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  Jim Brown   6/4/02,  5:17:14 PM
Pivot Trade Wrap (What is this?) Link

Greenspaned again! He just can't do it. His comments were all positive but just lacked the excitement traders were looking for. Yes, the economy is growing nicely but just not as fast as the first quarter. Yes, there will be a nice rebound but it will not be as strong as everyone wants because we simply did not fall far enough for that to happen. Bummer. Traders were disappointed and had been hoping uncle Alan would bail them out of bear market hell.

Speaking of the market, there were two attempts to take it down to support at 9600 today. The first one was successful with a 9592 dip but the second one was stopped just short at 9602. Both resulted in strong bounces and without the Greenspan comments in the middle the end of day results could have been much different. Still, 9600 held as did 511 on the OEX, 1030 on the SPX and 1550 on the Nasdaq. We should appreciate small favors.

Wednesday begins with the non-manufacturing ISM report at 10:AM. All indications are that the report will be positive, again. Most investors are still in denial that the recovery is underway and are more focused on India/Pakistan and tax evasion by a CEO making $100 million a year. The problem is still very low volume but the bounce today drew nearly 1.5 billion shares on the NYSE and 1.6 billion on the Nasdaq. Could it be that some sideline watchers are reading charts and realized that Dow 9600 was a successful retest of the January closing lows? If they were then they were betting that the next serious support at October's closing lows of 9050 are just too far away to be relative in a recovering economy. (famous last words)

Will tomorrow be a repeat of the last several weeks and mark yet another support level as broken? Who knows? I do know the Nasdaq has resisted breaking the prior support of 1560 on a closing basis for two consecutive days and that is a good sign. Despite the approaching summer doldrums this support could provide a base for future gains. Don't miss the action. See you at 9:15!

 
 
  Jeff Bailey   6/4/02,  4:41:50 PM
Jeff, I bought some CISCO July 15 Puts at the close today. What month are you in? I picked them up at 0.80c hoping for a little pop and get out. But the way this market has been going the last few weeks, it is a hard market to play on either side. But their are some big winners out there on either side. Just have to wait and be patient, which at times for me is hard.

I'm not playing the options in CSCO, but the underlying stock. I don't disagree with the $0.80 paid for the $15's as that is just about the amount of risk I profiled from $16.23 on 05/28/02 in the underlying.

I completely agree with your observation of being patient with things. Many stocks look to be hanging on by a thread and today, many did hang on and did not break some levels of support.

Thursday's Intel (INTC) $27.50 +3.3% is call is going to have both bulls and bears jittery near-term. For those bears that don't think so, they've forgotten what happened with CSCO earnings a couple of weeks ago and market action up to AMAT's mid-quarter.

Disclosure .... I currently hold bullish position in INTC and bearish position in CSCO. If you're thinking these trades offset/hedge each other a bit, then you would be thinking same thing that I am.

Technicals from p/f chart may explain as has been discussed in prior commentary.

INTC chart Link

CSCO chart Link

 
 
  Jonathan Levinson   6/4/02,  4:08:35 PM
Another action packed day, leaving many bulls and bears both happy and not-so-happy. Today's action remains firmly within the downtrend I see on the COMPX 30 and 60 minute charts. On the shorter timeframes, however, it's a different story. We'll look forward to seeing what tomorrow brings.

 
 
  Jeff Bailey   6/4/02,  4:01:41 PM
Attractive risk/reward and Intel (INTC) never sure, but may be similar to my past comments as it relates to point/figure chart with stop at $25 for bullish 1/2 positions from $28.79 Link

 
 
  Jeff Bailey   6/4/02,  3:59:01 PM
Intel (INTC) $27.27 +2.45% ... stock is holding gains, which is slight DIVERGENCE from some other stocks in semi sector.

Bank of America coming out with positive comments here on INTC based on chatter out of Taiwan of a Taiwan trade show that confirms their comments from last week; firm says motherboard mfg.'s are saying business will pick up in second-half of 02, recommends buying shares on attractive risk/reward basis, and notes that this comes ahead of Thursday's mid-quarter update.

Disclosure ... I currently hold bullish position in INTC.

 
 
  Leigh Stevens   6/4/02,  3:55:49 PM
Index closing Update: Backing and filling came sooner than I thought, as in TODAY - forget about tomorrow. That first rally looked like there was not going to be much opportunity to get on board closer to support.. The way it unfolded gave an opportuninty to buy some further dips in QQQ and OEX. In fact I find it hard to "trust" these rallies that turn around and go straight up. Instead, to "build" a base or bottom is better from the standpoint of assessing the buying/selling strength.

 
 
  Jeff Bailey   6/4/02,  3:54:48 PM
YLS.X and VZ trader's looking at 60-minute chart will note that YLS.X is below both its 200 and 50-pd MA's on 60-minute, thus VZ is stronger stock in the sector. Need the sector to continue lower for near-term success.

 
 
  Jeff Bailey   6/4/02,  3:53:32 PM
Wireless Telecom Index (YLS.X) 53.07 -1.4% ... good correlation near-term for traders in Verizon (VZ) and observations from 60-min chart there. Yesterday I posted chart of YLS.X Link and noted the 52.83 level as near-term support. Action into the close and today's trading ties in well with VZ at $42. Need some further sector weakness to help get any bulls to pull their bids as well as any bears covering short positions.

 
 
  Jeff Bailey   6/4/02,  3:43:42 PM
Cisco Systems (CSCO) $15.77 +2.87% .... Have been monitoring this recently profiled bearish stock (05/28/02 $16.23) for bulk of today's session. Will note that stock rallied in last 90-minutes to the rounding 50-pd MA. Much like VZ, this stock held together by 200-pd MA at $15.37. Tomorrow, should stock break the $15.12 level, the 1/2 position bear from previous profile can round to full position short and look for gap from $13.31 to $15.12 to get filled to downside.

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

 
 
  Jim Brown   6/4/02,  3:40:46 PM
Pivot Trade Signals
Everybody at lunch when we went long at 9600 just got another chance. Every time CNBC shows tape of Greenspan saying the economy is recovering slowly we take another hit in the indexes. Nothing changed from the reasons we went long. The Dow is at or near support and the OEX refuses to stay below 511. In my opinion the risk is minimum.

 
 
  Jeff Bailey   6/4/02,  3:37:36 PM
Market action seemingly found no buyers once bond market closed at 03:00. Earlier I thought market might try and rally to the close. I was wrong and glad I didn't profile anything long. As such, has me a little more bearish in my thinking that an hour ago as I'm now thinking plenty of sellers for stocks in here and the rally was simply based on technical action from 10-year YIELD.

 
 
  Jeff Bailey   6/4/02,  3:35:07 PM
Verizon (VZ) $42.20 +0.18% .... trader using q-charts on 60-minute interval can "slide" his/her chart to the right, go back and look at previous tests of 200-pd MA on 60-minute chart. I find similarity to the 03/08/02 to 03/22/02 date range. There too we saw a starting to roll 50-pd on test of 200-pd. Once 200 was broken at $46.80, bear got a nice move lower.

I had profiled VZ as short/put in market monitor on 03/24/02 at 10:16:56 near $46.06 not long after dates above. We've got some familiarity with the stock and should know what to look for and more importantly what NOT to look for.

 
 
  Jeff Bailey   6/4/02,  3:23:49 PM
Verizon (VZ) 42.10 -0.3% ... still monitoring this telecom stock from previous bearish profile on 05/31/02 at 02:55:29 Link . 60-minute chart shows a rounding 200-pd at $42 (current levels) and most likely what is "holding things together" near-term. Need a break of $42 to get stock going to our target of new lows.

Disclosure ... I currently hold bearish positions in VZ.

 
 
  Jim Brown   6/4/02,  3:07:10 PM
Pivot Trade Signals
The urge to close the open LONG signal here is strong. However, when I entered the signal I said to expect another drop today. Despite the apparent free fall from some Greenspan comment (just guessing) or another major sell program timed to coincide with the speech I still don't think the Dow can penetrate 9550. Let's hold this signal with the existing stop loss of a Dow print below 9545.

 
 
  Jim Brown   6/4/02,  2:48:50 PM
The Greenspan lull has commenced (he is speaking at an International Meeting of Central Bankers) while traders hold their breath fearing an "irrational exuberance" type statement. Since he wants the market to rise quickly so he can get rates back to level would suggest bullish statements ahead.
Keep your fingers crossed!

 
 
  Jeff Bailey   6/4/02,  2:43:38 PM
Morgan Stanley Cyclical Index (CYC.X) 560.95 -1.23% ... action here has me thinking that current trading in technology is simply some short-covering.

For most part, institutional shorts have focused attention on technology sector, not the stronger cyclicals. While CYC.X has recovered from its lows, would only think that gains in technology were more bullish if CYC.X were confirming with gains itself.

 
 
  Jim Brown   6/4/02,  2:36:47 PM
Pivot Trade Signals
Despite the bullishness breaking out all over the advance/decline ratio is still negative a .81 and new lows are beating new highs by a whopping 267 to 109. The TICKs hit a high of 1204 at 2:30 and the VIX is collapsing at 25.97. The TRIN has also collapsed at 1.01. Shorts are covering but still no volume from retail buying and this blip could die at any moment. Still, with all the indexes positive except for the Russell-2000 and an hour and 20 min left to trade we will take anything we can get.

 
 
  Jeff Bailey   6/4/02,  2:31:17 PM
60-minute intervals for shorter-term traders, good correlation lining up in the GSO.X, SOX.X and 10-year YIELDS as it relates to 50-pd and 200-pd ma's.

For instance... 10-year YIELD on 60-min shows 50-pd at 5.078%

GSO.X 50-pd at 121.59

SOX.X 50-pd at 480.

Observation has me thinking if 10-year YIELD doesn't break above its 50-pd, then may have SOX.X and GSO.X staying under there's while bond market still open. After bond market closes, we lose valuable info from YIELDS into the close for stocks at 04:00 EST.

 
 
  Jeff Bailey   6/4/02,  2:29:38 PM
10-year YIELD ($TNX.X) 5.028% ... session high YIELD was 5.034% in last hour, which "filled the gap" from yesterday's low. Interesting action based on comments from earlier today. While I didn't know for sure what the bond market was going to do, traders knew what to look for.

Of course, this is all very short-term observations, but is interesting how 10-year YIELD did seem to spark a bit of rally or recovery in stocks.

 
 
  Jeff Bailey   6/4/02,  2:24:02 PM
Semiconductor Index (SOX.X) 470.86 +4.3% ... nearing yesterday's session high, similar to GSO.X. Break above 471.62 could see some "buy in" from bears and further short covering. Link

 
 
  Jeff Bailey   6/4/02,  2:19:44 PM
GSTI Software Index (GSO.X) 120.70 +4.52% ... approaching yesterday's high. Break above 120.71 could trigger some "buy-in" and short-covering from bears. Bond market closes in about 50 minutes and market will lose bond market. Could then see INVERSE of yesterday's action and actually find buying into the close for stocks with 10-year YIELD at its session high.Link

Could be positive for Leigh's QQQ bullish trade.

 
 
  Leigh Stevens   6/4/02,  2:19:32 PM
Index TRADING Update: All the indices have flipped up from the low end of downtrend channels on the hourly charts, although there was much better definition on the Nasdaq channels. The hourly and daily stochastic models are flipping up - hourly has gone first (5-bar), 21-hour will follow if rallies here continue. Daily MAY flip up next - main thing with the daily model is that got fully oversold (finally). I like the OEX - besides the QQQ trade I suggested - my fill was 29.25 on QQQ. Was tempted to suggest OEX at same time - we're up some from the intraday low, but the bottom I was looking for in this time frame, is for more than a 1-day affair. It would not be surprising to see backing and filling, such as tomorrow, after this initial spurt.

 
 
  Jeff Bailey   6/4/02,  2:06:11 PM
AT&T Canada (ATTC) $30.65 -0.09% ... Moody's lowers the rating on ATTC's senior unsecured notes to Ca from B3. Moody's remains concerned that without some fomr of support from AT&T (NYSE:T) $12.23 +1.15%, company's debt will need to be restructured. Last week's release of the CRTC price cap decision, which provided little interconnect relief to ATTC, puts further doubt on the prospect that T will provide further support.

Chart of ATTC Link

Chart of T Link

I'm thinking some hedge funds might take this info and buy T, sell ATTC.

 
 
  Leigh Stevens   6/4/02,  2:05:39 PM
Index TRADING update: Suggest buying QQQ at current levels (last: $29.20) based on rebound from the low end of its downtrend channel. COMP has made an apparent double bottom and I like the risk to reward here, setting a stop just under todays low; e.g., 28.5. Also like apparent double bottom in SOX which I think is supportive.

 
 
  Jonathan Levinson   6/4/02,  2:01:03 PM
Questions about a long play in the QQQ at these levels. I'm expecting a rollover at 1575 on the COMPX, and remain loyal to the downtrend in which the COMPX has been trading. I note as well that this most recent buying has driven the TRINQ down to .44, which makes further upside more of a gamble than I like to see. Aggressive traders can try calls on a break above 1578, which is just above the high of the day, but be nimble and keep a tight stop under it. As discussed earlier, I will watch any call plays from the sidelines until the prevailing trend changes.

 
 
  Leigh Stevens   6/4/02,  2:00:33 PM
Subscriber QUESTION: " Leigh: can you explain how to set up moving average envelopes in Q-charts. Does your book cover the way you use envelops and the other indicators?

RESPONSE: Yes, on my book covering how I use envelopes and the other indicators. And no, I don't suggest switching to a different application just due to minor charting differences. If you want to test trading ideas and set up trading "systems" that is a different story.

Q-charts setting re "envelopes" - With a chart open, select Studies, then select "envelopes". Highlight the one line with their ("default") settings & chose Edit; set moving average length to 21 - no offset & "close' is correct "Source". Set percent to the desired level.

Only thing you cannot do on Q-charts is set 1 percentage figure for a lower envelope line and a different one for the upper line. This is not a big problem. After a move above/below the 21-day moving average you can reset the percent to allow for cases where it appears that an index has a tendency in recent weeks/months of having a somewhat greater volatility or range above OR below the moving average.

 
 
  Jeff Bailey   6/4/02,  1:50:19 PM
10-year YIELD($TNX.X) 5.012% ... YIELD at session high and looking to have an impact on MSFT if not other areas of the market. If 10-year YIELD is to fill the gap from this morning, then may see stocks firm as YIELD rises to 5.04%.

Bearish traders may want to look for some stocks that provide good resistance levels to short rallies based on what we're seeing related to the 10-year YIELD.

MSFT as an example shows near-term resitance up at $52-$52.25 level.

 
 
  Jim Brown   6/4/02,  1:46:57 PM
Buckle your seat belt - shorts are about to go for a ride!

 
 
  Jim Brown   6/4/02,  1:45:15 PM
I am looking at a Bloomberg and noticed 2300 June 500 SOX calls trade today. When I have noticed this kind of size in the past it usually preceded a decent move for the pile. I can't tell which side of the trade this was done on but I was noticing the SOX turn green. Any thoughts ? Jamie

Jamie, good research! I checked - this was the prices:

1500 @ 6.50 (high for the day) bid=5.50, ask=7.00 SOX 451.91 10:56:42
800 @ 7.40 (again high for the day) bid=6.60, ask=8.10 SOX 459.60 11:10:46

Somebody made a sizeable bet that the SOX would rebound from the May-7th lows of 455. Looks like a good bet !

 
 
  Leigh Stevens   6/4/02,  1:40:04 PM
Subscriber QUESTION: "Leigh, do you see any importance that the gap in the COMPX from may 8 was filled yesterday (Mon.)? a possible short term bottom?

RESPONSE: While we have continued lower after the gap was closed, we are not only looking at the initial chart gap having been "filled in" from 5/7-5/8, but are also looking a potential double bottom if the Nasdaq rallies from today's low. This is accompanied by the 14-day stochastic moving to a fully oversold level. I think we need to be alert to a bottom, based on these factors, as long as COMP doesn't break much below today's Nasdaq Composite low at 1548. Prior COMP low was 1560 - two lows with a 12 point difference is not much on the Composite, and double bottoms often occur in the same approximate area especially with a volatile item.

 
 
  Jonathan Levinson   6/4/02,  1:39:25 PM
Advancing volume has now exceeded declining volume on the COMPX, though the number of declining issues is still nearly double the number of advancers. The TRINQ has fallen to 0.5, and the QQV has given back most of its rise, and is up only .25 on the day. Price action is showing a bounce, but until the strong downchannel is violated to the upside, the trend remains down. So far yesterday's brief support in the 1575 area has acted as resistance, and 1550 remains the support area. I don't expect to see a sustained rally launch from here, but am watching carefully.

 
 
  Jim Brown   6/4/02,  1:33:07 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX
The initial stop loss on the current long signal will be a Dow print below 9545. I am using the Dow since any further drops will likely be Dow related. There are several minor intraday support levels between 9600 and 9550 with 9550 being strong support. If that support fails we want to be OUT of this position. Because the OEX/SPX are lagging the Dow we want to use the Dow numbers as the stop loss

 
 
  Jeff Bailey   6/4/02,  1:28:26 PM
Day Trader that's bearish MSFT is noting that 10-year YIELD at 5.002% isn't cooperating and would most likely takes small gain off the table in MSFT here at $49.90.

Swing trader makes the observation and perhaps understands why MSFT isn't just falling apart. (see 11:26:22)

 
 
  Jim Brown   6/4/02,  1:15:07 PM
Pivot Trade Signals
Explanation of my LONG signal. While I still suspect that we could see another dip I don't think the Dow can penetrate the 9550 level, only -50 points from the low just passed. Even with a dip to 9550 the OEX is performing valiantly and should not drop more than 3-5 points. The Nasdaq stopped at 1550, which was the bottom downtrending support line. Ticks were turning positive and advancers were starting to edge up on decliners. This was a gut feel based on minor confirmation of the indicators, a dead stop by the Dow on a century mark coupled with minimum downside risk.

 
 
  Jim Brown   6/4/02,  1:06:27 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Go LONG the OEX/SPX/DJX now in anticipation of a bounce off support at 9600 or below. OEX = 511.50 SPX = 1032

 
 
  Leigh Stevens   6/4/02,  1:02:40 PM
CBOE Volatility Index ($VIX.X) - Re my 10:35 post re VIX - "reading (today) is highest level since early-Feb, when the market bottomed after VIX reached a peak of 28.6. Highest VIX level before that, was a peak in VIX at 27.9 in November - after this, OEX climbed a 100 points. Best correlation I can find with VIX is to look for a significant bottom after the Index climbs over 27.00."

"Significant" needs to be better defined - it's not equal to "major", but could be construed many ways by mail I got. Actually, BEST correlation I found is for intermediate to major bottoms when VIX 21-day moving average rises above 35, then turns down. Market is a buy after mov. avg. turns lower. (Since 10/99, there has been one major and two intermediate-term "buy signals" on this basis). We're sure far from that!

However, what I can say relevant to VIX for the last 6 months ONLY, is that when VIX has gone above 27 on a closing basis and after it has turned DOWN on a daily closing basis, rallies of a few days to a few weeks have followed within a few days. VIX has continued to climb today - rising to an intraday high of 27.9. You are also familiar the statement that "past results are no guarantee of future results" - it applies here, but this jump in VIX is the type of volatility event that makes me want to be alert to a tradable bottom.

 
 
  Jim Brown   6/4/02,  12:55:44 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Cancel the outstanding SHORT signal at OEX 510.50.
I am starting to think there is a real bounce in our future. We could get another drop in the indexes from here but I think we should view it as an entry point instead of another shorting opportunity. Be prepared to go long on short notice later this afternoon.

 
 
  Jim Brown   6/4/02,  12:53:37 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Cancel the outstanding SHORT signal at OEX 510.50.

 
 
  Jim Brown   6/4/02,  12:52:42 PM
Pivot Trade Signals
More on the OEX divergence - The refusal of the OEX to break the 511 level to the downside is very bullish. With the Dow nearing the 9550-9580 support level I think there is a bullish bounce in the OEX in our future. Think about it. The OEX is only down -3.54 and the Dow is down over -107. Maybe a change in tactics is appropriate.

 
 
  Leigh Stevens   6/4/02,  12:47:01 PM
Subscriber QUESTION: "Got a double on on oex puts yesterday - would YOU have sold or held over until today?. Ringing the register is good, but it hurts the next day sometimes as trend continues!"

Was inclined to hold overnight last night the way market looked and did not suggest covering with only put/short play I had on (in QQQ). When there is a close on the low like that, the probabilities tend to be greater for continued weakness the next day, than for a jump on the following opening. I try to trade with the trend - hard to do when watching market day to day and taking "quick profits" hard to resist. Sometimes it helps to ask: if I took the trade now, do I think I have a favorable risk to reward; e.g, I assess near-term (upside) "risk" on short QQQ as 1, and I think further downside potential is 1. Is this a good trade? - that was question I asked myself this am, even though trend is still down. So, I took a profit, after holding overnight.

 
 
  Jim Brown   6/4/02,  12:46:13 PM
Pivot Trade Signals
Interesting divergence by the Dow and OEX. While the Dow has been steadily trending lower the OEX has been moving sideways just above 522.50 most of the day. The broader OEX obviously is not as impacted by drops in several stocks as the Dow. Either way it appears the afternoon breakdown could be any minute.

 
 
  Jim Brown   6/4/02,  12:21:24 PM
GE is still struggling with $30 support and one of the few Dow stocks not showing additional weakness to day. This is likely the last straw stock. As I said yesterday, if GE fails at 30 sellers for all the Dow stocks are likely to appear. There is a lot of volume on GE today with over 13 million shares already traded.

 
 
  Jonathan Levinson   6/4/02,  12:00:35 PM
Breadth has improved on an otherwise desultory COMPX, with declining volume beating advancing volume by roughly 4 million shares. The TRINQ is still in its range between .5 and 1. This feels much like the recent previous sessions, with fast opening action followed by a lull. Will the markets tank again? There's room to run downward, as evidenced by the QQV and TRINQ readings. I'm personally watching the 1550 level on the COMPX to signal a resumption the Nasdaq's fall. Note, however, that the Nasdaq is still firmly within its downchannel, and buying calls looks to me like trying to catch falling knife.

 
 
  Jeff Bailey   6/4/02,  11:30:10 AM
Short-term Option Traders It is just my opinion, but with VIX.X jumping to 27.17, option premiums are getting more expensive. If you're trying to "swing trade" indexes and buying offer and selling bid, chances are you're going to need something more than 10 or 20-minute swing trades. Link

 
 
  Jim Brown   6/4/02,  11:26:50 AM
Pivot Trade Signals
New lows are beating new highs by a better than 2:1 margin with 199 lows to 83 highs. (combined markets) The advance/decline ratio is negative at .65 with 3512 decliners to 2291 advancers. The Russell-2000 is only .17 cents above the low of the day of 471.50. This is only three points above last support at 468 and 14 points above February lows of 457. The midcaps as evidenced by the MDY have also broken to 3 month lows at 93.72.

 
 
  Jeff Bailey   6/4/02,  11:26:22 AM
Microsoft (MSFT) $50.00 +1.17% ... short-term traders.... one "concern" I have near-term is monitoring MSFT agains the 10-year YIELD ($TNX.X).

A short-term trader that is BEARISH on MSFT, does NOT want to see the 10-year YIELD fill its gap higher from this morning's gap lower.

Case in point would be YIELD action from as recent as May 23rd. You can really see how MSFT and 10-year YIELD worked in unison on 60-minute chart interval.

 
 
  Jim Brown   6/4/02,  11:17:34 AM
Pivot Trade Signals
The intraday trading is eerily similar to yesterday's high volatility at the open followed by pure boredom for the next four hours. I get the feeling that with no buyers everyone is simply waiting for the next sell program to trigger and take us down to the next level. The lack of buy programs below 9700 looks to me like continued apathy by institutional buyers. We had two buy programs after the morning drop but neither created a bounce with legs. The immediate stop when those programs pushed the Dow back over 9710 would indicate there are sellers waiting for any rally.

The Dow transports have been struggling with support at 2700 and it appears that support has now failed. For any Dow rally the transports must confirm with a corresponding move or the rally will fail according to Dow theory. If the transports are now breaking down then that would be confirmation that the Dow has more selling ahead. 2640 is the next support for the transports.

 
 
  Jeff Bailey   6/4/02,  10:37:55 AM
Microsoft (MSFT) $50.27 +1.62% ... short-term bear can come in here with short on stock, start with stop $52.50 and target $47 near-term. Looking at downward regression and stock has rallied this morning to mid-point of this regression.

Bearish trader looks for a trade at $49 to get stock back on a sell signal and create bearish vertical count of $41 Link , which could be achieved should market internals continue to weaken, especially the S&P 500 Bullish % ($BPSPX) (see 09:45:49)

More cautious bear can wait for today's trading to complete and see if stock won't set up "inside day" for trade tomorrow. Link

 
 
  Leigh Stevens   6/4/02,  10:35:40 AM
CBOE Volatility Index ($VIX.X), based on S&P 100 (OEX) index trading, moved to a new high above 27.00 this morning - this reading is highest level since early-Feb, when the market bottomed after VIX reached a peak of 28.6. Highest VIX level before that, was a peak in VIX at 27.9 in November - after this, OEX climbed a 100 points. Best correlation I can find with VIX is to look for a significant bottom after the Index climbs over 27.00.

 
 
  Jonathan Levinson   6/4/02,  10:35:07 AM
Nasdaq market breadth has been deteriorating, with decliners now beating advancers both in volume and number of issues. Despite that, the Nasdaq-100 Volatility Index ($QQV) is up only .53 as I type, and the TRINQ is below 1 at .74.

 
 
  Jeff Bailey   6/4/02,  10:33:43 AM
Hershey Foods (HSY) $64.28 -2.28% ... stock down after company announces that a negotiating session betwees reps of HSY, a federal mediator, and leaders of the Bakery, Confectionery, Tobacco Workers' and Grainmillers' Union broke down today after union negotiators refused to recommend improved company proposals to the membership. HSY said they will restart production using temp workers. Link

 
 
  Jim Brown   6/4/02,  10:28:44 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX
We were stopped out of the OEX/SPX/DJX LONG signal when the OEX traded below 512 at 10:19:42 (SPX 1035.30)

The SHORT signal is still active on a trade below OEX 510.50 (SPX 1033 est)
There is no LONG signal at this time.

 
 
  Jonathan Levinson   6/4/02,  10:15:42 AM
Nasdaq advancing volume 210,439,600, declining volume 118,753,904, unchanged 3,292,500, though there are 21 new highs and 107 new lows as I type.

 
 
  Jeff Bailey   6/4/02,  10:15:12 AM
Challenger layoff announcements, as measured by Challenger report, were 84,978 in May, down sharply from 112,649 in April. Though somewhat good news to markets, the layoff announcement data doesn't really correlate with other economic reports, as the timing and even the number of the layoffs is not a certainty even after the announcements are made.

 
 
  Jim Brown   6/4/02,  10:12:18 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
We were triggered on the OEX/SPX/DJX LONG at 10:02:44 when the OEX traded above 514.75 (SPX 1038.64 est) The initial stop loss for this signal will be OEX 512. (SPX 1036 est).

Selling appeared immediately after the break out to a new intraday high. This could be a short trade signal if internals don't bounce quickly. The adv/dcl ratio is up to .90 and nearing an even balance.

 
 
  Jeff Bailey   6/4/02,  10:06:18 AM
YIELD watch Closely monitoring the 10-year YIELD here at 4.979%. With retracement from 5.507% to 4.096%, monitoring the 61.8 retracement of 4.967% level. Equity bears really need a break below that level for signs market getting more defensive and running to safety of bonds. If so, then next lower YIELD level on this bond to look for YIELD support is the 4.801% YIELD level. There, I'd then look to lock in further some bearish gains in stocks short/put that have moved from entry points.

 
 
  Jim Brown   6/4/02,  10:03:21 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
The bounce stopped just short of yesterday's close on the Dow/OEX. The Nasdaq has moved into positive territory and advancers are gaining. Is this a head fake or a real indication of a bounce? I think the morning ranges have now been defined and I am going to suggest plays for each direction.

Go LONG the OEX/SPX/DJX if the OEX trades above 514.75 (SPX 1040.50)
Go SHORT the OEX/SPX/DJX if the OEX trades below 510.50 (SPX 1033)

 
 
  Leigh Stevens   6/4/02,  9:59:00 AM
Index TRADING Update: QQQ - falling to low end of an hourly downtrend channel, which intersects either at today's low at 28.65 or at 28.4, depending on how you draw the low end of an hourly downtrend channel. 28.4 is also the level of the early-May low. Expectations will be for a re-test of this level, which may or may not happen.

It makes some sense to take profits on short positions here or a dip under 29.0, at least shorts taken per my Friday suggestion when the Q's reversed at 31.0 resistance. Q's are rebounding from today's low and trading back above 29.00; exiting here as opposed to waiting to see if my downside target for 27.70-27.50 will be met. On risk to reward basis, it's sound strategy. QQQ is fully oversold now on an hourly basis and close to a fully oversold extreme on a 2-week (14-day) basis.

 
 
  Jim Brown   6/4/02,  9:54:12 AM
Pivot Trade Signals
The markets are still undecided about direction 15 min after the open. The Dow is down -30 but the Nasdaq is only off about -5 points. It appears the trend is still negative and the soaring VIX (27) is confirming. Decliners are beating advancers 2890 to 1775. There is no material support for the OEX/SPX at these levels that can be watched for an anticipated bounce. We just need to watch the markets for some indication of direction as we near the close of the first 30 min of trading. Should be a bounce around here somewhere!

 
 
  Jeff Bailey   6/4/02,  9:51:01 AM
Citigroup (C) $41.85 -1.29% .... is a NYSE and Dow Component I mentioned last week for bears to look to short. Gave double-bottom yesterday at $42 and vertical count is $32. Link

 
 
  Jeff Bailey   6/4/02,  9:49:12 AM
NYSE Composite ($NYA) 554.37 -0.67% ... getting downside alert here. This is spread-triple-bottom sell signal. Very correlative to yesterday's action in the Dow Industrials at 9,800. Link

 
 
  Leigh Stevens   6/4/02,  9:49:03 AM
Sector Update: Biotech Index ($BTK.X) - At 376.3, this index is nearing a retest of the 375.2 intraday low of early-May; the Biotech HOLDR's (BBH) have fallen to a new low already, taking out its early-May bottom.

 
 
  Jeff Bailey   6/4/02,  9:45:49 AM
Internal Weakening Lots of internal weakening/damage done yesterday to the various markets we follow.

S&P 500 Bullish % ($BPSPX) reversed into "bull correction" status at 57.6% as this market now following NASDAQ-100 weakness. Link

NASDAQ Composite Bullish % ($BPCOMPQ) reversed back into "bear confirmed" at 47.01%. Link

NASDAQ-100 Bullish % ($BPNDX) continued to show internal damage and just 30% (30 of 100) show a buy signal associated with their p/f chart. This sub-group of NASDAQ now "oversold" quantitatively. Link

In all, very defensive internals currently. Trader's should be looking to hedge long positions and expect bearish traders to get more aggressive.

Only the NYSE Composite Bullish % ($BPNYA) remains in a column of X Link.

 
 
  Leigh Stevens   6/4/02,  9:43:49 AM
Index Update: Dow 30/Industrials ($INDU) fell under its 200-day moving average at 9884 yesterday - this and the break of technical support at 9800 was a factor in institutional selling. The institutions by and large don't pay attention to much in the way of technical indicators, but this is one of them; i.e., the 200-day average. There were declines to under this key average in early-May, but there has not been two consecutive closes below it since the January sell off.

A continued decline should put more pressure on the Dow stocks, as institutions back away from buying dips. We're right at the low end of the hourly downtrend channel - DJX can drift lower along this line or rebound some - no rebound adds to the view that we're in another down leg. Potential downside targets in the Dow - weekly lows made at 9530-9580 in early-Feb.

 
 
  Jeff Bailey   6/4/02,  9:32:31 AM
Celestica (NYSE:CLS) $28.12 .... may be a stock for bears to keep an eye on. I've talked bearish before about this electronics contract manufacturer and I would think this morning's news out of Flextronics (FLEX) may confirm those thoughts/observations. Link

Point/figure chart remains bearish with vertical count of $22.

 
 
  Jim Brown   6/4/02,  9:32:20 AM
Pivot Trade Signals
The pivot trade model is flat as we head into the open and all outstanding signals have been cancelled. We will be watching for a continued dip at the open or an oversold bounce. Either is possible with the tech warnings and company downgrades competing with the oversold conditions. The futures are basically flat and are giving us no indication of any major move.

We need to realize that any bounce may only be a setup for a new short play and not the beginning of a new bull market. Likewise any further drop at the open will just compress the spring further and setting up an oversold bounce. I am not trying to give long-term signals for the major markets. This platform will only attempt to catch the short-term moves as the market pivots from overbought to oversold and back again regardless of the eventual trend or direction.

I got a couple emails recently asking why I was so bearish in the Monitor. I am not bearish or bullish. I am only trading the direction of the trend. I am letting the market dictate the direction of the trade. I have no control over the direction and I hope my intraday commentary is not coming across negatively. I do think the Dow will trade lower over the next couple weeks just because the technicals are pointing in that direction. The sentiment should be bullish after all the positive economic reports but lack of interest by the bulls is preventing a bullish bounce. We will trade the trend until the trend changes!

 
 
  Jeff Bailey   6/4/02,  9:30:27 AM
June Gold futures (gc02m) $328.50 +0.55% ... traded yet another 52-week high this morning and traded early session high of $330.30. Traders still citing jitters over India/Pakistan conflict.

 
 
  Leigh Stevens   6/4/02,  9:28:55 AM
WSJ (Wall Street Journal): front page story on resignation of CEO Dennis Kozlowski of Tyco International (TYC); Microsoft (MSFT) agrees to settle SEC civil allegations re misstatement of its earnings during portions of the '90's; El Paso (EP) executive C.Dan Rise found dead in an apparent suicide; Supreme Court strongly backed authority of SEC to penalize brokers who sell a client's stock for private gain - lock em up!?

 
 
  Jeff Bailey   6/4/02,  9:28:21 AM
Overseas Markets found selling on yesterday's lower session here in U.S. as Nikkei closed down 2.09%, or 248.32 points, at 11,653.07. Tokyo's broader Topix Index fell 1.26% or 14.28 points to 1,117.94.

 
 
  Jeff Bailey   6/4/02,  9:26:09 AM
Bank of Canada increases rates 0.25%; last increase was April 16th.

 
 
  Jonathan Levinson   6/4/02,  9:24:24 AM
Gold is returning from over $329/oz to $326.50. This move coincided with the slide in the equity futures reversing about 30 minutes ago.

 
 
  Jeff Bailey   6/4/02,  9:23:09 AM
Hewlett Packard (HPQ) $18.85 ... On conference call, CEO says it will achieve its $2.5 billion cost savings target one year earlier than projected; will benefit from an acceleration of job cuts; sees 10K job reductions by Nov. 1, with remaining 5K in cuts taken in fiscal 2003. HPQ projecting slower industry growth; sees 4-6% revenue growth in 2003 and 7-9% in 2004.

 
 
  Jonathan Levinson   6/4/02,  9:21:21 AM
The Nasdaq-100 Bullish Percent Index ($BPNDX) added one more sell signal to close at 30 yesterday, still not in oversold territory below 25 but edging closer. The Nasdaq-100 Volatility Index ($QQV) added 3.74 to close at 42.02. This rapid jump combined with the closing TRINQ reading of 4.51 makes a technical bounce likely, but as Buzz Lynn put it, it looks to be tradeable only for aggressive gunslingers, which I for one am not. Note that the $QQV spiked to 85.20 during last year's September lows, and at its curent 42.02 it is still in the cellar. There's still much complacency to work off.

 
 
  Leigh Stevens   6/4/02,  9:17:21 AM
Good Morning! - Quiet morning so far, but up ticks only on DJ, as I would have expected as DJIA should bounce some from low end of its hourly downtrend channel, per my Index Trader Summary at Link

INDEX FUTURES: S&P - off 0.8; Dow Jones - plus 7.00; Nas - down 8.0

 
 
  Jim Brown   6/4/02,  4:49:57 AM
Pivot Trade - Monday Summary (What is this?) Link

What a day! Monday was two huge drops with four hours of boredom in the middle. Traders saw a couple of huge sell programs beginning five minutes after the daily economic reports followed by two attempts to test 9800 again. It was not until 3:30 and after several hours of moving sideways that the real selling and the assault on 9800 began. I have been saying for three days that the market makers and institutions wanted to take the Dow down hard to 9800 and see if it was really support. I think the sell program that began at 3:30 qualified as hard. I wonder if the MMs knew it was coming or there was a conscious effort to sink the bid? The tech components of the Dow got killed at the close while GE, which had been under pressure all day actually gained ground. A flight to quality?

The rapid drop after a basically level day rocketed the internals into bullish territory. The put/call ratio closed at .93, the VIX at 25.70, the TRIN at 3.24. Declines beat advances by almost 3:1. Volume on the Dow spiked to over 1.3 billion shares. These indicators taken individually are not specifically bullish but on a combined basis indicate a very oversold condition.

I got several emails asking why I closed the short signal just before the end of trading if I thought the Dow was headed for 9550 as I stated in my 3:48 PM MM post. The rapid acceleration into the close was not normal trading activity. It had all the earmarks of a sell program to start, which triggered other sell programs as it broke 9800. Because the accelerated drop was so drastic in a short period of time I expected a rebound at the open tomorrow. It is like pushing down a spring. Push it down real slow and you can only get so far. Push it down very fast and you can compress it further but the following rebound will be harder. I think the drop on Monday at the close was that spring compressing suddenly.

I still think the eventual range will be 9550-9580. I just doubt it will be on Tuesday, at least not at the open. By closing the position at the close we have all our options open. (pun intended) If we get a rebound we can go long while we are waiting for that next entry point for the ride back down. If it drops further at the open then we will be ready to jump back in when the rebound from an even deeper level appears. I believe the markets don't trade in a straight line and all rapid moves, in either direction, are met with moves in the opposite direction. The speed of the drop changed my outlook but only on a very short-term basis. See you at 9:15!

 
 
  Leigh Stevens   6/3/02,  7:38:24 PM
The Market Monitor for Monday, June 3rd. was archived and can be viewed at Link

 
 

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