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  Jeff Bailey   1/7/03,  11:32:15 PM
Bull Confirmed! Yesterday's reversing "buy signal" in IBM combined with today's reversing "buy signal" in HPQ has the Dow Industrials Bullish % ($BPINDU) Link reversing back higher into "bull confirmed" status. This now has the offensive team back on the field in the Dow and only a reversal back lower at 48%, which would be "bear confirmed" would change things.

Discussed this in relation to the technicals of the Dow Industrials themselves and that if bears are going to rally the troops, they had better do it soon.Link

It was the S&P 100 Bullish % ($BPOEX) Link) that reversed lower "first" on December 4th, was followed by a reversal lower on December 6th in the NASDAQ-100 Bullish % ($BPNDX) Link , and then the Dow Bullish % ($BPINDU) followed on December 11th.

Per tonight's Index Trader Wrap and "dividend tax plan", we could be seeing the bullish % perhaps give some confirmation that President Bush's proposal is being viewed as a positive. I think the uncertainty right now is at what level the tax cut will be given. At the corporate level (don't tax as net income, the amount of money a company distributes to shareholders), or the individual level (don't tax the individual taxpayer on dividends received, where corporations already have paid a tax as dividends are paid on an AFTER tax basis). Again.... some thoughts on potential reasons and bullishness from a corporate tax-break on dividends is discussed in tonight's Index Trader wrap.

 
 
  Jeff Bailey   1/7/03,  11:11:54 PM
Per Linda's 04:01 Post S&P futures (sp03h) traded 923.50 near that post, and may have dipped to 920 just before/during that news.

Here... at 11:10 PM EST, S&P futures trade 923.50, slightly below their 923.80 04:15 PM close.

 
 
  Jeff Bailey   1/7/03,  5:24:12 PM
Hmmmm.... Was talking with John Seckinger on the phone and some interesting "levels" may be observed as it relates to both short-term and longer-term retracements (see 16:38:40 post on tomorrow's intra-day pivots/levels).

If Dow Industrials retracement is taken from the October lows of 7197.40 to 12/02/02 high of 9,043.73, then 19.1% retracement is at 8,690, which isn't too far off from tomorrow's S1 of 8,700.

Same thing for S&P 500 with retracement from Oct. lows of 768.63 to Dec. high of 954.28, which has 19.1% retracement of 918.82, which isn't too far off from tomorrow's S1 of 918.

This has me thinking a close below the 918 SPX and/or Dow 8,690 can be bearish.

For those bears a little "shocked" and there may be reason for this, which I'll discuss in tonight's Index Trader Wrap, by yesterday's bullishness, I think the smarter way to look to implement any type of bearish trades would be to see a test of some S2's, then look for short/put entries on rebounds back near S1s or daily pivots.

 
 
  Jeff Bailey   1/7/03,  4:38:40 PM
Daily Pivot/Levels for Wednesday

Dow Indu: S2=8,662, S1=8,700, P=8,751 , R1=8,789, R2=8,840

SPX: S2=914, S1= 918, P=924.50, R1=929, R2=935

OEX: S2= 463, S1=465, P=468.50, R1=471, R2=475

NDX: S2=1,045, S1= 1,058, P= 1,070, R1=1,084, R2=1,096

QQQ: S2=25.93, S1=26.29, P= 26.61, R1=26.97, R2=27.29

The above levels for tomorrow can be compared to today's levels where we see a "tightening" of the range as S2's move higher, while R2's are compressed lower. Slight increase in "pivots" lend slightly bullish bias on short-term basis.

Tuesday's Intra-day Pivots/Levels

Dow Indu : S2=8,527, S1= 8,650, P= 8725, R1=8,848, R2=8,924

SPX : S2= 900, S1=914, P= 923, R1=937, R2=946

OEX : S2= 455, S1=462, P=466, R1=474, R2= 479

NDX : S2= 1,020, S1= 1,040, P= 1,054, R1= 1,075, R2= 1,089

QQQ : S2=25.31, S1= 25.81, P= 26.20, R1= 26.70, R2= 27.09

 
 
  Linda Piazza   1/7/03,  4:01:29 PM
AP reports say that the Pentagon will send an Iraq war-plan staff to a Gulf post.

 
 
  Jonathan Levinson   1/7/03,  3:57:24 PM
Stonehse, your email address has been refused.

 
 
  Linda Piazza   1/7/03,  3:55:30 PM
CNBC and other sources report that UAL's pilots are ratifying a 29% pay cut.

 
 
  Mark Wnetrzak   1/7/03,  3:54:58 PM
Covered-Call Candidate: FDRY
Foundry Networks (NASDAQ:FDRY) $8.38 +$0.38, a company that designs, develops, manufactures and markets an end-to-end suite of high performance networking products, is another potential covered-call candidate. The stock has been forging a stage I base for almost a year with near-term support around $7.00. The FEB-$7.50 call ($1.45 x $1.60) would offer a cost basis around $6.90; a potential monthly yield of 5.7%; and a favorable way to take advantage of the current lateral trend.

 
 
  Jeff Bailey   1/7/03,  3:45:44 PM
The 3:15pm intraday update has been posted. Link

 
 
  Linda Piazza   1/7/03,  3:43:40 PM
Across many of the markets, charts currently show small-bodied candles sitting near resistance. The (5)(3) daily stochastics signal overbought conditions, are hinging, but have not yet rolled over. As of this writing, the Wilshire 5000 dropped below that 8722 left-shoulder level and appears ready to test the 8700 level. The XAU has moved back up a bit. The VIX has yet to have tested its 26.45 low of yesterday, a low that matched the 26.41 low of 11/22. Past patterns lead me to expect a rollover from these levels or near these levels soon, but those new highs vs. new lows make me cautious. If the markets continue to move down into the close, those small-bodied red candles might not have such small bodies, and I might not feel quite so cautious.

 
 
  Steven Price   1/7/03,  3:43:06 PM
Swing Trade Signals
Back to the downside. I certainly like the pullback after the second failure at Dow 8800, but until we break 8700, I still think we are rangebound with a higher low. I'd like to believe we just saw a right shoulder and I think a move back below 8650 would support that theory. SPX also back below the possible left shoulder at 925. Current levels: Dow 8727/SPX 921.90/OEX 467.15/COMP 1427.

That 200-dma in the COMP may turn out to be the reversal point, as it was in early December, but we probably won't get a good test of support until we hit the rising 50-dma of 1390 to the downside.

 
 
  Mark Wnetrzak   1/7/03,  3:42:49 PM
Covered-Call Candidate: GNSS
Genesis Microchip (NASDAQ:GNSS) $16.95 +$1.20, a company that designs, develops and markets integrated circuits that manipulate and process digital video and graphic images, recently came up on one of my covered-call screens. The company is rallying back above its 50- and 150-dma on decent volume after it bounced off support around $12.50. The FEB-$15 call ($3.10 x $3.30) offers an excellent way to participate in the current rally with a cost basis around $13.80 and a potential monthly yield of 5.6%.

 
 
  Jonathan Levinson   1/7/03,  3:40:17 PM
GE's union just announced a 2-day strike for January 14 and 15.

Thanks to reader Barb.

 
 
  Jonathan Levinson   1/7/03,  3:39:31 PM
I'm hearing trader talk that GE's unions are going out on strike. This is unconfirmed.

 
 
  Jim Brown   1/7/03,  3:39:21 PM
That 8800 short entry point is looking a lot better now. I am breathing easier and I think the bounce is over. (notice I said I "think") That has gotten me into a lot of trouble lately. Technically I think the resistance at 8800 is strong and we saw confirmation of that today.

 
 
  John Seckinger   1/7/03,  3:37:59 PM
Note: If the Dow closes at 8739, it would be the first time the Dow settles under the calculated pivot (8750) for the following day in quite some time. The Dow would also be closing back inside its daily Bollinger Band. I would have liked a failure at its 200 DMA (exp) of 8858; however, there is a chance we will see some more weakness tomorrow. A weekly chart doesn't give such a bearish outlook, but the low during the week of September 30th was 8732.

 
 
  Jonathan Levinson   1/7/03,  3:32:01 PM
The COMPX is back in its early afternoon range, currently at 1432. The TRINQ is back at .36, and the put to call ratio, last printed at .64, the day low. The QQV is low at 37.85, down .24 on the day. I keep harping on these numbers, but here's what I see. The COMPX has just failed to break the 200 day moving average for longer than a couple of minutes this morning. The put to call ratio is reporting a vast imbalance of bullish option trades over bearish ones. The TRINQ has been reporting buying hysteria day after day since last week, for the past weeks, we've seen readings rarely even exceeding 2.0. Kudlow, Cramer et al. have been making wildly bullish predictions lately. In short, it appears that the vast majority of traders, pundits, analysts and the media are unflinchingly bullish, and the TRINQ says that they've been putting their money where their collective mouth is. Perhaps they'll all be right. But that's not what the market tends to do. It tends to humiliate the greatest number possible. The failure at the 200 dma is by no means a done deal, and it may get exceeded. But indicators tend to revert to their historical means, and the indicators I follow are in extreme territory, showing that a rare degree of bullish speculation has already been displayed. We should watch our stops, but shorts put in at 1442 today are winners so far. If the market continues to fall, or at least resumes its slide, I'd suggest considering the next entry on a print below 1420 with a stop just above. Just my opinion.

 
 
  John Seckinger   1/7/03,  3:25:16 PM
The range continues in the equity markets, and the 30-year did weaken slightly into the close. By session's end, the ZB03H contract finished higher by 11 ticks at 110'12, but off the intra-day high of 110'24. The high was the mid-point of the daily Bollinger Bands. Therefore, least resistance is still lower unless the 30-year can CLOSE above the 110'24 area. I do believe that the sell-off in bonds over the last few days did NOT violate some significant areas; therefore, I can't say that traders will be selling rallies in the future. I would like to see 108'24 taken out first. Note: Higher bond prices means higher yields and usually weaker blue chips.

 
 
  Mark Wnetrzak   1/7/03,  3:14:12 PM
Covered-Call Regrets: BEAS, SEPR
Bea Systems (NASDAQ:BEAS) and Sepracor (NASDAQ:SEPR), positions in the covered-call model portfolio, continue to power higher and may be causing a bit of "call" selling regret. Aggressive investors may consider rolling-forward and possibly "up" - buy back the current calls and sell new calls with more time at the same or higher strike-price. For example, the BEAS position (long the stock, short the JAN-$10 calls) has a cost basis of $9.55; the JAN-$10 call ($3.70 x $3.90) could be bought back for say $3.80 and then the new cost basis would be around $13.40. The FEB-$12.50 ($2.20 x $2.30) or MAR-$12.50 ($2.55 x $2.65) could then be sold, allowing for a higher profit potential, but at a higher cost basis - $11.20 or $11.85 respectively. Remember though, professionals generally don't like to put more money on the table.

 
 
  John Seckinger   1/7/03,  2:45:51 PM
The U.S. Senate has agreed to extend unemployment payments to laid-off workers who have depleted their normal benefits. This was one of the first legislative acts of the new Republican-led Congress. The Senate unanimously approved a bill that will restore extended benefits to the roughly 800k laid-off workers whose benefits ran out (26 weeks without finding a job, plus an additional 13 weeks that expired on December 26th). These workers will now have until June 1st to find a job.

 
 
  Jonathan Levinson   1/7/03,  2:41:32 PM
The last time the COMPX violated the 200 dma was on December 2nd, which preceded the one month decline lasting until last week.

 
 
  Kent Barton   1/7/03,  2:33:31 PM
Cisco Systems (CSCO) $14.55 +0.37: Ticking slightly lower after Morgan Stanley issued some bearish comments on the company. Their analyst is forecasting no improvement in service provider or enterprise spending, and would not recommend the stock.

 
 
  Jonathan Levinson   1/7/03,  2:27:02 PM
The COMPX is currently trading just below the 200 dma at 1439 (1442 was yesterday's number), while QQQ has exceded it (26.59) by .13. Yields have regained some of their losses, though the TRINQ remains very low. The bulls have expended an awful lot of steam, but for the moment the supply is beginning to appear limitless. I continue to expect resistance at these levels to hold, but it remains a surprising show of strength.

 
 
  John Seckinger   1/7/03,  2:25:07 PM
Testing Futures Scalps
Now short at 928.00 set stop at 929.00

 
 
  Linda Piazza   1/7/03,  2:24:35 PM
At just over 8760 as of this writing, the Wilshire 5000 remains above its left-shoulder area. Earlier today, I'd tagged that left shoulder at about 8709, but one candle over showed a left-shoulder high of 8722. The daily (5)(3) stochastic remains hinged in overbought territory, but still hasn't turned down. Looking at daily and weekly charts, it doesn't appear likely that the Wilshire will move above its "head" level at 9010.68. As it rises toward that level, it will face historical resistance at the 9000 level, the exponential 200-dma at 8967.24, and a descending line from last spring. If the Wilshire turned down from current levels, it doesn't appear that the current prices rose so high that a potential H&S formation must be ruled out for this broadest of all markets, but a continued rise toward that 8900-9000 level would again negate that potential.

 
 
  Mark Phillips   1/7/03,  2:23:23 PM
ACS $55.24 (-0.94)

Would you be entering here? Seems to have bounced from 54.75...

I mentioned this one this morning in my 10:45 post, noting the attempt to stabilize near the $54.75 level. Sure enough, that turned out to be the low of the day, so far. Since then, the stock has made some progress, but conviction seems to be lacking, as it now rests about 50-cents off the lows. I'm really not excited about what I see on the chart right now and am a bit concerned about the lack of participation in the strength seen in the rest of the market. My inclination would be to wait to see if the $54.75 level holds as support again and if it does, then would consider entry. Otherwise, I think the better entry comes on a successful test of the $54 level.

 
 
  John Seckinger   1/7/03,  2:22:43 PM
Testing Futures Scalps Go SHORT under 928.00 - rolling at resistance - 930-931 proving tough

 
 
  John Seckinger   1/7/03,  2:20:49 PM
Note: The Dow did close yesterday outside its Daily Bollinger Bands, and the upper band currently comes in at 8783. Therefore, a close under 8783 should increase the risk of keeping a bullish position overnight. The 200 DMA (exp) is higher at 8859, and the Dow hasn't close above this average since May 24th.

 
 
  Jeff Bailey   1/7/03,  2:19:12 PM
QQQ $26.82 +1.86% ... back at a new intra-day high here and trades intra-day R1 of $26.70. From earlier posting of R2=$27.09, this may correlate near-term with our daily chart "volume pivot" of $27. Short-term bulls might look for some type of pullback entry near $26.50, for late session rally near $27.

Eye on Microsoft (MSFT) $55.89 +2.06%, which has traded strong bulk of the session. QQQ bull would want to see MSFT make a concerted move above $56, which has been a point of resistance from the open.

 
 
  Kent Barton   1/7/03,  2:17:47 PM
Strength in shares of MSFT ($55.86 +1.08) has helped to push the software index above its 200-dma at 109. The GSO.X is currently trading at 113.42 and doesn't have any significant resistance until the 119-120 area.

 
 
  Mark Phillips   1/7/03,  2:16:33 PM
LEN $55.32 (+1.40) After several rejections from the $54 resistance level, LEN broke out with conviction this morning, moving solidly above the 200-dma at the same time. The President's speech has only added more fuel for the bulls and the stock has now cleared the $55 level. Despite the fact that volume is lacking, price action is price action. I'll be dropping the play from the LEAPS portfolio as of the close tonight.

 
 
  Jim Brown   1/7/03,  2:09:44 PM
I got my 8800 short entry point. I just hope I don't have to eat it given all the bullishness after the speech. Still looking for a sell the news event and the negative A/D line seems to point to a less than bullish outlook. Time will tell.

 
 
  Jonathan Levinson   1/7/03,  2:07:10 PM
The COMPX has reached the 200 dma, TRINQ at .21, TICK.NQ 351. Here's the fight we've been waiting for.

 
 
  Ray Cummins   1/7/03,  2:05:08 PM
Spreads/Combos -- MERQ on the move!

Shares of Mercury Interactive (MERQ), a maker of products for software testing and monitoring, are "on the move" today after the company said its fourth-quarter earnings and revenue would be above previous expectations and would surpass year-earlier results. Currently the stock is up almost $4 (near $37) on the heels of the announcement and an upgrade by Pacific Growth Equities. Not surprisingly -- considering the new era of "tell the truth" regulations for analysts -- the issue was downgraded to "hold" from "buy" at Prudential based on an assessment that the stock is fully valued. In any case, the issue is trading at recent highs and our (bullish) "premium-selling" positions in MERQ will likely expire at maximum profit in two weeks.

 
 
  Steven Price   1/7/03,  2:04:32 PM
Swing Trade Signals
The Dow just broke to a new intraday high, so Jim may yet get his entry at 8800. We are seeing green in the SPX, OEX as well. That November high in the OEX was 472.47 and should be a crucial level if the Dow breaks above 8800. The SPX already took out that high back at 925 and could re-test yesterday's high at 931.77.

Current levels: Dow 8787/SPX 929.26/OEX 470.95/COMP 1439.85

 
 
  Linda Piazza   1/7/03,  2:01:56 PM
I've been searching my TA texts for information as to whether new high/new low figures or adv/dec figures should be given more credence, or whether one leads the other. In other words, if new high/new low figures tend to reverse sooner and to lead the markets, perhaps traders should be thinking that the strong new high/new low figures from the past days are signalling more upside. If the adv/dec figures tend to lead, then perhaps traders should be thinking this signals weakness and that the upside is limited. I can't find any studies that favor one study over the other. However, they're certainly showing divergence from each other. The failure of the adv/dec numbers to show strength today also might be signaling divergence from market action, but those strong new highs/new lows figures keep me from drawing too many conclusions about those adv/dec numbers.

 
 
  John Seckinger   1/7/03,  1:58:12 PM
Testing Futures Scalps 926.50 hit, currently flat

 
 
  Jeff Bailey   1/7/03,  1:52:31 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  John Seckinger   1/7/03,  1:49:14 PM
The XAU index remains under pressure, currently down 2.85 percent to 75.91 and has set an intra-day low of 75.53. Looking at P&F charts, one box scale, a sell signal is given with a 75 print. This goes back to the "bull trap" theory as the XAU traded 80 just a few days prior. Note: Mid-point of bollinger band comes in at 75.70 on a daily chart, and today was the first time tested since December 3rd.

 
 
  Kent Barton   1/7/03,  1:47:33 PM
Mylan Labs (MYL) $38.82 +0.84: This drug stock is hitting all-time highs this morning after the company announced a 3-for-2 stock split. Shares have been bid sharply higher on sepculation that its generic Sythroid medication would recieve FDA approval earlier than expected. Shares blew past historical resistance at $38.00 today on what's shaping up to be the strongest volume in several months.

The 3-for-2 split will be distributed on January 27th to shareholders of 17th. Shares are looking more than a little extended after moving higher for six consecutive days. Thus, traders thinking about playing a split run should probably wait for a pullback to the $34-$36 area before evaluating bullish positions.

 
 
  Jonathan Levinson   1/7/03,  1:42:57 PM
The US Dollar Index was climbing all morning and seems to have ticked down to just below 102.60 during the past 20 minutes.

 
 
  Linda Piazza   1/7/03,  1:41:27 PM
The divergence in volume patterns continues into the mid-day trading. New highs now outpace new lows by 76:9 on the NYSE and by 78:27 on the Nasdaq. However, decliners continue to outpace advancers on both, with a (ratio-method) .61 for the NYSE and .80 for the Nasdaq. On the NYSE, down volume comes in at 1.35 times up volume, while on the Nasdaq, up volume comes in at 2.46 times down volume.

 
 
  Jonathan Levinson   1/7/03,  1:39:38 PM
The put to call ratio has dropped to .70.

 
 
  Jonathan Levinson   1/7/03,  1:35:15 PM
Dubya is currently justifying the dividend tax cut as a way of drawing money into the market, to provide additional liquidity "to build more factories and employ more people." Unfortunately, the US is a net importer, and more of a provider of services than goods. Just a thought.

 
 
  Jonathan Levinson   1/7/03,  1:33:08 PM
The market isn't hating the President's speech, for a change. The COMPX has climbed to the top of its afternoon channel at 1431. Buying pressure grown, drilling the TRINQ down to .29. The TICK.NQ is at 167. The cost of the plan is worrisome, given the enormous US national deficit. Then again, as a taxpayer here in Canuckistan, I'd sure love to hear our leader proposing changes such as the President is currently outlining.

 
 
  John Seckinger   1/7/03,  1:31:56 PM
Testing Futures Scalps Presidents speech nearly over - Go FLAT at 926.50 if hit. Down trend still in place until 927 hit.

 
 
  Linda Piazza   1/7/03,  1:27:04 PM
Here are some tenets of the Bush plan: Bush wants to extend expired jobless benefits, increase business equipment writeoffs to $75,000, raise child tax credit to $1,000 this year, reduce the marriage penalty this year, and eliminate taxes on stock dividends. He proposes $3.6 billion re-employment accounts. Many of these tenets were expected.

 
 
  Ray Cummins   1/7/03,  1:23:28 PM
Spreads/Combos -- Genzyme (NASDAQ:GENZ) Straddle

Reader's Write: Hi Ray...I noticed that GENZ tested the bottom of its current range today and the puts in the straddle were trading for about $6, which would almost pay for both sides of my position. You mentioned last week that the stock could go to $28 or $27 before it rebounds but I am seeing two bounces already near that price. Do you think the best play is to hold for now or sell the puts and hope for a rally before the FDA panel meeting in mid-January? Thanks for your input. BD

Hello BD...Indeed the GENZ chart appears to be showing signs of support near the current range and today's quarterly earnings report and the CEO's recent comments at the J.P. Morgan H&Q health care conference may be part of the reason for the decline in selling pressure. The company posted acceptable earnings (fourth-quarter revenue rose 12%) and issued a forecast of strong growth for 2002, however the primary catalyst for the stock in the near-term is still the upcoming FDA meeting. If the panel approves both Fabrazyme and Aldurazyme, GENZ shares will rally sharply and at that point, your puts will be almost worthless. I think the opportunity to make the straddle a "free" play is fortuitous and not something that comes along very often in this wicked game. Unfortunately, YOU will have to make that decision, based on your outlook for the stock and the crucial FDA meeting later this month. Keep in mind, the options expire in two weeks so the time-value premium is eroding at an exponential rate. Good Luck!

 
 
  John Seckinger   1/7/03,  1:20:48 PM
One stock on fire today is IBM, higher by 1.88 points (or 2.17%) to 85.41. Rising above the $83 level gave a buy signal on a P&F chart, and slightly rejecting the left shoulder of a possible H&S formation. It is only 'slightly rejected' because the the left shoulder of 83.61 isn't that far underneath; moreover, prices are outside of their Bollinger Band on a daily chart and that does portend a pick up in volatility and possible rejection back into the band. It is my opinion that a move to 87 would officially reject the H&S pattern. The new bullish objective, according to P&F charts, is 101.

 
 
  John Seckinger   1/7/03,  1:18:50 PM
Testing Futures Scalps Go SHORT at 926.00 - Now 11:06 - rolling from high end of channel.

 
 
  John Seckinger   1/7/03,  1:18:13 PM
We will be testing the futures posting signals for next weeks launch. There may be stoppages or random posts for the next couple days.

Do not act on any signals - these are just tests.

 
 
  Jonathan Levinson   1/7/03,  1:09:17 PM
HUI continues to get sold off, headed for its 20 dma at 140.97. Next support should come at the 50 dma at 127.04 if that first support fails.

The COMPX is resting on 1425 support. The indicators continue to show extreme buying with the TRINQ at .37. The QQV has faded to flat as option traders grow complacent within the afternoon's so-far narrow range. Yields remain negative. Did traders buy the mystery ahead of Bush's speech? Will they begin to sell the history? So far the COMPX is holding up.

 
 
  Steven Price   1/7/03,  1:01:39 PM
Swing Trade Signals
We are certainly rangebound so far today, with no real continuation of yesterday's move, but also no reversal and so far a higher level of support. Although the Bush economic plan is "old news" we may get another push when he talks about his plan. However, we'll probably need something new to crack the 8800 barrier. I'm not yet convinced he won't add a little something that hasn't yet been released and that could give the markets a push, but unless that happens, we may see the 8700-8800 range throughout the day.

 
 
  Jeff Bailey   1/7/03,  12:58:09 PM
Nervous scale Good afternoon, Mr. Bailey

I must say that I have profited nicely from the combination of your technical evaluation of the indexes combined with Mr. Brown's fundamental insights, and for this I thank you.

I was wondering how nervous you would be, say on a scale of 1-10 (10 highest), if you were short SPX 965 calls with only 8 trading days left? Does any kind of profit-taking back to the 925 area put the head&shoulder formation back in play, or is the pattern technically negated with the violation of the right shoulder? I have a nice little winning streak going by waiting for a rally (in the SPX), then writing out-of-the money credit spreads (for 6-10% returns) above the previous rally highs. I have a bad feeling about this one, however...I would greatly appreciate any insight that you would share.

My "nervous" scale factor would be about 5 right now. I'd bee keeping a very close eye on the S&P 500 Bullish % ($BPSPX) and monitor for any type of bullish reversal. I'm not sure when the trade was put on, but if put on more than 8 sessions or so ago, should be getting some help from the lower VIX and time decay.

My "nervous" scale would increase to 7 should SPX trade at 940.Link

Now... I probably need to add this. The "subject line" to the above e-mail was "sweatin' bullets (again)".... if you're losing some sleep over this trade, then you might be a too OVERLEVERAGED and might need to cut back on size a bit. Also.... if you're short the calls at $4.00 or $3.00 and they're trading $1.50 today, then cut back some here. That's not a bad gain based on $4 or $3 entry.

Also... might want to try using the same techniques discussed in a past "Ask the Analyst column" Link we outlined for a trader in a trade he had on the QQQ's that had trader short both the puts and calls.

As far as a reversal back to 925 goes, and putting the reverse head/shoulder back into play, I call the "hunch backing" as the shoulder grows to the "ear." I think the trade yesterday has the pattern "suspect" and not to be heavily relied upon at this point. This is my opinion anyway.

 
 
  Ray Cummins   1/7/03,  12:53:02 PM
Spreads/Combos -- Portfolio Activity

Monday's sharp rally propelled a number of issues to new highs and two of the best performers in the (bullish) "Synthetic Positions" category were Varian Medical Systems (NYSE:VAR) and Scios (NASDA:SCIO). Both issues hit record levels, despite the recent downtrend in equities and it appears the upside activity (in both stocks) will continue in the near-term. Buying pressure was also evident in shares of Electronic Data Systems (NYSE:EDS) and the renewed interest help the issue reach a 5-month high near $20. Our (bullish) LEAPS combination has achieved profitability after only three weeks and the stock is poised for additional gains in the coming sessions. One position that did not benefit from the rally was our bearish calendar spread in Capital One Finance (NYSE:COF). As noted in Sunday's newsletter, the long (FEB-$25 Put) option was holding its value, even in the wake of the recent trend reversal, but when the stock moved above near-term resistance at $32, a prudent and timely exit was indicated for conservative traders. Among the recent downside winners, Expedia (NASADAQ:EXPE) surprised everyone with a $7 plunge yesterday to the $64 range after its main competitor, Hotels.com (NASDAQ:ROOM) slashed its earnings outlook amid tepid travel demand. Our "premium selling" positions in the issue are at maximum profit and the short (call) positions from $70-$80 are unlikely to be tested in the near-term.

 
 
  Linda Piazza   1/7/03,  12:47:57 PM
I lost both by satellite television service and broadband connection within a few moments of each other, so I'm playing catch-up as I take a look at charts. As I've mentioned several times today, volume patterns (many new highs versus new lows, but more declining issues than advancing issues) and intermarket relationships (VIX and VXN up and buying in bonds, but gold down and dollar up) aren't giving clear clues as to the ultimate market direction today. Other market participants perhaps are as confused, as the OEX prints several small-bodied or doji candles on the hourly chart. Those candles are indicative of battles between bullish and bearish market participants or of indecision. The indecision can't last forever, however.

 
 
  John Seckinger   1/7/03,  12:47:41 PM
Still seeing the divergence between the bond market and equities. The 30-year is higher in price by 18 ticks to 110'19, but the Nasdaq is higher and the Dow is only lower by 5 points. I deem this a divergence. Note: The Dow was unable to get back above the 8786 area and did find support at the 50% retracment of the day's range (8750). With that said, it might be a little difficult forecasting direction over the very short term.

 
 
  Jim Brown   1/7/03,  12:33:19 PM
Good grief! I take a day off and somebody let the bulls out! What a fine mess you got me into. Stopped out of my puts at 8700 without so much as a thank you. Teach me to leave you guys to watch the markets. Just like asking the fox to guard the hen house. (grin)

I am sure everybody noticed the dead stop at 8800 and exactly where the left shoulder stopped on November 6th. If the market rolled over here we would have a perfect right shoulder in place. You notice I said "if". My new years resolution was to hold my nose and trade the trend regardless of my bias. Looks like I made it almost two days before breaking it.

Unfortunately the short-term trend appears up but my personal bias is that the long-term trend is still down. However, it is amazing how little impact what we "think" has on the markets. Still I "think" the shorts got caught off guard one more time by a couple pieces of positive news and the new retirement money helped keep them off balance the rest of the day. I would love to see 8800 again on Tuesday for a personal short entry point but it may not happen. The Bush news is already old news and we have a good chance for a "sell the news" event unless something new comes out. The "positive" news out of Iraq was just what I talked about on Sunday. If the inspectors don't find the smoking weapons then Bush could decide to try and fight anyway without a clear mandate and we end up with egg on our face and the world against us. Either way it delays the potential start of the war and prolongs the uncertainty. Just my two cents!

 
 
  Jonathan Levinson   1/7/03,  12:20:29 PM
The COMPX seems to be making a home just beneath the 200 dma, a perfect recipe for indigestion over lunch hour. The put to call ratio has been mirroring the action in the tape, now down to .77. The TRINQ at .32 is to me the single most bearish of the indicators, showing that bulls have had the pedal to the metal for days now, just below the 200 dma. Will there be sufficient power to take out resistance? I thought not at 1400 COMPX, and that level fell within minutes. We'll have to see today in the 1440-45 zone.

Precious metals continue to get hammered, with HUI -5.74 and XAU -2.26.

 
 
  Ray Cummins   1/7/03,  12:05:18 PM
Spreads/Combos -- Notable Events -- Intermune (NASDAQ:ITMN)

Shares of ITMN tumbled $6 today after follow-up data released by the company suggested that their top-selling drug, Actimmune, now appears to be less effective than previously thought. According to the report, the overall survival advantage in the Actimmune-treated patients compared to placebo patients fell to 25% from 40%, achieved in the original study. To make matters worse, InterMune was already basing most of its original claims of efficacy on a much stronger analysis of a sub-group of patients in the study who had mild to moderate forms of idiopathic pulmonary fibrosis. Based on this condition, the new data appears even weaker, however InterMune executives will try to repair the damage done in a presentation at the J.P. Morgan H&Q Healthcare conference later today. Our bearish position in the issue is at maximum profit and with the current uncertainty surrounding the company's lead drug, the issue will likely trade lower in the coming weeks.

 
 
  John Seckinger   1/7/03,  12:04:51 PM
A range bound session? With the Dow unable to get back above 8786 and make a new relative high, it seems like we are range bound. Stochastics on shorter time frames appear slightly overbought and have crossed lower. Taking things to an even more micro level, 50% of today's range is just under 8750 and the Dow should find some support there.

 
 
  Steven Price   1/7/03,  12:04:13 PM
Swing Trade Signals
John's last post underscored the action in bonds, which are still seeing some buying in spite of the equity bounce. That tells me that the rubber band may have finally stretched to a pullback level, as we are getting some buying in treasuries. I'd really like to see the ten-year back over 114, however, which is about the midpoint of the big red candle from Jan 2. If we instead find resistance there, we may be seeing a dead cat bounce in the bond market and another leg up for equities.

Current levels: Dow 8773/OEX 469.60/SPX 926.18/COMP 1430.69.

I would have loved to see resistance at SPX 925 and the failure of barriers at that level, as well as the Nasdaq move above 1426 has me concerned about the short play. That being said, I still believe Dow 8825 is the correct stop-loss level to allow for a failure from 8800. However, conservative traders should be aware that we got dip buyng, rather than a breakdown and yet another higher low.

 
 
  Linda Piazza   1/7/03,  11:53:37 AM
Continuing the pattern over the last few days of trading, the new highs vastly outnumber new lows. On the NYSE, the proportion is 61 new highs to 8 new lows, and on the Nasdaq, it's 64 new highs to 19 new lows. This sign of strength is countered by the .51 and .73 adv/dec (ratio method) numbers for the NYSE and Nasdaq, showing more declining issues than advancing issues. On the NYSE, down volume still remains about 1.4 times up volume, and on the Nasdaq, up volume comes in at 2.3 times down volume, a move down from earlier this morning, when up volume was nearly 3 times down volume.

 
 
  Jeff Bailey   1/7/03,  11:52:35 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  Jonathan Levinson   1/7/03,  11:43:27 AM
Precious metals are being sold today, with gold trading below 348/oz, while HUI is down 5.56 to 143.99 and XAU -2.48 to 75.67.

 
 
  John Seckinger   1/7/03,  11:36:33 AM
Interesting how the Dow recovered while bond prices rose (read: lower yields). The Composite continues to outperform. Back to the Dow, a move above 8786 will break a short string of lower highs and lower lows on a five-minute chart. Note: The XAU is lower by 2.8% at 75.94 and bulls will need the 75 level to hold going forward.

 
 
  Jonathan Levinson   1/7/03,  11:28:06 AM
What causes the trinq to trade is such extream range both up and down compared to trin?

Both the TRINQ and TRINQ are calculated using the same formula. I believe the difference owes itself to the fact of the relatively lower share prices on the COMPX compared to the NYSE, and the resultant higher volume on the COMPX. This creates quicker swings in the ratio because of the "faster" volume on the COMPX.

 
 
  Linda Piazza   1/7/03,  11:14:28 AM
At just over 8715 as of this writing, the Wilshire 5000, the broadest market of all, has this morning been testing its left-shoulder level at about 8709. Yesterday, the Wilshire had climbed above that left-shoulder level and had looked to be ready to challenge the "head" level of a potential H&S formation. The daily (5)(3) stochastics have hinged, but there has not yet been a bearish kiss of the two stochastic lines. If there is, and if the prices also continue to fall, there's been bearish divergence since the last time the stochastics were in overbought territory. That last time the stochastics registered overbought, the Wilshire reached its early December intraday high of 9010.68.

 
 
  Steven Price   1/7/03,  11:14:24 AM
Swing Trade Signals
While we did break to new intraday lows before catching a bid, the COMP is back in the green and so far that 8740 opening support level in the Dow has failed to act as resistance. I would love to see a breakdown below 8700, but I'm not sure we'll get it after the last bounce. If we do, however, a test of the 50% retracement of the December drop at 8643 would be the next level of support I'd be watching.

Current levels: Dow 8741/COMP 1423/SPX 922.82/OEX 467.48

 
 
  Mark Phillips   1/7/03,  11:13:24 AM
MO $40.40 (+0.89) I neglected to mention the action in MO yesterday, but at the time, the weakness due to the bearish SSB comments looked like it was setting up a gift of an entry point for traders that missed the original LEAPS entry back in November. With President Bush's stimulus plan apparently giving a boost to dividend-paying stocks, MO is likely to benefit from increased investor attention. The stock currently boasts a dividend yield of 6.48%, and that has got to look attractive to investors stuck in 1-2% interest-bearing accounts. The change to the tax treatment of dividends is a big part of our rationale for this play and that just might be enough to get the stock through the $42 resistance level and above the descending trendline at that level. That should put MO in a better technical position and position it to start working on the higher levels of resistance. Remember that this isn't going to be an overnight wonder sort of play -- just a slow and steady gainer that ought to have the stock sitting substantially higher in the months ahead.

 
 
  Jonathan Levinson   1/7/03,  11:08:46 AM
And, as the price moves down, the put to call ratio has moved up to .84. Traders are becoming more bearish as price falls. This is an unpleasantly rapid jump for bears to see, but still indicates plenty of bullish speculation and portends further downside. The TRINQ is confirming, having moved up to .53, indicating normal to strong buying pressure, but no longer extreme.

 
 
  Linda Piazza   1/7/03,  11:05:53 AM
In addition to the important OEX support/resistance/pivot levels that Jeff just mentioned in his post, I also note historical support at 463.50-464 (September 11 high was 463.54, for example) and the exponential 50-dma at 456.48. If the OEX continues to fall, it might be good to be aware of these levels, too.

 
 
  Jeff Bailey   1/7/03,  10:59:02 AM
Intra-day Pivots/Levels

Dow Indu : S2=8,527, S1= 8,650, P= 8725, R1=8,848, R2=8,924

SPX : S2= 900, S1=914, P= 923, R1=937, R2=946

OEX : S2= 455, S1=462, P=466, R1=474, R2= 479

NDX : S2= 1,020, S1= 1,040, P= 1,054, R1= 1,075, R2= 1,089

QQQ : S2=25.31, S1= 25.81, P= 26.20, R1= 26.70, R2= 27.09

 
 
  Mark Phillips   1/7/03,  10:56:50 AM
AU $34.90 (-0.36) Gold bugs looking for an entry into this bullish play appear to be getting their wish this morning. While gold futures held above $350 all day yesterday, we're seeing a bit of weakness this morning, with the contract currently just above $348. That's pressuring the XAU index down to the $76.50 level, which is well off the $81 level seen yesterday morning. So it should come as no surprise, that our AU Call play is seeing some weakness this morning, currently trading right down to the month-long ascending trendline at $34.90. While a rebound from this level could work nicely, I'd feel better about a solid rebound from the $34 level, which appears to be stronger support, having served as resistance twice last month before the breakout above that level a couple weeks ago. If initiating new positions, look for confirmation of strength from the XAU.

 
 
  John Seckinger   1/7/03,  10:54:28 AM
Well, the 8731 level was taken out in the Dow and that should mean that the low during the first five minutes 8741 will act as resistance if the market bids. Remember, the pivot is at 8725 and this is the first day in some time that the market weakened enough to test its pivot. Are bulls finally getting tired? We should know very soon.

 
 
  Jonathan Levinson   1/7/03,  10:54:24 AM
The COMPX seems to be failing on this latest bounce attempt, which will set up a "hunchback" head and shoulders on the 5 minute chart. The TRINQ is still in the basement at .35, QQV up +1.28 so far, and yields all firmly in the red.

 
 
  Mark Phillips   1/7/03,  10:45:22 AM
ACS $54.80 (-1.37) Who says you can't get what you want? Following yesterday's bullish move, shares of ACS are pulling back this morning and it looks like we could get a test of the $54 level again today. after launching higher from the $55 level yesterday morning, the stock has retraced all those gains and is trying to stabilize near the $54.75 intraday support level. If that attempt fails, then a solid entry opportunity should present itself on a successful test of the $54 level (former resistance) as support.

 
 
  Jonathan Levinson   1/7/03,  10:45:07 AM
Interestingly, the put to call ratio dipped to .68 over the past half hour. The confusion suffered by some in reading the put to call ratio is easily solved right here in today's action. We saw the ratio drop (indicating increasing bullish speculation) as the price of the indices rose. In other words, people were betting more on prices going higher as the price went higher. This is exactly the opposite of what smart traders do. If price is going up, you should be less likely to buy and more likely to sell. Buy low, sell high. Yet the p/c ratio shows traders selling low, and buying more as price moves higher. This is why this contrarian indicator works so well.

 
 
  Linda Piazza   1/7/03,  10:39:56 AM
At 36.80 as of this writing, Valero Energy (VLO) announced yesterday a plan to shut down a catalytic cracker for nine days of repairs at a California refinery. (Ah, brings back my days growing up in Port Arthur, where every adult male I knew worked at a refinery.) With OPEC announcing that it will increase production, NYMEX oil prices also dipped, perhaps affecting VLO. I see slight support below at 36.50, where there is historical support and also the simple 22-dma, and stronger support at 36. It's still above its simple 200-dma at 36.19, and its exponential 200-dma at 35.29. When I'd first mentioned this stock, I'd mentioned that it might take several months to achieve its targets, but I'm worried that some readers might have bought January options. Those options are losing premium quickly while VLO consolidates. So far, it hasn't violated important technical support, although it keeps getting knocked back each times it pushes above 38. I've mentioned some possible bearish divergence on the weekly chart. VLO remains on a P&F buy signal and above its 200-dma, but those of you holding January options should evaluate your pain thresholds while considering whether to stay in this play. You might consider setting a stop just below one of the 200-dma's.

 
 
  Mark Phillips   1/7/03,  10:39:48 AM
BEAS $13.83 (+1.16) It's been a long time coming, but BEAS finally broke out this morning and judging by the early volume pattern where the stock has already traded more than half its ADV, this morning's breakout has conviction. Yesterday's late-afternoon trading had the stock inching above the $12.65 resistance level, but today's move is really showing that bullish conviction, as it came ahead of any discernable bullish action in the broad markets, with the stock trading an early high of $13.98. The initial surge seems to be fading a bit here with some weakness showing in the broad market, so traders that didn't enter on the breakout move at the open will want to look for intraday support to build in order to give an indication of a solid entry point. Given the apparently strong move, we shouldn't see a pullback back under the $12.65 level. Look for a rebound from either the $13.40 or $13.00 levels to provide that entry trigger.

 
 
  Jonathan Levinson   1/7/03,  10:36:58 AM
Ladies and gentlemen, if you'll be good enough to advance to your 5 minute COMPX chart, I present to you the formation known to some as "The Finger". Next support is approaching at 1420 COMPX.

 
 
  Jonathan Levinson   1/7/03,  10:26:14 AM
The COMPX is back to the 1426 support level. If it falls through that, the 5 minute candles will have printed the formation known as "The Finger", but it's still too early to tell.

 
 
  Linda Piazza   1/7/03,  10:24:14 AM
What do early volume patterns show? Caution might be good for both bears and bulls. The adv/dec numbers calculated by the ratio method show more decliners than advancers on both the NYSE and Nasdaq, with .56 and .84 numbers, respectively. On the NYSE, that follows through with down volume being 1.43 times up volume. On the Nasdaq, however, they must be buying a lot of the stocks that are advancing, because up volume is almost three times down volume. New highs outnumber new lows on both, with a 33:6 number on the NYSE and a 40:10 number on the Nasdaq. With bond yields down, and VIX and VXN up, the adv/dec numbers add to the caution for bullish traders. However, with the new highs/new lows numbers being so strong, Nasdaq up volume so high compared to down volume, the dollar up, and gold down, bears have reason for caution, too.

 
 
  John Seckinger   1/7/03,  10:24:02 AM
Few notes to fellow futures traders: Remember, I use all sessions in my calculations. This will give different readings if "all sessions" is not clicked on Q-charts as traders look at charts shorter than a daily snapshot (eg. 5-minute). Moreover, the range in the YM contract is confirmed via the CBOT's website. Yes, there are discrepancies between Q-charts and the CBOT. I believe the exchange is more accurate most of the time.

 
 
  Jonathan Levinson   1/7/03,  10:20:19 AM
U.S. Factory Orders Fall 0.8 Percent; Ex-Transportation Drop 0.7 Percent.

The markets seem to be liking the news. Here's the full story from Bloomberg: Link

 
 
  John Seckinger   1/7/03,  10:20:05 AM
The 10-point cushion under the low during the first five minutes seemed to help today (8741 versus intra-day low of 8733). I think it makes sense to use it on the upside as well (8778 plus 10 is 8788). Intra-day high of 8786, so breakout not yet confirmed.

 
 
  Jonathan Levinson   1/7/03,  10:12:44 AM
The COMPX is printing green straight toward the 200 simple dma at 1442. IF you have been waiting to short the COMPX, that's the place to do it. The 200 dma is the line in the sand separating bull territory from bear territory, and so in theory, that's the cheapest place to get your shorts on. (pun?) However, breakouts can happen, as telecom bears have learned. As always, I urge you to be merciless with your stops and if shorting, be ready for the possibility that they try to run it up and away above 1442.

 
 
  Steven Price   1/7/03,  10:09:59 AM
Swing Trade Signals
The Dow is now above its opening range and also yesterday's support at 8760. I'm beginning to think that run back to 8800 could be in the cards here soon.

Current levels Dow 8777/SPX 927.28/OEX 470.04/COMP 1436. We are picking up steam to the upside.

 
 
  Jonathan Levinson   1/7/03,  10:07:55 AM
The opening put to call ratio came in high at .79, but not in raging bull territory above 1. Nevertheless, the COMPX is now just 10 points away from its 200 day SMA at 1442.

 
 
  Jonathan Levinson   1/7/03,  10:06:56 AM
Jonathan what does Repo stand for? little confused on exactly what the fed does with adding liquidity and taking away

Please see my article in Traders Corner at Link

 
 
  Jonathan Levinson   1/7/03,  10:01:54 AM
The TRINQ is down to .33. With this many minute TRINQ days in a row, there is a reversal in our near future. Specifically when, however, is the question. NDX volatility as measured by the QQV is up .62 to 38.72, and bond yields have dropped their small gains, currently flat to negative. Precious metals are down again today, however, with HUI -2.76 and XAU -1.24.

 
 
  Steven Price   1/7/03,  10:01:27 AM
Swing Trade Signals
We shook off the opening pullback after appearing as though a breakdown was in progress. The SPX is now back over 925, the Dow is back over 8750. COMP trading on its high of the day.

Current levels Dow 8757/OEX 468.90/SPX 925.98/COMP 1427.36.

 
 
  Linda Piazza   1/7/03,  9:57:53 AM
I note also this morning that the VIX has gapped up and then moved over "resistance" at 28, printing 28.01 as of this writing. It's sometimes feels a bit abstract to apply technical tools such as resistance levels and moving averages to a discussion of the VIX's behavior, as it's not a stock that trades, but since these levels do give us some indication of the overall behavior of the VIX, and therefore of the broader markets, I continue to look at them. Since in technical analysis, we routinely study moving averages of moving averages and use other such techniques, it's probably not too abstract to apply technical analysis to the VIX, either.

 
 
  Jonathan Levinson   1/7/03,  9:57:16 AM
The fed has announced that it is taking no action today. With no expiries, the markets are entirely on their own.

 
 
  John Seckinger   1/7/03,  9:56:00 AM
Interesting how the Sox is higher by 1.17% at 335. There should be resistance above at 340. The dollar is higher as well; XAU Index lower. The Dow has taken out the low during the first five minutes (8741); however, I like to use a 10-point cushion before thinking about confirmation.

 
 
  Linda Piazza   1/7/03,  9:49:08 AM
Although the day is still young and anything can happen, I note that the Dow Jones Transportation Index has fallen below its exponential 200-dma at 2414.75. As of this writing, it remains above the psychologically important 2400 level, at 2403.07. Hourly stochastics have rolled, showing bearish divergence (equal stochastic highs and higher price highs). I would wait before the release of economic numbers in a few moments before making too many guesses about the ultimate direction of the markets, however.

 
 
  Steven Price   1/7/03,  9:44:27 AM
Swing Trade Signals
The opening range took us down to Dow 8740/SPX 926/OEX 468.47. The OEX and SPX have ticked below that support and the Dow is holding up at the moment.

Current levels: Dow 8748/OEX 468.29/SPX 924.81/COMP 1421.39

 
 
  Jonathan Levinson   1/7/03,  9:41:26 AM
The COMPX has printed a high of 1426 so far, with the TRINQ back at good ole .38, QQV +.78 to 38.87.

 
 
  John Seckinger   1/7/03,  9:40:01 AM
The range in the Dow for the first five minutes is from 8741 to 8778, while the pivot in for today comes in at 8725 and untested below. R1 is at 8848, while S1 is below at 8650. Bond prices are slightly in the red, and the Utility Index is down 1% at 273. With Saudi Arabia and Russia apparently agreeing to raise oil output, traders seem to be taking profits in companies within the Oil Index - lower by 1.55% to 457. Support is below at 450.

 
 
  Jeff Bailey   1/7/03,  9:36:26 AM
The 9:00 AM Intraday Update has been posted. Link

 
 
  Linda Piazza   1/7/03,  9:34:00 AM
Why our website offers more than a financial magazine: I've been a freelance writer for many years and I know that magazines have lead times. The articles must arrive in final edited form well ahead of the publication date. Today, I was reading a magazine's top picks for 2003 when I noticed a statement that the recommended prices were as of December 2, the magazine's cut-off date for publication. Anyone remember that date? It's the date of December highs, before the slide to December lows.

 
 
  Jonathan Levinson   1/7/03,  9:28:32 AM
Yields are flashing green, with FVX +3.2 bps, as QQQ tacks on 9 cents above yesterday's close. The fed has no repos expiring today, and, as was the case yesterday, any amounts added today will be net gains for the markets.

 
 
  Steven Price   1/7/03,  9:27:35 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Stops should be in place on the 1/2 Short signal with a Dow trade of 8825.

 
 
  Steven Price   1/7/03,  9:24:46 AM
Swing Trade Signals
We are currently short a 1/2 position with a stop of Dow 8825. The Nas is slightly in the green, as are Dow futures. We could get that test of resistance at 8800 shortly after the open. If I am stopped out over 8825, I think there is a good chance we could re-test the Dec 2 high over 9000. Aggressive traderrs can play that move with a tight stop. However, I also think it is a risky play with plenty of downside after a run-up of almost 600 Dow points to that level, as well as over 60 SPX points. If traders choose to jump on long on a breakout, I would probably place a stop just under 8800.

 
 
  Jonathan Levinson   1/7/03,  8:35:08 AM
Bonds have just opened, and yields are slightly down, with the FVX -1.5 bps, TNX -1.6, and TYX +.7. QQQ is down a mere .025 from its close of 26.32, no doubt buoyed by the positive surprise from EMC. The US Dollar index got bought all the way up to 102.60, and gold, which was sold down to the 348 level is back above 350/oz. The markets may be many things, but they certainly are not boring.

 
 
  Linda Piazza   1/7/03,  7:28:50 AM
European investors today must sort through a slew of newly released economic numbers. A survey of consumer confidence in the euro countries saw the number drop to a -16 from the -14 number a month earlier. German retail sales fell in November, and a retail association cut 2003 expectations to a drop of 1.5% from the previous forecast of a drop of .5%. However, despite the gloomy news, a business confidence number rose to a -9 from November's -11. Business owners still express reservation about spending. As of this writing, the FTSE 100 fell .84%, the CAC 40 fell a modest .06%, and the DAX fell .76%. Thursday sees the release of a German unemployment report that is expected to show the highest unemployment numbers in more than four years in the world's third-largest economy. The ECB also meets on Thursday, but is not expected to change rates.

Although up in early trading, the Nikkei later fell as worries about Iraq, the Japanese economy, and the effect of bad loans on Japanese banks weighed on the market. It closed down .65%. In Hong Kong, Duetsche Securities' upgrade of the semiconductor equipment sector in the U.S. to "buy" resulted in a gain of 1.3% for the world's foundry leader Taiwan Semiconductor Manufacturing (TSM) and 1.8% for United Microelectronics (UMC). Not enjoying such a good day in Asian trading was Hutchison Whampoa. After heavily investing in third-generation (3G) cell phone business, the company pushed back the 3G rollout in Hong Kong until at least Q2 of 2003. This is the second time the company has pushed back the rollout of 3G technology.

 
 
  Jim Brown   1/7/03,  2:49:42 AM
End of year renewal special - Only 6 days left to take advantage of the special. Those readers who want to lock in the cheapest rate possible with a ton of freebies should check it out! Click here: Link

Upgrade your regular subscription to a Premium level to continue receiving the Market Monitor. Click here: Link

 
 
  Jeff Bailey   1/7/03,  2:44:37 AM
The Index Trader Wrap has been posted: Link

 
 
  John Seckinger   1/7/03,  2:44:25 AM
The Futures Trader Wrap has been posted: Link

 
 
  Steven Price   1/7/03,  2:44:11 AM
The Swing Trade Game Plan has been posted: Link

 
 
  Jim Brown   1/7/03,  2:43:41 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 

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