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 Jeff Bailey   10/9/02,  16:29:22
Swing Trade Signals
The Swing Trade Model continues to hold SHORT the broader markets from OEX 393.00, with STOP at 402. Target zone currently is currently 380-385 and with recent intra-day resilience, would GLADLY lock in, or protect a gain near OEX 385. OEX closing trade was 392.69.

 
 
 Alan   10/9/02,  16:22:39
Index Futures
Futures Close: 415 PM: 2nd day in row, nice little Long scalp from exactly 3:53 pm to close. Closing Numbers: ES 778.25, YM 7279, NQ 809
ES had gone 775 at 4pm to a high of 779 before closing at 778.25
Day Lows occured about 3:53pm (ES 774.50, YM (Dow) 7262)

 
 
 Linda Piazza  10/9/02,  15:58:24
COSTCO: Don't get overcommitted to a short or put position in this stocks. Honor the stops you set when you entered the play. Yesterday I was cautious about entering a put play because of the higher-than-normal volume on the upswing. Today, with COST moving down, volume has not matched yesterday's move. While volume isn't as necessary to confirm a down move as it is to confirm a new uptrend, COST also has held above yesterday's lows, and it is printing an inside day. If broad market weakness can't carry it back down test that gap up yesterday morning and then to test Monday's low, you may find COST climbing back up to test those overhead MA's instead.

 
 
 Jonathan Levinson  10/9/02,  15:56:33
Filled on my GE puts. The SPX, INDU, and GE are now free to tank. I'm still holding my Qube puts, notwithstanding the falling wedge which projects to today's high. Given my current positions, I expect to see a divergence that should bring down everything but the COMPX. (grin)

 
 
 Steven Price  10/9/02,  15:54:22
Reader Question: Hi Steve,how about going short in QLGCnow that it broke 20? What are your thoughts? Thank you

QLogic (QLGC):$19.98 (-0.75) I think QLGC looks weak, as does the Semiconductor Sector Index (SOX.X). The SOX hung in positive for most of the day, before finally giving in and dropping to yet another new low. My problem with shorting the sector here (213.11 -2.81) is that there will probably be some support when the index reaches 200, and I'm not sure how much more we can squeeze out of QLGC. I've been a pretty big bear on the sector, playing it repeatedly short the last few months, but now I keep asking myself just how much more movement is left. My sentiment is nonetheless still down, it's just the current compression that makes me hesitate.

 
 
 John Seckinger  10/9/02,  15:50:51
Any idea about what to expect from reports coming out tomorrow morning?

Response: I would only worry about claims, especially since the only notable reports are due out on Friday (Retail Sales, PPI, and Michigan Sentiment). Import/Export might show import pressure due to higher petroleum prices, but most likely a moot point. The estimates for claims is 405k versus 417k, prior week. Note: Lower claims should mean lower bond prices and higher equities. Of course, the market could have easily priced in a 405k number.

 
 
 Alan   10/9/02,  15:47:34
Index Futures
ES 775, Dow 7300; All of last week up until yesterday, had spoken many times of the KEY ES 800 and Dow 7500 levels. Now, focus turns to ES 775 and Dow 7300.

 
 
 Jonathan Levinson  10/9/02,  15:47:04
I see a bullish falling wedge on the SPX and COMPX charts. Look at the 5 minute candles.

 
 
 Steven Price  10/9/02,  15:43:21
Pulte Homes (PHM) $36.46 (-2.16) OI put play PHM is now below yesterday's bounce level of $36.49. I would like to see some intraday resistance here to initiate new shorts

 
 
 John Seckinger  10/9/02,  15:40:43
Definitely satisfied with the eventual sell-off in the Dow. Catalyst? Yes, weakness in Utilities. The UTY Index is lower by 8.46% at 207.87. The intra-day low is 207.49. The bond market close at 114-20 also could be responsible for the selling pressure since 3 p.m. Note: A close above 7369 would change sentiment to more "slightly bearish" levels.

 
 
 Steven Price  10/9/02,  15:39:25
General Motors (GM) : $30.95(-2.65) After giving up $10.57 since we picked this put play on 9/26, the stock is probably due for a bounce. Premiums are high and those readers in the play may want to cash in significant profits on the direction and increased premiums. We are approaching $30 support, and could see a bounce soon.

 
 
 Alan   10/9/02,  15:38:43
Index Futures
Today at 3:30PM, ES SPFutures hit the Magic number of 775. Recall that yesterday at 3:30PM proved to be an that shorts covered; so far the same pattern is repeating.

 
 
 Alan   10/9/02,  15:22:54
Index Futures
CME's Nikkei futures haven't done much today: Opened at 8500, sideways all day at 8400 (which is - 100, and yet again; another new Nikkei low if their Cash market tonight follows the Nikkei futures.

 
 
 Alan   10/9/02,  15:17:24
Index Futures
ES bounce from 3PM's 777 has so far stalled at the 50% retracement of 784, now going back down and has the 780 battle.

 
 
 Alan   10/9/02,  15:09:49
Index Futures
HEDGE: Last night's OI website article was about using futures to hedge options. This might have been a great real world example to use at 3 PM's ES 777 level; long OEX puts from higher, hedge at 3 PM with Long ES futures until you see if that very important ES 777 holds or not. Jonathan...very good (smiles)...your SPX "The Number" comment.

 
 
 Jonathan Levinson  10/9/02,  15:07:56
Trade management: In my inimitable spirit of selling too soon, I am now offering my GE puts at the ask, and expect to be filled any moment. This is not because my outlook on GE has changed, but because the profit is substantial enough that I'll hate myself if I let it get away- one could say that my unspecified target has been reached. The SPX is printing new lows just above The Number.

The COMPX is just above intraday support at 1118. The afternoon's rangebound action has chopped up the 5(3) stochastics, but the low TRINQ says it all for me. Unless this is the start of a monster rally, it will have to recover from its "oversold" condition, which points to the COMPX being at a short term top. The QQV has recovered to +.30 on the day, but yields have continued to deteriorate.

 
 
 Alan   10/9/02,  15:06:10
Index Futures
Do or die time: ES Quad-bottom at 777 including Tue, Dow triple bottom at 7300 area at 3 PM. From the 2:51pm, I'd suggest lowering the trail stop on yesterday's short to SPX 785 from 790. The line in the sand has been drawn - ES 777, which for the last 2 minutes has held. Pointing out a possibility: IF ES loes 777, i have no idea how ugly it could get (esp. as the Dow is already -200); other side of the arguement: IF ES 777 truly holds as we go into the close, likely to get some shorts taking profit. 50% retrace from today's 2pm high at 791 to this 777 low is 784.

 
 
 Jeff Bailey   10/9/02,  15:01:40
Swing Trade Signals
OEX 394 and breaking intra-day upward trend to the downside here. Bear would like to see a close somewhere below the intra-day low of 392.55 to perhaps get a "gap down" situation tomorrow morning.

Swing Trade Model, will hold positon overnight. This morning's gap lower made it difficult to establish a "most favorable" type of entry point and I don't want to deal with that again tomorrow. Will now look to trade the plan as long as some type of late rally doesn't trigger our stop of 402.

My favorite Trader's quote... "NEVER say never, and NEVER say ALWAYS."

 
 
 Steven Price  10/9/02,  14:58:26
Whirlpool: $40.87 (-2.46)I am lowering the stop on put play WHR, entered at $44.81, to $44.25, just over its recent highs. Let's lock in a bit of profits in case of a Dow rally.

General Motors (GM): $31.72 (-1.88) I think this stock still looks weak, but there is almost a $10 profit on the put play, entered at $41.52, and traders may want to take partial profits as we approach support at $30.

 
 
 Jonathan Levinson  10/9/02,  14:56:41
On that note, Bailey, I like the cut of your jib too :)

 
 
 Jeff Bailey   10/9/02,  14:55:18
Seckinger ... you're 14:44:50 post is right on track in my thinking. Was looking at the OEX chart and 400 level and thought same with Dow 7,400. I gave a little "fudge" room in the Swing Trade Model to 402, but I like your thinking and correlation with OEX 400.

 
 
 Alan   10/9/02,  14:51:56
Index Futures
As the last suggested Index Trade given was the "short" consideration at 2:55 PM yesterday at SPX 809, Dow 7620s; for anyone still in that Short - keep hoping for ES (SP futures) to lose 775 and then freefall. I would lower the trail stop to SPX 790.

 
 
 John Seckinger  10/9/02,  14:44:50
It is all about patience. As outlined in my Traders Corner article last night, a trader can look for one of three patterns. Since the Dow has not tested its opening level, shorts should still remain in control. Yes, I did expect more selling pressure; however, aggressive traders can use tight stops near 7400. For last night's article, click here Link

 
 
 Alan   10/9/02,  14:37:15
Index Futures
Reader Question: Ben asks "What is the ratio of ES contracts to OEX contracts when used to hedge them?". SPX to OEX is approx. a 2:1 ratio. The answer also must factor in which OEX strike you are holding: at-the-money, in-the-money, or out-of-the-money and it's corresponding Option Delta. This takes some math, and one can never hedge to the nearest dollar. If you have 10 OEX put contracts, and have computed that if OEX moves 6 points, your option position will move 2 points (or $2000 profit). Roughly, 1 OEX pt=2 ES points; so 6 OEX pts=12 ES pts. Assume OEX is 400 and ES is 800 when you bought your puts. OEX is now 390, ES is 780; and you wish to hedge by going Long ES while still holding the puts. I would buy 3 or 4 ES Longs then at 780 to hedge the puts.
Say OEX climbs back higher by 6pts to 396, ES will move 12pts to 792. You are trying to protect that $2000 OEX move, so $2000 divided by $50 per ES point divided by the 12 pt ES move equals 3.33 I know that looks complicated and scary, but the first step is understanding the Why it's a good idea to hedge in that fashion, and then learn by paper trading real world examples until you get a feel on how many ES contracts to hedge with. The important thing for you to start with is figuring out your DOLLAR profit or loss based upon your actual OEX strike using the Option Greeks for that particular contract. That DOLLAR profit is what you wish to protect, not the actual OEX cash move.

 
 
 Linda Piazza  10/9/02,  14:25:45
The Adv/Dec level is still negative for the Nasdaq, but up volume has been ahead of down volume for most of the day, perhaps indicating some concentrated buying in a few issues. Gainers have included CSCO, INTC, AMAT, and MU.

 
 
 John Seckinger  10/9/02,  14:25:41
Note: After-the-close today, YHOO, SONS, RBAK, RMBS, and INFY are all scheduled to report earnings.

 
 
 Jonathan Levinson  10/9/02,  14:24:56
Apologies- it was a downgrade to JPM's credit rating, to "A1" from an "Aa3".

 
 
 Jeff Bailey   10/9/02,  14:18:39
Swing Trade Signals
"Talk'em down" is a trading term for talking to your trade. Maybe I should do it more often? OEX 394 here and found some selling from 398 in last 15 minutes.

"C'mon sellers, hit'em again at OEX 397 and driver it below 392. Make them think."

 
 
 Alan   10/9/02,  14:16:20
Index Futures
ES bounce from the 777 double bottom (YM 7274) paused after a nice 12 point run (Dow +100 run) at ES 790, Dow Cash 7400; and in the last 5 minutes has sold off rather hard, ES 782, YM 7305, NQ 820. (Did i miss a 2 PM report on CNBC saying that Pres. Bush was due to speak soon? [sorry, bad joke] Trend is down. I strongly doubt ES (SP futures) can withstand another attack at it's 777 level (if it gets there today). Watch ES 780/Dow Cash 7300 levels.

 
 
 Jonathan Levinson  10/9/02,  14:15:37
JPM's debt has just been downgraded by Moody's.

 
 
 Jeff Bailey   10/9/02,  14:14:21
Semiconductor Index (SOX.X) 219.77 +1.72% ... fading a bit here. On 5-minute chart, I see intra-day support at 217.70. A little "dip" to this 217.70 was right about when the OEX Swing Trade Model went short when OEX was 393.00.

 
 
 Jeff Bailey   10/9/02,  14:09:15
Morgan Stanley Cyclical Index (CYC.X) 376 -3.36% ... with the deep cyclicals at 52-week lows, I just don't know where any pick up in IT spending is going to come to bollster technology stock earnings.

No... today's DIVERGING gains in NASDAQ-100 "must" be short-covering related.

 
 
 Jonathan Levinson  10/9/02,  14:08:43
Today has been full of anticipation with little follow through either to the up or the downside- action remains in a narrow range. The upside breakout from our wedge didn't get far, and the indicators remain constant. The TRINQ is still too low at .21, the QQV is down .96, and yields remain in the red. These latter two indicators are in a rare conflict- usually the QQV would be up on negative yields, unless the buying in bonds has nothing to do with the outlook for equities. In any event, both the TICK and the TICK.NQ show broad based selling. What next? We continue to wait.

 
 
 Jeff Bailey   10/9/02,  14:01:57
Swing Trade Signals
Well... no sooner do I try and GO SHORT a break at the day's lows, when buyers come in. OEX at 398.76 and it's going to be very, very, very close to my outlined stop of 402.

SOX back at 221.59, and just under the intra-day high of 223.88 and I need a reversal lower here.

BIX.X 242.88 -2.23% and need the same reversal here, with 30-minute chart showing both the 21 and 50 SMA's at 245.

Need some sellers to hit things into the close right now.

 
 
 Steven Price  10/9/02,  14:00:46
Reader Question: What is your thinking on AMGN? I started watching it when Alan mentioned the "Warnings Rumor". Thanks Russ

Response:

Amgen (AMGN) $46.26 (+0.47) I usually try to stay away from trading rumors, since they can start anywhere and take on a life of their own. The Biotechs have shown good relative strength and AMGN has put together a series of higher highs and higher lows. The stock is getting up to resistance at $48-$49, but does not look like a short candidate. If the rumors turn out to be true, I guess I'll miss the opportunity, but there just aren't enough signs of weakness to make me take a chance on shorting this one.

 
 
 Steven Price  10/9/02,  13:52:43
Reader Question: Steven, WOW! The OI put recommendation was fabulous! Unfortunately for me, I could not execute a play between the market open and now. Besides, the implosion created very high volatility that inflated the put premiums for most of the morning (along with some specialist shenanigans!). I am thinking HAR may move higher to about $46.50 and that might be a good entry point for the put play. What is your opinion? Compared to QQQ, HAR and it options are "thinly traded" and I am not used to ADVs of less than several million shares in the underlying or less than several hundred in the option OI. Am I being too timid or should the H&S and PnF warrant a level of confidence given their matching downside targets? Thanks in advance for your comments. Mark

Response:

Harman (HAR) $46.70 (-1.90) Looks like you got the rebound you were looking for. I still like HAR as a short at this level, but since things have slowed down a little, let's watch it for intraday resistance. HAR is more thinly traded than some of the issues you may normally trade, but certainly moves enough to make a nice profit. I'm seeing it turned back at $47.00 right now and a move back below $46.50 could provide a nice entry point. One note of caution is that it did bounce this morning right above $45.00, which could provide some psychological support. I still think its potential is down to $42, but it is something to be aware of.

I don't think being "timid" is a problem at all. If premiums are higher than you are comfortable with, then maybe this particular play is not for you. Everyone has their own level of comfort and when you get out of that level, your decision making skills suffer.

 
 
 John Seckinger  10/9/02,  13:52:11
The daily theme between Utilities and the Dow appears to be continuing. Looking at the UTY Index, this interest-sensitive index is 10-points off its lows (currently at 219.50). The Dow is at 7370, 80-points above its low. This correlation shoould continue during the next two hours, at least.

 
 
 Jeff Bailey   10/9/02,  13:48:48
Question: Do you increase your risk (go to full position) when the trade gets profitable for you? Or do you increase your risk when underlying starts to move in your favor? Specifically what to do with open OEX trade entered at 393.00? Thanks for all your hard work.

With the bullish % at "oversold" levels, I personally wouldn't be looking to go to full positions. The 1/2 positon idea is to LESSEN risk in the bearish trade as RISK as depicted by the bullish % for a BEAR is currently high. However, by exposing less capital with 1/2 position, with weak internals, a sharp drop isn't out of the question, thus 1/2 bearish exposure may still be wanted. The thinking right now is... with bullish % LOW and BEARISH risk HIGH, I want to decrease my RISK in a bearish trade with 1/2 or even 1/4 postions. If I get the BIG move lower, then had some exposure, but if a BIG move higher is experienced, then I've reduced my risk.

 
 
 Alan   10/9/02,  13:48:09
Index Futures
RUMOR: Just hearing this now. At about 1:15pm, (and possible 2nd reason for this bounce off the ES 777 YM 7274 12:30pm bottom). "LONDON (AP)--An audiotape of Ayman al-Zawahri, al-Qaida's fugitive second in command, appears to be genuine and to have been recorded in the last few weeks, a U.S. official said Wednesday. In the tape, he threatens new attacks on the U.S. and its economy." What I heard was some traders were thinking if that's a recent tape, why didn't Bin Laden speak himself ? Is he really dead? Seems this audiotape on the surface is a silly reason to buy stock, but take bulls desperate for anything to latch onto, and the more important technical supports of ES 777, YM(Dow) 7274 holding at 12:30 PM and you get a ES 8-9 point bounce from 1:15 PM. Quotes: ES 786 (under the 787 resistance), YM 7343, NQ 822 (3pts under day highs)

 
 
 Alan   10/9/02,  13:26:55
Index Futures
Several emails have asked about books on Futures. I'm sure there are some out there, but the only one I ever read was called "Pit Bull" by Marty Schwartz and while a good read, was really about his life story. I appreciate there are many differences between Futures and Stocks/Options. But try and think of Futures this way - a STOCK that trades 22.5 hours a day; for that's really all it is. If you have traded the market but never traded MSFT or the QQQs, would you need a book to trade MSFT or the QQQS? Not really. Any type of Charting book you may have read relates to anything: be it trading MSFT stock, or MSFT options, or Nasdaq 100 Futures. Why do ISPs always say the problem is yours and not theirs? :(

 
 
 Linda Piazza  10/9/02,  13:24:19
COSTCO (COST) I just heard from readers short or in puts from yesterday. Good for you, if you bought those puts when Costco began rolling over at 32.24 yesterday, as that allows you to set a close stop loss, near the 22 and 50-dma's at 32.84 and 33.49, respectively. Those MA's are also in the area of a gap down, so you have another line of resistance to hold COST down. The P&F charts still show a target of 23, but first, you'll need to get through the October 7 28.81 support. Be careful in that area. To gauge how COST might do, be sure to watch either RTH or RLX for sector strength or weakness. The gap down on the Retail Holders (RTH) chart shows the damage done to retailers since the West Coast lockout, but retailers had been moving down since the double top formed in August and September. Resistance lies overhead in the area of that gap, an area of previous support, as well as a broken support line, echoing what I saw in COST's chart. This is an ugly chart.

Day before yesterday, I'd expected a rebound in COST if Taft-Hartley were invoked, and that rebound came yesterday. I'd looked for a rollover in the 32-33 area, below those important MA's as a better entrance for a put play. However, yesterday's strong volume on the rebound made me cautious and I didn't enter the play myself. I like all my ducks in a row before I enter, which sometimes keeps me out of profitable plays, as this one has been today. Here's a further caution: yesterday's quick updraft issued a low pole reversal alert on stockcharts.com. This warns you to be alert to a reversal, so pay attention to those stops, which should let you exit near your entry point. Today's candle is also showing an inside day, another reason to be cautious. Also, if the markets move into a bear rally mode, the move up can carry all stocks up with it, even this one. I can't advise you as to your particular position, since I don't know when you entered or how leveraged you are or how much time you bought--and the SEC wouldn't let me if I could--but I hope these long-winded ruminations are helpful.

 
 
 Alan   10/9/02,  13:08:17
Index Futures
ES (SP Futures) 50% retracement of today's Low/High 777/793 is 785

 
 
 Alan   10/9/02,  13:07:12
Index Futures
ES (SP Futures) at a Double Bottom at 777 at 12:30 PM. This matches the Low number from Tuesday; and a bounce has occured from there as ES returns to the 782-785 chop resistance level we've seen most of Wed. Dow did at that time make a new 4 year low dipping very briefly under 7300. NQ (NDX futures) remains the "least weak" index. If we see ES get back to the 777 level later today, the odds favor it not holding. I've now lost my chart data, and won't post again until I have an un-friendly discussion with my ISP.

 
 
 Steven Price  10/9/02,  12:57:19
Reader Question: Steve, looks like vix is telling us this may be the day dow hits 7000. thoughts? rick

Response:

I find the action in the VIX, which is derived from the volatility levels in the OEX, to be really interesting the last couple of days. It topped out at 49.99 this morning, 49.71 on Monday and 49.32 on Tuesday. I have said in a couple of Market Wraps that I expect it in the high 50s, before we see a real rebound. Because it is not a stock, which can be sold as a share at a specific price, I'm thinking that someone is selling huge amounts of premium when it approaches 50 and looking for a rebound in the market. That trade may eventually pay-off, but I think it will move higher first.

One interesting note on Implied Volatility is that it often can fall as quickly as it can rise. Traders left holding lots of long premium in a rising market usually look to get out as fast as possible and lower the option bids very quickly when the sellers come in. I have seen traders lose more on long premium in a slowly ascending, or stale market, than on market movement. The reason for this is that adverse directional movement usually provides trading opportunities along the way, while a market that goes nowhere, while premiums decay, provides little opportunity to make up for the losses.

 
 
 John Seckinger  10/9/02,  12:47:00
The weakness continues. The Utility Index (UTY) is now down an impressive 7% at 211. The projected objective (done yesterday with fitted retracement analysis) was 195. Turning to the Dow, the objective once under 7442 was 7000. What does the bond market think? 30-year bond just off intra-day high (114-26) at 114-23. Looking at the yield curve, the spread between the 5/10 year is only 5 ticks steep (read: neutral for equity direction).

 
 
 Jeff Bailey   10/9/02,  12:44:10
S&P Banks Index (BIX.X) 239.93 -3.4% ... broader market bear would want the BIX.X to take out Monday's lows of 236.65 soon to hint that MARKET sees something wrong in banking area and that further downside exists.

 
 
 Jeff Bailey   10/9/02,  12:34:22
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the SHORT signal at 12:30:40 when the OEX traded 392.92, which was just under our 393.00 trigger. Stop is tight at 402.00 with initial target range for swing trade of 380-385.

DJX = 73.01, DIA= 73.10, SPX = 779, SPY = 78.11, QQQ = 20.12, NDX = 810

 
 
 Jonathan Levinson  10/9/02,  12:29:44
Yields just ticked down. It's looking bad for Mr. Bull here. The TRINQ at .28 is still far too low, as is the TRIN at 1.11, and according to these indicators, there will be little cushion from a breadth perspective if the markets start to fall from this level.

 
 
 Jeff Bailey   10/9/02,  12:28:55
Swing Trade Signals
Dow Industrials breaking to a new 52-week low, would expect daily bullishness in tech to begin to fade, maybe have some market makers backing off their bids in NASDAQ.

 
 
 Jeff Bailey   10/9/02,  12:27:03
Swing Trade Signals
Dow Industrials (INDU) 7333 -2.2% ... trying to hold yesterday's low of 7331.49, but a break could bring a move lower. OEX trading 394.62 here and Swing Trade Model not yet triggered to GO SHORT at 393.00

 
 
 Alan   10/9/02,  12:16:03
Index Futures
Leaving for a bit, and hopefully will return to find ES somewhere other than this sideways 3-4 point range it's been in the vast majority of the day. No positions. ES has now made a triple top at 788 today, and triple bottoms at 780-782. Dow held 7325, but now can't take out 7400. Those Key numbers of ES 800 and Dow 7500 are now very far away. YHOO reports tonight, but YHOO's earnings in my view no longer have very much market weight. The only large earnings this week is GE (pre-open Friday). In the 5 min this took to ponder and write, ES sold off 5 pts from 788 triple-top to 783 back to 785 back to 783. Due to such very low futures volume, quick violent unpredictable moves (up or down) such as this are very common. The catalyst for yesterday was 1) SP500 coming close to that 775-777 level bringing in many short-covers; and 2) Dock Strike Ending. Other than technical index support/pivot bounces, what catalyst might drive em higher this afternoon? I can't really think of any, can you?

 
 
 Jeff Bailey   10/9/02,  12:12:25
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Getting some sell program premium alerts and semiconductors back near resitance. Let's once again place an order to GO SHORT the broader market if the OEX trades 393. Will follow with a tight stop at 402 and target the 380-385 range to begin.

Traders may want to further limit risk with 1/2 positions.

 
 
 Jonathan Levinson  10/9/02,  12:12:06
This is what a wedge feels like- look at the 10 minute chart of the COMPX. Which way will it break? I like the downside, given that all intraday 5(3) stochastics are overbought or in bear rolls, and the TRINQ as well is overbought. The TRINQ has been in a zone normally reserved for rallies, but the bond market and absence of fed money has kept a lid on it- so Mr. Bull has been draining the tank with his pedal to the metal, going nowhere. This is just how the market feels to me right now, and constitutes my guess as to upcoming direction for the COMPX. Stops will protect my account if I'm wrong.

 
 
 Jeff Bailey   10/9/02,  12:03:01
JetBlue Airways (JBLU) $33.02 -7.6% ... gaps to a 52-week low. Traders attribute weakness to expiration of post-IPO lock up period. Estimates are that about 5 million shares come free.

 
 
 Linda Piazza  10/9/02,  11:58:28
Erik Gebhard of Altavest.com stated yesterday in an article for marketwatch.com that December gold dropped about $5 from mid-October to early November in 13 of the last fifteen years. Yesterday, December gold futures reached a three-week low. I’ve been watching the weekly charts in both $GOLD and $XAU for a while now, and both look ugly to me. I see lower highs in both charts. However, the 200-week $XAU MA at 60.65 should provide some support. Daily charts show a difference in $GOLD and $XAU. On $GOLD daily charts, stochastics, RSI, and MACD all are turning down. However, $GOLD could dip to 314.96 (the 50-dma) and still maintain its overall uptrend. This would be in line with the $5 average dip noted by Gebhard during this season. $XAU daily stochastics are trying to turn up. However, upward movement may be limited by 50 and 200-dma’s (68.03 and 69.34, respectively). These conflicting signals, the historical seasonal downtrend in gold these next two weeks, and historical resistance and MA’s sitting overhead on the $XAU will keep me out of any gold plays.

 
 
 John Seckinger  10/9/02,  11:55:54
The Dow is below the low during the first five minutes (7369), but weakness doesn't seem to be materializing (it should). The 22 PMA (five-minute average) is at 7379, and should be a pivotal area going forward. Note: Utility Index lower by 5.76%. 30-year bond higher by 22 ticks at 114-17.

 
 
 Jeff Bailey   10/9/02,  11:46:01
Semiconductor Index (SOX.X) 222.69 +3.13% ... trying to make another "run" at the morning high of 223.88 here. If successful, could bring in some more short-covering.

 
 
 Steven Price  10/9/02,  11:43:57
Reader Question: Hi, Steve-- I can appreciate your reluctance re MDT and the sinking tide. Would you apply the same logic to SYK, which has had a double top breakout on the P&F charts and is up nicely this morning. Overhead resistance, however, is close by at 63. Many thanks for all of your work on the MM. doug

Response:

Stryker (SYK): $60.71 (+0.24) SYK has been the topic of frequent discussion at OI, as a possible long play. We were hesitant because of the resistance you identified and were actually looking for a test of $60 as support. This morning's action seems to be giving us that test, with a bounce from $59.80. The other hesitation was its position in the current ascending channel and the desire to get in closer to the bottom of that channel. My logic for the MDT play can be extended to SYK, however I like the possibility of a 1/2 position in SYK after the breakout from the bullish wedge on the PnF and this morning's good relative strength. Because of overall conditions, I would wait for a full position in any stock long until we find some type of bottom in the Dow.

 
 
 Alan   10/9/02,  11:37:36
Index Futures
11:17 AM I'm so bored I noticed this: For the 3rd day in the row, 11:17 AM provided an area to cover index shorts or open a Long for a profitable trade.

 
 
 Steven Price  10/9/02,  11:33:19
Pulte Homes (PHM): $37.11 (-1.51) OI put play PHM, entered at $39.14, has found some support at $36.50. I would look for a trade of 36.25 to initiate new entries.

 
 
 Jonathan Levinson  10/9/02,  11:33:16
Like yesterday, any fuel for a rally will have to come from selling in bonds. With mutual fund reserves very low, many shorts blown out from yesterday's bounce, and no fed money, I'm watching the bond market. As long as yields stay down, so will I expect equities to do the same.

 
 
 Alan   10/9/02,  11:29:52
Index Futures
Reader Question: Reader asked if there are "Options on Futures" : Yes there are, but they are extremely thin volume wise. Equity Index Options work better in my view, such as Equity Options on : OEX, DJX, DIA, SPY, NDX

 
 
 Alan   10/9/02,  11:22:28
Index Futures
Agreement with Jeff's comment: So far, this is an "Inside Day" suitable for those that Scalp Index points. The more I look at the ES chart, the more I wonder if there's a retest of 775-777 coming later today. At 10:30 AM i wanted YM Long at 7339 coming off 7325 double bottom and missed it. 45 min later, YM is 7319 and I have no current Long interest until i see ES firmly take out 787. ES is now 11:17 AM at 784, it maintains the current bearish posture if it can't take out the 785-86 number. If currently Flat the Indices, there's not much here to trade other than fast Scalps.

 
 
 John Seckinger  10/9/02,  11:12:40
Utility Index (UTY) lower by 4.57% at 216.71. The intra-day low is 215.55. I am still a believer this index is keeping the equity markets from rallying. Speaking of equity markets, the rise to 7440 should have been the catalyst for a move to 7500. Since that attempt failed, equities could begin to drift lower.

 
 
 Steven Price  10/9/02,  11:12:06
Harman (HAR): $45.28 (-3.32) I am lowering the stop on OI put play HAR to $50.00, just above the 200-dma of $49.41

 
 
 Alan   10/9/02,  11:09:48
Index Futures
ES Lost 787 support from its 793 resistance, now retesting the 782-785 area (an area of chop both yesterday and today). Dow had rallied 100+ points, then fell 100 points. So far, ES and YM(Dow) has made higher Lows. ES and YM trend from 10:35 AM remains "down" and will need ES over 787 for the pattern to change. I tried but missed fill on YM Long at 7339 so I'm flat.

 
 
 Jeff Bailey   10/9/02,  11:08:04
Swing Trade Signals
No open orders or positions currently exist in the Swing Trade Model. To be truethful, I'm "uncertain" right now and will NOT risk capital when I'm like this.

I see downside potential in OEX at 380 MAX for a swing trade, but MY resistance of 404 has risk/reward at OEX 396 of risk=7 to potentially make 16. This is slighly better than 1:2, but with option premiums high, makes it difficult to initiate a swing trade.

With so many "inside days" in the bar charts, I get the observation that I'm not the ONLY ONE having some "decision problems" as the MARKET seems to be experiencing the same problem. "Inside days" are somewhat a depiction of short-term consolidation and perhaps agreement on a price level.

For instance... yesterday's OEX price range was 393.49-408.57 and so far today 393.80-402.88, which is "inside" yesterday's range.

Despite a gain in the NASDAQ-100 (NDX.X) today it too is trading "inside" of yesterday's range of 795.25-827.78.

Current assessment is that it is "short-covering" in the 4-lettered NASDAQ stocks bolstering gains. That's great for a bull as long as it continues. It's when it doesn't that things get dicey.

 
 
 Steven Price  10/9/02,  11:06:36
Reader Question: Steven, Last night MRK was dropped from the OI play list. This a.m. is was downgraded. I currently hold MRK puts and am wondering whether or not to bail out of them this a.m. Any thoughts?

Thanks, -Donna

Response: Merck (MRK) $44.50 -1.50 The $44.50 level is providing some real support today and I would look for a break below that level for a sign of weakness. The support at this level just isn't what we were looking for, so I'm still for closing the play near where it was entered.

 
 
 Jeff Bailey   10/9/02,  11:02:15
Duke Energy (DUK) $17.38 -4% ... trading pretty much "in line" with the Utility Index (UTY.X) 216.58 -4.6% today.

My personal trading strategy is this. After first taking 1/2 position in the DUK Jan $20 puts, I decided yesterday to "leg in" further, but this time, took a 1/2 position in the DUK Jan $15 puts. Trading strategy would be to TAKE PROFITS in my Jan $20's if DUK trades $15.00. If so, then by my calculations, the taking of PROFIT in the DUK Jan $20's would have me "worst case" at break-even if DUK were to never go below $15. However, I'm not trading these options to trade for "break even." Link

 
 
 Steven Price  10/9/02,  10:59:53
Reader Question: Mornin' Steve. Looking at MDT. Seems to be holding VERY well considering drop in market. I'm getting a bullish vertical count of approximately $63.00. Am I correct on my calculations? Also would you wait a little longer to buy calls or is its inherent strength at present indicating to go long now? TIA Grant

Medtronic (MDT): $44.20 (+0.02) I really like the intraday rebound above the 200-dma of 44.08 in OI call play MDT. However, I really don't want to fight a sinking tide. I am looking for support at $44.00 on the intraday chart. If we get that, I like new entries, but right now, it's a little schizophrenic and the rest of the market is sinking. The Biotech Index (BTK.X) is holding pretty firm as well, but a sinking Dow, below 7400 will be an anchor on any upward movement. Look for support at $44 AND a market rebound before initiating long positions. The PnF vertical count I get is $64, which is pretty close to what you are seeing.

 
 
 Jonathan Levinson  10/9/02,  10:59:25
I have just closed my MRK puts for a $100 profit, which after comms pays the week's groceries, and rolled that money into more backmonth QQQ puts.

 
 
 Linda Piazza  10/9/02,  10:57:12
Looking into market sectors, I see the Morgan Stanley Cyclicals down 10.42, DJ Transports down 28.41, and the UTY down, too. All three look ready or are testing day's or yesterday's lows.

 
 
 Alan   10/9/02,  10:46:32
Index Futures
My 10:19 AM post has the ES pivots: At 10:35 AM, ES hit the 792-93 pivot and paused from its 13 point rally from day lows. It needs to hold the 785-787 level during this shake to remain 'uptrending'. NQ/NDX/Compx remains the strongest index.

 
 
 Jonathan Levinson  10/9/02,  10:44:19
TRINQ currently .18 - deep in redline territory. The move in the COMPX should reverse shortly according to this indicator. QQQ puts could be entered here, with a stoploss at COMPX 1140.

 
 
 Jeff Bailey   10/9/02,  10:37:52
10-year YIELD ($TNX.X) 3.613% ... did hold just above yesterday's low of 3.561%, with a morning YIELD low of 3.563%. Just not enough buying to make a break lower. It too is currently trading "inside" of yesterday's YIELD range.

 
 
 Steven Price  10/9/02,  10:37:43
Whirlpool (WHR) $42.27 (-1.06) OI put play WHR, entered at $44.81 looks to be forming a bear flag on the daily chart. new entries should look for a break below today's low of $41.65 for signs of a pattern breakdown. One thing to note is that we did not get the lower volume on the formation, so it is not textbook.

 
 
 Alan   10/9/02,  10:37:19
Index Futures
Houston we have Liftoff: ES 793, YM 7425, NQ 826

 
 
 John Seckinger  10/9/02,  10:36:40
Yesterday, the Nasdaq performed a "doji" pattern on a daily chart. Since this pattern took place after a descending trend, there is a chance that the selling pressure has lessened. Is an end of trend near? Candlesticks sure thinks so.

 
 
 Jeff Bailey   10/9/02,  10:35:41
Lots of "inside days" currently setting up. In essence, many indexes/sectors trading withing yesterday's trading range.

 
 
 Jonathan Levinson  10/9/02,  10:33:04
The TRINQ is now reading .21. The COMPX is at resistance below 1135. Unless this is the beginning of a huge rally, this bounce is now very extended. The QQV is down .99 to 52.64, and yields remain well in the red.

 
 
 Alan   10/9/02,  10:31:36
Index Futures
10:18 AM Dow Cash retested it's Tue Lows of 7325. ES 780 support held. Perhaps ES Shorts were waiting to see if that 780 number was lost which would have VERY quickly taken ES down to the 775-777 "large support" and likely lower. When ES held 780 (matching Dow retest of 7325) Bids came in sending em higher. ES 789, now thru minor resistance of 785 and 787, Dow 7400 with Green NDX. The only really bullish comment one might make so far is that new Index Lower Lows were not made today. Quick moving markets : ES 790, Dow YM 7400, NQ 820 likely to now act as next level of resistance. You aren't missing much if you aren't trading this Index Chop. ES in a very tight 8 point range all morning, spending most of its time around 785. SOX Semis have now double bottomed at 210-212, currently at 220, but doesn't really breakout until over 235 (area of prior support). If I was flat, and forced to pick a direction, I would select 'up', but would like breakout over ES 790 to confirm it.

 
 
 Jeff Bailey   10/9/02,  10:26:55
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
CANCEL previous GO SHORT the market indexes at OEX at 393.00.

OEX at 396 here.

 
 
 Jeff Bailey   10/9/02,  10:24:18
Swing Trade Signals
With SOX putting together a bit of a rally, has found a recovery begin to take place in broader markets. OEX session low has been 393.80, so SWING Trade Model still flat. Will look to cancel previous GO SHORT at 393.00.

 
 
 Jeff Bailey   10/9/02,  10:22:21
I'm shocked! NASDAQ-100 and QQQ going positive while other major indexes are still in the red. In recent months and weeks, it's been the NASDAQ leading the declines. Could this be the bottom? Time will tell, but may hint that bears getting more aggressive with some short-covering on weakness.

 
 
 Alan   10/9/02,  10:19:33
Index Futures
Gap Down and Sideways: 1015 Prices: ES 785, YM(Dow) 7360s, NQ 812: Unlike Mon and Tue, when the gaps were faded, today's 10+ point ES gap down has resulted in sideways index action from the open. Yesterday ES low/high was 777/810. Tue ES spent time trading between 782-785 which has been today's range so far. Losing that support on Tue resulted in the drop to the 775-777 large support in the ES (SP500) that everyone spoke of yesterday. Repeating a post made from late last night in case you missed it: "Japan's Mizuho Holdings Inc , the world's biggest banking group by assets, plunged 11.86 percent to a lifetime low of 171,000 yen." Markets have continued to sell in the 3 min this took to write with ES 780 providing some support. Watch ES 780 and Dow cash 7325(Tue's Dow Low). If anyone took Tue's 3 PM suggested Index Short at ES 810, Dow 7635 and is still holding Short - well done. Technically speaking, there's nothing wrong with retesting a large index support number, but IF ES/SPX should lose yesterday's Lows of 777-78 and drop a large amount under it, frankly - i have no idea where the next support might be. ES 750? "Buy the Rumor, Sell the News" seems to indeed have been correct concerning the Dock Strike 'ending'. ES Pivots: 775-777, 782-785, 787, 792-93, 798-800, 805, 809-812. SP500 remains the only Key index which has retested and held it's July 24th Lows without going under it. Dow, NQ, Compx, QQQs, SOX, etc have all traded under their July Lows.

 
 
 Jeff Bailey   10/9/02,  10:19:26
Semiconductors (SOX.X) 219 +1.43% ... now leading sector gainer. Might spur a recovery on a move above near-term resistance of 222.

 
 
 Steven Price  10/9/02,  10:18:56
Johnson and Johonson (JNJ): $56.60 -1.89 A stock to keep an eye on if we get a broad market rebound is JNJ. The stock had a triple top PnF breakout on its trade of $57 on October 2. The current bullish vertical count is $74. The stock has pulled back, but found support above $56, which is the top of the formation before the breakout (and would require a trade of $55 to break). I wouldn't be entering the Dow stock before we get a broad market bounce, but it is a long candidate when we do get one. (in spite of this morning's downgrade, which cited no specific problems with the company)

 
 
 Steven Price  10/9/02,  10:10:42
Harman (HAR): $46.93 -1.67 New OI put play HAR continues to break lower and is now below congestion on the daily chart. There is some possible support at $44 from the bullish support line on the PnF, but $42 is both the bearish vertical count and the measuring objective of its H&S breakdown.

 
 
 Jeff Bailey   10/9/02,  10:09:20
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
The markets are breaking to session lows and banks are weak. GO SHORT the broader market with an OEX trade at 393. The initial stop loss will be 398. Target will be the OEX 380-385 zone.

OEX trading 394 here.

 
 
 Steven Price  10/9/02,  10:01:20
General Motors (GM): $31.92 -1.68 OI put play GM last traded below $32 in January 1993. The next support level is $30, from a couple of months prior to that. before entering new positions, let's look for intraday resistance at $32. Let's lower to current stop to 435, where there was resistance intraday yesterday.

 
 
 Jonathan Levinson  10/9/02,  09:58:14
The Fed has again refrained from open market operations today. That makes three days in a row, the first time I've seen that happen since I began following the fed this year. The markets are again on their own.

 
 
 John Seckinger  10/9/02,  09:57:43
The Utility Index (UTY) is lower by 2.83% at 220.67. There could be some sell programs underneath 219; most likely acting as a catalyst for more selling in equities. Another sector in trouble is Oil (XOI), lower by 1.43% to 428 and nearing a strong psychological level set in late-July (425).

 
 
 Jeff Bailey   10/9/02,  09:57:16
Swing Trade Signals
OEX trading 396 -1.64% here. My "mindset" is that we're just about at yesterday's lows and still wouldn't be at my original bearish target of 390. Not overly bearish or bullish here, just "neutral," and that would describe the Swing Trade Model right now, with no open position or open orders.

 
 
 Jonathan Levinson  10/9/02,  09:55:37
An interesting perspective on my single favorite indicator. Try charting the live intraday TRINQ.X on Qcharts using a 5(3) stochastic setting. It looks oversold across most timeframes. This tells me that, at least breadthwise, the COMPX is about to start trending upward, or we're nearing a relative short term top in the COMPX as the TRINQ is oversold and is either due to rise or get more oversold. At .39, it's becoming extreme, and the odds favour a reversal, which should coincide with a price decline on the COMPX.

 
 
 Jeff Bailey   10/9/02,  09:48:53
All sectors currently in the red with the exception of Gold/Silver Index (XAU.X) 62.96 +0.28%.

Eye on S&P Banks Index (BIX.X) 244.25 -1.68%, where morning low has been 243.10.

 
 
 Jonathan Levinson  10/9/02,  09:47:29
The COMPX is beginning a gap fill, and should meet strong resistance in 1130 area. The TRINQ is at the low end of neutral at .63, and bulls should be hoping for a nice slow rise, though I doubt if they'll get it. The TICK.NQ is at the low bearish end of neutral at -176. With buying in bonds and yields deep in the red (particularly the thirty year), I'm not seeing very much that looks bullish on my screen. I have just added a 1/4 position on QQQ using back month contracts, an uncharacteristically unpremeditated move. I'm setting a trailing stop on it- it just felt weird to not have at least some kind of bearish position in the Qubes (grin).

 
 
 John Seckinger  10/9/02,  09:43:54
There is a rumor that a hedge fund is being forced to cover shorts in the Treasury market due to significant losses. Concerns over Brazil also seem to be responsible for the morning rise. Furthermore, weakness in the German finance sector (-73.67 points to 2548) has also most likely attracted buyers of fixed income securities.

 
 
 John Seckinger  10/9/02,  09:32:42
Treasury Bonds are once again going to try to close above 114-31 (yesterday's high was 115-04; close 113-27). The USZ2 contract is higher by 23 ticks at 114-15. Note: The contract's high settlement is at 114-16. Looking at the yield curve, fives are up 11 while tens are higher by 14.5. This is slightly bearish for equities.

 
 
 Linda Piazza  10/9/02,  09:31:36
Reader Question: Is there a website that gives you the pivot points for the different indices? If that info could be posted on your daily market monitor, just for the three major indices, I think it would really help.

Response: I'm not aware of a website that specifically posts pivot points for the three major indices, but you'll find that information in OptionInvestor articles and Market Monitor comments. Watch specifically for Alan's comments regarding pivot points in the futures and cash indices. For today's trading, you might also review Steven Price's article last night. I've provided a link: Link

 
 
 Jeff Bailey   10/9/02,  09:27:44
Swing Trade Signals
The Swing Trade Model is currently FLAT with NO open orders in place.

First duty of the morning will be to watch and see if the 10-year YIELD ($TNX.X) 3.584% can hold the 3.56% YIELD level. If not, do not expect a BULLISH equity market play to be profiled today, unless some type of sharp reversal is seen in Treasuries.

Second duty will be to keep an eye on the S&P Bank Index (BIX.X) 248.44 and monitor a potential decline at the open for support at Friday's relative low of 244. If 244 is broken to the downside, then Monday's 52-week low of 237 is suspect and would hint that yesterday's rally in Banks was simply short-covering. I discussed the "banks" in last night's Index Trader Wrap Link

 
 
 Jonathan Levinson  10/9/02,  09:25:26
Mother Abby has emerged to guide us through these troubled investing waters. If she ever becomes truly bearish, I'll take it as a sure sign to go long.

Many emails today concerning the fed's open market operations. The following is the Federal Reserve's FAQ list, which is an excellent resource for those interested:

Link

 
 
 Jeff Bailey   10/9/02,  09:19:37
The 09:00 Update has been posted. Link

 
 
 Steven Price  10/9/02,  09:18:31
In another example of inconsistency of analysts recommendations, yesterday's upgrade of the major drug stocks by Lehman was followed by this morning's downgrades of Merck (MRK) by Raymond James and Johnson and Johnson (JNJ)by Piper Jaffray.

 
 
 Linda Piazza  10/9/02,  09:10:28
Lately, several of us have been pointing to the importance of the banking stocks and watching the BIX. Friday, the index came within 4.26 points of a low set in June 2001, but then yesterday afternoon briefly moved back above the important 250 level. Some selling formed a shadow above the last hour's candle, and the index closed at 248.44, just under the important 250 level. Overnight, Germany's Commerzbank continued to be the center of rumors, and Australian banks suffered. In the U.S., SunTrust Banks reported slow-than-expected revenue growth and pointed to non-performing assets, such as a $46 million loan to Adelphia Communications. SunTrust doesn’t expect a significant reduction in non-performing assets, and it's unlikely that SunTrust is the only bank with similar non-performing assets. Watch the 233 level this morning for signs of a further breakdown in this index, perhaps predicting a further leg down in the broader markets, too.

 
 
 Jonathan Levinson  10/9/02,  08:46:00
The futures were treading water but have fallen on negative news for HPQ and an estimates downgrade of GE, with NDX currently -7.50 and S&P -9.90. The 15 minute US Dollar Index completed an h&s formation and is now down to the 107.75 level. Island is showing a last match for QQQ at 19.95 (closed at 20.16) and GE at 22.42 (closed at 23.35). Yesterday's bounce looked like a straight asset reallocation out of bonds- there was no other source of liquidity, except perhaps for short covering, but the action was well reflected in the recovery in bond yields intraday. I remain faithful to my analysis of the fed, which has clearly been tightening money supply for the past 2 weeks. If the fed takes no action or drains again today, we will have to watch the bond market to see if equities are going to bounce again or not. A last word on the dockworkers strike- the damage caused by the economic bottleneck has yet to be accurately assessed. I've heard that Mitsubishi had to close a plant for lack of parts. Apparently they can smell rotting perishables onshore, and, of course, the markets were falling well before the strike. Bears must remain vigilant with their stops to avoid getting rallied out of their profits, but bulls should be VERY hesitant to try to pick a bottom. Just take a look at the weekly candles on any of the indices. If that doesn't do it, check out the monthlies. We have yet to see a bottom, regardless of what the pundits are telling us in the media. This is not an opinion- it is drawn on the charts.

 
 
 Alan   10/9/02,  02:09:12
Index Futures
2 AM : US futures still sideways ahead of Europe's open which is expected to gap UP. At 2 AM: ES 797, YM 7470, NQ 813.

 
 
 Alan   10/8/02,  23:28:04
Index Futures
11: PM Futures STOPS
A few emails stemming from the Futures "Hedge options with futures" article tonight were regarding STOPS. Stops with Futures are much "easier" than stops with Options. I would compare Stops in Futures with Stops on a Stock. If you go Long MSFT at 44.50, and put a Stop of "Sell at Market if Last price is 44.0 or lower" (in other words, a 50 cent stop), you will fill at 43.99 most likely on your stop. Same thing with Futures. If you are long a ES (SP500) contract at 800, and ES is now trading at 809, and you put in a Sell Stop at 805; you would 99.9999% of the time get filled at 804.75. Just as with stocks or options, there are those amazingly rare a-few-times-a-year situations, when that STOP's market order will fill you lower than your stop price by a little bit. The advantage is, ES is so very very liquid vs. an option contract, it won't be lower by very much. Taking the above ES example: if MSFT just came out with a Warn - the market would simply plunge, and rather than gettings stopped out at your 805 price, you might fill at 803 or 804. Nothing that dire and that would be worst case.

 
 
 Alan   10/8/02,  23:18:47
Index Futures
11: PM Japan is doing guess what tonight? Making yet Another 19 year Low at 8500, down 200 from yesterday. I'll be honest, I keep typing 19 years, but don't know when it becomes 20 year. US Futures following the Nikkei down, ES 797 (down from 801 415pm close level), YM (dow) 7483 -30 from close, NQ 813. Look in the morning to see if Europe followed US higher -or- followed Japan lower.

 
 
 Jeff Bailey   10/8/02,  22:49:41
The Futures Trader Wrap has been posted: Link

 
 
 Jeff Bailey   10/8/02,  22:06:59
The Swing Trade Game Plan has been posted: Link

 
 
 Jeff Bailey   10/8/02,  22:04:17
The Market Monitor has been archived. To view Tuesday's comments, simply click this Link

 
 
 Alan   10/8/02,  00:20:30
Index Futures
Japan's Mizuho Holdings Inc , the world's biggest banking group by assets, plunged 11.86 percent to a lifetime low of 171,000 yen.

Japan Government data released during afternoon trade on Tuesday showed that machinery orders tumbled 13.6 percent in August from July, much worse than expected.

 
 
 Alan   10/8/02,  00:14:16
Index Futures
Bob C has a question concerning the Futures Hedge article in Teusday Nights Column. In your short YM/Long ES hedge, why not just go long a YM contract instead of the ES contract?

Answer: If you are short 1 YM and no position in ES, and the markets at a Key pivot, (say 7500) and you wish to hedge until the market decides whether to hold support-and bounce, or lose support-and tank; it wouldn't make sense to go long 1 YM as you are currently short 1 YM (and that would take you to "flat"). YM usually has a spread of $20-25 points, ES $12.50. That's why the Long 1 ES to hedge the existing Short 1 YM. Write back Bob if that does not make sense to you. (Also, and something I forgot to mention: with some futures broker, if you are Short 1 YM, and decide to hedge with 1 Long ES - they do NOT require any extra margin on the buying of the Long 1 ES as you are simply hedging your position, and not creating any additional risk exposure. So lets say your account size allowed you to buy or sell up to 5 contracts; and you were Short 5 YM contracts - if you Bought 5 ES contracts, that's fine - as you are now "holding" 10 total contracts, 5 are short, 5 are long; and you are perfectly fine margin wise.

 
 
 Alan   10/8/02,  00:07:03
Index Futures
This data is NOT confirmed: I have read tonight (and repeat, it is not confirmed) that Japan's Banks are down 30-50% in stock price in the last 10 days. If anyone can confirm this, please email me at futures@OptionInvestor.com

 
 
 Alan   10/8/02,  00:05:05
Index Futures
From your email comments on tonight's Hedge options with Futures article, it seems the next Futures article shall be on Futures trade Pivots - Support - Resistance levels. Thanks for your comments.

 
 

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