid-caps are following suit but not to the same degree. The BTK index just turned negative after trying to rally in early trading. The SOX just fell below the opening lows at 481.18 and is sitting at the lows of the day. Everything is turning red. Watch for a possible bounce at 530 but be prepared for the drop to accelerate should that level fail.

  Jeff Bailey   5/29/02,  10:28:55 AM
Applied Micro Circuits (AMCC) $6.25 -4.43% ... stock down after Needham cuts rating to "sell" from "hold". Link

We've talked about this company in the past and is OEM for Cisco Systems (CSCO). May also be a statement regarding Cisco's business near-term? Never sure, but if Needham believes business is slow at AMCC, then most likely not robust at CSCO. Yesterday, I profiled CSCO as short/put at $16.23.

Disclosure ... I currently hold bearish position in CSCO.

  Jeff Bailey   5/29/02,  10:22:28 AM
QQQ update $30.75 -1.18% from bullish profile 05/23/02 at $31.07. Will continue to hold bullish here, stop remains $29.95.

Biotech Index (BTK.X) 427.94 +0.54% showing marginal gains, but not offsetting negativity in Semiconductor Index (SOX.X) 483 -2.7%. Need those SOX to get turned around and get some bullish sentiment going.

Disclosure ... I currently hold bullish QQQ positions.

  Jim Brown   5/29/02,  10:17:10 AM
Pivot Trade Signals
See why we needed to wait for a trade over 535? Just no conviction by the bulls and too much negativity in the marketplace. Remember, we still have an open SHORT signal should the OEX trade under 530. If we fall out of bed here the next support levels are 9922/1632/1067/530.

  Jeff Bailey   5/29/02,  10:11:47 AM
Health Provider Index (RXH.X) 354.42 +0.22% .... after a nice little pullback last couple of weeks, came into the rising 50-day MA. MACD starting to round out on daily chart. Need a move higher, get MACD crossed ABOVE signal and should see some gains. Link

  Jeff Bailey   5/29/02,  10:08:54 AM
Community Health (CYH) $27.88 +0.61% ... I have retracement on stock from $25.35 to $20.36. This give us 50% at $27.85, 38.2% at $29.62 and 19.1% at $32.48. Link

  Jeff Bailey   5/29/02,  10:06:01 AM
Warming up to healthcare again .... Shares of Renal Care (RCI) $32.94 +1.51% are starting to treat bulls well since profile of 05/22/02 at $31.69. Link

Getting upside alert on Community Health (CYH) $27.85 +0.5% here. I like this one for short-term trader off "inside day" break higher. Target the $29.62 level, stop below yesterday's low of $27.30. Link

Disclosure, I have a bullish position in RCI.

  Jim Brown   5/29/02,  9:57:16 AM
Pivot Trade Signals
This looks like a good spot to jump into some QQQ calls. If the Nasdaq trades above 1640 with strength (QQQ 30.80) an aggressive investor could possibly scalp a few bucks on the QQQs. Resistance is $31.50-$32 so there is where I would look at setting a tight stop and/or closing the position.

  Jeff Bailey   5/29/02,  9:57:13 AM
El Paso (EP) $26.61 -22% ... stock gapped lower to open at $27.75. I'll keep an eye on the stock, but won't chase here. Link

Williams (WMB) $15.98 -6.6% still actionable and similar "problems" and EP and DYN.

Disclosure ... I hold a bearish position in WMB.

  Jim Brown   5/29/02,  9:49:46 AM
Pivot Trade Signals
We got the bounce at 532.25 but we need to wait for a trade over 535. It is still too early to pick a direction. The Dow set a lower high at 9983 on the second bounce and the Nasdaq stopped exactly on its previous high of 1640. The odds of a roll over with a drop out the bottom of the opening range is still very high.

  Jeff Bailey   5/29/02,  9:46:31 AM
Toll Brothers (TOL) $30.55 +0.92% .... will monitor this stock rather closely over next couple of sessions. One thing I didn't like in the CNBC interview was Mr. Toll saying "I see no end to the currently strong housing market." Comments like those can come back to haunt a person. If that is the case, I simply wonder why he just sold 700,000 shares? Link

  Jim Brown   5/29/02,  9:32:26 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
In anticipation of failed support let's SHORT the OEX/SPX/DJX if the OEX trades below 530. (SPX 1067 est).

If support at 9922/1632/1067 holds and it looks like we could get a bounce I want to go LONG but it is hard to issue a trigger before the fact. I would say a bounce off the OEX 530-532 area followed by a trade over 535. (SPX 1075)

  Jeff Bailey   5/29/02,  9:29:40 AM
El Paso (EP) $35.27 ... in follow up to this morning's 09:00 Update .... energy trader's point/figure chart is bearish. Vertical count is bearish to $28. Would look to put/short the stock on a trade at $32-$31, which would be a triple-bottom sell signal. Link

Similar chart here to what we saw in Dynegy (DYN) $9.69 at $20. Link

and what we've been mentioning in Williams Cos. (WBM) $17.11. Link

  Jim Brown   5/29/02,  9:24:00 AM
Leigh will not be contributing to the Market Monitor today or tomorrow. He had a family medical emergency over the weekend and had to leave town. He will be back on Thursday.

  Jim Brown   5/29/02,  9:19:31 AM
Pivot Trade Signals
Chip stocks appear to be leading the Nasdaq down in pre-market trading. The futures are negative after NVLS made cautious comments about lack of order growth without a rebound in IT spending. There are no economic reports today and stocks will be free to trade on their own merits. Given the negative sentiment about the chip sector this may not be a good thing. Also, Nortel said today that they do not expect a recovery in the optical market until late 2003 or even 2004.

Next support on the Dow is 9922, S&P 1067, Nasdaq 1632

The key question for today is "Do we buy support in anticipation of a bounce" or "Do we short the open in anticipation of another leg down?"

I am hard pressed to find anything positive for traders to hang their hats on this morning. But, the futures are not down far. Only -4 for the S&P and -38 for the Dow, -18 for the Nasdasq. With multiple upgrades of NVLS this morning there could be an underlying bid once the initial drop is over. The high put/call ratio of 1.08 at the close and the high TRIN at 1.72 would indicate a severely oversold condition and the possibility of a bounce. That bounce could be just an intraday spike. My initial thought is to buy any "bounce" at 9922/1632/1067. If there is no bounce or should that bounce fail we will go short below those levels. I will post the trade signals in about 5 min.

  Jeff Bailey   5/28/02,  9:55:05 PM
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