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  Linda Piazza   12/5/02,  7:22:46 AM
The ECB, European Central Bank, will announce its rate cut decision at 1:45 pm Frankfurt time today. Some economists predict a one half percentage point cut to 2.75%, speculating that a smaller cut will lead to disappointment. Yesterday, the European Commission worried that the economies of the dozen countries using the euro might see a contraction in the first quarter. The Bank of England declined to lower rates today, leaving their benchmark rate of 4% in place, while, in a surprise move, Sweden's Riksbank lowered its benchmark rate the second time in a month, by a quarter point to 3.75%. Currently, European markets are up as follows: FTSE 100 up 1.23%, CAC 40 up 2.03%, and DAX up 1.41%. The Nikkei closed down .99%.

 
 
  Jeff Bailey   12/4/02,  6:44:17 PM
Bear Alert! Today's action saw a net loss of 6 stocks to point and figure sell signals in the narrow S&P 100 Index as the S&P 100 Bullish % ($BPOEX) fell to 69%. Link

As mentioned in recent Index Trader Wraps, current levels of OEX Bullish Percent reached those found in March (red 3 on a p/f chart). A trader/investor now begins assessing downside risk to point/figure sell singals and upward trend in stocks they trade bullish. Bullish traders holding long in stocks that trade BELOW trend must begin assessing downside risk to a sell signal, then relative lows, then $0.00.

Before a bear gets carried away and OVER LEVERAGES his/her account in OEX, or index, or individual stock puts, trader/investor must understand potential for full, if not 50% retracement of recent move lower on some stocks. A quick look at the traditional $5 box scale of the OEX Index itself, gives the trader/investor a good risk assessment in relation to March's bullish % levels. Downside risk assessment for bulls currently at $445 (first sell signal) then upward trend at $420, with potential reward back to 480. Link

Bears will do the inverse with risk to stop of 490.

 
 
  Jeff Bailey   12/4/02,  5:46:50 PM
UAL Corp. (UAL) $3.12 +2.29% .... Air Transportation Stabilization Board rejects $1.8 billion loan guarantee. Stock trades $1.00 (-67% from close). Link

 
 
  Linda Piazza   12/4/02,  4:44:05 PM
IBM is now bidding up, although not yet opened. Apparently IBM first thought the fund would be underfunded by $4.5 billion, and thought it would need three years to restore it. The improvement in equity markets allows IBM to complete the funding this year.

 
 
  Linda Piazza   12/4/02,  4:40:14 PM
This quote is from marketwatch.com: IBM currently estimates a difference of $3.0 billion between the U.S. plan's assets and projections of benefit obligations on an accumulated benefit obligation or ABO basis. IBM will fund the difference by year's end.

 
 
  Linda Piazza   12/4/02,  4:14:27 PM
For those not listening to CNBC, IBM has been halted for news relating to their pension plan.

 
 
  Linda Piazza   12/4/02,  3:59:34 PM
Will the COMPX close over its August highs of 1426.76? The bulls and bears are fighting it out. Unless something drastic happens before the closing, today's candle will be a doji or a near-doji, showing that indecision in a visual manner. This would complete two candles of a three-candle morning star formation, a classic reversal formation. However, (5)(3) stochs are still in full roll, and that three-part reversal signal isn't confirmed until the third candle is completed. Until then, it's just a potential reversal signal.

 
 
  Steven Price   12/4/02,  3:50:43 PM
Swing Trade Signals
It looks like the failed rally is giving us another lower high. If I hadn't been stopped out, I would be holding the short position overnight. Those traders still short can take that for what it's worth, but I'm also not going to be opening any new positions with less than 15 minutes left in the trading day and support holding at Dow 8750 for the moment.

 
 
  John Seckinger   12/4/02,  3:41:13 PM
January Crude Oil is lower by 65 cents to 26.52, following word from a top Pentagon official that Iraq's declaration of its arms programs expected this weekend will not trigger a U.S. decision on military action against Baghdad. The XOI index is down by 0.47% at 439, and is now in-between its 22 and 50 DMA's of 436.6 and 443.2, respectively. A chart of Light, Sweet Crude shows prices at the bottom of its upward channel, and it looks like an intermediate pivot is near its 200 DMA of 26. Ticker: CL03F.

 
 
  Jeff Bailey   12/4/02,  3:40:40 PM
The 3:15 PM Intraday Update has been posted. Link

 
 
  Steven Price   12/4/02,  3:40:32 PM
Swing Trade Signals
Looks like we are right back in the pivotal area around Dow 8750. This was resistance for most of the day, before the recent spike. Right now it is holding (Dow 8753), and I'll wait for a breakdown before jumping back in again. 8700 hasn't given much support/resistance in either direction, but 8750 appears to be the pivot.

 
 
  Linda Piazza   12/4/02,  3:35:09 PM
I was just checking various sectors for strength or weakness and noticed noticed something I'd never seen on the PerfCharts section of Stockcharts.com. If you click on the link below and scroll to the middle of the page, you'll find a flow chart depicting a sector rotation model for various points in the economic cycle. According to that model, we're in a full recession. Link

That news that we're in a full recession may come as a surprise to many of you, as it certainly did to me! However, I had begun my search by looking at the Dow Jones Transportation Index. Unless a new model for economic recovery has been determined and I haven't been told, my understanding is that the transports should be leading any recovery. I hadn't looked at a chart of the transports in a week or two, and expected to see that this measure had been testing its 200-dma, as had most indices over the last week or so. A look at the chart shows that the transports aren't yet anywhere near testing the exponential 200-dma, surprising me a bit. Link

 
 
  Steven Price   12/4/02,  3:21:29 PM
Swing Trade Signals
In spite of our stop being violated, I still feel the lower lows in all of the broad market indices this morning were significant. I'm not looking to switch sides just yet and the failure back below 8800 may be more an indication that the stop was too low, rather than a change in the tide.

 
 
  Steven Price   12/4/02,  3:16:36 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the 1/2 short position when the Dow traded 8800 at 15:11:52.

I'll sit in the sidelines for the moment, but traders still short can watch yesterday's intraday high of 8815 for the next signal that the tide has turned decisively.

 
 
  Steven Price   12/4/02,  3:13:52 PM
Would you add to your short position if resistance holds at 8800 today? Scott

I'd like to see a move back under 8750, with resistance there, before adding to the 1/2 position.

 
 
  Steven Price   12/4/02,  3:03:44 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We are seeing some resitance now just below Dow 8800, with the rally starting to fade, but we are getting close to the stop loss.

Current levels Dow 8781/OEX 470/COMP 1439/SPX 922

Close the SHORT signal on a Dow trade above 8800.00

 
 
  John Seckinger   12/4/02,  2:59:35 PM
There is a report out that Microsoft is seeing modest PC shipment growth for fiscal year 2003, and shares of MSFT have risen from 55.82 to 57 and is now higher by 0.56% on the day. Certainly responsible for part of the rebound in equities.

 
 
  Steven Price   12/4/02,  2:58:19 PM
Swing Trade Signals
That 8750 resistance level in the Dow failed to keep a lid on the rally the last few minutes. Not sure what is bringing in the bulls here, but the intraday trend is definitely seeing a change. I haven't seen a bounce point yet, but our stop of Dow 8800 on the short signal appears to be in danger. I won't panic and close ahead of time, but traders should be aware of the sudden move to the upside.

Current levels Dow 8793/OEX471.52/SPX 923.80

 
 
  Jeff Bailey   12/4/02,  2:41:10 PM
Day Trader bull .... Looking long Kohls (KSS) $62.30 -3.7% on move ABOVE $62.55, target $64.50, stop just below $62.00.

 
 
  Jeff Bailey   12/4/02,  2:33:44 PM
FedEx (FDX) $53.68 +2.18% ... Jeff: I really enjoy and learn from your index wraps. I've traded FDX to the upside in the past and have done OK, but your comments last night about FDX, ABF and UPS raising prices seems bullish to me for these stocks. FDX is making a nice move considering today's market environment. What does your point and figure charts say?

I meant to look at these stocks, but get busy with other things, but I like your thinking here and scenario that they feel ability to increase prices and could drive top and bottom line growth.

I think I had actually profiled FDX as bullish back in September at that triple-top buy singal and break of trend at $51. The recent column of X from $49-$56 gives us bullish vertical count of $73, wich is about $20 potential reward from current levels and stop below trend at $49 quite attractive reward.

Quick check of Dorsey/Wright and Associates has FDX as "aerospace/airline" group and it is "bull confirmed" at 52%, not nearly as "overbought" as some technology sectors like the semiconductor at 74%.

I like FDX bullish on technicals and SCENARIO of pricing increase and holiday on-line shipping season providing upside fundamental catalysts.

 
 
  Kent Barton   12/4/02,  2:30:24 PM
Adobe Systems (ADBE) $26.45 -1.24: Traders who shorted ADBE when it fell below its 200-dma are sitting on some nice gains. Today's violation of short-term support at $27.00 has opened the door for a test of the 50-dma at $24.50. I'd probably be looking to lock in profits just above psychological support at $25.00.

 
 
  Jonathan Levinson   12/4/02,  2:25:53 PM
I understand Trin Is one of the indications you pay attention closely. If you have wrote in the past about it I have missed it. So would you please educate us in what Trin is and what we are looking for.

The TRINQ is the Nasdaq TRIN. It is a realtime breadth indicator, and I've attached a link that gives a good "clinical" definition of how it's computed. I believe that Leigh has an article on the site about the TRIN, a must-read, though I don't have a link to it. In general, a reading of .75 to 1.25 is neutral. Below .75 indicated bullish pressure, and below .50 is becoming extreme buying pressure. Below .30 and you start waiting for a reversal (ie price on the index will start moving back down). The reverse is true of readings above 1.25- anything above 3 is extreme, and above 4, one starts looking for a bounce in the index. The best strategy is to watch it as one of your live indicators and to develop a feel for it. It can also be charted ($TRINQ), and when compared to the COMPX, the TRINQ shows a good inverse relationship to the index. It is very sensitive, and many prefer to smoothe it by employing a moving average on the chart. Here's that Link

 
 
  Jeff Bailey   12/4/02,  2:19:48 PM
Procter&Gamble (PG) $85.86 +1.62% .... was talking with Kent Barton about stock and pulled up Relative Strength chart of PG versus the SPX. Link

Made note that at RS reading of 96 (see the red B) PG gave RS "sell signal" versus the broader S&P 500 and hints stock loses favor and weaker than SPX.

Can then "flip" to PG chart itself and see current rally comes back to (red B) at $86.00. The reason I'm still bearish PG is that RS is on "sell signal" currently, and I think "old support broken, becomes resistance" in the extension of the bullish support trend near $87, combined with bearish resistance at $89 and uppwer bollinger band of $88 resistance. Technically, stock may have simply gotten a little oversold near-term at base of Bollinger Band yesterday. Link

 
 
  Steven Price   12/4/02,  2:12:05 PM
Swing Trade Signals
Looks like our new resistance is going to be Dow 8750, with the last bounce falling short at 8744. I'm still going to stick with a stop over 8800 and I like the drop back below 8700, indicating that point will not be a signifcant support level. We're not getting any real follow through to the downside today, but the down trend still looks safe.

Current levels are Dow 8691/OEX 466.06/SPX 914/COMP 1418.

The other trend we are seeing once again is the stream of revenue predictions of flat spending in 2003. As we head into warning season, off of a 1700 point Dow rally, with bullish percentages in overbought territory in the Dow, OEX and NDX, and up against bearish resistance in the COMP, the risk still seems higher in long plays, which appear to have a ceiling at the 200-dmas and August high in the Dow, OEX, and SPX. Now that the COMP is back below its August high, it will be interesting to watch for resistance again at that level.

 
 
  Jonathan Levinson   12/4/02,  1:59:08 PM
Question regarding your 13:14 post today.

Don't expect to see much of a move down until selling relents a bit. Not expect to establish new bearish position untl trinq falls under 3.

I expressed it badly. What I meant to say is that the downmove was looking too extended on an intraday basis to allow me to reasonably expect significant downside without an upside correction first. Such correction (intraday) will be evident with the TRINQ below 3, if not lower, and the put to call ratio dropping back into the low .70s. I'm guesstimating these levels, but you see my thinking here. We bounce, then we go lower. If this *is* the bounce and the TRINQ, p/c ratio, and stochastics all return to neutral from overbought, then look out below.

 
 
  Jeff Bailey   12/4/02,  1:56:09 PM
Impax Labs. (IPXL) $4.50 -4.7% ... Hi Jeff, What's your thought on IPXL today?Thanks.

This is a very thinly traded stock I profiled as bullish on Monday for partial positions as BULLISH. IPXL has had rough two sessions and would currently stand pat with bullish positions and stop just under $4.00 as profiled. I will warn here, that on thinly traded small cap stocks like IPXL, trader that places a stop at $3.99 may give target for market maker to simply let stock drift lower, trigger stop, get some liquidity for himself, then take stock back higher.

While IPXL has traded lower past two sessions, so has Drug Index (DRG.X) 306.55 -0.42%, but looking for some technical support from rounding higher 50-day SMA to serve support, have IPXL firming up and rebound from current levels.

I currently hold small bullish position in IPXL stock (I like the longer-term May $5 calls too), but will not round up in position until stock clears $6.50.

 
 
  John Seckinger   12/4/02,  1:55:29 PM
The Dow is now back below its short-term pivot of 8700, but there is a trend line (5-minute) that comes in at 8680. This trend line exists because the last relative low (8665) failed to take out the 8653 level. For bears, a move under this area could be the catalyst for a move back towards the lows. It is definitely encouraging for bears that 8750 was not tested. It is also nice for bears that the Sox is at 331.32 and the intra-day low is just below at 330.11.

 
 
  Jonathan Levinson   12/4/02,  1:54:52 PM
Hi Jonathan. This morning I asked Linda for some gold stock references, but she deferred to you suggesting you were the "expert" in this field. I have been watching XAU and am thinking a contrarian's position may be in order. Your thoughts please.

Flattery will get you all everywhere, though I can't accept the title. Nonetheless, I'm bullish on the HUI, and less so on the XAU because it's loaded with "hedgers". Of course, those hedgers such as ABX and AU and PDG are better known, so they could benefit short term from the recognition in a breakout of gold.

Some traders I know are shorting the XAU here, betting on a pullback. Gold is nearing its 325-330 resistance area, so it's not a bad play. Personally, I prefer to trade the longer trend with my "permanent" long term positions, and my precious metals funds so qualify. My favorite gold stock is GG (G on the TSX). I believe it's optionable as well. Others love Harmony Gold, Durban Roodeport (DROOY), Kinross, Goldfields... I don't follow them all, and so can't recommend them.

 
 
  Linda Piazza   12/4/02,  1:47:31 PM
So far, the COMPX's August highs in the 1427 area (1426.76, to be exact) seem to be capping the upward moves. A look at intraday stochastics shows that 15-minute and shorter intevals are either oversold or nearing oversold, 30-minute is topping out, and 60-minute is still moving up strongly. I often (but not always) find that range-bound or choppy price movements prevail until at least the 30 and 60-minute stochastics move the same direction.

 
 
  Jonathan Levinson   12/4/02,  1:45:42 PM
Good morning Jonathan. You seem to be fairly bullish on gold and I was wondering what you think of silver as well? I read an article that silver to gold is usually a 17/ 1 ratio- normally and at the moment we have a ratio of approx. 70/ 1. Also, do you favor silver/ gold certificates, stocks or psychical silver/ gold? I'm looking for a place that sells silver/ gold- not the radio snake oil salesman guy! I agree with you on the over 330.00 gold price as a place to buy and I'm thinking we could see this sooner than later. That is why I had better get my ducks in a row fairly quickly. Any additional comments would be greatly appreciated. Thanx- Grant

Smart money buys gold, smarter money buys silver... so I've heard. I agree based on the fact that silver has a massive short interest, and it's an aggressive bullish commodities/metals play during what are uncertain financial times. I'm here in Canuckistan, so I use www.kitco.com to buy. If buying as a trade, try paper/certificates/miners. I prefer to diversify with metal and stocks/mutual funds (physical metal). I personally have almost no silver (physically or in "paper" form), other than what's in the precious metals funds I own (CEF.A on TSX, Royal Precious Metals Fund, AGF Precious Metals Fund.)

 
 
  Jeff Bailey   12/4/02,  1:44:15 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  Kent Barton   12/4/02,  1:29:58 PM
GSO.X software index 110.91, -3.40: While the SOX is the largest drag on the NASDAQ today, the GSO isn't looking much better. The index has pulled back to previous resistance at 110. Should this level fail, the GSO could quickly fall towards its 50-dma near 100. Sector bears will be watching for MSFT to break through support in the $56.00 area.

 
 
  John Seckinger   12/4/02,  1:20:48 PM
As the Dow stays between 8700 and 8750, I am already looking forward. ECB meeting, Intel mid-quarter update, Merck conference call, and St. Louis Fed President Poole (non-voter) should all make headlines tomorrow. On Friday, National Semi (NSM) is to report earnings, and a highly-anticipated non-farm report is scheduled to be released. Estimates are for an increase of jobs by 35k versus a 5k contraction the month prior. The unemployment rate should rise to 5.8% from 5.7.

 
 
  Jonathan Levinson   12/4/02,  1:14:06 PM
The COMPX is finally printing some fresh highs, currently at 1427. The TRINQ has fallen very little, and until the selling relents a bit, it will be difficult to expect much of a move down intraday. I would hope to see the TRINQ below 3 before considering a fresh bearish position. Yields as well are still deep red, with FVX down 7.6 bps, and precious metals are marching slowly higher, with HUI +2.26 and XAU +.68. The persistent TRINQ, QQV, yields and metals could be interpreted as the bulls being seriously hobbled today- I'm hoping for a bit of a bounce to buy in on and to give the ensuing move down more strength. The put to call ratio at .85 tends to support this thesis- bearishness is still fairly high- and big intraday downmoves tend to be reversals of bullish sentiment.

 
 
  Steven Price   12/4/02,  12:46:43 PM
Swing Trade Signals
While I certainly would have preferred a straight shot down after initiating the short signal, I am encouraged by the fact that we are running out of steam below yesterday's intraday top. Markets do not steam ahead in one direction and the pattern of lower highs and lower lows is what I will use to gauge adding to the short, or closing it. My initial target will be Dow 8500.

 
 
  Jeff Bailey   12/4/02,  12:39:29 PM
Retail HOLDRS (AMEX:RTH) 75.65 +0.97% .... looks to be benefiting form ISM Services numbers. Despite negative news from Federated Dept. (FD) $31.61 -1.15, this stock recovers from morning lows of $30, where November relative low of $29.08 held support at the open and stock bid from there. Quick check of Home Depot (HD) $26.00 (unch) has my "tail of the snake" holding well.

These intra-day observations still have RTH as bullish sector and might benefit should rotation away from technology continue on thought that IT spending still some time away based on HPQ and JDEC comments.

Looking for confirmation of bullish thoughts in RTH on break of $80 and still like 1/4 or 1/2 bullish positions. Link

 
 
  John Seckinger   12/4/02,  12:39:11 PM
A few days ago it was the 200 DMA's, and now I see a lot of tests of the 22 DMA (exp). Microsoft low at 55.95, while 22 DMA is at 56.01; Dow low at 8653 and 22 DMA at 8645; Nasdaq low at 1412 and 22 DMA at 1414. These are just a few.

 
 
  Jeff Bailey   12/4/02,  12:29:01 PM
Duke Energy (DUK) $19.84 -6.41% .... Yesterday, stock broke above its downward trend on BAR CHART on some volume late in the session. I have feeling that BIG short did some covering late yesterday afternoon.

I think this short shorted the stock on the secondary offering placed at $18.30 and may be making the observation that it is being defended by the underwriter of that secondary. Thinkingthen becomes.... money better placed elsewhere, and will revisit short on some type of multi-session closes on heavy volume below $18.30 that would hint underwrite not able to defend. Link

As such.... I'd look to close out any remaining open puts on DUK from previous profile, free up some cash and let's look for other opportunities right now.

 
 
  Steven Price   12/4/02,  12:15:23 PM
Thanks for all the work and the write up for SSFs. Would you let me know how I can trade it and the expiration date on them is it every month or three month ,Lets say if I want to go long and short on BRCD what should I do. Thanks again. cody

The expiration cycle is monthly for the next four months, although usually the front month will have the most liquidity. You can see a listing of the different products at this link Link . As far as trading these products, you should contact your individual broker to find out whether they offer access and how much the margin and commission requirements will be. The exchange requires 20% margin, but individual brokers may vary.

 
 
  OI Staff   12/4/02,  12:11:15 PM
Java Monitor Beta Testers. A new version of the Java Monitor has been posted to the download link you were given. Please return to the download site and get the new version for your Java Monitor to work correctly. EDITED

 
 
  Linda Piazza   12/4/02,  12:04:19 PM
I agree with Jeff's thoughts in his 11:54 comments. Some of the profit taking in the Nasdaq tech stocks may be exacerbated by the fact that these stocks may have seen some momentum players pile on in the last few weeks. Art Cashin noted something similar about a week ago on CNBC, and I've certainly noted a revival in interest in some of these stocks, if reader questions are any indication.

 
 
  Linda Piazza   12/4/02,  11:59:14 AM
Among NYSE issues, the adv/dec figures have worsened a little in the last hour. About an hour ago, I wrote down a figure of .71 for NYSE issues, and that number currently comes in at .62. Up/down volume for the NYSE is 150/424, also a lower percentage from the 128/276 number I noted about an hour ago. Among Nasdaq issues, the adv/dec numbers have stayed about the same at .42 now and .41 an hour ago. Up/down volume is currently 72/729 on the Nasdaq. This .41/.42 number and nearly 1:10 up/down percentage is consistent with the numbers seen all day yesterday, too, on the Nasdaq.

 
 
  John Seckinger   12/4/02,  11:55:08 AM
As far as upside levels in the Dow, I definitely agree with Steve on 8750 and 8800. Some bids are coming into the 30-year bond, but it is being reported that banks are selling 10 year notes and buying 30 years. Therefore, the correlation of higher bond prices and weaker stocks becomes slighly diluted. Looking elsewhere, the Sox isn't able to rally (down 7% at 331 with an intra-day low of 330), and the dollar is starting to lose some ground. The Dow is back at its short-term pivot of 8700.

 
 
  Jeff Bailey   12/4/02,  11:54:33 AM
Thoughts....... In no way do I think today's or any of the recent economic data is "doom and gloom" and should have me at this point thinking the indexes will take out the October lows.

However... I certainly do NOT think that today's economic data, or recent economic data was strong enough to support the higher stock prices and ESPECIALLY the Bullish % (NASDAQ-100 at 82%?).

I'm getting a lot of subscriber questions about this stock and that stock that are NASDAQ/technology stocks that have gained 100% or more from there lows and wondering why a sharp downside move with no news.

I can't answer all of these, and some actually have no news on them at this point, and may NEVER have any bad news. My thinking here is that theres some SIGNIFICANT profit taking in these types of stocks and RISK is being reduced.

For days... make that weeks, we've talked about the POTENTIAL for this type of action and traders should have planned for it either by legging out of some bullish technology gains, or at least following with tighter stops.

 
 
  Jeff Bailey   12/4/02,  11:42:59 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  Steven Price   12/4/02,  11:36:50 AM
Swing Trade Signals
I think the major upside resistance point on the Dow is now 8800. However, we are seeing some intraday resistance at 8750, which is also that trendline break from yesterday. More conservative traders can consider using 8750 as a stop, but I want to give it a little more room for a lower high to form on a rebound.

 
 
  Steven Price   12/4/02,  11:27:20 AM
Swing Trade Signals
The OEX and SPX are back under that lower low level I've been talking about as a sign of weakness. Those lows came on 11/26 and were 912.10 - SPX and 466.34 - OEX. Current readings are Dow 8667.09/ SPX 910.66/OEX 464.68. The Dow is back to hanging around 8670 after the rebound failed at 8750.

 
 
  Jonathan Levinson   12/4/02,  11:16:51 AM
Qcharts users, you won't believe this Link

 
 
  John Seckinger   12/4/02,  11:12:04 AM
Nasdaq remains under the 1425 level at 1418 (down 2%), but relative strength in the Dow continues to be a problem for bears. Even the dollar is back above its bullish trend line (106) at 106.13 and seems to be helping stocks temporarily. The 30-year (ZB02Z) will have to get back above 110'01 to get equity bears back in play, but it will most likely all start with the Dow, currently lower by 42 points at 8700. Ideally for bears, the Dow closes under 8625.

 
 
  Jonathan Levinson   12/4/02,  11:09:04 AM
GM JL,

I have some qqq Jan 28 puts. I'm thinking of selling December out of the money puts against these.

I am a total newbie at this so please advise. If I sell some December 25 puts for .50, will I only be accountable if the QQQs fall under 25 before expiration or is there something I'm missing.

You've got it, LB. Of course, it's the closing price on op ex day that ultimately determines your responsibility, but I don't like to let it get that far. My own strategy tends to be to hold the longer puts and short the front month puts on dips, then cover on bounces... ie hold the backmonth puts as an "investment" and trade the front month puts more frequently.

 
 
  Steven Price   12/4/02,  11:06:46 AM
Thanks for the great job. I missed the 8660 short and am looking for a higher roll over to enter. Would you still enter at close to 8800 on roll per last night swing trade note.

I'd be looking for a trade back under 8670 for entry. Our entry of 8660 went against us pretty quickly, but found resistance under 8750, which was the ascending trendline that was broken yesterday. That still looks bearish to me, but 8670 was the lower low this morning, which broke the recent trend of higher lows. Another trip back below that level would be my entry point after seeing successive lower lows this morning.

 
 
  Jonathan Levinson   12/4/02,  10:48:56 AM
We are seeing a weak bounce, with gap resistance holding so far, although the TRINQ is still above 4 after dipping into the mid threes at the peak, which coincided with 1427 COMPX. The CBOE put to call ratio opened at .89 and has edged up to .91, which is higher than a bear wants to see. It looks like the bounce might have some extra upside to it, but I'd guess that the top of the opening gap today should keep a lid on it.

 
 
  Linda Piazza   12/4/02,  10:48:23 AM
Concerning my 10:31 post, Dave notes that QCharts shows a 26.21 low for the Q's today, rather than the 26.31 low I'd noted. This 26.21 low matched exactly the August highs, and might be a key level to watch.

 
 
  Linda Piazza   12/4/02,  10:31:48 AM
QQQ: The August peak for the QQQ's occurred at 26.21, if I'm reading my charts correctly. This morning's low so far has been 26.31, showing that perhaps that August high figure is coming into play.

 
 
  Jonathan Levinson   12/4/02,  10:30:00 AM
Recall that the ECB will possibly announce a rate cut tomorrow at their Thursday meeting.

 
 
  Steven Price   12/4/02,  10:25:27 AM
Swing Trade Signals
We got our SHORT entry point on the 1/2 position with the Dow trade of 8660. Current readings are Dow 8667/OEX 464.67/SPX 910.69/COMPX 1414.21. After that bounce at SPX 910, I'm going to wait for a decisive rollover to add to the position. My plan was to do so at 910, which we crossed, but with the bounce, let's wait for the rebound to fail. I'll reassess under the day's lows.

 
 
  Jonathan Levinson   12/4/02,  10:22:54 AM
The fed has announced that it is taking no action, and yesterday's maturing 2.25B repo is now a 2.25B drain.

 
 
  Steven Price   12/4/02,  10:20:00 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the short signal when the Dow traded 8660 at 10:17

Place stops at Dow 8800

 
 
  John Seckinger   12/4/02,  10:16:33 AM
Few quick notes: The dollar has broken a daily bullish trend line, beginning with the lows on November 7th. Moreover, the NDX fell under strong support at 1070 and is now lower by 3%. Additionally, the Sox is down by over 6% and that 38.2% retracement level profiled yesterday is over 40 points higher. The XAU is also higher, and the curve just got a lot steeper. On the positive side, bonds did find price resistance and the Dow is above the 8660 level. I do put a lot of weight in the Dow, which is beginning to trade 'heavy' as I type.

 
 
  Steven Price   12/4/02,  10:12:07 AM
Swing Trade Signals
The failure over 8700 continues to look weak, especially considering the numbers in Jeff's post. If we get any momentum to the downside, we may finally get our short trigger at Dow 8660. After setting a lower low this morning, I can't really see an argument for a play to the long side today, although if we got a Dow bounce over 8800, my arm could probably be twisted. I highly doubt that possibility, but I've seen stranger things.

 
 
  Jeff Bailey   12/4/02,  10:11:52 AM
ISM Services (ISM) for November came in at 57.4% versus consensus of 54%. This is stronger than expected and did seem to give marginal lift to stocks, but doesn't appear to have the "upside" impact that Monday's ISM Manufacturing downside surprise had.

 
 
  Linda Piazza   12/4/02,  10:10:41 AM
November ISM services number was 57.4% versus 53.1% in October. This was a better-than-expected number and the DOW saw an immediate pop over 8700. So far, the pop hasn't lasted.

 
 
  Jeff Bailey   12/4/02,  10:07:35 AM
Factory Orders for November were +1.5%, which was slightly below economists forecast for 1.7% gain. Durable orders increase revised lower to 2.4% from recently reported 2.8%. Non-durable orders were up 0.6%. Not much here for bulls or bears to grab ahold of.

 
 
  John Seckinger   12/4/02,  9:56:19 AM
Bill Gross apparently is on the wire stating that the bull market in bonds is "over." Mr. Gross also mentions that "yieldier" spread products offer better potential. I just hope Mr. Gross has an alert on the 30-year at 111'16 (prices currently at 110'01) that will have him re-think that statement. As it stands right now, bonds did break lower in price over the last few weeks, and is currently at the top of a bearish price channel.

 
 
  Linda Piazza   12/4/02,  9:55:38 AM
At 33.14 as of this writing, the VIX yesterday closed above its simple 200-dma, currently at 31.50, according to Stockcharts.com. This morning, it's moved above the descending trendline that's been capping its movements since October. It's now testing the exponential 200-dma at 33.41. It looks as if more fear is moving back into the markets, at least temporarily.

 
 
  Steven Price   12/4/02,  9:52:00 AM
Swing Trade Signals
Interesting bounce we got after just making lower lows in the OEX/Dow/SPX. I think we look pretty weak below Dow 8700, but I used a trigger of 8660 to make sure we were getting a decisive move underneath those lows. We haven't gotten the trigger yet, but those looking to go short ahead of me can use a failed rebound below 8700 as a possible entry point.

 
 
  Jonathan Levinson   12/4/02,  9:47:19 AM
HUI and XAU are continuing northward, with HUI +2.15 and XAU +1.01. FVX is headed south, down .70, and money is clearly not looking for risk at the moment. We'll be watching what the fed does next- an announcement is due shortly.

 
 
  Jonathan Levinson   12/4/02,  9:41:30 AM
Another 3.73 TRINQ, QQV +1.19 to 46.61. The QQV sure rocks, doesn't it? Like a grunge/skater version of the stately-staid VIX. Many bears have asked me about the TRINQ- normally a +4 reading would have me getting short term bullish. While a high TRINQ reading will have me edgy for a reversal, it's important to preserve a feel for the magnitude of the waves we're reading. The TRINQ is a very sensitive indicator. Look at where we are on the $BPNDX chart. That's a big wave curling over. The TRINQ measures little wavelets. We saw this at the start of the rally, when day after day of sub .20 readings came through. So, think of the TRINQ as a subatomic breadth meter. Watch the BPNDX for a hint of where those sub-atoms are headed.

 
 
  Jeff Bailey   12/4/02,  9:39:52 AM
Brocade Communications (BRCD) $4.77 -8.44% ... notable 52-week low

 
 
  Steven Price   12/4/02,  9:39:14 AM
Swing Trade Signals
We got the lower lows in the OEX and COMPX, with the OEX trading down to 464.48 and the COMPX 1421.66, and we are close to the Dow trigger of 8660 (right now 8663). The SPX is holding just over 910 at 911.70

 
 
  John Seckinger   12/4/02,  9:34:32 AM
With futures near its lows, the bond market (via price action) is at its high. The 30-year is higher by '27 ticks at 110'01 and took out Tuesday's high of 109'27. Both the 22 and 50 DMA (exp) remain above at 110'10. The yield curve is 10 ticks steep (steep means more buying in short-term maturities and usually bearish for stocks), but I would have expected a move near 20 ticks or so. Looking at cash, the spread between 5/10 year notes are 93 basis points (100 basis points is 1%). Equity bears will expect this spead to move out more than 1% in the near term.

 
 
  Jeff Bailey   12/4/02,  9:30:32 AM
Negative Tone in stock futures puts added focus this morning on the 10:00 economic data and ISM Services (consensus 54.0) and Factory Orders (+1.7%), especially considering the higher bullish % data. If negative, could see a very negative response toward equities.

Treasuries are higher, with YIELD lower across the maturities and shows a more defensive market early this morning.

Per last night's Index Trader Wrap, QQQ shorts/puts on break of QQQ $26.75 will most likely see that at the open with QQQ ticking by at $26.63 here. Expect some upside heat should ISM Services and Factory orders come in strong, but feel it would be hard pressed to have the Q's much above $28.00. Will note that the QQQ 21-day SMA is rising at $26.52, so patient bear may want to wait until AFTER ISM and Factory Orders data. Link

 
 
  Steven Price   12/4/02,  9:28:11 AM
Swing Trade Signals
We will go short the broader market when we see a lower low in the Dow. This will come beneath 8670 and I will begin with a 1/2 position short and then add a full position when we get confrirmation with lower lows in the OEX, SPX and COMPX. The pivotal levels are Dow 8670/OEX 466/SPX 910/ COMPX 1440

Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Go SHORT 1/2 position on the broader market with a Dow trade of 8660

 
 
  Jeff Bailey   12/4/02,  9:24:43 AM
The 9:00 AM Intraday Update has been posted. Link

 
 
  Linda Piazza   12/4/02,  9:18:06 AM
Jonathan mentioned the talk of Europe's contracting economy and the interpretation that perhaps the ECB will finally lower rates. I thought it interesting that ECB council member Ernst Welteke told a German newspaper last Friday that the ECB could possibly lower rates if no negative pricing developments occurred before the meeting. If our FOMC members sometimes telegraph their intentions ahead of their meetings, I wondered if that was what Welteke was doing, too.

As of this writing, all European markets were down, and Asian markets closed down. The Nikkei closed down 2.16%. Currently, the FTSE 100 is down 1.27%, the CAC 40 is down .83%, and the DAX is down .54%.

 
 
  Jonathan Levinson   12/4/02,  8:39:21 AM
More talk of Europe's contracting economy, which we should read as "ECB seriously considering cutting rates." For the moment, however, US futures are down on the news, contrary to what we've seen in the past, though gold is up above 321/oz as I type. NDX futures are down 15 and SPX -8.30. QQQ is trading at 26.85, down from its close at 27.17. As an aside, INTC, which was talked up by Dan Niles two days ago, is currently trading at 19.84, down from its close of 20.31. It continues to appear that Mr. Niles managed to bull the stock at its precise, exact top, and hopefully he was very well compensated for doing so- distributing stock isn't easy.

This raises the question of today's action. Will the COMPX continue downward, or will it bounce. I certainly do not expect a straight line down. The 20 day sma will provide support, as bulls target that zone for dip buying, and every other point along the way- for example, see 26.50 QQQ. But, the bullish percent indices are all very extended, and whether you're a bull or a bear, it's unreasonable to expect a launch without a significantly deeper pullback- that, of course, is just my opinion. In short, I'm expecting more downside, a bounce, and then a lot more downside. But, the indicators will be there every step of the way, and there's no need to gaze so far out. There will be a gap down open, and we'll watch for a possible bounce from or near that level.

 
 
  John Seckinger   12/4/02,  5:11:09 AM
The Futures Trader Wrap has been posted: Link

 
 
  Steven Price   12/4/02,  5:10:50 AM
The Swing Trade Game Plan has been posted: Link

 
 
  Jim Brown   12/4/02,  5:10:33 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 

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