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  OI Staff   12/9/02,  5:08:54 PM
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  Jim Brown   12/9/02,  3:58:23 PM
Looks like Santa may be bringing a sack full of coal to many naughty traders if this keeps up. (grin)

  Linda Piazza   12/9/02,  3:56:55 PM
Currently 1370.12, the $COMPX is approaching the 38.2% Fibonacci retracement of the recent rally, mentioned in an earlier post. That number is 1367.

  Jim Brown   12/9/02,  3:54:21 PM
Only 4 Dow components up MO, MRK, JNJ and PG. All defensive consumer or drug stocks. Does that tell you anything? Only 3 stopck in the Naz IDPH, ADRX, ESRX are positive and they are also defensive of sorts.

  John Seckinger   12/9/02,  3:33:43 PM
Note: Dow back under 50 DMA (exp), currently at 8516. Believe me, I would like the Dow to perform another Santa Claus rally from here on in. Then I would not have to be as bearish as I have been over the last week or so. If the Dow gets back above 8700 I am sure I will look at things differently. However, with the Dow now setting another lower low (seven in a row) and lower high (five in a row), it is hard. If the Dow continues to fall, there should be some bulls down near 8350.

  Steven Price   12/9/02,  3:33:38 PM
Swing Trade Signals
So much for Friday's low providing support in the Dow/SPX. We broke down below 8500/895, adding another box to the PnF and removing intraday support over the last two days. I'll be looking for a rebound to enter short, now that the level has been removed. The next support comes at 8350/875 and I'll want an entry that can maximize the play. The last rebound today failed at 8550 and on Friday at 8680. A rollover at 8680 would be preferrable.

  Kent Barton   12/9/02,  3:33:34 PM
The 3:15 PM Intraday Update has been posted. Link

  Jim Brown   12/9/02,  3:32:55 PM
Jim ... you and your team do a fine job! I was at the SuperWalmart in Castle Rock, CO, south of DTC on Sat. after Thanksgiving around 2:00 - and it looked like a SLOW Tuesday afternoon - walked through the check out counters - of which only half were open - with one person in front of me! Incredibly, the same thing happened yesterday, about 1:30! I then drove down I-25 and over C-470 to University into Littleton - zero traffic ....! I was buying dog and cat food ... not contributing to the Xmas bottom line either! I much appreciate your efforts in helping me make money so I can keep up my end of the economy! Laura

Laura, it is a group effort. We will continue to do our part as long as you continue to do yours! Do you need any more dogs? My daughter has a couple too many and she is supporting the veterinary economy weekly! Thanks for the input!

  Jim Brown   12/9/02,  3:29:13 PM
Market outlook Several readers have been asking about 8500. Will it hold. The answer is about to be known. The A/D line is terrible and dropping fast. Declining volume is accelerating at a rapid pace and the futures are close to lows for the day. There is no volume and it appears we are going to see how far under 8500 the bottom really is. If we do break 8500 there is considerable support between 8350 and 8500. We could bounce at any time or simply drift sideways for a week. I would be careful of short plays here despite the negative outlook. With the Dow down for over a week now there may be a turnaround Tuesday in our future.

  Jim Brown   12/9/02,  3:24:06 PM
Hi Jim, I went to Costco (Kirkland, WA) yesterday like I normally do on Sundays. It was soooo empty. Usually devotees (oops...customers) wait outside Costco in droves before it opens. This week, it looked like a ghost town...I went to the checkout and there was only one person in front of me. Normally it would be at least 5. Some weeks earlier, i couldn't even get parking...sales have dropped off. Lots of tech layoffs in the region lately. Maybe that's taking a toll. Also, the unemployment figures from the govt are shady...1 out 4 tech employees is a foreigner (Indian, Chinese, Russian or Canadian)...When those folks get laid off, they don't collect unemployment. So they are the silent minority. The employment rate is closer to 7% than the govt would admit. Raghu

Ah! yes, the silent majority. I totally agree. There is an entire group of unemployed that is not on the rolls during this business cycle. Not only the foreigners but the housewives who were lured out of the house by the Internet bubble and big paychecks who are now unemployed again but do not want to go file for claims because of the requirement to continually apply for some jobs they don't want. I bet your 7% number could even be low.

  Linda Piazza   12/9/02,  3:24:01 PM
Don't look now, but the S&P 500 just dipped below Friday's low of 895.96. Will it be another bounce or a steeper fall?

  Jonathan Levinson   12/9/02,  3:23:25 PM
The COMPX just gapped to 1376 on the 1 minute chart, a new low of the day.

  Jonathan Levinson   12/9/02,  3:20:06 PM
The TRINQ is all over the map, printing almost 1 point swings. Last reading just ticked from 5.02 to 4.17 in a single print. It's either bad data, or some serious volume spikes landing in a small number of stocks. Either way, the COMPX is sputtering along just above 1380.

  Jim Brown   12/9/02,  3:20:04 PM
Jim, Retail update to add on craig's comment - same here at the best buy stores here in Orange County, CA. I went to 2 of them for a big ticket item, it seemed to me that there were people more interested in buying the big ticket items...but again where I live seems like its recession proof. Mercedes Dealers selling Benz' like pancakes! at Newport Beach location...N

Looks like it is up to you to hold up the economy!. I have several notes from readers planning to buy luxury cars in January after the luxury tax expires. What a killer! I paid $6K luxury tax on my Jag two years ago. Glad to see it go!

  Jim Brown   12/9/02,  3:15:58 PM
Jim, Surely traders are not waiting for the Fed meeting tomorrow, I'd have thought they would have dumped this market by now. JF

The Fed meeting is a non-event. They are not going to cut again because they already said they were done. They can't raise rates because the economy is still sick. They should go shopping instead!

  John Seckinger   12/9/02,  3:14:35 PM
The bond market is closed, and the 30-year failed to remain above the 110 level (read: higher bond prices should mean cash is leaving equities). The 110'16 resistance level will remain in place for tomorrow. Looking elsewhere, the XAU almost gave a P&F buy signal at 72 (high of 71.61). The XAU is currently at 70.62. Looking at equities, the Sox is breaking lower once more, the Nasdaq seems to be resting on a cliff; however, the Dow continues to show a little bit of relative strength. In order of importance, I always rate the Dow first.

  Jonathan Levinson   12/9/02,  3:14:22 PM
Perhaps they'll appoint Brad Pitt to succeed Harvey?


  Jim Brown   12/9/02,  3:13:20 PM
Retail Update - Hi Jim, Being the stay-at-home spouse, I do all of the grocery shopping. Last week I put it off until Friday, groan. Man was I surprised when I got a prime parking spot at the Super Wal-Mart. And the parking lot didn't lie, not much traffic inside. Also, the nursery area was packed, packed with overflow items that couldn't be put out yet because of space! Non-scientific and for-what-it-is worth! Lafayette Louisiana, 1/4 million population, regional shopping area. Centered between New Orleans and HoustonJK

I think our non-scientific poll is becoming scientific with so many areas of the country reporting the same results.

  Linda Piazza   12/9/02,  3:07:29 PM
Slightly bearish, although not conclusive, is the fact that (5)(3) hourly stochastics have been rising through the afternoon while the indices consolidated. The indices should have been rising along with the hourly stochastic. Although I'm a fan of stochastics, lately they've had such a tendency to redraw themselves that I sometimes doubt my memory or my eyesight, so I'm letting them alert me to possible trends without ever quite trusting what they're showing me.

  Jim Brown   12/9/02,  2:51:44 PM
Retail Update - Jim, I went into a Best Buy store in Grand Rapids, MI last Friday about 11:00AM. I was surprised at the large number of customers. Doesn't anybody work anymore! There was a queuing line of about 20 people just to get into one of the 8 cashier lines. Most were buying big ticket items. What recession? Craig

You must live in one of the few pockets of strength. The number of reports like this are definitely in the minority. By Best Buy here has been deserted both times I have been there in the last two weeks. Congratulations!

  John Seckinger   12/9/02,  2:47:31 PM
It seemed as though the recent pop in the markets was related to DOW Chemical announcing that the 4th Circuit Court of Appeal in Louisiana has sided with Dow Chemical in a dispute relating to the silicone breast implant trial. This decision reverses the verdict and a trial court ruling that would have applied this preliminary finding to claimants in a class-action lawsuit.

  Jim Brown   12/9/02,  2:44:28 PM
Retail Update - Jim: Our mall was so empty this weekend, my wife was able to walk up and get a picture of my daughter with Santa. Normally, you would have to take a week day off and pray that the wait would be less than a hour. ams

Anyone with kids knows this is the telling factor for mall traffic. I have waited in lines for years to do this and a "walk up" is unheard of. My four kids (31, 28, 24, 23) still get together and go sit on Santa's lap for the holiday group picture and give it to their mother. I will have to check and see if they have done it yet and how their wait was. Parents reading your comments will no longer doubt the light traffic!

  Jonathan Levinson   12/9/02,  2:38:31 PM
The COMPX has put together a whopping 6 point bounce off the lows. The TRINQ has given up 1 point on the move, currently reading 3.92. My phone rang with a bearish friend of mine looking to go long intraday, and all the traders talk I'm hearing is about covering shorts here. If this little bounce is the best that the bulls can put together today, then things could get ugly. Time to watch how the COMPX does from here, but the bounce needs to grow some wings shortly.

  Jim Brown   12/9/02,  2:25:12 PM
Retail Update - Jim, Our Wal-Mart was jumping this weekend, very crowded in Phoenix - DC.

I have gotten several comments about crowded WMT, TGT and Sears stores but they have been very few. I think there is a definite shift to discount stores and it boils down to the old adage again. Location, location, location. Every time I have driven past WMT here in Denver it has been full while malls just a couple blocks away were deserted. Others, like the earlier post, show only moderate shopper traffic. It is going to be interesting when earnings reports begin flowing and post holiday sales are going to be very aggressive.

  John Seckinger   12/9/02,  2:24:52 PM
Do you need some nondrowsy relief from allergies? If so, you might be excited that the price of Claritin will drop by as much as 76% when it is sold without perscription for the first time this week. I have allergies, and will probably get a box myself. Shares of Schering-Plough (SGP) are currently higher by 6.46% at 22.73 on volume of 6.5 million (7.3 million is average for an entire session). Claritin has generated sales of roughly $3 billion, and will be interesting if the added demand will make up for the loss in revenue.

  Jim Brown   12/9/02,  2:17:38 PM
Retail Update - Jim, We were shopping at the local (Clearwater, FL) Sam's Club Sunday afternoon, about 4 PM, and found a good crowd, but not packed. The telling moment came at check out. Most lines had only two to four people waiting, and our check out time was much shorter than normal. Seems like lots of folks not buying much. (Our purchase amounted to $35. Hardly worth the drive.) Keep up the good work, and I like the new MM. JL

  Linda Piazza   12/9/02,  2:17:31 PM
Although I don't daytrade and so don't check Fibonacci retracement levels on an intraday basis, a reader offers this suggestion relating to the use of intraday Fibonacci retracement levels: I've been very successful trading FR ranges both long and short using longer term ranges mentioned in your post and for day trade I found the 10-day, 60-minute FR very reliable. Keep up the great work. Remember to check any suggestions for yourself by either paper trading them until you're confident or by backtesting the probable results, as each of us has a different trading style.

  Jim Brown   12/9/02,  2:13:51 PM
Retail Update - Despite my previous post on Internet shopping there are a couple other points to mention. I have a son age 23. He and a friend are working for UPS during the holidays for extra money. They are drivers helpers on large established routes. When a driver picks up his truck in the morning he calls them if he has a big load. They meet him at an agreed location in uniform and ready to go. They are supposed to bring a sack lunch because busy holiday routes can run nonstop from dawn to well after dark. No time to stop for lunch. NORMALLY!

They have only been working 2-3 hours a day and only 2-3 days a week. The loads have been so light that many days the driver just does the route himself. Anyone familiar with UPS holiday patterns knows this is not the norm.

An interesting side note. My son said 30% or more of the packages they are delivering are from Amazon. Considering the comments I made in my last post it appears those online shoppers that do exist are buying from Amazon. Maybe this year they will turn the corner.

  John Seckinger   12/9/02,  2:12:12 PM
Side note: It looks as though former Goldman Sachs co-chairman Steve Friedman will economic adviser Larry Lindsey. This is not confirmed.

  Steven Price   12/9/02,  2:09:47 PM
Adding my two cents to Jim's last post, I think stores would be quick to point out if they were seeing a shift to on-line sales, rather than just talking about a weak holiday shopping season. Regardless of where the sales come from, same-store sales for many reatailers have been very weak, just a few days after the record setting day after Thanksgiving. I think that big day was a result of the late Thanksgiving and shoppers having one less weekend to complete their lists. I also think retailers will suffer from the short season due to a higher percentage of sales in the last two weeks before Christmas, when discounting becomes more aggressive.

  Steven Price   12/9/02,  1:59:58 PM
Swing Trade Signals
The Dow simply will not give up the 8500 level, but also is getting no bounce. I don't think it's a coincidence that we have stopped the drop right at 8501 once again and failed to rebound the same way we did last week. I'm leaning bearish on a break below that number, but will still wait to see resistance before piling on. 895 is serving as the corresponding level in the SPX. COMP trading 1379, hanging in after a weak rebound just below 1385.

  Jim Brown   12/9/02,  1:59:23 PM
Retail Updates - Jim: I really like your insights about the market and enjoy reading your columns. However, regarding your request for input about mall activity, I think your approach makes an incorrect assumption. Correlating all buying activity with mall activity completely discounts all Internet purchases. Shopping online avoids holiday hassles of driving to a crowded mall, finding a parking spot, waiting on long lines, etc. Besides, there is a much better selection of items on the web. Wishing you and those that you love a happy holiday season! Gary

Gary, I totally agree with the impact of Internet shopping as I am an aggressive web shopper. I looked up everything I was going to buy this year, ran comparisons, checked prices and bought about a dozen items on line. The smallest being a $20 popcorn popper and the largest a $2000 camera. There are very good reasons for shopping online and getting the best selection and best price are key.

However, my wife and I will still make 75% of our purchases in real brick and mortar stores close to home. I actually think our patterns are not the norm. There will be many online shoppers but the vast majority of consumers still are not computer friendly. I did a quick survey of my immediate family and friends, about 44 people that I knew enough about to make a determination. Of those 44 only 6, including myself, have made purchases online for this holiday season. I think my circle is fairly representative of a computer aware group. All but seven have computers at home, all but four use computers at work. However there was a complete lack of trend toward computer shopping. Quite a few, around 15, looked up items and prices but then bought or plan to buy at a retail store. Using the obviously unscientific data above, less than 15% of a computer active group "buy" online. I think this means that measuring the majority of the retail activity by mall sales is still relative.

  Jonathan Levinson   12/9/02,  1:56:15 PM
New lows printing, currently 1378 COMPX, TRINQ 4.8, TICK.NQ -110, QQV +2.88, FVX -6.6 bps.

  John Seckinger   12/9/02,  1:53:53 PM
The Dow did find resistance at the top of the aggressive bearish channel (five-minute chart), and has been riding the top of the channel lower ever since. Bonds are finding a bid as well, with the 30-year just under 110 at 109'27. It appears as though support on the major indices will be tested once more, and there is a chance it doesn't hold this time.

  Linda Piazza   12/9/02,  1:41:03 PM
Earlier on CNBC, Art Cashin mentioned the light volume today. Currently, volume on the NYSE is 6.58 million, in proportions of 130:520 up/down volume, and with an adv/dec figure of .46. On the Nasdaq, current volume is 8.3 million, in proportions of 76:735 up/down volume, with an adv/dec figure of .47. The worsening up/down volume figure on the Nasdaq points to increasing selling. On a contrarian basis, I begin to worry when this proportion approaches 1:10. I'm not predicting a bounce this afternoon, but only watchful for one as several warning signals line up: hourly and daily (5)(3) stochastics showing oversold conditions (although daily [21][3] stochastics are not yet in oversold territory), Jonathan's report of a high $TRINQ, and a disproportionately low up/down volume ratio. Those conditions can persist while more selling ensues, of course.

  Jim Brown   12/9/02,  1:40:31 PM
Retail Updates - Hi Jim, Friday afternoon I went to the 3rd Street Promenade in Santa Monica, a very popular/upscale mall, and it was deserted. It was a beautiful 70 degree plus day and I and my friend from Texas were amazed at how empty it was. We visited Pottery Barn, Armani Exchange, and Restoration Hardware. You could have shot a cannon off in any of them and only taken out sales staff asking if there was something you were looking for. I used to love Restoration Hardware when I first was in one 4-5 years ago but it has become very stale and most of the items they seemed to think would be big holiday hits seem largely unsold. Normally this time of year on a Friday afternoon the place would be packed. K

  Jim Brown   12/9/02,  1:37:52 PM
Retail Updates - I have been getting these updates from all around the country and I am going to post a few here. If you have an observation let me know.

Jim, Just heard about WMT's sales coming in at the low end of expectations last week and I have to tell you we were at the local SuperCenter here in Kansas City on Saturday at about 2-3 PM (primetime for these guys) and we were shocked at the number of empty parking spaces! We had no difficulty at all at finding a parking stall close to the front door. Could not believe it! We shop at this store at least every other Saturday and this was by far the least traffic we have seen there. I don't think this bodes well for the holiday season at all....RHD

  Kent Barton   12/9/02,  1:36:21 PM
Verint Systems (VRNT) $16.76 -1.52: Geez...If it was always this easy we'd all be buying new luxury cars for our family and friends, just like those happy folks in the Lexus commericals. VRNT was added as a short play on PremierInvestor this weekend. The stock hit our entry trigger just after the opening bell, bounced back to resistance at $18.50, and then promptly got spanked for a 13% loss in less than 90 minutes.

Our profit-target at $16.06 at took us out of the play just before shares bounced at $16.00. Traders who are still short should be looking for the $17.00 level to provide resistance. It's also interesting to note that the stock is trading just under the 50-pd MA on the 5-minute chart. This moving average acted as resistance on Friday.

  Steven Price   12/9/02,  1:31:12 PM
The 1:00 PM Intraday Update has been posted. Link

  Jonathan Levinson   12/9/02,  1:30:47 PM
The bounce has retraced, but the TRINQ is very high- 4.91 is a good level to expect some kind of bungy snap. On the other hand, .11 was too, and we never got it during the initial days of the October rally. One way or the other, time frames aside, this is an intense round of selling at this moment. The QQV is still off it's opening highs, currently +2.85 on the day. FVX is at its lows, -4.5 bps. Not a lot for bulls to cheer about, and if the day lows don't hold, it could get much uglier.

  Linda Piazza   12/9/02,  1:02:20 PM
Reader Comment: Thanks for the insight on the Fib retracement levels. However, for what it's worth, I also would refer to the old adage "when in doubt, scope out." You might consider drawing the Fib levels from the Mar'02 HI/Oct'02 LO on the INDU. On a closing basis and daily charts, you will note that the rebound went right up to the 50% level and has now dropped back exactly to the 38% level at 8525.

Response: Thanks for the reminder to look out further, Jeff, for more correlations with current action. For those of you who have never used Fibonacci retracement levels and would like to see how they work, go to stockcharts.com's free service and pull up a chart of a stock or index that interests you. Click on the "Annotate" button at the bottom of the chart. The pop-up chart that appears will have a toolbar across the top. Just to the left of the arrow on that toolbar is a button with a series of lines. This is the Fibonacci retracement tool. Just click on a relative high or low and then drag the cursor to the relative low or high that follows and the Fibonacci levels will display. It's amazing how often you'll find that historical resistance or support lines coincide with a Fibonnacci retracement level.

  Jonathan Levinson   12/9/02,  1:02:06 PM
The TRINQ spiked suddenly, the TICK.NQ ramped positive, and the COMPX is climbing off the lows. It could be a weird buying pattern being met with strong selling, or it could be some of that 7B in fed money finding a place to land. The next hour should be very telling.

  John Seckinger   12/9/02,  12:52:26 PM
The Sox index did hit support at 310, and a bounce from this level could have traders thinking about a short-term double bottom in the Dow at 8500. A five-minute chart of the Dow has a bearish trend line coming in at 8540, but conviction there isn't very strong. Conviction would increase if the 30-year could get over 110; currently higher by '14 ticks at 109'22/32. Note: The NQ02Z also came close to the 1023 support area (low of 1025.50). With most indices hitting support levels, we should get a feeling of strength from the bears' camp very soon (if they let short covering really materialize or bears keep selling every attempted rally and keep all indices near their lows).

  OI Staff   12/9/02,  12:16:30 PM
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  Steven Price   12/9/02,  12:11:47 PM
Swing Trade Signals
We got the break under 900 (currently 898.25) in the SPX and the Dow is still holding over 8500(8530.86). The COMP sell-off continues, currently trading 1381.68. The bounce on Friday was significant, but we may not get the same rally the second time around at those lows. Think:Flat-Basketball bounce. One note is the bounce we've gotten off most PnF boxes and the next PnF box on the Dow is 8500. Those bounces usually roll over and lead to a test of the next box down, 50 points lower, so the trick will be catching the top of the bounce.

  John Seckinger   12/9/02,  12:10:38 PM
What are your thoughts on ITG?

Response: Investment Tech. Group, which provides automated equity trading services to institutional investors and brokers, stated on Monday that their 4Q earnings would fall short of analysts' estimates. Shares are currently lower by 13.41% at 20.79 on heavy volume (third straight day of lower prices and higher than average volume). On a bar chart, everything looks bad. And that is what worries me. When assessing risk, I turn to P&F analysis. The bearish objective is at 14, and its sector (finance) is in Bear correction status with a 54% reading. My trading instints says a bounce upward to 22.50 could be a good put entry. The pivotal level is 20, so would rather a bounce higher first. If 22.50 not hit and shares go under 20, then (if short) tight stops have to be used.

  Linda Piazza   12/9/02,  12:04:40 PM
Just as a reminder, Pring says that most pullbacks retrace 1/3 to 2/3 of the previous advance. Others look at the 38.2 Fibonacci retracement number and expect a retracement between 38.2% and 50%. On Friday, I snapped a Fibonacci retracement tool on the INDU, COMPX and Q's, from their October lows to their recent highs. I came up with these approximate numbers for 38.2% and 50% retracements, respectively: INDU, 8354 and 8136; COMPX, 1367 and 1318; and Q's, 25.40 and 24.34. Notice that today's lows are getting close to a 38.2% retracement on the Q's, which might be a place to watch for a possible bounce, if one is going to occur.

  Linda Piazza   12/9/02,  11:56:10 AM
To add to my 11:07 post about Computer Sciences Corporation, CSC is at 32.00 as of this writing, down 1.20 on the day. While I'm not in favor of stepping in front of falling knives, you might put this on your watch list and see how it behaves as it falls. It's currently on a P&F buy signal. Link

So far, today, it's staying above a couple of uptrend lines, one drawn from the October lows to the November lows, and the other from CSC's breakout point in the middle of October to its November lows. That last and most sustainable trendline coincides with the 50-dma at 30.71, so I would watch to see if that level arrests CSC's fall. A look at the daily chart reveals that accumulation/distribution patterns (bottom of chart) shows that CSC is being accumulated. That pattern does not yet look as positive on weekly charts, however, so this one will go on my watchlist, but I won't yet be attempting any bullish plays on this stock. Link

  Jonathan Levinson   12/9/02,  11:41:46 AM
Intel is now at 17.71, down 5.29% on the day. While I'm not trading INTC, I mention it only for posterity with respect to analyst Dan Niles' bullish words on the stock exactly one week ago. It's been an astounding slide in the stock since then.

  Jonathan Levinson   12/9/02,  11:39:52 AM
Agree with you on further downside for nq, but I see big support on the 60mn chart of nq02z at 1020 (nov 19 low area) (QQQ 25.30 area). I think that is where the initial rebound will take place.

Thanks, Marc- that looks like a pretty reasonable level.

  John Seckinger   12/9/02,  11:39:35 AM
The Dow appears to be heading towards Friday's 8501 level, and weakness in the Sox seems to be providing the catalyst for such a move. Getting back to the five-minute pattern recognition (8575 area), the Dow in theory should continue to come under pressure until the end of the session as long as 8575 remains above. If 8500 is tested, the key will be whether the Dow uses that level as support or resistance.

  Jonathan Levinson   12/9/02,  11:38:45 AM
Bad news for bulls is the TRINQ, which is sticking to the 3 level even as the TICK.NQ worsens (currently -418). Bulls would prefer a spiking TRINQ to call the upside reversal, but so far, breadth is staying pretty even.

  Mark Phillips   12/9/02,  11:23:31 AM
The 11:00 AM Intraday Update has been posted. Link

  Steven Price   12/9/02,  11:18:34 AM
Swing Trade Signals
The slow bleed down in the Nasdaq is continuing, with COMP trading 1390.11 (-32.33). We may see similar action in the DOW 8554/SPX 901.83 /OEX 458.73. However, if we get a bounce, it should be either from SPX 900, or Friday's lows with the Dow bouncing off 8500. Still, there does not seem to be enough conviction to play in either direction right now. My longer term view is still down (going out a couple of weeks to a month), but I am not going to short ahead of a possible bounce in the next couple days.

  Linda Piazza   12/9/02,  11:07:50 AM
I've been trolling the news releases, looking for any good news that might liven the day a bit. After searching for a while this morning, I found a marketwatch.com report that Computer Sciences Corporation (CSC) is experiencing growth in demand for information security and IT support services. They expect this growth to continue through the next year to two years, and expect to increase staff by 400 qualified information security and IT intelligence support specialists.

  Jonathan Levinson   12/9/02,  11:06:43 AM
The TRINQ has perked up to 3.11 on this latest move, but at this rate, the COMPX will have been seriously amputated intraday before the TRINQ makes it to the mid 4's, which is sufficiently extreme to expect an immiment reversal. The TICK.NQ at -257 is bearish, and XAU is flat, with HUI creeping up behind it. QQV is up 2.73, giving up some its gains, which is good news for QQQ bears- an 8 percent spike off the open is extreme, and better to see the index moderating as the COMPX drifts lower. Buying in bonds is accelerating, with FVX -4.2 bps. If not for that large repo for the fed, I'd be thinking that today is a lock for bear positions. But 7B is a lot of potential bids, so caution remains the order of the day.

  Steven Price   12/9/02,  10:54:45 AM
Swing Trade Signals
the COMPX has now traded below Friday's low of the day (1391.10), though is currently finding support on a small bounce (1391.54 (-30.90). It is following the Semiconductor Index (314.38 -16.97), which may test support at 310 and 300. While I expect some type of bounce at those levels, things are getting ugly once again for the techs. We are at one of the pvotal levels I talked about earlier this morning, but have yet to get a look at Friday's lows in the Dow/SPX/OEX.

  John Seckinger   12/9/02,  10:50:01 AM
With the Dow under 8575, let us go over some company specific news. QCOM was downgraded by Solomon to In-line from Outperform, IBM downgraded to "Market Perform" from "buy" at Banc of America, Gateway and HPQ going to furlough workers for the holidays, and Wal-Mart says weekly sales at low end of the range. All companies listed are trading lower.

  Jonathan Levinson   12/9/02,  10:26:05 AM
Precious metals are giving some back today, with HUI -1.13 to 125.31, and XAU -.57 to 70.72. Gold is struggling to hold 325/oz, but after last week's nice run, a bull prefers to see some consolidation at these lofty heights, right below the 330 level that has kept a lid on every gold rally so far.

  Steven Price   12/9/02,  10:22:18 AM
Swing Trade Signals
The Nasdaq Composite just broke 1400 (1399.82). I think a break back below that number is bearish, especially without the spike-down momentum that broke the level on Friday morning. Still, I'd like to see the Friday lows tested in the other broader indices before choosing direction.

  Linda Piazza   12/9/02,  10:21:51 AM
In early trading, volume patterns support bearish positions, with adv/dec figures at .60 for NYSE issues and .55 for Nasdaq issues, and with up/down volume at 35:81 for the NYSE and 42:151 for the Nasdaq. I'm remaining watchful of those hourly and (5)(3) daily stochastics showing the possibility for a bounce, though, particularly since Jonathan's mention of the $7B overnight repo. As Jonathan has mentioned before, that money can be channeled into bonds as well as equities, of course.

  Steven Price   12/9/02,  10:16:46 AM
Semiconductor Index (SOX): 318.80 (-12.55) The SOX set yet another relative low this morning, in spite of the news Jim mentioned earlier about the sales increase at Taiwan Semiconductor. Friday's low of 322 is a memory, but let's look for some resistance in the 330 area, on a bounce, before jumping in short. 329 served as previous resistance, and has been closing support the last couple of days. We've seen a 70+ point sell-off in the last week, so I'd be careful about shorting before a bounce, which I would expect to come at 310, or 300, which are previous support levels.

  Jonathan Levinson   12/9/02,  10:14:10 AM
1400 COMPX looks more like "round number support" than anything more significant, but only time will tell. The TRINQ at 2.29 shows decent but not extreme selling pressure, and the QQV +3.16 on the day continues to be a very large spike in volatility. Looks like at least some market participants are taking notice of the spooky news that has become commonplace during the past week. Yields are down, but not by that much, with FVX -3.7 bps. Evidently it's the NDX options market that's the most worried- the VXN (COMPX volatility index) is up, but not nearly as much.

  John Seckinger   12/9/02,  10:10:57 AM
Pattern Recognition: The 50% retracement of today's range is now at 8599, which was the high during the rebound a few minutes ago. Moreover, the low during the first five minutes of trading was 8575. If things are going to get ugly, the 8575 level should now act as resistance and 8599 should not be penetrated for the remainder of the session. If 8600 is taken out, then look for a test of the unchanged area near 8643.

  Jonathan Levinson   12/9/02,  10:03:06 AM
The Fed has just announced an overnight repo of 7B. With no expiries today, that's a pretty substantial net addition, and could be used to put a bid under equities. Bears should keep it in mind and proceed cautiously.

  Steven Price   12/9/02,  9:51:08 AM
Swing Trade Signals
So far we got a bounce above SPX 900 and COMP 1400, but no significant comparable levels in the Dow and OEX (460 was broken briefly). Not much follow through however, so I'm sidelined until I see something worthy developing. The above support failed on Friday morning, so I'd need need to see somehting more convincinvg to go long here.

  John Seckinger   12/9/02,  9:49:27 AM
One sector that could help pressure the major indices is the Sox, lower by 2.68% at 322 and currently on support. If this area fails, support underneath is felt near 310. If current levels do hold the recent selling, there is not much resistance above until 340.

  Linda Piazza   12/9/02,  9:46:38 AM
The 9:00 AM Intraday Update has been posted. Link

  John Seckinger   12/9/02,  9:33:54 AM
The 30-year is both in the middle of a long-term wedge pattern and at a 50% retracement level from the low on October 22nd (106'13) to the high on November 12th at 112'14. Currently higher by 5 ticks at 109'11, the contract is above both its 22 and 50 DMA's (109'05). Resistance is seen at 110, and a trade at 110 might have traders selling bonds and buying stocks on a temporary basis. Note: On a candlestick basis, the Dow, Nasdaq, and S&P 500 all shown a bearish engulfing pattern.

  Jonathan Levinson   12/9/02,  9:31:33 AM
12 point gap down open to COMPX 1410. TRINQ 1.49, QQV +3.71 to 47.44. BIG spike in NDX volatility!

  Jonathan Levinson   12/9/02,  9:27:47 AM
How do you feel about IBM this morning?

Overall, glad I'm not long on it. It's looking to open around 81, where it's currently trading on Island ECN. This is at a fairly significant support level, visible on the daily charts. Ultimately, whether it holds or not is going to be a function of the broader market, and I would be purchasing extra time on put contracts - no need to bet on IBM to tank within the next 10 trading days. While the 5 day stochastic is oversold and bouncing, the 5 week stoch is in a full bear roll- so, I expect some turbulence and possible bounces, but the strength of those bounces will determine how long it takes the weekly selling pressure to do its work.

  Steven Price   12/9/02,  9:23:07 AM
Swing Trade Signals
I'm going to let the opening dip shake out, with an eye on Friday's lows as pivotal points. Those levels are Dow 8501.96/OEX 455.94/SPX 895.96/COMP 1391.10. Because we hit those levels only briefly, I'd like a second look before deciding to play a bounce or short a breakdown. With bullish percentages still high, we are getting bounces off every new low, so if we break down with no bounce, I'll look for resistance at those levels before shorting. If we get another rally later today, I'm looking at Dow 8680 or 8800 as possible shorting opportunities.

  Linda Piazza   12/9/02,  9:07:29 AM
The Nikkei fell .4% in Monday's trading, on news that machinery orders fell 4.1% in November after having risen 12.7% in October. Expectations had been for a fall of 3.5%. Some people speculate that Japan may be headed for yet-another recession, even though GDP numbers, also released during Monday's trading, were reported at .8%, slightly higher than the expected .7%. A Bloomberg News survey concluded that a Bank of Japan business confidence report due on Friday will show that a majority of companies are pessimistic about their prospects.

European markets are also down today, with the FTSE 100 down 1.08%, the CAC 40 down 1.20%, and the DAX down 2.17%, as of this writing. The German DAX may be particularly hard hit because of a report that industrial production decreased 2.1% rather than rising, as was expected.

  Jonathan Levinson   12/9/02,  8:52:02 AM
The US Dollar Index has given up 1 full point and is currently trading in the 105.20 area. Gold briefly dipped below 325/oz but is back above it, while the futures are down, NDX -13 and SPX -8. In case anyone could have missed it, UAL has filed for bankruptcy, the largest in airline history. Treasury bond yields are flat so far.

  Jim Brown   12/9/02,  3:36:01 AM
Taiwan Semiconductor - Said net sales rose +32% in November because of sustained seasonal demand for computer chips and communications products. They said there was only a -4.3% drop from October instead of the expected -15% to -20% drop. They affirmed guidance for the 4Q and said capacity utilization would be around 60%. Rumors were calling a large part of the gains from QCOM orders for the new faster phones. TSM declined comment on the report. This could be what is pulling the Nasdaq futures back from the brink after the Snow announcement.

  Jim Brown   12/9/02,  3:29:31 AM
Looks Like Snow in Washington - The dollar fell overseas and futures ticked down sharply after it was announced that CSX Corp Chairman John Snow would take over the job of U.S. Treasury Secretary. This was a very surprising move by the Bush administration to bring somebody in from the outside. At least he is not a complete newcomer as he served as Assistant Secretary and General Counsel of the Transportation Dept during the Ford administration and is the former chairman of the Business Roundtable.

Just like the markets rallied on the news O'Neill was leaving they may now weaken on news that a financial outsider is taking over a very crucial post.

  OI Staff   12/9/02,  2:52:08 AM
Java Monitor - We have achieved a level of stability on the new Java monitor and have implemented a new round of changes over the weekend. We would like anyone else that is interested to download it today to finish the testing with the maximum load. If you are interested in helping with what we hope is the final test please go to this link and follow the instructions. Click Here: Link

  Steven Price   12/9/02,  2:51:05 AM
The Swing Trade Game Plan has been posted: Link

  John Seckinger   12/9/02,  2:47:23 AM
The Futures Trader Wrap has been posted: Link

  Jim Brown   12/9/02,  2:46:43 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link


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