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  Jeff Bailey   1/28/03,  9:09:22 PM
S&P futures (sp03h) 854.20 at time of President Bush's State of the Union Speech.

 
 
  Jeff Bailey   1/28/03,  4:48:43 PM
Pivot Matrix for tomorrow. Weekly and monthly levels left unchanged, only the daily data has been changed based on today's high, low and close. Link

 
 
  Jonathan Levinson   1/28/03,  4:05:36 PM
Fascinating last minute save in the precious metals indices- HUI only -1.18 on the day, XAU -.14. Blink and you might've missed it.

 
 
  Linda Piazza   1/28/03,  4:03:36 PM
Inside days or pincer patterns? A pincer pattern occurs at the bottom of a decline or the top of an ascent. It's a two-candle pattern formed by two different-colored candles roughly equal in size, lined up next to each other. After a decline, for example, a red candle would be followed by a white candle. A pincer pattern can be a reversal pattern. While today's candles are mostly smaller and enclosed within the previous day's patterns--indicating harami's--harami's in themselves indicate that the momentum of the previous movement is slowing. Tomorrow will give us more information as we see markets either break out above today's highs or break below today's lows. Since longer-term patterns indicate intermediate weakness, I tend to think any upside breakouts should be brief but perhaps explosive.

 
 
  Jeff Bailey   1/28/03,  3:58:02 PM
The 3:15 PM Intraday Update has been posted. Link

 
 
  Linda Piazza   1/28/03,  3:46:24 PM
Up volume now comes in a 2.5 times down volume on the NYSE and 3.5 times down volume on the Nasdaq. Let's see how far that can push the indices before the closing bell.

 
 
  Mark Phillips   1/28/03,  3:39:59 PM
SYMC $46.52 (+2.32) Apparently, just filling the gap from Friday wasn't enough for the bulls, as they've continued to bid this stock higher throughout the day. A brief push through the $46.50 resistance level finally brought some selling into the stock, and it will now be important to see if the bulls can defend the $46 support level (top of the gap) ahead of the next push higher.

 
 
  Steven Price   1/28/03,  3:37:39 PM
Swing Trade Signals
We got yet another bounce and I'm thinking shorts are covering ahead of the President's speech. If that takes us out of the 1/2 short position at 8150, then one of the highlighted risks in this play - the State of the Union - bit us ahead of time. I still think the more aggressive stop just over 8200 also makes sense, but as I said when we entered, this is simply a high risk week.

Current levels: Dow 8104/SPX 860/OEX 435/COMP 1345

 
 
  Jonathan Levinson   1/28/03,  3:32:53 PM
Highs of the day on the COMPX 1346 and QQQ 25.02, TRINQ .42, QQV -1.02. CBOE put to call ratio .69.

 
 
  Jeff Bailey   1/28/03,  3:24:26 PM
Harmony Gold (HMY) $15.98 -4.9% .... weakness versus the Gold/Silver Index (XAU.X) 78.44 -1.4% on trader talk of 8 million share secondary offering. No confirmation that company is indeed mulling secondary offering, but looks to be impacting stock today. Harmony Gold recently moved its listing from NASDAQ to NYSE.

 
 
  Linda Piazza   1/28/03,  3:24:24 PM
So far, the Wilshire 500, both S&P's, and the Dow are printing inside days (or harami's, for candlestick fans) today. Markets haven't provided the entry points I'd hoped to see for my own trading purposes, but perhaps that's best ahead of tonight's State of the Union address. At least those inside days or harami's might give us guidance in tomorrow's trading.

 
 
  Jonathan Levinson   1/28/03,  3:08:07 PM
The put to call ratio has printed its second consecutive reading of .63, as the COMPX chops along just below its high of the day. The TRINQ has risen a bit to .42, and the QQV is off its lows, down .96 on the day. FVX closed near its lows, +2.1 on the day. The lack of follow through on the push higher is confusing and not bullish, as it seemed awfully short before the "consolidation" arrived. I'm waiting to see where we go from here, but so far resistance is holding.

 
 
  Linda Piazza   1/28/03,  3:07:18 PM
Since my last post, a couple of readers have suggested that I take a look at the 21-sma on the 60-minute Dow chart. Thanks, Wes and Russell. Check it out: Link

 
 
  Kent Barton   1/28/03,  2:41:49 PM
Xilinx (XLNX) $21.05 +0.62: Per our entry strategy outlined in last night's play description Link , we've been triggered in this PI long play. Our stop is now set at $19.49.

Looking at a 5-minute chart, you can see that the stock really caught a bid over the past hour. Shares took out both yesterday's high and previous short-term resistance just under $21.00. This action has roughly mirrored the SOX.X, which still faces overhead resistance at 284 and 286.

 
 
  Linda Piazza   1/28/03,  2:39:45 PM
I'm surprised today. I'd expected a stronger rally, with short-covering driving prices swiftly up toward strong resistance. Instead, as I look at the OEX hourly chart, for example, I see what appears to be a bear flag that began forming yesterday on these 60-minute charts. A bear flag moves counter to the previous movement, and moves in a series of higher highs and higher lows. If this is a bear flag, it should break down no more than halfway through the previous drop, which would measure somewhere around the 439-440 area.

 
 
  Jonathan Levinson   1/28/03,  2:33:56 PM
Latest put to call reading: .63.

 
 
  Jonathan Levinson   1/28/03,  2:33:31 PM
The COMPX is at an interesting point, just below moderate resistance at 1345-50. It's taken a great deal of energy to reach this level, given the large drop in the VIX and the smaller drop in the QQV, and the "overbought" level on the TRINQ at .37. The "news" factor of the President's speech tonight is doubtless adding a twist to today's market action, but it will take a serious hurrah to overcome the longer downtrend. The current rise is working off the oversold extreme in the indices, and if the market is true to form, it should leave off at the close above the recent lows but below heavy resistance, leaving participants holding a big question mark, as it loves to do.

 
 
  Jeff Bailey   1/28/03,  2:28:56 PM
UAL (UAL) $1.09 (unch) ... I see I can sell UAL Jan 05 put 25 for $24. The most one can loose on this trade is $1. I pay 6% on a load and if I pay $24 of the loan, in one year I save $1.44 in interest. In a bad case (I know it is not the worst case), the option is assigned in one year (a year before expiration) and UAL is goes to 0, I still gain $.44. What is the catch? Isn't the possibility of assignment before 1 year low?

The most you can lose on this trade is $1.00 per contract, this is true. However, I would think the likelihood of assignment is "high" as this is very deep in the money, on a stock that I feel is "worthless," though it trades for $1.00. It is my view that any "naked" put trader would see high liklihood of assignment. I don't know this for sure, but it is my view. The Jan 05 $25 puts (ZUAME) currently show just 83 open interest. Again, not sure, but bulk may have been assigned already.

I'll note that the Jan 05 $5 puts (zuama) show 14,000 open interest (bid=4.60 ask=4.70) and most you can lose here is $0.40 per contract if writing "naked." Assignment is arbitrary and with 14,000 open interest, the "odds" of assignment are perhaps less here, than in the Jan 05 $25's discussed above with 83 open interest.

 
 
  Linda Piazza   1/28/03,  2:27:22 PM
Up volume now ranks 2.2 times down volume on both the NYSE and Nasdaq. However, new lows rank roughly two times new highs. Adv/dec ratios are 1.4 on the NYSE and 1.16 on the Nasdaq, still rather neutral numbers.

 
 
  Steven Price   1/28/03,  2:20:35 PM
Swing Trade Exit Point Alert - OEX/SPX/DJX/DIA/SPY
Stops are currently set at Dow 8150. More aggressive traders can use a stop over the neckline break of 8200. In hindsight, this may have been the better stop, but if we are stopped out, I will likely still be looking for a rollover at 8200 to re-enter from the short side.

 
 
  Kent Barton   1/28/03,  2:17:59 PM
Microsoft (MSFT) $49.08 -0.09: In yesterday's 3:15 intraday update I mentioned that MSFT was trading at its bullish support trend on the point-and-figure chart. So far the bulls have managed to avoid a breakdown below this level. Link The bar chart, on the other hand, shows no clear support until the $43-$44 area. Shares are currently trading an Inside Day and showing a bit of relative weakness versus the NASDAQ. Tomorrow's action could be pivotal if Softee breaks out of today's consolidation pattern and moves below $48.00. This would make it difficult for the overall tech sector to put together a meaningful rally.

 
 
  Jeff Bailey   1/28/03,  2:16:40 PM
The 1:00 PM Intraday Update has been posted. Link

 
 
  Jonathan Levinson   1/28/03,  2:16:38 PM
Did anyone hear Jim Cramer's comment on CNBC about the 18 hour war and 1000 point DOW rally? Many are incredulous about what he allegedly said, but I missed it.

 
 
  Steven Price   1/28/03,  2:15:49 PM
Swing Trade Signals
We are setting new highs on the day and are right into intraday resistance from yesterday morning. It will be very interesting to see how the Dow handles the 8100 level if we get there. A rejection will simply be a lower high on the bounce. A breakthrough could put our 8150 stop in danger.

Current levels: Dow 8083/SPX 858.00/COMP 1340/OEX 435.05

 
 
  Jonathan Levinson   1/28/03,  2:15:44 PM
The COMPX is closing in on its high of the day, with QQQ currently 24.82. FVX is near the low end of today's range, +3.8 bps. The TRINQ is at .51, TICK.NQ bullish at +206. The COMPX has just printed a new high at 1340 as I type, while QQQ tries to follow.

 
 
  Jeff Bailey   1/28/03,  2:07:21 PM
01:00 PM EST Update was e-mailed, but we are currently experiencing issues with our server for uploading the 01:00 Update to the web site.

 
 
  Linda Piazza   1/28/03,  2:05:22 PM
As the markets push toward the day's highs, the VIX moves to the day's lows, now at 36.82 and pennies below the day's previous low at 36.85.

 
 
  Steven Price   1/28/03,  1:57:37 PM
Swing Trade Signals
I went back over the last 8 years, which was as far back as my charting program would let me, looking for State of the Union reactions. There was no consistent pattern to the markets the following day. The Dow results were as follows

2002 +144

2001 -141

2000 -290

1999 -20

1998 +100

1997 -87

1996 +50

1995 +9

1994 +? (I couldn't get the close for the prior day, but we got a green candle follwing the speech)

Current levels: Dow 8059/SPX 854.85/OEX 433.20/COMP1333/NDX 994.65

We are back over our pivot levels in the above indices, with bullish implications.

 
 
  Mark Phillips   1/28/03,  1:55:18 PM
SYMC $45.67 (+1.47)

Surprise, surprise, surprise! I started looking through the playlist a few minutes ago, and imagine my surprise to see OI Call play SYMC up a whopping 3+% and on pretty strong volume! It looks like buying the dip near the $43.50-44.00 level yesterday would have turned out to be a good move for those brave enough to take it.

With the broad market trying to move higher this morning, SYMC finally responded to yesterday's Legg Mason upgrade, gapping up and moving steadily higher throughout the day. With the move through the $45.45 level, the stock is now working on filling the gap left behind at the open on Friday and is working its way towards the top of the gap at $46. Conservative traders looking to enter on continued strength will now need to wait for the stock to clear last Thursday's intraday resistance just below $46.50 before jumping aboard.

 
 
  Jonathan Levinson   1/28/03,  1:36:24 PM
The US Dollar Index is currently 99.48, while feb gold is at 369.20. The put to call ratio has dropped to .70, and the FVX is lower, now up 3.6 bps. The range continues to dull hold the COMPX, currently 1333.

 
 
  Linda Piazza   1/28/03,  1:25:23 PM
KO: Coca-Cola is one of the companies contributing to the NYSE new lows today. KO fell to an intraday low of 41.00 today and trades near that level again at 41.07. Not only is this a 52-week low, but it is also a nearly six-year low. KO hasn't seen levels this low since May 1996.

 
 
  Kent Barton   1/28/03,  1:20:36 PM
Xilinx (XLNX) $20.51 +0.08: Trading slightly in the green after an early morning rally took shares up to (but not above) yesterday's high. Thus, our high-risk/high-reward speculative bullish play on Premier Investor remains un-triggered. What initally drew our attention to XLNX was the solid support at $20.00. It's interesting to see that this level was successfully tested this morning when the stock tagged a low of $20.11.

Meanwhile, the SOX.X hasn't been able to buck the gradual downtrend that has been intact for nearly three days. If the index continues to drift lower we'll be watching for XLNX to show relative strength and hold above support.

 
 
  Jonathan Levinson   1/28/03,  1:14:43 PM
The latest put to call ratio came in at .72. To give you some perspective, the 5 dma is .76 and the 13 dma is .78. Today's readings therefore represent a modest show of bullishness (which is bearish), much the same as the TRINQ at .55.

 
 
  Linda Piazza   1/28/03,  1:10:22 PM
CSCO bounced from its simple 200-dma yesterday and tested its exponential 200-dma today, but has not yet been able to push above that MA, found at 14.21.

 
 
  Linda Piazza   1/28/03,  12:43:44 PM
The ratio-method adv/dec calculations turn up numbers of 1.12 for the NYSE-traded issues and .91 for the Nasdaq-traded issues. These numbers are fairly neutral, with slightly more advancers than decliners on the NYSE and the opposite being true on the Nasdaq. Up volume comes in at 1.35 times down volume on the NYSE and 1.5 times down volume on the Nasdaq. Neither number is wildly bullish. New lows continue to outnumber new highs, continuing the pattern reversal seen from early January, with the ratios being 29:59 for the NYSE and 25:61 for the Nasdaq.

 
 
  Jonathan Levinson   1/28/03,  12:43:33 PM
The put to call ratio continues to languish in the low .70s. The COMPX continues to struggle with the 1328 level. Without any externalities to move the markets, it wouldn't surprise me to see rangebound action for the rest of the day. The President's speech will certainly help to get things moving, either up or down.

 
 
  Linda Piazza   1/28/03,  12:35:42 PM
Today's markets would be easier to gauge if there had been an oversold rally to carry the markets up to strong resistance, but now as I scan charts, I see a lot of indices that sit on light support, between stronger support and resistance. For example, the SPX sits in the middle of that regression channel I mentioned earlier. For most of the day, the jittery 5(3)3 hourly stochastics have looked as if a bearish kiss were imminent, without that bearish kiss ever being made, and the usually more reliable 21(3)3 hourly stochastics are turning up out of oversold levels one moment and then redrawing themselves and hinging down the next time I peer at the chart. This morning when I was watching CNBC World, a commentator mentioned that this wasn't a good time to go short because of the possibility for an oversold bounce and it certainly wasn't a time to go long because of the long-term outlook, and I guess that describes my attitude, too. I might have taken my chances by entering short near today's highs, but my computer wasn't cooperating at that time.

 
 
  Jonathan Levinson   1/28/03,  12:30:41 PM
The COMPX is currently at 1326. FVX is back down to a 4.3 bps gain on the day. TRINQ at .62 and TICK.NQ shows that the many are currently being supported by buying in the few. HUI and XAU are off their lows, currently -1.96 and -.95 respectively. Incidently and off topic, aren't Blix's glasses great? I'm a fan.

 
 
  Mark Phillips   1/28/03,  12:20:40 PM
Hmmmm...Time To Take Profits on Gold Positions?

I found it rather humorous that Bear Stearns added NEM (a mining stock currently in the LEAPS Portfolio) to their focus list this morning. Along with the rest of the precious metals sector, NEM has had a pretty nice run from the late-November lows near $23 to significant resistance near $30.

Like Jonathan, I feel that gold (and the mining stocks) have a long ways to go on the upside. but in the near-term, I sure don't think the extended nature of the bullish move is screaming for new entries here. In fact, in recent comments, I've suggested that the recent highs might make for a good place to harvest some partial profits on positions taken months ago, looking to re-enter the play on the next significant pullback.

What I find most interesting about the timing of the Bear Stearns move is a hint of capitualation. For the most part, gold and gold stocks are still widely denigrated (my wife's 401K doesn't even offer a fund oriented towards the precious metals industry) by Wall Street, and other financial "professionals", as insignificant in today's modern monetary system. The fact that a major Wall Street firm is adding a gold mining stock to its focus list tells me that they're starting to realize that gold is in a secular bull market and they don't want to be left behind.

So while I take the Bear Stearns move as a confirmation that now would be a good time to harvest some gains for the short-term gold traders, anyone that has a long-term horizon (like Jonathan and myself) should just stay the course, adding to bullish positions on any significant pullbacks.

 
 
  Steven Price   1/28/03,  12:18:48 PM
Swing Trade Signals
Churning, churning, churning. With the exception of the rally up to Dow 8078, which is approximately the same level we found resistance at yesterday morning on a failed bounce, we have mostly remained within the first 5 min candle, with the top at 8049 and a bottom at 8000. If this is the best rebound we can muster after an 800+ point loss, I would expect another leg down. It is possible we will be in a holding pattern for much of the day, ahead of the President's speech and tomorrow's conclusion of the Fed meeting.

Current levels: Dow 8025/COMP 1327/OEX 431.43/SPX 851.23

 
 
  Linda Piazza   1/28/03,  12:10:04 PM
At 37.92 currently, the VIX continued to pull back today. A study of the daily chart shows that from November to early January, the VIX formed a double bottom with the two bottoms at the 26 level. When the VIX moved above the 35.70 peak between those two bottoms, it confirmed the double-bottom pattern, predicting that the VIX might rise as high as the 45 level Mark Phillips has mentioned in his wraps (35.70-26.00 = 9.70. Add 9.70 to 35.70 = 45.40). Since that pattern formed over several months, it can be given greater credence than if it had been formed over a shorter time period. The VIX might see some support near that 35.70 level if it continues falling today.

 
 
  Jeff Bailey   1/28/03,  11:52:33 AM
The 11:00 AM Intraday Update has been posted. Link

 
 
  Linda Piazza   1/28/03,  11:41:36 AM
The SOX erased earlier gains. Perhaps investors read TSM's earnings release after all as the SOX currently trades down $.98. A look at the linked chart shows that it might be time for a relief bounce, however. The red line on the linked chart is a resistance trendline that has been pressuring the SOX since the middle of January, and it's far too steep to continue at this angle forever. However, note the green descending line. That's a descending trendline that has been in place since January 2000 and should retard if the SOX rises too far. Link

 
 
  Jonathan Levinson   1/28/03,  11:38:12 AM
The put to call ratio has dropped a bit to .73 now, along with the TRINQ at .52, TICK.NQ -47. FVX is now +6.1 bps, QQV -.11. HUI and XAU still down significantly, -2.93 and -1.54 respectively. The COMPX is back at 1328 resistance.

 
 
  Steven Price   1/28/03,  11:23:56 AM
Swing Trade Signals
We bounced after the pullback and are back in the green across the board. Levels to watch to the upside for resistance are the pivots at Dow 8032/SPX 852/OEX 431, as well as the opening range high of Dow 8049/COMP 1337.80/ SPX 853.37/OEX 432.96.

Current levels: Dow 8023/OEX 430.93/SPX 850.61/COMP 1326

 
 
  Linda Piazza   1/28/03,  11:23:25 AM
The Russell 2000 was one of the first of the indices to break its neckline level. Currently at 367.32, the Russell sits just above light support at 367. Below that, next light support is at 364. A move lower that 364 should see a retest of July 24, 2002 lows at 354.

 
 
  Jonathan Levinson   1/28/03,  11:16:55 AM
The CBOE website is back up. Latest p/c ratio .76. I note that the QQQ failed at resistance provided by its 5 dma, which is 24.87.

 
 
  Jonathan Levinson   1/28/03,  11:10:34 AM
The CBOE website isn't refreshing, so we'll have to wait for the latest put to call reading. The TRINQ is into neutral bullish territory at .74, QQV +.24, TICK.NQ -348, and FVX now up just 4.7 bps, well off its high.

 
 
  Steven Price   1/28/03,  11:01:28 AM
Swing Trade Signals
We got quite a fade, and took out today's pivot of 8032 in the Dow. The SPX is back below 850 and the OEX below 430. The Dow is sitting just over 8000.

Current levels: Dow 8006/COMP 1321 (in the red)/SPX 849.14/OEX 430.03 (just ticked up as I write)

 
 
  Linda Piazza   1/28/03,  11:01:11 AM
Sorry for my absence. My computer got cranky this morning when I asked it to do too many things at once. The first thing I looked at after signing back on was the SPX regression channel I mentioned late yesterday afternoon. That channel had contained SPX prices through December until the SPX broke out of the channel in early January. Yesterday prices fell back within the channel, and I wanted to see if today's rise broke the SPX out of the channel again. I'm testing whether it's valid to continue plotting the channel and to measure SPX price action against that channel. It's always possible to draw different channels. This morning, the SPX tested the upper boundary of that channel before falling back slightly, so that, so far, the channel seems a valid chart pattern to watch. Here's a Q-chart showing the channel: Link Today, the top of the channel crosses near today's highs, the middle of the channel crosses at about 842, and the bottom of the channel crosses at 827-828.

 
 
  Steven Price   1/28/03,  10:55:41 AM
WTW has broken support and is climbing back to resistance.How far could it fall according to PnF chart?

Weight Watchers (WTW) $42.11 -0.29 WTW has rebounded right back into resistance just below $43. In addition to that resistance level, the 200-dma sits a $43.59 and the 21-dma sits at $43.09. The PnF is actually quite extended and some bounce was to be expected. The recent low is $40 and the bounce has taken us back to just below the bullish support line breakdown at $43-$44. The current bearish vertical count is $31, but it is dervied from the current column of "O" and will not be a final number until we get a 3-box reversal into a column of "X" that defines the bottom of the current column of "O." The count would move lower by $2 for each box under $40 until we get that reversal.

There is PnF support at $36, which matches up to the daily chart going back to April 2002. $36 will be a tough level to break on the downside and would probably be my target on a short from this level. I would probably use a stop around $44-$45, which takes us above the 50-dma at $44.94. However, the stock has shown very good relative strength over the last few days and I would be hesitant to invest a full position on a stock that has added $2 over the last week in a sinking market. On the other hand, I do like the failed rebound into resistance after a big drop.

 
 
  Jonathan Levinson   1/28/03,  10:51:23 AM
As always, superb work and analysis--love reading your updates. Could you enlighten your readers as to how long the Kondratieff cycle is expected to last? Is this the 18 year cycle? I follow Elliott Wave as one of my primary methods of trading and the down cycle is very much in keeping where EW is pointing. BTW, the EW pattern for gold, as I'm sure you've often heard, is that we've peaked, or very close to it. Five waves up says the rally in gold is done (XAU as well) and that the deflationary concerns will eventually pull down the value of all assets, Au included. This will be because all assets start to get sold off as one by one, other assets lose their value and people have nothing else to sell to raise cash, and cash of course will become more valuable.

Thanks, Keene. I love writing them. You guys are the best. Yes, the K-Wave is the 18 year cycle. That doesn't mean that it has to last 18, or 21 or however many years it is. That's just the wavelength used to measure the cycle envelope, and generally, yes, it's been longer than a decade long. I'll know the Winter is over when CNBC is referred to as a telethon for GE, or as the world's longest running infomercial, as one of my trading gurus refers to it. Optimisim in the markets is still relatively high. When it's relatively low, we'll be in a better position to expect a meaningful reversal of the secular trend. EWT is something I'm in the process of learning. I do, however, disagree with their calls on XAU, HUI and gold, for the reasons listed below today. Bear in mind that Prechter himself has admitted that if gold continues to climb, he'll have to revise his count. As ever, the market will do what it wants.

 
 
  Jeff Bailey   1/28/03,  10:51:21 AM
Boots&Coots (AMEX:WEL) $0.43 -2.2% .... Not an oil service name on the tip of every trader/investor's toungue, but stock jumped from $0.15 to $0.48 on Friday, above its 200-day SMA of $0.17 on volume of 23 million shares. Here is company profile from Yahoo Finance Link , and may be in play on "Iraq war fears" and may play into scenario of "scortched earth" from Saddam Hussein should he decide to attempt same policy he did in Kuwait.

Speculative bulls only and if looking long, might start out gradual, but may be a stock gaining some attention over next couple of months.

 
 
  Jonathan Levinson   1/28/03,  10:39:48 AM
The fed has just surprised us with a 3.75B overnight repo, for a total net add today of 2B. I guess the aged-but-groovy Al Green read my 10:31:44AM post and grew suddenly terrified, perhaps even spitting his last bite of beluga-caviar-crepes-suzette across the oak breakfast table and into the crystal cigar-sized ashtray. "Andrea! Tell then to fire up another cropduster! More money to the markets!" The 3.75B comes due tomorrow.

 
 
  Jonathan Levinson   1/28/03,  10:31:44 AM
Over a year ago some noted that it would be a good thing for the value of the dollar to drop to help exporting companies and that this would be good for the economy overall too. Pols typically take the opposite view, as Snow has just done. What's the truth of the matter, and, as traders, how should we play it? Thanks

GREAT question. The fact is that the US is a net importer, and every month we seem to get a new record balance of trades deficit. The globe makes its money selling goods to the US, while the US is a net provider of services. So, globally, a weak USD requires that all of the world's exporters devalue their currency- which is why commodities are, have been, and will continue to rally. For US exporters, yes, a weak dollar is good, but they are in the vast minority. A strong USD is therefore a great idea. But, to get it there, the view seems to be that it will take a rate hike. With personal debt at record highs, interest rates at record lows, unemployment persistently high, growth relatively slow, and personal savings at record lows, a rate hike will increase the debt load on our maxed out corporations and individuals, leading to a wave of defaults, leading to a wave of bank failures, and so on. Not bullish, lettuce say. And so, the fed is up the proverbial creek, and the rally in "hard" assets should continue. I would not be a buyer of real estate, because to my mind it's just a matter of time before real estate becomes much cheaper. So, as traders, a weak dollar means go long commodities/gold/silver, stay bearish on most equities, stay bearish on US bonds, bullish on euro bonds.

This is what I see. I'm sorry it's not bullish for equities over the long term, though in bear markets we get spectacular, violent rallies, such as were seen in Japan. When this Kondratieff Winter is over, it will be the time for me to become an equity bull again. But for now, the above is my view of the market and the economy.

 
 
  Steven Price   1/28/03,  10:30:27 AM
Swing Trade Signals
That last surge to new daily highs was impressive and established the first 5 min candle close over the rretracement I just highlighted. On the 5 min chart it now looks like we broke out from a bullish wedge. Yesterday's high was 8150, which coincides with our stop and maybe we are finally getting the oversold bounce I've been talking about coming at some point.

Current levels: Dow 8070/COMP 1334/OEX 434.24/SPX 856.25

 
 
  Jonathan Levinson   1/28/03,  10:25:03 AM
A great quote I heard that just came to mind: "Whatever your weaknesses, the market will find them." I wish I could remember who said it. Nevertheless, I note that the markets have gone net nowhere since the opening gap up, but they have done so very dramatically. Nevertheless, the TRINQ is showing extreme buying pressure at .29, TICK.NQ is bullish at +192, FVX is bullish as bonds get sold, +7.5 bps, and the QQV is flat to down, -.13. HUI and XAU are getting slammed. Can the bulls do it? Or have they just done it? Let's remember to breathe while we wait.

 
 
  Mark Phillips   1/28/03,  10:19:13 AM
Looking like a slightly bullish consolidation day:

My first filter is the ADVDECV indicators, and for both the NASDAQ and NYSE, these indicators have been in the green since the opening bell. Add in the fact that bond yields are in the green, and it doesn't look like the bears are going to press their advantage today. We know that the market is near-term oversold, so a bit of a bounce like we're seeing this morning is in order.

But don't get any wild ideas about a runaway bullish move. Hoping for that right now is a bit too optimistic. I just scanned through my watch list of about 140 stocks, which span most of the sectors in the market. Of that group, only 1 stock is showing a loss of more than $1 and only 3 are showing a gain of more than $1. For the most part, today looks like a marketwide consolidation session, and that is reflected in the rather narrow range seen in most stocks.

 
 
  Steven Price   1/28/03,  10:14:43 AM
Swing Trade Signals
Looking t the fitted 5 min retracement from the opening range, we have yet to complete a candle above the 80.9%/19.1% level just a hair under 8050, which coincides with the top of the opening range. However, the rollover after the initial pop from the housing/confidence data also found buyers. So far we are simply moving sideways between 8020 and 8050 with high on the day of 8068.

Current levels: Dow 8037/COMP 1330/SPX 853.49/OEX 432.58

 
 
  Jonathan Levinson   1/28/03,  10:09:54 AM
The fed has announced a 9 day repo in the amount of 5B, for a drain of 1.75B today.

 
 
  Jonathan Levinson   1/28/03,  10:08:29 AM
The put to call ratio has just given us a reading of .65. Ahhh. Back to normal. The markets are now free to tank (grin!)

 
 
  Jeff Bailey   1/28/03,  10:03:51 AM
New home sales for December come in +3.5% at 1.08 million, slightly stronger than expected. Dow Jones Home Construction Index (DJUSHB) steady at 318.53 -0.25%.

 
 
  Linda Piazza   1/28/03,  10:03:24 AM
My literature suggests that the 79 Consumer Confidence number was the expected number, with some in the market expecting a number as low as 76.

 
 
  Linda Piazza   1/28/03,  10:01:54 AM
The Consumer Confidence number fell to its lowest levels since 1993, Bloomberg says, falling to 79 from the previous month's 80.7.

 
 
  Jeff Bailey   1/28/03,  10:01:09 AM
New Home Sales also due out along with consumer confidence at 10:00 AM EST.

December new home sales consensus is 1.04 million.

Dow Jones Home Construction Index (DJUSHB)318.53 -0.25%.

 
 
  Steven Price   1/28/03,  9:58:42 AM
Semiconductor Index (SOX) 281.34 (+1.69) So far the former support area from 282-285 appears to be acting as resistance on this morning's bounce in the chips. We are still in the green above 280, however, so I'm not ready to jump in short from this level if not already short. Look for a break below 274 in the SOX, which is minor support here, to jump on new semi short plays.

 
 
  Linda Piazza   1/28/03,  9:58:17 AM
The Consumer Confidence number is due out at 10:00 ET.

 
 
  Linda Piazza   1/28/03,  9:57:10 AM
Bloomberg is reporting that the White House is commenting on the Iraq situation, saying that it will release new evidence of Iraq's noncompliance. Bloomberg says that Bush is not expected to present this evidence tonight, but will present it to the U.N. committee soon.

 
 
  Linda Piazza   1/28/03,  9:54:31 AM
The flowers wilt, the flowers bloom. Now it seems like things are getting better. Apparently investors in semi-conductor companies gave this statement by Taiwan Semiconductor's Chairman Morris Chang more weight than they did the surprising shortfall in net profit. The world's largest contract microchip maker reported earnings that indicated a year where most profits accrued in the first half of the year and dropped sharply in the most recent quarter. With the SOX rebounding 2.97 points today, they also apparently discounted TSM's plan to trim its cap-ex budget for the next year to U.S.$1-1 1/2 billion from last year's US$1.65 billion, a cut expected to affect U.S. companies such as AMAT and ASML. Chang, however, reaffirmed expectations of an imminent turnaround in demand, an expectation that savvy investors should remember hearing repeated often over the course of the last couple of years.

 
 
  Ray Cummins   1/28/03,  9:51:23 AM
Spreads/Combos – Notable Events

Biogen (NASDAQ:BGEN) shares are trading sharply lower today in the wake of the company’s quarterly earnings report. The popular bio-tech development firm posted higher fourth-quarter profits, boosted by a one-time gain from a legal settlement and the resumption of royalty payments from Schering-Plough, however sales of its multiple sclerosis drug, Avonex, slumped. Biogen also guided analysts lower with regard to the coming quarter’s earnings and the stock is paying the price for the mediocre outlook.

Our new synthetic position in the issue is already profitable and conservative traders locked-in gains this morning as the issue fell below $34.

 
 
  Steven Price   1/28/03,  9:42:15 AM
Swing Trade Signals
High of Dow 8049 on the open. The trade of 8050 has bullish implications for the day. Traders looking to exit rather than take any pain today can do so now.

Current levels: Dow 8057/SPX 854.56/OEX 432.92/COMP 1338

 
 
  Ray Cummins   1/28/03,  9:41:24 AM
Spreads/Combos/Premium Selling -- Portfolio Activity

Despite the market's sharp sell-off on Monday, the majority of our bullish plays are positive and only a few require further attention. Some of the more obvious positions on the watch-list are: PF Chang's (NASDAQ:PFCB), Benchmark Electronics (NYSE:BHE), Chiron (NASDAQ:CHIR), Amgen (NASDAQ:AMGN), and HCA Inc. (NYSE:HCA). Neither of the new put-credit spreads (1/27 Combos) in Cerner (NASDAQ:CERN) and Pharmaceutical Resources (NYSE:PRX) were traded yesterday, however we will track both plays in the model portfolio

In the "bearish" category, the list of winning positions is extensive with a slew of downside movers including: Alliant Techsystems (NASDAQ:ATK), Beezer Homes (NYSE:BZH), Cabot Micro (NASDAQ:CCMP), Cognizant Technologies (NASDAQ:CTSH), Fifth Third Bancorp (NASDAQ:FITB), Illinois Tool Works (NYSE:ITW), Expedia (NASDAQ:EXPE), Harmon Electronics (NYSE:HAR) and Zebra Technologies (NASDAQ:ZBRA) among others. At the same time, new plays in Caterpillar (NYSE:CAT), Merrill Lynch (NYSE:MER) and Viacom (NYSE:VIA) offered almost no favorable entries during Monday's precipitous declines. With any luck, Tuesday's session will provide a brief respite for equities, thus creating new opportunites for some "premium selling" in bearish issues.

 
 
  John Seckinger   1/28/03,  9:40:17 AM
As a note: I will be commenting in the Futures Monitor today.

 
 
  Linda Piazza   1/28/03,  9:37:00 AM
John Snow, nominee for U.S. Treasury Secretary, speaks today, and his speech includes the statement that a strong U.S. dollar is in the national interest. While U.S. exporters might not be so glad to hear of a strong-dollar policy, European and Asian companies that export to the U.S. will be.

 
 
  John Seckinger   1/28/03,  9:33:42 AM
Intra-day Pivot/Levels for Tuesday (01/28/02)...

INDU : S2= 7840, S1= 7914, P= 8032 , R1= 8107 , R2= 8225

SPX : S2= 832, S1= 840, P= 852, R1= 859, R2= 871

OEX : S2= 420, S1= 425, P= 431 , R1= 436, R2=442

NDX : S2= 964, S1=976 , P= 992, R1=1004 , R2=1019

QQQ : S2= 23.98, S1= 24.25, P= 24.64 , R1= 24.91, R2= 25.30

 
 
  Jonathan Levinson   1/28/03,  9:31:03 AM
10 point gap up open on the COMPX to 1335, TRINQ .49, QQV +.75, TICK.NQ -189.

 
 
  Jeff Bailey   1/28/03,  9:26:31 AM
The 9:00 AM Intraday Update has been posted. Link

 
 
  Jonathan Levinson   1/28/03,  9:18:35 AM
As many of you might have noticed, I've been sweating the huge put to call readings we had yesterday. Not one to miss an opportunity to worry, I dug in a bit last night. Most traders I consulted pay closer attention to the moving average on the put to call ratio. Some like the 21 dma, others shorter periods, etc. One of the best technicians I know compares the 17 and 29 day oscillators to generate signals. On most measures, however, the moving average on the p/c ratio is still quite bearish, and yesterday's action generated signals more indicative of a market top (albeit late) than of a market bottom. Fair enough. I still expect the bounce discussed in my index wrap last night, but I'm no longer as worried about the p/c ratio signalling a substantial rally as I was yesterday.

 
 
  Steven Price   1/28/03,  8:55:32 AM
Swing Trade Signals
We are currently short a 1/2 position in the broader markets, with a stop at Dow 8150. I identified this entry as higher risk, given the recent sell-off and political climate and I still believe picking a direction in the current environment is difficult. We have a technical breakdown in place, with PnF sell-signals and bullish percents reversing lower. We also have lost over 800 Dow points in 8 sessions, indicating we are due for a bounce at some point. With the the State of the Union tonight, the FOMC meeting beginning today and a host of economic data due this week, we are subject to a snap back rally. More aggressive traders can use a stop above the neckline breakdown at Dow 8200 and more conservative traders, as I said yesterday, may want to sit these few days out.

 
 
  Jonathan Levinson   1/28/03,  8:50:51 AM
Although futures haven't moved in the past 15 minutes, yields are now firmly positive, with FVX +2.8 bps, TNX +2.1 bps, and TYX +1.4 bps. This would ordinarily look bullish for equities to me, but recall that yesterday we saw the same thing. It could be foreigners dumping US bonds to move into European bonds, as the ECB has move leeway for future rate cuts should they become necessary. The US Dollar Index has dropped to 99.51, and while I don't track the Euro, I know that's been rallying relative to the USD.

 
 
  Jonathan Levinson   1/28/03,  8:34:52 AM
CNNfn reports that durable goods orders rose 0.2% in December, less than expected. However, QQQ has been trading a few cents higher since the news was released at 8:30, and yields have been hugging the "unchanged" line.

 
 
  Linda Piazza   1/28/03,  8:32:58 AM
Today, Taiwan Semiconductor (TSM), the world's largest contract microchip maker, reported an unexpectedly sharp fall in Q4 net profit, but insists that it will see a recovery by Q2 in 2003.

 
 
  Jonathan Levinson   1/28/03,  8:23:55 AM
The US Dollar Index has recovered off its lows, cuurently 99.60, with Feb gold at 369.70. Although I wasn't watching for it, I'm hearing talk of "backwardation" in gold yesterday, in which the price of spot gold was actually exceeding that of back months. This is generally seen as a bullish indicator when it occurs. Futures are slightly positive, with QQQ trading 11 cents above last night's close, at 24.64.

Al Green has 6.75B in overnight repos expiring today. We await the 10AM announcement from the fed.

 
 
  Linda Piazza   1/28/03,  7:20:58 AM
Good Morning! The Nikkei dropped again Tuesday, closing down .98%. Banks contributed to the Nikkei's performance as concerns about their business outlook persist. Exporters Sony and Toshiba, both expected to report earnings tomorrow, dropped. So did Fujitsu, Japan's number one PC maker, after releasing its earnings report. Fujitsu reported a loss that it attributed both to slowing sales and to the devaluation of marketable securities. Similar concerns about devaluation of marketable securities recently cropped up worldwide in association with insurance stocks.

European markets traded cautiously positive in midday trading, but had dipped into negative territory by the time I completed writing this report. European markets were at first buoyed by the presumption that the U.S. would not immediately act against Iraq, the upturn in U.S. futures, and the release of a German business confidence number that rose from a revised 87.3 in December to its current 87.4. That December number was the lowest in almost a year, however. In addition, exports had ticked up in Germany, and European economists also point to the hope that the U.S. Durable Goods number, to be released later today, will indicate a pickup in the U.S. economy as it headed into 2003. European economists also remain optimistic that John Snow, if confirmed as U.S. Treasury secretary, will strengthen the dollar and thereby help European exporters. As of this writing, the FTSE 100 was down a minimal 0.09%, the CAC 40 was down even less, by 0.03%, and the DAX was down a more significant .41%.

 
 
  Steven Price   1/27/03,  10:22:53 PM
The Swing Trade Game Plan has been posted: Link

 
 
  Jonathan Levinson   1/27/03,  10:22:34 PM
The Index Trader Wrap has been posted: Link

 
 
  John Seckinger   1/27/03,  10:22:16 PM
The Futures Trader Wrap has been posted: Link

 
 
  Jim Brown   1/27/03,  10:21:54 PM
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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