Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
  Jim Brown   10/30/02,  5:44:08 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Kent Barton   10/30/02,  5:07:05 PM
After-hours action: EDS trading more than 10% higher on those higher-than-expected earnings. Other noteworthy news after the bell: EBAY reaffirmed its Q4 guidance, while Laboratory Corp (LH) beat estimates by two cents. PHSY was trading nearly 18% higher after blowing past earnings expectations. Q3 EPS came in at $1.20, versus the consensus estimate of only $0.84.

 
 
  Jim Brown   10/30/02,  4:18:56 PM
EDS reports 18 cents compared to its prior warning estimates of 12-15 cents. They are cutting jobs and restructuring.

 
 
  Jeff Bailey   10/30/02,  4:17:53 PM
As I look at charts late yesterday and today, I'm hard pressed to really find a stock/chart that jumps out at me and says "trade me." Other than TEVA, which I didn't see until after the close yesterday, per a subscriber's question yesterday, I'm just having a difficult time finding something for a trade.

Some thoughts on 25 vs. 50-basis point cut next week. I'm "convinced" the Fed will cut 25, but I think Mr. Greenspan and company will be watching tomorrow's weekly jobless claims number. Last week's decline to 389K was a positive. Once gain however, economists are looking for 400K. If jobless claims come in below 390, the Fed may have reason to only cut 25 basis. The lower the jobless claims numbers go, I'm thinking the better/stronger consumer confidence will be. Of course, just the opposite would be true.

Also... Advanced GDP for Q3 will be released tomorrow morning. Consensus is for 3.6% annual rate.

 
 
  Jim Brown   10/30/02,  4:09:28 PM
Jim, Get ready - Valter falls today!! DOW goes down -100 but not today! Try tomorrow late or Friday early. Trick or Treat, Valter! Michael

Happens to everyone! Don't give up, you were only a day early, Friday is going DOWN! - Mark

Valter, Valter, if you were always right Jim would be charging for your calls - Nice to know you are human too! - AK

Jim, Hey let's cut Valter some slack. The DOW dropped almost 70 points after his prediction. I made a few dollars on him today! NYC

Valter you are developing a following!

 
 
  Linda Piazza   10/30/02,  4:07:49 PM
Among other consumer cyclicals in the red today were many of the homebuilders. An exception was Clayton Homes, a manufacturer of mobile homes. Yesterday, Eric S. Ende, the manager of First Pacific Advisors Paramount Fund, listed this manufacturer as one of his picks, perhaps accounting for its move counter to the trend of other homebuilders today. A volume of 390,000, compared to a listed average volume of 940,000, leads me to believe that there wasn't much conviction behind this stock's rise, though.

 
 
  Jim Brown   10/30/02,  3:53:14 PM
i Jim, what a crazy and insane day, sorry I could not keep my promise, I'll try harder next time......the only positive at this point is the higher they get the harder and fastest they will fall......Valter

Let's have a moment of silence another leader has fallen. The market has claimed another forecasting victim.

 
 
  John Seckinger   10/30/02,  3:51:57 PM
I am definitely expecting a solid move out of the equity markets tomorrow. Reasons include the 30-year bond settling right at the 110'07 pivot level, Utility Index right at solid resistance, Dow at solid resistance, Dollar just above 107 (pivot level), and Gold finding good bids during last few days. I am tempted to buy some MSFT puts here on the close, but, being the disciplined trader that I am, I will wait until tomorrow.

 
 
  Jim Brown   10/30/02,  3:46:36 PM
Swing Trade Signals
EDS is the big announcer after the close and they have already warned. They could beat their warning OR miss it worse. Since we are so close to the current stop loss of 8460 you need to choose now to close your position or take a chance that they will say something else negative. (not that it has made much difference lately) Also, remember the economic reports tomorrow morning.

 
 
  Jim Brown   10/30/02,  3:41:27 PM
Swing Trade Signals
I just heard that Arch Crawford is expecting a big drop in the next 11 days and a big surge in gold tomorrow. He feels the rally in the last two days was totally artificial. Sounds like he is on the right track! (grin)

 
 
  Steven Price   10/30/02,  3:36:20 PM
Reader Question: Steve, Some of the restaurant stocks are down today and the change in pnra may be because it is in the same group. Is it an opportune entry time? Would you wait until it bounces off the 200d or would you look elsewhere for better returns? Phil

Panera Bread (PNRA): $31.80 (-0.92) This stock has once again found support on a pullback above $31.50. The stock has continued to set higher highs, but has stalled just under $33.00, unable to hold gains over that level. The fact that we seem rangebound between $31.50 and $33.00 has me considering dropping the play for lack of movement. While entry at this level seems like a good risk/reward ratio (with support close beneath) for a move to $35, I'm beginning to lose faith in the PNRA's ability to hold over $33. I'm going to give the stock a couple of more days, since it has been strong recently, but if it doesn't break back above $33.00 by the end of the week, it may be dropped.

 
 
  Jeff Bailey   10/30/02,  3:32:31 PM
03:15 Update has been posted. Link

 
 
  Jim Brown   10/30/02,  3:21:31 PM
Swing Trade Signals
They are trying to make a run but that resistance at 8450 is pretty strong. MSFT, IBM and MMM are seeing a lot of up volume as funds try to park that money as I discussed earlier.

 
 
  Kent Barton   10/30/02,  3:21:09 PM
Expedia (EXPE, $68.46 +1.62) is looking more than a little extended after gaining 81% in less than three weeks. The company reported strong earnings on October 23rd, but the stock simply looks overdue for some backing and filling to consolidate its gains. With shares approaching resistance at $70.00, bearish traders can watch for a rollover from current levels to provide an entry point.

 
 
  Jim Brown   10/30/02,  3:16:47 PM
Swing Trade Signals
We are not seeing a sell off yet and there is a flurry of economic reports in the morning. Are they brave or just think the bad news is priced in?

08:30 Jobless Claims
08:30 Q3 GDP
08:30 Q3 Employment cost Index
10:00 Chicago PMI
10:00 Help Wanted Index

 
 
  Jim Brown   10/30/02,  2:59:50 PM
Swing Trade Signals
Two minutes until showtime! The lack of volume and direction could change quickly once we get into the final hour. If the funds are going to start throwing money at stocks it is about time. It is interesting that we did not get the customary pre-3:00 buy/sell program to try and influence the last hours decisions.

 
 
  Jeff Bailey   10/30/02,  2:59:03 PM
Correction to 01:00 Update ... The Fed funds futures are indicating MARKET anticipation of a 25-basis point cut, NOT a 50-basis point cut as I had written. Again... The December 30-day Fed Funds Futures (ff02z) 98.57 indicates that Fed Funds will drop 25-basis points. 100- 98.57 = 1.43, so slight possibility too of 50-basis cut.

In a research note, several brokers including Goldman Sachs said they are looking for a 50-basis point cut.

Based on Fed Funds Futures, either Goldman is too "optimistic" or "pessimistic" on the Fed/economy, or the MARKET is clueless about a 50-basis point cut right now.

I made the above corrections to the web site, but was not able to catch the "calculation" error before I sent the e-mail version of the 01:00 Update.

 
 
  John Seckinger   10/30/02,  2:51:07 PM
The Dow is higher by 25 points, but to me the market is much lower. Why? Bonds have rallied significantly (109'29 to 110'24), the Utility Index looks "heavy" and is starting to falter, and bids are starting to enter the five year sector. A move in the Dow back above 8440 will probably make me throw my computer out the window (just sold my bond position for a loss - was basically short five-year notes).

 
 
  Steven Price   10/30/02,  2:48:43 PM
Reader Question: american express has been one of those dreaded buy and holds (and add occasionally). Thinking about writing otm calls on the holding. Any thoughts on the strategy on this breakout? john

American Express (AXP): $36.10 (+1.17) There is definitely some resistance around $38.50 and the 200-dma also looms just above at 36.80 so I'd favor selling the 37.50 calls or higher strikes. However, there is not much premium in those calls. If you are long the stock, anyway, and holding it, then the strategy will provide some extra income at the expense of possible upside profits.

Possible upside calls are Nov 37.50 (bid 0.55), Dec 37.50 (bid 1.45, Dec 40 (bid 0.65), Jan 37.50 (bid 1.95), Jan 40 (bid 1.05).

The problem with the 37.50 line is that if the rally continues, you are likely to have the stock called away, or have to buy them back at a higher price, therefore limiting your profit potential. $40 has a few more barriers to get through and will provide more profit potential on a continued upward move. However, selling the 37.50s for a higher premium will give more downside protection on a pullback.

 
 
  Jeff Bailey   10/30/02,  2:45:13 PM
Treasuries now have YIELDS in the red and PRICES green. Some money still rolling toward Treasuries finding the major Indexes now well off their highs.

After seein just two sectors in the red earlier (FPP.X and RLX.X), now seeing some red in the Broker/Dealers, Insurance, HMO, and Cyclicals.

 
 
  Linda Piazza   10/30/02,  2:32:37 PM
Jeff Bailey's latest update also mentions the Goldman prediction and offers some interesting insights.

 
 
  Jim Brown   10/30/02,  2:29:22 PM
Swing Trade Signals
The Dow drop came to a dead stop at the 5DMA of 8360 and found some buyers on about the 3rd test. It appears there was a futures program triggered at 892 but it did not last long.

 
 
  Linda Piazza   10/30/02,  2:18:08 PM
In reference to Goldman, a reader offered this information: Goldman's economic guy was on Lou Dobbs Moneyline last night with two other big firm economic guys. He actually said Goldman was forecasting a 50 bp cut and was painting an enormously gloomy picture of 2003. The other two analysts and Lou all looked at him like he was crazy. Thanks, Coleen.

 
 
  Jonathan Levinson   10/30/02,  2:17:16 PM
I had always understood that markets fall faster than they rise, but such has not recently been the case. The doctrine is predicated on the premise that fear is stronger than greed. Perhaps the fear of missing the bottom has been greater than fear of losing money. In any event, the COMPX, currently 1317, has been easing off its highs of the day in a gradual, but recently accelerating move. The TRINQ is a mere .38, showing continued buying pressure even as the index falls. Yields are now negative, so they're buying bonds even ahead of the large bond auction mentioned by John earlier. 1313 COMPX should be the next support on the way down.

GE has been in the red all day, and is making new lows as I type, currently down 3.48%, while having already surpassed yesterday's closing volume.

 
 
  Jim Brown   10/30/02,  2:16:27 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the 1/4 position short at 14:11:52 when the Dow traded at 8375. OEX 449.80, SPX 885.21, DIA 83.88, SPY 88.82, DJX 83.74, NDX 978.97, Compx 1317.57, QQQ 24.33, Emini 884.50.

I wanted to get in higher but we just did not get the climax top this afternoon and every dip was bought right up to 1:30. The initial stop loss on this signal will be Dow 8460. This is just above the high of the day.

 
 
  Steven Price   10/30/02,  2:06:23 PM
Reader Question: Steven, Just a reminder, if you can spare some time and give your opinion about INFY. Today it is trading @69.40 (+1.30) Ashok

Infosys Technologies (INFY): $68.90 +0.80 Ever since INFS's big run on October 10, when the company raised guidance, it has been forming what looks like a bullish flag.

The stock is currently on a 4-box PnF reversal down, but looks to have found higher support once again, as it has on each pullback. Each pullback has found support at the previous bottom of the "X" reversal column, or one box higher. The current pullback is now at the bottom of the previous column ($68). This tells me that a trade of $67 would be a trend break and I would close a long position at that point. The current bullish vertical count is $100 and the next buy signal comes up at $73. A trade of $74 gets it above resistance on both the PnF and daily chart and would be a decisive breakout from the flag pattern, as well. However, if it holds this level, above $67, a long position appears safe. I'm not sure I would consider long entry here, but I wouldn't close a long position, either. I would use $67 as my stop loss.

 
 
  John Seckinger   10/30/02,  1:51:17 PM
Is the Utility Index (UTY) telling me something? On July 24th, the Index rose from 219.02 to 245.71. Recently, when the UTY Index broke out higher on October 21st, the low was 220.31. Since October 21st, this index has posted higher highs and higher low; however, the high today was only 245.35 and still within the range set on July 24th. Eight sessions and the index is still within that day's range. Now I am starting to get bearish on equities. Please see chart: Link

 
 
  Jim Brown   10/30/02,  1:47:00 PM
Swing Trade Signals
A couple Dow techs are mounting a stealth rally. INTC and HPQ are moving to new relative highs. MSFT is at a dead stop at 53.25 which has been resistance for three weeks. IBM jumped +1.75 on the comments from the CEO to 78.50 but still has strong resistance at 82.50. Even JPM is shaking off all the rumors and nearing a new relative high. Citigroup is also about to break over $37. Despite all the bearish sentiment impacting the rest of the Dow stocks these are doing amazingly well. If MSFT broke out of that $53.50 resistance we could have a surprise rally on our hands.

I say this because MSFT and IBM are probably the most likely stocks to receive any last minute fund money because they are highly liquid and high priced. Funds can move in and out quickly and those are good symbols to have on your year-end statements.

 
 
  Steven Price   10/30/02,  1:45:13 PM
Reader Question: Steve - SOX options are very pricey. Can a trader achieve the same result using the less expensive Semiconductor Holders (SMH) options. Thanks Rich

Response: Both indices focus on the industry and can be used to play the group. There are many similarities, however they are not identical. For instance stocks that are not in the SMH that are included in the SOX are MOT and LSCC. Stocks that are in the SMH that are not in the SOX include ADI, AMKR, ATML, SNDK, VTSS.

Link to the components for the SOX Link and to find the SMH, go to amex.com, then click on the HOLDRS link and then SMH. Then click "Tear Sheet" (the link does not change while surfing the site)

Semiconductor Sector Index (SOX) 298.65 (+15.93)

Semiconductor holders (SMH): 24.10 (+1.17)

 
 
  Kent Barton   10/30/02,  1:43:55 PM
Chattem Inc (CHTT, $45.29 +0.74) has been in a steep uptrend for most of the year, so it's not too surprising to hear that the company just announced a 2-for-1 stock split. Shares are currently trading near 52-week highs after more than tripling in value from the February lows. Chattem isn't exactly a household name, but you've probably heard of their Gold Bond and Icy Hot Patch products. The split will be payable to shareholders of record on November 15th, with a payment date of November 29th.

 
 
  Linda Piazza   10/30/02,  1:40:29 PM
Ten-year and thirty-year yields moving near day's lows now. Of course, these days, I'm worried that it's a trap and that equity prices will explode as soon as enough people pile into puts.

 
 
  Jonathan Levinson   10/30/02,  1:32:26 PM
GE is at its low of the day, hasn't bounced at all in about 30 minutes, and is racking up pretty decent volume at these levels. Somebody with a lot of shares wants to have a lot less. Current price is 25.20, -2.48 on the day.

 
 
  John Seckinger   10/30/02,  1:30:01 PM
Shares of KMG, following the 11:59:06 Post, are now another dollar higher and came close to testing its 22 DMA (41.81). The overall Oil Index (XOI) is higher by 3.44% at 428.90 and should attract even more buyers if 431 is taken out. Note: The intra-day high is 430.03.

 
 
  Jim Brown   10/30/02,  1:28:23 PM
Swing Trade Signals
Notice how quickly that last dip was bought? Same with the dip at 12:09 and 12:42. Every time the Dow drops below 8418 the buyers appear. Somebody has some bids just under the market and trying to target shoot a lower entry.

 
 
  Kent Barton   10/30/02,  1:24:03 PM
Much like the SOX.X, the GSO.X software index is having trouble clearing overhead resistance. A move above 100 on the GSO, concurrent with a breakout to new relative highs for Mr. Softee, would bode well for tech bulls.

Should the sector break out, Symantec (SYMC, $39.86, +0.83) might present a good long play on a move above its multi-month high at $40.29. The stock looks like it could get a quick pop to the $42.50-$43.00 region if resistance gives way. SYMC gave a quadruple-top p-n-f buy signal back at $36.00, and shares have been trading strong ever since.

 
 
  Jonathan Levinson   10/30/02,  1:10:37 PM
Perhaps Goldman has grown tired of the ole buy-puts-then-downgrade routine for this week.

 
 
  John Seckinger   10/30/02,  1:09:55 PM
This market is very "efficient" (read: difficult to trade). I am now watching MSFT as a sentiment indicator, higher by 2% at 53.16 and getting close to some solid resistance levels at 53.44 (daily chart). If the recent consolidation pattern is in fact a bullish flag formation, shares could run to near 54 before pulling back. Weakness under 52.50 should take sentiment to more neutral levels.

 
 
  Linda Piazza   10/30/02,  1:08:38 PM
A report just hit the wires (unless it's been out there and I've just now heard it) that Goldman expects a 50-basis-points cut by the FOMC. Briefing.com mentions that the Fed fund futures give a 0% chance of this happening. Either Goldman has been sitting in on Iraq briefings with President Bush and also knows something about the end-of-week economic numbers, or the prediction appears unsupported.

 
 
  Jim Brown   10/30/02,  1:04:32 PM
Swing Trade Signals
While I would like to believe Valter I still remember that huge spike at the close yesterday when somebody was pumping up the market. I do not want to jump the gun only to have it aimed at my back once I go short again.

I got a kick out of the recent word games on CNBC. I thought they were making up that word but I went to dictionary.com and sure enough it exists AND it describes our market conditions today almost exactly!

oligopoly   ol*i*gop*o*ly - A market condition in which buyers/sellers are so few that the actions of any one of them will materially affect price and have a measurable impact (on competitors).

I did change the definition by adding "buyers" and separating "on competitors" to make more market sense but you have to agree it fits the current conditions.

 
 
  Jim Brown   10/30/02,  12:56:11 PM
Weldon - ok if he is not sir Alan then lets all pitch in and send him to Disneyland - Gary

 
 
  Jim Brown   10/30/02,  12:45:38 PM
Jim, If Weldon is in tri-state area of new york, I can't take him for golf due to bad weather, but I will take him to the movie theater. AP

Sorry, I think Weldon lives in California

 
 
  Jonathan Levinson   10/30/02,  12:42:34 PM
The COMPX has been unable to challenge its intraday highs off this pullback, and is currently trading at 1327. The 5(3) hourly and 30 minute stoch are crossing over, but the 60 minute signal is very early, and the 5(3) setting can be twitchy, so caution is in order until we've seen more of a move in price. The TRINQ is still a very low .20, with the TICK.NQ at -105. With this much fed money sloshing around and an upcoming bond auction, I'm surprised not to see more selling in treasuries, with FVX up a paltry 2.1 bps.

 
 
  Jim Brown   10/30/02,  12:42:02 PM
Swing Trade Signals
We are really struggling here! Like I said last night we have a stalemate. The bulls are afraid to buy in front of the economic reports on Thr/Fri and the bears are afraid to short before the Fed meeting on Wednesday. I definitely don't see a breakout over 8500-8550 today. We have lower highs on everything and the A/D line is rolling over. The VIX is ticking up, which indicates puts are being bought and prices are increasing. The RUT is trending down since 11:00 so funds are not putting any money to work in anything but liquid large caps. If we get a lower low on the SPX (889) and OEX (452) then the bulls should begin to worry.

 
 
  Jim Brown   10/30/02,  12:23:31 PM
Several people emailed wanting to chip in for green fees and a heated cart if we could convince Weldon, our other contrarian indicator, to play golf today.

I have not heard from him today so we do not know if he is in the market or playing golf. Hopefully he will email and let us know if he is short or long so we can do the opposite. (grin)

 
 
  Jim Brown   10/30/02,  12:06:07 PM
IBM Here is a link to that IBM story: Link

 
 
  Steven Price   10/30/02,  12:01:58 PM
Semiconductor Index (SOX.X): 297.27 (+14.55) We are seeing the SOX run out of steam around 300 again. Its high of 301.94 is just below Monday's high 302.26, indicating that this may be the exhaustion point. I have received a lot of emails about shorting the sector and if we can get resistance in place here, then we'll have a nice gauge for our stop loss on short plays. However, the sector still hasn't rolled over and we'll wait for that rollover to enter short.

 
 
  Jim Brown   10/30/02,  12:01:56 PM
Jim It is official,get ready for another D-DAY.......Dow is going down -100....Good luck to everyone....Valter

There you have it! Straight from Italy.

 
 
  Jim Brown   10/30/02,  11:59:59 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
The internals are beginning to weaken so I am going to set a SHORT trigger just in case we get a breakdown. Go SHORT the broader market with 1/4 position at Dow 8375. This is just below the support from 10:45-11:00 this morning. If that support fails (very minor) then we could see more weakness appear. Conservative readers may want to wait until we get a trade at 8300 again which is 7 points below the morning low. I still want to get in higher but it is not looking like that will happen.

 
 
  John Seckinger   10/30/02,  11:59:06 AM
In last night's Traders Corner article, I looked into the XOI Index and how chart patterns can be interpreted differently. With the Index higher by 3%, one stock within the XOI Index that is moving higher is Kerr Mcgee (KMG). Currently up 2.34 points, or 6%, to 40.69, KMG should test its 22 DMA (41.74) in the near term. The upside objective should be for a move to 44. If prices fall back underneath 40, sentiment should shift towards more neutral levels. Watch the XOI Index for confirmation (If XOI breaks solid resistance levels, put on slightly larger position).

 
 
  Jim Brown   10/30/02,  11:57:28 AM
Swing Trade Signals
Evidently the markets lost their momentum when Dow Jones ran a correction to the IBM comments. Apparently the IBM CEO said he sees the economy bottoming out soon, not the technology sector.

 
 
  Alan   10/30/02,  11:47:46 AM
Per 04:00 AM futures trade signal exit, the YN 'DOW' futures short from 8,367 , 1/4 size, was either covered last night at 04:00 AM for 50-points or was stopped out this morning at break-even.

My cable modem is dead, being replaced, and not certain of when I will be back up and running. Until I get up and running, will not be posting futures trades here.

 
 
  Steven Price   10/30/02,  11:41:21 AM
Retail Index (RLX.X): 287.87 -5.41 The RLX sank after this morning's Wal-Mart downgrade, but bounced at the 50-dma of 286. It traded down to 284.88, but is now holding over 286. I'd like to short the sector, possibly with the Retal Holders (RTH), but I want to see resistance under the 50-dma and some market weakness first. The RTH $76.75 (-1.18) is below its 50-dma of $77.26, but let's look for confirmation from the RLX.

 
 
  Jim Brown   10/30/02,  11:36:16 AM
Swing Trade Signals
It is interesting that even on supposed positive comments from IBM (I can't find them on the web however) that the markets could not maintain the bounce for more than 15 min. We would have been stopped out at that 8450 level anyway since the Dow made it to 8459 before rolling over.

The price action across all the indexes looks like it is moving in slow motion. Definitely no conviction on either side. If we break below 8375 with declining internals I am going to chance getting back in. Right now the Dow is slipping but the internals are still flat to up. I would rather see another bounce to the 8500-8550 but that may be wishful thinking.

 
 
  John Seckinger   10/30/02,  11:30:21 AM
A 60-minute chart of the Dow shows how prices are setting lower highs and lower lows (closing basis). I am short fives and long tens (which should be bullish for stocks), but worried over this pattern. If the Dow falls from here, most likely bids will re-enter the shorter part of the curve. A move back under 8400 will probably force me to the sidelines. Ideally, I would like the Dow to fall and the five years cheapen due to traders taking profits ahead of the FOMC meeting. I think that is getting too optimistic. Note: Fives down 9, tens lower by 12. For more information on the yield curve, please see article: Link

 
 
  Linda Piazza   10/30/02,  11:22:27 AM
On my 11:19 post, I meant to add the following: Wait for confirmation of a rollover instead of relying on oscillators alone.

 
 
  Jonathan Levinson   10/30/02,  11:19:58 AM
The COMPX stopped just over 10 points shy of the rally high of 1344 COMPX set on October 28th. FVX is up 6.3 basis points, which still looks too little to me. The TRINQ is at .16, which is toppy for the COMPX. Going long at this level would take much more courage than I have. TICK.NQ currently 265, QQV -1.48 on the day.

 
 
  Linda Piazza   10/30/02,  11:19:58 AM
Speaking of not stepping in front of a speeding train (Steven Price's 10:31 post), I wouldn't jump into a short position as markets approach resistance levels, even though intraday stochastics are either overbought and turning down or nearing overbought levels across all time frames. Although I'm not discounting the possibility that there may be another failure at resistance, I've also seen the 60-minute stochastic stay overbought for a couple of days while the markets stair-step upward. These oscillators are not as reliable in a trending market.

 
 
  Jim Brown   10/30/02,  11:12:18 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The closing numbers for the SHORT signal were OEX 453.16, SPX 891.25, DIA 84.33, SPY 89.51, DJX 84.22, NDX 984.67, Compx 1324.95, QQQ 24.48, Emini 890.75.

Evidently there were some comments from the IBM CEO that the tech sector may have bottomed and that activated some short covering. It will also make me more cautious on jumping back into a short without significant weakness. This is exactly what the bulls were looking for to confirm their position and the bears were afraid of to invalidate theirs.

 
 
  Jim Brown   10/30/02,  11:07:16 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Close the short signal now at Dow 8420, the 890 level was broken

 
 
  John Seckinger   10/30/02,  11:05:59 AM
Starting to get worried about the 30-year futures contract (ZB02Z), currently lower by 0'17 at 110'01 and underneath both its 50 and 22 DMA's (110'03 and 110'11, respectively). Additionally, the high on Tuesday was 111'01 and only '02 ticks lower than the relative high set on August 14th. As traders look at a chart, it might be difficult to become bullish at current levels. Above 110'11, sure, but not here. Downside risk? 108'16. Note: Lower bond prices should mean higher stock prices.

 
 
  Jim Brown   10/30/02,  11:03:49 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The S&P futures are testing resistance at 890 and a breakout over this level could trigger some buy stops and give the market a boost. If the futures break this 890 level I am going to close the current SHORT signal. We will look to reenter again closer to the 8500-8550 level.

 
 
  Jeff Bailey   10/30/02,  10:55:11 AM
Teva Pharma (TEVA) $76.31 +7.38% .... trader talk surfacing that TEVA becomes top candidate for potential NASDAQ-100 component near end of year as NASDAQ-100 looks to rid index of stocks that now lack meaningful representation due to stock price depreciation.

 
 
  Linda Piazza   10/30/02,  10:51:41 AM
What's doing well today (or at least until the next market turn)? Energy stocks. Exxon, BP Amoco, Royal Dutch Petroleum, ChevronTexaco, Unocol, and Phillips Petroleum are some of the stocks up for the day. What's not doing so well? Consumer Cyclicals, such as Wal-Mart, Target, Federated, Walgreen, Daimler-Chrysler, Wendy's, and Darden's Restaurants.

 
 
  Jeff Bailey   10/30/02,  10:49:34 AM
Borland Software (BORL) $12.19 +7.49% ... stock reversing lower open as Banc of America upgrades stock to "buy" from "market perform." Link

 
 
  Steven Price   10/30/02,  10:47:22 AM
Hartford (HIG): $39.62 -4.78 This monring's gap down was tricky and new entries from this level should look for a re-test of resistance at $40, or the opening price of $42. A failed rebound at either level can provide an entry point, so look for intraday resistance at those levels. Our entry in the write-up last night was much higher, however, the gap down has put us in new territory. The stock bounced just under $39.00, so momentum traders can look for a break below the day's low of $38.94 for entry.

 
 
  Jonathan Levinson   10/30/02,  10:37:01 AM
The COMPX is just below resistance on this move, with the TRINQ at .34 and QQV down 1.56 on the day. Yields are up, but not as much as I'd expect for a significant breakout in equities, FVX +.48. Metals are down slightly, and the CBOE put to call ratio is .61. I think that the bulls might be getting ahead of themselves here- let's watch.

 
 
  Jonathan Levinson   10/30/02,  10:32:37 AM
Heard on Bob Brinker's Money Talk radio show and other places that Alan Greenspan is not to be called "Sir". That designation, it is said, is reserved for british citizens. Greenspan is a KBE - Knight of the British Empire. Don't know for sure if that's true but thought I'd pass it along.

Thanks, Ed. If I ever meet the man, I'll be sure to select the appropriate salutation!

 
 
  Steven Price   10/30/02,  10:31:35 AM
reader Question: Steve MXIM is up with bad news and worse to come,when do you think we should go short very heavily?? Thank you

Maxim (MXIM): $31.53 +2.10 Maxim and the SOX (291.61 +8.89) both following the recent trend in the sector of rallying on bad news. I'm not going to stand in front of a speeding train here for fear we might get really bad news and an even bigger rally (GRIN). Kidding aside, while I don't see a near term improvement for these stocks, I will not go short while they are still strong. Whether its a valuation play, or blind faith, they are still going up and I'll look for the SOX to break below the 50-dma (272.38) AND find resistance there, before shorting stocks in the sector.

 
 
  Jim Brown   10/30/02,  10:29:16 AM
Swing Trade Signals
Looks like the bulls want to try a breakout here. 8400 is strong resistance and a break over that level could draw some more buyers off the bench. I considered moving the stop loss back down to something in the 8420 range but decided those 30 points would not be that critical and the chance of a failure under 8450 was still strong. If we are stopped out we will reenter the short as soon as weakness appears again.

 
 
  Jonathan Levinson   10/30/02,  10:26:07 AM
The "Treasury Refunding" referred to in John's 9:42 posting is not a Federal Reserve Open Market Operation, but has to do with the upcoming bond auction. Here's another link that should be helpful:

Link

 
 
  John Seckinger   10/30/02,  10:25:37 AM
Interesting price action so far today. The low in the Nasdaq is 1300, while the Dow has not tested 8400. One of these levels certainly has to give. The bond market seems to be betting on 8400. We will see.

 
 
  Steven Price   10/30/02,  10:21:11 AM
Hartford (HIG): $39.50 (-4.90) I am lowering the stop loss on OI put play HIG to $45

 
 
  Jonathan Levinson   10/30/02,  10:18:11 AM
The federal reserve website actually just changed its data after I reported it. It's now 4.25B, and the ON/RP is now a 2 day repo, expiring November 1st. Perhaps Sir Al is following the Market Monitor! We therefore have a net add of 2.5B today, and tomorrow's expiry is 10.25B.

 
 
  Jeff Bailey   10/30/02,  10:12:37 AM
Quest Diagnostics (DGX) $61.63 +1.53% .... keeping eye on this one as potential short/put candidate. Stock recently rallied to bearish resistance trend and found resistance at $66. Recent break at $62 triggered triple-bottom sell signal. Link

Yesterday, stock found support at rounding higher 50-day SMA, so for now would want a break below the 50-day SMA of $59.47 for leg lower.

 
 
  Jonathan Levinson   10/30/02,  10:10:32 AM
About that WMT downgrade:

One of the traders in the mIRC Pitstock trading room said yesterday's transactions show that GS bought 7,000 WMT Nov 55 puts prior to their downgrade today. Not sure on the timeprint but think he mentioned late in the day. Sounds fishy doesn't it?

Yes, it does. Perhaps the firm was buying them for a client. Or perhaps, they're in conflict of interest. I do not know whether it's legal or not, just reporting what I've heard. Seems like good work if you can get it, though.

 
 
  Jonathan Levinson   10/30/02,  10:07:40 AM
For all of you fed watchers, note that Federal Reserve OMO website has just managed to forget that there are 31 days in October, and has posted today's ON/RP as expiring Nov 1st. Be careful with their maturity dates- they had also mixed up the 6 day repo, and now correctly list it as maturing tomorrow. Here's the Link

 
 
  Jeff Bailey   10/30/02,  10:06:57 AM
Teva Pharma (TEVA) $75.93 +6.8% ... mentioned this one over past weeks as bullish looking supply/demand chart. Missed it yesterday, but stock gave triple-top buy signal at $70 and trades strong today on generic Augmentin approval. Link

 
 
  John Seckinger   10/30/02,  10:06:50 AM
With the Dow lower by 48 points, which sector could be the catalyst going forward? I would put the most weight in the 30-year (ZB02Z) bond and the contracts ability to stay above 110'07. The Utility Sector (UTY) should also be watched, as it has come off its highs (245 to 243) and looks "heavy". Gold is also up fractionally, but yesterday's move near the 200 DMA could have activity in the XAU slow during trading on Wednesday. As far as oil is concerned, I profiled it last night and did expect a rise back above 418 today; therefore, I think it will trade today without a correlation to the Dow. Speaking of the Dow, 8400 is definitely key. Key to downside: A close under 8250.

 
 
  Jeff Bailey   10/30/02,  10:04:37 AM
General Motors (GM) $32.71 -3% ... extends 0% financing through Jan. 2. Link

 
 
  Jonathan Levinson   10/30/02,  10:03:16 AM
The Fed has just announced a $4.647B repo. Perhaps Sir Al had a little loose change in his pocket to throw into the hat when it was passed around this morning. There is $1.75B in repos expiring today for a net add of just under $3B. Tomorrow, this, plus $10.25B will be expiring. If there isn't close to $15B added tomorrow, there will be a very large drain on the market.

 
 
  Jonathan Levinson   10/30/02,  9:56:44 AM
Trader's talk that Goldman was a big buyer of WMT Nov 55 puts yesterday.

 
 
  Jeff Bailey   10/30/02,  9:56:31 AM
30-year YIELD ($TYX.X) 50.21 or 5.021% ... per Index Trader Wrap.. morning's high YIELD was 5.045%, so seeing some buying come in as YIELD edges lower from intra-day high. NASDAQ-100 Index (NDX.X) 961 +0.06% just off its high of 970.47. 60-minute interval shows a rounding lower 21-hour SMA and starting to round out 50-hour SMA serving resistance in opening hour.

 
 
  Jeff Bailey   10/30/02,  9:48:52 AM
Wal-Mart (WMT) $54.92 -2.76% ... stock downgraded this morning by Goldman Sachs to "market perform" from "rec. list," noting that the stock has outperformed the S&P 500 by 26.8 percentage points over the past year, leaving its relative P/E at a 9-year peak of 1.7x. In addition, company's P/E-to-growth ratio is by far the highest among broadline retail growth peers at 2.3x, again suggesting that further outperformance from current levels will be difficult. Link

 
 
  Jonathan Levinson   10/30/02,  9:46:49 AM
Looks like it was my Scottrade feed that halted GE, currently trading down .44 to 25.41.

 
 
  John Seckinger   10/30/02,  9:42:30 AM
The Treasury announced the breakdown of the $40 bln quarterly refunding; $22 bln in 5-year notes and $18 bln 10-year notes. It will result in $37 billion dollars of new cash (since only $3 bln is maturing debt). The $37 bln of new cash is possibly the largest amount in two decades.

 
 
  Steven Price   10/30/02,  9:41:48 AM
Trimeris (TRMS) $52.65 +0.80 OI call play TRMS has broken back up through $52.00. New entries can wait for a re-test of $52.00 as support, or a break above $53.20.

 
 
  Jonathan Levinson   10/30/02,  9:39:18 AM
GE appears to be halted.

 
 
  Steven Price   10/30/02,  9:37:57 AM
Northern Trust (NTRS) : $35.19 -0.24 Look for a break under $35 for new entries in OI put play NTRS. We saw a bounce yesterday at $35.01, so look for that support level to fall first.

 
 
  Jonathan Levinson   10/30/02,  9:36:46 AM
The TRINQ is such a lovely indicator when it works (grin). The opening reading of .13 was too extreme to be sustained, and sure enough the COMPX gapped and proceeded to crap, as the TRINQ rose to its current .57. It is now in manageable bull territory, and the COMPX is free to either rise from gap support or sink through it to next support at 1290.

 
 
  Steven Price   10/30/02,  9:35:03 AM
Hartford (HIG): $42.16 -2.24 Let's give OI put play a few minutes to settle in after the gap down, before initiating shorts. I want to see the intraday action to avoid selling a dip and then seeing a rebound.

 
 
  John Seckinger   10/30/02,  9:33:56 AM
The December 30-year is now at the pivotal 110'07 level after setting an intra-day low of 110'00. A rise above 110'24 should bring real buyers into the bond contract, while a close under this 110'07 area could spell short term trouble. Looking at the curve, the 5/10 spread is flat after two solid days of steepening.

 
 
  Jonathan Levinson   10/30/02,  9:31:27 AM
8 point gap up open on the COMPX, TRINQ at .13 (!!), TICK.NQ +143.

 
 
  Jeff Bailey   10/30/02,  9:23:52 AM
09:00 Update has been posted. Link

 
 
  Steven Price   10/30/02,  9:15:25 AM
Maxim (MXIM)is currently trading up to $30.37 from its close of $29.43

 
 
  Steven Price   10/30/02,  9:12:47 AM
I'm still a little surprised by yesterday's bounces in the Retail Index (RLX)and Semiconductor Index (SOX). I'll be watching the 50-dmas again (RLX 286 and SOX 273) for downside entries only after I see intraday resistance. I'm going to be very cautious here, as I don't want to get whipsawed leading into next Wednesday's FOMC meeting. While a cut may already be priced into the market, the recent jitters have made entry extremely tricky. After the bell Maxim (MXIM) released earnings and made some cautious statements about orders and future visibility in the chips. The stock initially sold off and then rallied, so it will be interesting to see if the SOX continues to rally on bad news.

 
 
  Jim Brown   10/30/02,  9:11:26 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The futures are showing some weakness this morning but we are too close to the stop at 8400 for comfort. Let's raise the stop loss on the current SHORT signal to Dow 8450. This will give us a little more cushion at the open to allow the bulls/bears room to move.

 
 
  Jonathan Levinson   10/30/02,  8:37:21 AM
Bonds have opened and are getting sold, with the five year yield up 5.9 basis points, TNX +5.4, and TYX +2.8.

 
 
  Jonathan Levinson   10/30/02,  8:24:33 AM
Futures are slightly above flat, with NDX trading at 965, SPX 882.10. The US Dollar Index is hovering at 107.30, with gold off its best levels, trading above 315/oz. QQQ is trading up 12 cents at 24.04.

 
 
  Alan   10/30/02,  4:11:29 AM
Index Futures
Futures Trade Signal EXIT
Futures Trade Signal Short ENTRY YM 8367
At 405 AM, YM is at 8303, and assuming this overnight selling does not reverse by the time you wake up, NEW ORDERS are:
Cancel the stoploss at 8397, and place a stoploss now at BreakEven (8367)
Also place a OCO order to "buy to close" to cover this short at YM 8267.
Given that it's now 4am, I may miss the open, but the above is the new order on this short.

 
 
  Alan   10/30/02,  3:59:50 AM
4 AM Europe did a gap and trap: Opened higher and is selling firmly. At 4am, ES 878s, YM 8312, NQ 959
In the event some of you did wake up for this and feel like covering to lock in YM 50 point short-covering gain from the 315PM YM 8367 Short, go right ahead

 
 
  Alan   10/30/02,  3:33:37 AM
Wonder if any of you who emailed me about waking up for 30min after the Europe open are here :)
Futures leaking lower, ES 879.50, YM 8329, NQ 962
Current Futures Trade Signal is short YM from 8367

 
 
  Alan   10/30/02,  2:07:06 AM
2 AM quotes: ES 882, YM 8353, NQ 966
Europe is projecting a 30-50 gap up at their 3 AM open off the strength of the afternoon US rally. Good night.

 
 
  Alan   10/29/02,  11:32:30 PM
The Futures Wrap has been posted: Link

 
 
  Jim Brown   10/29/02,  11:32:16 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Jim Brown   10/29/02,  11:32:05 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 

Market Monitor Archives