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  Jim Brown   9/10/02,  8:42:23 PM
The Swing Trade Game Plan has been posted: Link

  Jeff Bailey   9/10/02,  8:12:16 PM
Adjusted Market Schedule ... Remember that in memoriam and rememberance of the events of September 11, 2001, NASDAQ will delay its market open on September 11, 2002, until 11:00 AM EST.

The NYSE will open for trading 30-minutes after the conclusion of the memorial service being held at the World Trade Center site, but will not open before 11:00 AM EST. Should the event last longer than its anticipated 10:29 AM conclusion, the NYSE will delay its opening beyong 11:00 AM. The NYSE will announce its exact timing of the opening bell following the conslusion of the memorial service.

  Jeff Bailey   9/10/02,  4:09:39 PM
Juices are flowing.... Jeff, Thought I'd add a piece to your Cummins puzzle. Their engines are regarded by many as the "engine of choice" for many high end motor homes. I don't follow that industry closely, but recall hearing commentary on CNBC to the effect that motor homes have been selling very well -- alternate means of vacation travel, baby boomers coming of "Winnebago age", etc.

Good thinking from that e-mail. Check out the chart of Winnebago (NYSE:WGO) $42.70 +0.94% Link and looking bullish again. Stock closed above its trending higher 200-day simple MA yesterday. Should look for support to be firming at/near the $37 level. Quite a bit of overhead supply to eat through from $40-$51, so I kind of like Cummins (CUM) under the above scenario as near-term overhead supply up at $40. Needs to break $33 to get there though.

OK... that's enough engine talk today, but point I'm trying to get across here is how a trader/investor can actually take some information then begin setting up some scenarios. Then with time, just follow the charts (I like supply/demand charts) to make the observation if the MARKET agrees or disagrees with the scenario. The key is to be on the same side as the MARKET as the MARKET in NEVER wrong, at least not for very long.

What's Daimler/Chrysler (DCX) $43.01 +4.26% looking like? Link Looks like the stock is trying to get bullish. Vertical count currently bullish to $64 (not sure DCX will get there, but some upside potential) and first sign of trouble is at $39.

According to Dorsey/Wright and Assoc. both CUM and DCX is classified as "auto/parts" and sector is "bull alert" at 50%. For perspective, in May (red 5) sector turned "bear alert" at 76% (after reaching 82% in March; red 3), then fell way down to 20% before reversing up to "bull alert" at 26%, then higher to 32% in early August (red 8). From bullish percent for sector, trader/investor compares against the 5 and 8 as it relates to the sector and looks for "auto stocks" and what they were doing during those times. Thinking is that in early May (red 5) bull looks to take profits, and in late July (red 7) early August (red 8) looking for entry points as sector bullishness builds. Bears doing just the opposite.

  Jim Brown   9/10/02,  3:56:11 PM
Swing Trade Signals
It is unconceivable that the markets are going out near the highs of the day with a major event possible tomorrow. This is either the height of bullishness or height of stupidity.

  Jeff Bailey   9/10/02,  3:48:12 PM
Trucks and the engines within here's a good e-mail that we might use. Again, I have no way of checking for certain about this traders two cent, but here's some thoughts from a subscriber.... This may "fit" with prior comments made today. It does "make sense" as to why the guy I talked to on my vacation that worked for Mac Truck was so busy as fleets look to buy current. Just another piece of the fundamental puzzle here ...

Welcome back Jeff, you were missed. My two cents on the truck builders and engine manufacturers is this. They engine manufacturers entered into an agreement with the EPA a couple years ago because they got caught circumventing the emission controls on their engines. The agreement caused them to have to meet stricter emission requirements on any engines produced after October 1, 2002. The EPA restrictions are not placed on the truck fleets themselves, only on the manufacturers. The "new" engines are less fuel efficient, much more complicated and expensive to work on, cost about $4000 more to purchase, and have an unknown reliability factor. Most fleets purchase a certain number of replacement trucks spread throughout the year. The fleets are avoiding the new engines like the plague. This has caused them to move up their 4th quarter 2002 and 1st quarter 2003 purchases into the 3rd quarter of this year. Obviously good for business now but most truck manufacturers and component suppliers (including Cummins) have very few orders for the 4th & 1st quarters.

I'm familiar with this because I own a trucking company (we're taking delivery of our replacement units this month). I'm just watching my Put leaps go up. I'd be very leery of a bullish trade in the truck or diesel engine manufacturers. Hope the info is useful. Keep up the great work.

Again... I (Jeff B) currently hold 1/2 bearish position in Knight Tranpsort (KNGT) $18.26 +0.71%, but not personally holding a bullish position in Cummins (CUM) $29.34 +0.51% at this point.

  Jim Brown   9/10/02,  3:47:11 PM
“microscope with subatomic charts” - I love it!! Good description. I will have to use that in the future!

  Jeff Bailey   9/10/02,  3:42:26 PM
The 3:15 PM intraday update has been posted. Link

  Steven Price   9/10/02,  3:41:39 PM
Reader Question: Steven, Thanks for all the info you give us. Does LLL's pullback offer a chance to get in, or a chance to get killed getting in?

Response: $54.97 (+0.13) I think this is a good point for entry. The pullback is not a trend reversal, and any support over the 200-dma of $52.54 looks bullish.

  Jonathan Levinson   9/10/02,  3:29:37 PM
Actually Jonathan, if you look at the trend line on 30 and 60...it's textbook clear. It's playing under the microscope with the subatomic charts that's dangerous.

Yes, in which case we're in a rising wedge with a fuzzy upper trendline. But I expected the h&s formation to play out. As Bruce has just pointed out, I think the market makers and big players watch for exactly what you are looking for and then do the very opposite. So the apparent breakdown on light volume was easy to manipulate with a buy program just at the right spot. Perhaps. What baffles me is that the lower trendline was bought at all. Either that reversal was bought by machines, or for the reasons Bruce suggests, or it was simply short covering at what they perceived to be lower support within the day's range. But, I doubt this latter interpretation, because the h&s formation looked very clean- an unlikely place for shorts to cover en masse. Oh well- The Great Humiliator strikes again.

  Jonathan Levinson   9/10/02,  3:14:52 PM
Many believe that the market is unpredictable, but today's action has made me disagree. The market in fact does the exact 180 degree opposite of what I think it should do. That launch from just below COMPX 1300 happened only after the h&s formation completed and the breakdown began, 1 point below secondary support, the whole within a context of global uncertainty, terrorist threat of attack, etc. The TICK.NQ is even more negative at -318, yet price is holding firm above the 1305-1310 confluence. If it feels like you're in the airball zone and just pulling the lever on a one-armed bandit, then either let your stops trigger you out or move to the sidelines. I'm ready to start flipping coins (or watching astrology- sorry, Arch!) at this point.

  Jim Brown   9/10/02,  2:42:56 PM
Swing Trade Signals
Trading at the neckline must have energized the bulls as the trend has drastically changed in just the last 10 minutes. Now most of the trades are going at ask and volume is still increasing. You would not have thought news on Martha could be such a market mover! (grin) Definitely a bipolar market!

  Jeff Bailey   9/10/02,  2:42:15 PM
NVIDIA (NVDA) $10.52 +13.8% ... stock up today on Dow Jones report that NVDA raised wafer orders for Q4. Earlier this morning, "trader talk" was that NVDA Link had placed meaningful order with foundry Taiwan Semiconductor (NYSE:TSM) $8.40 +6.4% Link and that NVDA price action may be some near-term short covering.

All this in the face of last night's warning by NVDA's primary competitor ATI Technologies (NASDAQ:ATYT) $5.82 +3% Link that ATYT expects Q4 EPS of $0.00-$0.02 and reveneus of $235-$240 million, which was lower than company's June 19 guidance of $0.05-$0.07, citing weakness in the PC market and more specifically, the notebook market. Company did say it still expected a sequential double-digit percentage increase in revenue for Q1.

  Jim Brown   9/10/02,  2:34:33 PM
Swing Trade Signals
Large block trades starting to appear going at bid on Time and Sales on the QQQ and SPY. The SPY is seeing trades at the low of the day. Futures are still trying to hold the line but struggling. Volume is picking up.

  Jim Brown   9/10/02,  2:29:00 PM
Swing Trade Signals
Those mini Head and Shoulders patterns on the SPX/OEX 15 min charts are right at the break point. (901/450.50) Once this neckline is penetrated the decline could accelerate.

  Jonathan Levinson   9/10/02,  2:11:21 PM
It looks like not much has happened in the past hour, but that's not exactly the case. I see head and shoulders intraday on the indices, but what's concerning me from the bearish perspective is Fabes' observation that the 30 and 60 minute 5(3) stochs have cruised from overbought into near-oversold territory, but without much downward price action. This divergence generally works to set off a nice move upward once the stochastics become oversold and reverse back up. The fact that I'm at a loss for reasons to go long the market has nothing to with this technical observation. Of course, the 5(3) is an exceptionally sensitive setting, and the longer 10 and 21 %K settings paint a less bullish picture. Other indicators are showing nothing different from earlier- TRINQ .56 shows bulls in control, not overbought; QQV down 1.25 on the day to 46.84 is neutral to bullish; gold down but bond yields deeper in the red- bearish. On this basis, a bearish trader is betting on fundamentals, being mostly news driven for the coming hours. Technically, there's a bid under the market that makes it difficult to short with a clear mind. Bearish traders can lighten up or buy some protective calls on a dip. Above all, use those stops and don't hurt yourself to be in the trade. There are always fresh setups, and cash is very respectable position.

  Jim Brown   9/10/02,  2:07:00 PM
Swing Trade Signals
Sentiment is changing! The A/D line is deteriorating and markets are drifting towards their lows for the day. All are only fractionally positive. The VIX is climbing again and declining volume is rising quickly. Looks like our buying opportunity for tomorrow morning about to occur.

  Steven Price   9/10/02,  1:57:47 PM
Here is the NYSE press release regarding tomorrow's delayed open:

NEW YORK, Sept. 5 – On Sept. 11, the New York Stock Exchange will open for trading 30 minutes after the conclusion of the memorial service being held at the World Trade Center site, but not before 11 a.m. Should the event last longer than its anticipated 10:29 a.m. conclusion, the NYSE will delay its opening beyond 11 a.m. The Exchange will announce the exact timing of the opening bell following conclusion of the memorial service.

  Jeff Bailey   9/10/02,  1:46:46 PM
The 1:00 PM intraday update has been posted. Link

  Jim Brown   9/10/02,  1:24:30 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The amazing resilience of the markets is causing me to rethink the short signal. I think we would be better off remaining flat instead of trying to short a possible afternoon drop. I would rather be flat and looking for an entry point for our next LONG signal.

Cancel the open SHORT signal. We will remain flat for the rest of the day. All current broad market signals are cancelled.

  Mark Whistler   9/10/02,  1:10:05 PM
Today's Richmond Fed Manufacturing Survey indicated that manufacturing activity fell in the Fifth District* for the first time this year during August. Employment conditions continue to lack strong growth, with the employment index negative for the third consecutive month. The survey indicates that manufacturers are meeting any increased demand by lengthening hours and productivity, but not actively hiring just yet.

* Fifth Federal Reserve District includes: the District of Columbia, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia.

  Jim Brown   9/10/02,  12:50:29 PM
Swing Trade Signals
I have been watching the time and sales on the QQQ, SPY, NDX & SPX futures filtered for block orders. The volume has dried up to almost a dead stop and there are very few big block orders. It would not take much money to move this market in either direction. Uncle Sam does not appear to be active in the markets over the last 30 min. It is just like the markets closed for lunch. Once the 1:15 White House Terrorist briefing begins the volume may pick up quickly depending on what is said.

Remember the two picked up in Germany for plotting a 9/11 attack. They had already infiltrated the air base as workers over the last six months and were in place to execute the attack. In the Philippines they are searching for a suicide cell that was going to attack the US and Israeli embassies tomorrow with up to 4 tons of explosives. There are active cells worldwide and these two events are not going to be the only ones. This ramping of information should be tanking the markets big time. The fact that it is holding as well as it is predicts a very bullish move on no seriously negative events tomorrow.

  Jonathan Levinson   9/10/02,  12:45:32 PM
Are we seeing the better part of a head and shoulders formation on the 5 minute COMPX chart? COMPX 1305-1310 continues to be the challenge for bears and bulls alike, as price remains stuck to that confluence. Bond yields have continued their march down, and gold is trying to pick itself off the canvas but still well off its highs from yesterday and last night. Based on the formation I'm seeing, I'd guess that the next visit to the day's lows will take the COMPX down to its next significant support around 1280. However, it will take much more significant selling than we've seen today to accomplish that. With the TRINQ staying comfortably below 1, the bulls remain in control for the time being.

  John Seckinger   9/10/02,  12:17:49 PM
Thinking out loud: Bush speaks to the UN on Thursday, and this could affect the "war premium" in Oil. The CRB Index (CR00Y) has gone vertical over the last three weeks, but has finally found resistance near 230 (dates back to January 2001). My question is, If the "war premium" ($4 to $6 dollars per barrel) is reduced and the CRB index falls. . .will bonds be the beneficiary? Most likely, "yes". Ok, higher bond prices in this environment may not be good for equities. My gut feeling likes the other scenario; spike up in the CRB index, bond prices lower, stocks higher. But, I have to respect resistance levels. . .and I will do just that.

  Jim Brown   9/10/02,  12:05:01 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
It appears the news is going hostile and the markets are going to tank. Let’s go SHORT the broader market with an OEX trade below 449. This is below the OEX 38% retracement level again and would represent a possible retest of the 50% level at OEX 437. (SPX trigger 900, DJX 84.75)

  Jeff Bailey   9/10/02,  12:03:00 PM
Harmony Gold (HGMCY) $16.50 -6.6% ... Jeff: I had a nice bullish trade in Harmong Gold per your comments at $13.50 before you went on vacation. Stocks pulling back a bit today and looking for another entry point. Any ideas?

Ugh! I decided to sell a full position long the day before I went on vacation for a small gain as I didn't want to leave that much capital exposed when I couldn't watch things (should have just bought some calls and let it be) and boy did my vacation cost me an opportunity here. I'd look for a pullback to $15 for a trader's bounce. Chart now bullish and vertical count growing to $30. Link

Wow! According to Dorsey/Wright and Assoc., "gold sector" bullish % now 54% and "bull alert" status. In early August (red 8) sector just reversed up to "bull alert" status at 20%. Tie that observation in with the "red 8" on HGMCY at $12.50. Feel how the sector bullish reversal really gave the "heads up" for bullishness in HGMCY? When HGMCY traded that $13.50 and gave the "buy signal" that was it wasn't it?

  Jim Brown   9/10/02,  12:00:29 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out of the LONG signal at 11:56:02 when the OEX traded below 453. SPX 904.52, DIA 85.61, SPY 91.01, DJX 85.45, NDX 936.77, Compx 1309.04, QQQ 23.27, Emini 904.00. We are now flat and ALL open signals are cancelled.

  Jonathan Levinson   9/10/02,  11:55:28 AM
The COMPX has pulled back from its highs and is now resting at the area formerly known as resistance. Look at your 5 minute COMPX chart to see the congestion between 1305 and 1310. Until this level is breached to the downside, I'll predict a range from 1310 to 1325. The TRINQ has blown off a little steam and is now at .47, indicating a more neutral buy bias. Bond yields are now negative, and with gold still down on the day, guess where the money coming out of equities in the past hour has gone. The TICK.NQ has deteriorated during this time and is now -137. QQQ 23.31 is likewise resting on recent support.

  Jim Brown   9/10/02,  11:48:39 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I had originally wanted to stay long through the trading day and look for some high risk bargain hunters to come in near the close. It appears the continued warnings are finally impacting the market and bulls are losing the advantage as more traders move to the sidelines. Let’s raise the stop loss to OEX 453. (SPX 903, DJX 85,25) This is just below the 10 DMA for the OEX and would represent a breakdown in sentiment. This would allow us to get out without a material loss and we can wait on the sidelines as well. With the gvmt raising the alert level more traders may think twice about being long.

  Jeff Bailey   9/10/02,  11:47:20 AM
Agilent Tech (A) $15.31 +3.9% ... jeff welcome back. i have jan 12.5 put option on A.from 13.25.would you evaluate technical picture if there is any change.thanks.

I mentioned this one as bearish just prior to heading off for vacation for longer-term puts and potential tax-loss sell candidate into the end of the year. Stock did trade down to $13.00 while I was gone, but rallies back right to past triple-bottom sell signal. Looking for formidable resistance $16 and below and would still target single-digits before year's end. First sign of strength would be trade at $18. Link

This is one of the S&P 500 Stocks that generated a "sell signal" that has helped the S&P 500 Bullish % ($BPSPX) Link reverse back into "bear confirmed" status, so I'm rather bearish on stock still, especially into end of year. According to Dorsey/Wright and Associates, Agilent (A) is classified as "electronics" and current status is "bull alert" at 24.6% after reversing up from 14% in mid-July. Recent high readng of bullishness for group has been 28%, so a decline back to 22% would have sector back in "bear confirmed" status and a reading of 54% would currently be needed for "bull confirmed" status.

Thinking here on my part is that broader weakening showing up in S&P 500 bullish % ($BPSPX) is similar to the ocean's tide starting to fall and A looks to be one of the boats reaching "dry dock." I like to short/put weak stocks and A ranks high on my list.

  John Seckinger   9/10/02,  11:43:40 AM
Confirmation from the yield curve has not yet taken place; nevertheless, it is encouraging to see the Dow find support near 8560 and at previous relative high areas (five-minute chart). Dollar is still strong, Gold is coming under pressure and might not find support for some time (70.75), Utility Index is underperforming Dow and down over two percent, and the Oil Index remains higher by 0.86 percent. This could be a slight "pivot" area for the Dow, and not as important as a break below 8480. Note: SOX now under 300. A close under 292 would be good for bears, while the upside objective is between 310 and 311 if 292 holds.

  Jeff Bailey   9/10/02,  11:29:44 AM
The 11:00 AM intraday update has been posted. Link

  Jeff Bailey   9/10/02,  11:28:57 AM
Forest Labs (FRX) $76.12 +4.24% ... mentioned this one as bullish back on 08/15/02 and supply/demand chart has held together. Seeing some other comments from Steve Price regarding stock this morning. I'm still holding 1/2 position in the Jan $70 call and targeting the $90-$95 target before expiration. Trade at $76 gives second "buy signal" since profiled and continues to hint that demand is in control. Link

According to Dorsey/Wright and Associates, FRX is classified as "drug" and that group is "bull alert" at 42%, up from July's low reading of 12%. Would take a reading of 56% to achieve "bull confirmed" status.

  Steven Price   9/10/02,  11:23:57 AM
Reader Question: Dear Steven, I went ahead and went long LLL today when it broke 55 and have placed my stop accordingly. What is your target or would you simply move up the stop as you go. Thanks for your excellent service. Marc

Response: LLL $55.70 (+0.86) I see the next levels of resistance at $59 and then $60 on the daily chart. These are also resistance levels on the PnF chart. Above that $64 is the next resistance level. I will move up my stop as we approach each successive level. While moving up stops leads to giving some profits back when stopped out, hopefully we will give ourselves more profit potential and allow for a bigger run. Conservative traders may look to take profits at $59, since the stock has been on a PnF tear and this would be the most likely level for a temporary reversal, as it is also the bullish vertical count.

  Jonathan Levinson   9/10/02,  11:15:48 AM
The COMPX ran into resistance just above 1320, reversing course at 1322 and is currently trading right below its 10 week sma at 1318. The TRINQ has been hovering around .35 all morning, and the TICK.NQ remains negative, currently -35. Volatility has eased off a bit with the QQV down .90. Gold continues to have a bad day with the HUI down 4.62 to 133.38 and XAU down 2.72 to 73.34.

  Steven Price   9/10/02,  11:08:29 AM
Semiconductor Sector Index (SOX.X) 301.20 (+13.22) The SOX break of 300 looks bullish in the short term. The next resistance level is 310, so any long semi positions should be reassessed when the index reaches that level.

  Steven Price   9/10/02,  11:05:16 AM
Microsoft (MSFT) $49.61 (+0.91) OI call play MSFT has rebounded nicely from its recent low of $45.88. It is now trading above its 50-dma of $49.34 and looks poised for a run back up to $53. More conservative investors may want to wait for a trade through $50 to initiate long entries. The stock bounced exactly at its PnF bullish support line as it has 6 straight times. With this type of PnF support, I put quite a bit of weight in this chart for this issue. The bullish vertical count for the stock is $72. I'm not predicting a move straight to that number, but the PnF is nontheless very bullish. The next bullish support level is $47 on a pullback.

  Jonathan Levinson   9/10/02,  11:05:02 AM
The Fed has added 6B in 2 day repos, replacing 1.5B expiring today for a net addition of $4.5B to expire on Thursday.

  Jeff Bailey   9/10/02,  10:55:26 AM
Good comment from John Seckinger at 10:51:22 ... will tie in with 11:00 EST Update and S&P 500 as to his observations now and will monitor going forward. I have retracement on SPX from 1170 to 797. See how 19.1% retracement at 869 held support on 09/05/02? Break above 911.00 could see rally to 940 (38.2% retracement) should YIELD curve continue to flatten.

  John Seckinger   9/10/02,  10:51:22 AM
Looking at the yield curve, the five-year continues to trade weak and is close to signaling another "significant flattening". What does this mean? Weak five-year causes yields between five and ten year notes to get closer together (flattens); bullish towards equities. Once it goes "significant", I will be sure there will remain an underpinning bid in the Dow throughout the remainder of the trading session.

  Jeff Bailey   9/10/02,  10:42:13 AM
Excellent note from subscriber e-mail regarding why Mac Truck was so busy..... Jeff, My understanding of why they are busy is that new emission standards are coming in shortly which is going to increase the cost of a truck by another $10,000. Trucking firms are purchasing units to avoid paying these addition costs. Jeff, just to let you know, I'm involved in this business.

Subscriber is exactly right. The guy I talked to in the woods did mention this as reason they are so busy, I remember now. He said some firms buying new tractors, while others will pay fines for awhile.

This now perhaps "explains" why Mac is busy and not necessarily "bullishness" for truckers and business pickup. However.... may also be somewhat bullish for Cummins (CUM) $29.39 (see end of 10:10:06 comments).

  Jim Brown   9/10/02,  10:41:37 AM
Swing Trade Signals
Nice buy program at 10:15 and it looks like it converted a few bears and has started some short covering. From the activity in the QQQ it appears many of the retail shorts are covering positions now. A/D line is accelerating rapidly and VIX is dropping like a rock at 36.89.

  Steven Price   9/10/02,  10:36:07 AM
L-3 Communications: $55.87 +1.03 As per my earlier post about this being a long entry point, I had a reader question about no longer waiting for a pullback to $53. In our write-up, we also cite a breakout over $55 as an entry point which is what we have seen the last two days. Because L-3 has some military ties, President Bush's speech to the U.N. on Thursday will have some effect on the stock, but he is widely expected to push for military action in Iraq. Stops should be raised from $49 to just below Friday's low of $52.00, which is also below the 200-dma of $52.54

  Jeff Bailey   9/10/02,  10:34:10 AM
Jeff, Just to clarify. Are you bearish or bullish on truckers short term.

Good question. I'd say I'm "cautiously" bearish right now. I added some comments to 10:10:06.

Also.... Jim sent me an e-mail regarding "truckers" .... Are you aware that Consolidated Freightways, 3rd largest trucker filed bankruptcy and closed its doors last week? Beneficiary would be ROAD Link and YELL Link that is why ROAD is up

Nope... I wasn't aware of this. No newspaper stands in Eagle's Nest Wilderness area and I didn't have any beaver pelts to trade for internet access. (grin). Good info and helps explain ROAD's rebound after sharp decline just prior to my vacation.

  Jonathan Levinson   9/10/02,  10:32:06 AM
This break of the upper ascending trendline of my former bearish wedge invalidates the pattern. Back to wait and see mode.

  John Seckinger   9/10/02,  10:19:47 AM
The Dollar Index is now above its 50 DMA (currently at 107.46), and seems intent on testing strong resistance above at 108.50. Currently at 107.60, currency traders remember that the Dollar has settled above the 50 DMA only three times since April. Moreover, the dollar has not rallied two consecutive days once above the 50 DMA. Therefore, I would not be surprised to see currency traders trying to short the Greenback overnight if the Dollar settles above 107.46. Of course, I would like to see the Dow rally and have these currency traders squeezed.

  Steven Price   9/10/02,  10:14:34 AM
Forest Labs (FRX) $74.20 (+1.18) The long straddle highlighted in this weekend's Ask the Analyst column Link , which was referred to in yesterday's Monitor, looks like it is at a good point for shorts against the long straddle. It is at the top of the recent range and has found resistance. After FRX's announcement this morning (as per Jeff's 9:00 update) the stock rallied to $75.15, where it was turned back at the same level as it was in mid-August. Remember to short only the amount of stock you are covered on for this play.

  Jonathan Levinson   9/10/02,  10:14:01 AM
I seem to be developing a fetish for this formation, but it looks like we have a bearish rising wedge on the COMPX 30 minute chart. Eyeballing it and trimming a few stray candle tops and bottoms here and there, it looks to project to approximately COMPX 1315, after which I guess for a break to approxiamtely 1277. We'll see if it plays out.

  Jeff Bailey   9/10/02,  10:10:06 AM
Knight Transport (KNGT) $17.85 -1.54% .... Link is "trucking" stock I profiled short/put just before leaving on vacation. Thought here was that "bad news" out of another trucker, Roadway (NASDAQ:ROAD) $29.40 +0.68% Link , might lead to weakness. However, I do note that ROAD rallied back hard from $21 (bearish count was/is $19).

I currently hold 1/2 bearish position in KNGT in the Oct. $20 puts.

Sometimes a vacation is interesting. I'll note that during my vacation, I was walking down an old logging road in the Eagle's Nest Wilderness and ran into a fellow from Pennsylvania and he was out here looking for Elk. He drove for 2-days out to Colorado, to spend 5 days looking for Elk before having to drive back to Penn. (another 2 days of driving) because he worked for Mac Truck (they make the big tractors for those 18-wheelers) and they were so busy, he wasn't allowed more than 1-week of vacation. He usually comes out to Colorado for 2-weeks. This hints a bit of a fundamental underlying strength perhaps in the truckers.

Hard rebound higher in ROAD also hints there's some buyers when these "trucking stocks" get near a bearish price objective, so trading targets to the downside a must.

I forget, but we did have a subscriber in the "trailer" part of the business. Months ago he was saying that he hadn't really seen a pickup in the trailer end of things and thought fundamental weakness still existed. Would be interested for an update. Not looking for "insider" info, but just general types of comments from those close to the business.

(Grin).... I told you I'd think about the markets when I was on vacation. If you thought I was kidding, I'm sure this guy from Penn. thought I was crazy as I poked and prodded his brain for various observations as it related to the trucking business. He gave me some "weird" looks when I asked him some questions and he was more focused on where the elk were, but was a very nice guy. We hunted together for a while and when we got back to camp, the guy was crawling all over my Cummins Turbo Diesel Engine..... you'd of thought the guy had died and gone to heaven as he "loved" diesel engines.

Hmmmm....... Cummins Engine (NYSE:CUM) $29.16 -0.10% .... Not seeing much bullishness here and that could be "good" for bearish position in KNGT. Setting upside alert at $33 for CUM. Stock has found some historical lows at this level, so not to interesting in a put/short. See how $28 has been support dating back to 2000? Link

Should KNGT work against me next couple of weeks, then CUM may be the "ace in the hole" for the call side.

Short/put KNGT and long/call CUM might be viewed as a "synthetic hedge."

  Jonathan Levinson   9/10/02,  10:09:43 AM
Trading on major exchanges will be delayed until 11AM EST tomorrow.

  Steven Price   9/10/02,  10:06:29 AM
Dow Jones U.S. Home Construction Index (DJUSHB): 336.05 (-2.66) If you are looking for short opportunities, keep an eye on this index. There is serious resistance in the index just over 346 (watch 350), and the group is finding resistance now from its recent run after announcements from several builders that they wre raising earnings guidance for the current quarter. After yesterday's news about foreclosures setting a record high, Jonathon's earlier analogy about the clap of thunder in the distance seems right on. Some stocks to watch:

Ryland (RYL) $43.44 Rolling over from resistance at its 200-dma of $44.14

Toll Bros (TOL) $25.76 Rolling over from resistance around $27

KB Homes (KBH) $50.43 Rolling over from resistance at $51.50

  Jonathan Levinson   9/10/02,  10:06:21 AM
The COMPX chart is looking a lot healthier than the SPX right now. I won't be dashing into QQQ's with my retirement funds just yet, but there it is. The longer intraday 5(3) stochs were on the verge of giving clear bearish crosses but have now reversed back up within overbought. The TRINQ at .34 has been lower in recent sessions, but it's still in overbought territory even at these levels. The TICK.NQ is negative at -141.

  Jonathan Levinson   9/10/02,  9:59:58 AM
Amazing, here we go again. 10 day SMA on QQQ: 23.39, COMP is 1311.16 and SPX 903.70. HIgh so far, and stall right now: QQQ 23.38, COMP 1311.17 and SPX 905.73. Is this machine driven or what? I'm not going long until I see that level clearly broken.

Good eye, Mark. There's a world of difference between being long and getting long. A long play already initiated with a stop under it is a lot easier to play than a flat account trying to get into a new position. I agree with the analysis. Your levels coincinde with the upper ascending trendlines drawn on my 30 minute SPX and COMPX charts.

  Jim Brown   9/10/02,  9:59:21 AM
Swing Trade Signals
The markets are beginning to trend to the downside on extremely low volume with the Dow/SPX/OEX already rolling over into negative territory. It appears the buyers have dried up and worries over 9/11 are taking their toll.

  Jeff Bailey   9/10/02,  9:59:00 AM
KLA-Tencor (KLAC) $32.90 +2.61% ... e-mail dated 09/07/02 Hi Jeff: I sincerely appreciate your insightful musings on the market and the educational information you offer on a daily basis. Now that I have appropriately paid homage at your feet are you seeing anything in KLA? It seems awfully strong.

Hmmmm... strong? Not if I look at the p/f chart. Stock recently broke a triple-bottom at $34.00 after getting "whacked" at bearish resistance trend. Link

Short-term trader holding September puts probably locks in some gains here, but look for a rally back to $35-$36 as another short/put entry point.

Note.... this is "semiconductor" stock, but in 09:34:19 post, talked a little about looking for stocks that have rallied to bearish resistance trend or giving sell signals as short/put candidates. Understand that comment, then study chart of KLAC as good example of what to be looking for at $39 or $34 levels.

  Steven Price   9/10/02,  9:50:03 AM
L-3 Communications (LLL): $55.56 (+0.72) OI call play LLL has found new ground over $55. It traded up to $55.05 yesterday, taking out resistance, but still spent most of the day fighting supply at that level (5 min. chart). It appears that supply is gone and the new consolidation level is just over $55.50. The stock is clear of the congestion from the middle of August until its breakout on Friday and looks good for long entries.

  John Seckinger   9/10/02,  9:45:08 AM
Checking the Intermarket Relationships: Gold lower, Dollar higher, Dow higher, Oil Higher, Yield Curve flatter, and Bond futures lower. These all, to me, make sense and are "rational". Utility Index is lower, which is uncharacteristic. Moreover, Dow is only up 6. Would have expected a larger move under the circumstances; nevertheless, still above 8480.

  Jonathan Levinson   9/10/02,  9:41:24 AM
My COMPX 1 minute chart is full of long white and red candles as the machines duke it out, rushing up, then rushing down and back again. It would take machines to be trading big at this level, with support just below and resistance just above. This is whipping up the volatility, with the QQV already up 1.15 today. Bond yields are off their opening highs, but the US Dollar index is continuing its upward march, currently just below 107.60.

  Jeff Bailey   9/10/02,  9:34:19 AM
It's good to be back! from a week vacation and getting up to speed on things. First thing I looked at last night when getting home was the bullish % charts. Just before I left on vacation, the NASDAQ-100 Bullish % ($BPNDX) Link had reversed into O's and "bull correction" and has deteriorated since then.

The S&P 500 Bullish % ($BPSPX) Link has then followed and also reversed, but into "bear confirmed" status. Again, this is indicative of the recent "bull allert" market taking a rest. Covered calls and protective puts can be placed on underlying stock positions, and bearish traders can be looking put stocks that are giving sell signals or rallying to bearish resistance trends on their point/figure charts. (Note: It would take a bullish % reading of 58% to get this market "S&P 500" back into bull alert status, and a reading of 60% to achieve "bull confirmed" status)

  John Seckinger   9/10/02,  9:30:25 AM
Note: There are no economic events scheduled for today. Rumors in bond pits are that position squaring will most likely continue; thus pressuring bonds and most likely sending cash into the equity markets. Also included in the position squaring should be selling of five-year notes - taking profits after the extended run-up (down) in price (yields).

  Jim Brown   9/10/02,  9:23:11 AM
Swing Trade Signals
Negative news events and negative comments from Intel failed to drag the market down overnight. Even a warning from Nokia and a failed drug report by DNA this morning has failed to blunt the sentiment.

This bullishness is amazing considering the possibility for a negative news event and/or terrorist attack. The news that another plot for a 9/11 attack was discovered in the Philippines yesterday was totally ignored.

We will maintain our current stops on any opening bounce to give the markets plenty of room to maneuver. Expect high volatility on low volume to be the norm.

  Jeff Bailey   9/10/02,  9:22:53 AM
The 9:00 AM intraday update has been posted. Link

  Steven Price   9/10/02,  9:08:57 AM
Nokia warned that third quarter sales would come in below expectations. Although handset sales were fine, they saw a drop in networking revenues.

  Steven Price   9/10/02,  9:05:27 AM
Blue Chip Economic Indicators are estimating U.S. growth at 2.3% for 2002 and 3.2% for 2003, which is unchanged from last month's survey. Estimates for 3rd quarter GDP are up to 2.7% from 2.6%, based on auto sales and capital spending.

  Jonathan Levinson   9/10/02,  8:19:23 AM
The US Dollar Index has continued its march higher to above 107.40, and gold has gotten whacked to the 318-319/oz level. Equity futures were volatile last night, whipping up and whipping down and causing me severe mood swings throughout the night during my periodic sleepwalks past the screen. It was all for naught, however, as the NDX futures are at +2.00 and S&P at +4.40. A number of bearish readers have been sending me emails, which I love, indicating an escalating level of fear about their shorts. Two things: Use stops. Jim's trading is an excellent example of how to trade well. You pick your entries and exits at the same time, adjust rarely once the trade is on, and let the price do the work for you. By now, this should be obvious to all- you cut your losses and let your profits run. Second thing: Read Steve's marketwrap if you're uncertain. The fundamental news is with rare exception just awful. The record mortgage defaults and foreclosures is like the distant clap of thunder in what the market has been treating as a clear blue sky. Of course, price is the only action. The market will bounce if it wants to bounce, and that's what your stops are for. But fundamentals are far from fixed. What I'm trying to say is that for those of you who are bearish, you might have trades currently in jeopardy, but your view of the fundamentals doesn't appear to require adjustment just yet.

  Jim Brown   9/9/02,  9:48:46 PM
The Swing Trade Game Plan has been posted: Link

  Jim Brown   9/9/02,  9:47:58 PM
The market monitor for Monday has been archived: Link


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