Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
  Jim Brown   10/31/02,  8:16:08 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Alan   10/31/02,  4:12:34 PM
GILD, a biotech, beats on earnings and is moving higher afterhours.

 
 
  Linda Piazza   10/31/02,  3:46:50 PM
KO update: 46.39 -0.46 For several days, KO has been moving up and challenging resistance in the 47.25-47.50 area, but hasn't been able to break above that resistance. The 22, 50, and 200-dmas are all still above, with the 22-dma now at 48.89. A descending line also lies ahead at about 47.50, that area of resistance. I've read several reports that hinted KO might have been the one of the big-cap recipients of some end-of-year buying, but if so, that buying hasn't been able to drive it much above recent lows or above those MA's and resistance levels. We'll see how it performs tomorrow and next week when that buying ends.

 
 
  Alan   10/31/02,  3:44:47 PM
What will be worth watching is if futures downtick hard after the cash market closes today at 4:00 PM as 'smart money' is locked into their long stock positions for today, Oct. 31st, but starts to short futures after 4 PM to 'hedge' as they may 'expect' some profit taking going into the FOMC and elections.

 
 
  Alan   10/31/02,  3:41:42 PM
Somehow i doubt 'they' will allow the last 15minutes of this 'buy the dips' mindset to change so expecting ES to burst through the 885 resistance.

 
 
  Alan   10/31/02,  3:39:48 PM
Seems the selling paused at 3:30 PM at Dow cash 8350 support, matching the ES 878 support. Currently ES is 884, knocking at the 885 resistance, if through that, 887, and 890 are above.

 
 
  Jeff Bailey   10/31/02,  3:36:58 PM
03:15 update has been posted. Link

 
 
  Alan   10/31/02,  3:22:25 PM
When this volume came in, this piece of ^^&*(()) Toshiba cable modem killed off my Quote program on packet losses, appears will have to wait until replacement 3Com modem shows up. One doesn't appreciate 'working' technology till it goes away for 2 days :(

 
 
  Jonathan Levinson   10/31/02,  3:20:42 PM
Well, James solicited my picture for publication purposes, copy of which was sent today. Alas, the picture of Greenspan morphed with A.E. Newman (what, me worry?) morphed with Master Yoda didn't cut it. You want scary, get ready for it when James posts it up.

GE has just gone negative, printing a low of the day, and buoying my spirits out of all proportion. Ditto Citicorpse and the COMPX. Perhaps the windows have already been dressed and the tape painted. We'll see. The TICK.NQ at -166 is nothing special, same for the TRINQ at .64- more like the buying slacked off. No sign of real selling yet.

Thanks to reader John who sent me a picture of himself snoozing... "defensively" with an axe. Some bears never relax :)

 
 
  Jim Brown   10/31/02,  3:16:15 PM
Swing Trade Signals
Looks like the arbitragers are winning the battle. The boring day has turned into a rout for the bears and the outlook for tomorrow is definitely negative. I am sure glad we stuck to our guns this morning.

 
 
  Jim Brown   10/31/02,  3:14:03 PM
The entire IT dept refused to be photographed. Something about wanting to remain anonymous. Others not able to attend because they do not live in Denver include:

Buzz Lynn - Reno NV
Mark Phillips - San Diego
Jonathan Levinson - Canada
Ray Cummins - Alaska
Mark Wnetrzak - Alaska
Linda Piazza - Dallas
Mike Parnos - Detroit
Alan - Philadelphia
Leigh Stevens - San Francisco

Thanks to the power of the Internet we all come together each day to do battle with the markets in your behalf. I really appreciate everyone and especially those that I embarrassed today.

 
 
  Jeff Bailey   10/31/02,  3:08:44 PM
Tenet Healthcare (THC) Company issues press release saying it is deeply concerned by allegations contained in an affidavit filed today by the U.S. Attorney's Office in Sacramento, California, regarding two physicians who practice at Tenet's Redding Medical Center in Redding, CA. Tenet is fully cooperating with the U.S. Attorney regarding the matter, which involves alleged false billings and unnecessary angioplasties, coronary bypasses and heart catheterizations by the two physicians. Tenet stressed that the decision to perform any medical procedure is the decision of the attending physician, and Tenet hospitals must rely upon the professionalism of its physicians in making these evaluations.

 
 
  Jim Brown   10/31/02,  3:05:07 PM
This is the last one for the day. Kari and Annalisa, from our customer service dept were unable to come to the party but did don fairy wings in the office today. We could not do without them and I do not want to leave them out.
Analisa: Link
Kari: Link

 
 
  Jonathan Levinson   10/31/02,  3:04:40 PM
The bond market has just closed, and the COMPX has just printed a very satisfying 4 point red candle on my one minute chart. The TRINQ remains in "anything can happen" bull territory at .57. I feel like I'm in that waiting room. HUI and and XAU are getting whacked today, which confuses me about the likelihood of a rate cut. Presumably if Al cuts one, it will hurt the value of the US Dollar by diminishing demand for dollar denominated bonds, which should be bullish for gold. Then again, global financial weakness such as we see should be supportive of the US Dollar and thus bearish for gold? Best to watch the charts.

 
 
  Jeff Bailey   10/31/02,  3:03:01 PM
Tenet Healthcare (THC) stock still halted with news pending. Didn't have alerts set on my computer, so didn't know stock was taking beating in last couple of hours. However, do see a news item that the stock was hit lower by a report from Modern Healthcare that THC offices in Redding, CA were raided yesterday by 40 agents from the FBI, HHS and IRS. Would expect company is getting ready to make comments on this.

 
 
  Alan   10/31/02,  2:55:25 PM
Futures chopping in last 30minutes, the question now becomes if 'they' have plans to ramp em higher into the close to finish this month out or not. One 'might' expect a big move in the last hour, but no idea if its a Long or Short. ES held 887 with resistance at 890, 892, 895, 900. Support lower is 885, 883, 879.50; currently is 888-889

 
 
  Jonathan Levinson   10/31/02,  2:50:17 PM
ROFLMAO! Good one, Jim! Mike, the resemblance is shocking :)

 
 
  Jeff Bailey   10/31/02,  2:49:47 PM
Tenet Healthcare (THC) $32.00 -17.8% ... trading halted... news pending. Link

 
 
  Jim Brown   10/31/02,  2:47:56 PM
Kenneth Lay was there disguised as Mike Parnos. Actually Mike did not join us so I took his police photo and cropped the ID numbers off the bottom. Now when you email the Couch Potato Institute of Trading you know who is reading your email. Link

 
 
  Alan   10/31/02,  2:40:28 PM
With NQ futures printing 1000; ES and Dow are lagging behind. On Monday when NQ printed 1000 levels, ES was over 905 and Dow was at 8550.

 
 
  Jeff Bailey   10/31/02,  2:39:57 PM
Johnson & Johnson (JNJ) $58.83 +2.67% .... still by "best idea" from a dow component perspective. Need's a trade at $59.00 to get p/f chart back in column of X, but still looks strong. First sign of trouble is $54. Link

On the flip side, I still like PG Link as 1/4 or 1/2 position short. That "bullish support trend" sure came into play and does hint that institutions were watching the stock for an entry point. Overhead supply should help keep things in check.

Between the two, can perhaps see how these two stocks play into the Dow Industrials p/f chart. PG resembles the Dow action in recent sessions, while JNJ appears to DIVERGE and have demand more in control of the stock. Link

Disclosure ... I currently hold BEARISH position in PG and BULLISH position in JNJ.

 
 
  Jim Brown   10/31/02,  2:34:33 PM
Swing Trade Signals
As I mentioned earlier there is likely to be a clash between the buy on close fund orders and the sell on close arbitragers that have been waiting on this event all week. This day is far from over and the ending fireworks should be exciting.

 
 
  Jeff Bailey   10/31/02,  2:34:21 PM
Microsoft (MSFT) $54.00 +1.69% ... breaking to session high here and moving above still trending lower 200-day SMA. Volume is light, so not thinking big upside move near-term, but this spells near-term "trouble" for my thinking about NASDAQ-100 and QQQ short. If short/put QQQ/NDX your synthetic hedge in my opinion is LONG MSFT, SHORT QQQ

 
 
  Jim Brown   10/31/02,  2:31:57 PM
Swing Trade Signals
That is all the pictures for now because the Dow is actually breaking to a new relative high at 8450 for the afternoon. We are in the last 90 minutes of trading and the internals are picking up. Check those stops and buckle those seatbelts.

 
 
  Alan   10/31/02,  2:31:10 PM
Dear Stock Market, I have been without cable modem for 2 days, thanks for not doing much while gone; now that cable modem is 'sorta ok' please do "something" into the close. Thank you. Sincerely, Alan

 
 
  Jeff Bailey   10/31/02,  2:30:31 PM
I've been getting ready for a presentation tonight for the Denver Trading Group, but just tuned in. I can't resist..... Per Jim's 02:23:25 and picture there... the girl on the left with a shocked look. I think that's when Mr. Seckinger picked up the microphone and began singing karaoke.

 
 
  Jim Brown   10/31/02,  2:29:55 PM
Kent, James and Ms Devil during a singing event but I think James and Kent were the only two singing! A good time was had by all! This was near the end of the party and John was still explaining bond yields to his companion or he would have been here too. He was really dedicated to making sure she understood. Link

 
 
  Jim Brown   10/31/02,  2:23:25 PM
Marilyn Monroe and Braveheart were watching Debra Winger sing. At least I think that is what James was doing. Notice the sly grin! Link

 
 
  Jonathan Levinson   10/31/02,  2:22:46 PM
Given the complete dearth of market action upon which to comment, and the fact that the yoda routine bored even me, I'll just reflect on the fact that even this little ramp job or buy program, whatever it is, has only managed to tack on a gain of 7 Nasdaq points. Is it just me, or does the market feel like a lead weight on Atlas' back?

 
 
  Jonathan Levinson   10/31/02,  2:20:28 PM
Well, that's it. I'm moving to CO.

 
 
  Jim Brown   10/31/02,  2:18:22 PM
I was busy during the party scouting out prospective new employees. (grin) I have no idea who this is but she said I bore a striking resemblance to one of her ex boyfriends. She told me who she was dressed as but I was more focused on the dirty looks from my wife who was taking the picture. Link

 
 
  Jim Brown   10/31/02,  2:14:33 PM
Steve Galaty our graphic artist and his wife Brooke came as Ma and Pa Viking and were a hit. Steve has been with us a couple years. The mousepad option expiration calendars are his work. (side note - We are adding the Fed meetings to this years calendar.) Link

 
 
  Kent Barton   10/31/02,  2:13:49 PM
Jim in a hooded cloak actually bears a striking resemblance to everyone's favorite Jedi, Obi-Wan Kenobi!

 
 
  Alan   10/31/02,  2:10:28 PM
Innocently asks where's the photo of Jim at? [grins] Did you go in costume perhaps as a 'devilish-evil Option Market Maker' ?

 
 
  Jim Brown   10/31/02,  2:07:29 PM
Here is a group shot that includes Kent Barton. Kent came dressed as "Slash" and also took his turn at the microphone. Kent is the editor for PremierInvestor and has been with us over a year. Don't worry Kent, I am saving those "other" pictures for a future blackmail session. Link

 
 
  Alan   10/31/02,  2:03:11 PM
Index Futures
I've somewhat "back" from 1 1/2 days of being in "cable modem" hell, working good enough to type this, but it appears the 'brand new' Toshiba cable modem I have stinks to use for streaming applications like data quotes/charts; and must wait until the ISP can "find" a replacement for the old 3Com cable modem which worked perfectly for streaming quotes.
Nice to be 'back' [grins]

 
 
  Jim Brown   10/31/02,  2:02:19 PM
Swing Trade Signals
Looks like the afternoon attempt to mark them up has started. We are getting bumps and green candles across all the indexes and the VIX is setting a new low for the day. With 2 hours to go, if they can mount a credible attempt to rally this early they may have a shot at 8500. A slim shot but it is possible. If they can run the stops and trigger some buy to covers they might be able to create some momentum.

 
 
  Steven Price   10/31/02,  1:57:29 PM
Reader Question: Hi Steven: EBAY 62.70 + 1.54, stock ran through 62 resistance, do we see further upside to 65, or retest 60 level, we are short, puts are still expensive, would that be an indicator that market does not expect much near term upside. Thank you for your comments on MM.

EBAY $63.45 (+0.95) EBAY has been moving quite a bit within the range between $60 and $65. The options are expensive because it is a high dollar stock and it is definitely moving, resulting in high implied volatility (price level of the options). The recent buying around $60 keeps me neutral here, as we are right in the middle of the current range. The stock failed again at $65, but hasn't broken down either. It's too bad they don't have a $62.50 strike to play a straddle on.

 
 
  Jonathan Levinson   10/31/02,  1:56:44 PM
It feels awfully isolated all the way out here in Montreal, far from the OIN Halloween action. Combined with a quiet market, and I had actually dozed off, and just awoke in time to catch the makings of a COMPX ramp job. COMPX 1335, desipte bond yields all in the red. Hmmm.

 
 
  Jim Brown   10/31/02,  1:48:42 PM
Besides singing John spent most of his time next to this unidentified female. I am sure he was just trying to help her with her portfolio. Link Here he was getting her views on bond yields and the possibility of the 30 yr treasury returning in the near future. Link

 
 
  Jim Brown   10/31/02,  1:44:16 PM
John Seckinger came as the midnight cowboy and he and Jeff kept trading places at the karaoke mic all night. I am under threat of serious bodily injury if I show any of them singing so those pictures will remain confidential. Link

 
 
  Jim Brown   10/31/02,  1:38:56 PM
One of the most popular attendees was Ms Devil in red leather. She does not work for us but as a point of reference James is 6-3 and wearing boots. She is wearing flats and she hunched over to hug him. He did not seem to mind! Link

 
 
  Jeff Bailey   10/31/02,  1:38:51 PM
01:00 Update is posted. Link

 
 
  Steven Price   10/31/02,  1:26:21 PM
Additional note on TRMS: Because the stock put another X in the current column today, the triple top has not been negated. A reversal would occur if the stock trades $51 tomorrow. However, I do like the support at the triple top breakout point. I am not ready to close the play just yet, because of this support, but I don't recommend entry until I see the reason for the sell-off, or evidence of renewed buying.

 
 
  Linda Piazza   10/31/02,  1:25:35 PM
Are any of the rest of you staring at charts, seeing contradictory formations? When I look at the linked S&P 100 chart, sometimes I think I'm seeing a rounding top formation. Other times, I think I'm seeing a bull flag, if I use a little imagination to form the parallelogram. Bull flags form after an almost vertical rise, which we've had recently, and represent a time of profit taking before the next upward move. They move counter to the previous movement, meaning they show a period of lower highs and lower lows, before breaking out again to the upside. That sounds familiar, too, doesn't it? Volume considerations aren't any help in deciding on the pattern. In both a bull flag and a rounding top formation, volume would be decreasing. In the case of a bull flag formation, volume should explode when prices break out to the upside. In the case of a rounding top formation, volume should increase as prices drop below the lip of the rounding top, although volume confirmation isn't quite as important in downside moves as it is in upside ones. Intuition tells me this should be a rounding-top formation. However, prices are holding steady while stochastics cycle down, lending support to the bull-flag theory, except that it's my belief and that of many people, that prices are being artificially supported just now. That makes me wary of believing in the bull-flag theory. Bottom line? I'll keep an open mind, use small positions, and honor stops. Link

 
 
  Jim Brown   10/31/02,  1:25:06 PM
Jim: Hmmm. I knew Jeff Bailey looked familiar to me when I met him at the last Denver seminar. He's the spitting image of my neighbors over here in Transylvania!!! Think they even made a movie or two about him. (grin)

Also, since boredom is attacking with a vengeance, I'm taking the liberty of sending along a humorous clip that was forwarded to me. If you've seen it before, my apologies. If not, enjoy. Normally, I would never think of jamming your already busy mailbox with material such as this, but today is one of those exceptions. Jeff

The year is 1923, in 1923 do you know who was:

1. President of the largest steel company?
2. President of the largest gas company?
3. President of the New York Stock Exchange?
4. Great wheat speculator?
5. President of the Bank International Settlement?
6. Great Bear of Wall Street?

Now, these men should have been considered some of the world's most successful men. At least, they found the secret of making bundles of money. Almost 80 years later, the history book asks us, do we know what actually became of these men?

ANSWERS:

1. The president of the largest steel company, Charles Schwab, died a pauper.
2. The president of the largest gas company, Edward Hopson, went insane.
3. The president of the NYSE, Richard Whitney, was released from prison to die at home.
4. The greatest wheat speculator, Arthur Cooger, died abroad, penniless.
5. The president of the Bank of International Settlement, shot himself.
6. The Great Bear of Wall Street, Cosabee Livemore, committed suicide.

However, in that same year, 1923, the winner of the most important golf championship, Gene Sarazan, won both the U.S. Open and PGA Championship.
What became of him, you ask?
Well, he played golf until he was 92, died in 1999 at the age of 95, and was extremely financially secure at the time of his death.
CONCLUSION: STOP WORRYING ABOUT BUSINESS AND OTHER BULLSHIT AND START PLAYING GOLF!

 
 
  Kent Barton   10/31/02,  1:24:21 PM
Semiconductor index (SOX.X 295.51, -578): Wednesday's close above 300 was a positive sign for the bulls, but chip stocks are having a tough time moving higher with the broader market basically moving sideways. AMAT, INTC, TXN, KLAC, NVLS, TXN, and MU are all trading within +/- 2.5% of break-even.

 
 
  Steven Price   10/31/02,  1:21:46 PM
Reader Question: Steven Any thouhts on TRMS ? ( Play of the day ). DOes the lows of 50.86 negates the triple top ? Is it a buy still at 51.3X. Also any opinions on AZO ? Thanks GeorgeQ

Trimeris (TRMS): $51.73 (-1.62) After hitting a high this morning at $54.60, this call play sold off to $50.86 briefly. It found buyers once again at $51 and is heading higher again. The stock usually does not trade in such a volatile range, and although there is no negative news on the stock, I would hold off on entry for the moment. It has been riding its 10-dma and that is where the pullback stopped. I did expect a pullback after the recent run, but not this far.

Autzone (AZO): $86.21 (+2.19) OI call play AZO has bounced once again from its ascending trendline and my initial target is $90. Conservative traders can look for intraday support at $86 to initiate long entry.

 
 
  Jim Brown   10/31/02,  1:20:56 PM
Swing Trade Signals
The markets are holding their own despite the convergence of major economic news today and tomorrow, end of year for some funds and no Fedspeak for a rate cut. However, the volume is extremely weak. The Nasdaq futures are trading so thin that there are huge gaps on the 2 min chart. I still think they will try to mark them up this afternoon so we need to keep a watchful eye open.

 
 
  Jim Brown   10/31/02,  1:15:15 PM
Hi Jim and Staff, I will fly in from London, UK for the costume party. I have met a few of you during the previous working sessions and would love to see most of these people not thinking of the markets for a second.
By the way, I nominated Jeff B. for the president during the Florida elections debacle in 2000. I told him that I would fly in from London to cast my vote in appreciation for all his work! I know that he was far better than Bush or Gore. His response? "Not for a Million Dollars!"
In any case, thanks again to your team for the good work! I can bet you that your team is the envy of many! Chuks

This is going to be an interesting party

 
 
  Kent Barton   10/31/02,  1:12:48 PM
Expedia (EXPE $67.81, -1.09): Discussed this one yesterday as a possible short. Shares made it up to $69.35 this morning before reversing into negative territory. The stock is showing relative weakness but seems to be finding support at the 200-pd moving average on the 5-minute chart ($67.52).

 
 
  Jim Brown   10/31/02,  1:09:46 PM
Our own braveheart showed up for the party. This is James who is the content manager for all the websites. He is currently redesigning OptionInvestor and if all goes well it will be up and live on Monday. If you like it send him an email on Monday. He is single, 31 and actively looking! Link

 
 
  Jim Brown   10/31/02,  1:02:25 PM
I have already received 6 confirmations for a possible Halloween party next year. Unbelievable how many people will do anything for excitement in their life! (grin) Here is a better picture of the tornado group. Very original and complete with the inside out umbrella. Link

 
 
  Steven Price   10/31/02,  1:00:05 PM
Reader Question: Hi,great newsletter, not sure who will get this note, but I'm just wondering what you think of the upcoming single-stock futures. Will this be something to delve into for the little investor,. Will it be something you will cover? thank you for any thoughts, bob

Response: I will be delving into single stock futures and deciding whether I think they will be of use to our readers. I do think they provide an opportunity for traders using stock to hedge options, however I am still forming an opinion on whether they are useful to the retail investor.

 
 
  Jim Brown   10/31/02,  12:58:41 PM
Swing Trade Signals
The next challenge for the market will be the convergence of the 2/5 DMA at 8375. This has been support several times this week and produced the rebound yesterday afternoon when it was 8358. I don't think the fund buying is over yet. I still expect a last gasp try to mark them up at the close but traders and hedge funds who have been waiting for the closing spike to sell into may put a wet blanket on that try.

The market action is like waiting in the dentist office for an appointment. You know there is a possibility of pain ahead but your not sure. The tension mounts as the patients ahead of you leave the waiting room. You can hear the drills and suction but keep trying to convince yourself that you will be ok. For today our appointment is at 3:PM. Excited yet?

 
 
  Jim Brown   10/31/02,  12:50:01 PM
The other couple in that same storm was Nich and Jessica Sheldon. Jessica is in charge of customer service and handles all the billing and accounting. Nich is the copy editor for OptionInvestor and AsianInvestorOnline.com. He is also responsible for the email newsletter. Note the wind blown tie is permanently in that position. Jessica was responsible for the idea and the makeup for the tornado look. Good job! (Jessica is also my daughter!) Link

 
 
  Jim Brown   10/31/02,  12:42:50 PM
This was one of two couples that got caught in a tornado on the way to the party. Dave doubles as a network technician, PC tech and HTML programmer in a pinch. He has been with us about two years. His wife's name is Emily. Great makeup! Link

 
 
  Jonathan Levinson   10/31/02,  12:41:36 PM
A bear flag it looks like on the COMPX 5 minute candles.

 
 
  Jim Brown   10/31/02,  12:36:48 PM
Love the photos and I'm jealous !! Why not organise a huge party and members that want to come can buy a ticket next year ? No working sessions .....just fun. Have not been to a Halloween Party before and would love to come even from Sydney. Anastasia

I challenge any of you to match that kind of dedication! Flying from Sydney to Denver for a costume party would not be my idea of fun! However, if there is enough response I would be glad to organize it!

 
 
  Jim Brown   10/31/02,  12:34:39 PM
Thanks for the great pictures but the ones I want to see are the scary faces on the bulls when the bottom falls this afternoon.

Be patient, time is on our side.

 
 
  Jonathan Levinson   10/31/02,  12:33:28 PM
Great is the tension, but slow is the action. 1331 is the COMPX, but slight is its strength. Many are the buyers with .61 on the TRINQ, but slight is their conviction with 61 for the TICK.NQ. Patient is the jedi trader, for unpredictable can be the action. But almost done is the Empire of mutual fund tape painters, and not small is the fed repo drain today. Prudent must we be, but soon will be the bears' opportunity.

 
 
  John Seckinger   10/31/02,  12:31:35 PM
The markets continue to remain calm as traders debate the Fed, next Tuesday's election, higher bond yields, Dow still over 1,000 points higher from October 10th, and a possible war with Iraq. Note: I did attend the costume party, and please ask Jeff how I did during the Karaoke portion of the event. Ok, so maybe I am not American Idol material.

 
 
  Jim Brown   10/31/02,  12:30:43 PM
It is not nice to interrupt me while the market is open. Yes, this is me and my beautiful wife. When trades are not going my way I turn into a real monster and anyone in arms length is in danger. Link

 
 
  Jim Brown   10/31/02,  12:25:07 PM
Speaking of cute couples another one of our new recruits is Steve Price and his beautiful wife Connie. While a cave girl at night she is a doctor during the day. Nice catch Steve! Link

 
 
  Jim Brown   10/31/02,  12:19:37 PM
That picture of Jeff probably portrayed him in a bad light. Here is one of Jeff and one of his many girls friends. I think they make a cute couple, don't you. Link

 
 
  Jonathan Levinson   10/31/02,  12:12:37 PM
I tried out my halloween costume last night- here's the picture:

Link

 
 
  Jonathan Levinson   10/31/02,  12:09:39 PM
It's easy to lose track, but I note (as the horror from that last picture reluctantly wears off) that the indices are all flat- up less than a few points- COMPX +4, INDU +3, SPX +2, OEX +1.5, RUT +.62. A lot of sound and fury, though. I consider even being flat to be amazing given the character of the news that we had this morning.

 
 
  Steven Price   10/31/02,  12:06:41 PM
International Paper (IP): $35.13 (-0.36) IP finally broke below $35 after finding support there the last couple of days. It has rebounded with the Dow, and let's wait for evidence of resistance below $35 for new entries. Now that the level has been broken, we got a 3-box PnF reversal down. There is some PnF support at $32-$33, so I would probably enter with ITM puts, rather than OTMs.

 
 
  Jim Brown   10/31/02,  12:05:41 PM
Happy Halloween - Due to the holiday I am going to post some pictures in the monitor of some of the staff from a costume party we had last weekend.

The first one is our leading market commentator, Jeff Bailey. You can see from the picture he has a darker side. We have been telling him that he is working too hard and he need to get out more during daylight hours. Don't you think he looks a little pale?

Link

 
 
  Jim Brown   10/31/02,  11:46:12 AM
Java Market Monitor- Obviously the integration of the Java monitor into the current system to allow both to run at the same time produced less than the desired result. We think the majority of the problems have been fixed.

HOWEVER, due to the problems experienced we have deactivated some of the new features on the Java Monitor and just want to get through the day with normal update capability.

Because I could not access the old monitor to delete the beta tester message I have hundreds of requests instead of the 50 or so I was going to allow. In order to treat everyone fairly I am going to give the instructions here instead of by email. Anyone who feels brave today can give it a shot. The biggest benefit today should be the elimination of the congestion later this afternoon when the number of posts and the number of readers reach critical mass. Trying the new monitor does not cancel the old one so you can always switch back if you experience problems.

The Java monitor runs on the Sun version of Java. If you try to load the monitor and you do not have the correct version then click here to download the correct version. Use the automatic download feature.

Sun Java Link

Once you have the correct Java you can click this link to launch the monitor.

New Monitor: Link

You also need to use Microsoft Explorer as your browser. Some versions of Netscape work, some don't.

We have deactivated the audible alarm and author screening for today. Once we are sure the basic monitor works for everyone we will turn those feature back on.

Very Important

Please send your comments about the monitor as well as problem reports to it@OptionInvestor.com

This is the ONLY address that can react to your problem reports.

As with any new system we know there will be problems. We have readers with every version of windows, Explorer, Netscape, Opera ever issued as well as all unix and apple platforms. Nothing will work on everything on day one. That is why we need your comments and complaints.

Good luck!

 
 
  Jeff Bailey   10/31/02,  11:38:22 AM
11:00 Update is posted. Link

 
 
  John Seckinger   10/31/02,  11:32:39 AM
One index that continues to trade lower is the US Dollar, down 0.43% and hit levels (106.54) not seen since early September. A weaker dollar could be currency traders telling the market that the US economy is still vulnerable to a double-dip recession, and that a 25 bp cut is not enough. It could also be foreigners repatriating until the dust settles regarding next Tuesday's election and Wednesday's FOMC meeting. The election could definitely be the wildcard.

 
 
  Jim Brown   10/31/02,  11:27:41 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Change the stop loss on the previous and current SHORT signal to 8575. This is just over the highs from the last two weeks. It appears the mutual funds are not done and I want to get as far away form the wide swings as possible. If this is too uncomfortable for you then please use whatever level you are comfortable with.

 
 
  John Seckinger   10/31/02,  11:26:32 AM
Expectations for tomorrow's ISM report now seems to be in the 45-47 range, versus previous forecasts of a 49 number. Bonds are most likely getting an underpinning bid due to such economic weakness, but there hasn't be a discernable trend so far this morning. Speaking of a trendless market, Dow participants might also have resigned ahead of the Nonfarm and ISM report due out tomorrow morning. Note: At the CBOT, traders are telling me they are 100% sure the Fed will cut by 25 basis points.

 
 
  Linda Piazza   10/31/02,  11:24:51 AM
EDS Post: The second link I mentioned, the performance comparison chart, didn't print. Here it is: Link

 
 
  Linda Piazza   10/31/02,  11:21:31 AM
Reader Question: EDS--do you think that perhaps we might have a breakout on our hands? They have tried to get the sour news behind them, earnings were bad, but at least a shade better. What's the chart tell us?

Response: EDS 14.83, up 1.08 at this writing. With the EDS Chairman reporting a decline in contract signings and offering other gloomy statements and with Q3 earnings falling almost 60%, it's hard to understand why investors haven't looked past the headline "beat analysts expectations" and driven the price down instead of up. Those expectations were revised expectations, but perhaps there's something in the report that's more positive than I'm seeing.

I took a look at the charts, too. The daily chart show that EDS seems to be in the process of forming a double bottom. "Seems" is important, though, because to complete a double bottom, a stock's price must move above the peak between the two troughs. For EDS to do this, it must move above the 15.18-15.22 area. In the process, it would give a new buy signal as it moved above 15.50, but it's currently on a sell signal. There's a gap from just over 15 to 16.50 to be filled, too, and the top part of that gap may present resistance. Then you have the psychological barrier of 20 to move through, and there may be a lot of sellers waiting to get out at that nice round number. On the plus side, RSI and MACD are moving up on the daily chart, although stochastics appear to have turned down again. The presence of the 22-dma at 13.47 may provide some support just under current levels. Today's move up is on strong volume, already over half the average daily volume, appearing to support the move up. There are lots of dip buyers out there, or else shorts covering.

This may zoom up, but it still feels a bit like knife-catching to me. The second link I've included is a relative-strength chart comparing EDS with IBM, CSC, ACN, and the S&P 500, showing that EDS is by far the weakest of the bunch. As a cautious trader, I hesitate to buy calls on a stock that's the weakest in a sector. If your trading style is different, you may decide to buy on a new P&F buy signal, with a stop just below the 22-dma. Link

 
 
  Steven Price   10/31/02,  11:13:11 AM
Reader Question: Steve - Siemans AG (SI) $47.78 ( 2.93) On OI watch list. Please comment on the break above $45.80 for long/call position. Thanks Rich

Response: Siemens AG (SI) $47.21 ( 2.36) When I placed Siemens on the Watch List for a possible long pay, I targeted a break over $45.80 resistance as a possible trigger. The stock gapped up this morning, and I'd like to see a pullback to intraday support and then I like a long play up to around $51. If we can get a pullback to around $46, that would make for a great entry and max profit. One concern I have from getting in over $47 is the bearish resistance line on the PnF at $49, which would not give much upside before resistance.

 
 
  Jim Brown   10/31/02,  11:12:16 AM
Swing Trade Signals
Amazing market day so far. Twice we rallied on horrible economic news and the talking heads are doing their best to spin it. The GDP was really only 1.6% if you take out autos and everyone knows autos are dropping fast in the 4Q as well as real estate sales. Mortgage applications fell -20% last week. Sound like a good time to buy stocks?

 
 
  Jonathan Levinson   10/31/02,  11:11:07 AM
Well, it looks like 1320 to 1350 will be the COMPX range until further notice. The day low is at 1323. My thinking is that if the market has priced in a rate cut, then just as today was a win-win proposition (bad news= rate cut, therefore bullish, good news= good news, therefore bullish), next week will be lose-lose (rate cut= expected, so sell the news, or no rate cut, sell!). Just idle speculation. But in the meantime, bonds are being bought modestly, with the five year yield down 3.7 basis points, and QQV is up .82 on the day. The 60 minute 5(3) stoch is in a bear roll off this last decline.

 
 
  Steven Price   10/31/02,  11:03:53 AM
Reader Question: Steve, What is your opinion on UNS has made a move up here? rick

Response: Unisource (UNS) $16.41 (-0.01) UNS has broken above its 50-dma of $15.77 and above $16, where it had been consolidating the last couple of weeks. The stock gave a new PnF buy signal at $16.50, so if I were long UNS, I wouldn't be closing the position. However, it has the PnF bearish resistance line just above, at $17.50, which coincides closely with the 200-dma of $17.76. I would expect some significant resistance around that area, so I probably wouldn't be initiating a long until it broke through those levels.

 
 
  Jim Brown   10/31/02,  10:25:13 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Apparently some of you did get the message about changing the stop loss on the open short to 8500 this morning based on email I received. So I am stuck in the middle here. I think this is the best we are going to see today. 8500-8550 has been the top for two weeks. For those who were stopped got out I am reinstating the SHORT.

Go short the broader market now at 8460, our previous stop

This way everyone will be on the same page.

 
 
  Jim Brown   10/31/02,  10:21:43 AM
Market Monitor Problems- I am almost afraid to post anything for fear the monitor will crash again. I think we have it stabilized and as soon as the last couple of problems get corrected I will start sending out the instructions for the Java beta testers.

 
 
  Steven Price   10/31/02,  10:18:20 AM
Reader Question: I've been watching QLGC it looks overbought and ready to roll over what do you think? Thanks, Lisa

Response: QLogic (QLGC)$35.49 (+0.04) I am looking for a rollover in the SOX before going short anything in the chip sector. I have had an itchy trigger finger for these stocks after a recent gain of over 41%. However, the technicals are still looking bullish and although common sense tells me to go short, I'm going to be patient, rather than swim against the tide.

 
 
  John Seckinger   10/31/02,  10:17:52 AM
The Chicago PMI number was its lowest reading since January. There should be a correlation between today's PMI report and tomorrow's ISM number. Estimates for the ISM report are for a slight drop to 48.9 from 49.5, month prior. I would not be surprised to see estimates fall slightly. Note: Sub-50 reading reflects contracting growth.

 
 
  Jonathan Levinson   10/31/02,  10:15:13 AM
Am I stupid or what??? What's making the QQQ run??

It's the Greenspan Put. The news is so bad that it's good (pricing in a rate cut).

 
 
  Jim Brown   10/31/02,  10:12:04 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
I doubt anyone actually got the stop loss raised this morning because of the delay in the posting and the broken monitor. We were stopped out of the open SHORT signal at 9:33 when the Dow traded at 8461. OEX 455.16, SPX 895.01, DIA 84.76, SPY 89.85, DJX 84.61, NDX 996.44, Compx 1335.65, QQQ 24.75, Emini 895.00.

We will look to reenter at a higher level. I am sorry for the confusion.

 
 
  Jonathan Levinson   10/31/02,  10:11:38 AM
And, as I was typing, the COMPX made a new rally high.

 
 
  Steven Price   10/31/02,  10:11:27 AM
Reader Question: Steve what do you think about GM at this level? Is it a good short given that terrible OCT sales numbers (Nov 1) are expected along with their pension problems.

General Motors (GM) $32.31 (-0.24) GM certrainly looks bearish, however, the slow slide down from $37 has left it just above recent support around $31. I'm having a hard time initiating shorts in the Dow ahead of the interest rate announcement, merely because I think that there will be dip buying on rate speculation. The worse things are economically, the more we will hear about a 50-basis point cut, which is unlikely. However, we still may see buying ahead of the announcement. I'm looking to short a GM rally under $35, or for a break below $30.00. I have no argument with traders who short ahead of tomorrow's auto and truck sales, as I think the numbers will be soft, however, I'm looking at the bigger picture right now and I think we may get a better entry point.

 
 
  Jonathan Levinson   10/31/02,  10:10:24 AM
how can anyone trade the last 5 minutes? (or days?)

This is from a trader, one of our readers, whose opinion I have learned to respect very much. I agree. This market is treacherous. However, looking at the daily chart, I see a slew of unfilled gaps below, and a very narrow range up here near the top. It has taken 15 Billion dollars in repos during the past week from the fed to keep the markets in this narrow, toppy range. We might rally from here, but it doesn't look like much of a base from which to launch a strong, sustained rally. Just my humble opinion.

 
 
  Jonathan Levinson   10/31/02,  10:07:24 AM
The Fed has 10.25B in repos expiring today, and has just announced an overnight repo of 6.25B for a net drain of 4B. If bonds do not sell off, I expect equities to be under pressure today for lack of liquidity.

 
 
  Jeff Bailey   10/31/02,  10:03:59 AM
Chicago PMI came in a 45.9 versus 49.00 consensus. Numbers below 50 are considered contraction.

 
 
  Jonathan Levinson   10/31/02,  10:01:45 AM
Looks like they don't like the Chicago PMI number- my screen has just exploded with red, and the COMPX gapped down on the one minute bars by 8 points to 1328.

 
 
  Linda Piazza   10/31/02,  9:52:59 AM
Yesterday, the energy sector was in the green ahead of earnings reports by many companies, including ChevronTexaco, Exxon, Phillips Petroleum, and Anadarko Energy. Today, many are still in the green in early trading. A notable exception is ChevronTexaco, down 1.17 as of this writing. CVX took a charge for its ill-fated stake in Dynegy and also suffered from poor refining results.

 
 
  Steven Price   10/31/02,  9:51:46 AM
Panera Bread (PNRA): $32.40 (+0.65) PNRA has been unable to hold advances above $33.00. I starting to see formation of a bull flag in the stock, as support at $31.50 has been solid. I would not recommend new entries until we get an upside breakout above $33 and some support at that level, as well.

 
 
  Jonathan Levinson   10/31/02,  9:49:49 AM
Red popping up on my screen, BSC, JPM and C.

 
 
  Jonathan Levinson   10/31/02,  9:47:52 AM
The COMPX is less than 10 points up from its open, and yields are slightly higher, FVX +1.9 bps. The COMPX is still below the rally high, and short term direction is still anybody's guess. The TRINQ is at .52, TICK.NQ +223. Daily and intraday 5(3) stochastics are overbought but not yet rolling over.

 
 
  Steven Price   10/31/02,  9:44:21 AM
Trimeris (TRMS) $54.07 ( 0.72) OI call play TRMS topped out this morning at $54.60. new entries should look for signs of intraday support over a round number, possibly $53 or $54. A break above $55 can also be used to initiate longs. Yesterday's surge took out a couple of key levels, so I'd like to see where it finds support now that we are above previous resistance. I can envision a pullback to $52, which was the last level at which it encountered resistance, but it doesn't seem likely in a rising market.

 
 
  John Seckinger   10/31/02,  9:44:08 AM
Side note: There is a rumor at the CBOT that traders are actually buying municipals and selling Treasuries. The muni's are short-term in nature (maturies up to 2005), and could also explain the weakness in the five year sector. Remember, lower bond prices (in this environment) should mean higher equity valuations.

 
 
  Jim Brown   10/31/02,  9:33:14 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Change the stop loss on the open SHORT signal to Dow 8500.

 
 
  John Seckinger   10/31/02,  9:33:02 AM
Dollar under the 107 level once again, and could be responsible for the selling pressure in the five-year bond arena. Selling in bonds could also be attributed to higher equities. Indices to watch today: Oil, higher by 4% at 430, and the Dec 30-year, lower by '04 ticks at 110'03 and just under its daily pivot.

 
 
  Steven Price   10/31/02,  9:20:43 AM
Short term bulls should love the lower than expected GDP number (3.1% v. 3.6% expectation). The worse the news, the better the chance the Fed will lower rates on Nov. 6!

 
 
  Jeff Bailey   10/31/02,  9:20:00 AM
09:00 Update has been posted. Link

 
 
  Linda Piazza   10/31/02,  9:15:29 AM
Marketwatch.com reports that Jobless Claims climbed 16,000 to 410,000. After this morning's economic numbers, futures dipped into the red, then rose again. S&P futures are now up 3.00.

 
 
  Jonathan Levinson   10/31/02,  9:03:17 AM
Bloomberg reports that GDP, the total value of all goods and services produced in the nation, rose at a 3.1 percent annual rate after expanding at a 1.3 percent rate in the second quarter. Economists had expected third-quarter growth of 3.7 percent. Initial jobless claims reached 410,000, higher than the 399,000 forecast. NDX futures are +7.00, SPX +1.30.

 
 
  Linda Piazza   10/31/02,  8:56:19 AM
Some of the economic numbers out so far this morning include the following: Jobless claims up 16,000 to 410,000. Continuing claims fell by 3,500 to 401,750. US Q3 Final Sales of Domestic Product up 3.2%. US Q3 Consumer Spending up 4.2%, Durables up 2.7%. Before these numbers, futures were up slightly. They dipped afterwards, and then turned higher again.

 
 
  Jim Brown   10/30/02,  12:08:43 AM
Reader Comments
From time to time we update our website with comments from readers. Since the Market Monitor readers are our some of our most faithful fans I would like to throw it out to the crowd. If you think Option Investor and provides a good value for its readers we would like to hear from you. Yes, this is a shameless attempt to extract some fresh testimonials from our readers.

If you have something you would like to say about Option Investor and would not mind us printing it, (first name and city only, we value your privacy), then send it to comments@OptionInvestor.com. You must include the statement "you have my permission to use my comments" somewhere in the email as well as your first name and city. JDTrader@xyz.com does not qualify as name since we do not display email addresses.

If you have negative comments then I want to know about it personally. Send negative comments to jim@OptionInvestor.com

We try to provide the best value for the money and we hope you feel that way too.

 
 
  Jim Brown   10/30/02,  12:07:45 AM
The Futures Trader Wrap - Alan is still off line tonight and there is no wrap. However, he went to the library and put together a Traders Corners on futures: Link

 
 
  Jim Brown   10/30/02,  12:04:32 AM
The Swing Trade Game Plan has been posted: Link

 
 
  Jim Brown   10/30/02,  12:04:17 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 

Market Monitor Archives