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  Jonathan Levinson   11/19/02,  8:56:28 AM
From Yahoo news:

The U.S. trade deficit dipped slightly in September to $38.03 billion, but was still the second highest level on record, the U.S. Commerce Department (news - web sites) said on Tuesday.

  Jonathan Levinson   11/19/02,  8:43:49 AM
The US Dollar Index and equity futures came down last night, USD to below 104.80, currently trading 104.90, with SPX futures down 2.70 and NDX -5.50. QQQ is trading 25.89 on Island ECN. For those bearish on GE, Bloomberg reported analysts are predicting that the company may take a fourth-quarter charge of as much as $2 billion, mostly to increase reserves at its reinsurance unit. Blooberg reported that GE is also likely to shift between $2 billion and $6 billion in equity to the balance sheet of its financing arm to keep the unit's debt at no more than eight times its equity. The analysts meeting that will put the bottom line on this speculation is scheduled for Thursday, but the stock is trading down .25 from its close to 23.35 on Island.

  Linda Piazza   11/18/02,  3:53:50 PM
Updates: On Friday, readers wrote asking about BRCM and CREE. Both offered some bullish aspects to their charts and both offered some concerns, especially on weekly charts. (See Friday's commentary.) Today, both are up on stronger than average volume. On Friday, I had mentioned that for BRCM, the shorter-term 22-dma had not yet moved above the 50-dma, and today that bullish crossover has occurred, but just barely. BRCM's daily candle is a spinning top, often a reversal signal. Stochastics still look ready to roll on both stocks, but that rollover may indicate a consolidation as well as a possible rollover, so price action and volume confirmations are the best guides. Today's gains happened in spite of those overbought stochastics--as is often typical of stocks in a strong new uptrend.

  Jeff Bailey   11/18/02,  3:45:39 PM
The 3:15 PM Intraday Update has been posted. Link

  Steven Price   11/18/02,  3:45:05 PM
I asked you about this stock on friday. It is up 1.50 as we speak! thoughts? thank you rick

Firstwave (FSTW): $10.56 +1.41 I haven't found any news on this stock yet, but that's some gap above resistance at $10. If it holds over $10, it looks like a move to $12 would be reasonable. The stock is very lightly traded and today's volume (still just under 50K) is quite a bit higher than usual, so there must be some reason that I haven't yet found. Because of the light volume, intraday charts are not as helpful, but its iuntraday chart has been consistently up. One thing to watch out for is corrections after recent volume spikes. This breakout is also a breakthrough of the PnF bearish resistance line and a buy signal at $10.50, with the next resistance at $12.00 on that chart, as well. Bullish vertical count is $15, but I would imagine a pullback from $12 before it takes a run at $15.

  Kent Barton   11/18/02,  3:43:59 PM
Genzyme Corp (GENZ) $30.04 +0.17 : Although GENZ has bearish p-n-f resistance at $31.00, the daily bar chart looks pretty good for a possible long trade if shares can get above the 200-dma ($30.78). This would put the stock at multi-month highs. The next area of substantial resistance is up at $38-$40. Wouldn't necessarily think about buying a stock that's just below its bearish p-n-f trend, but GENZ is definitely one to keep an eye on if the biotech group continues to move higher.

  John Seckinger   11/18/02,  3:26:02 PM
The Semiconductor Index (Sox) has fallen from 331 to 323 over the last few hours, but a daily chart still doesn't reflect any real technical damage. Nevertheless, a trend line from the high on August 22nd now bisects with the high on November 4th and today's high. Going forward, look for more selling pressure under 329. A move above today's high of 331.63 should get buyers to take the index towards the 335 area.

  Jim Brown   11/18/02,  3:21:50 PM
Swing Trade Signals
That was a dead stop at Dow 8500 and my pivot point for that index. Ditto for the 460/900 pivots on the OEX/SPX. Only the Nasdaq held its ground at 1400 and that is the key for me. A rally from this level in the morning could have staying power but a failure here at 8500/900/460 could setup a new down leg to retest last weeks lows. It appears the Dow is holding but still plenty of time for change.

  Linda Piazza   11/18/02,  3:18:59 PM
Currently at 31.34, the VIX has just moved back above its 200-dma at 31.24--and moved back down before I could finish typing that entry. Today should prove interesting.

  Jim Brown   11/18/02,  3:08:28 PM
Leonid Meteor Shower - No I am not suggesting an Arch Crawford connection to the market as a couple emails asked. Just a fun light show with some estimates of 2,000 shooting stars per hour. This is the last major show until 2098 and I doubt I will be around for that one. Here is a link for info:

First link: Link Second link: Link Third link: Link

  Jonathan Levinson   11/18/02,  3:02:09 PM
Jim, that was me snoozing in your backyard, and if you had supplied a better grade of birdseed, I might not feel so nauseus and dizzy today :) Speaking of which, this latest candle on the 60 minute COMPX chart appears to have at last violated the ascending trendline of the bear flag we've been watching.

  John Seckinger   11/18/02,  2:54:42 PM
The Dec. 30-year has started to show some life; currently higher by 0'15 at 111'17 and at its session's high. With the Dow lower by 60 points at 8517, fixed income traders' reasons for going long probably includes the possibility of a meltdown in equities during the last hour of trading (read: better be safe than sorry). The next area of resistance for the ZB02F contract is at 112'07. Support below is seen at 111 and 110'16.

  Jim Brown   11/18/02,  2:52:43 PM
Bear Market - I have a weekend place in the mountains and my wife and I stayed over last night to catch the Leonid meteor shower tonight without the light pollution from Denver. You should check this out for your area it is supposed to be spectacular tonight.

When I woke up this morning my bird feeder (8ft off the ground) had been destroyed. When the market was moving sideways this morning I headed out the back door to pick up the pieces and see if the culprit left any tracks. Deer had been a problem until I put on the top of the long post. As I stepped out the back door I noticed this big brown clump moving in my peripheral vision. A brown bear. He was sleeping in the yard about 20 ft from the back door. I froze and he laid his head back down went back to sleep. I eased back in the house and got my camera and went back and took a bunch of pictures. I finally made enough noise and he got up stretched, yawned and wandered off for quieter surroundings. It was small, probably 200-250 lbs but his feet were as big as mine. Puts an entirely new meaning "wild life" and nighttime walks under the stars. We had heard they were around but had never seen on in the five years we have been here.

  Jim Brown   11/18/02,  2:44:01 PM
Swing Trade Signals
The day appears to be playing out just like expected for a post expiration Monday. Lack of volume by the bulls failed to break resistance after two half hearted attempts. If the Nasdaq closes negative this sets the stage for another pull back to support tomorrow. In hindsight the afternoon bounce back to 1421/8580 may have been a decent entry point for a short considering the lack of volume on the attempt. On a throwaway day like today I did not feel like there was any use in trying to catch falling knives. The Dow is only 20 points away from my game plan entry point for a short from Sunday but with 1:19 min left in the day I am not going to initiate the signal. I would rather wait for tomorrow at this point.

  Steven Price   11/18/02,  2:38:04 PM
Steve, what do u think about the Defense sector as a short here? LMT, NOC seem to be falling daily (and a lot today)? Do you think now is a good entry? Will we see these on the watch list/put list soon?

I am hesitant to go short a group that could see a big overnight gap up if we invade Iraq. That doesn't mean you won't see any of them hit the short list, just that they will be high risk plays. There have been a slew of ideas as to what is sending these stocks down, from investigations into government contractors, to overvaluation on the Iraqi momentum, to the Pentagon budget peaking out. I try to trade what I see, and these certainly look like good shorts. However, I'm not blind to the beginning of weapons inspections, and would initiate shorts here with risk capital only.

  Steven Price   11/18/02,  2:25:11 PM
Good morning Steven: IBM 80.05 (+04), on Nov.14th, stock was 79.19 option price for IBMXO/Dec 75 put was 2.65-2.70, today as we write option price is offered at 1.50-1.60, reduction of -1.15 in premium, although stock only dropped .86 cents. Market makers managed to keep stock above 80.04 at close on /Friday expiration day (good call from OI side for stock will be above 80.00 at close) today another .25 cent drop in premium not change in stock, do you see a drop below 80.00 near term per P/F, or will the market makers continue to keep stock above that price and continue bringing the premiums further to the downside, your comments on MM much appreciated as always Thank you

IBM: $80.27 (+0.27) The pattern I have seen in a sideways market is implied volatility getting beat up on Monday following expiration in the new front month. It usually starts on Friday and continues on Monday's open. At the CBOE, I often sold bids at away markets on Monday morning, knowing I would have a chance to buy the options back cheaper later in the day. Of course, if the stock began dropping, I quickly bought them in, if possible. Usually by Monday afternoon, the new month's volatility level is about where it should be. The VIX broke below its 200-dma this morning and is finding support at 30. If it breaks below 30, we may see a new round of volatility sellers. If IBM begins to drop with any speed, the premiums should go back up quickly, but right now, premiums are coming in market wide.

I have seen market makers lose just as much money on dropping volatility, as they have on stock moving the "wrong" way, so they are quick to lower volatility when they sense a coming drop, so as not to get caught buying more than necessary. In fact, I remember the CBOE clearing firms registering their largest recorded monthly loss (over $1 billion) on sinking volatility, at the end of 2000 to the beginning of 2001.

The PnF on IBM is still bullish, but has significant resistance at $84. I think that as long as the stock continues to fail at its 200-dma (now 80.97), the downside still has more room. If it breaks above that level on a closing basis, I'd be less confident on the short. Right now the stock is forming a triangle on the PnF and if it breaks down, the next level of support would be $74 and then $70. To get that breakdown, we'll need a trade of $77.00.

  Linda Piazza   11/18/02,  2:14:09 PM
If the VIX were a stock, would I buy it? Like everything else, the VIX appears to be at a pivot point. Currently at 30.13, it's below its 200-dma at 31.24, a bearish sign, but above support at 28.60. Both (5)(3) and (21)(3) stochastics are oversold, but not yet turning up, so it certainly looks as if the VIX could continue down to test that 28.60 level. So far, today's candle is a doji with a long upper body, but with the VIX moving down as I type, that could change, and we could end up with a spinning top formation. Both these are reversal indicators, which might predict that the VIX could test that support and try to rise again. Would it rise far? A look at the weekly charts shows a possible double-top formation, with the formation completed in the 28.60-30 area. Looking at the log chart (rather than the linear one), a completion of the double-top formation would predict a move down to the 19-20 area. (On a log chart, measure the distance from the double peaks down to the trough between them, and then measure off an equal distance from the trough down to show the target. This is because log charts predict a proportional move.) On the weekly chart, the 10-week MA has moved below the 30-week MA, a bearish sign that often indicates a reversal of the primary trend. So, if the VIX were a stock, I'd wait to see if the 28.60 support holds, but would be leaning toward a bearish stance. Perhaps we will see the VIX move down into its historical 20-30 range. On the chart below, you can toggle between the daily and weekly charts: Link

  Jonathan Levinson   11/18/02,  2:08:27 PM
We have a failure at 1420 followed by what looks like a small sell program on the COMPX, current price 1415, TRINQ .43.

  John Seckinger   11/18/02,  2:03:23 PM
The Dow is currently testing its opening range (8579), and this could be a nice pivot for short term traders. The objective from here would be either a test of the daily high or low, depending on how traders react to the pivot. It is interesting that the 50% retracement of today's range is also near the 8579 level as well. To hard to guage direction here, since on a short term pivot, but I would not be surprised to see either 8639 or 8517 tested in the near term (unfortunately, this might not happen in the next two hours).

  Jeff Bailey   11/18/02,  1:59:48 PM
The 1:00 PM Intraday Update has been posted. Link

  Steven Price   11/18/02,  1:49:35 PM
Any opinions on NOC...It has come down a lot. With the spectre of war on the horizon - is this a buy here? Raghu

Northrop Grumman (NOC): $88.64 (-3.17) The breakdown in NOC is still continuing, with no signs of technical strength. I think it looks like more of a put than a call. It may get a rebound if we go into Iraq, but with the specter of investigations spilling to other stocks in the defense sector, I'd be hesitant to pick a bottom. So far each rebound has been met with extreme selling, so until we see a change in the pattern, I wouldn't go long NOC.

  Kent Barton   11/18/02,  1:46:16 PM
Amdocs Ltd (DOX) $11.03 +0.48 : Seeing some interesting gap-filling action in this software stock. DOX lost nearly half of its value on June 21st after the company fired its CEO and issued an earnings warning. Shares gapped below $10.00 and stayed under that level until Friday. This breakout above resistance has shorts covering en masse. Chart technicians will be looking for the stock to fill in the remainder of its gap and rise to the $15.00 area. Although I wouldn't be looking to chase this one higher, DOX is worth watching for a pullback to $10.00-$10.50.

  Linda Piazza   11/18/02,  1:37:47 PM
Dow theory holds that transports must advance if the economy is to advance. Manufactured goods must be transported. Taking a look at the Dow Jones Transports shows that same incipient H&S formation that's visible on the DOW Jones Industrials, except that it's perhaps more clearly seen on the transports, since the right shoulder has begun to round down. The neckline slants slightly upward, with the neckline now crossing somewhere near the 2300 level. This doesn't guarantee that the H&S formation will be completed, either here or on the Industrials, but the transports can be a leading indicator for the Industrials. Link

  Jim Brown   11/18/02,  1:26:07 PM
Yawn! - The volatility did not just bleed out of the market is disappeared. At 1:15 today the NYSE had barely traded 700 million shares. The Nasdaq has traded in a narrow range after bouncing off 1425 this morning but now looks like it is going to try and pierce that ceiling again. Considering the strong resistance and very weak volume I would say the chances are less than 50/50 today but tomorrow could be another story. As a post option expiration day we are following the historical trend to end flat pretty closely. A positive close by the Dow would help keep the bullish sentiment alive. This week has been a positive week for the S&P for nine consecutive years and I am expecting any positive bounce to attract more buyers who are looking for that trend to continue.

  John Seckinger   11/18/02,  1:24:29 PM
How does the Biotech Holders (BBH) look?

Response: A daily chart of the BBH resembles the Dow in a lot of ways. The possibility of forming a right shoulder, as well as being comfortably higher than its 22 DMA (dma at 86.76, while BBH currently trading at 89.60), are a few of them. The BBH is in the process of establishing a series of higher highs and higher daily lows, and lies just under a solid pivot area of 90. The objective above 90 will be for a test of the 200 DMA, currently at 93.62. If the BBH closes above 90, odds are this move will materialize. However, as always, watch for traps. If the BBH closes above 90, a close back below 90 will most likely cause bulls to liquidate and bears to get aggressive. If the BBH never closes above 90, a close under 88 could stall the rally and have bulls exiting until the dust settles.

  Steven Price   11/18/02,  1:03:56 PM
Genesis (GNSS): $18.50 (+1.33) OI call play GNSS broke decisively above its 200-dma (17.39). I like new entry here, although conservative traders can look for the SOX to break over 330 for confirmation.

  Jonathan Levinson   11/18/02,  1:01:43 PM
The COMPX continues to chug almost aimlessly along beneath the day high, price currently at 1413. The TRINQ is still showing steady buying pressure, now at .41, while the QQV has lost most of its gains, up .41 on the day. TICK.NQ -65. It's either showing distribution here, or base building for another run up on the 1425 resistance level. Neither would suprise me- price looks just a little too "cute", sauntering around here with its hands in its pockets, whistling a tune (who, me?) while waiting for the clerk to turns his head to load up his pockets. The shorter intraday 5(3) stochastics are topping while the longer ones are trying to turn bullish, reflecting the current chop. Remember that the fed drained today and yields are negative- I'd guess that this net drain in liquidity will resolve itself against equity prices. We'll see.

  Jeff Bailey   11/18/02,  1:01:31 PM

After giving the second consecutive sell signal at $20, and falling to $17, SCOR has rallied back strong to $26. Can still be looking put, but I personally am looking for a pullback to $20 as place to close out currently held Jan. $20 puts unless some overnight news takes place on gap below recent lows based on investigations and what Cardinal Health (CAH) does regarding the potential merger.

We may not know anything for sure until SCOR, which expects to file a late filing with its September 10-Q gets their numbers together. On November 13th, SCOR filed a Late Filing form with the SEC.

  John Seckinger   11/18/02,  12:28:44 PM
One index worth glancing at is the US Dollar, currently higher by 0.15% at 105.20 but well under Friday's high of 105.65. If the Greenback settles under 104.75, most likely the recent short covering rally will end. If the dollar gets some momentum to the upside, look for another test near 105.65 and the appearance of a bullish wedge pattern (daily chart). In just a few days, we should get a good feel for the US Dollar and its directional impact on equities.

  Jeff Bailey   11/18/02,  12:08:44 PM
Risk/Reward ... getting a lot of e-mail regarding this weekends "Ask the Analyst" column and new question's regarding risk/reward to then tie in with that column. On Friday, I discussed a bullish trade in Tellabs (NASDAQ:TLAB) $7.50 -1.44% here (high=$7.87 low=$7.40). Per "Ask the Analyst", there's probably no way a trader with a $10K account would consider "full position" in the stock 10% of capital, while stock is below trend, but per Friday's 03:00 Update, Link risk to the first sell signal would be to $3.75 and reward to bullish vertical count is to $22.50. Now, this is how current risk/reward could be established. I placed a support trend at $7.00, to depict stop in underlying stock at $6.50.

Do you see how even a "full position" bull in TLAB in the calls had similar $ risk in full position when NOT using a stop on TLAB options, but STOCK trader in TLAB really needs to follow with a stop at $6.50 to protect greater amount of capital. Then.... call option bull that uses formula as in this weekends column has UNTIL JANUARY to let the trade work, while at the same time following the SECTOR technicals in the YLS.X. What was/is the risk/reward on the sector and its p/f chart?

Now... for sector.... According to Dorsey/Wright and Assoc. they classify Tellabs as a "telephone" stock. That sector bullish % (BPTELE) is "bull confirmed" at 32%. This means, of the stocks grouped into the telecom group, 32% of the stocks show a p/f buy signal on their p/f charts, while 68% do not. Many trade well below their bearish resistance trends and a trader UNDERSTANDS that this group is then LONGER_TERM BEARISH. However, small positive is that TLAB is at least one of the 32% showing a buy signal on its p/f chart.

Disclosure: I currently hold bullish position in TLAB

  Jeff Bailey   11/18/02,  11:46:52 AM
The 11:00 AM Intraday Update has been posted. Link

  John Seckinger   11/18/02,  11:31:09 AM
We are starting to get some price compression in the Nasdaq, and this should portend a move towards either 1425 or 1400 in the near term. Since the opening, the Dow has traded weak and is underneath the short-term pivot of 8550. Note: Bond market very quiet, and not giving an indication of direction regarding equities.

  Steven Price   11/18/02,  11:07:05 AM
Semiconductor Sector Index (SOX.X): 328.04 (+8.36) I mentioned in my earlier post that a break over 330 would be a higher high. I neglected to write that this would be on a closing basis. The recent intraday high was 337, so a move above that level could be used as confirmation for long plays.

  Steven Price   11/18/02,  10:56:49 AM
ABC: $63.65 (-1.36) I like the rollover in ABC from Friday's oversold bounce and new entries on the OI put play can target a break below $63.00. The stock did bounce off $62.80 on Thursday, so conservative traders can wait for a break under that level.

  Jonathan Levinson   11/18/02,  10:50:24 AM
The COMPX just put in a lower high intraday, and the TRINQ has eased a little further off its extreme sustained .22 readings, currently .32. TICK.NQ at -444. QQV is holding its gains, +1.21 on the day. With yields flat to slightly negative on the longer bonds, and 4.25B in fed money being drained today, I'm figuring that there's little fuel to launch the indices into the next (higher) range. Famous last words, but this is what everything I watch is telling me.

  John Seckinger   11/18/02,  10:49:01 AM
With the Nasdaq higher by 0.49%, it is interesting that the Sox is up by 2.13%. A daily chart of the Sox shows the potential for more upside (330 to 340 range), but these bullish chart patterns can get traders in trouble. "Hope" (read: buying resistance), followed by a trap feeling. A move back below 317 should start some profit taking, while a close above 340 will make it clear that bulls are firmly in control. Downward objective just under 300.

  Linda Piazza   11/18/02,  10:39:34 AM
I like to look at up volume/down volume, in addition to looking at the number of advancing issues versus the number of declining issues. The ad/dec numbers show advancing issues and declining issues being fairly even, at 1.28 on the NYSE issues and 1.16 on Nasdaq stocks. Up/down volume tells a slightly different story, however, with up volume outstripping down volume 344/71 on the Nasdaq. That's pointing to concentrated buying in some stocks. Up/down volume is at 189/107 for NYSE stocks.

  Jim Brown   11/18/02,  10:18:53 AM
The opening volatility is beginning to fade and the excitement is fading with it. The real direction does not appear to be up. Sideways maybe as the option expiration impact works through the system or down as profit taking runs its course. We will not be going long unless we can break the Compx 1425 level again or sell off to support. There are very few external market factors to provide upward bias today. The A/D line is barely positive at +285 issues. The VIX actually broke below 30 this morning as it continues to bleed back to historical norms. With option premiums high today as the first day in the current month there is no rush to be in the market.

  John Seckinger   11/18/02,  10:15:19 AM
Now that the higher opening gap is closed, it will be interesting to see if the recent long liquidation continues. I will be pulling up 5-minute charts and expecting a few "b" patterns to form. Note: A lot of indices found horizontal support during the recent sell-off; therefore, watch for an increase in volume if looking to play on the markets weakness.

  Steven Price   11/18/02,  10:14:25 AM
Forest Labs (FRX): $105.75 (unch) We didn't get the bounce off $106 this morning and I would wait to enter long on intraday support over that number; or on a pullback to support above $103.50. $103.50 had provided some resistance prior to the recent breakout and could now be a new support level from which to enter.

  Jeff Bailey   11/18/02,  10:13:36 AM
Weekend Ask the Analyst ... I would like to see you do an article on how to be able to access risk/reward in a stock!! How much more detail is necessary than what you have outlined in this article? I would also like to know where is the best place to get the bullish percentage charts , p &f charts, and how to fit the retracement brackets (where to where). Look forwarding to hearing from you!!

Each can be a top and we can build on this weekend's article. Subscriber's can e-mail me with "Ask the Analyst" in the subject line of their e-mail on what they'd like to see discussed.

I'm using www.stockcharts.com to get the various MARKET INDEX bullish % as they are FREE and subscribers can use stockcharts.com. However, for SECTOR bullish %, there is none better that Dorsey/Wright's site where they have over 50 different sector bullish %. They have a 2-week free trial, but not all subscribers are willing to subscribe to that charting service.

  Jonathan Levinson   11/18/02,  10:09:35 AM
The fed has announced a three day repo in the amount of 7.25B, partially refunding an expiring 11.50B, for a net drain of 4.25B. I do not expect to see significant strength in equities today unless a serious selloff hits the bond market.

  Jeff Bailey   11/18/02,  10:08:43 AM
Program levels Thanks to subscribers for alerting me that this morning's buy/sell program premium levels along with fair value from HL Camp & Company were NOT updated this morning. I did not check the date at the top of their "update" and they have not been updated for today. While I would doubt that these numbers are too much differenct than Friday's, they are incorrect.

  Steven Price   11/18/02,  9:59:41 AM
Retail Index (RLX.X) 290.26 (-1.98) The Retail Index appears to be rolling over from a descending trendline I have from the last three rounding tops from closing levels in August, September and October. I think Wal-Mart's same store sales could be the first domino in the sector. I have just heard this same story every month since the summer, with sales warnings a couple weeks into the month.

  John Seckinger   11/18/02,  9:51:46 AM
Not a lot of talk in the bond pits, expect a rumor that a hedge fund is selling 10 year notes and buying 30's. This is just another form of flattening. Traders are most likely watching ten year yields near 4% for a possible move to 4.25%.

  Jonathan Levinson   11/18/02,  9:51:37 AM
The US Dollar Index has fallen slightly below is high of the day, which was slightly above the 105.30 mark.

  Steven Price   11/18/02,  9:50:56 AM
Semiconductor Sector Index (SOX.X): 325.50 (+5.82) Traders may want to wait to enter chip stocks long until after the SOX breaks above 330. This would be a higher high after the pullback to 281 (above the 50-dma) and the first real test of what could be a sustained bullish trend. Wihle I am still dumbfounded by any bullishness in the sector (with the exception of wireless stocks) right now, I'll trade what I see.

  Jim Brown   11/18/02,  9:44:53 AM
Dead stop at resistance of Nasdaq 1425. Now the battle begins, do we fail here or do the bulls have enough support to break out? My guess would be a pullback and another attempt later after any initial profit taking runs its course. The bullish sentiment is strong but so is the resistance at this level.

  Steven Price   11/18/02,  9:44:28 AM
Forest Labs (FRX): $106.03 (+0.28) OI call play FRX is once again reaching new highs. After an intraday high of $106.35, new entries can look to initiate on a trade of $106.50, if we get a bounce off $106 on this pullback.

  Linda Piazza   11/18/02,  9:39:30 AM
VOD Update: I expected a pullback in VOD on Friday and we got one. I closed out my position near Thursday's highs. With the weekend coming up, VOD's tendency to gap both directions, and stochastics and RSI indicating a possible consolidation or pullback, I thought I could get back in on a on that pullback, if technicals looked good. Friday, VOD printed an inside day. For those of you who like to play inside days, Friday's high was 18.68 and the low was 18.21. (For further information, Thursday's high was 18.93, and low was 18.15.) (5)(3) stochastics are still looking overbought and RSI is flattening just below overbought levels. Sometimes it's more important to watch formations and trendlines on the RSI than it is to watch the actual levels. From the time when VOD began its ascent in late September until early November, the RSI had formed a trendline of high lows. That trendline was broken in early November, and now RSI has come up to test the trendline again. Treat these tests just as you would a test of the trendline in the price. Right now, RSI appears to be rounding out just below the trendline, so it appears to be holding as resistance. What does this tell me? Perhaps these technical indicators are showing that VOD needs to consolidate a bit, digesting its recent gains, or perhaps they're just signalling that VOD will slow the rate of its ascent. Of course, these technical indicators aren't as trustworthy when a stock is in a strong new uptrend. Price action is often a better guide. If you decide to enter on a break of Friday's highs, you can now set a firm stop loss just below Friday's lows.

  Jonathan Levinson   11/18/02,  9:39:05 AM
The COMPX has pulled back to 1422.95 after printing The Number. TRINQ still .22, QQV +1.22 on the day. Now it's time to watch the depth of the pullback- all 5(3) stochastics from weekly on down peaked at 100% this morning.

  Steven Price   11/18/02,  9:33:28 AM
While Lowe's posted decent numbers, traders need to be a little leery of the retail sector. Wal-Mart sees same store sales at the low end of its 2-4% range. This range is basically half of its traditional growth expectations. I see this as a consumer spending red flag, as well.

  Jonathan Levinson   11/18/02,  9:33:12 AM
11 point gap up open on the COMPX to 1422, QQV +1.81, TRINQ .22. I'm working from home today, as I seem to have developed a stomach bug overnight. Watching tests of critical level with light nausea and stomach pains is bringing back memories to my earliest days as a trader :) See, there's always a bright side to every story.

  Jim Brown   11/18/02,  9:29:24 AM
If the futures hold the open could hit the threshold numbers we were looking for in the Game Plan this weekend. The key is going to be if they hold or fail at those numbers.

Nasdaq Compx 1425 and Dow 8650 are strong resistance and it appears from the futures that Nasdaq 1425 could be the challenge. There is always a chance the opening bounce will fail and we should not be in any rush to jump into a long trade. We should not be anxious to go short either as a pullback could be the launching pad for the next run.

Confused? We want to be in on the right side of the trade and that side may not be immediately known. This close to strong resistance we could trade on both sides near the open and I want to wait long enough to let the opening volatility fade first. I know this is common knowledge but many times emotion takes over. I know as I am the poster child for warning posters on emotional trading. The day after option expiration usually ends up pretty close to where it started as positions are settled. Be patient.

  John Seckinger   11/18/02,  9:28:56 AM
The yield curve is reflecting the likelihood of a higher opening, as the five-year note is down 3 ticks and the ten-year is lower by 2. The Dec 30-year is unchanged at 111'02 and the nearest support is roughly an entire point lower (32/32) at 110'05. There is some support at 110'17. Note: If the yield curve continues to flatten, or if the 30-year comes under pressure, stocks should move higher.

  Jeff Bailey   11/18/02,  9:28:44 AM
The 9:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   11/18/02,  9:09:43 AM
The US Dollar Index fell this morning but has drifted up to 105.30. Futures are up, NDX +7, SPX +6.1. QQQ is trading 26.69, up 25 cents from Friday's close.

  Linda Piazza   11/18/02,  9:09:26 AM
A Bloomberg article this morning notes that Germany's gross domestic product grew by a mere 0.3% last quarter. Among the twelve countries using the euro, Germany's economy makes up about a third of the total economies, so its prospects are watched closely. Today, its central bank worried that hopes for improvement have dimmed, with business confidence numbers dropping further and unemployment numbers rising higher. Ralph Solveen, an economist Commerzbank AG in Frankfurt, lowered the growth forecast for next year from 1.25% to 1%. In the way the markets work these days, the DAX has responded so far today with a rise of 1.91%. In other European markets, the FTSE 100 is up 1.24%, and the CAC 40 is up more than 2%. In Asia, though, the Nikkei closed down 1.85%.

  Jim Brown   11/18/02,  9:08:49 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link


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