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  Linda Piazza   1/6/03,  4:37:35 PM
Correction: John H. points out that in my 15:15 entry, I mentioned that the stochastics for the Dow Jones Transportation Index were extended far into oversold territory, when in actuality, they're extended far into overbought territory.

  Steven Price   1/6/03,  4:25:29 PM
EMC $7.50 (+0.60 from the close) OI stock pick EMC getting a boost after hours, saying it would earn $0.01-0.02 for the quarter, versus previous expectations of a loss of $0.02. This could give the COMP a boost in the morning if it isn't accompanied by other warnings. The company said customer spending was better than expected and revenue was better than $1.47 billion versus previous expectations of $1.27 billion.

  Linda Piazza   1/6/03,  4:08:45 PM
Today the broadest market of all, the Wilshire 5000, moved above its November left-shoulder level just above 8700. Currently at 8772.35, up 179.15, this market remains less than 100 points below its late November/early December "head" level at about 8850. It remains below its simple and exponential 200-dma's, at 9031.69 and 8969.28, respectively.

  Steven Price   1/6/03,  3:54:47 PM
Swing Trade Signals
We are seeing a bit of a drop into the close, and more than one bear will be whispering "right shoulder" with today's top at 8800 in the Dow. I'd prefer to see the SPX below 925 before jumping on that bandwagon, but it is definitely something to keep an eye on.

Current levels Dow 8762/OEX 469/COMP 1421/SPX 928.64

  Linda Piazza   1/6/03,  3:52:03 PM
Waiting for confirmation: As this afternoon progresses, several writers have cautioned traders to wait for confirmation of a rollover before initiating or adding to bearish plays. Last Friday, we saw the first two candles of a potential evening-star formation. The formation was only a potential formation until today's action either confirmed it or negated it. We all know by now that today's big white candles will not form the third candles in an evening-star formation. Candlestick charting gives traders an important tool to use when measuring investor sentiment, but Friday's indecision didn't follow through into selling today, and no evening-star pattern was formed.

  Jonathan Levinson   1/6/03,  3:51:08 PM
We are looking at the longest red candle seen today on the 60 minute and shorter timeframes. The TRINQ remains buried at .33- a very bullish day despite the failure 3 points above 1425.

  Jeff Bailey   1/6/03,  3:46:09 PM
The 3:15 PM Intraday Update has been posted. Link

  Mark Phillips   1/6/03,  3:42:45 PM
The DJX is trading in the suggested area of 87 to 88, but is still strong. Do you think that 90 would be a better choice because of the stronger than expected rally?

Great question! When we initially listed this LEAPS Watch List play, I was looking for a rally to, and failure at the $90 level. But things fell apart before giving us an entry and I recently lowered the entry target to $87-88. well, we're right at the top of that range and still looking strong. Remember the way we initiate plays within the LEAPS column is to wait for a bounce from support or a rally failure at resistance. As such, I wouldn't consider today's action to provide anything approaching a solid entry. We're right at resistance, and haven't seen any signs of failure just yet.

I think it is entirely possible that we'll continue upward into the $89-90 area, and a rollover there would make for an even better entry point than the currently listed entry target. I'll still honor that current entry target if we do get a rollover here, but I'd want to see a close below $87 to get me interested. In my opinion, cautious investors will do well to wait for a rally failure at a higher level if the enthusiasm we've seen over the last few days continues.

  Steven Price   1/6/03,  3:36:57 PM
No real pullback after the Dems plan was outlined, containing no dividend tax relief. That was pretty much expected and it looks like the bulls are still in charge.

Current levels: Dow 8795/SPX 931.55/OEX 471.23/COMP 1427.85

  Jonathan Levinson   1/6/03,  3:33:39 PM
The 200 day simple moving average for the COMPX is just ahead at 1442. Many technicians view that as the Mason Dixon Line for bulls and bears. If price breaks 1430, I'll be watching that level very closely. A break above would not be bearish, and puts a context on the continual rock-bottom TRINQ readings we've been seeing. Please don't misunderstand. The fundamentals do not appear to me to have changed. But price is the only action, and we'll trade what we see.

  John Seckinger   1/6/03,  3:32:16 PM
One index that really took off today (due to the talk of cutting the taxes on dividends) is the Utility Index. A week ago, I talked about 260 being a strong area. On Thursday, the Index finally broke above 260 and has not looked back since. Currently at 275 and above the 200 DMA (exp) of 274, I would keep this UTY index on the radar screen and continue to watch for similarities between this index and the Dow.

  Kent Barton   1/6/03,  3:17:11 PM
Here come the Democrats with their economic stimulus plan. Rep. Nancy Pelosi is discussing their ideas on CNBC right now. As Steve mentioned earlier, this might put a damper on the market's bullish enthusiasm.

  Linda Piazza   1/6/03,  3:15:25 PM
As I look back over charts, I notice that today's Dow Jones Transportation Index move over its exponential 200-dma is the first move over that level since July 1. Many technicians want to see more than an intraday move above an important MA as a sign of continuing strength. They want to see a close above that level. Some want to see a significant move above that level--say a 3% move. Some want more than one close. At any rate, I notice that daily (5)(3) stochastics are extended far into oversold territory as the index makes this move, although they have not yet even hinged, much less turned down.

  Jeff Bailey   1/6/03,  3:08:23 PM
Dow Industrials (INDU) .... took out to the upside both of today's R1 and R2. Last couple of days we have not seen a test of the PIVOT, though close. As such.... I'm calculating tomorrow's support/resistance using Dow h/l/c of 8,800, 8,602, 8,800 (guessing at close value), which gives a pivot of 8,734 and this would be support on intra-day basis tomorrow morning.

There may be lots of bears here near 8,800 trying to low risk a head/shoulder top pattern with 8,800 as the right shoulder, but gut feel is that any type of trade above 8,800 into close or tomorrow morning could bring in some short-covering.

As such, a bearish trader at this point with bullishness looking to carry into the close is better off (in my opinion) waiting for some type of support level from pivot analysis to be broken. Something that hasn't been done in past three sessions.

  John Seckinger   1/6/03,  3:07:15 PM
The ADX oscillator has both a +DI and -DI component, and currently +DI is at 30.39 while -DI is at 19.19. That is a difference of 11.20. It is all relative; therefore, is this 11.20 area wide enough to look for a relative top? Well, on November 6th (8800) the difference was about 16 points. The next time above 8800 (Nov. 22nd) the difference was about 15 points wide. The +DI then came back to cross the -DI oscillator as the Dow rallied to 9044. How can we use this then? I would look for a widening of at least 15 points and then a convergence in the two components as the Dow most likely consolidates.

  Steven Price   1/6/03,  3:06:01 PM
Swing Trade Signals
The Dow topped out right at 8800 and has pulled back just slightly. The OEX has yet to crack 472, but the SPX is now a full 5 points over its resistance level. As I said, if we are going to roll, it should be from this level, or it is likely we will re-test that December high. The COMP is also now above the 1426 level that had acted as resistance prior to the rally to 1500.

Current levels Dow 8794/OEX 471/COMP 1427/SPX 931.

  Mark Phillips   1/6/03,  3:05:16 PM
Back online here in the wind-blown reaches of the high desert, and looking at the impressive rise throughout the day. Like steve and Jeff, I'm looking for signs of a failure to this rally, so as to trade the recent range to the downside. Alas, they aren't there to be found today. there has been a consistent bid throughout the day, with very few sellers to be found. My favorite metric for measuring the strength of the market remains the ADV/DEC volume on the NYSE and NASDAQ. These charts have been in a steady and strong rise since the first 30 minutes of the day, without more than a mild blip along the way.

While not as strong as what was seen last Thursday, Advancing volume is leading Declining volume on the NYSE by a ratio of 110:22. That means that for every 100 shares on the buy side, there are only 15 shares on the sell side. The numbers on the NASDAQ are similar with a 101:16 ratio right now. Very lopsided tape here today, as resistance levels continue to fall.

While typing this, the DOW touched the 8800 level (poking above the bearish resistance line on the PnF chart) and the NASDAQ Composite is now over the 1425 level, testing the top of the 11/21/02 gap and rapidly closing in on the 200-dma at 1442.

  Jonathan Levinson   1/6/03,  3:04:13 PM
Good luck, Linda. If anyone's seen "The Right Stuff" recently, you'll recall that scene when Yeager is testing the X2(?) and, as he approaches mach 1, switches on his afterburner and blasts forward. That was my first though as the COMPX began printing green above 1426. The TRINQ is very low at .27, and the updated put to call ratio due out any moment. A print at or below .60 for that indicators is in reversal territory.

  Linda Piazza   1/6/03,  2:57:23 PM
Who knows what will happen the rest of the afternoon, but it's interesting that the 11/22 (intraday) low on the VIX was 26.41, and today's low was 26.45. The VIX had an initial bounce from that area, climbing back above 27 before dropping back a little again in the last few minutes. This is really micro-managing to be studying these small movements so closely, but I was interested to see what happened when the VIX reached those 11/22 lows today--at least, the first time today. We'll see what happens in the last hour of trading.

  Steven Price   1/6/03,  2:49:58 PM
Current levels: Dow 8779/OEX 470.27/SPX 929.51/COMP 1424.19

  Steven Price   1/6/03,  2:47:50 PM
Or maybe I should be listening to John's dad.

  Linda Piazza   1/6/03,  2:47:07 PM
I did it, Jonathan. I entered a bull put spread on the XAU today. It's my fault it's dropping.

  Steven Price   1/6/03,  2:46:55 PM
Swing Trade Signals
We are back to setting new highs for the day, and as I mentioned earlier, we could continue to see buying into the close. Gold is up slighlty and the VIX is holding its low, while Oil has retreated on the news that OPEC may increase production to make up for the Venezualen shortfall. we are approaching the November highs in the Dow (8800) and OEX (472) and if we are going to get a rollover, it should come from those levels. If not, I'll be on the sidelines until we test the August highs or get a breakdown below new levels of intraday support.

  John Seckinger   1/6/03,  2:34:50 PM
The impressive bid continues. I am trying to think of what my father (a Professor, currently in Pittsburgh) would tell me. "John," he would most likely say, "the plan [collusion] was to let the markets continue to weaken in 2002, but rally strong in the beginning of 2003 and strengthen the perception of the Bush's new economic team." Maybe I need less coffee.

  Jonathan Levinson   1/6/03,  2:20:59 PM
The HUI and XAU are now both in the red, with HUI -.01 and XAU -.87. The speed and strength of this reversal is worrisome, as the HUI never broke last year's high to the upside despite the breakout in gold. I expect a pullback in the price of gold, or at the very least a consolidation. Please note that this is merely a short term observation. The fundamentals that led to the explosive bull market in gold have not gone away- if anything, they've been exacerbated by the actions of the the fed and other central banks, global trading patterns, war, foreign buying, monetary inflation, threat of deflation, etc, etc. However, the metal and the stocks are overbought and need a pullback to relieve those readings. I'll be looking to buy more on a pullback.

  Linda Piazza   1/6/03,  2:18:06 PM
In my 10:12 post, I mentioned the OEX 471-472 left-shoulder highs from early November as possible resistance for the OEX today. Scanning my daily chart, I noticed an ascending channel that contained the OEX from October 15 until December 9, when the OEX finally fell out of the channel as it headed toward recent lows. A move above 472 would face resistance as it approaches that channel from the underside. That lower ascending line of the channel lies at about 476.25 today and would be slightly higher tomorrow. Once support is broken, it should serve as resistance, but we've seen the OEX blow through several layers of resistance today, so it's always possible that the OEX could blow through this resistance level, too. As the OEX continues to move through these levels of resistance, it's using up a lot of energy, as (5)(3) stochastics on hourly and daily charts reach levels indicating overbought conditions. All of us would point out that oscillators can remain pinned at overbought levels while prices continue to climb, of course.

  Steven Price   1/6/03,  2:10:42 PM
Swing Trade Signals
The VIX is holding in at its recent support level (discussed earlier by Linda) and the rally is taking a breather with the Dow hanging around 8750 and the SPX still maintaining its gain over 925. While the Bush plan certainly has bullish implications for stocks, we should get a better idea of just how easy/difficult it will be to get through Congress later this afternoon, when the Democrats apparently will be releasing details of their plan. I'm going to hang on short here, as (am I really saying this?) I wait for the Democrats to rescue my position (And we test another level of heavy resistance). I got caught holding overnight with a surprise news event, but there are usually two sides to the news and we may get the other side soon.

Current levels: Dow 8757/SPX 927.93/OEX 469.55/COMP 1421.

  Jonathan Levinson   1/6/03,  2:09:31 PM
For any goldbugs seeking a quick laugh, here's one I doubt we'll be seeing on the shelves at Blockbuster video: Link

  Kent Barton   1/6/03,  2:00:33 PM
Netease.com (NTES) $15.40 +2.26: One look at the daily chart for NTES brings back memories of the dot-com boom a few years ago. In a mere three months the stock has septupled in value! Shares are gaining another 18% today and seem to be on course to test the all-time high of $17.25. Volume is shaping up to be the strongest in the stock IPO'd in 2000. SINA, another Chinese internet stock, is also exploding to 52-week highs.

It's uncanny how history often repeats itself. As was the case a few years ago with internet portal stocks (remember LCOS and SEEK?), NTES is moving higher on speculation that it will become China's equivalent of Yahoo. The country offers an untapped market with incredible growth possibilities and millions of potential web users.

So what trading possibilites does this frenzied speculation offer? Obviously it takes a very aggressive strategy to play a stock that's gained so much over such a brief period of time. At this point it would be extremely risky to chase to stock higher. The daily chart shows that similar breakouts to new highs (on November 18th and December 23rd) were quickly met with selling. Traders looking for a potential high-risk/reward play could instead watch for a pullback to the multi-week trend of higher lows. This would take NTES to the $12.00 region.

  Jeff Bailey   1/6/03,  1:52:22 PM
The 1:00 PM Intraday Update has been posted. Link

  John Seckinger   1/6/03,  1:50:08 PM
It is just one of those days when the Dow gets in an aggressive channel and doesn't seem to want to relinquish any gains. The ES contract is at 927 and it isn't clear if this area will turn into support. On a five-minute chart, not even the 22 Period Moving Averages have been tested all session. For the ES, this pma currently comes in at 925. If 927 is in fact cleared on a settlement basis, 935 becomes the next objective. If 927 becomes solid resistance, a pullback could take the contract back to 916.25 (might not be reached until tomorrow).

  Steven Price   1/6/03,  1:47:43 PM
I certainly did not expect the President to double the tax-break (and certainly would have waited for a bigger rally to short if I had) and the question for traders is just how far that will take the markets. I expect the haggling to begin now that the news is out. That should temper the rally on the news, but we have taken out several levels of resistance that we cannot completely ignore.

  Steven Price   1/6/03,  1:43:39 PM
Swing Trade Signals
It is beginning to look as though we may head higher into the close as dips are bought over 8750. Traders who don't want to stick around for the pain can close the additional 1/2 short position. I still think with heavy resistance just over Dow 8800 that if there is a level at which to sell a rally, this one makes sense. However, after getting stopped out on the last signal, I wouldn't argue with those traders who would like to take a conservative approach and wait for a re-test of the December high over 9000.

  Jonathan Levinson   1/6/03,  1:42:23 PM
The TRINQ has been compressing along with the put to call ratio, latest readings of .30 and .68, respectively. I say compressing because, unless this is the beginning of a tidal wave of buying, the TRINQ and put to call ratios tend to oscillate within their ranges. Like a bungee that can stretch only so far, eventually a buying frenzy tapers off. The bullishness today has been very impressive, despite the relatively low overall volume on the indices. With a high TICK reading of 1331 for the day and no single print below 200, the buying has been pretty ferocious all day. With the COMPX closing in on my targeted resistance at 1425 and most of my indicators buried in overbought, the reversal could come soon. However, please wait for a failure of 1425 before shorting. Unless you feel confident to stand in front of the train with a stop at 1430, waiting for a reversal and a print back below 1420 is the prudent way to go.

  Kent Barton   1/6/03,  1:33:17 PM
Forest Labs (FRX) $105.26 -0.81: This PI long play is tracing an Inside Day, following Friday's upward gap. We've collared FRX with a tight stop at $103.99 and an exit target at $108. Assuming the current range holds, traders with open positions will soon have to decide whether to hold over Wednesday's stock split. Our strategy will most likely be to close the play as of Tuesday's close. We may also raise our stop tonight in order to protect a larger gain.

  Linda Piazza   1/6/03,  1:24:41 PM
New high/new low figures show the biggest differences I've seen in a while. The ratio is 90:9 for the NYSE and 80:13 for the Nasdaq. Adv/dec figures calculated by the ratio method for the NYSE are 2.81 and 1.85 for the Nasdaq. Up volume remains about four times down volume on the NYSE and has moved to just under six times down volume on the Nasdaq.

  Linda Piazza   1/6/03,  1:17:17 PM
The Dow Jones Transportation Index has broken above its exponential 200-dma (2414.83, according to QChart; 2414.47, according to another source).

  Steven Price   1/6/03,  1:16:56 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the first 1/2 short signal when the Dow traded 8760 at 13:14:36. Conservative traders can use this stop for the entire short position, but I'm going to maintain a 1/2 short with a stop at 8825.

  Jonathan Levinson   1/6/03,  1:14:09 PM
The US Dollar Index found support just above 101.75, but hasn't bounced far, currently just below 102.00. It looks like the 3.5B worth of fed interventions today found its way into equities for a change, if the weakness in bonds is any indication.

  John Seckinger   1/6/03,  1:10:02 PM
Bonds still coming under pressure as both the Dow and ES contract get closer to solid resistance areas. This seems to be a recurring theme today. Resistance, broken, resistance, broken. The 927 area in the ES contract is the R2 level from Thursday's levels, and I would be impressed to see the contract close above this area. Trying to pick a top is very hard, especially when the market(s) haven't shown any weakness yet. Interesting strength in light of a weak dollar.

  Jonathan Levinson   1/6/03,  12:53:40 PM
The last put to call ratio from 12:30 EST was at .73. If it continues dropping at this rate, I'll be thinking that we might not even see 1425 COMPX.

  Jeff Bailey   1/6/03,  12:48:45 PM
Bullish % ... Jeff, I want to thank you first. When I sent you question, you answer me every time. Your comments are very good. I had a successful BRCM put play after you gave the bearish view. I entered play after BRCM failed $18 at second time and exit it when it hit $15.5.

Today my question is whether %bpoex is correct from stockcharts.com. I went through OEX 100 stocks and found 52 stocks with buy signal. However, %bpoex is 54%. Is stockcharts.com data reliable ?

I believe the data to be pretty reliable. I also checked Dorsey Wright and Associates OEX bullish % (bpoex) and it too was at 54% and fell 1%, or net loss of 1 stock to a p/f sell signal on Friday.

Sometimes, during the day, a stock or two will have a "bad tick" that generates a p/f sell signal (sometimes a buy signal) that isn't caught until later. Both Dorsey and Stockcharts.com appreciate traders e-mailing them with this info as to the "bad tick" creating innacuracies on the p/f charts. This may be a "reason" why your bullish % count differs from what was posted. Not sure, but a thought.

  John Seckinger   1/6/03,  12:48:01 PM
Note: AT&T Corp. (T) is reporting that it will take $1.5 billion in charges as 3,500 jobs (5 percent of its work force) are cut. The company also plans to write down the value of some Latin American and high-speed Internet assets. Shares of T are currently higher by 0.25% to 27.72.

  Jonathan Levinson   1/6/03,  12:47:49 PM
Would you open a new short at a failure of compx 1425??

Yes, I would. I would do it with a tight stop, however, as the strength in the markets has been difficult to predict, with fast moves. The HUI and XAU have dropped precipitously in the past hour, while yields have continued higher. That said, I just finished my lunch in from of CNN live, and am shocked at how bad the news actually is. Watching Ari Fleisher's expressionless faceplate, listening to the Scud Stud discuss the ramifications of North Korea's nuclear threat, my first impulse was to pack my tent and head for the hills. Just another sign that, as Joe Granville said, news is for suckers and we should watch the charts. 1425 continues to look like a good candidate for significant resistance.

  John Seckinger   1/6/03,  12:30:29 PM
Note: Resistance 1 on a weekly chart of the Dow comes in at 8743. Resistance 2 is much higher at 8885, and the pivot is at 8492. Support, based on weekly calculations, are lower at 8350 and 8099.

  Jeff Bailey   1/6/03,  12:24:45 PM
Dow Industrials (INDU) 8,735 +1.5% .... Trade at 8,700 is right below bearish resistance Link and good looking place for short/put entry. However... for those that can watch things, I'd rather wait for a break back below 8,700 for new bear entry at this point. Even if I don't short/put before the close. Should markets "gap" lower tomorrow, I wouldn't think more than 100-Dow points type of move, unless something geopolitical that I can't predict at this point.

Tomorrow's economic data has Factor Orders due out at 10:00 AM EST.

QQQ $26.28 +2.29%.... here I see QQQ 10-cents above our $26.18 market maker resistance and I'd also want a QQQ close below the $26.18 level. This right now might hint that there is some "buy side" order flow in NASDAQ stocks, so for entry would want to see some type of short-term intra-day weakness.

On Friday, we saw bit of intra-day weakness in Dow, but late rally pegged the close. Today's action looking a bit similar at this point in my opinion.

  Linda Piazza   1/6/03,  12:23:52 PM
This comes under the category of "counting your chickens before they hatch," but (5)(3) hourly stochastics show a slight hinge, as if they're trying to roll. If that should happen, they're rolling down from a lower or perhaps equal high, while prices have made a higher high--obvious bearish divergence. That still hasn't happened and the danger in counting those chickens just yet is that RSI is still moving higher as prices move higher. There's no bearish divergence in the hourly RSI, and there are times when I trust the RSI more than stochastics. That's especially true of the jittery (5)(3) stochastics, which often give false signals. I suspect that markets will roll near those left-shoulder November highs, but with bond yields moving up so strongly and the XAU now dipping into the red, there's the possibility that the rollover won't happen today. That's why I'd looked back at the behavior of the markets around the time that the VIX hit relative lows in late November. If the VIX bounces today or tomorrow, but markets continue to climb, I'd look for an opportunity to short/put at higher levels. A move over those left-shoulder November highs, however, might make me stand aside until I see how markets behave around the December highs. Once markets were over those left-shoulder levels, we'd again have a failed H&S pattern.

  Steven Price   1/6/03,  12:19:01 PM
Swing Trade Signals
That Dow 8800 level from early November coincides with 925 in the SPX. That is where we sit in the SPX right now and we should get a good look at just whether the Bush plan is enough to take out that resistance.

Current levels: Dow 8735/SPX 925.00/OEX 467.88/COMP 1415

  John Seckinger   1/6/03,  12:18:30 PM
Another long talk with Bailey, this time about fitted retracements and the top of the first five minutes. I definitely plan on doing an article on this subject for tomorrow night's publication. In a nutshell, it is putting 0% retracement at the bottom of the first five minutes, and then 19.1% at the top of the first period. Once the first five minutes is taken out, traders can use 38.2%, 50, 61.8, 80.1, and 100% fitted retracement areas to trade from.

  Jonathan Levinson   1/6/03,  11:59:24 AM
Would you let me know what symbol in Q-charts you use to get your put to call numbers? Mine are not matching up with yours at all....

I don't use the PUTCALL Q-charts numbers or even follow them, as they track the equity put to call ratio only. The CBOE numbers combine these with the index put to call ratio, for a more complete picture. The data I'm following is at this Link

  Steven Price   1/6/03,  11:58:57 AM
Linda's last post correctly pointed out that a bottom in the VIX does not necessarily mean an end to the rally. However, we are approaching that level of support just over 26 and we have now added almost 500 Dow points since last week's low at 8242. While I'm certainly wishing I had not closed out my long prior to the rally, I would not be jumping on long after the big jump in what still looks like a bear market bounce. What that tells me is that if I am stopped out, I'd still be looking to short unless we get a big move over the August highs. A look at the weekly chart still shows a double top just over Dow 9000, and my next entry would most likely be short at that level with a VERY tight stop.

  Linda Piazza   1/6/03,  11:52:17 AM
As I look back at charts, I'm reminded that the intraday November 22 low in the VIX did not mark the short-term high in the indices. As the VIX consolidated and then began to move up, the indices reached those higher highs on December 2 before falling throughout that month. That alerts me that even if the VIX should bounce from current lows, that bounce would not necessarily mark the short-term highs in the indices. However, now I'm alerted that if the VIX did bounce and indices did continue to move higher, I should pay attention to that divergence.

  Mark Phillips   1/6/03,  11:47:49 AM
GS $72.60 (+2.22) Patience is rewarded! Currently on the LEAPS Put Watch List, GS symied our first attempt at entering near the $74-75 area by first breaking down through the $70 level a couple weeks ago. The $67 level was good for the first bounce, as that was the site of the bullish support line on the PnF chart, not to mention gap support from October 15th. Perhaps it was Abbey Cohen's stellar performance on Rukeyser's show on Friday that has sent the stock soaring? HUGE GRIN!

As I mentioned over the weekend, I expect the overhead 50-dma and 200-dma to first magnetize and then reject price action. Our job is to wait for that to happen. Since the stock has decisively broken above the $70-71 area, we now wait and watch for a rally failure near those two moving averages. That failure will likely coincide with an end to the current broad-market rebound.

  Jonathan Levinson   1/6/03,  11:43:46 AM
The 5(3) stochastics are overbought in all timeframes shorter than the 1 month candles, but the 5 week stoch shows no sign of rolling over yet. The QQV is creeping lower, and the latest put to call reading is .88. Yields are moving higher, with FVX +.69, TNX +4.7 and TYX +5 bps. Precious metal stocks are holding their gains. The TRINQ seems to be just on the verge of extreme, but has been in this area all day, which tells me that the buying could continue from here. At .37, the buying is aggressive but not hysterical as we've seen recently on those .20 days.

  Steven Price   1/6/03,  11:37:32 AM
Swing Trade Signals
It seems that most of the emails I've received over the last several weeks have involved selling rallies in a market that had been weakening until the last week, when we got the big rally to start the year. There has been no basic change in fundamentals and I agree with Jeff and John that selling rallies right now is the obvious strategy, especially as we approach resistance. However, I think a move back over 8825 in the Dow would signal another run at the August/Dec highs over 9000. My thoughts on that possibility are that it still presents a lot more downside risk than upside potential until we break that August high of Dow 9077. If we fail at 8800, then we'd have a neatly formed bearish H&S. However, logic means little if it isn't profitable. If we do break above 8825, I'll sit out after having been stopped out in the attempt to short the rally, at least until we test that high, or fail considerably in the opposite direction. It appears the chances of being stopped out on the short signal are growing.

Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Exit 1/2 of the short position on a Dow trade over 8760.

Exit the other 1/2 of the short position on a Dow trade over 8825.

  Mark Phillips   1/6/03,  11:36:59 AM
IBM $83.50 (+1.85) Aggressive OI Put Play IBM is pushing through the $83 resistance level here this morning, adding to the strength in the DOW -- IBM is number two on the Dow Point Gainer list, as I type. While the risk to reward on this play was favorable, recall that we talked about the risks of trying to pick a top in a stock that was trying to rally. Now above our $83 stop, we'll have no choice but to drop the play tonight unless things change dramatically this afternoon. Aggressive traders that still want to game an entry in IBM need to wait for some signs of weakness before dipping their toe in the water. In my opinion, that would require the stock to break back under $83 and test the opening levels just below $82.

  John Seckinger   1/6/03,  11:35:40 AM
One sector certainly making a move is the Sox, higher by 4% to 326.92 and above some solid resistance at 320 heading into the session. As long as this index stays above 320, I will look for continuing underpinning strength. An objective for longs most likely comes in at 338. Looking at the Dow, it is interesting how the high during the first few minutes (8634) quickly became support; moreover, the blue chips are at its sessions high. Open drive pattern? So far it is. For a link to information on this pattern, see article: Link

  Jeff Bailey   1/6/03,  11:34:14 AM
The 11:00 AM Intraday Update has been posted. Link

  Linda Piazza   1/6/03,  11:33:23 AM
If market behavior stays true to form this time, the SOX may give us the first answer about the potential for the formation of a right shoulder in a possible H&S formation. Currently at 326.68, a further rise in the SOX would challenge mid-December resistance levels near 330-331 and then, a move beyond that would hit the upper Bollinger band resistance on the daily chart, currently at 335.57. The left shoulder high happened on 11/04, when the SOX hit an intraday high of 337.65. It closed at 326.02 that day, however.

  Mark Phillips   1/6/03,  11:27:35 AM
I've been struggling to get back online for the past 2 hours, and it appears my connectivity will be sporadic throughout the day due to high winds playing havoc with power lines here in the high desert. So let's make the most of the time I have here to post.

ACS $56.14 (+1.33) This OI Call play performed rather well all last week and looks to turn in another solid performance today. Breaking out over Friday's $55 intraday resistance at the open this morning, the stock shot higher due in part to an upgrade from RBC capital. It isn't the most glowing recommendation though, as the firm only raised their price target to $58 (which is less than $2 above where the stock currently trades), raising it from its prior level of $32. Looks like RBC got caught sleeping on this one...maybe they ought to consider using PnF charts. ACS' PnF chart has been on a Buy signal since early December, and today's trade at $56 adds another X, bringing the vertical count target now to $91. Major resistance exists in the $56-57 area, which turned the stock back several times between March and June of last year. $57.05 is the stock's all-time high and a breakout over that level will have ACS in blue-sky territory.

  Linda Piazza   1/6/03,  11:16:01 AM
Up volume now ranks more than four times down volume on the NYSE and more than six times down volume on the Nasdaq. New high/new low numbers are 56:8 and 57:7, respectively, on the NYSE and Nasdaq. Ratio-method adv/dec numbers show slightly more buying than early this morning, with a 3.04 number for the NYSE-traded issues and a 1.98 number for the Nasdaq-traded issues. Although the Nasdaq up/down volume is moving toward troublesome levels, these current levels remain sustainable numbers, although that does not guarantee that they will be sustained.

  Jonathan Levinson   1/6/03,  11:15:17 AM
The put to call ratio has fallen slightly again to .89. The QQV is confirming this action, itself falling slightly to 39.35 as the COMPX moves higher. If this pattern continues at its current rate, I would expect to see 1425 COMPX, with a pause just below 1420. SPX 925 should coincide with that pause. Precious metals are holding their gains, with HUI +3.05 and XAU +.64 on the day.

  Mark Wnetrzak   1/6/03,  11:08:10 AM
Covered-Call Scenarios: ZIXI
Zix Corp. (NASDAQ:ZIXI) is testing a strong support area around $4.00. The model portfolio position (long the stock, short JAN-$5.00 calls) has a cost basis near $4.61. The JAN-$5.00 ($0.00 x $0.15) calls could be bought back and if the position was closed (buy back the calls and sell the stock) now, the total loss would be about $0.50 a share. Or, if an investor is still bullish long-term but simply wishes more protection short-term, they could roll-forward (buy back the current calls and sell new calls with more time) to a MAY-$5.00 call ($0.75 x $1.00) and lower their cost basis to (4.60 + .10 – 0.80 =) around $3.90. Or, an aggressive trader may just buy back the calls to free up the stock, being ready to exit on further weakness or new strength. With the current over-sold condition in ZIXI, the stock could rally back towards $5.00 and offer a painless exit or better adjustment. Lastly, one could just wait for expiration and then re-evaluate and avoid the extra commission charges. Just depends on your risk-reward tolerance.

  John Seckinger   1/6/03,  11:05:15 AM
Talking to Jeff on the phone, and I think we both agree that it makes sense to sell rallies in stocks. The question is, How much higher do you let the market(s) run? Possibly another 50-100 points in the Dow. This should then correlate with the YM contract at 8800. Note: Coming into today's session, I did think 8700 in the Dow would cap a rally, and hopefully it still does.

  Steven Price   1/6/03,  11:03:41 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We were triggered on the second 1/2 short signal when the Dow traded 8698 at 10:58:40. Stops are currently set at 8760 on the first 1/2 short and 8825 on the second 1/2 short.

Conservative traders can look to the 8760 stop level for their full positions, while aggerssive traders can look to the 8825 stop level. I'm going to split them with 1/2 at each level.

Current levels: Dow 8702/SPX 921.95/OEX 466.00/COMP 1411

The next resistance levels we are up against are Dow 8750/SPX 925/COMP 1420/OEX 472

  Linda Piazza   1/6/03,  10:56:51 AM
I spoke too soon about KO, as it's now playing catch-up with the rest of the markets and trying to turn positive.

  Steven Price   1/6/03,  10:53:56 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
Let's watch for a failure at Dow 8700 to add to the short position as we get more extended and approach resistance in the 8750-8815 range. I'm going to add another 1/2 position on the short side on a break back under 8700.

Go SHORT the broader market on a trade of Dow 8698. Set stops on the second 1/2 position at Dow 8825

  Linda Piazza   1/6/03,  10:49:17 AM
At 2403.07, the important Dow Jones Transportation Index has moved above the 2400 level that's been giving it trouble throughout the morning. The exponential 200-dma is overhead at 2414.83.

  Linda Piazza   1/6/03,  10:40:39 AM
Jeff mentioned Philip Morris. Another consumer non-cyclical not participating in today's rally is Coca-Cola (KO), currently at 44.43, currently down $0.31. Since falling through the 47 level in October, KO has been doing battle with six-year support in the 43-45 area. After diving to a low of 42.90 on the 30th, KO rebounded to test the 45 level, reaching 44.99 on the 2nd. Although I previously thought a fall through 43.50 would send KO spiralling down, it appeared there were still dip-buyers in this stock. It's still on a P&F buy signal. Disclosure: I have a put position entered when KO first moved through 47.

  Jonathan Levinson   1/6/03,  10:35:42 AM
The put to call ratio has dropped to .93- good news for bulls, because the drop was by no means precipitous, and indicates much bearish speculation. The QQV is still positive, up 1.3 at 39.62. Is that a bearish divergence, or are QQQ option traders merely taking their time in believing that this move up is real? We should know soon.

  Linda Piazza   1/6/03,  10:31:52 AM
Currently at 27.37, the VIX is nearing November lows. On 11/22, the VIX reached a low of 26.41 before beginning its rebound.

  Jonathan Levinson   1/6/03,  10:26:49 AM
There goes 1405 COMPX, rather quickly. I'll be very curious to see the put to call reading due out in 10 minutes. 1425 is the next major resistance.

  John Seckinger   1/6/03,  10:20:09 AM
Economic news: The December Non-Manufacturing ISM index fell 2.7 points to 54.7 after a 4.3 point rise to 57.4 in November. The report is weaker than expectations. There really has been no reaction to the data.

  Jeff Bailey   1/6/03,  10:12:32 AM
Philip Morris (MO) $38.02 -4.49% ... biggest Dow loser on the session after Salomon Smith Barney says that industry contacts continue to confirm that a major change could be announced to Philip Morris' salespeople today, with Salomon believing there is a good chance that the company will announce drastic changes to its current pricing/promotional strategy. Link

  Linda Piazza   1/6/03,  10:12:24 AM
If the OEX makes it above the 464 level, those of us watching for a potential H&S pattern will be watching for a rollover in the OEX around or before the 471.25 high in early November. Of course, shoulders aren't necessarily formed in one day's move, but a move much above that 472 level, toward the December 2 487.97 high would again foul the potential for a H&S pattern, as happened in November.

  Jonathan Levinson   1/6/03,  10:12:15 AM
The opening CBOE put to call ratio has just come in at 1.06, which is good news for bulls. It looks like option traders all had the same idea, which was to buy puts at this resistance level, thus setting up the conditions for a ramp higher, which we're seeing now. The COMPX is at 1404, at the upper end of its current s/r zone.

  Steven Price   1/6/03,  10:12:11 AM
Swing Trade Signals
Most averages trading on highs of the day after the President's plan released, OEX approaching that 50% retracement at 463.75.

Current levels: Dow 8665/SPX 917.43/COMP 1404.26/OEX 463.51

  Steven Price   1/6/03,  10:09:28 AM
Philip Morris $38.05 (-1.75) OI bearish Watch List candidate MO getting hit after SSB notes that it expects the compnay to announce a change in its pricing/promotional startegy.

  Jeff Bailey   1/6/03,  10:08:14 AM
Buy Program premium level triggered as indexes achieve new intra-day high.

  Jonathan Levinson   1/6/03,  10:06:21 AM
Precious metals are on a tear today, with the HUI +4.01 to 154.69, and XAU +1.56 to 81.07.

  Linda Piazza   1/6/03,  10:06:16 AM
Earliest volume patterns show buying, as expected. Ratio-method adv/dec numbers in earliest trading were 2.6 for NYSE-traded issues and 1.63 for Nasdaq-traded issues. New highs outnumbered new lows on both exchanges, with a 24:2 number on the NYSE and a 34:1 number on the Nasdaq. It's interesting that we saw a shift in the new highs:new lows ratio toward the end of last week, with new highs beginning to pull significantly ahead of new lows. I'll be watching that trend, to see if it continues. Up volume was 3.27 times down volume on the NYSE and 4.75 times down volume on the Nasdaq. Those numbers are sustainable, but will they be sustained?

  John Seckinger   1/6/03,  10:04:48 AM
President Bush is reportedly going to call for the complete elimination of taxes on stock dividends in his economic stimulus package. Bush's "jobs and growth plan", set to be announced on Tuesday, will supposedly cast $600 billion over 10 years.

  Jeff Bailey   1/6/03,  10:03:48 AM
Sell Program premium alert was triggered on the Challenger, Gray and Christmas layoff report.

  Jonathan Levinson   1/6/03,  10:03:19 AM
The fed has added 3.5B in 3 day repurchase agreements.

  Steven Price   1/6/03,  10:01:45 AM
Swing Trade Signals
We bounced off the bottom of the opening range in the Dow and we could be headed higher when the ISM number comes out in a couple of minutes. Conservative traders may not want to take the pain, but I still think we are in an extended range and I will stick with the 1/2 short position here with my current stop. I may add on a failure at 8700

  Jonathan Levinson   1/6/03,  9:55:11 AM
Predictably, the COMPX is having difficulty with the 1400-05 level. A break above that level will consume a lot of buying energy, but will bring into view the 1425 resistance level. With the TRINQ as low as it is at .33, I'll be surprised to see 1400-05 fail on this attempt.

  Jeff Bailey   1/6/03,  9:51:36 AM
ProBusiness Services (PRBZ) $16.62 +61.9% .... being acquired by Automatic Data Processing (ADP) $40.01 -0.9% for $17.00 in cash.

  Jonathan Levinson   1/6/03,  9:49:53 AM
The fed has no repos maturing today, and so any amounts added this morning will constitute net additions to the markets' liquidity. Awaiting the announcement.

  John Seckinger   1/6/03,  9:48:21 AM
It only took a few minutes today and the ES contract is already at its Resistance 1 area (913.25). As noted in the futures wrap, bulls should get tired between the 913.25 and 916.50 area. Resistance 2, based on Thursday's levels, comes in at 927 and would be the intermediate objective for longs. I expect some weakness near 913.25 to 916.50, and then would then like to see a move under 910 for confirmation. Since the ADX oscillator is under 20, it still makes sense to look for more of a range then anything else.

  Steven Price   1/6/03,  9:47:11 AM
Swing Trade Signals
We are starting to pick up some steam to the upside. The next key level I'm watching for the possibility of a continued rally is the OEX 50% retracement of the December loss. That level comes at OEX 463.75. The Dow and SPX have each broken those retracements, but the OEX has yet to confirm. Traders watching all three averages have noticed the lag recently in the OEX. The COMP ticked over 1400 and the SPX traded 915. The Dow (8650) and SPX (915) both added new PnF boxes to the upside. The Dow has bearish resistance at 8750, while the SPX bearish resistance comes at 925.

Current levels Dow 8641/SPX 914.38/OEX 462.12/COMP 1399.37

  Jeff Bailey   1/6/03,  9:45:18 AM
Defense Index (DFX.X) 165.81 +0.69% .... Monitoring for trade at 166 here, which would be triple-top buy signal. Link

Mentioned Dow component United Technologies (UTX) $65.05 +0.93% as a stock in sector that looked bullish with good risk/reward from $61. Link

And also have eye on L-3 Communications (LLL) $47.41 +0.8%, Link but not as bullish as stock traded below trend.

  Linda Piazza   1/6/03,  9:43:09 AM
The OEX saw highs in the 463-464 range on the 11th and 16th of December. With bond yields up and the dollar moving up, the OEX may test those levels as it moves toward the upper Bollinger band on the hourly chart, now at 466.6.

  Jonathan Levinson   1/6/03,  9:42:03 AM
The COMPX has reached the 1400-05 confluence zone, QQQ 25. The TRINQ has dropped to .37, indicating an overbought COMPX, QQV +2.13, premium still on a spike but off its highs.

  John Seckinger   1/6/03,  9:38:44 AM
After the first five-minutes of trading, the Dow has a range of 8602 to 8629. Today's pivot is below at 8596, while R1 is at 8640 and R2 is at 8679. Support underneath is seen at 8557 and 8513. The 30-year is lower at 109'28 still has some room to fall before hitting intermediate support at 108'27. The yield curve is flat as well; also slightly bullish for stocks.

  Jonathan Levinson   1/6/03,  9:32:05 AM
3 point gap open on the COMPX to 1390, with QQQ at 25.74, TRINQ .76, QQV +3.09 to 41.41.

  Jeff Bailey   1/6/03,  9:29:21 AM
Expedia (EXPE) $70.90 ... actively traded here at $63.12 in pre-market. On Friday, I bought some Feb. $70 puts when stock was around $70 and will sell 1/2 position at the open. Had a chat with Steve Price this morning and both think option premium will be "ripped" higher at the open and some decent premiums to be sold in early going.Link

What I "liked" about EXPE short/put was that RS was on a sell signal vs. NDX Link .

  Jeff Bailey   1/6/03,  9:27:30 AM
The 9:00 AM Intraday Update has been posted. Link

  Steven Price   1/6/03,  9:22:24 AM
Swing Trade Signals
We are currently short a 1/2 position in the broader markets and I'm going to let the opening range set in before deciding whether or not to adjust my stop of Dow 8760. The NDX is slightly up, with Dow and SPX futures slightly down, but not yet enough activity to make a call. I'm not sure why we are seeing a bounce in the equities off their lows, but I'm going to trade what I see. There is still quite a bit of resistance overhead, but so far Friday afternoon's bounce is holding.

  Jonathan Levinson   1/6/03,  9:21:29 AM
From Jeff's email update: ...pre- announcement driven with Hotels.com (ROOM) $59.04 checking in with a 18% decline...

LOL! Checking in... good one, Jeff!

  Steven Price   1/6/03,  9:17:06 AM
Hotels.com (ROOM): Readers holding puts in recent OI put play ROOM should be happy this morning, as the stock is currently down -11.79 to $47.25 following an earnings warning.

  Jonathan Levinson   1/6/03,  9:12:16 AM
Treasury yields have come off their highs but are still in the green, with FVX +4.7 bps, TNX +3.2 bps, and TYX +3.8 bps.

  Jonathan Levinson   1/6/03,  8:50:13 AM
Since the time of Linda's posting and in the absence of any news that makes it make sense to me, equities have suddenly become a buy and gold a sell. Gold broke 356 but has been turned back, currently trading below 354/oz, while NDX futures are trading at 1040 and SPX 910. QQQ is trading 25.83 on Island. The Dollar Index got smoked overnight, down 1.4 points from Friday's high to the current 101.80.

  Linda Piazza   1/6/03,  7:07:53 AM
While North Korea professed to want a peaceful solution to the crisis over its nuclear program, Iraq's Hussein did not sound so conciliatory over the weekend. As tensions rose when the inspection team sealed a chemical plant for many hours, not allowing anyone to enter or leave, Hussein claimed that the inspections team's true agenda was to spy.

Despite these worries, the Nikkei rose 1.57% in today's half-day of trading, this market's first trading day in the new year. Although some European markets closed for holidays today, the FTSE 100, CAC 40, and DAX all opened and have currently dipped into the red, falling 1.61%, .68%, and 1.32%, respectively. Today's trade brings the DAX near the psychologically important 3000 level again, with the DAX trading at 3052.24 as of this writing.

Perhaps affecting European trading was the release of economic numbers showing that the Index of Services number fell both in the markets using the euro and in the U.K. In Europe, that number fell from 54.9 to 53.2. As in the U.S., a number over 50 indicates expansion and a number under 50 indicates contraction. Insurers contributed to the losses after the U.K.'s Britannic announced a delay in dividend payments and bonuses to policyholders. However, automakers and refiners gained in early trading.

  Jim Brown   1/6/03,  3:31:08 AM
Win $2003 in 2003 ! We are going to close the year with a Guess the Dow for 2003 contest. We are going to give away $2003 in cash to the top 3 guessers. Place your guess now. You can change it as much as you want until the entries close on Monday at 9:AM. Click here: Link

  Jim Brown   1/6/03,  3:30:36 AM
Are you going to lose the Market Monitor?

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  Leigh Stevens   1/6/03,  3:29:34 AM
The Index Trader Wrap has been posted: Link

  John Seckinger   1/6/03,  3:29:00 AM
The Futures Trader Wrap has been posted: Link

  Steven Price   1/6/03,  3:28:40 AM
The Swing Trade Game Plan has been posted: Link

  Jim Brown   1/6/03,  3:28:19 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

  John Seckinger   1/6/03,  12:40:27 AM

  Alfonzo R Carson   1/6/03,  12:20:04 AM
Alfonzo R Carson Test


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