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  Jeff Bailey   6/25/02,  8:28:20 PM
Read this for an interesting scenario on just why the US$ may be as weak as it has been and continued to weaken today, thus pulling stocks lower. Link

 
 
  Jeff Bailey   6/25/02,  6:31:34 PM
WorldCom (WCOM) $0.83 ... stock getting crushed to $0.36 (-56% from close) after news headline that company may have committed fraud by boosting EBITDA by $3.6 billion over past five quarters. CNBC reported that the company will soon restate its earnings to reflect these issues. Link

 
 
  Jeff Bailey   6/25/02,  5:13:35 PM
API Data American Petroleum Institute reports that U.S. crude stocks fell by 6.333 million bbl; U.S. distillate stocks fell 1.231 million bbl; U.S. gasoline stocks rose by 1.492 million bbl and U.S. refinery runs were 93.7% this week versus 94.2% last week.

August Light, Sweet Crude Oil futures (cl02q) trading up $0.12 at $26.46.

 
 
  Jeff Bailey   6/25/02,  5:01:41 PM
Starting to wonder.... "Bad ticks" are a rather common occurance with the various charting services that traders are using. I constantly get e-mail from traders asking "was that a valid trade on ??? stock?" These "bad ticks" are most often created by an innacurately entered order at a trading desk, which when entered, creates a "false trade," which is later corrected.

However, one thing I'm noticing is specific to the QQQ. On q-charts, traders that will view the QQQ on a 5-minute interval will see where some of these "bad ticks" have been corrected. While the black intervals (trading that actuall took place) are the "true" trades of that interval, you may note a bright yellow streak (up or down) that is the "bad tick correction" where the bad tick was removed after the 5-minute interval bar was actually recorded.

The "starting to wonder" comments comes from how some of these "yellow streaks" (the larger the out of norm tick especially) have been somewhat foretelling of trading to come.

For instance... on 06/21/02 at the 14:45:00 5-minute interval, we see a "bad tick" in a downward trend from actual trading of $25.68, where the "bad tick" was up to the $27.37 level (very close to the 200-pd MA on this chart). The next trading day (Monday), the QQQ did trade lower to $25.21, but low and behold, traded as high as $26.79 on Monday (very close to Friday's "bad tick" level).

Yesterday, we find the inverse of this. When the QQQ was trading $26.68 at 14:35:00 on the 5-minute interval, once again a "bad tick" was found, but this time, lower to about $25.45 (I say about because the yellow line is difficult to see to be exact) and today's close is right near this level.

Today, at 15:50:00 on the 5-minute interval, I find another "bad tick" when the QQQ was trading $25.43, but the "bad tick" is lower to about $24.45.

While it may be entirely possible that these are simply "key punch" errors by a busy trader, it strikes me as rather odd at how this heavily traded index for technology has been pegging some of these "bad ticks" in recent sessions.

One of CNBC's regular guests from the trading floor has been commenting a lot lately on all of the "mini hedge funds" that are either aggressively buying or selling short the markets on a short-term basis.

While I would not "bet the farm" that these bad ticks are indeed a predictor of things to come and future trading of the QQQ, these "bad ticks" may be noteworthy.

While they may indeed by keypunch errors (the numbers are similar and sometimes just off by a single $1 digit), I'm beginning to wonder if they aren't actually a true "target" whereby an institutional buy/sell program is set up and a target established, where the "target" creats the bad tick, but is eventually achieved.

Even more perplexing, is when one of these "bad tick targets" is achieved, we see an almost immediate "bad tick" created once again and have seen that "bad tick target" achieved.

Again... not betting the farm here, but will take note of today's "bad tick" lower in the QQQ at/near $24.43 as a level of bearishness tomorrow.

 
 
  Jim Brown   6/25/02,  4:48:19 PM
Pivot Trade Wrap
Cliff Hanging - That was really ugly! The Dow turned a +123 point gain into a -155 point loss and came within about 30 points of retracing Monday's lows of 9083. The worst thing about this drop is it is still over 1000 points away from the September lows. The Nasdaq came within 10 points of Monday's lows and closed only one point above the 9/21 close. The 9/21 intraday low was 1387, still 36 points away from the current close. I would not expect the Nasdaq to stop falling soon since the NDX set a new four year closing low today at 1023.83. This is well below the 1088 intraday low on 9/21.

Bottom line, things look bad but they can still get worse. The put/call ratio is only .76 and that is not particularly bullish. Everybody wants to see a capitulation event to the Sept lows but we are very close for everything but the Dow and the selling is still accelerating. We could hit some more of those critical levels tomorrow and we will follow it tick by tick in the monitor. See you at 9:15 !

 
 
  Jonathan Levinson   6/25/02,  4:46:55 PM
When you play the QQQ's, how do you play them? If you were to look at buying QQQ's tomorrow, depending on what charts show tomorrow, would you buy July 24's, 25's, or 26's based on today's closing around 25.46? Or do you go farther OTM? I am usually a short term trader, 1 day, 2 day, etc. and I have been trading the OEX, they do have a wide spread but they do move. Also, from your earlier post about trading QQQ's, are you saying that when taking the wide OEX spread into account, the % profit would be about the same for QQQ's and OEX's?

I like to be reasonably far ITM- I tend to trade a larger number of contracts and hold them for a smaller move, and the "slippage" of OTM options is frustrating for shorter term trades. Above all, I trade for "safety" first and profit second, which is why I like smaller moves with more contracts. Others will disagree, and I grant their argument, but my own style works for me and I'm disinclined to fix what isn't broken. I haven't compared the relative gains between QQQ and OEX- again, my own personal strategy has kept me focused on Qs as of late.

 
 
  Jim Brown   6/25/02,  3:52:46 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out of the market SHORT signal at 15:48:00 when the OEX traded above 483. (SPX 975.54, DJX 91.24, DIA 91.35, SPY 97.79) After the false start this morning this signal covered a +14 point OEX move. We are flat going into the close.

 
 
  Jim Brown   6/25/02,  3:47:32 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The Nasdaq is nearing the 1414 low from Monday and the Dow the 9083 low. However the OEX is still 3 points away from its low. I am not sure we will hit that 481.50 profit stop today so I am going to lower the stop loss to protect against any bounce. Set the current stop loss at OEX 483. Also, close the trade at the close. We do not want to hold this trade overnight.

 
 
  Leigh Stevens   6/25/02,  3:44:50 PM
INDEX Comments: DJX/OEX/SPX , not wanting to be "left out" of the bear party, are fast closing on their lows of yesterday - at 90.8 in DJX, 480 in OEX and 971 in SPX. A great "trading" market - rallies retrace 50% - stop advancing - boom, short them. Buying the bottoms is a little more tricky!

 
 
  Jeff Bailey   6/25/02,  3:44:47 PM
Dow Transports (TRAN) 2,617.94 -4.4% ... getting downside alert here at the 200-day MA. This is perhaps most defensive sector has looked in sometime and may be BIG negative for markets to have stronger sector now showing weakness. Very defensive here. Link

 
 
  Leigh Stevens   6/25/02,  3:41:02 PM
INDEX Comments: Nasdaq indices are getting close to a retest of yesterday's lows - at 25.2 in QQQ, 1015 in NDX and 1414 in COMP. With the Nasdaq TRIN above 4.00 (at 4.50 currently), the selling pressure has been extreme. Not promising for a second bottom in the same areas - new lows would likely come first in QQQ.

 
 
  Jim Brown   6/25/02,  3:39:22 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's lower the stop loss on the current SHORT signal to OEX 486.50. (SPX 982) Continue to maintain a profit stop at 481.50. (SPX 973.50) These are just above the lows from Monday.

 
 
  Jim Brown   6/25/02,  3:24:30 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's lower the stop loss on the current SHORT signal to OEX 489. (SPX 986) Set a profit stop at 481.50. (SPX 973.50) These are just above the lows from Monday.

 
 
  Jonathan Levinson   6/25/02,  3:20:25 PM
Hi Jonathan, I know you play the QQQs and so do it. Have you tried playing the OEX the same way you play the Qs? The same appears to happen on the OEX that does on the QQQ/NDX. Traders buy puts when the Qs are up and calls when the stock is down and breaking down below prior support levels. If one keeps in mind the support and resistance levels, is it not possible to trade this index in the same way as the QQQs?

That's the beauty of what we're doing. You can trade ANY stock, commodity, or security according to these principles. It's a matter of where your greatest comfort and success lies. I've been playing QQQ options for the tight spreads, high volume, low premium, and big moves. It's been working, so I've been sticking with it. But these principles are applicable to every chart. Take your pick.

 
 
  Jim Brown   6/25/02,  3:09:44 PM
Earnings tonight include MU, PALM and COMS. Since Micron is already in trouble I don't expect anything positive out of that report. PALM is also fighting a tough consumer market. I doubt these stocks will move the market tomorrow unless a very positive surprise emerges

 
 
  Jim Brown   6/25/02,  2:56:46 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's lower the stop loss on the current SHORT signal to OEX 492. (SPX 992) We will continue to follow the market down with lower stops. The break under 488 sets up a potential retest of the 480 lows from Monday.

 
 
  Jim Brown   6/25/02,  2:32:46 PM
Pivot Trade Signals
The Qcharts chart for the OEX is not correct !!!!!! Do not trade based on the 494.75 tick !! It is actually only 489.38 !!! This symbol has had trouble all day.

 
 
  Jeff Bailey   6/25/02,  2:29:40 PM
US Dollar Index (dx00y) 107.61 -0.54% ... at session low and weighing on stocks further. Nothing serious at this point, but can see impact on things.

Dow Indu (INDU) 9,248 -0.36%, S&P 500 (SPX.X) 987 -0.5% , NSASDAQ Comp (COMPX) 1,434 -1.79% and Gold/Silver Index (XAU.X) 77.31 -1.32%.

 
 
  Jonathan Levinson   6/25/02,  2:25:02 PM
My SMTP server doesn't seem to be accepting outgoing emails- apologies to readers who have sent questions in the past 15 minutes.

One reader asked my trading conclusion based on the adv/dec volume and TRINQ. My conclusion is that there was immense selling pressure. While this can signal an impending reversal, the primary rule is not to catch falling knives. Furthermore, given the force of that down move, it seems that fear is at least as powerful as greed in this market. As Buzz Lynn so eloquently discussed last night in his Market Wrap, this is a market that is increasingly difficult to take seriously to the long side. While price on the COMPX is currently shaking off the extreme TRINQ reading below former support at 1445, there is not the rush of buyers that we remember from years past. The longer trend remains down, which makes put plays far easier to set up successfully than call plays for the time being.

 
 
  Jeff Bailey   6/25/02,  2:18:01 PM
EMC Corp. (EMC) $6.64 -1.62% ... Debt cut to BBB by S&P. Link

 
 
  Leigh Stevens   6/25/02,  2:05:55 PM
INDEX Comments: Nasdaq indices, being the weakest market on the rebound - retracing only 38% of the last downswing versus 50% for the S&P indices, broke first to below near support at prior (6/14) lows - now headed toward possible retest of COMP 1414, NDX 1015 and QQQ 25.2.

SPX/OEX have not yet taken out 1st. implied "support" points (their 6/14 lows) at 982 in SPX, 488 in OEX; below these levels, we're looking at 971 in SPX and 480 in OEX as support "implied" by the lows of yesterday. DJX has retreated already to the area of its prior low at 92.6 area - next potential support is yesterday's low at 90.8.

The Euro has been rallying the last couple of hours and stock traders appear to be trading off the dollar weakness. Maybe, I should include technical analysis of the dollar, at least against the Euro!

 
 
  Jonathan Levinson   6/25/02,  2:01:57 PM
Sorry to be repetitious, but that would be 7.55 times declining over advancing volume now. The TRINQ at 4.64. Wow!

 
 
  Jonathan Levinson   6/25/02,  1:58:38 PM
Declining volume is now over 5 times advancing volume. The TRINQ seems to have maxxed out in the 4.2-4.5 range. New COMPX daily lows printing steadily as I type.

 
 
  Jeff Bailey   6/25/02,  1:58:21 PM
Short-term traders/Day Traders you can really see the "impact" that the US Dollar Index (dx00y) 107.99 -0.2% has on things, or at least correlates against, versus the stock market. Breaking to afternoon lows here and really pulling/draging on stocks. Observations rather clear on 5 and 10-minute interval charts of the dx00y.

Can also see some bid coming into the gold stocks. Gold/Silver Index (XAU.X) 77.44 -1.16% off its lows.

 
 
  Jim Brown   6/25/02,  1:52:03 PM
Pivot Trade Signals
Everything turning red! All the internals are now negative and as Jonathan pointed out the declining volume on the Nasdaq has soared as the day progressed. Nothing specific has come out to tank the markets, just business as usual. The Dow is on the verge of going negative and that could be the trigger for the afternoon stampede. The VIX is nearing 30 again. However the put/call ratio at .76 and the TRIN at 1.06 are not showing any real fear and are basically neutral. We are approaching the first afternoon hurdle at 2:PM. Should be interesting.

 
 
  Jonathan Levinson   6/25/02,  1:41:02 PM
Big TRINQ reading of 4.17, with declining volume bashing advancing volume over 4:1. New LoD on the COMPX as I type, with price headed for 1440 now.

 
 
  Jonathan Levinson   6/25/02,  12:54:09 PM
Well, there's our dunk on the COMPX. Support at 1445 is holding so far. The TRINQ at 2.02 is high but we've seen MUCH worse this past month. The stochastics on the hourly COMPX chart are in a freefall, and support at this level looks like a critter caught in the headlights. Metals are off their lows of the day.

 
 
  Jim Brown   6/25/02,  12:52:20 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's lower the stop loss on the current SHORT signal to our entry point of 497. (SPX 1000) Internals are still positive despite the recent drop but they are weakening.

 
 
  Jonathan Levinson   6/25/02,  12:36:23 PM
Advancing volume is just slightly below declining volume on the COMPX, with the TRINQ higher at 1.13. It looked like our breakdown was delivered after a bit of a delay, but with the COMPX back at 1460, now testing the bottom of its wedge, our breakdown could be delayed. Stochastics are still bearish, and so am I. Not much strength being shown so far.

 
 
  Jeff Bailey   6/25/02,  11:46:05 AM
Hi Jeff, Got stopped out on FDX at 51.50. Mad at myself, because even though stock had performed well in down market, and had apparently completed a reverse H&S, (complete with retest of neckline), I held stock for announcement of earnings, and I know better than that. Anyway, with strong bullish statements from FDX mgmt. regarding earnings and future, would consider jumping right back in, but confused about technicals now with today's move down. Would appreciate your thoughts!

I'm a bit "mad" at myself, FDX and even analysts on this one too. I'm losing more and more confidence in holding anything over earnings. While holding any technology stock over earnings in recent years has not been a part of my trading plan, I'm getting skepticle about holding anything (cyclicals, transports, healthcare, etc.) over earnings any more.

It appears that there is some type of communication "gap" between FDX and analysts. FDX is saying that analysts were too high. I guess if that is/was the case, then it was FDX's job to say something prior perhaps. Today's "reaction" from the MARKET is that of "surprise" and doesn't seem to have been factored into past trading. As such, best to move to the sidelines here. Let the MARKET absorb the news and make its adjustments. Then, look to revisit in about 2-weeks. Link

From here, wouldn't give much more room below the rising 200-day MA at $50. Today's trade at $51 puts stock on a sell signal, count turns bearish to $44. While stock is still in upward trend, potential $44 too much risk under current market conditions for me to find attractive. Especially with what appears to be company/analyst disconnect.

 
 
  Jim Brown   6/25/02,  11:32:46 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
The broad market short signal was triggered at 11:26:28 when the OEX traded below 497 (SPX 1000.29, DJX 93.62, DIA 93.63, SPY 100.19) The initial stop loss on this signal will be OEX 500.50 (SPX 1007)

 
 
  Jonathan Levinson   6/25/02,  11:30:52 AM
It looks like the COMPX wants to coil tighter before it breaks. My ideal setup with be to enter puts on a rollover at 1470 with a stop just overhead at 1475 in case it breaks to the upside. Let's see if we get it.

 
 
  Jim Brown   6/25/02,  11:24:34 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Looks like we are beginning the roll. Lets go short with an OEX trade below 497.

 
 
  Jonathan Levinson   6/25/02,  11:21:24 AM
Jim's put it quite well. The COMPX is waffling too, but with advancing volume leading declining and the TRINQ sitting at .84. With yields up, metals down, and the QQV negative on the day, I'm surprised not to see more of a rise in the COMPX, but I'm also surprised to see the markets holding their levels after the poor start this morning. When in doubt, stay out. We'll reassess after the market chooses a direction.

 
 
  Jim Brown   6/25/02,  11:19:14 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's go SHORT again if we get another OEX print at 499 or above. The repeated failures to hit 500 could be telegraphing the afternoon trend.

 
 
  Jim Brown   6/25/02,  11:12:08 AM
Pivot Trade Signals
The markets cannot decide which direction they want to move. Resistance on the OEX is at 500 and 504-505. The index is waffling in a narrow 5 point range between 495-500. I would like to enter a new short in the 500 range as per our previous target but the strong internals are worrying me. With the confidence numbers at a 4 month low, the transportation index diving below 2700 and a downgrade on Cisco and a FOMC meeting in progress you would expect the markets to be cautious. They are not.! That would of course be logical and these markets are far from logical.

 
 
  Jeff Bailey   6/25/02,  11:00:56 AM
Wow! Your link on the Piceance Basin brought back some memories. I did my thesis in Petroleum Engineering on logging in overpressured areas and used the MWX well logs as part of my work. Thanks for the trip down memory lane

For me too. I worked on the Piceance basin for two years. I was the cartographer for the project. It took us (Mobil) about 9-months to actually define the "boundary" of the basin.

Most interesting was a tour of the "shale oil" facility that was put in back in the late 70's on thought of $50/bbl oil. Talk about a "blast from the past!" When the industry started talking about oil at $50/bbl, that was the proverbial "bubble." We've noted in recent years when $50/barrel is mentioned on CNBC that a top is nearing.

Yesterday, heard some discussion of Gold at $800/oz. Just taking notes of course.

 
 
  Leigh Stevens   6/25/02,  10:47:31 AM
INDEX Comments: COMP/NDX/QQQ have achieved only a fibonacci 38% retracement of the last Nasda downswing - however even the tech indices look like they could move higher but probably not before some more consolidation to "throw off" the short-term overbought readings on the hourly stochastics. Next resistances above highs of yesterday/today look like: COMP at 1490; NDX at 1089-1090 & Q's at 27 - 27 was the Sept. QQQ low.

 
 
  Leigh Stevens   6/25/02,  10:42:06 AM
INDEX Comments: SPX/OEX/DJX all have reached a 50% retracement of the last downswing. More significant resistance looks like it will be found at the 62% retracement area - at 1014-1015 in SPX, at 504-505 in OEX and at 94.8 in DJX.

 
 
  Jonathan Levinson   6/25/02,  10:37:32 AM
Breadth is now positive again on the COMPX, with the TRINQ back in neutral buy territory. However, the index is below overhead resistance, and the intraday stochastics are again overbought. Same conditions, same routine- short the rollover below resistance.

 
 
  Leigh Stevens   6/25/02,  10:36:55 AM
ON THIS DAY in 1868, Congress enacted legislation granting an 8-hour day to workers employed by the federal government. Hey, when was the last time YOU worked an 8-hour day. Well, I'm happy for them, but by now, 134 years later you would think "progress" would have em on a 6-hour day. Dream on!

Also, ON THIS DAY in 1948, the Soviet Union tightened its blockade of Berlin by intercepting river barges heading for the city - no wonder they had to transport everything by plane during the Berlin blockade! This was really the start of the Cold War. Now, the Russians are very warm to our dollars - capitalism YAVOL! Drink a toast today to the success of freedom in all its forms including the right to try any crazy idea that you want to - em, like selling books & records via home computer!

 
 
  Jim Brown   6/25/02,  10:33:04 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
That rebound stopped us out of the current SHORT signal when the OEX traded above 497. (SPX 1000.05, DJX 93.69, DIA 93.72, SPY 100.42, OEF 49.82) at 10:25:56.

There has been a trend change in the last couple minutes with the OEX now trading over 499 and the Dow nearing 9400. We will stand aside until a new entry presents itself.

 
 
  Jeff Bailey   6/25/02,  10:32:49 AM
Natural Gas We haven't talked much about "economic impact" of wild fires that have been cropping up here in the west much, but traders in this region will note that large natural gas reserves reside in the south west part of Colorado and south east portion of Utah. I was in that area earlier this spring and it was "dry as a bone." While I hope that we get a lot of rain and these fires subside, I'm thinking recent up-tick in natural gas prices may be in part due to some of what has been taking place with fires in this part of country recently.

Those fires around Glenwood Springs, CO that you may have read about, that were started by old underground coalbed fire, that are is known for large production of coalbed methane. When I worked for Mobil Oil, the Piceance Basin (that area) was of great interest among natural gas producers and was a fantastic project and interesting to work on. For you "oil/gas bugs" here's some interesting stuff. Link

 
 
  Jim Brown   6/25/02,  10:25:51 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
The SHORT signal was triggered at 10:11:16 when the OEX traded below 495. (SPX 998.10, DJX 93.36, DIA 93.41, SPY 99.95, OEF 49.82) The initial stop loss will be 497.

 
 
  Leigh Stevens   6/25/02,  10:22:51 AM
INDEX Comments: QQQ has been dipping under near support, at 26.2, at its prior low before yesterday. The price territory and trade between this level and 25.2, yesterday's low tick, should tell us how much belief traders have in this recent rebound. Hey, every dog has its day!! Myself, I'm also watching the key Nas stocks for whether they are going to hold at or above their yesterday lows. Will fear & loathing return to the market staight away or will the market find some traction ? - stay tuned!

 
 
  Jeff Bailey   6/25/02,  10:22:03 AM
Hanover Compressor (HC) $12.81 +5.86% ... getting a "pop" this morning from a Merrill upgrade. I find this interesting. Yesterday, I tried to trade this one bullish, but my on-line broker servers were over loaded and I couldn't get a trade off. Would have taken 1/2 off the table at the open though on the quick pop.

What interests me further is that Merrill upgrades when I was just liking stock again for aggressive bullish trade.

Also, Merrill downgraded stock back on May 24th, but coming back now.

Reason I was looking at HC as bullish yesterday is that July Natural Gas futures (ng02n) $3.54 +3.2% were making strong move higher. HC leases compressors to natural gas industry for production/movement of natural gas. Thinking has been, HC benefits on higher nat gas prices.

Currently, I've got a bid stuck out at $12.25 on HC and was looking for a trader's pop to $14.07, but would have to keep an eye on nat gas prices. Trader's will note that HC broke above "inside day" from Friday yesterday. Should have played this one instead of AU? Link

 
 
  Jeff Bailey   6/25/02,  10:12:21 AM
Existing Home Sales was down 0.3% to 5.75 million, but above estiamtes of 5.75 million. Dow Jones Home Construction Index (DJUSHB) 386.71 +0.36% is closest index we have to monitor such a number, and little response from MARKET here. Link

 
 
  Jonathan Levinson   6/25/02,  10:11:06 AM
Advancing volume is 1.35 times declining on the COMPX. The TRINQ is currently at a mellower .64, reflecting the slightly positive "buy" bias. Stochastics are all pointed south, but reflecting the chop at this "non-level" of 1464, between support at 1445 and resistance at 1475.

 
 
  Jeff Bailey   6/25/02,  10:07:40 AM
June Consumer Confidence came in at 106.4, which was in line with consensus. May's 109.8 reading was revised slightly higher to 110.3.

In all.... confidence slipping a bit, but not a big surprise and having little impact on trading here. Many had probably factored in a steeper decline as confidence is partially correlated against the stock market performance.

 
 
  Leigh Stevens   6/25/02,  10:07:04 AM
SECTOR Update: All that glitters is.... not always higher prices in the gold stocks - I lay out reasons why I would be selling into rallies and not treat the Gold & Silver sector index ($XAU.X) stocks as too precious on my Sector Trader wrap up last night - check out the chart & analysis at Link

While in the Sector section, note that there is a new ranking/order in the S&P 600 SmallCap ($SML.X) - Friday, Standard & Poor's compnay reclassified its "value" & "growth" sectors in SML. What they do is simple - not to be confused with stupid - is rank the 600 stocks by "price to book" ratio - the lowest half get listed as "value" stocks - this includes a lot of fallen tech & biotech angels. Whereas, stocks like La-Z-Boy furniture become "growth" stocks - hey, it's a growth business - selling recliners to American coach potatoes! Anyway the "rebalancing" that had to go on with the small cap fund managers probably contributed to Friday's volatility & to a lot of portfolio managers scratching their heads as to what it means to have everything decided on price to book, a bit of an arcane measure for most of us -

The Russell 2000's ($RUT.X) new lineup of small-cap stocks, broken into growth and value sectors, is rolled out this Friday. Russell is a bit broader in its criteria, using price to book, PLUS growth rates.

 
 
  Jonathan Levinson   6/25/02,  9:59:26 AM
To trade option of index or security which is the time (D, 60, 30, 15, 10) period of chart do you suggest? Also to exit do you use same time period of entry or different time period.

It depends on the time frame for your trade. However, I look at all time frames, starting at the weekly and then "zoom in", all the way down to 1 minute. This gives me a thorough picture of the different cycles, and where they are situated within each other. When a trend becomes evident across all time frames, low risk trade setups are born- ie a stochastics rollover from overbought on all intraday timeframes.

When the moment comes to execute a trade, either a buy or sell, I will tend to use the 1 minute and 5 minute views to try to squeeze the best price out of the trade. I use the same technique whether I'm buying or selling, though I usually take more care choosing the entry point than the exit point. A good entry is my key ingredient to good trades.

 
 
  Leigh Stevens   6/25/02,  9:56:19 AM
Wall Street Journal (WSJ) - This morning's WSJ has front page story on "a new hazzard for recovery" - gee, I thought we had plenty already! - article is about how "just in time" inventory extreme now means that we are not seeing a steady flow of big purchase orders from businesses. This situation is creating volatile swings in capital orders on a month to month basis.

In What's News: WorldCom slide toward delisting as the stock trades under a buck.

Home Builders build me a HOUSE - A Harvard housing study says 'no bubble' - my words - the study concludes that any reversal in home prices is likely to be short-lived.

UAL applied to the Feds for $1.8B in loan guarantees - they need em!

TRW received bids for its space & defense units from General Dynamics, Raytheon and Northrup, turning up the pressue on Northrup - the whole Defense group ($DFI.X) looks like it has made at least an interim top - a more close up view is on SECTOR TRADER at Link

GE plans to sell 90% of GE Global Exchange to Francisco Partners, valuing its e-commerce unit at $800 million - pocket change for GE, but the spirit of "Neutron Jack" lives on! If the biz ain't #1 in its space, SELL IT!

Lastly, Buy.com plans to guarantee that ALL of the books on its web site will be priced at least 10% below Amazon - em, competition in cyberspace - what will they think of next? - trading internet stocks based on earnings instead of promise!

 
 
  Jeff Bailey   6/25/02,  9:54:40 AM
Gold/Silver Index (XAU.X) 77.04 -1.67% ... suffering a bit as broader market averages show some gains. Technical concern for bulls here is that MACD on daily interval rolls over lower from below zero. Link Sign of more pronounced weakness would be at 73.00.

My more "aggressive" Bema Gold (BGO) $1.47 -6.32% not showing much aggressiveness from bulls, thus near-term defensive. Made mental note yesterday that stock rallied to first bullish target of $1.74, but gave up ground from there. Link

Decided to roll to more "institutional" Anglogold (AU) $28.49 -0.73% Link yesterday after break higher of "inside day," but here too, some near-term weakness. "Positive" is stock is in a base, whereas a BGO not much of a recent base. I'm currently looking to sell a day rally at $29.99, but willing to give some room as long as US$ Index stays below the 108.50 level (currently 108.04).

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

 
 
  Jim Brown   6/25/02,  9:54:15 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Highly frustrating! We got stopped out by about a point only to have the OEX stop dead on resistance at 498, our preferred entry point from yesterday. The urge to go SHORT again here (496) but the market internals are still very strong with the advance/decline ratio very positive at 1.68. Let's wait for another buying surge or breakdown instead.

Let's reinstate our short entry points with a trade at or above OEX 498 (SPX 1001) or a trade below 495 (SPX 996)

 
 
  Jeff Bailey   6/25/02,  9:43:56 AM
US Dollar Index (dx00y) 108.00 -0.19% .... Dollar is a bit weak this morning. For me, this creates some hesitancy about being overly "bullish" on stocks here early. A move above 108.50 would be needed to get me more bullish for stocks.

Treasuries are seeing some selling as the benchmark 10-year YIELD ($TNX.X) 4.878% rises.

 
 
  Jeff Bailey   6/25/02,  9:40:46 AM
FedEx (FDX) $52.50 -6.28% ... stock gapping lower on guidance that looks to have been below analyst's expectations, but what the company says was inline with its previous guidance. As such, adds some confusion to things.

If long the underlying stock, would place a stop under this morning's low of $51.50, and perhaps look to sell current months $55 covered calls.

If long underlying calls, assess account risk and have to make a "judgement" call as it relates to "next best opportunity." Point/figure remains bullish, but may have near-term cloud on stock with guidance below analyst consensus. Link

 
 
  Jim Brown   6/25/02,  9:36:57 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
That was quick! We were stopped out of the SHORT signal when the OEX traded above 497 at 9:33:14 (SPX 999.76, DJX 93.62) We will look for a roll over at resistance after the opening volatility is over to re-enter this signal.

 
 
  Jonathan Levinson   6/25/02,  9:34:50 AM
Current TRINQ reading of .34 indicates extreme buying pressure at the open, and I wouldn't bet on it to sustain this level for long. COMPX 1480 should act as resistance, but wait for the stochastics rollover before committing to the short side.

 
 
  Leigh Stevens   6/25/02,  9:30:19 AM
INDEX Comments: Bellwether GE has, so far, successfully tested its Sept low - yesterday's strong rebound bodes well for some further upside. So also, do Nas/Dow bellwethers INTC, MSFT & NDX bellwethers ORCL, QCOM and CSCO per my Index Trader Wrap last night at Link - time will tell, but OEX potential double low (relative to Sept) is something I've taken note of also. Not to say that we won't make a lower low later on, but we have to look at the possibility that the low of yesterday or a retest of it this week may set up some more upside.

 
 
  Jim Brown   6/25/02,  9:21:45 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The current stop loss on the open SHORT signal is 494. Futures have been up strongly all morning but have been weakening somewhat as we near the open. Change the stop loss to OEX 497 (SPX 1000) and let's try to avoid being knocked out at the open. We may be too close but that is all I am willing to risk at this point.

 
 
  Jim Brown   6/25/02,  9:19:22 AM
Pivot Trade Signals
The opening pre-market news is mixed with upgrades/downgrades and warnings all combining to give a positive boost to the futures. With the FOMC meeting beginning today I would not expect a strong rally. There may be some positive bias to the markets but it is expected to be minimal.

The divergence at the close yesterday from the market internals and the market gains should tell us there may be a lower low in our future. If we are stopped out of our current SHORT we will look for a roll over at 499 resistance again.

 
 
  Leigh Stevens   6/25/02,  9:10:13 AM
Pre-Opening, Stock INDEXES <> Good Morning!

Index Futures trading: S & P > +2.90 ; D J > +25.00 ; Nas > +10.00

 
 
  Leigh Stevens   6/24/02,  8:18:35 PM
The Market Monitor for Monday is archived and can be seen at Link

 
 

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