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  Steven Price   11/26/02,  4:04:16 PM
Steve, You or any of the other folks have any ideas on why JBLU is soing so well today, while everything else is crashing? Thanks, Jim

Jet Blue (JBLU): $35.31 (+0.46) JBLU has not really been behaving along with the broader market. It sold off big over the last week and a half and was due for a bounce at some point. That bounce fell short of a PnF reversal and also the descending 50-dma that has given it a ceiling after the big drop on Oct. 7. I'm going to keep the short open, but would not recommend new entries until we roll back under $34.50.

 
 
  Jim Brown   11/26/02,  4:00:39 PM
This is a good picture of ugly. The major indexes all failed at support and it looks like the big money is leaving in a hurry. It could be the Saudi question, terrorist concerns or simply flat before the holiday but the bottom line is the severity of the drop. This "stop run" could be setting up the holiday rebound and it would not be the first time big money has tried to "find the bottom" before going long. Any short entries they make trying to push the market down can be closed for a profit when they find support and then they can go long from a lower level.

Remember, Wed/Fri of Thanksgiving week are typically bullish and today would be a good day to use that "forced bottom" tactic. Could be a good spot for a LONG lottery play on the DJX/OEX.

 
 
  Steven Price   11/26/02,  3:55:39 PM
Swing Trade Signals
I'm not going to initiate a play on this breakdown for a couple of reasons. First, we are heading into two traditionally very bullish days and we have economic numbers out in the morning. Second, we have about 1/2 day of movement before the market essentially shuts down for the weekend. The breakdowns certainly appear bearish, as I have mentioned previously, but I'm staying on the sidelines, rather than trade in the face of history, with limited opportunity timewise.

 
 
  Linda Piazza   11/26/02,  3:49:00 PM
The VIX is now above 29, but I'd need to see a close above 28.60, rather than an intraday number at that level, before I believe that the VIX might test 30, then its 200-dma at 31.32 (simple, according to Stockcharts.com). As Leigh says, stay tuned!

 
 
  Jonathan Levinson   11/26/02,  3:44:59 PM
bottom of that wedge is a little porous methinks. I was watching it before and it broke downward so it will have to be redrawn I think.

It's still intact on my screen. It's doing that trick that the candles can pull, false breakouts/down which seem huge until the candle completes, and the formation magically reasserts itself. It looks more "porous" on the COMPX chart than on the SPX chart.

 
 
  Linda Piazza   11/26/02,  3:43:08 PM
Ever since that broadening formation started showing up the OEX charts (see my 9:52 post), I've been thinking that it might be possible for the OEX to test the 467-468 area, the area from which the lastest push upward was launched. If the market held there, the uptrend from the last ten days or so would be maintained, but a fall through that area might set up a likely test of 460 (with perhaps some slight support at 462-464). This isn't a trading recommendation, because I agree with Steve's caution about initiating new positions here.

 
 
  Jonathan Levinson   11/26/02,  3:42:22 PM
As I was typing the SPX broke to a new set of intraday lows. SPX 911 has been a pivot zone, and I'd be watching that area closely for hints of short term direction. Right now, it's a falling knife- a little early to be buying calls.

 
 
  Jeff Bailey   11/26/02,  3:42:18 PM
The 3:15 PM Intraday Update has been posted. Link

 
 
  Jonathan Levinson   11/26/02,  3:40:55 PM
Hi Jon, thanks for that little piece on the trin indicators. you mentioned about the trin.q and what you look for as indicating turning points. But I am looking at the trin.dj for the dow and it is showing up 3.47 @ 3.88. Should this be looked at as a buy signal for the dia calls for 1-2 day play? Thanks in advance for your feedback.

That's a pretty high reading for the TRIN, which tends to swing to smaller extremes than the TRINQ. I would never trade on one indicator alone, and as you know, I'm not the most bullish of speculators in general. With the SPX in a bullish descending wedge, the TRIN high, and the shorter term intraday oscillators oversold, you could try a long play, but I'd be very conservative in placing the stop. I believe that the greater risk is to the downside from here, and the risk/reward environment favors bearish plays, given how far up the indices have come and the looming 200 dma's above. But if your bias is bullish, this would look more like a dip to buy. With a tight stop, you could get in and try to play a bounce, but if it doesn't come as expected, bail quickly. With "good" news being met with selling this morning, the good times might not be rolling as they were over the past 2 months.

 
 
  Linda Piazza   11/26/02,  3:26:54 PM
New highs continue to stay ahead of new lows on both the NYSE and Nasdaq, but other volume patterns are not as positive. Adv/dec numbers are .61 for NYSE issues and .60 for Nasdaq issues. Up/down volume ratios are 294/917 for the NYSE and 429/1157 for the Nasdaq.

 
 
  Jonathan Levinson   11/26/02,  3:20:53 PM
Hi Jonathan, I really find your comments and insights very very helpful and I wanted to thank you.

Not as much as I want to thank you- Mr. Market can be pretty brutal, and there's nothing that goes as far as a pat on the back. It's much appreciated from all of us here.

 
 
  Jonathan Levinson   11/26/02,  3:16:20 PM
That looks like a bullish descending wedge on the SPX 30 minute chart. The COMPX isn't drawing it as closely, but bears should continue to watch their stops and stay cautious.

 
 
  John Seckinger   11/26/02,  3:04:52 PM
Notes: Both Novellus (NVLS) and Sun Microsystems (SUNW) are going to report their mid-quarter update today at 4:30 p.m. Shares of NVLS are lower by 4.27% to 34.66, while SUNW is unchanged at 3.8.

 
 
  Steven Price   11/26/02,  2:41:59 PM
Swing Trade Signals
We continue to see failed rebounds in everything but the Dow, which has been holding 8700. While this looks bearish, it is getting a little late in the day for me ahead of what I think will be a quick move in the morning following the economic data and then a slow afternoon. The next couple of days are traditionally bullish, as well. I'm going to pull the plug as far as new positions this afternoon, but if I were to enter, it would be short with Dow under 8700/SPX under 920/ and OEX under 469. If I didn't feel this was a risky play, I would enter it today, so I would tell readers who were considering going short to enter 1/2 positions only.

 
 
  John Seckinger   11/26/02,  2:38:22 PM
With only 25 minutes until the bond market closes, the 30-year is only 3 ticks under the 111 level at 110'29. 111'00 is the bottom of the recently profiled wedge formation, and a close above should be a big catalyst for asset allocation players looking to get into bonds and out of stocks.

 
 
  Jim Brown   11/26/02,  2:33:56 PM
That break under OEX 470 looks bad when coupled with the Nasdaq compx at 1450. I think we are seeing profit taking before the holidays from the October rally. With all the terrorist news today traders are not willing to hold positions until Monday with a high risk of unknown events. Next week begins earnings warning season again and expectations will meet reality and it may turn into a blind date gone bad. The key for me today is the Nasdaq 1450 level. It is the last index still above its respective pivot point at 1450. The Dow penetrated its pivot at 8730, OEX at 471, SPX 921. If the Nasdaq breaks 1450 it could get ugly.

 
 
  Jonathan Levinson   11/26/02,  2:15:02 PM
The QQV is up 2.14 at 41.67. If we have entered the "good news is bad" cycle, this could be a fascinating few weeks, but we're far from contemplating that just yet. The COMPX has broken the 1460 support level and is currently rebounding from its low of 1452. The TRINQ has finally come up for air at 1.32, a reading higher than I've seen since, seemingly, pteridactyls patrolled the sky and cakewalks still yielded cake (sorry, Jim, couldn't resist). FVX is now down 10.3 basis points, and it looks like the smarter money (options market and bond market) is feeling less than equity bullish at the moment.

 
 
  Steven Price   11/26/02,  2:05:36 PM
Swing Trade Signals
We are starting to see the dominoes fall for a possible short play here. The SPX has cracked below 920. The OEX is still above 470 and I'd want to see a break under 469. The Dow would also need to confirm with resistance below 8700, but things are moving in that direction. As I said earlier, with basically one day before things slow down, I'm going to need some awfully convincing evidence to enter a position and I'll look for all three numbers to align before entering short. As the day wears on, I'll be less inclined to enter, but readers are certainly free to enter at their own risk. As we get close to the end of the day, I basically view trades in the broader indices as playing tomorrow morning's numbers, which I am not inclined to do.

 
 
  Jeff Bailey   11/26/02,  1:58:33 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  Kent Barton   11/26/02,  1:51:42 PM
Citigroup (C), $37.63 -1.02: Much like the BKX.X banking index, C is rolling over from its 200-dma. Shares stopped short of giving a double-top p-n-f buy signal at $40.00 and are now starting to retrace the rebound from the November 13th lows. The rolling daily stochastics (5,3,3) suggest that the stock could pull back to its 50-dma at $33.46. More weakness in the Dow Jones would probably accelerate the decline. C, currently lower by 2.6%, is underperforming the Industrials.

 
 
  John Seckinger   11/26/02,  1:42:53 PM
With the Dow continuing to edge lower, it appears that the 8750 significance has grown in importance as a short-term pivotal level. One sector that is not helping bulls is the Oil Sector (XOI), lower by 1.27% at 430.62 and just above a nice pivot at 430. Resistance to the upside is seen at 435 and 444. Downside objective is 420. Note: Weakness in the XOI should correlate with lower stock prices, as well as being coincident to the Utilities Index (UTY). The UTY is lower by 1.06% at 247. 243 seems to be a key support level.

 
 
  Steven Price   11/26/02,  1:40:08 PM
Steven, What do you see the potential target be for IDPH to close the PUT position.GG

IDEC Pharmaceuticals (IDPH) $33.14 (-3.10) IDPH has seemed to flat line just over $33 since the drop this morning. The daily chart shows the next support level at $30, but I'd be thinking about taking some profits here, given the flat line. I think leaving 1/2 the position on for a break under $33 is fine, but I'd lower my stop to $34 to avoid a move back into the gap. Also be aware that premiums are most likely pumped up after tha gap down and will most likely come down significantly even on a small rebound.

 
 
  Steven Price   11/26/02,  1:31:50 PM
Hi Steve, Would you consider that a small head and shoulders pattern on WMT daily? Building the right shoulder now... Poking around looking at retailers and seeing prior strong issues such as AZO, BBBY looking weak -- could a leg down on retailers be around the corner?? Thanks ~~ Joanne

Wal-Mart (WMT): $53.75 (-0.02) Interesting observation in Wal-Mart. I have a descending neckline with a break around $52.00. I'm not sure that gives us enough room for a profitable put play in WMT with support at $50, but it could certainly be giving us bearish signals for the retailers. One of the factors I am thinking about right now heading into the holiday shopping season is the lack of Christmas bonuses this year. Many shoppers in past years have been a little more willing to extend the credit card knowing a bonus is coming. There will be fewer of those bonuses this year and many will be smaller. I have a hard time seeing anything but disappointing sales numbers hitting us soon in the sector. I made markets in Wal-Mart at the CBOE for about 4 years and have learned that it is a difficult stock to short, due to all of the support levels intermingled in each $5 range. I would use it as confirmation in the sector and look at other retailing stocks on a neckline break.

 
 
  Steven Price   11/26/02,  1:17:59 PM
Swing Trade Signals
This is one of those times when traders tend to force the action. There is not much happening, and we look for entries to try and do something. I'm going to look for confirmation from the major indices across the board, rather than try to force something today.

 
 
  Jonathan Levinson   11/26/02,  1:15:20 PM
COMPX at 1460 support.

 
 
  Jonathan Levinson   11/26/02,  1:11:12 PM
I would like clarification on Trin, Tick, and P/C. At what level are they bullish or bearish. I'm sure, lots of other people get confused by the various inverse relationships of indicators.

I would refer you to the articles in Traders Corner and Options 101, but for a quick rundown, here it is:

I watch the COMPX primarily, and so my indicators all (except for the p/c ratio) refer to the COMPX and the NDX. The TRINQ is the TRIN for the Nasdaq. For me, neutral is from .50 to 1.20 or so. Above 1 is bear territory, below 1 is bull. Below .50, the bullish breadth is becoming extreme, and below .25, it's very extreme. Above 2.50 is becoming extreme on the sell side, and above 4 very extreme. Best to think of the TRINQ like an oscillator. As it reaches an extreme, reversal is imminent. When above 4, bears should be snugging their stops, and below .25, ditto the bulls. Lately, we've been seeing extreme, persistent readings on the bull side, as we did for bearish breadth during this year's declines.

I use the TICK.NQ to gauge the "amplitude" of buying and selling. Currently, the -246 reading shows moderately broadbased selling.

Lastly the put to call ratio, which I've been discussing this week, is best understood as an oscillator. Take a look at the chart of the put to call ratio on stockcharts.com under the symbol $CPC. Generally, the lower it goes, the more imminent a downside reversal in the indices. Above 1 is becoming overly pessimistic and so an upside reversal usually follows.

 
 
  Linda Piazza   11/26/02,  1:06:32 PM
Reader Question about SONS, Sonus Networks: Any idea on the huge run up in SONS yesterday afternoon and this a.m.? Can't find any news items that would support such a move.

Response: I haven't been able to find specific news about Sonus, but I've been checking competitors and customers. I thought it might be an interesting for some of you trying to find out why a particular stock you follow is zooming up or falling through the floor. Here's what I turned up. NTT Communications is a SONS customer. (A check of the Sonus Network site turned up this information.) NTT Communications is a subsidiary of Nippon Telegraph and Telephone Corporation. (A global Internet search turned up that information.) Yesterday, Nippon Telegraph and Telephone Corp announced plans to invest as much as 500 billion yen ($4 billion) over the next five years to expand its high-speed Internet service. (A regular stock market news source turned up that information.) Now comes the guesswork. I'm guessing that some investors/traders surmised that some of the $4 billion would be directed to SONS, but that's only a guess. I can find no other news. Be careful, though, when trading these penny stocks. Art Cashin mentioned this morning that he's seeing a lot of money being invested/gambled on these penny stocks, and that they're not trading in typical bottoming fashion. SONS's rise today may be nothing more than momentum players piling into another cheap stock on a gamble that their money could double. If your account management rules allow you to gamble on a few penny stocks, then do so, but otherwise, stay out. I've got one of those stocks that I bought the day it secured a contract with a major company several years ago--it hasn't traded since October 20 and my trading screen is showing 0.00 for its price.

 
 
  John Seckinger   11/26/02,  12:55:51 PM
I have to preface with the fact that I really do like their doughnuts. Nevertheless, shares of Krispy Kreme (KKD) are lower by almost 6% after an analyst reported that a key measure of sales may be in danger as the company sells more of its doughnuts outside its stores. It was just a week ago when the company reported 3Q earnings rising 55%, as well as guiding for a strong 4Q. On a daily chart, the clear trend line of lower relative lows from March to late October was tested on Tuesday near 34.65. The intra-day low was 34.05, while KKD current trades at 36.03.

 
 
  Jonathan Levinson   11/26/02,  12:52:06 PM
The COMPX isn't bouncing, but it isn't diving either. My gut reaction is that 1460 will fall, but it's nothing more than a feeling, and the current price of 1465 allows a small buffer zone above the s/r line. My guess is certainly not motivated by the put to call ratio, which is too high for bears here, above .85 for the past hour and a half. The TRINQ is bullish at .75, though not the TICK.NQ at -121. Financials are trading weak, and the buying in bonds has relented only a touch, with FVX down 8.3 bps.

 
 
  Jeff Bailey   11/26/02,  12:47:56 PM
Retail HOLDRS (AMEX:RTH) $74.60 -0.06% Link ... group showing some relative strength today with SPX -1.06%. Slight rebound in today's consumer confidence report doesn't hurt.

Accidently looked at $0.50 box scale (was looking at Treasury YIELDS) and interesting look at RTH Link

I still like this group bullish ahead of holiday shopping season. Risk reward also favorable compared to many bullish trades.

Disclosure ... I currently hold bullish position in the RTH

Stock in group mentioned bullish about same time as RTH was Kohls (NYSE:KSS) $67.20 Link with trader's target of 200-day. Noting here that stock trades just under the 200-day SMA. As a RTH bull, I'd like to see one of my "leadership" stocks like KSS break above this 200-day on BIG volume (8 million +) and break on higher to $70, which is downward trend on the bar chart.

Thinking becomes, the RTH is "the snake"... KSS is at the "head" of the snake/inchworm and what's at the tail? Home Depot (NYSE:HD) $25.09 -1.4% Link

RTH bull has to monitor both ends of the snake and I'm thinking a RTH bull like myself needs HD to find a rebound.

Can't forget about Wal-Mart (NYSE:WMT) $53.70 -0.22% Link , which I consider the "heart." These three stocks are kind of my "key" stocks for group. KSS is leader right now, WMT holding tough, and HD is weak. 2 "plusses" and 1 negative right now. Combined, all three kind of represent the RTH picture don't they?

 
 
  Jeff Bailey   11/26/02,  12:34:08 PM
Adobe Systems (ADBE) $29.45 -2.74% ... lots of questions from bulls looking for entry points. Link

First things first. NASDAQ-100 Bullish % is at 79% so NASDAQ-100 risk is HIGH for bulls. Understand that in early October (red A) on a point/figure chart, ADBE was trading $18.50, gave the "bear trap" at $18 and shook loose all the weak holders, and now stands with a 66%. Am I eager to now get long full position in ADBE? Nope. Looking back, should have 1/4 or 1/2 longed at $22 and probably thinking I should take some profits off the table here with Bullish % so high.

Reward to bullish vertical count of $48.50 from current levels is $18.00, and risk to sell signal is $6. This is attractive risk/reward, but gets better on pullback to $25 and can give some room to $23 to try and avoid "first sell signal in upward trend often times buying opportunity for bulls."

I'd be patient with ADBE here. Sector is in good field position. According to Dorsey/Wright and Assoc. software bullish % (BPSOFT) is "bull confirmed" at 44%

If very bullish the fundamentals of ADBE, then technicals warrant bullish consideration. I don't like full positions with the NASDAQ-100 Bullish % at 79%. At same time, this stock would NOT be on my list of short/put candidates.

 
 
  Linda Piazza   11/26/02,  12:33:37 PM
Art Cashin just repeated the rumor about asset allocation out of stocks and into bonds, but he mentioned one firm doing the asset allocation, rather than two, as was reported earlier by Briefing.com.

 
 
  Steven Price   11/26/02,  12:18:13 PM
Swing Trade Signals
I like the bounce in the OEX (472.56), but with resistance at 475, I'm not sure long entry gives enough room for a profit, given the bid/ask spread. I'm getting more selective as we head closer to the holiday, so I'm going to stay flat unless I see the potential for a big move in the next 1 1/2 days.

 
 
  Jim Brown   11/26/02,  12:14:03 PM
SLM - fell off the cliff this morning and traders looking for an entry point for the OIN put play were given an excellent entry as it rebounded from its recent decline to resistance at 101 yesterday. Prior puts PG and IDPH both rewarded traders who kept the faith with IDPH now down -$7 from Friday's price. PG finally broke support at 87 and is continuing the down trend near $84.50.

 
 
  John Seckinger   11/26/02,  12:11:41 PM
The Dow, on short-term charts (one and five minute), is making higher highs and lows; however, there isn't conviction out of the bond market that makes it seem like the market will continue to rise. Dow is currently at 8750, so bond traders could feel this is slightly pivotal over the next few hours.

 
 
  Steven Price   11/26/02,  12:11:24 PM
Steven Oracle just broke $12 level, what will be target of Oracle? Thanks AP

Oracle (ORCL) $12.03 (+0.12) Oracle broke above its bearish resistance line at $11.50 and looks bullish adding another bos at $12. There is some resistance just over $12, around $12.15 and gain at $13.50 and $14.25. I'd probably wait for some intraday support over $12.25 before heading in long, given the last failure at that level.

 
 
  Jeff Bailey   11/26/02,  12:03:54 PM
CMGI (CMGI) $1.16 +18.3% ... Stock's up about 40% since mentioning here in market monitor on Friday. Would look to sell some strength near current levels Link .

Seeing technicals like that of AKAM Link which actually brought me to CMGI bullish observation, where these smaller "late to rally" stocks pull back to test the 200-day SMA. Bull that takes some profits off table in CMGI may then look to play AKAM bullish tomorrow afternoon should stock firm near 200-day SMA.

 
 
  Jim Brown   11/26/02,  12:02:28 PM
After seven straight weeks of gains the markets appear to be top heavy with traders selling good news when better news was expected. The GDP was better than expected at +4.0% with inventory accumulation at $15.5 billion. Well over the $1.9 billion previously reported. Unfortunately most of those gains came at the beginning of the quarter. Internally GDP growth appeared to have weakened with consumption growing at a much slower pace. It appears the 4Q GDP could be as low as +1.5% and traders had already priced in an economic recovery.

The odds of a double dip recession are lower but so are the odds of growth. The consumer has bought all the cars and houses they can stand and growth in those sectors will no longer be able to offset weakness in other areas. Layoffs picked up again in October with 171,088 workers losing jobs in mass firings. With Industrial Production and ISM numbers still weak it indicates this number could grow instead of decline.

The Consumer Confidence numbers rose to 84.1 from 79.6 last month but after five months of decline, holidays ahead and a rebounding stock market, analysts were expecting consumers to feel better. Not surprisingly consumers planning to buy cars, homes and major appliances dropped. The boost in the headline number was almost entirely based on the expectations component which rose from 81.1 to 88.4. This was probably helped somewhat by the Fed rate cut and things like the capture of the snipers, no terrorist attacks in the U.S and the stock market again. The bottom line from all this news this morning is a dose of reality that we are not out of the woods yet and earnings warnings, which begin next week, could be a problem for traders hopes. The news this morning was mostly better than analysts expected but worse than traders were hoping for. There was no miracle rebound yet despite what tech buyers were expecting.

 
 
  Linda Piazza   11/26/02,  12:01:58 PM
Briefing.com is reporting that they're hearing a rumor that two major firms are making an asset allocation away from stocks. Don't trade on rumors, but maybe someone else is doing so. I don't know if the two are related, but this rumor was reported at 10:44 ET, shortly before the OEX made its lowest dip of the day.

 
 
  Jonathan Levinson   11/26/02,  12:01:43 PM
Very little measurable action so far, with the TRINQ still too low, the QQV higher, to 40.66. The COMPX 1460 level continues to hold as support. Bond yields remain well down on the day, and it's apparent by this point in the session that our fed chairman's 22 primary brokers are adding to their treasury positions. The HUI has meandered higher, currently 116.69, and the XAU is limping along behind it, as always, +.38 to 64.1.

 
 
  Steven Price   11/26/02,  11:53:59 AM
Swing Trade Signals
From the short side, I'm looking at OEX 469/SPX 920/Dow 8650 as possible entry points if we get some speed in that direction.

 
 
  Steven Price   11/26/02,  11:50:21 AM
Swing Trade Signals
We got a first hand look at one of the issues facing us in a market where the Dow has swung 100+ points on all but 3 days since June. How wide should we place our stops? Even a wider stop of 470 on the OEX would have taken out our long position before the rebound. Certainly a trade under that level looked bearish, only to turn around on us. Let's wait for a solid trend to form before jumping back in. Not sure we'll see that between 470 and 474, so I'll be patient. I'm also keeping in mind resistance the last few days at 479, so any long play will have that to contend with. If we do manage that level, without a decent trend developing on the way up, then a rollover to a short there may be the best risk/reward scenario with a stop over 480.

 
 
  Jeff Bailey   11/26/02,  11:49:04 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  Linda Piazza   11/26/02,  11:48:35 AM
At 28.61 currently, the VIX has been conducting a challenge of the 28.60 level that had provided support during late June and early July. So far, that area is holding as resistance, keeping the VIX from moving back into the 30-50 range. Although it's just anecdotal, I'm watching a couple of February QQQ options--29 calls and 27 puts. The calls are seeing buying, but the puts haven't traded all day.

 
 
  John Seckinger   11/26/02,  11:35:40 AM
Per 09:53:26 post, buying in the 10-year market seems to have become contagious. The 30-year is now 1'02 higher at 110'29 and has an intra-day high of 111. Bond prices are currently on its 22 DMA (exp), and this area should be a good test for asset allocation players. I don't expect volatility to dry up anytime soon.

 
 
  Jonathan Levinson   11/26/02,  11:18:17 AM
It is difficult to imagine any significant downside today with a total of 18B in fed money sloshing around, which is my quick count of the recent repos not counting 28 day repos. This money might be used to jam treasuries instead of equities, but it doesn't take much buying in MSFT to levitate the indices. Put buyers and short call sellers are once again urged to be careful today.

 
 
  John Seckinger   11/26/02,  11:13:41 AM
Looking at a weekly chart of the Dow, the 22 Weekly Moving Average (exponential) comes in at 8621, while the 22 Weekly Simple Moving Average is much lower at 8428. Also interesting is the weekly RSI reading, which dropped back underneath 50 to 49.82. Today's sell-off doesn't seem to have inflicted any real technical damage, but there is still some downside risk. On the upside, there might be some stops above both 8750 and the 8810 level.

 
 
  Steven Price   11/26/02,  10:59:29 AM
I would think a break of 8691 would lead us to 8620 and a real good buy opportunity, What's your feeling.

I don't see a lot of support between 8700 and 8600, so we could see a quick drop in that range. I'd look for a decisive bounce from that level, before entering long again if we get down there. The current series of higher lows during the recent rally could take us as low as 8500 without turning the trend.

 
 
  Jonathan Levinson   11/26/02,  10:59:27 AM
The put to call ratio seems to be staying respectably low, opening reading of .55, latest reading .62. The TRINQ remains too low for the downside we've seen today, currently .79. HUI and XAU have gone positive, and buying of bonds has accelerated, with FVX down 9 basis points.

 
 
  Steven Price   11/26/02,  10:50:46 AM
Swing Trade Signals
Looks like OEX 470/Dow 8700 will be the next pivot points to watch. I'll hold off on a break below these levels to watch for a failed bounce before deciding on the next signal.

 
 
  John Seckinger   11/26/02,  10:47:13 AM
Looking at the Dow, there is an upward trend line that currently comes in at 8645. The pivot on the upside appears to be at 8750. Note that the 30-year is now higher by '22 ticks at 110'17 and nearing the 111 area profiled earlier. Looking elsewhere, the Sox is lower by 3.37%, while the XAU index is starting to get a bid. The Greenback is down fractionally.

 
 
  Steven Price   11/26/02,  10:43:15 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the LONG signal when the OEX traded 471.00 at 10:39

 
 
  Steven Price   11/26/02,  10:42:03 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We are approaching the stop loss of OEX 471.00. Close the long signal with a trade at this level.

 
 
  Linda Piazza   11/26/02,  10:33:28 AM
Reader Question about RFMD from earlier this morning, when RFMD traded at 11.51: I see 15 with nothing in between?

Response: On the weekly chart, I see some slight resistance in the 13.40-14.00 area, but it looks slight, maybe just for a day or so in each instance. I agree that the first major resistance resides in the 15 area. The P&F chart has just given an ascending triple top breakout signal. On weekly charts, both on-balance volume and acc/distribution patterns look good. MACD patterns look good.

You know I'm going to offer cautions, too. Here's the first and most important: Stockcharts.com shows the 200-dma at 11.62, and I'd want to see RFMD push above that level, with maybe at least an hourly close above that 200-dma before I was sure it wasn't going to hit that and fall (as it has since done) instead. If I were going to stay in the trade overnight, I'd want a daily close above that level. A second caution is that daily stochastics are overbought, but of course that hasn't been important lately, has it? Still, it's a sign that you might see some consolidation at the least, if not a pullback. If you think there's a possibility for consolidation immediately after entering a position, plan accordingly when you decide which strike and which month option to buy. You don't want too much time decay while that consolidation occurs. Another caution is that these rounding bottom formations have a tendency sometimes to morph into cup-and-handle formations. If RFMD were forming a handle, you'd probably see a pullback to the next support or maybe even to the 30-week MA at 9.07, but that pullback should occur on lighter volume. The pullback shouldn't last too long, either, or something's wrong.

A comment on Stockcharts.com. I quote them because their free charting service is available to all readers. I've noticed, however, that their moving averages tend to be a little different than those quoted by other charting services. Sometimes those diffences in the quotes listed on the Monitor are also due to using a simple moving average versus an exponential moving average. Experiment. Yesterday, I found that the simple 200-dma as quoted from Stockcharts.com was exactly the level from which ZMH kept bouncing. It proved to be the right average to watch for that particular issue. For another issue, an exponential average might prove more telling.

 
 
  Steven Price   11/26/02,  10:24:21 AM
Swing Trade Signals
So far we are getting a bounce around OEX 472, and I'm sticking to my stop of 471. The Consumer Confidence number was below expectations, but I don't see any panic yet. Certainly things aren't looking strong at the moment, but so far we bounced at yesterday's low of 471.87 and I'll wait for confirmation of momentum to the downside before bailing out on the LONG signal.

 
 
  Jonathan Levinson   11/26/02,  10:19:16 AM
The COMPX just witnessed a good rush of selling, but did not make it down to yesterday's low. The TRINQ is currently at .90, not even into bear territory yet.

Bears need to be VERY careful here. The reason is the fed. The amount of money they have been injecting into the markets represents a deviation from the tightening of its open market ops over the past months. For the record, I am utterly convinced that the fed is manipulating the markets to greatest extent of its ability. 8.5B is a lot of money to throw at the tape, whether for bonds or stocks. When the indicators look ripest for a rollover, I urge bears not to try to front-run the decline. Wait for confirmation and a bit of momentum to avoid getting whipsawed by your tax dollars.

 
 
  Steven Price   11/26/02,  10:09:07 AM
RE: PG finally fell below the $85.00 - Just a couple days too late.

Proctor and Gamble (PG): $84.61 (-1.03) Certainly took a little longer for the breakdown than we anticipated on the put play we closed last week, but I actually like short entries on a failed bounce under $85. or a break below $84.50

 
 
  Jonathan Levinson   11/26/02,  10:06:42 AM
The fed has announced an overnight repo in the amount of 8.5B, for a net add of 4.5B.

 
 
  John Seckinger   11/26/02,  10:03:29 AM
New Home Sales fell 4.5% to 1.007M vs 985K consensus, while Consumer Confidence fell to 84.1 vs 85.0 consensus

 
 
  John Seckinger   11/26/02,  9:57:19 AM
Note: Consumer Confidence and New Home sales to be reported at 10 a.m. Confidence in November is expected to rise to 85 versus 79.4, month prior. New Home Sales is expected to fall to 985k from 1.02 million in September.

 
 
  Jeff Bailey   11/26/02,  9:53:58 AM
Procter & Gamble (PG) $85.01 -0.73% ... stock first profiled here in market monitor and also on OI's put play list. Bears would like to see trade at $84 for a double-bottom sell signal and break of trend after triple-bottom sell signal at $87. Link

While stock hasn't "collapsed" most likely the higher level of bullish % and broader market positive has kept stock bidding. Looks to be one of the "toppier" Dow components that could really get crushed should the higher levels of bullish % find their way back to below the 30% level.

Target is bearish count of $77. Should Dow Bullish % ($BPINDU) Link reverse to "bear alert" at 64%, then Professor Davis' study of triple-bottom being profitable 93.5% of the time for an avg. gain of 23% in 3.4 months comes into play. From $87, that would be a target of $67.

According to Dorsey/Wright, PG is in foods/beverage/soap (BPFOOD) and currently "bull confirmed" at 46%. PG bears also look for sector weakness.

Disclosure ... I currently hold bearish position in the Jan $90 puts.

 
 
  John Seckinger   11/26/02,  9:53:26 AM
There is a rumor that a West Coast fund is buying ten year calls. Note: This is on price, not yield. If this fund is looking for higher prices and lower yields, it could be for a variety of reasons (weaker stocks, hedging purposes, etc.). My gut says this fund got caught in the downdraft of bond prices recently and is now leveraging a little more to try to recoup some losses. It is also reported that market participantes are excited about buying two year notes, especially if they can get the same coupon as last month despite rates now 50 bps. lower. Makes sense.

 
 
  Steven Price   11/26/02,  9:53:13 AM
Swing Trade Signals
Looks like the dip found some buyers once again. I'm going to leave the stop on the LONG market signal at OEX 471.00 for the moment. I like the move in the OEX back over 474 (474.43), but I am not quite ready to raise the stop to that level yet. As we move further into the week, I am going to be less patient with open positions. With essentially 5 days of time decay (counting Wednesday afternoon), I'll be looking to close out before the holiday. I will not be on the Monitor on Friday or Monday, as I'll be back in Chicago for the holiday.

 
 
  Jonathan Levinson   11/26/02,  9:53:06 AM
The fed, which has been on tear as of late, adding far more liquidity to the markets (aka "jamming") than usual, has 4B in repos expiring today. We await the announcement.

 
 
  Linda Piazza   11/26/02,  9:52:18 AM
For the last four days, intraday charts have shown a broadening formation on the OEX, best seen in the 15-minute charts. Broadening formations can be a sign of instability, so this is a little troubling, but lately the market doesn't break down when these potentially bearish-looking chart formations are seen. This formation should be seen as a warning to pay attention to stops, then, and not as a prognosis of failure.

 
 
  John Seckinger   11/26/02,  9:40:17 AM
Looking at the yield curve, the difference in yields between the ten and five year note is currently 95 basis points (4.14 minus 3.19%), and the trend of wider spreads between the two securities has been broken. In March, the spread was 60 bps, and reached a high of 117 just a few weeks ago. The downside objective is for a move to 80 (should be bullish for stocks), while an increase back above 100 would be viewed as slightly bearish for equities.

 
 
  Steven Price   11/26/02,  9:38:40 AM
For a new entry, would a bounce from 472 be a good entry or would you wait until 474?

I would look for some support at 474.00 before stepping in with a new entry.

 
 
  Jonathan Levinson   11/26/02,  9:38:05 AM
The TRINQ is showing .84, despite a gap and fade open on the COMPX and has already ticked down to .67 as I started typing. The degree of bullish breadth continues to astound me. The options market is a little more sceptical, with the QQV up .59... now .18, to 39.71. The TICK.NQ is flat/negative at -23 and gold is off slightly. The market looks entirely undecided so far. More rangebound action on the menu from the looks of things.

 
 
  Jeff Bailey   11/26/02,  9:34:23 AM
Emulex (ELX) $25.55 ... stock trading lower at $24.71 over ECNs after Deutsche Securities downgrades on belief that margins and pricing are favorable for the HBA vendors such as Emulex (ELX) and Q-Logic (QLGC), but also thinks that these factors are already reflected in valuation. As such, Deutsche downgrades to "hold" from "buy" based on valuation and the raises its price target to $24 from $20.... oh forget it..... no call here. Looks like a "take profits" call as stock hit their original target of $20.

Will note p/f chart Link still rather bullish with vertical count of $28. Hmmmm.... very unfavorable risk/reward here for new bullish entry as first sell signal would be at $16. If long, would look to take some profits off the table here, or snug a stop just under Deutsche's "new" $24.00 price target. I like Deutsche's "call" on this one, but just say "stock has reached our price target and view risk/reward as unatractive at current levels."

 
 
  John Seckinger   11/26/02,  9:32:54 AM
The 30-year has traded in a range of 109'27 to 110'13, and is currently higher by '12 at 110'07. Both the 50 and 22 DMA's are higher at 110'16 and 110'28, respectively. The area I deem as critical is from 110'27 to 111, and that represents the upward trending wedge trend line. A close above 111 should have serious implications.

 
 
  Steven Price   11/26/02,  9:30:08 AM
IDEC Pharmaceuticals (IDPH) $34.25 (-1.99) For those readers still holding puts from the IDPH Put Play, the stock finally gave up its support at $37.75 and I'd lower the stop to $38.00. The stock was downgraded by Merrill, citing slowing Rituxan sales.

 
 
  Linda Piazza   11/26/02,  9:30:07 AM
In Europe, all major markets are down. Today's European economic numbers included a report on German Business Confidence. This level fell for the sixth straight month, according to Bloomberg, to 87.3 from 87.7. The Nikkei closed down.

In the U.S., today's upgrades include OPWV to a buy, on solid handset demand and new customer wins, and HAL to a neutral. Downgrades include TECD to a market performer, on their somber outlook, and BGEN to a sell.

 
 
  Steven Price   11/26/02,  9:25:40 AM
The downward revision in predictions for 4Q GDP are certainly a negative, but I would have expected a little more of a pull back. The fact we are holding around 8800 simply looks like the consolidation of the last couple days is continuing. I'm going to stick with the long OEX signal unless I see any real momentum to the downside. Let's give the bulls a chance to buy the dip before we panic.

 
 
  Jeff Bailey   11/26/02,  9:24:52 AM
The 9:00 AM Intraday Update has been posted. Link

 
 
  Steven Price   11/26/02,  9:18:47 AM
Swing Trade Signals
We are long the OEX right now, with a stop at 471.00. We'll let the opening dip shake out and then decide whether to adjust the stop or leave it where it is.

 
 
  Linda Piazza   11/26/02,  8:56:52 AM
Among other factors contributing to the 4% Q3 GDP growth Jonathan mentioned were strong consumer spending, a rebound in inventories, and a 6.6% increase in company investments in software and equipment. A return of incentive programs increased car sales for Q3, but those sales are probably softening now, as evidenced by GM and F's statements about probable slower sales in the current quarter. According to Bloomberg, economists estimate that other facets of the economy may have slowed in the current quarter, too.

 
 
  Jonathan Levinson   11/26/02,  8:50:43 AM
The US Dollar Index remains in its range, hovering around 106.60. The futures stayed lightly in the red all night and have only begun to show green with the SPX leading the way on, presumably, the positive revision of the most recent US GDP data to 4% growth. I believe that there will come a time when "pro forma" will be considered a four letter word, but for today, this discrepancy has resolved itself in investors' favor. NDX futures remain slightly negative, with QQQ trading 27.86, down from its 27.99 close. Yields are down, with FVX off 4.1 bps.

 
 
  Steven Price   11/25/02,  11:48:59 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Jim Brown   11/25/02,  11:46:58 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 

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