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  Jeff Bailey   6/28/02,  5:21:59 PM
Expedia (EXPE) 59.29 +0.18% .... will continue to monitor this stock for potential short/put play. One thing I'm noting here at the close is DIVERGENCE between EXPE's % gain today and that of USA Interactive (USAI) $23.45 +3.76%.

For first time since announcmement of potential merger, I notice that EXPE lags bullishness in USAI.

Since today was end of quarter, may well be that EXPE was underperformer to USAI based on end of quarter distribution. However, I'll make note of "sell side bias" as it relates to USAI. Underperformance today may also hint that the proposed merger is having trouble.

USAI is also attempting to merge with Hotels.com (ROOM) $42.23 +0.54%. Here too, we see some "under performance" on a daily basis. Again, this appears to indicate a sell side bias related to USAI.

USAI is also attempting to merge with Ticketmaster (TMCS) $18.71 +3.25%. Aha! Similar gain in TMCS as found in USAI.

Question arises as to why EXPE and ROOM lagged the USAI gains, while TMCS kept locked to USAI. Is something going on with the merger, or is EXPE and ROOM simply under greater distribution?

If trading any of these 4 stocks, my thought further become that EXPE and ROOM are most likely the better put candidates now, when correlating against price action in USAI.

Would be thinking about short/put EXPE again, should USAI rally back near the $25 level.

 
 
  Jim Brown   6/28/02,  5:06:50 PM
Pivot Trade Wrap
Six in a Row! - The Dow made it six weeks of losses in a row but the Nasdaq managed to post a +24 point gain for the week on the strength of the Russell rebalancing. The Nasdaq posted the worst first half (-25%) ever and the selling may not be over. The NDX failed at 1075.73 today which was exactly where it rolled over on Monday, well below the center of the down trend channel.

The Russell rebalancing spurred massive buying in the small caps beginning about an hour before the close but it was not able to hold up the markets. The buying did not broaden out into the larger stocks and those that had gained during the day began to sell off as well. With EOQ window dressing over there is a good possibility we will see window stripping at the open on Monday. Funds will want to go back to the safety of cash and replenish the coffers for withdrawals next week. The terrorist threat over the 4th will keep many who would like to buy on the sidelines for another week.

The Pivot Trade model is SHORT the QQQ from 26.30 with a stop at 27.05. It is also SHORT the broader market (OEX/SPX/DJX/DIA/SPY) from OEX 494 with a stop at 498. Hopefully we can duplicate the outstanding OEX trade signal Leigh closed on Friday for a +17 point move. Next week should be exciting with volume expected to be very low any buy/sell programs should push it around like a tennis ball at Wimbledon. See you Monday!

 
 
  John Seckinger   6/28/02,  4:01:59 PM
Weekend Thoughts: The dollar DID NOT close above the 107.15 level and sectors such as the Semiconductor Index failed to keep intra day gains as the session wore on. Thankfully, trailing stops in IBM and ZION allowed for profits to be kept while losses in NVLS were minimalized. The Biotechnology Index weakened after barely failing to test the 22 DMA, while the Nasdaq Financial Index rose almost to the 50 DMA before falling dramatically back underneath the 22 DMA. What does this all mean? Buyers still seem nervous and would prefer "safe" (read: cash) investments over riskier assets.

 
 
  Jim Brown   6/28/02,  4:00:06 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
For those wondering we will be holding the SHORT signal over the weekend.

 
 
  Jim Brown   6/28/02,  3:55:24 PM
Pivot Trade Signals
Last Friday's Dow close was 9262.23. It sure looks like they are trying to hold it above that level for technical reasons. (Thanks for pointing this out - Fabes) With the bigger orders for larger cap stocks probably coming in as "market on close" the spike we are seeing here is a reaction to those orders. Major indexes back in the green for now.

 
 
  Jeff Bailey   6/28/02,  3:53:45 PM
Royal Gold (RGLD) $13.95 +4.33% ... a stock with a "gold bug" theme that is bucking the sector action. Never sure, but this action is rather interesting. Speculation would be that it may be a merger candidate for one of the larger producers. May see some acquisition activity of the major's with higher stock prices being used for acquisitions.

Jim noted to me in an e-mail that RGLD was being added to Russell-2000. I was looking for such news, but I didn't see it. Will defer to Jim on this one as I thought this might be a reason for gains, but I didn't see the news in press releases.

 
 
  Jim Brown   6/28/02,  3:45:43 PM
Pivot Trade Signals
Despite the massive buying underway in the small caps the major big cap indexes are losing ground. It appears everyone was waiting for the buying to begin hoping it would spark a broader rally. When it did not happen they are selling into the close. It is interesting that even though the majority of the stocks being bought for the Russell are on the Nasdaq the COMPX cannot make any gains and is about to go negative. What does that say for the market going forward?

 
 
  Jim Brown   6/28/02,  3:17:52 PM
Pivot Trade Signals
A lot of no-name stocks seeing strong Russell buying. RAY, RARE, PETC, JEF, etc. If you have Qcharts you can launch a "hot list" of "very short term up" to see the buying.

 
 
  John Seckinger   6/28/02,  3:17:43 PM
Interesting News: Qwest (Q) has asked employees to take unpaid leave in an effort to cut its $26 billion dollars in debt. Furthermore, the House Financial Services Committee sets Greenspan hearing for July 17th. In other news, Denver regional air carrier Frontier Airlines (FRNT) has asked the federal government to secure 85 percent of a $70 million line of credit. Shares are relatively unchanged at 8.00.

 
 
  Jeff Bailey   6/28/02,  3:16:40 PM
Stocks pulled back on reports that the U.S. Capitol building was being evacuated due to the "smell of smoke."

 
 
  Jonathan Levinson   6/28/02,  3:15:28 PM
TRINQ now at 1.52, declining volume around 1.5 times advancing volume. COMPX 1450 appears as the next support, but in fact we've seen 10 point range from 1440 to 1450 as a congestion area during past sessions. It would appear for the moment that the windows have been dressed. Bulls will be looking for an end-of-day ramp up, and bears will be hoping to see the day close in negative territory.

 
 
  Jonathan Levinson   6/28/02,  2:55:30 PM
Declining volume has now surpassed advancing volume on the COMPX for the day.

 
 
  John Seckinger   6/28/02,  2:51:45 PM
Speaking of Bellwethers, shares of AOL have now set higher relative lows and higher relative highs 12 of the last 13 30-minute periods. Currently at 14.72, traders most likely are looking for a test near the 15.25 level. During 2002, this should represent one of its best percentage gainers (albeit from low levels) and definitely get the attention of retail and institutional traders (if not already). It was just a few days ago when the company mentioned it has no plans to issue an earnings warning. Risk to the downside (read: stops placed) should be near the 14.13 area.

 
 
  Jim Brown   6/28/02,  2:50:10 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Not where I wanted it but still only 3 points under the high of the day. We were triggered on the market SHORT signal at 14:44:52 when the OEX traded below 494. (SPX 996.32, DJX 93.10, DIA 93.22, SPY 99.90, OEF 49.68) The initial stop loss will be 498. Considering how we struggled with 497, 498 should be out of reach! (famous last words!)

 
 
  Jonathan Levinson   6/28/02,  2:49:33 PM
Interesting that the QQV and VIX are at or near their lows of the day on this little downdraft.

 
 
  Jonathan Levinson   6/28/02,  2:42:22 PM
I'm ready to start tapping my screen to unstick the TRINQ- currently, endlessly in the .6-.7 range. Adv volume is around 2x declining volume, but there's no strength and volume at 1.2Bln on the COMPX is light. Let's call this upswing a bounce and reserve the appropriate respect for rallies. I may be speaking too soon as the COMPX flirts with the lower upsloping trendline- let's watch.

 
 
  Leigh Stevens   6/28/02,  2:40:47 PM
INDEX Comments: SPX & OEX look like they may start to roll over pricewise and retreat from their recent consoldiation patterns. Both indexes got to fully "overbought" extremes on the short (5) and longer term (21) stochastic indicators - these are now showing downside momentum. DJX is stalled at the top end of its hourly downtrend price channel.

 
 
  Jim Brown   6/28/02,  2:38:57 PM
Pivot Trade Entry Point Alert - QQQ
We were triggered on the QQQ short at 14:33:56 when the QQQ traded below 26.30. Our initial stop loss will be $27.05. No profit target at this time until we see where the day closes.

 
 
  Leigh Stevens   6/28/02,  2:35:15 PM
INDEX Comments: COMP & QQQ have been unable to penetrate the top end of their hourly downtrend channels, and further rally potential may be fading along with momentum models like stochastics which are drifting down now.

 
 
  Jim Brown   6/28/02,  2:31:28 PM
Pivot Trade Entry Point Alert - QQQ
With the Nasdaq stuck below 1485 let's SHORT the QQQ with a break below $26.30. Stop at $27.

 
 
  Jim Brown   6/28/02,  2:27:02 PM
Pivot Trade Signals
Somebody hold my hands before I hurt myself! OEX 497 is looking very inviting as a lowered entry target since it just can't seem to get above it to 499. Still have 1.5 hrs to go for that last minute spurt but I am getting really anxious to pull that trigger at this level. This patience thing is driving me crazy!

 
 
  John Seckinger   6/28/02,  2:26:37 PM
Profiled IBM finally breaks out higher! Longs who entered at 72.93 should have stops tightened. Our short term objective of 73.75 was almost triggered (intra-day high 73.62); however, the session certainly isn't over.

 
 
  Jeff Bailey   6/28/02,  2:22:05 PM
Icos Corp. (ICOS) $17.37 +4.89% ... volume spike in last hour of 965,000 shares has stock off best levels of $19.03. Now news that I see, but watchfor put opportunity on break of today's low as potential "heads up" to further downside action.

P/F chart remains longer-term bearish, with vertical count hinting at $12.00. Link

 
 
  Jim Brown   6/28/02,  2:15:58 PM
Pivot Trade Signals
Another reason the Russell rebalancing spikes the indexes is the reweighting of existing Russell stocks. If the market cap of a stock rose substantially during the year then funds must add to existing positions at the close today. This is happening to the home builders. Check out PLT, RYL, BZH and a manufacturing company SPW.

 
 
  Jim Brown   6/28/02,  2:10:12 PM
Pivot Trade Signals
Some stocks going into the Russell are starting to see some spikes. Looks like the end of day rush is beginning. Dow component JNJ just exploded from a probable EOQ buy. Same with BRL. IBM also broke $73 in the last couple minutes. Only 7 Dow components are negative - HPQ, GE, MCD, DIS, WMT, PG, JNJ.

 
 
  Jim Brown   6/28/02,  1:57:08 PM
Pivot Trade Signals
Finally a buy program! Notice the Dow is about to break to a new high but the other broader indexes are lagging. Some reluctance appearing in the broader market. Still a chance of the 499 entry if a couple more institutions have put off buying until the very end. Time will tell.

 
 
  Jeff Bailey   6/28/02,  1:56:54 PM
December Gold Futures (gc02z) 318.00 -1.11% ... per today's 01:00 Update, I had set an alert at $318 on this futures contract. Getting a break lower here and looks defensive. Would start getting further concerned for portfolios "overweighted" in this asset class.

 
 
  Jim Brown   6/28/02,  1:54:17 PM
Option Strikes
A reader asked me what put I would suggest on a short trigger today. Obviously there are a lot of choices. I personally like in the money puts on things like the DJX and QQQ because they are cheap and time premium is minimal. Others like the out of the money puts on the OEX but a 480 put on the OEX today is still $7.00. The DJX $94 put (at Dow 9320) is only $2.50 and a Dow retest of 9000 before the 4th of July could send the price to over $4.00. That is a 60% return. The OEX put at $7.00 would have to go to $11.20 for the same gain. Just an opinion.

 
 
  Jeff Bailey   6/28/02,  1:51:17 PM
Sony Corp (SNE) $53.43 +6.22% ... Jeff- What do you think about SNE reversal up three boxes on the point and figure chart? I think you profiled the stock around $52.00.

SNE was actually profiled last night on PI as a bullish play and stock gapped strong today. Yes, I like it still as bullish, but I need to do some work on this one going forward.

Last night, I was looking at SNE versus the Yen. What has taken place over the last two months is quite interesting.

From March-May, SNE shares appeared to correlate rather bullish with the gains found in the Yen versus the US$. However, it appears that since about June 1, the continued strength in the Yen versus the US$ has had a negative impact on SNE.

I'm thinking today's gap higher was due to the previously mentioned combined Yen intervention by the Fed and the European Central Bank. In essence, it appear that in June, shares of SNE lost some bullishness due to the Yen rise and perhaps in thought that Japan-based SNE may see some bottom line earnings pressure due to the currency conversion. Either that or losing some price competitiveness due to stronger Yen.

I will work on this some more and try to get this done by today's 03:00 Update.

Note: the main reason SNE was profiled was that bulls could control their downside risk with a tight stop as the stock had pulled back to a level of "psychological" support at $50, its 200-day MA, and into a previously built base where some good buying action had taken place in early March on the break above that base.

What I need to try and figure out is why SNE traded strong with the Yen showing gains up until late May. Then, the Yen continued higher, but SNE fell. It may simply be due to the negative market environment for broader stocks since early June, but I need to check on this further.

 
 
  Jim Brown   6/28/02,  1:34:12 PM
Pivot Trade Signals
Internals still shrinking. Very slightly but the trend is appearing. Declining volume is beginning to spike, The TRIN has reversed its downward trend. The adv/dcl line just broke below its 90 min moving average. Definitely not serious yet but the leading indicators are hinting at a direction change. Could still go either way depending on end of day orders so we will be patient.

 
 
  John Seckinger   6/28/02,  1:31:03 PM
Looking ahead, next week features only five companies reporting earnings. Moreover, Hong Kong and Canada markets are closed on July 1st. The Bank of England holds a meeting on July 3rd and 4th, while the European Central Bank will hold a session as we celebrate Independence Day. With both the BoE and ECU most likely exited over the recent run up in the euro, if the Dollar closes above 107.15 (currently at 107.08 for September Futures), momemtum to the upside should continue throughout the shortened week and benefit equities.

 
 
  Jonathan Levinson   6/28/02,  1:29:41 PM
Another sell program just took the advancing:declining volume down to slightly better than 2:1. The TRINQ is "up to" .69, as the COMPX dips back below 1480.

 
 
  Jim Brown   6/28/02,  1:15:02 PM
If they are going to launch any buy programs to stash cash for the month they should start anytime now.

 
 
  Jim Brown   6/28/02,  1:10:54 PM
Pivot Trade Signals
That last sell program almost triggered us on the bottom entry. I am glad it missed. The markets just can't seem to get above their earlier highs but are holding up nicely. The 60 min stochastics (10,3,5) are giving a sell signal as well as several other indicators. Unfortunately they don't factor in news events like end of quarter window dressing or Russell rebalancing until after the fact. My ideal setup would be an end of day spike to OEX 500 on a climax-buying binge possibly to do with the Russell as I think the EOQ is almost over. SPX 1000-1001 could be a challenge but the Dow is near the high of the day and could push the SPX on a breakout. We will continue holding our breath and hoping our 499 entry point is hit before the close.

 
 
  John Seckinger   6/28/02,  1:06:51 PM
Concerning Sector Rotation, the Nasdaq Banking Index continues to show strength while the Pharmaceutical Index came close to its 22 DMA before turning lower. What does that mean to a trader? Companies such as C and BAC could outperform while profits most likely will be taken within shares of BBBY, LOW, and WMT.

 
 
  Jeff Bailey   6/28/02,  12:45:27 PM
Airline Index (XAL.X) 68.91 +2.27% .... showing gains despite just announced S&P cutting debt ratings for CAL, NWAC, UAL, AMR and DAL.

 
 
  John Seckinger   6/28/02,  12:45:03 PM
With recently profiled stocks IBM and NVLS in a holding pattern, what could be the next catalyst as the weekend approaches? Possibly a short squeeze in the dollar heading into the weekend, or even a slight run up in commodity prices - which would continue shifting assets away from Treasuries and into riskier assets (further helping equities). Oil and Gold are lower; however, the CRB remains higher mainly due to higher soybean prices.

 
 
  Jonathan Levinson   6/28/02,  12:43:30 PM
Advancing volume is now beating declining volume just over 4:1 on the COMPX. The TRINQ is back at the lower end of its range around .37, and the QQV is way down on the day, -3.42 to below 50. COMPX price is comfortably above 1480 resistance for the moment. This would be the place for bulls to be long with a stop at 1475, but the low TRINQ, overbought intraday stochastics, threats of possible terrorist activity over the long weekend, and end of quarter and end of month window dressing will conspire to keep me out of long trades today.

 
 
  Leigh Stevens   6/28/02,  12:40:33 PM
INDEX Comments: SPX is trading at 1000, an important number, but probably a more "psychological" one than a technical area of potential resistance - the prior swing high was 1006, which is likely the key near resistance or key retest number.

 
 
  Jeff Bailey   6/28/02,  12:39:16 PM
Dianon Systems (DIAN) $51.98 -13.3% ... stock down after Thomas Weisel Partners note indicates that proposed Medicare payments schedule could be negative for pathology companies. According to TWP, today's Federal Register includes proposed rules for the 2003 physician fee schedule. Should this pass, payment for pathology services would decrease in 2003; this could decrease DIAN's most used CPT code by about 11%. Special note was made that these are only proposals at this time. Link

Trader's will note "suspicious" resistance right at the bearish resistance trend. Today's trade at $55 puts DIAN back on a sell signal and current vertical count (column of O's generaged today) gives longer-term bearish vertical count of $37.

 
 
  Leigh Stevens   6/28/02,  12:19:31 PM
INDEX Comments: NDX breaking out above top end of where I pegged top of its downtrend channel. Coming out of a minor bullish flag pattern and projects higher - as does QQQ - looks like the Q's could take out 26.8-27.00 but there should be some significant selling in this area also - an important area to watch.

 
 
  Jeff Bailey   6/28/02,  12:17:09 PM
BCE Inc. (BCE) $17.28 +3.97% ... announces it has reached a pact with SBC Communications (SBC) $30.29 +0.46% that will lead to the repurchase of SBC's 20% interest in Bell Canada for $6.32 billion Canadian. BCE will issue stock and debt to finance the deal. BCE maintains guidance for 2002.

 
 
  Jim Brown   6/28/02,  12:14:12 PM
Interesting play on Tyco today. With TYC at $14.10 the August $10 call is bid 5.30. This is about a 10% return on a covered call with no risk unless TYC falls below $8.80. Just thinking out loud.

 
 
  Jonathan Levinson   6/28/02,  11:51:57 AM
Still holding our breath as the COMPX stays pinned just below resistance. Market internals have remained basically unchanged over the past hour, and all my indicators are echoing the same story. TRINQ remaining below .5, stochastics easing a little out of overbought except for the more active 1 and 5 minute views. 1480 continues to act as resistance.

 
 
  Leigh Stevens   6/28/02,  11:44:13 AM
INDEX Update: Support & Resistance - Nasdaq Composite (COMP) Support > 1450, then 1438-1440 - Resistance > 1477, at prior (up) swing high, then 1487, at top end of hourly downtrend channel

Nas 100 (NDX) Support > 1056, 1050, then 1030 - Resistance > 1076, then 1100

QQQ: Support > 26-26.2, then 25.5 - Resistance > 26.80-27.00, then 27.7

 
 
  Jim Brown   6/28/02,  11:41:53 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Internals are starting to decline slightly and the markets cannot seem to be able to hit the old highs. Go SHORT with an OEX trade below 494. (SPX 996) This is farther away from 499 than I would like but I want to see some confirmation of the breakdown before entering the position. Would rather see 499 instead but I don't want to miss the train

 
 
  John Seckinger   6/28/02,  11:39:38 AM
With the Philadelphia Semiconductor Index looking to post its first three-day gain since late April (currently +8.89 at 403.42), traders can play companies such as AMD, AMAT, and NVLS. Currently at 35.25, NVLS appears to have potential for a short-term move to 36. Stops should be placed slightly underneath the 35 level. Note: ZION is back underneath the 200 DMA, resulting in a profitable trade. Moreover, shares of CBSS remain motionless, while IBM remains fixated near intra-day highs.

 
 
  Jeff Bailey   6/28/02,  11:37:41 AM
Dow Jones Transportation Avg. (TRAN) 2,736 +1.63% .... back above its 50-day MA after what appears to be a successful test of its trying-to-flatten-out 200-day MA. Looks to have "shrugged off" recent earnings guidance from Federal Express (FDX), which appeared to spook investors in the sector on 06/25/02. A break above the 2,800 level in the TRAN would be a vote of confidence from the sector on the economy and perhaps lead the broader markets out of their duldrums. Link

 
 
  Leigh Stevens   6/28/02,  11:34:45 AM
INDEX Comments: Nasdaq Composite ($COMPX) is at an important level - 1477 was its last upswing high

 
 
  Leigh Stevens   6/28/02,  11:29:05 AM
INDEX Update: Support & Resistance - S&P 500 (SPX) Support > 990, then 980 - Resistance > 1006-1007, then more major resistance at 1025

S&P 100 (OEX) Support > 490, then 485 - Resistance > 499-500, then 505

DJX: Support > 92.6, then 91.4 - Resistance > 94.1, then 94.5-94.7

 
 
  Leigh Stevens   6/28/02,  11:06:24 AM
INDEXES: TRADE Strategy NOTE - Moving Average Envelopes - OEX objective I had at 494 was based on where the 2% envelope line was relative to the 21-hour moving average. You can see this chart on my last night's INDEX TRADER wrap at Link

While I figure that OEX may retest prior swing high at 500, or top of downtrend channel at 505 as also seen on the OEX hourly chart at above LINK, the envelope line set at the percentage value where OEX was topping last time looked like an "easy" objective to attain. You can find out more about the use of Moving Average Envelopes by reading my Trader's Corner article on the subject at Link

In my next Trader's Corner's article, I'll put in my two cents on Bollinger Bands, with some material from a recent talk John gave to the Market Technician's Association which we both belong to.

 
 
  John Seckinger   6/28/02,  11:05:11 AM
IBM This multi-national computer hardware company likely will avoid exposure stemming from WorldCom (WCOM) and benefit intra-day due to a relatively stronger domestic currency. Currently at 72.93, shares could go as high as 74.89 (22 DMA) over the next few days. Risk is that shares weaken underneath 72.40 and stops are triggered. Once above 73.09 (intra-day high), tighten stops up to 72.75. For short-term traders, 73.75 can provide a solid exit point. Remember: This is for aggressive traders only.

 
 
  Jim Brown   6/28/02,  11:04:40 AM
Jim, You suggest shorting when OEX gets up to to 499. Isn't it better to wait for a bounce off 499 to increase the probability of winning? Sandy

That would be the best way to play but it is hard to give that signal in the Monitor in a way that automatic sell stops can be entered in advance.
If you entering your own trades when the signals are hit then waiting for an eventual breakdown back below 499 would be the preferred way to enter. No method is fool proof but this could prevent some instances of a market simply continuing higher and stopping you out.

 
 
  Jonathan Levinson   6/28/02,  11:02:11 AM
Another thought on our reader's question concerning the daily and weekly trend on the COMPX and stochastics crossups. I've just taken a look on the monthly and quarterly views. It looks like intraday we are overbought, daily and weekly oversold and crossing up, monthly and quarterly oversold but pointed south, and yearly in stochastics freefall toward oversold. This observation is just to pass the time, for interest's sake, and, possibly, for very long term investors.

 
 
  Jonathan Levinson   6/28/02,  10:54:15 AM
Upvolume is now between 2 and 3 times down volume on the COMPX. The USD is approaching yesterday's levels after having been down significantly overnight. The COMPX is still struggling with 1475-1480 resistance as bears hold their breath. The TRINQ has been showing some very low readings while COMPX price sits at this resistance level. Either the TRINQ or the COMPX price will crack first, and my gut is telling me it will COMPX price, but we will wait and see, and keep an eye on our stops.

 
 
  Leigh Stevens   6/28/02,  10:49:09 AM
INDEXES: TRADE Strategy NOTE - re my OEX trade - was asked why I had a stop-out point well under current levels (at 476.0) and and would risk potentially 15 points before exiting. A good question and the answer is that I normally would not risk giving back all of a profit - but trading strategy is relevant to what objectives you are are going for.

When the market warrents it, I go for a "position" type trade and attempt to ride the bigger trend - I have been writing about how I thought the market was putting in an intermediate low. My objective then may be to stay IN the emerging trend, so I set stops according to where a trend reversal would be indicated. If the objective is not met and the market looks like it has topped out, I can exit accordingly rather than get stopped out - but have to see it to know it.

I wouldn't necessarily ride an index down 15 points if it did not meet a further 5 point objective - but I set stops where the trend would indicate a larger (not minor) trend reversal. By setting an exit point only where the 2-3 day/2-week trends would indicate reversal I have, for example, the option of going for an eventual 525 objective in OEX, an upside target I have on an OEX close above 505. There is a risk to reward calculation that I am looking at, but its sometimes based on an "intermediate" trend viewpoint.

 
 
  Jeff Bailey   6/28/02,  10:45:06 AM
House OK's debt limit The House approved an increase in the federal debt limit by one vote late last night. The House of Representatives passed a $450 billion increase in the debt limit, which will now to to the President for his approval.

This has at times appeared to weigh on the markets and certainly the U.S. Dollar.

Gold stocks as depicted by the Gold/Silver Index (XAU.X) 72.96 -0.62% not getting hit all that hard as I would have thought under such approval. August Gold futures (gc02q) $319.0 -0.18% here.

 
 
  John Seckinger   6/28/02,  10:42:18 AM
With the dollar rebounding and shorter-dated Treasuries near its lows, what kind of asset allocation is taking place? Exactly, one into equities. Important note: If the Nasdaq manages to finish the week above 1387, a “bullish hook reversal” will have taken place. In my opinion, these patterns work much better at lows then highs. Remember, this pattern is for intermediate traders only.

 
 
  Jim Brown   6/28/02,  10:33:50 AM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Markets are having a nice run despite the Nasdaq struggling at 1480. OEX resistance is still 500. Let's go SHORT at an OEX trade of 499 with a stop loss at 503. Hopefully this rally will continue to OEX 500 before rolling over. The end of quarter buying should be over this morning and lunchtime could be the start of any weakness as traders start taking profits before the weekend.

 
 
  Jonathan Levinson   6/28/02,  10:24:55 AM
TRINQ at .33 is nearing extreme and tells me that this 1475-1480 level should hold. If it doesn't, bears, respect your stops.

 
 
  Leigh Stevens   6/28/02,  10:23:38 AM
INDEXES: TRADE Recommendation - UPDATE: The QQQ long position from 25.5, reached my trading objective at 26.60 - since QQQ has traded to above 26.60, we are out on this trade. Cancel any liquidating stops at 25.20.

 
 
  Jonathan Levinson   6/28/02,  10:22:36 AM
On the Q's, don't you think the daily chart is showing more upside, i.e macd starting to crossover and stoch agreeing, and only half way up? (RSI also still showing more upside)

Yes, although I note that the daily and weekly stochs have been barely making it out of oversold before returning. The oscillators are pointing to possibility for a summer rally, but it's been many weeks that the longer stochastics have been week- so, I'm relying on intraday s/r levels and oscillators with stop losses to guide my trades.

 
 
  Jim Brown   6/28/02,  10:18:52 AM
The Nasdaq came to a dead stop at 1475 resistance but the Dow, OEX, SPX are still moving higher. The intraday ranges are narrowing and advance/decline ratios are dropping. The VIX is back under 30 at 29.79 and the TRIN is .70. Looks like some more gains ahead as funds "mark up" stocks for the end of the quarter. I would love to see a run to OEX 500 !!

 
 
  John Seckinger   6/28/02,  10:17:17 AM
ZION, currently at 52.37 and above our 200-dma objective (52.96), could continue to benefit on the heels of recent economic reports (Chicago PMI and revised Sentiment figure); nevertheless, stops should now be just below current prices. Note: Report that European Central bank bought euros for yen should help dollar-denominated assets (read: Equities should move higher)

 
 
  Jeff Bailey   6/28/02,  10:12:18 AM
Xerox (XRX) $6.81 -14.87 .... opens for trading.

Merrill Lynch downgrades to "near-term reduce-sell/long-term neutral" from "neutral/buy" to reflect the increased risk of greater than expected revenue restatement.

 
 
  Jeff Bailey   6/28/02,  10:10:49 AM
Chicago PMI Came in at 58.2% for June, which was just above consensus of 58.0%. June's 58.2% reading was below May's 60.8% and hints of some pullback from stronger levels in May. Readings above 50% are considered levels of growth, while readings below 50% are that of contraction. In essence, today's PMI hints at a growing economy, but at a slightly lower rate than found in May.

 
 
  Jim Brown   6/28/02,  10:09:22 AM
Nice Trade! - Leigh's OEX long play from 477 to 494 covered a whopping +17 points. Good call!

 
 
  Jeff Bailey   6/28/02,  10:07:38 AM
Michigan Consumer Sentiment was revised up to 92.4 for all off June from the 90.8 preliminary figure. This is still below May's 96.9, but the June decline was smaller than previously reported, which is helping the broader market averages hold in positive territory.

 
 
  Jonathan Levinson   6/28/02,  10:05:32 AM
Beadth has weakened ever-so-slightly here in COMPX-land. Advancing volume is now between 2 and 3 times declining volume. 1475 seems to be holding, but we're not getting the immediate fallback either. TRINQ is showing continued buying pressure, staying below .5 with a bottom so far at .37.

 
 
  Leigh Stevens   6/28/02,  9:55:02 AM
INDEXES: TRADE Recommendation - UPDATE: OEX calls bought in OEX 477 area should be exited per my recommendation to sell when OEX hit 494.

 
 
  Jonathan Levinson   6/28/02,  9:51:22 AM
That was a nice surge on the COMPX, with a current TRINQ reading of .39. Advancing volume is between 3 and 4 times declining volume, as the COMPX stopped dead at 1475 for the time being. All intraday stochastics are in nosebleed territory.

 
 
  Jeff Bailey   6/28/02,  9:49:08 AM
NVIDIA (NVDA) $16.70 -2.22% ... some volume spike yesterday and some follow through today on the downside may hint of end of quarter dumping by fund managers getting the stock out of their accounts and today marks the end of the second quarter. If looking to close out, may want to lower stop just above today's high of $17.13 and see just how bad it might get into the close. Link

 
 
  John Seckinger   6/28/02,  9:47:56 AM
With the Nadaq Financial Index rising towards its 22 and 50 DMA's, companies to watch are CBSS and ZION. All look to move higher on Friday, but stops have to be tight. Currently at 33.75, CBSS could move as high as 34.50 with risk to the downside (via stops) limited to 33.45. ZION's objective is to test the 200-dma at 52.92 (stops to be placed just underneath Friday's open of 51.50).

 
 
  Jonathan Levinson   6/28/02,  9:36:23 AM
Opening breadth on the COMPX is slightly negative, confirmed by a TRINQ around 1.25, QQV up on the day, and the Precious Metals Index (XAU) slightly positive for a change. The COMPX is printing new highs as I type, and we might get our wish for a short entry at or near the 1475 resistance level.

 
 
  Leigh Stevens   6/28/02,  9:35:38 AM
INDEXES: TRADE Recommendation - Repeating last UPDATE from yesterday: OEX call buy recommended at OEX 477.3 - Raise STOP out/exit point to OEX 476.0, from 474.5. Sell objective: OEX 494.0. Will revise as needed today.

QQQ stock bought at 25.5 - raising stop to 25.20 from 24.50. SELL objective: 26.60.

 
 
  Jeff Bailey   6/28/02,  9:31:39 AM
NVIDIA Corporation (NVDA) $17.08 .... talked about this one yesterday in regards to past bearish profile from 06/14/02. I'd look to take some gains off the table here, or follow with a lowered stop profit just above $19, which was the bearish vertical count. Link

 
 
  Jonathan Levinson   6/28/02,  9:29:27 AM
End of quarter window dressing or end of recent bounce? With the QQQ's trading down around .25 from yesterday's close and all of the intraday COMPX stochastics closing near 100% overbought, we're looking at a gap-down open to complicate the picture, as Jim has pointed out.

 
 
  Leigh Stevens   6/28/02,  9:28:11 AM
Pre-Opening Comments: The Euro is higher again today - Sept. Euro futures trading at .9901, +0.53. Keep in mind that 1.00 is a major target for the Euro against the dollar. The volatility will likely increase in this area - the dollar was quite volatile yesterday. My target on the Euro is 1.02. There is a limit to how far the dollar is going to drop before leveling off and even rebounding a bit.

 
 
  Jim Brown   6/28/02,  9:24:54 AM
Join me in welcoming John Seckinger back to Option Investor this morning. Please don't hold it against him for causing the Nasdaq market crash by shorting Internet stocks as editor of our NetBulls.com news letter for two years during the bubble! He was a member of the CBOT at 27 and founded a daily newsletter sent to over 70 institutions while there. He is both fundamental and technical in his approach and it will be interesting to see if he is dressed as a bull or bear today. Welcome back John!

 
 
  Jeff Bailey   6/28/02,  9:23:29 AM
Market Internals There was some modest internal strengthening found in the various bullish % data, but not nearly enough to have any of these charts reversing back into columns of X.

The more volatile NASDAQ-100 Bullish % ($BPNDX) saw a net gain of 1 stock to a buy signal and now stands "bear confirmed" at 14%.

The S&P 100 Bullish % ($BPOEX) saw a net gain of 3 stocks to buy signals at 35%.

The broader S&P 500 Bullish % ($BPSPX) rose marginally from 37.8% to 38.2%.

The "broadest of broad" indicators found the NYSE Composite Bullish % ($BPNYA) edged lower to 48.3% from Wednesday's reading of 48.6%. The NASDAQ Composite Bullish % ($BPCOMPQ) also edged lower to 38.5% from Wednesday's reading of 39.2%.

These bullish % indicators still remain weak, and traders should have a more defensive posture with their trading and account management. Levels below 30% are deemed "oversold" on a longer-term basis, and care should be taken when shorting stocks that appear overextended on the downside, where overhead supply of stock that would create resistance is well above current levels.

 
 
  John Seckinger   6/28/02,  9:17:32 AM
Billionaire financier George Soros was quoted as saying the greenback could fall by a third in the next few years. Dollar has weakened overnight as continuing accounting concerns are most likely keeping international funds out of domestic markets. Not surprising, shorter-dated Treasuries are underperforming longer maturity issues. Will be interesting to see how multi-nationals highly dependent on exports react during trading on Friday.

 
 
  Jim Brown   6/28/02,  9:12:46 AM
Pivot Trade Signals
Please give us one more bounce! The negative futures are not painting a positive picture but they have been all over the board this morning. I would love to see one more positive spike to take us closer to resistance and tip the indicators into overbought. With the end of quarter bias and the Russell-3000 changes today the market could be erratic until the close.

Resistance is still 9420 for the Dow, 1007 for S&P, 502 OEX and 1475-1485 for the Nasdaq. We would be looking to enter a short position near those levels. The -$9.2 billion cash outflow from equity funds over the last week shows there is no conviction that the market has bottomed and the closing bounce yesterday was strictly EOQ buying and short covering.

If we don't get a clear bounce this morning it will be tough to pick an entry point due to the expected volatility. After being stopped out of the last few attempts to pick a top we will be more cautious and look for confirmation before taking the plunge

 
 
  Leigh Stevens   6/28/02,  9:04:03 AM
Pre-Opening, Stock INDEXES - Good Morning!

Index Futures trading: S&P > -1.80; Dow Industrials > -16.00; Nasdaq > -9.00

 
 
  Jeff Bailey   6/27/02,  8:42:03 PM
Celestica (CLS) $22.61 +3.28% ... will note from past bearish profile. Stock achieved its bearish vertical count of $22 yesterday. Would snug a stop just above today's high if still holding puts. Link

 
 
  Jeff Bailey   6/27/02,  8:26:47 PM
The Market Monitor has been archived. To view Thursday's comments, simply click this Link

 
 

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