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  Jim Brown   9/4/02,  8:51:59 PM
Swing Trade Game Plan - Click here: Link

  Steven Price   9/4/02,  5:01:58 PM
Reader Question: Hi Steven, Could you pls. comment on SYMC. I bought the Oct. 30 puts as recommended. With the big move up today, would you rec. closing the play tom. a.m. if it moves up at open? Or hold since its viewed as very bearish. Where would you place the stop loss? Thanks much

Response Symantec (SYMC) $30.76 (+3.09) SYMC's run today, along with other computer security companies, came after reports that the government would increase their security budget, and positive comments about the company from CSFB. The stock is now back into its consolidation pattern that held it from the middle of may until the end of August. Our current stop loss of $31 (end of day close) would convince me that the stock is back into consolidation and I would close the play. However, the stock was unable to hold that level today, and I'm not entirely convinced that this rally is for real. The other scenario that would make me close the play is the stock finding support once again at $30

  Steven Price   9/4/02,  3:56:39 PM
Reader Comment: Re: KBH Saw your stop move from $51 to $48. However with the stock trading down to $45 yesterday I think having a $3 dollar gain erode needs review ... double bottom support ... oversold

Your thoughts welcome ... thx

Response: KB Homes (KBH)) $47.91 (+2.82) While KBH did rebound today, it only has done so to a point below yesterday's high. When we adjust our stop losses on a play that has gone quickly in our favor, we are allowing for a bounce that is not strong enough to reverse the trend. I would suggest to our readers to adjust your own stop losses to reflect your personal trading style. If you would rather not give up a gain, in exchange for the opportunity to ride a trend lower, then don't. This is a perfectly rational decision, much like taking some chips off the table when you've paid for your flight to Vegas.

In this particular play, which was entered at $47.95, I adjusted our stop to allow for additional gains, while not giving up any $ on the play. Please use our recommendations as guidelines, taking your own personal styles into account.

  Steven Price   9/4/02,  3:49:10 PM
Reader Question: Re: Qlogic

Is this a short here at 33.8?

QLogic (QLGC): OI put play QLGC $33.85 (+1.49), originally entered at $36.60, is rebounding with the rest of the broader markets, after yesterday's sell-off. It appears the stock is trying to fill the gap on August 29, from the previous day's low of $34.15. A failure at this level could signal a short entry point. Our stop loss of $34.25 (end of day) would reflect not only the ability to close the gap, but to hold it. I don't get the feeling that it will be able to hold this level, but I would wait for a Nasdaq pullback to initiate a new short entry.

  John Seckinger   9/4/02,  3:46:45 PM
Let's do pro's and con's on the Dow. Dollar above 106, marginally bullish for stocks. Gold lower by 3 percent, bullish for stocks. Five-year has been relatively weaker during last few hours, bullish for stocks. SOX index above 282.75, bullish. Oil lower, bearish. Utilities lower, bearish. Dollar, Oil, Utilities, and Dow still dealing with "significant technical damage" in last few days; bearish. Also noteworthy is the possibility that the Dow is starting to form a b-pattern; representing long liquidation. The key relative low is, of course, today's low at 8280, while the 8450 to 8490 area should be the high for any type of rebound. It may take until tomorrow to define the high. A move above 8490 should nullify such a pattern, while odds point to prices coming back to the 8365 area before "resting".

  Jonathan Levinson   9/4/02,  3:42:30 PM
It's turned into a very positive day on the COMPX with 942M advancing shares to 335M declining. The anticipated bounce has arrived. The top of the descending trendline from August is at 1300-05, and the COMPX has yet to challenge it. With all intraday 5(3) stochastics overbought, I doubt that that level will be violated. If it does, the bulls will have something to cheer about. The TRINQ at .48 is low but not extreme, ditto the QQV, back below 50 and down 2.35 on the day. The TICK.NQ is reading -20.

  Jim Brown   9/4/02,  3:32:04 PM
Swing Trade Signals
OEX 449 is the 38% retracement level from the July lows to August highs. This means 38% of the gains have been given back. Just like a retracement level provides support on a drop they also provide resistance on a rally. That same level on the Dow is 8493 with 8309 being the 50% level. This could be the reason for the solid support at 8300 all day. The reverse is true of course. Should the 50% level be breached significantly it would be a strong sell signal.

  Kent Barton   9/4/02,  3:29:08 PM
The 3:15 PM intraday update has been posted. Link

  Jim Brown   9/4/02,  3:25:06 PM
Swing Trade Signals
Looks like the bulls finally found some traction. That short trigger at OEX 446 is looking very lonely but we will leave it active in case the indexes hit an air pocket.

  Mark Whistler   9/4/02,  3:22:42 PM
Associated Press reported that the car gunman was traveling from Philadelphia to the White House. The SS found a total of 16 guns in his car.

  John Seckinger   9/4/02,  3:18:16 PM
Per 12:26:19 Post, the Semiconductor Index certainly performed a "bear trap" once the index rose back above 282.75. The high after the short squeeze was 291.67, and did seem to become the wildcard just before the bond market closed. The index is currently coming under pressure as the bids from short covering evidently didn't result in a prolonged underpinning demand. Will be interesting to see where the SOX closes.

  Jim Brown   9/4/02,  3:15:37 PM
Swing Trade Signals
Looks like a dead stop at 8420/1290/892/448. Not a good sign for the bulls.

  Jonathan Levinson   9/4/02,  3:12:29 PM
There are some large bids on the QQQ tape, but price seems to be holding below QQQ 23. The TRINQ is down at .36 and the QQV has dropped 1.61 on the day. Both of which could fall further, but resistance overhead is substantial, and there doesn't seem to be much news to fuel a strong rally from here. COMPX 1300 should keep a lid on things if we see it. Intraday stochastics are overbought and the 5(3) 30 minute stoch is trying to give us a bearish cross, but those bids are so far preventing it.

  Jim Brown   9/4/02,  3:07:04 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's go short the broader market if the OEX trades below 446 again. (SPX 890) This would represent a possible failure of the current bounce and possibly a perfect entry point for an afternoon slide.

  Jim Brown   9/4/02,  3:02:55 PM
Swing Trade Signals
Now we need to start deciding where the next entry might be. The markets appear to be stalling here at 447 which in my opinion would be a good entry point as the possibility of failure is huge. I am going to issue a new short signal now.

  John Seckinger   9/4/02,  2:48:21 PM
Some bookkeeping notes: The September Bond has now gone "into the middle of the pit" for trading, while the December Issue becomes the "top step" or "front month" contract. All this terminology means is that December is the main contract and should now become the most active futures contract. September will stay in the pit for spread trades and its liquidity will most likely dissipate in the near term. Please change your bond quotes from "USU2" to "USZ2". "Z" stands for December.

  Jonathan Levinson   9/4/02,  2:39:48 PM
The COMPX is hitting resistance at the top of the lower descending trendline on the 60 minute chart. The intraday stochastics are also overbought. I'd be more enthusiastic about a rollover here if the day's range wasn't so tight.

  John Seckinger   9/4/02,  2:36:01 PM
Interesting side note: The Bond Market Association estimates that roughly $7 billion in construction projects have been suspended, cancelled or delayed due to a lack of terrorism insurance.

  Steven Price   9/4/02,  2:33:12 PM
REader Question: Steve: Could you take a look at the MO technicals based on comments made this morning (see below); it looks it should roll down to $45. Thanks for the input. Ernesto

"Recently, the competitive environment has become even more challenging, characterized by weak economic conditions, erosion of consumer confidence, a continued influx of cheap products and higher prices due to higher state excise taxes, and list price increases... As a result, the deep discount products of manufacturers of numerous small share brands have grown market share, putting pressure on the industry's premium segment."

Response: Philip Morris (MO) $48.05 -1.46 MO has rolled decisively since breaking below its 200-dma just over $50. It's gap down on August 23, however, found support at the 50-dma and the same level provided support the day after. Between the middle of March and end of May, the 50-dma gave support on 3 separate dips as well. The current 50-dma is $46.77, which coincides closely with the $46.99 support level from which the stock bounced previously and could provide support once again. Below this, however, $45 would be the next level, as you have pointed out. A look at the Point and Figure actually shows a bull flag pattern forming, with an upside breakout point of $51. While I probably wouldn't short the stock after today's news already seems to have been priced in, if you did short it, I would use a stop loss at the 200-dma of $50.26

  Jim Brown   9/4/02,  2:30:19 PM
Swing Trade Signals
If this rally is going to stop then OEX 447 should be the ceiling. It will be interesting if our original stop loss will be hit or it will prove correct. Is that crying over spilled milk? (only if it is not hit!!)

  Jim Brown   9/4/02,  2:27:44 PM
A reader just pointed out that the SPY seller from yesterday has missed out on $30 million in gains today. $30 million here, $30 million there and pretty soon you have to get a real job.

  John Seckinger   9/4/02,  2:26:39 PM
As the Dow set a new intra-day high, I begin to contemplate the possible scenarios: Dow uses 8380 as support and rallies towards 8430, or the session turns into more of "range bound" trading and the Dow softens back towards 8340. I am more inclined to believe the latter. It is the intermarket relationships that point to the likelihood of demand losing steam: lower oil, lower utilities, etc.. Interesting note: The SOX index did in fact rise back above 282.75. This index could be the wildcard, with its settlement key. Also noteworthy was shares of INTC coming incredibly close to its P&F sell signal of 15.50 (intra-day low 15.58) before reversing course and rallying towards 16 (currently at 15.88). With all this said, I am content on the sidelines until more evidence presents itself (yes, a move in the dollar).

  Jim Brown   9/4/02,  2:19:10 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Perfect timing. We lowered the stop loss just in time to be stopped out at the high of the afternoon when the OEX traded at exactly 445 at 14:14 pm. DIA 83.93, SPY 89.25, DJX 83.75, NDX 913.05, Compx 1278.42, QQQ 22.68, Emini 886.75. That's ok, the market is not directional and we can now sit on the sidelines until a pivot point is seen. I see no future in going long today.

  Jim Brown   9/4/02,  2:10:40 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I am becoming increasingly doubtful that we are going to get to the close without a bounce. Lower the stop loss on the current short signal to OEX 445. (SPX 886) If we get stopped we will look to reenter when weakness reappears.

  Jonathan Levinson   9/4/02,  2:09:29 PM
COMPX advancing volume has widened its lead on declining volume, now 520M to 410M. There are 119 new lows versus 17 new highs. You can guess the TRINQ at .82, and the former struggle between option traders has deflated, bringing down the QQV -1.05 on the day. The stochastics on the COMPX are all over the place, chopped up in the day's directionless range. The COMPX is currently challenging the 21 period SMA on the 30 minute chart, and if fact has just crossed it to the upside for the first time since last week. We'll see if this bullishness holds, but for the moment, the COMPX remains trapped in today's range.

  Steven Price   9/4/02,  1:58:45 PM
Reader Question: Hello Steve,where would you pull out on KLAC if you were short?? Thank you again for your amazing job on the market.

Response: Let me first say that flattery will get you everywhere!

KLA-Tencor (KLAC): $29.88 (-1.28) KLAC is now approaching its October low of $28.61. That low, however, was on a day where the stock ended up at $32.24. The previous low the day before was $29.21 and we are awfully close to that level. I would probably take 1/2 profits here and put a stop loss above yesterday's high of $32.54. If the stock breaks below the October low, it could have a long way down, but if Intel says anything positive tomorrow to spur a tech rally, you want to lock in some profits now, while taking advantage of a possible sell-off.

The fact that the Semiconductor Index has reached new 52-week lows today could take KLAC with it on a new round of selling. KLAC makes products for the sector, and may go down with the ship. The October low will be a pivotal point for the stock, but until it's broken the possibility of a rebound remains.

  Jim Brown   9/4/02,  1:53:51 PM
Swing Trade Signals
Interesting pattern in the 5-min OEX chart. Every time we hit the upper band the rally stopped. Should this pattern fail I would vote to close the short position. Link

  Steven Price   9/4/02,  1:47:40 PM
Reader Question: good morning Steve: Qcom in a trading channel, at present we are long, do you see a near term to the upside to 30 or a breakdown to 25,would appreciate your comments on market monitor. Thank you, Michael

Response: Qualcomm (QCOM) $26.92 (+0.03) QCOM has rolled over twice just above $30, and right now the trend in the stock looks down, at least to around $25. The fact that today's high of $27.64 is higher than yesterday's top of $27.60 is a slightly bullish sign, but it has encountered resistance at the 50-dma ($27.60) both days. The 50-dma has also provided resistance on the last 4 rollovers. Although it broke through this levelto the upside on August 15, it could still provide a ceiling on the stock now that it is back underneath. The other problem I see with a long position here is the series of lower lows both long-term and short term. The long term picture shows lower lows on May 7 ($24.63), July 2($24.24), and Aug 5 ($23.21). There is also a series of lower lows the last five days. I just don't see this as a bullish candidate right now.

  Mark Whistler   9/4/02,  1:39:33 PM
Dow Jones reports that there are no explosives found on arrested suspect.

  John Seckinger   9/4/02,  1:37:45 PM
As the Dow slightly recovers and most likely squeezes shorts, the Semiconductor Sector Index (SOX) remains underneath the 282.75 level. This is most definitely shorts defending their positions, knowing that a rise above 282.75 could became a catalyst for short covering, forcing them to take losses. Elsewhere, Gold issues remain under pressure as the Dollar rises above 106; moreover, both the Oil and Utility Index continues to test resistance set during trading on Tuesday. It is my opinion that both Oil and Utilities will need to rally in order to allow for blue-chips to gather momentum to the upside. Both indices have come under severe "technical damage" during the last fews of trading.

  Steven Price   9/4/02,  1:37:24 PM
Symantec (SYMC): $29.61 +1.64 OI put play SYMC has bounced with the rest of the sector. Apparently there is an expectation that President Bush's advisers will be calling for a large increase in the government's budget for computer security. SYMC generates 10-20% of its sales through the government. The stock fell yesterday, in spite of the Department of Health and Human Services signing up as a client. However, today's report seems to have lit a fire under the sector. SYMC filled its gap down from yesterday morning, but is looking like it has run out of steam. I would not recommend new short entries on this play unless we see a decisive rollover in the stock, however, possibly below yesterday's high of $28.50.

  John Seckinger   9/4/02,  1:19:14 PM
Current Events: The Secret Service issues an alert for man with explosives, believed to be heading to D.C. Fortunately, just moments ago this car bomb suspect was arrested.

  Mark Whistler   9/4/02,  1:18:24 PM
The 1:00 PM intraday update has been posted. Link

  Jonathan Levinson   9/4/02,  1:11:27 PM
I am long OEX/DJX and I thought we would have an oversold rally today. When you have time could you address the extreme oversold conditions on the 60-minute charts (OEX, SPX, DJX) and the extreme readings on the %K on the major indexes When I look at the OEX, DJX coupled with the high VIX/VXN readings I would expect a rebound. The TRIN and TRINQ were very high during the past several days as well...Currently the 5&10 day SMA's on the TRIN = 1.94 and 1.63 respectively...and on the TRINQ 1.92 and 1.53 respectively.

Also how do you utilize the TRIN/TRINQ for intraday trading

I love your service and have recommended it to several of my buddies.

There's the question that kept me confused from 5AM onward today. Please see my opening post this morning. Since that time, these indicators have blown off a great deal of steam from the morning's "bounce". I continue to be unsatisfied by the day highs, and if everyone will stop chuckling for a moment, I'll continue. The oversold extremes reached by the market yesterday were either "just" a big down day or the start of something much bigger. I personally vote for the latter. Just as we saw extreme, unsustainable overbought readings at the start of the August madness rally, day after day, with the 5 day ARMS breaking records, ditto the VIX/VXN collapse, so can we see the same extremes to the other side of the pendulum's arc. When a tidal wave begins to build, the initial readings of velocity, force, etc., will slam off the charts given the abberant forces at play. If we are seeing the same thing in the market, that would explain the irregularly extreme readings on our more sensitive indicators. The 5(3) stoch setting is very sensitive, and tends to get buried in a trending market. So too with the ARMS readings. I continue to expect some kind of a bounce, something slightly less pathetic than the one we witnessed this morning, followed by a larger decline. However, that's just my guess.

The TRIN and TRINQ (TRIN for the Nasdaq) are realtime breadth indicators. Leigh has an excellent article all about the TRIN in Trader's Corner or Options 101. When it gets very low (depending on day's range below .4 or .3), we are witnessing an extreme surge of buying pressure. Above 3, we are witnessing extreme selling. Like the tachometer of a car, it's best to observe its patterns before trying to use it in predicting the immediate future, but it's a very valuable tool in combination with our other indicators. When it's very low, I look to cover long positions (close long calls/stocks, cover short puts) and when it's high, I look to cover shorts (close long puts, cover short calls/stock). But, again, it's one indicator among many, and I don't adhere to it religiously- I only report on it that way (grin).

  John Seckinger   9/4/02,  1:09:40 PM
For the fourth time today, the 50 PMA (currently at 8335) on a five-minute chart acted as resistance. Other interesting developments include increasing bids in the five-year note, creating a solid "steepener" in the yield curve and reinforcing fixed income traders' bearish opinion on stocks.

  Jim Brown   9/4/02,  12:55:49 PM
NSM Earnings
NSM posted earnings of a penny a share, an increase over last year, but warned that the future is dim. They are guiding flat to down -5% with margins flat to down. "Early indications for the holiday season are not strong and weak end user demand is continuing to be a problem despite pockets of opportunity for specific products." The list of potential risk factors was long and included the ability to sell existing inventory at existing prices. Sounds like some distress sales in their future.

  Jonathan Levinson   9/4/02,  12:50:38 PM
Advancing volume is actually leading declining volume on the COMPX 375M to 350M. The TRINQ is therefore still in neutral buy territory, currently high for day at .86. The QQV is now slightly north of flat on the day. These readings are surprising given the breakdown past yesterday's support. The move in price is being met with complacency, as even the p/c ratio remains neutral at .73. Contrary to yesterday, there appears to be little fear at these levels. Either the bulls know something we don't, or they're in for a rude awakening.

  Jim Brown   9/4/02,  12:50:30 PM
Swing Trade Signals
Traders are holding on to Dow 8300 by their fingernails. Declining volume is soaring but the averages are still flat. We are building pressure for an explosive move soon. The EKG for the market is flat with falling blood pressure. The defibrillator is on the way but the result could be in either direction!

  Jim Brown   9/4/02,  12:40:42 PM
Swing Trade Signals
The Nasdaq A/D line has gone negative but the NYSE is still slightly positive. The volume has slowed to a crawl with the markets basically flat for the day. Everybody is waiting for somebody else to blink. The trend is still down and we have bleed off all the dead cat bounce gains from yesterday's drop. That was the second biggest drop of the year for the Dow and the fact we have given back all the rebound is negative as well. With NSM warning that the holiday quarter is looking very weak and revenue is expected to be flat to down due to extremely low consumer demand I don't see any hope for the semi sector or the Nasdaq. This is sure to weigh on investors trying to decide to hold profits over 9/11 or move to the sidelines.

  John Seckinger   9/4/02,  12:39:54 PM
Hello John Could you please explain what you meant by a Bear Trap as it relates to the SOX?

Sure, a "bear trap" is a situation that occurs when a bearish trend reverses course as bearish investors continue to sell short. These bears are eventually forced to buy at a higher price to cover their short position when the decline doesn't occur. As far as the SOX is concerned, it is my opinion that bearish traders are selling underneath the 52-week low of 282.75. Therefore, if prices begin to rise above 282.75, these shorts will be caught in a "bear trap."

  John Seckinger   9/4/02,  12:26:19 PM
Semiconductor Sector Index is now underneath the much-discussed 52-week low of 282.75. Currently at 279, this index should not trade above 282.75 in the near term, since a rise upwards could be considered a bear trap.

  John Seckinger   9/4/02,  12:17:38 PM
What are your thoughts on Autozone (AZO) in the near term?

Response: The bullish channel which began on July 24th was finally broken to the downside on Wednesday. Moreover, the 22, 50, and 200 DMA's were all tested and failed to act as support during trading on Tuesday. Currently down three percent at 68.87, shares should continue to trade towards 65.50 before value players step in. If momentum reverses and shares settle above 70, sentiment will shift to more neutral readings. The nearest DMA is the 200 at 71.22. Intermediate support can be found at 68.50 and just underneath 67.

  Mark Whistler   9/4/02,  12:09:04 PM
National Semiconductor Corporation (NYSE:NSM) trading halted.

  Jonathan Levinson   9/4/02,  12:07:44 PM
COMPX price is now resting at the lower ascending trendline projecting from yesterday's close, currently 1270. The QQV is at the lower end of today's range and the TRINQ at the upper end, still another divergence between the QQV and TRINQ. All 5(3) intraday stochastics are pointed south, and we could be about to see a break of the daily lows here.

  Jim Brown   9/4/02,  11:55:53 AM
Volume Selling in SPY I have had several readers ask about the huge block trades after the bell yesterday. "Who would take the other side of the trade?" and "Why such big trades in after hours when volume is very small?" VERY GOOD QUESTIONS!!

First, the market makers had to take the other side of the trade. That is their job. Second, I would bet a weeks salary that the orders came in at 2:40. If you look at an intraday chart of the SPY there was a sudden solid down trend from 2:40 lasting into the close. I suspect the market makers saw these huge block orders appear and immediately started selling short into the market. They dug a huge short hole over the next 90 minutes and then filled it with the block orders at the close. This is why the blocks were logged into the books after the close. Nobody in their right mind would try to move 30 million SPY in the after market.

Think about it. If you suddenly saw you were going to be put 10,000 shares of IBM at tomorrows opening you would be selling IBM short as quick as you could to create a hole 10,000 shares deep. When you are put the hole would be filled and you escape with minimal damage.

This is just my opinion on the SPY orders but I would bet on it!

  John Seckinger   9/4/02,  11:52:30 AM
Thinking outloud: The Dow did soften slightly from near the 50 PMA (five minute chart, currently at 8357), while both Oil and Utilities have rallied back to resistance levels. One concern is Gold, which is weaker than expected, and has me wondering where the cash went. Sure, some to the dollar, but not all. The five-year note still points towards lower stocks; however, getting slightly impatient that sell-off in stocks didn't materialize faster. Just thoughts.

  Mark Whistler   9/4/02,  11:42:25 AM
I just wanted to quickly point out that the weekly MBA Mortgage Applications composite number slid slightly for the second week in a row. The composite number came in at 1059.5, down from 1079.7 one week ago. Interestingly, the refinancing portion of the composite dropped, falling to 5159.6 from 5355.4. Unlike last week, the purchasing index rose slightly to 359.7 from 344.7. Overall the housing market still remains very stout, as long as interest rates remain below 7%.

  Jim Brown   9/4/02,  11:39:50 AM
Swing Trade Signals
The current bounce will reach the top of its trend channel around OEX 444.50 if it continues. I considered lowering the stop loss to just above the channel at 445 but the two point difference is not that material and the chances of being stopped out would increase significantly. I would rather continue to lurk well above the high of the day and let the guys on the floor beat themselves up over a few points and leave us forced to exit only if the bears lose the battle decisively.

  John Seckinger   9/4/02,  11:37:49 AM
An Observation: The Dow, currently up 45 at 8353, is underneath the 50 pma (five-minute chart) by only 6 points; however, this 50 PMA has acted as formidable resistance already two times during today's session. There may be stops above such a level. Note: Oil and Utilities remain in the red, and there is still interest in five-year notes (bearish towards stocks).

  Jim Brown   9/4/02,  11:21:52 AM
Swing Trade Signals
Interesting comments on CNBC just a minute ago. They pointed out that nearly 30 million shares of the SPY were sold after the close. At $88 a share this is a huge amount of money and represented a flight out of the market by big money. There were numerous block trades in the multiple millions of shares. This should be a clue to small traders. Of course we don't know if they were long from the July lows and taking profits or long from the August highs and taking losses. Either way they are telling us they don't see any upside in the near future.

The volume today is increasing and advancing volume is slowing. The A/D line which has been positive all day is on the verge of dropping into negative territory. The averages are still positive but well off their highs. I suspect that a drop into negative territory will be the signal for the bears to reappear in volume. We will sit patiently and watch because I believe the volume trades mentioned above are the leading indicator for this afternoon's direction.

  Steven Price   9/4/02,  11:14:24 AM
The 11:00 AM intraday update has been posted. Link

  Steven Price   9/4/02,  11:14:05 AM
Symantec (SYMC) $29.50 (+1.83) Without significant news in OI put play SYMC, I would wait for a break back below Fridays low of $28.51 to initiate short positions.

  John Seckinger   9/4/02,  11:12:19 AM
The 30-year Treasury Bond (TYX.X) has just set a new low in yields at 4.80 percent, and this buying of bonds should translate into selling pressure for equities. Speaking of equities, the Semiconductor Index has now turned negative (284.82), with all eyes most likely looking for a retest of the 282.75 low set on August 5th.

  Jonathan Levinson   9/4/02,  11:10:42 AM
The COMPX has completed a round trip to where it began today, around two points off its lows. The TRINQ is still in a neutral buy zone at .73, and the QQV remains flat. There is so little conviction in either direction that the best I could have done today would have been two scalps, and so I'm remembering to breathe and stay patient. Every day can be profitable, even if not immediately on paper, and patience is always a good strength to work on. That said, yields fell along with the indices- anything but a bullish sign. I'm still hoping for a more significant bounce to short- I can't explain why, but that didn't feel like "it". The CBOE put to call ratio fell to .68 as its low of the day- perhaps it's not low enough yet, ditto the QQV as Marc observed. Time will tell.

  John Seckinger   9/4/02,  10:59:17 AM
Note: A stronger dollar should pressure the Gold Index (XAU.X), currently down 1.83 percent to 69.47. If this index stays under 70, odds greatly increase for a move back to the 50 DMA at 67.73. This DMA exactly correlates to a 38.2 percent retracement level using the June 4th high of 89.11 and the July 26th low of 54.67.

  John Seckinger   9/4/02,  10:37:49 AM
It is my opinion that the only thing saving the Dow is strength in the US Dollar. There are rumors that Asian central banks are selling Japanese stocks and buying the Greenback to "window dress" their portfolio. Other factors for a stronger dollar include technical selling in the Euro as 0.99 is tested, as well as yen selling from foreigners as the Nikkei continues to fall.

  Jonathan Levinson   9/4/02,  10:30:38 AM
Is a divergence between the QQV and TRINQ a viable signal? Today we are seeing a rising QQV and lowering TRINQ, which could mean the buying pressure is not sustainable?

Excellent observation!

Your interpretation may well be correct. The QQV is currently down on the day at the moment, but not to a sufficient degree to coincide with the TRINQ collapse. It means that the options market is more fearful than the broader market. A TRINQ below .30 shows a spike in buying equal to hysteria, as yesterday's 5+ TRINQ reading was a selling frenzy. The QQV staying flat indicates that option traders have yet to break out the party hats. Option traders, I would *guess*, are more sophisticated than the broader market, and so I'd follow the QQV first. Note that bond yields are flat to negative- the same case can be made for the bond market as well. And so, yes, I'm certainly not bullish on this rally. For me it's only a question of timing the short correctly.

  Steven Price   9/4/02,  10:25:48 AM
Exelon (EXC): $44.25 -1.08 OI put play EXC can't catch a break, even with a broad market bounce. The stock is already trading below yesterday's low of $44.51. Yesterday's trade of $45 created a new PnF sell signal, with bullish support at $41.

  John Seckinger   9/4/02,  10:18:23 AM
Sector Search: With the Dow currently higher by 0.67 percent, sectors outperforming include Biotechs, Semiconductor, Networking, Internet, and Securities issues. Indices underperforming include Gold and Silver, Oil, Utilities, and Natural Gas. My favorite continues to be selling pressure within the Oil Index (XOI.X) and weakness in shares of Sunoco (SUN).

  Jim Brown   9/4/02,  10:10:22 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
If you are not in the current short signal a drop back below OEX 444 would be a new entry point.

  Jim Brown   9/4/02,  10:08:49 AM
Swing Trade Signals
Last night I mentioned that a 50-75 point opening bounce would relieve the pressure on the oversold internals and allow us to start a new leg down from a neutral position. The +57 point bounce has dropped the TRIN back to .86 from 3.88 and the VIX back to 42.25 from 44. With the low volume this morning the majority of our gains came from a buy program at 9:38 which added nearly +4.50 points to the OEX. Now that the opening volatility has eased we could see yesterday's trend reappear. The Dow/OEX/SPX all failed to reach their afternoon resistance levels and appear to be rolling over. Still to early to tell for sure but futures are showing weakness as well.

  Jonathan Levinson   9/4/02,  9:59:58 AM
This little eruption on the COMPX was enough to relieve the oversold readings on all the intraday 5(3) stochastics and bury the TRINQ at .26 and lower. QQQ is trading around 22.75 and QQV is fluttering around the zero mark, flat on the day around 51.40. Bears should be hoping to see this rise a little higher and then keel over, bringing the stochastics with it from overbought. I would love to see this happen at either COMPX 1290 or 1300. I remember the pattern in August, during that spectacular ramp job, when the COMPX would spurt up 5 to 10 points, pause, settle a little, then spurt up again. It did this for days. Be careful, and wait for confirmation from the oscillators before putting on puts, and in any case, keep the stops tight.

  John Seckinger   9/4/02,  9:58:47 AM
One Index that continues to lag the Dow is the Oil Index (XOI.X). Currently down 1.13 percent at 464.32, one company that could fall even faster than the overall index is Sunoco, Inc. (SUN). Shares of SUN are currently at 33.89, Optionable, and seems likely to fall a few more dollars before value players step in. Downside objective is just underneath 32, while a move above 34.69 should nullify bearish sentiment.

  Steven Price   9/4/02,  9:52:21 AM
Reader Question: Steven would offer comment in the MM on KBH and possible impact ... thank you

Response: KB Homes (KBH)$46.23 +1.15 KBH released August and Year to Date sales numbers this morning. August sales showed an increase, weighted heavily to West Coast orders. U.S. sales were up 8.1%, while sales in France were down 1.6% YTD sales were actually down 0.5% in the U.S., while sales in France were up 20.4%. YTD totals for the company have sales up 2%. The stock is rebounding this morning from yesterday's big drop, but the homebuilders in general are seeing a slowdown from the record pace of last month, as evidenced by a drop in purchasing applications. While demand is still strong, the stock looks overbought on expectations of previous rates continuing.

The breakdown below the gap of Aug 15 and close on the low esterday continues to look bearish. I would wait for the Dow to roll to the negative side before initiating new entries and have lowered my stop loss to $48.00, just above yesterday's high.

  Jim Brown   9/4/02,  9:46:42 AM
Program Trading According to HL Camp the program trading triggers for today are +$1.22 for buy programs and -$1.82 for sell programs. Fair value at the open was $.19 or basically flat.

  Jonathan Levinson   9/4/02,  9:40:32 AM
Buy program on the COMPX.

  Jonathan Levinson   9/4/02,  9:37:47 AM
A slight gap up open on the COMPX as price chops along at the top of gap support. QQQ is struggling to hold 22.50 again, and didn't participate in the morning jump. The TRINQ made it down to the low .30s and is now rising. If that was the bounce we were expecting, the slide should be substantial. Price has begun to fill the gap as I type, but it's a small distance. We'll see how it does at gap support, just below 1264.

  John Seckinger   9/4/02,  9:36:22 AM
Morning thoughts: September Bond (USU2) up two ticks, possibly indicating that fixed income traders do not believe the morning rise in the Dow. The Dollar is fractionally higher as well, nothing to hang your hat on. Looking at the yield curve, five-years are experiencing relatively strong demand; however, all eyes are most likely on the major indices. Both the Oil and Utility Sector are in the red, and this could keep the Dow from rallying.

  Jim Brown   9/4/02,  9:24:49 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Raise the stop loss on the open short signal to OEX 447. (SPX 891) Hopefully we won't need this room but I want to give the market some room until the volatility eases.

  Jim Brown   9/4/02,  9:22:40 AM
Swing Trade Signals
The futures are bleeding a little green as we near the open. It appears there was a small interest in buying the dip this morning in the premarket but that interest is waning. The indicators were very oversold at the close and the open could see some high volatility until a direction appears. I am going to widen the stop losses for the first few minutes to try and avoid being hit during this volatility.

  John Seckinger   9/4/02,  9:21:30 AM
The 9:00 AM intraday update has been posted. Link

  John Seckinger   9/4/02,  9:06:51 AM
The Nikkei falls another 1.5 percent overnight due to concerns over Japanese banks, while in Europe the Euro rises to over 0.99 against the US Dollar. Dow futures currently up 35 points, which is somewhat surprising given possible selling pressure in a plethora of technology companies. In other news, Salomon Smith Barney initiates coverage on the enterprise infrastructure software group with an underweight weighting. Companies include MERQ, ORCL, CA, and VRTS.

  Steven Price   9/4/02,  8:56:04 AM
Intel (INTC) : $15.86 Looks like Intel's Thursday mid-quarter update could be even more important after another Intel downgrade this morning. Merrill and CSFB cut 2002 and 2003 estimates based on weaker than expected PC demand, and severe price cuts on Sept 1. This could help push the Semiconductor Index (284.94)below its recent low of 282.75. If Intel has anything surprising to say we could see a rebound, but after downgrades the last two days, along with predictions of an earnings estimate cut tomorrow, we could see another round of selling for the chipmakers.

  Jonathan Levinson   9/4/02,  8:20:04 AM
The US Dollar Index took a slow rise all night and has just backed off the 106 mark, trading 105.90. Equity futures are trading a hair north of unchanged, with Island's realtime bookviewer showing QQQ at 22.46 x 22.48. I'm eager to see how the market opens breadth-wise, being short term confused about where it wants to go. The p/c ratio was above 1 all day yesterday- which to me says oversold. The QQV spiked, but is still in a neutral zone- remember it above 60? The TRINQ was at or near 5 all day, which is very oversold. Yet the oscillators, particularly the MacD on a daily basis, issued huge sell signals. I hate to be that guy, but I expect some kind of a bounce after yesterday's action, given that the shorter term indicators are oversold. Then again, a big move will always initially bury the more sensitive indicators, so we could be seeing that as well. In short, I'm in doubt, and so intend to try to stay out until I can get a clearer read on things.

  Jim Brown   9/3/02,  9:16:14 PM
Swing Trade Game Plan - Click here: Link

  Jim Brown   9/3/02,  9:15:18 PM
The Market Monitor for Tuesday has been archived. Click here to view it: Link


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