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  Jeff Bailey   7/11/02,  7:22:15 PM
Fascinating! I was just looking at the 5-minute interval charts of the 10-year YIELD ($TNX.X). I'll note that the 10-year YIELD reached its peak low at 12:05 EST, bounced the next 5-minute interval higher (selling in the bond), then retested the low at 12:15 EST, then gapped higher and continued higher into the close at 03:00 EST.

Any guesses on when the Dow Industrials, S&P 500 and NASDAQ Comp traded their session lows?

Answer.... 12:15!

While very short-term, may hint near-term how key YIELDS are being followed or indicating some rotation to stocks.

Will watch YIELD closely tomorrow morning. For me, 10-year YIELD needs to at least get back above 4.65% to show any type of conviction toward this rotation.

I also looked at the shorter-term 5-year YIELD ($FVX.X) 3.801%. It traded similar, but at 12:05, reached a low of 3.73%, bounced next 5 minute interval, then at 12:15 undercut its 12:05 yield low with a YIELD trade at 3.727%, then reversed higher like the 10-year YIELD.

 
 
  Jim Brown   7/11/02,  6:06:34 PM
Pivot Trade Wrap OOPS! -
The shorts finally ran out of steam when the Dow hit 8600 and the SPX 900. Psychological levels to be sure but only slightly below the 78% retracement level for the Dow at 8619. Regardless of why it rebounded the resulting positive numbers were a sight for sore eyes.

Just like a severe decline with a climatic ending on a negative news event we got just the opposite after the close today. Just when everyone thought the PC and Networking sectors were dead Dell raised guidance and JNPR beat estimates on better than expected revenue. WOW! Tech shorts are in trouble for tomorrow. The Futures spiked to +7.00 for the S&P and +25 for the Nasdaq. With the markets coming off a positive close and a strong rebound off the lows the regular Friday short covering rally could be explosive.

Volume was huge on the NYSE with 2.06 billion shares and 2.26 bln on the Nasdaq. Despite the nearly 2:1 declines over advances the total up volume was 2.7 bln to down volume of 1.6 bln. Amazing how the tables turned when you consider the Dow was down -700 points for the week around lunch time. Friday is shaping up to be a winner and you will not want to miss it. Tune us in at 9:15.

 
 
  Jeff Bailey   7/11/02,  4:51:43 PM
3m (MMM) $121.40 -2.09% ... Jeff: Stockcharts.com has a bull trap for mmm, could you comment.

Yes... Does everyone see the POTENTIAL bull trap Link at $130? Tom Dorsey talks about this pattern as described by its "founder" Mike Burke in Tom's book "Point and Figure Charting." The thought is that theres some type of "news" that drives the last buyer into the stock, giving a TRIPLE-TOP BUY SIGNAL and then the stock quickly reverses (similar to what we've seen), but there are no buyers left, everyone who wanted in is in.

Now... here's where I have a problem with Stockcharts.com and how they "adjust" their point/figure charts to reflect stock dividends. On May 16, MMM traded $130.60. When stockcharts discounts that trade for the dividend, this creates what appears to be a triple-top at $128, and the POTENTIAL "bull trap" now at $130. Gosh darnit! Somebody paid $130.60, so show the trade on the chart!!! (Is what I say)

I'm a bit "old school" I guess, and so is Tom Dorsey. His chart shows an X at $130 just above the red 5. Thus Tom Dorsey's p/f chart doesn't show as a "bull trap" as there's no triple-top.

Excellent observation from subscriber nonetheless, and I won't split hairs over (bull trap or not). Bullish vertical count is $152 and if stop as profiled is honored at $118 from point/figure chart, then risking $3.40 to potentially make $30 as it relates to the stock.

I'm not here to sell Tom's book, but if you're interested in reading a book on the topic, we offer it in our bookstore at this Link

 
 
  Jeff Bailey   7/11/02,  4:24:32 PM
Broadcom (BRCM) $18.77 +10.02% Hi Jeff, do you think that after today,brcm look positive as intc?????Thank you for your time....

Maybe "not the same" as it relates to p/f chart. BRCM still has a bearish vertical count of $11.00 associated with its chart and would take a trade at $19.50 to negate the current bearish count. In my mind, this shows a "big picture" right now that is a little more negative and questions to be answered.

Positive is that a "low pole warning" is under construction (more than 50% of long column of O has been retraced) and this is a "heads up" of potential accumulation.

Look at the P/F chart of BRCM and see how it has (in the past) given a couple of "buy signals" (X column exceeding previous X column) and then given those buy signals back up to sell signals. Might happen again so be careful if looking to trade long. Link

Nice little "pop" though from 4-days consolidation with a trying to trend up MACD. Might look for some other stocks in sector with similar pattern. Hints of some shorts covering on the break higher and decent short-term trade could have been had. Link

 
 
  Leigh Stevens   7/11/02,  4:22:40 PM
Subscriber QUESTION: "Per ur advice, I have a 10 day, 60 minute bar chart of QQQ that I follow with 5 and 21 period stochastics. I have a bid print high of 25.83 during the 3:30 bar on my chart. Would not that effect my stochastic readings? (bad tick just disappeared, but question remains) "

RESPONSE: If the "tick" disappears and that tick was either the highest high or lowest low for the period you are measuring, then the stochastic will recalculate. If the bad tick is NOT the highest high or lowest low, it doesn't matter because the stochastic indicator looks at the current "last" relative to the highest high and lowest for the period you have set for length; e.g., 5-bars (5 hours, days, etc.)

 
 
  Leigh Stevens   7/11/02,  4:10:16 PM
Speaking of our "Trader's Corner" section, my article this week is a very extensive looks at Bollinger Bands - how they are constructed and the variety of their uses. Included is material from a talk that John gave to the Market Technician's Association (MTA) in Feb. - John is a fellow member of the New York based MTA.

Anyway, this article., which will be up tonight (Thursday) is a compliment to the one I wrote on "simple moving averages" at Link

 
 
  Jeff Bailey   7/11/02,  4:02:14 PM
Intel (INTC) $18.27 +8.62% ... a trade at $18.50 would get stock back into column of X's and be first time stock shows some type of higher low on point/figure chart. With vertical count bullish to $26, could look long 1/2 position at $18.50, which would be a three-box reversal higher. Some sign of life here. Link

One of the stocks in the NASDAQ-100 showing a "buy signal" on its p/f chart and contributing positively to the NASDAQ-100 Bullish % ($BPNDX) Link

 
 
  Leigh Stevens   7/11/02,  4:02:01 PM
Subscriber QUESTION: "I have qcharts and would like to set up my charts with the hourly price channels. Are the hourly price channels called "Donchian Channel" on qcharts? If so, what settings do I use? "

RESPONSE: No - Draw a trendline, once you have 2-3 highs or lows with which to construct it. Then draw a parallel line through the opposite end - This would be at the highest high or lowest low that is opposite the first trendline.

Sometimes, you will "bisect" or draw through the highest high or lowest low IF you have a cluster of highs or lows that "touch" the parallel trendline.

In Q charts, to make a parallel line, right click on the trendline and choose "clone line" - then move it to opposite the first trendline.

I will do a future Trader's Corner article on constuction and drawing (and re-drawing) trend channels.

 
 
  Jeff Bailey   7/11/02,  3:55:22 PM
Hesitant Bulls may want to take a look at 3m (MMM) $122.12 +1.51% here as bullish. Can start with a nice tight stop at $119.50 and look for a rally back to the $130 level. Link

 
 
  Leigh Stevens   7/11/02,  3:54:40 PM
INDEXES: TRADE Recommendation - UPDATE: My QQQ trade objective is 25.5. I am long from 23.9. Also, suggest raising the stop from an initial 22.90 set today, to 24.15 for tomorrow.

 
 
  Jim Brown   7/11/02,  3:52:58 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We will be going LONG into the close. Hopefully this positive close will result in a positive open!

 
 
  Leigh Stevens   7/11/02,  3:49:12 PM
INDEX Comments: The indices continue to move higher and the 21-hour stochastic is up to about 1/3 of its range, from the low point - there is room especially for the S&P/DJX to move higher, relative to where these prices are in their hourly price channels and in terms of my longer hourly stochastic model.

The COMP, NDX and QQQ, which begin thier rallies from mid-channel, after making double bottom lows, have less room to rally before hitting resistance implied by the upper end ot their hourly downtrend channels.

 
 
  Jeff Bailey   7/11/02,  3:47:12 PM
OSI Systems (OSIS) $17.30 -2.37% ... here's something interesting that I just discovered. If you can, turn on your volume indicator with 30-minute interval settings.

See the spikes in volume at exactly 01:00 PM EST? As Mark Whistler likes to say, "that's the hour of power" when traders get back from lunch.

Notice how those "spikes" all but go away in July. This hints that some type of "program trade" may have been taking place back in June, just ahead of the end of quarter window dressing.

Every buyer above that level is a loser right now, but the systematic program is suspicious. As such, would not risk July expiration puts here. Close them out.

For expiration past, I'd keep a stop above $18.50 for now.

 
 
  Jeff Bailey   7/11/02,  3:33:32 PM
The 3:15 PM intraday update has been posted. Link

 
 
  Leigh Stevens   7/11/02,  3:31:53 PM
Subscriber QUESTION: "I was just curious as to how you hear about these trading floor rumors when you aren't anywhere near the trading floor? Spys? :-) Keep up the good work. "

RESPONSE: A source that provides a person giving continuous bid/offers - boring to listen to, but sometimes they also provide this background "color"; e.g., rumors making the rounds of the floor. By the way, 2 hours after we had this rumor, CNBC noted it too.

 
 
  John Seckinger   7/11/02,  3:30:46 PM
Two Sectors now on the radar screen for tomorrow is the Internet and Utility Index. Beginning with the Internet Sector, there is now a double bottom at 80 (set over the course of the last six trading session) and current 83.93 level does have some room to run; objective being the 22 DMA at 94.79. Risk to the downside is 79 on a settlement basis. The NYSE Utility Index is trying to do more than simple short covering, currently up 5.67 at 244.75. A settlement above 249 should be a catalyst for a move to 258. Downside risk is near 239. Note: The 22 DMA is at 256, while the 50 remains higher at 269.

 
 
  Jim Brown   7/11/02,  3:26:41 PM
Pivot Trade Signals
Could it be that a failure to drop any further means the sellers have run out of stock? No, that would be too easy. I just suspect we are seeing the early signs of a short covering rally for Friday. (I can hope can't I?) We will not look this gift horse in the mouth!!
Nasdaq futures are spiking and someone in the futures pit said earlier that it appeared the commercials were shifting from the S&P to the Nasdaq. Could be a good sign.

 
 
  Jeff Bailey   7/11/02,  3:05:48 PM
OSI Systems (OSIS) $17.25 -2.59% ... Being added to the Russell 2000 Index. This may create a near-term demand on thought of increased demand from index funds.

Tough call here on put options as some additions have been met with institutional selling into the index addition.

As it is.... assessing risk to $19.09 from here. If holding July puts, would close out 1/2 position on this news.

 
 
  Jonathan Levinson   7/11/02,  3:05:47 PM
The US Dollar Index has just spiked up, and I expect 1350 to hold as support on the COMPX. Famous last words. Nevertheless, the QQV is back up there, up 2.18 on the day above 61, and the VXN is up a whopping 4.67 to just below 70. Volume breadth continues to be strong on the COMPX for a change, though a little softer than at the day highs, approximately 1.5 advancing shares to each declining share. I expect the range to remain between 1350 and 1370 for the rest of the day, absent a pop in either direction, though it looks like 1350 is going to hold, price advancing as I type.

 
 
  John Seckinger   7/11/02,  3:03:35 PM
The Financial Index did in fact form a bearish triangle, currently underneath the 2100 base at 2083. In fact, because the triangle broke the base early (did not wait until the apex), it is my opinion that the sell off will be more severe. The objective is for a move to 1963. Of course, a settlement back above 2100 will change sentiment to more neutral levels.

 
 
  Jim Brown   7/11/02,  3:01:31 PM
Pivot Trade Signals
Turn out the lights it appears the party is over. At 3:PM everything is turning down and the lows of the day are not that far away. Could be ugly again!

 
 
  Jeff Bailey   7/11/02,  2:58:38 PM
Treasury Watch 10-year YIELD ($TNX.X) 4.628% snapping back around and now bonds almost back to unchanged as it appears some sellers have shown up.

By golly, these gold stocks are going to give me fits as we see the Gold/Silver Index (XAU.X) 76.60 -2.06% trade divergent to Treasuries as they see a bit of selling.

Action in gold stocks looks "emotional" as December Gold futures (gc02z) $319.90 +0.09 still near session high of $320.05.

Placer Dome (PDG) $11.05 -2.55%, just off profiled $11.23.

 
 
  Jim Brown   7/11/02,  2:51:09 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We are going to raise the stop loss on the current LONG signal to 455.50. This represents the intraday support between 1:30-2:00 and slightly over breakeven from our 454 trigger point. If the 3:PM turn is down we want to get out early. I know several readers have already triggered sells in the 459-460 level and I commend them for the quick gains.

 
 
  Jim Brown   7/11/02,  2:47:17 PM
Pivot Trade Signals
We are nearing the 3:PM turning point and the odds favor a strong short covering rally if the Dow can get into positive territory before then. It appears to be keeping the lid on the other indexes despite their positive numbers. If we drop back into the red on the S&P and OEX by 3:PM then the recent trend of a last hour sell off will probably repeat.

 
 
  John Seckinger   7/11/02,  2:23:59 PM
It is rumored that Morgan Stanley's Barton Biggs has raised his equity allocation, overweighting equities. Biggs sees capitulation in the market and believes that Iraq is keeping buyers at bay.

 
 
  Jonathan Levinson   7/11/02,  2:18:53 PM
The slide on the US Dollar Index has reversed, as has volume breadth on the COMPX, with advancing volume nearly twice declining volume as I type. Price didn't quite make it to 1370, and I watched as the QQV blew off steam, dropping several points to below 60 before reversing back up.

 
 
  Leigh Stevens   7/11/02,  2:18:27 PM
INDEX Comments: RUMOR going around on the S&P futures floor is that Intel (INTC) is going to issue a positive pre-announcement after the close.

2nd rumor is that there is some "prominant" analyst that will issue an upgrade on INTC.

9 times out of 10 such "floor" rumors are false, but they can and do move the futures, which sparks short-covering, which ignites some specualative buying and a trend gets going.

 
 
  Jonathan Levinson   7/11/02,  2:08:18 PM
The COMPX has light resistance at 1370, and heavier resistance at 1380 on this move.

 
 
  Leigh Stevens   7/11/02,  1:58:03 PM
AN INTERESTING NOTE - Washington, D.C., June 28, 2002 - The Securities and Exchange Commission today published a list of 945 companies whose chief executive and chief financial officers are now required to personally certify-in writing, under oath, and for publication-that their most recent reports filed with Commission are both complete and accurate. Officers who make false certifications will face personal liability. PRESS RELEASE is at Link -- THE LIST of Companies can be found at Link

 
 
  John Seckinger   7/11/02,  1:56:26 PM
Interesting notes: Dollar goes underneath 117 versus Yen for the first time since last September, 30-year bonds rally extensively, and Gold rallies as the overall Commodity Index remains higher. What is so interesting? The Nasdaq is neutral to slightly positive. Therefore, I will continue to make the "yield curve" observations as the most leading indicator during the current environment. When trading, it is critical to understand price action and what possible allocations are taking place.

 
 
  Jonathan Levinson   7/11/02,  1:55:09 PM
Advancing volume is now fractionally ahead of declining volume on the COMPX, which is struggling to break 1350. The automatic trendlines on my QQQ chart in Quotetracker have just redrawn themselves pointed downward, FWIW. The range so far is 1325-1360 on the COMPX.

 
 
  Jim Brown   7/11/02,  1:51:12 PM
Pivot Trade Signals
Definitely not a V bottom rocket but we will take any positive movement we can get. However, the weakness of the rebound calls into question the validity of it. This appears to be simply some minor short covering and profit taking from the Dow 8619 Fib level. I think the odds are good this too shall pass and the close for the day could be lower from here.

 
 
  Leigh Stevens   7/11/02,  1:50:58 PM
INDEX Comments: OEX now has finally managed to trade above its hourly down trendline and looks like it could get some upside "traction" - of course, after I'm stopped out - stops!, you can't live with em (sometimes) and you can't live without them.

I would re-establish the long OEX postion I had, but Jim's Swing Trade program is already long, so it would just be redundant. I might buy a dip back toward the lows perhaps if that developed, although I like the Index the best if it keeps going here and gains some upside momentum. A low that was successfully re-tested would be a possible second entry however.

 
 
  Jeff Bailey   7/11/02,  1:48:56 PM
The 1:00 PM intraday update has been posted. Link

 
 
  Jim Brown   7/11/02,  1:36:25 PM
Pivot Trade Entry Point Alert - SMH
We were triggered on the SMH LONG at 13:32:22 when the SMH traded at 28.50. We will use the AUG $25 call as our benchmark with an ASK at that time of $4.80. The initial stop loss will be $27.00.

 
 
  Jim Brown   7/11/02,  1:15:24 PM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Raise the stop loss on the current LONG signal to OEX 452. (SPX 906) The bounce is fading and the Nasdaq has gone negative again.

 
 
  Jim Brown   7/11/02,  1:13:38 PM
Pivot Trade Entry Point Alert - SMH
GO LONG the SOX using the SMH holders with a trade over $28.50. The SOX has been outperforming the broader market today and appears to be bouncing off the July-3rd lows.

 
 
  Leigh Stevens   7/11/02,  1:10:37 PM
INDEX Comments: QQQ - rally faded in the area of its hourly down trendline given the lack of "support" from the S&P stocks. I'll be looking for an hourly close above this resistance to suggest that the Q's low may be intact for awhile.

 
 
  Jim Brown   7/11/02,  1:01:30 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the LONG signal at 12:56:40 when the OEX traded above 454. (SPX 908.91, SPY 91.45, DIA 86.98, DJX 86.74) The initial stop loss will be OEX 450. (SPX 902)

 
 
  Leigh Stevens   7/11/02,  1:00:08 PM
INDEX Comments: QQQ - speaking of the down trendline, Q's just are breaking out above it.

 
 
  John Seckinger   7/11/02,  12:59:40 PM
Back to the Yield Curve: Fixed-income traders continue to sell their five-year bonds and take profits off the table. It is my opinion that these funds are being shifted into Nasdaq companies and should continue throughout today's session; providing an underpinning bid for OEX traders. Note: This does not imply there will be a strong rally; nevertheless, it does give bulls a good risk/reward scenario with solid execution at current levels.

 
 
  Jonathan Levinson   7/11/02,  12:58:36 PM
I beg to differ, Jonathan. We haven't had the bungy snap because I succumbed to my own gut feeling this morning and bought calls. Therefore, the Q's can't rise.

Great minds think alike, Linda.

Internals are much firmer on the COMPX (because I missed buying my calls), only 663M declining volume to 522M advancing. The US Dollar acapulco swan dive has stabilized for the moment, as the COMPX hovers now at 1335- oops, 1342 as I type. The QQV at 61 is beyond its upper bollinger band, and is ripe for a pullback- ie short term bullish indicator.

 
 
  Jim Brown   7/11/02,  12:56:45 PM
Pivot Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
If you want to try and catch this knife one more time let's go LONG the broader market with an OEX trade over 454. Maybe this Dow level will hold.

 
 
  Leigh Stevens   7/11/02,  12:54:57 PM
INDEX Comments: Nasdaq is continuing to hold up pretty well - ain't that a switch! Redrew my S&P channel lines to now "touch" the lowest low for the past 100 days, whcih is today. Second hourly low after the first one is a bit above it. Time will tell if this latest low is it for a while.

Down trendline on the hourly OEX now intersects at 456. A move above this level would be a potential reversal point at the moment.

Short-covering type buying has not been enough to cause the hourly trendline to be penetrated, so I continue to watch these trendlines as important technical "pivot" points.

 
 
  Jim Brown   7/11/02,  12:50:33 PM
Pivot Trade Signals
The Dow actually bounced (grin) at the 78.6% FIB retracement of the gains from the Sept lows. This level is 8619. This is the last line of "hope" and at this point could not really be called "support". However it did attract a few dip buyers but not in enough quantity to mount more than a decent pause. If 8619 fails again then the next vague support targets are 8500, 8235 and finally 8063, the post 9/11 low. It will be interesting to see if we can trade up from here.

 
 
  Jeff Bailey   7/11/02,  12:48:39 PM
December Gold (gc02Z) Will show a bar chart of this commodity futures in 01:00 Update. Right now, trading right at the upper end of downward regression. Only partial positions here as jumping the gun a bit. Overhead supply from $320-$331.

But with US Dollar Index (dx00y) 105.57 -0.49%, worth a partial position long.

 
 
  Leigh Stevens   7/11/02,  12:41:20 PM
Subscriber QUESTION: "CNBC ... interviewed Ralph Bloch, from Raymond James, sorry just had one of favourite market analysts on discussing this very issue. He mentioned several things like PUT/CALL ratio , bearish sentiment and and a scale that he looks at that clocked the Sept CAPITULATION at 17. The most recent level indicated just a mere 5.5. He says we are nowhere near the oversold levels necessary for this CAPITULATION. He says we need higher put/call ratio, an increase in bearish sentiment and an indicator level of 9 to 10 on his 17 scale for CAPITULATION. Comments?"

RESPONSE: Well, I don't disagree with the broader vision that "sentiment" is not close to where I consider it would be "normally" at a major bottom. I am more trying to trade the indexes, rather than making too many grand predictions - I have thought a couple of times that the market had put in a tradable bottom that was more than short-term - WRONG! - what has been missing in that view and I may have discounted it some, is that traders did not manifest the EXTREME bearishness normally seen in past cycles.

For example, it was only on the influence of the last options expiration Friday, that I saw the CBOE equities call to put ratio drop below 1; i.e., total daily equities put volume that day was greater than total call volume. Otherwise, I've not seen any other 1-day reading like this. In past markets, when there was a major low, there were often a NUMBER of days when this kind of lopsided put to call ratios occurred.

 
 
  Jeff Bailey   7/11/02,  12:39:22 PM
Dec Gold Futures (gc02z) $320.50 +1% ... I've taken 1/2 position bullish here in Placer Dome (PDG) $11.20 -1.23% at $11.23. Stop $10.50 to begin with, target $13.00 near-term.

 
 
  Jonathan Levinson   7/11/02,  12:38:30 PM
I suspect that the only reason we haven't gotten that "bungy snap" bounce on the COMPX is because I haven't purchased any Q puts in the past 2 days. My apologies to Nasdaq bulls.

 
 
  Jim Brown   7/11/02,  12:34:19 PM
Pivot Trade Signals
The current drop stalled at Dow 8600, SPX 900, which are purely psychological levels. The VIX is continuing to rise at 41.28 but the TRIN has weakened since yesterday. The futures pits are only 35% full and the sentiment remains very bearish. Program trading continues to account for nearly 40% of all NYSE volume. Retail trading is limited to selling and nobody is trying to buy the bounce. Next stop?

 
 
  Jonathan Levinson   7/11/02,  12:29:29 PM
The US Dollar's slide continues, now below 105.60. This bodes very ill indeed. The XAU is now green on the day. We've just had another attempted "bounce" off the 1325 support level on the COMPX, price actually printed 1323, and my lowball bid for QQQ calls went unfilled. I've just cancelled it because the expected bounce ran out of steam 5 points later. A very weak market, and a very confusing level right here.

 
 
  John Seckinger   7/11/02,  12:26:34 PM
Side Note: Stock market weakness this year has erased $2.4 trillion dollars in market value, which is roughly one quarter of the U.S. GDP.

 
 
  Jeff Bailey   7/11/02,  12:25:35 PM
Gold December Gold futures (gc02z) 319 +0.44% ... reversing some marginal losses from earlier. A break above $320 could set the sector on fire to the upside.

 
 
  Jim Brown   7/11/02,  12:25:27 PM
Pivot Trade Signals
Everyone keeps asking me when the markets will bounce given the -700 point Dow drop for the week. Nobody knows! Any estimate of support based on levels we have not seen in five years is a guess. Downtrend channels have been broken, moving averages are not even close and every oscillator is buried at the deepest oversold levels. By all logical standards there should be a "mother of all bounces" here soon. However, this market is not logical and current conditions are not typical. The only good news is the severity of the drop for the week. This is the capitulation event most have been waiting for and it is entirely possible the selling could increase! Margin calls are rising and every hundred point drop below the 9/11 lows will cause thousands more investors to throw in the towel. Everyone wants another LONG signal to catch this falling knife but considering the current conditions I think we need to be more careful about pulling the LONG trigger. Aggressive traders will step in front of the bullet anyway without a specific signal.

 
 
  Leigh Stevens   7/11/02,  12:20:59 PM
INDEXES: TRADE Recommendation - UPDATE: OEX has exceeded my suggested stop/exit point at 451 on the most recent decline and I am out. No further suggestion on OEX right now. When I made the rec it was up off the low, on a rising TRIN, but now we have "falling knife". SPX to 900 looks like next S&P target. Am still holding a QQQ long position with a stop at 22.90.

 
 
  Jeff Bailey   7/11/02,  12:18:51 PM
Market Makers Jeff, Can you refer me to any resources that explain the market maker in more detail. I want to understand their thought process more. I know you just gave a brief explanation but I would like to read some details on how they manage inventories and how that business is run. If you know of any articles, books, or any other type of resource, please let me know. Thank you.

Fantastic! This will help you so much! If you think market makers care which way a stock moves, you're wrong! All they care about is managing inventories and they let the market's supply/demand dictate there account management. Here's a piece I wrote on the subject in "Bailey's Basics." Link

One of these day's I'm going to write a book called "What color is your Ferrari?"

 
 
  Leigh Stevens   7/11/02,  12:14:45 PM
Subscriber QUESTION: "Leigh - I like to trade the QQQs. And I like to keep things simple to avoid paralysis of analysis. What "internals" would you consider essential to monitor? As always, thanks for your tutelage. "

RESPONSE: Well, this is just not a question that I can answer easily here. The best thing I can suggest is to follow my Index column, such as last night's at Link - By the way, the charts are the correct ones now.

If you look at the QQQ hourly chart, one thing that has been "working" to define the price swings, is the hourly trend channels, coupled with an oversold on the longer hourly stochastic (length: 21).

 
 
  Leigh Stevens   7/11/02,  12:08:37 PM
Subscriber QUESTION: "While the OEX, SPX and COMPX have all violated and are trading below their Sep 2001 lows, the DJI and SOX have not. The SOX breifly penetrated that low this morning and bounced. Is the SOX holding up the other indexes? If the SOX decicively breaks 343 would that be leg of another major move down for the broader indexes?"

RESPONSE: Some earnings upgrades for the chip makers ($SOX.X) have helped. Sellers don't appear to be pressing the short side now that SOX is back down to its Sept low or near it, in the 344 area. Whether a break of this area would lead to another down "leg" in the broader market is questionable.

I think that the market is too oversold to have a further down leg without a rebound first. It could happen of course, but it would be highly unusual to be this oversold and then go into free fall so to speak.

Lets say that in the game of "probabilities", this is one that I rank on the low side as a possible outcome. However, its also true that the excesses on the upside in the ' 90's bull market have led to major extremes on the downside in this phase of the bear market.

 
 
  Jim Brown   7/11/02,  12:07:32 PM
Pivot Trade Signals
Decliners nearing a 3:1 lead over advancers on a combined basis. The VIX is at 40.67 and new lows are 448 to 25 new highs. Repeat after me
"C-A-P-I-T-U-L-A-T-I-O-N"
The ugliness is continuing and appearing to pickup speed as we move into the lunch time lull. (lull ?) Eventually we will hit come level that triggers a flood of buy programs but who knows when it will happen. You can't get much more oversold than we are but we could stay in this range for sometime. There SHOULD be a short covering rally here sometime before the weekend but when/iff is anybody's guess.

 
 
  John Seckinger   7/11/02,  12:04:18 PM
How do I use GE to monitor the market today? thx for your great comments on AMGN and IBM in the last two days.

Response:

Thanks for the kind words. Since the Dow uses a price-weighted methodology and not actual number of shares outstanding, GE's 26.75 current price most likely will have more of a psychological affect than point impact. At a quick glance it looks at thought MMM has the most weighting of all blue chip companies, while T is at the bottom. Back to GE; clearly all chart patterns are showing least resistance to be lower. The monthly chart states a case for a move to 25, while it should take a move above 28.50 to reverse bearish sentiment. From a shorter term viewpoint, a daily chart does have shares at the lower end of its channel and a spike back up to near 28.50 before rolling over is possible (the key is to use a tight stop). Moreover, shares do have to trade back above its opening range of 26.80 before any short-term pop is possible.

 
 
  Jonathan Levinson   7/11/02,  12:02:42 PM
The US Dollar Index is still sliding, now below 105.80, as gold moves us and the XAU recovers from its morning beating. The COMPX is now hovering around 1330, above its 1325 low of the day but not showing much strength. Declining volume is leading advancing volume by better than 2:1, and all of the volatility measures are in nosebleed territory. This and other sentiment indicators such as the CPC are keeping bears like me from entering fresh short positions- options are pricey, and the potential for an upside bungy snap is substantial. But in the meantime, the COMPX just keeps drifting lower. After 1325, I'd look for support around 1300, but that seems low for this week.

 
 
  Jeff Bailey   7/11/02,  11:56:27 AM
Retail HOLDRS (RTH) 83 -1.82% ... giving downside alert here at 38.2% retracement support (retracement from $101.53 to $71.5, marks September low close to March high close). Defensive and some room to $80 and potentiall $77.25, which is 19.1% retracement.

According to Dorsey/Wright and Associate, retail sector is "bear confirmed" at 46%, so some downside risk can still be reduced to "oversold" levels of 30%.

Remember, retail sales number are due out tomorrow at 08:30 AM EST. Economists are looking of a 0.6% gain, excluding autos a 0.4% gain.

P/F chart of RTH is bearish, with obvious resistance at $90. Vertial count bearish to $83, so partial positions only.

 
 
  Leigh Stevens   7/11/02,  11:53:13 AM
INDEX Comments: OEX & SPX trading back down toward low end of their hourly channel lines - I was looking at the last few times that there were bottoms at the low end of this ever declining hourly channel - in a couple of instances, bottoming action took place over several hours of trading - but, the first low was not exceeded. There is a first time for everying and time will tell on whether this pattern repeats itself.

The weak index this time is DJX. IT is leading the way down, which is a reversal of what we have been seeing in past weeks, when the Dow held up better on pullbacks. The low end of the DJX price channel is down in the 85.50 area - DJX has not so consistently been falling to the low end of its hourly channel, but it just took out its earlier 87.00 low.

 
 
  Jeff Bailey   7/11/02,  11:52:47 AM
jeff, I see spread between ask (16.68) / bid (16.50), is there is any reason for such spread?

Yes... stock has been rather lightly traded in recent session. Put yourself in the market maker's shoes.

Lets imagine a seller comes in for for 20K shares at $16.50, and you're only short 15K in inventory. The "spread" gives you some room. You can execute his/her order (you buy at $16.50, 20K shares) you're account is not net long 5K shares at $16.50 (hey you took a nice gain though on 15K you were short at $19) and now you can lower your offer from $16.68 to say $16.65 and try to get out of your remaining 5K long before the stock goes below $16.50.

 
 
  Jonathan Levinson   7/11/02,  11:46:35 AM
In case anyone missed our earlier update, this is to repeat that Salomon Smith Barney has today downgraded Qwest (Q) to "underperform" (grin). I suppose that a criminal investigation or two could hinder a company's stock's performance on a "going forward basis".

 
 
  Jeff Bailey   7/11/02,  11:45:01 AM
OSI Systems (OSIS) $16.50 -6.87% .... OK, now we've got a 3-box reversal lower on the p/f chart. This might get some yellow light flashing at the trading desk. Need a break at $16.50 to get the light flashing red and another sell signal after the triple-bottom-sell at $18.00. Link

Expect market makers to let the stock trade $16.47, which would undercut the 07/03/02 low of $16.48. See if some sell stops are triggered and get a feel for order flow.

 
 
  John Seckinger   7/11/02,  11:44:40 AM
Checking corporate spreads, the Auto Sector (F, GM, DCX) is coming under significant pressure and widening out 20 basis points over Treasuries. Example: Ford bonds with 10 year maturity had a yield yesterday of 7% while Treasuries yielded 4%. Today, those bonds would move out to 7.2% versus 4% (a .20% or 20 basis point widening). This implies more risk to hold bonds backed by Ford and should not bode well for shareholders.

 
 
  Jeff Bailey   7/11/02,  11:40:54 AM
Jeff: I have to say, this bond YIELD thing I've learned from you is fun. I too witnessed the recovery this morning in stock, but like you pointed out, it was probaly just some short covering as treasuries weren't confirming, then stocks did fade back. Question is, why would anyone cover under such a condition to begin with?

That's a great observation on your part, and a better question. Short covering by "smart money" is simply a risk/reward and account management issue. This is why I believe so firmly in the bullish % charts.

As risk is reduced in the market (lower bullish %) there are a lot of gains at risk by bears, especially at institutional trading accounts that have had to short many stocks in order to eventually be able to provide liquidity to the markets as stocks continued to fall and "panick" selling begins to pick up.

In some stocks, a longer-term risk/reward conditions becomes known, and bears will need to square up some positions, lock in some gains, to get account risk more manageable.

This is also why I think it so important to check your vertical counts. Is there enough potential downside left to a vertical count, to warrant further selling and shorting based on the risk of an upside move to a "buy signal" where the vertical count would then turn bullish?

 
 
  John Seckinger   7/11/02,  11:36:01 AM
What a difference a few minutes make. Both the Dollar and Oil futures have significantly reversed; the dollar under pressure and now negative, while oil is 0.70 cents higher from its morning lows. The long bonds is 20 ticks below the session high as well. Even Gold is $1.20 higher than from levels when the Nasdaq rose above 1352. What does this all mean? Zero buying conviction within equities and continued global nervousness regarding dollar denominated assets.

 
 
  Jeff Bailey   7/11/02,  11:30:54 AM
Wow! was going through some "Bailey's Basics" and trying to get some chart links working. This one is kind of interesting. Who'd have thought? Link

Forget what you believe, trade what you observe.

 
 
  Jonathan Levinson   7/11/02,  11:24:19 AM
The US Dollar Index has just fallen off a cliff, now below 106.

 
 
  Leigh Stevens   7/11/02,  11:21:08 AM
INDEX Comments: Waiting game - just cause they stopped going down, it takes BUYING to get em up! Especially true in the S&P as selling pressure has been rising again, judging by the NYSE Arms Index (TRIN). Nasdaq is holding up better, but this segment is more oversold. Corporate reform activity is a potential feelgood, but the level of fear & loathing of stocks is still quite high.

 
 
  Leigh Stevens   7/11/02,  11:14:57 AM
ON THIS DAY in 1533 Henry the VIII was excommunicated from the Catholic Church by Pope Clement VII - seems that the church didn't take kindly to Henry's unique method of "divorce" - am not sure whether he destroyed the monasteries before or after this act by the Pope, but it was a divorce.

Also, ON THIS DAY in 1804 Alexander Hamilton, the "father" of our modern banking system, was mortally wounded by Aaron Burr in a duel. Fortunately we don't settle things by dueling anymore, although I know some Enron and WorldCom shareholders that would like to pace off with certains responsible former execs at those companies.

 
 
  Jonathan Levinson   7/11/02,  11:14:14 AM
Declining and advancing volume are nearly in a dead heat on the COMPX, as price coils into a wedge just above the 1340 support level. I'm strangely inclined to go long here, but it's nothing more than a gut feeling. Could be the high fear readings across the board. The US Dollar Index has just broken its 106.20 support, which doesn't bode well for short term bullish gut feelings- so I'm trying to wait patiently for an intelligent setup.

 
 
  Leigh Stevens   7/11/02,  11:04:55 AM
Wall Street Journal (WSJ) - This morning's WSJ has front page stories on:

Senate passage of tough fraud bill in unanimous vote - hey, 97-0 tells you something! Don't know where the other 3 (Senators) were, but not voting AGAINST that's for sure. The bill calls for a new "class" of crime for any "scheme or artifice" to defraud shareholders. Right on!

Also, on the front page is a graph showing the shriveling value of 10 grand invested in an "average" diversified stock fund since 1997 - this will graphically demonstrate that sinking feeling you may have when you look at your fund investments!

Yahoo's earnings report noted as being first profit in 6 quarters! Yahoo got a big boost from buying HotJobs - you might ask where are those "hot" jobs and who is advertising for them? Seems that it IS a profitable business though - not for nothing that those guys advertise on the Super Bowl broadcast at a gazillion dollars a minute!

 
 
  Jim Brown   7/11/02,  10:53:40 AM
Pivot Trade Signals
The roll over has begun with the Dow now down -70 again and a sell program hitting the Nasdaq as well. It was too good too last and shows that there are simply no buyers with conviction. Decliners are now beating advancers 2:1. There is likely to be a period of high volatility here as the battle for direction is waged. My vote is on the bears without a significantly bullish event. Support levels continue to fail after only minimal bounces. With the Dow down nearly -600 points for the week I am not sure what additional downside is possible so I am not contemplating a new put position at this time.

 
 
  Leigh Stevens   7/11/02,  10:51:28 AM
Subscriber QUESTION: "Hi, What is your upside target for a move on OEX? "

RESPONSE: Well, I'm not sure a long trade is even going to work here (with the index sinking again currently), until I see OEX at least break out above its hourly down trendline which hasn't happened yet. Assuming it does, my initial target is to back up to the 470 area which is between a 38 and 50% retracement of the last downswing.

 
 
  Jeff Bailey   7/11/02,  10:47:12 AM
OSI Systems (OSIS) $16.53 -6.71% ... bears in this one from last week's profile like the near-term divergence. Volume still lite and may take a trade at $16.50 or $16 on the p/f chart to get some bulls to crater and throw in the towel. "So close, yet so far" as the saying goes. Link

 
 
  John Seckinger   7/11/02,  10:44:10 AM
Morning Anecdotals: Looking at futures market; Dollar higher, oil lower, five-year weak, and Gold index underwater. All point to higher equity prices. A five-minute chart of the Nasdaq does indicate the possibility of a bullish flag.

 
 
  Jim Brown   7/11/02,  10:43:41 AM
Pivot Trade Signals
Qcharts is having trouble again today. The SPX quotes/charts are spotty at best with minutes passing between updates. The VIX is not updating at all and is stuck at the 39 close from yesterday. I have tried changing servers several times and some are showing more current SPX quotes than others but none appear to be correct.

 
 
  Jonathan Levinson   7/11/02,  10:43:15 AM
Upvolume is now 30M shares ahead of down volume on the COMPX, at 205M, with price chopping along around 1350. We note that all volatility measures are indicating fear, as is the put to call ratio at 1.12. However, price remains within the down channel visible on the 60 minute chart, and other than the oversold condition of the markets, investors aren't being enticed with any compelling reasons to be long equities. A break of this down channel would bring us to major resistance at 1380, and 1400-05 after that.

 
 
  Leigh Stevens   7/11/02,  10:28:05 AM
Subscriber QUESTION: "What the heck do you make of recent IBM action? I have 50 IBM Aug 75 puts, and was disappointed in its' lack of downside play. Any ideas? "

RESPONSE: Well, you have to look at the possibility that the stock is forming a bottom - stock at recent low in the 66 area retraced 62% of its ' 96 - ' 99 run up. This level of retracement is where I start to look for a turnaround - assuming there is going to be one, this is an area to watch.

You can ask the question that if you were taking a NEW short position, would risk to reward potential be good? I don't consider it to be great - especially in options, as stock is oversold - oversold condition doesn't mean its going to rally right away, but a sideways drift is another good possibility - this type action would work against you.

 
 
  Jim Brown   7/11/02,  10:25:15 AM
Pivot Trade Entry Point Alert - QQQ
The LONG signal from yesterday for the QQQ above 24.35 did expire untriggered at the close and was not active this morning. Leigh issued a QQQ buy at $23.90 this morning.

 
 
  Jeff Bailey   7/11/02,  10:25:13 AM
Longer-term Oversold Jeff: Could you explain what you mean by longer-term oversold?

Yes, please read the "Understanding Risk is Key" article from the Bailey's Basics section. While the example there was for the "computers" bullish % from Dorsey/Wright, it can be carried forward to the SPX, OEX, NDX, NYA and COMPX bullish % too. Link

For those that got my point/figure guide with their annual subscription, review that beginning on pg. 48.

 
 
  John Seckinger   7/11/02,  10:24:32 AM
Corporate spreads pretty thinly traded in morning activity; however, there is a rumor spreading of a large hedge fund expecting a stock market reversal. Staying with the fixed-income markets, it is impressive how weak the 5-year has gotten compared to the 10-year note. This clearly has given equities an underpinning bid. I just hope it lasts.

 
 
  Jim Brown   7/11/02,  10:14:49 AM
Pivot Trade Signals
That was a monster buy program but the news from the futures pits claim that Bear Stearns, ABN and Carr Futures among others have been heavy sellers this morning with orders in the 600-800 contract range. With a substantial buy program it could have triggered a repurchase of these shorts but I doubt it. This bounce could be just another entry point for a new drop. The TICKs have already reversed and Declining issues have started down again.

 
 
  Jeff Bailey   7/11/02,  10:14:47 AM
Market Action Have seen a bit of a comeback in equities. Current analysis is some good short covering by bears.

10-year YIELD 4.574% pegged near its lows of the session, so not looking like bullish money doing the buying.

 
 
  Leigh Stevens   7/11/02,  10:14:10 AM
INDEX Comments: ALL got back up to their hourly & half-hourly down trendlines, did not break above them on this initial round of short-covering - there is obviously still plenty of willing sellers. Adhere to stop points if taking a flyer on the long side here. OEX and QQQ are back down to around where I suggested speculative longs.

 
 
  John Seckinger   7/11/02,  10:10:38 AM
Yield Curve flattening as traders are extending duration and not afraid to buy 10-year notes at the expense of 5-year holders. The five year note is lagging behind 10's pretty significantly in the futures pits; definitely bullish for stocks. Traders taking profits from earlier trades when they bought 5's and sold 10's are most likely using their profits to enter equities. Real Question: How long will the asset allocation take place?

 
 
  Jeff Bailey   7/11/02,  10:09:35 AM
Market Internals continued to deteriorate somewhat yesterday.

Key level to notice is the broader S&P 500 Bullish % ($BPSPX) fell to 31.4% from Tuesday's reading of 35.2%. Getting very close to "oversold" longer-term levels of 30%. Link My how things have changed from January's 68% and March's 76% readings (70% deemed "overbought").

The narrower S&P 100 Bullish % ($BPOEX) fell to 28% from Tuesday's reading of 33%. This market is now longer-term oversold. Link

 
 
  Jonathan Levinson   7/11/02,  10:05:16 AM
COMPX volume is firming significantly on this rise off the 1325 low, now 164M declining to 140M advancing, though at 141 new lows to 4 new highs, we've seen brighter days. As I struggle with the shock of SSB's sudden downgrade of Q (grin), I note as well that the US Dollar index continues to show weakness, and the QQV is still green on the day, despite the COMPX bounce. In other words, traders who went long at 1325 shouldn't fall asleep at the switch- I'd be trailing my stop up to lock in profits. I do not believe that we have seen the lows for this week.

 
 
  Leigh Stevens   7/11/02,  10:03:11 AM
INDEXES: TRADE RECOMMENDATION: Buy OEX calls at current levels - OEX dipped under my 455 target, but has rebounded back above it - last at 456.8. Risk to 451.00 initially - just under today's low.

 
 
  Jeff Bailey   7/11/02,  10:01:16 AM
10-year YIELD 4.574% ... From the p/f chart, bearish count on YIELD has been 4.15% as a longer-term target. Today's trade at 4.6% is another "sell signal" on YIELD and shows demand building in this bond. Link

First sign of real "weakness" in the underlying bond would be a YIELD of 4.9% (49.00 on the chart).

 
 
  Leigh Stevens   7/11/02,  9:57:32 AM
INDEXES: TRADE RECOMMENDATION: Buy QQQ at current levels (last: 23.9), risking to 22.90. Stock is holding prior lows and due for a rebound. Risk to reward is favorable with stops.

 
 
  John Seckinger   7/11/02,  9:57:00 AM
Biotech Index initially attempted to trade defensively; however, shorts have regained control and put the index on its session lows. Currently at 280, this previously profiled support level should become pivotal as the session unfolds. Pharmaceutical Index hits our 264 objective in a much shorter timeframe than expected; nevertheless, currently at 262 this index should post its worst month on record.

 
 
  Jeff Bailey   7/11/02,  9:54:19 AM
Call your lender! if you've been thinkng about refinancing your mortgage. Get the paperwork started, then, if the 10-year YIELD hits the 4.365% level, pick up the phone and tell your lender "lock it in!"

 
 
  Jeff Bailey   7/11/02,  9:51:43 AM
Treasury Watch 10-year YIELD ($TNX.X) 4.561% ... equity bears getting a break they wanted here (in my opinion) as the 10-year YIELD breaks firmly below my 4.635% YIELD level. May now begin correlating some bearish counts in stocks from point/figure charts with a 10-year YIELD target of 4.365%, down at 19.1% retracement on the 10-year YIELD chart.

 
 
  Leigh Stevens   7/11/02,  9:51:05 AM
INDEX Comments: SPX - well under the low end of its channel and still sinking. We're so close to 900 (last at 906) now that this level looks like a target. Those even 100 and 1000 levels are usualy a draw for prices.

 
 
  John Seckinger   7/11/02,  9:48:41 AM
Treasury Bond Futures hit our 105-16 objective and then some (intra-day high of 105-23). It does seem like the extension in the 30-year was partially a result of curve players taking profits. Example: If long fives and short 30-years, taking profits would be to sell 5-year bonds and buy back 30-year issues. In the bond world this is called "flattening the curve."

 
 
  Leigh Stevens   7/11/02,  9:48:20 AM
INDEX Comments: COMP - as noted by Jonathan, 1325 is a likely next target and possible support - a natural one as this was its prior low.

 
 
  Jonathan Levinson   7/11/02,  9:46:32 AM
OK, stop everything! Salomon Smith Barney has just downgraded Qwest (Q) to underperform! Let's all take a moment to readjust our trading strategies and rebalance our portfolios based on this timely and stunning news!

 
 
  Leigh Stevens   7/11/02,  9:46:27 AM
INDEX Comments: QQQ - interesting that QQQ is holding its prior low at 23.6, at least so far. A next downside target, if 23.6 is pierced, is to 23-23.2 area.

 
 
  Jonathan Levinson   7/11/02,  9:44:16 AM
Despite its admirable attempt to hold the 1340 s/r level, internals aren't looking so hot on the COMPX, with 89 new lows to 1 new high, 1510 decliners to 699 advancers, and 103M declining shares to 32M advancing. The QQV is up another .9 to 59.96, getting up there. I would expect this decline to stop and possibly bounce from the 1325 s/r level.

 
 
  Jeff Bailey   7/11/02,  9:37:44 AM
The 9:00 AM intraday update has been posted. Link

 
 
  Jeff Bailey   7/11/02,  9:36:43 AM
Movie Gallery (MOVI) $16.50 -3.84% ... negative here at $16.50 as this is spread-triple-bottom sell signal and comes after a break in trend. Link

Back in mid-May, I discussed the secondary offering they did just above current levels. Look for some hedges to be put on here in MOVI and shorts to get active. Bearish vertical count is $14.

 
 
  Jim Brown   7/11/02,  9:34:08 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
That was quick. We were stopped out on the opening tick at 9:30:22 when the SPX traded below 920. (OEX 458.11, DIA 87.45, SPY 91.65, DJX 88.13)

 
 
  John Seckinger   7/11/02,  9:32:00 AM
The September Dollar is fractionally higher in morning trade, most likely technical in nature as currency traders still discuss the likelihood of a 115 exchange rate with the yen. It was interesting to note corporate spreads held in relatively well yesterday - the expectation was for a widening - which may begin to give bulls a reason to get excited. Also of importance is the yield curve getting even steeper (2 year versus 30 year), which will be carefully monitored as equities open.

 
 
  Jeff Bailey   7/11/02,  9:30:59 AM
MedImmune (MEDI) $21.10 ... stock higher at $23.35 after company says that is received a Complete Response Letter from the FDA for its Biologics License Application for FluMist, the FDA is requesting clarification and additional information relating to data previously submitted, and no additional clinical trials have been requested.

 
 
  Jim Brown   7/11/02,  9:28:21 AM
Pivot Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I am not going to change the stop loss on the LONG signal from yesterday. That stop is SPX 920 OEX 458. I hope we get a blowout dip at the open and a rebound but we will refrain from buying the bounce until it is clear the sentiment has changed.

 
 
  Jeff Bailey   7/11/02,  9:26:29 AM
Yahoo! Inc. (YHOO) $12.19 ... getting "whacked" at $11.06 in pre-market after downgrade by Merrill. This puts stock (on bar chart) right at the base of downward regression (regression taken from 01/09/02 to current, with 2 Std. Dev.)

Target was $11.50 based on earnings and point/figure bearish count of $8.50.

There should be some buyers of the July $12.50's (YHZSV) and give the subscriber holding such a position the ability to sit an offer in the option this morning.

Or... under current market conditions, place a stop as it relates to the stock at $11.55.

 
 
  Jonathan Levinson   7/11/02,  9:26:06 AM
The US Dollar Index was trying its best until the higher-than-expected jobless claims knocked it back down, currently just above 106.2

 
 
  John Seckinger   7/11/02,  9:22:31 AM
PPI rose 0.1% last month, while core wholesale inflationary figures posted its biggest rise since last December at 0.2%. June energy prices reportely remained unchanged; however, with the recent spike in Oil economists are most likely revising July figures upwards. The bond market is clearly trading higher because of lower equity prices; 30-year higher by 15 ticks at 105-08 (after yesterday's rise over 104-04 the objective was 105-16).

 
 
  Leigh Stevens   7/11/02,  9:17:03 AM
Pre-Opening INDEX Comments - Price areas at which I will be looking at for signs of a potential low and turnaround are:

SPX at & under 916, at low end of its hourly downtrend channel;

OEX at 455 & under, at low end of its price channel;

DJX - on a reversal to above its hourly down trendline - will have to see on levels if this develops. DJX has finally fulfilled its "minimum" downside objective implied by its Head & Shoulder's Top, by falling to 88.6 and under;

QQQ - possibly in the 23.00 area if reached. Will be watching on this to, per my comments last night. Sorry - charts need to be replaced, but comments are correct.

 
 
  Jim Brown   7/11/02,  9:16:16 AM
Pivot Trade Signals
Look out below! It appears there is no bottom to the current drop. Even good news from Kodak and Wal-Mart this morning could not keep the futures from going deeper into negative territory. The drug sector continued to be under pressure as the Financial Times published a report claiming Bristol-Meyers had overstated income by $1 billion. This could be the start of the new round of earnings disclosures as reporters seeking to make a name rip through company financials.

GM was downgraded for the second day in a row and is putting significant pressure on the futures. It appears the S&P will open well below 920 and a close under that level could be very negative to the market going forward. This is the October-1998 crash low and just above the low for all of 1998 of 912. This represents a complete breakdown of support and investor sentiment and could indicate an entirely new leg down in the current bear market.

The Nasdaq is showing a little more relative strength with futures down only -2.00 and may slow the general market drag somewhat. Of course with many Nasdaq stocks trading under $10 there is a perception that they can't get much cheaper. Looks like another fun day ahead.

 
 
  Leigh Stevens   7/11/02,  9:08:18 AM
Pre-Opening, Stock INDEXES - Good Morning!

Index Futures trading: S&P 500 > -5.10; Dow Industrials > -45.00; Nasdaq > +-3.00

 
 
  Jim Brown   7/10/02,  9:39:18 PM
The Wednesday Market Monitor has been archived and can be read in its entirety here: Link

See you at 9:15 tomorrow !

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