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  Jim Brown   9/3/02,  9:12:32 PM
Swing Trade Game Plan - Click here: Link

  Steven Price   9/3/02,  4:16:21 PM
Reader Question: Hi Steve i like your comments ( and target price ) on some observations on GE and the implications to the stock and the DOW ( and SPX ) today GE broke down the 50 dma, also the 10 dma cross down the 20 dma, and also on the PnF charts the stock made a reverse to the column of the "o"s , thanks Ernesto

Response: General Electric (GE) $28.46 -1.69 GE did reverse on the PnF chart into an area of support at $29. There is support in the current area (just above $28), both from a gap up on July 29 and on August 5 before the market began its last rally. Although GE has had some up and down movement, it has actually been in consolidation on the PnF chart since May. It has also been on a sell signal established back in April when the stock traded $34 on the way down. The current bearish vertical count is $18, established on that row of "O"s in March-April. A trade below $28 looks like it could land the stock back at $25, where it would most likely test support. $26.50 may also provide minor support as well.

  Jim Brown   9/3/02,  4:11:21 PM
Iraq - Saddam must be getting nervous. The inside scoop today was that Iraq warned Qatar that Ras Laffan, the industrial city heavy with LNG, chemicals, etc, would be destroyed if they let the US use their bases to launch an attack. It is being taken very seriously and workers in Jordan can no longer exchange Qatari Riyals for local goods/currency. Foreign interests in Qatar are beginning to become worried about Iraq retaliation. Getting a little hot on the throne in Iraq?

  John Seckinger   9/3/02,  4:03:19 PM
One more note: The September Bond (USU2) not only traded above previous relative high of 112-12 (set August 14th), but closed above this level at 112-23. This massive asset allocation shift out of equities and into bonds might help explain the increase in the volatility index (up 22.50 percent).

  Mark Whistler   9/3/02,  4:02:48 PM
I am getting curious about what is keeping the VIX so high after five plus hours of very narrow prices.
Thanks for your MM input,

To begin, as you know the VIX is supposed to provide investors with up to the minute estimates of volatility by using index option bid/ask quotes. The index is calculated by taking a weighted average of the implied volatilities of eight OEX calls and puts. Bottom line, the OEX is continuing to drop, thus, as the in-the-money options indicate, volatility (the VIX) is increasing.
The VIX closed at 43.86.

  John Seckinger   9/3/02,  3:59:43 PM
Time to recap Intermarket relationships: Dollar lower, yield curve steeper (more buying in five-year notes than 10-year), Gold higher, Utility and Oil Sector lower, Bond futures higher and CRB index lower. Everything seems in order. What does this mean going forward? Most likely not good news for blue chip traders.

  Jim Brown   9/3/02,  3:54:39 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
There appears to be no attempt to rally into the close and I see no positive news on the horizon. I am planning to hold this signal overnight and take my chances at the open on Wednesday. The markets could feed on this negativity and a new round of fund withdrawals could be on fund manager's desks tomorrow morning.

  John Seckinger   9/3/02,  3:51:34 PM
Disclaimer: I have been wrong with this one before; nevertheless, it seems as though the Dow will close on its lows and usually this means that demand could not handle the sell orders and the overhanging supply will simply enter into the market on Wednesday morning.

  John Seckinger   9/3/02,  3:47:20 PM
What do you think shares of Citigroup (C) and JPMorgan (JPM) could do in the next few days?

Response: Interesting Question. It would be too easy to say things will continue to free-fall from current levels. Why? The market seems to be falling in an area where a relative low could take form at any time and this low could then be used in conjunction with the low on July 24th. However, C is currently under the 22 DMA (33.57) and I do expect the market to test near the $28.60 level. If more aggressive with stops (instead of 22 DMA), I would look for $30.80 to be a solid resistance level. Looking at JPM, a similar pattern exists: shares somewhat in "no-man's land" and under the 22 DMA (26.01). I would expect shares to find support near 22 and not trade above Tuesday's open of 25.65.

  Mark Whistler   9/3/02,  3:45:38 PM
Keep an eye on the Semiconductor Index, the low from August 5th 2002 is at 282.75; technical bears could be chomping at the bit IF the index slips under the low. The SOX is currently at 286.19.

  Jim Brown   9/3/02,  3:40:04 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the new short signal with an OEX trade below 441 at 15:34:24. SPX 879.85, DIA 83.55, SPY 88.49, DJX 83.29, NDX 902.56, Compx 1266.40, QQQ 22.44, Emini 879.75. The initial stop loss will be OEX 444 (SPX 885) Sorry I jerked you out of that last signal but it looked like the 3:PM dive had been stopped dead at 8360 again. If we do not get a couple points here really quick I may close this one before 4:PM.

  John Seckinger   9/3/02,  3:39:25 PM
DSL is back up and running (grin). Looking at the intermarket relationships, the Dollar under 106 should keep blue chip traders at bay heading into Wednesday. Gold didn't follow-through higher, but still remains above the 70 area. Oil continues to underperform, while the Bond market settled just underneath the intra-day high (September Bond at 112-23, intra-day high at 112-29). This is yet another bearish sign. Note: Volatility Index up 20 percent.

  Mark Whistler   9/3/02,  3:37:08 PM
December gold futures GC02Z have crept above the 50-dma in today's trading. Gold is printing $315.70 at the time of this post, the 50-dma is at $314.86.

  Mark Whistler   9/3/02,  3:33:08 PM
Economic news to affect tomorrow's market includes:
the ABC News/Money Magazine Consumer Comfort Index, released at 6:30pm this evening.
Chain Store Sales Snapshot, 7:45 AM EST.
Construction Spending, 10:00 AM EST.
MBA Mortgage Applications Survey, 8:30 AM EST
Weekly Oil and Gas Inventories, 8:30 AM EST
Vehicle Sales, release time varies.

  Jim Brown   9/3/02,  3:32:20 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Looks like I jumped out of the SHORT a little early as the bounce off 8350 eventually failed. Let's go short again with an OEX trade below 441.

  Kent Barton   9/3/02,  3:22:10 PM
The 3:15 PM intraday update has been posted. Link

  Jim Brown   9/3/02,  3:15:14 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out of the short signal at 15:11:54 when the OEX traded above 443. SPX 883.21, DIA 83.89, SPY 88.84, DJX 83.73, NDX 904.86, Compx 1269.97, QQQ 22.48, Emini 883.00. When the Dow failed to break 8350 I elected to close the play by snugging the stop to near the current level. I am looking for an oversold bounce and reentry tomorrow.

  Jim Brown   9/3/02,  3:09:23 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Lower the stop loss on the current short signal to OEX 443. (SPX 884)

  Jim Brown   9/3/02,  3:08:03 PM
Swing Trade Signals
Get the barbeque sauce ready, the bull is almost done.

  Jim Brown   9/3/02,  2:51:38 PM
Editors Play - QQQ Laddered Strangle - I am getting tons of email asking if the Editors play from this weekend should be abandoned due to the huge drop on the QQQ. I am at a loss to understand why it should be abandoned. The market is doing EXACTLY what we expected and we have a very good chance of being filled on all the positions today and tomorrow. The put side will not be as profitable since it was entered on a gap down this morning but it was only an insurance position anyway. It can defray the cost of the calls if used in that manner.

I am not scared that the QQQ may hit 21.50 - I am hoping it will hit 21.50!! Remember this is a post 9/11 play. We are using October calls, not September. We are expecting a huge drop before 9/11 and a huge rally afterwards. Profit from it!

  Jim Brown   9/3/02,  2:44:10 PM
Swing Trade Signals
14 minutes left for that buy program to appear.

  Jim Brown   9/3/02,  2:43:35 PM
When you get a minute take a look at the top Nasdaq stocks on a 2 min intraday chart. MSFT, INTC, ORCL, AMGN, SUNW, DELL. These stocks represent a huge portion of the Nasdaq and Dell is the only stock that is showing any end of day life. This does not bode well for the Nasdaq's closing hopes.

  Jonathan Levinson   9/3/02,  2:40:27 PM
It might be a typo, but I've just seen Citicorp (NYSE:C, -3.00 today) referred to as "Citicorpse".

  Jonathan Levinson   9/3/02,  2:36:18 PM
First, thanks to you all for a magnificent job in keeping us current in the market. Invaluable. Second, like Rich I've just sold 75% my QQQ straddle for a nice profit. Would you sell the rest and just keep the calls at this level? I was thinking of waiting to see if it breaks down from here, and then selling the rest at today's close and putting on another straddle NOV or DEC while keeping the Oct calls as well.

Great question. Note that the calls are trading at a relatively high premium due to the huge QQV readings. However, that's not to say that they couldn't get higher. However, as the QQQ price rises, QQV should fall off, so it will take a relatively larger move to overcome the IV decay and show you a bottom line profit. On the other hand, QQQ options are notoriously "cheap" in premium, so this effect is lessened. If you have a bullish bias, you could hold the calls or sell some of them. The trouble with legging out of a complex position is that it is forced to become entirely unhedged and thus directional. Without knowing the details, I'd simply underline the short term oversold condition of the market. October contracts have many weeks to run, and other than the IV decay on a price rise, you should have several weeks before time decay becomes an issue.

  Jim Brown   9/3/02,  2:35:06 PM
Swing Trade Signals
Even though this sideways move is either boring or nerve wracking depending on your positions it is setting up for an explosive move as we approach the end of the trading day. We have had no success breaking the 8425 barrier to the upside and the 8350 barrier to the down side. The trading range has been very narrow with a slight trend to the downside. Either way you can bet we will not finish here. Traders will press the issue in about 25 minutes and you can bet the move will be strong. We could see short covering if we get a decent bounce. I would expect a buy program just before 3:PM which would be timed to try and stimulate a short squeeze. If this program does occur and fails then the party is over and 8200 would be my target for the end of the day. The countdown clock has begun!

  Jonathan Levinson   9/3/02,  2:30:08 PM
The COMPX just cratered again printing a new low at 1269. QQQ is hanging on by its nails to 22.50. Other than the weekly 5(3) setting, all stochastics are buried in oversold.

On a non-technical note, although it's been over a decade since I last read it, Herman Hesse's Siddartha said that he could do all things, because he knew how to breathe, how to wait, and how to fast. I would characterize the first two as the primary skills of the successful option trader, and the latter as the hedge against the first two (grin).

  Mark Whistler   9/3/02,  2:29:34 PM
Keep an eye on the VIX.X, which is attempting to push higher after traveling sideways for the majority of the day. Today's high is 42.43, the VIX is currently printing 42.11

  Mark Whistler   9/3/02,  2:26:48 PM
Although down, Phillip Morris (NYSE:MO) is still one of the strongest components of the Dow on the day. The stock is being pulled upwards by RJ Reynolds Tobacco (NYSE:RJR), which will replace Conoco in the S&P 500 Index after the close of trading TODAY.

  Jonathan Levinson   9/3/02,  2:01:01 PM
That’s a big help – I am playing a Oct. qqq straddle, just sold the put side for a profit. And now watching to take a run @ Novembers, so your notes on the basing of the compx help a lot your. Just thought you like to know some body hears you.

Thanks, Rich. It's your support and that of a number of other readers which helps makes this job so rewarding.

This "quiet" time is difficult to trade for an entry, and those who had the luxury of being in a position to sell into decline are feeling marginally better than those who didn't, all wondering which direction will prevail. Breadth gives us a bit of a clue, in that there are now roughly 12 declining shares for each advancing, an improvement from the 18:1 ratio we saw earlier. My ideal scenario would be a run back up to this morning's gap resistance followed by a stochastic and price rollover. But so far, the bounce has been non-existant.

  Jonathan Levinson   9/3/02,  1:47:02 PM
This flatlining market action since the initial drop had for the first time reminded me of the interminable waiting sessions from last week. The hockey stick formation today has extended further within its narrow range. The TRINQ and QQV are both incredibly persistent near the tops of their day ranges, with barely a pullback. The same can be said of the COMPX and QQQ but in reverse. The QQV continues to be the main barrier to entry here- whatever your directional opinion, volatility has risen very far very fast, jacking up the price of contracts through their IV component. Many will sell contracts with little regard to price, on volatility spikes alone. Shorting stock or shorting contracts is the way to play today, but with even short term direction uncertain for the moment, cash is an attractive position.

  Steven Price   9/3/02,  1:36:43 PM
Reader Question: Re: MXIM Is this a good entry, under $30? What do you see as a target from the PnF ? Thanks.


Maxim (MXIM): $29.77 (-1.84) I like this entry point for a short entry on MXIM. The stock is below the recent low of $29.82. There is PnF support at $28. The stock is still in correction from it previous buy signal, however a trade of $29 would establish a new PnF sell signal and a bearish vertical count of $21.

  Mark Whistler   9/3/02,  1:31:53 PM
The KBW Bank Index (BKX.X) looks very weak today, falling back underneath the 50-dma. Daily Stochastics appear fragile also, having fallen out of the overbought region in the last two weeks. Link

  Steven Price   9/3/02,  1:29:51 PM
Reader Questions:

Do you think Barr Labs has shone too much weakness this morning on it's drop or a good entry point?

With the DOW down 250 - 300 pts, and the three call plays from Sunday's newsletter (BRL, PII, & DRI) all pulling back to support levels (and what could be excellent entry points) should we look to go long these calls?

DRI has pulled back and drop $.10 below the stop, 24.50. It has held here for about an hour. DRI has fallen below it's 200 dma (24.66) but it is holding its 100 dma (24.26), are you taking this off of your screen or are you going for it? Thanks Bob

Response: Barr Labs (BRL) $67.22 -3.49 A look at BRL's chart shows suupport on three previous occasions last week, just over $66. It served as support again this morning. I would wait to initiate long plays, however, until the broader markets show a decisive rebound.

Darden Restaurants (DRI) : $24.49 -1.14 DRI is currently pinned right around its 200-dma of $24.65. Our current stop loss on the play is $24.50 (end of day). If the stock holds and breaks back above $25, this could be viewed as a long entry point. Once again, look for a broad market rebound to confirm any long play entries.

Our current play list is heavily slanted to the short side (10 puts, 3 calls)reflecting our overall sentiment. This does not mean that there are not some diamonds in the rough. Right now, all of our calls are holding at support and could provide good entries on a market rebound from today's drop. I would like to see the overall tide slow its fall, or begin a rise, however, before initiating ANY long play in an individual equity.

  Mark Whistler   9/3/02,  1:23:03 PM
The 1:00 PM intraday update has been posted. Link

  Jim Brown   9/3/02,  1:03:34 PM
Swing Trade Signals
For the dozen or so readers who have emailed me in the last hour and the many who have not the answer is Dow 8350. For those who think I am speaking in code the question was "I bailed out too early and wish I hadn't, when should I get back in?"

With the current "bounce" I would not try to pick an overhead entry point yet. I would only be comfortable at this time in jumping back in on a break below Dow 8350. If we get a real bounce from this level there is no telling where it will stop. I am not comfortable trying to pick it right now. We will wait for a rally failure before getting back in on a bounce. Meanwhile, for those of us still in the trade, you can help by hoping to get in on a breakdown of 8350 instead of getting in on a bounce. I am sure you would not want us to lose money just so you can get back in! (grin)

  Jonathan Levinson   9/3/02,  12:44:36 PM
Thank you for giving a "heads up" on the Fed Repurchase of $ 11 billion of Bills today. When you said it needed to be refunded tomorrow, does that mean this flood of liquidity will be taken away by tomorrow by the Fed? Does this affect equities only for today?

Thank you for all the help, education, support which has proven invaluable to all of us. We are all very thankful for your efforts.

Thanks back, Pali.

Yes, the $11B repo needs to be refunded tomorrow, and if the Fed adds anything less than $11B tomorrow, there will be a net drain equal to the difference. These are short term transactions. The Fed does other transactions as well- there's usually about $4B in 28 day repos open at any one time, and numerous other intermediate term transactions. There's more at the New York Federal Reserve's website at this Link

  John Seckinger   9/3/02,  12:38:38 PM
John, is this a b-formation in the Dow on a five-minute chart?

Response: Well, unfortunately it isn't. Why not? At 10:30:00 there were consecutive green candles, but then the relative low of 8391 failed to hold - nullifying the potential for the formation. Moreover, at 11:05:00 the Dow did the same thing: two green candles and then went underneath the relative low of 8370. In fact, the Dow has tried to establish the b-pattern five times; failing all five. Other technical measures must be used. In order to learn more about recognizing the "b-pattern", please see article. Link

  Steven Price   9/3/02,  12:35:24 PM
Reader Question: I've noticed you refer to P&F Charts often. Is that your default when looking for support and/or resistance and alerts? If so what chart service do you use. Also, what box size do you prefer to use. Thks j

Response: I think the more confirmation signals you can garner for a play, the better. I usually look at the daily chart first, then look for support and resistance from the short-term charts for activity throughout the day. This is usually followed by looking at the longer term trend, as well as the sector. The PnF shows larger buy and sell signals once I have looked at the play on other levels. Jeff Bailey would probably give you another approach altogether. The more evidence I have, the more money I'm willing to commit.

I usually use a $1 box under $100 and $2 box over $100. Under $20 I rely on the 0.50 box. I like to use Stockcharts.com and Dorsey Wright for tracking.

  Jonathan Levinson   9/3/02,  12:33:56 PM
A large buy candle has just bloomed on the 1 minute chart, bringing the COMPX all the way up to 1273. QQQ is trying to pick itself off the canvas at 22.50, currently bidded at 22.60. The intraday COMPX is displaying a rare "hockey stick" pattern, in which a huge breakaway gap down levels off to a flat, narrow trading range, which is where the index currently finds itself. Following what Jim said, neither side has yet to blink, but the TRINQ back at 4.96 is telling us that there is a lot of selling going on. Bond yields are strongly down, and that should keep a lid on any bounce, but the large overnight repo is the wildcard. Large bids are showing up on QQQ, but one would expect that at a major support level, and we've seen much more than that in the recent past.

  John Seckinger   9/3/02,  12:30:39 PM
Concerning the SOX.X, what levels are you looking at for shorts to cover?

Response: The 282.75 relative low set on August 5th certainly seems like an obvious place. If prices trade 282.87, shorts instead might wait to see how strong demand is before covering. This level clearly could be pivotal and turn into resistance, frustrating shorts that took profits too early. If prices do fall underneath, many shorts will most likley lower their trailing stop to 283 in case a bear trap takes form. A longer-term target would be near 261; however, that may be a tad optimistic. First things first, stay underneath 292, then test 283, then we will re-evaluate there.

  Jim Brown   9/3/02,  12:19:23 PM
Swing Trade Signals
That Dow 8350 level is getting closer with every negative tick. There is simply no good news in the market today and a break below that number could trigger another round of sell programs.

  John Seckinger   9/3/02,  12:16:52 PM
Dow down 3.33 percent while ten year note up 3.74 percent. In fact, ten-year bond (TNX.X) yield is now under four percent and only 3 basis points from its all time low. This certainly is significant for fixed-income traders. Disappointing economic data and the possibility of military action in Iraq might make bond traders think twice before taking profits. With the Dow staying underneath 8400, underperforming Oil and Biotech issues are on the verge on performing one more wave lower. The catalyst should be the blue-chips trading at 8350.

  Jim Brown   9/3/02,  12:11:08 PM
Swing Trade Signals
The lack of a continuing drop shows this is a serious support level as we expected. There have been a couple attempts to rally and each was hit with heavy selling. This shows there is strong overhead supply of sellers. The battle will continue until somebody blinks. The last couple relative highs have been lower highs and that is continuing to paint a negative outlook. However, this failure to drop to new lows could also be a warning to shorts that the buyers are increasing with each dip. I know this sounds like double talk but it is hard to say it any differently. OEX 441 is the bottom of this support range. This corresponds with Dow 8350. Until these levels are broken we should continue to expect this choppy movement and attempts to buy last ditch support. Below Dow 8350 and we could get really ugly, really quickly.

  John Seckinger   9/3/02,  12:03:55 PM
September Bond at session's high (112-25) and is clearly seeing cash enter at the expense of equities. Other notable events include interesting price action action in the Semiconductor Index, as prices (five-minute) took out the 288.28 low set at 10:20:00 but then immediately went higher. This looks like shorts getting caught. Resistance above is at 290 (currently at 288.97) and 292. A move under 288 should puts shorts back in control.

  Mark Whistler   9/3/02,  11:52:54 AM
The 30-Year Treasury just broke the most recent relative low on August 14th at 4.827%. The TYX.X is printing 4.822% at the time of this post.

  Jim Brown   9/3/02,  11:52:40 AM
Swing Trade Signals
Looks like we can kiss 8400 goodbye. Century marks are dropping fast and my secondary target of Dow 8100 this week is looking more likely with every tick. I am glad we did not take that profit stop at 445 although it would have been the right spot. We traded around 445 for over an hour before breaking through. We are in a level of congestion now until the OEX breaks below 441. Should that level fail there is nothing between there and OEX 430 but air.

  Jonathan Levinson   9/3/02,  11:42:37 AM
The COMPX has not bounced, but it's stopped tanking for the moment, which is the most bullish thing I've read or typed all day. Despite that, the TRINQ is still high and price is still weak, and the bloom has yet to fade from options premiums. There are 18 declining COMPX shares for each advancing. The CBOE put to call ratio has been above 1 all day. We could easily see an oversold bounce here. I would watch for it if the TRINQ declines further without a corresponding move in price. As a bear, I would be nervous to see the selling pressure ease off, and if price stayed flat, I might be inclined to cover. That impulse will be shares by enough bears to possibly kick off a covering bounce, but of course, it has yet to happen. The Fed money seems to be only scaring observers like me, because so far we've witnessed no large block buying, certainly nothing corresponding to the huge $11B added in. Perhaps it's being used in other markets, or not at all.

  Steven Price   9/3/02,  11:33:54 AM
KB Homes (KBH): $45.75 -2.20 OI Put Play KBH has filled its gap up from Aug 14 and also is below previous support of $45.78, just prior to the gap. Selling pressure is keeping it near its lows of the day and it does not look like the gap fill will result in a rebound. Shorts who got on at today's open of $47.95 may want to place stops just above that level at $48.00. New entries should look to initiate positions below today's low of $45.70. There could be PnF support at $45, then $42 below.

  Steven Price   9/3/02,  11:25:11 AM
United Technologies (UTX) $57.49 -1.90 OI put play UTX established a spread triple bottom breakdown on Thursday with its trade of $58.00. Today's trade of $57.00 created another "O" on the chart and got us past the "Bear Trap" of a quick reversal up. There looks to be round number support at $57.00, however the stock is seeing upside resistance at $57.60 on the 5 min chart. New short entries should look for a trade below $57.00.

  Steven Price   9/3/02,  11:21:36 AM
The 11:00 AM intraday update has been posted. Link

  Mark Whistler   9/3/02,  11:12:30 AM
The strongest stock in the Dow today is Philip Morris (NYSE:MO), which is down -0.37, or -0.76 percent for the day. The weakest stock is 3M (NYSE:MMM), falling -3.20, or -2.56 percent.

  Jonathan Levinson   9/3/02,  11:08:46 AM
The fed announced a huge overnight repo of $11B. This will have to be re-funded tomorrow to avoid a huge drain, but that is a very substantial amount of liquidity added. Other than a few stray 30,000 share bids around the 22.50 QQQ mark, I've seen little evidence of these funds hitting the equity tapes. In the past, repos of this size have coincided with strong bounces on the indices, so keep the stops in place on open shorts/ long puts.

  Mark Whistler   9/3/02,  11:04:52 AM
Just wanted to point out that today's move in the Biotech Index (BTK.X) is the first time the index has traded below the 50-dma in 17 days.

  John Seckinger   9/3/02,  11:01:48 AM
As the Dow Jones retreats by over three percent, it is slightly surprising that the Gold and Silver Sector Index is higher by only 1.15 percent. Currently at 70.26, the 200, 50, and 22 DMA all remain lower and have not been tested in three sessions. Resistance can be seen at 71.49, while a close underneath 70 could lead to more profit taking. The long-term objective should be for a move towards the 75-80 area. Symbol: XAU.X.

  Mark Whistler   9/3/02,  10:58:26 AM
The Challenger Report indicated that job-cuts elevated to the highest level in August since February. The report indicated 118,067 August layoffs versus 80,970 in July.

  Jim Brown   9/3/02,  10:51:37 AM
Any bets on the amount of money fleeing mutual funds this week as we get closer to 9/11? I bet the number will be huge. The herd protective instinct will be strong just as the urge to get back in after a quiet anniversary should produce a strong rally. Should be interesting.

  Jonathan Levinson   9/3/02,  10:43:12 AM
Volume breadth is stunning on the COMPX, with 366M declining shares versus 23M advancing. There are 90 new lows to 15 new highs, 2237 declining issues and 569 advancing. The decline has slowed here, COMPX 1276 and QQQ 22.62, and the TRINQ fell briefly to 3.72 and is back to 5. The sellers merely paused a bit.

  Jim Brown   9/3/02,  10:38:34 AM
Any suggestions if we have already taken profits?

I would look for a break under the lows of the day to signal a new entry unless we get a bounce here soon. Those lows are Dow 8388, Nasdaq 1273, OEX 444.79, SPX 885.78.

  John Seckinger   9/3/02,  10:36:16 AM
As the Dow hits 8400, the September bond (USU2) is testing the 112-12 high set on August 14th. This double-top was not unexpected, and it will be interesting if 112-12 becomes support or if traders look to fill the gap left down to Friday's close of 110-28. The U.S. Dollar, currently down 1.16% at 105.71, should be the main focus for fixed income traders. There isn't much support until the 104.88 area; however, the recent free fall could form a relative low at any time.

  Jim Brown   9/3/02,  10:35:40 AM
Swing Trade Signals
Dow 8400/OEX 445 is holding so far. Even the Nasdaq has stopped its free fall. With all the negative news there is just no buying support even though these significant support levels have been reached. Got to be some bulls mustering up the courage soon.

  Steven Price   9/3/02,  10:32:19 AM
Reader Question: Good morning Steve, where do you think we should pull out of qlgc and mxim????Thank you

Response: I don't see a reason to pull out here completely, with the Semiconductor Index (289.60 -10.59) SOX.X going south. However, this is probably a good time to lower stop losses and lock in some nice profits.

Qlogic (QLGC): $32.81 (-0.74) New stop loss - $34.00 - top of the descending channel. This stock was picked at $36.60, so taking 1/2 profits for conservative traders may be a good idea.

Maxim (MXIM): $30.27 (-1.34) new stop loss - $32.75 - Thursday's high and just above Friday's high. This stock was picked at $36.05, so taking some profits probably makes sense here. A trade of $30 constitutes a break in PnF support, and could lead to $28

  Jonathan Levinson   9/3/02,  10:31:05 AM
Love your timely commentary. It has saved me from making some bad entry points into this market. Your calls have kept me on the sideline until better entry points. One quick question: " I know that from looking at the charts provided by IO that Tradestation is being used as technical charting; however, what other services would you recommend that can be utilized to get the TRINQ and QQV real-time numbers? I trade with Ameritrade and Datek and wanted to possibly find if these services can be used to provide the technicals as mentioned.

I believe that Datek's feed can be used with Quotetracker, which is free and works very well. I use it myself and recommend it.

  Jonathan Levinson   9/3/02,  10:29:05 AM
QQV is up 5.16 and TRINQ is up 4.91. The rubber band is stretched very tight, and I would not be a buyer of contracts here. That said, any bounce will only be technical at best, and so far today all the bounces have been pauses on the way down. Trailing stops look like the way to go for selling open positions. I wouldn't be initiating new ones here, certainly not long volatility.

  Jim Brown   9/3/02,  10:27:26 AM
Swing Trade Signals
Dow 8400 is providing the current bounce. It is amazing how fast we got here after breaking 8500. Not much buying interest appeared as it appears the buyers have decided to remain on vacation until 9/11 has passed.

  Jim Brown   9/3/02,  10:23:08 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Maintain the current stop loss of OEX 448, SPX 892 unless you want to bail out now. My 445 target was hit an we saw a slight bounce but nothing concrete yet.

  Jim Brown   9/3/02,  10:20:30 AM
The NYSE has only posted 15 million shares of up volume so far today and only 13 million on the Nasdaq. Can you say run for the exits?

  John Seckinger   9/3/02,  10:14:57 AM
30-year cash bond (TYX) is free-falling in yields towards the 4.827 percent level set on August 14th. Fixed income traders appear to be buying all maturities, as equities are avoided at all costs. Sectors underperforming the Dow (-2.46 percent) include: Oil, Semiconductor, Biotech, and Networking issues. Note: Volatility Index (VIX) is higher by 15%. This could be in part due to the Greenback falling under 106.

  Jim Brown   9/3/02,  10:14:50 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Cancel the profit stop at 445. With the markets showing no strength and no indications of bouncing lets depend on a trailing stop loss instead of a forward looking stop to take us out of this signal.

Lower the current stop to OEX 448 !!

  Jim Brown   9/3/02,  10:11:31 AM
Swing Trade Signals
The ISM numbers came in weaker than expected at 50.5 which was the same number as July but less than the consensus of 52.0. This indicated the economy was just barely above recession levels, which would be anything under 50. The biggest problem was the new orders component which came in at 49.5 which is a recession level. Two dips please!

  Jonathan Levinson   9/3/02,  10:09:13 AM
The ISM numbers just came in under expectations at 50.1. That's what brought us that exhilirating WHOOSHHH we saw a few minutes ago.

  Jim Brown   9/3/02,  10:06:42 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Lower the stop loss on the open short signal to OEX 449. Just in case we get a bounce before our profit target I want to lock in these gains.

  Jonathan Levinson   9/3/02,  10:05:22 AM
Wow! The TRINQ is at 4.9 now, and QQV is holding its morning high as well. QQQ is breaking down, currently 22.69, and this is an outright sell-a-thon on the COMPX. I try not to be a gambler, and with the TRINQ this high and volatility spiking, I would NOT be an options buyer right now. Buying puts could leave you holding the bag if the TRINQ blows off and price reverses. Buying calls, even if we do get a reversal, will have you buying volatility which could collapse, taking your contract premium with it.

  Jim Brown   9/3/02,  10:01:53 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Set a profit stop at OEX 445, (SPX 882) This was the initial target for this signal as spelled out in the Game plan from Friday. If we get to this level I would like to close this signal and look for a bounce to reenter.

  Steven Price   9/3/02,  10:00:51 AM
IBM ($73.90 -1.48) OI Put Play IBM is now below its recent breakout level. The stock found resistance at $74 while forming its 7 week rectangle between June and August. Watch for resistance at this level now that it has broken down. If the stock shows new resistance here I will lower the stop loss.

  Jim Brown   9/3/02,  10:00:31 AM
Swing Trade Signals
The current dead stop is brought to you courtesy of Dow 8500. This was mentioned as support several times last week and this could be the line in the sand for returning traders. A break here could see 8400 quickly.

  Jim Brown   9/3/02,  9:51:47 AM
Jeff Bailey is on vacation this week and will be back on the firing line next Monday. John Seckinger, Steve Price and Jonathan Levinson will be filling the gaps this week so be sure and don't hold back on any questions.

  Jonathan Levinson   9/3/02,  9:45:46 AM
The first support level on the COMPX is holding so far, but without the spectacular bounce we saw in late August from this level. The TRINQ at 3.53 is signalling serious selling pressure, and the QQV up 4.75 is showing strong fear in the QQQ options market. The XAU is up 1.05 to 70.51, HUI up 1.05 to 129.69- a great day so far for gold bugs.

  Jim Brown   9/3/02,  9:42:57 AM
Swing Trade Signals
That was a fun open! Now the question is will it bounce? With thousands of traders back from vacation we could see some dip buying from those not in the markets last week. I am considering closing the short play here and reopening on a bounce but since my long term view is down between here and 9/9 I am weighing that strategy against staying in and riding it out. The A/D line has not bounced despite the tick up in the major indexes. This could indicate we are not done yet.

  John Seckinger   9/3/02,  9:41:01 AM
As expected, a weakening dollar is leading to higher gold prices. Other "normal" asset allocation developments are seen in higher five year notes versus ten year securities. This flight-to-safety towards Treasuries is defensive towards equities and should raise speculation over another rate cut by the Fed. Why? The two-year yield, now underneath 2%, is most likely getting to close to the 1.75% Federal Funds rate. In other Intermarket relationships, weakness in Utilities and the Oil Index should not be a surprise, as the two sectors have either lead the Dow or been a coincident indicator for quite a few months now.

  Steven Price   9/3/02,  9:27:54 AM
Consolidated Freightways (CFWYE) (0.71) Announced a Chapter 11 filing and said it would lay off 15,000 workers

  John Seckinger   9/3/02,  9:27:31 AM
The 9:00 AM intraday update has been posted. Link

  Steven Price   9/3/02,  9:23:58 AM
Semiconductor Index (SOX.X): (300.19) Look for the SOX to break support at 300 and possibly re-test the Aug 5 low of 282.75, after this morning's comments about Intel possibly guiding lower this coming Thursday

  Jim Brown   9/3/02,  9:19:20 AM
Swing Trade Signals
Rough day for the markets it appears. Numerous pockets of bad news are reminding investors why September is know as the worst month of the year for the markets. Japan came out of the blue to kick the legs out from under investors this morning. The day would not be complete without the required downgrade of a chip stock and Intel was the honoree today.

The current stop loss on the open short position is OEX 468 (SPX 929) These levels do not appear to be in danger at the open. However, I would caution about lowering them prematurely since an opening dip could disappear very quickly. I will play it by ear once we see if the drop is going to hold or if it is only temporary.

  John Seckinger   9/3/02,  9:13:00 AM
Ten-year bonds near four percent area and approaching a 20-year low in yield. In other news, an upbeat article on AT&T (T) in the NYT could allow shares to keep above the solid support level of 11.80 (closed Friday at 12.22).

  Jim Brown   9/3/02,  9:10:58 AM
Leigh Stevens is on a personal leave from OIN as he travels back to New York for the various memorial services for Cantor Fitzgerald employees along with some well deserved vacation. He will continue to write for the Trader's Corner during this time as his schedule permits.

  Jonathan Levinson   9/3/02,  9:03:45 AM
How do you get premarket prices on products that don't trade premarket such as ge and qqq? Suzanne

I get these quotes from the live order books at Island.com.

  Steven Price   9/3/02,  8:59:45 AM
In addition to the Nikkei's rough day, downgrades to Intel (INTC), ahead of its Sept 5 intra-quarter update, Ford (F), and Citigroup (C) are alll weighing on today's open.

  Jonathan Levinson   9/3/02,  8:55:20 AM
It's looking from here like the COMPX is going to gap down to late August's support of 1295 or so. The Nikkei gapped down and then continued a slow slide from there. I don't know whether to expect a bounce or not. Obviously, I see no fundamental reason to buy this market, and the MacD's are on sell signals, but strange things have been happening for a month. Support below the 1290-95 level is at 1280, then at 1260-65. Resistance overhead is at yesterday's close, 1315.

  Jonathan Levinson   9/3/02,  8:31:49 AM
The US Dollar Index got spectaturarly ramped over the weekend, peaking at 107.80 before getting smoked, gapping down, completing a breathtaking head and shoulders formation on the 15 minute chart and then collapsing to just below 106.00, where it currently is trading. The Nikkei had a very bad night, and the US equity futures, which had been holding on, gave up and are currently trading S&P -15.60, NDX -18.50. QQQ is trading 22.98 from a close of 23.49, GE below 30, bond yields negative, and gold trying for 315/oz.

  Jim Brown   8/30/02,  12:59:20 AM
Swing Trade Game Plan - Click here: Link

  Jim Brown   8/30/02,  12:58:55 AM
The Market Monitor for Friday has been archived. Click here to view it: Link


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