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  Jeff Bailey   7/1/02,  5:46:54 PM
Tyco Intl. (TYC) $13.75 +1.77% ... after the close, said it will sell 200 million shares of CIT Group (NYSE:CIT) for $23, raising $4.6 billion. The $23 is below the previously targeted $25-$29 range.

Tyco (TCY) plans to use the proceeds to help pay off a portion of its $27 billion debt.

 
 
  Jim Brown   7/1/02,  5:04:27 PM
Pivot Trade Wrap
Sold Too Soon - We closed the QQQ short trade much too early but the broader market SHORT is alive and well! All the major indexes closed at the lows of the day and we still have two days of trading before July-4th. The EOQ window dressing turned into portfolio stripping as expected. The markets tried to rally at the open but after several attempts the selling began in earnest.

Dow component IBM lost exactly the same amount that fellow component 3M gained with a drop of -4.40. IBM closed back at the $67.50 lows from last week as more airtime was given to the possibility of an IBM warning. This makes two home runs on IBM in the last two weeks. Readers that got in on the first trade and took their profits were able to jump back in again for another ride.

While nobody can guarantee the future it surely looks like investors are going to cash before the holiday with the government issuing another set of warnings today about possible attacks on the 4th. The volume was heavily weighted to the downside with down volume beating up volume nearly 4:1 on the NYSE and 7:1 on the Nasdaq even after taking WCOM out of the equation. WCOME traded over 1.5 billion shares and was half of the Nasdaq total volume of 3 billion shares. This was the 3rd highest volume day on the Nasdaq but half of it was those six-cent WCOME shares.

The Nasdaq closed 20 points below the 9/11 close and appears headed the way of the NDX which is now nearly -100 points below the intraday 9/11 low not just the close. The Dow closed at 9109, only 53 points away from the 61% retracement level. The outlook for Tuesday does not look good. The internals are buried in oversold but the sentiment is strictly "get flat or get short" ahead of the holiday. We could see a relief bounce at the open but the end of day trading could be an instant replay of Monday. We currently have an open SHORT signal on the broad market from OEX 494 with a stop loss at 489. The OEX closed at 478.41. Next support 471-472. We will adjust the stop loss at the open. Having fun yet?

 
 
  Jeff Bailey   7/1/02,  4:50:45 PM
New 3rd-quarter Circuit Breakers and Trading Collars are implemented as of July 1, 2002, and will be in place for the remainder of the quarter, benchmarked to Friday's close.

Here are the new quarterly benchmarks. Link

Q: What are "trading curbs" and how can it impact me?

A: Every morning in the 09:00 EST Update, we give "Fair Value" along with buy/sell program levels. The above-mentioned trading curbs, if triggered, will impact these buy/sell programs and their ability to be implemented. Here's a detailed explanation. Link

 
 
  Leigh Stevens   7/1/02,  4:04:09 PM
Subscriber QUESTION: " Any thoughts on what the bbh does from here"

RESPONSE: yes, it either takes out the prior low at 76.6-76.8 or not. Today's break on downside chart gap on the Biotech HOLDR's (BBH) doesn't look good for a bullish/bottoming outlook. Tomorrow (Tues) or the next day (Wed) should tell us the outcome on BBH in this regard. If we see new lows, 72 is a possible next target assuming the stock retreats to low end of its downtrend channel again.

 
 
  Leigh Stevens   7/1/02,  3:54:10 PM
INDEX Comments: SPX,OEX,DJX - SPX took out support at 971-975 - next is 964; OEX taking out 480 - next potential support looks like 475-476; DJX: took out 91.4 - next support looks like 90.8 per my 12:29 post.

 
 
  Leigh Stevens   7/1/02,  3:47:31 PM
Subscriber QUESTION: "has the oil sector formed a head and shoulders, march to June? and if so is it breaking the neckline?"

RESPONSE: A Head & Shoulder's (H&S) top top is apparent on the Oil Service Sector ($OSX.X) and recent price action has penetrated the "neckline" - the Oil Sector Index ($ OIX.X) could be building a top with it pattern of successively lower (up) swing highs, but has not "broken down" technically - it would if it fell under 305-306 (last at 322.7).

 
 
  Jim Brown   7/1/02,  3:47:26 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I have not forgotten about the open SHORT signal. I am not lowering the stop loss to a point near the current price because I do not want to be knocked out on an intraday bounce before the Wednesday close. Since we are very positive (+14 points) I am going to change it to OEX 489 but I want to be far enough above the current price that an opening bounce tomorrow does not take us out. Aggressive traders might want to get out here and get back in on an opening bounce. (if there is one!) Notice there is no rush to buy this dip.....

 
 
  John Seckinger   7/1/02,  3:45:38 PM
AOL: Corporate Bonds issued by AOL got wider today versus Treasuries (read: became riskier) by a significant 50 basis points. This could be a precursor for rougher times ahead. Note: Becoming wider versus Treasuries means to be granted a higher yield; therefore implying an investor is assuming more risk.

 
 
  Jeff Bailey   7/1/02,  3:44:35 PM
MCI Group (MCITE) $0.25 -85% ... trading halt lifted by NASDAQ after the company said it intends to pay the final dividend on that stock, before being rolled back into its parent WorldCom (WCOME) $0.06 -92% and eliminating the dividend. The dividend will be paid July 15th.

 
 
  Jim Brown   7/1/02,  3:38:34 PM
Pivot Trade Signals
OEX 479, SPX 969 are the next speed bumps now that the previous ones have failed. 9090-9063 is the next likely Dow resting place.

 
 
  Leigh Stevens   7/1/02,  3:33:51 PM
INDEX Comments: Nasdaq has continued to slide - COMP exceeded its first support at 1414-1415 I noted on my 12:23 post; next support > 1400, extending to 1395; NDX exceeded 1015 support, then 1009-1010 - next is 1000, then 993 area. QQQ took out 95.2 support; next is 24.7, then 24.50.

 
 
  Jim Brown   7/1/02,  3:32:59 PM
Pivot Trade Signals
Look out below! The indexes have gone into freefall but it could just be some sell programs. OEX 481, SPX 973 are the next speed bumps that could slow this drop. A break below those levels could set us up for a serious drop tomorrow. One email newsletter I received today was trumpeting the expected rally this week due to the expected inflow of cash to mutual funds. Did I miss something? With $9.2 billion outflows last week I doubt they are rushing back in this week. Any new contributions are probably being used to cover liquidations.

 
 
  Jim Brown   7/1/02,  3:24:40 PM
With slightly less than 3 billion shares outstanding on WCOM it poses the question "Who is buying the 1.35 billion already traded today at $.06 cents?" This values the entire company at $180 million and they have already received a bid of $4 billion for one of their divisions. The catch here is debt, loads of it. The revenue recognition problem will go away and the value of the billions in hardware, bandwidth, buildings, etc will remain. Is it possible the debt holders are sucking up huge numbers of shares hoping for a rebound? Or could it be MSFT or AT&T or ?? hoping to end up with control? Much is probably investors already seeing their investment at zero deciding that acquiring 5-6 or even 10-20 times more shares an insurance investment. Unfortunately, a bankruptcy could wipe out this stock and see new stock issued for debt holders. While there is significant value in WCOM there is also significant risk.

 
 
  Jonathan Levinson   7/1/02,  3:15:46 PM
The COMPX is printing fresh lows of the day below 1415, and yet the QQV is up only .78 on the day, below its earlier levels. Traders are remaining complacent as reflected in the option premiums they are demanding for the QQQ's, which tells me that further downside is a distinct possibility. Given that there are two more trading days until July 4th, with nothing other than oversold stochastics to incentivize buyers, the next two days promise to be interesting, and possibly far to the downside.

 
 
  Leigh Stevens   7/1/02,  3:09:09 PM
Subscriber QUESTION: "I understand how sideways trending prices can ameliorate overbought stochastic readings, thereby obviating their predictive capacity. But I'm wondering...can oversold stochastics be brought back to the norm(inside the bands) in a similar fashion?"

RESPONSE: Yes, sideways moves after an oversold reading, will do the same thing - that is, pull up the stochastic reading from a low level toward a midpoint or more "neutral" reading.

 
 
  Jim Brown   7/1/02,  3:07:33 PM
I see what I think is a dead cat bounce in AYE. Do you think this is a good short at this time? The big volume is the thing that bothers me. The price of puts is gone high because of the volatility in the stock I think...Thanks in advance.

Yes, I think it is a dead cat bounce. Investors in denial. The stock has a pretty good intraday top at 27.15 and could be an entry point for the Put play I described on Sunday. A conservative stop at 28.25 could keep you from getting knock out from anything but a real bounce. Remember, Merrill said they would have to issue more stock in order to stay afloat.

 
 
  Leigh Stevens   7/1/02,  3:04:32 PM
Subscriber QUESTION: "Where on the internet can I find a list of all the index's and the companies that make them up? "

RESPONSE: Each exchange (e.g., CBOE on SPX, DJX & OEX) will list information about the trading facts pertaining to each index options, hours, settlement, etc.

For the Index itself, you have to go to Dow Jones, Standard & Poor's company and the Nasdaq web sites for information relating to the stocks in the index at any given time.

 
 
  John Seckinger   7/1/02,  2:55:58 PM
On the Radar Screen: Brazil's currency, the real, hit a record low on the heels of economic and debt concerns about a left-wing victory in October's presidential elections. Introduced in 1994, the real fell to 2.890 per dollar, putting it 19.9 percent weaker than where it began the year.

 
 
  Jim Brown   7/1/02,  2:45:47 PM
Advance/decline ratios have declined significantly to .54 or nearly 2:1 in favor of the decliners. NYSE declining volume is spiking as well at better than 2:1 over up volume. We are 15 minutes away from the 3:PM turn and with conditions weakening it may be telegraphing the direction as strongly south.

 
 
  Jeff Bailey   7/1/02,  2:44:54 PM
Treasury Watch YIELDS across the major maturities pretty much mixed, but flat today. 13-week ($IRX.X) at 1.675% and marginal selling here today. Will reflect closer to the Fed Funds rate of 1.75%. Perhaps some selling on today's stronger economic data. 5,10 and 30-year mixed, but relatively unchanged. Has little money moving between bond market and stocks today.

 
 
  Jonathan Levinson   7/1/02,  2:34:40 PM
The COMPX has just taken out its low of the day after a brief attempt at the 1435 intraday resistance level. Next support should be arriving shortly at 1415.

 
 
  John Seckinger   7/1/02,  2:15:41 PM
Currency (FX) market remains relatively quiet; nevertheless, it remains widely known that that Bank of Japan likes to intervene when markets are thin.

 
 
  John Seckinger   7/1/02,  2:09:45 PM
The Semiconductor Index, currently 11.45 points lower at 376, is testing last Tuesday's close and lowest settlement since October 2nd.

 
 
  Leigh Stevens   7/1/02,  2:04:50 PM
Subscriber QUESTION: "Thanks for all your educational teachings it has given much food for thought. I just put the q'charts 10 day moving average of advances - (minus) decline to achieve an "overbought/oversold" graph on my screen but do not know exactly where the overbought/ oversold areas should be ? When you have a chance can you give the numbers of the upper and lower extreems. "

RESPONSE: I'll publish this chart on my Index Trader wrap tonight for further guidance. There is one level for these extremes - basically, look at the prior 3-6 month period and note if there was a level both on the low and high end where the market topped out/bottomed. These areas, by placement of level lines there, becomes my "assumed" line for overbought and oversold.

 
 
  Leigh Stevens   7/1/02,  1:54:17 PM
Subscriber QUESTION: "When creating Fibonacci retracements, how far back in time should you go to find the major tops and/or bottoms for 60 min/Daily/Weekly charts? "

RESPONSE: There is no hard and fast rule on this. Generally you look at what you perceive to be the most significant top or bottom - this is usually the highest high or lowest low.

Usually, the following time frames are common: 60 min - look at last 30 days

Daily - last 3-6 months

Weekly - last 1-3 years - within this timeframe, the last big top/bottom

 
 
  Leigh Stevens   7/1/02,  1:43:33 PM
Subscriber QUESTION: "Until mid-June or so, the XAU was a prime contra indicator for QQQ plays. Until Gold & NDX were both down one day. Please consider discussing how this happens? "

RESPONSE: A connection between gold stocks and NDX was only during a period when the market saw "linkage" and that is a something thing - like the current dollar/equities connection. Such links tend to occur when the market is lacking other "fundamental" news or to news that participants like, such as the current earnings trend.

A permanent type linkage is with the bond market, but even these two markets will occassionally go seperate ways.

 
 
  Jonathan Levinson   7/1/02,  1:38:31 PM
COMPX is now testing the level formerly known as weak support from earlier today around 1435. Any upside break should take us to the 1445 area.

 
 
  Jim Brown   7/1/02,  1:29:17 PM
Pivot Trade Exit Point Alert - QQQ
Nasdaq appears to be trying to put in an intraday bottom here at 1425. Advancing volume is picking up some. I pointed out that 25.30 could be intraday support earlier and it appears that has come to pass. Let's close the QQQ short position here at the current 25.50.

 
 
  John Seckinger   7/1/02,  1:18:22 PM
Side Note: Volume within shares of WorldCom (WCOME) is quickly approaching one billion.

 
 
  Jim Brown   7/1/02,  1:11:27 PM
There is a remote possibility that the attack in Afghanistan could end up being the trigger for another attack in the U.S. This could be the reason for the current drop and even more justification for being flat or short going into the 4th.

 
 
  Jim Brown   7/1/02,  1:04:23 PM
While I am sitting here watching the markets go nowhere fast I am working on the speaker list for the October seminar. Thought I would get your ideas as well. If you could have anybody in the business speak at the October seminar, who would it be? Obviously Greenspan is probably not available as well as Bernie Ebbers but other than those two, who would you like to see?

 
 
  Jeff Bailey   7/1/02,  12:56:58 PM
Brocade Communications (BRCD) $16.96 -2.92% ... Stock down after Lazard Freres initiates coverage with "sell" rating and $12 price target. The "sell" is based on lofty valuation, as firm believes investors may have mistaken near-term market share gains for long-term organic growth. This has led to an enterprise value that is 2.4 times greater than firm's estimate of the entire market in 2006. Link

Traders will note bearish p/f chart of BRCD. Recent triple-bottom sell at $18 and current vertical count is bearish to $15.

 
 
  Jonathan Levinson   7/1/02,  12:53:23 PM
COMPX has rebounded a bit off its lows, and we have the beginnings of a bullish oversold crossover on the 30 minute chart's stochastics (10(5)). Market breadth isn't much use because of the WCOME action today (current volume 925,000,000+), but we could be getting some kind of bounce forming here. I doubt if it will pack much punch, but unfortunately, without market breadth to rely on, my gut is now one of my primary indicators. Again, FWIW, declining volume is almost 12x advancing volume- subtract WCOME and we have a ratio of approximately 4:1 instead of 12:1.

 
 
  Jeff Bailey   7/1/02,  12:52:18 PM
U.S. bomb kills about 250 Afghans in friendly fire accident.

 
 
  John Seckinger   7/1/02,  12:41:11 PM
Gold, now in positive territory and almost three dollars above the session low, has similarities to trading in Treasury Bonds. Both have been flirting with the beginning of a downtrend; however, neither seems willing to concede just yet. Of course, one of the big reason is weakness in equities. This kind of ancillary evidence can be invaluable when trying to discern intermediate trends.

 
 
  Jim Brown   7/1/02,  12:31:10 PM
Looks like the Nasdaq saw a little buy program at 1425 but it was short lived. 1425 is the intraday support from last Thursday. Next step down levels would be 1415 and 1395 before the last and most important support at 1375. This was the multiyear low from last Wednesday. Should that level break we go into freefall.

 
 
  Leigh Stevens   7/1/02,  12:29:59 PM
INDEX Update: Support & Resistance - S&P 500 (SPX) Support > 971-975, then 964 - Resistance > 994, then 1000

S&P 100 (OEX) Support > 480, then 475-476 - Resistance > 491-492, then 497

DJX: Support > 91.4, then 90.8 - Resistance > 93, then 93.5

 
 
  Leigh Stevens   7/1/02,  12:23:18 PM
INDEX Update: Support & Resistance - Nasdaq Composite (COMP) Support > 1414-1415, then 1400-1395 - Resistance > 1460, then 1480-1485;

Nas 100 (NDX) Support > 1015, 1009-1010 - Resistance > 1040, then 1055

QQQ: Support > 25.2, then, 24.7 - Resistance > 25.9-26.0, then 26.3

 
 
  Jim Brown   7/1/02,  12:21:46 PM
MMM impact on the Dow now over +50 points with a +5.60 gain in MMM. Looks like the shorts expecting a negative earnings surprise from MMM were surprised negatively themselves!

 
 
  John Seckinger   7/1/02,  12:11:01 PM
Just like blue-chip stocks, Pharmeceutical issues have broken below previous intra-day support and are most likely hitting stops. Ancillary evidence is Gold finding a bid while the dollar begins to weaken.

 
 
  Jim Brown   7/1/02,  12:06:05 PM
Pivot Trade Exit Point Alert - QQQ
The QQQs are nearing first level support of 25.30 and could see some slowing of the drop. Should 25.30 fail the next stronger support level would be around 24.75. The low from last week was 24.39. Let's lower the official stop loss to our entry point of 26.30 but traders should be aware of an oversold bounce from the 25.30 level at any time. Don't wait for the official stop if you are concerned about shrinking profits.

 
 
  Jeff Bailey   7/1/02,  11:55:13 AM
Siebel Systems (SEBL) $13.31 -6.39% ... There have been a number of articles about the large buying of SEBL July 10 puts in anticipation of the July 17 th earnings report. Any opinion on the stock.

I see open interest in the puts heavy at $15 and $10 strikes.

Chart of SEBL is bearish. Link Have noted in past the bearish vertical count is $13 dating back to April (column of O from $33-24). Stock did trade that objective on 06/24 and has been hovering near $13 since. Most likely a "lottery" play in the $10's, but stock looks weak. Not all that "excited" about it, but wouldn't be buying calls. Would consider the $10's a lotter play.

 
 
  Leigh Stevens   7/1/02,  11:48:14 AM
Subscriber QUESTION: "Now looking to (possibly) get back into MO, and was wondering if the stock is a falling knife, having taken too much technical and psycholgical damage. Any thoughts? "

RESPONSE: Well, the stock stabilized at the low end of a multimonth trading range dating from last year - at around 43, which was approximate area of lows in March and again in August 2001. If you look at long-term charts, Philip Morris (MO) has had quite a run and the recent decline has retraced only about 38% of its major run up from its early-2000 low at 18.7. However, so far the ability to hold last year's lows is a plus. 42.2 recent low is area to watch - if you got long again, you have a stop point that makes sense - just under 42.2, say 41.7.

 
 
  John Seckinger   7/1/02,  11:40:37 AM
It is interesting to note that the Dow is trading relatively "responsively" (within an established intra-day range - relative low and high set within first 25 minutes) while the Nasdaq has performed an "open test-drive" (soon after opening - 20 minutes - tests levels higher before reversing quickly without looking back).

 
 
  Leigh Stevens   7/1/02,  11:34:09 AM
Subscriber QUESTION: "I watch the VXN, and I have been seeing some wild action, it dropped 5-points like it was nothing...how does this occur? "

RESPONSE: If Nasdaq 100 index (NDX) options pricing changes suddenly the VXN volatility index can also drop rather quickly. The Nasdaq 100 is a pretty volatile index - pricing can get wild at times. Then, when the volatility diminishes, the drop in VXN can be fairly sudden too. However, that sudden Friday drop was more than we've seen in a while.

 
 
  Jonathan Levinson   7/1/02,  11:29:39 AM
FWIW, Nasdaq declining volume is currently 10x advancing volume.

 
 
  Jonathan Levinson   7/1/02,  11:22:37 AM
Although I promised myself not to watch it, the TRINQ is just all over the map- a moment ago it was reading 4.31, which made sense as the COMPX printed new lows of the day, and now it's at .17, literally in the blink of an eye. This would be the part where young Skywalker switches off the targeting computer, and tells Wedge that he's going to eyeball it.

 
 
  Jim Brown   7/1/02,  11:22:01 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I think we can safely lower our stop loss on the open market SHORT signal. Let's change it to our entry point of OEX 494 (SPX 996) just in case a rebound appears out of nowhere.

 
 
  John Seckinger   7/1/02,  11:18:27 AM
The NYSE Utility Index is one of the rare outperforming sectors on Monday. Currently higher by 0.76 at 258.35, this index might complete a three-day winning streak for only the second time since March. The 22-DMA still remains higher at 265. Where is the cash coming from? Most likely selling within Pharmaceuticals and Biotech sectors.

 
 
  Jonathan Levinson   7/1/02,  11:03:48 AM
What are the best options to play if I think the Dow Jones Industrial might tank over the 4th of July? I'm not looking for strike prices just options that offer sufficient liquidity and smaller spreads.

That would be the DJX. DIA has recently become optionable, but the DJX should have better liquidity and therefore tighter spreads. Neither is as good as the QQQ, which has the lowest premium and tightest spreads, but, alas, it tracks the NDX and not the Dow.

 
 
  John Seckinger   7/1/02,  11:03:40 AM
It seems as though longer-dated Treasuries are selling off due to the prices paid component within the ISM report. As the dollar trades near its daily lows, Gold futures are two dollars off their session lows. Therefore, a theme to watch should be as follows: Weaker dollar, Stronger gold, Weaker 30 year bonds, Weaker Dow.

 
 
  Jim Brown   7/1/02,  10:50:41 AM
ZLC comments - There have been several emails regarding ZLC this morning from different readers, all hostile because ZLC spiked $2.00 on no news. ZLC is a current put play on OIN. What we see here is not an irrational spike on no news but a strong reason for stop losses. Nobody can predict the future and just because there is no news it does not mean the news cannot come out later this week. It could be just a short covering rally, the end of an institutional sell program, impending internal announcement or simply a buy program from a fund that thinks the stock is now a bargain. The point, use stop losses. You would be looking at it now from cash and the debate would be from an entirely different perspective.

 
 
  Jonathan Levinson   7/1/02,  10:50:13 AM
I was one of the unlucky persons holding January 04, 2.5 calls. Will the options continue trading even though WCOME gets delisted?

I believe so, given that a call is a contract permitting you to buy the stock, and I'd be surprised if it contains conditions as to the liquidity or listing for that stock. But, I'd suggest contacting the CBOE and passing the question along to them.

 
 
  Jeff Bailey   7/1/02,  10:48:11 AM
Quest Diagnostics (DGX) $81.61 -5% ... Link under some selling pressure today. No news, but company offers a broad range of clinical laboratory testing services used by physicians in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions.

Will note "bearish triangle" with past trade at $85 and trade at $80, then $79 presents further trouble technically. Current vertical count is bearish to $74.

 
 
  Jonathan Levinson   7/1/02,  10:36:07 AM
Having just resisted the urge to buy a whack of WCOME shares at .07 or .08, please keep in mind that WCOME has not "bounced" yet today, and despite the massive volume, is finding sellers in large supply. We're not in business to gamble, and it was that thought that kept me out. Note that some traders made money on Enron and Halliburton and Providian (thanks, Jim), but I've learned to stick to my plan. I prefer to make my money the "old fashioned" way, trading indexes and/or sectors using s/r lines and market internals and fundamentals. WCOME doesn't fit my plan, so I'm staying out.

 
 
  Leigh Stevens   7/1/02,  10:33:33 AM
Technical Analysis NOTE: "Definition of a bullish/bearish hook reversal: 'Consider an uptrending market, consisting of several days with generally higher highs, and higher lows; if the most recent day has a higher high than the previous day's high, and a higher low than the previous day's low, and if it closes lower than the previous day's close, it is a bearish hook reversal, and suggests that the market might turn lower the following day. Analogously, a bullish hook reversal occurs in a downtrending market. In this case, the most recent day has a lower high and lower low than the previous day, and closes higher; this formation suggests that a local low might be in place.' "

RESPONSE: Yes can see that its also similar idea to a "key reversal" up or key reversal down; e.g., 'key reversal down' - a higher high in an uptrend, followed by a close below the prior close - leaves out consideration of the low being lower than the prior low. (I consider this definition to be overly loose & consider reversal to be more "key" in its action if subsequent bar closes above/below the prior Low/High.)

Edwards & Magee state that a "hook day" is a trading day in which open is above/below prior day's high/low and the close is below/above prior day's close with a narrow range. This is basically the same idea as first definition. I can see where the "hook" idea comes in what they describe.

 
 
  Jonathan Levinson   7/1/02,  10:28:12 AM
A veritable fireworks display from WCOME on level II. Huge volume is trading at .07 to .09 per share, and it's unfortunately throwing off all the market internals.

Price on the COMPX is sitting at the lower end of the 1440-1450 congestion area, but there's just not much to celebrate today, and I expect price to continue its slide. The QQV is up approximately 1.5 on the day, catching up a little on Friday's large 3+ point decline.

 
 
  Jim Brown   7/1/02,  10:21:52 AM
Window stripping is now underway after the failure of the indexes to break even minor resistance this morning. Funds that stashed their cash over the weekend are now trying to revert back to cash before the holiday. The Dow is struggling to remain positive and could be the only thing preventing a major dip here. The beacon of hope is MMM which is up +4.81 on the day. This is giving the Dow almost a 35 point boost. Without MMM the current numbers could be significantly different.

 
 
  Jeff Bailey   7/1/02,  10:14:25 AM
Biotech Index (BTK.X) 332.87 -4.59% ... sector loser this morning. Alkermes (ALKS) $7.43 -53% hit lower Link after Johnson & Johnson (JNJ) Link received a non-approval letter from the FDA related to its New Drug Application for Risperdal Consta long-acting injection. Resperdal Consta uses Alkermes' Medisorb drug-delivery technolgy. If approved, Risperdal Consta will be manufactured by Alkermes.

 
 
  Jim Brown   7/1/02,  10:05:51 AM
Internals are weakening after the neutral ISM and slightly negative construction spending reports. If you are not short now would be the time as resistance appears to have held.

 
 
  Jeff Bailey   7/1/02,  10:05:18 AM
ISM Index was 56.2% in June, slightly better than the 55.5% consensus. The orders index slipped to 60.8% from May's 63.1%, but still quite strong.

The ISM employment index was up to 49.7% from 47.3%, which could bode well for Friday's employment report. The prices paid index jumped to 65.5% from 63.0%, which could be a point of some concern, but most likely will not attract much attention given the lack of corporate pricing power at present.

 
 
  Jeff Bailey   7/1/02,  10:03:11 AM
Construction Spending fell -0.7%, which was less than the 0.2% consensus.

Dow Jones Home Construction Index (DJUSHB) 385.26 +1.65%.

 
 
  Leigh Stevens   7/1/02,  10:01:47 AM
Subscriber QUESTION: "ZLC gets slammed big time on Friday with high volume, this morning it is up more than a buck! I'm holding puts and not liking the action one bit. No news that I can see to get it moving this quick.Any thoughts on what might be happening here? "

RESPONSE: Doesn't look like much is "happening" with Zale Corp (ZLC), from a technical perspective. Recent consolidation looks like a bear flag prior to another downswing - with an objective to the 34-34.60. I don't have objectives lower than that based on what I see with the chart right now. However, if stock climbed above 38, particularly on closing basis, this action would suggest ZLC was reversing back to the upside.

 
 
  Jeff Bailey   7/1/02,  10:01:36 AM
Inamed Corp. (IMDC) $24.80 -8% ... stock down after CEO resigns.

 
 
  Jim Brown   7/1/02,  10:00:56 AM
Volume is slowing as we near 10:00 and the ISM report. This does not normally give us much direction but with the market searching for something to hang a bid on this could have more importance.

 
 
  John Seckinger   7/1/02,  9:57:09 AM
Curious to see if this pattern holds true AFTER the ISM report: Dollar higher, oil lower, bonds lower, gold lower, Dow higher. Of course, this pattern would remain intact if ALL indicators traded opposite from their current trend (e.g. Dollar lower, oil higher, bonds higher, gold higher, and Dow lower).

 
 
  Jim Brown   7/1/02,  9:56:07 AM
The Russell-2000 is crashing this morning as stocks that were bid up on Friday get sold off this morning. The RUT dropped almost -5.00 before recovering slightly. The OEX/SPX are nearing their end of day resistance levels from Friday of 493/994. If they are going to roll over this morning this is the range where we would expect it. The Dow does not have significant intraday resistance until 9363, the 50% rertacement of the gains made from Sept to March highs.

 
 
  Jonathan Levinson   7/1/02,  9:53:41 AM
WCOM, now trading under symbol WCOME, has traded over 282,000,000 shares so far, and is showing a day range of .06 to .15. This is throwing off the TRINQ, and I won't be relying on that indicator today. The market internals should be read with a grain of salt today due to this aberration.

 
 
  Jeff Bailey   7/1/02,  9:52:55 AM
ICOS Corp. (ICOS) $16.43 -3.47% ... today's trade at $16.45 is fresh 52-week low. P/F chart looks defensive with bearish count of $12. Link

Put traders may want to look at the Aug $17.50's (IIQTW) $2.90 or Aug $15 (IIQTC) $1.75. Just 1/2 positions here as group is "oversold" but this one look lower. No stops, target $13.05

Note: I don't like to short/buy stocks that trade $13. Did it once and won't do it again.

MACD on daily interval threatening to roll and below zero level. Link

 
 
  Jonathan Levinson   7/1/02,  9:46:12 AM
Down volume is beating up volume 6.7:1, as the TRINQ stays buried at .17. I would expect a very high TRINQ with this ratio of down- to up volume. It could be heavy trading in WCOM that is skewing the indicator.

 
 
  Jeff Bailey   7/1/02,  9:40:01 AM
June ISM index will be released at 10:00 ET; MARKET is looking for a small decline to $55.5% from May's 55.7%.

May's construction spending will also be reported, a 0.2% gains is forecasted, matching April's increase.

 
 
  Jonathan Levinson   7/1/02,  9:40:00 AM
COMPX 1450 will be the first support level to watch, followed 1435. The initial gap down violated the uptrending channel that we were watching from Friday, and I expect 1460, former weak support, to act as weak resistance. Much stronger resistance can be found at the 1478-1483 range, where price tried but couldn't make it on Friday after several hours of struggling. New lows are printing as I type, with the TRINQ at .18 in the opening chop.

 
 
  Jonathan Levinson   7/1/02,  9:33:02 AM
Massive TRINQ reading of 7.48 as the COMPX opens down- this is not a clear signal, just opening volatility that is smoothing out as I type.

 
 
  Jeff Bailey   7/1/02,  9:32:00 AM
Market Internals There was some slight improvement made from Friday's trading to my key market internal indicators.

Most of the Bullish % indicators edged higher and the very narrow Dow Industrials Bullish % ($BPINDU) did see a net gain of, enough in fact to have this indicator reversing into "bull alert" status at 30% (Thrusday's reading was 26.6%). In essence 9 of the 30 Dow Components are currently showing buy signals on their p/f charts. Link This gives BEARS in this part of the market and perhaps some of the larger-caps a chance to assess risk in trades they hold, with a slight tint toward the bullish side. If holding a put/short position on a stock that comprises the Dow Industrials, it is helpfuld to "classify" the stock and perhaps make some sector associations as it may also hint of what money is doing in a corresponding sector.

 
 
  John Seckinger   7/1/02,  9:24:24 AM
Merrill Lynch lowers their 12-month target for the S&P 500 to 1050 from 1200, saying their Sell Side Indicator are deep into "sell" territory. The firm notes that a capitulation is nowhere in sight.

 
 
  Jim Brown   7/1/02,  9:15:10 AM
Pivot Trade Signals
Futures are mixed with the Dow indicating a positive open after MMM raised guidance from $1.25 to $1.33. Market commentators are struggling to find something to spin this morning in light of the scarce news for a holiday week. The ISM numbers are due out at 10:AM as well as the Construction Spending.

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.

 
 
  Leigh Stevens   7/1/02,  9:09:14 AM
Pre-Opening, Stock INDEXES - Good Morning!

Index Futures trading: S&P 500 > +0.90; Dow Industrials > +25.00; Nasdaq > -2.00

 
 
  John Seckinger   7/1/02,  8:59:26 AM
In morning news, eight of the top bond firms in New York now predict the Federal Reserve will wait until next year to raise interest rates, twice as many as one week ago. Among the explanations: The unemployment rate has not peaked and began its descent. NOTE: Employment figures are released this Friday, including the unemployment rate.

 
 
  Leigh Stevens   6/28/02,  9:50:59 PM
The Market Monitor from Friday, 6/28 has been archived on Link

 
 

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