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  Jeff Bailey   10/14/02,  3:54:06 PM
Earnings Tonight after the bell has notables MYG, MKH and UIS reporting. Then tomorrow before the bell as banks ASO, BAC, ONE, C, WFC all reporting. Other notables tomorrow after the bell are BBOX, DAL, FNM, FRX, JNJ, LLL, STT and TAP.A

 
 
  John Seckinger   10/14/02,  3:50:17 PM
Looking at a daily chart of the Dow, there appears to be a "doji" formation which could portend some selling pressure on Tuesday. Note: It is amazing, how on these slow, low volume days, thinking too much about price action might actually be hindersome to one's trading. I did not trade today, but would like to get an understanding of psychology heading into tomorrow, nonetheless. I am sure trading in the bond market will give me a better read of market conditions.

 
 
  Steven Price   10/14/02,  3:34:36 PM
Reader Question: Hi Steven! What do you think of MDT. After engulfing candle we had two days of profit taking. I did not find any bed news about MDT. What worries me is weakness when HMO and BTK are in nice uptrend.

Response: Medtronic (MDT) $43.90 (-0.12) We closed the call play on Friday after watching the end of day sell-off and struggles at $45. The stock is in an uptrend, but has now struggled with $44, a dollar lower than it did Friday, and its intraday support after the sell-off. I don't like the series of successive lower price struggles.

 
 
  John Seckinger   10/14/02,  3:11:33 PM
Hard to ignore the Biotech Index (BTK), higher by 4.6%, or 15-points, at 340. This index is now above its 22 and 50 DMA's, currently at 325 and 335, respectively. I expect a pullback to the 50 DMA in the near term, while the upside objective appears to be at 360. A move under the 22 DMA should have longs exiting and shorts getting aggressive.

 
 
  Steven Price   10/14/02,  3:10:35 PM
Reader Question: Has been unable to stay above 82 today. Do you still think this is a good entry point?

Response: Wellpoint (WLP) $82.08 (+1.24) I would probably wait for evidence of intraday support at $82.00 for new entries right now, since it has struggled to stay above that level. I am still bullish on the stock here, but as long as we are right at the $82.00 level, there is no harm in looking for support.

 
 
  Jonathan Levinson   10/14/02,  3:03:06 PM
Thanks for your questions, which have been the only thing keeping me awake this afternoon. None of the measures I follow have budged significantly (or even insignificantly), and thebig action was the 7 point drop that's now bouncing back up weakly, which followed a 7 or 8 point rise, all of which has taken all afternoon to complete. Linda's advice to do some housecleaning of whatever nature was right on.

 
 
  Jeff Bailey   10/14/02,  2:57:01 PM
Duke Energy (DUK) $18.93 -2.1% ... Jeff: What would you do with Duke Energy in light of the TXU problems. It is not as weak as I would have thought. Comments??

I'm going to continue to hold the January puts. UTY.X is down 2.2% here, so DUK performing "in line" with sector. Last week, COE of TXU said the dividend was safe. Today, TXU cuts dividend 80%. Is the dividend at DUK safe? Time will tell and January expiration to find out. Link

Today's trade at $18.00 in DUK has p/f chart back in a column of O. Can lower stop to $20 from $21, but not much else to do that I can see at this time.

 
 
  Steven Price   10/14/02,  2:48:48 PM
Here is some info I got from a reader on finding dividend dates. Thanks for the info !

Hi Steve, Here is a nice site to find ex dividend dates, and other info like board meetings, pay dates etc. Sure beats a phone call! Link Keep up the good work! GP Vermont

 
 
  Steven Price   10/14/02,  2:42:50 PM
Reader Question: Steve, I hold a few INTC 15 Puts. What do you think about INTC's near term future? Thanks. -AK

Response: Intel (INTC) $14.93 -0.20 Intel releases earnings after the bell on Tuesday, which should have a big impact on the chip sector on Wednesday. AMD also releases earnings after the bell on Wednesday, so it could be a very busy couple of days for all of these stocks. Without knowing which expiration month you hold, I might take a couple of different approaches. If I held the front month put, trading for less than a dollar, I might employ an expiration type strategy with the stock trading so close to the strike. This involves buying stock (either 50 shares per option, or 100 shares) on the dips and selling it on the rallies around the strike, using the option as protection. If you buy only 50 shares per option you have a chance to earn more if it keeps going down, but make less if it goes back up.

Keep in mind that option implied volatility levels usually sink quickly after earnings are released, if the stock doesn't move much, since the suspense is over. So if I held a back month, I might sell the higher volatility just before earnings are released if you get an increase in value. Of course, if the stock does go down, you will pass up profits to capture the increased volatility premium.

Ths stock has plenty of upside resistance between $15 and $20, and looks weak, failing at $15 today ahead of earnings. INTC narrowed its revenue guidance at its mid-quarter update, reassuring investors, while AMD lowered expectations based on a weak PC market. My guess is that the comments about the 4th quarter will be more important than the recent quarter's results, and I find it hard to imagine the comments will be positive in the current environment. I would probably keep the puts if they are for october, given the low risk/reward ratio.

 
 
  Jeff Bailey   10/14/02,  2:42:16 PM
Swing Trade Signals
Swign Trade Model remains flat after getting stopped out at OEX 427.00 this morning. Since that time, stocks have reached their tippy-top of the session and slowly drift lower. No bond trading to give any type of "confirmation" so I (Jeff Bailey) will not be profiling any further swing trades today.

Jim Brown should be back tomorrow and have a game plan to work off of.

One thing I had wanted to look for after Friday's gains was what type of action the stock market had today, even though bond market was closed. Risk for bear today was that lack of bond market would have traders letting stocks drift higher, get some idea of "buy side" from the bears, and I think today's highs played right into the hands of that. Only thing that surprised to today is that profressional traders didn't take out Friday afternoon's lows of OEX 417.78 to suck in some day-trader shorts.

60-minute chart of OEX shows MACD starting to roll and now beginning to threaten a cross below SIGNAL.

 
 
  John Seckinger   10/14/02,  2:41:51 PM
As the Dow continues to hold on to most gains achieved during Thursday and Friday, I wonder: Are equity bears weary about going short because the bond market might go much lower on Tuesday? I think there is some truth to that. With that said, the Dow has fallen under the 7848 level mentioned earlier (a level that would take me to more neutral levels concerning market sentiment) and should, once again, have an objective near 7745. Only a close under 7745 would make me think about a lower opening on Tuesday.

 
 
  Linda Piazza   10/14/02,  2:15:04 PM
I've been squinting at all the charts today, trying to find patterns, but the truth is that in such a low-volume day, those patterns aren't going to do me much good. If someone comes in with an everyday-sized buy or sell order, markets are going to be impacted more than they normally would. If you're flat, this is a good day to check out that new charting feature you've wanted to explore or do paperwork associated with your trades.

 
 
  Jeff Bailey   10/14/02,  2:12:57 PM
Teva Pharma (TEVA) $66.30 -1.08% ... Jeff, Could you please comment on TEVA? It looked promising at the time you became bullish on FRX, but TEVA couldn't breakout from its double top. I did notice that an insider sold 300,000 shares in September. Maybe the cloud of war in the middle east is weighing on this one. Any comments would be appreciated. I'll watch in Market Monitor.

While TEVA is same "group" as FRX, only realy difference I see between TEVA's p/f chart and that of FRX is the SIZE of the powder keg. FRX had a much longer-time/or bigger base from which to "explode" Link still bullish, but note that there isn't as big a base of consolidation at this point. Maybe it too a bit like JNJ Link where it will just take some further sector bullishness to get these "second stage stocks" to follow the LEADER (FRX) higher.

 
 
  Steven Price   10/14/02,  1:57:36 PM
Reader Question: Steve - SIGMA ALDRICH (SIAL) $46.05 - Now that it has filled the gap are we still looking for a breakdown for a short/put trade? Thanks Rich

Response: I like SIAL's gap-fill and failure at the 200-dma ($46.74), with its high trade of $46.29. let's wait for signs of a breakdown, preferrably under $45, to go short.

 
 
  Steven Price   10/14/02,  1:49:07 PM
Here is a link to the conversion/reversal article Link . Once again JPM does pay a dividend in October, however, the extra 0.34 made little difference in the LEAPS example, so I left it out to simplify the math. The same principles still apply.

 
 
  Steven Price   10/14/02,  1:42:47 PM
Reader Question:

Steve; The process of creating reversals and conversions to create a market or hedge positions is really interesting stuff. Please expand on what the market makers do for a large contract option order on a stock that typically has few option contracts traded. An equity option may have less than 50 contracts typically traded daily with less than 500 open interest and then one day there are 5000 contracts traded. I am often puzzled how the order gets filled and hedged when there is an unusual amount of volume at only one strike price. Sometimes one notices a very unusual amount of options traded on a stock at one strike price and there is average or less than average volume of shares traded. Often there is not a large volume of contracts traded at other strike prices either puts or calls and the average daily volume of the stock is within the average typically traded. Is there still a reversal or conversion happening or is something else going on here?

What does the market maker do here to hedge? Somehow someone else just decided to play the other side of the option?

Are the option books open to the public or just the market maker? For example lets say I wanted to sell or buy a large number of contracts perhaps 100 to 500. Would I be able to find out that there are open orders to see the likelihood of a fill? Is this just available for NASDAQ stocks using level II and is not yet available for options or is it available for exchanges like island and archipelago?

How did you know in your JPM example that no dividend would be give between now and the end of the year? Barons publishes which companies plan to go exdividend one to two weeks in advance. Where is there a better source if one wants to know one to two months in advance?

Super write up on reversals and conversions! Have a great weekend. Phil

Response: There are several things that may be happening when a big option trade comes across at one strike, without much difference in volume in the stock, or activity in other strikes. The first possibility is a cross. A cross is when a couple of large institutions (or one institution with two large customers) want to conduct a trade with each other. A broker walks into a pit and asks the market makers where they can cross the orders, without the market makers participating. They find a price, usually between the bid/ask, where no one is interested in trading, and then put up the trade between the two sides, so there is very little hedging. These firms may be unwinding an earlier trade, or simply hedging large portfolios.

Another possibility is that traders will only trade as many option contracts at one time as they feel they can hedge. Sometimes they will put in a stock order, while the broker waits, and then trade when the stock order is filled. Other times the market maker gives a price to fill 50 contracts, another for 100 and another for 500, dpending on how liquid the stock is and the likelihood of getting off the hedge on a lot of stock.

As far as public order books, there were some data vendors we used on the floor (outside of the pit) that provided the best bid/ask currently in the book, but I will have to look into which ones currently display those quotes. You can start by emailing help@cboe.com and asking where they get the data for the ILX terminals, or you can wait for an update from me when I get the skinny.

In order to find out which date a stock goes ex-dividend, you can call investor relations at any publicly traded company and they should be able to tell you when the next date is, or when they will release the info.

My JPM example in this weekend's Ask the Analyst column was for educational purposes, and my comment about no dividend between now and December was actually just to simplify the math example. It actually pays a dvidend on October 31.

 
 
  John Seckinger   10/14/02,  1:33:02 PM
One average that should be on a trader's radar screen is the CRB Index, currently higher by 1.1% at 228. The 52-week high is 229.62, and a settlement above 230 would be its highest close since January 1998. Note: The CRB Index should trade inversely with the bond market (in price). Lower bond prices could mean higher equity prices. This correlation has not been in tact for a few months; however, always good to follow relationships that does correlate well from a historical perspective.

 
 
  John Seckinger   10/14/02,  1:22:01 PM
The Dow has continued to use its 22 PMA (five-minute chart) as support, and is once again testing this average's strength at 7870. Still a hard market to interpret (since no confirmation from the bond market); however, certainly there appears to be underpinning bids in the Dow. A move underneath 7848 should take sentiment to more neutral levels.

 
 
  Jonathan Levinson   10/14/02,  1:06:18 PM
Those who are faint-of-heart or of delicate constitution needn't worry about this market so far today. COMPX 1220 turned back this quick, light volume runup, and the TICK.NQ is back to -192, the TRINQ at .90 and rising, and QQV at +1.90. There's not a lot to get excited about either way, and while the options market is showing caution with these big volatility readings, the action is otherwise perfect for a holiday Monday.

 
 
  Mike Parnos   10/14/02,  12:33:14 PM
Reader Question
Where do i find your comments, positions and reccommendations on the OI site?? Jacob

Response My column appears on Sundays and Thursdays. I've been writing for OI since the middle of July. You can find past columns in the OI archives under the "Traders Corner" and "Option 101" categories. Most are in "Traders Corner."

Check them out and feel free to contact me with any questions you have. We talk about different low risk spread strategies. I think you'll enjoy the articles. My approach is a little different. I welcome all new CPTI students.

 
 
  Jeff Bailey   10/14/02,  12:33:00 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Momentum carries through from Friday and STOPS out the Swing Trade Model at OEX 427.00 (14:29:32).

Trades at trigger = SPY 84.85, SPX=844, DIA=79.40, DJX=79.15, NDX = 903, QQQ= 22.48.

 
 
  Jeff Bailey   10/14/02,  12:27:04 PM
Swing Trade Signals
QQQ breaking above Friday's high. I'm expecting this to have bears looking for further cover and most likely stopping out the swing trade model. QQQ has some upside to $22.97 here and look for support to begin firming at $22.00.

 
 
  Steven Price   10/14/02,  12:26:31 PM
Reader Question: Steven, Am I in need of glasses or is there a reverse head and shoulders (with two right shoulders) on the daily chart of SYMC? Appreciate your numerous contributions to the MM... Thanks, rhd

Response: Symantec (SYMC) $35.20 (+0.80) No need for glasses, you are looking at a possible reverse head and shoulders. However, if you continue to look backward, the 35 resistance level has been tested repeatedly to the upside, with a "fake out" up to $36.67 on July 30. That move was a triple-top PnF breakout that turned out to be a "bull trap," with a quick reversal down. It was later followed by a spread triple-bottom sell, which turned out to be a "bear trap," indicating this stock can give some false technical signals. Friday's rally failed the 200-dma of $34.64 and it will be interesting to see if today's rally can hold above that level and $35. The next resistance is $37 and then $40. I might be willing to go long with a hold over $35. Based on the $5 rectangle the stock has been mostly confined to for the last 5 months, my initial target would be $40. I would use a pretty tight stop here (possibly $32.95), since it has failed this level and headed straight to $30 so many times.

 
 
  Jonathan Levinson   10/14/02,  12:21:27 PM
The COMPX has just erupted in a string of new highs, currently 1217 and racing toward that 1225 resistance level. The TRINQ is down to .75, which is in neutral buy territory, which the TICK.NQ is at +108. I'd love to see a very light volume runup, at least from a bearish perspective, as all of those sellers who have either been stopped out or were waiting for a better price will be staring it in the face when they return to trade tomorrow. QQV is still showing a big gain on the day but is near the low end of its day range, +2.1 at 51.43. Volatility is still the theme for today, even when price becomes rangebound.

 
 
  John Seckinger   10/14/02,  12:19:47 PM
Any thoughts on particular corporate bonds in the short, intermediate and/or long term?

Response: One corporate I would be watching is a 6.73% coupon issued by Johnson and Johnson (JNJ). It matures in November, 2003. Currently it is trading at a nice premium: 114.023. It is also AAA rated. In the BAA rated sector, I would watch Nabisco 2015's which have a coupon of 7.55 percent but at a healthy premium (124.93).

 
 
  Mike Parnos   10/14/02,  12:09:23 PM
Reader Question
The news is not so good all round and market is still showing strength. Can you please explain how this is happening?

Response
People buy for all kinds of reasons. In this instance, I think over the last few major up days days we've seen a lot of short covering. Secondly, there are those investors who are afraid their going to miss the bottom. These are the people who jump in every time there's a bounce in the market. These are also the same people who are the overhead supply when the market reverses and goes back down. They'll be waiting, as the market moves down, just a wishin' and a hopin' for the market to bounce up so they can get out even. How many do you think will take a small loss and live to trade another day? How many will hedge their trade? How many trades will turn into investments?

 
 
  Jeff Bailey   10/14/02,  12:02:43 PM
Swing Trade Signals
Equities continue to show some firming this morning and build to best levels of the morning. Dow +22 points, SPX +4.3 points, OEX +1.8 points, QQQ + $0.01.

Swing Trade Model still SHORT the broader markets from Friday afternoon at OEX 419.99, STOP 427.00, but has been hard pressed to see much below 418 since.

 
 
  Linda Piazza   10/14/02,  11:57:35 AM
With just over .5 billion in volume on NYSE and Nasdaq, each, this is one of the lightest volume days I've seen in a while. So what are we all doing sitting in front of our terminals? Seriously, it will be difficult to draw many conclusions based on today's light-volume action.

 
 
  John Seckinger   10/14/02,  11:42:17 AM
Price action within the Semiconductor Sector (SOX,-1.83%) is keeping the index below its 22 DMA (247) and will most likely need to rise above this average in order to attract longs. Looking at other sectors; Dollar relatively unchanged, while UTY index is still near the 219 level. Nasdaq still above 1200 at 1206.

 
 
  Mike Parnos   10/14/02,  11:38:14 AM
BBH Condor Update
For those of you who are following our BBH Iron Condor position, it seems that, at the moment, with BBH trading over $85, we now have a five point cushion. If BBH closes above on Friday, we will have made a very respectable 25% return on our risk and all options will expire worthless.

WORTHLESS -- the option seller's favorite word. At the CPTI, we prefer to be the casino, not the gambler. Remember, the retail investor is WRONG most of the time and we're always happy to take their money.

 
 
  Linda Piazza   10/14/02,  11:25:29 AM
Today may turn out to be an interesting day. So far, the major indices are printing doji or near doji candles (indicating indecision or a battle between bears and bulls)on the daily charts, and (5)(3)(3) stochastics are running up toward overbought at a rapid pace. They're not there yet and, by day's end, today's candles can look quite different than they do now. I read commentary this morning suggesting that Thursday and Friday were yet another example of a bear market rally. I'm still on the fence. I needed two things to happen to convince me that a new intermediate trend had begun. One was a close above the descending channel. We got that on Friday. Next, I'd want to see how the markets behave as they retest. If they fall back into the descending channels on a retest, I'll view this as yet another bear-market rally. If they retest, use the descending channel lines as support, and then move up again, I'll view this as the beginning of a new intermediate trend, and trade accordingly.

 
 
  Steven Price   10/14/02,  11:15:20 AM
Reader Comment: Hi Steve, I talked to a lot of people over the weekend and I tell ya what I heard was not good. Everyone said things are slow and getting worse. I live in Tucson, Az. and the real estate market has been strong but now that is starting to fade. My point why in the world would anyone want to own stocks in this environment ! A rally does not make sense to me with all the negatives am I missing something here? rick

Response: I also believe that things are still getting worse, in general. However, there is definitely some bounce room for long plays even in a declining market. That is why I favor going long with options right now, rather than equities. Less downside and the opportunity to take advantage of short-term moves.

 
 
  Jonathan Levinson   10/14/02,  11:13:55 AM
The Fed has not made any morning announcement, and I believe the Fed is closed for Columbus Day. In any event, the result is that there is no fresh liquidity from either the Federal Reserve or the bond market, so equities have been and will be on their own today.

 
 
  John Seckinger   10/14/02,  11:11:17 AM
Trend appears to be mostly range-bound; however, as the Dow is off by 0.53%, sectors outperforming include Bitoech (+3.34%) and Pharmaceutical Index (+2.39%). Turning to the Dow, the 50 DMA (7811) and 22 DMA (7820) could become good pivotal areas for day traders. Another important note is the Nasdaq keeping above 1200.

 
 
  Steven Price   10/14/02,  11:03:30 AM
Tough time getting entry points on our plays today, as the market treads water, with the bond markets closed for Columbus day.

 
 
  Steven Price   10/14/02,  10:46:02 AM
The HMO stocks are looking strong today, with OI call plays MME and WLP trading near their highs of the day.

Wellpoint (WLP) : $81.87 (+1.03) For those readers not already in the play, the stock topped this morning at $82.00, so look for a break above that level for new entries.

Mid Atlantic Medical: $41.80 (+1.55) MME topped at $41.98, so new entries here can look for a trade over $42.00.

 
 
  Mike Parnos   10/14/02,  10:39:01 AM
Good Morning
Happy Colombus Day. I'll be on the Market Monitor for awhile today. So, send your questions along.

A reminder!If you haven't already done so, go to yesterday's (Sunday) newsletter and test your Option IQ in my column. The questions aren't difficult and I think you'll have some fun at the same time.

 
 
  Jonathan Levinson   10/14/02,  10:38:04 AM
I'm watching the QQV flip around- even the volatility is volatile. Actually, I suspect we're seeing the results of lower volume today, which tends to create little gaps on every chart. The COMPX is currently deciding what to do with the 1200-10 level, going from trading outside the gap to now being constrained by it. The TRINQ is sitting on the fence, and this exciting day could turn boring within this narrow range.

GE is showing a lot of strength today, and making me trigger-itchy to try for a third homer with this from the short side. I told you when I closed out last Wednesday, only one day too soon. The stock is printing new highs at 24.55 as I type, and I find it a curious thing, given the clear interpretation of Friday's earnings report. If you make the rent for the month (or the quarter) by selling off some of your furniture, well, fine, but it certainly doesn't add to your net worth. This is my analogy to the sale of that e-commerce unit. In any event, I trade for money, not analogies, and the stock is still running up. I will be watching to short it again, but not until it looks obvious to me. The 21 day sma at 25.24 looks pretty good to me, but I'm in speculation mode for the moment (from the latin, speculari, meaning "to spy" or "to observe").

 
 
  Jeff Bailey   10/14/02,  10:19:39 AM
Drug Index (DRG.X) 300.64 +3.18% ... leading sector gainer today. Forest Labs (FRX) $92.40 +0.18% Link trades all-time high this morning. Dow component Merck (MRK) $50.01 +5.72%Link leads Dow gainers. Johnshon & Johnson (JNJ) $57.39 +1.35% challenging 200-day SMA once again. Link

 
 
  Steven Price   10/14/02,  10:10:38 AM
Reader Question: Hello Steve, I have enjoyed and profited from your comments in the Market Monitor and have been wondering what your assessment would be of a longer term play on Skechers.

The Stochastics and MACD look bullish to me and there is a Long-Tale-Down Reversal alert on the P&F chart. I believe the retail sector is probably very oversold as well as this stock which now has a P/E ratio of 5.4. Given that it may take months for the sector and the stock to recover. I was thinking of buying April calls or even a straddle or strangle. Would you agree that this stock might be worth a play at this time from a technical standpoint and do the option prices appear reasonable ? Thanks, Gene.

Response: Skechers $7.95 (-0.10) The teen-oriented apparel stocks have had a very rough time lately, with warnings from plenty of companies in the sector. SKX took a pretty good beating after its own warning. I find it interesting that the stock was turned back this morning just (0.05) short of a three-box reversal on the PnF(high of $8.45). There is an awful lot of resistance between $9.50 and $11 and I would be looking for at least the PnF reversal before thinking long play. I am also concerned that the trend in the retail sector is still down, as far as same store sales go. ARO's comments about low mall traffic are also pretty bearish, as they tend to be teen-havens. Certainly, if the holiday shopping season comes in better than expected, most of these stocks will get a boost, but there hasn't been anything to indicate that yet. The P/E ratio looks attractive, IF earnings hold up.

You seem to be looking for a bullish play, so I wouldn't waste extra $ playing a straddle/strangle. I personally wouldn't get into a stock with so much resistance overhead, but if you want to take a shot, I'd at least be looking for the PnF reversal at $8.50.

 
 
  Jeff Bailey   10/14/02,  10:09:27 AM
Utility Index (UTY.X) 216.87 -3.86% ... leading sector decliner today. Recently troubled TXU Corp. (NYSE:TXU) $11.70 -37.9% after pulling down bank line credit and slashing dividend. Link

 
 
  John Seckinger   10/14/02,  10:04:32 AM
The Dow is most likely going to do one of two things. (1) Use the opening level (7848) and levels just above (if stops hit) as resistance, or (2) use 7848 as support and make an assault on 7900. To me; pivotal. If stocks falter, I wouldn't be surprised with a test of near 7750 and then back higher (read: range bound). Stay tuned.

 
 
  Jonathan Levinson   10/14/02,  9:57:55 AM
Just over 60% of the COMPX gap has been filled- gap resistance will come at 1209.

 
 
  Jeff Bailey   10/14/02,  9:56:17 AM
Financials firm with S&P Banks Index (BIX.X) 261.78 (unch), KBW Bank Index (BKX.X) 672.50 -0.49%, Broker/Dealer Index (XBD.X) 352.48 -0.43% and Insurance Index (IUX.X) -1.16%. S&P 500 (SPX.X) 832 -0.38% and S&P 100 Index (OEX.X) 420.97 -0.40% near-term bear needs more weakness in the financials.

With bond market closed today, MARKET will have tough time getting a sense of direction.

 
 
  Jeff Bailey   10/14/02,  9:50:55 AM
Swing Trade Signals
Current market actiion somewhat similar to what I was looking for in Friday morning's market monitor. Some consolidation here with OEX 420.68. Need a break back below the 38.2% retracement on OEX chart of 418.40 to get a gradual slide going. OEX holding firm here at 421.00.

 
 
  Steven Price   10/14/02,  9:48:15 AM
Wal-Mart (WMT): $54.14 (+0.31) We are seeing some slight gains across the retail sector, after WMT said sales are on track for a 2-4% gain, as predicted. Don't get too excited. As far back as I can remember, Wal-Mart has started off each month with projections of 4-6% gains, and occasionally dialed them down to 3-5%. They have also missed projections the last several months. At the beginning of September, we heard the same thing, only to miss later that month. If growth is slowing down, even at the projection level, heading into the holiday season, I'd be hesitant to go long the retailing group.

 
 
  Jonathan Levinson   10/14/02,  9:47:11 AM
The COMPX is trying low gap resistance just below 1200. The TRINQ is rising, currently 2.2, while the TICK.NQ is improving at -73. QQV is up dramatically so far, +3.89. This a whiff of the volatility I'm expecting this op ex week peppered with earning reports.

 
 
  John Seckinger   10/14/02,  9:44:02 AM
One sector most likely pressuring equities is the Utility Index (UTY), lower by 2.65% at 219.59. Once under 219, selling pressure should accelerate and possibly spread to the major market indices. Will take a move back above 228 to change bearish sentiment.

 
 
  Steven Price   10/14/02,  9:42:03 AM
Eli Lilly (LLY) $62.78 (+0.78) This morning's $63 trade put new OI call play LLY above PnF resistance from August. If the Dow finds some legs I like entries with the stock back over $63. Conservative traders may want to look for a trade above the day's high of $63.12

 
 
  Jonathan Levinson   10/14/02,  9:37:19 AM
Look at that- the TRINQ at 1.91! Seems like forever since I saw the TRINQ even approaching 1 from the downside. The COMPX gapped below its 22 dma and major support at the 1200 level and is now trading just above 1190 support. The TICK.NQ is at -233. HUI is already + 1.03 and XAU is +.98. This is already an exciting day, just 4 minutes into the action!

 
 
  John Seckinger   10/14/02,  9:32:09 AM
With the Bond Market closed today, possibly the US Dollar can give us an indication of the likely downdrawn portended by futures. The Greenback is lower by -0.08 at 107.16, but still above its upward trend line that began in mid-July. It would take a move underneath 106.61 to get shorts aggressive.

 
 
  Jeff Bailey   10/14/02,  9:31:37 AM
Swing Trade Signals
The Swing Trade Model continues to hold SHORT the broader market from OEX 419.99 that was triggerred on Friday at 15:06:00 with trailing STOP at 427.00. Will look to lower a stop to profitable early this morning. Target range conitnues to be the 405-410 zone.

 
 
  Jonathan Levinson   10/14/02,  9:30:02 AM
With the bond market and Canadian markets closed for holidays today, I expect volume to off its normal range, which will no doubt frustrate those of us who watch volume closely. For that reason, today is a good day not to fall in love with any positions, and given that we are in options expiration week, I expect a lot of volatility, starting today.

 
 
  Jeff Bailey   10/14/02,  9:27:10 AM
09:00 Update has been posted. Link

 
 
  Linda Piazza   10/14/02,  8:39:35 AM
With the DAX down 3% this morning and some other European markets under water, too, banks, autos, and travel-related stocks are coming under the most pressure.

 
 
  Jonathan Levinson   10/14/02,  8:35:16 AM
Futures are in the red this morning despite the US Dollar Index being up a little to 107.15. NDX is down 13.00, S&P down 9.20. QQQ is trading at 21.86 from its close at 22.22. Gold recovered a bit last night, never breaking 315/oz and getting above 318/oz.

 
 
  Alan   10/13/02,  7:57:35 PM
Index Futures
745 PM; 75 Minutes after 6:30PM Sunday Night futures open : ES 833.00 (SP500 futures) are down 5 points from their 415 PM close; and at the small pivot support area of 832-833. ES 832-833 is 50% retracement of Fri's close at 838 and the 3:30PM low of 827.
Friday's support from 11 AM and 3:30PM is 826-828; below that is 823, 815, 812, 809. Above the current ES 833 is 835, 838-840, 843-44 (Friday's High), 848-852. This is classic futures games as "they" do some stop-running on Longs who stayed long into the weekend. If the market opens a bit lower as furtures are currently indicating, the obvious questions is IF (and at what price) dip buyers come in; the ones who may be feeling they "missed" the bottom at Dow 7200. Index Futures are flat, having shorted the Dow at 7900 at 2PM Friday, covering for 100 points. There's a strong chance I shall not be trading on Monday. Any questions on Futures or questions/comments regarding the 2 Futures articles this weekend, send them to futures@OptionInvestor.com PS: Strongly suggest clicking on the link that Jeff posted, great video. Very often, whatever the last 45 minute trend was on Friday at futures close gets reversed a few points on Sunday's futures open. Nikkei having a Green day, but having trouble with the 8600 level. Europe had hugely green days on Friday, check in tomorrow morning to see how they reacted. If you don't have realtime futures quotes, you can watch the Sunday overnight session for free at livecharts.com ; click Charts/All Sessions-24 hours and use the ticker ES02Z (Emini sp500 futures), they are delayed 10minutes.

 
 
  Jonathan Levinson   10/13/02,  5:43:55 AM
Here's a link I just found that is absolutely hilarious, moreso for readers who might have been a little frustrated with last week's rally. Please note that this is posted for entertainment value only, and is not intended to be a statement of my or OIN's view of the future- just here for a laugh. There are some very creative bears out there! Just turn on your speakers and click on this Link

 
 
  Jim Brown   10/12/02,  8:02:40 PM
Swing Trade Strategy Update
While I was bedridden last week I kept analyzing the reasons we get stopped out of so many swing trades. It all boils down to entry points. If you had the perfect entry point you could have a two point stop loss and never be hit. Sounds simple in theory but difficult in practice. Link

 
 
  Jeff Bailey   10/12/02,  7:58:32 PM
The Futures Trader Wrap has/will be posted: Link

 
 
  Jeff Bailey   10/12/02,  7:52:38 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Jeff Bailey   10/12/02,  7:51:29 PM
The Market Monitor has been archived. To view Friday's comments, simply click this Link

 
 

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