Option Investor
Archive
HAVING TROUBLE PRINTING?
Printer friendly version
  Jim Brown   12/19/02,  4:47:39 PM
Jim, I live in the Mpls/St Paul area. I was waiting for a client yesterday who thought she'd stop in the mall quickly and pick something up first. Very large mall, people were circling to find parking spots in the middle of the day. She waited in line for 20 min to check out. I too expect sales numbers better than some, but then I'm net long TGT and WMT.... wishful thinking I suppose. "K"

I think there is a good chance the numbers may be better than the current bearish forecast but will profits appear. With 50% off sales the norm already those sales may be blowouts instead of profit generators.

 
 
  Jim Brown   12/19/02,  4:41:15 PM
I think traders should take note of the closing levels on the TRIN at 1.81 and the high put/call ratio at .96. Both of these are bullish and would indicate fear in the market rising as oversold conditions increase. There is a very good chance this current down streak is about over.

 
 
  Jim Brown   12/19/02,  4:26:30 PM
Jim, I am from the Research Triangle area of North Carolina. I was Christmas shopping yesterday in the middle of the day. I was completely surprised by the amount of traffic I encountered. The Target and Best Buy stores were very busy. I could hardly find a parking place in the Target lot. My son works part-time for Target and he said they had all 24 registers open all day with lines waiting for each one. I realize that the store he works for is one of the highest volume stores they have in the Southeast but I believe shoppers are feeling the last minute rush. Our area was hit with an ice storm that caused major power outages for almost a week!! Judging by my parking lot count I believe people have been forced to shop later this year. I hope this helps. Ed

I agree the ice storm probably kept quite a few shoppers indoors and I think many others are just now realizing that the shopping season was a week shorter this year. The buying frenzy is being helped by the strong markdown cycle already in progress. Thanks for the observation!

 
 
  Linda Piazza   12/19/02,  3:58:15 PM
For the second day in a row, the COMPX candlestick chart proved trustworthy in predicting the next day's action. Yesterday's candle had completed a bearish evening-star formation, and today's action was bearish.

Or was it? We know the COMPX was down on the day, and anyone trading bullish knows that bullish trades suffered, but does that mean the candle was a bearish one? Not necessarily. Taking a look at today's candle (and realizing that the last few moments of trading can change the appearance of that candle), the candle appears to be a spinning top. A spinning top has a small real body. As mentioned several days ago, a spinning top can indicate that the previous movement is losing its momentum. With two down days in a row and with a generally downward slant to recent trading, we have at least a mini-movement down, so we can assume it's that down movement that might be losing momentum. However, a glance at the chart shows both the 50-ema (exponential daily moving average) and the 22-ema lie overhead, and perhaps might cap any attempt to move upward, given that RSI and (5)(3) stochastics indicate further weakness. Link

 
 
  Steven Price   12/19/02,  3:50:50 PM
Thanks Jim. At this point it appears that the Grinch has made off with the tree and the gifts, but we all know how the story ends. Now let's get to carving that Roast Beast!

 
 
  Jim Brown   12/19/02,  3:45:09 PM
Steve, I think you have a good one here. I like the fact that they could not push to 8300 and it is about time for any shorts to begin covering before option expiration and the holiday week. The key level is now 8390, which was the last material intraday resistance this afternoon. I think we have see the low for the week.

 
 
  Jeff Bailey   12/19/02,  3:44:43 PM
The 3:15 PM Intraday Update has been posted. Link

 
 
  Steven Price   12/19/02,  3:43:49 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the LONG 1/2 position when the Dow traded 8350 at 15:42

 
 
  Jim Brown   12/19/02,  3:36:32 PM
Hi Jim, Made my final run to Toys r Us yesterday. While the parking lot was overflowing, the store had only a handful of shoppers. To whom do those cars belong I ask. Many clerks standing around, with not much to do, added a few to the lot and then I'm told that most are an overflow from Dollar General next door. Dollar General?? I'd almost rather receive coal in my stocking. NYC

I am going to tell Santa you have been a good girl. No coal for you!

 
 
  Steven Price   12/19/02,  3:33:50 PM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We will add to the LONG signal by 1/2 position if the Dow bounces back over 8350, as 8300 is strong support and is a potential bounce point.

This will establish a full LONG position at 8350.

 
 
  John Seckinger   12/19/02,  3:29:13 PM
The Dow has made a nice move in the last 30 minutes (as projected by Bolliger Bands), and now testing the 38.2% retracement area profiled earlier (based off October low and December high).

 
 
  Linda Piazza   12/19/02,  3:23:32 PM
Also speaking of familiarity, KO fell through that November low of 44.21 this morning, printing a low of 43.57 (above its July low of 43.43), then retested that 44.20 level this afternoon. So far, that level has proved to be resistance this afternoon, with KO now at 44.08, down $0.46. I wouldn't be alarmed to see a trade up to 45, to test resistance there.

 
 
  Jeff Bailey   12/19/02,  3:17:14 PM
Dow Industrials (INDU) 8,350 -1.18% ... there's another 50-points. This now helps negate the possibility of a "bear trap." However, it was unlikely that a "bear trap" was present as the BULLISH % was HIGH and reversing LOWER. Usually "bear traps" take place when the BULLISH % is LOW and bears get trapped on an "artificial" breakdown. Link

 
 
  Linda Piazza   12/19/02,  3:16:33 PM
The COMPX just exceeded its days lows. Curiously, the NDX, which often leads the COMPX, had not yet done so as of this writing, although it may have done so by the time this appears---just did so.

 
 
  Mark Phillips   12/19/02,  3:14:19 PM
Speaking of familiarity. Remember my recent comments on ABC, where I was looking for the possibility of another rebound from the $56 support level? Didn't happen, did it? Instead, stock broke that level and printed $55 on Monday, removing any possibility of a bullish bias as PnF chart posted a double-bottom Sell signal. Vertical count now shows risk to the $46 level in play. Traders following the stock had plenty of time to get on board too, as we've had failed attempts to get back over $56 each of the past 3 days. With the stock now breaking below $55 today, I like new bearish entries on subsequent failed rallies below $56. Last support to watch out for is $53.85 (intraday low on 11/09/01. More cautious traders may want to wait for this low to be violated before venturing into a bearish trade. Once below that low though, there's no support to be found, as ABC will be moving into new all-time low territory.

 
 
  Linda Piazza   12/19/02,  3:09:50 PM
A few moments ago, the COMPX again skirted the day's low of 1349.91, trading less than a point above it before moving up again. For reference, the NDX low was 1001.23.

 
 
  Jim Brown   12/19/02,  3:09:38 PM
Santa Claus Rally - John Seckinger just forwarded me some data that shows the Santa Claus rally has had a perfect record since 1945. 1968 was a near miss to break the trend but was up +.86% to continue the streak. Basically from the Nov/Dec low to the January high the Dow averages more than a 10% gain. So far the Nov/Dec low is 8298 on Nov-13th. An average +10% gain would send the Dow back to 9127. Considering the pending war this may not be a typical year. However even a +5% gain would put us back to near 8750. I am not claiming any specific level but just reporting the historical trend.

 
 
  Jonathan Levinson   12/19/02,  3:06:55 PM
Per Jeff's 2:53 post, with the 15% change in the Naz 100 and getting rid of some "junk" stocks, how will that affect QQQ puts? Will these higher priced stocks lift the QQQ's or is there some type prorating?

Good question. The changes only come into effect after this op ex, so it won't affect Dec contracts. My guess is that it will buoy the Qubes, because some funds will be forced to buy these new components, while those being sold are the beaten down "losers". I would expect some upside as a result, but the larger components swing the real weight and won't be touched, so the upside shouldn't be major.

 
 
  John Seckinger   12/19/02,  3:02:32 PM
Just minutes from the close of the bond market, and the 30-year (ZB03H) just recorded a high of 111'00 - the profiled resistance many hours ago - before falling just slightly. What does this mean? Most likely that fixed income traders are a little nervous about price action in stocks during the last hour. If bonds closed above 111'00, I would be more bearish for stocks. Under 111'00, more neutral than anything else. I then turn to the Dow, which hasn't even rebounded to near 8390 yet. The Bollinger Bands are narrowing, so I expect a solid more in the near term.

 
 
  John Seckinger   12/19/02,  2:55:00 PM
I almost forgot: Talked to my parents last night, who live in Pittsburgh, and they went to a few malls last weekend. Both relatively busy; nothing significant they told me. I then spoke with my sister in Boston and brother in San Fran. My sister thought it was a little less busy than this time last last year, while my brother was surprised at the large amount of people. My personal experiences: I go to Best Buy and see people, but then head to Circuit City and it is a graveyard. Location: Lakewood, CO.

 
 
  Mike Parnos   12/19/02,  2:54:48 PM
Persistance
Just a thought before the market closes and the speculators count up their profits or bemoan their losses. The way to become a successful trader is to study and learn the strategies. Once you know them, you can handle whatever the market throws at you. The more strategy you use, the less of a speculator you become.

"Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'press on' has solved and always will solve the problems of the human race." — Calvin Coolidge

 
 
  Jeff Bailey   12/19/02,  2:53:58 PM
QQQ $25.01 -1.49% ... Jeff: with the new column of O's forming now on the QQQ pnf chart, do we start projecting downward targets off the new column of O's or is this where we employ a horizontal count? Also: how in the world did you project that bearish support trend line on the the Dow pnf? Thanks and best wishes,

At this point, we can't project a QQQ downside target, but can only assess risk to support of $20. Similar perhaps to December of last year, when QQQ reversed from $43 when the NASDAQ-100 Bullish % reversed lower on its bullish % chart from an overbought level of bullish % (does anyone see a pattern here?).

What a trader can do is look at the NDX itself. However, as noted last night, 15% of the stocks in the NASDAQ-100 will be changed. This is a rather SIGNIFICANT adjustment and takes out a lot of "junk" technology stock. This isn't to say the current technicals aren't in play on the NDX-100, but perhaps only 85% and not the entire 100% will impact not only the future bullish % readings, but the NDX and QQQ itself. So.... we need to interpret the NDX and QQQ with a "grain of salt" right now.

Here's the "traditional" $50-box scale of the NDX. Link and it looks "just like" the QQQ on this scale doesn't it? Note the NDX hasn't traded 1,000 at this point, while the QQQ has traded $25.00 finally (today). Why is this? Because institutional market makers use the QQQ to hedge inventory and with risk being high as depicted by the bullish %, it makes some sense that the QQQ might have a slightly more bearish action than the NDX.

Hey... this is getting too long, but we've done some things with changing the box scale on the NDX to $25 and $10 to try and get a feel for it. I'll do this again, but we'll need to BACK TEST any bullish/bearish counts to look for accuracy. Again... we must also understand the uncertainty that presents itself going forward with 15 new stocks, many non-tech, that are being added. I'm working on this analysis too.

 
 
  Jonathan Levinson   12/19/02,  2:52:27 PM
That bounce attempt ran out of steam, but the selling is continuing in mining stocks, with HUI getting clocked for 2.78 on the day and XAU getting hit harder, down 2.35 to 74.75. The hedged miner index, XAU, has ABX to thank for the relative weakness. Gold traders, in addition to avoiding ABX, should also steer clear of PDG and AU, both of which are also reputed to hedge by being short gold.

 
 
  Linda Piazza   12/19/02,  2:43:34 PM
Powell says Iraq's Declaration "fails totally to move us in the direction of a peaceful resolution." He threatened that Iraq would face the consequences of a failure to comply, that the U.N. resolution would be enforced, and that the world would not wait forever to do so.

 
 
  Steven Price   12/19/02,  2:42:28 PM
Swing Trade Signals
Maybe it's just wishful thinking for the long signal, but Colin Powell sounds an awful lot like he's giving Iraq another chance. We didn't get a sell-off on his statements, so I'm not particularly worried about a sell-off at this point.

 
 
  Linda Piazza   12/19/02,  2:41:17 PM
Colin Powell, Secretary of State,is speaking, enumerating the omissions in the Iraqi Declaration. In other news, Tenet Healthcare reveals that federal agents have obtained search warrants for two of its office buildings.

 
 
  Linda Piazza   12/19/02,  2:36:34 PM
I've been quoting Mark Phillips and recommending that traders read his articles on the benefits of becoming familiar with a particular stock or index you're interested in trading. While it's certainly possible to profit on trade setups on an unfamiliar stock, knowing the stock or index offers particular benefits even beyond those mentioned in Mark's article. Does this stock or index tend to meet its P&F targets? That's helpful to know when you're deciding on the risk/benefit ratio of getting into a trade. Does it often move $0.25 above or below a pivot point, trapping bulls or bears, and then reverse course? That's helpful to know when you're entering a trade or setting a stop loss. Does the market maker for that stock resolutely refuse to buy or sell options between the bid/ask? Does a stable stock nevertheless tend to trade up every morning, then drift down during the day--a helpful fact to know if you're a scalper?

 
 
  Jeff Bailey   12/19/02,  2:21:18 PM
Triple Witching Expration is so difficult to make an attempt at interpreting the market action. Is the SOX.X bidding 297.41 a sign of strength and conviction? Or is it because 300 is it the 2,493 open interest in the $275 puts, the heavy open interest in the Intel $17.50 calls/puts, etc. etc. that have the SOX.X firm after yesterday's declines?

While options markets don't CONTROL stock trading, they can influence it. It takes about a week AFTER expiration for the markets to return to a more "natural" state of trading. The week either side is difficult to make any type of intermediate to longer-term type of analysis.

 
 
  Linda Piazza   12/19/02,  2:18:24 PM
For those at work and not listening to CNBC or scanning news sources, Tenet Healthcare (THC) has been halted, pending news.

 
 
  Jonathan Levinson   12/19/02,  2:13:45 PM
There a bounce starting with the COMPX currently at 1355. A failure from this area could create a head and shoulders on the 5 minute chart, but we know better than to anticipate signals. The TRINQ has falled deeper into "neutral" territory at 1.28, TICK.NQ -226. Very little change in the indicators, and other than this morning's amazing Finger formation, it's been a relatively quiet day. As JB pointed out, we have a "wooly" descending wedge intraday, though it could also be a descending triangle with a slightly crooked support line. The trouble is that a descending wedge is bullish, while a descending wedge is bearish. Something to watch, but not something on which to trade.

 
 
  Jeff Bailey   12/19/02,  2:12:53 PM
Dow 9,000 In August of this year, the Dow broke a triple-bottom at 8,750. That "wasn't key" as it came at "support." Then at 8,200, the Dow broke bullish support trend, but there was still support at 8,050. Then the Dow broke to new 52-week lows at 7,500, but there was still support dating back to 1998.

My point here.... it doesn't matter if there's a lot of "whining", the Dow is starting to break down and supply is starting to outstrip demand. The bullish % was high, its reversing LOWER. The broader S&P 500 Bullish % is REVERSING LOWER, more stocks are giving sell signals and violating past levels of support.

If there's "whining" going on, then that's complacency. It's when everyone starts yelling and taking defensive action way too late when the bullish % are oversold that its time to take a buy approach to things.

 
 
  John Seckinger   12/19/02,  2:12:21 PM
Interesting Note: In 23 of the past 33 years, mutual fund portfolio managers have taken their cash levels down (in aggregate) between the end of November and the end of the January. This should exacerbate the buying they must accomplish during this two-month period, because January generally kicks off a seasonal surge of new investor inflows that cumulates in April or May.

 
 
  Linda Piazza   12/19/02,  2:06:51 PM
Just FYI and not something I've confirmed for myself, but an early-morning commentator on CNBC last week noted that while markets usually struggle in the weeks or months leading up to a war, they usually rebound "once the shooting starts." This is not trading advice.

 
 
  Jim Brown   12/19/02,  2:05:29 PM
My stance from Sunday has not changed. I am still a buyer of the broad market under 8450 with a stop loss at 8250. If for no other reason than we have seen a three-week down trend the odds of a holiday bounce are still strong. Obviously no guarantees but if the "material breach" declaration can only knock us back -80 points then the technical support levels should still be able to hold over the holiday. Numerous high level news items about troop call ups and potential attack dates could however ruin the typical holiday sentiment for retail traders and Santa may not come to Wall Street. Until that 8250 level is broken I am still hopeful for the historical holiday bounce.

 
 
  John Seckinger   12/19/02,  1:59:20 PM
I talked with at friend at the CBOT, and he said traders are almost afraid to short bonds due to the "material breach" use of words. Looking at the Dow, the lows at the 8390 area should be resistance, and this does line up with the mid-point of a short-term Bollinger Band. Note: Hearing now that late January should be being pivotal with respect to a decision on Iraq. I should note that the 8338 level looks to be the 38.2% retracement from the lows in October to the highs in December.

 
 
  Jim Brown   12/19/02,  1:55:53 PM
Everybody is whining about the market drop back to 8350 but we have known that the major support range has 8300-8450 since late October. Only a break below 8300 is really a material change in the current status. Despite the -80 point drop in the Dow the A/D line is only at -938 issues. Compared to yesterday's nearly -3000 issues this is a key indicator that there is really no conviction in the continued selling.

Light volume has been mentioned for over a week now. The general conversation goes something like "don't worry there is no volume so there is no conviction in the sell off." While I agree with the no conviction part everybody knows ships can sink in calm seas. There may not be a rush to sell as indicated by the low volume but there is definitely no rush to buy. Volume is a weapon of the bulls and obviously they are out of ammo. Hopefully they are just reloading for next week.

 
 
  Linda Piazza   12/19/02,  1:50:51 PM
Of particular concern to Mohamed ElBaradei, head of the International Atomic Energy Agency, is information concerning Iraq's recent purchase of aluminum tubes. Blix, chief U.N. weapons inspector, mentioned omissions in the biological area. Both men complained about the quality of the report, but mentioned the cooperation offered inspectors on the ground.

 
 
  Jeff Bailey   12/19/02,  1:46:42 PM
Per Mark's 13:26:36 hmmm.... "similar" to Dow Industrials chart. High Pole warning, little rebound, then reversing sell signal with some "air" underneath. Link

Some may wonder "why it wan't profile as HUGE short/put at $75?" Probably for the same reason it wasn't profiled for HUGE short/put at $64 in November (red B) when demand was really in control and little sign of distribution.

Still a strong stock, but some profits may be at risk that seek protection to $53, where the stock broke a triple-top. Man... you can really envision the "short-squeeze" at $53 when the stock broke above that level. Look to the left of the chart where $53 also had served past resistance. Now thinking as a bearish target, "resistance broken, becomes support."

 
 
  Linda Piazza   12/19/02,  1:46:00 PM
ABC News is reporting that U.S. Ambassador John Negroponte declared Iraq in "material breach" of its obligations. It had been reported earlier this morning that Bush would avoid using that particular language, as that diplomatic language that lead to war.

 
 
  Jeff Bailey   12/19/02,  1:43:42 PM
Proctor & Gamble (PG) $86.20 -1.29% .... From prior bearish profile at $87 in the Jan. $90 puts. I'm setting a trading plan, based on Jan. expiration to close out at least 1/2 of position if not entire should PG drop near $84 in the next week. Then should that take place, look for rally back near $87 and new entry points for Feb. expiration. Link

 
 
  Kent Barton   12/19/02,  1:42:24 PM
Affiliated Computer Services (ACS) $49.81 +0.91: Just announced a $650 million deal with Motorola. As part of the agreement, MOT will outsource its human resources services to ACS. Trading in Affiliated Computer is currently halted.

 
 
  John Seckinger   12/19/02,  1:37:54 PM
The 30-year is up a full-point at 110'27, and has yet reached resistance at 111'00. Look to see if bond traders take profits and temporarily enter stocks once this takes place. As far as stocks are concerned, the ES contract is right at support at 883.50. If this fails to hold, look for more solid bids (read: intermediate term traders) to enter at 876.

 
 
  Jeff Bailey   12/19/02,  1:33:33 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  Mark Phillips   12/19/02,  1:29:08 PM
The Phantom Stikes again! Sorry Linda, that was me -- note your name is right next to mine in the author-selection form.

It should be fixed now.

 
 
  Mark Phillips   12/19/02,  1:26:36 PM
ROOM $59 and falling. Talked about this one earlier as showing the most weakness in the OI Put list. Since then, ROOM has broken back under $60, and now $59, taking out its lows from last week in the process. This removes the question of a possible PnF Bear trap, as we now have another double-bottom Sell signal with the print below $59. Looks like the bears are back in town...

 
 
  Linda Piazza   12/19/02,  1:25:58 PM
Hmm. Adv/dec numbers still show more advancing issues than declining issues at the NYSE, with a number of 1.03. Up/down volume shows selling, with a 266:434 ratio. On the Nasdaq, that ratio is 328/638, with an adv/dec figure of .79. I would have expected worse-looking numbers.

 
 
  Jonathan Levinson   12/19/02,  1:24:33 PM
Um, Linda, it waddn't me at 13:12. We have a mystery poster!

 
 
  Jonathan Levinson   12/19/02,  1:23:45 PM
We have a fresh low of the day on the COMPX. I just finished talking my cousin out of buying a position in ATI Tech- he loves their video cards, but the chart looks pretty awful. The QQV is up big and the VIX is up much bigger, signalling either op ex week shenanigans or, more logical to my mind, the first sign that the market is starting to contemplate seriously the possibility that the rally might be coming to an end. The TRINQ remains mellow at 1.83, the TICK.NQ is worsening at -404, ditto yields, with the five year now down 9.3 bps.

 
 
  Kent Barton   12/19/02,  1:21:09 PM
Micron's earnings disaster continues to weigh on the chip sector. The SOX.X (294.18 -3.62) is sinking lower by another 1.1% today after violating support at 310 and 300. The next level of support is at the November lows near 282. Sector giant INTC (16.87 -0.25) has seen a similar breakdown, as shares begin to retrace the steep October rally.

 
 
  Steven Price   12/19/02,  1:18:11 PM
Swing Trade Signals
The Iraq news continues to get worse, with a recent announcement on CNBC that the U.S. will declare Iraq in violation of the UN agreement. We are trading around our lows of the day. I am not ready to close the long position, but we could take some pain here as the announcements regarding Iraq continue. We are not seeing a major sell-off, and I'm going to hang on for the moment. If we don't see a total breakdown on the news, I think a bounce is still apossibility.

 
 
  Ray Cummins   12/19/02,  1:15:15 PM
Combos: A Question!

Ray, You are almost always using credit spreads...but what is the disadvantage of entering some of the same plays using debit call (bull-call) spread or debit put (bear-put) spread where no margin is needed? FA

Regarding debit spreads: The primary disadvantage is the potential profits are not available at the same strikes, due to the characteristics of option pricing. For example, it is rare to find an "in-the-money" put-debit spread that will provide the same risk/profit ratio as its equivalent "out-of-the-money" call-credit spread. The same can be said of "in-the-money" call-debit spreads and "out-of-the-money" put-credit spreads. Only in very unique market conditions will a (vertical) debit spread offer a comparable risk/reward ratio to the equivalent credit spread. Hope that helps! Ray

 
 
  Mark Phillips   12/19/02,  1:12:21 PM
VIX Yep, you know I'm watching it this afternoon. Normally I'd say that a more than 10% increase in the VIX with a fairly mild loss across the broad market is sending a signal of major weakness on the horizon. But like Linda pointed out, this move probably has a lot to do with options expiration. It is interesting to note that the VXN is only up 0.46%, so there isn't a corresponding rise in volatility/fear in Tech-land. Just another metric to monitor as we head into the end of the week. With so many mixed signals, I'm content to wait until next week (after expiration) to try to fit all the pieces together into a coherent plan of action in the broad market.

 
 
  Linda Piazza   12/19/02,  1:11:11 PM
UN spokespersons just on CNBC spoke in terms of a "continuous" discussion with Iraq over the omissions in the Iraqi Declaration, rather than a single list of questions to be answered. They said those discussions would take some time.

 
 
  John Seckinger   12/19/02,  1:03:46 PM
The most recent low was 8392 versus 8391 the first time down. I didn't think it would be that close, but (per Post 12:30:46) the idea remains. For bulls, it would be nice to see a test of 8450 and then an eventual break above. I am sure bears would like to hit some stops under 8391, and it shouldn't be long before we know which camp wins.

 
 
  Linda Piazza   12/19/02,  1:00:41 PM
Anyone notice the VIX? It's 34.63. This may be distorted by options expiration, though.

 
 
  Linda Piazza   12/19/02,  12:56:22 PM
VLO: 36.90, up $0.13, but on light volume. Of concern to those holding calls on the recent break above 37.50 and the 200-dma might be the bearish divergence showing up in the (5)(3) stochastics as they turn down. Despite the DOW's struggle, however, this stock has managed to stay above its 200-dma (exp), and appears to be consolidating above the 35.50-36.00 support area. As I have mentioned in other posts, it concerned me when VLO pushed above that 200-dma, the 37.50 neckline of a reverse H&S formation, and the resistance on its P&F chart, but then got pushed down immediately. So far, this pullback appears to be nothing more consolidation, but be watchful.

 
 
  Jonathan Levinson   12/19/02,  12:55:42 PM
The COMPX is currently 3 points off its lows, and the indicators are much mellower on this second intraday decline, with the TRINQ at a very tame 1.72, QQV up .63 on the day, and the TICK.NQ -216. FVX is down 8.1 bps, while the HUI is back off its lows and down .17 on the day at 143.33.

 
 
  Ray Cummins   12/19/02,  12:44:01 PM
Spreads/Combos/Premium Selling - Other Noteworthy Events

Electronic Arts (NASDAQ:ERTS) has been a victim of the slowing demand for PC gaming software and today the selling continued after Pacific Crest downgraded the issue. Traders who sold calls or initiated bearish credit-spreads (as suggested in two recent editions of the OIN) were rewarded with a $4 retreat this morning and the stock is now trading at 2002 lows near $52.

Engineered Support (NASDAQ:EASI) also slumped early in the session after a downgrade by UBS based on valuation. In addition, the brokerage firm says it sees evidence of a slowing growth rate, the absence of organic growth, and relatively poor quarterly earnings visibility. Yikes! Traders who participated in last Wednesday's bullish synthetic position (and did not take the small profits earlier in the week) should consider exiting the play on any close below the sold (put) strike at $35.

 
 
  John Seckinger   12/19/02,  12:30:46 PM
The 30-year continues to power higher, up '22 ticks at 110'17 and now almost a full point off its lows. Resistance is felt at above at 111'00, and that could have bond traders rolling into stocks as profits are taken in the bond pits. Looking elsewhere, the Sox is lower by 1% at 294, while the Utilities Index (UTY) is down as well. If there are solid bids waiting for a retest of 8391, don't be surprised if we never get there. Scenario: Dow trades 8400 and then makes its way back to 8450 and today's pivotal area. If long, not testing the 8391 would definitely be a good sign.

 
 
  Steven Price   12/19/02,  12:24:22 PM
Swing Trade Signals
We are not getting any follow through on the bounce after the Philly Fed,which has failed, but also not falling back below Dow 8400. Not a whole lot to analyze from this point and I'm going to maintain the status quo. We are right about where we initiated the LONG signal, and momentum traders could certainly close out with no follow through in either direction, but my plan is still to do some accumulation around this support level and close out on a bounce from here. If we simply stagnate, I would consider closing, but we're not at that point yet.

 
 
  Ray Cummins   12/19/02,  12:22:46 PM
Great News For NBIX!
Pfizer (NYSE:PFE) has agreed to pay biotech firm Neurocrine Biosciences (NASDAQ:NBIX) up to $400 million for rights to co-develop and co-market the smaller firm's experimental insomnia drug; indiplon. Neurocrine will receive an upfront payment of $100 million and up to $300 million in milestone payments under the deal. Pfizer will also fund the ongoing development of indiplon and pay royalties on worldwide sales and co-promotion fees in the U.S.

Traders who participated in the recent (bullish) credit-spread or "premium selling" positions benefited from the news and it appears those plays will finish with some excellent profits. .

 
 
  Jonathan Levinson   12/19/02,  12:13:57 PM
Here's the full story on the Philly fed numbers just released: Link

 
 
  Jonathan Levinson   12/19/02,  12:12:36 PM
Philly Fed index came in at 7.2, up from November's 6.1 and above expectations.

 
 
  Linda Piazza   12/19/02,  12:09:03 PM
Interesting chart: After reporting earnings after yesterday's closing bell, BBBY (Bed, Bath, and Beyond) trades at 34.21, up 1.88, on volume that already exceeds average daily volume. (5)(3) stochastics are pointed up. This morning, it gapped up above its 200-dma (exponential). Time to go long BBBY?

Not so fast. It's still on a P&F sell signal. Also, take a look at the linked chart and notice the triangle that can be drawn with the top line starting at October highs and slanting down, and the bottom line starting at August lows and slanting up? Glance down at the bottom of the chart. Notice that volume has generally been falling off during that period? I wouldn't be trading this one either direction until it's broken solidly out of that triangle formation. Link

 
 
  Jonathan Levinson   12/19/02,  11:57:33 AM
The COMPX is struggling with the 1360-67 s/r zone. The TRINQ at 1.09 is dead neutral, while bond yields are lower with the FVX -4.8. We could see rangebound action here, recalling previous patterns of op ex week.

 
 
  John Seckinger   12/19/02,  11:56:18 AM
Note: 50% of today's range is 8448. The high on the rebound was 8448. Therefore, a move back above here might give bulls a slight victory. Just something to look for. Also note that prices are on the mid-point of the Bollinger Bands on a five-minute chart.

 
 
  Linda Piazza   12/19/02,  11:37:33 AM
One reason I like to watch both adv/dec volume and up/down volume is that they sometimes tell different stories. On the NYSE, the adv/dec issues still shows more issues advancing, with a 1.09 number, but the up/down volume shows that instead of a 2:1 ratio from earlier this morning, the ratio is now 164:258, showing more down volume than up. Both figures show selling on the Nasdaq, with a .77 adv/dec number and a 206:433 ratio of up/down volume. New lows outnumber new highs.

 
 
  Jeff Bailey   12/19/02,  11:33:15 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  Mark Phillips   12/19/02,  11:28:38 AM
Reversal of Fortune So much for that breakout attempt! After charging up to test the middle of its channel, CTXS is right back at the bottom edge, testing support near $12.80.

We've had quite the little slide in the market over the past 30 minutes, with big losses for the day on our other call plays, ISSX, MERQ and OVER. With the broad market looking exceedingly weak right here, short or flat appears to be where it's at. On the other side of the playlist, there deosn't appear to be any meaningful or sustainable upside from our Put list. Most plays fractionally in the gree, but looking weak across the board.

One play on the Put list that stands out for its weakness is ROOM. The stock once again broke below $60 this morning, but didn't take out last week's intraday lows. A quick bounce ran out of steam just over $61 and its looking heavy again here.

 
 
  Mike Parnos   12/19/02,  11:21:36 AM
A QQQ Iron Condor?
Question: I am having a problem on deciding which puts and calls to use for an Iron Condor on the QQQ. On the calls I am looking at Jan 28 and 30 and on the puts Jan 20 and 22. Any suggestions would be appreciated and thanks.

Response:Those are reasonable support and resistance levels. However, you could only take in a total of $.30. Now, $.30 on a $2 risk is a potential 17.6% return on risk -- which is OK. But, unless you're going to do a ton of contracts and are charged exceptionally low commissions, I would consider looking elsewhere. The QQQs traditionally don't have high enough premiums for one-month selling strategies.

 
 
  John Seckinger   12/19/02,  11:18:46 AM
It was interesting, and in my mind no coincidence, that the Dow temporarily stopped at the low during the first five minutes of trading (8412). It was, however, the low of the day at the time. With that said, look for some resistance there if the Dow begins to recover. I believe 8400 is a highly-watched area, so please watch out for bear traps just underneath. If 8400 turns into resistance, then we should have another wave lower. Also note: Dow at bottom of Bollinger Bands on five-minute chart. On a 60-minute chart, the low Bollinger Bands comes in at 8368.

 
 
  Steven Price   12/19/02,  11:17:04 AM
Swing Trade Signals
Did I say we got a bounce at Dow 8400? Silly me, we just rolled over and have taken out yesterday's lows. We are heading into the meat of support around 8300, and we may get a closer look at just what that level will be. As I write we are back over 8400, but we no doubt got a lower low.

 
 
  Linda Piazza   12/19/02,  11:15:17 AM
Interesting chart formation that Jonathan pointed out! While forming that finger, the COMPX also dropped back below the important 1367-1370 and 1360 areas that proved important yesterday. This again brings into the realm of possibility the downward target projected by the double-top formation on the hourly COMPX charts. That target was 1326 (1408 lowest top - 1367 = 41. Subtract 41 from 1367 = 1326). As I mentioned yesterday, these intraday formations don't always meet their targets.

 
 
  Jonathan Levinson   12/19/02,  11:12:13 AM
You are always coming up with catchy little diddies that you find somewhere on the internet so I thought I would pass this one on to you. By the way, do you know the stock symbol for Avery Dennison? Another subject – do you know the reason for ERTS’s precipitous fall?

Hilarious link that I don't dare post here. ERTS? The chart says it all- as per my article this weekend on TA and fundamental analysis, I don't follow the news on stocks closely at all, but this chart is loud and clear: SELL! Link is posted below. The stock symbol for which you seek is AVY on the NYSE.

Link

 
 
  John Seckinger   12/19/02,  11:10:51 AM
CNBC is reporting that while there are omissions in the Iraq report, Blix (chief U.N. weapons inspector) is not prepared to call it a violation.

 
 
  Steven Price   12/19/02,  11:10:33 AM
Swing Trade Signals
Quite a failure on the Iraq news. This is certainly going to be tricky trading and subject to news releases on almost a daily basis. So far the morning rally told us institutions liked the Oracle news, so unless we have a major drop, I'm going to stick to the plan. If we get another bounce, we'll look at SPX 900 as our pivot point. I am tempted to step up the long position after seeing 8400 hold even on the Iraqi violation, and aggressive traders can certainly play a bounce from here, but given the geo-political uncertainty, I think I'll stock with the 1/2 position.

 
 
  Linda Piazza   12/19/02,  11:06:13 AM
Reader Question: I had asked you about RSTO [Restoration Hardware] a few days ago, why it was tanking. I see there was news on Nov 18th.

Response: This is why I love technical analysis! On Tuesday when this reader first asked why RSTO was tanking, we were forced to speculate on the reason. Pier 1 had reported results, and some analysts were concerned about inventory levels in this specialty retailer. Other specialty retailers were moving down on strong volume, too, including Williams-Sonoma as well as Restoration Hardware. Yesterday, however, RSTO announced accounting foibles that were going to force a restating of their results. Today, the stock is again tanking on strong volume and currently trades at 4.31.

The reason that I love technical analysis is that it gave advance warning that something was wrong. We were never able to find a reason that day for the stock’s decline, but a reason did exist. When the reader first wrote, I noted that while still on a P&F buy signal at that time, RSTO had given a high-pole warning, quickly reversing into a column of “O’s,” and that it was close to giving a sell signal, which it has since done. Link I noted that it had fallen below its 50-dma (exp) and was sitting on light support. I mentioned technical support below at 4.65 and 4.00, and had mentioned that the weekly chart showed an ugly possibility: a potential H&S formation with the right shoulder perhaps being formed now. (Note: For those of you who might look at this chart and think this would make an ideal bearish play, it might be risky to enter near final support at 4.00, especially since the stock has fallen so precipitously this week. A better entry might be made on a bounce back up to resistance, a la Mark Phillips’ comments about the way he watched ABC for a potential put play on a failure at resistance.) Here’s the weekly chart: Link

My point in all of this is not to say that fundamentals should be ignored. I wouldn’t want to be holding a swing trade over an earnings announcement, for example, so I’d want to know about fundamentals that might impact my trade, but the charts give me information that no one else is going to give. Someone had advance warning of economic foibles in RSTO, but I didn’t and the reader didn’t, and yet we both could see something going wrong.

 
 
  Mike Parnos   12/19/02,  11:05:37 AM
Why Not ATM Puts & Calls?
Question: Mike, why do you suggest QQQ Feb 27 put & Feb. 25 call cost ($4.75), instead of QQQ Feb. 25 call & 25 put cost ($3.70)? I will appreciate your view. Thanks.

Answer: What you're suggesting is an at-the-money straddle. When using ATM puts and calls, the entire $3.70 is at risk. If QQQs finish at $25, your position has eroded to zero. We're trying to limit our risk to $2.75 and getting a running start by taking advantage of a little better delta. You can do it, but your risk is a little higher.

It also affects your percent return on risk. If the QQQ Strangle works and you make $1.00, your return on a $2.75 risk is 36%. Your $1.00 would be a return of 27%. It's not major money, but we have to try and use our money wisely and take advantage of anything we can.

 
 
  Jonathan Levinson   12/19/02,  11:04:52 AM
The COMPX 5 minute chart is a textbook example of a formation originally identified and named by one of my few and dear mentors in this craft. It's called The Finger. Looks like 13B in fed money doesn't go as far or as long as it used to.

 
 
  Jeff Bailey   12/19/02,  11:00:50 AM
Sell Program SPX 889 (now at low end of our option expiration range).

Boom! QQQ $25.00 day-trader QQQ bear target from $25.75.

 
 
  Mark Phillips   12/19/02,  10:59:51 AM
Thanks for the perspective, Jon.

 
 
  John Seckinger   12/19/02,  10:57:47 AM
Looking at a chart of the GC03G contract, I calculated an upside objective based off the breakout area and the apex of the wedge. If the high stands, the apex actually appeared to work better. Please see chart: Link

 
 
  Jonathan Levinson   12/19/02,  10:56:23 AM
thanks for opinion on idph a few days back sold made 2.00 on it isil is taking alot of heat. Would you buy here or leave alone. YOUR chart ability is unreal. THANKS

David, flattery will get you everywhere, but never discount luck, with which I appear to have been blessed on that call. I understand your eagerness to return to the well, but I would wait. While the stochastics is looking bottomy, the MacD is not, and is in a full bear roll, so much so that the 20 dma is getting ready to cross the 50 dma. You could try to play the double bottom 10.92, which would be a very aggressive trade, but if you do, put a tight stop under it and respect it. Here's what I see: Link

 
 
  Linda Piazza   12/19/02,  10:43:46 AM
Time for a volume check: Volume patterns show buying in earliest trading this morning, with adv/dec numbers at 1.89 for NYSE and 1.52 for the Nasdaq issues. Up/down volume was also positive, by more than 2:1 on NYSE volume and by almost 3:1 for Nasdaq. New lows continue to lead new highs, though.

 
 
  Steven Price   12/19/02,  10:41:33 AM
Swing Trade Signals
This fade has fallen through some short term intraday support levels and is just now catching a bid. The high in the SPX was 899.18, so we know what our next level of resistance is going to be - SPX 900.

Current levels: Dow 8468/SPX 895/OEX 454.94/COMP 1371

 
 
  Jonathan Levinson   12/19/02,  10:40:09 AM
I wish I had saved the link, but I recall seeing about 1 month ago a chart of the short interest on most of the major unhedged gold and silver mining stocks. The chart showed an increase in short interest across these stocks, and in some cases, it had increased by several THOUSAND percent. Because the total combined market cap of the HUI and XAU is but a small fraction of that of the INDU, mining stocks are very easy for the big boys to manipulate. When foreigners get bullish in metals, they don't think first of picking up some GG or even NEM- they go buy bullion. I believe that the lag between miners and metals can be attributed to a combination of manipulation / shorting (ie the ABX/JPM story from yesterday) and foreign bullishness in the metal exceeding domestic bullishness in the miners.

 
 
  Mark Phillips   12/19/02,  10:31:23 AM
What's this? Kind of interesting that Gold Futures (GC03G) skyrocketed up to as high as $355.70 last night, but are now trading more than $10 below that level as I type. While that still has the yellow metal trading up on the session, its nothing like what we saw last night.

But what I really want to call your attention to is the action in the gold stocks. The XAU index is just over the $76 level, down more than 1.3% and still consolidating the recent surge in price. Simply put, the gold stocks are not being driven higher by the ever-climbing price of gold. That's why I recently advocated NOT CHASING the gold shares higher on this move. In the LEAPS column we're tracking a bullish play on NEM, and I made it very clear that we don't want to chase the stock higher, with strong resistance in the $29-30 area -- we'll get a chance to enter again at a lower level. In NEM's case, I expect to see a gradual pullback to the top of the wedge the stock broke out of last week. That makes the $27 level a viable target for new bullish entries, especially with that level also attracting the 200-dma, currently at $26.97.

 
 
  Jonathan Levinson   12/19/02,  10:31:16 AM
Very interesting that bonds never sold off despite the incredible ramping in equities. This divergence indicates that the bigger/smarter money in bonds either didn't believe the morning's rally, or that the fed's 13B in fresh repo money went into bonds to keep yields down, which we know from the fed governors' recent speeches to be one of the fed's priorities. In any case, FVX is still -3.3 bps, TNX -2.9 bps and TYX -2.3. The COMPX has come back down to 1373, having failed to break that 1380 resistance zone, and precious metals are recovering as well, with HUI only off .58 on the day, well off its lows.

 
 
  John Seckinger   12/19/02,  10:29:46 AM
Jeff, the ES03H contract had a high of 900.00. Resistance, per Futures wrap, came in at 901.00.

 
 
  Jeff Bailey   12/19/02,  10:28:17 AM
QQQ $25.57 +0.78% .... per last night's Index Trader Wrap .... QQQ rallied right to our downward trend on 60-minute chart ($25.75), traded $25.78 now falls below support. Another decent short/put based on things discussed regarding triple-witching.

 
 
  Mike Parnos   12/19/02,  10:26:28 AM
Is It Time Yet?
I've received letters from readers just chomping at the bit to enter the next QQQ ITM Strangle. It has worked well over the last 3-4 months, so why shouldn't we do it again?

The QQQ ITM Strangle is an approximate two month strategy in which we buy a call and a put, two months out, on the QQQs at the strikes surrounding where the QQQs happen to be trading.

The QQQs, at this writing, are trading at $25.64. The Feb. $27 put can be purchased at $2.60. The Feb. $25 call can be purchased at $2.15. Total: $4.75. Now, this is a little higher than usual, but Feb. is a five week expiration month, so it's costing a little more. Because of the intrinsic value of this position, the real risk is only $2.75

The concept behind this strategy is that the QQQs regularly make a 3-4 point move every 3-5 weeks. We want to take advantage of that move and sell one of our long options for enough money to cover (or almost cover) the cost of our entire position. That would, in effect, leave us with a free option for when the QQQs reverse in the other direction. Using the Feb. option cycle, we will have 9 weeks for all this good stuff to happen.

Is it a good time to put on the position? It's a reasonable time. You might consider waiting until Monday or Tuesday and you may save a dime or 15-cents. But, then again, you might miss the beginning of one of the QQQ's moves. Your choice.

 
 
  Jeff Bailey   12/19/02,  10:26:05 AM
S&P 500 Index (SPX.X) 897.69 +0.71% .... per last night's Index Trader Wrap.... this morning's high of 899.19, pretty close to the 900 level we discussed. Good short/put here.

 
 
  Linda Piazza   12/19/02,  10:24:26 AM
Interestingly, Needham and Co. cut Oracle from a buy to a hold today, on valuation concerns. In the contrarian way this often works, does this downgrade mark the bottom in Oracle?

 
 
  Steven Price   12/19/02,  10:20:20 AM
Swing Trade Signals
Back at the days highs and I'm going to be cautious as we approach Dow 8525 and SPX 900. Those are pivotal points and if I can lock in some gains on a failure at those levels, then I may do so. If we get above that level, then I'll ratchet up the stop and let 'er run.

 
 
  Linda Piazza   12/19/02,  10:19:56 AM
Correction: KO does have some minor support below the 43.50 area, but major support has been between 43.50-45.00 for the last six years. Here's a P&F chart, showing that KO is on a sell signal. Link

 
 
  John Seckinger   12/19/02,  10:17:36 AM
Side Note: I believe that Hans Blix (chief U.N. weapons inspector) is currently addressing the U.N. Security Council and telling them that the Iraqi weapons report is incomplete. Should not be market moving.

 
 
  Mark Phillips   12/19/02,  10:14:41 AM
CTXS $13.62 (+0.72) Breakout, or head fake? After much anticipation, CTXS finally took out their early-December high this morning, charging as high as $13.99 before beginning to pull back. While the morning surge may seem huge, note that it only got the stock back into the middle of its ascending channel (top=14.75, center=$13.85, bottom=$12.75). The early bounce from just above the bottom of the channel is encouraging, but perhaps the better news is that after the initial surge and pullback, CTXS is finding support at the $13.50 level. This was the stock's prior high for this rally and finding support at this forer resistance level bodes well for the near future.

Realistically, we could see the stock fall back to test the $13.20-13.30 area as support. So long as buyers continue to show up in this area, such a rebound can be used for initiating new positions to the upside. I would also look to get more aggressive with the stop, raising it to $12.50, just below the bottom of that ascending channel.

 
 
  Steven Price   12/19/02,  10:13:06 AM
Swing Trade Signals
We got a small bump over 8500 in the Dow, but that move has faded. We are still struggling with the 50-dma at 8495 and have come off the highs across the board. Without some support over that level, I don't consider the move as long confirmation.

Current levels: Dow 8478/SPX 896.80/OEX 455/COMP1377

 
 
  Linda Piazza   12/19/02,  10:13:04 AM
KO: Coca-Cola 44.22, down $0.32. KO is approaching its November low of 44.21. Below that lies July's low of 43.43. Below that: empty space. Note: I would not enter a bearish play on KO ahead of a strong break of that 43.43 number, and I wouldn't do it unless volume were strong on that break. This is a six-year support level for KO. Disclosure: I have a bearish position in KO.

 
 
  Mike Parnos   12/19/02,  10:11:51 AM
Good Morning Everyone!!
The head ____________ (you fill in the blank) of the Couch Potato Trading Institute is here today. Hide your MACD, your RSI, your AD numbers, and your 30 minute charts. We're not going to dissect the market. We're just going to make money.

As the pragmatic salesman said so eloquently, "We're not here to Christianize the natives. We just want to sell bibles." -- And, in our case, we just want to sell premium.

Send your questions along and I'll address them as the day progresses.

 
 
  Jeff Bailey   12/19/02,  10:05:07 AM
Defense Index (DFI.X) 527 +1.29% ... getting upside alert I had set here from consolidation.

I like Dow component United Tech (UTX) $61.79 +0.17% as a long, stop $59.75, target $65 on near-term basis. Link

 
 
  Jonathan Levinson   12/19/02,  10:05:04 AM
The fed has just announced a 7 day repo for 4B. Today's expiring repos have now been fully refunded on a longer term basis, and so the fed's 22 primary dealers have all their bullets replenished with the added flexibility of additional time before which they must be returned.

 
 
  John Seckinger   12/19/02,  10:03:58 AM
Index of Leading Economic Indicators (LEI) rose 0.7% in November versus 0.6% consensus

 
 
  Jeff Bailey   12/19/02,  10:01:04 AM
Buy Program SPX 898

 
 
  Jeff Bailey   12/19/02,  9:59:53 AM
Tenet Healthcare (THC) $17.04 -0.64% .... Dow Jones reports that THC said it and the Justice Department are "far apart" on settling the governments investigation into its billing practices and that it (THC) is prepared to take its case to court if needed. Link

 
 
  John Seckinger   12/19/02,  9:56:58 AM
At 10:00, the Leading Economic Indicators (L.E.I.) report for November will be released. Expectations are for a 0.6% reading versus unchanged, month prior. It was the flat growth in October that ended a string of declines. This index correctly signaled the recession in 1990 and 2001, but gave a false signal in 1995.

 
 
  Linda Piazza   12/19/02,  9:53:51 AM
In welcome news in this time when initial jobless claims are again above 400,000, Home Depot (HD) announces that it will create 40,000 new jobs this year and is on target to open 200 new stores.

 
 
  Jonathan Levinson   12/19/02,  9:51:56 AM
The COMPX has miraculously been returned to the 1380 line. Does anyone recall when equities fell faster than they rose? It's been awhile. In any event, the 1380 level, which is in the process of being exceeded as I type, is a significant resistance level. QQV is down .37 on the day, not much given the amount of gunpowder detonated under the Qubes this morning, while the TRINQ is now down to .31. HUI is down 2.24 on the day. Still awaiting the next announcement from Al Green.

 
 
  Steven Price   12/19/02,  9:51:55 AM
Swing Trade Signals
Current levels Dow 8471/OEX 455/SPX 895/COMP 1381

 
 
  Steven Price   12/19/02,  9:51:02 AM
Swing Trade Signals
We're back in the green in the major indices and Dow 8490 is still the next resistance level on the intraday chart from yesterday. That correlates closely with the 50-dma, now sitting at 8495, so I'm looking for a move back over 8500 for confirmation on the LONG signal. I'd still rather add to it on a pullback, but I'd consider adding if we get momentum back over 8500.

 
 
  Linda Piazza   12/19/02,  9:48:03 AM
Fortunately for those holding bullish trades in Nasdaq stocks today, the COMPX has moved above the 1367-1370 area that might formed the floor for a rough double-top (1411 and 1408) pattern formed on the hourly charts across the last few days. As I mentioned yesterday, a movement above that level negates the importance of this formation. Bulls want to see the COMPX stay above that level on any pullbacks.

 
 
  Jonathan Levinson   12/19/02,  9:45:31 AM
"No... a Bud light!"

 
 
  Jonathan Levinson   12/19/02,  9:42:53 AM
This is what I was talking about earlier. It appears that a bottle rocket has gone off on the charts. The TRINQ is falling, currently .42, as the QQV gets ready to go negative. The 1 minute COMPX charts has more gap than candle currently.

 
 
  John Seckinger   12/19/02,  9:38:32 AM
As a reminder: The Phila Fed survey is due out at noon, and should have an impact today. Looking at the Dow on a five-minute basis, the low is 8412 and fortunately above the 8400 area. The Dow is only down 27 points, yet the 30-year is higher by 10 ticks at 110'05 (ZB03H) and continuing to show strength (negative for stocks). I could see the increase if the Dow was under 8400, but maybe they are forecasting equity direction. If stocks do recover, look for the 30-year to be hit pretty hard and fuel and equity rise.

 
 
  Steven Price   12/19/02,  9:31:00 AM
Correction In last night's newsletter, MERQ was listed as a put. This is a call play, sorry for the confusion.

 
 
  Jeff Bailey   12/19/02,  9:29:54 AM
The 9:00 AM Intraday Update has been posted. Link

 
 
  Steven Price   12/19/02,  9:25:56 AM
Swing Trade Signals
We are currently long a 1/2 LONG position in the broader market. I said yesterday that I could see a pullback down to around Dow 8300 without changing the plan to accumulate a long position in this area of strong support. I'll watch this morning's action for support levels and possibly step up to a full long position if I see that support. Current stop is set at Dow 8240. I have a Fib retracement set from the Oct low to the Dec 2 high which shows a 38.2% retracement at 8338, which could give us a bounce.

 
 
  Jonathan Levinson   12/19/02,  9:22:22 AM
More from Al Green's Crhistmas Extravaganza:

The following technical changes have taken place as of December 16, 2002 in the Federal Reserve Bank of New York's conduct of open market operations. First, FRBNY will use Reverse Repurchase Agreements (RRPs), rather than Matched Sale Purchases (MSPs), when it drains reserves from the banking system on a temporary basis.

Click for the full Link

 
 
  Jonathan Levinson   12/19/02,  9:08:35 AM
Gold hit 354/oz last night. The US Dollar Index hit 103.10. Gold is currently trading 346, while the USD it at 103.45. Bond yields and equity futures are negative, with QQQ trading down 30 cents from yesterday's close at 25.38.

The fed has 13B in repos expiring today, with 3B of 28 day repos, 4B in 3 day repos, and 6B in overnight repos. This morning, 9B in 28 day repos was added. If anyone thinks that they're reposing in pleasant cloud of cigar smoke punctuated by aged port and beluga caviar over at the fed building, in an orgy of yuletide bien Ítre presided by the aged-but-groovy Al Green, think again. A $9B repo is big money on a 28 day basis, and there's still the announcement pending for the remaining 4B expiring. The fed has been taking an increasingly aggressive stance with its open market operations, and while that permits increasing levels of direct intervention in our supposedly free financial markets by the fed, prices have not been rising and to me, it smells of worry. Either way, bearish traders should be careful of being caught offside in case of a sudden "open drive" jam such as we've seen. Watch your stops.

 
 
  Linda Piazza   12/19/02,  8:49:06 AM
Marketwatch.com posts the following information concerning jobless claims: Initial jobless claims again rose above 400,000, up 12,750 to 400,750. Four-week average jobless claims reached a 6-week high while 4-week continuing claims are at a 14-month low. Some speculate that seasonal factors skew the jobless claims data, and that the continuing claims number could be lower due to the number of people dropping off the rolls as benefits run out.

Futures are down, with DOW futures down 70 points, Nasdaq futures down 12, and S&P futures down 8.50.

 
 
  Linda Piazza   12/19/02,  7:21:13 AM
In early trading today, the German DAX fell below the psychologically important 3,000 level, trading at 2974.93 as of this writing. The CAC 40 also teeters near that 3,000 level, currently trading at 3043.58. The FTSE 100 also trades down, but by a modest 9.24 points. In Germany, insurers Munich Re and Allianz led stocks down after a Goldman Sachs downgrade. Commerzbank prices tumbled after its CEO worried that next year the bank might suffer from more corporate failures than hit it this year. In Germany and across the nations that use the euro, retail sales slowed as consumers worry about lost jobs and geo-political developments. Hans Blix is expected to report to the UN Council today that the Iraqi Declaration is incomplete. Despite these global worries or perhaps because it had fallen ten days out of the previous eleven and was due for a relief rally, the Nikkei closed up 43.56 points, the gains led by banks.

 
 
  Jim Brown   12/19/02,  3:44:53 AM
End of year renewal special - The end of year special has been posted and those readers who want to lock in the cheapest rate possible with a ton of freebies should check it out! Click here: Link

 
 
  Steven Price   12/19/02,  3:44:17 AM
The Swing Trade Game Plan has been posted: Link

 
 
  John Seckinger   12/19/02,  3:43:46 AM
The Futures Trader Wrap has been posted: Link

 
 
  Jim Brown   12/19/02,  3:43:15 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 

Market Monitor Archives