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  Jim Brown   12/12/02,  4:27:31 PM
Assets of all Money Market Mutual Funds rose +$10.36 billion in the week ended Dec-11th. However, retail MMM funds fell -$3.64 billion. The overall gains were attributed to institutions stashing cash to the tune of +$14.55 billion. This means retail investors were taking money out of funds while corporations were adding money. Since corporations were not putting it into the stock market it suggests that they were selling into the retail rally from last week. This is not a good sign for the near future

  Jim Brown   12/12/02,  3:56:45 PM
After I mentioned MMM earlier Nelson sent me this analysis. We are adding MMM as a put play tonight so I thought I would post it.

Hi Jim, Been conversing with Linda Piazza. on the Wicks & Bodies for the DOW & read monitor comment on MMM possible failure of 123.00 So I took the notion to calculate 1/4-1/2-3/4 points for you . You know how in candlesticks you look for the midpoints of the candle & body of them. Well here go's - just read the first one to understand how I calculated it & just look at the rest right to the point. I'm seeing 121.22 / 121.15 / 120.87 as next target.

Weekly candle high 126.15 - low 123.37 = 2.78 divided by 4= 0.695
3/4 126.15 - 0.695 = 126.0805
1/2 126.15 - 1.39 = 124.76
1/4 126.15 - 2.085 = 124.065
Monthly candle high 130.48 - low 123.37 = 7.11 divided by 4= 1.7775
3/4 130.48 - 1.7775 = 128.7025
1/2 130.48 - 3.555 = 126.925
1/4 130.48 - 5.3325 = 125.1475
Quarterly candle H 131.55 - low 110.75 = 20.80 divided by 4= 5.20
3/4 131.55 - 5.20 = 126.35
1/2 131.55 - 10.40 = 121.15
1/4 131.55 - 15.60 = 115.95
Quarterly candle using body close & open
Close 124.71 - Open 110.75 = 13.96 divided by 4= 3.49
3/4 124.71 - 3.49 = 121.22
1/2 124.71 - 6.98 = 117.73
1/4 124.71 - 10.47 = 114.24
YEARLY Candle all just shorten this here for you
High & low close & open of body of candle
3/4 123.6625 3/4 122.79
1/2 115.775 1/2 120.87
1/4 107.8875 1/4 118.95
So far it looks like its below the Weekly & monthly candles

Since Linda is the other half of this email if you have any questions about this please direct them to her. Thanks

  Linda Piazza   12/12/02,  3:55:28 PM
Last night, Mark Phillips wrote an article discussing how readers might watch a particular stock for a good entry, and used ABC as an example. Here's the link to Mark's article if you haven't yet read it: Link A couple of days ago, a reader pointed out the behavior of UNH, UnitedHealth Group. Perhaps put this one on your watchlist for a possible put play, in the same manner Mark discussed watching ABC. Here's the UNH chart: Link Late in November, UNH fell through support at 85. It tumbled to the mid-70's before recovering a bit. I've included an accumulation/distribution line below the chart. Notice how the line has been below its MA since late October? As UNH came up to test that 85 level this month, its upward movements have so far been capped by the 20-dma (exp), currently at the 84 level. The accumulation/distribution line also came up to test its MA and fell back again. The 200-dma lies just overhead at the 85 level, and the 10-week and 30-week lie just overhead, too, so that it should be difficult for UNH to push through the 85-87 areas. I like the fact that volume has been dropping off as UNH tried to push upward.

There are some problems with a potential put play in this stock, however. Right now, the (5)(3) stochastic is still cycling upward, and the daily RSI has broken above its downtrend. (Trends and formations are often important on the RSI.) Most importantly of all, it's on a P&F buy signal and won't produce another sell signal until it falls below 76. There's some prior support from July in the 82-83 area, too, so that might provide momentary support. Also, with expiration week next week, I wouldn't be surprised to see an effort to keep this one back as close as possible to its traditional trading levels over the next week. Although I wouldn't recommend an entry now, this might be worthwhile to watch for a rollover from the 84-87 area in the manner Mark described.

  Jim Brown   12/12/02,  3:51:30 PM
Remember last month when chip stocks were gapping higher on bad news on a daily basis? The reverse is happening this week. Taiwan Semi made some positive comments along with some of the chip makers but the SOX is trapped in the 320 level. TSM is actually dropping on the positive news. This chip malaise is holding the Nasdaq back from the typical 4Q gains. The comments from Intel CEO Andy Grove this week that they have not seen any recovery yet are weighing on the sector and the markets. It appears the expectations component is slowly being deflated and any future rally may have to run on real numbers and not faint hopes.

  Jeff Bailey   12/12/02,  3:44:41 PM
The 3:15 PM Intraday Update has been posted. Link

  John Seckinger   12/12/02,  3:39:42 PM
My father has been a professor for over 40-years, and he sent me an email surprised that MIT is going to offer lecture notes, etc. for all 2000 courses online for FREE. It will cost the institution roughly $100 million dollars (including royalties, materials, etc.), and the school only has 11 million dollars already. Everything should be up and running by 2007, and cannot be used commercially. Take a look at this site, as there are a number of classes up already. Maybe I will become a software engineer during my spare time. Please see link: Link

  John Seckinger   12/12/02,  3:34:45 PM
It is interesting that the 30-year has established a higher low for five consecutive sessions, and eight out of the last ten days. A higher high has been made the last four days in a row, and eight out of the last nine. On a yield basis, the trend line drawn this morning kept buyers in check, while the 50 DMA (exp) at 4.05% contained the selling for the second straight session. The theory of higher bond prices (lower yields) and lower stocks should hold, so keep the ZB03H and Tnx.x contracts on the radar screen.

  Jim Brown   12/12/02,  3:21:38 PM
AZO - Somebody recommended AZO as a call play on Tuesday based on a perceived bounce off support at 78.25 and an improving auto parts market. Surprise! Glad we decided to look elsewhere.

  Jim Brown   12/12/02,  3:16:39 PM
Knock this chip off my shoulder! You just thought you would stop our missiles. Hah! North Korea stepped up to the top of the hit list with the announcement that they would resume their plutonium based nuclear power program. (read "weapons development" program) With the U.S. cutting off some oil imports due to their nuclear program and stopping their missiles to Yemen they needed to do something to simulate spitting on superman's cape. We would have a little different problem attacking NK and they know it. They could kill tens of thousands in South Korea before the U.S. could squash them. They know it and they are waving the red flag at the U.S. knowing they are safe from an IRAQ type action. I would not expect much more harsh words toward North Korea since there is little they can do to follow up.

  Jim Brown   12/12/02,  2:50:55 PM
Teaser Ads - Don't you just hate those teaser ads you get by email that tell you of this fantastic company that is poised to explode and return you +10,000 percent if only you jump on it today? I probably get at least five a day. They won't tell you who the company is unless you sign up for their service.

I got one this morning and I am sure many of you got it also. The headline was "Cure for West Nile Virus, Eradication of Bioterrorism and a safe gain of +43% per year for the next three years all by simply investing in this one company.

The email went on to say why this company would benefit from everything from the coming war to vaccinating cows in Texas. I will just net the 2000 words down for you. Smallpox vaccine and West Nile Virus vaccine. Nearly $500 million of government contracts and $1.2 billion in the pipeline. The catch was the very low public profile because they are based overseas BUT lucky for us they trade on the Nasdaq. After reading the 15 page email (no kidding) I decided to find the company. A little research and I found it to be Acambis (ACAM). Now for the price of putting up with a boring day on the market monitor and in the markets you have the benefit of knowing who this blockbuster company is without having to lift a finger. Here is the summary that the other company built their email campaign on. Link I am not suggesting that this is a buy but they do have a lot of potential in the pipeline. Good luck!

  John Seckinger   12/12/02,  2:36:47 PM
Bonds continue higher, but I am not sure it was based on the FOMC minutes. It was interesting that the FOMC minutes from the November 6 meeting mentioned the risk of deflation (currently going on in Japan). A 'slight' risk, but still something clearly on the radar screen. Note: There is the PPI, Business Inventory, and Michigan Sentiment report due out tomorrow. PPI is expected to fall to 0.0% from 1.1%, month prior. The December Michigan report should rise from 84.2 to 85.

  Jonathan Levinson   12/12/02,  2:33:18 PM
For us suckers: New York, Dec. 12 (Bloomberg) -- The dollar dropped to its weakest against the euro in five months and fell against the yen on concern the U.S. near-record current-account deficit will hurt efforts to revive the economy and attract foreign investment.

The shortfall in the current account, which includes trade and income on investments, means the U.S. needs almost $1.4 billion a day in foreign capital to sustain the dollar's value. Japan and the 12-nation euro region have account surpluses.

Here's the full story: Link

  Jeff Bailey   12/12/02,  2:31:41 PM
60-minute Interval Charts ... just looking at last night's index trader charts with our upward "cheater" trend. 10-year YIELD hugging the trend, INDU, SPX, OEX, QQQ and NDX all doing the same. Not breaks of upward trend, but today's move in gold looks to be an alert to something negative, or at least the MARKET's perception of something negative. No confirming breakdowns from equities at this point.

  Jonathan Levinson   12/12/02,  2:23:09 PM
Concerning the revised unemployment data, one day "pro forma" will be a four-letter word. Once again, the markets have fallen into a tight range. The TRINQ and TICK.NQ are singing the same tune, .66 and -244. I clicked on the TV and listened to talk of nuclear weapons, chemical and biological attacks, diplomacy, and clicked it off again. The difficulty in explaining the move in gold is not in identifying a reason, but rather in eliminating the reasons that did not actually cause today's move- seems like there are so many. As Joe Granville once said, "News is for suckers." In any event, yields remain flat to negative, and the markets seem to have grown quiet.

  Jeff Bailey   12/12/02,  2:04:17 PM
S&P Retail Index (RLX.X) 278.82 -0.26% ... Hi, Jeff, I try to find P&F chart of $RLX.X from www.stockcharts.com. But I can't find it. Could you help ? Thanks.

stockcharts.com does not keep a p/f chart on the RLX.X. It is for this reason that I use the Retail HOLDRS (AMEX:RTH) $73.30 +0.2% in our weekly index/sector monitorings.

Chip Anderson at stockcharts.com is a pretty good buy. Maybe if somebody other than me asks for a chart of the RLX.X they'll get the data and make the chart.

However.... both look almost identical on a technical basis.

  Jim Brown   12/12/02,  2:04:13 PM
Now that the government has a couple of scapegoats in the form of O'Neill and Lindsey they were free to post the real jobless claims this morning. (grin) If you recall I mentioned last week that the numbers were artificially low and would be revised up this week due to the holiday. The problem as I see it is still rising unemployment in a seasonally strong holiday period. Retailers did not add extra workers and if you remember the nonfarm payrolls from last week they actually cut retail jobs. The numbers are still confusing because the continuing claims actually dropped last week while the new claims jumped. How much of this is related to workers dropping off the rolls as their claim benefits expire is not known. Another continuing problem is the lack of new hiring as evidenced by the nonfarm payrolls. It appears the pace of layoffs may be decreasing but the pace of hiring is still slowing as well. The bottom line is no underlying strength in the economy and that may be the real reason the markets are listless this week. The news is finally sinking in for traders.

  Kent Barton   12/12/02,  2:03:07 PM
Interesting action in the VIX.X (31.37, -0.03). The index is trading near its 200-dma after rolling over from the 38% retracement from October highs to November lows. At this point it looks like it could either head back down to the 27.00 area or rebound to retest the relative highs near 35.50.

  John Seckinger   12/12/02,  2:00:28 PM
Bristol Meyers (BMY) continues to fall on Thursday, following a report in the Wall Street Journal that questioned its accounting practices. Note: The company is currently under investigation by the SEC with regard to how it got wholesalers to buy more drugs than they needed (in the amount of $2 billion dollars). Shares are currently lower by 25.99 and a P&F sell signal would be given at 23.

  Jeff Bailey   12/12/02,  1:40:53 PM
The 1:00 PM Intraday Update has been posted. Link

  John Seckinger   12/12/02,  1:34:03 PM
The XAU remains strong (higher by 6.16%), the dollar continues to trade weak (104.53), and the Sox is right back at its trend line and could easily roll over from here. Even the 30-year is edging back up to its daily high of 111'02 (currently at 111) and reversed nicely from the 110'10 low. This should not be positive for stocks heading into the last few hours.

  Jim Brown   12/12/02,  1:25:03 PM
MMM - A reader pointed out that 3M was about to go critical if it breaks under $123. The PNF chart shows a 3 "O" bearish column and it is dead on the 100/200 DMA at $123.50 which is the last support before significantly lower numbers.

While this is very bearish for MMM it is also bearish for the markets. MMM is the largest weighted Dow stock and where MMM goes, the Dow will follow. After over a month of testing the $130 upper limit it appears the bears are in control and somebody is expecting bad things from the manufacturing sector. OR, This could be cash rotating into tech stocks. It could be tax selling because MMM has had a good run. It could be just frustration with the lack of being able to break $130 for a year. Or, it could be a signal that the Dow is in trouble in the coming weeks.

IBM broke $80 again on no news. This is the 3rd largest weighted Dow stock. This could be fear of an earnings warning and we do know from past experience this is a historical trend. However, IBM said last week they were not asking anyone to take extra days off around the holidays because they were busy. Did this fact get lost on traders OR are we seeing more weakness due to an impending market event?

It is tough to draw conclusions from just a couple stocks but when those stocks are the leaders for the Dow and by proxy the market they bear watching. (no pun intended)

  Jonathan Levinson   12/12/02,  1:21:06 PM
The FVX, TNX and TYX have entered negative territory by a hair, while the COMPX and SPX struggle along near short term support. Other than the action in precious metals, this is a very tough day to call- pullback or beginning of a decline? The TRINQ remains in neutral bullish territory, but the TICK.NQ is decidedly bearish at -256. The p/c ratio has dropped to .73, showing continued bullishness in the option market, a contrarian indicator.

  John Seckinger   12/12/02,  1:00:20 PM
The SPX is right at 900 pivot, but Sox at 320 and still looking slightly bearish. Still hard gettting conviction today, but bulls are not giving up and are currently holding the bullish trend line that comes in at 8480. On a five-minute chart, there is a "b" long liquidation pattern with an apex at 8525. If the Dow does not give us a short-term bid (since above the apex) and this 8525 level fails, look for another wave lower.

  Linda Piazza   12/12/02,  12:33:52 PM
Adv/dec numbers deteriorated significantly, with those figures now at .95 for the NYSE issues and .74 for the Nasdaq ones. Up/down volume is now about even with both NYSE and Nasdaq shares.

  Jeff Bailey   12/12/02,  12:31:33 PM
Feb Gold Futures (gc03g) 331.30 +1.78% ... bullish break-out above the $330 level here and bullish wedge. New contract high would come with trade at 333.71, which was the 06/04/02 high. BIIIIIG volume on the contract today at 2,565

Gives some confirmation to what we noted in Gold/Silver Index (XAU.X) 74.81 +5.9% now.Link

Dorsey/Wrights precious metals sector bullish (BPPREC) was "bull alert" status at 52.94% last night. Would take reading of 62% to reach "bull confirmed" status. In March of this year, sector bullish % reached 84% and by late July fell as low as 14% before reversing high. Amazing how the MARKET can remove risk, then realize lower risk when all looks to be lost.

  Jonathan Levinson   12/12/02,  12:30:44 PM
The capitalization of the XAU and HUI is miniscule compared to that of the INDU. I believe that the dollar getting sold is causing the move in metals and the selloff in the indices.

  John Seckinger   12/12/02,  12:24:27 PM
Jeff, I think you are on to something with the P&F charts. XAU hits the 72 buy signal and the index is now higher by 5.97% at 74.66. The bullish objective is for a move towards 90. Is this move higher in the XAU pressuring stocks? I think it is pressuring the dollar, which in turn pressure stocks. So, yes. How is the wildcard (Sox) doing? Currently down 1.15% at 319 and under the trend line of 323.

  Jonathan Levinson   12/12/02,  12:23:45 PM
Take a look at the US Dollar Index:


  Linda Piazza   12/12/02,  12:16:07 PM
A tale of two averages? Stockcharts.com shows the 50-dma (exp) and 22-dma (exp) of the S&P 500 at 899.85 and 908.25, respectively. That 50-dma is near the 895-897 area that has been providing support across the last few days, while today's high of 908.37 shows that the 22-dma might be coming into play, too. It will be interesting to see which way the S&P's break.

A reader pointed out this morning that yesterday's QQQ prices were also inside Monday's prices, as were Tuesday's. (Thanks, Russ.) This was also true of the S&P's. As I mentioned yesterday, Nison (of candlestick charting fame) pointed out that in a harami formation, when the small real body of a candle (such as Tuesday's candle)is near the bottom of the previous day's candle (Monday's), the most likely outcome is consolidation rather than a trend reversal. Yesterday's candles on the various indices were either doji's (with the S&P 500) or candles with small real bodies (as with the Q's) and gave a visual representation of that consolidation. That consolidation carried over into the early part of trading today.

  Jonathan Levinson   12/12/02,  12:09:08 PM
The put to call ratio has come down to .74, drifting lower all day from its opening reading at 1.08.

  Steven Price   12/12/02,  12:04:00 PM
Swing Trade Signals
Getting some downside momentum here. Let's keep an eye on the recent relative lows for signs of a breakdown. Those lows are Dow 8469/SPX 891.91/OEX 453.99/COMP 1367.07.

  Jonathan Levinson   12/12/02,  12:03:27 PM
I don't know if there's news causing this, but the only green on my screen is precious metals. The COMPX is setting new lows, and the TRINQ is still quite low at .73. If this is the beginning of a selloff, then there's a lot of room to the downside. QQV is +.49, and aside for the action in gold, this would look like a garden variety pullback.

  Jonathan Levinson   12/12/02,  11:59:16 AM
Gold has broken $330/oz.

  Steven Price   12/12/02,  11:51:00 AM
Reader sent me this blurb from the Onion - good for a chuckle:

VOLUME 31 ISSUE 23 — 8 JULY 1997

Stock Market 'Best Since 1928,' Say Investors

NEW YORK—Wall Street insiders are hailing the current bull market as the best since 1928, The Wall Street Journal reported Tuesday. "The Dow is on an unstoppable rocket-ship ride into the outer stratosphere of fiscal health and prosperity," H&R Block broker Phillip Guyer said. "I see no reason why this upward trend shouldn't continue forever. To celebrate, I think I'll buy myself one of those newfangled horseless automobiles—on credit!"

  Steven Price   12/12/02,  11:44:56 AM
Steven, Do think on 5 min chart dji is maiking H & S pattern? Thanks AP

Dow Jones ($INDU) 8578.65 -10.49 I see what you are talking about on the 5 min. chart, but the left shoulder on yesterday morning's rally is an awfully high shoulder. It could technically still be a shoulder, however, the downward sloping neckline in this case would not be broken to the downside until around 8500. Thanks for pointing out the potential pattern.

Swing Trade Signals
We do seem to be creeping higher with higher daily lows, albeit very, very slowly. I just don't see the momentum in either direction for a breakout and will stay on the sidelines for the time being.

  Jeff Bailey   12/12/02,  11:43:26 AM
The 11:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   12/12/02,  11:41:58 AM
Precious metals are showing amazing strength, with HUI up 5.52 on the day at 132.13, while XAU is now +3 at 73.59. Gold is above 328. Until 330-35 falls, it's the same old range, but we're getting close.

  John Seckinger   12/12/02,  11:34:29 AM
Not another day in this range (roughly 8625 to 8480). As far as pattern recognition goes, the high during the first five minutes (8608) did provide some resistance (intra-day high of 8615), and it should be noted that 8568 is 50% of today's range. I would look for slight support there. Still no conviction today, but I want to give bulls some credit for keeping prices above the bullish trend line outlined during the last few days. We still have plenty of trading left, however. The wildcard? I will look to the Sox, which is currently at 325 and above the mentioned bearish trend line of 323. Watch to see if the Sox can become a catalyst going forward. It should.

  Linda Piazza   12/12/02,  11:22:46 AM
Although the resistance levels that John, Steven, and others have mentioned have so far continued to hold this morning, volume patterns have improved. Adv/dec on NYSE issues is now 1.46, up from 1.02 this morning. On Nasdaq issues, the number is now 1.18, up from 1.00 earlier. Up/down volume patterns show improvement, too, with the up/down ratio almost 2:1 on NYSE shares and more than 4:1 on Nasdaq shares.

  Jonathan Levinson   12/12/02,  11:18:46 AM
Whhhooooeeee...HUI has broken 130, up 3.45 on the day, while XAU continues higher, +1.94 to 72.52. Yields are holding current levels with FVX +3.3 bps, while QQV has picked up and is flat to up, +.16 to 43.59. The TRINQ is low at .35 and TICK.NQ -71. Anything can happen here, with little direction from the intraday oscillators, while the daily is still in its bull run. We continue to watch and wait for a move to develop.

  Steven Price   12/12/02,  11:00:02 AM
Do you see a trade developing in ROOM at this level?

Hotels.com (ROOM): $61.97 -0.76 I would certainly classify this play in the higher risk category, but I do like the bounce off the 50-dma of $61.29. It broke down below that level intraday, but rallied back over. It also bounced off the bottom of the last column of "O" on the PnF, after its big drop. The Stoch has turned up and the MACD, although still in a sell signal, is approaching the center line weher it turned up the last time. That last MACD turnaround was reliable and led to a huge rally. I don't like the fact that this morning's rally was slammed after the open, but I might put on a 1/2 long position, with a stop under $60.

  John Seckinger   12/12/02,  10:55:35 AM
Note: Volume has increased significantly in the ES03H, NQ03H, and YM03H contracts. Even though the December contracts expire on the 20th, traders are definitely rolling into March today.

  John Seckinger   12/12/02,  10:49:49 AM
Asset allocation players are most likely looking at a chart of the Ten-year yield and realizing a break in trend did NOT occur. With that said, it is hard to shift funds from stocks into bonds. Please see chart: Link

  Jeff Bailey   12/12/02,  10:38:23 AM
Gold/Silver Index (XAU.X) $72.21 +2.3% ... just noticed XAU.X technically breaking out with today's trade at $72.00 on $1 box. This would be a rather "high risk" potentially "high reward" trade on a longer-term basis with break of trend and spread-triple-top buy signal. Link

Newmont Mining (NEM) $25.57 +2.11% Link ... also breaking abovce trend and double-top buy. I'd like the $25 strike calls, but buy as much time as affordable.

  Linda Piazza   12/12/02,  10:37:54 AM
As was true yesterday morning, volume patterns show adv/dec numbers in neutral territory, with a 1.02 figure on NYSE issues and a 1.00 figure on Nasdaq issues. Also as was true yesterday, up volume is nevertheless ahead of down volume on the Nasdaq, by a ratio today of 249 to 81, so a little over a 3:1 ratio.

  Jeff Bailey   12/12/02,  10:33:42 AM
Index Trader Wrap ... per last night's comments and charts. No breaks of upward trends this morning, and indexes all trading in their little "wedges" discussed last night.

10-year YIELD ($TNX.X) 4.026% session high has been 4.054%, which is just under yesterday's 4.056% high YIELD trade. As such, tough to put on a new trade so far today (for me) based on last night's thoughts.

QQQ session high has been $26.16, just 2-cents under our market maker resistance of $26.18. If already short QQQ not looking to add here and would prefer rally closer to $27, which might come if 10-year YIELD can make a move above yesterday's YIELD high is my thinking.

Should QQQ break below morning low (25.79), then I'd look to add to bearish Q position. FOMC minutes will be released at 02:00 PM EST, and traders that saw better than expected ex-auto numbers offset by higher weekly unemployment may be somewhat "neutral" and not all that eager to put on or take off positions.

  Steven Price   12/12/02,  10:32:27 AM
Swing Trade Signals
We now have all indices except the Dow, which is off only 6 points, in the green, and bonds in the red, giving some bullish confirmation. Traders holding long positions can keep their eyes on yesterday's top in the SPX at 910. However, there is addtional resistance in the SPX between 912 and 915, so I'm not going to enter ahead of that resistance. If we break through that 910 level, however, I would hold a long that I was currently in.

  Jeff Bailey   12/12/02,  10:11:24 AM
Costco (COST) $28.91 +1.5% .... G'Morning, Jeff: I had a question re: your afternoon update yesterday. You said: >>Shares of COST currently trade with a bullish vertical count of $54, but a trade at $28 would negate that bullish count, trigger a triple-bottom sell signal, and have the vertical count turning initially bearish to $17.<< I'm curious as to how you arrived at the $17 figure. Best wishes from the Monkey Guy :)

Good question.... however, I should have calculated a bearish count of $18, should stock trade $28.

Currently.... COST is on a "buy signal" after that trade at $33 where X column exceeded prior column of X high of $32. So.... this stock is still on a "buy signal" and bullish count still in play.

However, if stock were to trade $28, then we see a column of O (supply) exceeding below the current columns of O at $29, where demand has been strong enough to outstrip supply. A trade at $28 would put the stock back on a sell signal. As such we would count the column of O from $36 to $28 (should the sell signal come in this column) and I now would count 9 O's (with an O at $28 should it trade there). Then... (9*2)*1 gives me 18. I would then subtract that $18 from the top of the column of O, which is $36, to get $18.

The bullish and bearish counts come from ballistics. Where the length of the barrel (the column of the bullish or bearish count) is thought of as the barrel, which launches the projectile. In the case of equities.... its price. While a bullet travels straight to its target, its not all that often that a stock travels straight to is vertical counts. Sometimes those counts aren't achieved, sometimes they are exceeded. However, one of the few tools a trader/investor has to assess longer-term targets.

  Jonathan Levinson   12/12/02,  10:08:53 AM
From reader Marc: This gap fill is going to find buyers. The news is just to good on CIEN and AMGN. I think weak hands have been selling the rallies, but eventually they dry up. Retail data is not bad and unemployement ALWAYS rises at bottoms and turnarounds as corporations downsize and get mean and lean.

  John Seckinger   12/12/02,  10:08:44 AM
Strong resistance is above at 8625 (not tested this morning), while support near the 8460-8480 area is still a little bit lower. The blue chips have traded basically straight down since its opening, and there might be some resistance just above at 8565. Right in the middle of some good levels, but odds do seem to favor bears. I would like to see the Sox fall under 322 (currently at 324) for a little confirmation. Conviction isn't great here, but it should be encouraging for bears to see the morning's failure (longs getting out and shorts getting involved).

  Jonathan Levinson   12/12/02,  10:06:28 AM
The fed has announced an overnight repo of 6.75B, for a net drain today of 4B. Bearish. Alas, the put to call ratio has just come in for the first half hour at a whopping 1.08. Short term bullish. Think I'll go wind my watch.

  Steven Price   12/12/02,  10:05:25 AM
American International Group (AIG): $60.61 (-1.01) OI put play AIG got a bounce yesterday from the recent sell-off, but that bounce failed at the 50-dma of $62.43. The stock broke down below its PnF bullish support when it traded $60 on Dec 9 and the stock is starting to roll over again. Stoch has rolled back into a sell, and MACD remains on a sell signal. I like short entries on a move back under $60.

  Jonathan Levinson   12/12/02,  10:03:08 AM
Thanks to JB who pointed out that this 30 minute bear flag I'm zoning in on is breaking out of what looks like a bull flag on the 60 minute chart. Ah, vive la différence... But, quite correctly, the bull flag on the longer time frame should take precendence. So, we'll continue to watch and use our etch-a-sketches to draw pretty pictures on the charts. Thanks, JB.

  Jonathan Levinson   12/12/02,  10:00:22 AM
The COMPX is now in the middle of the ascending bearish channel on the 30 minute chart. TRINQ low at .30, TICK.NQ not-bullish at -299, HUI on Wheaties at 128.75 +2.14 on the day, FVX only +2.9 bps now.

  Jeff Bailey   12/12/02,  10:00:03 AM
3M (MMM) $123.94 -0.61% ... Per Steves 09.54:33 ... Steve and I most often agree. However, other than the retailer disagreement, I do believe I tried to sell some naked puts to Steve in MMM when it tested bullish support trend at $110.Link

That's what makes a market.... disagreement.

  Steven Price   12/12/02,  9:58:40 AM
Swing Trade Signals
We've now seen a failed rally over 8600 in the Dow, with the COMP holding onto its gain above 1400. However, as John mentioned earlier, bonds are down slightly, failing to confirm bearishness in the Dow. There is just nothing lining up right now that would make me wat to enter the market.

Current levels: Dow 8529/OEX 458.31/SPX 900.44/COMP 1402.23

  Jeff Bailey   12/12/02,  9:55:31 AM
Procter & Gamble (PG) $86.62 -0.96% ... session high has been $88.25 and stock seeing some selling on the news. Short-term, would like to see a close below the $86.00 level. P/F still bearish, stop $90 as planned. Link

Trader short the underlying stock may look to sell the December $85 puts (PGXQ) with bid of $0.85 here. Only makes sense if short 300 or more shares though.

Disclosure ... I currently hold bearish position in PG

  Steven Price   12/12/02,  9:54:33 AM
FYI: The last time Jeff and I disagreed on retailers, he (long position) was right in the short-term, but the short eventually turned in my direction - after I was stopped out. Better cover my short or give myself a wider stop (GRIN). Coincidentally , it was right around this range.

  Jonathan Levinson   12/12/02,  9:50:12 AM
On the 30 minute chart, I have the COMPX printing what could be a bear flag. The good news is that we'll know if I'm right or not with a print above 1414 or so. If the ascending upper trendline gets violated, then we'll watch for next resistance at 1425.

  Jeff Bailey   12/12/02,  9:48:39 AM
Retail HOLDRS (RTH) $73.50 +0.82% Link .... Per Steve's 09:29:48 ... I still like the Retail sector ABOVE most, especially technology. If Retail can't make it during Holiday shopping season due to any lack of confidence in job data, economy, etc, etc, etc, then many other sectors of economy don't stand a chance in he@@ of recovery in my opinion.

Discolsure... I currently hold a bullish position in the RTH.

  John Seckinger   12/12/02,  9:48:38 AM
The XAU Index is getting near the 72 level once again, currently higher by 1.34% at 71.53 (intra-day high of 71.64). The first objective should be for a move towards 78. Note how the Dollar is trading lower, and usually does move inversely to the XAU. Will this keep equities at bay? That is the theory, but it hasn't been perfect as of late. Looking elsewhere, the Sox index is higher by 1.78% at 329 and solidly above the bearish trend line of 323. The 22 DMA (exp) is just above at 331. On a daily chart, is the Sox forming a H&S?

  Jeff Bailey   12/12/02,  9:37:04 AM
NVIDIA (NVDA) $14.58 +4.06% ... THQ Inc. (THQI) $14.43 -2.96 Link trading lower after making some positive comments on X-Box sales yesterday regarding the platform "gaining acceptance" in the last 6 weeks. Those comments could be viewed as positive for NVDA Link , which derives 20% of its sales from X-Box.

This morning THQI was cut to "market perform" at Banc of America and has the firm cutting Q4 revenue estimates by $11 million to $261 million to reflect weak sales of Red Faction II. BofA reducing Q4 EPS estimate to $0.90 from $0.96 and FY03 to $1.35 from $1.40. These adjustments to estimates by BofA compare to consensus of $0.94 and $1.39.

  Linda Piazza   12/12/02,  9:36:02 AM
We can't translate what happens in European markets directly into expectations for the U.S. market's behavior, but those European markets certainly pared their earlier losses after the release of the U.S. economic numbers. Shortly before their release, the FTSE 100 was down 1.17%, and is now down .66%; the CAC 40 down 1.80%, and is now down .71%; and the DAX down 2.39%, and is now down .99%.

  John Seckinger   12/12/02,  9:35:23 AM
Not exactly the excitement I had hoped for, but the nice thing is the markets didn't gap above or below some important levels. The 30-year is down '18 ticks at 110'10 and slighly bullish for stocks, while most of the equity markets appear to be trading rather heavy. With the first five minutes almost over, a move above 8606 in the Dow should help bulls.

  Jonathan Levinson   12/12/02,  9:30:43 AM
11 point gap up open on the COMPX to 1407, TRINQ .18, QQV +1.13 to 44.37.

  Steven Price   12/12/02,  9:29:48 AM
My two cents on the retail numbers: It's nice that sales came in higher than expected, however the fact that the increase was seen at hardware and furniture stores, while traditional mall type stores saw a significant drop, simply tells me that refinancing and new home purchaes have created demand for home products. I still think the outlook for retail is dark and gloomy and I would be hesitant to put my money in those stocks for anyting more than a very short-term move. That doesn't mean we won't see a bounce after recent reports have been negative, but long-term I expect the trend to resume downward.

  Jeff Bailey   12/12/02,  9:29:48 AM
The 9:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   12/12/02,  9:29:24 AM
The fed has 17.75B in repos expiring today, 5B of which is a 28 day repo. These almost always get rolled over, and today is no exception. The fed has just announced a 7B 28 day repo, which covers the expiry 5B and leaves an additional 2B. There is now 10.75B expiring today, and we await the announcement with respect to the shorter term repos. Any readers baffled by the foregoing should check out my article on the subject in Traders Corner.

  Steven Price   12/12/02,  9:21:27 AM
Swing Trade Signals
The Swing Trade model is currently flat. We are currently right in the middle of recent support and resistance levels, and I don't plan on entering unless we see a re-test of a significant level. My preference is to get in around Dow 8800 on the upside, or 8350 on the downside. I'll still be watching intraday levels to see if something develops, but with the current drift, that may not happen today. The closest support/resisance I'm watching is Dow 8625/8680 just above us and 8470/8500 below.

  Jonathan Levinson   12/12/02,  9:15:57 AM
Yields have come off their highs even as equity futures have climbed, with FVX currently +4.7 bps, TNX +3.9 bps, and TYX +3.2 bps. QQQ is currently trading 26.09, up from its close of 25.72.

  Linda Piazza   12/12/02,  9:03:22 AM
I glanced at the ES contract just before the release of this morning's economic numbers, and it was reading 898. Currently at 905.75, the ramping up is showing a positive reaction, perhaps to the .4% increase in retail sales, above the expected .2% (according to marketwatch.com). Jonathan mentioned the high initial claims numbers. Other numbers include continuous unemployment claims down 165,000 and the four-week average up 10,000 to 387,250. Sounds as if the market has a lot to sort out this morning. So far, it's giving more weight to those retail sales figures, it appears.

  Jonathan Levinson   12/12/02,  8:58:55 AM
We have initial jobless claims that came in at 441K, blowing out consensus estimates of 378K for the week. This could explain the divergence between bonds and the US Dollar.

  Jonathan Levinson   12/12/02,  8:35:14 AM
Waiting for that retain sales report. But, as Linda pointed out, the steady night turned into a gloomy morning, and the futures went from lightly green to light red. I'm watching the Island ECN level II trades as I type, and they just spiked north, then south, and evidently the retail numbers have just been released. Meanwhile, the US Dollar Index got hit this morning, and is currently trading 104.70. In answer to a reader question, yes, there is generally a reverse correlation between the USD and Gold, which touched 327.50 and is printing a very bullish rise on the 15 minute candles. Meanwhile, QQQ is edging higher now, currently 25.90, and the news looks good. U.S. November Retail Sales Rise 0.4%; Sales Ex-Autos Rise 0.5%, beating analyst expectations of .4% and .2%.

  Linda Piazza   12/12/02,  8:22:08 AM
It would be nice to post sunny news about the European economy and markets, but that sunny outlook isn't appearing this morning. Today, the ECB halved the predicted rate of growth for the economies using the euro. Also, although sales of luxury vehicles had previously remained steady in Europe despite a slump in sales of economy models, the European Automobile Manufacturers Association's website today reported that the most recent BMW-brand sales fell 16 percent and Mercedes-Benz sales fell 8.6 percent. Industrial production has been falling across the region as unemployment grows, according to a Bloomberg report. Other Bloomberg headlines mention that police raided Vivendi's Paris headquarters to investigate accounting irregularities and that Al-Qaeda took over a chemical weapon in Iraq. European markets reacted to the gloomy news and perhaps to worries over economic numbers due shortly in the U.S. by falling: 1.17% on the FTSE 100, as of this writing, 1.80% on the CAC 40, and a whopping 2.39% on the German DAX. The Nikkei tacked on yet another day of losses, although each day's losses are growing smaller in proportion. Today's was a .22% loss.

  Steven Price   12/11/02,  10:58:28 PM
The Swing Trade Game Plan has been posted: Link

  John Seckinger   12/11/02,  10:58:09 PM
The Futures Trader Wrap has been posted: Link

  Jim Brown   12/11/02,  10:57:34 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link


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