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  Jim Brown   9/19/02,  9:14:47 PM
The Swing Trade Game Plan has been posted: Link

  Jim Brown   9/19/02,  3:59:29 PM
Swing Trade Signals
My support target from last night's game plan was OEX 420. I would be looking to go long again from there but not this close to the close with possible warnings in the wings. If we get another drop at the open we will look for an entry then.

  Jim Brown   9/19/02,  3:49:57 PM
KLAC - There is a rumor making the round that KLAC will warn after the close.

  Jim Brown   9/19/02,  3:48:52 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
It looked like we were going to get a bounce off the 62% retracement level but the Dow lost its battle with 8000 and the prospects are not good. Ending numbers are OEX 425.86, SPX 848.53, DIA 80.20, SPY 85.44, DJX 79.90, NDX 873.79, Compx 1224.07, QQQ 21.75, Emini 848.75.

The QQQ LONG signal is still open with a stop at 21.25

  Jim Brown   9/19/02,  3:44:18 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We are not getting the expected end of day bounce and without some points under our belt to insure against the overnight earnings warning risk I recommend closing the play here at our entry point of 426 and going flat the broader market. The Dow has broken under 8000 again. Repeat: Close the LONG signal now.

  Jeff Bailey   9/19/02,  3:38:21 PM
The 3:15 PM intraday update has been posted. Link

  Jim Brown   9/19/02,  3:35:18 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We are LONG the broader market at OEX 426. This is based on 424.90 being the 61.8% retracement level for the OEX. The bounce at 3:15 was off of that level and the low of the day for the OEX at 424.78. The Dow is still fighting to stay above 8000. This will be a quick signal if we get another leg down and I set the stop loss at 424 to take us out quickly on a failure. SPX 849.04, DIA 80.40, SPY 85.55, DJX 80.07, NDX 871.99, Compx 1221.99, QQQ 21.70, Emini 849.50.

  Jim Brown   9/19/02,  3:21:44 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Go long the broader market now at OEX 426 with a stop at 424

  Jim Brown   9/19/02,  3:03:53 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Go Long the broader market with an OEX trade over 427. The Dow did not break 8000 ! If we get a bounce I want to get back into the LONG signal immediately for any end of day run. The stop loss will be OEX 425.

  Jim Brown   9/19/02,  3:02:35 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the long signal at 14:56:43 when the OEX traded below 426. SPX 849.26, DIA 80.38, SPY 85.54, DJX 80.07, NDX 870.52, Compx 1221.40, QQQ 21.65, Emini 849.00.

  Jonathan Levinson   9/19/02,  2:53:26 PM
Be careful if thinking about putting on new puts on this breakdown. There's a bullish descending wedge on the COMPX 15 minute chart that is nearly complete.

  Jonathan Levinson   9/19/02,  2:34:27 PM
This is one of those critical moments- if the COMPX can break free of this s/r zone at 1230, the bulls will have their double bottom. If not, I'm expecting to see new lows.

  Jim Brown   9/19/02,  2:18:02 PM
Option Expiration - Just a reminder that DJX and SPX options cease trading at today's close. The OEX options cease trading with Friday's close.

  Jim Brown   9/19/02,  2:14:24 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Everybody always asks me to suggest new entry points for those not in the current plays. If I was not in the current LONG play I would be looking to go long with an OEX trade at 428 with a tight stop at 426. We are at the lows of the day on the OEX/SPX but the Dow is holding above 8000. This could be our leading indicator for the afternoon move. Just my opinion!

  Jeff Bailey   9/19/02,  2:13:28 PM
Per Linda's 13:58:24 post. I couldn't AGREE more. Only "reason" to use the stochastics right now is an "excuse" to take a profit if short/put and a stock/index trades your prior target. If nothing else, an "excuse" to lower a stop-profit in a bearish trade.

  Jim Brown   9/19/02,  2:13:11 PM
Swing Trade Signals
The OEX/SPX/Compx are at the lows of the day but the Dow is still holding above 8000. Falling but still barely above. That will be the key to the afternoon's direction.

  Jim Brown   9/19/02,  2:06:13 PM
Swing Trade Entry Point Alert - QQQ
I was hoping the QQQ would hit 21.50 to go long for the Fed meeting but it just does not look like it is going to happen. Let's go LONG the QQQ now at 21.80 and put a tight stop of 21.25 on the signal. The Target will be $23.00 by Monday afternoon.

  Linda Piazza   9/19/02,  1:58:24 PM
Stochastics and Other Oscillators: I forgot to mention in an earlier post that one reason that I don't rely on oscillators such as stochastics to give me buy or sell signals is that these oscillators are not reliable in a strongly trending market.

  Steven Price   9/19/02,  1:58:04 PM
Temple Inland (TIN) $44.05 (-0.52) I'm lowering the stop from $48.00 to $46.50, just above yesterday's high.

  Jeff Bailey   9/19/02,  1:58:03 PM
The 1:00 PM intraday update has been posted. Link

  Jonathan Levinson   9/19/02,  1:57:19 PM
Bearish traders can either pray for a breakdown here, or snug down their stops. I've chosen to do both. A bounce from here will look like an intraday double bottom, sure to whip Mr. Bull into a frenzy. A tight trailing stop will lock in profits and remove the pain from the equation, while hopefully following price down if that breakdown comes. The TRINQ is up to 3.41 and the QQV to 52.82, +1.83 on the day. Yields are dropping back down. With the COMPX just above its low of the day and 1225 support, it looks like make or break for the bears.

  Steven Price   9/19/02,  1:56:05 PM
Avery Dennison AVY: $57.49 (-1.38) I'm lowering this stop as well, from $62.00 to $61.00, just above Tuesday's high

  Steven Price   9/19/02,  1:53:08 PM
Barr Labs (BRL): $63.33 (-1.96) Time to lock in some profits. I'm lowering the stop on BRL to $65.50.

  Steven Price   9/19/02,  1:47:57 PM
Autozone (AZO): $75.03 (+0.78) Not much green on the screen today, but OI Call Play AZO is one of the lucky few. It bounced from a strong support trendline that began on July 24 and has held up on each of 3 subsequent pullbacks on the way up. I have a hard time recommending new entries with the Dow testing 8000, but this looks like a good long candidate on a Dow rebound. Earnings are next Wednesday, so we'll be closing the play before then.

  Linda Piazza   9/19/02,  1:36:37 PM
Reader Mark Fulford reports that troops have entered Arafat's headquarters in response to suicide bombings. Thanks, Mark.

  Jim Brown   9/19/02,  1:28:21 PM
Advance/Decline drop Take a look at the A/D line in the last 30 min. The major indexes have not dropped nearly as much as you would have expected which would lead you to suspect it was broad based in the smaller cap stocks. A drop of this magnitude in big caps would have us setting new lows on the Dow/S&P Link

  Jim Brown   9/19/02,  1:20:29 PM
Swing Trade Signals
The A/D line is approaching the low of the day after a huge bout of broad based selling that began at 12:45. The indexes are not showing the magnitude of the selling but the internals are dropping quickly. It appears to be a broad based program since the RUT is showing the most reaction.

  Jim Brown   9/19/02,  1:20:17 PM
Swing Trade Signals
There was a flurry of what looked like small sell programs that hit when the Dow touched 8115 at 12:45. They knocked the bulls back into reality and blunted the growing sentiment. Hopefully the resulting higher low will bring some new buyers in from the sidelines. If we can now make a higher high of 8120 or better we could see the beginnings of a new afternoon trend. (you can see I am stretching here for something to write about) Seriously, a print over 8120 would be bullish for those expecting an afternoon rebound.

  Jeff Bailey   9/19/02,  1:12:55 PM
Biotech note Wyeth Pharma said it will begin selling shares of Amgen (AMGN) $43.50 -4.35% in Q4. Stock hit lower. AMGN is BIG weighting in BKT.X and Biotech HOLDRS (BBH), so near-term negative for this sector.

  Jonathan Levinson   9/19/02,  1:04:45 PM
The COMPX has been chopping sideways in a 10 point range since this morning's fireworks. There has been no upward breakout or gap fill yet, but I know at least one bearish trader who's far from relaxing. The indicators are similarly respecting narrow ranges, as are the metals indices. Bond yields remain negative but have been improving. Volume breadth is very negative on the COMPX, with declining volume leading advancing volume 649M to 141M. I note, however, that the 5(3) stochastics have moved out of oversold without any significant improvement in price, which looks bearish to me. I see a number of imperfect chart formations on the different timeframes, and so won't speculate. For now, we appear doomed to a continuation of Jim's endless morning and rangebound trading.

  Jim Brown   9/19/02,  1:01:37 PM
12:48 ET INVN InVision falls on reports of screening delay (29.85 -4.15) Stock comes under heavy selling pressure in reaction to reports Senate Panel votes for 1-yr delay in airport screening.

Thanks to NASO for the details.

  Jim Brown   9/19/02,  12:55:38 PM
INVN The bottom just fell out of INVN and I can't find any news. Anybody know what happened?

  Jim Brown   9/19/02,  12:47:19 PM
SOX = SMH $21.21 - It appears to me that the SOX has held support and after a flood of bad news there may be some light at the end of the tunnel. (it is just the train but bulls are oblivious) I think the book-to-bill numbers could bring buyers back into the semis. Yesterday the SMH held 21 and that number has held again today. Aggressive traders may want to take a chance on the Oct $22.50 calls SMH-JX at $1.15. If the SMH breaks $21.50 (today's high) it could attract a lot of buyers. Just my opinion! I still think the SOX has farther to fall but not until after the Fed meeting on Tuesday. This would be a short speculation trade only. Use $21.50 as an entry trigger and only buy on a breakout over that level.

  John Seckinger   9/19/02,  12:47:03 PM
Ok, now that the Dow is above both the 22 and 50 PMA's (8075 and 8085, respectively), time to look for confirmation of an underpinning bid. Bonds are well underneath their highs; a bullish sign. Yield curve steep, but not as steep as this morning. Neutral sign. Utility Index outperforming Dow; bullish. Only thing concerning is dollar still under pressure and below 108 (107.18). Note: Cash YIELDS on 10-year and five-year notes are 93 basis points wide. This is extremely steep, and I will be following the cash market in the near term to see if sizable allocation begins to take place. I do expect the curve to steepen to 100 (1.00 percent), which is bearish for stocks; however, it should not be long before things turn around and the curve gets back to more "normal" levels (say, 60 bps wide).

  Linda Piazza   9/19/02,  12:30:40 PM
Reader Question: Could you please state what parameters you use for the MACD, STO and RSI and whether you use different numbers for different time frames?

Response: Thanks, Arnaldo, for the question. My style of trading may differ from that of some other technical traders, although I do consider myself a technical trader. I don't rely on stochastics, MACD, or RSI to give me buy or sell signals, but rather use them as confirmation of breaks in trends, chart formations, or moves above or below moving averages. It's those trends, chart formations, and moves above or below moving averages that give me buy or sell signals. I mainly trade off daily and weekly charts, looking for bigger movements, then use hourly stochastics and chart formations to choose the entry point on a particular day. I use both (5)(3)(3) and (21)(3)(3) settings on the daily stochastics, looking for a point when both are moving up or down in concurrence. I use (12,26,9) for MACD, although I prefer RSI (a leading indicator) and stochastics. I hope this helps, but if not, you might refer to some of the wonderful archived articles on using these technical indicators. Each trader may have personal preferences, and you'll probably develop your own.

  Jim Brown   9/19/02,  12:30:31 PM
MMM $119.31 - MMM has held support at $117 again and looks ready to rally with the Dow. For those looking for a quick pop I like the Oct $120 calls MMM-JD currently at $4.70 or the $125 calls MMM-JE at $2.45. High risk but with end of quarter window dressing ahead MMM is where any fund with cash will be parking money. MMM would also benefit from any pre-Fed rate cut speculation.

  John Seckinger   9/19/02,  12:23:42 PM
Note: 50 Period Moving Average (PMA) in Dow on a five-minute chart is at 8083. The high rebound was to 8083. This average is exponentially derived.

  Jim Brown   9/19/02,  12:23:30 PM
Swing Trade Signals
The lack of excitement here is under whelming. If we do not get some upward movement here soon I am thinking about going flat. The internals are improving very slightly but any decent sell program could squash them instantly. My hope is currently pinned to the increasing up volume and a slow tick up in the A/D line. There is definitely no conviction and every tick up has to break through another level of sellers. The Nasdaq which was leading the rebound earlier today has gone flat.

While I expect Dow 7500 soon (but not until after Tuesday) I do not see any favorable risk/reward in going short again today. Dow 8000 should hold and if it didn't then OEX 422 is where we would start seeing support. Dow 8000 equates to OEX 427, which would only give us a "possible" five points. If we do roll over and stop out I will be going flat instead of short. My next target on the downside would be a LONG signal at 422.

  Steven Price   9/19/02,  12:19:57 PM
If the rise in Panera is simply due to rumors, those with open put positions may have a chance at redemption. However, wishing and hoping is never a good position to be in. One of the rules I have always followed when I begin to wish and hope is to remember to make sure I can always come back and play the next day. Because we are an end of day newsletter, our stop loss is based on end of day closing price. However, I have identified this position as one which did not go as we had planned, so I have no argument with those readers who may want to close the play now. On a day when many put positions are turning profits, it may be time to let this one go and manage the others.

  Jim Brown   9/19/02,  12:11:08 PM
Philly Fed - The number came in at 2.3% but there was some confusion over the expectations. Some were showing estimates at 2.0 and others at 3.6, obviously a significant difference. The initial reaction was positive but it quickly lost steam as some sellers appeared for a moment. The internals are starting to improve slightly and the volume is picking up slightly. Still too early to say a bottom has been seen but the markets have taken everything thrown at it today and held that 8000-8050 level. Should be up from here.

  Steven Price   9/19/02,  12:05:46 PM
Panera Bread: $27.02 (+1.67) Here are some of the notes I have received from readers

Rumor PNRA may be bought out. CEO of another company (sorry I can't remember name -- owns several restaurant chains) was asked if they were going to buy PNRA and he gave "we are always looking" answer. Pat

5% increase in same store sales yesterday

While I have not been able to confirm either of these remarks, I would not be looking for new entries, and I would also note that the stock has run into an area of heavy congestion. It is above our stop loss and the trend we were trying to capture has been broken. I am between recommending closing the play right now, and looking at that chart and wondering if this is a golden opportunity for additional entry. However, as we are trying to capture the trend, I am leaning toward closing the play.

  John Seckinger   9/19/02,  12:05:21 PM
Coincidence? The Dow formed a nice b-pattern distribution on a five-minute chart, and was right at the pivot before the release. Moreover, the 22 PMA was at 8060 and just above the 8048 pivot.

  Jonathan Levinson   9/19/02,  12:03:38 PM
Or not. Looks like bullish news from the Philly Fed.

  Jonathan Levinson   9/19/02,  12:00:04 PM
It looks like a head and shoulders is in the process of breaking down on the 5 minute COMPX chart. The TRINQ is up to 2.64 on this move downward, and the longer intraday stochastics aren't nearly as oversold as they were the last time the COMPX challenged the 1230 level. The QQV is now up 1.93 on the day,a nd HUI and XAU are headed back toward their highs. The Philly Fed could be the feather that breaks this bounce, but we'll have to see.

  Jim Brown   9/19/02,  11:57:54 AM
Semi Book to Bill - The book to bill numbers yesterday were 1.14 which while still a positive number was less than the prior month. However, bookings and shipments actually increased. The reason the headline number fell is that it is a three months average. To me this is actually bullish that the underlying numbers rose. This could be the reason for the support in the SOX today. It is only down -3 points and still above that 256 seven year support trend. Could be a long SMH play here soon.

  Jim Brown   9/19/02,  11:53:08 AM
Volume - The volume has come to a screeching halt. I am watching the time and sales on the QQQ, SPY, Emini and a couple stocks and it has literally almost stopped ahead of the Fed report.

  Jeff Bailey   9/19/02,  11:45:25 AM
The 11:00 AM intraday update has been posted. Link

  Jeff Bailey   9/19/02,  11:44:33 AM
Biotech HOLDRS (BBH) $80.55 -1.48% ... Hi Jeff, It looks like BBH is basing/consolidating with good $ management to the down side. If I read the PNF chart correctly, a new sell signal would be at 78 and nice Stop loss. Would a call or maybe another type of option strategy would work if bullish?

Good thinking here and was thinking the same types of things late last night. My thinking however was related to a trader short/put the QQQ, and may create slight "hedge" for QQQ bear, with a BBH long.

After warning on earnings, GENZ +2.9% has traded up each day (even the day they warned on earnings.) In play "must be" next Thursday's FDA review.

In last night's Index Trader Wrap, talked about a near-term bullish break higher level in the Biotech Index (BTK.X) 330.59 -1.79% on break above 350 level. That would be about .... $83.00 for the BBH.

Not "crazy" about a BBH bullish trade here. Trader is getting an "inside day" today, but I like the risk/reward setup. Right now, my guess is a lot of shorts trying to short from the 350 level and rounding lower 21-day SMA and flat 50-day SMA, both at 350.

  Jim Brown   9/19/02,  11:41:26 AM
Is it soup yet? - Is it just me or is this the longest morning of the week? Seems like I am in a time warp and 12:00 is never going to come!

  Jonathan Levinson   9/19/02,  11:40:55 AM
Jeff- The QQQ closed at 4:15PM, after the EDS bomb hit, while the NDX closed at 4:00PM, prior thereto, thus the discrepancy today.

  John Seckinger   9/19/02,  11:37:21 AM
Volatility Index currently higher by 11.34 percent to 45.53. The 22 PMA in the Dow is at 8063 and has not yet been tested. The 50 PMA is slightly higher at 8091.

  Jim Brown   9/19/02,  11:32:54 AM
Swing Trade Signals
Sweating over the Fed! Still 30 min until the Philly Fed numbers and the markets are narrowing their ranges and trending closer to the lows of the day. This number should be critical and any flat to up report should produce a relief rally. HOWEVER, we need to be aware of a possible sell the news event. We could see a quick pop right into the jaws of the waiting bears.

  Steven Price   9/19/02,  11:11:19 AM
Reader Question: Good morning Steve, I have an open position on the IBM butterfly form late July. Any suggestions? I used puts, what is the possibility I will get assigned? If so, then what? Thanks, JP


Position: Long IBM 65-70-75 Butterfly

Long (1) 75 put, Short (2) 70 put, Long (1) 65 put

The position was looking pretty good until last night. An $0.80 investment had turned into $3.65 by expiration. So much for counting chickens two days before they're hatched. The position is still worth something as long as the stock is above $65. If you are assigned on the two short 70 puts, which I assume you will be, you simply exercise your in the money puts. If the stock is below $65, you exercise both the 65 and 75 puts. If it is above $65 just the $75 put. Any put that is in the money by more than 0.50 should be an automatic exercise, however, CHECK THIS with your broker. The rule used to be 0.75, so make sure your broker will exercise these on your behalf, or do it yourself. The loss on the 2 short 70 puts will be made up for with the exercise of the 75 put and the 65 put if needed. If the stock rebounds and finishes above $65 by more than the amount you paid for the butterfly, you will still make money. IBM is currently $65.42, so the butterfly is worth 0.42.

  Jonathan Levinson   9/19/02,  11:06:40 AM
This looks like a rounding ascending wedge on the 5 minute COMPX chart, which implies a re-visit of the day lows, but I know I'm squinting very hard to see the formation in today's action. What is evident is that this move off the lows has relieved the oversold readings on the oscillators and the TRINQ. The question now is whether we'll see the opening gap get filled or not. Bond yields have recovered but are still well in the red, and the QQV is still up .63, which shows that the smarter money has yet to become bullish intraday. Bottom line, bulls should keep their stops trailing tightly, and bears should watch for a stochastic rollover, preferably from gap resistance if the COMPX makes it that high. The TRINQ is a little lower since I started typing, currently 1.24.

  Jim Brown   9/19/02,  11:06:11 AM
Swing Trade Signals
Holding back any rebound is the Philly Fed report at noon. It is expected to come in at a +3.6% number compared with 3.1% last month. Last month the survey came in way below estimates and caused a serious reaction drop in the market. Traders are probably remembering this event and are just holding the line until it is released today. A bad report today would add to the overall weakness and could force the market to retest 8000 but I think it would have to be a real disaster to hold it down.

Think about it. We had JPM and EDS really show massive problems along with negative economics and both days the Dow held 8050. Today the futures were down -15 points from yesterday's close and the Dow is only down -115. There is a floor at 8000 and I don't think we will break it until after the Fed meeting. Of course that opinion and $5 will get you coffee and a bagel at PNRA. Rumor has it that PNRA could be a take over target. (Sure, and I guess Boston Chicken is the buyer? Or maybe Einstein's? )

  Steven Price   9/19/02,  10:59:09 AM
I have to give Jim Brown kudos for his table pounding on a possible IBM warning. He got the next best thing, however, I wanted a better entry point. In hindsight, I guess a $5 gain would have been better than not being in the play, which is where I am. Hindsight certainly is 20/20.

  Steven Price   9/19/02,  10:56:10 AM
Reader Question: Steven: After yesterday's close, I was wanting to write back and ask, based on the current level at 1236 on the COMPX, do you think that this is the next leg down on the H&S pattern which I wrote to you about yesterday. or can we look for bullishness and disregard the pattern. Thanks again for your great insight. Anthony

Response: I don't think you can discount the pattern, as it is repeated across all major indices. The next leg down looks to be 1200, which served as support from Aug 5 and July 24. There is some support at 1230 as well, from the days surrounding the July 24 low. I would wait for the Dow to break 8000, however, before I play the Nasdaq down to 1200 from this level. I am still bearish and believe it will happen. However, I will trade what I see, not what I think I'll see.

  John Seckinger   9/19/02,  10:55:59 AM
Five-year sector is beginning to lose some of its upside momentum (possible bullish implications), and the Utility Sector is starting to show signs of life. Looking at the Dow, the 22 PMA (five-minute chart) is now at 8078. A move above this average (Dow currently at 8050) could be the catalyst for higher prices to follow.

  Steven Price   9/19/02,  10:42:04 AM
Reader Question:What gives with PNRA? It's near the top of the list of top gainers today, blowing through your stop for no apparent reason. [Unfortunately, it's the only put I still hold after cashing in everything else yesterday morning.] Scott

Panera Bread (PNRA): $27.15 (+1.80) I have seen no news on PNRA, but my guess is that someone knows something (the conspiracy theory of unexplained stock movement). We will be closing the play as long as it stays above $26.50, and most likely if it doesn't. The only way I see keeping the play open would be a fall below $25.50. I'm glad to hear that you cashed in on the the other plays.

  Jeff Bailey   9/19/02,  10:31:48 AM
Aetna (AET) 39.75 +0.65% ... could you comment on AET's price action today? seems awfully strong considering the market is down 100+ points

Mentioned in last night's market monitor that AET is presenting this morning at the Bear Stearns Healthcare Conference. It was on September 13th, after bearish profile here when stock traded $40 and triple-bottom sell signal, that AET sold off to $37 level on rumor that the company would lower their guidance at the Bear Stearns conference. Link

Subscribers that have been with us since March, will remember how Adelphia, after previous bearish profile, reported earnings on March 27th, stock was bidding against us at $22, then something was said..... at $19.00. downside alert was triggered and the rest is history.

Watching stock closely today

  Linda Piazza   9/19/02,  10:30:42 AM
I've been looking at old charts from the trading week of July 22-26. The 427-428 area provided resistance for the OEX all that week, with the chart forming a sloppy reverse H&S formation. Perhaps that former resistance helped provide support today. A break of OEX 427-428 may be more significant, then, than a break of 430.

  Jim Brown   9/19/02,  10:29:11 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Change the stop loss on the current LONG signal to OEX 426 instead of 427. The 427 number did not exactly equate to a Dow 7990 or SPX 849. I think 426 will be more of a confirmation of a Dow drop under 8000. If that happens we want to get out. I could see another strong run on 8000 but I think it will hold. I just want to hedge my bet at this level.

  Jeff Bailey   9/19/02,  10:21:38 AM
Correction to 09:56:56 regarding OEX.

OEX target is 419, not 491. last two digits were transposed.

  John Seckinger   9/19/02,  10:16:01 AM
Bank of Japan (BoJ) announced Wednesday night that they plan to buy securities from Japan's struggling banks. Following the Nikkei crash, these Japanese banks have maintained bad loans on their books and were forced to stop acting as a lending institution. If these banks did lend, the money was given to businesses that failed. Why? If the banks wrote down the loans, regulators could then take an aggressive stance. Why doesn't these banks just sell their security holdings on the open market? It would make banks realize these equity losses, and all banks in Japan would rather take the alternative step of selling to an investor. In my opinion, this move will not help at all.

  Jim Brown   9/19/02,  10:10:37 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the new LONG signal at 10:04:20 when the OEX traded above 430. SPX 857.57, DIA 80.86, SPY 86.40, DJX 80.58, NDX 882.05, Compx 1236.13, QQQ 21.94, Emini 858.00. The initial stop loss will be OEX 427 and just under the low of the day. (SPX 849, DJX 79.90) Now we wait for the Fed.

  Jonathan Levinson   9/19/02,  10:08:35 AM
The TRINQ is holding above 4 even as the index prints day highs- I'd call that distribution, but price is the only action. The COMPX has commenced a gap fill on this morning's 20 point gap, currently trading 1237. Once those oversold oscillators have been relieved, look out below. GE dipped below 26.90 but is now just above it, and for the moment we have our bounce. The COMPX is now trading just below the area formerly known as support, and a push above 1242 will bring yesterday's trading range into view.

  Jim Brown   9/19/02,  10:07:51 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Our trailing stop was triggered at 10:04:20 when the OEX traded above 430. SPX 857.57, DIA 80.86, SPY 86.40, DJX 80.58, Ndx 882.05, Compx 1236.13, QQQ 21.94, Emini 858.00. This signal was entered at OEX 438.

  Steven Price   9/19/02,  9:59:44 AM
Reader Question: Hi Steve,

You wrote "If JPM is seeing high default rates from the telecoms, there are undoubtedly other banks with similar problems" Also here is anther piece of info I read yesterday "Options activity is brisk this afternoon for banking concern Citigroup. The stock has seen more than 11,900 contracts trade at its December 35 call. Prior to today's volume, open interest for this option stood at only 4,809 contracts, indicating that this is the initiation of a sizeable new position. Breaking down the activity, a block of 3,070 contracts changed hands at a bid price of 0.75. There were also several blocks of 1,000 contracts that crossed the tape between the bid and the ask prices." If though it looks bearish for C what is opinion on it since I'm long 35 Dec. call. Thanks Sam

Citigroup (C) : $28.28 (-0.83) There could be a couple of reasons for the sale, but experience tells me they think there is not much chance the stock will get back there. Of course they may be buying the stock at this level and simply reducing the cost basis by selling the calls. There is still a lot of time until December, so it could really be either case, but I would lean toward the former.

  John Seckinger   9/19/02,  9:59:23 AM
December 30-year bond, higher by 18 ticks at 113-11, once again made a new contract high at 113-20. Ticker: USZ2.

  Jim Brown   9/19/02,  9:58:35 AM
Swing Trade Signals
They are trying to hold the line at 8020 but there is some heavy selling sitting right on top of the bulls efforts. The morning bounce has been almost nonexistent and it appears the institutions are trying to exit in volume. The VIX is over 45 and the TRIN at 2.80 is down from over 4.00 this morning. The Put/Call ratio has actually fallen to .96 from 1.44 earlier. Still looking for a bounce but it is going to be tough.

  Jeff Bailey   9/19/02,  9:56:56 AM
Index Traders From Index Trader Wrap...

DIA bearish target was $80.50 ... Traded $80.29, currently $80.55. Would look to take some profits off table here.

OEX target is 419, trading 428. Look for resistance to be firm at 433.

SPX target is 835, trading 853. Look for resistance to be firm at 865.

SPY target is 84.00, trading 86. Look for resistance to be firm at 87.

QQQ target is 21.35, trading 21.77. Look to lock in some gains at target.

  Jim Brown   9/19/02,  9:51:58 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
If stopped out at OEX 430 we want to go LONG at the same level. I am looking for a Fed bounce and possible short covering this afternoon and Friday. This is expiration Friday and could give the indexes a positive rebound as well.

  Steven Price   9/19/02,  9:48:11 AM
Maxim (MXIM):$24.64 (-0.66) OI put play Maxim riding the Semi wave lower. I like entry short here, and don't expect the SOX (255.88) to find any support for another 5 points or so.

  Jim Brown   9/19/02,  9:46:46 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's lower the stop loss on the current SHORT signal to an OEX trade above 430. (SPX 858, DJX 80.50)Looks like we may go lower but I want to protect the current gains.

  Steven Price   9/19/02,  9:44:03 AM
Dow Jones ($INDU): 8041.50 -130.95 Interesting bounce just above 8000 (8011.68), but the average made it below the August 5 low of 8030. Looks like Jim's call of support at 8000 was right on. Still the break below 8030 looks awfully bearish.

  Jim Brown   9/19/02,  9:42:01 AM
Swing Trade Signals
All 30 Dow stocks opened lower and all but 2 of the Nasdaq 100 are trading lower this morning. The Dow came to a dead stop at 8011 but there has been no attempt to rebound as yet. The OEX broke the 430 level by -2 points to 427.71 and the S&P hit 855. The Nasdaq has printed a green candle on the 5 min chart. I wanted to exit here at 8000 but with the A/D continuing lower I don't want to jump out too quickly. If we break 8000 the drop could be swift despite the increasing possibility of a Fed rate cut.

  Jonathan Levinson   9/19/02,  9:41:16 AM
Hate those oversold readings. Looking at the descending channel on my 30 minute COMPX chart, I see another 5 points of downside, give or take, before we encounter trendline support at COMPX 1225. However, the very oversold TRINQ at 4.64, and the 5(3) stochastics which have all been drilled, makes me doubt if we'll even see it on this initial decline. The big question concerns what kind of a bounce we're going to see. I expect a sideways drift at most, but we'll have to see.

  John Seckinger   9/19/02,  9:36:52 AM
The US Dollar is just underneath its 22 DMA (107.25) at 107.18. Continued selling in the Greenback would give bears that much more ammunition. Ticker: DXOOY. Dow is down 1.93 percent. Sectors underperforming already include Biotech and Semiconductor issues.

  Steven Price   9/19/02,  9:35:56 AM
IBM $64.75 (-4.80) IBM was cut by several brokerage firms after EDS's warning. EDS is the second largest provider of global computing services - IBM is No. 1. Previous support was $66 from late June through early August. The stock is now at OCT 1998 levels

  John Seckinger   9/19/02,  9:30:43 AM
The yield curve is very strong this morning, with 5-year notes up 15 ticks and 10-year bonds higher by 18.5 ticks. Implications are clearly bearish for equities, but, more importantly, there is a chance that this will trigger a massive move out of stocks.

  Steven Price   9/19/02,  9:30:32 AM
Semiconductor Sector Index (SOX.X):262.79 As if we needed more bad news, Chip-Gear orders slowed for the third consecutive month. This has already sent the chip equipment makers rolling downhill this morning. In addition, Sun Microsystems was downgraded by Bank of America

  Jeff Bailey   9/19/02,  9:28:40 AM

S&P Premium Symbols From 09:00 Update, many of OI's subscribers use q-charts. The PREM symbol for the q-charts service is $prem

Traders can type that symbol, set that chart's time interval to 2 or 5-minute interval. Then, in the chart's window, simply "right click" your mouse button, then select "add alert". For the "buy program" one would enter today's $2.20 level with the appropriat >= direction.

After that alert is set, repeat the process, however this time the "sell program" level of $-1.10 is placed in the target, with <= direction.

Then, during the day, if one of these levels is hit, your q-charts station should "blink" that an alert has been triggered. You'll click the alert button to see what it is.

  Jeff Bailey   9/19/02,  9:22:51 AM
The 9:00 AM intraday update has been posted. Link

  Jim Brown   9/19/02,  9:09:14 AM
Swing Trade Signals
Housing Starts fell -2.2% to 1.609 million and much less than the 1.67 million expected. Initial Jobless claims fell -9,000 to 424,000 and continuing claims rose to 3.56 million. Both of these signs point to a continued weakening economy. Add this to the massive EDS warnings last night and the markets are headed south at a high rate of speed this morning. Morgan Stanley missed estimates by a whopping 12 cents this morning on weak trading and difficult market conditions.

The futures are down -11 this morning to 853 but in reality they are off more than -16 points. The timing of the EDS announcements yesterday was after the market closed but before futures closed their regular session. The 4:PM number was 869 but they fell -5 points to 864 before the 4:15 close.

Per the game plan from last night we will be looking to exit the current short signal around 8000 if the market looks like it will bounce. I expect a possible rebound into the Fed meeting on Tuesday on the expectations of a rate cut. Today is shaping up to be really exciting!

  Jonathan Levinson   9/19/02,  9:07:37 AM
The Fed has announced a 2B 28-day repo, which refunds the expiring 2B 28 day repo today. A remaining 5.75B expires today, and if the fed doesn't announce further repos today, that amount will constitute a net drain. I would expect that to keep a lid on any rally attempt we might see, but that's just a guess at this point.

  Jonathan Levinson   9/19/02,  9:03:04 AM
The US Dollar Index is sliding down a slippery slope and is currently trading below 107.40. Equity futures are down 10 for the NDX and -10.60 for the S&P. QQQ is trading below 21.70, and bond yields are sharply lower. Even old TYX has a bead of sweat above his impeccably stiff upper lip. I expect a gap down on the COMPX to yesterday's support in the 1235 area. If we don't bounce from the opening gap, look for support every 10 points on the way down to just under 1200. I expect some sort of a bounce of a purely technical nature. If not, (speakers on), then Link

  Jim Brown   9/18/02,  11:52:41 PM
The Swing Trade Game Plan has been posted: Link

  Jim Brown   9/18/02,  11:52:29 PM
The Market Monitor for Wednesday has been archived. You may view it here: Link


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