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  Jeff Bailey   6/21/02,  6:04:32 PM
Citigroup (C) 39.80 -1.7% .... hmmm.... was bearish this "bank" at $42 on the bearish triangle break lower. Stock did fall to $38.35 not long after, but still above that low. Looooook at today's VOLUME of 25.9 million. Wow! Some trading in this one. Old saying is ... "volume often times proceeds price action." Today's volume shows some interest, that's for sure. You can almost be certian that there was some type of institutional bets made and some cancelled today as it relates to the U.S. $. Link

Thinking... "the only fundamental reason I'd buy C, is if I thought the US$ was due for a rebound.".... "the only fundamental reason I'd short C, is if I thought the US$ was due to decline further." Link

As noted in the past, p/f chart of C is bearish and triggered the "bearish triangle" at $42. Only thing going against a bearish trader is the sector. According to Dorsey/Wright and Associates, the banking sector as a whole is "bull confirmed" at 88%.

Note: C is a Dow Component isn't it? While the Dow broke below its recent relative low, C has held above its recent relative low. Could this be some type of sign that the US$ is going to reverse higher? Or is C about to get crushed?

I'd stick with the supply/demand chart on this one for now. Bearish count is $31, but need some help from a weaker US$ most likely to get it there. First sign of strength is a trade at $44.

  Jeff Bailey   6/21/02,  5:48:28 PM
Insurance Indices Hey! They're back. It looks like the S&P Insurance Index ($IUX.X) listed on the CBOE is showing up again for q-charts! Hooray!

Some other's too that kind of break things down.

Dow Jones Insurance Index (DJTINN), DJ Life Ins. Index (DJUSIL), DJ U.S. Insurance (DJUSIR), Combined Insurance (INSRX). **These are symbols for q-charts.

On www.stockcharts.com, I just found the Nasdaq- Insurance Index ($INSR) Link

Will have to do some work with these over the next couple of weeks, see what's in them, etc.

I tested myself too on some things. One that was a bit of a surprise to me as far as sector performance was how well the S&P Banks (BIX.X) and KBW Bank Index (BKX.X) held in. They finished relatively unchanged on the week, but with all the currency concerns, would have thought lower. Maybe some underlying bullishness that needs to be understood/figured out?

  Jeff Bailey   6/21/02,  5:26:03 PM
Most bullish % gainers this week was...

1) Dow Jones Home Construction (DJUSHB) +10.3% Link

2) Dow Jones Transports (TRAN) +3.1% Link

3) Forest/Paper Products (FPP.X) +2.6% Link

Most bearish % losers this week were ....

1) Semiconductor Index (SOX.X) -10.8% Link

2) Disk Drive (DDX.X) -9.1% Link 2) Fiber Optic (FOP.X) -9.1% Link

3) Combined Telecom (IXTCX) -7.8%

  Jeff Bailey   6/21/02,  5:08:23 PM
Test yourself... What were this week's best bullish performing sectors on a % basis?

What were this week's best performing bearish sectors on a % basis?

Write your answer on a scribble pad. This may also be a test of your "sentiment" or how influenced you might be in regards to the media, or other relationships you have with fellow investors.

No cheating, and I'll post the answer at 05:26 EST. While the 29 various subsectors aren't necessarily a "complete" list, off all the various sector indexes, you may be surprised. If so, then perhaps some adjustments are made you thinking or questions posed, like... "why is that?, What is the MARKET thinking?"

This is something I try and do each day, then each week to see if I'm on track, or way off base on something.

  Jeff Bailey   6/21/02,  4:31:23 PM
Gold Bugs I wouldn't be too upset with today's action. Note the close on the August Gold Futures (gc02q) of 325.10. Pretty close to a nice round number of 325. Yes, a close at 350 would have been nice, but not that reasonable for today. The June contract (gc02m) which expired today, did edge above $325 at a session high of $325.20, but you can just imagine some squaring of things.

Most of the action was in the Aug. and Dec. (gc02z) contracts as positions look to have been rolled out or new ones stablished.

  Jeff Bailey   6/21/02,  4:05:14 PM
Jeff, yesterday's good recommendation to short AOL @16.26 with stop loss at 17.55.

Hey! I'm just glad a subscriber asked me about the stock. The "inside day" break lower was the attractive part. Link

If trading the "inside day" technique, just remember to follow down with a stop!

Explanation of "inside day" technique is in "Bailey's Basics" at this Link

  Jeff Bailey   6/21/02,  3:54:20 PM
Jeff, you are amazing (call on MSFT). Had some PUTS I bought yest. at resistance and took a decent profit earlier because I didn't believe they would go that low and wanted to be flat for week-end. Should have waited just a while longer with your observation.

My question is concerning the VIX which has dropped significantly along with the market. I this a significant change in sentiment or just X-day settlement gyrations.

Well... MSFT is a "key" stock and major part of many institutional portfolios (long and short). Never know for sure, but will be interesting to see where the stock closes.

You're wondering about the VIX.X also eh? Me too. Interesting to me that this more "contrarian" indicator is actually settling back, almost like the more defensive Gold/Silver Index (XAU.X) has done as the session progressed.

VIX.X being lower may indeed be from some institutional adjustments as it relates to selling of naked puts on a forward basis. Lets face it, institutions can take some heat, and with option premiums "jacked up" could be seeing some naked put selling forward contracts on some of their favorites. Never know for sure, but institutions usually sell options, they don't buy them.

  Leigh Stevens   6/21/02,  3:53:09 PM
INDEX Comments: DJX broke well under Friday's low following the Nasdaq pattern. OEX soon followed suit & can SPX be far behind? - 982 is not far away from current 986

  Jim Brown   6/21/02,  3:48:27 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
With no relief in sight I plan on holding the current SHORT over the weekend. Negative surprises have been the rule. Lower the current stop loss to our entry point of 491.

  Jim Brown   6/21/02,  3:42:01 PM
That thud you just heard was last weeks Dow low of 9261 being hit.

  Leigh Stevens   6/21/02,  3:39:49 PM
INDEX Comments: DJX is back to its prior low from last Friday - with NYSE TRIN at 2.31 selling pressure doesn't look like its going to stop here at 92.6.

  Leigh Stevens   6/21/02,  3:38:48 PM
INDEX Comments: Nasdaq Indices - The Composite has pierced last Friday's low at 1445 and may start to sink further, like the Nas 100 (NDX) did - and QQQ also. You could not have a better example of how support, once broken, can "become" resistance. Once NDX & QQQ fell under last their lows of last Friday, they rebounded back to that level one (NDX) or more (QQQ) times and - WAHLAH! - selling came in right at this level and eventually there was another downswing. This could work the other way later on, say Mon/Tues, if NDX rallied to above 1056 and QQQ above 26.2, and held this level on subsequent pullbacks, it would be the first sign of a possible upside reversal.

  Jim Brown   6/21/02,  3:34:07 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
We were triggered on the OEX/SPX/DJX SHORT at 15:19:52 when the OEX traded below OEX 491. (SPX 990.33, DJX 92.76) The initial stop loss will be OEX 493. I want to keep it tight in case there is a bullish stampede soon. (GRIN) A reader pointed out that a drop under 490 would bring another 5500 put contracts into the money and market makers would rather that not happen. They will likely pin it to the 490 strike or just above. With advance/declines dropping and down volume increasing they have their work cut out for them.

  Jonathan Levinson   6/21/02,  3:23:14 PM
Wow Jim! Looks like that signal just moved the market (grin)! The TRINQ has just busted 4, and breadth on the COMPX has just returned to "eek" territory, declining volume more than 4 times advancing.

  Jim Brown   6/21/02,  3:20:05 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Right on schedule! The afternoon roll over is underway. We were stopped out of the LONG at 15:17:02 when the OEX traded under 492. (SPX 992.71, DJX 92.95) There is an open short signal at OEX 491.

  Jim Brown   6/21/02,  3:10:02 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Go short the OEX/SPX/DJX with any OEX trade below 491. (SPX 991)

  Jim Brown   6/21/02,  3:09:42 PM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Let's tighten up the stops on the current LONG to OEX 492. If it is going to roll over let's get out of the way.

  Jim Brown   6/21/02,  3:08:43 PM
Pivot Trade Signals
Traders sometime have short memories but the market setup this afternoon is looking exactly like yesterday and we all know how that ended! While I would hate to go long over the weekend I would not mind going short if today repeats yesterday in the next few minutes. I am going to issue another SHORT signal now.

  Jeff Bailey   6/21/02,  2:58:04 PM
Micron Tech (MU) $18.47 +0.38% ... giving back some of earlier gains after UBS Warburg cuts to "hold" from "buy" based on the belief that the slower growth outlook for PC demand has effectively delayed the acceleration in DRAM demand, and that the projected increase in supply will likely match the projected increase in demand in 2002 or early 2003.

  Jim Brown   6/21/02,  2:55:16 PM
Pivot Trade Signals
Looks like the sellers are starting to gather again. The TICKS are beginning to trend back down as well as the advance/decline ratio. We have had decent intraday in support just above OEX 491 so we will let the LONG signal continue with an OEX 491 stop. We can still go either way and the last two Fridays have produced an afternoon rally. Why, other than short covering, would anyone want to buy stocks and hold over the weekend with another terrorist warning today is beyond me.

  Jeff Bailey   6/21/02,  2:52:49 PM
FedEx (FDX) $56.64 +2.44% ... trading like a champ and holding the $55 level from yesterday. Reverse/head shoulder still in play. A rebounding US$, may have FDX indeed achieving the reverse/head shoulder target of $64. Link

  Jeff Bailey   6/21/02,  2:51:03 PM
Dow Transports (TRAN) 2,755 +0.28% ... transports continue to hang tough and hold above their 50-day MA. No "signal" to weakness here to help call a lower market at this point. A rebound in the US$, coupled with a TRAN break above the 2,810 level could have the index unraveling to the upside. Link

Conversely, should the US$ continue to fall, may weigh on investor psychology and pull the transports lower.

  Jeff Bailey   6/21/02,  2:45:32 PM
Microsoft (MSFT) $52.68 -2.64% ... will take note of session lows of $52.51, pretty darned close to comments from 10:34:20 and observations of open interest, that may have stock settling out at $52.50 by the close. "Triple-witch" and some impact from that? Looks like it to me.

  Jonathan Levinson   6/21/02,  2:39:02 PM
Internals have deteriorated some, declining volume back up above three times advancing volume on the COMPX. I think that Leigh has nailed it- the bears are taking a breather and covering some. MSFT is showing renewed weakness which is a bad sign for the COMPX and the QQQ. As one reader has just pointed out as I type, with no bounce, the shorts may become emboldened and hold over the weekend. If so, I wouldn't hold my breath for any bounce before they start covering.

  Jeff Bailey   6/21/02,  2:37:58 PM
Verizon (VZ) 40.47 +1.32% ... Jeff: Dear Jeff, Haven't had an update on Verizon Wireless, I'm holding a July 42.5put. If you could update us on that. would really appreciate it.

I'd hang in there. Key near-term will be what the US$ does, and perhaps what the Dow Industrials does. If the US$ darts lower and Dow Industrials trades 9,250, gives the sell signal, then vertical count turns back to bearish. Link Remember, 9,300 was a prior bearish vertical count on the Dow Industrials.

While VZ isn't a Dow Component, the Dow Industrials is the "leading" or strongest index. It isn't the NASDAQ nor the S&P 500 that is the "leader", it's the Dow Industrials. Hopefully you can see somewhat of a "tie in" with VZ and a trade at $38, should the US$ fall from this 108 level. In essence... VZ isn't far from cracking, question is... "will it?" For you, the question is... "is it worth the risk of capital already invested, or is there a better opportunity elsewhere?"

If the US$ rebounds, then most likely VZ will rebound with it, or at least higher likelihood of that action in my mind.

  Jeff Bailey   6/21/02,  2:29:13 PM
Moody's changes outlook for U.S. wireless industry to negative Moody's changes the outlook for the U.S. wireless industry as well as AWE and NXTL to negative, citing rapidly decelerating growth and highly competitive marketplace.

  Leigh Stevens   6/21/02,  2:08:25 PM
INDEX Comments: COMP rebound is the only one that is occurring from its prior (last Friday) low - NDX & QQQ fell to below their 6/14 lows - this same level (prior low at 26.2) now appears to be a "resistance" point in QQQ. I doubt that this is going to go anywhere. So far, looks like short covering. S&P/DJX patterns look similar to yesterday's price action - a bearish type consolidation before more weakness and selling later on. Stay tuned.

  Jim Brown   6/21/02,  2:03:49 PM
Pivot Trade Entry Point Alert - Want to Chase? - OEX/SPX/DJX
For better or for worse we are now LONG. The LONG signal was triggered at 13:56:50 when the OEX traded above 493. (SPX 994.48, DJX 93.08) The initial stop loss will be OEX 491, just below the low of the day. The internals are still improving with up volume jumping significantly in the last five minutes. It will be interesting to see if the shorts covering before the weekend are blown out by institutions selling into every bounce.

  Leigh Stevens   6/21/02,  1:58:18 PM
Subscriber QUESTION: " Great article last night - relating to the premium of index futures to the index, can you tell me what the PREM.X is on Qcharts? I can see it is the futures over the cash, but are there any parameters Etc. and how we might interpret the info. Thanks..."

RESPONSE: PREM.X is simply the nearest S&P futures (the "front month" - as of today, September) contract level minus the SPX "cash" value - so, it’s the premium of futures to cash. However, unless you are getting "real time" futures quotes, or at least the Chicago Mercantile Exchange (CME) where the S&P 500 futures trade, PREM.X will be a delayed quote on the futures side. It then has little ability to identify sudden sharp shifts in the premium of futures to cash - these changes happen quickly when there is a index futures-related arbitrage buy or sell "program" going on.

But back to the significance of the PREM.X levels from day to day. Watching the levels from day to day will give you an ideas when the premium starts falling or rising, relative to the "norm", which tends to indicate rising bullish "sentiment" (rising premium level) or rising bearish sentiment (falling premium level).

However, there is another missing comparison number, which is "Fair Value" of futures relative to cash; i.e., what "should" futures be trading at to be "fairly" valued to the actual basket of stocks. For example, you know that fair value is 250 (2.5) points (futures over cash) today and you see that PREM.X is running at 350 most of the day - this is usually a result of a bullish sentiment and willingness to pay a "premium" price in the index futures in the belief that the index will be rising. On the other hand, if PREM.X is running 100 or even -100 to nearby futures - and fair value is 250 - then bearish sentiment predominates.

When PREM.X gets "rich' to cash, it invites buy programs - sell the futures, buy the basket of (S&P) stocks ("cash"). When the premium gets "undervalued, they unwind (liquidate) the previously done arbitrage programs by executing "sell programs" - buy the futures, sell the stocks. It's hard to INITIATE arbitrage that buys the futures and SHORTS the stocks, because of the "uptick rule" on shorting stocks. Arbitrage works on the rapid execution on each "side" of the trade - you cannot assume usually that you can short all the stocks you need to at the SAME time.

  Jeff Bailey   6/21/02,  1:56:42 PM
Gold/Silver Index (XAU.X) 78.75 -0.17% ... edging red here. August Gold futures (gc02q) 324.40 -$0.70, or 0.24%, losing a little too.

Looking near-term "neutral" as the US Dollar Index (dx00y) 108.09, continues to hover near the December 2000 lows.

  Jim Brown   6/21/02,  1:47:36 PM
Pivot Trade Entry Point Alert - Want to Chase? - OEX/SPX/DJX
Up volume is increasing, advance/decline ratio is improving, TICKS are increasing. Could it be the beginning of an afternoon bounce? Go LONG the OEX/SPX/DJX with an OEX trade above 493. (SPX 995 est) This is a high risk signal.

  Jonathan Levinson   6/21/02,  1:32:40 PM
Internals are firming on the COMPX, with declining volume between 2 and 3 times advancing, and the QQV down .24 on the day. 1450 is a nice, round number, and bulls and bears are no doubt wondering if this could be a level that provides some grip. The firming internals and falling QQV help, though the TRINQ is proving stubborn, still up at the 2.25 area. I note that at this point, both the long and short trends are down, and the falling dollar, rising metals, and falling bond yields are singing in unison.

  Jeff Bailey   6/21/02,  1:23:27 PM
Bema Gold (BGO) $1.65 +9.27% ... I'm going to suggest that short-term bullish traders from yesterday take some gains here.

  Jeff Bailey   6/21/02,  1:18:50 PM
Fiber Optic (FOP.X) 46.87 +0.06% ... this is interesting. One of the weakest sectors of the market showing some green. Hints of some short covering taking place. May be triple-with related, but worth noting.

  Leigh Stevens   6/21/02,  1:14:14 PM
Subscriber QUESTION: "Leigh, Look at the weekly INDU chart and see if there is not a H&S pattern. I have a projection down to 8927 if I'm correct. "

RESPONSE: I commented this week and again last night on the Head & Shoulder's Top pattern on the Daily Dow chart dating from Feb. - I get a downside projection to around 8860. You can see the chart on last night's Index Trader wrap at Link

  Leigh Stevens   6/21/02,  1:08:55 PM
Subscriber QUESTION: "SMH time? How about grabbing a few Aug or Nov SMH calls in this 30 range? "

RESPONSE: It may be Miller time after a day like today, but not for SMH. There is no sign of a bottom yet in the Semiconductor HOLDR's (SMH), as is true in the Semiconductor Index ($SOX.X). Both appear headed toward a retest of their September lows - for SMH, that is at 27.3 - stock is at 29.9. SOX prior low is 344, versus current level at 382. I always assume that, as a stock or an index gets closer and closer to a prior major bottom, that the item is being "pulled" there again as potential buyers use the prior low as a reference point - they figure, why bother doing any buying unless we get back into this area - if there is a turnaround before that, there tends to be a wait and see attitude about whether it is anything more than a temporary rebound.

  Jonathan Levinson   6/21/02,  1:05:48 PM
The put to call ratio is staying high at 1.30. The TRINQ is at 2.91 and the QQV is flat. Bears should appreciate the significance of the flat QQV, indicating that fear/volatility/option premium have remained indiffirent to today's downside action. Declining volume is between 3 and 4 times advancing volume on the COMPX.

  Jim Brown   6/21/02,  12:52:40 PM
Pivot Trade Entry Point Alert - CORRECTED - OEX/SPX/DJX
Go LONG the OEX/SPX/DJX with an OEX trade below 489.50. (SPX 989 est) The initial stop loss will be 486.50. (SPX 980 est) This is a high risk signal.(stop loss was incorrect)

  Jim Brown   6/21/02,  12:50:32 PM
Market Monitor
The monitor is still having technical challenges this morning. If you are still experiencing problems please close all your browsers and restart the monitor using the "Netscape" link even it you are using Explorer. This is the old monitor program. You may still have to manually refresh until we can get the problem resolved. Our lead JAVA programmer was at the hospital all last night when his wife started having contractions early. She is only six months pregnant. He is on the way to the office and should have a fix soon. Until then use the old version and manually refresh if necessary.

  Jeff Bailey   6/21/02,  12:50:05 PM
Gold/Silver Index (XAU.X) 79.72 +1.03% ... at session highs here. Hints of defensive posture from market as US Dollar Index (dx00y) continues to hover at the 108.09 level (December 2000 lows).

Thinking "good decision" by Jim to lift profit stops near tearm of bearish targets, and switch to strategy of trailing profit stops in his index put trades.

  Leigh Stevens   6/21/02,  12:47:51 PM
INDEX Comments: QQQ has taken out its prior low at 26.2 - next downside target looks like 25, at the low end of its hourly downtrend channel. The Nas Composite (COMP) is almost to its prior recent low at 1445 - the low end of its steep downtrend channel on the hourly chart is down in the 1420 area - if we see 1420 on the COMP, can 1400 be far behind! Always seems to be a "pull" toward those even 100 numbers.

  Jim Brown   6/21/02,  12:44:44 PM
Pivot Trade Signals
This is getting pretty ugly. Every indicator I have is diving into even more oversold. This proves the adage that things can always get worse. Technical indicators are buried in the extreme but the markets continue to fall. Sentiment is taking precedence and nobody wants to hold stocks today. The falling dollar, rising terrorist warnings, fear of a July-4th attack, Brazil default fears, etc.

  Leigh Stevens   6/21/02,  12:42:31 PM
INDEX Comments: OEX seems to be relentlessly moving down to a test of the prior (6/14) low at 488. 495 did not prove to be a "stopping" place - not even a 'resting' one! SPX - It's prior (6/14) low was 982 - once we get this close, you have to figure the index will go to the only prior price where enuf buying interest developed to turn the bear tide. DJX - now very close to ITS prior low at 92.6. (My 88.6 DJX objective based on the broad top pattern dating from Feb. is not looking so far fetched now.)

  Jeff Bailey   6/21/02,  12:36:49 PM
Benchmark US$ Index 108.12 -0.76%, Dow Industrials (INDU) 9,296 -1.43%, SPX 993 -1.31%, OEX 492 -1.53%, COMPX 1449 -1.54%, QQQ 26.04 -1.58%, RUT 459 -0.1%.

  Jim Brown   6/21/02,  12:28:06 PM
Jim, Went heavily into IBM (100 puts) needless to say I was a little nervous when it went up on a downgrade. Just got out for a $50,000 profit-- Did the same with OMI (should be OMG for Oh my God). Think I'm going to Disney World (just kidding) Thank you Thank you Thank you. (name withheld)

Come on you are making everyone else jealous. We think you should be sending us to Disneyland instead!! Great job!! Now how many losers did you have before hitting those home runs? Inquiring minds want to know!

  Jeff Bailey   6/21/02,  12:15:39 PM
Treasury Watch 10-year YIELD ($TNX.X) 4.773% and lower on the session. Will note that current YIELD level is just above yesterday's pre-release of Philly Fed numbers, when Treasuries saw selling on stronger-economic data. That selling has basically been bought back here. Still rather defensive, almost like bond traders are "weighing" the weaker dollar as reason to be buying Treasury, against the stronger Philly Fed data (strong economy, potential raising of interest rates) and reason to be a seller in Treasury.

Currency seems to be "dictating" the action, thus buying in Treasury as more defensive posture.

As money flows out of US (lower currency) and money flows to Treasuries (lower YIELD) stocks suffer as a result.

  Jim Brown   6/21/02,  12:15:11 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Go LONG the OEX/SPX/DJX with an OEX trade below 489.50. (SPX 989 est) The initial stop loss will be 496.50. (SPX 980 est) This is a high risk signal.

  Jeff Bailey   6/21/02,  12:10:31 PM
Aug. Gold Futures (gc02q) 325.40 +0.52%, right at yesterday's contract high. Move higher could "dislodge" sellers in Gold stocks.

  Jim Brown   6/21/02,  12:09:32 PM
Pivot Trade Signals
The next signal will be a LONG at the lows from last week. I am still bleeding from catching knives yesterday but technically a print in the 488-489 range (Dow 9260) should trigger a relief rally for a few points. I am not going to chase this on expiration Friday. If we get to the entry point we will go long with the expectation of scalping a few points before the close. If we don't hit the entry point we will watch from the sidelines the balance of the day.

  Jeff Bailey   6/21/02,  12:08:56 PM
Bema Gold (BGO) $1.59 +5.29% ... challenging yesterday's high, but not broken above $1.60.

Will note that Newmont (NEM) $28.95 -0.58% down fractional. Two different stocks in my mind. BGO more a "retail" stocks for individual speculators, while NEM more "institutional".... current analysis is that BIG money not overly bullish gold stocks yet, based on currency action.

  Jonathan Levinson   6/21/02,  12:05:40 PM
Anglogold is reputed to be one of the bigger hedgers of gold, and like Barrick and Placerdome, has been lagging the index as participants speculate that they will be forced to cover as the price of gold rises. This is unverified, but I've heard it quoted in many different sources.

  Jonathan Levinson   6/21/02,  12:03:49 PM
Declining volume over twice but less than thrice advancing volume on the Naz, QQV is up .62 and the TRINQ is at 2.48. It looks like QQQ 26/COMPX 1449/50 wants to hold for the time being, though the stochastics look poised for another try at them.

  Jim Brown   6/21/02,  11:59:47 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
TOO CLOSE !! We were stopped out of the SHORT signal almost immediately when the OEX traded above 493.50 at 11:54:40. (SPX 994.94, DJX 93.23) Looks like I set that stop a little close! However, a real buy program appeared! Will the surprises never end?

  Jeff Bailey   6/21/02,  11:59:30 AM
Anglogold (AU) 29.07 -1.75% ... still stuck in consolidation. May be a near-term laggard, but entry on break above $29.75. Link

Not sure why the stock isn't moving, but need to make observation that not "every" gold stock is on the move.

May be near-term "hint" that US$ is going to bid?

  Jeff Bailey   6/21/02,  11:56:50 AM
Bema Gold (BGO) $1.59 +5.29% ... "gold bug" bullish response here in reaction to US$ decline.

  Jeff Bailey   6/21/02,  11:55:40 AM
US Dollar Index (dx00y) 108.10 -0.78% ... did trade below the Dec. 2000 lows of 108.09 to 108.02 in past mintues. Has the Dow Indu. down -106 points here. Can Dollar hold, or break lower? Time will tell, but tensions mounting.

  Jim Brown   6/21/02,  11:51:23 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Cancel the 490.50 profit stop. The speed of the drop and the negative internals could take us lower. I am going to a trailing stop instead. Let's make our stop loss 493.50 to start and I will keep moving it down until we see some life come back into the market.

  Jeff Bailey   6/21/02,  11:50:16 AM
Intl. Paper (IP) $43.05 -0.6% ... candidate of "straddle" based on 11:00 Update. I like the $42.50 straddle in the July $42.50.

July calls (IPGV) $1.80 and puts (IPSV) $1.20 ... stock needs to move more than $3.00 from here.

For reasoning... I like the rather "neutral" MACD right near zero level and stock has been consolidating near a potential "pivot" of $43, giving some potential momentum if a break comes away from consolidation either direction. Link

Stock has the potential to move also as depicted by the chart.

  Jonathan Levinson   6/21/02,  11:43:07 AM
Declining volume is now tripling advancing volume on the COMPX. The TRINQ and QQV looked worse yesterday, telling me that the selling has room to run.

  Jeff Bailey   6/21/02,  11:38:36 AM
Microsoft (MSFT) $53.42 -1.25% ... breaking this morning's low. (see 10:34:20) and bearish for stocks in my opinion.

  Jim Brown   6/21/02,  11:30:49 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
The OEX low last week was 488.10. Due to the oversold conditions I am placing a profit stop at 490.50 just in case there is a "buyer" out there somewhere!! If we are going to bounce before the weekend, just above last weeks lows would be my bet.

  Jonathan Levinson   6/21/02,  11:28:37 AM
J, how do you check the put call ratio?

I go to Link

Times are expressed in Central time, and it's updated every 30 minutes.

  Jim Brown   6/21/02,  11:27:47 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
Lower the stop loss on the open SHORT signal to our entry point of 487.50. We are not giving back anything today!

  Jim Brown   6/21/02,  11:24:02 AM
Intel is setting new lows, MSFT is approaching the low of the day, IBM is closing in on $70 again. Looks like that put/call ratio is going into overdrive and could hit 1.50:1. This is an extreme reading and indicates real fear coming back into the market and normally signals a bounce. NORMAL is not something we have seen lately.

  Jonathan Levinson   6/21/02,  11:21:12 AM
COMPX declining volume is now 1.76 times advancing volume, with the TRINQ getting back up there at 2.32 and the QQV almost flat on the day. It would appear that fear has maxxed out for the moment. All intraday oscillators on the COMPX are oversold or getting there, as the COMPX sits just 3 points off its low of the day.

  Jonathan Levinson   6/21/02,  11:12:10 AM
The CBOE put-to-call ratio has been rising all morning, and has just printed a ratio of 1.35:1 as of 11AM EST. This, like high TRINQ readings, indicates a prevalence of bearish sentiment, and usually tells me to proceed with extreme caution in opening new put positions. Participants are piling on to one side of the boat, in this case with puts.

  Jim Brown   6/21/02,  11:07:13 AM
Market Monitor problems - We are having problems with the monitor refreshing this morning. The IT staff is working on it. Thanks for your patience.

  Leigh Stevens   6/21/02,  11:04:18 AM
Wall Street Journal (WSJ) - This morning's WSJ has front page story on the Supreme Court's ruling that states can challenge health maintenance organization's (HMO's) coverage decisions - the Journal article described this as a "potent weapon" for (health care) consumers. I don't know how much of a factor this is in the HMO sector index's ($HMO.X) weakness this today, what with general market weakness, but I have been seeing for a while -- as noted again last night in SECTOR TRADER at Link - a definite bearish divergence in the HMO technicals, as the index went to new highs on falling relative strength. The Health Providers Index ($RXH.X) has made a double top an even more definite sign of a peak, at least for now. These stocks have had quite a run, but no Sector goes up indefinetely and gets "ahead" of its fundamentals for too long. Witness the Gold sector.

  Jeff Bailey   6/21/02,  11:02:31 AM
Jeff: I got caught being greedy with DUK june 32.5 puts cost $1.35 I am now back in money (barely) ....wait or bail?????

It's a gamble as today's those options could turn into a pumpkin! Low risk tollerance and satisfied with gain? Then close them out. High risk tollerance and looking for a spike lower to call open interest at $30 and put open interest at $30, then roll the dice and hang in for the end of the session.

  Jim Brown   6/21/02,  10:57:55 AM
Hi, Jim. I just wanted to send a short note to you. I've been struggling with my trades all year (like most everyone else)--hasty entries (to get in on an apparent move), and then holding too long as the trade goes against me while I expect (hope!) for a recovery, etc. Lately, with the market apparently oversold (intermediate term), I've gone 100% to cash to regroup.

I decided to look for one good setup that I was comfortable with. I'd been eyeing IBM (among some others), and on Monday your 1:37 comment on IBM put activity caught my eye, so I bought a modest number of July 75 puts (just to start back into this game) at $2.75 with the stock rallying within its downtrend at $77.5 (just under resistance). I placed a profit target limit order of $5.90 (no stop loss), and watched the action daily, with no other new trades. Today, the opening gap down to near $70 took me out of the puts at $6.20 for a 125% gain--a nice confidence builder to get me back in the water--and I'm done for the week, thank you.

IBM may well fall further as you suggest, with a theoretical downside target of $61, and I may get back in on a little rally next week and as premiums come down a bit. But I would do it with the same capital at risk as my initial play rather than continue to leave my gains on the table to "let 'em ride."

Some of the "hedgies" (as Art Cashin calls them) that I know through my work are struggling in this market, too, and this reduction in the amount of capital at work is what they do to reduce risk (and stress) in an attempt to get back on track--not to mention stay in business! A disciplined approach is paramount, and putting more capital at risk in an attempt to make up for past losses is a likely path to financial ruin.

Thanks to you and your staff for the keen observations on IBM. Best regards, Scott

That was too good not to print! I hope others take your advice. Thanks Scott!

  Jeff Bailey   6/21/02,  10:50:00 AM
US Dollar Index (dx00y) 108.38 -0.54% ... at session low and looks to be seeking out the December 2000 lows.

  Jim Brown   6/21/02,  10:48:43 AM
Down volume has passed up volume on the Nasdaq and is picking up speed. the ratio is 2:1 in favor of down volume on the NYSE and now approaching 3:2 on the Nasdaq. This is a drastic change from the early morning positive levels.

  Leigh Stevens   6/21/02,  10:46:50 AM
INDEX Comments: Nasdaq 100 (NDX) - yesterday was first time that the NDX closed (at 1062) under its intraday low made last Sept. at 1089 - this prior low is an area to watch. No turnaround in the big cap Nasdaq would be signaled while it trades under this prior bottom at 1089. The Nasdaq Composite is another story - at 1450, at recent lows, the COMP is in the area of a cluster of lows made back in Sept. However, the 1-day closing COMP low was 1423 then and the intraday low was 1387.

  Jeff Bailey   6/21/02,  10:46:13 AM
Bema Gold (BGO) from yesterday's comments... making a bit of a move here at $1.54 +1.98%, hinting that there's some speculation taking place in the sector again today. (Disclosure... I have a bullish position in BGO)

June Gold futures (gc02m) 323.90 +0.21% and August Gold futures (gc02q) 324.0 _0.09% here.

  Jim Brown   6/21/02,  10:39:55 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
We were triggered on the OEX/SPX/DJX short at 10:30:06 when the OEX traded below 497.50. (SPX 1002.69, DJX 93.85) We are going to keep a tight stop on this at OEX 500. (SPX 1006)

  Jeff Bailey   6/21/02,  10:34:20 AM
Microsoft (MSFT) $54.21 +0.12% ... traders will note that MSFT tested its 50-day MA this morning at $53.40, session low has been $53.39. This correlates well with 60-minute chart and test of trending higher 200-pd MA on that chart. Thus, key near-term support in the session low of $53.39. Could be the "swing" stock for the markets today on a near-term basis.

Since today is triple-witch, will not heavy open interest at the $50 call, then 55 call ($52.50 is in between), and jeavy interest in the June $50 put. Has me thinking a close at $52.50, or near there, to be "neutral" and take as much money out as possible.

  Jonathan Levinson   6/21/02,  10:31:15 AM

Your TRINQ readings coincide with mine. The TRINQ is a very volatile indicator, based on the components of its calculation. Like advancing / declining volumes, it swings very fast. Leigh's article last night is an excellent discussion on the subject- he's posted the link below. Think of it like a pressure gauge- the higher it goes, the more selling pressure. Like a tachometer on a car, it can fall off quickly while speed (price, in my analogy) adjusts more gradually.

  Jim Brown   6/21/02,  10:29:59 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX
Go SHORT the OEX/SPX/DJX with an OEX trade below 497.50

  Jim Brown   6/21/02,  10:28:45 AM
The up volume on the Nasdaq slowly backing off its very positive morning ratios. The Nasdaq big caps are beginning to fade from their morning highs. Without the Nasdaq leading the Dow is in trouble as I mentioned in last nights wrap. Real support on the Dow is far below the current levels. Time to short?

  Jim Brown   6/21/02,  10:17:25 AM
Internals have reversed and are improving again. With the Nasdaq bucking the weeks trend and gaining ground this is confirming the oversold bounce theory. However, after being beaten to a pulp on the long side yesterday I am skeptical about going long even at "supposed" support levels. The reason is the strong institutional selling. They have been selling these bounces with aggression. When the intraday trend begins to weaken they pull the sell trigger. After looking at every possible chart and indicator last night I think we have farther to fall. If the internals would decline just a little bit I would be shorting here.

  Jeff Bailey   6/21/02,  10:10:15 AM
US Dollar Index symbol for q-charts is (dx00y) while symbol for www.stockcharts.com is ($USD). This is a trade-weighted geometric average of six foreign currencies (Euro, Yen, Pound, Canada/$, Sweden/krona and Switzerland/franc). Key near-term level of support would be the December 2000 lows. Link

  Jonathan Levinson   6/21/02,  10:04:54 AM
Good call, Jim. The COMPX is printing its highs of the day, and all intraday stochastics are showing bullish cross ups. COMPX 1480-1483 looks like nearterm resistance to me, but I won't short it unless we get a rollover from there, hopefully accompanied by a TRINQ reading below .50, which I find doubtful at the moment.

  Leigh Stevens   6/21/02,  10:01:43 AM
INDEX Comments: QQQ has so far held its prior recent low from 6/14, at 26.20. This is area to watch > 26 - 26.2; if there is a break of 26, a next technical target I would have is down to 25, at the low end of the hourly downtrend channel. COMP has no apparent support at its lows of today at 1456 , if we look at the prior bottom at 1445. However, the Nasdaq Composite ($COMPX) looks like it could hold ABOVE this previous low. Nas TRIN fell sharply in this first hour - from 3.50 area down to 1.18 currently, showing that selling pressure has deminished significantly. I did my Trader's Corner article yesterday on the Arms Index (TRIN) and its use in trading - see Link

  Jim Brown   6/21/02,  9:58:47 AM
The urge here is to go short and trade the decreasing internals but after yesterday's big drop and the strongly oversold conditions we are on the low side of the swing channel. The downside potential is limited without some pressure relief. With options expiring today there is no safety in time if we make a less than perfect entry. I strongly suggest not buying July options today as well. This means we need to be patient, watch the conditions develop and enter a new position only at extremes.

  Jonathan Levinson   6/21/02,  9:57:39 AM
COMPX down volume is coming back now, just about even with advancing volume.

  Jeff Bailey   6/21/02,  9:54:40 AM
Treasury Watch Yesterday's 10-year YIELD ($TNX.X) and other Treasury action is interesting and compelling. Last night I tried to understand what took place. A look at the 5-minute chart hints, that yesterday's selling in Treasuries, was most likely due to the Philly Fed report, than concerns about the current account deficit numbers. Observation here is that the current account numbers came out at 08:30 AM EST and did see some selling from that, but then trended back to the lower YIELDS of the session. It was the much stronger than expected Philly Fed numbers and stronger than expected economic reading there that really found the selling at 12:00 EST, which then had the 10-year YIELD selling into its close.

In essence, my analysis is that the bond market didn't like the Philly Fed number (stronger economy, potential for rate hikes) and sold some Treasuries short-term.

That analysis really has me keeping a closer eye on the U.S.$. It becomes very evident that the U.S. stock markets have traded lower in sympathy with the weaker U.S.$. One currency I'm especially interested in right here is the Euro at 0.9620 (unchanged). The reason for this is the p/f chart of this currency has the bullish vertical count of 0.96, and we hit that yesterday. The "thing" a trader (bullish or bearish) may want to look for from the bullish side, is strength in the US% versus the Euro to have stocks firming to higher, while a bearish equity trader would want the US$ to continue to decline.

  Jim Brown   6/21/02,  9:53:19 AM
Despite the negative open the advance/decline ratio is positive at 1.45 with advancers beating decliners 2822 to 1974. The ticks are also positive. This would indicate the headline stocks are impacting the indexes while the broader markets are not doing that bad. Those numbers are dropping as I type this which means traders are keying on the negative indexes and restraining their bullish urges to buy the dip.

  Leigh Stevens   6/21/02,  9:52:15 AM
INDEX Comments: OEX seems to be finding support in the 495 area, which I suggested in yesterday's Index Trader wrap commentary as an area to look for a possible near-term low and that might be a buying area - we'll see on that! DJX in 93.5 area was suggested as offering potential support & so far this area is holding also.

  Jonathan Levinson   6/21/02,  9:50:12 AM
Market breadth is interesting today- Advancing volume is twice declining volume (no, not a typo), confirmed by the TRINQ briefly below 1, though the number of new lows is more than triple the number of new highs. In other words, there's very heavy buying in a select number of issues. Given MSFT's presence on all 3 major indices, I'd guess that MSFT is a stock being defended this morning, currently up above its gap down open and currently at 54.13.

  Jim Brown   6/21/02,  9:49:34 AM
The OEX fell to 494.99 at the open, -25 cents under the afternoon lows from last Friday, before rebounding to 497.50. The Dow dipped to 9350 before rebounding slightly to 9388. According to Qcharts the TRIN spiked to 11.91 at the open! The VIX opened at 32.62 and above yesterday's very high close. The indexes have paused slightly as traders look for directions out of the morning volatility.

  Jim Brown   6/21/02,  9:41:09 AM
IBM opened ugly this morning at $70, down over -1.50, but has recovered slightly. I still expect it to move lower next week. MSFT opened down -.75 cents at 53.40. Intel is struggling to hold $19.20.

  Jonathan Levinson   6/21/02,  9:39:26 AM
QQV up a modest .78 on the day so far, and the TRINQ has eased off the redline, back to 2.36. The sellers still mean business, but their fingers are no longer shaking over their keyboards like they were yesterday afternoon.

  Jim Brown   6/21/02,  9:32:50 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
That didn't take long. We were stopped out at the open when the OEX fell below 499. (SPX 1006.29, DJX 94.26)

  Jeff Bailey   6/21/02,  9:26:26 AM
Market Internals .... yesterday's action saw a net loss of 2 stocks to sell signals on their p/f chart in the more volatile/tech-heavy NASDAQ-100, as the NASDAQ-100 Bullish % ($BPNDX) slipped lower to 21% from Wednesday's reading of 23%, while it would take a reading of 16% to have the NASDAQ-100 Bullish % reversing back into "bear confirmed" from currnet "bull alert" status, marginal internal weakness was exhibited. Link

The S&P 100 Bullish % ($BPOEX) remained unchanged at 49% and remains in "bear confirmed" status. Link

The broader-yet S&P 500 Bullish % ($BPSPX) fell from 46.4% to 45.6% and remains in "bear confirmed" territory. Link

And the "broadest of broad" had the NYSE Composite Bullish % ($BPNYA) Link showing modest gains at 53.06%, but still in "bull correction" status and the NASDAQ Composite Bullish % ($BPCOMPQ) Link fell from 41.2% to 40.83% and remains in "bear confirmed" status.

  Jim Brown   6/21/02,  9:25:01 AM
Pivot Trade Exit Point Alert - DJX/OEX/SPX
The stop loss on the current LONG signal is still 499. Aggressive traders might want to give it just a little more room to maybe 497.50 but 499 is still the official number.

  Jonathan Levinson   6/21/02,  9:22:32 AM
MSFT has just taken a premarket dive. This bodes very ill for the indices.

  Jonathan Levinson   6/21/02,  9:18:22 AM
News that DELL has been upgraded by Salomon Smith this morning, due to "valuation". I find this confusing in view of recent news and guidance from INTC, AMD and AAPL. Perhaps DELL has been selling computers that don't require processor chips?

  Jim Brown   6/21/02,  9:15:22 AM
Kick the dog last night?
I guess everyone could tell from my OIN wrap last night I was pretty frustrated with the market. I am sure I am not the only one. The more I studied the charts last night the more convinced I became that we could really retest the Sept lows and EVEN lower. The bullish sentiment from the early week rally was so seductive that I fell for it hook, line and sinker. (I am a bull at heart!)

The predominant trader view this week is the strong desire for a rally. They want to see the months of selling finally be over and that bias colors everything we see and do. There was so much "desire" to "believe" that last Friday was the bottom that the warning indicators were simply ignored. There was plenty of them to ignore! Believing so strongly in your bias makes you do things you shouldn't like attempting to catch the knife. Setting stop losses wider than you should. Forcing trades. In retrospect I should have left the morning signal to go long at 501 and not tried to trade the bounce. "But it was running away from me" Have you felt that way recently?

Fortunately every day is a new opportunity! We will never get them all right but we should at least get the majority. I am sure you have heard this many times in the last six months. "This is the hardest market to trade that I have seen in x years" I have heard this from even the most seasoned veterans. People with 20-30 years experience. Take yesterday afternoon. All the indicators were pointing to a rally. All the stars were lining up (sorry Arch) and just when things looked the best the bottom fell out. Don't look now but that is when it always happens. If you are an institutional seller you will wait for the best conditions possible before triggering that program. That was a huge program. Odds are good there were several programs and probably not related. When things were looking up around 2:45 I should have raised the stop just in case there was a 3:PM reversal. Hindsight is 20:20 and you never lose money trading in the past. Unfortunately you can't spend any of that shoulda, woulda, coulda money either.

I don't intend for this to become a pulpit or a confessional. It just seems that when I commit my thoughts to paper that I tend to see things more clearly. In "writing" out loud I hope that I can help other traders that are struggling to see that there is no magic answer. We all second-guess ourselves every day. We consider all the facts at our disposal and make the decision. If you try to make things too complicated you end up with the "paralysis of analysis" and never make a decision or end up jumping on the trend just before it reverses. The best way to prevent the dreaded "batting slump" is to take a deep breath, sit back, paper trade until you have a winner and then jump back in with real money. Limit yourself to 1 or 2 contracts. The profit potential is not important. The key is to get back into the cycle of winning again with real money. Once there increase your position size gradually. If you hit that slump again just repeat the process. Oops! Looks like I just turned it into a pulpit. Time to trade instead of talk!

  Jonathan Levinson   6/21/02,  9:14:51 AM
This promises to be an interesting day. The Nasdaq-100 Bullish Percent Index rolled over within oversold territory yesterday, dropping two stocks to close at 21. The TRINQ had some impressive spikes yesterday- my eye caught one as high as 5.18, and the 13 day EMA is now 2.11, or oversold. Yet, the QQQ daily stochastics rolled over yesterday from neutral, completing a bearish crossover. The QQQ's MacD also keeled over from -1.0, which looks awfully bearish to me. The Philly Gold and Silver Index (XAU), meanwhile, climbed the wall, closing above 78 on a buy signal, as Jeff pointed out yesterday. The US Dollar Index is looking weak so far, hovering around 108.80 this morning. There are no doubt a lot of nervous bulls, a lot of nervous bears, and a lot of caution from smart traders this morning.

  Leigh Stevens   6/21/02,  9:13:26 AM
Pre-Opening, Stock INDEXES - Good Morning - It's Showtime!

Index Futures trading: S & P > +0.70 ; D J > +2.00 ; Nas > -0.50

Not much change as traders are cautious on taking new positions ahead of possible volatility due to expiration Friday - also, there is absence of overnight news, except dollar is trading down from yesterday. Sterling (British Pound) went above 1.50 for first time in some time. But when I was working there a few years ago it was 1.70 at times - nice to get paid in pounds then & convert to dollars.

  Jim Brown   6/20/02,  11:45:13 PM
Alan Knuckman at Preferred Trade Live emailed me yesterday to say they have a new program for "autotrading" the different trades in the Market Monitor. They can do just specific trades, like QQQ, or do all of them. You can just tell them how far out of the money you want your strikes and how many contracts you want to trade and they will do everything else. Email him at Alan.Knuckman@preferredtrade.com and get all the details.

  Jim Brown   6/20/02,  11:36:29 PM
Expiration Friday
Unless you live in a cave you know that today is expiration Friday. I always have people ask "what if.." What if I don't sell my calls and they are in the money? What if the stock price is just above my PUT strike? There are so many questions that it is impossible to answer them all in the Monitor. I will touch on just a couple.

First, don't buy any July options today. The premium is huge. Volume is the only thing that determines a fair value and until they become the current month you will not have enough volume to take the market makers profit out of the equation. The market makers know that current month traders will be moving into July options today and Monday. They know that many traders will be rolling out unprofitable June positions and "have" to pay the price.

For all these reasons the premium on the July options is TOO HIGH. In reality the best course of action is to wait until Tuesday OR pick a month farther out. By using a September option for instance you will pay a lot more money but any move in the underlying stock or index will be reflected in the option price. There is no sudden depreciation of the premium over the weekend. With months to go the price is stable. The only reason for picking a July option on Friday is if you are selling time by writing covered calls or naked puts. This artificial premium then works in your favor.

If you are bored on Monday, pick some option strikes and just watch the premiums. You can actually watch the premiums shrink as the day progresses. If you are playing the OEX/SPX/DJX then Monday and Tuesday it is better to buy/short the DIA/SPY securities instead. The profits are less but the risk is also less. These securities trade like the QQQs. Speaking of the QQQs, the options on the Qs are not as susceptible to this problem as individual stocks or the OEX/SPX. The volume is so high it is hard to maintain an artificial price.

Closing Positions - Always close positions you don't want exercised. A reader once was short 10 contracts of a $200 PUT on a stock that closed at $201.25. At the close the contracts were bid an eighth, ask a quarter. Right after the close somebody in their sector issued a severe warning. The stock opened on Monday at $184 and the reader found that he had 1000 shares in his account. He had been put all 10 contracts at $200 for a loss of $16,000. This would not have happened if he had closed the position. I have heard of this happening several times. People fearing the worst will PUT the stock to void "wasting" the premium they paid. (can you say DUMB?) Institutions that were looking to get out of stocks sometimes execute their insurance puts if the stock is close. It avoids having to take market risk when selling.

Do you want your broker automatically exercising your calls because they are 50 cents in the money? I don't! Take the time to close all positions YOU DON'T WANT EXERCISED by 3:30 in the afternoon. Don't wait until the last minute. Computers go down, things break, orders get lost in the closing rush, etc. Better to be safe than sorry. One broker I used in the past would leave the expired contracts in my portfolio for as long as a couple weeks before they were deleted. Take the time to close the positions and avoid the risk!

  Jeff Bailey   6/20/02,  10:34:48 PM
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