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  Jeff Bailey   6/19/02,  5:43:56 PM
Hi Jeff, Brcd has been holding strong in these rough days and has triggered a Bullish Catapult Breakout on the P&F charts. I own the June 20 calls and am up 35%. Being options expire on Friday, would you roll it over to July or ride it out and see where it ends up.

I would roll out! I don't like risking near-term expiration on the potential "whims" of some institution trying to save a position that has my in-the-money option turning into a worthless pumpkin. I've seen some crazy "manipulation" of stocks just before and during expiration. Link

 
 
  Jeff Bailey   6/19/02,  5:27:05 PM
Jeff, other activities (seeking to supplement my trading income with a salaried position after a divorce settlement!) have kept away from intraday trading and I have had a great time looking at some of the long recommendations the Premier site has been highlighting over the recent past. Nice diversity and quite a few winners. I left RKY earlier this month when the O took over control on the PnF. With today's action a triple bottom break, the only reason I would not hit the "panick sell' button is the industry which tends to be somewhat countercyclical. I do not remember the rational for RKY when you profiled it originally but are you sticking with your position solely because it is an option position (i.e., total risk capital). If long the stock wouldn't you liquidate maybe in the cat bouce to 63. I recall that you had no compassion towards BGEN last march when some poor test or other regulatory issues pushed the stock into a bottom break which eventually let you buy $14 cheaper.

Yes! Per today's comments regarding RKY, I was talking specifically in regards to options, not the underlying stock itself, where an innvestor/trader with 100 shares has a much larger capital exposure, than an options trader with 1 contract.

Since RKY is more of an S&P 500 type stock, I would have to refer to the S&P 500 Bullish % ($BPSPX) Link to assess "market risk" as it relates to RKY. Nowhere near the "oversold" level of 30% in the S&P 500, so would be more defensive with the underlying stock.

 
 
  Jeff Bailey   6/19/02,  5:21:22 PM
Kronos Inc. (KRON) $30.42 -15% ... Jeff: I saw your earlier note about the NASDAQ-100 bullish percent reversing into bull alert status. I'm still holding some longer-term puts in KRON from your past comments, but I can't remember the target you had. I think it was $35. Should I be locking in some gains here based on the bullish %?

Well, the stock did get hit hard today, most likely on the ORCL earnings. However, yes, when profiled previously, I did give an initial bearish vertical count of $35, but that was when the stock gave the initial sell signal at $41. However, the resulting column of O (from 45 to 38) would have the trader assessing a downside target of $29. Link

Not sure what expiration you bought, but I'd move down a profit stop to $31.25 minimum, or simply look to close it out for a nice gain. While stocks can exceed their bearish counts, bulk of damage may have been done. Don't let a nice gain slip away.

 
 
  Jim Brown   6/19/02,  5:00:17 PM
Pivot Trade Wrap

Buyers run out of cash
The morning went well but the afternoon left much to be desired. The opening dip was not as bad as expected and traders rushed in to buy the dip. Unfortunately they ran out of money around noon and the bears feasted on freshly ground hamburger. While it appeared at the time that various things were adding to the selling it ended up just being a shortage of cash. There is plenty of money around but traders are just not willing to commit it to stocks.

The volume was still light with only 1.6b on the Nasdaq and 1.2b on the NYSE. Decliners ended up beating advancers 2:1. It looked like the markets would try to make a bounce just before the close but there was just too much fear of the dark. After the carnage yesterday nobody wanted to step up to the table and place a bet only to get clobbered by another round of earnings warnings.

With the close near the lows we could see another dip tomorrow. We will be looking to enter a long position on a dip to the 500 range in expectation of an oversold bounce from that level. Should that range be violated we will look for a quick exit and a re-entry on a bounce around 490. The previous low was 488. See you Thursday!

 
 
  Jeff Bailey   6/19/02,  3:55:28 PM
UTStarcom (UTSI) $20.05 -2% .... per 03:38:53. I've traded this one on rather aggressive intraday basis last couple of day's from the bearish side starting at $18.75 adding to it yesterday at $20.67. Looking to get out of this one though. Has seen a "crazy" bidder today from $20 to $20.36. What a bear needs to be cognizant of is the "potential" for a bearish signal reversed, where a short gets crushed on a move much above yesterday's high. Link

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

 
 
  Jim Brown   6/19/02,  3:49:29 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Cancel the outstanding OEX/SPX/DJX LONG signal. The market is not setting up for a favorable bounce. We will look to re-enter in the morning.

 
 
  Jeff Bailey   6/19/02,  3:49:18 PM
Affymetrix (AFFX) $22.98 -4.64% ... per 03:38:53. Also a previously mentioned bearish play on break at $20-$21. If stock is going to get "creamed" it should be sooner than later. What looks to have held it together is that stock is "biotech" and that sector bullish % is quite low at 14%. As such, willing to buy back on any type of capitulation gap. Link

 
 
  Jim Brown   6/19/02,  3:43:21 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Could be a bounce off support . Lower the entry point to 509.50

 
 
  Jeff Bailey   6/19/02,  3:42:39 PM
Newport (NEWP) $15.68 -4.21% ... is stock I mentioned bearish in past sessions and the August $20 puts (NZZTD) from $3.70. Willing to lock in a gain on any gap lower to $11, despite bearish vertical count being $6.00. Link

Disclosure ... I currently hold bearish position in NEWP

 
 
  Jeff Bailey   6/19/02,  3:38:53 PM
Some mental notes ... on May 3, I profiled a 1/2 bullish position in the QQQ Sep. $30 calls, after NASDAQ-100 Bullish % ($BPNDX) reversed into "bull alert" status. QQQ declined for two more days from $29.74 to $28.42, then big snap back rally on third day.

Yesterday's action had NASDAQ-100 Bullish % ($BPNDX) reversing into "bull alert" status, and today is first day and declining. Will have another day of observation tomorrow, but could see defensive action into Friday.

As such, will be willing to hold some bearish trades overnight, but getting more eager to cover on any sharp moves lower near-term on "capitulation" type action.

 
 
  Jim Brown   6/19/02,  3:34:13 PM
Pivot Trade Signals
With the afternoon drop in full swing it is time to start looking for a new entry point. Support has been in the 498-502 range with the last weeks low at 488. This sets up a potential bounce as soon as 502 and as late as 488. After seeing the bullish sentiment for the prior three days I feel we may have a hard time breaking 500 again. I am thinking about an entry point at 501 with a stop loss at 498. This sets us up for a rebound from 500 and takes us out with a further drop below that level. If the 498 breaks then we setup again in the 490 area.

 
 
  Jeff Bailey   6/19/02,  3:32:28 PM
Intel (INTC) $20.06 -8.85% ... Jeff: Under current market condition, where would you place a stop on INTC if long the underlying stock?

To get overnight protection, would look to hedge with a put option here, just in case a gap down situation would take place due to world events.

Otherwise, would place a stop at $18.

 
 
  Jonathan Levinson   6/19/02,  3:27:35 PM
The QQV is now up 3.47 and the TRINQ is at 3.8. Market breadth on the COMPX has reached the "perfectly awful" stage, and the oscillators are, guess what, oversold. Support at COMPX 1500 is the question right now. The extreme readings across the board tell me that 1500 is more likely to hold for the time being, although the lack of bouncing power bodes ill. I note that the XAU is still in the red today, which doesn't fit the overall picture. My feeling is that the indicators will become more oversold still and that 1500 will fail, perhaps after some bouncing around under 1510.

 
 
  Jim Brown   6/19/02,  3:11:10 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Go LONG the OEX/SPX/DJX with at a break over OEX 510.50 (SPX 1027.50)

 
 
  Leigh Stevens   6/19/02,  3:07:49 PM
INDEX Comments: SPX/OEX/DJX - The OEX has fallen back into its prior hourly downtrend channel - welcome back, it was like you never left! SPX never rallied to above its broad downtrend channel, also on its hourly chart - so, it never "broke out". It also reversed as it approached the area of its 21-day moving average, which is always my trading "pivot" point. SPX has reached a first potential support in the 1021 area, but I see better potential support around 1015. DJX fell below first support at 96-96.2, but has not yet reached a "better" area of technical support in the 95 area. Stay tuned.

DJX/Dow viewpoint for a near-term low is within the context of the top pattern that projects untimately to around 89 (88.6) as a longer term objective - per Head & Shoulders top pattern analyzed on Link in my INDEX TRADER wrap up last night.

 
 
  Jim Brown   6/19/02,  3:05:15 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
We were finally stopped out of the OEX/SPX/DJX LONG signal when the OEX traded below 509 at 14:54:24. (SPX 1022.84, DJX 95.91) The desire to jump back in is strong but we need to let emotions cool for a few minutes now that we are past the 3:PM turn and see what develops.

 
 
  Jonathan Levinson   6/19/02,  2:58:51 PM
Nervous is just the way I feel. I do not know what to do now. I have been watching this market for days without doing much of anything. When in doubt stay out!! Of course we could trade with the trend which is down.

We could, but the only thing that'll be sure to make the market rally will be my buying some puts right now (grin). Best to wait for an easier set up.

 
 
  Leigh Stevens   6/19/02,  2:56:02 PM
INDEX Comments: Nasdaq COMP fell first to potential support in the 1507 area, which "filled in" the hourly chart gap from Fri.-Mon. I think COMP may re-test the 1500 area however, before a tradable bottom would set up. COMP is also nearly back to the top of its prior hourly downtrend channel. This can lead to a rebound, or I'll just be "widdening" its downtrend channel.

 
 
  Leigh Stevens   6/19/02,  2:49:49 PM
INDEX Comments: QQQ has fallen back to support implied by its previously broken down trendline that I identified in my Index Sector Wrap last night at Link - the 27.5-27.7 area. The hourly stochastics have dropped back to oversold readings again - we're not quite there on the longer 21-hour model. Am not ready to suggest buying yet, but maybe by tomorrow. We need to see how a next potential bottom sets up - assuming it does. There might be a further dip to the 26.8-27.0 area.

 
 
  Jonathan Levinson   6/19/02,  2:44:55 PM
Or, then again, we could tank into oblivion. The indicators have all built up a lot of steam. I'd be nervous to short, but also nervous to go long. Overall, I'm just nervous.

 
 
  Jim Brown   6/19/02,  2:44:34 PM
PVN Exit Point Alert -
For those following my PVN trade I just pulled the trigger to exit. Two lower highs and the trend has changed negatively. Take profits.

 
 
  Jim Brown   6/19/02,  2:40:06 PM
Pivot Trade Signals
I feel like one of those actors in an adventure movie where they fall over the cliff and disappear from the cameras view. As the watcher moves to the cliff they see the hero hanging by his fingernails to a crack in the cliff face or some scrawny little twig that is threatening to pull lose at any moment. There is a real battle going on here and it won't take much for that twig to break. If we can hold here 21 more minutes we could see a 3:PM reversal bounce. (just grasping at straws but...)

 
 
  Jim Brown   6/19/02,  2:35:37 PM
Pivot Trade Exit Point Alert - corrected - DJX/OEX/SPX
Change the stop loss on the OEX/SPX/DJX LONG to 509. There is significant put activity at the 510 strike. Let's get under it.

 
 
  Jonathan Levinson   6/19/02,  2:33:02 PM
The TRINQ at 3.38 is getting very high and could be telegraphic an impending bounce as selling pressure intensifies. Like the buried intraday stochastics, it could remain oversold or become moreso, but at this level it is now in redline territory. I would guess that the next support should hold on the COMPX, perhaps as soon as COMPX 1500.

 
 
  Jim Brown   6/19/02,  2:31:30 PM
Turn out the lights, the party is over!

 
 
  Jeff Bailey   6/19/02,  2:23:44 PM
NVIDIA (NVDA) $25.15 -11.06% ... was stock profiled bearish recently (06/14) .... Prudential cutting estimates for FY03-04 and price target due to current weak PC environment and the belief that the NVDA's core revenues will be flat sequentially in the October quarter, rather than the previous estimate of +8%. Cutting FY03 est to $1.75 from $1.82 and FY04 to $1.90 from $2.08 (both below consensus) and cuts price target to $48 from $62. Link

 
 
  Jim Brown   6/19/02,  2:21:43 PM
Pivot Trade Signals
That last dip out to be buyable. The indexes stopped right at the last ditch support of 9600, 510, 1025 and 1515 on the Nasdaq. If they don't buy that dip we are in deep trouble!

 
 
  Jim Brown   6/19/02,  2:17:59 PM
Pivot Trade Exit Point Alert - corrected - DJX/OEX/SPX
Change the stop loss on the OEX/SPX/DJX LONG to 509. There is significant put activity at the 510 strike. Let's get under it.

 
 
  Jonathan Levinson   6/19/02,  2:16:27 PM
Bad Breadth on the COMPX, declining volume 6.3 times advancing volume, with the QQV and TRINQ up over 2 as the QQQ dives below support and COMPX prints its lows of the day.

 
 
  Jim Brown   6/19/02,  2:12:10 PM
Pivot Trade Signals
Looks like they are trying to test support one more time. Dow 9600, Nasdaq 1515, OEX 510 and SPX 1025. If we can hold here it could be seen as a successful intraday retest. Otherwise look out below.

 
 
  Jonathan Levinson   6/19/02,  2:03:03 PM
My quote service shows a day range of 27.68 x 29.02 for QQQ, while Waterhouse shows 27.68 x 28.82.

 
 
  Leigh Stevens   6/19/02,  1:53:34 PM
INDEX Comments: QQQ - My charting service, TradeStation, came back to me on the QQQ intraday range yesterday and indicated that the exchange (Amex) informed them that trades in the last 30 minutes, with spike up to 29.75, were valid and reflected actual trading at the time - then, the question became why they, Q-Charts and BigCharts - others, I suppose, were showing the DAILY high as 29.15. TradeStation just changed their daily range.

Second most active yesterday and I can't seem to find any solid answer on this - the WSJ doesn't show the daily range of the Q's. The Amex web site has no price history on the Q's that I can find - but the Site doesn't seem to be working right now either.

A bit strange that the quote vendors I am able to check currently are out of synch - but info I have so far is that 29.75 was the QQQ high yesterday. As I rely on charts, potential bad ticks are of concern.

 
 
  Jonathan Levinson   6/19/02,  1:45:06 PM
Declining volume is now 2.37 times advancing volume on the COMPX. The TRINQ is at 1.79 and the QQV up 1.99 on the day. 27.90 QQQ/ COMPX 1520 is acting like support, but not exactly spring-loaded during this lunchtime lull. I'd like to see price make a push in either direction and then fail before taking a position, particularly so with the intraday stochastics pointed everywhichway through the lunchtime chop.

 
 
  Jim Brown   6/19/02,  12:53:07 PM
Pivot Trade Signals
The new bombing in Israel and the cancellation of the Bush press conference has pushed the markets below their recent plateau. Negative world events are just adding to the negative stock news. It was announced that Rambus was being sued by the FTC for anticompetitive practices in the memory market. Some days the markets just can't get a break BUT every time it shakes off bad news it makes the current support levels stronger and increases our chances of a strong move out of this consolidation.

 
 
  Jeff Bailey   6/19/02,  12:52:16 PM
Treasury Watch 10-year YIELD ($TNX.X) 4.771% and at session low. Still rather defensive response from the bond market here. Next level to be monitoring for potential support is the 4.635% level. If reached "quickly," might be level of "capitulation" for stocks. Link

 
 
  Leigh Stevens   6/19/02,  12:48:29 PM
Subscriber QUESTION: "Can you recommend another way to play your recommendation on the I shares of the S & P 600 small cap index? There is not any options on this index available. Thankyou.

RESPONSE: That is the problem with sector trading - the inability to trade them in a leveraged way. It is why the iShares or HOLDR's are the only game in town as far as sector trading. I have suggested in industry sectors, buying calls/puts on individual stocks in an index as a way of playing that sector - provided that 2-3 different individual stock options are used so that you get some diversification.

In the small cap sector area, I favor the Russell 2000 iShares also (IWM) - there are options on the Russell 2000 ($RUT.X) that trade on the CBOE - I'm not crazy about the bid-ask spreads and the amount of premium you have to pay as a buyer, as a general rule.

Yesterday (6/18) total RUT call volume was 85; with put volume at 2,154, according to what I show in the Journal. This lopsided ratio suggests that the options are being used more as a portfolio hedge than a speculative option play. Institutions may not balk at paying a huge premium as a portfolio hedge.

With the RUT trading around 470 currently, I show the Sept. 470 calls (RUT IN) offered at 24.80, with 0 volume today according to Q-Qcharts and with a miniscule open interest of 103. The 480 Sept calls have a larger open interest indicated at 756. The Sept. 500 calls (RUT IT) have the largest open interest at 1,168 - these calls are offered at 11.40. So, this is what we are up against in trying to trade almost any sector option - there are only a few that are offered - one of the most real active ones, on an ongoing basis (XAU is more active currently, but big gold rallies only come along rarely), is the Semiconductors (SOX) and with call volume on a good day at maybe 2000 and similar in put volume recently at least - this is not an index option that I feel comfortable recommending on OI, unless perhaps I think I have "caught" a major top and puts are "relatively" cheap, or vice versa at bottoms.

 
 
  Jonathan Levinson   6/19/02,  12:36:03 PM
Internals are stonger than you'd think on the COMPX, with down volume over twice but less than thrice up volume, 79 new lows to 57 new highs. This wave of selling has broken the day's uptrend, and the question is where it will stop. The QQV is still below a 2 point gain on the day as I type, and the TRINQ is doing nothing special at 1.48. There remains little guidance beyond the stochastics and the support levels, and 27.70 is a number that many participants will be watching for a bounce. An intraday stochastics crossup from oversold at 27.70 is an intelligent place to put on a long position. Bears should wait for breakdown below that level before adding to shorts.

 
 
  Jim Brown   6/19/02,  12:35:48 PM
The internals continue to get worse, significantly worse. However we are still above the days lows and despite the fact that profits are evaporating we are still above our entry points and still above the days support. I know it is frustrating to sit and watch the nice bounce fade but we will maintain our stops. Our risk is minimal at 2 points on the OEX/SPX/DJX and 1 point on the QQQ. Let's give the markets some room and see what happens. It still appears program related and if you recall I mentioned this would happen in my 11:58 post. I am not surprised so let's just watch patiently.

 
 
  Jeff Bailey   6/19/02,  12:21:43 PM
Adolph Coors (RKY) $61.98 -5.86% ... Jeff, Are you still following a long position in RKY? I noticed a triple bottom break as well as a $3.00 dip today. I'm thinking I should kiss my Oct 70 call goodbye. Would you agree?

Yes, I would disagree with "kissing the OCT $75 calls goodbye" here. Bearish vertical count is $60 and stock trades in strong upward trend. If you need the $1.15 bid of those calls due to account risk management, then do what you have to, but I don't profile, or trade stops on my options.

If you can wait, but looking for different opportunity, then look to sell rally back to $63. Link

Note: Stock is down in reaction to domestic shipment data for May that was released by the Beer Institute yesterday. According to Goldman Sachs, this data, in conjunction with soft sales trends, suggest there may be some earnings risk to Goldman's Q2 estimates for beer companies. Specifically, believes BUD Link estimates may be a penny too high and RKY's could turn out to be around $1.43 vs. consensus $1.59.

 
 
  Jim Brown   6/19/02,  12:18:10 PM
Pivot Trade Signals
Storm clouds gathering on the horizon. Maybe it was just too good to last but the positive sentiment is deteriorating somewhat. This may be the reality setting in that the second half may be challenging. The bulls want to buy this dip badly and the bears are afraid to short it after the last three days of gains. They are afraid that any short will blow up in their face if somebody gives positive guidance.

They saw negative guidance, very negative, that is being ignored. (a sign of a historical market bottom) The major problem remains volume. Without volume there is no conviction and no conviction means we are still on shaky ground. The advance/decline line has dropped significantly and TICKs are negative again. Will this continue the rest of the day? Nobody knows but the severity of the current drop looks like it is program related. We will maintain our current stops on the OEX/SPX/DJX and QQQ longs and look for another bounce off the days support.

 
 
  Jeff Bailey   6/19/02,  12:10:54 PM
CNF Inc. (CNF) 36.94 +3.29% ... Jeff: What do you show as resistance levels on CNF? Still have some of those June 35's. TRAN going up today. Yellow beat estimates.

Stock is breaking to 52-week high. Triple-witching is Friday, thus thought of $37.50 target (June expiration)? Link

As far as technicals go, would have to refer back to previously discussed retracement of $43.17 to $21.65, which has 38.2% as support at $34.94, 19.1% at $39.05.

As mentioned before, would sell any "blow off" into the $37.50 and $39.05 level as June expiration holders run risk of losing gains here.

Understand the risk of potential triple-witch action and stock pegging open interest at $35.

 
 
  Leigh Stevens   6/19/02,  12:10:44 PM
INDEX Comments: COMP/NDX/QQQ - going the other way from the S&P as they are breaking down from bear flag patterns on the half hour and hourly charts, suggesting that another downswing is ahead. S&P indices are starting to weaken also, from the area of their recent highs, so caution is suggested there also.

 
 
  Jonathan Levinson   6/19/02,  12:04:40 PM
I've really enjoyed the new insights you have brought to OI. I've come to rely on your " internals" updates. I have a hard time gauging "shifts" in realtive strength between indexes /or sectors(e.g. compx, dow, s&p ) during the day and wonder how you track that. Just looking at a quote sheet with net and net % doesn't yield the "picture" I want quickly enough. How do you do this? thanks

Perhaps a comparison of net% while glancing at the RSI for each index or security that you're tracking will get you closer. RSI tracks the underlying price relative to itself on an ongoing basis. Add that to a quick eyeball of the % up or down for each security, and you get a better feel.

Another alternative I've used is to generate charts with one of the indicators being "Price relative to". This allows you to select the security or index you wish to compare to.

 
 
  Jim Brown   6/19/02,  11:58:39 AM
The Nasdaq is on the verge of going positive but struggling with that last few points. Expect some sell programs here as hedge funds try to blunt the rally and test the bulls resolve. If the Nasdaq goes positive we could see a real explosion. Keep your fingers crossed!

 
 
  Leigh Stevens   6/19/02,  11:50:33 AM
INDEX Comments: SPX/OEX/DJX - all have achieved minor upside break outs above their down trendlines on the 30 min. intraday charts. They look to be consolidating for another move higher.

 
 
  Leigh Stevens   6/19/02,  11:42:59 AM
INDEXES: SECTOR TRADE RECOMMENDATION: Have been looking to get back into the S&P 600 small cap sector since being stopped out prematurely on Friday's big down draft: my favorite play in this sector is the S&P 600 small cap iShares "value" stock - SYMBOL IJS - the S&P 600 has formed a Head & Shoulders (H&S) bottom pattern on the hourly chart and has achieved a "confirming" breakout above the "neckline" of this pattern. The IJS iShares are trading last at 91.3. I view this trade as a good long-term hold.

The prior IJS high at its May peak was 99.7. Immediate upside potential is to 96.25, based on the "minimum" upside objective implied by the H&S bottom formation. A recommended STOP will be included in my SECTOR TRADER update tonight.

 
 
  Jonathan Levinson   6/19/02,  11:37:37 AM
Yesterday's COMPX support at 1543 should act as resistance here. However, with the TRINQ staying between 1 and 2 and the QQV holding its gains, there should be plenty of room to run to the upside before those indicators signal an excess or peak in buying pressure. Watch the stochastics oscillators for signs of a possible rollover in the 1543-1548 congestion area.

 
 
  Leigh Stevens   6/19/02,  11:15:53 AM
INDEX Comments: SPX back above its short-term trading "pivot" at 1033.5 which is good bullish recovery. Ability to hold this area on subsequent pullbacks keeps hourly chart looking bullish.

 
 
  Jim Brown   6/19/02,  11:13:39 AM
Nice bounce underway! If the Nasdaq turns positive this market could explode. Bears would have a hard time not covering after a bounce out of the earnings black hole from last night. The close today could be very exciting!

 
 
  Jim Brown   6/19/02,  11:08:13 AM
The Russell-2000 has broken out of the pack and is the clear leader this morning. The RUT.X is up +2.28 after opening down over -4.00 points. The Russell is attempting to break out of resistance at 475, which would be bullish for the broader market. The way to play this breakout would be the IWM, (Russell I- Shares) However, with the Russell Shuffle coming up in 10 days I have a hard time believing we will not see a failure at 475 instead of a breakout. Fund managers dumping stocks that will be removed from the R2K should push the index lower. Be careful taking a bullish position in the RUT at this time.

 
 
  Jonathan Levinson   6/19/02,  10:59:14 AM
Breadth has improved on the COMPX as well, with declining volume 1.8 times advancing volume. There are 61 new lows to 39 new highs. The TRINQ has eased to 1.42, but the QQV remains high. The XAU is giving up some of its earlier gains, though bond yields are down across the board. The intraday stochastics are all headed north. This remains an iffy day for choosing a direction, though the COMPX's resilience is impressive for the moment.

 
 
  Jim Brown   6/19/02,  10:50:26 AM
Pivot Trade Signals
The advance/decline ratio just went positive which is amazing considering the amount of bad news the markets had to digest. While we may not be out of the woods yet the strong showing by the major indexes has got to be giving the bears heartburn. Just when they thought the bottom would fall out the buyers rushed in to provide support. We all know the first bounce at 10:15 could have just been a dead cat bounce and temporary but the positive advance/decline ratio is a broad indicator that things may not be as bad as they seem. Time will tell and we need to be flexible on our positions in case our belief does not match reality.

 
 
  Jim Brown   6/19/02,  10:42:34 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
The initial stop loss on the LONG QQQ signal will be $26.95, $1.00 below our entry point. The initial volatility may not be over yet and we want to avoid being taken out prematurely.

 
 
  Jeff Bailey   6/19/02,  10:42:09 AM
Dow Transport Avg. ($TRAN) 2,754 +0.72% .... sticking its head above the 50-day MA here. Looks bullish.

Would focus on FedEx (NYSE:FDX) $56 +0.07% bullish here.

 
 
  Jim Brown   6/19/02,  10:34:51 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
We were triggered on the OEX/SPX/DJX LONG at 10:27:54 when the OEX traded above 512. (SPX 1029.12, DJX 96.47) The initial stop loss will be OEX 510 and .74 points below the low of the day.(SPX 1024 est)

 
 
  Leigh Stevens   6/19/02,  10:29:43 AM
INDEX Comments: QQQ - the Q's have nearly met a "minimum" downside objective at 27.65, based on the minor Head & Shoulder's (H&S) top that formed on intraday charts yesterday. Intraday low has been 27.78 so far.

The move down has met another of my objectives in order to get comfortable on the long side again, which is to get the hourly stochastics back into a neutral to oversold reading again. The shorter hourly stochastic I use (5-hour) now is under 25 and longer stochastic (21-hour) is under 30 now. Looking good for the QQQ trade suggested by Jim.

 
 
  Jonathan Levinson   6/19/02,  10:29:05 AM
Looks like that bounce started as I was typing that last entry.

 
 
  Jonathan Levinson   6/19/02,  10:28:09 AM
Internals have worsened on the COMPX, with declining volume 3.42 times advancing volume. The TRINQ at 1.96 and QQV up 2.8 is high but persistent. A bounce is likely here, but if it doesn't materialize, I'd look for support in the QQQ 27.70 area.

 
 
  Jeff Bailey   6/19/02,  10:23:31 AM
Dow Jones Home Construction Index (DJUSHB) 375.21 +1.64% ... strong earning from LEN have group making its move above the 50-day MA and now clearing upper end of regression. Look for some bears in group to begin getting jittery here. Most likely some bears still playing the "reverse head and shoulders" potential, with right shoulder at 375, but move much above here could trigger substantial short-covering. Link

Today's trade at 375 gets index back on a "buy signal" and turns vertical count bullish to 450.

 
 
  Leigh Stevens   6/19/02,  10:18:08 AM
INDEX Comments: Nasdaq Composite (COMP) - at 1521 has fulfilled the "minimum" downside objective implied by its Head & Shoulder's top pattern that was apparent on the intraday charts yesterday. Interestingly, the daily low at 1519 got right to the TOP of the hourly upside gap resulting from the jump higher on Monday's opening - the gap between closing hourly high on Friday and first hour's low on Monday.

When a gap like this RESISTS being "filled in", its generally bullish on a technical basis. Upside chart "gaps" often act as support areas. Sometimes they get filled in - that would occur with a decline in COMP to 1507 - and then the index rallies, sometimes gaps "resist" being filled in - this later situation indicates a stronger underlying technical support and strength.

 
 
  Jim Brown   6/19/02,  10:13:09 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Go LONG the QQQ now at $27.95

 
 
  Jim Brown   6/19/02,  10:11:33 AM
Pivot Trade Signals
The market internals are improving slightly with the advance/decline ratio rising to .69 from the morning lows of .40. The TICKS are positive and improving. The Nasdaq appears to have bottomed at 1520 and is shaking off the bad news. This would be a good spot to enter a QQQ long.

 
 
  Jim Brown   6/19/02,  10:07:52 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Go LONG the OEX/SPX/DJX with an OEX trade over 512.00 (SPX 1030) The internals are improving and we could see a bounce here at any minute..

 
 
  Jim Brown   6/19/02,  10:05:32 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Close the open OEX/SPX/DJX SHORT signal here at 511.59 (SPX 1028.30

 
 
  Jim Brown   6/19/02,  9:57:43 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Lower the stop loss on the OEX/SPX/DJX short to OEX 513.00 (SPX 1034 est)

 
 
  Jonathan Levinson   6/19/02,  9:54:35 AM
Nasdaq-100 volatility/fear (QQV) is remaining persistent and holding its "gains", up 2.85 on the day, with breadth negative today on the COMPX, declining volume tripling advancing volume. The TRINQ at 1.27 is not significantly high, and if the COMPX does not start to pick up soon, this day could become a lot worse.

 
 
  Jim Brown   6/19/02,  9:51:24 AM
The initial bounce is fading as the prospect of a much weaker second half of the year appears to be weighing on traders. They wanted to buy the dip as evidenced by the quick rebound. There could be some lingering indecision here as traders fight the urge to change sides. Decliners are beating advancers by better than 2:1 ratio.

 
 
  Jonathan Levinson   6/19/02,  9:50:02 AM
The Gold and Silver Index (XAU) is trading up 1.2 today to 77.59, just below resistance in the 78.50-79 range. Its daily chart is oversold but it is overbought on the weekly, nevertheless worth watching as a potential hedge against the weakening US Dollar.

Disclosure: I hold a long position in precious metal funds.

 
 
  Jonathan Levinson   6/19/02,  9:45:26 AM
Microsoft (MSFT) has been showing strength so far this morning, despite AMD and AAPL's bad news yesterday after the close, though fading as I type. Support is at 53.94 and resistance at 57.40.

 
 
  Leigh Stevens   6/19/02,  9:41:53 AM
INDEX Comments: QQQ finding support so far at low end of emerging hourly uptrend channel around 28. Next lower support looks like 27.50. Q-charts and TradeStation and I don't know what other data feeds, have still not corrected the bad tick in QQQ at 29.75 that occured in the last hour of trading. Correct intraday high is 29.15 according to the daily charts, not 29.75 showing on the intraday charts. Poor data integrity to not have this fixed by now! - this may be the exchange's shortcoming as the data vendors can only work with what they get from them.

 
 
  Jeff Bailey   6/19/02,  9:37:37 AM
Lennar Corp. (LEN) $58.30 +1.84% ... reported earnings of $1.51 a share, which was better than consensus estimates of $1.20 a share. Link

 
 
  Jonathan Levinson   6/19/02,  9:35:19 AM
Big spike in the QQV at the open, up 2.33 to 48.06. The TRINQ is at 1.16, indicating to me volatility/fear spike, but not accompanied by a "spike" in selling pressure- if it were, we'd be seeing the TRINQ spiking well above 2 or 3 at this time. This could portend a gap fill, or perhaps the sellers haven't really appeared yet. I'm guessing in favor of the former.

 
 
  Jim Brown   6/19/02,  9:35:02 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Lower the stop loss on the OEX/SPX/DJX short to OEX 515 (SPX 1035 est)

 
 
  Jim Brown   6/19/02,  9:29:05 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
We are going to follow the OEX down with a trailing stop loss of about 3 points. The updated stop loss will be posted after the initial drop.

 
 
  Jim Brown   6/19/02,  9:22:24 AM
Pivot Trade Signals
Lady Luck Smiled - I would rather be lucky than good any day! The initial news from Oracle spiked the futures across the board and had it not been for the negative warnings from AMD, AAPL, CIEN, TQNT and the news from INTC this mornings open would have been much different.

Based on the underlying bullish sentiment over the last three days I view this dip as a buying opportunity. There is an underlying "bid" to the market in the OEX 500 range. I think a long play in that area makes great sense. After last nights news and today's dip the BAD NEWS WILL BE PRICED INTO THE MARKET. A recovery after this dip could be a lasting recovery. About the only company that could cause another major dip would be IBM or MSFT and only one of those two is expected to warn. The unknown factor is how low this drop will go. I would not be surprised with a morning dip followed by a morning bounce. I would be surprised to see a multi-day dip but anything is possible.

 
 
  Leigh Stevens   6/19/02,  9:13:27 AM
Pre-Opening INDEX Comments - Apple Computer (AAPL) warning on earnings last night is a big influence on stocks this morning; Morgan Stanley reported in line with expectations; Bear Stearns came in better than expected.

To those who shorted/bought puts as the indices built Head & Shoulders tops yesterday (apparent on the 30 min. charts expecially) AND stayed short overnight - congrats on your fortitude!

The Head & Shoulder's (H&S) pattern is one of the more reliable chart formations indicating a top or bottom - while the pattern was not "confirmed" by a break below the low end of the trading range (the "neckline"), it was a good indication that the indices had built at least minor tops and that the overnight "news" was going to be bearish. More on the H&S pattern in the Trader's Corner at Link

 
 
  Leigh Stevens   6/19/02,  9:10:00 AM
Pre-Opening, Stock INDEXES - Good Morning!

Index Futures trading: S & P > -13.70 ; D J > -115.00; Nas > -42.00

 
 
  Jeff Bailey   6/18/02,  9:42:57 PM
The Market Monitor has been archived. To view Tuesday's entries, simply click this Link

 
 

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