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  Jim Brown   6/12/02,  5:05:48 PM
Pivot Trade Wrap

An interesting day to say the least. The major averages all broke lows from last week but finished higher on strong volume. The warnings from a broad range of companies were offset by positive comments by PG and MOT. The heavy volume was strongly weighted to the downside in the morning but came back to even by the close of trading. A rumor that MSFT was going to pre-announce better than expected profits set off nearly a $3 rally in the stock. Since Microsoft is a major component in the Dow and Nasdaq it was instrumental in sparking the broader move.

The QQQ, DIA and SPY shares were very active with shorts being caught off guard. The QQQ traded over 150 million shares to finish at $27.86. Overhead resistance is still strong at $28.10 to $28.75 so it is a tough road ahead. IBM moved back over $75 just prior to the close but could offset any MSFT gains tomorrow if the drop continues.

The urge to short the closing spike was strong but a positive close is generally followed by a positive open. The resistance for the OEX is strong between 508-513. The positive comments from MCHP after the close could cause more short covering tomorrow and challenge those levels. We will trade what the market gives us tomorrow but until we break 513 it won't be a long! See you at 9:15 !

 
 
  Jim Brown   6/12/02,  3:59:03 PM
Looks like the quote feeds all died at the same time for the OEX/SPX. My Qcharts and Interquote are both stuck at 507.76 for the last six minutes. The SPX stopped at 1021.41. The last quote on either was 3:42 PM. The CNBC bug is stuck on 1021.41 as well.

 
 
  Jeff Bailey   6/12/02,  3:57:26 PM
Fedex Corp. (FDX) $55.95 -0.08% ... is a name in the transports to monitor should TRAN break above its 50-day MA. Nice "reverse head/shoulder" pattern in FDX, with neckline broken at $55. BIG volume yesterday on the break of the neckline, shows some interest from bulls or at least some bears calling it quits. Link

 
 
  Jeff Bailey   6/12/02,  3:53:12 PM
Dow Transports (TRAN) 2,708 +0.06 .... checking on them. Still don't see a break above their 50-day MA, which we monitored yesterday. We know what to look for though. Link

 
 
  Jeff Bailey   6/12/02,  3:50:59 PM
QQQ $27.81 +1.09% ... in my wrap last night on PI, I thought QQQ volume of 150 million or more might be sign of "capitulation." It's going to be close with 1,447 traded here.

 
 
  Leigh Stevens   6/12/02,  3:50:21 PM
INDEX Comments: Bear trap reversals? - time will tell, but the pattern we've seen today is the classic bear trap, as my friend Jack Schwager taught me - move to a new low (stops are run), followed by an upside reversal within a short time, especially intraday. Time will tell on whether this is short-lived or not - reversals occured right from low end of hourly downtrend channels as you can see in the Index Trader last night (Link )in the SPX and QQQ. Good support was found in the 500 area of OEX as I've been thinking that it would or "should" - espcially given the very oversold market.

 
 
  Jim Brown   6/12/02,  3:45:27 PM
Pivot Trade Signals
I know I said we would go into the close flat but aggressive traders might be looking at entering a new short here at 508. Significant resistance and evidence points to a MSFT rumor as the reason for the short covering rally. The risk here is that a positive close can produce a positive open. As much as I would like to short here we will officially wait until the open tomorrow. Let your conscience be your guide!

 
 
  Leigh Stevens   6/12/02,  3:42:20 PM
INDEX Comments: QQQ - key to QQQ upside as I've been noting today is MSFT which broke out above both trendline and moving average (50-day) resistance and is now on a good run higher.

 
 
  Jeff Bailey   6/12/02,  3:41:38 PM
Omnicom (OMC) $62.75 -18.91% ... from 10:23:35 comments. Fast action huh? Traders should note, OMC traded its bearish vertical count after that update of $54, when stock fell to a session low of $51.51. Stock's rebounded somewhat here. Link

Just making some notes on how some stocks can fall to a bearish target, and boy it can pay to be on the alert if its YOUR stock that you've got a trade on, when that target is achieved. Yep, they can still exceed the targets, but you just never know.

 
 
  Leigh Stevens   6/12/02,  3:39:37 PM
INDEX Comments: ALL have broken out above minor congestion areas and are running to the upside, suggesting that approximate double bottoms may be in place relative to Friday. Hourly stochastic bullish (upside) crossovers have been generated on the current hourly bar.

 
 
  Jonathan Levinson   6/12/02,  3:35:53 PM
COMPX is printing its highs of the day as the TRINQ falls to .53. Will watch for a stochastics rollover from overbought before adding puts. Again, I expect the 1525 resistance to hold, but will continue to watch carefully.

 
 
  Jim Brown   6/12/02,  3:35:42 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Tag, we are out! After fighting valiantly to stay under the 505 level all day the closing bounce triggered our stop loss at 3:31 when the OEX traded over 505. (SPX 1016.50 est)

We will go into the close flat and look to enter a new signal on Thursday. We should have taken the six points when the OEX was trading at 496.57 but all the indicators were pointing to a lower close.

 
 
  Jim Brown   6/12/02,  3:17:25 PM
Jim, would you go long if we take out the highs of the day?

I would be concerned about our chances of a major up move. There is significant overhead resistance in the 506-512 are on the OEX. I would look at a move into those areas as another entry point for a short. We are stuck in this purgatory just above psychological support and there is no clear catalyst for going long. If it is a "trading" play then I would wait for another low to buy. I would not buy a breakout here.

 
 
  Jeff Bailey   6/12/02,  2:56:02 PM
AT $8.50, ISN'T THE BREAKUP LEVEL OF TYCO WORTH MORE? NOT SHORT OR LONG TYCO.

"Ick.... fundamentals." (big grin) I guess.... if you "believe" in the fundamentals, that one would think TYC is worth $8.50. Question is... "does the MARKET believe in the fundamentals."

The point and figure chart has been hinting at $6.00 in TYC from the bearish vertical count dating back to June's sell signal at $17.50. Who am I to disagree at this point with $6.00? Link

First sign of strength is $12.

 
 
  Jim Brown   6/12/02,  2:41:11 PM
A "market reporter" just said that the "9472? level on the Dow was critical. If the market closed under that level it would indicate selling pressure on the Dow." Damn, I am glad I did not miss that tidbit of information!!!!

 
 
  Jim Brown   6/12/02,  2:39:14 PM
The 30-60 minute stochastics are rolling over to follow the shorter term indicators down. The intraday moving averages I follow, (different for each intraday chart I use) are now above the current level of 501.62. They were support for the last hour but are now in a resistance position. 22 min left before the 3:PM turn and if yesterday is any example, today could be ugly!

 
 
  Jonathan Levinson   6/12/02,  2:39:05 PM
Nasdaq declining volume beating advancing volume 1.3:1, with the TRINQ at .72 and QQV up .87 as I type. No significant selling pressure at these levels, with the COMPX fading south at a leisurely pace.

 
 
  Jim Brown   6/12/02,  2:31:50 PM
The Russell-2000 is still hovering right at its Feb lows around 458. Since it is significantly above its Sept lows of 373 I doubt we will see that bottom again. However if 458 breaks significantly it could stimulate the capitulation event everyone is expecting. Those investors who profited significantly on the Russell bounce should be getting progressively frustrated and could "capitulate" on any break of that 458 number. ALSO, the annual Russell shuffle is underway. Stocks will be deleted and added to the Russell at the end of June. Fund managers are under no obligation to hold the deleted stocks until the end of June and take a further bath as everyone else bails out. This means the Russell could be "loaded" for a further drop which could trigger the other indexes as well. Just a different view of the risks ahead!

 
 
  Jeff Bailey   6/12/02,  2:26:07 PM
Ciena (CIEN) $4.23 -8.44% ... as mentioned before... bearish vetical count is $0.50. Last week, I felt bears from previous profile near $7.00 should take some gains off the table. Nonetheless, this is one stock I would NOT want to own bullish in a portfolio. Link

Other than the $0.50 target, I've had retracement from $17.30 to $0.68, which has 19.1% retracement at $3.86. That may be level where market makers that are short the stock in inventory, then turn and bid stock, provide liquidity to bull's selling.

Understand... reason I'm no longer disclosing "I have bearish position in CIEN" is that the day INTC gapped lower, I thought bear in CIEN (like myself) needed to offset 20% decline in INTC with 30% gains from CIEN.

While account took a hit from INTC, CIEN gains may have more than offset, but to do so, account needed to be weighted by CAPITAL EXPOSED to each trade.

 
 
  Jim Brown   6/12/02,  2:24:20 PM
A reader just commented that we need "a really big sell program." I strongly agree! We need to get the dip everyone is waiting for so things can get back to normal. (does anybody remember normal? We better watch what we wish for because we might get it!) A giant sell program that was big enough to trigger all the capitulation stops would do wonders. Everyone seems to be targeting the Sept lows but "what lows?" Nasdaq, Dow, S&P ? The Nasdaq is only 100 points away from its lows while the Dow is nearly 1500 points away. The S&P at 66 points away is more likely. If the S&P and Nasdaq touch, the Dow will probably be forgiven. This still gives us a significant downside target. The OEX is only 20 points away from its 480 low. SO...what low are you wishing for?

 
 
  Jeff Bailey   6/12/02,  2:21:31 PM
Intl. Game Tech (IGT) $58.75 -2.48% .... getting downside alert here at "double-bottom" sell signal. Turns count back to bearsh. Once again, near-term "hurdle" becomes the bullish support $54. Link

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

 
 
  Jim Brown   6/12/02,  2:14:24 PM
Pivot Trade Signals
The talking heads keep talking about the strong volume today but they are neglecting to mention that down volume is outpacing up volume more than 2:1 on the NYSE and about dead even on the Nasdaq. These little bounces are being met with more selling and despite the minor gains at the moment the longer term trend is still down. Until that volume starts posting 3:1 to 5:1 ratios to the upside it is simply a false bounce.

 
 
  Jeff Bailey   6/12/02,  2:12:57 PM
Fed Beige Book headlines indicate that economic growth was moderate, but rather "uneven" in April/May. Uneven in that the labor market has been soft, retail sales flat, and price pressures muted. Adding all of this up, Fed sees more evidence (though most think none was really needed) to support Fed inaction at its June 25/26 meeting, and even beyond that.

Stocks seemed to see some positives from "short-covering" on the Beige Book release, but nothing to major here.

You can view the Biege Book report by clicking this Link

 
 
  Jonathan Levinson   6/12/02,  2:09:10 PM
Looks from the charts like the Beige Book wasn't "all that".

 
 
  Leigh Stevens   6/12/02,  1:58:04 PM
INDEX Comments: ALL - so far, best that can be said about these minor rebounds is that all the indices are trading above their prior recent (Friday) lows - more backing & filling may set some double bottoms, but the close is still 2 hours away. Then, of course, its not enough to bottom - to make for a trade or to bother covering shorts/puts, actual buying needs to come in. So far, the buyers are pretty scared. Witness the VIX and VXN levels - both are down from their intraday highs, but both sstill higher than recent closes. MSFT is extending its rally, keeping the Q's alive, but none of the other tech big caps inportant in the Nas 100 are following suit and CSCO is struggling to regain recent support. And, INTC, on life support, forgetaboutit!.

 
 
  Jeff Bailey   6/12/02,  1:58:03 PM
I Don't Profile STOPS with option trades!!! As mentioned before... I (JEFF BAILEY) do NOT profile stops with option trades. This is because I learned a long time ago to trade an option as if it were a stock, with the difference being that the price of the OPTION (whatever it is) should equate ONLY to what I would risk in the underlying stock to its stop.

For instance. If shorting Expedia (EXPE) at $66 and assessing risk to the "buy signal" at $77, I would be risking $11/share. As such.... if I risk $6 in a put option, I have therefor REDUCED my risk based on a 100 share short of the underlying stock, versus 1 put contract.

The ONLY traders that need to use stops on put options are traders that OVERLEVERAGE and expose excessive capital to a trade. This is DANGEROUS to begin with. I will not hand anyone a loaded gun. If you chose to OVERLEVERAGE on an option trade, then look to your own risk management book that you have written to determine stops.

The ONLY TIME I will suggest a stop on an option is if/when an option was profiled, and then become PROFITABLE and we might then want to protect gains.

 
 
  Jim Brown   6/12/02,  1:49:35 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
That was pretty close! The OEX traded to the day's high of 504.99 at 1:24, only one penny below the 505 stop loss on our open short signal. This current pause in the bounce is causing those buyers who bought the second dip to ponder the wisdom of their actions. Time will tell.

 
 
  Jeff Bailey   6/12/02,  1:30:11 PM
Gold/Silver Index (XAU.X) 76.39 -1.82% .... not really seeing any bullishness here, despite the NASDAQ-100 breaking to a new 52-week low today.

Has me thinking market may be finding a bottom and maybe things a little "overdone" to the upside in gold stocks?

Will see... just a short-term observation, but a little interesting. Makes account/risk management very important in our trading.

 
 
  Jim Brown   6/12/02,  1:20:50 PM
Just saw 2000 contracts of july 70 puts bought---NYC

Looks like one of our readers liked that put idea on IBM !! (grin) Looks like IBM is trying to rally with the Dow but I see this as a better entry point for those puts.

 
 
  Jonathan Levinson   6/12/02,  1:18:43 PM
TRINQ dropping fast, currently .54. QQV also giving up its high readings, currently up .64 on the day. I don't expect this burst to exceed 1525 on the COMPX. I'm also watching the intraday oscillators, which have all shaken off their oversold readings. I expect a rollover when this move tires itself out. I will trust an extreme low TRINQ reading combined with stochastics rollover to guide the next put entry.

 
 
  Jim Brown   6/12/02,  1:16:16 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
I am not going to lower the stop loss from 505 even though it appears we could be in for a bounce. Strong resistance still exists in the 505-507 range. We will take our 2 point loss if it happens.

 
 
  Jim Brown   6/12/02,  1:01:06 PM
Pivot Trade Signals
A little indecision here during the lunch time lull. Actually the Nasdaq is trying to come up for air. With the VIX hovering around 29 there is actually a chance that we could see a bounce this afternoon. Should that happen I doubt it would last but offer a new entry for shorts. This is an example of selling pressure hitting long term reluctance. To put it another way, the shorts are about sold out at this level. They can recharge and go again but this OEX 500 level is a psychological barrier. Many active shorters are wondering just how much further the markets can fall considering several indexes are already at the September lows. Internals are picking up some as bargain shoppers are attracted by the "cost cutter specials."

 
 
  Leigh Stevens   6/12/02,  12:43:27 PM
Subscriber NOTE: "today is a cycle day-- so stocks should attempt to hold the lows of June 7th--I guess the key word here is "attempt." being short the oex--I am looking for failure! :-) "

RESPONSE: Looks like OEX support, if we can call it that - a "stopping place" - is around 492 if OEX again hits low end of hourly downtrend channel. A short-term bottom could develop not far from 500 area (last at 497.2). I assume 500 area to be a psychological pivot area - as is 1000 on SPX; 100/1000 levels are important chart points usually.

 
 
  Jeff Bailey   6/12/02,  12:41:39 PM
Capital One Financial (COF) $57.17 -3.08% ... Jeff: Please take quick look at capital one. Have Sep 55 Puts at 3.2. Hitting new relative lows.

Most likely stock seeing some selling due to broader market. However, bearish count is $49. Would look to lock in some gains on 1/2 position at $52 should COF trade there, to protect some against a potential bounce from trend. Another "hurdle" to monitor is the rounding flat 200-day MA at $53.84.

Think about managin your risk. If you bought 2 puts, then trade at $53 may have those options at 100% gain. If you sell one, you've removed entire amount of initial risk in the trade, the rest then becomes a little "easier" as you've then managed risk.

 
 
  Leigh Stevens   6/12/02,  12:34:29 PM
INDEX Comments: Russell 2000 (RUT)Index trading in 458 area, which consists of many small and mid cap stocks and has been correcting from its leadership role over mid-Sept to mid-May, is weak today along with the other indices - however, the RUT is still trading above its Feb. lows in the 457 area. To show how far RUT is off Sept. bottom, its low then was in 375 area.

 
 
  Jonathan Levinson   6/12/02,  12:25:30 PM
Would like to place sell order on my QQQ puts--looked at monitor--what about just above Leigh's 1458? Thanks Denise

This is an excellent level to take profits, and one which I am targeting for my QQQ puts. Remember though, we like to enter passively and exit aggressively. Above all, protect your profits, and selling puts at support is the high odds play. However, continue to watch the oscillators and the different levels in the event the COMPX doesn't reach your desired exit- though I believe it will.

 
 
  Jeff Bailey   6/12/02,  12:22:53 PM
Aquiala (ILA) $12.17 -3.25% ... I can't get to all the e-mails. Yes, trade is working good, but understand most likely that broader market action helping things for us bears.

As such, would snug down a stop to $13.05 here, from $14. From retracement ($37.61 to $5.94) monitor 19.1% at $11.98 as near-term support. Would look to lock in some gains on any spike to $7.50. Never know, but need to have a plan for such an event. Link

Disclosure... I current hold bearish position in ILA

 
 
  Jonathan Levinson   6/12/02,  12:21:50 PM
This little COMPX "bounce" relieved the extreme readings on the TRINQ and QQV, while breadth remains very weak, with 203 new lows to 32 new highs, and declining volume beating advancing volume nearly 4:1.

 
 
  Jeff Bailey   6/12/02,  12:11:36 PM
Bema Gold (BGO) $1.31 +3.14% ... monitoring 60-minute interval chart here. Note converging 50-pd and 200-pd at/near $1.35.

Newmont (NEM) $29.00 on similar time frame shows converging 50 and 200 up at $30. For NEM bulls, want to see some aggressiveness in BGO and ability of speculators to push it higher, then think good things from the more institutional NEM.

 
 
  Leigh Stevens   6/12/02,  12:10:19 PM
INDEX Comments: QQQ - seems that hourly low I mentioned, at 26.66 is a bad tick & should get corrected later. Am showing daily low at 26.83.

 
 
  Jim Brown   6/12/02,  12:08:21 PM
Declines are beating advancers better than 2:1 and new lows just hit 321 for the day. Several commentators have said that prior bear market bottoms (capitulation events) ended with new lows in the 400-450 range. Not far off !

 
 
  Leigh Stevens   6/12/02,  12:06:31 PM
INDEX Comments: SPX is nearing the 1000 level, which is also around low end of its hourly downtrend channel. If there is a decisive downside penetration of 1000, it may not get the attention of the investing public, who remain focused more on the Dow average, but the fund managers will SIT UP and take note. This is "THEIR" benchmark for performance, etc.

 
 
  Jonathan Levinson   6/12/02,  12:04:24 PM
TRINQ showing 3.17, and QQV up over 2 points, showing sellers becoming much more motivated, crowding into the exit doors.

 
 
  Jeff Bailey   6/12/02,  12:02:08 PM
Expedia (EXPE) ... July $65 puts (QASSM) $3.00

 
 
  Leigh Stevens   6/12/02,  12:01:01 PM
INDEX Comments: SPX & OEX continuing to accerlate to downside, leaving Friday lows further behind. DJX is falling under its prior recent bottom (94.73) also. Look out below!

 
 
  Jeff Bailey   6/12/02,  12:00:43 PM
Expedia (EXPE) $64.00 -4.5% ... Have talked about this one... another "spread-triple" sell here. Link

Bear's targeting bullish support at $57 or bearish vertical count of $59.

 
 
  Leigh Stevens   6/12/02,  11:54:33 AM
INDEX Comments: Nas 100 Index (NDX) trading further under its SEPT low (1088.9)

 
 
  Leigh Stevens   6/12/02,  11:53:11 AM
INDEX Comments: Nasdaq Composite (COMP) - question is, with the Nasdaq 100 testing its SEPT. low, can the COMP be far behind? There were several intraday lows in Sept. in the 1450-1460 area, with the absolute low (1-day) at 1387, with close that day (9/21) at 1423. With COMP at 1480 and making a new intraday low, test of at least 1460 is not very far away.

 
 
  Jim Brown   6/12/02,  11:50:46 AM
Pivot Trade Signals
The early morning signal at 498.25 was just triggered on the OEX so regardless of which one you liked you should be short. Now we will start looking for a bottom. My first guess is the 490-493 range, which is the bottom of the current down trend channel.

 
 
  Jim Brown   6/12/02,  11:47:40 AM
Pivot Trade Signals
The OEX is sitting right at the 84.1% retracement level of the post September gains. (499.13) This "support" is critical for today. Should it break the OEX could drag the other indexes down with it. (not that they need any help) The NDX is now sitting just below the Sept lows. My market outlook is not good!

 
 
  Jim Brown   6/12/02,  11:44:16 AM
I was going through the charts of the Dow stocks and while MSFT is actually up today INTC is holding its own, but IBM is crashing. I have mentioned several times recently that IBM has some internal problems that have not come to light. Reportedly companies responsible for over $4 billion in 2002-2003 services orders have filed bankruptcy and could terminate the contracts. This is a strong and recurring rumor. IBM is one of the major reasons for the wekanes sin the Dow with a -1.79 loss. With the possibility of a major warning in our future.... IBM puts anyone?

 
 
  Jonathan Levinson   6/12/02,  11:43:02 AM
TRINQ at 2.45 on this move, QQV up 1.45 on the day, declining volume beating advancing volume over 4:1 on the COMPX as the index prints a new low of the day.

 
 
  Leigh Stevens   6/12/02,  11:42:30 AM
INDEX Comments: NDX has bounced off its SEPT lows a couple of times today today and is down near this level again (1088) - Nas 100 is first major index to hit its Sept. low. QQQ has exceeded its Sept. intraday low slightly - its Sept. low was 27.00 - versus its low today of 26.66.

 
 
  Jonathan Levinson   6/12/02,  11:25:32 AM
LOL! Attack of the program wars! Thanks, Jim.

 
 
  Jim Brown   6/12/02,  11:23:11 AM
Pivot Trade Signals
Today could be called the "Attack of the Program Wars". Competing buy/sell programs are whipping the indexes back and forth as support lows and resistance highs are tested and retested. The NDX has tested the September lows twice today and has been responsible for much of the market strength. It is currently trending down for another test from a lower high. If the NDX breaks through these lows the markets could react very negatively.

 
 
  Jonathan Levinson   6/12/02,  11:14:36 AM
Nasdaq declining volume is now more than doubling advancing volume as the COMPX bounces off its day low. These bounces haven't packed much punch thus far, with not enough buying to get the TRINQ below .50 (currently 1.09).

 
 
  Jim Brown   6/12/02,  11:11:59 AM
Hi, Jim, If a 1/2 position in puts (1/2 because some indicators show an oversold condition) had been purchased at this morning's first move below 503, would you suggest another half position if OEX dropped below the original trigger at 498.25? Linda

This is an excellent idea. Entering 1/2 of a position at the upper signal protects you from being 100% wrong. Once confirmation of the breakdown is in place (498.25) the second half of the position maximizes your profit while the first half then protects you from a loss. This is an excellent strategy in today's market.

 
 
  Leigh Stevens   6/12/02,  11:09:37 AM
INDEX Comments: Nasdaq Indices - NDX & QQQ retreated back to area of today's intraday lows, so unable to keep trading above Friday's low - another disappointment to the bulls - BULLS, 0 - BEARS, 10

 
 
  Jim Brown   6/12/02,  11:07:51 AM
Pivot Trade Signals
New lows are beating new highs by 4:1 at 246 to 61. The advance/decline ratio has fallen to a negative .65. The VIX is now over 28! Sentiment is weak and fear is finally returning to the market. The OEX came to a dead stop on that psychological support level of 500 and the Dow is trading just under 9500. Expect a bounce here due to the instantly oversold conditions from that huge sell program.

 
 
  Leigh Stevens   6/12/02,  11:06:42 AM
INDEX Comments: SPX retreating to a new intraday low, moving under prior low from Friday.

 
 
  Jim Brown   6/12/02,  11:02:52 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
I think we can safely move our stop loss down to 505.00 now! (SPX 1019 est) That sell program could have blunted any bullish sentiment still around.

 
 
  Jeff Bailey   6/12/02,  10:44:08 AM
NVIDIA (NVDA) $29.25 -4.37% ... Jeff, It appears NVDA is near double-bottom breakdown. What's the vertical count for NVDA and the risk level for bearish play? Please advise. Would look put at $29, stop $34.25 and target bearish vetical count of $19. Link

Also.. make note of the Spread-triple-bottom sell at $30. Professor Davis' study showed that pattern profitable for bear 86.5% of the time, average gain of 24.9% in 4.6 months. From $30, 24.9% is target to $22.53 in 4.6 months. Therefore, if you're buying July $30, then you aren't buying enough time per Professor Davis study.

 
 
  Jonathan Levinson   6/12/02,  10:41:10 AM
Advancing volume now slightly ahead of decline volume on the COMPX. TRINQ at .63. New lows beating new highs 139:27.

 
 
  Jim Brown   6/12/02,  10:35:17 AM
Pivot Trade Signals
The news that Motorola would hit their revenue numbers for the quarter rescued the markets from their drop. The short covering pop has put us back up around intraday resistance of 9550 on the Dow, 505 on the OEX and 1505 on the Nasdaq. Will it last? I would be surprised with the market internals weakening. Could be a nice short entry point for those still flat.

 
 
  Leigh Stevens   6/12/02,  10:30:45 AM
INDEX Comments: MSFT trading above its 50-day moving average at 53.56 - if a MSFT rally gets going and INTC continues to move above its intraday low and above its Tues. close, should help QQQ hold above 27.5 possibly establishing a double bottom - although the Nas indices went lower than their prior lows, double bottoms often are formed at approximately, not always exactly, same levels.

 
 
  Jeff Bailey   6/12/02,  10:23:35 AM
Omnicom (OMC) $64.26 -16% ... talked about this one last week (06/10/02 10:21:43)Link . Was "hoping" for a rally to $84 to smack/short/put this "bad boy," as bearish vertical count was to $54. Link

Stock getting "whacked" today after Wall Street Journal reports that OMC's accounting for a series of soured Internet investments is starting to stir controversy within the company, calling into question the CEO's forecasts of double-digit growth in revenue and profit.

 
 
  Jim Brown   6/12/02,  10:21:29 AM
OMC For everybody who emailed me this week asking if the bounce in OMC was an entry point you should be relieved this morning with the -$13 point drop. Did you make that entry as suggested?

 
 
  Jonathan Levinson   6/12/02,  10:15:37 AM
Nasdaq declining volume is now ahead of advancing volume 268:95, 126 new lows to 23 new highs.

 
 
  Jim Brown   6/12/02,  10:13:53 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
The short signal was triggered at 10:07:12 when the OEX traded below 503. (SPX 1016.91) The initial stop loss will be OEX 508.50 which is above yesterday afternoons intraday resistance. (SPX 1028.50 est)

 
 
  Jim Brown   6/12/02,  10:05:59 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Change the SHORT entry point to an OEX trade below 503. (SPX 1016) If we get a failure here we want to act on it.

 
 
  Jonathan Levinson   6/12/02,  10:05:06 AM
COMPX declining volume beating advancing volume 177:118, with TRINQ an even 1 and QQV up .41 on the day.

 
 
  Leigh Stevens   6/12/02,  10:03:23 AM
INDEX Comments: QQQ trading back to area of its prior 27.5 low - best help to Q's now is MSFT which is again (as it did yesterday) rallying to above its downtrend line and nearing its 50-day mov.avg. at 53.56 - MSFT last at 53.4

 
 
  Jim Brown   6/12/02,  10:01:24 AM
Pivot Trade Signals
The NDX hit its September lows this morning and rebounding but with no conviction.

 
 
  Jim Brown   6/12/02,  9:59:42 AM
Pivot Trade Signals
Now at the first resistance level of 503.50 on the OEX and 9543 on the DOW. Internals are still showing green so we could test the next level of 506.50-507 on the OEX.

 
 
  Leigh Stevens   6/12/02,  9:58:09 AM
INDEX Comments: COMP at 1498.5 trading back above its prior lows in 1496 area - maybe after running stops - some bargain hunting/short-covering type buying coming in.

 
 
  Leigh Stevens   6/12/02,  9:52:53 AM
INDEX Comments: CBOE Volatility Index ($VIX.X) on OEX continuing to climb above 27 - last at 27.8 - VXN index based on Nas 100 volatility, trading at 54.3, highest level since Nov. when it was coming down from its peak level above 85 in Sept.

 
 
  Jim Brown   6/12/02,  9:52:32 AM
Pivot Trade Signals
Aggressive investors are probably thinking about jumping in here between 501-502 but many times we will see a dip back to the morning lows before rebounding again. I am going to hold for a breakdown below 499 (498.25) or a failure at higher resistance.

 
 
  Jonathan Levinson   6/12/02,  9:48:51 AM
Sure enough, the QQV blew off some steam and is now up only .47 on the day, ditto the TRINQ at 1.7 as the selling pressure eases.

 
 
  Jeff Bailey   6/12/02,  9:47:55 AM
Some things I'm "looking for" as it relates to broader market and Gold stocks..... In brief... I'm thinking the XAU.X 77.55 -0.33% might get a "pop" to the 82.00 level, which might find resistance and may coincide with a bottom in the broader market averages. May correlated this with a QQQ at its bearish count of $25?

The $1 box of the XAU.X shows this index exceeded its bearish count of $76 yesterday. Now overhead supply begins to shape up at $82. Link

According to Dorsey/Wright and Assoc., the "precious metals" sector is now "bear confirmed" at 60% bullish. Traders/investors will remember this group was "overbought" at 82% in late May.

Remember... most institututions view the XAU.X p/f chart on a $2 box, but the $1 box gives us a little more noise and perhaps really helps identify near-term resistance at the $83 level. The $1 box also helps us underestand the potential NEGATIVE in that long column of O's. That long column of O's is somewhat different than the shorter columns of O's we've seen in recent months and hints of distribution. The $2 box does show the "high pole warning" we looked at yesterday. Link

The "high pole warning" is just that. A "warning" that a reversal in supply/demand may be taking place.

In a way... gold stocks become my "counter balance" to what the broader market may do. "Gold bugs" have been screaming that the bullish action there would spell doom for the broader equity markets, now we have a good test perhaps.

 
 
  Jim Brown   6/12/02,  9:45:23 AM
Pivot Trade Signals
Finally some green. I was hoping for a little positive reaction to the oversold internals from last night before heading down again. Looking for a breakdown at resistance for an entry point.

 
 
  Leigh Stevens   6/12/02,  9:38:43 AM
INDEX Comments: SPX falling below prior lows; Nasdaq indices now well under prior lows - look for low end of hourly downtrend channels to be next possible downside targets per my earlier post.

 
 
  Jim Brown   6/12/02,  9:37:06 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
No bounce and no volatility! Go SHORT the OEX/SPX/DJX on a breakdown with an OEX trade below 498.25. (SPX 1012 est)

 
 
  Jeff Bailey   6/12/02,  9:35:53 AM
NASDAQ-100 Trust (QQQ) $27.18 -1% ... new 52-week low here. Bearish verticl count remains $25 and might be a target on any type of "capitulation." Link

NASDAQ-100 Bullish % ($BPNDX) lost just 1 net stock to a sell signal yesterday, despite the drubbing taken. Good benchmark here vs. "outside" or index itself as the Bullish % nowhere close to the Sept. lows of bullish %. Thus, still some "risk" to the downside in the QQQ, say..... "$25". Link

Personally.... as a QQQ Sep $30 call holder, I'd just as soon get this over with, get the capitulation if the 1/2 bullish position for the Sep $30's are going to have a chance.

 
 
  Jonathan Levinson   6/12/02,  9:33:20 AM
$TRINQ at 2.15, $QQV up 1.08 today to 47.49.

 
 
  Jeff Bailey   6/12/02,  9:27:09 AM
Fair Value for the S&P 500 today is $0.08. That price will not change during the session. HL Camp & Company has their computers set for program buying at $1.56 and set for selling at $-1.07. Fair value for the NASDAQ-100 today is $0.70.

As S&P futures (sp02m) 1,013.50 (-0.70) drift lower into the open, it looks like stocks are slated for a fractionally lower open.

 
 
  Jonathan Levinson   6/12/02,  9:26:24 AM
Nasdaq-100 Bullish Percent Index ($BPNDX) grew more oversold, closing at 19 yesterday. It reached 17 at the May lows, but got down to 1 during the September lows. Today promises to be an important day for the markets.

 
 
  Jim Brown   6/12/02,  9:26:12 AM
Pivot Trade Signals
The warnings and downgrades are flying fast and they are not all tech stocks. Futures have slipped into negative territory despite an expected bounce in PG. Just another fun day in a bear market.

The intraday support/resistance numbers on the OEX breakout like this:

Support:
499.13 - 84% retrace of 9/11 gains
498.50 - June 7th low
490.00 - Bottom of current channel

Resistance
503.50 - 5 min/20 period EMA
506.50 - top of current channel
507.00 - 15m/22 period EMA

I stress that these levels are simple intraday support/resistance and represent levels where we could see a reversal. The current longer term trend is down and the odds are good that we are on track to retest the Sept lows. My bias this morning is to short any bounce to the resistance levels above and target 490 as the near term downside. If there is no bounce we will short a break below 498.50 instead. We will wait for the opening volatility to ease before jumping in if there is no major move.

 
 
  Leigh Stevens   6/12/02,  9:23:42 AM
INDEX Update: Support areas - Nasdaq Composite (COMP) Support > 1490 - maybe;then, 1458, at low end of its downtrend channel; QQQ: Support > 27.00 area; then, 26.7, at low end of hourly downtrend channel

 
 
  Leigh Stevens   6/12/02,  9:19:15 AM
INDEX Update: Support areas - S&P 500 (SPX) Support > 1012, at prior lows - maybe; then, 1000-998, at low end of its downtrend channel; S&P 100 (OEX) Support > 500-499 at prior lows - maybe; then, 493, at low end of hourly downtrend channel; DJX: Support > 94.7, at prior lows; then, 93.5, at low end of hourly channel

 
 
  Leigh Stevens   6/12/02,  9:09:31 AM
Pre-Opening, Stock INDEXES - Good Morning!

Index Futures trading: S & P > -0.90; D J > UNCH ; Nas > -7.50

 
 
  Jonathan Levinson   6/12/02,  8:40:48 AM
Nasdaq-100 Volatility as measured by the $QQV closed up 1.02 to 47.43. Yesterday's action kept the $QQV up against its upsloping upper bollinger band on both the daily and weekly views, and while the $QQV is "overbought" on a stochastic basis on the daily, it isn't on the weekly chart.

Why is this significant? Simply because I don't expect any kind of meaninful rally until the $QQV and market volatility in general have become the issue for the markets. In other words, true capitulation will be signalled by a visible, obvious climax of fear, reflected in a VIX, VXN and QQV top. If a rally will be a strong, tradeable bounce from a market "bottom", then that bottom will be marked by a top in volatility, much as it was following 9/11. Of course, the indices needn't reach those extreme levels, but I believe that they have farther to run.

 

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