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  Jim Brown   12/10/02,  3:59:48 PM
The advancing volume has accelerated significantly in the last hour and the A/D line has gained about +1000 issues. It appears a fairly strong buy program triggered at 3:15 and buy stops are being run. With the week long Dow slump there is a good possibility that this will carry over tomorrow but I would be very concerned about the SPX between 915-925 which is a potential roll over point. The bounce is overdue and it could bring traders off the sidewalks just in time to be hit by the next support test. I see the Dow 50DMA at 8365, 100DMA at 8388, 38% Fib at 8344. That makes 8350 my target before Christmas week and any bounce today and tomorrow is just taking the pressure off to allow this retest. I would load up on longs on any rebound from under 8400 if we actually get that dip. That is still an "IF" today.

  Jonathan Levinson   12/10/02,  3:43:40 PM
Eruption on the SPX/OEX, but the COMPX and NDX are lagging- a rare event these past few months.

  Jeff Bailey   12/10/02,  3:38:25 PM
The 3:15 PM Intraday Update has been posted. Link

  John Seckinger   12/10/02,  3:29:38 PM
Note: There are no economic reports tomorrow; however, Retail Sales, Initial Claims, and the FOMC minutes (November 6th) are set to be released on Thursday. Retail Sales consensus estimates is for an 0.4% increase, versus an unchanged reading in October. November Retail Sales, Ex-autos, is expected to come in at +0.2% versus +0.7%. Looking at the Dow, a five-minute chart shows a H&S formation with a right shoulder possibly now forming at 8534. This is just me thinking out loud, and it is my opinion that most H&S formations on short-term timeframes do not work. Just something to keep an eye on.

  Linda Piazza   12/10/02,  3:15:31 PM
In my 14:40 post, I neglected to mention that I'm using a (5)(3) setting for those 60-minute stochastics. Other intervals may be showing something different on the stochastics. Although the (5)(3) setting is jumpy and sometimes gives false signals, it also gives quicker warnings of changes in trend. Since I make trading decisions based on price action and not the stochastics, I like having more advanced warning, even if that warning doesn't pan out, but those of you making trading decisions using stochastic signals might want to experiment with different intervals.

  Jonathan Levinson   12/10/02,  3:12:35 PM
The image of Al Green in a Sandy Claus suit circling the sky amid a snowstorm of greenbacks might well cause horrific nightmares tonight. I'll blame it on you, Jim...

  Jonathan Levinson   12/10/02,  3:10:14 PM
The COMPX is finally showing some red and is below 1390. The TRINQ is still in low territory at .33. However, as mentioned earlier, the 60 minute 5(3) stoch became a lot less oversold during the extended narrow range near the day highs, and this buys bulls a lot more runway for a possible launch. The put to call ratio has come down somewhat to .82, with a recent intraday low of .80, but that's really not low enough to allow bears to call a midterm top- not like if it were below .65, for instance. The ADVDECV line on Qcharts (difference between advancing volume and declining volume) finally began to rollover, concomittant (sp?) with the break below 1390. This confirmation in volume adds credence to the rollover, but we're less that 5 points from the afternoon's range, and I don't want to make too much of it.

  Jim Brown   12/10/02,  3:07:55 PM
What were they expecting? With the point bleed after the Fed announcement it makes you wonder what traders were expecting. They already said there would be no further cuts and nobody expected a hike. Greenspan had been very specific about the "soft patch." The current sell the news event looks like many were either expecting another rate cut out of the blue or a statement that the GDP was going to be 5% next quarter. Neither was a possibility. You wonder if traders were expecting the announcement to be made by Greenspan in a Santa suit.

  Jeff Bailey   12/10/02,  2:58:08 PM
Boeing / General Dynamics Both Boeing (BA) $32.35 -0.15% and General Dynamics (GD) $79.94 -0.19% marginally lower despite the U.S. Court of Federal Claims issuing a stay of its August 2001 decision in the long-drawn out A-12 aircraft case. Court rules that the immediate collection of $2.3 billion from BA and GD in not in the nation's best interest and that both companies have raised substantial issues in the appeals process.

On December 2nd, the Department of Defense told BA and GD that it was going to deduct $2.3 billion from payments owed due the companies for work previously performed on variou military programs, with equal weighted $66 million per company over the next 18 months. GD issued a stay of these collections through the courts, with hearings set for January 9th.

  Linda Piazza   12/10/02,  2:40:36 PM
On the COMPX and NDX, hourly stochastics are in a full roll, with both the fast and slow lines turning over. That's not yet true of the DJI and the S&P's, although the hourly stochastics are certainly beginning to tip over.

  John Seckinger   12/10/02,  2:40:05 PM
The equity markets appear just a tad heavy right now; however, no technical damage so all is well for longs. The Sox is above 320 at 323, but bonds haven't sold off and decided to believe in today's upswing just yet. The yield curve is also showing absolutely no signs of movement. Note: If the Dow closes here, it will be yet another day of lower lows and lower highs.

  Jeff Bailey   12/10/02,  2:26:38 PM
Good observation, but helps trader understand risk Jeff: 1) Do you recalulate the vertical count after each additional buy/sell signal or maintain the original one generated when entering the position initially. It appears that sometimes vertical counts are surpassed as new columns are formed in a continued trend.

2) Some of the swings are quite large without generating reverse signals, I'm sure this will be tough to sit through. I haven't seen any rules for closing a position in P&F - Is it trend line breaking, or BP or full analysis of all indicators. I guess I just answered my own question - but how about your view.

Answer #1: No, the vertical count, stays in place until a NEGATING sell signal (on a bullish count) or buy singal (on a bearish count) is found on the point and figure chart. You are correct in your observation that some bullish/bearish counts are exceeded, and that is when Professor Davis' study can come in handy. (see bottom of 08/30/02 09:00 Update) Link

Answer #2: Yes, some swings are quite "large," but not necessarily so to the institutional fund manager holding a position, or one that is building a position. Institutions don't chase stocks unless there is some "super" catalyst present that will have extremene meaningful impact on stock over next 6 months. As to your question on "rules" for closing a trade. "Risk" in a trade should first be monitored to a "sell/buy signal" and then to trend. For example, if looking at a bullish trade, then where would first sell signal be given? If sell signal is generated, what then becomes my "risk" to trend? Then measure that "risk" against "reward" target from bullish vertical count, technical resistance or Professor Davis' study. Question: Is there enough reward at current levels to have me the trader assuming the risk to a "sell signal?" If answer is no, the trade position cut down, or no trade taken.

  Steven Price   12/10/02,  2:26:18 PM
Swing Trade Signals
While we are simply getting a slow bleed higher, I like the move above yesterday's intraday resistance in the Dow at 8550, as well as the move over 900 in the SPX. I plan on holding the 1/2 long signal overnight. Current levels Dow 8535/SPX 900.23/OEX 458.30/COMP 1392.40

  Jim Brown   12/10/02,  2:19:31 PM
Retail Updates - I had dinner with my son who is currently working as a UPS helper. We were talking about the number of Amazon packages and he confirmed that Amazon was still the number one delivery. He also said Lands End was a very close second with Omaha Steaks third. He is going to do a package count this week to get the exact numbers.

The Lands End connection was a surprise. Since LE was bought out by Sears that brings up a possible surprise by Sears which has been trading down since early June. Now at $25 and near the lows for the year a positive surprise could turn this stock around in the long term. I am not suggesting a trading play on Sears but I do think any dip back to $23-$24 would be an excellent point to go long with stock, call options, leaps or naked puts. I will have the numbers on the packages later this week.

  Jeff Bailey   12/10/02,  2:13:48 PM
No Change in Interest Rates Fed keeps rates unchanged at 1.25%. No surprises here. Fed funds futures (ff02z) have been pegged near 98.75 since last FOMC decision.

  Kent Barton   12/10/02,  1:51:46 PM
Reader question: I was interested in possibly playing the TEVA split play you mentioned in the Market Monitor a couple weeks ago. Are you still positive on it? I was thinking I would wait after its initial pop that day to see if it came down further and possibly buy calls later this month or even early January and hope for a run-up to the split. What do you think? I would want to assess the market and sector at the time of purchase as well. Ken

Response: Teva Pharmaceutical (TEVA) ($38.45 -0.14) announced a 2-for-1 stock split on November 25th. According to the press release, the additional shares were to be distributed "on or about Jan. 15" to shareholders of record on Dec. 10. Thus, you wouldn't expect the split to occur until mid-January. But as you can see from the quote, it's already trading on a split-adjusted basis! Why the company decided to do this before the distribution date is unclear. It may be related to the fact that TEVA is an ADR that is also traded on the Israeli exchange.

Although the possibility of a playing a split-run has been rendered moot, shareholders can be encouraged that TEVA has held within a couple points of its all-time highs. But as far as finding potential action points, the stock is sort of in a "no-man's land" right now. Resistance looms overhead at $40.00, while the 50-dma ($36.25) offers potential support. The $38.00 area also has acted as support on a short-term basis. However, TEVA will have a tough time holding this level if we don't see some leadership from the pharmaceutical index. Sector bulls will be watching for the DRG.X to hold above its 50-dma and move back towards the relative highs near 320. If this turns out to be the case, TEVA will have a good shot at breaking above its all-time high of $40.17.

  John Seckinger   12/10/02,  1:49:39 PM
The Sox index continues to remain volatile, trading higher on Tuesday by 5.56% at 324.74. Shorter timeframes shows support at 320.50 level, while resistance seems apparent at 330 on almost all chart periods. Note: The Sox was at 393 on December 2nd, and a 38.2% retracement of the recent decline comes in at 340. It would be impressive if the Sox reached 340 during trading today.

  Jim Brown   12/10/02,  1:37:25 PM
Things are finally looking up for the markets. After a long week of very negative action they were unable to push them lower this morning and it looks like the bargain hunters are beginning to nibble at stocks. The Fed is not likely to say anything negative since talking down the markets would be contrary to their 50 point cut at the last meeting. They are likely to say the risks are balanced and the recovery is underway but still sluggish. I would like to think the recent profit taking is over for a couple days but we never hit any significant support levels on the retracement. This sets up a bounce now and a deeper dip over the next 5-7 trading days culminating in a rebound for Christmas week if historical trends remain steady.

  Jonathan Levinson   12/10/02,  1:27:46 PM
If this market starts to slide before the announcement, it may keep right on going to 8300. They have not been able to push it up all day, even with it being oversold.

Yes, Fabes, it's not looking good so far. I'll look at it through the COMPX, which I'm following closely. Given the 1 point range of the past hour, it's not tough. The 60 minute 5(3) stoch has given a bearish cross, but the TRINQ is still far too low at .29 for a big launch north from here. On the other hahd, there's enough put buying (p/c ratio .88, in this range all day) to put some kind of a floor under the market- I'd prefer to see much less put buying before predicting a plunge. In all, we still have good conditions for a continued flatline.

  Jeff Bailey   12/10/02,  1:27:24 PM
The 1:00 PM Intraday Update has been posted. Link

  John Seckinger   12/10/02,  12:55:35 PM
It is interesting how the 30-year (ZB03H) took out yesterday's high by one-tick and tried to make it seem like 110'16 would happen without much energy (read: lower yields and weak stocks). The same thing happened with the Dow under 8480. On the flip side, the SPX traded just above 900 and the Dow took out 8535 by only a few points, only to reverse lower. So, which one was a trap? A move back under 8490 in the Dow and above 110'06 in the 30-year would give the impression of a little more selling in the works. However, if bonds come under more pressure and 8535 is taken out once more in the Dow, assets should continue to flow out of bonds and into stocks on a short-term basis. Longs will then most likely defend the lows in the Dow set today.

  John Seckinger   12/10/02,  12:38:07 PM
I kept Jeff on the phone a little too long, but there is always a lot to cover (read: sector rotation, etc.). It is interesting how the XAU contract came so close to the P&F buy signal at 72, only to reverse and trade as low as 68.49 on Tuesday. It seems to be partially related to a nice bid in the dollar, currently trading outside the last two day's ranges and higher by 0.25 at 105.49. It will be interesting to see if a weak XAU helps long equity investors.

  Jonathan Levinson   12/10/02,  12:30:21 PM
QQQ uptrend broke at around 27. Would you consider that a likely target for now? About .50 above 21 DMA.

I'd be watching the 21 dma at 26.51 first. If it can break that, then there's good possibility for a retest of the trendline. But the 21 DMA should see a battle, and there's resistance first at 26.30, which acted as short term support on the way down.

  Jonathan Levinson   12/10/02,  12:27:36 PM
We can see the COMPX struggling with the Dec 6 support line, now resistance, in the 1395 area. Will it fail or break through? The QQV is down modestly, just 1.02 on the day, while the TRINQ is low verging on extreme at .28. The 60 minute 5(3) stochastic is topped out and curling over, but no bearish cross. Yields offer no guidance, still flat on the day, and only the metals are really selling off so far from the top of their year's range. It's going to take some strong buying to power the COMPX up from these levels. The better chance for a breakthrough will be either following a shallow pullback, or perhaps just the passage of a few hours at the present level to allow the various indicators to moderate themselves. If we see the TRINQ rise and the 60 minute stoch come back down without a corresponding drop in price to the day's lows, the bulls might be able to see their wish granted.

  Steven Price   12/10/02,  11:57:09 AM
Stop of 8250? Wow! Do I read that correctly? Please advise at your earliest convenience! R. A.

There is significant support at 8300 and I put on a half position at this level to start getting long on a bounce from the current level, or even as low as the 8300-8400 range. We have seen some tremendous trading ranges and been stopped out one day ahead of a profit by leaving stops too tight. Traders uncomfortable with this wide of a stop can stay away from this entry, but I'd like to give it some more room to build a bit of a base. We are heading into a traditionally bullish time of the year, so after a sell-off 6 of the last 7 sessions, we may get some bouncing around in here before a move up toward 8800.

  Linda Piazza   12/10/02,  11:51:41 AM
Reader Question: What do you think of CRAY?

Response:First of all, I'm thinking, "Where was I when this was $4.00?"

Second, although this is on a P&F buy signal, it looks overextended on the short-term, and that look is supported by stochastics, both (5)(3) and (21)(3), which are pointed down. The (5)(3) had been showing bearish divergence before the price turned down. In addition, the P&F chart had shown the 7.5 level to be long-term resistance, so a pullback would be natural and expected at that level.

On the daily charts, the pattern actually looks like a rounding top. There's some measuring ability in these rounding top formations. Measuring from the top of the formation, just over 7, to the bottom, you can measure the distance and then measure a similar distance down below the bottom (on a log chart) to get the target. The problem with these formations is in knowing what's the bottom. On CRAY's chart, is it 6.4, where it broke through its consolidation pattern? Is it 6? I usually look at volume patterns to tell me, as volume should pick up as the pattern is completed to the downside. That's not happening with CRAY, which alerts me that although this looks as if it's a rounding top pattern, and CRAY certainly looks overextended, and stochastics are predicting that it's overextended, it may not meet its downside target.

To give me further clues, I looked at the weekly chart. Link Here we see a big rounding bottom formation. If you look to the right side of the chart, you see a spike in volume, too, confirming that push upward as should be seen in a rounding bottom formation. If you look at the bottom of the chart, I've included an accumulation/distribution chart. It shows that CRAY has been accumulated. The accumulation line has moved strongly above its MA, though, so a pullback is expected and natural here, too, as long as the MA remains slanting up and there's no bearish crossover of the accumulation/distribution line. A target is easier to establish with this rounding bottom formation, because the volume pickup is telling me that the 7.50 level is the appropriate level as the lip of the formation. That gives an upside target of about 13.50. (7.50 lip - 1.50 bottom = 6. Add 6 to 7.50 = 13.50.)

However, the rounding bottom formation hasn't yet been completed. It's going to require a push above that 7.50 level, and I'd want to see it push above it on strong volume, too. Weekly stochastics are pointing to a pullback or consolidation, as is the weekly RSI, confirming the need for a pullback seen on the daily chart. Remember that it's often more important to watch the patterns and trends on RSI than it is to watch the empirical number the line has reached. Notice that pattern of higher lows on the weekly RSI? I'd want to see that maintained on any pullback.

My verdict: Cray is overextended on the short-term, but since it's on a P&F buy signal and since weekly volume is confirming the potential for completion of a rounding bottom formation, I wouldn't be shorting or buying puts unless I was quick on the trigger. I don't tend to trade against trend, so this wouldn't be my choice. If a pullback were on light volume, if the weekly RSI maintained that pattern of rising lows, and if there wasn't a bearish cross of the accumulation/distribution line down over its MA, I'd consider going long on a pullback and bounce from the 10-week MA at 5.94 or the 50-dma at 5.40 or on a breakout over 7.50 on strong volume. If the pullback is too deep or on too strong of volume, I'd reassess.

If you buy on a pullback below 7.50, expect resistance again when that level is approached. If you buy on a break out over that 7.50 level, CRAY is going to face more resistance soon, though, and I'd expect another pullback ahead of that original P&F target around 9.75 and the psychological resistance expected at 10.00. Plan your option purchases to incorporate the idea that there might be consolidations in those areas.

  Steven Price   12/10/02,  11:33:14 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggerd on the long 1/2 position entry when the Dow traded 8530 at 11:32:40

  Steven Price   12/10/02,  11:30:34 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Per my last entry, let's enter long on a 1/2 position on a move above the high of the day, with an entry of 8525 in the Dow. If we get that bounce from here, after giving up more than 500 points in the last week, I'd like to participate. I'll consider adding to the long if we get a drop into the 8300-8400 range.

Go long a 1/2 position in the broader markets on a Dow trade of 8530

Set stops at 8250

  Jeff Bailey   12/10/02,  11:25:40 AM
The 11:00 AM Intraday Update has been posted. Link

  John Seckinger   12/10/02,  11:23:57 AM
The 30-year is in the process of setting its third consecutive higher low (5 out of six days), but the current 110 level (ZB03H) is still under some tough resistance at 110'16. A close above 110 should keep equity bulls at bay, but we have a lot of trading left in today's session. A close above 110'16 would definitely be bearish for stocks (that is the theory). Looking at the Dow, the blue chips remain in-between the 8535 and 8480 band; however, bulls appear to be gaining confidence.

  Linda Piazza   12/10/02,  11:16:15 AM
Are you all tired of hearing about Martin Pring and his pronouncements in the world of technical analysis? We're all used to looking at divergences between price action and such measures as stochastics, MACD, and RSI, but Pring also advices to watch for divergences between markets, too. If one market is making new relative highs, but another isn't, that might be bearish divergence. Some other writers have advised over the last few days that traders watch the DOW for confirmation after seeing apparent bounces begin on the COMPX, and I'd advise the same.

  Jonathan Levinson   12/10/02,  11:08:03 AM
Squinting at the 5 minute COMPX chart, it *does* look like an ascending wedge, which projects to approx 1395, assuming it doesn not break down sooner. While no pattern is perfect, ascending wedges tend to break to the downside approximately 75% of the time according to Bulkowski's Encyclopedia of Chart Patterns, if my memory serves.

  Jonathan Levinson   12/10/02,  10:56:10 AM
Looks like that reverse h&s breakout was just a fakeout.

  Jonathan Levinson   12/10/02,  10:46:37 AM
One of my preferred activities, other than eyeballing a slow intraday chart, is wallclimbing in a gym. Sometimes, when my grip has been reduced to mush, I just slither almost inch by inch, trying to just gain more height. The COMPX appears to have done the same with this 1380-85 resistance level, but in doing so appears to have printed a reverse head and shoulders, which is just breaking out as I type. The TRINQ is low at .36 but could go lower, and while bond yields are flat, the QQV is down .84 on the day, showing that the options market believes the move.

  John Seckinger   12/10/02,  10:44:10 AM
One Dow stock not trading particulary well is Disney (DIS), currently on its lows of the session at 16.50 (down 2%). It was only on December 2nd when shares were trading as high as 20.24. Now underneath its 22, 50, and 200 DMA's (exp), shares could find support between the 15.5 to 16.5 area. As far as P&F analysis is concerned, a sell signal will be given on a trade of 13.5.

  Steven Price   12/10/02,  10:32:25 AM
My reply to a very patient reader:

When I refer to rolling options between months I am basically talking about buying/selling the near term and replacing the position with the next month out. Some traders will sell their long front month options (DEC) and replace them with the next month (JAN) as they head into the steeper portion of the premium decay curve in the last couple of weeks. DEC is a common month to roll out of, since the end of the year can be a little slow with many people on vacation. Long premium traders that scalp stock against their long options (buying dips and selling rallies)don't see as many opportunities and would rather hold JAN.

Many firms that sell options to collect premium take the opposite approach as we near expiration, buying in the their short front month option that has decayed to almost nothing and then shorting the back month that still has plenty of premium in it. This is a much higher risk trade if you are a naked seller, but works for long stock holders who are willing to take the risk of holding the stock and writing covered calls.

  Linda Piazza   12/10/02,  10:32:21 AM
Looking for clues as to direction: On the NDX.X chart, I'm seeing bearish divergence between highs on price and highs on stochastics, on the five-minute and fifteen-minute intraday charts. I just don't trust my former favorite tool much any more, though, especially on these intraday levels, and especially when the five-minute might also be showing bullish divergence between lows on price and lows on the stochastics. Bond yields are down, but so are the VIX and XAU. Adv/dec numbers are positive, at 1.67 on NYSE issues and 1.55 on Nasdaq issues. Up/down volume is also positive, at a 112:64 ratio for the NYSE shares and 215:62 for the Nasdaq issues. I don't see anything that's giving me strong guidance just yet.

  Linda Piazza   12/10/02,  10:15:26 AM
Reader Question: Yesterday you talked about using the retracements and I was wondering whether you use the intraday hi and lows for fitting or the close? Thanks.

Response: I try both. Since it's so easy to snap a Fibonacci retracement tool onto the charts, I often look at both levels to see which provides the best correlation with other resistance and support levels. For example, yesterday when I was quoting numbers for the 38.2% retracement of the COMPX at 1367, I was using intraday highs and lows rather than closes. As I scanned across the chart, that 1367 number seemed a level at which there'd been historical support or resistance. The fact that the COMPX landed on that level yesterday seems significant and lends credence to the use of those intraday levels.

As Leigh often mentions in other connections, closing levels are more significant than intraday levels, so I certainly at least look at the closing levels with Fibonacci retracement tools, too. This is analogous to the way I look at both simple MA's and exponential MA's. For some markets and some periods of time, the price levels seem to follow the simple MA's more closely, and for other markets, the price levels seem to follow the exponential MA's more closely. As someone who loves mathematics and science, I'd like there to be one rule for how everything worked, something scientific and proven and logical, but unfortunately, there's that pesky matter of investor psychology thrown into the markets. They don't always cooperate when I want them to follow some logical pattern, so I experiment with all these tools.

  John Seckinger   12/10/02,  10:10:26 AM
The catalyst for getting equity bulls involved? Maybe even a move above 8535 could start things rolling. On a five-minute chart, the Dow is at horizontal and diagonal resistance (read: bearish trend line); however, 8535 should break out of both. Moreover, as stated in last night's wrap, support was seen at 8480 and this higher opening gave that area more credibility. If 8535 is not tested and 8480 is taken out, the next level of support is just under 8400.

  Jonathan Levinson   12/10/02,  10:01:24 AM
The fed has announced a 2 day repo in the amount of 8.25B, fully refunding the expiring 7B from today and leaving an additional 1.25B for the 22 primary dealers with which to amuse themselves.

  Steven Price   12/10/02,  10:00:24 AM
Swing Trade Signals
I've been examining the risk/reward scenario from a short at this level. We have been getting a series of lower highs and lower lows, which is certainly bearish. However, I think that if we don't get a bounce here, there is so much support in the 8300-8350 range that it would be likely to give us a boost on a trade uder 8400. A move under yesterday's lows has me leaning bearish for the very short term, but I think any bounce could land us as high as 8800. Therefore the risk reward seems favorable to a long entry between 8300-8400, rather than trying to squeeze out the last 100 points to the downside before a traditional end of year rally. Traders who want to try and capture the last dip can lean in that direction on a move under 8470, but I'm going for the low risk/high reward play on a bounce from 8350 if we head lower from here.

  Jonathan Levinson   12/10/02,  9:50:03 AM
The price of gold has fallen below 325, and with it the precious metals indices, HUI -2.26 to 123.50, XAU -1.64 to 69.35. Yields remain flat, however, and the markets continue to see direction. I'm awaiting the fed's morning announcement.

  Steven Price   12/10/02,  9:47:41 AM
Swing Trade Signals
We got the move over 8500, pullback above that level, which looked like a good bounce point, and then failed. I'll keep my eye on today's high of 8520 for more evidence of a bounce, but right now there is mot much evidence in either direction. Current levels Dow 8495/SPX 895.26/OEX 455.69/COMP 1377.10

  Jeff Bailey   12/10/02,  9:42:34 AM
GM Hughes (GMH) $10.90 -3.53% Link ... stock lower after it and EchoStar (DISH) $20.36 +6.8% Link announce the company's have decided to terminate their proposed merger immediately. Under the terms of the settlement, DISH has to pay $600 million in cash to GMH, and GMH retains its 81% stake in PanAmSat (SPOT) $15.05 -15% Link . The company's reached today's announced settlement because the proposed merger could not be completed within the time allowed by the merger agreement.

Some predict that today's announcement now clears the way for News Corp. (NYSE:NWS) $26.55 +0.11% Link to make a run at GMH's DirecTV. In November, NWS raised about $1.3 billion through a secondary offering of its FOX unit.

  John Seckinger   12/10/02,  9:40:06 AM
The recent softness in retail sales isn't significantly affecting corporate bonds issued by WMT, S, and FD during trading on Tuesday. It may be some attempt at value playing, since WMT and FD are trading near the bottom of a recent trading range. With interest on Tuesday by corporate bondholders, maybe it will translate into more demand for company shares.

  Jonathan Levinson   12/10/02,  9:30:30 AM
7 point gap up open on the COMPX to 1374, TRINQ .69, QQV +1.1 to 47.53.

  John Seckinger   12/10/02,  9:30:15 AM
As a reminder: The FOMC meets today, and the December federal funds contract is priced at an effective rate of 1.23% compared to the current 1.25% funds rate target. This equates to roughly a 10% probability that the Fed will cut by 25 basis points.

  Steven Price   12/10/02,  9:30:09 AM
According to Bank of Tokyo-Mitsubishi and UBS Warburg, who compile weekly retail sales data, sales lat week were down 2.3% from the previous week. Not a good sign heading into Christmas, since retailers rely on this time of the year for a large percentage of their sales. There was some bearish discussion on yesterday's monitor, as well as in last night's wrap, and it seems to be panning out that way. BTM economist Mike Niemira said, "Unfortunately, it's beginning to look a lot like Christmas 2000, which was a dismal season."

  Jeff Bailey   12/10/02,  9:28:33 AM
SanDisk (SNDK) $22.29 ... stock off 54 cents at $21.79 in pre-market after Thomas Weisel cuts to "market perform" based on valuation and capacity concerns. Link

  Jeff Bailey   12/10/02,  9:26:49 AM
The 9:00 AM Intraday Update has been posted. Link

  Jeff Bailey   12/10/02,  9:24:25 AM
Kroger (KR) $15.10 ... Reported Q3 earnings of $0.34 per share, which was in line with consensus. The company also announced a $500 million share buyback following completion yesterday of a $1 billion repurchase program authorized back in March of 2001. KR also said it is expecting health care and pension costs to increase substantially in 2003. Link

  Steven Price   12/10/02,  9:21:31 AM
Swing Trade Signals
I will be looking for this morning's rally to run out of steam at a previous resistance point (possibly 8550, 8680, 8800) for a possible shorting opportunity. I'm not going to just pick a top and will look for confirmation from several indices, including the Nasdaq. From the long side, I'd prefer to play a bounce on a pullback to round number support if we get it.

  Jeff Bailey   12/10/02,  9:21:10 AM
Northrop Grumman (NOC) $95.35 ... per 09:00 Intra-day update. NOC announces it has agreed on essential terms of the consent decree with the Department of Justice that should now allow the company to close its acquisition of TRW after shareholders of both company's approve the transaction at separate meetings on Wednesday, December 11.

  Jonathan Levinson   12/10/02,  9:16:46 AM
The fed has 7B in overnight repos expiring today, and we await the 10AM announcement. The bloom seems to be fading on the rally in the futures, and yields have come down a bit as well, with FVX currently +.7 bps.

  Jonathan Levinson   12/10/02,  8:24:42 AM
Looks like that TRIN/TRINQ bounce will come today. Will we have a gap and crap off the open, or will it take us up to the 21 day MA / bollinger band midpoint? We'll have to see. NDX futures are up, +8, SPX +7.20. The US Dollar has just turned up to just above 105.10, while gold is holding above 325/oz. Wouldn't it be nice if gold forms a higher base here at the 325 level, just inches from the 330/oz ceiling? QQQ is trading 25.42, up from its close of 25.22.

  Linda Piazza   12/10/02,  7:29:15 AM
Today, Nokia followed through on the dour forecasts made last week in its analysts meetings, and cut its fourth-quarter sales forecast. The world's largest mobile-phone maker commented that consumers favored the cheaper models and were slow to warm to models with more features, such as built-in cameras. The shares fell as much as 5.2 percent, but the news wasn't all gloomy in European trading. After Mitsubishi Motors Corporation revealed that orders for the Colt compact more than doubled its monthly sales target, shares of DaimlerChrysler climbed 1.6 percent, according to a Bloomberg report. DaimlerChrysler owns 37 percent of Mitsubishi. As of this writing, major European markets were up, with the FTSE 100 up 1.11%, the CAC 40 up .14%, and the DAX up 1.68%. However, the Nikkei added a fifth day to its string of losses, closing down .27%.

  Steven Price   12/10/02,  3:07:42 AM
The Swing Trade Game Plan has been posted: Link

  John Seckinger   12/10/02,  3:07:14 AM
The Futures Trader Wrap has been posted: Link

  Jim Brown   12/10/02,  3:06:48 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link


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