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  Steven Price   12/16/02,  4:04:09 PM
Swing Trade Signals
We got the push over 910 in the SPX, which was last week's resistance level, on the close. That should add another box to the the SPX's PnF reversal up. We now have reversals in the Dow and SPX and the OEX is 0.78 away from its own. The Dow finished above last week's resistance at 8625, as well. The COMP also broke 1400.

Current levels Dow 8627/SPX 910/OEX 463/COMP 1400

  Linda Piazza   12/16/02,  4:00:12 PM
The VIX has again moved below 30.

  Jeff Bailey   12/16/02,  3:52:17 PM
The 3:15 PM Intraday Update has been posted. Link

  Jim Brown   12/16/02,  3:51:22 PM
End of year renewal special - For those that tried to renew over the weekend and found the link to the renewal page broken, I apologize. It has been corrected and it is working fine today. Please check here for details: Link

  Linda Piazza   12/16/02,  3:48:59 PM
Just wondering: Does anyone remember Abby Joseph Cohen's end-of-year prediction for the S&P 500's?

  Jim Brown   12/16/02,  3:48:28 PM
My comments at the close on Friday about the big money pulling the bids to test support before going long for the holidays looks like it was correct. Where everyone was negative on Friday for no real reason they are bullish today for no real reason. It was simply profit taking and lack of buyers. The eight-week run by the Dow was just too much profit to build a holiday rally upon and the big money moved to the sidelines until we got close to those strong support levels. With the 50/100 DMA at 8408 on the Dow there was not much risk of further downside without a bounce first.

The key now will be if we can hold this level and move upward. I was looking for 8750 before the holidays and we now have a good head start. As I said in my weekend wrap I see this as only a trading rally and will be looking on returning some of these gifts after the holidays.

  Jonathan Levinson   12/16/02,  3:46:14 PM
Although the twitchy 60 minute 5(3) stochastic is crossing down here, this has been a very bullish day, notwithstanding the light volume. The only fly in the ointment appears to be the move in precious metals. Tomorrow's action in the equity markets will be critical in determining direction going forward.

  Linda Piazza   12/16/02,  3:43:42 PM
Will markets snug up under important resistance levels or push above them before the close? Perhaps some market participants are thinking ahead to the release of economic numbers tomorrow morning, including CPI, housing starts, building permits, industrial production, and capacity utilization.

  John Seckinger   12/16/02,  3:43:23 PM
It is being reported by CNN that "There are problems" with Iraqi declaration of weapons program to UN. This quote is from US Secretary of State Colin Powell.

  Steven Price   12/16/02,  3:34:35 PM
Personal note on retail sales. I was shopping this weekend at the same stores I visited the previous week. My wife and I were looking for some furniture and debated over a coffee table the previous weekend. After measuring our living room, I eventually lost out and she picked the one she originally wanted anyway. As we strode through the same store once again, I noticed the table I wanted had been reduced by 50%. While it didn't change our purchase plan, I couldn't help but think that even if retailers are able recover sales % numbers, the margins have been slashed so severely for these final two weeks before Christmas, which represent a higher percentage of sales with the late Thanksgiving, that I'd be looking to short an end of year rally in the retailers, prior to earnings releases in February.

  Linda Piazza   12/16/02,  3:30:47 PM
If markets close at or above current levels, charts for the indices will all show long white candles for the day, with long real bodies and virtually no wicks or shadows. These long white bodies without wicks or shadows are visual representations of the "open drive" pattern John mentioned earlier today.

  John Seckinger   12/16/02,  3:25:45 PM
Shares of Ebay (EBAY) are currently trading at 69.23 and higher by 2.7 percent, following an analyst from Deutsche Bank Securities maintaining his "buy" rating and noting that Ebay's listings growth is exceeding expectations.

  Steven Price   12/16/02,  3:23:46 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the long signal for a 1/2 position when the Dow traded 8605 at 15:21

  John Seckinger   12/16/02,  3:20:31 PM
40 minutes to go and all signs still point towards a close on or near the daily high. Will it be 8625? It is funny how the markets have a way of closing right on support or resistance levels.

  Steven Price   12/16/02,  3:18:17 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
If we pullback and get a move back over 8600 in the Dow, I'll go 1/2 position long, as the PnF reversal will confirm that in the SPX. I'll add to that position when we cross last week's highs.

Go LONG the broader market with a 1/2 long position on a trade of Dow 8605

Set stops at 8470

  Jonathan Levinson   12/16/02,  3:13:13 PM
Thanks to Ron for the heads up for our reader who just went long on IDPH. I don't follow the stock myself, but this is worth noting:

13:47 ET IDEC Pharm edges lower on Bexxar news (IDPH) 45.34 -1.00: Stock has given up about $0.50 in reaction to news that an FDA Committee has set a date to review Corixa's Bexxar drug (see 13:41 comment). IDPH states in its latest 10-Q that its business could be adversely affected if Corixa is successful at the ODAC meeting and is able to provide sufficient evidence to the FDA to support FDA approval for Bexxar. Zevalin is IDPH's competing drug. // to be reviewed 12/17/02 // www.corixa.com

  Jonathan Levinson   12/16/02,  3:11:11 PM
In reference to your reader's question about Q-Charts put/call symbol. PUTCALL is equity options on all US stocks. The CBOE data, as it says on the page is equity and index option activity. I think it's safe to say that the equity options referred to are those traded at the CBOE only.

Thanks, Wes.

  Jeff Bailey   12/16/02,  3:10:56 PM
CBOE Internet Index (INX.X) 95.47 -0.2% ... inching red here. Despite today's broader rebound in stock, this sector which tends to bid well when bulls are aggressive didn't come close to the psychological 100 level. To me, hints current stock rebound may not last long as market may lack aggressive bulls willing to take some risk. Will monitor, but this action in this sector seems to lack aggressiveness.

  Linda Piazza   12/16/02,  3:02:25 PM
Just checking out some of the stocks in the news today, I stumbled across this chart for Valero Energy, a company that raised earnings guidance today: Link Barely visible on this chart, but more even more visible on the weekly chart is a reverse H&S pattern with a neckline roughly at 37.50. Also visible on the daily chart is the 200-dma (simple) at 36.79, a level that has so far capped Valero's movements today. P&F charts show that VLO has given a buy signal today with a double-top breakout.

You might put this on your watchlist for a call play, watching for a breakout above the 200-dma (on strong volume), a move above the 37.50 neckline, and a move above the resistance shown on the P&F chart. Link Although reverse H&S formations have measuring characteristics, so that it's possible to predict a target once the neckline is broken, this reverse H&S is not a classic formation, as the head is somewhat out of proportion. Correlating this with the original P&F buy signal target of 60, it appears that the reverse H&S formation would provide a target of 60-65. (On a log chart, you don't subtract the level of the top of the head from the neckline level, and then add that back to the neckline to get a target. Instead, you measure the level from the neckline to the top of the shoulder, then measure that same distance above the shoulder. This gives you a proportionate number.) Don't jump the gun on this, as these formations are sometimes rejected.

Readers considering a call play should acquaint themselves with various resistance levels that lie above 37.50, such as slight resistance near 39 and again at 42-43, stronger resistance at 40 and 50. Also, a formation completed over several month's time might require several months to reach a target. Suggesting even more caution, however, are the lack of classic volume patterns in the formation for this reverse H&S. Volume is relatively high today on a light-volume day in the broader markets, but watch for even stronger volume as VLO moves above the neckline of this formation. Suggesting the most caution of all are fundamental concerns such as the geo-political developments that might impact the behavior of this stock. Plan accordingly.

  Jonathan Levinson   12/16/02,  3:00:35 PM
I use the symbol "PUTCALL" in Qcharts and the number I see on my screen is always different from the one you post. For example, I have been getting .64 - .75 for the past hour or so. Am I using the wrong symbol???

No, the divergence between the Qcharts data and the CBOE data from which I quote has been a question I've been unable to answer so far. I watched Qcharts for awhile and then gave up, and now rely only on the CBOE data. It's possible that the Qcharts number is computed solely on equity options volume, or index options volume... without knowing what goes into the number, it's impossible to tell. Having followed the CBOE data for a long time now, I've developed a feel for it, and so I'm sticking with it.

  Kent Barton   12/16/02,  2:58:24 PM
The GSO.X software index (106.01 +3.33) is getting a nice pop today with MSFT bouncing from its 200-dma. The index has bounced from its 50-dma at 102.60 but still faces staggered resistance at 108, 110, and 112. Technical bulls can be encouraged by the MACD (which is starting to level out at the baseline) and the uptrending daily stochastics (5,3,3).

  Jeff Bailey   12/16/02,  2:55:51 PM
Homebuilders Housing Index which measures housing activity reached 65 in December, which was an improvement over November's revised lower reading of 64. Still, this is the highest reading since November 2000. Dow Jones Home Contstruction Index (DJUSHB) 307 +4.28% Link and the HGX.X 225.89 +3.60% Link holding their session highs.

  John Seckinger   12/16/02,  2:54:23 PM
Is Santa Claus coming to town? First let us clear 8625 on the Dow, and then we can go look for some reindeer. The last few minutes has the blue chips coming under slight pressure, and I would be surprised if 8550 is unable to hold some profit taking. Of course, if long, it would be nice if the Dow could get some more buyers involved before the close (read: more volume). Note: Bond prices, which usually trade inversely to stocks, are near its session low at 109'02 as the bond pits look to close for the day.

  Steven Price   12/16/02,  2:54:11 PM
Swing Trade Signals
The failure at 8600 is looking as though it is picking up some downside steam. A move back down below 8550 would definitely be a break in the upward intraday trend and might even be a short opportunity, with a stop at 8630. The risk/reward ratio of that trade is questionable, but aggressive traders looking to short can keep an eye on those levels. If I were to short that level, I'd be targeting Friday's low and another test of the 50-dma down at 8429.

  Jim Brown   12/16/02,  2:52:23 PM
BSTE - FYI - A stock I wrote about on the monitor several weeks ago is on the verge of breaking out of current resistance and it looks like the shorts are beginning to cover. Time for a breakout play?

  Jonathan Levinson   12/16/02,  2:35:56 PM
just bought idph 33.85 would like to know what you think. Seems its been beaten down. thank you david

Indeed it has, and it looks good so far, sporting a recent MACD bullish cross. Watch for resistance at the 20 dma at 34.91.

  Jonathan Levinson   12/16/02,  2:33:30 PM
The put to call ratio is really hanging in there, latest reading at .99- does this sustained action have anything to do with its being options expiration week? I have no idea at this point but am beginning to wonder. Bond yields are holding their gains, as are precious metals, with HUI and XAU near their highs of the day, while the COMPX is printing new highs at 1392. A reader asked what to do with yields high, equities high, and commodities high. Good question- it's what distinguishes bulls from bears. I'd be waiting for rollovers to short, particularly with volume on the exchanges still very light- COMPX 936M and NYSE just over 1B so far.

  Steven Price   12/16/02,  2:32:51 PM
Swing Trade Signals
Today's bounce appeares to be getting stronger, but on EXTREMELY light volume, as we have not yet traded even 1 billion shares on the NYSE. I'm still watching those PnF reversal numbers and also last week's highs. I'm beginning to doubt whether I will get that long entry point on a pullback down to the 8300-8400 range and if we take out last week's highs I may enter long with a small position and a tight stop, since the risk reward here in the middle of the 8400-8800 range is not nearly as favorable as entering lower.

Current levels Dow 8593/SPX 906/OEX 461/COMP1392

  Linda Piazza   12/16/02,  2:27:58 PM
I've been watching 30-minute (5)(3) stochastics redraw themselves with some regularity the last five minutes as prices test and fall back from new highs for the day. Optimistic traders got their wish (see my 12:59 post), as the 60-minute (5)(3) stochastic reprinted itself and turned back up a while ago. Across all indices, it's now indicating overbought conditions, but not yet inclined to turn back down.

  Kent Barton   12/16/02,  2:23:27 PM
Forest Labs (FRX) $95.58 +1.63 announced a 2-for-1 stock split this morning. The split will be payable on January 8th to shareholders of record on December 23rd. It looks like shares could soon being filling in the December 6th gap, which was formed after Forest Labs said approval of one of its blood pressure drugs would be delayed. However, today's move isn't coming on strong volume, and shares aren't showing any sort of relative strength versus the broader market. I'd be wary about going long until the stock clears psychological resistance at 100, which is bolstered by the 50-dma.

On a related note, medical device manufacturer Mentor Corp. (MNTR) also announced a 2-for-1 split this morning.

  John Seckinger   12/16/02,  2:13:22 PM
The Dow continues to be resilient, and the "open drive" pattern of closing near or on its highs still firmly exists. Note: The Homebuilders index of housing activity rose to 65 in December from a 64 release in November. This is its highest reading in two years (November 2000).

  Linda Piazza   12/16/02,  2:11:47 PM
New highs stay above new lows as the markets move into afternoon trading. On the NYSE, new highs number 30, while new lows number 21. On the Nasdaq, the rtaio is 44 new highs to 40 new lows. Advance/decline remains positive, with a 1.84 number on NYSE issues, and a 1.19 number on Nasdaq issues. Up/down volume remains positive, too.

  Jeff Bailey   12/16/02,  2:04:40 PM
Eli Lilly (LLY) $64.35 -0.1% ... stock gives back early session gains of $65.25 in last 30-minutes. Company said it has decided to delay the European submission of ruboxistaurin for the eye indications that was planned for 2003 after trials failed to meet its primary endpoints. In the 2 trials, the overall rate of disease progression was much lower than predicted in the placebo groups.

  Jonathan Levinson   12/16/02,  1:57:47 PM
I just wanted to get back to you. You recommended GG at $10. As always I did not pull the trigger but thanks for your insight.

Thanks, Robert. I could just as easily have been wrong, but that's what the chart was saying at the time. There's always another trade.

  Jonathan Levinson   12/16/02,  1:46:36 PM
While gold is in breakout territory, the HUI is into the resistance area from May/June of this year. Given the vertical move that brought it to this level from last week and the overbought readings that such has generated, a pullback would not be out of the question. Then again, given the substantial short positions in many of the unhedged miners and in gold itself, it might not come. A fascinating time for precious metals.

  Steven Price   12/16/02,  1:46:10 PM
Swing Trade Signals
Is the rally for real? I referred to the PnF reversal points earlier and concidentally the OEX's reversal point of 464 is where the last rebound failed on Dec 11. The corresponding level in the Dow is 8625 and the SPX is 910. Those levels will need to be taken out to reverse the daily pattern of lower highs and could find some shorts waiting. Those traders with long positions can look to break above those levels to add on. If we fail once again in that area, traders may want to close out longs.

  Jeff Bailey   12/16/02,  1:45:07 PM
The 1:00 PM Intraday Update has been posted. Link

  Jonathan Levinson   12/16/02,  1:42:12 PM
Fabes- your email address is being refused.

  John Seckinger   12/16/02,  1:41:48 PM
Time to look at the Semiconductor Index (SOX), currently higher by 3.57% at 320.33. Interestingly, this index tested its bearish daily trend line exactly as the day's high of 321.96 printed. This line started on August 22nd and bisects the highs on November 4th and November 18th. A close above this 322 area would definitely be viewed as a positive.

  Linda Piazza   12/16/02,  1:38:07 PM
MSFT: 53.90, up 1.40 as of this printing. Friday, a reader wrote about noon, asking about a bullish play on MSFT. I'd expressed cautions about the way MSFT was behaving, and indeed it fell during the afternoon. Today, it's up strongly from Friday's closing.

What's changed? Here's the chart: Link MSFT challenged and moved above its first level of resistance, the 50-dma (exponential) at 53.86. Daily stochastics are trying to turn up.

However, today's move is on slightly lower-than-normal volume. MACD still looks bearish on both daily and weekly charts. I also often look at accumulation/distribution patterns and note again that the accumulation/distribution line has moved below its MA. As you scan across the linked chart, you can see that these accumulation/distribution crossovers of its MA have often been fairly good predictors of MSFT's behavior. Because of this and the behavior of the daily and weekly MACD, I'm still somewhat cautious on MSFT. As I mentioned Friday, that doesn't mean that this won't be "a fish that got away," as MSFT appears to be today. MSFT's behavior today also points out the need to know your own trading parameters when evaluating information. A daytrader could certainly have made money on MSFT today, but if you typically stay in a trade at least three-to-five days, there may still be a reason for caution and for carefully thought-out stops in any bullish trade.

  Jonathan Levinson   12/16/02,  1:36:02 PM
The unhedged precious metals index (HUI) has doubled its gains since the last time I posted, now at 141.63 (+1.94) on the day.

  Jonathan Levinson   12/16/02,  1:29:17 PM
The price of gold has broken 336. If this causes a burst of short covering, it could cause the liftoff of which goldbugs have been dreaming all year.

  Jonathan Levinson   12/16/02,  1:27:51 PM
Metals have suddenly gone positive, with HUI up .95 to 104.64, XAU hearly flat at 77.02. Not much action in equities, though bond yields have come down a touch.

  John Seckinger   12/16/02,  1:12:25 PM
The Dow is back at the 8565 area (profiled as resistance in an earlier post), and it does seem like the blue chips will have to gather a lot of energy to make it above 8625. However, I don't expect the Dow to fall below the 8480-8500 area if weakness does develop. With that said, expect buyers to enter if longs take a breather during the next hour.

  Jonathan Levinson   12/16/02,  1:10:39 PM
The TICK.NQ has just finished printing a series of day lows in the -300 area, and is currently -124. The TRINQ is still at the low end of its day range, and treasury yields remain near their highs. Precious metals are recovering nicely though still negative. So far the stochastic rollover that Linda noted is not having much impact on price, which is good news for bulls, but it's very early. This is either a top here or a consolidation. The put to call ratio just came in at 1.04 after briefly dipping below 1.0. Still an awful lot of bearish speculators out there.

  Linda Piazza   12/16/02,  12:59:24 PM
Perhaps we'll have an opportunity to see whether this morning's support levels will hold on a pullback. My charts are showing the first bearish kiss on the (5)(3) 60-minute stochastics across the indices. Although these skittish (5)(3) stochastics sometimes give false signals, the 30-minute (5)(3) have done more than signal a bearish kiss of the two lines--they've begun an actual roll. If you're bullish, you want to see prices hold steady or at least above this morning's pivot points while that 60-minute rolls and then cycles down. If you're really optimistic, you'll hope to see the 60-minute turn back up without rolling, as it sometimes does. If you're bearish, you want support levels to break as the 60-minute cycles down. Unfortunately, the charts don't predict which possibility will occur.

  Jeff Bailey   12/16/02,  12:57:36 PM
SBC Communications (SBC) $27.14 +5.4% ... Jeff: I'm a short-term trader and took your SBC trade from Friday. Stock is up rather strong today, do you still think it has a shot at your target of $28.50? I'm also looking at raising my stop. Any good points on a short term basis?

I still think SBC has a shot at $28.50, but 5.4% is a rather decent move considering today's broader market action. On a short-term basis, I'd look for support right near $27.00. On 60-minute chart, the 200-pd SMA was broken at $26.58. If bullish from $26.26 profile, would move stop to MINIMUM break even. If that's too much room, then snug a stop under $27.00, say $26.92 to try and help assure gain.

  John Seckinger   12/16/02,  12:44:49 PM
Sticking with the bond theme, there are rumors that mortgage accounts are actively selling 10-year notes (ZN03H). Also most likely hurting Treasuries is selling done as an attempt to hedge future corporate bond offerings. Furthermore, with the euro getting stronger against the dollar, a euro-denominated repatriation could be taking place as well.

  Linda Piazza   12/16/02,  12:33:38 PM
The VIX is falling fast today, and, with a low of 30.26, threatens to fall back into that historical 20-30 range again. The contrarian in me isn't too comfortable with the quick fall over the last days, however, as it hints at too much complacency this last week. It's possible to label last week's action as a consolidation, and volatility always falls during a consolidation, but with the markets feeling as if they were teetering on the edge of a greater fall all week, I would have expected fear to remain higher. Although the picture could change with this week's action, it appeared bearish to me that last week's consolidation in the S&P's was accompanied by a rising (5)(3) stochastic on the daily charts.

  Jonathan Levinson   12/16/02,  12:29:38 PM
What pushes the price up with volume low? i.e. what's the buffer that allows the price to go up on low volume? If there is no demand (buyers) for a product (stock), wouldn't there be even less demand at an even higher price? Yet the stock continues to go up? How?

It's cumulative volume that's increasing. There's a lack of sellers, which is allowing price to rise. As long buyers are willing to bid at higher prices and sellers are willing to offer their shares, price will rise.

  Jonathan Levinson   12/16/02,  12:24:58 PM
I watching with a skeptical eye on this rally. Is this a relieve rally that has no legs? The dollar has not changed all that much from last week, yet we seem to have some bulls wanting to run this up. The low volume is troubling and I'm wondering if there is a short here somewhere? By the way, semis are up even though there was that negative article in Barron's this weekend. Is the article being dismissed or is there something else at work here?

I'm not a huge fan of "reasons" for a rally, as noted in my article yesterday. But on a technical basis, most short term indicators were oversold and the indices were near support. Combine that with a 4B injection from the fed, and all the ingredients are there. Longer term bulls should be very concerned about the lack of volume thus far, and I'm watching for a rollover to short. A low put to call ratio (in the .60s at least) should be a good signal to get ready on the trigger, combined with the usual oscillator rollovers and crosses. However, as we all should have learned in October, patience is a virtue, and I'm in no hurry to spend live ammo trying to anticipate the top.

  Steven Price   12/16/02,  12:23:52 PM
Swing Trade Signals
I mentioned earlier that when we took out Friday's afternoon high, it certainly looked bullish. We also got that PnF reversal into a column of "X" in the SPX. We have yet to see them in the Dow and OEX, but we're getting close. OEX comes at 464 and Dow at 8600. I don't want to get long at the tail end of a 140-point morning rally, but if we get reversals across the board, I'll most likely enter on a pullback.

  John Seckinger   12/16/02,  12:17:35 PM
Looking at the bond market for confirmation, the 30-year (ZB03H) is currently lower by '19 at 109'14 and on the lows of the session and testing it 50 and 22 DMA's at 109'19 and 109'14, respectively. Note: A break under these levels in price (read: higher yields) should mean a move higher in equities (look for resistance in Dow at 8625).

  Jonathan Levinson   12/16/02,  12:14:51 PM
Volume is awfully thin in the markets today, which doesn't look too hot on today's resume. Of course, price is the only action, but it's hard to have long term conviction in a bounce on 589M COMPX / 463M NYSE shares after the first 2h45 of trading.

  Jonathan Levinson   12/16/02,  12:05:29 PM
I believe we'll see the COMPX fill the gap to 1400, though the neckline of the head and shoulders pattern from last week on the 30 minute candles is currently acting as resistance. The put to call ratio has reached 1.0, which is still too high to allow us to call a top.

  Jeff Bailey   12/16/02,  11:51:18 AM
The 11:00 AM Intraday Update has been posted. Link

  Steven Price   12/16/02,  11:50:14 AM
Swing Trade Signals
The next level to watch in this rally will be Dow 8600. That level would register a three-box reversal into a column of "X" from the current column of "O". 905 is the reversal level in the SPX and 464 is the reversal level in the OEX. While it certainly would have been nice to have been on board for this rally, those will be the next signals that the tide is reversing back up after the recent sell-off.

  Linda Piazza   12/16/02,  11:50:08 AM
Shake up your charting abilities: Dial up or down for a closer or broader view of the markets. For example, take a look at a one-minute chart of the SPX, and you'll notice that about 11:30, the SPX broke out of a rectangular consolidation pattern between 902-903 that had been forming since 11 am. While that breakout on a one-minute chart might not signify much over the course of a day's trading, especially to swing traders, you might test your ability to notice important chart formations. You might also notice that the one-minute chart sometimes shows "sticking points" or gaps that become important later. Dialing out to weekly or monthly charts also shows you sticking points or gaps that were important years ago, but which might come into play again as the markets move across them.

To further shake up your charting abilities, go to stockcharts.com and click on SharpCharts Voyeur (the last choice under "Charts" on the grey bar on the left of the page). Every couple of minutes, you'll be presented with a recently requested chart. Look at the way other people configure their charts. Why is someone using a 13-dma? Is that MA effective in pointing out pivot points for that particular stock? Might it be helpful in analyzing the stocks or indices that interest you? Why are so many people interested in charts on energy companies today? What does it signify when OBV (on-balance volume) is decreasing while ROC still looks strong on MATK, Martek Biosciences?

  Jonathan Levinson   12/16/02,  11:49:40 AM
Friday's gap resistance is now at issue as the COMPX reaches 1388. The TRINQ has squeezed down a touch further to .38, but the bears simply won't give up, with the put to call ratio at 1.08 now, staying north of 1 all day. It's difficult to see significant downside with this much speculation in puts, and barring a significant trend change, I expect Friday's gap to get filled.

  John Seckinger   12/16/02,  11:37:53 AM
As the Dow powers higher, so does the Oil Index (which can, contrary to popular belief, move in-step with the blue chips). The XOI Index is currently higher by 1.91% at 452 and at levels not seen since October 24th. The strike in Venezuela is in its 3rd week and, coupled with fears over a war with Iraq, has buyers getting aggressive. The Venezuela strike has slashed oil output to less than a third of Venezuela's normal 3.1 million barrels per day. The country accounts for roughly 14 percent of U.S. imports.

  Jonathan Levinson   12/16/02,  11:28:40 AM
The COMPX continues to struggle with resistance below 1385. The TRINQ is staying in the .40-.50 area, while the QQV is now up 1 point on the day. Advancing volume continues to gain on declining volume, and the slope of the ADVDECV line is showing no sign of a reversal yet. Precious metals are reversing part of the losses, while yields are setting new highs of the day, with FVX +3.7 bps.

  Linda Piazza   12/16/02,  11:14:52 AM
Marketwatch.com includes the following stocks among those to watch for today: ICT Group affirmed Q4 expectations, but said earnings would fall short. Valero Energy (VLO) raised its outlook due to a reduction of inventory levels. Bone Care International (BCII) advises that previously known manufacturing issues constrict its ability to fill customer orders for Hectorol, a treatment needed for some end-stage renal disease patients. Healthsouth (HRC) lowered earnings projections to 55 to 57 cents/share from a First Call estimate of 61, and also lowered 2003 revenue projections to $4.32 billion from 4.57. Noting strength in its consumer and aviation product businesses, Garmin (GRMN) raised its Q4 revenue expectations to a range of $132-135 million, from a first Call estimate of $108.2 million. Identix (IDNX) cited slower-than-anticipated government sales as one reason for their lowered outlook. InVision Technologies (INVN) mentioned the acceleration of EDSs—explosives detection systems—as a factor in its increased expectations.

  John Seckinger   12/16/02,  11:06:16 AM
The "open drive" five-minute pattern continues. In fact, this has been the case for trading on Monday during the last few weeks. The Dow makes a significant move in the first five-minutes, and then continues that trend throughout the session. Will the Dow close near its highs? Theory says it should. Support is seen below at 8480, but that level is soon getting out of reach. Pivot analysis does have resistance at 8565.

  Jonathan Levinson   12/16/02,  11:05:55 AM
The latest p/c ratio has just come in at 1.09. Still looking bullish. The TRINQ at .41 shows strong buying pressure verging on extreme, while the QQV has added slightly to its gains, +.91 on the day. Bears are being very persistent, but the buying continues to remain very aggressive.

  Jonathan Levinson   12/16/02,  11:00:16 AM
The put to call ratio at 1.21 for the 1st hour of trading explains the problem for bears this morning. With option traders thinking too many bearish thoughts, the market is most likely to go higher, which it currently is. The next reading is due out within the coming minutes, and I will be very curious to see what this past half hour has done to sentiment.

  Steven Price   12/16/02,  10:51:28 AM
Swing Trade Signals
Hindsight is always 20/20 and Friday afternoon's failed rally certainly looked weak. This morning's action, however, has taken out Friday's highs of the day and is starting to look bullish again. Let's see where this pulls back to and if we get some support above 8500 in the Dow and 900 in the SPX, it may be time to jump in with a partial long position.

Current levels Dow 8539/OEX 457.92/SPX 901.12/COMP 1383

  Linda Piazza   12/16/02,  10:49:37 AM
Double bottoms: With its move over 898 this morning, the SPX has confirmed a double bottom, formed from the 13th to today and best seen on the 30-minute charts. Double bottoms are not confirmed until the stock or index moves above the peak between the two troughs that formed the double bottoms. Double bottoms have measuring characteristics. The stock or index should move up a distance equal to the distance from the peak to the double bottoms. That would mean that the SPX would move up to about 906, an area of congestion and likely resistance seen from other days. I would caution that these intraday patterns often don't play out, although an intraday pattern seen on a 30-minute chart might be deemed more reliable than one on a 5-minute chart.

  Jonathan Levinson   12/16/02,  10:49:21 AM
The indices have gone nearly vertical, while bond yields have flashed green, but again are not reflecting the extent of the positive move in equities. The QQV as well is still positive, and so the buying in equities is not fully convincing the bond and options markets. The COMPX at 1381 is at resistance, and the 5(3) stochastics are overbought across all intraday timeframes, though they are not signalling a rollover at this time.

  Steven Price   12/16/02,  10:41:22 AM
Mercury Interactive (MERQ) $31.23 (+0.92) OI call play MERQ is rebounding nicely from Friday's pullback. I would probably wait for a move over $32.00 to initiate a long play here, which was the top on Thursday. More aggressive traders can target a move over the 21-dma of $31.45.

  John Seckinger   12/16/02,  10:38:49 AM
It is being reported that the family of Wal-Mart (WMT) founder Sam Walton plans to sell up to 16 million shares to fund charitable programs, including a $300 million gift to the University of Arkansas. The shares should be sold within the next six to 12 months. The value, as of today's 51.21 share price, would be roughly 820 million dollars. Of course, the 16 mln shares represent less than 0.4 percent of the company's total outstanding shares, and less than 1 percent of the Walton family's overall Wal-Mart holdings.

  Linda Piazza   12/16/02,  10:35:14 AM
In an effort to gauge retail sales patterns for this, the most important retail sales quarter, Jim has been featuring anecdotal information about shopping patterns. Contrary to what’s believed about most women, I’m not fond of shopping, but Saturday evening my daughter dragged me to several shopping malls in Houston. I’ve been hearing stories from her of increased traffic at Houston-area malls in suburban, moderately upscale areas. We first went to an outlet mall that featured outlets for retailers such as Ann Taylor, Saks, and other high-to-middle-end retailers. The parking lot was so full that people were pulling SUV’s onto the marshland surrounding the sprawling mall. Inside, it was difficult to maneuver through the mall. We were visiting some of those upscale stores, however, and didn’t have particular problems checking out, contrary to what we usually experience during the holiday season. From there, we went to a mall with a Neiman-Marcus. That parking lot was deserted and I saw fewer people in the entire mall than I’d seen in one store in the other mall. It was unclear whether that was due to shopping patterns throughout the city, as my daughter reported that she chose this particular mall (not the Galleria, which also has a Neimans) because it's known for being empty most of the year.

  Steven Price   12/16/02,  10:23:46 AM
What do you think about ISSX this morning with the gap lower? Paulie

Internet Security Systems (ISSX): $21.40 (-0.90) I think the bounce in ISSX following this morning's downgrade looks pretty strong. However, I'd like to see a move back above $22 for long entry, as that is where it ran out of steam on the bounce.

  Steven Price   12/16/02,  10:16:59 AM
Swing Trade Signals
Today's rally has so far crept higher that Friday afternoon's failed rally. However, with resistance in the SPX at 900 just in front of us, I'm hesitant to open long here. My plan has been to enter below 8400, and it certainly seems as though entering between that level and 8800 puts us in the middle of an awful lot of noise and subject to whipsaws.

Current levels Dow 8514/OEX 456.80/COMP 1376/SPX 898.72

  John Seckinger   12/16/02,  10:13:51 AM
Checking the Intermarket relationships: The XAU index is falling (down 1.73%) while the U.S. dollar is back above 104 and higher in price. The Dow is higher by 1.45%, while bonds are unchanged to slightly weaker on a price basis. The Utilities Index is also higher by 0.62% at 253 and continues to break out higher from its wedge pattern. Ticker: UTY.

  Linda Piazza   12/16/02,  10:10:39 AM
After the U.S. markets opened, European markets moved up again, toward their day highs. Last numbers for the FTSE 100 were up 1.28%, the CAC 40 up 2.12%, and the DAX up 1.92%, at the day's high.

  Jeff Bailey   12/16/02,  10:09:04 AM
Sector's all green except for Gold/Silver (XAU.X) 75.91 -1.55%. Drug (DRG.X), and Healthcare (HMO.X) +0.37%, (RXH.X) +0.08% just fractional gains.

  Jeff Bailey   12/16/02,  10:07:16 AM
Pacific Sunwear (PSUN) $28.56 +2.7% .... new 52-week high. Link

  Jonathan Levinson   12/16/02,  10:07:05 AM
Strange to see IBM and GG printing simultaneous lows of the day. Precious metals are giving back some gains, with HUI -1.7 to 137.99, and XAU 1.16 to 75.99. The fed has just announced a 4B 3 day repo, which constitutes a net addition for the day.

  Linda Piazza   12/16/02,  10:02:34 AM
In earliest trading, adv/dec volumes have been positive. On NYSE issues, the number is 2.04. It's 1.09 on Nasdaq issues. Up/down volume is positive on both, too, with a 30:12 ratio on NYSE volume and a 59:34 ratio on Nasdaq volume. I would caution that this early trading is often not a reliable indicator of the day's tenor.

  Jonathan Levinson   12/16/02,  9:55:09 AM
That 25.25ish number for the Qubes looks good so far, Linda.

No announcement from the fed yet. Friday's 4 day repo expires tomorrow, but there's nothing expiring today, and so anything added by the fed will be live ammo in the markets.

  John Seckinger   12/16/02,  9:54:28 AM
There was one chart in particluar I included in my futures wrap that gave the indication of a rally today. The equity markets did need to open higher, however. See chart: Link

  Steven Price   12/16/02,  9:45:28 AM
Swing Trade Signals
So far the opening rally has faded slightly. After Friday's sell-off, I'm not getting a sense of this being "the bounce." There is a lot of congestion in the Dow between 8475 and 8525 for the index to get through, as that level was support last week. Still, if we begin to see higher highs and higher lows on the pullbacks I may dip in with a partial long position.

  Linda Piazza   12/16/02,  9:45:17 AM
Friday afternoon, the QQQ's broke below a bear flag formation best seen on the 15-minute chart. I'll watch to see if that broken support now provides resistance or if the QQQ's can move above that level, currently at about 25.25. Since a bear flag formation is a rising formation, the level of that broken trendline will move up during the day.

  John Seckinger   12/16/02,  9:41:07 AM
Pattern recognition on a five minute chart: Looking at the Dow, the first five-minutes of trading had a range of 8434 to 8478. These levels should remain pivotal during today's session. It is too early to know if we are in a responsive (sell resistance or buy support) session, but look for the 8478 area to play both roles until the dust settles. Note: 50% of today's range is at 8457, which should act as support. For an article on this topic, see link: Link

  Jonathan Levinson   12/16/02,  9:40:01 AM
There's still decent buying pressure despite this light selloff, with the TRINQ currently reading a mere .65 and the QQV +1.83, having shed approx. 1.5 points. Which side will blink first?

  John Seckinger   12/16/02,  9:36:57 AM
The NY Fed's Empire State manufacturing index rose 0.9 points to 10.6 in December after an impressive 24 point rise in November. This report isn't a highly watched and not even listed on most economic calendars; however, it could portend a slightly weaker Philadelphia Fed number scheduled for Thursday (estimates at 5.0 versus 6.1 in November).

  Jonathan Levinson   12/16/02,  9:31:28 AM
5 point gap up open on the COMPX to 1367, TRINQ .41, QQV +3.25 to 45.84.

  Jonathan Levinson   12/16/02,  9:27:50 AM
Interestingly, there's buying in bonds this morning, despite the gains in equity futures, though yields aren't in the red by much. Currently, FVX is down by .2 bps, TNX -.5 bps, and TYX -1.2 bps.

  Jeff Bailey   12/16/02,  9:27:41 AM
Oil, Nat. Gas and Gold all showing gains this morning in futures trade.

Jan. 03 Oil (cl03f) $29.10 +2.32%, March Nat. Gas (ng03h) $4.99 +1.29% and Jan. Gold (gc03f) 334.50 +0.36

  Jeff Bailey   12/16/02,  9:27:37 AM
The 9:00 AM Intraday Update has been posted. Link

  Steven Price   12/16/02,  9:24:22 AM
Swing Trade Signals
The Swing Trade model is currently flat. I'm going to let the opening shake out and see if we get a breakthrough of any intraday resistance from Friday. After bouncing twice off the 50-dmas Friday, I'm tempted to open at least a partial long position here, but not until I see some type of sustainable move. I still think the ideal entry is about 100 Dow points lower, but I'm not sure if we'll get the chance.

  Jonathan Levinson   12/16/02,  9:00:39 AM
Gold opened strong last night and shot up to 334.95, only to settle back to near its previous close, currently trading 333.55. The US Dollar Index continues to hug the 104 s/r line, currently 104.10. The futures are lightly up, with SPX trading 891.70, and QQQ at 25.20, up .16 from Friday's close. Bond yields are currently flat.

  Linda Piazza   12/16/02,  8:52:17 AM
As the open of the U.S. markets approaches, European markets have trimmed some of their gains, but are still strongly up on the day, with the FTSE 100 up .94%, the CAC 40 up 1.85%, and the DAX up 1.5%.

  Linda Piazza   12/16/02,  7:40:50 AM
European markets rose this morning, with the FTSE 100 up 1.52%, the CAC 40 up 2.25%, and the DAX up 1.82%, as of this writing. One big story in Europe this morning is French bank Credit Agricole SA's bid to acquire the 82% of French bank Credit Lyonnaise SA it doesn't own, in what would be the world's third largest transaction this year. Credit Agricole's rival BNP Paribas SA had previously made its own bid to acquire Credit Lyonnaise, and market watchers wait to see if the country's largest lender by assets will make a further move.

Not all the overnight news was good, however. Monday, the Nikkei fell for the ninth straight day, ending down 65.27 points at 8450.94. Hard hit were exporters Sony and Canon, expected to suffer as the dollar falls against the yen. In Japan, Nasdaq Japan was renamed Hercules.

Across Asia, computer-related and other high tech stocks fell, including Taiwan Semiconductor, Mirae (a Korean semiconductor parts maker), Samsung Electronics, China's Legend group (a PC maker), and Tokyo Electron. In South Korea, observers felt that the Kospi's decline could be at least partially attributed to concerns over upcoming elections and North Korea's announced decision to restart its nuclear power plant.

  Steven Price   12/15/02,  8:48:32 PM
The Swing Trade Game Plan has been posted: Link

  John Seckinger   12/15/02,  8:47:47 PM
The Futures Trader Wrap has been posted: Link

  Jim Brown   12/15/02,  8:47:08 PM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link


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