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  Jeff Bailey   1/8/03,  5:59:51 PM
Daily Pivots/Levels ... Tomorrow's intra-day levels are as follows.

INDU : S2= 8,481, S1= 8,538, P=8,637 , R1=8,694 , R2=8,793

SPX : S2= 899, S1= 904.5, P=914 , R1=919 , R2=928

OEX : S2= 454 , S1= 457 , P=462.4 , R1=465 , R2=471

NDX : S2= 1,024, S1=1,033 , P=1049.5 , R1= 1,059, R2= 1075

QQQ : S2= 25.44 , S1= 25.69 , P=26.09 , R1= 26.34 , R2=26.74

Can compare to today's (Wednesday's) pivots/levels of ...

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

 
 
  Linda Piazza   1/8/03,  5:22:50 PM
I'm getting some questions about my "evening-star" post on the OEX. For those of you new to candlestick charting, an evening-star formation consists of three candles. On a daily chart, that would mean that it would take three days to complete the formation. The first candle is a big white candle. The second candle is a doji (a candle that looks like a cross). In the classic form, the doji would sit above the white candle, not touching it. The third candle would be a red candle that would form below the level of the doji, so that the doji did not touch it, either. In this way, the doji is like a star above the other two candles. An evening-star pattern forms after a stock or index has been moving up. It signals that the upward momentum has been lost and that prices will likely fall.

When I mentioned that this was a "non-classic" evening-star formation, I noted that the second candle was a small-bodied candle rather than a doji, and that it also did sit above the first white candle. I mentioned that Nison (author of a couple of books on candlestick charting) said that the evening-star formation did not always have to be in classic form. That's especially true when it forms just under resistance. In that way, the importance of the non-classic form of the evening-star is corroborated by the rollover near resistance. Specifically, Pring says, (pg. 112) that "there should be more flexibility in using candles in the stock market than in some of the other markets, such as futures. . . . [T]he classic evening star's three real bodies should not be touching. However, because in the stock market, the open price is usually near the prior session's close, the real bodies may touch."

For another perspective, Carl (thanks, Carl) writes that in G. Morris's Candlestick Charting Explained, page 57 states for evening star the second, the star, is "always gapped from the body." That just goes to show that even the experts on candlestick charting can disagree. Always study the information provided and see what concurs with your own experience.

 
 
  Jeff Bailey   1/8/03,  4:43:19 PM
Telephone Data Systems (TDS) $44.52 -7.5% ... Jeff: Did you see TDS into the close? I'm still holding a short from $49 that you profiled. Is there any news?

Not that I can find. I do see where they may have presented today at the Salomon Smith Barney "Entertainment, Media and Telecommunications Conference" which is being held from January 6-9. I see a block of 105,500 at the close (pros sell the close?) and am thinking TDS gave their presentation today? If the point and figure chart of TDS is any indication of the company's presentation or business outlook, then things are interesting for bears. Link

I'm looking at an earning's calendar and while not confirmed, the company is expected to report earnings on Jan. 28th before the bell. Analyst's estimates are for $0.39 versus year ago $0.63.

Hang in there. Bearish count is growing to $32. Maybe a pre-announcement is coming? Not sure.

Disclosure ... I currently hold bearish position in TDS

 
 
  Linda Piazza   1/8/03,  4:09:22 PM
At 44.07, Coca-Cola (KO) managed to cling to the 44 level into the close, although it made a brief dip below that level. Below 44, it looks to challenge recent lows of 42.97. KO takes its time testing these levels, popping quickly back up to test the previously broken resistance level and holding there before rolling over again. The 43-45 level has served as support for KO for six years. Disclosure: I have a bearish position in KO, entered when it broke 47.

 
 
  Jeff Bailey   1/8/03,  4:01:47 PM
Economic data tomorrow has weekly jobless claims out before the opening bell, with Wholesale Inventories due out at 10:00 AM ESt.

 
 
  Jeff Bailey   1/8/03,  4:01:12 PM
The 3:15 PM intraday update has been posted. Link

 
 
  Jeff Bailey   1/8/03,  3:58:51 PM
Early Pivot/Levels for tomorrow's Dow Industrails with h/l/c of 8,736/8,580, 8,580 would be...

S2=8,476, S1=8,528, P=8,631, R1=8,684, R2=8,788

 
 
  Jeff Bailey   1/8/03,  3:55:06 PM
Expedia (EXPE) $63.92 -2.73% ... Day trader's short from earlier can look to hold over the close as stock looks to now move below today's S1 into the close.

 
 
  Steven Price   1/8/03,  3:53:07 PM
Swing Trade Signals
As we head back toward the day's lows, traders need to make a decision on how to approach a trade that is headed in their direction. I do expect that we may see some type of bounce off of today's action. Do we close out here, and look to re-enter on a bounce? That is certainly one strategy, but let's face it, with the bid/ask spread, numerous entries can get quite expensive and turn winners into losers. I'm going to leave the position open and look to step up to a full short position on a failed rally from a lower high. However, each trader must decide how to manage a trade and certainly leaving puts on the offer, rather than sacrificing the spread is one way to try a capture a gain.

The COMP finally broke below 1400 and the Dow/SPX/OEX are trading near daily lows.

Current levels: Dow 8582/SPX 908.42/OEX 459.44/COMP 1399

Conservative traders may want to lower stops to break-even at 8700, however, I'm going to give it some bounce room and then adjust.

 
 
  Linda Piazza   1/8/03,  3:47:18 PM
If the OEX stays at this level or moves lower into the close, it's formed a non-classic three-candle evening-star formation. Although the middle candle was a small-bodied candle and not a doji, and although it did not sit above the first (white) candle, Nison states that non-classic evening-star formations that occur at resistance might be considered to be giving the same warning as the classic formation. This one formed near that important 472 OEX resistance.

 
 
  Jim Brown   1/8/03,  3:44:40 PM
Hello Jim, I agree with your post (at 14:45). We should not expect OI to give one point of view and that is the real strength of OI. I subscribe to other newsletters too which are run by one person and have only one point of view at any given time and believe me they are wrong most of the time. You guys are a great team and everyone is contributing in a different way to make sense of this beast we call market. I personally am very thankful to all of you for the wide depth of knowledge that you have provided in your newsletters. Your web site has provided me with education that I believe no one else could have. Thanks, Kevin

Jim: I know that you want to hear my complaints so here they are. I think that the OI writers hold too much of a common view. This may be because y' all talk and read each others stuff. One other issue is that you said that you could charge $10,000 per month if you were right all the time. Lets see you now charge approximately $40. Is that because you are right only 1 time in 250? (Heehee) I spent some time in another room this morning. It is nice to get back to intelligent information. I sure like it better when readers can't post (dumb) questions directly. I prefer to ask my dumb questions by Email. I hope that you take my compaints constructively. My problem is that my wife doesn't take any nonsense from me. I have to vent where I can. Thanks. JS

There you have it, a clear division of sentiment. I have received several emails in both directions. Since I doubt Jeff, Steve and I will ever line up on the same side at the same time there will be plenty of dissention to feed on. If we ever do all get on the same side PLEASE trade the other way.

I thought it was just my wife that refused to take any nonsense from me. By the way, JS, we just raised your subscription price for that 1 in 250 comment!!!

 
 
  Mark Wnetrzak   1/8/03,  3:37:52 PM
XMSR On The Move
XM Satellite Radio (NASDAQ:XMSR), a covered-call model portfolio position (long the stock, short the JAN-$2.50 call) is jumping higher on news it has signed up more than 360,000 subscribers.

 
 
  Linda Piazza   1/8/03,  3:36:06 PM
The Nasdaq ratio-method adv/dec numbers stayed steady through the afternoon, coming in now at .56, while the NYSE ratio is .57, lower than the .65 and .66 numbers from earlier this afternoon. Down volume is about 2.5 times up volume on the NYSE and about 5.4 times up volume on the Nasdaq. New highs continue to vastly outnumber new lows on the NYSE, by a 109:20 ratio. That ratio is a more modest but still strong 56:30 on the Nasdaq.

 
 
  Jonathan Levinson   1/8/03,  3:31:32 PM
From CNNfn.com: The central bank said consumer debt fell by $2.2 billion in November after rising a revised $1.6 billion in October. It was the first time since January 1998 that credit had declined. Industry analysts polled by Reuters had expected credit to increase by $3.9 billion in November.

Link

 
 
  Mark Wnetrzak   1/8/03,  3:25:12 PM
Covered-Call Calculator Update
The covered-call calculator has been updated and the link modified. The file can be used either online or now downloaded for personal use. It also can be used for Naked Puts and Spreads (bottom tabs). Here is the link: Link

 
 
  Jonathan Levinson   1/8/03,  3:24:16 PM
Amazing how those ascending and (in our case) descending wedges can go on and on. Of course, they also fail, which ours almost did just there. The TRINQ is now up to 3.1, though the QQV is still above 2 points too low given the bearishness of today's action. The put to call ratio probably didn't get any lower here, and while the TRINQ at 3.1 is showing solid, strong selling pressure, it's not yet extreme. Bears should mind their stops in case the COMPX decides to revisit 1418. Otherwise, 1388 is looking like a good candidate to the downside.

 
 
  Mark Wnetrzak   1/8/03,  3:14:37 PM
Covered-Call Portfolio: EYE
VISX (NYSE:EYE) is on our early exit/adjustment watch list today as it has moved below its 30-dma and the end-of-December low (failed rally?). The move lower should abate here at the "top" of the support area near $9.50 (stock currently $9.44 -$0.36) which coincides with a trend-line of the October and December lows. I simply don't like near-term implications in the "evening star" formation that is emerging on a daily chart.

 
 
  Linda Piazza   1/8/03,  3:13:41 PM
At 8595.96 as of this writing, the Wilshire 5000 looks to be forming a right shoulder. The 5(3)3 stochastics have made a bearish kiss, but I'd feel most comfortable when the slow line turns completely over, too. As I did earlier today with the OEX, I scanned back, looking for a configuration of indicators such as that I'm seeing now: the stochastics rolling over from a fully overbought level, the MACD flattening as it moved up toward the zero level, and the RSI (14) turning down from above the 50 level at the same time. As with the OEX, this particular confluence of indicators showed up in mid-May just before the slide into July lows. As a reader pointed out earlier, that doesn't mean the slide would occur today, and I would add that it doesn't mean the slide necessarily will occur at all, but technical indicators certainly point that direction. I also want to warn, as I often do, that a H&S pattern isn't confirmed until the prices move below the neckline. Although Pring advises that this type of formation is reliable enough that traders can enter from the bearish side as soon as that right shoulder is formed, we've all seen one potential H&S formation rejected in recent months.

 
 
  Mark Phillips   1/8/03,  3:09:21 PM
Familiarity Is Key Linda and I have talked about getting familiar with a small group of stocks and then following them very closely to get a feel for the way they trade. AZO is one I've been watching again, since its failed rebound that followed the big breakdown in early December.

That rebound failed right at the 20-dma last week and then the rollover began in earnest. Yesterday, the stock broke below that long-term ascending trendline and today, the weakness continues with AZO back under the $68 level, putting the PnF chart back on a Sell signal. Link There's still a lot of support in the $63-65 area, so I'm not wild about the risk/reward for new entries at this level. But traders that took advantage of the rally failure last week are smiling today. This would definitely be a good time to tighten stops to no higher than $71, and conservative traders might even consider taking some gains at current levels.

 
 
  Jim Brown   1/8/03,  3:08:26 PM
Thank you JPM! The weakness in the banking sector is finally starting to impact the Goldman Sachs long term put play I wrote about in the Editors Plays two weeks ago. We came very close to being stopped out at $74 but the down trend has finally come back. Still looking for that break under 70 again.

 
 
  Jeff Bailey   1/8/03,  3:06:45 PM
Consumer Credit fell by $2.2 billion in November, which was better than the rise of $3.9 billion expected by economists.

 
 
  Steven Price   1/8/03,  3:04:29 PM
Swing Trade Signals
We got that move below 8600 in the Dow and below 910 in the SPX. The COMP is still holding over 1400, but just barely. Conservative tradres may want to think about tighteneing the stop on the short play to a break-even of 8700, or possibly enev 8650, where we broke out to the upside a couple of days ago. The market doesn't move in a straight line and I'd like to see where we get a bounce and how high it takes us before deciding where to adjust the stop of Dow 8825.

Current levels: Dow 8588/SPX 909.20/COMP 1401/OEX 459.99

 
 
  Jim Brown   1/8/03,  3:02:40 PM
Next support for me is 8555-8565, 1400 on the Nasdaq and 903 on the S&P. I view the S&P 903 level as significant support and we could see a bounce there. It may only be temporary but we are definitely in the minor oversold range now so anything is possible. A break below S&P-900 would be lights out in my opinion.

 
 
  Mark Phillips   1/8/03,  2:59:47 PM
LPNT $26.00 (-3.49) I've been watching this stock for the past couple weeks, noting that it just continued to drift lower, getting closer and closer to major support near $29.50, all the while posting lower highs. That pattern broke with a vengeance this morning, and the stock has now shed more than 11% on very heavy volume. It now looks like we're finally seeing an oversold bounce and things could now get interesting. The stock created a big PnF Sell signal this today Link and that $30 level is now going to be stiff resistance on any sort of rebound. I wouldn't advocate jumping into short positions here, but would instead wait for a rebound failure, perhaps near $28, but ideally closer to $29, as a high-odds bearish entry. Current vertical count projects a bearish price target of $23.

 
 
  Mark Wnetrzak   1/8/03,  2:54:17 PM
Covered-Call Portfolio: ZIXI
On Monday, I went over several scenarios to adjust/exit the model covered-call portfolio position in Zix Corp. (NASDAQ:ZIXI) $4.50 +$0.11. The stock has indeed rallied as it was quite oversold and reached a high of $4.70 around noon today, offering an excellent opportunity to roll-forward or exit the stock painlessly (especially if the calls had been bought "back" earlier on weakness). Notice that the current mover higher in the stock isn't being supported by much volume - worrisome.

 
 
  Ray Cummins   1/8/03,  2:53:14 PM
Spreads/Combos -- More Portfolio Activity

One of the surprinsingly strong issues in the market today is Capital One Financial (NYSE:COF), up over $3 at $35.37. The rally is of interest to us because we have both bullish and bearish positions in COF and traders say the heavy-volume move coincides with news of government guidelines that require credit card companies to stop pursuing delinquent debts after five years. Regardless of the reason, the stock is definitely in a bullish trend and with the large premiums available in COF options, the issue presents some excellent trading opportunities.

Among the major commodities, Gold futures rose back above $350 an ounce today, helping bullish positions in the XAU and ASA Ltd. (NYSE:ASA). At the same time, the latest reports on U.S. crude inventories failed to reflect much of an impact from Venezuela's oil strike, sending crude futures below $30 for the first time in nearly three weeks. That activity did not help our positions in Valero (NYSE:VLO) and Anadarko Petroleum (NYSE:APC), however both plays remain profitable at the moment. The bullish spread in APC will likely be the first to go and conservative traders should consider exiting the position on any close below the sold put at $45.

 
 
  Steven Price   1/8/03,  2:50:26 PM
Does anyone else think CNBC could have come up with a better title for their Vegas broadcast than "Adult Toys Week"? Maybe they should do this by pay-per-view (GRIN)

 
 
  Jonathan Levinson   1/8/03,  2:49:48 PM
We may be witnessing the breakout from a bullish descending wedge formed this week, clearly visible on the 10 minute candles.

 
 
  Steven Price   1/8/03,  2:48:10 PM
My two cents on the PG premium question posed to Jeff: Traders can look at the out of the money option at the strike to determine premium levels. For instance, look at the Jan 90 call to see how much put premium there should be. There is a very finite relationship between premium levels in calls and puts and puts will have the same amount of premium over parity as the accompanying call, plus dividend, minus interest to expiration at that strike. If the 90 calls have nothing in them, then neither will the 90 puts.

 
 
  Jim Brown   1/8/03,  2:45:41 PM
I had a couple readers ask about the conflicting views of the different OIN writers and why didn't I get everybody on the same page. I think the divergence of views is one of the strong points of Option Investor. We all look at the charts a little differently. Some rely more on the pure technicals and some on sentiment. I feel sentiment (news, earnings, money flow, war, oil, stimulus, etc) have a direct impact to the markets. Technicals cannot foresee a specific event like the Alcoa earnings or the Gateway warning. If so then we would not have had the three day run before them. (I know this is not exactly correct) The run was powered by end of year retirement money. (another sentiment indicator) Still, if everyone "knew" Gateway was going to warn do you think they would have bought tech stocks so strongly?

What I am trying to say is that we all have our different market views. Everyone should decide which analyst they agree with the most and use them as their primary indicator. Everyone else is simply confirmation or a contrarian view. As we all know, there is no right view. Sometimes we get close but only for a couple days and then the market changes its mind.

The comments I made about going short over the last week are from me only. They are not a reflection on Jeff's views or Steve's swing trades. They are simply my viewpoints on the current market to be followed or ignored as you choose. Many readers complained over the last week that I was too bearish. Could be. I have been wrong before and will be wrong again. Your job is to consider all the facts and make your trades based on an informed judgment. If any of us were always right the monthly subscription would be $10,000 and well worth it. We are all traders trying to make sense of a mostly irrational market. If it ever becomes rational we will all be out of work and profits in the market will be miniscule.

 
 
  Jonathan Levinson   1/8/03,  2:45:17 PM
The put to call ratio has risen to .97. While the TRINQ has held at a moderate 1.99 and QQV 38.73, yields are off their lows and the COMPX is up to 1408. It will be interesting to see if the COMPX makes another run at 1418 resistance. For now, the bounce remains weak, but the high put to call ratio is troublesome for bears.

 
 
  Jeff Bailey   1/8/03,  2:42:42 PM
Procter & Gamble (PG) $85.09 -1.6% ... Jeff, Why isn't there any premium in the PG Jan 90 put?

Probably because at $85, the $90's are "so far in the money" that there is little premium to be had in a lower volatility stock like PG. Note how "tight" the Bollinger bands are with 21-day at $87, and lower at $85, upper at $88.

PG has traded bearish since the profiled bearish at $87, but hasn't "collapsed" to $77 by January expiration. With expiration near, I'd look to tighten down a stop on PG at $86 here, or perhaps think about selling the $85 puts (PGMQ) for $1.15 premium here. While the selling of the $85 puts OBLIGATES you to buy the stock at $85 less the $1.15 premium, by holding the Jan $90 put long, you've got the RIGHT to put it on somebody at $90 should the stock drop below $84.

 
 
  Ray Cummins   1/8/03,  2:40:06 PM
Spreads/Combos/Premium Selling -- Portfolio Activity

A number of stocks are "on the move" in the wake of today's sell-off. In the blue-chip group, 3M Corp (NYSE:MMM) is back in the $125 range, safely below our sold call at $130 and Goldman Sachs (NYSE:GS) failed to overcome near-term resistance at $75. In the technology segment, CDW Computers (NASDAQ:CDWC), Maxim Integrated Products (NASDAQ:MXIM) and Cabot Micro (NASDAQ:CCMP) all succumbed to selling pressure, boosting the probability of profit in those bearish positions. Biotech losers include Cephalon (NASDAQ:CEPH) and Gilead Sciences (NASDAQ:GILD) and the downside activity in those issues will improve the outlook for our recent call-credit spreads. One stock that is not benefiting from the slump is Lockheed Martin (NYSE:LMT) and with the sold put at $55, we are watching the issue closely for a potential early exit.

 
 
  Kent Barton   1/8/03,  2:31:43 PM
Amerisourcebergen (ABC) $56.16 -1.54 showed up as a possible bearish play during yesterday's pick meeting. The stock had rallied up to its descending trend of lower highs, looked technically overextended (as shown by the daily stochastics), and had started to unwind below psychological resistance at $60.00. What caused us to balk at adding ABC as a short was the recent strength shown by the drug sector.

The DRG.X pharmaceutical index is maintaining relative strength today with a loss of only 0.56%. However, the index's daily chart isn't as encouraging for the bulls. Yeseterday's rollover from the 200-dma (311) has led to a violation of the 50-dma at 307. A pickup in selling could take the DRG.X back towards the 295-300 area.

ABC looks like a more attractive short play now that the drug group is showing some technical negativity. Today's 2.6% loss has produced a three-box reversal on the p-n-f chart and shares are underperforming the DRG.X. Short entries could be targeted on a move under today's low ($55.86) or a failed rally near $59.00. Short-term traders could aim for a retest of the December lows near $50.00, but keep an eye out for possible support in the $53-$55 region.

 
 
  Linda Piazza   1/8/03,  2:29:33 PM
Another divergence: At 28.37 as of this writing, the VIX is nearer today's high of 28.77 than its low of 27.50, but the VXN at 44.72 is nearer its day's low of 44.44.

 
 
  Jim Brown   1/8/03,  2:27:36 PM
Jim, Now might be the time to lighten the load (1/2) on some puts just in case 8600 holds. I got in at 8650 all the way up to 8800. I wish I would of taken OI's analysis of waiting until 8800. Though I profited, sitting on my hands would of allowed me to take a money bath (grin). Kyle

I am comfortable waiting. I have a good cushion to 8800 and I think we are going to see lower numbers. Probably a bounce at 8600 but I think resistance at 8650 will hold and it will go lower. I am trying to become more passive and let the market work for me. Setting a stop at 8650 resistance still sets me up for failure if we got a little spike. I could be very wrong and maybe we are not going lower but I have the best entry I could hope for and I am willing to let my market sentiment develop. Check out the January chart from 2002. Could happen again.

 
 
  Steven Price   1/8/03,  2:23:50 PM
Swing Trade Signals
We are hitting new lows for the session, with the Dow hanging just above 8600 and the SPX holding over 910.We got a bounce off Dow 8600, which I highlighted as a point for a break in the trend of higher lows, so far seeing an intraday low of 8599. The COMP is also finding support at 1400. A break under these levels could quickly lead us lower, but so far they are holding up.

Current levels: Dow 8616/SPX 912.04/OEX 461.46/COMP 1406

 
 
  Linda Piazza   1/8/03,  2:03:10 PM
Valero Energy (VLO) is quickly approaching its exponential 200-dma at 35.29.

 
 
  Linda Piazza   1/8/03,  1:59:24 PM
New high/new lows figures continue to stump me. Today's ratios are 93:17 for the NYSE and 42:24 for the Nasdaq. If the markets continue to move down, I may have the answer to the question I posed yesterday, as to whether the new high/new low figure is a leading indicator, or whether the more negative adv/dec figure leads, or perhaps just whether a failure of the adv/dec figures to confirm the move up in the new highs/new lows figure was signaling bearish divergence. Here are the current ratio-method adv/dec figures: .66 for the NYSE issues and .55 for the Nasdaq issues. Down volume is almost twice up volume on the NYSE and about 3.5 times up volume on the Nasdaq.

 
 
  Jeff Bailey   1/8/03,  1:58:35 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  Jim Brown   1/8/03,  1:53:31 PM
That last dip could have sealed our fate. We could see a psychological bounce at 8600 but the next real support on my charts is 8554. This could be the magnet if we get that break. The declining volume is continuing to increase and there appears to be no buyers stepping up to the table. The 60 min oscillators are moving into oversold and that would correspond with the bottom getting closer.

 
 
  Steven Price   1/8/03,  1:46:55 PM
More pension probs at GM: Dow Jones reporting that GM may announce tomorrow that it will lower expected return on its pension plan. This could lower the company's earnings expectations. The company has been using a 10% expected return since 1993.

 
 
  Jonathan Levinson   1/8/03,  1:44:22 PM
The put to call ratio is getting up there now, latest reading at .94. Despite this, the TRINQ is only moderately higher at 2.08, ditto the QQV up 1.29 to 39. It looks like option traders are going increasingly bearish, while the overall market is expecting the current support level to hold. The best way to make everyone wrong from here, I think, would be to violate current support and then whipsaw back up. A selloff spike below 1400, perhaps to around 1390 COMPX, could accomplish that. Obviously, this is pure guesswork, but I'll be keeping an eye out for it.

 
 
  Kent Barton   1/8/03,  1:41:34 PM
Crude oil futures (cl03g) are continuing to move lower today after topping out near $33/barrel earlier in the week. This action in the price of the commodity is pressuring both the OSX.X (oil service index) and OIX.X (oil index). The OSX.X in particular was already looking a little top-heavy when it began to show bearish divergence (versus the price of crude) in late December.

The catalyst for oil's sell-off is an emergency meeting by OPEC that will be held on Sunday. Most analysts thinks the cartel will increase the prduction quota by 1.5 million to 2 million barrels/day. Meanwhile, the Venezuelan strike has entered its 37th day with no indication that the situation will be resolved anytime soon, while the prospects of war with Iraq seem to be increasing. In light of these underlying geo-political issues, I'd be surprised to see crude futures fall below previous resistance near $29.50.

 
 
  Linda Piazza   1/8/03,  1:35:51 PM
Bloomberg is reporting that German public workers are threatening to strike for the first time in a decade. Those of you reading my early-morning updates know that Germany is the third-largest economy in the world, and is suffering from high unemployment and stagnant growth. Tomorrow sees the release of the unemployment report in Germany, and some forecast that it might show that employment is at a 4 1/2 year low.

 
 
  Linda Piazza   1/8/03,  1:28:56 PM
The CEO of Entegris (ENTG), one of the semi-conductor equipment companies upgraded by Adams Harkness this morning, was just speaking on Bloomberg television. I didn't catch the entire interview, but it appeared that the CEO was speaking of increased demand in his sector. ENTG isn't benefiting from the upgrade today, down $.21 as of this writing.

 
 
  Steven Price   1/8/03,  1:26:20 PM
Swing Trade Signals
After setting new intraday lows, the Dow rebounded to that 50% retracement level I talked about earlier at 8643 and flirting with both sides of it for the moment. I'd like to see that level turn back into resistance for another leg down. If we are looking for a break in the pattern of higher highs and higher lows, a move below Monday's 8602 low would be the first step. 8600 is the next support level I'm watching, along with 1400 in the COMP.

Current levels Dow 8643/OEX 462.84/COMP 1407/SPX 914.68.

 
 
  John Seckinger   1/8/03,  1:22:58 PM
A note on Bush's tax agenda: Most tax benefits won't hit until 2003 taxes are filed in 2004 (might just be stating the obvious). In other news, the MBA mortgage applications index rose 24% during the week of January 3rd. Also, the refinance index rose 29% after an 11% rise the prior week to send the index to its highest level since mid-November. There is the TIPS action today (Inflation protected) in the bond pits, and I should note that I am not a big fan of those. The When Issued (security authorized but not issued) paper is softening today, and it reflects a somewhat hard sell by the Treasury when there doens't seem to be much inflation to protect against. However, I believe the maturity comes in at 9.5 years.

 
 
  Jonathan Levinson   1/8/03,  1:08:32 PM
The US Dollar Index continues to get murphied, having just broken below 101.75 support. Gold is now above 354/oz.

 
 
  John Seckinger   1/8/03,  1:08:07 PM
Equity bears should like how the 30-year (ZB03H) took the 111'00 resistance area and turned it into support. This is happening as the Dollars continues to trade weak and the XAU index approaches 78. Impressive. Note: When the Dow traded 8647 (the 10-point cushion), bulls did seem to lose some conviction. Using fitted retracements, the next area of support I see is 8610.

 
 
  Jeff Bailey   1/8/03,  12:59:03 PM
Pivot/Level Observations .... OK, now is when I like to "think like a market maker" and try and understand what just happened in the past hour or so. INDU traded S2, SPX and OEX hadn't quite traded their S2s, and NDX and QQQ hadn't come close to their S2s.

However, we've now seen the NDX and QQQ play "catch up" to the downside, and you and I certainly get the feel that market makers in 4-lettered stocks probably "stepped away" from some bids, or at least lightened up.

Hmmmm.... Expedia (EXPE) $64.37 -2.09% really gave up its "pivot" of $65.26 didn't it (see 11:09)? Thinking becomes, market makers were "sell biased" at that level, and good thinking on your part to short that pivot. Now we monitor for another test of S1 at $64.02 and boy wouldn't it be nice to see S2 of $2.30. Has potential as the NDX.X achieved its S2 today. Time will tell, but this can be "mindset" of a trader right now.

I've placed an intra-day retracement on EXPE from $65.75 to $63.18. What this does is give me 0% at $65.75, 19.1% at $65.25 (pivot) and lower levels of retracement to trade during the day. Do you see how 50% at $64.46 now serves resistance last 55 minutes and 61.8% at $64.16 serves support? A break of today's low of $63.95 should see a quick drop to 80.9% retracement of $63.67 is my thinking here.

 
 
  Linda Piazza   1/8/03,  12:57:27 PM
The daily OEX chart shows a bearish kiss of the 5(3)3 stochastics, with MACD flattening near zero after approaching that level from below, and with the RSI (14) turning down from the 55 level. I scanned across the chart, looking for a similar configuration of indicators. I found it in the middle of May, just before the slide into July lows. That doesn't mean that a similar slide will be repeated, but only that I'll now be watching for similar market behavior or for divergences from that behavior.

 
 
  Jonathan Levinson   1/8/03,  12:53:29 PM
While I'm expecting further downside, we have the following from reader Fabes:

An area to be careful, from Fridays's low to Mondays's high we have now retraced slightly over 62% of the move, good place for a bounce. Not much risk with a stop under todays low.

Thanks, Fabes.

 
 
  Jonathan Levinson   1/8/03,  12:52:21 PM
The COMPX has found support at 1400-05 as expected, but so far no much spring to it as the Qubes hug the 26 level. Gold has strapped on some boosters, breaking 352/oz, and HUI and XAU are both up nicely. Although I played ABX calls in 1999 and 2000 a bit, I only went seriously long on gold last year, when it was trading around 292/oz. It's difficult to imagine the joy that goldbugs must feel these past weeks and months, having hung on in some cases for years. Best to let the charts tell us when to buy and sell, as the fundamentals tend to give lousy timing signals.

 
 
  Mark Phillips   1/8/03,  12:49:04 PM
AU $35.20 (+0.61) On the other side of the coin, our gold play is actually performing rather nicely today, due to both broad market weakness and especially the weakness in the dollar. Once again testing the $102 level, the dollar index continues to look unhealthy, in much the same way as the chart of gold futures continues to look quite healthy, currently trading back above $354.

In last night's update, I mentioned that the AU ought to find solid support near the $34 level and this morning's intraday double bottom near the $34.30 level was close enough for my taste. Since then, the stock has staged a nice rebound, bac over $35 and recouping nearly all of yesterday's loss. So long as the dollar is weak, gold should continue to shine, attracting investors on the dips, and intraday dips in AU should continue to provide solid entries for the next attempt to push higher.

 
 
  Jeff Bailey   1/8/03,  12:45:38 PM
Futures Trading That will be posted here in the market monitor is INCLUDED in market monitor fee. Our customer service reps are getting lots of phone calls on this.

 
 
  Mark Phillips   1/8/03,  12:41:19 PM
This morning's drop and then steady slide lower has got to be discouraging to the bulls, but I am not seeing the heavy pressure to the downside just yet. So far, the weakness looks very orderly and contained. This is perhaps best demonstrated by the action in a couple of our current call plays, which have retraced to just above solid support and rebounded, albeit in a weak manner.

ACS $54.40 (-0.38) Remember the breakout last week? That breakout level was $54, and ACS dropped as low as $54.23 this morning and has now tested that level three times. There isn't much energy in any of these bounces though, as the intraday highs continue to move lower. While this could make for a solid entry into the play, more conservative traders will want to at least see the bulls push through intraday resistance at $54.65 before committing to new positions. Take note of the anemic volume today (386K vs ADV of 1.7 mln), and you can see there is no rush for the exits in the stock. This appears to just be consolidation above support before the next run higher.

BEAS $12.65 (-1.07) Yesterday's strong rally through the $12.65 resistance level certainly put a smile on the bulls' collective face. Of course most of those gains have been wiped away, with BEAS currently trading right at the $12.65 level as I type. A rebound from this level (old resistance becomes new support) would certainly be encouraging, and would make for a solid entry point. The problem as I see it is that volume, while not as strong as yesterday, is still robust, on track to easily top the ADV before the closing bell.

 
 
  Steven Price   1/8/03,  12:36:37 PM
Swing Trade Signals
The Dow had been hanging on to that 8650 mark by its fingernails, but has now lost it. It also broke briefly below the 50% retracement(of the Dec drop) mark at 8643 I highlighted in last night's Wrap. We got a slight bounce, but we have broken below opening support and we could get some speed to the downside from here. The 50 pma has now crossed below the 100 pma on the 10 min. chart in both the Dow and SPX. The 910 level in the SPX should be crucial, but we are headed in the right direction for bears. The SPX is still holding above the morning low and a break below 914 would be more decisive. As Jonathon mentioned, the 1400 level in the COMP should also be significant.

Current levels: Dow 8643/SPX 914.67/OEX 462.78/COMP 1405.

 
 
  Jonathan Levinson   1/8/03,  12:33:30 PM
Here comes the 1400-05 support level for the COMPX. The TRINQ is tame at 1.81 and QQV +1.27 at 38.98 as well. This level didn't hold for long as resistance, but there's no need for symmetry in such things. However, with the US Dollar Index getting absolutely toasted (see link below) and precious metals catching a nice bid, I'm guessing for further downside in equities.

Link

 
 
  John Seckinger   1/8/03,  12:32:13 PM
What is going on with the dollar?

Response: There has been word of selling the euro for yen, as well as talk of possible MoF interaction in order to WEAKEN the Yen. The dollar/yen is currently at 119.21, while 121.15 is 38.2% of the retracement of the December sell-off and did have a chance to be reached earlier. As far as dollar/euro is concerned, the dollar made some good gains overnight but has recently handed those back. Why? Possibly due to a report stating that PIMCO's Bill Gross supports a weak dollar. As equities continue to fall, I don't think the dollar will recover much. I will be watching the XAU and see if it can keep its gains (currently higher by 2.58%).

 
 
  John Seckinger   1/8/03,  12:12:49 PM
The Dow seems to be using the 8657 area as resistance; however, I didn't see the 10-point cushion under that area (missed by a few points). Note: Bonds are now above 111. Ok, let us see if the Dow can trade 8647 and then start to make some progress to the downside.

 
 
  Jim Brown   1/8/03,  12:11:39 PM
Look out below? The Nasdaq is near a new low for the day and the Dow is threatening to follow suit. Suddenly the bulls are not quite so confident about the New Years rally. This is normal. Check a chart for January 2002 and you will see the same pop on new money coming into the market the first 4-5 days of the year and then a couple weeks of declines as the earnings news like the Alcoa miss this morning and the Gateway warning last night take their toll on investor sentiment.

Earnings don't really start in mass until next week and Friday we have the nonfarm payrolls. Both reasons to be cautious in the markets. The A/D line is negative at -1800 issues and declining volume is increasing. As I mentioned in my wrap last night the almost 4 billion shares yesterday with no upward progress was a serious sign that the bulls were fading. I am not trying to make any kind of market prediction for the long term. I just think the next week or so the risk is to the downside instead of upside and traders should be careful with long plays. After the earnings are out and we get a couple more economic reports for 2003, then we will start talking about the longer term direction.

 
 
  Steven Price   1/8/03,  12:09:51 PM
Good Morning Steven: ROOM 49.01 + 2.53 % + 5.44, looking forward to short/put, where do you see resistance & support, would stock be ready to rollover, EXPE & USAI are showing weakness, thanks for posting on MM.

Hotels.com (ROOM) $48.60 +2.15 This former put play, entered back when the stock was testing support at $60, has bounced back from Monday's big drop that took it as low as $40.66. While I hope some of our readers took profits on the big drop, those still holding the play can look at this morning's failed rally at $50 for stop placement from this level. Conservative traders can set the stop at $50.25, while those willing to take a little more pain can set it just over $51 to allow for a failed rally over $50. The obvious support level is $40, but after such a strong bounce from that level, I think the next rollover, if we get it, will do a better job of giving us support indications.

 
 
  Jonathan Levinson   1/8/03,  12:03:39 PM
The COMPX is rushing for 1400 support while the TRINQ is up to 2.24 and QQV is +1.46 at 39.17. I'm waiting for the next put to call reading, but so far it looks like there's plenty of room for more downside. We'll watch what happens at to 1400-05 support level.

 
 
  Linda Piazza   1/8/03,  12:02:20 PM
Bond yields have now moved back down to the levels they held when the Fed repo was first announced.

 
 
  Jeff Bailey   1/8/03,  11:58:35 AM
Forest Labs (FRX) $107.10 +1.36% ... again... stock mentioned bullish here and breaking to multi-session high. Looks to challenge the 52-weeker of 12/02/02 which was $109.98. Might just do it by Friday with some "bold print" in the weekend's Wall Street Journal. Link

Stock is set to split 2:1 and earnings are due Jan.16th, which were pre-announced higher after Thursday's close. Don't forget highly anticipated FDA ruling sometime in late January or February regarding potential "block buster" Alzheimer drug. Lot's of potential momentum catalyst's in this one have some shorts getting hurt.

 
 
  Steven Price   1/8/03,  11:54:19 AM
Swing Trade Signals
The Dow made another run at 8700, trading as high as 8698 before fading. The SPX, on the other hand, did break over 920 briefly.

Those watching moving averages on an intraday basis will note that on the 10 min chart, the 50 pma crossed the 100 pma to the upside in the 8320-8330 range last Thursday, giving what some traders would view as a buy signal. It then crossed the 200-pma at 8400 later that day. That 50-pma is now approaching the 100 in the opposite direction and appears on the verge of giving a sell signal.

On the 5-min chart, the bullish crossover of the 50/100 pmas came at 8300 on 12/31, then reconverged at 8600, before heading higher. Those pmas converged yesterday for most of the day, before giving a sell around 8750 toward the end of the day. The 50 pma is now below both the 100 & 200 pmas, with the 200 pma crossover coming this morning during the last rally failure.

Current levels: Dow 8675/SPX 917.96/OEX 464.91/COMP 1412

While the pmas I noted above seem to be giving us sell signals, let's not mistake this morning's pullback for anything but a higher low - so far. It will still take a move over Dow 8825 to convince me that the rally of the last few days has staying power and I'll leave my stop on the 1/2 short signal there for now. Traders looking to get out near our entry point at 8700 can certainly tighten up stops to the break-even point here (not including bid-ask spread).

 
 
  Jonathan Levinson   1/8/03,  11:53:23 AM
Well, it doesn't look like the repo money will be finding its way into dollars, as the US Dollar Index just got sold off to below 102.40 on that latest move.

 
 
  Linda Piazza   1/8/03,  11:50:40 AM
Adv/dec numbers calculated by the ratio method continue to show more declining than advancing issues, although the ratios have moved off their lows. From a measurement of .46 earlier this morning, the NYSE adv/dec ratio is now .64, and from a .36 measurement earlier, the Nasdaq adv/dec ratio is now .60. Down volume remains ahead of up volume on both, 1.6 times up volume on the NYSE and 2.8 times up volume on the Nasdaq. This continues to show bearish patterns. Not so bearish, however, are the new high/new low figures, with a 62:13 ratio on the NYSE and a 35:19 ratio on the Nasdaq.

 
 
  Jeff Bailey   1/8/03,  11:47:33 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  John Seckinger   1/8/03,  11:44:31 AM
Well, we got one more test near Support 1 (8701), bears evidently do not feel like giving up just yet. What are the other markets telling us? The Sox is lower by 2.61% to 324 (I see support at 320), the 30-year is not above the 111 resistance area (110'29), and the Oil Index (XOI) is down about 1 percent to 445 and starting to hit some good horizontal support areas near 440. If bearish on stocks, I would wait until bonds (ZB03H) rise above 111 and the Sox fails at 320. That does look like a H&S in the Sox index.

 
 
  Jonathan Levinson   1/8/03,  11:44:02 AM
The latest put to call reading came in at .79. Nothing significant here, but bears have to love the absence of any high readings despite the violation of two support levels on the COMPX this morning.

 
 
  Jonathan Levinson   1/8/03,  11:36:28 AM
Re: Al Green: I saw a nice runup in equities after the announcement...can we have a golf clap for the PPT?? nothing like trashing your own balance sheet...

I've been seeing this increasingly, and I'd be curious to see the usage stats for the fed's open market ops webpage over the past year. It seems that a growing number of traders are taking cognizance of the fed's role in liquifying the markets.

 
 
  Linda Piazza   1/8/03,  11:33:49 AM
Since the Feds announced that 6.25B repo, bond yields have come off their lows, the VIX has moved down a bit, and the XAU has dropped a bit. From this sketchy information, it doesn't appear yet that the money is going into bonds, confirming Jonathan's speculation that it would not. Be careful with bearish trades.

 
 
  Linda Piazza   1/8/03,  11:27:43 AM
European markets fell further after the U.S. markets opened this morning, down .98% for the FTSE 100, down 2.00 for the CAC 40, and down 2.78% for the German DAX.

 
 
  Steven Price   1/8/03,  11:24:13 AM
Swing Trade Signals
The Dow re-tested the morning low at 8657, but the SPX held up on the last dip with a higher low of 915.79. I think we'll need to see resistance in the SPX at 915 on a break below that level for another leg down. A break below 910 would look particularly bearish, as the 910 level had served as strong resistance on the last few rallies prior to Monday's breakout. A break back below 915 would also appear as a bear wedge on the 5 min. chart.

 
 
  Jonathan Levinson   1/8/03,  11:18:23 AM
The put to call ratio actually fell during the past half hour to .73, as option traders went long on the dip. This is good news for equity bears.

 
 
  John Seckinger   1/8/03,  11:18:22 AM
In my 10:41:30 Post, I said a "move under 8656". Now, the Dow didn't trade there; however, I do think that it is a good rule-of-thumb to use about a 10-point cushion and try to help to avoid the dreaded "bear trap". Sure, they are times when traders can get aggressive and not wait for confirmation; however, today might be a day a trader would like to see the 8656 area turn into resistance (read: broken, and then tested from below and confirm bears are more in control).

 
 
  Jonathan Levinson   1/8/03,  11:17:27 AM
That 6.25B could be used to support the US Dollar Index, which saw some selling this morning- for that purpose, 6.25B is actually pretty modest. I doubt that it will find its way into bonds, because bonds have been catching bids this morning. My guess is that it's destined for dollars or equities.

 
 
  Jonathan Levinson   1/8/03,  11:13:45 AM
It looks like Al Green is calling in the cavalry, with an overnight repo of 6.25B. With no expiries, that is a very substantial amount, and makes me think twice about whether yesterday's upside resistance will hold if the fed's 22 primary dealers choose to jam it into stocks. We'll see.

 
 
  Jeff Bailey   1/8/03,  11:09:14 AM
Expedia (EXPE) $65.12 -0.95% ... day trader short/put candidate here as stock hasn't been able to "close" on 5-minute bar above $65.26, which is today's "pivot." Stock tested S1 this morning of $64.02, and S2 still below at $62.30. Can look short here with stop just above $65.50.

Disclosure ... I currently hold bearish position in EXPE Feb. $65 puts.

 
 
  John Seckinger   1/8/03,  11:07:52 AM
I am back. I don't have confidence in my connection, but I am back.

 
 
  Linda Piazza   1/8/03,  11:04:06 AM
Today, looking at intermarket relationships, I see bond yields down, gold up, VIX and VXN up, and adv/dec ratios showing selling. All these point toward further weakness. The only flies in the ointment are the higher dollar and the new highs/new lows figures which currently show a 53:11 ratio for the NYSE and a 33:17 ratio for the Nasdaq.

 
 
  Jonathan Levinson   1/8/03,  11:02:04 AM
The put to call ratio opened at .78 and climbed to .80, still net bearish readings, and I expect the next print to come in higher as people start to pile onto puts. The TRINQ has been staying very moderate at 1.53. This is significantly higher than yesterday's .3ish readings, but still nowhere near indicating extreme selling pressure. In other words, a slight decline in buying is bringing us the weakness in the indices we're seeing today. The QQV is only up .79 at 38.50. I'm about to chart the QQV to get a better feel for where we are, but the last time we saw readings in this range was at the December 2 highs.

 
 
  Jeff Bailey   1/8/03,  10:57:39 AM
John Seckinger called me and said his internet and land line access is down. John will post as soon as he is back up and running.

 
 
  Jeff Bailey   1/8/03,  10:56:31 AM
Pivot and supports daily S2's have been tested in the Dow and very close for SPX and OEX. NASDAQ-100 and QQQ have only tested their S1 at this point. This has me thinking for further weakness, traders turn some attention to NDX and QQQ here. Will note that QQQ low has been $26.20, just above our $26.18 level of "market maker" support. Need a break of $26.18, say $26.15 to begin thinking market makers more defensive.

 
 
  Steven Price   1/8/03,  10:46:50 AM
Swing Trade Signals
The last drop took us to a higher intraday low and the support I'm watching in the Dow would be 8650 intraday. The low is actually 8657, but we are bound to get round number support at 8650. SPX support comes at 914 and OEX at 463. With the rollover below 1426 in the COMP, the next support level I'm watching is 1400.

Current levels Dow 8669/OEX 464.36/SPX 916.92/COMP 1415.13

 
 
  John Seckinger   1/8/03,  10:41:30 AM
On a five minute chart, does anyone see the "b" long liquidation pattern in the Dow. The key relative low is 8656, and the apex seems to be at the 8675 area. A move under 8656 should then keep the market under pressure unless 8675 is taken out (read: trap). The upside objective is at 8700 and that bullishness would be nullified if 8675 is taken out as well. Let us see what happens.

 
 
  John Seckinger   1/8/03,  10:38:27 AM
One firm on Wall Street believes the response to the President's fiscal stimulus package will take fed funds rate to 2.50% and bring the 10-yr yield to 5.00%.

 
 
  Linda Piazza   1/8/03,  10:35:56 AM
As of this writing, the VIX has moved above resistance at the 28 and 28.25 levels, with next strong resistance at the 29 level. As I mentioned yesterday, it may seem strange to talk about support and resistance when applied to a fear measurement, but a study of some of my technical analysis texts shows other technicians performing similar studies and these levels do seem to correlate to market behavior.

 
 
  Jonathan Levinson   1/8/03,  10:27:25 AM
The fed has not yet let us know about this morning's open market operations. Will give them another 30 minutes and then give them a call. I always enjoy their classical music on hold, like a brief glimpse into Al Green's foyer...

 
 
  Linda Piazza   1/8/03,  10:26:05 AM
This morning continues the pattern of new highs outstripping new lows, with a 35:6 proportion on the NYSE and a 25:15 proportion on the Nasdaq. Adv/dec numbers continue to show more decliners on both, with a .46 number on NYSE-traded issues and a .36 number on Nasdaq-traded issues. These numbers show more selling than yesterday's. Today, down volume outnumbers up volume on both exchanges, showing a divergence from yesterday when up volume predominated on the Nasdaq. Down volume currently is 2.8 times up volume on the NYSE and 6 times up volume on the Nasdaq.

 
 
  Steven Price   1/8/03,  10:14:56 AM
Swing Trade Signals
The last support test took us just below the morning support range, as well as giving us an SPX PnF reversal at 915. We bounced once again and seem to be in a holding pattern between Dow 8660-8700 for the moment.

Current levels: Dow 8671/OEX 464.24/SPX 916.33/COMP 1416.23

 
 
  Jonathan Levinson   1/8/03,  10:11:49 AM
News of a plane crash in North Carolina 7 minutes ago: Link

 
 
  John Seckinger   1/8/03,  10:08:57 AM
Got some good questions this morning. What happens if the market cruises under the second support area? Here is an article on that subject: Link How are these levels calculated? I have quick article on that as well. See link: Link What if S2 and R2 are pretty wide? How can a trade play the range? Yes, I have an article on that as well. Link

 
 
  Linda Piazza   1/8/03,  9:55:57 AM
Investors in Valero Energy Corporation (VLO) don't appear to be impressed by the announcement that FORTUNE magazine has named the company as one of the "100 Best Companies to Work for in America." Perhaps they're more troubled by Valero LP's purchase of an asphalt terminal and storage facility in California from Telfer Oil Co., even though the acquisitions should be immediately accretive, according to the company. At 36.34, VLO is down $.72 as of this writing. I remind those holding January options that the simple and exponential 200-dma's are just below at 36.14 and 35.30, respectively. There were four technical reasons for entering this trade: a P&F buy signal, a move over the 200-dma (both), a move over a neckline of a non-classic reverse H&S, and a break of P&F resistance at 38. While consolidating, VLO has erased two of those four reasons for entering the trade. A move under the 200-dma's would still keep VLO on a P&F buy signal, but those 200-dma's are important watermarks, and would bring into question whether this was just consolidation or a normal pullback or a sign that bulls had been trapped, as I worried might be happening when VLO was immediately knocked back down after breaking through that resistance.

 
 
  Steven Price   1/8/03,  9:55:14 AM
Swing Trade Signals
We got quite a bounce off the opening dip and the question will be where that bounce runs out of steam. So far it has died under Dow 8700/SPX 920, but not by much.

Current levels Dow 8689/SPX 918.86.

Is this dip buying, or are we beginning to ratchet lower? Let's watch those opening support levels to find out.

 
 
  John Seckinger   1/8/03,  9:52:10 AM
For the aggressive traders out there, 50% of today's range comes in at 8698. No coincidence, the first calculated support area is at 8701; therefore, things are lining up. It gets tricky if the 50% area is cleared. The market will then have an objective of 8735; however, if the 50% is tested on a pullback before 8735 is hit - look for a failure. I personally would rather wait for a failure than look to play form 8698 to 8735.

 
 
  Jonathan Levinson   1/8/03,  9:50:37 AM
The HUI and XAU are both up today, and gold found support and is back in the green and above 350/oz. HUI is +1.88 to 145.1, and XAU +.94 to 76.36. If you're more of a short term goldbug, I'd be watching for a lower high. Some retracement of this month's huge gains is to be expected, and a failure at or below HUI 150 and XAU 80 would be a pretty clear signal to me that we're going to get it. Then again, gold bulls would have no problem seeing a consolidation at current levels. We'll keep an eye on it.

 
 
  Steven Price   1/8/03,  9:42:51 AM
Swing Trade Signals
Our opening range support in the Dow was 8674, which is below the S1 pivot of 8700, but above S2 at 8662. The SPX found support at 916, also between its S1 of 918 and S2 of 916. PnF reversals into the "O" column come at 8650 and 915. We took out the opening range when Alcoa finally opened down over $2 and bounced from 8661, which is awfully close to that S2 pivot in the Dow.

 
 
  Jonathan Levinson   1/8/03,  9:41:18 AM
The COMPX found resistance right here at 1418 yesterday. A failure at this level will be very not-bullish and should bring 1400 into view. It continues to look like shorts put on at 1442 were a great trade, and you should lower your stops to 1442 or set them to trail in order to protect at least your capital, or any profits racked up since yesterday.

 
 
  John Seckinger   1/8/03,  9:39:39 AM
After five-minutes of trading, we have a nice first period range in the Dow (8735 to 8674). Note: Support 2 comes in at 8662 and should be a solid level to watch for. Support 1 and the pivot in the Dow are both higher at 8701 and 8751, respectively. Bonds are higher on the session, but the 30-year is still under some solid resistance at the 111 area (currently at 110'26). A break above 111, coupled with a move under 8662 should give shorts some solid intra-day ammunition.

 
 
  Jonathan Levinson   1/8/03,  9:38:29 AM
JPM has been cut to "hold" today by UBS, and is currently down 4.09% or 1.14 to 26.70.

 
 
  Linda Piazza   1/8/03,  9:33:28 AM
Adams Harkness certainly believes in a recovery in the semi-conductor industry. The company upped the ratings of several companies providing systems or equipment for semiconductor manufacturing. Included among the companies are AEIS, TRKN, HELX, IFCN, ASYT, ENTG, and TWAV, all upped to a buy rating.

 
 
  Jonathan Levinson   1/8/03,  9:32:54 AM
8 point gap down open on the COMPX to 1423, TRINQ 1.77, QQV +1.18 to 38.89.

 
 
  Jonathan Levinson   1/8/03,  9:32:13 AM
Once again, there are no repo expiries from the fed, and so any amounts added today will be net additions to overall liquidity. The announcement is due around 10AM.

Falling asleep last night, I was thinking that we've seen the US Dollar Index get hammered during the past year. Forex is the largest of all capital markets- over 1 trillion dollars per day of volume. We've seen the fed's ownership of US securities increase steadily all year since 9/11/01, with a large spike in October coinciding with the rally in equities and the selloff in the USD. If US equities are up but the US dollar is down, that tells me that it's very likely that the US or the fed has been buying equities from foreigners who are cashing out of US denominated assets. If so, that is not mid- to long-term bullish for US stocks. Unless, of course, I have it wrong, but that's how it makes sense to me so far.

 
 
  Jeff Bailey   1/8/03,  9:28:00 AM
The 9:00 am Intraday Update has been posted. Link

 
 
  Steven Price   1/8/03,  9:26:40 AM
Swing Trade Signals
Looks like the Gateway warning will be starting us off in the red this morning. I metioned in last night's Swing Plan that I would be watching for a break below Dow 8643 as a sign of true weakness. We are currently short a 1/2 position in the broader markets. I'll also be watching the support levels Jeff listed in last night's pivot analysis on the Monitor at 4:38:40. Those supports are S1 8700, S2 8662.

 
 
  Jonathan Levinson   1/8/03,  9:20:09 AM
Steven's Index Trader Game Plan from last night is excellent, and I strongly recommend reading it if you haven't already. The link is near the bottom of this page.

 
 
  Jonathan Levinson   1/8/03,  8:46:04 AM
The Qubes are trading 26.43 on Island ECN, down .22 from its close. The US Dollar Index has climbed, in fact jumped, to 102.90, while gold is finding support at 345/oz for the moment. Bond yields are negative, with FVX -3.6 bps, TNX -3.4 and TYX -2.7.

 
 
  Linda Piazza   1/8/03,  7:49:23 AM
After a warning in the U.K. by Dixons Group Plc, the biggest seller in that country of consumer electronics, and last night's warning by Gateway, European concerns about slowing consumer growth deepened. Dixons said sales were flat during the important holiday season. Concerns extended to other sectors dependent on consumer spending. Amid these worries, the FTSE 100 fell .53%, the CAC 40 fell .78%, and the DAX fell 1.49%. Spain's IBEX remained the only European stock market in the green, rising after Argentina announced plans to remove currency controls put in place more than a year ago. This allows Spanish companies with investments in Argentina to send profits out of Argentina.

Tomorrow sees the release of Germany's unemployment report, a report that's sure to be watched closely. The ECB also meets tomorrow, but is not expected to change benchmark rates.

The Nikkei fell 1.6%, led down by banks and retailers.

In other news, Major Dan Amos talked about the movement of the Florida-based U.S. Central Command to Qatar, commenting in a Bloomberg article that this movement "is not an exercise."

 
 
  OI Staff   1/8/03,  7:34:39 AM
ATTENTION MARKET MONITOR USERS A new version of the Market Monitor for Windows has just been posted to the website.

You can download a copy by clicking the link here: Link

Please direct comments, questions or support requests via email to it@OptionInvestor.com

 
 
  Steven Price   1/8/03,  6:16:06 AM
The Swing Trade Game Plan has been posted: Link

 
 
  John Seckinger   1/8/03,  6:15:57 AM
The Futures Trader Wrap has been posted: Link

 
 
  Jeff Bailey   1/8/03,  6:15:49 AM
The Index Trader Wrap has been posted: Link

 
 
  Jim Brown   1/8/03,  6:15:03 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

 
 

Market Monitor Archives