Option Investor
Printer friendly version
  Jim Brown   10/1/02,  10:07:40 PM
The Swing Trade Game Plan has been posted: Link

  Jim Brown   10/1/02,  3:49:50 PM
OIN Plays New OIN plays for tomorrow are:

Calls   ITMN, GSK

  Jim Brown   10/1/02,  3:45:43 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's go short now at a trade below 424. Is there anybody that does not expect a drop tomorrow? The stop loss will be OEX 428.

  Jeff Bailey   10/1/02,  3:41:39 PM
The 03:15 Update has been posted. Link

  Jonathan Levinson   10/1/02,  3:34:09 PM
Going to have to take a mulligan today- the strength of this move is shocking. The QQV is back below 50 and the TRINQ is steady, finally dipping below .40 as the buying escalates. 1200-05, or 1207 for that matter, lasted all of 5 minutes with fresh highs printing at 1210. 1215 is the next resistance level, followed by 1225. The multiple resistance levels have so far fallen rather quickly, particularly 1200-05.

  Jim Brown   10/1/02,  3:00:00 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's try this again. Let's go back SHORT again at an OEX trade below 418. It "appears" that 420 may hold. If we get a downdraft after 3:PM I want to be in early. A +250 point Dow gain, even on severely oversold conditions is begging for a roll over tomorrow. This is October after all. There is a risk of a 3:PM dip and rebound so be aware.

  Jeff Bailey   10/1/02,  2:58:26 PM
Yield Calls Treasuries are seeing strong selling today. I've gotten a few e-mails from subscribers regarding the purchase of YIELD calls on the thought of further selling driving YIELD higher.

Today on CNBC a guest analyst was talkling about where he would "position" himself in YIELD. In general, his comments were that a bond bull (higher price, lower YILED) would be best off on a risk/reward basis to be in what he called "the belly of the curve." For bond traders, this would be the 10-year, as it relates to the 5-year and 30-year.

From my comments over the years here at OI, I've stated that the 30-year is the "riskier" bond as it relates to a bond bull. Riskier in that the longer-dated maturity has "risk to maturity" and uncertainty between today and 30-years from. Purely based on "risk", a YIELD call option buyer would most likely look for calls in the long-end under the scenario of a "bear market" for Treasuries eventually unfolding.

  Jim Brown   10/1/02,  2:30:03 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the SHORT signal at 14:22:58 when the OEX traded above 418.50. SPX 834.82, DIA 78.12, SPY 83.78, DJX 78.01, NDX 851.02, QQQ 21.17, Emini 835.00. Looks like more short covering and a buy program that triggered at 2:16 is trying to run them up again. S&P and Nasdaq futures and Russell-2000 all spiked significantly and at exactly the same time lending credibility to a broad based buy program.

  Jeff Bailey   10/1/02,  2:28:51 PM
P/F question Jeff: I saw your link that compares JNJ to INDU and SPX but I did not know how to read or interpret the chart. The first chart on JNJ it looks like 57 would make a triple top breakout as it would go higher than three of the columns of x's? What do numbers in a column mean? What do letters in a column mean? How do you create a comparison chart with stockcharts and what do you look for? You've impressed me with your acumen, I bet others feel the same way!

Answer #1 to "what do letters and numbers in the columns mean? ... The point and figure charting systems tracks "time" by placing a 1-9 (January-September) and A-C (October-December) where a p/f chart entry would be made on or after the appropriate month entry. On the JNJ chart, the "9" was charted to mark a trade at $53, which was actually charted on September 3rd. We now just start October, which would eventually have an "A" being charted, but not until a trade at $57 is found, or a 3-box reversal lower at $53 is traded.

Answer $2 to "I did not know how to read/interpret JNJ comparison to INDU and SPX".... These are "relative strength" point and figure charts, whereby the scale and plotting of X's and O's also used the 3-box reversal method of charting. All we're doing here is taking toda's closing price of JNJ, dividing by the INDU closing price, but will multiply by 1,000 to get a chartable value. Over time, a relative strength chart is constructed. UNLIKE line chart of RS, the point and figure RS chart will actually give a trader/investor a Relative Strength "buy signal" or "sell signal" to hint that relative strength is building or declining longer-term. The RS chart of JNJ versus the SPX, shows that JNJ gave a RS "buy signal" in mid-July at a reading of RS=57. Was there anything in JNJ's regular p/f chart in mind-July (after a red 7) that signaled a change in supply/demand taking place? Not really, until the "red 8) which is early August at $53. Perhaps a bullish trader would have taken a partial bullish position in JNJ at $53 at that time. Question is... has JNJ outperformed the SPX since early August? If so, perhaps it is a stock that investors/traders would look for leadership from under a "new bull market" scenario.

To get the RS chart, after you've pulled up an point and figure chart of JNJ, simply scroll down to Price Plot Attributes, click the "show relative strength vs. " box, and then enter the symbol you wish to measure against. For the S&P 500 symbol is $spx , for the Dow $indu , NASDAQ-100 $ndx . Are you trading RS? Look to short/put weak stocks with weak RS, and long/call strong stocks with strong RS.

By monitoring and understanding the point and figure RS charts, a trader/investor can better understand or grasp the "flow" of how a stock is trading, both near-term and longer-term. When a trader can get both the RS chart and regular P/F charts indicating bullish/bearish, powerful moves can take place.

  Jonathan Levinson   10/1/02,  2:24:18 PM
Wave 2 up of W5 down could end at 1206 which is .618 retracement of wave 1 down. Fits nicely with your 1200-1205 resistance level.

That level jumps off the chart- it's always reassuring to find a number of different techniques and approaches that coincide at a confluence level. Speaking of comfort, it looks like 1190 is under assault again with a print at 1191.

  Linda Piazza   10/1/02,  2:20:12 PM
It looks as if the 5-dma may be coming into play with the OEX here. With the 5-dma currently listed as 417.43 on stockcharts.com, the OEX moved just above that level before its steep ascent slowed. At 416.30 as of this writing, the OEX is now again below that 5-dma. It will be interesting to see if OEX can stay above that moving average with 15-minute and hourly stochastics topped out.

  Jim Brown   10/1/02,  2:08:34 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the broad market SHORT at 14:01:16 when the OEX traded below 416. SPX 829.56, DIA 77.68, SPY 83.18, DJX 77.58, NDX 842.84, Compx 1183.63, QQQ 20.94, Emini 829.00. The initial stop loss is OEX 418.50.

Interesting turn of events here. Suddenly the bulls were dropped for a loss and their outlook is not so rosy. Maybe I was not losing my mind after all. (Obviously the jury is still out on that idea)

  Jim Brown   10/1/02,  1:58:34 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Looks like the excitement wore off. Let's go back SHORT again at an OEX trade below 416. The initial stop loss will be OEX 418.50. If we break down here there is a little support at 413.50. Conservative readers may want to reenter at OEX 413.

  Jonathan Levinson   10/1/02,  1:57:36 PM
All intraday 5(3) stochastics are topped out and in various stages of rollovers with price just below 1190 resistance. I'd feel more comfortable in my call for 1190 to hold if the TRINQ were lower here, although .44 is overbought. Above 1190 is 1200-05, which is stronger resistance than 1190. Nevertheless, this bullish move so far has been quite impressive. We'll see how it holds.

  Jeff Bailey   10/1/02,  1:56:45 PM
01:00 Update is posted. Link

  Jim Brown   10/1/02,  1:26:22 PM
Swing Trade Signals
The break of 414 has triggered some short covering which has slowed at 416. That is the 71% retracement level and a key for many institutional traders. A break over 416 should be good to go for a run to the low 420-425 range. With every tick up we are hitting new resistance but that resistance is giving way to a strong bounce in the A/D line. Still over 2 hours in the trading day so anything is possible.

  Linda Piazza   10/1/02,  1:08:09 PM
Reader Observation: Concerning the oscillation of oscillators, I’ve noticed over the years a definite relationship between bbands [Bollinger bands] & (apparently) erroneous / misleading signals from stochastics, even over multiple time frames. When the b-bands “shrink,” stochs (regardless of settings) will oscillate between oversold/overbought without squat for price action movement – I can attest to many a false entry due to this. This factor alone cured me of one swing-trade methodology, and led me to incorporate chart patterns & other techie things into the mix. The difficult part of this (which would earn a PhD!!) is figuring out a characteristic of the b-bands for highest-probability of success, i.e. if b-bands are parallel and/or expanding in all pertinent time-frames, stochs are valid, while if the bands are tight in at least one time-frame, one must use other supporting info.

Response: Interesting comments. I agree whole-heartedly with your assessment of the fallacy of using one methodology. Oscillators fail in too many situations to give valid buy/sell signals in a vacuum. For those who want to learn more about Bollinger bands, here’s a link to an article Leigh wrote: Link

  Jonathan Levinson   10/1/02,  1:01:54 PM
The COMPX is at 1180 resistance. The QQV has fallen to 51.48, -.5 on the day, and the TICK.NQ is +192. Upvolume is leading downvolume 474M to 360M and the put to call ratio is at .87. I'm surprised to see the COMPX this high off its lows of the day, but I'll be shocked to see it make it beyond 1190.

  Jim Brown   10/1/02,  12:59:26 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out of the SHORT signal at 12:52:36 when the OEX traded at 413. SPX 824.50, DIA 77.13, SPY 82.75, DJX 76.90, NDX 842.48, Compx 11.76.26 QQQ 20.89, Emini 826.00.

Now we will get to see how strong this rebound really is. Resistance at 416 is first up and then a clear run to 426 is the bulls are back.

  Jeff Bailey   10/1/02,  12:43:21 PM
Good comments and I'm working on this Hi Jeff, I know that there is every reason to expect the major indexes to fold up and get blown away now that we are into October. I keep looking at the PnF charts for SPX and OEX. I fully understand why Jim is focused on OEX 412 as a trade there would reverse OEX into a column of X’s. SPX is already there and looks poised to move upwards from here. The $BPINDU is at 10 leaving little room to the downside. It’s no wonder I was feeling uncomfortable with my short positions; as such I have closed them out for now. I am beginning to think that a reaction rally at these levels would be a reasonable expectation. Medium and long term I still believe the direction is down. What would cause $BPSPX to change from bear confirmed at current levels. I am trying to get a feel for anticipating and quantifying the reaction rally for SPX to determine whether or not to play the upside short term.

According to StockTraders Almanac, the month of October tends to be worst month on NASDAQ EXCEPT in midterm election years. Now, I wrote a BEARISH intra-day update in late August Link that was brought on by reader e-mail and I was on the BEARISH side of thinking as it related to mid-term election years for September, and I'd say September was BEARISH now that it is complete. As such, I'm trying to find some time, compare some bullish % charts to figure out if October will be BULLISH.

In last night's Index Trader Wrap I talked about Johnson & Johnson (NYSE:JNJ) $55.30 +2.16% as a Dow component stock to keep an eye on from the bullish perspective. As subscriber notes above.... Dow Bullish % ($BPINDU) is at 10%, leaving "little downside risk" as it relates to the bullish %. Should JNJ trade $57 and Dow Bullish % reverse back up, watch out. Link

I like JNJ as BULLISH at $57 as relative strength is quite strong versus both Dow Industrials Link and S&P 500 Link

Kind of reminds me of what we noted in Forest Labs (FRX) at $74 and FRX's bullish triangle pattern. If JNJ trades $57, that would be a "triple-top" buy signal. If Dow bullish % Link were to reverse back up into X's, then I'm thinking JNJ leads a move higher.

Disclosure ... I currently hold bullish position in the JNJ January $55 calls (JNJAK).

  Jim Brown   10/1/02,  12:31:28 PM
Swing Trade Signals
If you look at the OEX on a 15 min chart the uptrend that is holding the markets up is clearly seen rising into the 412 area.

  Jim Brown   10/1/02,  12:22:31 PM
Swing Trade Signals
The markets are coiling for a break. The ranges are narrowing, A/D volume is moving to the upside, A/D ratios are improving. Nasdaq futures are trending up despite the negative Nasdaq. There is still overhead supply at OEX 412 but a steady pattern of higher lows. While I think the sentiment is negative it appears there may be an increasing number of buyers or just fewer sellers. We are wedging up to the 412 level on no materially better news.

We need to not be fooled by the higher lows because there still appears to be strong overhead resistance. I said "appears" because it has held strong several times. However, every time it is tested it loses strength.

I have toyed with the idea of going long on a breakout with a potential 430 top but I think we are still early. My brain tells me we should retest the lows but my guts are telling me we should be getting long soon. I was planning on that long being after the Jobs report on Friday. Even if we break out today there could still be another retest of the lows before Friday.

Therefore I am not going long on a breakout. I have detailed the risks and the expectations so feel free to do differently if you desire.

  John Seckinger   10/1/02,  12:14:31 PM
Per 10:46:56 Post, I am still waiting for the Dow to either trade and stay above 7685 or fall below 7532 before contemplating a trade (which, as most of us can guess, is usually in the form of a yield curve spread). Note: Above 7685, there is the 200-PMA (five-minute chart) currently at 7700 which might garner attention if equities decide to bid later in the session. Speaking of the yield curve, the curve is 7 ticks flat (yields on five and ten year notes are coming close together); a slighly bullish indicator. Nothing to hang your hat on.

  Jeff Bailey   10/1/02,  12:14:27 PM
Fannie Mae (FNM) $63.60 +6.81% ... jeff- fnm is on oi put list- what do you think about it considering they reported a narrowing of assets vs liabilities? am holding put for Nov.

Point and figure remains bearish with vertical count of $50, which would only be negated currently with a trade at $66. Not sure when puts were purchased, or strike. If from $72 when p/f chart gave "sell signal", would lower profit stop to $66.

  Jim Brown   10/1/02,  12:00:02 PM
Hi Jim, You sound quite today on the option market monitor...just curious any reason? thx Best, Naso

Nothing happening. OEX 412 has held three times but the strong pattern of higher lows is slowly applying pressure. The OEX is trading in about a 3 point range. While everything is trending higher there is just no real action. Over commenting just like overtrading is dangerous. If we apply too much importance to little moves then it causes us to over react. I prefer to be quiet if there is nothing to say.

  Steven Price   10/1/02,  11:52:20 AM
Reader Question: Hi steve, could you give me your comment of IBM, I got short @ 63.7, what would be a target and exit price?? Thank in advanced Harold

Response: $59.73 (+1.42) I profiled IBM a couple of weeks ago in "Ask the Analyst." In that article Link I discussed the textbook way in which IBM tended to act according to the measuring objective of its consolidation pattern. I discussed the new target of $58, and IBM actually bottomed yesterday at $57.99. Now that the objective has been achieved I would wait for signs of new weakness before shorting it again. A failure at $60 may serve as an indication, if the rest of the market also rolls over. My concerns are as follows:

1. IBM has reached its downside target. When it recently reached its upside target of $82, it rolled over and headed back into the previous pattern ($66-$74)

2. The Dow recovery after breaking 7500 yesterday was strong and I'd like to see the action at that level again before piling on short.

In spite of these concerns, I still feel bearish on IBM and I can't imagine good news at their earnings announcement on October 16, given EDS's report. However, because we reached the target, I would think about using a tight stop, just over $60. If it breaks toward the pattern again ($66 on the bottom), there may be more short opportunities.

  Jonathan Levinson   10/1/02,  11:51:29 AM
The fed has just changed it's posting, and the 3 day repo is now a two day repo. Well, what's a day and a few billion between friends? Today's repo is the only one.

  Jeff Bailey   10/1/02,  11:29:17 AM
11:00 Update is posted Link

  John Seckinger   10/1/02,  11:14:53 AM
President Bush on Tuesday expressed his concern over the labor dispute at major West Coast ports, since it could seriously hurt the U.S. economy. Hundreds of millions of dollars worth of cargo has been idled after 29 West Coast ports were shut down by an indefinite management lockout order amid a dispute over wages, benefits and working conditions. Port employers said the lockout could cost the economy as much as $1 billion a day.

  Jonathan Levinson   10/1/02,  11:13:36 AM
Still no word from the FED, so it's starting to look like that 3-day repo is it, in contradiction to the 9:41AM press release. If no other reserves are added, there were 2.25B drained today, which will keep a lid on equities and bonds today. If I'm right, yields should remain up while equities remain down. 1160 COMPX is the edge of the cliff from where I sit. The TRINQ is in neutral buy territory at .66, QQV is +.90, and the TICK.NQ is -295. The 60 minute 5(3) stochastic is trying to turn up, but so far there's no direction on this move off the bottom.

  Steven Price   10/1/02,  11:11:47 AM
General Motors (GM): $38.62 -0.28 OI Put Play GM, originally picked at $41.52, saw its eventual price target lowered from $45 to $41, after Lehman forecasted a 7 percent decline in GM's pension assets this year, which could lead to a higher funding shortfall and increased equity erosion. The stock has had some recent support at $38 and I would look for a break below that level for new entries.

  Linda Piazza   10/1/02,  11:08:42 AM
The trouble with stochastics is that they don't give clear signals on days like today, when traders most need them. While the 5-minute stochastic cycles up and down, the 15-minute and hourly stochastics wiggle back and forth, depending on OEX's direction at the moment.

  Linda Piazza   10/1/02,  10:54:24 AM
Once broken, trendlines are often retested. That retest often tells more about the underlying strength or weakness of a market than the original failure of the trendline. Watch to see how COMPX acts as it retests the support that held through much of yesterday, until late in the afternoon, to see whether that former support now provides resistance or whether COMPX can power back above the trendline again. Depending on how you draw that line, it now crosses about 1180.

  Jim Brown   10/1/02,  10:53:47 AM
Swing Trade Signals
We are seeing an amazing show of strength today with the uptrend from yesterday still intact on the 15 min charts. We are wedging up to the 412 level where dip buyers and overhead supply will meet. Considering the ISM numbers this is looking like a change in trend if that 412 number breaks.

  Steven Price   10/1/02,  10:47:45 AM
Kohls Corp (KSS)$58.93 (-1.88) I am lowering the stop on this OI put play, originally picked at $64.09, to $61.25, just above today's open ($60.77). Let's lock in some profits in case of a rebound. This stop will allow a failed rebound at $61.

  John Seckinger   10/1/02,  10:46:56 AM
With the Dow up 0.69%, sectors outperforming includes Oil (+1.86%), Pharmaceutical (+1.73%), and Healthcare Index (+0.99%). Looking at the Intermarket relationships; the Dollar is basically flat (107.05), Gold lower by 1.27% and on its 200 DMA (68.75), while the Utility Index is lower by 0.78% but seems to be slightly consolidating. With that said, it seems as though the major equity indices are in the spotlight. The Dow either needs to stay above 7685 or below 7532 in order to get some solid price action out of other markets.

  Jonathan Levinson   10/1/02,  10:38:21 AM
pardon my ignorance (just learnin'), but with the majority of the 5.75 bil going into treasuries, is this the fed's way of forcing people out of bonds and into equities by lowering the bond yield? TIA Grant

Your ignorance is in good company with mine. I don't believe that the fed has much discretion as to where the banks place the repo money. It could be that banks weren't willing to add exposure to equities yesterday, but I think there's more to it than that. With bonds making new highs daily and yields new lows, it could be banks protecting themselves from escalating defaults caused by a deflating credit bubble. Ultimately, an uptick in yields threatens maxxed out consumer/borrowers, and that domino threatens banks, who are already faced with escalating defaults. This is all my guess, just thinking out loud. In any event, the amount of liquidity that found its way into equities wasn't enough to spark a rally, but it did avert a meltdown/plunge.

  Steven Price   10/1/02,  10:37:14 AM
Reader Question:Hi Steven, Enjoyed reading your artlicle on QLGC. Is it a good time to buy puts on NVLS. It has been very weak lately. Would also like your fundamental take on the stock. Rgds Mehdi


Qlogic (QLGC) $24.85 -1.19 QLGC looks like a good short with its recent breakdown. The trade of $26 coincides with the breakdown I discussed in this weekend's column. I would still put on only a 1/2 position with the sector slowing its downward pace. The support levels I referred to have not held up, and look bearish. Here is a link to the analysis. Link

Novellus (NVLS) $20.58 (-0.23) I have been waiting for the Semiconductor Index (SOX.X) 237.62 (-0.62)to trade below 230, before jumping back on semi-related stocks. Novellus has found support around $20 the last several days, after recovering from the sell-off to $19.61 on 9/24, to trade as high as $23 last week. A trade back down to $20 would lead to a 3-box PnF reversal, and a $19.50 trade would create a new sell signal. I would probably see a close below $20 as an indication to go short, with a SOX close under 230. $19.50 would be an alternative short point.

  Jonathan Levinson   10/1/02,  10:34:02 AM
The FED has just announced 3 day repos of 3.5B, which refunds part of yesterday's expiring 5.75B. I am waiting to see the remaining announcements.

The COMPX is currently at 1162 after touching 1160. The TRINQ is at a mere .70, which actually indicates bull activity, and I hate to think of what it will look like once the sellers start to drive it above 1. QQV is very tame today as well, with NDX volatility up a mere .65 on the day to 52.63. Yields are still up but off their premarket highs. It looks to me like this inexplicable residual bullishness following the ISM numbers is rate-cut speculation.

  Jeff Bailey   10/1/02,  10:32:58 AM
Forest Labs (FRX) $86.50 +5.49% (52-week and all time highs) ... Jeff: Nice call on FRX. I did sell part of my January calls on Thursday for a nice gain, but held the other half. Should I look to sell today's strength and look for pullback?

Well.... Stock's higher after company announced late yesterday that it expects to exceed Q2 consensus of $0.57 by at least 30% due to strong net sales volume, which will be about $530 million. Sales during the quarter were primarily driven by the company's antidepressant franchise.

On a personal note... I was at a family gathering this weekend and was talking with my brother, who is a specialty rep for FRX. He noted that the company's recent launch of Lexipro (antidepressant that some call "baby-Celexa" was showing staggering sales volumes in early launch that blew away Celexa's early launch sales numbers). I'm guessing last night's news out of FRX was confirmation of this.

I'd just hold the Jan $70's that you have, continue to target the prior bullish vertical count of $96. Link

  John Seckinger   10/1/02,  10:30:20 AM
Two-year notes currently at 1.69% and still underneath the 1.75 Federal Funds rate. It is interesting how the 30-year bond remains under pressure as stocks erase most gains. Bond holders could be waiting for a sell-off underneath 7532 once again.

  Linda Piazza   10/1/02,  10:26:24 AM
Now the SPX is dropping below yesterday's uptrending line, too. It looks as if the COMPX may have been leading the other markets, as it's often done lately.

  Jonathan Levinson   10/1/02,  10:20:14 AM
The FED announced at 9:40 that it would be adding reserves by 2 day repos, but is keeping us in suspense as to the quantum. It looks so far as if yesterday's 5.75B went straight into treasuries, with some of it landing in equities around 2:30PM yesterday. Will continue to wait for the next announcement this morning.

  Jeff Bailey   10/1/02,  10:18:02 AM
Index Traders per prior bearish QQQ comments. QQQ rallied to $21.07, just under our "trailing stop" of $21.10 from last night's wrap. GSTI Software Index (GSO.X) 80.99 -2.26% and Biotechnology Index (BTK.X) 315 -1.5% are "good news" for QQQ bears as software and biotech are two most heavily weighted QQQ sectors.

  Linda Piazza   10/1/02,  10:15:27 AM
COMPX fell below yesterday's uptrending line, but the other indices haven't yet followed. It will be interesting to see if COMPX musters strength to test that trendline again.

  Jim Brown   10/1/02,  10:10:20 AM
Swing Trade Signals
That was an interesting reaction to the ISM numbers. The first really solid confirmation that the country is slipping back into recession with a 49.5 headline number and the markets rallied instead of crashed. Sell the rumor, buy the news? It will be really interested to see if this sticks. With Construction Spending down -0.4% as well there was not any really positive news.

A possible explanation would be a drop in layoffs from close to 120,000 last month to only 70,057 for September. This would indicate that the Jobs Report on Friday might still show positive job growth. Most analysts were expecting job losses instead.

  Jonathan Levinson   10/1/02,  10:04:01 AM
The COMPX dropped on the release of the ISM data and is now bouncing back up. Here comes some volatility.

  Jim Brown   10/1/02,  9:58:33 AM
Swing Trade Signals
I think the roll over at OEX 412 is pretty telling. None of the indexes were able to reach their afternoon highs from yesterday. As long as the ISM is not a strong upside surprise the down trend should continue. We have about 5 min until the release and the excitement starts. A/D is dropping pretty fast and the TRIN has fallen to .83.

  Jonathan Levinson   10/1/02,  9:53:33 AM
The urge to pile on to this now with puts is mitigated by (a) fear of an ISM surprise in a few minutes and (b) release of the fed's morning announcement on its open market operations for the day. There are 5.75B in overnight repos expiring today. Any amount added less than that will give us a net drain and put a lid on today's possible rally targets (rally?), whereas an amount superior to that will add fuel. So, I'm practicing patience even as I watch the TRINQ rising (.39 now) and COMPX price falling.

  John Seckinger   10/1/02,  9:47:57 AM
The December Bond has gapped lower and stayed there during pre-ISM trade. Currently, the USZ2 contract is down 1-02/32nd's at 113-06. The important support level is still another point lower at 111-30. Looking at the yield curve, five's are down 11 while 10's are off by 17. This is basically a neutral yield curve. It should come down to the ISM report, scheduled to be released at 10:00.

  Steven Price   10/1/02,  9:41:27 AM
Retail Index (RLX.X): 264.42 (-0.12) After Wal-Mart (WMT) and Federated (FD) warned again yesterday that this month's same store sales would be lower than expected, things for the holiday season looked bleak. This morning saw some specialty retailer downgrades, as well. I have a hard time believing in a rebound if consumer spending is decreasing heading into the biggest shopping season of the year.

  John Seckinger   10/1/02,  9:36:19 AM
Note: The Washington Post reports that the Labour Party has backed PM Tony Blair's proposed use of force on Iraq. This is force to be used "if all else fails and the UN supports it."

  Jonathan Levinson   10/1/02,  9:35:38 AM
Here we are again- same drill and same levels as yesterday on the COMPX, but with positive news for a change. First resistance is at 1187, then 1190, then at 1200-05. The opening TRINQ is a subterranean .25, but we'll wait for a stochastic rollover before thinking of putting on our shorts.

  John Seckinger   10/1/02,  9:34:47 AM
The Mitsubishi chain store sales index fell -0.8% in the week of September 28th. This report follows a -1.6% drop the prior week. Redbook reported that September chain store sales fell 0.7% from August. Note: These are not the best retail sales indicators, but they certainly show possible weakness after a relatively strong July and August.

  Steven Price   10/1/02,  9:29:49 AM
Semiconductor Sector Index (SOX.X) 238.24 Global Chip Sales rose 14% in August, over the year ago period, to $11.9 billion, according to the Semiconductor Industry Association. The index bounced above the recent low of 231 yesterday, and the news out of the sector has been indicating a turnaround in some areas. However, after QCOM's news that cell phone chip demand was increasing has been countered with downturn news in other wireless sectors, it will be interesting to see how much investors put in this news. After Sun Micro's restatement and Dell's upgrade, look for the action in the SOX around 250 to see if it can get over that level, and then if it can hold.

  Jeff Bailey   10/1/02,  9:29:13 AM
09:00 Pre-market update has been posted. Link

  Jim Brown   10/1/02,  9:27:21 AM
Swing Trade Signals
The Fannie Mae news this morning has the markets moving into positive territory. This positive sentiment may not last more than 30 min with the ISM numbers out at 10:00. The markets are very oversold and any combination of positive news events could provide a bounce.

The stop loss on the current SHORT signal is OEX 413. The trick will be to avoid that stop until the ISM numbers. The OEX closed last night at 406.30 so we do have plenty of room. There should be some window stripping today as funds that bought for the end of the quarter delete those stocks they really did not want. <

  Jonathan Levinson   10/1/02,  8:43:11 AM
It's turned into a green day after a lackluster night for the futures, which CNNfn attributes to SUNW's positive news. NDX futures are + 8.50, S+P +8.00. The US Dollar Index is back to 107.00 and gold is headed back toward 320. QQQ is currently trading 20.92, up .20 from its close. Bond yields are deep in the green.

  Jim Brown   9/30/02,  11:21:26 PM
The Swing Trade Game Plan has been posted: Link

  Jeff Bailey   9/30/02,  9:13:35 PM
The Market Monitor has been archived. To view today's comments, simply click this Link


Market Monitor Archives