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  Jeff Bailey   12/5/02,  8:54:31 PM
Ask the Analyst .... Today, I've received about 20 questions regarding "what expiration and what strike" I would buy in a specific stock or index. I can't answer each one here, but am thinking an article this weekend is warranted.

If subscribers can "beat" the 20-question level with a different topic, I'd like to give subscribers an idea of just how powerful the point and figure charting system can be with this regard.

For your "ask the analyst" topics, please send me an e-mail with "Ask the Analyst" in the subject line of your e-mail!

 
 
  Kent Barton   12/5/02,  4:24:53 PM
INTC ($18.96, -0.78): Trading near $19.35 in after-hours after the company raised its fourth-quarter revenue guidance. It'll be interesting to see if shares can hold these gains during the all-important conference call.

 
 
  Linda Piazza   12/5/02,  4:21:23 PM
VIX: Today was the first time the VIX closed over its exponential 200-dma since November 14. Link

 
 
  Jim Brown   12/5/02,  4:00:04 PM
EXPE & ROOM - These stocks took a significant hit on the UAL news and have not recovered. The profit taking is strong and both have significant gains for traders to take. ROOM has fallen from $75 to $66 in two days. EXPE from $78 to $70.

 
 
  Jeff Bailey   12/5/02,  3:50:07 PM
KB Home (KBH) $42.25 -0.02% .... stock is still on my "bearish trader's watch list". Bear would be rather aggressive as tight stop can be had at $46. Have alert set on q-charts at $41. More cautious bear looking at $41 support back in July and August might take partial position, then look for confirming break at $40. Bearish vertical count is $32 and if hit before this spring, when house shoppers come out of cold winter hibernation, would eagerly cover. Link . Note... Using 50-day SMA Bollinger's on many of the NYSE listed and non-technology stocks. They're more gradual trending and not as volatile as NASDAQ listed stocks.

 
 
  Jeff Bailey   12/5/02,  3:44:22 PM
The 3:15 PM Intraday Update has been posted. Link

 
 
  Jim Brown   12/5/02,  3:43:39 PM
BARZ - It looks like Barra broke down significantly today. The month long support at $34 finally failed and only the 50 DMA at 33.29 stands between it and $26.50. Could be worth setting a short signal at $32.90.

 
 
  Steven Price   12/5/02,  3:41:16 PM
Swing Trade Signals
With the rally failure once again, I don't see a good reason to close the 1/4 short position. We could definitely see a bounce in the morning after the Intel meeting tonight, but if it doesn't take us back over 8800, it may be an opportunity to add to the short position. Readers who do not want to chance the bounce can close tonight ahead of the meeting.

 
 
  John Seckinger   12/5/02,  3:40:36 PM
Note: It has just been reported that UAL is out of the Transportation Average Index and replaced by UPS. Shares of United Parcel are currently higher by 0.17 at 64.08. UAL is down 67% at 1.03. The transportation index is up fractionally at 2351 and showing a little more relative strength than the Dow. Q-charts Ticker, Index:TRAN

 
 
  Linda Piazza   12/5/02,  3:36:25 PM
Reader Question: Is the activity on the CBOE's Most Actives list just the purchase of options or could it be selling as well? Since the MCD $17.50 calls were ITM, can you assume that most of the call action was anticipating the stock to rise?

Response: Great questions! My understanding is that the volumes listed on the CBOE site could be the purchase or the selling of options. My assumption about the MCD calls is the same as yours, especially since it was coupled with a news release today that was viewed as positive.

If you page down the list of most actives, you'll find a number of OTM calls (or puts) showing up for some stocks or indices. My assumption is that the majority of those would be a result of option selling, establishing a bearish (or bullish, in the case of OTM puts) position. If I had been following MCD option trades for days, I could check to see what happened with open interest after a day of high volume. For example, if I knew yesterday's OI in MCD's 17.50 calls (which I don't), I could compare it with today's OI. If open interest increased today by about 4,000 contracts, I'd have further confirmation that most of those calls were bought to open a position.

 
 
  Linda Piazza   12/5/02,  3:18:05 PM
The push up since lunchtime allowed the 30-minute and 60-minute stochastics to pick themselves up far enough that they could turn down again. The 60-minute, in particular, had been pinned to the ground for a while. Actually, this is a good sign for bearish traders into the close, although it's not the final word, of course. I've seen the 60-minute stay oversold for days while price continued to move down (usually when I was holding calls), but sooner or later, that pressure has to release and the stochastics have to move up again. The fact that the pressure was released and these intraday stochastics and prices are moving down again gives bearish traders a little breathing room, but I would certainly assess your account management guidelines as you make decisions ahead of the close and factors that could affect trading tomorrow.

 
 
  Jim Brown   12/5/02,  3:15:07 PM
IBM - is picking up speed to the downside and approaching the low of the day and two week support at $82.50. Is it time to load up on IBM puts again? I think this is fear of Intel more than IBM specific but if that $82.50 level breaks I could see a drop to $78 very quickly.

 
 
  Jim Brown   12/5/02,  3:10:53 PM
NVR - Would somebody please start listing options on this stock. This home builder at $316 makes huge moves and looks like a perfect setup for a short entry but there are no options. Shorting a thinly traded $300 stock that tends to move $6-$12 a day is risky but if that support at $315 breaks it could be a long drop.

 
 
  Jim Brown   12/5/02,  3:07:25 PM
Semi stocks - You think somebody got an advance look? Since I made the post on semi stocks at 2:52 there has been a real downdraft in many of them. The sudden drop at 14:50 was led by several semis. NVLS, KLAC, VARI, MXIM, CCMP, AMAT. It looks like generals are deserting the battlefield just before the final battle.

 
 
  John Seckinger   12/5/02,  3:05:26 PM
Jeff, good lesson on Bullish Percent (P&F). Reading over everyone's post in the last hour is definitely along my train of thought. What is interesting to me is how the yield curve is starting to change. For the last few months, a steeper yield curve (yields widening out between 5 and 10 year maturities) should mean weaker stocks; however, recent mortgage selling has started to pressure the ten year note and have cash flow towards shorter maturities. This is happening when stocks rise, and changing the complexion of the curve. With that said, I will keep an eye on the 30-year only until the dust settles.

 
 
  Jim Brown   12/5/02,  3:01:42 PM
KMB - This is an ugly chart! An OIN reader emailed me that the support had finally broken and how did I feel about a put play now. I think it has farther to fall but I would think the option premiums after today's breakdown would be huge. I would like to get it on a bounce and roll over instead.

 
 
  Jim Brown   12/5/02,  2:57:54 PM
BSTE - is quickly approaching a triple top at 33.25 and a breakout there could setup a foray towards the previous highs around $60. Plenty of resistance levels above but that 33.25 level will be critical. It could be worth setting a buy stop just above it. Check out the PNF chart on this as well. That $33 level is key.

 
 
  Jim Brown   12/5/02,  2:52:28 PM
The semiconductor sector is rebounding and the SOX is very close to resistance at 341. If the Intel news is positive that number should be history. All of the semi equipment companies I checked have been moving up steadily since the 11:30 low. The health care companies are showing life and several biotechs are starting to show some short covering. Just a guess but it appears the oversold conditions are starting to produce signs of a rebound. The signs are very faint and could just be an increase in the patients pulse in anticipation of the electric shock paddles being applied by Intel tonight. There is no real trend change. Just more whipsaw as traders try to read between the candles for a clue to the future.

 
 
  Linda Piazza   12/5/02,  2:46:04 PM
John mentioned the news that McDonald's chairman Jack Greenberg will retire effective at the end of this year, and that MCD shares were moving up on the news. Something interesting shows up in a check of the CBOE site: the McDonald's 17.50 call series was among the most active calls traded yesterday. Here's the link: Link Of course, McDonald's is a big company and perhaps its options could be expected to be heavily traded. Here's a CBOE listing for McDonald's option trades today, and you'll find that total much less than yesterday's volume. Link It makes you think, doesn't it? While I don't enter trades based on what I see on the CBOE site, I do scan it now and then, looking for signs of unusual options activity. It's another resource we options traders can use.

 
 
  Jim Brown   12/5/02,  2:36:05 PM
The McDonalds bounce appears to be fading and the fear of Intel appears to be the weight on the market. With the P/C ratio at 1.00 now and the VIX back up at 35 there is a very good chance that we could see a bounce tomorrow as long as Intel does not disappoint. With everyone now expecting good news from Intel the bar has been raised for their guidance.

We also have that critical nonfarm payroll report in the morning and that could also be making the bulls a little more cautious.

 
 
  Jonathan Levinson   12/5/02,  2:35:14 PM
The latest put to call reading has come in at .99 - still quite high. The TRINQ is at .99, dead neutral, while the TICK.NQ is at -146. This continues to look directionless to me, but that put to call ratio is an obvious indication that downside could be limited. Thanks to Mark for digging up the Qcharts symbol for the realtime put to call ratio (PUTCALL). I'll be watching both.

 
 
  Steven Price   12/5/02,  2:20:58 PM
Swing Trade Signals
The Dow traded up to 8675 on the bounce and has fallen back to 8664. I'm still looking for a test of 8700 and then 8750 if it gets through. If we fail 8700, I'll consider moving up from a 1/4 to a 1/2 position on the short signal.

 
 
  Kent Barton   12/5/02,  2:10:11 PM
Amerada Hess (AHC) $57.15 +0.62: This PremierInvestor long play is approaching our profit-target. The political turmoil in Venezuela has Crude oil futures (cl03f) ticking higher today, leading to a 1.0% gain in AHC. The stock looks poised to trade up to our exit price of $58.50 if short-term resistance at $57.20 gives way. Those with a conservative strategy might want to think about taking some profits if shares roll over from current levels. Traders could also think about scaling into Apache (APA), which has more immediate upside potential. The stock is looking strong today after moving above its 200-dma and resistance at $56.00.

 
 
  Jonathan Levinson   12/5/02,  2:03:54 PM
Bears look out- high p/c ratio of 1.17: Link

 
 
  John Seckinger   12/5/02,  2:01:21 PM
With a few hours until the close, the Dow still remains under 8675 as shares of MCD are now about a dollar lower from it's intra-day high set just a few minutes ago following the news. The bond market is higher by '25 at 110'18 (above both 22 and 50 DMA's) and still giving a bearish reading on equities. Per earlier post, the Sox index never did hit the mentioned trend line at 325 (low of 327) and is now basically unchanged on the session at 335. We should know soon if traders are looking at either bonds or the Sox.

 
 
  Jeff Bailey   12/5/02,  1:43:11 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  Steven Price   12/5/02,  1:38:32 PM
Swing Trade Signals
After breaking back below 8700 this morning, the temporary bounce failed at that level. If it turns out to be the new resistance point, then we will have seen a series of lower highs at 9000, 8800 and 8700, to go along with the lower lows we've seen the last two days. I'd prefer to see resistance at the PnF sell signal of 8650, which we are nearing on the bounce, with the Dow at 8644, but 8700 will also look bearish. The next level to watch above 8700 is 8750, where we saw intraday resistance yesterday.

 
 
  John Seckinger   12/5/02,  1:37:59 PM
There is a report that Chairman and CEO of McDonalds (MCD) Jack Greenberg will retire effective at the end of this year. Shares have moved from 18.00 to 19.20 on the news.

 
 
  Kent Barton   12/5/02,  1:32:36 PM
THQ Inc (THQI) $16.69 -0.60: Shares of this videogame company are heading lower, despite reports of strong sales over the Thanksgiving weekend. The stock is looking pretty weak today after falling below its 50-dma at $17.17. The three-box p-n-f reversal and rolling MACD give technical bears additional ammunition. Also, check out that violation of 110 support on the GSO.X software index. A test of the $15.00 level wouldn't be out of the question for THQI if the sector cotinues to weaken. Bearish entries could be targeted on a rollover from the $17.50 area, near the top of the short-term descending trend of lower highs. Watch out for possible support at $16.00.

 
 
  Jonathan Levinson   12/5/02,  1:24:21 PM
The CBOE put to call ratio has eased off to its last reading of .83. The TRINQ is at 1.42, QQV +1.09, HUI +2.12 to 124.2 and XAU +1.31 to 69.34. I just caught Wolf Blitzer on CNN with a headline of "War is inevitable", with scenes of wargames being played, and I had flashbacks to the open-air Nintendo days of 1990-91. I'll call this a bearish, directionless day with the afternoon so far in a narrow range. The fed drain of 2B isn't significant enough to guarantee direction, and when in doubt, stay out. But if *forced* to choose a side, with the p/c ratio coming back down, I'd be betting bearish here.

 
 
  Jim Brown   12/5/02,  1:13:00 PM
The news that Best Buy and Circuit City had better than expected 3Q results came as a surprise to many. It could be a case of the bar being lowered to a point where anyone could trip over it. The key will be their guidance when they report actual earnings on Dec-17th. This will give them a pretty good chance to look at those 4Q trends and guidance could significantly help or hurt the market. I had quite a few readers send me comments on the lack of retail sales in their areas after my comments in the Tuesday night market wrap. At least 90% were seeing the same trend of limited if any buying. There were a couple hot spots including Seattle and Los Angeles. They were by far the exception. It will be interesting to see how this develops.

 
 
  Jim Brown   12/5/02,  1:05:24 PM
They are definitely fighting to hold the line at 8625 and the A/D volume had stopped falling for the last few minutes but is looking heavy once again. The QQQ was starting to trend up again but it was only a weak effort. The A/D line is about the only thing with an upslope trend at 1:PM. I am only showing two Dow components positive, MRK and EK but the losers are mostly fractional. MMM is the biggest loser at -1.80. IBM barely moved off the flat line at -.62 despite all the news last night. The bulls may be weakening but with plenty of support just below us they will have help when those levels are reached.

 
 
  Jonathan Levinson   12/5/02,  1:04:09 PM
Looks like a messy head and shoulders drawing on the 15 minute COMPX chart.

 
 
  John Seckinger   12/5/02,  12:55:10 PM
With the Dow right at the 8625 level, I start to wonder if traders are just a little nervous (read: slight position squaring) ahead of Intel's mid-quarter update at 5:30 p.m. and the non-farm report due out tomorrow at 8:30 a.m. On Friday, expectations are for an increase of 35k versus a decline of 5k in October. The unemployment rate is expected to rise to 5.8% versus 5.7%. I do like the fact that the Dow hasn't even tested 8650 since hitting 8625. Note: The 30-year (ZB02Z) is right at its 22 and 50 DMA's (110'12), so volatility should start to pick up.

 
 
  Steven Price   12/5/02,  12:28:25 PM
Swing Trade Signals
With the Dow holding over 8600, we could we a bounce after establishing the PnF sell signal at 8650. I'll be looking for it to run out of steam and establish a new resistance level before adding to the 1/4 short position. With the series of lower lows we are now seeing, I believe the ultimate direction is down. However, that doesn't mean we wont get a "ball bouncing down the stairs" scenario. If we can average into the short position on the way down, we are probably best off, limiting risk if we do get a continued rally back to the 9077 range.

 
 
  Steven Price   12/5/02,  12:25:06 PM
Qualcomm (QCOM): $39.32 (-0.66) With the Nasdaq Composite holding over 1400 and QCOM sitting on top of $39, I'm not going to close it just yet. However, I think I'd look for a trip back over $40 and some intraday support there before initiating a long. If we get resistance under $39, then I'd close the long position. So far, the dip under $39 found some buyers.

 
 
  Jim Brown   12/5/02,  12:11:29 PM
The news just keeps getting worse and we are finally reacting to it. The internals are terrible and getting worse. The 11:30 bounce attempt from 8620 is struggling. If the markets are going to recover this is a critical point. This is the bottom uptrend support and a failure here could see a test of 8350-8500. It is a wide range of congestion over the last month. This chart shows that support. Link

I am sure the AMD news is the only thing keeping techs from collapsing completely. If AMD is seeing stronger than expected chip demand then Intel would surely see that demand as well. ANY processor strength from AMD should carry across. This anticipated good news could be keeping the floor under the market at this level.

 
 
  Linda Piazza   12/5/02,  12:04:01 PM
Obviously, today's trading so far has erased the potential for a morning-star formation on the COMPX or DOW. Some readers who are new to candlestick charting wrote to ask about this formation when I mentioned its potential yesterday, and I thought I'd briefly (well, as briefly as possible) describe it. A morning-star formation comes after a decline such as the one we've had this week. It's formed by three candles. The first candle is a red candle, indicating that the market's closing price is lower than the opening price. The second day's candle in this formation is a doji. This candle looks like a cross and is formed when the opening and closing prices are the same or nearly the same, but the market moves above and below those prices during the day. This is a visual representation of the indecision market participants are feeling. Bulls and bears are fighting it out, with neither quite able to win the battle. It's a sign, though, that bulls could be gaining some strength or bears perhaps are not as aggressive. Ideally, the doji forms beneath the previous day's red candle, but this ideal isn't always found. Yesterday's doji was nearly ideal, though, as you can see from the enclosed link. Link Also, ideally, the next day, prices open above the level of the doji and climb all day, forming a white candle. From the chart, it can be seen that prices opened at about the right level, but then fell. For those of you who are bullish this market, the best that could be hoped for is that prices will climb above today's opening, perhaps forming a bullish hammer on a candlestick chart. (A hammer has a long lower shadow and a close at or near the day's high.) I mentioned the potential for a morning-star formation yesterday because I thought that traders might be alert to the possibility that these markets could reverse back up into their ascending channels today. Even if that potential had occurred, I thought the reversal would probably last only as long as it took for markets to hit the top of those channels again or until they finally succumbed to the weightiness that the stochastics have been predicting for a while. A look at the candles just before the end of trading can sometimes help you plan whether to hold onto a trade, hedge it, or add to it!

 
 
  John Seckinger   12/5/02,  12:03:38 PM
Here is an illustration of what I am looking at (Dow, five-minute chart). I hope it helps. Link

 
 
  Jonathan Levinson   12/5/02,  12:03:31 PM
The put to call ratio has risen to .89 as the QQQ and COMPX rise off the lows. Meanwhile, yields are near their lows of the day and QQV is near its high of the day. This is either indicating an intraday bottom nearby, or the beginning of another whoosh downward. The TRINQ is in neutral bear territory at 1.31, well up from its open below .30. The put to call ratio makes me edgy on bearish positions- too much put activity.

 
 
  John Seckinger   12/5/02,  11:41:31 AM
So far, the move lower has been fairly rational. The one-tick new low at 8674 versus relative low set on Wednesday at 2 p.m. before run-up to 8800, then the attempted rally above 8700, and then a fall that used the 8674 level as a pivot. 8650 was hit, congestion, and now the market is digesting the 8625 level. Ideally, a rally should not take the market back above 8674 area. For a nice confirmation, I would like to see the bond market rise from previous level (110'06) to above 110'16. Looking elsewhere, Sox is lower by 2.21% at 328 and will test a tend line at 325 produced from relative highs back in August and November.

 
 
  Jeff Bailey   12/5/02,  11:37:21 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  Steven Price   12/5/02,  11:27:06 AM
Swing Trade Signals
As I stated earlier, I am going with the short 1/4 position because I want to catch a follow through sell-off, but I am aware of the possibility of a bounce after the next lower low, which is a pattern we've seen recently. I will add to the position on a failed rally, possibly at 8700 or 8800. I may also add to the short on a move below 8600, along with the SPX under 900, with resistance at those levels, but I'll assess that risk when we get there.

Current levels are Dow 8618/OEX 461.95/SPX 906.09/ COMP 1413.21. The Dow, SPX and OEX have all taken out yesterday's lows, but the COMP has yet to do so.

 
 
  Steven Price   12/5/02,  11:19:20 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the 1/4 position short entry when the Dow traded 8625 at 11:13.44. Set stops at 8850, with a target on the short of 8500.

 
 
  Jonathan Levinson   12/5/02,  11:13:45 AM
This decline on the COMPX looks like a bullish descending wedge to me, visible on the 5 minute candles.

 
 
  Jonathan Levinson   12/5/02,  11:06:06 AM
I agree with Steven. Declining volume is increasing very gradually on the COMPX, and the TRINQ is staying persistently within bullish neutral territory. The QQV is down a touch and HUI/XAU are also giving back some gains. The CBOE put to call ration opened at .77 and has risen to .85. Too many bears spoil the decline, and it might take yet another bounce to clean some of them out. As I type, however, the TRINQ has risen to .97, which may portend another round of selling.

 
 
  Steven Price   12/5/02,  10:58:52 AM
Swing Trade Signals
Looks like we got the bounce, instead of the follow through after the sell signal. I'm going to wait for that bounce to fail at a previous resistance level and then look for short entry. If the bounce gains speed than I may jump on long for the short ride, before switching teams for what I expect to be a pronounced drop. We got yet another lower low today, and while I was stopped out on the short signal on the rally up to 8800 yesterday, bearish sentiment is still alive and well.

 
 
  John Seckinger   12/5/02,  10:49:18 AM
The Dow has now given a sell signal via P&F analysis (50 Box scale). The minimum (since column of O's still intact) bearish price objective is 8250. There sometimes is a caveat. As a rule of thumb, "the first sell signal in bullish trend can actually be a good buying opportunity." I believe I am quoting Jeff correctly. However, because the bullish percent is so high in the Dow, this rule-of-thumb can be discarded.

 
 
  Steven Price   12/5/02,  10:49:17 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Looks we are getting some follow through here, lets go with a 1/4 short position with a Dow trade of 8625. If the move continues, I don't want to be left watching the car pull away. However, we could still get a bounce, so let's limit the risk with a smaller entry at this level.

Go SHORT a 1/4 position the broader market at Dow 8625

 
 
  Steven Price   12/5/02,  10:46:36 AM
Swing Trade Signals
Got the breakdown under 8650, now let's look for the next resistance level.

 
 
  Jonathan Levinson   12/5/02,  10:44:00 AM
That was a good link for symbols you posted yesterday, thanks. Do you know Q-charts symbols for NYSE and NASDAQ up vol VS down vol ratios?

It's ADVDECV.NY and ADVDECV.NQ at this Link

 
 
  Steven Price   12/5/02,  10:43:16 AM
Swing Trade Signals
The Dow is back under the 8670 mark that was the signal for a lower low yesterday. Let's look at the 8650 PnF sell signal as the next pivot point. If we get a bounce after another new low and the sell signal, then we'll short that bounce when it runs out of steam. If we get resistance under 8650, then we jump on short with a 1/4 to 1/2 position until we cross below 8600.

 
 
  Steven Price   12/5/02,  10:39:56 AM
Do you think this price action and weakness in genz is a good opportunity to go long? Thanks, Carol

Genzyme (GENZ) $34.57 (-0.02) I like the bounce off $34 in GENZ. However, there is also some intraday resistance at $35. Given that support I like long entry on a bounce through $35, with an entry at $35.25

 
 
  Jeff Bailey   12/5/02,  10:35:02 AM
Procter & Gamble (PG) $86.43 +0.34% ... Stock traded $87.50 high, now back $1. I like new bearish positions here. Link

Disclosure ... I currently hold bearish positions in PG Jan $90 puts.

 
 
  Jonathan Levinson   12/5/02,  10:26:08 AM
Stock Traders Almanac says next week's a downer -- worst for NAS, so-so for S&P, in case you hadn't noticed ;-)

Many tanks for the heads-up, Matt. I should have been watching the autographed Stock Traders Almanac that Jim sent me when I won the "pick a play" invitational that Jim put out during the spring, back before I became indentured :)

 
 
  Steven Price   12/5/02,  10:24:03 AM
Swing Trade Signals
8700 failed to provide resistance in the Dow and the next short opportunity may be all the way up at 8800. We are drifting right around that number (8700), but we haven't seen any real selling or buying there.

 
 
  John Seckinger   12/5/02,  10:21:19 AM
I believe it is no coincidence that that Dow posted a one-tick new low (8673.75) under the relative low seen yesterday around 2 p.m. before the run-up over 8800. This area, if penetrated once more, should become pivotal. These are games that traders play; barely taking out a relative low and triggering some resting sell orders in order to trap them for a period of time to see if they can capture a quick profit by getting them to buy shortly thereafter.

 
 
  Linda Piazza   12/5/02,  10:14:23 AM
Jonathan mentioned some of the intermarket relationships that point to more bearishness (gold-related issues rising, bond yields flipping negative) and volume patterns are now reflecting some of the selling, too. From a 2.02 level earlier, the NYSE adv/dec number is now 1.09, and up/down volume now shows more down volume than up volume. On the Nasdaq, the adv/dec number has gone from 1.35 to .96, but there's still more up volume than down volume, by a 129:64 ratio. That ratio is lower than it was earlier, however. These are still fairly neutral numbers, but I'm watching the direction they're taking.

 
 
  Jonathan Levinson   12/5/02,  10:09:23 AM
The fed has just announced a 2B overnight matched sale-purchase agreement, for a net DRAIN of 2B that will be returned to the markets tomorrow. The fed seems to be tightening this week.

 
 
  Jonathan Levinson   12/5/02,  10:07:47 AM
This morning's gap n crap has brought the TRINQ up to .77, which is in neutral bull territory. On the one hand, bears should be wary of a bounce with all that "good" news out there. On the other, if the markets have entered the "good news is bad" phase, then bulls should look out. Bond yields have flipped negative and the QQV has flipped positive, and precious metals? The HUI is already up 1.33 to 123.41 and XAU +.76 to 68.79. The smarter money seems to dumping risk again.

 
 
  Jeff Bailey   12/5/02,  10:06:08 AM
Sector Strength has Airline Index (XAL.X) 42.36 +5.82% and Gold/Silver Index (XAU.X) 68.75 +1.05% as only two sectors showing gains greater than 1%.

$1 box chart of XAU.X shows downward trend at $70, with horizontal resistance below $72. Link

 
 
  Steven Price   12/5/02,  10:01:59 AM
Swing Trade Signals
That breakdown under Dow 8700 had some momentum behind it. Now that we are back under 8700, let's watch that level for resistance on a rebound. With 8815 proving it was resistance yesterday, any sinking market will find successively lower levels of resistance.

 
 
  Linda Piazza   12/5/02,  10:01:18 AM
While the Dow and S&P's might be down (as I type this), early volume patterns are positive on both NYSE and Nasdaq issues. In early trading, the adv/dec number on NYSE issues is 2.02, and up/down volume is 14:7. On the Nasdaq issues, adv/dec is 1.35, and up/down volume is 84:19. Volume patterns can be deceiving in early trading, so I don't let these patterns be my ultimate guide, but when volume patterns are working against the movement in the indices, they do signal a need to be watchful until the volume patterns move in synchrony with the markets.

 
 
  Steven Price   12/5/02,  9:53:33 AM
Swing Trade Signals
After not getting any bounce off this morning's jobs data or rate cut, things look pretty bearish. We are not getting any real momentum, however, and I'm going to wait for an entry point with some beneficial risk/reward. As we learned the last couple of days, new lows have led to increasingly weaker bounces and I'll look for a pivot point Dow 8650/OEX 464/SPX 910 to get a gauge of how we'll react to those levels. If we get a bounce, then we'll go long on that bounce until it runs out of steam and then flip sides. If we get a breakdown with any momentum behind it, then we'll pile on short.

 
 
  Jonathan Levinson   12/5/02,  9:51:48 AM
The COMPX is now at gap support after the first surprise of the day. Let's see if the bulls were setting a bear trap or whether this is going to sink further. TRINQ at .34 is at the low end and signals greater risk for bulls, but it's a sensitive indicator and doesn't need to bounce any time soon.

 
 
  John Seckinger   12/5/02,  9:50:28 AM
Note: There is an article in the Washington Times that suggests the US will declare war on Iraq due to a "material breach" of the recent UN resolution. The article said a declaration will depend on whether Iraq fails to mention in its U.N. report some banned weapons programs identified in U.S. intelligence reports.

 
 
  Jonathan Levinson   12/5/02,  9:42:00 AM
The Fed has a 28 day repo expiring today, and just refunded it in full for a net balance of zero. We are awaiting the shorter term repo announcement and will, of course, keep you posted most expeditiously.

 
 
  Jeff Bailey   12/5/02,  9:39:36 AM
Index Trader Wrap from last this week's comments regarding possibility for upside jobless data and specifically last night's commentary regarding reversal in OEX bullish %. Bearish entry points on rally might be best established in SPX 930, or simply look for SPX to turn red. Those looking for some type of technical trigger may use yesterday's SPX low of 909.51.

 
 
  John Seckinger   12/5/02,  9:38:14 AM
With the Dow performing a "doji" formation yesterday (nicely brought up by Linda in the monitor) and signaling indecision (on solid volume), I believe that bears will most likely wait until Wednesday's low of 8653 is taken out before getting aggressive. The Dow has performed a 'doji' formation three times during this rise (before yesterday), and those lows remain untested. With the bearish divergence still intact on a weekly basis, this low may be the one that fails to hold.

 
 
  Jonathan Levinson   12/5/02,  9:33:16 AM
14 point gap up open on the COMPX to 1444, TRINQ .24, QQV +.96 to 46.67.

 
 
  Jeff Bailey   12/5/02,  9:32:25 AM
The 9:00 AM Intraday Update has been posted. Link

 
 
  Steven Price   12/5/02,  9:27:01 AM
Swing Trade Signals
After the ECB rate cut, and the jobs data, I want to see just how much bounce the market has before choosing a direction. Yesterday's pullback gave us a lower low in the morning in the major indices, but bounced 3 points above the PnF sell signal on the Dow. If we get a rally that does not hold, I'll be looking for short opportunities. However, if we get momentum over Dow 8800, then I'll let it run up into prior resistance before choosing an entry.

 
 
  Jonathan Levinson   12/5/02,  8:52:35 AM
There's news on the tape that UAL is edging ever closer to Chapter 11, as their desired 1.8B federal loan guarantee was denied. The taxpayers can rejoice that their money won't be used to excuse poor management and decisionmaking, but it still bodes ill for UAL and its creditors. Here's more of the story: Link

 
 
  Jonathan Levinson   12/5/02,  8:48:19 AM
The futures are showing us the expected reaction, with NDX +13 and SPX +7.20. The US Dollar Index is showing wide swings on the 15 minute chart, with the index currently printing 106.10, close to flat on the morning. Gold is slightly down in US dollars, and bond yields are in the green with FVX +4.8 bps, TNX +4.7, and TYX +2.5.

 
 
  Jonathan Levinson   12/5/02,  8:05:59 AM
From Bloomberg.com: European Central Bank Cuts Interest Rates by Half a Point to 2.75 Percent - The European Central Bank lowered interest rates for the first time in more than a year as economic growth stalls and inflation recedes.

Link

 
 
  OI Staff   12/5/02,  7:54:45 AM
The Futures Trader Wrap has been posted: Link

 
 
  OI Staff   12/5/02,  7:51:53 AM
The Swing Trade Game Plan has been posted: Link

 
 
  Linda Piazza   12/5/02,  7:50:13 AM
The ECB has just announced a rate cut by one half a percentage point.

 
 
  OI Staff   12/5/02,  7:39:37 AM
Java Monitor Beta Testers!
A new version of the Java Market Monitor has been posted. Please return to the download link you were given to get the new version.

 
 
  OI Staff   12/5/02,  7:36:05 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 
  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%.

 
 

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