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  Jim Brown   7/2/02,  5:11:53 PM
Pivot Trade Wrap
Bad Day For the Bulls - The indexes ended down near their lows. The S&P closed very near to the 944.75 post 9/11 intraday lows and could be poised to lead tomorrow. This is very critical. If the 944 low fails then the retest of the 9/11 lows have failed for every index but the Dow. Its low was 8063. This would setup another possible series of drops with no target in sight. At least with the 9/11 reaction lows below us we had something to shoot for. Traders kept consoling themselves with the hope that the misery would stop when those lows were hit.

Trading on Wednesday is likely to be erratic. Because of the two days of significant drops this week the odds of another triple digit loss are slim. Buyers tried to buy the dip today but were unsuccessful in maintaining the gains. They will also try to buy any dip tomorrow and shorts will also cover to avoid event risk. Their risk is that there may not be any attack and the markets could explode on Monday at the open.

Traders are faced with a quandary. Longs risk an attack and a repeat of the 9/11 scenario. Shorts risk no attack and a limit up gap open. Either way option traders could lose 100% of their investment. Just being flat over July-4th is not enough. With many celebrations being held over the weekend that same event risk exists until the July-8th open. The only prudent course of action is to remain flat. Lost profits are not the same as lost capital. As long as you have capital there is always another trading day. See you Wednesday!

 
 
  Jeff Bailey   7/2/02,  5:09:11 PM
Polycom (PLCM) $10.90 -1.97% ... stock was halted after-hours trading as company guided lower on Q2 saying revenues look between $124-$126 million and pro forma EPS of $0.13-$0.14 versus consensus of $140.5 million and $0.20.

Stock resumed trading at $7.90 (-27% from close). Link

Stock was profiled as bearish at premierinvestor.net on 06/27/02 at $11.80 and would be looking to lock in bearish gains either in post-market, or open of trading tomorrow.

 
 
  Jeff Bailey   7/2/02,  4:21:10 PM
Advanced Energy (AEIS) $19.42 -5.63% ... Jeff: I'm short AEIS from 21.60. Learning to count, I see bearish vertical to 10-12. Am I close?

Yes... I have bearish vertical count of $11 (column of O's from $37-25). Link

Will also note the spread-triple-bottom sell signal at $23. Professor Davis' study under bear market conditions from $23 is profitable 86.5% of the time, for an average gain of 24.9% in 4.6 months.

As such, a 24.9% decline from $23 could have trader targeting $17.27 near-term. The vertical count of $11 gives hint there's enough room to meet Professor Davis' study from chart pattern.

Remember... according to Dorsey/Wright and Assoc., semiconductor bullish percent is "bear confirmed" at 16.27% so "oversold" on longer-term basis. Would look to lock in at least some gains if $17.27 were achieved near-term.

 
 
  John Seckinger   7/2/02,  3:57:41 PM
John Seckinger mentioned the rumor of a "coupon pass" maybe possibly issued this afternoon or tomorrow. Would you tell me about this and how it would affect the market.

RESPONSE:

A coupon pass is important to the markets because, via open market operations, the Fed provides sufficient liquidity to the banking system. Buy buying securities from a dealer, the dealer’s bank sees its reserves increase by the amount the Fed paid for the securities. This kind of outright purchase is different from repurchase agreement, when the dealers agree to buy back the securities from the Fed on a certain date. The definition of "pass" comes from the Federal Reserve buying T-bills from dealers; thus “passing” the bill. Of course, if the Fed failed to supply enough liquidity, the fed funds rate would rise as the supply fell. Conversely, if the Fed supplied too much liquidity, the fed funds rate would fall as supply outstripped demand. Open market operations are conducted by the Fed's Domestic Trading Desk (a.k.a. the Open Market Desk) at the New York Fed. Of course, if traders see the Fed buying coupons there may be an expectations regarding a coupon pass with a longer maturity; thus giving a bid to longer dated bonds (10-year or 30-year issues). Then, if bonds rise capital might be raised by selling equities. To reach further, dollar denominated issues might find a bid and the $USD could rise as well.

 
 
  Jonathan Levinson   7/2/02,  3:45:35 PM
Without WCOME's advancing volume, we're looking at worse than 6:1 decline/advancing volume ratio. The QQV is up near the top of its day range, up 2.5. The QQQ's are a few cents off the lows of the day, as is the COMPX. With thin volume today and for the rest of the week, the volatility could take us in both directions. Longer term direction for COMPX looks... well, just select the daily or weekly view on your COMPX chart.

Gung ho readers are looking at intraday charts are trying to pick the short term tops and bottoms. This is risky business, particularly on thin volume. As always, trade with tight stops.

 
 
  Jim Brown   7/2/02,  3:43:32 PM
Pivot Trade Signals
Now would be the time to go long if you so desire. The SPX failed to make a new low and we have an intraday triple bottom. It is still very high risk but it is clear that many readers are determined to go long. With 14 min until the close anything is possible.

 
 
  Jim Brown   7/2/02,  3:35:35 PM
Pivot Trade Signals
Many readers are getting itchy trigger fingers here and want to go long. Patience! I do too but not at the risk of a 100% loss. Have you ever had $100K in OEX calls and awakened to S&P futures lock limit down? I have and it is not a pleasant experience. Whether it is $1000 or $10,000 it is real money and a terrorist event over the holiday would not only be a tragedy but could represent a 100% loss. The markets are drifting back the lows of the day with the Nasdaq appearing ready to crack. The S&P is pressing to 944 again. The bullish sentiment from 1:PM has evaporated and volume is drying up to nothing. This is not the environment to be long. I could see making a lottery play on an opening dip tomorrow but not today. Be patient, there is plenty of blue sky above us once this thunderstorm passes.

 
 
  John Seckinger   7/2/02,  3:34:28 PM
The Semiconductor Index heads back towards its intra-day low while The Pharmaceutical Index is slightly off its worst levels. Both indices will most likely be posting multi-year low settlements. With light volume expected for Wednesday, things should be even more interesting as bears will most likely attempt to go for the jugular.

 
 
  Jeff Bailey   7/2/02,  3:31:58 PM
The 3:15 PM intraday update has been posted. Link

 
 
  Jeff Bailey   7/2/02,  3:29:41 PM
UST Inc (UST) $34.05 +0.29% ... looking for the door on this little rally.

 
 
  Leigh Stevens   7/2/02,  3:27:24 PM
INDEX Comments - Final Hour: SPX looks like it will be closing within close proximity to prior 945 Sept. low - this is the one that Art Cashin was talking about when he said that SPX "better not take out 944" - referring to the 944.75 low after the 9/11 panic. So, close and any weakness closer to the close or at/near the opening tomorrow will take it right thru 945 - volume is going to be thinning out tomorrow so it could be quiet it could also be volatile because of it.

 
 
  Jeff Bailey   7/2/02,  3:24:20 PM
UST Inc. (UST) $33.90 -0.14% ... very defensive here and looks like way too big of a seller want's out before the close. Looking for the door on this one and getting flat before the close.

 
 
  Leigh Stevens   7/2/02,  3:22:42 PM
INDEX Comments - Final Hour: Nasdaq rally attempt was weakest as would be expected. In terms of the stocks - final hour weakness has INTC closest again to its daily lows, as is true of MSFT, CSCO, QCOM, ORCL and SUNW. QQQ looks like it will retreat further toward my 23.3 next target.

 
 
  John Seckinger   7/2/02,  2:40:22 PM
As the Dow flirts with its opening price (9104), Treasury Bond Futures currently trade 12 ticks underneath their intra-day high. Gold meanwhile is down over a dollar and near its intra-day low. It is nice to see "normal" asset allocations taking place, since they can significantly help a trader throughout a trading session.

 
 
  Jonathan Levinson   7/2/02,  2:40:06 PM
COMPX market breadth has improved a lot on this upmove. Discounting WCOME's volume, we have declining volume beating declining volume by just over 2x. The QQV is holding its gains at 1.26. The COMPX is stuttering at the 1380 level which has been acting as resistance, and the shorter intraday 10(5) stochastics are overbought as the longer intraday stochastics have both crossed up from overbought. The day high of 1396 seems a long way off.

 
 
  Jeff Bailey   7/2/02,  2:33:25 PM
CIT Group (CIT) $22.53 -2.08% ... trying to battle back to today's IPO offering price of $23. S&P just now upgrading debt to A from BBB+.

 
 
  John Seckinger   7/2/02,  2:08:19 PM
Regarding event risk over July 4th weekend; it is possible that currency traders have already priced in some risk within the dollar and that a relief rally could take place after a hopefully safe holiday. Moreover, it is unusual for the dollar to find a bid as equities decline (giving reason to believe the short-term bid may continue). Also, the likelihood of Bank of Japan continuing their yen sales for dollars should further give bulls a reason to get excited over the near term.

 
 
  Leigh Stevens   7/2/02,  2:02:00 PM
INDEX Comments: Nasdaq meanwhile can barely manage a "dead cat" bounce. QQQ has stabilized in area of its lower envelope line on the hourly chart - 5% under 21-day MA. I would not buy first rally attempt in QQQ, wait for second - if any upside potential develops, it may not be so apparent in a 1st. oversold type rebound. Key QQQ stocks have stabilized barely - QCOM looks weak again, MSFT holding its own, as is ORCL; however, Cisco has gapped lower on revised earnings, but held its prior Sept. low. INTC is at low end of its downtrend channel and got back to 1998 - yes, 4 years ago - lows.

 
 
  Leigh Stevens   7/2/02,  1:54:14 PM
INDEX Comments: OEX continues to rebound from prior 571 low which is bullish - it is also the area of my 3 percent lower envelope line on hourly SPX (mov avg length: 21) - from this 'band' area, the prior 3 OEX rallies have had their starting points.

 
 
  Jim Brown   7/2/02,  1:52:29 PM
Retail traders are buying the dip and shorts are being forced to cover to protect profits. I repeat, I think this action is bullish BUT, I think it is suicide to take a long position ahead of a huge unknown over the holiday. I don't think there is enough reward to warrant trying to trade this move before the close. Use your own judgment.

 
 
  Jeff Bailey   7/2/02,  1:48:56 PM
UST Inc. (UST) $34.00 +0.14% ... stock gave back intra-day gains after a rather large block of stock was sold from $34.34-$34.27 (about 20K shares). Short-term, I'd want to see a move back above $34.10 to warrant holding over night. There was a bidder in here at current levels earlier today at $33.96-$34.00 and UST bull needs some help here.

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

 
 
  Jim Brown   7/2/02,  1:46:16 PM
Jim, Currently holding oexaug450P's, purchased couple of weeks ago. What strategy would you suggest, if any? J. Mac

Tough call. The July earnings cycle could give the markets hope or tank them completely. I am long term bullish but August falls right in the middle. My crystal ball is cloudy since the markets could decide a 2003 recovery is in the cards and start buying the July earnings winners. All of this is pure speculation. The attempt to rally here at SPX 945 IN FRONT OF THE HOLIDAY RISK is very encouraging. Of course it could just be the shorts trying to go flat and protect against a non-event rally on Friday/Monday. If I were profitable in the August position I would be looking to exit and reestablish on weakness next week. Just my opinion.

 
 
  Jeff Bailey   7/2/02,  1:39:19 PM
The 1:PM intraday update has been posted. Link

 
 
  Jonathan Levinson   7/2/02,  1:36:46 PM
Breadth has firmed a bit on the COMPX. Using our proprietary WCOME-delisted breadth indicator, declining volume is now a little more than 4x advancing volume. The TRINQ is at 2.14, despite over 365M "advancing" shares from WCOME. With the QQQ flirting with 24 support in a 24-24.30 range, the breakout move should be huge in either direction. On the down side of the ledger, we have all the ills afflicting the COMPX and the broader US markets, and I strongly suggest a read through Buzz Lynn's Market wraps from this and last week, among others. On the positive side, the COMPX has come down and is quite oversold. My personal feeling is that oversold is a matter of degree, and the sentiment indicators could get a lot worse. But, there could be a bounce any time, which I will take as an opportunity to short.

 
 
  John Seckinger   7/2/02,  1:36:36 PM
Checking corporate bonds reveals a downgrade on General Mills (GM)from stable to negative, partially explaining share price weakness (currently down $1.19 at $49.63).

 
 
  Jim Brown   7/2/02,  1:31:05 PM
Nice buy program that came through when the SPX broke below 946. The four major indexes, Dow, Nasdaq, S&P and OEX all saw a huge spike in ticks but the Russell did not even show a blip. This indicates a big cap basket of stocks was bought. With no event risk I would be a strong buyer on any bounce from here.

 
 
  Jim Brown   7/2/02,  1:16:59 PM
Going down? The SPX is headed back down for another retest of that 944.75 number and the outlook does not look good. Support below that is 932, the Oct 1998 low.

 
 
  Jim Brown   7/2/02,  1:09:10 PM
Any doubt about the severe oversold conditions should be erased by looking at the TRIN which has rocketed to 4.68 intraday. The VIX at 34.50 is also rising. The advance/decline ratio is very negative at .28 representing nearly a 4:1 win for declines.

 
 
  John Seckinger   7/2/02,  1:07:57 PM
TYCO (TYC) conference call details: The board is committed to a BBB rating, which is the lowest investment grade and critical for establishing loans and investor confidence. It is reported that accounting is accurate (via outside accountants) and that the SEC has not found anything material during a recent check. Shares are down $1.20 at 12.55.

 
 
  Jim Brown   7/2/02,  1:05:20 PM
Ford just announced sales that fell -10% for June and this is not going to be received well by the markets. GM is bringing back zero percent financing and with inventory piling up again they are worried about the second dip recession coming to pass. Looks like another shorting opportunity for day traders as the indexes begin to roll over on this news

 
 
  Jeff Bailey   7/2/02,  12:49:44 PM
Affymetrix (AFFX) $20.70 -10.7% ... bears in this previously profiled bearish trade are getting some redemption today. Need a break at $19.00 for their target of $14, but broader market and sector now having supply take control. Link

 
 
  Jonathan Levinson   7/2/02,  12:48:56 PM
Internals have worsened on the COMPX. Discounting 315M "up" shares of WCOME, we have advancing volume of 183M and declining volume of 844M. 22 new COMPX highs to 240 new COMPX lows. The QQV has even given back a bit of its gains, now up 1.63 on the day. We could be due for a bounce here, and appear to be getting one as I type, but it should be seen as a shorting opportunity. The COMPX has not suddenly turned profitable at these levels, and in fact has just sustained some technical damage, trading below key support lines. I would consider going long only as an aggressive lottery play here, very short term, or better yet, as a hedge against ongoing short positions.

 
 
  Jim Brown   7/2/02,  12:42:11 PM
Thank You, Thank You, Thank You, Thank You, Thank You, Thank You, Thank You, Thank You, Thank You......etc.
Don't think I could thank you enough! Multiple doubles in the past week! OIN is absolutely the best investment web site on the net....even at twice the price (don't get any ideas...[BIG GRIN])! Keith

Amazing how fast those trades 2 point losers are forgotten!! Thank you.

 
 
  Jim Brown   7/2/02,  12:37:20 PM
Alan Knuckman at Preferred Trade Live reports that the two heaviest strikes traded in the AutoTrade program for the last signal were the OEX 500 Put bought for $16 and sold at $31.60 and the OEX 495 Put bought at $13.50 and sold at $26.80. Again, congratulations to those AutoTrade participants!

 
 
  Jim Brown   7/2/02,  12:33:57 PM
Pivot Trade Signals
If it was any day but today the markets would be screaming to go long here. The SPX 944.75 level is still acting as support and could be a tradable bottom. ("COULD") Still, even if we get a +100 point Dow move here there is danger in being long over the holiday. This means any bounce could be sold at any time. Aggressive traders may want to try and daytrade this bounce but we are staying flat into the holiday. Fresh off a big win we do not want to give it back trying to trade the snap back. If I had to pick a trade it would be to short any bounce while looking for a sell off into the close.

 
 
  John Seckinger   7/2/02,  12:31:01 PM
Bond Futures now higher by 28 ticks at 103-26, extremely close to our short-term objective. Therefore, makes perfect sense to look for an allocation out of Treasuries and back into equities over a short-term period.

 
 
  Jim Brown   7/2/02,  12:26:27 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We are out! The open SHORT signal was stopped out at 12:22:02 when the OEX traded above the 471 stop. (SPX 951.12, DIA 90.23, SPY 95.47, DJX 90.07, NDX 971.86, COMPX 1366.22) The SHORT signal cover a 23 point move from 494 to 471. Congratulations to everyone who was along for the ride!

 
 
  Leigh Stevens   7/2/02,  12:24:59 PM
INDEX Comments: SPX/OEX/DJX - rally here comes as DJX approached its prior low. OEX attempting to climb back to area of its prior low at 471. Worth watching. TRIN is still very high - the key is see if TRIN starts coming off its 3.36 level.

 
 
  Jeff Bailey   7/2/02,  12:24:44 PM
Haven't seen this before... CIEN has Jan. $2.50 puts (EUQMZ), I don't remember ever seeing $2.50 strikes before. If holding the Previously proviled $7.50 or $5 puts, could roll out with gains in those, then simply take profits and roll to the Jan. $2.50 puts and reduce risk in your account. Then forget about the Jan. $2.50's, set an alert at $0.75 on CIEN and be done with it?

 
 
  Leigh Stevens   7/2/02,  12:21:16 PM
INDEX Comments: INTC (intel) - a key stock here, as the slide in the Semiconductors is an important reason that keeps the Nasdaq falling. - INTC at 16.78 is of course well under its 18.9 Sept bottom.

INTC is now quite near its low of June 1998 at 16.5. There was also a '97 weekly low in the 15.8 area. Net, net, the 16.5 - 15.8 area is a key technical area for Intel.

 
 
  Jeff Bailey   7/2/02,  12:18:07 PM
CIENA (CEIN) $4.16 +1.18% ... Good morning to you Jeff!......just wondering about cien?..whats up....still holding jan5puts....and with the $fop falling...nasdag, qqqs, and dix also going down...it is hanging tough?....I thought the wcome thing would help too, but it isn't. Are mf managers thinking this could be good for cien?...What are you thoughts here? I still think lower and $0.50 bearish count from last January's sell signal at $13.50 and resulting column of O still in play. Link

May be seeing some institutional short-covering, but lower highs last couple days hints of some sellers too.

Near-term, keep an eye on the Fiber Optic Index (FOP.X) 40.39 -5% Link and look for violation of the lows to have CIEN lower as bids get pulled.

 
 
  Jim Brown   7/2/02,  12:15:30 PM
The SPX is nearing the 944.75 level, currently at 946.55, and all the indicators are extremely oversold. Despite the negative sentiment surrounding the holiday there could be some bargain hunting at the 944.75 level. Tighten those stops and let's go out a winner today!

 
 
  Jim Brown   7/2/02,  12:12:49 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's change the stop loss on the open SHORT signal to 471. (SPX 950) This is just over the last intraday high.

 
 
  Jeff Bailey   7/2/02,  12:10:48 PM
Treasury Watch Treasuries at best levels of the session. Benchmark 10-year YIELD lower yet at 4.745%. Little cash available to defend stocks as cash flows to perceived safety of Treasuries.

 
 
  Jeff Bailey   7/2/02,  12:06:13 PM
Cardinal Health (CAH) $51.06 -10.89% ... Lots of questions regarding today's price action. Only thing I saw from yesterday was "trader talk" in regards to ... CAH past accounting/audit history. CAH dropped Andersen this year, but the company changed auditors from Deloitte & Touche to Andersen after the 1999 fiscal year. Though the changes did take place in regards to auditors, there's really no news/confirmation that there is any negative news regarding financials.

I was bullish CAH above the $67 level, but turned more cautious when stock broke trend and triple-bottom at $67. Should have just turned and shorted, but healthcare sector was too strong at that time. Something looks wrong here. Bearish vertical count of $54 exceeded today. Link

 
 
  Leigh Stevens   7/2/02,  12:06:02 PM
INDEX Comments: SPX/OEX/DJX - As the S&P indices move closer nearer to the low end of my hourly chart downtrend channels, the intersection levels - not to be confused with "support" - or potential next downside targets are:

SPX > target to 937; OEX > target to 465 area; DJX > a potential next objective is to 87.7

"Support" being of course an area where, from past performance or price action, there is reason to anticipate potential buying interest coming in again. This statement is not true in the case of downside (or upside) projections, based on chart or technical patterns.

 
 
  Leigh Stevens   7/2/02,  12:01:09 PM
INDEX Comments: COMP/NDX/QQQ - As the Nasdaq indices get nearer to the low end of my hourly chart downtrend channels, its worth mentioning the intersection levels - not to be confused with "support", but they are downside targets.

COMP > next target to 1335 area; NDX > target to 932; QQQ > potential objective is to around 23.3.

 
 
  Jim Brown   7/2/02,  12:00:34 PM
Reports from the futures pits indicate that nobody is buying other than to hedge current stock positions and covering shorts before the weekend. Volume is shrinking and only about 75% of traders are still at work. Nobody wants to go into the holiday long OR short. Most traders are planning to be flat by the close of business today. That could be a mixed blessing. If they are flat they will have to cover since most are short already.

 
 
  Jonathan Levinson   7/2/02,  11:57:55 AM
With 262M shares trading as "upvolume" on WCOME, and total upvolume of 394M on the COMPX to 683M shares of downvolume, we are looking at declining volume more than 5x advancing volume, not counting WCOME. This is a bad day any way you measure it. The QQV, now up 2.59, still is not at any significant resistance. Lastly, the Put-to-Call ratio between .84 and .95 isn't overwhelming in either direction. The QQQ, somehow, seems well positioned to head lower still on the basis of these breadth and broader market sentiment indicators.

 
 
  Jeff Bailey   7/2/02,  11:56:56 AM
Tobacco stocks bucking the broader market trend today after last week's drubbing from favorable plaintiff cour rulings.

Technically, I like UST Inc. (UST) $34.14 +0.55% as a bit of a laggard Link and using MO Link and RJR Link recent action to look for UST to "pop" from its base to short-term trader's target of $36. Stop would be under today's low in UST.

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

 
 
  Jim Brown   7/2/02,  11:56:14 AM
We need to look at the SPX as the leading indicator now. The post 9/11 intraday low was 944.75 and the Oct-1998 low was 932.32. The 944.75 low could be seen as the last ditch double bottom indicator since the OEX, COMPX and NDX have already broken their respective 9/11 levels. If the SPX 944.75 level fails then the Dow at 8063 is the only post 9/11 intraday low left. The Dow has disconnected from the broader markets and is lagging. Hopefully we will not have to wait for it to catch up.

 
 
  John Seckinger   7/2/02,  11:54:34 AM
Semiconductor Index continues to come under pressure (down 13% over last few days) as broader markets extend losses. Telecom, Drug, and Utility issues also remain soft. Furthermore, Transportation Index begins to weaken and is approaching its 22, 50, and 200 DMA's.

 
 
  Leigh Stevens   7/2/02,  11:51:22 AM
INDEX Comments: SPX at 949, is nearing its Sept. low at 945.

 
 
  Jim Brown   7/2/02,  11:51:12 AM
All the major indexes now entering the free fall zone. They tried to hold them and failed. Any support estimates now are just pure speculation. Keep those stops tight!

 
 
  Leigh Stevens   7/2/02,  11:48:38 AM
INDEX Comments: SPX/OEX/DJX - All have been consoldiating a bit after the first drop from the opening - however, patterns on the 30 min charts especially, looks like small bear flags which suggests that another downswing is ahead.

 
 
  John Seckinger   7/2/02,  11:30:48 AM
Treasury Bond futures, currently up 19 ticks at 103-17 (32 ticks equal one point), are near the highs of the session but getting close to intermediate resistance levels. Objective on the upside is for a test of 104-00, while a break underneath 102-28 could become a catalyst for more selling pressure within Treasuries. Note: higher prices equates to lower yields.

 
 
  Jim Brown   7/2/02,  11:11:24 AM
The OEX low from last week and the post 9/11 low is 471.27. This could provide a minor pause but with the NDX dropping like a rock it may only be temporary.

 
 
  Jim Brown   7/2/02,  11:06:52 AM
NDX 974 just failed and you can see the impact to the other indexes.

 
 
  Jeff Bailey   7/2/02,  10:58:01 AM
Semiconductor Index (SOX.X) 351 -4.42% ... threatening the Sept. 27 low of 343.93. Link

The $20 box is conventional used by Dorsey/Wright and most institutions. Vertical count currently bearish to $260.

According to Dorsey/Wright, semiconductor sector is "bear confirmed" and oversold at 12% bullish.

Intel (INTC) $17.23 -1.76% may be key stock for sector traders to monitor/understand. Trade at $19.50 would get stock back on a "buy signal" and contribute positive to bullish %. Bearish count of $22 has been exceeded. Link

Applied Materials (AMAT) $17.54 -2.7% ... also a "key stock" in sector. Would take a trade at $21 currently to get stock back on a "buy signal" and contribute positive to bullish %. Vertical count bearish to $10. Link

As such, bullish/bearish traders can use to understand potential risk/reward in sector and understand % levels if shorting.

 
 
  Jonathan Levinson   7/2/02,  10:57:51 AM
JL, They’re supposed to delist WCOME on Friday. Won’t you be glad to get your TRINQ back in working order!

Yes indeed. Thanks, Lowell.

The extreme COMPX decline has at least slowed a bit at the 1370-1375 level. Put holders can buy cheap out of the money back month QQQ (QAV) calls to protect profits, or can sell front month covered puts against their existing back month QQQ puts, etc. Note that sentiment is extremely negative, and yet the QQV is up only 1.18 on the day, and on a daily basis is not even at upper bollinger band resistance. The QQV daily stochastics are trying to cross back up from neutral territory. In other words, I see more room for the QQQ to the downside.

 
 
  Leigh Stevens   7/2/02,  10:51:48 AM
INDEX Comments: COMP now trading under its prior low at 1375 (last at 1374), indicating the still weak tone in tech. Nasdaq TRIN now at a 2.18 reading which is indiating still heavy selling pressure but TRIN has been coming down in last minutes - looks like short covering - Arms Index (TRIN) in Nasdaq nothing like the extremes of last night (above 6.00) which was a record reading both intraday and on a closing basis, according to my data history.

NYSE TRIN is also high at 2.56, indicating strong selling.

 
 
  John Seckinger   7/2/02,  10:49:58 AM
There is word of a coupon pass taking place with maturities ranging from 8/31/03 to 3/31/04. Also hitting the fixed income markets is news of Corporate layoffs reportedly rising 12% in June to 94,766. This figure could dampen expectations for a strong payroll report due out this Friday.

 
 
  Jeff Bailey   7/2/02,  10:46:36 AM
Intl. Game Technology (IGT) $52.84 -2.5% ... from previous bearish profile of longer-term puts for January expiration, traders/investors note today's trade at $53 is firm break of longer-term trend and spread triple-bottom sell Link

New near-term target is bearish vertical count of $48. Can lower stop to $58.

 
 
  Jim Brown   7/2/02,  10:45:30 AM
The NDX appears to be attempting to bottom at 974. According to the futures traders if 974 holds we could see the start of the short covering and profit taking. After the flurry of tech warnings and downgrades this morning any strength in the NDX would translate into the broader market. Watch this index! A break below 974 would setup another round of selling. Because the NDX is already trading in the free fall zone below 9/11 lows it is seen as a true market indicator.

 
 
  Jim Brown   7/2/02,  10:39:39 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's change the stop loss on the open SHORT signal to 475. (SPX 960) This is just over the last intraday high. Be prepared to cover at 472 or any point below if we get a bounce.

 
 
  Jim Brown   7/2/02,  10:38:17 AM
We are in "double bottom" territory, triple bottom if you count last week. The Dow is likely to pause at 9000 again and the Nasdaq should blink at 1367, the intraday post 9/11 low. This sideways action for the last 30 min could be a prelude to an attempt to rally here. Dip buyers could see a retest of the 1387/9000 area as the last stand and trigger those buys. While I remain doubtful we will lower the stop loss on the open short as we approach those levels.

 
 
  Jim Brown   7/2/02,  10:31:09 AM
The Russell-2000 is getting taken apart. Down -15 yesterday and another -8 today. The artificial run up in the new stocks added to the index is being subtracted again. The small caps are normally an area of strength when the broader markets are lagging. With the Russell leading the drop it is doubtful the big cap markets will mount any sustained rallies.

 
 
  Jonathan Levinson   7/2/02,  10:30:50 AM
I can recommend Medved's Quotetracker as well, which is offered in a registered and free version with adware. It has powerful realtime intraday charting with a slew of configurable indicators, and uses the realtime quote feed from whatever brokerage or quote service you subscribe to. I have no interest in Quotetracker except that I've been using it as my primary quote and intraday charting solution for just under 1 year.

 
 
  John Seckinger   7/2/02,  10:29:42 AM
Rumors are circulating about the Fed performing a coupon pass either today or on Wednesday. Reasons include holiday and weekend drains from the system. Therefore, the correlation to equities may become altered if the Fed decides to step in and make purchases.

 
 
  Jeff Bailey   7/2/02,  10:28:34 AM
Electronic Data Sys. (EDS) $30.75 -0.98% ... stock has gotten beaten up in recent sessions as WorldCom (WCOME) is/was large customer. EDS will hold teleconference today at 11:00 AM ET, during which Chairman and CEO Dick Brown and CFO Jim Daley will address the company's relationship with WorldCom as well as EDS's financial practices and policies. To listen-only to call www.eds.com/call

 
 
  Leigh Stevens   7/2/02,  10:27:05 AM
Subscriber QUESTION: "What are some good PC programs/online systems for real-time charting? Also, what settings do you use to setup your weekly/daily/hourly stochastics? I know you have answered this question before, unfortunately I can't find the info on your site. "

RESPONSE: No problem on repeating myself.

Real time charting that is good on cost and feature basis is Q-Charts from Quote.com, part of lycos. Their high-end "package" now includes MetaStock - however, the basic Q-charts is fine for most. Also, on the high end is TradeStation. Performance considerations suggest having a high speed internet connection for real-time quotes.

For Stochastics - I use usual default "smoothing" settings (3) and consider LENGTH to be only important variable - for Length, I use: Hourly - 5 & 21 - like them both to be overbought/oversold for best "signals"; Daily - 14 - a common "default" setting; Weekly - 8 or 13, depending on the index or stock

 
 
  Jeff Bailey   7/2/02,  10:24:42 AM
Vivendi (V) $17.75 -20.9% ... stock opens for trading here in U.S. Link

 
 
  Jonathan Levinson   7/2/02,  10:24:05 AM
Even with WCOME making a "bull run", up .01 to .07 as I type (grin) on 122M shares, advancing volume is still getting creamed by declining volume, currently 332M declining to 183M advancing. Subtract the 122M of WCOMEs, and you get the idea.

 
 
  Jeff Bailey   7/2/02,  10:20:35 AM
CIT Group (CIT) $22.25 -3.26% .... discounting a bit from IPO price of $23. Putting some selling pressure on Tyco (TYC) $13.39 -2.61% as a result of less than bullish response to the CIT offering.

 
 
  Leigh Stevens   7/2/02,  10:16:33 AM
INDEX Comments: Nasdaq Composite ($COMPX) at 1378 is trading now quite close to its 1375 prior low. If COMP takes this out, next implied support is at low end of its hourly downtrend channel well under current trading, down in 1335 area. COMP 1375 is an important area for you Nasdaq watchers.

 
 
  Jim Brown   7/2/02,  10:13:10 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's change the stop loss on the open SHORT signal to 480. (SPX 970) This is just over the last intraday high and should be safe for protecting current profits. We will move this down as the day progresses just in case there is a bout of pre-July-4th bargain hunting. Don't forget that shorts will also cover before the 4th to avoid a post 4th gap open bounce.

 
 
  John Seckinger   7/2/02,  10:11:09 AM
Banking Index trying to hold both the 22 and 50 DMA's. However, Financial issues are coming under pressure as the overall markets reversed. Utility stocks were unable to hold gains yesterday and continue to soften this morning. Particulary weak are Semiconductor stocks, falling underneath the relative low of 358 set just a few days prior.

 
 
  Jim Brown   7/2/02,  10:10:10 AM
Pivot Trade Signals
The markets are worsening and the OEX is trading at a session low. First level support(?) would be 471-472. With the markets very oversold there could be a bounce on any tick below here. Post 9/11 lows are dropping left and right and sentiment is getting worse. This sounds like a recipe for disaster but the markets tend to bounce when things look the worst. Keep those stops in place and trail them down.

 
 
  Leigh Stevens   7/2/02,  10:09:52 AM
INDEX Comments: QQQ at 24.35 trading UNDER its prior 24.4 low. NDX at 976 trading under its prior low at 980

 
 
  Jonathan Levinson   7/2/02,  10:06:03 AM
It's becoming tiresome watching the TRINQ flip and flutter as WCOME switches the Nasdaq breadth from negative to positive on moves of fractional cents. Be careful- that indicator is reflecting WCOME's trading more than anything else at this point. Note that the QQV is only lightly positive on the day, up .4.

 
 
  Jeff Bailey   7/2/02,  10:03:59 AM
Treasury Watch Treasuries marginally higher (YIELD lower). The benchmark 10-year YIELD ($TNX.X) 4.788% has slipped back below the 50% retracement level of 4.801% and hints at a still defensive market posture with cash finding its way back to this bond.

P/F chart at 0.25 box scale shows an attempt at "low pole warning" and may be early phase of some base building for YIELD. Link

 
 
  Leigh Stevens   7/2/02,  10:02:39 AM
INDEX Comments: GE , a Dow/S&P bellwether continues trading under its Sept. low at 28.50 - GE trading 28.25 currently. Prior intraday low in the stock was 27.4, but only until yesterday was there a close under 28.50 (at 28.45). Not a great sign for the OEX's ability to hang in around and/or above 480 at its Sept.low - time will tell!

 
 
  Jeff Bailey   7/2/02,  10:01:35 AM
US Dollar Index (dx00y) 106.71 +0.17% ... trying to put together 2-days of gains. Needs to build some type of base and most likely needs to get back above 108.50 level to spark interest or thoughts of any type of true strengthening. Link

 
 
  Jim Brown   7/2/02,  10:00:00 AM
They are trying to hold the S&P above the post 9/11 lows of 965. The trigger for short covering will be 969.00 but shorts are still trying to keep the lid on the bounce. IBM roared out of the gate this morning with a +1.50 move after a broker came to their defense. This move by IBM is holding the Dow in positive territory but the rumors of an impending warning are still alive. Looks like another entry point for those who expect the warning.

 
 
  John Seckinger   7/2/02,  9:57:52 AM
Pattern recognition. "Open Test Drive" in the Dow? By definition, prices take out a previous relative low (or high) and reverse back through the opening price without looking back.

 
 
  Jeff Bailey   7/2/02,  9:56:47 AM
ANADIGICS (ANAD) $5.02 -30% ... stock down after reiterating Q2 guidance, but warning on Q3, saying ANAD remains on track to pst a Q2 loss of $0.29 on revenues of approx. $23 million (consensus -0.29 and $22.78 million). However, for Q3, ANAD sees a loss of $-0.33 on revenues of approx. $21 million (consensus $-0.22 and $25.86 million). Link

If short/put ANAD, will note p/f chart is/was bearish and vertical count was $8.50. Would lock in some gains on this news.

 
 
  Jim Brown   7/2/02,  9:48:26 AM
Hi, Jim-- Since your comments yesterday re FLEX and AYE seemed to be very logical, I indulged and bought the FLEX July 7.5 puts @ 0.90 and AYE Aug 25 puts @ 1.80 when prices seemed to be turning lower this morning. FLEX then continued to surprise me with so large a move in my direction, and has nearly reached the double I had targeted with this trade. Now it has announced a conference call tomorrow to reiterate its guidance (which I recall was for lower earnings the last time it "guided"). I hate these public announcements because one cannot predict which way the mob will move the price.

Flextronics up slightly this morning on short covering after the company announced a conference call for today and affirmed earnings. This highlights the need for stop losses even on put plays that look like they are going to zero. There is always a major effort by the company and brokers to support their stock. Resistance levels this morning are 6.25 and 6.40. Readers in the put play should evaluate their positions and prepare to take profits if the stock moves above resistance.

 
 
  Leigh Stevens   7/2/02,  9:47:31 AM
Subscriber QUESTION: "Yesterday's Index Trader Sector today says you are long HHH at 22.80. Does that mean you are long HHH itself or you own calls? The only calls I see traded today are HHHKE, which seems pretty far out. I realize you tend to play larger swings in longer time frames. Does November represent the time frame you would favor for HHH? "

RESPONSE: HHH is the Internet HOLDR's trust stock - INX ($INX.X) is the actual CBOE Internet Index. I am tending more to use of the HOLDR's and iShares due to the difficulties of playing options in the Sectors. Even the ones that have some liquidity, like the Semiconductor index SOX, carry a lot of premium - those premiums tend to be high even during periods of low volatility and this if far from the case currently. If you trade options on the individual stocks in the index - you need to get into 2-3 of the stocks to hope to have a represenative play going relative to the index.

 
 
  Jonathan Levinson   7/2/02,  9:42:27 AM
WCOME is once again skewing the market breadth indicators, having racked up over 42M shares in the first 9 minutes of trading. The stock is up .003 to .063 as I type, so this will be counted as positive volume. The TRINQ is currently .41, showing an excess of buying pressure (perhaps 42M up .003?), and down volume is beating upvolume 83M to 71M. Subtract the WCOME volume from the up side of the ledger, and it paints a clearer picture of how the COMPX is doing this morning. Not too hot by any stretch.

 
 
  Jeff Bailey   7/2/02,  9:42:02 AM
Affymetrix (AFFX) $22.42 -3.36% ... today's trade at $22 has p/f chart back in column of X. Traders short the underlying now have clear stop at $26. Chart still bearish and vertical count hints at $14. Link

 
 
  Jeff Bailey   7/2/02,  9:39:07 AM
USA Interactive (USAI) $21.36 -4% ... per recent comments regarding bearishness in Expedia (EXPE) and Hotels.com (ROOM), trader's using USAI stock as tie to price action in EXPE and ROOM, will now note that USAI completed bearish count column gives bearish vertical count of $6 longer-term. That's about a 71% decline. As such, as long as proposed deal between USAI and EXPE/ROOM/TMCS is slated to go through, traders can begin using "similar" potential percentage downside to assess risk/reward in put plays on EXPE and ROOM. Link

 
 
  Jim Brown   7/2/02,  9:30:18 AM
Pivot Trade Signals
Was anybody left out of the pre-opening downgrades? Sixteen chip equipment companies plus QCOM, ANAD, MVSN, CHKP, RATL to name a few. All the PC makers were cut by Merrill who cut global PC growth from 10% to 2.5%. Cisco was cut due to flat to down networking business. Looks to be a bad day for tech stocks but how much further can they drop? The Nasdaq is very oversold but can get more oversold.

IBM has not yet warned and has only a couple days left before their time runs out. The Dow is under pressure, the Nasdaq is under pressure, the broader markets are under pressure. Still futures are not off the scale. It appears nobody cares enough to dump stocks in pre-market trading. The markets are at critical levels with the first speed bump for the Dow at 9056. The S&P is only two points away from the 965.80 post 9/11 close. Going to be another exciting day as this is the last day of the week with any hope of decent volume.

We still have an open SHORT signal from OEX 494 with a stop loss at OEX 489. We will adjust that stop once the opening volatility is over.

 
 
  Jonathan Levinson   7/2/02,  9:24:57 AM
Bond yields are down across the board, indicating buying in bonds and a continuation of the "flight to quality" from yesterday. Gold, however, is slightly down this morning.

 
 
  Leigh Stevens   7/2/02,  9:20:19 AM
ON THIS DAY in 1776, the Continental Congress resolves that the American colonies "are, and of right ought to be, free and independent States." Right on brother! Coming up on the forth, so take a moment each day and remember our wonderful but hard won freedoms. Read about the founding fathers; e.g., John Adams, Thomas Jefferson, Ben Franklin.

 
 
  John Seckinger   7/2/02,  9:13:30 AM
Case-in-point: French media conglomerate Vivendi fell as much as 40 percent after The Le Monde newspaper said the company in October 2001 tried to avoid booking a euro1.5 billion ($1.35 billion) loan transaction that resulted from a deal involving the sale of BskyB shares. Including the figure would have put figures into the red for the first time and increased its debt.

 
 
  Leigh Stevens   7/2/02,  9:11:56 AM
Wall Street Journal (WSJ) - This morning's WSJ has front page story on WorldCom "Angers Regulators As Accounting Scandal Widens" - hey, they are not the only ones angry. The talking media heads interview Wall & Main Street types that describe being angry as the most prevelant emotion. Perhaps cause it goes to the heart of Street orthodoxy - that you can rationally analyse any company when you get their quarterly reports and filings, by looking at revenues versus expenses and so on and get an idea of the earnings trend. When the books are cooked as they say, all bets are off.

Front page story on the fall of Vivendi's CEO, Jean-Marie Messier, who "craved the limelight".

GM and Ford roll out aggressive new discounts amid signs of softening demand - hey, you offer 0 percent financing long enuf and people will buy all the new SUV's that they're going to.

Tyco raised $4.6 billion via the IPO of its CIT unit, well below the expected $5 to 5.8 billion - its a tough market!

 
 
  John Seckinger   7/2/02,  9:08:56 AM
Dollar denominated assets are higher this morning as the euro fails to break parity against the dollar. Losses in European stocks and position sqaring have been factors in overnight trade. European Central Bank President Wim Duisenberg is scheduled to address the European Parliament on the ECB's annual report at 9 a.m. EDT. One possible discussion: Will U.S. Accounting concerns spread to Europe?

 
 
  Leigh Stevens   7/2/02,  9:02:57 AM
Pre-Opening INDEX Comments - Futures are bouncing all over the place this morning, as traders probably get an idea of what selling may show up this morning. Nasdaq continues weak. Close of OEX under 480 was not good for any kind of bullish chart picture - 480 of course being the Sept. low in the S&P 100. Nasdaq continues to be the really weak index as SOX appears headed to a new low, perhaps to a retest of its 344 Sept. bottom. Tech doesn't have to lead the way, but it needs to "stabilize" in here - otherwise its back to the pattern of lower (up) swing highs and lower (down) swing lows. Of course, the indexes never broke out of the top end of their hourly downtrend channels. OEX for example has been in a downtrend channel since mid-May, with its high of 553. Sameo, sameo.

Sell the good-sized rallies continues to be the watchword. Today is an important day in case of retests of the Sept lows in OEX at 471, possibly 953 in SPX, 89.3 in DJX, 1375 in COMP, 980 in NDX and 24.4 in QQQ.

 
 
  Leigh Stevens   7/2/02,  8:55:37 AM
Pre-Opening, Stock INDEXES - Good Morning!

Index Futures trading: S&P 500 > +0.70; Dow Industrials > +19.00; Nasdaq > -7.00

 
 
  Leigh Stevens   7/1/02,  7:35:19 PM
The Market Monitor for Monday, July 1st. has been archived at Link

 
 

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