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  Jim Brown   9/5/02,  8:51:00 PM
Swing Trade Game Plan - Click here: Link

  Jim Brown   9/5/02,  4:21:46 PM
Stock picks Survey 109 for, 4 against. 3 want the mutual fund info removed. This is the last update on this topic! Thanks for the quick response!

  Jim Brown   9/5/02,  4:17:16 PM
From Intel: Intel expects revenue for the third quarter to be slightly below the midpoint of the previous range of $6.3 billion to $6.9 billion, and within a narrower range of $6.3 billion to $6.7 billion. Microprocessor unit sales are trending toward the lower end of the normal seasonal pattern. The company's flash business is in line with expectations, while demand for other communications products remains soft. All other expectations are unchanged.

  Jim Brown   9/5/02,  4:13:43 PM
Intel Listen to the Intel conference call here: Link

  Jim Brown   9/5/02,  3:56:16 PM
Stock picks We are considering adding a section to OIN where we analyze stocks for the long term and make pure stock recommendations along with insurance/hedging recommendations for those stocks. We are not sure this is something everyone would like or just add more bulk to the emails. I would like your comments on this project. Yes, no, forget it! etc.

  Jim Brown   9/5/02,  3:47:55 PM
Swing Trade Signals
We have not gotten the post 3:PM sell off although the trend is still down. If you don't want to risk holding over the Intel announcement now is the time to exit. For reference the OEX 430 put is bid at 10.00 compared to ask 10.40 when the signal was triggered. Closing a 10 contract position will cost you $400 compared to the possibility of a major move if Intel says something positive or even less negative than expected. Decide now.

  Kent Barton   9/5/02,  3:24:15 PM
The 3:15 PM intraday update has been posted. Link

  Mark Whistler   9/5/02,  3:22:56 PM
Program trading update: FairValue for the S&P 500 today is $.18. Program buying begins at $1.52 and program selling starts at $-1.52. The symbols to watch progarm buying are: @prem and $prem, prem.x, $sps, and $spinx.

  Jim Brown   9/5/02,  2:58:31 PM
Swing Trade Signals
Another reason we may be seeing an afternoon drop is the jobs report tomorrow. With the rising jobless claims and the higher than expected Challenger layoff report earlier this week the odds are really good that the Non-farm payrolls report will be very negative. This would provide more ammunition for the double dip crowd. This is the last report for the week and coupled with a negative Intel outlook will hopefully provide that market dip to Dow 8100.

Please remember that holding a short position overnight can be very expensive if either of these news events turn out bullish. If it was only Intel tonight I would probably go flat the OEX and long INTC calls. The addition of the jobs report makes the risk reward ratio tilt in favor of being short in my opinion. I would love to be below OEX 436 before the close, well below!

  Jim Brown   9/5/02,  2:47:49 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
After an hour of waffling around at Dow support of 8300 the short signal was finally triggered at 14:43:12 when the OEX traded at 439. SPX 878.49, DIA 83.05, SPY 88.38, DJX 82.38, NDX 885.48, Compx 1255.20, QQQ 22.00, Emini 877.50.

Now we need a huge drop at 3:PM to get us far enough in the green (red) to offset any positive Intel news after the bell. Hopefully they will guide way lower and we will get that massive reaction drop at the open tomorrow.

The initial stop loss will be OEX 443 (SPX 881, DJX 83.20 est)

  Steven Price   9/5/02,  2:39:05 PM
Reader Question: Wonder if I could get your read on GE. It seems to be in a p/f sell, or close to it but seems oversold on a near term basis. Is this or is this beginning to look like a good short.

Response: GE $28.00 (-0.70) GE did create a new sell signal on the PnF chart. The daily chart looks bearish as well. It is now below its Aug 5 low of $28.27. I like the stock as a short, however, keep in mind it is a prime candidate to rebound with a market bounce. The downside target is around $23. The 5 min chart shows support around $28.00 ($27.99 low), so look for a trade below that level to initiate a short.

  Jonathan Levinson   9/5/02,  2:35:05 PM
Looking at the 10 minute chart of the COMPX, we have in fact broken out of the wedge to the downside, but our intraday support at 1255 is so far supporting the price. QQQ 22 remains the corresponding level to watch. There are 866M declining shares against 215 advancing, and to my mind Intel remains the main uncertainty causing traders to hesitate.

  Jim Brown   9/5/02,  2:32:37 PM
Swing Trade Signals
The markets appear to be settling in to a lower level just above the morning drop. Several readers have asked why. It appears the bulls who bought the dip were strong enough to stop the drop but did not have enough volume to maintain the advance. On the other side the bears may be backing off from the brink. The risk/reward ratio may not be as favorable for shorts after a 50% retrace of the August gains. With many people expecting a rally next week then how much farther can we drop? At least that is probably the thought process from the bear point of view.

We also have the Intel guidance tonight. With a ton of bad news already priced in there is little risk to the downside unless they really predict a disaster. With the Dow only 200 points away from 8100 and my pre-911 target we may be seeing the impact of that "bottoming process" that everyone keeps talking about.

Personally I would love to see a blowout this afternoon, horrible news from Intel and another blowout tomorrow morning that would push the OEX to 420. I would go long and hold my breath until 9/11. Just my opinion.

  Mark Whistler   9/5/02,  2:27:42 PM
1:24 pm EST, TEVA Pharmaceutical Industries Ltd. (NYSE:TEVA) announced that the FDA had approved the company's ANDA for Cefaclor. The generic drug will compete with Eli Lilly's Ceclor CD, marketed by Elan (NYSE:ELN).
Teva has been trying to trade higher on the day, though the stock was down -0.08, $65.32 at the time of this post. The daily chart indicates that the stock has recently pulled back to the 50-dma at $65.15.

  Jonathan Levinson   9/5/02,  2:13:30 PM
Thanks for all your insight & technical assistance. My question is : where do I go to find out the 10 to 15 top holdings of the triple Q's? I'm sure of a few of them, but would like to know more and can't seem to find the right site to give me this information. Thanks for your time. Always appreciate your comments on the Q's.

Flattery will continue to get you everywhere! Try this Link

  Mark Whistler   9/5/02,  2:12:51 PM
Moody's cut Qwest Communications debt...details not available yet. I think their debt was cut to CAA1, but haven't confirmed it. Maybe Moody's was 18 months behind on that one?!

  Jim Brown   9/5/02,  2:03:18 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the stop loss on the LONG signal at 14:00:26 when the OEX traded below 440. SPX 881.62, DIA 83.34, SPY 88.68, DJX 83.13, NDX 887.05, Compx 1258.37, QQQ 22.05, Emini 881.75. The SHORT signal is still active at OEX 439 (SPX 878)

  Jonathan Levinson   9/5/02,  2:00:48 PM
The bloom faded pretty fast, and a lot of those 30,000 share orders are underwater now, back at the lower end of this wedge we've been watching develop. John asked me which way I think it will break. Well, the short answer was no. However, breadth is strongly negative, the TRINQ and QQV are up, the news is bad, and QQQ is resting right at support. My guess is that we break south. But only time will tell. It should come shortly.

  Jim Brown   9/5/02,  1:58:55 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Maintain the SHORT trigger at OEX 439 (SPX 878) If the markets roll over I want to make sure they take out that Dow 8300 support. Cautious traders may want to wait for OEX 435 as an entry point as that is under the 50% retracement at 436.

  Mark Whistler   9/5/02,  1:56:37 PM
Although the 30-year Treasury yield has been trying to hang in there today, the TYX.X has been slowly slipping negative in the last 15 minutes. The TYX.X is printing -0.03, 4.780% at the time of this post.

  Jim Brown   9/5/02,  1:55:41 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Raise the stop loss on the current long signal to OEX 441.

  Jim Brown   9/5/02,  1:55:15 PM
Swing Trade Signals
I think the bullish sentiment is finally fading despite the big money attempt to hold up the market. We now have a lower high and higher low on the OEX so the pressure is building for a strong afternoon move. I am going to raise the stop loss to OEX 441 and go flat if triggered. We will leave the short trigger at 439.

  Jim Brown   9/5/02,  1:49:20 PM
Please only issue signals when we will make a profit. Man, ...great idea! Why didn't you think of that, Jim?

I follow the monitor all day but rarely take your exact entries. I'm usually way ahead of you because I can be more nimble and I'm more proactive than reactive. Occasionally, I'm on the other side of the trade even. The important thing is I can make decisions for myself and I am successful by anybody's standards. BUT, I owe at least 90% of my technical knowledge and 70% of my trading methods to having been an OI subscriber for 4 years. Keep up the good work. -WS

Hi Jim, Had to laugh at the comment posted to you. I would like the same service from you. Please only tell me trades that will make me a profit. I will pass on those you see as losing trades that you post. Any trades you feel unprofitable keep to yourself!! LOL!! :-) THANKS!!! JR

I had to post a couple of the responses out of the dozens I received. I was not picking on Sunil. Sunil is a frequent emailer and we correspond frequently. I felt some despair in this mornings email and that is why I posted it. If Sunil was feeling that way so were many others.

I rate the numbers of emails like pollsters do. If I get 5 on a subject then I know there are at least 50 readers who feel the same and I need to address the issue. The bottom line is that we are all responsible for the decisions. Once we pull the trigger on the order with our broker it becomes OUR position not Jim's position, or Steve's or Jeff's. We all need to take all the input we can get, analyze the options and make the call that fits our risk profile.

  Steven Price   9/5/02,  1:45:45 PM
Reader Question: Hi Steven! What do You think of AIG? I hold Sept $60 put.Looks like strong resistance at $59.00.Also stock is very sensitive to market movements. I can see strong buying when goes up. Thank You. Martin

Response: American International Group (AIG) $59.05 (-1.20) I actually see resistance just under $60. The stock is sensitive to market movement and to movements in the insurance sector. You may want to track the Insurance Index (IUX.X) as well. The stock is coming back a little bit with the rest of the market, however the graph still looks bearish. My only concern is support from Aug 5 of $57.20. If you are willing to limit any gains on the play to $5, you can sell the Sep 55 put for its current bid of $1.10 to limit any loss in the case of a market bounce. I keep looking at the graphs of the last few years and seeing how bearish September looks, and I am not looking to close shorts that are going in my favor right now.

  Jonathan Levinson   9/5/02,  1:37:27 PM
There's a strong bid on QQQ now, and those 30,000 share monster-truck bids are all over Island's bookviewer. The TRINQ is down to 1.43 and the QQV now up only 1.34. Bond yields are mostly unchanged, with only TYX positive. QQQ is just below its overhead resistance in the 22.30 area. Beadth has improved somewhat for the COMPX, 702M declining to 226M advancing shares. I keep wondering whether to buy puts, or buy calls, or do nothing. So, I've been practicing breathing and being patient, and waiting to see in which direction this thing breaks. I keep noticing that the difference between the top and bottom of the range is barely enough to cover my commissions and there's the added risk of being wrong. At times like these, it's best to remember that there will be easier setups than now, and part of being a great trader is knowing when to be patient.

  Mark Whistler   9/5/02,  1:28:16 PM
In the weekly Natural Gas Storage report, weekly storage increased by 65 bcf, for the week ending August 30th. Working gas in underground storage for the East elevated to 1,590 Bcf, which was a net increase of 53 bcf over the prior week. Bottom line, recent cooler temperatures have led to a nationwide increases in storage, and has exceeded three and five year averages for this time of year. Although gas prices could be supported by higher crude prices, in the near term...greater inventories mean a bearish outlook for gas. Bulls are hoping that higher crude prices will cause the market to look towards using more gas, and hopefully drive up demand.

  Steven Price   9/5/02,  1:24:33 PM
IBM $72.44 (-1.29) As I discussed eariler in the Monitor, IBM has performed well since initiating the short at $77.96. The last two days the stock has closed over its 50-dma (currently $72.23), indicating it may be finding support. This 50-dma appears to be providing support today, as well. Conservative investors may want to take at least 1/2 their profit on the $5-$6 winner.

  Steven Price   9/5/02,  1:20:10 PM
Reader Question: Steve, I have been watching A Agilent Technologies, Inc. Recommend on your Put list. But it has not done much since recommended. I was looking at the Oct. 12 1/2 Puts. Should I also be watching NWX.X Networking Index also to see how that moves? Stock Charts.Com is showing it to have a Alert Triple Bottom Breakdown. But so far it has not moved much. Neither has the options. Thanks, William

Response: Agilent (A) $13.63 (+0.13) has been moving sideways since trading down to $12.76 on Tuesday. It is still in a triple bottom breakdown formation on the PnF, however this breakdown occured back at $15 on August 27. I would probably wait until the stock trades below that low of $12.75 before initiating a new short on it. If the stock continues to move sideways or creep up, I will probably close the play tonight.

  Jonathan Levinson   9/5/02,  1:19:53 PM
May I please ask you a quick question? We all knew that on the Dow, the critical support was 8,304. If that was violated then the next stop is 8,100. If this is the case why are we chasing the rally intra-day when we can stay put and wait for the 8,100 level so we can take profits from the puts? Will you please clarify for me? As always thank you for your valuable insight.

The problem is that we don't have a crystal ball, and these "projections" may not come to fruition. In that case, we try to key off of intraday patterns to (a) profit from those patterns and (b) avoid taking a more substantial loss in the event that the 8100 projection doesn't get fulfilled. But above all, our input should be considered by you only in light of your own strategy and opinion. We can only tell you what we see. You have to consider it and integrate it into what you believe and what is compatible with your account management and risk tolerance. Holding steady for 8100 is a perfectly valid approach, but only you can make that decision.

  Mark Whistler   9/5/02,  1:09:22 PM
The 1:00 PM intraday update has been posted. Link

  Jim Brown   9/5/02,  1:04:38 PM
Jim: We would prefer to enter only when there is a profit in the trade. Too many entries and too many stop losses are not letting us make profits. Why not wait for the trade to materialize than to take so many losses. You teach always and we request you now to be patient. Never mind if a guess work trade is missed. Best wishes Sunil

Sunil, I call them as I see them. If the bounce today and current long play goes to OEX 450 then readers will be thankful for the call. If it turns negative and we get stopped out then readers will be angry. If I sit on the sidelines while the market goes against my bias for 20 points then readers will be angry that they missed the "obvious" profit. Unfortunately the profit is not "obvious" until it is history.

Until I become perfect I will continue to make some bad recommendations. I don't expect that change to happen in this lifetime. The market is very volatile and is very hard to predict reliably. If you know of someone who can do a better job then I will gladly hire them. I do not claim to have a magic potion.

I am sorry if we are stopped out more than readers think we should but if we don't take positions then we will not get the +20 point moves like we did on Tuesday.

If you don't agree with my entry points then don't take the trade. The decision is always yours. The market monitor and the swing trade signals are meant to be educational as well as profitable. Trust me, trading on my own is much faster and simpler and when I make mistakes it only cost me money.

  Jim Brown   9/5/02,  12:30:04 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Close enough? We came within 3 cents of bring stopped out and triggered on a new short play. The Dow stop at 8300 saved us. Let's lower the stop loss and the Trigger for the new short play to OEX 439 from OEX 440. (SPX 878) This will let the Dow trade slightly below 8300 without being triggered if we move back down to this area again.

  Steven Price   9/5/02,  12:26:52 PM
Semiconductor Index (SOX.X) 276.32 (-4.84) The SOX has traded below yesterday's low and established a new 52-week intraday low. It held up just above yesterday's low of 276.36 throughout this morning's drop, however finally moved past it to the downside. I would wait for a more significant break below this level to initiate more than 1/2 positions on semi shorts, since it is made up of a number of stocks and support levels are not as exact as with an individual issue. However, the sector still looks bearish. Going along with what Jim said earlier, we could see a chip rebound if Intel says anything positive after the bell, so place tight stops on short positions. Also keep in mind that since the report will come after the bell, any positions initiated today are subject to overnight gaps.

  John Seckinger   9/5/02,  12:26:27 PM
Pattern Recognition: With all eyes on INTC, my gut feeling says shares (currently at 15.07) will fall to 14.99 and then set the stage for a "bear trap", catching shorts as shares rally back above 15.30. Turning to Oil, the XAU index failed to roll and I do believe its relative strength is helping the blue chips, who are now testing resistance at its 22 PMA on a five-minute chart.

  Steven Price   9/5/02,  12:20:21 PM
QLogic (QLGC) $32.47 (-1.33)OI put play Qlogic rolled over from the top of its descending channel, begun in the middle of July. Yesterday's rebound brought it right to the top trend line of that channel. It broke back down into this channel on 8/30 and now looks to be finding resistance from it to the upside. Trading near its low of the day, I like this point for new short entries, but I would only initiate 1/2 positions ahead of Intel's announcement after the bell, with a tight stop (OI's current stop is $34.25).

  John Seckinger   9/5/02,  12:17:18 PM
The Securities Broker Dealer Index (XBD) is currently lower by 3.65 percent, and shares of Goldman Sachs (GS) are not helping. GS is down 3.82 percent after the company and CS First Boston became of interest to a congressional inquiry regarding how investments banks allocated initial public offerings to corporate executives during the late 1990s.

  Jonathan Levinson   9/5/02,  12:14:31 PM
The COMPX has broken its uptrend line in a surprising whipsaw move, giving up a surprise bounce and then a surprise return to support. I'm seeing those 30,000 share bids now, and so it looks like it's not just the little guys who are little confused here. The TRINQ is up to 3 now, and the QQV up 1.97 on the day. There's buying in bonds again, though the thirty year yield is still slightly positive. QQQ 22 remains The Number. Currently trading at 22.11.

  Jim Brown   9/5/02,  12:11:06 PM
Swing Trade Signals
it appears the bullishness has faded and we are headed back down to retest the day's lows. The stop loss on the current LONG signal is OEX 440 which is also the trigger for a new SHORT signal.

  John Seckinger   9/5/02,  12:10:13 PM
One index that has surprisingly shown relative strength is the Oil Index. In fact, the opening in the XAU at 470.35 was almost tested as the index rose to 468.82 before slight profit taking set in. Currently at 467 and now above the 22 and 50 PMA's (five minute chart), long traders should now watch Oil for possible guidance going forward. Looking at the wildcard INTC, shares are currently at 15.10 and might retest the intra-day low of 15.05.

  Jim Brown   9/5/02,  11:53:23 AM
Swing Trade Signals
The 25,000 share block sell orders are just ripping through the QQQ. It appears somebody is really trying to push the market down or exit a large position.

  Jim Brown   9/5/02,  11:44:04 AM
Swing Trade Signals
The initial targets on this rally would be OEX 448 which would be a fill of the gap down opening and the 38% retracement level. If that resistance fails then I would look at 450 as the high from yesterday's bounce. Should that resistance fail we could see a strong move up to the 458-468 ranges where there is considerable congestion. That is a lot of "if" but sometimes the markets need a wall or worry to climb. I don't believe in this bounce so I will be watching closely for weakness as we hit those numbers.

  Jim Brown   9/5/02,  11:35:19 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the LONG signal at 11:31 when the OEX traded above 443. SPX 884.78, DIA 83.58, SPY 89.10, DJX 83.36, NDX 896.15, Compx 1266.29, QQQ 22.27, Emini 885.00.

Although I was leaning bearish we can't ignore a strong move in the opposite direction. When the markets snap back from sudden drops it can cause serious short covering as traders race to lock in profits. I don't know what is powering this bounce but we will ride it until it quits.

The initial stop loss will be OEX 440 which is also our SHORT trigger. (SPX 878)

  Jonathan Levinson   9/5/02,  11:34:00 AM
Perhaps traders are speculating that the continuous stream of bad economic news will force a rate cut from the fed. That would explain the nice jump in precious metals we're seeing in HUI and XAU, as well as the bid in equities.

  Jonathan Levinson   9/5/02,  11:28:13 AM
A spectacular ramp in the US Dollar Index has taken place, with the index back above 106. I have no idea why, but that's the biggest money in the game. If I were a foreigner waiting to get out of my peaking US dollar denominated bonds, I'd be selling into the rush of buyers on today's bad economic news, and using the uptick in the US Dollar to get out. However, the support in US equities right now is puzzling. Was it just programs watching the prices flatline above support, and getting tripped off on the shorts covering at support? Perhaps. But on the 1 minute chart, we have higher lows coming in now. I have to assume that it's machines doing the buying, because there's no fundamental reason to be a buyer of equities, let alone tech, this morning.

  Jim Brown   9/5/02,  11:25:16 AM
Swing Trade Signals
Yes, we have two open signals. One thing we have seen is how fast this market can move. I am overall bearish but we need to remember to trade what we see. The rapid bounce this morning recovered more than 100 points on the Dow. There was the chance that traders had turned bullish with the OEX/SPX bounce off their 50% retracement levels and I wanted to allow for that possibility. We now have a bracket around the current price. A long at OEX 443 and a short at OEX 440. We will take the direction the market gives us.

  Jim Brown   9/5/02,  11:19:37 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's raise the short entry point to a trade below OEX 440. If the markets fail here that would give us room before 436 is tested again. I want to keep the stop tight at OEX 443 because a breakout over that level could move fast. We still have a LONG signal at OEX 443 as well.

  Jim Brown   9/5/02,  11:15:03 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
This rebound is looking stronger than I expected. Let's go long the broader market with an OEX trade over 443.

  John Seckinger   9/5/02,  11:10:00 AM
Two indices worth looking at are Gold and Silver (XAU) and Biotech Holders Index (BBH). Starting with the XAU, today's high did rise above the 71.49 high set on July 22nd; however, prices have since fallen back to 71.14. A settlement above 70 should keep bears at bay, while a close above 71.49 could be the catalyst for a move towards 74. Risk to the downside should only be to 69.50. Turning to the BBH, today's low of 78.25 failed to test yesterday's low of 77.25. Sure, there has been a series of relatively lower highs and lower lows; however, I would not be surprised to see relative strength begin to take form. Short term objective is for a test of 81.50, with longer expectations closer to 83.75 (22 DMA). Risk is for a move to 77.25.

  Jonathan Levinson   9/5/02,  11:05:14 AM
Great job guys! I went short the OEX at the close yesterday and have cashed in for a 60% profit today. I may re-enter, but at this point I think the VIX needs to be respected. I don't pay much attention to this indicator usually, but when it climbs above 40 it gets my attention. We're at 43-44 right now. Going back to 1997 I count 13 closes over 45. In my opinion a snapper could happen today, tomorrow, Monday. I think risk has just crossed the net into the bears court. Comments?

On a technical basis that is an excellent assessment. We're seeing it happen right now as the markets bounce. However, I would hasten to add that sentiment indicators, as well as breadth indicators, can get buried or spike during extreme moves. We saw this when the VXN set a record drop and the TRIN set a record 5 day high in August. These indicators cannot be traded blindly, but they give excellent cautionary signals, particularly when sitting atop a quick profit.

  Jim Brown   9/5/02,  11:04:24 AM
Swing Trade Signals
If this bounce is going to fail we should be getting close. My target would be OEX 441 but the sudden acceleration in the last couple minutes is making me reconsider that target. The Dow just crossed 8300 again and is looking bullish

  Jim Brown   9/5/02,  10:55:30 AM
MXIM - Going along with Steve's comments. I would close the Maxim play completely before the day is over. If Intel says something positive the extremely oversold chip sector will bounce tomorrow. An $8.00 move on a $30 put play is nothing to sneeze at. Take the money off the table! Just my opinion.

  Jim Brown   9/5/02,  10:52:09 AM
Intel - Intel has been widely expected to lower earnings estimated after the close today. I agree with the concept but not necessarily the severity. Since some really bad estimates are already priced into the Intel stock price, anything but a disaster should produce a rebound. I think a Sept $15 call for $1.00 (current price) could be a winner. I don't think there is any future in a put, also $1.00, since Intel has already suffered significantly. $15 is a multi year low. I would suggest taking a few hundred dollars and buying 2-3 contracts and hope for a better than expected report. Total risk capital only!

  Steven Price   9/5/02,  10:50:41 AM
Maxim (MXIM) $28.44 (-1.25) This OI put Play, originally picked at $36.05, is nearing support of $28.10 from August 5, before the market run-up to its high of Aug 22. Conservative Traders may want to take some significant profits here after an almost $8.00 winner. I can see a scenario where we bounce off the August 5 low of 8030 in the Dow, which is still a couple hundred points away. However, with this stock already reaching that point, taking a few chips off the table seems prudent. Because there is still room to fall in the broader markets, I would only take 1/2 of the position off and lower my stop loss to the point I'm not willing to give any more back on a rebound. This point is different for many traders, so use your own stomach as a gauge for where you want to put your stop loss - I'm lowering mine to $31.00, just above yesterday's high.

  Jonathan Levinson   9/5/02,  10:49:59 AM
11.5 billion in total injected by Fed today. Markets must be in real trouble.It would look that way, but it's not the huge addition that you think. Wednesday's $7 billion overnight repos, plus $6 billion in 7 day repos were expiring today, and so we have a net drain of $1.5B. I would characterize it as neutral to slightly negative for the markets.

  John Seckinger   9/5/02,  10:48:59 AM
Looking at Dow components, only MO and PG are showing green. The leaders to the downside include INTC, C, JPM, MCD, SBC, and WMT. Looking elsewhere, shares of Prudential (PRU) are currently under its IPO price of 29 (28.66). Also, the Utility Index is right on 38.2 retracement level of 270. Weakness underneath should take the broad based selling to deeper depths.

  Steven Price   9/5/02,  10:42:35 AM
Exelon (EXC) $44.74 (+0.09) OI put play EXC, originally picked at $46.82, has shown some resilience the last couple of days and I am inclined to take 1/2 profits on the play. I would also lower the stop loss from $47.25 to $46.25, just above yesterday's high, to both lock in profits and get out of the way of any rebound. The fact that it has not really rebounded yet is keeping me open on the other 1/2 position for another possible leg down.

  Jim Brown   9/5/02,  10:42:07 AM
Swing Trade Signals
Sure looks like a long trade setting up but I am not sure what the future would be. OEX 440? OEX 441 would be my roll over target for a new short so going long on this promising bounce would be questionable. Of course this has probably got OEX 450 written all over it since we are flat. I am content to let is run and look for a rally failure in the 441 area.

  Jonathan Levinson   9/5/02,  10:40:16 AM
Thanks so much. Because of watching you and Leigh, I have doubled my income the last few months.

I know I speak for myself, and most likely for Leigh as well, in offering to accept to be flown to whatever tropical destination you can think of to sip umbrella drinks and discuss it further.

  Jonathan Levinson   9/5/02,  10:38:16 AM
I would be more inclined to characterize this as a standing 8 count than an actual bounce off the day lows on the COMPX. Price has flatlined just above the lows of the day, and the 1255 COMPX / QQQ 22 levels remain key support for now. I remain baffled as to where the buyers are coming from, but with they've remained constant- TRINQ still below 2. There are currently 362M declining shares and 56M advancing. I personally am not thinking of going long at support. Bond yields are confusing me, however, being sligly down to flat, and the thirty year yield is actually positive on the day.

  Steven Price   9/5/02,  10:37:11 AM
Retail Index (RLX.X): 280.07 (-9.29) Disappointing same store sales from Wal-Mart (WMT), Target (TGT), Albertsons (ABS), Sears (S), May Dept Stores (MAY) and Federated (FD), among others have led the group lower. Back to school sales have been slow and even Wal-Mart was unable to achieve the low end of previous expectations of 4-6%, coming in at a 3.8% increase. The others noted above saw decreases in same store sales. Albertsons noted a 0.5% deflationary factor in their earnings report today.

  Jim Brown   9/5/02,  10:32:47 AM
Hi Jim,
1) If you short the market with an impending breakdown at OEX 435, are you still proposing to go long the QQQ at 21.50?
2) A breakdown to these levels comes alongside a break in Intel below a supposedly key level of 15.50. If you are still proposing a long play at 21.50, do you think the QQQ can rally meaningfully without Intel breaking back above 15.50?
Many thanks...SR

Glad you asked! I have a dozen or so questions about this signal and the Editors Play from last Sunday.

First, the Editors Play was for a post 9/11 relief rally. Everybody keeps asking if they should continue buying calls down to $21.50 as scripted. Absolutely! This was the plan and everything is going according to that plan. With only 21.75 and 21.50 remaining as entry points it is going perfectly.

Second, the open swing trade signal to go long the QQQ at $21.50 is very close and it is separate from the signal to go short the broader market at OEX 435.

Both the QQQ signals are for a post 9/11 relief rally. The QQQ could drop farther before it goes up but I think the Intel news is priced in. I think anything but a real disaster from Intel tonight will give the QQQs a boost.

I also think bargain hunters will appear on Mon/Tue so today and Friday are the only chances we will have to get filled at the $21.50 level.

Where is that bullish faith?

  Steven Price   9/5/02,  10:27:46 AM
Barr Labs (BRL): $68.19 (-0.97) A look at the daily chart in OI call play BRL shows a classic bull flag forming. I see narrower trading ranges, declining volume during the formation, and the run-up preceding the formation. I would wait for a breakout from the pattern to the upside before inititating new long entries, but the support it has found during the recent market decline is encouraging. I would also look for a bounce in the broader markets before initiating long plays on any equities today.

  Jim Brown   9/5/02,  10:22:06 AM
Hi Jim, One of the hardest things I have been working on in my trading plan is to not buy the first hours volatility. Believe me this morning has been a real test of my patience. Going by your swing trade signal is a lesson I will always remember. Buying the breakdown of the 50% retracement level is a much better choice and if it does not get hit I can wait for a rollover at a higher level. Thanks big guy! Sko

This was a tough one. I wanted to buy the opening drop very badly! However the premiums would have been huge. I wanted to buy the bounce at 10:00 just before the reports but something could have surprised and I would have been toast. I wanted to buy the breakdown after the reports but with the 50% retracement level only 3 points below at the time it would have been very high risk. So, here we sit, still flat with the OEX down -11.78 points but at a dead stop at 436. It is very frustrating to see points ticking off but without a crystal ball we sometimes have to watch from the sidelines until the next setup comes along.

  Steven Price   9/5/02,  10:22:03 AM
Cymer (CYMI): $21.61 (-1.23) OI Put Play Cymer consolidated last November around $22.00, reaching a low of $21.70 before continuing its ascent at the time. That was the last time the stock saw this level and it is now below that support. The next significant level of support is around $17. The company's customers include many semiconductor chipmakers, so keep an eye on the SOX when pondering new entries. I like the current level to initiate shorts, but I like it even better on a SOX trade below 276.

  John Seckinger   9/5/02,  10:20:20 AM
The Dow is currently down 2.44 percent. Sectors underperforming include Semiconductor and Biotech. Sectors outperforming include Gold and Silver and Precious Metals. The Volatility Index is higher by 12 percent. The dollar, oil, utilities, yield curve, gold, and commodities all point towards lower equity prices. Of course, most are simply lagging and I would put more weight in the dollar and Oil. The Oil index is lower by 1.75 percent. REP, profiled yesterday as Oil came under pressure, is lower by 4 percent to 12.10. SUN was the other company.

  Steven Price   9/5/02,  10:11:12 AM
Semiconductor Sector Index (SOX.X): 277.96 This index set a new intraday 52-week low yesterday at 276.36. Today's sell-off has stopped just shy of this mark, but below the previous low of 282.75. Intel's mid-quarter update comes out after the bell and several analysts have stated they expect Intel to lower estimates. Watch for a break below yesterday's low to initiate short poisitions on semi stocks

  John Seckinger   9/5/02,  10:06:38 AM
Shares of Intel are being drowned in a sea of blue (time and sales) as massive selling pressure took over once 15.50 was penetrated. Currently at 15.30, INTC could be the catalyst for most indices during trading on Thursday. Note: From a technical point of view, shares of INTC should not rise back above 15.50. Near-term objective is for a move to 11.

  Jonathan Levinson   9/5/02,  10:06:12 AM
Despite the ISM miss and the ensuing selloff, there's a bid under the market currently protecting QQQ 22 and evidenced by the tame TRINQ reading of 1.95. The QQV is up 2.41, and clearly 1255 COMPX and QQQ 22 are the numbers to watch.

  Jim Brown   9/5/02,  10:01:33 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Short the broader market on an OEX trade at 435.(SPX 869) This is below the 50% retracement level of 436.98. (SPX 870.34)

  Jim Brown   9/5/02,  9:59:15 AM
Swing Trade Signals
I am sitting here watching the indexes weaken but I don't want to short a breakdown until after the reports AND on a continued drop to after OEX 436 which is the 50% retracement level. I would like to see positive reports and a small bounce that we can short on a failure.

  Jonathan Levinson   9/5/02,  9:56:04 AM
it always amazes to see how fast the market gets "smoked" usually falls twice or 3x as fast as it rises but 20x here....unreal! SPX was 200mins yesterday to get to the high and 10mins this am to take it all back!

Kevin, this is an excellent observation, and explains why so many bears got hit during the August madness rally. Fear is stronger and more urgent than greed, which is why markets tend to fall more quickly than they rise. The August rally was so quick and violent that no one could believe that it would hold nearly as long as it did- well, at least I didn't. To me, the August rally felt like panic buying, some type of a meltup, if you will.

  Jim Brown   9/5/02,  9:47:38 AM
Swing Trade Signals
We got an initial stop on the drop at OEX 438.80 only 30 cents below yesterday's low and right at support. We are seeing a little bounce as we await the economic reports due out in 15 min. Hopefully we can get another bounce before the markets roll over again. The Dow came back to rest right on 8300 which provided the support and bounce yesterday. This is the 50% retracement level from the July lows to the August highs. Hopefully it will hold here until the reports come out.

  Jonathan Levinson   9/5/02,  9:46:53 AM
The COMPX found support so far at 1265, which is a number I can remember typing many times several months ago. The bounce has been minimal so far, and I wouldn't be inclined to bet the farm on its holding. The 10AM data is clearly going to be of key importance. The bulls are hoping for it to serve as the cavalry to save them from what is shaping up to be a very bad day.

  John Seckinger   9/5/02,  9:43:03 AM
Intel, set to give guidance on the close, is currently down 2.91 percent at 15.65. The intra-day low is 15.55, and P&F charts will issue a sell signal if shares trade 15.50. Weakness under 15.50 could not only pressure the Semiconductor Index (currently lower by 2.45 percent at 283.15) but all major indices as well.

  Jonathan Levinson   9/5/02,  9:37:04 AM
The opening TRINQ at 2.45 and the TICK.NQ at -136 show moderate selling pressure, less than I would have expected for a nearly 20 point gap down. QQV is up 2.52 to 52.38. We seem to be getting a fresh breakdown as I type with the QQQ on level 2 bidding at 22.22. Those P-Diddy 30,000 share bids are notably absent so far.

  John Seckinger   9/5/02,  9:36:52 AM
The December Bond (USZ2) is currently higher by 11 ticks (11/32) at 112-02, and there is a rumor the contract could see a significant short squeeze if equities continue to fall. Asian central banks appear to be good buyers of Treasuries, since there is a chance certain Japanese banks will not be able to make the 8% capital adequacy ratio as required by the Bank of International Settlements.

  Steven Price   9/5/02,  9:35:12 AM
IBM $72.35 (-1.38): IBM still appears to be heading toward $70, but at a slower pace than its recent decline since the position was opened. Conservative traders may want to either take some significant profits here, or lower their stop loss. OI's current stop loss on the position is $75, just above the previous breakout point to the upside. If the stock breaks $70 to the downside, the next target is between $66 & $67

  Jonathan Levinson   9/5/02,  9:30:43 AM
The COMPX has gapped down at the open by 18 points to 1274, QQQ trading at 22.33 near yesterday's lows.

  Jim Brown   9/5/02,  9:29:52 AM
Swing Trade Signals
Another fun morning only this time we are flat! Xy#@z%!! (cuss) The two major economic reports this morning, Factory Orders and ISM non-mfg, are not due out until 10:AM. Retail Sales and Jobless Claims have already sent the futures deep into the red. The problem of course is do we try to get in at the gap down open or wait for a bounce that may never come. I looked at as many factors as I could find and with support at Dow 8300, SPX 880, OEX 440, Nasdaq 1280, I think I will elect to get in after the 10:AM reports. I can see a gap down to near support and then a pause for the data. On the outside chance that the data will be better than expected I plan to wait. If it is bad then it will break support and we will be off to the races. If it is good then we could see a bounce back to zero and then a failure. Bottom line - we will wait for the 10:am reports

  John Seckinger   9/5/02,  9:25:29 AM
The 9:00 AM intraday update has been posted. Link

  John Seckinger   9/5/02,  9:22:03 AM
Looking at the Retail Sector, Wal-Mart Stores Inc. missed its August sales target and could bring down the entire Index during trading on Thursday. The company reported a 3.8 percent increase at stores open at least a year, well below year-ago levels.

  John Seckinger   9/5/02,  9:18:50 AM
September S&P Futures are lower by 12.20 points to 877.50, while Nasdaq futures are off by 15 points. Turning to the Dow, the September contract is back under 8300 at 8295, down 95 points. FairValue for the S&P 500, according to HL Camp & Company, is at $.18. That price will not change during the day. Program buying is set at $1.52, while program selling is at $--1.52. FairValue for the NDX 100 is $1.25.

  John Seckinger   9/5/02,  9:08:18 AM
A report out of Germany showing the nation’s unemployment rate rising to 9.9% seemed to be a catalyst in the overnight selling. The German report also showed manufacturing orders falling 0.9 percent. Economists expected a 0.5 percent increase. In other world news, Bank of England decided to leave rates unchanged at 4.00 percent

  Steven Price   9/5/02,  8:55:37 AM
The four-week average for initial jobless claims rose 5,250 to 400,000. The moving average has risen by 19,500 in the last four weeks, showing layoffs are increasing.

  Jonathan Levinson   9/5/02,  8:05:35 AM
The US Dollar Index made up to above 106.00, but couldn't hold it, and is now at 105.60 after briefly touching 105.40. It has taken the futures down with it, NDX -12 and S&P -11.70. Gold is up to 317/oz.

  Jim Brown   9/4/02,  8:56:19 PM
Swing Trade Game Plan - Click here: Link

  Jim Brown   9/4/02,  8:56:08 PM
The Market Monitor for Wednesday has been archived. Click here to view it: Link


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