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  Alan   10/29/02,  10:36:17 PM
The Futures Wrap has been posted: Link

 
 
  Jim Brown   10/29/02,  9:09:24 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Jim Brown   10/29/02,  7:18:05 PM
Greenspan spoke at a Institute of International Education event tonight. It looks like a generic speech with a bullish tone but it has no mention of any Fed policy action or a hint of direction. Link

 
 
  Jonathan Levinson   10/29/02,  4:14:10 PM
From the GE 10Q:

"There is a broad spread of risk in the portfolio, but there is also a concentration of risk in commercial aircraft, including loans and leases of $25.0 billion and $21.5 billion at September 30, 2002, and December 31, 2001, respectively"

Link

 
 
  Alan   10/29/02,  4:12:20 PM
GE says $800 million at risk, here's the link Link

 
 
  Kent Barton   10/29/02,  4:12:04 PM
Maxim Integrated (MXIM) 29.38, -$1.11: This chipmaker certainly didn't waste any time after the bell to release their earnings. The company reported Q1 results of 22 cents, in-line with the consensus estimates. As touched on earlier by Steve, the stock is looking technically weak and may present a good short trade if the SOX.X finally breaks under its 50-dma. Not coincidentally, MXIM bounced from its own 50-dma ($28.21) today.

 
 
  Alan   10/29/02,  4:05:58 PM
ES was at 881-882 at 4 PM, after the cash close of market, ES has leaked slightly lower, currently 880.75, YM 8345; A short would like to see ES close UNDER the 879.50-880 pivot numbers.

 
 
  Alan   10/29/02,  4:03:24 PM
Index Futures
Futures Trade Signal EXIT
4PM : YM Short from 8367.
Covered 1/4 of original size at 8355 for YM +12 gain, $60 per $1000 Margin, +6%
Taking home 1/4 size short into the overnights with a stop at YM 8397.
NOTE: Since this YM short only has a 15 point cushion, if you are risk adverse with holding it overnight, cover before 5PM for a tiny 6-7 % gain.

 
 
  Alan   10/29/02,  3:57:43 PM
Index Futures
Futures Trade Signal EXIT
Signal is short YM from 8367 on remaining 1/2 Size
A non-bearish comment: Dow "should have" lost 8350 there, ES "should have" lost 880 : Neither did.

With only a few points of YM cushion in this YM Short, exit the short signal with * EITHER * your full remaining position size if you wish to minimize risk going into the overnights,
* OR * cover 1/2 of your remaining size (1/4 of original position) here in the YM 8356 area for tiny +10 YM point gain and take 1/4 size home short from 8367 and use a 30 point stoploss.

 
 
  Kent Barton   10/29/02,  3:49:06 PM
Fifth Third Bancorp (FITB) $63.45, -1.00: Shares are underperforming the broader market, and looking technically weak after falling under the 50-dma ($63.47). There's some possible congestion in the $60-$62 area, but the rolling MACD and three-box reversal on the p-n-f chart are hinting at more downside. This might be one to keep an eye on if the market heads lower on Wednesday.

 
 
  Alan   10/29/02,  3:47:50 PM
Dow so far holds 8350 and ES 880 support on first Short assault on those numbers.

 
 
  Jeff Bailey   10/29/02,  3:47:33 PM
Sherwin Williams (SHW) $27.68 +12.7% ... stock jumps on reports of a mistrial in a Rhode Island lead-paint case. Jury was deadlocked. Link

 
 
  Alan   10/29/02,  3:46:41 PM
Index Futures
Futures Trade Signal EXIT
At 3:45 PM, at a YM print of 8337, 1/2 YM Short from 8367YM covered for +30 YM points, $150 per $1000 margin contract, +15%

Breakeven trail stop on remaining 1/2 balance until we see what this GE news is

 
 
  Jim Brown   10/29/02,  3:44:52 PM
Swing Trade Signals
That was close! The Dow rose to 8399.53 before rolling over again. We missed being stopped out by only .47 of a Dow point. This is strong resistance and it took a huge amount of effort for the bulls to push this rally through the 8300-8350 levels. We could see an exhaustion top here as bad news from GE takes us down again.

 
 
  Alan   10/29/02,  3:44:45 PM
After this commercial break on CNBC< the teaser was re a 10Q filing from GE.

 
 
  Alan   10/29/02,  3:42:39 PM
Index Futures
Futures Trade Signal ENTRY
Cover 1/2 YM Dow short for +30 or better

 
 
  Steven Price   10/29/02,  3:37:52 PM
Reader Question: give me opinion on bls as a short thanks kt

BellSouth (BLS): $26.60 (-0.19) BLS is right up against resistance between $27-27.50. However, there has been no sign yet of a rollover. I'd like to pick a top in this group, but given today's broad market bounce, I'm trying to find shorts in downtrends. This stock has been trending higher, and although it looks like it is running out of steam, I'd wait for a sign of weakness before shorting. This level is also important on the PnF, as a trade of $28 would be a spread triple top upside breakout, but the bearish resistance line is just above at $29. I would wait for a rollover on the daily and then place my stop at $29.00. The stock found support at $26 the last two days, so a close under that level is the first sign of a rollover.

 
 
  Alan   10/29/02,  3:36:04 PM
Index Futures
Futures Trade Signal ENTRY
YM SHORT ENTRY: Dow cash 8388, YM Short from 8367

 
 
  Alan   10/29/02,  3:34:43 PM
Index Futures
Futures Trade Signal ENTRY
Dow cash is right under 8400, go short YM IF under 8389

 
 
  Alan   10/29/02,  3:33:19 PM
In the event anyone is still in that YM Long from dow cash 8200, i'd suggest raising trail profit stop to + 150 but exit before the close.

 
 
  Alan   10/29/02,  3:31:20 PM
Dow is now GREEN for day

 
 
  Jonathan Levinson   10/29/02,  3:22:07 PM
Note that we've seen $12B in fed money added on this round, the first tranche of which only expires tomorrow. As noted earlier, that's a lot of gunpowder.

 
 
  Alan   10/29/02,  3:19:40 PM
Index Futures
315 PM quotes: ES 876s, YM 8288, NQ 954
Before leaving for lunch, had pondered leaving the remaining 1/4 size YM (Dow) long from 8180 with a break-even stop vs. the suggested 8210 stop (which hit). The original exit would now be printing YM +100 (or better) as YM is now 8315. In the event someone did take that original YM 8180 long and is still holding some, I'd use +100 Profit trail stop as we go into the close, or exit before close.

NEW signals, Dow cash 8350 is likely resistance. Next signal is likely a short.

 
 
  Jim Brown   10/29/02,  3:09:02 PM
Swing Trade Signals
Consumer Confidence must have taken a substantial turn for the better this afternoon. There is an amazing rebound underway and it appears some shorts are getting surprised. The futures spiked substantially and ran the stops causing some significant short covering. We just hit a new resistance level at 8300 and 8350 is just above. Still an hour until the close and anything is possible.

 
 
  Jonathan Levinson   10/29/02,  3:07:59 PM
Now this, on the other hand, looks like a bounce, with 10 points added in a few minutes. TRINQ down to 2.89, FVX down 16.9 bps now. Seems to be finding resistance at the next s/r level, 1290 COMPX.

 
 
  Linda Piazza   10/29/02,  2:29:58 PM
Stockcharts.com lists the OEX 50-dma at 439.67. That might provide some momentary support if OEX continues to fall this afternoon.

 
 
  Jonathan Levinson   10/29/02,  2:29:56 PM
The COMPX is bouncing a lot less than the INDU, and the selling seems to be picking back up on the COMPX as the TRINQ rises above 3 again. FVX is down a touch from its "bounce" high, current off 18.4 bps.

 
 
  Steven Price   10/29/02,  2:27:29 PM
Reader Question: Do you have an opinion on PPD?

Response: Prepaid Legal Services(PPD) $21.24 (-0.35) I've seen some articles questioning this company's growth claims, so I'm not sure I'd consider it long. As a short, the $19.50-20 range has acted as both support and resistance, so I would probably look for a breakdown of that level. Still, any short play may also find support around $17, so the move may be limited.

 
 
  Jeff Bailey   10/29/02,  2:27:16 PM
Navistar (NAV) $19.35 -10.62% ... stock was halted for trading, now resumed. Company announced it would take a Q4 restructuring charge of up to $456 million, and says the completed restructuring program will lower the company's breakeven point, reduce fixed and variable costs, and improve profit opportunities at any point in the business cycle. In addition, Ford has advised the company that their current business case for certain V-6 vehicles is not viable, and Navistar is taking a $120-$130 million after tax charge for assets directly related to this product. Link

 
 
  Jim Brown   10/29/02,  2:17:06 PM
Swing Trade Signals
The closer we get to the close the more volatility I expect. The Nasdaq has failed to set any new highs this afternoon and it appears the bulls may have run out of steam. There was no big dead cat bounce and those hoping for a higher exit are starting to become resigned to a lower close.

 
 
  Jonathan Levinson   10/29/02,  2:12:14 PM
Of the bulls in OMG, another moment of silence in particular for naked put writers who didn't think to buy a few OTM puts "just in case". Complex option strategies are there for a reason- here's a rare, extreme example.

 
 
  Linda Piazza   10/29/02,  2:09:39 PM
Here we are at yet another pivot point. Today, the VIX has been climbing valiantly, trying to get back above the 5-dma after yesterday's precipitous fall. Link

 
 
  Jonathan Levinson   10/29/02,  2:06:36 PM
A moment of silence for former bulls in OMG. Thanks to reader David for pointing this one out to us. For the record and without knowing the story that precipitated the decapitation of this stock, the chart does NOT look like a buy here, though it's of course early to tell.

 
 
  Jonathan Levinson   10/29/02,  2:01:46 PM
We have a rollover starting on the 5 minute 5(3) and 10 minute stochastics. TRINQ lower at 2.86 but easily in bear territory. If that was the dead cat bounce, then it must've died eating a bown of lead... but it's too early to tell. 1281 COMPX remains the low of the day, 7 points away, support on this downmove.

 
 
  Steven Price   10/29/02,  1:19:09 PM
Reader Question: TRMS hit the entry of 52$ today but seems to be having a follow thru problem... Realizing that volume is extremely light on it, would you suggest hanging with it?? Did a partial position (Phew!). Thank You!!

Trimeris (TRMS): $51.18 (-0.32) The stock has pulled back from this morning's high but is still showing decent relative strength, down less than 1%. I think going with the partial position when choosing long plays in a declining market is a prudent move. The stock is currently heading sideways, however, I wouldn't punt just yet, since it has been fairly resilient.

 
 
  Kent Barton   10/29/02,  1:16:14 PM
Phillip Morris (MO) ($41.27, -0.37): A decent earnings report helped MO to bounce sharply off its October lows, but the rally faded at the descending trendline of lower highs, just below the 50-dma. Shares are beginning to sell off from this area of resistance, and the declining Dow Jones certainly doesn't help the bulls. Support at $40.00 might go up in smoke if the Industrials continue to weaken. Traders can look for short entries at current levels, targeting a decline to the $36-$38 region.

 
 
  Jonathan Levinson   10/29/02,  1:13:00 PM
The COMPX so far isn't trading like a market that wants to bounce, though arguably the action here at the lows could be characterized as base-building. Reader Shelley points out that, in the same vein, Paul Kangas will likely attribute today's selloff to "profit taking". That said, the TRINQ has eased off its extreme readings in the 4's to 3.27. FVX has recovered some as well, currenly down 17.3 bps. The TICK.NQ remains negative at -214, and HUI and XAU have given back some of the day's gains but are still up on the day. Rate cut bulls are re-thinking their positions, if the FVX, HUI and XAU action this afternoon is any indication.

 
 
  Steven Price   10/29/02,  1:10:30 PM
Reader Question: Hi Steve, I've been watching AZO today the weakness looks like a good entry point but it also violated the suggested stop. Do you think it is still a good call opportunity? Thanks, Lisa

Response: Autozone (AZO) $82.03 (-1.08) AZO has been remarkably consistent with its bounces from the ascending trendline, and it did so again this morning. I would probably wait for the Dow to break over 8300 before initiating a long play here, but the pullback does look like a possible entry point.

 
 
  Jim Brown   10/29/02,  1:05:08 PM
Swing Trade Signals
I received several emails about lowering the stop loss earlier when the market was inching upward. I am trying to avoid changing it constantly. Once in a profitable position with the overall trend going in our direction I would be very happy to keep the same trade open for several days and allow the markets to bounce around all they want below us.

My current pivot point is Dow 8350 and as long as the short-term moving averages are moving down I plan on staying in this short instead of jumping in and out with the ebb and flow of the markets. Getting into a successful position is the hardest part lately. Once in I would like to enjoy the ride. Everyone is always free to take profits at any time.

 
 
  Alan   10/29/02,  12:52:04 PM
Index Futures
Futures Trade Signal EXIT
At approx. 12:45 PM, our trailing YM (Dow$5 futures) Profit stop hit at 8210 giving gain of 30 YM points on the remaining 1/4 size for $150 per $1000 margin contract, or gain of 15%. This position is now FLAT and shall await a possible signal during the afternoon session. (The chart link in my 12:43 PM post is now fixed)

Totals for this YM Long sigal: Gains of +35, +55, +30

 
 
  John Seckinger   10/29/02,  12:44:06 PM
Oil Index near lows of the session, the Sox is only two points from its session lows, and 30-year bond contract is only '08 ticks underneath its intra-day high. Bullish equity traders seem to have nothing to hold on to. Definitely time to expect a move towards 8200 once more.

 
 
  Alan   10/29/02,  12:43:40 PM
Before leaving for lunch, was curious. It seems that today's lows in ES (SP500 futures) matched the open lows on Oct. 17th, a ES 15 day - 5 minute. You'll notice how ES 875 had been strong support, and now the first attempt to trade over it at 12:20 PM found sellers.

Jim, hasn't the Fed often used the Washington Post newspaper as a 'leak' on their intent in the past? For this past weekend, they did have some articles indicating the paper's view of "one more cut before year-end"
The 15 day chart can be seen at Link

 
 
  Jeff Bailey   10/29/02,  12:43:23 PM
Procter & Gamble (PG) $87.52 +2% ... stock up after earnings today. Jeff: PG.......tested 88 and failed!......am thinking this could be good place to add positions.......you thoughts are appreciated......GREAT JOB TO ALL!!!!!

OK... PG traded that triple-bottom yesterday at $87. Sounds like subscriber is already short/put 1/4 or 1/2 position and I'd leave it at that for now. Stock found support at bullish support trend, and for now, that's the longer-term bullish trend. Link

Chart is looking bearish near-term as VERTICAL count is bearish to $77. HORIZONTAL count is also bearish to $75. If already short, think about "sprinkling" some bets for now, but if PG breaks below $84 and gives another sell signal, then look to short/put further, all the time keeping and eye on the bullish % charts to assess MARKET/INDEX/SECTOR risk.

Relative Strength of PG still rather strong. Would "read" the RS chart versus Dow as .... "on buy signal, but column of O." This would be interpreted as longer-term bullish, but near-term starting to show some weakness. Link

Interesting for bear though that stock gives the triple-bottom and RS chart reverses into O.

Good looking Dow short, but wouldn't round up at this point.

 
 
  Jim Brown   10/29/02,  12:35:33 PM
Swing Trade Signals
We are approaching strong resistance at 8300 and it will be interesting to see if the bears start selling at 8280-8290 to beat the rush. Art Cashin cast a wet blanket on the rate cut idea just a minute ago with comments about the Fed going out of its way for four months to say that enough rate stimulus was already priced in. This matches my comments of "no Fed speak" to alert investors to their intention to cut next week. The outlook, despite the strong bet in the Fed funds futures, is far from certain that they will cut next week. This wet blanket statement by Art may cause some rethinking of bullish sentiment.

 
 
  Jeff Bailey   10/29/02,  12:32:43 PM
NASDAQ-100 Hi Jeff, In your opinion what do you think is the best way to play this down move in the NDX?

This depends on account size. A "smaller" account that doesn't want to expose $5k in 1 NDX at or in-the-money contract, should turn to the QQQ and expose a lesser amount of capital.

 
 
  Jeff Bailey   10/29/02,  12:28:35 PM
POWER TO THE INCHWORM! Jeff, Seriously, could you address this consumer confidence number. Seems to me that it is indeed a "backward looking indicator" and has been adversely affected by several factors: sniper making people afraid to shop, are we going to war or are we not, Senators dying, etc. WHEN does the survey get taken??? If it was say late last week then I understand why it's down so much... My thoughts are that the recent influx of dip buyers won't be able to stand the retrace and it will amount to backing and filling. I believe the VIX pullback and the BP% runup will prove foretelling and we aren't done yet. What do you think?

Hmmm... it is known for fact that the consumer confidence numbers are backward looking. I don't know for certain when the survey is conducted.

However! As noted in this weekend's Index Wrap, last weeks buying in Treasuries was a bit of a "heads up" to what we've seen yesterday and today. I do think that today's consumer confidence numbers were "quite a bit" weaker than expected. Why do I say this? I call it "rate of change." Today's sharper move lower in Treasuries hints to me that today's confidence numbers were a bit of a surprise and drawing more of a reaction from the bond market.

In play now is the possibility of a rate cut. Mr. Greenspan "knows" its the consumer that has been carrying the bag and corporations have been sitting on the sidelines and NOT spending. What a BEARISH equity trader is now watching out for is a near-term upside catalyst from any type of rate cut. This may have the Dow holding above the 8,000 level into next week's Fed meeting.

I think technology stocks MOST vulnerable in all of this. Also on November 6th, Cisco reports earnings. As stated in past, I'm not expecting much different tone that what we've heard from Intel and others about "lack of IT spending."

 
 
  John Seckinger   10/29/02,  12:27:36 PM
Sometimes it is the psychological component that gets traders' attention. I am referring to the Semiconductor Sector (Sox) hugging its bearish trend line that began in mid-May. In order for the Dow to keep falling, I think this line might have to be broken. Please see chart: Link

 
 
  Alan   10/29/02,  12:23:05 PM
Index Futures
Futures Trade Signal EXIT
Exited 1/4 position size at YM (Dow$5 futures) at 8235 for gain of 55 YM pts (YM did trade about 10-15 pts higher , or $275 per $1000 margin contract, gain + 27.50 %

Still LONG remaining 1/4 size from 8180, now raise the Profit trail stop to 8210 (to lock in +30 gain) and place a sell to close at 8280

ES did break out over 872, and 875 remains resistance. Cya after lunch.
12:23 PM quotes: ES 875, YM 8252, NQ 954

 
 
  Jim Brown   10/29/02,  12:19:36 PM
Swing Trade Signals
Something everyone needs to consider. With all the rate cut talk already, any real rate cut on Wednesday is rapidly being priced into the market and an actual cut is going to be a nonevent. Once "everybody" expects it the damage is done. The wild card here is the lack of fedspeak that normally telegraphs intentions in advance. That may indicate that Alan is planning to hold his cards to play at the next terrorist attack or when war breaks out in Iraq. This is setting us up for a major fall if they do nothing next Wednesday. The bottom line is don't count your rate cuts before they are announced.

 
 
  Jim Brown   10/29/02,  12:09:41 PM
Swing Trade Signals
The relatively minor drop in the markets considering the bad news makes you wonder where we would be if the Fed was not expected to cut rates next week. We did get a triple digit drop but it is rapidly regaining lost ground every time a CNBC reporter says rate cut.

It is interesting that the Nasdaq is not recovering as fast as the Dow, SPX and OEX. The Nasdaq futures are still trending down and printed a new low for the day just a couple minutes ago. We are a long way from out of the woods.

 
 
  Alan   10/29/02,  12:07:48 PM
Index Futures
Futures Trade Signal EXIT
From the remaining 1/2 Size YM Long from 8180, sell to close 1/2 of the remaining size, in other words, 1/4 of the ORIGINAL size, here at 8230 (or better) to lockin 50 YM points for 1/4 size.

 
 
  Jonathan Levinson   10/29/02,  12:06:46 PM
The TRINQ is staying awfully high at 4.56, though that was due after the record breaking sustained lows that we've seen this month. FVX remains very low, down 19.2 basis points. The COMPX is just above its lows, currently 1285, with the QQQ at 23.55.

 
 
  Linda Piazza   10/29/02,  12:00:27 PM
Consumer staples looking a little greener than they did yesterday, helped along by PG, Dial, Avon Products, Estee Lauder, Kimberley Clark, Albertson's, and Anheuser Busch. I guess no matter how bad consumer sentiment gets, the babies' diapers still need to be changed, people are going to bathe, and women will wear makeup. While listening to the tune Jonathan posted, people might drown their sorrows in beer. Not contributing to the green on the consumer staples screen are Campbell Soup, Coca-Cola, and Pepsi, although all three of those are up from their lows.

 
 
  Alan   10/29/02,  11:46:42 AM
Taking a longer view, here's a one month Dow chart with some Fib retracement lines drawn in from Oct. 10 low of 7200 to the recent top at 8550, you can see the first fib retracement is where we are right now (8232), with the next lower Fib number of 8038. Here's the chart link Link

 
 
  John Seckinger   10/29/02,  11:43:23 AM
Clearly the supply in mortgages this morning were easily digested by the fixed-income market. Traders will now hope that bond prices will reverse later this afternoon, but don't hold your breath. Currently at 110'31, prices will have to fall to 110'07 before sentiment goes neutral. Moreover, weakness in the Dollar (now under 107 at 106.98) should be sending foreigners towards the bond market as well. Foreigners could repatriate, but since it is not happening now, it makes no sense to speculate that it will happen in the next few hours. Back to stocks, the 22 PMA (5-minute) is at 8255, while Dow is at 8247. We could have our 'procedural' test. Then volatility should pick up again.

 
 
  Steven Price   10/29/02,  11:40:51 AM
Note on the Maxim (MXIM) play. The company reports earnings tonight (as pointed out by a reader), so we will move to the sidelines for the time being. Thanks Jeff.

 
 
  Jeff Bailey   10/29/02,  11:25:45 AM
Amerco (UHAL) $5.94 +27.7% ... talked about this one yesterday. Hmmmm... could it be?

 
 
  Jim Brown   10/29/02,  11:23:01 AM
Swing Trade Signals
If bulls were looking for a dip to buy they got it this morning. The bounce at 8200 shows that there are investors that will buy anything but I would bet that there are institutions holding stock right now and praying for a bounce before the day is out so they can get out before a complete collapse occurs.

Overhead support is now resistance at 8250, 8300, 8360. It will take more than wishful thinking to break through those levels this afternoon. With no redeeming internal numbers in the Consumer Confidence I think the longer term outlook is clear. Funds will see more outflows after the numbers are plastered across the business page headlines tonight and tomorrow. A substantial market drop today will only accelerate that action.

On the outside chance that enough bulls show up that are willing to buy this bad news and the market closes higher that should take all the fear out of the market. If news of this magnitude, albeit backward looking, cannot shake the underlying bullish sentiment then I can't imagine what would.

With a flood of economic reports on Thr/Fri and those reports expected to be negative, I can't imagine anyone wanting to go long only to be hit with another potential leg down in two days. Just my opinion!

 
 
  Jeff Bailey   10/29/02,  11:19:41 AM
Own some calls? One thing that can help a trader by NOT overleveraging in calls and only trading a number of contracts that he/she would normally buy in the underlying stock (100 share = 1 contract) is that a trader will often-times hold their calls, but still short the underlying stock or Index-like security. In essence, create a near-term hedge, using the call option as a protective call. Hey... if the option is moving against you and at a loss, then use the darned thing as a hedge and short the underlying if downside risk is there on a profit-taking type move.

I see a ton of potential reverse head and shoulder pattern potentials where a little pullback like we're seeing sets up some right shoulders on the pullback. Should a trader holding some call in STRONG stocks with good relative strength, then could look for a rebound from a right shoulder, close out the short for a gain, then still hold the calls. Could end up with a double win situation, not only in the short, but the call that was bought a month or a week ago!

 
 
  Jeff Bailey   10/29/02,  11:16:12 AM
Russell 2000 Index (RUT.X) 363.68 -1.4% Link ... per previous Index Trader's wrap I was looking for the smaller caps to be relative strength upside performers. Index is at levels near those comments and with some of the larger cap index like the Dow, SPX, OEX and NDX showing some losses of 2% or greater, would look to move to sidelines on any full positions. Traders holding some 1/4 positions with expiration greater than 2-months can continue to hold long, but may want to offset with a 1/4 bearish trade in the larger caps. Much more profits to be taken out of the larger caps than smaller caps is my thinking and more near-term downside.

 
 
  Alan   10/29/02,  11:15:18 AM
Index Futures
Futures Trade Signal EXIT
EXIT 1/2 Size hit at 8215 (high was 8220bid) on sell to close order, giving 35 YM point gain, or $175 per contract, and using $1000 margin per contract, is gain of +17.50 %

For now, maintain Profit trail stop of 8190 on remaining 1/2 Size.
ES resistance remains 872, then 875, followed by 877 which is 50% retracement of today's low and the 877 level it was at BEFORE the 10 AM bearish sentiment number.

 
 
  Steven Price   10/29/02,  11:12:32 AM
Maxim (MXIM) : $29.13 -1.35 I'm looking at semis to short with a 50-dma breakdown in the SOX. I like Maxim, which has reversed from its bearish PnF resistance line and established a 3-box reversal down. The stock could find some support from its 50-dma of $28.21. I would look for a break below $29 and conservative traders can wait for a break below $28.21. Wait for the SOX to break its 50-dma before initiating a short.

 
 
  Alan   10/29/02,  11:09:01 AM
Index Futures
Futures Trade Signal EXIT
From the YM (Dow$5 futures) LONG from 8180(or better), exit 1/2 position size at 8210 or better to take 30 point profit, on the remaining 1/2 Long, maintain the 8190 Profit trailing stop

 
 
  Jeff Bailey   10/29/02,  11:06:54 AM
11:00 Update is posted. Link

 
 
  John Seckinger   10/29/02,  11:05:38 AM
The Dec 30-year is now higher by two full points at 110'31. Furthermore, the yield curve went from flat to 20 ticks steep. Also, Oil Index is now lower by 4%. As far as equities are concerned, the 22 PMA (five-minute chart) is currently at 8278 and dropping rapidly. I am sure that the Dow will want to test this average sometime over the next hour. Once that procedure is over, bears should feel more comfortable about adding to shorts.

 
 
  Steven Price   10/29/02,  11:05:37 AM
Semiconductor Index (SOX) : 278.94 -12.86 Yesterday's peak over 300 is looking like a reversal pattern, however we saw a similar peak on the 24th. I'm looking for a break back below the 50-dma of 273.38 for confirmation of a failed rally.

 
 
  Alan   10/29/02,  11:05:17 AM
Longer term view comment: ES/SP500 852 is the 38% retracement from the Oct. 10 lows to the top of this recent rally, if over the coming days we indeed head much lower.

 
 
  Jonathan Levinson   10/29/02,  11:03:33 AM
Readers with questions about the Fed's daily activities reported here should take a read through my weekend article on the subject, posted at this Link

 
 
  Alan   10/29/02,  11:03:09 AM
Index Futures
Futures Trade Signal EXIT
From the YM (Dow$5 futures) LONG from 8180(or better), place Profit trail stop at 8190 to lock in minimum of 10 points, which would be gain of 5%.
Longs now want ES to take out 872 to the upside heading into next resistance at 875

 
 
  Jonathan Levinson   10/29/02,  10:59:03 AM
I'm all over it, Linda. Sir Al probably receives a fair bit of correspondence already, though!

 
 
  Alan   10/29/02,  10:57:46 AM
Index Futures
Futures Trade Signal ENTRY
At 10:55 PM, Long YM Entry of 8180,
Dow cash 8202, ES 868-869

 
 
  Alan   10/29/02,  10:54:38 AM
Index Futures
Futures Trade Signal ENTRY
Go LONG YM at 8190 or better as it appears Dow cash will hold 8200

 
 
  Jonathan Levinson   10/29/02,  10:54:24 AM
We remember COMPX 1280 from weeks and months past. Well, that's the next support level. The TRINQ is high at 4.38, five year yield down over 20 basis points. These are extreme readings, and a bounce would be expected, but then, this has been a month of extremes. Watch the 1280 support level.

 
 
  Linda Piazza   10/29/02,  10:54:20 AM
Think we should email the song to Greenspan, Jonathan?

 
 
  Steven Price   10/29/02,  10:49:34 AM
Retail Index (RLX.X): 283.47 -7.13 The RLX hung in briefly following the Confidence number, but the support didn't last long and it has now broken below its 50-dma of 286.79.

 
 
  Jonathan Levinson   10/29/02,  10:47:43 AM
Here's a hilarious tune- not a trading recommendation, just a funny song- listen to the words. Wonder how they did it?

Link

 
 
  Jim Brown   10/29/02,  10:47:01 AM
Swing Trade Signals
The SPX broke under its 50DMA at 872. Future support levels are the Oct-18th low at 866, the Oct-16 low at 856 and the gap fill from Oct-15th at 842.

 
 
  John Seckinger   10/29/02,  10:46:16 AM
The IMF has lowered their GDP forecast for the European Monetary Union to 2.0% from 2.3% for 2003 and 0.7% from 0.9% in 2002. The Union also noted that the ECB needs to adopt a clear easing bias on rates.

 
 
  Alan   10/29/02,  10:42:47 AM
Another fast 10 minute move: ES sold off about 8 points from 10:30 AM's failure to climb over 875.

 
 
  Jim Brown   10/29/02,  10:40:09 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
The 8250 support level as broken and traders wishing to add to the 1/4 short position should be doing so quickly. A break under support at 8150 would be the suggested entry point for any remaining SHORT positions.

 
 
  Jonathan Levinson   10/29/02,  10:39:45 AM
Today is the 73rd anniversary of October 29, 1929, for what it's worth. It might be relevant 1000 points from here, though I doubt we'll see it.

 
 
  Jim Brown   10/29/02,  10:39:18 AM
Swing Trade Signals
The transports are down -55 at 2223 and appears ready to fill the gap from Oct-17th at 2200 and possibly lower. The TRIN, an oversold indicator that is powered by advancing/declining volume has rocketed to 2.56 from a low of .83 at the open. The A/D line has fallen to -2413 net decliners. The Russell has gone into free fall along with the semiconductor index. This may turn out to be a history making day.

 
 
  John Seckinger   10/29/02,  10:38:07 AM
It is definitely fun to have confirmation. Oil is lower by 3.75%, 30-year is now higher by over a full-point (should mean equities will come under pressure for most of the session), yield curve went from flat to steep, and Gold Index is up by 3.24%. I believe the 30-year was a good leading indicator this morning, so let's take a look at the ZB02Z contract. Higher by 1'24 at 110'23, weakness under 110'12 could give shorts in equities a reason to cover. Intermediate objective remains at 112.

 
 
  Linda Piazza   10/29/02,  10:38:05 AM
Stockcharts.com lists the Dow Jones Industrial's 50-dma at 8218.87, so a move below that level will confirm the bearish nature of today's action. It wouldn't be surprising to see a brief bounce from that area, either, but if the other indicators remain as bearish as they are, I would expect that MA to fail as support eventually.

 
 
  Alan   10/29/02,  10:35:51 AM
Ponderings re that terrible 10 AM sentiment number. When in the month of October was it taken? Market bottom was Oct. 10th but Dow didn't see back over 8000 until after that. Will be interesting to see this number a month from now. The parking lots of the malls near me have traffic with the BBY (Best Buy) so full parking is a problem. The downside to these sentiment numbers is very often the consumer says 'x' but actually does 'y'. Such as saying in mid Oct "we are worried with the Dow at 7500" but 2 weeks later hasn't changed their spending patterns.

Dow has just lost 8250, NQ has held 950-55, ES chopping around 872 key support.

NOW we get to see if dip buyers are still 'here', but with most mutual funds being on a T+3 settlement date, yesterday was the 'end of the month' for many funds and now 'they' don't care as much to prop up prices. quotes: 1035AM ES 871, YM 8204, NQ 955 (NQ is the least weak)

 
 
  Jonathan Levinson   10/29/02,  10:34:08 AM
Gold continues higher and FVX continues lower, down an amazing 18.5 basis points now to 2.783%. Money is running for cover from equities, as the TRINQ is up to 3.77- haven't seen these levels in what seems like an eternity but is only weeks. The COMPX continues to find support at the 1290 level.

On the 5(3) weekly stochastic, we have a bearish cross for the first time since the rally began. This could un-draw itself the way stochastics do, but, again, it's the first attempt at a rollover on this dominant cycle that we've seen. The market is no less treacherous than it was, but let's not underestimate the significance of the market selling off on bad news, which has not happened in weeks. We'll see now how far the selling goes. The 1.75B repo is not chump change and would certainly make my day, but market wise it is small- not enough to serious jam equities against a tide of sellers. However, the 5B and 5.25B, combined with this fresh 1.75B, none of which have expired yet, combine to form a respectable pile of gunpowder, and so I wouldn't go breaking my account management rules to short the market with that much fed money sloshing around. Plan the trades and trade the plan, as always.

 
 
  Jeff Bailey   10/29/02,  10:33:04 AM
Alert! Dow Industrials (INDU) 8,243 -1.49% ... trade at 8,250 is break of triple-bottom sell signal. This is BEARISH and discussed in this weekend's Index Trader Wrap. Should be 1/4 or 1/2 position short in the Indexes here. Especially NASDAQ-100 Index.

 
 
  Jim Brown   10/29/02,  10:30:51 AM
Swing Trade Signals
The 8300 support has failed and we are testing the support at 8250. Should this level fail the next material support will be 8150 and the 50% retracement level of the Aug-Oct drop.

 
 
  Steven Price   10/29/02,  10:23:19 AM
Northern Trust (NTRS): $35.66 -0.89 OI put play NTRS approaching recent low of $35.22, which can be used as a trigger for short entries. Alternative for conservative traders would be a break below $35.00

 
 
  Jim Brown   10/29/02,  10:21:53 AM
Swing Trade Signals
The Consumer Confidence report should be seen as a leading indicator for the flood of economic reports we will see on Thursday and Friday. It will be tough for the bulls to paint any positive picture from this news and reports like nonfarm payrolls due out on Friday.

The only positive spin we could get would be an almost sure rate cut from the Fed. The cut would have no real impact on the economy with Fed funds already so low but it could have a sentiment impact on consumers.

The recent "man on the street" surveys show an almost complete lack of excitement for the coming shopping season. WalMart is a proxy for the retail sector has broken below support from the last two weeks and is beginning to trend down again. This confidence number should erase all hopes for avoiding a double dip.

 
 
  Linda Piazza   10/29/02,  10:20:05 AM
A sweep of the usual indicators shows dollar and yields down, gold and VIX up, and down volume swamping up volume. All seems in place for a viable put play, but watch your stops. An old saw in technical analysis says that if a move up has retraced a significant portion of a down move (and this one retraced about 2/3 of the move down from the July rally), the next move down might be a conservative one. (It works the other way, too: if a downdraft retraces a significant portion of the previous move, the next move up might be small.)

 
 
  Alan   10/29/02,  10:20:00 AM
Index Futures
Despite the hard selling, despite GE's "warning", despite the worst sentiment numbers since 1992, ES has yet to go lower than this past Friday's lows. So far today, ES has held the 875 level, Dow cash lost 8300 but did not yet lose 8250, NQ (NDX) lost 972 support but as held 950-55 support. In other words, after making a new monthly high at yesterday's open, we are now retesting the lows from this past Friday.

Here's a chart showing ES last Mon. to this past Friday showing this ES range I've talked about alot of ES 875-900 Link

 
 
  Jeff Bailey   10/29/02,  10:17:41 AM
Qualcomm (QCOM) $32.60 -7.8% ... off its lows of $32.40 after research firm Fechtor Detweiler questions the significance of the TD-SCDMA reports noted by AmTech Research (see 09:48:21). Fechtor says that TD-SCDMA is only supported by Siemens, that the Chinese government has supported it for some time and it is well known, and that it would be a minimum of 3-5 years to implement; firm sees no short-term impact on QCOM, and even questions whether there are any longer-term implications.

 
 
  Jonathan Levinson   10/29/02,  10:16:37 AM
Gold is getting bought again, with HUI +2.42 to 115.15, XAU +1.63 to 66.07. COMPX low of the day is currently 1291, at support.

 
 
  Steven Price   10/29/02,  10:16:12 AM
International Paper (IP): $35.41 -0.71 IP bounced yesterday at the 50-dma of $35.83. That 50-dma is $35.76 today and provided no support for the short play. Conservative traders can wait for intraday resistance at this level or the Dow to break 8250 to initiate.

 
 
  Jeff Bailey   10/29/02,  10:12:40 AM
Treasuries up sharp on price after this morning's confidence numbers. 5-year December futures (fv02z) 113'100 +0.53% has YIELD ($FVX.X) falling to fast to 2.28% Link

Looks defensive and has stocks vulnerable as cash rotates back toward safety of bonds.

 
 
  Jim Brown   10/29/02,  10:10:19 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the SHORT entry at 10:02:16 when the Dow traded below 8300. OEX 447.21, SPX 879.99, DIA 82.97, SPY 88.30, DJX 83.98, NDX 962.93, Compx 1299.43, QQQ 23.91, Emini 877.75.

The initial stop loss will be close at Dow 8400 and just over the high of the day. If the markets bounced back from this negative news I would be very surprised and we would want to close the short quickly.

 
 
  Jonathan Levinson   10/29/02,  10:08:46 AM
Amazing! Bad news getting sold instead of bought. FVX is now down 13.9 basis points. TRINQ 2.7. QQV +1.68. Citicorpse -.56 to 35.74. JaPalM down .78 to 20.47. COMPX testing 1300 with a low of 1297 on the day.

 
 
  Steven Price   10/29/02,  10:07:47 AM
The Consumer Confidence number looked terrible and the RLX.X (287.87 -2.73) is still hanging in for the moment. One note however, is that Wal-Mart (WMT) $55.47 -0.60 has broken below its 200-dma of $55.84, which had provided support over the last week.

 
 
  John Seckinger   10/29/02,  10:07:15 AM
Another index making a move this morning is Gold (XAU). Currently up 2.42% at 65.98, the 50 and 200 DMA's are just above at 66.23 and 67.09, respectively. I would put more weight in the 200 DMA. As far as support goes, the 22 DMA is underneath at 64.11. It would take a collapse to under 60 before sentiment will shift to bearish readings. Note: This index was higher by roughly 1.6% before the consumer confidence number.

 
 
  Jim Brown   10/29/02,  10:06:50 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the stop loss on the LONG signal at 10:02:16 when the Dow hit 8300. OEX 447.21, SPX 879.99, DIA 82.97, SPY 88.30, DJX 83.98, NDX 962.93, Compx 1299.43, QQQ 23.91, Emini 877.75.

The consumer confidence numbers were very ugly and should be very negative for traders going forward.

 
 
  Alan   10/29/02,  10:03:42 AM
ES futures dropped 10 points in 2 minutes off those simply terrible numbers, ES 878, YM 8270, YM 966

Now the question is whether this large dip gets bought 'once again'

 
 
  Jim Brown   10/29/02,  10:01:21 AM
Confidence fell to 79.4 from 93.7 and lowest level since 1993

 
 
  Alan   10/29/02,  10:00:09 AM
With minutes to the 10 AM numbers, supports of ES 885, Dow cash 8350, NQ 972 have held by the smallest of margins. The move from this 10 AM number is likely to be 'fast' either up or down; breakdown is under 883 ES, and breakout is ES over 892 and then 'holding' there

 
 
  Jonathan Levinson   10/29/02,  9:57:11 AM
Overnight repo of 1.75B has just been announced.

 
 
  Jim Brown   10/29/02,  9:56:19 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Reminder - We have an active SHORT entry signal at Dow 8300 for 1/4 position. There is strong support at 8325-8350 and that is why I am also keeping the stop loss on the current long signal at 8300.

 
 
  Jim Brown   10/29/02,  9:52:33 AM
Swing Trade Signals
The markets are tentative as expected before the 10:AM confidence numbers. Any Dow excitement on the PG numbers has been hurt by weakness in IBM. The Futures are trading at the low for the day and the outlook does not look good. A bad confidence number could be the final straw. The internals are dropping with the A/D line a -894 and the VIX back up to the 36.70 level after sinking to near 34 yesterday. 8 minutes left until the confidence number.

 
 
  Steven Price   10/29/02,  9:52:32 AM
Proctor and Gamble (PG): $87.75 (+2.00) The PG rebound this morning following an earnings beat has fallen short of the 200-dma of $88.25. I'll be watching to see if it can breakthrough that level. If not and we get some market weakness with the earnings news out, this may be a short candidate.

 
 
  Alan   10/29/02,  9:50:03 AM
Futures: ES failed the 890 resistance and is now at 885s (morning lows) and matching yesterday's lows. Next lower is 883 (remember that 883-888 band I showed in the Futures Wrap's charts? , then 879, 875. Volume is low.

 
 
  Jeff Bailey   10/29/02,  9:48:21 AM
Qualcomm (QCOM) $33.84 -4.4% ... stock down after AmTech Research saying that Chinese officials along with two top telecom service providers will announce their own version of CDMA on Wednesday; saying the new technology is called TD-SCDMA and that the officials will call for an industrial alliance to promote this alternative to QCOM's WCDMA and CDMA2000; AmTech believes that China will try to pay little or no royalties to QCOM and may contend that QCOM patents are not enforceable if officials rule the new technology is innovative and different from CDMA2000. Link

 
 
  Steven Price   10/29/02,  9:48:00 AM
Reader Question: Still holding puts on OMC, broken support at 15 & 50 dma. Comments please, if you can get to it? Thanks. Love all of the OIN educational analysis!

Response: Omnicom (OMC) $59.85 +1.50 matched earnings expectations of $0.68 per share and got a boost back through the 50-dma and $60 barrier. It has failed to $60 and I would like to see a break below recent bounces at $57.50 for new shorts. For those holding puts on OMC, look for intraday support at $60 as a signal to close the play.

 
 
  Jonathan Levinson   10/29/02,  9:47:25 AM
There are $5B in 6 day repos expiring tomorrow and $5.25B in 3 day repos expiring the next. There has been no announcement yet as to today's action, if any. I'll be that the trading desk is waiting for the consumer confidence numbers too.

 
 
  John Seckinger   10/29/02,  9:46:14 AM
One Index failing is Oil, lower by 2.51% at 421 and nearing the July 24th low of 418. A rise above 429 should take the index towards more neutral ratings and could even portend a move to 445. However, a collapse under 418 should send the index towards 390. Could be pressuring stocks, but correlation today not as clear as it was yesterday.

 
 
  Alan   10/29/02,  9:41:25 AM
The first 10minutes of futures find a tight 2 point sideways action between ES 887s and 889; YM (Dow) futures have gone sideways at 8350s

 
 
  John Seckinger   10/29/02,  9:34:17 AM
It looks as though yield curve traders are taking the morning off; extending duration and entering the 30-year instead. The Dec. bond is higher by '26 ticks at 109'25 and at its session high. There is solid resistance at 110'08. Longs should have an intermediate objective of 112. Note: 30-year should trade inversely to stocks on Tuesday.

 
 
  Jonathan Levinson   10/29/02,  9:31:16 AM
We have a 1.86 point gap down open on the COMPX- I guess we can call that flat. TRINQ 1.07, TICK.NQ -179.

 
 
  Steven Price   10/29/02,  9:30:18 AM
Retail Index (RLX.X): 290.60 I think this will be one of the main sector indices to watch to see if it can crack the 300 barrier, with Consumer Confidence numbers coming out. If not, there may be some good shorts here.

 
 
  Alan   10/29/02,  9:29:11 AM
Index Futures
ES Pivots: 872, 877, 879.50, 883, 885, 888, 892, 895, 898, 900, 902

10 AM Sentiment numbers, overnight low was 7AM near 885
928 AM: ES 887s, YM 8340, NQ 979
Seems the market is waiting for those 10 AM Economic numbers.

 
 
  Jim Brown   10/29/02,  9:27:00 AM
Swing Trade Signals
Another rocky day in our futures? CSCO and QCOM were taking heat in premarket trading and were leading the Nasdaq futures lower. PG beat estimates and affirmed their forecast to help the consumer sector today. Dow futures are down about 40 points to 8340 despite continued talk about a rate cut next week to head off potential problems in advance of a war with Iraq.

We are likely to remain weak until 10:00 when the Consumer Confidence is released. The stop loss on the current LONG signal is 8300. That is also the trigger to go SHORT. I would like to see us trade up slightly before the confidence numbers to give us more of a confirmed direction at 10:AM.

 
 
  Steven Price   10/29/02,  9:25:03 AM
Centex (CTX): One stock I'll have my eye on at the open is CTX $44.26. I'm looking for resistance under $45 for a short entry point on this OI Watch List stock.

 
 
  Jonathan Levinson   10/29/02,  9:20:44 AM
The US Dollar Index is off its lows just above 107.00 and is now at the 107.40 level. A big battle taking place.

 
 
  Jeff Bailey   10/29/02,  9:20:13 AM
09:00 Update has been posted. Link

 
 
  Jonathan Levinson   10/29/02,  9:07:48 AM
Well put, Linda. Agreed. The standard rules of account management continue to apply- there's still no obvious play, and experts continue to disagree about short and long term direction.

 
 
  Jonathan Levinson   10/29/02,  9:04:46 AM
Once again we have buying in bonds that far exceeds the action in equities, or here, futures, with FVX down 4.4 bps while SPX futures are -3.10, NDX -5.00. Perhaps it's speculation of a rate cut. Either way, it looks like we're in for yet another of these October days in the market. Gold continues its march higher, currently at 317/oz.

 
 
  Linda Piazza   10/29/02,  9:02:21 AM
Very interesting: If you've got some time while you're waiting for the economic numbers at ten this morning and if your charting service allows it, pull up a chart of the OEX from July 1, 1999-December 31, 1999. The July through early November section looks eerily similar to the same period this year. There's a similar double-bottom formation. There's a descending line, a break above it, and then a consolidation that appears ready to roll over and test or break through that descending line again. This consolidation occurs just below the peak between the two troughs of the double bottom, just as is happening now. The consolidation comes complete with a flattening of the RSI and a move down in the (5)(3) stochastics, just as we're seeing now.

Without even realizing it, we've grown so accustomed to interpreting all chart signals through bearish eyes, but in 1999, a similar consolidation to the one we're seeing now broke out to the upside, with stochastics and RSI turning back up. The OEX moved up another 70 points by the end of 1999. The markets were considerably different in 1999 than they are now, as we all know, so I'm not suggesting that the same thing will happen this year. Instead, I'm suggesting that we shouldn't be too biased when interpreting charts. If (and that's a big "if") we're in a new intermediate bull market, then a consolidation might precede another push up. If we're in yet another bear-market rally that's run out of steam, a consolidation might be the prelude to another fall. Don't get married to either opinion.

 
 
  Alan   10/29/02,  2:03:11 AM
The Futures Wrap has been posted: Link

 
 
  Alan   10/29/02,  2:01:36 AM
2 AM: futures leaking lower so far
ES 888, YM 8362, NQ 984

 
 
  Jim Brown   10/28/02,  12:33:54 AM
The Swing Trade Game Plan has been posted: Link

 
 
  Jim Brown   10/28/02,  12:33:26 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 

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