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  Jim Brown   10/15/02,  10:01:54 PM
The Swing Trade Game Plan has been posted: Link

  Jeff Bailey   10/15/02,  7:16:42 PM
Please, Please, don't do this.... I didn't have that many puts up until today, but as the rally got going I went short City Group, GM, DJX puts and BBH puts. These have put me quite a bit in the red as the market never seemed to let up on the upside.

After such a huge rally, do you see a retracement in our future? Should we not have at least one down day? The calls are haevay now and this is option expiry week. I am of course holding December, January puts. I could of course take the huge loss and dump the puts now. Please let me have your thoughts on a technical point of view.

Thank you and best regards,

Yes, I see a retracment in our future, and one I've "been seeing" for the past two days. NEVER underestimate the power of a bull, nor a bear, but to put on so many bearish trades at one time is not very good account management. By your own admission (December/January expiration) you're looking months out, which should have an option's trader "legging in" to bearish trades only when some success begins to be found. To put on 1,2,3,4 bearish trades for Dec./Jan. expiration doesn't make too much sense. Hey... if you did anything "correct" was that you didn't put on 4 bearish trades with October expiration.

Note: I (Jeff Bailey) bought some QQQ puts a couple of days ago, and you can imagine how wonderful that trade was going at the close. Yesterday and today, I LEGGED into some INTC puts, and that now looks a little better. Thank goodness I didn't go gung-ho and be bearish technology all at once two day's ago is my thinking here.

"LEG INTO" a bullish/bearish stance, don't go heck bent for election (understanding that October mid-term elections tend to be bullish, not bearish) and put on a bunch of trades on one side of the market in a single day! While such a trade/account management action can have you getting "rich quick" it can also have you getting "poor quick."

I see lots of "overlap" here too. Why a bearish trade in C and GM (both Dow Components) and then buying DJX puts on top of it? 3 out of 4 bearish trades all Dow related? Have you been following the Dow Industrials Bullish % Chart ($BPINDU) Link

Believe it or not, trade/account management can have the worst of stock pickers saving themselves from the MARKET if they will SIMPLY LEG INTO THINGS and not go OVERBOARD with putting on trades in one single position. By legging into a bearish trade, get the first trade or two going in your favor, then add bearish trades once you get some profits going in the direction you predicted.

I would consider tonight's "earnings" from Intel (INTC) a great deal of "luck" for a trader that put on several Dow-related bearish trades today. Don't let tonight's "good fortune" pass you by. Hey... at least it was a technology stock that dropped the bomb, and this makes some sense as it relates to technology not seeing much earnings until the deeper cyclicals see some earnings drop to the bottom line. Intel not different is my thinking and they discuss lack of corporate spending still.

Tomorrow morning, read the e-mail you just sent me. Understand your "jitters" and be willing to get things under control.

  Jeff Bailey   10/15/02,  4:34:17 PM
Intel (INTC) $16.52 +9.4% ... shorts couldn't get enough of the stock into the close as they chased higher ahead of the numbers. Stock trading $14.92 (-9.6% from close) here.

  Jim Brown   10/15/02,  4:32:42 PM
MSFT   traded below $50 on the Intel news after closing at $52.40. They have recoverd some to $50.60 but still trending down.

  Jim Brown   10/15/02,  4:27:54 PM
Can I have my market short back please?

  Jim Brown   10/15/02,  4:26:46 PM
Text of Intel Earnings Release Link

Street was looking for $.13 vs actual of $.11. The $.10 headline number contained a charge and was not the comparison number. They still missed the lowered estimates by two cents and guided lower.

  John Seckinger   10/15/02,  4:22:26 PM
I believe today's price action was reminiscent of an "open drive" session, defined as a higher opening, prices never below the high during the first five minutes, and then a close near or at the high. Here is an article on the subject, as well as others. Link

  Jim Brown   10/15/02,  4:20:45 PM
Intel Earnings = $.10 cents
Revenue = $6.5 billion

  Jim Brown   10/15/02,  4:05:16 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out of the SHORT signal at 15:59:46 when the OEX traded at 447. SPX 880.73, DIA 82.50, SPY 88.42, DJX 82.51, NDX 949.28, Compx 1281.15, QQQ 23.57. The short covering was simply too strong for the bears to overcome. We will get our chance since this was the fourth winning day in a row and the Dow is up over +1000 points from the Thursday lows. Profit taking anyone?

  Jim Brown   10/15/02,  3:57:00 PM
OIN plays for tomorrow

Call - NPSP Put - EBAY Put - DIA

  Alan   10/15/02,  3:55:44 PM
Index Futures
For the 4th day in a row, at 3:30 PM, a retracement low occured as Shorts tried to push futures under a strong support level, in today's case 872. Once that attempt failed, rallied em upward. Don't forget: INTC and NVLS earnings tonight.

  Jim Brown   10/15/02,  3:55:24 PM
Swing Trade Signals
I am holding the SHORT signal over the close if we are not stopped out. I can't imagine that the bounce will continue with 10+ tech stocks announcing earnings tonight.

  Jonathan Levinson   10/15/02,  3:35:09 PM
FVX, the five year yield, is now above 3%, up a whopping 22 basis points.

  Alan   10/15/02,  3:15:20 PM
Index Futures
WASHINGTON (CBS.MW) - House Minority Leader Richard Gephardt, building on the Democrats' central mid-term campaign theme, called Tuesday for $200 billion in short-term stimulus to jump-start the sluggish U.S. economy.
Gee, all this 2 weeks before November elections. Do you think they are related somehow {grins}

  Jeff Bailey   10/15/02,  3:00:43 PM
Utility Index (UTY.X) 221.90 -0.34% ... just inching red here. First sector I've seen reverse from a gain into a loss today. Gold/Silver Index (XAU.X) 60.38 -3.95% has been lower all session.

  Alan   10/15/02,  2:58:41 PM
Index Futures
While no formal Futures Signal was given, the short from Dow Cash 8200 had been mentioned and it certainly spent enough time there that perhaps some of you took it; so I shall make the comment of :If in that trade, I would use a break-even stop, and target a gain of 35 to 50 Dow points from your entry for 1/2 the size, and monitor the ES (sp500 futures) 870-875 level as we come into today's close to determine the exit for the remaining 1/2 size. Chart wise, ES would need to lose 870 with some conviction to truly generate a Sell signal. NQ remains the weakest index.

  Jim Brown   10/15/02,  2:58:32 PM
Swing Trade Signals
That last little bounce scared me a little and I thought the market might have gathered enough strength for a pre-3:PM run but the internals have turned down again. We have intraday support at 442, 441, 438.50 then it gets pretty slim below that. We are 5 min from the 3:PM turn and the close is going to be interesting!

  Jonathan Levinson   10/15/02,  2:57:40 PM
What is the link to the daily info. regarding repos by FED? Tyically, is there a schedule for such actions or they do it on a daily basis or is it random? Is there a time during the day that actions take place - so that we can check at the appropriate time?

The announcements are made every morning between 10AM and 11AM EST. You can follow along at this Link

  Jim Brown   10/15/02,  2:50:55 PM
Swing Trade Exit Point Alert - GM
That was quick! The afternoon short covering bled over to GM and it hit my suggested stop loss of $36.25 at 14:44:04. I still believe in the play and would reenter that short with a trade below 35.50. With all the negative news out about GM today and with estimates of $1.85 to $2.50 as the pension impact to earnings next year this has to be short covering. They admitted sales would be slower and incentives were costing them money. Do the math!

  Alan   10/15/02,  2:35:11 PM
Index Futures
ES 873, YM(dow $5) 8150, NQ 940: ES has held the new support at 872 on the first attempt to trade under it, Dow only retraced 50 points from its day highs, NQ remains the least strong index as it hit its 950 resistance and came very close to trading near its 10am lows. In the 2 minutes this took to type, ES 876, YM (Dow) 8173, and NQ 945 are again upticking confirming that so far - this shake from Dow 8200 is nothing more than a minor retracement and not "real" selling.

  Jonathan Levinson   10/15/02,  2:34:56 PM
Very neat info on the Repos issue. I was wondering if you have looked back in time to see if there was any trend that they perform this function. For instance, 2x's a week, etc.. and if so, were the markets usually up..Thanks for your postings. As soon as I read they put money in the pot, I knew the market would go up.

In fact, I have been watching and studying the fed's activities for the past several months. There is, in my opinion, a direct correlation between open market activity and equity prices. Moreover, the fed has been "tightening" as of late, or at least adding less liquidity and draining relatively more than it has tended to this year. The reason why eludes me, particularly given the weakness we were seeing in equity prices until this rally kicked off last week. Incidently, the rally off the SPX lows coincided with a $4.5B repo, the first fed money added after days of staying flat.

  Linda Piazza   10/15/02,  2:30:34 PM
OEX hourly stochastics are beginning to roll. What gives me pause is a comparison of today's hourly candle charts with those on Friday. They look eerily similar. When hourly stochastics rolled on Friday, prices stayed within a tight range before stochastics turned back up again. If we've begun a new intermediate move, pullbacks will be shallower than they were before, so watch your stops and pay attention to account management.

  Jonathan Levinson   10/15/02,  1:56:42 PM
COMPX price is right back to 1272. Volume breadth has not deteriorated significantly, which makes sense given that we're looking at a 6 point decline on the COMPX- another example of watching too closely on a quiet day. Nonetheless, pullbacks of any magnitude have been rare lately. Most noteable is the rally in yields, with FVX up 2.07 to 29.82. With the selloff in bonds compounded by the addition of today's fed money, I'm surprised not to see more of a rise in equities, though the day is far from over.

Reader Connie has asked a further question about the repo of fed money. Upon expiry of an overnight repo, which, tomorrow, will occur for the 4.5B added today, the banks must repurchase the securities they sold to the fed today. For this, the banks require cash, and for that, they need to sell whatever they bought today, which normally impacts the markets. Example: The fed bought 4.5B of bonds held by the banks, replacing those bonds with cash. The banks spend the 4.5B purchasing stocks, treasuries, whatever they want today. Tomorrow, the banks have sell those stocks and treasuries to buy back the bonds from the fed. If the fed doesn't renew those expiring repos tomorrow with new liquidity, the market will see a drain equal to today's addition, which is why I track this activity daily.

  Jim Brown   10/15/02,  1:55:51 PM
Check that last Entry Point posting.   I changed the stop loss to OEX 447. I do not want to be too aggressive and get taken out by an afternoon buy program. I think OEX 445 should hold but I feel safer at 447.

  Jim Brown   10/15/02,  1:49:02 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the SHORT signal at 13:38:52 when the OEX traded below 443. SPX 874.46, DIA 81.90, SPY 87.73, DJX 81.85, NDX 940.46, Compx 1273.92, QQQ 23.37, Emini 874.25. The initial stop loss was OEX 453 but let's change it to just over the high of the day at 447. The speed of the drop is telling me we are not going to challenge that level again.

  Jim Brown   10/15/02,  1:43:51 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the LONG signal at 13:38:52 when the OEX traded below 443. SPX 874.46, DIA 81.90, SPY 87.73, DJX 81.85, NDX 940.46, Compx 1273.92, QQQ 23.37, Emini 874.25. This signal was initiated at OEX 432.

  Jim Brown   10/15/02,  1:42:03 PM
My vote on the CNBC mystery stock is TSCO

  Jim Brown   10/15/02,  1:38:36 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Go SHORT with a 1/4 position with an OEX trade at 443. The stop loss will be OEX 453. This is an aggressive trade and assumes the OEX will fail somewhere between here and the 445-450 range. If this signal is triggered we will add to the position at OEX 440.50 (1/4) and again at OEX 438 (1/4) and OEX 436 (1/4). With each position increment we will lower the stop loss by two points.

  Jim Brown   10/15/02,  1:36:49 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The A/D line is dropping as well as the Russell. Declining volume is rising. Let's raise the stop loss on the current LONG signal to a trade below OEX 443.

  Steven Price   10/15/02,  1:29:56 PM
Reader Question: Sunday OI said look for support in LMT at 59.90 to get in on the calls and here it is. But it's gotten here on a day when the mkt. is way up. Is there a defense index to consult or aerospace for guidance? It seems a cause for concern that on such a day the downside trigger target is met. rb

Response: Lockheed Martin (LMT) $60.10 (unch) LMT has tested support at $60, as well as the 200-dma of $60.04. The corresponding Defense Index ($DFI.X)is showing a 2.75% gain. LMT has shown a series of higher lows since it bottomed recently just over $56, but also failed its 50-dma of $63.53 on its recent rally after we picked it. With the stock seemingly pinned between the two averages, I probably wouldn't recommend entry at this point.

  Alan   10/15/02,  1:23:46 PM
Index Futures
While there remains NO pure sell-signal, here at Dow 8200 (1000 points in 3 days) is a POSSIBLE area of some profit taking; however, the market really has not had any sizeable profit taking since Thursday morning. Using Jim Brown's Long OEX calls as an example, it would be possible to Hedge those OEX calls by shorting Dow Futures here at Dow Cash 8200 and take a 'wait and see' attitude on what happens and in this fashion not lose any bid-ask spread on the OEX calls; especially as VIX has dropped 2 points today (40.04 -2.57) from Wed's VIX 50.

  Jim Brown   10/15/02,  1:23:41 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's raise the stop loss on the current LONG signal to a trade below OEX 442. This is a trailing stop and I will try and keep it about 2 points below any high as the day progresses. I want to get out before any drop on Intel fears later this afternoon.

  Jonathan Levinson   10/15/02,  1:22:25 PM
COMPX price exceed the 10 day moving average when it crossed north of 1272, and printed highs all the way to 1279 before easing off. The TRINQ has remained low, currently .20, while the QQV finally dropped, currently -2.31 to 47.76. Volume breadth is awesome to the upside, with 1,081 advancing shares to 63M declining and TICK.NQ of +348. There's a lot of steam in today's rally, and some significant unfilled gaps below it.

  Jim Brown   10/15/02,  1:20:49 PM
Swing Trade Signals
We need to start thinking about closing this LONG signal. With the Dow up +320 today and +1000 from the Thursday lows there is an extreme chance of a profit taking dip soon. There has got to be a contingent of traders that is thinking about taking some profit off the table before INTC earnings tonight.

The Dow has resistance at 8200-8250 and with a +300 point gain already it is doubtful we will clear that 8250 level today. I do not want to just close the signal in case we do get a short covering rush into the close. I am going to change the stop loss and start trailing it closer to the current level. Cautious traders may want to close the play now and avoid the 2 point drop a trailing stop will incur.

  Alan   10/15/02,  1:12:16 PM
Index Futures
Dow is now 1,000 points higher than its Lows last Tuesday.

  Jeff Bailey   10/15/02,  1:04:07 PM
Short Interest Jeff: Here's a good short interest site. Link

Thanks! Will have to check it out.

  Alan   10/15/02,  12:57:32 PM
Index Futures
As the markets remain sideways, thought I would make following "food for thought" comment. At 10PM at night, have you ever regretted NOT taking a particular option position home?
Using yesterday as example: I'm sure you had occasions where you were flat Options, but considering taking home a position very close to the closing bell, but decide not to. Perhaps on Monday at 3:45 PM you considered opening a Long Call position in the banks or financials (C, GS, AIG) ahead of Tue's pre-open earnings in the Banks. But you decided not to. It's now 10PM, and after thinking about the market over dinner, you regret not doing so. You now see how the Nikkei has upticked from its 8PM open, realize it's likely that Europe moves up as well, and given the beaten up nature of the bank stocks, it's likely the US market has a strong gap-up. You can't go back and buy those Option Calls at 10PM at night, but you can buy Futures. By the same token, perhaps at 10PM, you are regretting buying MSFT 50 puts on Monday at 3:45pm, and decide to Hedge them by going long NQ futures.

  Jeff Bailey   10/15/02,  12:51:01 PM
Vertical counts Jeff: What exactly is "Bearish vertical count" or "Bullish vertical count" ? If it is explained somewhere on OptionInvestor.com just point me there.

Two articles in "Bailey's Basics" section of the site. Bullish Link and Bearish Link

Once you're done with those I STRONGLY SUGGEST reading "Understanding risk is key" Link

  Jeff Bailey   10/15/02,  12:46:18 PM
Nokia (NOK) $15.50 +7.04% ... Hi Jeff, what are your thoughts on NOK.I'm holding a long position in NOK and on the p&f chart NOK has a double top breakout on very strong volume.NOK has earnings on thursday and I want ask you,should I wait untill to the earnings.I'm a little bit worry about the action in MOT(earnings after the close today) today.

If "worried" then by golly pay yourself for the RISK you took and take a nice profit.

However, might just want to take partial profits if holding November/December calls. I see MASSIVE reverse/head shoulder pattern in the p/f chart. See the head at $11 and left/right shoulders at $12? Stock gives a "buy signal" today at $15.00, which has bullish vertical count of $20.50. Link

Alway's nice to be able to take some gains off the table ahead of earnings, then if you get the "upside surprise" when technicals hint of bullishness, then a little less "worried" about things.

  Jeff Bailey   10/15/02,  12:33:04 PM
Utilities Jeff:Thoughts on put plays on PEG and AEP. Seem to be weak stocks in a weak sector. Not participating in todays move.

Let's see.... AEP $20.24 +2.3% Link ... has bearish vertical count of $15.00. Stock traded $15.50 before recent bounce. (hmmm... maybe the bad news is factored in?).

PEG $24.39 +0.2% Link has bearish vertical count of $20. Stock traded $20.00. (hmmmm... maybe the bad news is factored in?).

DUK $18.98 -0.78% Link ... has bearish vertical count of $12.50, stock's traded low of $16.50. Maybe all the bad news not yet factored in?

Note: Stocks don't always achieve bullish/bearish vertical counts, sometimes they do, and sometimes they are exceeded. However, EXCELLENT TOOL for risk/reward assessment, especially for OPTION'S TRADERS!!!!

Awesome observation from the p/f charts of how the rallies are nearing resistance though, and trader's can use these observations to understand we may be near a level of key resistance near-term for some of these utility stocks. For a bear, which ones hint of the best DOWNSIDE?

Disclosure ... I currently hold a bearish position in DUK

  Steven Price   10/15/02,  12:32:05 PM
Reader Question: wanted to get your thoughts on General Mills ( GIS). Looks like it met its resistance at near 43 and is starting a slight sell off.

Response: General Mills (GIS) $42.49 (-0.34) OI put play GIS failed to hold its gain above the 50-dma of $42.71. It is still on a MACD sell signal and stochastics also look like they are rolling over to the sell side. My concern is that it found support at the PnF bullish support line of $41 on the last drop and I would probably wait for a break below that level to enter short. While the stock is showing some real weakness, in light of the broad market rally, it may be hard to get a lot of downside movement against the rising tide. If the Dow rally falls back below 8000, then I would expect GIS to fail the $41 level. This combination of weakness would be a good sign to initiate a short entry.

  Jim Brown   10/15/02,  12:30:22 PM
Swing Trade Signals
How many times have shorts been here before? It is mid-afternoon and the markets although looking toppy (technical term) just continue to bleed up instead of down. No big moves just constant higher lows and constant pressure against the overhead resistance. The bears are sure it will break down this afternoon but they are continuing to worry about every positive tick. Their ulcer factor is rising with the Russell starting to trend up again and the A/D ratio picking up slightly. The up volume continues to race ahead. The down volume on the NYSE just now broke 100 million shares. The Nasdaq down volume is only 41 million. What a difference a week can make. The "world is coming to an end" bears are suddenly experiencing that event but it is specific to them and not a global event now.

I don't want to wax eloquent about the change in the markets because it is far from complete. That same bleed up the bears are worried about is keeping bulls nervous as well. Until that last resistance breaks there is always the possibility of a momentum failure and profit taking to appear. As we approach 1:PM it will be interesting to see how the institutions decide to move. Buy the bounce and avoid being left behind or pull back and look for another dip. Odds are good there are plenty of buy stops just overhead to prevent being left behind. We just need those stops to be triggered!

  John Seckinger   10/15/02,  12:27:05 PM
As most of you can guess, I love trading the yield curve and then use the Dow for exit (and entry) purposes. Currently short fives and long tens, I agree with Jim's 10:18:57 post that states exiting once the first post open dip is violated. For the Dow, that level is 8102. I would also like to see the 30-year bond (110-27) fall just a few more ticks lower and trigger some aggressive short selling.

  Linda Piazza   10/15/02,  12:20:50 PM
In reference to my 11:48 post about KO, PEP, and BUD being down on the day, I took a quick look at several years' worth of charts to see if there was a clear pattern, thinking along the lines of a seasonal play such as Jeff's on CPB. Although several of these did seem to decline during late September to mid October some years and then rise into the holiday season, particularly 1998 and 1999, there didn't seem to be a pattern that could be traded with any confidence.

  Jeff Bailey   10/15/02,  12:16:34 PM
FedEx (NYSE:FDX) $53.77 +4.65% ... ugh!.... sold this one the other day into some strength for small profit and wanted to see a triple-top at $53. Stock trades the triple-top, so bulls back on board with demand firmly in control. Link

  Alan   10/15/02,  12:06:49 PM
Index Futures
Futures Trade 1 EXIT: (forgive the delay) By now, the remaining 1/2 size YM (Dow$5 futures) trade stopped out at Breakeven. This trade did 1/2 size for +35 YM points,$175 gain,or +22% and the second 1/2 size was Break-even for $0. While this trade wasn't as impressive as the last one of +100 Dow points, 22% gain in one hour is better than a stick in the eye.

ES (SP500) futures continue to chop around 871-874 , providing plently of long/short 1 pt ES trades of $50 gains (5%gain) but frankly, the focus of this Futures MM trades is not 1 point ES trades. To answer a reader's question on 'why' ES 872-875 is such a strong resistance level, as you can see by the extreme chop in this level it is - but 'why?' Sometimes there's technical reasons, such as % retracements, etc; other times they occur through mere observation of prior trading levels. Advance/Decline on volume continues to climb as is at Day Highs (bullish). As INTC and NVLS are the big earnings tonight, I would watch them (and SOX index) for a sense of market direction going into the afternoon.

  Jeff Bailey   10/15/02,  12:05:41 PM
Short Interest Jeff: In ref. to your comment regarding AMZN earlier; you mentioned that the short interest on the stock is at 18% of the float. Where do you suggest I should look for that kind of information. I would imagine in the coming days, if the market keeps its bullish posture, due to short covering we should anticipate faster rise from those stocks that have higher short interest. Is this a correct assesment?

You can get short interest from Yahoo! Finance in the "statistics" of a stock. Link

I used to use a site called shortinterest.com, which had more current info, but they went out of business or got bought out.

High short interest can have a stock rising faster, but a trader/investor MUST still check the technicals!!!! AMZN technicals are strong, and while stock can get squeezed, note that it has ACHIEVED a bullish vertical count. I'd expect higher short interest here to make better stock to look for pullback bullish entry, where the shorts provide support to the stock under a pullback condition, say $17.50-$18.00. Link

  Jim Brown   10/15/02,  12:05:04 PM
Swing Trade Entry Point Alert - GM
We were triggered on the GM put play at 11:58:30 when GM traded at 34.75. The ASK when triggered was $1.55. on the GM-WF Nov-$30 put. I would suggest a stop loss of $36.25 on this signal.

On stock trade signals like this I will not be following up on a daily basis. These signals are targets of opportunity and it will be up to the individual trader to enter/exit as each trade progresses. I will comment on it from time to time but not necessarily on a daily basis.

  Jonathan Levinson   10/15/02,  12:01:54 PM
We now have 823M advancing shares to 54M declining on the COMPX, which is trading 1270. The US Dollar Index is off its highs and back to just below 107.70. The TRINQ is another touch higher at .24. It's easy on a day like today, actually a very slow day other than the nuclear gap up open, to stare too closely and lose the forest for the trees. The TRINQ is "rising", but it's gone from buried in extreme overbought (.10) to a little less extreme overbought. My point is to be careful in your trading. I've just resisted the urge to short some more- .10 to .24 on the TRINQ could be the start of a breakdown, but one decent buy program could easily erase this miniscule .14 gain, and there's still a fresh $4.75B in fed money floating around out there.

  John Seckinger   10/15/02,  11:52:23 AM
Treasuries continue to come under pressure as possible mortgage selling and a break of highly-watched moving averages becomes the catalyst for longs exiting en masse. The Question remains: Is there a large holder of Treasuries selling the bond contract in order to move cash into equities? Note: 30-year Dec. Bond has now fallen over 4 points in less than five trading sessions. Of course, if the Dow reaches 8197, the blue-chips will be up 1,000 points since Thursday morning.

  Jeff Bailey   10/15/02,  11:49:09 AM
Volume Hi Jeff, Volume question. With everyone and his brother looking for a "follow thru day".. I notice that naz volume is running approx a half billions shares by 10:30. How much (if any) of this volume can be attributed to option expiration week, etc. I only trade equities and always wonder how skewed volume figures can be during this week each month.

That's a question I think CAN NOT be answered with any degree of accuracy. I'm sure there's some volume implications from option experation and those institutions that may have written some covered calls on "old" bullish positions that may now be at or in the money may be coming back in and establishing new cost basis in their "favorites." Sure, they may get some called away, but may be long-term capital gains. New entries in positions in recent sessions may now be slated for longer-term too.

Point taken from volume is that there's INTEREST in stocks for a change.

  Jim Brown   10/15/02,  11:48:34 AM
Swing Trade Entry Point Alert - Citigroup
I agree with Jeff and I think the +2.50 bounce in Citigroup is an opportunity to enter a SHORT. Let's go LONG the Dec-$30 PUT C-XF, currently 1.65, if C trades below $32.50. $34 is strong resistance and not likely to be broken.

  Linda Piazza   10/15/02,  11:48:09 AM
Summer must be over. Coca-Cola (KO), Pepsico (PEP), and Anheuser-Busch (BUD) are all down for the day, although Pepsico by only .07 at this writing.

  Jeff Bailey   10/15/02,  11:39:09 AM
Citigroup (C) $32.75 +8.3% .... Link trader talk (may be bears short) is that C actually missed estimates if a gain due to the sale of a building is excluded - the sale of 399 Park Avenue yielded a gain of $323 million after tax, or about six cents per share. A note from Keefe Bruyette indicates that they did not include the sale in estimates and that C earnings therefore missed their estimate. It is not clear if other firms, besided Keefe Bruyette, had also excluded this non-operating item from estimates.

  Jim Brown   10/15/02,  11:28:17 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's raise the stop loss on the current LONG signal to OEX 438. It appears the markets are moving up again and this would place the stop just under the morning pause. I will raise it again should the OEX pass 445. Current resistance is OEX 448, 455 and 460. This would equate to 8250 and 8375 on the Dow and 876-895 on the SPX. I see anything over OEX 448 as a gift and 450 as a likely exit point. This may be wishful thinking but if the shorts don't see any weakness around lunch they could start a new wave of covering.

  Jonathan Levinson   10/15/02,  11:27:39 AM
In the same vein as Jim's GM short, I'd be targetting C on this rise, which had to sell assets in order to make its numbers and is still under investigation, etc. I won't be getting in on the play myself because of my GE and QQQ put positions, but it looks like a good idea for a play to me.

  John Seckinger   10/15/02,  11:25:14 AM
Note: 50 DMA in Dow was tested at 8175 (Intra-day high at 8179).

  Steven Price   10/15/02,  11:21:58 AM
Reader Question: Hello: What are your thoughts on JNJ here at $59.10. Thanks

Response: Johnson and Johnson (JNJ) $59.13 (+1.30 ) I like the bounce this morning from the 200-dma of $57.71, and the stock has had great recent support. I think that I would wait to see if the earning's momentum can generate a new PnF buy signal at $60 before entering long.

BTW I thought I'd give Jeff B his props for trying to get me to play this stock long on last week's pullback. It almost makes up for him selling FRX at $80.

  Alan   10/15/02,  11:20:04 AM
Index Futures
If you agree that the SP500 Futures market plays a large role in 'what' the market in general does, I would like to point out 2 very important SPX/Sp500 futures/ES numbers. 848-852, and 872-875. SPX basically gap opened higher well above the 852 level (at 867 from Mon's close of 843), and has spent the morning between 867 and 873 with a current triple top at 872. Ignoring sentiment and focusing on technicals, I believe SPX/ES 872-875 area may be "top" area of resistance for this morning and that we go lower before higher. Will be interesting to see if technicals get thrown away if ES/SPX soars over 875.
In general, seldom does SP500 futures gap up thorugh such an important number (848-852) without at some point re-testing that gap. As ES remains locked in a very narrow 6 point range so far, I merely wished to comment my view on how strong the ES/SPX 872-875 resistance will be currently (next higher is ES 880-882). I doubt many took Monday's 11PM Long comment from ES 843-844, but if you did, congrats. Key earnings tonight are INTC & NVLS. Very bullish looking Advance/Decline Volume indicator. MSFT getting close to its $52 resistance.

  Jim Brown   10/15/02,  11:15:49 AM
Swing Trade Entry Point Alert - GM
Nothing says we have to only trade indexes! The GM earnings this morning were huge but the problems have not gone away. Their pension liability exceeds their market cap and will require large sums of money over the next few years. The zero, zero, zero programs is costing them lots of money and current sales are slowing. Clearly the next quarter is going to be tough followed by an even tougher 1Q. I would be looking to short this bounce today. Let's go LONG the NOV-$30 PUT GM-WF, currently $1.50 ask, if GM breaks below $34.75. I expect GM longs to use this bounce to exit a troubled company.

  Steven Price   10/15/02,  11:10:10 AM
Reader Question: Steve- Thanks for sharing your knowledge-certainly does help. Am looking at qcom (an old favorite of mine)-close to it's 200 dma. would you be buying past 34.00 or wait for pullback? Thanks for your time. Nancy

Qualcomm (QCOM): $34.40 (+1.65) I put this stock on the OI watch list, looking for a breakout over $32. We definitely got that break, and now that it crossed the 200-dma of 33.44, I would look for some support to avoid chasing it. I think we need to look at the PnF chart, as well, given the stock's high of $34.99. The PnF bearish resistance line is $35 and would require a trade of $36 to break through. There is also prior PnF resistance at $35 back in June. I would probably look for a show of intraday support above the 200-dma, or a breakthrough of bearish resistance as signals to enter long.

  Steven Price   10/15/02,  11:04:00 AM
Reader Question: Howdy, Price action on LLY seems a little suspect with today's rally. Your thoughts? Thanks, Bob

Response Eli Lilly (LLY) $62.08 (+0.09) LLY seemed intent on testing support after yesterday's break above $63.00 resistance. It found that support intraday at $61, just above the original PnF breakout level of $60. We have to remember that this was a stock headed higher before last week's rally, and was not due for an oversold bounce. I like the fact that it found support at a higher level, but given its lack of participation in today's rally, I would probably wait for a break above yesterday's high of $63.16 for new entries.

  John Seckinger   10/15/02,  11:01:04 AM
The yield curve is 16 ticks flat between 5/10 year note, while the cash spread is 102 bp wide (3.93% in 10-year versus 2.91% yield for 5's). I would have expected more of a flattening with the Dow higher by over 900 points since Thursday's low. What would I expect? Either the curve flat by over 30 ticks or the cash spread easily under 100 basis points. What I am trying to do is gauge Institutional conviction when it comes to the recent asset allocation out of Treasuries.

  Jonathan Levinson   10/15/02,  10:53:27 AM
What does it mean - when you say that the FED has added $X billion via overnite repo or Y days repo?

An overnight repo is a repurchase agreement, by which the fed purchases securities from banks, but with the proviso that the banks will purchase them back from the fed the next day. Thus, cash is added to the banks' reserves, but only "overnight", to be refunded the next day to the fed.

  Jeff Bailey   10/15/02,  10:52:02 AM
Sector Watch has all sectors in the green except for Gold/Silver Index (XAU.X) 61.07 -2.87% Link . Laggard, but holding marginal gains are Utility (UTY.X) 224.60 +0.87% Link .

  Jeff Bailey   10/15/02,  10:47:49 AM
Forest Labs (FRX) $95.71 +2.37% ... stock gaps higher after reporting earnings that beat estimates by 3 cents. Traders note that today's high trade of $95.95 falls 5-cents short of $96.00, which was bullish vertical count (column of X from $66-$75) Link . If still long from past bullish profiles, can look to take some gains of the table here.

  Jonathan Levinson   10/15/02,  10:46:51 AM
Thinking out loud. I think that if I were a bull, I'd be directing $4.5B into treasuries instead of equities. A selloff in treasuries is a rally in yields. A rally in yields is effectively an incremental rate hike, which jeoparizes consumers and corporations alike. We'll have to see.

In the meantime, the TRINQ is up to the top of today's range at .20. The TICK.NQ has faded somewhat at +182. The COMPX made a run at 1270 and got turned slightly back. We have 566M advancing shares to 31M declining shares on the COMPX, while the CBOE total put to call ratio has risen from .65 after the 1st half hour of trading to .75. Other than the TRINQ and the huge jump in treasury yields, there's nothing to indicate that this rally has overextended itself yet. That *is* one huge, unfilled gap, though.

  Jim Brown   10/15/02,  10:46:27 AM
Swing Trade Signals
Interesting morning! I have been back one hour and I am already worn out from trying to assimilate everything, analyze and report it. No wonder Jeff was stressed last week. (grin) It looks like the Nasdaq Comp just set that new high over 1270 but was immediately knocked back again. Definitely hinging on INTC which is up +1.00 and holding in front of their earnings tonight.

We need to get some momentum here quickly or this rally is going to fail. If the bulls cannot run them up the bears will become braver and start testing the waters again. The A/D line has been flat since 10:AM but advancing volume is still increasing.

The Russell appears to have topped as well at 357. This could be a leading indicator to confirm any Nasdaq weakness. If the Russell begins rolling over before the big caps and the Nasdaq weakens I would exit the LONG position.

  Jeff Bailey   10/15/02,  10:42:58 AM
Intel (INTC) $16.14 +6.95% ... stock challenges 50-day SMA here ahead of tonight's earnings (consensus $0.13 per share). Merrill Lynch says that firm's gross margin estimates for Q4 looks "shaky" given checks that seem to confirm their belief that the company is cutting production in an effort to reduce inventory, reiterates "neutral" rating, saying they'd like to see more attractive valuation and evidence that margins are moving in the right direction again before they become more positive on the stock.

  Jim Brown   10/15/02,  10:38:48 AM
Swing Trade Signals
Looks like another attempt on Nasdaq 1270 is underway. The failure of the indexes to give back much of their early gains is encouraging. If that 1270 level breaks we could be off to the races again.

  Jeff Bailey   10/15/02,  10:36:32 AM
Amazon.com (AMZN) $19.69 +2.5% ... stock fell just shy of $20.40, which would be 52-week high. Stock to watch as short interest is high at 18% of float. P/f chart has stock achieving its bullish vertical count of $19.00. Link

  Jonathan Levinson   10/15/02,  10:36:03 AM
The Fed has added $4.75B via overnight repo. There is $5.75B already in the system via 6 day repo from October 11th. This should give upper gap support some extra support.

  Jeff Bailey   10/15/02,  10:33:29 AM
Kohls (KSS) $57.91 +4.9% Link ... placed on Recommended List at Salomon Smith Barney.

  Jim Brown   10/15/02,  10:33:07 AM
Swing Trade Signals
Looks like another attempt on Nasdaq 1270 is underway. The failure of the indexes to give back much of their early gains is encouraging. If that 1270 level breaks we could be off to the races again.

  John Seckinger   10/15/02,  10:25:40 AM
Checking current Intermarket Relationships: Gold lower by 3% while Dollar approaches 108 (107.74). 30-year lower by 1-18, Utility Index higher by 0.31%, and Oil up 1.9%. Gold, currently at 60.85, could still drop to 59 and keep an upward trend which began back in July. Bonds, on the other hand, continue to test its 50 DMA and sellers' conviction. Utility Index looks neutral, while Oil is slightly bullish but under its 50 DMA (currently at 458, while 50 DMA is at 464).

  Alan   10/15/02,  10:21:55 AM
Index Futures
Futures Trade 1 Comment: as we did Friday, suggest taking 1/2 size YM (Dow $5 futures) Short profit gain of 35 points ($175,or 22% gain based on $800 margin); and put a break-even trailstop on the rest. ES 867 (triple bottom), YM 8100, NQ 937. ES futures have a LARGE gap area at 848-852, while I am not suggesting that gap fills today, it's a level to keep an eye on if it does get near there. Appears that Dow is the stongest index, and NQ the least strong with ES in the middle.

  Jonathan Levinson   10/15/02,  10:20:19 AM
I am bidding on a 1/4 position of my beloved GE puts here, with a few months' extra time for good measure.

  Jim Brown   10/15/02,  10:18:57 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's raise the stop loss on the current LONG signal to OEX 436. If we get a complete roll over this would be the level just under the first post open dip. That dip stopped at 436.84. We will exit if that level fails and 436.00 is hit.

  Steven Price   10/15/02,  10:18:39 AM
If you are looking at the retail sector, Wal-Mart (WMT) $55.45 +1.30 is off only 3% on the year and is currently right up against its 200-dma of $55.87. A trade over $56 would show significant strength and this could be a lower risk stock to try and catch a wave higher in the Dow. There is resistance at $58 and $59, and you won't get an oversold bounce, but a break over the 200-dma could lead to a steady rise.

  Alan   10/15/02,  10:16:44 AM
Index Futures
Note: From Thur 10 AM to today: In 3 trading days, ES was up over 100 points, Dow almost 1000, NQ 150 points.

  Jim Brown   10/15/02,  10:16:25 AM
Swing Trade Signals
The battle is fierce and the battle line is the 1270 level on the Nasdaq Comp. Several times the index has tried to add to its massive gains with a trade at that level but has failed. That should be the key for this rally to continue. With the QQQ trending down from the gap open the rest of the indexes should follow suit. Kicking and screaming but they should follow suit. The big cloud on the horizon is the tech earnings led by Intel tonight. We need the Nasdaq to hold 1260 for the broader rally to hold.

  Jonathan Levinson   10/15/02,  10:15:32 AM
The bloom is fading, but slowly, with QQQ at 23.28, COMPX 1266, and TRINQ rising slightly to .13. The TICK.NQ is +201, and QQV down a mere .84 to 49.23. The lack of a collapse in the NDX volatility is a curious divergence, showing that the options market is more bearish than either bonds or equities. We'll have to see how it plays out.

On a purely editorial basis, I'm still amazed at the reaction to GE and C's earnings reports. If you have to sell off assets in order to make your numbers, fine, but why would that increase your net worth? Imagine selling your sofa to make the rent. I believe that what we are seeing a purely oversold, technical bounce that was helped along with last week's fed infusion and some strong spin on these earnings reports. That's just my humble opinion. In the meantime, we trade price, which is the only action.

  Steven Price   10/15/02,  10:12:25 AM
Autozone (AZO): $84.70 +2.25 OI call play AZO now above $84.50 resistance from June. A trade of $85 is a PnF resistance break, as well. Conservative traders can wait for a break above that level for new entries. The logical stop on this play is still $80, but I don't have a problem with traders tightening up the stop to protect significant profits on the play.

  Alan   10/15/02,  10:12:17 AM
Index Futures
Futures Trade 1 Entry: Getting a 2nd chance at the ES 872/Dow Cash 8150 resistance levels provided for a YM (Dow $5) futures Short at YM 8136 area, Dow Cash 8150. Use a stoploss of 25 points from your entry. A Short now wishes to see ES lose the 870 level. NQ (NDX) futures making lower lows from the 9:45 AM 950 resistance level.

  Jim Brown   10/15/02,  10:10:53 AM
Swing Trade Exit Point Alert - QQQ
The QQQ traded below 23.25 and appears to be the leading decliner at this point. If you are still in the QQQ LONG position I would consider exiting now.

  John Seckinger   10/15/02,  10:08:51 AM
With the Dow higher by 3.52% and Nasdaq up by 3.89%, sectors outperforming include Semiconductor (SOX, +6.53%), Biotech (BTK, +4.44%), and Airline (XAL, +6.35%). The Volatility Index (VIX) is lower by 4.85%.

  Jim Brown   10/15/02,  10:08:43 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
The OEX traded above 441 at 10:02:52. SPX 872.24, DIA 81.90, SPY 87.62, DJX 81.66, NDX 940.65, Compx 1269.79, QQQ 23.37, Emini 873.00. You should now be fully invested in the broader market long signal.

  Jim Brown   10/15/02,  10:05:02 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Go to a full position at OEX 441. The risk here is the Nasdaq which has failed to set a new high.

  Steven Price   10/15/02,  10:04:07 AM
Intermune (ITMN): $35.95 +1.73 We got a fresh buy PnF signal in OI call play ITMN with the trade of $35. Entry points from here that I see include a trade over $36 or a re-test of support at $35 for more conservative traders.

  Jim Brown   10/15/02,  10:01:44 AM
Swing Trade Signals
Looks like the bloom is fading but it is still early. This could be the post-open dip that the bulls are looking for to add to their position. All the indexes and the futures are showing red candles but after the big opening gap this is to be expected. I am not ready to raise the stop on the LONG signal as I think the October dip buyers appear to have arrived in force. I think there is a good chance they are going to push us higher today. The key for me now will be a trade above the highs of the day. Dow 8158, Nasdaq 1270, SPX 870, OEX 440.50. This would be the trigger for those still short to cover and those who want to be long to bite the bullet. I doubt there is going to be a lot of shorting into this market this morning.

  John Seckinger   10/15/02,  10:01:08 AM
It is being reported that Duetsche Bank is concerned about a liquidity crisis that could prompt "aggressive" global central bank eases before the end of the year. Furthermore, the WSJ came out with an article this morning (referencing an S&P report) about the lack of liquidity in the Utility sector.

  Alan   10/15/02,  10:00:54 AM
Index Futures
This is a quick chart just made of ES (SP500) Futures overnight, notice how the run started at Europe's 3AM open into today's 10am period. Link

  Alan   10/15/02,  9:56:10 AM
Index Futures
I had technical problems posting to Market Monitor this morning. Last nights 'guess' on today's open of "over 843-844 on a short stop run at 846-848 proved correct, but never expected 'this' large a gapup. ES (Emini SP500 futures) have LARGE resistance here near the 872 level, Dow Cash 8150 is an area of gap fill back to Sept. 19th. I was not able to get my post up to suggest an ES short at 872 resistance 10 min ago, so Futures Model remains Flat. If anyone used that previously noted ES 872 resistance to exit Longs/open a short, the extreme down target is the 852 gap fill area.

  Steven Price   10/15/02,  9:54:42 AM
Wellpoint (WLP): $84.10 (+1.82) OI call play WLP, picked at $78.40 with a trigger at $80 is heading toward the initial hurdle at $86.27. New entries should be aware of this level of resistance from the middle of June. Our target remains $90. I am raising the stop to $79.50.

  Jim Brown   10/15/02,  9:53:30 AM
Swing Trade Exit Point Alert - QQQ
The QQQ stopped at 23.50 and appears stalled. Let's put the stop on the current QQQ long trade at 23.25. Very strong resistance is just overhead at 24.00 and with Intel earnings tonight I doubt it will break it. (this was not an official signal but a "suggestion" just before I left on Thursday Oct-3rd.)

  Steven Price   10/15/02,  9:50:02 AM
Autozone (AZO): $83.49 +1.04 OI call play AZO, entered at $79.38, ran into resistance at $74.50 on the open. It encountered some trouble at that level in June as well and I would wait for a break above $74.50 for new entries. Let's raise the stop on the play to $80

  Jim Brown   10/15/02,  9:48:34 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
The next resistance levels are OEX 440, SPX 875 and Dow 8250. Add to the current LONG signal with another 1/4 to 1/2 position with an OEX trade over 441.

  John Seckinger   10/15/02,  9:44:25 AM
Note: The 50 DMA (exp) in the Dow is at 8174, while the 50 DMA (exp) in the Nasdaq is at 1259. Dow is currently at 8149; Nasdaq at 1267. The cash 30-year bond (TYX.X), currently at 4.91%, is also above its 50 DMA (exp) at 4.89%.

  Jeff Bailey   10/15/02,  9:44:13 AM
10-year YIELD ($TNX.X) 3.938% ... after giving a p/f "buy signal" on YIELD on Friday at 3.8% (38.00 on chart), gets some follow through today on further selling. Current YIELD objective builds to 4.7%. Link

  Jim Brown   10/15/02,  9:43:45 AM
Swing Trade Signals
Now the fun begins. The Dow stumbled right at the 8100 resistance level and the Nasdaq +46 point gap open ran into traouble at 1268. Now the bears and the bulls will wait for confirmation of the move. Bears still short will be waiting to see if there is going to be a pull back for them to exit with less pain and the bulls will be looking for a dip to buy or a Nasdaq bounce over the high of the morning to indicate confirmation. All the initial knee jerk buying is over and now the real conviction begins.

  Jonathan Levinson   10/15/02,  9:43:40 AM
The 20 week moving average is at 23.92 QQQ / 1326 COMPX. We have the 5 week stochastics that in full bull runs now, and, as was the case in August, I believe that this is the cycle that is currently dominant- not a very daring observation, given that all of the shorter cycle 5 period stochastics are currently buried.

The opening 10 minute candle on the COMPX is blowing off and forming a top spike, but the TRINQ is still teeth-grindingly low at .10. Options volatility hasn't blown off as much as I expected, only 1.25 off the QQV. This is a fascinating moment, and I'm trying to take in as much of it as possible.

  Jeff Bailey   10/15/02,  9:40:16 AM
Dow Industrials (INDU) 8,121 +3.09% ... today's trade at 7,950 has the Dow Industrials p/f chart giving a buy signal. Looks bullish the bullish % chart reversing into "bull confirmed" status at relatively low 20% level. Trader's looking long follow with stop at 7,700, which would be first sign of weakness currently. Link

  Linda Piazza   10/15/02,  9:40:04 AM
There's a lot of buying going on: $TRIN at 0.15 and $TRINQ at an unbelievable 0.09.

  Jim Brown   10/15/02,  9:38:20 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the SHORT signal at 9:31:28 when the OEX traded above 432. SPX 852.39, DIA 81.60, SPY 87.03, DJX 79.84, NDX 942.70, Compx 1263.39, QQQ 23.48, Emini 867.50.

  Jim Brown   10/15/02,  9:36:56 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the LONG signal at 9:31:28 when the OEX traded above 432. SPX 852.39, DIA 81.60, SPY 87.03, DJX 79.84, NDX 942.70, Compx 1263.39, QQQ 23.48, Emini 867.50. The initial stop loss will be the entry point for the signal of OEX 432, SPX 852.

  John Seckinger   10/15/02,  9:34:49 AM
The dollar is higher at 107.78, but still underneath the 108 resistance level. Looking at bonds, the 30-year is lower by 1-16 at 110-26 and the yield curve is relatively flat. Definitely a solid reason explaining the bullish underpinning tone to the marketplace. Remember, there is still a rumor out that Soros is selling a sizable bond position he initiated in hopes that the ECB would cut rates. They did not (meeting was last Thursday). Also, the December bond (US2z) is testing its 50 DMA (110-26) for the first time since May 21st.

  Jonathan Levinson   10/15/02,  9:33:59 AM
41 point gap up open on the COMPX to 1261, with the TRINQ currently .11 and QQV down 1.3 to 48.77.

  Jeff Bailey   10/15/02,  9:31:52 AM
Bull Confirmed ... Yesterday's action saw the Dow Industrials Bullis % ($BPINDU) Link reverse back higher in "bull confirmed" status at 20%. This is now a bull confirmed Index and bulls can be looking long.

  Jim Brown   10/15/02,  9:29:52 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I repeat, do not wait for the 432 stop loss to exit the current SHORT signal. Get out as soon as the options open.

  Jim Brown   10/15/02,  9:27:44 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Go LONG the broader market with an OEX trade over 432. This should be a 1/4 to 1/2 position to avoid against a gap and crap open. OEX 440 is going to be the first resistance level to be tested. We will add to this position as the morning progresses if the move continues.

  Jim Brown   10/15/02,  9:25:28 AM
Swing Trade Signals
QQQ traders should hold off on closing the LONG trade from the prior week. I had indicated 23.00 as a target last night but we could get a bounce past that this morning.

  Jim Brown   10/15/02,  9:23:50 AM
Swing Trade Signals
Surprise, surprise. The better than expected earnings by several Dow components (C, JNJ, GM) and positive analyst comments on IBM and MSFT have the futures going through the roof. The Nasdaq futures are +34 and S&P +24. The next resistance levels of 7950 and 8000 appear to history and 8100 is next up.

We should be stopped out of the current short position at the open and I would recommend closing it as soon as possible. We will look for a move above resistance for a new signal. The problem will be determining where to get on this speeding train. In the game plan last night the entry point for a long was OEX 432 and we could hit that on the open.

With Dow futures showing 8090 at the open (just below resistance at 8100) we could see a gap and crap but with the positive sentiment, long term oversold conditions and short covering it is looking highly unlikely.

As I type this the possibility of a strong move after the open appears more likely than not. While I am not a fan of taking risks at the open I think there is more risk to not being in the market. The OEX resistance levels are all the even numbers of 440, 450, 460 with the strongest being 460. That is a long way from our current 425 level. I am going to issue a 1/4 position LONG signal at 432 as indicated by the game plan last night.

  Steven Price   10/15/02,  9:09:00 AM
So much for the 38.2% retracement level of 7915 providing resistance in the Dow. Let's hold off on new entries long and let the rally settle first. We could certainly see continuation of this rally if earnings throughout the week keep up the trend of beating expectations. I would look for the Dow to run into heavy resistance in that case around 8300. It found a bunch of support there before the recent breakdown to 7197 and that level should provide another real test.

  Jonathan Levinson   10/15/02,  8:37:09 AM
The Corinthian Geyser has morphed into a rocket launch on positive earnings news from C, JNJ and GM. I have yet to review any of the data, but futures are going through the roof, with NDX +28.50 and S&P +23.40. Gold has been hammered and the US Dollar Index is trading 107.60. QQQ is trading 23.25 in the premarket, GE 25.71. Bonds have opened negative with yields rallying.

  Alan   10/14/02,  11:34:47 PM
Index Futures
Clicking on this URL Link
will bring up a current (11:30 PM) display of what a Future's Level 2 box looks like. This is on the ES (Emini SP futures). Double clicking on a Bid or Offer will generate you a fill, just as with a Stock Level 2 box. As you can see, Futures are extremely low volume at this time of night which is why the Size at each bid/ask is so low. During the day, an average is about 500-800 contracts of size within each 1 ES point; and before you say "that's all?", please realize that each ES futures contract controls $42,150 of assets ($50 times the current value of 843=$42,150)

  Alan   10/14/02,  11:29:59 PM
Index Futures
Reader Question from Joel: Your email asked the same question as others: Futures Quote providers: Qcharts is certainly an acceptable quote/chart provider for futures quotes. You can try it right now, use ticker "CME:ES02Z" (without the quotes of course), be sure to select "All sessions-show 24 hours" and you can see 10 minute delayed ES (Emini SP500 futures) quotes. I believe Qcharts charges $10/month for the CME E-mini exchange fee to receive REAL-TIME quotes/charts. The other contract would be NQ02Z (NDX futures). Almost all the quote providers offer real-time E-mini futures for this $10 monthly extra fee, you simply need to contact them requesting it. Note: CME also offers for $50-60 month the entire CME futures feeds on such things as Hogs, Nikkei, Russell, currency products, etc, however, more than likely all you would need is the $10 CME E-mini product. CBOT provides the Dow$5 futures contract (YM02Z) for free to the data providers, but not all quote providers offer it to their clients, but once again, you would need to contact your quote provider to ask. Most Realtick clients as example, can receive free real-time CME and CBOT futures feeds from their broker after doing 50 to 60 trades per month. If you go to the cbot.com website, and look around a bit, there is a free real-time data and charting source there but only for the Dow $5 contract.
As for being able to trade Futures from your existing stock/option account such as Etrade, Datek, Ameritrade, Schwab, Realtick, etc; almost all of them do NOT offer Index Futures trading. The only stock and options broker that I am aware of that allows futures trading from is www.interactivebrokers.com
I also suspect most Stock and Option brokers shall NOT offer Single Stock Futures (SSF) when they begin trading in two weeks and would also require a Futures brokerage account.

  Alan   10/14/02,  10:47:19 PM
Index Futures
Key Tuesday pre-open Earnings from : Banks (BAC, ONE, C, FNM, WFC); General Motors (GM); JNJ. After hours Tuesday, the 2 large Earnings are Intel (INTC) and Novellus (NVLS)
As of 10:30 PM, Futures continue their sideways action; ES 843, YM (Dow) 7872, NQ 909

  Jim Brown   10/14/02,  9:32:15 PM
The Swing Trade Game Plan has been posted: Link

  Alan   10/14/02,  9:09:44 PM
Index Futures
9PM: Futures sideways since their 4:15 Close:
ES (E-mini SP500 futures) 842-843, YM Dow $5 futures 7860, NQ (E-mini NDX futures) 908
Nikkei breakout over 8400-8500 resistance, currently near 8800

  Jeff Bailey   10/14/02,  7:46:02 PM
The Market Monitor has been archived. To view today's comments, simply click this Link

  Alan   10/14/02,  12:31:50 AM
Index Futures
Guess for the overnight futures: Sunday night had Europe being 'down', and 'they' did an overnight stop run on US futures "Longs". My guess is that Europe has an Up open, and that tonight has US futures having some Shorts stopped out (what I call a 'shorts stop run') at perhaps 846-848 levels before 8 AM Tuesday morning. Futures do not have market makers, but 'they' still have their little games - just like Stock and Option Market Makers do. Good night.

  Alan   10/14/02,  12:28:51 AM
Index Futures
Lloyd asks a question of "If I buy one ES LONG at 818.50, what would the actual price be of that trade? Would it be 818.50*50? I can't seem to get my head around the initial price and final price. Do I just multiply them by $50?"
This is my fault for not perhaps being clearer. Assume for sake of discussion your futures broker requires $1000 margin to daytrade 1 ES contract. You have $10,000 in the account. ES is 818.25 bid x 818.50 ask. You buy 1 ES at 818.50 and that's all you 'pay'. Your broker will "tie up" or use as margin $1,000 of your money to do this. It doesn't matter if ES is 818 or 848, you do not "pay" or "use up" any more margin monies. The only time the "1 ES point = $ 50" comes into usage, is computing your gain or loss on the trade. You went long at 818 and sold at 820 making 2 ES points and you make $100 (2 x 50). You went long at 818 and sold at 817 you lost 1 ES point and lost $50 (1pt x $50).


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