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  Steven Price   10/10/02,  5:20:01 PM
Reader Question: Hi Steve, I continue to love your work. I just shorted KSS at 49.84 on the bounce from 44. What do you think. Where is a good place for a stop. Thanks, LB

Response : Kohl Stores (KSS) $49.45 (-5.00) The problem I had with shorting KSS from this point is the risk/reward, which leads me to your question. My next downside target would be around $42, which is last September's low ($41.95), and the most logical stop loss on the play is probably $56.50, which is above intraday resistance from Wednesday. It actually traded up to $56.49 in the first part of the day, but then encountered resistance at $56 afterward. An alternative is $50, where it failed its rebound today. However, $50 doesn't give much room from today's close. Had the stock sunk lower into the close I would have used $50. This is my problem with the trade - I would be risking $6.50 to make $7 and I usually look for better ratios. If I were in the trade already, I guess I would simply figure out how much I was personally willing to risk, in order to possibly capture the profit on my downside target, and place my stop there.

 
 
  Jeff Bailey   10/10/02,  4:25:27 PM
War vote ... President Bush says the House voted 296-133 to approve the resolution, which would allow the president to pursue military options if the United Nations-backed diplomacy fails. The Senate will now vote and many expect the Senate to follow the House's lead.

 
 
  Jeff Bailey   10/10/02,  4:21:49 PM
Utilities (UTY.X) 224.11 +8.61% ... Sector bounced from 52-week lows today. Just before the close, ratings agency Fitch contends that last month's decision that El Paso (NYSE:EP) $5.38 -2.35% illegally withheld natural gas supplies during the California energy crisis has clouded the pipeline sector, possibly making it harder for the company's to refinance debt and pay for capital expenditures. Until the issue is resolved, there will be "significant negative overhang" in capital markets.

For me (Jeff Bailey) these comments perhaps make sense as we've seen some secondary stock offerings from the utility stocks in recent weeks. Maybe they have tried to go to the debt markets to issue bonds at lower rates, but the current risks too great to get a coupon on the bond that justifies. When you can't float a bond to refinance maturing debt, next choice is the stock market.

 
 
  Alan   10/10/02,  4:01:40 PM
Index Futures
"they" did indeed want ES/SPX to close over 800 and Dow over 7500 for the 4 PM Cash Close. Another one-day bear market today - or - the start of something more long lasting ? Tune in tomorrow. GE earnings and tomorrow's economic reports will likely set the morning tone.

 
 
  Alan   10/10/02,  3:58:43 PM
Index Futures
Last comment re the ES 805 Index Short: if any daytraders are still short 1/2 size from 805, I would hold it with a stop at 804 (to lock in 1 point gain) and see what happens after the 4pm cash close. IF flat - I would stay flat into the close.

 
 
  Jeff Bailey   10/10/02,  3:58:26 PM
Sometimes my technical analysis is "too complex" Linda, but the relationship between Treasuries and Stocks is about the most simplistic analysis I've ever pointed out to traders/investors. It was clear back in early 2000 when the 30-year YIELD broke upward trend when I became concerned for stock. During that time, it was "crazy" to think a break in upward YIELD trend could possible be a signal that stocks might be about to suffer the consequence. However, for supply/demand traders/investor, the bond market now holds the supply of cash, that stocks so desperately demand.

 
 
  Alan   10/10/02,  3:55:32 PM
Index Futures
Comment re Futures closes from 4 PM to 4:15PM The last few days, when the afternoon was rather Bearish - from 355pm to 415pm saw futures upticking on last-minute end of day covers. I wonder if today from 4pm to 415 PM brings the opposite? which would be selling and would be the reverse of today's afternoon trend.

 
 
  Linda Piazza   10/10/02,  3:53:05 PM
Jeff's email market update was just talking about correlating bond activity and equity activity. He suggested that we should see money coming out of the 30-years if equities are going to continue to rise. (Hope I'm not oversimplifying here, Jeff.) It's also interesting to correlate this with gold prices. A while ago, Jonathan sent me some research that postulated that the only condition not yet met for a gold bull market is that the upward momentum in bonds must slow. Looking at gold, the recent decline doesn't yet predict a slowdown in bond prices.

 
 
  Alan   10/10/02,  3:52:48 PM
Index Futures
GE $22.47 is the big earnings report for tomorrow morning (pre open)

 
 
  Alan   10/10/02,  3:49:09 PM
Index Futures
News just came out on Pres. Bush making a statement at 4 PM re: the House vote on Iraq, sad comment, but do you notice ES selling picking up the moment the news on Pres. Bush speaking came out ? ES did briefly dip under 800 to 799s and now will have the expected ES 800 / Dow Cash 7500 battle into the close.

 
 
  Jeff Bailey   10/10/02,  3:36:14 PM
Just a friendly poke Alan... I agree with you entirely. Can't chase this move on a day-trader basis, but even if I felt conviction on the bullish side from the swing-trade of things, I'd have pulled the trigger. Maybe tomorrow? Lots of shorts seem to be jittery about something..... Never know how long a short-covering rally can last. You're comments are well served to a bear that may have been complacent though... he/she has to be wondering.... should I close out now, or hope for a pullback. Things can change quickly. There's been plenty of bad news in recent weeks and a bear sure doesn't want any good news.

 
 
  Alan   10/10/02,  3:35:15 PM
Index Futures
Index Short: ES 801, YM 7490, NQ 850: Raise your Profit stop to lock in 2 points from the short entry at 804.75/805. ES may hold 800 - or - losing it could bring in some pretty hard selling. This gets you 2 points at least no matter what happens.

 
 
  Jeff Bailey   10/10/02,  3:33:02 PM
S&P Banks Index (BIX.X) 250.59 +5.03% ... strong day from the sector, but still just below my 19.1% retracement of 252.61 and keeps me cautious on the bullish side.

Yep.... I missed the move off the lows in the indexes, but I've missed about 15 of those the past two years.

 
 
  Alan   10/10/02,  3:31:48 PM
Index Futures
Index Short: Once ES lost 805, that triggered an Index Short. Whether or not it becomes a 1-3 pt short scalp - or something to hold for a bit remains unknown. If you took that short signal, put in a stop to lock in at least 1 point gain from your entry from either 804.75 or 805.00

 
 
  Alan   10/10/02,  3:28:34 PM
Index Futures
That's what I had meant Jeff: thanks for adding the "daytrader" in there. At ES 806, Dow cash 7550; it was simply at too high a level when that post was made to consider opening a new long at those levels at the current moment.

 
 
  Jeff Bailey   10/10/02,  3:28:02 PM
Reverse/head and shoulders potential once again in the 60-minute charts of the SPX, OEX, with neckline right in here near SPX 805. "Last time" this was observed, both broke their potential right shoulders at SPX 816 and fell lower. Currently, potential "right shoulder" could form near SPX 780 on 60-minute chart.

I prefer to see head and shoulders and reverse head and shoulders in the daily charts, as they tend to provide more consitent pattern recognition and get more market participants involved.

 
 
  Alan   10/10/02,  3:24:02 PM
Index Futures
My only regret today was an appointment causing me to miss the open today, not getting back till 11 AM [grin]

 
 
  Jeff Bailey   10/10/02,  3:23:01 PM
Too late to chase long??? Dow Industrials and S&P 500 both traded 52-week lows today. Day trader's are "too late," but plenty of time for swing traders to get some better entry points.

 
 
  Alan   10/10/02,  3:20:05 PM
Index Futures
ES holding 800 at 3pm as indeed caused more short covering. ES 807, Dow Cash 7560, NQ 854. If flat, too late to chase long, too dangerous to open a short; but will look for ES exhaustion top if it loses 805. ES stalled right under the 809-812 extreme target for today.

 
 
  Jeff Bailey   10/10/02,  3:19:38 PM
The 03:15 Update has been posted. Link

 
 
  Jonathan Levinson   10/10/02,  3:12:19 PM
There's a descending trendline on the daily COMPX candles that can be viewed on the 60 minute chart connecting the highs. It projects to around 1180-85. The bearish ascending wedge is point to within a few points of that level. I expect the summit push to start at 1175 and end at 1185. A break past that level will be a significant bullish victory according to my charts.

 
 
  Alan   10/10/02,  3:05:52 PM
Index Futures
Day highs here near 3pm : ES 804s, YM 7518, Dow cash 7536, NQ 853

 
 
  Alan   10/10/02,  3:03:48 PM
Index Futures
One gets the feeling "they" are doing everything they can to keep ES over 800 and Dow Cash over 7500. IF, repeat IF ES firmly loses the 798-80 area, selling on profit taking could come in quickly. IF ES holds 800, we may see more shorts covering sending it to next higher resistance at ES 805/Dow cash 7550. Merely as FYI, above those levels we have ES 809-812, Dow cash 7600

 
 
  Jonathan Levinson   10/10/02,  3:01:38 PM
The bearish ascending wedge at which I'm staring is best viewed on the 15 minute COMPX chart, but it's also appeared on the QQQ and SPX. It projects upward to approximately 1175, and should break south. Falling volume as the price rises will confirm the validity of the pattern, which is reliable 76% of the time according to Bolkowski's Encyclopedia of Chart Patterns.

 
 
  Alan   10/10/02,  2:51:28 PM
Index Futures
A moment ago, ES futures had a simply huge offer at 800.00 and it was "eaten" meaning fully absorbed sending ES to touch 801 again. Once again, ES 800 and Dow 7500 will control the close's direction; numbers i'm sure you are tired of seeing me type.

 
 
  Alan   10/10/02,  2:48:43 PM
Index Futures
Index Short: Triggered 800-801, gain of 3-5 points on 1/2 position at 795-96, stop hit at 799 on the rest (gain 1-2 points), now Flat. Next upside target would be ES 805 and Dow 7550.

 
 
  Alan   10/10/02,  2:32:38 PM
Index Futures
ES 795, YM 7429, NQ 844
ES 795 and Dow cash 7450 will either hold or it won't. No one "knows". I'm changing my prior post accordingly. If you took the Index Short at ES 800-801, take some profit here around 795-96, this would be about a gain of about 10-15% depending on Margin. I would then lower my stop to about 799 on any remaining shorts from 800-801 with an eye on possibly getting "near" the 793 to cover the rest.

 
 
  Jeff Bailey   10/10/02,  2:31:07 PM
QQQ $20.94 +4.3% ... has tested uppwer end of my downward regression at $21.20. Short-term bear can look short in here, with tight stop just above $21.35. Thinking would be, if BIX breaks lower after testing resistance, a slide lower is possible. QQQ perhaps best "low risk" and "high potential" return index short here at downward trend.

 
 
  Jonathan Levinson   10/10/02,  2:26:19 PM
Having to leave the screen for an appointment and being able only to get one quote each ten minutes or so with the celphone is an experience I hope not to repeat for a very long time. During this time, the COMPX has broken and then returned to the 1155 s/r level, printing a day high at 1162. The intraday 60 minute 5(3) is in the process of printing a bearish cross, and the TRINQ has already eased slightly off its lows of the day, currently .22. The low of .13 was a level I had only seen once before, back when WCOM was at .06 and was setting volume records. The TICK.NQ is at -77, and yields are off their highs of the day. Next support should be at 1140.

 
 
  Alan   10/10/02,  2:18:45 PM
Index Futures
Index Trade signal so far has provided about 3-4 ES points, 35-50 Dow points. IF ES gets NEAR the 793 level, consider taking 1/2 short profits and hold the rest at breakeven.

 
 
  Jeff Bailey   10/10/02,  2:17:28 PM
S&P Banks Index (BIX.X) 249.75 +4.69% ... trades a daily high of 252.20, which is a "stinking" penny above my 19.1% retracement of 252.19. Is somebody playing games? Will look for 60-minute support at the 21-hour SMA of 245. The BIX hasn't been able to hold that 21-hour SMA for sometime, but if it can on a test later today or even tomorrow, this might give me some conviction to try and "pick a bottom" for bullish broader market entry. This might equate with OEX 398, SPX 788, DJX 74.00, NDX 830 as pullback entry points.

 
 
  Alan   10/10/02,  2:12:40 PM
Index Futures
Index Trade: IF ES Loses 795, next lower target on short would be the bottom of the 792-795 range, perhaps 793

 
 
  Alan   10/10/02,  2:08:35 PM
Index Futures
Index Trade: Index shorts from ES 800 level and Dow cash 7500-10 level; if you shorted those levels, 'maintain'

 
 
  Jeff Bailey   10/10/02,  2:03:20 PM
YIELD Calls I like 1/4 positions in the 30-year Treasury YIELD ($TYX) calls. The TYX Mar. 47.50 (tyxcw) are offered $3.90 here. For an equity bull, you would want YIELD to move higher here and have bond market selling "riskiest" bond, but also the highest YIELDING bond. Note: This bond's YIELD reached a recent low on 09/24/02.

 
 
  Jeff Bailey   10/10/02,  1:57:00 PM
Swing Trade Signals
Swing Trade Model remains flat. Will watch the close and if equities can hold these highs, then may look for BULLISH entry. BUT... LET IT BE KNOWN, that TODAY'S lows are most likely only level for technical stop. As such, would ONLY consider partial positions.

BIX is 251.85, and finding some resistance. Intra-day technicals showed OEX, SPX pausing near their resistance levels and today's bullish move still looks tentative.

All sectors except Gold/Silver (XAU.X) 60.16 -2.41% are in the green. What should have a BULL cautious is that the LEADERSHIP groups as it relates to percentage gain are those that have been the WEAKEST groups in recent months/weeks and hints that short-covering is most likely BULK of buyers.

 
 
  Alan   10/10/02,  1:55:44 PM
Index Futures
If you were nimble and quick, an ES short SCALP was avaible at the 800 level for 2 points. Logical to do a stop run on shorts to get ES over 801 and Dow over 7500. ES next resistance is 805, Dow 7550-70. If flat, and thinking 'short', consider waiting until ES loses 800 and Dow cash 7500;

 
 
  Jeff Bailey   10/10/02,  1:51:48 PM
S&P Banks Index (BIX.X) 252.10 +5.68% ... getting upside alert here at 19.1% retracement. If the BIX can begin to make a move higher, then look for broader market bullishness to build. This matches Monday's highs, so tentative here, but near-term a positive sign begins to shape.

 
 
  Steven Price   10/10/02,  1:35:04 PM
Reader Question: Mornin' Steve. With yahoo's numbers and outlook, would you consider a possible call play here. I've got the vertical count at approximately 27.00 from the double top breakout. Your kind and wise words would be appreciated. TIA Grant

Response: Yahoo (YHOO) $12.12 (+2.14) Yahoo's 21% gain this morning took it right up against the bearish resistance line on the PnF ($12). $12.50 is the breakout level. However, even with that breakout, there is a lot of resistance on the daily chart between this level and $15, then again at $16. I get a vertical count of $18.50 on the stock (remember these are 0.50 boxes under $20). While I could see it eventually reaching its vertical count, the amount of resistance along the way will most likely not be kind to option premiums. I'd pass on this one as a long for those reasons.

 
 
  Alan   10/10/02,  1:28:16 PM
Index Futures
MSFT 46.0, NQ 850 also confirming this may be a good "exit Longs/open Scalp? shorts"

 
 
  Alan   10/10/02,  1:26:25 PM
Index Futures
Boom ! ES 800 / Dow 7500 : Perfect place to exit longs -or- get ready to open a short

 
 
  Steven Price   10/10/02,  1:20:22 PM
I'm having trouble finding anything attractive at the moment. I don't believe in the rally yet, but I also don't want to get caught shorting a short-covering rally. For now, I'll watch from the sidelines.

 
 
  John Seckinger   10/10/02,  12:48:02 PM
With the Dow higher by 140-points at 7427, there is still a chance the 7459 high will be re-tested. Of course, the Dow needs to clear the last relative high (five minute chart) of 7433 first and trigger some stops. Above 7427, my objectives would be only for a move to the 7475-7490 range. The yield curve is showing a 10-tick flattener, but that is only mildly bullish for equities. The 30-year is lower by 23 ticks; however, bulls might wait until bonds fall another 12 ticks before placing bids in equities. The catalyst? Possibly Gold, lower by over 4% at 59.06.

 
 
  Jeff Bailey   10/10/02,  12:46:38 PM
Swing Trade Signals
The Swing Trade Model remains FLAT with no open orders. OEX as a benchmark trades 400.32 and major indexes have been range-bound for last hour.

Intra-day technicals do show the QQQ finding some support at the $20.65 level, which had been my "potential" reverse head and shoulder level that when the QQQ broke this level on October 4th, the Q's fell to new lows. This $20.65 level did serve as resistance until today, when broken back to the upside. On intra-day basis, a break much below the $20.60 level hints short-covering may be lessening. Current resistance is daily high of $20.98 and upper-end of downward regression at $21.20.

QQQ and NDX have been relative strength the past two sessions, and currently I think bulls monitor for leadership near-term or at least aggression from bears covering shorts.

 
 
  Alan   10/10/02,  12:42:48 PM
Index Futures
Thinking out loud with afternoon / close thoughts: I would view today as a positive bullish day if ES closes over 785, and Dow over 7350. If this rally falls apart this afternoon taking ES back down towards the 775-77 level, Dow 7300 - that would be another story entirely. The obvious upper levels of ES 800 / Dow 7500 are the next levels to watch.

 
 
  Jonathan Levinson   10/10/02,  12:37:56 PM
Unfortunately there's no way to play this COMPX level without stops. The TRINQ flatlined and is drifting higher to .19, coinciding with a 10 point fade in the COMPX price, but it's hardly the quick and ugly blowoff top that I was expecting. The put to call ratio, due to update in a moment, was 1.07 30 minutes ago- far too high for a happy bear. The TICK.NQ is more negative at -187. This conflict of indicators just means to keep the stops snug and don't get too committed to your short term view of the future.

 
 
  Alan   10/10/02,  12:34:59 PM
Index Futures
One thought on the Retailers warning: Is it possible that consumers are still spending, but simply there are now too many retailers out there in the Malls and that a Glut has formed. I mean how many different stores are needed in one mall to buy a pair of Jeans.

 
 
  Linda Piazza   10/10/02,  12:30:03 PM
COSTCO: With COST now at 32.15, I hope those of you in put or short plays took the earlier suggestion to snug down stops and watch Tuesday's low for signs of a bounce. Volume today is over 10,000,000, swamping the 30-day average volume of just over five million. That signals accumulation. For three days, volume patterns have been flashing trouble signs for this stock. Volume has been rising with an increase in price and decreasing with a decrease in price, the exact opposite of what you want to see for a put play. With a dip from 32.24 on Wednesday's rollover to 28.75 this morning, those more aggressive than I am still could have collected decent profits. Although COST is still on a sell signal on the P&F charts, a move above the 22-dma at 32.75 and the 50-dma at 33.41 would be yet another signal that sentiment has changed.

 
 
  Alan   10/10/02,  12:26:37 PM
Index Futures
ES rallied 7 pts off it's 787 support, but now has stalled again under the 795 resistance. A lot of chop between 792-795 is not un-expected. If this 792 holds and we take out 795 firmly, would make a Higher Low for the morning. ES 792 is the 50% retracement of the day high at 797 and 11:50 AM low of 787.

 
 
  Alan   10/10/02,  12:22:50 PM
Index Futures
Jeff, it's hard to see on my charts but what was OEX's exact July lows? 387?

 
 
  Alan   10/10/02,  12:20:02 PM
Index Futures
Europen markets have followed the US markets up are now all Green for the Day.

 
 
  John Seckinger   10/10/02,  12:13:32 PM
Checking the Intermarket Relationships: Gold lower by 3.71%, Dollar higher. Bonds weak, Dow higher. Utilities and Oil higher (short-covering), Dow higher (short-covering). Note: Sox higher by 4.23%, and QQQ's up over 3.7%. Looking at the Dow, the 7375 only kind of held (low on pullback was 7365). Therefore, even though I still expect higher prices due to the P-distribution pattern, I would not be risking a full position (half at most). It is interesting how 7400 remains pivotal. Trade carefully. Longs will most likely take profits en masse once under 7350.

 
 
  Alan   10/10/02,  12:06:39 PM
Index Futures
Hedge: Merely as information from last trade: If YM short from Dow Cash 7418, when ES traded at what I thought may have been a support (787), I could have hedged the YM short on a 1:1 ratio by going Long ES at 787 until the market decided which way to go from that pivot support. That would have locked in profit on the short and give me time to decide what to do. I did not do that as the original goal of the YM short (as posted) was simply a "Short Scalp" and the 35-50 point target area was hit.

 
 
  Alan   10/10/02,  12:02:22 PM
Index Futures
ES 782-785 is now a support level, and with ES selling off 10 points from it's 11 AM highs (797 to the 787 we saw a moment ago) was another reason I decided to just take the Short Scalp vs. holding it. Market is still in a bullish tone for the day overall, and would need to lose that ES 782-785 / Dow 7325-7350 area to change my view.

 
 
  Alan   10/10/02,  11:59:23 AM
Index Futures
ES losing 790 confirmed the Dow 7418-20 short, and with Dow currently at 7367, that Short Scalp resulted in a 35-50 point gain so the point target was hit; and I've covered to Flat.

 
 
  Alan   10/10/02,  11:54:12 AM
Index Futures
I define a Dow YM short scalp with a target of about 35 points, $175 (35 points x $5 per Dow point), which is about a 10% gain depending on the margin your futures broker requires.

 
 
  Jeff Bailey   10/10/02,  11:50:06 AM
Swing Trade Signals
After juuust hitting my OEX stop of 402, the OEX traded a high of 402.15. Based from retracement levels, the SPX 791.98 +1.95% still trades just under my 19.1% retracement level of 798.80. Traders that may have had stops just above SPX 800 at 802 may still be holding short.

I'm not thinking current rally should have Index BEARS too jittery, and can still look for entry points on this rally, with some tight stops just above those levels discussed. I thing the lagging in Retail is biggest thing that keeps SPX in check here.

S&P Banks Index (BIX.X) 247.47 +3.74% still range bound between our retracement levels of 252-237. Today's rebound now shows 4-days consolidation within this range. Still thing the banks will dictate more MEANINGFUL market direction.

 
 
  Jonathan Levinson   10/10/02,  11:46:39 AM
The TRINQ is still buried, now reading an astounding .13. I'm bidding on some December QQQ puts, a 1/8th position only. This about sums up my conviction in the play. COMPX 1150 has held so far, and 1165 seems miles away with the TRINQ so low- kind of like reaching for the cookie jar until on tip toe, then trying to jump higher from there. Unless there's a new rally happening, fueled by short covering and the fed's one-day (overnight) 4.5B injection, I'll bet against this overbought condition as measured by the TRINQ, TICK.NQ (-219) and the stochastics, which are beginning their bearish crosses and topped out across all intraday timeframes.

 
 
  Alan   10/10/02,  11:43:12 AM
Index Futures
so far ES now making Lower Highs: 798, 795, and now 793. On the bullish side, Dow cash held 7400.

 
 
  Steven Price   10/10/02,  11:41:28 AM
Reader Question: Steven, What do you think bout shorting cdw computer center inc (CDWC). It broke breaish traingle? Thanks AP

Response: CDW Computer Centers (CDWC) $42.65 (+1.78) This stock has an awful lot of support at $40. A trade of $40.00 would give a sell signal on the PnF chart, and I would look for resistance there before shorting. That's a couple of dollars away right now, butif it manages to break down below that level, then I would consider it.

 
 
  John Seckinger   10/10/02,  11:39:29 AM
Testing the bullish conviction. For those of you who follow the "P-distribution" theory I outlined many months ago, the Dow needs to hold roughly 7375. If not, I would be slighly nervous being long. Here is the link to the article: Link

 
 
  Alan   10/10/02,  11:34:20 AM
Index Futures
Opened a Dow short at Dow Cash 7418 for a Scalp (or will hold it if ES firmly loses 790)

 
 
  Alan   10/10/02,  11:30:14 AM
Index Futures
ES 794, YM 7416, NQ 844: Moral of this morning is : be very careful trying to Short into a period of "Shorts Covering". If no NEW ES/YM high is made here, and if Flat, consider opening a short with tight stop. ES 792-795 currently: recall how ES 782-785 was a area of great chop? Now we have the same situation except 10 ES points higher.

 
 
  John Seckinger   10/10/02,  11:29:54 AM
The Dow, even with today's rally, is in the process of completing six trading sessions with lower highs and lower lows. Yesterday's high was at 7500, and this level will have to be penetrated today if the downward pattern is to be broken.

 
 
  Alan   10/10/02,  11:24:14 AM
Index Futures
ES 790 and Dow Cash 7400 Hold. Current ES 793s-794, Dow 7430. Futures traders will now watch to see if a Higher High can be made or not; if they don't; may see a bit more Long profit taking ahead of the Lunch hour. NQ (NDX futures) make a new day high at 845, next resistance for NQ is 850-853.

 
 
  John Seckinger   10/10/02,  11:16:41 AM
Thinking out loud: It was rumored a few days ago that Soros was heavily buying Treasuries because he felt the ECB needed to ease. Well, they didn't ease. Therefore, traders in the bond pits most likely went for the jugular (trying to front run Soros) and sold bonds. And it was this selling in bonds that led to equity shorts being extra nervous and quick to cover this morning. Who knows? Maybe Soros was "building the chart" this morning in the USZ2 contract so traders wouldn't sell immediately. Note: 30-year Bonds lower by 1 full point at 113-19.

 
 
  Alan   10/10/02,  11:13:43 AM
Index Futures
Dow ran 250 pts in ONE HOUR ! ES rallied 30 points in ONE hour !
Bear market rallies can indeed be most impressive
Market Top so far: Dow 7450, ES 797 (as it stopped right under the next resistance of 798-800), NQ 843. Watch to see if ES 790 and Dow cash 7400 hold. If they do, may bring in more covers, if they are firmly lost, Long profit taking from this morning's buys may occur.
Trend from 10 to 11 AM : UP very hard Trend from 11 AM to current: Down slightly (ES lower by 5, Dow by 50)

 
 
  Jeff Bailey   10/10/02,  11:08:41 AM
Swing Trade Signals
While my "gut feel" is that I set my stop too tight, can't question things here. Gave MARKET every opportunity to collapse, but didn't get cooperation from the Financials. From here on, not looking to try and short/put any breakdowns. Did it twice for "break-even" and now loss. Seems to be just enough shorts looking to cover on weakness to negate a sharp move to targets. With option premiums high, not anxious to profile trades ahead of the weekend and I think markets rather range bound into the weekend. If I could get an OEX move up toward 410-415 range, might think of short-term bearish trade, with a target near current levels into Friday's close, but that would be more "short-term" and not "Swing-Trade" type of trade.

 
 
  John Seckinger   10/10/02,  11:06:32 AM
One of trading patterns outlined in the "Open to Close" Traders Corner article a few days ago was the "open test-drive" scenario, which seems to be happening in the Dow (as well as other equities). The market(s) opened higher, "tested" new lows, and then "drove" back through the opening range. The opening of 7286 should not be tested again, and an underpinning bid should remain throughout the session.

 
 
  Alan   10/10/02,  11:02:40 AM
Index Futures
John, I know what you mean. The last 30 minutes, internet backbone problems are causing my quotes to turn off and on, or lag by 1-2 minutes. Dow now +250 off it's 10 AM lows. We all know the next higher numbers by now don't we? [grin] ES 800 and Dow 7500. My guess is we see some profit taking under those numbers as by now, everyone knows what a large resistance they will likely be on the first attempt to pierce thru them.

 
 
  Jeff Bailey   10/10/02,  11:01:25 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The rally looks to be building and has the OEX trading 402.00, which STOPS OUT our go SHORT the Swing Trader Model from OEX 393 here at OEX 402.00 (10:59:25)

SPY=80 , SPX=795, DIA=74.86, DJX=74.54, NDX=838 QQQ=20.87

 
 
  Jonathan Levinson   10/10/02,  11:01:06 AM
Quite a move on the COMPX with 1135 resistance blown out rather quickly. Amazing what 4.5B can do for a market. I'm receiving numerous questions about shorting this. I'd be very patient before standing in front of this train. The intraday 5(3) stochastics are maxed out but show no sign of rolling over. With resistance cleared, the next stop looks like COMPX 1165 to me. The TRINQ is now buried at .13 and 1165 is looking very far off given how overbought the TRINQ is, particularly with a TICK.NQ at -44. But better safe than sorry. Gunslingers can try to time a shorter time frame rollover with a very tight stop and hope to catch the top, but 1135 will act as short term support on the way down, and this impulsive move might only pause on the way up. Caution is in order.

 
 
  John Seckinger   10/10/02,  10:58:46 AM
Nothing is more fun to wake up to serious computer problems, especially when you are long the yield curve and the radio says S&P Futures are higher. Speaking of bonds, corporates within the retail sector continue to widen (example: Target) and this weakness should continue to pressure securities as well (intermediate term).

 
 
  Alan   10/10/02,  10:56:31 AM
Index Futures
Very shallow profit taking from Dow 7400. Current trend from 10 AM remains :Buy the Dips. Watch Dow cash 7400, ES 790 for a sense of market direction, either up or down.

 
 
  Jeff Bailey   10/10/02,  10:52:02 AM
Swing Trade Signals
After morning lows, market finds a bid and stocks at their best levels of the session.

For second session, NASDAQ-100 and QQQ show some leadership, both up better than 2.5% here.

OEX trades 398.53 +1.47%, after breaking below yesterday's low and traded session low of 387.80, but not into our target range of 380-385. Swing Trader Model still SHORT the broader markets from OEX 393, STOP OEX 402.00.

S&P Banks Index (BIX.X) 247.39 +3.71% not cooperating for a bear at this point and S&P Retail Index (RLX.X) 253.05 -0.47% off its lows of 244.92.

 
 
  Steven Price   10/10/02,  10:50:38 AM
The bounce in the Dow at 7197 came at the downside measuring objective (actually 7180-7190) of the H&S pattern breakdown. you can view the patterns by clicking here. Link

 
 
  Alan   10/10/02,  10:49:46 AM
Index Futures
For 4 straight days; the Dow had traded MINUS 200 points from it's day high to day low. Today, the Dow has traded POSITIVE 200 points from it's day lows to current level (7200 to 7400). ES 790 (current level) matches the Wed afternoon 2pm high; next ES up levels are: 793-95, 798-800. Would expect some profit taking to come here at Dow 7400.

 
 
  Steven Price   10/10/02,  10:41:20 AM
C.R. Bard (BCR): $51.75 OI put play BCR, picked at $51.70, bounced right above $50 this morning, at $50.07. I would probably wait for a break under $50 to initiate shorts if the market fades.

 
 
  Alan   10/10/02,  10:39:50 AM
Index Futures
A one-month observation: morning of Sept. 11th: ES opened at 930, Dow 8750. Today's Lows of ES 767 and Dow 7200 are 163 ES pts / 1550 Dow points Under those levels from 1-month ago. No telling how many month-long shorts are still holding or have started to cover; but remember that bear market rallies can be very impressive.

 
 
  Alan   10/10/02,  10:34:11 AM
Index Futures
Notice how the Dow high at 9:40 AM was 7325 (a prior mid-size support level) which acted as resistance at that point, ES finally lost 775 to hit a 10 AM low of 767. My guess is the Dow Cash hitting the century mark of 7200 lead to some covers forming a Dow 120+ rally, ES + 12pt rally. Dow once again has paused under that 7325 number. Yesterday, ES 782-785 was an area of a great many trades and likely to be the next higher area of resistance today.

 
 
  Jonathan Levinson   10/10/02,  10:16:25 AM
The Plunge Protection Team has arrived. The fed has paritally renewed the $3B expiring 28 day repos today in the amount of $2B, but is adding $4.5B in overnight repos. With no overnight or other expirations today, this $4.5B is fresh money. I expect there to be a floor under the market, and whether it amounds to a lessening of the slope of the slide, or an outright bounce, the market has now found a new short term source of liquidity today.

 
 
  Steven Price   10/10/02,  10:11:43 AM
I realize that "woulda, coulda, shoulda" is a useless feeling to dwell on, but I can't help the frustration that comes with seeing Kohl's (KSS)$45.45 down $9, after we were stopped out on our short play at $61.25 on a one day Dow rally.

 
 
  John Seckinger   10/10/02,  10:10:05 AM
Having DSL problems for last hour. Should be fully-functioning shortly.

 
 
  Jeff Bailey   10/10/02,  10:09:25 AM
Most BEARISH technical of the day in my book. The NYSE Composite (NYA.X) 417.29 -0.9% breaks to 52-week low and violates low of 418.82. For me, this is the "institutional" market average. Slow slide on break lower, but hints to me that institutions aren't doing, or able, to do a lot of buying.

 
 
  Steven Price   10/10/02,  10:05:52 AM
Harman (HAR): $45.80 (-1.10) Conservative traders contemplating getting into HAR short at this level might want to wait for a test of $45.00, where it bounced yesterday. The put play was picked at $48.60 and looks bearish down to $42, but with yesterday's bounce, it is something to watch out for.

 
 
  Jeff Bailey   10/10/02,  10:01:54 AM
Swing Trade Signals
OEX trades 390. Quick review is that this way my original bearish target from bearish trader earlier in the week, where the Swing Trade Model was stopped out for "break-even" at OEX 399. We never got our target during that trade, but now that "original" target is met, we sense weakness still building.

Just when OEX trades 390, QQQ breaks its upward trend at $19.95.

 
 
  Jonathan Levinson   10/10/02,  10:01:30 AM
The sellers have arrived! TRINQ has jumped to .77, SPX is trading below The Number. It happened fast.

 
 
  Steven Price   10/10/02,  10:00:54 AM
Whirlpool (WHR) $39.50 (-1.10) I like the break under 40 for short entries on this OI put play, along withthe SPX breakdown below July's 775 intraday low. Conservative traders may want to wait for a re-test of $40 to the upside as resistance before jumping in.

 
 
  Jeff Bailey   10/10/02,  9:58:24 AM
Swing Trade Signals
Dow Industrials (INDU) 7,254 -0.43% and breaking to another 52-week low. Look for this type of action from the worlds most often-quoted market average to weigh on investor psychology.

 
 
  Steven Price   10/10/02,  9:56:17 AM
Reader Question:Steven, Went to the scans on StockCharts.com and examined the PnF triple-bottom results. Cintas (CTAS; $39.6 10/9/02) looks like a good candidate with a bearish target of $35 and shows some support at the $38 dollar level. Looking at the 3 month daily chart, I "see" a H&S pattern between Aug 22 and Sep 15 (I'm new at this H&S interpretation) with a target of $33.88. Does my analysis seem reasonable? Mark

Response: Cintas (CTAS) $40.11 (+0.51) Would you like a job? Your analysis is accurate. However, before shorting the stock, I'd like to know the reason for yesterday's big drop and I'd also watch the intraday chart for signs of resistance at $40. A couple more things to watch out for: The PnF "bear trap," which is a one box breakdown on a triple bottom and then a quick reversal up, as the last sellers are exhausted (another box down gets us past this). Also look for PnF resistance underneath the breakdown level (in this case $41). While a trade of $43 would be required for a reversal, and Jeff B. might not give much credibility to a trade of $41, I personally think that when a breakdown matches a round number like $40, which has some psychological implications, I'd like to see that number acting as resistance.

 
 
  Jeff Bailey   10/10/02,  9:53:53 AM
QQQ $20.20 +0.74% ... showing a gain here, but just as yesterday was an "inside day" current intra-day range of $20.37-$20.06 is also "inside" of yesterday's range. In last night's Swing Trade Wrap, showed 60-minute interval chart of QQQ with short-term upward trend developing. Would take a trade at about $19.95 to have this upward trend broken.

 
 
  Linda Piazza   10/10/02,  9:52:49 AM
COSTCO: 29.47 -0.98. Although I was cautious about volume considerations on the rollover, COST continues its downward trend and now has moved into the gap from Tuesday's close to Wednesday's open. COST reported better-than-expected earnings, but lighter-than-expected revenue. I suspect it's being carried down by the weakness engendered by multiple retail companies reporting disappointing earnings or revenues today. Watch Tuesday's low for signs of a bounce. A further caution is tomorrow's retail sales figures. They should be disappointing as well. However, you must consider the is-it-already-built-in factor. There may be a sell-the-rumor, buy-the-fact effect in this beaten-down sector with the release of those numbers. Now that you're making money, begin lowering stops according to your own risk levels, as I wouldn't be surprised to see a temporary pop tomorrow in the retail stocks.

 
 
  Jeff Bailey   10/10/02,  9:49:31 AM
Treasuries see modest selling with benchmark 10-year YIELD ($TNX.X) steady at 3.588%, just above its 52-week low of 3.561% YIELD found on Tuesday. Defensive for stocks on a break lower, while equity bulls hold hope for an equity bottom above 3.561%. (my thinking anyway)

 
 
  Jonathan Levinson   10/10/02,  9:47:25 AM
The bullish descending wedge that so sweated me yesterday has broken to the north, according to plan. It projects to just below COMPX 1135. The TRINQ is once again buried at .25, and seems to correlate well with that projected high. For what it's worth, because trading from single indicators is a good way to go bust, the TRINQ cannot stay this low forever, and seems to be indicating that the 1130-40 area is a top of some sort. The only way I see this interpretation being invalid is if we are witnessing the formation of an intermediate bottom at this level, and that this is the start of a strong rally. For many reasons shared by many of you, I don't believe this latter possibility to be the case. Stops for bearish COMPX positions can be set for 1140 just in case we're wrong.

 
 
  Jeff Bailey   10/10/02,  9:43:25 AM
Swing Trade Signals
Most NYSE listed stocks open by now. OEX trades 394.60 +0.48% here. Looking for some resistance at/near the 400.00 level.

Retailers as depicted by the RLX.X 64.75 may be viewed as a "negative" and keep broader-market bulls on the sidelines early.

 
 
  Jeff Bailey   10/10/02,  9:40:09 AM
Dow Industrials (INDU) 7,315 +0.39% ... was a little "red" at its opening tick, but not all components were trading. Now all are open for trading and slight gain of 29 points found.

 
 
  Jeff Bailey   10/10/02,  9:38:38 AM
S&P Banks Index (BIX) 240.34 +0.75% ... holding its lows and opens marginally higher. Will keep a close eye on the banks near-term as I feel this is the "swing" sector for the broader markets. Slightly positive trade here.

 
 
  Steven Price   10/10/02,  9:36:57 AM
WalMart (WMT) $50.00 -0.74 WalMart is playing with the $50 level this morning after negative comments from a number or retailers. The stock has held up well recently, but I can't imagine it holding up in the face or poor retail numbers getting even worse. I'm going to look for resistance and $50 and then consider going short.

 
 
  Alan   10/10/02,  9:33:46 AM
Index Futures
Remember, watch the number of ES/SPX 775 for a sense of market direction. Open numbers: ES 774, YM 7255, NQ 811 (NQ strongest number at open). ECB (European Central Bank) left interest rates as is without a cut.

 
 
  Jeff Bailey   10/10/02,  9:32:17 AM
Swing Trade Signals
The Swing Trade Model continues to hold SHORT the broader market from yesterday at OEX 393, STOP 402 and does not have a sell target order in. Bearish target range is 380-385.

 
 
  Steven Price   10/10/02,  9:20:12 AM
It was just a matter of time before the recent sales warnings from retailers caught up to their bottom lines. This morning Federated (FD), which owns Macy's and Bloomingdale's lowered Q3 and Q4 outlook. Kohl's (KSS) reported that same store sales decreased for the 5 week period ending Oct 5, from a year ago. If same store sales are weaker than they were while we were sitting home watching 9/11 news updates, the economy does not look good.

 
 
  Alan   10/10/02,  9:17:34 AM
Index Futures
I have an appointment this morning, and will miss the open. Be back later this AM.

 
 
  Jonathan Levinson   10/10/02,  9:04:19 AM
Here's an excellent link illustrating how not to trade. We've all been there, and unfortunately, too many never go beyond: Link

 
 
  Jonathan Levinson   10/10/02,  7:06:54 AM
Well, the 3AM Corynthian Geiser Formation (don't bother looking it up- this one was penned by yours truly) rescued the futures and all is now well with the world. Well, at least according to CNNfn's front page, which credits the move to Yahoo and Aetna. I suppose that JPM's woes and its massive OTC $30T+ derivatives exposure has been superceded by good news from Yahoo. If they say so... I suspect that Europe owns a little bit more of our futures and Japan's equities. In any event, NDX futures are currently +7.50, S&P +5.2. Japan recovered miraculously to just below its lows of the day. The US Dollar Index has recovered to just below 107.00. GE reports before the bell, and there's a slew of economic news due this morning.

 
 
  Alan   10/9/02,  11:19:39 PM
Index Futures
11 PM: ES 775, YM 7248, NQ 805
My guess is there's a bearish stop run tonight. A total guess would have ES trading to 770-772 area by Thursday's market open. Good night.

 
 
  Alan   10/9/02,  10:13:13 PM
Index Futures
10 PM Futures: ES 776, YM 7247, NQ 806
Japan's Nikkei continues to sell, 8215 - 300 - 3.5%. Lead down by Banks and Financials. Tomorrow morning, look to see how Germany's DAX handled its 2500 support.

 
 
  Jeff Bailey   10/9/02,  10:06:18 PM
Swing Trade Signals
Swing Traders... I would also invite you to review tonight's Index Trader Wrap Link and some thoughts there. This may help to understand how we handle the Swing Trade Model near-term and what I'll be looking for and correlating against.

Alan may be bringing index BEARS some "good news" in his 09:43:41 PM post. I've read something about banking concerns in Japan.

 
 
  Jeff Bailey   10/9/02,  10:01:36 PM
The Futures Trader Wrap has been posted: Link

 
 
  Alan   10/9/02,  9:43:41 PM
Index Futures
930PM ES 776, YM (Dow) 7261, NQ 808
Bad begets "More Bad" ...Japan's Nikkei down 200 pts at new Lows of 8300, ES Futures are 4 pts lower at 776 from their end-of-day small short covering bounce. If Europe follows the US and Japan lower, ES Futures may open Thur morning Under that Key 775 support level. Chart-wise, ES/SPX under 775 doesn't look very pretty. Pull up a Monthly chart of SPX index. Thur morning, 8:30 AM, has some economic data on Jobs.

 
 
  Jeff Bailey   10/9/02,  9:07:06 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Jeff Bailey   10/9/02,  9:05:33 PM
The Market Monitor has been archived. To view Wednesday's comments, simply click this Link

 
 
  Alan   10/9/02,  1:05:18 AM
Index Futures
12:30AM ES 773, YM 7242, NQ 802
1 AM ES 775.5, YM 7260, NQ 805

 
 
  Alan   10/9/02,  12:02:24 AM
Index Futures
A random Thought: On the morning of Sept. 11th, ES opened at 928, YM (dow) at 8750. Today, about one month later, the Dow is 1500 points lower, and ES is 150 points lower. No one knows When, or Where the next bear-market rally will come from; however, it could be rather strong.

 
 

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