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  Jeff Bailey   1/18/03,  4:32:03 AM
A loooong "Ask the Analyst" column tonight, but interesting stuff I think.

Was also doing some intra day logbook work and taking some notes. No reversals up or down in the bullish % charts, but NDX saw a net loss of 2 stocks to reversing p/f sell signals. OEX was flat and still 61%, SPX lost 3 stock to p/f sell signals, still column of "O" and slips to 60%, which was 01/09/03 and 01/10/03 readings. NYSE and NASDAQ Comp bullish % slipped marginally, while very narrow Dow Bullish % was unchanged at 60%.

New highs versus new lows still impresses me at the NYSE. Today, 112 new highs versus 17 new lows. NASDAQ softening further with 73 new highs, but a growing number of new lows at 31.

Volume is steady at NYSE with 1.33 today. NASDAQ volume of 1.63 billion was second heaviest day this week, with Wednesday's 1.73 billion the heaviest.

It was my plan to leave work "early" today and head to south east Colorado to chase some geese. Well.... I'm out of here and I guess you could say I am leaving "early!" It's 04:30 AM EST, so it's early Saturday morning. Geese start flying at about 09:00 MST, so I've got plenty of time to get where I'm going.

Enjoy the 3-day weekend and see you back here Tuesday morning!

  Jeff Bailey   1/17/03,  8:04:39 PM
Pivot Matrix Here is the updated pivot matrix. The daily area is for Tuesday's trade (markets closed for Martin Luther King Jr.). The weekly area was tabulated using this week's High,Low,Close. There was nothing done to the monthly section as we have not completed the month of January bars yet. Link

Observations: I note correlative support levels in the Dow Indu, OEX and SPX at Tuesday's S2, with the weekly S1s. Making note to potential "key" levels of support at INDU=8,475 and OEX=450 and SPX=890.

On the resistance side of things, I note correlative points at Dow Indu, OEX and SPX, with their daily R1s, and their weekly PIVOTS. Making note to potential "key" levels of resistance at INDU=8,670, OEX=463 and SPX=912.

I go into next weeks trading with some sense of a range for the Dow and OEX and SPX. INDU=8,475-8,670, OEX=450-463, SPX=890-912.

For the monthly area, maybe a conincidence, but today's SPX close 901.78 isn't too far from the Monthly pivot. High so far for the SPX this month has been 935.05 (not too far off from monthly R1) and low so far this month has been SPX 879.92 (no correlation to monthly R2, R2, Pivot)

With little correlation showing up in NDX or QQQ, those traders may need to monitor the INDU, SPX and OEX levels.

Again... I haven't been able to backtest these type of matrix correlations. However, if you don't make the observation, there's no way to ever know if things line up.

Two scenarios at play here, based on potential ranges defined.

1) Early next week, do we see continuation lower, with test of correlative DOW, SPX and OEX support levels, and then get a recovery rally?

or 2) Do we get early week recovery rally back to correlative resistance, and then a push lower to correlative supports?

If this were any other day that Friday, I think I might be able to shed some light on these two questions.

Can you guess how a trader might look to answer these two questions? How will "tomorrows" trading start out? For that we would have to LOOK TO THE FUTURES. Stay tuned for more on this. Hint: Look at the S&P e-mini futures. I saw this tonight based on a subscriber's question regarding our "5-minute" retracement technique. Go back to today's opening for futures, which is actually at 04:40 PM EST. The first 5-minute bar in the es03h was from 916.25 to 921.75 and was quickly reversed lower the next 5-minutes. Almost as if the futures market was going to sell REGARDLESS of what IBM or MSFT had to say. Look how that "fitted" retracement came into play today. Be sitting down when you do this.

Some of the above, and reprint of John Seckinger's "pivot analysis" article will be shown in this weekend's "Ask the Analyst" column.

  Jeff Bailey   1/17/03,  5:48:01 PM
I was concentrating on the downside today, but John Seckinger's note regarding upcoming earnings for Tuesday. Here's an intra-day chart of JNJ, I didn't even think of shorting it as it wasn't "tech" related. But here's the "5-minute fit" going up instead of down. JNJ's chart is probably a "rarity" today considering the tide was going down, but kind of interesting. Link

Note: The "reason" I've been mentioning a "close above on 5-minute basis" is based on observations that we can even make regarding JNJ's 5-minute chart. See the moves above $54.88, which couldn't close there. It's almost like a computer program at an institutional trading desk was alerted and systematically checked its inventory, squared things up a bit based on order flow, sold some stock on the move above $54.88, sold JNJ back below $54.88 (imagine the program was set up to sell a level and then 10-cents below that level to feed liquidity to buyers and then stop selling when $54.78 was reached, and not sell again until either $54.88 was traded or $54.70 was traded. If the lower $54.70 alert was triggered, then the computer would check its firm's inventory. If inventory was a little low, then it would buy $54.70 to $54.80, then stop buying unless 54.70 as triggered again.

What if our minds thought like this? Do you think a computer is listening to CNBC or reading the news wires? Nope. It is just trading levels and managing risk in its firms inventory.

  Linda Piazza   1/17/03,  4:16:50 PM
What a tough week for everyone, bulls and bears alike. Remember that markets are closed on Monday, so give yourselves a good long weekend to relax, recoup, and replan.

  Steven Price   1/17/03,  3:59:28 PM
Swing Trade Signals
We're are going home officially flat, but leaning short. I'd like a dead cat bounce anywhere under Dow 8700 as an additional short entry on Tuesday, with the SPX finding resistance at 910.

  John Seckinger   1/17/03,  3:58:19 PM
Some notable names reporting earnings before-the-open on Tuesday include MMM, SCH, C, F, GP, JNJ, USB, and WFC. Also on Tuesday is December Existing Home Sales, scheduled to be released at 10:00 a.m. Additionally, the Book-to-Bill report will be released at 6 p.m.

  Jeff Bailey   1/17/03,  3:58:18 PM
MSFT getting pounded lower into the close $51.40 -7%, heavy volume trade here!

  Mark Wnetrzak   1/17/03,  3:57:58 PM
Covered-Call Portfolio: AGIL
Agile Software (NASDAQ:AGIL) bouncing back above $7.50 though the stock is unlikely to be "called away" unless it closes above $7.75 or so.

  Jonathan Levinson   1/17/03,  3:56:16 PM
GE's recovery off the lows is nothing short of miraculous. Perhaps James Cramer's bullish comments on it today gained some traction.

  Jeff Bailey   1/17/03,  3:54:05 PM
Forest Labs (FRX) $52.22 -2.26% ... going to take another May $55 call here and bid just 1 at 2.90. I don't mind the 3-day premium deterioration.

I'm pretty sure that FRX doesn't sell software, or reliant on capex spending from. It is somewhat reliant on getting FDA approval for its Alsheimer drug, but there seems to be good demand for its antidepressant drugs. Maybe even more so after today's trade in MSFT and IBM.

  Linda Piazza   1/17/03,  3:54:04 PM
The reader who asked about WLP makes this observation: The open interest on the 65 and 70 puts is large and on the Jan 70 calls. Could this be playing a part in the activity today?

Great observation, Bob. I should have checked that myself. Yes, as Steve mentioned earlier, there's some attempt to peg stocks near strikes with high open interest, so that could be playing a part in what's happening. Still, like Mark, I don't like the high volume on this move, and the reader agreed, too.

  John Seckinger   1/17/03,  3:52:30 PM
If the Dow closes near these levels, we will get a WEEKLY pivot next week of 8672, while S1 is at 8476 and S2 would be at 8362. R1 would be at 8786, and R2 much higher at 8982. The 8672 area is close to the pivot of 8700 I outlined earlier.

  Kent Barton   1/17/03,  3:50:58 PM
Deluxe Corp (DLX) $39.88 -0.55: FINALLY under $40.00! This is a very positive technical development for the bears. We'll see how the breakdown plays out on Monday.

  Jonathan Levinson   1/17/03,  3:49:47 PM
GE's displaying astounding resilience here just below opex 25. I would have thought that after their less than stellar earnings news, we could have expect something deeper than a mere 21 cent drop.

  Jeff Bailey   1/17/03,  3:48:17 PM
Be Alert! SPX 903.26 ... if SPX gets much above 904. See 03:15 update.

I've also got my "buy program" premium alert ready, just in case.

  Jeff Bailey   1/17/03,  3:47:08 PM
The 3:15 PM intraday update has been posted. Link

  Jonathan Levinson   1/17/03,  3:45:15 PM
The TRINQ has dropped down to 2.4 on this bounce, with the COMPX 4 points off the lows.

  Jonathan Levinson   1/17/03,  3:42:07 PM
Bears like the relative light index volume today, as explosive volume usually marks a bottom. Bear markets "recruit" volume on the way down. 1.4B COMPX and 1.1B NYSE is light indeed at this point in the day.

  Mark Wnetrzak   1/17/03,  3:34:21 PM
Covered-Call Portfolio
As for the February positions in the model covered-call portfolio; Asyst Tech. (NASDAQ:ASYT) has broken down in a horrid MSFT/IBM induced move. On Monday's Market Monitor, I noted that Asyst's move down after it had gapped-up at the open was looking a bit excessive: a warning against entering any bullish positions. Globespan-Virata (NASDAQ:GSPN) is also suffering from the tech blues and should be monitored closely if it tests support near $4.50. Webmethods (NASDAQ:WEBM) has gapped lower today and a move towards support around $9 may be forthcoming. Webmethods reports earnings on Tuesday.

  Mark Phillips   1/17/03,  3:33:43 PM
ASD $67.16 (-1.00) Finally, the PnF bullish support line is broken. It took most of the week to get the job done, but today's broad market weakness seems to have been the catalyst, with ASD trading below $67. Taking out that support just removes one more obstacle for the bears. Despite this bearish development, I wouldn't be chasing the stock lower today. An oversold rebound wouldn't be out of the question, and taking profits ahead of the long weekend would certainly be prudent. If the weakness persists next week, there will surely be another entry opportunity.

  Linda Piazza   1/17/03,  3:29:56 PM
Thanks, Mark, for adding information about WLP. That's why I included the "or your colleagues" portion of the reader's question.

Mark has mentioned his computer problems today, and I had my own early this morning. John often talks about what happens during the first five minutes of trading. It's amazing to me how important it can be to watch those first few minutes of trading. If computer problems or other issues take me away from the screen then, I have much more difficulty gauging the rest of the day's action.

  Ray Cummins   1/17/03,  3:24:25 PM
Spreads/Combos/Premium Selling -- Big Movers!

Despite today's widespread slump in equity values, some of the bullish issues in our portfolio enjoyed strong upward moves. eBay (NASDAQ:EBAY) shares jumped almost $4 to the $75 range after the company said its fourth-quarter profit more than tripled from the previous year. Our bullish debit spread (FEB-$60C/$65C) is at maximum profit with the issue above $65. Sallie Mae (NYSE:SLM) also vaulted $4 higher to $109 in the wake of an upgrade from UBS Warburg. Analyst Gary Gordon raised his rating for Sallie Mae to a "Buy," saying he expects stronger fee income growth and a stable interest margin in '03 and '04. Our bullish credit spread is profitable with the issue above $95. Other stocks with buying pressure include a recent winner in the Synthetic Positions group: Watson Pharmaceuticals (NYSE:WPI), as well as Amgen (NASDAQ:AMGN), Accredo Health (NASDAQ:ACDO) and Barr Laboratories (NYSE:BRL).

  John Seckinger   1/17/03,  3:23:35 PM
Since the beginning of 2003, we have seen an inefficient move higher in the Dow to 8800, followed by a pullback, the bull trap above 8800, and now a decline. I start to wonder, "Is this a short covering P-formation?" If it is, the significant area to the downside would be 8552 and the low set on January 3rd. The apex would be at 8695. The relative high would be at, of course, 8869. That is why ideally I would like a close under the 50% retracement of the move at 8522 and take care of all these levels in the process.

  Linda Piazza   1/17/03,  3:21:07 PM
Reader Question: Would you take the time to give an evaluation on GE?

Response: GE's chart looks ugly, doesn't it? However, I see some support in the 23 level, both from current historical support and also from 70.7% Fibonacci retracement of the move from GE's long-time base in 1994 to its highs. Below that, I see support in the 21.50, its last-year's lows. Since the 5(3)3 stochs have moved down into oversold territory, there's always a chance of a light bounce from that area.

However, on the daily chart, I’ve been watching a pennant formation I drew in several months ago, with the lower line sloping up since October. Last week, GE broke through that that lower line just before it also fell through its 50-ema. I would expect any bounce in GE to be stopped at that former resistance, now just above the 50-ema. If it falls and bounces from the 23 area, it's possible that we'll see a right triangle form, with a few tests of the 23 area before GE falls through that, too. Of course, 5(3)3 stochastics haven't made the slightest attempt to turn up yet. The 21(5)3 is just now rolling. MACD is turning down from its attempt to move above zero, and RSI is moving toward oversold levels, too.

Weekly RSI is turning down and not near oversold, but the weekly 5(3)3 stochastics appear trying to turn up from midway down its fall. The big red weekly candle GE looks to be forming doesn't portend any long-term strength in GE, so I'd give more weight to the weekly RSI and MACD. There's potential for a bounce from the 21.50-23 level then, but that's not necessarily a given, since the daily short-term stochs and RSI aren't even trying to move up. I'd expect another failure beneath 26 if GE did move up. Be aware that a drop beneath 21.50 will soon face the psychologically important 20.00 level. GE is on a P&F sell signal. A move up to 28 will turn that into a buy signal, but that doesn't seem likely at this point.

  Jonathan Levinson   1/17/03,  3:20:13 PM
We saw 1377 ad nauseum coming and going, north and south, during the past year. But the weakness in the COMPX is truly astounding. One trader just mentioned that the market appeared to be "crowning". That's one way of putting it. The TRINQ is staying persistently high, but the divergence between the TRINQ and QQV and VXN is astounding. One screams "SELL!" and the other chuckles "What!? Me worry?" Next week should be interesting indeed.

  Mark Phillips   1/17/03,  3:19:49 PM
CMCSK $26.13 (-0.67) 10-dma doing its job on this OI Call play, with the stock dropping to the $26 level (that we thought might be a good entry level) and flatlining throughout the day. Is it an entry? Not in my book! Market's weak and the stock is holding support, not rebounding from it. No point taking a position ahead of the weekend, especially with daily Stochs (5,3,3) now turning down. Wait to see if the buyers come back on Tuesday.

  Mark Wnetrzak   1/17/03,  3:13:57 PM
Covered-Call Portfolio
The model covered-call portfolio is holding up fairly well in this downdraft though a few January positions may not be assigned: VISG, MOGN, LVLT - to close call there, AGIL, and IDNX. Viisage Tech. (NASDAQ:VISG) has failed once again near $5 though it did offer a painless exit last week. MGI Pharma (NASDAQ:MOGN) failed to move back above its 150-dma and is once again testing support around $7. Level 3 Communications (NASDAQ:LVLT) may not be assigned as it is trading at less than a $0.25 from the $5-strike. The chart remains neutral and rolling to the FEB-$5 calls next week may be a viable move, depending on your outlook. Agile Software (NASDAQ:AGIL) has moved back below its 150-dma and appears to be breaking its OCT - DEC trend-line: not a good sign near-term. Identix (NASDAQ:IDNX) is looking a bit worrisome as it once again moves towards long-term support around $4, though Tuesday's rally did offer a painless exit, especially if the sold calls were bought back on weakness the day before.

  Mark Phillips   1/17/03,  3:12:22 PM
WLP $70.00 (+2.90) Wow! I just saw Linda's answer to the reader question on this OI Put play and thought I'd chime in. The bounce we've been waiting for and a big reason I mentioned in the update that traders in up near the $70 level ought to be snugging up their stops or harvesting gains ahead of the expected bounce. The best looking entry opportunity looked to be on a rollover from the $69 area, and clearly we didn't get that. Showing a bit of weakness up here just below the $70.25 stop, but likely this one gets pinned near the $70 strike at the close. Given the strong buying volume that has been flowing into the stock all day, I'd be very reluctant to consider new positions near current levels. My inclination would be to look elsewhere for solid put trades -- today's performance is too strong for my tastes.

  Mark Phillips   1/17/03,  3:05:34 PM
Apologies for my extended absence. Technology is great when it works and maddening when it doesn't. Suffice to say, I've done little other than battle with gremlins all day. I'm hoping this time things hold together.

With my email back up now, there's a flood of questions to deal with, and not enough time to do it between now and the close. Any LEAPS related issues, I'll cover in the weekend column. But at a minimum, I would not advocate ANY bullish entries today.

  Jonathan Levinson   1/17/03,  3:01:59 PM
The 5(3) stoch on the 30 minute COMPX candles has given us a buy signal with a bullish cross on this latest 6 point bounce off the lows. The TRINQ has pulled back to a still-high 3.94, with the TICK.NQ at +90. QQV has tanked on this move, now down 1.48 to 35.95- just a bullish day in the QQQ, I guess. The HUI and XAU are still in the dumps but slightly off their lows.

  John Seckinger   1/17/03,  2:55:07 PM
Side Note: Morgan Stanley's chief market strategist Barton Biggs is retiring. I am sure that specifics will follow soon.

  Jeff Bailey   1/17/03,  2:53:23 PM
Observation That needs to be backtested. This may be a "coincidence" and I'm willing to admit that it could be. From the pivot analysis "matrix", I note that the Monthly pivot is 901, and the weekly S2 for the SPX is 898. Both number's pretty close to 900. Is this a coincidence to option expiration?

Given some time and a little effort, I could backtest this observation and "wonder" if in the past there has been any type of pattern to index expiration closing levels matching a previous MONTHLY pivot analysis and the prior weeks of expirations range and pivot analysis in finding some type of "peg" level for option expiration closing strike.

There are those that subscribe to "max pain" theory that use something similar, but has to do with taking out as many calls/puts as possible by close of expiration.

  Mark Wnetrzak   1/17/03,  2:47:30 PM
Linda, I feel your painas I also closed a few puts before yesterday's close but alas, that is the cost of money-management discipline.

  John Seckinger   1/17/03,  2:45:30 PM
So, back on the phone with Jeff. I want to start to figure out when old pivot levels "expire" in the minds of institutional traders, and Jeff brought to my attention that I should be comparing weekly and monthly levels with certain pivot areas; therefore getting a 'hierarchal' basis intact. That does make a lot of sense. I will most likely do the backtesting on Monday.

  Ray Cummins   1/17/03,  2:43:28 PM
Spreads/Combos/Premium Selling -- Portfolio Activity

Today's brisk sell-off favored a number of our recent bearish positions in the technology group including Cabot Micro (NASDAQ:CCMP), KLA-Tencor (NASDAQ:KLAC), Linear Technology (NASDAQ:LLTC), and Qualcomm (NASDAQ:QCOM). In the broader sectors, brokerage giant Goldman Sachs (NYSE:GS) also slid lower and housing construction stocks such as Beazer Homes (NYSE:BZH) and KB Homes (NYSE:KBH) slumped as well. On the downside, bullish positions in Benchmark Electronics (NYSE:BHE), Intuit (NASDAQ:INTU) and PF Chang's (NASDAQ:PFCB) are being swept under by the widespread selling pressure and these issues have moved to the "early exit" watch-list for the coming week.

  Linda Piazza   1/17/03,  2:38:07 PM
I'm trying hard not to look at the value of the February OEX puts I closed yesterday afternoon at 3:30. As Steven said earlier, however, I wouldn't do it differently. When I entered the position Wednesday, my plan was to exit ahead of those numbers, so I stuck to my plan. In my early trading days, I held over earnings, FOMC meetings, and the like a time or two too many. Taking my profits ahead of time last night kept my blood pressure nice and steady. As I mentioned late yesterday in the Monitor, each of us should assess our accounts and make difficult decisions at the end of each day. Have stops been met or even exceeded on a closing basis? What about profit targets? Is the position still trading according to the plan formulated when the trade was entered? How long did you intend to stay in the trade when it was entered? What will time decay do to positions held overnight or especially over a weekend?

  Jonathan Levinson   1/17/03,  2:31:50 PM
Buying in bonds continues, and selling on the COMPX remains very strong with the TRINQ holding above 4, while the selling in miners deepens, XAU -1.41 and HUI -2.23. I remember seeing this during the panic selloff at the July lows, when they just started selling... everything. QQV and VXN remain negative, and have been so throughtout this latest set of intraday lows, though the COMPX is trying to bounce here, currently 3 points above the lows. The TICK.NQ has risen to -46.

  Kent Barton   1/17/03,  2:23:26 PM
Biotech HOLDRS (BBH) $91.68 -1.37: Trading an Inside Day, following Thursday's breakout to multi-month highs. In light of the 3.2% decline on the NASDAQ, it's somewhat encouraging to see that the stock is only pulling back by 1.4%. If the broader tech sector manages to find its footing on Monday we'll be looking for BBH to move above $94.00 and attack new relative highs. Premier Investor's long play was triggered at $92.12.

  Linda Piazza   1/17/03,  2:17:49 PM
Reader Question: What do you or your colleagues think about this big move in WLP today? Didn't turn around at 69 where there was resistance and now it’s pushing up against its 10 dma. I wanted to pull the trigger at 69 and now I'm wondering. Do you wait for it to break down below the stop somewhere?

Response: I’m not part of the pick team, so I didn’t realize until after I’d answered the reader that WLP was an OIN put play. The current stop for that play is $70.25, if I read the listing correctly, and OIN has been waiting for a rollover near 69 for a new entry. The knowledgeable people on the pick team set out those parameters. Here’s my additional assessment of the chart patterns, with the weekly chart first: I see bearish divergence setting up with the stochs making equal highs while the price did not. The weekly 5(3)3 stochs are rolling over now. Weekly MACD is flattening out beneath the 0 level, and RSI is flattening, too. On the daily chart, Wellpoint Health is speeding right up toward a confluence of the 50-dma and 200-ema, with the more-important 200-ema at 71.39. Also right at the current level is the top of that gap down from November. Daily RSI and 5(3)3 stochs are cycling back up, and daily MACD is turning up from beneath the zero level. Volume appears fairly strong today, supporting the upward move. However, WLP is on a P&F sell signal. It would take a move above 74 to turn that into a buy signal. Relative to the DJI, it's currently on a "buy" signal but in a column of O's, so short-term, it probably will suffer some weakness. Relative to its sector, it's on a "buy" signal, but in a column of O's, also indicating some short-term weakness in relationship to its sector. Its sector is weak in relationship to the SPX. So, is this an earnings run ahead of the February 11 earnings? Flight to the same healthcare issues that once flourished during the market downturns? Is there news we don’t know? I'm not sure. All in all, it looks as if WLP could perhaps run up to that resistance, but as chart signals look now, I wouldn't expect it to push past that resistance before turning down again. I would wait for that rollover before taking a new entry, since today’s move was on such strong volume and since those daily stochs indicate that WLP may move higher or consolidate a while before turning over. Take a look again at the recommendations made when WLP was included in the pick list for further guidance and for the reasoning behind the current stop.

  Steven Price   1/17/03,  2:16:03 PM
Swing Trade Signals
We are really not getting any bounce and the SOX has given up support at 300. I'm not sure that we'll get one from here, but I would still expect some bottom feeding after a big drop in IBM and MSFT that could give us an additional entry point on Tuesday a little higher. The breakdown of support at 900 in the SPX is also significant and I like the short entered at Dow 8590 for those traders who chose to get in. The ideal entry would have been the failed rally to 8660, but at the time the bounce looked bullish, considering the bad news last night.

As I said last night, it took an awful lot of will power not to go short on the breakdown of 8700, but I probably would not do things any different ahead of a news event. we are approaching the confirming sell signal in the Dow at 8550, as we have already gotten them in the SPX and OEX.

Current levels: Dow 8562/SPX 899.14/OEX 455.96/COMP 1377

  Jeff Bailey   1/17/03,  2:09:09 PM
The 1:00 PM Intraday Update has been posted. Link

  John Seckinger   1/17/03,  2:03:57 PM
Per 1:21:04 Post, so far this last wave has been textbook. Now we just need a move to 8546 and then ideally a close under 8522. Why 8522? This is 50% retracement of the rise at the beginning of this year. Aggressive traders would like to keep the Dow under the 8575 area, instead of the S2 level mentioned earlier (8593). 8575 is both the initial low and the 50 DMA, exponentially derived.

  Jonathan Levinson   1/17/03,  2:03:39 PM
I'm having visions of Apollo Creed groggily groping for the ropes after Rocky landed yet another haymaker on his kisser in Rocky II as I watch the COMPX unable to put anything together, and have to keep wondering about Al Green and the fed. What were they thinking? Did they need the 3B (call it three-very-large) to cover the tab from the Christmas Party in the Federal Reserve Building? Perhaps a new shipment of aged port and Cohibas from their own private facility in the Dominican Republic to avoid running afoul of the ban on Cuban stogies? Perplexing indeed.

  Kent Barton   1/17/03,  1:56:52 PM
Deluxe Corp (DLX) $40.00 -0.43: Here we go again! The bulls simply will not let DLX fall below support at $40.00. Someone is very insistent on not letting the stock drop under this level. We're looking for shares to get moving to the downside once support finally gives way.

  Linda Piazza   1/17/03,  1:39:26 PM
John mentioned looking at weekly charts earlier this afternoon for support, resistance, and pivot levels, and Jonathan mentioned the stochastics on the weekly chart. I’d also like to mention that, as of this time, the weekly charts on the indices seem to be setting up bearish engulfing patterns. These are two-candle patterns in which a white candle is followed by a red candle that totally engulfs the white candle. They’re particularly significant when the white candle is a doji or when the pattern follows a doji. Last week’s DJI chart showed a doji, with this week’s bearish red candle engulfing it. I caution that these charts can change by the end of trading today. Also, entry points are still important, and I second Steven’s cautions about three days of expiring time premium.

  Jonathan Levinson   1/17/03,  1:38:44 PM
The 30 minute 5(3) has just given a sell signal from midway up its run, crossing back down. The TRINQ is up there now, 4.31, and the TICK.NQ is -268. QQV is acually up now, a whopping +.08 on the day, while VXN remains in the cellar, -1.21. FVX still down 6.4 bps, and QQQ has just printed a low of the day at 24.42.

  John Seckinger   1/17/03,  1:30:41 PM
For RYAAY, we would need a print of 38.00 or lower to get a sell signal. Jeff didn't introduce me to P&F charting (heard Dorsey in 1994), but Jeff sure made me realize that I needed to learn P&F instead of just knowing it was some X's and O's. Jeff did introduce me to Bullish Percent Charts, and that has really made a difference. I have Dorsey's 2nd Edition book. Very helpful.

  Jeff Bailey   1/17/03,  1:23:37 PM
Correction I had to make corrections to earlier 01:17:48 post. I've made those corrections and need to be more careful. I only see a sell signal in PSFT, no sell signal in RYAAY.

  John Seckinger   1/17/03,  1:21:04 PM
For the first time since 12:05, we are getting closes on a five-minute chart away from S2 and 8593. The low of the day is at 8574, and fitted retracements shows support below at 8546. Risk on adding a short here would be for a move back to 8593, since it will probably hit stops and squeeze out shorts trying to defend this move.

  Jeff Bailey   1/17/03,  1:17:48 PM
I'm envious ... subscriber is working hard, and hopefully trading some too, but sending me intra-day p/f analysis on reversing sell signals. He says one new "sell" signal in PSFT Link No new sell signals for OEX at this point.

How's MSFT doing?.... $52.55 -5.05%. I've got an alert set at $52.75. It went off earlier with a "bad tick" and I was looking for market rally, but then saw it was a bad tick.

  Jeff Bailey   1/17/03,  1:10:10 PM
Telephone Data (TDS) $45.42 -1.68% Jeff: Do you still like TDS as a short/put for Feb-March? Haven't heard much about this one in recent days.

Oh yes... I still like and hold my previously profile puts in TDS from $49. Stock got a bit of an "oversold" bounce, but looks to be breaking down from "inside day" today. I'd like to see a new 52-weeker next week to keep me interested too.Link

  Jonathan Levinson   1/17/03,  1:09:30 PM
As a bearish trader, I'm pleased with what I'm seeing in the COMPX. As it sits just above the lows, passing time and working off the oversold readings, complacency is mounting as the QQV and VXN continue to drop, and even the put to call ratio dropped a few notches to .82 this past half hour. Bears love to see the market grow increasing optimistic, as bulls are far easier to dodge when they're full of hope and certainty. Of course, we could be witnessing a bullish divergence in the volatility indices, but my feeling is that this is just extreme complacency, and not a heads-up on an impending bull run. The bid in bonds is solid, with FVX -6.4 bps, for added reassurance.

I still can't believe that Al Green actually drained 3B from the markets today. Fascinating, that.

  Linda Piazza   1/17/03,  1:09:13 PM
Coca-Cola to ease food shortages? Lest you think John is joking about the seizure of the KO factory in Venezuela to ease food shortages, he's not. One of the problems plaguing KO lately has been the global outlook for the company, and it was after a company announcement in October that it would be impacted by slower sales that the recent tumble began. I've been wondering lately, too, if anti-American sentiment affected sales overseas.

  John Seckinger   1/17/03,  1:08:46 PM
After Microsoft splits its stock, chairman Bill Gates will own about 1.2 billion shares. He would then receive a $99.5 million dividend payment. Of course, his shares are down 5% right now, and that would equate to a 'paper' loss of roughly 1.5 billion dollars.

  Jonathan Levinson   1/17/03,  1:03:27 PM
Are the any Exchange traded funds, or other vehicles in which to participate in the Gold area, without having to buy the individual stocks ??

For gold miners, there are two indices, the XAU and HUI, which I frequently quote. The XAU is optionable as well, though it's been a thin market with wide spreads for options, which makes it much tougher to trade well. There's also a fund which warehouses gold and silver in Canada, CEF. Its South African equivalent, going by memory, is ASA, but I might be mistaken. Generally the XAU and HUI, as well as mutual funds comprised of miners, will be more volatile than the physical metal- more highly leveraged. CEF is much less volatile, and I use it to balance my more aggressive precious metals positions in my account.

  Linda Piazza   1/17/03,  1:02:43 PM
Double bottom in the VIX at 26? Link Not so fast. Although the VIX appears to have found support twice recently at the 26 level, and currently sits at 28.75, those MA’s I’ve marked (50-ema, 200-ema, 200-sma) have grouped themselves between the 30-32 area, an area of prior resistance for the VIX. They might provide resistance to a further move up in the VIX. Although it seems strange to talk of resistance or support for the VIX, it does resist moving above or below that 30-32 area, depending on its current position, so it seems fair to study the VIX using normal technical analysis tools. In technical analysis, a double bottom is not confirmed until a reading occurs that’s higher than the reading at the peak between the two double bottoms. For the VIX, that peak occurred at 35.55.

  John Seckinger   1/17/03,  12:59:47 PM
Apparently, Venezuelan national guard troops armed with machine-guns seized control of a local bottling affiliate of Coca-Cola Co. (KO). The troops took bottled and canned drinks to ease food shortages caused by an opposition strike.

  Jonathan Levinson   1/17/03,  12:51:32 PM
The COMPX continues to go nowhere, now just 5 points above the lows, while the QQV and VXN fade further, with QQV -1.22 and VXN -1.09. *If* this is the beginning of a larger drop, as the weekly stochastics seem to indicate, then these volatility measures are helping us see just how big it could be, as fear has actually dimished on this significant down day. The 1400-1405 support level on the COMPX was critical, and it got dropped like a bad habit. As an option writer, I'd be inclined to demand a larger premium for my contracts, and not a smaller one as these indicators are currently showing.

  John Seckinger   1/17/03,  12:51:06 PM
Sox has fallen under 300; currently at 299.72. 80.9% retracement of the rise in 2003 comes in at 297.65. Resistance is seen above at 309. If 297 is taken out, the next objective is the December 31st low at 285.66.

  Jonathan Levinson   1/17/03,  12:48:20 PM
barrick is always held up as the anti-christ to gold purists because of their hedging activities. If you are so inclined take a look at their 10-k or some such. After reading some months ago about their hedging program and results I came away with a greater appreciation of how good at it they are. Can't say the same for all the hedging of others, but ABX ain't no dummy.

I'm sure they're not, and own some ABX in one of my funds, if I'm not mistaken. But, I wouldn't put my entire precious metals position on ABX, because if gold goes launch from here, Barrick and other hedgers will continue to underperform their peers, just as they did last year.

  Steven Price   1/17/03,  12:43:31 PM
Do you think the potential for a drop outweighs the time decay over the weekend and next week? Since there are 5 weeks to expiration, instead of the usually typical 4? Thanks Chris

Chris makes a good point. My hopes for an ideal scenario are that we get a close at a lower low, a failed bounce on Tuesday morning and that volatility comes in from today's sell-off level, thus giving us a much cheaper entry point. However, I think the break back under 8600 and the sell signals in the SPX and OEX are significant. I think my "ideal" scenario hopes and the three day weekend are both factors against entering here. However, in the long run, it probably makes less of a difference if we do fulfill my downside expectations.

I'm watching Microsoft and thinking that we'll get some type of bounce, as it has held above its 200-dma at $52.00. IBM, however, has fallen through its 50-dma at $52.08 and the 200-dma sits all the way down at $76.66.

  Jeff Bailey   1/17/03,  12:41:36 PM
Applied Materials (AMAT) $13.59 -5.23% ... Jeff: I see you talk and seem to like to trade KLAC and KLIC, but not AMAT or NVLS or TER. I like to trade AMAT, can you cover it too?

I can try to cover them all, but for most part, they tend to trade in unison. I personally prefer NOT to trade AMAT, only because it is the "big dog" and if institutional bulls are going to step up at some point and buy the equipment, then AMAT is most likely first on the list. As a bearish trader in semi-equipment stocks, then I'll stick with the smaller NVLS, KLAC, KLIC. TER, well... that's got 3-letters in it, and while retracement techniques work well with listed stocks, its the market makers that really use these retracement techniques. So... you and I can think more like the market makers and get inside their heads.

  John Seckinger   1/17/03,  12:40:05 PM
It is amazing to me how the Dow, on a five-minute chart, is continually either closing or opening at the S2 level (8593). Certainly significant for traders. As Jim mentioned, the S&P pits at the CME are closing at 1:00 p.m. to get a headstart on the 3 day weekend.

  Linda Piazza   1/17/03,  12:40:04 PM
While many of the indices moved below their 50-ema’s this morning, the Dow Jones Transportation Index did not. Last week, I began noticing weakness in this index ahead of the weakness in the others, and now there appears to be divergence again. At 2346.47 as of this writing, this index remains above its 2333.64 50-ema, trendline support (since mid-October) at 2322, and historical support at that 2322 level, too. This does not predict a move up in the indices, but instead is just one factor I’m watching.

  Jeff Bailey   1/17/03,  12:35:25 PM
Kulicke and Soffa (KLIC) $6.02 -5.34% ... trades bearish day-trader's targe of $6.05. Here is a screen capture just made Link , so traders can tie in with 10:30:26 comment and profile. Maybe can be used in the future too.

  Steven Price   1/17/03,  12:33:04 PM
Semiconductor Index (SOX) (299.66 -15.99) The SOX is sitting right at 300 and it will be interesting to see if we get pinned close to that level. The options on this index stopped trading yesterday, so that shouldn't be an issue, but this level has tended to act like glue in the past. Look for support at 283-289 if it does break down.

  Jonathan Levinson   1/17/03,  12:24:51 PM
What is the difference between unhedged and hedged gold stocks. My understanding is that unhedged are more sensitive to near term changes in the price of gold? Some gold stocks like GG are in both groups?

Hedged miners are companies that have sold calls against their reserves of physical gold. There are doubtlessly different mechanisms for accomplishing these hedges, but that's the most obvious. By taking bearish positions in gold, these miners are said to be "hedged". Unfortunately, as gold rises, they lose money on these positions, and need to cover at a loss. This is why the main XAU components such as Barrick and Placedome have been lagging the unhedged miners. The XAU is not exclusively comprised of "hedgers". As far as I know, Goldcorp has no hedges on its books. Hedged miners should be less impacted by a decline in the price of gold, while they'll also underperform on an increase in the price of gold. This is why I'm not too upset at seeing hedgers in my precious metals mutual funds where they occur- they help to lower the volatility of my portfolio in the event that my read of the markets fail me and gold goes into a serious decline.

  John Seckinger   1/17/03,  12:23:36 PM
Time to look at some weekly charts. The Nasdaq is at 1386, while its 22 WMA is at 1386 as well. The Dow is at 8593, and its 22 WMA is at 8603. The SPX is at 903, while its 22 WMA is at 916. I believe the pivot in the SPX was at 918. The high today was 914.60, and an attempted rally failed at 910. The low is 900.96. Technically, the SPX looks to have traded the 'best' in regards to its range. I would be surprised with a close either below 900 or above 910. Clearly we have a lot of trading left.

  Mark Phillips   1/17/03,  12:23:26 PM
As it turns out, my QCharts problems were just the tip of the iceberg, as the gremlins apparently completely took over my machine and shutdown/restart took the better part of 2 hours. But I'm back now, and looking to catch up on all the email and developments that occurred while I was offline.

please would you elaborate on current support and resistence level .i would like to go long what would be a reasonable entry point.

SYMC $46.30 (-1.35) Stock is on the weak side with the rest of the Tech sector today. Ahead of earnings, SYMC broke above resistance near $46, and after beating the street estimates by 8 cents when it reported earnings Wednesday night, it pushed as high as $48.30 yesterday before pulling back with the rest of the market. That high now defines resistance as it was a new all-time high. With the broad market weakness, look for further downside in the near-term, with the 10-dma ($45.81) as possible support. Stronger support comes in between $44-45, the lower end of which corresponds to the 20-dma and December's highs which ought to now act as support if the recent breakout has any legs.

That said, I would echo Steve's comments today about entering new positions today -- with expiration Friday, premiums on Feb contracts are likely inflated today, and we have 3 days of time decay straight in front of us. Prudence would dictate waiting until next week.

  Jonathan Levinson   1/17/03,  12:18:28 PM
The put to call ratio has crept up to .85, yet both the QQV and VXN remain solidly negative. The precious metal indices have gone negative again, despite continued weakness in the USD. The COMPX is 6 points above its lows, but it's taken its time getting here, and with the TRINQ at 3.46, there is solid selling continuing on the COMPX, even here above the lows. The 30 minute 5(3) stochastic has given a bullish cross and is running north, but again, the bounce has so far been slightly. Whether to close profitable put positions here or not is a perfect dilemma, and depends entirely on your time frame and trading goals. The long cycles are just beginning to turn down, but in the short term, a bounce looks pretty obvious. The "obviousness" of the bounce makes it less certain, because the market loves to deke us out. But that's how it looks right now.

  Jeff Bailey   1/17/03,  12:05:53 PM
Microsoft since this is one of our "key" stocks, I can use the 11:00 Update and technique discussed there to monitor the stock. Here is a 5-minute chart of MSFT using that technique and will help me build some observations.Link

Now, I say "5-minute close below $52.50 should see test of $52.35." This would be a bearish saying. If it doesn't come true, and MSFT rebounds and get a 5-minute close above $52.75, I make an observation of some type of firming, as my "bearish statment" didn't come true. Anytime a "thought" isn't proven true, it becomes an alert to opposite thinking.

Now, this is short-term thinking, but there is nothing that says a chartist that views the daily charts with retracement, or weekly charts with retracement can't follow same logic process and levels.

  John Seckinger   1/17/03,  12:03:58 PM
With the Dow under S2 at 8593, it is once again time for fitted retracements. This gives support underneath at 8546 and then 8500. If the five-minute chart closes back above 8593, then we could get a bounce back to 8646 (S1) before seeing weakness once again. I see Jeff covered the fitted retracement theory. Please see link: Link

  Linda Piazza   1/17/03,  11:55:31 AM
More H&S’s! We’ve talked about the potential for H&S’s and reverse H&S’s, with some stocks and indices showing the potential for both. Here’s a chart of the Russell 2000. The thick red line marks the neckline of a potential reverse H&S. The thick green line markets the slanting neckline of a rougher-looking potential regular H&S formation: Link Can the Russell perhaps complete both the H&S and the reverse H&S? Probably not. If the Russell were to fall beneath the neckline of the regular H&S, as it’s threatening to do, the eventual target would be about 334 (414 head – 374 neckline = 40. Subtract 40 from the 374 neckline = 334). That number would probably be too near the 324.90 low that formed the head of the bigger potential reverse H&S formation.

  Jeff Bailey   1/17/03,  11:48:06 AM
The 11:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   1/17/03,  11:39:24 AM
So far, the 356/oz support level on gold that Robert mentioned is holding, and if it does, I'll very happily take a mulligan. Light volume support can work too, particularly in a bull market, in which gold currently is. Tell that to TD Waterhouse, which in its latest newsletter, a veritable fount of sagacity and insight, is recommending everything BUT gold. Works for me- it allows me to use the media a contrary indicator, which so far has been generally profitable. In any event, HUI is now up 1.08, XAU +.07, reversing their earlier losses today.

The COMPX found support so far at 1380, a level I remember well, down to approx 1377 if memory serves. The TRINQ is at 3.65, high and verging on extreme, but how many sub- .30 days did we have getting here? QQV is now negative, down .49 and VXN is down .40, as the option market actually lowers premium on contracts as if today were a bullish day. Very strange- it's either opex, or denial. Speak of which, I wonder how Dan (de)Niles is faring with his INTC recommendation around 21 or 22? Remember that?

  Steven Price   1/17/03,  11:36:16 AM
Cintas (CTAS): $43.80 (-1.00) OI put play CTAS gave a triple bottom sell-signal at $44.00. Traders can enter at this level, but conservative traders may want to stick with a 1/2 position until we hit $43.00 and get past the possibility of a bear trap (bear trap = one-box triple bottom breakdown followed by a reversal)

  Steven Price   1/17/03,  11:33:15 AM
Swing Trade Signals
For those who may have missed earlier comments, I am leaving my signals today as suggestions. We are ahead of a three day weekend, which will undoubtedly eat up some time decay and I'm letting traders choose for themselves whether they wish to take on that decay.

Note: I will also be gone on Wednesday but plan on leaving stops in place on any trades entered Tuesday.

  John Seckinger   1/17/03,  11:31:17 AM
In the corporate bond arena, there has been a lot of talk of traders selling Sprint (FON) paper (bonds). Shares are down 2.5% to 15.10 and under a wedge near the 15.15 level. The 22 DMA (exp) is higher at 15.32. Support appears to be at 14.55. Using pivot analysis, S2 comes in today at 14.76, while S1 is at 15.12 (about the wedge area). The pivot? 15.56. On a weekly chart, it looks like a bearish engulfing pattern. Not good. A P&F chart shows a column of O's starting today as well.

  Linda Piazza   1/17/03,  11:26:13 AM
VLO: 36.85, - 1.14 as of this writing. I hope that those of you holding January options took my advice yesterday and set trailing stops to take you out at a profit. As I’ve mentioned several times, this stock tends to get taken down, too, when the markets go down. Those of you holding longer-term options should be watching the grouped support near the 35.50-36.00 area. That area is the confluence of the 35.90 historical support, the 50-ema at 35.54, the 200-ema at 35.54, and the 200-sma at 35.70. The daily stochs have been cycling down while VLO basically consolidates in a 35.50-38 range after its steep runup, but weekly stochs may be signaling bearish divergence. Weekly MACD still looks strong.

  Steven Price   1/17/03,  11:24:49 AM
Swing Trade Signals
The Dow hit the earlier entry trigger at 8590 for 1/2 short position. Possible stops would just above today's high at 8665, or at 8700, just above yesterday's close.

  Steven Price   1/17/03,  11:17:10 AM
Swing Trade Signals
We have now established 50-dma breaks in the Dow/OEX/SPX/COMP. All but the Dow have fallen below the Jan 8 pullback lows. The 200-dmas appear to be a memory. I have no problem with traders entering short at these levels, although we are still a few points away from the Dow trigger at 8590.

Current levels: Dow 8604/OEX 458.24/SPX 903.80/COMP 1385.

I do believe that we will see some volatility contraction in Feb options on Tuesday (certainly some drop in premium from time decay as well), unless we get a big move to start next week. Expiration can be a tricky animal and commiting full capital to its actions is not suggested.

As I wrote, we got a bounce from Dow 8600 and the OEX bounced above that 457.50 sell signal, with a low of 458.06

  Linda Piazza   1/17/03,  11:14:51 AM
Here’s something else I’m watching this morning on the NDX. The green line is a weak trendline, so far supported only by two points, but it comes in at the 1020 level, an area of historical support. A break in this trendline can therefore be considered more serious than it would otherwise. Bears should be aware that it’s also an area for a potential bounce, if shorts decided to begin covering at some point today. Trailing stops might be in order if you're in January puts. Link

  John Seckinger   1/17/03,  11:10:46 AM
Time for more weakness. Notice how the ES contract certainly used 910 as resistance (noted in Futures Wrap), while the NQ contract fell under its S2 within the first few minutes of trading. Both contracts are on its lows of the session. There are a number of charts on both of these contracts in last nights wrap. Getting to the Dow, it will be interesting to see if 8607 and yesterday's S2 becomes resistance.

  Linda Piazza   1/17/03,  11:06:36 AM
The COMPX also is testing its 50-ema, located at 1389.76. As of this writing, it’s just dipped below that level, but these 50-ema’s might be interesting to watch.

  Steven Price   1/17/03,  11:03:11 AM
Swing Trade Signals
We are once again rolling over toward the lows of the day and my feeling from here is we are headed lower over the next few sessions. However, we will have to deal with three days of weekend time decay. We got the sell signal on the SPX at 905 and I think a close at a lower low in the Dow below 8580 will look very bearish for the near term. I'd love to see a lower low close and then a bounce on Tuesday morning to short. I'm going to let traders make the time decay decision on their own, rather than make this an official signal and I'd look to enter a 1/2 short position at Dow 8590. Note the OEX sell signal (on the 2.5 point box) comes at 457.50 and the Dow comes at 8550. By waiting until after this drop shakes out today, conservative traders will get a look at the bullish percent to see if we have gotten a reversal down by the close. Of course that carries with it the possibility of a continued drop with no rebound and missed profits.

  Linda Piazza   1/17/03,  11:00:32 AM
Nasdaq down volume rates at 8 times up volume, showing the concentrated selling pressure in some issues, as the number of declining issues is only about twice the number of advancing issues. (This translates to an adv/dec ratio of .46.) On the NYSE, down volume comes in at a more modest 2.12 times up volume, with an adv/dec ratio of .52. New highs continue to outrank new lows, with a 44:7 ratio on the NYSE and a 26:15 ratio on the Nasdaq.

  John Seckinger   1/17/03,  10:56:59 AM
Jeff and I were going over some fitted retracements, and it is amazing how the five-minute close theory works. Case-in-point: KLAC. Anchor the retracement at the high of the day, and then put the 19.1% area at 37 (low for first five-minutes). The 50% area comes in at 36.34 (low of the day 36.33). Remember, wait until the five-minute bar CLOSES outside of the levels before calling it a confirmation.

  Linda Piazza   1/17/03,  10:50:56 AM
The OEX sits right above its 50-ema, now at 459.40, with today's $.14 below that level.

  Jonathan Levinson   1/17/03,  10:45:10 AM
The put to call ratio has just printed its second reading at .78. It looks like the bears are going to get off easy on this drop, as put speculation has remained relatively tame.

  Steven Price   1/17/03,  10:42:07 AM
RJ Reynolds (RJR) $46.80 (+0.56) In spite of overall market weakness, OI call play RJR has continued to climb higher and is trading near its highs of the day, after finding brief resistance at $46.50. Conservative traders can wait for a re-test of $45 as support after Wednesday's breakout, but I like new entry on either a support test at $46.50 or a move over $47.

  Jonathan Levinson   1/17/03,  10:37:52 AM
I find that Livecharts tends to become Deadcharts on down days more than on up days. Maybe it's just me.

  Jonathan Levinson   1/17/03,  10:36:52 AM
Do you think that the 356 level could be an important support for Gold. I believe that it was a resistance levee. Also can you suggest some other stocks to do some covered calls?

Pithy but complete! The 356 level could be support, but I doubt it, given how little basing has occurred at these levels. It takes volume to create strong support, I'm just not confident at current levels. Then again, the COT reports I've been hearing about but have not yet seen this week seem to indicate very large commercial short positions at these levels, very large retail long positions. Will the smart money get crushed for a change? Don't know, but I am personally hesitant to add to my longs just yet. For covered calls, the only stocks I'd want to own would be precious metals, and I'm not deep enough into their charts to make picks for you. I'd steer you to the Covered Calls section of the website. I remain a fan of Goldcorp.

  Mark Phillips   1/17/03,  10:36:23 AM
Since my 10:18 post, I've gotten a stream of emails from readers using QCharts. Some, like me, are having problems today, while others are having no problems. Sadly, changing servers doesn't seem to affect the problem today. I can connect to servers just fine -- just can't seem to get the charts to paint -- must not be living right...GRIN

  Jeff Bailey   1/17/03,  10:30:26 AM
Kulicke and Soffa (KLIC) $6.18 -2.83% ... pivot analysis levels today are S2=6.12, S1=6.18, P=6.54.

intra-day rally back to $6.18 right here, decent day-trader short- stop $6.24, and target $6.05.

  John Seckinger   1/17/03,  10:28:54 AM
Side Note on Firewall: It is scary how many "High-rated Intrusions" have been blocked since I downloaded Zone Alarm Pro. The only thing you need to tinker with is under "Program Control" and then "Programs." After that is done, it seems to really work well.

  Jonathan Levinson   1/17/03,  10:27:41 AM
The US Dollar Index hit a new low at 100.31, currently at 100.53, yet gold is getting sold, with HUI now -.66 after being up over 1 point, and XAU -.43. While on the topic of strange things, the VXN is actually down .68. Just another bullish day, as far as the COMPX volatility index is concerned. The QQV is up a diminutive .68, but at least it's not in negative territory.

  Jeff Bailey   1/17/03,  10:27:10 AM
Semiconductor Index (SOX.X) 304.40 -3.55% .... today's pivot analysis levels are S2=304.77, S1=310.22, Pivot=318.90.

Similar perhaps to KLA-Tencor (KLAC), have seen S2 achieved, undercut a bit at morning low, and firming a bit. Reason I am sitting an offer in a shorter-term put trade in KLAC.

  Jeff Bailey   1/17/03,  10:24:40 AM
Microsoft (MSFT) $52.91 -4.37% ... Dow Indu bidding back a bit, and most likely the firming in MSFT . Can bid further if MSFT can muster a 5-minute close back above $53.00. Reason I say/think this is that MSFT pivot analysis had MSFT's S2 of $54.20 and a bit "oversold" so far below S2. May try and rally back to $54.20 or today's S1 of $54.83.

Same can be thought with QQQ/NDX

  Steven Price   1/17/03,  10:23:20 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
The Dow rebounded back through what would have been my stop of 8655 had I been triggered below. Without the trigger I am simply going to close the short signal. I'll look for resistance up above to get in, but as the day wears on and we get closer to the three day weekend, I will most likely keep the signal on the "advice level," rather than making it official.

  John Seckinger   1/17/03,  10:22:40 AM
It is interesting how yesterday's S2 was today's low (8607). We all know that I like to take a retracement between the S2 and R2. If you do this with today's levels, resistance is seen at 8665. If you use yesterday's (since Thursday's S2 worked), resistance is seen at 8694 (which is above today's high).

  Jonathan Levinson   1/17/03,  10:19:52 AM
My Deadcharts has taken the morning off, it appears.

  Mark Phillips   1/17/03,  10:18:22 AM
It must be a conspiracy, Linda. GRIN In my case, I can't get QCharts to paint anything this morning -- since I've talked to several others that aren't having is problem, I'm assuming its at my end and not a server issue with QCharts. Back when I get the problem resolved and am no longer flying blind.

  Jonathan Levinson   1/17/03,  10:16:07 AM
Here's a picture from The Economist that reader Brad might want to posterize, after obtaining the requisite consents, of course: Link

  Jeff Bailey   1/17/03,  10:13:03 AM
10-year YIELD ($TNX.X) 4.016% .... did dip below the 4.0% level, but "firm" now at 4.016%. Helps give stocks some firming and may not be coincidental to many of today's S2s in the indexes.

  Jonathan Levinson   1/17/03,  10:11:38 AM
I'm pretty flabbergasted... the fed has just announced a 6 day repo for 3B, thereby allowing 3B in liquidity to drain from the market. Perhaps one of Al Green's lackeys left out a stray zero in typing the order, in the manner that has become fashionable on Wall Street of late. Or, perhaps Al Green is trying to spark a bit of selling in bonds to try to trick the equity markets into steadying. Or, perhaps he's collecting his sheckels to buy bullion at www.bulliondirect.com after reading about it here, thanks to reader Phil's sharp eye. "Give me 3B worth of Canadian Maples. Not enough for delivery? OK, the rest in Eagles? Not enough either?" We'll see how it plays out.

The TRINQ has dropped from above 4.5 to 3.86, still high, but the COMPX is sticking in the low 1390's, another congestion area we remember well. The low of the day was 1388, and the opening put to call ratio a mere .77 as option traders bought the dips. The QQV is up a mere .13 on the day. Arguably, the selling has barely started yet, if these indicators are to be believed.

  Linda Piazza   1/17/03,  10:08:09 AM
Don't you hate it when you can't sign onto your trading screen in the morning? I'll be back as soon as I reach technical support. In the meantime, here are some thoughts I put together earlier this morning. I mentioned about a week ago that I’d been scanning the charts, looking for a match to the particular configuration of oscillators that I was seeing on the charts. Here’s the chart: Link On this daily DJI daily chart, I was seeing the MACD flattening just as it tried to cycle up from a slow dip below the 0 level. I saw the 5(3)3 stochastics flattening in the overbought range after some low highs that had never reached the overbought range. I saw the RSI basing near the 50 range and then moving up, only to begin rolling over before quite reaching the overbought range. As I mentioned last week, this particular configuration showed up last May. I found other times in the past months when the MACD was flattening after moving above the zero level, but in those other instances, the MACD had first moved more deeply into the oversold range than it had this time and in May. Perhaps it was a stretch to compare the two time periods—this last week’s trading and May’s trading—but part of being a successful trader lies in recognizing patterns. I didn’t bet the farm on a down move, but I did begin theorizing that a down move was more likely than an up move based on what had happened in May. I continue to test current action against what happened then, ready to change my hypothesis if market action doesn’t agree. So far, it does.

  Jeff Bailey   1/17/03,  10:01:01 AM
KLA-Tencor (KLAC) $36.42 -3.8% .... hitting today's S2 here. Looking to sit at offer and sell long some February 35 puts taken yesterday. Will continue to hold profiled March $35 puts from yesterday, and will leg into those (hopefully with the profits from Feb. $35's) should KLAC see any type of rally again back near $38.

  Steven Price   1/17/03,  10:00:36 AM
Swing Trade Entry Point Alert - OEX/SPX/DJX/DIA/SPY
We got an oversold bounce that rolled over and is heading back to the lows of the day. Go SHORT a 1/2 position at Dow 8590. This is below the 50-dma support and gives us a 10-point cushion for a break below 8600. It should also correlate with a sell signal in the SPX at 905 on the PnF chart. I'll add to the short when the Dow gives its own sell signal at 8550. Because we have seen plenty of recent buying and the bullish percents remain in columns of "X," let's set a tight stop at 8655, just above today's high if triggered. My target will be Dow 8400 to start, with an eventual target of 8300.

  John Seckinger   1/17/03,  10:00:18 AM
Shares of Home Depot (HD) are higher by 1.21% to 22.40, despite reporting that profit and sales in the coming year would fall well short of its previous targets. The company also said it would spend $4 billion on technology upgrades, worker training and store improvements. R2 came in at 22.52, and the high of the day in HD is 22.70. Will be interesting if shares find support at R1, or 22.34. Pivot is 22.14.

  Jonathan Levinson   1/17/03,  9:51:46 AM
We continue to await the announcement from the fed regarding today's open market ops. I doubt if today's repo will be small.

  John Seckinger   1/17/03,  9:49:21 AM
The Michigan Consumer Sentiment report came in at 83.7, well below estimates of 87.

  Steven Price   1/17/03,  9:43:08 AM
Swing Trade Signals
We are getting a little support at Dow 8600, but the SPX and OEX have already moved below those Jan 8 lows. The Dow low of 8608 is just abvoe the 50-dma at 8607. I'm looking for a break of Dow 8600 and then a small bounce for a rollover to enter short. The actual PnF sell signal does not come until 8550 and I'll start with a 1/2 position. If the support holds for long, I'll shift into "advice mode" to avoid the long weekend time decay.

  John Seckinger   1/17/03,  9:41:54 AM
January Michigan Sentiment is due out at 9:45 a.m. December showed a reading of 86.7, and estimates for this report is at 87.0.

  Jonathan Levinson   1/17/03,  9:37:52 AM
per the mm...pick a bottom? you're kidding right? cmon jman pound the table SHORT THE CUBES!! SHORT THE CUBES!! oops nice 22 pt. gap down. hate it when that happens!

The weekly 5(3) stoch has just crossed and given the sell signal. Interestingly, the QQV is up a mere 1.06. I don't like to play gaps, and I'll only note that the last sell signal I gave was when the COMPX broke below 1450, I suggested to wait for a break of 1445 or so and place the stop at or slightly above 1450. I've learned not to scalp- that's more of Jim's domain- only because I'm less burnt at the end of the day and those big signals are easier to trade. To each his/her own style.

  John Seckinger   1/17/03,  9:37:06 AM
After the first five-minutes of trading, the Dow has a range from 8695 to 8623. A 50% retracement comes in at 8659. If the blue chips are going to do an "open drive" lower, this 8659 area should not be tested. Note: S2 comes in at 8593, and I will use fitted retracements if this area is cleared.

  John Seckinger   1/17/03,  9:33:25 AM
Intra-day Pivot/Levels for Wednesday (01/15/02)...

INDU : S2= 8593, S1= 8646, P= 8726 , R1= 8779 , R2= 8858

SPX : S2= 904, S1= 909, P= 918, R1= 923, R2= 932

OEX : S2= 458, S1= 462, P= 466 , R1= 470, R2=474

NDX : S2= 1042, S1=1052 , P= 1068, R1=1078 , R2=1095

QQQ : S2= 25.82, S1= 26.13, P= 26.55 , R1= 26.86, R2= 27.28

  Jeff Bailey   1/17/03,  9:32:39 AM
The 9:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   1/17/03,  9:32:20 AM
22 point gap down open on the COMPX to 1401, right at support, TRINQ 3.67, QQV +1.09.

  Jonathan Levinson   1/17/03,  9:24:58 AM
Thanks, Phil!

I've followed your coverage on metals, XAU, HUI and individual equities with some interest. I noted your mention (1/13, 11:04) of Kitco as a bullion source the other day, in response to a subscriber inquiry. Kitco is OK (I carry one of their key chains), but have you checked out Bullion Direct at www.bulliondirect.com/? They offer a catalog but also a trading platform to broker client trades for a 1% fee per side. Their trading prices for common coins and bars are often considerably better than Kitco's on both sides of the trade. One example, which I think may have been relevant to the subscriber question, is better 2003 Silver Eagle ask prices by nearly 20% at $6.42 (with the fee) vs. Kitco's $7.98 for unspecified dates. Obviously, that's a huge difference in a bullion purchase. I've found Bullion Direct to be prompt and professional on the occasions I've used them. To be clear, I have no relationship with Bullion Direct other than having an account there, and I figured your subscribers could be interested.

  Steven Price   1/17/03,  9:24:15 AM
Swing Trade Signals
We are currently flat but it appears as though we may get a move through the Jan 8 lows of SPX 910/Dow 8580. As I said in last night's wrap, let's see if we get a bounce and then think about shorting the bounce. I don't want to get caught in another round of dip buying, so let's let the dip get bought and hope for a rollover. One note of caution: we have a three day weekend ahead of us and that will cost some time decay. If we don't get an ideal entry early today, I may simply give my opinion as to shorting spots (or going long, althogh that is doubtful), rather than making them official signals so that traders unwilling to suffer the time decay do not have to.

  Jonathan Levinson   1/17/03,  9:23:35 AM
The US Dollar Index briefly set a new low at 100.39.

The 5(3) stochastic, which gives the earliest stochastic signals you'd want to follow, has keeled over from overbought but not yet given a sell signal on the weekly candles. More upside is certainly possible, as we do not anticipate signals on indicators. However, with weeks of low TRINQ readings just finished printing and the stochs rolling over, compounded by awful news throughout, compounded by the fact that the awful news is starting to elicit a negative reaction from the market again, I would be very slow to try to pick the bottom here with long positions. That's just my humble opinion, and others will no doubt differ.

  Jonathan Levinson   1/17/03,  9:17:44 AM
The fed has 6B in overnight repos maturing today.

  Linda Piazza   1/17/03,  8:53:22 AM
European markets continue to trade in the red today, with the FTSE 100 now down .78%, the CAC 40 now down 2.12%, and the DAX now down 2.67%.

  Linda Piazza   1/17/03,  8:50:10 AM
This morning’s economic report on the U.S. trade deficit reveals that the deficit was wider than forecasted, reaching a $40 billion record. While exports were little changed from the previous month, imports grew to $123.3 billion versus $117.5 billion in October. Imports of consumer goods were a record $27.8 billion.

  Jonathan Levinson   1/17/03,  8:35:35 AM
Yields have opened in the red, with FVX -5.5 bps, TNX -4.5 bps and TYX -3.6. The US Dollar is dropping back toward its multiyear lows, currenly 100.48. To give you some perspective, this is down from approximately 120 one year ago. QQQ is currently trading 25.88.

  Jonathan Levinson   1/17/03,  8:16:31 AM
General Electric's Profit Has Biggest Drop in 9 Years on Reinsurance Costs is the top story on Bloomberg.com today. MSFT has now dropped over 4 points since its afterhours high yesterday, currently trading 52.45, while QQQ is currently at 25.91. Poor Maria will be in the position of having to blame everything on her very own employer's results, GE. I wish I had CNBC in front of me this morning. The US Dollar Index chart looks like the index is falling down the stairs, with a morning low of 100.40, currently just below 100.60, while gold has recovered almost all of the ground lost last night, a few cents below yesterday's close of 357.80.

  Linda Piazza   1/17/03,  7:25:29 AM
“GE delivered solid results in a very challenging economy, with excellent performances by several businesses and one major disappointment,” a Bloomberg report quoted GE CEO Immelt as stating this morning. That major disappointment came from the reinsurance unit, Employers Reinsurance Corp. After being hit by losses from asbestos cases and World Trade Center claims, ERC took a charge to shore up reserves. Immelt blamed the charge on poor underwriting in past years. GE’s reported a net income of $0.31/share, in line with analysts’ expectations of $0.30-.31/share, but that represented a fall in net income from $3.93 billion a year ago to $3.1 billion. A Bloomberg report characterized this as the biggest quarterly drop in nine years. Sales rose from $33.9 billion to $35.4 billion.

  Linda Piazza   1/17/03,  7:04:34 AM
Good morning! The good news first: After dipping into the red in early trading, the Nikkei closed up 0.94% on the day. While a firmer yen hurt exporters, banks had a strong day, leading the index higher.

European markets suffered fallout from the Microsoft earnings report and outlook, however, with Cap Gemini SA, Europe’s biggest computer-services company; Business Objects SA, a French software maker; Infogrames Entertainment SA, a video game maker; and Philips Royal Electronics NV particularly hard hit. Also, although banks fared well in Japan, they declined in Europe after Credit Suisse First Boston cut ratings of many. After Germany insurer AMB Generali Holding AG announced a 2002 loss, some insurers also suffered. As of this writing, the FTSE 100 had fallen 0.60%, the CAC 40 had fallen 1.82%, and the DAX had once again fallen below 3000, down 2.01% to 2992.63.

In other news, U.S. buyout firm Kohlberg Kravis Roberts & Co. may join Wal-Mart, J Sainsbury PLC, and William Morrison Supermarkets Plc in bidding for Safeway Plc. Some theorize that KKR won’t face the antitrust issues faced by the other interested parties.

  Steven Price   1/16/03,  1:58:08 AM
The Swing Trade Game Plan has been posted: Link

  Jeff Bailey   1/16/03,  1:57:48 AM
The Index Trader Wrap has been posted: Link

  John Seckinger   1/16/03,  1:57:26 AM
The Futures Trader Wrap has been posted: Link

  Steven Price   1/16/03,  1:57:07 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link


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