Option Investor
Printer friendly version
 Alan   10/8/02,  16:18:32
Futures: 4:15PM Close: Dow Cash 7501, ES 800.50, YM (Dow Futures) 7510, NQ 814.50. The Guess for the Close was right [grin] on ES over 800 and Dow Cash over 7500. Will try to answer some of your emailed questions re using Futures to HEDGE an existing Option Index position on tonight's website.

 Alan   10/8/02,  15:57:18
Futures: ES 796 seems to now be targeting the 50% retrace of day low/high at 793.50

 Alan   10/8/02,  15:54:08
Seems to be "Buy the Rumor (at noon) and Sell the News (as Pres Bush ends his speech) re the Dock Strikers returning to work Wed.

 Jeff Bailey   10/8/02,  15:53:24
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
With OEX trading 404.92 +2.2% it doesn't look like our previous GO LONG on PULLBACK to 401.00 is going to get filled. As such let's CANCEL order and wait until tomorrow to get a feel for market's trading. May be able to get a little "cheaper."

CANCEL prior instruction to GO LONG at OEX 401.00

 Alan   10/8/02,  15:46:45
Pres Bush on TV, reports have dock workers returning to work on Wed. Sell the News or Buy the News?

 Jeff Bailey   10/8/02,  15:46:02
Forest Labs (FRX) $91.91 +2.69% ... Jeff, FRX traded near 92 what is next?

Not sure, but as mentioned before when bullish profiled at $74, vertical count (X's from 65 to 75) was bullish to $96. Can snug a stop under $87, which would be first sign of weakness.

 Alan   10/8/02,  15:43:11
Futures: ES 50% of Day's Low/High 777/810 is 793.5; we've seen this type battle at the close before....ES 800 and Dow cash 7500. Just noticed a 5 minute old negative comment from 3M (MMM - a Dow stock) $113s. Will the earlier Guess on ES close over 800 and Dow Cash 7500 be right? [grins]

 Jeff Bailey   10/8/02,  15:37:32
03:15 Update is posted. Link

 Alan   10/8/02,  15:37:06
Futures: 330 PM: Dow minus 100 points from its 245pm high at 7620, currently 7512. ES 798.50 is 50% retracement of the 810 top and its 1:30 PM low at 797; and appears to have a caught a Bid from that level. The Index Short entry was perfect, the suggested cover however was a bit early (grin).

 Alan   10/8/02,  15:27:28
Futures: ES (802s) has made a series of lower highs the last 30 min: 810, 808.50, 807.0 with support at 802-803, and then 798-800. Afternoon tone is bullish, but last 30 min tone is "Long Profit Taking" from the ES 810 top.

 Alan   10/8/02,  15:14:58
Futures: Short: ES 802, YM 7528, NQ 821 If you took the 2:55pm mentioned Index Short (ES 809s, Dow Cash 7610, NQ 830); Trail Stop it or Cover them. Monitor that ES 800/Dow 7500 level; my guess is that those levels will hold going into the close but that's a total guess obviously. There's Short Profit in that Index Short; nothing wrong with taking profit. Market tone is "bullish" with ES over 800 and Dow over 7500.

 Jeff Bailey   10/8/02,  15:10:42
FedEx (FDX) $49.35 +0.61% ... stock finding resistance at $49.99 and this is just under the psychological level of $50. With potential reprieve coming in West Coast dock workers (for at least 80 days), FDX call option holder with current month expiration may be at risk near-term. P/F chart still bullish, with first sign of weakness being trade at $48. Previous profiled stop for bull was $47.75. Link

Disclosure ... I currently hold bullish position in FDX.

 Alan   10/8/02,  15:07:05
Futures: ES 807.50, YM 7585 Would take 1/2 short-scalp profits from prior post as ES holds the 805-6 support level on first test and hold rest at breakeven. Watch ES 805 support if in the short.

 Jeff Bailey   10/8/02,  15:04:36
Wells Fargo (WFC) 45.72 +5% ... was a stock that caught my eye this morning with a rebound in banks. Stock tested bullish support trend and decent risk/reward play with stop at $43. Link

Despite recent drubbing, stock still shows good relative strength versus SPX. Link

Disclosure ... I currently own bullish position in WFC

 Jeff Bailey   10/8/02,  15:02:33
Johnson & Johnson (JNJ) $58.77 +3.65% ... stock trying to lead and make some higher ground. Some signs of leadership from this Dow component. Link

Disclosure ... I currently own bullish position in JNJ

 Jonathan Levinson  10/8/02,  15:01:28
Duke of Bailey?

This impressive bounce took out 1140 resistance... well, by less than 5 points. Most worrisome to a bear is that yields flipped to green across the curve, and the QQV fell significantly, currently -.99 to 52.90. The TRINQ fell too, but not enough- it flipped from light sell territory to neutral buy. If funds continue to flow from bonds, the indices will continue to climb. That said, there's a lot of resistance along the way comprised of stranded bulls and aggressive shorts. Next resistance looks to be 1155-60.

 Alan   10/8/02,  14:55:11
Futures: ES 809.50, Dow Cash 7620, NQ 830 : If Long, consider taking Profits. If flat, consider opening a Index scalp short (TIGHT stop) as the Market Tone remains bullish with ES over that mentioned 805-6 pivot.

 Jeff Bailey   10/8/02,  14:52:34
duke, would you cover short positions at 18.75 on this stock.

Yes... I would cover an UNDERLYING SHORT POSITION IN THE STOCK, but I WOULD NOT CLOSE A PUT OPTION in this stock. The reason I don't like the short position in the stock is that currently, company pays HIGH dividend and short has to pay that in addition to exposure of the stock. With put options relatively "cheap" on lower volatility stock, the OPTION actually gives the bearish trader exposure and LIMITS risk. Therefore, this is better put option trade that bearish equity trade. PS ... my name is Jeff, not duke. (grin)

Now... if DUK ends up cutting their dividend then a stock trader not so concerned about paying dividend on underlying short, but if they cut dividend like some other utilities have in recent months, well, the put options should do fine is my thinking. Will they cut the dividend? Not sure, but I can't figure out why they didn't go to the debt markets to raise money instead of equity market.

 Alan   10/8/02,  14:50:48
Futures: ES next resistance is 809-12, 815. Dow cash printing 7600 now.

 Alan   10/8/02,  14:48:03
Futures: ES 805, YM (Dow) 7560, NQ 825 : Returned to miss the ES 805 top at 2pm. If anyone had taken (and held) that high risk Index Long from 1120 AM today at 781-82 congrats for holding. As written in last night's Wrap, there have been years when October 8 th provided to be a reversal day. Not saying the same holds true in year 2002, merely was an observation. Other years, Oct 15th time period marked a reversal. Once ES this afternoon re-tested its 787 support near 1:30pm and once climbing over the 798-800 resistance, ran up to it's next upper resistance at 805-806 (Mon's High was 809). If flat, watch the ES 800 and 805 numbers for market direction. 240pm Bullish that ES held the 800 retest. Bulls would like to see Dow Cash take out 7600 to upside

 Linda Piazza  10/8/02,  14:34:20
COSTCO (COST): 32.15, up 2.97, 10.18%. I was looking at this stock yesterday. As the fourth largest company using the docks affected by the PMA lockout, this stock was being pressured yesterday. I expected a rebound if Taft-Hartley were invoked, and we're seeing that rebound today. However, COST is still on a P&F sell signal, with a target to 23. I thought any rebound might be a good opportunity to get a better entry on puts on any rollover beneath the clustered 22 and 50-dma's (33.06 and 33.58) and the 50-weekly MA, also in the 33 area. This would give the oversold stochastics a chance to release and move toward overbought again, provide a trader with a clear stop loss, and provide more downside to capture. However, today's move up is on strong volume, making me cautious. If this were going to be a good put entry, volume should be lower on an up move.

 Steven Price  10/8/02,  14:18:58
While I have a hard time believing in this rally, I am not initiating new shorts until it fades. If it does, I still like GM under $35.

 Jonathan Levinson  10/8/02,  14:06:42
Looks like I spoke too soon. The COMPX is taking another run at 1135 resistance. 1135-40 is a decent congestion area that had formerly functioned as support. However, note that the TRINQ is above 1 this time, whereas this morning it was overbought at .37. While I expect this level to hold down the price, I'm frankly surprised that it's made it this far.

 Jeff Bailey   10/8/02,  14:00:40
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
With banks and retailers rebounding, looks to have market catching a bid and OEX trading 403.27 here. As such, will GO LONG the broader markets with an OEX pullback to 401. The initial stop loss will be OEX 394. Initial swing trade target is 412.

 Jim Brown  10/8/02,  13:54:14
FYI: Russell-2000 bottom? I bought (40) of the IWM-KN Calls this morning.

 Jonathan Levinson  10/8/02,  13:40:33
Given that the indicators seem to have almost flatlined, a couple of observations. The COMPX has just made a lower high on this most recent move up. Yields have not recovered in any meaningful way, and the QQV continues to rise. As Jeff has aptly pointed out, the COMPX ..*IS* the.. weakest link! There seems to be very little strength under the market, and the downtrend is still very much intact. While the low price levels make me a nervous bear, I'd be a much more nervous bull (were I to have any bullish positions). I expect lower lows, but am keeping stops on and am mostly in cash, just in case. I've learned that steady money beats the big score every time, and am not willing to risk months of hard work here in case I get blindsided.

 Jeff Bailey   10/8/02,  13:08:39
Hmmmm.... so close to OEX 390 this morning with a trade at 393.49, but yes, I think the potential "dock worker settlement" got me, or at least brought a bid to the markets.

Hey... the stronger OEX, which I've ranked just below the Dow Industrials were about break even, but I do think the weaker QQQ and NDX may have gotten a marginal gain. Not sure, but with volatility higher than yesterday, just don't know for sure.

 Jonathan Levinson  10/8/02,  13:04:51
"They call me Dubya" (grin)

 Jeff Bailey   10/8/02,  13:03:17
Swing Trade Signals
The Swing Trade Model is currently flat after the OEX traded our stop at 399.00, which was yesterday's SHORT entry point.

Banks (BIX.X) +3.9% and (BKX.X) +3.5% along with Retailers (RLX.X) 261.63 +3.13% driving S&P gains.

 Linda Piazza  10/8/02,  12:57:08
Jeff, great trade on the Swing Trade. You picked the right entries and protected participants against losses, other than commission. You just got Bush-whacked with the Taft-Hartley announcement.

 Linda Piazza  10/8/02,  12:52:14
JDA Software is not included in the GSTI Software Index, but nevertheless, I've been watching to see what effect this morning's warning might have on other software stocks. Some, including MSFT, INTU, ORCL and SAP have been up significantly this morning, but none were above their 5-dma's before CNBC released the White House's announcement that Taft-Hartley would be invoked, and hourly stochastics were beginning to turn over for all these stocks. Although it looked as if these software stocks would succumb to overall market weakness and the JDAS warning, all bets are off as the markets react to this White House news. This points to the difficulty in trading when market-moving news is expected.

 Steven Price  10/8/02,  12:52:10
Reader Question: what to get your feeling on Merk (MRK) as it peeked again below the 46 mark, even on an up rally.

Response : Merck (MRK) $45.25 (+1.12) After this morning's sector upgrade the stock did find resistance again at $46. However, I would like to see some weakness before initiating a new short position here. A move below $45 would be a good short sign, but a move below $44 again would be better.

 Jeff Bailey   10/8/02,  12:48:44
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out of the SHORT signal at 12:44:17 when the OEX traded 399.07.

At 12:44:17 SPX= 790 , SPY= 79.45, DJX= 74.44, DIA= 74.70, QQQ=$20.07 NDX=806.50

 Alan   10/8/02,  12:48:41
Futures: ES 788.50, Dow Cash 7425 both at their 50% retracements of today's Low/High. CNBC reports that Pres Bush WILL seek to invoke the Taft Hartley act on the West Coast dock work strike; and that news has pushed ES and DOW over their 50% retracement levels, NQ is at it's 50% retrace at 810. Monitor the RLX retail index. Look for a pause here. Consider taking any long profit or a short scalp. Lunch for me.

 Jeff Bailey   10/8/02,  12:46:58
QLogic (QLGC) $20.27 -1.93% ... Hi jeff thanks for your great work .now that GE broke the 23.00 area and QLGC broke the 20.00 area whar would be the target on the downaide? and also the restanc? thanks

I'd be looking to close out a put/short in QLGC Link . Stock exceeded the bearish vertical count we had calculated form mid-August to $27. On p/f chart, I see resistance at $26. According to Dorsey/Wright and Associates, QLGC is "semiconductor" and current sector status is "bear confirmed" at 8%. This is very low and "oversold" reading, so while very weak, RISK runs high for a bear.

General Electric (NYSE:GE)

 John Seckinger  10/8/02,  12:43:42
Rumor: There is a rumor that George Soros is buying Treasuries. It is also rumored that his reasons include the need for the European Central Bank (ECB) to lower rates.

 Jeff Bailey   10/8/02,  12:38:07
Aetna (AET) $31.81 -0.53% ... Jeff: I'm still holding some AET Nov. $40 puts. With some rebound in the financials today, what are we looking for in AET from here?

Well.... I didn't hold my AET as long as you, but you should have some handsome gains. AET hasn't yet achieved it bearish vertical count of $29 at this point, but I'd look to lock in some gains on 1/2 if not 3/4 of the position at this point. Professor Davis' probability of 23% decline from the triple-bottom at $40 has not been achieved either at $30.80. However, with the stock about $1.00 from that probability target, would lower stop to $32.84, thus risking $1 to make a $1 to Professor Davis' study. Link

 Alan   10/8/02,  12:36:31
MSFT hard selling coming in. In a few minutes, sold off from $47.70 to $44.20

 Jeff Bailey   10/8/02,  12:32:59
Banks Both the BIX.X +2.73% and BKX +2.2% are rebounding today and this is what keeps the SPX +0.03% and OEX +0.15% a little stronger than the Dow -0.42%, NDX -0.58% and NASDAQ Comp -0.52%.

 Jonathan Levinson  10/8/02,  12:30:59
Further thoughts on liquidity: Many will argue that price declines on light volume are bullish, and not bearish. Many bears prefer to see high volume failures of their favorite indices. However, declines on high volume result in cash being built up as the sellers cash out their positions. This liquidity can be used to buy stocks back up. Low volume declines on the indices simply evaporate market cap and liquidity, and are far more bearish in their implications, in my opinion. That said, I believe that individual stocks that get croaked on high volume are a different story- there, the liquidity built up will often find its way into other stocks or instruments.

 Alan   10/8/02,  12:29:55
IBM: Bloomberg reports IBM will be buying back shares today, IBM now up 1+ pts off it's multi-year lows at 55.0 today.

 Alan   10/8/02,  12:27:45
Futures: ES 786, Dow 7400: after forming a new day low at the top end of the 775-777 large support area at exactly 12 Noon, ES has caught a strong bid (likely on short covers as many futures trader had that 775 number in their heads as downside support. ES 50% retracement of today's low/high 798/778 is 788. The last 4 days, at the moment the Dow goes "minus 200 points from it's day highs", that period has often been a reversal time period. ES, Dow, NQ today have traded at lower lows on yet another day. IF ES gets over the 788 retracement level, next higher resistance is now 792-93, 795-96, 798-800. Monitor Dow's current 7400 for a directional indicator.

 John Seckinger  10/8/02,  12:22:26
December Bonds set a new contract high at 115-04. The index is currently up 31 ticks at 114-29. A close above 114-31 should give equity bears ample ammunition going forward. Note: UTY index did attract some short covering once back above 219 (currently at 223), and this interest-rate sensitive index will most likely have to go back under 219 in order to keep bonds at such atmospheric levels.

 Alan   10/8/02,  12:14:21
Futures: 12:07 PM Knife Catching: Yesterday's High risk long provided ES +10 pts, Dow +100 pts. Today's High Risk long on the ES 782 double bottom only provided +2 to +3 at most as the 785 level provided resistance. Since that 785 failure, ES sold off to the large 775-777 support. SPX is the only key index to NOT take out it's July Lows (which were 775 at the open on July 24th). As a comparision, Dow's lows that day were about 7550. For the 4th day in a Row, Dow has gone minus 200 points lower from it's day Highs (7525 to 7325 today). Trend remains 'down'

 Linda Piazza  10/8/02,  12:06:17
Watch BIX ($GSPBK on stockcharts.com) today. Currently at 241.54, yesterday's close was only 4.26 above the Jun 26, 2001 low and close of 233.19. Below that, the next support comes at 223 level, and then at March 6, 2001 close near 213.

 Jeff Bailey   10/8/02,  12:04:47
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
With the OEX 394.59 -0.39% violating yesterday's low, let's lower the STOP LOSS on the Swing Trade Model to OEX 399.00, which was our bearish entry point yesterday. This would allow some intra-day protection against any type of dockworker lockout settlement. Will KEEP target at 390.00.

Here's the OEX chart I was monitoring this morning on 60-minute interval and "fitted" retracement overlay. This is the chart I'm currently using for the Swing Trade Model Link

 Jeff Bailey   10/8/02,  11:53:10
TXU Corp. (TXU) $14.75 -34% ... "utility" stock halted with news pending. Most likely main reason the Utility Index (UTY.X) 220 -7.3% and even Duke Energy (DUK) $17.34 -5.8% under some pressure.

I'd say TXU's p/f chart was juuuuust a little bearish wouldn't you? Link At $49, a point/figure chartist was saying.... "the first test of bearish resistance is often times most painful for a bull."

 John Seckinger  10/8/02,  11:38:57
Yes, the Utility Index is down 8.34% at 218. The relative weekly low of 219 could become a pivot in the near term. Above 219, shorts should cover. Below 219, shorts should try to become more aggressive. A downside objective? Well, considering the UTY is hitting all-time lows, fitted retracement will have to be used. Result: 195.

 Jonathan Levinson  10/8/02,  11:36:57
It looks like what doesn't go up must go down. The COMPX is taking what is so far a weak bounce off its lows of the day at 1112. The sentimenet and breadth indicators are still rather neutral given the blast of selling that occurred, and if this bounce doesn't pick up some steam, the sellers will lose patience and set off another round of selling. On the other hand, there's still the potential to engineer a double bottom at SPX 775, but without the liquidity to drill up the indices, it will be likely to become a triple bottom, and so forth.

 Alan   10/8/02,  11:35:25
11:30 Futures: ES 784(SP futures) does have the very real possibility of hitting their July Lows of 775-777. My prior post (ES 781-2, NQ 800) had to do with technical trade levels and not market sentiment. Sometimes technicals win, sometimes sentiment wins (sentiment like 'who warns next?' IBM? CSCO? etc). Mon had a trade-able low at 11:17AM, same time as today lows occured (this was 2nd reason for prior post). ES needs over 785 to confirm and that's not happening so far. The hard selling has stopped for the moment, but hasn't really gone 'up' yet. Keep the stops TIGHT ! In the last 30 seconds, ES looking a little stronger

 Steven Price  10/8/02,  11:29:30
Pulte Homes (PHM): $36.99 (-0.12) I am lowering the stop on this OI put play, entered at $39.14, from $44.50 to $40.25.

 Jeff Bailey   10/8/02,  11:24:37
Swing Trade Signals
Well... looks like the Swing Trade Model dodged the morning "rally" as the OEX session high has been 403.23 and currently trading back at 395.26. Treasuries have reversed course and now finds buyers as YIELDS are in the red. OEX 390 target still looks achievable near-term. Will follow with some adjustments if OEX takes out yesterday's low of 394.80.

Interesting that weakness leads as QQQ $19.84 -1.4% trades yest another 52-week low.

 Steven Price  10/8/02,  11:23:22
General Motors (GM): $33.63 (-2.24) OI put play GM, originally entered at $41.52, has been in a free fall all morning. Round number support has meant nothing to the stock thus far and it is now approaching its $32.00 low in January 1993. Because this is the next logical support level, I probably would not initiate new shorts for only a $1.63 profit potential. If it breaks $32.00, then the next support is found just under $30. There is now potentially an $8 profit on this play, depending on where readers got in and I would think about taking some profits as we close in on $32.

 Alan   10/8/02,  11:22:01
Futures: Cisco CSCO new lows, 8.35; ES 782s and NQ 800 at their Mon Lows; Dow Cash is 30 points Under their Mon Lows. "VERY" high risk level to ponder a Index Long if flat for possible short covering, repeat VERY high risk (use Tight Stops goes without saying). The only reason is double bottom on Yesterday's Lows.

 Steven Price  10/8/02,  11:16:31
Reader Question: currently in Whirlpool (whr) noticed not much movement with regards to volume and it broke the 42.50 yesterday, do you see any more downside to it. with the market now negitive doesnt show much moving to the dow yesterdays lows.

Whirlpool (WHR): $42.01 (+0.23) OI put play WHR, entered at $44.81, caught some support yesterday at $41.50. I would wait for a break below that level to initiate new positions. If it hangs out over $42, while the Dow sinks, I would consider closing the play and taking my profits.

 Jeff Bailey   10/8/02,  11:15:46
The 10:00 Update has been posted. Link

 Alan   10/8/02,  11:13:32
FUTURES: 11:09 AM: SOX Semi Index 212 : Yet another multi-year low. YM Dow futures printing 7389, a few points above Mon's 3:50pm lows. A short-cover bounce COULD occur very shortly. I would be careful on opening a New short here, unless market melts if Dow Cash 7400 gives way.

 Alan   10/8/02,  11:10:50
FUTURES: 11:07 AM: ES 787s, YM (Dow) 7404, NQ 804 ES resistance did indeed prove to be 798-800 as there was a double top today at 798. (and Dow Cash 7530). Market has sold off since the 10:25 AM 798 Double Top. The markets once again seem to have sold off there when news of a Pres. Bush speech came out. GM and IBM remain a serious drag on the Dow, Sox index selling off all morning to current 215. ES currently at 788-89, which is a downward gap fill to it's 415pm Mon Close. Trend remains 'Down'. ES pivots: 805, 798-800, 795-6, 788, 783-85, and the very large support at 775. QQQs are now back under 20. Observe how the action from the prior day can often impact the current day. Mon ES spent a great of time trading between 792 and 798, providing possible long or short scalp trades. The same numbers repeated today. NQ is now 805, yesterday's low was the psych number of 800. Market feels as it wants to retest yesterday's lows. Monitor the Dow cash 7400 level (for support or breakdown) if short from the resistance level of 798-800

 Jonathan Levinson  10/8/02,  11:07:59
QQQ is back below 20. The TRINQ is at 1.38, just north of neutral. QQV is up 1.26- a fraction of the percentage gains we saw yesterday. The COMPX has filled its gap and is now setting new lows below 1118. Yields have flipped to negative, and so not only is there no liquidity to fuel a bounce coming from bonds, but in fact, they're now draining from equities.

 John Seckinger  10/8/02,  11:00:46
7511 and 7465 did play the role of pivot, as previously posted. Objective? Unfortunately, it is only for a test of 7425 - the opening range. If prices go below 7425, this level would then become psychologically significant (read: resistance). The December Bond is at 114-03, and a move above 114-08 could be the catalyst needed for more selling pressure.

 Steven Price  10/8/02,  10:59:29
GlaxoSmithKline (GSK) $39.47 (-0.22) I don't like the intraday resistance in this OI call play at $40, and I would not enter long at this time.

 Steven Price  10/8/02,  10:57:07
FLIR Systems (FLIR): $29.26 (+1.04) After receiving some positive news, OI put play FLIR, entered at $34.55, failed the $30 level. I like new entries here, as well, if we get some downside momentum in the broader markets.

Readers may notice that most of my evaluations this morning have come with market environment caveats. I like the failure of the broader indices at 7500 Dow, 800 SPX and 400 OEX right now and it appears we will get some downside momentum.

 Jeff Bailey   10/8/02,  10:52:51
Duke Energy (DUK) $17.50 -4.8% .... looking for some volume now with the triple-bottom and new 52-week lows. Vertical count turns bearish here with initial count at $14.50. Link

 Steven Price  10/8/02,  10:51:55
Tech Data (TECD): $24.83 (-0.37) OI put play TECD is seeing some resistance at $25 intraday. If the Nasdaq turns red, I like new entries under $25.

 Steven Price  10/8/02,  10:41:46
General Motors (GM):$34.74 -1.14 GM's comments apparently caught up to them this morning. I would have expected a little more suport at $35, which only lasted about 15 minutes. Now that we are below that level, I'm looking for intraday resistance at $35 to initiate shorts. Let's test that level on a rebound first. However, if the Dow turns negative, then I would pile on.

Sorry for the brief absence, I had some technical difficulties that seem to be solved now.

 Jeff Bailey   10/8/02,  10:38:14
Duke Energy (DUK) $17.77 -3.4% ... stock turns 7.4 million shares in first hour of trading. Look the other way if the stock trades $17.50 is my thinking. Link

 Jonathan Levinson  10/8/02,  10:28:59
I believe that the precious metals and miners markets are too small to have much impact on the equity indices one way or the other. They are, however, big enough to have an impact on my retirement account (in which all of my metals funds are located), which is smaller today, with HUI -3.31 to 111.88 and XAU -1.74 to 63.04.

 John Seckinger  10/8/02,  10:26:13
Looking at a five-minute chart of the Dow, the high after the first period was 7511. This could become a pivot for traders on an intra-day basis. The downside pivot appears to be at 7465. Stength may be coming from another wave lower in Gold, but that is hard to discern (since correlation yesterday was not solid). Bonds remain basically flat, while the 4.77% drop in Utilities evidently is having little impact.

 Jeff Bailey   10/8/02,  10:22:01
Swing Trade Signals
Per swing trade model... OEX has reached session high of 403.14 and well below our trailing stop of 407. I've also got a "fitted retracement" on OEX from 480.11 to 356.56. This gave me further downside levels of 19.1% at 380.15 (close to my head shoulder top target), but also gives us a 38.2% retracement of 403.75, which would be near-term resistance. More risk averse bear could have a stop just above at 404.00, and I will most likely move stop lower to here should OEX take out yesterday's low of 394.80 today.

 Jonathan Levinson  10/8/02,  10:19:57
The COMPX retraced just under 70% of its gap up and is now drifting back up to near top-end gap resistance at 1129. The TRINQ is back into neutral territory at .83. I expect 1135 to keep a cap on the action. The only source of liquidity with which to fuel a rally would be short covering or a selloff in bonds, neither of which we're seeing. The TICK.NQ at -296 is showing enthusiastic selling. I'm watching the day highs for signs that this range is violated, but beyond that, it's shaping up to be a slow day (famous last words).

 Jeff Bailey   10/8/02,  10:15:47
Duke Energy (DUK) $18.05 -1.9% ... still got my eye on this utility for a downside move. "Discounting" below it's recent secondary offering price of $18.35. If institutions decide to dump as secondary begins to discount, bearish trader wants to be on the alert.

Disclosure ... I currently hold bearish position in DUK

 Jonathan Levinson  10/8/02,  10:08:14
Here is the terse announcement from the Fed. Once again, the market is on its own today: Temporary Open Market Operations: 10/08/2002 The Desk has entered the market announcing: No action

 Alan   10/8/02,  10:05:45
Until ES (Sp futures) takes out 798-800 to the upside, the overall trend remains 'Down'. ES hit resistance right at that level at 9:43 AM's post and has leaked lower since, trading at day lows of 792-93 (which also was Fri's Lows, and an area of a lot of trades Mon afternoon around 3 PM before the bearish Consumer Credit report sent ES straight through the 790 support to the next lower support at 783-85. YM (Dow futures) hit a morning high of 7515 and have also leaked lower, currently 7445 (60 pts off their highs). GM and IBM acting as drag on Dow. Watch to see if ES holds 790 (which matches Dow Cash 7450). If you shorted the market at that ES resistance at 798, I would take 1/2 profits here as ES appears to be holding 790. ES needs over 795 now for market breakout.

 Jeff Bailey   10/8/02,  09:59:49
S&P Banks Index (BIX.X) 244 +2.8% ... talked about this index in last night's Index Trader Wrap. Holding historical support at 236 this morning and just below our 19.1% retracement of 247.79 here. 21-hour SMA trending lower at 248.34 currently. Short-term, will be monitoring for a break much above 248-250 for potential rally, which could spur broader market strength. For now, not seeing it.

 Jeff Bailey   10/8/02,  09:52:02
Swing Trade Signals
Looking at some 60-minute interval charts of the indexes and haven't seen one that has tested its 21-hour SMA. QQQ $20.11 -0.24% came close at $20.42 (21-hour SMA at $20.45) but found selling. For me, this would be expected as NDX and QQQ most out of favor/weakest indexes.

 John Seckinger  10/8/02,  09:50:22
December Bond (USZ2) lower by 4 ticks at 113-26 and apparently not believing the rally in equities. The yield curve (fives down 4 while 10s lower by 5 ticks) is slightly more a believer, but not significant. One sector making it slightly difficult for equities could be the Utility Sector (UTY), lower by 1.57% at 234. Other notes: Dollar near 108 at 107.87, Gold is lower by 2.59%, and Oil is fractionally higher.

 Jonathan Levinson  10/8/02,  09:49:26
The FED has yet to make any announcements for today. I'm expecting this any minute. If it refrains from adding any liquidity today, this bounce, which already appears to be in trouble, will be in big trouble. Fresh lows at COMPX 1127 as I type.

 Alan   10/8/02,  09:48:47
9:43 AM Futures have held their Gap Up, ES was 797 at 915 AM, sold to 793 after market open (where it was at the end of Pres. Bush's speech last night). Resistance is right here at 798-800; matching Dow Cash 7550 resistance. ES had touched 802 at 3 AM earlier tonight ahead of Europe's open. YM Dow futures had a morning high of 7515, it's now leaking under 7500 at 7480.

 Jonathan Levinson  10/8/02,  09:36:11
We have a 10 point gap up open on the COMPX that is now slowing just below 1135 resistance. The TRINQ got hammered down to .37, and while it can go lower, it's now in overbought territory. QQV is slightly up. In the same vein, yields are up slightly- an absence of conviction can be seen in the smarter money of the options and bond markets, which tells me that this bounce will have its work cut out for it.

 John Seckinger  10/8/02,  09:32:00
Trading in fixed-income securites appears rather light this morning, but could pick up if equities begin to move substantially. Economic news this morning included Mitsubishi's index of chain store sales rising 0.8% in the week of Oct 5, offsetting the -0.8% decline the prior week. Moreover, Redbook reports that its chain store sales index fell -0.7% in September.

 Jeff Bailey   10/8/02,  09:31:35
Swing Trade Signals
The Swing Trade model is still short from OEX trigger at 399.00 and keeping trailing stop at 407.00 currently. Target for trade remains 390 at this time.

Treasuries are seeing modest selling, but not enough at this point to have me wanted to adjust my stops. I will want to watch the opening 30-minutes of trading to get a feel for things at this point.

 Alan   10/8/02,  09:26:21
Index Futures
Futures: ES 795, YM (Dow) 7500, NQ 818. Based on Futures, it appears Dow Cash will open around the 7500 level; and ES futures below the Key 800 pivot, but above 790 support. I would look for a move (up or down) those 2 numbers: ES 795 and Dow 7500. All 3 futures indices currently are sitting at their 50% retracements from Mon's Low/High. ES (SP Futures) look to open 10 points higher than their close. At Mon's market open, they opened -10 from their Fri close and the gap faded. Europe was mixed: France and England were Up, Germany was Down.

 Steven Price  10/8/02,  09:26:11
After yesterday's break in support ot 400 OEX, 800 SPX, and 7500 Dow, I will be looking for resistance at these levels before determining that we are going further south. Right now we are not seeing it, but if the opening rally fails, watch the intraday charts for evidence.

 Steven Price  10/8/02,  09:21:53
General Motors (GM): $35.88 OI put play GM's CEO told an Italian newspaper that he expects 2003 vehicle sales to fall because economies won't revive until the midle of the year, but can't quantify the decrease yet. This is a departure from previous comments from automakers about flat sales.

 Jeff Bailey   10/8/02,  09:16:42
09:00 Update has been posted. Link

 Linda Piazza  10/8/02,  08:36:46
Futures are up as of this writing, but if the markets power up, they may have to do it without the help of the techs. This morning, GS cut IBM estimates for both 2002 and 2003. Digitimes.com reports that Samsung may be among the companies rushing to clear inventory due to a pessimistic outlook on the Q4 DRAM market, perhaps putting pressure on companies such a Micron. Also, JDA Software told analysts to expect lower software licensing revenues for Q3. While I wouldn't rule out a bear-market rally, the overall outlook apparently hasn't improved.

 Jonathan Levinson  10/8/02,  07:27:32
I kept thinking of Dana Carvey in that movie trailer, "They call me Dubya." Well, no missiles are in the air, no new protests on Vermont ETV, and the futures never saw red. S&P and NDX futures are +7.9 and +7 respectively. The US Dollar Index got ramped up to just below 107.80. I'd be more nervous in my shorts, except that logically I can't see where the money's going to come from for a rally or even a jam job. The fed has been inexplicably draining liquidity each day, letting the market bash and crash through all kinds of major supports- this would never have happened even a few weeks ago. Mutual funds are fully invested already, and I've been hearing rumours that they've been drawing on equity lines to meet redemptions. Lastly, John Q., or the "sheeple", have, I imagine, been simply not opening their statements. At least, all those with whom I speak. They don't care about gold, or metals, or shorting, or even getting to cash- they just don't want to know. I doubt that they're going to jump in with a few $B to jumpstart a rally. So, my guess is that these bumps will fizzle... unless the shorts start to cover en masse. But, with bulls already on the run this week, I have my doubts there too. If I'm wrong, that's what stops are for.

 Alan   10/7/02,  22:30:41
Index Futures
ES had upticked to 793 ahead of Pres Bush's speech. A speech which is not being covered by the 3 major networks, just CNN and Fox. ES has sold off 3pts since the talks began. Currently 790

 James  10/7/02,  22:29:47
The Swing Trade Game Plan has been posted: Link

 James  10/7/02,  22:25:51
The Futures Wrap has been posted: Link

 Jeff Bailey   10/7/02,  22:17:27
Yesterday's Market Monitor has been archived. You may view it and previous days here: Link

 Alan   10/7/02,  00:09:45
Index Futures
1145pm Futures are inching up in the overnights. Current values:
ES at night Highs of 793s (+10 higher than 4 PM, +5 higher than their 415 PM Close.
YM (Dow) at night highs of 7485 (+100 from 350pm Lows, +40 from their 5 PM close).
NQ at night Highs of 821 (+20 higher than 4 PM Lows, + 8 higher than their 415 PM Close.
ES +10 than 4 PM Cash Close equals OEX approx. +5. OEX Cash Close 396 and the current Futures levels approx. OEX at 401. Japan's Nikkei is up + 100.
Based on current Dow Futures, Dow Cash equals approx 7505 level. It seems Monday's Dow Cash 7400 may indeed provide some support going into Tue open. Goodnight.


Market Monitor Archives