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  Jim Brown   9/30/02,  6:06:59 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Linda Piazza   9/30/02,  4:00:29 PM
Of course, as soon as I typed that last entry, the markets proceeded to fall further. The potentially bullish hammer is no longer a true hammer.

 
 
  John Seckinger   9/30/02,  3:57:38 PM
According to the Stock Trader's Almanac, I believe this September will be the second worst September on record. In 1931, the Dow lost 30.7% during the month of September.

 
 
  Jonathan Levinson   9/30/02,  3:57:33 PM
Nice trade, Jim. The COMPX is currently passing 1170 southward. Looks very bearish for tomorrow's open.

 
 
  Linda Piazza   9/30/02,  3:54:41 PM
The daily OEX chart shows a mixed picture, making it difficult to forecast direction. MACD and RSI are turned down, and stochastics are trying to roll down. However, the candlestick for today has a potentially bullish interpretation. Confirmation of a bullish candlestick confirmation won't come until completion of tomorrow's candle, however, and that's too late to predict tomorrow's action. If prices continue to fall into today's close, shortening today's shadow, that potentially bullish interpretation will be erased.

 
 
  Jim Brown   9/30/02,  3:38:43 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the SHORT signal at 15:31:16 when the OEX traded below 410. SPX 820.43, DIA 76.49, SPY 82.26, DJX 76.42, NDX 843.07, Compx 1181.72, QQQ 20.97, Emini 819.50. The initial stop loss will be OEX 413.00 (SPX 825, DJX 77.00)

Bring on the earnings warnings after the close!! With the west coast docks still closed the retailers are starting to warn about lower earnings due to lack of holiday merchandise. Great, another excuse for slow sales! Blame in on the weather, dock strike, corporate crime, Brazil or the Easter Bunny. But numbers were showing declines before the dock strike. I suspect the ISM numbers tomorrow are not going to be positive.

 
 
  Jeff Bailey   9/30/02,  3:36:05 PM
The 03:15 PM EST update has been posted. Link

 
 
  Jonathan Levinson   9/30/02,  3:34:49 PM
Maria's probably just trying to protect her inevitable GE options.

 
 
  Jim Brown   9/30/02,  3:29:45 PM
Maria is doing her best to talk the market up - Maybe they should send Joe out to jog again.

 
 
  Jim Brown   9/30/02,  3:26:51 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's raise the entry point on the current SHORT signal to OEX 410. The last bounce is running out of steam and could roll over into the close. If it does I want to be ready.

 
 
  Jim Brown   9/30/02,  3:18:27 PM
Swing Trade Signals
We are very close to that gap fill at 412.95 but while the bounce has slowed no weakness has appeared. Shorts are probably still making that cover/no cover decision. I am very close to calling an entry point here if that decision appears to be "not covering".

 
 
  John Seckinger   9/30/02,  3:15:14 PM
It was interesting that the December Bond closed 5 ticks underneath its opening range. The high was 114-31 (double-top with last Wednesday), while the low was 114-07. Just a few minutes ago, the 30-year closed at 114-09. The yield curve, on the other hand, still closed very strong - with the five-year note up 21 ticks and 10-year bond higher by 20.5. This is a 44 tick steepener. If the Dow closes positive, will be interesting to see how the curve handles the sell orders tomorrow morning. Could lead for a higher opening for equities.

 
 
  Jeff Bailey   9/30/02,  3:10:14 PM
Buy Program At S&P premium $1.28

 
 
  Jonathan Levinson   9/30/02,  3:09:19 PM
Bounce indeed. The COMPX is closing in on gap resistance, a point away. A breakthrough at that level will bring 1190 resistance, followed by 1200 resistance into view.

 
 
  Jim Brown   9/30/02,  3:04:26 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's raise the entry point on the current SHORT signal to OEX 403. If the current bounce fails after the second attempt at 410 then I would not expect a rally off the 400 level and entering at 403 would be justified. However, I am still looking for a higher entry.

 
 
  Jim Brown   9/30/02,  3:02:24 PM
Swing Trade Signals
If we are going to get an end of day bounce it should happen now. The 3:PM turn is upon us and from the looks of the ticks and A/D indicators there were several buy program triggered in an attempt to sway the closing numbers. Now we can sit and watch the programs battle it out and see who ends up the winner. With the ISM numbers at 10:AM tomorrow we can afford to wait till tomorrow to get short again if that is how it plays out. We could miss a high profile earnings warning but those should be drawing to a close.

 
 
  Jonathan Levinson   9/30/02,  2:44:05 PM
Whether it was a flag, wedge or triangle, the ascending trendline off today's lows is in jeopardy right now, after a second unsuccessful attempt on COMPX 1180. The indicators are doing their best to read this chop, and it looks like the 5 period 30 minute stochastics are trying to win the title, currently in a full bear roll off the afternoon high. It still seems strange describing 1180 as a high- the expression "knee-high to a grasshopper" comes to mind. GE is trying to hold 24, and put play BSC tried but failed to clear 56. The Fed's large repo today, expiring tomorrow, seems to have done little for equities and might well have found its way into bonds, if the renewed collapse in the yields is any indication. I wonder if Sir Alan still doubts that there's a credit bubble?

 
 
  Jim Brown   9/30/02,  2:41:15 PM
Swing Trade Signals
I am watching this point bleed carefully. I am not in any rush to jump back into the SHORT side but if the OEX breaks 405 it would be a signal that the up trend in place from 10:30 had broken. I will still wait for a break below 399 instead of jumping in now because there could still be some end of day buying.

 
 
  Jim Brown   9/30/02,  2:23:54 PM
ChoicePoint   If you read my editors plays on Sunday you might be interested in the +$3 gain in CPS today. This reinforces my thought that a mutual fund was bailing out and that was pushing the stock down.

 
 
  John Seckinger   9/30/02,  2:10:52 PM
Seems to be Biotechs leading the recovery, as the BTK index is currently higher by 2.32%. Reasons for the recovery include speculation that a new FDA chief, to be named shortly, will be extremely beneficial to the sector. Note: Dow lower by 1%.

 
 
  Jeff Bailey   9/30/02,  2:03:50 PM
Trading curbs lifted As Dow Industrials (INDU) 7,623 -0.98% recover to within 90-points of Friday's close.

 
 
  Jim Brown   9/30/02,  2:03:32 PM
Swing Trade Signals
Now that we are over OEX 406 again let's review the resistance levels. The bottom of the opening drop was 408.50 and initial resistance but only very minor. OEX 412.95 was the Friday close and would be a gap fill from this mornings drop. If we fill that gap the 413 level would be the make or break level. We could see a drop on immediate selling or a bounce on short covering if we make it a few ticks over that level. There is likely to be some late window dressing from funds that figure they can buy stocks at the close to be "technically long" for their investor statements and then sell those same stocks Tuesday morning. This way they are only at risk over on night. If they can get the closing pop bullish on a late buy then there is a good possibility Tuesday will open up as well and give them a positive open to sell into.

Other institutions know this trick and could be holding their next sell programs at bay until the close to gain from the end of day buying. The trick will be to see who is holding the larger orders.

Most people think the markets are simply a bunch of traders buying and selling stocks every day and are oblivious to the games the institutions play. When you are dealing in tens of millions of dollars a few extra ticks in your direction are worth a lot of money. It is a chess game of monumental proportions and the players can never see the board. Everyone just guess where the next moves will be and tries to plan accordingly.

Either way, I look for a short covering bounce into the close

 
 
  Jeff Bailey   9/30/02,  1:50:35 PM
Dow Industrials (INDU) 7,581 -1.54% (-118 points).... Hi Jeff: We're nearing that Dow 7611 number. When the curbs are lifted do you think the original trend will come back into play and accelerate?

Difficult to say, but will be watching the premiums and potential buy/sell execution levels if trading curbs are lifted.

I'm thinking we might see a bit of a recovery, since we've seen some modest recovery from the lows.

 
 
  Jim Brown   9/30/02,  1:45:27 PM
FYI - Weldon just left to play golf! Get ready to trade! (grin)

 
 
  John Seckinger   9/30/02,  1:42:18 PM
Putting things in perspective: Yield curve (5/10 year) is now 102 points wide (3.59%-2.57%), representing a 30-day high. The 50-, 200-, yearly, and five-year high is at 110. The curve moved wider by 4 bps today alone. Note: 10-year average is 28.9 basis points. I think the 100 area should prove pivotal in the near-term, with more selling pressure in equities the longer the spread remains over one full percentage point wide.

 
 
  Jeff Bailey   9/30/02,  1:36:23 PM
The 01:00 Update has been posted. Link

 
 
  Jonathan Levinson   9/30/02,  1:35:07 PM
We're getting a bearish cross on the 30 minute 5(3) stochastic on the COMPX, half way to overbought. This is typical of the directionless chop we've been seeing since bouncing off the bottom of 1180. The QQV has crept up a bit and the TRINQ has crept down. But yields are still in the cellar, gold and metals are still up, and I don't see much rally from here- famous last words.

 
 
  Linda Piazza   9/30/02,  1:02:10 PM
I second Jonathan's and Jim's caution. Because of the oversold conditions, today may not be the right day to trade for any but the nimblest of traders, disciplined at getting out when a trade moves against them. While you'll kick yourself if you don't enter and see your erstwhile profits add up, you'll kick yourself more if you lose capital you can't afford to lose. There will always be another trade.

 
 
  Jeff Bailey   9/30/02,  12:59:49 PM
Agilent (A) $12.62 -3.5% ... Jeff: Nice call, or should I say put on A. I took my gains off the table in the October 15 puts today. Any thoughts on rolling out to November?

Yes... could roll out with some of your gains, but limit capital exposure in the November $12.50's or January $12.50's has an end of year "tax-loss sell" candidate.

Bears getting some help today after Soundview downgrades to "neutral" from "outperform" following references to lack of recovery at a number of diversified industrial tech companies. Cuts 2002-2003 estimates and lower price target to $15 from $21. Link

Disclosure ... I currently hold bearish position in A

 
 
  John Seckinger   9/30/02,  12:56:56 PM
Looking at a five-minute chart of the Dow, the aggressive bearish pattern continues. A move above 7600 should break this pattern. 30-year still up one point, five-years still strong, and oil index underperforming the Dow (down 2.28%). Another sector underperforming is the Sox index, lower by 4.11%. Showing green is gold, higher by 3.33%. Note: Most likely, this is a "wait-and-see" market. 7600 is 60-points higher, while the intra-day low is 80-points lower.

 
 
  Jonathan Levinson   9/30/02,  12:46:52 PM
The COMPX did an about-face at 1179, 1 point below the start of my congestion area. I expect to see some rangebound trading above the lows of the day, but for the record, I don't believe that those are "THE" lows by any stretch. The TRINQ never did turn bullish by going below 1, and the QQV is still up there, currently +2.45 on the day. The rally in bonds tells the real story today, and the terrible market breadth on the COMPX. How terrible? 192 new lows to 11 new highs, 2 decliners for each advancers, and 642M declining shares for 164M advancing. Just remember: Cash IS a position. If bond yields are too low, equities look to be headed lower but could bounce in the short term, and it just feels too iffy to do anything else, remember that cash is a safe, legitimate position. Don't chase the trades, because that's for amateurs, which you are not. Wait for a setup to fall into your lap and then trade that. If it feels wrong, then it probably is. Patience is a virtue, particularly in tricky markets.

 
 
  Jim Brown   9/30/02,  12:35:41 PM
What's with the SHORT signal at 399? I thought the plan was to go short again on a bounce? We just "bounced" off OEX 406, why did you not issue a short signal then.

This must not be my day. I was expecting more than a 6 point bounce and the day is far from over. The internals have weakened since the initial bounce but not enough to warrant jumping in at the 406 level for a new short.

The 399 trigger is insurance against a sudden breakdown. If we do get a stronger bounce near the end of the day I will be more than happy to initiate a higher signal. There is no rush to jump back in. The markets are severely oversold and an entry at the 406 level is not a high odds play. It may end up being the right one if 406 ends up being the bounce high but hindsight is always easier to trade than foresight.

 
 
  John Seckinger   9/30/02,  12:27:49 PM
FOX news has reported that a "suspicious package" was found in the Senate Hart Building.

 
 
  Linda Piazza   9/30/02,  12:25:11 PM
OEX and DOW charts today show a formation that looks a lot like a bearish rising flag. To confirm that such a formation is bearish, look to volume considerations. Volume should be decreasing as the index or stock rises. Since my chart service doesn't provide intraday volume on indices, I took at look at GE, INTC, and other big-ticket stocks showing similar formations. All show declining volume as the flag rises, indicating that these may indeed be bearish formations. Always wait for a confirmation of these formations, however, as all can fail. This morning, S&P Banking Index has not yet fallen significantly through the 266 level forming a base of the broadening right triangle. The bearish implications of that broadening formation have not yet been confirmed, and the formation may yet fail. Their usefulness right now might be in urging caution in loading up on call plays, anticipating a bottom.

 
 
  Jim Brown   9/30/02,  12:22:44 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's go short the broader market with an OEX trade below 399. (SPX 799, DJX 74.50) The lows of the day are OEX 399.46, SPX 800.20, DJX 74.60. The initial stop loss is OEX 403.

 
 
  Jim Brown   9/30/02,  12:22:29 PM
Swing Trade Signals
We are trapped in that range between wanting to bounce on oversold and plenty of supply still available. With the ISM numbers tomorrow likely to show recession there is a strong possibility that we will see much weaker markets before the week is over. The morning bounce has failed and it looks like an end of day window dressing bounce is becoming less likely. I am going to issue another short signal but please consider the risks before entering.

The OEX is nearing 399 again. The July lows were 384+., The SPX lows were 775+. This would indicate to me that a break of the OEX 399 level could have us retesting those levels. Since the Dow has broken the 7532 July lows it is no longer the leader of our fate. The Nasdaq is already below its 1192 July low and the NDX is below its low of 856.

Since I use the OEX for tracking of the broad market short signals, I will use it to speculate on a breakdown move. If we break 399 we "COULD" see a move to OEX 385. That would be a -14 point drop. This would be great if we could guarantee it but we are very oversold and trading in a range that could cause a bounce at any moment. A short trade in this range is high risk. Do not take this signal if you do not agree with this analysis and are willing to take the risk.

 
 
  Jim Brown   9/30/02,  12:19:06 PM
Fed easing quote "Ian Shepherdson, chief U.S. economist with High Frequency Economics said, "The stage is now set for an awful ISM, a negative payroll number and a Fed ease next week." Jeff quoted this quote in the 11:00 a.m. update this morning. Does Ian Shepherdson really mean that the fed could ease next "week" or does he mean that the fed could ease next "month". I didn't think that the fed met until November 6th. A concerned reader.

The Fed can ease at any time. If they were going to do it I would expect it on Friday after the Jobs report or on Monday to get full benefit of the emotion attached to the rate cut. This is historically when surprise cuts occur.

The next meeting is Nov-6th and the fed funds futures are showing a 100% chance of a cut.

 
 
  Jim Brown   9/30/02,  12:08:42 PM
Free Fall comment @ 10:35 - Jim, Whether the DOW does end up below 6000 or not, don't you think this post was a little emotional. "Over the Top" comes to mind. For those of us less experienced traders, this type of comment might keep us from playing a long trade even if indicated. Thanks, MJR

I certainly hope everyone did not think this was an emotional attempt to influence anyone about future plays. It was only my opinion on the market. I think I have said many times over the last few weeks that I expected lower lows ahead. I also said in the game plan that I expected to get out of the prior short at 7555 and look to reenter on a bounce from a higher level OR a breakdown from the 7500 level. I don't think I have stated a bullish case in any of my writing.

In reporting what some other analysts have been projecting I am just attempting to caution those dip buying bulls who read the monitor that any bounce off 7500 may not be the double bottom rebound into a new bull market that they expect. I feel that everyone should be aware of what the upside looks like as well as the downside. If I influenced readers to reconsider a long play from here then maybe that was a good thing. It is not my intention to put an emotional spin on anything although sometimes it is impossible to prevent it. Trading is emotional and a break below 7450 should be emotional for everyone trying to decipher the market road map due to the very negative implications. I am sorry if I offended anyone with my emotional emphasis.

 
 
  John Seckinger   9/30/02,  12:04:52 PM
With the ISM Index released tomorrow, traders should have been taking notes on today's CMI report. The Chicago Index fell to 48.1 from 54.9 in August, much lower than the 52.1 expectation. ISM expectations are for a 51 reading versus 50.5, month prior.

 
 
  John Seckinger   9/30/02,  11:51:04 AM
The October Federal Funds futures contract currently yields 1.66%, representing the chance of an inter-meeting cut by the Fed. Note: Next FOMC meeting is on November 6th. Also, Bill Gross of PIMCO did speculate on CNBC that the Fed will ease by 50 bps at or before the November 6th meeting.

 
 
  Jeff Bailey   9/30/02,  11:40:10 AM
Trading Curbs Jeff: Thank you for all the good advise and analysis. Could you explain what you mean by trading curbs? Thank you

Each morning in the 09:00 EST Update, I post the "program" buy/sell premium levels from HL Camp, where they have their computer program execution levels set. Think of these as "non-emotional" triggers for an institution to sell/buy a basket of stocks when the premium level is hit. Today, multiple sell programs were triggered, but when the Dow falls 180 point, Trading Curbs are put into place and doesn't allow these non-discriminate computer generated programs to execute.

A computer is only as "smart" as the program that runs it. You can imagine that if trading curbs were not put in place (shutting down computer generated sell/buy programs) a computer might just continue to sell... sell... sell... sell... sell... sell and have the markets falling out of control. (The inverse can be true if computer programs were buy... buy... buy... buy). At some point, "cooler" heads need to prevail and human intervention is needed. After trading curbs are put into place, index selling/buying is done by human traders.

 
 
  Jeff Bailey   9/30/02,  11:26:07 AM
The 11:00 Update has been posted. Link

 
 
  Jonathan Levinson   9/30/02,  11:12:16 AM
COMPX 1180 will be first resistance on this move upward.

 
 
  John Seckinger   9/30/02,  11:10:37 AM
The December bond (USZ2) did test the contract high of 114-31 (set on Wednesday) before coming under slight profit taking. The contract is now slightly lower at 114-21, possibly the reason for the Dow rising off its lows. Note on two-year "negative carry": Remember, the Fed could cut rates even lower, say to 1.50%, and rectify the situation. Moreover, the five-year note is higher by 1-07/32nd's at 114-11 and still above last Wednesday's high of 114-03.

 
 
  Jim Brown   9/30/02,  11:10:16 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
All the indicators appear to be pointing up. I think we could get a long scalp here but I am not going to make the signal official. I can see the possibility of an end of quarter window dressing bounce but I am looking to short it not play it. If you want to go long this would be the place at OEX 404. Dow 7540, SPX 808. I would look for a top in the OEX 415 range. Just a wild guess. Ticks are improving, A/D is improving, Advancing volume os close to turning positive. Good signs but very weak. Repeat: this is not an official signal, do not autotrade this comment. There is still risk to the downside as well. conservative traders should wait for a higher odds entry point.

 
 
  Jim Brown   9/30/02,  11:04:40 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the stop loss on the SHORT signal at 10:59:20 when the OEX traded above 403. SPX 806.42, DIA 75.38, SPY 80.94, DJX 75.22, NDX 834.59, Compx 1167.74, QQQ 20.76, Emini 806.75. Looks like a buy program busted us out the range but there has not been any follow through yet. Hopefully we will get a bounce here to relieve the oversold conditions and set us up for a new short entry.

 
 
  Jim Brown   9/30/02,  10:53:37 AM
Email For some reason our email is running about 2 hours behind this morning. I am just now receiving email that was mailed at 9:AM ET this morning

 
 
  Jonathan Levinson   9/30/02,  10:52:03 AM
I just picked up the phone and called TD Waterhouse to see how it's going over there. A broker with whom I've grown friendly told me that it's very quiet, but that it's been very quiet for months now, and that today doesn't seem particularly special in terms of call volume or customers "freaking out". This coincides with my indicators, which are more moderate than I would have expected. TRINQ is only reading 2.21 and QQV + 2.49. Only the bond market is really reflective of today's significance, in my opinion.

 
 
  Jim Brown   9/30/02,  10:46:51 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's lower the stop loss on the current SHORT signal to OEX 403. (SPX 806, DJX 75.30) If we are going to get a bounce that will hold I don't want to give back everything we gained this morning.

 
 
  Linda Piazza   9/30/02,  10:42:12 AM
Looking at the important S&P Banking Index, I noticed that the index has formed a broadening right triangle over the last five or six days with a base at 266. A broadening formation is usually a sign of instability. With BIX ($GSPBK on Stockcharts) currently at 266.55, the index has been holding near the crucial 266 area all morning. Broadening formations occasionally fail to work, but this type usually portends a further fall.

 
 
  Jeff Bailey   9/30/02,  10:36:46 AM
Trading Curbs went into effect after Dow Industrials (INDU) 7,467 -3.03% (-234 point) fell 180 points from Friday's close of 7,701.45. For curbs to be lifted, Dow must recover to withing 90 points of Friday's close, which would be 7,611.45. Setting upside alert on my q-charts trade station for today at 7,611.45.

 
 
  Jim Brown   9/30/02,  10:35:24 AM
Swing Trade Signals
Free fall! If we break the mornings lows here at Dow 7466 there is a good chance we will go into free fall. It is entirely possible that the market makers will pull the bids in an attempt to wash out the markets and get a solid bottom. The problem with this is we don't know how far below the current levels that bottom might be. There are several noted analysts thinking an October low for the Dow below 7000 is a slam dunk. There are also many that expect a low below 6000. I sure hope this does not come to pass but it would be a heck of a buying opportunity!!

 
 
  Jonathan Levinson   9/30/02,  10:31:33 AM
Metals are up, with the HUI +2.89 to 128.23, XAU +1.55 to 70.16. The world will not look different to me, however, until gold clears the $330 mark, $335 to be safe. $325 remains the short term hurdle. There is a complete absence of strength today, and the best performing stock on my watchlist is BSC, only because the quote feed froze on it back when it was only down 1.28% (currently down 1.61% according to optionsXpress realtime). The TRINQ is a more reasonable 3.42, the TICK.NQ -480, QQV +3.08. Bond yields appear to have collapsed. A lot of people are waiting for or speculating about a "crash". Well, the past month looks like one to me. JPM is now below 18 and has been making the feeblest attempts to break back above. GE is firmly below 24, QQQ below 21, MSFT below 44.

 
 
  John Seckinger   9/30/02,  10:24:27 AM
Two-Year notes now YIELDING 1.71%. Fed Funds are at 1.75%. This is called a "negative carry," since it will cost institutions 1.75% to borrow money that they need to hold an inventory of 2-year notes. They then re-sell the 2-year notes at 1.71%. Not a desirable situation. Note: The 2-year note has fallen below the fed-funds rate only four times in the last 10-years (including today).

 
 
  Jim Brown   9/30/02,  10:08:19 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the new short signal at 10:02:12 when the Dow traded below 7485. OEX 400.44, SPX 801.98, Dia 74.92, SPY 80.50, Dow 7484.71, Ndx 827.53, Compx 1163.25, QQQ 20.57, Emini 800.25. The initial stop loss will be OEX 405. This is slightly above the last intraday bounce. With the Dow down -221 already we are either going much lower very soon or we are going to bounce any moment. This is a high risk signal but I would hate to miss a total market breakdown.

 
 
  Jonathan Levinson   9/30/02,  10:04:53 AM
The Fed has added 5.75B in overnight repos, all of which is a net add with nothing expiring today. This could be used to fuel a bounce.

 
 
  Jim Brown   9/30/02,  10:02:31 AM
Swing Trade Signals
That was discouraging! The Dow did not even blink when 7532 was hit. Either the buy programs triggered at 7550 and all we got was that little +30 point bounce or there is not going to be any. The Nasdaq is leading the indexes down and accelerating. We will wait for the Dow 7485 to trigger the next short.

 
 
  Linda Piazza   9/30/02,  9:59:21 AM
A quick scan of various indicators shows dollar and bond yield down, VIX and gold up, and declining volume gaining over advancing volume. $TRIN and $TRINQ show selling. Both (5)(3) and (21)(3) daily stochastics have turned over, but the 21 is deep in oversold territory, and so are hourly stochastics. With those oversold stochastics and OEX approaching the psychologically important 400 number, care should be exercised if you're still in a short play.

 
 
  John Seckinger   9/30/02,  9:51:30 AM
Checking the Intermarket Relationships: Dollar lower, Gold higher, Dow lower. Bonds higher, CRB Hihger, Dow lower. Yield curve steep, Dow lower. Oil and Utilities lower, Dow lower. So far, all relationships appear to be trading as expected. The catalyst going forward? I will watch to see if the December Bond reached 115 (currently at 114-17) and gives a sense of short term capitulation.

 
 
  Jim Brown   9/30/02,  9:47:50 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's go short the broader market on a breakdown of the July lows. With the low at 7532 and possible support at 7500 let's set our trigger at 7485. This allows for a short dip below 7500 before being triggered. I do not expect this trigger to be hit and it is only for insurance. I expect to reenter a short position on a bounce from Dow 7532. I will initiate a signal when/if that event occurs.

 
 
  Jonathan Levinson   9/30/02,  9:45:48 AM
This feels very weak. The COMPX has so far failed to bounce by more than 2 points. The TRINQ at 2.51 isn't nearly as high as the price action would have me think, unlike the QQV which is up 2.68 so far. COMPX 1175 is support at the low of the day, just 2 points away.

 
 
  Jim Brown   9/30/02,  9:44:25 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Our profit target of Dow 7555 was hit at 9:40:06. OEX 403.77, SPX 809.63, DIA 75.54, SPY 81.10, Dow 7554.27, NDX 839.94, Compx 1175.96, QQQ 20.89, Emini 808.50. The short signal initiated at OEX 418 is now closed. I will reinitiate a new signal in a couple minutes.

 
 
  Jim Brown   9/30/02,  9:31:55 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's change the stop loss on the open SHORT signal to Dow 7555.This is just above the Dow 7532 low for July and in the range where I expect a bounce. We can reenter the short on this bounce or reenter on a drop through 7500 if 7532 fails. I do not have an OEX/SPX equivalent for this number since the Dow is accelerating faster now than the broader indexes. I would guess something in the 408 range for the OEX but Dow 7555 is the posted number we will go with.

 
 
  John Seckinger   9/30/02,  9:30:54 AM
NY Fed President McDonough was quoted on Monday as saying the Fed "knows what to do" if the economy slows. Those comments seemed to add fuel to the powerful bond market rally. The December bond is already up 1-11/32nd's at 114-11, but still under Wednesday's high of 114-31. Looking at the curve, fives are up 28 ticks and 10's are up 32 ticks; thus steeping the curve a very impressive 40 ticks.

 
 
  Jim Brown   9/30/02,  9:19:45 AM
Swing Trade Signals
The Personal Income number came in less than expected at +0.4% compared to estimates of +0.5%. Personal Spending came in at +0.3% compared to the +0.6% expected. The consumer appears to be slowing as we have been reporting over the last several weeks. WalMart lowered same store sales guidance to the lower end of the range and warned that earnings would be less than expected.

Merrill cut estimates on GE, Lehman cut FNM a current OIN put play, INTC official repeated comments that there was no recovery yet and it would be tough to tell when a recovery would appear.

Just another September morning! It looks like we are going lower at the open and the game plan is to exit the current short signal at Dow 7555 and reenter on any bounce or a drop through the 7532 July low. Since Dow futures are already down to 7570 we should get close to those numbers at the open. Should be an interesting day.

 
 
  Jeff Bailey   9/30/02,  9:17:07 AM
The 09:00 Update has been posted. Link

 
 
  Jonathan Levinson   9/30/02,  9:14:13 AM
An interesting divergence on the QQQ daily candles. Most of the stochastics timeframes that I watch, including the 5(3), 21(3) and 10(5) gave bullish oversold crosses... with price moving down. I've seen this occur on the 1 minute candles, but never on the daily, and never to this extent. It will resolve itself, with price moving either north or south. In the former case, it will be because price is lagging the stochastics move- that is, that buyers have been paying a falling ask in increasing numbers. In the latter, the asks are dropping faster than the bids and once the bids get with the program, price will plummet. I personally believe it's the latter case unfolding, but only time will tell.

 
 
  Jonathan Levinson   9/30/02,  8:45:38 AM
The US Dollar Index has come down to 106.90, and the futures are in the red, S&P -7.80 and NDX -8.50. Gold is pushing toward $325 again. QQQ is currently trading 21.13 from a close of 21.31.

 
 

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