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  Jeff Bailey   1/24/03,  5:14:10 PM
Updated Pivot Matrix ... From suggestion of subscribers, I've added a new column to the matrix that simply calculates the point range between the daily, weekly and monthly S2-R2. Option traders may find this useful for selecting various strikes and measuring the price paid for an option against a potential range of trade. Link

  Linda Piazza   1/24/03,  3:51:17 PM
While I wouldn’t be surprised to see a technical bounce early next week, here’s one reason for a bearish overall outlook in the weekly DJI chart: Link With the weekly MACD rounding down from below zero and that falling candle formation, the outlook isn’t good for the DJI. However, note that a fall to 8000, and then a rebound from there would start to form a right shoulder on a reverse H&S formation . . . here we go again, right?

  Jonathan Levinson   1/24/03,  3:42:34 PM
Very little to enlighten us in the indicators. The most recent put to call ratio was .83. VXN +1.54, QQV +.97, TRINQ 2.6, TICK.NQ -56. There's some accelation in the selling of individual issues on the COMPX, and it looks like MSFT might be one such candidate. Other than that, this has been a rather orderly afternoon.

  Jeff Bailey   1/24/03,  3:38:36 PM
The 3:15 PM Intrady Update has been posted. Link

  Linda Piazza   1/24/03,  3:30:29 PM
John, I’ve been watching 200-ema and 200-sma crossovers in the charts lately to see what kind of signals they give. Since the exponential average gives more weight to the more recent numbers, I treat it as a fast MA as compared to the simple average. I’ve been studying it for a while, but not long enough to give a scientific conclusion. What I have noticed is that the crossovers tend to lead on the upswings, but trail on the downswings. Readers, don’t trade on this information. It’s just something I’m watching.

  Linda Piazza   1/24/03,  3:24:02 PM
VLO: Currently at 35.57, Valero Energy remains (barely) above its 200-ema, its 200-sma, and its 50-sma. Despite the downdraft in the markets and weekly stochastics that are beginning to cycle down, VLO has held steady. I do like Valero’s ability to stay above its 200-dma’s while the markets fall, yet readers who entered on the break of the 37.50 neckline, the P&F buy sign, and the push through P&F resistance have watched Valero hold on at lower levels than their entries while premium evaporates. VLO reports January 28, and readers in long-term positions should consider whether they want to hold over those earnings.

  John Seckinger   1/24/03,  3:22:40 PM
If a trader is not sure whether or not to use a simple or exponential moving average, why not chart both? In the following chart (five-minute), notice how the Dow, after the first five-minutes, didn't test any of the six averages until the 8150 area. Please see chart: Link

  Jonathan Levinson   1/24/03,  3:19:57 PM
US Dollar Index low of the day now 99.16.

  Jonathan Levinson   1/24/03,  3:02:15 PM
The COMPX is printing new lows of the day. Recall that Al Green actually drained 3B in liquidity today. Fascinating.

  John Seckinger   1/24/03,  3:01:54 PM
With one hour left in the session, I would be surprised if the Dow doesn't close near or on the lows. This is, by definition, an "open drive" session. I would like to see bonds higher by more than a full-point, but the dollar under 100 should be just as important. If the 8107 area is hit in the Dow, it be interesting to see if this level does becomes resistance.

  Mark Wnetrzak   1/24/03,  2:56:31 PM
Covered-Call Portfolio
Most of the issues in the model covered-call portfolio are suffering as the threat of war increases. Globespan-Virata (NASDAQ:GSPN) is looking rather weak as it continues to move lower in its support area and is threatening to break the trend-line from the October low. A stock demonstrates strength when a correction stops near the "top" of a consolidation area, and weakness when it moves towards the "bottom" of a support area.

  Jonathan Levinson   1/24/03,  2:52:20 PM
The COMPX is down to within 2 points of the low of the day, currently 1345, with QQQ below 24.80. The FVX is well off its lows, currently down 4.6 bps. QQV for some reason has finnaly lit up, currently +.90 to 37.70 and VXN is +1.35 to 44.62. The TRINQ is reading 2.39. I personally am feeling nervous, just like Linda, in contemplation of holding over the weekend. However, that's what I intend to do. Al Green, George W.- none have been able to stave off today's selloff, and it's easy to underestimate the animosity currently brewing in the international sphere. I'm nervous being in bearish positions, but I'd be terrified being bullish ones. Manage your account so that you can survive a mistake, but my own positions will stay on going into Monday. Flat, as Mark points out, is a very respectable position as well.

  Mark Phillips   1/24/03,  2:50:54 PM
For what it's worth, I wouldn't take a long trade ON ANYTHING today ahead of the weekend and all of the potential market-moving events early next week. Following the major breakdowns across the market, it seems clear that the bears are firmly in charge. That said, I'd have to side with Linda on bearish positions as well. Just about any bearish position should now be profitable, and I would elect to close out in the green this afternoon and hope for a better entry on a rebound early next week. A bird in the hand...

  Linda Piazza   1/24/03,  2:44:58 PM
KO: It’s interesting that Coca-Cola’s low of 42.90 today is the exact low from December 30, the lowest low since June of 2001. KO has been in a right-triangle formation that’s got a bottom somewhere along here! The trouble is that KO keeps bouncing from levels I think are the bottom. While I previously thought a move below 43.50 would drive KO’s prices down further, those bounces lead me to believe a safer new entry would be a move below 42. I’ve also seen recent arguments to buy KO because it’s so near that historical support and risk would be minimized on a bullish play. While that might be true, this bearish formation and KO’s P&F sell signal don’t tempt me to enter bullish plays.

  Kent Barton   1/24/03,  2:43:59 PM
Microsoft (MSFT) $50.20 -2.08: Not looking so hot after rolling over from its 200-dma at $51.89 and breaking support at $51.00. A violation of the $50.00 level would put MSFT in a "fast-move" region that was created by the rapid mid-October rally. This ascent began near $44.00.

  John Seckinger   1/24/03,  2:35:33 PM
Bonds have fallen from 112'28 to 112'13 as equities slightly recover. It was interesting that the Utilities Index (UTY) never managed to test the aforementioned 247-249 area. This interest-sensitive index is currently at 250.44. Also worth noting is the NQ futures contract falling under 1000 once again. S2 for the NQ is at 996.75, and the intra-day low is 994.50.

  Jonathan Levinson   1/24/03,  2:24:49 PM
U.S. Tells Americans Abroad to Be Prepared for Fast Flight in Emergencies

The U.S. State Department issued an advisory to Americans worldwide to be prepared to depart from foreign countries where they are residing in the event of an emergency, listing no specific threat.


  Jonathan Levinson   1/24/03,  2:20:39 PM
The COMPX is flatlining just below 1348. The indicators I watch have also become stuck- virtually unchanged over the past hour.

  Steven Price   1/24/03,  2:18:37 PM
Could you please explain how to calculate the Drops associated with the DOW/SPX/OEX and NDX head/shoulders neckline break with numbers / %'s TIA Steve

The neckline break is actually not an exact measurement, as it can be drawn connecting either intraday lows or closing prices, but it is generally taken from the low between the left shoulder and head to the low between the head and right shoulder and extending that line in both directions to get the nreak on the right side. You then take the measurement from the top of the head (once again you can use either closing or intraday highs) and connect to the neckline. Project the distance from head to neckline downward to get the measuring objective.

  Kent Barton   1/24/03,  2:15:26 PM
Crude oil and gold at multi-year highs, the U.S. dollar at multi-year lows, and the VIX.X spiking above resistance at $36.00...You can almost smell the growing fear in the market ahead of Monday's U.N. deadline!

  Steven Price   1/24/03,  2:14:32 PM
Swing Trade Signals
If we do get a failed bounce on Monday and Tuesday, particularly failing at the 8200 neckline, I plan on using that failure as a short entry point. My concern about entering today is that we get a big rally if the Iraq news is better than expected.

  Linda Piazza   1/24/03,  2:06:26 PM
Steven mentioned his concern about the upcoming UN meeting and Bush’s speech the next day. Next week also sees an FOMC meeting. I plan to exit my directional OEX bearish play today. Although I believe that the longer-term outlook is now decidedly bearish, I don’t like to hold over potentially market-moving events. I’ve been burned a time or two too many doing that. If you’re in trades, evaluate your original trading plan and your pain threshold when deciding whether to hold over the weekend.

  Jonathan Levinson   1/24/03,  2:05:28 PM
COMPX 1350 seems to be holding, even as the shorter stochastics drift upward to relieve the extreme oversold readings. The TRINQ holding at 2.33 and VXN below 45 is bad news for price, as there's no traction to arrest slide- the same phenomenon we witnessed yesterday with the drift higher, but in reverse. FVX is down 6.2 bps. The US Dollar Index is off its lows and Feb gold turned back from 370/oz, but the numbers are shocking. Remember the US Dollar Index a year ago? It was 120. Now 99.27. Gold was below 290/oz.

  John Seckinger   1/24/03,  2:00:28 PM
With the Dow unable to reach the last area of the fitted retracements (8107), prices have gravitated back to the higher retracement area of 8161 for some consolidation. This should neutralize some of the extreme bearish sentiment during the session today, but all it will take is a move back under 8150 to get bears showing their claws once more. Should be interesting during the next 30-minutes or so.

  Steven Price   1/24/03,  1:53:29 PM
Swing Trade Signals
We got the H&S neckline break and I've identified that signal as a short entry point. I've also said I prefer to enter on a failed bounce. It appears that today's sell-off is Iraq related and shorts (or longs for that matter) are playing with fire ahead of the weapons report deadline on Monday. Last night's earnings reports don't seem to justify the current sell-off and I am quite surprised we have dropped as far as we have. I have a hard time envisioning the drop of 700 Dow points in seven days continuing unabated without some bounce (more than yesterday's 50 points). I don't think I am going to enter a short ahead of a weekend and ahead of the report, although if I were to enter, it would be from the short side. I like the neckline break at Dow 8200 for shorts, but I would have been more comfortable if it hadn't come on such a steep drop. I think the chances of a bounce if the report buys Iraq more time are pretty good and I would enter no more than a 1/4 position short if at all. I am going to wait to see the market reaction on Monday before entering more trades at this point. There are simply too many non-market related issues that can jump out at us, as they have today.

  John Seckinger   1/24/03,  1:53:14 PM
In Geopolitical news, it is rumored that Hans Blix will give Iraq a "B" as a grade on the degree of their cooperation when he addresses the United Nations on Monday.

  Jeff Bailey   1/24/03,  1:50:43 PM
The 1:00 PM Intraday Update has been posted. Link

  Linda Piazza   1/24/03,  1:47:16 PM
I second Jonathan’s suggestion to use trailing stops if you're in bearish trades. Although I mentioned in my previous post that there’s nothing really to slow the OEX at this point, perhaps that 435 support is stronger than I suspected. I do remember a period several months ago when ten-day charts seemed to gravitate around 436. The OEX is moving above that 38.2% October-December retracement at 437.87 as I type. A sustained move above this level, with at least five-minute if not longer closes above the level, could be seen as a sign to rally. Another sign that bulls might interpret as bullish would be a five-minute move above 438.56, the last five-minute high. These wouldn't necessarily be stops that an intermediate-term trader would use, but could be signs to watch for a more sustained rally.

  Jonathan Levinson   1/24/03,  1:43:23 PM
February gold has just touched a new high at 370/oz.

  Jonathan Levinson   1/24/03,  1:36:48 PM
The put to call ratio has printed a new high for the day at .87, and with the VXN near its day high and TRINQ as well (2.33), the possibility of that bounce seems greater. FVX is off its lows at -5.6 bps for the day. Again, I don't expect much, and QQQ 25 plus or minus a few cents could do it, but it's better safe than sorry with profits. Trailing stops are an excellent tool. It goes without saying that I can think of no fundamental reason for a bounce- only technical. The US Dollar Index has just stunk up the joint again with a new low at 99.19.

  Linda Piazza   1/24/03,  1:21:13 PM
There’s not really much to slow the OEX at these levels until it hits 426-429. There’s some slight historical support near 435, but strong support lies between 426-429, where the 61.8% retracement of the October-December rise lies and also where monthly S1 lies. With that said, daily candles that span about twenty points seem to be the maximum, with a few exceptions. That would bring the OEX to about 430.

  Linda Piazza   1/24/03,  1:07:46 PM
As the indices hit new lows, up/down volume patterns remain at sustainable levels. Down volume is 4.5 times up volume on the NYSE and 6.5 times up volume on the Nasdaq. That’s actually down a bit from earlier levels on the Nasdaq, when down volume was 7.2 times up volume. The NYSE has traded about 800 million shares, while the Nasdaq has traded almost 900 million shares, a bearish sign on such a down day.

  Jonathan Levinson   1/24/03,  1:07:43 PM
The put to call ratio at .84 is telling us more of the same, but price action has been putting it nicely in context. The COMPX is able to twitch a bit and flutter its eyelids on the bounces, little more than pauses in the selling so far. The TICK.NQ at -412 and TRINQ at 2.34 shows pretty broadbased selling, but no signs of panic, although the VXN has added a bit, now +1.42. The QQV is still offline.

  Mark Phillips   1/24/03,  1:02:58 PM
GS $68.75 (-3.17) Following yesterday's solid rebound, shares of GS are getting creamed today, reversing yesterday's bounce and then plunging below the $70 support level. While we dropped this OI Put Play last night due to concerns of a continued rebound, I suspect there are some readers that held the play. Congratualations to them, as it is looking like a solid bearish play right now. Keep an eye on the stock as it approaches its December lows in the $67-68 area. Needless to say, a breakdown there will have lower levels in play, with the $65 level possible support, followed by the $58-59 area from early October. Current vertical count from the PnF chart Link is $53. but be careful with new entries right here, as the bullish support line comes in at $68.

  Jonathan Levinson   1/24/03,  12:45:20 PM
The latest put to call ratio was .82. The five year yield has dropped a little further to 2.810%, down 8.1 bps. The last small rise on the COMPX turned back at 1350, while the VXN has added to its gains, now +1.13. On the VXN daily candles, it's on "buy signals" on the MacD and stochastics, and at 44.40, it's above the short term 5 and 13 dmas. Today's action should cause them to cross, which would be a signal of further weakness in the COMPX to come, but we don't anticipate signals on a chart. Worth watching.

  John Seckinger   1/24/03,  12:44:48 PM
Looking at more intermediate levels, the 8120 area in the Dow is a 50% retracement from October to December rise. I would use the 8106 fitted retracement area for more executional purposes, and then use the 8120 level as the close approaches in order to judge possible sentiment on Monday. The ES contract (E-mini S&P 500 contract) has already hit its 50% retracement at 861.25 today. The intra-day low is 861.00.

  Linda Piazza   1/24/03,  12:31:59 PM
This may be micro-managing, but I note that both the $TRAN and the $UTY made a higher low on the five-minute charts. It’s still uncertain whether they can make a higher high, however. I don't know about the rest of you, but I tend to get more nervous when I'm making money than when I'm losing money, and that's when I tend to micro-manage. Knowing your trading style allows you to govern those emotional reactions, however. I do it by setting alerts that tell me when to act and not acting when those alerts aren't sounding. I try to take the emotion out of the trading.

  Jeff Bailey   1/24/03,  12:28:29 PM
Dow Industrials (INDU) 8,168 -2.5% ... found some "round number" support at 8,150 with low trade of 8,148. However, I think lower still to close near 8,108. Here's chart of Dow using "5-minute fit" technique. Rather interesting how this technique seems to be trade. Link

It's the 5-minute interval close below 8,157.85 that has me looking lower to 8,108, with intra-day resistance of 8,207.

  Jonathan Levinson   1/24/03,  12:23:42 PM
Feb gold now 369/oz, USDX 99.30. The speed of these moves is impressive.

  Linda Piazza   1/24/03,  12:19:59 PM
Wow! Just noticed that the VIX is over 35, at 35.65.

  Jonathan Levinson   1/24/03,  12:17:06 PM
Dollar Falls for Record Ninth Day in Row Against Euro on Iraq War Concern

The dollar fell for a record ninth straight day against the euro on concern the U.S. will lead an attack against Iraq, hurting foreign demand for assets in the world's biggest economy.


  Linda Piazza   1/24/03,  12:16:02 PM
Down volume is a bit more than four times up volume on the NYSE and a bit more than seven times up volume on the Nasdaq. This isn’t extreme from what I’ve noticed during other declines.

  Steven Price   1/24/03,  12:14:40 PM
Swing Trade Signals
The S2 level at Dow 8207 coincides with the 5 min fitted retracement at 8207. A failed rebound with resistance at that retracement level may be the best entry point for shorts on the failure back under 8200.

  John Seckinger   1/24/03,  12:13:14 PM
As noted at 11:45:23, a trader can now look to use fitted retracements as the S2 area has been taken out in the Dow. Here is a chart on how the fitted retracement will look. Note: The retracement levels on the right side of the chart is from the Daily S2 to R2, while the retracement levels on the left side it fitted based on the range in the first five minutes of trading. Link

  Linda Piazza   1/24/03,  12:12:17 PM
Some consideration should perhaps now be given to the OEX 61.8% retracement of that October-December rally. That level is at 426, and I also note a monthly S1 at 427.

  Jonathan Levinson   1/24/03,  12:08:51 PM
Feb gold is now printing highs at 368.30/oz, with the US Dollar index at 99.39.

  Jonathan Levinson   1/24/03,  12:05:22 PM
The COMPX is now down 40 points and has just printed a low at 1347. QQQ is below 24.80. The TRINQ at 2.31 is showing selling, but nothing extreme, and while the FVX is now down 7.7 bps, the VXN is only up .32. The put to call ratio fell a bit to .81 from its high of .84. What to do, what to do? If you're short, perhaps trailing stops, or a stop around QQQ 25? Not advice, just suggestions.

  Linda Piazza   1/24/03,  12:03:27 PM
Bears, be careful here. The OEX hit a low of 438.01, close to the 437.87 50% retracement. Depending on your interest in holding over the weekend, your long-term outlook, and your own trading plan, watch first for a move back above the 440 level or the 442 S2 for today. That 442 area looked important on the five-minute charts today.

  Jeff Bailey   1/24/03,  12:01:22 PM
The 11:00 AM Intraday Update has been posted. Link

  Jeff Bailey   1/24/03,  12:00:09 PM
Dow Industrials (INDU) 8,168 -2.4% ... with Dow down 200-points here, trading curbs were put in place for computer programs when Dow fell 170 points. NYSE curbs will stay in place until the Dow returns to within 80 points of yesterday's closing price of 8,369.47, which would be 8,289.47.

  Steven Price   1/24/03,  11:57:04 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We were stopped out on the 1/2 long signal at 11:51:50 when the Dow traded 8175. It certainly looks like we got the H&S neckline breakdown I've hghlighted in the last few Wraps. I'm not going to go short now that we are down more than 200 points today, but I'll look for short entries on a failed bounce from here.

  Mark Phillips   1/24/03,  11:55:20 AM
BREAKDOWN! So much for support. All major indices breaking down, with the OEX taking out 440 and the dow solidly breaking 8200. Remember the saying about the bearish consequences of the market taking out its december lows anytime in the first quarter? Well, we just did that, and as others have pointed out recently, there isn't a lot below us for support. If that 50% retracement level fails to provide support on the OEX, then it could be an ugly end to the month of January.

  Linda Piazza   1/24/03,  11:54:35 AM
The SOX just moved below the possible 284 neckline. Again, watch for closes, not brief moves below an important level. As evidence, the SOX briefly moved back above that neckline while I typed this entry.

  Linda Piazza   1/24/03,  11:49:40 AM
Here we go. Remember the 50% retracement of the OEX October-to-December move at 437.87, as well as some slight historical support near 435.

  John Seckinger   1/24/03,  11:45:23 AM
Using fitted retracements (anchoring the 100% retracement at 8367 and the 80.9% level at 8318, low during the first five-minutes), support in the Dow below 8206 is seen at 8156 and then 8106. Resistance is at 8238.

  Linda Piazza   1/24/03,  11:45:05 AM
This morning, CSCO broke through its 200-ema as well as its simple 22 and 50-dma’s. Currently trading just above 14.00, it remains above its simple 200-dma at 13.60. CSCO is significant because on January 14 and 15, it came right up the neckline of a reverse H&S formation, testing it before falling back.

  Jonathan Levinson   1/24/03,  11:38:19 AM
The US Dollar Index has printed a new low at 99.39, and is currently trading at 99.43. Feb gold posted a new high at 368, currenly 366.6/oz.

  Jonathan Levinson   1/24/03,  11:34:50 AM
The put to call ratio has made it up to .84, still too low to call this a "bottom" but certainly high enough to expect a pause in the selling or at least a weak bounce. The COMPX has just printed some new lows at 1353, though the VXN is still up a paltry 1.19. FVX is down 5.6 bps, and the TRINQ is up to 2.38, showing moderate selling pressure.

  Linda Piazza   1/24/03,  11:27:50 AM
It’s an interesting day. Steven commented on the recent VIX tops. We’re all noting strong support levels nearby, but countering with the possibility of disastrous moves if those support levels are broken. Daily 5(3)3 stochastics remain even more oversold, while weekly 5(3)3 stochastics turn over in mid-rise. Weekly 21(3)3 stochastics haven’t even begun to roll yet, however, although they’re up in territory signaling overbought conditions. I’ve got a zillion alerts set to monitor different scenarios. If pressed, I could give an argument for a bounce early next week on a sell-the-rumor, buy-the-fact move as we finally learn something about Bush’s plans for Iraq and on a relief bounce as the daily 5(3)3 stochastics relieve some of the oversold pressure. I could also pose an argument for a continued plunge (those long-term weekly stochastics). It’s kind of a pick-your-theory day, but it’s certainly not one in which you should marry that theory. However, if those necklines are firmly broken on closing today, then there's no longer much of a bullish argument to be posed.

  John Seckinger   1/24/03,  11:27:20 AM
In Geopolitical news: ABC News Online is reporting that Japan has called on its nationals living in Iraq to leave the country by next Wednesday because of a possible US-led attack.

  Steven Price   1/24/03,  11:18:31 AM
Market Volatility Index (VIX) 33.33 (+2.36) Linda commented earlier on the VIX having moved through its 200-ema. Traders can also note the move back through the 100-ema (32.80), which has capped the last four rallies in the VIX as the markets have sunk. The next level of resistance is horizontal at 35, which coincides with the last three VIX tops/market bottoms.

  Jeff Bailey   1/24/03,  11:10:44 AM
KLA-Tencor (KLAC) $34.87 -4.2% ... from previous bearish profile near $38 for 1/2 positions, stock gets hit today after earnings. Here's a NASDAQ-100 stock generating a reversing p/f sell signal. Link

Looking for some potential support near bullish trend at $33, maybe a bounce, but stock/sector looks to have ability to reach levels back near the lows.

Watching Semiconductor HOLDRS (NYSE:SMH) $22.42 -3.27% for trade at $22.00, which would be break of important support. "Head/shoulder top" formation in SMH with neckline at $23 or so, and head at $30, gives downside target of $16. Link

Disclosure: I currently hold bearish position in KLAC

  John Seckinger   1/24/03,  11:09:53 AM
The Utilities Index (UTY), since falling back underneath the 260 area, has simply imploded. Currently down another 3.85-points to 251, the next area of support comes in-between 247 to 249 based on a series of retracement levels (intra-day low is 249.78). Therefore, both bonds and the UTY, as well as the Dow, all seemed to have hit solid retracement areas this morning before pausing. If the 8203, 247, and 112'12 area is cleared in the near term, we could get another wave of equity bearishness. Bonds are now at 112'12 and have reached 112'15.

  Linda Piazza   1/24/03,  11:08:20 AM
Depending on how you draw the neckline, the Wilshire 5000, the broadest of the markets, either has broken the neckline of its H&S formation or else is sitting right at the neckline. I’ve drawn two possible necklines, one including the shadows of the candles (magenta) and one not including the shadows (red.) Link This chart indicates the danger to both bulls and bears. Bullish traders should be aware of the possibility that the neckline has already been broken. Bearish traders should be alerted to the probability that bulls will try to defend these necklines on the markets and that these might be places to expect bounces. Decide how much of a bounce (if bearish) or how much of a further downside test (if bullish) your account and your blood pressure can endure. Decide ahead of time and be prepared.

  Jonathan Levinson   1/24/03,  11:06:05 AM
The put to call ratio jumped from .66 to .77 and then .78 for this past half hour. This is not an extreme reading, nothing like the 1.08s and 1.15s we've seen on other days, and this tells me that while me might have a pause in the selling to revive bullish enthusiasm a bit, I don't believe that this is a "bottom". The VXN is back to +1.14, TRINQ now 2.14 and the TICK.NQ -204. FVX is -4.6 bps. Today set a new low for the week, if I'm not mistaken, and all of the major indices have now erased all of their gains for 2003, although XAU, HUI and the CRB are all positive.

  Jeff Bailey   1/24/03,  10:55:52 AM
Need to get my scan set up... subscriber has e-mailed me saying 2 reversing p/f sell signals in the S&P 100 in AEP Link and HIG Link

Technicals look rather similar don't they? (Below trend).

According to Dorsey/Wright and Assoc. AEP is "electric utility" and that sector is "bull confirmed" at 72%. This is a rather historically high level of bullishness and higher risk area of bulls. As a bear in AEP, I like the stock's sell signal today and hints this may be an "early loser" should the market look to sell some risk at higher levels of sector bullish %. Looks for a bullish % reversal to 66% and "bear alert" status for further signs of sector internals deteriorating.

Dorsey has HIG as "insurance" and that group is currently "bull confirmed" at 51.11%. Needs a bullish % reading of 46% to reverse to "bull correction" and reading of 34% to reach "bear confirmed." As such, if looking short/put HIG, would only look 1/2 position right now. Might see 3-box reversal back near $47 with sector still "bull confirmed" and not really overbought. Still, HIG looks to provide downside leadership.

  Steven Price   1/24/03,  10:48:04 AM
Swing Trade Signals
We are seeing a series of lower highs on intraday rebounds and conservative traders who chose not to raise stops earlier at the suggested levels can exit here with a 45-50 point Dow loss if they so choose. My stop remains 8175, as bears have not yet cracked the 8200 support level in the Dow or 440 in the OEX.

Current levels: Dow 8229/SPX 870.73/OEX 441.64/COMP 1356.

  Mark Phillips   1/24/03,  10:48:04 AM
SYMC $44.25 (-1.74) The downdraft in the broad markets this morning has propelled this new OI Call play right down to strong support at $44, without so much as a pause at the $45 level. While just an hour into the trading day, the stock has already traded almost half its average daily volume, and that certainly isn't encouraging for the bulls. All of the major indices are testing/breaking critical support levels this morning,new bullish entries are certainly bucking the trend at current levels. But if the broad markets find support and SYMC can hold above the $44 level, this could turn out to be a solid entry into the play. It certainly gives us a favorable risk/reward with our stop at $43 giving us $1 of downside risk, as compared to $4 of upside potential just for a retest of the recent highs. It seems that the poor results from ISSX last night is the other major factor weighing on all the security-related stocks. How quickly investors have forgotten the strong results posted by SYMC just over a week ago.

  Linda Piazza   1/24/03,  10:45:26 AM
If the OEX does fall below 440, what’s next? Looking at historical support only, I note slight historical support at 435, which coincides roughly with the 437.87 50% retracement of the October 10-December 2 move. The next strongest historical support lies near 428, which coincides with the monthly S1 Jeff has listed in his matrix.

  Jonathan Levinson   1/24/03,  10:41:49 AM
The put to call ratio is tardy from the CBOE. But the VXN has somehow lost most of its gains, no doubt as traders begin to play the bounce. Perfect for a bear- here's another way to skin the majority of bulls. QQV is still offline, but the VXN is +.32 on the day despite a 33 point drop on the COMPX. Complacency reigns.

  Linda Piazza   1/24/03,  10:38:50 AM
For the first time in a long while, new lows outnumber new highs on the NYSE, with 38 new lows to 22 new highs. This is a decided change in recent volume patterns, and parallels the weakness we’re seeing today. On the Nasdaq, new lows equal new highs, with both numbering 23. On the NYSE, down volume is a little more than three times up volume, while on the Nasdaq, it’s almost five times up volume. These numbers appear sustainable, but I caution bearish traders that we’re also near strong support levels.

  John Seckinger   1/24/03,  10:33:56 AM
The low in the Dow is 8203, while S2 comes in at 8206. Since we didn't get a five-minute close underneath this area, I won't go to fitted retracements just yet. Resistance above is seen at 8256 and the next retracement above. S1 is 8288. Note: The 30-year bond has a high of the recently profiled 112'12 level, most likely corresponding with the Dow at S2. If bonds fall and stocks bounce, it should be here.

  Steven Price   1/24/03,  10:33:43 AM
Swing Trade Signals
We hit fresh lows once again for the day and the SPX and Dow have all taken out the Dec 31 bottoms, turning us negative for the year. As Linda pointed out earlier, there are bulls defending OEX 440 for the moment, but so far the trend toward lower intraday lows has continued and I would not be surprised if I am stopped out at 8175. That being said, I'm going to stick with the original plan and leave my stop in place at Dow 8175, since that should correlate to a OEX 440 breakdown. I do think the environment has changed, as I mentioned earlier, with all major indices in the red, but with no real impetus for the sell-off (except the dollar, of course), it looks like weekend jitters ahead of Iraq problems.

Current levels: 8218/SPX 869.44/OEX 440.89/COMP 1354.

  Linda Piazza   1/24/03,  10:32:35 AM
At 33.28, the VIX is now well above its 200-ema.

  Jeff Bailey   1/24/03,  10:31:40 AM
Telephone Data Systems (TDS) $43.00 -1.82% ... from previous bearish profile of $49, new 52-weeker here. I'm currently holding the Feb. $50 puts from $49 profile and looking for something near $42.50 to close out FEB expiration. For those holding longer-dated expiration, hang in there, this one looks lower still with bearish vertical count of $30.00. Link

  Jeff Bailey   1/24/03,  10:27:52 AM
Forest Labs (FRX) $52.70 -0.32% ... stock was added to OI call play list today. Quick check of daily pivot analysis has S2=50.34, S1=51.61, P=52.30, R1=53.57, R2=54.26.

For bull entry today, I'd look for something back near the pivot of $52.30 if allowed.

Yesterday was talking with my brother, that is specialty rep for FRX. He nor I am sure "why," but company has moved up its annual national sales meeting from October to this June I believe. Company is said to be poised to hire roughly 400 new reps in coming year, and speculation is that this may strategy to prep for anticipated approval of new Alzheimer's drug, which some predict may be "blockbuster" status and provide annual sales above FRX's popular Celexa and newly launched Lexapro.

Discussion with my brother (not a director) is that Alzheimer drug, which the company voluntarily withdrew application for back in September has recently refiled the application with more study results. FRX has had a "history" of withdrawing application, to gather further data, which has seemed to improve odds of approval. Time line for FDA panel review is within next six-weeks, and hopes are that FDA panel approves FDA review. Best case, is that drug gets "fast track" status, as drug is one of few for moderate-to-severe treatment of Alzheimers.

Reason I mention this is expiration selection. I've been accumulating the FRX May $55 call, as I want TIME to then look for.... 1) FDA panel acceptance and "fast track" status, 2) FDA final approval. My price target is $70 on or before expiration, but to get there, FRX NEEDS the FDA panel acceptance to then build the anticipation for another blockbuster drug.

  Jonathan Levinson   1/24/03,  10:24:22 AM
Rantings of a goldbug: Here's my take on precious metals and commodities. Bear in mind that it's just my opinion. I trade what the charts tell me, and these are just fundamental comments- experts will no doubt disagree. Commodities tend to move in long cycles- the commodities bear market that ended 2 years ago was nearly 20 years long. As the world's central banks continue to attempt to inflate the global debt away and avoid deflation, printing money as quickly as they can in a vain attemptto avoid the Kondratieff Winter that has commenced, it will continue to take more and more of that devaluating currency to buy the same amount of every commodity, be it gold, silver, coffee, soybeans, pork bellies or oil. I'll sell my commodities when the fat lady sings. Wait for people to be unanimous on gold being a "buy" and unanimous on GE and other stocks being a sell. That's when I'll sell my gold and buy stocks. Same as at the top of the tech market, when gold was a joke and tech was a "buy". The crowd is always wrong- that's the market's job. The crowd is only beginning to hear about gold. It has yet to really begin buying. Wait until they notice that gold was up 27% or so last year and precious metals stocks approx 80%. They'll start chasing it and run it to the moon. Then I'll think of selling mine.

  Mark Phillips   1/24/03,  10:22:17 AM
With the markets getting smacked lower in the past half hour, we can see that once again gold stocks are the one bright spot in the whole market, with the XAU index up 1.7% at $81.70. That moves the XAU through the $81 resistance level, and gold bulls will be setting their sights on the May 2002 highs near $89.

This move is certainly treating our NEM LEAPS play right, with price moving back over the venerable $30 level. That 200-dma certainly proved to be important support for our play on that profit-taking dip, and it will be interesting to see whether NEM can hold above the $30 level and challenge its 2002 highs above $32.

  Linda Piazza   1/24/03,  10:20:05 AM
Yesterday, CNBC discussed the bearish and bullish cases for gold, Jonathan, and the phrase "lunatic fringe" wasn't used once. I guess the tenor of discussions about gold have changed.

  Jonathan Levinson   1/24/03,  10:19:12 AM
If there's a bounce in the cards, it's right around here, as I observe this week's triple bottom support on the COMPX. A breakdown below 24.88 QQQ will not be bullish.

  Linda Piazza   1/24/03,  10:18:19 AM
European markets reacted to our market action by dipping lower, with the last readings showing the FTSE 100 flat and erasing earlier gains, the CAC 40 up .41%, and the DAX down 1.50%.

  Jonathan Levinson   1/24/03,  10:16:58 AM
Gold has broken 366/oz, HUI is above 151, XAU above 81, and the US Dollar Index down to 99.68. It appears that the "lunatic fringe" is recruiting new members.

  Linda Piazza   1/24/03,  10:15:05 AM
If the SOX should continue dropping today, an area to monitor is 284. A move below that level (not just a brief test) would appear to break the H&S neckline on the SOX. Link

  John Seckinger   1/24/03,  10:09:21 AM
Using retracements for the 30-year bond (currently higher by '21 ticks at 112'07), support is seen at 111'24, while resistance is above at 112'12 and 112'24. I am not hearing about a huge allocation into bonds from stocks, but I am sure that will happen as we approach 112'24. The yield curve is relatively flat, which supports this lack of allocation en masse. There is a rumor that Tom Daschle is expected to announce a plan at the Cleveland City Club that totals $141 bln and includes a $300 rebate for every adult and the first two children in a family. His plan also triples the amount that small businesses can deduct on investment to $75,000, a 50% tax credit to small businesses this year, a 20% tax credit to companies that invest in broadband internet, a $40 bln gift to states for homeland security, and extension of unemployment benefits to 1 million Americans.

  Steven Price   1/24/03,  10:09:07 AM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
We are approaching the Dec 31 low of 869.45 in the SPX and we already took out the Dec 31 low of 8242 in the Dow. Right now our swing trade is off 35 points in the Dow, after going up 100 points intraday yesterday. The alternative stops I suggested have been hit, but my current stop of Dow 8175 remains in place. We are seeing some dip buying, but none of it has lasted very long thus far.

Current levels: Dow 8241/COMP 1361/SPX 872.70/OEX 442.80

Stops should be set at Dow 8175

  Linda Piazza   1/24/03,  10:05:21 AM
OEX 440 has been an area of historical support, so those of you in bearish plays might be alerted that bulls might defend that area. Decide ahead of time how much of a bounce you want to tolerate and that way, you'll be prepared if a bounce does materialize.

  Jonathan Levinson   1/24/03,  10:04:54 AM
The fed has announced a weekend repo of $4.5B, which amounts to a net drain of $3B against the overnight repo expiring today.

The put to call ratio remains at .66 for the first half hour of trading. QQV is obviously offline, still flat, though the VXN actually came up a bit, +1.03 currently. Complacency on a downdraft is good news for bears. TICK.NQ -457, TRINQ 1.6.

  Linda Piazza   1/24/03,  10:01:35 AM
The VIX climbed back above 32, currently at 32.01.

  Linda Piazza   1/24/03,  9:58:55 AM
At 14.30 as of this writing, CSCO touched but managed to stay above its 200-ema at 14.25. The day is still young, however.

  Steven Price   1/24/03,  9:57:54 AM
Swing Trade Signals
The sell-off picked up steam quickly and we dropped just above Thursday's low in the Dow. How quickly a winning trade can turn. I have less conviction following this morning's drop than I did yesterday when it was mostly due to action in AT&T and the SPX and COMP remained positive for much of the day. We already took out yesterday's low in the SPX and OEX.

Current levels:Dow 8276/SPX 876.14/OEX 444.77/COMP 1369

  Linda Piazza   1/24/03,  9:55:32 AM
At 2178.45, the Dow Jones Transportation Index is down more than 50 points. Next support lies at 2130.

  John Seckinger   1/24/03,  9:51:49 AM
In last night's Investor Education Sector, I "Lined up Levels" within the ES contract and outlined how a trader can increase conviction. Today's price action definitely went along what I was thinking. I do think this kind of trade set-up can help with all contracts. Please see link: Link

  Mark Phillips   1/24/03,  9:51:27 AM
Isn't it interesting how we've really gone nowhere over the past few days? In looking at the daily chart of the SPX last night, I couldn't help noticing that the close on Tuesday was 887.62. Yesterday's close of 887.34 almost perfectly reversed the slide on Wednesday, and so far today, the negative price action has almost perfectly removed yesterday's gains. We appear to be gradually moving down, but I'm certainly not seeing any conviction behind that move. Markets appear to be falling under their own weight, as there aren't enough buyers to prop them up.

In a reversal from yesterday's action, today we have my favorite breadth measures (ADVDECV.NY and ADVDECV.NQ both opening in the red and heading south since the opening bell. With bond yields in the red and VIX in the green, I'm expecting this deterioration to continue as we head for the weekend.

  Linda Piazza   1/24/03,  9:49:16 AM
Yesterday’s low in the OEX was 445.27 and Wednesday’s was 445.31. That appears to be an important level to watch.

  Steven Price   1/24/03,  9:48:58 AM
Swing Trade Signals
We bounced slightly after setting our opening range, but the bounce didn't last long. We are setting fresh lows of the day and could be headed to the S1 level at 8288 on a break below 8300. I also don't like the break under SPX 880. I don't see much to hang my hat on this morning from the long side and traders looking to close the long signal at the break-even will want to get their stops set at Dow 8275.

Current Levels: Dow 8302/SPX 878.92/OEX 446.20/COMP 1370

  Jonathan Levinson   1/24/03,  9:48:13 AM
No signs of life from the QQV, which is flat, while the COMPX volatility index (VXN) is +1.25 to 44.50 as the COMPX sets new lows. The QQV is very low at 36.80, and has lots of room to the upside- in other words, the QQQ options market is very complacent, which can translate into significant downside in the Qubes. TRINQ is now 1.67, showing light selling pressure.

  Linda Piazza   1/24/03,  9:47:11 AM
I’m a recent subscriber to Q-charts. This isn’t a plug for Q-charts, but I do like the ability to include notes in the alerts I set. For example, after John’s 9:37 post, I set an alert for Dow 8343 and added a note that this was the pivot and would nullify the “open drive” possibility if hit. That ability is a great asset when trying to watch all the indices at once.

  John Seckinger   1/24/03,  9:42:40 AM
Also note that the 8338 level (Friday's pivot) is also the 38.2% retracement of the move from October to December (7197 to 9043). This should add to its significance.

  John Seckinger   1/24/03,  9:37:48 AM
We have a nice red candle for the first five-minutes of trading, as the Dow traversed from 8367 to 8318 during this period. A move back up above 8343 would retrace more than 50% of the range, as well as take out the pivot to the upside. This should then null the possibility of an "open drive" session.

  Jeff Bailey   1/24/03,  9:37:11 AM
The 9:00 AM Intraday Update has been posted. Link

  Jonathan Levinson   1/24/03,  9:36:09 AM
COMPX found support again at 1376, TRINQ now 1.46.

  John Seckinger   1/24/03,  9:32:58 AM
Intra-day Pivot/Levels for Friday (01/24/02)...

INDU : S2= 8207, S1= 8288, P= 8337 , R1= 8419 , R2= 8468

SPX : S2= 871, S1= 879, P= 885, R1= 893, R2= 898

OEX : S2= 442, S1= 447, P= 449 , R1= 454, R2=457

NDX : S2= 1000, S1=1016 , P= 1028, R1=1044 , R2=1056

QQQ : S2= 24.75, S1= 25.13, P= 25.48 , R1= 25.86, R2= 26.21

  Linda Piazza   1/24/03,  9:32:25 AM
European markets moved up since my earlier posting, with the FTSE 100 now showing a gain of .88%, the CAC showing a gain of 1.18%, and the DAX now down only .38%, having just climbed back to the 2800 level.

  Jonathan Levinson   1/24/03,  9:30:53 AM
6 point gap down open on the COMPX to 1382, TRINQ 1.19, QQV flat.

  Steven Price   1/24/03,  9:19:44 AM
Swing Trade Signals
We are currently long a 1/2 position entered yesterday at Dow 8275. So far the morning and overnight activity is not encouraging, but we have not seen a sell-off, either, recovering from the overnight dip. However, with the bonds finding bids and the dollar lower, conservative traders who want to get out with a gain from yesterday's entry and wait to see how much lower we go won't get an argument here. For the moment I'm leaving my stop at Dow 8175.

  Jonathan Levinson   1/24/03,  9:00:25 AM
Al Green has 7.5B in overnight repos expiring today. The announcement should be released shortly after 10AM.

  Jonathan Levinson   1/24/03,  8:49:46 AM
Here's a laugh, apparently from the Wall Street Journal:

East Jersey State Prison inmates outearned dozens of stock pickers from UBS PaineWebber, as well as other New Jersey residents, to come in third place in the latest statewide stock-picking contest.

Here's another laugh- it's a skit from Saturday Night Live: Link

  Jonathan Levinson   1/24/03,  8:34:39 AM
Bonds have opened, and are finding bids as yields fall, FVX -3.7 bps, TNX -2.7 bps and TYX -2.2 bps.

  Jonathan Levinson   1/24/03,  8:12:39 AM
Bloomberg reports "U.K. Fourth-Quarter Economic Growth Declines by Half as Production Shrinks". Our futures are so far unaffected by the news, and QQQ is trading right where I left it last night at 25.52. There was a sudden selloff as soon as the after-the-bell reports came out yesterday, chopping the Qubes by nearly 40 cents from yesterday's high right before the bell. The US Dollar Index is down to 99.70 and gold down by 40 cents, holding above 363/oz.

  Linda Piazza   1/24/03,  7:36:58 AM
While most European markets rose in early trading today, the German DAX fell .87% to 2786.87 as of this writing. In the U.K. the FTSE 100 rose .12% despite a report that the country’s economy halved its rate of expansion in the Q4, as compared to the previous quarter. Slowing growth in industrial production and services contributed to the drop in GDP from 0.9% in the previous quarter to the fourth quarter’s 0.4% rise. In a theme that’s heard across Europe, economists pointed to a decline in exports as U.S. growth slows and as the dollar falls in value against the euro. U.K. bankers and insurers helped steady the FTSE after Goldman, Sachs recommended Lloyds TSB, a U.K. lender, and after Legal & General Group, a life-insurance company, reported lower costs than expected. The CAC 40 rose .69%.

In other European trading, Fiat shares rose after the death of Giovanni Agnelli, the 81-year-old head of the family dynasty that controls the company. Agnelli had reportedly opposed the sale of the troubled manufacturer’s car unit to General Motors, and some feel that his death allows the sale of the car unit or a controlling stake in the company. Also of note in Europe, shares of GlaxoSmithKline fell after Europe’s biggest drugmaker halted the study of Serevent. People taking this asthma treatment suffered more deaths than those taking the placebo.

Slowing exports also trouble Japanese investors as the dollar falls against the yen. In the heaviest trading in six weeks, the Nikkei fell .67%. One gainer was Kumagai Gumi, a builder. Rumors circulated that Sumitomo Mitsui Financial would offer a rescue package, but both companies denied the rumor. In other Asian trading, SK Telecom announced a plan to buy back 3% of its shares. The company also planned to adjust its 2003 investment plans. After reporting an unexpected drop in Q4 profit earlier in the week, the company’s shares have plunged.

  Jeff Bailey   1/24/03,  2:02:59 AM
S&P futures (sp03h) settled at 883.00 for Thursday. Since that time, today's session has seen a high of 885.30 (17:55:00) and low of 878.40 (00:50:00). Current trade is 880.30 (02:02:08)

  Jim Brown   1/23/03,  12:07:52 AM
Market Monitor Performance We are receiving some complaints that the monitor is not refreshing reliably on older computers. Primarily Win95 and Win98 PCs with 64MB or less and mostly on dialup connections. It is not a problem with your computer but more a problem of resources. After lunch the number and size of the posts grow to as much as 125K to 150K and manipulating that much data every 30-60 seconds on the slower computers causes the connection to time out.

We are modifying the monitor to incorporate some changes everyone has requested and we are going to improve the handling of the data as well. These changes should be completed this weekend.

We will have the option of having both the Market Monitor and the Futures Monitor open at once in different screens or combined on the same screen. We are simplifying the option window with some instant change buttons on the front page. Once we complete these changes we will turn on the alert feature that allows you to set an alert for a trade recommendation.

  Steven Price   1/23/03,  12:07:24 AM
The Swing Trade Game Plan has been posted: Link

  Jeff Bailey   1/23/03,  12:07:02 AM
The Index Trader Wrap has been posted: Link

  John Seckinger   1/23/03,  12:06:44 AM
The Futures Trader Wrap has been posted: Link

  Jim Brown   1/23/03,  12:06:17 AM
Yesterday's Market Monitor has been archived. You may view it and any previous days here: Link

Disclaimer: Results posted in the Market Monitor are hypothetical and OIN does not claim that any reader achieved these exact results. Due to the lag time between research, writing, posting, uploading, reading and execution there will be differences between the actual signal given and the fill achieved by the reader. Fills may be better or worse but in many cases they will be different. The writers will make every effort to give advance notice of intended signals and indicate potential price targets. Your individual results may vary depending on your activity level and aggressiveness. This forum is intended as an education service only. Trading involves risk and should not be attempted by anyone not ready to accept this risk. By acting on any signal in this forum you agree and personally accept this risk.


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