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  Jonathan Levinson   11/5/02,  9:21:18 PM
SEC Chairman Harvey Pitt has just announced his resignation. Here's the Link

  Jim Brown   11/5/02,  8:58:26 PM
The Swing Trade Game Plan has been posted: Link

  Kent Barton   11/5/02,  5:32:50 PM
Although it's very early in the game to be speculating on the results of today's election, some early exit poll indications "circulating around media circles" can be found at www.drudgereport.com

Matt Drudge isn't exactly the most balanced news source, but these numbers suggest that control of the Senate will indeed come down to one or two razor-thin races. It's very likely that the final outcome will still be up in the air by the time the market opens tomorrow morning.

  Linda Piazza   11/5/02,  4:59:42 PM
Tarrant County in Texas has already announced a voting machine problem in one precinct will make it difficult to count 340,000 votes.

  Linda Piazza   11/5/02,  4:52:21 PM
UAL shot up from 3.40 to 4.15 in late trading this afternoon, and climbed another $.10 in afterhours on news that they had been able to restructure their debt and postpone payments due in November and December. The debt to its German lender will now be due in 2007, removing a major obstacle to UAL's ability to pull itself out of bankruptcy. Should be interesting to see if these gains carry over into the rest of the week's trading.

  Jim Brown   11/5/02,  4:39:53 PM
CSC - Computer Sciences Corp announced earnings after the close of 54 cents a share but the real news was their guidance. They saw no recovery in IT demand and even with their heavy book of government contracts saw growth for the second half of 2003 at only 2% to 4%. They lowered their guidance for the full year results. This should drag on IBM and EDS tomorrow.

  Jim Brown   11/5/02,  4:01:29 PM
Qcharts Hell - I don't know if anybody else is struggling today but our Qcharts this afternoon has been unbelievable. It can't be volume today. If you have been having problems I just did not want you to think you were alone.

  Jim Brown   11/5/02,  3:45:12 PM
Swing Trade Signals
The markets are setting up for an excellent entry point at OEX 470 tomorrow morning. Just pray for an opening bounce.

  Linda Piazza   11/5/02,  3:41:25 PM
Reader comment: Might be a quiet day, but notice how quietly the Q's filled 90% of yesterday's gap. Could be significant going into tomorrow.

  Jeff Bailey   11/5/02,  3:36:17 PM
The 3:15 PM Intraday Update has been posted. Link

  Linda Piazza   11/5/02,  3:10:54 PM
Volatility: If you need something to do on this deadly dull day when all prices seem to have come to a standstill, call up a 10-year quarterly candlestick chart for the $SPX. If you look toward the far left-hand side of the chart, you'll notice that those candles are awfully small compared to the recent ones. It was once common for the $SPX to sit in a tight range for an entire quarter. Yikes!

  Jim Brown   11/5/02,  3:07:30 PM
Swing Trade Signals
Interesting that the markets are bleeding up here at the end of the day. Does not appear to be any fear about the election outcome or the Fed. Either that or we are seeing short covering from those that fear a surprise. Remember what I said about high odds entries. This is not one of them.

  Jim Brown   11/5/02,  3:05:48 PM
Sorry I didn't mention the new appeance of the Web Site. I really like seeing the faces of the writers. Reminds me of the Post Office down in Texas. Wanted dead or alive (Grin--Grin). Really looks good and it is interesting putting the faces with the articles. Have to admit that I was supprised by most--Tom

I have to admit I did have to remove the numbers and reward language at the bottom of a couple pictures.

  Jim Brown   11/5/02,  3:03:58 PM
Cisco - Jim, This close to expiration with a stock sitting right on a strike I like the straddle idea. However if the stock were to sit still at 12.50 it's a total loss. If you buy 500 shares of csco at 12.50 and 5 puts at .80, your total risk is 400.00. If the stock doesn't move much you only lose premium on one side. This is best of course if you think the stock is going to go up. If worried about downside, I like to buy 10 puts. Put the stock to someone and use the other 5 puts for profit over the next few days. "K"

Excellent idea but it assumes you want to hold the stock longer term. I like the idea of only having .80 cents additional cost basis in the stock which gives you unlimited upside while protecting you on the downside. Good job!

  Jim Brown   11/5/02,  3:00:07 PM
Futures Trade Signals
I have received several questions today from readers asking why the futures signals are no longer in the monitor. I explained this in detail in the Sunday Futures Wrap. Please read that article for the answer.

  Jim Brown   11/5/02,  2:50:16 PM
Cisco - For those risk takers out there here is a trade for you. There is a growing rumor that Cisco has the quarter in the bag and they may guide upward for the next quarter. Talk about an upside surprise! There is still a lot of Cisco bears that are warning they could miss their revenue numbers substantially. Nice to have a balanced view!

With CSCO at 12.36 it is right on the money for the Nov-12.50 straddle. The calls are selling for .75 and the puts for .90. Considering the possibility for CSCO to move $2-$3 on good or bad news there is the potential for profit. Add in a surprise 50 point cut from the Fed or no cut at all and if the stars lined up the move could be huge.

For those not interested in risking $1.65 you could go to the $10-$15 strangle where the put is 20 cents and the call 15 cents. Obviously risking 35 cents is a lot more tolerable but you need a 20% move in the stock (2.50) just to hit either side. Now if the Fed cut 50 points and Cisco met/beat earnings with upside guidance it could see $15+ in a heartbeat.

Another option would be to wait for the Fed decision to move the market and then buy the side closest to the direction you favor. Obviously if the Fed only cut 25 points and the market tanked -200 points then the $12.50 CSCO call would be even cheaper. Just a thought.

Either way this is a high-risk strategy and should only be used by those with pure risk capital. So many options, so many plays, no clue as to the outcome!

  Jim Brown   11/5/02,  2:13:25 PM
Swing Trade Signals
I have several readers begging to short OEX 465 and I agree with the concept but we are still at risk from the Fed meeting tomorrow. I only want to enter high odds signals in November to try and hit my goal of 75% winners. We can see a buy program at any time. There is every possibility that some shortsighted bulls will buy the dip in anticipation of a 50 point cut tomorrow. I would rather wait patiently for a high odds signal with the maximum chance of profit. Everyone is of course welcome to trade their own account anyway they like and you don't need my permission to short 465.

  Linda Piazza   11/5/02,  2:11:30 PM
Kent Barton mentioned that MO was currently printing an inside day. Other consumer staples currently printing inside days include KO, CL, KMB, and BUD.

  Jim Brown   11/5/02,  2:07:25 PM
Jim, My compliments on the changes to the web site. It only took me a minute or so to reacclimate myself with the new locations of the articles...very straight forward. There are some very good ideas that were implemented such as immediate access to the current plays, new put and call plays, etc. With the new ease of access to the recommendations, I certainly hope every reader realizes the true value of the subscription is in the commentaries and do not shun them just to get to the plays. My only complaint is that I think you should have used the Halloween party photos as the portraits :-)

Don't you just love the air being pumped into the market? I think I'm starting to hear the hinge on the trap door starting to creak. Add a bit more weight from a meaningless 1/4 point Fed rate cut and a ho hum Cisco earnings announcement and the false bottom should come flying open. Analysis using Elliott's wave theory is indicating about a 100 point drop in the SPX over the next two week. Looks like the sun, moon and stars are aligning. Can't wait for Thursday and the sled ride downhill......K

Come on K, don't you see the new bull market in progress? (grin) We all know that the markets "SHOULD" correct after the Fed meeting regardless of the decision because the results are already priced into the market. We have had a good old fashioned pre-Fed rally but the bad news is still with us. However, I think the bulls are determined to buy November and any dip could be brief.

  Jonathan Levinson   11/5/02,  2:04:15 PM
The US Dollar made a lower low after the open and has been running north from there, heading for 106.00, but unfortunately is doing so in a bearish ascending wedge formation (on the 15 minute bars), which tends to break south. I see a bullish descending wedge still operating on the COMPX 15 minute chart- so many wedges so little time. But it paints the interesting picture of equities heading higher against the dollar heading lower- more of the same from this rally, if both formations play out.

  Kent Barton   11/5/02,  2:03:09 PM
Phillip Morris (MO) ($42.40, +0.66): Continuing to find resistance at the descending 50-dma ($42.88), and currently trading an Inside Day. Not too surprising to see shares trading mostly flat ahead of the election results and FOMC meeting. Going forward, bears will be watching for MO to break under $41.66 and fall below support at $40.00.

  Jim Brown   11/5/02,  2:02:22 PM
Hi Jim, We decided a few weeks ago to buy a 36" TV. It was decided that I would do the shopping, since I actually enjoy the negotiating process---- surprised? Visited all the stores you mentioned. Only CC negotiated right down to 0% for one year. They seemed pretty desperate. They were not going to let me out without making a deal. NYC

Morning Jim, Out here in Atlanta Georgia it's the same at Circuit City no customers Gwinett county mall area has become a ghost town after they opened the new Georgia mall & it is nowhere as busy as it use to be. By the way anyone been in a COMP USA store lately my gosh I remember the hey days when you use to walk in & see people have there arms full of the newest software buying that open source Linux software & I know its sitting on their shelves collecting dust with tons of other stuff. It was as if everyone was trying to see who could buy more than the other person. And I tell you what the shoe stores are going out of business with wholesale closings everywhere. Just remembering (grin). Nelson B.

So are the readers trying to tell us something about the state of the economy? Will the 4Q holiday season cause an instant resumption of a feeding frenzy by consumers? Somehow I don't think so.

  Steven Price   11/5/02,  1:59:37 PM
Got this from one of our readers:

Airports to screen more luggage by hand - WSJ The Wall Street Journal reports that the automated bomb-detection machines being used to screen luggage at U.S. airports are so prone to false alarms that federal officials plan to privately search many checked bags by hand. (Watch for a possible negative reaction in INVN, and to a lesser extent LLL and OSIS.)

Thanks, Ron

  Linda Piazza   11/5/02,  1:51:40 PM
Sector rotation: Looking into volume considerations and comparing the buying in consumer staples to the selling in techs, I notice that the buying in companies such as CL, MO, KO, and BUD has generally been light--often about 1/3 average daily volume so far. The selling in companies such as TXN, ADI, INTC, and AMAT generally amounts to about 2/3 average daily volume so far. That hints that there's less conviction in the buying of consumer staples than there is in the selling of semis.

  Jeff Bailey   11/5/02,  1:46:15 PM
The 1:00 PM Intraday Update has been posted. Link

  Steven Price   11/5/02,  1:46:07 PM
Reader Question: Any idea what's going on with INVN? I can't find any news. I guess this could be related to the election with all of the homeland security bills held up in Congress.

Response: Invision (INVN) $31.96 (-1.46) The defense sector has sold off the last couple of days, partially due to election uncertainty and possibly due to sector rotation. Lockheed Martin's possible legal problems didn't help, either. NOC and LMT both sold off hard yesterday, as well, however, have bounced today (INVN has not). INVN suffered when Congress extended the deadline for airports to comply with security requirements several weeks ago and investors maybe shying away until they see what the make-up of Congress will be, since they control the time frame in which INVN's scanners will be required.

  Linda Piazza   11/5/02,  1:38:57 PM
Sector update: $BIX ($GSPBK on stockcharts.com) 289.46, did break below yesterday's low. $SOX reached a new day low at 308.79 - 16.89, dropping below slight support around 310. Consumer Staples (XLP) are near or at the day's high. I don't know whether this is sector rotation as shorts close their positions in consumer staples and longs close theirs in tech stocks, or a flight to safer stocks and away from riskier tech stocks, or a combination.

  Jonathan Levinson   11/5/02,  1:29:40 PM
Bears should be careful- I see what could be a bullish descending wedge on the COMPX 15 minute chart. A bounce from 1380 or better will confirm it here, and a break below 1380 will invalidate it.

  Jonathan Levinson   11/5/02,  1:28:05 PM
The COMPX is printing fresh lows at 1385, while my quote screen goes red. TRINQ 1.36, TICK.NQ -220, QQV +1.03.

  Linda Piazza   11/5/02,  1:27:15 PM
Advance/Decline line remains negative for both NYSE and Nasdaq. Briefing.com mentions that most buying today has centered on the big caps. A look at Stockcharts.com's Market Carpet and Fidelity's Map of the Market shows that some of that big-cap spending is going to consumer staples, a group that was down yesterday.

  Kent Barton   11/5/02,  1:26:23 PM
AT&T (T) 14.23, +0.34: Trading to a new multi-month high today after the stock was upgraded by Kaufman Brothers. Shares seem to be catching a bid ahead of the expected spin-off of the AT&T Broadband division to Comcast (CMCSK). T might tack on another 5% and rally to the $15.00 area if the bulls can push through the May high of $14.30. P-n-f chart is showing a fresh double-top buy signal.

  Jonathan Levinson   11/5/02,  12:42:55 PM
Declining volume has extended its lead on advancing volume on the COMPX with this recent move south, now 550M to 353M. The TRINQ is up to 1.2, which is low in absolute standards but quite bearish relative to yesterday's extremely low readings. HUI is back in the green, and QQV has added a bit to its gains, +.72 on the day, though selling in bonds continues, with FVX now +4.6 bps. This is turning into a narrow range, boring day, and feels odd after all the recent volatility.

  John Seckinger   11/5/02,  12:21:50 PM
The Dow has retreated from it's intra-day high (8670), but there should be slight support at current levels (8610). Reasons can be found on a five-minute chart, and it should only take a move under 8575 to attract new shorts. If bids do develop here, the Dow might get some new money once 8650 is cleared. Just remember, flows are light and conviction is not strong either way.

  Linda Piazza   11/5/02,  12:12:36 PM
.BIX, 290.34, +.33. Just monitoring various important indices for market strength or weakness, I noticed that the banking index BIX is approaching yesterday's low of 289.61. MA's below that could offer support are 50-dma of 281.42 and rising 22-dma of 274.45.

  Steven Price   11/5/02,  11:59:29 AM
Reader Question:Steven, New here, my question is when you mention the calls and puts in your daily and weekly reports you mention different strikes and months for same securities (I'm not referring to the spreads and strangles, etc., but to the plain puts and calls). Does this mean that all of the suggestions are to be traded or is it just pick and choose? TIA A.S.

Response: We provide a list of possible puts and calls for the convenience of our readers. These are generally the strikes we like for the play, but each has its own risk/reward level. In-the-money strikes carry the most reward if the stock goes in our favor and the most risk if it does not. Out-of-the-money strikes are lower investment, lower reward. Readers can choose one of our suggestions, or a strike we haven't listed, since there are many months and many strikes on each stock (or index).

  Jeff Bailey   11/5/02,  11:53:05 AM
Halliburton (HAL) $16.15 -2.82% .... yesterday stock traded lower on "rumor" that CEO may be resigning. I received e-mail this morning that looks to be just that, rumor. However, stock trades lower still. Trader's short/put on "rumor" can snug a stop to profitability. Stock outperforming to the downside with Oil Service Index (OSX.X) 83.59 -0.7% down fractional.

  Steven Price   11/5/02,  11:49:46 AM
While the Dow could possibly get a lift through 8750 on short term market euphoria if the republicans take the Senate, or the initial Fed rate reaction is positive, a failure at that level over the next day and a half looks pretty bearish from this level.

  Steven Price   11/5/02,  11:46:53 AM
Retail Index (RLX.X): 284.44 +3.46 The Retail Index is finding resistance to the upside from its 50-dma of 285.25. It has struggled with this level the last three days after breaking down through it. The Retail Holders (RTH) 74.26 (+0.91), which OI is short, is still more than $2 below its 50-dma of $76.54, which is downward sloping. I expect a rising tide to lift the RLX through its 50-dma (although it could not yesterday), however, I would only question the RTH short play if the RTH were to break through its own 50-dma and continue that way after the FOMC announcement shakeout ends.

  John Seckinger   11/5/02,  11:40:02 AM
There seems to be some bond traders taking profits in the five-year arena (ZF02Z). This makes some sense, since logic has it that only a 50 bp cut will strengthen the contract during trading on Wednesday. Yes, the curve flattens, but more importantly flows are most likely directed to blue chips on a temporary basis. The five-year note is currently down '06.5 ticks at 112'24 and underneath its 22 DMA of 112'26.5.

  Jeff Bailey   11/5/02,  11:38:15 AM
11:00 Update Link

  Jonathan Levinson   11/5/02,  11:22:18 AM
Light volume today, but declining volume is outpacing advancing volume by a bit on the COMPX, 364M to 292M, while price sputters along just below 1395, forming what's either a bear flag or a rising wedge on the five minute candles. The TRINQ is still neutral at 1.09, but this is heads and shoulders above the .1-.3 readings we had for most of yesterday. The QQV is still positive, +.66 on the day, while FVX is higher by 3.7 bps.

  Linda Piazza   11/5/02,  11:09:40 AM
Reader Comment: Referring to the reader's question on divergence this AM, I went back to 10-10 @1052 but could not find anything regarding divergence. Can you share the "article" you referred to explaining divergence with us?

Response: I don't know that I'd dignify my Market Monitor posts with the term "article," but the actual posting was on 10/11 at 10:53, with a clarification at 12:23. Thanks for asking the question so I could clarify this. For those of you who haven't yet done so, you can check archived Market Monitor posts by clicking on "Missed a day?" at the bottom of the Market Monitor screen.

  John Seckinger   11/5/02,  10:58:29 AM
The Gold Index (XAU) is currently down fractionally at 67.87, and seems to be at a nice pivotal area - as long as you follow retracement analysis. The 50% retracement from the Sept. 16th high to Oct. 10th's low comes in at 68, while a 38.2% retracement from the July 26th low to Sept. 16th's high is 68.68 (today's high is 68.76).

  Linda Piazza   11/5/02,  10:53:45 AM
I hope we get a throwback this week. A throwback occurs after prices penetrate a trendline. Prices get thrown back to the trendline, testing it for resistance or support. Ever since OEX broke above the descending trendline, I've been waiting for that throwback, to see how the OEX behaves. The trendline has served as support during the recent consolidation, but I'm not sure I'd consider a sidestep down the trendline as a true throwback. Now that OEX has broken out of consolidation, a move back toward the trendline will make me more confident of entering call plays if the trendline holds as support or put plays if the trendline fails as support. (By the way, throwbacks are also useful when studying penetrations of ascending trendlines.)

  John Seckinger   11/5/02,  10:49:45 AM
What do cash bonds tell us? Two-year note is currently above the 1.75% fed funds rate at 1.81%, while the 5, 10, and 30 year issues hover near 3, 4, and 5 percent in yield, respectively. A relatively quiet session, especially as traders are most likely watching the When Issued (WI) securities as part of this weeks refunding operation. If I had to give a sentiment rating, I would say neutral to slightly bearish (read: neutral to slightly bullish for stocks). Remember, watch the tyx.x contract and see if 5.1% is taken out to the upside.

  Steven Price   11/5/02,  10:47:48 AM
Semiconductor Sector Index (SOX): 320.94 (-5.08) The SOX hasn't seen much of a pullback after last night's AMAT announcement. Several failed intraday rallies during the recent run have produced reversal-looking spikes, but so far it has continued to find bids the next day. I still wouldn't be shorting here, as the upward trend appears in tact. If it does reverse, I'll be quick to pile on short, but not yet.

  Jeff Bailey   11/5/02,  10:39:03 AM
Healthcare Sectors have HMO.X -3% and RXH.X -4.38%. Groups may be under pressure on MARKET thinking of Democrat wins in today's elections.

Tenet Healthcare (THC) $23.95 -11% also down after JP Morgan question THC's internal controls and Centers for Medicare and Medicaid Services threatening to rescind Medicare reimbursement from THC's Palm Beach Gardens facility by November 9. The agency has been investigating TCH due to its failure to correct infection problems at the Palm Beach Gardens hospital.

  Steven Price   11/5/02,  10:37:34 AM
Trimeris (TRMS): $56.06 (-0.10) I like the newfound support in OI call play TRMS at $55. It bounced there yesterday intraday, on a pullback after the big gain and at $55.50 this morning. The stock has had the rally cap on recently and I've been looking for the new support level. I am not going to recommend new entries at this point because we will be closing the play ahead of earnings on Nov. 7. Those readers holding calls can close it along with us, or play it on their own. The company has not yet begun selling its new product, Fuzeon, which is under priority review at the FDA (the review period ends March 16), so readers should not yet be looking at profits.

  Jonathan Levinson   11/5/02,  10:32:31 AM
If we see a rather large infusion tomorrow am, would you conclude that the fed plans to disappoint the market and will prop it up with cash? Keep up the good work!

It could go either way. The trend has been to unleash a large repo the day after a rate cut to "guarantee" the desired market effect. And, of course, there is a large bond auction scheduled, which will itself suck up over 30B worth of liquidity. Remember that fed money can find its way into equities or fixed income securities, and this is where the predictions become tricky- it's a question of knowing where the daily money is going to go. The ISM data today showed price paid increasing and unemployment increasing- seems inflationary to me, which, I would think, should help to discourage the fed from cutting more than the expected .25, if that. Note that this is all idle speculation- it's easier to play the support and resistance lines and to keep an eye on the liquidity situation for large moves. A 2B net repo is a minor eddy- not like 7.25B, which is a fullblown wave of money. I'll ignore a 2B when trading, whereas Illl be much more hesitant to trade against 5B or more.

  Jeff Bailey   11/5/02,  10:30:32 AM
QQQ $25.86 -0.1% ... BUYING 10 November $26 puts (QAVWZ) $0.90 ahead of tomorrow's FOMC meeting. Targeting $24.25.

  Jim Brown   11/5/02,  10:28:49 AM
Get used to the current market blahs because there is not likely to be any major moves today with all the election talk controlling the airwaves. The decent ISM number, although lower, had zero impact on the market. Multiple downgrades on tech stocks due to valuation had minimal impact on tech stocks. The market is open for business but nobody showed up for work. The talking heads are talking about a possible Republican gain and should this trend continue into the close it could offset some of the profit taking ahead of the Fed meeting. Still no Fed head talking about rates in public. Very quiet. It is very unusual for them not to telegraph their intent.

  Steven Price   11/5/02,  10:27:00 AM
Intuit (INTU): $52.69 (+0.69) I like INTU's pullback between $61-$62 for long entries. It found support in the range we were looking for in the play and offers decent risk/reward from this level.

  Jonathan Levinson   11/5/02,  10:20:59 AM
Well, Linda, other than being bearish on GE (which owns CNBC) and on Joe Kernan's "Kahuna", I'd be more than happy to school some of our faves on the Squawk about the fed's daily open market operations :)

  Jim Brown   11/5/02,  10:20:24 AM
Circuit City -On the same lines of thought as Steve's HD post I was out looking for a audio/video component rack on Sunday. I tried SoundTrack, BestBuy and Circuit City among others. SoundTrack and BestBuy had decent crowds but Circuit City had less than 20 people in the entire electronics super store. It was a virtual ghost town. Today they warned. It is hard for me to believe that a store can come back from this kind of consumer trend. All the stores were just several minutes from each other and there was a clear preference by consumers. Whether it was lack of advertising, prices, selection or who knows what the CC store is in trouble. If this is repeated across all their properties this will not be the last warning.

  John Seckinger   11/5/02,  10:18:42 AM
The correlation between the 30-year bond (ZB02Z) and the Dow appears to remain intact (read: prices trade inversely). With the bond contract down '09 ticks at 109'13, expect support between 108'27 and 108'17. Resistance is felt at 110. If these levels are hit, look for fixed-income holders to use equities as a hedge. Example: Bonds fall to 108'27 and bond buyers step in, it would make sense to expect sellers to enter stocks.

  Linda Piazza   11/5/02,  10:13:25 AM
Jonathan's post about two-day repos reminded me that this morning Thomas Caldwell, Chairman of Caldwell Asset Management, spoke on CNBC and made an allusion to the Fed's continued infusion of cash into the system by methods other than interest rate cuts. I'm sure other CNBC guests have referred to these methods, but not often enough that I've previously caught a discussion of the methods Jonathan and others have been detailing for us for quite some time.

  Jeff Bailey   11/5/02,  10:05:07 AM
ISM Non-mfg. came in at 53.1% versus 52.0% consensus. Numbers above 50% are considered signs of expansion, while those below are contraction. September's reading was 53.9%, so October's number slightly down from September's levels.

  Jonathan Levinson   11/5/02,  10:02:17 AM
The Fed has added 4B in two-day repos, for a net addition of 2B. This is a small-to-modest number and shouldn't have much effect either way.

  Jonathan Levinson   11/5/02,  9:54:22 AM
The COMPX is back up to 1395, which is yesterday's gap support turned resistance. The TRINQ is at .96, neutral, the TICK.NQ +65, also neutral, and the QQV is +1.45 on the day (bearish). Some selling in bonds with FVX +1.9 bps. The fed has 2B rolling off today from yesterday's overnight repo, and it will be interesting to see today's action from the fed, due out any time now.

  Steven Price   11/5/02,  9:49:14 AM
Thought on investor mentaility: I was in Home Depot last night (where I have been quite often while re-doing my house) and remarked to the cashier that it was too bad they didn't offer cash back rewards. He responded I should just buy the company's stock. When I told him I didn't think that was such a hot idea right now, since it was headed down, he said "That's when you buy it." I'm sure all those buyers of CMGI and CIEN at $100, $80, $60, $40 and $10 agree. Which brings me to Kent's short from yesterday. Home Depot: $27.42 (+0.77) I'm looking for intraday resistance for short entries after a weak bounce this morning. So far $27.50 has been the ceiling and shorts can look for entry on a break back below $27.00

  John Seckinger   11/5/02,  9:48:52 AM
Looking at a daily chart of the Dow, the 22 DMA (exp) has crossed above the 50 DMA (exp) for the first time since February 22nd. The 22 DMA is at 8296, while the 50 DMA is at 8288. It will important to see if the 22 DMA crosses back underneath and traps some longs.

  John Seckinger   11/5/02,  9:41:15 AM
The weekly chain store sales (Mitsubishi and Redbook) showed weeky retail Halloween buying, but the volatility within these reports do not really give a good indication of overall retail sales. Few notes today: ISM Services report out at 10 a.m., while the bidding deadline for part of the quarterly refunding (5-year note) is at 1 p.m.

  Steven Price   11/5/02,  9:38:02 AM
Panera (PNRA): $33.78 +0.65 For those readers still holding calls on PNRA, the stock finally broke out above $33 on a closingbasis yesterday, trading as high as $34.17 intraday. While it is moving slowly, the stock is headed in the right direction and $35 shold provide the next resistance level.

  John Seckinger   11/5/02,  9:34:55 AM
With the bond market down fractionally (30-year down one tick), equities opening up relatively unchanged seems to make sense. Therefore, keep an eye on the ZB02Z contract during trading on Tuesday. If the Dow starts to go lower and bonds do not find a bid, start to look elsewhere. I would begin with the Dollar, then the Sox, the Utility Index, and then finally Oil.

  Jim Brown   11/5/02,  9:34:29 AM
The Swing Trade Game Plan has been posted: Link

  Jonathan Levinson   11/5/02,  9:31:40 AM
10 point gap down open to 1386 on the COMPX, TRINQ 2.08, TICK.NQ +71.

  Jim Brown   11/5/02,  9:27:50 AM
Looks like we will see a weaker open today with the futures flat. The volume today is expected to be very flat as the election takes center stage. The profits from the last several days may be taken off the table just in case the election goes badly.

There is starting to be more cautious comments about the possibility of NO rate cut on Wednesday. The number of analysts expecting a 50-point cut is decreasing steadily. The Fed has been uncharacteristically quite before this meeting. This is beginning to worry many bond analysts.

This unknown factor will continue to weigh on the markets until tomorrow as traders clear their bets off the table. The AMAT news of -1750 job cuts and lower expectations for capital spending in 2003 should make those tech bulls a little less bullish today. The mid-quarter updates are starting and Cisco reports earnings tomorrow. Morgan Stanley said they could see CSCO missing revenue by $200 million due to recent channel checks. With the markets up strongly from the October bottom and major events tomorrow trader conviction will be tested today.

  Jeff Bailey   11/5/02,  9:24:40 AM
09:00 Update Link

  Linda Piazza   11/5/02,  8:33:53 AM
Reader Question: On the Market Monitor, Oct. 10th, 10:52 am, your post concerning divergence was the best explanation I have read, and I thought I finally understood it. However, it seems I am still confused. For example, on the [August] highs for the SPX compared with the highs for today 11/4/02, then looking at the stochastics for the 5,3,3 setting; does this show a bullish or bearish divergence?

Response: You’re not alone in finding the concept confusing. Some aspects seem intuitive and some seem counterintuitive. When a previous OptionInvestor writer discussed divergence several years ago, I printed up the article and referred to it many times before I felt I understood the concept.

Let’s look at the instances you pointed out. A quick comparison of (5)(3)(3) stochastics at the August highs to October’s show that stochastics topped out at similar levels before cycling down in October. However, two factors keep us from drawing a conclusion about divergence yet. First, stochastics turned right back up again without ever reaching oversold levels, so they could come reach higher highs or could reprint themselves and cycle all the way down to oversold again before prices turn down. We just don’t know yet. Second, there’s the fact that those prices haven’t turned down yet. Until both prices and stochastics turn down, we won’t be sure of their final levels. Although many don’t believe it’s likely, it’s possible that $SPX will reach 965 before turning down, with stochastics again topping out at that same August level. In that case, no divergence would exist. A second possibility is that yesterday’s $SPX high will be the high for October and November, and prices could break through the bottom of recent consolidation. If so, stochastics would likely redraw themselves and point back down again. If that should happen, there would be bearish divergence, because stochastics made an equal high but prices couldn’t reach an equal level. In effect, prices would have been given an equal push, but just couldn’t climb as strongly. That would signal weakness. Link

  Jonathan Levinson   11/5/02,  8:22:53 AM
The US Dollar Index got croaked at 3AM, hitting a low of 105.50, and has been rising in a bear flag formation ever since, currently just below 105.80. NDX and SPX futures are off, -7.50 and -1.70 respectively. QQQ is tading 25.69. A thought: if this rally were truly The Rally, I would expect to see significant strength in the US Dollar as foreigners rushed to get in on the action. We have seen the reverse. While every bull market begins as a bear market rally, the action in the dollar so far indicates to me that the upside on this rally is limited. Bears who have not been toasted yet have to be careful, which to me means either using tight stops and being willing to get stopped out repeatedly trying to pick good entries, or hedging. The rally might or might not be over, but I believe that in hours, days or weeks, it will be. Be careful if already in calls or planning on it, be careful if already in puts or planning on that- just be careful.


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