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  Jonathan Levinson   10/27/02,  7:10:11 AM
from briefing.com 1 year ago 10/29/01

"14:12 ET Market Weakness : Traders noting a host of reasons for market weakness today. The main catalyst being cited is market being marked up last week to boost yr- end numbers for mutual funds; due to t +3 trade settlement, funds needed only to prop up stocks through Friday for 10/31 yr-end....."

 
 
  Jonathan Levinson   10/26/02,  1:43:21 PM
For those who follow the TRIN, here's a very telling chart of the 10 DMA TRIN. Note the recent low reached and compare to prior relative lows.

Link

 
 
  Jim Brown   10/25/02,  9:43:17 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Kent Barton   10/25/02,  5:01:12 PM
This afternoon's rally is being partly attributed to the improved prospects of a Republican-controlled Senate, but the outlook for Congressional control remains just as cloudy as it was before today's developments. Early speculation is that former Vice President Walter Mondale may replace Wellstone on the ballot. Mondale's high profile, combined with a strong sympathy vote, could help the Democrats retain Wellstone's seat.

Whether the GOP can take back the Senate will depend on the outcome of neck-and-neck Senate races in Colorado, South Dakota, Missouri, and New Hampshire.

 
 
  Alan   10/25/02,  4:51:00 PM
415PM Futures CLosing prices: ES 898s (ES did print 900.00 right near 413PM before closing at 898s)
YM 8435, NQ 992
Have a great weekend !

 
 
  Jim Brown   10/25/02,  4:19:32 PM
Jim, I'm amazed. I almost wrote earlier when I had this revelation that we need to trade what the market gives us and not what we wish it would give us. But I let 'good sense', 'vast experience', and 'superior intellect' get in the way. How can the bulls push this market up to a point where the bears jump in and start covering. And then more bulls buy enough to sustain the whole crazy process. We've had, at best, mediocre economic news, a US Senator has been killed, we're going to war in Iraq, pension funds are grossly under funded, etc, etc. We even have Italian's calling 200 point dips the day after a surprisingly strong market and followed by a, at least for now, 125+ gain.

What the heck happened? When will sanity come back into this market and when can we start making money again the old fashioned way, buying and selling options with a good, profitable conclusion? John

In the Swing Trade Wrap last night I mentioned the positive forces at work going into the election only a week away. That is one factor. With the Durable Goods drop this morning there is an even better chance that traders will be expecting a rate cut on the Wednesday after the election. Notice I said "traders will be expecting". It makes no difference between now and then if they finally do cut or not. It is the expectation of the cut that will hold the market up. The tragic death of the liberal democratic senator in Minn. today also gave the market a boost on the hopes that the republicans could gain control the congress. It is a sad event but the market is always forward looking.

I exited the SHORT signal today for multiple reasons. Premium decay over the weekend, a triple digit bounce on the Dow that could encourage bulls even more over the weekend. Ma and Pa Kettle will see the +126 in the Saturday paper and maybe decide the rally is for real. All of this needs to be factored in to your outlook for next week. I said last night that I could see another bounce next week and this afternoon just increased that caution.

Fundamentals will return and that could be on Nov-7th. Be patient and trade what you see not what you want to see. Sounds easy but very hard.

 
 
  Alan   10/25/02,  4:16:26 PM
Oddly, ES upticked into the close, and NQ downticked by small amounts.

 
 
  Alan   10/25/02,  4:13:00 PM
Small ES short squeeze into the close, ES 899s

 
 
  Jim Brown   10/25/02,  3:58:18 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Exit points for the closed SHORT signal. OEX 454.94, SPX 896.24, DIA 84.35, SPY 89.96, DJX 84.32, NDX 992.54, Compx 1327.45, Emini 896.00.

We did not hit the initial stop (8450) but with the Dow up +115 on a Friday before a potentially positive week there was just no reason to take the risk. We will look to enter again on the next move. I could easily see a positive open on Monday pushing us back to 8550 and another failure. That would be a good entry.

 
 
  John Seckinger   10/25/02,  3:57:12 PM
Time to look ahead: On the economic docket, there are no reports on Monday and Wednesday. Tuesday has the October Consumer Confidence at 10 a.m. Thursday is the Advance GDP report and ECI index, while Friday features the Nonfarm Payroll report and October ISM Index.

 
 
  Steven Price   10/25/02,  3:57:09 PM
I just got out of a meeting and will try to catch up with emails. Unfortunately there are only 5 min. left to trade, so manage your risk according to your accounts and I'll do my best to post responses. Also send in your questions for Ask the Analyst to asktheanalyst@OptionInvestor.com

 
 
  Jim Brown   10/25/02,  3:53:50 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Exit SHORT signal now at Dow 8430.. End of day drop is not happening and I don't want to hold over the weekend.

 
 
  Alan   10/25/02,  3:53:08 PM
Index Futures
Just saw a great reason why I dislike the last 30 minutes of futures trading on Fridays. ES at 898: is it going to run short stops and print over 900-901 -or- is it going back to 895? No one "knows" so late in the day, and you can see how in 1 3minute bar it sold 3 points and in my view, that's 'not tradeable' with good risk/reward

I've mentioned the ES pivot of 880 a great many times, if you look at today's chart (as a review), you can see what an important number it was again today.

Futures Signal going into weekend flat with no more trades for today.

 
 
  Alan   10/25/02,  3:42:47 PM
NQ (NDX futures) 997, can 'they' get a NQ close over 1000 in 30minutes?

This will mark the third row in a week of GREEN weekly closes.

 
 
  Alan   10/25/02,  3:32:18 PM
Index Futures
Futures Trade Signal EXIT
Signal entered, Short ES 896.00
At 3:24 PM, ES Profit Trail stop hit at 895.00 for a Gain of +1 or 5% on the remaining 1/2 Size short from 896 signal entry.
ES got very close to the 892 support, and if that would have failed, 888 was the next lower support. When 892 held (as well as Dow cash 8400), shorts covered taking ES back up to 886s.

Currently now FLAT - as a rule, given the possible extreme wild nature with futures on Friday afternoons after 3:30, most times, the risk/reward does not warrant a trade.

 
 
  Alan   10/25/02,  3:13:07 PM
Index Futures
Futures Trade Signal EXIT
Signal entered, Short ES 896.00
At 3:11 PM, with ES at 892.50x892.75, the 1/2 size Cover bid hit for Gain of ES +3 points, 15%
Maintain remaining 1/2 size Profit Trail stop at 895.00
We now seek ES to lose 892 support to further escalte the selling.

 
 
  John Seckinger   10/25/02,  3:12:10 PM
Bond market is closed, and it looks like the five-year note will settle higher almost as much as the 30-year (+15 versus +18, respectively). There are certainly times when the bond market does its own thing, and today's rally in bonds could be attributed to either problems in Venezuala or a "bear trap" in bond prices (read: short covering). As far as the Dow is concerned, bulls seemed intent on getting their weekly net gain (above 8320). Technical in nature, and independent of bond prices.

 
 
  Alan   10/25/02,  3:09:21 PM
Index Futures
Futures Trade Signal EXIT
Signal entered, Short ES 896.00
Lower Profit Stop to 895.00 now, to lock in a minimum of +1 ES point gain.
Very close now to 1/2 size cover buy at 893.00 with ES 893.25.x893.50

 
 
  Jim Brown   10/25/02,  2:59:04 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Let's raise the stop loss back to 8500. We are so close and only a couple minutes till the 3:PM turn. At this point 50 points will not hurt ay worse.

 
 
  Alan   10/25/02,  2:59:01 PM
Index Futures
Futures Trade Signal ENTRY
Signal entered, Short ES 896.00
Stoploss is 2 points, seeking 3 point target on first 1/2 size position, buy to cover order at 893.00

 
 
  Alan   10/25/02,  2:57:06 PM
Index Futures
Futures Trade Signal ENTRY
2:55 PM: Short ES 896 or better, use 2 point stoploss

 
 
  Kent Barton   10/25/02,  2:51:00 PM
VIX.X Volatility index (36.52, -3.38) breaking to the downside after spending more than a week hovering near its 50-dma (40.13).

 
 
  Jonathan Levinson   10/25/02,  2:50:39 PM
The rally in bonds and rally in equities continues. FVX is down 8.8 basis points while the COMPX is up almost 25. The buying has been steady and strong, with the TRINQ at .72 and the QQV now down a whopping 3.08 to 43.92. 1330 has so far kept a lid on the rally, and it did not get challenged on this last runup. As long as the market continues to buy bad news, it will be difficult to explain the action or predict a solid top. QQQ is now 24.62, while precious metals are slightly in the green. Money seems to be fleeing out of cash into whatever is available, be it bonds, metals, or tech stocks.

 
 
  Jim Brown   10/25/02,  2:38:11 PM
Swing Trade Signals
Looks like we will stop out at 8450 unless something happens quick.

 
 
  John Seckinger   10/25/02,  2:22:07 PM
For the second consecutive session, it looks like the cash 30-year bond (TYX) will finish with lower yields. Yields have risen from 4.66% to 5.21% in only eleven sessions. The 200 DMA is above at 5.24%, while both the 22 and 50 DMA's remain lower near 4.95%. From the October 10th low to the high set yesterday (4.66 to 5.21), the 38.2% retracement is at 5.04%.

 
 
  Jim Brown   10/25/02,  2:17:03 PM
Swing Trade Signals
Dead stop at 8369 again but the higher low pattern suggest we may eventually break this resistance unless the bears get tired of waiting and just pull the trigger to dump it all. The last bounce at 14:08 appeared to be a buy program but other than that volume is rather flat.

 
 
  Alan   10/25/02,  2:04:29 PM
font color=blue>Index Futures
Futures Trade Signal EXIT
1:59 PM NQ currently is chopping around 980, went as low as 978s a moment ago. For the 3rd Friday in a row, I'm having an internet backbone problem, so to be safe, am closing this Short NQ Signal out in full on the remaining 1/2 remaining position size.

Futures Signals therefore "Flat"

 
 
  Steven Price   10/25/02,  2:03:45 PM
Note on the Paul Wellstone plane crash. While I didn't necessarily always agree with his politics, his office was instrumental in helping my wife's family make it from the Seychelles Islands to attend our wedding several years ago, when they had visa problems. He was a decent guy who helped us out, in spite of the fact that my wife had not lived in his state of Minnesota for several years. Good guy, huge loss.

 
 
  Steven Price   10/25/02,  1:59:22 PM
Reader Question: Hi Stephen, I am currently watching IBM for a good put entry. It has been hovering between 73-74 for a little while today. The dow has also been rangebound so am still waiting. Whats your thoughts on the play. Wait for a break below $....? Much appreciated and keep up the good work. Nick

IBM: $73.53 (+1.43) As you mentioned, we are seeing a rangebound Dow and IBM is currently holding between $73 and $74. I would like to see a breakdown in either the stock or the Dow before piling on. In the current earnings environment, I think it is important to wait for an entry point that doesn't contradict what we see in the broader markets. While it can be frustrating to sit on the sidelines, sometimes it is the best strategy. We try to observe the big picture and not trade in a vacuum. While we focus on what we think are the best long or short candidates, we don't want to blindly enter a trade without confirmation of the trend.

 
 
  Kent Barton   10/25/02,  1:40:16 PM
Breaking news: Plane crash in Minnesota. Senator Paul Wellstone believed on board.

 
 
  Alan   10/25/02,  1:40:02 PM
Index Futures
Futures Trade Signal EXIT
At 1:35 PM, with NQ printing 980, exit signal hit for covering 1/2 Size NQ short for Gain of +5, maintain the 985 breakeven stop on the remaining 1/2 Size.
ES downticked to its 883 support which held, and first attempt to take out 887 failed.
But the tone feels more bullish as if forced to guess, I'd guess "they" have Dow closing over that 8320 green for week/red for the week number.

 
 
  John Seckinger   10/25/02,  1:33:13 PM
Volume in the bond pits are drying up fast, with the Dec 30-year up '19 ticks and above 109 at 109'01. Fives still finding a solid bid, with talk that a hedge fund bought 5,000 December five year notes (face value of 500 mln) a few hours ago. Reasons could include rumor of a coup in Venezuela, but a friend of mine at the CBOT believes this rumor to be completely untrue. Oil Index is lower by 1.24%.

 
 
  Jeff Bailey   10/25/02,  1:27:03 PM
Cigna (CI) released for trading at $37.23 after halted at $36.81.

 
 
  Jim Brown   10/25/02,  1:25:14 PM
Preferred Trade Alan Knuckman at Preferred Trade Live reminded me that customers can call them direct if they have problems with the system and they can make the trades for you.

The number is 888-281-9569

Talk to Alan Knuckman or Andrew Aronson.

He also mentioned my comment earlier in the week that OIN staff cannot give you specific trading advice about your current positions. They said they would be happy to review positions with anyone and help you decide a course of action. You do not have to be a Preferred customer to call them for this advice.

Give them a call.

 
 
  Alan   10/25/02,  1:23:43 PM
Index Futures
Futures Trade Signal EXIT
Buy to Close 1/2 position size on the NQ short at 980 for Gain of +5 points, lower stop to Breakeven on rest.

 
 
  Alan   10/25/02,  1:21:42 PM
Index Futures
Futures Trade Signal
Dow and ES are selling off, NQ is yet really selling that hard as of yet. Sometimes shorting the strongest index is the best plan for it falls first and the hardest, sometimes it does not. I had not wished to perhaps confuse you by suggesting *BOTH* an ES 888-890 level short, and a NQ 985-988 short as both those were strong resistance. ES has fallen nicely from those levels, NQ has barely budged so far only providing approx 4.5 points of short gains so far. At perhaps another time, if I were to post a signal of "Short BOTH ES AND NQ at xyx price, this will be the reason why.

 
 
  Jonathan Levinson   10/25/02,  1:17:47 PM
I see COMPX trendline support at lucky number 1313.

 
 
  Jim Brown   10/25/02,  1:10:46 PM
Jim, This is getting interesting YELL falling hard ready to test or fail 28.50 Somebody knows something smells. Just observing here. Nelson

Looks like the bears are waking up.

 
 
  Steven Price   10/25/02,  1:07:54 PM
Cintas (CTAS): $49.49 +0.74 We added this put play last night, but in the write-up said we would look for intraday resistance under $50 AND Dow resistance under 8300. I would hold off on entries, since the stock has followed the market rally, in spite of a negative outlook going forward. If the rally continues, we'll wait to enter. If we get a breakdown, then we will enter.

 
 
  Jim Brown   10/25/02,  1:04:29 PM
Swing Trade Signals
There is our lower low from the 12:24 dip on the Dow. If the Nasdaq breaks 1315 the dominoes should start to fall.

 
 
  Alan   10/25/02,  1:01:29 PM
Market shorts now want ES to lose 885, DOw cash has lost 8350 pivot by a slim margin, currently 8339. Market shorts however need to factor in the 8320 number, as that dictates whether we have a 3rd week of green close, or 1st week of red close since October 10th rally started.

 
 
  Jonathan Levinson   10/25/02,  12:53:11 PM
The latest put to call reading has come in at .71, while the TRINQ remains low-ish at .67. The COMPX has made minced meat of my 1300-1310 s/r area, yesterday to the downside and today to the up. I'm watching GE trace an ascending wedge toward 26.40 on light volume on the 5 minute chart, and I'm salivating for yet more puts, though I'm too nervous to bid aggressively for them. Such is the nature of post-traumatic stress disorder, though I wouldn't belittle the condition by attributing it to me. As the month is starting to wind down, I'm noticing how disturbing the endless rallying on bad news truly was. As I type, the lower ascending trendline is being violated on GE, so I might have missed my entry.

The QQQ options market remains very optimistic, QQV -2.47, showing the shocking strength in tech today, while the FVX is down 6.4 basis points. Yet another confusing day in the markets.

 
 
  Jeff Bailey   10/25/02,  12:51:46 PM
Cigna (CI) $36.81 -42% .... Halted with news pending.

 
 
  Jim Brown   10/25/02,  12:51:46 PM
Swing Trade Signals
Today is a carbon copy of yesterday between 10:am and 1:PM. The 10:AM bounce, sell off, double top intraday, etc. If the next low is below 8335 the next couple hours should be down. Just an observation.

 
 
  Alan   10/25/02,  12:44:30 PM
CI , CIgna appears HALTED for news

 
 
  Alan   10/25/02,  12:40:35 PM
Index Futures
NQ remains at 985-988 resistance area. NQ which has been the strongest index today has paused, BUT ES has played bullish catchup as it held its 885 support a few minutes ago as just printed day highs at the 890 resistance level (next higher is 892-895). MSFT $52.41 also at day highs and right under its 52.50 resistance.

 
 
  John Seckinger   10/25/02,  12:35:47 PM
Looking for a catalyst: Per 11:16:46 Post on the 50 PMA (five-minute chart, Dow), this moving average was penetrated at 11:45 and prices have stayed above since (closing basis). The 22 PMA (8330) also seems ready to cross above this average. If prices fall back below the 8330 level, I will take a solid neutral stance.

 
 
  Steven Price   10/25/02,  12:32:38 PM
Lockheed Martin (LMT) $55.05 (-4.05) getting slammed on a warning about losses in its pension plan. I read recently that over 1/2 of the S&P 500 is facing pension problems, and this could definitely be a time bomb that isn't just affecting GM.

 
 
  Jim Brown   10/25/02,  12:28:46 PM
Swing Trade Signals
Dead stop at that 8369 resistance. Actually it hit 8371 but who is counting. looks like there are still some sellers lurking overhead. The Nasdaq blunted as well but did not pull back. That would indicate to me we will have another attempt to move up. Another failure could signal a reversal back to negative territory. It will be interesting. Boring news day so bulls are stimulated into movement? Just a theory.

 
 
  Alan   10/25/02,  12:24:47 PM
Index Futures
Futures Trade Signal
Dow and ES are selling off, NQ is yet as of yet. Sometimes shorting the strongest index is the best plan for it falls first and the hardest, sometimes it does not. I had not wished to perhaps confuse you by suggesting *BOTH* an ES 888-890 level short, and a NQ 985-988 short as both those were strong resistance. ES has fallen nicely from those levels, NQ has barely budged so far only providing approx 2.5 points of short gains so far. At perhaps another time, if I were to post a signal of "Short BOTH ES AND NQ at xyx price, this will be the reason why.

 
 
  Alan   10/25/02,  12:22:39 PM
Index Futures
Futures Trade Signal ENTRY
Go short NQ (NDX) futures at 984 or better, currently 985.50x986

 
 
  Steven Price   10/25/02,  12:10:15 PM
General Motors: $35.03 -0.60 GM is refusing to participate in the rally, and we dropped the put play for sideways movement. Every now and then an e-mail slips by me and I discovered this one from Monday. Thought I'd share it with those watching the stock.

I know logic doesn't always prevail in the market however I run a large GM dealership in Virginia and October is the worse month I can remember in MANY years. I own puts and find it hard to believe that when GM and the rest of the industry reports their sales at the end of the month that anything good will be said.

 
 
  Alan   10/25/02,  12:05:04 PM
Index Futures
SOX SemiIndex, NQ and MSFT leading this 'stealth rally' today. While it wasn't posted as a formal trade signal, if anyone went Long on a BuyStop of ES being over 885, with it now trading at 889, I would now suggest taking long profit as it appears the next signal will be a short but am waiting for MSFT to lose 52.00 before that signal comes in.

If you look at charts, at 11:45 AM, ES was still drifting sideways at top band of this mornings range at 883, on no news, it upticked 3 points higher in one bar, taking out the 885 stops, paused for 5 minutes, and then (again in one 3minute bar) went 885 to 889.
Who knows what the afternoon brings, but for now, it seems Dow will close green for 3rd week in a row (needing over 8320 to do so).

 
 
  Jim Brown   10/25/02,  12:01:19 PM
Swing Trade Signals
Looks like the lack of a drop has brought some buyers back into the market. Last resistance before we could get a significant bounce would be 8369-8394 and of course 8400. I am going to leave the stop at Dow 8450 just in case those resistance levels hold. Traders wanting to go flat before the weekend might want to close the signal now and not wait for the stop.

 
 
  Jim Brown   10/25/02,  11:51:00 AM
Preferred Trade There is a problem accessing Preferred right now for some readers. (including me) They claim they are not having any problems and it is possible the Internet is having another DOS attack like we had on Monday.

 
 
  John Seckinger   10/25/02,  11:50:54 AM
A tale of two markets. The Dow, on a 60-minute chart, is setting lower highs and lower lows, while the Nasdaq is showing higher highs and higher lows. Both indices, on a daily basis, are recording relatively high RSI readings, and MACD levels above when the last relative highs were set (1426 and 9050).

 
 
  Alan   10/25/02,  11:40:55 AM
Index Futures
Futures Trade Signal
After waiting for the dust to settle from the 9:45 AM and 10 AM Economic reports, since 10:15 AM the markets have once again been drifting sideways. ES remains locked in a very tight 879-883 range, and the Dow continues to chop sideways near its 8300 pivot level. There almost "feels" as there is an underlying Bid in the market, Advance/Decline by volume has turned green. But we need to see Dow firmly breakout over 8300 (or ES over 885) before considering a Long entry.

 
 
  Steven Price   10/25/02,  11:34:50 AM
Unitedhealth (UNH): $97.86 (-0.42) UNH's drop this morning was a case of the entire HMO sector getting hit on the Cigna sell-off. However, as many analysts have said, CI's premium risk management problems were specific to the company, and UNH has performed well in that area. UNH has rebounded strongly off its low of $95 and I wouldn't be panicking about holding it long. In fact, I think the small loss in spite of Cigna's $28 drop shows strength.

 
 
  Steven Price   10/25/02,  11:26:05 AM
Reader Question: Thanks for the post Steven. That was fast and much appreciated. I am new to the options and really depend on you (OIN) to tell me what to do. So in this case, I really am uncertain as to what I should do. Sell now and take the big loss or wait it out and close the position at a better price? Currently it is bidding .20. Thanks much again. P

Response: Electronic Arts (ERTS) $65.95 +0.10 Thispost is in regard to Nov 75 calls bought at 0.75. Each trader has his/her own risk limits. I would like to tell you "what to do," but unfortunately I am not familiar with your style of trading, and it is most likely different than mine. If I were holding the trade and the bid were 0.20 I would probably hold the calls as a "lottery play," given the positive comments from ERTS and the volatility of the stock. However, everyone must decide how much they are willing to lose before getting out. Jeff B. often advocates no stop loss on option trades, instead risking only what you are willing to lose and preaching proper account management. I am not entirely in his corner on this one, as I think "getting out" helps clear a trader's mind and allows him/her to move on to the next trade. My suggestion would be to assess your account from this point. If you would not put the trade on here, then there is probably no reason to be in it (this was one of my mentor's favorite sayings and usually proved accurate).

 
 
  Jonathan Levinson   10/25/02,  11:22:54 AM
The COMPX 10 minute chart is showing me a wedge, which could break either way but tends to be a continuation pattern, and I expect a break south. We'll see. The TRINQ remains bullish at .71, TICK.NQ bearish at -159, QQV bullish at 45.11 -1.89 on the day, FVX bearish down 7.4 bps. The CBOE p/c ratio is at .71, still low but not like .56 for the previous 1/2 hour's reading. Overall, however, the p/c ratio is describing a lower range, which points to increased bullishness. Bears should be encouraged by that fact.

While I am expecting a significant pullback from this month's dramatic rally, I continue to be scarred by the shocking rise we saw off the October lows. Each time I see what feels like a "ridiculous" new high on the indices or stocks that I follow, a level that I was "hoping to see again" to load up on puts, I get gripped with fear that the price will just continue forever, like Roald Dahl's Great Glass Elevator. I hear Dirty Harry whispering, "Do ya feel lucky, PUNK? Well, do ya?" I managed to buy some GE puts yesterday near the open, but I haven't yet been able to pull the trigger on more QQQ contracts. This is partly irrational and partly good account management. If it keeps you out of serious trouble, fear can be a good thing.

 
 
  Jim Brown   10/25/02,  11:22:53 AM
Morning Jim, Any news on the weakness in Transports. Looks as if 2263 fails it could fall to test 2200 little gap? Seems weaker than the other indexes? Nelson

Good point Nelson! The key here I think is the drop in Durable Goods orders for nondefense aircraft and parts of -46%. This is a huge drop and traders are probably keying on that. This was after two large monthly gains but the drop is still huge.

This drop in transports will drag on the Dow and could provide the offset to the Nasdaq strength. It looks like the drop is accelerating in the transports as I type this.

 
 
  Linda Piazza   10/25/02,  11:17:18 AM
BC: Brunswick Corp. $19.79 -10.78% Wish I'd bought puts ahead of this company's earnings announcement. Today's volume in excess of 800,000 has already far exceeded the average daily volume of 511,000. This corporation manufactures Sea Ray and Bayliner boats, as well as Mercury and Mariner engines. Its earnings were up sharply, yet missed First Call estimates by $0.01. In addition, they guided expectations to $0.18-.23 in Q4 and $1.10-1.15 for the year, when analysts expected $0.23 for Q4 and $1.16 for 2002. This morning's gap moved BC below its 21-dma of 20.60 and dropped it below the important psychological level of $20.00. I won't be following this, as options are thinly traded, and also because it has some previous support in the $18.50 level, and again at $16.50 and $15.00. A trader would need to monitor closely at those levels and have the ability to get in and out quickly, but I thought I'd show the experienced traders among you a chart so you could evaluate the play for yourselves. Link

 
 
  Steven Price   10/25/02,  11:17:05 AM
Reader Question: Inside day so far with AZO. Volume somewhat lighter than average. Wait until Monday to determine whether it will move N or S? duggo

Autozone (AZO) : $85.10 +0.07 The PnF triple top breakout was down at $77 and the stock has pulled back and given fresh buy signals twice since then. The buy signal at $82 lasted only $1 before the next pullback and the next buy signal at $84 was good for a $5 move. Each pullback came to a previous buy signal. The problenm is that it is difficult to tell if the pullback this time will stop here, or the next buy signal lower at $82. I am tempted to buy this pullback, but I think I'd like to see some upside first. Waiting until Monday, or at least a trade back over $86 seems prudent.

 
 
  John Seckinger   10/25/02,  11:16:46 AM
Pattern Recognition: Not seeing too much as of yet; nonetheless, the 50 PMA (five minute chart) in the Dow was at 8365 when then Dow hit its intra-day high of 8363. This short-term moving average currently sits at 8339, and could be pivotal. Five-year notes, oil, and the dollar all points towards lower equities; however, the fact that the Dow opened the week at 8320 still remains in the back of my head.

 
 
  Alan   10/25/02,  11:05:10 AM
Index Futures
Using the 10:45 AM post to answer several reader questions re Futures Premium. The last few weeks, Dow Premium (the difference of the Futures vs. the Dow Cash) has been on average NEGATIVE 10 to 15 points. Dow Cash might be 8400, and YM (Dow futures) being 8385x8390. A few minutes ago, it dipped to an extreme level of 25 to 30 points Under cash, creating "value" and often at that time, program trading will come in and create a short-term upward "pop" in the futures which did occur and now the Dow Premium is back to its 'normal' Negative 10-15 points (Dow cash 8288, YM 8274)

How would an Institutional Program Trade occur? Perhaps they had their computers set to do this: IF Dow Premium becomes -28, Buy YM Dow Futures *AND* Short DIA stock in a 1:1 ratio. As the Premium returns to its "normal" level of -15; they would exit the position by "Sell to close YM Dow futures *AND* Cover DIA Short stock; thus locking in 13 YM Dow futures points in a relatively risk free fashion.

 
 
  Jeff Bailey   10/25/02,  11:00:40 AM
eFunds Corp (EFDS) $9.00 -6.73% ... After gapping lower and trading a session low of $7.25, stock has rebounded. In pre-market press release, company announced that it will delay its earnings while it completes a review of the accounting treatment given to various transactions that occurred in 2000 and 2001. EFDS previously announced that the SEC is conducting an inquiry involving the Company's restatement of certain 2001 results. The SEC staff has requested additional information. Link

 
 
  Jim Brown   10/25/02,  10:56:40 AM
Swing Trade Signals
Looks like the 8260 level from this mornings drop is going to be the key. It appears we are going to test it again and a break could turn ugly. The Durable Goods numbers appear to be weighing on the market and bulls are not as convinced as they were last week.

 
 
  Jeff Bailey   10/25/02,  10:56:07 AM
Per Index Trader Wrap Major indexes all holding above their 50-day SMAs and haven't seen any downside violations today. Smaller-cap Russell-2000 Index (RUT.X) 366.94 +0.25% the exception as it has yet to be able to test its 50-day SMA of 373.50. Slight positive near-term for bulls as this technically weaker index holds support above 360 and starting to round flat 21-day SMA of 355.Link

 
 
  Jeff Bailey   10/25/02,  10:49:00 AM
Dow Jones Home Construction (DJUSHB) 312.61 -1.49% ... despite better than expected housing numbers this morning, marginal weakness here and dipping back below a flat 50-day SMA. Failed rally attempt at rounding flat 200-day SMA will have a bear's attention that this group my be seeing distribution longer-term. Link

 
 
  Alan   10/25/02,  10:45:36 AM
Dow Futures Premium is now showing about 25 to 30 points UNDER cash, this is bearish, usually its been about 10-15 point under the Dow Cash.

 
 
  John Seckinger   10/25/02,  10:42:37 AM
Note: The Dow began the week at 8320. There certainly could be some determined bulls out there that would love to extend the winning streak to three (weekly basis).

 
 
  Alan   10/25/02,  10:42:07 AM
Futures are moving quickly off pivots today, in the 90 seconds it took to "see" ES was going to hold 880 mentioned support, and type that long signal entry, it was already 882. It was too dangerous to park a limit buy at 880, as if it would have failed, 877 could have printed just as fast as 883 is printing now.

 
 
  Jonathan Levinson   10/25/02,  10:41:55 AM
The put to call ratio has been declining today and the latest reading just came in at .56. That's a lot of optimism, in my opinion, and fading the put to call ratio is a good way to avoid the herd. It can certainly fall lower (see $CPC on stockcharts.com), but this is the lowest reading we've seen since August.

 
 
  Jeff Bailey   10/25/02,  10:41:03 AM
Procter & Gamble (PG) $88.13 -0.76% ... Key technicals here for Dow component as it tests longer-term 200-day SMA at $88.15. Also key may be support above $87. If broken, would be triple-bottom sell at $87, but still above trend with some near-term downside risk to bullish support at $84 Link . For bullish % watchers, a trade at $87 would take one stock away, or 3.33% from Dow Industrials Bullish % ($BPINDU) Link

Relative Strength versus Dow Industrials still strong, but close to reversing lower and may take a trade at $87 to do so Link . As such, might be on a bearish traders watch list, but just 1/4 or 1/2 positions as stock trades trend on its point/figure chart.

 
 
  Steven Price   10/25/02,  10:34:47 AM
Reader Question: I have been watching ITMN it was a call play acouple of weeks ago. It has come back down to the conservative entry point. Do you feel it's still a valid play? thanks, Lisa

Response: Intermune (ITMN) $35.00 +0.02 ITMN has filled the gap up from 10/15 and the pullback actually looks less severe than previous ones. There has been plenty of resistance around $37-$37.50, so I'm not sure a long option play has enough room to run for my tastes. However, if the stock can show support above $35.00, we may be seeing a new take-off point.

 
 
  Alan   10/25/02,  10:26:12 AM
Index Futures
Futures Trade Signal ENTRY
No current Trade Signal. Now that un-tradeable 9:45 AM and 10 AM reports are out of the way, here's a recap. ES held 875-77 this morning, stalled at 888 after 10 AM, and now is sideways at 883 pivot (above 880 support and below 885 pivot).
Dow cash came close to losing 8250 support, but did not; rallied 100 points off its morning lows to stall at 8370, currently chopping above 8312 soft-support and 8350 resistance.
NQ hit resistance at 988, now chopping near its 972 support.

In a word: market is selling since the 10:05 AM morning highs, but is holding right at 50% retracement area of today's lows/highs; futures are roughly the same levels they were at last night at 4 PM.

In the minutes this took to write, selling as increased, Dow is looking to retest its 8300 support and ES its 880 support. IF those levels hold, thus making a higher low, shorts may cover a bit more *but* IF they fail, we could easily close the gap downward to the morning lows.
Currently, use Dow 8300 and ES 880 as sense of market directional movement.

 
 
  Jonathan Levinson   10/25/02,  10:20:29 AM
"The CME is experiencing difficulties with the TOPS order routing facility. Due to connectivity problems with TOPS to the CME and Globex, there will be delays in E-Mini and small Nasdaq contracts. We will update you as more information is available. "

 
 
  John Seckinger   10/25/02,  10:20:27 AM
Thinking about the better-than-expected New Home Sales report, which rose to a record pace of 1.021 million. I believe I saw mortgage companies talk about hiking rates again this week to 6.3% (30-year), and I have to imagine traders are factoring in a slightly weaker report for next month. Sure, new home sales would have to drop under 800k in order to change the look of the amazingly resilent market; however, as the Dow hovers near 8330, cash on the sidelines maybe looking now for another catalyst besides the housing sector.

 
 
  Jeff Bailey   10/25/02,  10:11:14 AM
Verizon (VZ) $35.90 -2.68% ... reported Q3 earnings of $0.77 per share, which was in line with consensus. Revenues rose 0.6% year-over-year to $17.07 billion versus 16.92 billion consensus. VZ reiterates its 2002 outlook of $3.05-$3.09 (consensus $3.04) while lowering capex guidance to $12.3-$12.7 billion from $13-$13.5 billion.Link

 
 
  Steven Price   10/25/02,  10:09:37 AM
Reader Question: Hi Steven, I am surprised to see the Nov. 75 calls for this stock is half the price from yesterday's close. The underlying stock price is higher currently by 1 pt. Can you please explain why? And if you can tell me as to what I should do since I bought the calls @ .75. Anxiously waiting for your answer and thanks. P

Response: $66.15 +0.30 ERTS is currently giving back some of its early gains, but a look at the chart shows the schizophrenic action in ERTS. The stock has bounced above its 50-dma and raised guidance for this quarter and next year (in addition to blowing away earnings estimates last night). The stock has experienced repeated pullbacks after reaching new highs and continues to set a series of higher lows on each pullback. If the stock holds above it 50-dma ($64.90), then the trend is still up, with another higher low. Implied Volatility premiums are always highest ahead of earnings, so the Nov 75 calls were no doubt lowered after the stock didn't get the "pop" some traders were looking for after earnings.

 
 
  Jim Brown   10/25/02,  10:06:15 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Restatement of stop loss. The current stop loss on the current SHORT signal is Dow 8450. I am trying to keep it wide to prevent the strong intraday swings from taking us out prematurely. The economic news is already fading and we could see some more weakness before the afternoon. Techs are the key today but the performance of Cigna after their warning is casting a cloud over the entire market.

 
 
  Linda Piazza   10/25/02,  10:03:30 AM
Heading into the release of the housing numbers, up/down volume favors the bulls, with up/down ratio at 94/61 for the NYSE and a strong 154/57 for the Nasdaq.

 
 
  Jonathan Levinson   10/25/02,  10:02:12 AM
The fed has just added 5B via 6 day repo for a net addition of 500M. This is very modest and should not have much impact on the markets either way.

 
 
  Jim Brown   10/25/02,  10:01:32 AM
New Home sales +0.4%, Existing Sales inline with estimates.

 
 
  Alan   10/25/02,  10:01:03 AM
ONLY using futures as a guide, the housing numbers must be good. ES went from 882-883 to 886 in about 30 seconds.

 
 
  Jim Brown   10/25/02,  10:00:30 AM
Swing Trade Signals
As I indicated in the Swing Trade Wrap last night the QQQ was the pocket of strength and it is leading the way today. It closed right on strong support of 23.70-24.00 and has a strong bounce underway this morning. Positive results from ELX and positive comments from Micron about DDR memory pricing is buoying the tech sector. Unless we see the momentum fade in techs and a serious breakdown of that 23.70-24.00 support I doubt we will see a major failure on the Dow today. There is too much indecision in the market for the bottom to fall out of the Dow while the QQQ is green.

The lack of a serious drop in the final Consumer Sentiment number has encouraged the bulls as well and the A/D line is rapidly improving. The Home Sales will be critical in keeping it going but nobody expects any real negativity in that sector yet.

 
 
  Alan   10/25/02,  9:57:42 AM
Ahead of 10 AM housing numbers (and the last report for today): futures have upticked from 9:45AM, and at 9:57 AM are: ES 882, YM 8300, NQ 977 (morning highs for all 3)

 
 
  Steven Price   10/25/02,  9:55:19 AM
Semiconductor Sector Index (SOX):284.41 +5.91 The SOX rebounded from its 50-dma of 276, which is a far cry from August, when it found resistance there. The rollover at 300 still looks like the SOX has run its course, but if it's finding support then I'm staying away from shorts in the sector until I see the signs of a collapse. While common sense indicates it should be much lower, it's not going to put cash in our pocket if we swim against the tide.

 
 
  Alan   10/25/02,  9:50:46 AM
Michigan Sentiment Index 80.6, this is the final revised number, and of minor market importance, expected was 81.0. No market impact.
ES remains locked in 877-880 chop, Dow cash came close to 8250 support, but did not go lower, NQ is actually above its 972 support; futures aren't going up because of a great sentiment number, perhaps on covers that it 'wasn't worse'

 
 
  Steven Price   10/25/02,  9:45:27 AM
United Health (UNH): $96.12 (-2.16) After the Cigna news, CNBC reported that UNH was down over $3 to $95.00. The stock has also traded as high as $99.75 and is gapping as investors evaluate the HMO sector following Cigna's news. Cigna $40.15 (-23.45) is crashing after guiding lower due to its failure to manage risk by keeping premiums in line with health cost increases. This was one of UNH's strength's, as it not only beat estimates, but guided higher.

 
 
  Jonathan Levinson   10/25/02,  9:44:17 AM
I spoke too soon. The COMPX made it back above 1300, but not by much, and the whole area from 1300-1310 is a giant bungy cord. It will take some strength to get back above it. I'll reiterate my guess that the day-after-day low TRINQ readings, which might be setting records by this point, are the result of desperation buys from an in-trouble hedge fund. I just can't understand where the buying is coming from, and the bond market bears me out. Even end of year tape painting by mutual funds is unlikely, given that most funds reported that they were fully invested, on top of the huge weekly redemptions. OK, I'll shut up now. Just speculation anyway.

QQQ is trading 24.10. We're awaiting the next economic reports.

 
 
  John Seckinger   10/25/02,  9:43:08 AM
A quick check before the 9:45 report: Dollar under 108, Gold higher, Oil and Utilities lower, and bonds higher (with good bids in five-year). Looking at the Dow, bears should be excited with market under 8309. 50 DMA (exp) is below at 8223.

 
 
  Alan   10/25/02,  9:39:00 AM
NQ (NDX) 975s and 3rd day in row, NQ is strongest index, Dow weakest.

 
 
  Jim Brown   10/25/02,  9:35:31 AM
Swing Trade Signals
Remember we still have the Consumer Sentiment at 9:45 and Home Sales at 10:00. The markets will probably not get too far away from this level until after the sentiment.

 
 
  Jonathan Levinson   10/25/02,  9:35:14 AM
The COMPX has just bounced off 1300 and is back to 1297. The TRINQ is .70- consecutive days of low/bullish readings. QQV is up .71 on the day. FVX is now down 9 basis points. Treasuries are being bought.

 
 
  Alan   10/25/02,  9:34:23 AM
Futures overnight lows were at 8:32 at 875 moments after that bearish Durable Goods report. ES in the same 878-880 range it was in Wed at 2 PM off the bearish Beige Book. Support 875, near resistance 880.
Agree with you Jim, also surprised not weaker, especially if you add in CI's large warn and the weak health sector stocks.

 
 
  John Seckinger   10/25/02,  9:32:23 AM
Looking at the December Bond (ZB02Z), the contract is two full points above yesterday's low of 107'02 and the suspected "bear trap" is coming to fruition. Additionally, the yield curve is very steep this morning, with fives up '14 ticks and tens higher by '14.5. Now it is up to the Dow to take this lead and go under 8300.

 
 
  Alan   10/25/02,  9:30:24 AM
Index Futures
9:30AM ES 878s, YM 8250s, NQ 968-69

 
 
  Steven Price   10/25/02,  9:30:03 AM
Electronic Arts (ERTS) $66.90 + 1.05 For those readers holding the ERTS call play, the company beat earnings estimates by 0.17 and raise guidance for this quarter and 2003

 
 
  Jim Brown   10/25/02,  9:29:49 AM
Swing Trade Signals
It is amazing that the market has not fallen through the floor after the horrible Durable Goods number. Is the news so bad that the hopes of a rate cut on the 6th that strong? The irrational exuberance of buying stocks in expectation of a rate cut is misplaced optimism. It is common knowledge that it takes 6-9 months for a cut to be felt in the system so any cut in November is not going to prevent a double dip back into recession. Enough ranting!

We are short from Dow 8500, OEX 455, SPX 898. Maintain this short position unless the Dow trades over 8450. I am leaving the stop wide to allow for the 200 point swings we have been having without being stopped out.

 
 
  Jonathan Levinson   10/25/02,  9:22:36 AM
Another divergence between bonds and equities, with the five year yield (FVX) off 8 basis points, yet the futures are basically flat. Difficult to explain, other than that bonds are a much larger market and "smarter" money. Is it a hedge fund in trouble and trying to unwind positions, perhaps covering short equity positions? No way to know, but this is the second time I've seen this anomaly in 2 days.

 
 
  Alan   10/25/02,  9:08:53 AM
Index Futures
In the overnight futures: ES drifted 878 to 884, several times hitting 885 resistance, sold off hard off the bearish 8:30 AM economic data hitting a new overnight low of 875, bounced to 881, sold off to its current 878 area.
9:08AM ES 877-8, YM 8260, NQ 968

 
 
  Jonathan Levinson   10/25/02,  9:04:06 AM
The fed's 22 primary dealers owe $4.5B to the fed on the expiry of yesterday's overnight repo. It will drain from the market unless it is replaced with a new repo. We are waiting for the announcement.

 
 
  Jonathan Levinson   10/25/02,  8:37:58 AM
Durable goods orders fell 5.9% in September, the biggest decline since last November. Futures are off on the news, with QQQ trading negative now, last at 23.95.

 
 
  Jonathan Levinson   10/25/02,  8:29:34 AM
My future charts looks like victims of an attack of the program trades, but the last reading is NDX +4.50, SPX +3.50. The US Dollar Index got sold down to 107.60 before rebounding to its current level around 107.90, while gold has continued its slow advance above 312/oz. QQQ is trading 24.11 currently on Island, up from its close at 23.98.

 
 
  Alan   10/24/02,  11:46:11 PM
Pivot numbers for Friday: ES: 868, 872, 877-879, 880, 883, 885, 887, 892, 895, 900, 902, 905
NQ: 935, 950-55, 972, 988, 1000
Dow Cash: 8100-8150, 8200, 8250-8270, 8350, 8400, 8440-50, 8500, 8550

 
 
  Alan   10/24/02,  11:18:43 PM
10:47pm JAPAN OPPOSITION LEADER STABBED TO DEATH IN TOKYO

11 PM quotes: ES 879s, YM 8282, NQ 969.50
About 9 PM tonight, ES had dipped back to 877 (Thur's day low), bounced to kiss 880 before the futures close at 11 PM for one-hour.
Perspective: ES right here between 878-880 is at the Wed 2:10 PM level immediately following the Beige Book release; it went up 25 ES points from there, made a new Month high Thur at 905 and sold off 25 points to current 880 level.

One bearish thought re market manipulation off the Elections and Fund's October tax-lossing selling being over by month end: Funds may have been waiting for any last-minute tax-selling to see how how the Election market manipulation took the markets before they started doing that "last-minute tax-loss selling". If that is the case, we could sell off into the rest of next week if indeed Thur was "the top".

Remember Arnold Schwarzenegger and his line from the Terminator film? "I'll be back" It seems Arnold is making Terminator 3.

Also, I'm sure there are funds who would love to show a positive gain for the month of October and will also start selling to lock in Long Profits if the selling indeed "is back" Are the bears/shorts now saying "I told you that I'll be back" ?

The contrarian in me wonders if Friday has dip buyers showing back up at some point

 
 
  Alan   10/24/02,  11:18:30 PM
8:30 Durable Orders, 9:45 MI Sentiment, 10:00 New/Existing Home Sales

 
 
  Alan   10/24/02,  11:18:17 PM
The Futures Wrap has been posted: Link

 
 
  Jim Brown   10/24/02,  11:18:06 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Jim Brown   10/24/02,  11:17:52 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 
  Alan   10/24/02,  12:05:45 AM
Nikkei green and day highs off the 8500 support, now at 8700 level

 
 

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